Attorney General Ken Paxton’s recent crusade against nonprofit organizations has been turbocharged by a flurry of favorable court rulings validating his use of a nearly 150-year-old state law to demand a company’s internal documents, and move to shut them down if they don’t comply.
Over the last two years, Paxton has launched investigations into at least a dozen companies, mostly immigrant-serving nonprofits, claiming they were breaking the law, or in some cases, their own corporate charters. None of these allegations have yet been proven in court.
What two key Texas courts and a federal appeals court have said, though, is that Paxton has wide authority to demand internal corporate records and file lawsuits to revoke a company’s right to do business in Texas if he believes they are violating the law. He can bring these legal actions without offering evidence to back up his claims, a Texas appeals court ruled.
While a judge would eventually have to rule on the merits of the allegations, that’s a process that can take months or more, requiring nonprofits to hire expensive lawyers to combat claims that might never be borne out.
No group has yet had to turn over documents or lost their corporate charter as legal battles are ongoing, but recent court rulings in Paxton’s favor leave few avenues to challenge this strategy outright.
Instead, organizations targeted by Paxton’s probes — including Annunciation House, the migrant shelter network, and Jolt Initiative, a Latino voter engagement nonprofit — are scrabbling together funds and pro bono support to defend themselves individually against his claims.
“The courts have said that the attorney general does have this significant power,” said Kristin Etter, an attorney with the Texas Immigration Law Council. “Nonprofit organizations should all be prepared to face increased scrutiny and understand that they can be targeted for any reason or no reason whatsoever.”
The strategy was thrown into relief last month by Paxton’s latest legal maneuver against Jolt, which has been operating under state scrutiny for more than a year after a Fox News host alleged the group was registering undocumented immigrants to vote. Local election officials swiftly debunked the claims, but Paxton still demanded the organization’s internal records.
After Jolt sued, Paxton retracted his request. But before the group’s leaders could breathe a sigh of relief, Paxton filed a new lawsuit, asking a Tarrant County judge to revoke Jolt’s charter and shut down the organization entirely.
Continuing to battle these claims has forced Jolt to lay off staff, scale back operations and do damage control with volunteers and donors, the group said in a new federal lawsuit.
Paxton did not respond to a request for comment. But in a statement announcing the new lawsuit against Jolt, he made it clear these side effects were a win in and of themselves.
“Any organization attempting to register illegals, who are all criminals, must be completely crushed and shut down immediately,” Paxton said. “JOLT is a radical, partisan operation that has, and continues to, knowingly attempt to corrupt our voter rolls and weaken the voice of lawful Texas voters. I will make sure they face the full force of the law.”
A strategy is born
In February 2024, three lawyers from the Texas Office of the Attorney General showed up at Annunciation House, claiming the El Paso-based group was operating illegal migrant “stash houses.” They brought with them an order to turn over business records and documents to the state, known as a “request to examine.”
This century-old statute grants the attorney general wide-ranging access to records related to any business operating in Texas. Under the law, a company that refuses to provide the documents “forfeits the right … to do business in this state,” while corporate leadership can face criminal charges.
The statute was designed by the framers of Texas’ constitution, who were wary of big business and wanted tools to hold banks and railroads accountable, said Randall Erben, a professor at the University of Texas School of Law and former aide to Gov. Greg Abbott.
“A request to examine is just an extension of that historical authority that the framers gave the attorney general to look after corporations and make sure they were complying with Texas law,” Erben said.
A lawyer for Annunciation House asked for 30 days to gather the requested documents. The attorney general’s office granted them 24 hours, stressing in legal filings that the statute requires documents be handed over “immediately.”
“It is well-established that courts must give statutory words their ‘common, ordinary meaning unless a contrary meaning is apparent from the statute’s language,’” Paxton wrote in a filing. “And here, the common ordinary meaning of ‘immediately’ is that OAG must be given access to the records right away.”
When a judge temporarily blocked the request, the AG’s office moved to revoke the group’s charter.
While that case made its way through the courts, Paxton sent more of these requests, at least a dozen by Erben’s count.
“None of these, as far as I can tell, have been at the request of a consumer, which is what you’d usually expect,” Erben said. “It’s all on his own motion. This attorney general has stretched these tools beyond recognition into the, for lack of a better word, culture wars.”
At least 10 were sent to nonprofits that serve immigrants. Another was sent to a private company, Spirit Aerosystems, one of the nation’s largest producers of airplane parts.
Spirit made parts for Boeing 737 Max planes, which had been in the spotlight for a pair of fatal crashes and other safety incidents. Paxton demanded information related to manufacturing defects, as well as the company’s diversity, equity and inclusion programs, so he could see “whether those commitments are unlawful or are compromising the company’s manufacturing processes.”
