Insurance Coverage Blog

Book Review: The Fall of the House of Zeus: The Rise and Ruin of America's Most Powerful Trial Lawyer, by Curtis Wilkie

As I mentioned in my review of another book about Scruggs, Kings of Tort , I'm going to read and review this book as well. But I get bored doing things the same old way, and so I'm going to try something new: live blogging a book. As I read along in the book I'll make observations and comments on the pages I've read, and bump this post up to the top of the blog with new updates. 

I've stayed away from reading other reviews of this book to try to come at it uninfluenced by the opinions of others, although of course some people have expressed orally or in email some of their general opinions, favorable and unfavorable. 

Notes on the title, preface and first few pages of Chapter One    

Fall of the House of Zeus? Right, I know, Dickie Scruggs was called Zeus in college because of his amazingness, or some such. I thought the book's title might be ironic, but after reading this far, I'm guessing it's not. Right before the preface, there is a quote from The Iliad about Zeus the cloud-gatherer laying on invincible hands, and his queen being afraid, and the rest of the gods being troubled in the House of Zeus. Now, Zeus wasn't above engaging in a few capers himself and shared much of the cupidity and caprice of humans, but with about a billion times more power. So it's not as if Scruggs is being promoted as a candidate to expand the Holy Trinity to a foursome.  Still, I'm getting a strong vibe here that the Zeus metaphor isn't contrapuntal. 

The preface, in fact, sets out on a pro-Scruggs track that suggests a title for the Latin edition of this book might be Summa Apologia Scruggsicum.  Or possibly a sequel to Milton's Paradise Lost, where the author this time "attempts to justify the ways of Scruggs to men." Whereas, the whole Scruggs saga suggests to me a different sets of gods: the Gods of the Copybook Headings versus the Gods of the Market Place.  Indeed, I think the Gods of the Copybook Headings were decidedly unamused with Scruggs. 

The preface sets out a world in which little people are in essence yoked up to pull sledges while top-hatted swells with Mr. Peanut monocles and walking sticks crack whips on their backs, and it is necessary for trial lawyers to graciously step up and do their stuff to stop the victimization because of a "vacuum created by a lack of government regulation."  Why, if only government were larger, more intrusive and more intent on controlling every facet of life, then it would be unnecessary for folks like Scruggs to bring down Big Tobacco. Except that he didn't. All Scruggs and others, including Congress, did was to give the tobacco cartel an iron grip on the market by creating barriers to entrance, and in return the tobacco companies forked over protection money to trial lawyers and set up slush funds for use by state politicians. All of which they get back through customers in cooperation with those wondrous government regulators. Meet the new boss, same as the old boss; four legs good, two legs better, and all that. Scruggs as the best friend of the helots since the great liberator, Epaminondas, is a bit hard to read without tasting a little bit of throw-up in the back of your mouth.

That taste grows stronger at the end of the preface with this passage that describes a conversation between the author and Scruggs (I haven't mentioned yet that Wilkie is an unabashed friend of Scruggs):

As I was leaving the room where we met, he folded his hands and asked, "When all this is over, are you going to be able to tell me how I got mixed up with these guys?"  

I have tried.

Excuse me? How did Scruggs get mixed up with all these bad boys? Let me check the title of the book again. Oh yeah, Rise and Ruin of America's Most Powerful Trial Lawyer. I thought we were talking about Zeus here. Just a few pages earlier, didn't it say this: "Scruggs first drew blood from the asbestos industry and then brought Big Tobacco to its knees . . . . he was locked in an epic struggle with his most formidable opponent to date -- the American insurance industry . . . ."   

Um, how come one minute he's the most powerful trial lawyer in the country and is up on Olympus kickin' some tobacco, asbestos and insurance a$$, but then the next minute he's a victim? Isn't the better question how "those guys" got mixed up with him? Now, let me make a guess here -- we're going to hear some Poorer-Than-Thou talk. That is, we're going to read a fair amount about Scruggs' being poor when he was a kid and consequently he overcompensated about money and control and winning at all costs. With the point being the same one as in the great line in West Side Story: "Hey, I'm depraved on account I'm deprived!" If so, try and sell that to Officer Krupke because I'm not buying. 

OK, we're off to an inauspicious and ill-omened start. I hope I'm wrong about what else the book is going to say -- or leave out. But I bet I ain't. 

Posted By David Rossmiller In Industry Developments
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Another great editorial from the Wall Street Journal, which long ago saw that Dickie Scruggs and Jim Hood, despite claiming to be clothed with righteousness, were walking around with no pants.  The backdrop of this opinion piece is the cache of emails that came from a document subpoena by State Farm in Ex rel. Rigsby, the False Claims Act lawsuit that was supposed to be the centerpiece of the Scruggsification of Katrina litigation, applying that special mix of Scruggs' secret sauce: "whistleblowers, "  folks making off with "insider" documents, add some sweet potatoes, stew it all up with mighty blasts of hot air and do a little home cookin' in your friendly local magic jurisdiction.   

Before I talk about the WSJ piece and those emails a little more, I want to point something out about this Rigsby lawsuit.  This is the one most people call the Qui Tam, but I don't, because that sounds like some kind of toenail fungus,  so I prefer to call it by its given name.  The sand ran out in the timer on the Rigsbys' 15 minutes of fame some time ago, and I feel sorry for them that they invested all their capital in shares of Scruggs, Inc. right before the doors got padlocked.  Somehow they became convinced that wearing a gasoline suit and playing with matches was a great idea.  It's sad, really.  What I want to point out is this -- after the emails became public, and after I wrote about them here, I looked up the ruling by the federal judge in the District of Columbia that resulted in the Rendon Group being forced to give the emails to State Farm. 

About three years ago I wrote a chapter in the Appleman on Insurance Practice Guide (shameless plug) about the attorney-client and work product privileges and so I like to think my knowledge in this area of the law is somewhat above average.  I was thinking, why weren't these emails, or at least some of them, protected as work product or by the attorney-client privilege?  Not saying they would have been, but I wasn't clear as to why not.  

Now, before continuing, let's take a pause and put a section here that is just for the people who aren't die-hard, shrieking, soccer-hooligan-like fanatics of this saga.  These folks, whom we will henceforth refer to as "normal people," might find useful an overview of this, just of whiff of Secret Sauce.  If so, the judge in D.C. gave a pretty good summary here, and after this brief intermission we will return to our regularly scheduled programming:

The complicated story begins with the Rigsby sisters, who, while working as claims adjusters for E. A. Renfroe & Company, a contractor for State Farm Mutual Insurance Company (“State Farm”), found information that they claim showed that StateFarm was defrauding the United States in the manner in which it was processing the claims that the insureds were making for damage to their homes and businesses caused by Hurricane Katrina. Several law firms in Mississippi then began to investigate and prosecute claims by those insureds against State Farm. The Rigsby sisters also brought a qui tam action against State Farm in Mississippi. The law firms in Mississippi hired The Rendon Group, Inc. (“TRG”), a Washington D.C.-based public relations firm, which apparently had the obligation to create a favorable public atmosphere for the lawsuits that the Scruggs Law Firm, P.A. (“Scruggs”) and other law firms who were bringing or going to bring in relation to Hurricane Katrina. The atmosphere became a lot less favorable to the Rigsbys and the law firms when an Alabama court was convinced that the Rigsby sisters had illegally taken from State Farm the documents upon which the law firms were predicating their claims against State Farm. Additionally, there was an apparent public disclosure that the Rigsby sisters had accepted a large amount of money from Scruggs for their services as plaintiffs. To make it all the more interesting, Richard “Dickie” Scruggs, the head of Scruggs, has since gone to jail for bribing a judge in what I can only hope is an unrelated matter. The Scruggs law firm has since dissolved.

That's the judge's summary of what all the hoo-ha is with the Rigsbys.  Now, more about the privilege issue.  When I read the judge's decision, it was not what I thought I would see.  I thought somehow the privilege of the Rigsbys might have been waived by being disclosed to outsiders, or some such.  But no.  In fact, the Rigsbys' own lawyers couldn't assert privilege because they couldn't review the documents that arguably were subject to privilege for fear of being tainted and disqualified by the same mess that got their previous lawyers disqualified. That's what it's come to, folks.  This Scruggs-Katrina thing started out as a blitzkrieg of armored columns and right now it looks about like Jed Clampett,  Granny, Elly May and Jethro driving up the street in their truck. Here's a pdf of the ruling so you can see for yourself.   

The Rendon Group, the public relations firm Scruggs hired to stage manage what was to be his latest triumphant business venture, tried to step in and assert privilege, but that's about like you taking advice from your mother-in-law during a fight with your spouse, it's not going to happen.  The Rendon Group had no standing  --  they had no basis to assert attorney-client privilege because they never had an  attorney-client relationship with anyone.

All right, so that's enough about the Rigsbys for now. We set out to talk about that WSJ editorial, so let's do that for a while.  

The editorial mentions, in recounting how Mississippi Attorney General Jim Hood worked with Scruggs and other trial lawyers to come up with a Kobayashi Maru scenario for insurance companies in the state, how Hood had denied to the WSJ that he ever colluded with Scruggs.  Of course, there were some prior indications that other Hood's denial was subject to potential other interpretations  But then those Rendon emails came out and Whoops!  Hood, and a number of other people, must feel like someone walking down the hospital hallway with one of those surgical gowns that has no back to it.  Turns out Scruggs' own PR firm, Rendon, worked on "cleaning up" Hood's prose for a letter he wrote to be published in the Journal.  Ouch.  Is that the best they could do?

You know, the judge in D.C. ordered the release of only part of what State Farm asked for in the subpoena to Rendon, and he may change his mind and order Rendon to give up more.  The Ex rel. Rigsby trial is set for December, let's hope there is some reason the rest of these emails will come out.   If this fragment holds this much treasure, imagine the untapped riches in the rest.  Plus, these emails are some of the most hilarious material in the whole Katrina Follies.  I mean, it was obvious the master plan went drastically awry and that things got FUBAR'd up beyond all repair, but I had no idea this gang was so inept.  Some of these people, they should have been wearing floppy shoes, baggy pants and curly orange wigs, and walking around beeping each other's red noses. 

Also, thanks to the Journal for the kind words about me --  "did the nation a service."  That is high praise indeed.  I know I was read throughout the Scruggs Nation, which is a subset of the actual nation consisting of various folks whose minds are inexorably wrapped around this story, including Scruggs skeptics and opponents, lawyers and others who know Scruggs or know of him, people in Mississippi and the South, folks involved in Katrina litigation, various Scruggsites and Hoodian sycophants who love to hate on me, and so forth.  But it's nice of them to give me an upgrade, as it were, to the nation as a whole.  I certainly felt the whole Katrina story was not only fascinating but important enough for me to give up not only all my free time but a lot of sleep for a couple years.  Plus, let's face it, it's pure comedy gold. 

UPDATED: After I hit the publish key, I thought, I hope someone doesn't take the last sentence wrong.  There certainly was nothing funy about the hurricane or the destruction it brought.  By the Katrina Follies, I refer only to the goofballery that characterized so many revolutions of the Scruggs-Hood axis.  That's where I walked onto the scene. 

Posted By David Rossmiller In Industry Developments
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After a year's hiatus, I've been looking for the right time to start blogging again.  This is that time. The sun, which never sets on the Scruggs Nation, shines ever so brightly once again.

I mean, I can't pass up a moment like this one, where there is a golden cache of emails out there in the public record, a used-to-be secret hoard of communications between the inner Scruggs circle and the PR firm that was supposed to stage manage his triumph in Hurricane Katrina litigation.  What could go wrong with that plan?

I apologize in advance to readers who are not well-versed in Scruggsmania, or those who have forgotten some of the names or sequence of events. In this post, I won't have the time to give a total recap and will have to assume that the reader has a background in what I'm talking about.

These emails are attached to this post at the Y'all Politics blog, and yesterday blog proprietor Alan Lange called me and said they were a must-read.  Here's a link directly to the emails. Alan said these were required reading particularly since a fair number of these emails are about me and my Scruggsblogging.  Well, I read every single one of them and my reaction is . . . what's the word I'm looking for here? Yowza! Crikey! Or maybe even Holy Cow!  

With this new information coming to light, I might have to re-evaluate. I thought at the time this was a pretty sophisticated bunch, the Scruggs PR operation, but these emails make me wonder.  Look, I'm not naive about PR people -- as a rule, to their clients' faces they are utter, shameless sycophants that would make Toadie from the Road Warrior look like Winston Churchill in comparison, but behind their clients' backs they snark on them mercilessly, Joan Rivers style. So you expect to see some stuff like that in emails, particularly when they have to deal with a rather challenging bunch like the Scruggs gang.  But I was surprised to see Dickie dissed, and my oh my but the Rigsby sisters get less respect than Eleanor Rigby.

And I do think that at the beginning of Katrina litigation the PR people in conjunction with Scruggs did a really nice job of managing the news cycle.  And I have to say that when I read things such as chief Scruggs PR flack Ainsley Perrien calling me "irresponsible and offensive," that's OK. I mean, what else is she supposed to say to her clients? It's a tough job she had.  I'm sure in person she is a perfectly pleasant professional and I wish instead of kvetching about me and assuming I was some hireling living off State Farm's payroll she would have called me up to give me her point of view, and if she asked I would have been happy to tell her why I was doing what I was doing: I found the Katrina story to be fascinating human drama and it became a hobby to blog about it. It was just a pure accident.  And I could have told her that all these hilariously Inspector-Clouseau-like schemes revealed in the emails that were supposed to silence or counter my blogging wouldn't have any effect, but I certainly would have listened to and valued her perspective if offered in good faith.  How does the maxim go? "A man convinced against his will is of the same opinion still." 

Some of these schemes are: (and to be fair, not all of these were hatched or necessarily endorsed by Perrien, some of them came from Zach Scruggs or the Scruggs(less) Katrina Group)

• Serving a subpoena duces tecum for my "blog records" aimed at finding out who my sources were and intimidating people, which they refer to as "snitches" or "squirrels,"  from communicating with me.
• Creating astroturfed, fake blogs that would be pro-Scruggs and/or attack me.
• Submitting a ton of fake, astroturfed pro-Scruggs comments to my posts.
• Investigating me in an attempt to dig up dirt and/or expose me as a complete idiot or paid lackey of the ruling class.
• Complaining to media reporters who interviewed me and quoted me.

In my view, these are are all foolish and ineffectual ideas.  Let's explore the reasons:

• I would have quashed a subpoena as harassing and irrelevant to any case in which it was issued,. To be valid, the subpoena would have had to issue under the authority of the U.S. District Court for the District of Oregon, and so I would have fought it in Portland. I also would have used Oregon's media shield law to keep from revealing any sources -- I was a newspaper reporter back in the day, and bloggers are every bit as much journalists as print and broadcast media. 
• I guess one man's "snitch" is another man's "whistleblower," eh? And vice versa. For folks who were so involved in promoting the "whistleblower" Rigsby sisters, you would think they would get the nomenclature right.
• Almost all my information came from public records like court filings so the sources were pretty obvious.
• You can fake all the astroturf blogs you want, but since it was a pure accident I happened along at the time I did, I couldn't be replicated or reverse engineered. 
• Swarms of pro-Scruggs comments under the posts, written by some rent-a-mob? How pathetic is that?  You think I don't know who writes those comments? I saw very few of these kind of comments, in any event.
• I guess they didn't find the dirt. Whew!!
• As someone who worked for a metropolitan daily newspaper for eight years, I can state with great certainty that telling media people whom they should talk to is a good way to make yourself look weak, weasely and untrustworthy, and goes a long way toward totally discrediting yourself. 
• The internet is a marketplace. People read what they want to read. Good and entertaining posts are in demand, mindless shilling and hack writing are not.

In many ways, this is stuff lawyers and professional PR people should know.  It's kind of odd that they didn't, don't you think? They didn't know what to make of blogging, like it was a completely alien life form. It's kind of like when the Aztecs first saw Cortes and his crew on horses, they couldn't figure out what they were looking at.

Let's look at a few of the things these people said:

• Page 238 of the pdf, a July 29, 2007 email from Zach Scruggs to Ainsley Perrien. "What do you think about setting up someone to blog against him directly, refuting statements he makes. I will write the blog if someone else can actually do it. I don't want to do it directly because it drags me down to his level, but it should be done."  I have always liked Zach Scruggs, I wish he had only sunk as far down as my level.
• Check out page 337, a heated email from Zach to Perrien dated November 12, 2007, where he says "we need someone else (a lawyer) who dedicates his life to attacking Rossmiller's blogs on us," and demands that Perrien come up with a concrete plan to stem a flow of bad publicity from a variety of sources that is "making us look like criminals."  Remind me, how did that plan work out?
• Look at page 240, Perrien's response to Zach. She talks about chewing out the Associated Press reporter who interviewed me, bemoans the fact that Zach won't blog and talks about putting another blogger on the Scruggs Katrina Group website that is "very aggressive like rossmiller w our side of the story. We could do that today."  She had to know it wasn't that easy. I mean, she had to, right, she was just shining him on? If wishes were horses, beggars would ride.
• Same email, she says to Zach: "We were just meeting Friday and Saturday over the rossmiller blogger issue and decided to implement our own person to go after him. Once ap started quoting him I hit the roof." Come on, two days of meetings about me? I don't believe that for a second. This is all a pose, this roof-hitting. And who is this person they implemented to go after me? Whoever it was, someone forgot to tell me, I never noticed and apparently neither did anyone else. In any event, this plan either never materialized, was attempted but FUBARed up beyond all repair, or happened but failed in spectacular New Cokeian fashion. 
• Page 350 has another November 12 email from Zach to Perrien. I really like this one, Zach is a good writer, if he had blogged more like this it would have been something to behold.  The email is a long rant about how unqualified I am and yet the media is giving me all kinds of credibility, and then there is this great line: "Other than staying at a Holiday Inn Express last night he has no basis to be able to opine on any of this stuff . . . . EXPOSE HIM!"   One reason I like this so much is about four months before this email was written I was back in the small town in North Dakota where I grew up at a school reunion and a girl I went to high school with introduced me to her husband. She mentioned I was a lawyer and he said, "Yeah, and you stayed at a Holiday Inn Express last night too." He thought we were putting him on, didn't believe I was really a lawyer, I mean, it's natural, not that many lawyers from a small town, right? It was a pretty good laugh. I guess he expected that lawyers wear a suit at all times.
• Page 375 has a January 3, 2008 email from Perrien to someone whose name is not familiar to me (maybe he stayed at a Holiday Inn Express the previous night). Speaking of me, she says, "FYI -- this is the blogger that is driving us nuts."  She talks about training some blogger who was going to take me on.  In one of the earlier emails, there was some reference to "Anna Marie" and "Cottonmouth," whom I take it were in some way being encouraged to indulge in pro-Scruggsianism and possibly take me on. If I ever knew, I no longer remember who these people are.  Can anyone help me out?
• Starting on page 378, there is a lot of interesting stuff, from February 2008 and there is an entire post I wrote about Mississippi AG Jim Hood testifying in court.  This was my favorite post evah and I see it drove the Scruggs Katrina Group, to quote Ainsley Perrien, "nuts." I know these are just private musings and people under pressure blowing off steam, so I don't take it personally or that seriously, what they are saying.  These things they are talking about like "pop[ping] this jerk w a subpoena," subpoenaing my "ass" to see who was paying for my "poison," delving into my firm's internal records, shutting down my "ass" and my "little snitches" too. Page 397 contains a plan that was ill-thought-out and I'm sure after emotions cooled the author realized its flaws.
• Page 405 has a great email from Perrien to the Scruggs Katrina Group people, it's part of the same thread. This is a classic instance of someone trying to act like they are going along with some kids who are going to TP the teacher's house or Dippity Doo his car door handles while actually saying stuff that will tend to get them to think twice about it.  This email is so great the only way it could be any better is if it was covered in chocolate. Remember now, Ainsley Perrien has been in the PR business for decades, deals with the media all the time, and she says goofy stuff like "would it be a freedom of speech issue? Would he try to take that stance? I don't think there is a lot of precedence on this.  Going into unchartered territory can be time consuming.  On the other hand we need to show our teeth.  This would certainly get coverage and raise the issue of how bloggers impact litigation. They are not journalists and can't be protected as such, I would think, given the obvious bias."
• Wow! She is totally putting these guys on, right? I mean, this is a seasoned professional, she knows you don't need a little "press" tag in your hat or a government-issued badge to be a journalist, right?  She knows that opinion columnists write obviously biased pieces and that they are protected just the same as the "neutral" people, correct? She's aware of the First Amendment, state media shield laws, anti-SLAPP suit laws, not to mention the fact that she thoroughly researched me and knew I know media law very well and am also a litigation lawyer by trade, right? And she knew this would have been a total fiasco and about the last thing this bunch needed at the time, right? I mean, secretly she is thinking, this gang doesn't need to be taking anyone on, they need to be running for the tall grass, isn't she?  In reading through these 400-plus pages of emails, I really liked this lady, I'm sure she knows what she is doing.  Like when she asks whether they are going to serve me with a subpoena when I arrived in Mississippi for the Mississippi State Insurance Day forum, that was only to point out how stupid it would have been and how I would have stood on that stage where I spoke waving that subpoena, and how they would have been the laughingstock of the (Scruggs) nation. I like how at the end, right after giving this half-hearted line about how they should call her if she can be any help putting the flaming bag of dog poop on the teacher's porch, she pretends to be one of the cool kids by adding, "Rossmiller is irresponsible and offensive to me." Well played, Ainsley!
• Page 425 has this great plaintive all-caps wail type of thing going on, and page 428 more fantasizing about subpoenaing my "blog records," whatever that is. 
• Page 434 has about the first sensible thing I read in these emails, it says "Be prepared for him to come at us with both barrels if we do that.  Those guys are dangerous and we might be walking into a lion's den." To which I say, Amen! You don't know the half of it, brother.
• Page 438 has this thing from lawyer Don Barrett that says "We must be very careful here," and essentially shuts down Operation Ass Subpoena. 
• However, page 442 has some more foolishness about how some guy they were training up was going to go after me on some blog, some guy named Norm.  Whoever this was, I'm sorry, but I don't remember this happening. If you actually went after me, Norm, no offense intended by not remembering.
• Near the end of the emails, Perrien asks someone, in response to a post I wrote about the Trailer Lawyers, "What are the Trailer Lawyers?" (This, by the way, was after I had been to Mississippi, where I noticed my ass was not served with a subpoena while there).  This sudden lack of enthusiasm for the fight, this lack of attention to detail, disappoints me.  Ainsley, my friend, it is not "what," but "who," for the Trailer Lawyers you know well by their given names, but the names the rest of us know them by are these: Trailer Chip and Trailer Tony, Trailer Todd and Trailer Mary.  It says so right here.  And, Ainsley Perrien, let's close this post with this requiem that brought me great sadness to write, for with this the Trailer Lawyers slowly pulled their double-wide off into the sunset. Sing it with me, to the tune of Don McLean's American Pie:  (I admit it needs updating, it was written two years ago).

Bye bye Trailer Lawyer pie,

Drove my trailer to the courthouse but the judge said bye bye

Them Snake Farm boys was laughing while we cried

Singing this will be the day your case dies,

This will be the day your case dies. 

Now for five months, we've been on our own

Since Scruggs got knocked off his lawyer throne.

But that's not how it used to be.

When the Rigsbys sang for ABC,

With some quotes they borrowed from Dickie,

And some files that came from piracy.

And as we reached the motion stage, 

My hands were clenched in fists of rage,

No story we could tell,

Could break that Snake Farm spell.

And as our briefs climbed higher in the fight,  

We just couldn't seem to get it right, 

I saw bloggers laughing with delight,

The day the Qui Tam died.

And they were singing,

Bye bye Trailer Lawyer pie,

Drove my trailer to the courthouse but the judge said bye bye

Them Snake Farm boys was laughing while we cried

Singing this will be the day your case dies,

This will be the day your case dies. 

Posted By David Rossmiller In Industry Developments
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For those who remember the heady Katrina litigation days of the Ride of the Rigsbys -- appearing on ABC's 20/20, acclaimed as alleged whistleblowers -- these times are very different for the sisters. They've slipped in the celebrity rankings to a most unenviable category: forgotten but not gone.  The inevitable next stage?  Jointly occupying a corner box in the New, New Hollywood Squares, I suppose, hosted by John McEnroe or some such.

Contestant: I'll take the Rigsby Sisters for the block.

McEnroe: Kerri and Cori Rigsby. What famous tourist attraction features more than 200 kinds of reptiles?

Rigsby Sisters: Snake Farm!!

Contestant: I'm going to disagree.

McEnroe: The correct answer is the San Diego Zoo. Circle gets the square.  By the way, Rigsby Sisters, you've answered either "Snake Farm" or "State Fraud" to every question this week. 

I saw this Anita Lee story in the Sun Herald about the latest on the Rigsbys.  The case brought against them by E.A. Renfroe, a State Farm contractor who did claims adjusting for the insurer during Katrina, a case in which they were utterly routed, is nearing final settlement.  Have I gotten totally out of touch, or are the names under the Rigsbys' pictures reversed in the story? Not Anita's fault, someone else other than the reporter does that kind of stuff at a newspaper.  You know your status is in free fall when they put someone else's name under your picture.  In a month or two, folks won't even get the Rigsby part right, the cutline under the picture will have the name of some other former celebrity of yesteryear, like, say, Gary Coleman of Diff'rent Strokes. 

The story has some pdf's of stuff to do with the winding up of the Renfroe v. Rigsby case in Alabama federal court and an interesting filing from a few days ago in the False Claims Act case, Ex rel. Rigsby, in federal court in Mississippi, which to me appears to be tottering like a 90-year-old guy without his walker. Here's that pdf.  Looks like more of the same old to me, the usual blah blah about the Brian Ford engineering reports on the McIntosh property and so forth.  You may remember these reports from the unusual detail that the first one attributed all the damage to wind, and strangely enough, Kerri Rigsby herself later wound up greenlighting the flood payment to the McIntoshes.  So there would seem to be some inconsistency there. As Gary Coleman might say, "What you talkin' 'bout, Rigsbys?"

The filing seems to be a plea to be allowed to engage in discovery before a May 20 hearing on this case before Judge L.T. Senter Jr., and Judge Senter has already said this won't happen -- the basis for the case is supposed to be first-hand knowledge of the massive fraud the Rigsbys allege.  If you read the document, you can see the first-hand knowledge is pretty thin, just a couple of anecdotes. Didn't see anything in there about Kerri Rigsby approving the flood payment, maybe that will be covered in the next brief. Or maybe the brief will say Gary Coleman approved the flood payment.

All right, so that's it for this post, except for one more thing.  Let's finish it off with the newest song I've added to my work-in-progress musical, The Katrina Follies.  This song, Don't Ignore Rigsbys, as I posted about two days ago, appears in the second act, and is sung by the actors portraying Dickie Scruggs and Mississippi AG Jim Hood, to the tune of the Beatles' Eleanor Rigby.

Ah, look at those two whistleblowers

Ah, look at those two whistleblowers

Don't ignore Rigsbys

Picked out the fraud from the files where Snake Farm had it hid

That's what they did

Met in a trailer, accessed computers and lawyers were there

Just 'cause they dared

All the whistleblowers, where do they all come from?

All the whistleblowers, where do they all belong?

Posted By David Rossmiller In Industry Developments
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Nothing like giving the readers a lot of advance notice before an ultra-high stakes award like this is finalized, right? I'm a bit tardy on this, but hey, it's not like I'm on the advisory board of the Insurance Law Center and might have been expected to post on this more than a day before the contest ends . . . oh yeah, I am. 

Well, in any event, here is a link to the ILC's Insurance Person of the Year voting, with four big categories: policyholder lawyers, regulators, judges and insurer-side lawyers.  In the last category, I'm surprised no one nominated Dickie Scruggs -- he almost did more for State Farm and other insurers, in the long run, than they did for themselves. 

(By the way, I'm almost done writing my musical, The Katrina Follies. Here's one of the latest songs I've written, Don't Ignore Rigsbys, which is sung to the tune of the Beatles' Eleanor Rigby.  This song comes in early in the second act, sung by the actors portraying Dickie Scruggs and Mississippi AG Jim Hood). 

Ah, look at those two whistleblowers

Ah, look at those two whistleblowers

Don't ignore Rigsbys

Picked out the fraud from the files where Snake Farm had it hid

That's what they did

Met in a trailer, accessed computers and lawyers were there

Just 'cause they dared

All the whistleblowers, where do they all come from?

All the whistleblowers, where do they all belong?

Anyway, check out the link, if you care to.  You too can vote for your favorite!  As long as it's one of the finalists listed.  A veritable Insurance People's Choice Award.  And don't worry, you've got . . . well, almost two whole days left, until March 18, to get your vote or comment in.

Posted By David Rossmiller In Industry Developments
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Kodrin v. State Farm is one of the Katrina cases, which I wrote about previously here and here.  It was different from many Katrina cases in that, at least as far as what was presented to the jury, there was nothing to sort out about wind vs. water and what damage had been caused by each.  So this is not one of the cases where anti-concurrent cause language became an issue -- although as I repeatedly talk about, under the facts of Katrina damage, anti-concurrent cause language should never have been an issue, because the facts of Katrina damage do not support analysis of the damage as caused by concurrent causes. 

I never get tired of saying this: I will be saying it in my speeches at the PLRB conference in Seattle later this month, and I probably will still be saying it when I am a little old man sitting in a rocker in front of the TV complaining about how the neighbor kids are so loud I can't hear my programs and by the way, why doesn't the milk wagon come anymore? No set of facts I have looked at -- and I have looked at a lot of them -- shows that any Katrina damage was caused by anything other than single forces working independently.  A lot of you may have heard this before, so you can skip the rant and jump down to a further discussion of Kodrin, but I think it bears repeating because this point is so easily lost in time.  Homeowners policies insure against damage to property, property has various elements.  Unless multiple concurrent forces cause the same damage to the same element of property, that is, unless they worked together to cause that result and unless it would not have occurred except for the combination, concurrent causes were not at work.

Kodrin is the ultimate in single causation questions: that's all the jury heard, a dichotomy between the Kodrins' claim that wind alone destroyed their house, and State Farm's claim that flood alone destroyed their house.  This may sound like a strange set-up to you, until you look at the facts of the case: the whole neighborhood was hit by Katrina flooding, which washed the rest of the houses off their foundations and kind of pooled them in one location.  These homes, although severely damaged, were not utterly torn down and demolished.  The Kodrins' home, among all of them, was the only one obliterated. 

This led them to,  as the Fifth Circuit put it in their opinion from a few days ago, "speculate" that a tornado destroyed the house.  Their claim was belied by their acceptance of the policy limits of their flood insurance.  I don't say this to be a smart alec, but rather because I wonder about this flood payment in Kodrin and a number of other instances: did they give the flood money back or did they keep it? I ask this because the choice before the jury was all wind or all flood, and the jury found all wind. So what happened to the federal flood money?   

The jury, as the first link above shows, felt the Kodrins had been treated unfairly and awarded them the maximum amount under the policy plus punitive damages under Louisiana law.   I'm not sure if I'm adding it up correctly, but it looks like the punitive damages were about $135,000, plus about another $140,000 in statutory attorney fees and costs, not a huge amount in the scheme of things, but the precedent was important to State Farm, I imagine. 

The challenge to the verdict on the damage itself, as opposed to the punitive damage portion, was a steep climb uphill -- you have to show that the jury instructions were wrong and prejudicial, and stuff of that ilk.  Most of the time such challenges don't succeed, and this one was no different.  Even though it wasn't necessary for the court to parse out causes -- because whether you believed it was wind or water that caused the damage, it was presented to the jury as an instance of single force causation -- I was pleased to see the Fifth Circuit panel recognized that merely because flood destroys a house does not mean that covered wind damage didn't previously occur.  This is the example they used, in footnote 15 on page 7:

It is important to distinguish between this dispute over which force totally destroyed a home and cases in which the parties disagree as to the causes of various damaged elements of a home. Distinct elements of damage would have to be considered separately. Flood damaged carpets, for example, would not bar recovery for a wind-damaged roof.

Now, this gives me some hope that this panel gets it when it comes to an understanding of the proper analysis to differentiate between single and multiple force damage: first determine what the loss is.  The example used, flooded carpets and wind-damaged roof, was a fairly common scenario in Katrina damage, but it really doesn't present any analytical problems, only problems of proof.  The real test of understanding is the realization that the carpet itself, or the roof itself, could be damaged by two single forces that caused separate damage, one covered and one uncovered, and that this does not make them concurrent forces. 

A house is not a unitary phenomenon of property, it has constituent elements that themselves are property.  Constituent elements such as carpet, likewise, are not monolithic, but have various degrees of worth as property -- merely because wind tears some pages out of a book does not make the book worthless, although its value might be lessened considerably.  There is still some value there when the book is destroyed by flood -- the two forces worked separately to cause separate damage, and the damage from the first force still occurred and caused damage even though the second force would have taken all the value of the book away.  The key is would have: in the hypothetical I pose, that is not actually what happened, and so would have doesn't matter.  However, as I said, it wasn't necessary for the Fifth Circuit to consider that issue this time, and so they didn't, and this is just as well, because explanations from the Fifth Circuit of Katrina causation analysis usually haven't been that great.

Although the court left standing the jury verdict on property damage, it vacated the award of punitive damages.  The court said, in light of the evidence, there could be an honest dispute about what caused the damage to the Kodrin home.  Again here, I don't know what happened with the flood payment, whether that was returned or not, or the precise circumstances under which it was applied for, paid and accepted, but the very fact of a flood payment creates an idea in my mind that there could be an honest belief that flood caused the damage. 

Here's what  the court said about bad faith, when it exists and when it doesn't: 

State Farm declared that it determined flooding was the more likely cause of the damage to the home because (1) the Kodrins’ neighborhood was inundated when a levee was overtopped during Hurricane Katrina, (2) the Kodrins’ home was just one house away from that levee, and (3) many other houses in the area were lifted off their foundations and destroyed by the floodwaters. The Kodrins themselves acknowledged that their claimed wind damage to their home was unusual in their neighborhood, advancing that a tornado must have caused the damage as their speculation why their home was the only one in the area destroyed by wind, not flooding. On these facts, we perceive no probative evidence that State Farm acted in bad faith. State Farm’s refusal to pay was with reason, even if the jury ultimately rejected that reason. The Kodrins have failed to prove otherwise; they essentially ask this court to find bad faith any time an insurer denies coverage and a jury disagrees. This would unduly pressure insurers to pay out claims that they have reason to believe lie outside the scope of coverage, solely to avoid penalties later. Such a rule would pervert the presumption that insurers act in good faith unless the insured proves bad faith, and this is foreclosed by Louisiana law.

Posted By David Rossmiller In First Party Insurance , Industry Developments
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The Scruggs Nation has a fever, and the only prescription is more Scruggs. Well, OK, this news story is not about Dickie Scruggs, it's about Zach Scruggs, not the same, I know, but it will have to do.  Seems like whatever happened with his reporting from prison to the halfway house, it's not going to be a big deal.  

He was arrested in Oxford, Mississippi, after allegedly reporting late to the halfway house.  His lawyers say he was 15 minutes early instead, so there's a discrepancy.  According to the story:

The Bureau of Prisons initiated an investigation after people reported seeing Zach Scruggs around Oxford on Feb. 24, the day he was to report to Tupelo. His wife, Amy, had picked him up at the federal prison, and they stopped and had lunch on the Square.

The Bureau of Prisons investigated what route Scruggs took from the prison as well as what he did while on the trip.

If he wasn't late, it really doesn't matter what route he took or what he did while on the trip, I would think. Well, anyway, who's to say?  The world may never know.  The story says he was released from the Lafayette County jail on Monday and is now at the halfway house. 

Posted By David Rossmiller In Industry Developments
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I was looking through my Bloglines feedreader last night under my folder labeled "anti-concurrent cause," and saw this really good post from the Slabbed blog.   This is a fascinating discussion not only of Katrina damage, but of the theory of illusory insurance coverage.  It's old, now, the post, from the nostalgia file, but it is still worth talking about.  

Now, as many of you know, in the course of my work I represent both policyholders and insurance companies, so I really don't have a dog in the fight (apologies to Michael Vick, I know the metaphor might be a touchy subject), and I have no particular ideology when it comes to insurance.  I like insurance theory because it, in many ways, is like Plato's Allegory of the Cave, in his Republic: it is merely a metaphor for the human condition and the limits not only of attempts to order and describe human behavior according to the logos -- rational principles in harmony with the universe  -- but also of the limits of human understanding.  The concept of causation, of which anti-concurrent cause theory is a part, and of 'illusory' coverage are just some of the shadows on Plato's cave wall. 

I'm sure that if you go looking for illusory coverage you can find or think of some examples, but as it is discussed in most case law, illusory coverage seems to me a particularly hard-to-pin-down shadow on the wall.  In some ways, the theory of illusory coverage is itself illusory, in other words, and I have great confidence that whatever it is and wherever it is, it is not found in anti-concurrent cause language in insurance policies, at least the way I explain anti-concurrent cause.  So I can't agree with the premise presented, both by the author, nowdoucit, and quoted material from policyholder lawyer Chip Merlin, that anti-concurrent cause language is in any way ambiguous or illusory. 

The key to what I am saying here is that anti-concurrent cause is merely a causation analysis that is present in the contract and overturns the common law default analysis of efficient proximate cause, and another key is the realization that insurance policy language is full of special definitions and terms of art that are not necessarily the same as English.  This fact of life is because insurance policy drafters attempt to respond, in addition to the changes in the nature and amount of losses, to court decisions.  I don't see anti-concurrent cause as actually removing any coverage from a policy, but even if it did, this is not a startling idea -- exclusions do the same.  A causation analysis just defines the relationship between forces and coverage, it just tells how to apply the language and terms of the policy.   Anti-concurrent cause analysis may take some work to understand, but at it's heart, it exists to keep uncovered damage from being covered, not the other way around.  Once you accept that, and it is difficult for many to accept, it is a direct route to realizing that the words "concurrently or in sequence," as found in anti-concurrent cause clauses, are words that are not nearly as expansive as might be imagined on first blush, but instead are pretty limited in application. 

I could go on and on about this -- I have before and I will again.  I'm going to be speaking about Katrina damage, wind vs. water (in the Vegas line wind is currently a two-touchdown favorite for coverage) and anti-concurrent cause theory and application in Seattle later this month at the PLRB conference.  For reasons I don't fully understand, I am actually speaking twice, they tell me, on March 24 and 26, I think are the dates.  If you're there, come to one of the speeches and we can talk about these shadows on the cave wall. 

Posted By David Rossmiller In Industry Developments
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You might recall that one of the central talking points by certain people during the heyday of Katrina litigation was this: insurance companies committed massive fraud on policyholders and federal taxpayers by overstating flood damage that would be paid, up to $250,000, by federal flood policies, and understating wind damage that would be paid from the insurers' own pockets.

To me this point was like one of those tiny cars in the circus where, paradoxically, a large number of clowns keep coming out of it.  As we've since learned, this strategy of claiming this type of fraud was arrived on just after Katrina happened, long before claims had even been adjusted.  Among the chief proponents of this view were, of course, Mississippi AG Jim Hood and his confidential informant, Dickie Scruggs.  They, of course, had their hallelujah chorus of such as U.S. Rep. Gene Taylor, Sen. Trent Lott and many others, all singing the Katrina Fraud Theme Song (which is sung to the tune of The Beatles' Hello Goodbye):    

You say flood, I say wind

I say fraud, and you just grinned, grinned, grinned

Oh no! You say let's steal, and I say get real

Let's steal/get real

I don't know why you say let's steal, I say get real

Despite Congressional hearings and other such massive wastes of taxpayer money -- hearings that included an assortment of dingbats and moonbats, not the least of which were some of the people on the Congressional committees themselves --  nothing came of all this Wagnerian screeching.  

Now, it has always seemed pretty clear to me that this strategy of claiming fraud on the nation's taxpayers was simply a way to try to nationalize Katrina issues and put added pressure on insurers to pay more.  One of the legal offensives that supposedly would vindicate these accusations was a False Claims Act case filed by Dickie Scruggs and his "insiders," the Rigsby sisters.  You can ponder the words "False Claims Act" and decide for yourself what the false claims are in connection with this lawsuit: the insurers' conduct or the allegations themselves. 

This case is the one that people who deal with these Katrina cases all the time refer to as "the Qui Tam," which in Latin of course means "Who's Your Daddy?" I prefer to call it the False Claims Act case, because I hate to be ruled by the dead hand of Latin, or if I must use Latin, I call it by its name, Ex rel. Rigsby,  which sounds like a great name for a race horse.  This case, you may remember, featured secret meetings in beach trailers to access State Farm files from laptops, it featured the Trailer Lawyers -- Trailer Chip and Trailer Tony, Trailer Todd and Trailer Mary -- and it featured the flood payment in the McIntosh case, and for the quiz, all you really need to remember about that payment is this: Kerri Rigsby herself approved the flood payment. You heard that right. The only specific example cited in the lawsuit of fraudulent conduct is one where the supposedly fraudulent payment happened because of one of the plaintiffs, or as they call them in this type of lawsuit, "relators." Try to "relate" that fact to the overall allegations: Kerri Rigsby approved the federal flood payment to the McIntoshes.    

I was looking at the docket of this case, and there was an order by Judge L.T. Senter Jr. in mid-February, and here it is. This is a fascinating order, typically brief, well-written and to the point,  which to me appears a clear indication Senter may be getting ready to pull the chain on this thing. Here is what I saw as a key part of the opinion:

In their Amended Complaint, Relators identify two and only two specific instances in which they allege the submission of false flood damage claims: the McIntosh property situated at 2558 South Shore Drive, Biloxi, Mississippi; and the Mullins property situated at 6057 Pine Tree Drive, Kiln, Mississippi. The defendants assert that the Mullins property was not covered by a SFIP and that the SFIP payments made on the McIntosh property were fully justified in light of the flood damage there. McIntosh collected the statutory maximum SFIP coverage on his property, and the individual who supervised and approved this payment was one of the Relators.

My review of the material from the McIntosh case discloses that the McIntosh home was inundated with approximately six feet of water. The house was not reduced to a shell or left as a foundation only by the storm, so there was physical evidence from which the extent of flood damage could be reasonably estimated. Because this is a FCA case and because the McIntosh property is the only property covered by a SFIP and identified in the Amended Complaint, I believe it is appropriate to conduct a hearing on the pending motions to allow the parties to present evidence concerning the question whether the payment of the flood insurance limits in the McIntosh case was justified, as a matter of law.

The hearing will be equivalent to a summary judgment hearing, and the Rigsbys are not allowed to conduct discovery beforehand.  Instead, Judge Senter said he is interested to see what they know firsthand, because supposed firsthand knowledge of fraud by a whistleblower is at the root of False Claims Act lawsuits.   All in all, it looks like one of the last stars in the once glittering Scruggs/Katrina sky is ready to wink out. 

Posted By David Rossmiller In Industry Developments
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You might have seen how Zach Scruggs, whom this AP story describes as "the son of the once legendary civil lawsuit attorney" Dickie Scruggs, was released from prison early to go to a halfway house to  prepare "for a successful return to society." Whoops! Mission Unaccomplished. That successful return to society might have to wait a while.  

I might have edited the description in the first story to say "the disgraced son of the legendarily disgraced Dickie Scruggs," because, hey, The Scruggs is still legend, maybe more so than ever. I mean, let's face it, give the man his due, Dickie Scruggs is the guy who took down Dickie Scruggs! That's hard to do. When he was on top of the world, untouchable, he must have been tapped on the shoulder by an angel or something, because, well, you all know what happened -- he just up and Scruggsed himself. A public servant, is really what he was.  Against all expectations, he enlisted as a Commander in the Karma Corps, and as he looked down the ranks, there was Tim Balducci standing tall and proud, front and center, reporting for duty.  What I'm trying to say is, that's legend for you. Balducci and Scruggs, fixing their bayonets and charging toward their destiny.

But there will be more time to talk of Dickie.  You know the sun never sets on the Scruggs Nation -- gets eclipsed for a few months maybe, but it never sets.  Now is the time to talk of Zach.  There seems to be some confusion about what went on.  It seems he definitely was arrested by the Bureau of Prisons over some alleged irregularity over his reporting to a halfway house after being released from prison.  This story in the Hattiesburg American says:

Scruggs, 34, was arrested Friday by the Bureau of Prisons and placed in the Lafayette County jail after someone reported seeing him eating on the Oxford Square with his family Tuesday.

As best as I can understand it, the younger Scruggs didn't report directly from the prison to the halfway house, but instead went to the middle of Oxford, near the old Scruggs Law Office, and had lunch with his family.  Close family friend and former Mississippi AG Mike Moore was quoted in the story as saying  Zach stopped "to have lunch in his hometown and visiting his kids, then people started calling and blogging." Calling and blogging. Sure, it must have been startling, people might have thought they were having flashbacks to the old days, hallucinations, like you walk into a restaurant and you see Winston Churchill having a burger with Lizzie Borden, or something.  Must have had folks checking to see if someone laced their water with PCP. Folks probably didn't know what they'd see next, maybe Dickie himself bursting through the door in an Elvis get-up, with some fake Elvis hair piled up to the ceiling and gyrating his pelvis while singing Jailhouse Rock, just like in this unintentionally hilarious video, backed by a chorus of jailbirds. 

There seems to be some dispute about what happened.  Some officials say Zach was late reporting to the halfway house, but his lawyers say he was 15 minutes early.  Supposedly, there will be hearing later this week to determine his fate, and at this hearing, I guess we will see if this "15 minutes early" thing is yet another creative flight of lawyer language, the typical Scruggsian prose stylings like the fake and non-existent "insiders" Dickie Scruggs claimed to have in State Farm headquarters in Bloomington, Illinois.  (The fact Scruggs ever claimed this, which he did as a kind of head-fake psych-out strategy against State Farm, shows the danger of believing your own p.r.  It is little known, but about that same time, Scruggs also publicly boasted that he could stretch out his arms, spin them rapidly in a circle and fly like a helicopter).

The story doesn't contain a direct quote from Moore on this, but paraphrases him and another Scruggs lawyer as saying Zach "arrived 15 minutes before his deadline." Hmmmmm. Is there any wiggle room in that phrase, "his deadline"?  Let's look at a quote from his other lawyer:

Cal Mayo, another attorney for Scruggs, also said via e-mail, "Mr. Scruggs was released on Tuesday morning and given a time to report in Tupelo. I assume that (the) BOP expects an unescorted inmate on furlough from early morning to some time in the afternoon to have lunch, or at least this would seem reasonable."

Maybe the Scruggs version of a "deadline" includes assumptions of "reasonable" time for lunch and losing track of time.

Well, let's wrap this one up and wait to see what happens. A final word, the Hattiesburg American story says Scruggs "has landed a job as an office assistant in Oxford as part of the requirements of his release."  Reading that made me think, what became of the old Scruggs Law Office space on the square?  Is it now an FBI training center -- the Scruggs Center for Surveillance Studies, or some such? Inquiring minds want to know.      

Posted By David Rossmiller In Industry Developments
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Holy Cow! The McIntosh case, which I have referred to as the Verdun of insurance litigation, has been dismissed by the plaintiffs' own motion.  Given this litigation had long been the scene of intense trench warfare, consuming attorney fee dollars like five NFL offensive linemen chowing down on popcorn shrimp at an all-you-can-eat  buffet, it is surprising to see this turn of events.

If you remember, Thomas and Pamela McIntosh v. State Farm is the granddaddy of Katrina litigation, or perhaps more accurately, the Mother of All (Insurance) Battles.   This is the case where Kerri Rigsby of Rigsby sisters "whistleblower" fame approved the flood payment to the McIntoshes, and where, strangely enough, the original engineering report on the damage to the home said the damage was from wind, not flood.  Alexis "Lecky" King, a State Farm catastrophe team leader, found fault with the report and asked the engineers to re-evaluate.  The second report noted the presence of both wind and water damage.  Before we move on with the recap, remember that the first report was done by a man named Brian Ford, because his name will come up again. Ford did not work on the second report. 

Now, the McIntosh claims file was among those taken by the Rigsby sisters and fed to Dickie Scruggs for use in lawsuits he was bringing and planned to bring against State Farm.  This is the case that really started all the public uproar about changed engineering reports, insurer fraud, etc. etc.  Keep in mind that Kerri Rigsby and her sister, Cori, who like Kerri was another claims adjuster working with State Farm, both quit and went directly to work for Scruggs in what federal judge L.T. Senter called a "sham" consultant arrangement -- but not before they had performed a massive "data dump," where they and some friends spent the weekend copying State Farm claims files to give to Scruggs and his good friend, Mississippi AG Jim Hood.  (Don't forget Hood once called Scruggs his "confidential informant" and helped him play keep away with the documents the Rigsby sisters took. Jeez, talk about backing the wrong horse -- if you go to the track with Jim, use him as a reverse barometer.)

You may also remember that the Scruggs Katrina Group, besides "employing" the "whistleblower" Rigsby sisters, also discussed hiring Brian Ford as a consultant.  Ford wanted a similar deal to those of the Rigsby sisters, somewhere in the neighborhood of 10-Large per month.  Entrepreneurism at work, you say?  Maybe.  But of course, payments by a party to material witnesses they would be calling to support their case is frowned upon, and in the end, that led Judge Senter to disqualify the Rigsby sisters as witnesses and to disqualify the Scruggs Katrina Group itself as counsel for the McIntoshes. 

Their present counsel, the Merlin Law Group, went a different direction with this than Scruggs did.  Here's a copy of the motion, and here's part of what the motion says:   

After engaging in extensive discovery, the Plaintiffs have determined the following:

(a) the McIntosh dwelling was damaged as a result of Hurricane Katrina;

(b) the majority of the damage to the McIntosh dwelling was caused by flooding;

(c) the McIntosh dwelling sustained flood damage of at least $250,000 to the structure and $100,000 to its contents;

(d) State Farm promptly and properly paid Plaintiffs the full policy limits of their flood insurance policy; and

(e) State Farm promptly tendered payment to Plaintiffs for wind damage covered under their homeowners insurance policy prior to the time that the dwelling was inspected by an engineer.

This has got to the most surprising development since those German and English soldiers met on that World War I battlefield for a soccer game during a Christmas truce.

The motion, which was granted yesterday by Judge Senter, dismissed with prejudice all the punitive claims.  That left only the contract claims, and my understanding is that those were settled. 

I'll discuss this more later. 

Posted By David Rossmiller In Bad Faith , Duty to Indemnify , First Party Insurance , Industry Developments
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Q: How do you know you've hit rock bottom? 

A:  When even a politician doesn't want your money.  

This story says Delaware Sen. Joe Biden is donating some Scruggs campaign cash to charity, possibly to start offloading links to disreputable figures.  A sign that he's going to be looking to take up residence at the Naval Observatory come next year?  It's actually not just Dickie Dough, but money from the whole Scruggs Gang. 

You might remember this post I did last December on some of Scruggs' political outreach efforts -- the post quotes some news stories and mentions P.L. Blake's "relationship" with Biden.  Doesn't mean much by itself, I suppose, when you are a Senator everyone claims to have a relationship with you.  Heck, even I got yelled at by John McCain back in my reporter days, maybe that means I had a relationship with McCain. But hey, come to think of it, who hasn't been yelled at by McCain -- if you've spent any time at all around him, he's yelled at you.  Maybe there's more to the P.L. Blake-Biden thing,  maybe there's not.  Maybe Blake got $50 million to clip newspaper articles, maybe he didn't.  Just sayin'. 

I wonder, will Jim Hood follow Biden's lead and give back all those campaign contributions he got from Scruggs last year? 

Posted By David Rossmiller In Industry Developments
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UPDATE:  As a number of people have pointed out, this post is in error.  Zach Scruggs' sentence actually began on August 15.  Sorry for the error, that's what you get for trying to blog from a cyber cafe in 20 minutes while the clock is burning minutes faster than a lawyer burns through a retainer. 

---------------------------------  

This Sun Herald story by Anita Lee is a little old, but I'm just now getting back to some things I wanted to blog about before but didn't have the time for.  It says Zach Scruggs' prison sentence begins August 25 -- it had been scheduled to begin today -- and he will serve his time in a minimum-security federal prison in Fort Smith, Arkansas, the same place where Sid Backstrom will serve out his sentence.  

Just out of curiousity, I did some quick research on the Ashland, Kentucky prison where Dickie Scruggs is located.  Here is a link to a Bureau of Prisons website that talks about the difference between various prisons and their levels of security. Not tremendously informative, but since Ashland is a low-security facility, it indicates prisoners there are housed in dormitory-like settings.  I lived in a dormitory in college, where I was in a room with a roommate and there were communal showers and toilets, and I'm not sure whether this is what is meant by a dormitory, or if it is some barracks-like setting right out of Cool Hand Luke.  I also found this post on a website that discusses prison rules -- the most interesting thing about the site was that the post is by a state corrections officer whose fiance is a prisoner in a federal facility (hey, stick with what you know, I always says) --  but there is a little additional information about what conditions are like at the Ashland facility.

Posted By David Rossmiller In Industry Developments
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This story by Patsy Brumfield of the Daily Journal says Dickie Scruggs has won a legal victory of sorts: the Mississippi Supreme Court has stayed proceedings in the Lafayette County lawsuit Jones v. Scruggs, and agreed to decide whether the case should be sent to arbitration. 

If you recall, this lawsuit was the origin of the "earwigging" of Judge Lackey that landed Scruggs, his son and Sid Backstrom in the pokey.  Earlier this year, the new judge presiding over the case, Judge Coleman, refused to send the case to arbitration and was considering whether and how much money sanctions should be assessed against Scruggs for unfairly tampering with the legal process.  Having the state Supreme Court agree to take up the matter is a victory of a sort, I guess, but is kind of like standing in the charred, smoking remains of your burned-up house and finding that the box with your award ribbons from sixth grade music camp made it unharmed. 

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I'm posting today from the Oregon Coast Cyber Cafe in Manzanita, Oregon, which, when I looked it up on my PDA, sounded like a cool place to have some vastly overpriced decaf coffee and listen to some piped in tunes while blogging.  No offense, but it turns out to be a tiny little house behind a local grocery store converted into an office-like setting with some VFW-hall-like tables and some computers, and where you pay big ransom money for wireless time.  To which I say . . .  OK, deal! Because it's not easy to find a place to blog in these small Oregon towns.  I've been camping with my family this week, which is one reason posting has been light, and this will have to do.  The local library has wireless, but it doesn't open until noon, and also doesn't allow power cords for your laptop, and I had an unfortunate battery shutdown yesterday.  So this is where it happens today.  If the blogging is no good, blame it on having to rush before my minutes are used up.

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It's hard to tell when Jim Hood comes out of nowhere with some bizarre escapade like last week's press conference whether such an event is an objective in itself or merely an attempt to deflect attention from something else that will come up later.

If you recall, last week Hood said he is:

• responsible for the additional State Farm Katrina settlements because he sued State Farm several months after they announced a deal with Mississippi Insurance Commissioner George Dale to reopen thousands of claims files;
• the strongest man in the South, and he would prove it by walking right through a brick wall in front of reporters' eyes, except there was no brick wall around; and
• probably the reincarnation of the Pharaoh Thutmose III of Egypt, circa 1500 B.C, or possibly P.T. Barnum, or both.  

Just kidding about the last two, but he actually did say the first one.  It's a hard one to figure, saying something so utterly refutable -- it is just natural Hoodism/Hoodzpah/Hoodwinking? Or is Jim trying to get out in front of some other news, you know, build up some positive press before something else heads south in the South?   

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Another wonderful day in Jim's neighborHood. Mississippi AG Jim Hood announced a settlement of the breach of contract lawsuit he filed in June 2007 against State Farm.  Insurance Commissioner Mike Chaney took issue with Hood's chest thumping, according to this story in the Sun Herald.

Insurance Commissioner Mike Chaney, who was on the Coast to speak to two different groups Wednesday, said after hearing about Hood's remarks: "I think he's crazy to call a press conference on a lawsuit claiming credit for something he didn't do."

Hood claimed credit for State Farm paying an additional $74 million of Katrina settlement money.  State Farm paid this money, following the collapse of a deal between State Farm and Dickie Scruggs, with Hood's approval, to certify and then settle a class action involving some 36,000 Mississippi homeowners.  The class action settlement was rejected by U.S. District Court Judge L.T. Senter, Jr., who was concerned, among other things, about procedural unfairness of the process set up under the agreement to settle claims, and about what exactly Scruggs would do to earn some $15 million due him under the settlement.  This failed class action was a backdrop to a settlement at about the same time of some 640 Katrina cases by Scruggs and State Farm (this settlement money, of course, is what led to the dispute within the Scruggs Katrina Group over allocation of the dough, leading to ejection of attorney John Jones from the group and a lawsuit by Jones, leading to Scruggs trying to grease with wheels of the lawsuit by bribing the judge over a procedural matter of sending the case to arbitration).

If you need or want a refresher on the Hood lawsuit, I wrote about it back in 2007, including in this post. Hood's lawsuit alleged State Farm breached its agreement to make additional payments to Mississippi homeowners, which as you can see, was part of the class action proposal.  Earth to Hood: one problem with this theory --(1)  when a federal judge steps on your agreement, you are relieved from performance of it, and (2) State Farm had already agreed, in a deal with then-Insurance Commissioner George Dale, to reopen the claims, which resulted in payments that probably were about equivalent to what they would have paid under the class action process, minus the dough to Scruggs. (The failure of Scruggs to get the money turned out to be an incredibly lucky thing for him. Hey, what's an extra $15 million to a guy who's already loaded, anyway? Besides, if Scruggs had gotten this money, it was just another opportunity for another dispute with his partners, another lawsuit and more earwigging temptations) 

Here's a post I wrote about the deal between State Farm and Dale.  You may want to note the date of it -- March 20, 2007.  Then you may want to note the date of Hood's lawsuit -- June 2007.  Then you may want to note that, in his press conference yesterday announcing the settlement of his lawsuit, Hood claimed credit for the results created by Dale.  Then you may want to note that Hood, in a second press conference yesterday, claimed credit for the following: 

• Brett Favre coming out of retirement.
• The peanut butter and jelly sandwich. 
• Invention of the word "Hi."  
• Nice weather.
• Affordable, but elegant silverware.
• Long pants.
• Smiling.
• Good health, for those who have it. (He blamed State Farm for those who are in bad health, and said he is considering suing the company over this and opening a grand jury investigation, possibly involving the Rigsby sisters as star witnesses).

 As the Sun Herald story noted, State Farm, like Chaney, wasn't buying Hood's line:

He [Hood] credited the lawsuit with forcing State Farm to pay policyholders an additional $74 million. However, Hood filed the lawsuit in June 2007, after State Farm had begun the re-evaluation process under the Mississippi Insurance Department's supervision. Hood's lawsuit accused the company of violating an agreement with his office that called for federal court supervision of the re-evaluation.

"We find it perplexing Attorney General Hood would claim full credit for a process he opposed from day one and was the foundation for his lawsuit against us, which he now has settled," State Farm spokesman Fraser Engerman said Wednesday. "Nonetheless, we are pleased the attorney general understands State Farm has met its obligations under the agreement made with his office in January 2007.

Yes, ladies and gentlemen, just another example of Jim's incredible Hoodzpah.  If I was George Dale, I'd be pretty ticked off. The earliest Hood started talking about his lawsuit was somewhere around May 2007, as you can see from this post I wrote from that time.  

Here, by the way, is a press release from Hood's office, which has a link in it so you can listen to the press conference, if you care to.  

Now look at this press release from Dale last December. In it, he says the figure for all settlement money because of his agreements with State Farm and Nationwide to re-evaluate claim totaled $110 million -- Nationwide paid out an additional $40 million, in addition to the State Farm dough. 

Oh, I almost forgot.  At that second press conference yesterday, Hood also claimed credit for the following: 

• The Nationwide payments of $40 million (even though he didn't sue Nationwide for breach of contract, he is sure they were scared into paying by the example he set with State Farm).
• Tax rebates.
• Friendly dogs and soft kitty cats.
• When the sun shines and the fish bite.

Now that Hood has emerged from the phone booth wearing a cape with a big S emblazoned on his chest, let's take a look at some other statements by Hood on this matter, some that were made under oath.

For example, here is some of his testimony from a hearing in Natchez earlier this year, which came as part of the lawsuit by State Farm against Hood -- yes, that's right, remember that State Farm successfully sued Hood to enjoin him from further criminal investigation of the insurer, which is kind of like an elk taking away a hunter's 30.06 and chasing him off with a spray of bullets. 

Q. Would it surprise you if State Farm has spent in excess of $70 million on reevaluated Hurricane Katrina claims on the coast? 
A. Probably, in that I don't know what State Farm's included  in that 70 million. It could be legal fees, all that type thing. They have had statistical -- we take questions about their statistics frequently when they name how many policyholders settled and so forth.

Check it out. It's on pages 73 and 74 of the transcript of that proceeding, and you can find the transcript as the top link in this post I wrote in February 2008. (I link to the post rather than just the transcript because I want you to read the first paragraph of the post, it's one I thought was pretty funny). 

Do you see what Hood said? He didn't know the first thing about the process, how much was paid, who was getting paid, and so forth. He even doubted State Farm had paid $70 million!  But when it comes time to settle the lawsuit, he covers his tail by claiming credit for the results he testified he didn't know a thing about.  If you read the seven or eight pages before the ones I cited, you will see I am correct.  Another amazing display of Hoodzpah.

Oh, and I almost forgot to mention it, but at that second press conference yesterday, Hood also claimed credit for:

• Making chocolate taste good.
• Straight teeth and good dental hygiene on the part of most Americans.
• Several sonnets and plays mistakenly attributed to Shakespeare.
• Throwing the winning touchdown pass for the New York Giants in the Super Bowl.
• Catching the winning touchdown pass for the New York Giants in the Super Bowl.
• Inventing the Super Bowl.
• Inventing the New York Giants.
• Inventing the National Football League.
• Inventing football.

Posted By David Rossmiller In Industry Developments
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I know I haven't been blogging enough where these two things happen in one day:

a.  My wife tells me I haven't been blogging enough; and 

b.  Dr. Ed Duett, of Mississippi State, tells me folks in Mississippi are complaining that I haven't been blogging enough. 

Ed is in Portland for some kind of academic risk management conference, and I had lunch with him Monday.  Good to see him again (I spoke at the Mississippi State Insurance Day in April).   So, workload permitting, I'm trying to catch up.  So here goes.

I got a chuckle out of the headline and lede of this Associated Press story: "Anti-tobacco lawyer Dickie Scruggs has reported to a federal prison in eastern Kentucky." 

Anti-tobacco lawyer?  Is that an apt description?  If anything, I think Scruggs would be described as pro-tobacco -- after all, without it, he wouldn't be pulling in his $50 million a year, or whatever his take is.  If those tobacco companies weren't around, Scruggs would be just another con trying to get large by lifting weights, instead of being the richest guy in the cell block.  Maybe "pro-money lawyer Dickie Scruggs" would have been more accurate, or more accurate yet, "pro-Dickie Scruggs lawyer Dickie Scruggs."  

No word yet on whether he has hatched any escape plans.  

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Only about 35 emails today from people wondering why I'm not blogging on the Scruggs news -- I'd love to, but I have doing deadline stuff for paying clients the past two days. Maybe later tonight I can get at some of the back log. You don't know how much you miss blogging till you don't have the time to do it anymore.  Like the song says . . . .  

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I grew up in a tough school with a lot of colorful characters who used a lot of colorful language, and consequently I have a wide repertoire of colorful expressions for a variety of situations in life, such as when stuff surprises or amazes me.  For public consumption, though, I censor most of these and translate them into one of several stock phrases, such as Holy Cow!  So in reading some depositions attached to the latest State Farm filings in Ex rel. Rigsby, the False Claims Act case where the Trailer Lawyers got kicked out, I had cause several times to say Holy Cow! 

Now, I have seen for some time that the Rigsby Sisters' story line that had been sold originally -- "Hero Sisters Aid Crusading Lawyer Scruggs In Stopping Insurance Company Fraud" -- was going to undergo a substantial makeover.  This really didn't require any great prescience, and the same observation could have been made by anyone who was paying a moderate degree of attention.  Obviously, Dickie Scruggs has totally discredited himself, so the demand for the original story line is somewhere up there with the demand for salmonella-laced tomatoes and new chapters of the Milli Vanilli fan club.  I mean, if someone was pitching this story to those two con men in The Producers today -- the ones looking for the worst play possible to stage, one that was sure to bomb -- they would pick the original Rigsby-Scruggs story over "Springtime for Hitler." 

So let's face it, we all knew a change had to come.  The only question is how big the change would be.  Well, the results from the precincts are beginning to come in, and it looks like the whole darn Rigsby story might come unglued like a letter held over a steaming tea kettle.   

OK, but we don't want to rush through all the details at once here.  First, we may want to acknowledge that there were some ridiculous elements to the story from the beginning, stuff that just never did add up.  I mean, it's a little like the song "Hang Fire," by the Rolling Stones -- I laugh every single time I think about this song, where the counterculture icon, party master Mick Jagger is berating his fellow Englishmen for being lazy slobs who won't work for a living.  (Although if you have ever seen Jagger in concert, you have to admit he is one hard working son of a gun -- thus, the source of his irritation). Here's one thing that stands out from this new brief, which talks about the Rigsbys' conversations with two fellow workers at the E.A. Renfroe Co., Dana Lee and Tammy Hardison. 

Sometime in March 2006, the Rigsbys told Ms. Lee that they were going to work for Dickie Scruggs by providing him with documents about his clients. (Lee Dp. at 59-60.) They tried to convince Ms. Lee and Ms. Hardison to assist them, saying: “You’ll be heroes. We are going to get a book deal. We’re going to make a movie. . . . We’re going to be famous.” (Lee Dp. at 63.)

When I'm reading this, I'm saying Holy Cow! to myself: Book deal? A movie? And I'm thinking: this is starting to read like a sequel to The Secret Life of Walter Mitty.    

Now there is so much good stuff here we could easily get ahead of ourselves, so we have to slow down a bit and talk just a little about what this brief is about.  It's part of the continuing fight over whether the Provost Umphrey firm can take the place of the disqualified Trailer Lawyers.  We all know, of course, that for sheer hilarity no one can take the place of the Trailer Lawyers, so on that ground they are a poor substitute.  I will grant you that there is a certain Dickensian cast to the firm name -- Provost Umphrey.  Sounds a bit like one of the great Dickens character names, like Uriah Heep (David Copperfield),  Uncle Pumblechook (Great Expectations) , Mr. McChoakumchild (Hard Times) or Paul Sweedlepipe (Martin Chuzzlewit).  But until I see evidence they've been in a trailer, I'm indifferent to whether they get to step into the case or not.  Here's a copy of the brief, by the way.

And the brief also contains this gem:

In fact, Ms. Lee and Ms. Hardison testified that they were at Cori Rigsby’s house in December 2005 and observed the Rigsbys watching the movie “The Insider,” a film based
upon Scruggs’ exploits in the tobacco litigation. While watching “The Insider,” the Rigsbys
were discussing who was going to play each of them in their future movie. (Lee Dp. at 71-72; Hardison Dp. at 40-41.)

A couple things about this passage are striking.  First, the name "The Insider" takes on new meaning with Dickie Scruggs soon to go inside a federal prison. Second, December 2005 is before the Rigsbys acknowledge hooking up with Scruggs -- but about the same time he went to then-Insurance Commissioner George Dale with a demand for Dale to support him in his quest to become a Katrina Czar overseeing a half-a-billion dollar fund he proposed to wring out of State Farm through the use of State Farm "insiders."  Third, if this is true -- and I have no idea whether it is or not, I merely note the implications of the new testimony -- it means the Rigsbys' testimony about the timeline of their involvement with Scruggs is inaccurate. Fourth, what actresses did they want to play them?  We don't learn this essential fact. UPDATE: A reader points out below in the comments that, in one of the depositions, Kerri Rigsby wanted Sandra Bullock to portray her in the movie.  Bullock is a fine actress, although I'm not sure she's demonstrated the range to depict the Machievellianism suggested by the depositions.  I mean, Kerri comes across in these depos as a cross between Ma Barker and Lucrezia Borgia.   I make no representation as to the accuracy of this testimony, I merely comment as to its appearance. 

Another interesting passage suggests Cori Rigsby had to be talked into participation in The Katrina Follies by her sister, Kerri, and mother, Pat Lobrano: 

Indeed, it now appears that Cori Rigsby was initially a reluctant participant. (Lee Dp. at 59-60; Hardison Dp. at 36-37.) The fact that she had to be convinced by her sister and mother to join forces with Scruggs evidences her awareness that what she was being asked to do was improper. [This next part originally was in a footnote to the preceding paragraph]. In contrast, Kerri and her mother appear to have immediately enjoyed the “cloak and dagger” aspect of Scruggs’ underhanded methods. (Hardison Dp. at 43-44.) For example, Ms. Lee and Ms. Hardison saw Kerri Rigsby again in May, 2006, when they traveled to Pensacola for Memorial Day weekend. (Lee Dp. at 77-78.) Ms. Rigsby told Ms. Lee that she could only stay for a couple of hours because she had received a call from Scruggs and had to take her computer to a hacker for Dickie. (Lee Dp. at 79; Hardison Dp. at 46-47.)

Everyone has been pretty patient so far, so let's get to the depositions.  Here is the deposition of Dana Lee, the one talked about in the brief. Some interesting things you will want to check out in it.  One is the supposed "shopping trip" the Rigsbys took to Texas in late 2005, which I heard about some time ago and wrote about back in April, and which some believe was merely a cover story for meeting Scruggs there (in support of this theory, you might note that Scruggs has demonstrated a fondness for out-of-jurisdiction meetings with witnesses and "insiders" over the years).  

Also, Lee testifies to Kerri Rigsby's supposed efforts to influence the adjusting of her mother's Katrina claim. And she talks about the supposed meeting Scruggs had with a State Farm "insider" in Bloomington, which he bragged about in a news story, and which turns out to be so much Scruggsian hot air -- he hired a guy to meet him at the airport and hand him an empty envelope to make it look like he was getting some top secret documents.  I guess he had no qualms about staging this phony baloney stunt and then claiming it as real to the media, but then again, that's not so hard to believe about a guy who would bribe a judge.   

Here is the deposition of Tammy Hardison.  This has a lot of the same information as the Lee deposition, but the testimony manages to portray Kerri Rigsby in an even poorer light, heavy on ruthless, two-faced conniving qualities but light on horsepower between the ears.  Here's an example:

Q. Tell me about that. 
A. Kerri came over to my camper and asked me if I would look through my files and -- any of my claimants and look and see if I saw anything that maybe looked kind of strange or something that maybe Dickie might want to, you know, have their name. And I told her no. 
Q. Okay. And did you ask her at any time why she was doing it? 
A. Well, yes. I was very upset that she was doing it. And she said, well, we'll never get caught. We'll never, you know, be found out. 

Kerri Rigsby thought she would never be found out? Holy Cow!  Did someone tell her that, or did she come up with that idea all on her own? Because, you know, that is simply absurd, on the one hand talking about being big movie star heroes, and on the other hand, no one will ever know.  Kind of like thinking no one will ever know if you go to work wearing pants made out of aluminum beer cans.  

Just so it's easier for you to compare what Lee and Hardison testified to what Kerri said to what Kerri said she said during her own deposition on April 30 and May 1, 2007, here is a copy of that Kerri Rigsby deposition. 

The import of all of this? The Ride of the Rigsbys is definitely over, finished, bye-bye, ancient history, kaput, ausgespielt. If I was in their shoes, I'd still be thinking about who would play me in the movie, but this time I'd be worried.

Posted By David Rossmiller In Industry Developments
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During the time in recent weeks I was preoccupied with other matters and couldn't spend much if any time blogging, it crossed my mind that perhaps when I was able to come back to blogging, I would find that the Trailer Lawyers -- Trailer Chip and Trailer Tony, Trailer Todd and Trailer Mary -- had found a way to get back into the Katrina spotlight.  Sadly, it appears they have not.  Which can mean only one thing: it's time for a mournful limerick. 

There once was a lawyer with a trailer,

Had a client named Rigsby, wouldn't fail her.

But he got kicked off the case,

He's gone with no trace.

Maybe he went to see Scruggs' jailer.

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Couldn't really think of a clever headline for this post, sorry. In working my way through the backlog after returning to active blog duty, I was interested in this post at the Merlin Law Blog, a tribute to Judge Senter, of Hurricane Katrina fame.  I certainly agree that Judge Senter has done a remarkable job.  He's moved through an incredible docket load, and has shown he has a mind that is adaptable and open to new information, something that cannot be said about every federal judge. He's shown firmness without being imperious -- most federal district court judges aren't, but a significant portion of them are, like all other judges, I guess.

I don't know Judge Senter except what I've read in his opinions and what people tell me about him, but one thing I can say, having followed his opinions and actions for a couple years, it has given me a new appreciation for how difficult it can be to be a judge -- he's handled some really tough issues, some really contentious, nasty lawsuits. His writing style is one of his best attributes -- short, simple and direct, no hiding the ball. I'm basically a guy who grew up on a farm in North Dakota, a state devoted to a radical form of egalitarianism, and consequently one thing that is revolting to me is pomposity and self-importance, in legal writing or otherwise.  None of that in Judge Senter's opinions, thankfully.  I haven't agreed with every decision, but at least his opinions are open and accessible enough that I can work my way through them and pinpoint what I disagree with and why.

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I'm a little late to comment on this one -- it's a couple days old -- but it's still worth talking about.  It's a foregone conclusion that it will happen: the Mississippi State Bar is moving to take away the law licenses of Dickie and Zach Scruggs. I guess Dickie Scruggs won't be able to claim to be a  "jailhouse lawyer."  Or to practice law in Cuba when he escapes.

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As I mentioned in an earlier post, due to escape concerns, Dickie Scruggs will not be going to prison in Pensacola, Florida, which unfortunately means he will not be nearby to consult with attorneys on lawsuits if a future hurricane strikes the area. Here is a story in the Sun Herald about how, as a second choice, he and Zach requested that they both serve time in a federal pen in Arkansas.   

But this was not to be either.  Scruggs seems to have lost all his pull -- where's P.L. Blake when you need him? Zach is going to Pensacola, Dickie to Ashland, Kentucky. Sid Backstrom, who got a sentence of 2.5 years out of the Scruggs Bribery Scandal, will serve time in the Arkansas prison. As you know, prison gangs are a big concern, so with these guys scattered, they won't be able to form a Scruggs Nation gang anywhere  . . . unless they each form their own Scruggs Nation chapter in each of the prisons.  Perhaps officials have unwittingly trebled the gang danger here.  Rumor has it that the official tattoo of the planned Scruggs Nation gang was going to be an S with a snake head on top, and then a line through the middle to make it a dollar $ign -- but remember, that is just a rumor and I am still checking it out.   

Incidentally, speaking of the Scruggs escape risk, a reader pointed out to me the story of Bart Chamberlain, an oilman who fled to Switzerland in his private plane to avoid paying a civil judgment.  I hadn't heard of Chamberlain before and read half a dozen stories on the guy, and strangely, I found myself liking him, possibly because the price control measure he was accused of violating was so stupid and counterproductive.  In the end, I think if Dickie wanted to escape, he'd do it right now before he reports to prison August 4.  However, Kentucky is a long way from the ocean, and harder to get overseas from, so I suppose it reduces the chance of successfully absconding. But if officials have that fear, why not just put him in a high-security prison? 

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OK, I said blogging would resume July 22.  More like July 23.  Sorry for the delay, but the workload that was interfering with blogging has now eased, for the time being, sufficiently to allow for life's necessities -- such as blogging -- to resume. 

This story from Patsy Brumfield -- I had a sixth-grade teacher named Michelle Brumfield, I wonder if they are related somehow (that's typical of someone from North Dakota, we had so few people we figured everyone was related somehow) -- on Dickie Scruggs' not being assigned to a prison in the Florida Panhandle.  Scruggs is a former Navy flyer and famously has his expensive Air Scruggs ride, and apparently officials don't assign people to the prison if they have or have had a pilot's license. (Rumor has it his ride is so nice it is being featured in an upcoming episode of a new reality TV series, "Pimp My Escape Plane"). 

Question: where's he gonna go? Cuba? Is the fear that all of a sudden we'll see Dickie Scruggs wearing fatigues and smoking a cigar on a podium next to Fidel and Raul? Actually, it might solve the question of who is to become Fidel's successor: with his dough, Scruggs could instantly energize the Cuban economy.  With his ego, Scruggs could also instantly fit in as the ruler of a country, and let's face it, even Scruggs is bound to be an improvement on the Castros.  His first act as El Presidente would certainly be to file a massive class action lawsuit in Miami against State Farm, the U.S. Attorney's Office and Tim Balducci.

Fortunately, prison officials have thought this all through, and have come to the conclusion that while a guy who can fly is a great escape risk -- he might walk away from his job hoeing peas and sweet potatoes and steal a plane from a nearby military base, I guess -- a guy who can merely ride in a plane, boat or car is no threat at all. I mean, they've probably got all kinds of statistics that show the vast majority of people who escape from prisons do so by getting behind the controls of a conveniently parked nearby escape plane. Come to think of it, you ever been to Alcatraz and taken the tour, where they talk about that famous escape by the three guys who were never found? Of course they weren't found! Everyone was looking for them in the water. Instead, based on this new information, I'm thinking it's likely they went air mail. 

Of course, this new data means we must come up with a theme song for Scruggs' prison sentence, and after some thought, I believe there is only one choice: the gospel standard "I'll Fly Away."  I mean, it's got to be, doesn't it: "Like a bird from these prison wall I'll fly, I'll fly away/ No more cold iron shackles on my feet, I'll fly away." 

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Two questions.

Number 1.

Q:  How close is this whole Rigsby mess to unraveling, like a crow swooping down, grabbing a loose thread on your suit and flying off?

A: Apparently, pretty close.

Number 2.

Q: When is an agreement to indemnify someone's expense not an agreement to indemnify someone's expenses?

A: Apparently, when Dickie Scruggs is involved.

Take a look at this new lawsuit filed by Scruggs against one of the law firms that had been defending the Rigsby sisters, Kerri and Cori, in the Renfroe v. Rigsby case in federal court in Alabama.   Scruggs is suing for declaratory relief -- a declaration by the court interpreting, in this case, a contract -- to the effect that the Scruggs Law Firm doesn't owe some $1.7 million in fees to Zuckerman Spaeder, a D.C. law firm that, as I wrote about here, withdrew from representing the Rigsbys in March because of non-payment. 

You may remember that the Rigsbys have testified in the Renfroe case that Scruggs agreed to defend and indemnify them if they ran into legal problems for taking State Farm documents illicitly and giving them to Scruggs.  Unfortunately for them and others, this agreement is not in writing, so its exact contours are, like so many agreements Scruggs has been in, subject to conjecture. 

In this new lawsuit, Scruggs says he doesn't owe the fees -- the former Scruggs Katrina Group owes them, because he made the agreement with the Rigsbys and hired the Zuckerman firm under authority of the SKG.   Without going back to check on every detail, just off the top of my head, I would say I think Scruggs has at least a point here, and he may be correct. The SKG certainly knew the Rigsbys were retained for a "sham consultancy" -- in the words of Judge L.T. Senter Jr.  -- and I think also the funds for the Rigsbys' $150,000-per-year "salaries" were advanced by Scruggs but ultimately paid by the SKG. 

The bigger question is whether Scruggs asked the rest of the SKG about the defense and indemnity agreement beforehand, if he was authorized as a joint venturer to bind them to such an agreement, and if they subsequently ratified the agreement by part performance. 

Disputes about fees are always interesting, because it is the only time you will see a lawyer denounce high fees.  Normally, you bring up the subject of a fee being too large to a lawyer, and the reaction is like you suggested he could save money on suits by buying only the coat but no pants -- just totally crazy.  In this lawsuit, Scruggs is saying $1.7 million in fees is way too high. (I'm sure Himself would never charge or accept massive legal fees). That is a lot of money, but the Zuckerman firm's rates are probably pretty high, and this is something that would have been known in advance.  Also, they probably had to do a lot of work and had difficult conditions to do it in.  We'll see.  I'm inclined to be sympathetic to lawyers who get stiffed on fees. 

Posted By David Rossmiller In Industry Developments
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Judge "Maximum Neal" Biggers today sentenced Zach Scruggs to 14 months in prison for his role in the Scruggs Bribery Scandal.  Actually, it was not the maximum he could have received -- three years was the max.  According to this Associated Press story by Holbrook Mohr, the younger Scruggs seemed surprised. 

Here is a transcript of Zach Scruggs' sentencing hearing, at the website of the Sun Herald, and you may note when you read it that Zach was represented by suspected Trailer Lawyer Todd Graves.  (Unconfirmed rumors were that Graves arrived at the courthouse in a single-wide pulled by a 1986 Jeep Cherokee with rust colorations, and was met by a State Farm band of pipers playing "Bye Bye Trailer Lawyer Pie."  I'm still checking this out).

Also present and representing Zach was former Mississippi AG Mike Moore, who at one point, to the apparent surprise of the judge, who said he was accustomed to only one lawyer speaking on behalf of a defendant, interjected some bunk about counseling Zach over the last year and how he's now very remorseful. 

Judge, the only thing I will say, because I 've known Zach since he was a little boy, what has occurred in this case is completely out of character for him. And I've counseled with him and worked with him over the last year, and I can promise the Court that he is very remorseful and very contrite and ashamed, ashamed of what has occurred.

Yeah, right, I can hear you now, what you're saying to yourself: "Moore was counseling him? That might be part of his problem right there." This is of course a very cynical view which I in no way endorse, I merely note that some may be thinking this.  The Moore statement apparently went over with the Court like a lead zeppelin, because as mentioned, the judge sentenced the younger Scruggs to 14 months, contrary to the recommendation of prosecutors for a sentence of probation. (You may recall, if you know your rock and roll history, that Keith Moon,  the fabled drummer of The Who, heard that Jimmy Page, Robert Plant, John Paul Jones and John Bonham were going to form a new band out of the debris of The Yardbirds, and Moon supposedly said that the new band "would go over like a lead zeppelin."  Thus the name of the band, Led Zeppelin -- the simplified spelling was, no doubt, so as not to confuse fans of heavy metal).   

Here's what Judge Biggers had to say about Scruggs' role in the bribery scandal, including a nice little exchange with Mike "Lead Zeppelin" Moore. 

All right. Well, as counsel and the Government both know, and as the Court pointed out at the plea, any pleas for leniency by the Government or anyone else are not binding on the Court. And the Court primarily is bound by the sentencing guidelines that are the law, regardless of what any individuals ask for.

Your case is a sad case, Mr. Scruggs, as your attorney eloquently stated. The primary actor in this case was your father. It would not have happened without him. And it makes it even sadder that you, his son, was brought into it. The evidence in this case shows that you were fully aware of this corruption - - attempted corruption of Judge Lackey. You took that order that Balducci brought up to your law office that - - the corrupt order that was attempted to be bought from Judge Lackey. And you made comments on it. You said where commas should be and what things should be said about it, what the order should say.

And based on some of those tapes that you - - that were played at the request of your attorney - - or your father' s attorney, Mr. Keker, and which I heard because they were produced, I just - - it was just clear that you not only knew what was going on, you were participating in what was going on. You helped write that order.

You shake your head, Mr. Moore; but I heard the tapes. He wrote - - he suggested what should be in that order, that corrupted order. Have you heard that?

MR . MOORE: Judge, I 've listened to every tape, interviewed every witness.

THE COURT: Well, then, you've heard that if you've listened to every tape.

MR . MOORE: I did Judge - -

THE COURT: He commented on it.

MR . MOORE: - - and I hope I get a chance to respond.

THE COURT: Well, you've had your chance to respond. Well, you can respond to that; you can respond to that. Go ahead.

MR . MOORE: Thank you, Your Honor. Zach Scruggs never had any knowledge whatsoever that there was any conspiracy to bribe a judge in this case. Zach Scruggs, on March 28th, was at a meeting about a - -

THE COURT: He' s not being sentenced for conspiracy to bribe a judge.

MR . MOORE: I understand, Judge.

THE COURT: He' s being sentenced for misprision of a felony. But the underlying offense is the corruption of Judge Lackey. He knew that Judge Lackey was being corrupted, and he had an order there that he was looking at that was part of - - that was an order that was being bought from Judge Lackey - - or being taken - - persuaded - - at the very least, that he - - you're saying he knew - - that I know he knew - - was that this order was the result of a corruption or attempted corruption of Judge Lackey.

MR . MOORE: Right. Your Honor, I - -

THE COURT: And whether it was for money or whatever else is really immaterial; it was a corrupt order.

MR . MOORE: The only difference - - and I don' t want to offend the Court. But the only difference is, is that the only thing Zach knew was that Tim Balducci went to have a conversation with Judge Lackey. He never knew that anybody conspired to bribe a judge or to do something untoward. The tape that you're talking about is a tape that occurred after Tim Balducci came to the Scruggs Law Firm on November the 1st, wired up, wearing a wire, walked up the stairs, saying he was there to meet with two individuals, Sid Backstrom and Dick Scruggs. Zach Scruggs, all the evidence would show, happened to walk in the room that day. He was never a part of that. And that' s the only evidence the Government ever had in this case. And that may be a distinction without a difference in Your Honor' s mind, but it' s a distinction in Zach' s mind.

THE COURT: Well, that' s something you can argue. Whether or not that' s true remains open. He hasn' t pled guilty to being part of the bribery. And he' s not being sentenced for part of the bribery. You know, when Mr. Backstrom - - who' s admitted he was part of the bribe - - and your client are as close as they were, they're up there in that office every day talking about their - - the legal projects of the firm - - and it' s hard to - - it' s kind of a stretch of credulity to believe that Backstrom never mentioned that money was being sent down to Judge Lackey. You can claim that; you can argue that. And as far as the law is concerned, I'm going to base the sentence on that. But whether or not I believe that is something else.

MR . MOORE: One thing I ' d say, Judge, is - - and I know you've listened to some of the tapes, but I 've listened to all of them. And if the Government has a different view, they can say it. With all of the conversations, hundreds of conversations, that were wiretapped and taped, there' s no mention of Zach Scruggs in this case anywhere. He just - -

THE COURT: I understand all of that. That' s not part of this hearing. What do you say, Mr. Dawson?

MR . DAWSON: I ' d have to disagree with that statement. Mr. Scruggs - - Zach Scruggs is mentioned on some of the tapes.

THE COURT: That was my recollection also. And another thing that impressed me negatively about this, frankly, is that when you, Mr. Scruggs, and Mr. Backstrom were talking with Mr. Balducci over this order that he had brought to you before it had been entered by Judge Lackey, it was an order that you were commenting on how it should read and what it
should say - - and you've told me that you have a great respect and love for the legal field, for the legal profession. And I ' m - - I ' m not questioning that. But you certainly had no great respect for the Circuit Court of Lafayette County or Judge Lackey, because the tapes show that you told Mr. Balducci and Mr. Backstrom that we need to hurry up and get this order signed before some other asshole gets the case. Now, that' s a total thumb in your nose at the Lafayette County Circuit Court. And it contradicts your statement to the Court that you have a great love and respect for the legal profession.

