Texas will open a new business court within four months that it hopes will be able to handle complex cases more efficiently. While there is still uncertainty about how the court will operate, its structure and the powers of the Texas Legislature will help answer important questions.
Will a pending case be transferred to a business court? Under the tentatively approved rules, parties in eligible cases can transfer those cases to the new court, but only for cases filed on or after September 1, 2024. Cases also must fall into several specific categories for which the Business Court has jurisdiction, including disputes over $5 million, such as:
- derivative lawsuit
- Related to the organizational operations or governance of an organization
- Securities claim
- Breach of duty by a controller of a corporation arises from Texas business organization law.
- If related to a listed company, relating to any of the aforementioned subjects;
The Commercial Court also has jurisdiction over disputes over $10 million for breach of contract and certain violations of state financial or commercial law, but does not have jurisdiction over claims for personal injury, legal negligence or medical negligence.
Proposed Rule 355 establishes procedures for transferring a case to the Business Court: A party to a lawsuit must give notice to the court in which the case was originally filed, specify the division of the Business Court to which the party seeks to transfer the case, assert facts establishing jurisdiction and venue in the Business Court, and state whether any party opposes the transfer.
If opposed, a litigant seeking removal has 30 days from the time he discovered (or should have discovered) that he could bring an action. A litigant seeking to oppose removal has 30 days from the time the removal notice is filed, or 30 days from the time of appearance if the notice has not been served on the party.
In addition to litigants, a district or county court judge may request that a case be transferred to a business court if transferring the matter would “promote the fair and efficient administration of justice.” .
How will the new court affect the pace of litigation? Litigants should expect litigation to become more expedited, particularly in setting hearings and awards on early motions to narrow issues and dispose of claims.
District courts are adept at adjudicating commercial cases, but large and complex commercial cases can strain an already overworked judiciary. As new courts will have fewer caseloads and staff specialized judges who need to avoid the proverbial block, litigants should expect those judges to resolve disputes more efficiently .
Although there is a risk that attrition rates for new court judges will be higher than expected, given that appointed business court judges are only appointed for two-year terms, litigants should expect that most business court judges will be reappointed. We should expect it. In any case, as Travis and Bexar counties demonstrate with their rotating central case processing systems, cases can proceed even if the judge is not familiar with the dispute at hand.
Will an increase in the amount of written opinions affect litigants’ strategies? The Texas Supreme Court has passed a rule requiring business court judges to “submit written opinions” in connection with dispositive decisions “on issues of significance to the state’s jurisprudence, whether requested by a party or without regard to the request.” provisionally approved. As a result, litigants will likely see more briefs explaining the reasoning behind decisions that could impact future cases.
It is unclear what precedential effect the Business Court judge’s written opinion will have on judges in future cases brought before Texas Business Court or on Texas district courts deciding similar commercial matters. At the very least, such a case would have persuasive authority in both courts.
What does this mean for litigants? In addition to scrutinizing decisions from the Texas Supreme Court and the Texas Court of Appeals, litigants should also be on the lookout for upcoming decisions from Business Court judges.
Therefore, parties that file cases early may have the opportunity to influence state precedent for years to come, which could lead to certain lawsuits against hearing disputes in business courts as soon as possible. It may affect the interests of the parties involved.
Subsequent litigants should benefit from a more robust set of commercial litigation laws, particularly around rulings on motions to dismiss and motions for summary judgment under Rule 91a, and the need for strategic decisions at the outset of a dispute. It should give you some insight.
Should litigants expect their cases to be heard by specialist judges in the Business Court? Unlike commercial courts in other states, business courts do not exclude the right to a trial by jury. And for lawsuits originally filed in district court, litigants should expect to be tried by a jury in the same county in which the plaintiff filed the lawsuit.
In an action originally filed in the Business Court, the plaintiff may select the appropriate county for a jury trial after a pretrial resolution by the Business Court. The parties and the Business Court judge may also choose to hold a jury trial in another county.
The adopted bill and proposed rules do not specify whether a business court judge or a district court judge will preside over the trial. Litigants should pay close attention to whether their business dispute will involve a jury trial, as this may affect a litigant’s strategy, including whether to become the first litigant.
States such as Delaware and New York have introduced specialized business courts. Each state’s specialized judiciary handles cases differently, and Texas business courts are no exception. It will take time to determine what impact the Business Court will have on Texas jurisprudence, but potential litigants should be aware of several strategic issues once the court opens. There is a need.
This article does not necessarily reflect the opinion of Bloomberg Industry Group, Inc., the publisher of Bloomberg Law and Bloomberg Tax, or its owners.
Author information
Michael C. Holmes is a vice chairman at Vinson & Elkins, where his practice focuses on mergers and acquisitions, securities litigation, corporate governance, director and officer representation, and commercial disputes.
Quentin L. Smith is a commercial litigation partner at Vinson & Elkins, specializing in business, energy, and petrochemical disputes.
Grant Newton is an associate at Vinson & Elkins, where he focuses on complex commercial litigation matters in state and federal courts.
Paul Hill contributed to this article.
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