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M. versus Texas Department of Licensing and Regulation

Case Study

M. versus Texas Department of Licensing and Regulation


The client, an owner/operator of a beauty college, hired the firm as the Texas Department of Licensing and Regulation (the licensing entity that regulates these types of colleges), without previous notice to the client, had changed how it interpreted its own rules as to the calculation of refunds on college tuition at the college for students no longer enrolled in the college.


 This action by the Department had harmful consequences, affecting the ability of this particular college (as well as all beauty colleges statewide) to operate, affecting enrollment decisions for the college, and causing undue financial constraints on the college. 


 The Phan Law Firm, P.C., filed a declaratory action in State District Court to enjoin (prevent) the Department from enforcing its rule and its interpretation of that rule and sought monetary damages against the Department and individual Board members. The firm argued that the previous interpretation of the rule was the correct interpretation and that there was no authority to reinterpret the rule without undergoing a substantive rule-making process, which there had not been.


The Office of the Attorney General intervened and defended the licensing entity. After review, the Office of the Attorney General quickly determined that it could not support the action of the Department, reversed course, and agreed with the firm’s interpretation of the statute and rules relating to the calculation of refunds. The Office of the Attorney General quickly moved to dismiss the case with prejudice. Meaning it could no longer bring or challenge the action as was the want of the Department. This result not only provided clarity to the firm’s client for its operational purposes but also had a statewide impact as it assisted other beauty colleges in the State in their operations.