Based on these considerations, and based on the sentencing guidelines that have been furnished the Court, you have no criminal history. I ' m taking into consideration the Government' s plea bargain with you. Of course, I told you when the plea bargain was entered into it was not a binding plea agreement. If, really, the Government and defendants were serious on something that would bind the Court to a specific sentence, it would have been an 11( c ) ( 1 ) ( C ) plea agreement like Mr. Backstrom had which bound the Court.

MR . MOORE: Your Honor, we were informed by the Government on that matter - - we asked for a binding plea and the Government - -

THE COURT: You didn' t get it. You were here when he entered a plea of guilty. It was not an 11( c ) ( 1 ) ( C ) ; I told you it was not binding.

MR . MOORE: Judge, we know that. I just - -

THE COURT: Well, all right. Then, if I want you to say anymore, Mr. Moore, I 'll ask for it.

If you know anything about Mike Moore, you know, of course, that he kept right on talking, despite what the judge said, and even stepped on co-counsel Graves' lines in doing so.  In the end, the judge said he will consider allowing Zach to stay out of prison until after the birth of his third child in October.  He was fined $250,000.  Judge Biggers said he gave some weight to the prosectuors' recommendation of probation, and imposed the 14 months sentence instead of the 21 to 27 months the sentencing guidelines call for.   

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Judge "Maximum Neal" Biggers sentenced Dickie Scruggs to five years in prison, the most Scruggs could receive under his plea agreement.  According to this story in the Sun Herald, Scruggs finally came forward with an apology:

Before sentencing, Scruggs told the judge, "I could not be more ashamed to be where I am today. I realized I was getting mixed up in it and I will go to my grave wondering why. I have disappointed everyone in my life - my wife, family and friends here to support me today. I deeply regret my conduct. It is a scar and a stain on my soul."

Scruggs had asked for a sentence of only 30 months, but Biggers, solidifying his reputation as someone who is not to be messed with, called Scruggs out and knocked him around pretty good, as the story says:

He said, "There is no question in the court's mind that Mr. Scruggs, Mr. Richard Scruggs, was a leader and a planner (in the conspiracy). He has said he came into the scheme late. Regardless, he was the leader, he was the money man."

In fact, Biggers said Scruggs had entered into the scheme so easily that it made him wonder whether Scruggs had done such a thing before and indeed evidence indicates that he may have.

Biggers found that at least five people, including Scruggs' son Zach, participated in the conspiracy. He said Scruggs will have a chance to study a copy of the pre-sentencing report while he is in prison. He said one of the conspiracy participants, Timothy Balducci, "said you know where a lot of bodies are buried. It might do you some good to uncover some of those bodies."

That second paragraph, and the end of the third, are key.  At a time like this, where someone is facing the music, it's always tempting to say enough is enough, let's just forget about it and move on.  But what about all those buried bodies?  And what about what Maximum Neal Biggers said -- doesn't it appear from the casual way Scruggs participated in this bribery scheme, with as little moral struggle as if he was taking a drive to the grocery store, that it was a part of his existing psychological montage?

Legal Newsline also has a good story on the Scruggs sentencing.  Check out this excerpt: 

Biggers said he was "personally shocked" when he first heard of the case, a shock that was sustained when he first saw the Government's evidence.

The harshness of the sentence -- which includes a $250,000 fine, three years of supervised release and the price of his incarceration -- can be traced to Scruggs' motives. Biggers said there is a difference between a criminal stealing out of necessity and what Scruggs did.

A 2003 audit of Scruggs in an asbestos fees dispute showed a net worth of approximately $200 million.

"The justice system has made you a rich man," Biggers said. 

Hey, let's be fair here!  The justice system gave a lot to Scruggs, so maybe he just decided it was time to give some back!  In $40,000 increments, apparently. 

I'll be out of the office until Tuesday, but Marjory Morford will post updates as appropriate. 

UPDATE: Sid Backstrom gets less time.  Judge Biggers sentences him to two years and four months in prison and fined $250,000.  He is to report on August 1 also.   According to the Sun Herald:

Biggers said he was impressed that Backstrom seemed remorseful about his role in the case. He was ordered to report to prison on Aug. 4.

"I cannot say that I have seen that kind of remorse from your co-defendants," the judge said.

Zach Scruggs will be sentenced on July 2.

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I've been reading some of the excerpts from the treasure trove of letters asking the Court for leniency in the Scruggs sentencing tomorrow.  And after reading them, I've had a change of heart.  You know what I say?  He's suffered enough, just let him go! I mean, lighten up a little here, let's not get all harsh, let's not go all Torquemada on the dude!  Just kidding.  And now back to reality.

Here's a link to the Sun Herald story with the excerpts -- you remember it was the Sun Herald who did the quick thinking and filed a motion with Judge Biggers asking to see the letters in the public interest. 

My overall impression: about what I expected.   Scruggs has done a lot of good things for certain people, I'm sure, although I don't find that very relevant to what is going on with his sentencing.  As with most folks with a lot of dough or power, it's not hard to find any number of people to swear what a great guy he is.  It's funny how that works.  When I started practicing law, one of the partners at the firm I was with told me how becoming a partner was a real self-improvement for him: he got more attractive, his jokes were funnier, he became wiser -- and the strange thing is that the longer he was a partner the more true this was!  He said he hated to go home sometimes, because for some strange reason they were out of step there and never laughed at his jokes and they never were amazed at his wisdom. A prophet is not without honor, except in his own country, I guess. 

About leniency for Scruggs, I would say this -- a five-year maximum sentence already seems pretty lenient, considering he participated in a scheme to bribe a judge, and that he is a lawyer.  You know, the cost of monitoring everybody is just too high, to a great degree the legal system or any system doesn't work unless people behave themselves, unless they are willing to accept that the system is more important than their individual needs or desires. Engaging in corruption of the legal system, the same system you use as a backdrop for your claims of great beneficence and altruism, isn't really excused by scattering checks along the way like a trail of bread crumbs for the birds to follow on the way to your sentencing.

I see that a number of people cited Scruggs' tobacco litigation as a reason to take it easy on him -- as if firmly entrenching a rent-seeking cigarette cartel that is impervious to competition or destruction as long as it pays its annual tax to attorneys general and plaintiffs' lawyers is some noble accomplishment.   There were some touching stories, such as the one about Scruggs paying funeral expenses.  Again, almost everyone has their good side, but Scruggs isn't being sentenced for the crime of being a monster, he's being sentenced for bribery.  Merely because he has done good for some doesn't mean the bribery or the danger that poses to the legal system goes away. 

As a Shakespeare fan, I took special interest in this excerpt from one of the letters: 

"Recall William Shakespeare's famous words in the play Julius Caesar: 'The evil that men do lives after them; the good is oft interred with their bones.' Nevertheless, Dick's failing does not change all the good he had done and the enormous credit he deserves for changing so many people's lives for the better."

Interesting.  This is taken from Mark Antony's funeral oration, of course, and Antony, although he said he came to bury Caesar, not to praise him, intended to do exactly the opposite of what he said.  The implication of the line is that the conspirators who killed Caesar buried a lot of good with him, and what's more, that this "evil that men do" may be the assassination of Caesar itself, not Caesar's illegal usurpation of power.  Is this line apropos in these circumstances?  Scruggs, at the max, only goes away for five years, and he's unlikely to be flogged daily and fed on thin gruel and weevil-infested bread.  And after he gets out, he still has all that dough to keep on doing all that good to make sure it isn't interred with his bones.  Also, there was no conspiracy to get Scruggs here -- he Scruggsed himself.  If ever one has gotten enormous credit for "changing so many people's lives for the better," it is Scruggs, the master of media manipulation.  It's not about whether Scruggs is an angel or a Hitler -- it's just about paying the piper.    

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As the world turns.  It had almost completely slipped my mind that Dickie Scruggs was to be sentenced this Friday, until I talked with Alan Lange of Y'All Politics yesterday.  With Katrina cases winding down and the Scruggster getting measured for a tailored orange jumpsuit, I admit my attention has begun to wander, but it's been difficult to find something as interesting to talk about.  Last time I had this feeling was when the Soviet Union fell.  You remember that?  Everyone was just standing around looking at each other.  They're gone? Dang, who do we oppose now?

Thanks to readers for sending along stories about the upcoming sentencing.  Sorry that my time has been so restricted, responding to emails has been hit and miss lately, I know.

As you might have heard, on Friday Judge Biggers granted the motion by the Sun Herald newspaper to get access to the pre-sentencing letters written by folks.  Not all were fan letters begging for leniency, I know.  One reader sent me a copy of a letter he wrote to the judge recommending harshness.  Here's a copy of the judge's order.  Just after the judge granted the order, Sid Backstrom, also to be sentenced in the Scruggs Earwigging Scandal, filed an objection/motion for reconsideration.  Always it's a good idea in federal court to file your objections before the judge decides, and the batting average for motions for reconsideration is -- this is just a rough estimate here you understand -- probably something like 0.0 percent.  Here's a copy of the motion for reconsideration, made on grounds that the contents of these letters may be intended to be private.  Private?  Who sends a letter to a federal judge in a high profile case and expects to remain anonymous?  I mean, what would be in these letters that someone would expect to remain private: "Judge, please don't pass this on to anyone else because it's a little embarrassing, but here's a little story I thought you mind find amusing and enlightening about Sid.  Well, one time in gym class in high school he was doing calisthenics, and some guys pantsed him . . . ."   Here's a copy of the motion.   

Judge Biggers, of course, denied the motion yesterday.

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Team Scruggs just can't catch a break these days.  Disappointingly, Judge Senter refused to overturn his disqualification of the Trailer Lawyers from the False Claims Act case (question: which side is it that's makes the false claims? Remind me).  This means an end to hilarious Trailer Lawyer briefs and antics, an end to angry Trailer Lawyer denunciations of "Snake" Farm, an end to alibis featuring Goofy and Minnie Mouse.  In short, this drains a lot of enjoyment out of this vale of tears, but we will soldier on nonetheless.  Farewell noble Trailer Lawyers, we will miss you, and we offer a complimentary bag of Doritos, a six-pack of Schlitz and an archive edition of The Weekly World News ("Pointed Hat Found Within Lincoln's Stovepipe: Abe Was A Witch!") as lovely parting gifts.  And so exit, stage right, the Trailer Lawyers Burlesque Show: a little song, a little dance, a little seltzer down your pants.

An interesting part of the ruling: Judge Senter says why he didn't disqualify Scruggs the first time he was asked to do so, and why he did the second time:

The first time I considered the issue of disqualification, that issue was presented by State Farm. By the time the issue was raised, State Farm and the SKG had had extensive involvement in the post-Katrina litigation and had at one point jointly presented the Court a proposed settlement of all the remaining State Farm cases. It appeared to me that in light of the extensive dealings that had gone on between the SKG and State Farm the issue of disqualification was being raised to gain an unfair tactical advantage. For this reason I determined that State Farm had waived its right to seek SKG’s disqualification. This was not the case with E. A. Renfroe, Inc. (Renfroe). I granted Renfroe’s motion to disqualify because Renfroe had not waived its right to seek SKG’s disqualification.

In other news, Judge Senter overruled Dickie Scruggs' objections to production of many records, including those involving the supposed "Third Man," a purported third State Farm insider, in Bloomington, whom Scruggs claimed fed him key company documents on the QT.  Question: did you ever hear anyone ever brag about litigation espionage this way before? Whatever was he thinking?  It will be fascinating to see what if anything these documents are.  My guess: a menu from the company cafeteria and some State Farm fridge magnets.   Scruggs will have to turn these documents over before he is deposed. Here's Judge Senter's opinion.  

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The Sun Herald of Biloxi, according to this story, has filed a motion in federal court to get copies of the letters people are writing to ask for leniency for Dickie Scruggs, Zach Scruggs and Sid Backstrom, at their upcoming sentencing.  This is a great idea, I wish I had thought of it myself.  Here's a copy of the motion.  I'm curious to see how many of the letters take a tone like "Hey, what's the big deal about a little earwigging?"

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A curious kerfuffle in the McIntosh v. State Farm case.  Yesterday Cori Rigsby filed an emergency motion seeking to have the Court modify its order dealing with production of certain of her computer records to State Farm. 

I read over the motion a couple times, and it's somewhat confusing, but apparently among the records to be produced are several things that have alarmed Cori Rigsby greatly, leading to this emergency motion.  What all these records are, one cannot tell from the motion, but the motion does say that among the records that should not be produced to State Farm are, evidently, some of the claims files that were illicitly taken in the Trailer Lawyer and Data Dump days.  Amusingly, the motion says production of these records to State Farm -- which are under an injunctive order by Judge Acker in Alabama federal court -- would cause Rigsby to violate Acker's injunction and protective order, which keeps State Farm from actually viewing these documents.

Here's a copy of the motion for you to read for yourself.  There are a few exhibits, none of which are new, but in the interest of a complete record, they are provided below.    

Exhibit A, Judge Acker's injunction.

Exhibit B, consent order.

Exhibit C, permission for Mississippi Department of Insurance to view documents subject to injunction.  

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The last strains of the song "Bye Bye Trailer Lawyer Pie" had not yet died out when the Trailer Lawyers filed a motion for reconsideration of their disqualification from Ex rel. Rigsby, the False Claims Act case that stemmed from various trailer summits and accessing of documents from a laptop in a trailer. 

State Farm has filed its response to that Trailer Lawyer motion, which seemed remarkably ill-tempered, while carefully avoiding use of the word "trailer" once again. (Remember, it's not a trailer! It's a temporary housing unit, a description, that come to think of it, also fits a thatched hut or a cardboard box.)  Here is the response, which characterizes the Trailer Lawyer motion for reconsideration as founded on false statements by the Trailer Lawyers and their clients, the Rigsby sisters.  It's a pretty good piece of work.  An excerpt:

3. Nor do the Rigsbys proffer any newly discovered evidence, focusing instead on known events that occurred long before disqualified Counsel filed their two opposition briefs to State Farm’s disqualification motion. In fact, the only “new” evidence provides additional confirmation that disqualified Counsel’s declarations contain false statements. In particular, disqualified Counsel’s assertion that they had “no involvement” in the policyholder cases is refuted by former Scruggs Katrina Group (“SKG”) attorney Derek Wyatt’s recent deposition testimony, which reveals that he and other SKG members met with a number of lawyers from Bartimus, Frickleton, Robertson & Gorny, PC (“BFRG”) for several hours to discuss “strategy” with regard to the “Hurricane Katrina cases.”

As the brief explains in a footnote, Wyatt was deposed in the Renfroe v. Rigsby case, and this deposition was under seal for a period of time.  This deposition is news to me, and I do not have and have not read the transcript.  The excerpts of the deposition contained in the brief suggest the transcript is a doozy.   

The brief also points out the mechanisms for reconsideration of a judge's decision, by that judge, are few and far between in federal court.  When I saw the Trailer Lawyer motion for reconsideration, I thought how I've never seen one of those in federal court before, although I used to see plenty of them in state court, where the rules are looser, before Oregon courts issued local rules clamping down on them.  In any event, the justification for a motion for reconsideration is much greater in a place like Oregon state court, where you rarely have a judge assigned to your case and your motion is heard by whatever harried jurist happens to get the motion by luck of the draw.  The judge likely has no research staff, no time to prepare and has never heard of your case before, completely unlike federal court. 

Anyway, thank goodness the Trailer Lawyers didn't decide to go gentle into that good night, or I wouldn't have an excuse to link once again to this post containing the lyrics to Bye Bye Trailer Lawyer Pie. All together now! One, two, three, four . . . Bye Bye Trailer Lawyer Pie, drove my trailer to the courthouse but the judge said bye bye . . . .

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I don't often write something that intentionally falls into the category of "Who Cares?" -- sometimes I do this by accident, I know -- but this is one of those things I have to mention, because I spent dough and effort pursuing it, and because it involves intellectual property rights in my blog, which if you have them you are supposed to let people know.  I now have a trademark on the Supplemental Register at the U.S. Patent and Trademark Office for Insurance Coverage Law Blog, with the intention of getting it on the Principal Register in short order. Many thanks to my colleague, Matt Wilmot, a great IP lawyer, for his invaluable help in getting the mark registered and working with the PTO.  

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Judge Senter's opinion is here.  The Provost Umphrey firm in Texas, which had been recommended to policyholders by the disqualified Katrina(less) Litigation(less) Group, will not itself be disqualified, providing that within 14 days they can say the following is true:

1. There is and will be no agreement between Provost Umphrey and any of the disqualified attorneys for a division of fees or any other arrangement of any kind for the payment of compensation to any of the disqualified attorneys for work performed after the date of my order of disqualification;

2. Neither Barrett nor any of the disqualified attorneys will participate, directly or indirectly, with Provost Umphrey in the future representation of these former clients; and

3. There is and will be no financial arrangement or understanding in connection with any Katrina case between Provost Umphrey and any of the disqualified attorneys for the payment of any sums other than expenses reasonably incurred before April 4, 2008, and for services rendered before April 4, 2008, on a quantum meruit basis, if a right of
recovery for these sums were asserted and established.

Hat tip: Phunk & Wagnalls, and several readers who sent me tips on these developments. 

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You may have heard about this.  State Farm, citing an oppressive legal climate in Mississippi fostered in large part by Attorney General Jim Hood, wants to hike rates in Mississippi by 13 percent and will drop coverage for homes within 1,000 feet of the coast.  Here is a good AP story on developments, with State Farm saying the political and legal climate in the state is "simply untenable."  Anita Lee of the Sun Herald also has a good story, with State Farm's letter to Insurance Commissioner Mike Chaney, whom I met when I was in Mississippi in April -- I got along with him a lot better than I'm sure I would have with the hand-picked Dickie Scruggs candidate for Insurance Commissioner. 

The AP story says Hood wants to review the letter before commenting.  What? That's not like Hood, where's that gunslinger mentality when you need it to juice up a post? Surely he won't be able to keep quiet about this -- maybe he will call State Farm "unprofessional," as he did Judge Acker, or perhaps he will borrow from the Trailer Lawyers and call them "Snake Farm."   Maybe a staffer will come up with a new term for Hood to spew, like "Sneak Farm," "Stink Farm" or "Spite Farm."

Posted By David Rossmiller In Industry Developments
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If I was an adviser to Jim Hood, I would have counseled just letting Judge Acker's blast against the "so-called law enforcement official" go unanswered, or passing it off with a simple "I took the actions necessary to protect the people of Mississippi and protect the integrity of my office (chuckle), the allegations are false," or "he doesn't have his facts straight," or "he's not looking at all the facts and circumstances."   

The trouble with the latter is, of course, Judge Acker does know all the facts, and is possibly the only person who knows all the facts relating to the Rigsby sisters' illicit taking of State Farm claims files.  Nevertheless, there is no sense in calling more attention to what Acker said about Hood -- saying there was enough evidence for a jury to find he was an active abettor of improper behavior by Dickie "Magic Jurisdiction" Scruggs in playing keep-away with the documents in defiance of Acker's order. 

But Hood is Hood, and so that advice probably would have gone unheeded, because he prefers to make media statements such as the ones in this story sent to me yesterday by a reader.

U.S. District Judge William Acker ruled Thursday that Hood helped his "close confidant" Scruggs avoid handing over papers the trial lawyer wanted for Katrina-related lawsuits against State Farm Fire and Casualty Co.

"We will be filing with a federal judge to redact and take out the unnecessary criticism," Hood said. "It's unprofessional. This judge has a history of problems dating back to 1988."

Unprofessional? I mean, what do you say to that? It takes one to know one? 

And what is this thing he's going to file with a federal judge to excise stuff from Acker's opinion, which can be read in its full glory at this post?  Is this the promised Motion To Make A Fool Of Myself?  And who is this federal judge that he's going to file the motion with? Is it a U.S. federal judge? Or perhaps a magistrate of the United Federation of Planets? Maybe Captain Kirk can deliver the motion on his spaceship, or better yet, maybe Denny Crane can represent Hood in this action.  How would you like to be the staff person assigned to write this "motion"?

You know, this is an instance of picking a fight with the wrong guy, like these people in bars who for some reason want to get into altercations with huge professional NBA and NFL players. (Why is that?  You seldom hear about baseball or hockey players being challenged to fights in bars).  All this will do is give this story another media cycle, and you might notice, none of Hood's defenses have been substantive or respond to specifics. The 2008 Hood Self-Destruction Tour -- coming soon to a city near you.

UPDATE:  Thanks to a reader for sending me this link to a Wall Street Journal editorial about Hood's woodshedding by Judge Acker.  The Wall Street Journal Law Blog also continues its excellent posts about the Scruggsing of Scruggs, the Katrina Follies, the Mess in Mississippi and Hood's Hoodzpah, with this post.   

Posted By David Rossmiller In Industry Developments
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Here's a case I've been meaning to get to for a few days -- Marketfare Annunciation, LLC v. United Fire & Casualty Ins. Co.  On June 6 a federal jury in the Eastern District of Louisiana, in New Orleans, handed down a $21 million against United Fire and in favor of Marketfare, a small local grocery store chain, over Katrina damage.

The insured claimed losses under its property insurance business interruption insurance because of covered wind damage, from what I can make out in the pleadings.  The insurer said the losses were due to uncovered flood, and it appears the insured accepted flood insurance payments of some $6 million.  A substantial part of the verdict, as I read the pleadings, was for business interruption insurance, but the insurer's position was that some of the chain's stores could have been up and running in a month, and that no money was owed for interruption from an uncovered cause like flood. The insured, in turn, said United Fire adjusted the loss in bad faith and put pressure on an engineer to alter his loss report. 

Unfortunately, I don't have a lot of time to look more closely at the pleadings -- I hope what I've written here is accurate, but someone may want to correct me or provide more information.  By my rough calculation, some $6 million of the award was for statutory bad faith damages. I see from the docket that the insurer is moving to appeal.

Here is a copy of the judgment, and here is a copy of the Pre-Trial Order.  Finally, here is an Associated Press story on the verdict, doesn't give a lot more information.  

Posted By David Rossmiller In Industry Developments
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In reading Judge Acker's opinion of yesterday once again, it is striking how different this writing is from most judicial and legal writing -- one can actually understand it, and it is well-written and enjoyable to read.   I say "enjoyable" not merely because I agree with what it says, but because the judge made good use of the writer's storytelling tools.

One other thing: Judge Acker is perhaps the only person who knows all the facts that are known about the Rigsby sisters' illicit taking of State Farm claims documents.  He has seen the documents themselves -- they are under lock and key under a protective order in his courthouse under the injunction he issued in December 2006.  And I do not see in this opinion or his prior opinions any hint that these documents are blockbusters or that they have any explosive evidentiary value, or that they amount to anything at all. What is in the documents is not necessarily his concern in Renfroe v. Rigsby lawsuit before him, of course, but he knows what is in them.  And if that is true -- that these documents are just so much hype promulgated by Scruggs and the Rigsby sisters -- I wonder if that is one of the things driving his anger, in addition to the violation of his injunction.  There have been a number of depositions taken in the Renfroe case, including testimony submitted under seal, and he is undoubtedly aware of the evidence uncovered by special prosecutors appointed by him to go after Scruggs on a charge of criminal contempt, which was dismissed without an evidentiary hearing earlier this year.  So what there is to know about all this, Judge Acker knows it.  We don't exactly know what it is that constitutes all that Judge Acker knows, but we do know this -- what he does know has made him very upset. 

Before we go on, some brief context on what this is all about may be helpful.   Kerri and Cori Rigsby, working with Dickie Scruggs, took State Farm claims documents from their employer, E.A. Renfroe, a business hired by the insurer to adjust Katrina claims.  They did this in a massive "data dump" weekend in June 2006, but they also accessed State Farm databases, using a list of Scruggs' Katrina plaintiffs, in March and April 2006.  They did this in a trailer on Trent Lott's property near the Mississippi Coast. There is a dispute whether the Trailer Lawyers of Missouri were also there, or if they were present, how many were present and whether they were actively involved or merely on the couch watching All My Children.

Renfroe sued the Rigsbys for breach of their confidentiality agreement, and Renfroe got a summary judgment decision that they did breach.  During the course of this lawsuit, before the summary judgment, Renfroe asked for an injunction requiring the documents to be returned, and Judge Acker entered an injunction after he found a likelihood that Renfroe would be successful on the merits of its claims. This injunction was in December 2006.  It required the Rigsbys and all their "agents, servants, employees, attorneys, and other persons in active concert or participation with them who receive actual notice of this order, by personal service or otherwise (with the express exception of law enforcement officials)" to deliver the stolen documents to Renfroe's attorneys.  

We all know what happened next.  Scruggs and Jim Hood talked on the phone, and Scruggs sent his copies of the documents to Hood, who already had his own copies of the documents when he took special delivery of them from the Rigsbys during the data dump.  In the criminal contempt prosecution, Judge Vinson dismissed the charges, saying Scruggs met this law enforcement exception, although as Judge Acker points out, this doesn't make sense, because if that was the way to read the injunction, the Rigsbys themselves could have merely given the documents to Hood or even a passing off-duty cop to avoid giving them back. 

The "with the exception of law enforcement officials" is so obviously a qualifier of who needs to give the documents back, rather than an indication of where you can send the documents to avoid giving them back, that it hardly merits serious discussion.  But Judge Vinson saw it the other way, and he also said the court had no jurisdiction over Scruggs, and therefore he couldn't have violated the injunction because it didn't apply to him.  Vinson's jurisdiction finding, however, was based on the ground that Scruggs was not the attorney-of-record, rather than on any failure of the injunction to extend to persons in Mississippi (Judge Acker's court is in the District of Northern Alabama).  But, Judge Acker said, Scruggs was plainly an "agent" of the Rigsbys. and "if Scruggs was not subject to the injunction, nobody was." 

As he said:

Scruggs was the alter ego of the Rigsbys, and the Rigsbys were the alter egos of Scruggs.  They could not have been any more closely "identified" without obtaining a marriage license.  There were in bed together.

You get the idea -- Mr. and Mrs. and Mrs. Rigsby-Scruggs.

Judge Acker also ripped the Rigsbys' argument that they were allowed to take the documents in June 2006 in support of their False Claim Act case filed in April 2006.

Do they really argue that after filing the qui tam case, the Rigsbys were authorized by the False Claim Act and obligated to the taxpayers to steal Renfroe's records two months after the qui tam case was filed?

Along the way, he ripped up Mississippi Attorney General Jim Hood pretty good, calling him a "so-called 'law enforcement official' " and saying there was enough evidence for a jury to find he was a a co-conspirator and aider and abettor of Scruggs in the criminal contempt case.  Hood's reaction to these statements, in this Clarion-Ledger story, was typically comical and nonsensical:

Hood says he intends to file a motion requesting Acker revise the ruling because of its "derogatory conclusion." "The rules of judicial performance do not allow a court to engage in unnecessary attacks on officers of the court, particularly when they are not even parties to the litigation. This Judge interfered with a grand jury investigation and we believe that either he, an appellate court, or the Alabama Commission on Judicial Performance will remedy this situation." 

Who writes this material?  I ask, because this is really funny stuff.  I often listen to Channel 150 on XM radio, which features continuous excerpts from live comedy shows, and I can easily picture hearing Hood's routine on there some morning on the way to work.  Judge Acker interfered with the grand jury investigation?  How about Scruggs, who told him to shut it down so State Farm would settle Katrina cases with Scruggs and give him a pile of dough?  How about Hood, who is the one who actually shut down the grand jury without returning a single Katrina indictment? By Hood's own statement, he and Scruggs should be reported and investigated.  Also, who says the attacks on Hood are "unnecessary," and whoever said he was an "officer of the court" in a case where he was not a party and where his only involvement was to help Dickie Scruggs hide documents that a judge ordered returned?  Officer of the court? Better bust the general back to private, if that's the kind of officer he is. 

Now, it should be mentioned that earlier in the Renfroe case, much earlier, Judge Acker said the Rigsby were not in civil contempt. Obviously, because that is what he ruled Thursday, he changed his mind.  And what changed his mind, he said, was information that the Rigsby sisters:

copied State Farm documents using a list of Scruggs's clients, and that these documents were segregated by them in a plastic boot box.  They were never mentioned by the Rigsbys until recently, and they have never been returned, although copies may be randomly scattered among the papers returned to Renfroe's counsel and now stored under lock-and-key in the court's chambers.  The Rigsbys admit that they did not return the boot box documents, but say they do not have the box and do not know where it is.  This court is tempted to deduce a location for the boot box documents, but will proceed on the assumption, at this late stage, that the boot box and its contents will never be found.

Which location do you think he was thinking of, the Scruggs Law Firm or the lair of the Trailer Lawyers?  Maybe both?

In any event, he found both Scruggs and the Rigsbys were in civil contempt for failure to return all the documents that were taken -- he did not know about the trailer escapades until after his previous finding.

This court feels less reluctance to impose sanctions on the Rigsbys than it otherwise would feel because Scruggs is obligated as indemnitor to pay all monetary damages assessed in this case against the Rigsbys.

The amount of the sanctions, $65,000, representing Renfroe's attorney fees spent chasing down the documents, is barely a couple days bills for what Scruggs paid his criminal lawyer, John Keker, and I presume Scruggs can easily pay this out of his annual receipts of tobacco settlement money.  Remember that the indemnity agreement is not in writing, however, and you have to think about all the other folks who have trouble enforcing oral agreements with Scruggs.  However, the Rigsbys know stuff about Scruggs, and it might be the wisest policy not to give them any reason to become upset.

Here's an Associated Press story on Acker's ruling.  Interesting that it focused on what Acker said about Hood, not what he said about Scruggs and the Rigsbys. 

Here's an Anita Lee story in the Sun Herald, which talks about Scruggs and the Rigsbys in the lede, but also talks a lot about Hood.   Must have really stung, for Hood to come out and make crazy statements suggesting he somehow was going to intervene in the case and report the judge to ethics authorities.  The motion that Hood is going to file, what's it going to be called -- Motion To Make A Fool Of Myself? 

Lastly, so you don't have to go the prior post, here is a copy of Judge Acker's contempt order, and here is a copy of his opinion.  

Posted By David Rossmiller In Industry Developments
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Wow.  Judge Acker found Scruggs and the Rigsby sisters jointly and severally liable for civil contempt and a fine of $65,000 in the Renfroe v. Rigsby case, relating to failure to promptly return the stolen State Farm claims files to Renfroe's counsel.  Here's the order, and here's his opinion.  More comments to come later when the day job allows, but as for now, let me say this opinion is extremely well-written with the care and writing flair typical of Judge Acker's opinions -- plus, anyone who calls Jim Hood "a so-called 'law enforcement official' " is my kind of judge.    

Posted By David Rossmiller In Industry Developments
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Dickie Scruggs' sentencing hearing has been moved again.  Here's the story.  I wonder how that federal investigation of the Wilson case is doing. Walter Olson has some news, including links to a post on the folo blog and a story by Patsy Brumfield. 

-- In other matters, here's a story Anita Lee wrote in the Sun Herald about the Trailer Lawyers' attempt at a comeback tour, with a nice picture of the Rigsby sisters.  I still say it's too bad they ever got involved with Scruggs.  Just a guess on my part, but I bet they will feel the same one day, if they don't already.  You may recall the post I did earlier this week about the Trailer Lawyers' brief requesting Judge Senter reconsider his disqualification, a brief that suggests they have been quaffing some abundantly spiked Scruggsian Kool-Aid.

-- You might have seen the recent article by syndicated columnist David Ignatius on Scruggs, which contained these paragraphs: 

What destroyed [plaintiffs attorney  Melvyn] Weiss and Scruggs was a system in which the money just got too big. The two had helped spawn an industry of class-action mega-cases that was so lucrative, the plaintiffs couldn't afford to lose. So the "good guys" began to cut corners.

Weiss and Scruggs got in trouble in part because they were especially aggressive in representing people they believed had been wronged. "They were the Daniel Boones, who cut through the Cumberland Gap," argues Alex MacDonald, a prominent plaintiff's lawyer with the Boston firm MacDonald Rothweiler Eisenberg LLP. 

The system destroyed Scruggs? Wrong.  Scruggs destroyed Scruggs.  Scruggs got in trouble "in part because [he] was especially aggressive in representing people [he] believed had been wronged"? Like who, himself?  Is that why he participated in the bribery scheme, because he was especially aggressive in representing those wronged people?  That description makes it sound like he's a cop who got suspended for knocking over some shelves of canned peas while rescuing hostages in a grocery store.   

Posted By David Rossmiller In Industry Developments
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A few weeks ago, it was Bye Bye Trailer Lawyer Pie. But the Trailer Lawyers, bless 'em, are not willing to haul their trailer off quietly into the sunset.    

The Trailer Lawyers have now filed an eight-page rant against State "Snake" Farm and, strangely enough, Judge L.T. Senter Jr., who disqualified them.  The rant is entitled Motion for Reconsideration, and it is based on such new and dynamic allegations and conclusions as  these:

• State Farm should be known as "Snake Farm" for its treacherousness, and its lawyers must themselves be disqualified because they knew of the Rigsby sisters' sham consultant arrangement.
• Reporter Anita Lee of the Sun Herald wrote a story in 2006 about the sisters' consultant arrangement with Dickie Scruggs and so she also must be disqualified.    
• Judge Senter imposed higher levels of scrutiny on the Trailer Lawyers than he had in some other instances, and this is very unfair, so he must be disqualified.
• Everybody who has been talking about the Trailer Lawyers has their facts all wrong and so everybody must be disqualified.
• The Trailer Lawyers should be un-disqualified because they are without blame, and because they merely entered the trailer to watch Dr. Phil, have a few brews and eat some Doritos.  Dr. Phil, however, must be disqualified.
• The word "trailer" must be disqualified and is not to be used, particularly in connection with the Trailer Lawyers.

I paraphrase and exaggerate for effect, of course, but that's the general tone, and remarkably, some of these exaggerated points are really what the Trailer Lawyers wrote.  If your intent was actually to get a federal judge to reconsider his ruling, there probably are better ways to do it than to call him out in an extended diatribe. 

Incidentally, this is as good an excuse as we may get for some time to reprise the Trailer Lawyer anthem: Bye Bye Trailer Lawyer Pie, the lyrics of which are available at this earlier post. 

Posted By David Rossmiller In Industry Developments
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The latest filings in the McIntosh case's latest flare-up over discovery issues includes this interesting question posed in State Farm's brief in response to Dickie and Zach Scruggs' objections to Judge Walker's order compelling production of certain documents:

Yet continuing their quest not to produce any documents, despite the substantial reduction in their scope, the Scruggses have filed another objection with this Court, thus causing one to wonder: What information could possibly be contained in those documents that the Scruggses so desperately want to keep from ever seeing the light of day?

The briefing for discovery fights in cases involving Scruggs and the former Scruggs Katrina Group provides some of the best details available as to Scruggs' methods of conducting litigation.  For example, read this passage from the same State Farm brief: 

Laboring under the misimpression that Judge Walker was required to address each and every ground asserted by the Scruggses – and, by extension, the Rigsbys and the Plaintiffs – they complain that Judge Walker did not address their argument that the subpoena implicates their Fifth Amendment right against self-incrimination. See Doc. 1201 at 8. Incredibly, the Scruggses go so far as to suggest that “[t]hese objections are even more compelling now in light of the Scruggses’ guilty pleas in the criminal matter pending in the Northern District, for which they still await sentencing.” Id. (emphasis added). Having already confessed guilt, it is difficult to comprehend how the mere production of documents in an unrelated civil matter somehow increases the risk that they will incriminate themselves. That they have already done – in open court.

The Scruggses’ speculation that producing the documents “may” subject them to some undefined outcome in the civil case pending before Judge Acker in Alabama or a more severe sentence in the Northern District for their roles in the bribery of a judge – as if that offense, which strikes at the heart of the judicial system, does not already carry a stiff penalty – does not demonstrate that Judge Walker’s ruling was clearly erroneous or contrary to law.

Yet one need not read too far between the lines to recognize the apparent subtext. Scruggs has already came perilously close to a contempt citation for failing to follow the Order of Chief Judge Mills in the Northern District of Mississippi, which denied Scruggs’ motion to quash State Farm’s subpoena for his deposition in State Farm v. Hood, No. 2:07-cv-188-DCB-MTP (S.D. Miss.). Judge Mills found that despite the fact that “the court’s intent [in its order] … should have been clear to all parties,” Scruggs “appears to have used” certain language in the order “for tactical purposes, to limit” State Farm’s rights – conduct which Judge Mills ruled “is clearly unacceptable, and the court will not tolerate any further attempts to violate its … order,” and that “[a]ny future non-compliance… will be dealt with as contempt.” See State Farm v. Hood, No. 3:08-cv-00012-MPM (N.D.Miss. Feb. 4, 2008) (Doc. 18); McIntosh Docs. 1131, 1131-2.

Sham consultant arrangements with the Rigsbys, discussions with material witness Brian Ford about a consultant agreement, "whistleblowers" illicitly taking records, playing keep away with documents with the assistance of state law enforcement officials, dubious assertions of attorney-client privilege to prevent question at depositions, all of these things happened, and more, during Katrina litigation.  I wonder what the answer is to the question posed above -- what might be in the documents requested? For instance, what would be revealed in the production of documents as to the identity of the supposed source in Bloomington feeding State Farm information to Scruggs? That there wasn't one?  Maybe.  Time will tell the story. 

Incidentally, here's a letter to Judge Walker from counsel for E.A. Renfroe, the Rigsby sisters' ex-employer, about these discovery disputes. 

Posted By David Rossmiller In Industry Developments
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Dickie Scruggs, Zach Scruggs, and their former law partner Sid Backstrom are to be sentenced July 2 in the Scruggs bribery scandal.  John O'Brien at Legal Newsline has a story, and here is Judge Biggers' order setting the scheduling hearing.

Here's an excerpt from the judge's order:

The court has observed that the defendants have solicited numerous persons to write letters to the court requesting leniency for the defendants and making observations about the defendants’ character. The court will allow testimony from a maximum of three persons for each defendant in the defendant’s discretion at the sentencing hearing.  

How much time for rebuttal witnesses? 

Dickie Scruggs, as you may recall, is to receive five years in prison as part of his plea agreement, and Backstrom two-and-a-half, but Zach Scruggs' guilty plea came after what might loosely be termed the "open enrollment" period for plea bargains, and for plea bargains after the last date set from them before trial, the Court does not necessarily feel obligated to accept any terms worked out with prosecutors.  In return for Zach Scruggs' plea to misprision of a felony, prosecutors are recommending a sentence of probation.  We'll see if Judge Biggers goes with that or something harsher.  

Posted By David Rossmiller In Industry Developments
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Some of the things that have been going on in the Scruggs Nation that past few weeks, not all of which I have had time to touch on yet.

-- A story from Anita Lee of the Sun Herald: E.A. Renfroe is asking for the dismissal of Ex rel. Rigsby, the False Claims Act case brought against Renfroe, State Farm and others by the purported "whistleblower" Rigsby sisters and their now disgraced lawyer and employer, Dickie "Magic Jurisdiction" Scruggs.  

-- I've mentioned this before, but only briefly.  In the McIntosh v. State Farm case, the Thunderdome of Katrina litigation, Scruggs was ordered earlier this month to turn over the following:

• All communications between Scruggs and Brian Ford, the guy who was interested in a $10,000 a month consulting job with the Scruggs Katrina Group ("Hey, why should be Rigsbys be the only ones to make some "consulting" dough off this thing!").  Ford, as you may recall, was the engineer who went to the McIntosh home and came back with a report that essentially overlooked flood damage -- a considerable oversight, in that Kerri Rigsby herself later authorized payment of flood insurance to the McIntoshes.
• Communications between Scruggs and the media about Hurricane Katrina, including ABC, which engaged in a brief spasm of "whistleblower" stories about the Rigsbys, including a big 20/20 piece, but which has been strangely silent of late.
• Any documents Scruggs picked up from a "highly placed source" at State Farm.  You may remember that the Scruggs claimed in a media interview that he picked up documents from such a source in Bloomington, Illinois, State Farm's headquarters.  I am skeptical this ever happened, unless whoever this supposedly was went through the trash or is someone who took complete leave of their senses and lost all instincts of self-preservation.  People will say all kinds of things to reporters that are half true or not remotely true. 
• All documents related to any financial interest Scruggs still has in Katrina litigation against State Farm.  This last one is interesting -- I've wondered myself what interest and/or control Scruggs still has in Katrina litigation.  Here's an Associated Press story on it from a while back.

-- How long do you figure it will be until Scruggs, the Rigsby sisters and possibly a whole lot of others get sued by State Farm and State Farm employees over their roles in Katrina litigation?  My guess? Not too long.

--  What in the world is that federal grand jury doing in the Southern District of Mississippi?  You know, that new grand jury that was impaneled earlier this year to replace the outgoing grand jury, in the investigation of alleged Katrina insurer fraud that has spent wheelbarrows of federal dough but returned results that can be summarized as follows: bupkis.

-- Scruggs to be unable to benefit by Lazarus Ruling -- at Law and More.

-- Someone from the website Slabbed has been incessantly trying to promote the site in the comments to this blog.  As you may or may not know, no comment appears on this blog unless I hit a button saying it will be published.  Sometimes when I'm too busy Marjory Morford fulfills this function.  Excessive self-promotion is one of the things that makes me hit the delete button on comments submitted. But in this instance I'm going to throw out a hat tip to Slabbed, if for no other reason than to stop the incessant spamming of my comments box, regarding a post on some developments yesterday in the McIntosh case, involving Scruggs saying he didn't receive notice of State Farm's discovery motion. 

 

Posted By David Rossmiller In Industry Developments
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I know, I know, citizens of the Scruggs Nation, I know.  You will see this post and be stricken with nostalgia for the days of the 20,000-word Scruggs Nation posts, the ones that took me five hours to write, the days when the feds were rattling, the Scruggs was battling and Dickie's friends were skedaddling.  Time moves on, however, and we deal with the world as it is. 

Yes, you say, but you should at least headline this post with the Scruggs Lite designation, as it is not a full-blown employment of creative powers, not a worthy successor to the Scruggs Nation line.  And to that I say this: I considered this, but thought the headline might be misinterpreted as applying to the quality of the New Yorker article on Scruggs that I am going to talk about today.  And it is a fine story, so I would not wish to give this impression.

As you may recall, this story came out about the time I was headed to Florida and also when I hit a particularly nightmarish patch of extreme busyness, which continues in full force.  So I did not read the New Yorker article until Dunn Carney's marketing director, Marjory Morford, left a copy on my chair one day last week.  Although I am a subscriber, I couldn't find that issue at home, which is not entirely surprising -- I have a 4-year-old daughter who likes those little subscription cards that fall out of the magazine when you open it, and she may have walked off with it and hidden it in her private library, wherever that happens to be at the time.

Here is a link to the story.  As yet, it is still only in abstract form on the website, so you can't read the full text at the link. My reaction? My first reaction was that it could have been called "Best of Dickie Scruggs," or "Scruggs' Greatest Hits."  I don't mean to imply it was pro-Scruggs, certainly not in the sense of the adoring press coverage Scruggs received a year or two ago -- it was an even-handed, fair story.  It was a very good overview, caught a lot of the great details.  (But I would have liked to see some more of the Falstaffian Jim Hood in there, and at least some mention of the Trailer Lawyers). However, despite the article's length, I did not learn much about the why of it all, I would have preferred an article that could have been called the Psychology of Pscruggs.   

The story also bought into the Balducci Wannabe theory, which has some attractive elements to it, but is one that I ultimately reject because it suggests Balducci, not Scruggs, was primarily to blame. If this theory has any validity, I think it comes only as a subtext to the main irony -- Balducci was not in fact the prime mover, he was merely an opportunistic agent operating under parameters and precedent that had been set by Scruggs.  The Wannabe theory tends to show Scruggs in the light of a victim, but he is not -- he is a victim only in the sense that someone who steps on his own landmine after forgetting where he buried it is a victim. 

Also, the story characterizes the Rigsby sisters as being fired.  This has been disputed in legal proceedings, but in my view, they in essence quit or fired themselves.  They did the data dump, illicitly copying thousands of pages of confidential documents, then walked in and announced it, hoping to provoke some big scene where they could look like martyrs.  Instead, they were treated quite courteously, apparently to their disappointment.  At that point, one should note, they had already come to an agreement where they would work for Pscruggs as "sham" consultants, as Judge Senter put it.  One of the story's biggest disappointments was that it gave short shrift to characters in the plot like Hood and the Rigsby sisters.  Looking more closely at them would have done a lot to explain more about how Dickie Scruggs' brain works.  In other words, my approach: the Katrina Follies.  It would have been better than the extensive quotes about him -- those are interesting, but they are merely what people say, and quickly the quotes started looking like this to me: "Blah blah blah blah blah blah blah blah." More showing, less telling would have been welcome.  

Still, I don't want to be too critical of the story.  Not everyone has followed the Pscruggs Psaga closely, and even a Greatest Hits type of story must come as quite a shocker to many first-time readers or casual observers.  But, I do have to say, the definitive Scruggs Story has yet to be written.

Also, one last point.  You know what the story really needed?  I know that you do.  A song!  The story even mentioned that dopey quote by Scruggs about how he was so poor growing up, if he wouldn't have been a boy he "wouldn't have had anything to play with."  This quote, of course, is the basis for one of the great numbers in my upcoming musical, The Katrina Follies, entitled "Dickie's Got A Magic Jurisdiction." 

Posted By David Rossmiller In Industry Developments
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It is with much sadness I report that the Trailer Lawyers -- Trailer Chip and Trailer Tony, Trailer Todd and Trailer Mary -- have been disqualified from Ex rel. Rigsby, the False Claims Act case often known by the incredibly ugly phrase "the Qui Tam," which of course is Latin for "Trailer Lawyer."

This is sad because the Trailer Lawyers have been a source of much enjoyable fodder for this and other blogs, and now, I fear, we will have to do without pleasant diversions such as making up Trailer Lawyer songs, like the following (sung to the tune of Don McLean's American Pie):

Bye bye Trailer Lawyer pie,

Drove my trailer to the courthouse but the judge said bye bye

Them Snake Farm boys was laughing while we cried

Singing this will be the day your case dies,

This will be the day your case dies. 

Now for five months, we've been on our own

Since Scruggs got knocked off his lawyer throne.

But that's not how it used to be.

When the Rigsbys sang for ABC,

With some quotes they borrowed from Dickie,

And some files that came from piracy.

And as we reached the motion stage, 

My hands were clenched in fists of rage,

No story we could tell,

Could break that Snake Farm spell.

And as our briefs climbed higher in the fight,  

We just couldn't seem to get it right, 

I saw bloggers laughing with delight,

The day the Qui Tam died.

And they were singing,

Bye bye Trailer Lawyer pie,

Drove my trailer to the courthouse but the judge said bye bye

Them Snake Farm boys was laughing while we cried

Singing this will be the day your case dies,

This will be the day your case dies. 

My oh my, is this end of the Trailer Lawyers? No more Trailer Lawyer songs!  Truly, the Day the Music Died.  

Almost forgot, here's Judge Senter's opinion. 

Posted By David Rossmiller In Industry Developments
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Time continues to be extremely limited, and blogging has been impossible.  However, if politics is the art of the possible, blogging is the art of the impossible.  I'll see if I can sneak a post in later this morning. 

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Time continues to be extraordinarily limited.  Thanks to readers for pointing out the article in the New Yorker on Dickie Scruggs.  I was called by one of the fact checkers for the magazine about the story, although I didn't have time to return the call before the story closed.  Although I am a subscriber of the magazine, I haven't had time to read the story, and there was no way to link to it yet on their website.  I'll comment in a few days, when I return from traveling to Florida to give a speech to the Mississippi Bankers Association. 

All I have time for today is this link to a recent Anita Lee story in the Sun Herald (thanks to Ted Frank of Overlawyered and Point of Law for the heads up) about the Renfroe v. Rigsby case.  Not much time to comment, but the story is pretty self-explanatory.  Also, there will be no post for tomorrow, I decided it is too much of a hassle to travel with a laptop through security.  I had my fill of security hassles when I returned from Mississippi last month -- got to the airport too late to check my bag and had to carry it through security, setting off numerous puzzled looks over the cheese, sweet potato and other paraphernalia I was presented with at Starkville.  Said one TSA employee after opening my bag: "I could have guessed the rest from the X-ray, but I never would have guessed the sweet potato." I said, "Blame it on Dickie Scruggs."  Now that I am laptop free, I will consider whether the next step is feasible: traveling without shoes.  Although I wouldn't have to take them off, it might invite a different form of scrutiny. 

While I'm gone, comments will be published by Marjory Morford.  She's sharp, so don't try to sneak anything by her.

Posted By David Rossmiller In Industry Developments
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This recent Anita Lee story in the Sun Herald tells how hundreds of former clients of the disqualified Katrina(less) Litigation Group have migrated, at the suggestion of KLG lawyer Don Barrett, to the Texas tobacco litigation firm Umphrey-Provost.  You can see the Barrett letter to clients at this post I wrote earlier.  Some other former clients, as I mentioned recently, chose not to get new lawyers but instead to settle their claims.

Now, let's look at what is happening with Ex rel. Rigsby, also called the False Claims Act case, also called the Qui Tam, but which I like to call, simply, the Trailer Lawyer case.  Late last week State Farm (or in the lexicon of suspected Trailer Lawyer Chip Robertson, "Snake Farm") filed a rebuttal to the latest Trailer Lawyer filings.

These filings include a brief calling State Farm's attempt to disqualify the Trailer Lawyers the last desperate act of a desperate company (actually, it sounds more like the first act of the Katrina Follies, the musical I am writing: "If this trailer's rockin', don't come a-knockin', Trailer Lawyers are busy inside, tappin' on the keyboard with the Rigsby Sisters, surfin' through the claims files till their fingers blister").   These filings also included another brief that avoided the use of the word "trailer" like it was a gift basket of pit vipers ("Sir? Special delivery from Snake Farm. Sign please").  See this prior post for more information. 

State Farm's rebuttal brief contains these paragraphs, which seems a good excerpt to kind of sum up their position (boring legal citations omitted, and some explanatory information inserted):

The Rigsbys’ [Trailer Lawyers'] response and opposition briefs confirm even more clearly why all of their counsel must be disqualified. Counsel admit that they knew of the payments to the Rigsbys soon after they began, “either in late Summer or early Fall of 2006” and knew that any payment to the Rigsbys was improper on multiple levels and violated the ethical rules. Yet, for the next year and a half Counsel made no effort to stop these payments or to disassociate themselves from Richard F. Scruggs (“Scruggs”), his law firm, or the Rigsbys. As in McIntosh v. State Farm [the case where the KLG was first disqualified by Judge Senter], Counsel’s “failure to take timely and reasonable remedial steps or to object to this arrangement amounts to a ratification of Scruggs’s actions” and warrants disqualification.

. . .

In McIntosh, this Court disqualified the remaining SKG lawyers because they were in a joint venture with Scruggs and knew or should have known about his unethical conduct, but did
nothing to stop it. In this case, all Counsel were similarly in a joint venture with Scruggs, admittedly knew of his unethical conduct, and did nothing to stop it.

Further, Counsel’s ties to the SKG are much more significant than they disclose. Chip
Robertson has in fact not only entered an appearance and served as co-counsel with Scruggs and the SKG in the appeal of Tuepker v. State Farm Fire & Casualty Co., he actually argued the appeal before the Fifth Circuit. Similarly, BFRG [Robertson's firm] served as co-counsel with Scruggs and the SKG on behalf of the McIntoshes in In re State Farm Fire & Casualty Co. This representation is especially significant, as it pertained to State Farm’s Petition for a Writ of Mandamus from this Court’s denial of State Farm’s first disqualification motion. BFRG also served as co-counsel in Cori Rigsby & Kerri Rigsby v. Gene Renfroe & Jana Renfroe. 

Here's a copy of the State Farm brief, which includes a number of exhibits, 168 pages or so in all, that I've provided here as well.     

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California wildfires have provided some interesting battles between policyholders and insurers, chiefly over whether the insurer or the homeowner is responsible for the home being underinsured when it was destroyed. I wrote about a Bloomberg piece on that subject in this post last year. 

The California Court of Appeals, Fourth District, recently decided a case, Everett v. State Farm,  involving the destruction of a home during the October 2003 wildfires near Los Angeles.  Here's a copy of the opinion.   

In the case, homeowner Agnes Everett had a State Farm policy that, when she purchased insurance from the company in 1991, had guaranteed replacement cost.  However, in 1997 State Farm stopped including guaranteed replacement cost with its policies -- a number of other insurers did the same thing, also some still offer the coverage.  It appears State Farm sent a notice to Everett with the renewal of her policy that year and every year after that the coverage was not available and she was responsible for obtaining sufficient insurance to cover increased value of her home.  This did not happen, and the home was underinsured when it burned down.  If the opinion said how much the home was actually worth, I missed it, but it was more than the $138,000 in structural loss and $76,000 in contents loss that the insurer paid.  (Everett had purchased the home in 1991 for $99,000).

Everett sued State Farm and her insurance agent, alleging breach of contract, bad faith, negligence, reformation and fraud, based on two theories -- the policy actually did provide guaranteed replacement cost because it was ambiguous about the level of coverage, and State Farm failed to provide her with sufficient notice of changes in her policy.

The Court of Appeals upheld the trial court's grant of summary judgment in favor of the insurer, and said there was nothing ambiguous about the policy.  Everett's ambiguity argument had focused on the word "replace."  The presence of this word is not consistent with any result except actual replacement of what was destroyed, which means replacement of its entire value, Everett argued.  The court disagreed. Policies must be read as a whole, and ambiguity does not grow out of one word taken in isolation.  The court said the policy made it clear that no matter what was replaced, it would only be up to the limits stated on the declarations page.

The court also said the State Farm notices were consistent were what the Legislature required, and that they clearly said that, while State Farm included an estimate based on general home value information what a theoretical level of insurance might be, the homeowner must be the one to check this out with an appraiser or otherwise and make sure enough insurance was available.  The court also said the claims involving the agent could not stand -- the policy contained an integration clause that said the policy contained the entire agreement between the parties, meaning no oral agreement, even if an agent had made one, could supersede the written terms.

An interesting case, sent to me by a reader.  If you have a case you'd like me to look at, feel free to let me know about it.  Can't promise I'll write about it, of course, but odds are pretty good I will eventually.

Feels a little odd to be writing about non-Katrina cases again.  For those who only know me from Katrina, Scruggs, Hood, Trailer Lawyer coverage, this is what I used to do all the time on this blog, and I kind of like it.  Not as fun as writing about the Trailer Lawyers, of course, but we can't dance all the time.

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The effort to find lawyers for the McIntoshes, plaintiffs against State Farm in one of the signature and most bitterly fought Katrina cases, continues to run into snags.  You may remember Judge Senter's order of April 15 in which he clarified that his earlier disqualification order pertaining to the Scruggs(less) Katrina Group, aka the Katrina(less) Litigation Group, is broad and pertains to any law firm associated with the SKG-KLG. 

In my review of the docket of this case, it appears another Mississippi firm may run into problems trying to represent the McIntoshes.  The Lumpkin & Reeves firm, of Biloxi, has asked Judge Senter, in an abundance of caution, for clarification whether it can represent the plaintiffs. State Farm opposes the entry of the Biloxi firm into the case based on its participation in a deposition earlier in the case and, apparently, involvement in presenting arguments or information to the Court in conjunction with the disqualified lawyers.

Dickie Scruggs is viral right now, no doubt about it.  When he sneezed, a lot of lawyers caught a cold.  

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This is a relatively small article I wrote for the OADC magazine, the Oregon Association of Defense Counsel.  I'm not actually a member of that organization, but one of my partners is on the Board of Directors, so I like to help out when I can.  Some of the information was contained in the much larger anti-concurrent cause article I wrote for the recent New Appleman on Insurance: Critical Issues in Insurance Law, but this has more of a focus on Oregon's plain English insurance law.  Oregon, of course, is where I live.  If I had to write an article applying to all 50 states, I doubt much would change about my conclusions.  

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I've had a number of stories by Becky Mowbray of the New Orleans Times-Picayune sitting around in my feedreader waiting for me to find time to comment.  Between the day job and the Trailer Lawyers, it's been difficult, but I can sneak some of them in here. 

-- This Mowbray story is about federal regulation of insurance, as opposed to the current state system. It's interesting that opponents of federal regulation claim it would amount to deregulation, which of course by that they mostly mean deregulation of rates.    

Consumer advocates counter that "optional federal charter" is code for deregulation, and there's nothing in it for policyholders. In their lobbying, deep-pocketed insurers would make sure that a federal system would resemble the most deregulated state systems, such as Illinois. Allowing companies to choose between being regulated by the states or the federal government would create a race to the bottom on regulation as the two systems would compete to attract insurers. Strong consumer-protection laws in California would be dismantled, and Florida would be powerless in its stand against insurance companies.

"I'm not opposed to a federal role, but the OFC is a bad idea because it gives the option to the insurance companies," said Hunter, who will release a study this week on the effects of different regulatory systems on consumers. "If I'm a state and I want insurance companies to choose my system, I would lower my standard. It would decimate regulation."

The kicker, Hunter said, is that [Treasury Secretary Henry] Paulson's proposal is short on details about consumer protection, but states explicitly that there would be no regulation of homeowners and auto insurance rates. He's not kidding.

"While numerous arguments have been made to justify such rate regulation, they are unpersuasive," Paulson's proposal reads. "Insurers should neither be subject to rate regulation nor be required to use any particular rate, rating element or price."

I wonder why some always assume that lack of central planning will result in consumers getting hosed.  The history of deregulation -- increased competition, in other words -- is to the contrary.  Can't say that it matters much to me either way, but it's interesting to think about.

-- Louisiana's efforts to shrink the risk profile of the state-run property insurer are bearing fruit, with new companies moving in to buy up some policies held by Citizens Property.

-- Allstate's posting of 150,000 McKinsey documents to its website wasn't enough disclosure, some are claiming.  They also want to see documents relating to hurricane catastrophe claims adjusting.  Allstate says it is reviewing to see if there are more relevant documents.

-- FEMA says it wants to change the formula by which insurers get paid for flood adjusting -- it says the formula worked well before, but resulted in a windfall for insurers for adjusting claims from Hurricanes Katrina, Rita and Wilma. 

-- Even though this is non-Mowbray, I'm also going to sneak in one Trailer Lawyer comment here.  I have no idea what the Trailer Lawyers are like in real life, they may be great people, steady as a rock, unflappable, whatever. I only comment on what I see in their public fight with State Farm, and, I'm trying to say this in a way that is not completely unkind. They need some professional public relations help.

This bombastic, chest-thumping pose they strike in pleadings and interviews with friendly newspaper reporters is not the way to go.  It's got the smell of fear to it, desperation, evasiveness, running for the tall grass. Whereas this kind of thing calls for a certain touch of Cary Grant, of David Niven, a certain grace under pressure, kind of like the characters Will Smith plays in the movies, the Trailer Lawyers give off the aura of folks in a chair fight on the set of Jerry Springer, some cross between Woody Allen and Travis Bickle, Robert DeNiro's character in Taxi Driver. ("You talking to me?").

Their selective analysis, including that incredibly ill-advised pleading where they refused to use the word "trailer," tells you that they are getting their clocks cleaned public relationswise. 

Posted By David Rossmiller In Industry Developments
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A good way to finish out the week -- once again it's Trailer Time, where we catch up on another episode of the Trailer Lawyer News, with that beloved and familiar cast of characters: the Rigsby Sisters, Dickie Scruggs, Trailer Todd, Trailer Tony, Trailer Chip and Trailer Mary, and of course, Snake Farm. 

Remember Hemingway's saying that courage is grace under pressure? Well, I'm not sure what he would call these Trailer Lawyer briefs that have been filed in the False Claims Act case, Ex rel. Rigsby, but they do not appear to exhibit grace under fire.  The tone of these Trailer Lawyers briefs is a little too desperate, a little too florid, a little too tricky, a little too defensive, a little too offensive.

Here's the latest, wherein Trailer Todd Graves' firm blows its stack in print.  When you start reading one of their briefs, it's like Fibber McGee opening up that hall closet.  On this site, you can find a link to listen to a version of opening the closet from the old Fibber McGee and Molly radio show. I think I must have heard or seen 50 different versions of the closet door opening, and it still makes me laugh every single time, with all that junk spilling out.

Let's take a look at the most recent Trailer Talk:

Having made scurrilous and unsubstantiated accusations of wrongdoing against former United States Attorney Todd P. Graves and the law firm of Graves Bartle & Marcus LLC (“GBM”) in its recently-filed motion to disqualify, State Farm Fire and Casualty Company (“State Farm”) now seeks to preclude Mr. Graves from personally appearing before this court to defend himself. These are the desperate actions of a desperate company.

There is no basis for denying Mr. Graves pro hac vice admission to this Court. There is no basis for disqualifying Mr. Graves and GBM from continuing to represent the Government’s interests in this matter. There is not a wisp of evidence that Mr. Graves or any other GBM attorney violated the Mississippi Rules of Professional Conduct or any other ethical standards by which they may be judged. GBM did not access State Farm’s confidential databases, GBM did not make any improper payments to Cori and Kerri Rigsby, and GBM was not associated with the Scruggs Katrina Group or any successor entity.

Question: what interests of the government do they represent?  Hasn't the government declined to get involved in this lawsuit?

Look at the last thing to spill out of the closet, I mean, the last paragraph:

So this unfortunate side show can finally be brought to an end, Relators respectfully request that the Court convene a hearing on these matters. State Farm should be ordered to come forward with any evidence it possesses to show that Relators’ counsel engaged in any conduct warranting disqualification under the applicable ethical standards. If State Farm fails to come forward with such evidence, sanctions should be imposed on both the company and its attorneys Jeffrey A. Walker, Robert C. Galloway, E. Barney Robinson III and Benjamin M. Watson.

Bring it to an end? Come on, what are you trying to do, spoil our fun? 

Incidentally, what this is all about is Graves applied for pro hac vice admission in this case, and State Farm opposed it in this pleading. I left the explanation of the substance until last, because the entertainment value is what really matters here, for our purposes.  See you for the next episode of the Trailer Lawyer News, when it will be Trailer Time once more. In the meantime, don't open that closet door!

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Again, time is very limited today, so this will have to suffice.

-- I saw this story in the Insurance Journal that, following the Fifth Circuit's opinion in Broussard v. State Farm, the case has settled, so there won't be any new trial.    

-- This item from the Las Vegas Sun on a sudden increase in interest following an earthquake in Utah is interesting: 

Fuller said most people usually don't buy earthquake insurance because of its cost, the belief that an earthquake won't happen in Utah or that the federal government would help in an emergency.

But since Hurricane Katrina hit New Orleans in 2005, fewer people have been willing to rely on the belief in government help, Fuller said.

"I think before Katrina, people saw FEMA as the answer to getting a house rebuilt," he said. Fuller said the largest factor that keeps people from buying earthquake insurance, though, is its cost, which can double the price of homeowner insurance. Deductibles for earthquake insurance, usually set at 5 or 10 percent of the cost of rebuilding, are higher than normal home coverage

If you read the story, however, you'll see the actual numbers reported are tiny, certainly no indication of a trend. 

-- The Foti Albatross

Former Louisiana Attorney General Charles Foti is probably missed greatly by Mississippi AG Jim Hood -- Foti made him look super-competent in comparison. Another story here about cleaning up the debris of Foti. 

-- Recent anti-concurrent cause decision in federal court in Florida

My attention was called to a summary judgment opinion of the federal district court for the Northern District of Florida, in Empire Indemnity Ins. Co. v. Winsett. 

Florida uses a causation analysis in first-party property claims that is unusually precise and defined among the states, and also different from other states.  First, courts look at whether causes are independent -- such as earthquake and a lightning strike, or windstorm and wood rot -- or dependent, such as when an earthquake breaks a gas main that starts a fire. 

If the causes are dependent, the efficient proximate cause doctrine is used to determine which cause set the others in motion.  If this cause is covered, the damage will be covered. If the causes are independent, courts use what they call a concurrent cause analysis -- as long as one cause is covered, the damage is covered. 

Anti-concurrent cause language is upheld in Florida, but in this case, the court said it didn't preclude coverage. The anti-concurrent cause language was not contained as a "lead-in" to exclusions as one normally sees, but from what I can determine by reading the case, the provision was embedded in the mold exclusion itself.  The exclusion was for bodily injury or property damage due in whole or in part to fungi or bacteria in or within a building, "regardless of whether any other cause, event, material or product contributed concurrently or in any sequence to such injury or damage." 

The way the court analyzed this, the anti-concurrent cause language would apply only to truly concurrent causes -- those that are of independent origin. The allegations of the complaint, however, indicated dependent causes, according to the court: failure to install of vapor barrier set in motion mold growth, leading to damage to renters of property. Therefore, the court said, anti-concurrent cause language doesn't apply because the efficient proximate cause doctrine is used for dependent causes. Failure to install the vapor barrier, according to the court, was a covered cause and therefore the damage was covered.  The court also placed some significance on the fact the anti-concurrent cause language was embedded in the exclusion and was not a lead-in provision, although I fail to see why this would make a difference, and the court made no effort to explain this -- possibly because the explanation wouldn't make any sense. The significance of lead-in language is only that it applies to more than one exclusion.  One could just as well write anti-concurrent cause language into each exclusion, but it saves space to do it the other way. 

One glaring omission in the court's analysis -- what of the words "or in any sequence" in the anti-concurrent cause provision.  As those who have read my examinations of anti-concurrent cause language know, sequential damage is precisely what the court is talking about here: dependent causes that result in damage. The court gave no explanation for ignoring this policy language altogether.  Neither did the court attempt to figure out what the words meant, why they would be in the policy or what distinction was drawn with the words between concurrent and sequential damage.  The analysis could have been a lot better.

Posted By David Rossmiller In Industry Developments
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Time is extraordinarily short today for posts of any kind -- just a heads up in case you were looking for a new one. Probably not going to happen.

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The Trailer Lawyers have been promising a devastating response to State Farm's motion to disqualify them in the False Claims Act case, Ex rel. Rigsby.  They filed two briefs yesterday in opposition, one by Chip Robertson's firm, loaded with euphemisms and which studiously avoids the word "trailer," and another by Todd Graves' firm. In the Robertson brief, here's the description of a Trailer Summit:    

The meeting was held in a temporary housing unit due to the damage caused to so many structures by Katrina.

Temporary housing unit? How about "prefabricated improvisational dwelling"? What of "non-self-propelled mobile abode"? "Non-permanent omni-directional quarters"?  The new brief goes to extreme and silly lengths to avoid calling things by their right names. How devastating can a response be when it's afraid of the word "trailer"?

Look at this statement in the Robertson brief: 

These are the facts: After the Rigsby’s completed the document protection exercise, they immediately informed State Farm that they had accessed the State Farm database and downloaded documents. They did not try to keep their actions secret. What is also true is that while the Rigsbys had access to the databases, they never improperly accessed or exceeded their access to these systems. Their counsel never used their computers or accessed their data base.

Let's take a look at this stuff.

"Immediately informed State Farm." it says. "Immediately" in this context does not refer to, as you might expect, immediately, but instead means "some months after they admittedly had begun engaging in covert spying on behalf of Dickie Scruggs." As the November 20, 2007 deposition of Kerri Rigsby shows (page 140), the sisters fessed up only after they were ready to quit, after they realized that State Farm had just about figured out they were covertly funneling documents to Scruggs, and they did this only after they did a final frenzied "data dump" over the weekend, inviting some friends over to help them copy thousands of pages of claims files.

"Document protection exercise." The Rigsbys agreed in testimony that they illicitly took the documents. Is it any use to try to come up with some Newspeak label?  Question: when someone doesn't dare call a trailer what it is, why should anyone buy this characterization of the Rigsbys' secret taking of documents?

"They did not try to keep their actions secret." Except up until the time they were going to be caught and then they took thousands of more pages secretly, staged a walk-out, and went over to Scruggs to be paid $150,000 a year.

"[T]hey never improperly accessed or exceeded their access to these systems." Notice the word "access." If you give me a key to your house to feed your fish while you're on vacation and I go in and take your TV, did I exceed my access? Technically, no.  

Let's apply this style to a familiar story, that of the Three Little Pigs, told by the wolf:  

I politely asked to be allowed entry, as I conveyed information that extreme wind conditions were expected momentarily.  Sudden violent gusts destroyed two semi-permanent structures. I paused briefly only to take nourishment to sustain me as I hurried to warn the occupant of a nearby permanent clay-based dwelling unit.  Regrettably, my warning was ignored, and as I tried to access via a vertical entrance to contact said occupant, I was attacked with heated liquids.

Apparently, though, we finally know who Trailer Todd is: Graves admits to being in the trailer, although the Trailer Lawyer filing denies they met with the Rigsbys in the temporary housing unit in March 2007.  The Trailer Lawyers say it was April.  This looks like it contradicts the testimony of their own clients, although it is possible both Rigsby sisters were messed up on dates, basic facts, when stuff happened, what they did, what other people did, etc.  You know, the whole story.  Odd that they were both were wrong the same way, though, isn't it?      

Here's a few more things filed by the other Trailer Lawyers: Trailer Chip, Trailer Tony and Trailer Mary. 

Robertson declaration.

DeWitt declaration.

Winter declaration.

All of this seems to say they didn't "instruct or encourage" the Rigsbys to do what they did.  Why, according to the Trailer Lawyers, they know nothing at all! (Lack of awareness -- not exactly the trait one looks for in a lawyer). They just happened to be passing through and sought shelter in the trailer, er mobile home, I mean, semi-stationary vehicular habitat, I mean, temporary housing unit -- well, you know what I mean -- because it was time for Days of Our Lives and they hoped to find a TV, a bag of Doritos and a six-pack of Schlitz for refreshment!  

Posted By David Rossmiller In Industry Developments
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Lots of e-mails from readers yesterday about this story by Anita Lee in the Sun Herald on Kerri and Cori Rigsby. The story is headlined "Under Pressure," which means we better cue up the You Tube video of the David Bowie song of the same name. The lyrics, in case you can't understand the words, include the following:

Pressure pushing down on me
Pressing down on you no man ask for
Under pressure
That burns a building down
Splits a family in two
Puts people on streets

. . . . .

Its the terror of knowing
What this world is about
Watching some good friends
Screaming let me out
Pray tomorrow takes me higher
Pressure on people

. . . . .

This is our last dance
This is our last dance
This is ourselves under pressure
Under pressure pressure

(I also link to this version with Bowie and Annie Lennox, not as spirited as the first one, but it's worth it to see these two great performers together).  A very good song, so good one could ask whether the lyrics rise to the level of poetry.  I say: certainly, if poetry expresses, in shorthand and without the conventions of expository prose, some truth about human experience.   "The terror of knowing what this world is about," is what it says.  Means different things to different people in different circumstances, but we've all been there, haven't we? Litigation is machinery that tears people's lives up, lawyers and litigants and witnesses, it can rip the soul right out of you if you're not careful. Pressure. Pressure on people. 

Before we look at the story, one more thought to brace us for the journey. Do you remember in Dickens' David Copperfield, the opening, those great, great words? "Whether I shall turn out to be the hero of my own story, or whether that station will be held by any one else, these pages must show."  Perfect beginning, perfect words. Aren't we all tempted to see ourselves as the hero of our own story? But as David Copperfield implies, this determination is not up to us -- it is something "these pages must show." There is also something ominous in those words: they foreshadow that the narrator will be both subject and object, a mere bit player in scenes of his own life.  Even  though we may write a page in the book of life, we delude ourselves by thinking we determine life's course.  Life mocks our attempts to control it, and we act as a Sorcerer's Apprentice, releasing forces whose power we only dimly realize.  And as the opening of Copperfield suggests, in your own story, in my story, in our story, we may turn out not to be the hero, and what's worse, our story may not necessarily be all about us.  We forget this, but we would do well not to forget it.   

Now let's look at the Sun Herald story.  First, let's look at this excerpt:

The sisters said they were naive in February 2006 when they first reported in a meeting with policyholders' attorney Dickie Scruggs what they called underhanded tactics at the State Farm Catastrophe Office.

"It was a tough decision, but we just needed help and needed somebody to stop what was going on," Kerri Rigsby said. "We didn't know what we were getting into at the time.

"I would do it again. I wouldn't recommend it to anybody else. We just definitely didn't know what to do. I guess, in my wildest fantasy, I thought that Dick (Scruggs) would just fix it."

As it turns out, they didn't know what they were getting into with Scruggs or State Farm.

With Scruggs, they unwittingly stepped into a political, legal and ethical minefield.

And let's note this later section of the story:

The Rigsbys hoped to remain anonymous when they went to Scruggs, taking with them records from State Farm files. They had begun saving and copying the records in the fall of 2005. As events unfolded, they say they realized anonymity would be impossible.

How plausible is this? The way the story says it, they first "reported" to Scruggs in February 2006. Yet the story also says they began saving and copying records in the fall of 2005.  Did they do this solely on their own?  Did Scruggs ask them to do so, directly or indirectly? These are important questions, for their testimony under oath has been they did not meet with and form an attorney-client relationship with Scruggs until February 2006.  Yet knowing how adverse almost all people are to "begin saving and copying records," one must inquire further about the reason they would go counter to this fundamental and recurrent feature of human psychology, especially since their conduct just happened to match with Scruggs' agenda and litigation plans, and they just happened to meet secretly with Scruggs and the Trailer Lawyers, and they just happened to illicitly access State Farm computer files in the exact order of a list of Scruggs' plaintiffs. 

These questions are not answered or addressed in the story, and the story does not tell us why they are not. In that these questions are central to the litigation mess the sisters find themselves in and about which they complain, one might expect these questions to be explored in the story, but again, they were not. 

Let's go forward just one more yard here, by taking a look at another piece of the story:

The sisters said they acted on their own when, over a weekend in June 2006, they downloaded thousands of pages of records from State Farm computers. They used a State Farm engineering roster and a Scruggs client list to decide what records to download.

"I knew that as soon as we did the data dump, we would lose our jobs," Cori Rigsby said. "I knew we would lose our careers."

The "acted on their own," is what it says. There is more than one connotation to this phrase.  We know some friends helped them out in the physical tasks of the data dump, so the statement is not literally true and therefore might be taken to mean they continue to claim they did not perform the data dump at the direction of Scruggs or others. But the phrase does not even quite say that.  We know AG Jim Hood's office sent someone to pick this stuff up right after it was copied.  How did he hear about it? But more than that, do you see the limiting perspective of the phrase "acted on their own"?  It stops short of addressing its own implications, and therefore does not reveal all that stuff that might be uncomfortable to talk about.  For example, the phrase can also be taken to mean merely that their conduct was volitional and that Scruggs was not physically involved in the tasks themselves.  It is quite difficult to picture a scenario where the Rigsbys decided, solely on their own, to copy thousands of pages of documents that were later used in litigation as purported support for their allegations.

Again, human nature is not to engage in a potentially fruitless frenzy of weekend activity involving playing with thousands of pages of paper.  This type of behavior is more typical of some larger plan. In that it has become manifest that a larger plan involving the Rigsbys had been activated some time prior to this, that this plan was carried on covertly, and that this activity has been found to create ethical problems justifying the disqualification of lawyers and the Rigsbys as witnesses, it is legitimate to inquire further as to the meaning and credibility of "acted on their own."  How does the data dump tie in to the accessing of the State Farm servers during the March 11 Trailer Summit, attendance at which is a point of hot contention at present? 

Also, staying on this point for the moment, what of the Lee Harrell deposition, in which he testified that Scruggs claimed, in a December 2005 meeting with Harrell and Insurance Commissioner George Dale, that he had corporate insiders at State Farm and was going to work this just like he and Mike Moore worked the tobacco litigation? The question, once again, is what of this testimony?

In that there is no apparent motive for Lee Harrell to make up this meeting or what was said in it, let us assume for purposes of argument that this testimony has credibility.  Who were these insiders? In the time since December 2005, no other State Farm "insiders" have surfaced, and we would surely have seen them by this point if there were any others.  So the logical inference is that Scruggs' reference was to the Rigsby sisters.  Remember two facts -- they say they began copying and keeping records in the fall of 2005, and they say they did not "report" to Scruggs until February 2006. There are several discrepancies here then that justify further inquiry.  I don't need to belabor it, you can see if for yourself.

Let's switch gears just a bit.  Although in this story the Rigsbys seem to be generally aligned with Scruggs, there is the germinating seed of a new narrative:

"I knew that as soon as we did the data dump, we would lose our jobs," Cori Rigsby said. "I knew we would lose our careers."

They told State Farm executives the following Monday what they had done and were soon out of work. Scruggs followed his tobacco playbook, offering them consulting salaries of $150,000 each to come to work for him on policyholder cases. He also planned to use them as witnesses in those cases.

The sisters had no familiarity with attorneys' rules of conduct. To pay witnesses is unethical.

Again, following his tobacco game plan, Scruggs took the Rigsbys to the media and pursued political options to pressure State Farm. 

Let's just accept this at face value, these statements, because our purpose is to examine them for an indication of where the Rigsby narrative will lead next.  They aren't quite making Scruggs the fall guy for their problems yet, but the door is open. They were "naive," they "had no familiarity with attorneys' rules of conduct," they didn't realize that "to pay witnesses is unethical." You will notice that the obverse side of the coin -- that in order for it to be unethical for lawyers to pay witnesses, it must be unethical for witnesses to accept money from lawyers -- is not addressed.  That seems to be the direction they are traveling -- maintaining that what they did was according to sincere belief, but that to the degree what they did was illegal or unethical, they were led into it by Scruggs and his "playbook."  I think, but I do not know for sure, that Scruggs is still paying for lawyers for the sisters.

This road has some bumps and twists and turns, because they have testified that, contrary to the implication of Scruggs' alleged statement to Harrell and Dale, they were not working with Scruggs before February 2006.  So there are some hard and fast facts they have testified to, and their own testimony under oath can't be blamed on Scruggs.  The fluidity of the narrative, in other words, has some limits which they themselves have prescribed.  Let me be clear: I make no judgment or representation as to the truth of their statements.  I merely note things that don't make sense as the facts are currently known. 

Let's look at another thing from the story, the last line, which says:

During countless hours of questions from corporate attorneys, Kerri Rigsby said at one point they produced an 8-by-10 photo of her dog, Payton, and asked about him.

Now, let's try to make sense of this.  The hours of the depositions in fact are not countless, because one could count them -- the time of beginning and concluding are noted in the transcript of the depositions.  But why the questions about the dog? Was this some frivolous harassment?  ("Who do you think would win in a fight between a T-Rex and King Kong? Who put the "Ram" in the Ramalama Ding Dong? Please, listen closely to my question and answer that question.") 

The questions about the dog appear to me to be aimed at the hypothesis explained below.  In the May 1, 2007 deposition of Kerri Rigsby, this questioning, beginning on page 36 and continuing to about page 46, appears designed to explore additional living expenses paid under the State Farm policy of the Rigsbys' mother, who was uprooted by Katrina damage.  To collect additional living expenses under the contract, you must have additional living expenses. And when living with a family member, you must provide a tax ID number or Social Security number of the family member.  Kerri, according to her testimony, executed a lease agreement with her mother for $2,800 a month so her mother could collect these expenses, and said: 

Absolutely. I wasn't going to let her live there for free. (Page 39, lines 21-22).

The money collected, however, appears from the testimony not to have gone directly to Kerri Rigsby but into an account for something called Payton Properties -- recall that Payton is the name of her dog, and recall also that there exists an 8 by 10 photo of the dog that was produced at the deposition.  The account, it seems, was not for the dog, however, despite the name of the company. It was, however, named after the dog, of this we can be sure.

Kerri testified this company did not have a tax ID number and was not registered with the state.  Kerri testified she did it this way because this was the advice of the lady at the bank -- "note to self, must resolve not to follow advice blindly from whomever offers it".  Kerri testified that Payton Properties was synonymous with Kerri and Kerri only.  Her state of being therefore was unique to the personhood of Kerri Rigsby herself and did not extend to members of the animal kingdom.  Again, the account was not set up for the benefit of the dog, although it was named for the dog.  The testimony does not reveal if the dog received incidental benefits from the use of its name, such as perhaps a Milk Bone, extra kibble or additional petting and kind words. But some things seem clear: the dog was not the actual holder of the account and the dog did not control or share in the money, nor did the dog exercise authority over the company bearing its name.  

Additionally, I suspect the point in asking about the taxpayer status of Payton Properties -- remember, named after but not controlled by the dog, so the dog cannot be blamed here, nor does it appear the dog provided advice in any respect -- and whether this sub rosa company's income was reported to the Internal Revenue Service and whether $2,800 per month was a fair market value for the lease. In other words, the hypothesis being explored was whether the insurance claim was inflated to channel money to Kerri Rigsby which was then not reported as income.  This much is apparent to me in reading the transcript, and would be to anyone else who cares to read it as well.  I don't know the truth of the hypothesis, but the existence of the hypothesis was the reason for the questions, not idle curiosity about the dog, whom you will remember, was named Payton, and of whom at least one 8 by 10 photograph exists.  

Now, when someone gives an interview, if they make it seem like big bad lawyers are picking on their puppy and this turns out not to be a complete version of events -- whoops, forgot to mention that unregistered company created to accept insurance dough -- one begins to suspect a few other things about the statements made in the interview as well.  Of course, the dog thing is just a line in the Sun Herald story, so we don't know exactly what Kerri Rigsby said about the dog or the questions that led to the statements.  The implication of the line in the story, however, is that Kerri Rigsby stated an outrageous example of the harassing character of deposition questioning. From the evidence of the transcript, I would have to disagree with that assessment. 

Incidentally, all the Rigsby depositions I have are available at this post.  For free, too.

Posted By David Rossmiller In Industry Developments
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Reading cases about insurance coverage for employee bad conduct is sometimes difficult -- not just the legal part of it, the facts are often pretty disturbing.  I mean, some of these folks? We're talking major league weirdos.  After I read some of these cases, I feel like going to wash my hands -- or not, considering they are often about some wacko using bathroom surveillance equipment.  You read these, you've got to watch The Sound of Music three or four times just to get your mind right again.

Randy Maniloff has done a service by taking a close look at some of these cases and how the coverage issues in them shake out.  Here's a copy of a good article he wrote on the subject for a recent edition of Mealey's.  Didn't ask him how many times he had to wash his hands during the course and scope of writing this piece.    

Posted By David Rossmiller In Industry Developments
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I've nominated this song as the official theme music for Trailer Lawyer posts.  A reader nominated this terrific song as the anti-Snake Farm, pro-Trailer Lawyer anthem.  There were other good suggestions from readers for theme music in the comments to this post, and more are welcome. We can't make these important decisions lightly.

Posted By David Rossmiller In Industry Developments
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Posting will be light, probably, for the next few days due to extreme day job demands.  I do want to mention, however, that I will be posting on Monday, April 28 the text of my new article on anti-concurrent cause and Fifth Circuit Katrina cases, being published this week in New Appleman on Insurance: Current Critical Issues in Insurance Law. In the course of examining the workings of anti-concurrent cause, this article puts a heavy emphasis on two things: a critique of the circuit court's decision in Leonard v. Nationwide and examination of the nature of ambiguity in insurance contracts. 

The second part was included for three reasons: it's fun to talk about, it was necessary to talk about, and it gives me an excuse to highlight once again the amazing work of Prof. Michelle Boardman in her article March 2006 article in the University of Michigan (Go Blue!) Law Review, Contra Proferentem: The Allure of Ambiguous Boilerplate. I've talked about this article before, and as I said in the Critical Issues piece, it is destined to become a classic on the subject, not just because of the insights presented but because it is uncommonly well-written.  

Because LexisNexis owns the copyright to my article, I am not free to do with it what I want, but my friends there have given me permission to post it on my blog, along with appropriate legal mumbo-jumbo about copyright ownership and so forth.  But it is embargoed until Monday, so the post has to wait. These things have a lengthy lead time, and I wrote it in January, so even though the article's nominal scope is all Katrina litigation before the Fifth Circuit, the Broussard case had not yet been decided so the treatment of this case is incomplete. The name of it is Katrina in the Fifth Dimension: Hurricane Katrina Cases in the Fifth Circuit Court of Appeals.

It's very difficult to write these things and keep them from becoming some boring string of legal indecipherability where the author quack-quack-quacks along as mindlessly as a duck.  The primary responsibility of the author is not to put words on paper or to try to look smart but to write something that fellow humans would find enjoyable and possibly enlightening to read. If the thing won't be read, it has no hope of being accepted. So a lot of thought has to go into organization, pacing and storytelling, using all of the writer's tools: plot, character development, foreshadowing, simile, metaphor and allegory, humor.  Intellectual discourse that lacks humor fights itself, it will only appeal to ideologues who are already convinced.  And it is not easy, believe me, to find humor that is both appropriate to the subject matter and works to tell the story, while maintaining intellectual standards. I have no use whatsoever for any kind of writing in which the author distances himself or herself from the reader, denying the humanity of both, where the author fails to do the work to anticipate the struggles and distractions of the readers and try to solve these problems in advance.  Humor is one such device that can be employed by the author, even in works of the utmost gravity, a point made most famously and most unforgettably by Thomas De Quincey in his essay, On the Knocking at the Gate in Macbeth.  One of the most remarkable things about this essay to me is its opening line, in which we come to understand that the author actually read or saw Macbeth as a boy -- imagine that. A reminder that, in addition to its other attractions,  Macbeth is a ripping good yarn.   

So, once again, the embargo is in place, but on Monday it is lifted and that's when I will post the article. In passing, I will also mention that I finished the chapter on Hurricane Law for the Appleman's treatise, and that will be published in the book at some point in the semi-near future, the exact timing of which I haven't inquired about because it was so exhausting to write I was sick of thinking anything about it by the time it was done. As you might expect, anti-concurrent cause is a prominent part of the chapter.

Posted By David Rossmiller In Industry Developments
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Better do a quick post this morning on this Anita Lee story in the Sun Herald on a motion for sanctions against Dickie Scruggs in the Wilson fee dispute case, the one in which Joey Langston pleaded guilty to trying to influence a judge. This paragraph seems explosive:

[Wilson attorney Vicki] Slater said she learned how the conspirators communicated. If Scruggs had something to relay to DeLaughter, Peters and Scruggs' attorneys met before Peters had lunch with DeLaughter. If DeLaughter had a message to pass along, he told Peters over lunch, then Peters met with Scruggs' attorneys.

If this is true, what are the feds doing about it? Seems the Wilson investigation fell into a crater since Scruggs pleaded guilty. 

Posted By David Rossmiller In Industry Developments
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You know the old saying -- if you can't stand the heat, stay out of the trailer. This story by Dan Margolies in today's Kansas City Star features angry denunciations by Chip Robertson and Todd Graves, suspected Trailer Lawyers, of State Farm:

“There’s a reason people call them ‘Snake Farm,’ ” Robertson said Monday.

OK, before we proceed, let's say something about this "Snake Farm" line.  As an insult, it's so-so, it's been said before, but I think the intent was for something more, a good satirical catch phrase to coalesce the storyline.  While I can appreciate the effort, this violates the first rule of satire -- it has to be funny. Like "Trailer Lawyers" is funny and catchy, it's fun to say, it's funny to think about a bunch of lawyers crammed into a trailer, probably the first trailer they've ever been in their lives ("try not to touch anything, you might catch something!").  The phrase is more than words, it gives you an image.  But "Snake Farm" is not funny, whether you agree with it or not.  It just sounds kind of unattractively bitter, like Great-Grandpa sittin' around complain' about how the milk wagon don't come no more, and them dang kids next door are so loud I can't watch my programs!!  

