Monthly Archives: June 2008

Scruggs Nation: June 27, the sentencing

Judge "Maximum Neal" Biggers sentenced Dickie Scruggs to five years in prison, the most Scruggs could receive under his plea agreement.  According to this story in the Sun Herald, Scruggs finally came forward with an apology:

Before sentencing, Scruggs told the judge, "I could not be more ashamed to be where I am today. I realized I was getting mixed up in it and I will go to my grave wondering why. I have disappointed everyone in my life – my wife, family and friends here to support me today. I deeply regret my conduct. It is a scar and a stain on my soul."

Scruggs had asked for a sentence of only 30 months, but Biggers, solidifying his reputation as someone who is not to be messed with, called Scruggs out and knocked him around pretty good, as the story says:

He said, "There is no question in the court’s mind that Mr. Scruggs, Mr. Richard Scruggs, was a leader and a planner (in the conspiracy). He has said he came into the scheme late. Regardless, he was the leader, he was the money man."

In fact, Biggers said Scruggs had entered into the scheme so easily that it made him wonder whether Scruggs had done such a thing before and indeed evidence indicates that he may have.

Biggers found that at least five people, including Scruggs’ son Zach, participated in the conspiracy. He said Scruggs will have a chance to study a copy of the pre-sentencing report while he is in prison. He said one of the conspiracy participants, Timothy Balducci, "said you know where a lot of bodies are buried. It might do you some good to uncover some of those bodies."

That second paragraph, and the end of the third, are key.  At a time like this, where someone is facing the music, it’s always tempting to say enough is enough, let’s just forget about it and move on.  But what about all those buried bodies?  And what about what Maximum Neal Biggers said — doesn’t it appear from the casual way Scruggs participated in this bribery scheme, with as little moral struggle as if he was taking a drive to the grocery store, that it was a part of his existing psychological montage?

Legal Newsline also has a good story on the Scruggs sentencing.  Check out this excerpt: 

Biggers said he was "personally shocked" when he first heard of the case, a shock that was sustained when he first saw the Government’s evidence.

The harshness of the sentence — which includes a $250,000 fine, three years of supervised release and the price of his incarceration — can be traced to Scruggs’ motives. Biggers said there is a difference between a criminal stealing out of necessity and what Scruggs did.

A 2003 audit of Scruggs in an asbestos fees dispute showed a net worth of approximately $200 million.

"The justice system has made you a rich man," Biggers said. 

Hey, let’s be fair here!  The justice system gave a lot to Scruggs, so maybe he just decided it was time to give some back!  In $40,000 increments, apparently. 

I’ll be out of the office until Tuesday, but Marjory Morford will post updates as appropriate. 

UPDATE: Sid Backstrom gets less time.  Judge Biggers sentences him to two years and four months in prison and fined $250,000.  He is to report on August 1 also.   According to the Sun Herald:

Biggers said he was impressed that Backstrom seemed remorseful about his role in the case. He was ordered to report to prison on Aug. 4.

"I cannot say that I have seen that kind of remorse from your co-defendants," the judge said.

Zach Scruggs will be sentenced on July 2.

 

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Scruggs Nation: June 26, the pre-sentencing

I’ve been reading some of the excerpts from the treasure trove of letters asking the Court for leniency in the Scruggs sentencing tomorrow.  And after reading them, I’ve had a change of heart.  You know what I say?  He’s suffered enough, just let him go! I mean, lighten up a little here, let’s not get all harsh, let’s not go all Torquemada on the dude!  Just kidding.  And now back to reality.

Here’s a link to the Sun Herald story with the excerpts — you remember it was the Sun Herald who did the quick thinking and filed a motion with Judge Biggers asking to see the letters in the public interest. 

My overall impression: about what I expected.   Scruggs has done a lot of good things for certain people, I’m sure, although I don’t find that very relevant to what is going on with his sentencing.  As with most folks with a lot of dough or power, it’s not hard to find any number of people to swear what a great guy he is.  It’s funny how that works.  When I started practicing law, one of the partners at the firm I was with told me how becoming a partner was a real self-improvement for him: he got more attractive, his jokes were funnier, he became wiser — and the strange thing is that the longer he was a partner the more true this was!  He said he hated to go home sometimes, because for some strange reason they were out of step there and never laughed at his jokes and they never were amazed at his wisdom. A prophet is not without honor, except in his own country, I guess. 

About leniency for Scruggs, I would say this — a five-year maximum sentence already seems pretty lenient, considering he participated in a scheme to bribe a judge, and that he is a lawyer.  You know, the cost of monitoring everybody is just too high, to a great degree the legal system or any system doesn’t work unless people behave themselves, unless they are willing to accept that the system is more important than their individual needs or desires. Engaging in corruption of the legal system, the same system you use as a backdrop for your claims of great beneficence and altruism, isn’t really excused by scattering checks along the way like a trail of bread crumbs for the birds to follow on the way to your sentencing.

