Judge Senter disqualifies Katrina(less) Litigation Group, ousts Rigsby sisters as witnesses in Southern District of Mississippi

Citing ethical lapses including the payment of the Rigsby sisters as material witnesses, Judge L.T. Senter Jr. has disqualified the Katrina Litigation Group from remaining Katrina cases, and has also booted the sisters as witnesses from all cases in the Southern District of Mississippi.  Here's the opinion, and here's a rather extended excerpt -- the language is Senteresque, which means stunningly blunt when the occasion calls for it:   

State Farm and Renfroe have charged Scruggs with two basic types of ethical misconduct and with conflicts of interest, all of which relate in one way or another to the relationship between Scruggs and the SKG and two former Renfroe employees Cori and Kerri Rigsby (the Rigsby sisters). State Farm and Renfroe allege 1) that Scruggs participated and encouraged the Rigsby sisters to wrongfully appropriate and disclose confidential documents in which both State Farm and Renfroe had a legitimate right to confidentiality; and 2) that Scruggs paid the Rigsby sisters a substantial sum in furtherance of Scruggs’s efforts to encourage the misappropriation of these documents.

State Farm and Renfroe have alleged additional acts of misconduct relating to other witnesses and to the plaintiffs’ counsel having obtained documentary and physical evidence without following the established procedure for the use of out-of-state subpoenas in the discovery process.

I have determined that disqualification is required because Scruggs, acting in furtherance of the SKG joint venture, paid the Rigsby sisters a substantial sum of money (a consulting fee of $150,000 per year) despite Scruggs’s knowledge that the Rigsby sisters were material witnesses in connection with many hurricane damage claims that were likely to become the subject of litigation. While Scruggs made the arrangements for these payments, the other members of the SKG joint venture knew or should have known that the payments were being made, and I am of the opinion that their failure to take timely and reasonable remedial steps or to object to this arrangement amounts to a ratification of Scruggs’s actions. While the other ethical misconduct alleged by State Farm and Renfroe are substantial, the payments to the Rigsby sisters are, in and of themselves, sufficient to warrant disqualification.

It is apparent to me, from my review of the deposition testimony of the Rigsby sisters, that there was no legitimate reason for these payments and that the “consulting” work that ostensibly justified these payments was a sham. Even if this were not the case, the performance of legitimate work that is closely related to a matter in litigation cannot justify an attorney’s payment of a substantial sum of money to a non-expert material witness.

Payments to non-expert witnesses are specifically limited to statutory witness fees; reasonable expenses actually incurred for mileage, meals, and lodging; and reasonable compensation for time lost from work while attending a trial or testifying by deposition. (Opinion No. 145 of the Mississippi State Bar Ethics Committee, March 11, 1988). The payments Scruggs made to the Rigsby sisters bears no reasonable connection to any work they performed or to any of expenses they incurred in testifying. These payments were clearly improper. N.L.R.B. v. Thermon Heat Tracing Services,Inc., 143 F.3d 181 (5 Cir.1998); Golden Door Jewelry Creations, Inc. v. Lloyds Underwriters Non-Marine Ass’n, 865 F.Supp 1516, 1526 (S.D.Fla.1994); Rentclub, Inc. v. Transamerica Rental Fin. Corp., 811 F.Supp 651, 653 (M.D.Fla.1992), aff’d 43 F.3d 1439 (11th Cir.1995); Wagner v. Lehman Bros. Kuhn Loeb Inc., 646 F.Supp 643 (N.D.Ill.1986).

Even though the payments to the Rigsby sisters originated with Scruggs, the other members of the joint venture were aware or should have been aware that the payments were being made and did nothing to prevent their continued payment. In these circumstances, all of the other members of the original SKG are responsible for this breach of ethics. Those whom these firms have subsequently associated must also be disqualified to prevent the appearance of impropriety in the remainder of this litigation. See MRPC 5.1(c) (“A lawyer shall be responsible for another lawyer’s violation of the rules of professional conduct if: (1) the lawyer orders or, with knowledge of the specific conduct, ratifies the conduct involved . . . or . . . knows of the conduct at the time when its consequences can be avoided or mitigated but fails to take reasonable remedial action.”); See American Can Co. v. Citrus Feed Co., 436 F.2d 1125, 1128-29 (5th Cir.1971).

