Monthly Archives: December 2007

Scruggs Nation, Day 31 (Part II)

There are lots of developments that need updating, so I am putting up this second post today to accommodate them all. 

— Mississippi State Auditor Phil Bryant, on December 20, filed a lawsuit in Hinds County against the Langston Law Firm, Joey Langston and Tim Balducci seeking a return of some $18 million in funds recovered from the MCI tax litigation.  A copy of the complaint can be seen by clicking here.

In the complaint, Bryant alleged that $118 million was recovered in a settlement of that litigation, but that $4 million was illegally donated to an organization called the Children’s Justice Center of Mississippi, and $14 million was illegally paid to Langston and Balducci as attorney fees. 

— In a development I did not note until I saw it mentioned in this Anita Lee story in the Sun Herald, Magistrate Judge S. Allan Alexander earlier this month quashed a subpoena by E.A. Renfroe issued in the Renfroe v. Rigsby case in Alabama for the depositions of Dickie Scruggs and others from the Scruggs Law Firm.  Judge Alexander is a magistrate in the Northern District of Mississippi, where Dickie Scruggs and his son, Zach, are facing federal charges relating to an alleged attempt to bribe Judge Henry Lackey.  

Here is a copy of the Scruggs motion to quash and the memorandum in support. 

Here is a copy of Judge Alexander’s order.

Here is a copy of Renfroe’s motion for de novo review of her order.

If you look at the case number on the top of these documents and the caption, you can see this decision is in the Northern District of Mississippi, not in the Northern District of Alabama, where the Renfroe case is filed..  The reason is apparently that Renfroe moved to compel the depositions in the Northern District of Mississippi.  A special case number was assigned just for the Scruggs motion to quash — this is explained in the text of the motion — and I have not seen these documents posted on the Renfroe docket in Alabama.  Ironically, the Scruggs motion to quash was filed on the same day Dickie and Zach Scruggs were indicted.

Also ironically, the Scruggs motion in the Renfroe case is very similar to one made just a few days ago in McIntosh v. State Farm, in the Southern District of Mississippi, to try to overturn Magistrate Judge Robert Walker’s order requiring Dickie and Zach Scruggs to sit for depositions by State Farm and Renfroe. Judge Alexander handed down her order quashing the Renfroe subpoenas on December 3, before Judge Walker ordered that the depositions of the Scruggses take place, and whether Walker was aware of Judge Alexander’s order I do not know, but it is not mentioned in the Walker order. 

Renfroe is seeking review of Judge Alexander’s order, saying her ruling is based only on the Scruggs supporting memorandum, with no opposition brief filed, and that she did not have all the facts.  Among these facts, Renfroe claims, are that Judge Alexander found Renfroe could just as easily obtain the desired information from the Rigsby sisters themselves, but Renfroe has already deposed them and says they gave evasive answers, had an inability to remember and asserted privilege to avoid questions.

— I have had requests to follow up on something in State Farm’s recent motion to disqualify the Katrina Litigation Group (formerly known as the Scruggs Katrina Group) from Katrina cases.  I wrote about the motion in this post, which contains copies of some of the relevant pleadings. The requests for more information relate to something in the supporting legal memorandum — references to supposedly abusive exercise of the subpoena power by the SKG and one of its attorneys, leading to admonishment by courts for these practices.  The memorandum in support of the motion to disqualify did not go into great detail, but referred back to another pleading, a memorandum in opposition to an amended complaint in the Shows v. State Farm case, and exhibits attached to the memo.  Below is that opposition brief and the exhibits, so you can read and judge for yourself.

Memorandum in opposition to amended complaint.

Exhibit 1.

Ex. 2.

Ex. 3.

Ex. 4.

Ex. 5.

Ex. 6.

 — Lastly, the defendants in the bribery case have filed a motion to compel the government to produce additional evidence.  Click here to read it.  The motion reveals that the government  produced additional discovery on the day after Christmas, including 13 cassette tapes containing recorded conversations between Balducci and Judge Lackey, two FBI interview reports, telephone records, a compact disc with a pen register and trap and trace data, and 13 CDs containing photographic evidence and audio and video recordings of meetings between Balducci and Judge Lackey. 

The motion says the government has not produced transcripts of the recordings yet, and many of the recordings are hard to understand.  Whether this is wishful thinking, spin or fact remains to be seen. The government also has not yet produced, according to the motion, the affidavit of a special agent in support of a September 25, 2007 application for a wiretap on Balducci’s phone, nor any of the materials seized during the November 27 raid of the Scruggs Law Firm offices or the December 10 raid of Joey Langston’s offices.  I haven’t heard what, if any, discovery the defense has produced to the government.

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Scruggs Nation, Day 31

Even during the short days of the holiday season, the sun never sets on the Scruggs Nation.  Reader interest continues to be at phenomenal levels, as judged by my site meter and the continued calls and e-mails. So even though I continue on vacation until Wednesday, I am posting this update.

A reader e-mailed me with this Associated Press story on renewed attempts by Dickie Scruggs and the Rigsby sisters to quash video depositions of Scruggs and his son and law partner, Zach Scruggs, set for January 15.  Magistrate Judge Robert Walker ruled against an earlier motion to quash/motion for protective order earlier this month (see this post for more and a copy of Judge Walker’s order).  I took a look at the filings made on December 27 and 28 in the case, McIntosh v. State Farm, and have linked to them below. In a nutshell, the new pleadings ask Judge L.T. Senter, Jr. to modify or overturn the magistrate’s rulings because, it is claimed, the depositions will improperly impinge on attorney-client communications. 

