The State of Texas v. Nonparty Patient No. 1, Nonparty Patient No. 2, Nonparty Patient No. 3, Nonparty Patient No. 4, Nonparty Patient No. 5, Nonparty Patient No. 6, Nonparty Patient No. 7, and Nonparty Patient No. 8, Nonparty Patient No. 9, Nonparty Patient No. 10, and Nonparty Patient No. 11

ACCEPTED

15-25-00023-CV

FIFTEENTH COURT OF APPEALS

No. 15-25-00023-CV AUSTIN, TEXAS

4/14/2025 3:41 PM

In the Court of Appeals CHRISTOPHER A. PRINE

CLERK

for the Fifteenth Judicial District15th COURT

FILED IN

OF APPEALS

Austin, Texas AUSTIN, TEXAS

4/14/2025 3:41:30 PM

CHRISTOPHER A. PRINE

Clerk

State of Texas,

Appellant,

v.

NONPARTY PATIENT NO. 1, NONPARTY PATIENT NO. 2,

NONPARTY PATIENT NO. 3, NONPARTY PATIENT NO. 4,

NONPARTY PATIENT NO. 5, NONPARTY PATIENT NO. 6,

NONPARTY PATIENT NO. 7, AND NONPARTY PATIENT NO.

8, NONPARTY PATIENT NO. 9, NONPARTY PATIENT NO. 10,

AND NONPARTY PATIENT NO. 11,

Appellees.

On Appeal from the 95th Judicial District Court, Dallas County

BRIEF FOR APPELLANT

Ken Paxton Abigail E. Smith

Attorney General of Texas Assistant Attorney General

State Bar No. 24141756

Brent Webster

First Assistant Attorney General Rob Farquharson

Assistant Attorney General

Ralph Molina State Bar No. 24100550

Deputy First Assistant Attorney General

Office of the Attorney General

Austin Kinghorn Consumer Protection Division

Deputy Attorney General for 12221 Merit Drive, Ste. 650

Civil Litigation Dallas, Texas 75251

Tel: (214) 290-8830

Johnathan Stone

Fax: (214) 969-7615

Chief, Consumer Protection Division

Counsel for Appellant

ORAL ARGUMENT REQUESTED

Identity of Parties and Counsel

Appellant:

State of Texas

Appellate and Trial Counsel for Appellant:

Abigail E. Smith Johnathan Stone

Assistant Attorney General Division Chief, Consumer Protection

State Bar No. 24141756 Division

Abby.Smith@oag.texas.gov State Bar No. 24071779

Rob Farquharson Johnathan.Stone@oag.texas.gov

Assistant Attorney General David Shatto

State Bar No. 24100550 Assistant Attorney General

Rob.Farquharson@oag.texas.gov State Bar No. 24104114

David.shatto@oag.texas.gov

Office of the Attorney General of Office of the Attorney General of

Texas Texas

Consumer Protection Division Consumer Protection Division

12221 Merit Drive, Ste. 650 P.O. Box 12548 (MC-010)

Dallas, Texas 75251 Austin, Texas 78711

ii

Appellees:

Non-party Patients 1–11

Appellate and Trial Counsel for Appellee:

Jervonne D. Newsome William M. Logan

Texas Bar No. 24094869 Texas Bar No. 24106214

jnewsome@winston.com wlogan@winston.com

Thanh D. Nguyen Evan D. Lewis

State Bar No. 24126931 edlewis@winston.com

tdnguyen@winston.com State Bar No. 24116670

Jonathan Hung Olivia A. Wogon

State Bar No. 24143033 Texas Bar No. 24137299

johung@winston.com owogon@winston.com

WINSTON & STRAWN LLP WINSTON & STRAWN LLP

2121 N. Pearl St., 9th Floor 800 Capitol Street, Suite 2400

Dallas, TX 75201 Houston, TX 77002

Telephone: (214) 453-6500 Telephone: (713) 651-2600

iii

Table of Contents

Page(s)

Identity of Parties and Counsel ................................................................................ ii

Index of Authorities ................................................................................................ vi

Record References ................................................................................................ viii

Statement of the Case ........................................................................................... viii

Statement of Jurisdiction ...................................................................................... viii

Issues Presented ...................................................................................................... ix

Introduction ............................................................................................................. 1

Statement of Facts ................................................................................................... 2

I. The State Sues Dr. Lau for Violating SB 14, the Ban on

Transgender Treatments for Minors, in Collin County. ............................ 2

II. The State Serves Subpoenas on Hospitals; Non-party Patients

Sue in Dallas County. ................................................................................. 3

III. Procedural History ..................................................................................... 4

IV. Other Related Proceedings ......................................................................... 4

Summary of the Argument ....................................................................................... 5

Standard of Review .................................................................................................. 5

Argument ................................................................................................................. 6

I. The State is Protected from this Suit by Sovereign Immunity. ................... 6

A. Sovereign immunity protects the State from suit, absent

express waiver by the legislature or the State. ...................................... 6

B. Sovereign immunity applies to State-brought lawsuits for civil

penalties. .............................................................................................. 8

C. Sovereign immunity applies to this action. .......................................... 9

D. Neither Tex. R. Civ. P. 176.6 nor 192.6 affirmatively waive

sovereign immunity. ........................................................................... 11

II. Non-party Patients Lack Standing to Challenge the Subpoena for

the 10 Unrepresented Patients. ................................................................. 13

Prayer ...................................................................................................................... 15

Certificate of Compliance ....................................................................................... 15

iv

Appellant’s Appendix .............................................................................................16

v

Index of Authorities

Page(s)

Cases

Allibone v. Freshour,

2017 WL 5663607 (Tex. App. Nov. 21, 2017) .................................................... 13

Bd. of Land Comm’rs v. Walling,

Dallam 524 (Tex. 1843)....................................................................................... 6

Brown & Gay Eng’g, Inc. v. Olivares,

461 S.W.3d 117 (Tex. 2015) ................................................................................. 6

DaimlerChrysler Corp. v. Inman,

252 S.W.3d 299 (Tex. 2008) .................................................................... 5, 13, 14

Dallas Area Rapid Transit v. Whitley,

104 S.W.3d 540 (Tex. 2003) ............................................................................... 7

Hosner v. DeYoung,

1 Tex. 764 (Tex. 1847) ........................................................................................ 7

In re Google LLC,

2025 WL 258715 (Tex. App.—15th Dist., Jan. 16, 2025, pet.

imminent) .................................................................................................... 12, 13

Nazari v. State,

561 S.W.3d 495 (Tex. 2018) ........................................................................ passim

Reata Constr. Corp. v. City of Dall.,

197 S.W.3d 371 (Tex. 2006) ........................................................................ passim

State v. Brannan,

111 S.W.2d 347 (Tex. Civ. App.—Waco 1937, writ ref’d). ................................. 7

Tex. Adjutant Gen.’s Office v. Ngakoue,

408 S.W.3d 350 (Tex. 2013) ............................................................................... 6

Tex. Dep’t of Parks & Wildlife v. Miranda,

133 S.W.3d 217 (Tex. 2004) ................................................................................ 5

vi

Tex. Educ. Agency v. Leeper,

893 S.W.2d 432 (Tex. 1994).............................................................................. 12

Tex. Off. of Comptroller of Pub. Accts. v. Saito,

372 S.W.3d 311 (Tex. App. 2012) ................................................................ 1, 7, 11

Wichita Falls State Hosp. v. Taylor,

106 S.W.3d 692 (Tex. 2003) ..................................................................... 7, 11, 12

Statutes

Tex. Gov’t Code § 311.034 .............................................................................. 1, 7, 11

Tex. Gov’t Code § 554.0035 .................................................................................... 7

Tex. Health & Safety Code § 481.071 ...................................................................... 3

Other Authorities

Tex. R. Civ. P. 176.6 ......................................................................................... passim

Tex. R. Civ. P. 192.6 ........................................................................................ passim

Tex. R. Civ. P. 199.4 .............................................................................................. 12

vii

Record References

“CR” refers to the one-volume clerk’s record. “RR” refers to the one-volume

reporter’s record of March 6, 2025.

Statement of the Case

Nature of the Case: This is a subpoena challenge seeking to quash the production

of medical records under Tex. R. Civ. P. 176.6 and 192.6.

Trial Court: 95th District Court, Dallas County

The Honorable Monica Purdy

Course of Proceedings: After Non-party Patients 1–11 filed suit seeking to quash the

State’s subpoenas, the State filed a plea to the jurisdiction and

plea in abatement.

Disposition in the The district court rendered an order denying the State’s plea

Trial Court: to the jurisdiction and plea in abatement. CR.401. After the

State automatically stayed the proceedings by appealing the

denial of its plea to the jurisdiction, the district court pro-

ceeded to issue an order staying all document production.

CR.402.

Statement of Jurisdiction

The Court has jurisdiction under Texas Civil Practice and Remedies Code Sec-

tion 51.014(a)(8) and Texas Government Code Section 22.220(d)(1).

viii

Issues Presented

The issues presented are as follows:

1. Did the trial court err in denying the State’s plea to the jurisdiction

based on sovereign immunity?

2. Did Non-party Patients have standing to challenge production of med-

ical records for 10 patients they do not represent?

ix

Introduction

In Texas, it is black-letter law that the State is immune from suit unless the leg-

islature waives sovereign immunity using “clear and unambiguous statutory lan-

guage.” Texas Off. of Comptroller of Pub. Accts. v. Saito, 372 S.W.3d 311, 313 (Tex.

App. 2012); Tex. Gov’t Code § 311.034. It is also black-letter law that while sover-

eign immunity does not apply to certain “offset” claims filed in response to a gov-

ernmental entity’s affirmative lawsuit for monetary damages, sovereign immunity

most certainly does apply to a governmental entity’s affirmative lawsuit for civil pen-

alties. Compare Reata Constr. Corp. v. City of Dall., 197 S.W.3d 371, 375 (Tex. 2006),

with Nazari v. State, 561 S.W.3d 495, 507 (Tex. 2018).

Those two simple concepts are enough to decide this case. After the State sued

a pediatrician in Collin County for violating several Texas laws, including the state

ban on providing cross-sex hormone treatments to minors, the State issued subpoe-

nas to two hospitals for the medical records of 21 relevant patients. Eleven of those

patients retained counsel and filed suit in Dallas County, seeking to quash the sub-

poenas for all twenty-one patients in their entirety.

But the State is protected from such suit by sovereign immunity. The State has

never sued Non-party Patients 1–11, so there is no lawsuit for them to “offset” under

the Reata rule; furthermore, even if the State had, the State’s lawsuit against the

doctor was for civil penalties, not monetary damages. The State is thus subject to

sovereign immunity, and the two Texas Rules of Civil Procedure that Non-party Pa-

tients rely on—Rules 176.6 and 192.6—contain no “clear and unambiguous” waiver

of that sovereign immunity. Even to the extent sovereign immunity does not apply,

1

Non-party Patients 1–11 have no standing to challenge production for the other 10

unrepresented patients.

This should have been an easy case for a plea to the jurisdiction—and it still is.

This Court should reverse the trial court and remand with instructions to dismiss

the case for lack of subject-matter jurisdiction.

Statement of Facts

Many related proceedings and motions concerning the facts of this case are cur-

rently before this Court. To ease the Court’s understanding, the below chart displays

all ongoing litigations related to this matter and major relevant case events:

I. The State Sues Dr. Lau for Violating SB 14, the Ban on Transgender

Treatments for Minors, in Collin County.

On October 17, 2024, after an investigation, the State sued Dr. May C. Lau for

violations of the Texas Deceptive Trade Practices Act and SB 14, the statewide ban

on providing cross-sex hormones, puberty blockers, and so-called gender-affirming

2

surgeries to 21 minors. 1 The State filed its Original Petition and Request for Injunc-

tive Relief in the 493rd Judicial District Court of Collin County. CR.43. On Novem-

ber 4, 2024, the State filed a similar lawsuit against a different doctor, Dr. M. Brett

Cooper, also with the 493rd Judicial District Court of Collin County. On January 13,

2025, the court entered a protective order to ensure privacy of the minor patients

involved and their medical records. CR.79.

II. The State Serves Subpoenas on Hospitals; Non-party Patients Sue in

Dallas County.

On January 16, 2025, the State served subpoenas on Children’s Hospital Dallas

(Children’s) and UT Southwestern Medical Center (UTSW) (collectively “the hos-

pitals”) for the medical records of 21 patients treated by Dr. Lau. CR.22, CR.31. 2

The State concurrently mailed notice to all 21 patients at their most recent address

known to the State, informing them of the subpoenas. 3

On February 2, 2025, 11 of the 21 patients (Non-party Patients) obtained repre-

sentation and filed this lawsuit in Dallas County challenging the subpoenas for med-

ical records for all 21 patients.CR.11. They have also filed several non-party motions

1

The State has since amended its Original Petition to add a cause of action for vio-

lating Texas Health & Safety Code § 481.071, which prohibits the prescription of

controlled substances without a valid medical purpose.

2

The State later withdrew and served substantially similar subpoenas on both hos-

pitals.

3

As with prior filings before this Court, the State has not attached such notices to

safeguard the identities of the minor patients but can provide them to the Court on

request in a supplementary filing.

3

in the Collin County action seeking to stay virtually all discovery in that case, despite

not being parties to that action and declining to intervene. See Case. No. 15-25-

00031-CV (Non-party Patients’ Mandamus filing to this Court challenging the Col-

lin County Court’s production orders).

