Federal judge requests that U.S. Attorney prosecute Dickie Scruggs for criminal contempt

Judge William Acker wants Dickie Scruggs prosecuted for what he believes was Scruggs’ willful "defiance" of a preliminary injunction the judge issued in December. 

The injunction was entered in a lawsuit brought by E.A. Renfroe, an independent claims adjusting business that did most of its work for State Farm, against two former Renfroe employees, Cori and Kerri Rigsby.  The two have admitted they copied some 6,000 pages of documents from Renfroe’s Katrina claims adjusting files.  They did this while still employed by Renfroe, and after they had made a secret deal with Scruggs to copy the documents and give them to him.  The two then left Renfroe before they could be fired, and formally joined Scruggs’ legal team as consultants with contracts for $150,000 a year, which Scruggs says is the same amount they earned the year before working for Renfroe. As you may recall, Renfroe sued the Rigsby sisters for alleging breaching their confidentiality agreements.

In December, Judge Acker issued a preliminary injunction requiring the sisters and Scruggs, who still had an attorney-client relationship with them, to return all documents to Renfroe’s counsel (the number of documents was commonly said to be 15,000, but that apparently included multiple copies of some documents).  The judge also issued a protective order keeping Renfroe’s attorney from turning the docs over to Renfroe itself or to State Farm.  This second detail is important to remember, because after Acker entered the injunction, Scruggs called Mississippi Attorney General Jim Hood on the phone that night.  At that time, Hood was both suing and criminally investigating various insurers, including State Farm.  The result of the conversation with Hood was a plan where Scruggs would send the documents to Hood instead of to Renfroe’s counsel, apparently in the belief that cooperating in Hood’s request for the documents — a request that was instigated by Scruggs himself — would immunize him from any problems with Judge Acker, or at least promote some goal that was more important to Scruggs than staying out of Acker’s dog house or possibly getting sent up on contempt charges.

Before we go on, I should mention that if you want to read any of this for yourself, you can do so by clicking on this link to a pdf of Judge Acker’s 26-page memorandum decision, filed Friday. 

Back to the play by play.

Scruggs later claimed that he believed his actions were in keeping with the terms of the injunction — and one would surmise he would also say this about this request to Hood for Hood to shoot him back copies of the Renfroe docs he had just Fed Exed to Hood.  The thinking here apparently being that Hood’s touching of the documents would be a kind of Holy Water that would cleanse them and make them suitable for just about any purpose.

It should be specifically remarked upon at this point that Acker does not accept that Scruggs believed he was complying with the injunction, not by a long shot.  One reason for Judge Acker’s suspicions that Scruggs knew he was violating the injunction was that four days after the phone call between Scruggs and Hood, an assistant AG sent a confirming letter to Scruggs that said Hood’s office was "not comfortable that the protective measures put in place by the Court will be effective in keeping these documents out of the grasp of State Farm."  Just pause over that language for a second.  The assistant AG is saying, in response to a phone call from Scruggs, she is not comfortable that Judge Acker’s order sufficiently fulfills a goal of the Attorney General’s office, so she wants to work with Scruggs to get around the order. 

Now, keep in mind three things: first, there was a protective order that prevented State Farm from seeing the docs; two, this letter saying the injunction provided insufficient protection to keep the documents from State Farm belies Scruggs’ stated belief that he was complying with the injunction; and three, what in the world do two officers of the court — a prominent lawyer and a state attorney general — think they are doing finding ways to promote their own goals in contravention of a federal judge’s order?

What were those goals? Judge Acker has his suspicions here too, as this passage from his opinion shows:

[E]ven if the court had not issued a protective order with the preliminary injunction, and even if Renfroe’s counsel had promptly disclosed the documents to State Farm, the court does not understand how this would have jeopardized a criminal investigation of State Farm.  Unless, as Renfroe has hinted at, Scruggs and Hood had teamed up to bully State Farm into civil and criminal settlements by telling State Farm that they had 15,000 inculpatory documents but not allowing State Farm to see them, the court does not see why it was worth it to Scruggs to risk contempt. (Emphasis added).

Acker’s view of Scruggs behavior can best be summed up by this passage from page 21:

Taking Scruggs’s word for it, he was arrogating to himself the right to substitute his judgment for the court’s judgment.  That spells "defiance."

Acker referred the matter to Alice Martin, U.S. Attorney for the Northern District of Alabama.  If she declines to prosecute, Judge Acker will appoint another attorney to prosecute the contempt action.  By the way, here’s an Associated Press story on Judge Acker’s opinion, with some reaction by Dickie Scruggs and his son and law partner, Zach Scruggs.  I’ve posted on this case quite a bit, if you want more background, do the search bar at your right and type "Rigsby."   



