Jackson Walker Wins Bid to Question Government Bankruptcy Lawyer

The Justice Department’s bankruptcy division lost a fight to stop Jackson Walker LLP from deposing its regional chief and several other ranking government attorneys about a relationship between a former judge and attorney.

The Texas law firm can depose Kevin M. Epstein, who leads the US Trustee’s Texas offices, as well as several other high-ranking members of the regional offices about whether they knew of the romance, Judge Eduardo V. Rodriguez of the US Bankruptcy Court for the Southern District of Texas said in an opinion Wednesday.

The relationship between former Houston bankruptcy judge David R. Jones and Elizabeth Freeman, who was a partner at Jackson Walker until late 2022, became public last year.

Rodriguez, who said the issue was a matter of first impression before his court, denied a motion to quash Jackson Walker’s subpoenas to the US Trustee, which serves as the Justice Department’s bankruptcy watchdog.

Information the firm is able to pull from the government attorneys could help Jackson Walker build a legal defense against the US Trustee’s litigation, in which it seeks to disgorge as much as $23 million in fees the firm earned in cases involving Jones while it employed Freeman.

The revelation of the romance led to Jones’ resignation and litigation entangling him, Jackson Walker, and Freeman. A federal criminal investigation is also ongoing.

The US Trustee has accused Jackson Walker of breaching its ethical duties by failing to disclose the relationship.

The opinion will allow Esptein to be deposed, as well as Assistant US Trustee Millie Sall, trial attorneys Hector Duran and Stephen Statham, and Henry Hobbs, a former US Trustee for the Austin Texas office and former acting US Trustee for the region.

The Texas law firm said it should be able to question whether Epstein or any of his office’s attorneys knew about the romance before Jones admitted to it last year, or if they received any communications about it.

The US Trustee argued that the subpoena should be quashed under what’s known as the “apex doctrine,” which requires extraordinary circumstances to justify the deposition of high-ranking government officials. Rodriguez rejected that argument, noting that there are at least 19 other employees at the US Trustee’s level.

The testimony is also justified so Jackson Walker can determine whether the US Trustee had knowledge of the relationship and failed to disclose it as a potential defense, Rodriguez said.

“While the United States Trustee certainly has an important job with significant responsibility, holding a government position with significant responsibility alone is not the standard to employ the exception to the general rule that parties are entitled to depositions,” Rodriguez said.

The US Trustee has said none of its personnel knew of the relationship, and even if they did it wouldn’t absolve Jackson Walkers actions.

A Justice Department spokesman declined to comment Thursday.

Jackson Walker is represented by Rusty Hardin & Associates LLP and Norton Rose Fulbright US LLP. Jones is represented by Quinn Emanuel Urquhart & Sullivan LLP. Freeman is represented by Law Office of Tom Kirkendall.

The case is Professional Fee Matters Concerning the Jackson Walker Law Firm, Bankr. S.D. Tex., No. 23-00645, opinion 11/13/24.