Supreme Court rescues plaintiff's whistleblowing verdict

What does it mean to "discriminate?" The Supreme Court tells us in a case brought under the federal whistleblower statute that makes it illegal to discriminate against employees who speak out against certain forms of corporate and Wall Street fraud. The Court rules in favor of the employee with a broad definition of "discriminate."

The case is Murray v. UBS Securities, LLC, issued on February 8. Plaintiff proved at trial that he was fired because he blew the whistle on fraud against shareholders. The jury awarded him nearly $1 million in damages. The Second Circuit vacated the verdict, holding that the trial court got the jury instructions wrong because the jury was not asked to find whether plaintiff's termination was motivated by "retaliatory intent." If so, then the jury could find that plaintiff was discriminated against. The Supreme Court unanimously finds the Second Circuit got it wrong and the verdict is back on the table.

Here is what the statute says: No employer subject to Sarbanes-Oxley  “may discharge, demote,  suspend, threaten, harass, or in any other manner discriminate against an employee in the terms and conditions of employment because of ” the employee’s protected whistleblowing activity." The placement of the word "discriminate" means Congress intended to "capture other adverse employment actions that are not specifically listed, drawing meaning from the terms 'discharge, demote, suspend, threaten, and harass' rather than imbuing those terms with a new or different meaning." 

After reviewing prior Supreme Court cases holding that "discriminate" means differential treatment, Justice Sotomayor holds that "an animus-like 'retaliatory intent' requirement is simply absent from the definition of the word 'discriminate'" and "does not matter whether the employer was motivated by retaliatory animus or was motivated, for example, by the belief that the employee might be happier in a position that did not have SEC reporting requirements." The only intent that [the statute] requires is the intent to take some adverse employment action against the whistleblowing employee 'because of' his protected whistleblowing activity."

The Supreme Court also reviews the burden-shifting framework under the statute. Congress wanted plaintiffs to prevail under Sarbanes-Oxley if the discrimination was a "contributing factor" in the adverse employment action. "The incorporation  of  the  contributing-factor  standard  in Sarbanes-Oxley reflects a judgment that 'personnel actions against employees should quite simply not be based on protected whistleblowing activities —not even a little bit." If the plaintiff can prove that discrimination was a contributing factor, to prevail, the employer must should it was have demoted or fired him "in the absence of that behavior." That burden-shifting worked as it should in this case, the Court says, as it worked "to sharpen the inquiry into the elusive factual question of intentional discrimination," as juries are given the difficult to ask of resolving discrimination cases, usually on the basis of circumstantial evidence. The statute requires that burden-shifting.

The is remanded to the Second Circuit to take up any other arguments that UBS may have in attacking the verdict. But my guess is the Second Circuit will formally affirm the verdict and Murray will have his victory.