III. Procedural History

On March 3, 2025, the State filed a plea to the jurisdiction and plea in abatement

in this case, arguing sovereign immunity and dominant jurisdiction. CR.340. On

March 6, 2025, the Dallas County Court held a hearing. The court first denied the

State’s plea to the jurisdiction and plea in abatement. CR.401. The State immedi-

ately filed its notice of appeal to this Court, automatically staying proceedings in Dal-

las County. CR.426. Ignoring this stay, the Dallas County Court proceeded to issue

an order staying the hospitals from producing “any documents to the State until the

interlocutory appeal [of the denial of the State’s plea to the jurisdiction] reaches a

final resolution.” CR.402 (emphasis in original). This appeal concerns the State’s

plea to the jurisdiction; the State separately filed a mandamus petition challenging

the denial of its plea in abatement and the improperly issued order. See Case No. 15-

25-00039-CV.

IV. Other Related Proceedings

While the Dallas County case was proceeding and since this appeal has been

filed, the Collin County Court has continued to oversee discovery in its own case,

including ordering the hospitals to produce medical records for all 21 patients to ei-

ther their counsel (in the case of Non-party Patients 1–11) or to Dr. Lau (in the case

4

of the unrepresented patients) for privilege and redaction review. Non-party Patients

have filed a mandamus petition with this Court seeking review of that order. See Case

No. 15-25-00031-CV.

Summary of the Argument

I. The State is protected from this subpoena challenge by sovereign im-

munity because Non-party Patients chose to file this challenge as a new lawsuit in a

new jurisdiction, rather than as a motion in the existing lawsuit. Because the State’s

lawsuit against Dr. Lau is a suit for civil penalties, not monetary damages, the State

did not open itself up to “offset” claims from Dr. Lau or third parties. See Reata

Constr. Corp. v. City of Dall., 197 S.W.3d 371, 375 (Tex. 2006); Nazari v. State, 561

S.W.3d 495, 507 (Tex. 2018). And since neither of the rules that form the basis of

this subpoena challenge contain an affirmative waiver of sovereign immunity, see

Tex. R. Civ. P. 176.6, 192.6, sovereign immunity applies.

II. Even to the extent sovereign immunity does not apply, Non-party Pa-

tients 1–11 do not represent the other 10 patients subject to the 21-patient subpoena.

As such, they do not have standing to challenge the production of those 10 patients’

records. DaimlerChrysler Corp. v. Inman, 252 S.W.3d 299, 304 (Tex. 2008).

Standard of Review

“Whether a court has subject matter jurisdiction is a question of law.” Tex.

Dep’t of Parks & Wildlife v. Miranda, 133 S.W.3d 217, 226 (Tex. 2004).

5

Argument

I. The State is Protected from this Suit by Sovereign Immunity.

Sovereign immunity protects the State from countersuit or related claims when

it files an affirmative suit for civil penalties. Because the relevant Texas Rules of Civil

Procedure do not contain an affirmative waiver of sovereign immunity, the State is

immune from this suit.

A. Sovereign immunity protects the State from suit, absent express

waiver by the legislature or the State.

The doctrine of sovereign immunity “bars suit against the state and its entities”

unless the state waives immunity. Tex. Adjutant Gen.’s Office v. Ngakoue, 408 S.W.3d

350, 353 (Tex. 2013) (citation omitted). Sovereign immunity protects the State and

its political subdivisions from endless litigation, while leaving to the Legislature to

determine how and “when to allow tax resources to be shifted ‘away from their in-

tended purposes toward defending lawsuits and paying judgments.’” Brown & Gay

Eng’g, Inc. v. Olivares, 461 S.W.3d 117, 121 (Tex. 2015) (quoting Tex. Nat. Res. Con-

servation Comm’n v. IT-Davy, 74 S.W.3d 849, 853–54 (Tex. 2002) (plurality op.)).

Sovereign immunity is a common-law creation, and “it remains the judiciary’s re-

sponsibility to define the boundaries of the . . . doctrine and to determine under what

circumstances sovereign immunity exists in the first instance.” Reata Constr. Corp.

v. City of Dall., 197 S.W.3d 371, 375 (Tex. 2006). By contrast, the Legislature deter-

mines when and to what extent to waive that immunity. Id. The doctrine of sovereign

immunity has been part of Texas jurisprudence since the days of the Republic. See

Bd. of Land Comm’rs v. Walling, Dallam 524, 526 (Tex. 1843) (discussing the

6

doctrine in the courts of the Republic); Hosner v. DeYoung, 1 Tex. 764, 769 (Tex.

1847) (recognizing the doctrine after Texas joined the Union). The doctrine has gen-

erally been considered “a rule of necessity.” State v. Brannan, 111 S.W.2d 347, 348

(Tex. Civ. App.—Waco 1937, writ ref’d).

A finding of legislative wavier of sovereign immunity “requires clear and unam-

biguous statutory language.” Texas Off. of Comptroller of Pub. Accts. v. Saito, 372

S.W.3d 311, 313 (Tex. App. 2012); Tex. Gov’t Code § 311.034. For a plaintiff to over-

come a defendant’s assertion of sovereign immunity, “the plaintiff must affirma-

tively demonstrate the court’s jurisdiction by alleging a valid waiver of immunity.”

Whitley, 104 S.W.3d at 542. Dallas Area Rapid Transit v. Whitley, 104 S.W.3d 540

(Tex. 2003). This waiver must be truly express—for example, the Supreme Court

has approvingly cited statutory language stating “Sovereign immunity is waived and

abolished to the extent of liability for the relief allowed under this chapter for a vio-

lation of this chapter,” as being sufficiently “clear and unambiguous.” Wichita Falls

State Hosp. v. Taylor, 106 S.W.3d 692, 696 n.5 (Tex. 2003), judgment withdrawn and

reissued (May 13, 2003) (quoting Tex. Gov’t Code § 554.0035).

In addition to legislative waiver, certain types of claims against the government

fall outside the scope of sovereign immunity to begin with, so waiver is not required.

One such category is affirmative claims filed by a governmental entity for damages.

In the case Reata Construction Corporation v. City of Dallas, the Supreme Court ob-

served that if a “governmental entity interjects itself into or choose to engage in liti-

gation to assert affirmative claims for monetary damages, the entity will presumably

have made a decision to expend resources to pay litigation costs.” 197 S.W.3d at 375.

7

Thus, because the government has already made the decision to expend tax re-

sources on the litigation, the traditional rationale for sovereign immunity does not

apply to the extent the opposing party files counterclaims “only as an offset to reduce

the government’s recovery.” Id. The Court further held that in cases filed by the

government “for monetary relief,” sovereign immunity does not protect the govern-

ment from “claims germane to, connected with, and properly defensive to those as-

serted by the governmental entity.” Id. at 377. This is known as the Reata rule.

In sum, in Texas suits against a government entity, sovereign immunity is the

default: It applies and the State is immune from suit, unless the Legislature expressly

waived it or the case falls outside the scope of sovereign immunity, like State-brought

affirmative claims for monetary damages.

B. Sovereign immunity applies to State-brought lawsuits for civil

penalties.

The Supreme Court has made clear that the Reata rule applies only to affirmative

government claims for damages—it does not apply to State suits for civil penalties. In

Nazari v. State, 561 S.W.3d 495 (Tex. 2018), the State brought Texas Medicaid

Fraud Prevent Act claims seeking penalties against dental providers for fraudulently

obtaining Medicaid payments for dental and orthodontic treatments to children. 561

SW.3d at 495. The providers responded with counterclaims and third-party claims

against the State. Id. The provider argued that the State had abrogated sovereign

immunity by filing suit against them and that they could now sue the State in re-

sponse because it was “subject to the same rules that govern other parties,” like the

8

Texas Rules of Civil Procedure, and that the State “must participate in the litigation

process as an ordinary litigant.” Id. at 501 (citing cases).

The trial court, Third Court of Appeals, and Supreme Court all rejected the pro-

viders’ argument. Id. The Supreme Court held that “the Reata rule . . . never applies

when the state initiates litigation to enforce a substantive prohibition against unlaw-

ful conduct by imposing a monetary penalty.” Id. at 507 (emphasis added). This is

because “offsets,” like those in Reata, are “never ‘germane to, connected with, and

properly defensive to’ whether a monetary penalty is due. Penalties are inherently

one-sided. Citizens cannot claim a penalty against the state, but the state can and

does frequently assess fines, penalties, and sanctions against its citizens.” Id. The

Court further held that “applying the Reata rule to [suits by the State seeking civil]

penalties would run counter to Reata itself and would thwart the primary justifica-

tions underlying sovereign immunity’s very existence . . . .” Id. at 509.

C. Sovereign immunity applies to this action.

Because the State’s lawsuit against Dr. Lau in Collin County sought only civil

penalties and injunctive relief, not monetary damages, the Reata rule does not apply

and the case does not fall outside the scope of sovereign immunity. As an initial mat-

ter, Non-party Patients’ argument that the State waived sovereign immunity 4 to their

lawsuit in Dallas County by suing Dr. Lau in Collin County would not hold water

even if the State’s suit were for money damages. That is because the State has never

4

While the Non-party Patients refer to the State as having “waived” sovereign im-

munity under Reata, technically Reata is based “not on a waiver theory, but on the

scope of the [government’s] immunity.” Nazari, 561 S.W.3d at 501.

9

sued the Non-party Patients. Thus, any permissible offset claims under Reata could

be filed only by Dr. Lau, not by the Non-party Patients.

But regardless, sovereign immunity protects the State from counterclaims and

third-party claims brought by any party because the State’s suit against Dr. Lau seeks

civil penalties, not monetary damages. CR.75 ¶¶ 257–58 (State’s Original Petition,

Prayer for Relief). This is the exact situation addressed by the Supreme Court in

Nazari. A lawsuit against the State cannot be an “offset” for monetary damages

when the State seeks no damages from Non-party Patients (or Dr. Lau) to begin with.

“Since the state’s action is punitive rather than compensatory, . . . the Reata rule

does not apply.” Nazari, 561 S.W.3d at 510.

Importantly, this does not leave Non-party Patients without a remedy. Had

Non-party Patients chosen to file their subpoena challenge in Collin County (which

is permitted under Texas Rules of Civil Procedure 176.6(e) and 192.6, the bases for

this action), it would have been in the form of a motion related to a discovery issue

in the State’s case and on the State’s claims. Sovereign immunity would not apply.

Indeed, Non-party Patients have brought various challenges to the subpoenas in Col-

lin County Court, and that court has devoted substantial time to resolving those chal-

lenges. See Case No. 15-25-00031-CV (mandamus petition filed with this Court re-

garding the Non-party Patients’ discovery challenges in Collin County).

But because Non-party Patients chose to file this challenge in a separate court in

Dallas County, they changed the form of their challenge from a discovery motion in

an ongoing case to a new lawsuit bring a third-party claim. This is the exact form of

suit prohibited in Nazari. It is barred by sovereign immunity.

10

D. Neither Tex. R. Civ. P. 176.6 nor 192.6 affirmatively waive

sovereign immunity.

Finally, neither of the Texas Rules of Civil Procedure at issue contain “clear and

unambiguous language” waiving sovereign immunity for subpoena challenges. Saito,

372 S.W.3d at 313; Tex. Gov’t Code § 311.034. The Supreme Court has held that for

a statute to waive sovereign immunity, it must usually state so expressly, such as by

saying “sovereign immunity to suit is waived.” Wichita Falls, 106 S.W.3d at 697.

There is no such clear waiver language here—indeed, neither Rule 176.6 nor Rule

192.6 makes any reference to sovereign immunity. And while the State is ordinarily

subject to the Texas Rules of Civil Procedure when it litigates, those rules are not

sufficient to overcome sovereign immunity when it has not been waived. See Nazari,

561 S.W.3d at 500–01 (holding that while “procedural rules apply to the state just as

they would any other litigant,” those rules are not sufficient to waive sovereign im-

munity).

On the “rare occasions” that the Supreme Court has found “waiver of sover-

eign immunity absent ‘magic words,’” the Court has considered four factors. Id.

The first factor is whether the statute would be “meaningless unless immunity were

waived.” Id. Second, if the statute has any “ambiguities” concerning immunity, they

should be resolved in favor of retaining immunity. Id. Third, “if the Legislature re-

quires that the State be joined in a lawsuit for which immunity would otherwise at-

tach, the Legislature has intentionally waived the State’s sovereign immunity.”

Id. at 697–98. And fourth, waiver is more likely when the Legislature has enacted

“simultaneous measures to insulate public resources from the reach of judgment

11

creditors,” such as a statutory provision that limits “the State’s potential liability.”

Id. at 698.

None of those four factors are present here. First, far from being meaningless,

Rules 176.6 and 192.6 still function in 99.9% of cases that do not involve challenges

to government subpoenas issued in a civil penalty case. They still function in this

case as well, albeit in a limited manner—Non-party Patients are still able to challenge

the subpoenas in Collin County. Second, there is no ambiguity about the lack of

waiver—but to the extent it exists, it must be resolved in favor of retaining immunity

for the State. Third, there is no Legislative requirement that the State join a lawsuit

that waives immunity. The primary example of this is the Declaratory Judgments

Act, which “expressly provides that persons may challenge ordinances or statutes,

and that governmental entities must be joined or notified.” Tex. Educ. Agency v.

Leeper, 893 S.W.2d 432, 446 (Tex. 1994). But neither Rule at issue in this case says

anything about mandatory joinder or notification. Finally, neither Rule says anything

about limiting the State’s liability. In sum, neither Rule 176.6 nor 192.6 expressly or

implicitly waives sovereign immunity, so the State is immune from this suit.

Below, Non-party Patients additionally cited this Court’s recent holding in In re

Google LLC, 2025 WL 258715 (Tex. App.—15th Dist., Jan. 16, 2025, pet. imminent),

to support their position of affirmative waiver. But that case has no bearing on this

one. As this Court is aware, in Google, the State brought Deceptive Trade Practices

Act and Capture or Use of Biometric Identifier Act claims against Google. Id. at *1.

