Famed attorney told to answer questions about leaked Katrina documents

By HOLBROOK MOHR
Associated Press Writer
932 words
15 December 2007
15:02
Associated Press Newswires
English
(c) 2007. The Associated Press. All Rights Reserved.

JACKSON, Miss. (AP) - Prominent attorney Richard "Dickie" Scruggs is accustomed to asking tough questions during high-stakes lawsuits. This time, it appears he'll have to answer a few questions himself.

A federal judge has ruled that Scruggs and his son and law partner, Zach, can be questioned under oath about their handling of leaked documents in a Hurricane Katrina insurance case. The order is unusual because Scruggs is an attorney in the case, and his deposition testimony could be used by the opposing side.

"Although rarely allowed, depositions of a party's counsel are not altogether prohibited," U.S. Magistrate Robert H. Walker wrote Wednesday. "Where the attorney has non-privileged, relevant information unavailable by other means, such depositions have been allowed."

The order is not related to a bribery indictment that accuses Scruggs, his son and several associates of paying a judge $40,000 for a favorable ruling. Instead, the order was issued in a lawsuit that Scruggs filed on behalf of Thomas and Pamela McIntosh, of Biloxi, against State Farm Fire and Casualty Co.

The lawsuit accuses an engineering firm, working for Bloomington, Ill.-based State Farm, of producing conflicting reports on the cause of storm damage to the couple's home. Scruggs says one of the reports is fraudulent and was designed to deny the McIntosh's insurance claim.
The reports were given to Scruggs in February 2006 by Cori and Kerri Rigsby, sisters from Ocean Springs who worked for E.A. Renfroe, a State Farm-affiliated engineering company, according to court records.

Scruggs claims the documents indicate that State Farm pressured its engineers to change their reports on storm damage so that claims could be denied after the Aug. 29, 2005, hurricane. The Rigsby sisters copied thousands of internal State Farm claims records and provided them to Scruggs. Scruggs calls the sisters "whistleblowers," but they also worked as consultants making $150,000 a year, according to court records.

The judge's ruling is simply stating that not every question asked of Scruggs will be covered by attorney-client privilege, but it's not clear exactly what questions he'll have to answer, said John Keker, a San Francisco attorney who is part of Scruggs' legal team.

The leaked documents have already caused some legal troubles for Scruggs, who is the brother-in-law of Sen. Trent Lott, R-Miss., and one of the wealthiest plaintiffs lawyers in the country.
Earlier this year, U.S. District Judge William Acker in Alabama ruled that Scruggs willfully defied a court order to return the leaked files, which Scruggs gave to Mississippi Attorney General Jim Hood.

Keker said Scruggs did not violate the injunction and they have filed a request that Acker recuse himself from hearing the case.

"He's not guilty of any contempt whatsoever," Keker said.

State Farm claims Hood used the information to pressure the company to settle civil lawsuits. State Farm sued Hood in federal court in Mississippi, and a judge ordered the attorney general in November to temporarily halt his investigation of the company.

"We make it clear in our lawsuit against the attorney general that we feel that Jim Hood, working in cooperation with Dickie Scruggs and all of Scruggs' associates, has been harassing State Farm in an attempt to force us to settle lawsuits," Jonathan Freed, a State Farm spokesman, said Friday.
Scruggs and some of his associates were major financial backers for Hood when he ran for attorney general in the last two election cycles.

Scruggs gave Hood's campaign $33,000 in July, according to campaign finance reports. In a letter to U.S. Attorney Alice Martin in Alabama dated July 16, Hood called Scruggs a "confidential informant" in his Katrina investigation and asked that Scruggs not be prosecuted for giving him the leaked documents.

Hood said through a spokeswoman that there was no connection between the contribution and his decision to write the letter. She offered no other comment.

When Martin declined to prosecute Scruggs for criminal contempt, Acker appointed three special prosecutors to handle the case. Every federal judge in north Alabama recused themselves from the case, at Scruggs' request, so a judge from Florida has been assigned to preside over the case.
A status hearing is scheduled for Feb. 8.

Meanwhile, a sexual harassment lawsuit filed Wednesday against a law firm affiliated with Scruggs claims Ridgeland-based Nutt & McAlister also kept some of the documents in violation of the judge's order. Nutt & McAlister attorneys did not immediately respond Friday to call from The Associated Press.

This is not the first time Scruggs has been praised by some and criticized by others for using leaked information from whistleblowers in major lawsuits.

When Scruggs sued tobacco companies to recoup what Mississippi spent to treat sick smokers in the 1990s, some critics claimed that he used questionable tactics to obtain information. Whatever the case, the tactics proved profitable. Scruggs reportedly made $848 million for his part in brokering a multibillion-dollar settlement. That case was portrayed in the 1999 movie "The Insider."
In the bribery case, prosecutors claim Scruggs, his son, attorney Timothy Balducci, former Mississippi Auditor Steve Patterson and attorney Sidney Backstrom conspired to bribe Lafayette County Circuit Judge Henry Lackey for a favorable decision.

The alleged bribe was made in a lawsuit over $26.5 million in legal fees from a Katrina settlement. Balducci has pleaded guilty to conspiracy and is working with prosecutors. The others say they are innocent.