I see that a number of people cited Scruggs’ tobacco litigation as a reason to take it easy on him — as if firmly entrenching a rent-seeking cigarette cartel that is impervious to competition or destruction as long as it pays its annual tax to attorneys general and plaintiffs’ lawyers is some noble accomplishment.   There were some touching stories, such as the one about Scruggs paying funeral expenses.  Again, almost everyone has their good side, but Scruggs isn’t being sentenced for the crime of being a monster, he’s being sentenced for bribery.  Merely because he has done good for some doesn’t mean the bribery or the danger that poses to the legal system goes away. 

As a Shakespeare fan, I took special interest in this excerpt from one of the letters: 

"Recall William Shakespeare’s famous words in the play Julius Caesar: ‘The evil that men do lives after them; the good is oft interred with their bones.’ Nevertheless, Dick’s failing does not change all the good he had done and the enormous credit he deserves for changing so many people’s lives for the better."

Interesting.  This is taken from Mark Antony’s funeral oration, of course, and Antony, although he said he came to bury Caesar, not to praise him, intended to do exactly the opposite of what he said.  The implication of the line is that the conspirators who killed Caesar buried a lot of good with him, and what’s more, that this "evil that men do" may be the assassination of Caesar itself, not Caesar’s illegal usurpation of power.  Is this line apropos in these circumstances?  Scruggs, at the max, only goes away for five years, and he’s unlikely to be flogged daily and fed on thin gruel and weevil-infested bread.  And after he gets out, he still has all that dough to keep on doing all that good to make sure it isn’t interred with his bones.  Also, there was no conspiracy to get Scruggs here — he Scruggsed himself.  If ever one has gotten enormous credit for "changing so many people’s lives for the better," it is Scruggs, the master of media manipulation.  It’s not about whether Scruggs is an angel or a Hitler — it’s just about paying the piper.    

 

 

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Scruggs sentencing approaches, letters to be released

As the world turns.  It had almost completely slipped my mind that Dickie Scruggs was to be sentenced this Friday, until I talked with Alan Lange of Y’All Politics yesterday.  With Katrina cases winding down and the Scruggster getting measured for a tailored orange jumpsuit, I admit my attention has begun to wander, but it’s been difficult to find something as interesting to talk about.  Last time I had this feeling was when the Soviet Union fell.  You remember that?  Everyone was just standing around looking at each other.  They’re gone? Dang, who do we oppose now?

Thanks to readers for sending along stories about the upcoming sentencing.  Sorry that my time has been so restricted, responding to emails has been hit and miss lately, I know.

As you might have heard, on Friday Judge Biggers granted the motion by the Sun Herald newspaper to get access to the pre-sentencing letters written by folks.  Not all were fan letters begging for leniency, I know.  One reader sent me a copy of a letter he wrote to the judge recommending harshness.  Here’s a copy of the judge’s order.  Just after the judge granted the order, Sid Backstrom, also to be sentenced in the Scruggs Earwigging Scandal, filed an objection/motion for reconsideration.  Always it’s a good idea in federal court to file your objections before the judge decides, and the batting average for motions for reconsideration is — this is just a rough estimate here you understand — probably something like 0.0 percent.  Here’s a copy of the motion for reconsideration, made on grounds that the contents of these letters may be intended to be private.  Private?  Who sends a letter to a federal judge in a high profile case and expects to remain anonymous?  I mean, what would be in these letters that someone would expect to remain private: "Judge, please don’t pass this on to anyone else because it’s a little embarrassing, but here’s a little story I thought you mind find amusing and enlightening about Sid.  Well, one time in gym class in high school he was doing calisthenics, and some guys pantsed him . . . ."   Here’s a copy of the motion.   

Judge Biggers, of course, denied the motion yesterday.

 

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“Bye Bye” to Trailer Lawyers again, Scruggs to be deposed, required to give up docments

Team Scruggs just can’t catch a break these days.  Disappointingly, Judge Senter refused to overturn his disqualification of the Trailer Lawyers from the False Claims Act case (question: which side is it that’s makes the false claims? Remind me).  This means an end to hilarious Trailer Lawyer briefs and antics, an end to angry Trailer Lawyer denunciations of "Snake" Farm, an end to alibis featuring Goofy and Minnie Mouse.  In short, this drains a lot of enjoyment out of this vale of tears, but we will soldier on nonetheless.  Farewell noble Trailer Lawyers, we will miss you, and we offer a complimentary bag of Doritos, a six-pack of Schlitz and an archive edition of The Weekly World News ("Pointed Hat Found Within Lincoln’s Stovepipe: Abe Was A Witch!") as lovely parting gifts.  And so exit, stage right, the Trailer Lawyers Burlesque Show: a little song, a little dance, a little seltzer down your pants.

