A $36 million dispute over plumbing problems in a medical office building could be the first test of Texas’ big bet that the Delaware Chancery Court has gotten it wrong for more than two centuries: Juries can decide complex business cases.
The trial, among more than three dozen set to be heard by a jury over the next 12 months, emphasizes the key role regular citizens will play in Texas’ grand move to stand up a specialized business court to rival Delaware, whose judges alone decide trial winners and losers.
“I’m certainly confident in the jury trial system,” said Hunter Barrow of Andrews Myers, who represents the defendant in the trial, set to begin Oct. 27 in Houston. “I think it’s good that the parties have the option to try their case to a jury.”
Long the go-to venue for business disputes, Delaware’s system for trials before a judge in theory offers a greater sense of predictability than what might come from strangers grouped together in a jury box.
But a jury “frees up the judge to call balls and strikes,” said Judge Grant Dorfman of the Houston division, one of the 10 judges handling all of the Texas Business Court cases. “I don’t have to decide if the witness is lying or not. That’s their job.”
A Texas Business Court case automatically goes before a jury if either side prefers that route, although bench trials remain an option.
Putting on jury trials is just one of the many challenges the Texas Business Court, which launched last September, faces in year two: Its judges will get hit with a swarm of new cases after the Legislature lowered jurisdictional barriers without also providing additional resources. Meanwhile, they await a decision from Gov.
During its first year, the business court opened 185 cases and disposed of one-third, including dozens that didn’t satisfy jurisdiction. Another case was resolved through the court’s first merits based ruling, just five months after its filing. No jury trials came up because no case made it that far.
The energy sector accounted for more than one-fourth of cases, signaling that even as Texas emerges as a technology hub, the state’s oil and gas industry continues to be dominant.
Sixteen law firms represented a party in five or more cases. Jackson Walker, the largest firm in the state by attorney count, had the most with 14, followed by Lynn Pinker Hurst & Schwegmann of Dallas, and Beck Redden of Houston, each with 11.
Houston, the most populous city in the state, brought in more cases than divisions in Dallas, San Antonio, Austin, or Fort Worth. The downstream effect unburdened district courts in Harris County, which would’ve heard those cases prior to the business court and are facing a shortage of judges.
Major companies that found their way into the court included Pilot Travel Centers,
‘Smarter Than People Think’
Yet, its lawyer, Tim Shelby of Ahmad, Zavitsanos & Mensing, says he’d have no qualms presenting others cases to a jury.
“Juries are smarter than people think,” Shelby said. “Collectively, they don’t miss much.”
But skepticism looms from outside the state, and not just about whether juries can handle complex business cases.
“Jury trials are a significant negative when it comes to business litigation,” said Lawrence Hamermesh, professor at Widener University Delaware Law School. “Unlike a judicial opinion that explains the legal significance of the facts presented, a jury verdict is a black box: it provides no guidance to future transaction planners.”
About half the states have specialized business courts, but Texas is specifically aiming to lure business away from Delaware—home to roughly two-thirds of Fortune 500 companies—with promises of a legal landscape more hospitable to Big Tech and controlling shareholders. Nevada is considering a similar approach.
Business leaders in Texas had long pushed for a court modeled after the Delaware Chancery Court, which emerged as a go-to forum for companies in the state in the late nineteenth century. It finally arrived in 2023 thanks to a push from Abbott.
Months later, a gift from Delaware: A Chancery Court judge voided a $56 billion
As other Delaware corporations threatened a “Dexit” with an eye turned to Texas, Abbott signed a law this summer allowing corporations to stop a shareholder from bringing a derivative action unless they own more than 3% of a corporation’s shares. Tesla took steps to adopt the change, as did
Notably, the law, SB 29, allows corporations to include language in their governing documents waiving a person’s right to a jury trial against the company concerning any internal entity claim.
But, on balance, juries handling high-stakes business disputes can work “if Texas judges can keep a tight reign on their juries,” said Jonathan Macey, professor at Yale Law School.