Google noticed a party representative deposition for the State seeking a representa-

tive of the State on several topics pursuant to Tex. R. Civ. P. 199.4. This Court held

12

that sovereign immunity is abrogated as to party depositions in suits brought by the

State. Id. at *7. Google says absolutely nothing about whether the State filing one law-

suit abrogates immunity against the filing of new lawsuits by nonparties in a different

jurisdiction.

The State files thousands of lawsuits every year—yet Non-party Patients can

point to no statute nor any case law showing that the State waives sovereign immun-

ity from suits brought under Rules 176.6 and 192.6. In the lone instance of waiver

that undersigned counsel are aware of, Allibone v. Freshour, the Texas Medical Board

affirmatively chose to waive sovereign immunity in a suit brought under Tex. R. Civ. P.

176.6 and 192.6. 2017 WL 5663607, at *2 n.4 (Tex. App.–Austin Nov. 21, 2017). Al-

libone is distinguishable because it involved an administrative subpoena, not a court-

issued subpoena from an ongoing litigation. But it is also an exception that proves

the rule—there is no general waiver of sovereign immunity by the State from suit

brought under Rules 176.6 and 192.6. The State is decidedly not waiving sovereign

immunity in this suit; consequently, the Dallas County Court should have dismissed

this suit for lack of jurisdiction.

II. Non-party Patients Lack Standing to Challenge the Subpoena for the

10 Unrepresented Patients.

Even if this case were not blocked by sovereign immunity, Non-party Patients

do not have standing to challenge the subpoenas insofar as they apply to the produc-

tion of medical records for patients they do not represent, because Non-party Pa-

tients suffer no injury from that production. “A court has no jurisdiction over a claim

made by a plaintiff without standing to assert it.” DaimlerChrysler Corp. v. Inman,

13

252 S.W.3d 299, 304 (Tex. 2008). “For standing, a plaintiff must be personally ag-

grieved . . . .” Id.

The subpoenas challenged by Non-party Patients seek medical records for 21

patients of Dr. Lau. CR.27–28 (Children’s subpoena); CR.36–37 (UTSW sub-

poena). But as the caption of this case indicates, Non-party Patients 1–11 represent

only eleven of those patients. They therefore do not have standing to challenge pro-

ductions of medical records related to the 10 unrepresented patients unless those

productions would somehow cause them an injury that is “concrete and particular-

ized, actual or imminent, not hypothetical.” Inman, 252 S.W.3d at 304. Non-party

Patients have never presented any evidence in this case that the production of rec-

ords for unrelated, unrepresented patients would harm them. And to the extent they

have argued harm in other cases, the record is clear that those claims of injury are

baseless. See, e.g., State’s Resp. to Mandamus Pet’n, Case No. 15-25-00031-CV.

14

Prayer

The Court should reverse the district court’s denial of the State’s plea to the

jurisdiction and direct the district court to dismiss the case for lack of subject-matter

jurisdiction.

Respectfully Submitted,

Ken Paxton Johnathan Stone

Attorney General of Texas Chief, Consumer Protection Division

Brent Webster

/s/ Abigail E. Smith

First Assistant Attorney General

Abigail E. Smith

Ralph Molina Assistant Attorney General

Deputy First Assistant Attorney General

Rob Farquharson

Austin Kinghorn Assistant Attorney General

Deputy Attorney General for

Civil Litigation Office of the Attorney General

Consumer Protection Division

12221 Merit Drive, Ste. 650

Dallas, Texas 75251

Tel: (214) 290-8830

Fax: (214) 969-7615

Counsel for Appellant

Certificate of Compliance

Microsoft Word reports that this document contains 3,648 words, excluding ex-

empted text.

/s/ Abigail E. Smith

Abigail E. Smith

15

No. 15-25-00023-CV

In the Court of Appeals

for the Fifteenth Judicial District

Austin, Texas

State of Texas,

Appellant,

v.

NONPARTY PATIENT NO. 1, NONPARTY PATIENT NO. 2,

NONPARTY PATIENT NO. 3, NONPARTY PATIENT NO. 4,

NONPARTY PATIENT NO. 5, NONPARTY PATIENT NO. 6,

NONPARTY PATIENT NO. 7, AND NONPARTY PATIENT NO.

8, NONPARTY PATIENT NO. 9, NONPARTY PATIENT NO. 10,

AND NONPARTY PATIENT NO. 11,

Appellees.

On Appeal from the 95th Judicial District Court, Dallas County

Appellant’s Appendix

Tab

1. Order Denying the State’s Plea to the Jurisdiction and

Plea in Abatement .................................................................................... A

2. Tex. R. Civ. P. 176.6 ................................................................................. B

3. Tex. R. Civ. P. 192.6 ................................................................................ C

4. Reata Constr. Corp. v. City of Dall., 197 S.W.3d 371 (Tex. 2006) ............. D

5. Nazari v. State, 561 S.W.3d 495 (Tex. 2018) ............................................ E

16

Tab A

Cause No. DC—25-01823

Nonparty Patient No. 1,

Nonparty Patient No. 2,

Nonparty Patient N0. 3,

Nonparty Patient No. 4, IN THE DISTRICT COURT OF

Nonparty Patient N_o. 5,

Nonparty Patient No. 6, DALLAS COUNTY, TEXAS

Nonparty Patient No. 7,

Nonparty Patient No. 8, 95TH JUDICIAL DISTRICT

Nonparty Patient N0. 9,

Nonparty Patient No. 10, and

Nonparty Patient No. 1 l,

Plaintifis,

vs.

The State of Texas,

Defendant.

@

{'PRQPGSED} ORDER DENYING

THE STATE’S PLEA TO THE JURISDICTION AND PLEA IN ABATEMENT

Pending before the Court is the State’s plea to the jurisdiction of this Court and plea in

abatement. Having considered the pleadings, record evidence, and the parties’ arguments, the

Court'fmds that the State’s pleas are hereby DENIED.

So ORDERED and SIGNED this Blkday OWZOZS;

The Hon. Judge Monica‘ Purdy

95th Judicial District Court

Dallas County, Texas

Tab B

176.6. Response, TX R RCP Rule 176.6

Vernon's Texas Rules Annotated

Texas Rules of Civil Procedure

Part II. Rules of Practice in District and County Courts

Section 9. Evidence and Discovery (Refs & Annos)

A. Evidence

Rule 176. Subpoenas (Refs & Annos)

TX Rules of Civil Procedure, Rule 176.6

176.6. Response

Currentness

(a) Compliance Required. Except as provided in this subdivision, a person served with a subpoena must comply with the

command stated therein unless discharged by the court or by the party summoning such witness. A person commanded to appear

and give testimony must remain at the place of deposition, hearing, or trial from day to day until discharged by the court or

by the party summoning the witness.

(b) Organizations. If a subpoena commanding testimony is directed to a corporation, partnership, association, governmental

agency, or other organization, and the matters on which examination is requested are described with reasonable particularity,

the organization must designate one or more persons to testify on its behalf as to matters known or reasonably available to

the organization.

(c) Production of Documents or Tangible Things. A person commanded to produce documents or tangible things need not appear

in person at the time and place of production unless the person is also commanded to attend and give testimony, either in the same

subpoena or a separate one. A person must produce documents as they are kept in the usual course of business or must organize

and label them to correspond with the categories in the demand. A person may withhold material or information claimed to be

privileged but must comply with Rule 193.3. A nonparty's production of a document authenticates the document for use against

the nonparty to the same extent as a party's production of a document is authenticated for use against the party under Rule 193.7.

(d) Objections. A person commanded to produce and permit inspection or copying of designated documents and things may serve

on the party requesting issuance of the subpoena--before the time specified for compliance--written objections to producing

any or all of the designated materials. A person need not comply with the part of a subpoena to which objection is made as

provided in this paragraph unless ordered to do so by the court. The party requesting the subpoena may move for such an order

at any time after an objection is made.

(e) Protective Orders. A person commanded to appear at a deposition, hearing, or trial, or to produce and permit inspection and

copying of designated documents and things, and any other person affected by the subpoena, may move for a protective order

under Rule 192.6(b)--before the time specified for compliance--either in the court in which the action is pending or in a district

court in the county where the subpoena was served. The person must serve the motion on all parties in accordance with Rule 21a.

A person need not comply with the part of a subpoena from which protection is sought under this paragraph unless ordered to

do so by the court. The party requesting the subpoena may seek such an order at any time after the motion for protection is filed.

(f) Trial Subpoenas. A person commanded to attend and give testimony, or to produce documents or things, at a hearing or

trial, may object or move for protective order before the court at the time and place specified for compliance, rather than under

paragraphs (d) and (e).

© 2025 Thomson Reuters. No claim to original U.S. Government Works. 1

176.6. Response, TX R RCP Rule 176.6

Credits

Aug. 5, 1998 and Nov. 9, 1998, eff. Jan. 1, 1999.

Section 1 to Section 3, Rule 41 appear in this volume.

Vernon's Ann. Texas Rules Civ. Proc., Rule 176.6, TX R RCP Rule 176.6

Current with amendments received through February 1, 2025. Some rules may be more current, see credits for details.

End of Document © 2025 Thomson Reuters. No claim to original U.S. Government Works.

© 2025 Thomson Reuters. No claim to original U.S. Government Works. 2

Tab C

192.6. Protective Orders, TX R RCP Rule 192.6

Vernon's Texas Rules Annotated

Texas Rules of Civil Procedure

Part II. Rules of Practice in District and County Courts

Section 9. Evidence and Discovery (Refs & Annos)

B. Discovery

Rule 192. Permissible Discovery: Forms and Scope; Work Product; Protective Orders; Definitions (Refs &

Annos)

TX Rules of Civil Procedure, Rule 192.6

192.6. Protective Orders

Currentness

(a) Motion. A person from whom discovery is sought, and any other person affected by the discovery request, may move within

the time permitted for response to the discovery request for an order protecting that person from the discovery sought. A person

should not move for protection when an objection to written discovery or an assertion of privilege is appropriate, but a motion

does not waive the objection or assertion of privilege. If a person seeks protection regarding the time or place of discovery, the

person must state a reasonable time and place for discovery with which the person will comply. A person must comply with

a request to the extent protection is not sought unless it is unreasonable under the circumstances to do so before obtaining a

ruling on the motion.

(b) Order. To protect the movant from undue burden, unnecessary expense, harassment, annoyance, or invasion of personal,

constitutional, or property rights, the court may make any order in the interest of justice and may--among other things--order that:

(1) the requested discovery not be sought in whole or in part;

(2) the extent or subject matter of discovery be limited;

(3) the discovery not be undertaken at the time or place specified;

(4) the discovery be undertaken only by such method or upon such terms and conditions or at the time and place directed

by the court;

(5) the results of discovery be sealed or otherwise protected, subject to the provisions of Rule 76a.

Credits

Aug. 5, 1998 and Nov. 9, 1998, eff. Jan. 1, 1999.

Section 1 to Section 3, Rule 41 appear in this volume.

Vernon's Ann. Texas Rules Civ. Proc., Rule 192.6, TX R RCP Rule 192.6

Current with amendments received through February 1, 2025. Some rules may be more current, see credits for details.

End of Document © 2025 Thomson Reuters. No claim to original U.S. Government Works.

© 2025 Thomson Reuters. No claim to original U.S. Government Works. 1

Tab D

Reata Const. Corp. v. City of Dallas, 197 S.W.3d 371 (2006)

49 Tex. Sup. Ct. J. 811

[4] city charter provision stating that city could “sue and be

sued” and “implead and be impleaded” did not waive city's

KeyCite Yellow Flag - Negative Treatment immunity.

Declined to Extend by Nazari v. State, Tex., June 22, 2018

197 S.W.3d 371 Court of Appeals' judgment reversed and remanded.

Supreme Court of Texas.

Brister, J., filed concurring opinion in which Hecht and

REATA CONSTRUCTION

O'Neill, JJ., joined.

CORPORATION, Petitioner,

v. Procedural Posture(s): On Appeal.

CITY OF DALLAS, Respondent.

No. 02–1031 West Headnotes (10)

|

Argued Dec. 12, 2004.

[1] States Nature and scope of immunity in

|

general

Decided June 30, 2006.

Sovereign immunity protects the state from

Synopsis lawsuits for money damages.

Background: Owner of building that was damaged by water

from a punctured water main brought negligence action 171 Cases that cite this headnote

against construction company and excavation subcontractor,

and subcontractor filed third-party claim against city. City [2] Municipal, County, and Local

filed plea in intervention asserting a claim of negligence Government Waiver of and Exceptions to

against subcontractor. The 162nd Judicial District Court, Immunity in General

Dallas County, Bill Rhea, J., denied city's plea to the

Political subdivisions of the state, including

jurisdiction, and city appealed. The Court of Appeals, 83 cities, are entitled to immunity from lawsuits for

S.W.3d 392, reversed. Subcontractor filed petition for review. money damages—referred to as governmental

immunity—unless it has been waived.

270 Cases that cite this headnote

Holdings: On motion for rehearing, the Supreme Court,

Johnson, J., held that:

[3] States Necessity of waiver or consent

[1] city did not have governmental immunity from States Effect of waiver or consent

subcontractor's claims germane to, connected to, and properly Sovereign immunity encompasses immunity

defensive to claims asserted by the city, to the extent any from suit, which bars a suit unless the state has

recovery on those claims would offset any recovery by the consented, and immunity from liability, which

city; protects the state from judgments even if it has

consented to the suit.

