From the inbox:
The State of Texas has failed in its attempt to end the landmark lawsuit challenging the dismantling of the state’s Historically Underutilized Business (HUB) program.
The Fifteenth Court of Appeals rejected the State’s request to dismiss the underlying lawsuit, allowing Texas business owners and a trade association representing more than 150 contractors to continue challenging the Comptroller’s regulations in Travis County District Court.
The State argued that the case should be thrown out because the Comptroller withdrew the emergency regulations the plaintiffs originally challenged and replaced them with final regulations. The court disagreed, finding that the challenged HUB regulation had been adopted “without substantive change.” The business owners can now return to trial court and continue their challenge.
“The State asked the court to end this case. It lost,” said Alphonso David, President and CEO of the Global Black Economic Forum and co-lead counsel for the plaintiffs. “Replacing one set of regulations with another does not give the Comptroller power the Legislature never gave him. The core question is unchanged: Can the Comptroller ignore the Legislature and rewrite Texas law through regulation? The answer is no, and we will return to the trial court to make that case.”
“Thousands of businesses lost certifications, contracts, employees and opportunities because of these regulations,” David continued. “Changing the form of the regulations does not erase that harm. We will keep fighting for the businesses, workers and communities paying the price.”
This case is bigger than the state’s contracting program. It is about whether Texans can rely on laws passed by their elected representatives and whether an executive official can unilaterally issue regulations to cut thousands of businesses owned by women and people of color out of a program the Legislature created. The stakes reach beyond Texas: businesses, investors, workers, and communities across the country depend on stable public contracting systems and clear limits on executive power.
The case will now return to Travis County District Court, where the plaintiffs will continue challenging the Comptroller’s unlawful regulations. The Global Black Economic Forum, Petrillo Klein + Boxer LLP, Freedom Economy, and American Pride Rises continue to support the litigation alongside a coalition of business and civil rights organizations.
See here, here, and here for the background, and here for the court’s opinion. This bit from the opinion adds on to what is said in the above press release:
Contrary to the State Parties’ assertion, we cannot conclude there is no live controversy between the parties as to the validity of the Comptrollers’ HUB policy, as reflected in the Comptroller’s recently adopted rules. Similarly, we cannot conclude that there is no live controversy as to the Appellees’ ultra vires claim that the state agency officials have acted or have threatened to act in conflict with the HUB Act, a claim that is independent of their challenge to the Comptroller’s rules.
The plaintiffs may or may not prevail on their claims – I think their case is clear, but we all know how this can go – but they get to live to fight on. That will do for now.
The Fifteenth CoA was created in part to keep first tier appeals involving the state out of the reliably blue Austin CoA, and all of its justices were hand selected by Greg Abbott. Surviving a motion to dismiss means that the case has some actual merit, so it’s reasonable to expect that the ruling won’t change after a trial or summary judgment hearing on the merits.
Re: “Surviving a motion to dismiss means that the case has some actual merit”
That’s not necessarily true. It depends. Many motions to dismiss are based on justiciability doctrines, which are very popular with certain policy-making courts to *avoid* the merits. Lack of standing is one of them. These doctrines are “useful” to undermine legislative policy, such as for example consumer protection statutes (Fair Debt Collection Practices Act, Fair Credit Reporting Act, etc.).
HOW APPELLATE COURT (UN)MAKE PUBLIC POLICY
The FDCPA authorizes a statutory penalty of $1,000 per proven violation, but with the modern standing doctrine (interpretation of article III in the federal system), it’s not enough to prove that the debt collector committed one of the laundry-list violations, the plaintiff has to show concrete harm. So, in practice, a consumer who has been dunned may have to plead and show that they are a mental wreck (emotional harm), which is an obvious disincentive to sue except in the most egregious cases. This thwarts the legislative policy of broad grass-roots enforcement by citizens and benefits debt collectors as a class of defendants.
For expert commentary, see Adam Flaherty & Isaiah W. Ogren, The New Standing Doctrine, Judicial Federalism, and the Problem of Forumless Claims, Yale Law J. (2025);
https://yalelawjournal.org/pdf/134.3.FlahertyOgren_do7z91vo.pdf
Lauren Young, How Detrimental is Transunion v. Ramirez, Really? Understanding the Impact on Environmental Law, 99 Wash. L. Rev. 1435 (2024).
STANDING DENIAL IN TEXAS STATE COURTS
The Texas Supreme Court has followed the SCOTUS on standing even though state district courts are courts of general jurisdiction and are not bound by any restrictions of article III (which applies to federal courts). The emulation of federal standing jurisprudence is atexual, but has the same effect: weakening citizen enforcement of legislative policy by curtailing access to the courts and imposing a requirement to establish injury up front to even proceed with a case once it is filed. Again: Why even file when you can’t win because you won’t even get to a trial to make your case?
MERITS AVOIDANCE THROUGH JUDICIAL IMMUNITY GRANTS
In Texas, motions to dismiss are often based on assertion of sovereign or governmental immunity. This is also a court-made doctrine to avoid decision on the merits and serves to let government actors escape liability. It’s a way to make the citizens suffer the consequences of government error and even misconduct.
Suppose that the police is in hot pursuit of a prostitution suspect and T-bones you at an intersection where you had the green light. You are likely out of luck if you sue after you have been permanently disabled as a result of the collision. The government harmed you, but cannot be held accountable for actual damages. Why? Because that would cost the government money. That’s the “justification” for the immunity doctrine. The SCOTX favors the public fisk.
Your government-inflicted injuries are your own problem. Suck it up, citizen!
Many statutes provide for state agencies to be sued in Travis County, which is why such suits would then go to the Austin Court of Appeal (the Third CoA). Often on immunity defenses asserted by way of “plea to the jurisdiction” (Texas equivalent of motion to dismiss for lack of jurisdiction).
The SCOTX has gone so far as to hold that a statute that says that such-and-such government entity may be sued does not mean that the entity may actually be sued (i.e., that immunity is waived). The leading case is Tooke v. City of Mexia, 197 S.W.3d 325, (Tex. 2006), which has already been cited more than a 1000 times.
As Mollusk points out, the Third CoA is a Dems-controlled court. The Fifteenth now gets all these appeals regardless of where in the state they originate because it was given exclusive jurisdiction of appeals involving state entities.
Going forward, the members of the Fifteenth will be elected statewide, so this is going to remain a mini-SCOTX as long as Texas remains GOP-controlled. The original members were all appointed by Governor Abbott. The Chief is a former SCOTX member returning from a long interlude in private practice. The other two previously served on regional courts of appeals.