Kirkland & Ellis LLP, Jackson Walker LLP, and former bankruptcy judge David R. Jones have successfully moved to dismiss a lawsuit accusing them of conspiring to conceal Jones’s romantic relationship with attorney Elizabeth Freeman. The decision was rendered on Friday by Chief District Judge Alia Moses of the U.S. District Court for the Western District of Texas.
Judge Moses, though dismissing the case, expressed her dissatisfaction with the outcome, noting the court’s need to avoid manipulating legal frameworks to resolve difficult cases. The ruling represents a significant victory for the firms, Jones, and Freeman, who have been at the center of a scandal that has shaken the bankruptcy community since October.
In her ruling, Moses acknowledged that while the dismissal does not absolve Jones of his ethical lapses, it does address the legal deficiencies in the plaintiff’s claims. Jones had been criticized for failing to recuse himself from cases involving Freeman, a situation that presented an obvious appearance of impropriety.
The lawsuit, initiated by Michael Van Deelen, a former shareholder affected by a contentious Chapter 11 case overseen by Jones, alleged that Jones had concealed his long-term relationship with Freeman while making rulings on cases involving her firm. The suit also led to the revelation of this previously hidden relationship.
Van Deelen’s complaint expanded in January to include Freeman, Kirkland, and Jackson Walker, accusing them of bankruptcy fraud, honest services fraud, mail and wire fraud, and obstruction of justice. He alleged that the firms had deliberately failed to disclose the relationship to gain favorable rulings in bankruptcy proceedings.
Freeman and the firms have denied any wrongdoing. Freeman stated that her relationship with Jones had no bearing on the damages Van Deelen suffered. Kirkland and Jackson Walker maintained that they were unaware of the full extent of the relationship and had no involvement in any misconduct.
Moses also rejected Kirkland’s request to sanction Van Deelen and his legal team, determining that the lawsuit was filed in good faith. The ongoing litigation continues to explore who at Jackson Walker was aware of the relationship and when.
In addition to the lawsuit dismissal, the Justice Department’s bankruptcy monitor is still pursuing efforts to recover at least $13 million in fees from Jackson Walker related to undisclosed conflicts of interest.
The legal teams involved are: Beck Redden LLP and Hueston Hennigan LLP for Kirkland; Rusty Hardin & Associates LLP for Jackson Walker; Bandas Law Firm PC for Van Deelen; McKool Smith PC for Jones; and the Law Office of Tom Kirkendall for Freeman.