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3 Responses to Federal judge requests that U.S. Attorney prosecute Dickie Scruggs for criminal contempt

  1. Hurricane Katrina litigation update

    As I mentioned to someone earlier today, writing about Hurricane Katrina litigation is my chocolate, I can’t stay away from it or get enough of it. Well, actually chocolate is my chocolate, but Katrina litigation is right up there with…

  2. Courtney

    I am the Assistant AG mentioned in your article and wasn’t part of any phone call between Hood and Scruggs about these documents. I don’t guess you’ll post my comments, but your readers should know that, when Judge Acker asked to see a sample Renfroe claims file, Renfroe had to issue a subpoena to State Farm in order to comply with his request. Why would Renfroe have to subpoena its own documents from State Farm? That document custody situation would give pause to any decent prosecutor. I also notice the grand jury isn’t mentioned in the timeline. The point is that the targets of criminal investigations shouldn’t see the evidence before the grand jury does. This case may not be anyone’s favorite illustration of that consideration, but this is an extremely dangerous precedent to set. How can prosecutors effectively operate grand juries in the future if the criminals control the evidence? I would just appreciate the full telling of the story because there are a lot of good people here in Mississippi working in insurance who are suffering hits to their credibility because it’s so much easier to hate Scruggs than to really look at what Renfroe did. I’ve worked insurance defense before and know very well what he represents to the industry, but whatever you think of him doesn’t make Renfroe’s conduct okay. They are lucky to have him as a red herring.

  3. Thanks for your comment, I certainly appreciate and value your perspective. I don’t have a problem publishing your comment, I’m not afraid of differing points of view nor am I psychologically invested in any myth that I know everything.
    I don’t have space to mention everything in any given post, but probably could have done better a better job of talking about that there was a grand jury investigation, which as I recall returned no indictments. Some would say the entire grand jury was just political posturing, possibly a misuse of office. As for myself, I don’t know whether the grand jury was mere gamesmanship or was legit.
    I don’t think the post implies you were part of the conversation between Scruggs and Hood, although I believe Judge Acker’s opinion does say your letter was a follow-up to that conversation. In any event, there is no explanation for your having sent it other than that Scruggs first made the call to Hood and then sent to documents to Hood, which no one disputes.
    The protective order that Acker had in place kept Renfroe’s attorney from giving the docs to either State Farm or Renfroe. It’s difficult to understand why anyone would determine that his order was insufficient and then seek to circumvent it.
    It does not surprise me much that State Farm asked for a subpoena from Renfroe. Quite often, when people ask me for documents I tell them to send me a subpoena so no one can accuse me of breaching confidentiality portions of settlement agreements, willingly divulging work product, and similar concerns. When I get the subpoena, I can respond or object, or make my privilege objections on the record and say why certain things will not be produced. On its face, nothing seems odd about that at all, especially when there is an ongoing criminal investigation.
    Your comments also assume that there was some reason to keep the documents from State Farm, such as they had engaged in criminal activity. I’m assuming they haven’t, or wouldn’t Hood be doing a big disservice to the state by not indicting crooks? Also, let’s keep in mind that Renfroe had the documents because they came from State Farm in the first place — State Farm already had the documents, it just didn’t know which ones they were. From what I have seen of these documents, they don’t excite me. The best stuff seemed to be that McIntosh group of documents, and that frankly doesn’t hold together for me. Others have different views, I know, which is why they make both vanilla and chocolate.
    Your comments also assume I hate Scruggs, which is far from the truth. I’ve spoken and written of my admiration for what he has done in these Katrina cases on many occasions. However, he is not God and like all of us, is subject to audit, review and analysis. The fact that I like many things about him does not mean I like everything he does or that I will refrain from honest analysis. It is merely my interpretation of what I see.
    Also, in response, I am not an insurance defense lawyer as I understand that term, which is someone who defends insureds after being hired by the insurance company. I am instead an insurance coverage lawyer, meaning I analyze and litigate the rights and obligations of insurers and policyholders under their contracts and state statutes. Sometimes I work for insurance companies, sometimes I work for policyholders. My purpose with this blog is neither to defend not attack any side, but simply to do what I like to do, talk about insurance coverage law and Katrina developments. That’s it, there’s no hidden agenda. I say what I think, and sometimes it is pro-Scruggs, sometimes not, sometimes it is for the insurance company point of view, sometimes not.
    I don’t know specifically what Renfroe did that was different from what State Farm did, so I can’t comment on Renfroe. I do know this, if I have a confidentiality agreement with an employee and they start copying off documents and selling them (arguably that is the import of getting a $150,000 employement contract from Scruggs),I am going to be one ticked-off cowboy and I’m going to sue that person, just like Renfroe did to the Rigsbies.
    Thanks again for taking the time to comment. If all you have read of my work is that one post, I would encourage you to read more, you will see that I make every effort to treat everyone fairly and I try to respond to all comments, especially those that differ with my views.