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."