Two years after passing legislation to create the Texas Business Court, state lawmakers this session made some amendments to how it will function.
House Bill 40 expands the jurisdiction of the business courts and adds jurisdictional clarification. Two lawyers who spoke to The Texas Lawbook about the changes said they could encourage attorneys who have so far taken a “wait and see” approach to bring their cases to the new court.
The bill was authored by Rep. Brooks Landgraf, R-Odessa, who did not immediately respond to requests for comment. The legislation, which takes effect Sept. 1, reduces the amount in controversary from $10 million to $5 million.
Vinson & Elkins partner Marisa Secco Giles said the changes should result in more cases being filed in the business court.
“I think some of this was born out of the experience in the business courts over the past year,” Giles said.
A $10 million threshold was high for a new court where there isn’t predictability, said Thomas Gutting of Porter Hedges.
“That’s an awfully big dollar amount to play with as a guinea pig,” Gutting said.
The bill also allows the transfer of cases filed prior to Sept. 1, 2024, when both parties and the business court agree. The Texas Supreme Court Advisory Committee will adopt rules governing the transfers.
“We know for sure that there has to be agreement among the parties and that the business court has to agree to hear the case quickly,” Giles said.
Gutting said the bill provided clarification.
“It’s nice to have some clarification, because there were some gaps in the initial bill that I think came to light once it passed, and folks started to grapple with what fell within the court’s jurisdiction and what didn’t,” Gutting said.
Other Legislation
HB 40 was not the only piece of legislation this session that addressed the business courts.
Senate Bill 29 allows businesses to include a jury waiver in their corporate charter for certain types of disputes, like an internal entity claim.
The bill was authored by Sen. Bryan Hughes, R-Mineola. Hughes did not immediately respond to requests for comment.
Giles, who plans to monitor the impact of that legislation, said she suspects it will lead to more bench trials on issues within the business court’s jurisdiction.
“I think that’s probably looked upon favorably by at least some companies to have the ability to waive a jury trial,” Giles said.
Preparing for Next Session
While it didn’t make it into the final version of the bill, adding an additional judge to the First and Eleventh divisions, which cover Dallas and Houston, was discussed.
Giles noted there have been judges from other divisions sitting on cases filed in the First and Eleventh divisions, in part due to the high volume of cases in the Houston division.
Online records show 66 cases have been filed in the Eleventh Division and 40 cases in the First Division. The Third, Fourth and Eighth divisions have had a total of 43 cases filed since opening almost a year ago.
“Perhaps that’s the legislature’s plan for covering the increase in cases, or maybe they’ll reconsider that after they see how big the filing increase is after the effective date,” Giles said.