The US Supreme Court ruled in Murray v. UBS Securities LLC that whistleblowers under the Sarbanes-Oxley Act (SOX) need not prove retaliatory intent. This ruling is consistent with current precedent for Energy Reorganization Act (ERA) Section 211 cases before the US Department of Labor (DOL), which the US Nuclear Regulatory Commission (NRC) will take into account in interpreting its anti-retaliation regulations.

The US Supreme Court on February 8 held in Murray v. UBS Securities LLC that the Sarbanes-Oxley Act of 2002 (SOX)[1]—which makes it unlawful for an employer to retaliate against employees for reporting what they reasonably believe to be violations of certain categories of criminal fraud and/or fraud against shareholders—does not require a whistleblower to prove that an employer acted with retaliatory intent.[2]

THE CASE

This case arose when Trevor Murray, an employee at a publicly traded company, was fired after he voiced concerns about pressure he received from other employees to skew US Securities and Exchange Commission (SEC)-required reports. After being discharged, Murray filed a complaint under SOX with the DOL. Because the DOL did not issue a final decision within 180 days, Murray filed suit in federal district court under a removal provision similar to that applicable to claims under the ERA.

SOX features the same burden-shifting framework as the ERA. First, a claimant must show that his or her protected activity “was a contributing factor in the unfavorable personnel action alleged in the complaint.”[3] If the claimant meets those requirements, the burden shifts to the employer to show “by clear and convincing evidence” that it “would have taken the same unfavorable personnel action in the absence of” the protected activity.[4]

ROAD TO THE SUPREME COURT

At the district court level, a jury found that Murray had established that his protected activity was a contributing factor for his termination, and that UBS Securities LLC failed to prove that it would have fired Murray absent his protected activity.

On appeal, the US Court of Appeals for the Second Circuit remanded the case, holding that Murray was required to prove that UBS acted with retaliatory intent.

The Court reversed, concluding that So’s retaliation provision does not require a specific showing of retaliatory intent. In doing so, the Court held, in part, that requiring a claimant to prove an employer’s retaliatory animus would ignore the statute’s burden-shifting framework,[5] which provides a mechanism for determining intent. It also opined that public policy supports requiring the employer to bear the burden of intent because proving discriminatory intent is difficult and “employers ‘contort[l] most of the cards.’”[6]

The Court dismissed the concern that, without a specific retaliatory-intent requirement, innocent employers would face liability for legitimate, nonretaliatory personnel decisions. The Court reasoned that the statute’s burden-shifting framework sufficiently protects employers by providing that an employer will not be held liable where it “demonstrates, by clear and convincing evidence, that [it] would have taken the same unfavorable personnel action in the absence of” the protected behavior.

While the Court’s ruling in Murray v. UBS is specific to retaliation claims under SOX, similar language is used in section 211 of the ERA. In footnote 1 of its decision, the Court noted the similarity between SOX, the ERA, and other whistleblower statutes.[7] As explained above, both SOX and the ERA invoke the same burden-shifting framework.

DOL CONSIDERATIONS

Thus, it is likely that the DOL and courts may apply the holding of Murray v. UBS in the Section 211 context. This outcome would be consistent with our experience with the DOL, where the agency generally does not require a whistleblower to prove retaliatory animus on the part of an employer to make a prima facie case of retaliation under the ERA.

Rather, retaliatory intent, or a lack thereof, can be considered as evidence tending to prove or disprove whether a protected act was a contributing factor for an adverse action. Thus, while the decision in Murray is likely to prevent a shift toward requiring whistleblowers to prove retaliatory intent, the practical result will be maintenance of the status quo in this area of law—at least within the DOL.

NRC CONSIDERATIONS

Similarly, at the NRC, the Commission directed the NRC staff to look to DOL interpretations of the ERA for its application of its antiretaliation regulatory provisions, such as 10 CFR 50.7 and 70.7.

At this time, it is unclear whether the NRC will try to rely on the implication of retaliatory intent for findings of deliberate violations of these provisions, or if additional evidence of a manager’s animus will be required to support a deliberate violation.

[1] 18 USC. § 1514A(a) (“No company . . . may discharge, demote, suspend, threaten, harass, or in any other manner discriminate against an employee in the terms and conditions of employment because of any lawful act done by the employee.”).

[2] Murray v. UBS Securities, 601 US ___, slip. op. (2024) (Order).

[3] 49 USC. § 42121(b) (2) (B) (i).

[4] 49 USC. § 42121(b) (2) (B) (ii).

[5] Id. at 10.

[6] Id. at 11 (quoting 135 Cong. Rec. at 5033).

[7] Compare 18 USC. § 1514A(a) (“No company . . . may discharge, demote, suspend, threaten, harass, or in any other manner discriminate against an employee in the terms and conditions of employment because of any lawful act done by the employee.”) (emphasis added) with 42 US Code § 5851: (“A holder of a certificate under section 44704 or 44705 of this title . . . may not discharge an employee or otherwise discriminate against an employee with respect to compensation, terms, conditions, or privileges of employment because the employee [acted lawfully.]”) (emphasis added).

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