Scruggs Nation, Day 17: Jones v. Scruggs revisited

While there is a lull in the FBI raids, lets take this time to regroup and look back on a few of the themes we have touched on earlier.  One is this: if what prosecutors say is true — and let us remember we have only heard one side of the story so far — what went on with the Jones v. Scruggs lawsuit such that a man at the very pinnacle of success would risk disgrace and jail?

Walter Olson addresses this question in this article in todays Wall Street Journal. (A quote from me suggesting that Scruggs entire career will now be reappraised, which appeared in a recent Los Angeles Times story, appears at the end of the article).  Heres an excerpt:

"It just boggles the mind," said one Mississippi trial lawyer quoted in the Los Angeles Times about the indictment of tort lawyer Richard "Dickie" Scruggs last week on charges of backing the attempted bribery of a state judge. "Here is a man who has had an enormous amount of success, who reached a level very few attorneys, if any, have reached. Why would he risk everything over a legal dispute over attorneys fees?"

Why indeed? Mr. Scruggs, a prime mover in the $246 billion tobacco settlement with the states, is arguably the most formidable plaintiffs lawyer in history. Why risk a long prison term just to add more millions to a fortune already too vast to spend in one lifetime? While it is too early to tell — and Mr. Scruggs deserves a presumption of innocence — hints at possible motives are by no means lacking.

Lets explore this question by looking at some of the pleadings filed in Jones v. Scruggs, the fee dispute case in Lafayette County between Jones, Funderburg and the rest of the then-Scruggs Katrina Group. (After the indictment of Scruggs and four others, the group first announced the Scruggs firm would withdraw from Katrina litigation, then Scruggs counter-announced that he would not, then according to sources John W. "Don" Barrett, an old friend of Scruggs whose Barrett Law Office was part of the Scruggs Katrina Group, went to Scruggs office for a meeting, and after that the group once again announced Scruggs was withdrawing from Katrina cases and Scruggs filed withdrawal motions in the remaining cases.  The group has been renamed the Katrina Litigation Group). 

Below are some significant pleadings in the case. Of these, I have linked before only to the complaint.  I have read every page of these, and they are well worth the time it takes.

  • Complaint
  • Exhibits to complaint, defendants answer and motion to compel arbitration 
  • Plaintiffs motion to stay arbitration
  • Defendants response to motion to stay arbitration
  • Plaintiffs reply
  • Plaintiffs supplemental brief
  • Defendants reply re plaintiffs supplemental brief 
  • UPDATE — a reader reminded me I didnt link to Jones amended complaint.  See this post  for a link to the amended complaint and for a copy of Jones motion for court control of SKG attorney fees.    

One of the most interesting parts of these pleadings are the exhibits to the defendants reply, the last item in the sequence above.  I have looked at these several times wondering if the documents I received from the court in Lafayette County were out of order somehow — this is possible — because why the defendants would have included these documents as exhibits is a mystery to me.  They appear particularly unhelpful to the defendants and especially Dickie Scruggs.  For example, remember that Johnny Jones and Steve Funderburg, the plaintiffs in this case, earlier represented Dickie Scruggs in the Luckey case, another fee dispute. A number of readers have communicated with me raising questions about how Jones can seek to establish a pattern and practice of Scruggs cheating other lawyers out of attorney fees when this effort would involve, in part, discussing a case in which Jones had an attorney-client relationship with Scruggs.  It is debated whether the work product privilege belongs to the lawyer or the client, but everyone agrees that the attorney client privilege belongs solely to the client, and only the client can waive it. 

One way in which waiver can occur is where the client places the privileged communications or the relationship "at issue."  Courts have various explanations of the at-issue doctrine — some would find the fact that the communications are a necessary part of deciding the dispute at hand to satisfy the doctrine — but almost any court can find a waiver where the client himself explores or reveals the communications. So if indeed it was the defendants who placed at issue the Steve Funderburg e-mail of March 4, 2007 to Dickie Scruggs (page 18 of the exhibit in the last document linked to above), doing so does not make sense to me. In the e-mail, Funderburg blasts Scruggs as follows:

John and I DEFENDED you in fee dispute litigation, for Gods sake.  We DEFENDED you  when people said you were greedy, or were a back-stabber, or a liar, or anything else.  Good Lord we trust you as a friend.  Well . . . good job.  You have developed a routine.  It worked.  But go to your grave knowing that you have shaken my belief in everything I hold dear.  I did not believe that people like you really existed.  I am ashamed and will always be ashamed of having defended and protected you.  You are a man without honor and you should know that about yourself.

Of course, there are exceptions to the attorney client privilege, such as the crime-fraud exception, where legal advice is sought to advance a criminal or fraudulent purpose, but generally ones own attorney is not the one who seeks resort to this exception. I dont know how this will all play out — the at-issue doctrine can be broad or narrow, depending on the circumstances and the court.  Readers may have their own take on this, but I wanted to raise the question and see what others think.

But back to the central point of today: why would he do it? What Jones and Funderburg appear to be driving at is that acting in this way is a habit, a method of doing business.  Seen in this light, the alleged bribery scheme is just an extension of this ruthless business method. Even if that is true, another question remains. Why try bribery to get the case into arbitration when Jones, it is evident from looking at the documents, had repeatedly demanded arbitration pursuant to the joint venture contract before filing suit?  Jones answer in the pleadings is that once the lawsuit was filed — perhaps Scruggs and the others did not truly believe Jones would file suit and instead believed he would back down and take either the original $1 million offered, the lesser $600,000 offered later, or perhaps even less — the potential for bad publicity and punitive damages from the tort claims in the lawsuit led to a re-evaluation.  This re-evaluation must have been relatively quick, because the lawsuit was filed March 15, 2007, and the defendants filed a motion to compel arbitration April 10.  In addition, prosecutors have alleged the purported bribery scheme involving Scruggs began around March 28. Another possible explanation is this: what if Scruggs thought that Jones, not a member of the inner circle of the SKG (good grief, he didnt even have his own private jet!) just needed to be taught a lesson about power and who is fit to wield it in this world? What if? Under such a view, the alleged bribery might be seen as an expedient, perhaps regrettable, perhaps not, to support and re-inforce the natural order, a kind of historical determinism in which the little things like alleged bribes are all subsumed in inevitability. What if?       

There are other points worth exploring that are touched on by the Jones v. Scruggs pleadings, including a re-evaluation of the supposed "whistleblower" Rigsby sisters.  We can talk about that in greater depth at a later time, but since, included in the pleadings, is Judge Ackers order finding Scruggs in contempt and recommending him for prosecution in the Renfroe v. Rigsby, let me just recommend that you read it again closely in light of the Jones lawsuit, and ask yourself this.  It is apparent that Jones and possibly other members of SKG were troubled by hiring material witnesses as litigation consultants, and also with paying them with SKG funds. What if — just what if — when the protective order is finally lifted on the State Farm claims documents the Rigsby sisters took from Renfroe, they are found to match up virtually one for one with the policyholder lawsuits Scruggs and SKG had already filed? What would that say about their whistleblower status? What would it say about Jim Hoods involvement with the Rigsby sisters, his grand jury investigation of State Farm and his suggestion that Scruggs (according to Scruggs testimony) send the documents to him, Hood, rather than comply with Ackers injunction, at a time where Hoods criminal and civil pressure played a big part in State Farms willingness to settle with Scruggs? Again, what if, and what would this say? 


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