Kirkland & Ellis lawyers had no knowledge that Houston Bankruptcy Judge David Jones was having a secret romantic affair with a former partner at a Texas law firm that served as its co-counsel in dozens of corporate restructurings and that Kirkland cannot be held accountable for the ethical lapses of the judge in those cases, according to court documents filed Friday.
In a 61-page filing in the U.S. District Court for the Southern District of Texas, lawyers for Kirkland argue that the Chicago-founded law firm should be dismissed from a federal racketeering lawsuit that accuses Kirkland and its co-counsel at Dallas-based Jackson Walker of exploiting the relationship between Judge Jones and former Jackson Walker partner Elizabeth Freeman.
In a separate filing, Kirkland asked the federal court to issue sanctions against the plaintiff, Michael D. Van Deelen, who brought the lawsuit and the lawyers at the Bandas Law Firm who represent him.
“The national bankruptcy landscape was indisputably altered when former Chief Bankruptcy Judge David Jones admitted to concealing a long-term romantic relationship with Jackson Walker partner Elizabeth Freeman,” Kirkland states in its motion. “But whatever the alleged conduct of Jones, Freeman, and Jackson Walker, it has nothing to do with Kirkland & Ellis.”
In October, Van Dellen, a former shareholder who objected to the 2020 bankruptcy proceedings and restructuring plan involving McDermott International, which was approved by Judge Jones, sued the judge and Freeman, who was then a partner at Jackson Walker, for bankruptcy fraud after learning that they were involved in a romantic relationship and secretly living together.
The U.S. Court of Appeals for the Fifth Circuit opened an investigation, which resulted in Judge Jones resigning. Fifth Circuit Chief Judge Priscilla Richman ended the inquiry without making any findings.
In January, Van Deelen amended his lawsuit to include Jackson Walker and Kirkland as defendants, saying their lawyers knew about the relationship and “deliberately concealed” it because the relationship “influenced the orders issued in the bankruptcy proceedings for the benefit of the [law firms].” The lawsuit claims that lawyers for Kirkland and Jackson Walker quietly touted their secret connections to clients as an advantage in receiving favorable treatment by Judge Jones.
Lawyers for Van Deelen argued that Kirkland should be forced to forfeit $162 million in legal fees its lawyers were paid in the 26 bankruptcy cases they handled before Judge Jones from 2019 to 2022.
U.S. District Judge Alia Moses has been assigned the case.
The filings Friday and during the past three weeks also revealed all of the parties have beefed up their legal teams.
Kirkland’s motion to dismiss was filed by prominent Houston trial lawyer David Beck of Beck Redden and Los Angeles trial lawyer John Hueston of Hueston Hennigan.
On March 8, Jackson Walker filed noticed that it hired high-profile Houston trial lawyer Rusty Hardin to lead its defense.
Judge Jones, who has argued that he is covered by judicial immunity, has hired McKool Smith principals John Sparacino and Gary Cruciani. Freeman is represented by Houston lawyer Tom Kirkendall.
In its two court filings, Kirkland said its decision to hire Jackson Walker as local counsel in its bankruptcy restructuring cases filed in Texas is “straightforward.”
“The firm not only had substantial on-the-ground resources in Houston, but also included in its partnership the former clerks of both Judge [Marvin] Isgur and former-Judge Jones,” Kirkland’s brief states. “All reliable evidence, including admissions from each of Kirkland’s purported ‘coconspirators,’ has made clear that Kirkland was lied to about the existence and extent of the improper relationship — just like everyone else.”
Jackson Walker has not filed any motions in the federal civil litigation, but it stated in briefs in the bankruptcy cases being challenged that Freeman lied to firm leaders about her relationship with Judge Jones.
Kirkland also argues that it was not responsible for the actions of Jackson Walker.
“Contrary to plaintiff’s repeated assertions, the bankruptcy rules did not require Kirkland to disclose potential conflicts of ‘its local counsel’s partner,’” the brief states. “Said another way, plaintiff’s allegations establish at most that Kirkland mistakenly presumed that a federal judge was complying with his statutory and ethical obligations. While this assumption was, in hindsight, mistaken, the notion that a party may assume a federal judge is acting properly — and certainly is not required to assume that a federal judge is acting improperly — is well-ingrained in the law.”
The case is Michael Van Deelen v. David R. Jones, SDTX, No. 4:23-cv-3729.