On June 1, 2025, which was the last day of the 2025 Regular Session of the Texas Legislature, the Legislature passed House Bill 40 (“HB 40”), which would amend Texas Government Code Chapter 25A, the statute that established the Texas Business Court, and would make various other clarifying and technical amendments to Texas statutes in relation to the Business Court. HB 40 has been sent to the desk of Governor Abbott for his signature. Unless vetoed by the Governor, these amendments will go into effect on September 1, 2025. HB 40 was the subject of much backroom negotiation over the course of the legislative session, and many of the amendments that were in the original draft of HB 40 were removed as a result of opposition or requests from various legislators.
A summary of the most significant amendments contained in HB 40 that may affect our clients are set forth below. As passed, HB40:
- Lowers the threshold for the amount in controversy from $10 million to $5 million for suits arising under a “qualified transaction” and for certain actions arising out of a violation of the Finance Code or the Business & Commerce Code, among other claims.
- Expands definition of “qualified transaction” to include a series of related transactions.
- Provides that the amount in controversy for the Business Court’s jurisdictional purposes is “the total amount of all joined parties’ claims.”
- Clarifies that, assuming the amount in controversary threshold is met, the Business Court has jurisdiction over any action “arising out of a business, commercial or investment contract or transaction,” as opposed to any action “that arises out of a contract or commercial transaction,” in which the parties to the contract or transaction agreed in the contract or a subsequent agreement that the Business Court has jurisdiction of the action.
- Adds to the Business Court’s jurisdiction (1) actions arising under the Texas Uniform Trade Secrets Act, Chapter 134A, Civil Practice and Remedies Code and (2) actions arising out of or relating to the ownership, use, licensing, lease, installation or performance of intellectual property, including computer software, software applications, information technology and systems, data and data security, pharmaceuticals, biotechnology products, bioscience technologies and trade secrets.
- Confirms that the Business Court has jurisdiction concurrent with district courts over actions to enforce an arbitration agreement, appoint an arbitrator, review an arbitral award and take other judicial actions relating to or in support of arbitration proceedings, so long as a claim included in the arbitration is within the Business Court’s jurisdiction and satisfies the required amount in controversy.
- Moves Montgomery County (The Woodlands, Conroe) from the not yet operational Second Business Court Division, to the currently operating Eleventh Business Court Division (Houston).
- Removes language in Chapter 25A that would have abolished the remaining six non-operational geographic divisions of the Business Court on September 1, 2026. These amendments preserve the potential for these six divisions to commence operations if and when the Legislature appropriates funding for their operations.
- Aligns the language regarding the Business Court’s supplemental jurisdiction with its federal analog. The statute now gives the Business Court supplemental jurisdiction “over any other claim so related to the action that the claim forms part of the same case or controversy.” The statute retains the requirement that a supplemental claim may only proceed in Business Court if all parties to the claim and the Business Court judge agree to the exercise of supplemental jurisdiction.
- Excludes from the Business Court’s jurisdiction any claim related to a consumer transaction to which a consumer in Texas is a party that arises out of a violation of federal or state law.
- Directs the Texas Supreme Court to “establish procedures for the prompt, efficient, and final determination of business court jurisdiction on the filing of an action in the business court,” with a focus on “efficiently addressing complex business litigation in a manner comparable to or more effective than the business and commercial courts operating in other states.” The new provision authorizes the Supreme Court to, among other things, (1) provide for jurisdictional determinations based on pleadings or summary proceedings, (2) establish limited periods during which issues or rights must be asserted, and (3) provide for interlocutory or accelerated appeals.
- Allows entities to establish venue in a county located in an operating division of the Business Court by provisions in the entities’ governing documents with respect to actions regarding (1) governance, governing documents or internal affairs; (2) acts or omissions of an owner, controlling person or managerial official; (3) breach of duty by an owner, controlling person or managerial official; or (4) the Business Organizations Code.
- Authorizes transfers of cases from district and county courts that are within the jurisdiction of the Business Court that were commenced prior to September 1, 2024, upon an agreed motion of a party and permission of the Business Court, under rules to be adopted by the Supreme Court for that purpose. When adopting such rules, the Supreme Court is directed “to (1) prioritize complex civil actions of longer duration that have proven difficult for a district court to resolve because of other demands on the court’s caseload, (ii) consider the capacity of the business court to accept the transfer of such actions without impairing the business court’s efficiency and effectiveness in resolving actions commenced on or after September 1, 2024, and (iii) ensure the facilitation of the fair and efficient administration of justice.”