#texas two-step

[yappermajorthoughts]

Engie, Scout, and Soldier.

Call it "All American Sandwich."

[mostlysignssomeportents]

One of America’s most corporate-crime-friendly bankruptcy judges forced to recuse himself

Today (Oct 16) I'm in Minneapolis, keynoting the 26th ACM Conference On Computer-Supported Cooperative Work and Social Computing. Thursday (Oct 19), I'm in Charleston, WV to give the 41st annual McCreight Lecture in the Humanities. Friday (Oct 20), I'm at Charleston's Taylor Books from 12h-14h.

"I’ll believe corporations are people when Texas executes one." The now-famous quip from Robert Reich cuts to the bone of corporate personhood. Corporations are people with speech rights. They are heat-shields that absorb liability on behalf of their owners and managers.

But the membrane separating corporations from people is selectively permeable. A corporation is separate from its owners, who are not liable for its deeds – but it can also be "closely held," and so inseparable from those owners that their religious beliefs can excuse their companies from obeying laws they don't like:

https://clsbluesky.law.columbia.edu/2014/10/13/hobby-lobby-and-closely-held-corporations/

Corporations – not their owners – are liable for their misdeeds (that's the "limited liability" in "limited liablity corporation"). But owners of a murderous company can hold their victims' families hostage and secure bankruptcies for their companies that wipe out their owners' culpability – without any requirement for the owners to surrender their billions to the people they killed and maimed:

https://pluralistic.net/2023/08/11/justice-delayed/#justice-redeemed

Corporations are, in other words, a kind of Schroedinger's Cat for impunity: when it helps the ruling class, corporations are inseparable from their owners; when that would hinder the rich and powerful, corporations are wholly distinct entities. They exist in a state of convenient superposition that collapses only when a plutocrat opens the box and decides what is inside it. Heads they win, tails we lose.

Key to corporate impunity is the rigged bankruptcy system. "Debts that can't be paid, won't be paid," so every successful civilization has some system for discharging debt, or it risks collapse:

https://pluralistic.net/2022/10/09/bankruptcy-protects-fake-people-brutalizes-real-ones/

When you or I declare bankruptcy, we have to give up virtually everything and endure years (or a lifetime) of punitive retaliation based on our stained credit records, and even then, our student debts continue to haunt us, as do lawless scumbag debt-collectors:

https://pluralistic.net/2023/08/12/do-not-pay/#fair-debt-collection-practices-act

When a giant corporation declares bankruptcy, by contrast, it emerges shorn of its union pension obligations and liabilities owed to workers and customers it abused or killed, and continues merrily on its way, re-offending at will. Big companies have mastered the Texas Two-Step, whereby a company creates a subsidiary that inherits all its liabilities, but not its assets. The liability-burdened company is declared bankrupt, and the company's sins are shriven at the bang of a judge's gavel:

https://pluralistic.net/2023/02/01/j-and-j-jk/#risible-gambit

Three US judges oversee the majority of large corporate bankruptcies, and they are so reliable in their deference to this scheme that an entire industry of high-priced lawyers exists solely to game the system to ensure that their clients end up before one of these judges. When the Sacklers were seeking to abscond with their billions in opioid blood-money and stiff their victims' families, they set their sights on Judge Robert Drain in the Southern District of New York:

https://pluralistic.net/2021/05/23/a-bankrupt-process/#sacklers

To get in front of Drain, the Sacklers opened an office in White Plains, NY, then waited 192 days to file bankruptcy papers there (it takes six months to establish jurisdiction). Their papers including invisible metadata that identified the case as destined for Judge Drain's court, in a bid to trick the court's Case Management/Electronic Case Files system to assign the case to him.

The case was even pre-captioned "RDD" ("Robert D Drain"), to nudge clerks into getting their case into a friendly forum.

If the Sacklers hadn't opted for Judge Drain, they might have set their sights on the Houston courthouse presided over by Judge David Jones, the second of of the three most corporate-friendly large bankruptcy judges. Judge Jones is a Texas judge – as in "Texas Two-Step" – and he has a long history of allowing corporate murderers and thieves to escape with their fortunes intact and their victims penniless:

https://pluralistic.net/2021/08/07/hr-4193/#shoppers-choice

But David Jones's reign of error is now in limbo. It turns out that he was secretly romantically involved with Elizabeth Freeman, a leading Texas corporate bankruptcy lawyer who argues Texas Two-Step cases in front of her boyfriend, Judge David Jones.

Judge Jones doesn't deny that he and Freeman are romantically involved, but said that he didn't think this fact warranted disclosure – let alone recusal – because they aren't married and "he didn't benefit economically from her legal work." He said that he'd only have to disclose if the two owned communal property, but the deed for their house lists them as co-owners:

https://www.documentcloud.org/documents/24032507-general-warranty-deed

(Jones claims they don't live together – rather, he owns the house and pays the utility bills but lets Freeman live there.)

