the University of Texas at Austin v. Dijaira B. Smith ( 2015 )

TEXAS COURT OF APPEALS, THIRD DISTRICT, AT AUSTIN
NO. 03-14-00509-CV
The University of Texas at Austin, Appellant
v.
Dijaira B. Smith, Appellee
FROM THE DISTRICT COURT OF TRAVIS COUNTY, 200TH JUDICIAL DISTRICT
NO. D-1-GN-13-004318, HONORABLE AMY CLARK MEACHUM, JUDGE PRESIDING
MEMORANDUM OPINION
The University of Texas at Austin appeals the denial of the plea to the jurisdiction
it filed in Dijaira B. Smith’s suit brought pursuant to the Texas Whistleblower Act. See Tex. Gov’t
Code §§ 554.001-.009 (the Act). The University contends that the trial court erred in concluding that
Smith made a good faith report of a violation of law to an appropriate law enforcement authority and,
as a consequence, determining that it had subject-matter jurisdiction over Smith’s claims. Because we
conclude that Smith failed to make a report of a violation of law to an “appropriate law enforcement
authority” as required to waive the University’s governmental immunity, we reverse the order
denying the plea to the jurisdiction and dismiss the suit for lack of subject-matter jurisdiction.
BACKGROUND
Smith was formerly employed by the University as Director of Finance for the
University Interscholastic League (UIL). In 2012, the University’s Office of Internal Audits (Internal
Audits) began an investigation into allegations made against the UIL. Smith was asked to meet with
auditors from Internal Audits. Smith told the auditors that: (1) the UIL’s Executive Director had,
in an effort to bolster a UIL vendor’s application for a home loan, committed bank fraud by falsely
representing to a mortgage lender that the wife of a UIL vendor would be working as a contract
employee for the UIL; (2) the UIL had made unauthorized transfers of funds to the University’s
Division of Diversity and Community Engagement in violation of Texas Government Code section
771.004; (3) a UIL deputy director sexually harassed a UIL employee; (4) the same UIL deputy
director used a vehicle identified as belonging to the Bridge City Independent School District while
employed by the UIL; (5) the same deputy director sought to have Smith alter a government
document in connection with an open records request; (6) the UIL employed actionable hiring and
employment practices; and (7) the UIL failed to comply with laws governing its procurement of
goods and services. Smith later met with University attorneys from the Office of the Vice President
for Legal Affairs (Legal Affairs) and confirmed her earlier statements about the use of a Bridge City
ISD vehicle and the transfer of funds between the UIL and the Division of Diversity and Community
Engagement. According to Smith, after providing this information and cooperating with the
auditors, she was subjected to a series of adverse employment actions culminating in the termination
of her employment.
Thereafter, Smith filed suit alleging that the adverse employment actions, including
the termination of her employment, were in violation of the Act. Smith claimed that the adverse
employment actions were the direct result of her providing information to auditors from Internal
Audits and to attorneys from Legal Affairs. In response, the University filed a plea to the jurisdiction
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in which it asserted that the court lacked subject-matter jurisdiction over Smith’s suit because she
had failed to comply with the requirements for bringing a claim under the Act. Specifically, the
University contended that Smith did not report a violation of law by UIL or its employees to an
appropriate law enforcement authority. See id. § 554.002(b) (defining when report is made to
“appropriate law enforcement authority” under Act). After a hearing, the trial court denied the
University’s plea to the jurisdiction. The University then perfected this interlocutory appeal. See
Tex. Civ. Prac. & Rem. Code § 51.014(a)(8) (allowing party to pursue interlocutory appeal of
trial court’s ruling denying plea to jurisdiction filed by governmental unit).
STANDARD OF REVIEW AND STATUTORY FRAMEWORK
A plea to the jurisdiction is a dilatory plea that seeks dismissal of a case for lack of
subject-matter jurisdiction. Harris Cnty. v. Sykes, 136 S.W.3d 635, 638 (Tex. 2004). Subject-matter
jurisdiction presents a question of law that appellate courts review de novo. City of Houston v. Rhule,
417 S.W.3d 440, 442 (Tex. 2013). The plaintiff has the burden of alleging facts that affirmatively
demonstrate the trial court’s jurisdiction. Texas Dep’t of Parks & Wildlife v. Miranda, 133 S.W.3d
217, 226 (Tex. 2004). When subject-matter jurisdiction is premised on a cause of action under
the Act, the plaintiff must allege facts which, if true, would establish a violation of the Act. See
State v. Lueck, 290 S.W.3d 876, 880-81 (Tex. 2009). We begin with the allegations in Smith’s live
pleadings, which we construe liberally in favor of jurisdiction and, unless challenged with evidence,
take as true. See Miranda, 133 S.W.3d at 226-27. We also consider any evidence relevant to the
jurisdictional inquiry. See City of Elsa v. Gonzalez, 325 S.W.3d 622, 625 (Tex. 2010); Bland Indep.