Let's take a look at a further excerpt from the story (I've added the words in brackets throughout this post for clarity in light of the Robertson statement): 

Although Graves and Robertson were not part of the Scruggs Katrina Group, State [Snake] Farm wants them off the whistleblower case. The insurer charges they were at meetings during which its computer data were illegally accessed.

That accusation met with angry denunciations this week by Graves and Robertson, who emphatically denied they had any role — as participants or observers — in the matter.

“They’re trying to cast these aspersions on us by saying that on March 11 (2006) we were with these girls in a trailer and got on the State [Snake] Farm Web site and viewed stuff,” Graves said. “The depositions State [Snake] Farm cites don’t say that.”

Graves acknowledged the Rigsbys might have given some of the downloaded information to Tony DeWitt, Robertson’s partner. But that, he said, “was not an ethical violation.”

“You’re not supposed to be able to go in court and just throw things up there,” Graves said. “Maybe in the blog world you can, but that’s not how you’re supposed to plead cases.”

Let's look at the Graves quote in the third paragraph of the excerpt. What do the depositions say?

Well, both Cori and Kerri Rigsby said, in their November 19 and November 20 depositions, that there were two trailer meetings.  Here's a link to a post with all the Rigsby depositions I have so you can do your own detective work, if you care to.

We know that State, sorry, Snake Farm was able, through a simple check of who accessed their server and when, to determine Cori Rigsby accessed the Sta-, Snake Farm claims records in virtually the same order they appeared on a list of Scruggs plaintiffs -- and in the January 2008 deposition she admitted she had such a list, although she said she didn't remember where she got it. This check of computer records has previously been submitted as evidence in the McIntosh case.

We also know that Cori Rigsby, on November 19, testified as follows:

Q. And when did you give Tony DeWitt your laptop? 
A. In April. 
Q. Did you also give him your password? 
A. I don't remember. 
Q. Well, it wouldn't do much good to have the laptop without the password, would it? 
A. Well, I was sitting right next to him. 
Q. All right. Did you boot it up for him? 
A. I don't remember. 
Q. What were you searching for? 
A. I'm not -- I'm not sure of the exact -- that we had a list. There were some documents that we were talking about. We were talking -- I'm not sure which documents he retrieved. I let  him in the computer, and I can't speak after that. 
Q. Where did this take place? 
A. It took place in Pascagoula. 
Q. Did you print documents as a result of that search? 
A. No, sir. 
Q. Did he read documents off your computer? 
A. I'm assuming he did. 
Q. Can you give me the date of this incident? 
A. I believe that this occurred in March. 
Q. March of '06? 
A. Yes, sir. 
Q. Can you be more specific by day? 
A. I can't. 
Q. Would your calendar refresh your  recollection? 
A. If I wrote it on there, it would have. 
Q. Do you know whether you did? 
A. I don't know. 
Q. Didn't you normally write appointments with your lawyers on your calendars? 
A. I normally did. 
Q. Did you -- is that a yes? 
A. Yes. 
Q. Did you go to his office? 
A. No. 
Q. He came to you? 
A. Yes. 
Q. He came to your house? 
A. No. We met in a trailer. 
Q. Pardon me? 
A. We met at a trailer. 
Q. Okay. Who else was there? 
A. Tony DeWitt. There were two meetings in this trailer, and I'm going to get confused as to  who was at which meeting. 
Q. Well, do your best. 
A. Okay. Tony DeWitt, Dick Scruggs, Zach 
Scruggs, Mary Winters, Chip -- 
Q. Chip who? 
A. I don't remember Chip's last name. Kerri, myself and my mother. 

* * * * *

Q. Once you logged in -- I assume you're following your counsel's instruction? 
A. Yes.

OK, this is Cori Rigsby's own testimony.  The date of the testimony, once again, is November 19, 2007. A fair inference from this testimony is that there were two trailer meetings, because that is what she said.  And at least at one of them, "Chip" and Mary Winters were present.  Coincidentally, Chip Robertson and Mary Winters, along with Tony DeWitt, are the names of the lawyers representing the Rigsbys in the False Claims Act "whistleblower" case, and Robertson is also of course the champion of the phrase "Snake Farm." A fair inference is that she gave her laptop to DeWitt in April, possibly at the second of the trailer meetings, perhaps at some other location.  But for sure at some point and at some place in April, she said, she did give the laptop itself to DeWitt.  She also testified that DeWitt was sitting right next to her at some point while she was accessing the computer, and at this meeting he might have viewed documents rather than accessing the computer itself, but it might also be that she "let him in the computer" and then doesn't know what he did.  This is not definitive one way or the other whether the computer was logged in to the server at that time.  It appears she said this occurred in March. 

Here is Kerri's testimony from the next day:

Q. And who did you meet with at the trailer? 
A. We met with several attorneys at that trailer. 
Q. Give me their names, please. 
A. Tony Dewitt, there was an attorney named Mary, Todd, and Chip. 
Q. Mary's last name? 
A. I don't recall her last name. 
Q. Is she an attorney? 
A. She is an attorney. She works with Tony Dewitt. 
Q. Does Tony Dewitt have a law firm name? 
A. It does, but I don't know what the name is. 
Q. How about Todd, is he an attorney? 
A. He's an attorney, but I don't believe he's in the same office. 
Q. Do you know what firm he's with? 
A. I don't. 
Q. And Chip, does he have a last name? 
A. He does, but I don't recall his last name. 
Q. Is he a lawyer? 
A. He's a lawyer. I believe he's the head of that firm that Tony works with.

* * * * *

Q. Well, my question is: Was there a situation that occurred on March 11, 2006, when you and your sister both accessed the McIntosh file through a State [Snake] Farm computer? 
A. It's possible, yes. 
Q. I don't want possibility. Is that likely to have occurred? 
A. Likely, yes.

Now, Kerri's testimony continued that day, November 20, 2007, as follows:

Q. Okay. Thank you. You talked earlier about a meeting that occurred on March 11th, 2006 in a trailer. And you listed several folks that were there, all attorneys except for your sister, I believe, and your mother -- 
A. Correct. 
Q. -- at that meeting. At that meeting -- 
MR. TAYLOR: I just want to be clear about one thing, Mrs. Lipsey. She has testified that there was a meeting. She did not provide the date. The date was provided by records from State [Snake] Farm's computers. 
MS. LIPSEY: Right. That's correct. That's correct. 
Q. But let's talk about -- you do remember that there was a meeting in spring, early spring, I guess, of 2006? 
A. Yes. 
Q. And at that meeting the attorneys that you listed earlier were present along with your  mother and your sister? 
A. Yes.

So from this we can see that Kerri Rigsby's belief was that the lawyers she named, Chip, Mary, Todd, Tony, were at the earlier of the trailer meetings, the one that occurred in March.  It's possible she was mistaken, of course. But that is the inference one must draw from her testimony.

What does this not tell us? It does not tell us who Trailer Todd was.  We know Todd Graves is one of the lawyers with his name on the lawsuit, but Trailer Todd might very well have been someone else named Todd. It does not tell us who looked at the computer while it was logged on to State Farm, excuse me, Snake Farm computers.  We know Cori Rigsby did, and Kerri Rigsby said it is likely she did as well.  Beyond that, the testimony is not complete. 

My question: does it matter whether lawyers looked at the documents on the server? What is the difference between looking at data that is on someone's server, and looking at that information after it has been illicitly downloaded from the server? Would you feel any better about me if you learned I was not the one who went into a house to take papers off someone's desk, but instead I had an arrangement with the household butler to take them, and then I read the papers only after he came outside and handed them to me? What about if I read them a month after he took them, would that be better? 

So let's return to the Graves quote from the Kansas City Star story:

“They’re trying to cast these aspersions on us by saying that on March 11 (2006) we were with these girls in a trailer and got on the State [Snake] Farm Web site and viewed stuff,” Graves said. “The depositions State [Snake] Farm cites don’t say that.”

A fair inference from the Kerri Rigsby testimony is that lawyers named Chip, Mary, Tony and Todd were in the trailer on March 11 -- a fair inference, for that is what she said.  Again, she could be mistaken, but since she was there and was the star of the show, her words carry some weight on this issue.  Neither of the Rigsbys said Chip, Mary and Todd watched as the information was downloaded, although neither said this did not happen, either. It does appear, however, that a fair reading of the Cori Rigsby deposition is that Tony DeWitt read documents off her computer on March 11, 2006, and possibly also that he was in control of her computer as well, doing what exactly we do not know for sure.  But we can say with some degree of assurance that he was not using the computer, for example, to get online and play chess against Shredder, because his purpose in being at the trailer had to have something to do with the False Claims Act case that was filed the next month. 

Whether this means Tony viewed the documents when they were on the server or after they were downloaded is not clear, but again, does that really matter? Even if Chip, Mary and Todd were not present at all on March 11, isn't the real question whether they viewed and made use of the documents knowing how they were obtained? And if Tony DeWitt was in the trailer on March 11, which appears to be the import of the testimony, are not the others charged with the knowledge of their colleague? Also, in the quote, who does "we" refer to?  

Just sayin'.

One thing I don't think I've seen to this point is a categorical denial that Robertson or Graves ever met with the Rigsbys in the trailer, nor have I seen a denial that they knew how the documents were obtained and viewed and made use of them anyway.  This latter element would be hard to deny, in my opinion, in that the lawsuit is based on the documents and the Rigsbys are the plaintiffs.    

Also, let's just focus ever so briefly on the last Graves quote from the story's excerpt:

“You’re not supposed to be able to go in court and just throw things up there,” Graves said. “Maybe in the blog world you can, but that’s not how you’re supposed to plead cases.”

I don't remember, in all the many stories that were done before about the "whistleblower" Rigsby sisters and this False Claims Act case, was there any peep from Graves or Robertson about how the publicity might unfairly affect the other side, or about how judges were too dumb to make up their own minds on the evidence?  In the story, Robertson also says, apparently speaking of State, er, Snake Farm, "I know they’re trying to sell a story, but it would be useful if they’d try to get the facts before trying to influence improperly any judge who might be reading the Internet." 

The other pro-Rigsby stories, it seems, would not confuse a judge who just happened to pick up the paper or sign on to the Internet, but Trailer Lawyer stories will.  Hmmm.  This is an interesting defense, not particularly persuasive in my opinion, that suggests judges cannot withstand the power of the Internet, and that Snake Farm is behind blog posts on this issue, at least insofar as it wrote a juicy storyline that will get bloggers stoked.  In case you want to look, here's a copy of the Snake Farm memorandum in support of its Motion to Disqualify Trailer Lawyers.  I know one thing Snake Farm is not responsible for, however, and that is the testimony of Cori and Kerri Rigsby -- and the Trailer Lawyer story comes from them. So whatever the truth is, these allegations originate with the lawyers' own clients. 

Incidentally, if we are going to keep talking about the Trailer Lawyers, we are going to need an official theme song.  Considering the first line of this song, I can't think of a better one. 

Posted By David Rossmiller In Industry Developments
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When Judge Senter issued his order disqualifying the Katrina(less) Litigation Group, was this letter from Don Barrett on behalf of the KLG what he had in mind?  Where the Katrina Litigation Group handpicks a successor and sends clients a contract to sign up with that firm?

Here's the key part of Judge Senter's order:

The payments made to the Rigsby sisters require the disqualification of the successors to the SKG and those whom they have added as associates from further participation in any litigation in this Court against State Farm and Renfroe arising from property damage attributable to Hurricane Katrina.  

Here's a link to the new firm Barrett recommends, including language welcoming the new Katrina clients.  And here is a link to a story about the new firm being sued over attorney fees in tobacco litigation.  Sound familiar?

Posted By David Rossmiller In Industry Developments
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Is Todd Graves denying he is a Trailer Lawyer? In this story, he says he was at Disney World on March 11, 2006, the day of the first Trailer Lawyer meeting with the Rigsby Sisters and Dickie Scruggs.  Someone named Todd apparently was there, though, according to the Kerri Rigsby November 20, 2007 deposition.

However, according to the Cori Rigsby deposition of November 19, 2007, page 67, there were two Trailer Summits. The second meeting occurred in April 2006-- it's confirmed on page 182 of the November 20 Kerri Rigsby deposition, although it's not clear to me who was there. 

Graves seems most concerned with showing he was not at the Trailer Summit before he left office as U.S. Attorney for the Western District of Missouri on March 24, 2006, although to me it doesn't seem that important -- more significant is did he review the documents and did he know they were gained illicitly?  Did he sign on to the lawsuit knowing what the score was, and did he stay signed on to the lawsuit knowing what the score was? I don't think Graves gets a pass merely because he didn't access the State Farm server, as he claims, or that he may not have been present at the trailer when the Rigsbys used their passwords to gain access to the claims system for purposes of engaging in Scruggspionage.  It does not appear to me that he has ever denied being at the trailer at all, perhaps at the second meeting, and it appears to me he has merely denied accessing documents on State Farm's server, not that he unaware where they came from or how they were obtained.

Doesn't this seem odd to you? A former chief justice of the Missouri Supreme Court (Chip Robertson) and a former U.S. Attorney (Graves), implicated in some kind of tawdry trailer tryst involving documents that federal Judge Acker, in Alabama, has found were wrongly taken -- "stolen" is the word he has used.  Now, is there any justification for this? Does anyone really believe that a False Claims Act case entitles the relators and their lawyers to do whatever they want, that the rules don't apply to them?  Considering that the purpose of the Act is to address wrongful behavior toward the government, it would be strange indeed if the remedy for this included further unlawful or unethical behavior.  However, the Trailer Lawyers are supposed to be the experts on False Claims Act cases, not me.  I guess we'll have to wait and see.

NOTE: I thought I published this early this morning, but apparently I hadn't.  It was sitting in my blog's admin basket until someone asked me if I intended to write anything for today.  

Posted By David Rossmiller In Industry Developments
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As I've said, work is the curse of the blogging class.  Day job demands come first, so I had difficulty grabbing some blogging time until late April 16/early April 17, when I wrote this post.  A couple must-blog-about things follow.

Trailer Lawyer News   

Terry Ganey of the Columbia (Missouri) Tribune has a Trailer Lawyer story, which appears to include fresh quotes from an interview with Todd Graves and Tony DeWitt.  As you may remember, there was some uncertainty over whether the "Todd" in the trailer with the Rigsby sisters -- they couldn't remember the last name during their depositions -- was in fact Todd Graves, a now former U.S. Attorney for the Western District of Missouri.  

This story, though, still leaves some uncertainty -- but from the quote attributed to Graves, it appears to me one inference is that he acknowledges he was in the trailer (or if that is too pejorative, "mobile home," if you prefer).

(Bracketed material in the excerpt that follows was inserted by me to give context):

Graves and Anthony DeWitt, an associate in [Chip] Robertson’s law firm [Robertson also apparently is one of the Trailer Lawyers], said they would be filing a substantial, formal answer to State Farm’s motion [to disqualify the Trailer Lawyers], which both said was inaccurate.

"I’ve never been around a computer that was on a State Farm database," Graves said. "The allegation is ridiculous. They don’t have a basis for it."

DeWitt said the law firms’ answer would be filed by Friday, unless the court granted an extension.

"The facts that are in the motion are all wrong," DeWitt added. "We never went onto their computer system. We never did the things we are alleged to have done. We have not violated any of the rules of professional conduct in Missouri or Mississippi." 

I don't know, the quote could still make sense if he is denying being the Todd in the trailer at all, but wouldn't he have said that? I mean, wouldn't the quote be: "I never was in that trailer, er, mobile home, with those women, the Rigsbys, and so I couldn't possibly have looked at any computer while they were hacking State Farm's system or whatever it is they supposedly did. Good Grief, it's hot in here, who turned on the furnace? Waiter, check please!!"   Question: can someone make me some bumper stickers that say "Who Is Trailer Todd?"  I'll hand them out as prizes to people who renew a two-year subscription to my blog.  Who is Trailer Todd -- inquiring minds want to know.

Let's step back just a bit to recall that Graves and Robertson, besides representing the Rigsbys in the False Claims Act case State Farm is trying to get them kicked off of, were brought in late in the game to represent Zach Scruggs, right along with Mike Moore, just before the younger Scruggs pleaded guilty to misprision of a felony in the Scruggs judicial bribery case - bad timing, no doubt. I should note this lawsuit is sometimes referred to, mostly by me, as Ex rel. Rigsby, which is its name and which I like because it sounds like a great name for a race horse -- "Trailer Lawyer leads Scruggs Guilty Plea by a neck down the stretch, but here comes Ex rel. Rigsby gaining on the outside!" Among those very familiar with the case, it is simply known as "the Qui Tam," a legal name for this type of lawsuit which I hate because it sounds like some kooky product sold on an all-night shopping network -- "the Qui Tam slices, dices, juices, peels, purees, grates, fries, bakes and broils, it refrigerates, freezes, toasts and cleans the dishes -- you can throw out every other appliance in your kitchen!" All right, now we can step forward again. 

Now here is an excellent post at a site called Fired Up! Missouri about the Tribune story and about the whole Trailer Lawyer bit (thanks for the shout out at the end of the post).  Here's a fun part of the post, making a point I've considered here:

Relying upon that testimony, State Farm's pleading then immediately makes an earth-shattering statement:

83. On information and belief, the “Todd” about whom Kerri Rigsby testified in the preceding paragraph is either Todd Graves or Todd A. Scott.

Why is the prospect that Todd Graves was at that first trailer meeting so potentially explosive?

Because on the date of the meeting, Graves was still in his post as United States Attorney for the Western District of Missouri. The meeting took place on March 11, 2006, just one day after Todd Graves announced that he would resign his post on March 24, 2006 --some two weeks later.

If indeed Todd Graves was present at the March 11, 2006 trailer meeting, he was not only present while the Rigsby sisters and other attorneys gained illicit access to State Farm files in preparation for litigation, but also present while still carrying a badge and wearing a title of law enforcement prestige from the Department of Justice. He would have been there while still an employee of the taxpayers of the United States. 

Now, I don't know who Todd A. Scott is and I didn't go back to read the State Farm pleading to see if that was explained.  I'm not saying Trailer Todd was either Todd Graves or Todd A. Scott -- it might have been Sweeney Todd for all I know.  But here's the really good analysis from the Fired Up post:

Note that Graves and DeWitt couch their denials very carefully. Both go to lengths to refute specifically the claim that they accessed State Farm's computer files, though nothing provided by Ganey indicates that either man denies having been present at the March 11, 2006 trailer meeting.

Immediate clarity is necessary on whether Todd Graves claims to have been present at or absent from the March 11, 2006 meeting. If Ganey explored this topic with Graves and did receive answers and simply chose not to publish them in this piece, I would hope he would make those responses available. If Ganey did not, perhaps some other reporter will put that query to the former U.S. Attorney.

If Graves was at the March 11, 2006 trailer meeting, an immediate accounting must be given to the people of Missouri, and of the United States, for why a sitting U.S. Attorney was in another state, effectively engaging the private practice of law before leaving office. And then the appropriate punishments should be assigned.

One can also say, based on the Ganey story, that neither man denies having seen the State Farm documents on the Rigsby laptop either, only that they deny having looked at the documents as the Rigsbys accessed them on the State Farm server.  Considering the flexibility of the English language, that still leaves plenty of room for looking at the docs right after they were downloaded, or later, or some such. 

Alan Lange at Y'all Politics -- one of the great blog names, by the way, much more creative than mine -- noted this same thing in regard to a footnoted disclaimer in a recent filing by the plaintiffs in the Qui Tam, I mean, in Ex rel. Rigsby ("by a nose at the wire!").  The footnote got him fairly perturbed, which you can see from reading his post.

Well, it's late as I write and this is starting to confuse me.  We'll await further developments on this Trailer/Mobile Home Lawyer story, add a piece here and a piece there, and see what the truth turns out to be.  As the saying goes, the truth will set you free. Or put you in jail. Or get you disqualified. Or whatever. The funny thing about the truth, though, is you never see anyone wearing a T-shirt that says "Truth Happens." Seems like you really have to dig to make it happen.  Everyone got their shovels?

More Moore

I heard about this Moore post at folo by NMC earlier in the evening and didn't have a chance to get to it for four hours, but it was worth waiting for. I mean, this deserves a Holy Cow!

You remember yesterday? Of course you remember yesterday, although it's been a long day and I'm not sure I do.  What I mean is, you remember yesterday where I asked a bunch of questions about that story where Mike Moore said he got a text message from Lon Stallings debunking Judge Lackey's testimony in the Jones v. Scruggs  hearing? (Look at the end of the post).

This is the testimony where Lackey said he didn't go to AG Jim Hood with concerns over Balducci's earwigging overtures because he heard from Stallings that Scruggs, through Moore, had pressured Hood to drop his criminal investigation of State Farm because the insurer was demanding it as a condition of settling 640 cases, the settlement of which resulted in beaucoup coin to the Scruggs Katrina Group -- $26.5 million in attorney fees to be exact (which they immediately began squabbling about with Jones, at that time a member of the SKG, which led to the Jones v. Scruggs fee dispute, which led to the Balducci earwigging, which led to sweet potato time, which led to jail time).    

OK, the relevant point of that portion of my post from yesterday is that Moore said Lackey either made it up or lost his marbles.  Here's the part of the Daily Journal story I excerpted:

"Judge Lackey either is very confused or he made up the story out of whole cloth," Moore said.

"Jim Hood is a very, very close friend - he worked for me, supported me in my first campaign. I encouraged him to take my place."

Moore, who represents Scruggs' son Zach on his criminal charges in the Lackey bribery attempt, said he had an investigator interview Stallings and he made no mention of the conversation with Lackey.

"On the contrary, he told Lackey to call the AG's office," Moore added.

He also showed the Daily Journal a text message he had just received from Stallings, which confirmed the story.

Was Moore surprised to hear Lackey's accusations from the stand Tuesday morning?

"Sure, I was appalled," he said.

Moore also noted he, as attorney general, had removed Patterson from office as state auditor and prosecuted him.

"I of all people would not have anything to do with Steve Patterson," he noted. 

Now, as I noted, some things about this seemed, well, something less than complete.  That brings us back to the NMC post.  It talks of a story by Alyssa Schnugg of the Oxford Eagle, which wasn't published yet as I wrote this, where she talked to Stallings and dude said he never text messaged Moore and doesn't even know how to text message! Whoops. Lesson: if you ID a guy as the man you saw running from the store with a gun and a bag of money after a stick-up, make sure you're not talking about a guy with no legs. 

Apparently, Stallings basically backs Lackey, said he was off on a few details, but that the judge was truthful. Plus, did I mention it? Dude said he never text messaged Moore and doesn't even know how to text message!  What's Moore got to say about this, I wonder? I mean, besides "Good Grief, it's hot in here, who turned on the furnace? Waiter, check please!!"

See what I mean?  That's why they don't sell those "Truth Happens" T-shirts. Lots of unanswered questions. Well, I'll make you a deal: you keep reading, and I'll keep asking. 

One final question: who was the text message from, the one Moore was showing off? Well, OK, two final questions: and what exactly did it say?

UPDATE: We know the answer to one of these questions: the message wasn't from Stallings -- dude said he never text messaged Moore and doesn't even know how to text message! -- it was from  "Moore associate Lee Martin," which I assume means an associate in Moore's private law offices.  What does it mean, though, that Moore said it "confirms his recollection of what his investigator told him about speaking with Stallings and his advice to Lackey."

What have we got here, some kind of sixth-hand information, some "investigator" talked to Stallings about what Lackey and Stallings said? What does it mean, "his investigator," Moore is in private practice now, no longer an AG, what does he do, walk around with a butler, a manicurist, a bodyguard and an investigator? Who has an investigator? 

Isn't this just amazing? Moore's evidence that he uses to call Lackey out as a liar is some "yes, boss" e-mail.  I can picture that e-exchange. Moore: "Didn't my investigator tell me while I was yelling at the butler that he anticipated Lackey would take the stand and so he asked Stallings what Stallings said to Lackey and Stallings denied what Lackey just said? Isn't that the way it happened?"

Response: "y-y-yessir, why, yessir, that's exactly what the truth is, what you just said, sir."

SECOND UPDATE: As a reader pointed out, there is one Lee Martin listed in the Mississippi Bar Roll, with an e-mail address at the Mike Moore Law Firm, but the physical address is listed as Office of the Attorney General.  Hmmmm, don't know what that means.  Lots of people get dragged into this stuff, names get splashed all over, it's too bad, really. I wouldn't mention it, except it was in the paper.  

Posted By David Rossmiller In Industry Developments
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The Shows case, the big RICO lawsuit filed with fanfare and hoopla last year by the Scruggs Katrina Group, now is plaintiff-lawyerless.  A federal judge, following in the footsteps of Judge Senter's disqualification of lawyers affiliated with Dickie Scruggs and the Rigsby sisters in the McIntosh case, has disqualified the Katrina(less) Litigation Group and associated counsel.  Here's a copy of the order.

Scruggs Disease is highly contagious, as you can see from this new order by Judge Senter stating that an Alabama firm cannot represent the plaintiffs in McIntosh because of the firm's previous links with the Scruggs Katrina Group. Here's the brief the firm wisely filed seeking clarification before jumping into the lawsuit.

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THIRD UPDATE:

Here is the scheduling order entered by Judge Coleman, allowing discovery on damages, and setting a hearing on that issue for November 12.

Also, here is a story from Holbrook Mohr of the Associated Press, where Jim Hood "denies his predecessor delivered a warning that a wealthy lawyer would fund an opponent in last year's election if Hood didn't cooperate in Hurricane Katrina litigation."  Not sure if that matches the headline: "AG denies being pressured in Katrina cases."  The way the story reads, Hood denies only that Moore delivered the message -- Hood does not say he received no pressure.      

Finally, I liked this post by Alan Lange over at Y'all Politics about Mike Moore's comments.

SECOND UPDATE:

Here's the order of default judgment as a sanction, done in the usual way, by striking the answer and all responsive pleadings. The order also allows plaintiffs' attorney fees since July 17, 2007, without prejudice to the main attorney fee claim contained in the complaint.

UPDATE:

Many thanks are due to the ICLB Irregulars, those who supply information without asking for public acknowledgment, indeed while preferring to remain anonymous while doing the people's work.   Such is ICLB's Oxford correspondent, with the latest dispatch from the courtroom -- a default judgment was entered against the defendants as a sanction for improper conduct in the Jones v. Scruggs litigation.

Findings of the Court:

Implication is drawn from Scruggs’s pleading of Fifth Amendment. Court finds that in March 2007 at the law offices of Scruggs Law Firm, Balducci and members of Scruggs Law Firm agreed to use Balducci’s friendship with Judge Lackey for a favorable decision in a pending suit. Balducci met with Judge Lackey and attempted to persuade him to enter summary judgment for defendants with the understanding that he would make Judge Lackey of counsel at his law firm upon retiring. Judge Lackey recognized this as improper and subsequently reported the incident to federal justice authorities.

Thereafter Judge Lackey worked with the FBI to aid the investigation and to gather evidence that the “attempt to influence” developed into a conspiracy of Richard Scruggs, Zach Scruggs, Sid Backstrom, Tim Balducci and Steve Patterson to bribe Judge Lackey was carried out.

Plaintiffs' motion for sanctions should be granted. Actions justify harsh sanctions. Pleadings and answer are stricken. Default entered in favor of the plaintiffs.

Hearing will be held in the future to determine amount of fees due plaintiff due under joint venture agreement. Damages will include attorney fees and expenses subsequent to hearing on July 17 (Okolona hearing) before Judge Lackey on defendants’ motion to enforce arbitration. Punitives will be considered

The judge asked if either side had questions. 

Grady Tollison, for plaintiffs, said that he had a scheduling order that they had drafted.

Cal Mayo, for defendants, asked for clarification about the punitives. The judge stated that he was entering a default on punitive damages for which he found a violation. He did not consider actions prior to the filing of the complaint. The punitives are for the finding of bribery and conspiracy to corruptly influence Judge Lackey. The default doesn’t extend to punitives on the face of the complaint, but the judge will allowed punitives to be argued at the hearing. The allegations in the complaint were not sufficient on their face to award general punitives.

Attorney fees limited to hearing date of Judge Lackey (I believe he was referencing the July 17 Okolona hearing) and after. Arbitration contract applied after the filing of complaint up until alleged improper action and that time period should not be applicable for the attorney fees.

The judge said that Percy, one of the attorneys for the plaintiff, had submitted an order that the court found acceptable with certain revisions. The plaintiff's attorneys conferred and accept as revised. Mayo had a couple of suggestions. The court will return at 10:30 to iron out details of the order.

Plaintiff John Jones told one reporter, “not about money… about the fact that penalties have to send a message to the entire bar, to the public, that you can't tamper with the integrity of our system of justice.” 

  

----------------------------------------------------------------------

Expecting word from the courtroom soon -- actually, I have word from the courtroom but want to make sure I understand what happened before passing it on.  

In the meantime, let's look at this update from Patsy Brumfield of the Daily Journal about yesterday's testimony by Judge Lackey, in which former Mississippi AG Mike Moore says he was "appalled" by what Lackey said.  If you remember, Lackey said he didn't go to AG Jim Hood with his qualms about the overtures by Tim Balducci because of what he heard about Scruggs putting heat on Hood, with Moore's involvement, so that Hood would help settle cases against State Farm.  Specifically, the heat purportedly was in the form of threatening to run a candidate against Hood in the primary if Hood didn't dance to the right tune. 

"Judge Lackey either is very confused or he made up the story out of whole cloth," Moore said.

"Jim Hood is a very, very close friend - he worked for me, supported me in my first campaign. I encouraged him to take my place."

Moore, who represents Scruggs' son Zach on his criminal charges in the Lackey bribery attempt, said he had an investigator interview Stallings and he made no mention of the conversation with Lackey.

"On the contrary, he told Lackey to call the AG's office," Moore added.

He also showed the Daily Journal a text message he had just received from Stallings, which confirmed the story.

Was Moore surprised to hear Lackey's accusations from the stand Tuesday morning?

"Sure, I was appalled," he said.

Moore also noted he, as attorney general, had removed Patterson from office as state auditor and prosecuted him.

"I of all people would not have anything to do with Steve Patterson," he noted.

Questions:

• What exactly did the text message say? 
• Will Moore be willing to share it with the public, say, by posting a copy of it on his law firm's website?  Did Moore get Stallings permission to show his text message to third parties?
• When it says "confirmed the story," what story was confirmed? According to Moore, Stallings said to contact the AG's office.  Does that mean that Stallings did not relate the story about Hood being pressured? Does it mean he did relate that story but said to contact the AG anyway? Does it mean that he related the story but did not claim any involvement by Moore?  Does it mean that Stallings said Lackey's testimony was entirely false? 
• If the text message confirmed something, why don't we know verbatim what the message said, and if a message from Moore to Stallings preceded it, why don't we have a verbatim accounting of what that message said?  Since Stallings is a Mississippi public official, these text messages should be accessible through a Public Records Law request. 
• Something about the Moore remarks strikes me as something less than a categorical denial that Hood received pressure from Scruggs to help settle the cases, or at the least, that Scruggs intended to or tried to assert such pressure. When Moore says he wouldn't have anything to do with Patterson, does that also mean he wouldn't have anything to do with Balducci?  If Scruggs wanted or intended to pressure Hood to bring about that result, even if Hood wasn't aware of it, was Moore aware of it in any way?
• Is it wise to call Lackey out as either confused or a liar? This was tried, with a distinct lack of success, by Scruggs' defense in the bribery case.  What motive would Lackey have to lie?
• If Lackey is confused, can Moore say with confidence the investigation would have turned out the same way had Lackey actually gone to the AG's office? I mean, Hood showed a draft of his own civil lawsuit against Katrina insurers to Scruggs for his input within days after Katrina hit, he worked closely with Scruggs on such matters as the Rigsby documents and considered Scruggs his confidential informant.  It's not like we lack evidence, outside of the evidence of Lackey's testimony yesterday, that Hood and Scruggs were tight.  Who will say with a straight face that Lackey's fears about going to the AG's office were delusional?  It would take a lot of Hoodzpah to make such a claim.     

Posted By David Rossmiller In Industry Developments
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It's not the first time this has happened to me during the Katrina Follies, that I have trouble believing what I'm hearing.  I think I am a hardened observer of these events and that nothing could shock me anymore, but then something else does.

Like the testimony by Judge Lackey yesterday about not being able to go to the Mississippi Attorney General's Office because, he was told, Jim Hood had buckled to pressure from Dickie Scruggs to cooperate in Scruggs' mass Katrina settlement with State Farm that netted the $26.5 million in fees at the core of the Jones v. Scruggs dispute.  One can draw two inferences from this: that Lackey believed Hood was compromised because of his role in bringing about the conditions that  led to the lawsuit, and two, that Lackey believed Hood was controlled by Scruggs, would rat out Lackey and quash an investigation.   Just set aside the question of whether these perceptions are accurate -- it is bad enough that he believed that it was unsafe and unwise to trust the state's attorney general to deal with a bribery investigation. 

Remember that Hood himself later said he would have a conflict of interest in going after people who had been commissioned to do selected work for the AG's office, like Joey Langston and Tim Balducci, and that it would be like going after family.  Remember also that he said Dickie Scruggs was one of his "confidential informants," so that would make Scruggs family too.  No wonder Scruggs had such faith in his Magic Jurisdiction theory -- it must have seemed he could do just about anything with impunity.  Do you remember Scruggs Primetime, the Ride of the Rigsbys, the first and second acts of the Katrina Follies?  All that malarkey that was said and done, and how very few questioned it?  But once Lackey blew away the magic dust, it all came undone in a hurry.

My ICLB Oxford correspondent will have another report from the courtroom as the hearing continues today.  I'll post an update here when I have one.

Posted By David Rossmiller In Industry Developments
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When Roger Parloff has weighed in with Scruggs coverage, he has done a tremendous job, and one that is quite difficult.  At this site, I assume that readers have a high degree of familiarity with the Scruggs Supernova.  If they don't, well, they can type in a search for "Dickie Scruggs" and study up to become naturalized citizens of the Scruggs Nation.  But when writing less frequently on a subject for a mass audience, it is quite a challenge to describe what is going on without losing the rich flavor of the context. In other words, it takes a lot of skill as a storyteller to keep your piece from becoming just some recitation, some boring, droning tale you hear from the guy on the bar stool next to you, with the particulars swallowing up any larger point, or conversely, with the point hammered at you without enough supporting details for you to believe in the point. 

Here's a follow up, on his blog, of a recent Scruggs piece that will appear in the print edition of Fortune.  In this follow up, he discusses some developments that didn't make the first story -- makes for some good reading.      

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THIRD UPDATE:  Here's a story by Patsy Brumfield of the Daily Journal on the day's events.  Here is another story, by Alyssa Schnugg in the Oxford Eagle -- but this link might go bad right away, apparently the paper doesn't have permalinks on its main page.  I tried to pull this story from the archives, but if it isn't there when you follow the link, it's not my fault.

SECOND UPDATE: "The Monster Was Dickie Scruggs." 

Here's some great live blogging from NMC at folo.   

I'll try to find some time to comment more thoroughly on the day's events, but it won't be until tonight at the earliest. 

UPDATE: Finally got a moment to post, here's the report on the morning session from ICLB's Oxford correspondent.  We're out on the frontiers of verisimilitude here, and folks, this is as close as you're ever going to see to a guest blogger on this site: 

Motion for continuance.

Judge Coleman pointed out that the motion setting the hearing date was entered 4/3. All parties advised on Thursday before that date by e-mail that matter would be heard today. Counsel for both sides acknowledged receiving the e-mail. Judge was advised that the parties were available 4/14-18. The judge intend by tone of the email that he wanted matter to proceed.

The judge asked the defense: what witnesses would not be available to testify, intending, instead to assert their Fifth Amendment right?

Cal Mayo for Scruggs and Scruggs Law Firm -- Richard Scruggs, Zach Scruggs, and Sid Backstrom will be sentenced in the next 45 days. They have been advised by their criminal attorneys to assert the Fifth Amendment in response to questions today. May be available to testify after sentencing. Steve Patterson, whose the defense offered would be beneficial to the court on the matter of sanctions, had been advised by his counsel that he was not to testify. Mayo stated that they had not been able to find Balducci.

Motion for Sanctions.

Cal Mayo presented an order clarifying the scope of sanctions to the judge. The plaintiff consents. It was difficult to hear, but I believe the order limits the scope of sanctions to compensatory damages or stricken pleadings.

Grady Tollison, for the plaintiffs, informed the court that Judge Lackey had been subpoenaed by both sides, but was tied up in a jury trial. When available, his testimony would be taken, likely out of turn. Counsel for Dickie Scruggs indicated that Scruggs was across the street and would be retrieved for testimony first since Lackey not available.

Tollison offered into evidence the following documents, while we were waiting for Scruggs to arrive:

Ex 1 - certified copy of plea, transcript - Tim Balducci .
Ex 2 - certified copy of plea, transcript - Sid Backstrom
Ex 3 - certified copy of plea, transcript - Dickie Scruggs
Ex 4 - certified copy of plea, transcript - Zach Scruggs
Ex 5 - certified copy of plea, transcript - Steve Patterson
Ex 6 - interrogatory answers 1, 3, 11 - of Nutt & McAlister - $40,000 paid by SKG [I think this question involves the reimbursement of $40,000 by N&M to Scruggs for documentation presented]
Ex 7 - interrogatory answer from Barrett Law Office, P.A.. - substantially same as Nutt & McAlister
Ex 8 - interrogatory answer from Don Barrett individually - substantially same as Nutt & McAlister
Ex 9 - interrogatory answer - Lovelace
Ex 10 - interrogatory of Richard F. Scruggs - [Mayo: objection to these - no testimony in this, as Scruggs objected to each of the interrogatory requests]
Ex 11 - interrogatory of Scruggs law firm [Mayo: objection to these - no testimony in this, as Scruggs objected to each of the interrogatory requests]
Ex 12 - Requests admission by Nutt & McAllister

Dickie Scruggs and Backstrom arrived. Tollison called Dickie Scruggs to the stand.

Scruggs approached witness stand, sat and pulled out small index card.
Brooks Dooley introduced himself as representing Scruggs.

[below I attempted to capture the substance of the question. It was impossible to get a verbatim representation of the question given the speed with which these questions were asked and to which Scruggs responded. Provided interesting - albeit one-sided narrative]

Scruggs introduced himself for the record.
Tollison questioned the witness.
Q: You a member of Scruggs Law Firm?
A: Respectfully decline to answer… based on the advice of counsel, …5th amendment …. [prepared statement read from index card]
Q: Member of Scruggs Katrina Group?
A: Respectfully decline to answer… based on the advice of counsel, …5th amendment ….
Q: The finances of the Scruggs Katrina Group were handled by Nutt & McAlister?
A: Respectfully decline to answer… based on the advice of counsel, …5th amendment ….

At this point, Judge Coleman asked the witness to say “same reason” instead of reading the long, prepared statement asserting his Fifth Amendment rights. Scruggs’ attorney offered that that was acceptable so long as everyone understood “same reason” to be an assertion of Fifth Amendment rights, as described in the prepared statement.

Tollison resumed questioning. Scruggs responded “same reason” to each of the following: .
Q: You individually and Scruggs Law Firm are defendants in Jones, Funderberg…
Q: Other defendants in this case Nutt & McAlister, Don Barrett , Barrett Law Firm, Lovelace..?
Q: Case assigned to Judge Lackey?
Q: Up until ___ [date], defendants were represented by Daniel Coker?
Q Defendants filed motion to stay and compel arbitration?
Q: Tim Balducci not attorney of record for any of the attorneys in this case?
Q: Isn’t it a fact that Tim Balducci, Sid Backstrom and Steve Patterson ______ have all plead guilty to conspiring with you to corruptly influence Judge Lackey?
Q: You have pleaded guilty to count one of an indictment?
Q: In open court under oath admitted to conspiring?
Q: Admitted the government’s statement and statement of government’s facts under oath was correct?
Q: You knew that Sid Backstrom had conspired with Tim Balducci to bribe Judge Lackey?
Q: You knew that payment of $40,000 had been agreed to and paid by Tim Balducci?
Q: Order signed…?
Q: You prepared invoice to submit to Nutt & McAllister to be reimbursed for $40,000 payment?
Q: The invoice of payment to Balducci was ostensibly to do questions for voir dire?
Q: There were no questions for voir dire?
Q: Case that voir dire was to be done has never been tried?
Q: Balducci asked for another $10,000 to give to Judge Lackey after the $40,000?
Q: You gave Balducci the $10,000 and prepared documentation to show it was for jury instructions?
Q: No jury instructions prepared?
Q: Purpose of these jury instruction invoices and documents and voir dire was to be reimbursed by SKG for bribe money?
Q: Nutt & McAllister, a member of SKG, was on the pleading Linsey v. USAA?
Q: Case was ostensibly the case for the jury instructions and voir dire by Tim Balducci?

At this time, Tollison asked that judge infer that a question answered with the Fifth Amendment would be favorable to the plaintiffs.
Mayo: Asked the Court to wait until end of hearing to make inference.
Judge responded inaudibly.

Short recess.

Judge Lackey called by Tollison to the stand.
Substance of Judge Lackey’s testimony is a repeat of what we have already heard, but it is as follows.
Lackey was assigned to a case called Jones et al v. Scruggs, and had signed an order sealing before process was issued and before attorneys on either side. Sealed at the request of Tollison, although no conversation between Lackey and Tollison took place at that time about facts/merits of the case. Lackey knew only that it was a fee dispute between two groups of lawyers. When answers/pleadings filed, Daniel Coker initially represented all of the defendants.

On March 28, 2007, Tim Balducci called Judge Lackey and wanted to know if he could speak with him. The judge had known Tim for a long time and recognized that he was a young lawyer with great ability. When Balducci called, Lackey felt that whatever he was calling about was very important, and Lackey told him he could see Balducci that afternoon.
After exchanging pleasantries, Tim Balducci indicated the reason for his visit. [Defense objected with hearsay, which was overruled because the statement was part of a conspiracy]. Tim indicated that while practicing with Joey Langston, he had made some “mighty good friends and mighty good money.” He then explained the Katrina consortium of 5 law firms, how fees were divided. Balducci described “scurrilous allegations” that had been made by Grady Tollison against “his friends” - described as Judge Lackey to his recollection as “Mr. Scruggs and Mr. Barrett and Mr. Nutt and maybe someone else or two.” Balducci explained that his friends “were being mistreated and he only wanted them to be treated properly.” He suggested that a summary judgment motion would probably dispose of the worst allegations and those claims that remained could probably be handled in arbitration. At this point, Balducci also indicated to Judge Lackey that “when he got ready to lay the gavel down” there was a place for Lackey as of counsel at Balducci’s firm.

Lackey described going to the U.S. Attorney’s office and speaking with John Hailman, who asked him not to do anything or tell anyone until he heard from him.

He intended to recuse himself. Informed the Daniel Coker firm and Tollison law firm that he was going to recuse. Sent to judge Howorth and he signed. Before Judge Elliot signed (the other judge in the circuit district), Lackey withdrew the order and informed the attorneys he was back on .

First told Judge Howorth about the situation. Then went to DA office and spoke with Lon Stallings. Lackey said that he “knew he couldn’t go to the AG office because he knew that Mr. Scruggs through Mike Moore had told the AG that if he didn’t go along with it then they would fund a candidate against him and see that he was properly funded to defeat.” [Mike Moore, sitting in the gallery, looks down and shakes his head]

In May, Lackey had contacted TB and told him that Grady t wanted to have hearing on the matter and that he had not received his proposed motion for SJ. Tim Balducci advised that they had changed tactics and they thought they could take care of it in arbitration. Delay would assist because Mr. Jones having financial difficulty. If delayed would encourage Jones to settle. Judge Lackey stated that his perception of “they” was the four other firms with the Katrina Group. Judge Lackey’s perception was that the contact was on behalf all the law firms as defendants. The order applied to all the defendants.

Ultimately, Lackey, prefacing with “I don’t want this to sound improper,” indicated that he “was having some serious difficulty,” and “just could not bring myself to say bring me some money and I would do this but I ultimately did.” He stated that the US Attorney's office had been listening to the conversations were convinced, “much more than I,” that the intention of Balducci was to bribe the judge. Lackey stated that he was hoping that Balducci would say, “Judge, you misunderstood me.” Judge Lackey finally suggested $40,000. It was a figure that Lackey came up with, a “spontaneous suggestion.” He told Balducci that he “didn’t want any of his money, if it wasn’t Scruggs’ money [he] didn’t want it.” Balducci complied and the exchange was videotaped.

Tollison tendered the witness.

Counsel for Nutt, et al. questioned Judge Lackey [didn’t introduce himself, and I don’t know who he was].

His questions elicited responses from Lackey that he didn’t recall hearing David Nutt’s or Sparky Lovelace’s or Don Barrett’s names after the initial meeting where Balducci described the SKG. No SJ motion ever filed in this case. The lawyer asked if Balducci had told him that there were only three people that knew about the improper contact - Scruggs, Lackey and Balducci - to which Lackey responded “that’s right.”
Said that Tim Balducci never entered an appearance in this case, and that an Okolona hearing, where the defense presented orders to the judge, counsel for the plaintiffs was present.

Cal Mayo for Scruggs and Scruggs Law Firm then questioned Lackey:
Ultimately turned into exercise of walking through chronology - again - including many references to transcripts, details of meetings with the FBI, the U.S. Attorney’s office, Tim Balducci.

Only high points will be listed below.

Questioned Lackey about sealing case, and Lackey stated that he had never sealed a case before (had never been asked to), but that he “hated to hang out dirty wash” with the fee dispute between lawyers. Mayo asked Lackey if Tollison (who requested the case be sealed) told you if it involved any attorneys that practiced law in Oxford, that there was an arbitration agreement between the parties, or that settlement discussions were ongoing, all of which Lackey responded in the negative. Lackey said that Tollison or Tollison’s office prepared the order that was presented to him

Mayo questioned Judge Lackey about three interactions with Balducci that were “total fabrications” - when he told Balducci that there’d been improper ex parte contact by the other side, when he told Balducci that “Grady is putting some pressure on me to get this done,” and when he told him that Tollison had called, asking Judge Lackey not to enter an order until he got Tollison’s latest memorandum. Judge Lackey said he felt like “a lost ball in tall weeds, to tell you the truth” and “wanted to bring it to a close.” All of these “fabrications” were Judge Lackey’s idea.

Mayo went over the background relationship between Lackey and Balducci. Initial improper contact. Lackey’s contacting Howorth after the improper contact, and their discussion of Lackey’s obligation to report. He said it was one of hardest things he’s ever had to do. He considered “Tim Balducci friend but consider the law a friend, too.” He subsequently talked to John Hailman and then with Chief Justice Smith. They decided not to report to the Mississippi Bar because didn’t want to tip off any of the individuals being investigated.

At some point in the chronology, which seemed like an effort to tout the independence of Balducci, Tollison objected - noted that there are “already five guilty pleas already in evidence” and argued that this line of questioning was not relevant. Objection overruled.

After he had initially “recused” himself - he talked with the FBI. He realized “what a monster we were probably dealing with and the lives that he had probably destroyed and the young lawyers whose lives and their families that he had destroyed, I agreed to get back in it.” Mayo asked: “Who was ‘he’?” Lackey said, “Dickie Scruggs. It was evident what he has done. Don’t you think it is evident? I think that he has done more to destroy this profession than anything that has happened in my lifetime.”

Another of the reasons that he got back into the case was that he knew that Jim Hood had told Lon Stallings that if he didn’t go through with a settlement of State Farm cases and allow them to collect $26.5 mil in attorney fees that Scruggs would find a candidate that would run against and fund just like they were going to do the commissioner of insurance. [Moore’s jaw appears to tense whenever his name is mentioned.]

Lackey said, “If you could buy judge’s decision like buying can of coffee or sack of sugar, it absolutely infuriated me.”

Perhaps the highlight, and certainly the lightest moment of the hearing was when Cal Mayo approached Judge Lackey to refresh his recollection with a transcript of one of the recorded conversations between Judge Lackey and Balducci. While showing him transcript, Lackey said, "while I’m thinking about it, let me give you back your check. I was here anyhow.” Much laughter in gallery. Through laughter, Judge Lackey explained that it was for travel expenses. Judge Coleman told Lackey that he needed to ask Mayo if he was wearing a wire. More laughter.

After taking Judge Lackey through the end of September when Judge Lackey talked about how he came up with the $40,000 number - thinking that maybe he had “overpriced” himself -- Cal Mayo concluded the questioning. Throughout the questioning, Judge Lackey had trouble hearing Mayo and often responded to questions with commentary well beyond the scope of the question. Several times, Cal Mayo appeared to be bordering on frustration with his witness.

Tollison said he had one question: “From the time that you became judge in Feb 1993, have I ever one time ever discussed the substance of any case with you?”

Lackey: “You mean ex parte? No.”

At this time the plaintiff rested, but indicated that that he was going to request attorney fees. 

Well, that's it for this update.  I'll see if I can catch you up on the afternoon session later.  

_________________________________________________________________

I'm going to be on the road today, making blogging more challenging, but challenges exist to be overcome, and I will update this post later with a report from ICLB's secret Oxford correspondent on today's hearing.  As time is short this morning, let me refer you to this post by NMC at folo for further details on what the hearing is about.  

Posted By David Rossmiller In Industry Developments
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As you may have heard, following an adverse decision in the Florida Court of Appeal, First District, Allstate decided to release to the public the so-called McKinsey documents, which some plaintiff lawyers claim are a smoking gun showing Allstate bad faith toward bodily injury claimants.  The insurer has put some 150,000 pages of documents up on its website, after early furnishing them to the Florida Office of Insurance Regulation during an ongoing dispute with state regulators over Allstate's refusal to play along with their strategy to roll back property insurance premiums or at least keep increases low.

As part of its strategy to put the heat on insurers, almost all of which where not following the game plan that Charlie Crist has so prominently bellowed, the Office of Insurance Regulation began targeting selected big fish, including Allstate.    

Regulators scheduled a hearing where Allstate was to come to answer questions about its underwriting and pricing decisions, and a few other things.  They also issued subpoenas for a huge number of documents.  Whether this was reasonable or just some mau-mauing by officials scared witless by Sheriff Charlie, the insurer, in fact, came up pretty far short of complying, and rather than detail the entire list, perhaps it is best to refer you to pages 3-6 of this April 4 opinion by the Court of Appeal, First District.

After Allstate failed to comply with the subpoena, the Office of Insurance Regulation issued an Immediate Final Order, or IFO, suspending Allstate from writing new insurance business in the state until it complied with the subpoenas.   Allstate went to the appeals court, and on January 18 obtained a temporary stay of enforcement of the suspension until the merits of the case were decided.  They were decided, in the April 4 decision, but against Allstate -- the Court of Appeal said the Office of Insurance Regulation did not need to go to court to enforce its subpoenas under the circumstance and had the power to act as it did. 

However, the suspension still has not taken effect because the court gave Allstate 15 days to request a new hearing, and then moved the deadline up, and the insurer yesterday requested another hearing..  

The April 4 opinion is interesting, in part because it contains some inconsistent analysis.  For example, as the court says, an IFO is supposed to issue only upon a showing of danger to the public.  Remember, the purported reason regulators subpoenaed records was to see why -- they suspected some sort of collusion or price fixing -- Allstate had not lowered homeowners insurance rates as much as the state wanted or expected. 

Pop quiz! This expectation was --

A. Well-founded, because central command economies and state price controls have been proven effective time and time again and were in fact the economic success story of the 20th Century.

B. Entirely reasonable, because insurance companies steal so much they give piracy a bad name, which means, of course, that they would eagerly agree to take less.

C. A messianic delusion that occurred in the head of Charlie Crist after he pounded the table so hard his fist bounced back and knocked himself out. 

D. False doctrine akin to waiting for the Great Pumpkin to appear, in that it ignores the fact  insuring property in Florida is risky.

E. Not sure, let's check with former President David Palmer, the guy who does the Allstate TV commercials -- he was a good president and should know the answer.

So, as I was saying, the appellate court said the Office of Insurance Regulation had the right to issue an IFO because:

First, it alleged monetary loss to policy holders and beneficiaries. OIR received complaints regarding Allstate’s claims handling practices, and information indicating Allstate’s claims handling practices arbitrarily reduced bodily injury claim payments to its policyholders and beneficiaries by up to 20%. This allegation of widespread personal monetary loss is sufficient to meet the danger requirement of section 120.60, Florida Statutes. Second, the IFO alleged ongoing criminal activity. The Legislature made failure to cooperate with an OIR investigation a crime.   [Boring legal citations omitted].

OK, maybe, but that allegation about the 20 percent and the bodily injury and so forth is in relation to car accident claims, not homeowners insurance.  Also, if there was criminal activity, how come Charlie Crist didn't come knocking with a pair of cuffs?

I should qualify that it is only my understanding that the McKinsey documents relate to primarily to auto insurance and not homeowners policies, I haven't read the 150,000 pages and don't know that for a fact.  My understanding is they concern bodily injury claims by third parties, not policyholders -- so I suppose there is a small category of such claims that could derive from homeowners insurance, but not many.  You can look at that Miami Herald story again on the Allstate decision to unveil the McKinsey documents, and see some vagueness on the issue:  

[An Allstate official] noted that many attorneys misinterpreted the information from McKinsey that refers to how the company deals with claims from other parties, not from policyholders. Many of the sections often referred to by plaintiff attorneys refer to claims-handling practices for auto claims, but they were taken to be applied to homeowners policies as well.

"They were taken to be applied to homeowners policies as well." See what I'm saying? "They were taken"?  Who did the taking? The logical antecedent for this phrase is "plaintiff attorneys," but if so, one would think the sentence would say, "often referred to by plaintiff attorneys, who assert Allstate uses the strategy outlined in the documents not only for auto accident claims but for homeowners and other types of policies as well."  

All right, now where were we? Right, McKinsey documents. These have generated so much controversy over the years I have a special search on my feedreader just for stories and posts about them.  Some of the posts I've written about them are available here, here, here and here.

Some say these documents are a smoking gun, others say these people are blowing smoke.  Here's a sampling of recent opinion about these developments: policyholder attorney Chip Merlin; LaBovick Injury Law Blog; Victoria Pynchon (I'm a big fan of Victoria and her blog); Dennis Wall; Beach Blog; and Mike the Actuary.

By the way, here's the link to see all 150,000 documents: better plan to take a lunch.  

Posted By David Rossmiller In Industry Developments
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Another judge in the Southern District of Mississippi has cited Judge Senter's recent decision to disqualify the KLG in his case. Here's the opinion. The Rigsby sisters are also barred as witnesses, and all purloined documents excluded unless it can be shown they were obtained through normal discovery.  

NOTE: Originally I had written the judge was in Illinois, I'm not sure why I wrote that, I was in a hurry and somehow got that idea.  Then I looked back at the name and of course recognized Sul Ozerden as the judge who got the job that Bobby DeLaughter wanted -- allegedly Trent Lott called DeLaughter to talk to him about the job during the course of the Wilson v. Scruggs attorney fee litigation.  

Posted By David Rossmiller In Industry Developments
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The Trailer Lawyers yesterday filed an emergency motion for a stay of the "whistleblower" case, Ex rel. Rigsby.  Here it is.  They want things on hold -- probably so they don't have to waste any time on a case they may wave goodbye to -- until the motion to disqualify them is decided.  I liked this paragraph:

State Farm's disqualification motion is based upon the misguided premise that GBM and BFRG are vicariously responsible and can be disqualified for acts about which they had no or incomplete knowledge, and did not in any way direct.  The motion is over-brimming with innuendo ad [sic, I think it's supposed be "and" but I like it anyway] inflammatory rhetoric, and lacks any factual basis that GBM and BFRG are unqualified to continue this representation.  This motion is nothing more than a transparent attempt to focus attention away from the fraud State Farm perpetrated on its own policyholders and on the federal government, and create a side-show big enough to camouflage its own obvious wrongdoing.

A couple things: "had no or incomplete knowledge, and did not in any way direct." What does that mean?  That when Cori Rigsby fired up the laptop, they thought they were going to be taking an online survey about kitchen products? "Hey, this is the strangest looking ad for a blender I ever saw!" Think about it: "my knowledge that they were going to illegally access documents was incomplete because I didn't really know what was in the documents!" Consider the statement that they did not direct anything: "Hi, I'm Dickie Scruggs, welcome to the first meeting of what we'll call the Trailer Lawyer Katrina Group. Now, everyone look for the cardboard footprints with your name on them, and stand right there, put these blindfolds on and we're gonna have quite a surprise for you!!" 

Also, consider that last sentence -- if it's a side-show, I'd say the side-show is working, wouldn't you?  As you read the emergency motion, you can see they think there is a very real chance they will be disqualified.  As all this goes on and intensifies, I wonder how long until the Rigsby sisters figure enough is enough, that they've been led around long enough, and just spill their guts?  The day will come when they will talk. 

Here's State Farm's response to the motion to say proceedings. Two interesting things.  One, it claims the Trailer Lawyers are already disqualified under the terms of Judge Senter's order disqualifying the Katrina(less) Litigation Group.  Two, it doesn't oppose a stay, but says the motion to dismiss the case on jurisdiction grounds needs to be decided first. 

The fact that State Farm lawyers turned this brief around in a few hours tells me State Farm has learned a lot about controlling the news cycle and effectively promoting its position.  Compare that to 15 months ago, and it's like night and day.  Take a good look, ladies and gents, because what you are seeing, what you have seen the last nine or 10 months, is one of the most sophisticated and successful corporate litigation and public relations strategies you will see in your lifetime.  I mean, for a while Scruggs had it all goin' on with linking public relations with litigation, but this rivals any effort ever put out by Scruggs. 

UPDATE: Someone asked me why Todd Graves' name is not on the emergency motion, although the name of his firm is. I don't know.   

SECOND UPDATE: This is as good a place as any to scoop up all the pleadings that have been filed in recent days, not all of which I have linked to previously.  In addition to those above, here are: 

Motion to Dismiss for Lack of Jurisdiction

Memo in Support

Motion to Dismiss for Failure to State a Claim

Memo in Support

Summary Judgment Motion

Memo in Support

Motion to Disqualify Lawyers

Answer to Complaint and Counterclaims

The counterclaims are interesting to read, make sure to check them out -- civil conspiracy, breach of contract, trade secret theft, computer fraud, common law fraud.  Yikes.  I don't think the Rigsby sisters had any idea what they were getting into, that they were going to be in the middle of a Lawyer Riot.  They certainly wouldn't be the only ones of whom this could be said in the Katrina Follies, but ordinary people who get caught up in the machinery of litigation, it just grinds your bones to dust, till there's nothing left of you. 

Posted By David Rossmiller In Industry Developments
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This post really doesn't have the juice to deserve a Scruggs Nation title.  So as not to dilute the quality of my Scruggs Nation trademark, I'll use "Scruggs Lite" for stuff where I'm too tired/busy to hit the high notes.  

Knock, knock

-- This is almost past the point where I care anymore, but this Guilty but Innocent schtick of Zach Scruggs is starting to wear thin.  This is like hearing one too many knock-knock jokes from that neighbor kid -- I'm sorry, but I can't pretend it's cute anymore, it's just starting to get really annoying. Here's a story from Anita Lee of the Sun Herald about the most recent thing, where he says in a document filed with the Mississippi Supreme Court that, like his father, he won't fight the Bar's efforts to suspend him indefinitely. Here's the story's lede:

 Attorney Zach Scruggs apologized to the state Supreme Court and to his fellow attorneys and Mississippians for his role in a judicial bribery case, saying an earlier objection to disbarment was meant to give him time to straighten out his clients' affairs.

Wouldn't you love to know what clients' affairs had to be straightened out, such that with an open plea where Judge Biggers can wind up on him and drive him 450 feet with a Louisville Slugger if he cares to, he would risk looking foolish, arrogant , devious, manipulative, petulant, defiant and clueless all at the same time? Here's a copy of the document filed with the state Supreme Court.

Quote, unquote

-- I love this post at the Fraud Files.  Looks like others are adopting my quotation marks for the "whistleblower" Rigsby sisters.   

Ex rel. Rigsby: Trailer Lawyer lawsuit

-- This Rebecca Mowbray story in the Times-Picayune, about State Farm's motion to dismiss Ex rel. Rigsby or disqualify the Trailer Lawyers, has a great quote from attorney Allan Kanner near the end of the story:

With the problems in the Rigsby suit, the Branch Consultants, the former insurance adjusters who filed the New Orleans whistleblower suit, have asked the 5th U.S. Circuit Court of Appeals to reinstate their case.

Their attorney, Allan Kanner, said that State Farm is playing "musical chairs" with the judicial system in filing a motion to dismiss the Rigsby suit. Because State Farm and other insurers argued six months ago in New Orleans that the Branch suit shouldn't stand because the allegations about the flood program were covered in Mississippi, the company shouldn't now be allowed to argue that the Mississippi suit is deficient in supporting allegations about the flood program.

"This proves that Judge Beer should not have listened to State Farm in his court when they said, 'The Mississippi court will deal with this.' I think it's outrageous," Kanner said. "The headline should be, 'State Farm in favor of frivolous lawsuits when they provide corporate immunity.' " 

I like to see it where lawyers get how to deal with the media -- reporters don't have the space to print the blah blah blah attorneys pawn off on judges and each other, they need interesting quotes to sell stories.   

Coming Monday

A few people have been bugging me about putting all the Rigsby sisters' depositions in one easy to find and easy to access post.  Sitting around loading a bunch of e-files that I've already loaded in other posts is probably among my least favorite aspects of blogging, but I think this would indeed be a valuable thing for readers.  A few parts of the depositions, I may not have posted previously.  Be warned, Kerri's latest is under seal, so it won't be among them.

Posted By David Rossmiller In Industry Developments
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The jewel of the crumbling Scruggs Katrina Empire, the False Claims Act case Ex rel. Rigsby, is being attacked by State Farm, which says the case should be dismissed. Here's the memorandum in support of the motion to dismiss, which basically calls the Rigsby sisters parasitic late-comers to already public allegations who are attempting to cash in without having ever to ante up with anything real.  It's been crazy busy for me, but I had to stop and read the memo -- which, you know, for a memorandum about jurisdiction was a pretty good page-turner.

I'll follow up when I can and link to more docs, but in the meantime, here's one more thing to read, the memo in support of State Farm's summary judgment motion.  This document in essence says the Rigsbys have no claim for retaliatory discharge because they were engaged in illegal espionage -- you could call it Scruggspionage for short -- and you can get fired for doing illegal stuff.

More later. 

UPDATE:  This is the one I was waiting to see, just got filed on PACER -- a memorandum in support of State Farm's motion to disqualify the Trailer Lawyers -- Chip Robertson (former state supreme court justice), Todd Graves (former U.S. Attorney)  and others -- who, it looks like to me, met in that trailer down on the beach on Sen. Lott's property while the Rigsby sisters accessed the State Farm claims documents. They are the lawyers who represent the Rigsby sisters in the False Claims Act case.

I have tried to picture in my mind what was going on there: was everyone huddled around looking at claims files on a laptop, gazing with wide open eyes at the wonder of it all? Was everyone present at once?  Were some people off in a corner watching reruns of the Beverly Hillbillies, drinking a Pepsi and paging through Oprah's latest magazine? Did anyone say, "Hey, wait a minute here, can I say something? This is nuts what we're doing." Somehow this Trailer Summit sticks in my mind as a metaphor for the ridiculousness into which this thing devolved.  Or maybe it is less that this thing devolved, and more that it was always a mess, it's just more apparent to us now.

SECOND UPDATE: Here's the State Farm press release.  These two paragraphs are interesting:   

State Farm’s motion for summary judgment and counterclaim outlines actions undertaken by Cori and Kerri Rigsby and others to unlawfully obtain confidential policyholder information from State Farm to advance their own personal and financial goals and agendas.

No later than February 2006, and maybe as early as October 2005, the Rigsbys, together with attorneys Dickie Scruggs and others, schemed to abuse and exploit their access to State Farm’s confidential computer systems and policyholder records. State Farm has filed a counterclaim against the Rigsbys seeking damages for their admitted, unauthorized, theft of information from State Farm, in violation of the federal Computer Fraud and Abuse Act.

I think it will come out, probably not too far in the future, that they met in 2005.  I don't know if it was as early as October, but maybe it was. 

Posted By David Rossmiller In Industry Developments
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Regarding yesterday's news of the disqualification from Katrina cases of the Katrina Litigation Group, the entity derived from the former Scruggs Katrina Group and containing three of the original five firms, what will happen now?  It's hard to overstate how big a development in Katrina litigation this is.  Remember as we discuss this ruling that, in addition to disqualifying the remaining KLG firms from Katrina litigation in the Southern District of Mississippi, he barred the Rigsby sisters as witnesses and also barred the use of the documents taken from State Farm.  A huge development.  

One thing we should expect is a motion in the False Claims Act case, Ex rel. Rigsby, which is also in the Southern District.  That motion, I would expect, would be to dismiss the case entirely, because it is founded on the stolen documents -- in that the government has not intervened in the lawsuit, it is nothing more than an ordinary lawsuit, and the same arguments would apply to it as to the McIntosh case where Judge Senter issued the disqualification order.  If the Rigsby documents can't be used in any of the KLG cases in the Southern District, why should they be able to be used in the False Claims Act case? 

The motion, I would guess, would have an alternative request that, if the case is not dismissed, the lawyers should be disqualified. The lawyers are not the KLG lawyers, but rather Chip Robertson, Mary Winter, Todd Graves and so forth, the same people who represented Zach Scruggs in the criminal charges against him.  You may remember that Kerri and Cori Rigsby have testified to meeting in a trailer in Pascagoula with those lawyers and Dickie Scruggs on March 11, 2006.  Here is a copy of Kerri Rigsby's deposition from November 20, 2007, a deposition I have posted a number of times.  Read a few pages starting on page 21 of the transcript.  You will see that she acknowledges that she and Cori were both in the trailer around 2 p.m. that day, which is the time State Farm has determined, from a check of computer records, that Cori and/or Kerri began accessing from a laptop the claims files of policyholders, most of whom were clients of Scruggs, in virtually the same order they were listed on the McFarland complaint that incorporated the claims of a huge bunch of policyholders. By the way, here is a copy of Cori's deposition from November 19, 2007, I've also posted this before. 

Now, given the constituency in the trailer, you can see some potential issues with this, can't you? In that deposition, Sid Backstrom asserted attorney-client objections to almost all questions dealing with what happened in the trailer -- although actions themselves are seldom protected communications.  Did the attorneys present look at some of the files online?  Let's remember who some of the people in trailer were.  Chip Robertson, whose name appears as counsel of record on the False Claims Act complaint, was a former chief justice of the Missouri Supreme Court.  If Todd Graves, who also appears as counsel of record on the complaint, was the Todd in the trailer, he was at the time U.S. Attorney for the Western District of Missouri, and was until he left office on March 24, 2006.

We don't know, from the depositions, exactly what if anything they did or exactly when they were present in the trailer.  But if they were, does it strike you as odd, to put it mildly, that they would have wanted to have anything to do with a covert operation where claims adjusters were acting as undercover agents to surreptitiously gain access to documents in this manner? Does not this scene -- if in fact this is what happened -- strike you as both ludicrous and spectacularly questionable? It's hard to picture a more bizarre scene than high-powered lawyers meeting with two corporate spies in a trailer for these purposes.  And didn't anyone pause to think that of course the access to the computer files left a record like footprints across a freshly painted floor?  I would have trouble believing any of this if it were not in the depositions, and if there were not other evidence that has been supplied in exhibits to filings in McIntosh and other cases.  You lawyers out there, ask yourself, would you have been found in a trailer with the Rigsby sisters the same day they -- still employees of E.A. Renfroe in good stead and still active in Katrina adjusting and cases -- were accessing claims files?  Does it seem to you OK to obtain documents for litigation in this manner? 

Why has it taken this long to get to this point? Litigation has rules.  What good are they if this is what happens?

Remember also the Scruggs RICO suit filed in June 2007. (See this post for a copy of the complaint). Will State Farm now move against this lawsuit?  It is founded in essence on these now- barred Rigsby documents, and in a series of bizarre developments and excesses throughout the Katrina Follies, this lawsuit stands out as almost freakishly excessive.  Only in the perfect storm of media pro-Scruggs rah-rah, unhealthy cooperation and assistance from state and federal prosecutors, and passivity on the part of the courts and legal community, could this lawsuit fail to be denounced roundly. If you read the post linked above in this paragraph, you will see that at the time I did denounce it with satire. I do not mean to give myself much credit or imply any great act of courage on my part by saying this, I say it only to point out the otherwise deafening silence that prevailed.  You may also wish to note this lawsuit was filed just after Scruggs was referred by Judge Acker for prosecution of alleged criminal contempt of court. (A charge that has since been dismissed).  If it has any merit than as a distraction and as leverage against State Farm, this has escaped my attention.

Remark upon where we are compared to one year ago.  At that time, I was writing that State Farm should not be sitting back and accepting these developments, but should instead pursue an aggressive counter-strategy.  I do not intend to imply that what happened later was as a result of what I said, merely that it was obvious to me as an observer that things were happening that were seriously wrong. Katrina litigation had become, as Scruggs said it would months earlier, not a legal battle but a political and public relations battle.  He said it himself in a recorded interview.  But courts are not an episode of Boston Legal, no one should be able to write a script where one side is given super powers and the other side has to walk around with lead weights. 

Some lawyers in Mississippi, and these would be people with no love for State Farm or insurance companies whatsoever, have said to me that this type of conduct -- let's call it Scruggsism -- was an immense disservice to policyholders in the long run, an unwarranted seizing of the brand of policyholder litigation for Scruggs' own purposes, and one which has cast disrepute on worthy claims and on honorable policyholder lawyers. And in this view, Scruggs is anathema because he turned State Farm into a sympathetic figure.  Maybe.  I neither praise nor denounce State Farm, I only hold a mirror up to nature, and describe what I see as best I can.  And what I see is a stunning turnaround in fortunes, brought about by Scruggs' own excesses, that enabled a decisive counterattack, one that produced a complete rout. 

If I have time, I will comment more on the specifics of Judge Senter's ruling yesterday.  For now, one should ask what is different about the circumstances now and when Judge Senter denied the previous State Farm motion for disqualification of Scruggs in September 2007?  Here is a copy of the original memorandum in support of the motion to disqualify, filed in June 2007.   You can compare it to the later memorandum, the successful one, filed on January 3, 2008.   And here is a copy of Renfroe's memo in support, filed the next day.  

You can see from reading these memoranda that both times, State Farm based its motion for disqualification in part on the $150,000 annual payments to the Rigsby sisters for what Judge Senter said yesterday were "sham" consulting arrangements.  State Farm, both times, based its motion in part on Scruggs' use of the sisters as agents to take documents through non-conventional means while they were working for State Farm.  So what is different? You will remember that the previous motion was denied not because it had no merit -- Judge Senter specifically did not rule on that -- but because State Farm had known of the conduct for more than a year before bringing its motion, thereby waiving its objections.  Yet the second motion, of course, was filed even later than one year after much of the conduct was known.

In his opinion from yesterday, Judge Senter cited the more recent depositions of Cori and Kerri Rigsby, and it is true that these depositions contained more answers, and showed such a stark picture of improper conduct that it could not be overlooked.  I said the same in this post from December 2007 on the need to re-evaluate the role of the Rigsby sisters.  See also this post from a few days earlier (look near the bottom).  Much of the conduct was not as fully known last September as it is now, and although Judge Senter did not say so, objections to the conduct should not be waived, because the conduct is an ongoing and continuing course of affairs.  In other words, it happens again all over again every day.  The post-September depositions of the Rigsbys, of Brian Ford, and of Lee Harrell, make this more apparent.   All of these things, and more, by the way, are posted on my blog.  If you play around with the search feature and are willing to invest some time, you will find a lot of stuff. 

Again, I give myself no credit for seeing these things as they were or for pointing them out.  Anyone else could have done the same.  My only question -- why didn't they, particularly the media?

Oh, I do have one other question.  Can we finally either drop the mandatory use of the word "whistleblower" before every mention of the Rigsby sisters, or place it in quotes, as I have long done?

UPDATE: I forgot one additional question.  How much longer is the investigation by the U.S. Attorney for the Southern District of Mississippi into allegations of insurer fraud in relation to pushing wind payments onto federal flood insurance, which has accounted for millions of dollars in taxpayer expenditures and which has produced no absolutely no results, going to continue? A new grand jury is going to be impaneled this coming week, and my understanding is the office intends to keep pursuing its elephantine investigation.  You'd think folks there were scared to pull the plug for fear of what some, like Trent Lott and Gene Taylor, would think, and out of fear over who will take the hit for a costly investigation with no results. 

Posted By David Rossmiller In Industry Developments
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I'll comment more on this later, but wanted to get the decision up as soon as possible for you to review.  Here it is. 

Posted By David Rossmiller In Industry Developments
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Just a brief post again today, came back to Portland to a lot to do.

Did you see this story by Anita Lee in the Sun Herald this morning?  In a move calculated to give Jim Hood a run for the record for public self-beclownment, Zach Scruggs, like his father, is also fighting disbarment. 

Let's look at an excerpt:

The Mississippi Bar argues the Scruggses can and should be disbarred as a result of their guilty pleas. Both admitted they entered the pleas because they are, in fact, guilty.

Michael Martz of Brandon, an attorney representing both Scruggses in the disbarment proceedings, previously served as attorney for the Mississippi Bar.

Asked why the Scruggses have filed the motions objecting to disbarment, he said, "We want the bar and the court to follow the law."

To which the bar and the court respond, "Good idea, practice what you preach." Can you believe the effrontery of that spin?  Also, do you remember Zach Scruggs' letter that he was sending around asking people to write Judge Biggers and mention all the good stuff he has done in his life? The letter in which he said:

I wanted to give y'all an update on my situation. Last Friday I had to make the most difficult and painful decision of my life. As you already know, I was charged by indictment last November for conspiracy and bribery of a state court judge. I have always maintained my innocence with respect to those charges and continue to do so to this day. As a result, I was willing to face trial by myself on those charges, which carried up to 75 years in prison and $1.5 million in fines.

Late last week, the government prosecutors agreed to drop all of the original bribery charges and instead charge me with a different and separate offense of “misprision of a felony,” which carries a potential 3 year sentence, and to recommend probation.  I agreed to this.  Misprision of a felony essentially means that I had knowledge of a felony and failed to report it to authorities.  The particular felony I had knowledge of was that Tim Balducci, who was not our firm’s counsel of record, had improper ex parte conversations with a state court judge about our case in an effort to obtain a ruling in our favor. Although I was not aware of any money being paid to the judge, I was aware of Tim’s personal relationship with the judge and that he was using that relationship, in part, to influence the judge. I was aware of this and failed to report it or take any action to stop it. I deeply regret this failure and have taken full responsibility for my actions. I cannot comment any further on this, but you should feel free to contact my lawyers if you need a more detailed explanation of the charge.

Questions:

• What is all this, a plea of "Guilty but Innocent"? 
• Did Zach's lawyers look over and approve that "Say what a great guy I am" letter before he sent it out? Good Grief, I hope not, I can't picture any reason on Earth they would agree to allow such a thing. 
• Is anyone else going to send a letter around asking those with contrary points of view to write letters to Judge Biggers asking for for a stiff sentence?
• What are the odds the Scruggses will exit the public scene with any grace or class?
• Why is it so important to the Scruggses that they continue to point out that Tim Balducci was not counsel of record for the Scruggs Law Firm when he bribed Lackey?  All this talk about Balducci being a wannabe or an outsider, none of it matters, none of it is an adequate excuse or even any excuse at all.  Would it be any better if Balducci had his own private plane and was Scruggsian in wealth?  Would that make them feel any better?  Why point out Balducci traded on his friendship with Judge Lackey? Does that make it OK that Dickie Scruggs traded on his friendship with Tim Balducci?

Posted By David Rossmiller In Industry Developments
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The Mississippi State Bar, as I've mentioned, has responded to Dickie Scruggs' Motion to Stick Around with this Response, which in essence says Scruggs' guilty plea acknowledges in writing that he is, in fact, guilty of the crime to which he pleaded, and therefore this makes him unfit to be a lawyer in Mississippi.  The date on the document is April 1, although it would have been more fitting if Scruggs' opposition to disbarment had itself been filed on April Fool's Day.  Here also is a copy of the Bar's motion to indefinitely suspend Scruggs and strike him from the rolls of Mississippi lawyers, on the chance that the state Supreme Court buys Scruggs' motion.  Why Scruggs is indulging in this effort to stave off the inevitable is a question I don't know the answer to.

Very little time for blogging this morning, have a plane to catch back to Portland.  What a great visit, what a fantastic group of people I've met in Mississippi.  To tell the truth, I guess I had no idea of how closely people here have been following this blog, and the outpouring of support and interest I've seen has been a humbling and amazing experience.  I thank all the many people who have shown kindness to me here, especially those who spent time carting me around and making sure I was taken care of.  The hospitality I've seen here has been unlike any experience in my life, one I shall always remember.  Thanks to Dr. Ed Duett and Mississippi State for having me here, and thanks to all the people who came out for my speech.  I wish I had more time to speak with people here.  I've received many words of thanks since I arrived, but I really haven't done all that much.  If anyone is inclined to extend thanks, however, extend them to my wife, because all these blogging hours have come out of her time, and she has never once complained about it.

Thanks for the gifts I received, although at some point I suppose the sweet potato will go bad.  In the meantime, I'll keep it in my office until people complain about the smell.

Posted By David Rossmiller In Industry Developments
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A few preliminaries.  A fun trip so far, a few glitches.  My luggage didn't make the connection from Houston to Jackson, it finally caught up with me about midnight in Starkville. Everyone has been great, what a friendly place, wonderful people. A beautiful state. Really impressive program they put together here at Insurance Day.

Here's the latest on the Scruggs disbarment: according to this update in the Daily Journal, the State Bar is saying that even if Scruggs' challenge -- that the rules require a copy of a conviction to be attached, and there is none because he has not yet been sentenced -- even if this is true, he should be suspended pending sentencing.  Scruggs is represented by the immediate past general counsel  of the State Bar, which has caused many to wonder: hey, hasn't Scruggs had a pretty good amount of fee disputes and controversy before, and isn't it likely that someone filed bar complaints against him before? If so, what happened to the investigations of these complaints?

Also, why does Scruggs care? He has no hope of keeping his license as a convicted felon who admitted to conspiracy to bribe a judge, so what is this: an exercise in complaining about how the hangman's noose is too tight, or something else? Is there some reason Scruggs wants to keep his license an extra few months, such as some payment of fees requiring payment to his law firm? (Non-lawyers can't claim they have a law firm).

People stop being lawyers for all kinds of reasons, though, and I wouldn't think that payments that have been earned, such as tobacco money, could be made conditional on remaining a lawyer for life. This can't be true, because then he could say his agreement to take care of the Rigsby sisters after they got run out for purloining documents to support his litigation would only be effective while he was an attorney riding high, and we all know he wouldn't just cast these two out with no paycheck . . . well, OK, bad example! Maybe it has something to do with needing to assert continued control over some aspect of some litigation for the moment .  Or maybe it just has to do with the kind of thing where people are tarring and feathering you and you point out their grammar is imperfect.

Funny thing about the agreements with the Rigsbys.  Like a lot of Scruggs' fee agreements, they aren't in writing.  But hey, no problem, right? I mean, you don't need a piece of paper to pin Scruggs down, he's never been accused of trying to cheat someone on an oral contract! Oops, bad example again.

Speaking of the Rigsbys and Scruggs, you will recall how they all have claimed repeatedly that they never spoke prior to his becoming their attorney in February 2006.  Often they don't remember much else, but on that they are certain. (Note, however, that in the recent Cori Rigsby deposition I posted, she did admit for the first time that she accessed the State Farm records using a list of the plaintiffs in Scruggs' cases, although she wouldn't admit to Scruggs' having given it to her for that purpose -- and there is some plausibility to this, as crazy as it sounds -- after all, she has a history of taking documents without permission)!

What if, however, the reason the Mississippi Department of Insurance's market conduct survey of State Farm -- you remember that, they've been working on it for quite some time, to check out State Farm's conduct in Katrina adjusting -- what if the reason this is taking so long is that there is new evidence to check out about whether the stories hold up about when Scruggs and the Rigsbys first met? And possibly about Hood's role and when it began?

What if? Remember, Scruggs and the Rigsbys have made a lot of people mad, and people talk, and give up all kinds of information about when meetings took place and where.   Remember that Scruggs, according to the Lee Harrell deposition I have linked to so many times, said in December 2005 he had State Farm "insiders" at that time -- but under oath, he and the Rigsbys said February 2006. Wouldn't it be ironic if this market conduct survey creates more problems for Scruggs, the Rigsbys and Jim Hood than it does for State Farm?  But isn't that the way it goes? Once the center no longer holds, everything flies apart at the margins too.

Posted By David Rossmiller In Industry Developments
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I'm not sure what to think about Florida's possible decision to strip cash from the underfunded state-run insurer, as reported in the Miami Herald, and give it to start-up insurers that might blow away the first time a hurricane comes by.  Well, yes I am sure -- the governing classes have lost their minds.

Citizens Property was formerly the state insurer of last resort.  However, due to the fact that regulators and lawmakers impose price controls more successfully on Citizens than on private insurers, it has to provide coverage at actuarially unsound rates -- officials know, of course, that ultimately Citizens is backed by the wallets of all insurance purchasers in the state, who are in line for a special surcharge on insurance premiums if a bailout is needed.

Martin Grace has more at RiskProf.

Also, see this post by the Truck Insurance Extremist, which includes the following:

So weird has the Florida insurance market become that contrary to Governor Crist’s hopes that Citizens would foster competition, it has actually had the opposite effect. Private insurers treat Citizens with kit gloves and pray that it grows rich and strong. That’s the only hope for avoiding a gigantic assessment bill. As with Florida’s regulatory culture the assessment risk presented by Citizens only adds to the state’s unattractiveness.

With one exception: "Take Out" speculators love Florida. The speculators who form these thinly capitalized insurance companies do little more than bet on hurricanes. Here’s how the scheme works. You capitalize an insurance company in this state for $5,000,000. Simultaneously you start a management company to operate the insurance company. You then offer to take over (take out) a chunk of policies from Citizens Insurance Company. It is not uncommon to see these small take-out companies write $50 to $200 million in premium. You then pay your management company a fee of 10 to 15% of the premium income. The management company quickly recoups the initial $5,000,000 investment. Everything after that represents pure profit. A few years without a storm and you’ve made a fortune. Best of all, if a hurricane ever causes you to go bust; the state insurance guarantee fund picks up all the claims. For obvious reasons most of us would not regard speculation as a permanent solution to the state's insurance difficulties.

Posted By David Rossmiller In Industry Developments
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'Esquire' magazine

Holy Cow! What can the reasoning be behind this latest move by Dickie Scruggs, as reported by Anita Lee of the Sun Herald?

Attorneys for Dickie Scruggs are asking the state Supreme Court to dismiss a Mississippi Bar complaint that calls for his disbarment as the result of his guilty plea on one charge of conspiring to bribe a north Mississippi judge.

Scruggs' attorneys argue that the formal complaint is premature because U.S. District Judge Neal B. Biggers Jr. has not yet accepted his plea. Scruggs is represented before the Supreme Court by Michael Martz, the Mississippi Bar's former general counsel.

It is a small item at the bottom of this story, which is about the Mississippi Supreme Court formally suspending Judge Bobby DeLaughter, at the request of the state bar, pending investigation of his judicial conduct in a case where attorney Joey Langston has pleaded guilty to trying to influence him with suggestions of an appointment to the federal bench via then-Sen. Trent Lott. 

Premature? Scruggs pleaded guilty to a felony involving the subversion of the legal process. Why in the name of sweet potatoes should anyone wait for anything else? I mean, what is Scruggs worried about, becoming ineligible for his dental insurance through the county bar medical plan?  At least some others voluntarily surrendered their licenses -- true, it was as part of a cooperation deal with the feds, but I'm trying to find something positive to say about these guys! Is Scruggs burning the midnight oil down there at the Scruggs Law Firm, working the phones, issuing legal advice and acting the generalissimo under the end?  Maybe getting in a few last licks on that False Claims Act case?  This is getting kind of weird, it's kind of like a guy who doesn't want to turn in his key to the office when he's got caught heisting dough from the safe -- or like two insurance company adjusters who steal documents from the company and picture some scenario where they are going to continue working there. 

Whether Biggers has accepted the plea or not, Scruggs admitted to participating in a conspiracy to bribe a judge.  If the state bar can't make a move at that point, what good is a state bar, why not just have lawyer discipline enforced by Dickie's Hallelujah Chorus (now seeking guest conductor, Maestro Jim Hood on leave of absence).

UPDATE: Just got a copy of Scruggs' motion to dismiss the bar complaint.  Here it is.

'The invincible man'

That's the title of this very long, very good story by Anita Lee in Sunday's Sun Herald. This is excellent, I hope we see more stories like this.  This story has an exquisite comparison between the fates of attorney Paul Minor, who was sentenced last year in a judicial bribery scandal, with Scruggs cooperating with prosecutors but not being charged -- many think because of his connections to Trent Lott. 

The story begins with: 

Dickie Scruggs blinked back tears as he rushed from the federal courthouse in downtown Jackson.

He had just testified against a fellow attorney who was like a brother, Paul Minor.

It also mentions these details:

From the time charges were filed, Minor's defense cried "selective prosecution." Scruggs' brother-in-law is U.S. Sen. Trent Lott, who recommended Southern District U.S. Attorney Dunn Lampton for his job.

Mississippi's chief law enforcement officer at the time, Mike Moore, was a close friend who steered lucrative tobacco litigation to Scruggs in the 1990s. Moore's office also helped with the judicial bribery investigation.

Moore delivered Scruggs to the back door of the federal courthouse when he testified before the federal grand jury that indicted Minor two months later. Moore, whose black BMW SUV the media spotted, said he just happened to be on his way to work and had talked with Lampton about ensuring Scruggs reached the courthouse early.

Lampton questioned Scruggs, as a cooperating witness, before the grand jury.

Moore later claimed that he was not involved in aspects of the investigation that included Scruggs and Lampton removed himself from the case, acknowledging a conflict where Scruggs was concerned. The Justice Department's Public Integrity Section took the lead at two trials, although assistant U.S. attorneys from Lampton's office also represented the government.

The story points out some disparate treatment of the roles of Scruggs and Minor:

The jury did not consider an $80,000 loan Scruggs guaranteed for Diaz in 2000, or how Scruggs paid off the loan through a third party. During this time, appeals were pending before the Supreme Court in legal-fee disputes between Scruggs and other attorneys.

In one of those cases, Diaz joined a unanimous opinion in Scruggs' favor. Rendered in December 2001, the decision sent the dispute back to Jackson County, where Scruggs wanted it. Even so, attorney Merkel of Clarksdale prevailed in the lower court.

At Minor's 2007 trial, a second jury convicted him and the two lower court judges. Minor is serving 11 years in federal prison.

Seven years more than Scruggs will get, one could note. And apropos of the story's beginning, near the end, it marks this moment in time:

Scruggs testified March 13, 2007, in the Minor case. On or about March 15, 2007, federal investigators learned, Scruggs and other attorneys started what became a conspiracy to bribe Circuit Court Judge Henry L. Lackey in North Mississippi.

