Insurance Law

Scruggs nation, February 8

By David Rossmiller

I am glad John O'Brien of Legal Newsline did this story on the Wilson-Scruggs fee dispute case, the one in Hinds County where Joey Langston pleaded guilty to attempting to bribe the judge, Bobby DeLaughter, with consideration for a spot on the federal bench.  This is the best explanation I have yet seen of the case, who the players are and what happened.

Here's an excerpt:

For William Roberts Wilson, disagreeing with fellow trial attorney Richard "Dickie" Scruggs has caused a nuisance that has lasted 14 years -- and counting.

With the recent confession of one of Scruggs' attorneys that he attempted to bribe the judge presiding over Wilson's attorneys fees dispute with Scruggs, several issues have risen that will keep the arguments alive well past the 2007 settling of the case.

Wilson attorney Charles Merkel said a few options are being discussed for the suit, filed in 1994.

"There are new developments everyday," Merkel said. "We want to know all of the facts before we act precipitously with only half of the knowledge."

Wilson, Alwyn Luckey and Scruggs each had their own stake in a group Scruggs started to file asbestos cases. Wilson had sold his interest in more than 2,300 asbestos cases in an agreement that was interpreted differently by the two sides.

Luckey was awarded $17.5 million in his dispute with Scruggs after a trial in front of U.S. Magistrate Judge Jerry Davis, but Wilson received only a $1.5 million payment because Hinds County Circuit Judge Bobby DeLaughter's interpretation of the contract showed no remaining balance owed to Wilson, and that a trial would have been merely for bragging rights.

Now, besides the fact the story is a good read, I'm glad it came along because it allows me to talk a bit about the transcript for the trial in the Wilson-Scruggs case without spending a long time trying to explain the whole background.  Read the O'Brien story for most of that. I will only add that the case had parallel components -- in Hinds County, in the case before DeLaughter, the issue was the proper interpretation of the original joint-venture contract for asbestos lawsuits; while in another case in federal court the issue was whether Scruggs had wrongfully taken Wilson's asbestos fees money and used it to fund Scruggs' later tobacco litigation.

So with that said, here is a copy of the transcript of the state court trial.  Actually, what you will see is argument before DeLaughter, who rules in favor of Scruggs on key questions, which led to a settlement that was announced on the record before DeLaughter the next day. (The handwriting in the transcript is not mine, but it does serve to draw your attention to places you may be particularly interested in).

You can see here, on pages 19-20, that the judge continues his rejection of the methodology of Wilson's expert of calculating monies owed under the contract, and, since Scruggs had very late in the game forked over some $1.35 million that was indisputably owed (see page 33), Judge DeLaughter said his prior rulings meant that no compensatory damages were owed, that no punitive damages could be awarded, and therefore the trial was going to be over "bragging rights."  If you look at the earlier portion of the transcript, however, you will see that, had Judge DeLaughter instead accepted the methodology of Wilson's expert, some compensatory damages would have been at stake that day, and punitive damages could have been awarded by the jury.  You will also want to note that, arguing for Scruggs at the trial, were Joey Langston and Tim Balducci. (Just as an aside, I was impressed by Balducci, I thought he did a good job in his arguments -- did not seem at all a wannabe as some try to portray him).   

Remember that special master Bobby Sneed had earlier in that year, 2006, given a recommendation that Scruggs owed some $15 million under the contract. This finding was rejected by DeLaughter.

Remember also that in the federal court case, which was stayed by Judge Lee pending the outcome of the case before DeLaughter, Lee had basically blown by Scruggs' summary judgment motion in an April 2005 ruling, and a constructive trust may well have been imposed over Scruggs' tobacco money, but for the stay pending the resolution of the state court case.  Here is a copy of Judge Lee's decision so you can read it for yourself, if you are so inclined. What constructive trust means here is that, because Wilson's money may have furnished some 29 to 39 percent of the money used to finance the tobacco litigation, Wilson would have had a claim to some of the gain on that money.

However, look at the last pages of the trial transcripts, and you can see the settlement of the Hinds County matter was in essence a settlement of the federal court case.  So I'm not sure how much, in total, Wilson could have collected had Sneed's recommendation stood up and the constructive trust claim gone to trial in federal court.  As it was, the case settled for a much lesser amount, which the parties are not to divulge under the terms of the confidential settlement agreement, but this case has been looked at by so many people that a whole bunch of folks know what the amount is and have talked about it -- somewhere in the $5 million to $7 million range, I believe. 

Food for thought.  You know the feds are looking through this stuff.  Now you can too.

-- Lastly, and I know you're going to say that stuff about Jim Hood is technically not Scruggs Nation material, but I just don't have enough energy to write a whole post about the immediate and substantial rising that occurred with news that Hood had entered into a confidential settlement with State Farm over the State Farm lawsuit that enjoined his further criminal investigation.

Some people commented publicly, some sent me e-mails, I'm sure it's the talk of Mississippi today.  One point that seems valid is how can Hood keep a state contract secret?  He was sued in his official capacity as Attorney General, is not the settlement available under the state's public records law?  Another is why does he want to? I mean, is there some odious term in it, like he is required to show up at State Farm's headquarters in Bloomington each February 7 and say, "Thank you, sir, may I have another"?  Was there some particularly humiliating condition -- he had to autograph for Ed Rust a copy of the Lee Harrell deposition, where Harrell alleged Hood threatened to indict State Farm from the CEO on down if they didn't settle civil Katrina lawsuits, and write on the transcript "Me sorry" with one of those dopey frown faces drawn next to it?

Full post as published by Insurance Coverage Law Blog on February 08, 2008 (boomark / email).