Navigating Texas Business Courts (State Bar of Texas Annual Meeting 2024)

Episode Notes

Transcript

Rocky Dhir:

Hello and welcome to another episode of the State Bar of Texas podcast. That noise behind us. That’s because we’re recording live from our state bar annual meeting in Dallas, Texas. This is your host Rocky Dhir. And joining me now I’ve got two very special guests. We’re going to be talking about these new Texas business courts. You might’ve been hearing some rumblings about joining me. We’ve got the honorable Emily Miskel and we’ve got Marcy Greer. Now you might be wondering, who are these two to be talking to me about business courts? So let’s take a moment and get to know our panelists real quick. So Judge Miskel, let’s start with you since you’re the judge. Sorry Marcy, but she outranks both of us. That’s just how it works for the moment time, right? Yeah. So Judge Miskel, tell us, obviously you’re a judge, we made that clear, but where are you judging?

Judge Emily Miskel:

So I’m currently on the Fifth Court of Appeals in Dallas, and prior to that I was a trial court judge in district court in Collin County.

Rocky Dhir:

I think she’s just showing off now. I’m now an appellate judge. Okay. I’ve been elevated. And Marcy, how about you tell us what your practice is?

Marcy Hogan Greer:

So I do appellate and commercial litigation, complex litigation of every type.

Rocky Dhir:

So, alright, so here’s the opening question, the most obvious question I think everybody has. Why in the heck do we need business courts in Texas? So who wants to start us off on that one?

Marcy Hogan Greer:

Well, the legislature thinks so and the governor thinks so and they want,

Rocky Dhir:

That has never stopped me from questioning. Why do we know the rationale behind

Marcy Hogan Greer:

It? Absolutely. They want to drive more business to Texas. They feel that businesses are concerned about the unpredictability of the courts in the 254 counties. And so by having a centralized court that handles in specialized cases like this, they think that it will make businesses feel more comfortable about being sued in Texas and bringing their litigation to Texas and hopefully incorporate here, feel more comfortable being home here.

Rocky Dhir:

Now you were both giving a talk for two of the sections. It’s going to be a joint talk for the litigation section and the Texas Young Lawyers Association along with the business law and corporate counsel sections talking about these business courts. So Judge Miskel, can you walk us through what does it take to get in front of a business court? Is it any business case just automatically goes there? Or how do you get your case to

Judge Emily Miskel:

Be heard? Yes, this is a great question. So one thing right up front, as the penant in chief of this conversation, one thing people don’t realize is they’ll refer to business courts plural with an S, but actually the business court is one statewide court that’s divided into divisions and each of the current five divisions that go into effect on September one will have two. So even though it is a statewide court, only the biggest urban areas will have business court divisions starting on September 1st. And so the doors will open September 1st. If you are in a county that’s in one of those areas where it’s available to you, three types of cases will come into business court. The first is what we would call corporate governance type cases where it’s the internal workings of an entity.

Rocky Dhir:

Shareholder litigation lawsuits,

Judge Emily Miskel:

Yes. Anything in the business organization’s code and those disputes must be worth at least $5 million or have a publicly traded company involved to be in business court. Okay. The second group of cases that can be in business court are disputes above $10 million. So any type of statutory defined term qualified transaction or a contract dispute where people agree that they should be in business court and it’s worth $10 million or also people can agree at any time that they want their dispute in those subject areas heard in business court. And then the third type of cases that the business court will hear are cases that are in the supplemental jurisdiction. So claims that are related to those main business court cases may also go to business court. If everybody, the parties and the judge agree.

Rocky Dhir:

If they don’t agree, then I assume that supplemental case then stays in a non-business

Judge Emily Miskel:

Court stays in district court or county court at law. So you could potentially have disputes proceeding on two parallel tracks

Rocky Dhir:

That could kind of make it interesting then, right? Because now there could be a strategic question, Marcy, as the complex business litigation person, this could become an interesting question for people. Now you say, well I don’t know if I like my business courts judge, so maybe I’ll keep another case in district court and hope that I get a favorable outcome in one or the other. Is that, do we think there’s going to be a forum shopping or kind of a hedging of the bets kind of question that might occur?

Marcy Hogan Greer:

Absolutely. I think that when, so

Rocky Dhir:

Yes, it’s going to happen.

Marcy Hogan Greer:

I think it’s inevitable that that’s going to happen. People are going to be looking for ways, if they want to be in business court, they’re going to file in a jurisdiction or file in business court and try to keep it there. Whereas if you don’t want to be in business court, you file in El Paso, for example, because there is no operating division. Sorry,

Rocky Dhir:

El Paso. Yeah,

Marcy Hogan Greer:

I’m just using an example. Example. So there’s going to be a lot of gamesmanship, I think to try to get one case advanced faster than the other. There’s a lot of opportunity for very creative and innovative litigation surrounding who should be first, who should be in business court, et cetera.

