Tex. Educ. Agency v. U.S. Dep't of Educ., 20-60051

• Court: United States Courts of Appeals. United States Court of Appeals (5th Circuit)
• Citation: 992 F.3d 350
• Docket Number: No. 20-60051,20-60051
• Parties: TEXAS EDUCATION AGENCY, Petitioner, v. UNITED STATES DEPARTMENT OF EDUCATION, Respondent.
• Decision Date: 23 March 2021

992 F.3d 350

TEXAS EDUCATION AGENCY, Petitioner,
v.
UNITED STATES DEPARTMENT OF EDUCATION, Respondent.

No. 20-60051

United States Court of Appeals, Fifth Circuit.

FILED March 23, 2021

Drew L. Harris, Assistant Attorney General, Glorieni Marie Azeredo, Assistant Attorney General, Office of the Attorney General, General Litigation Division, Cynthia O. Akatugba, Office of the Attorney General, General Litigation Division, Austin, TX, for Petitioner.

Jaynie Randall Lilley, U.S. Department of Justice, Washington, DC, Elisabeth Prince DeVos, Secretary, U.S. Department of Education, U.S. Department of Education, Marleigh D. Dover, Assistant Director, U.S. Department of Justice, Carlos Muniz, U.S. Department of Education, Washington, DC, for Respondent.

Before Higginbotham, Smith, and Dennis, Circuit Judges.

Jerry E. Smith, Circuit Judge:

The National Defense Authorization Act of 2013 ("NDAA") prohibits any recipient of federal dollars from retaliating against whistleblowers who report an abuse of that money. Laurel Kash filed a complaint with the U.S. Department of Education ("DOE"), alleging that the Texas Education Agency ("TEA") had discharged her in retaliation for whistleblowing; the TEA maintains it did so for legitimate reasons.

The DOE investigated Kash's complaint, credited it, and awarded her damages. The TEA contends that violated Texas's sovereign immunity. Agreeing with the TEA, we grant the petition for review, vacate the offending order, and remand for prompt entry of dismissal.

992 F.3d 354

I.

Congress enacted a broad-based whistleblower protection program as part of the NDAA.¹ The operative provision reads as follows:

An employee of a contractor, subcontractor, grantee, or subgrantee or personal services contractor may not be discharged, demoted, or otherwise discriminated against as a reprisal for disclosing to a person or body described in paragraph (2) information that the employee reasonably believes is evidence of gross mismanagement of a Federal contract or grant, a gross waste of Federal funds, an abuse of authority relating to a Federal contract or grant, a substantial and specific danger to public health or safety, or a violation of law, rule, or regulation related to a Federal contract (including the competition for or negotiation of a contract) or grant.

41 U.S.C. § 4712(a)(1). The NDAA, by its terms, applies to any federal contract or grant and is not limited to a particular appropriation or class of grant.²

If an employee believes he was subject to unlawful retaliation, he submits a complaint to the Inspector General of the agency responsible for the relevant federal money, at which point that agency investigates the complaint and determines whether the employer unlawfully retaliated. See id. § 4712(b)(1)–(2)(A). Depending on its findings, the agency then issues an order denying or granting relief, which can include reinstating the whistleblower, otherwise abating the adverse employment action, and paying damages that can cover backpay and attorney's fees. See id. § 4712(c)(1)(A)–(C). Any person aggrieved by that order (i.e., a complainant denied relief or an employer ordered to give relief) may petition the appropriate U.S. Court of Appeals for review, which conforms with the provisions for judicial review in the Administrative Procedure Act ("APA"). Id. § 4712(c)(5).

Kash was hired as the TEA's Director of Special Education in the summer of 2017. During the hiring process, the TEA conducted a background check in which it discovered allegations that Kash had kissed a high school student at her previous job in Oregon. Kash explained that the allegations were false, had been made by a disgruntled and discredited colleague, and had been rejected by Oregon state officials. The TEA hired Kash despite the allegations because she had been exonerated.

Kash's employment at the TEA got off to a rocky start. She reported directly to Justin Porter, who observed and received reports of Kash's allegedly unprofessional behavior throughout the early parts of her tenure. He held multiple counseling sessions with her in her first few months.

