Several U.S. Supreme Court justices are leaning towards rejecting an attempt by UBS Group to make it more difficult for financial whistleblowers to prove retaliation claims. The court heard oral arguments in an appeal by Trevor Murray, a former UBS bond strategist who alleges that he was unlawfully fired for refusing to publish misleading research reports and for complaining about being pressured to do so.
Murray was awarded $1.7 million by a jury, but the New York-based 2nd U.S. Circuit Court of Appeals overturned the verdict last year. The court stated that the jury should have been instructed that in order to hold UBS liable under the federal Sarbanes-Oxley Act (SOX), Murray had to prove that the company acted with retaliatory intent.
This ruling created a split with at least two other appeals courts that have allowed the lack of intent defense to be raised in a SOX case, though it must be proven by the defendant.
The outcome of this case could have significant implications for whistleblower litigation. If the court rules in favor of UBS, it could greatly limit whistleblower lawsuits as it is often challenging for plaintiffs to prove a defendant’s motives.
UBS is being represented by Eugene Scalia of Gibson Dunn & Crutcher, who is the son of late Supreme Court Justice Antonin Scalia and a former U.S. labor secretary. This marks his first appearance before the court.
During the oral arguments, the court’s three liberal justices and one conservative justice, Neil Gorsuch, seemed skeptical of UBS’s position. They argued that SOX, which prohibits discrimination against employees who report financial misconduct by publicly traded companies, does not seem to impose the high bar adopted by the 2nd Circuit and advocated by UBS.
Scalia, on the other hand, argued that SOX is no different from other employment discrimination laws that require plaintiffs to prove that employers intended to discriminate. UBS has claimed that Murray was fired as part of a cost-cutting campaign that eliminated thousands of jobs and not because of his complaints.
Murray is backed in the appeal by the Biden administration, with Anthony Yang from the U.S. Department of Justice appearing on his behalf during the arguments.
Justices Samuel Alito, Amy Coney Barrett, and Brett Kavanaugh expressed reservations about certain aspects of UBS’s arguments. Kavanaugh, for instance, noted that regardless of the jury instruction, UBS was still able to argue that Murray’s firing was not a result of his complaint.
The case, titled Murray v. UBS Securities LLC, is expected to have significant implications as it unfolds. A ruling against Murray could potentially make it tougher for other whistleblowers to pursue retaliation claims against their employers.
