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.




Filed under Industry Developments

2 Responses to Scruggs Nation, Day 31

  1. m.williams

    I hate to see “O” in Comments. This is about documents. This is about the Rigsbys documents. This is about some other documents. This is about past practice stuff.
    When Scruggs delivered stolen documents to Congressman Waxman(Dem. CA) in May, 1994, he brought Mike Moore along to explain to Henry that the documents were “stolen”. By Attorney Gereral?
    Mike and Dickie said that they determined the documents “belonged” to the public. They didn’t say that they themselves stole them. And they also said nothing about a TRO/Order which presents the coined idiom of discovery in law – reverse discovery. I like it.
    But Henry was ruffled. The big question is avoided, which is “Who did the stealing?” we pause to explain, rather nicely, that the actual theft was by Moore and Scruggs. Did you know that?
    So what’s the point here? What about the Rigsby’s? Let’s examine the past.
    Frontline’s had all the answers then and now. Bit of mendacity on line though.
    Frontline notes questions of interest. Since the stolen documents went to Congressman Waxman. He turns them over to his staff. Scruggs had a spare box or two. Staff gets them.
    Frontline then asks Scruggs, how did the FDA get another box of the same documents on the same day? Dickey’s answer is interesting mumbo jumbo.
    Fontline then asks Scruggs, how did Stan Glantz (UCSF prof.) get a box of the same documents on the same day? Dickey’s answer is interesting mumbo jumbo.
    Frontline then asks Scruggs, how did the NY Times get a box of the same documents on the same day? Dickey’ answer is interesting mumbo jumbo.
    Scruggs doesn’t play CATCH ME IF YOU CAN because he’s actually doing the theft. And he doesn’t just make a few boxes from a box. It doesn’t matter if the original is there or not. There’s no difference.
    So, the Rigsby documents are not on the web yet, but it wouldn’t surprise me if they got there. Maybe “O” is better than “l”. Not in reverse discovery.

  2. If there are any True Officer’s of the Court here, I request your help at