UBS Clash at Supreme Court Tests Whistleblower Suit Rules (1)

The US Supreme Court considered reinstating a $900,000 jury verdict won by a fired UBS Group AG research strategist in a case that could make it easier for whistleblowers to win suits claiming retaliation under a federal investor-protection law.

UBS contends that federal law requires whistleblowers to prove they were the victims of intentional retaliation. But that argument drew skepticism from several justices, including Neil Gorsuch, who questioned whether it could be squared with the language of the 2002 Sarbanes-Oxley Act.

“I don’t see ‘retaliation’ in the statute,” Gorsuch told UBS’s lawyer, Eugene Scalia. “You’re asking me to read things into a statute that aren’t there.”

Scalia is the son of Antonin Scalia, the conservative Supreme Court justice who died in 2016.

Employees have filed more than 750 Sarbanes-Oxley claims with the Labor Department over the past six years. The law was enacted following the corporate fraud that toppled Enron Corp. and WorldCom Inc.

The case centers on Trevor Murray, who claims he was fired for refusing to skew his reports to help the company’s business strategies. A federal appeals court set aside a verdict in Murray’s favor, saying he should have been required to prove that UBS intentionally retaliated against him.

Murray’s lawyer, Easha Anand, said Sarbanes-Oxley requires employees to show only that their protected activity was a “contributing factor” to a decision to fire or demote them. After that, Anand said, it’s up to the employer to show that it would have made the decision even if the whistleblowing hadn’t occurred.

Several justices said that so-called burden-shifting framework gave UBS an adequate chance to argue that it didn’t fire Murray in retaliation.

“Didn’t that defense get to the jury?” Justice Brett Kavanaugh asked Scalia.

Gorsuch suggested the high court could issue a narrow ruling kicking the case back to the New York-based 2nd US Circuit Court of Appeals rather than reinstating the jury verdict.

Murray worked in support of UBS’s commercial mortgage-backed securities business. His suit described a “concerted, extended effort” by managers and colleagues to get him to write bullish assessments.

UBS said Murray’s termination was part of a broader staffing reduction driven by the bank’s financial difficulties at the time. UBS cited the impact of a $2 billion loss by a rogue trader at its London office five months before the firing.

The case, which the court will decide by June, is Murray v. UBS, 22-660.

(Updates with excerpts from argument starting in third paragraph.)

To contact the reporter on this story:
Greg Stohr in Washington at gstohr@bloomberg.net

To contact the editors responsible for this story:
Elizabeth Wasserman at ewasserman2@bloomberg.net

Peter Blumberg

© 2023 Bloomberg L.P. All rights reserved. Used with permission.