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. The motions to disqualify will be granted. An appropriate order will be entered, and the plaintiffs in all cases affected by this disqualification shall be allowed a period of forty-five days in which to retain new counsel or to notify the Court of their intention to proceed pro-se. For good cause, this period may be enlarged at the discretion of the United States Magistrate Judge assigned to the case. The plaintiff’s failure to retain new counsel or to inform the court of the intention to proceed pro-se will make a case subject to this order eligible for dismissal without prejudice. The attorneys subject to disqualification by the terms of this order shall send, via United States mail, postage prepaid, a copy of the opinion and order in this case to each client affected by this ruling.

The Rigsby sisters will be disqualified as witnesses in any actions now pending on this Court’s docket against State Farm or Renfroe in which the SKG or the KLG has represented the plaintiffs, and any documents supplied by the Rigsby sisters to the SKG or the KLG or its associates shall also be excluded from evidence unless the plaintiffs can show that the documents were obtained through ordinary methods of discovery.

I joked about it before, but now it is a reality.  The Katrina Litigation Group is now the Katrina(less) Litigation Group, just as its predecessor, the Scruggs Katrina Group, became the Scruggs(less) Katrina Group when Scruggs was indicted. 

My goodness, the Rigsby sisters' rocket sure enough has run out of fuel.  I feel sorry for them, seems to like they were used. I know what some of you will say, they are adults, they made their own choices, and what they have done has resulted in a lot of money being spent and a lot of people being put through criminal investigations and other assorted nonsense for more than two years now.  All that may be true. But imagine some of the things that might have been said to them, the inducements, the promises.  Could turn the heads of a lot of people, maybe, under the right circumstances.  Doesn't mean I approve of what they did, merely because I have sympathy for them personally. 

UPDATE: Will the Mississippi State Bar now investigate what Judge Senter has said were ethical lapses?  

 

 

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Ping sent from PointOfLaw Forum on April 5, 2008 2:56 PM
A fairly spectacular rebuke to the lawyers formerly allied with Dickie Scruggs in the hurricane litigation, as well as to the now-disgraced Scruggs himself: the judge has disqualified both the lawyers and the Rigsby sisters from participating in Katrin...
Written By:WOW On April 4, 2008 4:21 PM

I am shocked by the decision. It is obviously just and well thought out. Who knew it would actually come to this? I'm sure the KLG will appeal, but Senter absolutely made the only decision that should have been made.

Let the plaintiffs move forward with counsel not tied to this now odorous sweet potato mafia.


Written By:A Retire Claim Rep On April 4, 2008 7:41 PM

The shoes keep falling. Is AG Hood next?

Written By:C.Daltro On April 5, 2008 4:24 AM

The contents of the documentation would by traditional conduct be subjected to a Master to determine what applies to lawyer-client privilege. A lawyer, having examined documentation that was claimed as privilege by the oppostion, is obviously in danger of sanctions, and probably speedily removed upon a simple motion. So Senter's ruling comes well into this, and late. Surely, State Farm
asked for this simple santion - disqualification for pre-empting the attorney-client relationship for which the reasonable sanction is exclude the other side's attorneys?

Daft that State Farm wouldn't Defend attorney-client privilege, motion for a special Master to review the docs, and, that this motion didn't happen - but maybe that's what happened. That is the normal process as I understand American law.

Peculiar, however, that State Farm would not vigorously go for that sanction, and dismissal, which is now granted. I can't believe that Mississippi law is not following that fundamental right to motion out Scruggs, et al, for taking this to the trial judge long ago. I'm amazed and amused.

