Texas Department of Assistive and Rehabilitative Services, Successor in Interest to the Former Texas Rehabilitation Commission v. Richard Howard

TEXAS COURT OF APPEALS, THIRD DISTRICT, AT AUSTIN
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NO. 03-05-00031-CV
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Texas Department of Assistive and Rehabilitative Services, successor in interest to the
former Texas Rehabilitation Commission, Appellant
v.
Richard Howard, Appellee
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FROM THE DISTRICT COURT OF TRAVIS COUNTY, 345TH JUDICIAL DISTRICT
NO. GN200245, HONORABLE SCOTT H. JENKINS, JUDGE PRESIDING
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OPINION
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 a larger community, and we allow whistleblowing public
employees to be made whole through lawsuits against the State. See Tex. Gov’t Code Ann.
§§ 554.002-.003 (West 2004). Richard Howard, a unit manager with 24 years of service at the Texas
Department of Assistive and Rehabilitative Services, reported several of his employer’s practices
that he believed violated the law to the State Auditor’s Office (“SAO”). Howard alleges in his
petition that when he requested clarification of Department practices from his own human resources
director, as per the instructions of the SAO representative, his superiors learned of his report to the
SAO and retaliated. Howard was counseled and rated below standard on his yearly performance
appraisal, effectively denying him promotions and merit pay increases. Howard sued the department
under the Whistleblower Act, and a jury awarded him damages, costs and attorney’s fees. In six
issues, the Department challenges whether the evidence is legally and factually sufficient to sustain
the jury’s verdict. Because we find that the evidence is legally and factually sufficient, we affirm
the judgment.
FACTUAL AND PROCEDURAL BACKGROUND
Howard, who possesses a Ph.D. in anthropology from the University of Texas, is a
unit manager in the disability determination services division of the Department. From the time
Howard was employed by the predecessor of the Department in 1977 to the time of this dispute in
2001, he had established an exemplary work record, rising to his current position from the position
of entry-level disability examiner. The testimony at trial indicates that, despite supervising a
changing staff of 16 disability examiners, his unit consistently ranked among the Department’s best
in annual performance appraisals.
The record contains the caseload performance statistics that were used by the
Department to evaluate individual units for cost-effectiveness and the timely processing of cases for
the years 1997 to 2001. Based on the Department’s performance standards, the rankings of
Howard’s unit were strong. Howard’s unit ranked second, first, first, first and first, respectively,
among the five units in his directorate, and sixth, second, third, fourth and third, respectively, among
the 25 units in his division. Howard’s unit performed capably despite accepting “underperforming”
examiners from other units, which he then retrained and developed into better performing
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employees. During fiscal year 1999, Director Connie Miller, Howard’s supervisor, assigned Howard
an examiner that had not met all of his job standards for the previous ten years. On Howard’s
performance appraisal dated September 1999, Miller noted, “[this disability examiner] meets or
exceeds all of his job performance standards for FY-99. The above exemplifies Mr. Howard’s
ability to manage people.”
He received similar accolades from his subordinates. He was nominated by unit
employees for employee of the year for a sixth time in 1997. The record also includes a letter from
three examiners in his unit, sent to Miller, which praised Howard for being “supportive” and an
“exemplary supervisor.” It stated, “[Howard’s] skills as a mentor and problem solver continue to
inspire us to try and excel above and beyond the general expectations of the agency.” An associate
commissioner who received a copy of the letter wrote to Howard, “[n]otes such as these . . . are
elusive these days. I value what you did to earn this support and respect.” Howard testified that in
his 24 years at the Department, including 11 as a unit manager, he had never been rated below
standard on any performance evaluation. Until 2001.
In late 2000, Howard became concerned with what he considered to be the arbitrary
actions and policy decisions by upper management that he believed were hurting worker morale.
When two of his subordinates were refused promotions based on unwritten career ladder
requirements, he considered it “the straw that broke the camel’s back.” Howard compiled a list of
the practices that concerned him, placing each into one of two different categories of infractions: he
called the first the non-uniform application of policy and the second the falsification of state
documents. In November or December 2000, he called the SAO and reported the practices.
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The SAO representative did not take immediate action on the call. Instead, he
referred Howard to the Department’s human resources director for a written clarification of
Department policy. Howard then requested the information from the director of human resources,
Josephine Sanchez, as per the instructions of the SAO representative. In the organizational structure
of the Department, however, Sanchez reported directly to Deputy Commissioner David Ward.
Sanchez testified that even though Ward had hired her to specifically address the Department’s
problems with inconsistent practice and policy, Ward was irate when she told him of Howard’s
report on approximately January 3, 2001. Ward, according to Sanchez, called Howard a “loose
cannon,” and a “whistleblower,” and “stated that Richard was not going to be promotable.”
According to Sanchez, Ward demanded that she not give any more information to Howard, including
the policy interpretations requested by the SAO, and that if she did, Ward would view it as a personal
attack on him by Sanchez.