In October, Kash voiced her concerns about the TEA's data analysis contract with an entity called SPEDx, funded with money granted under the Individuals with Disabilities Education Act ("IDEA"). Kash told Porter she believed the contract was unnecessary and that it was awarded because the SPEDx contractor and a sub-contractor were friends of Penny Schwinn, Porter's direct supervisor. Schwinn caught

992 F.3d 355

wind of those allegations and discussed them with Kash and Porter. The same day as that conversation, Kash reported her concerns about the SPEDx contract to Bill Wilson, the TEA's Director of Internal Audit. She repeated her belief that the contract was awarded because the contractor and sub-contractor had a personal relationship with Schwinn, and she added a concern that the contract was inappropriately awarded on a sole-source basis.

The following month, Porter issued Kash a formal letter of reprimand that alleged instances of Kash's purported unprofessionalism and inappropriate communications with external stakeholders. The letter also discussed Kash's complaints about the SPEDx contract, saying that, although Kash could report the allegations through appropriate channels, it was inappropriate to voice her complaints in the way that the letter asserted she had. The letter said that voicing those concerns to external stakeholders in particular could undermine Schwinn's reputation and negatively impact the TEA. Shortly thereafter, Kash followed up with Wilson about her concerns with the SPEDx contract and expressed her fear that she would be fired.³

A few weeks later, an allegation became public that Kash had "tried to cover up the physical and sexual abuse of a six-year-old special education student and retaliated against the teaching assistants who reported it." The teaching assistants had filed a lawsuit in Oregon detailing those allegations. And the TEA received emails from members of the public concerned about the allegations. Upon learning of the lawsuit, Porter texted Kash that he was going to direct questions about the allegations to the TEA's communications director; Kash responded that she was not liable for anything and that the lawsuit was brought by "that crazy employee I told you about this summer."⁴

Days after the cover-up allegations broke, Kash filed a complaint about the SPEDx contract with the DOE Office of the Inspector General ("OIG"). Before that, the TEA had been discussing whether to terminate Kash's employment. The day after she filed her complaint, the TEA did so.⁵

Kash filed a whistleblower-retaliation complaint with the OIG the following September. She claimed that both her termination and the letter of reprimand she received were retaliation for her reporting legal problems with the SPEDx contract. The TEA maintained that it terminated her because she could no longer effectively do her public-facing job after the cover-up allegations broke. Following a yearlong investigation, the OIG "sustained Kash's allegations of whistleblower reprisal" based

992 F.3d 356

on her termination.⁶

After a full hearing, an ALJ agreed and ordered the TEA to pay Kash damages. The TEA petitions for review, claiming, among other things, that the investigation and award of damages violates Texas's sovereign immunity. Since that is a constitutional issue, our review is de novo .⁷

II.

In general, states⁸ are immune from federal agencies’ adjudication of private parties’ complaints in the same way they are immune from suit. Fed. Mar. Comm'n v. S.C. State Ports Auth. , 535 U.S. 743, 747, 122 S.Ct. 1864, 152 L.Ed.2d 962 (2002). The DOE and Kash submit different theories of why, despite that general rule, sovereign immunity does not bar the DOE's investigation and award of damages. Kash analogizes the proceeding to a suit brought by the United States, which would not be barred by sovereign immunity. The DOE contends that the TEA waived its immunity from whistleblower-retaliation claims because the NDAA conditions acceptance of federal money on such a waiver. Both theories fall short.⁹

A.

Though states are immune from suits brought by private parties, "[i]n ratifying the Constitution, the States consented to suits brought by ... the Federal Government." Alden v. Maine , 527 U.S. 706, 755, 119 S.Ct. 2240, 144 L.Ed.2d 636 (1999). Kash contends that the NDAA's whistleblower-retaliation provision "reflects Congress's longstanding, but growing recognition of the indispensable role whistleblowers play in revealing waste, fraud, and abuse in federal grantmaking and contracting with a variety of parties, including states." On that basis, Kash theorizes that the DOE's investigation and order advance the United States’ "interest in having state grantee compliance with federal law be unhindered by whistleblower retaliation." Therefore, she posits that the proceeding is less like one in which a private complainant hales the state before the administrative agency and more like a suit brought by the United States to defend its own interests.

Whether whistleblower-retaliation investigations into a...