Is a Billionaire Executive Chairman a Public Person?

Warren is a savvy businessman with a ruthless sense for profit, building Dallas-based Energy Transfer Partners into a $40 billion company over forty years in the oil and gas business. Energy Transfer Partners has 120,000 miles of pipes and brags that it moves “nearly 30 percent of the natural gas and oil produced in the United States.” Warren is also a longtime political donor.

In February 2022, Warren sued O’Rourke over comments the former congressman made in his campaign to unseat Abbott. O’Rourke had suggested there was a link between the $1 million donation Warren gave to Abbott and a law Abbott signed that allowed gas companies like Energy Transfer to opt out of winterization requirements designed to help prevent blackouts during major storms. (Warren had previously donated $1.4 million to Abbott’s campaigns over the past two decades.)

Abbott signed the legislation in June 2021, a few months after Winter Storm Uri ravaged Texas, resulting in hundreds of deaths. Energy Transfer announced in May 2021 that the company had earned $2.4 billion in windfall profits during the storm. Electricity spiked by nearly 30,000 percent and natural gas skyrocketed by more than 16,500 percent during the storm.

According to Warren’s suit, O’Rourke had defamed him by making comments like, “Kelcy Warren and Greg Abbott want us to stop talking about how Warren’s company made over $2 billion in profits while Texans were freezing to death, and then turned around and gave $1 million to Abbott’s campaign,” as O’Rourke told the Dallas Morning News in March 2022.

Debate in the case has focused on O’Rourke’s usage of the term “bribe” to describe Warren’s $1 million donation. O’Rourke’s attorney, Chad Dunn, said in a brief that it was used in “its nondefamatory colloquial sense.”

Jane Kirtley, a professor of media ethics at the University of Minnesota’s law school, pointed out, “The Supreme Court of the US has stated that hyperbolic speech in the political back and forth is expected, it’s the American way.”

Warren’s case could reverberate beyond Texas and help set a nationwide precedent about who courts determine is a “limited-purpose public figure.”

In a 1974 case, the Supreme Court defined “limited-purpose public figure” as a person who “voluntarily injects himself or is drawn into a particular public controversy and thereby becomes a public figure for a limited range of issues.”

If the courts determine Warren is such a public figure, then Warren will have to reach a high bar to prove O’Rourke had “actual malice” when making his statements about Warren and Abbott.

But if the courts determine that Warren is simply a private person, the plaintiff will be held to a much lower standard, and only has to prove O’Rourke was guilty of “negligence.”

Warren and his legal team are arguing that, despite him being a mega donor and billionaire executive chairman of a publicly traded Fortune 500 company, the oil magnate is a private person under libel law. Warren’s position was summarized by his attorney, Dean Pamphilis of Kasowitz, Benson, and Torres, a firm led by former president Donald Trump’s longtime lawyer Marc Kasowitz.

“What they’re asking you to do here is to conclude that a million-dollar — or any — campaign contribution makes you a public figure, opens you up to attack that you can’t defend against unless you prove actual malice, and there is no precedent for that whatsoever,” said Pamphilis in a hearing before the Third Circuit on December 7.

Beneath that argument is an attempt to craft an aggressive new legal doctrine: that huge campaign contributions should not subject billionaires to additional scrutiny, and that it should be far easier for billionaires to sue over political statements made about their campaign contributions.

“If I had to characterize this suit, I would call it a SLAPP suit,” asserted Kirtley. “It’s being brought to silence criticism and commentary about what this individual has done.” SLAPP suits, an acronym for “strategic lawsuits against public participation,” seek to crush free debate by silencing critics using defamation and libel law.

While Texas has an anti-SLAPP law, Abbott in 2019 signed legislation weakening it, limiting the ways in which a defendant can seek to have a case dismissed.

Kelcy Warren’s Money Trail

Warren’s lawsuit is widely expected to fail in the court where the lawsuit is currently lodged — Texas’s Third Circuit Court of Appeals, which is made up of Democrats.

But the outcome of the suit is much less certain if it reaches Texas’s all-Republican Supreme Court, where six of the nine justices have either been backed by generous campaign contributions from Warren or by groups funded by the company Warren leads.

Dunn, O’Rourke’s attorney, said in a statement to us that “the matter is likely to be before the Texas Supreme Court.”

