Scruggs Nation, post-Ides of March, pre-St. Patrick’s Day edition

A roundup of stories about the Scruggs plea agreements, and a few comments:

Hood: you can’t get there from here.

This Legal Newsline story by John O’Brien about Mississippi Attorney General Jim Hood’s reaction to the Scruggs plea is hilarious.  Let’s look at a few excerpts (I’ve boldfaced some particularly amazing parts):

In catching high-profile plaintiffs lawyer Richard "Dickie" Scruggs in a judicial bribery scheme, the federal government’s methods of investigation worked perfectly, Mississippi Attorney General Jim Hood said Friday.

So well, in fact, that he wishes he could use the same, even though he has recently deferred prosecution of one federal judicial bribery case to the local district attorney and has shown no sign of filing charges against Scruggs.

"The federal government effectively used its wiretap authority to prosecute a rare judicial bribery case," Hood said. "It would be an effective deterrent in other white collar crime cases, if the Legislature would give wiretap authority to state prosecutors."

Hood has drawn criticism since the November indictment of Scruggs, a large campaign contributor whose relationship with Hood was described as "remarkably close" by federal prosecutors in Scruggs’ recently dismissed contempt case.

Editorials called for Hood’s resignation because the second-term Democrat would not file state charges against Scruggs, any of his co-conspirators or attorney Joey Langston. Langston pleaded guilty to a judicial bribery scheme involving Scruggs in Hinds County. 

Could I be reading this right? Hood is blaming the lack of wiretap authority for his not investigating and prosecuting Scruggs and others? Isn’t that a bit like a guy who every morning says he can’t exercise on the stairmaster because he doesn’t have nice enough sweat pants?

Also, I have another question: "rare judicial bribery case"? What’s rare, the judicial bribery or someone actually bringing a case because of it? 

Because [Joey] Langston was awarded state contracts by Hood to sue prescription drug-maker Eli Lilly and MCI, Hood said he could not prosecute him.

"Due to Mr. Langston’s past representation of this office, it could create an appearance of impropriety for our office to participate in a potential state prosecution of this case. It will be up to the appropriate District Attorney(s) to handle any potential state case(s). The resources of my office will be available to them."

Can that possibly be true? Anyone who gets a contract from the AG’s office is immune from the AG’s authority? The AG is state government’s lawyer — how about others who contract with state government, is there also a conflict of interest for Hood to investigate them?  Remember how Hood earlier this year announced a big offensive — in lieu of prosecuting Scruggs and others — against makers of fake contact lenses and unsafe toys? Hey, all those toy makers have to do is sneak in and get a contract with the AG’s office somehow and they are off the hook!  Look at Hood’s statement again — do you believe that if a special assistant AG appointed by Hood somehow wound up ripping off the state for millions that Hood couldn’t prosecute him even regarding that same case? Of course you don’t.  So why would we believe that Hood can’t investigate the same person for completely separate, unrelated alleged wrongs?

What resources of Hood’s office would be available which would also not cause a conflict of interest, the copy machine?  A box of legal pads and pens?

L.A. Times story.

Here’s a story from Richard Fausset, Jenny Jarvie and Henry Weinstein of the L.A. Times on the Scruggs guilty plea (the story has a quote from me).  A pretty good story, comparing, at the beginning of the story, the downfall of Scruggs with the face plant of Eliot Spitzer.  Of course, the writers are using that just as a frame of reference, they are not suggesting an actual similarity, except perhaps in that they both thought they could get away with it.

But you remember what Tolstoy wrote at the beginning of Anna Karenina, don’t you?

Happy families are all alike; every unhappy family is unhappy in its own way. 

True enough.  Each of these downfall stories is always unhappy in its own way. 

WSJ Stories.

This Wall Street Journal story by Paulo Prada and Ashby Jones appeared the morning of the Scruggs guilty plea and deserved better than to get lost in the day’s events.  It is an extremely good retrospective on Scruggs’ series of fee disputes.  The story asks the question everyone has been asking:

To many legal observers, the indictment raises a hard question: What could lead a lawyer who once earned nearly $1 billion on a single case, the tobacco litigation, to bribe a judge over a matter of a few million dollars? 