Even if they didn't own communal property, judges should not hear cases where one of the parties is represented by their long term romantic partner. I mean, that is a weird sentence to have to type, but I stand by it.

The case that led to the revelation and Jones's stepping away from his cases while the Fifth Circuit investigates is a ghastly – but typical – corporate murder trial. Corizon is a prison healthcare provider that killed prisoners with neglect, in the most cruel and awful ways imaginable. Their families sued, so Corizon budded off two new companies: YesCare got all the contracts and other assets, while Tehum Care Services got all the liabilities:

https://ca.finance.yahoo.com/news/prominent-bankruptcy-judge-david-jones-033801325.html

Then, Tehum paid Freeman to tell her boyfriend, Judge Jones, to let it declare bankruptcy, leaving $173m for YesCare and allocating $37m for the victims suing Tehum. Corizon owes more than $1.2b, "including tens of millions of dollars in unpaid invoices and hundreds of malpractice suits filed by prisoners and their families who have alleged negligent care":

https://www.kccllc.net/tehum/document/2390086230522000000000041

Under the deal, if Corizon murdered your family member, you would get $5,000 in compensation. Corizon gets to continue operating, using that $173m to prolong its yearslong murder spree.

The revelation that Jones and Freeman are lovers has derailed this deal. Jones is under investigation and has recused himself from his cases. The US Trustee – who represents creditors in bankruptcy cases – has intervened to block the deal, calling Tehum "a barren estate, one that was stripped of all of its valuable assets as a result of the combination and divisional mergers that occurred prior to the bankruptcy filing."

This is the third high-profile sleazy corporate bankruptcy that had victory snatched from the jaws of defeat this year: there was Johnson and Johnson's attempt to escape from liability from tricking women into powder their vulvas with asbestos (no, really), the Sacklers' attempt to abscond with billions after kicking off the opioid epidemic that's killed 800,000+ Americans and counting, and now this one.

This one might be the most consequential, though – it has the potential to eliminate one third of the major crime-enabling bankruptcy judges serving today.

One down.

Two to go.

If you'd like an essay-formatted version of this post to read or share, here's a link to it on pluralistic.net, my surveillance-free, ad-free, tracker-free blog:

https://pluralistic.net/2023/10/16/texas-two-step/#david-jones

My next novel is The Lost Cause, a hopeful novel of the climate emergency. Amazon won't sell the audiobook, so I made my own and I'm pre-selling it on Kickstarter!

[harleycao]

This is SO random, but please tell me somebody watches Hallmark movies and has seen the recent one, "Texas Two-Step".

There's a song in the movie that I really liked but I can't find the name or artist for it!

Here's a section of the lyrics that I happen to remember.

"Living red rope velvet with the lipstick and lace. Just a millennial girl in a brand new age. I'm making waves. "

(I think I remember it correctly. I know for a fact at least most of this is right because I replayed the scene the song was in after finishing the movie so I can try and identify what song it is... But no luck).

i expect this song is probably called "waves" or "making waves" or maybe "I'm making waves" but idk.

Please help someone!

[hallmark-movie-fanatics]

Hallmark Channel's 2026 Summer Nights Movie Lineup

The Greek Aisle Premiering Saturday, June 2, 8pm/7c. Starring Nikki DeLoach and Apostolis Totsikas. When Georgia travels to the Greek island of Corfu to finalize an inheritance, she unexpectedly discovers that marrying her handsome co-inheritor is the only way to meet the requirements.

Texas Two-Step Premiering Saturday, June 13, 8pm/7c. Starring Heather Hemmens and Brendan Penny. Olivia returns to Texas to help her aunt with her country music bar that's fallen on hard times and reconnects with Luke, her childhood sweetheart turned cowboy, and her passion for dancing.

The Love Heist Premieres Saturday, June 20, 8pm/7c. Starring Lyndsy Fonseca and Peter Porte. Celebrity stylist Kayli must team up with hotel security chief Mills to track down an iconic piece of fashion history after it goes missing on her watch before the Chicago Costume Gala.

A Castle of Our Own Premieres Saturday, June 27, 8pm/7c. Starring Brennan Elliott and Erica Cerra. When an overworked architect takes an unexpected summer trip, a sandcastle contest and a contractor help her reconnect with her daughter, rediscover joy, and find love she never saw coming.

[just-mebs]

I have been making SFMs for only 3 days now and I literally can't stop

[silence-caravan]

Only here I'm posting all the versions.

This ship has almost no content, but in the little it has, there are a couple of jewels.

That and also big "daddy issues" vibes, I'm here for it.

[heckoffmate]

Engineer: That position is called the reverse cowgirl.

The person you ship Engie with: YEEHAW!

Engineer: And that is why we're never gonna do the reverse cowgirl.