On January 3, 2001, Ward’s direct subordinate, Associate Commissioner Kay Chee,
instructed Howard’s supervisor, Miller, to discipline Howard for transferring reconsideration files
between disability examiners. Miller, who testified that Howard was “one of my best supervisors,”
hesitated. According to Miller, there was no written policy that prohibited Howard’s actions, this
type of transfer was routine in the Department, and Howard was the only manager that he was
instructed to discipline.
Despite disciplining Howard in January, Miller recommended Howard for a merit
increase on May 29, writing, “Howard has met and/or exceeded performance standards of all
essential marginal job functions of his functional job description over the last twelve months.” On
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October 12, Howard’s merit increase was denied by Commissioner Chee, who instead directed
Miller to discipline Howard again, this time because one of Howard’s disability examiners misplaced
a file, which delayed its processing for a substantial period of time. Miller disagreed with this order,
too, as unreasonable and unfair. Miller testified that if it had been left to his discretion, as it usually
was, he would not have rated Howard “below standard” because Howard lacked actual control over
the individual files.
Soon thereafter, Miller was instructed by Chee to rank Howard “below standard” on
the areas of his 2001 performance appraisal plan that corresponded to the issues for which he had
been disciplined. Miller testified that even one below-standard ranking on a performance appraisal
could “destroy a person’s career,” and that he was upset “because he knew what it was going to do
to an excellent employee.” As Chee’s requests to Miller to discipline Howard became more
frequent, Miller asked Chee, “Well, what do y’all have against Richard?” Miller testified that Chee
responded, “Well, just do your job.” Howard’s “below standard” rating on his December 3, 2001,
performance appraisal made him ineligible for a merit increase for the next 12 months.
In early 2002, three of the five program operations director positions, the position
immediately above Howard’s, became vacant. Despite this unprecedented opportunity for
promotion, Howard was not chosen for any of the positions. As Commissioner Ward testified,
Howard’s negative performance appraisal made it impossible for him to be among the leading
candidates for the jobs. At the time, Commissioner Chee selected all directors of program
operations, and Commissioner Ward reviewed all the selections.
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Howard filed suit against the Department in January 2002. On July 31, 2002, both
David Ward and Kay Chee retired after 28 and 29 years of service to the Department, respectively.
At the conclusion of the trial, the jury answered all the questions in the court’s charge
in favor of Howard. The jury found that Howard made a good faith report to the SAO concerning
the Department and that he had a good faith belief that the SAO was an appropriate law enforcement
authority. The jury further found that the report was the cause of Howard’s adverse performance
appraisal and the denial of his 2001 merit increase and that if Howard had not made the report,
neither of these actions would have occurred. The jury also found that the Department would not
have written his adverse performance appraisal or denied Howard’s merit increase based solely on
information or observations not related to his report to the SAO.
The jury awarded Howard $259,799.31 in damages for the loss of one promotion and
two merit pay increases, their effects on his retirement annuity and social security benefits through
his life expectancy, and reasonable attorney’s fees. This appeal ensued.
ANALYSIS
The Controversy
In its first, second, and third issues, the Department contends that the evidence is
legally and factually insufficient to establish that Howard made a good faith report of a violation of
law to an appropriate law enforcement authority. The Department further contends that the evidence
is legally and factually insufficient to establish a causal link between Howard’s report and his
termination. The Department also asserts that the evidence shows that the same employment actions
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would have been taken even if Howard had not made a protected report. Finally, the Department
argues that the evidence is legally and factually insufficient to support the jury’s award of damages.
Howard responds that he presented legally and factually sufficient evidence to prove
the contested elements of his whistleblower claim and to support his damage award. Howard further
responds that the jury’s rejection of the Department’s affirmative defense was not against the great
weight of the evidence.
Standard of Review
We are asked to determine whether Howard presented legally or factually sufficient
evidence to prove the contested elements of his whistleblower claim and to support his damage
award. Evidence presented at trial is legally sufficient if it enables reasonable and fair-minded
people to reach the verdict under review. City of Keller v. Wilson, 168 S.W.3d 802, 827 (Tex. 2005).
Legal-sufficiency review must credit favorable evidence if reasonable jurors could, and disregard
contrary evidence unless reasonable jurors could not. Id. A reviewing court cannot substitute its
judgment for that of the fact finder, so long as the evidence falls within the zone of reasonable
disagreement. Id. at 822. When conducting a factual sufficiency review, we examine the entire
record and set aside the verdict only if it is so contrary to the overwhelming weight of the evidence
as to be clearly wrong and manifestly unjust. See Cain v. Bain, 709 S.W.2d 175, 176 (Tex. 1986).
Under either standard, jurors are the sole judges of credibility of the witnesses and
the weight to give their testimony. See City of Keller, 168 S.W.3d at 819. Likewise, it is the
province of the jury to resolve conflicts in the evidence. Id. at 820. Reviewing courts cannot impose
their own opinions to the contrary. Id. at 819.
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Report of a Violation of Law
The Whistleblower Act prohibits a state or local government entity from taking
adverse personnel action against a public employee who in good faith reports a violation of law by
the employing governmental entity to an appropriate law enforcement authority. Tex. Gov’t Code
Ann. § 554.002. The Act is designed to enhance openness in government and compel the State’s
compliance with law by protecting those who inform authorities of wrongdoing. City of New
Braunfels v. Allen, 132 S.W.3d 157, 161 (Tex. App.—Austin 2004, no pet.). The Act evidences two
legislative purposes: (1) to protect public employees from retaliation by their employer when, in
good faith, employees report a violation of the law, and (2) to secure lawful conduct on the part of
those who direct and conduct the affairs of public bodies. Id. Because the Act is remedial in nature,
it should be liberally construed to effect its purpose. Id. (citing Hill v. Burnet County Sheriff’s Dep’t,
96 S.W.3d 436, 440 (Tex. App.—Austin 2002, pet. denied)).
Both parties agree that a “report,” for the purposes of the Act, includes “any
disclosure of information regarding a public servant’s employer tending to directly or
circumstantially prove the substances of a violation of criminal or civil law, . . . statutes,
administrative rules or regulations.” Davis v. Ector County, 40 F.3d 777, 785 (5th Cir. 1994) (citing
Casteneda v. Department of Agric., 831 S.W.2d 501, 503-04 (Tex. App.—Corpus Christi 1992, writ
denied)). In the instant case, a reasonable jury could have found that Howard made a report to the
SAO.
Howard testified that in late November or December 2000 he had a 45-minute
telephone conversation with a representative of the SAO, who referred Howard to the Department’s
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human resources director for a written clarification of Department policy. Howard testified that he
then requested the information from the director of human resources, Josephine Sanchez, testimony
that Sanchez confirmed in her deposition presented at trial. An organizational tree depicting the
structure of the Department and showing that Director Sanchez reported directly to Commissioner
David Ward was admitted into evidence, as was an e-mail dated January 4, 2001, from Director
Sanchez to Commissioner Ward, outlining “Richard’s allegations.” In the e-mail, Director Sanchez
wrote, “Mr. Ward, I asked Richard if he had called the Texas Audit Committee as he’d indicated on
our recent telephone conversation. He said that he did. . . .”
Howard testified at length about the contents of this telephone conversation. He
recalled that he identified himself by name and as a manager at the Department and communicated
to the SAO representative his “concerns about the illegality of these various what I thought were
violations. And basically I was calling to inquire—to confirm actually whether what I thought were
illegal acts were in fact illegal acts and thinking that would be the appropriate agency to whom I
should report these violations.” According to Howard, the SAO representative “listened to all—
everything I had to say, the identification of all the infractions that I identified.”
Howard testified that he discussed with the SAO representative every Department
practice that he later included in a letter to the attorney general. The letter contained six complaints:
(1) internal leave policies “do not conform to state employment law”; (2) the deputy commissioner
selectively promoted individuals without posting the job positions and subjecting the applicants to
competitive interviews; (3) Howard was directed to amend two final selection documents after they
had been reviewed and approved by the director of human resources and legal services, so that the
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final documents that were made available to the public were not the same as the approved copies;
(4) management selectively allowed employees to retire and then be rehired; (5) employees were
refused promotions based on unwritten career ladder requirements; and (6) unwritten requirements
led employees to falsify their overtime reports.
Quoting Howard, the Department maintains that the call was merely an “inquiry” and
that, because Howard was only seeking “opinions” regarding the “legality/validity” of the
Department’s practices, the call does not qualify as a report for the purposes of the Act. Howard had
also used those words of circumspection in the letter listing his complaints and in an internal
grievance that he subsequently filed with the Department. Howard, however, explained at trial that
although he “thought [the practices] were illegal,” he used those words because he was “not a lawyer
and I certainly can’t quote the statute definition of the illegal practices.”
Neither the Act itself nor the definition of “report” provided in Casteneda, however,
require the use of specific phrasing in a whistleblower report, nor do they require that a
whistleblowing employee state his complaint in the affirmative, as opposed to reporting the matters
in the form of a query. See Casteneda, 831 S.W.2d at 503-04. Rather, the Act only requires a
disclosure of information by a public employee tending to directly or circumstantially show a
violation by a public employer. See id. Based on the proof at trial, a reasonable jury could have
found that Howard met that burden. Thus, Howard’s report of the Department’s alleged violations
of law to the SAO was sufficient to establish this element of his whistleblower claim. See Tex. Gov.
Code Ann. § 554.002(a).
We overrule the Department’s first issue.
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Good Faith Violation of Law
The supreme court has defined good faith in the whistleblower context to mean 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. Wichita County v. Hart,
917 S.W.2d 779, 784 (Tex. 1996). The first prong of this test considers the employee’s subjective
belief: whether the employee honestly believed the conduct reported was a violation of law. Id. at
784-85. The second prong is objective because it measures the employee’s belief against that of a
reasonably prudent employee in similar circumstances. Id. at 785. A report of an alleged violation
of law may be in good faith even though incorrect, however, as long as a reasonable person with the
employee’s same level of training and experience would also have believed that a violation had
occurred. Id. at 785-86.
Howard testified repeatedly that, at the time he called the SAO, he believed that
certain policies and practices at the Department violated the law. In addition to the more general
testimony described in the previous section, Howard also provided the representative of the SAO
with specific names of laws that he believed were violated by the Department. Our sister court in
San Antonio has found this persuasive, if not necessary, stating, “[t]he fact that [the whistleblower]
has pointed out an actual law that he believes [his co-worker] violated is relevant to our inquiry
here.” Bexar County v. Lopez, 94 S.W.3d 711, 713 (Tex. App.—San Antonio 2002, no pet.).
Howard testified that he believed that the policy incentivizing employees to falsify their overtime
reports and the Department to keep a “double ledger system” for recording employee overtime
violated the Fair Labor Standards Act. See Fair Labor Standards Act of 1938, 29 U.S.C. §§ 201-19
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(1998). He also testified that he believed that his modification of a final selection document before
it was made available to the public was a violation of the Open Records Act because it gave non-
selected applicants a false understanding of their placement on the selection matrix. See Tex. Gov’t
Code Ann. §§ 552.021-.022 (West 2004).
Additionally, Howard testified that he discussed the Department’s leave policy with
the SAO representative and the specific laws and constitutional provisions that he believed it
violated. The record shows that Howard understood this policy because it was the focus of
complaints to him by one of his disability examiners, Janet Shannon, who had previously worked
at the SAO. On October 27, 2000, shortly before he called the SAO, Howard forwarded to Miller
an interoffice memorandum written to him by Shannon that expressed her concerns about the
Department’s leave policy. Howard included a short preface to the memorandum, in which he wrote,
“Ms. Shannon points out that [Department] policy involving the ‘40 hour minimum leave balance’
is in effect incompatible with the legal opinions, referenced by the Office of the State Auditor.”
Shannon’s memorandum cited provisions in the Department’s leave policy that appeared to violate
“Article V, Section 8(c) of the General Appropriations Act-Texas Senate Bill 222[,] Texas
Constitution, Article 1, Section 16 [and] the 14th Amendment of the Constitution of the United
States.” On appeal, the Department conceded that Howard reported a good faith violation of law
with regard to agency leave policy.
Furthermore, a reasonable jury could also have found that Howard’s beliefs and
expectations were commensurate with his training and experience. Howard’s testimony shows an
understanding of the Department’s written requirements and the specific instances where the
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Department improperly and unfairly implemented its own policies. A jury could have concluded that
a reasonably prudent manager with Howard’s training and experience would have come to a similar
conclusion. Thus, Howard’s good faith report of the alleged violations of law by the Department
was sufficient to establish the good faith element of his whistleblower claim. See id. § 554.002(a).
The jury could reasonably have concluded that Howard, in good faith, reported a violation of law
by the Department.
We overrule the Department’s second issue.
Appropriate Law Enforcement Authority
The Department also contends that the evidence is factually and legally insufficient
to support a finding that Howard made his report to an “appropriate law enforcement authority.”
“Appropriate law enforcement authority” is defined in the Act as an authority that is a part of a state
or local governmental entity or of the federal government that the employee in good faith believes
is authorized to: (1) regulate under or enforce the law alleged in the report to have been violated; or
(2) investigate or prosecute a violation of criminal law. Id. § 554.002(b). The determination of
whether an entity is an appropriate law enforcement authority is a question of law. Texas Dep’t of
Transp. v. Needham, 82 S.W.3d 314, 318 (Tex. 2002).
Generally under Needham, we would first determine whether the SAO has been given
the authority to either “regulate under or enforce the law” alleged in the report to have been violated,
or “investigate or prosecute a violation of criminal law.” Id. at 320. If the answer to any of these
questions is yes, then the SAO is an appropriate law enforcement authority as a matter of law.
Because neither party briefed the question of whether the SAO is an appropriate law enforcement
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authority as a matter of law, we decline to address this question. Instead, we turn to an alternative
formulation also addressed in Needham.
In light of subsection (b) of the statute, which was added in its entirety by the
legislature in 1995, the Needham court determined that, even if an entity was not an appropriate law
enforcement authority as a matter of law, a plaintiff could still prevail if he could demonstrate that
he had a good faith belief that his report was made to an appropriate law enforcement authority. Id.
The Needham court then applied the same test of good faith to section 554.002(b) that it utilized in
determining whether a good faith violation of law had been reported under section 554.002(a). Id.
at 320-21. The test for good faith belief regarding an appropriate law enforcement authority consists
of a subjective and objective prong, both of which must be satisfied in order to satisfy the good faith
standard. Id. at 321. The subjective prong requires that the employee believe that the governmental
entity was either authorized to “regulate under or enforce the law alleged to be violated in the report”
or that it was authorized to “investigate or prosecute a violation of the criminal law.” Id. The
objective prong requires that the employee’s belief that the report was made to an appropriate law
enforcement authority be reasonable in light of his training and experience. Id.
