WHISTLEBLOWERS BEWARE: State of Texas and TxDOT v. Lueck (Tex 2009)

Three ways to skin the whistleblower: 1. summary judgment; 2. special exceptions, and now, for good measure, culling tool no. 3: DISMISSAL ON THE PLEADINGS

OPEN SEASON ON WHISTLE BLOWERS

Regulatory Noncompliance Not Illegal, Supreme Court says (at least not when it comes to defeating whistleblower suits brought by terminated public employees)

Lawsuits by public employees in employment-related disputes, such as wrongful termination or discrimination, are usually responded to with motions for summary judgment or with special exceptions if the pleadings are arguably insufficient or otherwise defective. In its recent decision in State of Texas v. Lueck, the Texas Supreme Court approved a third method: Dismissal on the pleadings. Adding to its nearly spotless record of decisions favorable to governmental defendants, the Court gave its seal of approval to dismissal on the pleadings in a wrongful discharge suit brought under the Texas Whistleblower statute by an employee fired by TxDOT. The Act provides a statutory cause of action for public employees retaliated against for reporting illegal activity at work. Finding lack of jurisdiction -- one of the Court's favorite disposal doctrines -- the Court dismisses the whistleblower's suit outright without remand to the lower court. No opportunity to replead necessary.

It would be futile anyway.

For good measure, and although not necessary to kill the lawsuit at hand, the Court held that two necessary elements were not satisfied by the plaintiff's pleadings in this case, and thus warranted jurisdictional dismissal: (1) the recipient of the plaintiff's report of allegedly illegal activity was not a proper law enforcement authority, and (2) the complaint was not really about illegal acts, but merely “regulatory noncompliance,” as if administrative law weren't really law.

Two birds killed with one opinion. Two defenses to whistleblower claims beefed up and stamped with the court's seal of approval, and a new method to swiftly dispatch whistleblower suits without delving into evidence. Three new precedents handed to the defense bar for the price of one (appeal).

The basic thrust of the High Court's whistleblower jurisprudence matches the Court's commitment to quash tort claims against public entity defendants under the Texas Tort Claims Act: Such suits should not be brought in the first place, much less should the plaintiffs claims be vindicated. Plaintiffs claiming whistleblower protection, after all, create inconvenience to government officials and seek to impose liability on governmental defendants, a favored category of litigants at the High Court.

Such suits should be dismissed if at all possible. The earlier the better.

Indeed, the Supreme Court is seeing to it.

This latest installment in the Court's strings of pro-government and anti-employee rulings not only narrows the scope of the legislated immunity waiver effected by the Whistleblower Act, but also approves the summary disposition of whistleblower claims without even the need for a summary judgment motion to test the strength of the evidence.

Under the newly fashioned precedent, a plea to the jurisdiction will do. And lest the Plaintiff amend the pleadings to meet the Court's tightened standards of what constitutes a qualifying claim entailing protection against and a remedy for adverse employment actions, the Court also blesses denial of any opportunity to replead. The claim could not succeed anyhow, the Court opines. The Court no doubt is right. A favorable verdict and judgment for a whistleblower would surely not withstand Supreme Court review, whatever the rationale that might be offered to effect reversal.

But better still if whistleblowers' rants of retaliation do not go to a potentially sympathetic jury in the first instance. Safer to quash a whistleblower suit at its inception, and to deter others brazen enough to invoke the Act. The latest opinion promises to accomplish as much.

WOULD-BE WHISTLEBLOWERS BEWARE!

The Lueck opinion fits in neatly with the Texas Supreme Court's immunity jurisprudence. Immunity theories are indeed an awesome weapon in the arsenal of the defense. No wonder the Court is so fond of them. If immunity is established, the evidence does not matter. The merits become irrelevant. Pesky plaintiffs can be thrown out of the courthouse without much ado, not to mention the inconvenience of a trial to determine whether the allegations in the pleadings are supported by the facts. Judicial resources can thus be preserved. This has been a principal concern of the Court, an interest the Court has shown a deep commitment to vindicate. Time and again. At the expense of the plaintiff's constitutionally guaranteed right to access to the courts.

