Texas is on the verge of opening a new business court, designed to streamline the management of complex commercial litigation. Although details regarding the court’s operations still remain to be fully outlined, the structure enforced by the Texas legislature along with its mandate provide insight into the purpose and potential impact of this new legal establishment.
The court’s preliminarily approved rules allow for the shifting of qualifying cases to the business court. However, this applies only to cases filed on or after September 1, 2024, that falls within certain specified categories such as:
- Derivative proceedings
- Disputes related to an corporation’s organizational matters or governance practices
- Securities claims
- Breach of duty cases involving an entity’s controlling person as per the Texas Business Organizations Code
In addition, the court is also expected to take on disputes that exceed $10 million relating to breaches of contract and specific violations of state’s finance code or business and commerce code while notably excluding personal injury, legal malpractice, and medical malpractice claims.
On the strategic side for litigants, the new court’s impact could be profound. An increase in issued written opinions by the business court judges could potentially influence a litigant’s plotting on both immediate and future cases. Even though their precedential effects remain unclear, it’s quite plausible that these opinions will, at the very least, have a persuasive authority in both the business court and the Texas district courts regarding similar commercial issues.
Unlike other state commercial courts, this court does not eliminate the right to trial by jury. Cases originally filed in a district court will be tried by a jury in the original county of the plaintiff. Plaintiffs who have chosen to initially file in the business court will retain the right to choose any proper county for a trial by jury following a pre-trial resolution.
Given everything stated, one must note that how the Texas business court will shape the state’s jurisprudence remains an open question. Lessons from other states like Delaware and New York which have implemented specialized business courts will inevitably be relevant. However, the final structure and impact of Texas’ model will be worth tracking for all those involved in commercial dispute resolution.
This report is based on an article authored by Michael C. Holmes, Quentin L. Smith, and Grant Newton of Vinson & Elkins for Bloomberg Law.