What is a whistleblower's burden to prove retaliation under the Sarbanes-Oxley Act?

The DOL ARB’s September 30, 2016, decision in Palmer v. Canadian National Railway provides critical guidance on the two-stage burden-shifting framework that applies to whistleblower retaliation claims whistleblower retaliation laws enforced by DOL, including the Sarbanes-Oxley whistleblower protection law.

First, the factfinder must determine whether the employee has proved, by a preponderance of the evidence, that the protected activity was a contributing factor in the adverse action. Id. at 35. In other words, the ALJ assesses whether it is “more likely than not that the employee’s protected activity played a role, any role whatsoever, in the adverse personnel action.” Id. If the employee prevails at the first step, the factfinder must determine whether the employer has proved by clear and convincing evidence that it would have taken the same adverse action even if the employee had not engaged in protected activity. Id. :‘Any’ factor really means any factor. It need not be ‘significant, motivating, substantial or predominant’—it just needs to be a factor.” Palmer v. Canadian National Railway, ARB No. 16-035 at 53 (citations omitted).

A whistleblower may prove causation through circumstantial evidence. Such evidence can include “motive, bias, work pressures, past and current relationships of the involved parties, animus, temporal proximity, pretext, shifting explanations, and material changes in employer practices, among other types of evidence.” Bobreski v. J. Givoo Consultants, Inc., ARB No. 13-001, ALJ No. 2008-ERA-3 (ARB Aug. 29, 2014).

In Mixed-Motive Cases, Whistleblowers Will Always Prevail in Showing Contributing Factor Causation

In cases where employers rely on both protected activity and legitimate reasons when deciding to take an adverse action, an employee will always be able to prove contributing factor causation. While Palmer permits an ALJ to consider the alleged non-retaliatory reasons for an adverse action at the causation stage, such evidence is inconsequential if it fails to show that the employer acted only for legitimate reasons.

The ARB explained:

Importantly, if the ALJ believes that the protected activity and the employer’s nonretaliatory reasons both played a role, the analysis is over and the employee prevails on the contributing-factor question. Thus, consideration of the employer’s nonretaliatory reasons at step one will effectively be premised on the employer pressing the factual theory that nonretaliatory reasons were the only reasons for its adverse action. Since the employee need only show that the retaliation played some role, the employee necessarily prevails at step one if there was more than one reason and one of those reasons was the protected activity.

Palmer v. Canadian National Railway, ARB No. 16-035 at 56-57 (citations omitted).

Whistleblowers Need Not Demonstrate Pretext

Because a whistleblower will establish contributing-factor causation if she shows that her protected activity was one of many reasons for an adverse action, a whistleblower need not prove pretext. In other words, though an ALJ can consider the employer’s alleged non-retaliatory reasons when determining causation, a whistleblower need not disprove those alleged non-retaliatory reasons.

At the Causation Stage, ALJs Should Not Weigh the Employer’s Non-Retaliatory Reasons Against the Employee’s Protected Activity

In Palmer, the ARB admonished ALJs not to weigh the relative importance of the protected activity and the employer’s non-retaliatory reasons when determining contributing factor causation. As discussed above, the contributing factor standard is met if the protected activity was only one of many reasons for the adverse action. The protected activity need play only some role, however small, in the decision. See id. at 55. It is therefore inconsequential if the non-retaliatory reasons were of great importance to the decisionmaker, while the protected activity had little weight. See id. Under the contributing factor standard, the only question to be answered is whether the decisionmaker placed any weight whatsoever on the protected activity. See id. If so, the whistleblower will establish causation.

The Same-Action Affirmative Defense in Whistleblower Cases Is Onerous

Once a whistleblower establishes contributing-factor causation, the employer faces an onerous burden to prove an affirmative defense:

It is not enough for the employer to show that it could have taken the same action; it must show that it would have. Palmer v. Canadian National Railway, ARB No. 16-035 at 57.
ALJs must apply the “clear and convincing” standard of proof to employers’ affirmative defense. “Clear and convincing” is usually thought of as the intermediate standard between “a preponderance” and “beyond a reasonable doubt.” Id.
It requires evidence showing that it is “highly probable” that the employer would have taken the same adverse action in the absence of the protected activity.
“Clear and convincing” evidence can be quantified as establishing the probability of a fact at issue “in the order of above 70%.”

Guide for Sarbanes-Oxley Corporate Whistleblowers

We also represent corporate whistleblowers in Sarbanes-Oxley whistleblower retaliation claims. To learn more about protections for corporate whistleblowers, download our free guide Sarbanes-Oxley Whistleblower Protection: Robust Protection for Corporate Whistleblowers.

Experienced Sarbanes-Oxley Whistleblower Attorneys

The whistleblower lawyers at Zuckerman Law have substantial experience litigating Sarbanes Oxley whistleblower retaliation claims and have achieved substantial recoveries for officers, executives, accountants, auditors, and other senior professionals. To learn more about corporate whistleblower protections, see our Sarbanes-Oxley Whistleblower Protection FAQ. Click here to read client testimonials about the firm’s work in SOX whistleblower matters and other employment-related litigation.

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Leading whistleblower law firm Zuckerman Law has written extensively about whistleblower protections and is quoted frequently in the media on this topic. A sample of those blog posts and articles appears below: