Insurance Coverage Blog

• Scruggs Nation, Day 29
  

  I continue on vacation through next Wednesday, but will post this week when I can.  For now, just a short post on the Wall Street Journal's editorial yesterday (subscription only).  The editorial posits an unholy alliance between state law enforcement officials and certain members of the plaintiff's bar:

  This Mississippi Tort Inc. enterprise began in the 1990s, when former Attorney General Mike Moore sued tobacco companies and contracted out the lawsuit to his old law school buddy, Mr. Scruggs. Their nicknames were Scro and Mo. Mr. Scruggs's firm is estimated to have earned nearly $1 billion in fees; Mr. Moore became a movie hero ("The Insider").

  It is a seductive business model, and these days a crew of tort kingpins known as the Pascagoula Mafia show up in nearly every state lawsuit. Mr. Hood made trial lawyer Joey Langston rich by throwing him the state's case against MCI/WorldCom. Mr. Hood also hired Mr. Langston's firm -- where Mr. Balducci was a partner -- to pursue Eli Lilly. It also happens that Mr. Langston is one of Mr. Hood's major campaign contributors.

  When Mr. Hood sued State Farm, Mr. Scruggs supplied him with key documents. Former AG Moore, now a trial lawyer himself, worked both with Mr. Hood on his state insurance litigation and with Mr. Scruggs in private Katrina suits. Mr. Balducci, who left the Langston firm to set up his own practice, was also working with Mr. Scruggs on Katrina litigation. And did we mention who is Mr. Scruggs's personal criminal attorney? Mr. Langston.

  These relationships are now starting to haunt the participants. Mr. Hood faced a tough re-election this fall after his Republican opponent highlighted Mr. Hood's backroom relations with the trial bar. State Auditor Phil Bryant this summer sent Mr. Hood a letter demanding his office commence proceedings to recover the $14 million paid to Mr. Langston and colleagues in the MCI/WorldCom case, saying that, under Mississippi law, the money paid in fees to Mr. Langston rightfully belonged to the state.

  Mr. Hood has also been countersued by State Farm, in a detailed complaint alleging that he had an ethically conflicted relationship with Mr. Scruggs throughout the Katrina litigation. Mr. Scruggs gave Mr. Hood documents that had been purloined by two former State Farm contractors, and Mr. Hood helped Mr. Scruggs keep those documents away from a federal court. Mr. Scruggs is also -- you had already guessed this -- one of Mr. Hood's major campaign contributors.

  It's not only the Wall Street Journal that thinks this way.  I've heard similar sentiments from plaintiff's attorneys in Mississippi outside the Hood-Moore-Scruggs-Langston circle.  Speaking of Hood, he got a lucky break in that the Scruggs indictment didn't happen until after he was re-elected.  Any scrutiny that Hood is now receiving, he is in a much better position to withstand it as the state's AG than as a private citizen.  Hood himself must believe he is being scrutinized -- how else to account for his month-long case of laryngitis?

    

• Scruggs Nation, Day 28
  

  Just a short post for now, maybe more later today, maybe not. I saw this USA Today story by Donna Leinwand on the Scruggs scandal today.  The story is a fairly decent overview of what has gone on so far -- there is only so much you can do in the space of a typical USA Today story. Basically you've heard it all before, but a couple points need to be commented on.  Here's one excerpt from the story.  

  Scruggs is innocent of the charges, his lead attorney, John Keker, says. Scruggs "didn't know anything about (the alleged bribe)," he said. "The whole circumstances are slightly crazy."

  . . . .

  Balducci "did it on his own," Keker says. "Now he's trying to spread the pain around."

  I've said it before, but I'll say it again.  This seems remarkably weak as a defense.  I keep waiting to see what else Keker has got in his magic act, and he keeps going back to the same dumb trick where he pulls a coin out of your ear.  If this is the best he has, I wonder if a plea agreement might be in the offing before the trial date.  We will have to wait and see what the evidence against Scruggs is, but in addition to Balducci's testimony, it probably includes audio recordings of conversations with Balducci, particularly related to the "extra $10,000," and payments to Balducci that are going to be extraordinarily difficult to explain as payments for jury instructions and jury consulting, their supposed purpose.  In addition, the FBI "taint" team is continuing to look at the hard drives of the Scruggs law firm, and they may reveal even more. 

  A corollary to this defense is that Balducci supposedly is the ne'er-do-well son trying to impress daddy by fixing, without his knowledge, some problem that has perplexed ol' pops.  I'm sure you've seen this plot in a couple hundred movies and sitcoms -- Dad's Buick has some tricky fuel injectors and Junior borrows his wrench set, sneaks out to the garage in the middle of the night and gets busy under the hood -- won't the old man be surprised in the morning when his car fires right up!  Maybe he'll be so pleased he will front the money for that spring break trip to Cancun.  It always ends the same, Dad walks out to the driveway in the morning and finds his entire engine scattered in pieces all over the concrete, and Junior fast asleep in the back seat.  As a storyline, it probably works better in Leave it to Beaver than the Scruggs case.

  Here's another excerpt from the story:

  The indictment and the criminal contempt charge stem from Scruggs' work on behalf of Katrina victims. Scruggs, who lost his Pascagoula home in the storm, gathered prominent trial attorneys to sue State Farm, saying it had shortchanged Gulf Coast residents who lost homes and businesses.

  State Farm alleges in court papers related to those lawsuits that Scruggs colluded with Mississippi Attorney General Jim Hood to force Katrina case settlements by threatening a criminal investigation.

  Hood did not return phone messages left at his office. In a letter to U.S. Attorney Alice Martin of the Northern District of Alabama, Hood wrote that Scruggs is a confidential informant for the state's investigations into how insurers responded post-Katrina.

  Scruggs introduced Hood to two sisters who had worked at State Farm and passed thousands of documents to Scruggs, court papers say. When U.S. District Court Judge William Acker ordered Scruggs to return the documents, Scruggs instead gave them to Hood, Acker wrote.

  The judge asked Martin to prosecute Scruggs for criminal contempt of court. Hood asked Martin not to prosecute. When Martin declined to press charges, Acker appointed two special prosecutors. On Aug. 21, they charged Scruggs with criminal contempt.

  Keker says Scruggs did not violate Acker's order because Scruggs interpreted it to mean that he could give the documents to law enforcement.

  I see a similar description of the events relating to Scruggs' sending the documents to Hood in just about every news story  that mentions it, no matter which newspaper or magazine is doing the writing.  Often, journalists look at what some other journalist has written, and don't see a lot of need to vary it, because the audience is not the same. Let me point out, however, that this description is inaccurate and misleading, because it fails to give the context that Hood had absolutely no need for the documents, because he already had copies.  This is often why readers of these stories fail to see what Scruggs did as a big deal -- what's wrong with sharing information with law enforcement?

  However, it appears far different when you know Hood had had his own copies of the docs for a long time, that he and Scruggs spoke about what to do just after Acker's order was entered, and that the only plausible explanation for sending the docs to Hood was to find a way not to comply with Acker's order and get away with it.   Hood and Scruggs had done their thing for so long, I imagine both were shocked when Acker threw down on Scruggs and referred him for alleged criminal contempt of court.  You know, I've read Acker's contempt order a number of times, and each time it strikes me that it appears if Acker thought he could have referred Hood for some charge as well, he woul