Texas Business Court Decision – May 29, 2026

No. 25-BC11B-0099    M. Brown v. Exxon Mobil Corporation (Eleventh Division, Judge Sweeten) 2026 Tex. Bus. 35

Jurisdiction – Sec. 25A.004(b) and (d).

Background.  Brown, a 29-year Exxon employee serving as Vice President of Basestocks & Waxes, had his employment end on July 25, 2025. Exxon contends Brown resigned after testing positive for THC-metabolites under a random drug screen pursuant to the  company’s Alcohol and Drug Use Policy. Brown contends he was unlawfully terminated because of his race, arguing the Drug Use Policy did not cover THC-metabolites and that, in any event, similarly-situated non-Black executives who violated comparable policies were treated more favorably. Upon termination, Brown forfeited about $5 million in previously awarded incentive compensation, including unvested Restricted Stock Units (RSUs). After exhausting administrative remedies with the Texas Workforce Commission, Brown filed suit in the 11th District Court of Harris County under Section 21.051 of the Texas Commission on Human Rights Act (TCHRA). Exxon removed the case to the Business Court, and Brown moves to remand. The motion to remand is granted.

Issue Presented: Whether the Business Court has subject matter jurisdiction under either (1) Texas Government Code Sec. 25A.004(b)(2), as an action “regarding the governance, governing documents, or internal affairs of an organization,” or (2) Sec. 25A.004(d)(1), as an action “arising out of a qualified transaction” involving at least $5 million in consideration.

1. On the “internal affairs” question, the court applies the cannon of noscitur a sociis (a word is known by the company it keeps), reading “internal affairs” in context with its statutory neighbors – “governance” and “governing documents” – to conclude the term encompasses entity governance questions, not general employment disputes. The court rejects Exxon’s three arguments: that CEO involvement in the termination triggered jurisdiction; that Brown’s officer status triggered it; and that the forfeited RSUs constituted “ownership interests.” As to the RSUs, the court found the core dispute was Exxon’s allegedly discriminatory decision to forfeit them, not the ownership interests themselves.
2.  On the “qualified transaction” question, the court held the RSUs and incentive awards were not the “but-for” cause of the litigation – they were one of several damages categories flowing from the alleged racial discrimination, not the transaction out of which the claim arose. Brown’s claim under Section 21.051 of the TCHRA does not “arise out of” a qualified transaction, and the court does not have jurisdiction over this claim under Sec. 25A.004(d).
3. Remanded to the District Court of Harris County.