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Minding Your Ps and Qs: Whistleblower Protection and Employer Defenses

Minding Your Ps and Qs: Whistleblower Protection and Employer Defenses. 17th Annual Texas Higher Education Law Conference University of North Texas Denton, Texas March 25-26, 2013. Mari McGowan Abernathy, Roeder, Boyd & Joplin P.C. Employer Posting Required.

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Minding Your Ps and Qs: Whistleblower Protection and Employer Defenses

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  1. Minding Your Ps and Qs:Whistleblower Protection and Employer Defenses 17th Annual Texas Higher Education Law Conference University of North Texas Denton, Texas March 25-26, 2013 Mari McGowan Abernathy, Roeder, Boyd & Joplin P.C.

  2. Employer Posting Required • The law requires each governmental employer to notify employees of their rights under the Texas Whistleblower Act “by posting an appropriately worded sign in a prominent place in the workplace.” Tex Gov’t Code 554.009

  3. Employer Posting Required • The law requires each governmental employer to notify employees of their rights under the Texas Whistleblower Act “by posting an appropriately worded sign in a prominent place in the workplace.” Tex Gov’t Code 554.009

  4. Employer Posting Required • The law requires each governmental employer to notify employees of their rights under the Texas Whistleblower Act “by posting an appropriately worded sign in a prominent place in the workplace.” Tex Gov’t Code 554.009

  5. Purpose of the Texas Whistleblower Act • Protect public employees from employer retaliation when reporting in good faith a violation of law, and • Secure lawful conduct from those conducting the affairs of state and local government Tarrant County v. McCrary, 310 S.W.3d 170, 173 (Tex. App. – Fort Worth 2010, pet. denied)

  6. Who is “protected” ? A state or local governmental entity may not suspend or terminate the employment of, or take other adverse personnel action against, a • public employee • who in good faith reports a violation of law • by the employing governmental entity or another public employee • to an appropriate law enforcement authority TEX. GOV’T CODE §554.002(a)

  7. “Public Employee” defined… …an employee or appointed officer (other than an independent contractor) who is paid to perform services for a state or local government. • must be paid (not a volunteer, student, guest, etc.) • either part-time or full-time • cannot be independent contractor (will depend on the employer’s extent of control) TEX. GOV’T CODE §554.001(4); Permian Basin Cmty. Ctrs. for MHMR v. Johns, 951 S.W.2d 497, 501 (Tex. App. – El Paso 1997, no writ)

  8. What is the public employee protected from? A state or local governmental entity may not suspend or terminate the employment of, or take other adverse personnel action against, a • public employee • who in good faith reports a violation of law • by the employing governmental entity or another public employee • to an appropriate law enforcement authority TEX. GOV’T CODE §554.002(a)

  9. Adverse Personnel Action… ..”is an action that affects the employee’s compensation, promotion, demotion, transfer, work assignment, or performance evaluation.” . . . the action must be “material and likely to deter a reasonable, similarly situated employee from reporting a violation of the law.” TEX. GOV’T CODE §554.001(3); Montgomery Cty. v. Park, 246 S.W.3d 610, 613 (Tex. 2007)

  10. Important Whistleblower Act Cases State v. Lueck, 290 S.W.3d 876, 885 (Tex. 2009) • Plea to Jurisdiction is proper vehicle to challenge whether factual elements exist to support a claim. • Internal policy recommendation of TxDOT was not a report of a violation of law that the Act was designed to protect. • Even if email did report a violation of law, the employee’s supervisor was not an appropriate law enforcement authority to whom such a report should be made. • Email report indicated employee knew his supervisor was not the proper authority within TxDOT to regulate the reported violations…so he could not have formed a good-faith belief that the supervisor was authorized to enforce such violations.