So he left the courthouse in tears, but he's tough, he got over it fast! He went back to the office and immediately began working on a recipe for Sweet Potato Succotash (this is a link to one such recipe, but note that in this dish, the corn is not on the ground).  Or excuse me, plans for Operation Earwig, if you prefer.  The story concludes with this observation by a former state Supreme Court justice, whom I believe, like Scruggs and Lott, was also from Pascagoula. 

One who stood by Minor was Chuck McRae, a former Supreme Court justice from Pascagoula who frequently attended both of Minor's trials. McRae, a maverick who has his own history with the Judicial Performance Commission, remained in Jackson to practice law after he left the bench. He never liked Scruggs.

"He always had the mindset of 'I'm going to beat you, crush you, but I also want to know in advance that I'm going to do it,'" McRae said

The way McRae sees it, Minor got more time for influence peddling than Scruggs could receive for an outright bribe. Scruggs pleaded guilty to conspiracy to commit fraud, which carries a maximum penalty of up to five years in prison and a $250,000 fine.

"There is a lot of irony. And he would have gotten away with it but for that attitude that he was Teflon with Trent. He lost that Teflon," said McRae, referring to Lott's resignation two days before Scruggs was indicted.

"The irony is that he never thought he could be touched and he got touched." 

True enough.  Why would he think otherwise?  Here's a guy who bragged openly about "magic jurisdictions" where the outcome was rigged, and about using the legal system as a form of media/political/public relations insurrectionist coup, and as far as many were concerned, Superman came up short in comparison.  He goes around with a Magic Jurisdiction Show and no one questions how the same card keeps turning up on top of the deck every single time.  What a coincidence, amazing! The question now is, how many other times did he get away with the same or similar conduct?  Another question: why did he get away with it?  And a third: if he did get away with other similar conduct, who looked the other way or just didn't give a rip, and should they be held accountable now?

Oh, and I almost forgot the last question: if there is more, how many others were involved, and what were their names? Inquiring minds want to know.

Mississippi bound

Going to be flying down to Starkville Tuesday to speak at the Mississippi State Insurance Day on Wednesday at 3 p.m.  So I'll do my best to blog, but don't expect a lot from me this week. 

Hope to see all of you there who can make it, after I give my talk, I'll be there for questions as long as people are there wanting to ask. 

UPDATE: I forgot to add this earlier -- like a lot of other blogs, I have a spam filter that weeds out comments from robot blogs that have fake comments that are really just attempts to hawk some product, sometimes its insurance, sometimes its Viagra, a lot of it is porn.  The filter is usually pretty discerning, but occasionally real comments get filtered out, and because I don't check the junk very often, I sometimes don't see these to rescue them until days after they were sent.  Sometimes I don't check the junk for quite a long time, and so I might never see the comments -- they get purged automatically after a while.  A few frequent commenters and others not so frequent, for a reason I don't quite know, have some comments filtered out, and some that show up in the regular comment box for me to approve and publish.  If your comment is not unsubstantiated personal gossip, some sick attack with no intellectual merit,  or some stream of guff and spewage that seems designed only to see how many words I will read before I hit the delete button, and you don't see it published, this may be what happened to it.  I apologize for that, but there is only so much I can do with the filter or it won't serve its purpose -- you wouldn't believe how many robot spammers there are out there. 

On the topic of comments in general, the overwhelming majority of commenters are responsible, and I certainly don't mind opposing points of view and in fact I encourage them, but the type of thing I'm not a big fan of is some long stream of personal abuse about how I'm a hypocrite, corrupt, insane, a dictator, tyrant, stuff like that.  It's my blog, not an outlet for someone to hone their version of Oceania's Two-Minute Hate. Most of that snarky guff, I read about four words and poof it's gone. 

Posted By David Rossmiller In Industry Developments
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The Rigsby sisters better hope that False Claims Act lawsuit pays off, they are just about out of meal tickets.

Here is a copy of the latest Cori Rigsby deposition.  It was taken in January 2008 in the Renfroe v. Rigsby lawsuit, and unfortunately a great many sections were removed -- apparently these sections are sealed because the documents the sisters took from State Farm were being discussed.  So some of the really good stuff is missing, probably the stuff that got the prosecutors in the criminal contempt of court proceedings against Dickie Scruggs in Alabama so excited.

What is left, a lot of it we knew already.  But surprisingly to me, it appears she actually had a notion that she was going to funnel these documents to Scruggs, remain anonymous, and continue adjusting for State Farm for the rest of her life.  Wow.  This begs the question of why you would want to continue adjusting for a company you claim engaged in fraudulent practices, but that issue aside, if she believed she would not be found out, she was either naive or duped.

In reading the transcript, she confirms that the Scruggs(less) Katrina Group, now known as the Katrina Litigation Group, cut the Rigsby sisters loose from their $150,000 a year "consulting agreements," citing lack of money to pay them. (Could just be an excuse, some in the SKG were against hiring the sisters in the first place).  Scruggs, you remember, wanted them hired, allegedly to take care of them after people at State Farm and Renfroe began to figure out they were spies for Scruggs.  But, the transcript says, when the KLG said adios to the sisters, he didn't step up and agree to continue paying them.  I wonder what they are going to do now -- not much chance of getting back into claims adjusting.  I felt kind of sorry for Cori when, during the deposition, her phone rang and it was her realtor -- she is selling her house. 

It was interesting that she continued to deny having spoken with Scruggs about taking documents from State Farm prior to February 2006.  The date is significant because in December of 2005, according to a deposition in the same case of Lee Harrell, Mississippi deputy commissioner of insurance, Scruggs had a meeting with then-Commissioner George Dale where Scruggs came in with some grandiose scheme that frankly sounds like Scruggs' intellectual train had left the rails, wherein Dale was supposed to support Scruggs' move to extort some $500 million from State Farm for a Katrina compensation fund over which Scruggs would preside, throwing out some shekels to the people while no doubt making a few dollars for himself.  Dale refused.  Think about this for a moment -- Himself wanted to set himself up as some kind of autocrat, some Katrina Czar.  It just sounds so utterly -- what's the word I'm looking for here -- nuts!

But also in that meeting, according to the Harrell deposition, Scruggs claimed to have insiders at State Farm that had access to documents, just like in the tobacco litigation.  Why did Scruggs say this if he had not talked to the Rigsby sisters until two months later?  We know Scruggs represented the sisters' mother in her insurance claim, and it may be that based on conversations between the two, he had reason to believe he would have the sisters' cooperation.  For example, their mother could have told him the sisters were extremely troubled by certain documents, and even related what the contents of those documents were. 

Go ahead and read through it yourself.  When I read these Rigsby sisters depositions, one thing sticks out time and time again, and that is the sheer audacity of hiring material witnesses, that were testifying in civil cases and before grand juries, as "consultants" of a law firm.  Being paid by someone doesn't necessarily buy your testimony -- if you work for a company and continue to draw your check, that doesn't mean if you give testimony favorable to them it's a bribe.  But you worked there already.  This is completely different. They take documents to support Scruggs' litigation, quit the place where the took the documents from and then he hires them at a very high fee for jobs at which they have no set duties and no set hours, and at a time when they are to offer testimony against the party from whom they took the documents.

Looking back over this, I wonder, would they do it again? 

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I was interviewed on MPB this morning by Karen Brown, who did a good interview about the Scruggs Scandal.  I'll provide a link to the Web streaming of the program as soon as I can.

UPDATE: Here's the link.

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Florida insurance wars

I've likened Florida lawmakers and regulators to Wile E. Coyote -- they persistently pursue failed strategies.  Every time that Acme rocket backpack blows up or runs them headlong into a cliff, they strap on another. They also are somewhat like a guy who is denied a promotion and then comes home and beats the stuffing out of his dog.  Everything about the state's insurance mess is someone else's fault -- they never pause to consider whether the central-command regulatory regime they love might be making things worse, or be one of the actual causes of the problem.  Instead, they sound like some of the black helicopter conspiracy theorists, looking for evil everywhere.  And when you are emotionally invested in finding wrongdoing, you keep at it, no matter how many times that rocket explodes and singes your fur. 

While Scruggs was imploding, I didn't have as much time as I'd like to follow this saga.  So I'll offer a couple blog posts and news articles here to start back on track.  You may remember that Florida regulators barred Allstate from selling certain new policies in the state until they turned over documents regulators think will show collusion or defiance of the state's Wishful Thinking Law -- the Florida insurance "reform" package passed last year that, in contravention of all reality about the risk of insuring property in Florida, was supposed to set things right and make insurance affordable.        

Allstate turns over documents to Florida regulators.

Tampa Tribune story on McKinsey documents.

Allstate fined $25,000 a day in Missouri.

Book on McKinsey docs hits Amazon.

Louisiana insurance developments

Citizens Property, the state-run property insurer of last resort, which acquired a reputation for colossal incompetence, is back in the news. 

Suit accuses Citizens executives of racketeering.

The state has also, in place of the abolished ratings board, created a new consumer advocate office.

Scruggs

Dickie Scruggs' name has now been turned into a buzz phrase, a symbol, shorthand for excesses that discredit his cause, although it's disputed by some whether Scruggs had any cause other than Scruggs, human beings are complex and merely because one has other, undisclosed aims does not mean the goals one publicly professes are not sincere.  The latest example of how Scruggs' place in the rogue's gallery du jour is secured, I offer this editorial from the Wall Street Journal.  An excerpt:

March has been a rough month for the tort bar, and not only because two of its standard-bearers -- Dickie Scruggs and Mel Weiss -- have both copped to felonies. A judge in California has put a damper on the efforts of plaintiffs lawyers to drum up lawsuits abroad and have them tried in the U.S.

It's not even about Scruggs, but these days, all you need to do to make your point is mention his name. I'll prove it.  Scruggs! See what I mean?

See also these posts by Jane Genova and Walter Olson.  I'm still waiting for the release of the "Lawyers Gone Wild: Spring Break Edition" DVD.

In other Scruggs-related news, Hinds County Judge Bobby DeLaughter says he will not fight a temporary suspension while his conduct is probed in the Wilson fee dispute case involving Scruggs, according to this story by John O'Brien of Legal Newsline. 

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I now know the time I'll be speaking in Starkville: April 2 at 3 p.m.  I'll provide the entire list of speakers soon, when it's ready to release to the public.  That puts me as the last speaker of the day, so I hope everyone isn't tired and surly by that point.  I'll probably speak for about 40 minutes or so, and leave some time for questions. 

Lastly, here's something that's been on the LexisNexis Insurance Law Center for a while, those of you who have followed the Katrina Follies might be interested in it -- a short profile of Judge L.T. Senter Jr. 

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Here's a link to a podcast interview of me by Chad Hemenway of A.M. Best about Sher, the flood-policy case and Landry, the Valued Policy Law case.  Both are before the Louisiana Supreme Court, which has heard oral arguments.  (The link is actually to the A.M. Best podcast menu, it's the third one from the top as I write this. I will try to get a better, more permanent link to insert here). Chad did a good interview, I enjoyed it. 

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I have to conserve my time and energy between now and April 2, when I'll be speaking at the Mississippi State Insurance Day, because I need both to work on my speech.  Writing jokes is hard to do and takes a lot of time, I know people are expecting some new ones.  There is some more serious stuff in the speech, too. I won't, however, be performing any of the songs from my musical-in-progress, "The Katrina Follies," not even from the showstopping third act, which has its own title, with a double meaning: "Scruggscapades on Ice."  So posts may be more limited this week.

--  This is excellent stuff.  The Wall Street Journal Law Blog is questioning whether it is ethical for a defense lawyer like John Keker to rave on about how his client is innocent and being set up by in a fraudulent prosecution, right up to the moment the guy pleads guilty to the fraudulent charges.  You might also remember that Keker wrote a letter to the Journal back around November 20, just before the Scruggs really hit the fan, demanding a retraction because the Journal said Scruggs convinced the Rigsby sisters to steal documents from State Farm.  Untrue on two accounts, said Keker -- they decided to copy the documents all by themselves (I am not making this up) and they didn't steal anything.  

Except that in this deposition from November 20 Kerri Rigsby herself agreed she had stolen the documents -- or at least, neither she nor her lawyer quarreled with that description.  The Keker comments and the Law Blog post are also discussed on this blog sponsored by the Carnegie Legal Reporting @ Newhouse -- which I've read before and which is a pretty decent site. 

I'm not sure of the ethics of it, myself.  I mean, in one way, I've come to expect that a great many lawyers will spew gushers of malarkey and tommyrot in the face of the most obvious contradictions and without regard for either what the truth is or whether they are making total jackasses out of themselves.  Doesn't necessarily make it right, but I've never seen anyone do anything about it, either. But even though it's a losing battle, I'm glad the Law Blog is taking a look at this.

-- I appreciate the link from George Wallace at Declarations and Exclusions, but I am sorry to hear that my own blogging would lead to a lessening of anyone else's output.  There are a lot of people who try to sell lawyers on blogging for various reasons, attracting new clients, building reputation, increased brand recognition.  And I say, sure, all that is true, if you do it right, but underlying all that, at the very heart of the matter, what it is about for me is freedom, freedom to break out of the insufferable banality of calcified prose and that lawyerish fake persona that robs you of your humanity.  Blogging for me is liberation, the ability to cast off the shackles placed by dead hands and soar through the sky -- even without my own private plane!  As I wrote in the LexisNexis Insurance Law Center post George links to: Legal bloggers of the world unite! You have nothing to lose but your chains.

-- I see NMC at folo came up with some pretty decent answers to the 10 unanswered Scruggs questions I posed yesterday. 

-- Lastly, I had a reader comment in one of my posts from yesterday that seemed to question my ability to work a plug for ABBA into a blog post. No problem, I've done it before and I can do it again. And in light of the demise of the Scruggs Law Firm (three out of four lawyers in a recent survey said, "I'm guilty"), I thought this song, Waterloo, would be the most appropriate, with its prophetic first lines:

At Waterloo Napoleon did surrender/ And I have met my destiny in quite a similar way/ The history book on the shelf/ It's always repeating itself.

I picked this version of the song because of two hilarious things about the video: their shocking costumes, especially that cape and the starburst guitar, and the fact that the performance is so totally mailed in and lipsynched.

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Details are here in this post by Karen Yotis.

I was also on the Insurance Law Center's March 21 podcast, talking about a bunch of stuff, including the Sher and Landry cases currently before the Louisiana Supreme Court, legal blogging and Scruggs.  Steve Berstler did a very good interview, these guys that have been on the radio, they have a skill that's hard to master, but sure does sound good when it's done right.  You can click here to listen.  (I'm a few minutes into the podcast).

Lexis also interviewed me about a whole lot of Katrina-related stuff, and I read this interview and thought it was done very well.  Anytime I get to use one of my favorite metaphors -- Wile E. Coyote and his Acme rocket backpack -- and this makes it into the interview, it makes me happy.  A preview of the interview is here, but the article itself is available only on the paid Lexis database. As you may know, I believe one problem with legal commentary is it is generally boring, with an off-putting pretentiousness, so I bring a different approach.    

As I've mentioned, I'm on the advisory board for the ILC, so I'm not disinterested in its success. But as I have a lot of places where I could choose to spend my time, I wouldn't be doing it if I didn't believe in the product and the people behind it.  Good people, people who get Web 2.0. Without good people -- people of imagination and creativity, risk-takers -- you can't have good product.  

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There are more than 10, of course, way more.  But these 10 will do for a starter.

1.  How likely do you think it was that a lawyer of the reputation of John Keker and a defendant of the wealth and notoriety of Dickie Scruggs failed to test their case before mock juries?  I would say it is very unlikely, and my guess is they used more than one. I would also take an educated guess that, if they did, the answers from the mock jury were unfavorable.

2.  Is the talk of the 50 sealed indictments just wishful thinking on the part of Mississippians, some deus ex machina that will come in and settle the plot?   And if they are real, what are the feds waiting for? One reason I've been skeptical of this is hardly anything is really a secret about the Scruggs case -- I hear a lot more than I pass on, much of it credible or reliable -- but I've not heard any of the names supposedly on this list.

3.  It seems evident that the government will seek an indictment against Scruggs for his alleged role in the Wilson case.  Why did they wait until the conclusion of the Lackey bribery case rather than going after a superseding indictment and rolling all the charges into one?   

4.  Where will Dickie Scruggs do his prison sentence?

5.  What exactly does the phrase mean that Balducci used with Judge Lackey, "lay the corn on the ground"?  

6.  Will Jim Hood continue to hand out multi-million dollar cases like a Pez dispenser? (Scroll down to the middle of the post).

7.  Will we ever find out what exactly P.L. Blake did for those millions?

8.  Returning to the issue of the Wilson case, was the timing of Joey Langston's guilty plea anything other than a justification to use the evidence as prior bad act evidence against Scruggs?  Were there plans to roll up the Wilson case, but then these plans were scrapped?

9.  When and if all the information on the Wilson case comes out, I'm sure going to be curious to see the testimony about Trent Lott's role in the call to Judge DeLaughter, aren't you?  I mean, given that he had known Bobs Wilson for a long time, and given that Dickie Scruggs was his brother-in-law, is it possible that he could have been unaware that Judge DeLaughter had before him a case involving Wilson and Scruggs?  If he did know, how is that OK?  If he didn't know, how is that OK?

10.  In thinking about this, it seems to me that when Mike Moore was brought on the Zach Scruggs' defense team, this indicated a fighting strategy, a trial strategy.  If this is so, what happened to change this strategy and make Zach willing to take a plea agreement just a short time later?  

UPDATE: What do you think of this letter to the editor in the Wall Street Journal?  It was written by an attorney and takes John Keker to task for his statements about how weak and even fraudulent the case was against Dickie Scruggs, including right up to the time Scruggs pleaded guilty to these fraudulent charges.  An excerpt:

It was really nauseating, however, to read the absurd assertion by John Keker, his lawyer, that Mr. Scruggs was innocent and that the "prosecutors have concocted a 'manufactured crime' in which his client had no part". . . . So, according to Mr. Keker, the prosecutors could freely be accused of trying to frame an innocent man. . . .

One assumed that when Mr. Keker made factual assertions he was accurately reporting what Mr. Scruggs had told him, since he presumably knew Mr. Scruggs's side of the story through lengthy interviews under the protection of the attorney-client privilege.

Then we learned, a few hours later, that Mr. Scruggs was guilty all along. Either Mr. Keker knew this or he was ignorant. . . .

Every day these lawyers appear on television and in the papers repeating the ridiculous alibis of their clients, not as their clients' legal positions but as facts, only to be ultimately made foolish by a plea or a trial.

SECOND UPDATE: The phrasing in this New York Times story on the Zach Scruggs plea was interesting, I think, and an indication of the zeitgeist.  The lede called Dickie Scruggs "a recently disgraced trial lawyer." (For those who wonder why I spell "lede" this way, it's the way journalists write it so it's not confused with the word "lead," as in lead paint).  My first thought was no, he disgraced himself quite a long time ago, but then I thought again, they're right. Although an act that results in disgracing might have occurred some time back, the disgracing itself connotes a public consensus and does not occur until the public knows the disgraceful facts.  Think about that phrase for a minute.  If last October anyone had told you that you would see that sentence in the Times or anywhere else in March, would you have thought they were nuts? I would have.

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THIRD UPDATE: Here's a copy of the transcript of Zach Scruggs' plea agreement.  I heard it was available on folo and maybe other websites, but I had already ordered it by the time I heard that, so what the heck, the $21 cost of the transcript is on me.

SECOND UPDATE: Here are some of the documents from the plea.

Plea agreement.

Information.

Possible penalties for charge.

Factual basis for government charge.

Plea agreement accepted.

Since it's a felony, of course his law license is gone too.

And here's a story by Anita Lee of the Sun Herald.

FIRST UPDATE:  A few additional details from a follow-up phone interview I did with our correspondent --

Zach's mother, Diane, was in court.  She did not look nearly as frail as she did last week when Dickie pleaded, was holding up better. Dickie (wisely) was not present.

Our correspondent has seen Zach in court before, feels he exudes an aura of arrogance which was also manifest today.  Zach did not do himself any favors, our correspondent says, during his allocution.  Unlike Sid Backstrom last week, he did not break down or even come close, or really even give a sincere apology.  His speech talked of his love for the legal system and how he really didn't know what was going on.  Judge Biggers appeared chagrined that the deal included no time in prison for Zach, our correspondent believes that will not sit well with Biggers and he will sentence Zach to some time.    

Is it over now? Probably not.  There is the Wilson case.  There are the 50 sealed indictments out there, which I have heard about for months and about which I have been skeptical, but which some sophisticated people believe are real and not myth.    

ORIGINAL POST: Here is a report from ICLB's ever-dependable Oxford correspondent, whose identity remains confidential to readers but whom I vouch for.

Zach pleaded guilty to a one-count information for misprision of felony. He stood before Judge Biggers with his attorneys Mike Moore and Todd Graves. David Sanders represented the government.

The elements of the crime that he committed are as follows:

1. federal felony was committed.

2. he had knowledge of the felony

3. failure to notify authorities

4. committed an act to conceal the crime.

Max possible penalty is 3 years, $250,000 penalty, supervised release up to one year.

Zach waived indictment in exchange for dismissal of original indictment and not being charged with offenses related to the charge.

Government recommended probated sentence.

Judge pointed out that the sentence recommended was not binding on the court.  The judge asked Zach if anyone had made any prediction as to his sentence, to which Zach respoonded that no one had.

The charge stems from a meeting on 3/15/07 where Zach, Dickie Scruggs, Backstrom, Patterson and Balducci met and discussed Balducci's relationship with Judge Lackey and at the meeting it was decided that Balducci would speak to Judge Lackey about making a favorable ruling for defendants in Jones v. Scruggs.

The judge noted that the government was going from charging Zach to 6-count felony indictment to one count misprision of felony.  This observer got the impression that Zach was getting a sweet deal with his plea, and that Judge Biggers thought so as well.

Zach asked to address the court and noted that no one was "sorrier than I." He pointed out that he did not bribe or conspire to bribe Judge Lackey nor did he have knowledge of a bribe. He did, however, have knowledge of improper contacts by Balducci to Judge Lackey and had a duty to prevent these, in which he failed. He said he had a duty to prevent ex parte contact. Talked about the duty he owed to the legal profession and how he was truly sorry to the legal profession and how he loved the legal profession. Judge Biggers responded: the "legal profession that you say you love so much you will not be a part of for the rest of your life."

This was just filed  -- a waiver of indictment by Zach, allowing a charge of misprision of a felony to be brought through an information rather than an indictment. 

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A reader provided me with some outstanding research on Zach's defense team, including some stuff from my own blog.  Remember, the team now includes Mike Moore, Todd Graves, Chip Robertson and Mary Winter. 

Graves is the former U.S. Attorney for the Western District of Missouri, who, according to this press release, left resigned his office on March 24, 2006. Remember that date.

Here is the Kerri Rigsby deposition transcript I posted some months ago and referred to again just a few days ago.  Look again, starting on pages 16 and 17.  You will see, as I've mentioned before, Rigsby testifies to meeting in a trailer with Dickie Scruggs and some other lawyers: "Tony DeWitt, Mary, Todd and Chip."  Tony DeWitt and Mary Winter are former law clerks for Chip Robertson when he was on the Missouri Supreme Court, and worked for his firm.   But who is Todd? Rigsby testified this Trailer Summit took place sometime in March 2006, she wasn't specific as to the date.  According to the press release, Graves didn't leave office until March 24, which leaves seven days in March after he is out of office to meet with Rigsby.

We may assume the Todd mentioned is Todd Graves, because his name appears on the complaint of the Ex rel. Rigsby False Claims Act lawsuit filed the next month, along with Dickie Scruggs and Chip Robertson, Tony DeWitt and Mary Winter. (Look at the end of the lawsuit for the attorney signatures).  Someone of Graves' reputation would surely have worked on the case before it was filed, rather than just consenting to have his name added. 

Here is a press release from 2007 showing Robertson's previous involvement with the Scruggs firm on some kind of nursing home lawsuit (Sid Backstrom's name is also mentioned, you have to scroll down a bit to find it).

Robertson's connections with Scruggs go way back -- in fact, he resigned from the Missouri Supreme Court to get in on the tobacco litigation, according to this article in the Kansas City Business Journal.  His firm continues to represent the Rigsby sisters in the "whistleblower" lawsuit.  

Question: how did Graves get involved in all of this so early, considering he was a U.S. Attorney from another jurisdiction right before the False Claims Act was filed?

Interesting, isn't it, how Dickie Scruggs likes to keep it all in the family? And interesting how all these Rigsby sisters lawyers are now representing Zach. A Scruggs legal affair is like a Cohen brothers movie, the cast is always the same.

Now for something totally different, I'll close with this item: Is Jim Hood going to to get wiretap authority? Heavens! Quis custodiet ipsos custodes?

Also, hearing at 10 a.m. today in Oxford, Mississippi on Zach Scruggs' latest motions.  Here's the notice.

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In the Renfroe v. Rigsby case in Alabama, the Rigsby sisters have been represented by attorneys from three firms, two from Alabama and one from Washington, D.C., all paid for by Dickie Scruggs.  The D.C. lawyers have now filed a motion to withdraw from the case for the following reason (I inserted the boldface to highlight the really significant part):

This motion to withdraw is the result of the inability of the Rigsbys and others to pay Zuckerman Spaeder LLP's fees and expenses going forward, or to adequately satisfy existing fee and expense obligations.

"And others"?  That can only be Dickie Scruggs.  Is this criminal prosecution of Scruggs and his involvement in the Renfroe suit, the Rigsby False Claims Act lawsuit and other stuff tapping out even Scruggs' mighty wallet?  Mike Moore and that other passel of lawyers for Zach aren't cheap, I'm sure, and Scruggs himself is not out of the woods on the Wilson case. 

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You may have heard that Zach Scruggs, the last man standing in the Scruggs Supernova, has come out with new motions.

My favorite is this one, his motion to move the trial date, which should have contained a subhead reading "Delay: the Lawyer's Best Friend," and which contains this priceless paragraph:

Most significantly, based on the summonses the court sent out, members of the pool have been notified of their selection and they will, undoubtedly, have a heightened interest in this case. Many in the jury pool now know that Defendant’s co-defendants pleaded guilty in this case, making them susceptible to the inappropriate inference that the co-defendants’ pleas indicate guilt on the part of Defendant. This is particularly true for any potential jurors that read the inaccurate report in a March 14, 2008 article from Jackson’s Clarion-Ledger which indicated that Defendant agreed to surrender his law license as part of Richard F. Scruggs’s plea agreement. A continuance is warranted to give time for the media coverage in this matter to subside and the sensational and misleading stories in this case to fade from the selection landscape.

I'm not sure what exactly the C-L said because they yanked this from their website, whether they said he had agreed to surrender his law license or whether a deal would call for that or what.  But just because the deal didn't happen does not mean what the C-L said is untrue. Something else might have happened that blew the deal up. 

I also liked this:

A continuance is needed in this case to allow Defendant’s counsel to adequately prepare his defense in light of the recent pleas of his co-defendants. Until the end of last week, Defendant’s counsel were preparing the defense under the assumption that the trial would involve multiple defendants with varying levels of alleged culpability. Undersigned counsel entered their appearance only 8 weeks ago, and will now be responsible for carrying the full load of the trial. Moreover, the very recent pleas of codefendants have significantly changed the strategic and tactical realities for Defendant and his counsel, and additional time is needed to adequately prepare the defense in light of these new realities.

Come on now, we've got Mike Moore and these Rigsby sisters lawyers added to the team, isn't that enough bodies to pull the sled? Also, sounds like their job should be a lot easier now with all the other folks off the field.    

In addition, he wants a James hearing, which is not a karaoke party featuring James Brown music , but rather a determination of whether hearsay statements of co-conspirators should be admitted. Here's the motion.

Lastly -- and I cannot be sure, but this brief did not appear to be filed on a napkin -- the Zach Scruggs team wants to exclude prior bad acts evidence, namely anything to do with the Wilson case, in which Joey Langston has pleaded guilty to trying influence Judge DeLaughter.  This is the case, you may remember, where Zach wrote an e-mail to attorney Johnny Jones saying, in part, as follows:

In a May 29, 2006, e-mail obtained by federal authorities, Zach Scruggs told his father's attorney in the case, John Jones of Jackson, that "you could file briefs on a napkin right now and get it granted." Jones responded in his e-mail, "You have misconceptions about Joey and Tim that I hope ultimately do not need to be explored. ... If we win, it will be because the law says we win."

See this post for more details.

Here's what the Zach Scruggs brief says about this:

Additionally, the government provided counsel with a copy of an email involving Zach Scruggs and Johnny Jones, wherein they discuss the Wilson case; however, nothing in the email suggests Zach’s Scruggs’s knowledge that any quid pro quo (prospective federal judgeship) was being offered to Judge DeLaughter, which is the crux of the government’s offering and the very reason that the government was seeking to introduce the allegation. Hiring someone because he or she has a good relationship with a judge is certainly not a novel concept, and more importantly, not illegal. What is illegal is offering the judge something of value in exchange for some act. No such allegation exists against Zach Scruggs. On February 26, 2008, the Court denied the motion in limine.

There you have it. It's not illegal to file briefs on a napkin.  Anyone who sees anything wrong with this statement is being inflammatory and creating additional prejudicial media coverage that constitutes a further reason to delay the trial indefinitely. 

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Here's a copy of the Commission's petition to the Mississippi Supreme Court. This comes from ethics complaints filed against DeLaughter by attorneys for William Roberts Wilson in the fee dispute case against Dickie Scruggs.  Joey Langston, who represented Scruggs in the later stages of that investigation, has pleaded guilty to conspiracy to influence DeLaughter with the offer of a federal judgeship.  I'll update later.

UPDATE: Here's an AP story on this from Mike Kunzelman, here's one from Jerry Mitchell of the Clarion-Ledger.  

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Let's return for a moment to last week and the plea agreements of Dickie Scruggs and Sid Backstrom.  We can surmise from the fact that Scruggs and Backstrom made plea agreements that Zach Scruggs also discussed a plea agreement.

My working hypothesis was that one strong motivation for Dickie Scruggs to make a deal was to help get Zach out of this mess.  This was based not just on common sense but information I received about family pressures Scruggs was receiving.  Since then, I have also gotten quite a lot of information about what might have happened that led to no deal for Zach, and not all of this information is entirely consistent, or more accurately, it is consistent to a point but it is missing unanimity on the one key thing -- exactly why the deal fell apart. 

I believe that something close to what the Clarion-Ledger reported last Friday and then yanked from its website was being discussed -- Zach would walk but surrender his law license.  (It would be helpful if the CL would explain why the information was yanked -- because the source or sources turned out not to be credible, because the deal was only conceptual on one party's part and was not actually a serious possibility, or because the deal was set up and then fell apart because of some reason we don't know for sure).

It is also plausible, considering Zach's apparently lesser involvement as alleged by prosecutors, to assume that in any deal, even if he did not escape prison entirely, his time would have been minimal, say one year at the most. Now, as I've mentioned, one sticking point could have been whether he would also walk on possible charges stemming from the Wilson case.  Another could have been whether he would have to cooperate with prosecutors in the Lackey bribery case and in Wilson, the latter of which could set him at odds with his father's interests.

Let us suppose, just to examine these assumptions, that it is true that Dickie Scruggs was interested in making a deal that would also benefit his son.  Seeing as the deal fell apart, what other motives did Scruggs have to make the plea bargain he eventually did?  In other words, why did he not do what many predicted he would, walk into court with Kenny Rogers' "The Gambler" blasting from his earphones?  We know, from a motion the government filed at that time, that the defense saw the "taint team" evidence -- the data pulled from the Scruggs Law Firm computer system -- the day before the plea bargains. 

Merely because one thing follows another does not mean the first caused the second. However, we also know, from review of court filings, that even without this taint team evidence, the government's case was strong -- the recordings showed Scruggs reviewing and editing Lackey's draft order, Balducci would testify against him and the government would introduce evidence of his involvement in an alleged conspiracy to bribe Judge DeLaughter in the Wilson case.  If the taint team evidence tended to solidify the government's case -- e-mails and the like that showed Scruggs' knowledge and participation -- he likely would have received advice from his attorneys that he stood a high likelihood of being convicted on most or all the six counts against him and spending the rest of his life in prison.

With the deal he received, however, he will be free in five years (in theory only, because we don't know what will happen with the Wilson case).  In any event, a 100 percent chance of five years is better than an 80 percent chance of 75 years.  So he had motives of his own to settle, and he is not obligated under the agreement to cooperate with prosecutors.

A small item in the Wall Street Journal today by Ashby Jones says that even though Scruggs has pleaded guilty and could be called as a witness without Fifth Amendment problems, the government is unlikely to do so because of the risk of antagonizing the jury by having a father testify against his son. (Hat tip, Jane Genova). Not to mention, if you read the transcript of Dickie's plea, you can see that he's not going to give it up easy.

About whether the passing of the March 17 plea deadline is real, or if Zach can still get a plea agreement, readers, in comments and in e-mails, said that after the plea deadline any plea is an "open" plea, essentially one in which the judge makes no assurances of willingness to accept terms worked out with prosecutors.  I looked up some federal case law and what I saw was in line with these statements -- a judge has the authority to set such a deadline to assist with trial management and is not bound to accept any agreement after that, except for good cause.  Normally, the mere fact that the deadline was missed is not good cause.  A judge can make exceptions, of course, but generally it appears they do not. 

In state courts, the law varies from state to state -- I found this interesting case from Illinois explaining the two different views of courts on how set-in-stone the plea agreement deadline is.  You might be interested.  

Lastly, readers pointed out something I didn't remember -- two new members of Zach's defense team, Chip Robertson and Mary Winter, are old hands with the Scruggs Circus.  Their firm represents the Rigsby sisters in the False Claim Act "whistleblower" case against State Farm, and as one enterprising reader found out in doing research on my blog, Robertston and Winter are mentioned in one of the Kerri Rigsby depositions I've posted.  See beginning on page 17.  Also, here is the post in which I discussed other aspects of the deposition. 

Kerri Rigsby met them, according to her testimony, back in early 2006 in a trailer along with Dickie Scruggs (the trailer may have been the one set up on former Sen. Lott's property after Katrina in Pascagoula, but this is not clear from the transcript).  Apparently, Cori Rigsby brought her laptop and accessed the State Farm claims documents with her laptop and State Farm password. These claims documents, the value of which appears to be some mixture of hype and hope, were used by Scruggs in a variety of sensationalism ways to drum up publicity and to use as leverage -- the Rigsby sisters' 20/20 interview, numerous uncritical press stories featuring Scruggs' exaggerations, the False Claims Act case, several Katrina cases including McIntosh v. State Farm, grand jury investigations in conjunction with state and federal prosecutors, and of course, as a negotiating ploy in the settlement of the 640 Katrina cases against State Farm.  This last item, of course, led indirectly to  two prosecutions of Scruggs -- the first stemming from his game of keepaway with the help of AG Jim Hood with the documents in defiance of Judge Acker's order, the second as a result of the conspiracy to bribe Judge Lackey in the Jones v. Scruggs fee dispute that arose out of the settlement. 

When you see it written down that way, you can see how one thing led to another and brought us to where we are now.  So it's only fitting that Robertson and Winter, who were there at or near the beginning, should be there at the end. 

I've mentioned it before, and I'll mention it again. This long list of events culminating in Scruggs' plunge makes me think of Gray's Elegy Written in a Country Church-Yard.

The boast of heraldry, the pomp of power,
And all that beauty, all that wealth e'er gave,
Awaits alike th' inevitable hour:-
The paths of glory lead but to the grave. 

Posted By David Rossmiller In Industry Developments
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As I wrote in one of my posts yesterday, Judge Biggers' order of yesterday afternoon made it clear that the deadline for plea agreements remained March 17.   Some people have asked me whether this is an absolute deadline -- for example, if Zach Scruggs wanted to enter into a plea agreement just before trial, would the judge reject this. 

The answer is that I don't know, this wasn't covered on any of the episodes of Boston Legal I've seen. But having seen a little bit of Judge Biggers in action in this case, I suspect that when he says something he means it.  There are a lot of criminal defense attorneys and prosecutors reading who could give a better answer than I can, and maybe one of them will e-mail me or leave a public comment below.

You know by now, of course, that Mike Moore is now formally part of the Zach Scruggs defense team.  According to this post on the Wall Street Journal Law Blog, Zach's lead attorney, Todd Graves, said Moore has been an unofficial part of the team for some unspecified period of time.  

As you also know by now, two other attorneys filed appearances on behalf of Zach yesterday, Edward Robertson, Jr. and Mary Winter.  Robertson, according to his bio on his firm's website, goes by "Chip" and is a former chief justice of the Missouri Supreme Court. I don't see criminal defense listed as one of the firm's practice areas, but he certainly knows his way around a courtroom, as this other bio I found on the Web shows.     

So apparently there goes my hypothesis that Dickie Scruggs' chief reason to plead guilty would be as part of a deal for Zach to walk away with minimal or no jail time.  Bringing in Moore, Robertson and Winter certainly looks like a move to get ready for trial. 

A couple questions: does Dickie Scruggs' guilty plea mean that he cannot refuse to testify on Fifth Amendment grounds about this conspiracy if called to the stand? Would Scruggs want to testify, perhaps to say that his son had no clue what was going on?  

If Zach is indeed going to trial, this seems like a tremendous gamble on his part.  Makes me wonder about that report last Friday in the Clarion-Ledger -- I never found it myself but I saw it talked about on other blogs like Y'all Politics and folo --  that a deal had been worked out with Zach where he would surrender his law license, and that was it.  If that was the deal on the table, I wonder if the sticking point was whether Zach would walk on possible charges stemming from the investigation of the Wilson case, the one where Joey Langston has pleaded guilty to conspiracy to bribe a judge.  Whomever was the source for the information, the paper hasn't mentioned that deal since, so if it existed, it fell through. 

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I looked back at PACER to see if there are new developments, and two new lawyers are requesting pro hac vice admittance to represent Zach Scruggs.  

Here they are: Edward Robertson, Jr. and Mary Winter. Haven't had much time to do any research on them, but here is a quick bio of Robertson.   

Also, this order filed by Judge Biggers makes clear that the extension granted on Friday to deal with remaining motions does not affect the plea agreement deadline of today.    

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Not sure exactly what this means, but I just saw this on PACER. Mike Moore, for those who don't know, is the former AG of Mississippi and a close friend of Dickie Scruggs who worked with Scruggs on the tobacco litigation and has also had a hand in Katrina litigation.

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A roundup of stories about the Scruggs plea agreements, and a few comments:

Hood: you can't get there from here.

This Legal Newsline story by John O'Brien about Mississippi Attorney General Jim Hood's reaction to the Scruggs plea is hilarious.  Let's look at a few excerpts (I've boldfaced some particularly amazing parts):

In catching high-profile plaintiffs lawyer Richard "Dickie" Scruggs in a judicial bribery scheme, the federal government's methods of investigation worked perfectly, Mississippi Attorney General Jim Hood said Friday.

So well, in fact, that he wishes he could use the same, even though he has recently deferred prosecution of one federal judicial bribery case to the local district attorney and has shown no sign of filing charges against Scruggs.

"The federal government effectively used its wiretap authority to prosecute a rare judicial bribery case," Hood said. "It would be an effective deterrent in other white collar crime cases, if the Legislature would give wiretap authority to state prosecutors."

Hood has drawn criticism since the November indictment of Scruggs, a large campaign contributor whose relationship with Hood was described as "remarkably close" by federal prosecutors in Scruggs' recently dismissed contempt case.

Editorials called for Hood's resignation because the second-term Democrat would not file state charges against Scruggs, any of his co-conspirators or attorney Joey Langston. Langston pleaded guilty to a judicial bribery scheme involving Scruggs in Hinds County. 

Could I be reading this right? Hood is blaming the lack of wiretap authority for his not investigating and prosecuting Scruggs and others? Isn't that a bit like a guy who every morning says he can't exercise on the stairmaster because he doesn't have nice enough sweat pants?

Also, I have another question: "rare judicial bribery case"? What's rare, the judicial bribery or someone actually bringing a case because of it? 

Because [Joey] Langston was awarded state contracts by Hood to sue prescription drug-maker Eli Lilly and MCI, Hood said he could not prosecute him.

"Due to Mr. Langston's past representation of this office, it could create an appearance of impropriety for our office to participate in a potential state prosecution of this case. It will be up to the appropriate District Attorney(s) to handle any potential state case(s). The resources of my office will be available to them."

Can that possibly be true? Anyone who gets a contract from the AG's office is immune from the AG's authority? The AG is state government's lawyer -- how about others who contract with state government, is there also a conflict of interest for Hood to investigate them?  Remember how Hood earlier this year announced a big offensive -- in lieu of prosecuting Scruggs and others -- against makers of fake contact lenses and unsafe toys? Hey, all those toy makers have to do is sneak in and get a contract with the AG's office somehow and they are off the hook!  Look at Hood's statement again -- do you believe that if a special assistant AG appointed by Hood somehow wound up ripping off the state for millions that Hood couldn't prosecute him even regarding that same case? Of course you don't.  So why would we believe that Hood can't investigate the same person for completely separate, unrelated alleged wrongs?

What resources of Hood's office would be available which would also not cause a conflict of interest, the copy machine?  A box of legal pads and pens?

L.A. Times story.

Here's a story from Richard Fausset, Jenny Jarvie and Henry Weinstein of the L.A. Times on the Scruggs guilty plea (the story has a quote from me).  A pretty good story, comparing, at the beginning of the story, the downfall of Scruggs with the face plant of Eliot Spitzer.  Of course, the writers are using that just as a frame of reference, they are not suggesting an actual similarity, except perhaps in that they both thought they could get away with it.

But you remember what Tolstoy wrote at the beginning of Anna Karenina, don't you?

Happy families are all alike; every unhappy family is unhappy in its own way. 

True enough.  Each of these downfall stories is always unhappy in its own way. 

WSJ Stories.

This Wall Street Journal story by Paulo Prada and Ashby Jones appeared the morning of the Scruggs guilty plea and deserved better than to get lost in the day's events.  It is an extremely good retrospective on Scruggs' series of fee disputes.  The story asks the question everyone has been asking:

To many legal observers, the indictment raises a hard question: What could lead a lawyer who once earned nearly $1 billion on a single case, the tobacco litigation, to bribe a judge over a matter of a few million dollars? 

(The story also contains the obligatory spin from Scruggs' lawyer about how he didn't do it, which was vitiated a short time later when that same lawyer stood up in court and had to poke Scruggs with a cattle prod to get him to follow through on allocuting his guilty plea).

You know my working hypothesis: Scruggs is not the gambler he has sometimes been portrayed as, he is a guy who likes to work things so the result is preordained, and as we've seen, he is surely not the only one.  I cite this portion of the story as further evidence in support of this hypothesis.

Around this time, another law-school classmate, Michael T. Lewis, says he gave Mr. Scruggs the idea that ultimately made him rich and famous: demanding that tobacco companies repay states for their Medicaid costs in caring for people sickened by smoking.

Mr. Scruggs was intrigued, but had drawn criticism over his asbestos litigation for the state. Detractors called it a gravy train for the attorney general's favored lawyers, who repaid the favor with campaign donations.

So Mr. Scruggs turned to another political pal: Pete Johnson, who says Mr. Scruggs asked him to help push through legislation clearly authorizing the attorney general to farm out lawsuits to private lawyers. Mr. Johnson, a former state auditor, says that at an airport restaurant in March 1994, Mr. Scruggs promised him 10% of his legal fees from the tobacco case if the bill passed and the litigation was successful.

With Mr. Johnson navigating behind the scenes, the bill passed. But after the tobacco settlement brought Mr. Scruggs nearly a billion dollars in legal fees, he said "he didn't owe me anything," Mr. Johnson says. Like Messrs. Luckey and Wilson, Mr. Johnson filed a suit for legal fees against Mr. Scruggs.

In 2001, with the suit unresolved, Mr. Johnson dropped it. He was a liver-transplant survivor, and "decided I'd rather spend whatever time I have left alive at peace and not in court fighting for money," he says.

Mr. Scruggs then sent him a $100,000 check, via an intermediary and without explanation. Mr. Johnson saw it as "a way for him to tell my estate that I was paid for my work." 

Again, a really good story.  The Journal followed up the next day with this editorial.  The editorial's answer to The Question is that Scruggs was supersaturated with hubris. Well . . . . I hate to get picky, but I don't think this goes very far as an explanation. 

The point I made with the Anna Karenina quote above is that comparing Scruggs to Spitzer, as the editorial does, focuses on surface similarities to the exclusion of underlying causes. If Scruggs had hubris, why, one needs to ask, did he have such hubris, and how did it manifest itself? Many people, after all, are arrogant -- lawyers, as a class, are plagued by a high percentage of people who are insufferably arrogant, vain and full of false notions about their own preeminence. Yet the overwhelming majority of lawyers, even the overwhelming majority of the smaller subset of Hubristic Attorneys, do not commit crimes.

So it wasn't just pride or arrogance, it also had something to do with the special conditions found in Mississippi.  As we've talked about before, not every legal endeavor Scruggs engaged in was successful.  We can ask ourselves -- has he had any successes at all, in fact, where he was not able to manipulate the results through the political process or, let's put it this way, other means? 

I myself don't see Scruggs as a particularly arrogant man.  I see him as a practical man, a man who well understood the use of ambient tools -- he'd use whatever was at hand as an aid for his litigation. I see him, in fact, as having a particular genius for this kind of creative work that overcame his moral principles.  Maybe that's hubris, maybe it isn't.  But the explanation goes much, much deeper, and my understanding of it is still far from complete. 

Followup on Joe South story.

This AP story has updates on developments in the case of a man killed in an accident involving a client of Tim Balducci, Darron Lee Minor.  You may remember earlier stories about how the FBI surveillance tapes of Balducci's conversations with Judge Lackey captured Balducci offering Lackey a bribe to take certain actions in the trial of this client.  Not only that, it appears Balducci pried an extra $20,000 out of the defendant's family that they shouldn't have had to pay -- they are not responsible to make Balducci whole because of a fee dispute he had with Joey Langston. [UPDATE: see the comment below from "some lawyer," who points out the transcript says Balducci wanted to get this extra money, not that he actually did].

Balducci said Minor's family paid Langston $30,000 for his firm to represent Minor, but Balducci said that when he left the firm, the $30,000 was not paid to him. He told Lackey he planned on going back to Minor's family and asking for another $20,000 since he never got paid by Langston.

He offers Lackey $10,000 to rule in his favor.

Balducci: "I think I've got a good theory. I think I can get the legs cut out of this beforehand, gimme twenty grand to do it, and if he does, then I thought me and you could split it and we could, you know, we could get it taken care of."

Lackey, knowing he's being taped, agrees. Balducci asks Lackey to continue the case for him in November.

Balducci: "We'd put it off 'til February and then I'll file a motion to quash in the meantime after I get paid."

The case was continued, but Dist. Atty. Ben Creekmore said it wasn't because Lackey did what Balducci requested. Creekmore said Judge Andrew Howorth continued the trial in November until March 17.

"I thought Balducci had good arguments, obviously, because I granted the continuance," Howorth said this week in denying another continuance. "But now I see that a lot of that was a ruse to get out of the case because he knew he was going down."

Since Balducci was arrested a few days after the conversation, Minor was without representation and a new lawyer had to be appointed. Attorney Casey Lott entered an appearance for Minor but pulled out. Attorney David Hill took over as defense attorney about two weeks ago, Creekmore said.

Creekmore denied that the attempted bribery by Balducci caused any of the previous delays in Minor's trial.

"To say that the Scruggs case delayed this trial would be fair but only from the November trial date until the March date," Creekmore said. "But this story is about what Darron has done. And he's going to be tried on that."

Question: how much of this kind of thing is going on in Mississippi?  

Battle of McIntosh continues.

I've been meaning to comment on this John O'Brien story for some time and never got around to it.  It's about the ongoing battle between the Scruggs(less) Katrina Group, now formally called the Katrina Litigation Group, and State Farm in the McIntosh v. State Farm case, a Verdun-like litigation hell consuming vast quantities of time, money and resources without any effect in breaking the stalemate.  

You may remember that I've written extensively about this case and State Farm's efforts to disqualify the KLG based on the sins of Dickie Scruggs, the KLG's vicarious liability for them and the KLG's supposed endorsement and participation in unethical conduct, not all of it involving Scruggs.  

Well, after Scruggs obtained a dismissal of Judge Acker's charge of criminal contempt of court against him a few weeks ago, the KLG filed supplemental authority with the court giving notice that the charge had been dismissed, you know, as partial refutation of State Farm's charges of unethical behavior.

I wouldn't say Friday's guilty plea by Scruggs completely moots KLG's filing.  After all, the contempt charge grew directly out of the handling by Scruggs of claims filed stolen from State Farm (many of these documents were used by the entire KLG in litigation, and allegedly at least one other KLG firm retained copies of some of the documents instead of returning them as ordered by Judge Acker).   The bribery charges, however, were peripheral to Katrina litigation against State Farm -- the bribery occurred in a fee dispute between member firms of the Scruggs Katrina Group over money paid in settlement of 640 Katrina cases by State Farm.  So they aren't the same animal. Nevertheless, the guilty plea does take the bloom off the rose.  I tell you what, if you've ever seen the person next to you sprayed by a skunk, you know some of the stink rubs off on you.

I've considered whether the dismissal of the Alabama charges against Scruggs is equivalent to saying he did nothing unethical.  I don't think so.  The judge dismissed the case because of a supposed lack of jurisdiction over Scruggs, and also, in what to me is an amazingly myopic reading of the terms of Acker's injunction, because the "law enforcement exception" in the injunction allowed Scruggs to play keep-away with the documents with his close friend Jim Hood instead of returning them as ordered.

A lack of jurisdiction doesn't impact the issue of ethics at all, but what about the ruling on the law enforcement exception? Isn't that conclusive as to that issue, and doesn't it say Scruggs was legally able to do what he did? Is being legally able to do what he did equivalent to saying it was ethical?  As to the last question, remember that the case was dismissed not because the judge said there was insufficient evidence of his intent to defy the injunction, but that what the did was allowed under the injunction. So I'd say the KLG filing has a point, and that it will be very difficult for anyone to argue the unethical nature of Scruggs' actions in defying the injunction. However, that does not mean that all the other stuff he did -- working hand-in-glove with Hood, paying the material witnesses like the Rigsby sisters whopping salaries for doing little to nothing, or even his other uses of the documents -- is OK.  There is still plenty to talk about there, and my prediction is the talk has only just begun.

Posted By David Rossmiller In Industry Developments
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We'll stay on this post all day and update. Look for the latest information at the top (I got chewed out by readers last time I did this for putting the new updates at the bottom).

Welcome L.A. Times readers!

TWELFTH UPDATE:  I've read through the Scruggs plea transcript posted below, and he wasn't exactly brimming with remorse.  Here's what I mean:

THE COURT : Mr. Scruggs, you have heard the United States Attorney state what evidence he could present against you on this particular charge if the case were to go to trial. Do you agree with the prosecutor' s summary of what you did?

MR . KEKER : Your Honor, could I interrupt to say that much of the prosecutor' s summary - - we discussed it - - is based on discovery and information that we have learned during the process of preparing this case. We believe - - and I 've discussed with Mr. Scruggs - - that the prosecutors could prove what they say they are proving. Much of that is, as you know, based on testimony of people and under circumstances where Mr. Scruggs was not there and doesn' t have firsthand knowledge of it. But we agree that that' s what they can prove, and that that' s an adequate factual basis for the plea.

THE COURT : All right. Mr. Scruggs, then, did you do what the prosecutor just said you did, as far as your acts in this charge are concerned?

THE DEFENDANT : I joined the conspiracy later in the game. It' s not exactly as the prosecutor allocuted, in that there was no intent to bribe the judge; it was an intent to earwig the judge, Judge Lackey; and that that - - the earwigging idea was not originated by me or anyone in our firm, although we went along with it, at the beginning of - - sometime in March. 

THE COURT : Well - -

MR . KEKER : But then later - - what about later? You got to say something about later.

THE DEFENDANT : I did join the conspiracy after that.

THE COURT : So you agree - - are you telling me that you did join the conspiracy, and you did furnish some money to give to Judge Lackey in return for him issuing an order in your favor in this case? Is that what you're saying? Do you disagree with that?

THE DEFENDANT : That' s what I ' m saying.

THE COURT : All right. The Court finds , then, that there is a factual basis for this defendant to plead guilty to this charge. Richard Scruggs, do you plead guilty or not guilty to Count 1 of this indictment?

THE DEFENDANT : I plead guilty, Your Honor.

Lots of new terms in the Scruggs matter -- sweet potatoes, earwigging, etc.  Earwigging means "To influence, or attempt to influence, by whispered insinuations or private talk," according to this online source. 

ELEVENTH UPDATE: A reader alerted me to the fact that the WSJ Law Blog had posted transcripts of the plea agreement proceedings today, but that the links were broken.  So I took a chance and called the court reporter, who was kind enough to send them to me.  A very nice lady.

Here are the transcripts, I want to get them up right away.  I'll comment when I've read them.

Scruggs plea transcript.

Backstrom plea transcript.

Hearing on Zach Scruggs' motion to dismiss.

TENTH UPDATE:  I've seen a variation of the lede in this Clarion-Ledger story in several others today: "surprise plea agreements."  Surprise to whom? If you've been paying attention to the evidence as it was revealed, you saw that the government's evidence was very strong.  And if you knew that the government had huge leverage over Dickie Scruggs because his own son was indicted as an alleged co-conspirator, you would know as I've been saying for quite a while, that Dickie's choices were bleak, and swinging for the fences at trial could result in his son doing a lot of years of hard time, as well as ensuring he himself would never walk this Earth as a free man again.  I figured pleas would come either late today after the latest motions were turned down, or Monday, the last day to submit plea agreements to the court.  For quite a while I've been saying to folks who e-mailed me about attending the trial that I doubted there would be one, so it's no surprise to me or others who were watching closely. 

NINTH UPDATE: This motion was filed by the government today.  It asks the court's permission to turn over evidence gathered by the FBI "taint team" -- a team that separately analyzed data like computer files copied from the Scruggs Law Firm during the November FBI raid -- to the federal prosecutors in the Scruggs case.  From this motion, we learn that this information was turned over to the defense team just yesterday -- the timing of the pleas could have had something to do with the evidence.  

EIGHTH UPDATE: Roger Parloff of Fortune's Legal Pad

SEVENTH UPDATE: Check out Walter Olson at Overlawyered for more news and links.

SIXTH UPDATE:  This has got to be kind of like getting a paper cut after you've lost your legs, but in another matter, the 11th Circuit Court of Appeals turned down Scruggs' petition for a writ of mandamus against Judge Acker, in the Renfroe v. Rigsby civil lawsuit in federal court in Alabama.  Scruggs sought to have Acker removed as a judge from the case, saying he was biased because he had referred Scruggs for criminal contempt of court in the case. 

Here's a copy of the 11th Circuit's order.

FIFTH UPDATE: Just got a moment to link to the documents.

Dickie Scruggs' plea agreement.

Backstrom's plea agreement.

Factual basis for Scruggs' plea agreement.

Factual basis for Backstrom's plea agreement.

FOURTH UPDATE: A story by Richard Fausset of the L.A. Times, with an interesting quote from attorney James Robie.

"You know, I've spent hundreds of hours letting that issue marinate, because it boggles my mind," said James Robie, a Los Angeles attorney who is representing dozens of Katrina-related cases Scruggs' clients brought against State Farm Insurance. "I believe he became completely intoxicated by power. . . . And he's so avaricious that he'd often tie in with it, 'How many millions can I rake in?' Just because it was a game."

Fascintating, but I don't think Scruggs became intoxicated by power, as one would normally understand that phrase.  I think he -- contrary to the perception of him as a gambler -- was someone who showed a proclivity and a talent for arranging things, when he was able, so that it was a "heads I win, tails you lose" situation.  Sometimes he had enought juice to do that, sometimes he didn't. 

Also, I occasionally get people saying to me, stop kicking Scruggs, you don't kick a guy when he's down.  Two things.    First, if we can't collectively condemn judicial bribery and all its implications, and examine how far this pattern of conduct reaches, if we can't defend the institutions that protect us, we are not worthy of survival.  Second, unlike many, many others, I kicked Scruggs when he was up, too.  

THIRD UPDATE:  Here's a story from the ABA Journal, with a lot of good links, and unfortunately, a very good profile story that was superseded by events today.  But hey, Scruggs happens.

SECOND UPDATE: Here's the word from ICLB's confidential correspondent at the courthouse this morning:

Sentencing in 30-45 days.

Before the hearing, DS and Backstrom sitting in the gallery. DS hugging people who spoke, shaking hands, talking. DS sitting next to wife before hearing started. Backstrom did not have a wife at his side when sitting in the gallery waiting for proceedings to start (at which time both he and DS moved to the defense table). Sat with DS and DS's wife before moving to defense table.

Judge annouced that Backstrom and DS changing "not guilty" plea to "guilty" as to count 1 (conspiracy to attempt to bribe...)

Both Backstrom and DS plead guilty to count 1 of the indictment. Max sentence is 5 yrs. No recommendation for DS's sentence. Backstrom recommendation in his plea agreement that his sentence not exceed one-half of DS's sentence.

Counts 2-6 will be dismissed for each.

DS represented by Keker. Dawson for gov. DS was very stoic. Answered judge's questions clearly; talked clearly, understandably, loudly; otherwise completely motionless. This plea has no effect on the Wilson investigation. DS pled first. then left the courtroom, glanced in direction of his wife. His wife followed and then returned for Backstrom's plea.

Backstrom - represented by Tannehill and Trapp. Backstrom agreed that he did enter into a conspiracy but did not assist in "furnishing monies." He indicated (when asked by Biggers who provided the monies) that his law firm did. Trapp and gov quibbled a second or two about the word "corruptly" in front of "influence" - it was Trapp's understanding that "corruptly" would be removed. The gov indicated that is had been removed from the first paragraph, only because the gov (Norman for gov) didn't feel it was worth arguing about. Biggers asked if he understood that the acts of one co-conspirator are attributed to all. He said he understood. Throughout, Backstrom was quiet, reserved. entered plea and then asked to say something. Said he apologized to the court, his family. Began sobbing. Stated that he had made some of the worst decisions of his life in this matter, and that he accepted responsibility. Biggers responded: "Your apology is on the record. No doubt you made some awful decisions."

Both DS and Backstrom remain on their original bond.

___________________________

UPDATE: Backstrom too. No word yet on Zach, I just heard from someone at the courthouse for the hearing on Zach's motion to dismiss, apparently as of this writing (9:25 a.m. Pacific time), the hearing is still going on.

_________________

I started hearing strong rumors of a plea agreement this morning, and it turns out to be true.  Here's a breaking story from Holbrook Mohr of the AP.  More to come later.  Also, let me be the first to point out -- apparently it wasn't Too Dumb For Dickie.   

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There's a hearing today in Oxford on the latest motions.  Someone in the comments yesterday asked what time -- 10 a.m. -- although if that pre-trial publicity was one-tenth as pervasive and inflammatory as the defense claims, I suspect he wouldn't have had to post a comment on a blog to find that out, he could have just listened to the people shouting in the street.  In any event, it's 10 a.m. -- pack up the babies and grab the old ladies, bring along your PDA or laptop so you can catch all the latest pervasive and inflammatory news, and head on down to the courthouse. 

Speaking of pervasive, here's an affidavit that was filed in court on the 12th along with a motion I linked to in an earlier post, a motion for reconsideration of having the jury be anonymous.  The affidavit was another one of these "this publicity is killing me" things.  There were a number of exhibits, some of which I looked at, but most of which I didn't bother to download.  Because what they were is some press clippings -- looks like P.L. Blake is earning some of those millions Scruggs paid him!  You can look in the link above to the affidavit and see for yourself.  These exhibits were arranged by publication, you know, trying to make it look like there was a lot of them, a whole huge amount of prejudicial, inflammatory, mad dog, foaming-at-the-mouth-and-drooling-on-your-shoes press coverage.  But in truth, it was this stack that was pathetically thin. I'm talking thin like some character in Oliver Twist begging for some more gruel.  I said to myself, is this all there is? Because dang, talk about indictments, that wafer-thin stack was an indictment of the media coverage, all right.  An indictment of the lack of it.  (As always, I note there are exceptions to the lack of coverage, and you folks know who you are).

Also filed was the government response to the latest motions, which was that rarest of things, a brief that literally was brief.  Basically said the motions were old news and there was no need to come up with a new response.

One of the exhibits to the affidavit above was this supplemental jury questionnaire that the defense is asking the court to use -- I intended to write a satire of this thing, when you read it you will see why, but I ran out of time, so you'll have to make due on your own. 

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USA v. Scruggs has had a flurry of motions in recent days that will be argued at a hearing tomorrow, and then you know what Monday is -- last day for plea bargains.  Here are the motions. 

Motion to sever. This motion, which is a second try at coming up with reasons why the trial of Sid Backstrom and Zach Scruggs (Zach also endorsed or joined in the motion) should be separate from that of Dickie Scruggs, contains this interesting passage:

The impaneling of an “anonymous jury” is seldom used in American trials. Any resident who pays attention to the various “trials of the century” that have garnered extensive media attention, or who watches “Court TV,” “Law and Order,” “Perry Mason,” or even “Boston Legal” knows it. Impaneling an anonymous jury denies Mr. Backstrom his right to a jury of known individuals.

I love this! Because I talk about Boston Legal all the time on this blog and how it's my chief source of knowledge about criminal procedure -- which is why everything I know about criminal procedure is wrong.  For example, from watching that show, I would expect the trial to take roughly 35 minutes, and to feature substantial evidence of how global warming has led to a longer growing season for sweet potatoes, along with mandatory stupid closing rants about some politics du jour.

There also is a footnote about how blogs have gone with Scruggsurround Sound, and how this "incredible" level of publicity about Dickie Scruggs is endangering a fair trial for the other defendants, who -- I guess this would be the implication -- are allegedly much less allegedly involved.  Well, even with the number of readers way up, you have to keep some perspective -- the number is small compared to the population of Mississippi, many readers are not in Mississippi at all much less northern Mississippi and readers tend to be hard-core information seekers and those who in some way would never be picked for a jury in the first place because of some self-interest in these proceedings, because of who they work for or because they hold very strong opinions about what is going on.  As far as the level of publicity from mainstream media, with a few exceptions, it's not very high or very aggressive.

One clarification in the footnote: my readership isn't up "15-20 more readers" as it says there, I estimated 15 to 20 times more.  I know, I know, it's just a typo, no biggie, I make them all the time myself. Just sayin'.  Anyway, I place no faith in numbers, could be more, could be less.  As you know, I was happy writing about Katrina litigation and insurance coverage issues, and Scruggs just happened to melt down on my watch.   

Motion to compel discovery.

Dooley Affidavit.

Exhibit A

Exhibit B

Exhibit C (partial transcript of the February 20 motion hearing, featuring testimony by Tim Balducci)

Exhibit D

Motion to reconsider anonymous jury. This motion has a long section about how inflammatory and pervasive the Scruggs coverage has been, and this section, with the exception of a few points I would agree with, is completely wrong. 

Let me put it to you this way: say a doctoral candidate in media studies wrote a dissertation on how the mainstream media in Mississippi has been super-aggressive, coming out with investigative stories every couple days on Scruggs, really blowing the coverage out.  Do you think this person could defend this malarkey against challenge?  Good Lord, wake up and smell the sweet potatoes!  There's hardly been any coverage at all compared to what there should be.   

And that stuff about blog readership and the number of people reading the papers?  Come on, if you think any blog involved in the day to day Scruggs coverage has had 222,000 people reading it in the past few weeks, you need an intervention and a reintroduction to reality.  All those numbers cited? They are all fake.  You can measure stuff with any number of deceptive statistics -- blog sitemeters are notorious for inflating the traffic to make bloggers feel good about themselves. Same with newspaper circulation figures and online numbers. That's why I pay no attention to those kinds of things.  

I will agree with one thing, however, and that is the disgusting nature of some online comments noted in the brief.  I won't publish garbage like that, and most of the idiots who would write something like that don't even try me anymore.  No matter what we think of what allegedly happened, we are still talking about our fellow human beings here, and let's remember -- each of us is capable of good and evil.  That's why we punish evil -- to guard against our tendency to want to do it.

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I'm going to be speaking at Mississippi State University's Insurance Day -- I'm not sure if I'll be speaking on April 1 or April 2, but I'll get back to you soon when I clarify that.  Here's a link to sign up to attend -- there's a list of the speakers. 

It's going to be about the time of the Scruggs trial, if there is one, so I might stop in Oxford to pay my respects.  Unfortunately from the standpoint of doing everything I would like to in Mississippi, this is a very crazy busy time for me at work, so I can't stay long.  I'm sure I'll be back -- maybe to do interviews for that book I've been talking about.

What am I going to talk about? Well, I've been working on an hour-long speech about the nuances of anti-concurrent causation, including a really, really in-depth look at some case law from the '60s . . . . What are you kidding me, I'm gonna talk about Scruggs, of course!! 

Scruggs, Scruggs and more Scruggs, a veritable Scruggs-o-rama, a Scruggs-a-thon, a Scruggstacular, a Scruggsation.  And Hood.  Oh yes, I am definitely gonna talk some Hood.  Jim Hood, if you show up there I can do that interview with you I've been wanting to do -- I am gonna have a tape recorder with me!  And about Katrina litigation, yes indeed, I will talk about all that. 

Look, I like intellectual discourse as much as the next person, I like nuances, and mental challenges and all that, or I wouldn't be an insurance coverage litigator in the first place.  But let's face it, I'm also the guy who came straight off the farm in North Dakota and went down to Phoenix to be a crime reporter, driving around with the Crips and the Bloods and all, and I even got yelled at by John McCain a time or two (that was after I left the crime beat, didn't see much of J-Mac in the projects). So what I'm trying to say is I like excitement and sensationalism too -- wouldn't have been much of a crime reporter if I didn't -- and we're gonna talk about the sensational stuff, the really good stuff.  That's what we're gonna talk about.  But if folks want to ask questions, I can leave time for that.  I have only one requirement -- don't make fun of my accent.

If you have a particular topic or event or issue you'd like me to talk about, tell me in the comments or in an e-mail.  I can't promise anything, but I will consider requests. 

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Read this AP story on Jim Hood saying he will offer the full resources of his office to local District Attorneys if they decide to investigate and prosecute those connected to the Scruggs scandal.  No one has any plans to do so, of course.  Question: does this seem at all to you like someone saying that, if their favorite song isn't the next one on the radio, it is a sign from above they don't need to get more exercise or put more in the collection plate in church?

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Look, I'm not saying this just because I'm on the advisory board, and I'm not saying this just because I have this post up about legal blogging, and I am not saying this just because I am as amazed as anyone that a behemoth like LexisNexis is beginning to understand the interactive possibilities of free internet content.  I am saying it because the Lexis Insurance Law Center is turning into a very good product, a primary source for insurance news, opinion and perspective.  There's some pretty good stuff there, and it's getting better all the time.  It's going to take some convincing on my part to get folks to turn loose and "let their freak flag fly," as the comment to my ILC post says, but I am nothing if not relentless. 

UPDATE:  Thanks to Walter Olson at Point of Law for the link to my ILC post, and to Kevin O'Keefe at Lexblog for the same. 

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Here's another of those great Rebecca Mowbray stories in the Times-Picayune on Katrina legal developments in Louisiana.  This story discusses two different schools of thought among courts in the state when analyzing a common factual scenario -- someone had both a homeowners policy and federally backed flood insurance when Hurricane Katrina and Hurricane Rita damage happened.  The majority view is that any payments accepted under the National Flood Insurance Program act as an offset to claims under the homeowners policy; in other words, that there is only so much damage, and the acceptance of the flood payment is an acknowledgment that that dollar amount of loss was not due to wind, and therefore is not owed under the homeowners policy.

The minority point of view is that the two are separate contracts and acceptance of flood payments does not prejudice any rights under the homeowners contract -- which allows for a double recovery, usually a position against public policy in insurance.  The intellectual attraction of this second position is a bit hard for me to fathom -- it seems sort of like Eliot Spitzer arguing he is operating under two different sets of obligations in his relationships with his wife and his prostitute.

Federal judges in New Orleans, in the Eastern District of Louisiana, have followed this first view -- that flood payments act as an offset.  Judges in Lake Charles, in the Western District, have gone the opposite way.  This excerpt from the story gives you a pretty good idea of what is going on:

A string of rulings from different judges last spring largely went in favor of the insurers' position that the flood and wind policies should work in tandem, such as an April 13 ruling for Allstate in the case of New Orleans homeowner Edward Esposito.

"Esposito is entitled to recover in this lawsuit any previously uncompensated losses that are covered by his homeowners policy and which when combined with his flood proceeds do not exceed the value of his property. Esposito is not entitled to obtain a windfall double recovery by now recharacterizing as wind damage those losses for which he has already been compensated by previously attributing them to flood," Judge Jay Zainey wrote, agreeing that a flood payment was tantamount to an admission that damage was caused by flood.

In the consolidated Rita litigation against State Farm Fire and Casualty Co., plaintiffs attorney Jennifer Jones sought to make a pre-emptive strike on behalf of her 125 clients. In motions filed May 1, Jones asked Judge Patricia Minaldi in Lake Charles to declare that it would be inappropriate for State Farm to receive a credit for the amount of money her clients collected from the flood program.

Minaldi largely sided with Jones, saying that unless State Farm had expressly stated in its policy that it would reduce the value of the homeowners policy in the event of a flood, it couldn't use the existence of a flood to limit its obligations under the homeowners policy.

"The plaintiffs entered into two distinct contracts -- the homeowners policy and the NFIP policy," Minaldi wrote. "The plaintiffs paid premiums under both policies in exchange for separate coverages. . . . State Farm is therefore obligated to pay for losses which are attributable to wind damage irrespective of other policies or coverages."

By the way, here's a post I wrote last year on one of these cases, Esposito.

Now, for this next part, bear with me.  Because the Mowbray story does not give a specific name or case identification for these St. Charles cases, I had to search blind for them on PACER.  I found three of the Judge Minaldi rulings, but each had no actual link to the memorandum decision in the case, so I don't know what it said.  So I found, on Westlaw, a case called In re Cameron Parish Rita Litigation, WL 2066813 (July 13, 2007), which must be one of the cases mentioned, because it, like the cases in the story, featured Judge Patricia Minaldi, attorney Jennifer Jones and State Farm.

Because I don't have an Adobe file from PACER, I can't link to that.  I am instead going to risk the wrath and boredom of the audience by citing a considerable portion of the Cameron Parish decision ripped from the Westlaw case, the portion analyzing why there should be no offset of flood money.  You can read this, you can skim it, you can throw your mug of decaf coffee in a rage, you can skip it entirely, but here it is (I boldfaced the portion that seems most important): 

The plaintiffs have filed the instant motion to prevent State Farm from asserting that, if coverage is owed under a homeowners policy, recovery should be reduced by the amount of NFIP proceeds already received. The plaintiffs argue that such an “NFIP offset” amounts to a “corporate subsidy” to State Farm by the federal government. On the contrary, State Farm contends that the purpose of property insurance is indemnification-e.g., restoring the insured to the position he occupied prior the loss. If the court does not permit a set-off for NFIP benefits, State Farm argues that the plaintiffs would obtain double recovery.

The issue of an NFIP offset has been considered by a number of courts throughout the Gulf South in the wake of Hurricanes Rita and Katrina. The wind versus water scenario in Cameron Parish, however, is more factually similar to the Katrina cases arising on the coast of Mississippi than those resulting from the canal breaches in New Orleans. As such, the decisions of Judge Senter in the Southern District of Mississippi are particularly instructive.

In Tejador v. State Farm Fire and Casualty Co., No. 1:05cv679, 2006 WL 3257526 (S.D.Miss. Nov. 6, 2006), Judge Senter held:

[T]he Plaintiff's actual loss is the maximum recovery he may receive from all applicable policies of insurance for both his dwelling and personal property. Insurance contracts insure only against covered losses, and it is a basic proposition that “[i]nsurance law is based on the principle of indemnification and is aimed at reimbursement. The benefit derived from insurance should be no greater in value than the loss.” These well-established principles of indemnity and insurable interests apply to all insurance claims under policies that are not “valued policies.” *3 Id. at *2 (internal citations omitted) (emphasis added).

In two subsequent decisions, Judge Senter reaffirmed that the principle of indemnification does not apply to valued policies.FN2 See SIMA/Signature Lake, L.P. v. Certain Underwriters at Lloyds London, No. 06cv186, 2006 WL 3538862, *2 (S.D.Miss. Dec. 7, 2006); Glover v. Nationwide Mut. Fire Ins. Co., No. 06cv85, 2006 WL 3780858, *1 (S.D.Miss. Dec. 21, 2006).

FN2. It is undisputed that the State Farm policies at issue in this case are valued policies.

Judge Senter's position is supported by Louisiana's Valued Policy Law (VPL), La.R.S. 22:695. The VPL provides, in pertinent part:

Under any fire insurance policy insuring inanimate, immovable property in this state, if the insurer places a valuation upon the covered property and uses such valuation for purposes of determining the premium charge to be made under the policy, in the case of total loss the insurer shall compute and indemnify or compensate any covered loss of, or damage to, such property which occurs during the term of the policy at such valuation without deduction or offset, unless a different method is to be used in the computation of loss.... La.R.S. 22:695(A) (emphasis added).

The VPL very clearly states that, in the case of a total loss, the insurer is bound to indemnify the insured for any covered loss without deduction or offset.

Furthermore, it is well-established that an “insurance policy is a contract between the parties and should be construed by using the general rules of interpretation of contracts set forth in the [Louisiana] Civil Code.” Louisiana Ins. Guar. Ass'n v. Interstate Fire & Cas. Co., 630 So.2d 759, 763 (La.1994). Article 1985 of the Civil Code states, “Contracts may produce effects for third parties only when provided by law.” La. C.C. Art. 1985. Comment (b) to article 1985 explains, “Because of the ever-increasing importance of third party-beneficiary contracts, this Article provides that contracts bind only the parties unless they have lawfully stipulated otherwise.” La. C.C. Art. 1985, cmt. b (emphasis added).

In this case, the plaintiffs entered into two, distinct contracts-the homeowners policy and the NFIP policy. The plaintiffs paid premiums under both policies in exchange for separate coverages. Accordingly, State Farm obligated itself to indemnify the plaintiffs for any covered losses under the homeowners policy, while the WYO companies, as agents of the federal government, obligated themselves to pay for flood losses. In the absence of an express stipulation, this case presents no occasion for State Farm to benefit as a third party to the NFIP policy.

State Farm is therefore obligated to pay for losses which are attributable to wind damage irrespective of other policies or coverages. Of course, whether the plaintiffs are entitled to additional (or any) benefits under the State Farm policy is a question of fact which depends upon, among other factors, the apportionment of loss due to wind, the value of the home, and the extent of wind coverage already paid. 

The plaintiffs will not be estopped from making a claim against their homeowners policy. However, where the flood insurer has settled an insured's claim by paying policy limits, the insured may be estopped from recharacterizing, as wind damage, losses for which he has accepted flood insurance compensation. See SIMA/Signature, 2006 WL 3538862, at *3.

Accordingly, the plaintiffs' motion for partial summary judgment on the inapplicability of the NFIP offset will be granted. Payments already made under the NFIP for flood damage shall have no bearing on the plaintiffs' recovery for segregable wind damage under the State Farm policy.

This is not quite the way the story said -- Judge Minaldi did allow that, if the NFIP policy paid its limits, that loss could not be claimed as wind damage.  I wonder why the distinction, however, between a flood policy paying its limits and a flood policy paying half its limits -- although there are two contracts, there is only one set of facts. Either the flood damage was accurate and the acceptance of flood payments was legitimate, or the opposite is true.  If the former is true, does that not seem to preclude recategorization as wind damage? 

Incidentally and finally, I note that Judge Minaldi found the policy's anti-concurrent cause provision ambiguous, a position which the Fifth Circuit has since reversed in Tuepker v. State Farm.  As you might expect, having seen Judge Minaldi quote Judge Senter at length, she followed the similar approach he used toward anti-concurrent cause in the Tuepker and Leonard cases, among others.  As I argued, and I think as I showed fairly decisively in my October 2007 article on anti-concurrent cause language in Appleman's Critical Issues in Insurance Law, this view of anti-concurrent cause language is somewhat wrong, although analytically it could have been right with just a little tweaking.  By saying that, I do not mean to put these judges down, it is merely a difference of opinion on an intellectual matter. I don't know much about Judge Minaldi, but Judge Senter is a very fine judge -- it's just that, at least in the instance of anti-concurrent cause, he was a victim of false doctrine.

One correction -- I originally wrote St.Charles instead of Lake Charles.  Thanks to DCromeans in the comments for the heads up.

Posted By David Rossmiller In Industry Developments
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This probably makes little sense to non-bloggers, but I have always had a favorable feeling toward Zach Scruggs because of his work on the Scruggs Katrina Group blog.  I thought he did a creditable job there -- the blog was not all it could have been, but then again, he had other things to do.  I actually thought they should have put some professional writer to work on it with him and make it into a Katrina Central from the policyholders' perspective.  But on second thought, the media was generally so accepting of the SKG spin that spending extra effort or funds on the blog probably would have been unnecessary as a public relations tool. 

A couple times on the SKG blog Zach responded to something I had written, and he, or someone else doing work on the blog, also put Insurance Coverage Law Blog on the blogroll.  Despite the fact that even pre-indictment I often satirized or criticized Dickie Scruggs, I stayed on the blogroll -- this could have been an oversight, but in any event, no one eradicated my link, and it would have been quite simple to do so.  Might sound silly to you, but I thought Zach was a good blogger, I had respect for him because of it and I still do.

So in reading Zach Scruggs' reply brief yesterday in USA v. Scruggs -- the reply to the government's response to his motion to dismiss based on supposed false testimony to the federal grand jury by Tim Balducci and an FBI agent -- I found myself wishing I could buy at least some of what the brief was peddling.  But that didn't work out so good for me.   The following passage is a good example of why:

Balducci did not address Zach Scruggs and Sid Backstrom on November 1, 2007, saying that “you guys are paying for it.” Resp. Br. at 5 (citing the grand jury transcript). Such a direct remark to Zach Scruggs as he was heading away from Balducci to the door of Sid’s office on his way out, referencing Zach Scruggs’s direct “payment” for something, would materially alter what was said. It would make it more possible for the grand jury to believe that Zach Scruggs heard this statement and should have responded with a question. But that is not what Balducci said. He actually said, “…we’re paying for it.” (emphasis added) That comment may or may not refer to Zach Scruggs, and may or may not have been directed to Zach Scruggs. Agent Delaney’s version leads to the inference that it was said to, and referenced some action by, Zach Scruggs. That is the ultimate question, not an assumption that the Government can falsely graft into Mr. Balducci’s actual words on November 1. Again, the Government acted improperly by allowing this false statement to stand.

It is probably easier to understand my theorizing about property insurance causation and the meaning of anti-concurrent cause language than it is to parse out this paragraph, but I attempt to do so at some length below.  To borrow a metaphor I used in a recent court brief, the arguments in Zach's motion and reply brief do not appear to be merely grasping at straws, they seem to be imagining straws to grasp at.  

Take a look at another paragraph, produced with the subheading used in the reply brief:

2. The Government’s alleged “clarification” of Balducci’s false testimony did not cure the lie

Immediately after Balducci testified that he told Backstrom and Zach Scruggs, “you’re paying for it,” the Government asked, “Is it possible that you might have used the term sweet potatoes again referencing the amount of money involved?” Balducci responds, “I think I did.” Resp. Br. at 3 (citing grand jury testimony). But this testimony merely seems to indicate that Balducci used the term “sweet potatoes” again when he was making the “we’re paying for it”  comment. It does not plausibly “clarify” that Balducci never referenced in Zach Scruggs’s presence a payment of $10,000 to the judge at the judge’s request—a claim that Balducci prominently and falsely made to the grand jury not once, but twice, without any correction by the Government.

The Government can only mount this tepid defense of its grand jury questioning in the first place because the Court and all the parties now have transcripts of the November 1, 2007, transcript, and can follow along with the Government’s explanation of what it was allegedly trying to do. But a grand juror hearing Balducci’s false testimony would not—indeed, could not—understand that Balducci had earlier made the “sweet potatoes” reference only one time, and did so instead of (in his own mind, apparently), not in addition to, his allegedly specific reference to the $10,000. The Government knows that given Balducci’s twice-repeated and serious misstatement, it should have asked him to clarify that while in Zach Scruggs’s presence, he never referenced a payment of anything—whether of money or of something else of value, whether of $10,000 or any other amount—to Judge Lackey.

Finally, the Government never even attempted to correct Balducci’s false testimony that he told Zach Scruggs that Judge Lackey wanted something (whether money, sweet potatoes, or anything else) in exchange for and in order to enter his “amended” order. It never corrected Agent Delaney’s false testimony that Balducci told Zach Scruggs the judge had complained about Balducci owing him $10,000 under an “agreement.” These misstatements go to the core of what the Government now admits is the only evidence the grand jury heard regarding Zach Scruggs’s alleged knowledge and agreement to bribe Judge Lackey.

The sophistry of these arguments is just a little more than I can stomach.  Consider this: in the November 1 transcript, a copy of which is at the end of this post, you can see for yourself on pages 19-30 that Zach Scruggs is an integral part of an extended conversation about a draft order from Judge Lackey.  Not once does he question why he is in possession of such an order, nor does he apparently see anything wrong with it.  In fact, incredibly, on page 28 he takes time during the discussion to denounce opposing counsel as unethical: 

Well, shit you know, this is the proper thing to do, uh, uh, it, it's just uh, you know, (UI) it's just so unprofessional, uh, what these guys have been up to, and unethical. Attaching all these uh, things that they're ciphering through and God knows what GRADY's talkin' to STATE FARM lawyers about. Hey, make this, you know, you got so and so, make that, buy that case we can ... get all of it.

Now, if you read this section of the transcript, it appears that Zach Scruggs did not know exactly what was meant by the Jones v. Scruggs case being stayed while it was sent to arbitration.  But he is paying attention to what is being talked about, including Balducci's statement that he doesn't know if he will have the same "stroke" with another judge if Lackey retires.  And he was in the room during this exchange:

Zach Scruggs:  It could be .. (UI).

Balducci: God only knows. (pause) Urn, the other piece of this puzzle I hadn't told you yet is uh, get it how you want it because I've got to uh, I've gotta go back for another delivery of uh, another bushel of sweet potatoes down there. So. Because of all of this that has come up.

Backstrom:  Mm-hmm.

Balducci: So get it right. Get it how you want it 'cause we're payin' for it to get it done right.

So to reiterate what we've talked about in other posts, the hope of the Zach Scruggs defense team is that it will seem as if these statements made by Balducci were directed only to Backstrom, because the word "you" is used, and elsewhere in the transcript Balducci had used the word "ya'll" (that's the spelling used in the transcript) to refer to "you guys."  One such instance of the use of ya'll is on page 20:

Balducci: Addressing that recent filing and he, he wanted me to approve it. Well, the problem is, I didn't know, 'cause I didn't, I didn't have the institutional knowledge of the case to really know if it was ok or not. So I wanted ya'll to look at it and tell me if it's ok and if not,
make whatever edits need to be made to it ...

Does this seem like it gets Zach off the hook to you? It doesn't to me. Balducci is asking Backstrom and Zach to edit the judge's order -- in what alternative reality is that exculpatory evidence, even if the ya'll/you dichotomy has any significance in this conversation?

If any event, if you do a search of the word ya'll in the document, you will find there is not another use of the word while Zach is still in the room.  However, on page 22, there is this use of the plural you when Balducci is speaking of both Zach Scruggs and Backstrom, and possibly others:

Balducci: Or re, I don't know what he's trying to say.

Backstrom: Uh, yeah, maybe. Maybe.

Balducci: Do you want, I mean, do we, I mean we can do whatever we wanna do if you wanna clean that up any, if you think it ...

Zach Scruggs: I don't know how to clean it up other than, uh, 'cause I don't know what he's trying to say -- I mean it's not bad, but I'm not sure what his intent was.

Here's another one, on page 24:

Balducci: ... that's all I'm saying is you need to look, get uh, not for purposes of getting this order entered, but you probably all just know anyway from your lawyers what GRADY has filed, but urn, I mean the, I guess the the issue ...  

Here's another, one page 26:

Balducci: Yeah. No, I agree. I think the proper way to approach him would be let's get this order entered, and then if you wanna go back to the well later and get it, get an order sealing the file or closing the file or whatever, we can do that later.

So in light of this, jump back up a little bit, to the "sweet potatoes" passage above. If this you/ya'll dialectic is real in this conversation, you can see that the speaker immediately before Balducci says he's going to deliver some more sweet potatoes is Zach Scruggs, and Balducci's use of "you" in "I haven't told you yet" would logically be directed to Scruggs, not to Backstrom, if it indeed was directed to only one of them. Then if this is so, why would we suppose that Balducci's next use of 'you," in "get it how you want it because we're payin' for it to get it done right," would refer to Backstrom and not Scruggs, if Balducci's use of the word was intended again to address only one of the two? 

The other thing the reply brief tries to sell is that the "sweet potatoes" comment is not equivalent to a statement that Lackey wanted another $10,000, because that is not explicitly stated.  This is supposedly important because Balducci testified before the grand jury that he had told Backstrom and Zach about the extra payment, and that this means Balducci lied and that the government misled the grand jury.  The implication of this argument is one that is pretty absurd, as the government has pointed out: that Zach Scruggs thought Balducci was actually going to deliver sweet potatoes to Lackey.  Another possibility -- the argument that Zach just didn't hear this stuff at all because he was leaving the room or distracted while he was leaving the room -- is more plausible, but collapses under the weight of the evidence of his previous participation in the conversation.  

Ultimately, therefore, neither the motion nor the reply brief are persuasive, I regret to say. 

Finally, I've published them before, but here for your convenience are Zach Scruggs' initial motion, the government's response, a copy of the November 1, 2007 recording made by Balducci at the Scruggs Law Firm, a copy of Balducci's testimony before the grand jury, and a copy of FBI Agent Delaney's grand jury testimony.     

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On Friday I linked to a post at Law and More that discussed a recent American Lawyer article on Dickie Scruggs.  I gave my quick take on Scruggs, without having read the article, but later that day I had a chance to read the story, by Susan Beck.  I thought this article was very well-done, but I think it rushes by some of the more significant hypotheses one can frame about Scruggs. (Here's a direct link to the Law and More post, and here's a link to the American Laywer article on Law.com).

I also read the long comment to my Friday post -- and I know who this person is and that he knows Scruggs very well.  He believes Scruggs is a sharp businessman with a law license -- not a great lawyer by any means -- a guy whose interest in helping prosecute a suit against tobacco companies coincided with other interests on both sides.  As others, notably including Walter Olson, a senior fellow at the Manhattan Institute and author of the excellent book The Rule of Lawyers, have pointed out, state attorney generals and lawmakers liked the idea of what is in essence a big tax on tobacco companies that didn't need to pass legislatures or Congress.  And the settlement benefitted Big Tobacco -- it created barriers to entry of the market that protect existing companies against competition. As the comment said, "the industry wanted the deal for protection, and they have it." 

