Even though the Texas Business Court is now open and beginning to receive the complex commercial cases it was designed to resolve, questions still linger about whether the new court is consistent with the Texas Constitution. Such doubts, still raised by opponents of the business court even after the Supreme Court’s unanimous decision affirming the new Fifteenth Court of Appeals in In re Dallas County, No. 24-0426 (Tex. Aug. 23, 2024), may discourage parties’ resort to, and impair public confidence in, the new court.
In our view, there should be no doubt that the business court is well within the legislative prerogative to create.
The Texas Constitution has long provided that the “judicial power of this state shall be vested in one Supreme Court, in one Court of Criminal Appeals, in Courts of Appeals, in District Courts, in County Courts, in Commissioners Courts, in Courts of Justices of the Peace, and in such other courts as may be provided by law.” Tex. Const. art. V, Section 1.
What other courts? The Constitution answers that as well: “The Legislature may establish such other courts as it may deem necessary and prescribe the jurisdiction and organization thereof, and may conform the jurisdiction of the district and other inferior courts thereto.” Id. Such legislatively created “‘other courts’ … are known as statutory courts.” Dailing v. State, 546 S.W.3d 438, 444 (Tex. App–Houston [14th Dist.] 2018, no pet.). The Legislature exercised that authority in the case of the business court: “The business court is a statutory court created under Section 1, Article V, Texas Constitution.” Tex. Gov’t Code Section 25A.002.
If, as In re Dallas County made clear, the Constitution gives the Legislature considerable authority to create new appellate courts with specific duties, the Constitution gives it even broader authority to create new trial courts with “exclusive … or original jurisdiction” over matters that heretofore reposed in the district courts. Tex. Const. art. V, Section 8. The several constitutional attacks on the business court all lack merit.
The Business Court Is Not a District Court in Disguise
If the business court were in fact a species of district court, it would be unconstitutional: its judges are appointed, not elected; they serve two-year terms, not four; and their courts have limited and discrete subject-matter jurisdiction, not the general and plenary jurisdiction distinctive to Texas district courts.
Of course, the business court shares some characteristics with district courts. With some exceptions, it “has the powers provided to district courts,” its judges have “all powers, duties, immunities, and privileges of a district judge,” and they are in the same retirement system as district judges. Tex. Gov’t Code Sections 25A.004(a), 25A.005, 837.001(a).
But far from the “exclusive, appellate, and original jurisdiction of all actions, proceedings, and remedies” presumptively entrusted to district courts, see Tex. Const. art. V, Section 8, business court jurisdiction consists of a narrow range of civil matters involving corporate disputes or high-dollar business cases, see Tex. Gov’t Code Section 25A.004(b)–(h).
Thus, that the business court “exercises some of the jurisdiction of district courts” does not make it one. Jordan v. Crudgington, 231 S.W.2d 641, 645 (Tex. 1950). And that it also exercises some of the procedural “powers provided to district courts,” including power to “issue writs of injunction, mandamus, sequestration, attachment, garnishment, and supersedeas,” Tex. Gov’t Code 25A.004(a), does not make it a district court either. If it did, the exclusive jurisdiction over a substantial portion of eminent domain suits long given to Harris County civil courts at law, Tex. Gov’t Code Section 25.1032(c), would have transformed those statutory courts into district courts.
Because the business court is a statutory court, not a district court, many of the opponents’ constitutional criticisms miss their mark.
The Business Court Does Not Deprive District Courts of Their Jurisdiction
In arguing that the business court deprives district courts of their constitutionally conferred jurisdiction, opponents rely on several cases that predate the 1985 amendment to Article V, Section 8, such as the 1933 case of Reasonover v. Reasonover, 58 S.W.2d 817 (Tex. 1933), which held that the Legislature cannot strip a district court of jurisdiction over matters expressly conferred on the court under Section 8 as it then existed. As amended, however, Section 8 gives district courts “exclusive, appellate, and original jurisdiction of all actions, proceedings, and remedies, except in cases where exclusive, appellate, or original jurisdiction may be conferred by this Constitution or other law on some other court, tribunal, or administrative body.” Tex. Const. art. V, Section 8.
While the current jurisdictional grant over “all actions, proceedings, and remedies” is broader than the district courts’ specific litany of authority over “all criminal cases of the grade of felony,” “all cases of divorce,” “all suits to recover damages for slander or defamation of character,” and so on before 1985, the outer bounds of that constitutional authority—that the Legislature may confer “exclusive … jurisdiction … on some other court, tribunal, or administrative body”—is even broader. It is, indeed, considerably broader than the Legislature’s authority to create new appellate courts. In short, as the court recognized in In re Dallas County, the people themselves have removed whatever constraints once existed on legislative power to grant jurisdiction over a limited class of business cases to the business court.
Business Court Judges Need Not Be Elected
Some have also claimed that our Constitution requires all Texas judges to be elected, not appointed. But while the Texas Constitution requires the election of some judges, it does so with particularity as to the various enumerated courts—art. V, Section 2(c) (Supreme Court Justices); art. V, Section 4(a) (Court of Criminal Appeals Judges); art. V, Section 6(b) (Court of Appeals Justices); art. V, Section 7(b) (District Court Judges); art. V, Section 15 (Constitutional County Court Judges); art. V, Section 18(a) (Justices of the Peace); art. V, Section 30 (Statutory County Court Judges)—not universally. Indeed, well over one-third of all judges now sitting in Texas are appointed municipal court judges; the business court adds only 10 to the more than 1,000 existing unelected judicial officers.
Certainly, if the Legislature can transfer “original” or “exclusive” district court jurisdiction to an “administrative body,” only one of which (the Railroad Commission) is elected, it can do so to a statutory court whose judges have been appointed by the governor and confirmed by the Senate—the same method of selection applicable to decisionmakers of most state administrative bodies.
The Business Court Is an ‘Inferior’ Court; So Are District Courts
Finally, opponents argue that the business court is unconstitutional because it is functionally equivalent to district courts rather than “inferior” to them—a requirement they claim to find in Article V, Section 1. A statutory court, they argue, cannot be equal to or greater than the district court in geographic scope, authority, power, or jurisdiction. Since the business court exercises statewide jurisdiction, and its judges handle some of the state’s larger matters in financial size, it cannot be “inferior.”
But the isolated phrase “inferior courts” will not bear the weight such argument requires. For one thing, Article V, Section 1 actually refers to “the district and other inferior courts.” This comports with common understanding: “inferior” courts are not unimportant courts, but rather courts whose judgments are subject to appellate review. See, e.g., Ex parte Towles, 48 Tex. 413, 439–40 (1877).
The Legislature vested the Supreme Court with exclusive jurisdiction to hear constitutional challenges to the business court, see 88th Leg. R.S. H.B. 19 Section 4(a). If there is to be a challenge, it is best for everyone in the state that it come soon. And if and when it does, we believe the court will uphold the business court’s constitutionality.
Thomas R. Phillips is a partner at Baker Botts in Austin, Texas, and a retired Chief Justice of the Supreme Court of Texas. Matthew M. Hilderbrand is an associate at Baker Botts.
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