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The plaintiff in the case was Paula Jones, an Arkansas state employee. According to Jones, on May 8, 1991, she was escorted to Arkansas Governor Bill Clinton's hotel room in the Excelsior Hotel in Little Rock, Arkansas (now the Little Rock Marriott) by Arkansas State Trooper Danny Ferguson. Inside the room, Jones was propositioned by Clinton and he exposed himself to her. Jones claimed she kept quiet about the incident until 1994, when a David Brock story in the American Spectator magazine, printed an account. She filed a sexual harassment suit against Clinton on May 6, 1994, two days prior to the three-year statute of limitations, and sought $750,000 in damages. Ferguson was also named as a Defendant.
The lawsuit was filed in the U.S. District Court for the Eastern District of Arkansas. By the time Clinton had been elected President, a motion in the case was heard by Judge Susan Webber Wright, who had once been a student of Professor Bill Clinton at the University of Arkansas School of Law. Judge Wright ruled that a sitting President could not be sued and deferred the case until the conclusion of his term. She did allow the pre-trial discovery phase of the case to proceed without delay in order to start the trial as soon as Clinton left office.
Both parties were unhappy with aspects of this ruling and both appealed to the United States Court of Appeals for the Eighth Circuit. That court ruled in favor of Jones, and held that "the President, like all other government officials, is subject to the same laws that apply to all other members of our society." Clinton then appealed to the U.S. Supreme Court.
In a unanimous decision handed down on May 27, 1997, the Supreme Court upheld the decision of the Court of Appeals. In the unanimous opinion by Justice John Paul Stevens, the Court ruled that separation of powers does not mandate that federal courts delay all private civil lawsuits against the President until the end of his term of office. Stevens also wrote "it appears to us highly unlikely to occupy any substantial amount of petitioner's time." In his concurring opinion, Justice Stephen Breyer held that presidential immunity would apply only if the President could show that a private civil lawsuit would somehow interfere with the President's constitutionally assigned duties.
In pre-trial depositions, a witness in Jones v. Clinton named Monica Lewinsky had denied having engaged in a sexual relationship with Clinton. But a woman named Linda Tripp, who Lewinsky had considered to be a friend, had secretly recorded their conversations, in which Lewinsky discussed her affair with Clinton. Tripp then turned the tapes over to Kenneth Starr, an independent counsel who was investigating other aspects of alleged misconduct by Clinton. The revelations from these tapes led to further scandal, when Clinton denied under oath that he had a sexual relationship with Lewinsky. The evidence that Starr had obtained had led to charges of perjury and obstruction of justice and the impeachment of Bill Clinton.
Jones's lawyers had tried to show to the court a pattern of behavior by Clinton that involved his repeatedly making sexual advances on state or government employees. The lawyers subpoenaed women that they suspected Clinton had had affairs with, one of whom was Monica Lewinsky. In his deposition for the Jones lawsuit, Clinton denied having "sexual relations" with Monica Lewinsky. Based on testimony provided by Linda Tripp, which identified the existence of a blue dress with Clinton's semen on it, Kenneth Starr concluded that Clinton's sworn testimony was false and that he had committed perjury. During the deposition in the Jones case, Clinton was asked, "Have you ever had sexual relations with Monica Lewinsky, as that term is defined in Deposition Exhibit 1, as modified by the Court?" The judge ordered that Clinton be given an opportunity to review the definition. The definition read that "a person engages in sexual relations when the person knowingly engages in or causes contact with the genitalia, anus, groin, breast, inner thigh, or buttocks of any person with an intent to arouse or gratify the sexual desire of any person". Clinton was adamant in his denial that he did not have sexual relations with Lewinsky. He later said, at the Starr Grand Jury, that he believed the definition of sexual relations agreed upon for the Jones deposition excluded his receiving oral sex. It was upon the basis of this statement that the perjury charges in his impeachment were drawn up.
Clinton was impeached by the House of Representatives on December 19, 1998, on charges of perjury and obstruction of justice. But despite Republican control of the Senate, Republicans were unable to muster the required two-thirds special majority needed to convict Clinton and remove him from office. On February 12, 1999, only 50 Senators voted that Clinton was guilty on the obstruction charge and 45 senators voted guilty on the perjury charge.
On April 12, 1999, Wright found Clinton in contempt of court for giving "intentionally false" testimony in Jones v. Clinton. Clinton was fined $90,000, and she referred the case to the Arkansas Supreme Court's Committee on Professional Conduct, because Clinton still possessed a license to practice law in Arkansas.
The Arkansas Supreme Court suspended Clinton's Arkansas law license in April 2000. On January 19, 2001, Clinton agreed to a five-year suspension and a $25,000 fine in order to avoid disbarment. On October 1, 2001, Clinton's U.S. Supreme Court law license was suspended, with 40 days to contest his disbarment. On November 9, 2001, the last day for Clinton to contest the disbarment, he opted to resign from the Supreme Court Bar, surrendering his license, rather than facing penalties related to disbarment.
The Independent Counsel concluded that President Clinton testified falsely on three counts under oath in Clinton v. Jones. By this time Kenneth Starr had been replaced by a new Independent Counsel Robert Ray, who chose to decline criminal prosecution in favor of what are known as "alternative sanctions". This included his impeachment. In a statement he released, Ray said:
"As a consequence of his conduct in the Jones v. Clinton civil suit and before the federal grand jury, President Clinton incurred significant administrative sanctions. The Independent Counsel considered seven non-criminal alternative sanctions that were imposed in making his decision to decline prosecution: (1) President Clinton’s admission of providing false testimony that was knowingly misleading, evasive, and prejudicial to the administration of justice before the United States District Court for the Eastern District of Arkansas; (2) his acknowledgement that his conduct violated the Rules of Professional Conduct of the Arkansas Supreme Court; (3) the five-year suspension of his license to practice law and $25,000 fine imposed on him by the Circuit Court of Pulaski County, Arkansas; (4) the civil contempt penalty of more than $90,000 imposed on President Clinton by the federal court for violating its orders; (5) the payment of more than $850,000 in settlement to Paula Jones; (6) the express finding by the federal court that President Clinton had engaged in contemptuous conduct; and (7) the substantial public condemnation of President Clinton arising from his impeachment."
The case of Jones v. Clinton was eventually settled on November 13, 1998. Jones was paid $850,000, more than she had originally claimed, without any apology or admission of responsibility by Clinton. After paying her legal fees, Jones received about $200,000 of this.