Rosaena Resendez v. Texas Commission on Environmental Quality ( 2012 )

TEXAS COURT OF APPEALS, THIRD DISTRICT, AT AUSTIN
NO. 03-11-00244-CV
Rosaena Resendez, Appellant
v.
Texas Commission on Environmental Quality, Appellee
FROM THE DISTRICT COURT OF TRAVIS COUNTY, 261ST JUDICIAL DISTRICT
NO. D-1-GN-10-04081, HONORABLE AMY CLARK MEACHUM, JUDGE PRESIDING
OPINION
Appellant Rosaena Resendez appeals from the trial court’s order dismissing her suit
against her former employer, the Texas Commission on Environmental Quality (the “Commission”),
for damages under the Texas Whistleblower Act. See Tex. Gov’t. Code Ann. §§ 554.001–.009
(West 2012). The Commission filed a plea to the jurisdiction, arguing that sovereign immunity had
not been waived because Resendez failed to allege a valid whistleblower claim. The trial court
granted the plea to the jurisdiction and dismissed Resendez’s suit. On appeal, Resendez claims that
the trial court erred in granting the plea to the jurisdiction because her petition sufficiently alleges
a valid cause of action. We reverse the trial court’s order granting the Commission’s plea to the
jurisdiction and remand this case for further proceedings.
BACKGROUND
Resendez worked as an employee for the State of Texas for over thirty-four years.1
Prior to the events of this case, Resendez had no history of incidents or conflicts during her tenure
as a state employee. As of October of 2009, Resendez worked for the Commission as a
Texas Emissions Reduction Plan (“TERP”) Usage Monitor. TERP is a state program administered
by the Commission which provides grants and rebates to Texas residents as an incentive to replace
certain automobiles with lower emission vehicles. See generally Tex. Health & Safety Code Ann.
§§ 386.001–386.252 (West Supp. 2012). Between 2001 and 2008, the Commission awarded over
$700 million in TERP grants and rebates.
In 2010, the Texas State Auditor released an audit report concerning the
Commission’s administration of the TERP program (the “TERP audit report”). The purpose of the
audit was to determine, among other things, “whether internal controls for TERP grant programs at
the Commission provide assurance that the programs comply with state law . . . .” Based on this
audit, which reviewed the Commission’s “selection, monitoring, and enforcement activities” from
fiscal year 2006 through fiscal year 2010, the state auditor concluded that the Commission needed
to strengthen its review of the information applicants have provided in order to better ensure that
applicants were in fact eligible to receive TERP funds.
Specifically, the TERP audit report recommends that the Commission ensure that
the social security numbers provided by applicants are “valid and match the applicant’s name.” The
audit report states that the Commission submitted applicants’ social security numbers to the
1
The facts recited herein are taken from Resendez’s original petition and evidence that was
before the trial court when it ruled on the Commission’s plea to the jurisdiction.
2
Texas Comptroller of Public Accounts “so that the Comptroller’s Office can identify whether the
applicants have outstanding debt or tax liabilities,” but otherwise did not appear to verify the
applicants’ information. Based on a limited review, the TERP audit identified two applicants whose
social security numbers belonged to people who were deceased. The Commission ultimately agreed
with some of the TERP audit report’s recommendations, and the Commission stated that by the
Spring of 2011, it would purchase a copy of the “Social Security Administration’s Death Master
File” so that it could verify whether applicants were using deceased persons’ social security numbers.
The Commission also pledged to begin requiring applicants to submit photocopies of their state or
federal identification documents.
In October of 2009, prior to the release of the TERP audit report, Resendez was
assigned to investigate the whereabouts of a truck that was purchased with TERP funds. Resendez
learned that the owner of the truck was a non-citizen who had been deported to Mexico. Based on
her investigation, Resendez reported to Steve Dayton, the team leader in charge of the “Grant
Development Team,” that “individuals illegally in the United States were receiving TERP money.”
Resendez believed that these applicants were committing an illegal act by defrauding the state
government, and she offered to investigate what procedures could be implemented to prevent this
fraud in the future. Dayton explained that the Commission was “under a lot of pressure” to quickly
review and approve TERP applications and that it “would be too expensive and time consuming to
verify an applicant’s social security number.”
The following day, Joe Walton, the Commission’s “Implementation Grants
Section Manager,” visited Resendez in her office to discuss her concerns. Resendez again stated that
certain TERP applicants were defrauding the state, but Walton told her to “drop it.” Four days later,
3
Walton performed a formal “write-up” of Resendez, at which time he admonished her both orally
and in writing that she was being “disruptive in the workplace.” The written “Employee Conference
Record” states that Resendez was being “argumentative with [Dayton] by making allegations that
the TERP program issues grants to illegal aliens,” that she became argumentative with Walton
during their meeting the next day, and that she threatened to “contact the Legislators, INS, and EPA
about the TERP program.” Finally, the written admonishment instructed Resendez that:
(1) As a TERP usage monitor you should continue to perform your
job duties including alerting your supervisor when a grantee may be
in non-compliance with a grant. If you have a reasonable basis to
believe that a law has been violated, you need to report it to
management.
(2) Conduct yourself professionally and refrain from engaging in
gossip, rumors or other conduct that is disruptive to your manager and
coworkers.
According to Resendez, over the next three months, her supervisors continued to find other false
reasons to discipline her. In February of 2010, Resendez was placed on employment “probation”
which was scheduled to end August 10, 2010.
On July 23, 2010, Resendez spoke with David Brymer, the director of the
Commission’s Air Quality Division. Resendez told Brymer about her prior conversations with
Dayton and Walton in which she “reported to them the fraudulent activity.” Brymer “cut [her]
off and said ‘this is not the time or place to talk about that.’” A week after this meeting, Resendez
sent Brymer a letter in which she again reported her conversations with Dayton and Walton. On
July 29, 2010, Resendez told State Senator Juan Hinojosa’s office that she had “reported that people
illegally in the country were receiving TERP funds to [Commission] supervisors.”
4
On August 4, 2010, less than a week after she had contacted Senator Hinojosa’s
office, Resendez was issued a notice of termination. After her grievance was denied, Resendez filed
this underlying lawsuit, in which she alleges that her termination violated the Texas Whistleblower
Act. See Tex. Gov’t Code Ann. §§ 554.001–.009. Specifically, Resendez asserts in her original
petition that she made a good faith report that her employer or another public employee violated the
law, she made the report to an appropriate law-enforcement authority, and as a result of her report,
the Commission terminated her employment. See id. § 554.002.
In response to Resendez’s petition, the Commission filed a plea to the jurisdiction,
claiming that Resendez failed to sufficiently plead a valid whistleblower claim. In response to the
Commission’s plea, Resendez reasserted the facts outlined in her petition and argued that they
constituted a valid whistleblower claim. Attached to Resendez’s response were copies of (1) the
TERP audit report (2) Walton’s write-up of Resendez, and (3) Resendez’s sworn affidavits. In
these affidavits, Resendez states that she believed that “individuals receiving TERP funds were
committing an illegal act by defrauding the state government out of taxpayer funds” and that she
believed that Dayton and Walton “could put a stop to the illegal activity by investigating and
reporting the fraud.” She also states that:
At the time I made all these reports to all three of my supervisors and
Senator Hinojosa, I believed that it was illegal for state employees
not to report, and to not prevent, fraud being undertaken on the
state government by individuals fraudulently securing TERP funds.
I also believed that my supervisors and a State Senator had the
authority to investigate these violations of the law.
Following a hearing and additional briefing by the parties, the trial court sustained the Commission’s
plea to the jurisdiction and dismissed Resendez’s case. This appeal followed.
5
STANDARD OF REVIEW
Whether a court has subject-matter jurisdiction is a question of law which we review
de novo. Texas Dep’t of Parks & Wildlife v. Miranda, 133 S.W.3d 217, 226 (Tex. 2004). The
plaintiff has the burden of alleging facts that affirmatively demonstrate the trial court’s jurisdiction.
Id. When subject-matter jurisdiction is premised on a cause of action under the whistleblower act,
the plaintiff must allege facts which, if true, would establish a violation of that act. State of Tex.
v. Lueck, 290 S.W.3d 876, 880–81 (Tex. 2009). When a plea to the jurisdiction challenges the
pleadings, we construe the pleadings liberally in favor of the plaintiff, and unless challenged with
evidence, we accept all allegations as true. Miranda, 133 S.W.3d at 226–27. If the pleadings do not
affirmatively demonstrate an incurable defect in jurisdiction, then the plaintiff should have the
opportunity to amend before the plea can be granted. Id.; Harris County v. Sykes, 136 S.W.3d 635,
639 (Tex. 2004). If the pleadings affirmatively negate jurisdiction, the trial court may promptly grant
the plea without allowing time to amend. Miranda, 133 S.W.3d at 227.
However, “a court deciding a plea to the jurisdiction is not required to look solely to
the pleadings but may consider evidence and must do so when necessary to resolve the jurisdictional
issues raised.” Bland Indep. Sch. Dist. v. Blue, 34 S.W.3d 547, 555 (Tex. 2000). We do so because
courts are required to determine if they have subject-matter jurisdiction at the earliest possible
moment. Miranda, 133 S.W.3d at 226. Where, as here, the jurisdictional issues and accompanying
evidence implicate the merits of the case, 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.). 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
6
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.
DISCUSSION
We take great care in addressing issues of a public whistleblower suit. As this
Court has noted:
The State of Texas elevates public employees who report legal
wrongdoing to a protected status as a matter of fundamental policy.
The State views whistleblowing by a public employee as a
courageous act of loyalty to the larger community, and we allow
whistleblowing public employees to be made whole through lawsuits
against the State.
Texas Dep’t of Assistive & Rehabilitative Servs. v. Howard, 182 S.W.3d 393, 399
(Tex. App.—Austin 2005, pet. denied). The whistleblower act is “designed to enhance openness
in government and compel the State’s compliance with law by protecting those who inform
authorities of wrongdoing.” Id. (citing City of New Braunfels v. Allen, 132 S.W.3d 157, 161
(Tex. App.—Austin 2004, no pet.)). Because the whistleblower act is remedial in nature, we
construe its provisions liberally in order to effectuate its purpose. Texas Dep’t of Criminal Justice
v. McElyea, 239 S.W.3d 842, 849 (Tex. App.—Austin 2007, pet. denied) (citing University of
Houston v. Barth, 178 S.W.3d 157, 162 (Tex. App.—Houston [1st Dist.] 2005, no pet.)).
In her sole issue on appeal, Resendez argues that the trial court erred in granting the
Commission’s plea to the jurisdiction. Specifically, Resendez asserts that she pleaded a valid claim
under the Texas Whistleblower Act, and therefore her suit falls within the act’s waiver of sovereign
immunity. See Tex. Gov’t Code Ann. §§ 554.002, .0035. Generally, sovereign immunity protects
7
the state and its various divisions, such as the Commission, from suit and liability. Travis Cent.
Appraisal Dist. v. Norman, 342 S.W.3d 54, 57–58 (Tex. 2011). “The waiver of [sovereign]
immunity is a matter addressed to the Legislature,” which courts may not disturb. Guillory v. Port
of Houston Auth., 845 S.W.2d 812, 813–14 (Tex. 1993) (quoting Lowe v. Texas Tech Univ.,
540 S.W.2d 297, 298 (Tex. 1976)). Without such a waiver, sovereign immunity deprives a court of
subject-matter jurisdiction. Miranda, 133 S.W.3d at 224.
In keeping with its purpose of protecting public employees who speak out against
unlawful conduct, section 554.0035 of the whistleblower act waives sovereign immunity “to
the extent of liability for the relief allowed under this chapter for a violation of this chapter.” See
Tex. Gov’t Code Ann. § 554.035. The supreme court has interpreted this to be “a limited waiver of
immunity that allows consideration of the section 554.002(a) elements, to the extent necessary in
determining whether the claim falls within the jurisdictional confines of section 554.0035.” Lueck,
290 S.W.3d at 883. Thus, in order to qualify for section 554.0035’s limited waiver of immunity,
Resendez must plead facts which, if true, establish a violation of section 554.002 of the
whistleblower act. See id. To establish a violation of section 554.002, Resendez must allege 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 employee; (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 Ann. § 554.002(a); Dallas Cnty. v. Logan, 359 S.W.3d 367, 370
(Tex. App.—Dallas 2012, pet. filed).
The supreme court has emphasized that “[a]lthough the section 554.002(a) elements
must be included within the pleadings . . . the [employee’s] burden of proof with respect to these
8
jurisdictional facts ‘does not involve a significant inquiry into the substance of the claims.’” Lueck,
290 S.W.3d at 884 (quoting Bland Indep. Sch. Dist., 34 S.W.3d at 554). “‘[I]f a plea to the
jurisdiction requires the trial court to wade deeply into the lawsuit’s merits, it is not a valid plea.’”
Id. (quoting Miranda, 133 S.W.3d at 235 (Jefferson, C.J., dissenting)). In reviewing a plea to the
jurisdiction, courts consider the plaintiff’s pleadings and factual assertions, as well as any evidence
in the record that is relevant to the jurisdictional issue. City of Elsa v. Gonzalez, 325 S.W.3d 622,
625 (Tex. 2010). Furthermore, courts indulge every reasonable inference in favor of the non-movant
and resolve any doubts in her favor. See Miranda, 133 S.W.3d at 228 (internal citations omitted).
If the jurisdictional facts implicate the merits of the case and the evidence creates a “fact question
regarding the jurisdictional issue,” then the plea to the jurisdiction should be denied. Gonzalez,
325 S.W.3d at 625–26.
In this case, the Commission did not present any evidence or challenge the evidence
presented by Resendez. In addition, the Commission did not challenge any of the factual allegations
Resendez asserts in her original petition. Thus, we take Resendez’s allegations as true and treat the
evidence as undisputed. See id. Furthermore, the Commission does not dispute—and nothing in the
record contradicts—Resendez’s claim that she was a public employee and that she was terminated
because of the reports she made. Therefore, we conclude that the record at least raises a fact issue
about the first and fourth elements of Resendez’s whistleblower claim. See Logan, 359 S.W.3d
at 370. The Commission asserts that Resendez has failed to sufficiently show that (a) she made a
good faith report of violations of law by her employing governmental entity or another public
employee and (b) she made the report to an appropriate law-enforcement authority. See id.; see also
9
Tex. Gov’t Code Ann. § 554.002(a). We address whether Resendez has raised a fact issue about
these two elements of her whistleblower claim separately.
Violations of law by public employees
The second element of a whistleblower claim requires that an employee make a
good faith report of a violation of law by her employing governmental entity or another public
employee. See Tex. Gov’t Code Ann. § 554.002(a). At the time Resendez made the underlying
reports, she believed that public employees had a legal obligation to report and prevent fraud
being committed against the state.2 She reported to the head of her division, and ultimately to a
state senator, that Dayton and Walton had failed to report fraud being committed against the state.3
Thus, Resendez asserts that she created a fact issue with regard to this second element. We agree.
Good-faith belief of violation of law
In the context of a whistleblower claim, “good faith” has both a subjective and
objective component. See Texas Dep’t of Transp. v. Needham, 82 S.W.3d 314, 319 (Tex. 2002)
2
Although Resendez’s initial complaint states that she reported that “her employer . . .
violated the law,” none of the facts in her complaint nor her subsequent affidavits assert that she
believed the Commission itself was violating the law. Resendez’s conclusory statement in her
complaint does not provide sufficient jurisdictional facts. See Larsen v. Santa Fe Indep. Sch. Dist.,
296 S.W.3d 118, 131–32 (Tex. App.—Houston [14th Dist.] 2009, pet. denied). Thus, Resendez is
protected under the whistleblower act, if at all, because she reported violations of law by another
public employee.
3
Resendez’s reporting that TERP applicants were violating the law cannot form the basis
of valid whistleblower claim because TERP applicants are not public employees. See Tex. Gov’t
Code Ann. § 554.002(a) (West 2012); Saldivar v. Texas Dep’t of Assistive & Rehabilitative Servs.,
No. H-08-1820, 2009 U.S. Dist. LEXIS 94979, at *38–40 (S.D. Tex. Oct. 13, 2009) (concluding that
plaintiff failed to state claim under Texas Whistleblower Act when he reported that third-party
vendors were violating law). Thus, Resendez is protected under the whistleblower act, if at all,
because she reported that her supervisors were violating the law.
10
(citing Wichita Cnty. v. Hart, 917 S.W.2d 779, 784 (Tex. 1996)). “‘Good faith’ means that (1) the
employee believed that the conduct reported was a violation of law and (2) the employee’s belief
was reasonable in light of the employee’s training and experience.” Hart, 917 S.W.2d at 784. The
subjective component ensures that an employee seeking whistleblower protection actually
believed that she was reporting a violation of law. See Needham, 82 S.W.3d at 319. The objective
component ensures that an employee only receives protection “if a reasonably prudent employee in
similar circumstances would have believed that the facts as reported were a violation of law.” Id.
In this case, Resendez asserts that she had a good faith belief that her supervisors
were violating the law by failing to report fraud being committed by TERP applicants. In her
affidavit, Resendez states that “[a]t the time I made all of these reports . . . I believed that it was
illegal for state employees not to report, and to not prevent, fraud being undertaken on the
state government . . . .” The Commission did not challenge Resendez’s affidavit, and there is no
evidence in the record that contradicts Resendez’s assertion. Therefore, we conclude that Resendez
has satisfied the subjective component of good faith, because she did in fact believe that Dayton and
Walton were violating the law by failing to report fraud being committed against the state.
Next we consider whether Resendez’s belief was objectively reasonable given
her training and experience. See id. Resendez was instructed in her write-up that if she had any
evidence that fraud was being committed in the TERP program, she should report it to management.
This disciplinary admonishment could make an employee more likely to believe that public
employees generally have an obligation to report fraud being committed against the state. See Office
of the Attorney General v. Rodriguez, No. 08-11-00235-CV, 2012 Tex. App. LEXIS 7013, at *9–10
11
(Tex. App.—El Paso Aug. 22, 2012, no pet.) (noting that agency policy “mandates that any person
who received a report of fraud has a duty to refer the matter to” investigators).
Furthermore, Resendez’s affidavit states that Dayton and Walton had the authority
to “put a stop to the illegal activity by investigating and reporting the fraud.” This assertion is
corroborated by the TERP audit report, in which the Commission states that the team leader of the
grant development team, i.e., Dayton, is responsible for implementing procedures to confirm that
applicants are qualified to receive TERP funds. This indicates that Dayton had some authority over
the administration and monitoring of the TERP program, which could lead a reasonable employee
to believe that he had a legal duty to prevent fraud within the program.
Similarly, Resendez’s affidavit states that Walton is the Commission’s
implementation grants section manager and that he is on the TERP advisory board. The record
indicates that Walton exercised authority over the TERP program given that he told Resendez
to drop her complaints about fraud and then disciplined her for being “argumentative” with her
supervisors. These facts could make an employee more likely to believe that Dayton and Walton had
a legal obligation to report fraud occurring within the TERP program, given that they had seemingly
broad authority over its administration. See Tex. Gov’t Code Ann. § 321.022(a) (West 2005)
(requiring certain administrative heads to report fraud to state auditor); University of Tex. Sw. Med.
Ctr. v. Gentilello, 317 S.W.3d 865, 871 (Tex. App.—Houston [1st Dist.] 2010, pet. filed)
(concluding alleged whistleblower produced sufficient evidence that he had good-faith belief
supervisor was appropriate law-enforcement authority given that supervisor was required under
“Medicare/Medicaid rules and regulations” to investigate and prevent violations of federal law).
12
In its brief, the Commission argues that Resendez could not have reasonably believed
Dayton and Walton were violating the law by not reporting fraud because there is no statute that
requires them to make such a report. In her response to the plea to the jurisdiction, Resendez cites
to section 321.022(a) of the government code, which states:
If the administrative head of a department or entity that is subject to
audit by the state auditor has reasonable cause to believe that money
received from the state by the department or entity . . . may have been
lost, misappropriated, or misused, or that other fraudulent or unlawful
conduct has occurred in relation to the operation of the department or
entity, the administrative head shall report the reason and basis for
the belief to the state auditor. The state auditor may investigate the
report or may monitor any investigation conducted by the department
or entity.
Tex. Gov’t Code Ann. § 321.022(a). If an administrative head refuses to make such a report, he
has committed a Class A misdemeanor. See id. §§ 321.019(a)(3)–(b), .022(a) (West 2005). The
Commission asserts that “[a]s a long-time state employee, Ms. Resendez would certainly know
the difference between the administrative head of the entire [Commission], who is subject to
section 321.022(b) [sic], and her supervisors, who are not.” Thus, the Commission contends that
a reasonable employee in Resendez’s position would know that section 321.022 did not impose a
legal duty on Dayton and Walton to report potential fraud.
There is no requirement that an employee identify a specific law when making her
report. McElyea, 239 S.W.3d at 850. Nor does the employee need to prove that the complained-of
conduct is in fact a violation of law. Id. However, there must be some actual law which prohibits
the complained-of conduct. Id. Violations of internal agency policy not promulgated pursuant to
a statute or ordinance are not considered violations of the law under the whistleblower act. See
13
Harris Cnty. Precinct Four Constable Dep’t v. Grabowski, 922 S.W.2d 954, 956 (Tex. 1996); Vela
v. City of Houston, 186 S.W.3d 49, 53 (Tex. App.—Houston [1st Dist.] 2005, no pet.). Thus, an
employee must report what she in good faith believes to be conduct that violates some actual law,
rule, or regulation. “In other words, when an employee believes and reports in good faith that a
violation has occurred, but is wrong about the legal effect of the facts, he is nevertheless protected
by the whistleblower statute.” McElyea, 239 S.W.3d at 850 (internal citations omitted).
In this case, the record does not indicate exactly what authority Dayton and Walton
possess or where their positions fall within the hierarchy of the Commission. Furthermore, the terms
“administrative head” and “entity” are not defined in chapter 321 of the government code, and there
is nothing in the record to suggest that those terms have some specific definition within the
Commission. Thus, it is not clear if Dayton and Walton are in fact administrative heads of an
entity that is subject to audit by the state auditor. See Tex. Gov’t Code Ann. § 321.022. However,
Resendez is not required to prove that what she reported was in fact a violation of law or that Dayton
and Walton are in fact administrative heads of a qualifying entity. Rather, Resendez must show that
a law exists that prohibited the complained-of conduct and that she had a good faith belief that the
law was violated.
The TERP program was subject to audit by the state auditor. As previously discussed,
the evidence indicates that Dayton and Walton exercised authority over the administration of TERP.
In addition, Resendez’s admonishment to report illegal activities to management could make
an employee more likely to believe that management, i.e., Dayton and Walton, had some authority
to monitor, prevent, and report fraud. See Rodriguez, 2012 Tex. App. LEXIS 7013, at *9–10. This
evidence could support a finding that Resendez reasonably believed that Dayton and Walton
14
were administrative heads who had a legal duty to report fraud under section 321.022 of the
government code.
