Texas Business Court Decision – June 18, 2025

No. 25-BC03A-007  Jerry Reed v. Rook TX, LLP (Third Division, Judge Andrews)

Jurisdiction.  Reed won the $7.5 million Lotto Texas jackpot in May 2023; in this suit he alleged the jackpot would have $102.5 million if defendant Rook had not illegally manipulated the system to win the April 2023 lotto jackpot; he contends Rook misrepresented its date of formation to the State of Texas and that the LLP was created to hide the identity of the defendants-conspirators who rigged the lottery. Reed brought this action in Travis County, stating claims for money had and received, negligence per se, and four derivative theories of liability: civil conspiracy, aiding and abetting, assisting and participating, and concert of action; for the purposes of this analysis, the court presumes the causes of action are viable. Rook removed the case to the Business Court, asserting the Court has jurisdiction under Sec. 25.004(B)(2) of the Government Code, which applies to an action regarding the governance, governing documents, or internal affairs of an organization; Reed moves to remand the case for lack of jurisdiction, contending the case can be proven by access to publicly available documents without any reference to Rook’s internal governance or governing documents.

Held: (1) Giving the words of the statute their ordinary meaning, when the amount-in-controversy requirement is met, Section 25A.004(b)(2) gives the Court jurisdiction over a lawsuit or judicial proceedings (“action”) concerning or respecting (“regarding”) the management and direction of an organization’s affairs (“governance”), the documents adopted to to govern its formation and internal affairs (“governing documents”), its ownership or membership interests (“internal affairs”), or the rights, powers, and duties of its governing persons, officers, owners, or members (“internal affairs”);

(2) Whether Rook was created as part of a scheme to rig the lottery and for the purpose of concealing the identities of those involved is a matter concerning Rook’s management and direction, the validity of its formation and the duties of its governing persons – all matters covered by 25A.004(B)(2);  Reed’s theory that Rook misrepresented the date of its formation and the date it received the winning ticket by providing false dates which predate the actual date of Rook’s legal formation necessarily concerns the legal documents adopted to form Rook, specifically its initial certificate of limited partnership; the fact that Reed might be able to establish this from a public record does not undermine the court’s jurisdiction; disputes over the validity and effectiveness of a limited partnership’s formation and certificate of formation necessarily revolve around the partnership’s governing documents and internal affairs;

(3) Reed has pleaded facts and theories of liability that regard Rook’s governance, governing documents or internal affairs, and these theories purport to be a basis for Reed’s recovery under each of his causes of action, and through his derivative claims, against each defendant; thus the Court construes its jurisdiction under 25A.004(b)(2) as extending to the entire action absent some jurisdictional limitation or exception, none of which are present in this case.

The motion for remand is denied.