[2] subcontractor's claims against city did not fall within Tort

Claims Act's waiver of immunity for personal injury caused 248 Cases that cite this headnote

by a condition or use of property;

[4] States Nature and scope of immunity in

[3] statute providing that a home-rule municipality “may

general

plead and be impleaded in any court” did not waive city's

It is the judiciary's responsibility to define

immunity; and

the boundaries of the common-law doctrine of

sovereign immunity and to determine under what

© 2025 Thomson Reuters. No claim to original U.S. Government Works. 1

Reata Const. Corp. v. City of Dallas, 197 S.W.3d 371 (2006)

49 Tex. Sup. Ct. J. 811

circumstances sovereign immunity exists in the Section of Tort Claims Act waiving

first instance. governmental unit's immunity for personal injury

and death caused by a condition or use of tangible

56 Cases that cite this headnote personal or real property only waives immunity

when the governmental unit is the user of the

[5] Water Law Miscellaneous defects or property. V.T.C.A., Civil Practice & Remedies

failures Code § 101.021(2).

City did not have governmental immunity from 27 Cases that cite this headnote

excavation subcontractor's third-party claims for

negligence, arising out of incident in which

subcontractor drilled into water main due to [8] Municipal, County, and Local

city's alleged misidentification of water main's Government Particular Cases and

location and caused flooding to nearby building, Contexts

to the extent that subcontractor's claims were Excavation subcontractor was not entitled to

germane to, connected to, and properly defensive an opportunity to replead its negligence claims

to claims asserted by city, and to the extent any against city, before any dismissal of the

recovery on subcontractor's claims would offset subcontractor's claims due to city's governmental

any recovery by the city from subcontractor, immunity, where city had twice filed special

where city had intervened in building owner's exceptions claiming that subcontractor failed

negligence lawsuit against subcontractor in order to state a cause of action for which the city

to assert negligence claim against subcontractor. could be liable under the Tort Claims Act, and

subcontractor had amended its petition twice,

88 Cases that cite this headnote but its pleadings still failed to demonstrate a

waiver of immunity. V.T.C.A., Civil Practice &

[6] Municipal, County, and Local Remedies Code § 101.021.

Government Other particular works

20 Cases that cite this headnote

Excavation subcontractor's negligence claims

against city, arising out of incident in which

subcontractor drilled into water main due to [9] Water Law Miscellaneous defects or

city's alleged misidentification of water main's failures

location and caused flooding to nearby building, Section of Local Government Code providing

did not fall within Tort Claims Act's waiver of that a home-rule municipality “may plead and

city's immunity for personal injury caused by a be impleaded in any court” did not waive city's

condition or use of property, although tenants governmental immunity from negligence claims

of building claimed that fumes from generators asserted by excavation subcontractor, arising out

used in the flooded building after the water of incident in which subcontractor drilled into

shorted out the electricity made them sick; Act water main due to city's alleged misidentification

waived immunity only if city was user of the of water main's location and caused flooding

property, and there was no claim that city was the to nearby building; waiver of immunity for tort

user of the generators. V.T.C.A., Civil Practice & claims was governed by Tort Claims Act, which

Remedies Code § 101.021(2). was the later-enacted, more specific statute

regarding waiver of immunity in tort cases, and

4 Cases that cite this headnote phrase “plead and be impleaded” did not clearly

and unambiguously reflect legislative intent

[7] Municipal, County, and Local to waive immunity. V.T.C.A., Civil Practice

Government Immunity and exceptions & Remedies Code § 101.021; V.T.C.A.,

thereto in general Government Code § 311.026; V.T.C.A., Local

Government Code § 51.075.

© 2025 Thomson Reuters. No claim to original U.S. Government Works. 2

Reata Const. Corp. v. City of Dallas, 197 S.W.3d 371 (2006)

49 Tex. Sup. Ct. J. 811

We grant the City of Dallas's motion for rehearing. We

62 Cases that cite this headnote withdraw our opinion of April 2, 2004, and substitute the

following in its place.

[10] Water Law Overflow or Leakage

The issue in this case is whether the City of Dallas has

Provision of city charter stating that the city

governmental immunity from suit for claims by Reata

could “sue and be sued” and “implead and be

Construction Corporation arising from the City's alleged

impleaded” did not waive city's governmental

negligence. The court of appeals held that the City had

immunity from negligence claims asserted by

immunity. We conclude that the City does not have immunity

excavation subcontractor, arising out of incident

from suit as to Reata's claims which are germane to, connected

in which subcontractor drilled into water main

with, and properly defensive to the City's claims, to the extent

due to city's alleged misidentification of water

Reata's claims offset those asserted by the City. We reverse

main's location and caused flooding to nearby

the court of appeals' judgment and remand the case to the trial

building; phrases “sue and be sued” and

court for further proceedings.

“implead and be impleaded” did not, separately

or together, constitute a clear and unambiguous

waiver of immunity from suit.

I. Background

21 Cases that cite this headnote

The City of Dallas issued Dynamic Cable Construction

Corporation, Inc., a temporary license to install fiber

optic cable in Dallas. Dynamic subcontracted with Reata

Attorneys and Law Firms Construction Corporation to do the drilling for the project.

Reata inadvertently drilled into a thirty-inch water main,

*372 Lee L. Cameron Jr., Rebecca M. Alcantar, Amy flooding a nearby building owned by Southwest Properties

Elizabeth Stewart, Jeffrey Osmon Marshall, Wilson Elser Group, Inc. Southwest sued Dynamic and Reata for

Moskovitz Edelman & Dicker LLP, Dallas, for petitioner. negligence, and some tenants of the building intervened.

Reata filed a third-party claim against the City alleging

*373 Charles S. Black Jr., Asst. City Atty., Julie B.

that the City negligently misidentified the water main's

Essenburg, Office of the City Atty. of City of Dallas, Deborah

location. Before answering Reata's third-party claim, the

G. Hankinson, Law Office of Deborah Hankinson PC, Dallas,

City intervened in the case, asserting negligence claims

for respondent.

against Dynamic. A few weeks after intervening in the

Malinda York Crouch, Sr. Asst. City Atty., Houston, Elliot suit, the City answered Reata's petition and filed special

Clark, Winstead Sechrest & Minick, P.C., Rafael Edward exceptions asserting that Reata's claims were not within the

Cruz, Office of the Atty. Gen., Kristofer S. Monson, Asst. Texas Tort Claims Act's waiver of immunity. See TEX. CIV.

Solicitor Gen., Don Wayne Cruse Jr., Asst. Solicitor Gen., PRAC. & REM. CODE § 101.021. The City subsequently

Austin, Bruce S. Powers, Asst. County Atty., Houston, filed an amended plea in intervention asserting claims of

William M. Boyd, John R. Stooksberry, Boyd Veigel, P.C., negligence against Reata and a plea to the jurisdiction

McKinney, Robert C. Lyon, Robert Lyon & Associates, asserting governmental immunity from suit. Reata filed

Rowlett, Bob Gorsky, Lyon Gorsky Baskett, et al., Dallas, a response claiming that (1) governmental immunity did

Delmar L. Cain, Office of Gen. Counsel, College Station, not apply because the City subjected itself to the trial

Miles T. Bradshaw, Feldman & Rogers, L.L.P., Dallas, for court's jurisdiction by intervening in the lawsuit and seeking

amicus curiae. affirmative relief; (2) the Dallas City Charter and section

51.075 of the Texas Local Government Code contain express

Opinion waivers of governmental immunity because they provide,

respectively, that the City may “sue or be sued” and “plead

Justice JOHNSON delivered the opinion of the Court, in and be impleaded”; (3) under the common law, the City

which Chief Justice JEFFERSON, Justice WAINWRIGHT, could not assert governmental immunity for its actions in

Justice MEDINA, and Justice GREEN joined. failing to properly identify the water main's location prior to

1970 because water services were considered a proprietary

© 2025 Thomson Reuters. No claim to original U.S. Government Works. 3

Reata Const. Corp. v. City of Dallas, 197 S.W.3d 371 (2006)

49 Tex. Sup. Ct. J. 811

function; and (4) even if the Texas Tort Claims Act applied, [1] [2] [3] “Sovereign immunity protects the State

Reata's claim fell *374 within the Act's waiver of immunity.

from lawsuits for money damages.” Tex. Natural Res.

The trial court denied the City's plea to the jurisdiction, and

Conservation Comm'n v. IT–Davy, 74 S.W.3d 849, 853

the City took an interlocutory appeal. See TEX. CIV. (Tex.2002). Political subdivisions of the state, including

PRAC. & REM. CODE § 51.014(a)(8). cities, are entitled to such immunity—referred to as

governmental immunity—unless it has been waived. 1 See

Rejecting each of Reata's asserted bases for a waiver of

governmental immunity, the court of appeals reversed and Wichita Falls State Hosp. v. Taylor, 106 S.W.3d 692, 694

n. 3 (Tex.2003). Sovereign immunity encompasses immunity

dismissed Reata's claims against the City. 83 S.W.3d 400. from suit, which bars a suit unless the state has consented,

The court of appeals held that even though the City intervened and immunity from liability, which protects the state from

in the suit against Reata, by such action the City asserted its

right to sue but did not waive its governmental immunity from judgments even if it has consented to the suit. Tex. Dep't of

Transp. v. Jones, 8 S.W.3d 636, 638 (Tex.1999). We have held

suit. Id. at 398–400. that sovereign immunity from suit deprives a trial court of

subject-matter jurisdiction. Tex. Dep't of Parks & Wildlife

In Anderson, Clayton & Co. v. State ex rel. Allred, 122

Tex. 530, 62 S.W.2d 107, 110 (1933), we stated: “[W]here a v. Miranda, 133 S.W.3d 217, 224 (Tex.2004); Jones, 8

state voluntarily files a suit and submits its rights for judicial S.W.3d at 638.

determination it will be bound thereby and the defense will

be entitled to plead and prove all matters properly defensive. 1 For ease of reference, we will use the term

This includes the right to make any defense by answer or “sovereign immunity” to reference both sovereign

cross-complaint germane to the matter in controversy.” But immunity and governmental immunity.

the court of appeals relied on other language in that opinion

[4] Sovereign immunity is a common-law doctrine that

providing that the State, having invoked the jurisdiction of the

initially developed without any legislative or constitutional

district court, was “subject to the same rules as other litigants,

except in so far as such rules may be modified in favor of enactment. See Cohens v. Virginia, 6 Wheat. 264, 19

the State by statute or may be inapplicable or unenforceable U.S. 264, 293, 5 L.Ed. 257 (1821) (recognizing the doctrine

without citing statutory or constitutional authority); *375

because of exemptions inherent in sovereignty.” 83 S.W.3d

Hosner v. De Young, 1 Tex. 764, 769 (1846) (same); see

at 399 (quoting Anderson, 62 S.W.2d at 110). The court of

also Tex. A & M University–Kingsville v. Lawson, 87

appeals concluded that when a governmental entity intervenes

S.W.3d 518, 520 (Tex.2002). We have consistently deferred

in a lawsuit, “sovereign immunity still forecloses suit against

to the Legislature to waive such immunity. See IT–Davy,

that governmental entity.” Id.

74 S.W.3d at 854; Guillory v. Port of Houston Auth.,

In this Court, Reata asserts (1) governmental immunity 845 S.W.2d 812, 813 (Tex.1993); Duhart v. State, 610

did not apply because the City subjected itself to the trial

court's jurisdiction by intervening in the lawsuit and seeking S.W.2d 740, 741 (Tex.1980); Lowe v. Tex. Tech Univ., 540

affirmative relief; (2) the Dallas City Charter and section S.W.2d 297, 298 (Tex.1976). We have previously discussed

51.075 of the Texas Local Government Code contain express the possibility that a governmental entity might waive its

waivers of governmental immunity because they provide, immunity by certain actions, even absent a legislative waiver

respectively, that the City may “sue or be sued” and “plead of immunity. See Catalina Dev., Inc. v. County of El

and be impleaded”; and (3) even if the Texas Tort Claims Paso, 121 S.W.3d 704, 705–06 (Tex.2003). However, there

Act applied, Reata stated a claim within the Act's waiver of is tension between the concept of a governmental entity

immunity. waiving its immunity from suit by some action independent

from the Legislature's waiving immunity and the principle

that only the Legislature can waive sovereign immunity. See

II. Sovereign Immunity IT–Davy, 74 S.W.3d at 853. There is also tension between

the concept of a governmental entity waiving its immunity

© 2025 Thomson Reuters. No claim to original U.S. Government Works. 4

Reata Const. Corp. v. City of Dallas, 197 S.W.3d 371 (2006)

49 Tex. Sup. Ct. J. 811

from suit and the principle that a court's lack of subject- In this situation, we believe it would be fundamentally unfair

to allow a governmental entity to assert affirmative claims

matter jurisdiction generally cannot be waived. See Fed.

against a party while claiming it had immunity as to the party's

Underwriters Exch. v. Pugh, 141 Tex. 539, 174 S.W.2d

598, 600 (1943). Recognizing that sovereign immunity is a *376 claims against it. See Guar. Trust Co. v. United

common-law doctrine, we have not foreclosed the possibility States, 304 U.S. 126, 134–35, 58 S.Ct. 785, 82 L.Ed. 1224

that the judiciary may modify or abrogate such immunity (1938) (noting that the rule allowing claims against a foreign

sovereign that has asserted its own claims is assumed to be

by modifying the common law. See Taylor, 106 S.W.3d

founded on principles of justice); see also Cunningham v.

at 695–96; see also Tex. Dep't of Criminal Justice v.

Parkdale Bank, 660 S.W.2d 810, 813 (Tex.1983) (stating that

Miller, 51 S.W.3d 583, 593 (Tex.2001) (Hecht, J., concurring)

fundamental fairness requires parties to be heard on the merits

(noting that judicial abolition of immunity may be necessary

of their cases).

to prompt the Legislature to enact a reasoned system for

determining the government's responsibility for its torts).

Therefore, it remains the judiciary's responsibility to define

the boundaries of the common-law doctrine and to determine III. Analysis

under what circumstances sovereign immunity exists in the

first instance.

