Do Texas businesses need their own court system? Key state leaders say yes

Do Texas businesses need their own court system? Key state leaders say yes

Critics of the specialty business court plan say it would promote unequal justice in Texas.

AUSTIN — A new court devoted solely to settling disputes among businesses would help clear already backlogged district court dockets across the state and provide proponents of economic development another selling point in the effort to attract more companies to Texas.

That’s the message from Texas‘ top three elected officials and one of the most powerful lobbies in the Capitol. But critics of proposal that has been slated for the legislative fast track this year say it’s yet another effort by state Republican leaders to bend over backward to accommodate corporate interests and replace locally elected and locally accountable judges with those handpicked by politicians.

In separate recent announcements, Gov. Greg Abbott, House Speaker Dade Phelan and Senate president and Lt. Gov. Dan Patrick said the creation of what’s known as a specialty business court should be among lawmakers’ top priorities during the legislative session that began Jan. 10 and ends May 29. The concept would be modeled after the centuries-old Chancery Courtof Delaware that in the past several years has been emulated in more two dozen states.

“Texas is the home of business, and so we should be the home of business courts,” Abbott said in an interview with the USA TODAY Network where he talked about his legislative priorities for the session.

A need for ‘consistency and efficiency’

Abbott, a third-term Republican, said the proposal that has been floated in several recent legislative sessions would provide consistency in the application of state law when businesses find it necessary to battle one another in court. The influential lobby group Texans for Lawsuit Reform is also adding its muscle to push the proposal through the GOP-dominated House and Senate.

“Businesses need consistency and efficiency, and a specialized business court achieves both by having highly experienced judges who only handle this specific type of litigation and are fully engaged in each case, helping build a deep body of case law in Texas,” said Lucy Nashed Cafrelli, spokeswoman for the lawsuit reform organization.

“Businesses today know the same case with the same facts can produce wildly varying outcomes simply based on which part of the state it’s filed in and which judge is hearing it, and we know attorneys are telling their clients not to litigate in Texas because of this unpredictability.”

Several organizations that represent the interests of attorneys have pushed back with some force against establishing a separate court system for business cases during recent legislative sessions. The Texas Association of Defense Counsel, in a letter to lawmakers in 2021, said the Delaware model would likely be a poor fit for Texas.

The association noted that Delaware is the nation’s second-smallest state with only three counties and has a population about 1 million. Texas, by contrast, is the second-largest state, boasting 254 counties and a population approaching 30 million.

Appointing vs. electing judges

Under House bill 19, which was filed Tuesday and sent to the House Judiciary and Civil Jurisprudence Committee, a business court would have much of same authority as a state district court. However, instead of being elected from one of Texas‘ more than 450 state district courts, the seven business court judges called for in the bill would be appointed by the governor and be subject to confirmation by the Texas Senate.

Because the Legislature meets in regular session for only five months every other year, gubernatorial appointees who are named after lawmakers have left Austin often begin serving immediately and go through a confirmation process during the session that follows.

San Antonio attorney Laura Tamez, president of the Texas Trial Lawyers Association, said appointed judges would be problematic.

“While TTLA is reviewing the bill to fully understand its implications, we  —  along with the entire civil trial bar  —  have opposed similar measures for at least the last three legislative sessions,” Tamez said. “The bottom line is that Texans value electing their judges.”

What is the Delaware Court of Chancery?

According to Delaware’s court system website, the chancery is a non-jury trial court that has “original and exclusive equity jurisdiction” over various cases involving trusts, real property, guardianships, civil rights, and commercial litigation.

The judges, one of whom serves as “chancellor” and the six others as “vice chancellors,” are expected to have deep expertise in business. The serve for 12 year terms.

Perhaps its most recent high-profile case was the 2022 lawsuit filed by Twitter against Elon Musk after the multibillionaire sought to back out of his promise to by the popular social media site. The court finally dismissed the lawsuit in November after Musk reversed himself and proceeded with his planned purchase.

Recent history of the move toward business courts

According to a 2011 report published by the National Center for State Courts, the push for specialty litigation venues to hear complex business-to-business disputes began gaining steam in the late 1980s and early ’90s.

“In seeking specialized dockets, businesses were not looking for fixed results. Nor were they seeking tort reform, as the cases at issue would most typically involve businesses or sophisticated parties as litigants, not consumers,” the center’s report said. “Commercial and business litigants did not need to know that they were going to win the case or cap their losses, but simply that a decision would be made in a reasonable time and that the decision would have an articulated core of legal principles shaping the court’s ruling.”

Would the Texas business court affect lawsuits from ordinary citizens?

That is not the plan, Abbott said in his interview.

“It doesn’t deal with personal injury, or anything like that,” the governor said.

But Ware Wendell, executive director of the legal accountability nonprofit Texas Watch, said he worries that separate courtsystems would undermine the principle of “equal justice under the law.”

“Which cases would be swept up by this so-called business court? And which judges would hear these disputes?” Wendell said. “Our current state judges work hard to deliver independent justice under the law. All judges should be chosen directly by the people and accountable to them through elections. We don’t need a new star chamber in the state of Texas, and we don’t needspecially selected judges for special interests.”

John C. Moritz covers Texas government and politics for the USA Today Network in Austin. Contact him atjmoritz@gannett.com and follow him on Twitter @JohnnieMo.