Ken Paxton’s whistleblowers ask Texas Supreme Court to take up their case as $3.3 million settlement in jeopardy

Plaintiffs in a whistleblower lawsuit against Attorney General Ken Paxton have asked the Texas Supreme Court to end its pause on the case after Paxton would not agree to finalize a settlement agreement by the end of the legislative session. (Eric Lee For The Texas Tribune, Eric Lee For The Texas Tribune)

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Attorneys for four former employees who sued after they were fired by Texas Attorney General Ken Paxton asked the state Supreme Court on Wednesday to take up their whistleblower case again, worried that their $3.3 million settlement agreement may be falling apart.

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The move comes after the former employees claim Paxton’s team would not agree to a deadline to finalize legislative approval of the settlement. The two sides had agreed to put the case on pause while they sought the approval of the payments from the Legislature.

The whistleblowers are former deputies to Paxton who say they were fired in retribution for accusing him of corruption to law enforcement.

The multimillion-dollar settlement, announced last month, would give back pay to the four former employees and would include an apology from Paxton as well as other concessions. But the agreement needs to be approved by state lawmakers, who have expressed an unwillingness to use taxpayer dollars to settle Paxton’s case. At the request of the parties in January, the Texas Supreme Court put the whistleblower case on pause while the two sides looked to finalize the deal. But without a deadline, the case could be on pause indefinitely, attorneys for the former employees said on Wednesday.

“Sadly, we have not been able to reach a final settlement because [the Office of the Attorney General] will not agree to include in the formal agreement a deadline for the legislature to approve funding this session, even though that was the fundamental premise upon which they asked us to negotiate in the first place,” the attorneys said in a statement. “So we’ll go back to court, where the taxpayers will end up paying more to defend OAG than they would to settle this case.”

Chris Hilton, chief of general litigation at the attorney general's office, said Thursday that after entering into a settlement agreement the attorney general's office "immediately began to fulfill its obligations" under the deal to save taxpayers money.

"Now the plaintiffs have decided to try to undo the agreement by filing a misleading brief with the Texas Supreme Court, all the while coordinating with the media to create drama," Hilton said. "We’ll continue to seek a cost-efficient resolution, even while the plaintiffs needlessly drag this process out."

Attorneys for the former employees said they would still settle the case if lawmakers approved the $3.3 million settlement this session.

“But we cannot and did not agree to give [the Office of the Attorney General] the benefit of a settlement while the whistleblowers wait in perpetuity for legislative approval,” they wrote.

The fired employees’ attorneys have urged lawmakers to approve the settlement, but its funding looks bleak after top legislators, including House Speaker Dade Phelan, came out against the use of state funds to settle the case. The Legislature’s top budget writers did not include the settlement in their first draft of bills to resolve miscellaneous legal claims.

In a filing to the Supreme Court on Wednesday, attorneys for the former employees said the attorney general’s office has told them verbally that they have put the whistleblowers in a “gotcha position.” If lawmakers do not approve funding for the settlement by the end of this legislative session on May 29, the attorney general’s office has said the whistleblower case should remain on pause until the next legislative session in 2025. If it is not approved again, the filing reads, the attorney general’s office has said the case should remain on pause until the following session in 2027.

“And so on in perpetuity. [The Office of Attorney General] tells Respondents the case will never resume; they have given up their claims forever, even if legislative approval is not forthcoming,” the filing reads. “[The Office of Attorney General] thus reaps all benefits of a settlement, and [the former employees] achieve none.”

In written communications, the fired employees’ attorneys say Paxton’s office has been “craftier,” arguing that it is still researching what would happen if the Legislature refuses to approve the settlement and will not address that potential outcome until it happens.

The fired employees’ attorneys blasted both positions as “preposterous,” arguing that they would have never agreed to put the case on pause indefinitely or for a lengthy time period.

The motion to pause the case — which was requested, drafted and filed by the attorney general’s office with agreement by the fired employees — was “intended to briefly postpone” any potential ruling while the two sides sought legislative approval for the $3.3 million settlement. But attorneys for the fired employees say Paxton’s refusal to set a deadline is preventing the two sides from completing the settlement agreement while at the same time not letting their case against him move forward.

The whistleblower lawsuit was filed after eight former top deputies to Paxton accused him of bribery and abuse of office in October 2020 and reported Paxton’s alleged actions to authorities. All eight of those employees either were fired or resigned.

No charges have been filed against Paxton, but the reports to authorities set off an FBI investigation into Paxton. He has denied wrongdoing.

In November 2020, four of the former employees — Blake Brickman, David Maxwell, Mark Penley and Ryan Vassar — filed a whistleblower lawsuit claiming Paxton had improperly retaliated against them after they accused him of criminal acts. They sought reinstatement and compensation for lost wages, as well as pay for future lost earnings and damages for emotional pain and suffering.

Filings in the whistleblower suit revealed more details about the crimes the former employees alleged Paxton committed, including doing political favors for real estate developer Nate Paul, a friend and political donor who gave Paxton $25,000 for his 2018 campaign. The allegations said Paul helped Paxton with a home remodel and by hiring Paxton’s alleged girlfriend. Paxton is married to state Sen. Angela Paxton, R-McKinney.

The whistleblowers claimed Paxton pushed to have the attorney general’s office get involved in Paul’s legal disputes, even when lawyers in the office advised against it. Paxton pushed to investigate a real estate deal involving one of Paul’s companies and an Austin charity, and appointed a special counsel to look into claims Paul made that state and federal law enforcement had improperly raided his home in 2019. Lawyers in the attorney general’s office had found “no credible evidence” that Paul’s rights were violated, but the special counsel was appointed over their objections.

Paul has denied wrongdoing.

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