A. The City's Claim for Relief

We have generally deferred to the Legislature to waive Although there may have been some question after

immunity because the Legislature is better suited to address

Anderson regarding whether sovereign immunity

the conflicting policy issues involved. See IT–Davy, continues to exist when an affirmative claim for relief is filed

74 S.W.3d at 854. A lack of immunity may hamper by a governmental entity, subsequent cases indicate that under

governmental functions by requiring tax resources to be used such circumstances immunity from suit no longer completely

for defending lawsuits and paying judgments rather than

exists for the governmental entity. 2 In State v. Humble Oil

using those resources for their intended purposes. Id. & Refining Co., 141 Tex. 40, 169 S.W.2d 707, 708 (1943), we

The Legislature has expressed its desire to preserve its considered whether a defendant in a tax suit could assert an

interest in managing fiscal matters through the appropriations offset against the State for taxes it had previously overpaid.

process by maintaining sovereign immunity unless it has The court of appeals concluded that the rule announced in

clearly and unambiguously stated otherwise. TEX. GOV'T Anderson applied: the defendant was entitled to claim an

CODE § 311.034. The United States Supreme Court has offset for any matter dependent upon or connected with the

also recognized that suits for money damages against states

“may threaten the financial integrity of the States” and that State's suit. Id. at 709. We stated that “[w]e have no fault

“at the time of the founding, many of the States could have to find with the rule of law announced in ... Anderson ...

been forced into insolvency but for their immunity from

when applied in a proper case.” Id. However, we went on to

private suits for money damages.” Alden v. Maine, 527

hold that the Anderson rule did not apply in Humble Oil

U.S. 706, 750, 119 S.Ct. 2240, 144 L.Ed.2d 636 (1999).

because (1) its application would abolish the rule that taxes

However, if the governmental entity interjects itself into or

due the State cannot be offset, and (2) the defendant's claim

chooses to engage in litigation to assert affirmative claims

was not connected with the State's claim as the two involved

for monetary damages, the entity will presumably have made

a decision to expend resources to pay litigation costs. If taxes for different months and years. Id. at 710. While

the opposing party's claims can operate only as an offset to our opinion in Humble Oil did not specifically address the

reduce the government's recovery, no tax resources will be issue of whether the trial court had jurisdiction over Humble's

called upon to pay a judgment, and the fiscal planning of claims against the State, we acknowledged that in certain

the governmental entity should not be disrupted. Therefore, a circumstances, a defendant would be entitled to assert a claim

determination that a governmental entity's immunity from suit against the State if the State filed suit.

does not extend to a situation where the entity has filed suit

is consistent with the policy issues involved with immunity.

© 2025 Thomson Reuters. No claim to original U.S. Government Works. 5

Reata Const. Corp. v. City of Dallas, 197 S.W.3d 371 (2006)

49 Tex. Sup. Ct. J. 811

2

of the entity that filed suit. See Humble Oil, 169 S.W.2d at

The City argues that Anderson is in conflict with

two prior cases from this Court in which we held 710; Anderson, 62 S.W.2d at 110.

immunity had not been waived as to claims brought

against the governmental entity plaintiffs by the [5] Therefore, we hold that the decision by the City of Dallas

to file suit for damages encompassed a decision to leave its

defendants. See Borden v. Houston, 2 Tex. 594,

sphere of immunity from suit for claims against it which

611 (1847); Bates v. Republic, 2 Tex. 616, 618 are germane to, connected with and properly defensive to

(1847). However, those cases are distinguishable claims the City asserts. Once it asserts affirmative claims for

from Anderson because they involved claims monetary recovery, the City must participate in the litigation

by the defendants for set-offs unrelated to the process as an ordinary litigant, save for the limitation that the

City continues to have immunity from affirmative damage

governmental entities' claims. Borden, 2 Tex. at

claims against it for monetary relief exceeding amounts

595–96; Bates, 2 Tex. at 616–17. necessary to offset the City's claims. Moreover, we see no

substantive difference between a decision by the City to file

In Kinnear v. Texas Commission on Human Rights, 14 an original suit and the City's decision to file its claim as an

S.W.3d 299, 300 (Tex.2000), we acknowledged that the trial intervenor in Southwest's suit. Accordingly, when the City

court had jurisdiction over claims against the State in a filed its affirmative claims for relief as an intervenor, the

case where the State had filed suit. In Kinnear, the Texas trial court acquired subject-matter jurisdiction over claims

Commission on Human Rights filed suit against Kinnear, made against the City which were connected to, germane

alleging that he had violated the Texas Fair Housing Act. to, and properly defensive to the matters on which the City

Id. at 299. Kinnear counterclaimed for attorney's fees as based its claim for damages. See Anderson, 62 S.W.2d at

provided by the Act, and when he prevailed, the trial court 110. Absent the Legislature's waiver of the City's immunity

from suit, however, the trial court did not acquire jurisdiction

awarded them. Id. at 300. In response to the question over a claim for damages against the City in excess of

of whether the trial court had jurisdiction, we said that damages sufficient to offset the City's recovery, if any.

“[b]ecause the Commission initiated [the] proceeding under

the Texas Fair Housing Act, and Kinnear claimed attorney See City of LaPorte v. Barfield, 898 S.W.2d 288, 297

fees as a consequence of that suit, the jurisdictional question (Tex.1995); Anderson, 62 S.W.2d at 110 (holding that

in this case was answered when the Commission filed suit.” when a governmental entity files suit, “the defense will be

Id. Later, four concurring justices in a plurality opinion entitled to plead and prove all matters properly defensive”). 3

cited Kinnear and Anderson for the proposition that

3

“the State can waive immunity by filing suit.” IT–Davy, 74 At the time Anderson was decided, a claim of

S.W.3d at 861 (Hecht, J., concurring). an offset was referred to as a defensive matter. See

Sw. Contract Purchase Corp. v. McGee, 120 Tex.

In circumstances such as those now before us, where the 240, 36 S.W.2d 978, 979 (1931) (stating “defendant

governmental entity has joined into the litigation process in error pleaded in defense ... certain offsets and

by asserting its own affirmative claims for monetary relief, defenses”).

we see no ill befalling the governmental *377 entity Because the City's assertion of claims for damages against

or hampering of its governmental functions by allowing Reata means that the City does not have immunity from

adverse parties to assert, as an offset, claims germane to, Reata's claims to the limited extent we have explained above,

connected with, and properly defensive to those asserted by we must consider Reata's remaining arguments to determine

the governmental entity. And, our decisions that immunity if the City's immunity from suit has been completely waived

from suit does not bar claims against the governmental entity in some manner.

if the claims are connected to, germane to, and defensive to the

claims asserted by the entity, in effect, modified the common-

law immunity doctrine and, to an extent, abrogated immunity

B. Texas Tort Claims Act

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Reata Const. Corp. v. City of Dallas, 197 S.W.3d 371 (2006)

49 Tex. Sup. Ct. J. 811

[6] Reata claims that the court of appeals erred in holding [9] Reata also claims the City's immunity from suit is waived

that its claims against the City do not fit within any waiver by section 51.075 of the Local Government Code, which

of immunity under the Tort Claims Act. Specifically, Reata provides that a home-rule municipality “may plead and be

claims that the court of appeals did not liberally construe impleaded in any court.” See TEX. LOC. GOV'T CODE

its pleadings as asserting damages for personal injuries. § 51.075. However, waiver of immunity for tort claims is

governed by the Texas Tort Claims Act. See TEX. CIV.

See Tex. Dep't of Transp. v. Ramirez, 74 S.W.3d 864,

867 (Tex.2002) (noting that pleadings should be liberally PRAC. & REM. CODE ch. 101; Miranda, 133 S.W.3d at

construed in favor of jurisdiction). 224–25 (holding that the governmental entity was immune

from suit for a tort unless it was expressly waived by the

Through the Tort Claims Act, the Legislature has waived the Tort Claims Act). Under rules of statutory construction,

City's immunity for “personal injury and death so caused by we give precedence to the Tort Claims Act over section

a condition or use of tangible personal or real property if the 51.075 because the Tort Claims Act is the later-enacted,

governmental unit would, were it a private person, be liable more specific statute regarding waiver of immunity in tort

to the claimant according to Texas law.” TEX. CIV. PRAC. &

cases. See TEX. GOV'T CODE § 311.026. Moreover, in

REM. CODE § 101.021(2).

Tooke v. City of Mexia, 197 S.W.3d 325, 342, 2006 WL

[7] The court of appeals concluded that none of the 1792223 (Tex.2006), we have held that the phrase “plead

damages claimed against the *378 City—property and and be impleaded” in section 51.075 does not clearly and

mental anguish damages—were recoverable under that unambiguously reflect legislative intent to waive immunity

subsection. 83 S.W.3d at 396. Reata argues that a claim for from suit. See Taylor, 106 S.W.3d at 697–98 (Tex.2003).

personal injury damages was made as the intervenors asserted

that fumes from generators used in the flooded building [10] Reata also claims the City's immunity is waived by the

after the water shorted out the electricity made them sick. Dallas City Charter which states that the City may “sue and

However, section 101.021(2) only waives immunity when the be sued” and “implead and be impleaded.” DALLAS, TEX.,

CITY CHARTER ch. II, § 1(2), (3). As we explain in Tooke,

governmental unit is the user of the property. San Antonio

such phrases, separately or together, do not comprise a clear

State Hosp. v. Cowan, 128 S.W.3d 244, 245–46 (Tex.2004).

There is no claim that the City was the user of the generators. and unambiguous waiver of immunity to suit. Tooke, 197

S.W.3d at 342. The City Charter provision does not waive the

[8] Reata also argues that if its claim was not properly City's immunity from suit. See id.

pleaded to demonstrate a waiver of immunity, it should be

given the opportunity to amend before its case is dismissed.

See Tex. Dep't of Parks & Wildlife v. Miranda, 133 S.W.3d IV. Conclusion

217, 226–27 (Tex.2004). But, in the trial court, the City twice

filed special exceptions claiming that Reata failed to state Because the City asserted affirmative claims for monetary

a cause of action for which the City could be liable under relief against Reata, the City does not have immunity

the Tort Claims Act. Reata amended its petition twice, but from Reata's claims germane to, connected to, and properly

its pleadings still fail to demonstrate a waiver of immunity. defensive to claims asserted by the City, to the extent any

Accordingly, we hold that the court of appeals correctly recovery on those claims will offset any recovery by the City

determined that Reata's claims do not fit within any waiver of from Reata. We reverse the court of appeals' judgment and

immunity under the Tort Claims Act and that Reata was not remand the case to the trial court for further proceedings

entitled to replead. consistent with this opinion.

C. Waiver of Immunity by the Local Justice BRISTER filed a concurrence in which Justice

Government Code and City Charter HECHT and Justice O'NEILL joined.

Justice WILLETT did not participate in the decision.

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49 Tex. Sup. Ct. J. 811

4

*379 Justice BRISTER, joined by Justice HECHT and See Texas Ass'n of Bus. v. Texas Air Control Bd.,

Justice O'NEILL, concurring. 852 S.W.2d 440, 444 (Tex.1993).

I join in the Court's judgment, as American law has long

5

held that a government waives immunity from suit by filing See Univ. of Texas Sw. Med. Ctr. v. Loutzenhiser,

an affirmative claim in court. I write separately because I 140 S.W.3d 351, 358 (2004).

disagree with the State that this rule is mistaken, and with

Personal jurisdiction, by contrast, concerns a court's power

the Court that we must partially abrogate sovereign immunity

because the rule is in “tension” with other jurisdictional over parties. 6 A court cannot enter judgment against a

rules. Instead, sovereign immunity has always had its own set party who has not been haled into court through proper

of jurisdictional rules because jurisdiction over private and service, 7 and its writ extends beyond its borders only as

public parties is simply different. far as due process allows. 8 Personal jurisdiction can be

voluntarily waived by appearance, 9 or impliedly by an

In all cases, whether the parties are public or private, a

court must have jurisdiction to issue a binding judgment. But untimely objection. 10

“[j]urisdiction,” as the United States Supreme Court recently

6

observed, “is a word of many, too many, meanings.” 1 See CSR Ltd., 925 S.W.2d at 594.

Both subject-matter jurisdiction and personal jurisdiction are

“jurisdictional” in that a court cannot enter judgment without 7

See Wilson v. Dunn, 800 S.W.2d 833, 836

them. 2 Sovereign immunity is also “jurisdictional,” but in (Tex.1990).

ways that do not fit neatly into the other two categories.

8

See World–Wide Volkswagen Corp. v. Woodson,

1

444 U.S. 286, 292, 100 S.Ct. 559, 62 L.Ed.2d 490

Steel Co. v. Citizens for a Better Env't, 523 U.S.

(1980).

83, 90, 118 S.Ct. 1003, 140 L.Ed.2d 210 (1998)

(internal quotation marks omitted). 9

See Hilburn v. Jennings, 698 S.W.2d 99, 100

2 (Tex.1985).

See Ruhrgas AG v. Marathon Oil Co., 526 U.S.

10

574, 583–84, 119 S.Ct. 1563, 143 L.Ed.2d 760 See TEX. R. CIV. P. 120a.

(1999); CSR Ltd. v. Link, 925 S.W.2d 591, 594 Throughout Texas history, we have held that sovereign

(Tex.1996); see also Anderson, Clayton & Co. immunity is “jurisdictional” 11 but without characterizing

v. State, 122 Tex. 530, 62 S.W.2d 107 (1933). it as either subject-matter or personal jurisdiction. To the

Subject-matter jurisdiction concerns a court's power over contrary, in Anderson, Clayton we held that when the

State waived immunity by filing suit, the trial court “acquired

cases. 3 It stems from the doctrine of separation of powers,

and aims to keep the judiciary from encroaching on subjects jurisdiction of the parties and subject-matter.” *380 12

properly belonging to another branch of government. 4

11

Subject-matter jurisdiction cannot be waived or conferred by See, e.g., Missouri Pacific R.R. Co. v.

agreement, must be considered by a court sua sponte, and can Brownsville Navigation Dist., 453 S.W.2d 812, 814

be raised for the first time on appeal. 5

(Tex.1970); State v. Lain, 162 Tex. 549, 349

3 S.W.2d 579, 581–82 (1961); W.D. Haden Co. v.

See Arbaugh v. Y & H Corp., 546 U.S. 500, Dodgen, 158 Tex. 74, 308 S.W.2d 838, 841 (1958);

––––, 126 S.Ct. 1235, 1244, 163 L.Ed.2d 1097

Walsh v. Univ. of Tex., 169 S.W.2d 993, 994

(2006); CSR Ltd., 925 S.W.2d at 594. (Tex.Civ.App.-El Paso 1942, writ ref'd).

