TEXAS EDUCATION AGENCY v. UNITED STATES DEPARTMENT OF EDUCATION
No. 20-60051
United States Court of Appeals for the Fifth Circuit
March 23, 2021
Petition for Review of an Order of the United States Department of Education No. 19-73-CP
Before HIGGINBOTHAM, SMITH, and DENNIS, Circuit Judges.
The National Defense Authorization Act of 2013 (“NDAA“) prohibits any recipient of federal dollars from retaliating against whistleblowers who report an abuse of that money. Laurel Kash filed a complaint with the U.S. Department of Education (“DOE“), alleging that the Texas Education Agency (“TEA“) had discharged her in retaliation for whistleblowing; the TEA maintains it did so for legitimate reasons.
The DOE investigated Kash‘s complaint, credited it, and awarded her damages. The TEA contends that violated Texas‘s sovereign immunity.
Agreeing with the TEA, we grant the petition for review, vacate the offending order, and remand for prompt entry of dismissal.
Congress enacted a broad-based whistleblower protection program as part of the NDAA.1 The operative provision reads as follows:
An employee of a contractor, subcontractor, grantee, or subgrantee or personal services contractor may not be discharged, demoted, or otherwise discriminated against as a reprisal for disclosing to a person or body dеscribed in paragraph (2) information that the employee reasonably believes is evidence of gross mismanagement of a Federal contract or grant, a gross waste of Federal funds, an abuse of authority relating to a Federal contract or grant, a substantial and specific danger to public health or safety, or a violation of law, rule, or regulation related to a Federal contract (including the competition for or negotiation of a contract) or grant.
If an employee believes he was subject to unlawful retaliation, he submits a complaint to the Inspector General of the agency responsible for the relevant federal money, at which point that agency investigates the complaint and determines whether the employer unlawfully retaliated. See
Kash was hired as the TEA‘s Director of Special Education in the summer of 2017. During the hiring procеss, the TEA conducted a background check in which it discovered allegations that Kash had kissed a high school student at her previous job in Oregon. Kash explained that the allegations were false, had been made by a disgruntled and discredited colleague, and had been rejected by Oregon state officials. The TEA hired Kash despite the allegations because she had been exonerated.
Kash‘s employment at the TEA got off to a rocky start. She reported directly to Justin Porter, who observed and recеived reports of Kash‘s allegedly unprofessional behavior throughout the early parts of her tenure. He held multiple counseling sessions with her in her first few months.
In October, Kash voiced her concerns about the TEA‘s data analysis contract with an entity called SPEDx, funded with money granted under the Individuals with Disabilities Education Act (“IDEA“). Kash told Porter she believed the contract was unnecessary and that it was awarded because the SPEDx contractor and a sub-contractor were friends of Penny Schwinn, Porter‘s direct supervisor. Schwinn cаught
The following month, Porter issued Kаsh a formal letter of reprimand that alleged instances of Kash‘s purported unprofessionalism and inappropriate communications with external stakeholders. The letter also discussed Kash‘s complaints about the SPEDx contract, saying that, although Kash could report the allegations through appropriate channels, it was inappropriate to voice her complaints in the way that the letter asserted she had. The letter said that voicing those concerns to external stakehоlders in particular could undermine Schwinn‘s reputation and negatively impact the TEA. Shortly thereafter, Kash followed up with Wilson about her concerns with the SPEDx contract and expressed her fear that she would be fired.3
A few weeks later, an allegation became public that Kash had “tried to cover up the physical and sexual abuse of a six-year-old special education student and retaliated against the teaching assistants who reported it.” The teaching assistants had filed a lawsuit in Oregon detailing thosе allegations. And the TEA received emails from members of the public concerned about the allegations. Upon learning of the lawsuit, Porter texted Kash that he was going to direct questions about the allegations to the TEA‘s communications director; Kash responded that she was not liable for anything and that the lawsuit was brought by “that crazy employee I told you about this summer.”4
Days after the cover-up allegations broke, Kash filed a complaint about the SPEDx contract with the DOE Office of the Inspector Generаl (“OIG“). Before that, the TEA had been discussing whether to terminate Kash‘s employment. The day after she filed her complaint, the TEA did so.5
Kash filed a whistleblower-retaliation complaint with the OIG the following September. She claimed that both her termination and the letter of reprimand she received were retaliation for her reporting legal problems with the SPEDx contract. The TEA maintained that it terminated her because she could no longer effectively do her public-facing job after the cover-up allegations broke. Following a yearlong investigation, the OIG “sustained Kash‘s allegations of whistleblower reprisal” based
After a full hearing, an ALJ agreed and ordered the TEA to pay Kash damages. The TEA petitions for review, claiming, among other things, that the investigation and award of damages violates Texas‘s sovereign immunity. Since that is a constitutional issue, our review is de novo.7
II.