Furthermore, the undisputed evidence establishes that Resendez told Dayton and
Walton about potential fraud being committed against the state. In response, Dayton told Resendez
that he did not have the time or resources to address the issue, and Walton simply told her
to“drop it.” This could support a finding that Resendez reasonably believed that her supervisors had
“reasonable cause” to believe fraud was being committed, that they had a duty to report potential
fraud, and that they refused to do so. See Tex. Gov’t Code Ann. §§ 321.019, .022. These facts,
if true, would constitute a violation of section 321.022 of the government code. See McElyea,
239 S.W.3d at 850. Therefore, we conclude that there is a fact question about whether Resendez had
a good-faith belief that Dayton and Walton were violating the law.
Reporting the violation of law
In its plea to the jurisdiction, and again on appeal, the Commission asserts that even
if Resendez had a good-faith belief that Dayton and Walton were violating the law, the record does
not indicate that she reported that violation to anyone. The Commission claims that Resendez only
alleged that she reported that TERP applicants were committing fraud, not that her supervisors were
violating the law by failing to report fraud. Thus, the Commission asserts that Resendez has failed
to state a valid whistleblower claim because she did not report a violation of law by a public
employee. See Tex. Gov’t Code Ann. § 554.002(a).
For purposes of the whistleblower act, a “report” includes “any disclosure of
information tending to directly or circumstantially prove the substances of a violation of criminal or
civil law, . . . statutes, administrative rules or regulations.” Howard, 182 S.W.3d at 399–400
15
(internal quotations omitted). There are no magic words or specific phrasing that an employee
must use when making a whistleblower report. Id. The employee need not specify what law is being
violated at the time she makes the report. McElyea, 239 S.W.3d at 850. Nor does the employee have
to affirmatively state that the conduct is in fact a violation of the law. See Howard, 182 S.W.3d
at 400-01 (concluding that whistleblower report may be in form of query about whether conduct
is unlawful).
In this case, Resendez told Brymer about potential fraud being committed against
the TERP program. She also told Brymer that she had “prior conversations with Mr. Walton and
Mr. Dayton in which [she] reported to them the fraudulent activity.” It is reasonable to infer from
this affidavit that Resendez told Brymer (1) that her supervisors knew about the fraud and (2) they
had not done anything about it. See Miranda, 133 S.W.3d at 228 (noting that courts indulge every
reasonable inference in favor of non-moving party). This failure to report the alleged fraud is the
very conduct which Resendez believed in good-faith was illegal. Resendez was not required to
affirmatively tell Brymer that her supervisors’ failure to act constituted a violation of the law. See
Howard, 182 S.W.3d at 400-01. Nor was she required to cite to any specific statute. See McElyea,
239 S.W.3d at 850. Indulging every inference in Resendez’s favor, we conclude that her statements
to Brymer could tend to prove that Dayton and Walton unlawfully refused to report fraud being
committed against the state. See Tex. Gov’t Code Ann. § 321.022(a). Therefore, we conclude that
there is a fact question about whether Resendez reported a violation of law by other public
employees. See id. § 554.002(a).
16
Appropriate law-enforcement authority
The third element of a whistleblower claim requires an employee to make her report
to “an appropriate law enforcement authority.” See id. § 554.002(a)–(b). The statute defines an
appropriate law-enforcement authority as a “part of a state or local governmental entity . . . 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 governmental entity must be capable of more than internally disciplining “its own employees for
an alleged violation” or “forward[ing] information to another entity to prosecute.” Needham,
82 S.W.3d at 321. To qualify as an appropriate law-enforcement authority, the governmental entity
must be capable of regulating, enforcing, investigating, or prosecuting alleged violations.
An employee must make a report to a person who she in good faith believes is
an appropriate law-enforcement authority. See Tex. Gov’t Code Ann. § 554.002(b). As previously
discussed, in the context of a whistleblower claim, “good faith” has both a subjective and objective
component. See Needham, 82 S.W.3d at 320–21 (concluding that test for good-faith applicable to
employee’s belief that making report to appropriate law-enforcement authority is same as belief
that reporting violation of law). Thus, in order to defeat the Commission’s plea to the jurisdiction,
Resendez must raise a fact question about whether (1) she subjectively believed that the individual
she reported to had authority to regulate, enforce, investigate, or prosecute the alleged violation and
(2) that her belief was objectively reasonable. Id.
The supreme court has explained that the particular law that a whistleblower believes
was violated is critical to the determination of whether the whistleblower had a good-faith belief
that she was reporting the violation to an appropriate law-enforcement authority. Id. As previously
17
discussed, the “particular law” that is the basis of Resendez’s whistleblower claim is
section 321.022(a) of the government code. The relevant unlawful conduct that Resendez reported
was that Dayton and Walton knew about fraud being committed against the state but failed to report
it. Therefore, the remaining issue is whether Resendez had a good-faith belief that she was reporting
Dayton’s and Walton’s allegedly unlawful conduct to an appropriate law-enforcement authority.
