Jones v. Scruggs hearing today

THIRD UPDATE:  Here’s a story by Patsy Brumfield of the Daily Journal on the day’s events.  Here is another story, by Alyssa Schnugg in the Oxford Eagle — but this link might go bad right away, apparently the paper doesn’t have permalinks on its main page.  I tried to pull this story from the archives, but if it isn’t there when you follow the link, it’s not my fault.

SECOND UPDATE: "The Monster Was Dickie Scruggs." 

Here’s some great live blogging from NMC at folo.   

I’ll try to find some time to comment more thoroughly on the day’s events, but it won’t be until tonight at the earliest. 

UPDATE: Finally got a moment to post, here’s the report on the morning session from ICLB’s Oxford correspondent.  We’re out on the frontiers of verisimilitude here, and folks, this is as close as you’re ever going to see to a guest blogger on this site: 

Motion for continuance.

Judge Coleman pointed out that the motion setting the hearing date was entered 4/3. All parties advised on Thursday before that date by e-mail that matter would be heard today. Counsel for both sides acknowledged receiving the e-mail. Judge was advised that the parties were available 4/14-18. The judge intend by tone of the email that he wanted matter to proceed.

The judge asked the defense: what witnesses would not be available to testify, intending, instead to assert their Fifth Amendment right?

Cal Mayo for Scruggs and Scruggs Law Firm — Richard Scruggs, Zach Scruggs, and Sid Backstrom will be sentenced in the next 45 days. They have been advised by their criminal attorneys to assert the Fifth Amendment in response to questions today. May be available to testify after sentencing. Steve Patterson, whose the defense offered would be beneficial to the court on the matter of sanctions, had been advised by his counsel that he was not to testify. Mayo stated that they had not been able to find Balducci.

Motion for Sanctions.

Cal Mayo presented an order clarifying the scope of sanctions to the judge. The plaintiff consents. It was difficult to hear, but I believe the order limits the scope of sanctions to compensatory damages or stricken pleadings.

Grady Tollison, for the plaintiffs, informed the court that Judge Lackey had been subpoenaed by both sides, but was tied up in a jury trial. When available, his testimony would be taken, likely out of turn. Counsel for Dickie Scruggs indicated that Scruggs was across the street and would be retrieved for testimony first since Lackey not available.

Tollison offered into evidence the following documents, while we were waiting for Scruggs to arrive:

Ex 1 – certified copy of plea, transcript – Tim Balducci .
Ex 2 – certified copy of plea, transcript – Sid Backstrom
Ex 3 – certified copy of plea, transcript – Dickie Scruggs
Ex 4 – certified copy of plea, transcript – Zach Scruggs
Ex 5 – certified copy of plea, transcript – Steve Patterson
Ex 6 – interrogatory answers 1, 3, 11 – of Nutt & McAlister – $40,000 paid by SKG [I think this question involves the reimbursement of $40,000 by N&M to Scruggs for documentation presented]
Ex 7 – interrogatory answer from Barrett Law Office, P.A.. – substantially same as Nutt & McAlister
Ex 8 – interrogatory answer from Don Barrett individually – substantially same as Nutt & McAlister
Ex 9 – interrogatory answer – Lovelace
Ex 10 – interrogatory of Richard F. Scruggs – [Mayo: objection to these – no testimony in this, as Scruggs objected to each of the interrogatory requests]
Ex 11 – interrogatory of Scruggs law firm [Mayo: objection to these – no testimony in this, as Scruggs objected to each of the interrogatory requests]
Ex 12 – Requests admission by Nutt & McAllister

Dickie Scruggs and Backstrom arrived. Tollison called Dickie Scruggs to the stand.

Scruggs approached witness stand, sat and pulled out small index card.
Brooks Dooley introduced himself as representing Scruggs.