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49 Tex. Sup. Ct. J. 811

12 attributes of sovereignty not to be amenable to

Anderson, Clayton, 62 S.W.2d at 110 (emphasis the suit of a private person without its own

added). consent ...”).

In the last seven years we have addressed sovereign immunity 17

See, e.g., TEX. FAM. CODE § 157.375(a) (“While

almost exclusively in terms of subject-matter jurisdiction. 13 in this state for the sole purpose of compelling

This approach began with a per curiam opinion in 1999, 14 the return of a child through a habeas corpus

which distinguished a 1988 opinion that appeared to say proceeding, the relator is not amenable to civil

the opposite. 15 But acknowledging that sovereign immunity process and is not subject to the jurisdiction of

implicates subject-matter jurisdiction does not mean it does any civil court except the court in which the writ

not implicate personal jurisdiction, too. Indeed, the earliest is pending.”) (emphasis added); TEX. R. CIV.

Texas cases, dating even from the Republic, addressed P. 120a(1) (providing for special appearances to

object to jurisdiction “over the person or property

sovereign immunity in terms of “amenability” to suit, 16 a

of the defendant on the ground that such party or

term borrowed for personal jurisdiction. 17

property is not amenable to process issued by the

courts of this State”) (emphasis added).

13

See, e.g., Tex. Dep't of Parks & Wildlife v. These early Texas cases were not aberrations; sovereign

immunity has historically been considered a problem

Miranda, 133 S.W.3d 217, 224 (Tex.2004); Tex.

primarily of personal jurisdiction. Blackstone addressed

Natural Res. Conservation Comm'n v. IT–Davy, 74

sovereign immunity under “The Rights of Persons,”

S.W.3d 849, 855 (Tex.2002); Dep't of Transp. concluding that sovereign immunity arises from the nature of

v. Garza, 70 S.W.3d 802, 808 (Tex.2002); Tex. the sovereign party, not the subject matter of the sovereign's

Dep't of Criminal Justice v. Miller, 51 S.W.3d 583, case:

585 (Tex.2001).

14

See Tex. Dep't of Transp. v. Jones, 8 S.W.3d 636,

Hence it is, that no suit or action

638 (Tex.1999) (per curiam).

can be brought against the king, even

15 in civil matters, because no court

See Davis v. City of San Antonio, 752 S.W.2d can have jurisdiction over him. For

518, 520 (Tex.1988) (“We do not read our opinion all jurisdiction implies superiority of

in Duhart [a previous sovereign immunity case] power: authority to try would be

as holding that the trial court lacked subject matter vain and idle, without an authority

jurisdiction of the case and that any judgment to redress; and the sentence of a

rendered for the plaintiff would have been void.”). court would be contemptible, unless

Between 1988 and 1999, the Seventh Court that court had power to command the

of Appeals had suggested sovereign immunity execution of it; but who, says Finch,

concerned both. See Bd. of County Comm'rs shall command the king? 18

of County of Beaver Okl. v. Amarillo Hosp. Dist.,

835 S.W.2d 115, 130 n. 2 (Tex.App.-Amarillo

1992, no writ) (“[S]overeign immunity concerns 18 1 William Blackstone, COMMENTARIES ON

both subject matter jurisdiction and personal

THE LAWS OF ENGLAND *235.

jurisdiction.”) (emphasis added); Laykin v.

Once bereft of kings, the earliest American cases still viewed

McFall, 830 S.W.2d 266, 267 n. 1 (Tex.App.-

Amarillo 1992, no writ) (same). sovereign immunity in terms of personal jurisdiction. 19 In

The Federalist No. 81, Alexander Hamilton borrowed the

16 language of personal jurisdiction *381 in stating, “It is

See, e.g., Kenedy v. Jarvis, 1 S.W. 191, 194

(Tex.1886); Bd. of Land Comm'rs v. Walling, inherent in the nature of sovereignty not to be amenable to the

Dallam 524 (Tex.1843) (“[I]t is one of the essential

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49 Tex. Sup. Ct. J. 811

suit of an individual WITHOUT ITS CONSENT.” 20 In the Given these similarities and differences with each doctrine,

United States Supreme Court's first major opinion, the state it should come as no surprise that the jurisdictional rules

of Georgia refused to file a plea or appear at oral argument for governing sovereign immunity borrow from both but are

identical to neither. Thus, just like subject-matter jurisdiction,

fear that its appearance would waive sovereign immunity. 21

sovereign immunity may be raised by the court even if the

19 parties do not. 24 But like personal jurisdiction, Texas law

See generally Caleb Nelson, Sovereign Immunity

has long held that a governmental entity waives immunity by

as a Doctrine of Personal Jurisdiction, 115

filing suit on an affirmative claim. 25

HARV.L.REV. 1559 (2002).

20 24

THE FEDERALIST NO. 81 (emphasis in original).

Compare Tex. Dep't of Parks and Wildlife v.

21 Miranda, 133 S.W.3d 217, 226 (Tex.2004) (“The

See Nelson, supra note 19 at 1598 (discussing

trial court must determine at its earliest opportunity

Chisholm v. Georgia, 2 U.S. (2 Dall.) 419, 1

whether it has the constitutional or statutory

L.Ed. 440 (1793)).

authority to decide the case before allowing

The full story is that sovereign immunity includes concerns

the litigation to proceed.”), with Mayhew

about both subject-matter and personal jurisdiction, but is

v. Town of Sunnyvale, 964 S.W.2d 922, 928

identical to neither. In terms of subject matter, whether

(Tex.1998) (raising ripeness issue sua sponte as an

a government ought to compensate particular claimants

element of subject-matter jurisdiction).

involves policy issues beyond the traditional scope of

judicial proceedings. 22 But at the same time, there is some 25

Kinnear v. Tex. Comm'n on Human Rights, 14

incongruity in saying that routine tort and contract suits are

beyond the traditional subject matter of the courts simply S.W.3d 299, 300 (Tex.2000); Anderson, Clayton

because one party is a government employee. 23 & Co. v. State, 122 Tex. 530, 62 S.W.2d 107, 110

(1939).

22 Federal cases addressing the sovereign immunity of the

See Fed. Sign v. Tex. S. Univ., 951 S.W.2d 401, states reflect this same hybrid nature, including elements of

414 (Tex.1997) (Hecht, J., concurring) (“[N]ot all

both subject-matter and personal jurisdiction. 26 And like the

the factors that weigh in determining the State's

Texas rule, there is no question that states waive immunity

liability on its contracts can be assessed in a judicial

from suit *382 in federal court by claiming an interpleaded

proceeding.”).

fund, 27 filing a bankruptcy claim, 28 or removing a case to

23

See State v. Snyder, 66 Tex. 687, 18 S.W. 106, 107 federal court. 29

(1886) ( “The state, as a plaintiff, has the same

right as other plaintiffs to institute and maintain 26

actions in the district courts upon any cause of See Wisc. Dep't of Corr. v. Schacht, 524

action of which, under the terms of the constitution, U.S. 381, 394, 118 S.Ct. 2047, 141 L.Ed.2d

such courts have jurisdiction, and so by force of 364 (1998) (Kennedy, J., concurring) (“In certain

the jurisdiction conferred on such courts by the respects, the immunity [accorded states by the

constitution, and without reference to any statutory Eleventh Amendment] bears substantial similarity

authorization.”). to personal jurisdiction requirements, since it can

Similarly, concerns about a court's power to order the be waived and courts need not raise the issue

government to appear, give evidence, and pay a judgment sua sponte. Permitting the immunity to be raised

share much in common with personal jurisdictional limits at any stage of the proceedings, in contrast, is

over foreign parties. Yet, it seems awkward to say Texas more consistent with regarding [it] as a limit on

courts cannot “reach” other Texas governmental units, when the federal courts' subject-matter jurisdiction.”)

all necessarily share the same space, and sometimes the same (citations omitted).

buildings.

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49 Tex. Sup. Ct. J. 811

27 recognizes every just claim the citizen has against

See Clark v. Barnard, 108 U.S. 436, 447–48, 2 it, that in its own way it will do justice in reference

S.Ct. 878, 27 L.Ed. 780 (1883). thereto, and that it has ability to do so; and this

28 is one of the reasons why no suit can be brought

See Gardner v. New Jersey, 329 U.S. 565,

against the state without its consent.”); Borden

573–75, 67 S.Ct. 467, 91 L.Ed. 504 (1947); see

v. Houston, 2 Tex. 594, 611–12 (1847); Bd. of Land

also Cent. Va. Cmty. Coll. v. Katz, 546U.S. Comm'rs v. Walling, Dallam 524 (Tex.1843).

356, ––––, 126 S.Ct. 990, 1004, 163 L.Ed.2d 945

(2006) (holding that States agreed “not to assert any Second, “[c]oercion ... is incompatible with sovereignty.” 32

sovereign immunity defense they might have had Without some indication of consent, “the powers of judicial

in proceedings brought” in bankruptcy). tribunals, however great they may be, are not of a character so

transcendent as to enable them to afford [a] remedy.” 33 But

29

See Lapides v. Bd. of Regents of Univ. Sys. when a government voluntarily seeks affirmative relief from

of Ga., 535 U.S. 613, 616, 122 S.Ct. 1640, 152 the courts, it is not coercion but cooperation for the courts to

L.Ed.2d 806 (2002). adjudicate the matter.

Thus, the jurisdictional rules of sovereign immunity cannot

32

be derived by simply plugging in the rules of subject-matter Borden, 2 Tex. at 611.

or personal jurisdiction governing private parties and cases.

33

For one thing, those rules conflict. And because sovereign Walling, Dallam 524 (cited with approval by this

immunity includes elements of both but all of neither, there is Court in Kenedy v. Jarvis, 1 S.W. 191, 194

no general rule about which should apply or be preempted. (Tex.1886)); accord, Snyder, 18 S.W. at 106, 110;

Bates v. Republic, 2 Tex. 616 (1847).

Rather than abrogating sovereign immunity piecemeal or

adopting rules governing either subject-matter or personal Third, sovereign immunity protects the government from the

jurisdiction wholesale, we should look to those rules for distraction and expenses that would ensue if citizens could sue

guidance, applying them (or a hybrid of them) according to the government whenever they pleased. 34 But again, when

the purposes and peculiar necessities of sovereign immunity. the government *383 brings its own affirmative claims, it

This is precisely what the Court has done when considering has obviously concluded that the distraction and expense of

arguments to limit or abolish sovereign immunity completely, litigation is worthwhile in that particular case.

looking to the purposes behind the doctrine for guidance. 30

Considering those same purposes here shows why the 34

Texas Natural Res. Conservation Comm'n v. IT–

traditional rule that a sovereign's affirmative claim waives

Davy, 74 S.W.3d 849, 854 (Tex.2002); Walling,

immunity from suit is the right one.

Dallam at 525–26 (Tex.1843) (“The experience

of ages and the wisdom of the most enlightened

30

See Wichita Falls State Hosp. v. Taylor, 106 statesmen and judicial expositors have sanctioned

S.W.3d 692, 695–96 (Tex.2003). the doctrine that less injury would arise from the

delay or even the denial of justice to individuals

First, sovereign immunity is founded on the presumption that than from the distraction and imbecility consequent

governments will do justice to their citizens, by one means or upon the government's being involved in continual

another. 31 By filing suit in court, a government makes clear and harassing controversies at the will or caprice of

that it has chosen to pursue justice (and presumably not just every citizen in the community.”).

for itself) through litigation, at least in that particular case.

Fourth, the protection sovereign immunity affords to the

public fisc suggests that a government waiver by filing a claim

31

State v. Snyder, 66 Tex. 687, 18 S.W. 106, 109 should be limited to that claim's extent. 35 Absent sovereign

(1886) (“It is to be conclusively presumed, in the immunity, policy decisions regarding government spending

absence of a statute authorizing suit against the

would be made by judges and juries, not the Legislature. 36

state in reference to a given matter, that it fully

That might still be the case if, when a government asserted its

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49 Tex. Sup. Ct. J. 811

own claim, it waived sovereign immunity as to much larger against governmental units, 40 it has not played the same role

counterclaims and entirely different transactions. By filing in limiting which particular suits may be filed by them. Trying

suit on a claim, a government consents to have the courts to collect an affirmative claim does not raise the same kinds

decide its entitlement to a particular sum, but no more. of concerns as trying to avoid one.

35 39

State v. Humble Oil & Ref. Co., 141 Tex. 40, See, e.g., Wichita Falls State Hosp. v. Taylor,

169 S.W.2d 707 (1943); Snyder, 18 S.W. at 110;

106 S.W.3d 692, 696 (Tex.2003); IT–Davy, 74

Borden, 2 Tex. at 611–12 (1847); Bates, 2

Tex. at 618. S.W.3d at 854; Univ. of Tex. Med. Branch

at Galveston v. York, 871 S.W.2d 175, 177

36

IT–Davy, 74 S.W.3d at 854 (“Subjecting the (Tex.1994); Duhart v. State, 610 S.W.2d 740,

government to liability may hamper governmental 742 (Tex.1980).

functions by shifting tax resources away from their 40

intended purposes toward defending lawsuits and See IT–Davy, 74 S.W.3d at 862 (Hecht, J.,

paying judgments.”); Bates, 2 Tex. at 618. concurring).

