the University of Texas at San Antonio v. Cathy Wells ( 2011 )

MEMORANDUM OPINION
No. 04-10-00615-CV
THE UNIVERSITY OF TEXAS AT SAN ANTONIO,
Appellant
v.
Cathy WELLS,
Appellee
From the 407th Judicial District Court, Bexar County, Texas
Trial Court No. 2009-CI-10557
Honorable Janet P. Littlejohn, Judge Presiding
Opinion by: Karen Angelini, Justice
Sitting: Karen Angelini, Justice
Phylis J. Speedlin, Justice
Steven C. Hilbig, Justice
Delivered and Filed: February 9, 2011
REVERSED AND RENDERED
This is an appeal from the denial of a plea to the jurisdiction. In two issues, the
University of Texas at San Antonio (“UTSA”) argues that the trial court erred in denying its plea
to the jurisdiction because Cathy Wells did not plead and cannot show that (1) she made a good
faith report of a violation of law, and (2) she reported a violation of law to an appropriate law
enforcement agency as required by the Texas Whistleblower Act. See TEX. GOV’T CODE ANN.
§ 554.002(a) (West 2004). Because we agree that Wells did not report a violation of law to an
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appropriate law enforcement agency, we reverse the trial court’s order and render judgment that
Wells’s claims against UTSA be dismissed for lack of jurisdiction.
BACKGROUND
According to Cathy Wells’s petition, she was hired by UTSA to work in the Office of P-
20 Initiatives (“P-20”). Her responsibilities included ensuring the “integrity of expenditures and
personnel assignments in accordance with the legal requirements and contracts entered into” by
P-20. Wells alleged in her petition that in early 2009, she discovered what “she in good faith
believed to be illegal activities being carried out” by her supervisors. According to Wells, she
discovered that one of her supervisors “had knowingly processed financial documents expending
monies in an illegal manner” and that “invoices had been sent to and payment received from
participants of the CPS Distinguished Fellows Program in amounts that exceeded the agreed
contract amounts.”
Wells alleged that she reported these activities to Julee Otter, Manager of Compliance,
who is under the supervision of UTSA’s Director of Compliance in the Office of Audit
Compliance and Risk Services. She also reported these activities to Maria Perez, Management
Analyst in the Office of Compliance. According to her petition, she presented Otter and Perez
with “evidence of illegal activities occurring within UTSA and expressed concern that she was
being forced to make false and illegal reports to the government, exposing her to criminal
liability.” Wells’s petition alleged that she “reported the fraud in accordance with UTSA
policies, directives, and training.” According to her petition, Wells was told by Otter “that if the
fraud she suspected was in fact occurring, the Office of Compliance would report the fraud to the
police department. The Office of Compliance would conduct an internal investigation first,
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report to UTSA Administration, then notify Wells of [its] findings.” Wells also alleged that Otter
told her that she would be protected by the Whistleblower Act.
After Wells was fired, she brought this lawsuit against UTSA under the Texas
Whistleblower Act. In response, UTSA filed a plea to the jurisdiction, which the trial court
denied. UTSA then filed this interlocutory appeal.
DISCUSSION
Under the Texas Whistleblower Act, immunity is waived when a public employee alleges
a violation of chapter 554 of the Government Code. TEX. GOV’T CODE ANN. § 554.0035 (West
2004). The standard for a violation of chapter 554 appears in section 554.002(a), which states
that the governmental entity “may not suspend or terminate the employment of, or take other
adverse personnel action against, a public employee who in good faith reports a violation of law
by the employing governmental entity or another public employee to an appropriate law
enforcement authority.” Id. § 554.002(a). These elements under section 554.002(a) “are
jurisdictional when necessary to ascertain whether the plaintiff has adequately alleged a violation
of the chapter.” State v. Lueck, 290 S.W.3d 876, 884 (Tex. 2009). UTSA’s plea to the
jurisdiction argued that Wells had failed to plead that (1) she made a good faith report of a
violation of law, and (2) she reported a violation of law to an appropriate law enforcement
agency as required by the Texas Whistleblower Act.
“When a plea to the jurisdiction challenges the pleadings, we determine if the pleader has
alleged facts that affirmatively demonstrate the court’s jurisdiction to hear the case.” Id. “If the
pleadings affirmatively negate the existence of jurisdiction, then a plea to the jurisdiction may be
granted without allowing the plaintiffs an opportunity to amend.” Id. at 884-85. According to
UTSA, the uncontroverted allegations in Wells’s petition affirmatively negate jurisdiction.
