The Supreme Court returned for week 2 of its October Sitting today, hearing two arguments in a day for the first time this term (that used to be the norm but at least here in October this is the only day that's happening ... and that's just because the Court was off for yesterday's Federal Holiday that Shouldn't Exist). Since I can really only get through one oral argument a day, I'm going to write up the second case summary from 10/10 on Wednesday, and will write up the argument to be heard on 10/11 on Thursday.
Now, to the first case of the day ... Murray v. UBS Securities is a case about whistleblowers and the protection that they receive from retaliation. Specifically, it involves whistleblowers who work for corporations when they report financial irregularities. Corporations are held to a wide variety of financial requirements, especially publicly traded ones. Sarbanes-Oxley specifically provides whistleblower protection related to any of the following areas: securities fraud, shareholder fraud, bank fraud, a violation of any SEC rule or regulation, mail fraud, or wire fraud.
The Question Presented in this case is a little confusing if you don't understand the context - it reads: "Whether, following the burden-shifting framework that governs cases under the Sarbanes-Oxley Act of 2002, a whistleblower must prove his employer acted with a “retaliatory intent” as part of his case in chief, or whether the lack of “retaliatory intent” is part of the affirmative defense on which the employer bears the burden of proof." So what exactly are we talking about?
The argument of the Petitioner is that a Plaintiff filing an illegal retaliation suit under Sarbanes-Oxley gets the benefit of a "burden shifting" process. Their case must meet a minimum threshold - that the plaintiff suffered some sort of unfavorable employment action (termination, demotion, reassignment to a less favored position, loss of pay, loss of benefits, etc.), and that their whistleblowing behavior was a "contributing factor" in the unfavorable employment action. Since an employee can't see into the mind of an employer, they have circumstantial ways to demonstrate this - for instance, by demonstrating that an employer had knowledge of the whistleblowing, and that they took action to cause the unfavorable employment action against the whistleblower in close proximity to becoming aware of the whistleblowing.
If the whistleblower can satisfy this "contributing factor" test (either via the knowledge + proximity test I cited above or in any other way), then the Petitioner/Plaintiff argues the burden shifts to the employer to demonstrate that they would have made the adverse employment decision anyway. For example, they could provide evidence of performance reviews where the whistleblower consistently underperformed, justifying the unfavorable employment action. Or they could demonstrate that they laid off 10 other people on the same day because they were reducing their workforce. Many other options certainly exist - the key is that the employer would have to demonstrate that the whistleblower would have faced the unfavorable employment decision regardless of their status as a whistleblower.
Alternatively, the Respondent/Defendant argues that the whistleblower in a Sarbanes-Oxley retaliation case like this needs to demonstrate before the burden shifts that there was some kind of discriminatory intent. That intent is essentially assumed in the Plaintiff's "contributing factor" test, where causation and intent merge together. The Respondent, however, says that an independent showing of some kind has to be made before the burden shifts at all to the employer. The Justices seem rather skeptical - multiple judges asked many questions relating to what this means in practice, since the cause of the whistleblowers injury and the intent behind would seem to generally be part of the same thing - they were terminated for whistleblowing, for instance - and that termination for whistleblowing is both the cause of their injury, and the intention behind the action that led to it. Separating out the two things becomes largely an exercise in semantics, as far as most of the Justices are concerned.
The Respondent's lawyer (Eugene Scalia, son of the late Justice Antonin Scalia and a former Secretary of Labor under President Trump) tries valiantly during the argument to give examples where the Plaintiff's view of burden-shifting causes harm to innocent corporations (ha!) but the Justices seem largely skeptical about the whole thing and point out that generally speaking, a corporation that is not violating Sarbanes-Oxley whistleblower protections should be able to demonstrate that in part 2 of the retaliation analysis, when they can put on evidence that the employee would have faced discipline of some sort regardless of their whistleblowing (again, as mentioned earlier, for reasons such as poor performance or the employer reducing staff normally). He suggests that there are times when such evidence would be inextricably bound up with the whistleblowing itself such that the employer could be acting without discriminatory intent but nonetheless be unable to demonstrate that effectively if the burden had shifted. Again, the arguments are a bit convoluted and the Justices don't seem to be biting.
While it is always a bit fraught to suggest the Court will rule in favor of employees, I actually think that is a fairly safe bet here. Justices Gorsuch and Kagan in particular seem highly skeptical of whether the Respondent's approach have any basis in the text, with Gorsuch at one point saying "You're asking me to read things into a statute that aren't there. Aren't you, counsel?" and Justice Kagan saying "I mean, Congress could definitely have written a statute like that, that sets up here's the protected activity, it was a contributing factor, and there was -- the employer intended for the protected activity to be a contributing factor. That's a sensible statute. But if that were the statute, you don't need the second step of the burden-shifting analysis ...". In other words, the Respondent is trying to get more protection for employers than the statute offers.
The general thrust of the arguments really seems to be that the burden shifting analysis in Sarbanes-Oxley is there for a reason - as Justice Kavanaugh puts it, it is the employer who has the information necessary to defend against these suits, and that's why the burden is on them if the plaintiff in a case like this can establish enough evidence suggesting that their whistleblowing as likelier than not to be a contributing factor. Proving the case would be too difficult for a plaintiff absent burden shifting, and that would be damaging to employee willingness to blow the whistle on illegal behavior. Congress built the burden shift in to make such retaliation claims more of a threat as an inducement to employers not to retaliate against whistleblowers. It's a public policy decision, effectively.
