U.S. Supreme Court upholds whistleblower protections

Whistleblowers who are punished by their employers after exposing alleged misconduct don’t have to prove the firm intended to retaliate against them, according to a ruling by the U.S. Supreme Court.

In a case involving a former research analyst of UBS Securities Inc. who was fired soon after reporting to a supervisor that a couple of the firm’s traders were attempting to influence his independent reports, the Supreme Court ruled that the analyst didn’t have to prove the firing was intended as retaliation under the whistleblower protections in securities legislation.

According to the decision, a district court jury initially rejected UBS’ argument that the fired analyst had to establish that he was dismissed as retaliation — shifting the burden to the firm that it must prove he would have been fired even if he hadn’t complained about alleged misconduct. That court ordered almost US$1 million in damages and US$1.8 million in attorneys’ fees and costs against the firm.

However, that decision was overturned on appeal.

The appeal court vacated the jury’s verdict and remanded the case for a new trial, ruling that the lower court erred by not instructing the jury that “retaliatory intent” had to be established.

Now, the U.S. Supreme Court has unanimously ruled that an employee has to prove only that whistleblowing activity was a “contributing factor” in disciplinary action from the firm, not that the employer acted with retaliatory intent.

The Supreme Court said the whistleblower protections in the Sarbanes-Oxley Act of 2002 (SOX) don’t specify “retaliatory intent” as a requirement, “and the provision’s mandatory burden-shifting framework cannot be squared with one.”

According to a Washington, D.C.–based law firm that represents whistleblowers, the ruling “has immense implications for a number of whistleblower protection laws.”

“This is a major win for whistleblowers and thus a huge win for corporate accountability,” said David Colapinto, a founding partner of the firm Kohn, Kohn & Colapinto, in a release.

“A ruling in favour of UBS would have overturned more than 20 years of precedent in SOX whistleblower cases and made it exceedingly more difficult for whistleblowers who claim retaliation under many similarly worded federal whistleblower statutes,” he said.