Texas Education Agency and Mike Morath, Commissioner of Education, in His Official Capacity v. American Youthworks, Inc., D/B/A American Youthworks Charter School Honors Academy, Inc., D/B/A Honors Academy And Azleway Inc., D/B/A Azleway Charter School
496 S.W.3d 244
| Tex. App. | 2016Background
- In 2013 the Texas Legislature (Senate Bill 2) amended Education Code §§ 12.115–12.116 to require mandatory revocation of open-enrollment charters meeting certain academic/financial “three strikes” criteria, to limit review of ratings, and to restrict judicial appeals of revocation decisions.
- TEA’s Commissioner sent December 2013 letters notifying several charter schools (including American YouthWorks, Honors Academy, Azleway) that their charters would be revoked under the new statutory scheme; each school sought administrative review (informal review, then SOAH where applicable).
- Before SOAH hearings concluded, the charter holders sued TEA and the Commissioner in Travis County district court under the UDJA and APA, seeking declaratory and injunctive relief to halt revocation proceedings and challenging the statutes, TEA Rule 109.1002, and alleged ultra vires acts.
- The district court issued temporary injunctions stopping further revocation steps; TEA and the Commissioner appealed interlocutorily, arguing sovereign immunity and lack of jurisdiction.
- The Third Court of Appeals analyzed whether the pleadings invoked an inherent right to judicial review (or viable ultra vires/constitutional claims) despite statutory bars to judicial review and concluded the suits were barred by sovereign immunity; it vacated/dissolved the injunctions and dismissed for want of jurisdiction.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether sovereign immunity bars the Charter Holders’ suits | Charter Holders argued UDJA/APA and §7.057 (and ultra vires/constitutional exceptions) permit district-court review and injunctive relief against revocation | TEA argued the Education Code bars judicial review of ratings and revocation; sovereign immunity therefore deprives court of jurisdiction | Held: sovereign immunity bars the suits; pleadings do not invoke a viable ultra vires or constitutional exception, so dismissal for want of jurisdiction was required |
| Whether Charter Holders have a constitutionally protected property interest in their charters (due process / retroactivity) | Charter Holders claimed vested property interests in their charters and asserted retroactivity and due-process violations under §§12.115–12.116 | TEA argued charters and statute reserve unfettered legislative/agency discretion (and §12.071), so no protected interest; Robinson balancing still requires an underlying property interest | Held: no constitutionally protected property interest exists (charters expressly subject to state discretion); due-process and retroactivity claims not viable |
| Whether UDJA permits declaratory relief construing statutes or rules (and thus waives immunity) | Charter Holders sought statutory construction and declarations under UDJA (and relied on §37.004(a)) | TEA relied on Sefzik and statutory text: UDJA waives immunity for validity challenges to statutes but not for declarations of rights under statutes or for rule challenges; specific waiver is limited | Held: UDJA waives suit only for challenges to statute validity; requests for statutory construction or to declare rights are barred by sovereign immunity (may only be recast, if possible, as ultra vires claims) |
| Whether APA §2001.038 rule challenge and §7.057 claim save jurisdiction (rule invalidity or §7.057 waiver) | Charter Holders argued APA §2001.038 waives immunity for rule challenges and §7.057 allows district-court review of agency actions/ratings | TEA argued (1) any ruling that invalidates Rule 109.1002 or enjoins it would be moot/useless because the schools’ accountability ratings already are final/unappealable; (2) §12.116 and §12.115 expressly limit judicial review so §7.057 does not override them | Held: §2001.038 does not provide jurisdiction here because invalidating the rule would not affect the final, unappealable ratings (no justiciable controversy); §7.057 does not overcome the specific statutory bar to judicial review of revocation decisions |
Key Cases Cited
- Robinson v. Crown Cork & Seal Co., 335 S.W.3d 126 (Tex. 2010) (adopts balancing test for retroactivity claims but requires an underlying protected interest)
- Heinrich v. Texas, 284 S.W.3d 366 (Tex. 2009) (ultra vires suits permit only prospective relief; retrospective relief barred by sovereign immunity)
- Texas Dep’t of Transp. v. Sefzik, 355 S.W.3d 618 (Tex. 2011) (UDJA does not waive immunity for declarations of rights under a statute)
- Texas Dep’t of Parks & Wildlife v. Miranda, 133 S.W.3d 217 (Tex. 2004) (standards for pleading subject-matter jurisdiction and reviewing jurisdictional evidence)
- Roth v. Board of Regents, 408 U.S. 564 (1972) (property interest requires a legitimate entitlement derived from existing rules or understandings)
- Continental Cas. Ins. Co. v. Functional Restoration Assocs., 19 S.W.3d 393 (Tex. 2000) (no right to judicial review of an administrative order absent statutory grant or constitutional/property violation)
- Sun Oil Co. v. Railroad Comm’n, 311 S.W.2d 235 (Tex. 1958) (statutory grants of review construed to be limited to final agency orders)