Before we take a closer examination of the pleadings, let’s review Walker’s earlier order and see what the scope of the depositions is to be and why Walker ordered them.  Judge Walker’s order itself is rather brief — six pages — and I excerpt at length from it below to show the relevant particulars. (Certain formatting, footnote references and court docket references have been removed for convenience, and I highlight in bold certain significant sections of the order to make it easier to follow).  

Cori Rigsby (Moran) and Kerri Rigsby (the Rigsbys) were E.A. Renfroe employees assigned to work State Farm Katrina claims in Mississippi immediately after the hurricane. At least by February 2006, the Rigsbys began copying and/or taking State Farm documents and giving them to Richard Scruggs. While still employed by Renfroe/State Farm, the Rigsbys continued to secretly provide State Farm documents to Scruggs. This conduct continued until June 2006, culminating in what has become known as the “data dump” weekend in early June 2006 when the Rigsbys and some of their friends copied thousands of confidential State Farm documents which they also turned over to Scruggs. Shortly after the “data dump” weekend, the Rigsbys, who have been characterized by Plaintiffs’ counsel as key witnesses in the McIntosh case, were hired by the Scruggs Firm as “consultants” in Katrina litigation, at annual salaries of $150,000.00 each. To further complicate matters, the Rigsbys are also plaintiffs in a qui tam action filed under seal by Scruggs on their behalf on April 26, 2006. That case remained sealed until August 1, 2007, when the Court ordered the seal lifted. Thus, the Rigsbys are not only material witnesses in this case, they are both employees and clients of the Scruggses. The multiple relationships involved have repeatedly resulted in situations where it became difficult to determine just whose interests the Scruggses were purportedly representing. For instance, the Rigsby’s were represented by Gregory Hawley and Katherine Brown at their April 30-May 1, 2007 depositions, but Richard Scruggs frequently objected and instructed them not to answer questions on grounds of work product and attorney-client privilege. Scruggs even went so far as to state he was “wearing two hats” – one as Rigsby’s lawyer, and another as her employer during this deposition taken in the McIntosh case.

One of the key issues in this case is the existence of two engineering reports prepared about a week apart in October 2005. Richard Scruggs testified in proceedings in Alabama, that the October 12, 2005 engineering report on the McIntosh property was among the first twenty documents the Rigsbys gave Scruggs in February 2006. Scruggs also testified that there was a sticky note on the McIntosh engineering report he received from the Rigsbys. This original engineering report on the McIntosh property has become a critical point in this litigation, as it appears to be the linchpin of Plaintiffs’ bad faith claims. Scruggs did not represent the McIntoshes when he received the engineering report. Indeed, he did not represent them until some time after the broadcast of an ABC television 20/20 program at the end of August, 2006. However, according to Mr. McIntosh’s notes, Joe Rhee, an ABC news producer, contacted Mr. McIntosh on August 21, 2006, prior to the 20/20 broadcast, and stated he (Rhee) had a copy of the McIntosh property engineering report with the sticky note, that there were whistle-blowers (managers) within State Farm who had copied files, including the McIntoshes’ file. In a later phone call the same day, Rhee told McIntosh there were two engineering reports on his property, one dated October 12, 2005 which had the sticky note, and another dated October 20, 2005. When McIntosh asked if Rhee/ABC would stay on the story through completion, Rhee responded affirmatively, stating that they “had worked with Dickie Scruggs before and they respect each other and would stay with us till the end.” From this, one might reasonably infer that Scruggs was the source of Rhee’s information regarding the McIntosh claim.

A copy of the October 12, 2005 engineering report was filed as Exhibit C to the McIntoshes’ complaint on October 23, 2007, the first page of the exhibit is copied with the sticky note in place, and the second page is a copy without the sticky note. Defendants understandably desire to question Richard and/or Zach Scruggs about the report, as well as other State Farm documents the Rigsbys provided, the circumstances surrounding the receipt of such documents and the chain of custody of the documents after the Scruggses received them. Defendants further desire to question Zach Scruggs regarding his receipt of confidential internal emails which the Rigsbys forwarded to him while they were still in the employ of Renfroe/State Farm. Defendants also want to explore the particulars of the employment relationship between the Scruggses and the Rigsbys, who are material witnesses in the McIntosh lawsuit. The Court is of the opinion that Defendants should be allowed to pursue this information from the Scruggses.

On October 23, 2007, Defendant Renfroe filed its joinder in State Farm’s response to Plaintiffs’ motion for protective order/to quash the Scruggs depositions. Renfroe points out that it was joined as a defendant in the lawsuit by amended complaint filed May 31, 2007, which alleges Renfroe failed to disclose the existence of the October 12, 2005 engineering report to Plaintiffs. Renfroe states the Rigsbys violated their employment agreement in failing to notify Renfroe about the report, instead choosing to give it to the Scruggses to further their own pecuniary interests. Renfroe seeks to ascertain the extent to which the Scruggses helped conceal from Renfroe the “alleged concerns of the Rigsby sisters, as well as the object of their concerns, the October 12th report.” In light of the fact that Scruggs has testified he received the report in February 2006, and the Rigsbys’ testimony that they did not keep a copy of the document, the Court finds merit in Renfroe’s desire to question the Scruggses about the clearly relevant, unprivileged matter regarding the delivery and receipt of the October 12 report, as well as what was done with it after the Scruggses received it.

. . . .

