WSJ editorial: With email revelations, it's another wonderful day in the neighborHood
Another great editorial from the Wall Street Journal, which long ago saw that Dickie Scruggs and Jim Hood, despite claiming to be clothed with righteousness, were walking around with no pants. The backdrop of this opinion piece is the cache of emails that came from a document subpoena by State Farm in Ex rel. Rigsby, the False Claims Act lawsuit that was supposed to be the centerpiece of the Scruggsification of Katrina litigation, applying that special mix of Scruggs' secret sauce: "whistleblowers, " folks making off with "insider" documents, add some sweet potatoes, stew it all up with mighty blasts of hot air and do a little home cookin' in your friendly local magic jurisdiction.
Before I talk about the WSJ piece and those emails a little more, I want to point something out about this Rigsby lawsuit. This is the one most people call the Qui Tam, but I don't, because that sounds like some kind of toenail fungus, so I prefer to call it by its given name. The sand ran out in the timer on the Rigsbys' 15 minutes of fame some time ago, and I feel sorry for them that they invested all their capital in shares of Scruggs, Inc. right before the doors got padlocked. Somehow they became convinced that wearing a gasoline suit and playing with matches was a great idea. It's sad, really. What I want to point out is this -- after the emails became public, and after I wrote about them here, I looked up the ruling by the federal judge in the District of Columbia that resulted in the Rendon Group being forced to give the emails to State Farm.
About three years ago I wrote a chapter in the Appleman on Insurance Practice Guide (shameless plug) about the attorney-client and work product privileges and so I like to think my knowledge in this area of the law is somewhat above average. I was thinking, why weren't these emails, or at least some of them, protected as work product or by the attorney-client privilege? Not saying they would have been, but I wasn't clear as to why not.
Now, before continuing, let's take a pause and put a section here that is just for the people who aren't die-hard, shrieking, soccer-hooligan-like fanatics of this saga. These folks, whom we will henceforth refer to as "normal people," might find useful an overview of this, just of whiff of Secret Sauce. If so, the judge in D.C. gave a pretty good summary here, and after this brief intermission we will return to our regularly scheduled programming:
The complicated story begins with the Rigsby sisters, who, while working as claims adjusters for E. A. Renfroe & Company, a contractor for State Farm Mutual Insurance Company (“State Farm”), found information that they claim showed that StateFarm was defrauding the United States in the manner in which it was processing the claims that the insureds were making for damage to their homes and businesses caused by Hurricane Katrina. Several law firms in Mississippi then began to investigate and prosecute claims by those insureds against State Farm. The Rigsby sisters also brought a qui tam action against State Farm in Mississippi. The law firms in Mississippi hired The Rendon Group, Inc. (“TRG”), a Washington D.C.-based public relations firm, which apparently had the obligation to create a favorable public atmosphere for the lawsuits that the Scruggs Law Firm, P.A. (“Scruggs”) and other law firms who were bringing or going to bring in relation to Hurricane Katrina. The atmosphere became a lot less favorable to the Rigsbys and the law firms when an Alabama court was convinced that the Rigsby sisters had illegally taken from State Farm the documents upon which the law firms were predicating their claims against State Farm. Additionally, there was an apparent public disclosure that the Rigsby sisters had accepted a large amount of money from Scruggs for their services as plaintiffs. To make it all the more interesting, Richard “Dickie” Scruggs, the head of Scruggs, has since gone to jail for bribing a judge in what I can only hope is an unrelated matter. The Scruggs law firm has since dissolved.
That's the judge's summary of what all the hoo-ha is with the Rigsbys. Now, more about the privilege issue. When I read the judge's decision, it was not what I thought I would see. I thought somehow the privilege of the Rigsbys might have been waived by being disclosed to outsiders, or some such. But no. In fact, the Rigsbys' own lawyers couldn't assert privilege because they couldn't review the documents that arguably were subject to privilege for fear of being tainted and disqualified by the same mess that got their previous lawyers disqualified. That's what it's come to, folks. This Scruggs-Katrina thing started out as a blitzkrieg of armored columns and right now it looks about like Jed Clampett, Granny, Elly May and Jethro driving up the street in their truck. Here's a pdf of the ruling so you can see for yourself.