[below I attempted to capture the substance of the question. It was impossible to get a verbatim representation of the question given the speed with which these questions were asked and to which Scruggs responded. Provided interesting – albeit one-sided narrative]

Scruggs introduced himself for the record.
Tollison questioned the witness.
Q: You a member of Scruggs Law Firm?
A: Respectfully decline to answer… based on the advice of counsel, …5th amendment …. [prepared statement read from index card]
Q: Member of Scruggs Katrina Group?
A: Respectfully decline to answer… based on the advice of counsel, …5th amendment ….
Q: The finances of the Scruggs Katrina Group were handled by Nutt & McAlister?
A: Respectfully decline to answer… based on the advice of counsel, …5th amendment ….

At this point, Judge Coleman asked the witness to say “same reason” instead of reading the long, prepared statement asserting his Fifth Amendment rights. Scruggs’ attorney offered that that was acceptable so long as everyone understood “same reason” to be an assertion of Fifth Amendment rights, as described in the prepared statement.

Tollison resumed questioning. Scruggs responded “same reason” to each of the following: .
Q: You individually and Scruggs Law Firm are defendants in Jones, Funderberg…
Q: Other defendants in this case Nutt & McAlister, Don Barrett , Barrett Law Firm, Lovelace..?
Q: Case assigned to Judge Lackey?
Q: Up until ___ [date], defendants were represented by Daniel Coker?
Q Defendants filed motion to stay and compel arbitration?
Q: Tim Balducci not attorney of record for any of the attorneys in this case?
Q: Isn’t it a fact that Tim Balducci, Sid Backstrom and Steve Patterson ______ have all plead guilty to conspiring with you to corruptly influence Judge Lackey?
Q: You have pleaded guilty to count one of an indictment?
Q: In open court under oath admitted to conspiring?
Q: Admitted the government’s statement and statement of government’s facts under oath was correct?
Q: You knew that Sid Backstrom had conspired with Tim Balducci to bribe Judge Lackey?
Q: You knew that payment of $40,000 had been agreed to and paid by Tim Balducci?
Q: Order signed…?
Q: You prepared invoice to submit to Nutt & McAllister to be reimbursed for $40,000 payment?
Q: The invoice of payment to Balducci was ostensibly to do questions for voir dire?
Q: There were no questions for voir dire?
Q: Case that voir dire was to be done has never been tried?
Q: Balducci asked for another $10,000 to give to Judge Lackey after the $40,000?
Q: You gave Balducci the $10,000 and prepared documentation to show it was for jury instructions?
Q: No jury instructions prepared?
Q: Purpose of these jury instruction invoices and documents and voir dire was to be reimbursed by SKG for bribe money?
Q: Nutt & McAllister, a member of SKG, was on the pleading Linsey v. USAA?
Q: Case was ostensibly the case for the jury instructions and voir dire by Tim Balducci?

At this time, Tollison asked that judge infer that a question answered with the Fifth Amendment would be favorable to the plaintiffs.
Mayo: Asked the Court to wait until end of hearing to make inference.
Judge responded inaudibly.

Short recess.

Judge Lackey called by Tollison to the stand.
Substance of Judge Lackey’s testimony is a repeat of what we have already heard, but it is as follows.
Lackey was assigned to a case called Jones et al v. Scruggs, and had signed an order sealing before process was issued and before attorneys on either side. Sealed at the request of Tollison, although no conversation between Lackey and Tollison took place at that time about facts/merits of the case. Lackey knew only that it was a fee dispute between two groups of lawyers. When answers/pleadings filed, Daniel Coker initially represented all of the defendants.

On March 28, 2007, Tim Balducci called Judge Lackey and wanted to know if he could speak with him. The judge had known Tim for a long time and recognized that he was a young lawyer with great ability. When Balducci called, Lackey felt that whatever he was calling about was very important, and Lackey told him he could see Balducci that afternoon.
After exchanging pleasantries, Tim Balducci indicated the reason for his visit. [Defense objected with hearsay, which was overruled because the statement was part of a conspiracy]. Tim indicated that while practicing with Joey Langston, he had made some “mighty good friends and mighty good money.” He then explained the Katrina consortium of 5 law firms, how fees were divided. Balducci described “scurrilous allegations” that had been made by Grady Tollison against “his friends” – described as Judge Lackey to his recollection as “Mr. Scruggs and Mr. Barrett and Mr. Nutt and maybe someone else or two.” Balducci explained that his friends “were being mistreated and he only wanted them to be treated properly.” He suggested that a summary judgment motion would probably dispose of the worst allegations and those claims that remained could probably be handled in arbitration. At this point, Balducci also indicated to Judge Lackey that “when he got ready to lay the gavel down” there was a place for Lackey as of counsel at Balducci’s firm.