With respect to the documents requests which accompanied the deposition subpoenas, the Court notes that the Scruggses have produced no privilege logs, without which the Court cannot evaluate claims of privilege. And the Court declines to accept the Scruggses blanket claims of privilege as to the documents requested.

Although rarely allowed, depositions of a party’s counsel are not altogether prohibited. Where the attorney has non-privileged, relevant information unavailable by other means, such depositions have been allowed. The Court is of the opinion that the Scruggses may have such information, and that this case presents sufficiently unusual circumstances to justify allowing the depositions of Richard and Zach Scruggs. It is therefore, ORDERED that the motion for protective order/to quash the notices of deposition of Richard and Zach Scruggs is denied.

Before discussing the specifics of this order, one might note that the overall tone appears to express a certain declining patience by Judge Walker with the litigation tactics of the Scruggses.  It may be that he is also fed up with the litigation tactics of State Farm, I don’t know, but Judge Walker’s orders of late seem to have taken a turn against the Scruggses.

This order says a couple things. First, it says that because no privilege log was produced by the Scruggses, the court cannot evaluate claims of privilege as to individual documents and will not respect a blanket claim of privilege.  Second, it appears to say that testimony must be given only regarding events and communications to which the attorney-client privileged does not apply.  As to the first element, the Federal Rules of Civil Procedure require that a party, to support a claim of privilege, must "describe the nature of the documents, communications, or tangible things not produced or disclosed — and do so in a manner that, without revealing information itself privileged or protected, will enable other parties to assess the claim." FRCP 26(b)(5)(A).  Although the Rigsbies, in the first pleading linked below — their objections to Walker’s order — say that a privilege log is not required under local rules, this statement in the Federal Rules is almost always understood to refer to a privilege log.  What else would it refer to?  Sometimes, but probably not as often as it should be, failure to produce a privilege log results in a finding of waiver of the privilege.  I say not as often as it should be because federal case law is full of examples where a party appears to have been acting in an obstructive and harassing manner in the production of documents, but the court fails to crack down on this behavior time after time.   

As to the second element, actions themselves usually are held not to be communications and are not privileged.  So events such as taking documents are not privileged communications, and the act of giving them to a lawyer normally is not privileged either, but certain aspects of the transmittal that might reveal otherwise privileged communications can be.  Where the client can be required to testify as to matters, a lawyer can also be required to testify.  In addition, there are certain exceptions to the attorney-client privilege, such as the crime-fraud exception, which State Farm apparently raised but which appears not to have been accepted by Judge Walker as a justification for breaking the privilege.  However, a claim of privilege as to communications coinciding with actions is lessened by sharing the information and communications to any degree with those outside the attorney-client relationship, such as with a producer from ABC News. In addition, as Judge Walker indicated, given the multiplicity of roles played by the Scruggses and the Rigsby sisters, it is not clear that which if any communications are claimed to have been made within the attorney-client relationship and not waived by disclosure to third parties or adversaries.    

One other argument in the first Rigsby pleading bears some discussion — the argument that a Rule 30 notice of deposition to a party (the McIntoshes) is ineffective in this circumstance because Rule 30 applies to parties and the Scruggses are not parties to the case.  (Here is a copy of the deposition notice of Dickie Scruggs). The argument is that a Rule 45 subpoena, which applies to non-parties, is the proper vehicle. Although the Scruggses have withdrawn from Katrina litigation, including the McIntosh case, following last month’s federal indictments on charges of alleged bribery, the actions, documents and communications that are relevant were all in conjunction with their representation of the McIntoshes.  I have seen this argument used before, both ways.  When a Rule 45 subpoena is sent, sometimes the objection is that Rule 30 should have been used.  When a Rule 30 notice is sent, the objection is that — even where a lawyer continued to represent a party — that lawyers are not parties and can be reached only by Rule 45. In the end, the judge’s decision usually comes down to other factors, such as whether the communications are "at issue" in the litigation, whether some other form of implied or express waiver has occurred, or whether an exception to the attorney-client privilege applies.  Seldom is a deposition quashed merely because of a technical argument of this nature — because everyone knew what was going on and prejudice seldom results, the court can consider the deposition to have been obtained under either or both rules and can waive technical deficiencies.  

The Scruggses’ pleading are more lengthy, and were filed by the office of John Keker, the blue-chip lawyer who is defending Scruggs against bribery charges in Mississippi and a criminal contempt of court charge in Alabama.

The pleading called Objections to Magistrate’s order does not have an auspicious beginning. Three times in the first three paragraphs the pleading uses the word "clearly," a good word to avoid because, contrary to the intention of the author, it suggests and often telegraphs a weak argument buttressed by a word that assumes but does not prove what it claims.  One of these uses is fine — Walker’s decision is referred to as "clearly erroneous," nothing more than a reference to the legal standard.  But the others — "clearly falls within the scope of information protected by the attorney-client privilege," and "Any relevant information the Scruggses may have is clearly privileged" — are of the type to shun.  Some judges instruct their clerks to circle any use of the word "clearly," or its substitutes, "simply" or "plainly," as a key to weak arguments.  Doesn’t mean they are weak, necessarily, but it’s like calling attention to a large coffee stain on your white pants.  Doesn’t necessarily mean you’re a sloppy, careless oaf, but why increase the chance of someone getting this impression?

One sentence in the fourth paragraph got my attention: "Depositions of opposing counsel, such as the ones ordered by Magistrate Walker, have been regularly criticized for disrupting the adversarial system and lowering the standards of the legal profession."  The reverse argument has been made regarding the conduct that prompted the notices of deposition in the first place, and varying opinions can exist about where or at whom the last 13 words of the sentence could best be directed.