In general, states8 are immune from federal agencies’ adjudication of private parties’ complaints in the same way they are immune from suit. Fed. Mar. Comm‘n v. S.C. State Ports Auth., 535 U.S. 743, 747 (2002). The DOE and Kash submit different theories of why, despitе that general rule, sovereign immunity does not bar the DOE‘s investigation and award of damages. Kash analogizes the proceeding to a suit brought by the United States, which would not be barred by sovereign immunity. The DOE contends that the TEA waived its immunity from whistleblower-retaliation claims because the NDAA conditions acceptance of federal money on such a waiver. Both theories fall short.9
A.
Though states are immune from suits brought by private parties, “[i]n ratifying the Constitution, the States consented to suits brought by ... the Federal Government.” Alden v. Maine, 527 U.S. 706, 755 (1999). Kash contends thаt the NDAA‘s whistleblower-retaliation provision “reflects Congress‘s longstanding, but growing recognition of the indispensable role whistleblowers play in revealing waste, fraud, and abuse in federal grantmaking and contracting with a variety of parties, including states.” On that basis, Kash theorizes that the DOE‘s investigation and order advance the United States’ “interest in having state grantee compliance with federal law be unhindered by whistleblower retaliation.” Therefore, she posits that the proceeding is less like one in which a private cоmplainant hales the state before the administrative agency and more like a suit brought by the United States to defend its own interests.
Whether whistleblower-retaliation investigations into a state are constitutionally permissible because they advance the United States’ interests is res nova in this circuit. For three reasons, they, like any
First, the logic of Alden does not apply to whistleblower-retaliation investigations. In Alden, 527 U.S. at 756, the Court relied on the fact that “[s]uits brought by the United States itself require the exercise of pоlitical responsibility for each suit prosecuted against a State, a control which is absent from a broad delegation to private persons to sue nonconsenting States.” But the NDAA lacks that control for whistleblower-retaliation investigations of nonconsenting states. Instead, it authorizes any “person who believes that the person has been subjected to a reprisal prohibited” by the NDAA to “submit a complaint,” which the Inspector General must10 investigate.
Second, the reasoning in our qui tam caselaw is persuasive and applicable. The False Claims Act authorizes private citizens to sue on behalf of the United States to recover its money from “any person” who falsely claims it.
So too here. Kash‘s contention means, at most, that the United States is a party in interest in the whistleblower-retaliation proceeding. But the United States certainly did not commence the action; Kash, a рrivate citizen, triggered the investigation by filing a complaint with the OIG. Nor did the United States prosecute the action; the OIG investigator played a neutral role in determining whether to recommend ordering or denying relief based on his analysis
Third, “[w]e are always chary to create a circuit split,” and accepting Kash‘s theory would do so. Alfaro v. Comm‘r, 349 F.3d 225, 229 (5th Cir. 2003). In Rhode Island Department of Environmental Management v. United States (”Rhode Island“), 304 F.3d 31 (1st Cir. 2002), the court rejected a contention very similar to Kash‘s. That case involved the whistleblower-protection рrovision of the Solid Waste Disposal Act,
As in Rhode Island, a private individual—Kash—tried a case against the employer—the TEA—and the Secretary (first through its OIG and then through an ALJ) acted as a neutral arbiter of law and fact. Accepting Kash‘s argument would require rejecting the First Circuit‘s holding that this neutrаl role meant the Secretary was not the true plaintiff.
Kash contends we can distinguish Rhode Island on the ground that the NDAA applies only to states that have a contractual or grantor-grantee relationship with a federal agency, while the Solid Waste Disposal Act applied even without such a relationship. But that distinction is apropos of nothing. The reasoning of Rhode Island does not rely on the lack of a relationship between the state and federal governments, but instead on the role the federal government played in the whistleblowers’ claims. And—grantor-grantee relationship or not—the federal government plays that same role in Kash‘s claim. Nor is there any authority for the proposition that the existence of a contractual or grantor-grantee relationship is relevant to the state‘s consent to suit. In fact, as discussed above, Foulds is to the contrary.
B.
Though states are immune from suit by private parties, they can waive their immunity for particular types of cases.13 And “Congress can induce a state to do so by making waiver a condition of accepting federal funds.” Gruver, 959 F.3d at 181 (citing Pace v. Bogalusa City Sch. Bd., 403 F.3d 272, 277-79 (5th Cir. 2005) (еn banc)). The DOE contends that the NDAA conditions the acceptance of any federal grant or contract on waiving immunity from whistleblower retaliation claims related to that grant or contract.14
1.