Sch. Dist. v. Blue, 34 S.W.3d 547, 555 (Tex. 2000). When, as here, the jurisdictional issues and facts
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implicate the merits, the defendant is “put to a burden very similar to that of a movant for summary
judgment.” See University of Tex. v. Poindexter, 306 S.W.3d 798, 806-07 (Tex. App.—Austin 2009,
no pet.). Consequently, only conclusive contrary evidence suffices to negate the existence of any of
the jurisdictional facts Smith has pleaded. If the record raises a fact question that requires addressing
the merits of the case in order to resolve jurisdiction, then the case may proceed. Miranda, 133 S.W.3d
at 227-28. However, if the relevant evidence is undisputed or fails to raise a fact question, the court
rules on jurisdiction as a matter of law. Id.
Section 554.0035 of the Act waives sovereign immunity when a public employee
alleges a violation of the Act. See Tex. Gov’t Code § 554.0035. A violation of the Act 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.” Lueck, 290 S.W.3d at 878 (citing
Tex. Gov’t Code § 554.002(a)). Thus, to qualify for the Act’s waiver of immunity, Smith must have
pleaded facts which, if true, establish a violation of section 554.002. To do so, Smith must have
alleged the following elements: (1) she was a public employee; (2) she made a good faith report of
a violation of law by her employing governmental entity or another public employer; (3) she made
the report to an appropriate law enforcement authority; and (4) she suffered retaliation as a result of
making the report. See Tex. Gov’t Code § 554.002(a).
DISCUSSION
The University’s plea to the jurisdiction did not contest that Smith was a public
employee, that she made a good faith report of a violation of law by her employing governmental
entity, or that she suffered retaliation as a result of making the report. The gravamen of its plea to
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the jurisdiction is its assertion that Smith did not meet her burden as to the third element of her
Whistleblower cause of action, i.e., that she made her report to an “appropriate law enforcement
authority,” as that term is defined in the Act.
The Act provides that a report is made to an “appropriate law enforcement
authority . . . if the authority is part of a state or local government entity or the federal government
that the employee in good faith believes is authorized to: (1) regulate under or enforce the law
alleged to be violated in the report; or (2) investigate or prosecute a violation of criminal law.”
Id. § 554.002(b). “[A]n appropriate law-enforcement authority must be actually responsible for
regulating under or enforcing the law allegedly violated. It is not simply an entity responsible for
ensuring internal compliance with the law allegedly violated.” University of Tex. Sw. Med. Ctr. v.
Gentilello, 398 S.W.3d 680, 685 (Tex. 2013). The Act does not protect reports made to supervisors
with power only to oversee internal compliance within an entity. See Texas Dep’t of Human Servs.
v. Okoli, 440 S.W.3d 611, 615-16 (Tex. 2014). Such reports are not protected even if the supervisors
are obligated to forward complaints to another department that does have outward-looking authority
to regulate under or enforce the law alleged to be violated or to investigate or prosecute criminal
violations against third parties. Id.
To satisfy the requirement that a report be made to an “appropriate law enforcement
authority,” a plaintiff seeking protection under the Act must prove either that the report was made
to an appropriate law enforcement authority or that the employee had a good-faith belief that it was.
Id. at 614. “An employee’s belief is in good faith if: (1) the employee believed the governmental
entity qualified, and (2) the employee’s belief was reasonable in light of the employee’s training and
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experience.” Id. (citing Texas Dep’t of Transp. v. Needham, 82 S.W.3d 314, 321 (Tex. 2002)). The
“second element is an objective one,” and the employee only receives protection under the Act “if
a reasonably prudent employee in similar circumstances would have believed the governmental
entity to which he reported a violation of law was an appropriate law-enforcement authority.” Id.;
see also Texas Comm’n on Envtl. Quality v. Resendez, 450 S.W.3d 520, 522 (Tex. 2014) ( explaining
that claimant must satisfy both subjective and objective requirements); Gentilello, 398 S.W.3d at
689 (stating that Act “restricts ‘law-enforcement authority’ to its commonly understood meaning”).