In addition to some of the arguments made by the Rigsbies, the Scruggs pleadings also argue that, in light of the criminal charges against them in Alabama (in addition to Dickie Scruggs, the charge there is against the Scruggs Law Firm, of which Zach Scruggs is a member), the depositions endanger their constitutional rights.  This prompts me to wonder: why couldn’t they just take the Fifth as to any questions that might tend to implicated them in criminal matters?  All in all, the Scruggs pleadings are pretty good and make some decent points. We’ll have to wait and see what Judge Senter decides to do. 

There is much more to say, but this post is long enough.  Read and evaluate the pleadings for yourself with the links below.  If your time is limited, the two most important are the objections by the Rigsby sisters and the objections by the Scruggses. 

Rigsby objections to magistrate’s order.

Rigsby motion to intervene.

Rigsby memo in support.

Scruggs objection to magistrate’s order.

Scruggs motion to stay magistrate’s order.

Scruggs motion to intervene to object to magistrate’s order.

 

 

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Scruggs Nation, Day 29

I continue on vacation through next Wednesday, but will post this week when I can.  For now, just a short post on the Wall Street Journal’s editorial yesterday (subscription only).  The editorial posits an unholy alliance between state law enforcement officials and certain members of the plaintiff’s bar:

This Mississippi Tort Inc. enterprise began in the 1990s, when former Attorney General Mike Moore sued tobacco companies and contracted out the lawsuit to his old law school buddy, Mr. Scruggs. Their nicknames were Scro and Mo. Mr. Scruggs’s firm is estimated to have earned nearly $1 billion in fees; Mr. Moore became a movie hero ("The Insider").

It is a seductive business model, and these days a crew of tort kingpins known as the Pascagoula Mafia show up in nearly every state lawsuit. Mr. Hood made trial lawyer Joey Langston rich by throwing him the state’s case against MCI/WorldCom. Mr. Hood also hired Mr. Langston’s firm — where Mr. Balducci was a partner — to pursue Eli Lilly. It also happens that Mr. Langston is one of Mr. Hood’s major campaign contributors.

When Mr. Hood sued State Farm, Mr. Scruggs supplied him with key documents. Former AG Moore, now a trial lawyer himself, worked both with Mr. Hood on his state insurance litigation and with Mr. Scruggs in private Katrina suits. Mr. Balducci, who left the Langston firm to set up his own practice, was also working with Mr. Scruggs on Katrina litigation. And did we mention who is Mr. Scruggs’s personal criminal attorney? Mr. Langston.

These relationships are now starting to haunt the participants. Mr. Hood faced a tough re-election this fall after his Republican opponent highlighted Mr. Hood’s backroom relations with the trial bar. State Auditor Phil Bryant this summer sent Mr. Hood a letter demanding his office commence proceedings to recover the $14 million paid to Mr. Langston and colleagues in the MCI/WorldCom case, saying that, under Mississippi law, the money paid in fees to Mr. Langston rightfully belonged to the state.

Mr. Hood has also been countersued by State Farm, in a detailed complaint alleging that he had an ethically conflicted relationship with Mr. Scruggs throughout the Katrina litigation. Mr. Scruggs gave Mr. Hood documents that had been purloined by two former State Farm contractors, and Mr. Hood helped Mr. Scruggs keep those documents away from a federal court. Mr. Scruggs is also — you had already guessed this — one of Mr. Hood’s major campaign contributors.

It’s not only the Wall Street Journal that thinks this way.  I’ve heard similar sentiments from plaintiff’s attorneys in Mississippi outside the Hood-Moore-Scruggs-Langston circle.  Speaking of Hood, he got a lucky break in that the Scruggs indictment didn’t happen until after he was re-elected.  Any scrutiny that Hood is now receiving, he is in a much better position to withstand it as the state’s AG than as a private citizen.  Hood himself must believe he is being scrutinized — how else to account for his month-long case of laryngitis?

  

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Scruggs Nation, Day 28

Just a short post for now, maybe more later today, maybe not. I saw this USA Today story by Donna Leinwand on the Scruggs scandal today.  The story is a fairly decent overview of what has gone on so far — there is only so much you can do in the space of a typical USA Today story. Basically you’ve heard it all before, but a couple points need to be commented on.  Here’s one excerpt from the story.  

Scruggs is innocent of the charges, his lead attorney, John Keker, says. Scruggs "didn’t know anything about (the alleged bribe)," he said. "The whole circumstances are slightly crazy."

. . . .

Balducci "did it on his own," Keker says. "Now he’s trying to spread the pain around."

I’ve said it before, but I’ll say it again.  This seems remarkably weak as a defense.  I keep waiting to see what else Keker has got in his magic act, and he keeps going back to the same dumb trick where he pulls a coin out of your ear.  If this is the best he has, I wonder if a plea agreement might be in the offing before the trial date.  We will have to wait and see what the evidence against Scruggs is, but in addition to Balducci’s testimony, it probably includes audio recordings of conversations with Balducci, particularly related to the "extra $10,000," and payments to Balducci that are going to be extraordinarily difficult to explain as payments for jury instructions and jury consulting, their supposed purpose.  In addition, the FBI "taint" team is continuing to look at the hard drives of the Scruggs law firm, and they may reveal even more. 