Resendez reported Dayton’s and Walton’s failure to act to both Brymer and Senator Hinojosa’s
office. We will first consider whether Resendez had a good-faith belief that Brymer was an
appropriate law-enforcement authority.
As an initial matter, we consider whether, as a matter of law, Resendez could
not have had a good-faith belief that Brymer was an appropriate law-enforcement authority. In
Texas Department of Transportation v. Needham, and again in State v. Lueck, the supreme court held
that a supervisor’s authority to internally investigate and discipline its employees, standing alone,
is not sufficient to show that the supervisor is an appropriate law-enforcement authority. See Lueck,
290 S.W.3d at 885; Needham, 82 S.W.3d at 320. The Commission asserts that these cases
conclusively establish that Resendez could not in good faith believe that Brymer was an appropriate
law-enforcement authority because Brymer worked within the Commission and he only had authority
to internally monitor and discipline his employees.
However, several of our sister courts have held that Needham and Lueck do not stand
for the broad proposition that, as a matter of law, “an employer’s ability to require an employee to
comply with state law” cannot give rise to a good-faith belief that the employer is an appropriate
law-enforcement authority. Moreno v. Texas A&M Univ.-Kingsville, 339 S.W.3d 902, 912
(Tex. App.—Corpus Christi 2011, pet. filed); see also Rodriguez, 2012 Tex. App. LEXIS 7013
18
at *11–12; Gentilello, 317 S.W.3d at 869–70; Texas Dep’t of Human Servs. v. Okoli, 317 S.W.3d
800, 810–11 (Tex. App.—Houston [1st Dist.] 2010, pet. filed). As one court explained, “[t]he fact
that an employee makes a report of a violation of law to his employer or superior regarding the work
being performed by the governmental entity that employs him does not automatically render the
Whistleblower Act inapplicable.” Okoli, 317 S.W.3d at 810–11. The question remains whether,
under the facts of a particular case, an employee had a good-faith belief that making an internal
report of a violation of law was a report to an appropriate law-enforcement authority. See, e.g.,
Moreno, 339 S.W.3d at 912–13 (concluding evidence that supervisor had authority to enforce
compliance and employees were instructed to report noncompliance to supervisor could lead
employee to believe that supervisor was appropriate law-enforcement authority); Gentilello,
317 S.W.3d at 870 (noting that supervisor had duty to enforce rules and regulations at hospital even
though he “may not have had power to write the rules or assess fines”). We agree with our sister
courts that an employee may, under certain facts, state a valid whistleblower claim even though she
reported the violation of law to her employer or supervisor. We proceed to determine if Resendez
has created a fact question about whether she believed in good faith that Brymer was an appropriate
law-enforcement authority.
In her affidavit, Resendez states that she “believed that my supervisors and a
State Senator had the authority to investigate these violations of the law.” The Commission does
not dispute, and there is nothing in the record to contradict, Resendez’s claim that she believed
Brymer was an appropriate law-enforcement authority. Therefore, we conclude that Resendez has
satisfied the subjective component of good faith, because she in fact believed that she reported
Dayton and Walton’s unlawful conduct to an appropriate law-enforcement authority.
19
Next, we consider whether Resendez’s belief that she reported to an appropriate law-
enforcement authority was objectively reasonable. The evidence establishes that Brymer is the
director of the Commission’s Air Quality Division, and it is reasonable to infer that the TERP
program is administered from within the Air Quality Division.4 Thus, Brymer exercised some
authority over the administration and distribution of TERP funds, in that he was the head of the
division that oversaw their disbursement.
The facts in this case are very similar to those in Texas Department of Human
Services v. Okoli. See 317 S.W.3d at 803. In Okoli, a whistleblower who believed one of his
supervisors was fraudulently processing benefits reported the fraud first to his supervisor’s superior,
and then to that superior’s manager. Id. The whistleblower claimed that he reasonably believed that
his supervisors were appropriate law-enforcement authorities because “his work rules required
employees to make reports of fraudulent conduct to their supervisors.” Id. The court concluded that
there was a fact question about whether the whistleblower had a good-faith belief that his supervisors
were appropriate law-enforcement authorities. See id. at 809–10. The court noted that if a state
agency requires an employee to report criminal matters up the chain of command, and if the agency
“contemplates referral of criminal matters” within its internal policies, then the employee is entitled
to whistleblower protection based on his reporting unlawful conduct to his superiors. Id.
Similarly here, the record before us suggests that an employee in Resendez’s position
could have reasonably believed that Brymer was an appropriate law-enforcement authority to whom
4
Neither party expressly states nor denies that TERP was administered through the
Air Quality Division. However, Brymer approved of Resendez’s termination, indicating that he
exercised authority over the employment of TERP usage monitors. Furthermore, the TERP audit
report repeatedly emphasizes that the purpose of TERP is to improve air quality, which would
logically indicate that it would be a part of the Air Quality Division.
