Texas Lawyer Blog

Judge nixes R. Allen Stanford's motion to disqualify Akin Gump from representing defendants in insurance-coverage suit

U.S. District Judge Nancy Atlas of the Southern District of Texas today denied R. Allen Stanford’s motion to disqualify Akin Gump Strauss Hauer & Feld from representing the defendants in Stanford’s insurance-coverage suit. In a Memorandum and Order, Atlas wrote that she is “sensitive” to preventing conflicts of interest, but “Stanford, however, has failed to satisfy his burden to demonstrate he personally was a former client of Akin Gump and has also waived any alleged conflict that may have existed.” On July 2, in Laura Pendergest-Holt, et al. v. Certain Underwriters at Lloyd’s of London, et al., Stanford filed a motion to disqualify Akin Gump on the ground that from about 2000 to early 2009, he and some Stanford Financial Group companies had “substantial dealings” in an “attorney/client capacity” with Akin Gump. Akin Gump, which represents the underwriters who issued the directors’ and officers’ policies covering Stanford and other former executives of Houston-based Stanford Group, filed a response under seal. In Pendergest-Holt, et al. v. Certain Underwriters at Lloyd's of London, et al., Stanford and three other former SFG executives seek coverage under directors-and-officers policies, which the insurance companies have denied on the ground the executives engaged in activities defined by the policies as money laundering. The executives claim the money-laundering exclusion should not apply, and a preliminary injunction hearing on that issue is set for Aug. 24. Stanford’s attorney, Robert S. Bennett, of Bennett Nguyen Joint Venture of Houston, says, “We are disappointed. We thought we had shown enough.” Bennett says Stanford may appeal. Barry Chasnoff and Neel Lane, partners in Akin Gump in San Antonio, represent the insurers. Chasnoff did not immediately return a telephone message, and Lane, who was out of the office, did not immediately respond to an e-mail. Akin Gump spokeswoman Kristen White did not immediately provide comment.
-- Brenda Sapino Jeffreys

Continental general counsel Jennifer Vogel not moving to Chicago once Houston-based airline merges with United

Jennifer Vogel (pictured), Continental Airline Inc.’s general counsel since 2001, will not move to the company’s new headquarters in Chicago once the Houston-based airline merges with Chicago-based United Airlines. In a written statement today, Vogel says she is not able to move to Chicago due to personal commitments in Houston. “I feel incredibly honored to have been a part of Continental’s remarkable turnaround and success over the last 15 years and will treasure the enduring friendships I have made as I move to the next chapter of my life,” wrote Vogel, Continental’s senior vice president, general counsel, secretary and chief compliance officer. On July 27, Continental and United announced the selection of a new senior leadership team for the combined airline, which calls for the current general counsel at United, Thomas Sabatino Jr., to become the general counsel of the combined company. Vogel could not be reached for immediate comment today, but Continental spokeswoman Julie King says a decision about how long Vogel will remain with the company “hasn’t been finalized.” Sabatino is currently senior vice president, general counsel and corporate secretary of UAL Corp. and United Airlines, its principal subsidiary. On May 3, the two airlines announced a definitive merger agreement that is expected to close during the fourth quarter of the year. The airline will be called United Airlines and be based in Chicago. Vogel, who joined Continental in 1995, is married with two daughters.

-- Brenda Sapino Jeffreys

CCA Presiding Judge Sharon Keller seeks Supreme Court mandamus to vacate public warning, dismiss all charges against her