There is ample evidence that Howard subjectively believed that the SAO was the
appropriate law enforcement authority to which he should report his complaints. As discussed
earlier, Howard testified that the issue of the disparate treatment of employees with low annual and
sick leave balances was originally brought to his attention by one of his subordinates, Janet Shannon,
who had previously worked at the SAO. Howard forwarded to Miller the memorandum he received
from Shannon, including the three separate “SAO Leave Interpretation Letters” that were attached
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to it. Shannon’s memorandum stated, “As we are all aware: The State Auditor is directed to provide
uniform interpretation of the subchapters of the Texas Government Code relating to leave provisions
and shall report to the governor and the legislature any state agency that practices exceptions to those
laws.” Howard testified that he was impressed with Shannon’s memorandum and familiar with her
credentials, having reviewed her file when she was transferred to his unit. In his testimony, Howard
recalled that Shannon was “part of a task force with the Texas State Auditor’s Office for a year and
half performing investigations.” As the Department conceded, “the only facts in the record that
could arguably support a belief that the State Auditor’s Office had regulatory or enforcement
authority related to one of [Howard’s] concerns is limited to the topic of the [the Department’s] leave
policy.”
When Howard’s subordinates were refused promotions based on unwritten career
ladder requirements, he considered it, “the straw that broke the camel’s back.” Howard compiled a
list of the practices that concerned him, placing each into one of two different categories of
infractions: he called the first the non-uniform application of policy and the second the falsification
of state documents. Howard did not know where to report the infractions, so he asked Janet Shannon
for advice. Howard testified,
I knew that she had been a Texas state auditor. I knew that she had been somehow
responsible or involved in investigating these kinds of issues, so I went to her for
some direction and said, Where do you think I should go, where should I take this?
. . . . She recommended that I make my report to the Texas state auditor. . . . I’m
vaguely remembering that she advised me that they were . . . involved with the
regulation of—the application of policies and mismanagement among various state
agencies in Texas.
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From his conversations with Shannon, Howard derived his understanding of the
powers of the SAO. He testified:
[Shannon] explained to me that the Texas state auditor had subpoenaed her. I didn’t
realize until yesterday that they don’t actually issue the subpoena but they request the
subpoena. She talked about joint investigative committees involving the Department
of Public Safety. She talked about the fact that based on the findings, entire boards
had been removed, management audits had resulted in changing policies. So it
seemed to me that was the place to go with my concerns.
Howard was asked, “At the time you made the phone call, what did you believe that the Auditor’s
Office had the power to do as a result of these?” Howard responded, “Bottom line, fix it.”
Both parties adduced proof as to whether Howard’s belief was reasonable in light of
his training and experience. Susan Riley, a 27-year veteran of the SAO and an audit manager,
testified that she was unaware of any studies or surveys conducted to determine what state employees
know about the SAO. She believed that none had ever been conducted. Anthony Garrant, the acting
state classification officer, was asked more directly if it would be unreasonable for a state employee
to think that the SAO had regulatory authority, and he responded, “the word ‘unreasonable’ is a
pretty strong word.” Garrant continued, “people interpret things differently,” according to their own
training and experience. Commissioner Chee, a 28-year veteran of the Department at the time this
dispute arose, was asked about the SAO at trial. Chee recalled that at her deposition she testified that
the SAO may have been responsible for the oversight of departmental management audits. She also
testified at her deposition that she believed the SAO was responsible for the “Sunset” audit and that
if the agency failed that audit the SAO could shut down the Department.
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But neither party addressed the statutory role of the SAO. Section 554.010, entitled
“Audit of State Government Entity After Suit,” states that, at the conclusion of a successful
whistleblower lawsuit against a state governmental entity for a sum greater than or equal to $10,000,
the attorney general shall provide to the SAO a brief memorandum describing the facts and
disposition of the suit. Tex. Gov’t Code Ann. § 554.010(a) (West 2004). Section 554.010(b) states:
Not later than the 90th day after the date on which the state auditor’s office receives
the memorandum required by Subsection (a), the auditor may audit or investigate the
state governmental entity to determine any changes necessary to correct the problems
that gave rise to the whistleblower suit and shall recommend such changes to the
Legislative Audit Committee, the Legislative Budget Board, and the governing board
or chief executive officer of the entity involved. In conducting the audit or
investigation, the auditor shall have access to all records pertaining to the suit.
Id. § 554.010(b).
The legislature itself has turned to the SAO to “audit or investigate” the state
governmental entity that has been successfully sued, and its mandate acts as further evidence of the
reasonableness of Howard’s decision. Id. The jury could reasonably have concluded that Howard’s
report of the Department’s alleged violations of law to the SAO was sufficient to establish this
element of his whistleblower claim. See id. § 554.002(a).
