Neighborhood Centers Inc. v. Doreatha Walker

ACCEPTED
01-14-00844-CV
FIRST COURT OF APPEALS
HOUSTON, TEXAS
1/8/2015 9:31:40 PM
CHRISTOPHER PRINE
CLERK

C ASE N O . 01-14-00844-CV
FILED IN
In the First Court of Appeals 1st COURT OF APPEALS
HOUSTON, TEXAS
Houston, Texas 1/8/2015 9:31:40 PM
CHRISTOPHER A. PRINE
Clerk
Neighborhood Centers, Inc.,
Appellant

v.

Doreatha Walker,
Cross-Appellant and Appellee

From the 80th District Court, Harris County, Texas
Cause No. 2014-37034

DOREATHA WALKER’S
COMBINED CROSS-APPELLANT AND APPELLEE’S BRIEF

HIRSCH & WESTHEIMER, P.C.
Whitney Rawlinson
State Bar No. 24068655
1415 Louisiana, 36th Floor
Houston, Texas 77002
713.223.5181 -- Telephone
713.223.9319 -- Facsimile
wrawlinson@hirschwest.com
ATTORNEYS FOR DOREATHA WALKER

Oral Argument Requested
 IDENTITIES OF PARTIES AND COUNSEL

Appellant: Attorneys:

NEIGHBORHOOD CENTERS, INC. WILSON, ELSER, MOSKOWITZ,
EDELMAN & DICKER, LLP
Linda P. Wills
Texas Bar No. 21661400
Nicole L. Phillips
Texas Bar No. 24074892
909 Fannin Street, Ste. 3300
Houston, Texas 77019
Telephone: (713) 353-2000
Facsimile: (713) 785-7780
linda.wills@wilsonelser.com
nicole.phillips@wilsonelser.com

Cross-Appellant and Appellee: Attorneys:

MS. DOREATHA WALKER HIRSCH & WESTHEIMER, P.C.
Whitney Rawlinson
State Bar No. 24068655
wrawlinson@hirschwest.com
1415 Louisiana, 36th Floor
Houston, Texas 77002
Telephone: (713) 220-9140
Facsimile: (713) 223-9319
wrawlinson@hirschwest.com

i
 TABLE OF CONTENTS
Identities of Parties and Counsel .................................................................................. i
Table of Contents ........................................................................................................... ii
Index of Authorities ...................................................................................................... iii
Statement of the Case.................................................................................................... vi
Issue Presented on Cross-Appeal .............................................................................. vii
Statement of Facts .......................................................................................................... 1
Summary of the Argument ........................................................................................... 4
Argument and Authorities ............................................................................................ 5
I. The trial court improperly concluded Neighborhood
Centers is immune from suit under chapter 451 of the
Texas Labor Code. .......................................................................................5
A. Chapter 451 creates a private cause of action against
Neighborhood Centers, a private employer.............................6
B. Texas courts have not decisively afforded entities
like Neighborhood Centers immunity from suit. ...................7
C. An entity should not obtain immunity from suit
merely by operating an open-enrollment charter
school. ................................................................................................ 12
II. The Court should not disturb the denied plea to the
jurisdiction on the claim under the Texas Whistleblower
Act. ................................................................................................................. 15
A. In the absence of immunity from suit, this Court
lacks appellate jurisdiction to review the trial
court’s ruling. .................................................................................. 16
B. Otherwise, a governmental entity must act as a
lawful governmental entity. ....................................................... 17
C. Guaranty Petroleum does not affect the Court’s
inquiry. .............................................................................................. 21
Conclusion and Prayer ............................................................................................... 233
Certificate of Compliance ............................................................................................ 24
Certificate of Service .................................................................................................... 25

ii
 INDEX OF AUTHORITIES
CASES

Ben Bolt-Palito Blanco Consolidated ISD v. Tex. Political Subdivisions
Property/Cas. Joint Self-Ins. Fund,
212 S.W.3d 320 (Tex. 2006) ..................................................................... 8-9, 12-13

City of Dallas v. Albert,
354 S.W.3d 368 (Tex. 2011) ................................................................................. 8, 9

City of Houston v. Levingston,
221 S.W.3d 204 (Tex. App.Houston [1st Dist.] 2006) ................................ 17

City of Houston v. Woolley,
51 S.W3d 850 (Tex. App.—Houston [1st Dist.] 2001) ................................... 20

City of Seabrook v. Port of Houston Auth.,
199 S.W.3d 403 (Tex. App.—Houston [1st Dist.] 2006, pet dism'd) ........... 17

Dutcher v. Owens,
647 S.W.2d 948 (Tex. 1983) ................................................................................... 19

Guaranty Petroleum Corp. v. Armstrong,
609 S.W.2d 529 (Tex. 1980) ............................................................................ 21, 22

Guthrey v. Taylor,
112 S.W.3d 715 (Tex. App.—Houston [14th Dist.] 2003, no pet.) .............. 21

Howle v. Camp Amon Charter,
470 S.W.2d 629 (Tex. 1971) ................................................................................... 14

KIPP, Inc. v. Whitehead,
446 S.W.3d 99 (Tex. App.—Houston [1st Dist.] 2014, pet. filed) ................ 11

Long v. Castle Tex. Prod. Ltd.,
426 S.W.3d 73, 78 (Tex. 2014)................................................................................. 5

