Scruggs Nation, Day 7: the Implosion

As you now know, Timothy Balducci has been arraigned — he represented himself at the hearing — and released on his own recognizance.  As you also now know, the dueling letters campaign has stopped, and the Scruggs(less) Katrina Group speaks with one voice once more.  And that voice says: "Dickie is out." The three remaining SKG firms are in.  The Scruggs firm has also begun filing motions to withdraw from all the remaining SKG Katrina cases.  The original documents that show these things can be seen at my post from yesterday, but I am reproducing a copy of the letter below anyway so we can read it together and ponder what an utterly remarkable development this is in light of the state of Katrina litigation one year ago, where Hood and Scruggs were tearing up the pea patch, barrelling through all obstacles in their path like a monster truck over a row of parked Yugos.  

 As you may be aware, criminal charges have been brought against the
      Scruggs Law Firm in North Mississippi.  These charges are unrelated to
      your claims and to litigation against your insurers.

      The Scruggs Law firm has informed us that in the interest of its
      clients, it has withdrawn from the group of attorneys who represent
      your claims until these legal matters have been resolved and it is also
      withdrawing as counsel in your case if filed.  Members of the Scruggs
      Law Firm have assured us that they engaged in no wrongdoing and we are
      confident they will be cleared of the charges.

      Barrett Law Office, P.A., Nutt & McAlister, PLLC and Lovelace Law Firm,
      P.A. are committed to the same level of performance and professional
      expertise that have to date provided settlements to over 1,300 Katrina
      clients.  We will continue to pursue relief to you and the other
      clients who have been shortchanged by their insurers.

      Our immediate focus will be the pending claims and related litigation.
      We will contact you shortly with more information.


      Don Barrett, Barrett Law Office, P.A.
      David H. Nutt, Nutt & McAlister, P.L.L.C
      Dewitt Lovelace, Lovelace Law Firm, P.A.

UPDATE: I knew about but forget to mention that Balducci has resigned his license to practice law.  As the WSJ Law Blog reported yesterday:

Anyway, what we do know is that Balducci probably won’t be practicing law anytime soon. The Mississippi state bar heard from Balducci on Saturday evening, as it turns out. Balducci (or someone on his behalf) faxed a letter to Jackson indicating he intended to withdraw his license to practice law. The letter allegedly refers not only to his license in Mississippi, but to other jurisdictions as well: Texas, Alabama, Tennessee, and Washington, D.C.

Now, let’s consider a few things, as follows:

Judge Lackey and other Lafayette County judges recused themselves from the Jones v. Scruggs case 10 days before the Scruggs indictments.

I got an e-news flash from Legal Newsline yesterday afternoon with a story by John O’Brien stating this:

OXFORD, Miss. – A little more than a week before a federal grand jury indicted prominent Mississippi trial lawyer Richard "Dickie" Scruggs, the state judge he allegedly attempted to bribe and two others recused themselves from presiding over the case from which the indictment sprung.

On Nov. 19, circuit judges Henry Lackey, Robert Elliott and Andrew Howorth all told the state Supreme Court they would "awate" the appointment of a special judge to take on the case, Jones v. Scruggs.

Nine days later, Scruggs and two others from his firm, son Zack and Sidney Backstrom, were pegged as conspirators along with Timothy Balducci and Steven Patterson of Balducci and Patterson by the federal government. 

The five allegedly offered Lackey $40,000 to compel arbitration in Jones, a case filed by fellow Scruggs Katrina Group member John Jones. He said Scruggs was attempting to take more than his share of $26.5 million in attorneys fees from the settling of 640 Hurricane Katrina-related cases against State Farm Insurance Cos.

Chosen to replace Lackey was William F. Coleman Jr. of Jackson, a senior status judge retired from Hinds County Circuit Court. He was not immediately available for comment.

"All three of the trial court judges in Lafayette County Circuit Court recused themselves on the matter of Jones v. Scruggs," state Supreme Court public information office Beverly Kraft said, "and submitted a request to the Mississippi Supreme Court for appointment of a special judge."

The judges did not offer an explanation for their request in the one-page motion. Lackey could not be reached for comment.

UPDATE: [Legal Newsline now has the story back up. You can click here to see a copy of the recusal papers, and see that they were signed on November 19, but not filed until November 29, the day after the indictment — I’m told the papers may have been mailed between the three signing judges during the intervening time, something that, since clerks and others could conceivably see these papers, seems like somewhat of a gamble that no one would innocently mention the recusal to someone, who would repeat it to the alleged conspirators .  But maybe the judges sent the document by personal and confidential mail.  I’m also told the unusual spelling of "awate" above was simply a typo in the writing of the story and not a suggestion that the judges don’t know how to spell.]  I can’t seem  to find the story on Legal Newsline itself, but it may just be a glitch in posting.  You may remember the Fortune/CNN post by Roger Parloff I linked to yesterday. In that story attorney we learned this interesting news: 

In April, [John] Jones says, Lackey recused himself from hearing Jones’s case without explanation. But then in May, on his own motion, Lackey suddenly “unrecused” himself, Jones says — again without explanation. Jones now surmises that Lackey had, by May, brought the FBI into the picture, and was now prepared to wear a wire and help it prove the crime. 

Was the latter recusal also known to the litigants? One ordinarily would think so, there is not much point in a recusal if the parties to a lawsuit don’t know about it.  Recall that the indictment was filed November 28.  The litigants, including the alleged conspirators, would have wondered what was going on.  However, the fact that Jones did not mention this in the interview with Parloff, and that this information hasn’t previously been noted — as well as the fact that this seems like something that could tip the alleged conspirators off that something was afoot, argues against public knowledge.  What do you make of this?

