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Texas Attorney General Hopes to Get 1 Supreme Court Ruling to Stop Whistleblower Lawsuit

On November 12, 2020, more than a few individuals employed, at one time, by Ken Paxton, the Texas Attorney General, filed an employment discrimination lawsuit in Travis County District Court. The filing was assigned Case Number: D-1-GN-20-006861.

The lawsuit is styled Brickman v. Ken Paxton and lists the following plaintiffs:

• Brickman, James Blake
• Maxwell, David
• Penney, J Mark
• Vassal, Ryan M

Ken Paxton, Attorney General of Texas is the only named defendant.

A Summary of the Whistleblower Complaint on the Texas Attorney General

The complainants are former high-ranking employees of the Texas Attorney General’s Office (OAG). In late September 2020, the complainants provided reports to the Federal Bureau of Investigation (FBI), the Texas Rangers, and other law-enforcement authorities.

They alleged their beliefs that Texas Attorney General Ken Paxton and/or the OAG had or might be engaged in criminal activity. They claimed there may be acts of bribery; tampering with a governmental record; abuse of official capacity; bank fraud; obstruction of criminal investigations; obstructing, influencing, or impeding an official proceeding; tampering with a witness; money laundering; and violations of the Racketeer Influenced and Corrupt Organizations Act.

They provided notice of those reports to the OAG on October 1, 2020, and by mid-November, all four complainants had been fired. After filing unsuccessful grievances with the OAG, the complainants sued the OAG, asserting claims under the Whistleblower Protection Act and are seeking reinstatement.

The case involves the alleged relationship between Paxton and Nate Paul. Paul owns numerous real-estate-investment companies. The complainants make a case alleging Paul and a “political action committee of a law firm representing Nate Paul’s interests” each donated $25,000 to Paxton’s campaign, that Paul had employed a woman with whom Paxton had a personal relationship, and that Paul or his entities had assisted in a “major remodeling project” at Paxton’s home.

Starting in 2019, at least sixteen of Paul’s entities filed for bankruptcy protection. Foreclosure proceedings have begun for more than twelve of the entities. Paul was being investigated by the FBI and other law enforcement. In August 2019, the FBI obtained warrants to search Paul’s assets; which included his house and office.

The complainants have made allegations that starting in 2019, Paxton used OAG resources in Paul’s favor and “improperly interfere[d] in [Paul’s] civil disputes and criminal matters.” They have further claimed Paxton’s “abuse of the OAG to benefit Paul” increased in 2020. During this period of time, the complainants stated Paxton “became less rational in his decision making and more unwilling to listen to reasonable objections to his instructions.” In the complainants lawsuit they made detailed allegations about how Paxton acted or directed OAG staff to act on Paul’s behalf.

The Complaints More Detailed Allegations on the Texas Attorney General

OPEN-RECORDS ISSUES

Paul made an open-records request to the Texas State Securities Board seeking records related to the 2019 search of his properties, and the Board requested an OAG opinion about the request.7 Paxton pressured then-Deputy First Assistant AG Ryan Bangert issue an opinion allowing the records to be released—“a highly unusual move that was contrary to well-established precedent related to protecting the integrity of criminal investigations.” Despite Paxton’s efforts, the OAG issued an opinion stating that the records were not all subject to disclosure due to the pending criminal investigation.

In March 2020, Paul made another request for records related to the search, this time to the Texas Department of Public Safety (DPS). The FBI filed a brief urging the OAG to “follow its longstanding practice of not providing documents related to an ongoing investigation” and sent Paul a redacted copy. Paxton “tried to help Paul get the unredacted brief,” contacting Vassar several times to pressure him to issue an opinion favorable to Paul, “direct[ing]” him to “find a way to release the information,” and saying he “did not want to use the OAG to help the FBI or DPS in any way.” Vassar, however, thought Paxton’s directives “would overturn decades of settled expectations among sister law enforcement agencies, compromise the OAG’s own law enforcement information, and likely spark innumerable lawsuits challenging the newly announced application of the law.” Paxton “personally took” the OAG’s file related to the search, “which included documents sealed by a federal court,” kept it for about a week, and later directed that the OAG opinion should “take no position on whether the documents should be released.”