(The story also contains the obligatory spin from Scruggs’ lawyer about how he didn’t do it, which was vitiated a short time later when that same lawyer stood up in court and had to poke Scruggs with a cattle prod to get him to follow through on allocuting his guilty plea).

You know my working hypothesis: Scruggs is not the gambler he has sometimes been portrayed as, he is a guy who likes to work things so the result is preordained, and as we’ve seen, he is surely not the only one.  I cite this portion of the story as further evidence in support of this hypothesis.

Around this time, another law-school classmate, Michael T. Lewis, says he gave Mr. Scruggs the idea that ultimately made him rich and famous: demanding that tobacco companies repay states for their Medicaid costs in caring for people sickened by smoking.

Mr. Scruggs was intrigued, but had drawn criticism over his asbestos litigation for the state. Detractors called it a gravy train for the attorney general’s favored lawyers, who repaid the favor with campaign donations.

So Mr. Scruggs turned to another political pal: Pete Johnson, who says Mr. Scruggs asked him to help push through legislation clearly authorizing the attorney general to farm out lawsuits to private lawyers. Mr. Johnson, a former state auditor, says that at an airport restaurant in March 1994, Mr. Scruggs promised him 10% of his legal fees from the tobacco case if the bill passed and the litigation was successful.

With Mr. Johnson navigating behind the scenes, the bill passed. But after the tobacco settlement brought Mr. Scruggs nearly a billion dollars in legal fees, he said "he didn’t owe me anything," Mr. Johnson says. Like Messrs. Luckey and Wilson, Mr. Johnson filed a suit for legal fees against Mr. Scruggs.

In 2001, with the suit unresolved, Mr. Johnson dropped it. He was a liver-transplant survivor, and "decided I’d rather spend whatever time I have left alive at peace and not in court fighting for money," he says.

Mr. Scruggs then sent him a $100,000 check, via an intermediary and without explanation. Mr. Johnson saw it as "a way for him to tell my estate that I was paid for my work." 

Again, a really good story.  The Journal followed up the next day with this editorial.  The editorial’s answer to The Question is that Scruggs was supersaturated with hubris. Well . . . . I hate to get picky, but I don’t think this goes very far as an explanation. 

The point I made with the Anna Karenina quote above is that comparing Scruggs to Spitzer, as the editorial does, focuses on surface similarities to the exclusion of underlying causes. If Scruggs had hubris, why, one needs to ask, did he have such hubris, and how did it manifest itself? Many people, after all, are arrogant — lawyers, as a class, are plagued by a high percentage of people who are insufferably arrogant, vain and full of false notions about their own preeminence. Yet the overwhelming majority of lawyers, even the overwhelming majority of the smaller subset of Hubristic Attorneys, do not commit crimes.

So it wasn’t just pride or arrogance, it also had something to do with the special conditions found in Mississippi.  As we’ve talked about before, not every legal endeavor Scruggs engaged in was successful.  We can ask ourselves — has he had any successes at all, in fact, where he was not able to manipulate the results through the political process or, let’s put it this way, other means? 

I myself don’t see Scruggs as a particularly arrogant man.  I see him as a practical man, a man who well understood the use of ambient tools — he’d use whatever was at hand as an aid for his litigation. I see him, in fact, as having a particular genius for this kind of creative work that overcame his moral principles.  Maybe that’s hubris, maybe it isn’t.  But the explanation goes much, much deeper, and my understanding of it is still far from complete. 

Followup on Joe South story.

This AP story has updates on developments in the case of a man killed in an accident involving a client of Tim Balducci, Darron Lee Minor.  You may remember earlier stories about how the FBI surveillance tapes of Balducci’s conversations with Judge Lackey captured Balducci offering Lackey a bribe to take certain actions in the trial of this client.  Not only that, it appears Balducci pried an extra $20,000 out of the defendant’s family that they shouldn’t have had to pay — they are not responsible to make Balducci whole because of a fee dispute he had with Joey Langston. [UPDATE: see the comment below from "some lawyer," who points out the transcript says Balducci wanted to get this extra money, not that he actually did].