We overrule the Department’s third issue.
Causation
The Department asserts that the evidence is legally and factually insufficient to
establish that Howard’s damages were caused by his good faith report to the SAO. Specifically, the
Department contends that it took action against Howard because he improperly authorized a transfer
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of reconsideration files to low-level disability examiners and because he was responsible for a
misplaced file in his unit.
To prove causation in a whistleblower case, an employee need not prove that his
reporting of the illegal conduct was the sole reason for the employer’s adverse action. Texas Dep’t
of Human Servs. v. Hinds, 904 S.W.2d 629, 634 (Tex. 1995). Rather, a public employee must
demonstrate that, after he reported a violation of law in good faith to an appropriate law enforcement
authority, the employee suffered discriminatory conduct by his employer that would not have
occurred had the report not been made. City of Fort Worth v. Zimlich, 29 S.W.3d 62, 67 (Tex.
2000).
Circumstantial evidence may be used to establish a causal link between an employee’s
legally protected activity and an employer’s retaliation. See Continental Coffee Prods. v. Cazarez,
937 S.W.2d 444, 451 (Tex. 1996). Known as the Cazarez factors, such circumstantial evidence
includes: (1) knowledge of the protected activity by the decision-maker, (2) expression of a negative
attitude toward the plaintiff’s protected activity, (3) failure to adhere to agency policy, (4)
discriminatory treatment of plaintiff compared to similarly-situated employees, and (5) evidence that
the stated reasons for the adverse action was false. Id. But evidence that an adverse employment
action was preceded by a superior’s negative attitude towards an employee’s report of illegal conduct
is not enough, standing alone, to show a causal connection between the two events. Zimlich, 29
S.W.3d at 69.
There is ample evidence in the record that the two people directly involved in the
decisions to take adverse employment actions against Howard—Commissioners Chee and
Ward—knew of Howard’s report to the SAO. The director of human resources, Josephine Sanchez,
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testified that Howard talked to her about his SAO report in December 2000. Sanchez testified that
even before she had the opportunity to inform Ward, Ward already knew that she had spoken with
Howard. Sanchez testified that Ward called Howard a “whistleblower” and a “loose cannon,”
described Howard as “not promotable,” and threatened to “fix him.” Because Ward instructed
Sanchez to ask Howard if he actually called the SAO, she wrote Ward an e-mail in January 2001
stating, “Mr. Ward, I asked Richard if he had called the Texas Audit Committee as he’d indicated
on our recent telephone conversation. He said that he did. . . .” Ward denied Sanchez’s statements,
and testified that Sanchez had never told him that Howard had called the SAO.
Sanchez also testified that she spoke with Chee about Ward’s threats directed towards
Sanchez, and that she informed Chee about the ongoing dialogue she was having with Howard.
Sanchez testified that she and Chee “had extensive telephone conversations where she told me about
David Ward,” and that Chee advised Sanchez to “be very careful” because Ward “was definitely
after” her. Sanchez was then asked, “[d]id [Chee] tell you why Ward was after you?” to which
Sanchez responded, “Yes. Because [Chee] said that [Ward] viewed me as being a whistleblower and
that I was assisting Richard.”
Howard introduced evidence showing that the Department counseled and disciplined
him in a manner that deviated from its standard practices and the way it treated other similarly-
situated employees. Miller testified that Chee instructed him to subject Howard to disciplinary
counseling for his transferring of reconsideration files to disability examiners even though the
practice was routine in the agency. Miller testified that Howard was the only unit manager ever
disciplined for this practice. There was also evidence that Chee and Ward had tolerated much more
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serious file transfer abuses. For example, Miller testified that, in the recent past, when the Social
Security Administration had put a hold on continuing disability review cases, one director and one
unit manager ignored the directive and transferred their “hold” files back to Social Security, thus
shortening their unit’s processing time and artificially inflating its productivity numbers. Miller
testified that it was common knowledge in the Department that these two employees had violated
policy, and it was openly discussed at a meeting over which Chee presided and Miller attended.
Miller testified that Chee expressed no negative opinion about the transfers at the meeting and that
both employees were promoted shortly thereafter. In Miller’s opinion, these file transfers were far
more serious than Howard’s transfer of reconsideration files.
Howard also adduced evidence that his being disciplined for the lost file was a pretext
for the department’s adverse employment action. Miller testified that when evaluating unit
managers, he generally had discretion to simply not rate an item on a quarterly performance review,
instead of rating the item “below standard.” Miller testified that he had exercised that discretion on
reviews for other unit managers and that if Howard’s review had been left to his discretion, he would
have chosen not to rate Howard on the standard corresponding to the lost file. Miller testified that
Howard was an excellent supervisor and that he objected to the rating because Howard was “going
to be rated below standard on a new standard which I thought was unreasonable to be in his job
description anyway because I didn’t think that—I thought the standard was unreasonable for
supervisors.” When Miller was asked, “who is the person that directed you specifically to include
in this quarterly counseling that Mr. Howard was going to be rated below standard on his
[performance appraisal plan]?” he identified his supervisor, Kay Chee. Miller thought the action so
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inappropriate that he wrote in the subjective comments section of the quarterly counseling, “I find
this very ironic as his unit was never above two percent in aged cases. Every [disability examiner]
in the unit exceeded the 120 aged case standard.”