In a petition for writ of mandamus filed July 29, Texas Court of Criminal Appeals Presiding Judge Sharon Keller asks the state Supreme Court to vacate the public warning the State Commission on Judicial Conduct (SCJC) issued to her on July 16. Keller also asks the Supreme Court to dismiss all charges against her. According to the petition, Keller seeks mandamus relief because SCJC executive director Seana Willing, who serves as the examiner in cases involving alleged judicial misconduct, “has publicly admitted” that the commission’s public warning order “does not comport with the Texas Constitution.” [See “Bad Law?” Texas Lawyer, July 26, 2010, page 1.] Keller further alleges that the commission lacked authority to issue the public warning and that its warning is “void on its face because it was rendered contrary to limiting constitutional authority.” As alleged in the petition, “[T]he SCJC had no more authority to render a public warning against Keller than it would to order her home to be forfeited.” Keller alleges that the SCJC based its public warning on Rule 10(m) of the Rules for the Removal or Retirement of Judges, which purports to allow the commission to issue a public warning. But Keller alleges that under the state constitution, after the commission initiates formal proceedings against a judge, it has authority to impose only three remedies: dismissal of the charges, public censure, or a recommendation for removal or retirement of the judge. Keller further alleges that the commission failed to defer to findings of the special master, 37th District Judge David Berchelmann Jr. Berchelmann heard evidence in Keller’s case during an August 2009 trial and, according to his January report to the commission, found that her conduct does not warrant punishment. Willing says she cannot comment on the contents of Keller’s petition. However, Willing says the commission’s position will be that Keller has an adequate appellate remedy through a three-judge panel that, at Keller’s request, the Supreme Court would appoint to review her case. Willing also says she is not aware of anything in Chapter 33 of the Texas Government Code or Article 5, §1a(8) of the Texas Constitution that gives the state Supreme Court mandamus authority over the commission. On July 29, Keller also filed an emergency motion asking the Supreme Court to stay the time limitations within which she must request the appointment of a three-judge special court of review for her case. The statutory 30-day period in which Keller must make the request for the panel to conduct the review began running when the commission issued the July 16 public warning. Keller further asks that the stay remain in effect for 10 days after the Supreme Court rules on her mandamus petition. Keller asserts in her emergency motion that she should not be compelled to seek appellate review before the Supreme Court rules on her petition for a writ of mandamus. The commission issued its public warning to Keller for her conduct on Sept. 25, 2007, the day the state executed convicted murderer Michael Richard. The commission found that Keller failed to accord Richard the right to be heard when she twice said “no” when asked if the CCA clerk’s office would remain open past 5 p.m. on the day of Richard’s execution. Charles “Chip” Babcock, a Jackson Walker partner in Dallas and Houston who represents Keller, and John J. "Mike" McKetta, a shareholder in Austin's Graves Dougherty Hearon & Moody who was the special counsel who prosecuted Keller, could not be reached for immediate comment.
-- Mary Alice Robbins

Baker Botts rolls out new compensation, promotion system for associates

Baker Botts associates are learning this week about potential changes to their pay and bonus packages that become effective Jan. 1, 2011, says Maria Boyce, partner-in-charge of the firm’s Houston office. The firm is moving associates from lock-step promotions and pay to a merit-based system, she says. Based on each associate’s current tenure with the Houston-based firm, they are a junior, mid-level or senior associate. “The initial placement of lawyers into levels is based solely on tenure,” she says. Beginning Jan. 1, 2011, lawyers in each level will be paid the same base salary, have opportunities to earn the same merit-based bonuses and charge the same billing rate, she says. She also notes, “No associate is going to have their base pay cut in 2010 as a result of the introduction of this change.” When annual evaluations are conducted in November and December, the associates will be placed in levels based on their evaluations rather than their seniority, she says. “Based on year-end evaluations, their compensation could be at a lower or higher level, or the same, which affects their base pay and bonus opportunity,” she says. “We anticipate that most associates will stay in the same level or move up to the next level effective Jan. 1, 2011.” The new system will impact entry-level associates differently. Boyce notes that entry-level associates will remain at the $160,000 entry-level pay for their first calendar year with the firm. So why the change? Boyce says the firm introduced an associate-attributes model to its lawyers in 2008 that defines the skills expected of associates at each of three levels as they progress towards firm partnership. Based on the firm’s attributes model, for example, a senior-level associate would be expected to manage and lead a team of lawyers on a transaction or a litigation matter while working with the partner responsible for the matter; a mid-level associate would be expected to help coordinate a team of lawyers; and a junior-level associate would be a member of a team and delegate tasks to professional staff, she says. The firm adopted the new program to compensate associates for their skills rather than their tenure and to demonstrate to clients that associates’ billing rates correlate with their skills, she says. Annual associate evaluations are conducted by local and firm-wide leadership in each department — corporate, litigation, global projects, tax, environmental and intellectual property — and are a result of feedback from all lawyers who worked with an associate during the year, Boyce says. Of the firm’s 448 Texas lawyers, 261 are associates, Boyce says. The partners in charge of each office are meeting with each associate in their respective offices this week to discuss the program and each associate’s level in the program, she says. Boyce says the firm’s partnership track, where associates are considered for partnership after 8.5 years of practice, is not changing. She says the firm does not release salary information other than the $160,000 base annual salary paid to entry-level associates. The firm does not have a maximum time frame for an associate to proceed through the levels. “Some will go through the levels more quickly, some more slowly, but there’s no deadline,” she says

