Insurance Coverage Blog

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.

Posted By David Rossmiller In Industry Developments
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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.  

Posted By David Rossmiller In Industry Developments
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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!

Posted By David Rossmiller In Industry Developments
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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.

Posted By David Rossmiller In Industry Developments
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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.

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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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