Volkswagen Group of America, Inc. And Audi of America, Inc. v. John Walker III, in His Official Capacity as Chairman of the Texas Department of Motor Vehicles Board The Honorable Michael J. O'Malley, the Honorable Penny A. Wilkov, in Their Official Capacities as Administrative Law Judges for the State Office
03-15-00285-CV
Tex. App.Jul 1, 2015Background
- Audi (Volkswagen Group of America, Inc. and Audi of America, Inc.) sued Board Chair John Walker III and SOAH ALJs Michael J. O’Malley and Penny A. Wilkov in their official capacities seeking injunctive relief to stop a remand and reopening of an administrative contested case after a Proposal for Decision (PFD) had issued.
- The underlying contested case involved Budget Leasing’s protest of Audi’s rejection of a proposed transfer of two Austin Audi dealerships; SOAH ALJs held a nine‑day hearing, issued a PFD recommending findings adverse to the proposed transferees, and the Board initially dismissed the protest for procedural defects.
- After a rehearing motion (and an ex parte LinkedIn message to a Board member by a prospective transferee’s principal), the Board voted to grant rehearing and Chair Walker signed a Remand Order directing SOAH to conduct supplemental proceedings and to consider an untimely April 30 letter and whether PFD conditions had been satisfied.
- Audi contended the Remand Order and the ALJs’ reopening of the record were ultra vires because: the APA (Gov’t Code §2001.058(e)) does not authorize remand after a PFD; SOAH rule 155.153 forbids reopening after a PFD; and Occupations Code §2301.709(a) limits the Board to considering only timely‑submitted materials.
- Defendants filed pleas to the jurisdiction asserting governmental immunity and failure to exhaust administrative remedies; the trial court granted the pleas and dismissed Audi’s claims.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the Board Chair’s remand after a PFD was ultra vires and therefore not immune | Walker lacked statutory authority to remand after a PFD because §2001.058(e) lists exclusive post‑PFD options and does not include remand | Chair/Board relied on general statutory powers and board procedures (2301.151/153/709) to justify remand | Trial court granted defendants’ pleas and dismissed claims (Audi argues this was error) |
| Whether ALJs may reopen the record after issuing a PFD | Reopening is prohibited by SOAH Rule 155.153(a)(4); requiring ALJs to reopen was ultra vires | ALJs/Board assert SOAH routinely takes remands and Rule 155.3 permits procedural modification | Trial court dismissed; Audi argues ALJs exceeded authority and their acts are not immune |
| Whether the Board/ALJs may consider untimely evidence on rehearing/remand | Occupations Code §2301.709(a) limits the Board/its delegate to considering only timely‑submitted materials (April 30 letter was untimely) | Board/ALJs contend they may take further action "conducive" to final order and consider necessary materials on rehearing | Trial court dismissed; Audi contends consideration of untimely evidence made the remand ultra vires |
| Whether procedural irregularities and ex parte contact tainted the Remand Order | Board’s action followed improper ex parte contact and produced an order materially broader than the motion voted on, violating §2001.058(d)/(e) and §2301.709(c) (majority vote) | Board/Chair argue the motion and vote authorized remand and SOAH should address supplemental issues | Trial court dismissed; Audi argues Chair’s order exceeded the Board vote and resulted from improper process |
Key Cases Cited
- City of El Paso v. Heinrich, 284 S.W.3d 366 (Tex. 2009) (official‑capacity suits for prospective relief are allowed when state actors act ultra vires and such acts are not barred by sovereign immunity)
- Tex. Dep’t of Parks & Wildlife v. Miranda, 133 S.W.3d 217 (Tex. 2004) (standards for reviewing jurisdictional pleas; courts must consider evidence and resolve doubts in favor of the plaintiff)
- Mid‑South Pavers & Constr., Inc. v. Texas Dep’t of Transp., 246 S.W.3d 711 (Tex. App.—Austin 2007) (agency interference with ALJ fact‑finding undermines SOAH’s neutral hearing structure; agency must respect ALJ independence)
- City of Houston v. Rhule, 417 S.W.3d 440 (Tex. 2013) (jurisdictional questions are reviewed de novo)
- Sexton v. Mount Olivet Cemetery Ass’n, 720 S.W.2d 137 (Tex. App.—Austin 1986, writ ref’d n.r.e.) (administrative agencies are creatures of statute and may exercise only powers expressly conferred)