Lackey described going to the U.S. Attorney’s office and speaking with John Hailman, who asked him not to do anything or tell anyone until he heard from him.

He intended to recuse himself. Informed the Daniel Coker firm and Tollison law firm that he was going to recuse. Sent to judge Howorth and he signed. Before Judge Elliot signed (the other judge in the circuit district), Lackey withdrew the order and informed the attorneys he was back on .

First told Judge Howorth about the situation. Then went to DA office and spoke with Lon Stallings. Lackey said that he “knew he couldn’t go to the AG office because he knew that Mr. Scruggs through Mike Moore had told the AG that if he didn’t go along with it then they would fund a candidate against him and see that he was properly funded to defeat.” [Mike Moore, sitting in the gallery, looks down and shakes his head]

In May, Lackey had contacted TB and told him that Grady t wanted to have hearing on the matter and that he had not received his proposed motion for SJ. Tim Balducci advised that they had changed tactics and they thought they could take care of it in arbitration. Delay would assist because Mr. Jones having financial difficulty. If delayed would encourage Jones to settle. Judge Lackey stated that his perception of “they” was the four other firms with the Katrina Group. Judge Lackey’s perception was that the contact was on behalf all the law firms as defendants. The order applied to all the defendants.

Ultimately, Lackey, prefacing with “I don’t want this to sound improper,” indicated that he “was having some serious difficulty,” and “just could not bring myself to say bring me some money and I would do this but I ultimately did.” He stated that the US Attorney’s office had been listening to the conversations were convinced, “much more than I,” that the intention of Balducci was to bribe the judge. Lackey stated that he was hoping that Balducci would say, “Judge, you misunderstood me.” Judge Lackey finally suggested $40,000. It was a figure that Lackey came up with, a “spontaneous suggestion.” He told Balducci that he “didn’t want any of his money, if it wasn’t Scruggs’ money [he] didn’t want it.” Balducci complied and the exchange was videotaped.

Tollison tendered the witness.

Counsel for Nutt, et al. questioned Judge Lackey [didn’t introduce himself, and I don’t know who he was].

His questions elicited responses from Lackey that he didn’t recall hearing David Nutt’s or Sparky Lovelace’s or Don Barrett’s names after the initial meeting where Balducci described the SKG. No SJ motion ever filed in this case. The lawyer asked if Balducci had told him that there were only three people that knew about the improper contact – Scruggs, Lackey and Balducci – to which Lackey responded “that’s right.”
Said that Tim Balducci never entered an appearance in this case, and that an Okolona hearing, where the defense presented orders to the judge, counsel for the plaintiffs was present.

Cal Mayo for Scruggs and Scruggs Law Firm then questioned Lackey:
Ultimately turned into exercise of walking through chronology – again – including many references to transcripts, details of meetings with the FBI, the U.S. Attorney’s office, Tim Balducci.

Only high points will be listed below.

Questioned Lackey about sealing case, and Lackey stated that he had never sealed a case before (had never been asked to), but that he “hated to hang out dirty wash” with the fee dispute between lawyers. Mayo asked Lackey if Tollison (who requested the case be sealed) told you if it involved any attorneys that practiced law in Oxford, that there was an arbitration agreement between the parties, or that settlement discussions were ongoing, all of which Lackey responded in the negative. Lackey said that Tollison or Tollison’s office prepared the order that was presented to him

Mayo questioned Judge Lackey about three interactions with Balducci that were “total fabrications” – when he told Balducci that there’d been improper ex parte contact by the other side, when he told Balducci that “Grady is putting some pressure on me to get this done,” and when he told him that Tollison had called, asking Judge Lackey not to enter an order until he got Tollison’s latest memorandum. Judge Lackey said he felt like “a lost ball in tall weeds, to tell you the truth” and “wanted to bring it to a close.” All of these “fabrications” were Judge Lackey’s idea.