An interesting part of the ruling: Judge Senter says why he didn’t disqualify Scruggs the first time he was asked to do so, and why he did the second time:

The first time I considered the issue of disqualification, that issue was presented by State Farm. By the time the issue was raised, State Farm and the SKG had had extensive involvement in the post-Katrina litigation and had at one point jointly presented the Court a proposed settlement of all the remaining State Farm cases. It appeared to me that in light of the extensive dealings that had gone on between the SKG and State Farm the issue of disqualification was being raised to gain an unfair tactical advantage. For this reason I determined that State Farm had waived its right to seek SKG’s disqualification. This was not the case with E. A. Renfroe, Inc. (Renfroe). I granted Renfroe’s motion to disqualify because Renfroe had not waived its right to seek SKG’s disqualification.

In other news, Judge Senter overruled Dickie Scruggs’ objections to production of many records, including those involving the supposed "Third Man," a purported third State Farm insider, in Bloomington, whom Scruggs claimed fed him key company documents on the QT.  Question: did you ever hear anyone ever brag about litigation espionage this way before? Whatever was he thinking?  It will be fascinating to see what if anything these documents are.  My guess: a menu from the company cafeteria and some State Farm fridge magnets.   Scruggs will have to turn these documents over before he is deposed. Here’s Judge Senter’s opinion.  

 

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Sun Herald seeks Scruggs fan letters

The Sun Herald of Biloxi, according to this story, has filed a motion in federal court to get copies of the letters people are writing to ask for leniency for Dickie Scruggs, Zach Scruggs and Sid Backstrom, at their upcoming sentencing.  This is a great idea, I wish I had thought of it myself.  Here’s a copy of the motion.  I’m curious to see how many of the letters take a tone like "Hey, what’s the big deal about a little earwigging?"

 

 

 

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Rigsby emergency motion

A curious kerfuffle in the McIntosh v. State Farm case.  Yesterday Cori Rigsby filed an emergency motion seeking to have the Court modify its order dealing with production of certain of her computer records to State Farm. 

I read over the motion a couple times, and it’s somewhat confusing, but apparently among the records to be produced are several things that have alarmed Cori Rigsby greatly, leading to this emergency motion.  What all these records are, one cannot tell from the motion, but the motion does say that among the records that should not be produced to State Farm are, evidently, some of the claims files that were illicitly taken in the Trailer Lawyer and Data Dump days.  Amusingly, the motion says production of these records to State Farm — which are under an injunctive order by Judge Acker in Alabama federal court — would cause Rigsby to violate Acker’s injunction and protective order, which keeps State Farm from actually viewing these documents.

Here’s a copy of the motion for you to read for yourself.  There are a few exhibits, none of which are new, but in the interest of a complete record, they are provided below.    

Exhibit A, Judge Acker’s injunction.

Exhibit B, consent order.

Exhibit C, permission for Mississippi Department of Insurance to view documents subject to injunction.  

 

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Trailer Lawyer news: State Farm’s response to Trailer Lawyer motion to reconsider

The last strains of the song "Bye Bye Trailer Lawyer Pie" had not yet died out when the Trailer Lawyers filed a motion for reconsideration of their disqualification from Ex rel. Rigsby, the False Claims Act case that stemmed from various trailer summits and accessing of documents from a laptop in a trailer. 

State Farm has filed its response to that Trailer Lawyer motion, which seemed remarkably ill-tempered, while carefully avoiding use of the word "trailer" once again. (Remember, it’s not a trailer! It’s a temporary housing unit, a description, that come to think of it, also fits a thatched hut or a cardboard box.)  Here is the response, which characterizes the Trailer Lawyer motion for reconsideration as founded on false statements by the Trailer Lawyers and their clients, the Rigsby sisters.  It’s a pretty good piece of work.  An excerpt:

3. Nor do the Rigsbys proffer any newly discovered evidence, focusing instead on known events that occurred long before disqualified Counsel filed their two opposition briefs to State Farm’s disqualification motion. In fact, the only “new” evidence provides additional confirmation that disqualified Counsel’s declarations contain false statements. In particular, disqualified Counsel’s assertion that they had “no involvement” in the policyholder cases is refuted by former Scruggs Katrina Group (“SKG”) attorney Derek Wyatt’s recent deposition testimony, which reveals that he and other SKG members met with a number of lawyers from Bartimus, Frickleton, Robertson & Gorny, PC (“BFRG”) for several hours to discuss “strategy” with regard to the “Hurricane Katrina cases.”

