Editor’s Note: Law Week Colorado edits court opinion summaries for style and, when necessary, length.
In 2011, Trevor Murray was employed as a research strategist at securities firm UBS, within the firm’s commercial mortgage-backed securities business, according to the opinion. In that role, Murray was responsible for reporting on commercial mortgage-backed security markets to current and future UBS customers. Securities and Exchange Commission regulations required him to certify his reports were produced independently and accurately reflected his views. Murray contended two leaders of the CMBS trading desk improperly pressured him to skew his reports to be more supportive of their business strategies, even instructing Murray to “clear [his] research articles with the desk” before publishing them, despite this requirement of independence.
Murray reported that conduct to his direct supervisor, Michael Schumacher, in December 2011 and again in January 2012, asserting it was “unethical” and “illegal.” Schumacher expressed sympathy for Murray’s situation but emphasized it was “very important” Murray not “alienate [his] internal client.”
When Murray later informed Schumacher the situation with the trading desk “was bad and getting worse,” as he was being left out of meetings and subjected to “constant efforts to skew [his] research.” Schumacher told him he should just “write what the business line wanted.”
Shortly after that exchange Schumacher emailed his supervisor and recommended Murray “be removed from [UBS’s] head count.” Schumacher recommended in the alternative if the CMBS trading desk wanted him, Murray could be transferred to a desk analyst position, where he would not have SEC certification responsibilities. The trading desk declined to accept Murray as a transfer, and UBS fired him in February 2012.
Murray then filed a complaint with the Department of Labor alleging his termination violated 1514A of Sarbanes-Oxley because he was fired in response to his internal reporting about fraud on shareholders. When the agency didn’t issue a final decision on his complaint within 180 days, Murray filed an action in federal court. Murray’s claim went to trial.
UBS moved for judgment as a matter of law, arguing, among other things, Murray had “failed to produce any evidence that Schumacher possessed any sort of retaliatory animus toward him.” The District Court denied the motion.
The District Court instructed the jury to prove his 1514A claim, Murray needed to establish four elements: he engaged in whistleblowing activity protected by Sarbanes-Oxley, UBS knew he engaged in the protected activity, he suffered an adverse employment action and his “protected activity was a contributing factor in the termination of his employment.” On the last element, the District Court further instructed the jury: “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 [his] employment.”
The court explained Murray was “not required to prove that his protected activity was the primary motivating factor in his termination, or that . . . UBS’s articulated reason for his termination was a pretext.” If Murray proved each of the four elements by a preponderance of the evidence, the District Court instructed, the burden would shift to UBS to “demonstrate by clear and convincing evidence that it would have terminated [Murray’s] employment even if he had not engaged in protected activity.”
During deliberations, the jury asked for clarification of the contributing factor instruction. The court responded the jury “should consider” whether “anyone with th[e] knowledge of [Murray’s] protected activity, because of the protected activity, affect[ed] in any way the decision to ter-minate [Murray’s] employment.” When the court previewed this response to the parties, UBS indicated it “would be comfortable” with that formulation.
The jury found Murray had established his 1514A claim and UBS had failed to prove, by clear and convincing evidence, it would have fired Murray even if he hadn’t engaged in protected activity. The jury also issued an advisory verdict on damages, recommending Murray receive nearly $1 million.
After the trial, UBS again moved for judgment as a matter of law, which the court denied. The court then adopted the jury’s advisory verdict on damages and awarded an additional $1.769 million in attorney’s fees and costs. UBS appealed the decision, and Murray cross-appealed on the issues of back pay, reinstatement and attorney’s fees.
The 2nd Circuit Court of Appeals panel vacated the jury’s verdict and remanded for a new trial. The court identified the central question as “whether the Sarbanes-Oxley Act’s antiretaliation provision requires a whistleblower-employee to prove retaliatory intent,” and, contrary to the trial court, it concluded the answer was yes. The court acknowledged the jury instructions correctly identified the four elements of a 1514A claim, consistent with Circuit precedent. The court concluded the further instruction on the contributing factor element was wrong as a matter of law.
Looking to the text of 1514A and focusing in on the phrase “discriminate . . . because of,” the court nevertheless held “to prevail on the ‘contributing factor’ element of a [§1514A] antiretaliation claim, a whistleblower-employee must prove the employer took the adverse employment action against the whistleblower-employee with retaliatory intent.” The court noted this holding was consistent with its recent “interpretation of nearly identical language in the Federal Railroad Safety Act.”
The court further determined “the district court’s failure to instruct the jury on Murray’s burden to prove UBS’s retaliatory intent” wasn’t harmless despite “circumstantial evidence at trial that UBS terminated Murray in retaliation for whistleblowing,” such as the close temporal proximity between Murray’s whistleblowing and termination and the fact Schumacher had given Murray a good performance evaluation before his whistleblowing. The court concluded “[r]etaliatory intent is an element of a section 1514A claim,” and “[t]he district court erred by failing to instruct the jury on Murray’s burden to prove UBS’s retaliatory intent.”