A corollary to this defense is that Balducci supposedly is the ne’er-do-well son trying to impress daddy by fixing, without his knowledge, some problem that has perplexed ol’ pops.  I’m sure you’ve seen this plot in a couple hundred movies and sitcoms — Dad’s Buick has some tricky fuel injectors and Junior borrows his wrench set, sneaks out to the garage in the middle of the night and gets busy under the hood — won’t the old man be surprised in the morning when his car fires right up!  Maybe he’ll be so pleased he will front the money for that spring break trip to Cancun.  It always ends the same, Dad walks out to the driveway in the morning and finds his entire engine scattered in pieces all over the concrete, and Junior fast asleep in the back seat.  As a storyline, it probably works better in Leave it to Beaver than the Scruggs case.

Here’s another excerpt from the story:

The indictment and the criminal contempt charge stem from Scruggs’ work on behalf of Katrina victims. Scruggs, who lost his Pascagoula home in the storm, gathered prominent trial attorneys to sue State Farm, saying it had shortchanged Gulf Coast residents who lost homes and businesses.

State Farm alleges in court papers related to those lawsuits that Scruggs colluded with Mississippi Attorney General Jim Hood to force Katrina case settlements by threatening a criminal investigation.

Hood did not return phone messages left at his office. In a letter to U.S. Attorney Alice Martin of the Northern District of Alabama, Hood wrote that Scruggs is a confidential informant for the state’s investigations into how insurers responded post-Katrina.

Scruggs introduced Hood to two sisters who had worked at State Farm and passed thousands of documents to Scruggs, court papers say. When U.S. District Court Judge William Acker ordered Scruggs to return the documents, Scruggs instead gave them to Hood, Acker wrote.

The judge asked Martin to prosecute Scruggs for criminal contempt of court. Hood asked Martin not to prosecute. When Martin declined to press charges, Acker appointed two special prosecutors. On Aug. 21, they charged Scruggs with criminal contempt.

Keker says Scruggs did not violate Acker’s order because Scruggs interpreted it to mean that he could give the documents to law enforcement.

I see a similar description of the events relating to Scruggs’ sending the documents to Hood in just about every news story  that mentions it, no matter which newspaper or magazine is doing the writing.  Often, journalists look at what some other journalist has written, and don’t see a lot of need to vary it, because the audience is not the same. Let me point out, however, that this description is inaccurate and misleading, because it fails to give the context that Hood had absolutely no need for the documents, because he already had copies.  This is often why readers of these stories fail to see what Scruggs did as a big deal — what’s wrong with sharing information with law enforcement?

However, it appears far different when you know Hood had had his own copies of the docs for a long time, that he and Scruggs spoke about what to do just after Acker’s order was entered, and that the only plausible explanation for sending the docs to Hood was to find a way not to comply with Acker’s order and get away with it.   Hood and Scruggs had done their thing for so long, I imagine both were shocked when Acker threw down on Scruggs and referred him for alleged criminal contempt of court.  You know, I’ve read Acker’s contempt order a number of times, and each time it strikes me that it appears if Acker thought he could have referred Hood for some charge as well, he would have done it. 

 

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Scruggs Nation miscellany

Finally got home after some bad weather and even worse plane flights.  Just before the flight took off I got a number of messages with a couple things that, if I had had access to a computer, I would have used as an update to the last post.  However, enough time has passed that a lot of people won’t see it, and I like that post the way it is, so I’ll throw a few things together in this post and resume my Christmas break.

This story by Errol Castens in the Daily Journal is a well-written profile of Tim Balducci. What caught my eye, however, were these grafs near the end:

Attorney General Jim Hood says Balducci’s status as a special assistant attorney general was strictly as an employee of The Langston Law Firm.

“His only involvement with our office is in whatever tasks he was assigned by his employer,” Hood told the Daily Journal.

Hood’s chief of staff, Geoffrey Morgan, added, “To my knowledge, Timothy Balducci has not handled any part of the Eli Lilly case since on or about Dec. 1, 2006, when he left the Langston Law Firm.”

Hood talked to the Daily Journal? Then I’ll definitely be waiting to hear from him and his assistant AG Courtney Schloemer about when I get to conduct those interviews of them next week.  After all, according to Schloemer’s comments published in Legal Newsline, I’m ignoring their side of the story.  So again, I’m ready to tell it, and I have a lot of questions. 

This Anita Lee story in the Sun Herald contains a fact I did not know — the Scruggs(less) Katrina Group has stopped paying the Rigsby sisters their annual $150,000 salaries for "consulting" work.  The way I have linked to the story is to its second part, and the relevant part is the second paragraph from the top.  Maybe Dickie Scruggs is still paying them out of his own funds.

— You may remember that, in Renfroe v. Rigsby, Judge Acker requested a written response to the court to his question about when Scruggs agreed to indemnify the Rigsbies and pay for their attorney fees in this case.  Here is the answer.  There is no written agreement, but instead evidence of when such an agreement came into being through partial evidence and performance of the agreement. The pleading says the attorney fees have been paid in large part out of SKG funds, and it also appears that Scruggs may have committed the SKG rather than himself as the indemnitor. In light of the Anita Lee story about the SKG declining to pay further consulting fees to the sisters, I wonder if they will also repudiate the attorney fee payments and the indemnity agreement itself.  If so, that probably leaves the sisters with no agreement and dependent solely on Scruggs’ goodwill.

Here’s an order from yesterday in the Scruggs bribery case from Judge Biggers granting the request for a continuance, but note that he moved the trial date only to February 25.  Here’s a second order extending the date for plea agreements to February 11.  Wonder if there will be any more. 

— That’s it for now.  Merry Christmas.

