Bad Day for Whistleblowers in Texas

One of the most important things about whistleblowing or retaliation claims are that they are almost always created by statutes, so the statutory language is critical.  Today the Texas Supreme Court made just that point, in ruling that unlike other states, the whistleblower statute in Texas does not cover reports to individuals who are only responsible for compliance within an agency.

Justice Willett writing for the Court put it concisely: "Other states’ whistleblower laws accommodate internal reports to supervisors; Texas law does not."

Noting that Texas whistleblower has an "undeniable focus on law enforcement" only a report to someone who has

the power to (1) regulate under or enforce the laws purportedly violated, or (2) investigate or prosecute suspected criminal wrongdoing

is sufficient. The University of Texas Southwestern Medical Center at Dallas v. Gentilello, (TX 2.22.13).

If a whistleblower has a good faith belief that the person he or she is reporting the wrongdoing to, that is sufficient, but citing three of its former decisions, the Court makes it clear that there is an objective component to the good faith test. It is not what a potential whistleblower believes, no matter how sincerely, but what "a reasonably prudent employee in similar circumstances" would have thought.

Here the result is to find a lack of jurisdiction for a complaint made by a medical school faculty member that trauma residents were treating and operating on patients without an attending physician supervising.  The problem was that he only complained to another faculty member whose responsibility was not for "law enforcement but law compliance." A person insufficient to meet the strict statutory definition of an "appropriate law enforcement authority."

The Court goes on to knock down some creative arguments to get around its precedent, but finds that neither a standard "no retaliation" policy or the ability to mete out internal discipline is sufficient to create the needed status of "appropriate law enforcement authority."

In a second case, Texas A&M University - Kingsville v. Moreno, (TX 2.22.13)  the Court dismissed a suit by an assistant vice president and comptroller based on her complaint (and subsequent termination because of it) to the University President that her boss had allowed his daughter to receive in-state tuition in violation of law.

Quoting its Gentilello opinion:

The Act, by its text and structure, restricts “law enforcement authority” to its commonly understood meaning. That is, it protects employees who report to authorities that actually promulgate regulations or enforce the laws, or to authorities that pursue criminal violations. The specific powers listed in section 554.002(b) are outward-looking. They do not encompass internal supervisors charged with in-house compliance and who must refer suspected illegality to external entities.

The President's authority to compel compliance with state law on tuition waivers, was not the same as enforcing the law in the sense required by the statute.

Before officials at various government agencies (private sector employers are not covered by the general Texas whistleblower statute) rejoice too much, the logical outcome of today's decisions is to force potential whistleblowers to take the agency's dirty laundry outside the organization, rarely an option that agencies would prefer. But it may be the modern way, Dodd-Frank has been accused of having a similar impact.

Our old friend, the rule of unintended consequences, is never far away in employment law matters.