In May 2020, Paul made a third open-records request, seeking the unredacted FBI brief from the OAG. Paxton asked Vassar for a copy of the unredacted brief, directed him “to find a way to release” the brief, and directed Vassar to release an OAG opinion that “ultimately concluded that the unredacted FBI brief must be released.”

OAG INTERVENTION IN A CHARITY’S LAWSUIT

A lawsuit between several of Paul’s entities and the Roy F. and Joann Cole Mitte Foundation, which had invested with Paul, resulted in the appointment of a receiver over several of Paul’s entities, and the OAG Charitable Trust Division initially declined to intervene because the foundation was well represented and its interests were protected. Paxton took a “deep personal interest” in the case and despite being advised that the OAG should not intervene, insisted that the OAG intervene “for the purpose of exerting pressure on the Mitte Foundation to settle on terms favorable” to Paul.

Brickman reviewed the pleadings and again informed Paxton that the OAG “had no interest in the case and should not waste resources of the OAG participating” in the dispute, but “Paxton did not waver in his desire to bring the power and resources of OAG to bear” to help Paul. “So intense and bizarre was Paxton’s desire to help Nate Paul,” that Brickman and then-First Assistant AG Jeff Mateer “had to talk Paxton out of personally attending and appearing” before the trial court, which would have been “unprecedented” given that Paxton “has not appeared in any court on behalf of the OAG in the memory of any of [appellees], if he ever has.” The Charitable Trust Division withdrew from the case several months later.

OAG OPINION ON FORECLOSURE

Paxton asked Bangert to research whether COVID restrictions on in-person gatherings should prevent foreclosure sales. Paxton “made clear that he wanted OAG to express a specific conclusion: that foreclosure sales should not be permitted to continue.” Appellees said that Paxton was “adamant” about his position and characterized his personal interest in the issue as “surprising” and “bizarre.” “Even more bizarre was the speed and timing of the release of the opinion Paxton sought”: the OAG released the opinion requested by Paxton at about 1:00 a.m. on Sunday, August 2, 2020, three days after Paxton’s initial request for research, and “[u]nbeknownst to” appellees, the opinion had the effect of stopping several August 4 foreclosure sales of Paul’s properties.

INVESTIGATIONS INTO PAUL’S ADVERSARIES

In May 2020, Paxton arranged and attended a meeting between Paul and the Travis County District Attorney’s Office. Paul provided a criminal complaint accusing individuals involved in the 2019 search of Paul’s home and offices—federal and state law-enforcement officers, the federal magistrate judge who signed the search warrants, and an Assistant U.S. Attorney—of violating his rights.

The Travis County DA referred Paul’s complaint to the OAG, as Paxton had expected, and Maxwell and Penley were assigned to investigate. After forensics experts determined that there was “no credible evidence” to support Paul’s allegations, Maxwell and Penley informed Paul of that fact. Paxton then met with Maxwell, Penley, and Paul and “pushed back” against the recommendation to close the investigation.

In August 2020, Paxton asked Vassar how the OAG retains outside counsel, and Vassar explained that the process requires several stages of review and authorization by at least ten OAG personnel. About a week later, Paxton asked whether the OAG can retain outside counsel to investigate criminal allegations. Despite Vassar’s cautions, Paxton asked him to contact two candidates: “a veteran former state and federal prosecutor with decades of experience” and Brandon Cammack, “a Houston criminal defense attorney who had been licensed only 5 years and never served as a prosecutor.”

A week later, Paxton decided to retain Cammack, the less experienced attorney, and instructed Vassar to draft a contract “immediately” because he thought the new Travis County DA might rescind the referral to the OAG. On September 4, Vassar sent the draft contract to the General Counsel Division for review.