 

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Scruggs Nation, Day 24: Christmas vacation

It has been quite a month of incessant Scruggsblogging.  Believe it or not, before the indictment I planned December as a period where I could minimize blogging and work on other things such as my next Appleman’s Critical Issues article on Fifth Circuit Katrina decisions and a new chapter in the Appleman’s treatise on hurricane coverage law.  As I write this, I am still trying to get back home to Portland so I can observe Christmas with my family, so this will likely be my last post for a few days.  A few items, holiday-related and otherwise:

  • She will never be crowned by the aristocracy and she has never been considered chic, but no female singer has ever sold a song like Karen Carpenter.  Check out her version of Santa Claus Is Coming To Town.  Never mind the grainy image, the dopey brass and sax,  the totally unfunny Jack Benny schtick at the beginning and that wacky, wacky ’70s look that pervades the whole thing in such a bold and degraded way it almost invites God to destroy the world by fire, never mind that the words portray Santa as a cross between Big Brother and some deranged Prussian Gruppenfuehrer, her performance is totally sincere. I don’t consider her a guilty pleasure like, say, this this song by ABBA. (Or better yet as an example of something you have to apologize for really liking, this ABBA song).  In contrast, every song Karen Carpenter ever sang, she makes you feel that she believes each word she says.  And I’ll tell you what, that is something there is always too little of.
  • You can see some quotes from Courtney Schloemer, an assistant AG in Jim Hood’s office, about me, or to me, I guess, in this John O’Brien Legal Newsline story. In response to her apparent concern I have not called her for information, one thing I would say is I hardly ever call anyone for information.  I have a day job and I am not the Associated Press, which is why I don’t conduct interviews and write news stories. Although what I do here is opinion journalism of a sort, this is a blog and not a news organization.  I comment on public events and public documents of interest to me, and it is true I am fortunate in that many people come to me with information, but it is beyond my resources to become a wire service, unless someone will fork over some asbestos, tobacco or insurance settlement money so I can hire some reporting staff!  Apparently she felt it was quite unjust that I repeated from the Brian Ford notes about her alleged conversation with an SKG attorney concerning a criminal conviction helping out the civil cases. She also asks why do I assume State Farm did no wrong, when I have not seen the evidence she has.  An excerpt from the story:

"This is all a little like kicking someone who has their hands tied behind their back. We can’t disclose what we know from the grand jury, because there is an ongoing investigation, albeit temporarily enjoined by the federal courts. So while we may have information responsive to some of the points being discussed by people who do NOT have access to grand jury information, we are not at liberty to present the other side of the story.

"I am constantly surprised though at those who, without reviewing one document from the grand jury investigation, will swear on a stack that State Farm did no wrong. How do you know?

. . . .

"Maybe Mr. Rossmiller considers me collateral damage, but I have three investigators working with me who participated in the State Farm investigation and they deserve better than this. If you want to go after the people who put their names on the ballot or make millions of dollars every year, then have at it, but I would appreciate it if you would at least try to get our side of the story before you drag ordinary people through the mud."

First, I don’t assume that State Farm has done no wrong. I don’t assume it has done wrong either.  I am not emotionally invested one way or the other as to its rightness or wrongness. I read and interpret publicly available documents and discuss the evidence.  My conclusions derive from the evidence that is available to me — others have other opinions, and that is why they make vanilla and chocolate.  There may be facts I do not know, this is true.  However, I am not sure if her observation is meant to suggest State Farm has done wrong based on her knowledge of secret, undisclosed grand jury information that cannot be contested or examined — if so, I would take issue with such an extrajudicial statement coming from a state law enforcement official who works for an office with the power to drag ordinary people through the mud and threaten to indict them, whether in aid of civil cases or otherwise.

Second, the same door is open to Courtney Schloemer and Jim Hood as to anyone else — e-mail me or call me and give me your perspective. As I said, my opinions are based on the evidence available to me. 

Third, the documents I discuss are open-sourced and publicly available.  Readers of this blog are quite sophisticated and can make up their own minds and draw their own conclusions.

Fourth, I don’t believe I have mentioned Ms. Schloemer’s staff, favorably or unfavorably. I didn’t know she had one. If she hadn’t mentioned these three investigators, I would not have known they existed. I do not know their names or what they do, therefore I cannot drag them through the mud.  In fact, I am not sure why she speaks of them — prior to this mention of them, they appear to have been mud-free. 

I must disagree with her characterization of me as kicking her when she can’t fight back in public — a statement that is belied by her fighting back in public.  When a law enforcement official’s name appears repeatedly in public documents, such as on page 8 of Judge Acker’s order referring Dickie Scruggs for alleged criminal contempt, and when that official acts in the name and under the authority of the state in critical matters of high public interest including criminal investigations, that person is a public figure and comment is justified.  Also, one correction to the story: I think what I said was that the conduct, if true, was outrageous, not that it was outstanding.  If I said outstanding, I meant outrageous, which I think is apropos as a term to describe — if it in fact happened as the Brian Ford notes relate — discussions by an assistant attorney general with one party to civil litigation about the possible indictment and conviction of the other party as a potential boon to that litigation.  Still, Ms. Schloemer, you wanted to get a message to me and you did — I will continue to think over what you said.

Rest assured, I do not consider you collateral damage.  I bear you no ill will and I welcome your input. Same goes for Jim Hood, I would be happy to receive communications from him.  Maybe he can tell me whether he agrees with your statement.  In fact, since I will have some vacation days right after Christmas and will have a free hour or two, and since I used to be a professional journalist and have done thousands of interviews, and since you said I did not get your side of the story, consider this my offer to conduct a formal news-type interview of you and Jim Hood, separately or together, on the matters I have been discussing on this blog for the past year.  I can publish the interview right here next week. Here’s my e-mail address to respond: drossmiller@bpmlaw.com, (Or you or Mr. Hood can pass the message through John O’Brien at Legal Newsline).