Scruggs did to himself what State Farm could not.

You may recall State Farm put a huge effort into disqualifying Scruggs from Katrina cases earlier this year on ethics grounds.  Judge Senter ruled against them, saying they had waited too long to bring these objections and therefore waived them, and State Farm’s request to the Fifth Circuit for a writ of mandamus to force Senter to reverse himself failed in mid-November.

Throughout the year, in conversation I had taken to using the word "Scruggs" as a verb, as in "to scruggs someone," meaning to unleash a multi-pronged attack against an opposing party, implying heavy use of creative alternatives such as use of media pressure and different types of legal actions to up the psychological, legal and public pressure on the opposing party to unbearable risk levels, while achieving a result one might not have obtained by merely prosecuting the lawsuit without these other methods.  Here, however, one could say that Scruggs scruggsed himself, with the result that he disqualified himself.  And it may be that this reverse scruggsing has just begun.   

The apparent Scruggs defense strategy to portray Balducci as a wayward youngster acting on his own won’t sell.

Let’s again check out one of the paragraphs from the WSJ story on the big Scruggs party December 1, which I talked about yesterday:

"This is a clear case of a young man wanting to endear himself to Dickie Scruggs in hopes that he might one day have a chair at his table," says Lowry Lomax, a close friend of Mr. Scruggs who is also an Oxford plaintiffs lawyer and was the co-host of Saturday’s Christmas party.

Is that going to be the line? Balducci is 40 years old, for pete’s sake, and was accomplished enough as a lawyer to be named as a special assistant attorney general by AG Jim Hood and to represent the state in the big MCI litigation.  Not to mention that the FBI apparently has documents from Scruggs purporting to hire Balducci for $50,000 to prepare jury instructions — guy must be one hell of a jury instruction writer for that price — (prosecutors say this was a cover for transfer of attempted bribe money).  Sounds like he had a seat at the table, and was on his third helping, too.  But there’s another reason this story is implausible.  Let’s remember that Scruggs has consistently portrayed himself as the brains and the mastermind behind Katrina litigation —  he came up with the "whistleblower" Rigsby sisters, he put together the framework for the Katrina litigation and he was the brand name. All right. On the one hand he’s the all-seeing, the all-knowing. But on the other hand, when it comes to knowing what Balducci was doing, suddenly he’s a figurehead, people going rogue on him, just sitting around watching Days of Our Lives and drinking a Pepsi, not a clue. 

It won’t sell.



Filed under Industry Developments

8 Responses to Scruggs Nation, Day 7: the Implosion

  1. Bill Freivogel

    “barrelling through all obstacles in their path like a monster truck over a row of parked Yugos.”
    Bill Freivogel

  2. Thick

    Once State Farm reverses the Broussard decision currently before the Fifth Circuit (see breaking news in Biloxi Sun Herald), it is all over but the crying. Don Barrett can lead the Katrina group all he wants, but the handwriting is on the wall…it is finally OVER. Other than the criminal prosecution of the Scruggs’ and Jim Hood hightailing it to some foreign country, this drama is done.

  3. Justus

    Thick, I agree that it’s only a matter of time because it’s closing in on Scruggs, Hood and Barrett. However, I don’t agree with your implication about Jim Hood. He is not a career plaintiff’s lawyer or politician, and he’s only been the AG less than four years. I think that Hood hasn’t done anything wrong, but got “played” by these plaintiff powerbrokers – Scruggs, Nutt and Barrett are much more worldly than Hood.

  4. Thick

    Justus, point taken and I agree Mr. Hood is not wordly. But, when an AG gets “played” by others, he HAS done something wrong. His office represents the citizens of Mississippi, not the Scruggs’ and Barrett or the sisters. Hood and Scruggs have been in cohoots since day one and each have used their respective leverage to tilt the insurance process in their favor. Policyholders filing suit following a disaster of Katrina’s magnitude is not surprising, nor unexpected. But, the playing field being prejudiced by the collusion of the plaintiff’s bar and the chief governmental authority in MS was and is reprehensible.

  5. Scruggs indictment VI

    Plenty of news today, and some links to commentary: As part of Timothy Balducci’s guilty plea, the feds confirm that Balducci has been “substantially” assisting them in their case against the other defendants. Per the…

  6. Justus Kneads

    Agreed, Thick.
    But, Hood wasn’t colluding or acting for the “plaintiff’s bar”. If he was doing so for anyone, it was for a very, very few select, high-profile lawyers that you have already mentioned. I have talked to a lot of folks, and to be objective, you shouldn’t impute the acts of Scruggs, Nutt or Barrett on the entire plaintiff’s bar, 99.99% of whom find all of their acts very dispictable.
    Also, to be objective, if your implications about Hood are correct, it would likewise be wrong if he colluded with defense counsel or the defense bar, or big business. Similarly, a year or two ago, there was much publicity in the news that the attorneys of a prominent Jackson, MS, defense law firm were “drafting” judicial opinions for the Supreme Court of Mississippi. Would you also consider that wrong, or would you see no problem with it since our government (Court) was allowing defense lawyers to draft their opinions instead of plaintiff’s lawyers? Just wondering?

  7. Heavy

    There are many many bodies buried, I look forward to all those bodies popping up soon. Our justice system in Mississippi is hopelesly corupted, we have a chance to clean it up. Will we?