On the court sit Justices John Philip Devine, Jimmy Blacklock, and Brett Busby, who have received $6,250 in direct campaign contributions from Warren. Unlike federal judges and many state supreme court justices that are appointed, Texas supreme court justices are elected statewide for staggered six-year terms.

Warren’s company Energy Transfer additionally gave $1 million to a federal super PAC called Engage Texas, which in turn funded the Engage Texas state PAC, which then bankrolled the Judicial Fairness PAC, which spent $750,000 backing the GOP’s Texas supreme court candidates — Justices Jeffrey Boyd, Brett Busby, Nathan Hecht, and Jane Bland — in the 2020 election.

Judicial Fairness PAC was also at the center of a recent influence-peddling scandal at the Texas Supreme Court. On October 2, 2020, the court rejected an appeal of a lower court decision affirming a $900,000 judgment against Apache Corp, a Fortune 500 oil exploration firm based in Houston, over a gender discrimination case. Then, on October 26, 2020, Apache pumped $250,000 into Judicial Fairness PAC, the same PAC indirectly supported by Energy Transfer. On June 25, 2021, the court reversed their prior decision and vacated the judgment against Apache.

Two of the four justices the PAC had supported in the 2020 election recused themselves because they had worked on the case prior to reaching the high court. The other two did not recuse themselves. Texas rules do not mention campaign contributions as it relates to recusal, and just six of forty-two states with judicial elections for appellate judges restrict judges’ ability to decide for themselves whether to recuse when they have received campaign contributions from litigants or their attorneys. The Texas rules do mandate recusal when “the judge’s impartiality might reasonably be questioned.”

Energy Transfer has given $340,000 to the Republican State Leadership Committee (RSLC) since 2018 (and $200,000 during 2020 election cycle), and RSLC gave $300,000 to the Texas-based Judicial Fairness PAC during the 2020 election cycle as it supported the Texas supreme court campaigns with independent expenditures.

“Judges’ Decisions May Be Motivated by the Desire to Repay Campaign Contributors”

Legal experts say that Warren’s backing of Texas supreme court justices could put the court in a position of banning criticism of its own decisions by ruling in favor of Warren.

Warren and Energy Transfer Partners’ support of candidates for the Texas Supreme Court “only underscores the need for people to be able to speak freely about campaign contributions,” speech that Warren is seeking to chill through his lawsuit, said Seth Stern, a First Amendment lawyer and advocacy director of the Freedom of the Press Foundation, which advocates for journalist rights. “The press and public are entitled to discuss the functioning of the judiciary.”

He added that the Texas supreme court ruling in favor of Warren’s lawsuit “would cut against the public’s ability to discuss and the press’ ability to cover matters of great public importance, including matters before the Texas Supreme Court.”

Kirtley, the law professor, told us that the “question of who gives money to judges and with what set of expectations is a good one. To stifle that, it’s not a good thing, it doesn’t embrace transparency or citizen participation. Putting names and affiliations on campaign finance donations is important to telling the whole story. What it sounds like to me is this individual doesn’t want this story to be told.”

The case could ultimately be appealed to the US Supreme Court, which has previously raised concerns about the reams of money flowing into judicial races around the country. In the 2019 and 2020 cycles, $97 million flowed into statewide judicial races, according to data collected by the Brennan Center for Justice at New York University’s law school.

Former justice Sandra Day O’Connor wrote in a 2002 decision that “Even if judges were able to refrain from favoring donors, the mere possibility that judges’ decisions may be motivated by the desire to repay campaign contributors is likely to undermine the public’s confidence in the judiciary.”

In a 2009 case involving former Massey Energy CEO Don Blankenship’s efforts to influence the state judiciary, former justice Anthony Kennedy wrote for the majority that “there is a serious risk of actual bias — based on objective and reasonable perceptions — when a person with a personal stake in a particular case had a significant and disproportionate influence in placing the judge on the case by raising funds or directing the judge’s election campaign when the case was pending or imminent.”

That said, with O’Connor and Kennedy replaced by Samuel Alito and Brett Kavanaugh, the new six-three court dominated by conservatives could prove more favorable for Warren.

Three of the court’s nine justices were appointed by Trump. Warren donated $10 million to America First Action, a pro-Trump super PAC, in August 2020, making him the group’s fourth-largest donor. The fossil fuel executive has also hosted fundraisers for Trump at his Dallas home.