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In her petition, Wells alleged that she reported fraudulent activities to UTSA’s Office of
Audit Compliance and Risk Services. UTSA argued in its plea to the jurisdiction that its Office
of Audit Compliance and Risk Services is not “an appropriate law enforcement authority” to
whom such a report should be made. The Whistleblower Act defines an appropriate law
enforcement authority as “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.” TEX. GOV’T CODE ANN.
§ 554.002(b)(1), (2) (West 2004). Under this definition, “it is clearly not enough that a
governmental entity has general authority to regulate, enforce, investigate, or prosecute.” Tex.
Dep’t of Transp. v. Needham, 82 S.W.3d 314, 319 (Tex. 2002) (emphasis in original). Rather, the
governmental entity must be authorized “to regulate under or enforce ‘the law alleged to be
violated in the report,’ or to investigate or prosecute ‘a violation of criminal law’.” Id. at 320
(emphasis in original). “In other words, the particular law the public employee reported violated
is critical to the determination.” Id. Here, Wells did not specifically allege what law the UTSA
officials were violating, except to say that they were engaged in fraudulent activities. 1 UTSA, a
university, has no authority to regulate under or enforce Texas’s laws relating to fraud. See id.
(explaining in a Whistleblower case, that the Texas Department of Transportation had no
authority to regulate under, or enforce Texas’s driving while intoxicated laws, the law alleged to
have been violated by the whistleblower). Nor does UTSA have authority to investigate or
prosecute criminal laws relating to fraud. See id. (explaining that TxDOT had no authority to
investigate or prosecute DWI laws).
1
We note that UTSA also argued in its plea to the jurisdiction that Wells did not allege a violation of law in her
petition. However, because we hold that she did not report a violation of law to an appropriate law enforcement
authority, we need not determine whether her petition alleged a violation of law.
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However, our conclusion that UTSA is not a governmental entity authorized to regulate
under, enforce, investigate, or prosecute Texas’s laws relating to fraud does not end our inquiry.
See id. Wells would still be entitled to protection under the Whistleblower Act if she “in good
faith” believed UTSA was an appropriate law enforcement authority. See id. In the context of
section 554.002(b), “good faith” means the following:
(1) the employee believed the governmental entity was authorized to (a) regulate
under or enforce the law alleged to be violated in the report, or (b) investigate or
prosecute a violation of criminal law; and
(2) the employee’s belief was reasonable in light of the employee’s training and
experience.
Id. at 321. Here, Wells argues that she had good faith to believe that UTSA was an appropriate
law enforcement authority because when she reported the fraudulent activities to Otter in
UTSA’s Office of Compliance, she was told by Otter that her claims would be investigated and
that she would be protected by the Whistleblower Act. However, Wells’s petition also alleged
that Otter told her “that if the fraud [Wells] suspected was in fact occurring, the Office of
Compliance would report the fraud to the police department.” (emphasis added). Thus, at the
time Wells reported the alleged illegal activities to UTSA, she was told by UTSA that it was not
authorized to do anything about the allegations – it would need to report the fraud to the police
department. Indeed, in an affidavit attached to her response to the plea to the jurisdiction, Wells
affirmed that she “reported the fraud in accordance with UTSA policies, directives, and
training.” However, “the statutory definition’s limiting language–regulate under, enforce,
investigate, and prosecute–does not include an employer’s power to internally discipline its own
employees for an alleged violation.” Needham, 82 S.W.3d at 321. That UTSA had policies,
directives, and training relating to its own employees is not sufficient to show a good faith belief
that UTSA was an appropriate law enforcement authority. See id. (holding that evidence of
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TxDOT’s internal disciplinary process, the employee’s participation in that process, and the
employee’s belief that TxDOT could forward information to another entity to prosecute a drunk
driving allegation was not sufficient to support a finding that the employee in good faith believed
he was reporting to an appropriate law enforcement authority under the Whistleblower Act).
Because the uncontroverted allegations in Wells’s petition affirmatively negate
jurisdiction, we reverse the trial court’s order and render judgment that Wells’s claims against
UTSA be dismissed for lack of jurisdiction.
Karen Angelini, Justice
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