Everything You Need to Know About Texas’s Business Courts

Texas Governor Greg Abbott signed House Bill 19 on June 9, 2023, codifying a new Texas business court system.

The goal of the new business court system is to utilize commercially focused judges to adjudicate cases more efficiently than in the traditional court system.  Removing certain matters from the traditional docket should also lighten traditional judges’ dockets, quickening the pace of litigation in all state courts in Texas.

September 1, 2024

The business courts will have jurisdiction over certain specific categories of commercial cases, where the amount in controversy exceeds $5 million in some instances, and $10  million in others, and the case involves specific business-related issues, such as corporate governance and internal corporate affairs issues, securities litigation, breaches of fiduciary duties, actions arising out of the Texas Business Organizations Code, or commercial transactions in which the parties agreed the business court would have jurisdiction.

The business courts will also have jurisdiction over cases with publicly traded companies, regardless of the amount in controversy, that involve specific business-related issues, such as those outlined above.

The business court law directs Governor Greg Abbott to appoint district judges.  More heavily populated areas (including Dallas, Houston, Austin, San Antonio, and Fort Worth) will have two business court judges.  The new law also provides for a new appellate court—the Fifteenth Court of Appeals—to hear appeals from the business courts.

The judges have yet to be appointed and confirmed, but qualifications include: 10 or more years of experience in complex civil business litigation, business transaction law, serving as a judge in a Texas court with civil jurisdiction or any combination of that experience.

Initially, judges will be appointed for two-year terms, and can be re-appointed multiple times.

The Texas Lawbook reported that at least twenty individuals have applied for appointment to the courts, but Governor Abbott has not yet made his appointments.

As part of House Bill 19, the Texas Legislature also created the Court of Appeals for the Fifteenth Court of Appeals District (the “15th Court of Appeals”), a new intermediate court of appeals charged with direct appellate review of decisions from the business courts.  The 15th Court of Appeals will be based in Austin, Texas and will also become effective on September 1, 2024.  Decisions of the 15th Court of Appeals are subject, in turn, to discretionary appellate review by the Supreme Court of Texas.

House Bill 19 provides a mechanism that allows parties to lawsuits that were filed in a Texas district court or county court, but which also fall within the business courts’ jurisdiction, to be “removed” from the district or county court and transferred to the division of the business court for the region of the state in which the case was pending.  Parties may file an agreed notice of removal at any time during the lawsuit to effectuate removal of the action.  If not agreed, however, a party seeking to remove a lawsuit to the business court must file a notice of removal no later than the 30th day after the date the party requesting removal discovered, or reasonably should have discovered, facts establishing the business court’s jurisdiction over the action.

Additionally, if there is an application for temporary injunction pending in the lawsuit on the date the party requesting removal of the action discovered, or reasonably should have discovered, facts establishing the business court’s jurisdiction over the action, then the deadline to file a notice of removal is the 30th day after the date the application is granted, denied, or denied as a matter of law.

House Bill 19 specifies that the “[p]ractice, procedure, rules of evidence, issuance of process and writs, and all other matters pertaining to the conduct of trials, hearings, and other business in the business court are governed by the laws and rules prescribed for district courts,” unless the statute dictates otherwise.  House Bill 19 also preserves each parties right to a jury trial in actions pending in the business courts “when required by the constitution.”

On August 23, 2024, the Texas Supreme Court denied Dallas County’s challenges to the Fifteenth Court of Appeals’ constitutionality. Specifically, Dallas County argued that the Fifteenth Court’s geographic range unconstitutionally covered the entire state; that its jurisdictional scope was unconstitutional for various reasons, and that its new justices will be unconstitutionally installed because they will not be elected until November 2026 despite having been appointed in September 2024.  The Texas Supreme Court held that S.B. 1045 is constitutional with respect to the challenges that Dallas County raised.