Finally, while courts in these cases see separation among the Second, while the Legislature may waive immunity in

branches, parties sued by the State may see only different individual suits, in recent years it has done so quite rarely. 41

parts of the same tree. This paradoxical three-in-one structure Given the press of other business in a rapidly growing state,

(which no doubt resonated with the trinitarian Founders) 37 it is unrealistic to expect immunity decisions to be made

requires the courts at some point to insist that “[t]here is not piecemeal rather than collectively. The reasons for strictly

construing waiver for whole classes *384 of suits against the

one law for the sovereign and another for the subject.” 38 A

government are not the same when a single government unit

rule allowing governments to make a claim but preventing

files a single case.

all offsetting claims looks less like sovereign immunity than

sovereign inequity.

41

See id.

37

Cf. Note, The Twenty Dollars Clause, 118 Finally, when governments bring suit, they must do so

HARV.L.REV. 1665, 1680 (2005) (“In an analogy through agents who ultimately derive their authority from

that would have resonated with the Founders, the

the Legislature. 42 Those agents generally are not authorized

trilogy of life, liberty, and property was as the

to waive immunity from liability, or immunity from suit in

Christian trinity of Father, Son, and Holy Spirit:

individual cases. But when they file suit on an affirmative

three-in-one; the same, but different.”).

claim, they must be doing so with legislative authorization.

38 If the rule were otherwise, it is not clear how a government

Fristoe v. Blum, 92 Tex. 76, 45 S.W. 998, 1000

could ever assert its own claims.

(1898) (quoting People v. Stephens, 71 N.Y.

527, 549). 42

Thus, the traditional rule of limited waiver by appearance is See Pub. Util. Comm'n v. City Pub. Serv. Bd. of

consistent with all of the purposes of sovereign immunity. It is San Antonio, 53 S.W.3d 310, 316 (Tex.2001).

not in “tension” with the jurisdictional rules governing private This Court found it “well settled” more than 100 years ago

parties; it is simply a different rule. that governments who file suit must follow the same rules as

the governed:

Nor do I see any unresolvable tension between this rule and

our frequent statements that sovereign immunity must be

waived by the Legislature in clear and unambiguous terms, 39

for several reasons. First, while the Legislature has taken an It is well settled that so long as

active role in deciding which particular suits may be filed the state is engaged in making or

enforcing laws, or in the discharge of

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49 Tex. Sup. Ct. J. 811

When a government voluntarily enters a contract, it waives

sovereign immunity from liability (though not suit) to that

any other governmental function, it is

extent; 44 when a government voluntarily files suit, it waives

to be regarded as a sovereign, and has

sovereign immunity from suit (though not liability) to that

prerogatives which do not appertain

extent as well. Because the City of Dallas filed an affirmative

to the individual citizen; but when it

claim here, it waived immunity from suit to that extent.

becomes a suitor in its own courts, or

a party to a contract with a citizen, the

44

same law applies to it as under like See Fed. Sign v. Tex. S. Univ., 951 S.W.2d 401,

conditions governs the contracts of an 405–06 (Tex.1997).

individual. 43

All Citations

197 S.W.3d 371, 49 Tex. Sup. Ct. J. 811

43

Fristoe, 45 S.W. at 999.

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Tab E

Nazari v. State, 561 S.W.3d 495 (2018)

61 Tex. Sup. Ct. J. 1525

561 S.W.3d 495 [4] the appellate courts lacked interlocutory jurisdiction to

Supreme Court of Texas. address dismissal of third-party claims.

Dr. Behzad NAZARI, D.D.S., et al., Petitioners,

Judgment of the Court of Appeals affirmed.

v.

The STATE of Texas; Xerox Corporation;

Lehrmann, J., concurred in part, dissented in part, and filed

and Xerox State Healthcare, LLC f/k/ opinion in which Johnson, J., joined.

a ACS State Healthcare, LLC, Respondents

See also 2018 WL 3077704.

No. 16-0549

|

Procedural Posture(s): Petition for Discretionary Review;

Argued February 6, 2018

Interlocutory Appeal; Plea to the Jurisdiction; Motion to

|

Dismiss.

OPINION DELIVERED: June 22, 2018

|

Rehearing Denied December 14, 2018 West Headnotes (19)

Synopsis

Background: State brought action against dental services [1] States Necessity of waiver or consent

providers alleging fraud in violation of the Texas Medicaid The common-law doctrine of “sovereign

Fraud Prevention Act, and providers counterclaimed for immunity” prohibits suits against the state unless

conspiracy, breach of contract, and conversion and brought the state consents and waives its immunity.

third-party claims against state contractor administering

the program for common-law fraud, breach of contract, 19 Cases that cite this headnote

promissory estoppel, negligent hiring, negligent supervision,

negligence, and gross negligence. The District Court, Travis [2] States Nature and scope of immunity in

County, 53rd Judicial District, Stephen Yelenosky, J., general

granted State's plea to the jurisdiction on the counterclaims

Sovereign immunity from suit implicates a

and granted State's motion to dismiss third-party claims.

court's subject-matter jurisdiction, because it

Providers filed interlocutory appeal. The Austin Court of

recognizes the courts' limited authority over the

Appeals, 497 S.W.3d 169, affirmed the dismissal of the sovereign creating them.

counterclaims and dismissed the appeal regarding the third-

party claims. Providers' petition for review was granted. 13 Cases that cite this headnote

[3] States Nature and scope of immunity in

Holdings: The Supreme Court, Brown, J., held that: general

When it applies, sovereign immunity from suit

[1] as a matter of first impression, State seeking a transfer operates to shield the public from the costs and

of funds is insufficient to preclude protections of sovereign consequences of improvident actions of their

immunity; governments.

[2] as a matter of first impression, sovereign immunity barred 3 Cases that cite this headnote

dental service providers from asserting counterclaims;

[4] States Power to waive immunity or

[3] as a matter of first impression, sovereign immunity consent to suit

protects State from counterclaims that seek to offset a penalty;

and

© 2025 Thomson Reuters. No claim to original U.S. Government Works. 1

Nazari v. State, 561 S.W.3d 495 (2018)

61 Tex. Sup. Ct. J. 1525

Although the state may elect to waive its A governmental entity does not waive its

sovereign immunity, that policy decision belongs sovereign immunity by filing a claim for

largely to the legislature. affirmative relief; instead, the scope of

governmental immunity does not reach the

defensive counterclaims to the extent that any

[5] States Mode and sufficiency of waiver or recovery on the counterclaims serves as an offset

consent against the government's recovery.

The legislature may waive the state's sovereign 9 Cases that cite this headnote

immunity by statute or by legislative resolution.

8 Cases that cite this headnote [10] States Mode and sufficiency of waiver or

consent

[6] States Mode and sufficiency of waiver or The state's assertion of a claim for monetary

consent relief, standing by itself, is not enough to trigger

the abrogation-of-immunity rule; the fact that the

If the legislature elects to waive sovereign

state seeks a transfer of funds is not sufficient

immunity, it must do so by clear and

to place it beyond the protections that sovereign

unambiguous language. Tex. Gov't Code immunity from suit affords.

Ann. § 311.034.

2 Cases that cite this headnote

5 Cases that cite this headnote

[11] States Particular Claims and Actions

[7] States Power to waive immunity or

States Intentional torts in general

consent to suit

Sovereign immunity barred dental service

Although courts defer to the legislature to

providers from asserting counterclaims for

determine whether the state has waived

conspiracy, breach of contract, and conversion

immunity, sovereign immunity is a common-

against State, in State's action for fraud

law creation, and the responsibility to define

under Texas Medicaid Fraud Prevention Act;

the boundaries of the doctrine remains with the

arguments for conspiracy and breach of contract

judiciary.

had nothing to do with whether providers

9 Cases that cite this headnote violated Act, conversion counterclaim would

have never resulted in an offset, and State

sought monetary penalty under Act, rather than

[8] Municipal, County, and Local damages. Tex. Hum. Res. Code Ann. § 36.052.

Government Entities Entitled to Immunity

A governmental entity does not have sovereign 2 Cases that cite this headnote

immunity from suit for monetary claims against

it that are germane to, connected with, and [12] States Mode and sufficiency of waiver or

properly defensive to affirmative claims made by consent

the entity, to the extent that the claims against the

The rule under which the state, by participating

entity offset the entity's own claims.

in certain litigation, steps outside the sphere

6 Cases that cite this headnote of protection that common-law sovereign

immunity from suit provides never applies

when the state initiates litigation to enforce a

[9] Municipal, County, and Local substantive prohibition against unlawful conduct

Government Waiver of and Exceptions to by imposing a monetary penalty.

Immunity in General

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Nazari v. State, 561 S.W.3d 495 (2018)

61 Tex. Sup. Ct. J. 1525

[13] States Nature and scope of immunity in 1 Case that cites this headnote

general

Sovereign immunity protects the state from [19] Appeal and Error On motion for

counterclaims that seek to offset a penalty. dismissal or nonsuit

8 Cases that cite this headnote Statutes do not authorize an interlocutory appeal

from an order granting a governmental unit's

motion to dismiss third-party claims on non-

[14] Penalties Persons liable jurisdictional grounds.

Penalties are inherently one-sided; citizens

cannot claim a penalty against the state, but 1 Case that cites this headnote

the state can and does frequently assess fines,

penalties, and sanctions against its citizens.

*497 ON PETITION FOR REVIEW FROM THE COURT

[15] States Particular Claims and Actions OF APPEALS FOR THE THIRD DISTRICT OF TEXAS,

David E. Puryear.

A citizen seeking to offset a penalty must

assert some other, non-penal source of the state's Attorneys and Law Firms

liability, such as a tort, or a contract.

Jason D. Ray, Riggs & Ray, P.C, J. Woodfin Jones, Alexander

Dubose Jefferson & Townsend LLP, Austin, E. Hart Green,

[16] States Nature and scope of immunity in Mitchell A. Toups, Weller Green Toups & Terrell, L.L.P.,

general Beaumont, Richard Bruce Pecore, Liles Parker, PLLC,

Kingwood, Robert M. Anderton, Law Offices of Hanna &

A penalty cannot be offset against the state any

Anderton, Austin, J. A. (Tony) Canales, Canales & Simonson,

more than a prison sentence.

P.C., Corpus Christi, for Petitioners.

J. Campbell Barker, Philip A. Lionberger, Raymond C.

[17] Appeal and Error On motion for Winter, Scott A. Keller, Office of the Attorney General of

dismissal or nonsuit Texas, Jeffrey C. Mateer, First Assistant Attorney General,

Appellate courts lacked interlocutory Christopher R. Cowan, Eric J.R. Nichols, Beck Redden LLP,

jurisdiction to address whether trial court erred in Austin, David M. Gunn, Constance H. Pfeiffer, William

dismissing dental service providers' third-party C. Webb, Beck Redden LLP, Houston, Robert C. Walters,

claims against state contractor administering Gibson, Dunn & Crutcher LLP, Dallas, for Respondents.

Medicaid program, in State's action against

providers for violation of Texas Medicaid William R. Peterson, Morgan, Lewis & Bockius LLP,

Fraud Prevention Act; State moved to dismiss Houston, for Amicus Curiae Pharmaceutical Research and

providers' third-party claims against contractor Manufacturers of America.

on ground that Act did not permit third-party

Constance H. Pfeiffer, Beck Redden LLP, Houston, David M.

claims, which was non-jurisdictional ground.

Gunn, Beck Redden LLP, Houston, for Amici Curiae Xerox

Tex. Hum. Res. Code Ann. § 36.001 et seq.

Corporation, Xerox State Healthcare LLC.

4 Cases that cite this headnote

Oscar Xavier Garcia, Attorney at Law, Brownsville, Philip H.

Hilder, Hilder & Associates PC, Houston, William Graham,

[18] Appeal and Error Interlocutory and Hilder & Associates, Austin, for Other interested parties.

Intermediate Decisions

A party may not appeal an interlocutory order

unless authorized by statute.

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Nazari v. State, 561 S.W.3d 495 (2018)

61 Tex. Sup. Ct. J. 1525

33.71(a). During the events that spurred this litigation, Xerox

Opinion administered the prior-authorization program under a contract

with the state. The state alleges that the Providers routinely

Justice Brown delivered the opinion of the Court, in which

submitted prior-authorization and post-treatment-payment

Chief Justice Hecht, Justice Green, Justice Guzman, and

requests that misrepresented the severity or nature of the

Justice Devine joined.

patients' conditions, sought payments for services that were

In this enforcement action under the Texas Medicaid Fraud never provided, falsely claimed that licensed employees had

Prevention Act (the Act), the State of Texas alleges that provided the services, and in some cases, accepted kickbacks.

several dentists and their professional associations and At the same time, the state alleges, Xerox failed to properly

employees (collectively, the Providers) fraudulently obtained review the Providers' prior-authorization requests and instead

Medicaid payments for providing dental and orthodontic simply rubber-stamped them. 2 The state thus maintains that

treatments to children. In response, the Providers assert the Providers and Xerox committed independent frauds in

counterclaims and third-party claims alleging that the state violation of the Act, ultimately costing the state “and its

and its contractor mismanaged the payment-approval process taxpayers millions of dollars.”

and misled the Providers regarding the requirements that the

Texas Medicaid Program (the Program) imposes. The state 1 The state's live petition alleges that the Providers

filed a plea to the jurisdiction against the counterclaims and

fraudulently performed “general dental and/or

a motion to dismiss the third-party claims. The trial court

orthodontic services.” The remainder of this

granted both. The Providers filed this interlocutory appeal.

opinion refers to these services as “orthodontic

We conclude that sovereign immunity bars the Providers'

services” or “orthodontic treatments.”

counterclaims against the state and that we lack interlocutory

jurisdiction to address the trial court's dismissal of the 2 The state's allegations against Xerox form the core

Providers' third-party claims. We affirm the court of appeals' of a separate Medicaid-fraud case, also announced

judgment. today. See In re Xerox, 555 S.W.3d 518, 2018 WL

3077704 (Tex. 2018).