  11. Important Post – Lueck Whistleblower Cases Galveston Indep. Sch. Dist. v. Jaco, 331 S.W.3d 182 (Tex. App.—Houston [14th Dist.] 2011, pet. denied) Univ. of Houston v. Barth, 2011 Tex. App. LEXIS 6866 (Tex. App.— Houston [1st Dist.]) Aug. 25, 2011, pet. filed) Tex. Dep’t of Transp. v. Garcia, 2010 Tex. App. LEXIS 4779 (Tex. App.— Corpus Christi, June 24, 2010, no pet.) Univ. of Tex. Southwestern Med. Ctr. v. Gentilello, 317 S.W.3d 865 (Tex. App.—Dallas 2010, pet. filed)

  12. Important Post – Lueck Whistleblower Cases City of Elsa v. Gonzalez, 325 S.W.3d 622 (Tex. 2010) Univ. of Tex. San Antonio v. Wells, 2011 Tex. App. LEXIS 920 (Tex. App.—San Antonio Feb. 9, 2011 no pet.) Tex. Water Dev. Bd. v. Neal, 2010 Tex. App. LEXIS 3225 (Tex. App.— Austin Apr. 28, 2010, pet. denied) (unpublished) Moreno v. Tex. A&M University-Kingsville, 339 S.W.3d 902 (Tex. App.— Corpus Christi May 5, 2011, pet. filed) DART v. Carr, 309 S.W.3d 174 (Tex. App.—Dallas, pet. denied)

  13. “Good Faith Report of Violation of Law” means . . . Good Faith (subjective and objective element) . . . (1) the plaintiff believed the conduct violated the law; and (2) the plaintiff’s belief was reasonable in light of his/her training and experience. TEX. GOV’T CODE §554.002(a); City of Elsa v. Gonzalez, 325 S.W.3d 622, 626 (Tex. 2010)

  14. Good Faith . . . Good Faith (subjective and objective element) . . . • does not require that plaintiff is right • does not require that a law is actually violated • does have to be honest and objectively reasonable Vela v. City of Houston, 186 S.W.3d 49, 53 (Tex. App. – Houston [1st Dist.] 2005, no pet.) (because of electrician’s 18 years of experience as electrician, his erroneous belief of code violation was not in good faith)

  15. “Report of Violation of Law . . .” Report . . . • generally any “disclosure of information” tending to show a violation of law (oral report, phone call, email, written letter) Violation of Law - “law” defined in sec. 554.001(1) as: (A) a state or federal statute; (B) an ordinance of a local governmental entity; or (C) a rule adopted under a statute or ordinance.

  16. What is a “violation of law” . . .? DART v. Carr, 309 S.W.3d 174 (Tex. App.—Dallas 2010, pet. denied) • a plaintiff is not required to identify a specific law when making the report • A plaintiff does not have to establish an actual violation of law • However, there must be some law prohibiting the complained of conduct to state a claim. • An internal policy is not a law. • Otherwise “any complaint, grievance or misconduct could support a claim.”

  17. What is a “violation of law” . . . ? Galveston Indep. Sch. Dist. v. Jaco, 331 S.W.3d 182 (Tex. App.—Houston [14th Dist.] 2011, pet. denied) • UIL rules are not rules “adopted under a statute or ordinance.” • This court gave a strict and narrow construction of “law” and the definition of “law” in Whistleblower Act.

  18. Is a University rule a law? University of Houston v. Barth, 365 S.W.3d 438 (Tex. App.—Houston [1st Dist.] 2012, pet. filed) The University Rule • The university maintained a written policy governing the U of H system called a SAM (“System Administrative Memorandum”). • Under the SAM, employees are directed to report criminal activity and advised that failure to do so may result in disciplinary action. • The officials identified in the SAM for reporting included the University police, University GC and its CFO.

  19. Barth Facts . . . • Barth was a tenured professor in the Hotel Management College. • The College business manager told Barth that he suspected the dean of the College, Alan Stutts, had engaged in questionable accounting practices, mishandled University funds, and entered into an unauthorized contract for services on behalf of the College. • Stutts was Barth’s supervisor. • Barth reported Stutts’ conduct to the University’s CFO, GC, internal auditor and Associate Provost.

