Only a handful of people know what happened at a show-cause hearing in Houston federal court Wednesday morning in the litigation to determine whether Jackson Walker should be forced to return about $13 million in legal fees earned in bankruptcy cases before former Judge David Jones.
Moments after Southern District of Texas Chief Bankruptcy Judge Eduardo Rodriguez had counsel for the parties make announcements for the record, he addressed those present at the 8:30 a.m. hearing.
“A portion of this hearing will be very sensitive,” he said. “So there will be a moment when I seal a portion of this proceeding.”
Quinn Emanuel partner Benjamin I. Finestone, who represents Jones, spoke first and told the court he had met with lawyers from Jackson Walker and Rusty Hardin’s firm, which is representing Jackson Walker in this case.
The judge immediately interjected, just minutes after the hearing began, and sealed the courtroom.
The courtroom stayed sealed for two hours while counsel for Jackson Walker and counsel for former Judge Jones faced Judge Rodriguez, who scheduled the hearing after the U.S. Trustee’s Office informed him the parties had apparently gone behind his back and violated a prior order by conducting a private interview with the former judge about his secret romantic relationship with former Jackson Walker partner Elizabeth Freeman.
Members of the media, court observers, counsel for plan administrator for JC Penney and even lawyers for the U.S. trustee’s office were forced to wait in the hallway before being allowed back inside the fourth-floor courtroom in the Bob Casey Federal Courthouse.
Later, during an unsealed portion of the hearing, Laura D. Steele, representing the U.S. Trustee, voiced objections to the decision to conduct the show cause hearing in secret.
“The U.S. trustee is the watchdog of bankruptcy proceedings,” she said. “And the watchdog can’t watch if the proceedings are sealed.”
Chief Judge Rodriguez said he understood her concern and planned to make an expedited decision on the request for a transcript of the sealed hearing, including quickly deciding whether to unseal or partially unseal the transcript and audio of the hearing. The judge has previously raised concerns that some lines of questioning of current and past court officials, including Judge Jones, might violate federal rules of the judiciary that require decision-making be confidential.
“I’m pretty confident most of it should be unsealed, as I sit here today,” the judge said, explaining he could change his mind after further reflection.
“I didn’t know what was going to come out at this hearing … it’s very delicate … that’s why I sealed it,” Chief Judge Rodriguez continued. “And I believe I have broad discretion to do that.”
The U.S. Trustee’s litigation seeking to disgorge Jackson Walker of its legal fees paid in two-dozen bankruptcy cases between 2019 and 2023 is just one of a handful of cases launched after it was disclosed in October 2023 that former Judge Jones, who was the busiest bankruptcy judge in the U.S. handling high-dollar, complex business bankruptcies, was involved in the romantic relationship with Freeman, who was a lawyer involved in nearly all of those matters. Two federal racketeering lawsuits have also been filed and are pending. And Bloomberg Law has reported that the U.S. Justice Department is conducting a separate criminal inquiry into the matter.
The courtroom was unsealed, and everyone was allowed back in around 10:35 a.m., only for the court to promptly order a brief recess until 10:50 a.m.
Once back in session, attorney Stephen Lemmon of Streusand Landon Ozburn & Lemmon in Austin, who represents the plan administrator for JC Penney, took to the lectern to argue why the court should allow him to subpoena AT&T and T-Mobile for four years of phone and text log records from former Judge Jones’ government-issued cell phone.
Lemmon reiterated to Chief Judge Rodriguez multiple times that he wasn’t seeking — and did not think the phone companies could even provide — the substance of the texts, only the log of when calls or texts were sent and received and the phone numbers involved. He argued that the request does not implicate “judicial policy,” which is a set of rules governing responses to subpoenas issued to current or former judges or their staff.
Chief Judge Rodriguez seemed unconvinced that Lemmon could know whether judicial policy was implicated without first viewing the information he is seeking. Lemmon argued the Eleventh Circuit and the U.S. Supreme Court have issued opinions supporting his request for the logs.
Chief Judge Rodriguez asked whether Lemmon was seeking within his request calls between former Judge Jones and himself or other federal judges. Lemmon said he wasn’t looking for the “substance” of any calls or messages, only when and between whom they took place. In court documents, there have been allegations that Judge Jones and Freeman secretly texted each other even as court hearings involving them both were taking place.
Could the request be narrowed, the chief judge asked.
“You’re asking for every number associated with this phone,” Chief Judge Rodriguez said. “Why do you need so much information? … How is that relevant at all?”
Lemmon said he believes that data “is and will be relevant.”
Finestone, who moved to quash the request, chimed in to say Lemmon should look elsewhere for that information.
“I can say, on behalf of my client, there were no ex parte communications with any attorney about the substance of any case,” he said, taking time to chastise Lemmon for requesting the court approve a subpoena based on “rank rumors.”
Lemmon said he felt “silly investigating rumors,” but that if no ex parte communications occurred, that should be established by evidence.
“And the best way to establish that is by looking at the phone log,” he said.
Chief Judge Rodriguez said the request was too broad and granted the motion to quash, but told Lemmon he could bring a more tailored request in the future.
At 11:25 a.m., right after that ruling, former Judge Jones, who had been sitting in the well of the courtroom in a chair along the wall that separates attorneys from observers, stood and asked Chief Judge Rodriguez if he could be excused.
The judge said that was fine, and Jones left.
Chief Judge Rodriguez then began questioning counsel for the U.S. Trustee’s Office about a deposition and interview they conducted with Freeman on July 30. He wanted to know what topics were covered and whether any questions were off limits.
Steele began explaining how what the Trustee’s Office did with Freeman was different than what Jackson Walker did by interviewing former Judge Jones.
“We never concealed the fact that the interview took place,” she said, explaining the office had filed notice of its intent to depose her and disclosed that at a hearing before Chief Judge Rodriguez on July 29.
Steele said they questioned Freeman about her relationship with Jones, her role at Jackson Walker, and about what cases she took and why.
“You thought it was OK to take her deposition?” Chief Judge Rodriguez asked.
Steele said yes, noting discovery deadlines, and the fact that the Trustee’s Office provided notice that it was occurring.
Steele explained that they had intended to record the entire six-hour interview with Freeman but later realized they had only recorded the first three hours.
That news seemingly did not sit well with Chief Judge Rodriguez, who ordered the Trustee’s Office to file under seal all notes taken during the unrecorded three-hour portion of the interview.
Tom Kirkendall, who is representing Freeman, then addressed the court, explaining he and his client agreed to the interview “in a collaborative effort to move the case along.” He said there were no restrictions on the questions that could be asked and that the interview was wide ranging.
After Freeman’s six-hour interview concluded, Kirkendall said he sat for another hour and spoke with the Trustee’s Office and part of the discussion was about a phone call between Kirkendall and former Judge Jones.
Steele objected to the court’s demand to hand over notes from the interview, arguing they constituted protected work product. She said it was “beyond the pale.”
“To require us to turn over any work product is out of bounds,” she said.
Chief Judge Rodriguez argued that the notes from the interview with Freeman “directly implicates” judicial policy. He also initially said he wanted any notes about the phone call between Jones and Kirkendall but later said he determined the judicial policy isn’t implicated and that he wouldn’t require those notes to be filed under seal.