The blog entry for the week is actually not an ADA case at all but it may have a substantial impact on the ADA universe. The case of the day is Murray v. UBS securities, LLC, a unanimous decision written by Justice Sotomayor, from the Supreme Court decided on February 8, 2024, here. It actually explores what a plaintiff has to show when it comes to proving discrimination in a Sarbanes-Oxley case. As usual, the blog entry is divided into categories, and they are: facts; Court’s reasoning that Sarbanes-Oxley does not reference or include a retaliatory intent requirement; Court’s reasoning that Sarbanes-Oxley has a contributing factor burden shifting framework built into the statute that also dictates there be no retaliatory intent requirement when it comes to whistleblowers proving retaliation; Justice Alito concurring opinion joined by Justice Barrett; and thoughts/takeaways and how Murray might impact ADA jurisprudence. Of course, the reader is free to focus on any or all of the categories.
In 2011, Trevor Murray was employed as a research strategist at securities firm UBS, within the firm’s commercial mortgage-backed securities (CMBS) business. In that role, Murray was responsible for reporting on CMBS markets to current and future UBS customers. Securities and Exchange Commission (SEC) regulations required him to certify that his reports were produced independently and accurately reflected his own views. See 17 CFR §242.501(a) (2022). Murray contends that, despite this requirement of independence, two leaders of the CMBS trading desk improperly pressured him to skew his reports to be more supportive of their business strategies, even instructing Murray to “clear [his] research articles with the desk” before publishing them. 1 App. in No. 20–4202 (CA2), p. 254. Murray reported that conduct to his direct supervisor, Michael Schumacher, in December 2011 and again in January 2012, asserting that it was “unethical” and “illegal.” App. 28. Schumacher expressed sympathy for Murray’s situation but emphasized that it was “very important” that Murray not “alienate [his] internal client” (i.e., the trading desk). Ibid. When Murray later informed Schumacher that the situation with the trading desk “was bad and getting worse,” as he was being left out of meetings and subjected to “constant efforts to skew [his] research,” Schumacher told him that he should just “write what the business line wanted.” Id., at 29–30. Shortly after that exchange (and despite having given Murray a very strong performance review just a couple months earlier) Schumacher emailed his own supervisor and recommended that Murray “be removed from [UBS’s] head count.” Id., at 39. Schumacher recommended in the alternative that, if the CMBS trading desk wanted him, Murray could be transferred to a desk analyst position, where he would not have SEC certification responsibilities. The trading desk declined to accept Murray as a transfer, and UBS fired him in February 2012.
After the judge had instructed the jury, the jury sought clarification on the instructions. Once they received the clarification, the jury awarded $1 million to Murray and the court subsequently awarded $1.769 million in attorney’s fees and costs. When the court clarified the instructions, the clarification did not include any suggestion that discrimination per the Sarbanes-Oxley Act’s anti-retaliation provision required a whistleblower-employee to prove retaliatory intent. UBS appealed and won at the Second Circuit. Murray then appealed to the United States Supreme Court. In light of a conflict between the Second Circuit v. the Fifth and Ninth Circuits, the Supreme Court accepted the case.
Court’s Reasoning That Sarbanes-Oxley Does Not Reference or Include A Retaliatory Intent Requirement.
- Sarbanes-Oxley’s statutory text states that no employer subject to the act may be discharged, demoted, 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. 18 U.S.C. §1514A.
- The placement of the word “discriminate,” in that section’s catchall provision suggests that it is meant to encompass other adverse employment actions not specifically listed. The clause is clearly drawing meaning from the terms “discharge, demote, suspend, threaten, and harass,” rather than giving those terms a new or different meaning.
- Prohibited discrimination occurs when an employer intentionally treats a person worse because of a protected characteristic.
- In Bostock, which we discussed here, the Court made clear that a lack of “animosity,” is irrelevant to a claim of discrimination under title VII.
- Any animus-like retaliatory intent requirement is absent from the definition of the word, “discriminate.”
- When an employee treats someone worse-whether by firing them, demoting them, or imposing some other unfavorable change in the terms and conditions of employment-“because of,” the employee’s protected whistleblowing activity, the employer violates §1514A. It does not matter whether the employer was motivated by retaliatory animus or motivated, for example, by the belief that the employee might be happier in a position that did not have SEC reporting requirements.
- Accepting that the word “discriminate,” is relevant to the intent inquiry, the only intent required by §1514A requires is the intent to take some adverse employment action against the whistleblowing employee “because of,” is protected whistleblowing activity.
Court’s Reasoning That Sarbanes-Oxley Has a Contributing Factor Burden Shifting Framework Built into the Statute That Also Dictates There Be No Retaliatory Intent Requirement When It Comes to Whistleblowers Proving Retaliation
- The statute is clear that whether an employer “discriminated,” has to be resolved through the contributing-factor burden-shifting framework applying to Sarbanes-Oxley whistleblower claims.
- Requiring a whistleblower to prove an employer’s retaliatory animus ignores the statute’s mandatory burden-shifting framework, the discussion of which was conspicuously absent from the Second Circuit’s opinion.
- The burden-shifting framework provides a means of getting at intent, and Congress here has decided that the plaintiff’s burden on intent is simply to show that the protected activity was a “contributing factor in the unfavorable personnel action per 49 U.S.C. §42121(b)(2)(B)(i).”