The court's opinion was authored by Justice Paul Green. Not a single member of the Court dissented. On an earlier occasion, it was the Chief himself who took the lead in weakening whistleblower protections. Jefferson authored the opinion in which the Court gave the nod of approval for petty retaliation by government managers in holding that the punishment complained of in that case fell short of discharge or demotion and did not rise to the level of an actionable adverse employment action under the Whistleblower Act. Montgomery County v. Park, 246 S.46 S.W.3d 610 (Tex. 2007). In that case, the Chief set the tone. Lueck marks a further step to erode the Whistleblower Act, and the notion that it affords a viable remedy, and thus undermines its purpose.

EXCERPTS FROM THE TEXAS SUPREME COURT'S ANTI-WHISTLEBLOWER OPINION IN STATE V. LUECK (TEX. 2009):

Under the Texas Whistleblower Act, sovereign immunity is waived when a public employee alleges a violation of Chapter 554 of the Government Code. TEX. GOV’T CODE § 554.0035. A violation under Chapter 554 occurs when a governmental entity retaliates against a public employee for making a good-faith report of a violation of law to an appropriate law enforcement authority. Id. § 554.002(a). George Lueck was fired from the Texas Department of Transportation (TxDOT) after he sent an e-mail to the director of the Transportation Planning and Programming Division, reporting what he believed to be violations of state and federal law. Lueck then sued the State of Texas and TxDOT under the Whistleblower Act, alleging that he “was fired because of his good faith reports of TxDOT’s violation of state and federal law.”

We hold that, because Lueck’s e-mail report only warned of regulatory non-compliance, not a violation of law, and because an agency supervisor is not an appropriate law enforcement authority to whom a report should be made, Lueck’s allegation affirmatively negates the court’s subject-matter jurisdiction over the cause. The State’s sovereign immunity is not waived, and thus, we reverse the court of appeals’ judgment and dismiss the case for lack of subject-matter jurisdiction.

* * *

TxDOT points to uncontroverted allegations within Lueck’s pleadings, claiming that they affirmatively negate jurisdiction because the e-mail sent to Randall did not report a violation of law to an appropriate law enforcement authority. As for the report element, Lueck’s pleadings affirmatively negate the existence of a reported violation. Lueck’s fifth amended petition states that Lueck “believed and reported in good faith that if the Department did not pursue an immediate and positive resolution to Cooper’s October 29, demand[,] the Department would violate federal and state law by failing to remedy non-compliance with the federal and state reporting requirements.” This allegation merely recites Lueck’s prediction of possible regulatory noncompliance. Such a regulatory non-compliance of this kind does not equate to a violation of law under which a law enforcement authority regulates or enforces within the meaning of the Whistleblower Act. See TEX. GOV’T. CODE § 554.002(b). Further, Lueck attached the e-mail report to his pleadings, and the only discernable violation in the report itself states that TxDOT’s current system for reporting traffic data “is not capable of handling this data and will, therefore, never be in compliance.” This references the violation reported in the 1995 Federal Highway Administration report, which is only intended to call TxDOT’s attention to a previous, publicly-known instance of regulatory non-compliance. At most, this reference to a previous violation of a federal standard expresses disagreement with remedial measures taken by TxDOT after it was already knowingly out of compliance. An internal policy recommendation of this kind is not a report of a violation of law that the Whistleblower Act was designed to protect. Even if this e-mail did report a violation of law, Lueck’s supervisor, Mr. Randall, is not an appropriate law enforcement authority to whom such a report should be made.

* * *

[A]s a matter of law, Lueck’s pleadings affirmatively demonstrate that he did not allege a violation under the Whistleblower Act.3 For these reasons, we reverse the court of appeals’ judgment and dismiss the cause for lack of subject-matter jurisdiction.

CASE STYLE AND DETAILS & LINKS: State of Texas and TxDoT v. Lueck, No. 06-1034 (Tex. Jun. 26, 2009)(Green)(Whistleblower Act claim dismissed)(allegation of regulatory noncompliance insufficient, report not to proper law-enforcement agency)
THE STATE OF TEXAS AND THE TEXAS DEPARTMENT OF TRANSPORTATION v. GEORGE LUECK;
from Travis County; 3rd district (03-05-00510-CV, 212 SW3d 630, 08-16-06) motion to dismiss denied
The Court reverses the court of appeals' judgment and dismisses the case for lack of jurisdiction.
Justice Green delivered the opinion of the Court. [pdf 16 pgs.]
View Electronic Briefs in State of Texas and TxDoT v. Lueck (Tex 2009)

Justice Brister dissents on worker's right to get paid

The Texas Legislature passed the Payday Law to give unpaid workers a quick alternative to lengthy civil litigation. But today the Court holds they lose everything if they pursue that alternative a little too late, even though years remain to file suit in court. This is not about biting apples twice; this is about a man’s wages, a claim that like many others can be filed a second time if the first disposition was not on the merits. By holding Payday claims dismissed for tardiness cannot be refiled in court, the Court converts a law giving extra options to workers into a trap where they may forfeit all their rights. Because I agree with the state agency entrusted with these claims that this could not possibly be what the Legislature intended, I respectfully dissent.