As the brief explains in a footnote, Wyatt was deposed in the Renfroe v. Rigsby case, and this deposition was under seal for a period of time.  This deposition is news to me, and I do not have and have not read the transcript.  The excerpts of the deposition contained in the brief suggest the transcript is a doozy.   

The brief also points out the mechanisms for reconsideration of a judge’s decision, by that judge, are few and far between in federal court.  When I saw the Trailer Lawyer motion for reconsideration, I thought how I’ve never seen one of those in federal court before, although I used to see plenty of them in state court, where the rules are looser, before Oregon courts issued local rules clamping down on them.  In any event, the justification for a motion for reconsideration is much greater in a place like Oregon state court, where you rarely have a judge assigned to your case and your motion is heard by whatever harried jurist happens to get the motion by luck of the draw.  The judge likely has no research staff, no time to prepare and has never heard of your case before, completely unlike federal court. 

Anyway, thank goodness the Trailer Lawyers didn’t decide to go gentle into that good night, or I wouldn’t have an excuse to link once again to this post containing the lyrics to Bye Bye Trailer Lawyer Pie. All together now! One, two, three, four . . . Bye Bye Trailer Lawyer Pie, drove my trailer to the courthouse but the judge said bye bye . . . .

 

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Insurance Coverage Law Blog™

I don’t often write something that intentionally falls into the category of "Who Cares?" — sometimes I do this by accident, I know — but this is one of those things I have to mention, because I spent dough and effort pursuing it, and because it involves intellectual property rights in my blog, which if you have them you are supposed to let people know.  I now have a trademark on the Supplemental Register at the U.S. Patent and Trademark Office for Insurance Coverage Law Blog, with the intention of getting it on the Principal Register in short order. Many thanks to my colleague, Matt Wilmot, a great IP lawyer, for his invaluable help in getting the mark registered and working with the PTO.  

 

  

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Agent, insurer liability for failure to procure flood insurance

This decision in a little long in the tooth, blogosphere-wise, but I’ve had it sitting around for a while and was reminded of it when I saw it recapped in Mealey’s recently.  U.S. District Court Judge Peter Beer, of the Eastern District of Louisiana, granted partial summary judgment on May 2 to State Farm and one of its agents, Nora Vaden, over a claim that they were negligent in failing to procure a flood insurance policy for the homeowner, Liselotte Morice.  Here’s a copy of the very short order written by Judge Beer.  

According to the order, Morice maintained a flood insurance policy since 1987 on a rental property in Metairie, Louisiana.  In 2003, she allegedly wanted to transfer her coverage from one property to the other, and contacted Vaden, her agent, about doing so.  She also allegedly completed a flood insurance application, but State Farm has no record of receiving an application for flood insurance on the property and has no record of receiving a policy premium to purchase flood insurance for the second property. 

After Hurricane Katrina hit in 2005, Morice spoke with Vaden at a State Farm mobile disaster claims office, where she learned she had no flood insurance on the second property.  She sued in state court, and State Farm removed the lawsuit to federal court based on diversity of citizenship. 

The basis for the judge’s decision was that Morice should have known as early as 2004 that no flood policy was in effect.  She thought that higher premiums withdrawn directly from her account, she said, meant the payments were going for flood insurance.  However, they apparently were merely a rate increase on the insurance she already had.  According to Judge Beer’s order, she admitted she received no confirmation of the flood policy, nor did she receive any documentation from Vaden about the supposed flood coverage.  The claims were therefore pre-empted by a Louisiana statute creating a one-year limitations periods for suits involving agent negligence.

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Provost Umphrey firm not disqualified, provided they meet conditions set by Judge Senter

Judge Senter’s opinion is here.  The Provost Umphrey firm in Texas, which had been recommended to policyholders by the disqualified Katrina(less) Litigation(less) Group, will not itself be disqualified, providing that within 14 days they can say the following is true:

1. There is and will be no agreement between Provost Umphrey and any of the disqualified attorneys for a division of fees or any other arrangement of any kind for the payment of compensation to any of the disqualified attorneys for work performed after the date of my order of disqualification;

2. Neither Barrett nor any of the disqualified attorneys will participate, directly or indirectly, with Provost Umphrey in the future representation of these former clients; and

3. There is and will be no financial arrangement or understanding in connection with any Katrina case between Provost Umphrey and any of the disqualified attorneys for the payment of any sums other than expenses reasonably incurred before April 4, 2008, and for services rendered before April 4, 2008, on a quantum meruit basis, if a right of
recovery for these sums were asserted and established.

Hat tip: Phunk & Wagnalls, and several readers who sent me tips on these developments. 

 

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