In a significant early ruling, one of Texas’s newly established Business Courts addressed a key procedural question: whether pre-existing cases may be removed to the specialized forum. Judge Bill Whitehill’s October 30, 2024 decision in Energy Transfer LP v. Culberson Midstream LLC held that, regardless of subject matter, cases filed before September 1, 2024 must remain in their original courts.
Background: Texas’s New Business Court System
As a refresher, the Texas Legislature created the Business Court system to provide a specialized venue for litigants in complex commercial disputes with high amounts in controversy. When doing so, Texas joined nearly half the country in forming a distinct court system expressly designed to handle this type of litigation. Our detailed breakdown of the Lone Star State’s Business Courts can be found here.
In some circumstances, the Texas Legislature mandated that Business Court judges issue written opinions. Such instances include, upon request of either party, dispositive rulings (such as summary judgment or dismissal), or on an “issue important to the jurisprudence of the state, regardless of request.” This is a key difference from Texas’s district courts, which rarely issue formal written rulings, even on case dispositive motions.[1] The desired practical and procedural effect of this requirement is to create a repository of case law on key issues upon which future litigants may rely when judging possible outcomes.
The Business Courts officially opened on September 1, 2024, and written opinions have begun to emerge. One recent opinion clarified from the First Division[2] answered a key question: Are suits filed before September 1, 2024 that meet the other jurisdictional qualifiers are removable to the Business Courts? Judge Whitehill answered that question with a firm “no.”
The Energy Transfer Decision: No Retroactive Removal
The case is Energy Transfer LP v. Culberson Midstream LLC, et al.[3] The matter was filed in April 2022 in the 193d District Court of Dallas. On September 30, 2024, Plaintiffs removed the case to the Business Court system. Defendants quickly moved to remand the matter to the District Court. When doing so, Defendants asserted that the plain text of the relevant statute restricted the Business Courts’ jurisdiction to matters commenced on or after September 1, 2024, and applying the statute retroactively would be unconstitutional. The statute-at-issue (H.B. 19 §§ 8 and 9) reads as follows:
The changes in the law made by this Act apply to civil actions commenced on or after September 1, 2024. This Act takes effect September 1, 2023.
In response, Plaintiffs made three arguments. First, the Business Court removal statute does not expressly address or prohibit the removal of cases filed before September 1, 2024. Second, the statute is procedural—as opposed to substantive—such that removal is appropriate for preexisting cases. Third, the exclusionary language the Legislature used to describe what cases could not be brought in the Business Courts is not contained in H.B. 19. The Court was unconvinced and ordered the case be sent back to the district court where it was first filed.
In remanding the case, Judge Whitehill relied primarily upon the plain text of the statute. In doing so, the Court held the text “restricts the court’s entire authority . . . to act to cases filed on or after September 1st [2024].” Accordingly “no specific reference to removals is necessary to preclude removing cases filed before September 1, 2024.” Judge Whitehill also noted that if the Legislature meant to allow removal of pre-September 1, 2024 cases it could have written that the Business Courts “may begin accepting cases on or after September 1, 2024” without the “commenced on or after” qualifier. It did not. Consequently, no action commenced before September 1, 2024 may be removed.
On November 1, 2024, Plaintiffs filed a notice of appeal of Judge Whitehill’s remand ruling. That appeal will be heard by the Fifteenth Court of Appeals—Texas’s new appellate court created to hear, among other things, appeals out of the Business Court system.
Key Takeaways for Practitioners
For the moment, Judge Whitehill’s opinion resolves any confusion that may have existed for litigants in pre-September 1, 2024 cases. In short, and pending the ultimate result of Plaintiffs’ appeal, litigants must remain in the District Court. And even if pre-September 1, 2024 cases had been eligible for removal, litigants would have faced another procedural hurdle: the standard 30-day window for removal following service or receipt of the first pleading indicating removability. This means that even for cases filed after September 1, 2024, parties must act promptly to preserve their removal rights to the Business Courts.
Ultimately, the opinion serves as a reminder that current and prospective Texas litigants must work with experienced counsel to understand the procedural ins and outs of the Business Courts. Litigants who fail to do so may find themselves at a strategic disadvantage when attempting to navigate Texas’s newest judicial avenue.
FOOTNOTES
[1] Tex. R. Civ. P. 360.
[2] Covering Collin, Dallas, Ellis, Fannin, Grayson, Kaufman and Rockwall Counties.
[3] No. 24-BC01B-0005.