  • Here’s a copy of an order filed in Hinds County in April 2006.  In it, Judge Simpson ordered State Farm to turn over certain documents to the Attorney General, on condition that he erect an ethical wall keeping information from the criminal probe from reaching those AG staffers working on Hood’s civil suit against State Farm.  The judge also stated: "All counsel of record in this case are cautioned against making extrajudicial statements or releasing information concerning any matters before the grand jury." 

I refer you to this news story, that contains this passage:

Simpson asked Hood to explain how it became public that the grand jury was investigating allegations that State Farm allegedly is manipulating engineering reports to deny policyholders’ claims. Hood denied that he was a source of that information.

"It’s difficult to keep a matter like this quiet," Hood said. "There’s been absolutely no proof that we’ve leaked any information that’s improper."

I refer you to the Brian Ford notes, page Ford 0012, fourth and fifth lines from the top.

I refer you to this video of Jim Hood’s testimony before Congress, starting at 8:15-27 (also watch the reactions of the people sitting behind Hood during this stretch of testimony).

I refer you to the deposition of Lee Harrell, page 340.

All depends on what your definition of "extrajudicial statements" and "releasing information" is.

  • That’s it for this post and likely until Christmas is in the rear view mirror.  Season’s Greetings. As Tim Balducci might say, see you on the "flip" side.

 

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Scruggs Nation, Day 23: the wire part II

Prosecutors filed a response yesterday to the defense motion for a continuance, and this document contains what looks like to me a very strong indication that Tim Balducci did not begin cooperating with investigators until November 1, when he delivered the last $10,000 installment of the alleged $40,000 bribe.

Click here to see a copy of the government’s responseAnd click here to see a copy of the indictment, so you can follow the play-by-play.    

The government’s response says as follows:

On December 17, 2007, the government made available to the defense a September 27, 2007, recording of a conversation between Timothy Balducci and Circuit Judge Henry Lackey, together with videos of Balducci and Judge Lackey on October 18, 2007, and November 1, 2007. Also included in the discovery on that date were surveillance photos from September 27, 2007, and November 1, 2007. Additionally, the government provided to the defense certain documents related to expense transmittals from the Scruggs Katrina Group.

Now, there would be no point at all that I can see to taping a meeting of Judge Lackey and Balducci on November 1 if Balducci had already begun cooperating.  As I mulled over the sequence of events listed in the indictment, that meeting on November 1 stuck out like a sore thumb, and I posted about this earlier this week.  Why would Balducci bother to deliver the $10,000 if both he and Lackey were wise to the fakeness of the transaction?  You will note that, among all the sums mentioned in the indictment, only a final extra $10,000 that Balducci apparently asked for after delivery of the full $40,000 is not mentioned as being delivered to Lackey, and the obvious implication of that is that Balducci was put up to claiming the judge was demanding more money above the original $40,000, so more evidence could be gathered.  That last part seems clear, but what of the drop-off of the other $10,000 earlier in the day November 1?

One commenter to my post said the meeting was probably real — the FBI confronted Balducci after it was over and showed him the surveillance tapes, and then sent him to Oxford with a body wire to go talk to Backstrom and the Scruggses.  This was a very, very good analysis, but not having any experience "flipping" or "being flipped," I was skeptical: I imagine that if I was confronted like this, I might be too shaken to pull off a good acting job with my co-conspirators, might start muttering to myself about "the damn FBI," or say something stupid like "I can’t believe we thought we could pull this off, we should have known it would never work."  Maybe I would start some Nixon-like sweating, or break out in involuntary twitching.  Maybe if someone asked me what took me so long to get there I might blurt out defensively "Well, traffic was a bitch and getting busted is a real time-killer too!  Just wait and see."  I also wondered whether the FBI would care to send Balducci in without more prep time — maybe an encounter session with a few felons from other cases who had flipped, some film room time to watch some "how to" videos, maybe bring in a stress coach, physical therapist or motivational speaker to keep him loose.

But from the description in the government’s new filing, it does indeed appear that is just what they did.  This theory is supported by another section of the new filing that talks of evidence of consensual recordings involving Balducci, Backstrom, Dickie Scruggs and Zach Scruggs.  Because the indictment mentions Balducci meeting with all three on November 1 after he returned from Lackey’s office, this is a logical time for the consensual recordings to have been made.

Incidentally, that last sentence quote above from the government’s filing talks of expense transmittals from the Scruggs Katrina Group.  I assume that refers to the allegations in the indictment that Dickie Scruggs created phony documentation purporting to pay Balducci for jury instructions and jury consulting in an effort to cover up the true purpose of the payments to Balducci. They are alleging he paid out of SKG funds? Whoa! If I was in the SKG and someone used common funds and the name of my organization for alleged bribe money, I would be even more steamed than when I heard about the alleged bribes in the first place.

