On February 22, 2023, the Supreme Court of Texas will hear oral arguments in a Multi-District Litigation case. Certain indirect investors in a petrochemical company have requested dismissal of suits filed against them by persons alleging injuries from an explosion at a facility owned by the company.

Investors Allegedly Responsible
The investors are private equity entities. The allegations, taken as true for purposes of the request for dismissal, include that the investors are indirect investors of the company, appointed two of five members of the company’s board, provided input and expertise to the company, and required the investors’ preapproval of expenses of $5 million or more. The plaintiffs allege that the investors failed to approve an extensive maintenance procedure (a “turnaround”) that would have prevented the explosion.

Texas Law Treats Investors as Separate Entities
The investors argue that the company and the investors are separate legal entities and that protecting investors from liability is a bedrock principle of Texas law. Indeed, even when companies have centralized control, mutual purposes, and shared finances, Texas law treats them as separate legal entities for purposes of determining liability.

The investors argue that none of their alleged actions were inconsistent with industry standard, and they should not be compelled to be parties to 2,168 cases with over 7,000 plaintiffs represented by 57 different law firms.

For access to the briefs (including several amicus curiae briefs) https://search.txcourts.gov/Case.aspx?cn=22-0227&coa=cossup