In late September, Cammack asked for an OAG email address or “some other official documentation to identify himself as” working for the OAG, and Vassar explained that the contract was not yet approved. Paxton then asked Vassar why the contract had not been approved and said he was “tired of his people not doing what he had asked.” The next day, Penley (the Deputy AG for Criminal Justice) refused to approve the contract because of a lack of credible evidence supporting Paul’s claims. “On Saturday, September 26, 2020, Paxton asked Penley to meet him in McKinney[, Texas],” where he pressured Penley to approve Cammack’s contract. Penley reiterated that he “could not in good conscience approve the contract” because there was “no factual basis for the absurd investigation ordered by Nate Paul of the FBI agents and federal prosecutor involved in obtaining search warrants for Paul’s home and offices.”

The contract, which appellees assert was never approved through the proper OAG channels, was attached to appellees’ petition. It lacks an “OAG Contract No.,” for which there is a blank at the top of the first page, but is signed by Cammack and Paxton and states that Cammack’s duties as “Outside Counsel” were to begin on September 3. The contract explains that the OAG had been referred a criminal complaint and that Cammack should “conduct an investigation, under the authority of the OAG,” and “prepare a report documenting any potential criminal charges that may be discovered.”

Cammack started to work at Paxton’s direction, “falsely represent[ing] that he was a ‘special prosecutor’ in order to obtain grand jury subpoenas under false pretenses to investigate, harass, and intimidate Nate Paul’s perceived adversaries.” In late September, Cammack obtained thirty-nine subpoenas from the Travis County Grand Jury “by falsely claiming he was a ‘Special Prosecutor’ authorized to represent OAG.”10 He was accompanied by Paul’s attorney when he served at least some of the subpoenas.

[The complainants] also alleged that Cammack’s investigation exceeded the scope of the referral because he looked into a new request by Paul, which “assert[ed] a wild conspiracy theory.” Thus, appellees asserted, “not only was Cammack never properly approved under OAG policies to conduct any investigation in the first place and never had the title or powers of a prosecutor, he was now obtaining subpoenas under false pretenses to conduct an investigation that was never in the scope of his asserted contract with OAG,” all done “at the direction of OAG and Ken Paxton to benefit Nate Paul and Ken Paxton.”

REPORT TO APPROPRIATE AUTHORITIES AND IMMEDIATE RETALIATION

In late September, appellees learned that “Paxton was causing OAG to use the grand jury process and the subpoenas obtained under false pretenses to investigate and intimidate Nate Paul’s perceived financial adversaries,” as well as law-enforcement officers and federal prosecutors who had been involved in the 2019 search. The subpoenas sought “personal information such as [the individuals’] personal cell phone information and were clearly designed only to harass and intimidate the law enforcement officers.”

During the last week of September 2020, appellees “talked frequently about what each of them knew about the various actions Paxton and OAG were taking to benefit Nate Paul and Ken Paxton personally.” Because several divisions had been involved, “not every [appellee] knew the whole picture” until they discussed the situation. At that point, “each of the [appellees] formed a good faith belief that Paxton and OAG had violated Texas and federal criminal law, including but not limited to laws regarding bribery, tampering with government records, obstruction of justice, harassment, and abuse of office.” Appellees explained that “Paxton’s decisions, opinions, and exercise of discretion described in detail above were far removed from the bounds of what an ordinary, prudent civil servant would do” because they “were all ostensibly for the benefit of” Paul, who was “under FBI investigation and caught in a maelstrom of business failure and litigation,” was “a major donor to Paxton’s campaign,” was assisting Paxton in remodeling his home, and had employed the woman with whom Paxton had an extramarital relationship. Appellees thus stated that they “reasonably believed Paxton’s bizarre abuse of his office was the result of bribery.”

On September 30, Brickman, Penley, Vassar, and several other whistleblowers went to the FBI to report their good-faith beliefs that Paxton and the OAG had violated the law. Maxwell was not able to attend the meeting, so he made a separate report to the Texas Rangers and later made reports to the FBI and the Travis County DA’s Office.

On October 1, seven whistleblowers—Brickman, Vassar, Penley, Mateer, Bangert, and two others—sent a letter to the OAG Director of Human Resources, providing notice about their report to the FBI. Maxwell did not sign the letter because he was out of state, so he sent his own letter about his report.