20
she could report Dayton’s and Walton’s alleged conduct. After Resendez told Walton that she
intended to inform “Legislators, the INS, and the EPA” about issues with the TERP program, Walton
admonished her that if she had any “reasonable basis to believe that a law has been violated, [she]
need[ed] to report it to management.” Obeying that instruction, Resendez reported her supervisors’
failure to address fraud to the next manager in the chain of command, i.e., Brymer. Thus, we
conclude that there is a fact question about whether Resendez reasonably believed that Brymer was
an appropriate law-enforcement authority.5 See id.; see also Moreno, 339 S.W.3d at 912–14 (noting
that employees were instructed to report illegal conduct to supervisors and thus fact question existed
about whether reasonable employee could believe supervisors were appropriate law-enforcement
authority); Gentilello, 317 S.W.3d at 870 (“While [supervisor] may not have had power to write the
rules or assess fines . . . he had both the power and duty to enforce those rules and regulations at [the
particular governmental entity].”).
The Commission asserts that if Resendez wanted to report her supervisors’ failure
to prevent fraud, she should have reported it to the state auditor, rather then to Brymer. The
Commission cites to this Court’s decision in Reninger v. Texas Building & Procurement
Commission, 259 S.W.3d 364, 368 (Tex. App.—Austin 2008, pet. denied), as precedent that a long-
term public employee should know that the state auditor is the appropriate agency to
report misapplication of state funds. However, Reninger is distinguishable from this case in
three significant respects.
5
Because we conclude that there is a fact question about whether Brymer was an appropriate
law-enforcement authority, we need not determine whether Senator Hinojosa was an appropriate
law-enforcement authority.
21
First, the employing agency in Reninger directed the whistleblower to section 404.094
of the government code, which specifically states that the state auditor “has the authority to
determine” whether the conduct alleged is unlawful. See id. (citing Tex. Gov’t Code Ann. § 404.094
(West 2005)). In this case, there is no indication that the Commission instructed Resendez or
any other employee to report issues of regulatory noncompliance to the state auditor. In fact, the
evidence suggests just the opposite; when Resendez threatened to report allegations to outside
agencies, she was admonished that any allegation of unlawful activity should be reported to
management within the Commission.
Second, section 321.022(a), the relevant statute in this case, requires certain
employees to report misappropriation of funds to the state auditor, but there is nothing in
section 321.022 that suggests that the state auditor has the authority to prosecute an employee for
noncompliance. Contrast Tex. Gov’t Code Ann. § 321.022(a) (imposing legal duty to report certain
conduct to state auditor), with § 404.094(a) (stating that state auditor is agency that determines
noncompliance). As previously stated, section 321.019 of the government code states that an
administrative head’s refusal to make a section 321.022 report constitutes a criminal offense. See
id. §§ 321.019(b) (making failure to report Class A misdemeanor), .022(a). The state auditor has
no authority to prosecute criminal offenses, and the most it could do is report a violation of
section 321.019 to another agency. Thus, on appeal, it is unclear whether the Commission properly
determined which governmental entity Resendez should have reported the alleged unlawful conduct
to in this case. See id. § 554.002(b).
Finally, the record in Reninger established that the whistleblower “had 31 years’
experience in the accounting field, including 19 years’ experience in government accounting . . . .”
22
259 S.W.3d at 368 (emphasis added). This particularized experience in governmental accounting
presumably made or should have made the employee in Reninger more aware of which state
agencies are responsible for oversight and regulation of state funds. See id. However, we do not
read Reninger to stand for the broad proposition that, as a matter of law, long-term state employees
should know that they should report all mismanagement of state funds to the state auditor. In this
case, there is nothing to indicate that Resendez had the kind of particularized experience of the
whistleblower in Reninger. Cf. id. The record does not indicate that Resendez has ever worked in
governmental accounting or inter-agency reporting of the type discussed in Reninger. Cf. id. Thus,
even assuming that the state auditor is in fact the governmental entity responsible for prosecuting
violations of section 321.022, we cannot conclude that as a matter of law, Resendez should have
known this.
CONCLUSION
Having determined that there is a fact question about each element of Resendez’s
whistleblower claim, we conclude that the trial court erred in granting the Commission’s plea to the
jurisdiction. See Lueck, 290 S.W.3d at 883. We therefore reverse the trial court’s judgment and
remand the cause to the trial court for further proceedings.
Diane M. Henson, Justice
Before Chief Justice Jones, Justices Pemberton and Henson;
Justice Pemberton Dissenting without Opinion
Reversed and Remanded
Filed: December 28, 2012
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