Balducci said Minor’s family paid Langston $30,000 for his firm to represent Minor, but Balducci said that when he left the firm, the $30,000 was not paid to him. He told Lackey he planned on going back to Minor’s family and asking for another $20,000 since he never got paid by Langston.

He offers Lackey $10,000 to rule in his favor.

Balducci: "I think I’ve got a good theory. I think I can get the legs cut out of this beforehand, gimme twenty grand to do it, and if he does, then I thought me and you could split it and we could, you know, we could get it taken care of."

Lackey, knowing he’s being taped, agrees. Balducci asks Lackey to continue the case for him in November.

Balducci: "We’d put it off ’til February and then I’ll file a motion to quash in the meantime after I get paid."

The case was continued, but Dist. Atty. Ben Creekmore said it wasn’t because Lackey did what Balducci requested. Creekmore said Judge Andrew Howorth continued the trial in November until March 17.

"I thought Balducci had good arguments, obviously, because I granted the continuance," Howorth said this week in denying another continuance. "But now I see that a lot of that was a ruse to get out of the case because he knew he was going down."

Since Balducci was arrested a few days after the conversation, Minor was without representation and a new lawyer had to be appointed. Attorney Casey Lott entered an appearance for Minor but pulled out. Attorney David Hill took over as defense attorney about two weeks ago, Creekmore said.

Creekmore denied that the attempted bribery by Balducci caused any of the previous delays in Minor’s trial.

"To say that the Scruggs case delayed this trial would be fair but only from the November trial date until the March date," Creekmore said. "But this story is about what Darron has done. And he’s going to be tried on that."

Question: how much of this kind of thing is going on in Mississippi?  

Battle of McIntosh continues.

I’ve been meaning to comment on this John O’Brien story for some time and never got around to it.  It’s about the ongoing battle between the Scruggs(less) Katrina Group, now formally called the Katrina Litigation Group, and State Farm in the McIntosh v. State Farm case, a Verdun-like litigation hell consuming vast quantities of time, money and resources without any effect in breaking the stalemate.  

You may remember that I’ve written extensively about this case and State Farm’s efforts to disqualify the KLG based on the sins of Dickie Scruggs, the KLG’s vicarious liability for them and the KLG’s supposed endorsement and participation in unethical conduct, not all of it involving Scruggs.  

Well, after Scruggs obtained a dismissal of Judge Acker’s charge of criminal contempt of court against him a few weeks ago, the KLG filed supplemental authority with the court giving notice that the charge had been dismissed, you know, as partial refutation of State Farm’s charges of unethical behavior.

I wouldn’t say Friday’s guilty plea by Scruggs completely moots KLG’s filing.  After all, the contempt charge grew directly out of the handling by Scruggs of claims filed stolen from State Farm (many of these documents were used by the entire KLG in litigation, and allegedly at least one other KLG firm retained copies of some of the documents instead of returning them as ordered by Judge Acker).   The bribery charges, however, were peripheral to Katrina litigation against State Farm — the bribery occurred in a fee dispute between member firms of the Scruggs Katrina Group over money paid in settlement of 640 Katrina cases by State Farm.  So they aren’t the same animal. Nevertheless, the guilty plea does take the bloom off the rose.  I tell you what, if you’ve ever seen the person next to you sprayed by a skunk, you know some of the stink rubs off on you.

I’ve considered whether the dismissal of the Alabama charges against Scruggs is equivalent to saying he did nothing unethical.  I don’t think so.  The judge dismissed the case because of a supposed lack of jurisdiction over Scruggs, and also, in what to me is an amazingly myopic reading of the terms of Acker’s injunction, because the "law enforcement exception" in the injunction allowed Scruggs to play keep-away with the documents with his close friend Jim Hood instead of returning them as ordered.