The Beck story does an excellent job of cataloging some of Scruggs' failures, and it's ultimate conclusion seems to be that Scruggs is an idealistic guy with often poor judgment in case selection who scored big because of a few lucky confluences of events.  If his reputation was ever deserved, the story seems to say, it is behind-the-times -- sort of like an NFL lineman who keeps getting voted to the All-Pro team long after his skills have degraded to the point he is just an above average player.

Maybe.  But this theory fails to recognize that Scruggs was in large part responsible for creating a hostile legal climate for insurance companies in Katrina litigation, and it fails to account for his Katrina success long after his "prime" was supposedly over.  And I'm not sure I see Scruggs as idealistic as that term is commonly used -- opportunistic might be a better word, opportunistic in looking for a good storyline and a good opening to make money.  Also, if Scruggs was in large part the product of luck and unique circumstances, that would place him in the same boat as the rest of humanity -- whom could we look at and say this is not true?

I think this excerpt from the Beck story, however, is a significant insight into Scruggs:

Over the years, Scruggs has attempted to paint himself as a different breed of plaintiffs lawyer, one who is more principled and discerning. He has criticized lawyers who rush to file securities lawsuits after a company's stock drops. "Those are piggyback cases, not primary kills," he told Chief Executive magazine in June 2002. "I try to take on companies that have successfully avoided liability but shouldn't have. I don't want to get there after the antelope has been brought down."

In addition to eschewing securities suits, Scruggs has also opted not to take a seat on the lucrative pharmaceutical litigation bandwagon. Scruggs, it seems, isn't eager to join a case where he can't be the leader. "I'm probably not the best person in the world to work with others on a coequal basis," Scruggs told The American Lawyer in 1996. "I like to make decisions and call the shots."

I think you can take this a step further and examine Scruggs' career under the following hypothesis: did he have any legal success where he was not able to manipulate the rules? Some would say the entire field of tort liability that Scruggs plays in is about changing the rules or altering them to suit the social and policy goals of trial lawyers, but I do not mean "manipulate" in the broad context, I mean it in the context of the immediate case or cases at hand.  What success does Scruggs have where he was unable to manipulate the outcome through forum selection, publicity, and, shall we say, other means?

Don't get me wrong, I don't discount the Beck hypothesis totally.  I merely want to test it against other possible hypotheses.  In favor of the Beck theory, I would note that early on in the Katrina litigation, as noted in the Lee Harrell deposition I have often referred to, Scruggs spoke of Katrina cases in the same terms as tobacco litigation -- he had "insiders" and was going to work the cases just like he and Mike Moore had worked the tobacco litigation.  A complex man, one whose story is difficult to tell, and one on whom the last word has certainly not been written, here and elsewhere.

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I wasn't sure what was going on in this story in the Clarion-Ledger, something about lawyers for William Roberts Wilson filing a motion seeking sanctions against Scruggs is about all I caught.  So a reader provided me with a copy of the motion filed in Hinds County March 4, and it becomes clearer.  Here's a copy of the motion.  

Recall that this is the case in which Scruggs' former partner in asbestos lawsuits sued Scruggs over attorney fees he said Scruggs owed him but never paid.  In that case, Wilson v. Scruggs, Judge Bobby DeLaughter presided, and Joey Langston, who was counsel for Scruggs near the end of the long case along with Tim Balducci, has pleaded guilty to conspiring to bribe DeLaughter with the offer of a federal judgeship.  Balducci, in a February 20 hearing in USA v. Scruggs, testified that he, Scruggs and Langston were in on the bribery plot. 

DeLaughter, by the way, continues on the bench and denies wrongdoing.  Langston, you remember, has said in statements before the court that he edited or wrote judicial orders in the case, and this is the case in which Zach Scruggs famously said you could write briefs on a napkin and the judge would still rule in your favor.  See, for example, this Clarion-Ledger story from January, which contains this paragraph:   

In a May 29, 2006, e-mail obtained by federal authorities, Zach Scruggs told his father's attorney in the case, John Jones of Jackson, that "you could file briefs on a napkin right now and get it granted." Jones responded in his e-mail, "You have misconceptions about Joey and Tim that I hope ultimately do not need to be explored. ... If we win, it will be because the law says we win."

(Langston and Balducci were also acting as counsel for Scruggs in the case at that time).

Two things are amazing to me about the motion: one, that the case is somehow still open, and two, that DeLaughter is still presiding over it.  As the motion says, the second one must be a mistake, because DeLaughter earlier recused himself from any case Scruggs was involved in.  Probably DeLaughter didn't even know this case was still alive, and I'm having a hard time figuring out why it would be, but it apparently is.  The first paragraph of the motion says that the case "is presently an open case on the docket of the First Judicial District of Hinds County, which has never had any final judgment or order filed closing same."

The motion seeks to have DeLaughter and all judges of the district recused from the case -- DeLaughter for obvious reasons, and the others presumably because their fairness would also be questioned as colleagues of Judge DeLaughter, although this is not explicitly stated in the motion.  The motion also says Wilson will seek sanctions against Scruggs in light of the testimony of Balducci and Langston.  I would guess we might also see some kind of action initiated against Langston, who still has a pile of dough. 

The motion is followed by exhibits.  The first is Langston's plea agreement, and the second is a partial transcript of testimony by Balducci at the February 20 hearing, where he was being questioned by Scruggs' lead attorney, John Keker. I thought Balducci held up pretty well to some tough questions, see what you think.

UPDATE: Reading through my Bloglines feeds this morning, I saw this post by Jane Genova about an American Lawyer article on Dickie Scruggs.  I'll check when I get to the office to see if we have a subscription to American Lawyer -- working from home, I wouldn't have a clue if we did or what the online password is -- so I haven't read the story. 

But Genova's description of its working theory is that Scruggs is an average lawyer with above average entrepreneurial acumen.  That he got lucky with asbestos and then hit the jackpot with tobacco, but he got crazy and tried to touch the sun and, well, you know the rest.  

If I have given a fair approximation of what the American Lawyer story says, this is the wrong theory about Scruggs.  I have heard from a number of accomplished lawyers in Mississippi that Scruggs is no great litigation attorney in the sense of traditional skills.  That does not lead me to the conclusion that Scruggs is not a great lawyer  -- to me, a great lawyer is one who gets the results he set out to get.  With one qualifier -- within the rules.  To some degree, you look at any part of Scruggs' career, he was either changing the rules to fit his needs or, some would say, breaking the rules.  The story of Scruggs is not one of a guy who went on one march too far, it's that of a guy who operated within a system, partially of his own creation, partially adapted from existing structures, that protected and supported his aims, because that system stood to benefit if he did.  How things were done, nobody really questioned that much.

Another thing cannot be overlooked.  Scruggs, better than just about anyone I have ever seen, knew how to play the media. I am sensitive to this because I used to be a professional journalist, and I know from the inside the strengths and weaknesses of media people.  To put it bluntly, he was extraordinarily gifted in coming up with a story line that the media would accept without question, because the reality was too complicated and time consuming for them to get to the bottom of.  Better to take the surface story, which was easy to digest and regurgitate.

That's only part of the story -- the rest will have to wait for my book. Publishers, sounds like a good read, doesn't it?

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In the Scruggs bribery case, Judge Biggers granted the government's request for an anonymous jury because of concerns of potential harassment and intimidation. Here's a copy of his order, and here is an excerpt, which I have broken up into paragraphs for easier reading:

The court also finds that element (1) above exists in this case in that extensive publicity has been paid to this case thus far and, after the trial begins, publicity will likely increase and the names and addresses of the jurors sitting on the case would be enhanced and more likely cause attempts to contact the jurors by news media or friends or acquaintances who do not know the proper role for juror conduct, and therefore more pressure would be brought on the jurors if their names were in the public news media during the trial.

There is also consideration that the jurors would be subject to intimidation, pressure, and approaches by agents of the defendants. That is the tactic that has been alleged by the government to have been used with the judges in this case and the 404(b) case, according to the testimony before the court at this time.

In the case of U.S. v. Edwards, 303 F.3d at 614, the court pointed out that the defendant had numerous operatives and allies who might have attempted to influence the jurors, and that circumstance was an element to be considered along with others that existed in justifying an anonymous jury.

Also filed today was the government's response to Zach Scruggs' motion to dismiss the indictment. Here's a copy.  The response casts the motion is a very poor light, trying to make it look like a desperate and somewhat silly attempt to nitpick over parsing of the phrase "sweet potatoes." 

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I had not seen this in my readings of the government evidence in the Scruggs case, but this story by Alyssa Schnugg of the Oxford Eagle is about an alleged conversation between Tim Balducci and Judge Lackey concerning a bribe in a second, unrelated matter, a DUI manslaughter case.  A reader just e-mailed it to me, and I wanted to get it up on the site.  Great story, really well-written.

UPDATE:  As a reader noted below in the comments, the link already went bad.  The Eagle has some kind of funky pre-Industrial Age thing going on with its website, so apparently you can't get permalinks. I've asked the Eagle if I can get a better link, until then I guess you'll just have to imagine the story for yourself.    

SECOND UPDATE: Let's try this link and see if it works.  Thanks to Jay in the comments.

THIRD UPDATE: I'm informed by a reader with a far better memory than I have that this is in one of the trascripts I posted on February 26.  Here's a copy of the transcript, and here's a link to the post of that day. The first copy of the transcript is partial, [see below for an update, I was wrong, this second transcript is not the same thing] here's a later full transcript filed by the government that has the entire recording of Balducci's foray into the Scruggs Law Firm after he was flipped by the government.

FOURTH UPDATE: Thanks to NMC in the comments, never mind the second transcript I posted, it's a different Balducci conversation.  As NMC says, it's tough to keep it all straight -- after a while one sweet potato begins to look like another.

. 

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You will recall the False Claims Act lawsuit by the so-called "whistleblower" Rigsby sisters -- the ones who received no-show (or at least "very little show") jobs at $150,000 a year from Dickie Scruggs while being material witnesses in Katrina cases prosecuted by Scruggs, and while being called before a state grand jury as star witnesses.  Why these facts are not endlessly repeated, as they should be, in any press story about the Rigsby sisters, is beyond me. Nothing personal against them, but in contrast to the days when they were feted on such shows as ABC's 20/20, they have lost all cachet and nearly all their credibility.

Ex rel. Rigsby, the False Claims Act lawsuit they filed, under seal, in April 2006 with Scruggs at the helm, is now in the category of Forgotten But Not Gone.  Here's the latest story on this relic, one of the last Katrina dinosaurs still stalking the Earth.  We'll get back to the story, by Anita Lee in the Sun Herald, in a minute.

Some in the U.S. Attorney's Office for the Southern District of Mississippi wanted to tell the judge presiding over the case, Robert Walker, that the government would not intervene in the lawsuit -- the evaluation was that there is no evidence of what the lawsuit alleges, massive insurer ripoffs of the National Flood Insurance Program during Katrina claims adjusting.  Others in the office, however, and I suspect these are the people continuing to play around with the federal grand jury regarding similar allegations, opposed this, and the result was the U.S. Attorney's Office didn't give a clear answer to Walker's directive to say one way or another whether the government would intervene. 

The answer was a half-hearted "not at this time."  The divisions within the U.S. Attorney's Office over this lawsuit reflect a more fundamental and troubling reality: the office has been messing around with a grand jury for, what, two years or more and has brought no charges against any insurer.  Surely by this time, the government has had time to work up a case, if there is one.  Is it that no one has had the guts to tell Trent Lott, Gene Taylor and others that there is no "there" there?  How many millions have been expended on document reviews and the like in this case, and what is there to show for it?  When will the FOIA requests start bringing this to light? 

So back to the Anita Lee story.  The version I have linked to has today's date, but it appears to be the same as the version I saw yesterday. The story says this:

Ocean Springs whistle-blowers are dropping three major insurance companies from a lawsuit filed over Katrina claims handling, choosing to focus on State Farm insurance companies as they press for damages under the federal False Claims Act.

Attorneys for the whistle-blowers, sisters Cori and Kerri Rigsby, expect a federal judge to approve the request that Allstate, Nationwide and USAA be dismissed from the lawsuit.

"We wanted to focus our case and make it as detailed as possible against State Farm," said Anthony DeWitt, a Missouri attorney who specializes in False Claims Act cases. Such cases allow employees who uncover fraud against the government to file lawsuits.

Translation: let's contract the lawsuit to conserve resources -- massive civil lawsuits consume money like you're throwing shovelfuls of dollars into a furnace; our main man, Scruggs, got whistled for an alleged technical foul and is on the bench; the government is treating us like we forgot to put on deodorant; this thing is just sittin' here like a '73 Plymouth on blocks; and you know what? I think we got nothin'.  So before we turn this thing out to pasture, let's go back to the well one more time and see if we can get some juice out of State Farm. What, you got a better plan?

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As I've said before, work is the curse of the blogging class.  Time is limited for blogging these days, but let's see what I can squeeze into the blog in the next few days.

This Mike Kunzelman story is very interesting: former Louisiana AG Charles Foti, a prosecutor of almost mythic ineffectiveness and Mr. Magoo-like short-sightedness, is being second-guessed on at least two fronts after being defeated for re-election last year: his successor wants to dump some of his "curious" lawsuit choices, and insurers are suing the state to challenge Foti's hiring of private lawyers to prosecute a lawsuit on behalf of the state.

Louisiana’s new attorney general says he inherited some “curious” cases from his predecessor, Charles Foti Jr., who teamed up with campaign donors on his way out of office to file a pair of multimillion-dollar antitrust lawsuits.

Attorney General James “Buddy” Caldwell also inherited a case in which Foti is accused of illegally contracting with some of the same private lawyers to represent the state in a lawsuit involving the Road Home rebuilding program.

Caldwell, through a spokeswoman, said he is reviewing Foti’s lawsuits and contracts with private lawyers and hasn’t decided how many cases to keep. He wouldn’t identify the cases of interest, but said they were filed during Foti’s final days in office last month.

“There has been documented curious official behavior on the part of the previous AG’s Office that has not gone unnoticed. It’s not going to take a Catahoula Cur to find the trail,” he said in a statement, referring to the official state dog.

For me, the following was the heart of the story:

It’s not unusual for private lawyers to represent the state without billing hourly rates or reaching an agreement on contingency fees, said Dane Ciolino, a law professor at Loyola University in New Orleans.

“It’s essentially the attorney general giving them a fishing license and they don’t know what size fish they’re going to catch,” said Ciolino, who teaches a course in legal ethics.

. . . .

“Unfortunately, in Louisiana, we have a long history of attorney generals doling out litigation to friends and contributors,” Ciolino said.

It's not just in Louisiana, though: same thing in Mississippi, and not just Under the Hood -- Mike Moore also favored the tactic.

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In marked contrast to the bellicose approach of Florida officials under Gov. Charlie Crist, Louisiana, in the down insurance market on the southern Coast after Hurricane Katrina, decided on the soft sell.  In one way, you could say, Louisiana didn't have a lot of choice.  Unlike a big, populous state such as Florida, Louisiana like most states has little leverage with insurance companies -- if it threatens to shut them out or impose onerous or stupid regulations, insurers don't lose all that much by packing up their suitcases.  When you're the fourth guy off the bench on a basketball team, your threats to quit if you don't get your way are insufficiently persuasive.

However, reality often has little to do with the course of conduct of politicians and their sort, so Louisiana could have followed the path of Florida.  But it didn't.  And there are indications that Louisiana's relatively hands-off approach, combined with a relatively small state subsidy for insurers, is producing positive results for consumers.  This Becky Mowbray story in the Times-Picayune says that private insurers are beginning to buy up policies formerly held by the state-run insurer, the laughably corrupt Citizens Property Insurance Corp., to the point where the state insurer will soon hold less risk than it did before Hurricane Katrina struck.  Although she took deserved heat for her handling of the Katrina aftermath, praise is in order for former Gov. Kathleen Blanco, who backed the softer approach, and to other state officials including Insurance Commissioner Jim Donelon. 

Meanwhile, Florida continues its nostalgia tour, reaching back to the dark ages of economics for inspiration -- central planning, price controls, table-pounding tirades and harangues by the state's highest elected official and many more embarrassing features.

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Zach Scruggs yesterday filed a motion seeking to dismiss the charges against him (here is a copy).  If this were granted, it would be huge -- with Zach out of the case, much of the government's leverage over Dickie Scruggs would disappear, and chances of a plea agreement with the elder Scruggs would drop significantly. 

As is appropriate when a man is fighting for his liberty, Zach Scruggs pulls no punches.  Here's the brief's lede (it was all one big paragraph in the brief, I've made it into three to make it a little easier to read):

It has been clear since the filing of this indictment that the government has no credible
evidence that Defendant David Zachary (“Zach”) Scruggs knowingly participated in any scheme to bribe a judge. That is precisely why what little evidence the government is attempting to use must be carefully reviewed for accuracy.

Following the hearings conducted by this Court last week, the government provided the defendants with the grand jury testimonies of Timothy Balducci and FBI Special Agent William Delaney. The grand jury testimonies are patently false and misleading in material respects and undoubtedly led to the erroneous indictment of Defendant Zach Scruggs. The testimonies are directly and unmistakably contradicted by the government’s own electronically obtained evidence secured by the government well in advance of the testimonies.

The use of false and perjurious testimony cannot be reasonably explained or justified, and the use of such evidence is an affront to our justice system and a deprivation of the most basic and inalienable rights due each of us, including Defendant Zach Scruggs. Defendant Zach Scruggs therefore respectfully moves this Court to dismiss the indictment against him.

The brief says that the charges are based on three erroneous inferences made by the government about Zach Scruggs' involvement in the alleged bribery scheme:

First, the government claims that Zach Scruggs participated in the initial March 2007 meeting wherein the participants discussed and agreed to Mr. Balducci’s involvement in the Jones v. Scruggs matter pending before Judge Henry Lackey. The government and its witnesses acknowledge that no criminal conduct was discussed or considered during that meeting.

Second, the government alleges that on October 18, 2007, Mr. Balducci delivered an order to the Scruggs Law Firm and picked up a package left for him by a third party when Zach Scruggs happened to be working there after hours, again with no criminal conduct discussed.

Third, and most important for purposes of this motion, the government claims that Zach Scruggs was present in Defendant Sidney (“Sid”) Backstrom’s office during a November 1, 2007 conversation with Mr. Balducci, who had just been arrested by the FBI and was voluntarily wearing a body wire (at the direction of government lawyers and agents) in an effort to ensnare others.

 I am struck by one thing on page 5 of the brief:

Indeed, the transcript instead indicates that Zach Scruggs, rather than believing the order at issue was being “paid for” by the Scruggs Law Firm or others on their behalf, knew of no such impropriety. For example, Zach Scruggs reviews the order and states, as to a particular part of it, “I don’t know what he’s trying to say. I mean it’s not bad, but I’m not sure what his intent was.” Ex. A at 22 (emphasis added).

To which I say, hang on here -- if Zach was not involved, how do you explain the fact he is reading and editing a draft order, an ex parte communication from Judge Lackey? I mean, how does that happen under the scenario presented in the brief, a scenario where Zach doesn't have a clue.  And remember, the government has the evidence from the Wilson case, the one in which Joey Langston pleaded guilty to trying to influence Judge DeLaughter, of Zach writing in an e-mail that one could write an order on a napkin and get it approved in that case.  

Also, you people in Mississippi tell me, does this passage make sense? 

After some comments by Zach Scruggs and Mr. Balducci about Zach’s reluctance to take the call (id.), there is a pause (p. 30), after which Mr. Balducci appears no longer to be speaking to Zach Scruggs. Balducci’s language changes from the plural “y’all” to the singular “you.” And Zach Scruggs’s voice is never heard on the tape again. 

I talk to quite a few people in Mississippi, and I believe I hear y'all used in the singular sense quite a bit -- "Rossmiller, I've got some information y'all definitely want to know about."  I also have been educated to the usage, "all of y'all," as in, "I told y'all to step out of the car, not all of y'all." But I also hear y'all used in the plural. So y'all tell me, which is it? 

Here are the exhibits to this motion:

Exhibit A -- transcript of the November 1 body-wire recording Balducci made in the Scruggs Law Firm.

Exhibit B -- Balducci grand jury testimony. (First version was messed up, here's the corrected version filed shortly afterward).

Exhibit C -- grand jury testimony of FBI Agent William Delaney.  

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Here's a pdf of the judge's order.  More when I have a minute to read it.

__________________

UPDATE: I read it, and all I can say is thank goodness, it has been a long time coming -- finally, a case where the criminal justice system doesn't railroad a famous, rich, white guy!  Famous rich friends of Dickie Scruggs -- it's party time!

Although the judge did allow that it might have looked bad that Scruggs defied the terms of the injunction, Judge Vinson cited two reasons why the charge of criminal contempt could not stand against Scruggs:

First, the court had no jurisdiction because Scruggs was not active in the Renfroe v. Rigsby case -- he was the Rigsby sisters' lawyer in another capacity. 

Second, Scruggs did not violate the injunction because of its "law enforcement exception."

About the first reason, what a relief to know that one can escape any punishment merely by not being the attorney of record in a case -- it is so much better to pay someone else to be the attorney of record, and sit back and actually pull the strings while taking none of the heat! 

About the second, this is also good to know -- that an exception that allows the parties to cooperate with law enforcement, also will allow a guy the judge just said isn't affiliated with the case or representing any party to "cooperate" with law enforcement by using the very documents that are the subject of the injunction to play keep-away.

All in all, a good day's work, and a vindication of the principles of playing games with judicial orders.

One final thing -- you remember how these documents were supposed to be sent to Hood under the "law enforcement exception" so they wouldn't fall into the wrong hands and hurt Hood's grand jury investigation?  How soon we forget.  Look at Hood's press release from when the settlement with State Farm was announced in January 2007, the settlement where he agreed not to prosecute the insurer:

"After months of heated negotiations, I am happy to announce that our office has reached a settlement agreement with State Farm in our state court litigation,” said Attorney General Jim Hood.

Months of negotiations?  Let's see, the documents were sent to Hood in mid-December 2006.  Well, then . . . I guess, just maybe, protecting the grand jury process wasn't really the motive for sending the documents after all.  Why not?  For starters, let's remember that we've heard some substantial evidence that, about this very time, Scruggs was pressuing Hood to drop the criminal investigation so State Farm would settle civil cases with Scruggs. 

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Is it just about over, the Jim Hood Self-Destruction Tour? I mean, we are all on his back to talk when he fell silent in the wake of the Scruggs indictment, but now it looks like Quiet Jim knew better than Chatty Jim.  This new strategy of talking to the media? Not working.  When is one of Hood's people going to put an arm on his shoulder, take him aside and say, "Jimbo, we're going need you to make some changes here.  What we're picturing is kind of an immediate transition from this jabber-jaws thing where you keep on stepping in it out in public and hurting yourself and us, and going more to a kind of a deal where you go back to hiding in your office with the phone turned off and the curtains shut. "   

I listened to the MPB interview again a couple of times. Let's take a closer look at some of Hood's statements.  

"There was a problem with the element of proof, and there was no need to try and indict State Farm." 

A problem with the element of proof?  What was the problem with the proof, there wasn't any?  Then Hood had no reason to begin his second grand jury investigation in July 2007, after he had signed the non-prosecution agreement (the violation of which, as you remember, resulted in the embarrassing debacle of the State Farm lawsuit and injunction against him, and a defeat so crushing it apparently goaded him to cease his silence and go on the comedy club circuit).

"State Farm was the snake in all this."

What is this, Aesop's Fables?  If State Farm was the snake, what was Hood, Deputy Dawg?

"If my good friend Mike Moore, who I've known for years, was unable to influence me to sign off on this federal class action, then nobody else was  . . . ."

How did Moore try to influence him, and why did Moore care?

That decision not to prosecute them was made, as it should be, without any influence, without any regard to any civil cases . . . .  

I made their [State Farm's] chief lawyer out of Bloomington meet me in Memphis is when we negotiated it . . . so for two, three weeks, maybe even a month in that time period, I wasn't talking to any of them[Scruggs and his people]."

Wait a minute, the first quote says Hood didn't make the decision to settle the criminal prosecution until he heard from his investigator at the grand jury  that there were no grounds for indictments.  So why was he involved in negotiations with State Farm before that time?

This interview was incredibly lame, a lot of unasked questions.  Like a simple one.  If what Hood says is true, why was he so upset when the federal class action didn't go through? This, as you remember, has been cited by Hood again and again as a breach of the agreement with him that justified Hood's own breach of the non-prosecution agreement.  If dropping the criminal prosecution was not an exchange for what Scruggs wanted -- the settlement of 640 Katrina cases and the certification and immediate settlement of a class action -- then why did Hood care when the class action didn't happen after Judge Senter shot it down? 

I am a former professional journalist, and I'm a very good interviewer.  AG Hood, I issued this invitation once before and I'll say it again, let's do a comprehensive interview, I'll have it recorded and put on this blog word for word.  Just give me a call to arrange it.

One final thing: did you notice he went the whole interview without mentioning once that Courtney Schloemer told him to do something? Also, have you noticed that Hood has had very little to nothing to say about the confidential settlement in the State Farm v. Hood case lately?  For a while, all Hood could do is talk about how he supposedly got the case thrown out and the allegations declared false -- contrary to all reason and evidence -- until that Sheila Birnbaum accidental e-mail that talked of trying to tag him with contempt of court.  Since then, seems like he's recovered his balance on that subject. 

UPDATE: I thought this was a very good post on Y'all Politics on Hood.   Kind of walks you through Hood's non-stop self-pummelling.  In other news, I hear Hood's media escapades have led to a new unofficial policy in the Attorney General's office -- every Friday is now Fiasco Friday, where it's OK to beclown yourself and make a complete shambles of everything you undertake.  A sort of a Fool For A Day policy.

Posted By David Rossmiller In Industry Developments
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I listened to it, not much time right now to comment. But here's the link. Listen for what he says about being influenced by Mike Moore and how the answers get pretty fuzzy when it comes to what Balducci and Patterson actually said to him. One thing though.  Here he talks about getting word from his folks with the state grand jury that there was insufficient evidence of a crime to indict State Farm.  Exactly when was that?  And why then did he start up another grand jury investigation in July 2007?

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In this AP story by Holbrook Mohr, does Jim Hood sound like he's about had enough of being Attorney General of Mississippi?

A State Farm attorney suggested during a court hearing earlier this month that Scruggs dispatched Balducci and Patterson with a message for Hood: Scruggs, a political force with deep pockets, would support another candidate for attorney general if Hood charged State Farm with a crime.

Hood scoffed at the notion on Wednesday.

"I didn't care who (Scruggs) supported. I wasn't crazy about being attorney general anyway," Hood said, adding that he preferred being a district attorney.

You know, I watched Hood all through last year and part of the year before, including his Katrina testimony before Congress, and I detected no sign that he was having anything less than the time of his life. So I would suspect this last statement of being some sort of revisionist history -- a person's mind can play tricks on them that way.  But who knows. 

Hood also says in the story the following: 

Attorney General Jim Hood says he would not have met with two men now entangled in a judicial bribery case had he known they allegedly were promised $500,000 to try to influence his investigation of an insurance company's handling of Hurricane Katrina claims.

"If I knew they were getting paid that much, I would have told them to get out of the office because it just didn't smell right," Hood said Wednesday.  

An FBI document made public this week as part of one judicial bribery case alleges embattled plaintiffs attorney Richard "Dickie" Scruggs paid two associates to persuade Hood not to file criminal charges against State Farm Fire and Casualty Cos. Hood is not a party in the bribery investigation.

I know what he's intending to say, but it sure didn't come out right, did it? "If I knew they were getting paid that much."  I mean, a couple hundred K is all a job like that is worth, max! Right? That's what it sounds like. 

Hood's quote also makes it sound as if the meeting took place in his office.  The questioning on the stand by the State Farm lawyer mentioned above suggested the meeting took place in a restaurant in Jackson. Question: are we talking about the same meeting, or was there more than one? 

Another thing -- in the transcript of the State Farm v. Hood hearing, it's like a game of dodge ball.  Why is Hood now willing to talk about the meeting?

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I'll have a few more things to say about yesterday's orders by Judge Biggers, which are in this post from yesterday, when I have time to post, which will be over my lunch hour today.  Don't want you to think I've forgotten about these. 

_____________________________________

What is striking to me about Judge Biggers' orders denying defendants' motions is how short the orders were -- not much wringing of hands or fussing around.  The order denying defendants' motion to suppress wiretap evidence, for example, was only five pages and from the looks of it, the actual number of words in it is substantially less than my average Scruggs Nation post.  

That order cuts right to the heart of the matter and refutes the defendants' notion that the initial meeting between Tim Balducci and Judge Lackey did not involve "corrupt overtures."  As the judge points out, sending an attorney not involved in the case, unbeknownst to opposing counsel, to trade on his personal friendship with the objective of influencing the judge is certainly corrupt enough. As Judge Biggers wrote:

In the same meeting with Judge Lackey, Balducci offered Judge Lackey a job as "of counsel" in Balducci's law firm when the judge chose to retire.  These actions are certainly a clear and gross violation of all known codes of ethics applicable to attorneys and judicial officers.

The judge's order denying the motion to exclude evidence of prior related bad acts by Dickie and Zach Scruggs -- their alleged involvement in a plot to influence Judge Bobby DeLaughter -- was also a big blow to the defendants.  Biggers spent barely more than three pages on this order.

There is no question that the extrinsic evidence offered in the present case constitutes a similar alleged act within the meaning established by the aforementioned case law.  The 404(b) evidence reveals (1) the employing of a person not an attorney of record to approach a state court judge (2) with the intent to corrupt the state court judge in regard to (3) a fee dispute (4) involving two of the defendants herein as well as two others who have already entered guilty please in this case -- all substantially the same elements as charged in the conspiracy count before the court in the present case.

Let's also remember that, in addition to these charges, Scruggs faces potential charges in the DeLaughter matter.  Why is the government going to present this prior bad acts evidence of his alleged involvement but not charge him with a crime? It may be that the government wants to get this case out of the way, and a superseding indictment would lead to delay that is unacceptable to someone.    

Lastly, I want to address a recurrent theme I hear about this prosecution, the alleged plot to influence DeLaughter and the criminal contempt of court prosecution of Scruggs in Alabama.  That theme is that Scruggs is too smart and sophisticated to be involved in dumb stuff like this -- it's "too dumb for Dickie," in the words of one of his famous, rich friends. 

Scruggs undoubtedly was involved, in the Alabama case, in sending the Rigsby documents to Hood instead of returning them to the attorneys for the sisters' former employers as ordered.  But even with that case, some presume he must have had some grand, sophisticated insight into the law, and that his non-compliance was either legally permissible or not worth bothering such a figure about.

This reasoning is a mystery to me for a couple reasons.  First, what evidence is there that smart people don't do dumb things?  In my observation, other than the truly and incorrigibly stupid, no group of people is so prone to dumbness as smart people. Second, merely because something is not sophisticated does not mean it will not work well and work better than something complicated. We are so inured to complex schemes like Enron and hiding the source of campaign contributions that we forget -- when it comes to being crooked, simpler is usually better, less risky and easier to remember.  Why involve some sheik from Saudi Arabia, a London solicitor living in his Mum's basement and a couple former Congressmen to deliver a bushel of sweet potatoes? It's better to keep it all in the family.  Think of Scruggs' statement a few years ago about the Magic Jurisdictions in Mississippi, where it's all just a put-on, where justice is just a puppet show for the foolish and the gullible.      

And people also ask why, why would he do it? To which I say, why does anyone do anything? Because you want to and you can.  

Posted By David Rossmiller In Industry Developments
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I saw this story on my PDA yesterday but didn't link to it because it was only a few paragraphs of a "breaking" story and I couldn't tell what was going on, which makes commenting difficult.  I figured there would be a more complete story later, and I was right.

This story, by Steve Korris of Legal Newsline, talks about a ruling by Judge Coleman, the new judge in the fee dispute case that led to the alleged plot to bribe Judge Lackey, Jones, Funderburg v. Scruggs. Judge Coleman ruled yesterday that he has the authority to default Scruggs and issue a judgment against him if a later evidentiary hearing shows he tried to bribe Lackey.  What's more, the ruling says that the other defendants, the other member firms of the former Scruggs Katrina Group (now known as "the new and improved Katrina Litigation Group: 100 percent Scruggs-free!") can be held vicariously liable for his conduct and also defaulted.  Hey, as the saying went in the Old West, ride with an outlaw, die with an outlaw.

A copy of the ruling is linked to in the story, but links to other sites don't always stay good for a long time, so I'll link to it here on my own server so it stays a part of our record. The evidentiary hearing will be held after Scruggs' plea or trial.  If he pleads or is convicted, it won't be much of a hearing.  If he is found innocent, it doesn't necessarily determine the outcome of the hearing, however -- the civil standard of proof is lower, although one would suspect for allegations of fraud on the court the standard should not be a mere preponderance but the heightened clear and convincing evidence standard.  My evidence professor at Michigan, the great John Reed, once quantified the difference between preponderance, clear and convincing and beyond a reasonable doubt as 51 percent, 85 percent and 95 percent certainty.  It was just an exercise to show the difference, I'm not sure he would want anyone to hold him to those figures, but it seems like an acceptable formulation. 

The arguments reported in the story against the position the judge eventually took appear to be that the case has to proceed to arbitration no matter what, because this is what the joint venture agreement said. This seems far-fetched.  Even if Scruggs and the SKG did not waive arbitration by refusing it, as Jones claims, if a judge can't take the hickory to people who try to bribe the court, the court has no inherent powers and is not an arm of justice, it is nothing but a forum for hot air and sweet potatoes vendors.

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I read the latest filing by the special prosecutors in USA v. Scruggs (Alabama edition) and they really slagged Scruggs big time in this one.  An excerpt:  

The Special Prosecutors have also learned of recent sworn testimony by Cori Rigsby Moran and/or Kerri Rigsby, in which it was acknowledged by one or both of these material witnesses, that the Defendant Scruggs knew of the planned "data dump" weekend in June 2006, before the data dump occurred, and that it was Scruggs who made pre-arrangements for the Attorney General's office to pick up the documents on that Monday morning.  Other witnesses are expected to offer evidence that the weekend before the data dump . . . Scruggs arranged for a computer expert to assist Kerri Rigsby with her State Farm laptop.  This sworn testimony by colleagues, clients and employees of Scruggs, given under oath, contradicts not only their prior testimony, but Scruggs' sworn testimony before this Court.  The truth is finally coming out -- that it was Scruggs who helped arrange the "data dump" while suing State Farm, from whom the documents were taken . . . .

The government expects to show at trial, based upon recent facts discovered, that Scruggs provided cell phones to the Rigsby sisters, that were in the name of a relative of Scruggs' legal assistant, in order to attempt to hide communications between Scruggs and the Rigsbys.  These furtive actions once again demonstrate the intent of the Defendants to avoid disclosure of their communications and true relationship.

Included in the attachments are excerpts from the recent court testimony of Attorney General Jim Hood in the Federal Court civil suit, State Farm v. Hood  . . . . Contrary to the testimony provided by Scruggs in the Renfroe v. Rigsby action, the testimony of Mr. Hood makes it clear that he learned of the court's injunctive order while on his cell phone driving with his from from Jackson to Natchez for the weekend on Friday night, December 8th, when Scruggs called him. He had not seen the injunction prior to that call from his generous benefactor and it was Scruggs, rather than Attorney General Hood, who therefore made the interpretation that is now being used as a hypothetical excuse for the defiance of the court.  Indeed, Hood denies ever seeing or reading the injunction.  This is directly contrary to Scruggs' testimony in this case in which he says it was the Attorney General's interpretation of the order and he simply agreed with Hood.

Now, in fairness to Scruggs, I have read that transcript of Hood's testimony word by word, and it seemed like Hood was so panicked on the stand he would have denied he was wearing pants, if anyone had asked him about it.  I mean, it was almost like he thought he was at an audition for a remake of Ernest: Scared Stupid.  My read of the transcript of the February 6 State Farm v. Hood hearing was that Jim Hood was busting a move for the tall grass and he would trample anyone, man, woman, child or pet, who got in this way.  

But be that as it may, the prosecutors have put together their best piece yet in this supplemental reply to a Scruggs motion that seeks to quash the prosecutors' attempt to force him to produce documents.  

The prosecutors took a somewhat different approach than I expected in saying how Scruggs allegedly violated Judge William Acker's injunction. Recall that the injunction required the Rigsby sisters and their agents to return copies of claims documents the sisters took from their employer, E.A. Renfroe. I'll get to more about what the prosecutors said in this latest pleading in a moment.  But before then, so that we can all see it as we follow along, here is the language of Acker's injunction and the accompanying protective order. Except for the sub-headings, which were in bold in the original, I've left it the same except to bold-face some of the body text to emphasize the important parts.

Preliminary Injunction

[D]efendants, Cori Rigsby Moran and Kerri Rigsby, and their agents, servants, employees, attorneys, and other persons in active concert or participation with them who receive actual notice of this order by personal service or otherwise (with the express exception of law enforcement officials) are hereby MANDATORILY ENJOINED to deliver forthwith to counsel for plaintiffs all documents, whether originals or copies, of each document and tangible thing, in any form or medium, that either of the defendants or anyone acting in conjunction with or at the request or instruction of either of them, downloaded, copied took or transferred from the premises, files, records or systems of Renfroe or of any of its clients, including, but not limited to State Farm Insurance Company and which refer or relate to any insurance claims involving damages caused or alleged to have been caused by Hurricane Katrina in the State of Mississippi.

Defendants and their agents, servants, employees, attorneys, and other persons in active concert or participation with them who receive actual notice of this order by personal service or otherwise, are further ENJOINED not to further disclose, use or misappropriate any material described in the preceding paragraph unless to law enforcement officials at their request.

This injunction shall become effective upon the posting by plaintiff of an injunction bond in the amount of $50,000 for the payment of such costs and damages as may be suffered by defendants or any persons found to have been wrongfully enjoined. The said bond shall be in a form, and with a corporate surety, approved by the Clerk.

Protective Order

Because the documents and information in the possession or control of defendants and/or their agent or, or may be, relevant to an ongoing criminal investigation by the Attorney General of Mississippi, the court finds that there is a compelling interest in protecting the use and disclosures of those certain documents and information to anyone not needing that information for the criminal investigation or for preparation of the above-entitled case. Therefore, plaintiff’s counsel shall not disclose to State Farm or any of its agents, including E.A. Renfroe & Company, Inc., any of the material delivered to them pursuant to the mandatory injunction without first obtaining the express written approval of the court after in camera inspection. The documents shall be kept by counsel for plaintiff in a separate, locked location, and no copies shall be made and the contents thereof shall not be revealed without express authorization of the court.

Now, without even getting to what the prosecutors said, do you believe that the language of the first paragraph allows someone holding copies of the documents, with the exception of law enforcement, not to comply with the order to return them?  Any way you read that language, it says everyone who is an attorney or is acting in concert with the Rigsbys, save for law enforcement officials, must return the documents. It does not say anyone who has the documents does not need to return them if they give them to law enforcement officials instead, particularly when those law enforcement officials already have their own copies of the documents. There is no way you can read it that way unless you put in words that aren't there.

Well, you say, what about the second paragraph -- it says the documents can be further "disclosed" to law enforcement "at their request."  To which I say, if I give you a piece of paper with your name written on it, I have not disclosed anything to you. If I tell you the surprise ending of a book you own and which you just read, I have not disclosed anything to you.  Nor can you disclose documents or their contents to someone who already has the documents and has read their contents.  Also, disclosing something in this context does not mean you can defy the first part of the order to return the documents so that you can disclose.  And let's remember another thing -- the Court was fully aware as were all participants in this lawsuit that Hood had his own copies: it had been all over the news and it had also been discussed in pleadings before the court in the Renfroe v. Rigsby lawsuit.  So let's face it -- Scruggs' continued word games with these provisions of the injunction are getting old and sounding more and more childish and desperate.

Now, with more evidence gathered, prosecutors are highlighting another part of the injunction: that Scruggs did not provide the documents "at their request." For evidence, they offer this December 13, 2006 e-mail to Scruggs from Courtney Schloemer, one of Hood's assistant AGs.  The e-mail said, "Upon reviewing my letter, I see that I was not clear that I propose taking custody of your documents with the permission of Judge Acker.  I don't want to thwart him and wind up in an Alabama jail."

Not clear is an understatement.  See if you can find any hint of seeking Acker's permission in this letter she wrote to Scruggs the day before, asking him to send the documents because "I am not comfortable that the protective measures put in place by the Court will be effective in keeping these documents out of the grasp of State Farm."  Here's another e-mail chain, where you can see Schloemer is being cautioned against taking the documents from Scruggs, as opposed to copies of them -- (Why in the world would she need copies? She already had copies of the documents!) -- because Hood's office had intervened in the case and therefore had notice of the injunction.  So, Schloemer was cautioned in this December 15, 2006 e-mail, watch out because Acker will hit the roof.

So the special prosecutors can play it the way they feel it, and say all this adds up to that neither Hood nor Schloemer requested the documents from Scruggs.  I don't believe that.  However you want to put it, if Scruggs asked Hood to ask Scruggs to send the documents, or whatever, here's how it all played out: Hood and Scruggs talked about sending the documents after Acker issued the injunction, and then Scruggs sent them, and then Hood received them.  I don't think it makes sense to claim the documents weren't at Hood's office at Hood's request. 

Even if Hood and Schloemer requested the documents be sent -- and look at that December 12 letter again -- there is no credible reading of the injunction that says Scruggs, along with all other attorneys and others acting in concert with the Rigsbys except for law enforcement, can refuse to return the documents to the Renfroe lawyers.  

One more thing: the prosecutors are quite specific as to what they think Scruggs' motive was to allegedly defy the injunction -- he wanted to prevent any possibility the documents would be revealed to State Farm, despite the protective order preventing this, because he was in the middle of negotiating the settlement that brought $26.5 million in fees (and ironically, a fee dispute with the Jones firm that led to Scruggs' indictment on bribery charges).  The theory is that Scruggs did not want State Farm to know there were no "smoking guns" in the documents. 

That doesn't make total sense to me. Didn't State Farm knew exactly what was in those documents because they had a forensic computer technician analyze what documents the Rigsbys downloaded from the State Farm system, because Scruggs later introduced some of the documents in the McIntosh case and the Rigsbys talked about them on the 20/20 TV "news" show in August 2006?  You think that State Farm wasn't thinking to themselves, Scruggs wouldn't hold back the worst stuff, if there was anything worse than what he used on 20/20, he would have used that instead.  So they knew a lot, but there was also some things they probably didn't know -- the Rigsbys could have made paper copies before the data dump.  And yet, the same logic applied -- Scruggs would lead with his best stuff.  

I have considered a theory that what Scruggs wanted to do was use the mystery about the documents to keep the media believing they were a smoking gun, and to keep the heat on State Farm as a way of pumping up the rage and creating some more of those "Magic Jurisdictions" in Mississippi that Scruggs so famously spoke of.  If you don't remember those days, Scruggs had a great thing going, he and his crew were like the Lords of Flatbush.  

Scruggs even had the AG's office all worked up in a tizzy about these documents, convincing them he was some kind of confidential informant or some such tommyrot.  And he wanted them in a tizzy until such time as they needed to be de-tizzified: when State Farm demanded that the criminal investigation be dropped as part of any civil settlement with Scruggs.  And you might think that sounds like asking for a lot, but you know what, State Farm believed and still does believe that the criminal investigation was baseless and was nothing but an unethical, incestuous merger of politics, law and good old shotgun justice, an adjunct of the Scruggs lawsuits.  So demanding that it go away was no big deal, it would be like you expecting your neighbors to take their kids with them when they go home.

But to test this Media War theory as Scruggs' motivation, let's remember that under the terms of the injunction State Farm wasn't supposed to see the returned documents.  Even if someone had violated the terms of the protective order and had leaked the contents to State Farm, it's not as if State Farm was going to hold a press conference and show everyone that the documents were OK.

So Scruggs, one would conclude, must have believed either (a) the documents held a smoking gun, (b) the documents did not in fact contain a smoking gun, (c) the documents had a gun but it had never smoked due to public health awareness campaigns funded by Scruggs' tobacco litigation, or (d) Scruggs like all other human beings commits mistakes in strategy and had some dumb internal calcuation that no longer makes sense, if it ever did.  It seems to me that (a) is unlikely, in that if one has damning evidence the best leverage is to show it.  However, (b), (c) and (d) all seem possible, and without additional information, about equally likely. 

Give me a better explanation and I'll buy it. 

Finally, let me close by linking to another exhibit attached to the prosecutors' brief, this January 18, 2007 letter from Don Barrett of the Scruggs Katrina Group to Sheila Birnbaum, of Skadden, Arps, lead counsel for State Farm.  I'm not even going to summarize it, it's all so objectionable all I'd do is repeat the whole thing.  Just take two minutes to read it for yourself.  You know, I've seen this letter before, but every single time I read it, it just makes me nauseated all over again. How come this stuff never winds up in a Grisham book? 

Posted By David Rossmiller In Industry Developments
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Judge Biggers' orders are out on the defense motions in USA v. Scruggs (Northern Mississippi edition) -- all denied.  We can talk more about these later, but here they are:

Order denying motion to suppress wiretap evidence.

Order denying motion to exclude extrinsic evidence of prior related acts.

Order denying motion to sever Zack Scruggs and Sid Backstrom trials from trial of Dickie Scruggs.

Order denying motion to dismiss indictment, motion to dismiss counts 2, 3, and 4, motion for change of venue. (This last bunch had already been denied in rulings from the bench last week, this document merely memorializes those decisions).  

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There was a large number of filings in the USA v. Scruggs case (Northern Mississippi edition) yesterday, but one thing from these documents stuck out like a sweet potatoes deliveryman in a judge's chambers. Check out this passage from one of the exhibits attached to a supplemental Scruggs brief on the validity of the wiretaps in the bribery case.

[Balducci] further explained, prior to this March 2007 meeting [where the alleged conspirators allegedly hatched their alleged plot to allegedly bribe Judge Lackey] the [Scruggs Law Firm] was trying to settle some Katrina Insurance cases with the State Farm Insurance Company.  SLF and SFIC were near a settlement, however, [Dickie Scruggs] learned that the Mississippi State Attorney Generals office had threatened to indict SFIC due to some impasses between the Attorney Generals office and SFIC.  SFIC was not going to settle the civil cases with SLF, if the company was going to be indicted by the Attorney Generals office.  [Scruggs] asked [Steve Patterson] to speak with Attorney General Jim Hood since [Patterson] and Hood had a long standing relationship.  [Scruggs] offered to pay Patterson Balducci $500,000 if they could get Hood to relent on indicting SFIC. [Balducci] accompanied [Patterson] to a meeting with Hood and Hood later agreed not to indict SFIC. [Scruggs] eventually settled with SFIC and that settlement yielded approximately $26 million in attorney fees. [Scruggs] reneged on his pledge to pay Patterson Balducci $500,000, but later agreed to pay Patterson Balducci $100,000 a month over five months. [Scruggs] first paid Patterson Balducci $100,000 in March 2007 and eventually paid the entire $500,000.

Holy Cow!  This comes from Exhibit 5 to the Scruggs supplemental brief on the wiretaps, a November 12, 2007 report by FBI of information from Balducci.  Do you see what this says? It says that Scruggs paid Balducci and Patterson half a million dollars to get Hood to back off the State Farm grand jury investigation.  And it  implies Hood backed off because of the meeting with Balducci and Patterson.  Why he backed off, this does not say.  But remember at the February 6 hearing in State Farm v. Hood where State Farm's lawyer, Jim Robie, asked Hood about these two threatening him on behalf of Scruggs, that Scruggs would fund a challenger in the Democratic primary if Hood didn't back down and clear the way for Scruggs to collect his fees?  If you don't, read this post I wrote about the hearing.

Seems to me that whole business needs to be explored some more, don't you think? If this is true, doesn't it qualify as some sort of improper influence of a public official? And what about Hood? Is  dropping a criminal investigation under such circumstances -- again, if this is true -- consistent with proper performance of the job of Attorney General?  I sure would like to know if this stuff is true, wouldn't you?  Besides the information about Hood, this is a key document to read to understand the alleged plot to bribe Lackey.

It appears media reports last week on the hearing in this case weren't exactly clear, because I got the impression the motion to suppress the wiretaps and information stemming from them had been decided.  This was not true -- instead, Judge Biggers asked for supplemental briefing on that motion.  Here's a Daily Journal story that says Judge Biggers is due to decide that motion today, and here's all the documents filed yesterday since the last time I updated you on the docket. 

Minute order.

Defendants' response to the government's motion for an anonymous jury.

Government supplemental brief regarding motion to suppress wiretaps.

Scruggs supplemental brief regarding motion to suppress wiretaps.

Affidavit in support of Scruggs motion, and attached exhibits below: 

Exhibit 1.

Exhibit 2.

Exhibit 3.

Exhibit 4, transcript of May 29, 2007 recording of Balducci-Lackey call.

Exhibit 5.       

Exhibit 6.

Defendants' request for a pre-trial conference.

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There's no place like home . . .  gulp. Or so Dickie Scruggs and the other alleged bribery conspirators seemed to think when they filed their motion for a change of venue for their scheduled March 31 trial. 

However, Judge Biggers has turned that motion down, apparently along with all the others (the news stories I read are unclear about the fate of the motions to sever the trials of Zach Scruggs and Sid Backstrom from that of Dickie Scruggs, but since they don't affirmatively say the motions were granted, I'm assuming those motions also were denied). Here's an update from the Daily Journal, and here's one from the Clarion-Ledger. 

There was a new motion filed in USA v. Scruggs (Northern Mississippi edition) yesterday -- a motion by the government to empanel an anonymous jury and sequester jurors for the length of the trial.  Let's take a look at the factors a court ponders when considering whether the names and background information about jurors should be withheld from the parties, and you see if you can pick out which factors the government is worried about:

(1) The defendant’s involvement in organized crime;

(2) The defendant’s participation in a group with the capacity to harm jurors;

(3) The defendant’s past attempts to interfere with the judicial process or witnesses;

(4) The potential that if convicted the defendants will suffer a lengthy incarceration and substantial monetary penalties; and

(5) The extensive publicity that could enhance the possibility that jurors’ names would become public and expose them to intimidation and harassment.

If your eyes came to rest first on number 3, you have good instincts.  The government also cited reasons number 4 and 5.

The motion also requests that the jury be selected from across the Northern District and sequestered, to reduce the chance of people having been exposed to pretrial publicity (seems like a strange assumption in the day of the internet) and -- the motion says -- to prevent the influence on jurors of publicity during the trial.  Not to mention that keeping the jury in the company of U.S. Marshals reduces the chance someone tries offer them a bushel of sweet potatoes.

Posted By David Rossmiller In Industry Developments
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Good stuff here from Paulo Prada and Ashby Jones.  Here's an excerpt:

Several people familiar with the situation say that associates of Mr. Scruggs told investigators that Mr. Scruggs relayed Judge Delaughter's interest in the federal judgeship to then-Sen. Lott. In early 2006, Mr. Lott called the judge and discussed his interest in the federal bench, those people say. Seven months later, in August 2006, Judge Delaughter delivered a ruling widely considered favorable to Mr. Scruggs.

A month after that, President Bush nominated a Gulfport, Miss., lawyer named Halil "Sul" Ozerden to the vacant seat on the federal bench Mr. Delaughter had allegedly been interested in. People familiar with the process said Mr. Lott and Mississippi's other U.S. senator, Thad Cochran, approved of the appointment. The full Senate confirmed Mr. Ozerden in April 2007.

A person familiar with Mr. Lott's activities at the time confirmed he called Judge Delaughter, but said the call wasn't made specifically at the behest of Mr. Scruggs. Mr. Lott routinely called "dozens of people" across Mississippi as a matter of Senate business, the person said.

Some questions about Lott's knowledge or lack thereof (no pun intended, in this instance, at least). Was Bobby DeLaughter really someone who plausibly could have been nominated by George W. Bush? In other words, was he a reliably conservative Republican who is relatively young and could be expected to spend decades on the bench? What was his age and record relative to the eventual real nominee and others contacted by Lott?  (It is not unheard of for distinguished lawyers and judges who are not of a president's party to be interviewed for the federal bench, but they are seldom selected unless as part of some political deal). 

Some more questions. We know Lott knew Scruggs, because Scruggs is his brother-in-law (Lott and Scruggs are married to sisters).  How much did Lott know about the Wilson case before Judge DeLaughter, the one with the allegedly suspect rulings that came after Lott's expressed interest in DeLaughter for the federal bench?  Was he aware Scruggs had a case before DeLaughter? Did he personally know Bobs Wilson, Scruggs' former partner who was suing over attorney fees? If so, in what classification would we place his phone call: (a) no problem, just one of those things, (b) stupid but no problem, just Lott being Lott, (c) somewhat of a problem or (d) Lotts of problems?

Also, what's the right way to spell DeLaughter's name? His bio from Hinds County spells it with a capital L.

That ruling mentioned in the Wall Street Journal story?  The one in August 2006?  I've got the transcript posted on this blog.  Check it out for yourself in this post.

UPDATE:  Scruggs' defense lawyers say they will call Lott and DeLaughter as witnesses.  

Posted By David Rossmiller In Industry Developments
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I loved this stuff on the Scruggs hearing from Patsy Brumfield of the Daily Journal -- great color.

The third-floor courtroom was packed – media, regular folks and law students, even curious attorneys from around the storied Oxford Square.

The defense tables were filled with some of the finest criminal lawyers money can buy. Keker, one of California's and the nation's top attorneys, reportedly charged more than Barry Bonds wanted to pay for defense during his legal troubles with Major League Baseball over his alleged steroid use.

Through it all, Dickie Scruggs – who looks like he hasn't eaten a square meal since their Nov. 27, 2007 indictment – maintained this surreal expression on his face, which looked like he was wearing makeup. It was this fixed smile and got kind of creepy after two or three hours.

But frankly, his life is on the line. He faces something like 75 years in prison, which would just about do it for a 61-year-old man. His beloved son's prospects and Backstrom's are the same at this stage.

I'm not sure what my facade would look like in the same spot.

Judge Biggers started Keker off on a short leash, but increased his latitude a little bit during questioning throughout the day.

Clearly the defense strategy is to convince the judge, and a jury if necessary, that when the Scruggs firm started talking to Balducci about schmoozing Lackey, Dickie Scruggs told him directly "not to do anything illegal," as Keker characterized it. They also hammered away at the government's "creation" of the crime and why it took Lackey six months to ask for money from Balducci.

Biggers wasn't impressed, apparently. The indictments stick.

Also, for more information, see this story from Alyssa Schnugg of the Oxford Eagle. 

The hearing continues today, according to the Daily Journal story, with arguments on motions to throw out Counts 2, 3 and 4 of the indictments, a change of venue for the trial and separate trials for Zach Scruggs and Sid Backstrom.

Posted By David Rossmiller In Industry Developments
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This is the question some have posed to me.  I considered this possibility immediately after I heard of the e-mail about Jim Hood, which is discussed in this post from two days ago.  I soon rejected this as a likely possibility for reasons I will state below, and I didn't think it worth bringing up until I received several messages from regular readers whom I would place in the category of canaries in the rumor coal mine -- they reliably hear of almost all the key rumors and are accurate reflections of the zeitgeist (I mean this in a complimentary way -- if they were nutjobs I would pay no attention to what they say).

The indications are therefore that a considerable traffic exists in the belief that the e-mail was not an accident, but rather a sort of dead fish mailed to Hood ("if youse don't shaddap, youse will sleep wit da fishes"). I think this is unlikely for the following reasons: 

• Hood is slicing and dicing himself like he's a new kitchen tool on a TV infomercial. He is sowing the seeds of his own discredit everywhere he goes, like a reverse Johnny Appleseed.  I think we can take it as a given that Birnbaum has no particular regard for Hood, so why would she do anything intentionally that might interfere with or distract from Hood's own self-demolition?
• Under certain settings on Microsoft Outlook, when folks forward you an e-mail, it arrives as an attachment.  When you click on the attachment, you are actually in the original e-mail, and if you try to respond to the person(s) who sent it to you, you will respond to the original recipients of the e-mail instead.  The more usual setting -- one that embeds the original e-mail addresses harmlessly as dead text within another live e-mail -- does not present this danger.  So it is quite believable that she could have gotten the e-mail as an attachment, and accidentally responded to all in the way explained above.  I myself received a copy of the Hood e-mail from a source -- the thing spread with amazing speed -- and fortunately it arrived like almost all my forwarded e-mails, as a harmless embed.      
• If Birnbaum was going to send such a message to Hood, there are better and safer ways to do it without her name being attached.  She could talk to someone who knows Hood, with the knowledge they would repeat it to Hood, for example.  Better yet, she could have someone else talk to someone who knows Hood, with the knowledge they would repeat it to Hood.
• State Farm's method of operation throughout Katrina litigation has not been to speak out publicly in advance of motion practice, but instead to file motions and let the conversation flow from them.  Why change at this point, especially when, as mentioned above, Hood is on a search and destroy mission with himself as the target?
• Neither Birnbaum's nor State Farm's style during Katrina litigation has been to create public personalities or personas.  While I thought this strategy was somewhat anemic early on and criticized it in posts, it has proven to have a certain effectiveness -- a State Farm counteroffensive succeeded perhaps better than anyone in the company could have hoped.  Whether it was due to brilliant strategy, to ineptness and overreaching of the opposition, to luck or to some combination of these is something that will have to be sorted out after it is all over. 
• The fact that the e-mail message was not overly derogatory to Hood has also created suspicion that it was a plant.  The Birnbaum message was "This is so over the top. Can we ask that he be held in contempt of court for misrepresenting a settlement agreement and order of the court."  Now, what many folks love about e-mail is it brings a certain ability to inject some creativity into life, such many folks forget or disregard the possibility that these e-mails could surface at some point.  And these folks may have been tempted, had they been in Birnbaum's place, to unleash some language that might euphemistically be referred to as colorful.  So the fact that these kind of words were not present makes some suspicious.  However, you will notice that, if the e-mail is reproduced accurately in the AP story I read, there is no question mark at the end, as one who was carefully composing for the public eye would have done. Also, like many lawyers, Birnbaum may be the sort who is careful not to put unnecessarily harsh words into e-mails, knowing from experience in litigation these are always hard to explain if they should come up for any reason.
• The fact that it accomplishes a purpose that would seem desirable to State Farm -- it gives State Farm's position on the interpretation of the settlement agreement without having to worry about push-back for talking about a secret agreement as Hood is doing -- has also fueled suspicions. But again, there was no need for Birnbaum or State Farm to do anything about this.  Hood emerged from months of self-imposed silence to testify in such a way that he seemed determined to prove the truth of the maxim: "It is better to remain silent and be thought a fool than to speak and remove all doubt."  His statements of victory in the State Farm lawsuit, in the wake of his disastrous performance at the hearing, were greeted with incredulity and jeers.  
• The fact that it accomplishes what some think is another State Farm purpose -- warning Hood and reiterating to him that he is now little people -- has further created suspicions.  Yet for the same reasons I discussed above, this seems unlikely.  Really, what penalty would Hood pay?  Is Judge Bramlette going to find him in criminal contempt of court and appoint special prosecutors, like Judge Acker did in Alabama when Dickie Scruggs refused to turn over documents as ordered but instead gave them to Hood (who had his own copies and so didn't need Scruggs' documents)?  Very unlikely.  

So that's my take on it. You may agree, you may disagree.  That's why they make chocolate and vanilla.

Posted By David Rossmiller In Industry Developments
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March 17 remains the last day for plea bargains in USA v. Scruggs, and if the defense motions that will be heard at today's hearing don't succeed, I wonder if we'll start seeing some movement.  

Here are the pleadings filed yesterday:

Here is the government's opposition to Sid Backstrom's and Zach Scruggs' motions for severance.  This brief makes the point that statements in a November 13, 2007 recorded phone conversation between Balducci and Backstrom were taken out of context to make it sound like Backstrom had no clue about the Lackey bribe. Judge for yourself.  Here is the Backstrom motion to sever, read paragraphs 18 and 19.  And here is the full transcript of the call between Balducci and Backstrom, attached as an exhibit to the government response.

Here is the government's response to the defendant's motion for a change of venue. I was shocked while reading this brief to learn of a type of crime I had never heard of before -- using guard bears to kill people:

. . . involved a widely publicized conspiracy to import marijuana and the grizzly murders of two innocent people who stumbled upon the marijuana conspiracy being placed into effect.

That's inhumane!  Besides training them to kill, I bet they were forcing the grizzlies to smoke dope too.  Grisly, of course, is what is intended. Mistakes happen, I make them all the time myself (had a typo in this sentence, in fact, before I fixed it).  This one, however, strikes me as funny whenever I see it.

Here is a copy of the government's response to the defendants' motion to suppress the wiretaps.

I found this passage interesting:

If the affidavits supporting the Balducci and Patterson wiretaps along with the affidavit supporting the search warrant for the Scruggs Law Firm were revised to include the omitted information described in the defendants’ motion, the affidavits would describe conversations for the most part between Tim Balducci and Judge Henry Lackey. The defendants’ descriptions of these conversations, however, is not accurate. To begin, the defendants describe Lackey’s requests as “demands” and that Balducci “relented” to such. Putting the hyperbole aside, Judge Lackey asked only once whether Scruggs would help him if he helped Scruggs, to which Balducci replied immediately: “I think, no question that would happen. Yes sir. No question.” Judge Lackey then told Balducci to “talk to your man and, just, you know, whatever you need to do holler back at me.” Far from “demanding” payment, Judge Lackey went on to tell Tim just to “think about it and get back with him.” Two days later Balducci contacted Judge Lackey and told him he would like to meet with him in Calhoun City to determine how much “help” Judge Lackey needed. At that meeting the Judge suggested $40,000 and Balducci agreed, stating such a payment would be “no problem.” Lackey also told Balducci he could bring the order that Scruggs wanted signed. Immediately following the meeting at which Balducci agreed to pay a $40,000 bribe, Judge Lackey contacted the FBI. It was 10:08 A.M. Also, at 10:08 that morning a telephone call was placed from Balducci’s cell phone to The Scruggs Law Firm. In other words, it was perfectly clear that Balducci contacted someone with the Scruggs Law Firm immediately following his meeting with Judge Lackey. All of this information was included in the affidavit in support of the wiretap placed on Balducci’s cell phone signed on September 25th.

Overall, I was taken by how easily the government seemed to swat down the defense arguments -- the brief is only 10 pages.

Here is the government's response to the motion to dismiss for outrageous government.  It's got a great timeline of events in it.  The exhibits are something you'll want to see. Here is Part I of the transcript of the November 1, 2007 recording after Balducci was busted and the feds sent him back to the Scruggs Law Firm to bag the rest. Check out page 37 for a description of Jim Hood as a Pez dispenser for multimillion dollar cases. 

Here is Part II. Check out page 49 for Balducci being upset with Hood for favoring Joey Langston and not wanting to dance with the one who brought him. Also, check out starting on page 50 where Backstrom and Balducci discuss Dickie Scruggs' role in the bribery scheme. Start reading on page 67 for discussions directly between Scruggs and Balducci -- interesting bit on page 75 where Scruggs is making suggestions how the judge can edit the order, including punctuation -- plus a lot more.  Doesn't look good for Scruggs.  From the looks of things in that transcript, it wasn't too dumb for Dickie.

Here's the government's response to the defense motion to exclude evidence of prior related bad acts.  An excerpt:

The evidence would show that when Circuit Judge Henry Lackey tested the defendants’ intent by setting a figure, $40,000, Balducci’s immediate response was that he did not believe that would be a problem. He did not believe that would be a problem because he had been involved the year before in representing Richard F. “Dickie” Scruggs and The Scruggs Law Firm in the case of Wilson v. Scruggs, in the circuit court of Hinds County, Mississippi. Richard F. Scruggs and The Scruggs Law Firm had been willing on that occasion to spend money to hire Ed Peters for the purpose of corruptly influencing Peters’ close and trusting friend, State Circuit Judge Bobby Delaughter. Richard F. Scruggs and The Scruggs Law Firm had also caused the possibility of a federal judgeship to be communicated to Judge Delaughter in a further effort to corruptly influence the judicial process, or in the defendants’ parlance, to ensure that they would get a “fair” trial.

. . . .

The facts in the case at bar and the facts in the Wilson case are strikingly similar. In both cases, Richard F. “Dickie” Scruggs and The Scruggs Law Firm used others as intermediaries in their bribery attempts. Balducci, Langston and Patterson paid Ed Peters to corruptly influence Judge Delaughter, a trusted long-time friend. Dickie Scruggs caused Langston to communicate through others that Delaughter would be considered for a federal district court judgeship, in order to further corruptly influence the outcome of Wilson v. Scruggs, in his favor. In the Lackey case, Scruggs and The Scruggs Law Firm used Balducci to unethically and corruptly influence his long-term, trusted friend, Henry Lackey. As in Wilson, it was for the stated purpose of just getting a “fair” trial. Unable to get it for free, the defendants did not hesitate to pay $50,000 to corruptly influence Judge Lackey, while speaking in lofty terms about it being the “proper” thing to do. In both cases the litigation involved millions of dollars that were at stake in contested attorneys’ fees, and, ironically, in both cases there may have been reason to believe The Scruggs Law Firm would likely prevail, even without the bribes, but they were willing to have judges corruptly influenced to ensure they had an edge. The corrupt overtures in both cases occurred within a one year period, and both were designed ultimately to ensure success by impugning the integrity of the judicial process.

Finally, somehow Zach Scruggs' lawyers were able to get a reply brief filed yesterday on the issue of severing his trial.  

I'm no expert on criminal law -- I leave that to the writers of Boston Legal.  But the government materials here look hard to refute.

Posted By David Rossmiller In Industry Developments
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Welcome Above the Law readers!

Some of Jim Hood's proneness to gaffes must have rubbed off on Sheila Birnbaum of Skadden, Arps, a lead counsel for State Farm, when she was down in Mississippi to hear Hood testify February 6.  Earlier today, Birnbaum accidentally replied to all the people on the distribution list for an e-mail Hood's press spokeswoman sent out this morning to a number of people, including reporters.  Birnbaum thought she was responding to other State Farm lawyers.

I wrote a post earlier today about the e-mail from Hood's office, in which Hood said there actually was no settlement of State Farm's lawsuit, and that the judge dismissed the case because State Farm's allegations were false.  Read the post, and you'll see the language of the judge's order is quite clear and so obviously contradicts what Hood is saying that it is hard to fathom why he would bother denying it.  Also read this post, about Hood's claims in an op-ed piece in a Jackson, Mississippi newspaper Monday that "allegations lodged against me by this insurer were shown to be false when a federal judge recently threw out a lawsuit it had filed against my office."

Here's from an AP story by Mike Kunzelman on the Birnbaum e-mail mistake:

In Monday's piece, Hood wrote that State Farm's allegations "were shown to be false" when Bramlette agreed to dismiss its lawsuit. His spokeswoman, Jan Schaefer, echoed that claim in a press release Tuesday in which she denied Hood reached a "settlement" with State Farm.

"The only reason it is referred to as such is because the details of the attorney general's criminal investigation needed to be protected," Schaefer wrote. "The case was dismissed because the allegations were false."

In response to Schaefer's e-mail, Sheila L. Birnbaum wrote, "This is so over the top. Can we ask that he be held in contempt of court for misrepresenting a settlement agreement and order of the court."

"No you can't," Hood's spokeswoman fired back.

More than a dozen reporters, including several from The Associated Press, were listed as recipients to all three e-mails.

In a telephone interview with The Associated Press, Birnbaum said thought she was responding internally to Schaefer's e-mail and didn't realize she was sending it to reporters.

"I'm embarrassed that I pressed the wrong button," she said. "That e-mail shouldn't have gone out."

The headline on the story suggests the e-mail may hurt the "truce" between Hood and State Farm.  I don't think so, because there is no truce.  They hate him and he hates them, and they will continue to say bad things about each other until this Katrina generation has passed away.  There is, however, an enforceable settlement agreement, and nothing that Hood said or Birnbaum said will change that. 

However, everything else aside, the lady did ask a question.  Should Hood be held in contempt for misrepresenting the settlement?  Alternatively, should he be cited for denial of reality, given a Rorschach test to help explain his "squealing" imagery in the newspaper op-ed, and asked whether he has ever been abducted by aliens or had beers with Bigfoot?   

Posted By David Rossmiller In Industry Developments
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Mississippi AG Jim Hood has developed quite a specialty in talking about things that are supposed to be secret, like his state grand jury investigations last year and the recent settlement in the State Farm v. Hood lawsuit.  But how low have Hood's fortunes sunk? This low: he can't even win an argument when he's the only one talking.

This op-ed in the Jackson Clarion-Ledger appears to be part of some odd kind of strategy in which Hood goes around in a wheelchair with two black eyes, a neck brace and both legs in a cast while claiming to have cleaned the other guy's clock.  Specifically, Hood is now implying he won the lawsuit against him:

In fact, allegations lodged against me by this insurer were shown to be false when a federal judge recently threw out a lawsuit it had filed against my office. And due to our efforts, the company now claims to have paid an additional $70 million to Coast homeowners.

Come on, that's weak, weak as a seventh-grader's biceps. Threw it out? We all know the case was dismissed in the sense that the judge found he had jurisdiction and that Hood's contract not to prosecute State Farm was valid and enforceable.  For Hood to claim he won is like a jockey surrounding himself with a posse of dwarfs and claiming he's tall.

We all know Hood settled on terms advantageous to State Farm after Hood stumbled all over himself on the witness stand, doing his best impression of someone who was testifying while listening to some Merle Haggard tunes on his iPod.       

Even though the settlement is secret, we know Hood gave guarantees of non-prosecution to State Farm and to specific individuals in the company, or State Farm would not have settled.  It's one thing for Hood's relatives and friends to go around saying the case was "dismissed," because that is technically true -- all cases are eventually dismissed.  Doesn't say anything about who won the case, but they are in fact dismissed or terminated at some point. It's quite another for Hood to imply, in a written statement, one that was not off the cuff but which he had time to look over, reflect on, edit and correct, that a judge found the allegations of the lawsuit to be false.  

Some of those enemies of his that Hood talks about in the op-ed appear to be managing his schedule and writing his material, because he is also going around to the media further discrediting himself.  He is saying he is sidelined for the duration of the judicial bribery investigations because they involve folks who contributed campaign dough to him.  He cites prosecuting these people as a conflict of interest.  Maybe, in the sense that when you prosecute someone it conflicts with your interest in getting more campaign dough from him.  But an actual conflict of interest, no. The conflict, instead, is in not prosecuting someone because they are a friend of the Attorney General.

More: Y'all Politics, folo, Sid Salter.

One more thing on the op-ed -- seriously, who is writing Hood's stuff these days? Take a look at this passage:

Through a bombardment of television ads, they screamed about who you should blame for your troubles. They hollered at levels so high that nothing else could be heard above it. The shouting continues today.

But those who are yelling the loudest are those who are squealing the most - the big corporations, the insurance companies, the losers of a hard-fought political campaign. And they will continue to squeal because, at the end of the day, they understand that the office of attorney general will never stop its fight to protect the citizens of Mississippi.   

With all this yellin' and hollerin' and squealin', sounds like this piece was written by Sigmund Freud after watching Deliverance one too many times.

Finally, this is an interesting piece on Hood from Patsy Brumfield of the Daily Journal, about an incident where Hood, well, I'll let Patsy tell it:

HOUSTON - The recently settled case between State Farm and Attorney General Jim Hood isn't the first time he has been accused of improperly threatening criminal action in a civil case.

Six years ago, he did so in a case not with millions at stake, but over $2,101.17.

That's it for this post.  Stay tuned for the next episode of the High Street Follies.

Posted By David Rossmiller In Industry Developments
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The Scruggs defense just got its official slogan, if it is on the ball enough to know a gem when they see it, from this Q&A in the Wall Street Journal Law Blog with actor Colm Feore, who played Scruggs in a movie.  

Back in November, Scruggs was indicted for allegedly bribing a judge in Mississippi, and it’s turned into quite a mess. In fact, we call it The Mess in Mississippi. The case might go to trial in March. Have you heard about any of this?

I had not heard about this case. But on the face of it, it seems way too dumb for Dickie. My experience of Mr. Scruggs is of a very generous, smart, and kindly southern gentleman. You must always keep in mind that Dickie’s success has likely made him as many enemies as friends. It sounds like rubbish to me.

There you have it: "Too Dumb For Dickie." Perfect number of words and syllables for all of the following:

• a bumper sticker (suggested promotion: "salt" demand by covertly putting bumper stickers on thousands of cars, making it appear everyone else owns one of these must-have cool items)
• a T-shirt (suggested art: Scruggs in a pose like Rodin's The Thinker)
• a propaganda flyer distributed in the streets and left under windshield wipers (gives gritty "street" feel to defense of Scruggs, makes it seem like the people are rising up, speaking truth to power, ready to back The Scruggs -- also distracts from uncomfortable fact that Scruggs has moved for change of venue for trial because he apparently fears being judged by his own)   
• a fridge magnet (suggested promotion: give bags of magnets to kids, tell them to affix magnets to parked vehicles, offer payment of Too Dumb For Dickie T-shirt and bumper sticker)
• a banner in a protest march (see third item: if not enough people are interested in authentic protest march, bring in underemployed actors for fake protest, have everyone wear Scruggs masks to keep them from being identified, immediately get them out of state before media interviews them and finds they all speak with New York accents)   
• a public access cable show (suggestion: hire really good looking actors and actresses to pretend to be ordinary Mississippi teens and young adults and their parents who are concerned about things like justice and how famous, rich lawyers are unfairly targeted by the criminal justice system) 
• a sky-writing message from an airplane (suggestion: file motion with court to allow currently grounded-by-court-order Air Scruggs to be outfitted with sky-writing equipment, make up silly argument about how it is unconstitutional for a man not to be allowed to use his own property in his defense)
• a forehead tattoo (suggested promotion: set up mobile tattoo parlor in a panel truck near college campus, provide "bottomless" cup of beer from kegs in truck to anyone who gets tattoo)
• a production by a puppet theater (kids will pester parents to buy items like T-shirts, magnets and bumper stickers, will demand to be allowed to get forehead tattoo, pressure parents to vote to acquit if picked for Scruggs jury) 
• a hip-hop song ("Yo, it's too dumb for Dickie/ That bribe was just a quickie/ You talkin' 'bout The Scruggs/ My man don't run with thugs/ My man ain't implicated/ It ain't sophisticated" -- offer free internet download together with 50-percent-off coupon for purchase of T-shirt, fridge magnet and forehead tattoo) 
• an episode of "My Name Is Earl" (substantial product placement fee may be necessary -- be prepared with legal research that establishes product placement fee cannot be used as evidence of related prior bad acts) 
• an art project for a third-grade classroom (furnish free supplies including American flag stick-ons, red, white and blue crayons, stickers that say "Justice May Be Blind But She Ain't Dumb, And Neither Is Dickie," include numerous finished posters by professional artists that kids can sign their names to -- display posters in prominent public location, have public vote and offer prize to winning entry "That best captures the injustice of the false allegations and charges" -- make sure prize is not exact amount of $40,000, arrange for prize to go to non-existent kid, Justice Foreall, for "Tears for Dickie" entry actually made by Dickie Scruggs, produce fake video where actor pretending to be journalist pretends to interview kid actor who pretends to be Justice Foreall, who donates cash prize to the newly-endowed Too Dumb For Dickie Scholarship at Ole Miss Law School)  
• a more or less continuous courtroom interjection ("Objection, Your Honor -- Too Dumb For Dickie")
• a celebrity cause-of-the-day (convince celebrity friends and non-friend celebrities who are merely looking for some controversy and publicity to stage "Scruggs-a-thon," whereby they produce videos to be distributed to local TV stations in which they pretend to lock themselves in jail cells and vow to remain there until Scruggs is freed -- make sure in each video the celebrity ends the piece by thrusting his or her upraised fist through the bars and shouting, "It's too dumb for Dickie: Free Scruggs!" -- try if at all possible to limit participation only to celebrities who are not well known to be dumb themselves). 

Scruggs legal and marketing teams -- get busy: remember, every good career comeback has a slogan. Also, one of those dumb little clip art things that perfectly sums up the slogan is needed, include it with all materials: here's my suggestion. 

Did you like that line in the Q&A about how Scruggs' success has made him as many enemies as friends, and that's the reason for all this unpleasantness? That is so true! I mean, I was just watching a public access show on cable about how famous, rich white guys can't catch a break from the criminal justice system.  I don't mind telling you, I was shocked.  It really made me think, especially after I found a flyer on my car windshield, and my kids started bugging me about wanting to get art lessons -- it seems like every kid in America wants to be a famous artist like that kid in Mississippi, Justice Foreall.    

This all sounds familiar, where have I heard it before? Oh, right, the WSJ Law Blog's interview with novelist John Grisham right after the Scruggs indictment.  Grisham said he couldn't believe Scruggs would be involved in such an unsophisticated bribery plot.   

What do you make of the indictment of Dickie Scruggs?

My initial reaction was one of surprise. I know Dickie Scruggs. This doesn’t sound like the Dickie Scruggs that I know. I was really shocked by the news. When you know Dickie and how successful he has been you could not believe he would be involved in such a boneheaded bribery scam that is not in the least bit sophisticated. I don’t believe it. I hope it’s all proven to be wrong.

Now, let's turn to a related, vital question.  Which kind of people will be best inclined to support Scruggs on the jury at his trial? My research into this -- which admittedly consists, so far, only of reading these two posts on the WSJ Law Blog -- strongly suggests that one group that can be expected to be very skeptical of these charges is famous, rich friends of Dickie Scruggs. 

Another related question: who can be expected to be the least sympathetic?  My research into this -- which admittedly consists, so far, only of reading Scruggs' motion for a change of venue -- is that people who live near Scruggs and know the most about him would be the worst.   My research also indicates that venues where Scruggs could expect a fair trial include any county where the jury pool consists largely of famous, rich friends of his.

Finally, speaking of Grisham, he has a new book out, as you may know.  I may be one of the few people in this country who has never read a John Grishman book -- no particular reason, I just never got around to it.  I've seen some movies made from his books, and I enjoyed those, and I once drove cross-country while listening to a books-on-tape of his "A Painted House" -- what a wonderful story that was, it made the miles fly by.  But I've never read one of his books.  Maybe I'll have to pick up the new one in light of what I heard about it from a friend of mine, coverage lawyer Randy Maniloff.

Here's what Randy said -- (he gave me permission to use this, I don't want people to think I cut from e-mails and out folks on the blog without talking it over with them):

When the Scruggs story broke, this is what John Grishman had to say about it . . . .

"When you know Dickie and how successful he has been you could not believe he would be involved in such a boneheaded bribery scam that is not in the least bit sophisticated. I don’t believe it. I hope it’s all proven to be wrong."

Cut to two months later and Grisham releases his latest novel, "The Appeal."  The inside dust jacket describes the book like this:

"In a crowded courtroom in Mississippi, a jury returns a shocking verdict against a chemical company accused of dumping toxic waste into a small town's water supply, causing the worst cancer cluster in history.  The company appeals to the Mississippi Supreme Court, whose nine justices will one day either approve the verdict or reverse it.

"Who are the nine?  How will they vote? Can one be replaced before the case is ultimately decided? The chemical company is owned by a Wall Street predator named Carl Trudeau, and Mr. Trudeau is convinced the Court is not friendly enough.  With judicial elections looming, he decides to purchase himself a sea on the Court.  The cost is a few million dollars, a drop in the bucket for a billionaire like Mr. Trudeau.  Through an intricate web of conspiracy and deceit, his political operatives recruit a young, unsuspecting candidate.  They finance him, manipulate him, market him, and mold him into a potential Supreme Court justice.  Their Supreme Court justice.

"The Appeal is a powerful, timely, and shocking story of political and legal intrigue, a story that will have readers unable to think about our electoral process or judicial system in quite the same way ever again."

Who knew that what Grisham was doing was setting the stage for his impending sale of a sophisticated bribery scheme?  

Me again: sounds like a real page turner, true enough -- kind of a Manchurian Candidate type of deal, made in the USA -- let's call it the Mashulavillian Candidate.  This is timely, too, because it really hits the nail on the head: one of the greatest problems in Mississippi today? Judges who don't know they are being bribed!  What we need more of are judges who are at least smart enough to know if they are being bribed -- you know, a judge that when you tell him you are going to drop off a bushel of sweet potatoes doesn't invite you over for supper.

Posted By David Rossmiller In Industry Developments
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I read this recent opinion from the Fifth Circuit about a fee allocation among plaintiffs' counsel in a class acton settlement.  The case was of interest to me because it involves Don Barrett, of tobacco litigation and Scruggs(less) Katrina Group fame, and if you remember, a fee dispute among Scruggs Katrina Group firms is what touched off the Judge Lackey bribery plot allegedly involving Dickie Scruggs.  In addition, the ethics of the Katrina Litigation Group, as it is now known, are being challenged by State Farm in several Katrina cases.  Here's one of the latest posts that has information about that.

Finally, I was interested because of the fact the opinion was written by Chief Judge Edith Jones, who chewed out Dickie Scruggs last year during oral argument in the Leonard v. Nationwide appeal, and who had a sharp exchange with William Walker, counsel for the policyholders, during oral argument last year in the Broussard v. State Farm appeal.  In short, no matter who you are, Judge Jones is the toughest kid on the block.

She proved it again in this case, vacating a district court's approval of an attorney fee allocation where Barrett, one of the co-lead counsel, went to an ex parte hearing with the district court judge and got approved a fee allocation that Judge Jones strongly suggested -- or perhaps outright said -- was based on misinformation and selective use of evidence.  Here's the opinion's opening summary, which gives you a pretty good idea of what is going on in the case:

Lead Plaintiffs' Counsel in this class action persuaded the district court to divide up a $6.875 million lump sum attorneys' fee award among more than six dozen plainttiffs' lawyers accourding to Lead Counsel's proposed allocation.  This might be permissible, except that the court was so persuaded in an ex parte hearing and apparently without benefit of supporting data.  The Court further accepted the Lead Counsel's proposed order sealing the individual awards; preventing all counsel from communicating with anyone about the awards; requiring releases from counsel who accepted payment; and limiting its own scope of review of objections to the allocation.  These and other facets of the court's process are unauthorized and objectionable. . . .

I'm not saying this case has anything to do with anything.  I'm just sayin'. 

-- An interesting story by John O'Brien of Legal Newsline about bloggers and the Scruggs scandal.  I should have gotten back to John and spent more time answering questions about this, but this last couple weeks has been very crazy for me, not a lot of extra time. 

Anyone reading these words today probably has some idea about the place of blogs in the Scruggs events, you don't need me to say it.  I've probably helped shine the spotlight in some places that needed it.  But I try to guard against letting myself fall prey to blogger triumphalism or feeling self-important. I just try to provide the best analysis I can, the best writing I can, the best entertainment I can, and have fun doing it.  I grew up in North Dakota, and NoDaks believe in staying within themselves.  

I don't get too caught up in how many people are reading my blog or any of that -- mostly I think sitemeters tremendously exaggerate a blog's audience to make bloggers feel better about themselves.  I know a lot of people read this site, how many exactly I don't know and I really don't care, it's quite a few.  What is more important and always has been is whether I am reaching the kind of people I want to, and I have been very fortunate in being able to do so. When it comes right down to it, this blog is part of the marketing I do as a lawyer, and I've made a lot of friends, met a lot of great people.  Some of them are like family to me.  And you folks in Mississippi, I've got to say, nicest bunch of people in the world.  You have been very good to me, I look forward to seeing as many of y'all as I can when I come to Mississippi in April for the Mississippi State Insurance Day.  I know I won't see all of y'all, but as many as I can.   

-- Finally, and this is unpleasant to do but necessary, and I think necessary to do publicly to reinforce community norms.  To the person yesterday who spammed me with a whole bunch of comments, the first few of which I was willing to tolerate and publish in the interest of broad-mindedness, but which became increasingly Yosemite Sam-like, pointless and abusive to such a degree I won't allow them to be published, I have this to say: you are banned from my site for a period of time that is indeterminate, but which in all likelihood will extend beyond infinity.  As I understand it, other sites may have had some difficulties with you as well.  If all you can talk is guff, go start your own blog and talk it to yourself.

Posted By David Rossmiller In Industry Developments
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I was going through my feedreader, which I haven't had much time to do recently, and with this relative lull it's a good time to give a few links and talk about a few things that I've yet to get to.

-- I was reading this story by John O'Brien of Legal Newsline about the battle in the McIntosh v. State Farm case over whether the Scruggs(less) Katrina Group, now known as the Katrina Litigation Group, should be disqualified for allegedly unethical conduct.  I love this story because it talks about one of my favorite artifacts from the post-Katrina conflagration, the Brian Ford notebook.  For sheer outrageousness and unintentional hilarity, the Ford notes are not quite up there with Hood's confidential informant letter, Dickie Scruggs' anti-George Dale ad where he depicted Dale as a pig with lipstick, or the transcript of Hood's testimony at the February 6 State Farm v. Hood hearing, but they have great value, a sort of Rosetta Stone of Katrina litigation.     

The first pleading linked to in the story is a response brief by the KLG objecting to what it sees as dirty tactics in trying to get KLG lawyers disqualified.  On page 10 of the response was something that made me laugh, an attack on the declaration of State Farm's ethics expert, Charles Wolfram, who is described as "a lawyer whose bar license is inactive and who retired nine years ago."  You know, when the argument is over alleged corruption, dirty tricks and lies by practicing lawyers, pointing out that the expert is not an active attorney may not be the worst thing you could say about him.  I'm not sure what is the point of the remark about Wolfram retiring nine years ago -- maybe it is to imply he must be completely senile by this time, or perhaps that someone who has not been in the game for nine years couldn't possibly be wise to all the new excuses for unethical lawyer conduct.  But I don't mean to pick on the KLG, I know and like some of the lawyers in it.   

Incidentally, with every story Legal Newsline runs about Jim Hood, they use the same picture, which has another guy in the photo who seems to be reacting to Hood by making some kind of mocking, simian-like face. I'm sure that, whoever he is, he just got caught on camera in the middle of talking, telling a joke, sneezing, whatever.  Every time I see that picture I feel sorry for the guy. 

-- I haven't had time to do a lot of analysis of the motions Dickie Scruggs and the other defendants filed the other day.  But when the motions were filed, my initial read on the motion for a change of venue was, Hey, hasn't Scruggs always portrayed himself as a fighter for the little guy, a tribune of the people, a freedom fighter?  After all, he took on Big Asbestos, Big Tobacco and Big Insurance on behalf of the people.  And now he's saying he's afraid of his own? 

You remember back in the day, almost a year ago, when Scruggs said Katrina litigation wasn't just a legal battle, it was also a political battle and a public relations battle?  Back then, he sat down for worshipful interviews with NPR (the post linked to is a long time ago, in it I said I didn't know much about the facts of Katrina cases, sometimes I wish that were still true), and he was the captain of the U.S.S. Katrina, in command of a media machine.  Now he's kvetching that the media is examining him in "excruciating detail" and instead of controlling public relations, he's running from the public. As I've said before, your perspective depends on which end of the microscope you're on. 

