Texas Business Courts Are Facing Remand Blitz Over Date Debate

A fight is brewing in Texas’ three-month-old business court system, threatening to eliminate one-third of cases docketed so far.

Texas created these courts to streamline complex business disputes with legislation that applies to “civil actions commenced on or after” the courts opened on Sept. 1. Most litigators take that to mean the courts can accept new cases filed since that date, not cases that already existed in non-business courts.

But a competing argument—rejected so far by three business court judges—points to language some lawyers say opens the court’s doors to older cases. The law, H.B. 19, never says it applies to litigation brought “only” on or after the court’s launch date. Lawmakers must’ve intentionally omitted the word, they say, because in other laws restricting a court’s jurisdiction to a certain date the use of “only” does appear.

“I thought it was a ridiculous argument and I still think it’s a ridiculous argument,” said Joel Reese of Reese Marketos.

Reese represents Culberson Midstream LLC, a Texas natural gas operator that got a Dallas business court judge to reject plaintiff Energy Transfer LP’s bid to transfer a two-year-old case from a district court.

Energy Transfer’s lawyer, Jared Eisenberg of Lynn Pinker Hurst & Schwegmann, declined to comment about the judge’s decision. His firm is appealing the order, along with separate orders from business courts rejecting two other pre-Sept. 1 filings.

If they prevail on appeal, business courts would have to accept pre-existing cases so long as they meet other non-timing qualifications.

‘Absurd or Nonsensical Result’

The initial rollout of business courts in Texas’ five biggest cities—Houston, San Antonio, Dallas, Austin, and Fort Worth—has garnered a total of 50 cases, through Dec. 3. Sixteen of the 50 combined cases pre-dated the opening of the business courts and may be too old to stay, according to a Bloomberg Law analysis. Judges have rejected four of them for that reason, while lawyers in three others opted to walk away on their own. A decision is pending in nine others.

Thus far, no judge has ruled business courts can try a case filed before the courts opened.

The judges in Houston account for 26 cases, more than half of the overall caseload. Dallas has 13 cases, San Antonio and Austin have four apiece, and Fort Worth has three.

“The legislature could have made its wishes clearer, more explicit, but it still seems pretty clear to me,” said Barry Barnett of Susman Godfrey.

Barnett convinced Judge Bill Whitehill of the Dallas division in late October to turn back a suit brought in 2019 against his client, Hinduja Global Solutions.

Accepting cases that existed before the business courts opened would overwhelm the system, Barnett reasoned.

“The business court that opens its doors on Sept. 1, 2024, is not gonna be flooded with a bunch of cases that were filed in district court,” he said.

Judge Jerry Bullard of the Fort Worth division rejected a 2017 case on Nov. 6. He wrote in an opinion that accepting pre-Sept. 1 cases “would lead to an absurd or nonsensical result.”

The court itself is trying to stem these filings with a warning. Underlined and in bold, the clerk’s website says removal to business courts “Applies only to actions filed after 9/1/2024.”

Beverly Crumley, the clerk, declined to address the competing argument applying to earlier cases.

“I do not have the authority to answer legal questions regarding matters filed in this court,” she said.

Appeals Jurisdiction Question

The fight will be decided next by the statewide appellate court, created at the same time to hear business court appeals and matters involving the state.

But it’s not clear whether that court has jurisdiction to consider the pre-Sept. 1 filing question.

The law creating the business courts also doesn’t expressly authorize an appeal of an order rejecting a case. Notably, a failed proposal to create the court from two years earlier did grant the appeals court that authority.

“Considering the legislative history of the Act, I believe the 15th Court of Appeals does not have jurisdiction to consider this appeal,” said Reese, the Reese Marketos lawyer for Culberson Midstream.

If the appeals court can’t decide the matter, it’s not clear who will. The decision may be unappealable, or it could wind up before the Texas Supreme Court.

“You would think they want to resolve this quickly because the whole idea (of business courts) is you don’t get bogged down in procedure,” Barnett, of Susman Godfrey, said.