Business Litigation / 2 min read
New Specialized Business Courts in Texas
Effective September 1, 2024, Texas will have five specialized, high-dollar courts for commercial disputes and constitutional challenges have already been raised by several industry groups who have expressed concerns. According to the newly signed House Bill 19, the courts will be located in Houston, Austin, Dallas, Fort Worth, and San Antonio. Another six courts could be added later, in some additional rural areas, if approved by the legislature. A special appellate court has also been established to hear appeals from these courts.
Comparison to Other States
Though new to Texas, similar court systems exist in several other states. In general, these courts hear controversies involving $10 million or more for business controversies, although there is a lower threshold for certain types of business claims ($5 million) or suits involving a publicly traded company. Parties will be able to decide to file a case in these courts (plaintiff's original filing) or to remove the case from another court into this business court (removal by the defendant).
Judges and Procedures
The judges will be appointed by the Governor and confirmed by the Texas Senate for a two-year term and can be reappointed. In the year before these courts open, they will be busy adopting rules for practices, procedures, and evidence, as well as the process for removing cases to these courts. Thus, there is still some uncertainty about whether there will be any substantive procedural differences that may impact the decision to try a case in this court.
Concerns
There is reasonable concern that these judges will not be selected through the Texas elections process—they are effectively chosen by the Governor. A decision by a jury may still be required by the Texas Constitution, which still subjects the businesses involved to the uncertainties of a jury decision. There are also many types of cases that will not be allowed in the business courts, including those involving a governmental entity, foreclosure of a lien, antitrust, consumer transactions, and insurance disputes.
Benefits
The purported benefits are that the appointment process could result in judges who are particularly knowledgeable about complex commercial litigation who have a smaller docket to allow for more intensive case management. Unlike with arbitration, the parties are not charged for the work of the judge, other than through normal court filing fees. Also, unlike arbitration, there is an appeals process.
Future Developments
We will watch for any future challenges to this new bill and keep you informed.