-- Jane Genova's post at Law and More analyzes some of the contentions in the motion for change of venue.  She points out that I have been "compulsively" writing about Scruggs for a long time, long before the indictments came around.  I would put a slightly different spin on it.  I became interested in Katrina litigation because of the intricacies of insurance coverage law involved, and Scruggs just happened to be in the picture.  My main goal is to communicate with the readers of this blog, and Scruggs is merely part of the vocabulary of the lingua franca.  A great post by Genova, which makes Scruggs' lawyers look like they are going on some Grandpa Simpson-like rant about technology, having absolutely no idea what they are talking about.  

-- The White Collar Crime Prof blog also continues its excellent Scruggs analysis with a look at the motions.  Great post, great writing.  As many blogs are showing, legal analysis does not have to be boring.     

Posted By David Rossmiller In Industry Developments
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In the crunch of daily blogging, inevitably some things get left behind.  Sometimes they stay left behind, but sometimes, through luck and perseverance -- like the Rachel finding Ishmael afloat on Queequeg's coffin while searching for its lost children -- these castaways are rescued.  Here are some of them from recent days and weeks:

-- In the Renfroe v. Rigsby case, in federal court in Northern Alabama, Scruggs filed a petition for a writ of mandamus with the 11th Circuit.  Although I've known of this since February 1, the day after it was filed, other stuff came up, I couldn't find it right away, etc. etc., typical blogger's lament.  The writ asks the 11th Circuit to find that Judge Acker committed an abuse of discretion in failing to recuse himself from the case.  Here's a post I wrote about Acker's decision to deny the motion to recuse.  Here's another about the implications of Acker's denial of Scruggs' request to certify an interlocutory appeal, forcing him to file a writ of mandamus. (As it turns out, Scruggs admits in the petition that an interlocutory appeal may not be taken from the denial of a motion to disqualify a district judge, so his request wasn't proper in the first place). Click here to read a copy of the petition for mandamus.

The mandamus petition didn't say anything I haven't seen before.  One argument that seems so tired and worn-out that even Scruggs' lawyers can't summon any enthusiasm for it is the one about the law enforcement exception in Judge Acker's injunction.  The injunction required the Rigsby sisters and their agents and all those who act in concert with them, "with the express exception of law enforcement officials," to return to Renfroe's attorneys thousands of copies of State Farm claims documents they took.   You know by now what Scruggs did, so Renfroe's lawyers wouldn't get them -- he called up Hood, they talked it over, and Scruggs sent his docs to Hood, who already had his own copies.  Hood's office sent some communications to Scruggs to try to give him some cover, then later apparently got a little spooked and sent another letter, after Scruggs had already gotten rid of the documents, saying only give them to us if it doesn't violate Acker's order.  

The argument is that Scruggs did nothing wrong in sending his copies to Hood, because Hood is a law enforcement official and there's that exception, don't you see.  This argument just seems to get lamer and lamer each time I see it, lamer than a three-legged mule, lamer than a convention of Elvis impersonators, lamer than the word "lame," which is totally out of style. To gauge how lame, let's refer to the transcript of the February 6 State Farm v. Hood hearing, and let's let Hood tell it,  starting on page 111:

Q. My next question is, when Judge Acker issued an order for Dick Scruggs to turn over the very same documents which your office already had, your office asked Mr. Scruggs to bring them there, didn't they?

A. There again, the premise of your question is they're the very same documents. I told you I don't know. Secondly, I did send -- well, Courtney sent a letter to Mr. Scruggs asking for those documents. That is correct.

Q. You saw Courtney's letter asking Dickie Scruggs to send the documents to your office?

A. There was some communication. I don't know what form. I didn't see it. No, sir. That's my -- there again, I'm trying to state what you need to be asking Courtney.

Q. And you know, don't you, that because Mr. Scruggs defied a court order and gave the documents to Courtney Schloemer, that Judge Acker held him in criminal contempt? You know that, don't you?

A. You know, I think it's debatable. I know that the court found that it was in contempt, but I think there was some law enforcement exception and I -- I did read something that the -- that the -- the Ninth Circuit ruled that there was a law enforcement exception. So I take -- to answer your question the best I can, yes,  the judge held him in contempt for delivering those documents. I do not agree with your characterization of whether or not he should have -- he was actually in contempt.

MR. ROBIE: Your Honor, I'd like to show the witness Exhibit 13, the document we'll mark as for identification.

THE COURT: You may do so.

(DOCUMENT TENDERED TO WITNESS)

A. Okay.

BY MR. ROBIE:

Q. Mr. Hood, is this a letter that your office sent to Mr. Scruggs asking him to turn over the documents to you rather than to Renfroe pursuant Judge Acker's order?

A. I don't know. I've never seen the letter. So I don't know.

THE COURT: All right. Wait just a minute. Take a little time to read it if you would, General Hood. Let me do the same. So if you'll just give me an opportunity to read this letter, please.

(COURT EXAMINED DOCUMENT)

THE COURT: All right. You may proceed, counsel.

A. Yes, sir.

BY MR. ROBIE:

Q. Is that a letter that Courtney Schloemer sent out for your office?

A. There again, I don't know if she sent it out. I have read it and I'm familiar with -- that Courtney sent some document to him asking for it. And then she sent him another letter saying that we're not saying defy the court's order. I think there was a clarification. I think there was another letter, e-mail, communication, some type documentation. I haven't seen either of them, though.

Q. Did you talk to Mr. Scruggs between the date of Judge Acker's order and Courtney sending him a letter telling him to bring the documents to your office?

A. I have been told -- and I don't know if I actually read any of the transcript -- that Mr. Scruggs said that he called me. And, there again, that would have been -- from my understanding -- I try to get some dates straight. It would have been December 9th, which was a Friday. I know that on that day of the year, which would have been '06, I was down here again on my anniversary on the 9th, that Friday night and -- here in Natchez.

THE COURT: I hope your presence here today, General, won't stop you from coming to Natchez.

 A. Yes, sir. My wife loves it and I do too. And we stayed here that night. The Saturday night I went back. My folks had their 50th anniversary in Jackson. We went out that night. I don't know when I talked to Mr. Scruggs. I do agree that I did. I don't know the date. I don't even remember the conversation. I remember driving down with my wife on the phone the whole time and feeling bad about it. And if I talked to Mr. Scruggs, I do not know. I -- if he says that I did, I do not dispute that.

Q. Well, the record in the Renfroe case has a specific finding in the contempt citation that he talked to you and that the two of you decided he would take the documents -- or the documents would be delivered to your office. Do you dispute that?

A. I haven't read any of the findings of what Judge Acker has done. There again, I understand Mr. Scruggs testified to that and I don't -- I don't dispute that, that we asked him to send us the documents.

Q. Right.

A. That's correct.

Q. And did he do that?

A. Not to me. But as far as I know, he did send them to our office. I never saw the documents. I never -- there again, they were sealed and never -- never touched by our office.

Q. That set was never opened either, huh?

A. As far -- no. I thought we were talking about the set that -- which set are you talking about?

Q. I'm talking now about the second set, the Dickie Scruggs set that he brought to you in violation of Judge Acker's order.

A. There again, I don't agree that there was not some law enforcement exception. So your answer -- you want me to answer that he violated the order. The answer to that is no. As far as what he sent us, the documents that were sent to us in December of '06 were not opened it's my understanding. And Courtney can tell you about that.

OK, do you see my point? If there was no problem, would Hood have reacted to the questions like Robie was throwing snakes at him?  

 -- In the prosecution of Scruggs for criminal contempt in Alabama, Scruggs continues to call the special prosecutors "private counsel," suggesting they are Acker's toadies without true authority,  and moved for an evidentiary hearing to show they had no constitutional authority over him and that they had conflicts of interest that should preclude them from accepting the job of prosecutor/private counsel. (After  being prosecuted by professionals in Mississippi, apparently Scruggs will accept nothing less than the authentic article -- another testimony to brand loyalty). 

Here's a story about the hearing, which was held on February 8. An excerpt:

Attorneys for prominent Mississippi attorney Richard "Dickie" Scruggs asked a federal judge Friday to dismiss criminal contempt charges alleging he ignored a court order to turn over documents related to insurance claims after Hurricane Katrina.

A defense lawyer told U.S. District Judge C. Roger Vinson that Scruggs hopes to put the Alabama case to rest and concentrate on unrelated federal charges filed in Oxford, Miss., where Scruggs is accused of conspiring to bribe a judge in a dispute over $26.5 million in legal fees.

"We just want to get out of here and go deal with the problems in Mississippi," Scruggs attorney John W. Keker said during a hearing.

Special prosecutors said the Alabama case could be resolved in any possible plea deal in the bribery and conspiracy case in Mississippi, but there has been no word of an agreement. They urged Vinson to let the contempt charges move forward against Scruggs, one of the nation's richest trial lawyers and a brother-in-law of former Sen. Trent Lott, R-Miss.

The judge did not indicate when he would rule. Vinson, of Pensacola, Fla., was appointed to hear the case after federal judges in Alabama stepped aside.

Here's some documents and motions from the case. 

Here is a subpoena for documents prosecutors wanted to send to Scruggs.

Here is Scruggs' motion to strike the government's motion to which the subpoena was attached.

Here is Scruggs' motion for an evidentiary hearing to disqualify prosecutors.

Here is the prosecutors' response to the motion to disqualify.

And here is the government response to Scruggs' motion to strike the request for documents.

-- Roger Parloff has a great post on his Legal Pad blog at Fortune on Scruggs' defenses and the motions filed February 11.  Here's a link to the post, and here's an excerpt:

Attorneys for famous plaintiffs lawyer Richard F. “Dickie” Scruggs filed a battery of motions yesterday which suggest that he plans to try to invoke a variety of “entrapment” defense — claiming, essentially, that the government unfairly lured him into committing the crime — without openly admitting that that’s what he’s doing. If a defendant invokes the entrapment defense openly, he becomes subject to a number of special obligations and burdens that the Scruggs lawyers will want to avoid. I’ll explain exactly what I mean by that at the end of this post, after reviewing the substance of the motion.

A long, excellent post, read the whole thing.

And here is another good Parloff post, this one about the Hood testimony and the State Farm v. Hood hearing. I heard about it on February 8, but didn't have time to get to it until today. 

-- At the beginning of the post, I mentioned a scene from Moby Dick -- let's remember the very words with which the book ends: Ishmael says that the Rachel "in her retracing search after her missing children, only found another orphan."  Many more are out there, of course, orphaned stories, events, facts, and that is why I write, day after day -- to search the infinite sea to try to bring them home. You can help.

-- Finally, I'm trying out a new catch phrase for Scruggs Nation posts: "The truth will set you free -- or put you in jail, depending on the circumstances. "  Let me know what you think.

Posted By David Rossmiller In Industry Developments
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Well, everyone has been waiting for some time for the other shoe store to drop in the Scruggs scandal, especially after the guilty plea of Joey Langston. It  wouldn't surprise me to see some big developments soon. But be that as it may, for today, in USA v. Scruggs (Mississippi version), the news is the mass filing of motions in the case -- under the amended scheduling order of this case, yesterday was the deadline for pre-trial motions (March 11 is currently the last date for submission of plea agreements).

Below are the documents filed today.  I skimmed most of the memoranda, read some parts closely, looked at some of the evidence, but there was more here than I had time for.  However, it's all here for you to peruse at your leisure.

Here is a motion by the three remaining defendants -- Dickie Scruggs, Zach Scruggs and Sid Backstrom -- to dismiss the indictment for outrageous government conduct.

Another big motion: to suppress wiretap evidence.  And here is something that you will love to comb through, I'm sure -- the affidavit in support of these motions along with accompanying exhibits.  Read the affidavit and find which of the exhibits below you want to examine -- a lot of this is transcripts of phone conversations, wiretap applications and other good stuff.

• Exhibits 1-10
• Exhibits 11-20
• Exhibits 21-30
• Exhibits 31-37

A third: a motion in limine to exclude extrinsic evidence of alleged involvement in the Joey Langston plan to bribe a state judge. 

And a fourth, a motion to dismiss counts 2, 3 and 4 of the indictment.

Also, here is Sid Backstrom's motion to sever his trial from that of Dickie Scruggs, on grounds that it would be prejudicial to Backstrom if he were tried with Scruggs.

The same kind of motion from Zach Scruggs, with commentary on page 4 from Tim "Sweet Potatoes" Balducci. From "man crush" to "where the bodies are buried," the man is just a fount of quotable quotes.

UPDATE: There was another motion filed yesterday, although I didn't see it on PACER the last I checked about 9 p.m. Pacific Time last night.  It's a motion to change the venue of the trial -- too much bad publicity in Mississippi.  Some I've heard from would disagree and say there hasn't been enough publicity.  

Posted By David Rossmiller In Industry Developments
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I read through every single word of the transcript, and it was painful -- painful because Jim Hood thoroughly beclowned himself.  Whether it was an intentional diversionary tactic or involuntary, I cannot say, but the persona Hood offered at the hearing was certainly no Albert Einstein -- in fact, it was not even an Alfred Einstein.  After a time, I began to wonder if Hood's act was some kind of misguided Jerry Lewis tribute -- like this one -- and I hesitantly turned the pages, expecting him to burst out with a  "Hey Laaaaady!"  

In the biggest laugh of the hearing, Hood claimed he sent the "Dickie Scruggs is my confidential informant" letter to U.S. Attorney Alice Walker, in July 2007, not as a favor to Scruggs but to protect the Rigsby sisters and the State Farm documents they took. Kerri and Cori Rigsby, you may recall, were and are being sued by State Farm contractor E.A. Renfroe for allegedly breaching their confidentiality agreements by taking thousands of claims documents and feeding them to Dickie Scruggs.

Hood seemed hopelessly out of his element talking about, well, just about anything you would expect him to know about, but especially the Renfroe v. Rigsby suit and surrounding issues.  It turns out that he did not even write the letter -- his assistant AG Courtney Schloemer did --  and he claimed repeatedly to know little to nothing about the case, or about the order Judge William Acker issued requiring the sisters and their agents to return all copies of the documents to Renfroe's attorneys (a protective order was also part of the order, which forbad the attorneys from sharing the contents of the documents with Renfroe itself or with State Farm).

Instead of returning them, Scruggs called Hood (Scruggs has testified to this), and they made an arrangement to send the docs to Hood in an effort to take advantage of the injunction's law enforcement exception.  Now, there are three problems with this course of conduct.  One, Hood already had his own copies, so he didn't need any more from Scruggs.  Two, the law enforcement exception in the injunction was so Hood wouldn't have to return his own copies, not so he could become the public library for anyone with papers who wants to take it on the lam from the law (it was also so the Rigsbys could cooperate with Hood's criminal investigation without violating the order).  Three, it torqued off Judge Acker, who by and by issued an order ripping Scruggs and referring him for prosecution for criminal contempt of court.     

Let's look at one passage of the transcript, beginning on page 127, where Hood explains the letter to Martin:     

Crikey!  Reading this, it gives me the same feeling I had a few years ago when a woman from England told me the English navy was indisputably the greatest and most powerful in the world.  I didn't really have any response.  What are you going to say to someone who said adios to reality about the time of Adm. Nelson?

I could compile a list of what is wrong with this passage, but why overdecorate the Christmas tree? You can see for yourself.  Just remember one thing -- and here may want to take a closer look at the date at the top of the letter to Martin -- about the events Hood is talking about, the Rigsbys testifying before the grand jury, the State Farm witnesses before the grand jury: All that happened six months before he wrote the letter to Martin! Not to mention it wasn't Renfroe who referred Scruggs out for criminal prosecution, it was Judge Acker.  Does Hood mean to imply that Acker was shilling for Renfroe,or that Scruggs gets a pass whatever he does merely because he plays cards and shoots pool with Hood?

Let's also remember that those documents Hood was seeking to protect by writing the letter to Martin, he had already returned Scruggs' copy to Renfroe's attorneys several months prior.       

And let us not forget that despite Hood's repeated protestations of ignorance -- he said he didn't know what Acker's injunction said, didn't keep up on the pleadings in the Renfroe case, didn't really know what was going on -- he apparently felt well-qualified and sufficiently knowledgeable to send the letter to Martin.  The fact that Scruggs had just contributed $33,000 to his re-election campaign, he said, had absolutely nothing to do with his decision -- didn't even serve as an attention-getter.

Another curious aspect of Hood's testimony is he portrayed himself far differently than he has throughout his career, especially when running for re-election last year.  Back then, he was the man in charge, the Alpha Law Dude, finger on the pulse, etc. etc.  Now, according to his testimony, it's like Courtney Schloemer was the secret real AG and he was a sort of Chauncey Gardiner figure who makes vapid pronouncements that others, through the power of wishful thinking and self-interest, interpret as being full of meaning.  Check it out: 51 references to the word "Courtney" in the transcript, almost all from Hood.  Don't ask me, Courtney did it.  I don't know about that, you'll have to ask Courtney.  I wasn't in charge of that, Courtney was.  I didn't eat any breakfast that day, Courtney never called and told me to.  Hood had to know this was a disastrous performance, didn't he?  I mean, he couldn't have done himself any more damage by wearing to court one of those "I'm with stupid" T-shirts with the arrow pointing up.  So what would have been his motive for painting a portrait of himself with the words "Out to Lunch" tattooed on his forehead?  Is he that worried about the current state of investigations in Mississippi that he's going to claim either ignorance or ineffectiveness as a defense? 

Before making two final points, let's compile a short list of other notable things about this hearing transcript:

• First off, if you have not seen it, take a look at the State Farm amended complaint in State Farm v. Hood, paragraph 18.  This contains the agreement between Hood and State Farm that ended his criminal investigation of the insurer.  Hood claimed that the words "the investigation" could not have referred to allegations State Farm defrauded the federal government by processing wind damage as federally insured flood damage (for properties with flood insurance), and that he didn't think of such allegations until April 2007.  Instead, Hood said, his investigation prior to the settlement dealt only with insurers' failure to pay wind claims.  You may not need me to point this out, but this is the same thing!  Not to mention that you can watch this video of Hood testifying to Congress on February 28, 2007,  where Hood cited the implications for failure to pay wind damage as including that the federal flood insurance paid for damage it shouldn't have (see approx. 7:10 of the video).  Note that February 28, 2007 is prior to April 2007.
• Hood said he got the idea for filing his civil lawsuit against insurers, which he filed just two weeks after Katrina hit, from the sheriff of Jackson County.  No offense to the sheriff, but why isn't Hood soliciting legal advice from other key sources like his barber, his dry cleaner and the guy at the burrito cart down the street? 
• He admitted he circulated a draft of his civil lawsuit against insurers, filed just two weeks after Katrina hit, to a group of plaintiffs' lawyers including Dickie Scruggs.  At this point, most Katrina claims had not yet been made, much less adjusted.  At the very least, this stinks.  Not saying that the two things are in any way tied together, but one can't help but remember that this lawsuit was filed in Hinds County, the same county were Joey Langston has confessed that he tried to bribe a judge. 
• Several people who read the transcript wondered why State Farm attorney Jim Robie didn't try to pin Hood down more -- he failed to answer many, many questions.  After reading the whole transcript, I have two answers: first, to the degree Robie tried to pin him down, Hood said he didn't know and/or that Courtney did it, and second, Hood was destroying himself as it was, decimating his credibility and his own case like the Grim Reaper swathing down whole populations in the Black Death.  If this is not true, whatever could have possessed Hood's lawyers to enter into a settlement just a few hours after he stepped off the stand, without even waiting for the next day's testimony?
• If you're Courtney Schloemer, how do you like Hood laying everything off on you?  You gotta love a leader that stands behind you -- way, way, way behind you, as you lead the charge into a machine gun nest. 
• One Mississippi lawyer who is vehemently anti-State Farm told me, after reading the transcript, that the worst thing Hood and Scruggs have ever done is to make State Farm look like a victim. I don't quite see it the same way, but the person makes a point.
• In looking through Robie's questions to Hood, I know the facts behind many of these questions, and so I know those questions weren't tricks or phony. In light of that, and considering Robie's reputation, I have to assume he had solid evidence to ask the question about whether Hood was approached by Tim Balducci and Steve Patterson, who have since pleaded guilty in the judicial bribery case.  The question was whether Scruggs sent the two to tell Hood that if he didn't settle the criminal investigation of State Farm (State Farm had demanded that Scruggs' 640 civil cases, Hood's civil lawsuit, and the criminal investigation all be wrapped up at once), that Scruggs would fund an opponent to Hood in the primary election (see page 158).  Hood eventually denied it, but read the back-and-forth for yourself.  The theory behind this question, of course, is that Scruggs would exert such pressure because he wanted the cases to settle, in that Scruggs and the Scruggs Katrina Group stood to gain attorney fees of $26 million from the settlement.

Second to last, I want to talk about Hood's answers about anti-concurrent cause language in insurance policies, one of my favorite subjects.  As I said in the last section of this article that appeared in New Appleman on Insurance: Critical Issues, Hood is completely, totally wrong about how anti-concurrent language works and how it was used by insurance companies in Katrina adjusting.  I cannot stress strongly enough that out of everything he has ever said about anti-concurrent cause language, not one single word I have heard or read has been correct. Not one. 

He again testified at length about anti-concurrent cause language in the hearing, and again, he got it all wrong.  Read the article above,  look at the transcript, and you will see that I am right. (I think the version of the article I linked to above was not in fact quite final, not the exact version that appeared in the publication, so it probably has a few typos still in it).

I was appalled at how proud Hood was that he negotiated language for State Farm's proposed arbitration procedure that was to have been a part of the class action certification and settlement that never happened.  On page 169, he said he subtly inserted the phrase "During the reevaluation and arbitration process, State Farm will not assert as a ground for the total denial of a claim that water contributed to policyholder's loss if wind damage occurred." 

When I read that, I actually felt sick to my stomach that he has fooled himself into believing he got one over on State Farm.  Hood, listen to me!  These people wrote that clause 25 years ago, they guard it like it's the Holy Grail, they know what it means and what it doesn't mean, they fought for it in the Fifth Circuit and won.  Why do you think they let that language go in, Hood?  That's right, because what I have been saying for a year is true -- Katrina damage did not involve concurrent or sequential causes of loss, as those terms are understood in this context, and State Farm knows it -- they repeatedly admitted that very thing in depositions.  So congratulations, you got them to agree to their own interpretation of the policy and their own interpretation of the facts of Katrina damage!  The real point of controversy is the last part of the phrase -- "if wind damage occurred."  You missed the whole point, Hood!  Who is to say whether wind damage occurred or not, and if it did, how much?  Right. Now you begin to see. This is kind of like someone sitting around smoking packs upon packs of Marlboros and thinking the biggest threat to their health is vampires.  

And really lastly, I want to address briefly the concerns I've heard about the settlement in this case being sealed.  How can this be, folks ask -- Hood is a state official, he enters into an agreement, the people have the right to know what it is.  Yes, others say, but Judge Bramlette has jurisdiction over the case, he can seal the settlement if he wants to.  But here's what I wonder about -- unless he plans to memorize the settlement, Hood has to have it on file somewhere in state government.   Once it is there, is it not a public record that anyone can access? And how long is this supposed to be under seal, and why? Do you think in this secret settlement that Hood got the better of State Farm, just like he did with that "subtle" provision on the anti-concurrent cause language?

Posted By David Rossmiller In Industry Developments
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OK, y'all have been waiting to see this, and here it is. Here's a transcript of the February 6 and 7 hearing in State Farm v. Hood -- lots of fine reading here, knock yourself out.  I've looked through it at some key places, but at present I don't have time to write a bunch about this.  However, it's an important document and I wanted to get it before the public as soon as I could.  I'll have more to say later.

UPDATE: I've been looking under the Hood of the transcript, reading and considering, talking to various folks with various points of view, and I'll post Sunday February 10 with more thoughts on the transcript and the settlement.

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I am glad John O'Brien of Legal Newsline did this story on the Wilson-Scruggs fee dispute case, the one in Hinds County where Joey Langston pleaded guilty to attempting to bribe the judge, Bobby DeLaughter, with consideration for a spot on the federal bench.  This is the best explanation I have yet seen of the case, who the players are and what happened.

Here's an excerpt:

For William Roberts Wilson, disagreeing with fellow trial attorney Richard "Dickie" Scruggs has caused a nuisance that has lasted 14 years -- and counting.

With the recent confession of one of Scruggs' attorneys that he attempted to bribe the judge presiding over Wilson's attorneys fees dispute with Scruggs, several issues have risen that will keep the arguments alive well past the 2007 settling of the case.

Wilson attorney Charles Merkel said a few options are being discussed for the suit, filed in 1994.

"There are new developments everyday," Merkel said. "We want to know all of the facts before we act precipitously with only half of the knowledge."

Wilson, Alwyn Luckey and Scruggs each had their own stake in a group Scruggs started to file asbestos cases. Wilson had sold his interest in more than 2,300 asbestos cases in an agreement that was interpreted differently by the two sides.

Luckey was awarded $17.5 million in his dispute with Scruggs after a trial in front of U.S. Magistrate Judge Jerry Davis, but Wilson received only a $1.5 million payment because Hinds County Circuit Judge Bobby DeLaughter's interpretation of the contract showed no remaining balance owed to Wilson, and that a trial would have been merely for bragging rights.

Now, besides the fact the story is a good read, I'm glad it came along because it allows me to talk a bit about the transcript for the trial in the Wilson-Scruggs case without spending a long time trying to explain the whole background.  Read the O'Brien story for most of that. I will only add that the case had parallel components -- in Hinds County, in the case before DeLaughter, the issue was the proper interpretation of the original joint-venture contract for asbestos lawsuits; while in another case in federal court the issue was whether Scruggs had wrongfully taken Wilson's asbestos fees money and used it to fund Scruggs' later tobacco litigation.

So with that said, here is a copy of the transcript of the state court trial.  Actually, what you will see is argument before DeLaughter, who rules in favor of Scruggs on key questions, which led to a settlement that was announced on the record before DeLaughter the next day. (The handwriting in the transcript is not mine, but it does serve to draw your attention to places you may be particularly interested in).

You can see here, on pages 19-20, that the judge continues his rejection of the methodology of Wilson's expert of calculating monies owed under the contract, and, since Scruggs had very late in the game forked over some $1.35 million that was indisputably owed (see page 33), Judge DeLaughter said his prior rulings meant that no compensatory damages were owed, that no punitive damages could be awarded, and therefore the trial was going to be over "bragging rights."  If you look at the earlier portion of the transcript, however, you will see that, had Judge DeLaughter instead accepted the methodology of Wilson's expert, some compensatory damages would have been at stake that day, and punitive damages could have been awarded by the jury.  You will also want to note that, arguing for Scruggs at the trial, were Joey Langston and Tim Balducci. (Just as an aside, I was impressed by Balducci, I thought he did a good job in his arguments -- did not seem at all a wannabe as some try to portray him).   

Remember that special master Bobby Sneed had earlier in that year, 2006, given a recommendation that Scruggs owed some $15 million under the contract. This finding was rejected by DeLaughter.

Remember also that in the federal court case, which was stayed by Judge Lee pending the outcome of the case before DeLaughter, Lee had basically blown by Scruggs' summary judgment motion in an April 2005 ruling, and a constructive trust may well have been imposed over Scruggs' tobacco money, but for the stay pending the resolution of the state court case.  Here is a copy of Judge Lee's decision so you can read it for yourself, if you are so inclined. What constructive trust means here is that, because Wilson's money may have furnished some 29 to 39 percent of the money used to finance the tobacco litigation, Wilson would have had a claim to some of the gain on that money.

However, look at the last pages of the trial transcripts, and you can see the settlement of the Hinds County matter was in essence a settlement of the federal court case.  So I'm not sure how much, in total, Wilson could have collected had Sneed's recommendation stood up and the constructive trust claim gone to trial in federal court.  As it was, the case settled for a much lesser amount, which the parties are not to divulge under the terms of the confidential settlement agreement, but this case has been looked at by so many people that a whole bunch of folks know what the amount is and have talked about it -- somewhere in the $5 million to $7 million range, I believe. 

Food for thought.  You know the feds are looking through this stuff.  Now you can too.

-- Lastly, and I know you're going to say that stuff about Jim Hood is technically not Scruggs Nation material, but I just don't have enough energy to write a whole post about the immediate and substantial rising that occurred with news that Hood had entered into a confidential settlement with State Farm over the State Farm lawsuit that enjoined his further criminal investigation.

Some people commented publicly, some sent me e-mails, I'm sure it's the talk of Mississippi today.  One point that seems valid is how can Hood keep a state contract secret?  He was sued in his official capacity as Attorney General, is not the settlement available under the state's public records law?  Another is why does he want to? I mean, is there some odious term in it, like he is required to show up at State Farm's headquarters in Bloomington each February 7 and say, "Thank you, sir, may I have another"?  Was there some particularly humiliating condition -- he had to autograph for Ed Rust a copy of the Lee Harrell deposition, where Harrell alleged Hood threatened to indict State Farm from the CEO on down if they didn't settle civil Katrina lawsuits, and write on the transcript "Me sorry" with one of those dopey frown faces drawn next to it?

Posted By David Rossmiller In Industry Developments
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This just in.  The judge has ruled that the January 2007 agreement between Hood and State Farm is not tied to other contingencies like the disapproved class action settlement, is enforceable and is unambiguous.  The parties have reached a settlement which is confidential. The federal court retains jurisdiction to enforce the settlement, the lawsuit is dismissed with prejudice.

UPDATE: forgot to include a copy of the judge's order. Here it is.

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Holy Cow, do I wish I could have been in the courtroom to hear the exchange between State Farm attorney Jim Robie and AG Jim Hood, which I was hearing about for a couple hours tonight by rumor but finally have confirmed as true.  At first, I did not quite believe the reports I was receiving, because it suggested a colossal drubbing of Hood on the witness stand beyond what even I would have expected. 

You know, Hood went into this current round of litigation attempting to dissolve the State Farm injunction, in effect shouting the motto "Bring it on!" After spending Wednesday on the witness stand, it appears Hood has a new motto: "Stop bringing it on!"

Let's slow down here, and take this one step at a time.  I see this exchange is alluded to in the updated Associated Press story tonight, but not in the amount of detail I heard. In the AP story, Hood is finally talking a blue streak and saying his dispute with State Farm is settled.  State Farm says in the story that this is "premature," which I don't know at this moment what that means.  Maybe it means all the details of the "No More Pantsing of Hood" clause have yet to be worked out.  Let's think for a moment.  Why would Hood, who has treated the press this past two months as if it consisted of Medusa and the Gorgon sisters, and who locked down his office with a "no comment to the media or bloggers" policy earlier this year (it hurts that he did this shortly after I publicly invited him to call me for an interview to present his side of events), be trying to get out in front of something that State Farm says is premature to talk about?  Unless it is perhaps an effort to save face about something that would otherwise look like a reprise of the Killer Bunny scene from Monty Python and the Holy Grail: "Charge! . . .  Run Away, Run Away!"

I don't have verbatim quotes, but Robie asked Hood if he was at a dinner in Jackson right after Scruggs had tentatively settled 640 Katrina cases with State Farm, and if Tim Balducci and Steven Patterson told Hood that if he didn't help make the settlement happen Scruggs and Mike Moore would make sure Hood had opposition in the 2007 Democractic primary, and within a week Hood settled the criminal investigation with State Farm in late January.

The way I heard it is Hood turned red at the question, said he hadn't been to the restaurant in a long time, then said he hadn't been threatened, but instead said he had talked with Balducci and Patterson about leaving a firm they were with.  

Here's an excerpt from the AP story on the exchange:

During Wednesday's hearing, a State Farm attorney asked Hood if it was true that Scruggs threatened to support an opponent to run against Hood last year if he didn't end his criminal probe of State Farm as part of the January 2007 settlement.

Hood, who was re-elected to a second term in November 2007, denied that allegation.

"If you're asking me, 'Did somebody come to me and threaten me?' the answer is no," he said.

Now, you may remember that in the Lee Harrell deposition on October 31, Harrell testified that Scruggs threatened to support an opponent in the Democratic primary of Insurance Commissioner George Dale unless Dale supported Scruggs' proposal to set himself up as some sort of Katrina Czar over a $500 million slush fund that was to be squeezed out of State Farm.  So the kind of threat implied by Robie's question would not be unthinkable in Scruggsylvania.  

I do not yet have a transcript of Wednesday's proceedings, but I have every reason to believe that the Robie-Hood exchange happened pretty much like it is related above.  With Robie's high reputation, it doesn't seem to be part of the equation that he would step out on a limb without some evidence to support a question like that.   

In addition, see my first and second updates yesterday on the hearing, and you get a picture of Hood's world starting to look like one of those Salvador Dali paintings -- clocks turning into liquid and dripping off the wall, folks floating above the ground with no feet, barren landscape with no sign of life, everything getting real surreal on him in a big hurry, like he wants to yell "Waiter, check please!" but he knows it isn't going to do any good. 

Now, think about it from Hood's perspective, considering what he's been asked about and what he said.  He's laid a whole bunch off on Courtney Schloemer, and she's due up the next day, and gulp, what is she going to say? And Scruggs' deposition transcript, where presumably he took the Fifth, is going to be read, question after nauseating question and Scruggs taking the Fifth beaucoup, and State Farm is going to be arguing a negative evidentiary inference from the lack of a response.  Plus, as I understand it, Robie at the end of the day isn't done with Hood, and Hood's gotta be thinking, is this like a timeout in football when the field goal kicker comes on to the field? Is dude trying to "ice" me? What if he's saving some question that's even bigger than the Balducci question? What if he's got a secret question that is, like, Balducci squared? I mean, put yourself in Hood's shoes, you might feel like Mike Tyson is your opponent in the ring and you're all ears.   Hey! Someone turn off that dang heat, this courtroom is like a sauna!

Let's also think about something else here: State Farm sued Hood, and got an injunction, and at the beginning of the hearing, the judge extended it for another month at least, so what are the odds that this settlement, when officially announced, is going to involve State Farm walking away with anything less than a non-prosecution agreement?    

UPDATE: Here's an AP story from January 9, 2007, where Hood is talking about his negotiations with State Farm.  In this story, all that is discussed is a settlement of Hood's civil lawsuit against the insurer, the one about which he testified yesterday and said he showed a draft to Scuggs before filing it.  Not mentioned yet, however, is a settlement of the criminal investigation.  It is understandable that Hood would have been willing to dismiss the civil lawsuit, but to give up his criminal investigation was something he would not naturally have wanted to do, and to not only give up an investigation but to tie it to settlement of Scruggs' cases is pretty extraordinary.  The addition of the proposed class action, where 36,000 policyholders would get some money, would have been some incentive to add the criminal investigation to the pot, but also remember that Judge Senter had serious problems with the proposed procedures of claims resolution under this settlement, saying they were all in State Farm's hands -- in effect, he was questioning whether policyholders would have a fair tribunal to resolve disputes. Scruggs and the Scruggs Katrina Group, however, were going to get some $15 million or more in attorney fees out of the settlement of the class action. (Remember, the class action, which never made it past Senter, is different from the settlement of the 640 Scruggs Katrina cases against State Farm, that happened and didn't require judicial approval).

Posted By David Rossmiller In Industry Developments
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Here's the latest (I've had this information for a while but just got a few minutes to blog) on the hearing: 

Posted By David Rossmiller In Industry Developments
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These are the latest developments from the State Farm v. Hood hearing, on whether State Farm's injunction against Hood's criminal investigation should continue, as of 11:30 a.m. Pacific Time, 1:30 p.m. Central Time. 

Testimony this morning touched on:

• the scope of Hood's investigative subpoenas and post-agreement subpoenas;
• the Rigsby sisters' subsequent data dump in July and whether they could be considered agents of the Attorney General;
• issues relating to National Flood Insurance Katrina claims by homeowners;
• the famed "confidential informant" letter from Hood to Alice Martin, U.S. Attorney for Northern Alabama, where Hood told Martin that Dickie Scruggs shouldn't be prosecuted for alleged criminal contempt, as desired by federal Judge Acker, because Scruggs was his confidential informant in Hood's investigation of insurers' Katrina claims handling;
• testimony about whether Scruggs himself is a whistleblower, insofar as state law appears to appy to whistleblowers against government agencies, not to whistleblowing in general;
• Kerri Rigsby and other witnesses were not in court while not testifying, but if Hood would have showed up this morning he would have been allowed as an officer of the court. However, Hood did not show up before lunch, apparently to the surprise of his counsel.  Hood is due to testify after the lunch break;
• No in camera discussions took place before lunch, everything was in open court.

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What a show it's going to be today.  We've got Jim Hood, Courtney Schloemer, Kerri Rigsby, and the transcript of the deposition of Dickie Scruggs all showing up today for the big hearing to decide if State Farm's injunction against Hood's criminal investigation will continue. 

As far as that Scruggs deposition, no one is supposed to talk about it because it's sealed tighter than an FBI waterproof body microphone, but I believe the deposition happened late Monday after Judge Mills woodshedded Scruggs. Since Scruggs' own attorney said he was going to refuse to answer each question on grounds that it might tend to incriminate him, it would be shocking if Scruggs did not journey to the Fifth Dimension. The questions, from reading the transcript of Friday's hearing about the Scruggs deposition (see below for a link, it was in yesterday's post), included many about how much Scruggs and Hood cooperated in linking civil litigation and criminal investigations, when both of them began working with the Rigsby sisters, Mike Moore's involvement, and many, many "Moore."  But even though Scruggs didn't answer, look at that All-Star cast listed up top, they're not all going to take the Fifth -- should be plenty of good questions and answers today.  Where's Court TV when you need it?    

I'm sure Hood is tired of getting pies thrown in his face, but I thought the tactic in this Motion to Strike State Farm's trial brief was overly defensive.  This new filing by Hood takes to task the State Farm's trial brief, which I linked to in yesterday's post, as being nothing but a surrebuttal to Hood's motion to dissolve the injunction.  Maybe, maybe not, but complaining about a party's extra briefing usually comes off as pretty whiny, like running to teacher to tell about kids who won't give your ball back.  It just highlights the fact you believe the brief was effective -- if it wasn't, you wouldn't care, because you never try to stop someone who is damaging themselves.  Better to just use the occasion as an excuse for writing your own extra brief knocking down any new points they made and making your own again. 

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You know, I'm glad I read this long story in the Daily Journal about Joey Langston.  I learned a few things I didn't know. However, one goal of the story was to make the reader see the human side of Joey Langston, and to tell the truth, the story just kind of made me more ticked off at him -- here's a guy on top of the world, holding himself out as the state's top trial lawyer or some such, and he has to resort to a conspiracy to bribe a judge.  My suggestion for some entrepreneur in Mississippi: start selling bumper stickers that say "Real Lawyers Don't Bribe Judges."  You want the idea, it's yours.  Just buy me a good cup of decaf when I come to Mississippi in April.  I've heard from some people in Mississippi -- some are friends of Langston, some just know him -- and some hold out high hopes that, out of all this bunch, he's the one who will be redeemed, learn from this, become a big humanitarian and devote himself to good. We'll see.  Talk about redemption is cheap. The real thing comes at quite a price, and bribes don't work. 

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Some things I wanted to update you on in State Farm v. Hood. Remember what this case is -- State Farm sued Hood back in November in his capacity as Attorney General, seeking to enjoin his renewed criminal investigation into the insurer's claims adjusting activity.  State Farm obtained an injunction, that continues to this day, barring Hood from his investigation on the basis of an agreement he signed in early 2007 not to prosecute the insurer as a result of its settlement of 640 Katrina cases brought by the Scruggs Katrina Group.  State Farm also paid $5 million to Hood, which he wanted to cover legal fees and costs of his investigation.  

Now, I have heard from all sides on this question, and one very interesting point of view -- and these folks would not be in the category of really big fans of State Farm, quite the contrary -- is that it was remarkably not smart to link a criminal investigation so directly to the fate of civil litigation.  A couple conclusions derive from this point of view.  First, what better way to say this whole thing was a wholly owned subsidiary of Scruggs, Inc.  Second, even if it wasn't, it was less than astute to give grounds for the appearance of a shakedown, especially as -- again, in this view -- that the whole massive settlement of 640 cases was a boon for State Farm, not a great deal for many if not most of the 640 homeowners, and a big payoff to Scruggs & Co. for results that, when you do the math and look at the individual cases, were not that impressive.  This view would also hold that, whatever his motives, Hood didn't necessarily want to drop the criminal investigation, but got pushed to do so by those who said it was a good idea to put dollars in the hands of Mississippi policyholders.

We should also recall that, at that time, it appeared it would be possible to some -- not to me, but to some others -- to get approved a massive proposed class action involving some 36,000 policyholders in Mississippi, and that this deal between State Farm and Scruggs, with Hood's blessing, would pump more millions into the state.  The class action, which was to have been settled as soon as it was approved, was rejected by Judge L.T. Senter Jr. on grounds of procedural unfairness and failure to comply with the Federal Rules for class actions.  Hood, a few months later, filed his own lawsuit against State Farm for alleged breach of this class action agreement, even though the insurer did enter into an agreement with Insurance Commissioner George Dale that resembled the class action settlement in some ways, and even though if a federal judge rejects your class action settlement, that is a pretty good excuse for not doing it .  I have always wondered if Hood believed that State Farm thought all along the class action was not likely to be approved -- kind of like they hoodwinked him.  It would be difficult for him to say this publicly, because to do so would be to admit State Farm was smarter.  In addition to filing his own lawsuit, Hood also restarted his criminal investigation with a state grand jury in July 2007. 

In any event, here's some recent documents relevant to this case.

As you know, a hearing on whether the injunction should continue is coming up February 6.  State Farm issued a subpoena for the attendance of Courtney Schloemer, one of Hood's assistants who was involved with the grand jury investigation of State Farm, to attend the hearing.  My prediction is that Schloemer will attend, will not seek to avoid testimony under any form of privilege, and will air out some things she's been wanting to say for some months. 

Hood, for his part, issued a subpoena to Kerri Rigsby, of "whistleblowing," data dump and Scruggs Katrina Group fame.  Here's a copy of the subpoena. I imagine he wants her there to testify about State Farm's allegedly wrongful acts that led her to take some 5,000 to 15,000 State Farm claims documents and bolster Hood's reasons for wanting to investigate the insurer.  

Now this is interesting: here is the transcript of a February 1 hearing held before Michael Mills, chief federal judge of the Northern District of Mississippi, on State Farm's motion to compel Dickie Scruggs to submit to a deposition for the case and Scruggs' motion to quash the deposition subpoena. The hearing was held in Oxford, not in the Southern District where the State Farm v. Hood case is located, because Scruggs is in northern Mississippi, and outside the reach of a trial subpoena to bring him to the hearing.  As the transcript makes clear, Scruggs intends to assert the Fifth Amendment at the deposition, and we know from Judge Mills' testy order yesterday that Scruggs will have his deposition taken no later than today. 

State Farm, however, wants him at the deposition because it wants to use an evidentiary presumption against him -- in the civil case -- that his answer to each question would have been unfavorable to Hood's position. I'm not sure I fully buy the extent to which such a presumption can be made in these circumstances, but I haven't really researched the issue for some time, so I don't really know.  Aside from substantive issues, you and I both know State Farm wants to take this deposition and get Scruggs to take the Fifth for fun -- Scruggs endlessly cited the fact that some State Farm employees took the Fifth in some of their depositions, not to mention the simple fact that it's Scruggs.  Not saying their aren't legit reasons to take his deposition, but as a lawyer who takes depositions himself, I can vouch that legitimate purposes and having fun are not always strangers to one another.   The result of the hearing, of course, was that Judge Mills ordered the deposition to go forward.    

Here is a copy of State Farm's trial brief for the hearing tomorrow.  I didn't see a trial brief for Hood on PACER. 

The hearing is going to be a big one. I imagine everyone will be watching for the result, particularly some of the folks in the criminal division of the U.S. Attorney's Office for the Southern District, who are debating which way to go with their own grand jury investigation.  Sometimes prosecutors aren't all that different from other folks, they don't need a weatherman to know which way the wind blows.

Posted By David Rossmiller In Industry Developments
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Yes, I know, about now everyone is expecting another edition of Scruggs Nation, where folks gather round the indictment water cooler and drink deeply of the latest scruggsational news and analysis.

And that will come with the next post, but first, there is unfinished business regarding Jim Hood.  How do I justify letting Hood on stage first?  Easy.  Look at how vital Hood has been in Scruggs' Katrina run.  I mean, Hood was like a blocker or a jammer in Roller Derby -- how you gonna get counterclockwise around that track without him?  For evidence, you need look no further than that "confidential informant" relationship the two had.  They've drifted apart recently, you say?  Possibly as a result of that strong odor of scandal wafting from the direction of the Scruggs stables?  Hood has suddenly developed a compulsion to spend all day polishing his office desk and peeking out through the curtains? Come on, let's get serious, don't you sell Hood short.  You think he's gonna run for the tall grass?  Not likely.  It wasn't but last week that Hood was slinging for Dickie once again, trying to get him out of having his deposition taken by State Farm. Face it, these guys are a team, they are joined together like links in a chain.  I'll leave it up to you to decide which is the weakest link.

The unfinished business is what to call posts when they are about Hood.  Now, you have to rise pretty high to get a special name for posts about you on my blog, but I think Hood has earned it. I tried "Hood Nation," but that won't do -- readers hated it, plus it steals Scruggs' spotlight, and one thing you don't do if you know what's good for you is to stand in Scruggs' light.  Or his shade, for that matter.  Best if you step aside entirely.  Here's some reader suggestions for the marquee name for Hood posts:

• Hoodlum
• Hoodwinked
• Hoodsville
• Hood N' Plenty
• Hoodgate
• Hoodzpah

I also tried out "Hoodnscruggs" for posts about both Scruggs and Hoods -- because remember, these guys really work well together, they put the "confident" in "confidential informant" -- but really, that was just a joke, too many brand names and it lowers the cache of the whole IP portfolio.  I don't think I need a name for joint Scruggs and Hood posts.  Still, there were two suggestions I really liked.  The first combined the names -- Scrood Nation -- in a way that suggested the inevitable outcome of the combination.  The second played off the old Bartles and Jaymes commercials -- the new version would be called Barters and Shames.  There was even a clever commercial-like scenario where the two would shake down people for money, then ironically, use the old Bartles and Jaymes tagline: "Thank you for your support."  Actually, sounds like a good scene to put in the musical I'm writing -- The Katrina Follies, featuring a showstopping number with actors portraying Scruggs, Hood and the Rigsby sisters, backed by a chorus line of briefcase-carrying Scruggs Katrina Group lawyers, surrounded by huge, oversize copy machines cranking away at reams of paper, with State Farm claims documents falling gently from the sky like giant snowflakes.  The song is called Do Da Data Dump and features this catchy refrain: "When Scruggs call the tune, everybody jump/  everybody love to do da data dump."   Believe me, when the audience gets a load of this, it's gonna take the roof off. 

Posted By David Rossmiller In Industry Developments
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Late last year, I linked to Randy Maniloff's 2007 Top Ten coverage cases -- I wrote about it in a post here, and I'll say it again: how many people out there are producing sophisticated legal analysis where they can make you laugh at the same time? Not many, unless they've been keeping themselves well-hidden.  That's why I think this Top Ten is such a remarkable achievement.  I have this dream that someday the market will demand that all legal analysis be written like this -- with recognition that readers are human beings, not bezerk androids that will devour whatever swill you toss in front of them, like electric hogs bellying up to the trough for another helping of legal slop.  

Lexis-Nexis, which publishes Mealey's, where the Top Ten appeared, also did a podcast where they interviewed Maniloff.  Probably just a little tweaking on the sound quality wouldn't have hurt, but it's a good podcast, very informative.  Click here to get to the Lexis Insurance Law Center post where you can listen to Randy's podcast, and read a copy of his article.    

As a member of the advisory board of the Insurance Law Center, I also want to point out this good post by Karen Yotis on the ILC about Maniloff's work.  Let me ask you: did you ever think you'd see lively, well-written stuff like Karen's post, or free content like the links above, from Lexis-Nexis? I didn't.  I mean, it took a lot to convince me.  But I'm impressed by what they are doing with Web 2.0 and the direction they are going.  The Web has transformed all sorts of communications, and the world increasingly will be made up of two kinds of people -- those on the train who understand this, and those who don't get it and stand staring and slack-jawed as the train pulls away and the folks on it wave bye-bye.

One last thing: if you like what you see, take half a minute to tell Randy you appreciate his hard work -- his e-mail address is in the article.  And check out the ILC and drop an e-mail to  Karen and the folks there -- they're listening for your feedback.

Posted By David Rossmiller In Industry Developments
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How long has it been since Katrina came ashore? More than two years and five months.  You would think that would be enough time for the government to make up its mind whether it has reason to believe the allegations of the Ex rel. Rigsby False Claims Act lawsuit, or whether it has reason to believe the allegations are pure bunk. 

The government is ready to do neither.  In response to Magistrate Judge Robert Walker's order of last year that the government must elect by January 31 whether to intervene in the case or let it slide, the U.S. Attorney's office dropped back 15 yards and punted. 

By Order dated August 7, 2007, the Court indicated that the Government must make its election regarding intervention on or before January 31, 2008, and it has indicated to the United States that no further extensions of time would be permitted. The Government's investigation has not been completed, as certain potentially relevant information has not become available. As such, the United States is not able to decide, as of the Court's deadline, whether to proceed with the action. Accordingly, the United States hereby notifies the Court that it is not intervening at this time.

However, under 31 U.S.C. § 3730(c)(3), the United States retains the right to intervene in this case at any time “upon a showing of good cause,” and the Government’s investigation of and attention to this case will continue.

Here's a copy of the government's response. Before this response, I predicted privately that the government would not intervene in this lawsuit for several reasons.  What U.S. Attorney in his right mind wants to deal with the implications of this lawsuit? It alleges fraud on the part of insurers, in part because they allegedly paid out federally backed flood insurance for homes that were damaged or destroyed by wind, thereby minimizing or eliminating their own wind payments while ripping off the U.S. Treasury.

Great story, until you realize all the places it leads. Even if it is true, what do you do with the fact that it was the government itself that waived proof of loss after Katrina, to speed flood payments and get money in the hands of homeowners as quickly as possible?  Who's defrauding who? What do you do with the fact that policyholders applied for and accepted the flood payments? If the flood payments were wrongful, so was the acceptance of them, and there is no way around that fact.  Either the money was legit to compensate legit flood damage, or insurers paid it knowing it was a charade and policyholders took the money under false pretenses.  So if you're going to accuse insurers of a rip-off, you had better be ready to go around and start demanding money back from the policyholders.  Is that going to happen? Only if the government has taken leave of its senses, only if they've said adios to reality -- the public would rise with pitchforks and torches. 

I myself have seen no convincing or persuasive evidence that the allegations of Ex rel. Rigsby are correct.  I know many of you disagree with me.  Let us set ideology aside for a moment and remember that the scenario depicted -- overpayment of flood money and underpayment of wind money -- could occur only in limited circumstances.  Areas where flood was without dispute the main or only agent of damage to homes, such as in New Orleans, would be ineligible for potential inclusion -- no wind damage, no potential overpayment of flood money.  Also, where flood damage to homes was in fact equal to or greater than the amount paid out (the maximum flood policy limit was $250,000), the potential issue with underpayment of wind damage is not a rip-off of federal money, but rather legit payment of flood money and wrongful failure to pay wind damage.

So the universe of potential instances of the alleged fraudulent conduct is confined to homes where it can be proven there was (1) wind damage but no flood damage, yet flood payments still occurred: (2) flood damage that was smaller than the amount of flood insurance paid, and where wind payments were either not made or were less than was warranted by the credible proof of wind damage.  Do you see what I'm saying? The number of cases where these potential facts apply is a relatively small percentage of the total number of Katrina claims.  And when you look within this universe, you are faced with the issue of how do you prove the flood payment was excessive in relation to the damage?  This can be a very difficult determination, and it would have to be done by the government hundreds if not thousands of times to prove its case.  Let's remember another thing -- whose name is on this lawsuit? That's right, Kerri Rigsby.  Who approved the federal flood payment to Thomas McIntosh that has become so famous in the McIntosh v. State Farm case? That's right, Kerri Rigsby.  Before setting out on the trail, think where it leads. 

Question: with the U.S. Attorney trying to occupy some gray zone where it is not formally repudiating this case but also not endorsing it, where does the case sit with the main lawyer behind Ex rel. Rigsby, Dickie Scruggs, otherwise occupied?  Remember this story from December, where AP reporter Mike Kunzelman said that another firm Scruggs hired was hard at work on the case? I wonder whether this case is really active or is ready to be stuck in the litigation wax museum.

Another question: what do you make of the amazingly ambiguous statement in the government response quoted above? "The Government's investigation of and attention to this case will continue."  Is this just typical blah blah blah in a legal filing, some kind of word pillow so the paragraph doesn't fall down and go boom? Or is there a hidden message here about the federal grand jury's investigation? Inquiring minds want to know. 

I had more to write on other subjects for today, but downstairs I heard my wife watching a PBS documentary on Judy Garland and I had to break away and catch that.  The way she could sing, the way she threw herself into every song and totally believed in it, well, she was almost as good as Frank Sinatra.  Not much will pull me away from blogging, but dang, Judy Garland? All that talent, it's like she is the figure of Adam in that painting in the Sistine Chapel, like she was personally touched by the hand of the Creator himself.  You can't miss something like that.  I'll get back to the other stuff when I can. 

Posted By David Rossmiller In Industry Developments
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I like catch phrases like "Scruggs Nation" and so forth -- like any brand name, it signals the consumer what is coming without a lot of extraneous verbiage. I've been less successful in thinking of a brand for posts featuring Jim Hood -- he's more of a localized phenomenon than Scruggs, and unlike Scruggs, I have yet to receive conclusive evidence that the "nation" cares about Hood.  So I am trying Hood Nation out today for reader reactions.  Actually, Hood and Scruggs were working as a team for so long that, back in the day, I often thought they should have spun off a line of products to capitalize on their fame under the "Hoodnscruggs" trademark.

One product that came to mind for this Hoodnscruggs brand was a kind of frozen waffle/scrambled eggs type of thing with a celebrity endorsement by, say, John Travolta: "You know, when I'm on the set of a movie, sometimes I have to get up pretty early, and there's not a lot of time for breakfast.  So I just pop a couple Hoodnscruggs waffleggs in the toaster, and in less than a minute, I've got a tasty, nutritious meal, with the syrup I need to get me going in the morning."   I also thought about a set of compact weights for use in the office called the Strongarm -- "You need a workout every day, because you never know when you'll need to put the Strongarm on someone.  The Strongarm office weight set -- pumps you up, and works great as a paperweight too.  It's got a pleasing streamlined look, looks so good people will think you got a new work of art for your office.  The Strongarm -- makes you tough, tough as a state prosecutor or a top tort lawyer." Another one -- a set of hidden microphones called the Little Squealer, "for your favorite confidential informant." But, I guess the moment has passed.  It wasn't only to virgins that Herrick was speaking when he said to make much of time:

GATHER ye rosebuds while ye may, Old Time is still a-flying:
And this same flower that smiles to-day To-morrow will be dying.
The glorious lamp of heaven, the sun, The higher he's a-getting,
The sooner will his race be run, And nearer he's to setting.
That age is best which is the first, When youth and blood are warmer;
But being spent, the worse, and worst Times still succeed the former.
Then be not coy, but use your time, And while ye may, go marry:
For having lost but once your prime, You may for ever tarry.

So, now that I've got that out of my system, let's make much of time ourselves, and look at some developments in the Hoodnscruggs Nation.

-- Oh my goodness, did you see the filing a couple days ago by U.S. Attorney Jim Greenlee, in the Scruggs scandal, of this notice of intent to use evidence of similar acts? The thought popped into my head, how many similar acts are there?

-- And yesterday, Judge Biggers denied Scruggs' request to reconsider Biggers' prior denial of Scruggs' earlier request to add to his lawyer harem an attorney who used to represent Steve Patterson, formerly a co-defendant but who has since pleaded guilty in the case. Biggers is a good writer -- gets to the point, makes his point and then stops writing.  Here's an excerpt from his opinion:

Defendant Richard F. Scruggs bases the present motion on his assertion of an alleged Sixth Amendment right to the counsel of his choice, requesting “that the Court give due weight to his constitutional right to counsel of his own choosing.” The primary purpose of the Sixth Amendment right to counsel, however, is to guarantee a defendant the right to effective counsel -- not to counsel of his choosing  . . . .

Defendant Richard Scruggs can hardly complain that to deny his motion to approve Mr. Coghlan as one of his attorneys is to deprive him of the assistance of counsel under the Sixth Amendment. Defendant Scruggs has five eminent attorneys of record at present. The court has waived for the defendant the local rule requiring local counsel – a rule not strictly enforced in criminal cases when the court finds a defendant represented by competent counsel from other federal court districts. It would, thus, appear disingenuous for Scruggs to claim that without Mr. Coghlan on his team, he will be deprived of his Sixth Amendment right to effective assistance of counsel.

-- Let's talk a bit about the State Farm v. Hood case.  You know, this case kind of reminds me of something you might see in one of the cruder kids' movies, where some kid is getting picked on by a tough kid in elementary school, maybe this tough guy, he's running with some kid version of a gang, say, something called the Hoodnscruggs Gang -- you know the dumb names kids come up with.  Well, in one scene of the movie the tough guy is gloating to his gang, and the picked-on kid comes up behind him and pantses him.  Bango!  And everyone laughs as the tough guy is toddling around the school yard with his trousers down around his ankles and his shorts flapping in the breeze. 

There is lots of new activity in the case.  Here's something that caught my eye: this notice of intent by State Farm to serve a subpoena on Courtney Schloemer, one of Hood's assistant AG's, for her attendance at the big row coming on February 6, the hearing about whether the injunction against Hood's criminal prosecution of the insurer should stay or go.   Schloemer, you may remember, worked with Hood's grand jury, and according to the Brian Ford notes, she discussed his potential testimony before the grand jury with one of the Scruggs Katrina Group attorneys. (Click here for a post I wrote that has a link to the unredacted Ford notes, the link is about halfway down the post).

Now, you may say so what, it's debatable about who is using whom in that transaction.  And I will say, I see your point but I don't buy it -- it looks bad, just like it looks bad if what Lee Harrell said in his deposition is true, that Scruggs tried to strongarm George Dale into backing some play to set him up as a Katrina czar with State Farm money, and that Hood was working with Scruggs to strongarm State Farm into settling civil cases through threats of criminal investigation.

Despite what she said about me to Legal Newsline, I have no ill will toward Courtney Schloemer.  I'm sure she's trying to do her job as she thinks best.  Plus, I dish it out, so I reckon I can take it, too.  I'm a litigator, if I got upset about every instance of someone giving me the skunk eye I'd never get anything done. 

As to that subpoena, it didn't take State Farm long to transfer its intent into an actual subpoena, which was served on Schloemer at 7:02 p.m. yesterday, it says, IN THE PARKING GARAGE OUTSIDE HER OFFICE.  Dang, you know, when I read this I felt sorry for her, someone laying for you with process, you're just trying to get in your car and get home.  But of course, she and the Prisoner of High Street have, I'm sure, caused more than a few hearts to flutter by serving subpoenas in similar ways. Your perspective, it all depends on which end of the microscope you're on. 

The other big news from State Farm v. Hood yesterday is that Hood, who knows what it's like to get pantsed, is trying to keep his confidential informant from being likewise pantsed in a State Farm deposition scheduled for Friday. Check out the bench memorandum State Farm filed yesterday.  A letter from Hood's lawyer to the Magistrate Judge is attached as Exhibit A, and an e-mail string involving Scruggs' attorney, John Keker, is attached as Exhibit B. Hood and Scruggs, together again. Maybe that Hoodnscruggs line of products might sell after all. Waffleggs, anyone?   

By the way, from last Friday, here's State Farm's response to Hood's motion to dissolve the injunction, including all the exhibits that go with it.  One of these exhibits is Exhibit I, Hood's testimony to Congress in February 2007.  Read it, and ask yourself, should he be making statements like that regarding an ongoing criminal investigation before a state grand jury? 

Here's a copy of State Farm's memorandum in opposition, which is much the same as the response linked to above.  

Posted By David Rossmiller In Industry Developments
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This document, a transcript of the August 18, 2006 hearing before Judge DeLaughter in the Wilson v. Scruggs case, is what I've been reading the last few days, when I can grab a few minutes here and there.  I'm in a stretch where blogging time is limited, and I will have more to say about this case and this transcript later, but as the audience for this blog includes a lot of really sharp people who like to read and interpret documents for themselves, I want to put this out in the public domain.  The Scruggs side was argued by Tim Balducci, which will also be of interest to many. 

Two places I will call your attention to:

1. Look on pages 16-25, where the judge discusses the preclusive effect of a federal ruling in the Luckey case, and finds that the Wilson-Scruggs agreement creates an express trust and a fiduciary duty from Scruggs to Wilson.  Remember that the special master's recommendation had been denied months earlier -- one would think the question of fiduciary duty and express/constructive trust would have to come before the special master's findings were addressed, not after.  There may be good reasons, for this, of course, that I don't know about.
2. Read pages 83 to 120, where the court granted Scruggs' motion to strike Wilson's expert and also decided to ignore a $228,000 accounting error that the court's expert found and to adopt the figures offered by Scruggs' expert. 

This isn't the full story of the case by any means, but it makes for some interesting, and curious, reading.

Posted By David Rossmiller In Industry Developments
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Just some brief items today.  I've got some good Scruggs-related documents, but I'll see if I can get them posted tomorrow.  Monday morning is a wicked time to post, and Monday in January in Portland is even worse.  T.S. Eliot said April is the cruellest month, but I'll put my money on January every single time.  Incidentally, the poem where he said that, the Waste Land, contains what to me is the most chilling line in literature: "I will show you fear in a handful of dust."  It could mean various things, but one interpretation surely is in keeping with the answer to the question Tolstoy posed in his 1886 short story, How Much Land Does A Man Need?  The answer? Just enough for a grave. Here's the story's last paragraph:

His servant picked up the spade and dug a grave long enough for Pahom to lie in, and buried him in it. Six feet from his head to his heels was all he needed.

Throughout this sad Scruggs spectacle, I've had occasion to think over the uses of wealth and power, and their ends.  Gray's Elegy Written in a Country Church-Yard gives one possible view:

The boast of heraldry, the pomp of power,
And all that beauty, all that wealth e'er gave,
Awaits alike th' inevitable hour:-
The paths of glory lead but to the grave. 

-- A reader sent me a link to this 1999 Wall Street Journal story about bizarre goings-on including flying dog poop and gun play at a Dickie Scruggs mansion in Pascagoula.  I think the story's first paragraph summed it up pretty well.

"I deeply regret and sincerely apologize . . . for the unfortunate incident involving the dog poop shoveled from my yard on May 16, 1999. My conduct was inappropriate as a good neighbor."

Paths of glory, indeed.

-- Some misinterpretations have arisen of my previous posts: I am not ceasing to write about Dickie Scruggs, I merely am not going to write a Scruggs Nation post every day.  More of a time commitment than I can commit to over the long haul.  

--   On Friday, Scruggs filed a motion that asks Judge Biggers to reconsider and allow attorney Kenneth Coghlan to represent Scruggs after all.  Click here to read the motion, and here is an excerpt: 

Finally, while the Court is certainly correct that Mr. Coghlan is “not the only attorney in this local area … that would be available to assist Mr. Scruggs[],” Mr. Scruggs believes that Mr. Coghlan is the very best attorney to assist his lead counsel in this matter and respectfully requests that the Court give due weight to his constitutional right to counsel of his own choosing.

In the event that the Court does not permit Mr. Coghlan to enter an appearance on behalf of Mr. Scruggs, the undersigned counsel wishes to notify the Court that counsel intends to consult with Mr. Coghlan on issues related to local custom and practice, jurisdiction, jury selection and other strictly legal and procedural (i.e., non-evidentiary issues) that may be pertinent to the defense of the case but which do not implicate any attorney-client privileged communications or information. Mr. Coghlan will have no role in the trial of this matter and will not render any legal advice or consultation to Mr. Scruggs. Furthermore, Mr. Coghlan will not be consulted regarding the specifics of either Mr. Scruggs’s or Mr. Patterson’s alleged involvement in the conduct at issue in the Indictment.

See Wheat, 486 U.S. at 159; see also Powell v. Alabama, 287 U.S. 45, 53 (1932) (“It is hardly necessary to say that, the right to counsel being conceded, a defendant should be afforded a fair opportunity to secure counsel of his own choice.”)

What is this all about? Some attempt to create an issue for appeal? Gotta believe there are other lawyers Keker could consult with about local practice.

Posted By David Rossmiller In Industry Developments
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How bad is it, just how embarrassing is it, for a state Attorney General to get tagged with an injunction by the company he spent months demonizing and investigating? Probably about as bad as: 

• Having to sit silently in your office for months, and on the few occasions when you do speak, having to pretend to get all excited about going after makers of fake contact lenses and foreign toys.  No matter what they say, no AG wants to be known as Lens Master or The Toy Fighter.
• Having to keep a blank look on one's face, stare into the distance and talk about how it looks like rain whenever anyone mentions Dickie Scruggs, Joey Langston or Tim Balducci.
• Having to find a removal specialist for your tattoo that says "Jim, Tim, Dickie and Joey: Best Friends Forever and Ever!!! Party On!! I will never forget you, dudes!"
• Dictating the same thing to your Dictaphone again and again and again: "Memo to self -- find way to be relevant once more."

Well, as we discussed yesterday, Jim Hood is once again ready for action -- he wants to dissolve that State Farm injunction and kick some more insurance company fanny.  Why? Don't ask why! That's just how Hood rolls. You might as well ask him about Dickie Scruggs! And you know what the answer would be? That's right: "It looks like rain." Because it's none of your business, chump. 

Yesterday, in State Farm v. Hood, here's what happened.

This order by Judge David Bramlette extended the State Farm injunction through the date of the hearing on Hood's motion to dissolve it -- February 6.

This order by Magistrate Judge Michael Parker orders Hood to appear at the hearing to testify, and also allows State Farm to take the deposition of Dickie Scruggs for use at the hearing "as this witness many be outside of the subpoena power of this court and, therefore, may not be available to testify live at the hearing."  Why wouldn't Scruggs be available?  Hmmm, what if he pleaded guilty and were in custody elsewhere?  Of course, the reference could simply be to the rules on trial subpoenas, which state that they are enforceable on witnesses only if the witness is found in the judicial district or within 100 miles of the courthouse.  It's much easier to get a deposition of someone than it is to make them testify at trial.

State Farm lost no time noticing the deposition of Scruggs for February 1.

Lastly, barring some big developments, I probably am reverting to my normal, pre-Scruggs Nation schedule, which means no posts Saturday or Sunday.  Speaking of the Scruggs Nation, I thought this post on the Scruggs Nation, at the Lexis-Nexis Insurance Law Center, was well written, although why anyone would not be fascinated by what is going on with Dickie Scruggs is beyond me.  I mean, here's Scruggs, a guy who has been to the mountain top, and then, whoops! He slips on the banana peel he himself just threw on the ground, and bounces all the way to the bottom.

The blogger, Tom Hagy, works for Lexis and, full disclosure, I am on the advisory board of the Insurance Law Center and the post is about me.  But that's not the point -- it's a good, entertaining post.  It's harder to do than it looks. 

Posted By David Rossmiller In Industry Developments
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A few things to catch up on that happened while I was out sick, a few new things.

-- First, AG Jim Hood on Friday moved to dissolve the temporary restraining order State Farm obtained against him last year that prohibits him from continuing with his criminal investigation of the insurer.

Hood has been a prisoner of his office for months now, reduced to a sort of Capt. Queeg-like state, mumbling about going after makers of fake contact lenses while clacking ball bearings in his hand.  But apparently he's decided on a jail break -- he's trying to bust right out of that injunction and get back to where he once belonged, when he was riding high with his confidential informant and the Rigsby sisters.  A real golden oldie, straight from the Nostalgia File.  I half expect to see Hood at a press conference dressed up as Elvis, playing Blue Hawaii on an 8-track player and holding a lighter aloft in tribute to better days gone by.     

I read the AG's memorandum in support of his motion, and here's what I don't get: the point of the memo is that, under the Younger doctrine, federal courts should not restrain state prosecutions unless there is "great and immediate" irreparable injury beyond the normal injury from being prosecuted in good faith.  The AG tries to load up the description of the doctrine so that it sounds impossibly crazy that this standard could ever be met:

The 'bad faith' exception, is not merely a finding of bad faith, but rather bad faith joined with harassment, an absence of cause to prosecute, and great irreparable injury. (Memo, p. 7).

It's not so crazy, though, that all those criteria might be fulfilled.  Aren't they all just the same thing?  For example, if the Non-Prosecute Agreement Hood signed with State Farm is enforceable, and so far the judge has indicated it is, then there is an absence of cause to prosecute because Hood  contractually waived his right to do so.  Prosecuting someone in violation of an agreement not to prosecute might also be said to constitute harassment and bad faith, and if so, it would certainly also lead to great irreparable injury.  So I saw the brief kind of like someone who comes up to tell you some purportedly outrageous story about the antics of a neighbor, but the story doesn't deliver the goods and you think to yourself, what's the point of this and when will it stop?

-- The government's January 16 subpoena to the Scruggs Law Firm in the criminal contempt prosecution in northern Alabama is something, isn't it? The subpoena asks for:

• All correspondence and e-mails from the firm to Jim Hood or his assistant, Courtney Schloemer, about the Renfroe v. Rigsby lawsuit, Judge Acker's orders in the case, and the  claim file documents the sisters took.
• Communications from the law firm to the U.S. Attorney's Office for the Southern District of Mississippi about the same stuff, plus the False Claims Act "whistleblower" lawsuit called Ex rel. Rigsby (this is the one where the Rigsby sisters claim the right to some fantastic sum as a percentage of blowing the whistle on alleged insurance company fraud).  
• Copies of all correspondence with the Rigsby sisters and their mother prior to February 2006, when the sisters claim they hired Scruggs as their lawyer for the "whistleblower" lawsuit, and copies of all contracts and agreements between the Rigsbys and Scruggs.
• Telephone records of calls between the firm and Hood or Schloemer.

There's a lot more, take a look at it.  Looks like prosecutors are thinking there are some inconsistencies in the version of events offered by Scruggs, Hood, the Rigsbys and others.  Interestingly, they want to further scrutinize Hood's conversations with Scruggs after Acker ordered Scruggs to return the documents the Rigsby sisters took. Instead, Scruggs and Hood spoke and Scruggs wound up sending his copies to Hood in an attempt to fall under a "law enforcement" exception to Acker's injunction. (Remember, Hood already had his own copies of the documents and didn't need Scruggs').  Here's a copy of the government's motion to compel the Scruggs Firm to comply with the subpoena. 

Scruggs' attorneys yesterday filed a motion to strike the special prosecutors' motion to compel.  Scruggs claims they have no authority to prosecute him for a variety of reasons that never have made much sense to me -- you can read about them yourself in this copy of the motion to strike. 

-- I'm sure I must have linked to this sometime over the last week, but just in case I didn't, here's the new scheduling order in USA v. Scruggs (Mississippi Version).  Significant dates include the new trial date of March 31, a March 17 deadline for plea agreements to be submitted, and a February 11 deadline for pre-trial motions. Not a whole lot of time for motion practice, especially considering how many irons Scruggs' lawyers have in the fire.  Here's a copy of the official trial notice.

-- Now on the McIntosh v. State Farm case. My goodness, when I look at the docket of this case lately it looks like a pit full of snakes, there is some new and nasty motion nearly every day.  I guess I don't have the energy to describe all these, other than to say if there is a Litigation Hell, this is  what it will look like.    

The case, in which State Farm is seeking to disqualify the remaining firms of the former Scruggs Katrina Group for alleged ethics violations, was going to come to trial February 25, until lawyers for the McIntoshes asked for a continuance.  Judge L.T. Senter Jr. granted the motion for a continuance last week in this order. Looks like the new trial date will be in July or August.

There is a lot of interesting stuff on the docket, one of which is this motion by the Rigsby sisters to quash State Farm's subpoenas to Dickie and Zach Scruggs on the grounds the subpoenas will infringe on attorney-client communications.  I should also link to this response by Mike Moore, the former Mississippi AG, giving his perspective on his involvement in Katrina litigation, why he is not a member of the SKG and why he should not be disqualified.  A pretty good, lively narrative about his role and involvement with Hood and Scruggs, well worth a read.  It was followed the same day by Moore's motion to withdraw.

-- Lastly, for today, here's a link to the Mississippi Bar's latest on the allegations that Steve Patterson, indicted along with Dickie Scruggs, Tim Balducci and others, had been engaging in the unauthorized practice of law.   It's got a very good timeline, except for one thing -- it leaves out the date of the now famous Balducci "man crush" letter.  You want to keep the readers with you through the whole parade, you gotta throw 'em some candy once in a while. 

Posted By David Rossmiller In Industry Developments
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An excellent story in the New York Times this morning by Nelson Schwartz on P.L. Blake's connections with Dickie Scruggs and how many people who've been targeted by Scruggs over the years are now lining up to whack him like he's pinata.  Click here for a copy of the story (free registration required to read it).  Here's an excerpt:

Rather than courtroom victories against the tobacco makers, legal experts say, it was Mr. Scruggs’s ability to put together a coalition of state officials and Washington politicians, while adeptly courting the news media, that ultimately forced cigarette makers to pay up in the landmark $248 billion national settlement.

Mr. Scruggs declined to comment for this article. But his lead defense lawyer, John Keker, says Mr. Scruggs was unaware of any bribery attempts and is completely innocent.

Now, the fate of Mr. Scruggs is being watched closely by advocates of tort reform as well as lawyers and industry leaders, who have all found themselves in his cross hairs over the last two decades. “He stands for the proposition that the halls of justice can become the arena for pressing public policy goals,” says David M. Bernick, a partner at the firm Kirkland & Ellis, who has represented the tobacco industry. “People want to know the reality of how he came to be so influential.”

This is natural, and it's just going to intensify.  Scruggs' enemies are going to seek to make his name one of opprobrium, synonymous with one who claims to be protecting the public good but instead manipulates and undermines public institutions for his own good and the good of a gang of outlaws and thugs along for the ride.  And they'll seek to paint the whole big-time tort bar with the same brush.  Remember that interview I gave the LA Times back in November, about how people would begin to re-evaluate how his amazingly successful man got to be so amazingly successful? It's not such a hard call to make -- even though this was before I heard of P.L. Blake or Joey Langston's confessed involvement in a scheme to influence the judge in the Wilson attorney fees case.  

Back to Blake.  The story mentions Steve Patterson's plea agreement hearing, where the government said it had evidence Blake served as some kind of intermediary in the Lackey bribery scheme.  While I was out of the office last week, I asked my secretary to get the transcript of the hearing from the court reporter, and it arrived yesterday afternoon.  Here's a copy, and here's the relevant passage about Blake (sorry for the small type, but importing from Abobe Acrobat is unpredictable -- I think it's readable enough):

On September 27th, 2007, Timothy Balducci delivered a

first installment, consisting of Patterson Balducci, PLL C ' s

$20,000 to Circuit Judge Henry Lackey. On September 28th,

2007 , Steven A . Patterson and Timothy R . Balducci spoke by

telephone; and unbeknownst to either, the call was being

recorded pursuant to Court order.

Patterson told Balducci that his wife had just gotten off

the phone with " P . L . " - - that being known to the Government as

P . L . Blake - - who had just gotten out of the meeting that

Patterson had asked him to have. Balducci asked Patterson to

call P . L . for details. Patterson called back and related to

Balducci that P . L . had in fact met with Dick Scruggs, and "he"

knows it' s going to be "40. " Patterson assured Balducci that

P . L . was confident that Scruggs would take care of Patterson

and Balducci. "We got your horse sold" or words to that

effect.

On October 7th, 2 0 0 7 , Timothy Balducci called Steven A .

Patterson at approximately 5 :48 p . m . Patterson told Balducci

that he had just talked to P . L . , and that he - - Steve

Patterson - - would be calling "the guy in Oxford tomorrow. "

Patterson assured Balducci that "the guy in Oxford" was

expecting a call. And on the following day, October 8th, at

approximately 8 :17 a . m . , Balducci called Patterson. Patterson

indicated that he was about to call Scruggs.

In a second telephone conversation that same date, Timothy

Balducci and Steven Patterson discussed the firm' s financial

problems; and Patterson reassured Balducci that, "We've got 40

coming from Scruggs" or words to that effect.

On October 10th, 2007, at approximately 8 :55 a . m . , Steven

Patterson called Timothy Balducci and informed Balducci that he

needed to find out when "that order" was going to be signed.

Patterson stated that P . L . needed to know.

Timothy Balducci is expected to testify that on

approximately the 16th of October, 2007, Timothy Balducci and

Steven Patterson were in Oxford to meet with Richard "Dickie"

Scruggs on other matters. When they entered the office,

Richard "Dickie" Scruggs stated, " I know y 'all have talked to

P . L . , and I 've talked to P . L . Everything' s fine. Y 'all are

going to be covered, " or words to that effect. Patterson and

Balducci assured Scruggs that they were there for other

reasons.

Later that day, after leaving the Scruggs Law Firm,

Patterson and Balducci went their separate ways. However, at

approximately 7 :30 p . m . , Timothy Balducci called Steve

Patterson and told Patterson that he had just spoken with the

judge and that the order would be available the next day. It

was actually two days later, on October the 18th, when Timothy

Balducci met with Circuit Judge Henry Lackey, paid him an

additional $10,000; and picked up a proposed order from Judge

Lackey.

In the meantime, a Court-authorized intercept picked up a

phone call from Richard "Dickie" Scruggs to Steven Patterson at

Patterson' s residence. Scruggs was inquiring about the

whereabouts of Balducci and the order. Patterson assured

Scruggs that Balducci had gone "south" - - meaning to Judge

Lackey' s chambers in Calhoun County - - but would hand-carry the

order to Oxford. Scruggs told Patterson to have Balducci put

it on his desk and pick up a package which was ready.

Balducci was surveilled entering the Scruggs Law Firm and

leaving Judge Lackey' s chambers. Balducci left the order and

picked up a check for $40,000, together with documents designed

to conceal the true nature of the payment. On November 1st,

2007, Timothy Balducci made the final payment of 10,000 to

Judge Henry Lackey.

This part of the transcript quoted above appears to validate this paragraph in the Times story:

At his 2004 deposition, Mr. Langston provided what might be a clearer version of just how Mr. Blake fit into Mr. Scruggs’s operation. “I know that Mr. Blake seemed to be Dick Scruggs’s — his switchboard, I call it, you know. Everybody, not everybody, but a lot of people wanted to be involved with Scruggs on tobacco, and I got the impression that P. L. Blake was kind of a filter for a lot of those people. I also got the impression he was Dick Scruggs’s listening post.”

There is a lot, lot more to learn about all this. 

Another story I saw in the Times, from yesterday, is this Associated Press story  about Judge DeLaughter recusing himself earlier this month from a number of cases to, he said, avoid even the appearance of impropriety. Dickie Scruggs was involved in at least one of the cases, it's not known for sure how many.

Posted By David Rossmiller In Industry Developments
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I'm a bit under the weather today so just a quick post for now.

The Daily Journal has the transcript of Joey Langston's guilty plea, which contains this passage:

At about that time, Langston, working with Balducci and

Steven A . Patterson, contacted and retained the services of Ed

Peters, a close personal friend of Judge DeLaughter. For his

services , Langston agreed to pay Peters $50,000 in cash. After

paying the $50,000, the parties agreed that they would also

divide any money over and above what Scruggs was willing to pay

in the Wilson matter.

In the end, based on this reverse contingency fee, Peters

received an additional $950,000 for his services. After hiring

Peters, Langston and Timothy R . Balducci and Steven A .

Patterson were in regular contact either by phone or by

facsimile concerning the case; and the three traveled regularly

from the Northern District of Mississippi to Jackson,

Mississippi, to meet with Peters in person to discuss issues

concerning the Wilson litigation.

While Peters was not fully cognizant of the issues

surrounding the litigation, he would relay whatever information

he received from Langston, Balducci, and Patterson to Judge

DeLaughter before any of this information was filed with the

Court. In at least one instance, Judge DeLaughter e -mailed a

rough draft of an opinion he planned to enter to Peters . And

Langston and Balducci and Patterson would be able to see it

before any filed - - final version was filed.

During the course of the litigation, Langston and Scruggs

were also aware that Judge DeLaughter was interested in a

position as a federal judge. Based on this knowledge, Scruggs

told Langston to let the Judge know that if he ruled in his

favor he would pass his name along for consideration regarding

the federal judgeship. Langston then informed Peters, who, in

turn, passed the information along to Judge DeLaughter. The

Government would further show that, in fact, DeLaughter' s name

was submitted for consideration for a federal judgeship, and

DeLaughter was so notified.

Here's a story on the Langston transcript and plea by Patsy Brumfield of the Daily Journal.

Here's another story on events by Jerry Mitchell of the Clarion Ledger.  According to the story, Judge DeLaughter continued to deny any wrongdoing.

Posted By David Rossmiller In Industry Developments
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Good day once again to the Scruggs Nation.  A confluence of known and unknown deadlines and responsibilities of varying sorts -- unusually heavy even for my schedule -- robbed me of almost all blogging time yesterday and the night before, and Scruggs Nation posts take considerable prep time and effort.  Thanks for the outpouring of concern and support from across the Scruggs Nation. I have not been abducted, nor have I fallen ill from mysterious radioactive substances slipped into my red Yellowstone mug of decaf with the white moose silhouette.  I'm still trying to go through all the e-mails in my inbox, so I apologize if I haven't gotten back to you.  

First things first, here again are links to the documents on the USA v. Scruggs docket from yesterday and recent days. I've broken this up by sections so you can jump to what interests you most.

-- Bench memorandum to Judge Biggers. The memo analyzes potential conflicts of interest from the recent lawyer switching in the case. Remember that, before Scruggs requested that Kenneth Coghlan join his defense team, Coghlan represented Steve Patterson, who pleaded guilty after Coghlan withdrew as Patterson's attorney.  If Dickie Scruggs were represented by Coghlan, as Scruggs has requested, the memo said, Scruggs

[C]ould later claim in a . . . petition challenging his conviction based on ineffective assistance of counsel, that counsel who represented Patterson "pulled punches" with respect to cross examination of Patterson should he be a government witness a the trial of Scruggs' case.

Moreover, he could also claim that counsel did not make full use of whatever privileged information he received as a result of his temporary representation of Patterson to help exonerate Scruggs. With respect to Patterson, he could latter claim that his impeachment with the use of privileged information adversely affected his ability to obtain a . . . motion for reduction of sentence. Likewise, the duty to provide privileged information to current client Scruggs could adversely affect Patterson whether or not Patterson enters a plea of guilty and testifies on behalf of the government. 

(Originally described the memo as by, not to, Judge Biggers, it's fixed now).

-- Here's a copy of Patterson's plea agreement. He pleaded guilty to conspiracy to commit bribery of an elected state official, and is subject to a maximum penalty of five years in prison, a $250,000 fine and three years of supervised release.  In handwriting on the second page, it says "The government agrees to take the position that the Defendant, as compared with other defendants in this case, was a minor participant with the meaning of  . . . the U.S. Sentencing Commission Guidelines Manual." 

-- Here's the order from Tuesday's hearing where Patterson changed his plea to guilty. (At the end of this post, there is a picture of the scene outside the courthouse from one of this blog's Oxford, Mississippi correspondents).

-- Minute order from yesterday's hearing. Judge Biggers granted Tony Farese's motion to withdraw as counsel for Zach Scruggs, and denied Coghlan's motion to appear for Dickie Scruggs, as he indicated he would do in the bench memorandum.

-- Nathan F. Garrett made a pro hac vice application to appear on behalf of Zach Scruggs, joining Todd P. Graves, who has his own page on Wikipedia (as do the Rigsby sisters, Kerri and Cori, of Katrina fame, in an article the neutrality of which is disputed). Judge Biggers approved the application in this document. Check out this resume, dude is definitely not off the rack.  It's been pointed out to me that I've spent time telling how impressive some of these defense lawyers are without mentioning the background of the prosecutors.  I am aware of the impressive qualities of these lawyers as well, and their day will come. The sun never sets on the Scruggs Nation, and has time, over time, to shine on all.

-- Here is another copy of the unsealed Motion for Continuance of Pretrial Motions Date and Trial Date.

The motion to seal the motion for continuance of the trial date was withdrawn and the trial date reset to March 31.  I think it was a very shrewd move by John Keker to file the motion on Friday and move that it be sealed, and then withdraw the motion to seal -- this increased the effect of and attention to what was in the motion: claims that Dickie Scruggs was framed by Judge Lackey and the feds. 

Keker appears to have a grasp of one fundamental rule of media relations -- bury bad news in the Friday night-Saturday morning cycle when no one is paying attention, and highlight good news by bringing it out early enough in the week to give it good play all week long, when everyone is watching.  Smart. But that's why he gets paid the really, really, really big bucks. How big? Remember the stories about how he was too expensive for the tastes of mega-multi-millionaire baseball player Barry Bonds?  Too expensive for Bonds? That's like saying the food in the buffet line is too rich for an NFL team's offensive linemen.

Now, for reasons that occasionally I have trouble remembering, my chosen fate is to spend virtually all my time around lawyers.  So I am aware of and wary of lawyer spin.  I admire good spin, and try to remember the method, tone and manner of presentation to perhaps use it myself sometime.  What we've got here is some pretty good spin, trying to make the best out of what's available.  However, while you can turn lemons into lemonade, it's hard to make lemonade out of manure.  This is not much of a surprise, they've indicated all along their strategy would include attacking Lackey and making Balducci out to be a freelancing klutz.

Pages 6 and 7 of the motion makes these interpretations of the evidence, designed to show that Dickie Scruggs was a victim of what is portrayed as Lackey's efforts to con Balducci into falsely claiming Scruggs knew what was going on. My comments are offset below each bullet point.

•  In the May 21, 2007 recorded meeting between Balducci and Lackey, it was the judge who suggested Scruggs was involved, saying "I just want to hear you say it again . . . you and Scruggs are the only ones who know anything about this?"

[Key word is again, which suggests he said it before.  In the indictment, page 5 -- (click here for a copy) -- the government alleges that on May 9, Balducci approached Lackey about a bribe and delivered the now famous "where the bodies are buried" speech, admittedly not on a par with Pericles' funeral oration for eloquence, but it, like Pericles' declamation, could be said to capture the moment in its own unique way.  Didn't I say two days ago that these guys needed to get that book off Amazon, Informers In Your Midst: 10 Telltale Signs from Constantly Asking You To Speak Up To Wearing An FBI Sweatshirt?

Also, what was Balducci's answer? Choices range from the following:

-- "Scruggs involved? Wherever would you get an idea like that?  Heck, I had to go rogue on this operation, he would never approve of dishonesty like this, no sir. I am tired of being a wannabe, I want to deliver the goods here and surprise him with this -- won't tell him it was a bribe, of course, I'll just say I told you you had a nice suit, and it made you think more kindly of us.  By the way, do I act like I have a complex? People keep saying that about me."

-- "How many times do I have to say this, this is not that hard of a concept, get with it."

-- "Hell yes, don't worry, no one else will ever know. Why are you always fixing your tie and straightening your desk? It's like you're expecting someone to come and take your picture."

