Leora F. Eisenstadt (Temple University – Fox School of Business and Management) and Jennifer M. Pacella (Indiana University, Kelley School of Business) have posted The Whistleblower Perception Problem in Judicial Imagination and Treatment (American Business Law Journal, Volume 64, forthcoming) on SSRN. Here is the abstract:
In its 2024 decision in Murray v. UBS Sec., LLC, the Supreme Court considered the standard under the Sarbanes-Oxley Act of 2002 for protecting whistleblowers from retaliation and endorsed an extremely employee-friendly standard. The decision was not surprising but what stood out was the manner in which the Court discussed whistleblowers who report fraud or other securities law violations and their role in society. The Court described them as deserving of substantial protection because “the health, safety, or well-being of the public may well depend on whistleblowers feeling empowered to come forward.” This simple but powerful endorsement of the value of fraud whistleblowers stands in stark contrast to the Supreme Court’s now infamous discussion of another kind of whistleblower—those who report discrimination under Title VII of the Civil Rights Act of 1964. In University of Texas Southwestern Medical Center v. Nassar, the Court described these whistleblowers as essentially fakers who file frivolous discrimination claims in order to avoid terminations or other adverse employment actions. Rather than viewing employees who come forward to report unlawful discrimination as providing a laudable service to society and helping to protect the “well-being of the public,” the Court imagined a large number of these whistleblowers to, in fact, be deceitful employees who are fabricating discrimination claims to save their own jobs.
The Court’s perception of these two different types of whistleblowers is merely the beginning. This Article explores both the perceptions of these whistleblowers but also the differences in substantive treatment that flow from them. In this comparison, we consider two distinct areas of treatment: (1) the causation standards applied to retaliation claims by the two types of whistleblowers and the likelihood that the act of reporting unlawful conduct will be protected under each standard and (2) the “reasonable belief” standard for evaluating whistleblowers’ beliefs about the underlying conduct they are reporting and the impact this standard has on the likelihood that whistleblowers will be protected against retaliation. Through this comparison, this Article contributes a new lens with which to view the federal courts’ documented hostility to discrimination claims and proposes that this approach highlights an unjustifiable inequity in judicial interpretation. The subject matter of unlawful conduct at the heart of a whistleblowing complaint should not dictate the level of legal protection the whistleblower receives, particularly when those distinctions are borne out of judicial interpretation rather than clear Congressional action.
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