Insurance Law

Scruggs Nation, Day 49

By David Rossmiller

Is a picture worth a thousand words? Here's a photo that a Mississippi friend of Insurance Coverage Law Blog took of the Scruggs Law Firm in Oxford yesterday morning, dead potted plants and all.  (Used by permission. Copyright is held by the photographer, who is known to me, but who wishes to remain anonymous to y'all at this time). 

Now, let's start with an account of yesterday's hearing in the case that launched a thousand shifts at my computer terminal, Jones v. Scruggs.  The report  from ICLB's correspondent on the scene is so good I will reproduce it below with only slight edits:

Hearing on Motion to Quash Subpoenas - January 14, 2008, 9:30 a.m.

Before Judge Coleman

 

Attorneys:

Jones attorneys: Grady Tollison, Roy Percy & Cameron Ables

Scruggs, et al attorneys: Cal Mayo & Pope Mallette (for Scruggs and Scruggs Law Firm); Larry Moffett, Shea Scott Ken Rutherford & Trey Byars (for Don Barrett, Barrett Law Firm, Nutt & McAlister, and Sparky Lovelace)

 

On the Motion to Quash Subpoenas - Dickie Scruggs, Zach Scruggs, Sid Backstrom, Meg McAlister, Judge Lackey:

Defendants' Arguments:

• Pursuant to MRCP 45, a subpoena can be quashed if it would result in an undue burden. The Mississippi Supreme Court has articulated a set of factors (although Defendants didn’t consult multiple factors or balance anything; just said that the subpoena’s burden would be undue). On the other hand, plaintiff will not suffer prejudice if the defendants are not forced to testify at this time. Defendants argue that the attempt to force these individuals to testify at this time is simply plaintiffs’ effort to “out” this.
• Defendants argue that three of the subpoenaed witnesses are scheduled to go to trial in six weeks on the exact same matter, and to force them to comply with a subpoena at this time would be to equivalent to a mini-criminal trial. They would be forced to defend the same allegations of the criminal matter.
• Discussion of the assertion of the Fifth Amendment. Zach Scruggs and Sid Backstrom aren’t parties to this lawsuit. If they are forced to testify and take the Fifth, no negative inference may be drawn from this. No benefit to plaintiff if they invoke.
• Testimony not relevant - two issues: (1) the scope of their testimony is an issue for arbitration; (2) parties entered into an agreed order in April not to pursue discovery pending the arbitrability ruling [Defendants argue that they haven’t waived their right to an arbitration ruling; they argued that they have not done anything inconsistent with the desire to arbitrate, which, Defendant’s argue, is what the MS Supreme Court looks at to determine waiver. Defendants argue that plaintiff is trying to make a connection between the Nov. 28 indictment and a waiver of arbitration]; when determining whether this case should proceed to arbitration, the court considers a snapshot at the time the demand was made (back in March 2007), can’t consider post-litigation facts.
• Rebuttal: no case cited for the proposition that post-litigation actions have created an invocation of the judicial process - those things that would be considered an invocation of the judicial process are those things that happen IN the courtroom. This is a criminal investigation.
• Rebuttal: not relevant to this litigation. Forcing testimony would place an undue burden on the parties who will be defending themselves six weeks from now; potential jurors will read that individuals have asserted their Fifth Amendment rights.

Plaintiff's Arguments:

• Prejudice to Plaintiff. “Whether or not it is a crime, is irrelevant. It is an outrage…We are all ashamed.” Argued that plaintiff had been cheated out of money, for more than a year, cheated out of his day in court, and the court should have no sympathy. Plaintiff has suffered prejudice by the delay.
• Plaintiff countered in response to Defendants’ argument that this is within the scope of the arbitration agreement, that conduct during litigation is for the court to decide.
• The relevance of the evidence that would be presented involves a substantial invocation of the judicial process.
• Plaintiff argued that defendant’s bribery attempt is an admission that the defendants’ motion to compel has no merit. Cited Madge v. State for this proposition.
• Plaintiff argues that it is entitled to an adverse inference or testimony.  

Court inquired if anyone had ANY opinion from ANY court that has addressed this issue of bribery/attempted bribery and the connection to a waiver of arbitration. No one had anything to offer. Determined that this is a matter of first impression.

The highlights -- and lowlights -- for our correspondent.

1.  The proffered testimony of Judge Lackey via Tollison:

a. Lackey was the one who came up with the $40,000 figure for the offered bribe;

b. Defendants wanted to delay proceedings in an attempt to wait the Jones, Funderburg firm out. Defendants believed that Jones was having difficulties financially, and that he would be forced to settle if the proceedings dragged on very long.

c. Balducci told Lackey that when he was ready to take off his robe, Lackey would have a place at the Balducci firm if he wanted.  