LTTS Charter School, Inc. v. C2 Construction, Inc., ("C2 Construction II")
342 S.W.3d 73 (Tex. 2011) .............................................................................. passim

iii
LTTS Charter School, Inc. v. C2 Construction, Inc., ("C2 Construction III")
358 S.W.3d 725 (Tex. App.—Dallas 2011, pet. denied) ............................... 10, 11

LTTS Charter School, Inc. v. Palasota,
344 S.W.3d 378 (Tex. 2011) ..................................................................................... 9

LTTS Charter School, Inc. v. Palasota,
362 S.W.3d 202 (Tex. App.Dallas 2012) .................................................. 10, 11

Pegasus School of Liberal Arts & Sciences v. Ball-Lowder,
—S.W.3d—, 2013 WL 6063834
(Tex. App.—Nov. 18, 2013, pet. filed) ..................................................... 10-11, 19

Prepared Table, Inc. v. Assured Learning Centers of Am., Inc.,
No. 14-01-00912-CV, 2002 WL 1438617
(Tex. App.—Houston [14th Dist.] July 3, 2002) ..........................................8, 11

Reata Constr. Corp. v. City of Dallas,
197 S.W.3d 371 (Tex. 2006) ............................................................................ 12, 13

SJ Med. Ctr., LLC v. Estahbanati,
418 S.W.3d 867 (Tex. App.—Houston [14th Dist.] 2013, no pet.) .............. 10

State of Tex. v. Holland,
221 S.W.3d 639 (Tex. 2007) ..................................................................................... 5

Tex. Dep't of Parks & Wildlife v. Miranda,
133 S.W.3d 217 (Tex. 2006) ..................................................................................... 8

Tex. Dept. of Criminal Justice v. Simons,
140 S.W.3d 338 (Tex. 2004) ................................................................................... 17

TGS-NOPEC Geophysical Co. v. Combs,
340 S.W.3d at 441 (Tex. 2011) .............................................................................. 20

Tooke v. City of Mexia,
197 S.W.3d at 332 (Tex. 2006) ..........................................................................8, 12

Travis Central Appraisal Dist. v. Norman,
342 S.W.3d 54 (Tex. 2011) ................................................................................... 6, 7

iv
Warnke v. Nabors Drilling USA, LP,
358 S.W.3d 338 (Tex. App.—Houston [1st Dist.] 2011, no pet.) ................. 11

STATUTES

TEX. CIV. PRAC. & REM. CODE § 51.014(a)(8) ................................................... passim

TEX. EDUC. CODE § 12.103(a) .................................................................................... 18

TEX. EDUC. CODE § 12.1056 ..................................................................................... 7-8

TEX. EDUC. CODE § 12.1161(a) .................................................................................. 14

TEX. EDUC. CODE § 12.128(a) .................................................................................... 14

TEX. EDUC. CODE § 45.001 ......................................................................................... 14

TEX. GOV'T CODE § 554.001(2) ............................................................................16, 18

TEX. GOV'T CODE § 554.002(A) ............................................................................16, 19

TEX. GOV'T CODE § 554.0035 ..................................................................................... 18

TEX. LAB. CODE § 504.001(3) ....................................................................................... 6

TEX. LAB. CODE § 504.053(e) ....................................................................................... 7

v
 STATEMENT OF THE CASE

Nature of Case This is an interlocutory appeal taken from a trial
court’s ruling on plea to the jurisdiction filed by an
entity operating an open-enrollment charter school.
See TEX. CIV. PRAC. & REM. CODE § 51.014(a)(8);
LTTS Charter School, Inc. v. C2 Construction, Inc., 342
S.W.3d 73, 82 (Tex. 2011).

Court Below 80th Judicial District Court
Harris County, Texas
Hon. Judge Larry Weiman Presiding

Course of Proceedings Ms. Walker sued Neighborhood Centers, her former
employer, asserting a cause of action for (1) worker’s
compensation retaliation under chapter 415 of the
Texas Labor Code, and (2) discrimination under the
Texas Whistleblower Act. 1CR 105 et seq.

Neighborhood Centers filed a plea to the jurisdiction,
asserting governmental immunity from suit on both
claims. 1CR 196 et seq.

On September 26, 2014, the trial court granted the
plea as to the claim under chapter 451 of the Texas
Labor Code, but denied the plea as to the claim under
the Texas Whistleblower Act. 1CR 317.

Neighborhood Centers perfected an interlocutory
appeal, and Ms. Walker perfected an interlocutory
cross-appeal. 1CR 333; 2CR 280.

vi
 ISSUE PRESENTED ON CROSS-APPEAL

Before courts deem an entity “a government unit unto
itself” with immunity from suit, they must first find legislative
intent to confer the nature, purposes, and powers of an “arm of
the State government.” Neighborhood Centers is a private
nonprofit corporation that operates an open-enrollment charter
school, but disavows all other functions, burdens, and purposes of
a governmental entity. Texas courts have not decisively afforded
Neighborhood Centers immunity from suit—should this Court do
so?

vii
 STATEMENT OF FACTS
Neighborhood Centers, Inc. is a private nonprofit corporation that

operates an open-enrollment charter school under chapter 12 of the Texas

Labor Code.1 Neighborhood Centers claims to offer a number of other services

and programs, such as Head Start, workforce career centers, meals and

programs for seniors, immigration services, tax preparation services, and a

community credit union. 2

Ms. Walker holds a master’s degree and certification in mid-

management as a principal.3 Neighborhood Centers began employing Ms.