Mayo went over the background relationship between Lackey and Balducci. Initial improper contact. Lackey’s contacting Howorth after the improper contact, and their discussion of Lackey’s obligation to report. He said it was one of hardest things he’s ever had to do. He considered “Tim Balducci friend but consider the law a friend, too.” He subsequently talked to John Hailman and then with Chief Justice Smith. They decided not to report to the Mississippi Bar because didn’t want to tip off any of the individuals being investigated.

At some point in the chronology, which seemed like an effort to tout the independence of Balducci, Tollison objected – noted that there are “already five guilty pleas already in evidence” and argued that this line of questioning was not relevant. Objection overruled.

After he had initially “recused” himself – he talked with the FBI. He realized “what a monster we were probably dealing with and the lives that he had probably destroyed and the young lawyers whose lives and their families that he had destroyed, I agreed to get back in it.” Mayo asked: “Who was ‘he’?” Lackey said, “Dickie Scruggs. It was evident what he has done. Don’t you think it is evident? I think that he has done more to destroy this profession than anything that has happened in my lifetime.”

Another of the reasons that he got back into the case was that he knew that Jim Hood had told Lon Stallings that if he didn’t go through with a settlement of State Farm cases and allow them to collect $26.5 mil in attorney fees that Scruggs would find a candidate that would run against and fund just like they were going to do the commissioner of insurance. [Moore’s jaw appears to tense whenever his name is mentioned.]

Lackey said, “If you could buy judge’s decision like buying can of coffee or sack of sugar, it absolutely infuriated me.”

Perhaps the highlight, and certainly the lightest moment of the hearing was when Cal Mayo approached Judge Lackey to refresh his recollection with a transcript of one of the recorded conversations between Judge Lackey and Balducci. While showing him transcript, Lackey said, "while I’m thinking about it, let me give you back your check. I was here anyhow.” Much laughter in gallery. Through laughter, Judge Lackey explained that it was for travel expenses. Judge Coleman told Lackey that he needed to ask Mayo if he was wearing a wire. More laughter.

After taking Judge Lackey through the end of September when Judge Lackey talked about how he came up with the $40,000 number – thinking that maybe he had “overpriced” himself — Cal Mayo concluded the questioning. Throughout the questioning, Judge Lackey had trouble hearing Mayo and often responded to questions with commentary well beyond the scope of the question. Several times, Cal Mayo appeared to be bordering on frustration with his witness.

Tollison said he had one question: “From the time that you became judge in Feb 1993, have I ever one time ever discussed the substance of any case with you?”

Lackey: “You mean ex parte? No.”

At this time the plaintiff rested, but indicated that that he was going to request attorney fees. 

Well, that’s it for this update.  I’ll see if I can catch you up on the afternoon session later.  

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I’m going to be on the road today, making blogging more challenging, but challenges exist to be overcome, and I will update this post later with a report from ICLB’s secret Oxford correspondent on today’s hearing.  As time is short this morning, let me refer you to this post by NMC at folo for further details on what the hearing is about.  

2 Comments

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2 Responses to Jones v. Scruggs hearing today

  1. tsetse

    “Available to testify after sentencing . . .” Yeah, right. Holding my breath knowing that’ll pan out.

  2. Around the web, April 15

    “Paid at the end of the day”: “eye-popping” ambiguity of former Mississippi AG Mike Moore’s multiple roles as Katrina insurance “resolution counsel” [Parloff] Called in Jones v. Scruggs fee dispute, Scruggs takes the Fifth at least 19 times [AP, YallPo…