The good-faith inquiry “turns on more than an employee’s personal belief, however strongly felt
or sincerely held.” Gentilello, 398 S.W.3d at 683 (citing Needham, 82 S.W.3d at 321 (emphasis
in original)).
Did Smith Report to an Appropriate Law Enforcement Authority?
In her live pleadings, Smith alleged that she made reports of the alleged violations
of law to Internal Audits and Legal Affairs, but she does not allege specific facts that meet her
burden of demonstrating that she had a good faith belief that either Internal Audits or Legal Affairs
were “appropriate law enforcement authorities.” See City of Elsa, 325 SW.3d at 625 (conclusory
pleadings do not provide sufficient jurisdictional facts to determine if trial court had jurisdiction).
We look, then, to any evidence that would support this required jurisdictional fact. See id. (considering
whether there was evidence that would establish existence of required jurisdictional facts). Smith’s
response to the University’s plea to the jurisdiction referred the trial court to her deposition
testimony. In that testimony, Smith acknowledged that she knew that the function of Internal Audits
was limited to internal compliance issues. Smith testified to the following:
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Q: What was [Internal Affairs’] function at U.T.—Austin?
A: It’s to ensure that U.T. departments were complying with The University of
Texas at Austin, U.T. System, and the law, any other law applicable, to
ensure that they were in compliance with those laws—and to take actions if
the law—law regulations were not in compliance.
Q: What type of action do you believe [Internal Audits] could take?
A: I believe that they could terminate employment. It’s one of them. I believe
that if the violation was applicable, they would—move forward to other
enforcement agencies, and I believe that they had the authority to enforce.
Smith further testified that she believed that Internal Audits could ensure only that University
employees, and “not outsiders,” were in compliance with applicable rules, regulations, and laws.
Smith also stated that she believed Internal Audits “made the law for U.T., and if the law goes
beyond the U.T. boundaries, they would take actions” by which she meant that they would report
violations of the law to “other government agents, the law enforcement agents.”
In response to interrogatories propounded by the University regarding her report of
bank fraud to Internal Audits, Smith stated that she believed that Internal Audits “could investigate
violations of the [] law, with corresponding duties to forward the fruits of such investigation
to proper prosecutorial authorities.” In her deposition testimony, Smith confirmed her belief that
Internal Audits was limited to investigating issues related to the University and that it did not have
the authority to interfere with the activities of other State agencies. She testified that, although she
did not know whether Internal Audits had the authority to prosecute anyone for bank fraud, she
believed that if it discovered such conduct it would “move forward” and report it to other authorities.
With respect to the transfers of money between agencies she alleged to be in violation of the
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Government Code, Smith’s interrogatory responses stated that she believed that Internal Audits and
Legal Affairs were authorized to “regulate under and enforce against violations of Government Code
Section 771.004 by U.T. employees,” investigate any such violations and “pass the fruits of such
investigation to appropriate prosecutorial authorities.” Smith’s deposition testimony was consistent
with her interrogatory response. Smith also testified that the basis for her belief that Legal Affairs
was a law enforcement authority was simply that they were the University’s lawyers and because
Internal Audits asked Legal Affairs to participate in the investigation.
Even if Smith’s testimony were sufficient to meet the subjective component of her
required good faith belief that either Internal Audits or Legal Affairs was an “appropriate law
enforcement authority,” we must also consider whether such a belief is reasonable given Smith’s
training and experience. See, e.g., Gentilello, 398 S.W.3d at 683 (even if employee “honestly
believed” she reported to appropriate authority, belief can only satisfy good faith requirement “if
a reasonably prudent employee in similar circumstances” would have thought so). In Gentilello,
the Texas Supreme Court explained what constitutes an appropriate law enforcement authority
under the Act:
The upshot of our prior decisions is that for an entity to constitute an appropriate law-
enforcement authority under the Act, it must have authority to enforce, investigate,
or prosecute violations of law against third parties outside of the entity itself, or it
must have authority to promulgate regulations governing the conduct of such third
parties. Authority of the entity to enforce legal requirements or regulate conduct
within the entity itself is insufficient to confer law-enforcement status. Indeed,
holding otherwise would transform every governmental entity that is subject to any
regulation or that conducts internal investigations or imposes internal discipline into
law enforcement authorities under the Act. Such a result would collide head-on with
the Act’s limited definition and our cases interpreting that definition.