The Rendon Group, the public relations firm Scruggs hired to stage manage what was to be his latest triumphant business venture, tried to step in and assert privilege, but that's about like you taking advice from your mother-in-law during a fight with your spouse, it's not going to happen. The Rendon Group had no standing -- they had no basis to assert attorney-client privilege because they never had an attorney-client relationship with anyone.
All right, so that's enough about the Rigsbys for now. We set out to talk about that WSJ editorial, so let's do that for a while.
The editorial mentions, in recounting how Mississippi Attorney General Jim Hood worked with Scruggs and other trial lawyers to come up with a Kobayashi Maru scenario for insurance companies in the state, how Hood had denied to the WSJ that he ever colluded with Scruggs. Of course, there were some prior indications that other Hood's denial was subject to potential other interpretations But then those Rendon emails came out and Whoops! Hood, and a number of other people, must feel like someone walking down the hospital hallway with one of those surgical gowns that has no back to it. Turns out Scruggs' own PR firm, Rendon, worked on "cleaning up" Hood's prose for a letter he wrote to be published in the Journal. Ouch. Is that the best they could do?
You know, the judge in D.C. ordered the release of only part of what State Farm asked for in the subpoena to Rendon, and he may change his mind and order Rendon to give up more. The Ex rel. Rigsby trial is set for December, let's hope there is some reason the rest of these emails will come out. If this fragment holds this much treasure, imagine the untapped riches in the rest. Plus, these emails are some of the most hilarious material in the whole Katrina Follies. I mean, it was obvious the master plan went drastically awry and that things got FUBAR'd up beyond all repair, but I had no idea this gang was so inept. Some of these people, they should have been wearing floppy shoes, baggy pants and curly orange wigs, and walking around beeping each other's red noses.
Also, thanks to the Journal for the kind words about me -- "did the nation a service." That is high praise indeed. I know I was read throughout the Scruggs Nation, which is a subset of the actual nation consisting of various folks whose minds are inexorably wrapped around this story, including Scruggs skeptics and opponents, lawyers and others who know Scruggs or know of him, people in Mississippi and the South, folks involved in Katrina litigation, various Scruggsites and Hoodian sycophants who love to hate on me, and so forth. But it's nice of them to give me an upgrade, as it were, to the nation as a whole. I certainly felt the whole Katrina story was not only fascinating but important enough for me to give up not only all my free time but a lot of sleep for a couple years. Plus, let's face it, it's pure comedy gold.
UPDATED: After I hit the publish key, I thought, I hope someone doesn't take the last sentence wrong. There certainly was nothing funy about the hurricane or the destruction it brought. By the Katrina Follies, I refer only to the goofballery that characterized so many revolutions of the Scruggs-Hood axis. That's where I walked onto the scene.
"did the nation a service." They are correct. You are a hero to those of us who live here.
Sorry to bother you. Just curious on your thoughts. You remember 'confidential informant'…
Did you notice page 116, an email from Ainsley to John Rendon (March 18, 2007), “This is ridiculous. I followed the Judge Acker's order to the letter. He told us to return SF's documents back to their surrogate Renfroe and we did. In the order there was a clause or cut-out if you will owing for the documents to be held by law enforcement and that's where they were. With the chief law enforcement officer of the state -- attorney general Hood. We did nothing wrong. We complied.”
Interesting that Ainsley is the one saying “I” and “we”. Thought those docs were held by Scruggs and Hood (the confidential informant and the legal officer). I guess there’s a lot of confidential informants?
On the first round of emails that everybody saw, 03/23/07, 4:09 pm, from Scruggs’ secretary to Ainsley, “URGENT-Call Me”. The log shows that same evening 5:30-6:28 pm, several emails re “Letter to Attorney General Jim Hood.”
Hmmmm, a 3/23/07 letter involving Hood and Scruggs…man that sounds familiar….. “Scruggs sent a letter to Hood on March 23, 2007 requesting that Hood send him ‘copies of all State Farm documents that your office voluntarily provided E.A. Renfroe last month.’” [page 11, Memorandum Opinion, filed June 15, 2007]