  20. Barth Facts . . . • After the report, Stutts gave Barth marginal ratings on his evaluations which affected his merit raises. • Barth was denied funds for travel related to his position. • Stutts withdrew from a symposium Barth created and earned $10,000 in annual compensation. As a result, the symposium was canceled. • Barth grieved Stutts’ twice alleging retaliation and a lower-than-deserved merit evaluation which lowered his salary increase. • Neither grievance was successful.

  21. Barth Facts . . . • Barth then reported Stutts to the University police department. No action was taken. • The University CFO requested the internal auditor look into Barth’s allegations. • The auditor found Stutts violated portions of the SAM. • Barth sued the University claiming a violation of the Whistleblower Act.

  22. Barth Court Ruling . . . • Court found the employee reported a violation of law when he reported a coworker’s violations of the University’s financial rules.  • The University contested the employee’s argument that its rules constituted a law adopted under statute or ordinance that could form the basis of a whistleblower claim. 

  23. Barth Court Ruling . . . • As a legislatively-created university, the court found the University Board of Regents was empowered to “enact bylaws, rules, and regulations necessary for the successful management and government of the university.”  • Thus, the rules of the University were of the same force as an enactment of the Legislature and, therefore, a “law” under the Whistleblower Act.

  24. • Media is NOT a proper law enforcement authority. Beaumont v. Bouillion, 896 S.W.2d 143, 145 (Tex. 1995) • Police Chief and District Attorney were proper law enforcement authority where employee reported a criminal violation to them . . . BUT • Later report to the town manager against Chief and DA alleging a failure to investigate was NOT protected because town manager as not a law enforcement authority. Town of Flower Mound v. Teague, 111 S.W.3d 742, 755 (Tex. App. – Fort Worth, 2003, pet. Denied) “Appropriate Law Enforcement Authority”?

  25. “Appropriate Law Enforcement Authority”? Does the entity: • regulate under or enforce the law alleged to have been violated; OR • Investigate or prosecute a violation of criminal law.

  26. “Appropriate Law Enforcement Authority”? City of Elsa v. Gonzalez, 325 S.W.3d 622 (Tex. 2010) • City council was NOT appropriate law enforcement authority for purposes of the Texas Open Meetings Act. • “[T]he Whistleblower Act’s limited definition of a law enforcement authority does not include an entity whose power is not shown to extend beyond its ability to comply with a law by acting or refusing to act or by preventing a violation of law by acting or refusing to act.”

  27. “Appropriate Law Enforcement Authority”? Tex. Water Dev. Bd. v. Neal, 2010 Tex. App. LEXIS 3225 (Tex. App.— Austin Apr. 28, 2010, pet. denied) (unpublished)Plaintiff’s reports to her employer, the Texas Water Development Board, regarding alleged violations of the Texas Labor Code were NOT made to an appropriate law enforcement authority.

  28. “Appropriate Law Enforcement Authority”? University of Texas San Antonio v. Wells, 2011 Tex. App. LEXIS 920 (Tex. App.—San Antonio Feb. 9, 2011, no pet.) • The focus is on the entity itself, not the specific department or office that received the report. • University is objectively NOT an appropriate law enforcement authority for a plaintiff’s complaints of criminal fraud.

  29. A Bad Day for Whistleblowers in Texas On February 22, 2013, the Texas Supreme Court issued decisions in two whistleblower cases testing the “appropriate law enforcement authority” question: • University of Texas Southwestern Medical Center at Dallas v. Gentilello • Gertrude Moreno v. Texas A&M University – Kingsville

  30. UT Southwestern v. Gentilello • University of Texas Southwestern Medical Center at Dallas v. Gentilello, 317 S.W.3d 865 (Tex. App.—Dallas 2010, pet. granted) • Tenured professor of medicine held two chair positions. • During employment, he claimed he discovered that hospital residents were treating and performing surgical procedures on patients without the supervision of an attending physician in violation of Medicare and Medicaid regulations. • He reported the alleged violations to a supervisor who set the policies regarding the presence of attending physicians and who had the power to internally investigate Medicare and Medicaid violations.

