Although much has been said of HB 40’s newly effective changes to the Texas Business Courts’ jurisdiction, many may have overlooked HB 40’s revision to Section 74.162 of the Texas Government Code, which weaves the Business Court into the Texas framework for multidistrict litigation. As revised, Section 74.162 now reads as follows (revisions in bold):
Sec. 74.162. TRANSFER OF CASES BY PANEL. Subject to Section 74.1625 and notwithstanding any other law, the judicial panel on multidistrict litigation may transfer civil actions involving one or more common questions of fact pending in the same or different constitutional courts, county courts at law, probate courts, or district courts, or the business court to any district court or to the business court if the business court has jurisdiction for consolidated or coordinated pretrial proceedings, including summary judgment or other dispositive motions, but not for trial on the merits.
At first blush, this amendment appears to open the door for the business courts to hear a wide array of consolidated MDL proceedings. But practitioners should remain mindful of two significant roadblocks that prevent parties from funneling MDL proceedings to the business courts, the most significant of which is the business courts’ limited jurisdictional scope.
MDL Cases Must Clear an Ambiguous Jurisdictional Hurdle.
Section 74.162 permits MDL transfers to a business court only “if the business court has jurisdiction.” This jurisdictional requirement is by no means toothless, but its significance depends heavily on whether courts interpret the language of this amendment as requiring the business courts to have jurisdiction over each of the consolidated actions, or whether jurisdiction over just one of the consolidated actions will suffice. Under either interpretation, the business courts’ limited jurisdiction is a central concern.
To be sure, HB 40 broadened the jurisdiction of the business courts in many respects. But it also maintained or imposed significant limitations on the types of disputes the business courts may hear. Indeed, as of Sept. 1, section 25A.004(h)(4) of the Texas Government Code prohibits the business courts from hearing cases involving a consumer transaction. Although this jurisdictional limitation may seem modest in isolation, its impact will be compounded under a more restrictive interpretation Section 74.162 requiring the business courts to have jurisdiction over each of the consolidated actions.
For example, it is possible that an MDL proceeding may involve one case that fits squarely within the business courts’ jurisdiction alongside a related case that involves consumer transaction claims. If the business courts may not hear MDLs that raise consumer claims alongside other claims, then the universe of potential MDLs is quite limited. The judicial interpretation of this jurisdictional requirement will therefore be paramount in determining the degree to which the business courts are involved in MDL cases going forward.
MDL Litigants Cannot Specifically Request the Business Court as a Transferee.
Given the importance of the business courts’ jurisdictional limitations described above, practitioners preparing future motions to transfer may choose to include some degree of analysis regarding the Business Courts’ eligibility to serve as a transferee forum. Those doing so should exercise discretion.
Importantly, HB 40 does nothing to change the longstanding principle that Texas MDL litigants have no say in the selection of a specific transferee court or judge. Indeed, in stark contrast to its federal counterpart, the Texas MDL Panel has often stated that it strongly disfavors such requests. For example:
- “This Panel routinely resists a party’s request for a specific pretrial judge,” from In re Grape Growers Products Liability Litigation.
- “We disfavor the practice of parties suggesting a particular county or a particular judge, because the procedure is not supposed to facilitate forum shopping,” from In re Astroworld Litigation.
- “[W]e remind the parties that we have repeatedly stated that we disfavor requests that we appoint specific judges requested by the parties,” from In re Farmers Ins. Co. Hurricane Harvey Litigation.
- “[W]e consider it improper for a motion to seek transfer to a certain court or county. … Such express requests are improper because Rule 13 is not meant to be a venue-changing or judge-selecting procedure,” from In re Digitek Litigation.
- “In this case, as in many of the motions to transfer recently filed, the movants have suggested transfer to a particular county and even a particular judge. We disfavor this practice. Consolidation of cases into a pre-trial court is not intended to facilitate forum shopping, nor the appearance of forum shopping,” from In re Petroleum Wholesale Litigation.
Consequently, however fitting the business courts may be to preside over a particular MDL proceeding, practitioners should therefore be mindful that HB 40’s changes to Section 74.162 are not an open invitation to specially request the transfer of MDL cases to the business courts.
Conclusion
Although HB 40’s revisions to Section 74.162 open the door for business courts to preside over MDL proceedings, the impact of this change remains to be seen. At bottom, the foundational aspects of state-level MDL planning remain unchanged, and practitioners should remain mindful of the Texas MDL Panel’s rulings.
Paul R. Genender is co-chair of the Complex Litigation and Arbitration practice, chair of the Texas Commercial Litigation practice and co-chair of the Dallas office at Paul Hastings.
Craig A. Stanfield is a Houston-based trial lawyer and partner in the Complex Litigation & Arbitration practice at Paul Hastings.
Brian Kay also contributed to this article.