Texas Association of Business National Federation of Independent Business, American Staffing Association LeadingEdge Personnel, Ltd. Staff Force, Inc. HT Staffing Ltd. D/B/A the HT Group The Burnett Companies Consolidated, Inc., D/B/A Burnett Specialists Society for Human Resource Management Texas State Council of the Society for Human Resource Management Austin Human Resource Management Association Strickland School, LLC And the State of Texas v. City of Austin, Texas, and Spencer Cronk, City Manager of the City of Austin
565 S.W.3d 425
Tex. App.2018Background
- In Feb 2018 Austin enacted a paid-sick-leave ordinance requiring employers to provide one hour of paid sick leave per 30 hours worked, with accrual caps and civil/criminal penalties; effective date was Oct 1, 2018 (temporarily stayed pending appeal).
- A coalition of employers and business associations (the "Private Parties") sued the City for declaratory and injunctive relief, alleging the ordinance is facially unconstitutional—principally preempted by the Texas Minimum Wage Act (TMWA)—and raising due-course-of-law, equal-protection, association, and warrantless-search claims.
- The State of Texas intervened (through the Attorney General) asserting only a TMWA preemption claim and seeking declaratory relief and injunction.
- The City filed pleas to the jurisdiction and a motion to strike the State’s intervention, arguing lack of ripeness/standing and that the claims are not viable (governmental immunity), and the district court denied the temporary injunction and the City’s jurisdictional challenges.
- The Court of Appeals addressed the City’s cross-appeal on jurisdiction first, held the Private Parties’ claims ripe, held the State may intervene under Tex. Civ. Prac. & Rem. Code § 37.006(b), and concluded the TMWA preempts Austin’s ordinance because the ordinance establishes a “wage.”
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Ripeness of Private Parties' facial challenge | Ordinance passed and will imminently impose obligations and enforcement; realistic danger of injury | Not ripe because ordinance not yet effective; no present injury | Claims ripe: plaintiffs likely to be regulated/enforced against once effective, so justiciable |
| State's right to intervene | UDJA §37.006(b) entitles Attorney General to be served and "heard" when ordinance alleged unconstitutional | "Heard" means only amicus participation, not intervention/party status | State entitled to intervene as party under §37.006(b) and had standing |
| Preemption: whether ordinance establishes a "wage" under TMWA | Ordinance requires paid compensation for hours not worked (paid sick leave), thus establishes a wage and is superseded by TMWA | "Wage" refers only to direct compensation for services, not fringe benefits like sick leave; no preemption | Ordinance establishes a wage (increases pay for hours not worked); TMWA expressly preempts municipal wage regulations; ordinance unconstitutional as preempted |
| Temporary injunction / irreparable harm | Ordinance will cause uncompensable costs to businesses and state sovereignty injured by thwarting enforcement of state law; injunction preserves status quo | Denial appropriate; merits for injunction are for trial court; city argued court abused discretion to enjoin | Court abused discretion by denying injunction: plaintiffs showed cause of action, probable right (preemption), and probable, imminent, irreparable harm (both private costs and state sovereignty) — injunction ordered |
Key Cases Cited
- Tenet Hosps. Ltd. v. Rivera, 445 S.W.3d 698 (Tex. 2014) (defines facial challenge concept)
- Texas Dep’t of Parks & Wildlife v. Miranda, 133 S.W.3d 217 (Tex. 2004) (standards for plea to the jurisdiction and pleading construction)
- Texas Nat. Res. Conservation Comm’n v. IT–Davy, 74 S.W.3d 849 (Tex. 2002) (jurisdictional review principles)
- Crites v. Collins, 284 S.W.3d 839 (Tex. 2009) (jurisdictional issues prioritized on appeal)
- Butnaru v. Ford Motor Co., 84 S.W.3d 198 (Tex. 2002) (standards for temporary injunction)
- Walker v. Packer, 827 S.W.2d 833 (Tex. 1992) (appellate review: no discretion to misapply law)
- City of Laredo v. Laredo Merch’'s Ass’n, 550 S.W.3d 586 (Tex. 2018) (local regulation vs. state preemption framework)
- BCCA Appeal Grp., Inc. v. City of Houston, 496 S.W.3d 1 (Tex. 2016) (home-rule municipality powers and limits)
- Patel v. Texas Dep’t of Licensing & Regulation, 469 S.W.3d 69 (Tex. 2015) (due-course-of-law economic regulation standard)
- Pennel v. City of San Jose, 485 U.S. 1 (U.S. 1988) (standing requires realistic danger of sustaining a direct injury)
- Abbott v. Perez, 138 S. Ct. 2305 (U.S. 2018) (state sovereignty and irreparable harm when state law enforcement is frustrated)