* * *
The Legislature has chosen to give Texans asserting Payday claims two different ways to proceed. That being the case, this Court has no business saying that if they try one too late, then they get none at all. The Commission properly dismissed Igal’s Payday claim as late, but that does not preclude his common law claim which was filed on time. Because the Court holds otherwise, I respectfully dissent.
___________________________
Scott Brister
Justice

Should workers get paid - and if not - be able to vindicate their rights in Texas courts?

Texas Supreme Court adds new weapon to the arsenal of legal doctrines to invoke against workers by adapting res judicata principles to bar a unpaid-wage claim based on a prior agency ruling, rather than a judgment on the merits by a court of competent jurisdiction.

Igal v. Brightstar Info Tech Group, Inc. NO. 04-0931 (Tex. Dec. 7, 2007)(Wainwright)
SALEH W. IGAL v. BRIGHTSTAR INFORMATION TECHNOLOGY GROUP, INC. AND BRBA, INC.; from Dallas County; 11th district (11‑03‑00099‑CV, 140 SW3d 820, 06‑30‑04)

The Court affirms the court of appeals' judgment.Justice Wainwright delivered the opinion of the Court as to Parts I, II, III, IV.A, IV.B.2, and V, in which Justice Green, Justice Johnson, Justice Willett, and Justice McCoy joined, and an opinion as to Part IV.B.1, in which Justice Green, Justice Johnson, and Justice Willett joined.

Igal had the option of seeking relief for alleged unpaid wages in an administrative proceeding under the Payday Day Law or pursuing a common law debt action in state court. He chose the former. Only after TWC entered a final judgment on the merits, which Igal elected not to appeal, did Igal seek redress in the courts. We hold that the doctrine of res judicata bars Igal from pursuing relief in a court of law after obtaining a final decision in TWC for the same transaction. We therefore affirm the judgment of the court of appeals.

________________________________________
J. Dale Wainwright

Justice Brister delivered a dissenting opinion, in which Chief Justice Jefferson, Justice O'Neill, and Justice Medina joined. (Justice Bob McCoy sitting by appointment pursuant to section 22.005 of the Texas Government Code)(Justice Hecht not sitting)

Texas: Right to Work Writ Large - But Not Right to Get Paid

Dec. 7, 2007 - Majority of Texas Supreme Court rules that worker who filed payday act claim late with administrative agency may not sue for breach of contract in state court, even though contract claim was not time-barred and agency could not have adjudicated it given its limited administrative-claim jurisdiction. Conceding that the Texas Legislature enacted the Payday Act as an additional remedy and more user-friendly admininstrative alternative to filing suit, the Court nevetheless treats the Commission as a court and accords res judicata effect to its final order dismissing the worker's administrative claim as untimely.

Anti-worker thrust of court's opinion proved too much even for Justice Brister (not known for sporting pro-labor or leftist credentials), who wrote stinging dissent, joined by the Chief, by Harriet O'Neill, the only women on the court, and by Justice David Medina.

Igal v. Brightstar Information Technology Group, Inc. 04-0931 (Tex. Dec. 7, 2007)(Wainwright)(employment law, common law claim for unpaid wages, statute of limiations, Texas Payday Act, res judicata based on commission's dismissal of statutory claim)

SALEH W. IGAL v. BRIGHTSTAR INFORMATION TECHNOLOGY GROUP, INC. AND BRBA, INC.; from Dallas County; 11th district (11-03-00099-CV, 140 S.W.3d 820, 06/30/04)
The Court affirms the court of appeals' judgment.Justice Wainwright delivered the opinion of the Court as to Parts I, II, III, IV.A, IV.B.2, and V, in which Justice Green, Justice Johnson, Justice Willett, and Justice McCoy joined, and an opinion as to Part IV.B.1, in which Justice Green, Justice Johnson, and Justice Willett joined.