2. The plaintiff's weak argument: basically just appealed to emotion and said that the system had been undermind and they deserve testimony.

3.  The ruling: wasn't grounded in any law (because the parties all admitted that they had nothing directly on point).  Sustained the motion to suppress the testimony, and disallowed anything that goes to the alleged conspiracy to bribe.  The judge stated that a bribery attempt is not literally tantamount to a waiver of arbitration.

4.  The judge: hard to hear and mumbles.

There you have it, a great report from the courtroom. Many thanks to our correspondent, who earns a year's free subscription to this blog. I'm told by another reliable source that, on the key question of whether the case is going to arbitration or litigation, the judge in essence said the case was headed to arbitration when he got it, it is ripe for arbitration, and that is where it is going, period.  Same result that Scruggs allegedly paid good money for, and now he gets it for free! (Not counting legal fees, of course). What a strange world we live in.

One brief excerpt from yesterday's Clarion Ledger story on the hearing before we move on:

Lackey wasn't permitted to testify, either, but Oxford lawyer Grady Tollison said if he were, he would testify Balducci approached him in March 2007 about ruling in Scruggs' favor.

Lackey said as he was getting ready to put on his robe, Balducci said he could have a place in his law firm after he stepped down from the bench, according to Tollison, who is representing the lawyers suing Scruggs over the legal fees.

Tollison said Lackey was so upset by this offer that he reported the matter to federal prosecutors.

After this initial offer, Balducci called back and said he wanted the judge to merely delay the dispute because the plaintiff, Jackson lawyer John Jones, was having financial problems.

In a subsequent meeting, Lackey, who by now was cooperating with the FBI, said he was "just a country judge, had some financial difficulties and needed $40,000," Tollison said. "He will testify that that was his figure."

Tollison said Lackey quoted Balducci as saying that would be no problem, but it might have to come in payments.

(In)justice on the installment plan.  At least Balducci didn't have to pay any vigorish.  

UPDATE: Here's a copy of Judge Coleman's decision regarding arbitration.  He's favoring it, but holding his ruling until he decides Jones, Funderburg's motion for sanctions -- the motion was made due to the bribery scandal. 

-- In light of the unveiling of the guilty plea yesterday of bribery conspirator Steve Patterson, it is worth revisiting the Wall Street Journal story of more than a month ago about the Dickie Scruggs Christmas party.  The story had this paragraph:

As for the man considered Mr. Scruggs's chief accuser -- the considerably less-well known Mr. Balducci -- many people in these parts are contemptuous. "He has some sort of complex," said Deborah Patterson, the wife of Steven Patterson, Mr. Balducci's business partner, who was also indicted in the case.

I wrote about the story in this post.  At the time I said, and said repeatedly afterward, that a strategy to portray Balducci as some sort of wannabe, rogue, freelance briber was weak. It's looking weaker by the day, don't you think?  If he was freelance, then so were Langston and Patterson.   Dang, Scruggs has gotta control his people better and make better personnel decisions! What's the defense, produce a tape with Scruggs dictating to his secretary like this? "Memo: new law firm guideline -- no bribes without discussing it with the head honcho. . . . wait, strike that, doesn't sound good. Just put no bribes. New item: find seminar on how to better monitor personnel and recognize signs of rogue behavior like improbable success in litigation.  Item: hire industrial psychologist, test everyone, get rid of anybody with a complex. Last item: go on Amazon, find book Informers in Your Midst, 10 Telltale Signs from Constantly Asking You To Speak Up to Wearing an FBI Sweatshirt."

-- I see on the PACER docket that Zach Scruggs, despite signing a waiver that allows Tony Farese to represent both him and Joey Langston, has retained another attorney, Todd P. Graves, of Missouri. (Originally got the wrong name, as commenters pointed out, I've changed it). 

UPDATE: Here's a link to some information on Graves, a former U.S. Attorney for western Missouri.  Here's a Washington Post story mentioning him, he was one of the U.S. Attorneys sacked by the Bush Administration in the scandal that occupied everyone's attention for so long.  As some readers have observed to me, if one were contemplating making a deal with prosecutors, this would be a good guy to have close. 

-- Lastly, here's a new order from Judge Biggers in the bribery case. Basically says the three remaining defendants who have not pleaded filed a sealed motion on Friday asking for a continuance of the trial date and to keep the motion sealed.  The court said the motion will be considered on Wednesday along with the defendants' prior discovery motion.

-- You know how they say it ain't over till it's over? From what I hear, it's a long way from being over. That's all for now.  Many thanks to all those who continue to contact me with information, you know who you are. Thanks for your trust and for taking the time to explain. 

Full post as published by Insurance Coverage Law Blog on January 15, 2008 (boomark / email).