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Secret Courthouse Romance, Ethics Investigations, Tens of Millions in Legal Fees: The SDTX Bankruptcy Scandal One Year Later

Houston Bankruptcy Judge David Jones’ voice was filled with emotion one year ago today in an interview with The Texas Lawbook. “I don’t know. I don’t know. I don’t know what is going to happen next. I just don’t know. I guess I have to resign.”

The Fifth Circuit had just published notice that it was investigating possible misconduct by Judge Jones over allegations that he had been involved in a multiyear secret romance with a former bankruptcy partner at Jackson Walker. The firm had been paid more than $20 million — fees often approved by Judge Jones — for its role in dozens of high-profile bankruptcies in which Jones served as judge or mediator. Jones officially resigned Oct. 15, 2023. The 365 days since have been pure chaos in the Houston bankruptcy courts, which is one of the three busiest courts in the nation for business bankruptcies.

“The whole thing is a mess, a complete fiasco,” said former UNT Dallas law dean Royal Furgeson. In a first-ever detailed timeline of the events of the past year and several years prior, The Lawbook documents a scandal about romance, secrecy, tens of millions of dollars in legal fees and ethical lapses that have engulfed the bankruptcy courts in Houston.

SDTX Bankruptcy Court Scandal Timeline

2011: David Jones leaves Houston law firm Porter Hedges after 19 years as a corporate bankruptcy lawyer to become a bankruptcy judge in the Southern District of Texas. Jones later hires

CDT Roundup: 17 Deals, 12 Firms, 150 Lawyers, $8.4B

Chevron’s announcement last week of a $6.5 billion divestiture of a couple of Canadian upstream interests reminded us that the California company is on the verge of relocating its C-Suite to Houston. But included, along with the household furniture and company file cabinets, is an ongoing beef with their new Texas neighbors, Exxon Mobil, over Chevron’s proposed $53 billion merger with Hess Corp. The CDT Roundup catches up with recent developments regarding the disputed merger, along with the usual list of firms and lawyers behind last week’s Texas-related transactions.

Prosecutors Must Narrow Charges in Criminal Suit Over West Texas Hydrogen Sulfide Death After Successful ‘Multiplicity’ Challenge

Aghorn Operating had argued the government was charging it three times for the same death, while prosecutors argued that each count related to an alleged violation of a different environmental law and that forcing it to narrow the charges would cut against the legislative intent and “undermine the deterrent value of the OSH Act.”

U.S. District Judge David Counts became the first federal judge in history to interpret the contours of a multiplicity challenge — that is, an argument that the Department of Justice is impermissibly spreading a single offense over several counts — related to alleged violations of the Occupational Safety and Health Act resulting in an employee’s death.

Lawyer for Foster Care Children Will Appeal Fifth Circuit Rejection

The lead lawyer for tens of thousands of foster care children in Texas said Sunday that he will appeal a decision handed down Friday by a federal appeals court removing the federal judge who has overseen the litigation for 13 years and whose orders have forced Texas officials to greatly improve how they investigate accusations of abuse in the state’s foster care system.

Houston trial lawyer Paul Yetter told The Texas Lawbook in an interview Sunday that he believes the opinion by the three-judge panel of the U.S. Court of Appeals for the Fifth Circuit focuses too much on procedure and not enough on specific evidence involving dozens of mentally challenged and disabled children in the foster care system who remain in serious danger because of the lack of attention from Texas officials.

Fifth Circuit Reverses Sanctions Against Texas in Foster Care Case, Removes Trial Judge

A three-judge panel of the U.S. Court of Appeals for the Fifth Circuit in a decision issued late Friday blasted the federal trial judge overseeing the litigation over the allegedly disgraceful conditions of the Texas foster care system for telling lawyers for the state of Texas that “doesn’t hurt” for state officials to “go over and above the minimum standards for protecting Texas children. The federal appeals court panel said that U.S. District Judge Janis Jack has made courtroom remarks that “implied bias” that “raise serious questions concerning … the appearance of justice.”

P.S. — ADL Honors Reasoners, Dallas Hispanic Bar Gala, Inns of Court Recognizes Gray Reed Partner

Two years ago, The Texas Lawbook created the full-time pro bono, public service and diversity writer position with a carrot-and-stick approach: Highlight the successes of Texas lawyers in these three critical areas to hopefully encourage others to do the same and to provide data and analysis about where lawyers and firms are falling short. To be sure, the sticks are being sharpened to address failures. But today, we have three successes to highlight.

Truelove: The Last Name Attached to Some of Marshall’s Biggest Verdicts

From the $663 million False Claims Act judgment against Trinity Industries in 2014 to this year’s $1.4 billion settlement on behalf of the state of Texas against Facebook parent Meta, one name stands out: Truelove. Jennifer and Kurt Truelove have been involved in some of the biggest verdicts and settlements to come out of Marshall, the East Texas town famous for its patent litigation docket.

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