When Miller and Chee discussed Howard’s yearly performance appraisal plan in the
fall of 2001, Miller again voiced his concerns about rating Howard “below standard” on the items
corresponding to his transfer of cases and the lost file. Miller again expressed his preference to not
rate the two standards because he knew that even a single “below standard” rating could “destroy
a person’s career to some degree in the agency, especially if you’re a supervisor.” Miller added, “in
this case, with his past job performance, I had problems with that because I knew what it was going
to do to an excellent employee.” According to Miller, Chee again asserted an unusual amount of
interest in controlling Howard’s evaluation. Miller recalled that a similarly-situated unit manager
who was rated “below standard” on one of the same items as Howard was later allowed by Chee to
change the rating to “not rated.” In sum, Miller testified that Chee’s treatment of Howard was both
unfair and disparate.
Howard also presented evidence that Chee and the Department overreacted to the lost
file and seized it as an opportunity to reprimand Howard. The discovery of the file in Howard’s unit
was triggered in part by a letter from a federal disability program administrator to Commissioner
Ward inquiring about the status of certain files that had been active for more than a year. However,
the letter did not criticize the Department’s performance. Instead, it said, “the list is remarkably
short considering the size of your pending workload.” Additionally, as mentioned above, Miller
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testified that it is unfair to discipline unit managers for lost files because disability examiners are
primarily responsible for individual files.
We hold that the evidence is legally and factually sufficient to establish that the
Department would not have taken negative action against Howard when it did if Howard had not
reported Department practices to the SAO. Although there is conflicting evidence as to why Howard
was disciplined, the jury was free to believe some witnesses, disbelieve others, and resolve any
inconsistencies in their testimony. See City of Keller, 168 S.W.3d at 822. The jury’s finding on
causation is not so contrary to the overwhelming weight of the evidence as to be clearly wrong and
manifestly unjust. See Cain, 709 S.W.2d at 176.
We overrule the Department’s fourth issue.
Affirmative Defense
In its fifth issue, the Department complains that the jury rejected, against the great
weight of the evidence, the affirmative defense submitted in questions one and two. It is an
affirmative defense to a whistleblower action that the Department would have taken the negative
personnel actions against Howard based solely on information that is not related to the fact that he
made his protected report to the SAO. See Tex. Gov’t Code Ann. § 554.004(b) (West 2004).
Here, the Department has the burden of proof on its affirmative defense. When a
party attacks the factual sufficiency of an adverse finding on an issue on which it has the burden of
proof, it must demonstrate on appeal that the adverse finding is against the great weight and
preponderance of the evidence. Dow Chem. Co. v. Francis, 46 S.W.3d 237, 242 (Tex. 2001) (citing
Croucher v. Croucher, 660 S.W.2d 55, 58 (Tex. 1983)). Whether the great weight challenge is to
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a finding or a nonfinding, a court of appeals may reverse and remand a case for a new trial only when
it concludes that the finding or nonfinding is against the great weight and preponderance of the
evidence. Ames v. Ames, 776 S.W.2d 154, 158-59 (Tex. 1989); Cropper v. Caterpillar Tractor Co.,
754 S.W.2d 646, 651 (Tex. 1988).
In reviewing this issue, we are reminded of the supreme court’s admonition that we
may not reverse simply because we conclude that “the evidence preponderates toward an affirmative
answer.” Herbert v. Herbert, 754 S.W.2d 141, 144 (Tex. 1988). We may only reverse where “the
great weight of [the] evidence supports an affirmative answer.” Id.
After a lengthy charge conference that produced an agreed jury charge, the
Department now complains that the jury was distracted by confusing charge questions. This appears
to be an attempt by the Department to argue charge error without asserting it as an issue on appeal,
because the Department failed to preserve this error at the trial court. We have already discussed the
evidence that supports the jury’s rejection of the Department’s affirmative defense. Based on the
evidence, the jury could reasonably have rejected the Department’s affirmative defense submitted
in questions one and two.
We overrule the Department’s fifth issue.
Damages
In its sixth issue, the Department asserts that the evidence is legally and factually
insufficient to support the jury’s award of damages. We have previously refused to uphold an award
of damages for a discretionary bonus in a whistleblower case, and the Department contends that we
should reverse the award of damages here because there is no evidence other than speculation
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showing that Howard suffered any economic harm from the negative performance evaluation. See
Housing Auth. of Crystal City v. Lopez, 955 S.W.2d 152, 156 (Tex. App.—Austin 1997, no pet.).
The Department also contends that Howard’s report could not have been the reason his merit
increases were denied because the sole decision maker, Commissioner Chee, was unaware of the
report at the time she denied the raise—a contention we have already rejected.