• Balducci "says a number of times" he does not want Lackey to do anything improper, saying "you do what you feel comfortable with," and "I don't mean to make you uncomfortable, . . . if it's not something that you feel right about, you do what your heart tells you . . . I've got complete confidence that this is completely fine . . . I would never put . . . you in that position . . . I have complete confidence that it's fine." 

Once more, what's the context? Other interpretations include the following:

-- "Disclaimer. This message has been approved by my legal adviser, 'fine' should be taken for purposes of this communication to mean we won't get caught."

-- "Hey, it's natural to get a little nervous the first time out with bribery, don't sweat it, there's nothing to it!"

-- "It's not going to bother me no matter what you do, you make up your own mind, all we are talking about is whether you wanted a Diet Coke or some tea!"

• Balducci said that "frankly I think we're right and I think that the law is on our side and I think probably had I never even approached you, we'd have probably had the right result for us on this thing . . . My goal was simply to . . . tell you where, that I had an interest in this thing, and, if I could, to help guide you to where I thought this thing . . . legally could come."

Possible interpretations:

-- "I really don't respect your legal skills and figured you would get it wrong, even though it's soooo simple. So I figured, nothing says 'we're right' like filing a Motion for Me to Pay You Some Cash!"

-- "Don't pay any attention to the fact this is my second improper ex parte visit to your offices to discuss something I have no business sticking my face into, I just wanted to tell you I knew you would make the legally sound decision.  Call me overeager, but when someone deserves praise, I like to deliver the news in person."

-- "Dang, now that I found out you might have ruled for us anyway, I kind of feel like a fool.  Well, a deal's a deal, it's too late now, I said it, thanks for listening, and anyway, the funds have already been appropriated, I don't want to deal with this bookkeeping hassle, you take it anyway."

-- "I think it will make you feel better about accepting a bribe it we both try to pretend you would have ruled for us anyway."

• On May 9, Balducci asked Lackey whether he thought the Jones-Scruggs agreement required arbitration, and Lackey said, "It does . . . It looks like that's what they agreed to." 

This was the initial meeting, before Lackey went to authorities, so possible other statements by Lackey that were left out of the defense motion include.

-- "However, there are other legal considerations that strongly incline me to rule the other way, such as waiver. No dice, Balducci!"

-- "By it, of course, I am referring to the part of the contract where it says Jones was going to write the briefs in the Katrina cases."

-- "It does[n't] . . . [I'll tell you what, they never agreed to arbitration], It looks like that's what they agreed to!  Why are you here, anyway?"

In real estate, it's location, location, location.  With statements, it's context, context, context. There's more, read it for yourself and see what other interpretations you can think of.  Remember, we don't know all the evidence, we don't know where all this is going, and just remember, Keker could be right.

I know, there's more news to catch up on, I will talk about it as I can find time. I leave you with these excellent posts by Walter Olson at Overlawyered about Joey Langtson (Part I) and (Part II)(read all of it, it is truly great reporting by Walter), and the picture below outside the courthouse after Patterson's guilty plea.

Posted By David Rossmiller In Industry Developments
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SECOND UPDATE: Here's a copy of last Friday's sealed motion, now unsealed, in which some of the defense strategy is laid out. 

UPDATE: Dickie Scruggs' lawyer says he was framed. Here's a story about it from Anita Lee of the Sun Herald, and here's an excerpt:

Attorney John Keker said during a procedural hearing that FBI investigators offered "very misleading" evdience so a judge would agree to continue wiretaps into its investigation of his client. Keker also asked for FBI notes on the wiretaps to further that argument. Scruggs and two other defendants are going to ask that the tapes not be used at trial.

A September 2007 tape recording indicates Lackey was trying to lead Balducci to say that Scruggs was aware of the bribe and that Scruggs put the money up for the bribe. Balducci said in the recording that Scruggs did not know about the bribe.

On Sept. 27, Balducci paid Lackey $27,000 of the $40,000 bribe. When Lackey mentioned Scruggs, Keker said Balducci responded, "... the way this will work is, I'll just go to him at some point and say, 'I've cured a problem that you had and you need to recognize the problem I've cured for you; that's how it works... . He is not involved in a direct manner, doesn't want to be, doesn't need to be."

Judge Neal Biggers Jr. denied the request, saying the defense has the tape recordings and does not need the notes.

It also was noted today that in Patterson's guity plea entered in court Tuesday, he indicated that prosecutors were wrong in alleging that any conspiracy began in March.

Patterson said he didn't realize that when a discussion ensued regarding how to settle a legal fee dispute, it was the beginning of a conspiracy to bribe Lackey in order to settle the dispute in their favor.

Also in court today, Biggers continued the trial until March 31 because of scheduling conflicts and to give prosecutors sufficient time to turn over discovery evidence to the defense.

I also note that the court docket shows that attorney Tony Farese has once again renewed his motion to withdraw as counsel for Zach Scruggs, after he hired former U.S. Attorney Todd Graves.   Here's a copy of the motion.

--------------------------------.

Lots of inquiries from the Scruggs Nation this morning.  My day and night job schedules aren't conducive at the moment to a real Scruggs Nation post, which takes a long time to prepare.  If I have time to do a post this evening, I will.

Posted By David Rossmiller In Industry Developments
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Before I get to the news, a couple things. I've had requests to put the "insurance" back in Insurance Coverage Law Blog, and these are fair points.  I have now finished my latest lengthy analysis for New Appleman on Insurance: Current Critical Issues in Insurance Law, so this frees up a little time for more posts on insurance.  This article, which I believe will appear in April, is on the Fifth Circuit's Katrina jurisprudence, including a long look at some questions about ambiguity in policy drafting: Why are insurance policies so hard to read?  Would anyone read them even if they were "easy" to read? Is it desirable or even possible to draft policies the layman will comprehend while still responding to specific court precedent?  One interesting study I looked at found an auto policy more difficult to read than Albert Einstein's The Meaning of Relativity. 

If you haven't kept up with the Florida insurance market, Florida Gov. Charlie Crist has been in a long-running battle with insurers over the state's high property insurance rates.  A year ago, Florida lawmakers passed the latest in the state's legislative and regulatory "fixes" to the system -- officials pushed Florida's state-backed property insurer further into the market as a competitor, and added billions to a state fund for a reinsurance pool for the private market.  All this, and more, was supposed to lead to rates coming down, but whoops, they didn't.  Instead most insurers have filed for big rate increases, sending Crist into episodes of table-pounding.

There is low political risk in railing against insurance companies at any time, but it becomes particularly attractive when the alternative might be blaming yourself for the continued failed regulatory scheme of the state, or failure to level with the people about the economic realities of the risk of insuring property in Florida.   I've chronicled Crist's insurance war in a number of posts on this blog, feel free to look them up with the search bar. 

Last month, Crist announced that he had enlisted the "free" help of three trial lawyers to look into a state-backed class action lawsuit against insurers -- as one reader pointed out, sounds a lot Jim Hood's arrangement with Joey Langston and Tim Balducci in the MCI litigation.  State regulators have also issued subpoenas, including one to Allstate related to a scheduled hearing this month, where regulators wanted to ask about the company's reinsurance costs and its relationship to risk modeling companies.  Allstate turned over some 30,000 documents, but state officials say they were nothing more than what is publicly available anyway.  Officials are after other documents to test their theory that insurers might have colluded to avoid rate cuts after last year's much-ballyhooed insurance fix, but Allstate has refused to turn over records of communications with trade groups, according to this story in the Pensacola News Journal. 

A story in today's Miami Herald says that now Florida Insurance Commissioner Kevin McCarty has suspended Allstate from writing new auto policies -- Florida auto coverage is a desirable market -- but the suspension apparently does not affect the company's ability to write new property policies. Here's an excerpt:

McCarty abruptly ended a scheduled two-day meeting Tuesday after just two hours. He was angered that Allstate officials failed to turn over some information the state requested on property coverage rates. Company officials had described the state's request as "irrelevant."

Allstate was to have provided documents into its reinsurance program and its relationship with risk modeling companies, insurance trade associations and insurance rating organizations, but instead returned a 51-page letter of objections to the state's subpoena.

"In view of Allstate's ongoing, blatant disregard of our subpoenas, I have little choice," McCarty said Wednesday. "Suspending their certificate of authority to write new business in our state should make my point."

We'll see what success state officials have.  Last year, they put heavy pressure on State Farm, leading the insurer to agree to increase its rate reduction from 7 percent to 9 percent, rebate some $23 million in surcharges (peanuts, really, in the scope of the Florida market) and pay the state's legal bills of $1.5 million. Not sure if those bills were related to "free" trial lawyers or not.

Posted By David Rossmiller In Industry Developments
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Is a picture worth a thousand words? Here's a photo that a Mississippi friend of Insurance Coverage Law Blog took of the Scruggs Law Firm in Oxford yesterday morning, dead potted plants and all.  (Used by permission. Copyright is held by the photographer, who is known to me, but who wishes to remain anonymous to y'all at this time). 

Now, let's start with an account of yesterday's hearing in the case that launched a thousand shifts at my computer terminal, Jones v. Scruggs.  The report  from ICLB's correspondent on the scene is so good I will reproduce it below with only slight edits:

Hearing on Motion to Quash Subpoenas - January 14, 2008, 9:30 a.m.

Before Judge Coleman

 

Attorneys:

Jones attorneys: Grady Tollison, Roy Percy & Cameron Ables

Scruggs, et al attorneys: Cal Mayo & Pope Mallette (for Scruggs and Scruggs Law Firm); Larry Moffett, Shea Scott Ken Rutherford & Trey Byars (for Don Barrett, Barrett Law Firm, Nutt & McAlister, and Sparky Lovelace)

 

On the Motion to Quash Subpoenas - Dickie Scruggs, Zach Scruggs, Sid Backstrom, Meg McAlister, Judge Lackey:

Defendants' Arguments:

• Pursuant to MRCP 45, a subpoena can be quashed if it would result in an undue burden. The Mississippi Supreme Court has articulated a set of factors (although Defendants didn’t consult multiple factors or balance anything; just said that the subpoena’s burden would be undue). On the other hand, plaintiff will not suffer prejudice if the defendants are not forced to testify at this time. Defendants argue that the attempt to force these individuals to testify at this time is simply plaintiffs’ effort to “out” this.
• Defendants argue that three of the subpoenaed witnesses are scheduled to go to trial in six weeks on the exact same matter, and to force them to comply with a subpoena at this time would be to equivalent to a mini-criminal trial. They would be forced to defend the same allegations of the criminal matter.
• Discussion of the assertion of the Fifth Amendment. Zach Scruggs and Sid Backstrom aren’t parties to this lawsuit. If they are forced to testify and take the Fifth, no negative inference may be drawn from this. No benefit to plaintiff if they invoke.
• Testimony not relevant - two issues: (1) the scope of their testimony is an issue for arbitration; (2) parties entered into an agreed order in April not to pursue discovery pending the arbitrability ruling [Defendants argue that they haven’t waived their right to an arbitration ruling; they argued that they have not done anything inconsistent with the desire to arbitrate, which, Defendant’s argue, is what the MS Supreme Court looks at to determine waiver. Defendants argue that plaintiff is trying to make a connection between the Nov. 28 indictment and a waiver of arbitration]; when determining whether this case should proceed to arbitration, the court considers a snapshot at the time the demand was made (back in March 2007), can’t consider post-litigation facts.
• Rebuttal: no case cited for the proposition that post-litigation actions have created an invocation of the judicial process - those things that would be considered an invocation of the judicial process are those things that happen IN the courtroom. This is a criminal investigation.
• Rebuttal: not relevant to this litigation. Forcing testimony would place an undue burden on the parties who will be defending themselves six weeks from now; potential jurors will read that individuals have asserted their Fifth Amendment rights.

Plaintiff's Arguments:

• Prejudice to Plaintiff. “Whether or not it is a crime, is irrelevant. It is an outrage…We are all ashamed.” Argued that plaintiff had been cheated out of money, for more than a year, cheated out of his day in court, and the court should have no sympathy. Plaintiff has suffered prejudice by the delay.
• Plaintiff countered in response to Defendants’ argument that this is within the scope of the arbitration agreement, that conduct during litigation is for the court to decide.
• The relevance of the evidence that would be presented involves a substantial invocation of the judicial process.
• Plaintiff argued that defendant’s bribery attempt is an admission that the defendants’ motion to compel has no merit. Cited Madge v. State for this proposition.
• Plaintiff argues that it is entitled to an adverse inference or testimony.  

Court inquired if anyone had ANY opinion from ANY court that has addressed this issue of bribery/attempted bribery and the connection to a waiver of arbitration. No one had anything to offer. Determined that this is a matter of first impression.

The highlights -- and lowlights -- for our correspondent.

1.  The proffered testimony of Judge Lackey via Tollison:

a. Lackey was the one who came up with the $40,000 figure for the offered bribe;

b. Defendants wanted to delay proceedings in an attempt to wait the Jones, Funderburg firm out. Defendants believed that Jones was having difficulties financially, and that he would be forced to settle if the proceedings dragged on very long.

c. Balducci told Lackey that when he was ready to take off his robe, Lackey would have a place at the Balducci firm if he wanted.  

2. The plaintiff's weak argument: basically just appealed to emotion and said that the system had been undermind and they deserve testimony.

3.  The ruling: wasn't grounded in any law (because the parties all admitted that they had nothing directly on point).  Sustained the motion to suppress the testimony, and disallowed anything that goes to the alleged conspiracy to bribe.  The judge stated that a bribery attempt is not literally tantamount to a waiver of arbitration.

4.  The judge: hard to hear and mumbles.

There you have it, a great report from the courtroom. Many thanks to our correspondent, who earns a year's free subscription to this blog. I'm told by another reliable source that, on the key question of whether the case is going to arbitration or litigation, the judge in essence said the case was headed to arbitration when he got it, it is ripe for arbitration, and that is where it is going, period.  Same result that Scruggs allegedly paid good money for, and now he gets it for free! (Not counting legal fees, of course). What a strange world we live in.

One brief excerpt from yesterday's Clarion Ledger story on the hearing before we move on:

Lackey wasn't permitted to testify, either, but Oxford lawyer Grady Tollison said if he were, he would testify Balducci approached him in March 2007 about ruling in Scruggs' favor.

Lackey said as he was getting ready to put on his robe, Balducci said he could have a place in his law firm after he stepped down from the bench, according to Tollison, who is representing the lawyers suing Scruggs over the legal fees.

Tollison said Lackey was so upset by this offer that he reported the matter to federal prosecutors.

After this initial offer, Balducci called back and said he wanted the judge to merely delay the dispute because the plaintiff, Jackson lawyer John Jones, was having financial problems.

In a subsequent meeting, Lackey, who by now was cooperating with the FBI, said he was "just a country judge, had some financial difficulties and needed $40,000," Tollison said. "He will testify that that was his figure."

Tollison said Lackey quoted Balducci as saying that would be no problem, but it might have to come in payments.

(In)justice on the installment plan.  At least Balducci didn't have to pay any vigorish.  

UPDATE: Here's a copy of Judge Coleman's decision regarding arbitration.  He's favoring it, but holding his ruling until he decides Jones, Funderburg's motion for sanctions -- the motion was made due to the bribery scandal. 

-- In light of the unveiling of the guilty plea yesterday of bribery conspirator Steve Patterson, it is worth revisiting the Wall Street Journal story of more than a month ago about the Dickie Scruggs Christmas party.  The story had this paragraph:

As for the man considered Mr. Scruggs's chief accuser -- the considerably less-well known Mr. Balducci -- many people in these parts are contemptuous. "He has some sort of complex," said Deborah Patterson, the wife of Steven Patterson, Mr. Balducci's business partner, who was also indicted in the case.

I wrote about the story in this post.  At the time I said, and said repeatedly afterward, that a strategy to portray Balducci as some sort of wannabe, rogue, freelance briber was weak. It's looking weaker by the day, don't you think?  If he was freelance, then so were Langston and Patterson.   Dang, Scruggs has gotta control his people better and make better personnel decisions! What's the defense, produce a tape with Scruggs dictating to his secretary like this? "Memo: new law firm guideline -- no bribes without discussing it with the head honcho. . . . wait, strike that, doesn't sound good. Just put no bribes. New item: find seminar on how to better monitor personnel and recognize signs of rogue behavior like improbable success in litigation.  Item: hire industrial psychologist, test everyone, get rid of anybody with a complex. Last item: go on Amazon, find book Informers in Your Midst, 10 Telltale Signs from Constantly Asking You To Speak Up to Wearing an FBI Sweatshirt."

-- I see on the PACER docket that Zach Scruggs, despite signing a waiver that allows Tony Farese to represent both him and Joey Langston, has retained another attorney, Todd P. Graves, of Missouri. (Originally got the wrong name, as commenters pointed out, I've changed it). 

UPDATE: Here's a link to some information on Graves, a former U.S. Attorney for western Missouri.  Here's a Washington Post story mentioning him, he was one of the U.S. Attorneys sacked by the Bush Administration in the scandal that occupied everyone's attention for so long.  As some readers have observed to me, if one were contemplating making a deal with prosecutors, this would be a good guy to have close. 

-- Lastly, here's a new order from Judge Biggers in the bribery case. Basically says the three remaining defendants who have not pleaded filed a sealed motion on Friday asking for a continuance of the trial date and to keep the motion sealed.  The court said the motion will be considered on Wednesday along with the defendants' prior discovery motion.

-- You know how they say it ain't over till it's over? From what I hear, it's a long way from being over. That's all for now.  Many thanks to all those who continue to contact me with information, you know who you are. Thanks for your trust and for taking the time to explain. 

Posted By David Rossmiller In Industry Developments
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I'll keep this post on top throughout the day and update it with news as I hear of it and have time to post it.

-- Joey Langston turned himself in at the U.S. Attorney's Office this morning, says this breaking story by Patsy Brumfield and Errol Castens in the Daily Journal.

UPDATE: I've had a chance to pull all the current entries on the docket in USA v. Langston from PACER, and have reorganized them from the way I originally had them and relisted them below so they are easy to access. 

Here's the government Information with the charges against Langston.  

SECOND UPDATE: Langston's plea agreement. 

Here is Zach Scruggs' waiver of conflict letter that states Tony Farese can represent both him and Joey Langston. Again, more later.

Here is a copy of Joey Langston's waiver of conflict letter (you need one from each client).

Here is Langston's waiver of indictment. 

Here is a copy of the minute order of the hearing January 7 where Langston entered his plea agreement before Judge Michael Mills. 

Here is the order setting the conditions of Langston's release.

Here is Langston's unsecured bond. 

Here is the notice of penalties and here is the criminal cover sheet. 

THIRD UPDATE: As you can see, in the plea agreement Langston pleads guilty to conspiracy to corruptly influence an elected state official, which maximum penalties of five years in prison, a $250,000 fine and three years supervised release, but the agreement is that the sentence will not exceed three years. He will not face forfeiture of his share of the $3 million of Scruggs "savings" he split in the Wilson case.  He allegedly split the money with Steve Patterson and "a close personal friend" of the judge who was supposed to influence Judge DeLaughter's decision in the case, allegedly acting on behalf of Dickie Scruggs. Generous of the feds, don't you think?  I wonder what this means. Does it mean their analysis is Judge DeLaughter was not actually influenced, despite that being the goal of the conspiracy? I don't know much about what the government can do as far as confiscating money and holding it in trust, say, while Wilson and his attorneys sue to get it back. They always have the option to sue Langston anyway, among others. 

If the allegations concerning Scruggs and others are true, and if the influence was actually not effective, then these interpretations are possible of the allegations in the charges against Langston: (a) he ripped off Scruggs for a big split that was not deserved; (b) Langston didn't know the influence was ineffective, thought the conspiracy achieved its goals and that he deserved the split; (c) it didn't matter to Scruggs whether the money was deserved or not, he got a much bigger windfall than the $3 million that was split among the three alleged co-conspirators, and better safe than sorry, a fair day's pay for an unfair day's work. 

FOURTH UPDATE: Great question in the comments about whether the Wilson judgment can be reopened.  Here's a pdf of Mississippi Rule of Civil Procedure 60 to follow along with.  Can the judgment be overturned?  The rule has provisions for reopening old judgments for fraud and other reasons.  Now that I've had more time to look this over and think about it, the answer depends on whether there is evidence that Judge DeLaughter was actually influenced.  We know from Langston's plea there was a conspiracy to do so, but if a conspiracy is ineffective, or for some reasons the conspirators didn't follow through, then the fraud really was on Scruggs, whom the government alleges put them up to it on his behalf.  If a conspiracy to corrupt a process doesn't actually achieve its aims or result in a corruption of the process, it seems to me the judgment is hard to overturn.  But those are just preliminary thoughts.

FIFTH UPDATE: Here's a Jerry Mitchell story in the Clarion Ledger about the efforts of Scruggs' attorneys to keep him from having to testify in the Jones v. Scruggs lawsuit, the one the bribery indictments arose out of. The hearing on the request is today. 

SIXTH UPDATE: Check out this Daily Journal story, says John Jones' lawyer, Grady Tollison, said in the Jones v. Scruggs hearing today that Judge Lackey, the target of the alleged Scruggs bribery conspiracy, is the one who came up with the $40,000 bribe figure as part of an FBI sting.  Guess they were trying to figure out an amount that the alleged conspirators would for sure jump at.  Not too far out of line with the $50,000 allegedly paid to Ed Peters to influence the decision in Wilson, although I'm sure they didn't know at the time how shrewdly they pegged the market.  These FBI guys and Lackey that came up with that $40,000 figure, which apparently was just right in that sweet spot for the bribe market, man, I want these guys to be picking my sports bets.  Might have been just a little low considering a judge should be worth more than a judge's best friend, but hey, aren't we all Monday morning quarterbacks when it comes to what you should and should not have done in setting the amount of a bribe in sting operations? I hate it when someone second guesses the amount I set for a bribe, so I'm not going to do that to others.  

SEVENTH UPDATE: Steve Patterson has pleaded guilty.  Here's the plea agreement.  Says January 10 is the date, and that's where they put it in the PACER docket today, behind the stuff filed on Friday, but it wasn't there yesterday, I can assure you of that, must have checked five times for new activity. 

 EIGHTH UPDATE: This Clarion Ledger story says the judge in the Jones v. Scruggs case quashed the subpoenas to make Scruggs testify in the case.  Question: why? The story doesn't say. Also, and I've seen this before in this paper, in referring to the Wilson case it says "both sides settled the case."  You know, I hate it when only my side settles the case and the other side keeps litigating against us, it makes life so difficult.

NINTH UPDATE: Here is a statement from the Mississippi Bar about these crazy events.  An excerpt:

[Bar President Bobby] Bailess continued, “The actions of these few lawyers are not reflective of the vast majority of the over 6,700 lawyers in Mississippi who each day serve their clients and communities with honesty, integrity and competence.”

Bailess concluded by saying, “While The Mississippi Bar is not directly involved in criminal proceedings, the Bar will swiftly deal with those who have pled guilty. With regard to those accused of wrongdoing, the Bar will follow normal disciplinary procedures while allowing the criminal justice system to work.”

The Mississippi Bar’s General Counsel, Adam Kilgore, added, “The Mississippi Bar takes very seriously its roll as a designated disciplinary agency of the Supreme Court of Mississippi. The attorney discipline process is regulated by the  

Rules of Discipline for the Mississippi State Bar, as set forth by the Supreme Court of Mississippi. Under Rule 15 of those rules, the Bar’s Office of General Counsel is prohibited from discussing specific cases until such time as they become public record by way of the attorney discipline process.” 

TENTH UPDATE: Hood speaks, doesn't say much. Story by John O'Brien of Legal Newsline. 

Posted By David Rossmiller In Industry Developments
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A common sentiment among many of the people I have communicated with in Mississippi is hope, hope that despite the embarrassment of the ongoing investigations and revelations, a new and better future awaits.  I think this accounts for much of the vehemence that we are seeing as more allegations come to light -- a desire to storm the Bastille, and tear it down so that no stone is left standing on another.  In this view, a good chunk of the state's legal and political system has long since fallen into the hands of an oligarchy that operates as a law unto itself while perverting the authority and means of the state, simultaneously using this power for its own ends to steamroll opposition while maintaining a surface appearance of legitimacy to cover its tracks and allow itself to function with impunity. 

Particularly galling to those who hold this view is that they not only feel abused, they feel intimidated into having to pretend that they do not know they are being lied to -- or denied any recourse, which works out to the same thing -- thereby facilitating their own disadvantage and perpetuating and strengthening the corruption they feel exists.  After all, one who lies to deceive us is a dangerous person.  But exponentially more dangerous than the liar who seeks to fool us is the liar who will lie to our face, knowing that we know he is lying.  This person we tend to see not merely as an opportunist or one who deceives for gain, but as a principled opponent of the truth.  This is because this second kind of person does not merely seek to outwit us with deceit, but robs us of dignity and self-worth by rubbing it in that we can do nothing to stop him and had, in fact, better support the pretense of truth or pay a heavy price.

I have been thinking about this and pondering this for a very long time now, and I hope I am accurately expressing and summarizing what I am hearing. I cannot count the number of times folks in Mississippi have expressed what to me is a surprising amount of fear of being found out to have spoken out, even in private to me.  Now, as many of you know, I grew up on a farm in a very rural area, so I am no stranger to the pressures of conformity in a fixed social order.  From the time I started Sunday School when I was 3 to the time I graduated from high school at 17, I went to school with the same bunch of kids, and in fact, many of us went to college together as well.  Until I moved away to Phoenix when I was 24, small town life in North Dakota was all I knew, I had never been anywhere else.  Yet I know that my experience with a fairly rigid social structure is very different from the problems people are telling me about in Mississippi -- I never had any feeling whatsoever that the system was corrupt, rigged or designed to benefit a few to the detriment of all others, merely that a lack of economic opportunity forced a continual migration of the most talented that led to a loss of social dynamism.  In fact, North Dakota was and remains an almost fanatically egalitarian place in which displays of power or wealth are viewed as gauche to the point of exclusion from polite society.  The culture of Portland, Oregon is somewhat similar when it comes to egalitarianism, and I see no evidence anyone in Portland believes the legal or political culture is corrupt. I am lucky, I guess, in that I have operated my entire life without fear of opening my mouth and without any feeling that the dealer could cheat without penalty.  So I have had some learning to do. 

I am not saying this accounts for all the reasons people want to remain confidential -- obviously simple prudence dictates not wishing to get sideways with employers or colleagues, and also obviously one's access to information tends to dry up when one brands oneself as the town crier.  Also, many people rightly recognize the complete story remains to be told, that they are supplying just a fragment, and do not want to be seen as vouching for the ultimate conclusion.  But a good bit of it is, and I lack a better phrase, fear of specific powerful cabals.  Certainly, in my prior career as a journalist, I was no stranger to the concept of someone wishing to remain anonymous to promote a given self-interest at low risk, but that has been notably absent from the overwhelming majority of communications I have had here.  Instead, I detect a lack of immediate self-interest and a strong desire to promote the commonweal, the public good.

So that brings me back to the original point -- hope. Mixed with hope is a sort of demoralizing gut feeling that in the end the whole thing will be just like getting all excited about turning a corner in the road during a hard journey on foot, and then seeing the destination is still a hundred miles away. One reason folks are hanging back, people have told me, is they don't believe the feds will really get to the bottom of this: a few people will go to jail, some pleas will be entered, and they'll call it a day.  How likely is this to be the reality? We know that all human endeavors, including investigations, face a point of diminishing returns -- at some point, the tracks become obscured by time, the targets too entrenched and the evidence not quite substantial enough to warrant continuing in light of the resources expended.  So a few weeds get pulled out of the lawn, but they spring right back up again when the lawn guy drives away. So where will it all lead and how far will it go?  That question remains to be answered, and a lot of hopes and fears are riding on that answer.

In saying all this, I hope it goes without saying, I do not hold myself out as an expert or authority of any kind, I am merely someone at a distance trying to hold a mirror up to nature, to report what I see and hear.  I myself do not know the answers to very much, I am merely attempting to ask the right questions.

With that said, let's once again face the new day and survey the landscape of the Scruggs Nation. 

-- Alan Lange at Y'all Politics has written an open letter to AG Jim Hood, "Jimmy, we have a problem," urging Hood to leave his bunker and get out and enforce the law, in effect, to put the General in Attorney General.  An excerpt (the hyperlinks in the excerpted text don't actually work, you will need to visit Alan's post for those -- also, the links are that funny purple color here because I read them before excerpting his post):

I know it’s a tough deal to find out that people close to you have done wrong. You must be enormously disappointed – not to mention embarrassed. But this is the gig you signed up for, General Hood. Remember, justice is supposed to be blind (or at least significantly vision impaired). The confidence in our legal system has been shaken to its very core, and you have the ability to help make it right. The trust that these people, who are so close to you, have admitted to violating is so very basic that they deserve the same prosecutorial vigor that you seem to save only for people who committed crimes 30 years ago. This is here and now. Like Operation Pretense (which was also led by the feds due to weak leadership in Mississippi), this could help define your legacy as an Attorney General who actually fought corruption versus empowering it, like you seem to be doing at this point.

Now I am not a lawyer, but I have a bit of legal advice. I know within the federal system, an “independent special prosecutor” is often used in matters of this type. I can’t think of a better time or place. Appointing someone with the legal authority to chase these folks down wherever the trail may lead seems to be imperative. Your office may actually have some conflicts as there is at least some evidence that there has been some coordination between some of your campaign contributors under federal indictment and your office. Plus, you have taken a LOT of money from these guys in your campaigns (I mean a LOT of money!). It's almost like they knew you would never prosecute them. Since those campaign contributions, you provided some safe harbor to Dickie Scruggs with your previously unannounced and since unmentioned “confidential informant” language that you used when he developed some contempt issues with Judge Acker in Alabama. Plus, Courtney Schloemer and some investigators in your office have had some conversations with federal grand jury witnesses that just so happened to be paid consultants of Dickie Scruggs in his civil matters. While not per se illegal, it could be interpreted as having the appearance of impropriety, which I know someone as sensitive to legal accuracy and public sentiment like you would never want. All of this is not to mention the fact that your mentor and friend Mike Moore, has been working with your office simultaneously on State Farm grand jury matters and the Scruggs litigation team, according to the Lee Harrell deposition.

Put simply, you seem to have a conflict. Plus, you don’t seem real enthusiastic on taking on the role of the “tough as nails” top law enforcement officer of Mississippi in this particular instance.

It’s time to appoint a special, independent prosecutor so that we can pursue state charges against those that have admitted guilt on federal charges and those that might admit guilt or be found guilty later. The integrity of our state judicial system depends on it.

-- That Jerry Mitchell story in the Clarion Ledger that I linked to yesterday? Shocking, even though it's pretty much along the lines of what I've been hearing for a long time.  Just seeing it in print, all in one place, however, brings a different feeling than hearing parts of it over time.  Still, it doesn't feel like all there is to know. This part of the story leaves me with questions:

In his statement to authorities, Langston said he helped Scruggs try to influence Circuit Judge Bobby DeLaughter, who heard the case.

DeLaughter, a former assistant district attorney under Peters, has repeatedly said he took no bribe. "The hardest part of this is not being able to defend myself, but I just can't comment on it," he said Saturday.

About a year after the lawsuit was filed, the Internal Revenue Service disallowed some of Wilson's deductions on his income tax filing, causing him to owe taxes, said his attorney, Vicki Slater of Jackson.

Despite being in bankruptcy, Wilson paid 100 percent of those taxes, she said.

The state Tax Commission talked of pursuing a case against Wilson, but the Bankruptcy Court blocked any action, she said.

In 2001, Scruggs' attorneys took some of Wilson's accounting documents received through discovery to Peters, then Hinds County district attorney, asking Peters to pursue a tax case against Wilson.

Later, one of Wilson's lawyers met with Peters, and Slater said Peters told that lawyer that a "high-ranking public official" asked him to prosecute Wilson.

Peters could not be reached for comment.

Wilson did nothing to warrant criminal prosecution, Slater said. "All of this was to help Scruggs in his lawsuit."

In 2005, a federal judge ordered Scruggs to pay Luckey more than $17 million.

Wilson's case wound up back in Circuit Court before DeLaughter.

Scruggs' attorneys expressed concerns DeLaughter's former law partner, Bill Kirksey, was involved in that lawsuit and decided to hire Peters, according to statements Scruggs' lawyers have given federal authorities.

Peters asked for $50,000 in cash for his services, according to the statements, and because Langston didn't have $50,000 in cash, Balducci supplied it.

But Scruggs' lawyers never listed Peters as an attorney of record in the case. According to statements, Peters was eventually given a total of $1 million to influence DeLaughter in the case. The statements show DeLaughter did not receive any of that money.

What was done with the money then? How was it paid, in what increments and over what time?  Was this designed from the start as something where the money wouldn't go any further?  If so, what was the plan to influence the judge's decision? The story later mentions Trent Lott (I am  assuming, without evidence to the contrary, that if this scheme in fact occurred that Lott was duped into doing what he did) making a courtesy call to DeLaughter about a possible federal judgeship.  But what about the timing? Was the timing of the call such that it plausibly could be even considered an inducement?  We don't know -- the story says the DeLaughter decision adverse to Wilson happened in early 2006, but not when the call was made.  Also, the story doesn't say what role if any Peters may have played in getting Lott to make the call.  So, again, what was the money paid for?  This is supposed to be a week full of revelations.  Let's hope we find out some of the answers.

One more point, and then we can sit back and await developments.  Remember on that tape Tim Balducci said to Judge Lackey about all the "bodies" that were buried? Well, the plural of a word can encompass anything from two to infinity.  If it turns out that what we are hearing is actually what happened in the Wilson case, not to diminish the investigation at all, but it still strikes me as low-hanging fruit.  So many other threads remain.  One question that keeps running through my mind: what in the world did Dickie Scruggs agree to pay P.L. Blake $50 million for?   We know he agreed to pay it, because he himself testified that he did. But no explanation yet adds up as to why and what for.

Posted By David Rossmiller In Industry Developments
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A story by Jerry Mitchell in this morning's Clarion Ledger says Joey Langston entered a guilty plea in federal court.  Here's a link.  As of the time I'm posting this it's early on the West Coast, I may have more to say about this later.   

UPDATE: Walter Olson has written a long, excellent post at Overlawyered on the significance of the Langston plea on the national scene.  Walter also likens Mississippi AG Jim Hood's current status to a "potted plant."  Incidentally, on Friday, Hood's office sent an e-mail to AG employees barring any contact with the media AND bloggers without authorization.  Apparently the media restriction was in place before, but now bloggers are expressly included in the ban.  I guess Hood figures if he's not going to talk, no one else should either.   

SECOND UPDATE: At times like this, it is easy to fall into a feeding frenzy and speculate unfairly. Remember we are working with a limited universe of known facts, and that interpretation of documents, public records and statements on the record by those who know first-hand is different than assuming the worst about someone or speculation based on oral or informal rumors, or what we wish to be true. Readers are free to contact me with information about what is going on, but I humbly ask that commenters please refrain from statements on this blog about the guilt or criminal involvement of those who have neither admitted any culpability nor been charged with a crime.  A label of criminal carries a serious stigma.  Let's be fair even to those we may not like.  If anyone deserves to be brought to justice, well, let it come, but let's try to put ourselves in the shoes of those we discuss, and their families.  Let's remember that compassion, even for an enemy, is mankind's noblest trait. Let's only say those things that we would stand up in public, attach our name to and answer for.

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SECOND UPDATE: I have bumped this update to the top to make sure everyone sees it. I heard from Patsy Brumfield at the Daily Journal that there was an error when the story below was posted online and it is in the process of being changed.  Apparently the reference to Tony Farese, as a commenter predicted, was a mistake and he was not the one who said Joey Langston is cooperating with authorities.   

--------------------------------------------------------------------------------------------------------------------------

Another report from the Daily Journal's Patsy Brumfield on Scruggs developments. Seems to me the big news is in the fifth paragraph, which I've emphasized with boldface.

OXFORD – Federal prosecutors still haven’t given defense attorneys information about the search warrant for Booneville attorney Joey Langston’s office, among numerous other documents, videotapes and wiretaps they say the government has.

The search warrant for the Langston Law Firm, a new defense motion states, calls for “all records relating” to two cases in which the firm represented famed Oxford litigator Richard “Dickie” Scruggs.

Scruggs, his son Zach, Oxford attorney Sidney Backstrom, former state Auditor Steven Patterson and New Albany attorney Timothy Balducci were indicted Nov. 28, accused of trying to bribe a judge for a favorable ruling in a $26.5 million Katrina legal fees lawsuit. Balducci pleaded guilty and is cooperating with the government.

A source close to the case told the Daily Journal on Wednesday that Patterson has changed his innocent plea for leniency and is helping prosecutors. His status and other sealed documents are expected to become public Monday, when one legal observer said more issues of the case will be clarified.

In a reportedly unrelated case, sources also say Langston was indicted and is cooperating with investigators. Langston’s attorney, Tony Farese of Ashland,said.

Farese himself said that? Whoa. I guess we can take that as authoritative.  As I mentioned, I think it was yesterday, the final date for plea agreements in the Scruggs case is February 11.  If the Langston matter involved other charges, some other timeline would apply in any case that resulted. To represent Langston while continuing to represent Zach Scruggs without a conflict of loyalty ensuing, Farese must have determined there is no reasonable grounds for believing either the younger Scruggs or Langston would testify adversely to each other's interests.   

UPDATE: Check out the excellent reader comment below from Watching Closely. Point of the comment is that maybe the Journal story has an incomplete sentence or something else that will require a clarification or correction. I've reproduced the story above just as it appeared online (except for adding the boldface), and you will notice there must be some kind of error, typographical or otherwise. "Sources" are identified as saying that Langston was indicted and is cooperating, and if Farese were the "sources," there would be no need to cite other sources -- who cares what they think if the man's attorney is telling the tale?  In addition, there is a period after "investigators," not a comma, as we would expect if the information were being attributed to Farese.  

Posted By David Rossmiller In Industry Developments
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Though the Renfroe v. Rigsby case in Alabama has lost the spotlight to other legal developments, like a solid but B list actor on the red carpet at the Oscars when Tom Cruise steps out of his limo, it's worth mentioning that the case goes on and worth filling you in on some developments.

As I posted about recently, Judge Acker denied motions by Scruggs and the Rigsby sisters that he recuse himself from the case on the grounds of the perception of bias that might arise from his referral of Scruggs for criminal contempt of court charges (Scruggs is not a party in this case, nor did he represent the Rigsbys in the lawsuit against them by Renfroe). In his order denying the motion, Acker stayed further proceedings in the case, except, as he explained in this later order, for discovery.   Here's Renfroe's request for clarification upon which he was acting.  A deposition in the case is taking place in Mississippi today -- presumably of an expert witness, because expert depositions are mentioned in the motion -- and Judge Acker issued this order stating that a magistrate judge would be standing by to handle "anticipated" discovery disputes in the deposition.

UPDATE: After seeing the comment below from Justus, I did some checking myself and it is correct that the Maria Brown deposition is taking place today. Brown, a former paralegal at Nutt & McAlister, one of the firms in the former Scruggs Katrina Group, alleges in her lawsuit against the firm that, despite Acker's order that the Rigsbys and all their agents return copies of claims documents the sisters took from State Farm, the firm intentionally failed to destroy electronic records of the documents, saying they were in the "public domain."  Here's a post I wrote about the lawsuit.     

Scruggs, by the way, is seeking permission from Judge Acker to file an interlocutory appeal to the 11th Circuit of the order denying recusal.  In his previous order, Judge Acker said only that he was staying further proceedings to give Scruggs and the Rigsbys a chance to seek appellate review from the 11th Circuit.  He did not say he would grant permission to file an interlocutory appeal, however, and it is possible Judge Acker might deny this request, forcing Scruggs to file a writ of mandamus. The significance of this is that mandamus is an extraordinary remedy with a high burden of proof, because the appellate court is in essence ordering the judge to correct an abuse of discretion, rather than merely reviewing the legal ruling de novo, or without deference. For a further explanation, see In re Bayshore Ford Truck Sales, Inc., 471 F.3d 1233 (11th Cir. 2006).  If you don't have access to Westlaw or Lexis, you might be able to access this case through Findlaw or some other free service on the Web.

In the criminal case against Scruggs in Alabama, by the way, there are no new docket entries since the December entry setting February 8 as the date of a hearing to decide pending motions.  Among these are the show cause order that has been briefed by Scruggs and the government.  The show cause order requires Scruggs to show why he should not be held in criminal contempt, and the hearing was scheduled for November, along with Scruggs' arraignment, but was never held because Scruggs filed a successful motion to disqualify the trial judge, Scott Coogler, along with all other judges in the Northern District of Alabama.  The reason stated in the motion for disqualification was that Coogler and other judges in the district, as colleagues of Judge Acker, might be biased or the perception of bias might exist. 

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I heard about this a couple days ago and just had to post on it.  Newly elected or re-elected Mississippi state officials took their oaths of office on Thursday, and among these officials was AG Jim Hood.

Although Hood was highly visible, outspoken and leading the charge against insurance companies post-Katrina, lately he has become what some refer to -- OK, what I refer to -- as the Prisoner of High Street (the location of his office).  Ever since State Farm got an injunction against his criminal investigation of the insurer and especially since the Scruggs hit the fan, Hood has been about as vocal as Marcel Marceau doing meditation.  

Now, from what I can see, Hood is an energetic law enforcement official.  I follow Katrina-related events, but I'm not in a position to judge his total performance in office nor do I care to -- I will leave that to the residents of Mississippi, who spoke in the last election.  I've read about some of his prosecutions and investigations, and some of these have struck me as very worthy and laudable efforts. But you'd think such an official would be all over this Scruggs stuff, in the absence of countervailing factors or reasons, such as perhaps his previous closeness to Scruggs making an investigation unpalatable in several ways.  Still, he is bound to uphold the law of Mississippi and as numerous readers have pointed out to me, the federal charges and continuing federal investigation certainly do not preclude the application of Mississippi law nor do they prevent a concurrent state investigation.  For example, post-Katrina, Hood conducted a criminal investigation through a state grand jury into potential abuses in Katrina claims adjusting by insurers, even as a federal grand jury and the U.S. Attorney in southern Mississippi reportedly were doing much the same thing, not to mention all the hoo-ha in Congress. 

But what did Hood announce as his priorities in office at his swearing-in? Here's a story that says what.  

Hood said he’s looking forward to continuing his fight against cybercrime and those committed against the elderly and children. Hood said his office had also begun a new initiative targeting counterfeit products from overseas.

Hood said the products include counterfeit drugs, brake pads, contact lenses and lead-contaminated toys.

I am not making this up.  Fake contact lenses and toys. Can you imagine?  Isn't that a little like having a sideline pass at the Super Bowl but instead of following the game sitting at the concession stand eating hot dogs and watching a DVD about how to install a bathroom fan?

Hood, by the way, was among the luminaries at Friday's investiture ceremony for federal judge Sharion Aycock in Fulton, Mississippi.  Among the crowd of several hundred were a couple judges from the Fifth Circuit Court of Appeals, Magistrate Judge S. Allan Alexander, U.S. Sen. Thad Cochran and Tony Farese, who continues as Zach Scruggs' attorney after seeking to withdraw but being blocked from doing so for the time being by Judge Biggers.  The Scruggs case was, as one would expect, discussed discretely and in hushed tones among many attendees.  If Hood said anything about the case to anyone, I didn't hear about it.   

UPDATE: My attention has been called to this story in today's Clarion Ledger about a new anti-crime initiative in Jackson.  Included in the list of the crime-busting cooperative is about every possible police force and agency except, hilariously, one you would expect to see front and center.  See if you can figure it out from this excerpt:

Before Robert Shuler Smith was sworn in as the new Hinds County district attorney, we noted that more state resources should be applied to Jackson/Hinds crime fighting.

One Monday, after Smith was sworn in, Gov. Haley Barbour, U.S. Attorney Dunn Lampton and newly elected Lt. Gov. Phil Bryant announced a $3.5 million, two-year crime-fighting package.

"Every citizen of our state has an interest in having a safe and secure Capital City. By working together, this initiative will bring new resources in identifying, prosecuting, convicting, and removing the worst criminal offenders from the streets of Jackson," Barbour said.

The funding will provide for a full-time-equivalent special Circuit Court judge, two new assistant district attorneys, one new public defender, and additional support staff.

It also will fund an investigations team to include members of the Mississippi Bureau of Narcotics, the Mississippi Bureau of Investigation, the Mississippi Department of Corrections, Jackson Police and Hinds Sheriff's Department, with federal agencies, including the U.S. Attorney's Office, the Drug Enforcement Administration, the Bureau of Alcohol, Tobacco, and Firearms, and the FBI.

  

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Lots of interest from readers in this story from the Daily Journal with hints as to what may be going on with Steve Patterson.  Here's a copy of the documents the story mentions as being filed today -- Defendants' Reply to the government's response to the defendants' earlier motion to compel discovery, and the accompanying Exhibit A.  

The point of the story is that Patterson is not listed as among the defendants making the reply, whereas he was listed as being behind the actual motion made late last month.  True enough. Lots of rumors about what is going on, some of it you take with a grain of salt, some of it you don't need a weatherman to know which way the wind blows.  Incidentally, someone also pointed out to me that, although Tony Farese continues to be Zach Scruggs' attorney, Farese's signature is not on the new pleading.  What that might mean, I don't know, maybe nothing.  

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This thing in Mississippi is starting to rock around and bounce like a pressure cooker with no safety valve and the burner underneath turned up to flamethrower level.  Feels like it's about ready to blow up and spray strawberry preserves and shrapnel all over the kitchen.  They say if you can't stand the heat -- or the explosions -- get out of the kitchen.  But when the feds are the ones who invited you into the room, it's not like a movie, where if you don't like the show you get up and leave. They tend to get very -- what's the word I'm looking for here? -- upset if you try to check out without leaving a little something behind. Admission costs you nothing, but dang, that exit fee? It's pretty steep.  Your gut is full like you just dined on a heavy meal where the main courses were fear, terror and panic. If you got invited and you've got something to throw on the table, you empty your pockets to get out before that lid blows. If you left your chips in your other pants, or you're the feds' guest of honor, well . . . . You know what happens.

So, Citizens, put on your bomb disposal suits, and make sure your blast helmets are on tight for the next few days.  Let's peer out from our bunkers, through our reinforced Plexiglas face guards, and take a look at the landscape of the Scruggs Nation.

-- First let's look at this AP story on the federal grand jury.

JACKSON, Miss. -- The federal investigation in a judicial bribery case that entangled one of the nation's wealthiest plaintiffs attorneys appears to be expanding, with a grand jury considering at least one case dating back to 1994.  

Famed plaintiffs attorney Richard "Dickie" Scruggs, his son and several associates were indicted Nov. 28 on charges they conspired to bribe a judge for a favorable ruling in a dispute over $26.5 million in legal fees from a Hurricane Katrina settlement.  

On Thursday, sources close to the investigation told The Associated Press that a federal grand jury in Oxford has been asked to look at at least one other case Scruggs was involved in during his rise to the top of his profession.  

A 1994 lawsuit in which two of Scruggs' former associates, attorneys Alwyn Luckey and William Roberts Wilson Jr., sued Scruggs for a bigger cut of millions of dollars that the attorneys had won in asbestos litigation is one of the cases apparently being looked into by federal authorities.  

Hinds County Circuit Clerk Barbara Dunn said today that the 1994 file was not available because federal investigators took all 7,001 documents related to the case earlier this week.  

The judge who presided over the 1994 case was Circuit Judge Bobby DeLaughter, a former prosecutor renowned for successfully prosecuting Byron De La Beckwith in the 1990s for the 1963 murder of NAACP field secretary Medger Evers.  

During a telephone interview with the AP on today, DeLaughter said he could not comment on reports of the grand jury probe but challenged anyone who doubted his judicial integrity to read his ruling in the case.  

Numerous calls to U.S. Attorney Jim Greenlee's office in Oxford this week have not been returned. Attorneys for Scruggs have not responded to repeated requests for comment.

-- Judge Biggers lets no moss grow under his feet. Here is a copy of his order setting a hearing for 10 a.m. next Wednesday.

The court notes that in the motion and response thereto, not only are issues raised about whether some requested material is discoverable under the statutes and case law, but also whether some of the items requested have been furnished to the defendants. Counsel are advised that in the interest of judicial and attorney economy, counsel should carefully review Federal Rule of Criminal Procedure 16 and Title 18 U.S.C. § 3500, which address the bulk of the issues raised by the parties in the motion and response, and separate those materials which are clearly not discoverable from those that are.

Also, the government claims it has already furnished to the defendants some of the items requested by them prior to the date of the request. This issue should be resolved prior to the January 16 hearing through a conference between the government and defendants. The court does not wish to expend judicial resources on matters which could be so easily resolved by the parties outside of open court.

This is my favorite kind of judge.  Doesn't look like he's in the mood for anything that might be perceived as messing around. 

Incidentally, you might have noticed in the court docket on PACER that some time back Judge Biggers issued this order moving the date for plea agreements in this case from January 7 to February 11.  Just sayin'.

-- With the McIntosh v. State Farm trial deadline looming on February 25, I was wondering when one side or the other would come to the court and say it just isn't going to happen.  Preparing for a trial in federal court is a massive job in even a small to medium-size case, and this thing is big and nasty, and I'm talking nasty like a cross between Bad, Bad Leroy Brown and King Kong.  This case has the disposition of Chewbacca after you gave him a buzz cut. The motion practice alone on pre-trial motions will consume resources like a forest fire.

Now I see the former Scruggs(less) Katrina Group, now known as the Katrina Litigation Group, has moved to continue the case and re-set the trial date.  Here's a copy of the motion, and here's an excerpt:

1. Prior to their withdrawal from this case in December, the Scruggs Law Firm had handled the case almost exclusively and had done all of the trial preparation. Plaintiffs’ counsel who remain in this case have worked diligently to learn about the case and to prepare it for trial, but cannot be prepared for trial by February 25, 2008, and need an additional month to be able to fairly and adequately present the case for plaintiffs.

2. Outstanding discovery issues remain for both sides.

3. The undersigned [attorney Don Barrett] is, since the withdrawal of the Scruggs Katrina Group from this case, the lead trial counsel for the plaintiffs. Prior to the Scruggs’ withdrawal, a case pending in the Northern District of Mississippi before Judge Davidson was set for trial in Oxford beginning February 4, 2008. Counsel opposite in that case has estimated that this case will take longer than three weeks to try. Therefore, lead counsel for the McIntoshes will be unavailable if this trial setting is not continued from its current setting, and unavailable for the three critical weeks immediately preceding the trial.

4. This motion is not brought for purposes of delay, but to promote the ends of justice.Plaintiffs have not previously sought any continuance, and can be prepared to try this case with as little as four weeks additional time.

-- In a kind of odd sidelight to the Renfroe v. Rigsby case in Alabama, a dust-up ensued in the federal district for Northern Mississippi over subpoenas Renfroe issued to take the depositions of Dickie and Zach Scruggs.

For procedural and jurisdictional reasons, this resulted in the opening of a new case in Northern Mississippi to consider Scruggs' motion to quash, which was granted by the Magistrate Judge.  Renfroe asked for a de novo review [review of the whole thing, top to bottom, with the reviewing judge not being required to give any deference to the ruling] by the Article III judge assigned to the case. (For non-lawyers, unless parties consent to the jurisdiction of the U.S. Magistrate, his or her orders must be reviewed by a judge confirmed by the U.S. Senate if one of the parties requests -- Article III refers to the section of the U.S. Constitution that requires federal judges to be appointed by the president and confirmed by the Senate). In light of Judge Senter's decision in the McIntosh case that Dickie and Zach Scruggs can be deposed by State Farm, however, Chief Judge Michael Mills issued this order yesterday that in essence stays the case.  

On January 8, 2008, this court set for hearing on January 17, 2008, Scruggs’s motion to quash the subpoena issued against him in this case. On that same day, however, in McIntosh v. State Farm et al., 1:06cv1080 (S.D. Miss.), U.S. District Judge L.T. Senter issued an order affirming Magistrate Judge Walker’s order permitting Scruggs’s deposition in that Hurricane Katrina case. Judge Senter indicated in his order, however, that the status of the documents at issue therein was uncertain, and Judge Senter accordingly remanded the case to the Magistrate Judge for additional inquiries in that regard. Judge Senter appeared to be particularly concerned regarding Scruggs’s arguments that some or all of the documents in question were privileged, and he directed that Judge Walker address these privilege issues on remand.

It is thus apparent that another district judge has already addressed the issue of Scruggs’s deposition regarding the Rigsby documents. This court does not wish to interfere with Judge Senter’s resolution of these issues, and it appears that his resolution of identical issues will serve the interests of judicial economy. The proper course of action is to stay the matter of Scruggs’sdeposition in this case until concerns regarding the privileged documents have been resolved in McIntosh. The court presumes that the McIntosh analysis will prove conclusive in this matter.

In any event, the parties may file revised motions before this court seeking whatever relief they deem to be appropriate in this case. It is therefore ordered that the hearing previously set for January 17, 2008 in this case is continued until a date to be determined later.

Here's a post I wrote a couple weeks ago with more. The docket on PACER on this little case filled up fast, with such entries as Motion for De Novo Review of Order Quashing Subpoenas and a counter Motion to Quash Motion for De Novo Review.  If things kept going on the way they were, I was expecting to see entries like Motion To Leave Me the Hell Alone, I've Got Other Problems!, Motion To Shut Up and Face the Music and Motion To Stop Making More Motions, I'm Tired.

Isn't it remarkable all that is going on all over the place?  It's like Dickie Scruggs is made of fire right now, wherever his name appears, a conflagration breaks out.  Not sure even the Keker Brigade has enough hoses and water to put them out. We'll see.

-- I heard that AG Jim Hood, the Prisoner of High Street, was sworn in yesterday for his second term.  Got me to thinking.  It's odd that he hasn't rushed to start a state investigation of these Scruggs allegations, or at least demanded that the feds cut him in on a joint state-federal investigation.  Maybe I just haven't heard about it. 

UPDATE: I heard about the weird thing at the end of this post on this blog from a couple readers today.  It's not uncommon for people new to getting attention to let their egos start writing checks the Reality Bank ain't gonna cash.  Kind of weird and sad. I've been writing about Katrina litigation and Scruggs for a long time before this blog came along, and whatever the implication is supposed to be there, I don't get my information or documents from some blog, I get them from people who have them, the court clerk and from PACER. One reader pointed out I've linked to this blog in the past and said complimentary things -- it's something that folks did when I started blogging, helping out the newbie -- but I will have to rethink this. It's easy to get carried away with yourself, I know -- I remember back in the day I got a story on A-1 of my paper in Phoenix the second day I was working there and I thought I was the Duke of Earl.  Had a few hard lessons along the way from folks who disagreed. I've said it before and I'll say it again, I'm a busy practicing litigator, I hear from a lot of connected people every day, I form my own opinions from talking to them and reading documents they send me and I find myself, and I don't really pay attention on a daily basis to what other people on the internet are doing. 

Posted By David Rossmiller In Industry Developments
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I haven't seen so many lawyers move around this fast since they evacuated my building last year because of a gas leak.  Seems like everyone in the Scruggs case either wants someone else's lawyer or the lawyer wants someone else's client.  Sounds like a writer's-strike Boston Legal script that didn't make the cut.  Why, next thing you know, Dickie Scruggs is going to say he wants to swap judges . . . oh wait, that's no joke, he's already tried that twice, once in his criminal contempt of court prosecution in Alabama (successful) and once in the Renfroe v. Rigsby case in Alabama (unsuccessful so far).  With this much mind-changing, I don't want to get behind these guys in line for ice cream.  

By the way, if you've got catching up to do, here's a link to my post Monday on the Langston firm withdrawing from representation of Scruggs.  Here's a link to a post yesterday about Tony Farese asking the court to withdraw as Zach Scruggs' lawyer, and here's a link to a post yesterday about Judge Biggers saying no to the request, as well as questioning a move where former counsel to defendant Steve Patterson wanted to represent Dickie Scruggs.

-- I know a lot of you are reading hoping to see what take I have on what may or may not be going on with Joey Langston.  Do I know? My answer is I don't know.  I hear things, many of them from knowledgeable and credible sources, and I hear these things from sources diverse enough that I would bet you that 90 percent of what I'm hearing turns out to be true -- maybe 100 percent -- but both back in the day when I was a reporter and now that I'm a lawyer, my bias is for documents, for evidence in my hand.  Time has taught me the lesson that getting ahead of the hard evidence and rushing to talk about it is not a good idea.

I've used the word "fluid" to describe the current situation -- and the lawyer-changing we see going on is a strong indication of how much in flux things are right now, and how many things are in flux -- and I'm not comfortable writing about information that has to be classified as rumor at this point.  There is a difference between my interpreting written evidence or passing along information directly from the person who knows absolutely for sure, on the one hand, and discussing what I've heard that sounds about right, on the other.  I also know that oral and informal communications are subject to a feedback loop and to being contaminated by cognitive dissonance, lack of precision and self-authentication.  I don't want this to sound trite or maudlin or preachy, and I hope it doesn't, because I'm just sayin'.  But I keep in mind that I have a duty of fairness, and I keep in mind that real people are involved, folks with families that love them and count on them, folks that might lose their freedom.  Maybe these people have done wrong, maybe they haven't.  Fairness is not the same as saying I don't have an opinion.  I can and do have opinions about what goes on, but I want to know for sure what it is folks supposedly have done before I start to form an opinion or say what it is.  I'm glad I've heard these things and that sources are keeping me informed, don't get me wrong.  But I'm going to continue to wait to discuss publicly until I see documents, or news reports where the reporter has had the time, inclination and resources to nail down the facts. There will be plenty of time to discuss and analyze.  You know where to find me.  I'm here every day and I will see this thing through -- I've been following and writing about Katrina and Scruggs and anti-concurrent causation and the Rigsbys and State Farm and all the rest for two years now, and I'll be here until the cows come home to roost if I need to be. 

-- I see in the McIntosh v. State Farm case that Judge Senter issued an order about whether State Farm can depose Dickie and Zach Scruggs and whether the Rigsby sisters need to produce certain documents like telephone records.  Again, in case you need a refresher -- and who doesn't, sometimes I have to look back myself to remember what I've written -- here is a lengthy post I wrote back on December 29 about this controversy.  Here's a copy of Judge Senter's order from yesterday. He  was asked to review orders by Magistrate Judge Robert Walker ordering the Rigsbys to produce the documents and that the Scruggses must testify.  Senter upheld Walker's order about the Rigsbys -- the phone records are not attorney-client communications but instead only show what numbers were called and when.  For non-lawyers, remember that unless a given act is itself intended as a communication -- nodding your head, flipping your attorney the bird (who hasn't done that, or at least wanted to?) -- it is not ordinarily considered protected by the attorney-client privilege.

About the depositions of the Scruggses, he wrote:

Much of the argument with respect to the Scruggses’ depositions hinges on their positions that what is involved is subject to the attorney-client privilege, that they are being deposed as “opposing counsel,” and that their rights and defenses are jeopardized in a criminal contempt proceeding pending in Alabama. Yet, as the Magistrate’s Order points out, it is difficult to determine at any stage of the proceedings exactly what roles the Scruggses were playing. The example used by the Magistrate is the statement made at the depositions in April/May 2007 that Richard Scruggs was wearing “two hats”–one as the Rigsbys’ lawyer and the other as their employer. It appears from the record that Zach Scruggs did the same thing on at least one other occasion. How all this connects with their representation of the Plaintiffs is also unclear. This is why the Scruggses’ depositions are appropriate–to ferret through this forest of relationships, especially in terms of the timing of various conduct and activity. Whether substantive information is obtained is largely up to the deponents, who are represented by their own counsel on different fronts.

So the answer is yes to the depositions. But wait, there's more.

Judge Senter also said he is concerned about the documents State Farm wants the Scruggses to produce. Judge Walker had rejected what he called the Scruggses' "blanket claims of privilege" with no privilege log being produced to substantiate claims of privilege and allow a document-by-document determination.  Judge Senter said "the fact remains that [these assertions of privilege] were raised," and sent these "important issues" back to Walker to resolve.

Judge Senter summed it up this way: "In short, while it is appropriate for the depositions of the Scruggses to be taken, there is no practical sense in the depositions being held at this time."  As trial in this case is set for February 25, that doesn't leave much time to resolve the issues and still take the depositions.  What are the odds, do you think, that after Judge Walker resolves the document issues, that the Scruggses will ask for another review of that ruling by Judge Senter?  On a scale of certainty, I'd place it somewhere between the sun coming up tomorrow and Wile E. Coyote's Acme rocket backpack blowing up. 

Posted By David Rossmiller In Industry Developments
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In what has developed into a sort of game show called "Who's My Attorney?", Judge Biggers has denied permission for attorney Tony Farese to withdraw as counsel for Zach Scruggs -- he was going to withdraw and reportedly represent Joey Langston.  Here's the latest from Judge Biggers, who is described to me by those who know as "a very hard-nose federal judge."

In this order, Judge Biggers also asks why Kenneth Coghlan, who used to represent defendant Steve Patterson and withdrew in favor of substitute counsel Hiram Eastlake, can now represent Dickie Scruggs, as Coghlan has asked permission to do.  Both instances raise conflict issues -- what if Patterson testifies against Scruggs and Coghlan has to cross-examine his own former client?  Judge Biggers raised this concern.  The same could be said for the Farese situation, I suppose -- what if Langston testifies against Zach Scruggs? In any event, Biggers denied permission for Farese to withdraw at present because the trial date is approaching and Zach Scruggs has no substitute counsel.

In light of the judge's questions, it appears Coghlan is dropping out.  Here's the very last entry on the PACER docket for this case, under the judge's order.

Is it just me, or is this whole thing starting to resemble a runaway stage coach on fire, careening over rocks and through gullies, wheels flying off and folks jumping out, hoping to land on something softer than a cactus?

Posted By David Rossmiller In Industry Developments
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Zach Scruggs' attorney, Tony Farese, has filed a motion to withdraw as counsel in the Mississippi alleged bribery case.  According to the motion, Zach Scruggs is going in a different direction with his legal representation and has terminated Farese's services. Here's a copy of the motion. 

UPDATE: While I've got a moment, thought I'd pass along this story by Patsy Brumfield in the Daily Journal about all the attorney switching in the Scruggs case. 

 Two more attorney changes in the fast-moving case of famed litigator Richard "Dickie" Scruggs became public Wednesday.

• Oxford attorney Ken Coghlan, who once defended a Scruggs co-conspirator, asked the court to approve him as an addition to Scruggs' defense team.

• Ashland attorney Tony Farese, who is new attorney for Booneville trial lawyer Joey Langston, asked the court to allow him to withdraw as legal defense for Scrugg's attorney son Zach.

Did P.T. Barnum slip into town without my noticing?

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Yesterday in the Scruggs criminal case in Mississippi, the government filed its response to a December 28 defense motion to compel the government to provide certain evidence in discovery.  That defense motion can be seen by clicking here, and we will get back to talking about it shortly.

Here is a copy of the government's response.  Now, taking these documents together, a couple things emerge.

On November 27, the day the FBI raided the Scruggs Law Firm, Steve Patterson was placed into custody.  The defense motion requests "[A]ny recording of the November 27, 2007 telephone conversation between Balducci and Patterson that occurred while Patterson was in custody, or any written record containing the substance of this conversation." So Balducci, presumably cooperating with the FBI, spoke with Patterson the day of the raid.  What was said we don't know, and the government response says "No recording or written record of the conversation was made."

The defense motion also asked for any written, recorded or oral statements made on or about November 27 by Patterson.  There must be some, because the government response says "The government has provided these statements to the defense in the form of an FBI 302 of the interview." (An FBI 302, as you can guess from the context, is a report of an interview with a witness by FBI agents).

The defense motion further requested any statements made on or about November 27 by Sid Backstrom.  Again, there must be some, because the government response says these have already been provided.  A word of caution is in order -- a statement does not necessarily mean someone spilled his guts.  Conceivably, it could consist of a witness criticizing an agent's clothes, or otherwise saying little to nothing. 

The defense motion asks for any record of statements made by Tim Balducci.  According to the government response, it does not need to produce statements made by alleged co-conspirators, and the government will not produce Balducci statements it has not already previously handed over.  Presumably, those handed over are the wiretap and other recordings in which Balducci's voice appears.

In addition, the defense motion asks for grand jury material, but the government response says it is not required to turn over grand jury testimony until after a witness has testified at trial.

Perhaps it is best, to try to make sense of all this the best we can, to take these two documents and the indictiment (click here to see a copy of the indictment) and form a timeline so we can see what is alleged and known, and in that way, see more clearly what we do not know. I've compiled such a timeline below.  The date and source for the information is given in bold.  Anything from the indictment should be considered an allegation and not a statement of fact indicating guilt.

• March 15-28.  Dickie Scruggs, Zach Scruggs, Backstrom, Balducci and Patterson allegedly met at the Scruggs Law Firm in Oxford to discuss how to influence the outcome of the Jones v. Scruggs lawsuit.  Indictment.
• March 28.  Balducci placed a call to Judge Henry Lackey asking to meet with him later that day.  Indictment.
• March 28.  Balducci traveled to Calhoun County to meet with Lackey to make an overture on behalf of the co-conspirators about the Jones lawsuit.  Indictment.
• May 3.  Balducci had a telephone conversation with Lackey where Balducci said "they had changed their strategy" and would rely on a motion to compel arbitration rather than a summary judgment.  Indictment.
• May 4.  Backstrom e-mailed a proposed order compelling arbitration to Balducci, who faxed the proposed order to Lackey.  Indictment.
• May 9.  Balducci has a conversation with Lackey at Lackey's chambers.  This is the now famous "there are bodies buried that . . . he [Dickie Scruggs] and I know where" conversation, in which Balducci also tells the judge that if he is inclined to rule in their favor, "everything will be good."  Indictment.
• May 9-September 21.  Balducci has several meetings with Lackey. Indictment. May 9 and September 21 meetings between Balducci and Lackey were taped via video and audio.  Defense motion. It is logical for us to assume that any other meetings between the two were also recorded.
• September 21.  At a meeting with Lackey, Balducci agreed to pay Lackey $40,000 cash on behalf of Dickie Scruggs and the Scruggs Law Firm for a favorable order.  Indictment.  Immediately after the Lackey meeting, Balducci placed a four-minute call to the Scruggs firm and discussed the bribery transaction with Backstrom.  Indictment.
• September 25.  FBI Special Agent William P. Delaney makes an application for a Title III wiretap.  Government response.
• September 26.  A call made from Balducci's phone at 10:11 p.m. is recorded.  Defense motion. The recording of the call ended abruptly because Balducci was talking to his father about unrelated matters and the government did not record this.  Government response.
• September 27.  Patterson had a conversation with Balducci discussing the bribe. Balducci delivered $20,000 in cash to Lackey in the judge's chambers, then traveled to the Scruggs firm in Oxford.  Balducci had a phone conversation with Patterson where Balducci said "All is done, all is handled and all is well." Indictment.  A call was made from Balducci's phone at 8:36 a.m.  This was recorded.  Defense motion.  The call broke up abruptly because Balducci lost cell phone service.  Government response.
• September 28.  A call is made from Balducci's phone at 5:03 p.m. Recorded. Defense motion. The call ended abruptly when Balducci lost cell phone service.  Government response.
• September 29.  A call is made from Balducci's phone at 4:56 p.m. Recorded. Defense motion. The government stopped recording apparently when they realized the subject of the conversation was not related to the alleged scheme.  Government response. 
• October 2.  A call is made from Balducci's phone at 5:31 p.m.  Recorded. Defense motion. The government stopped recording when it became clear Balducci was talking to an associate at his firm about an unrelated matter -- how to repair a gas leak to the associate's hot water heater.  Government response. 
• October 4. A call is made from Balducci's phone at 2:50 p.m.  Recorded. Balducci and Lackey talked by phone at 3:49 p.m.  This was recorded. Defense motion.  The government stopped recording the earlier call when it became clear Balducci was talking to someone about a political campaign.  Government response.
• October 16.  Balducci and Lackey talked by phone at 7:26 p.m. This was recorded.  Defense motion.
• October 18.  Patterson called Balducci and wanted to know what was going on with the order.  Patterson said he talked to Dickie Scruggs about 15 times and Balducci needed to call Scruggs.  Balducci delivered $10,000 in cash to Lackey in his chambers.  Dickie Scruggs called Patterson and they discussed "Tim" coming to the Scruggs Firm when he left the judge's chambers.  He was to bring the order, put it on Dickie Scruggs' desk and pick up a "package."  Dickie Scruggs prepared a $40,000 check for Balducci and false documentation to cover up the true reason for the payment.  Balducci delivered the order [apparently signed by the judge] to Zach Scruggs and picked up the false documentation.  Balducci then called Backstrom and told him he had delivered a copy of "those papers that we've been waiting on." Indictment. Lackey's secretary called Balducci at 11:16 a.m. to say Lackey was running late at the doctor's office and would call Balducci later. Recorded. Government response.  Balducci and Lackey talked at 1:18 p.m. This was also recorded. A recording was made from Patterson's phone at 4:21 p.m.  Defense motion.
• October 19.  A recording was made from Patterson's phone at 10:35 a.m. and another at 10:39 a.m.  Defense motion.
• October 24.  Government applies for an extension of the wiretap.  Government response.
• November 1.  Balducci delivered another $10,000 in cash to Lackey and obtained an amended order.  Balducci discussed the amended order with Zach Scruggs and Backstrom, saying "we paid for this ruling, let's be sure it says what we want it to say." Also that day, Balducci talked to Dickie Scruggs and Scruggs agreed to take care of an extra $10,000 payment to the judge and said he would "hire" Balducci in an unrelated case to prepare jury instructions to cover up the $10,000 payment. Indictment. Balducci made a consensual recording of a conversation.  It is 90 minutes long and involves the other four alleged conspirators. Defense motion.
• November 3.  A recording was made from Patterson's phone at 11:10 a.m.  Defense motion. The government stopped recording when agents realized Patterson was talking to an employee about unrelated litigation.  Government response.
• November 4.  A recording was made from Patterson's phone at 8:40 p.m.  Defense motion. The government stopped recording when agents realized Patterson was talking to an employee about unrelated litigation.  Government response.
• November 5. Dickie Scruggs sent an e-mail to Balducci forwarding the false documentation to cover up the extra $10,000 payment.  Balducci drove to Oxford and took hand delivery of the $10,000 check and false documentation.  Indictment.
• November 13.  Backstrom and Balducci had a phone conversation where they discussed the bribery scheme.  Indictment. 
• November 27.  Scruggs Law Firm raided.  Patterson is taken into custody and makes some kind of statement to FBI agents. Balducci and Patterson hold a telephone conversation, of which no recording or written record was made. Backstrom makes some kind of statement to FBI agents.  Government response.  
• November 28.  Indictment served on Dickie and Zach Scruggs, Backstrom, Patterson and Balducci.  
• December 5. Balducci pleads guilty.  Click here for a post I wrote about this.
• December 10.  FBI raids Joey Langston's law office.

A few more things. We know from Lackey's interview with the Wall Street Journal a few days after the indictment that he went to the FBI shortly after Balducci first approached him. We know the Balducci-Lackey meetings were recorded with audio and video equipment.  We also know from the government response that Lackey made his own recordings of telephone conversations with Balducci, except for the October 18 call at 11:16 a.m. because his secretary, not Lackey, made the call.

Now, what we can see from this timeline is that the government was recording calls between Lackey and Balducci, with the judge's permission, from shortly after Balducci's first approach to the judge. The audio and video recordings appear to have begun with Balducci's first meeting at the judge's chambers. Merely because a specific meeting is not mentioned as being recorded does not mean it wasn't, it just isn't stated in either the defense motion or the government response.  

The government did not try to get a wiretap until September 25 -- I wonder why they waited so long? It becomes apparent that Balducci, as many have speculated, was not cooperating with the FBI until after his November 1 meeting with Lackey.  We know he was cooperating later in the day on November 1, because he made a consensual recording of conversations with the other defendants.  He does not appear to have been cooperating earlier, because there would be no purpose in videotaping the hand-off of the money earlier on November 1 if Balducci were already cooperating, unless some third person was in the room, and we have no evidence to indicate anyone else was there. Likewise, the alleged October 18 delivery of money also would make no sense if he were cooperating. We also know the government was recording Balducci's calls without his permission as late as October 4, when agents stopped recording a call because it was not related to the investigation.  

It is apparent from this timeline that I was right earlier when I suggested the "extra" $10,000 to be obtained for Lackey on November 1 was made up by prosecutors to get more evidence against Dickie Scruggs. The documentation mentioned in the indictment must have been gathered with Balducci's permission after November 1, and it appears all to be of the type that he would have in his possession.  The FBI would not have had much time between the Scruggs law office raid and when the indictment was issued to the next day to analyze documents, paper or electronic, from the Scruggs firm. 

Another thing stands out. There is no indication from any of this that phones were tapped at the Scruggs office, or that anyone connected with that office had their cell phones intercepted.  If this is true, I wonder why. There is also no indication that any kind of listening device was planted in the Scruggs office, or that any "insider" existed, besides Balducci.  The absence of evidence does not necessarily equal evidence of absence, of course.

You readers, I'm sure, will have other things to add that I have overlooked either in these documents or in other things on file in this case.  Let's view this timeline as a continuing project that we all work on together.

Posted By David Rossmiller In Industry Developments
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It's been quite some time since Joey Langston has been active in the Scruggs bribery defense, but his firm was still involved, or at least had its name on the pleadings.  No more. Here's a copy of the notice of withdrawal filed today for Langston and the Langston Law Firm. 

UPDATE:  Here's a story on Langston's withdrawal from the Northeast Mississippi Daily Journal.

SECOND UPDATE: Judge Biggers just signed the order allowing Langston to withdraw.  Click here to see it.

Posted By David Rossmiller In Industry Developments
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Work and other responsibilities left very little time for blogging today -- not that I don't have relevant documents and other stuff to pass along, but I don't have time to do a proper post on them -- so for now just a few things:

-- Rumors and reports, some of them highly specific and credible, of impending criminal justice developments continue to gain force.  I am not, however, in a perfect position to spend time sorting them out.  As we are dealing here with the potential loss of liberty of people as well as their reputations and livelihood, I am going to let the fluidity of these circumstances congeal into something concrete before talking about them.  This may happen soon, perhaps it will not happen at all.  We will have to wait and see. 

-- A reader passed along a very good column from the Greenwood Commonwealth newspaper on Friday about P.L. Blake.  I read it then, didn't get around to linking to it right away but meant to do so today, but I see that the newspaper appears to have a firewall where you have to pay for access to stuff that isn't today's news.  Since I don't feel like doing this -- and I'm not sure the link would let you see the story anyway -- you'll have to take my word for it unless you saw the story yourself.  It was really good.  I don't see much of a percentage in having a paid database unless you're Lexis-Nexis or the Wall Street Journal.  I could be wrong -- wouldn't be the first time -- maybe it's just me or my computer.  If someone can give me a link that will work for everyone, I'd love to show you the column, very insightful about Scruggs and Blake.

UPDATE: Try this link to read a copy of the story (thanks to Susie in the comments). 

-- Thanks for all the e-mails, I have been so busy lately I'm sure I have missed responding to some, but I've read them all. 

-- As I mentioned, I have lots of documents to look at.  One of the most interesting of these is the second deposition of Cori Rigsby in the McIntosh case, on November 19, 2007.  It's late as I'm writing this and I don't have time to give a full play-by-play on it, but since many of you enjoy reading these documents for yourself, I'm going to link to it anyway.  Click here to read the deposition.  Here's a hint to find the most interesting parts: use the search feature on Adobe Acrobat -- usually it's the little binocular-looking thing in the top left, depending on your program -- and enter the word "privilege."  That will take you to numerous hits where attorney-client privilege and work product were asserted to avoid questions.  I believe that subsequently, Magistrate Judge Robert Walker has ruled against most or all of these assertions of privilege. 

Posted By David Rossmiller In Industry Developments
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Numerous readers have inquired what the Mississippi State Bar may be doing in relation to the Scruggs allegations.  I inquired of Adam Kilgore, General Counsel of the Mississippi Bar, and he was good enough to respond on the record as follows:

[B]ecause of the work we do in the Office of General Counsel (OGC), I am not at liberty to discuss specific cases until such time as the OGC takes action that is considered public.  This is so because of the disciplinary process we work under as outlined in the Rules of Discipline for the Mississippi Bar (MRD) as set forth by the Supreme Court of Mississippi.

First, we take no disciplinary action in Mississippi against lawyers who are under indictment awaiting trial (at least not action related to the indictment.  If there are other unrelated disciplinary matters involving the lawyer, that process usually goes forward according to our standard practice and procedures).  Thus, if any attorney is active and in good standing, s/he remains so while awaiting trial.

If a lawyer is convicted of a felony as outlined in Rule 6 of the MRD, or pleads guilty to a felony as outlined in Rule 6, MRD, the OGC files a formal complaint against the attorney in accordance with Rule 6, MRD.  The complaint contains a certified copy of the conviction or guilty plea.  Under Rule 6, the certified copy of the conviction or guilty plea is all the evidence that is necessary of the underlying conduct.  The formal complaint the OGC files contains a request that the Mississippi Supreme Court disbar the attorney.  Along with the formal complaint, the OGC also files a motion for immediate suspension pending the appeal of the conviction.  In most cases, the Mississippi Supreme Court grants the motion for suspension fairly quickly.  Once the appeal is decided and if the conviction is not overturned, the OGC then files a motion to disbar the attorney, which the Mississippi Supreme Court takes up at that point.

In the case of a guilty plea, the OGC does not file a motion for immediate suspension but asks for disbarment in the formal complaint since guilty pleas as generally not appealed.  The OGC has filed such a formal complaint under Rule 6, MRD, against Timothy Balducci, one of the attorneys indicted in the Scruggs matter.  Mr. Balducci, you will recall, entered a guilty plea.  The OGC submitted a certified copy of the guilty plea with the formal complaint, asking for disbarment.  That complaint is a matter of public record.  The original is filed in the Supreme Court Clerk's Office.

Thanks to Mr. Kilgore and the Mississippi Bar for this information.  Because sometimes it's difficult to copy text to a blog post, depending on what application the text is coming from, I retyped his reply -- I type 90-plus words a minute on a good day so it's no big deal -- so if there are mistakes, they are mine and not his.  On the same topic, I see that the Federalist Society of Mississippi is sponsoring a panel discussion of legal ethics January 17 in Jackson. The topic: Is the Mississippi Bar Doing Enough to Combat Corruption and to Protect the Honor and Integrity of the Profession?  Here's a copy of the flyer for the event -- I'm sure it will be a lively event in light of the recent and continuing revelations.  You will recall that one of the people indicted, Steve Patterson, is a non-lawyer, and it is difficult for a bar association to do something about non-attorneys.  You may recall this post I wrote about the dust-up that ensued when the Union County bar wanted the state bar to take a look at whether Patterson was engaged in the unauthorized practice of law.  Tim Balducci got mad and authored the now infamous "man crush" letter -- to me, a pretty good indication that whenever it was that Balducci was "flipped," it wasn't before this letter was written on August 1, 2007.  Would you care about something like this if you had become the FBI's sock puppet and were facing, at best, disgrace and disbarment yourself?  

On somewhat different topic, I saw this Legal Newsline story by John O'Brien, about Dickie Scruggs receiving a trial subpoena for the McIntosh v. State Farm case for February 25, the same date his trial for alleged bribery is currently scheduled to begin.   The story has links to the Scruggs trial subpoena, as well as to other trial subpoenas including one issued to Johnny Jones, the attorney who is suing Scruggs for settlement fees in Jones v. Scruggs, the case where Scruggs and others allegedly conspired to bribe Judge Henry Lackey to obtain an order compelling arbitration. 

Scruggs is already contesting Magistrate Judge Walker's ruling in the McIntosh case that State Farm can depose him on January 15.  I would expect he's going to fight the trial subpoena even more strongly, probably on grounds that his testimony wouldn't be relevant to the issues to be tried.  Because he's no longer an attorney in the case, I don't think he can file a motion in limine, but the Katrina Litigation Group (formerly the Scruggs Katrina Group) may do so, and may do the same with regard to Jones. Scruggs isn't going to leave this to the good graces of others, I'm sure, and will seek to file his own motion to quash the subpoena.  Jones, I would think, would do the same, I know I would.  Since State Farm is also asking for documents in the subpoena, I wonder if they might drop the demand for testimony if the documents are given up. 

Incidentally, from what I can see on PACER, it looks like that February 25 date for the McIntosh case won't change, and I believe it was expected to be a three-week trial even without this Scruggs/Jones stuff.   

I also had a chance to look through the brief E.A. Renfroe filed in McIntosh on Friday in support of State Farm's motion to disqualify the Katrina Litigation Group from the case on ethics grounds.  Many parts of it seemed strong, some parts seemed a little attenuated or weak, but it sure is fascinating reading no matter what your opinion about the merits. I printed it off from PACER just to take a quick glance through it and got hooked and read the whole thing.  Even though I know a lot of this Katrina stuff cold, it's still difficult for me to pick my way through boring writing, and this was anything but boring. 

The rapidly approaching trial deadline means there isn't much time left to deal with the disqualification motion.  I'm not going to hazard a guess as to what will happen, I'm just glad I'm not the one who has to make the decision as to what to do about it.  Following all this Katrina litigation has given me a new appreciation for how tough the job of being a judge can be.

Posted By David Rossmiller In Industry Developments
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Just caught wind of Judge Acker's decision tonight regarding motions filed by Dickie Scruggs and by the Rigsby sisters.  They asked Acker to recuse himself from the Renfroe v. Rigsby civil case, in the Northern District of Alabama (along with all other judges in the district), on grounds of the perception of bias stemming from his referral of Scruggs to special prosecutors for alleged criminal contempt of court.  The contempt charge arose out of Scruggs' failure to return documents the sisters took from Renfroe and State Farm as ordered by Acker's injunction.  He instead, after talking with Mississippi AG Jim Hood after the injunction was issued, sent them to Hood, even though Hood already had his own copies.

Here is a copy of the opinion, and here is a key excerpt from the end of his opinion:

A litigant cannot himself create a basis for recusal by committing a sanctionable offense and suffering the consequences. A judge cannot allow himself or herself, in fear of a recusal motion, to withhold an appropriate sanction that is commensurate with an offense. Rule 11 and Rule 37, F.R.Civ.P., come to mind. Judges are, of course, human beings, and therefore are not perfect. But, if they are to fulfill their roles as arbiters of disputes in the society that has granted them that responsibility, they cannot constantly walk on eggshells.

One of the sanctions available to a judge in the administration of justice is the sanction of contempt, never a pleasant matter. In twenty-five years on the bench, I have never before found probable cause for the prosecution of a party, or of a lawyer, for criminal contempt. If a finding of such probable cause automatically mandates recusal under § 455(a), this case is as good a vehicle as any for establishing such a bright line recusal rule.

In order to give movants an opportunity to obtain an appellate review of my denial of their motions, I will not rule on other pending motions unless and until movants decline to seek a reversal of my order, or the Eleventh Circuit affirms my order. Meanwhile, by separate order, I will deny the motions.

There you have it.  I would expect Scruggs and the Rigsby sisters to appeal this decision to the Eleventh Circuit, which will probably rule fairly quickly one way or the other, so as not to delay this case any further than necessary.

Despite being 17 pages long, the opinion is a pretty quick read.  Although I imagine the judge had some research help -- what's the use of being a federal judge and having clerks if you don't get research assistance -- it has the tone of being written by Judge Acker himself, in careful, even painstaking fashion.  In the opinion, he comes across as very reasonable, giving Scruggs and the Rigsbys and their attorneys their due, and resting his decision on established and well-respected authorities.  As far as legal writing goes, this opinion is accessible and easy to read, usually uses the simplest words possible, and marches right along from point to point and conclusion to conclusion without dawdling or mugging for the camera, while using language that is direct and even lively at times.  A very well-written piece of work.

Posted By David Rossmiller In Industry Developments
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Yesterday State Farm filed a motion in the McIntosh v. State Farm case seeking the disqualification of the coalition of law firms formerly called the Scruggs Katrina Group and now known as the Katrina Litigation Group.  You may recall that last month I wrote about a similar motion filed in the Shows v. State Farm case.  Click here to read that earlier post.

Here is a copy of the memorandum in support of the new disqualification motion, which really is more or less the same as the memorandum in the Shows case.  

Apropos of yesterday's post on the Kerri Rigsby deposition, you may be interested in the memorandum in support of State Farm's motion last month to compel Kerri and Cori to answer questions they were instructed not to, on privilege grounds, in the November depositions. Here's a copy of that memorandum. 

Here is a part of the brief I found interesting on the question of whether the presence of the Rigsby sisters' mother at a meeting with attorneys destroyed the attorney-client privilege (I've removed references to the pages of the deposition transcript to make the passage easier to read.  I have also added some explanatory material that is in brackets and italics to distinguish it from other bracketed material in the excerpt):

The Rigsbys freely admit that third persons with no interest in this matter attended some, if not all, of the Rigsbys' meetings with the SKG in early 2006.  For example, Kerri Rigsby testified that her mother -- Pat Labrano -- attended one of the SKG meetings in February 2006, one in March 2006, another in April 2006, and still others in early 2006 the timing of which Ms. Rigsby could not precisely recall.  When asked why the presence of a third party did not effect a waiver of the purported privilege now asserted by the Rigsbys, Mr. [Sid] Backstrom [of the Scruggs Law Firm] asserted that the privilege somehow survives because Ms. Labrano "was a client" of the SKG. 

When asked, however, Mr. Backstrom refused to identify even in general terms the nature of the SKG's representation of Ms. Labrano.  Even more perplexingly, Mr. Taylor [an attorney from another firm hired by Scruggs to defend Kerri Rigsby's deposition] speculated that Ms. Labrano's presence at numerous SKG meetings with her daughters did not waive the purported privilege because "she was also playing the role of representative or facilitator [for Cori and Kerri] which," in Mr. Taylor's view, "would bring her within the privilege."  There is no such thing as a so-called "representative" or "facilitator" privilege that would prevent waiver of the privilege that the Rigsbys attempt to assert here.

But even if there were, Ms. Labrano was not the only third person present at the SKG meetings.  Indeed, Kerri Rigsby testified that Ms. Labrano's husband -- Bill Labrano -- also accompanied the sisters at SKG meetings.  It is axiomatic that the sharing of otherwise privileged information with third persons waives any privilege that could attach.  Indeed, "the disclosure of an otherwise privileged communication to a third person . . . eliminates the intent for confidentiality on which the privilege rests.  Martin v. Am. Employers' Ins. Co., 115 F.R.D. 532, 536, (S.D. Miss. 1987)(finding waiver of the attorney-client privilege)(citations omitted).  Whether or not the SKG may have represented the Labranos in some other matter does not bring them within the fold of the attorney-client or work product privileges here.

It is equally plain that even if both Ms. Labrano and her husband were acting in some sort of inexplicable representative capacity on the Rigsbys' behalf at the SKG meetings the privilege would still be waived.  Accordingly, even if the information that the Rigsbys most recently seek to withhold was privileged (and it clearly is not), the presence of third parties at the SKG meetings in question would constitute a clear waiver of any claim of privilege.