“Runaway judges, which the Delaware Legislature has been trying to control, are hardly better than runaway juries,” he added.
‘Broaden the Net’
Texas’ business court judges, each appointed by Abbott to a two-year term, are handling more than 120 active cases. Of those, nearly 50 have a jury trial setting—most by the end of year two.
Although that poses logistical concerns for a court still getting its footing, trials will likely be called off as parties reach pretrial resolutions.
“It’s very common particularly in Texas to set a case for a jury trial,” James Parker of Lloyd Gosselink Rochelle & Townsend said. “All you have to do is provide notice and pay a nominal fee. You can always waive the jury at the last minute.”
In between trials, the court will try to get its arms around a potential avalanche of new cases.
In its first session after creating the court, the Legislature lowered jurisdictional barriers by cutting in half the amount-in-controversy for a qualified transaction to $5 million. That change, which took effect at the beginning of September, matches the threshold already in use for governance and derivative proceedings.
Lawmakers also opened the door to litigation related to intellectual property and trade secrets, and allowed for the court to begin handling arbitration disputes.
“All of that is certainly an indication that the Legislature believes it’s going well because they’re broadening the net,” Andrew Price of Norton Rose Fulbright said. “We kind of get away from an emphasis of can you be in business court or not.”
Also new: judges can accept cases that were ineligible in year one because they originated before the business court opened. Now, cases are permitted no matter their age, subject to agreement of the parties and permission of the judge under rules adopted by the Texas Supreme Court.
“The potential for a flood [of new cases] is concerning,” Dorfman, the court’s administrative presiding judge, admitted.
No New Judges Added
Scrapped from the bill version that made it to Abbott’s desk was a proposal to add a third judge in the busiest divisions, Houston and Dallas, and another to activate unfunded divisions in six rural areas. Instead, the court is getting a modest upgrade—law clerks—and the Houston division is adding Montgomery County, population of about 750,000.
“I’m not uberly worried about that,” said Christopher Kratovil, of Dykema, whose firm has six active cases. “I think if anything the business court has been a little bit underutilized.”
Austin and Fort Worth combined have fewer cases than Houston or Dallas.
The system received no additional funding for new court space, meaning jury trials will be held in existing courthouses.
“We can all speculate as to what our workload might look like,” Judge Jerry Bullard of the Fort Worth division said. “If we get a lot of cases coming in then the Legislature has the opportunity to grow us a little the next time around.”
The Texas Legislature, which meets for scheduled sessions only in odd-numbered years, is slated to meet next in a regular session in 2027.
“The business court is going to bring more businesses to Texas just because we have a sophisticated infrastructure to handle these disputes,” Breton Rycroft of Andrews Myers said.
‘Good Place to Be’
Twenty-four companies including
That was on pace with prior years when 17 arrived in 2023, 38 in 2022, and 79 in 2021.
Musk’s
“The business court is one part of a bigger picture,” Judge Marialyn Barnard of the San Antonio division said. “It’s the economy. It’s the quality of life. Texas is just a good place to be.”
Archer Aviation, a publicly traded electric air taxi manufacturer that incorporated in Delaware seven years ago, is prioritizing Texas for a potential relocation, the company told Bloomberg Law in May.
Zion Oil & Gas, a publicly traded company headquartered in Dallas, relocated its corporate home to Texas from Delaware.
“Governor Abbott looks forward to the courts’ ongoing work in solidifying Texas’ position as the national leader in business,” Andrew Mahaleris, his press secretary, said in a statement.
As the pressure to perform increases in year two, judges face uncertainty about their futures. Unlike other state judges in Texas who run for re-election, continued employment rests not in the hands of voters but Abbott, the sole voice in deciding whether to retain the judges for another two years or swap them out for someone new.
He hasn’t announced plans.
“I’m assuming they’ll get communication to us about re-appointments,” Barnard said, “or new appointments if they don’t like the appointment.”
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