The U.S. Trustee’s Office has told Chief U.S. District Judge Alia Moses that Jackson Walker “has no substantive right to a jury trial” in the case where it is trying to claw back millions in fees awarded to the law firm in 33 cases where former bankruptcy judge David Jones served as a mediator or judge.
The U.S. Trustee, often referred to as the watchdog of the bankruptcy system, argued in an eight-page response filed Wednesday that the Seventh Amendment right to a jury trial applies only to actions that are “legal in nature” and to determine whether that bar is met, a court has to “consider the cause of action and the remedy it provides.”
“Both factors compel the conclusion that the U.S. Trustee’s Rule 60 motions and fee application objections are equitable, not legal, in nature,” the response argues, explaining that the U.S. Trustee’s motion to vacate bankruptcy court orders approving fee applications “are equitable in nature because they can only arise in a bankruptcy case and because they invoke only substantive rights provided by the Bankruptcy Code.”
“Second, the remedy here is also equitable. An action to compel the return of fees under section 328 and to impose civil sanctions for a professional’s violation of the Bankruptcy Code’s employment and compensation standards as well as the professionals’ failure to disclose connections under Federal Rule of Bankruptcy Procedure 2014 derives from a court’s residual equitable power to ‘issue any order . . . that is necessary or appropriate to carry out’ a provision of the Code. 11 U.S.C. § 105(a),” the response argues.
Jones resigned the bench after a secret relationship with a former Jackson Walker bankruptcy partner, Elizabeth Freeman, was publicly reported. Freeman, who practiced at Jackson Walker while many of the 33 cases were being decided, left the firm before news of the relationship broke.
Jackson Walker also waived its right to a jury trial, the U.S. Trustee told Chief Judge Moses in its response, in part based on statements the firm’s lawyers made to U.S. District Judge Amy M. Baggio in Oregon.
In the Oregon case, the trustee was seeking communications between Jackson Walker and its hired ethics experts at Holland & Knight regarding the Jones-Freeman relationship. Quoting from a transcript of a proceeding before Judge Baggio, the response argues that Jackson Walker said the fee case would not be tried to a jury.
The excerpt reads:
So we think one of the main protections within the case law and the rule are to prevent confusion by the factfinder. And in this case, I want the Court aware that these cases will be tried to the court. These will not be jury trials. So it’s not going to – we will have a sophisticated factfinder who will make determinations as to what comes into evidence and what doesn’t come into evidence.
“Open-court waivers of jury trial claims are binding,” the trustee argued in the response. “Even if JW had not waived any theoretical right it may have to a jury trial when it consented to the bankruptcy court’s entry of final orders in this matter, JW affirmatively and unequivocally waived in open court any theoretical right it may have to a jury trial.”
Judge Moses had given Jackson Walker and the trustee until July 15 to inform her how mediation attempts were going in the case. In a brief, they informed the court attempts had failed.
Judge Moses’ order with the July 15 deadline came after counsel for Jackson Walker filed a demand for a jury trial on July 3.
“Jackson Walker makes this request for a jury trial in response to the Court Clerk’s notice that if the case is not settled by July 15, 2025, the Court intends to set it for a jury trial,” the filing reads. “Jackson Walker intends to continue mediation and hopes the case can be settled within the deadline set by the Court. This request for a jury trial is intended not to replace mediation but only to inform the Court of Jackson Walker’s desire for a jury trial if mediation is not successful.”
In a final argument, the trustee argued in Wednesday’s response that Jackson Walker missed the deadline to request a jury trial. Because the firm filed its sur-replies in the fee dispute cases on Aug. 12, 2024, it had to request a jury trial by Aug. 26, 2024.
“The U.S. Trustee respectfully requests that JW’s Jury Demand be stricken or denied,” the trustee argued. “In the alternative, the U.S. Trustee respectfully requests a hearing or further opportunity to be heard on JW’s claimed entitlement to a jury trial for any issue in this case.”
Jackson Walker is represented in the litigation by Jason Boland, William Greendyke, Julie Goodrich Harrison and Maria Mokrzycka of Norton Rose Fulbright and Rusty Hardin, Leah Graham and Emily Smith of Rusty Hardin & Associates.
The U.S. Trustee is represented by Millie Aponte Sall, Vianey Garza and Alicia Barcomb.
The case is In re: Professional Fee Matters Concerning the Jackson Walker Law Firm, Case No. 4:23-cv-4787-AM.