Written By:bothered On April 5, 2008 4:40 AM

David: The bar will not act unless 1. Judge Senter refers this matter to the bar or 2. A sworn complaint is filed.

A lawyer could be seen on a film on the 6 oclock news committing a murder but the bar would not act on that unless 1. A sworn complaint is filed or 2. The lawyer pled guilty or was convicted of murder.

Scruggs and Nutt have been paying fact witnesses millions of dollars for years, buying them houses, helping them buy boats and cars. But until now no one did anything about it.

Sad but true.

Written By:Commentor On April 5, 2008 6:02 AM

Generally speaking, the Mississippi State Bar does not investigate attorneys unless there is a bar complaint, but clearly there are exceptions. However, my guess is that there have been bar complaints made in this case and based on Senter's ruling, it is hard to imagine that they will skate without at least a public reprimand. The ethics opinion cited by Senter seems to be directly on point.

Written By:WOW On April 5, 2008 6:56 AM

Where is everyone? This is big news!

Written By:MORE COWBELL On April 5, 2008 8:39 AM

If the plaintiffs subpoena the State Farm engineering documents, and the sticky notes, from Dunn Lampton, will Senter allow the documents into evidence? Or I guess the plaintiffs could ask for the Documents from S.F. in discovery, and S.F. will gladly hand them over. I guess this means Lecky can testify now?

Sweet Potato Mafia? David, there's the title for your book.

Written By:Retired Claim Rep On April 5, 2008 9:14 AM

How does this affect the RICO case?

Written By:sam On April 5, 2008 10:57 AM

"Sweet Potato Mafia, would be an interesting title. I think "Affording Due Proce$$," might be more to the point.

Written By:tsetse On April 5, 2008 4:17 PM

WOW. I, for one, am not surprised at all. Not one bit. Haven't read the opinion yet, but I'm looking forward to it. I guess you've already reported that the NY Bankruptcy case "threw down" on langston and balducci and ruled for the Auditor regarding that $$14MIL langston no doubt worked so hard to earn.

i borrowed "throw down" from you, rossmiller. if it's all the same to you, i don't intend to return it.

LET THE HITS KEEP ON COMING until there's not a one of these thugs left standing.

Written By:tsetse On April 5, 2008 4:37 PM

ethical lapses. how's this for irony -- whiny baby zach got hung on that "misprision" of felony for NOT TELLING ON DADDY AND THEM for earwigging -- an "ETHICAL LAPSE." If all of a sudden this NOT REPORTING is going to be taken seriously, can you count on ten fingers how many upstanding, honorable officers of the court kept their big, fat mouths shut when peters, langston, balducci, scruggs, delaughter, and heaven only knows who else were committing "ethical lapses." If purchase of justice in mississippi is no more than a MISPRISION OF FELONY, maybe they'll all get a few days of picking up trash around the courthouse before they
reapply to the Bar and become MEMBERS IN GOOD STANDING once again.

Written By:David Rossmiller On April 5, 2008 8:57 PM

Cowbell and Sam, I think you're on to something with this title. Of course, it would equally work well for a cookbook, and that might be easier to write. Recipes could include Earwig Jambalaya, Mafia Madness Casserole, Sweet Potatoes ala Scruggs, Scruggs on Ice Sherbet, Corn on the Ground, Buried Body Burger, Wannabe Waffles and Eggs Balducci -- Flipped Over Easy.

Written By:MORE COWBELL On April 6, 2008 8:31 PM

He was flipped easily wasn't he? Then turned on Langston, who he just broke up with. Looks like the feds are having a hard time coming up with the goodies in the Delaughter case? Any update on that case?

Maybe your chapters could have menu titles? Langston Lasagna, Rigsby Ragu Sauce, Keker Casserole, Johnny J. Jambalaya, etc.

Written By:outofstateadjuster On April 8, 2008 12:03 AM

How soon do we start seeing malpractice actions against the (S)KLG members for the impact of their ethical lapses on their client's cases?

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