Justice Brister delivered a dissenting opinion, in which Chief Justice Jefferson, Justice O'Neill, and Justice Medina joined. (Justice Bob McCoy sitting by appointment pursuant to section 22.005 of the Texas Government Code)(Justice Hecht not sitting)

The second opinion released by the Texas High Court the same day also involves workers' rights in the workplace:

Morales v. Liberty Mutual Ins. Co., No. 05-0754 (Tex. Dec. 7, 2007)(O'Neill) (worker's comp. subscriber, nonsubscriber, employment status, course and scope, employees vs. independent contractors)
MARGARITA MORALES, INDIVIDUALLY AND AS NEXT FRIEND OF PAULETTE MORALES AND LAURA MORALES, MINOR CHILDREN OF GUADALUPE D. MORALES, DECEASED v. LIBERTY MUTUAL INSURANCE COMPANY AND CONTINENTAL CASUALTY COMPANY; from El Paso County; 8th district (08-04-00135-CV, 169 S.W.3d 485, 07/28/05)
The Court reverses the court of appeals' judgment and remands the case to the trial court.

April 20, 2007 Texas Supreme Court Opinions

The Supreme Court opinions issued April 20, 2007 cover much legal ground and do not lend themselves to an easy summary under a common theme.

After a lull lasting several weeks, during which only a couple of per curiam opinions were handed down, the Supreme Court, on Friday issued thirteen opinions covering a wide array of issues spanning family law, employment law, leases, medical malpractice, and other areas of law and practice, not to mention sovereign immunity, a perennial theme. Two of the signed opinions were authored by Chief Justice Wallace B. Jefferson. Justice Nathan L. Hecht, Justice Scott A. Brister, Justice Harriet O'Neill, and Justice Dale Wainwright wrote one opinion each. The remaining decisions were issued per curiam. In this batch of opinions, dissent was remarkably absent. Justice Johnson delivered a concurring opinion in one of two cases involving Baylor University. Baylor v. Coley, No. 04-0916 (Tex. Apr. 20, 2007)(Hecht);
Baylor Univ. v. Sonnichsen, No. 04-0851 (Tex. Apr. 20, 2007).

Baylor's Day in the Supreme Court - University prevails in two employment disputes

The two university cases involved contract issues regarding employment. In Baylor Univ. v. Sonnichson, a former coach's fraud claims failed because he was seeking the same damages he could not recover for breach of an alleged oral contract because that claim was barred by the statute of frauds. In Bayler v. Coley, the Plaintiff likewise ended up empty-handed. The Court held that the there was no evidence that the University had breached Coley's contract, and that there was no jury charge error regarding constructive discharge. Justice Johnson wrote separately on the issue of preservation of jury charge error and concluded that Coley' s proposed jury instruction was not substantially correct because it contained a comment on the weight of the evidence by referring to her as being tenured in a position, rather than a field, which would have allowed for greater flexibility in assignments and responsibilities without resulting in a potentially actionable demotion. The nature of Coley's job responsibilities was not clearly defined and was a contested issue.

Two more in a steady stream of sovereign immunity decisions

Sovereign immunity, which accounts for a large number of cases in which the Supreme Court granted review recently, was not an issue in these two higher education employment cases because Baylor is a private university. In an unremarkable sovereign immunity case decided on Good Friday, the Court reversed for reconsideration in light of new case law by the trial court, as it has done in other cases decided in per curiam opinions. See State of Texas v. Precision Solar Controls Inc. (Tex. April 5, 2007). In the latest sovereign immunity case, U.S. v. Boateng, the Texas Supreme Court had occasion to examine a different angle. In this case, immunity was invoked by the United States (on behalf of a Medicare intermediary), rather than a state entity or a local government. Moreover, the defensive plea was asserted in a bill a review proceeding in which the party seeking relief from a prior judgment necessarily appears as petitioner, rather than defendant. The Supreme Court denied the United States' petition, thus allowing the case to be remanded to the trial court on mandate of the court of appeals, which had reversed the trial court's order granting the bill of review without trial. The Supreme Court opined that fact issues regarding the extent of the immunity claims remained unresolved.