-- Jeanne Graham

President nominates Marina Garcia Marmolejo for Southern District bench

In a press release today from the White House, President Barack Obama announced his nomination of Marina Garcia Marmolejo, a partner in Reid Davis in San Antonio, as a judge for the U.S. District Court for the Southern District of Texas. “I am confident she will serve on the federal bench with distinction,” the president stated in the release. Marmolejo is Obama’s second judicial nominee for Texas. On July 14, he nominated Diana Saldaña for a Southern District bench in Laredo. According to the White House press release, Marmolejo joined Reid Davis in 2009 and previously was of counsel in the San Antonio office of Thompson & Knight. Prior to entering private practice, Marmolejo was an assistant U.S. attorney in the Southern District, a post she held from 1999 until 2007. A 1996 graduate of St. Mary’s University School of Law, Marmolejo began her legal career as an assistant public defender, serving first in the Western District and later in the Southern District. U.S. Rep. Lloyd Doggett, D-Texas, notes in an e-mail from his office that the Texas Democratic Delegation had recommended Marmolejo for a judicial nomination on May 13, 2009.
-- Mary Alice Robbins

Harris County DA's Office: Investigation of Metropolitan Transit Authority of Harris County document-related allegations closed

The Public Integrity Division of the Harris County District Attorney’s Office announced July 27 that it has closed its investigation into allegations that employees of the Metropolitan Transit Authority of Harris County (Metro) destroyed public documents and failed to comply with open records requests in violation of the Texas Public Information Act. “A careful analysis of all of this information led to the determination that there was no evidence of criminal wrongdoing by employees of METRO concerning the Texas Public Information Act, nor was there any evidence that any METRO employee had knowledge of the destruction of public records,” the DA’s office announced in a written statement. In a written statement, Metro chairman Gilbert Garcia said the transit agency is pleased with the outcome of the investigation. “With this issue behind us, we can continue to move forward building the NEW METRO, promoting greater transparency and restoring public trust and confidence in the agency,” he wrote. The DA’s office’s investigation began in March after Houston lawyer Lloyd Kelley filed Lloyd Kelley v. Frank J. Wilson, et al., in the 61st District Court in Harris County. Kelley sought court orders to prevent Metro from destroying documents he had requested. That suit settled in June. On June 2, 61st District Judge Al Bennett signed an Agreed Final Judgment finding that “all matters in controversy have been resolved and settled” and Kelley would take nothing. In the order, Bennett found that all investigations to date found no improper or illegal destruction of documents on the part of the defendants and found that the Metro board of directors had adopted a records-retention policy. The DA’s announcement doesn’t end the brouhaha for Metro. Pauline Higgins, who was fired on Feb. 23 as general counsel of Metro, filed a defamation and whistle-blower suit on April 19 that names Metro and Frank J. Wilson, its former president and chief executive officer, as defendants. In Pauline Higgins v. Frank J. Wilson, et al., Higgins alleges Metro fired her because she had complained to Houston Mayor Annise Parker that the transit agency wasn’t complying with state laws governing document retention. She also alleged that Wilson defamed her with statements he made at press conferences. In answers filed in May, Metro and Wilson each deny the allegations. Metro further alleges in its answer that Higgins was an at-will employee and its decision to terminate her took place before she “claims” to have reported an alleged violation of law to the Houston mayor. Higgins’ attorney, Rusty Hardin, of Rusty Hardin & Associates of Houston, says Higgins contended all along there was no improper document destruction. Kelley, of Lloyd E. Kelley & Associates of Houston; Robin Gibbs, a partner in Gibbs & Bruns in Houston who represents Wilson in Higgins’ defamation suit; Terese Buess, an assistant Harris County DA; and Raquel Roberts, a spokeswoman for Metro, did not immediately return telephone calls seeking comment.

-- Brenda Sapino Jeffreys

Podcast: 20 years of the Americans With Disabilities Act

In today's Texas Lawyer podcast, Michael P. Maslanka, managing partner of Ford & Harrison in Dallas, looks back at the impact of the landmark legislation.