Spirit sued, saying that requiring companies to comply “immediately” amounts to unreasonable search or seizure. They cited a 2015 U.S. Supreme Court ruling striking down an ordinance that required Los Angeles hotels to provide police with a list of guests immediately upon request. Subjects of a search “must be afforded an opportunity to obtain precompliance review before a neutral decisionmaker,” without which there would be an “intolerable risk” that the search “will exceed statutory limits, or be used as a pretext to harass,” the high court ruled.
In the Spirit case, Paxton argued that the term “immediately” meant “in a reasonable time” to allow for judicial review. U.S. Magistrate Judge Mark Lane pointed out that this was contradictory to the office’s claims in the Annunciation House case, leaving companies that were served one of these requests to rely on the “grace of the Attorney General” in deciding how quickly to comply.
Lane concluded the statute was unconstitutional and could not be used to investigate corporations any longer.
Paxton’s office appealed to the 5th U.S. Circuit Court of Appeals. During the hearing, Judge Stephen Higginson harped on the agency’s changing interpretation of the word “immediately,” noting the expansive interpretation when dealing with a multinational corporation versus the punitive approach to a small nonprofit.
“What’s the case that says that the attorney general can … play with the litigants like that?” Higginson asked.
Higginson and the other two judges on the panel seemed primed to agree that Paxton should no longer have access to this tool.
And then the Texas Supreme Court ruled in the Annunciation House case.
A strategy is validated
After a state judge rejected Paxton’s effort to examine Annunciation House’s documents and shutter the organization, the attorney general’s office appealed directly to the Texas Supreme Court. The high court did not consider the merits of Paxton’s case against the nonprofit, but instead looked at the statutes that undergirded his investigation.
The all-Republican court ruled that Paxton had wide authority to request documents and ask the courts to revoke a corporation’s charter.
“Said more simply, the question reduces to whether the attorney general may file a lawsuit,” Justice Evan Young wrote in the court’s ruling. “Framed that way, our answer — that the attorney general may do so — should sound rather unremarkable.”
The justices also tackled the question of whether “immediately” really meant “immediately” in the request-to-examine statute.
“We agree with the attorney general that the term cannot reasonably be read literally, as in requiring compliance ‘without lapse of time, without delay,’ or ‘instantly,’” Young wrote. “[P]roviding physical documents without even a momentary delay is a physical impossibility.”
Instead, “to dispel any specter of unconstitutionality,” they held that the statute had an implicit provision allowing someone served with one of these requests to ask a judge to review it before they handed over documents. “That reading allows the attorney general flexibility in deciding when to mandate compliance — but it does not permit him to withhold precompliance review altogether,” Young wrote.
Since this ruling came down before the 5th Circuit could rule on the Spirit Aerosystems case, the federal court incorporated it into its finding. If the state Supreme Court interpreted the statute to allow time to take the request to a judge before complying, the 5th Circuit said it was satisfied that the statute was constitutional.
The state’s 15th Court of Appeals, a newly created appellate court, also further strengthened Paxton’s ability to pursue these cases. Paxton had filed a lawsuit seeking to revoke the business license of FIEL, a longtime immigrant rights organization, on the grounds that they engaged in political advocacy despite their corporate charter saying they wouldn’t.
FIEL argued this was a violation of their free speech protections; a state judge agreed, blocking the case from proceeding. But the appellate court intervened, ruling Paxton could file a lawsuit to revoke a corporation’s charter as long as he had probable grounds to believe there was a case.
He did not need to prove his suspicions before filing the lawsuit — the court “must accept as true the allegations in the State’s petition,” the 15th Court ruled, because “no statute, rule or case law explicitly requires the state to verify its petition or support it with evidence.”
Powered by People, a voter registration group founded by former El Paso Congressman Beto O’Rourke, spent more than $400,000 defending itself against a request-to-examine and corporate charter action brought by Paxton’s office. Spirit Aerosystems’ lawyers requested almost $600,000 in attorneys fees, even before the case went up on appeal.
Jolt and other groups facing these lawsuits say they intend to continue to fight back, pointing out that Paxton has yet to win on the merits in court. But as the net widens, dragging more nonprofits into costly legal battles, the immediate impact is already clear.
Jolt, in the new federal lawsuit, said battling the state for more than a year has cost them dearly. In a normal year without statewide or federal elections, the group registers about 12,000 people to vote. But with layoffs, disappearing donors and increased documentation requirements, they’ve only managed to register 3,500 so far this year.
This is all part of the strategy to wear these groups down, long before they even get into court, Erben said.
“Every one of these is something Paxton sees as inconsistent with his conservative philosophy of governance,” Erben said. “I don’t see this stopping anytime soon. He’s writing a playbook.”