In the end, while I could see Thomas and/or Alito ruling for the corporation/Respondent in this case, I think at most they will have each other. This should be a strong 9-0, 8-1, or 7-2 win. Anything closer than that would be a big surprise to me on this one.
Now, to the first case of the day ... Murray v. UBS Securities is a case about whistleblowers and the protection that they receive from retaliation. Specifically, it involves whistleblowers who work for corporations when they report financial irregularities. Corporations are held to a wide variety of financial requirements, especially publicly traded ones. Sarbanes-Oxley specifically provides whistleblower protection related to any of the following areas: securities fraud, shareholder fraud, bank fraud, a violation of any SEC rule or regulation, mail fraud, or wire fraud.
The Question Presented in this case is a little confusing if you don't understand the context - it reads: "Whether, following the burden-shifting framework that governs cases under the Sarbanes-Oxley Act of 2002, a whistleblower must prove his employer acted with a “retaliatory intent” as part of his case in chief, or whether the lack of “retaliatory intent” is part of the affirmative defense on which the employer bears the burden of proof." So what exactly are we talking about?
The argument of the Petitioner is that a Plaintiff filing an illegal retaliation suit under Sarbanes-Oxley gets the benefit of a "burden shifting" process. Their case must meet a minimum threshold - that the plaintiff suffered some sort of unfavorable employment action (termination, demotion, reassignment to a less favored position, loss of pay, loss of benefits, etc.), and that their whistleblowing behavior was a "contributing factor" in the unfavorable employment action. Since an employee can't see into the mind of an employer, they have circumstantial ways to demonstrate this - for instance, by demonstrating that an employer had knowledge of the whistleblowing, and that they took action to cause the unfavorable employment action against the whistleblower in close proximity to becoming aware of the whistleblowing.
If the whistleblower can satisfy this "contributing factor" test (either via the knowledge + proximity test I cited above or in any other way), then the Petitioner/Plaintiff argues the burden shifts to the employer to demonstrate that they would have made the adverse employment decision anyway. For example, they could provide evidence of performance reviews where the whistleblower consistently underperformed, justifying the unfavorable employment action. Or they could demonstrate that they laid off 10 other people on the same day because they were reducing their workforce. Many other options certainly exist - the key is that the employer would have to demonstrate that the whistleblower would have faced the unfavorable employment decision regardless of their status as a whistleblower.
Alternatively, the Respondent/Defendant argues that the whistleblower in a Sarbanes-Oxley retaliation case like this needs to demonstrate before the burden shifts that there was some kind of discriminatory intent. That intent is essentially assumed in the Plaintiff's "contributing factor" test, where causation and intent merge together. The Respondent, however, says that an independent showing of some kind has to be made before the burden shifts at all to the employer. The Justices seem rather skeptical - multiple judges asked many questions relating to what this means in practice, since the cause of the whistleblowers injury and the intent behind would seem to generally be part of the same thing - they were terminated for whistleblowing, for instance - and that termination for whistleblowing is both the cause of their injury, and the intention behind the action that led to it. Separating out the two things becomes largely an exercise in semantics, as far as most of the Justices are concerned.
The Respondent's lawyer (Eugene Scalia, son of the late Justice Antonin Scalia and a former Secretary of Labor under President Trump) tries valiantly during the argument to give examples where the Plaintiff's view of burden-shifting causes harm to innocent corporations (ha!) but the Justices seem largely skeptical about the whole thing and point out that generally speaking, a corporation that is not violating Sarbanes-Oxley whistleblower protections should be able to demonstrate that in part 2 of the retaliation analysis, when they can put on evidence that the employee would have faced discipline of some sort regardless of their whistleblowing (again, as mentioned earlier, for reasons such as poor performance or the employer reducing staff normally). He suggests that there are times when such evidence would be inextricably bound up with the whistleblowing itself such that the employer could be acting without discriminatory intent but nonetheless be unable to demonstrate that effectively if the burden had shifted. Again, the arguments are a bit convoluted and the Justices don't seem to be biting.
While it is always a bit fraught to suggest the Court will rule in favor of employees, I actually think that is a fairly safe bet here. Justices Gorsuch and Kagan in particular seem highly skeptical of whether the Respondent's approach have any basis in the text, with Gorsuch at one point saying "You're asking me to read things into a statute that aren't there. Aren't you, counsel?" and Justice Kagan saying "I mean, Congress could definitely have written a statute like that, that sets up here's the protected activity, it was a contributing factor, and there was -- the employer intended for the protected activity to be a contributing factor. That's a sensible statute. But if that were the statute, you don't need the second step of the burden-shifting analysis ...". In other words, the Respondent is trying to get more protection for employers than the statute offers.
The general thrust of the arguments really seems to be that the burden shifting analysis in Sarbanes-Oxley is there for a reason - as Justice Kavanaugh puts it, it is the employer who has the information necessary to defend against these suits, and that's why the burden is on them if the plaintiff in a case like this can establish enough evidence suggesting that their whistleblowing as likelier than not to be a contributing factor. Proving the case would be too difficult for a plaintiff absent burden shifting, and that would be damaging to employee willingness to blow the whistle on illegal behavior. Congress built the burden shift in to make such retaliation claims more of a threat as an inducement to employers not to retaliate against whistleblowers. It's a public policy decision, effectively.
In the end, while I could see Thomas and/or Alito ruling for the corporation/Respondent in this case, I think at most they will have each other. This should be a strong 9-0, 8-1, or 7-2 win. Anything closer than that would be a big surprise to me on this one.