In a second sovereign immunity case in which a decision was handed down April 20, 2007, the Supreme Court examined whether a takings claim is the proper avenue for the owner of a patent who performs services under contract with the State to assert his intellectual prporty rights. The patent-holder, Herbert Holland, had filed suit claiming the State’s unauthorized use of his patented technology constituted a taking under Article I, section 17 of the Texas Constitution. Writing for the Court, Justice Harriet O'Neill, rejects the takings claim, when, as here, the State’s use is pursuant to colorable contract rights, even though the contract was not between the State and Holland individually. Because the State was not acting under its powers of eminent domain, Holland could not assert a valid takings claim against the State for the alleged unlawful use of his patent. Finding that the state retained its immunity from suit under these circumstances, the Supreme Court reverses the court of appeals' judgment and dismisses Holland’s claim for want of jurisdiction. State of Texas v. Holland, No. 05-0292 (Tex. Apr. 20, 2007)

Domestic Relations, Benefits, and Wills

Several of the most recent decisions of the Supreme Court impact family law practitioners and probate lawyers. In the Estate of Marvin Nash afforded the Court an opportunity to address the effect of a divorce on a will, while in Holmes v. Kent, in a per curiam opinon, the Court resolved a benefits dispute under the Teacher Retirement System (TRS) by finding that a former teacher had not followed proper procedure to remove her former husband as designated beneficiary of an optional annuity prior to her death. The Court adopted the position urged by the TRS, which had filed an amicus brief in which it argued that the statutory requirements for changes in beneficiaries should be strictly adhered to.

Although the Supreme Court does not hear criminal cases, it had occasion to grant habeas corpus relief in a case in which a party sought to enforce contractual alimony by having the ex-spouse jailed for nonpayment. Finding that failure to comply with a private agreement regarding alimony created a debt not enforceable by contempt, the Supreme Court ordered the ex-husband released from custody. In Re Alvin Green, No. 06-0496 (Tex. Apr. 20, 2007)(per curiam).

Variations on Malpractice: Doctor vs. Lawyer and Doctor vs. Doctor

Two of the decided cases involved health care liability claims. In Low v. Henry, the Supreme Court reviewed the propriety of a sanctions order for factually false allegations against physicians in a medical malpractice case. In an opinion authored by Justice Wainwright the Court agrees with the trial court that pleading abuse did occur, but remands for reconsideration of the $50,000 in sanctions imposed on the attorney, which the Court deems severe and not supported by sufficient evidence. Low v. Henry, 50 Tex. Sup. J. 606 (Tex. 2007). In Jackson v. Axelrad Justice Brister wrote the opinion for the court resolving a dispute over the responsibilities of a patient in the medical malpractice context, where the patient-plaintiff himself was also a medical doctor, rather than a lay person to whom special knowledge and expertise cannot be imputed, and should have reported a critical symptom.

Commercial Tenants Beware!

On the business law front, the Supreme Court addressed an important and recurring issue in commercial leasing. Writing for the unanimous court, Chief Justice Jefferson held that the "as-is" provision of the parties' contract, and the express warranty disclaimer contained therein were valid and enforceable, and thus barred the tenant's suit against the landlord.
Gym-N-I Playground, Inc. v. Snider, No. 05-0197 (Tex. Apr. 20, 2007)(Jefferson)

Second Bite at Out-of-State Defendants

In IRA Resources, Inc. v. Griego, an appeal from the trial court's ruling on a special appearance, the high court determines that the court of appeals had improperly found special jurisdiction, and remands with instructions that the court reexamine the case to see if the criteria for general jurisdiction were satisfied. The court of appeals had not reached that issue.

Mandamus Relief Granted (Conditionally, as is Customary)

The Supreme Court granted mandamus in two of the cases disposed of April 20, 2007. As it had done on several occasions before, it directed a trial court to enforce arbitration. In Re RLS Legal Solutions, LLC. It did so notwithstanding the concerns Chief Justice Jefferson had recently voiced in his State of the Judiciary Address about the erosion of legal and appellate remedies by private arbitration. In addition, the Court granted mandamus to require disqualification of counsel in a suit by a doctor against a medical center for revoking his hospital privileges, holding that there was no adequate other remedy. The hospital's attorney had previously been associated with the firm that represented the doctor and the representation of the current client would have required him to call into question the advice given the doctor by his former law partner. In Re Michael Angelo Basco, No. 05-0771 (Tex. Apr. 20, 2007)(per curiam)