Walker as a third-grade teacher at its open-enrollment charter school in 2013,

and recognized her efforts by featuring her as a “Good Worker” in early

2014.4

During that time, Ms. Walker and other witnesses discovered a number

of standardized testing irregularities and possible health code violations in her

classroom, which were making Ms. Walker and her students feel ill.5 Ms.

1 1CR 105-06, 1CR 196.
2 1CR 201.
3 1CR 106.
4 1CR 105-06, 118; 1CR 196.
5 1CR 106–07, 110, 114.

1
Walker began to document these problems and informed Neighborhood

Centers, but to no avail. 6

In March 2014, Ms. Walker requested paperwork from Neighborhood

Centers to complete a worker’s compensation claim and seek medical

treatment for her symptoms.7 Instead, Neighborhood Centers directed Ms.

Walker into a meeting where she was informed she was being removed from

her students, demoted from her position as a third-grade teacher, and

reassigned as an “interventionist” and “girl scout leader.”8 Neighborhood

Centers threatened to deny Ms. Walker’s worker’s compensation claim if she

declined to comply. 9 Embarrassed and feeling unfairly penalized, she

reluctantly accepted.10

A few days later, upon learning Ms. Walker had reported the testing

irregularities and health code violations to the appropriate authorities,

Neighborhood Centers placed Ms. Walker on leave, then terminated her on

false pretenses.11

6 1CR 110.
7 1CR 105-106.
8 1CR 106, 111.
9 1CR 111–12.
10 1CR 106-07, 111.
11 1CR 108, 110.

2
 Ms. Walker sued Neighborhood Centers for worker’s compensation

retaliation under chapter 451 of the Texas Labor Code, and wrongful

discharge and discrimination under the Texas Whistleblower Act. 12 Ms.

Walker sought damages and reinstatement to her former position as a third-

grade teacher so she could continue to pursue her goal of becoming an

administrator. 13

Neighborhood Centers filed a plea to the jurisdiction on both claims,

arguing that governmental immunity from suit deprived the trial court of

subject-matter jurisdiction to decide them. 14 After a hearing, the trial court

granted the plea as to the claim under chapter 451 of the Texas Labor Code,

but denied the plea as to the claim under the Texas Whistleblower Act. 15

Neighborhood Centers perfected an interlocutory appeal, and Ms.

Walker perfected an interlocutory cross-appeal.16 See TEX. CIV. PRAC. & REM.

CODE § 51.014(a)(8); LTTS Charter School, Inc. v. C2 Construction, Inc., 342

S.W.3d 73, 82 (Tex. 2011).

12 1CR 105 et seq.
13 1CR 117, 119.
14 1CR 198–202.
15 1CR 317.
16 1CR 333; 2CR 280.

3
 SUMMARY OF THE ARGUMENT
By granting Neighborhood Centers’ plea to the jurisdiction on the claim

under chapter 451 of the Texas Labor Code, the trial court improperly

concluded Neighborhood Centers enjoys immunity from suit rather than

immunity from liability. Neighborhood Centers is a private nonprofit

corporation subject to a cause of action for worker’s compensation retaliation

under chapter 451 as a private employer. Texas courts have not decisively

afforded entities like Neighborhood Centers immunity from suit, and no public

purpose or policy compels this Court to do so. The trial court’s dismissal of

this claim should be reversed.

The Court should not disturb the denial of Neighborhood Centers’ plea

to the jurisdiction on the claims under the Texas Whistleblower Act. In the

absence of immunity from suit, Neighborhood Centers’ arguments about

waiver of immunity no longer apply, and neither subject-matter jurisdiction

nor appellate review under Texas Civil Practice & Remedies Code §

51.014(a)(8) are implicated. Alternatively, Neighborhood Centers should not

be treated as a governmental entity for the purpose of claiming immunity from

suit, yet avoid a remedial statute designed to ensure lawful conduct and

protect employees of governmental entities.

4
 Whether a trial court has subject-matter jurisdiction is a question of law

reviewed de novo on appeal. State of Tex. v. Holland, 221 S.W.3d 639, 642 (Tex.

2007). Similarly, a trial court’s interpretation of a statute is reviewed de novo

on appeal. Long v. Castle Tex. Prod. Ltd., 426 S.W.3d 73, 78 (Tex. 2014).

ARGUMENT AND AUTHORITIES
I. The trial court improperly concluded Neighborhood Centers is
immune from suit under chapter 451 of the Texas Labor Code.
Although Neighborhood Centers is a private nonprofit corporation, it

emphasizes that its open-enrollment charter school is “part of the Texas public

school system.” Neighborhood Centers argued in its plea to the jurisdiction

that its governmental immunity from suit is not waived under chapter 451 or

any other worker’s compensation statute, and urged the trial court to dismiss

the claim under chapter 451 for lack of subject-matter jurisdiction. 17

But Neighborhood Centers improperly assumed the conclusion of its

own argument: Does a private nonprofit corporation enjoy immunity from suit

merely because it operates an open-enrollment charter school?

This is an unsettled question in Texas jurisprudence that should be

answered in the negative. This Court should reverse the trial court’s dismissal

of this claim, and remand this case for further proceedings.

17 1CR at 198–99.