- While many statutes dealing with employment discrimination apply a higher bar by requiring a plaintiff to show that his protected activity was a motivating or substantial factor in the adverse action, the incorporation of the contributing-factor standard into Sarbanes-Oxley itself reflects a judgment that personnel actions against employees should quite simply not be based on protected whistleblowing activities-not even a little bit.
- The ordinary meanings of the words “contribute,” and “factor,” suggests the phrase “contributing factor,” is broad.
- The statute’s burden shifting framework provides at 49 U.S.C. §42121(b)(2)(B)(ii), that an employer will not be held liable where it “demonstrates, by clear and convincing evidence, that it would’ve taken the same unfavorable personnel action in the absence of,” the protected behavior. The right way to think about that kind of same-action causation analysis is to change one thing at a time and see if the outcome changes. Therefore, the question is whether the employer would have retained an otherwise identical employee who had not engaged in the protected activity.
- The contributing-factor framework Congress chose in Sarbanes-Oxley is not as protective of employers as a motivating-factor framework, which is by design. Congress has employed the contributing-factor framework in contexts where the health, safety, or well-being of the public may well depend on whistleblowers feeling empowered to come forward. This Court cannot override that policy choice by giving employers more protection than the statute itself provides.
- While a whistleblower invoking the retaliation provisions of Sarbanes-Oxley does have the burden to prove that his protected activity was a contributing factor in the unfavorable personnel action alleged in the complaint, the whistleblower is not required to make some further showing that his employer acted with retaliatory intent.
Justice Alito Concurring Opinion Joined by Justice Barrett
- Sarbanes-Oxley makes no mention of any animus in any of its provisions and there is no ground for the Court to add it as an additional, non-statutory requirement.
- The rejection of a “animus,” requirement does not read intent out of the statute. That is, a plaintiff still has to show an intent to discriminate.
- The phrase “in any other manner discriminate,” suggests that the adverse action must be a form of discrimination.
- Discriminatory discharge that is made “because of,” a particular factor necessarily involves an intentional choice where that factor plays some role in the employer’s thinking. In other words, the plaintiff must prove that the employer intentionally treated the plaintiff worse because of the protected conduct.
- Proving intent means that the plaintiff must show that a reason for the adverse decision was the employee’s protected conduct. A plaintiff need not prove that the protected conduct was the only reason or even that it was a principal reason for the adverse decision. Showing that it helped to cause or bring about that decision is enough. If the plaintiff makes that showing, the statute’s intent requirement is met, and the only open question is causation. With respect to causation, Sarbanes-Oxley shifts the burden to the employer to prove by clear and convincing evidence that it would’ve taken the same unfavorable personnel action alleged in the complaint. In other words, the employer has to show then that the plaintiff’s protected conduct did not cause the challenged employment decision. If the employer satisfies that burden, then the element of causation has not been proved.
Thoughts/Takeaways and How Murray Might Impact ADA Jurisprudence
- This case may have significant repercussions with respect to the ADA. For example, the retaliation provision of the ADA, which can be found at 42 U.S.C. §12203(a) is written in the same way at the retaliation statute in Sarbanes-Oxley. That is, the word “discriminate,” leads off the statutory provision. As a result, a strong likelihood exists that any effort of a defense attorney to show that retaliation with respect to the ADA involves showing retaliatory animus will likely fail.
- What is missing from the ADA in terms of the statutory provisions is the burden-shifting baked into Sarbanes-Oxley. As we have discussed multiple times, such as here, McDonnell Douglas has over the years taken over summary judgment when it comes to ADA cases, particularly on the employment side. We know from this blog that whether that kind of approach will continue to make sense is very much up in the air. The hard thing to figure out from Murray is whether the discussion of burden shifting and motivating factor is expressing some kind of affinity for that kind of framework or whether the discussion is occurring because of the statutory provisions contained in Sarbanes-Oxley. The answer to that question matters because of trying to hazard a guess as to whether the Supreme Court will continue with McDonnell Douglas as a summary judgment tool or whether it will adopt an approach like the Seventh Circuit, which we discussed here, or an approach like the 11th Circuit, which we discussed here.
- It is also interesting to think about this case with respect to whether a person alleging retaliation can get damages, a point with the courts are all over the place on as we discussed here. As I mentioned in that blog entry, Justice Alito when he was on the Circuit Court bench wrote an opinion where he said that retaliation is discrimination. That decision combined with this decision does have you wondering whether damages are possible in a retaliation case.
- Bostock, which we discussed here, is an absolute must read when it comes to causation.
- As Justice Alito says, you still have to show intentional discrimination.
- We know that compensatory damages under title II are only possible upon a showing of deliberate indifference, see this blog entry for example. We also know that deliberate indifference can mean different things depending upon the jurisdiction you are in, such as here for example. As far as I can tell, “deliberate indifference,” is a judicially created standard for Rehabilitation Act cases and for title II cases. The language of this decision is broad enough to create a real issue in my mind whether “deliberate indifference,” for the reasons the Court describes in Murray, is still good law. Definitely look for plaintiffs attorneys to begin exploring this in title II and §504 cases. It also raises the issue of what might be the likelihood or not of the Court deciding whether emotional distress damages can be available under title II of the ADA. We already know from Cummings, here, that emotional distress damages are not available under the Rehabilitation Act absent a change in the law from Congress. The jury is still out so to speak, and especially now after Murray, as to whether the same analysis will apply to title II cases.