Burnet County judge allows Ken Paxton whistleblower lawsuit to proceed

Attorney General Ken Paxton holds a press conference at the Houston Recovery Center on October 26, 2021. (Mark Felix For The Texas Tribune, Mark Felix For The Texas Tribune)

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BURNET — A Burnet County district judge ruled Tuesday that the Ken Paxton whistleblowers’ case can proceed in Travis County, while Paxton’s recently launched legal challenge to the revived lawsuit remains pending.

The ruling by Judge Evan Stubbs could allow the whistleblowers’ attorneys to subpoena Paxton and his top aides.

The ruling came a week after Stubbs temporarily halted the whistleblower lawsuit at the request of Paxton’s office. The office argued the whistleblowers were violating a tentative settlement they reached earlier this year by restarting work on it after Paxton’s acquittal in his Senate impeachment trial.

Neither Paxton nor the whistleblowers attended the hearing, which featured extensive debate over whether the terms of the settlement had been met even though the Legislature still has not approved its $3.3 million payout. Stubbs expressed skepticism as Paxton's side argued the whistleblowers were effectively trying to unwind a final agreement.

“If it were truly, actually and finally settled,” the judge said, “then I don’t think we’d be here.”

A group of Paxton’s former top aides sued in Travis County after they were fired in 2020, claiming they were being punished for reporting him to the FBI on suspicion of bribery.

The whistleblowers almost settled with the attorney general’s office for $3.3 million earlier this year. But the Texas House, concerned about using taxpayer dollars for the settlement, started probing the underlying claims and recommended Paxton’s impeachment.

The two sides faced off for over four hours in a courtroom here Tuesday, arguing over whether Stubbs should grant Paxton’s request for a temporary injunction that would further derail the Travis County case. At the end, Stubbs denied the request for a temporary injunction and scheduled a Dec. 14 hearing on a separate motion, filed by the whistleblowers, to change the venue of the Burnet County case to Travis County.

Stubbs also dissolved the temporary restraining order that he issued last week, paving the way for the Travis County case to come back to life.

“I’m not saying you can’t go forward with your case in Travis County,” Stubbs told the whistleblowers’ lawyers, adding the caveat that another judge may disagree.

After the hearing, a lawyer for one of the whistleblowers, Tom Nesbitt, said there was “no restriction” on the case moving forward in Travis County. The lawyers declined to comment on their next steps, but they had given notice they planned to subpoena impeachment records and take depositions shortly before Paxton sued them in Burnet County.

A lawyer for Paxton’s office, Bill Helfand, said after Stubbs’ ruling that the office may appeal his denial of the temporary injunction. Stubbs advised him to move swiftly with any appeal.

In late September, the Texas Supreme Court allowed the case to resume in Travis County and move to trial. The whistleblowers asked the Supreme Court to do that after the Senate acquitted Paxton in an impeachment trial that centered on their claims.

The terms of the settlement — and whether those terms had been fully met — were hotly debated Tuesday in Stubbs’ courtroom. The two sides spent most of the hearing questioning Johnathan Stone, a special counsel in Paxton’s office who Helfand called as a witness.

Helfand argued Paxton was complying with the agreement and that the whistleblowers did not like the outcome of the impeachment trial so they were now trying to use their lawsuit as a “second impeachment proceeding.”

“Now that’s an abuse of a lawsuit,” but also a breach of contract, Helfand said.

Joe Knight, a lawyer for whistleblower Ryan Vassar, said it was “almost comical” to suggest the situation is resolved when the whistleblowers have not seen “a nickel” of the $3.3 million. Another whistleblower attorney, Don Tittle, emphasized to Stone that the part of the settlement that says it is “contingent” upon approval of funding.

“The agreement is contingent,” Tittle said, “and the thing it is contingent has not happened.”

The hearing featured several moments of drama and acrimony between the two sides.

At one point, Nesbitt sought to call his co-counsel, Knight, as a witness because Knight was part of the settlement talks. Helfand objected, saying state bar rules prohibits a lawyer being a witness in their own case. Knight said he disagreed, but the judge intervened and got the whistleblowers' attorneys to withdraw Knight as a witness to avoid any further controversy.

It was not the only time the judge had to step in. He asked Knight and Stone to calm down after Knight accused Stone of attacking his credibility and Stone responded in the affirmative. Helfand also had to mediate toward the end of hearing after Knight called Helfand's closing statement redundant and Helfand complained about personal attacks.