5
 A. Chapter 451 creates a private cause of action against
Neighborhood Centers, a private employer.
Chapter 451 of the Texas Labor Code, also known as the “Anti-

Retaliation Law,” was enacted in 1971 to create a cause of action against any

“person” who “discharge[s] or in any other manner discriminate[s] against

an employee because the employee has filed a worker’s compensation claim in

good faith.” See TEX. LAB. CODE § 451.001(1). The statute does not define the

word “person” but has been held to cover the actions of private employers. See

Travis Central Appraisal Dist. v. Norman, 342 S.W.3d 54, 54-55 (Tex. 2011).

Two years after the Anti-Retaliation Law was enacted, it was adopted

and incorporated by a sister statute under chapter 504 of the Texas Labor

Code. Id. at 56. For the first time, chapter 504 required “political subdivisions”

to provide worker’s compensation benefits and expressly made the Anti-

Retaliation Law applicable to these “political subdivisions.” Id. Public school

districts are included in the definition of “political subdivisions” under chapter

504, and their governmental immunity from suit was held to have been

legislatively waived by its enactment. See id. at 57; see also TEX. LAB. CODE §

504.001(3).

A subsequent amendment to chapter 504 included a broad statement at

the end of an unrelated section that “[n]othing in this chapter waives

6
sovereign immunity or creates a new cause of action.” Norman, 342 S.W.3d at

57. (citing TEX. LAB. CODE § 504.053(e)). The Texas Supreme Court

concluded this statement “cloud[ed] the chapter’s former clarity” regarding

governmental immunity from suit. Id. at 57, 58–59. The court held that

chapter 504 could no longer be read as a “clear and unambiguous” expression

of consent for “political subdivisions” to be sued in a private cause of action

under the Anti-Retaliation Law. See id. at 58–59 (discussing section

504.053(e)).

Regardless of whether chapter 504 waives a public school district’s

governmental immunity from suit as a political subdivision, it is undisputed

that Neighborhood Centers is a private nonprofit corporation and a private

employer. Its plea to the jurisdiction could not properly have been granted

unless, as a preliminary matter, it enjoys immunity from suit merely because it

operates an open-enrollment charter school.

B. Texas courts have not decisively afforded entities like
Neighborhood Centers immunity from suit.
Neighborhood Centers predicated its plea to the jurisdiction on section

12.1056 of the Texas Education Code, which provides that open-enrollment

charter schools are “immune from liability to the same extent as a school

7
district.” TEX. EDUC. CODE § 12.1056. 18 As the Texas Supreme Court recently

noted, section 12.1056 grants open-enrollment charter schools statutory

“immunity from liability” without mentioning “immunity from suit.” LTTS

Charter School, Inc. v. C2 Construction, Inc. (“C2 Construction II”), 342 S.W.3d 73,

78 n.44 (Tex. 2011) (citing TEX. EDUC. CODE § 12.1056).

Immunity from liability is not synonymous with immunity from suit.

Tooke v. City of Mexia, 197 S.W.3d 325, 332 (Tex. 2006). The former is an

affirmative defense that bars or limits enforcement of a judgment against a

party. See id.; see also Tex. Dep’t of Parks & Wildlife v. Miranda, 133 S.W.3d

217, 224–25 (Tex. 2006). Only the latter can form the basis of a plea to the

jurisdiction. See Prepared Table, Inc. v. Assured Learning Centers of Am., Inc., No.

14-01-00912-CV, 2002 WL 1438617, at *2 (Tex. App.—Houston [14th Dist.]

July 3, 2002, no pet.) (not designated for publication) (discussing TEX. EDUC.

CODE § 12.1056 regarding open-enrollment charter schools and noting “[t]he

defense of immunity from liability is, however an affirmative defense”).

Governmental immunity from suit is a common-law doctrine, and its

boundaries are carefully drawn by the judiciary. See City of Dallas v. Albert, 354

S.W.3d 368, 373 (Tex. 2011). Courts examine the nature of an entity before

granting it governmental status with immunity from suit. See, e.g., Ben Bolt-

18 See 1CR 198; Appellant’s Brief, at 12.

8
Palito Blanco Consolidated ISD v. Tex. Political Subdivisions Property/Cas. Joint

Self-Ins. Fund, 212 S.W.3d 320, 324–26 (Tex. 2006). If governmental

immunity from suit is held to exist, limited waivers may only be created by the

legislature. City of Dallas, 354 S.W.3d at 373.

The Texas Supreme Court has not affirmatively decided whether a

private nonprofit corporation enjoys immunity from suit if it operates an open-

enrollment charter school. See C2 Construction II, 342 S.W.3d at 82; id. at 90 (J.

Guzman, dissenting) (“[I]t is unsettled whether the Legislature has the power

to confer immunity from suit on privately operated, open-enrollment charter

schools.”); see also LTTS Charter School, Inc. v. Palasota, 344 S.W.3d 378, 378

(Tex. 2011) (per curiam) (noting that C2 Construction II did “not decide the

underlying issue of whether an open-enrollment charter school possesses

immunity from suit”). 19

A divided Texas Supreme Court did recently conclude section

51.014(a)(8) of the Texas Civil Practice and Remedies Code authorizes an

interlocutory appeal from a ruling on a plea to the jurisdiction filed by an

19 The Solicitor General for the State of Texas has not, as asserted by Neighborhood
Centers, argued to the Texas Supreme Court that open-enrollment charter schools “have
immunity from suit.” See Appellant’s Brief, at 25–26. The Solicitor General explained the
State “takes no position as to whether open-enrollment charter schools enjoy immunity
from suit,” but urged that the court should only base such a determination, if any, “on the
background rules governing the creation of governmental entities” set out in Ben Bolt-
Palito Blanco Consolidated ISD v. Tex. Political Subdivisions Property/Casualty Joint Self-Ins.
Fund, 212 S.W.3d 320 (Tex. 2006). See Appellant’s Brief, Appendix D, at 1–2.