-- Anne K. McMillan

Brief filed in same-sex divorce battle

If Texas Attorney General Greg Abbott prevails, at least two same-sex couples will not divorce in this state. On July 21, the Texas Office of the Attorney General filed a brief in Austin’s 3rd Court of Appeals objecting to a divorce granted March 31 by Travis County 126th District Court Judge Scott Jenkins to two women married in Massachusetts. In its brief in State of Texas v. Angelique S. Naylor and Sabina Daly, the OAG asks the 3rd Court to reverse Jenkins’ decision and to dismiss the women’s divorce suit. The OAG argues in its brief that same-sex partners have “no fundamental right to a divorce” in Texas and seeks oral argument. At the trial court, Daly objected to the OAG’s intervention, and Naylor responded to the OAG’s attempt to intervene by arguing that the Texas Family Code permits same-sex divorce and that the U.S. Constitution requires the court to grant a same-sex divorce. James “Jody” Scheske, a partner in Akin Gump Strauss Hauer & Feld who represents both women in the appeals court, declines comment but writes in an e-mail that his clients’ response is due before the end of August. A spokesman in the OAG’s press office says no one is available immediately for comment and refers to the office’s brief. Scheske also represents a man seeking a same-sex divorce in Dallas who faces objections from the OAG. In that case, In the Matter of the Marriage of J.B. and H.B., the OAG argued against the proposed same-sex divorce on April 21 before a panel of Dallas’ 5th Court of Appeals. A decision is pending.

-- Miriam Rozen

Winstead shareholder signs books over the weekend in advance of National Scout Jamboree

Winstead shareholder Nelson Block, who has done pro bono work for the Sam Houston Area Council Boy Scouts of America for 20 years, helped kick off the 2010 National Scout Jamboree over the weekend. On July 24, he held a book signing during scouting family day at the American Art Museum at the Smithsonian in Washington, D.C., for a book he co-authored in 2009, “Scouting Frontiers: Youth and the Scout Movement’s First Century.” He says, “It was really great to be able to have your book featured at the Smithsonian.” Today, about 38,000 scouts from around the country set up camp at Fort A.P. Hill, located near Fredericksburg, Va. It’s opening day of the 10-day jamboree, which will help celebrate the 100th anniversary of the Boy Scouts of America. Block, who is also an assistant scoutmaster of Troop 806 in Houston, has participated in several jamborees as a scout leader and parent. He wishes he were attending the one that started today. “Today the boys were all moving in and settling in, moving in their tents and getting their cooking areas set up,” he says.
-- Brenda Sapino Jeffreys

Lawyer-turned-entrepreneur births baby-bedding business

Sara Bloom (pictured), president and chief executive officer of Oliver B, is looking forward to mid-October. That’s when she plans to attend a buyers’ market in Las Vegas, in hopes of convincing representatives of major department stores to begin selling her baby-bedding products. Concern about the safety of baby bedding led her to begin researching crib bumpers before the birth of her first son in September 2007, Bloom says. She says that in November 2008, she left her job as an associate with Mayer Brown in Houston to create her business, named for her eldest son, Oliver. “At the end of 2008, I saw this amazing opportunity where I could help millions of mothers across the country sleep at night,” Bloom says. After learning that an acquaintance’s son had died of Sudden Infant Death Syndrome, Bloom says she was not sure whether to use commercially made crib bumpers. “I cut off pieces of my son’s bumper so air could get into his bed at night,” Bloom says. Then Bloom began designing her own crib-bumper and baby-bedding products. Bloom says she was engaged in designing prototypes of her crib bumper and testing them until March, when she submitted her application for a patent. Her bumper comes in 20 separate pieces. Each padded section (pictured) ties around two crib slats with a bow, Bloom says. The day after she applied for a patent for the crib bumper, Bloom says she began selling baby-crib sets, which include the bumpers, to boutiques in Houston, Dallas and southern California and through her website. It was not easy to go from being a lawyer at a major firm to starting a business, Bloom says. While she says being a baby-bedding entrepreneur is very different from being a lawyer, she says the training she received as a corporate attorney working on high-level mergers and acquisitions helped her with the due diligence required for her own business. Seeing how the companies she represented structured themselves and ran their businesses also helped her in getting her business up and running, Bloom says. She says she holds a J.D. from California Western School of Law and a LL.M from the University of San Diego School of Law. “It was a lot to walk away from,” Bloom says.  But, she says, “You have to follow your passion. It’s turned out great.”
 –  Mary Alice Robbins