A lack of jurisdiction doesn’t impact the issue of ethics at all, but what about the ruling on the law enforcement exception? Isn’t that conclusive as to that issue, and doesn’t it say Scruggs was legally able to do what he did? Is being legally able to do what he did equivalent to saying it was ethical?  As to the last question, remember that the case was dismissed not because the judge said there was insufficient evidence of his intent to defy the injunction, but that what the did was allowed under the injunction. So I’d say the KLG filing has a point, and that it will be very difficult for anyone to argue the unethical nature of Scruggs’ actions in defying the injunction. However, that does not mean that all the other stuff he did — working hand-in-glove with Hood, paying the material witnesses like the Rigsby sisters whopping salaries for doing little to nothing, or even his other uses of the documents — is OK.  There is still plenty to talk about there, and my prediction is the talk has only just begun.




Filed under Industry Developments

7 Responses to Scruggs Nation, post-Ides of March, pre-St. Patrick’s Day edition

  1. Lurker

    This comment is out of place but I did not know where to put it. Are you aware that people on the coast (Bay St. Louis in this case) are getting taxed for their Katrina Recovery Grants from the Federal Government? This happened to my son last Friday.

  2. Tim

    Interesting read, although I can tell you Pete Johnson was full of it in my opinion. As I recall he testified he was paid for the work he did and when it ended his payment stopped. Years later he claimed he had an “oral contingency fee” contract for 10%. He forgot that the Rules of Professional Conduct are very clear that you cannot have an “oral contigency fee” contract. Mr. Johnson should have read those rules if what he said was true. He was losing his case and was appealing to the Supreme Court when he dropped it for whatever reason.
    Its easy for him to jump on the bandwagon now.
    Otherwise another good read David.

  3. some lawyer

    In the transcript Balducci tells Lackey that he wants to get $20K from the Minor family, not that he actually got it.
    Also, Scruggs and his son in fact are extremely arrogant people, although that does not invalidate your thesis.

  4. Rodney

    I’ve just returned from 2 months e-free in India (there’s some complex legal/tort stuff going on there) and re entered your blog to the news that Dickie’s put his hands up! With a bit of hindsight, I could never see a trial after the wiretap turned up.
    “So it wasn’t just pride or arrogance, it also had something to do with the special conditions found in Mississippi” you say in your excellent piece and I
    agree. One of those “special conditions” was the fact that this happened in their back (and front) yards, and in the bit in between; they were livng in neighbour’s houses when the litigation started. The King of Tort lawyer’s house vanishes and I don’t think that he’s going to say “That’s life”. Maybe this intimacy of loss was the hubris tipping point.
    I’m sure there will be a lot of breastbeating (already started on Y’All) and highly politicised editorials, but, to this Brit, this geezer must get a minimum of 10 years and PJ be waterboarded for his grain storage secrets.

  5. dixie68

    Long ago most of us faced the fact that Mississippi is a real GOB state and our 1890 Constitution that cannot be changed is part of the reason. We cannot have a ballot initiative; we have no newspapers that go past picking up AP releases. As far as I am concerned, the internet may be our salvation. With this site, Folo, and Y’all Politics, those of us who want to know what is going on are getting first class reporting, for which I am extremely grateful.
    It sickens me that so many bleeding hearts are surfacing now with the belief that poor Mr. Scruggs, the genius attorney, was taken in by that young boob, Balducci. Makes me want to learn to play a fiddle, so I can accompany them.

  6. alsoalawyer

    Lurker, I just talked to my CPA about the MDA grant last week. It is taxable only to the extent that you claimed losses to your home following Katrina. In other words, if you claimed a $50k uncompensated loss for damage to your home, and you received $30k from the MDA grant, you are now being compensated for $30k of your $50k loss and must pay taxes on that portion.
    If you claimed no losses (which I would think almost everyone did), you would not be taxed. This does not include losses for contents or anything except your home. I am not a CPA, but that’s what I was told and it seems completely fair to me…

  7. observer

    Hood is right and wrong. There is no excuse for the Mississippi Legislature to not allow wiretapping in Mississippi (except by the Mississippi Bureau of Narcotics for drug offenses). But, Hood, as the most blantantly political law enforcement officer in the state, is certainly one of the reasons it didn’t pass (you can’t say he is the only reason, because wiretap laws have been failing in the legislature since way before Hood was around).
    To get it passed, it is going to take a strong attorney general, who is viewed as fair and impartial, by everyone. Hood isn’t that guy, for sure.