 

 

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Judge in former Scruggs fee case receives grand jury subpoena

UPDATE: Numerous readers have informed me that the description of the attorneys in the Luckey and Wilson cases is in error.  Jack Dunbar was original lead counsel in Luckey and Wilson. Dunbar brought Johnny Jones in specifically to handle the plantiff’s constructive trust claims related to the tobacco money.  Jones wound up working on everything in the cases and Steve Funderburg was also pulled into the cases because of the immense workload.  Joey Langston and Tim Balducci were involved in Luckey but not really in the Wilson case until special master Bobby Snead issued his recommendations.  At that point, Scruggs removed Dunbar as lead counsel and brought in Langston and Balducci on the Wilson case. Balducci and Funderburg drafted the proceedings and briefs although Langston would be lead counsel at trial.  Jones was no longer participating at that time because he was working full time on Katrina cases. 

So to clarify, Balducci and Langston’s involvement in the Luckey case began in January 2004-the trial was held in June 2005.  Following Luckey’s $17.5 million victory in the summer of 2005, Langston and Balducci got involved in the Wilson case for the last ninety days before the trial.

_______

This story by Jerry Mitchell in the Clarion-Ledger today says Judge Robert DeLaughter, who presided over the Wilson fee dispute case involving Dickie Scruggs several years ago, has received a grand jury subpoena in an investigation into potential judicial bribery.  I have heard many, many good things about Judge DeLaughter from lawyers in Mississippi.  In a prior story, DeLaughter told Mitchell he did not take a bribe.

One would assume that the investigation at this point is shaped to a large degree by information from Tim Balducci, whose plea agreement requires him to give truthful information or lose the benefit of the agreement, but even if Balducci didn’t supply information on the case, it might come in for scrutiny because DeLaughter rejected a special master’s finding that Scruggs’ opponent  was owed $15 million, and he settled for an amount that is undisclosed but appears likely to be peanuts.  In a similar fee dispute case in federal court in the same time period, the Luckey case, Scruggs was ordered to pay $17 million. Interestingly, Balducci was Scruggs’ attorney in the Luckey case but not in the Wilson case — his lawyers in that action were Johnny Jones and Steve Funderburg, who are suing Scruggs now in a fee dispute over division of Katrina settlement money.    

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Scruggs Nation, Day 22: the Renfroe v. Rigsby disqualification motion

I wanted to bring you up to speed on the Renfroe v. Rigsby case, the one where E.A. Renfroe & Co. is suing the Rigsby sisters for breach of their confidentiality agreements in giving State Farm claims documents to Dickie Scruggs, who apparently passed them around to the Scruggs Katrina Group and other policyholder lawyers like a bottle of cheap wine at a frat party. This case, you may remember, is the one out of which the prosecution of Scruggs for alleged criminal contempt of court arose.

On November 28, attorneys for the Rigsbies filed a motion to disqualify Judge William Acker from the case, saying his impartiality was compromised in light of his appointment of special prosecutors to go after Scruggs. Here is a copy of the supporting legal memorandum. A very interesting point in the brief: although Scruggs is not the sisters’ attorney for purposes of defending this case, he has agreed to indemnify them for attorney fees and damages they may be assessed because of the case.   

Here is Renfroe’s brief in opposition to the motion to disqualify.   And here is the item that interests me most, an order from Acker, following a hearing on the motion to disqualify last week, that says the court neglected to ask when the Scruggs indemnity agreement was made, and giving the Rigsbies until December 21 to respond.  I could make various guesses based on what facts I know, as I’m sure you could too, but I’m just going to wait and see what the answer is.

I don’t know what the proper analysis is for the Rigsby motion.  I once had a case in federal court where the judge, a few weeks before trial, on my motion fined one of the defendants $25,000 for violating a court order, then much to my chagrin recused herself.  Turned out all right.  The trial was held as scheduled, the judge we got was equally good, and we won the case in a bench trial.  Judge Acker’s action in the Renfroe case, however, was not against a party or even the party’s counsel, but an attorney who represents the Rigsby sisters in another capacity.  The Rigsby argument is that there is such an identity of interests, and that actions in this civil case may reflect on the criminal prosecution, that Acker either cannot be impartial or there is the substantial appearance that he cannot be impartial.  What do you think the right answer is?

UPDATE: As Justus pointed out in the comments, far more cogently than I did in this post, the point of Judge Acker’s query is that the supposed indemnity agreement must be in writing to be enforceable under the Statute of Frauds. So he wants to see written evidence of the Rigsby agreement, leading one to suspect that he suspects there is no written contract.   

 

 

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Maniloff’s Top 10 coverage cases of 2007

One of the bright lights of legal writing and insurance coverage writing in particular is Randy Maniloff, a coverage lawyer in Philadelphia.  With a truckload of new readers here, this is a good time to bring you Randy’s annual look at the year’s ten most significant coverage decisions, the seventh consecutive time he was written this really difficult piece for Mealey’s Litigation Report.

I read it all — you’ve got to really like a writer who can make you laugh aloud when writing about insurance (the item on the global warming case broke me up) — and I guess I can’t disagree with the selections, except that if I was writing it, the Top 10 would all be Katrina cases, because that’s mostly what I’ve written about for the past year, so much so that I haven’t paid much attention to anything else.  I’d probably also make it the Top 11 and include Woo v. Fireman’s Fund, the case about Dr. Woo, aka " the pig-slayer," a dentist who put fake pig teeth in an anesthetized patient’s mouth and took pictures, which I wrote about at length here and here

Randy has been a good friend of this blog since back in the day, when my daily visitors were measured in the dozens (if I was lucky) rather than the thousands.  If you like the piece, let him know, his e-mail address is in the article.  When you’ve got a long piece of careful analysis that is also written with style and humor, you’ve got something pretty rare on your hands. It took a lot of effort and skill to do what he did.  Without further ado, here it is, 2007’s Top 10 coverage cases.

 

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