In this issue: A Houston judge threatens Jackson Walker with sanctions, breaking down the Protect College Sports Act, and Uber’s third bellwether trial.

A Houston bankruptcy judge took Jackson Walker and the DOJ’s bankruptcy watchdog to task after discovering another Chapter 11 case potentially tainted by the romance between a onetime attorney at the firm and a former judge, James Nani reports.

Jackson Walker must explain why it shouldn’t be sanctioned in Diebold Holding’s bankruptcy for failing to disclose the relationship, Judge Eduardo V. Rodriguez of the US Bankruptcy Court for the Southern District of Texas said in a Friday order.

The firm must also show why a special master shouldn’t be appointed to explore whether there are more cases with undisclosed connections, he said.

Photo Illustration: David Evans/Bloomberg Law; Photo: Getty Images

Rodriguez indicated his increased concern over the impact of the undisclosed romance between former US Bankruptcy Judge David R. Jones and former Jackson Walker partner Elizabeth Freeman, and questioned whether the US Trustee — in its multi-year litigation surrounding the scandal — unearthed all proceedings with potential conflicts.

The judge is now considering folding the Diebold case into the US Trustee’s larger litigation. Jackson Walker must also file an itemized audit of all bankruptcy cases involving Jones in the Southern District of Texas since 2020.

Photographer: Johnnie Izquierdo/Getty Images

The Protect College Sports Act — which passed the Senate 77-22 last week and now awaits a House vote — could erode student athletes’ individual and collective bargaining power, George Weykamp reports.

The upsides for athletes are it includes health and safety standards and mandates student representation on athletic governing boards. But it also grants the NCAA a partial antitrust exemption that gives it broad control over enforcing rules concerning athlete transfer and eligibility.

Those changes are likely to undermine union organizing efforts among student athletes. The bill also leaves open the question of whether college players should be classified as employees, a necessary criteria for unionizing under the National Labor Relations Act.

West Texas A&M professor Darrell Lovell told George the bill reverts several years to an era where the NCAA had significant power to determine eligibility and earning potential.

“These are essentially contract stipulations that are being federally codified without approval or without negotiation with the people that they will be applied to,” he said. “Here, you’re getting all the positives on the organization side, the caps, the limited transfers, the agent caps, but the players are getting none of the negotiating power.”

Ira Gonzalez, a Miami-based partner at McCarter & English who has been closely monitoring the bill, told me the increase of the revenue share cap will also be detrimental to smaller schools’ ability to recruit and retain athletes, including in Texas.

“Even certain Power Four schools that are not as competitive as some of the others — frankly, they can’t even walk through the door on competitiveness at this point,” he said.

Photographer: Mark Felix/Bloomberg

One of the biggest US energy producers, Valero Energy, is taking advantage of the Jones Act waiver more than its competitors. The Texas-based company has requested 29 of the 128 waivers as of Oct. 1, Zach Williams reports.

Valero and other oil companies have been criticized by domestic mariners for pursuing waivers at a time of record profits for the industry. Of Valero’s tied requests, 11 are for voyages between Gulf energy hubs rather than trips that would directly increase consumer supplies.

Documents reveal that 13 of the 14 requests tied to Phillips 66 were for shipments between Texas and the Northeast or California. Another proposed voyage for mid-October would transport gasoline between Washington state and San Francisco. Royal Dutch Shell was tied to six proposed voyages, while Marathon Petroleum and Exxon Mobil were each tied to three.

The volume of waiver requests “reflects a domestic fleet unable to efficiently meet the country’s transportation needs,” said Colin Grabow, an opponent of the law.

But American Maritime Partnership President Jennifer Carpenter said that without the law “we would be relying on foreign-flagged ships and foreign crews to carry critical energy cargoes,” which would make the US “even more intertwined with global market disruptions.” Read More

Photographer: David Paul Morris/Bloomberg

The third bellwether trial against Uber over its alleged failure to prevent passenger sexual assault begins this week in Austin, following the company’s loss in two prior trials in Arizona and North Carolina.

US District Court Judge Charles Breyer, who has been overseeing the multidistrict litigation in San Francisco, has urged the company to discuss a universal settlement of the approximately 5,000 cases, but the company’s lawyer has said it is undeterred from going to trial. Docket

Raul Gastesi, a corporate and civil litigation attorney who has been monitoring the lawsuits, says this case differs because it’s focused on the company’s own conduct — how it screened the driver and how it designed its app — versus driver behavior.

Gastesi added that bellwethers are about valuation, and the two prior verdicts of $8.5 million and $5,000 don’t give either side a reliable range.

“A third verdict, in a case involving a far more serious alleged assault than the Charlotte case and tried under Texas law, will carry real weight,” he said. “A substantial plaintiff’s verdict would add pressure for a global resolution.”

Other cases to watch this week:

• The Fifth Circuit will hear arguments today in Humana’s case against the US Health and Human Services Department, which it alleges unlawfully bypassed proper rulemaking procedures in a policy related to Medicare fund distribution — a dispute Humana says puts “billions of dollars in revenue at stake.” Docket
• Tomorrow, the Texas Supreme Court will weigh whether a trial court properly struck an AI-generated deposition transcript in a wrongful termination lawsuit. Docket
• Also before the Texas Supreme Court, Texas’ teachers union will argue Wednesday against a state agency rule it says removes teachers’ right to protest assignments when a charter school takes over a failing public school. Docket
• Jury selection is scheduled for today in Edge Networking Systems’ patent infringement lawsuit against Amazon. The case moves forward after a magistrate judge rejected Amazon’s claim that the patents actually belong to the inventor’s prior employers, Intel and Cisco. Docket