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Judge Schedules Deposition of Ex-Judge Jones, Sorts Out Discovery Dispute Between Jackson Walker, U.S. Trustee

August 27, 2024 Michelle Casady

The chief U.S. bankruptcy judge for the Southern District of Texas, Eduardo Rodriguez, will preside over the depositions of former bankruptcy Judge David Jones and his former case manager in a Houston courtroom next month.

During a hearing Tuesday at the Bob Casey Federal Courthouse, Chief Judge Rodriguez brushed aside scheduling concerns the parties raised and ordered that Albert Alonzo, who served as case manager to Jones for more than a decade, be deposed on Sept. 18. Former Judge Jones, who resigned his office after public revelations that he had a secret romantic relationship with a Jackson Walker bankruptcy partner, will be deposed in the same courtroom, under the supervision of Chief Judge Rodriguez, the following day.

“This is taking priority over everything else,” Chief Judge Rodriguez told those present for the hearing in the litigation to determine whether Jackson Walker must give back millions it earned in fees in bankruptcy cases before former Judge Jones.

On Saturday, Chief Judge Rodriguez determined that Jones and his former case manager can be questioned under oath about Jones’ relationship with Elizabeth Freeman, who formerly was a partner at Jackson Walker but was asked to leave the partnership after confessing to the firm in 2021 that the relationship existed.

Most of Tuesday’s hearing was spent resolving discovery disputes between Jackson Walker and the U.S. Trustee, who is trying to claw back more than $13 million in fees paid to the law firm in cases where Jones was the judge or mediator and Freeman was a lawyer. The U.S. Trustee is an arm of the Department of Justice and acts as the watchdog over bankruptcy matters. The office has said it is investigating more than 30 bankruptcy cases that may have been “affected” by the Jones-Freeman relationship, including those involving Neiman Marcus, Denbury Holdings, J.C. Penney, Chesapeake Energy, McDermott International and EXCO Resources.

As Julie Harrison of Norton Rose Fulbright, who represents Jackson Walker, told the court, the U.S. Trustee’s office “really seems to view the discovery process as a one-way street.”

Harrison raised eight instances where she alleged the U.S. Trustee had either not responded to discovery requests — interrogatories and requests for production — or had lodged objections to the requests that the Jackson Walker legal team didn’t understand or disagreed with.

“The big picture issue is an overall lack of information from the U.S. Trustee,” she said, referencing the Region 7 Trustee, Kevin M. Epstein. “In essence, he wants everyone to play by the rules except for himself.”

The objective of the requests from Jackson Walker is to suss out whether the U.S. Trustee’s Office had any knowledge about the secret romantic relationship between Freeman and Jones before The Wall Street Journal publicly reported it in October 2023.

That knowledge is relevant, Harrison explained, because if the U.S. Trustee knew about the relationship and still approved the fees paid out to Jackson Walker, the office has no standing to now object to those payments, or to attempt to claw them back.

Harrison accused the U.S. Trustee of making arguments that transparency in the case is required to maintain the public’s trust in the court system while simultaneously obfuscating Jackson Walker’s attempts to get to the truth of the matter.

“So to the extent he knew about the relationship but sat by and did nothing … Jackson Walker is entitled to discover those facts,” she told the court.  

The Jackson Walker legal team has reason to believe that some employees of the U.S. Trustee’s Office interacted with Freeman and former Judge Jones socially, over drinks, at barbecues and at other gatherings among members of the Houston bankruptcy community, Harrison explained.

The U.S. Trustee’s investigation is now targeting members of those social circles, Harrison said.

Among the information Jackson Walker is seeking from the U.S. Trustee is communications that would show there was knowledge of the following: the relationship between Jones and Freeman, that they lived together, that they owned property together, and the reasons for their respective divorces. 

Laura D. Steele, who represents the U.S. Trustee, told Chief Judge Rodriguez during the hearing that Jackson Walker is attempting to draw attention away from the fact that for years the firm failed to make disclosures about the relationship to the appropriate authorities by turning the litigation into an investigation of the U.S. Trustee.

“Instead of picking up the phone, Jackson Walker went down a path of concealment,” she said, urging the court to agree the information Jackson Walker seeks is not relevant to this litigation.

“It is Jackson Walker who had the duty of candor,” she said. “Jackson Walker chose silence, and it chose silence in the face of its duty to speak.”

Steele argued what’s relevant in this case is Jackson Walker’s conduct and its failure to disclose the relationship, and she said the U.S. Trustee had no “actual knowledge” of the relationship because of Jackson Walker’s concealment.

And because Jackson Walker has “never alleged” that the U.S. Trustee had actual knowledge of the relationship — and never asserted that as a defense — Steele argued that Chief Judge Rodriguez should not allow the discovery into the U.S. Trustee’s office.

“Discovery must be limited to the actual claims and defenses that are before the court,” she said.

Chief Judge Rodriguez entered a seven-page order at the conclusion of Tuesday’s hearing giving the U.S. Trustee until Sept. 3 to respond to Jackson Walker’s interrogatories and until Sept. 13 to produce documents responsive to the firm’s other discovery requests.

The case number is 23-00645.

Michelle Casady

Michelle Casady is based in Houston and covers litigation and appeals — including trials, breaking news and industry trends — for The Texas Lawbook.

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