9
entity operating an open-enrollment charter school. See C2 Construction II, 342

S.W.3d at 74–75. This holding does not mandate a conclusion that all such

entities are entitled to immunity from suit. See, e.g., SJ Med. Ctr., LLC v.

Estahbanati, 418 S.W.3d 867, 872 (Tex. App.—Houston [14th Dist.] 2013, no

pet.) (noting some entities that are not governmental units may nonetheless be

statutorily treated as if they were for certain purposes).

On remand from C2 Construction II, the Fifth Court of Appeals in Dallas

confronted this separate, unresolved question. See LTTS Charter School, Inc. v.

C2 Construction, Inc. (“C2 Construction III”), 358 S.W.3d 725, 735 (Tex.

App.Dallas 2011, pet. denied). The court of appeals treated the issue as one

of first impression and concluded an entity operating an open-enrollment

charter school does enjoy immunity from suit. Id. at 735–36 (citation omitted).

The court of appeals immediately applied its holding in a companion case that

had been reversed and remanded by the Texas Supreme Court in light of C2

Construction II. See LTTS Charter School, Inc. v. Palasota, 362 S.W.3d 202, 208

(Tex. App.Dallas 2012, no pet.) (on remand from 344 S.W.3d 378 (Tex.

2011)).

Shortly thereafter, in Pegasus School of Liberal Arts & Sciences v. Ball-

Lowder, the Fifth Court of Appeals summarized this new development in case

10
law and analyzed a related issue involving open-enrollment charter schools

and the Texas Whistleblower Act. See —S.W.3d—, No. 05-13-004-482-CV,

2013 WL 6063834, at *1, 3 (Tex. App.—Nov. 18, 2013, pet. filed). The court

of appeals’ resolution of that issue is currently pending review, and the parties

and amicus curiae recently responded to the Texas Supreme Court’s request

for briefing on the merits. 20

As noted by Neighborhood Centers, this Court is not bound by any

holding of the Fifth Court of Appeals. Warnke v. Nabors Drilling USA, LP, 358

S.W.3d 338, 348 (Tex. App.—Houston [1st Dist.] 2011, no pet.). 21 No other

Texas courts of appeals have expressly held a plea to the jurisdiction may

properly be granted in favor of a private nonprofit corporation if it operates an

open-enrollment charter school.

20 In KIPP, Inc. v. Whitehead, this Court restated the same holding from C2
Construction II the Fifth Court of Appeals reiterated in Pegasus. See 446 S.W.3d 99, 105
(Tex. App—Houston [1st Dist.] 2014, pet. filed) (citing LTTS Charter School v. Palasota,
362 S.W.3d 202, 208 (Tex. App.—Dallas 2012, no pet.) (citing C2 Construction III, 358
S.W.2d at 735)). But none of the parties in KIPP challenged whether the entity operating
an open-enrollment charter school in that case enjoyed immunity from suit as a preliminary
matter, and this Court ultimately concluded that the plea to the jurisdiction was properly
denied for other reasons. The Texas Supreme Court has requested a response to the
petition for review in KIPP, which implicitly conflicts with the Fourteenth Court of
Appeals’ analysis in Prepared Table, Inc., 2002 WL 1438617, at *2.
21 See Appellant’s Brief, at 17 n.5.

11
 C. An entity should not obtain immunity from suit merely by
operating an open-enrollment charter school.
The objective of sovereign and governmental immunity from suit is

pragmatic: “to shield the public from the costs and consequences of

improvident actions of their governments.” Tooke, 197 S.W.3d at 331. The

absence of governmental immunity from suit “may hamper governmental

functions” and require public resources to be used for defending lawsuits and

satisfying judgments, rather than “their intended purposes.” Reata Constr. Corp.

v. City of Dallas, 197 S.W.3d 371, 374 (Tex. 2006).

For an entity to claim status as “a government unit unto itself” and

enjoy immunity from suit, “the governing statutory authority” must evidence

legislative intent to grant the entity “the ‘nature, purposes, and powers’ of an

‘arm of the State government.’” Ben Bolt, 212 S.W.3d at 325. Governmental

entities are those legislatively endowed with the “powers of government

and . . . the authority to exercise such rights, privileges and functions.” Id.

Neither Neighborhood Centers nor its open-enrollment charter school

is legislatively endowed with any governmental powers. Neighborhood

Centers concedes it does not possess typical indicia of governmental authority,

such as jurisdiction over a portion of the state, a governing body that is

12
locally-elected, or the power to assess and collect taxes. 22 Unlike public school

districts, both Neighborhood Centers and its open-enrollment charter school

are governed by corporate charters and boards, and cannot be described as

“body politic[s].” See id. No governmental functions are disrupted if private

nonprofit corporations must defend claims asserted against it as usual. See

Reata Construction Corp., 197 S.W.3d at 374.