Rocky Dhir:

So let’s talk about two issues regarding precedent. Alright, so I guess, or maybe three actually. Alright, so we’re going to ask three questions. The first is, what type of precedent are these courts going to be guided by when they open their doors on September 1st? And then Marcy, you brought up a point earlier, which is a lot of businesses, we’ve opened these courts because the legislature wanted businesses feel like there was some continuity. They didn’t have to worry about the hundreds of district courts, but yet we’ve got these business courts in different cities, so we could be having different decisions coming from different courts for a while. So how do you think we’re going to weave through those issues? What kind of precedent is going to guide these courts as we

Judge Emily Miskel:

Move forward? So can I answer the second one first and then Marcy can answer the first one about precedent and make a plug for the advocate. But as far as how we’re going to have consistency between different divisions of the business court, the legislature also created the 15th court of appeals, which is a statewide court of appeals. So all appeals from a business court, wherever it might be, will go and be resolved by the 15th court of appeals. So you will have consistency in that. Every business court case goes to one court of appeals, which will help the development of precedent. And as far as how does that precedent get created from scratch.

Marcy Hogan Greer:

So it is some guidance for starting a court out of the blue. Of course, persuasive authority can come from any source of state or federal. But in terms of defining precedent, one of the very specific provisions of the statute is requiring business courts to write written opinions that can be searchable, which is something unusual. State court judges typically don’t write opinions, but the business court is required to in certain circumstances and encouraged to in others. So there’ll be a body of law that they can start helping each other make. And I would think that the 10 judges who’ve been appointed to the business court are going to coordinate and know what each other are doing. They don’t necessarily bind one another, but they would be persuasive to each other. So the idea is to get that predictability from this body of case law that says this is how it’s going to be. And it’s not just limited to substantive law, it’s also the procedural things. How are we going to deal with discovery disputes involving trade secrets? How are we going to deal with seal orders when sensitive information is being involved and things like that. I think they’re going to work together and they’ll also have local rules that they will adopt to kind of create that predictability because as justice Ms said, it’s one court, it’s not a series of courts and all 10 judges on that court I think will be working together

Rocky Dhir:

Now if they have to write their opinions out, that’s going to put a lot of work on these judges. So just I guess from a housekeeping perspective, are these judges going to get law clerks or are we just thinking maybe the volume won’t be the same as it is in district court and county court at law where sometimes there’s just not time to write a detailed written opinion on every case that comes into your door? Has there been any thought put

Judge Emily Miskel:

Into that? So the statute provides that these judges, unlike every other judge in Texas, get a staff attorney. So the judges will have a full-time staff attorney to help them produce these reasoned opinions

Rocky Dhir:

And they have to be reasoned. Okay, I’m not going to be one of these judges. Alright, you’ve just taken me out of the running entirely.

Marcy Hogan Greer:

Well, the positions been filled, so you’re a little late. Oh

Rocky Dhir:

Well, okay. And in that case, you guys just have it in for me today. This is how I see what’s going on here. I guess the question now becomes, if we’re going to start specializing courts, right? We’ve got family courts, we’ve got criminal courts, now we’ve got business courts. Is this a trend that you think we’re going to start seeing in Texas where we start getting more specialized courts? And if so, what’s going to be the interplay between the district court and county courts at law versus the specialized courts? I mean, I’m trying to think ahead, say in the next 20, 30 years, is this going to be a trend that you think we’re going to see?

Judge Emily Miskel:

So I also serve on our Texas Judicial Council, which is a body that works with the legislature to study and recommend things about our court system. And one of the things that Texas has is a very complicated multi-level court system with, I mean the flow chart of how our courts work is just not easily explainable to the average person or average lawyer for that matter. And so over the years, at various times we’ve studied how to simplify our court system or how to realign the jurisdictions of courts to make it make more sense. But that is a political decision that has lots of interests involved. You are changing the jurisdiction of courts that already exist and what they have. And so the group that does that weighing and balancing is the legislature. And so over time the legislature does change things here and there. I think their effort here though is to have predictability for businesses in the hopes that they can rely on the business courts. So whether or not we have a simplification of our other court system or change our jurisdictional amounts, for example, they changed the jurisdictional amounts for of justice of the peace courts to $20,000. That was a pretty big change. And that’s huge. We’re still seeing how that plays out in our justice system. So that always goes on in the background. So I’m not sure that the creation of the business court makes any of the rest of it more or less likely or more or less urgent. Does that answer your question?

Rocky Dhir:

Sure. Yeah. I was trying to see if there’s got a crystal ball

Judge Emily Miskel:

Is this is a piece of a trend? I think this is its own separate special baby.