[mostlysignssomeportents]

Johnson and Johnson's bankruptcy gambit fails

The Third Circuit Court of Appeals has foiled Johnson & Johnson’s plan to use a bankruptcy scam called the Texas Two-Step to escape paying 40,000 women who were injured when the pharma giant sold them asbestos-tainted talcum powder to dust over their vulvas, leading to gruesome cancers:

https://www.wxxinews.org/2023-01-30/appeals-court-clears-the-way-for-more-lawsuits-over-johnsons-baby-powder

If you’d like an essay-formatted version of this post to read or share, here’s a link to it on pluralistic.net, my surveillance-free, ad-free, tracker-free blog:

https://pluralistic.net/2023/02/01/j-and-j-jk/#risible-gambit

Back in 2018, a jury awarded $4.69 billion to 22 women whose ovarian cancer was caused by J&J’s toxic product, $4.14b of which was punitive, awarded because J&J ignored the link between applying talcum powder to one’s genitals and cancer, and continued to market its products as a “Shower to Shower” genital deodorant:

https://www.cnn.com/2018/07/13/health/4-69-billion-verdict-johnson--johnson-talcum-powder/index.html

With thousands more lawsuits in the pipeline, the company sprung into action, restructuring in Texas using a quirk of the state’s merger laws that allows a single company to “merge” into two separate entities.

https://statutes.capitol.texas.gov/Docs/BO/htm/BO.10.htm

The Texas Two-Step is a corrupt gambit that uses this quirk to allow large companies to escape liability for their misdeeds, by creating one company that holds the assets and profitable businesses of the firm, and another company that holds the firm’s toxic products and the liabilities they produced. The “bad” company then declares bankruptcy, leaving the “good” company to walk away with the billions it made by harming people, and leaving the victims to squabble over the meager assets from the bankruptcy.

To maintain the pretense that this maneuver isn’t just a ruse to escape liability, companies undertaking the Texas Two-Step have the “good” company guarantee some of the liabilities of the “bad” company. That’s what J&J did, and the women it injured sued over it:

https://www2.ca3.uscourts.gov/opinarch/222003p.pdf

The appeals court didn’t find J&J’s bankruptcy persuasive. They found that any bankruptcy for the “bad” company should come after it had exhausted all guarantees the “good” company had made. Summarizing the court opinion Bloomberg’s Matt Levine writes, “You want to file for bankruptcy while you still have plenty of money to pay claims, but not too much money.”

https://www.bloomberg.com/opinion/articles/2023-01-31/matt-levine-johnson-johnson-s-jnj-bankruptcy-didn-t-work

J&J has vowed to appeal. If their appeal succeeds, it will be another blow against corporate accountability and against the bankruptcy system, both of which have are at their lowest ebb in living memory. Just the fact that J&J is still in business is remarkable. Poison talcum powder is only the latest salvo in J&J’s war on women’s reproductive organs — just a year ago, the company was ordered to pay hundreds of millions for selling women vaginal meshes, aggressively marketed for incontinence and prolapse, long after it learned that these meshes could permanently fuse with patient’s pelvic floors, leading to “severe pain, bleeding, infections, discomfort during intercourse.”

https://www.theguardian.com/us-news/2022/apr/13/johnson-johnson-pelvic-mesh-implant-ads-case

J&J was also neck-deep in the opioid crisis, going to far as to commission a report from McKinsey entitled “Maximizing Value of the Narcotics Franchise,” on how to use its dominance of poppy-extract to corner the market on opioids:

https://pluralistic.net/2022/06/30/mckinsey-mafia/#everybody-must-get-stoned

It was the opioid sector that brought popular attention — and well-earned disgust — to the US bankruptcy. The criminal Sackler family, owners of Purdue Pharma and proprietors of OxyContin, used a nakedly corrupt move to shift their bankruptcy proceeding to Judge Robert Drain of the Southern District of New York:

https://pluralistic.net/2021/08/07/hr-4193/#shoppers-choice

Drain is notoriously tolerant of corporate crime and is an enthusiastic booster for the principle of using bankruptcies to escape consequences for corporate mass-murder. Which is exactly what the Sacklers did, cramming through a bankruptcy deal that let them walk away with billions, stiffing the survivors of their opioid business:

https://pluralistic.net/2021/07/29/impunity-corrodes/#morally-bankrupt

J&J told women to put carcinogens down their underwear. For decades. It gave tens of thousands of women ovarian cancer. Then it tried to use Texas’s courts to walk away with billions. But this time, a court stopped them. This time there’s no separate system of justice, like the one that gave the Sacklers billions in dirty money. This time, the company might just have to pay for its crimes.

Image: James Wagstaff (modified) https://www.flickr.com/photos/jesse/2256760407/

Mike Mozart (modified) https://www.flickr.com/photos/jeepersmedia/26191532093

CC BY 2.0 https://creativecommons.org/licenses/by/2.0/

[Image ID: A picture of a white-out dust storm at Burning Man. A giant tulip rises out of the dust. Its petals are suggestive of a vulva. A giant bottle of Johnson and Johnson baby powder enters the frame from the top right corner.]