The Business Court has remanded an employment discrimination action to a Harris County district court after Plaintiff’s former employer removed the case to the Court.
Brown v. Exxon Mobil Corporation (2026 Tex. Bus. 35; May 29, 2026) arose from a long-time employee of Exxon’s employment discrimination claim against the company. Plaintiff filed his charge, received a right to file civil action from the Texas Workforce Commission, and filed suit in Harris County district court. Exxon removed the case to the Business Court. Plaintiff filed a motion to remand for lack of jurisdiction.
In an opinion by Judge Sweeten, the court granted Plaintiff’s motion and remanded the case to the originating district court. Plaintiff claimed that Exxon unlawfully terminated his employment based on race. § 21.051(1), Labor Code. He sought back pay, front pay, lost fringe benefits, compensatory damages for future pecuniary loss, and noneconomic damages, plus exemplary damages and attorney’s fees. Exxon argued that the Business Court had jurisdiction under § 25A.004(b)(2) (action regarding internal affairs of an organization) and 25A.004(d)(1) (qualified action).
As to the first ground, Exxon argued that: (1) since Plaintiff alleged the involvement of Exxon’s CEO in his termination, the action involved the “rights, powers, and duties of an organization’s governing persons”; (2) because Plaintiff was a Vice President at Exxon, he qualified as an “officer” and “governing person,” so his lawsuit came under the statute; and (3) Plaintiff’s lawsuit implicated Exxon’s incentive program, which constitute “matters relating to the organization’s membership or ownership interests.” Brown responded that his lawsuit was an old-fashioned statutory employment law discrimination case having nothing to do with Exxon’s internal affairs. He further contended that Exxon’s “hyperliteral” reading of the statute would vastly expand the Business Court’s jurisdiction to every employment discrimination claim.
Turning to the interpretation of the statutory language, the court examined the meaning of “internal affairs” in the context of the surrounding terms “governance” and “governing person.” “Governance,” the court observed, “as used in Section 25A.004(b)(2) relates to the management and direction of the entity’s affairs under its governing documents and applicable law.” The statute defines “governing documents” as “the instruments, documents, or agreements adopted under the organization’s governing law to govern the organization’s formation and internal affairs.” That’s a lot of governing. In its statutory context, consequently, “internal affairs” has to do with with “internal entity governance dictated by the entity’s governing documents and governing law.”
As to the first Exxon’s arguments, the court declined to stretch the statute to cover a CEO’s “alleged, unspecified, ‘participation’ in an employment decision.” Rather, “the primary issue is whether an actor—whatever their title—with the power to terminate [Plaintiff] did so unlawfully in violation of Section 21.051 of the Texas Labor Code, a statute with the express purpose of eliminating illegal employment discrimination in the workforce, and allowing victims of discrimination to be made whole for injuries suffered on account of unlawful employment discrimination.” As the court observed, Exxon’s characterization of “internal affairs” would mean that “almost any CEO decision made or taken would involve the ‘rights, powers, and duties of an organization’s governing persons [or] officers,’ conferring Business Court jurisdiction.” It wasn’t willing to go that far.
Second, Plaintiff’s status as a VP of an Exxon division didn’t create jurisdiction, either. Exxon argued that the termination of a “governing person” affected the person’s “rights” and came within the statute. “But,” the court stated, “the right to be free from unlawful racial discrimination in the workplace and the concomitant right to seek redress for injuries sustained resulting from alleged discrimination are statutory rights derived from Section 21.051 of the TCHRA and common to millions of other managerial and non-managerial employees in Texas.” In short, his lawsuit didn’t arise from his corporate position, “but from his status as an employee.” The court likewise rejected Exxon’s argument that because Plaintiff’s termination resulted in the forfeiture of certain incentives under Exxon’s incentive plan, it implicated the company’s “internal affairs.” But, as the court observed, Plaintiff’s “claim concerns whether, in its discretion, ExxonMobil treated [Plaintiff] inequitably by forfeiting his [incentive awards] due to his race” in violation of the statute. As such, Plaintiff’s action did not “respect or concern a subject of disagreement relating to ExxonMobil’s ownership interests.” In fact, Plaintiff had no dispute with Exxon’s program, only that Exxon allegedly didn’t treat him like other similarly situated employees because of his race.
Finally, Plaintiff’s claims didn’t arise out of a qualified transaction. Exxon characterized Plaintiff’s claims for damages exceeding $5 million as conferring jurisdiction on the Business Court. Plaintiff countered that his damages claim arose from his statutory employment discrimination cause of action and were recoverable under the Labor Code. In other words, his claim didn’t “arise out of” a qualified transaction. The court thus lacked jurisdiction and remanded the case to the Harris County district court from whence it came.
