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Texas AG Ken Paxton reaches $3.3 million settlement with former employees in whistleblower case

The Texas Legislature will have to approve the settlement agreement, which will be paid for with public dollars.

DALLAS — Texas Attorney General Ken Paxton has agreed to apologize and to settle a whistleblower lawsuit with four former employees for $3.3 million, according to a mediated settlement agreement filed today with the Texas Supreme Court. 

The lawsuit against Paxton accused him of firing the former employees after they alleged Paxton committed criminal acts, according to past court filings.

In the settlement, which will be paid for with public dollars, it says, that "Attorney General Ken Paxton accepts that plaintiffs acted in a matter that they thought was right and apologizes for referring to them as 'rogue employees.'" He also agreed to remove a statement from the AG's website that called them "rogue employees." 

Paxton had released a previous statement on Oct. 5, 2020, addressing the employees' allegations and saying he decided to hire an "outside independent prosecutor" to investigate them.

"Despite the effort by rogue employees and their false allegations I will continue to seek justice in Texas and will not be resigning," Paxton's 2020 statement said.

The Texas Legislature will have to approve the settlement agreement.

The deadline to reach a settlement was Thursday. 

"I am glad that the OAG has recognized the legitimacy of our claims and the value of the damages we sustained," Mark Penley, one of the former employees said in a statement to WFAA. "I appreciate all seven of the other whistleblowers in our original group for their commitment to the importance of integrity, transparency and respect for the rule of law in government. As a group, our actions were not motivated by politics in any respect."

Before his firing, Penley served as deputy attorney general for criminal justice for about a year under Paxton. He is also a former federal prosecutor and had been recruited by Paxton to serve on his executive team.

 "We took a stand for the principles that a state agency should only exercise its power within the boundaries of the law and for the benefit of the citizens of Texas," Penley said. "Honest government should be a bipartisan ideal."

Paxton issued a statement of his own Friday.

In it, he said, “After over two years of litigating with four ex-staffers who accused me in October 2020 of ‘potential’ wrongdoing, I have reached a settlement agreement to put this issue to rest."

He said he had "chosen this path to save taxpayer dollars and ensure my third term as Attorney General is unburdened by unnecessary distractions."

The road to legislative approval may be a rocky one, however. 

State Rep. Jeff Leach, who chairs a House committee that oversees the AG's Office, said in a statement that he was "extremely troubled and concerned that hardworking taxpayers might be on the hook for this settlement between the Attorney General and former employees of his office."

"I’ve spoken with the Attorney General directly this morning and communicated in no uncertain terms that, on behalf of our constituents, legislators will have questions and legislators will expect answers," Leach's statement continued. 

The maximum amount that each former employee could collect in non-economic damages is $250,000. Plus, they can also collect reasonable back pay and attorney’s fees.

The settlement does not specify exactly how much each of the employees will receive.

It does say former deputy attorney general for legal counsel Ryan Vassar will receive 27 months of back pay. That will allow him to receive 27 months of service credit to the state's retirement plan.

 In November 2020, the former top deputies -- Penley, Vassar, David Maxwell and Blake Brickman -- filed a whistleblower lawsuit against him, alleging that Paxton, the state’s top law enforcement officer, systematically used the powers of his office to benefit a friend and campaign donor and then retaliated against them and four other employees when they reported it to law enforcement.

The whistleblowers contended that Paxton and the donor met regularly in 2020. The Texas Tribune has reported that the whistleblowers alleged that Paxton, who is married, helped the donor because the donor gave Paxton’s alleged girlfriend a job.

All eight employees were either fired or resigned from Paxton’s office.

Paxton’s position had been that as an elected official he is exempt from the Texas Whistleblower Act. He’s denied firing them in retaliation and says he fired them over personal disagreements.

The state’s third Court of Appeals based in Austin ruled against Paxton. He appealed to the Texas Supreme Court.

In late January, in a joint filing to the Texas Supreme Court, Paxton’s lawyers and attorneys representing three of the former employees — Paxton’s former deputies — asked the court to “defer consideration” of the whistleblower suit “pending the outcome of their ongoing settlement negotiations.”

Grant Dorfman, Paxton's deputy first assistant attorney general, signed the settlement on behalf of the attorney general's office.

“Mark Penley has spent virtually his entire career as a prosecutor," said Don Tittle, an attorney for Penley. "A public firing tends to tarnish reputations. But this settlement goes a long way towards restoring his impeccable reputation.”

 Tittle called the settlement "a very important case."

"Accountability in government is often nonexistent these days," Tittle said. "With this settlement, we believe that his claim, and those of the other whistleblowers were vindicated."

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