Labor & Employment Law Daily Wrap Up, WHISTLEBLOWERS—2d Cir.: Second Circuit reverses district court on ‘contributing factor’ in whistleblower retaliation action, (Feb 11, 2025)

By Lene Powell, J.D.

A dissenting judge said she would have affirmed for the whistleblower as it was clear the jury considered the correct legal standard.

The Second Circuit reversed a federal district court decision in a whistleblower action against UBS Securities, finding the district court incorrectly instructed a jury on the meaning of “contributing factor” in assessing the effect of the whistleblowing on employment termination. A 2-1 circuit court panel ruled that a contributing factor must “actually cause or help cause the termination decision.” Merely influencing the termination or generally being the type of thing that tends to cause termination is not sufficient (Murray v. UBS Securities, LLC, No. 20-4202(L) (2d Cir. Feb. 10, 2025)).

The judgment of the district court was vacated and remanded for further proceedings.

The ruling streamlines the issues on remand following an earlier reversal by the Supreme Court on the separate issue of retaliatory intent.

Alleged whistleblower retaliation. Trevor Murray worked at UBS Securities in 2011-2012, providing research reports on commercial mortgage-backed securities (CMBS). Under SEC regulations, he was required to produce his reports independently from other UBS employees who traded in CMBS products.

Murray was terminated after he reported to a supervisor that two CMBS traders were violating those regulations by asking him to publish reports supporting their business strategies. He sued UBS, alleging that he was terminated in violation of the anti-retaliation provision of the Sarbanes-Oxley Act of 2002 (SOX), 18 U.S.C. § 1514A.

Prior proceedings. Under SOX, a plaintiff must show that his protected activity—here, reporting violations of SEC regulations—was a “contributing factor” in an adverse employment action taken against him. The burden then shifts to the defendant to show by “clear and convincing” evidence that it would have taken the adverse action anyway.

The district court instructed the jury that “for a protected activity to be a contributing factor, it must have either alone or in combination with other factors tended to affect in any way UBS’s decision to terminate plaintiff’s employment.”

UBS objected that the “in any way” language was overbroad. The district court overruled UBS’s objection, and Murray won and was awarded $903,300.

In UBS’s initial appeal, the Second Circuit vacated and remanded for a new trial, holding that SOX plaintiffs must show that a defendant acted with “retaliatory intent.” The Supreme Court then reversed the circuit court, holding that retaliatory intent is not an element of a retaliation claim under SOX. The Supreme Court did not address the “contributing factor” question.

“Contributing factor.” Reviewing de novo, the Second Circuit panel found the district court incorrectly stated the law when it instructed the jury about “contributing factor.”

The district court’s instruction was “doubly overbroad,” according to the panel. The instruction was imprecise about both the influence that whistleblowing needed to produce (“affect” versus “contribute to”) and the level of abstraction at which to assess whether that influence occurred (“tended to” versus “actually did”).

The panel noted that whistleblowing may “affect” a termination without playing a part in making it happen. For example, if a company consults counsel to weigh the risk of a potential lawsuit before terminating a whistleblowing employee, then whistleblowing could be said to have “affected” that termination by altering how it came about—even if the decision to terminate was “not based on whistleblowing—not even a little bit.”

The panel also found that a supplemental instruction did not cure the error and that instructional error prejudiced UBS.

Dissent. Judge Myrna Lopez dissented, saying she would have affirmed the judgment for Murray.

The parties’ arguments to the jury focused specifically on whether UBS fired Murray because of his whistleblowing, Lopez said. It was clear from the jury’s questions that they considered the facts at hand, not hypothetical generalities about whistleblowers generally.

“Even if a reasonable juror could make such an error, it’s clear that the actual jury here did not, and I see no good reason to disturb its verdict,” Lopez wrote.

This is case No. 20-4202(L).

Judge: Park, M.

Attorneys: Robert Lloyd Herbst (Herbst Law PLLC) for Trevor Murray. Gabrielle Levin (Mayer Brown) for UBS Securities, LLC and UBS AG.

Companies: UBS Securities, LLC; UBS AG

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