On October 2, Paxton directed that Penley and Maxwell should be placed on “investigative leave”; they were fired on November 2. Mateer resigned, and Brent Webster was appointed to replace him as First Assistant AG. On October 5, Webster started taking actions intended to embarrass and intimidate Brickman such as taking away his duties, ordering him out of an important meeting, demanding to speak with him alone or with an armed peace officer present, and ordering him to leave his personal cell phone in his car; Brickman was fired for insubordination about two weeks later after he expressed concerns about ongoing OAG work on Paul’s behalf despite public statements by Paxton that the agency had concluded its investigation into Paul’s complaints. On October 19, Vassar was placed on investigative leave and walked out of the building by security; he was fired on November 17 “for false and pretextual reasons.” Finally, one other whistleblower was fired on October 20, and another two resigned in late October after being harassed and humiliated.

Meanwhile, on October 3, the OAG issued a statement asserting that the whistleblowers sought “to impede an ongoing investigation into criminal wrongdoing by public officials including” OAG employees. According to appellees, the statement was “blatantly false,” there was no such investigation, and the statement and several others issued later by the OAG were intended to intimidate, discredit, and retaliate against the whistleblowers.

Cited from an Opinion issued by the Texas Court of Appeals, Third District, under Cause 03-21-00161-CV

The Texas Attorney General Attempted to Dismiss Trial Court Lawsuit

The OAG filed a motion to dismiss under rule 91a, arguing that the OAG’s immunity from suit was not waived under the Act because appellees only claim to have reported unlawful acts “committed personally by the Attorney General, who is neither the ‘employing governmental entity’ nor ‘a public employee,’” and had not alleged facts demonstrating that they made a good-faith report of illegal conduct to an appropriate law-enforcement authority. (governmental entity may not take adverse personnel action against public employee who reports in “good faith” violation of law by “employing governmental entity or another public employee” to appropriate law-enforcement authority). The trial court denied the motion to dismiss, and the OAG filed this appeal under the statute that authorizes an interlocutory appeal from an order that “grants or denies a plea to the jurisdiction by a governmental unit.”

The Trial Court and Court of Appeals Deny the Texas Attorney General’s Attempt to Dismiss the Lawsuit

The OAG asserts that Paxton should be able to fire OAG employees if he decides they are not sufficiently loyal or if he has “lost confidence” in them, pointing to the supreme court’s observations about the “interests in tension” involved in whistleblower protections and its statement that “the duty of loyalty and other competing legal and ethical principles are powerful arguments in favor of limits” on when whistleblowers should be protected. [case law omitted]. And indeed, Texas is an employment-at-will state, in which employers can terminate employment for virtually any reason. [case law omitted] However, the Texas Whistleblower Act provides an exception to that general rule—a government employer may not fire an employee who makes a good-faith report of illegal conduct because he made the report. Thus, although loyalty and confidence are important considerations in employment matters, the Act provides that a State employer cannot fire an employee because he reports illegal conduct by the employer, even when it is that act of reporting that causes the employer to lose confidence or feel the employee lacks loyalty. We hold that [the complainants] alleged facts bringing their lawsuit within the reach of the Act, and we affirm the trial court’s order denying the OAG’s rule 91a motion to dismiss.

Opinion of the Third Court of Appeals, under Cause 03-21-00161-CV

Texas Attorney General Files a Petition for Review with the Texas Supreme Court

On January 5, 2022, the Texas Attorney General filed a petition for review with the Texas Supreme Court.

On March 21, 2022, the complainant filed their response to the petition for review.

On April 14, 2022, the Texas Attorney General files a reply to the response of the complainants.

On April 25, 2022, the Lieutenant Governor Dan Patrick, Governor Greg Abbott, and Honorable Kent R. Hance file amicus Curia letters in hopes the Texas Supreme Court will review the Texas Attorney General’s petition.

The matter is currently awaiting decision from the Texas Supreme Court.

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