Scruggs nation, February 8

I am glad John O’Brien of Legal Newsline did this story on the Wilson-Scruggs fee dispute case, the one in Hinds County where Joey Langston pleaded guilty to attempting to bribe the judge, Bobby DeLaughter, with consideration for a spot on the federal bench.  This is the best explanation I have yet seen of the case, who the players are and what happened.

Here’s an excerpt:

For William Roberts Wilson, disagreeing with fellow trial attorney Richard "Dickie" Scruggs has caused a nuisance that has lasted 14 years — and counting.

With the recent confession of one of Scruggs’ attorneys that he attempted to bribe the judge presiding over Wilson’s attorneys fees dispute with Scruggs, several issues have risen that will keep the arguments alive well past the 2007 settling of the case.

Wilson attorney Charles Merkel said a few options are being discussed for the suit, filed in 1994.

"There are new developments everyday," Merkel said. "We want to know all of the facts before we act precipitously with only half of the knowledge."

Wilson, Alwyn Luckey and Scruggs each had their own stake in a group Scruggs started to file asbestos cases. Wilson had sold his interest in more than 2,300 asbestos cases in an agreement that was interpreted differently by the two sides.

Luckey was awarded $17.5 million in his dispute with Scruggs after a trial in front of U.S. Magistrate Judge Jerry Davis, but Wilson received only a $1.5 million payment because Hinds County Circuit Judge Bobby DeLaughter’s interpretation of the contract showed no remaining balance owed to Wilson, and that a trial would have been merely for bragging rights.

Now, besides the fact the story is a good read, I’m glad it came along because it allows me to talk a bit about the transcript for the trial in the Wilson-Scruggs case without spending a long time trying to explain the whole background.  Read the O’Brien story for most of that. I will only add that the case had parallel components — in Hinds County, in the case before DeLaughter, the issue was the proper interpretation of the original joint-venture contract for asbestos lawsuits; while in another case in federal court the issue was whether Scruggs had wrongfully taken Wilson’s asbestos fees money and used it to fund Scruggs’ later tobacco litigation.

So with that said, here is a copy of the transcript of the state court trial.  Actually, what you will see is argument before DeLaughter, who rules in favor of Scruggs on key questions, which led to a settlement that was announced on the record before DeLaughter the next day. (The handwriting in the transcript is not mine, but it does serve to draw your attention to places you may be particularly interested in).

You can see here, on pages 19-20, that the judge continues his rejection of the methodology of Wilson’s expert of calculating monies owed under the contract, and, since Scruggs had very late in the game forked over some $1.35 million that was indisputably owed (see page 33), Judge DeLaughter said his prior rulings meant that no compensatory damages were owed, that no punitive damages could be awarded, and therefore the trial was going to be over "bragging rights."  If you look at the earlier portion of the transcript, however, you will see that, had Judge DeLaughter instead accepted the methodology of Wilson’s expert, some compensatory damages would have been at stake that day, and punitive damages could have been awarded by the jury.  You will also want to note that, arguing for Scruggs at the trial, were Joey Langston and Tim Balducci. (Just as an aside, I was impressed by Balducci, I thought he did a good job in his arguments — did not seem at all a wannabe as some try to portray him).   

Remember that special master Bobby Sneed had earlier in that year, 2006, given a recommendation that Scruggs owed some $15 million under the contract. This finding was rejected by DeLaughter.

Remember also that in the federal court case, which was stayed by Judge Lee pending the outcome of the case before DeLaughter, Lee had basically blown by Scruggs’ summary judgment motion in an April 2005 ruling, and a constructive trust may well have been imposed over Scruggs’ tobacco money, but for the stay pending the resolution of the state court case.  Here is a copy of Judge Lee’s decision so you can read it for yourself, if you are so inclined. What constructive trust means here is that, because Wilson’s money may have furnished some 29 to 39 percent of the money used to finance the tobacco litigation, Wilson would have had a claim to some of the gain on that money.

However, look at the last pages of the trial transcripts, and you can see the settlement of the Hinds County matter was in essence a settlement of the federal court case.  So I’m not sure how much, in total, Wilson could have collected had Sneed’s recommendation stood up and the constructive trust claim gone to trial in federal court.  As it was, the case settled for a much lesser amount, which the parties are not to divulge under the terms of the confidential settlement agreement, but this case has been looked at by so many people that a whole bunch of folks know what the amount is and have talked about it — somewhere in the $5 million to $7 million range, I believe. 

