Scruggs to be arraigned November 20

One of the latest entries from the PACER docket in USA v. Scruggs says this:

 

11/05/2007   NOTICE OF HEARING as to Richard F Scruggs, The Scruggs Law Firm, P.A. Arraignment and oral argument on the motion to dismiss contained in the defendants' response to order to show cause (doc. #7) set for 11/20/2007 09:00 AM before Magistrate-Judge Harwell G Davis III in BIRMINGHAM, AL. (SHB, ) (Entered: 11/05/2007)

 

Speaking of Dickie Scruggs, here's a link to a National Law Journal story that discusses the False Claims Act whistleblower lawsuit brought by Scruggs on behalf of the Rigsby sisters. 

The story wants to talk about False Claims Act lawsuits more than it wants to talk about Scruggs, and that's OK, I guess, although it seems a curious editorial choice -- let's be honest, what's more interesting, details of the False Claims Act or Dickie Scruggs, who is a walking headline factory?  That issue aside, I diverge from some things that are said in the story because it implies that Scruggs' troubles with Judge William Acker and prosecutors grew out of the whistleblower lawsuit, called Ex rel. Rigsby.  This is not so.

Instead, it was what one colleague of Scruggs has called the "Renfroe dogs" that caused Scruggs to have teeth marks in the seat of his pants -- E.A. Renfroe & Co. filed suit against the Rigsby sisters in September 2006 for alleged breach of their confidentiality agreements, and that lawsuit does not appear connected to the False Claims Act lawsuit.  It turned out the False Claims Act lawsuit had been filed by the Rigsby sisters in April 2006, while they were still working for Renfroe -- long before the Renfroe suit was filed -- but it is not my understanding that Renfroe filed suit because of the qui tam whistleblower action, or at the time that Renfroe filed suit that it even knew of Ex rel. Rigsby, which was sealed until earlier this year. 

The whistleblower lawsuit is not mentioned in the Renfroe complaint, but that doesn't necessarily prove anything.  However, it has come out in the criminal contempt prosecution of Scruggs that Renfroe learned of the False Claims Act case during discovery in the breach of confidentiality agreement lawsuit against the sisters. It appears Renfroe suspected the sisters were taking claims file documents before they quit in June 2006, and Renfroe knew where the documents went no later than August 25, 2006, when ABC's 20/20 ran a report that in part made use of the documents and interviews with the sisters.  The documents provided to Scruggs were also used for a variety of purposes other than the qui tam lawsuit.  For example, Scruggs filed some of them in the McIntosh v. State Farm case, and prosecutors allege Scruggs, with the cooperation of Mississippi AG Jim Hood, used them as in effect a bargaining chip in negotiations with State Farm over a proposed class action certification and settlement that ultimately was disapproved by federal judge L.T. Senter Jr.  The evidence therefore does not support a conclusion that ties the qui tam action and the breach of confidentiality agreement lawsuit directly together.

So we must conclude that it is not correct to imply, as the National Law Journal story does, that the Renfroe lawsuit was in retaliation for the False Claims Act case, or even that the use of the documents in Ex rel. Rigsby was any part of the basis of Renfroe's claims.  Nor does it stand to reason that, as the story says, the claims against the Rigsbies might have been dismissed had Renfroe been a party to the False Claims lawsuit at the time Renfroe filed its own lawsuit.  Because the taking of the Renfroe documents gave rise to multiple uses of them, the formation of the allegations of the False Claims Act lawsuit being just one, merely observing that the second followed the first is not to say the first caused the second.  The act of taking the documents and giving them to Scruggs, for all his many purposes, was instead what constitutes the alleged breach of confidentiality and what resulted in the Renfroe lawsuit.   

Here's a copy of the complaint in Ex rel. Rigsby, before Renfroe was in the case.  And here is a copy of the amended complaint in May 2007 where Renfroe was added as a defendant to that case.  Despite its addition as a defendant to the whistleblower case, the Renfroe lawsuit against the Rigsby sisters continues: here is a copy of the Renfroe memorandum filed October 31 in support of its motion for partial summary judgment.  If the fact that Renfroe is a defendant in Ex rel. Rigsby were relevant to the validity of the Renfroe claims against the Rigsbies, would not that relevance have some effect even now? Just asking, is all. The Renfroe memorandum, by the way, is worth a read -- it won't take long.

Another question: do you suppose the management at Renfroe, which undoubtedly is highly pleased that its lawsuit against the Rigsby sisters has led to the prosecution of Scruggs, has placed an order for souvenir coffee mugs imprinted with the motto "Renfroe Dogs"? Maybe with a logo of a snarling pit bull? I imagine the dogs at Renfroe take this appellation as quite an honor, under the circumstances. 

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