The 2nd Circuit’s opinion requiring whistleblowers to prove retaliatory intent placed the circuit in direct conflict with the 5th and 9th Circuits, which had rejected any such requirement for 1514A claims. This Court granted certiorari to resolve this disagreement.
According to the opinion, a whistleblower who invokes 18 U. S. Code 1514A bears the burden to prove his protected activity “was a contributing factor in the unfavorable personnel action alleged in the complaint,” but he isn’t required to make some further showing his employer acted with “retaliatory intent.”
After evaluation, the judgment was reversed and the case was remanded for further proceedings.
Department of Agriculture Rural Development Rural Housing Service v. Kirtz
This case arose from a loan Reginald Kirtz secured from the Rural Housing Service. RHS, a division of the U.S. Department of Agriculture, “issues loans to promote the development of safe and affordable housing in rural communities.” According to Kirtz, he repaid his loan in full by mid-2018. The USDA repeatedly told TransUnion, a company engaged in the business of preparing consumer credit reports, his account was past due.
These misrepresentations damaged his credit score and threatened his ability to secure future loans at affordable rates. To resolve the problem, Kirtz alerted TransUnion to the error, and the company notified the USDA. Kirtz said the USDA failed to take “any action to investigate or correct” its records. He eventually decided to sue the agency under the Fair Credit Reporting Act.
As originally enacted in 1970, the FCRA focused largely on two groups. First, it addressed “consumer reporting agenc[ies]” like TransUnion, charging them with various new duties designed to ensure the accuracy and confidentiality of their work. Second, it imposed new regulations on “person[s]” who procure credit information from consumer reporting agencies.
The FCRA proceeded to define the term “person” broadly to “mea[n] any individual, partnership, corporation, trust, estate, cooperative, association, government or governmental subdivision or agency, or other entity.” The act further authorized consumers to seek damages for violations of its terms, but only against consumer reporting agencies and those who use the information they produce.
In the Consumer Credit Reporting Reform Act of 1996, Congress amended the FCRA to broaden its reach. Congress added provisions addressing those who furnish information to consumer reporting agencies. Referencing the definition of “person” it adopted in 1970, Congress instructed if a consumer disputes “the completeness or accuracy” of his credit information, the “person” who furnished it must investigate the matter and take steps to correct any mistake. To enforce these new duties, Congress revised the 1970 Act’s remedial provisions. Congress authorized consumer suits against “[a]ny person” who willfully or negligently fails to comply with “any” of the law’s “requirement[s].”
Kirtz sought relief under these new provisions. According to his complaint, the USDA furnished information to TransUnion. The agency had noticed the information it supplied was false, the opinion noted. That false information allegedly impaired Kirtz’s ability to access affordable credit. Yet the agency allegedly failed to take any steps to correct its mistake, either willfully or negligently. By way of remedy, Kirtz sought money damages consistent with what the FCRA allows.
In response, the USDA moved to dismiss the complaint. The agency didn’t dispute allegations like Kirtz’s state a viable claim for relief. Instead, it pointed to this Court’s precedents holding the federal government enjoys immunity from suits for monetary damages unless Congress waives that immunity. And, the agency contended, nothing in the FCRA purports to render the federal government amenable to suit. The District Court sided with the USDA, but the 3rd Circuit reversed. Judge Krause observed 1681n and 1681o authorize suits for damages against “any person” who violates the act, and 1681a expressly defines “person” to include “any” government agency.
According to the opinion, a 2021 study cited by the Consumer Financial Protection Bureau “found that over 34% of consumers surveyed were able to identify at least one error in their credit reports.” Mistakes like these, the opinion noted, can lead lenders to insist on higher interest rates or other terms that make it “difficult or impossible” for consumers “to obtain a mortgage, auto loan, student loan, or other credit.” Federal agencies are among “‘the largest furnishers of credit information’” to consumer reporting agencies.
The lower courts have reached different views on the question of whether federal agencies are answerable under the FCRA for their mistakes. Like the 3rd Circuit, the 7th and D.C. Circuits have held the FCRA authorizes suits against government agencies no less than it does private lenders. The 4th and 9th Circuits, by contrast, have held sovereign immunity bars consumer suits against federal agencies. The U.S. Supreme Court agreed to hear this case to resolve that conflict.
The Executive Branch may question the wisdom of holding federal agencies accountable for their violations of the FCRA. But Congress’s judgment commands the law it has adopted speaks clearly: a consumer may sue “any” federal agency for defying the law’s terms. Because it followed this legislative direction, the judgment was affirmed.