Texans for Lawsuit Reform (TLR) is hailing today the passage of Texas House Bill (HB) 40, bipartisan legislation that will help solidify Texas’s standing as the greatest state in the nation to live, work and innovate. 

On June 1, the Texas House of Representatives and the Texas Senate reached an agreement and adopted a conference committee report for HB 40. The bill now heads to Texas Gov. Greg Abbott’s desk for signature.

Critically, HB 40 makes additional enhancements to the Texas Business Court, a first-of-its-kind specialized trial court in Texas that handles complex business-to-business litigation, and which began operating on September 1, 2024.

Specifically, HB 40 includes provisions that will:

• reduce the amount-in-controversy requirement for filing a lawsuit in or transferring a case to the Business Court from $10 million to $5 million; 
• remove the sunset provisions for rural divisions of the Business Court, paving the way for Business Court expansion to all corners of Texas, subject to legislative appropriations;
• expand the subject matter jurisdiction of the Business Court to actions relating to the use of intellectual property and actions to enforce arbitration agreements, among other actions;
• clarify the Business Court’s supplemental jurisdiction; and
• allow companies to designate the Business Court as the exclusive venue in their governing documents for dispute resolution of actions relating to the internal affairs of the companies.

“The bipartisan passage of HB 40 is a major victory for the Lone Star State,” said TLR President and General Counsel Lee Parsley. “Establishment of the Texas Business Court in 2024 was a significant investment in Texas’s economic growth and development, creating an efficient process to help streamline the resolution of lengthy and complicated business cases. HB 40 builds on this success, and includes enhancements that will unleash the full potential of the Texas Business Court and entice more businesses to relocate and operate in Texas.”

Passage of HB 40 follows the enactment of another critical piece of legislation, SB 29, on May 14. SB 29 introduces a series of corporate reforms that will make Texas the preferred destination for corporate relocation and reincorporation by codifying the business judgment rule and allowing corporations to establish a minimum ownership threshold before a shareholder or group of shareholders can pursue a derivative claim, among other provisions.