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Id. at 686; see also Okoli, 440 S.W.3d at 616 (reaffirming that internal report of wrongdoing does not
trigger Act’s protection unless it is made directly to authority with outward-looking law enforcement
power). In Gentilello the court emphasized that the Act’s restrictive definition of “appropriate law
enforcement authority” is “tightly drawn” and centers on law enforcement, not law compliance. See
Gentilello, 398 S.W.3d at 689; see also Texas A & M Univ.–Kingsville v. Moreno, 399 S.W.3d 128,
130 (Tex. 2013). Correspondingly, “a whistleblower cannot reasonably believe his supervisor is
an appropriate law-enforcement authority if the supervisor’s power extends no further than ensuring
the governmental body itself complies with the law.” See Gentilello, 398 S.W.3d at 689 (emphasis
in original).
The record fails to demonstrate that either Internal Audits or Legal Affairs possessed
the requisite outward-looking authority to constitute an “appropriate law enforcement authority”
under the Act, and Smith acknowledged as much in her deposition. Instead, she testified that she
believed that Internal Audits and Legal Affairs could forward her report to the authorities that could
prosecute or enforce the alleged violations. But even when an agency’s policy is to forward reports
to the agency’s enforcement arm, “reports up a chain of command” are not sufficient under the Act.
See Resendez, 450 S.W.3d at 522 (citing Okoli, 440 S.W.3d at 614 (collecting cases)). “When an
employee reports wrongdoing internally with the knowledge that the report will have to be forwarded
elsewhere . . ., then the employee is not reporting ‘to an appropriate law enforcement authority.’”
Okoli, 440 S.W.3d at 615 (emphasis in original). “Although such a policy permits employees to
reasonably believe reports will be sent to an appropriate law-enforcement authority, it provides no
reason to believe the reported-to supervisors are appropriate authorities.” Office of the Att’y Gen.
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v. Weatherspoon, ___ S.W.3d ___, No. 14-0582, 2015 WL 5458683, at *2 (Tex. Sept. 18, 2015)
(emphasis in original). We do not believe that a reasonable employee in circumstances similar to
Smith’s would have believed that Internal Audits or Legal Affairs was an appropriate law
enforcement authority. See Gentilello, 398 S.W.3d at 682 (noting Act’s requirement that report
be made to one with “free-standing regulatory, enforcement, or crime-fighting authority”).
On appeal, Smith relies principally on her argument that because Internal Audits and
Legal Affairs are part of the University of Texas System, and because the University of Texas
System also has as one of its components the University of Texas Police Department, Internal
Audits and Legal Affairs are “part of a state or local governmental entity” authorized to investigate
or prosecute a violation of criminal law. See Tex. Gov’t Code § 554.002(b)(2) (“appropriate law
enforcement authority” includes authority that is part of state or local governmental entity that
employee in good faith believes is authorized to investigate or prosecute violation of criminal
law). The supreme court has recently rejected a similar argument made by the employee in Office
of the Attorney General v. Weatherspoon. 2015 WL 5458683, at *3. In Weatherspoon, Ginger
Weatherspoon, who worked as an assistant attorney general in the Child Support Division of the
Office of the Attorney General, claimed to have had her employment terminated as a result of her
reporting alleged violations of criminal law by two senior attorneys to her managing attorney, to the
Child Support Director and the Deputy Director of Child Support, and to an attorney in the Open
Records Department. See id. at *1. Weatherspoon argued that because the Office of the Attorney
General has an Ethics Advisor, a Criminal Investigation Division, and statutory authority to
prosecute certain crimes, the Office of the Attorney General had the requisite outward-looking
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authority such that her reports were made to an “appropriate law enforcement authority.” Id. at *3.
The supreme court held that this argument failed because “the authority of some OAG divisions
to investigate or prosecute crime does not transform the entire OAG into an appropriate law-
enforcement authority.” Id. The court stated that: “An entire agency does not become an appropriate
law-enforcement authority merely because some divisions have such power.” Id. Guided by this
supreme court precedent, we conclude that the existence of the University of Texas Police
Department within the University of Texas System does not make Internal Audits or Legal Affairs
“appropriate law enforcement authorities” under the Act.
CONCLUSION
Because Smith cannot establish that her actions satisfy the Act’s requirement that
she have made a report to an “appropriate law enforcement authority,” as that term is defined in
the Act, the University remains immune from this suit. Accordingly, we reverse the trial court’s
order denying the University’s plea to the jurisdiction, grant the plea, and dismiss Smith’s suit for
lack of subject-matter jurisdiction.
_____________________________________________
Scott K. Field, Justice
Before Justices Puryear, Pemberton, and Field
Reversed and Dismissed
Filed: November 25, 2015
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