A “Plaintiff-Friendly” Standard for SOX Whistleblowers – A Helping Hand for FCA Relators?

On February 8, 2024, the US Supreme Court issued a unanimous opinion in Murray v. UBS Securities, LLC, No. 22-660 (U.S. 2024) restoring a $900K jury verdict in favor of a whistleblower under the Sarbanes-Oxley Act (SOX) related to publicly-traded businesses and their financial reporting. The whistleblower was awarded damages based on having demonstrated that his adverse employment action followed protected activities. On appeal, the Circuit court reversed, finding that the employee but had not demonstrated retaliatory intent by the employer. The Supreme Court disagreed and ruled unanimously that the former UBS employee who had blown the whistle on UBS, sued, and prevailed before a jury in 2017 was entitled to recover because proof of the employer’s state of mind – retaliatory intent – intent was not required.

UBS had argued that, as a matter of law, a SOX whistleblower must demonstrate retaliatory animus to prove that protected activity (engaging in whistleblowing conduct) was a contributing factor to an adverse employment action. The justices disagreed, stating that retaliatory animus was one way, but not the only way, to prove the connection between protected activity and the unlawful reaction by the employer.

What does this ruling mean for whistleblowers under similar laws aimed at encouraging private citizens to come forward, such as the federal False Claims Act (FCA) by providing protection from reprisal by their employers or contractors? The employee or contractor need only show that their protected activity contributed to the adverse employment action (such as a demotion or firing). The employer then bears the burden to prove that the employment action would have resulted without the protected activity. The Court made clear that the burden of proof (like the relevant statute) “is meant to be plaintiff-friendly.”

Whistleblowers under the FCA (like under the SOX provision) who suffer retaliation, which includes being terminated, harassed, or in any other way discriminated against “because of” their protected activity, need not prove a separate element (the employer’s intent), only a causal link between the two. The SOX provision addressed by the Supreme Court, Section 1514A, contains the exact “because of” language that Congress employed under Section 3730(h) of the FCA. This ruling provides whistleblowers with a powerful tool in the burden-shifting framework in claims for retaliation.

This ruling may allow FCA whistleblowers to meet liability standards to avail themselves of the broad damages of Section 3730(h) – “all relief necessary to make that employee, contractor, or agent whole.”  The proof required to prove liability, that the discrimination in the terms or conditions of employment (including harassment, threats, demotion, suspension, or termination) was “because of” the protected activity, does not also require proof of a “retaliatory” mindset. It is to be seen whether the overall similar aim of SOX and FCA (and similar) anti-retaliation provisions, encouraging private citizens to come forward for a larger public good, will lead to “plaintiff-friendly” standards of proof on the whistleblowers’ private causes of action.

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