A state‘s waiver of sovereign immunity “must be knowing and voluntary.”16 Where the waiver is effected by accepting federal funds conditioned on waiver, the “knowing” and “voluntary” requirements align with two of the requirements for all conditions placed on federal money: “[A]ny condition on the receipt of federal funds must be unambiguous ... [and] the grant and its conditions cannot amount to coercion as opposed to encouragement.” Gruver, 959 F.3d at 182 (citing South Dakota v. Dole, 483 U.S. 203, 207-08 (1987)). Where those constraints on Congress‘s spending power are met, the requirements for an effective waiver are also satisfied. See id.
The “voluntary” requirement is usually, but not always, met where the “knowing” requirement is. Pace, 403 F.3d at 279. Neither party contends that the NDAA‘s condition would be coercive, so we express no opinion on the matter and focus our analysis on the “knowing” requirement.
The “knowing” requirement is a “stringent clear-statement rule ....” Id.17 That is because for Spending Clause analysis, “the key is not [Congressional intent] but what the States are clearly told regarding the conditions that go along with the acceptance of those funds.” Arlington Cent. Sch. Dist. Bd. of Educ. v. Murphy, 548 U.S. 291, 304 (2006). The statute need not include a “talismanic incantation[] of the magic words” “‘waiver’ or ‘condition,‘” but it must be “unambiguous ....” Pace, 403 F.3d at 281-82. Furthermore, “[a] general authorization for suit in federal court is not the kind of unequivocal statutory language sufficient to” overcome sovereign immunity. Atascadero State Hosp. v. Scanlon, 473 U.S. 234, 246 (1985). Instead, the statute must “manifest
The DOE asserts that the NDAA unambiguously put the TEA on notice that it would be subject to the remedial scheme of
The TEA is correct. The NDAA lacks the clarity required for a knowing waiver under our and Supreme Court caselaw. Comparing the NDAA to other statutes that we have held are and are not sufficiently clear elucidates this. We hаve held that the 18IDEA and 19Title IX unambiguously conditioned a federal grant on states’ waiving their immunity. Both cases relied on statutory language expressly mentioning sovereign immunity. For example, in Pederson, we held that the language, “‘a State shall not be immune under the Eleventh Amendment of the Constitution of the United States from suit in Federal court for a violation of title IX of the Education Amendments of 1972‘.... clearly, unambiguously, and unequivocally conditions receipt of federal funds under Title IX on the State‘s waiver of Eleventh Amendment Immunity.” Pederson, 213 F.3d at 875-76 (quoting
Conversely, we have held that statutes lacking an explicit reference to sovereign immunity are not sufficiently clear. For example, the Rehabilitation Act says “Any party aggrieved by a final decision described in subparagraph (I), may bring a civil action for review of such decision. The action may be brought in any state court of competent jurisdiction or in a district сourt of the United States of competent jurisdiction ....”
2.
The DOE does not rest its waiver argument solely on the text of the NDAA. It also contends that regulations clarify what the statute may have left ambiguous, thereby making the state‘s waiver knowing and voluntary. Specifically,
A question of first impression is whether the clarity required for a waiver of sovereign immunity to be “knowing” can be met by regulations clarifying an ambiguous statute. The needed clarity cannot be so provided—it must come directly from the statute, for two reasons.
First, when Congress places conditions on “the States’ receipt of federal funds, it ‘must do so unambiguously....‘” Dole, 483 U.S. at 207 (quoting Pennhurst State Sch. & Hosp. v. Halderman, 451 U.S. 1, 17 (1981)). Regulations that interpret statutes are valid only if they either match Congress‘s unambiguous command or are clarifying a statutory ambiguity. See Chevron, U.S.A., Inc. v. Nat. Res. Def. Council, Inc., 467 U.S. 837, 843-44 (1984). Relying on regulations to present the clear condition, therefore, is an acknowledgment that Congress‘s condition was not unambiguous, so that method of analysis would not meet the requirements of Dole. Given Gruver‘s acknowledgment
Second, the ability to place conditions on federal grants ultimately comes from the Spending Clause, which empowers Congress, not the Executive, to spend for the general welfare. The Constitution carefully separates the “purse” from the “sword” by assigning to Congress and Congress alone the power of the purse. THE FEDERALIST NOS. 78 (Alexander Hamilton), 58 (James Madison). Allowing the Executive to require states to waive immunity to receive federal funds would grant the Executive a power of the purse and thus would be inconsistent with the Constitution‘s meticulous separation of powers. Therefore, regulations cannot provide the clarity needed to render the state‘s waiver of sovereign immunity knowing.
The petition for review is GRANTED. The order granting relief to Kash is VACATED; this proceeding is REMANDED to the agency with direction to dismiss thе proceedings without delay.26
JERRY E. SMITH
UNITED STATES CIRCUIT JUDGE