Harvey Corn, C.P.A., testified as an expert on Howard’s economic harm. Although
Corn was timely designated and his report timely produced, the Department never took his
deposition, never sought additional information about his expert opinions, never designated its own
economic damages expert, and never filed a Daubert/Robinson challenge to Corn’s testimony. See
Daubert v. Merrell Dow Pharm., Inc., 509 U.S. 579 (1993); E.I. du Pont de Nemours & Co. v.
Robinson, 923 S.W.2d 549 (Tex. 1995). The Department also did not object to any part of Corn’s
report. Nor did the Department object to any of Corn’s testimony until after his report had already
been admitted into evidence in its entirety.
Corn testified that “the mathematics, the source data, the information that supports
work life expectancy and life expectancy, the automated calculators provided by the State of Texas
and the Social Security Administration are all I think as good as you can get.” He testified that his
report and testimony were based on reasonable accounting probability. In his report and in his
testimony at trial, Corn detailed the process he followed to determine Howard’s economic damages.
Corn began his report with Howard’s claims that: (1) he was wrongly denied two
merit pay increases of four percent base pay that should have commenced on September 1, 2001, and
September 1, 2002; (2) alternatively, he was wrongly denied a promotion on February 1, 2002, from
his current pay grade of B-12 to pay grade B-13, and, in accordance with Departmental practice, an
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increase to pay grade B-14 one year later, on February 1, 2003; and (3) he may have been denied the
benefits of both the promotions described above and of the effect of the five percent merit pay
increase he received on March 1, 2004, when applied to the higher salary level of grade B-14. Corn
then calculated a dollar figure for each of these alternative damage scenarios. Corn’s damage
calculations consisted of the following: (1) the difference between Howard’s actual wages and his
expected wages through the expected date of trial; (2) the difference between Howard’s actual wages
and his expected wages through the completion of his work expectancy; (3) the difference in
Howard’s retirement annuity based on his current compensation and his expected compensation
through his life expectancy; and (4) the difference in Howard’s social security benefits through his
life expectancy. His report concluded with the calculation of exact dollar figures for each of the
three alternative damage scenarios:
it is my opinion that Richard Howard was damaged by the [Department’s] failure to
grant merit pay increases on September 1, 2001, and September 1, 2002, in the
amount of $129,673 and in the alternative Mr. Howard was damaged as a result of
the [Department’s] failure to grant him promotion on February 1, 2002, in the
amount of $119,774. Additionally, Mr. Howard may have been damaged in amount
of $180,691 as a result of both the failure to grant promotion and the failure to apply
his March 1, 2004, merit pay increase to the appropriate wage rate.
The jury, however, was not limited to these three choices. At trial, Corn testified that
he constructed his report so that his figures could be adjusted by the jury if they disagreed with the
size of the merit pay increases used in his calculations, or if they believed that the merit pay increases
or promotions would have occurred on dates not contemplated by the report. This flexibility proved
unnecessary, however, as the jury awarded $180,691 to Howard, the exact dollar amount that Corn
specified in his report and testimony corresponding to the third damage scenario.
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The jury weighed the conflicting evidence, decided the facts, and calculated a damage
award that exactly matched Corn’s damage calculations. But Corn’s report was not the only
evidence on Howard’s damages. Howard supported Corn’s report by producing evidence, discussed
in greater detail above, to show that Howard was denied merit increases and promotions because of
his call to the SAO. In summary, Miller testified that he recommended Howard for the May 2001
merit increase and that Chee denied it, and both Miller and Howard testified that the negative 2001
performance appraisal made Howard automatically ineligible for a merit increase in May of 2002.
Regarding Howard’s loss of promotions, Miller testified that the “below standard” rating that
Howard received on his 2001 performance appraisal could “destroy a person’s career.” Howard then
testified that three of the five director of program operations positions, the position directly above
his, became vacant simultaneously only two months after he had received the negative marks on his
performance appraisal. He testified that he applied, interviewed, and was subsequently denied for
all three director positions and that Commissioners Chee and Ward were responsible for choosing
the new directors.
For the above reasons, the jury’s award of damages for Howard’s lost promotions and
merit pay increases in the instant case is distinguishable from the “annual salary adjustment” that we
declined to uphold in Crystal City. See Crystal City, 955 S.W.2d at 156. In Crystal City, the
“annual salary adjustment” was an annual bonus given at the discretion of the agency. Id. In the
instant case, Howard’s damages reflect salary increases and promotions based solely on merit. Thus,
we hold that the evidence is legally and factually sufficient to support the jury’s award of damages.
We overrule the Department’s sixth issue.
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Conclusion
Having overruled the Department’s issues, we hold that the evidence was legally and
factually sufficient to support the jury’s verdict. We affirm the trial court’s judgment.
__________________________________________
Jan P. Patterson, Justice
Before Justices B. A. Smith, Patterson and Waldrop
Affirmed
Filed: December 8, 2005
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