The Supreme Court to Hear Cases on Maritime Law and Whistleblower Protections
The Supreme Court is gearing up for oral arguments on October 10th, with two cases in the spotlight. The first case, Murray v. UBS Securities LLC, revolves around the Sarbanes-Oxley (SOX) Act of 2002, which was enacted in response to corporate scandals like Enron. This law safeguards whistleblowers from retaliation, but the question remains: how do whistleblowers prove retaliation?
Trevor Murray, a former UBS strategist, alleges that he was pressured by company leaders to manipulate his research. After being fired in 2012, Murray took his case to a federal district court and emerged victorious. However, the U.S. Court of Appeals for the 2nd Circuit overturned the judgment, agreeing with UBS that Murray needed to prove retaliatory intent.
The Supreme Court is set to consider whether Mr. Murray had a burden to prove retaliatory intent or if the lack of that intent is part of the company’s defense. The Sarbanes-Oxley Act states that the whistleblower’s action must be a “contributing factor” in the alleged “unfavorable personnel action.”
The logo of Swiss bank UBS is seen in Zurich, Switzerland, on Oct. 25, 2018. (Arnd Wiegmann/Reuters)
The employer can defend themselves by showing “clear and convincing evidence” that they would have taken the same action even without the employee’s involvement.
UBS argues that they terminated Mr. Murray due to significant financial difficulties and his position becoming unnecessary. However, Mr. Murray maintains that he faced retaliation.
Support for Mr. Murray comes from Senator Chuck Grassley (R-Iowa), the Securities and Exchange Commission (SEC), and the U.S. solicitor general, who have filed amici briefs. In July, two SEC commissioners dissented from the agency’s decision to join the solicitor general’s brief, criticizing the lack of “full and careful consideration.”
Insurance Question
The second case on the docket for October 10th is Great Lakes Insurance SE v. Raiders Retreat Realty Co. LLC, which centers around an insurance company’s refusal to cover a claim for a yacht that ran aground near Fort Lauderdale, Florida. Great Lakes Insurance (GLI) argues that the policy with Raiders Realty was void because the latter failed to recertify or inspect the yacht’s fire equipment in a timely manner.
In maritime law, companies often use a choice-of-law clause to determine which state’s law applies in a contract. According to SCOTUSBlog, this particular contract selected federal admiralty law and New York state law. Raiders filed the suit in Pennsylvania, arguing that the state’s rules on insurance denial would protect them more than New York law. They also seek to render the choice-of-law clause unenforceable, citing Pennsylvania’s “strong public policy.”
In the case of Bremen v. Zapata Off-Shore Co., the Supreme Court ruled that a forum-selection provision is unenforceable “if enforcement would contravene a strong public policy of the forum in which suit is brought.” This ruling led the 3rd Circuit Court of Appeals to overturn a lower court’s decision in favor of GLI.
The Supreme Court will grapple with the standard for judging the enforcement of such clauses and whether a “strong public policy” can render them unenforceable.
How do whistleblower advocacy groups argue that the burden of proof for retaliation should be on the company rather than the whistleblower?
Ommission (SEC), and numerous whistleblower advocacy groups. They argue that the burden of proof for retaliation should be on the company, not the whistleblower. They claim that requiring whistleblowers to prove retaliatory intent would undermine the purpose of the Sarbanes-Oxley Act and discourage individuals from reporting fraud and misconduct.
Senator Chuck Grassley (R-Iowa) speaks during a Senate Judiciary Committee hearing in Washington, on Sept. 21, 2023. (Kevin Dietsch-Pool/Getty Images)
On the other side of the argument, UBS and other business groups contend that requiring whistleblowers to prove retaliatory intent is necessary to prevent false claims and protect companies from baseless accusations. They argue that proving retaliatory intent is crucial to distinguishing legitimate whistleblower cases from disgruntled employee claims.
The Supreme Court’s decision in this case could have significant implications for whistleblower protections under the Sarbanes-Oxley Act. If the Court rules in favor of UBS, it may establish a higher burden of proof for whistleblowers and make it more difficult for them to prove retaliation. This could discourage individuals from coming forward and reporting corporate wrongdoing.
The second case to be heard by the Supreme Court is United States v. Carrier Corporation, which involves a dispute over maritime law. The case centers around a retired worker suffering from asbestos-related injuries, who alleges that Carrier Corporation, a manufacturer of air conditioning units, failed to warn him about the dangers of asbestos in their products.
The worker filed a lawsuit against Carrier, claiming that the company’s failure to provide adequate warnings violated maritime law. However, the lower courts dismissed the case, ruling that maritime law should not apply because the product was installed on land, not a vessel.
The Supreme Court will now decide whether maritime law should cover products that are predominantly used on land but have some connection to maritime activities. This case has implications not only for individuals seeking compensation for asbestos-related injuries but also for the interpretation of maritime law in general.
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