AG Settlement Collapses Over Payment Dispute


Ken Paxton stands and speaks. | Image by WFAA.

Settlement discussions have fallen through in a contentious case between Texas Attorney General Ken Paxton and former employees who claim they were punished for reporting potentially unlawful activity.

As previously reported by The Dallas Express, several whistleblowers within the Office of the Attorney General (OAG) alleged “that Paxton was breaking the law and abusing his office to benefit himself” and others close to him.

The whistleblowers agreed to enter into settlement talks with Paxton last month after years of litigation.

However, on Wednesday, a motion was filed with the Texas Supreme Court to resume the lawsuit after the whistleblowers backed out of settlement talks.

The petitioners allege that the “OAG refuses to agree to a deadline by which the litigation will resume if the Legislature does not approve the settlement funding.”

The mediated settlement agreement that had been reached previously included a payout of $3.3 million from the OAG. These state taxpayer funds were “contingent upon all necessary approvals for funding.”

Texas House Speaker Dade Phelan (R-Beaumont) doused hopes of completing the settlement by suggesting, “I don’t anticipate that $3.3 million being in the House budget.”

“Mr. Paxton’s going to have to come to the Texas House, he’s going to have to appear before the Appropriations Committee, and make a case to that committee as to why that is a proper use of taxpayer dollars,” Phelan said. “That is his job, not mine.”

With funding not forthcoming, the whistleblowers claim the “OAG has now reneged on the fundamental concept of a deadline,” adding that in oral communications the OAG suggested that if the Legislature refuses to fund the settlement, “the case will never resume; they have given up their claims forever.”

The former employees note that, if Paxton and the Office of Attorney General were to explicitly agree, then the lawsuit would automatically resume if the Legislature adjourns sine die without authorizing payment.

“Respondents want to finalize the settlement,” the motion continued. “If OAH reverses its position and agrees to an end-of-session approval deadline before the Court disposes of its petition for review, the settlement agreement could be finalized and Respondents would join in another request to abate until the settlement is approved or the deadline expires.”

Furthermore, the whistleblowers claimed to “be willing to abate the litigation pending a joint effort to achieve funding approval by the deadline described herein.”

“No matter what, Respondents cannot accept OAG’s attempt to avoid a ruling on its petition beyond this regular legislative session, much less in perpetuity, and nevertheless enjoy all benefits of a settlement while Respondents’ meritorious claims go uncompensated,” the motion concluded.

OAG General Litigation Division Chief Chris Hilton offered a different perspective on the motion, telling The Dallas Express, “The Office of the Attorney General and opposing plaintiffs signed a binding Mediated Settlement Agreement weeks ago that maximizes savings to the taxpayer. OAG immediately began to fulfill its obligations under the agreement.”

“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 alleged.

“We’ll continue to seek a cost-efficient resolution, even while the plaintiffs needlessly drag this process out,” he concluded.

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