A Texas bankruptcy court judge who is a mediator in a lawsuit brought by 900 Virgin Islanders over asbestos injuries when Hess Corp. subsidiary HONX owned the St. Croix refinery, is in a longtime relationship with an attorney who until December worked for the law firm representing HONX.
The Wall Street Journal, in a report on Saturday, said the relationship came to light last week after a plaintiff in another case sued Judge David Jones of the U.S. Bankruptcy Court in Houston, alleging he had a conflict of interest that tainted his rulings while presiding over the 2020 case of offshore-drilling company McDermott International.
In that case, as in the U.S. Virgin Islands asbestos litigation, the local counsel is Jackson Walker LLP, where Jones’ longtime girlfriend, bankruptcy attorney Elizabeth Freeman, worked until leaving in December to start her own firm.
The plaintiff in the McDermott case, Michael Van Deelen, said in his pro se filing that Freeman clerked for Jones for six years before joining Jackson Walker and worked on the McDermott case for its entirety.
Deelen also alleged that on March 6, 2021, he received an anonymous letter via the U.S. mail that “complained of alleged corruption between Defendant Jones, Jackson Walker and Freeman in a scheme in which corporate bankruptcy filers would hire Jackson Walker to represent them and then get favorable treatment from Defendant Jones because of his amorous relationship with Freeman. Defendant Jones subsequently denied that he had a romantic relationship with Freeman.”
Jones had not responded to Deelen’s complaint as of Wednesday, according to the court docket.
The relationship has also prompted a complaint by litigants in bankruptcy settlement talks involving prison health care provider Corizon, according to a report last week by Business Insider.
Jones confirmed the relationship to the Wall Street Journal and told the paper he had no duty to disclose it because while he and Freeman have lived together for years at his Houston home, they are not married, have no communal property, and agreed that she would never appear in his courtroom. (Exhibits in Deelen’s suit show that in 2016, the judge bought the home that Freeman had been living in since 2007 and that they are listed as co-owners of the property assessed at $1.07 million.)
“If for any reason I thought that I should have done something more, I would have done it,” Jones told the Wall Street Journal. “I’m certainly not afraid of my relationship. I just simply think I’m entitled to a certain degree of privacy. I and I alone made the call that so long as she never appeared in front of me, that was sufficient.”
Jackson Walker LLP attorneys declined to comment when contacted Tuesday. The Source also reached out to an attorney for the Official Committee of Unsecured Creditors in the HONX asbestos case but did not receive a response by press time. However, Adam Levitin, a professor at Georgetown University Law Center who focuses on bankruptcy and commercial law, told the Wall Street Journal that if Jones was in a romantic relationship with a lawyer from Jackson Walker, he shouldn’t have heard any bankruptcy cases in which Jackson Walker represented the company.
“It creates an appearance of impropriety and partiality,” Levitin told the newspaper. “A lawyer’s conflicts are imputed to all other attorneys at the firm. She was a partner of the firm. It creates the possibility that a litigant feels that they lost not because of the merits of a case, but because of the relationships the judge has.”
Hess Oil Virgin Islands Corp. (HOVIC), now called HONX, filed for Chapter 11 protection in Houston in April 2022, claiming in court filings that given the number of plaintiffs in the asbestos case, it would take 40 years to litigate each claim in V.I. District Court.
Hess and its subsidiaries ran the Limetree Bay refinery on St. Croix’s south shore from 1965 to 1998 — when its partially owned subsidiary Hovensa was formed — allegedly exposing a generation of Crucians to unchecked toxins in their workplace.
Litigation of the cases has been moving at a snail’s pace since 1997 and 1998 when the first 400 cases were filed by people claiming illness due to asbestos and/or silica dust exposure from the refinery and St. Croix Alumina. In 2013 and 2014 alone, approximately 120 people sued Hess with claims of asbestos exposure during their employment, according to court documents. Over the years, the plaintiffs have been mostly employees of the Hess refinery, family members or people who lived in the vicinity.
Some of the plaintiffs have died before giving depositions and others have not been located because of the passage of time, slowing down the process. That prompted the V.I. Legislature to pass a law in September 2021 to grant seniors and the terminally ill preference in civil actions.
The Official Committee of Unsecured Creditors — seeking last year to have the case dismissed and the asbestos litigation heard outside of bankruptcy court — has alleged that HONX is just a hollow shell of a company that was revived to shield Hess Corp’s $37 billion in assets against the suits.
U.S. Bankruptcy Judge Marvin Isgur, who is presiding over the case in Houston and appointed Jones as a mediator, denied the motion to dismiss in December.
Numerous news reports have painted the U.S. Bankruptcy Court in Houston as a place companies go to get favorable rulings, with the Wall Street Journal characterizing it as “a premier landing spot for corporate reorganizations.” The Houston Chronicle published a business feature, calling Jones the judge who saved the Texas bankruptcy court.
Companies are known to take advantage of what is known as the “Texas two-step,” where they split into two parts — funneling assets into one and debts into the other, which then files for bankruptcy.
The dangers of asbestos — a fibrous, fire-resistant material that can lead to specific lung cancers — have been known since the 1930s and federally recognized as hazardous since the 1950s. The St. Croix refinery, built in the early 1960s and opened in 1965, is thought to have contained millions of pounds of asbestos. Court filings allege workers were routinely exposed, especially while cleaning up storm damage at the plant. They also may have unknowingly brought the toxic fibers home to their families as it clung to their clothing.
In May, Hess agreed to put $106 million into a trust for former refinery workers and their families injured by asbestos exposure on St. Croix. Its proposal set aside $90 million for claimants who already filed, $15 million for potential future claims, and $1 million to cover administrative costs of the trust. The oil giant also pledged $10 million more if new claims exceeded the $15 million allocated by 2030. However, the future claims representative in the case rejected the figures as too low and the deal collapsed.
Hovensa sold the refinery to Limetree Bay in 2015, which attempted several restarts of the plant — shuttered in 2012 — to disastrous ends. In May 2021, oil spray from a flare coated homes downwind, leading the Environmental Protection Agency to order it shut down for 60 days. Limetree filed for bankruptcy protection shortly thereafter and current owner, Port Hamilton Refining and Transportation, acquired the refinery at an auction that December, presided over by Jones.
