The whistleblowers who sued Attorney General Ken Paxton say they’re headed back to court unless he agrees that the Legislature must approve their proposed $3.3 million settlement before the current legislative session ends in May.
They are the four former aides to Paxton who allege he fired them in retaliation for reporting him to federal authorities for bribery and abuse of office. Paxton has denied all wrongdoing. Their lawyers said Wednesday they were “forced” to file a motion in an Austin appellate court Wednesday asking for the case to resume.
In a joint statement, the lawyers said a deadline of the end of session for payment was the “fundamental premise upon which they asked us to negotiate in the first place.”
“So we’ll go back to court, where the taxpayers will end up paying more to defend (the Office of the Attorney General) than they would to settle this case,” the lawyers said. “We would still settle the case if the Legislature approved the payment this session, but we cannot and did not agree to give OAG the benefit of a settlement while the whistleblowers wait in perpetuity for legislative approval.”
The attorney general’s office did not immediately respond to a request for comment.
Some members of the Legislature, including Texas House Speaker Dade Phelan, have expressed opposition to approving the settlement. Earlier this month, Phelan said in an interview with CBS DFW that he did not think it was a “proper use of taxpayer dollars.” Taxpayers are already on the hook for $600,000 in legal fees for Paxton’s defense.
The case now returns to the Texas Supreme Court, where it landed after Paxton appealed in December 2021 a decision by the 3rd Court of Appeals that upheld a lower court’s finding that the state’s whistleblower protection law should have prevented the employees from being fired.
The all-Republican court had not yet decided whether it would grant the case when the whistleblowers and Paxton asked them to hold off on any decisions while the parties finalized their settlement agreement. The court could decide to grant or deny at any time; it is not subject to a deadline.
In addition to the $3.3 million payment, the settlement, which the parties announced last month, would have required Paxton to remove a news release from his website that is critical of the employees. He also would have had to state in the agreement that he “accepts that plaintiffs acted in a manner that they thought was right and apologizes for referring to them as ‘rogue employees.'”
The multimillion-dollar settlement, announced last month, would give back pay to the four former employees and would include an apology from Paxton as well as other concessions. But the agreement needs to be approved by state lawmakers, who have expressed an unwillingness to use taxpayer dollars to settle Paxton’s case. At the request of the parties in January, the Texas Supreme Court put the whistleblower case on pause while the two sides looked to finalize the deal. But without a deadline, the case could be on pause indefinitely, attorneys for the former employees said on Wednesday.
“Sadly, we have not been able to reach a final settlement because [the Office of the Attorney General] will not agree to include in the formal agreement a deadline for the legislature to approve funding this session, even though that was the fundamental premise upon which they asked us to negotiate in the first place,” the attorneys said in a statement. “So we’ll go back to court, where the taxpayers will end up paying more to defend OAG than they would to settle this case.”
Paxton’s office did not immediately respond to a request for comment. He has denied wrongdoing.
Attorneys for the former employees said they would still settle the case if lawmakers approved the $3.3 million settlement this session.
“But we cannot and did not agree to give [the Office of the Attorney General] the benefit of a settlement while the whistleblowers wait in perpetuity for legislative approval,” they wrote.
The fired employees’ attorneys have urged lawmakers to approve the settlement, but its funding looks bleak after top legislators, including House Speaker Dade Phelan, came out against the use of state funds to settle the case. The Legislature’s top budget writers did not include the settlement in their first draft of bills to resolve miscellaneous legal claims.
In a filing to the Supreme Court on Wednesday, attorneys for the former employees said the attorney general’s office has told them verbally that they have put the whistleblowers in a “gotcha position.” If lawmakers do not approve funding for the settlement by the end of this legislative session on May 29, the attorney general’s office has said the whistleblower case should remain on pause until the next legislative session in 2025. If it is not approved again, the filing reads, the attorney general’s office has said the case should remain on pause until the following session in 2027.
“And so on in perpetuity. [The Office of Attorney General] tells Respondents the case will never resume; they have given up their claims forever, even if legislative approval is not forthcoming,” the filing reads. “[The Office of Attorney General] thus reaps all benefits of a settlement, and [the former employees] achieve none.”
In written communications, the fired employees’ attorneys say Paxton’s office has been “craftier,” arguing that it is still researching what would happen if the Legislature refuses to approve the settlement and will not address that potential outcome until it happens.
The fired employees’ attorneys blasted both positions as “preposterous,” arguing that they would have never agreed to put the case on pause indefinitely or for a lengthy time period.
The motion to pause the case — which was requested, drafted and filed by the attorney general’s office with agreement by the fired employees — was “intended to briefly postpone” any potential ruling while the two sides sought legislative approval for the $3.3 million settlement. But attorneys for the fired employees say Paxton’s refusal to set a deadline is preventing the two sides from completing the settlement agreement while at the same time not letting their case against him move forward.
Couple things. First, let’s remember that SCOTx was going to rule on the question of whether Paxton could be sued at all under the Texas Whistleblower Act. Paxton had argued that he could not be sued under that law because he’s not public employee, because elected officials don’t count under that law. By asking SCOTx to resume their deliberation on that question, the four plaintiffs are risking that their answer will be to rule in Paxton’s favor and toss the lawsuit altogether. And even if they win on that question, it just means that the lawsuit can go back to a district court and be heard on its merits. Which, again, they could lose, or they could get a lesser amount awarded to them. And the whole thing will then have to go through the appeals process, because of course Paxton will fight it for as long as he’s in office, and the verdict could get overturned or the award could be reduced, and the whole thing could take years. Whatever else you may think about their case and the initial settlement, these guys are taking a substantial risk by doing this.
But you can see why they’re willing to take that risk. Paxton, who has always been able to turn a bad situation of his own making into an advantage, is using the Lege’s understandable unwillingness to pay for his sins as an indefinite stalling tactic. As things stand now, he has zero incentive to take any action. The case is frozen in amber. And even if SCOTx ultimately rules that the lawsuit can proceed, if there’s one other thing (besides criming) that Paxton is good at, it’s delaying legal reckonings. Who knows how long he could draw this out, assuming he remains in office?
All of which suggests a fairly easy way out for SCOTx, if they want to take it. They can rule that the Lege doesn’t have to apportion any money to pay the settlement, and let Paxton pay for it out of whatever budget the Lege sees fit to give him. This is of course what I have been arguing they should do, as it is the most fair and just solution at this point, so I’m a little biased. But, you know, it really is a good solution – it allows the whistleblowers to get their back pay and their apology, it guards against a much larger potential verdict while also not putting the public on the hook, and it makes Paxton bear the brunt of the financial penalty. It might damage the AG office’s ability to do its job, but that’s just too bad. This is what happens when you put a crook in charge of law enforcement. I hope SCOTx comes to the proper conclusion and saves us all a multi-year saga.