Texas Business Court Decision – August 25, 2025
No. 25-BC03A-007 Jerry B. Reed v. Rook TX, LP, et al. (Third Division, Judge Andrews
Civil case – Jurisdiction. Reed won the $7.5 million Lotto Texas jackpot in May 2023; in this suit he alleged the jackpot would have been $88 million if defendant Rook had not illegally manipulated the system to win the April 2023 $95 million lotto jackpot; in his earlier amended complaints he contended Rook misrepresented its date of formation to the State of Texas when it claimed the winnings and that Rook was created to hide the identity of the defendant-conspirators who rigged the lottery. The case had been filed in Travis County and removed by defendants to the Business Court. In its opinion of June 18, 2025, the court rejected Reed’s motion to remand, concluding Reed had pleaded facts and theories of liability that regard Rook’s governance, governing documents. or internal affairs, and had asked the court to pierce the corporate veil; since these theories were the basis for his recovery under each of his causes of action against each defendant, the court had jurisdiction under 25A.004(b)(2). See the summary dated June 18, 2025 below, or Reed v. Rook Tx LP, 2025 Tex Bus. 23, 2025 WL 1713358.
Reed amended his complaint, stripping away all allegations related to the defendants’ formation and corporate purpose, as well as his veil-piercing claims, thereby expressly disclaiming any theories requiring interpretation of governance or internal affairs; Reed then moved again to remand the case to Harris County.
Held: Just as Reed had pleaded his way into Business Court jurisdiction by alleging claims regarding the Rook defendants’ governance, governing documents, and internal affairs, he has successfully pleaded his way out of the Court’s jurisdiction by removing all such claims from his pleadings: the plaintiff is master of the complaint. The Rook defendants concede the court no longer has jurisdiction under 25A.004(b)(2), but they raise three alternative bases for jurisdiction. The court rejects them all:
(1) The court does not have supplemental jurisdiction under 25A.004(f) because Reed never agreed to proceed on any claim in Business Court and consistently argued the Business Court lacked jurisdiction and should remand the entire case to Travis County;
(2) the court does not have qualified transaction jurisdiction under 25A.004(d)(1) based on an argument that Reed’s tortious interference claim involving a qualified transaction – hypothetically that Reed would have purchased a ticket for an $88 million jackpot, thus creating a transaction over the $10 million threshold; however, even if Reed had purchased a ticket for a chance at $88 million, the consideration for that purchase would not have been $88 million because it was not known whether the ticket would have been the winning ticket; instead, the consideration for the transaction looks to the value of the ticket at the time of purchase -$1.00; and
(3) the case does not implicate the Court’s trade-regulation jurisdiction under 25A.004(b)(3)(A); whether or not the Texas Lottery Act is a trade regulation law, Reed does not seek a remedy under the Act, seeking instead to assert negligence pers se claims (albeit supported by claims defendant violated two provisions of the Act (Sec. 466.307 and 466.3054); the court hold that if Texas were to recognize a negligence per se claim based on violations of the two sections, the claims would arise under general tort law and would not be claims under a state trade regulation law for purposes of Sec. 25A.004(b)(3).
Reed’s renewed motion for remand is granted.