Food for thought.  You know the feds are looking through this stuff.  Now you can too.

— Lastly, and I know you’re going to say that stuff about Jim Hood is technically not Scruggs Nation material, but I just don’t have enough energy to write a whole post about the immediate and substantial rising that occurred with news that Hood had entered into a confidential settlement with State Farm over the State Farm lawsuit that enjoined his further criminal investigation.

Some people commented publicly, some sent me e-mails, I’m sure it’s the talk of Mississippi today.  One point that seems valid is how can Hood keep a state contract secret?  He was sued in his official capacity as Attorney General, is not the settlement available under the state’s public records law?  Another is why does he want to? I mean, is there some odious term in it, like he is required to show up at State Farm’s headquarters in Bloomington each February 7 and say, "Thank you, sir, may I have another"?  Was there some particularly humiliating condition — he had to autograph for Ed Rust a copy of the Lee Harrell deposition, where Harrell alleged Hood threatened to indict State Farm from the CEO on down if they didn’t settle civil Katrina lawsuits, and write on the transcript "Me sorry" with one of those dopey frown faces drawn next to it?




Filed under Industry Developments

8 Responses to Scruggs nation, February 8

  1. Jim Hood deposed

    PoL contributor David Rossmiller has a series of posts summarizing yesterday’s dramatic developments in the Scruggs-related dispute between the Mississippi attorney general and State Farm, which culminated in a confidential settlement (is that somethin…

  2. Newt

    “Just as an aside, I was impressed by Balducci, I thought he did a good job in his arguments — did not seem at all a wannabe as some try to portray him.”
    I thought the same thing — and it was just yesterday I had a Jackson defense lawyer telling me how “squirrel-ly” Balducci is, basically buying into and repeating the whole “it was all Balducci” line.

  3. bellesouth

    David, your question on the Mississippi Open Acts law is the $64k question. It is under seal in U.S. District Court, so I don’t think we have an answer on that yet. And how do we know who wants to keep it sealed? Why do you only suspect Hood of wanting it sealed? It seems like SF is the one with the PR problem. Hood CCL.

  4. Does no one see this but me:
    Judge de Laughter
    gotta laugh to keep from crying, but it is a fascinating bunch of tales, eh?

  5. Jacksonian

    You guys are both wrong. Balducci’s no squirrel. However, it is easy to make a great argument when the hearing has been scripted ex parte.

  6. jim

    I just do not see how this can remain sealed the taxpayers of the state of MS should know– after all there is $5 million of their money involved
    There is entirely too much sealing going on in all of these cases!

  7. Rebecca Marie

    In 1995 my family and I were involved in a toxic chemical spill in which the toxic fumes engulfed our home and caused serious health problems. For 13 years Plaintiff and Defending attorneys have kept us from having our day in court. The first presiding Judge over this lawsuit was Judge James E. Graves who is now a Supreme Court Judge was given the right to hold the settlement awards. The trial was held in 1998 where no Plaintiffs were found to have no injuries, but the settlement was put on my family’s name. Second Judge presiding over settlement awards was Judge Tomie Green who my husband and I went before. Her statement at the time was she was transferring the law suit to Judge Bobby DeLaughter because there was to many attorneys involved. We then filed papers in 2005 in the Hinds County Circuit Court demanding release of our settlement awards and went before Judge Bobby DeLaughter. In his court room he told my husband that no one was trying to defraud us of our awards. But 2 years later in late 2007 Judge Bobby DeLaughter dismissed our claims with prejudice after these claims had been settled since 1998. Here recently attorneys issued letters to their clients stating there would be no trial held for fear no Plaintiffs would be found to have injuries again. This would twice confirm my family are the only recipients to the hundreds of millions of dollars in claims.We have been without our home for 13 years which is in clear violation of our 14th Constitutional Amended right and live with life-threatening conditions. My opinion Judge Bobby DeLaughter should be removed from the Bench. Thank You for your time

  8. one who knows

    I keep seeing references to the amount of the settlement aggreement between Wilson and Scrugs as 5 to 7 million. Very wrong.wilson received only 1.5M about the amount of expenses incurred over the 12 years of litigation