No overriding governmental purpose or public policy supports an

alternative conclusion. As Neighborhood Centers is quick to point out, there is

a meaningful distinction between a public school district and a public school.23

Similarly, there must be a meaningful distinction between a private nonprofit

corporation and the open-enrollment charter school it operates. While the

purpose of an open-enrollment charter school may be similar to that of a

public school, a private nonprofit corporation may provide a multitude of other

services unrelated to a public school district’s mission: workforce career

centers, meals and programs for seniors, immigration services, free tax

preparation services, a community credit union. 24 Neighborhood Centers does

not argue these other initiatives are “governmental” in nature at all. 25

22 See Appellant’s Brief, at 13–15.
23 See Appellant’s Brief, at 27.
24 See Appellant’s Brief, at 5.
25 See Appellant’s Brief, at 27.

13
 The objectives of governmental immunity from suit are not advanced by

bestowing it on a private nonprofit corporation in this context. Although they

receive some state funding, 26 the open-enrollment charter schools are not

funded by public bonds or local tax revenue like public school districts. See

TEX. EDUC. CODE § 45.001. Nor would any state property purchased or leased

with funds received by the private nonprofit corporation be subject to

execution. See, e.g., TEX. EDUC. CODE § 12.128(a) (“Property purchased or

leased with funds received by a charter holder . . . is considered to be public

property . . . of this state held in trust . . . .”). If its charter is revoked, the

school ceases to operate as open-enrollment charter school and the private

nonprofit corporation ceases to receive state finding altogether. See TEX.

EDUC. CODE § 12.1161(a).

Consistent with Neighborhood Centers’ own arguments, the legislative

creation of charter schools does not “represent an expansion of the

government of the State of Texas, or the creation of hundreds of new local

governmental entities or political subdivisions” in their own right. 27

26 Although a private nonprofit corporation operating an open-enrollment charter
school receives some state funding and provides a public service, immunity from suit cannot
be based on this fact alone. “Charitable immunity” has been abolished since Howle v. Camp
Amon Charter, 470 S.W.2d 629, 630 (Tex. 1971).
27 See Appellant’s Brief, at 16.

14
 A private nonprofit corporations can always limit exposure by

shouldering the burden of establishing an affirmative defense based on

statutory immunity from liability. But to summarily permit a private nonprofit

corporation to “take on the mantle” of governmental immunity from suit

merely by operating an open-enrollment charter school leaves litigants

“deprived of their day in court” without justification or recourse. Cf. C2

Construction II, 342 S.W.3d at 83 (Guzman, J., dissenting) (complaining that

majority provided unwarranted “signal” that every private nonprofit

corporation may enjoy immunity from suit merely by operating an open-

enrollment charter school, when court did not fully analyze that issue).

The Court should sustain Ms. Walker’s issue on cross-appeal and

reverse the trial court’s dismissal of her claim under chapter 451 of the Texas

Labor Code.

II. The Court should not disturb the denied plea to the jurisdiction on
the claim under the Texas Whistleblower Act.
Ms. Walker also alleged that Neighborhood Centers took adverse

actions against and terminated her for reporting health code violations and

testing irregularities to appropriate authorities. 28 Under the Texas

Whistleblower Act, a “state or local governmental entity” may not “suspend or

28 1CR at 106-09.

15
terminate the employment of” or “take other adverse personnel action” against

an employee “who in good faith reports a violation of law” by that entity to an

appropriate law enforcement authority. See TEX. GOV’T CODE § 554.002(a);

554.001(4).

In its only issue on appeal, Neighborhood Centers complains the trial

court improperly denied its plea to the jurisdiction on this claim because “as a

private nonprofit corporation, there is no waiver of immunity” for claims

asserted under the Whistleblower Act.”29 However the Court resolves Ms.

Walker’s issue on cross-appeal, the Court should not disturb that ruling.

A. In the absence of immunity from suit, this Court lacks
appellate jurisdiction to review the trial court’s ruling.
If the Court sustains Ms. Walker’s issue on cross-appeal and concludes

that Neighborhood Centers enjoys no immunity from suit, the Court need not

decide whether the Whistleblower Act constitutes a legislative waiver of

immunity.

Whether a claim under the Whistleblower Act could be properly

brought against a private nonprofit corporation in that case would not

(1) implicate the trial court’s subject-matter jurisdiction, (2) be the proper

subject of a plea to the jurisdiction, or (3) be reviewable as an interlocutory

29 See Appellant’s Brief, at 13.

16
order under Texas Civil Practice & Remedies Code section 51.014(a)(8). See

City of Seabrook v. Port of Houston Auth., 199 S.W.3d 403, 413 (Tex.

App.Houston [1st Dist.] 2006, pet. dism’d) (“‘[A]n interlocutory appeal

cannot be taken from the denial of a plea to the jurisdiction that does not raise

an issue that can be jurisdictional.’” (quoting Tex. Dept. of Criminal Justice v.

Simons, 140 S.W.3d 338, 349 (Tex. 2004)).

In that event, the Court should dismiss Neighborhood Centers’ issue on

appeal for lack of appellate jurisdiction. Id.

B. Otherwise, a governmental entity must act as a lawful
governmental entity.
The Whistleblower Act is “designed to enhance openness in

government and to compel the government’s compliance with law by

protecting those who inform authorities of wrongdoing.” City of Houston v.

