Risk Update

Judicial Judgements — Romantic Relationship Matter Escalates, Judicial Recusal News

Judge Recuses Herself From Antitrust Case Against Top Colleges” —

  • “A federal judge has recused herself from a financial aid conspiracy case against 40 private colleges, saying she and her family members are ‘involved with one or more of the university defendants.'”
  • “Judge Sharon Johnson Coleman of the US District Court for the Northern District of Illinois on Oct. 18 filed a request for reassignment in the case, which accuses the College Board and 40 private universities of engaging in a scheme tied to financial aid that violates US antitrust law. The case has been reassigned to Judge Sara L. Ellis.”
  • “Judge Andrea R. Wood of the US District Court for the Northern District of Illinois recused herself last month from a settled antitrust class action brought by homeowners over realtor commission payments, citing the spouse of a distant relative who is a partner in a law firm representing one of the defendants.”
  • “In April, Judge Michael Farbiarz recused himself from the Justice Department’s antitrust suit against Apple Inc. citing a rule barring federal judges from overseeing cases in which their impartiality ‘might reasonably be questioned.'”
  • “Federal law requires judges to disqualify themselves from cases when they have a conflict of interest, such as appearance of impartiality, actual bias, or personal knowledge of disputed evidentiary facts.”

DOJ Seeks Jackson Walker’s Partnership Agreement in Ethics Probe” —

  • “Jackson Walker LLP should be forced to hand over its partnership agreement as part of a probe into whether the firm should’ve disclosed a relationship between a bankruptcy judge and one of its attorneys, a Justice Department unit said.”
  • “The agreement would reveal whether the Texas firm’s partners could have removed former firm partner Elizabeth Freeman after they learned of her relationship with ex-judge David R. Jones, the Justice Department’s bankruptcy monitor, the US Trustee, told the US Bankruptcy Court for the Southern District of Texas on Monday.”
  • “‘Jackson Walker’s Partnership Agreement represents potentially the only contractual basis for what its partners, including Freeman and management, legally bound themselves to do,’ the US Trustee said in a motion to compel.”
  • “The request was made as part of the US Trustee’s challenge to as much as $23 million in fees Jackson Walker collected in cases involving Jones while it employed Freeman. The US Trustee has said Jackson Walker should have disclosed the relationship.”
  • “The firm said it retroactively reduced Freeman’s compensation by almost $79,000 for 2021 through November 2022—the share of partnership profits from cases she worked on in front of Jones, according to court documents filed Monday.”
  • “The partnership agreement could reveal whether Jackson Walker took inadequate steps to remove Freeman from the firm or cases Jones worked on, or if Jackson Walker ‘waited months for Freeman to voluntarily act,’ the US Trustee said.”
  • “The agreement would disclose what duties Freeman and firm management had, whether they failed to follow those rules, and whether and how Freeman could have been let go for cause, the motion said.”
  • “If Freeman had authority to act on behalf of the whole firm, that could show that her actions should be imputed to all of Jackson Walker, the US Trustee said. The agreement would also allow the US Trustee to determine whether Jackson Walker ‘knowingly continued to accept the financial benefit of cases heard or mediated by Jones,’ the US Trustee said.”
    “Jackson Walker has said the US Trustee should be able to find the answers it seeks in depositions it’s taken.”
  • “Attorneys for Jackson Walker didn’t immediately respond to a request for comment Tuesday. The firm has previously said Freeman lied to it about the full extent of her relationship with Jones, and has maintained that it didn’t violate any ethical rules or disclosure obligations.”
  • “The US Trustee has said some Jackson Walker employees made efforts to seal documents alleging a relationship and that at least three employees knew about the relationship.”

Pre-Bankruptcy Texts Deepen Ethical Concerns About Ex-Judge” —

  • “Recently revealed texts highlighting a Houston attorney’s apparent interactions with a former bankruptcy judge whom she was dating have added more fuel to the fire amid allegations that their relationship led to improper communications about cases he oversaw.”
  • “The texts offer a peek at how Elizabeth Freeman, a partner at Jackson Walker LLP at the time, characterized to her firm colleague her discussions of Chapter 11 cases with David R. Jones, her boyfriend and then-judge for the US Bankruptcy Court for the Southern District of Texas.”
  • “And while they don’t necessarily confirm improper, ‘ex parte’ communications, the texts do raise fresh concerns over whether he should’ve recused himself from cases involving Jackson Walker, as well as the ability of distressed corporations and their advisers to hand-pick their bankruptcy judge to secure the outcomes they want.”
  • “Freeman’s texts reveal planning over filing JCPenney’s sprawling Chapter 11 case in Jones’ court. On May 12, 2020, three days before the bankruptcy filing of the storied American retailer, Freeman told her Jackson Walker colleague that she had ‘talked to Jones’ and ‘he’s got us,’ according to texts displayed in records viewed by Bloomberg Law.”
  • “Freeman told her colleague that there were ‘too many fights’ in the JCPenney case, where Jackson Walker served as local counsel to the company’s lead bankruptcy lawyers at Kirkland & Ellis LLP, and that it couldn’t afford a ‘process hawk,’ referring to Jones’ judicial colleague and friend, Judge Marvin Isgur.”
    Impartial”
  • “The texts highlight ongoing questions over how Jones could have been ‘impartial,’ said Judith Fitzgerald, an attorney with Tucker Arensberg PC and a former bankruptcy judge.”
  • “‘This type of behind-the-scenes conduct is an embarrassment to, if not an indictment of, a judicial system which promises litigants access to justice and adjudication by fair and impartial judges,’ Fitzgerald said. ‘A courtroom should present a level playing field for the issues raised, not one that pre-handicaps the outcome.'”
  • “Bankruptcy rules require attorneys to refrain from communications with the court concerning matters affecting a particular case, said bankruptcy expert Lynn LoPucki, a professor at the University of Florida Levin College of Law and longtime critic of forum shopping. If Freeman talked to Jones about the JCPenney case, she violated the rule, he said.”
  • “The texts don’t seem to pass ‘the smell test,’ said Brya Keilson, a Morris James LLP partner and former trial attorney for the Office of the US Trustee. But she cautioned that it’s not clear from the texts whether others also talked to Jones before the case.”
  • “‘It’s not obviously: ‘Yes, this is ex parte, this is a conversation between the judge and only one party,’’ Keilson said. ‘But it certainly could be, and that’s never a good position in to be in to be discussing something that could be taken as that.'”
  • “Georgetown University law professor Adam J. Levitin said the pre-bankruptcy communications between Freeman and Jones aren’t ex parte communications. There was no bankruptcy filed, so there was no case with parties, he said.”
  • “And while the texts seem to counter Jones’ claims that they didn’t discuss their mutual cases, the level of harm isn’t fully clear.”
  • “In a court hearing over the US Trustee’s motions to disgorge Jackson Walker’s fees in August, Jones’ attorney, Benjamin I. Finestone of Quinn Emanuel Urquhart & Sullivan LLP, said there were no ex parte communications about the substance of any case Jones was involved in.”
  • “But formal labels don’t matter as much as the ethics do, Levitin said. The communications violate the Code of Conduct for United States Judges, which says judges can’t consider communications concerning an ‘impending matter that are made outside the presence of the parties or their lawyers,’ Levitin said.”
  • “‘The Freeman texts illustrate that debtors don’t pick judges because of their skill or experience,’ Levitin said. ‘They pick them because they anticipate favorable treatment.'”

For even more, see: “Jackson Walker Lawyer Texts Reveal Anger Over Judge Romance