  31. Gentilello Facts . . . • Professor’s chair positions were removed. • He sued under the Texas Whistleblower Act alleging he had a good faith belief that Medicare and Medicaid violations were occurring and he reported these violations to the person that he believed in good faith had the authority to “investigate and correct” the violations.

  32. Gentilello Court Ruling . . . • The Court of Appeals found a fact issue existed on whether the professor had a good faith belief that he reported to an appropriate law enforcement authority (the Clinical Department Chair). The medical center sought review. • The Texas Supreme Court overturned the decision of the Court of Appeals, holding that consistent with the court's prior cases, “the Whistleblower Act's constricted definition of a law-enforcement authority requires that a plaintiff's belief be objectively reasonable. On that score, purely internal reports untethered to the Act's undeniable focus on law enforcement—those who either make the law or pursue those who break the law—fall short.” • The Court noted that other states' whistleblower laws accommodate internal reports to supervisors; Texas law does not.

  33. Gentilello Court Ruling . . . • The Court stated that under the Texas Act, “the jurisdictional evidence must show more than a supervisor charged with internal compliance or anti-retaliation language in a policy manual urging employees to report violations internally. For a plaintiff to satisfy the Act's good-faith belief provision, the plaintiff must reasonably believe the reported-to authority possesses what the statute requires: the power to (1) regulate under or enforce the laws purportedly violated, or (2) investigate or prosecute suspected criminal wrongdoing. 

  34. Moreno v. Texas A&M - Kingsville Gertrude Moreno v. Texas A&M University – Kingsville, --- S.W.3d --- (Tex. 2013). • Moreno was employed as Asst VP for Finance and Administration and Comptroller. • Moreno’s supervisor obtained an out-of-state tuition waiver for his daughter to attend TAMUK at the Texas-resident rate. Moreno challenged that action resulting in the revocation of the waiver and her supervisor ultimately paid full tuition for his daughter. • Moreno was then terminated with no explanation. • Moreno appealed her termination through TAMUK’s grievance process alleging retaliation, and then sued under the Texas Whistleblower Act.

  35. Moreno Court Ruling . . . The Court of Appeals found Moreno created a fact issue that she had a good-faith belief that her supervisor violated the law and she could have relied on the interpretation of the law given by the employer in forming her belief.  The Court felt Moreno showed that she followed the college’s policy in reporting the violation to her supervisor and that the supervisor had both the duty and the power to enforce the rules. Again, the Texas Supreme Court overturned the decision by the Court of Appeals.

  36. Moreno Court Ruling . . . • Quoting the GentilelloOpinion: The Act, by its text and structure, restricts “law enforcement authority” to its commonly understood meaning. That is, it protects employees who report to authorities that actually promulgate regulations or enforce the laws, or to authorities that pursue criminal violations. The specific powers listed in section 554.002(b) are outward-looking. They do not encompass internal supervisors charged with in-house compliance and who must refer suspected illegality to external entities. • The President's authority to compel compliance with state law on tuition waivers, was not the same as enforcing the law in the sense required by the statute.

  37. The logical outcome of the Gentilello and Moreno decision is to force potential whistleblowers to take the agency's issues outside the organization, an option that agencies would not prefer. However, agencies are protected from retaliation claims when an employee has complained internally, but failed to contact the appropriate enforcement authority.

  38. Minding Your Ps and Qs:Whistleblower Protection and Employer Defenses THANK YOU!!! Mari McGowan Abernathy, Roeder, Boyd & Joplin, P.C. 1700 Redbud Blvd., Ste. 300 McKinney, Texas 75069 (214) 544-4000 www.abernathy-law.com

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