Texas appellate justices appear skeptical of Attorney General Ken Paxton defense that he’s exempt from state’s whistleblower law

Sign up for The Brief, our daily newsletter that keeps readers up to speed on the most essential Texas news.

A panel of Texas 3rd Court of Appeals justices expressed skepticism of an argument from Attorney General Ken Paxton’s lawyers on Wednesday that he is exempt from the state’s whistleblower act because he’s not a public employee and a case against him should be thrown out.

Former Paxton deputies in the Office of the Attorney General claim in a whistleblower lawsuit that they were fired for reporting alleged crimes by Paxton to law enforcement. Paxton’s lawyers are trying to get the case dismissed and asked the appeals court to throw out the case on the grounds that Paxton is not subject to the whistleblower law. A lower court denied Paxton’s motion to dismiss the case in March.

Barely a minute into oral arguments, Justice Chari L. Kelly began questioning Solicitor General Judd E. Stone II, who is representing Paxton in the suit.

“Isn’t the action of every lawyer at the OAG’s office an action by the employing governmental agency?” Kelly said.

Justice Gisela D. Triana questioned Stone’s argument that all elected officials are exempt from the whistleblower law and Chief Justice Darlene Byrne asked whether his interpretation would give Texas Supreme Court justices immunity from sexual harassment claims from their employees.

Stone said employees filing sexual harassment claims would have other avenues for relief outside the whistleblower law, but argued that the attorney general as an elected official cannot be sued under the law, which covers public employees, appointed officials and governmental entities.

All three justices on the panel hearing Wednesday’s arguments are Democrats. Paxton is a second-term Republican who is seeking reelection next year.

In October, eight senior aides in the attorney general’s office accused Paxton of abuse of office, bribery, tampering with government records and obstruction of justice for his involvement in legal matters relating to Nate Paul, an Austin real estate investor and a Paxton political donor.

Within seven weeks, all eight officials had either resigned or been driven out of the office. Four of the officials who were fired — David Maxwell, Ryan M. Vassar, James Blake Brickman and J. Mark Penley — filed a whistleblower suit against Paxton in November.

They are seeking reinstatement to their positions, as well as compensation for lost wages, future loss of earnings and damages for emotional pain and suffering.

Stone argued that barring the attorney general from firing employees when they disagree with legal positions or have lost his trust would be an infringement on the elected official’s power.

But Kelly questioned that argument and nodded to claims by the whistleblowers’ lawyers that Paxton is a public employee because he receives checks from the state and participates in its retirement system, and that he acts as the entity because he is its titular head.

“If he can go in and change any decision internally … If he truly has the power to have the last say on anything that comes out of the agency. How is he not the agency?” she asked.

Stone said the justices should interpret the law as it was written, which did not include elected officials in the text of those who can be sued on whistleblower claims.

But Joe Knight, who argued for the whistleblowers’ lawyers, blasted the idea that the Legislature wrote a statute meant to ensure public employees complied with the law and then exempted elected officials without explicitly saying so. He said the drafting of the law in such a way would be “strange and unlikely,” and said the “Legislature does not hide elephants in mouseholes.”

In briefings to the court, the whistleblowers’ lawyers said when lawmakers intend to exempt elected officials from being labeled as public employees, they do so in the text of the law. The Texas Whistleblower Act does not.

The whistleblowers’ lawyers said exempting the attorney general would rob the law of its purpose to protect public employees reporting wrongdoing by government entities.

Stone also argued in briefs that the former officials did not make the reports to law enforcement authorities required to invoke whistleblower protection, and that even if they had, they reported only potential crimes, not crimes that had actually happened.

The whistleblowers’ lawyers attacked that argument, saying their clients reported their concerns to the Travis County District Attorney’s Office, the FBI, the Texas Rangers and the attorney general’s human resources office.

The lawyers also said their clients believed Paxton had already abused his office, tampered with government records, taken bribes and obstructed justice through his interactions with Paul when they brought their concerns to law enforcement.

The whistleblowers believed Paxton was using his office to benefit Paul, who had donated $25,000 to Paxton’s reelection campaign in 2018. Paul had remodeled Paxton’s home and hired a woman with whom Paxton was allegedly having an affair, lawyers said in their brief.

In return, the whistleblowers believed, Paxton intervened in public records requests on behalf of Paul and forced them to issue a legal opinion that would bar foreclosure sales during the COVID-19 pandemic days before one of Paul’s properties was scheduled to be sold at a foreclosure sale.

Paxton also intervened to help Paul pursue legal claims accusing the FBI, the U.S. Attorney’s Office for the Western District of Texas, the Department of Public Safety and a federal magistrate judge of wrongdoing in an FBI raid of his home and business, the whistleblowers claim. Such a case usually would be referred to the Travis County District Attorney, but Paxton had the case referred to his office, the whistleblowers said.

The appellate justices recessed Wednesday without issuing a decision. It was the court’s first in-person hearing since the beginning of the pandemic.

The whistleblower suit is one of multiple legal problems troubling Paxton. He is also reportedly being investigated by the FBI for his interactions with Paul.

Separately, Paxton has been fighting allegations of securities fraud for six years. He is accused of persuading investors to buy stock in a technology firm without disclosing he would be compensated for it. He was a member of the Texas House at the time. Paxton denies any wrongdoing in that case and says those accusations are politically motivated.

After Wednesday’s hearing, T.J. Turner, an attorney for Brickman, described Paxton’s appeal as a stalling tactic.

“This appeal is nothing more than a delay tactic so that Ken Paxton can avoid the scrutiny in the courtroom just as he has in his criminal case, except this time he’s using taxpayer dollars,” Turner said. “We look forward to a prompt decision from the court.”

If you appreciate reporting like this, you need to be at the all-virtual 2021 Texas Tribune Festival happening now through Sept. 25. Join as big names from politics, public policy and the media share what’s next for Texas and beyond. Explore live and on-demand programming, including dozens of free events, at tribfest.org.