Levingston, 221 S.W.3d 204, 218 (Tex. App.Houston [1st Dist.] 2006, no

pet.) (citations omitted). The Whistleblower Act evidences two legislative

objectives: (1) to protect employees of state and local governmental entities

from retaliation by their employer when, in good faith, they report a violation

of the law, and (2) in consequence, to secure lawful conduct on the part of

those who direct and conduct the affairs of those entities. See id. (citation

17
omitted). Because the Whistleblower Act is remedial in nature, it should be

liberally construed to effect these purposes. Id.

The Whistleblower Act expressly creates a private cause of action

against state and local governmental entities, and waives any immunity from

suit to the extent of their liability under it. See TEX. GOV’T CODE § 554.0035.

It provides, in relevant part:

“Local governmental entity” means a political subdivision of the
state, including a:
(A) county;
(B) municipality;
(C) public school district; or
(D) special-purpose district or authority.

See TEX. GOV’T CODE § 554.001(2).

Neighborhood Centers does not dispute that a public school district is a

“local governmental entity” and enjoys no immunity from suit or immunity

from liability under the Whistleblower Act. Neighborhood Centers also does

not dispute that “an open-enrollment charter school is subject to federal and

state laws and rules governing public schools.” See TEX. EDUC. CODE §

12.103(a).

Neighborhood Centers nonetheless discourages the Court from

applying a remedial statute designed to secure lawful conduct and protect

18
employees of public schools, and in the same breath seeks immunity from suit

because it operates one. The Court must not overlook the “odd result” that

would occur if the Court accepts both arguments.

Neighborhood Centers argues the term “local governmental entity” is

“specifically and narrowly defined” in the Whistleblower Act and does not

expressly mention an open-enrollment charter school. 30 But the legislature

indicated its definition was not exclusive. See TEX. GOV’T CODE § 554.001(2)

(“local governmental entity” means “a political subdivision of the state,

including . . . .” (emphasis added)). In fact, open-enrollment charter schools did

not exist when the Whistleblower Act was originally enacted and could not

have been expressly included. 31 But the legislature prudently left the definition

open-ended, and this Court may conclude an open-enrollment charter school

fits within it.

30 See Appellant’s Brief, at 13.
31 That the legislature subsequently declined to pass S.B. No. 940 should have no
bearing on this Court’s analysis. See Appellant’s Brief, at 30. The 83rd legislative session, in
which S.B. No. 940 was introduced, concerned itself with a multitude of proposed charter
school reforms, which culminated in the passing of a broad, bi-partisan bill by the Texas
Senate and the House of Representatives: S.B. No. 2. Before it passed the Senate, S.B. No. 2
was extensively revised at the insistence of, among others, the author of S.B. No. 940. See,
e.g., http://www.texasobserver.org/senate-passes-charter-bill-after-compromises-with-
dems (discussing compromises and changes with Senator Royce West, author of S.B. No.
940) last visited on January 8, 2015. It is entirely possible S.B. No. 940 was not adopted
after introduction because more important reforms required the legislators’ attention, and
at least one Texas court of appeals was poised to hold that open-enrollment charter schools
already constitute “local governmental entities” under the Whistleblower Act. See Pegasus,
2013 WL 6063834, at *5. Courts should not “draw inference of the legislature’s intent from
the failure of . . . bills to pass.” See Dutcher v. Owens, 647 S.W.2d 948, 950 (Tex. 1983).

19
 Similarly, the legislature did not “limit” rather than illuminate the

statute’s application by using the term “local governmental entity” and

defining it as a “political subdivision.” 32 See TGS-NOPEC Geophysical Co. v.

Combs, 340 S.W.3d 432, 441 (Tex. 2011) (courts should “presume the

Legislature chooses a statute’s language with care, including each word

chosen for a purpose . . .”); City of Houston v. Woolley, 51 S.W3d 850, 853–54

(Tex. App.—Houston [1st Dist.] 2001, no pet.) (“We also should not adopt a

construction that would render a . . . provision . . . meaningless.”). 33

As explained above, open-enrollment charter schools are part of the

public school system, are responsible for implementing the state’s school

system of public education, are subject to state laws and rules governing

public schools, and are immune from liability to the same extent as a public

school district. The definition of “local governmental entity” under the

Whistleblower Act may be liberally construed to ensure lawful conduct and

protect employees of an open-enrollment charter school.

32 See Appellant’s Brief, at 20.
33 The Texas Supreme Court did not “declin[e] to hold that open-enrollment
charter schools were political subdivisions,” it declined to decide whether open-enrollment
charter schools were political subdivisions. See Appellant’s Brief, at 21 (citing C2
Construction II, 342 S.W.3d at 76 n.13).

20
 C. Guaranty Petroleum does not affect the Court’s inquiry.
Neighborhood Centers expresses great concern that, if this Court treats

an open-enrollment charter school as a “local governmental entity” or

“political subdivision” under the Whistleblower Act, such a holding would

render open-enrollment charter schools subject to all statutory requirements

applicable to public school districts and other governmental entities.

The Court is not presented with the question of whether the terms

“governmental unit,” “governmental entity,” “political subdivision,” or “local

governmental entity” will always include open-enrollment charter schools,

without reference to how each of those terms are used or defined by specific

statutes. Words or phrases used in different statutes do not necessarily have

the same meaning where the statutes relate to different subjects. See Guthrey v.