Marcy Hogan Greer:

I would agree with that. The legislature and the governor have wanted this court for a very long time. It’s kind of modeled on the Delaware Chancery court with some elements of federal court brought into the picture. And they have been trying, I think this is the sixth legislative effort and they finally got it through. So it’s a very important prerogative and priority.

Rocky Dhir:

How are we choosing the judges on these courts? I mean, I can see people wondering how that happens. I mean obviously I’m not going to be one of them. We’ve already established that. But otherwise, how were the judges chosen and how will they be chosen moving forward?

Judge Emily Miskel:

The judges are chosen by the governor who appoints each judge for a two year term and he can appoint the same person for multiple two year terms if the governor chooses to do that. But they are not elected, they’re appointed by the governor. And so as we mentioned, he’s appointed the first 10. So the business court will be operating in five divisions corresponding with Houston, Austin, San Antonio, Dallas, and Fort Worth. The biggest areas,

Rocky Dhir:

Basically wherever we have state biannual meetings it sounds like. There you go.

Judge Emily Miskel:

Yes. And each division will have two judges. And so just I believe last week the governor appointed the 10. One of them is here. We’ve seen him. Jerry Bollard is here. Oh,

Marcy Hogan Greer:

Okay.

Rocky Dhir:

Sure.

Judge Emily Miskel:

But they’re all a very qualified group of judges. I was excited to see the names. So there’ll be a great group of ambassadors to start this new project.

Rocky Dhir:

What do we say to small businesses? Because this sounds like it affects mainly the larger businesses. You said 5 million and up if it’s a publicly trade or disputes of $10 million or more. For businesses that are, say, dealing with a measly sum of a couple of hundred thousand dollars, they arguably would want some continuity as well on business decisions. So why were those larger sums chosen as opposed to something that just affects small businesses also? Any thoughts?

Marcy Hogan Greer:

I think they wanted to start with a limited group that would be very sophisticated in nature. When you’ve got $10 million, 5 million at stake, it’s going to be sophisticated litigation. And I would not be surprised at all if subsequent legislatures lower that amount for that reason, once it’s up and running. But for purposes of developing the law in this area, I think they, I’m just speculating, but my sense would be that they are wanting to get very sophisticated parties litigants to develop the law and then start to leverage that down to smaller cases.

Rocky Dhir:

Alright. So probably we’re starting to run a little short on time. I mean, this is a very fascinating topic, a lot more fascinating than I thought it would be to be honest with you. But here we are. Here’s kind of the final question, and I hope both of you guys will weigh in on this one. What do you think Texas lawyers should be doing to kind of prepare for this new business court development? Obviously if you don’t deal with businesses, maybe you do nothing, but for most Texas lawyers there’s going to be some impact with this court. How do they prepare? What do you think that they need to do to get ready?

Judge Emily Miskel:

So I would say if a case is going to business court, it happens within the first 30 days of the case. This is something that will be sprung upon you very quickly. Even if you didn’t originally file the case in business court, the defendant may try to remove you to business court and you need to be jumping on that within the first 30 days. What I would say is know that this is in the government code. It’s in government code 25 a chapter 25 A. It’s a relatively short section, but it’s filled with defined terms and complex provisions that refer to other provisions. So print the whole thing out, read it five times and carry it with you in your briefcase. And then anytime you have something come up, just you got to refer to the government code.

Rocky Dhir:

Okay. That’s going to be our starting point.

Marcy Hogan Greer:

And I would also recommend there’s the winter edition of the Advocate put out by the litigation section of the state bar, and it was focused entirely on the business court with different perspectives, different rulings on it. To your point about precedent, David Cole wrote an excellent article on how precedent would be developed. I think that’s a really good practical breaking down of how this will work. And we’re happy to share our PowerPoint with anyone and answer questions. Well,

Rocky Dhir:

If they want this PowerPoint, how do they get it? Do they reach out to one of you or is there a place where is it

Marcy Hogan Greer:

Available? Think it’ll be available through the state bar, but they can also send me an email at [email protected] and I’ll send it their way.

Rocky Dhir:

Perfect. Okay. Well that seems to be all the time we have for this installment of the State Bar of Texas podcast. I want to thank both of our guests, Marcy Greer and the Honorable Emily Miskel. Thank you both for joining us today. Thanks for having us. Absolutely. Thank you. And I want to thank you, the listeners for tuning in. This is a great conference. You guys are missing out if you’re not here. Hopefully we’ll see you next year if you weren’t here for this one. But if you like what you heard, please rate and review us. An Apple podcast, Google podcast, Spotify, Amazon music, or wherever you get your podcast. I’m Rocky Dhir signing off for now. Until next time, thanks.