If I am understanding this correctly, I disagree somewhat with the way it is stated, not to mention the use of the word "clear" to describe something that may not be so clear from the text of the memorandum.  The presence of third parties does not automatically destroy the attorney-client relationship, as long as the communications were made under circumstances that evidence an intent to keep them secret.  Spouses and relatives often attend meetings with attorneys, and this does not destroy the privileged nature of communications as long as their presence was reasonably necessary to accomplish the purpose of the client. 

A court will look at the circumstances and the sophistication of the client to see whether the presence was necessary -- if the person was just there as a litigation tourist, to kibitz or to campaign for their own agenda, the privilege could indeed be broken.  Some people, however, are afraid of lawyers -- justifiably so if you ask me, because as a class lawyers are far from the most likeable people -- and want the experience and comfort of a close family member in certain meetings.  We don't want to break the privilege every time this happens.  But I suspect that the Rigsby sisters, who styled themselves whistleblowing heroes and came equipped to the meeting with Scruggs with their State Farm laptops, and who after all had each other at the meeting for aid and comfort, are difficult to fit within this category.  And in how many meetings did these women actually need their mother present?     

And here is something new that was also filed yesterday, State Farm's memorandum in support of its motion to compel the Rigsby sisters to produce documents they have admitted in depositions to having, such as a log of questionable activity at State Farm, but which they denied having in response to written discovery requests. 

No matter what your views of the conduct of insurance companies in Katrina adjusting, or your views on the litigation conduct of Scruggs and company, you have to admit that the turnaround in the litigation posture of the parties in the last few months of Katrina litigation is nothing short of astounding.  Scruggs under indictment, his law firm kicked out of Katrina litigation, Judge Acker swinging a light saber, the SKG looking like Marley's ghost, FBI agents doing lightning raids of law firms when they're not tapping telephones and filming covert videos, everyone connected with Scruggs running for the tall grass, State Farm with an injunction against the Attorney General, Jim Hood either scared to or unwilling to open his mouth, the Ride of the Rigsbys over, State Farm on the offensive across the board.  The hunters have become the hunted.    

If you had predicted this turn of the screw a year ago, I wouldn't have called you crazy, but I definitely would have wanted to check out your track record in Vegas. Remarkable, remarkable events which we are unlikely to see again in our lifetimes.  Which is why, day after day, I continue to give up what free time I have to chronicle them here.

Incidentally, have you seen the Scruggs coverage of Lotus on the folo blog? Some very good stuff, and some very good commenters have congregated there, as they have here.  Interesting post yesterday cataloguing some of the rumors. I hear some of these same things, some I hear turn out to be true, others don't.  Time, as always, will tell -- but sometimes we have to dig a bit to make it tell. 

This is probably it for the posts for the week, have a great weekend.  More next week on the Rigsby depositions, and on Scruggs events, as well as some analysis of some coverage cases I've been meaning to get to, at readers' requests.  But if those rumors turn out to be true, and they turn out to be true tomorrow, maybe I'll have to write some more.

Posted By David Rossmiller In Industry Developments
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The November 20, 2007 deposition of Kerry Rigsby in the McIntosh v. State Farm case makes for some really interesting reading.  Here's a pdf of the deposition so you can see for yourself.  

Highlights of the deposition are listed below. 

* Check out this exchange on page 15.

Q: He [Dickie Scruggs] was going to give you advice on what to do with the documents you had stolen?

 A: Yes.

Q: And by then you had stolen what kind of documents from State Farm?

A:  In February of '06, I had obtained the McIntosh report and some other documents.  I can't recall the specifics.  I believe it was some protocol that had been issued through State Farm, possibly e-mails that I had received, directives.

This is a somewhat more direct variation of the "Was it raining or sunny when you killed your parents with an ax"  question every deponent is warned about.  I may incorporate this question and answer into my deposition prep as an example -- "if someone asks you if you hired a lawyer to tell you what to do with stolen documents, what are you going to say?" 

* Note that on page 2 of the deposition, Sid Backstrom of the Scruggs Law Firm (now under indictment in the alleged bribery case) says he is there representing the plaintiffs, the McIntoshes.  Another lawyer from another firm was defending Rigsby's deposition.  But when the questioning turned to whether Rigsby used her laptop to access State Farm claims files while meeting with Dickie Scruggs in a trailer (see pages 24-36), Backstrom stepped in and instructed her not to answer on grounds of attorney-client privilege. (See also around pages 180-190 for more on the assertion of attorney-client privilege).

The attorney conducting the questioning appears to have handled this with a far more even temper than I would have displayed under the same circumstances.  The attorney-client privilege applies to communications, including non-verbal acts intended as communications, such as nodding your head, giving your lawyer the thumbs-up, and the like.  The fact that your lawyer told you to drive down to Wendy's to pick up a large fries and a side salad does not mean that the fact that you traveled from the lawyer's office to Wendy's is protected from disclosure, particularly if it becomes relevant in a lawsuit whether it was you behind the wheel of a car that sideswiped 15 parked cars along the route.  Driving your car is not communications.  Neither is using a laptop to access claims files, even if it was done from your lawyer's trailer and at his instruction, especially when the act of logging onto a password protected computer system creates a record accessible to parties outside the attorney-client relationship, thereby waiving any expectation of secrecy in the act, if not in the communications themselves.  

Note that starting on page 36, her attorneys let her answer questions about which documents she gave to Scruggs and when.  It was only what happened in the trailer -- from the questions, it appears State Farm believes Scruggs may have plugged a USB drive or other form of memory device into the computer to store the accessed information -- that Backstrom objected to. 

* Dickie Scruggs provided three different law firms, in addition to his own representation and that of the now Scruggs(less) Katrina Group, to represent Kerri and Cori Rigsby. (Page 42).

* She says that Scruggs never had verbally agreed to indemnify her for any damages that she might be assessed in the Renfroe v. Rigsby case: "I just believe he will take care of it, but I don't know that for a fact." (Page 45).  This answer, to me, is somewhat different from the answer provided to Judge Acker's query about when Scruggs entered into an indemnity agreement with the Rigsby sisters.  See the answer here, and compare for yourself.   

* From the questions on pages 49-50, one can infer that State Farm believes that either Kerri or Cori Rigsby told supervisors she thought someone in the office was working for Scruggs as a mole and she couldn't believe it, and that she hated Scruggs.  The questions and answers on page 51-52 show that Kerri Rigsby's mother knew Scruggs and was recommending in the fall of 2005 that she and Cori should go see him to show him claims documents they had already taken.

* She has no career plans for after the consulting contract with the Scruggs Katrina Group is done. Q: "You certainly won't go back to insurance adjusting, will you?" A: "No. I don't believe I will."  (Page 53). We know from other information, as discussed in a previous post (see the second item), that the renamed Katrina Litigation Group has stopped paying the sisters, although this does not mean that Dickie Scruggs himself has stopped paying them. 

* She says that, on pages 64-67, while still working for Renfroe, it is "probable" she lied in every one of the Katrina mediations she attended, including after she had formed an attorney-client relationship with Scruggs. (Apparently the allegedly probable lies were in favor of State Farm). 

* She has no information that State Farm shredded any documents responsive to grand jury subpoenas and says it is customary in claims operations to shred documents that are not necessary (page 70).  She has no information that specific State Farm employees ever shredded any documents. (same page).

* See beginning on page 100 or so for information about the "data dump" weekend. Although the testimony is that the sisters pulled documents using engineering report rosters of claims, State Farm, in other pleadings on file in the McIntosh case, has  provided documentation from computer records that the files were accessed in order of the names as they appeared in the McFarland mass complaint (the McFarland cases are those that were part of the big settlement in January 2007 of 640 SKG cases against State Farm).

* Pages 142-143 relate what sounds like a pretty bizarre incident of investigators from the state Attorney General's office photographing the license plates of State Farm employees who were attending a meeting called to talk about the bad press State Farm was receiving.  Apparently the sisters had told Dickie Scruggs of the meeting, and he told the AG's office.

* See starting on page 198 for a description of some Inspector Clouseau-like tape recording of one of the Rigsby sisters' bosses.

*  She testified that, for a brief time, she was employed both by Renfroe and the Scruggs Katrina Group. (See page 247).

Remarkable stuff.  There's more in there, of course.  Read it yourself and see what you think.

Posted By David Rossmiller In Industry Developments
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There are lots of developments that need updating, so I am putting up this second post today to accommodate them all. 

-- Mississippi State Auditor Phil Bryant, on December 20, filed a lawsuit in Hinds County against the Langston Law Firm, Joey Langston and Tim Balducci seeking a return of some $18 million in funds recovered from the MCI tax litigation.  A copy of the complaint can be seen by clicking here.

In the complaint, Bryant alleged that $118 million was recovered in a settlement of that litigation, but that $4 million was illegally donated to an organization called the Children's Justice Center of Mississippi, and $14 million was illegally paid to Langston and Balducci as attorney fees. 

-- In a development I did not note until I saw it mentioned in this Anita Lee story in the Sun Herald, Magistrate Judge S. Allan Alexander earlier this month quashed a subpoena by E.A. Renfroe issued in the Renfroe v. Rigsby case in Alabama for the depositions of Dickie Scruggs and others from the Scruggs Law Firm.  Judge Alexander is a magistrate in the Northern District of Mississippi, where Dickie Scruggs and his son, Zach, are facing federal charges relating to an alleged attempt to bribe Judge Henry Lackey.  

Here is a copy of the Scruggs motion to quash and the memorandum in support. 

Here is a copy of Judge Alexander's order.

Here is a copy of Renfroe's motion for de novo review of her order.

If you look at the case number on the top of these documents and the caption, you can see this decision is in the Northern District of Mississippi, not in the Northern District of Alabama, where the Renfroe case is filed..  The reason is apparently that Renfroe moved to compel the depositions in the Northern District of Mississippi.  A special case number was assigned just for the Scruggs motion to quash -- this is explained in the text of the motion -- and I have not seen these documents posted on the Renfroe docket in Alabama.  Ironically, the Scruggs motion to quash was filed on the same day Dickie and Zach Scruggs were indicted.

Also ironically, the Scruggs motion in the Renfroe case is very similar to one made just a few days ago in McIntosh v. State Farm, in the Southern District of Mississippi, to try to overturn Magistrate Judge Robert Walker's order requiring Dickie and Zach Scruggs to sit for depositions by State Farm and Renfroe. Judge Alexander handed down her order quashing the Renfroe subpoenas on December 3, before Judge Walker ordered that the depositions of the Scruggses take place, and whether Walker was aware of Judge Alexander's order I do not know, but it is not mentioned in the Walker order. 

Renfroe is seeking review of Judge Alexander's order, saying her ruling is based only on the Scruggs supporting memorandum, with no opposition brief filed, and that she did not have all the facts.  Among these facts, Renfroe claims, are that Judge Alexander found Renfroe could just as easily obtain the desired information from the Rigsby sisters themselves, but Renfroe has already deposed them and says they gave evasive answers, had an inability to remember and asserted privilege to avoid questions.

-- I have had requests to follow up on something in State Farm's recent motion to disqualify the Katrina Litigation Group (formerly known as the Scruggs Katrina Group) from Katrina cases.  I wrote about the motion in this post, which contains copies of some of the relevant pleadings. The requests for more information relate to something in the supporting legal memorandum -- references to supposedly abusive exercise of the subpoena power by the SKG and one of its attorneys, leading to admonishment by courts for these practices.  The memorandum in support of the motion to disqualify did not go into great detail, but referred back to another pleading, a memorandum in opposition to an amended complaint in the Shows v. State Farm case, and exhibits attached to the memo.  Below is that opposition brief and the exhibits, so you can read and judge for yourself.

Memorandum in opposition to amended complaint.

Exhibit 1.

Ex. 2.

Ex. 3.

Ex. 4.

Ex. 5.

Ex. 6.

 -- Lastly, the defendants in the bribery case have filed a motion to compel the government to produce additional evidence.  Click here to read it.  The motion reveals that the government  produced additional discovery on the day after Christmas, including 13 cassette tapes containing recorded conversations between Balducci and Judge Lackey, two FBI interview reports, telephone records, a compact disc with a pen register and trap and trace data, and 13 CDs containing photographic evidence and audio and video recordings of meetings between Balducci and Judge Lackey. 

The motion says the government has not produced transcripts of the recordings yet, and many of the recordings are hard to understand.  Whether this is wishful thinking, spin or fact remains to be seen. The government also has not yet produced, according to the motion, the affidavit of a special agent in support of a September 25, 2007 application for a wiretap on Balducci's phone, nor any of the materials seized during the November 27 raid of the Scruggs Law Firm offices or the December 10 raid of Joey Langston's offices.  I haven't heard what, if any, discovery the defense has produced to the government.

Posted By David Rossmiller In Industry Developments
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Even during the short days of the holiday season, the sun never sets on the Scruggs Nation.  Reader interest continues to be at phenomenal levels, as judged by my site meter and the continued calls and e-mails. So even though I continue on vacation until Wednesday, I am posting this update.

A reader e-mailed me with this Associated Press story on renewed attempts by Dickie Scruggs and the Rigsby sisters to quash video depositions of Scruggs and his son and law partner, Zach Scruggs, set for January 15.  Magistrate Judge Robert Walker ruled against an earlier motion to quash/motion for protective order earlier this month (see this post for more and a copy of Judge Walker's order).  I took a look at the filings made on December 27 and 28 in the case, McIntosh v. State Farm, and have linked to them below. In a nutshell, the new pleadings ask Judge L.T. Senter, Jr. to modify or overturn the magistrate's rulings because, it is claimed, the depositions will improperly impinge on attorney-client communications. 

Before we take a closer examination of the pleadings, let's review Walker's earlier order and see what the scope of the depositions is to be and why Walker ordered them.  Judge Walker's order itself is rather brief -- six pages -- and I excerpt at length from it below to show the relevant particulars. (Certain formatting, footnote references and court docket references have been removed for convenience, and I highlight in bold certain significant sections of the order to make it easier to follow).  

Cori Rigsby (Moran) and Kerri Rigsby (the Rigsbys) were E.A. Renfroe employees assigned to work State Farm Katrina claims in Mississippi immediately after the hurricane. At least by February 2006, the Rigsbys began copying and/or taking State Farm documents and giving them to Richard Scruggs. While still employed by Renfroe/State Farm, the Rigsbys continued to secretly provide State Farm documents to Scruggs. This conduct continued until June 2006, culminating in what has become known as the “data dump” weekend in early June 2006 when the Rigsbys and some of their friends copied thousands of confidential State Farm documents which they also turned over to Scruggs. Shortly after the “data dump” weekend, the Rigsbys, who have been characterized by Plaintiffs’ counsel as key witnesses in the McIntosh case, were hired by the Scruggs Firm as “consultants” in Katrina litigation, at annual salaries of $150,000.00 each. To further complicate matters, the Rigsbys are also plaintiffs in a qui tam action filed under seal by Scruggs on their behalf on April 26, 2006. That case remained sealed until August 1, 2007, when the Court ordered the seal lifted. Thus, the Rigsbys are not only material witnesses in this case, they are both employees and clients of the Scruggses. The multiple relationships involved have repeatedly resulted in situations where it became difficult to determine just whose interests the Scruggses were purportedly representing. For instance, the Rigsby’s were represented by Gregory Hawley and Katherine Brown at their April 30-May 1, 2007 depositions, but Richard Scruggs frequently objected and instructed them not to answer questions on grounds of work product and attorney-client privilege. Scruggs even went so far as to state he was “wearing two hats” – one as Rigsby’s lawyer, and another as her employer during this deposition taken in the McIntosh case.

One of the key issues in this case is the existence of two engineering reports prepared about a week apart in October 2005. Richard Scruggs testified in proceedings in Alabama, that the October 12, 2005 engineering report on the McIntosh property was among the first twenty documents the Rigsbys gave Scruggs in February 2006. Scruggs also testified that there was a sticky note on the McIntosh engineering report he received from the Rigsbys. This original engineering report on the McIntosh property has become a critical point in this litigation, as it appears to be the linchpin of Plaintiffs’ bad faith claims. Scruggs did not represent the McIntoshes when he received the engineering report. Indeed, he did not represent them until some time after the broadcast of an ABC television 20/20 program at the end of August, 2006. However, according to Mr. McIntosh’s notes, Joe Rhee, an ABC news producer, contacted Mr. McIntosh on August 21, 2006, prior to the 20/20 broadcast, and stated he (Rhee) had a copy of the McIntosh property engineering report with the sticky note, that there were whistle-blowers (managers) within State Farm who had copied files, including the McIntoshes’ file. In a later phone call the same day, Rhee told McIntosh there were two engineering reports on his property, one dated October 12, 2005 which had the sticky note, and another dated October 20, 2005. When McIntosh asked if Rhee/ABC would stay on the story through completion, Rhee responded affirmatively, stating that they “had worked with Dickie Scruggs before and they respect each other and would stay with us till the end.” From this, one might reasonably infer that Scruggs was the source of Rhee’s information regarding the McIntosh claim.

A copy of the October 12, 2005 engineering report was filed as Exhibit C to the McIntoshes’ complaint on October 23, 2007, the first page of the exhibit is copied with the sticky note in place, and the second page is a copy without the sticky note. Defendants understandably desire to question Richard and/or Zach Scruggs about the report, as well as other State Farm documents the Rigsbys provided, the circumstances surrounding the receipt of such documents and the chain of custody of the documents after the Scruggses received them. Defendants further desire to question Zach Scruggs regarding his receipt of confidential internal emails which the Rigsbys forwarded to him while they were still in the employ of Renfroe/State Farm. Defendants also want to explore the particulars of the employment relationship between the Scruggses and the Rigsbys, who are material witnesses in the McIntosh lawsuit. The Court is of the opinion that Defendants should be allowed to pursue this information from the Scruggses.

On October 23, 2007, Defendant Renfroe filed its joinder in State Farm’s response to Plaintiffs’ motion for protective order/to quash the Scruggs depositions. Renfroe points out that it was joined as a defendant in the lawsuit by amended complaint filed May 31, 2007, which alleges Renfroe failed to disclose the existence of the October 12, 2005 engineering report to Plaintiffs. Renfroe states the Rigsbys violated their employment agreement in failing to notify Renfroe about the report, instead choosing to give it to the Scruggses to further their own pecuniary interests. Renfroe seeks to ascertain the extent to which the Scruggses helped conceal from Renfroe the “alleged concerns of the Rigsby sisters, as well as the object of their concerns, the October 12th report.” In light of the fact that Scruggs has testified he received the report in February 2006, and the Rigsbys’ testimony that they did not keep a copy of the document, the Court finds merit in Renfroe’s desire to question the Scruggses about the clearly relevant, unprivileged matter regarding the delivery and receipt of the October 12 report, as well as what was done with it after the Scruggses received it.

. . . .

With respect to the documents requests which accompanied the deposition subpoenas, the Court notes that the Scruggses have produced no privilege logs, without which the Court cannot evaluate claims of privilege. And the Court declines to accept the Scruggses blanket claims of privilege as to the documents requested.

Although rarely allowed, depositions of a party’s counsel are not altogether prohibited. Where the attorney has non-privileged, relevant information unavailable by other means, such depositions have been allowed. The Court is of the opinion that the Scruggses may have such information, and that this case presents sufficiently unusual circumstances to justify allowing the depositions of Richard and Zach Scruggs. It is therefore, ORDERED that the motion for protective order/to quash the notices of deposition of Richard and Zach Scruggs is denied.

Before discussing the specifics of this order, one might note that the overall tone appears to express a certain declining patience by Judge Walker with the litigation tactics of the Scruggses.  It may be that he is also fed up with the litigation tactics of State Farm, I don't know, but Judge Walker's orders of late seem to have taken a turn against the Scruggses.

This order says a couple things. First, it says that because no privilege log was produced by the Scruggses, the court cannot evaluate claims of privilege as to individual documents and will not respect a blanket claim of privilege.  Second, it appears to say that testimony must be given only regarding events and communications to which the attorney-client privileged does not apply.  As to the first element, the Federal Rules of Civil Procedure require that a party, to support a claim of privilege, must "describe the nature of the documents, communications, or tangible things not produced or disclosed -- and do so in a manner that, without revealing information itself privileged or protected, will enable other parties to assess the claim." FRCP 26(b)(5)(A).  Although the Rigsbies, in the first pleading linked below -- their objections to Walker's order -- say that a privilege log is not required under local rules, this statement in the Federal Rules is almost always understood to refer to a privilege log.  What else would it refer to?  Sometimes, but probably not as often as it should be, failure to produce a privilege log results in a finding of waiver of the privilege.  I say not as often as it should be because federal case law is full of examples where a party appears to have been acting in an obstructive and harassing manner in the production of documents, but the court fails to crack down on this behavior time after time.   

As to the second element, actions themselves usually are held not to be communications and are not privileged.  So events such as taking documents are not privileged communications, and the act of giving them to a lawyer normally is not privileged either, but certain aspects of the transmittal that might reveal otherwise privileged communications can be.  Where the client can be required to testify as to matters, a lawyer can also be required to testify.  In addition, there are certain exceptions to the attorney-client privilege, such as the crime-fraud exception, which State Farm apparently raised but which appears not to have been accepted by Judge Walker as a justification for breaking the privilege.  However, a claim of privilege as to communications coinciding with actions is lessened by sharing the information and communications to any degree with those outside the attorney-client relationship, such as with a producer from ABC News. In addition, as Judge Walker indicated, given the multiplicity of roles played by the Scruggses and the Rigsby sisters, it is not clear that which if any communications are claimed to have been made within the attorney-client relationship and not waived by disclosure to third parties or adversaries.    

One other argument in the first Rigsby pleading bears some discussion -- the argument that a Rule 30 notice of deposition to a party (the McIntoshes) is ineffective in this circumstance because Rule 30 applies to parties and the Scruggses are not parties to the case.  (Here is a copy of the deposition notice of Dickie Scruggs). The argument is that a Rule 45 subpoena, which applies to non-parties, is the proper vehicle. Although the Scruggses have withdrawn from Katrina litigation, including the McIntosh case, following last month's federal indictments on charges of alleged bribery, the actions, documents and communications that are relevant were all in conjunction with their representation of the McIntoshes.  I have seen this argument used before, both ways.  When a Rule 45 subpoena is sent, sometimes the objection is that Rule 30 should have been used.  When a Rule 30 notice is sent, the objection is that -- even where a lawyer continued to represent a party -- that lawyers are not parties and can be reached only by Rule 45. In the end, the judge's decision usually comes down to other factors, such as whether the communications are "at issue" in the litigation, whether some other form of implied or express waiver has occurred, or whether an exception to the attorney-client privilege applies.  Seldom is a deposition quashed merely because of a technical argument of this nature -- because everyone knew what was going on and prejudice seldom results, the court can consider the deposition to have been obtained under either or both rules and can waive technical deficiencies.  

The Scruggses' pleading are more lengthy, and were filed by the office of John Keker, the blue-chip lawyer who is defending Scruggs against bribery charges in Mississippi and a criminal contempt of court charge in Alabama.

The pleading called Objections to Magistrate's order does not have an auspicious beginning. Three times in the first three paragraphs the pleading uses the word "clearly," a good word to avoid because, contrary to the intention of the author, it suggests and often telegraphs a weak argument buttressed by a word that assumes but does not prove what it claims.  One of these uses is fine -- Walker's decision is referred to as "clearly erroneous," nothing more than a reference to the legal standard.  But the others -- "clearly falls within the scope of information protected by the attorney-client privilege," and "Any relevant information the Scruggses may have is clearly privileged" -- are of the type to shun.  Some judges instruct their clerks to circle any use of the word "clearly," or its substitutes, "simply" or "plainly," as a key to weak arguments.  Doesn't mean they are weak, necessarily, but it's like calling attention to a large coffee stain on your white pants.  Doesn't necessarily mean you're a sloppy, careless oaf, but why increase the chance of someone getting this impression?

One sentence in the fourth paragraph got my attention: "Depositions of opposing counsel, such as the ones ordered by Magistrate Walker, have been regularly criticized for disrupting the adversarial system and lowering the standards of the legal profession."  The reverse argument has been made regarding the conduct that prompted the notices of deposition in the first place, and varying opinions can exist about where or at whom the last 13 words of the sentence could best be directed.

In addition to some of the arguments made by the Rigsbies, the Scruggs pleadings also argue that, in light of the criminal charges against them in Alabama (in addition to Dickie Scruggs, the charge there is against the Scruggs Law Firm, of which Zach Scruggs is a member), the depositions endanger their constitutional rights.  This prompts me to wonder: why couldn't they just take the Fifth as to any questions that might tend to implicated them in criminal matters?  All in all, the Scruggs pleadings are pretty good and make some decent points. We'll have to wait and see what Judge Senter decides to do. 

There is much more to say, but this post is long enough.  Read and evaluate the pleadings for yourself with the links below.  If your time is limited, the two most important are the objections by the Rigsby sisters and the objections by the Scruggses. 

Rigsby objections to magistrate's order.

Rigsby motion to intervene.

Rigsby memo in support.

Scruggs objection to magistrate's order.

Scruggs motion to stay magistrate's order.

Scruggs motion to intervene to object to magistrate's order.

 

Posted By David Rossmiller In Industry Developments
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I continue on vacation through next Wednesday, but will post this week when I can.  For now, just a short post on the Wall Street Journal's editorial yesterday (subscription only).  The editorial posits an unholy alliance between state law enforcement officials and certain members of the plaintiff's bar:

This Mississippi Tort Inc. enterprise began in the 1990s, when former Attorney General Mike Moore sued tobacco companies and contracted out the lawsuit to his old law school buddy, Mr. Scruggs. Their nicknames were Scro and Mo. Mr. Scruggs's firm is estimated to have earned nearly $1 billion in fees; Mr. Moore became a movie hero ("The Insider").

It is a seductive business model, and these days a crew of tort kingpins known as the Pascagoula Mafia show up in nearly every state lawsuit. Mr. Hood made trial lawyer Joey Langston rich by throwing him the state's case against MCI/WorldCom. Mr. Hood also hired Mr. Langston's firm -- where Mr. Balducci was a partner -- to pursue Eli Lilly. It also happens that Mr. Langston is one of Mr. Hood's major campaign contributors.

When Mr. Hood sued State Farm, Mr. Scruggs supplied him with key documents. Former AG Moore, now a trial lawyer himself, worked both with Mr. Hood on his state insurance litigation and with Mr. Scruggs in private Katrina suits. Mr. Balducci, who left the Langston firm to set up his own practice, was also working with Mr. Scruggs on Katrina litigation. And did we mention who is Mr. Scruggs's personal criminal attorney? Mr. Langston.

These relationships are now starting to haunt the participants. Mr. Hood faced a tough re-election this fall after his Republican opponent highlighted Mr. Hood's backroom relations with the trial bar. State Auditor Phil Bryant this summer sent Mr. Hood a letter demanding his office commence proceedings to recover the $14 million paid to Mr. Langston and colleagues in the MCI/WorldCom case, saying that, under Mississippi law, the money paid in fees to Mr. Langston rightfully belonged to the state.

Mr. Hood has also been countersued by State Farm, in a detailed complaint alleging that he had an ethically conflicted relationship with Mr. Scruggs throughout the Katrina litigation. Mr. Scruggs gave Mr. Hood documents that had been purloined by two former State Farm contractors, and Mr. Hood helped Mr. Scruggs keep those documents away from a federal court. Mr. Scruggs is also -- you had already guessed this -- one of Mr. Hood's major campaign contributors.

It's not only the Wall Street Journal that thinks this way.  I've heard similar sentiments from plaintiff's attorneys in Mississippi outside the Hood-Moore-Scruggs-Langston circle.  Speaking of Hood, he got a lucky break in that the Scruggs indictment didn't happen until after he was re-elected.  Any scrutiny that Hood is now receiving, he is in a much better position to withstand it as the state's AG than as a private citizen.  Hood himself must believe he is being scrutinized -- how else to account for his month-long case of laryngitis?

Posted By David Rossmiller In Industry Developments
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Just a short post for now, maybe more later today, maybe not. I saw this USA Today story by Donna Leinwand on the Scruggs scandal today.  The story is a fairly decent overview of what has gone on so far -- there is only so much you can do in the space of a typical USA Today story. Basically you've heard it all before, but a couple points need to be commented on.  Here's one excerpt from the story.  

Scruggs is innocent of the charges, his lead attorney, John Keker, says. Scruggs "didn't know anything about (the alleged bribe)," he said. "The whole circumstances are slightly crazy."

. . . .

Balducci "did it on his own," Keker says. "Now he's trying to spread the pain around."

I've said it before, but I'll say it again.  This seems remarkably weak as a defense.  I keep waiting to see what else Keker has got in his magic act, and he keeps going back to the same dumb trick where he pulls a coin out of your ear.  If this is the best he has, I wonder if a plea agreement might be in the offing before the trial date.  We will have to wait and see what the evidence against Scruggs is, but in addition to Balducci's testimony, it probably includes audio recordings of conversations with Balducci, particularly related to the "extra $10,000," and payments to Balducci that are going to be extraordinarily difficult to explain as payments for jury instructions and jury consulting, their supposed purpose.  In addition, the FBI "taint" team is continuing to look at the hard drives of the Scruggs law firm, and they may reveal even more. 

A corollary to this defense is that Balducci supposedly is the ne'er-do-well son trying to impress daddy by fixing, without his knowledge, some problem that has perplexed ol' pops.  I'm sure you've seen this plot in a couple hundred movies and sitcoms -- Dad's Buick has some tricky fuel injectors and Junior borrows his wrench set, sneaks out to the garage in the middle of the night and gets busy under the hood -- won't the old man be surprised in the morning when his car fires right up!  Maybe he'll be so pleased he will front the money for that spring break trip to Cancun.  It always ends the same, Dad walks out to the driveway in the morning and finds his entire engine scattered in pieces all over the concrete, and Junior fast asleep in the back seat.  As a storyline, it probably works better in Leave it to Beaver than the Scruggs case.

Here's another excerpt from the story:

The indictment and the criminal contempt charge stem from Scruggs' work on behalf of Katrina victims. Scruggs, who lost his Pascagoula home in the storm, gathered prominent trial attorneys to sue State Farm, saying it had shortchanged Gulf Coast residents who lost homes and businesses.

State Farm alleges in court papers related to those lawsuits that Scruggs colluded with Mississippi Attorney General Jim Hood to force Katrina case settlements by threatening a criminal investigation.

Hood did not return phone messages left at his office. In a letter to U.S. Attorney Alice Martin of the Northern District of Alabama, Hood wrote that Scruggs is a confidential informant for the state's investigations into how insurers responded post-Katrina.

Scruggs introduced Hood to two sisters who had worked at State Farm and passed thousands of documents to Scruggs, court papers say. When U.S. District Court Judge William Acker ordered Scruggs to return the documents, Scruggs instead gave them to Hood, Acker wrote.

The judge asked Martin to prosecute Scruggs for criminal contempt of court. Hood asked Martin not to prosecute. When Martin declined to press charges, Acker appointed two special prosecutors. On Aug. 21, they charged Scruggs with criminal contempt.

Keker says Scruggs did not violate Acker's order because Scruggs interpreted it to mean that he could give the documents to law enforcement.

I see a similar description of the events relating to Scruggs' sending the documents to Hood in just about every news story  that mentions it, no matter which newspaper or magazine is doing the writing.  Often, journalists look at what some other journalist has written, and don't see a lot of need to vary it, because the audience is not the same. Let me point out, however, that this description is inaccurate and misleading, because it fails to give the context that Hood had absolutely no need for the documents, because he already had copies.  This is often why readers of these stories fail to see what Scruggs did as a big deal -- what's wrong with sharing information with law enforcement?

However, it appears far different when you know Hood had had his own copies of the docs for a long time, that he and Scruggs spoke about what to do just after Acker's order was entered, and that the only plausible explanation for sending the docs to Hood was to find a way not to comply with Acker's order and get away with it.   Hood and Scruggs had done their thing for so long, I imagine both were shocked when Acker threw down on Scruggs and referred him for alleged criminal contempt of court.  You know, I've read Acker's contempt order a number of times, and each time it strikes me that it appears if Acker thought he could have referred Hood for some charge as well, he would have done it. 

Posted By David Rossmiller In Industry Developments
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Finally got home after some bad weather and even worse plane flights.  Just before the flight took off I got a number of messages with a couple things that, if I had had access to a computer, I would have used as an update to the last post.  However, enough time has passed that a lot of people won't see it, and I like that post the way it is, so I'll throw a few things together in this post and resume my Christmas break.

-- This story by Errol Castens in the Daily Journal is a well-written profile of Tim Balducci. What caught my eye, however, were these grafs near the end:

Attorney General Jim Hood says Balducci’s status as a special assistant attorney general was strictly as an employee of The Langston Law Firm.

“His only involvement with our office is in whatever tasks he was assigned by his employer,” Hood told the Daily Journal.

Hood’s chief of staff, Geoffrey Morgan, added, “To my knowledge, Timothy Balducci has not handled any part of the Eli Lilly case since on or about Dec. 1, 2006, when he left the Langston Law Firm.”

Hood talked to the Daily Journal? Then I'll definitely be waiting to hear from him and his assistant AG Courtney Schloemer about when I get to conduct those interviews of them next week.  After all, according to Schloemer's comments published in Legal Newsline, I'm ignoring their side of the story.  So again, I'm ready to tell it, and I have a lot of questions. 

-- This Anita Lee story in the Sun Herald contains a fact I did not know -- the Scruggs(less) Katrina Group has stopped paying the Rigsby sisters their annual $150,000 salaries for "consulting" work.  The way I have linked to the story is to its second part, and the relevant part is the second paragraph from the top.  Maybe Dickie Scruggs is still paying them out of his own funds.

-- You may remember that, in Renfroe v. Rigsby, Judge Acker requested a written response to the court to his question about when Scruggs agreed to indemnify the Rigsbies and pay for their attorney fees in this case.  Here is the answer.  There is no written agreement, but instead evidence of when such an agreement came into being through partial evidence and performance of the agreement. The pleading says the attorney fees have been paid in large part out of SKG funds, and it also appears that Scruggs may have committed the SKG rather than himself as the indemnitor. In light of the Anita Lee story about the SKG declining to pay further consulting fees to the sisters, I wonder if they will also repudiate the attorney fee payments and the indemnity agreement itself.  If so, that probably leaves the sisters with no agreement and dependent solely on Scruggs' goodwill.

--Here's an order from yesterday in the Scruggs bribery case from Judge Biggers granting the request for a continuance, but note that he moved the trial date only to February 25.  Here's a second order extending the date for plea agreements to February 11.  Wonder if there will be any more. 

-- That's it for now.  Merry Christmas.

Posted By David Rossmiller In Industry Developments
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It has been quite a month of incessant Scruggsblogging.  Believe it or not, before the indictment I planned December as a period where I could minimize blogging and work on other things such as my next Appleman's Critical Issues article on Fifth Circuit Katrina decisions and a new chapter in the Appleman's treatise on hurricane coverage law.  As I write this, I am still trying to get back home to Portland so I can observe Christmas with my family, so this will likely be my last post for a few days.  A few items, holiday-related and otherwise:

• She will never be crowned by the aristocracy and she has never been considered chic, but no female singer has ever sold a song like Karen Carpenter.  Check out her version of Santa Claus Is Coming To Town.  Never mind the grainy image, the dopey brass and sax,  the totally unfunny Jack Benny schtick at the beginning and that wacky, wacky '70s look that pervades the whole thing in such a bold and degraded way it almost invites God to destroy the world by fire, never mind that the words portray Santa as a cross between Big Brother and some deranged Prussian Gruppenfuehrer, her performance is totally sincere. I don't consider her a guilty pleasure like, say, this this song by ABBA. (Or better yet as an example of something you have to apologize for really liking, this ABBA song).  In contrast, every song Karen Carpenter ever sang, she makes you feel that she believes each word she says.  And I'll tell you what, that is something there is always too little of.
• You can see some quotes from Courtney Schloemer, an assistant AG in Jim Hood's office, about me, or to me, I guess, in this John O'Brien Legal Newsline story. In response to her apparent concern I have not called her for information, one thing I would say is I hardly ever call anyone for information.  I have a day job and I am not the Associated Press, which is why I don't conduct interviews and write news stories. Although what I do here is opinion journalism of a sort, this is a blog and not a news organization.  I comment on public events and public documents of interest to me, and it is true I am fortunate in that many people come to me with information, but it is beyond my resources to become a wire service, unless someone will fork over some asbestos, tobacco or insurance settlement money so I can hire some reporting staff!  Apparently she felt it was quite unjust that I repeated from the Brian Ford notes about her alleged conversation with an SKG attorney concerning a criminal conviction helping out the civil cases. She also asks why do I assume State Farm did no wrong, when I have not seen the evidence she has.  An excerpt from the story:

"This is all a little like kicking someone who has their hands tied behind their back. We can't disclose what we know from the grand jury, because there is an ongoing investigation, albeit temporarily enjoined by the federal courts. So while we may have information responsive to some of the points being discussed by people who do NOT have access to grand jury information, we are not at liberty to present the other side of the story.

"I am constantly surprised though at those who, without reviewing one document from the grand jury investigation, will swear on a stack that State Farm did no wrong. How do you know?

. . . .

"Maybe Mr. Rossmiller considers me collateral damage, but I have three investigators working with me who participated in the State Farm investigation and they deserve better than this. If you want to go after the people who put their names on the ballot or make millions of dollars every year, then have at it, but I would appreciate it if you would at least try to get our side of the story before you drag ordinary people through the mud."

First, I don't assume that State Farm has done no wrong. I don't assume it has done wrong either.  I am not emotionally invested one way or the other as to its rightness or wrongness. I read and interpret publicly available documents and discuss the evidence.  My conclusions derive from the evidence that is available to me -- others have other opinions, and that is why they make vanilla and chocolate.  There may be facts I do not know, this is true.  However, I am not sure if her observation is meant to suggest State Farm has done wrong based on her knowledge of secret, undisclosed grand jury information that cannot be contested or examined -- if so, I would take issue with such an extrajudicial statement coming from a state law enforcement official who works for an office with the power to drag ordinary people through the mud and threaten to indict them, whether in aid of civil cases or otherwise.

Second, the same door is open to Courtney Schloemer and Jim Hood as to anyone else -- e-mail me or call me and give me your perspective. As I said, my opinions are based on the evidence available to me. 

Third, the documents I discuss are open-sourced and publicly available.  Readers of this blog are quite sophisticated and can make up their own minds and draw their own conclusions.

Fourth, I don't believe I have mentioned Ms. Schloemer's staff, favorably or unfavorably. I didn't know she had one. If she hadn't mentioned these three investigators, I would not have known they existed. I do not know their names or what they do, therefore I cannot drag them through the mud.  In fact, I am not sure why she speaks of them -- prior to this mention of them, they appear to have been mud-free. 

I must disagree with her characterization of me as kicking her when she can't fight back in public -- a statement that is belied by her fighting back in public.  When a law enforcement official's name appears repeatedly in public documents, such as on page 8 of Judge Acker's order referring Dickie Scruggs for alleged criminal contempt, and when that official acts in the name and under the authority of the state in critical matters of high public interest including criminal investigations, that person is a public figure and comment is justified.  Also, one correction to the story: I think what I said was that the conduct, if true, was outrageous, not that it was outstanding.  If I said outstanding, I meant outrageous, which I think is apropos as a term to describe -- if it in fact happened as the Brian Ford notes relate -- discussions by an assistant attorney general with one party to civil litigation about the possible indictment and conviction of the other party as a potential boon to that litigation.  Still, Ms. Schloemer, you wanted to get a message to me and you did -- I will continue to think over what you said.

Rest assured, I do not consider you collateral damage.  I bear you no ill will and I welcome your input. Same goes for Jim Hood, I would be happy to receive communications from him.  Maybe he can tell me whether he agrees with your statement.  In fact, since I will have some vacation days right after Christmas and will have a free hour or two, and since I used to be a professional journalist and have done thousands of interviews, and since you said I did not get your side of the story, consider this my offer to conduct a formal news-type interview of you and Jim Hood, separately or together, on the matters I have been discussing on this blog for the past year.  I can publish the interview right here next week. Here's my e-mail address to respond: dpr@dunn-carney.com, (Or you or Mr. Hood can pass the message through John O'Brien at Legal Newsline).

• Here's a copy of an order filed in Hinds County in April 2006.  In it, Judge Simpson ordered State Farm to turn over certain documents to the Attorney General, on condition that he erect an ethical wall keeping information from the criminal probe from reaching those AG staffers working on Hood's civil suit against State Farm.  The judge also stated: "All counsel of record in this case are cautioned against making extrajudicial statements or releasing information concerning any matters before the grand jury." 

I refer you to this news story, that contains this passage:

Simpson asked Hood to explain how it became public that the grand jury was investigating allegations that State Farm allegedly is manipulating engineering reports to deny policyholders' claims. Hood denied that he was a source of that information.

"It's difficult to keep a matter like this quiet," Hood said. "There's been absolutely no proof that we've leaked any information that's improper."

I refer you to the Brian Ford notes, page Ford 0012, fourth and fifth lines from the top.

I refer you to this video of Jim Hood's testimony before Congress, starting at 8:15-27 (also watch the reactions of the people sitting behind Hood during this stretch of testimony).

I refer you to the deposition of Lee Harrell, page 340.

All depends on what your definition of "extrajudicial statements" and "releasing information" is.

• That's it for this post and likely until Christmas is in the rear view mirror.  Season's Greetings. As Tim Balducci might say, see you on the "flip" side.

Posted By David Rossmiller In Industry Developments
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Prosecutors filed a response yesterday to the defense motion for a continuance, and this document contains what looks like to me a very strong indication that Tim Balducci did not begin cooperating with investigators until November 1, when he delivered the last $10,000 installment of the alleged $40,000 bribe.

Click here to see a copy of the government's response.  And click here to see a copy of the indictment, so you can follow the play-by-play.    

The government's response says as follows:

Now, there would be no point at all that I can see to taping a meeting of Judge Lackey and Balducci on November 1 if Balducci had already begun cooperating.  As I mulled over the sequence of events listed in the indictment, that meeting on November 1 stuck out like a sore thumb, and I posted about this earlier this week.  Why would Balducci bother to deliver the $10,000 if both he and Lackey were wise to the fakeness of the transaction?  You will note that, among all the sums mentioned in the indictment, only a final extra $10,000 that Balducci apparently asked for after delivery of the full $40,000 is not mentioned as being delivered to Lackey, and the obvious implication of that is that Balducci was put up to claiming the judge was demanding more money above the original $40,000, so more evidence could be gathered.  That last part seems clear, but what of the drop-off of the other $10,000 earlier in the day November 1?

One commenter to my post said the meeting was probably real -- the FBI confronted Balducci after it was over and showed him the surveillance tapes, and then sent him to Oxford with a body wire to go talk to Backstrom and the Scruggses.  This was a very, very good analysis, but not having any experience "flipping" or "being flipped," I was skeptical: I imagine that if I was confronted like this, I might be too shaken to pull off a good acting job with my co-conspirators, might start muttering to myself about "the damn FBI," or say something stupid like "I can't believe we thought we could pull this off, we should have known it would never work."  Maybe I would start some Nixon-like sweating, or break out in involuntary twitching.  Maybe if someone asked me what took me so long to get there I might blurt out defensively "Well, traffic was a bitch and getting busted is a real time-killer too!  Just wait and see."  I also wondered whether the FBI would care to send Balducci in without more prep time -- maybe an encounter session with a few felons from other cases who had flipped, some film room time to watch some "how to" videos, maybe bring in a stress coach, physical therapist or motivational speaker to keep him loose.

But from the description in the government's new filing, it does indeed appear that is just what they did.  This theory is supported by another section of the new filing that talks of evidence of consensual recordings involving Balducci, Backstrom, Dickie Scruggs and Zach Scruggs.  Because the indictment mentions Balducci meeting with all three on November 1 after he returned from Lackey's office, this is a logical time for the consensual recordings to have been made.

Incidentally, that last sentence quote above from the government's filing talks of expense transmittals from the Scruggs Katrina Group.  I assume that refers to the allegations in the indictment that Dickie Scruggs created phony documentation purporting to pay Balducci for jury instructions and jury consulting in an effort to cover up the true purpose of the payments to Balducci. They are alleging he paid out of SKG funds? Whoa! If I was in the SKG and someone used common funds and the name of my organization for alleged bribe money, I would be even more steamed than when I heard about the alleged bribes in the first place.

Posted By David Rossmiller In Industry Developments
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UPDATE: Numerous readers have informed me that the description of the attorneys in the Luckey and Wilson cases is in error.  Jack Dunbar was original lead counsel in Luckey and Wilson. Dunbar brought Johnny Jones in specifically to handle the plantiff's constructive trust claims related to the tobacco money.  Jones wound up working on everything in the cases and Steve Funderburg was also pulled into the cases because of the immense workload.  Joey Langston and Tim Balducci were involved in Luckey but not really in the Wilson case until special master Bobby Snead issued his recommendations.  At that point, Scruggs removed Dunbar as lead counsel and brought in Langston and Balducci on the Wilson case. Balducci and Funderburg drafted the proceedings and briefs although Langston would be lead counsel at trial.  Jones was no longer participating at that time because he was working full time on Katrina cases. 

So to clarify, Balducci and Langston's involvement in the Luckey case began in January 2004-the trial was held in June 2005.  Following Luckey's $17.5 million victory in the summer of 2005, Langston and Balducci got involved in the Wilson case for the last ninety days before the trial.

_______

This story by Jerry Mitchell in the Clarion-Ledger today says Judge Robert DeLaughter, who presided over the Wilson fee dispute case involving Dickie Scruggs several years ago, has received a grand jury subpoena in an investigation into potential judicial bribery.  I have heard many, many good things about Judge DeLaughter from lawyers in Mississippi.  In a prior story, DeLaughter told Mitchell he did not take a bribe.

One would assume that the investigation at this point is shaped to a large degree by information from Tim Balducci, whose plea agreement requires him to give truthful information or lose the benefit of the agreement, but even if Balducci didn't supply information on the case, it might come in for scrutiny because DeLaughter rejected a special master's finding that Scruggs' opponent  was owed $15 million, and he settled for an amount that is undisclosed but appears likely to be peanuts.  In a similar fee dispute case in federal court in the same time period, the Luckey case, Scruggs was ordered to pay $17 million. Interestingly, Balducci was Scruggs' attorney in the Luckey case but not in the Wilson case -- his lawyers in that action were Johnny Jones and Steve Funderburg, who are suing Scruggs now in a fee dispute over division of Katrina settlement money.    

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I wanted to bring you up to speed on the Renfroe v. Rigsby case, the one where E.A. Renfroe & Co. is suing the Rigsby sisters for breach of their confidentiality agreements in giving State Farm claims documents to Dickie Scruggs, who apparently passed them around to the Scruggs Katrina Group and other policyholder lawyers like a bottle of cheap wine at a frat party. This case, you may remember, is the one out of which the prosecution of Scruggs for alleged criminal contempt of court arose.

On November 28, attorneys for the Rigsbies filed a motion to disqualify Judge William Acker from the case, saying his impartiality was compromised in light of his appointment of special prosecutors to go after Scruggs. Here is a copy of the supporting legal memorandum. A very interesting point in the brief: although Scruggs is not the sisters' attorney for purposes of defending this case, he has agreed to indemnify them for attorney fees and damages they may be assessed because of the case.   

Here is Renfroe's brief in opposition to the motion to disqualify.   And here is the item that interests me most, an order from Acker, following a hearing on the motion to disqualify last week, that says the court neglected to ask when the Scruggs indemnity agreement was made, and giving the Rigsbies until December 21 to respond.  I could make various guesses based on what facts I know, as I'm sure you could too, but I'm just going to wait and see what the answer is.

I don't know what the proper analysis is for the Rigsby motion.  I once had a case in federal court where the judge, a few weeks before trial, on my motion fined one of the defendants $25,000 for violating a court order, then much to my chagrin recused herself.  Turned out all right.  The trial was held as scheduled, the judge we got was equally good, and we won the case in a bench trial.  Judge Acker's action in the Renfroe case, however, was not against a party or even the party's counsel, but an attorney who represents the Rigsby sisters in another capacity.  The Rigsby argument is that there is such an identity of interests, and that actions in this civil case may reflect on the criminal prosecution, that Acker either cannot be impartial or there is the substantial appearance that he cannot be impartial.  What do you think the right answer is?

UPDATE: As Justus pointed out in the comments, far more cogently than I did in this post, the point of Judge Acker's query is that the supposed indemnity agreement must be in writing to be enforceable under the Statute of Frauds. So he wants to see written evidence of the Rigsby agreement, leading one to suspect that he suspects there is no written contract.   

Posted By David Rossmiller In Industry Developments
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Let's take another look at yesterday's defense motion in USA v. Scruggs in northern Mississippi, the case of alleged bribery, not to be confused with USA v. Scruggs in northern Alabama, the criminal contempt of court case. 

In the Alabama case, by the way, the docket shows a February 28 hearing on all pending motions has been scheduled before the new judge, C. Roger Vinson. 

Back to the bribery case. (Click here to read yesterday's motion).  A few things the motion reveals:

• Through discovery, the government has a provided the defense with a 90-minute "consensual recording." We know this does not consist of the meetings of Tim Balducci at Judge Lackey's office, because the motion later says none of the Lackey audio or visual recordings have yet been turned over.  A consensual recording is just what it sounds like -- one of the people involved consented to the recording being made. The motion says "four defendants" can be heard on the recording. Whether the four includes Balducci, or means the Scruggses, Backstrom and Patterson, I don't know.
• The government also turned over a cassette with a consensual recording. No other information about this.   
• The government  provided a CD with 124 recorded telephone conversations. Even considering this investigation went on for months, that is a surprisingly high number to me.
• The government has not provided evidence seized in the November 27 raid on Scruggs' office, evidence seized in the December 10 raid of Joey Langston's office, any telephone records, any photographs or other physical evidence, any exculpatory evidence or, as mentioned, the Lackey recordings.
• A government "taint team" is working on electronic records seized from the Scruggs and Langston law offices. What is a taint team? This excellent link tells you: a team not otherwise part of the investigation who reviews electronic records, some of which will not be connected to the alleged crime, to protect the government against suppression hearings based on the premise investigators reviewed records they had no right to see.
• The Scruggs defense team is planning suppression hearings based on the warrant for the November 27 search, the application for and extension of the wiretaps, and to dismiss some or all the counts of the indictment.

Just to return for a moment to the indictment itself (click here to see it), I've been mulling the allegations over, and I can't decide about the alleged events of November 1.  On that day, Balducci supposedly delivered the last $10,000 of the agreed upon $40,000 to Judge Lackey, and allegedly Dickie Scruggs had already given Balducci a $40,000 to cover this.  On that same day, Balducci allegedly had the conversation with Zach Scruggs and Balducci where he said "we paid for this ruling, let's be sure it says what we want it to say." And also on November 1, Balducci allegedly had a conversation with Dickie Scruggs where Scruggs agreed to pay an extra $10,000 to Lackey.  These last two items tend to support a theory that Balducci was already cooperating with the government at this point -- the statement to Zach Scruggs and Backstrom smacks of one made to obtain their reactions on tape, and there is no reason to ask for a fake extra $10,000 payment from Dickie Scruggs unless to further implicate him and get documentary and audio recording evidence against him.  However, if Balducci was cooperating, why deliver the last of the $40,000 to Lackey?  What would be the purpose of delivering alleged bribes when both the bribee and the briber knew the transaction was fake?  Maybe readers can supply the answer.

Lastly, thanks for all the continued shout outs from across the Web: Overlawyered, Y'all Politics (which has become a veritable Scruggs Central), the Wall Street Journal Law Blog (I notice they have a noun definition of "scruggs" that may or may not be compatible with my definition of the verb "to scruggs"), folo and many more than I can keep track of.  And thanks for all the continued e-mails from readers: tips, observations, documents.  Very valuable, very helpful as we search for answers together. As always, you know where to reach me: dpr@dunn-carney.com.

Posted By David Rossmiller In Industry Developments
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No time to blog on this now but wanted you to be able to see the document for yourself. Click here to view.

UPDATE: Some have asked me about a term used in the motion. It says that on December 7, the government, pursuant to a discovery request, provided the defendants with a copy of a 90-minute "consenual recording made in the course of its investigation . . . [that] contains statements by the four defendants."  What is a consensual recording? Here is the answer from a government website.  It is where one of the participants (an agent is also considered a participant) consents to the recording, as opposed to a wiretap or other form of non-consenual monitoring.  Under the allegations of the indictment and Tim Balducci's later guilty plea so early in the case, one would have to assume the consensual participant was Balducci.  Ninety minutes? That's a lot of talk.   

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First off, let's deal with a bit of news from the ongoing trench warfare between the entity formerly known as the Scruggs Katrina Group and State Farm known as McIntosh v. State Farm.  Judge Robert Walker has ruled that State Farm may take the video depositions of Dickie and Zach Scruggs, as you can see from the following document on PACER from December 12.  Order denying plaintiffs' motion for protective order/motion to quash.

If you follow these things, you might have noted that two days prior, the McIntoshes filed this brief: Plaintiffs' opposition to State Farm's motion for partial summary judgment.  Also, click here to see Exhibit A to the brief.  (One can no longer say "Scruggs filed," as he and his firm have withdrawn from McIntosh and other SKG Katrina cases). In it, including on page 11 of the brief, there is an extended argument about the significance of the fact that three State Farm employees -- Lecky King, State Farm Flood Coordinator for Katrina, her assistant, Lisa Wachter and King's supervisor, Dave Randel, have taken the Fifth to questions during depositions, citing AG Jim Hood's at-that-time ongoing criminal investigation of State Farm. (The investigation, as you may recall, has since been enjoined by the federal district court, as you can see by clicking on this copy of this November 13 order extending injunction against Hood).   In light of Judge Walker's December 12 order the question must be asked: will the Scruggses themselves take the Fifth in the depositions?

You can see the original notices of the depositions of the Scruggses by clicking on this link to a post I wrote in August and going to the bottom of the post.

Now back to a question I have raised before, including in my post from Saturday -- should the role of the so-called "whistleblower" Rigsby sisters in SKG litigation receive a new review and closer scrutiny? For example, has their importance, and the importance of the 5,000 to 15,000 documents State Farm documents they took from their employer, E.A. Renfroe, and gave to Scruggs and AG Jim Hood been vastly over-hyped? Is the storyline we have heard about the Rigsby sisters accurate to any degree?

I see in the McIntosh docket that the sisters' broad assertion of privilege to keep from producing certain documents was rejected fairly decisively on December 14 by Judge Walker.  Click here to read the order requiring them to produce the documents.  

These items from the McIntosh docket may also interest you:

• Motion to quash State Farm's subpoenas for Rigsby telephone records
• Supporting memorandum
• Ex. A (copies of subpoenas)
• Ex. B (copy of e-mail requesting State Farm to modify subpoenas)

Judge Walker denied the motion to quash the subpoenas on December 14 by a minute order available on the PACER docket.  The minute order states that "The subpoenas are limited to a relatively short time frame, and it appears that the information sought is relevant or may lead to the discovery of relevant evidence."

The subpoenas are to telephone companies and seek the telephone records of the sisters from October 12, 2005 to February 28, 2006.  This appears to be an effort to discover if the storyline is false that the sisters began talking with and working with Scruggs in February 2006, as Scruggs has stated in testimony in the Renfroe v. Rigsby civil case in Alabama (this is the lawsuit out of which the ongoing prosecution of Scruggs for alleged criminal contempt arose).

You may also recall that in State Farm's lawsuit against Hood -- the one that has resulted in a continued injunction against his resuming his criminal probe of State Farm -- the insurer has alleged that the documents the sisters took match up virtually case for case with those in the  SKG's McFarland group of cases.  These are the 640 cases that resulted in the big settlement announced in January between State Farm and SKG, which included the $26.5 million in attorney fees that gave rise to the fee dispute with Jones, Funderburg.  This lawsuit, as we all know, is the one in which Scruggs and four others are alleged to have attempted to bribe Lafayette County Judge Henry Lackey.

You can see the allegation here in the Farm v. Hood amended complaint, paragraph 57.  The complaint alleges that "a comparison between a list of State Farm claim files that Kerri Rigsby accessed in June 2006 and a list of [McFarland] clients . . . reveals that, of the first 118 claim files Kerri Rigsby accessed, 99 matched up name for name and in substantially the same sequence as the names of plaintiffs listed on an exhibit to the McFarland complaint."   

In the McIntosh case, State Farm filed an affidavit back in September with this evidence. Click here to see the affidavit, click here to see Exhibit A with some of the evidence, and click here to see Exhibit B with more of the evidence.

Recall also that Kerri Rigsby is listed in the Brian Ford notes as having discussed Katrina litigation with Sen. Trent Lott, and recall also that Hood has stated in open court in Harrison County, on April 11, 2006, that he already had many of the State Farm documents that he was requesting through grand jury subpoenas: "We know what a lot of it that they're going to produce and we're just going to see if they actually give us what is written on them and stuck to them and so forth. So I've had this for a long time, this information for a good while and there's nothing in that civil case that I can do [apparently a reference to his then-civil suit against insurance companies including State Farm]."  

And we must also remember that the deposition of Lee Harrell, assistant Insurance Commissioner of Mississippi, provides evidence that in December 2005, Scruggs called a meeting with Insurance Commissioner George Dale, said he had highly placed "insiders" at State Farm and wanted Dale's cooperation in working the matter like he and former Mississippi AG Mike Moore had worked the tobacco litigation.  Harrell also testified to meetings in early 2006 in which Hood allegedly said if State Farm didn't settle civil litigation, "I'm going to indict them all, from Ed Rust [State Farm's CEO] down."

Finally, let us also journey back through the mists of time to remember that the Alabama federal court prosecution of Scruggs on a charge of criminal contempt came when he, apparently at Hood's suggestion, failed to send copies of the thousands of documents the Rigsby sisters took from Renfroe to Renfroe's attorney, and instead send them to Hood, who already had his own copies, having arranged for state employees to go pick them up at home from the Rigsby sisters after they copied them off in a massive "data dump" in June 2006.  In his order recommending Scruggs for prosecution, Judge William Acker wondered why Scruggs would so this, unless it was so Scruggs and Hood could "bully" -- his word -- State Farm into the McFarland settlement.  The question also arises -- if the documents were so damaging, why not return them and thereby increase Scruggs' bargaining power by showing he had the goods on State Farm?  Unless, of course, all this talk of the documents' explosive value is just pure bunk.   

Those are sufficient points for today, all on the public record.  The question: are the Rigsby sisters whistleblowers, or espionage agents of a sort who worked on behalf of the team of Scruggs and Hood, a state law enforcement official, to create an enhanced climate of fear in civil litigation out of proportion to the reality that otherwise would have existed? (Note also that they went to work immediately after leaving Renfroe in June 2006 as "consultants" to Scruggs, with no specific duties, at annual salaries of $150,000 paid from SKG funds, and that they, like engineer Brian Ford, who was also approached about being a litigation consultant, are material witnesses to Katrina cases).

One thing's for sure: Hood isn't talking about it.  Since the indictment of his "confidential informant," Scruggs, Hood has been uncharacteristically silent. 

Posted By David Rossmiller In Industry Developments
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While there is a lull in the FBI raids, let's take this time to regroup and look back on a few of the themes we have touched on earlier.  One is this: if what prosecutors say is true -- and let us remember we have only heard one side of the story so far -- what went on with the Jones v. Scruggs lawsuit such that a man at the very pinnacle of success would risk disgrace and jail?

Walter Olson addresses this question in this article in today's Wall Street Journal. (A quote from me suggesting that Scruggs' entire career will now be reappraised, which appeared in a recent Los Angeles Times story, appears at the end of the article).  Here's an excerpt:

"It just boggles the mind," said one Mississippi trial lawyer quoted in the Los Angeles Times about the indictment of tort lawyer Richard "Dickie" Scruggs last week on charges of backing the attempted bribery of a state judge. "Here is a man who has had an enormous amount of success, who reached a level very few attorneys, if any, have reached. Why would he risk everything over a legal dispute over attorneys' fees?"

Why indeed? Mr. Scruggs, a prime mover in the $246 billion tobacco settlement with the states, is arguably the most formidable plaintiffs lawyer in history. Why risk a long prison term just to add more millions to a fortune already too vast to spend in one lifetime? While it is too early to tell -- and Mr. Scruggs deserves a presumption of innocence -- hints at possible motives are by no means lacking.

Let's explore this question by looking at some of the pleadings filed in Jones v. Scruggs, the fee dispute case in Lafayette County between Jones, Funderburg and the rest of the then-Scruggs Katrina Group. (After the indictment of Scruggs and four others, the group first announced the Scruggs firm would withdraw from Katrina litigation, then Scruggs counter-announced that he would not, then according to sources John W. "Don" Barrett, an old friend of Scruggs whose Barrett Law Office was part of the Scruggs Katrina Group, went to Scruggs office for a meeting, and after that the group once again announced Scruggs was withdrawing from Katrina cases and Scruggs filed withdrawal motions in the remaining cases.  The group has been renamed the Katrina Litigation Group). 

Below are some significant pleadings in the case. Of these, I have linked before only to the complaint.  I have read every page of these, and they are well worth the time it takes.

• Complaint
• Exhibits to complaint, defendants' answer and motion to compel arbitration 
• Plaintiff's motion to stay arbitration
• Defendants' response to motion to stay arbitration
• Plaintiff's reply
• Plaintiff's supplemental brief
• Defendants' reply re plaintiff's supplemental brief 
• UPDATE -- a reader reminded me I didn't link to Jones' amended complaint.  See this post  for a link to the amended complaint and for a copy of Jones' motion for court control of SKG attorney fees.    

One of the most interesting parts of these pleadings are the exhibits to the defendants' reply, the last item in the sequence above.  I have looked at these several times wondering if the documents I received from the court in Lafayette County were out of order somehow -- this is possible -- because why the defendants would have included these documents as exhibits is a mystery to me.  They appear particularly unhelpful to the defendants and especially Dickie Scruggs.  For example, remember that Johnny Jones and Steve Funderburg, the plaintiffs in this case, earlier represented Dickie Scruggs in the Luckey case, another fee dispute. A number of readers have communicated with me raising questions about how Jones can seek to establish a pattern and practice of Scruggs cheating other lawyers out of attorney fees when this effort would involve, in part, discussing a case in which Jones had an attorney-client relationship with Scruggs.  It is debated whether the work product privilege belongs to the lawyer or the client, but everyone agrees that the attorney client privilege belongs solely to the client, and only the client can waive it. 

One way in which waiver can occur is where the client places the privileged communications or the relationship "at issue."  Courts have various explanations of the at-issue doctrine -- some would find the fact that the communications are a necessary part of deciding the dispute at hand to satisfy the doctrine -- but almost any court can find a waiver where the client himself explores or reveals the communications. So if indeed it was the defendants who placed at issue the Steve Funderburg e-mail of March 4, 2007 to Dickie Scruggs (page 18 of the exhibit in the last document linked to above), doing so does not make sense to me. In the e-mail, Funderburg blasts Scruggs as follows:

John and I DEFENDED you in fee dispute litigation, for God's sake.  We DEFENDED you  when people said you were greedy, or were a back-stabber, or a liar, or anything else.  Good Lord we trust you as a friend.  Well . . . good job.  You have developed a routine.  It worked.  But go to your grave knowing that you have shaken my belief in everything I hold dear.  I did not believe that people like you really existed.  I am ashamed and will always be ashamed of having defended and protected you.  You are a man without honor and you should know that about yourself.

Of course, there are exceptions to the attorney client privilege, such as the crime-fraud exception, where legal advice is sought to advance a criminal or fraudulent purpose, but generally one's own attorney is not the one who seeks resort to this exception. I don't know how this will all play out -- the at-issue doctrine can be broad or narrow, depending on the circumstances and the court.  Readers may have their own take on this, but I wanted to raise the question and see what others think.

But back to the central point of today: why would he do it? What Jones and Funderburg appear to be driving at is that acting in this way is a habit, a method of doing business.  Seen in this light, the alleged bribery scheme is just an extension of this ruthless business method. Even if that is true, another question remains. Why try bribery to get the case into arbitration when Jones, it is evident from looking at the documents, had repeatedly demanded arbitration pursuant to the joint venture contract before filing suit?  Jones' answer in the pleadings is that once the lawsuit was filed -- perhaps Scruggs and the others did not truly believe Jones would file suit and instead believed he would back down and take either the original $1 million offered, the lesser $600,000 offered later, or perhaps even less -- the potential for bad publicity and punitive damages from the tort claims in the lawsuit led to a re-evaluation.  This re-evaluation must have been relatively quick, because the lawsuit was filed March 15, 2007, and the defendants filed a motion to compel arbitration April 10.  In addition, prosecutors have alleged the purported bribery scheme involving Scruggs began around March 28. Another possible explanation is this: what if Scruggs thought that Jones, not a member of the inner circle of the SKG (good grief, he didn't even have his own private jet!) just needed to be taught a lesson about power and who is fit to wield it in this world? What if? Under such a view, the alleged bribery might be seen as an expedient, perhaps regrettable, perhaps not, to support and re-inforce the natural order, a kind of historical determinism in which the little things like alleged bribes are all subsumed in inevitability. What if?       

There are other points worth exploring that are touched on by the Jones v. Scruggs pleadings, including a re-evaluation of the supposed "whistleblower" Rigsby sisters.  We can talk about that in greater depth at a later time, but since, included in the pleadings, is Judge Acker's order finding Scruggs in contempt and recommending him for prosecution in the Renfroe v. Rigsby, let me just recommend that you read it again closely in light of the Jones lawsuit, and ask yourself this.  It is apparent that Jones and possibly other members of SKG were troubled by hiring material witnesses as litigation consultants, and also with paying them with SKG funds. What if -- just what if -- when the protective order is finally lifted on the State Farm claims documents the Rigsby sisters took from Renfroe, they are found to match up virtually one for one with the policyholder lawsuits Scruggs and SKG had already filed? What would that say about their whistleblower status? What would it say about Jim Hood's involvement with the Rigsby sisters, his grand jury investigation of State Farm and his suggestion that Scruggs (according to Scruggs' testimony) send the documents to him, Hood, rather than comply with Acker's injunction, at a time where Hood's criminal and civil pressure played a big part in State Farm's willingness to settle with Scruggs? Again, what if, and what would this say? 

Posted By David Rossmiller In Industry Developments
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Maria Brown, a former employee of Nutt & McAlister, a law firm that was and is a key player in Katrina litigation as part of the Scruggs Katrina Group, has sued the firm for employment discrimination, breach of contract and other claims.  Click here to read a copy of the lawsuit, and click here to read the exhibits to the complaint.  Let's remember these are just allegations and are only one side of the story -- here's what the lawsuit alleges:

• The firm knowingly kept electronic records of State Farm claims documents that had been ordered returned by Judge William Acker in a December 2006 preliminary injunction.  You may recall that Dickie Scruggs' failure to promptly return his copies of the same documents resulted in his ongoing prosecution for alleged criminal contempt of court in Alabama.  When Brown complained about the keeping of the records, she was told it was OK because the documents were in the public domain.
• "The overall environment was saturated with sex which consisted of sexual innuendoes, sexual acts, on-line masturbation, payments for sexual favors performed in the broom closet, sexual overtures and adultery."
• The firm promised to pay off the $85,000 she owed on her home as a bonus for working hard, but than paid her only $5,000 from Katrina proceeds.
• Brown was sexually harassed, including by being presented a picture of the genitalia of a male member of the firm.  This person then asked her for a picture of her genitalia.  She declined. She informed management of the harassment but they did nothing about it.
• She was terminated for complaining about the sexual harassment and the "illegal activity . . . with regard to Judge Acker's Preliminary Injunction." 

The really intriguing allegation is that Nutt & McAlister failed to comply with Acker's order. Because the order required the Rigsby sisters and their agents to return all copies of documents they had taken from State Farms claims contractor E.A. Renfore, the question is whether Nutt & McAlister was an agent and what obligation the firm was under to comply with the injunction.  Prosecutors say that Scruggs, as their attorney, was their agent.  But even if the SKG rather than Scruggs himself paid the $150,000 per year consulting salaries of the Rigsby sisters, that makes them agents of the SKG, not vice versa.  

The implication of the complaint is that the firm sent back paper copies but kept electronic copies, which, if true, would belie an assertion that the firm believed they were not subject to Acker's order. Indeed, the complaint alleges that the justification for not deleting the electronic records was that they were in the public domain.  Some of the documents might, in fact, have previously been used in litigation or given to the media, but that is not the same thing as saying this exempts them from Acker's order.  We do not know, from the allegations of the complaint, whether these electronic records purportedly were of all the 5,000 to 15,000 documents taken by the Rigsby sisters, or only some.   

Again, it's only one side of the story. 

Posted By David Rossmiller In Industry Developments
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Two straight weeks of Scruggsblogging has finally caught up with me.  Due to a confluence of other events often referred to as "life," I didn't finish with all the other things that I had to do until well after midnight, so this post must of necessity be short. 

Rumors of what will happen next abound, and at this point few of the things I have heard would surprise me.  However, it wouldn't be fair to the people involved to engage in rank guesswork, so like the rest of you, I'm going to sit tight and wait to see what happens next.

Many have been asking me to say something more about Trent Lott's resignation, especially in light of this Harper's blog post by Scott Horton speculating on all kinds of reasons Lott might have left the Senate. Read an excerpt:   

Fair enough. That said, the two prominent figures in the Mississippi legal community mentioned above told me that Lott has recently engaged a well-regarded local criminal lawyer to advise him on some questions relating to the Scruggs case. There’s no crime in hiring a lawyer, but it does point to Senator Lott having on-going dealings with the U.S. Attorney handling the Scruggs case.

Might the prosecutors have asked Trent Lott, one of Washington’s political titans, to resign as part of a deal? A week ago I would have found that very far-fetched, but now I am not so sure.

Why would prosecutors do this? If Lott did anything wrong, he would be far from the only criminal in the United States Senate.  Would it make a noticeable difference to have one less? However, I have trouble buying these scenarios about Lott being involved in wrongdoing, they just don't add up for me.  And, as reader Ironic pointed out in the comments yesterday, this NPR story plausibly explores Lott's announced resignation as a precursor to registering as a lobbyist, and why he may not be talking abou it.  In this instance, I'm going to go against my history and give Lott a break, and say I believe him, which is what I've said all along.  Lott, don't prove me wrong now!

For more discussion of the Scruggs scandal, let me refer you to this post by Walter Olson at Overlawyered, and the world of Scruggs links at Y'all Politics. 

One final thing: did you hear the criminal contempt case in Alabama against Scruggs got a new judge?  If you will remember, all the judges in the Northern District of Alabama recused themselves on Scruggs' motion to avoid the appearance of bias, because all obviously know their colleague Judge William Acker, who referred the charge to special prosecutors. Here's an AP story on this development.   And here is a pdf of the order appointing the new judge. You know, it's just like Scruggs to show everyone up, it's not enough to have one criminal prosecution against him, he has to have two. 

Posted By David Rossmiller In Industry Developments
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From across the Scruggs Nation, information keeps rolling in. Citizens of the Scruggs Nation, we have much work to do today.  Let us prepare for this work by first listening to the greatest song in the history of Earth, La Marseillaise, in perhaps its greatest and most moving rendition, the famous, famous scene from Casablanca. Click here to listen, and enjoy. Buckle up, or if you prefer, as the song says, To Arms, Citizens!

First up on the Scruggs Nation agenda for today is this.  I have had many requests to talk more about P.L. Blake, who he is and what he did.  We can only begin that task today, but a journey of a thousand miles starts with a single step.   

P.L. Blake, the Fred Thompson connection

Remember P.L. Blake, the figure Dickie Scruggs apparently spoke about in the book Assuming the Risk, by Michael Orey, when he referred to "the dark side of the force" aiding Scruggs in litigation?  (We do not know this for sure, because curiously Blake's name does not appear in the book). Do you remember a couple days ago we saw in the Scruggs deposition in the Luckey case -- a deposition defended by admitted attempted briber Tim Balducci -- that Scruggs agreed to pay Blake the emperor-size sum of $50 million?  Click here to see the trial transcript that discusses payments to Blake (start at page 43 of the pdf and read to the end, Blake is mentioned on page 46 of the pdf, page 510 of the transcript).

Blake was involved in controversy in the early 1980s over his PLB grain company.  Below is a paragraph from a decision of the Mississippi Supreme Court, Blake v. Gannett, 529 So.2d 595 (1988) that explains:

PLB Grain owned one of the largest, if not the largest, grain storage facilities in the United States. It had contracted with the Commodity Credit Corporation (CCC) to store 21.5 million bushels of grain. In order to receive the contract, PLB had indicated to the CCC that it had a net worth of at least $5 million. The surplus grain stored for the government by PLB under the CCC contract became a national story on October 18, 1983. The controversy involved the quantity and quality of the grain stored by PLB Grain. Texas officials charged that the quality of the grain had deteriorated substantially. USDA officials claimed that it had not deteriorated. Later, in 1984, CCC determined that there were quality and quantity problems with the grain stored in PLB's elevators. State FmHA officials knew that Blake had an interest in a Texas grain storage facility, but did not know the exact nature of that interest. Information concerning PLB Grain was never included in FmHA loan applications.

Click here to see a copy of Blake v. Gannett and read for yourself. The paragraph quoted is at 529 So.2d 599 -- for those not familiar with how to read case law, look for the purple numbers embedded in the text, they show you the page of the case reporter. When you read this case, look just below the headnotes for the names of the attorneys -- you will note that Blake's attorney was Fred D. Thompson, of Thompson & Bussart, Nashville, Tenn., of Senate Watergate counsel, movies and TV and presidential candidate fame. The case involved allegations that the Clarion-Ledger, owned by the Gannett corporation, had libeled Blake in investigative stories.  The newspaper was exonerated.

We can see from the 1984 Washington Post story below that Thompson was Blake's lawyer for a long time.

Grain Storage Firm Found in Default On U.S. Contract --- By Ward Sinclair Washington Post Staff Writer
546 words
29 September 1984
The Washington Post
English
(Copyright 1984)

The Agriculture Department yesterday found a Texas grain elevator firm in default on a grain-storage contract that President Reagan's campaign press secretary helped the firm to win in 1982.

The firm, PLB Grain Storage Corp., owner of the nation's largest grain elevator in Plainview, Tex., failed to meet a USDA deadline to produce 1 million bushels of missing government-owned corn stored there or pay about $3 million for it.

After weeks of unsuccessful negotiations with the company, the USDA found it in default on its federal contract, which could lead to revocation of its license by the state and further wrangling about PLB's government debt.

The elevator, owned by P.L. Blake of Greenwood, Miss., has been at the center of political controversy since last year when Texas Agriculture Commissioner Jim Hightower charged that corn stored at PLB had deteriorated and should be given to drought-stricken ranchers.

Blake is represented by Nashville attorney Fred Thompson, Republican counsel for the Senate committee that investigated the Watergate scandal more than a decade ago. Thompson and farm lobbyist Jim Lake, now press secretary for the Reagan-Bush reelection campaign, helped PLB win its long-term federal-storage contract in 1982.

Thompson acknowledged that Lake assisted PLB two years ago but denied reports in the Agriculture Department that Lake had played a role in trying to arrange a settlement in the government's latest contretemps with PLB. Efforts to reach Lake for comment were unsuccessful.

State and federal officials believe that the grain, part of an original 22.5 million bushels, is missing because of PLB "operating deficiencies" -- failure to handle it properly and prevent moisture shrinkage.

PLB could lose a long-term USDA storage contract extending to 1986 and worth $3.6 million per year to the firm, even though the government has little grain stored there now.

The Texas Agriculture Department padlocked the elevator two weeks ago after confirming a reported shortage of about $3.1 million in corn stored there by the Commodity Credit Corp. since President Jimmy Carter's partial embargo on grain sales to the Soviet Union.

U.S. Agriculture Secretary John R. Block denied that the grain had deteriorated and resisted Hightower's efforts to win release of the corn to assist ranchers who needed feed grain to replace forage destroyed by drought in south Texas.

Others, such as Sen. Lloyd Bentsen (D-Tex.) and House Agriculture Committee Chairman E (Kika) de la Garza (D-Tex.) jumped into the fray and with legislation directing use of the grain for ranchers.

In the current flap, PLB has until mid-October to show cause before Texas authorities why its elevator license should not be revoked. Thompson said that PLB will appeal the USDA's default ruling and indicated that resolution of the dispute could be months away.

PLB is one of dozens of elevators receiving federal money for storage under long-term contracts negotiated by the Reagan administration, even though they have no grain in their bins.

A House subcommittee chaired by Rep. Glenn English (D-Okla.) recently charged that the government has lost at least $20 million through the long-term agreements.

True, just because you are someone's lawyer doesn't necessarily mean anything.  But then again, maybe it does.

Blake: other political connections

Let's get in the Wayback Machine and look at another news story involving Blake.

Newspaper: Anderson Didn't Report Free Trips
23 September 1989
The Associated Press Political Service
(Copyright 1989. The Associated Press. All Rights Reserved)

GULFPORT, Miss. (AP) _ A Jackson newspaper reports that 5th District congressional candidate Tom Anderson didn't report free air travel worth thousands of dollars while a House staff member and later as a U.S. ambassador, as required by law.

The Clarion-Ledger of Jackson said it had obtained Anderson's executive branch disclosure reports showing he listed only two of at least 18 flights he made between October 1982 and June 1984 on airplanes owned by Greenwood businessman P.L. Blake's DeWitt Corp.

Anderson, a Republican, was legally required to file the reports annually as chief of staff to then-Rep. Trent Lott and as ambassador to the Eastern Carribean. The reports specifically say "gifts of transportation" totaling more than $250 from any one source in one year must be reported.

"You will find that in my executive financial disclosure that I made while I was (ambassador) in Barbados, that is listed," Anderson said on Wednesday, insisting that all 18 trips were reported.

The Clarion-Ledger said it obtained the reports from Washington Thursday and then tried again to contact Anderson about the discrepancy. Anderson released a statement through his press aide on Friday after 11 written questions were sent to his campaign office, the newspaper said.

And as the Luckey trial transcript shows, Scruggs, before the big payments to Blake, had made loans to Blake despite the fact he was in bankruptcy and had no collateral to give on the loans. 

Q: Did he did he [sic] give you any collateral?

A: Other than his enormous network of political connections in the state and otherwise, no, he didn't have any -- he didn't give me any collateral for it, no, but he did sign a note every month. 

(Page 53 of the pdf).

Scruggs also testified at the trial that Blake's value was that he gave routine intelligence on what key members of Congress were doing through his relationships with people such as Sen. Joe Biden, now, like Thompson, also a presidential candidate. (See pages 54-55 of the pdf).  In the pages of the transcript I cited, you will also see Tom Anderson mentioned.

By the way, this week Peter Lattman reported in the Wall Street Journal Law Blog on a connection between Sen. Biden and Steve Patterson and Tim Balducci. 

Patterson has been a player in Mississippi Democratic circles for some time. Early in his career, he worked for John Stennis, the longtime U.S. senator from the state, and later served as a Mississippi Democratic party chairman. In 1996, his political ambitions were derailed when he resigned as Mississippi state auditor after pleading guilty to a misdemeanor charge of filing false documents to avoid paying county taxes on car tags.

Most recently, Balducci and Patterson had thrown their weight behind the 2008 presidential campaign of Sen. Joseph Biden, whom Mr. Patterson got to know while working for Sen. Stennis. Indeed, Balducci had a Biden bumper sticker on his red Ford truck, according to someone who rode in it. Their bet on Biden was that he wouldn’t win the presidency but would become Secretary of State under a Hillary Clinton administration, according to two people familiar with their thinking.

I love that phrase -- according to two people familiar with their thinking.  If what prosectors say about Patterson, Balducci, Scruggs and the others is true, what indeed were they thinking! 

Balducci as wannabe 

We have seen indications that Dickie Scruggs' friends have begun to paint Tim Balducci as a deluded hayseed off on a lark of his own in his admitted bribery attempt of Judge Lackey, like some idiot at a Star Trek convention walking around with a toy phaser, wearing pointed ears, speaking Klingon, demanding more Romulan ale and speculating on Capt. Kirk's childhood in Iowa. It remains to be seen whether Scruggs' defense team, which according to PACER records now officially includes superstar lawyer John Keker and his team of all-stars, will continue to play this theme or have the sense to discard it as sounding utterly foolish, a kind of the-dog-ate-my-homework defense.  

Walter Olson has a wry look at attempts to play the wannabe card at Overlawyered, where he refutes efforts to portray Balducci as a "clueless newbie, a mere Timothy Tiptoes."    

Attacks on Judge Lackey's credibility

I do not know if Judge Lackey has any damaging episodes in his past, but in talking to those who know him, I hear he will be a formidable and credible witness.  You may remember the Wall Street Journal interview by Ashby Jones and Lattman with Lackey, and Keker's attack on Lackey as some kind of publicity seeker, implying he might be a nutjob who is trying desperately to manufacture his 15 minutes of fame at age 73. In contrast to this portrait, I hear very good things about Judge Lackey -- a fair, compassionate jurist of integrity -- who will fare much better with a northern Mississippi jury than, as one source memorably put it, "San Francisco lawyers in $3,000 suits with Fleet Street shoes." 

UPDATE: I should point out this Clarion-Ledger story by Jerry Mitchell that follows up on the FBI raid Tuesday on Joey Langston's offices.

Ashland lawyer Anthony Farese, a friend of Langston and who is representing Scruggs' son, said the documents seized Monday were unrelated to the Katrina case but did involve an attorney fees dispute in which the Langston firm represented Scruggs.

He would not specify which case but said it was an old case in which New Albany lawyer Tim Balducci, indicted with Scruggs in the case, "was the one who did the work," Farese said.

Balducci has not been associated with the Langston firm for more than a year, Farese said.

"It's important for the public to know that neither the Langston firm nor any of their principals or their employees are accused of any wrongdoing," Farese said.

This would seem to be a reference to the Luckey case, but one can't be sure.  Frankly, I'm not paying much attention to lawyer spin about why the FBI raids an attorney's offices after Langston himself, during the FBI raid on the Scruggs law offices two weeks ago, famously said they were there to look for a particular document from a particular Katrina case, but didn't find it.  Kind of made it sound like they were there to investigate a report that the firm didn't have low-flush toilets or something. Turned out to be a little more than that.

Posted By David Rossmiller In Industry Developments
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First, I must extend thanks to all citizens of the Scruggs Nation who are so vigilant in trying to keep me informed.  Readers from coast to coast, with disparate points of view, have reached out to me.  Your identities stay confidential with me.  Thank you for your trust.  I view myself less as someone who knows what is going on and more as someone who is trying to ask the right questions to figure out what the heck is going on. 

As you know, Joey Langston, an associate of both Scruggs and Tim Balducci, not to mention a figure closely linked to Mississippi AG Jim Hood, had his offices searched by the FBI yesterday.  What they were looking for or what they found, if anything, I don't know.  The fact that Langston withdrew from the public eye and pulled back from court appearances on behalf of Scruggs last week suggests that Langston knew some trouble was brewing for him.   As a point of interest, you can look back at the documents I posted yesterday in Scruggs Nation, Day 12, and see that both Joey Langston and Tim Balducci are listed as among the counsel for Dickie Scruggs in the Luckey v. Scruggs lawsuit.  By saying this, I don't mean to suggest this case furnishes any of the motivation for the FBI search -- I don't know.  The case is merely one of a number of threads that tie Langston, Balducci and Scruggs.  There are others, and these will be spoken of here in due time.     

Today, let's look over a news story that may have gotten blown around and misplaced in the melee after Hurricane Scruggs made landfall late last month.  Here is a recent story by AP reporter Mike Kunzelman on Ex rel. Rigsby, the False Claims Act "whistleblower" lawsuit filed by the Rigsby sisters in April 2006.   Let's look at part of the story here:

The indictments announced last Thursday by U.S. Attorney Jim Greenlee present an awkward question for the Justice Department's civil division: Should the federal government take over a case brought by a lawyer now under federal indictment?

"It does put them in a little bit of quandary," said Randy Maniloff, a Philadelphia-based lawyer who represents insurance companies and has closely followed the wave of litigation spawned by the Aug. 29, 2005, hurricane.

The Justice Department has until Jan. 31 to decide whether to intervene in the case.

However, legal experts say the department doesn't need to take over Scruggs' case to investigate allegations that insurers defrauded the federal government by falsely blaming Katrina's flood waters for damage to homes.

As recently as Oct. 30, Justice Department attorneys said in court papers that they were conducting an "active civil investigation" of the allegations in Scruggs' suit. On Tuesday, a federal magistrate in Gulfport said the government still hasn't elected whether to intervene.

I don't have any special insight as to what the Justice Department is going to do with this case, but one would suspect that with the two-year anniversary of Ex rel. Rigsby peeking its head up over the bushes, if the U.S. Attorney's Office was going to do anything with this lawsuit it would have done it by now.  One would also suspect the attraction of getting involved in this case -- whatever this attraction may once have been, and it apparently has not been much-- is diminished by the odor of scandal, alleged criminal activity and alleged ethical shortcomings now wafting steadily from the direction of Dickie Scruggs.   

In light of the prosecution of Scruggs in federal court in Alabama over alleged violation of Judge William Acker's injunction in the Renfroe v. Rigsby suit over the taking of State Farm claims documents by the Rigsby sisters, in light of the bribery indictment and, possibly, in light of whatever is going on with Langston, wouldn't it kind of seem like the government is at war with itself for the Justice Department to step into Ex rel. Rigsby at present?  (By the way, for new readers or veteran readers who need remedial courses in anything to do with these two lawsuits, I have written extensively about them here -- simply use my blog's search feature to the right to find posts as background).  That question, of course, assumes there is anything substantive to the lawsuit -- and possibly there is little or nothing at all to its premise that insurers conspired to rip off the federal Treasury by pushing Katrina wind damage payments onto federally backed flood policies.

It seems undeniable that these allegations have steadily lost their public cachet as Congressional legislation to juice up the National Flood Insurance Program with wind coverage faltered. This could mean the allegations of widespread insurer fraud were mere props to push through the legislation and were tossed aside like an old Tickle Me Elmo once the novelty wore off and their usefulness was done. Or on the other hand, the allegations could be true, mostly true, somewhat true or a tiny bit true, but as Congress itself was in part to blame for creating and maintaining the system that led to the alleged abuses, and as the truth of the allegations would still mean money got into the hands of people who needed it, the Congressional investigations may have produced rapidly diminishing marginal utility to individual members associated with them.  

Lastly, in other news, Hood Talks! -- (through written responses to questions).  This AP story on the search of Langston's office, if you scroll down a bit, contains this great stuff about the AG: 

Scruggs has been a major force in the wake of Katrina, representing hundreds of homeowners who sued over hurricane damages.  He also worked closely with Mississippi Attorney General Jim Hood in lawsuits against State Farm.  Hood has said Scruggs was his "confidential informant." 

Hood has refused to discuss the bribery case in detail, but says it will have no effect on the lawsuits filed by the state on behalf of hurricane victims.

"The federal indictment has absolutely nothing to do with our case against State Farm," Hood said in a written response to questions.

Hood won't say if he is pursuing state bribery charges against Scruggs, who was one of his major political contributors and a close ally in the legal battle with insurance companies.

(Hat tip: Y'all Politics).