Taylor, 112 S.W.3d 715, 721–22 (Tex. App.—Houston [14th Dist.] 2003, no

pet.) (courts consider meaning of same or similar language used elsewhere

within only same legislative act or one similar in nature). For the same reason,

the Texas Supreme Court’s analysis in Guaranty Petroleum Corp. v. Armstrong,

609 S.W.2d 529 (Tex. 1980), does not apply.

21
 Guaranty Petroleum did not “specifically hold[ ]” an entity “must

possess” certain characteristics to be considered a “political subdivision.” 34 The

question in Guaranty Petroleum was whether a water district—which was

undisputedly a “political subdivision”—could act as the State’s agent in

executing an oil and gas lease, without first complying with administrative

procedures required of “a department, board, or agency” in the same

circumstances. See Guaranty Petroleum, 609 S.W.2d at 529. The Guaranty

Petroleum “test” was to evaluate factors relevant to distinguish between a

locally-autonomous “political subdivision” and “a department, board, or

agency” of the State—not to define a “political subdivision” in every respect.

Id. at 530–31. The Court held that a “political subdivision” was not also a

“department, board, or agency,” but that has no bearing on whether an open-

enrollment charter school constitutes a “local government entity” or “political

subdivision” in this case. 35 See id.

34 See Appellant’s Brief, at 13.
35 Additionally and alternatively, if this Court concludes the Whistleblower Act
cannot liberally be construed to apply to entities that do not share all characteristics
identified in Guaranty Petroleum, the Court should conclude the absence of those same
characteristics militate against holding Neighborhood Centers enjoys immunity from suit
in connection with a claim under Texas Labor Code chapter 451.

22
 CONCLUSION AND PRAYER
A private nonprofit corporation operating an open-enrollment charter

school cannot have its governmental immunity and eat it, too.

This Court should sustain Ms. Walker’s issue on cross-appeal, reverse

the trial court’s dismissal of her worker’s compensation claim under chapter

451 of the Texas Labor Code, and dismiss Neighborhood Centers’ appeal for

lack of appellate jurisdiction. Alternatively, this Court should overrule

Neighborhood Centers’ issue on appeal, reverse the dismissal of Ms. Walker’s

claim under the Texas Whistleblower Act, and remand this case for further

proceedings.

Respectfully submitted,

HIRSCH & WESTHEIMER, P.C.

By: /s/ Whitney Rawlinson
Whitney Rawlinson
State Bar No. 24068655
1415 Louisiana, 36th Floor
Houston, Texas 77002
713.223.5181 -- Telephone
713.223.9319 -- Facsimile
wrawlinson@hirschwest.com

ATTORNEYS FOR DOREATHA
WALKER

23
 CERTIFICATE OF COMPLIANCE
I do hereby certify that the relevant contents of this document consist of
4,715 words, in compliance with Texas Rule of Appellate Procedure 9.4(i) and
this document complies with the typeface requirements of Texas Rule of
Appellate Procedure 9.4(e) because it has been prepared in a proportionally
spaced typeface using Microsoft Word 2013 in 14 point Bell MT font.

/s/ Whitney N. Rawlinson
Whitney N. Rawlinson

24
 CERTIFICATE OF SERVICE

I further certify that on January 8, 2015, a true and correct copy of the
foregoing document was sent to all counsel of record as indicated below:

Linda P. Wills
Nicole Phillips
WILSON, ELSER, MOSKOWITZ, EDELMAN & DICKER, L.L.P.
909 Fannin St., Ste. 3300
Houston, TX 77010
Telephone: 713-353-2000
Facsimile: 713-785-7780
linda.wills@wilsonelser.com
nicole.phillips@wilsonelser.com

/s/ Whitney Rawlinson
Whitney Rawlinson

25
 C ASE N O . 01-14-00844-CV

In the First Court of Appeals
Houston, Texas

Neighborhood Centers, Inc.,
Appellant

v.

Doreatha Walker,
Cross-Appellant and Appellee

From the 80th District Court, Harris County, Texas
Cause No. 2014-37034

APPENDIX TO DOREATHA WALKER’S
COMBINED CROSS-APPELLANT AND APPELLEE’S BRIEF

Order Granting and Denying Plea to the Jurisdiction………………………Tab A

Texas Labor Code § 451.001……………………………………….…………Tab B

20140567.20140567/1985463.1
317
§ 451.001. Discrimination Against Employees Prohibited, TX LABOR § 451.001

Vernon's Texas Statutes and Codes Annotated
Labor Code (Refs & Annos)
Title 5. Workers' Compensation
Subtitle B. Discrimination Issues
Chapter 451. Discrimination Prohibited

V.T.C.A., Labor Code § 451.001

§ 451.001. Discrimination Against Employees Prohibited

Currentness

A person may not discharge or in any other manner discriminate against an employee because the employee has:

(1) filed a workers' compensation claim in good faith;

(2) hired a lawyer to represent the employee in a claim;

(3) instituted or caused to be instituted in good faith a proceeding under Subtitle A; 1 or

(4) testified or is about to testify in a proceeding under Subtitle A.

Credits
Acts 1993, 73rd Leg., ch. 269, § 1, eff. Sept. 1, 1993.

Notes of Decisions (738)

Footnotes
1 V.T.C.A., Labor Code § 401.001 et seq.
V. T. C. A., Labor Code § 451.001, TX LABOR § 451.001
Current through the end of the 2013 Third Called Session of the 83rd Legislature

End of Document © 2015 Thomson Reuters. No claim to original U.S. Government Works.

© 2015 Thomson Reuters. No claim to original U.S. Government Works. 1