The Providers tell a different story. They deny knowingly

I submitting false prior-authorization or payment requests.

Instead, they claim their requests and services complied

with the Program's requirements as the state and Xerox

Background

explained and enforced those requirements. According to the

The facts giving rise to this dispute depend on whom you Providers, the state permitted and even intended Xerox to

ask. According to the state, the Providers voluntarily agreed approve as many treatments as possible. This instruction,

to participate in the Program by providing *498 orthodontic the Providers say, was part of the state's plan to fend

treatments to qualifying children in exchange for payments off additional liabilities in a series of long-running federal

from the state at reduced Medicaid rates. 1 See generally lawsuits related to allegations that the Program “did not

42 U.S.C. §§ 1396 to 1396w–5 (authorizing each satisfy the requirements of federal law.” Frew ex rel. Frew

state to administer its own Medicaid program); TEX. HUM. v. Hawkins, 540 U.S. 431, 434, 124 S.Ct. 899, 157 L.Ed.2d

RES. CODE § 32.001 (implementing the Texas Medicaid 855 (2004); see also Frazar v. Ladd, 457 F.3d 432, 434 (5th

Program “to provide medical assistance on behalf of needy Cir. 2006) (discussing “the latest chapter in the suit to improve

individuals and to enable the state to obtain all benefits for Texas administration of the Medicaid program to afford health

those persons authorized” by federal law). The Program pays care to the certified class of indigent children”).

for certain “medically necessary” orthodontic treatments,

but it does not cover treatments that are for “cosmetic The Providers allege that because the state was desperate

reasons only.” 25 TEX. ADMIN. CODE §§ 33.40(b), to appear compliant with the federal-court orders, the state

turned a blind eye to Xerox's routine rubber-stamping of

33.71(a). As one way of preventing improper payments, the Providers' requests. This, the Providers say, led them to

the Program requires dentists and orthodontists to obtain believe that the information they were submitting complied

prior authorizations for all services and treatments. Id. § with the Program's requirements and established that their

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61 Tex. Sup. Ct. J. 1525

patients qualified for orthodontic services. But when reports

of the state's exploding expenditures began to emerge, the See id. § 36.052 (authorizing civil remedies). The state alleges

Providers allege the state blamed them in an effort to avoid that each of the Providers is “jointly and severally liable for

responsibility for its own actions, enrich itself, and limit its the damages which arose either directly or indirectly, as a

liability to the federal government for having mismanaged the result of each [of the Providers'] unlawful acts.”

Program. As a result, the *499 Providers say they are not

responsible for improper requests, if any, and are not liable The Providers filed an answer generally denying the state's

for any overpayments. To the contrary, urge the Providers, allegations. They also asserted counterclaims against the

the state and Xerox are liable for all losses, expenses, and state for conspiracy, breach of contract, and conversion.

attorney's fees that the Providers have incurred as a result of The Providers seek “proportional recovery of actual and

the state's and Xerox's “scheme.” exemplary damages, interest, court costs, and attorney's fees

against the State.” They allege that the state has waived its

The state's first step was to initiate administrative actions sovereign immunity as to the Providers' “connected, germane,

against various dentists—including the Providers—alleging and defensive counterclaims” and that it “is liable up to

they fraudulently obtained payments from the Program. An those amounts plead[ed].” The Providers also asserted third-

avalanche of legal proceedings involving the state, Xerox, party claims against Xerox, seeking damages and contribution

and the Providers ensued. Throughout these proceedings, the for common-law fraud, breach of contract, promissory

state has sought to pursue its claims against Xerox and the estoppel, negligent hiring, negligent supervision, negligence,

Providers separately, while Xerox and the Providers have and gross negligence. They allege the state and Xerox

attempted, unsuccessfully, to join all of the claims in one were responsible for authorizing the Providers' services and

proceeding. After the administrative-law judges ruled against conspired to rubber-stamp the Providers' authorization and

the state in its administrative actions, the state filed this payment requests. The Providers say this conspiracy led them

lawsuit against the Providers. to continue using the same standards to establish medical

necessity, making the state and Xerox liable for any payments

In this suit, the state alleges that the Providers committed for services that were not medically necessary.

fraud in violation of the Act by submitting false prior-

authorization and payment requests, seeking payments for The state filed a plea to the jurisdiction against the Providers'

services never rendered, misrepresenting the qualifications of counterclaims, asserting that sovereign immunity bars the

those who provided orthodontic services, and, in some cases, counterclaims and that the Providers lack *500 standing

accepting illegal kickbacks. The state argued that the trial to assert any claims under the Act or for breach of the

court could enjoin the Providers from committing fraud. See contract between the state and Xerox. The state also filed a

TEX. HUM. RES. CODE § 36.051(a) (authorizing injunctive motion to dismiss the Providers' third-party claims against

relief). It also pleaded in its petition for a recovery “to the Xerox, arguing that the Act does not permit a defendant

maximum extent allowed by law,” including specifically: to assert third-party claims and that sovereign immunity

bars such claims against a state contractor acting within the

(1) the amount of any payments provided under the scope of its contractual authority. The trial court granted

[Program], directly or indirectly, as a result of each both motions, expressly holding that “the state is entitled to

[Provider's] unlawful acts, bring this action against [the Providers] to the exclusion of

other parties.” The Providers filed an interlocutory appeal,

(2) prejudgment interest on the amount of the payments or and Xerox filed a brief supporting the Providers' appeal. The

the value of such payments, court of appeals affirmed the trial court's order dismissing the

(3) two times the amount of any payment provided under Providers' counterclaims. 497 S.W.3d 169, 171 (Tex. App.

the [Program], directly or indirectly, as a result of each —Austin 2016). The court did not consider the merits of the

[Provider's] unlawful acts, Providers' appeal from the order dismissing the third-party

claims, concluding that it lacked interlocutory jurisdiction

(4) civil penalties, and

over that order. See id. at 184.

(5) expenses, costs, and attorneys' fees.

We granted the Providers' petition for review. We need not and

do not address the merits of the parties' claims or pick between

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61 Tex. Sup. Ct. J. 1525

their competing descriptions of the underlying facts. The only with the state and the court of appeals that it does not. See

issues before us today are: (1) whether sovereign immunity

497 S.W.3d at 175 (“Nothing in the provisions of the Act

bars the Providers' counterclaims against the state; and (2)

can be construed as a waiver of immunity for the claims at

whether the trial court erred by dismissing the Providers'

issue in this case.”).

third-party claims against Xerox. We conclude that sovereign

immunity bars the counterclaims, and we agree with the court

The Providers argue that the attorney general “waived” the

of appeals that we lack interlocutory jurisdiction to address

state's sovereign immunity *501 by filing this suit and

the order dismissing the third-party claims.

voluntarily appearing in court. In support, the Providers rely

on cases like Anderson, Clayton & Co. v. State ex rel.

Allred, in which we held that “where a state voluntarily files

II

a suit and submits its rights for judicial determination, it

will be bound thereby, and the defense will be entitled to

Counterclaims plead and prove all matters properly defensive.” 122 Tex.

530, 62 S.W.2d 107, 110 (1933). “This includes the right,”

[1] [2] [3] The trial court dismissed the Providers'

we explained, “to make any defense by answer or cross-

counterclaims on the ground that sovereign immunity

bars those claims, meaning the court lacked jurisdiction complaint germane to the matter in controversy.” Id. The

to hear them. The common-law doctrine of sovereign Providers also cite cases stating, for example, that “[w]hen

immunity prohibits suits against the state unless the state the state becomes a party to a suit it is subject to the same

consents and waives its immunity. See Hall v. McRaven, rules that govern other parties.” Sec. Tr. Co. v. Lipscomb

508 S.W.3d 232, 238 (Tex. 2017). Sovereign immunity Cty., 142 Tex. 572, 180 S.W.2d 151, 159 (1944); see also

from suit “implicates a court's subject-matter jurisdiction,”

State v. Naylor, 466 S.W.3d 783, 792 (Tex. 2015) (“[T]he

Engelman Irrigation Dist. v. Shields Bros., Inc., 514 State must abide by the same rules to which private litigants

S.W.3d 746, 755 (Tex. 2017), because it recognizes “the

are beholden.”); Reata Constr. Corp. v. City of Dallas, 197

courts' limited authority over the sovereign creating them.”

S.W.3d 371, 377 (Tex. 2006) (“[T]he City must participate in

Hall, 508 S.W.3d at 238 (citing Brown & Gay Eng'g,

the litigation process as an ordinary litigant[ ] ....”); State

Inc. v. Olivares, 461 S.W.3d 117, 121 (Tex. 2015) ). When

v. Zanco's Heirs, 18 Tex.Civ.App. 127, 44 S.W. 527, 529 (San

it applies, immunity from suit “operates to ‘shield the public

Antonio 1898, writ ref'd) (“When the state of Texas enters its

from the costs and consequences of improvident actions of

courts as a litigant, it must be held subject to the same rules

their governments.’ ” Id. (quoting Tooke v. City of that govern other litigants[ ] ....”).

Mexia, 197 S.W.3d 325, 332 (Tex. 2006) ).

The state disagrees, relying on cases like Borden v.

[4] [5] [6] Although the state may elect to waive its

Houston for the rule that the state's appearance as a plaintiff

sovereign immunity, that policy decision belongs largely to

in its own courts does not waive its immunity against

the legislature. See Engelman, 514 S.W.3d at 753. The

counterclaims. See 2 Tex. 594, 611–12 (1847) (“When

legislature may waive the state's immunity “by statute or

individuals have rights against the government, the clearest

by legislative resolution.” Fed. Sign v. Tex. S. Univ., principles of equity and justice demand that those rights shall

951 S.W.2d 401, 405 (Tex. 1997), superseded by statute be respected[ ] .... But however clear the right may be, ... it can

be enforced against the government only by its consent, and

on other grounds as stated in Tex. Dep't of Parks &

in the manner it may prescribe.”). And while the state may be

Wildlife v. Miranda, 133 S.W.3d 217, 224 (Tex. 2004). If the

bound to follow certain procedures when it appears in court,

legislature elects to waive immunity, it must do so “by clear

the state contends, procedural rules cannot waive the state's

and unambiguous language.” Tooke, 197 S.W.3d at 328– immunity.

29 (citing TEX. GOV'T CODE § 311.034). In this court,

the Providers do not argue that the Act expressly waives the We agree with the state that these decisions do not establish

state's immunity against their counterclaims, and we agree that the state waives its sovereign immunity by initiating suit.

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Nazari v. State, 561 S.W.3d 495 (2018)

61 Tex. Sup. Ct. J. 1525

Many of the cases the Providers cite stand simply for the

resolution of that issue. We explained in Reata that once

proposition that procedural rules apply to the state just as they

a “governmental entity interjects itself into or chooses to

would to any other litigant when the state appears in court.

engage in litigation to assert affirmative claims for monetary

That proposition, though sound, does not answer the question

damages, the entity will presumably have made a decision

whether sovereign immunity protects the state from having to

to expend resources to pay litigation costs.” 197 S.W.3d

defend certain actions to begin with. See Fed. Sign, 951

at 375 (emphasis added). We also recognized that “it would

S.W.2d at 407 (“To state what happens if the State consents

be fundamentally unfair to allow a governmental entity to

to be sued says nothing about whether the State consents to

assert affirmative claims against a party while claiming it had

be sued.”).

immunity as to the party's claims against it.” Id. at 375–76.

[7] [8] [9] And while the quote from Anderson appears

To resolve the issue, we must first answer which part of the

to support the Providers' waiver argument, we clarified that

phrase “monetary damages” best captures Reata's holding:

case and others like it in Reata Construction Corp. v.

is it the word “monetary,” as the Providers argue, or is it

City of Dallas. See 197 S.W.3d at 374, 376–77 (citing

the word “damages,” as the state argues? See id. at 375.

Anderson, 62 S.W.2d at 110). We based our Reata

We conclude that Reata applies to damages, but that the

holding not on a waiver theory, but on the scope of the City's

question whether it applies further—and how much—is one

immunity. See id. at 375 (“[I]t remains the judiciary's of first impression. This conclusion gives rise to a second

responsibility to ... determine under what circumstances

question: does Reata apply to penalties? We conclude

sovereign immunity exists in the first instance.”). So although

that it does not. The third question is whether the state's

we defer to the legislature to determine whether the state

action under the Act seeks to impose a penalty. We answer

has waived immunity, “sovereign immunity is a common-law

that question in Xerox, also decided today. See Xerox, 555

creation,” and the “responsibility to define the boundaries of

S.W.3d at 533–34. In that case, “[c]onstruing the statute as a

the doctrine” remains with the judiciary. Engelman, 514 whole, we conclude Section 36.052 of the [Act] employs a

S.W.3d at 753. One such boundary is that a governmental

penalty scheme.” Id. at 534. Since the Act is penal, Reata's

entity simply “does not have immunity from suit for monetary

abrogation-of-immunity rule does not apply. Accordingly, the

claims against it that are ‘germane to, connected with,

state's sovereign immunity protects it from the Providers'

and properly defensive to’ affirmative claims made by the

counterclaims.

entity,” to the extent that the claims against the entity offset

the entity's own claims. City of Dallas v. Albert, 354

S.W.3d 368, 372 (Tex. 2011) (quoting *502 Reata, 197 A

S.W.3d at 378). “This is not because the governmental entity

‘waives’ its immunity by filing a claim for affirmative relief. The Providers argu

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