Insurance Law

Hammer time: more thoughts on Judge Acker's civil contempt ruling on Scruggs, Rigsby sisters

By David Rossmiller

In reading Judge Acker's opinion of yesterday once again, it is striking how different this writing is from most judicial and legal writing -- one can actually understand it, and it is well-written and enjoyable to read.   I say "enjoyable" not merely because I agree with what it says, but because the judge made good use of the writer's storytelling tools.

One other thing: Judge Acker is perhaps the only person who knows all the facts that are known about the Rigsby sisters' illicit taking of State Farm claims documents.  He has seen the documents themselves -- they are under lock and key under a protective order in his courthouse under the injunction he issued in December 2006.  And I do not see in this opinion or his prior opinions any hint that these documents are blockbusters or that they have any explosive evidentiary value, or that they amount to anything at all. What is in the documents is not necessarily his concern in Renfroe v. Rigsby lawsuit before him, of course, but he knows what is in them.  And if that is true -- that these documents are just so much hype promulgated by Scruggs and the Rigsby sisters -- I wonder if that is one of the things driving his anger, in addition to the violation of his injunction.  There have been a number of depositions taken in the Renfroe case, including testimony submitted under seal, and he is undoubtedly aware of the evidence uncovered by special prosecutors appointed by him to go after Scruggs on a charge of criminal contempt, which was dismissed without an evidentiary hearing earlier this year.  So what there is to know about all this, Judge Acker knows it.  We don't exactly know what it is that constitutes all that Judge Acker knows, but we do know this -- what he does know has made him very upset. 

Before we go on, some brief context on what this is all about may be helpful.   Kerri and Cori Rigsby, working with Dickie Scruggs, took State Farm claims documents from their employer, E.A. Renfroe, a business hired by the insurer to adjust Katrina claims.  They did this in a massive "data dump" weekend in June 2006, but they also accessed State Farm databases, using a list of Scruggs' Katrina plaintiffs, in March and April 2006.  They did this in a trailer on Trent Lott's property near the Mississippi Coast. There is a dispute whether the Trailer Lawyers of Missouri were also there, or if they were present, how many were present and whether they were actively involved or merely on the couch watching All My Children.

Renfroe sued the Rigsbys for breach of their confidentiality agreement, and Renfroe got a summary judgment decision that they did breach.  During the course of this lawsuit, before the summary judgment, Renfroe asked for an injunction requiring the documents to be returned, and Judge Acker entered an injunction after he found a likelihood that Renfroe would be successful on the merits of its claims. This injunction was in December 2006.  It required the Rigsbys and all their "agents, servants, employees, attorneys, and other persons in active concert or participation with them who receive actual notice of this order, by personal service or otherwise (with the express exception of law enforcement officials)" to deliver the stolen documents to Renfroe's attorneys.  

We all know what happened next.  Scruggs and Jim Hood talked on the phone, and Scruggs sent his copies of the documents to Hood, who already had his own copies of the documents when he took special delivery of them from the Rigsbys during the data dump.  In the criminal contempt prosecution, Judge Vinson dismissed the charges, saying Scruggs met this law enforcement exception, although as Judge Acker points out, this doesn't make sense, because if that was the way to read the injunction, the Rigsbys themselves could have merely given the documents to Hood or even a passing off-duty cop to avoid giving them back. 

The "with the exception of law enforcement officials" is so obviously a qualifier of who needs to give the documents back, rather than an indication of where you can send the documents to avoid giving them back, that it hardly merits serious discussion.  But Judge Vinson saw it the other way, and he also said the court had no jurisdiction over Scruggs, and therefore he couldn't have violated the injunction because it didn't apply to him.  Vinson's jurisdiction finding, however, was based on the ground that Scruggs was not the attorney-of-record, rather than on any failure of the injunction to extend to persons in Mississippi (Judge Acker's court is in the District of Northern Alabama).  But, Judge Acker said, Scruggs was plainly an "agent" of the Rigsbys. and "if Scruggs was not subject to the injunction, nobody was." 

As he said:

Scruggs was the alter ego of the Rigsbys, and the Rigsbys were the alter egos of Scruggs.  They could not have been any more closely "identified" without obtaining a marriage license.  There were in bed together.

You get the idea -- Mr. and Mrs. and Mrs. Rigsby-Scruggs.

Judge Acker also ripped the Rigsbys' argument that they were allowed to take the documents in June 2006 in support of their False Claim Act case filed in April 2006.

Do they really argue that after filing the qui tam case, the Rigsbys were authorized by the False Claim Act and obligated to the taxpayers to steal Renfroe's records two months after the qui tam case was filed?

Along the way, he ripped up Mississippi Attorney General Jim Hood pretty good, calling him a "so-called 'law enforcement official' " and saying there was enough evidence for a jury to find he was a a co-conspirator and aider and abettor of Scruggs in the criminal contempt case.  Hood's reaction to these statements, in this Clarion-Ledger story, was typically comical and nonsensical:

Hood says he intends to file a motion requesting Acker revise the ruling because of its "derogatory conclusion." "The rules of judicial performance do not allow a court to engage in unnecessary attacks on officers of the court, particularly when they are not even parties to the litigation. This Judge interfered with a grand jury investigation and we believe that either he, an appellate court, or the Alabama Commission on Judicial Performance will remedy this situation." 

Who writes this material?  I ask, because this is really funny stuff.  I often listen to Channel 150 on XM radio, which features continuous excerpts from live comedy shows, and I can easily picture hearing Hood's routine on there some morning on the way to work.  Judge Acker interfered with the grand jury investigation?  How about Scruggs, who told him to shut it down so State Farm would settle Katrina cases with Scruggs and give him a pile of dough?  How about Hood, who is the one who actually shut down the grand jury without returning a single Katrina indictment? By Hood's own statement, he and Scruggs should be reported and investigated.  Also, who says the attacks on Hood are "unnecessary," and whoever said he was an "officer of the court" in a case where he was not a party and where his only involvement was to help Dickie Scruggs hide documents that a judge ordered returned?  Officer of the court? Better bust the general back to private, if that's the kind of officer he is. 

Now, it should be mentioned that earlier in the Renfroe case, much earlier, Judge Acker said the Rigsby were not in civil contempt. Obviously, because that is what he ruled Thursday, he changed his mind.  And what changed his mind, he said, was information that the Rigsby sisters:

copied State Farm documents using a list of Scruggs's clients, and that these documents were segregated by them in a plastic boot box.  They were never mentioned by the Rigsbys until recently, and they have never been returned, although copies may be randomly scattered among the papers returned to Renfroe's counsel and now stored under lock-and-key in the court's chambers.  The Rigsbys admit that they did not return the boot box documents, but say they do not have the box and do not know where it is.  This court is tempted to deduce a location for the boot box documents, but will proceed on the assumption, at this late stage, that the boot box and its contents will never be found.

Which location do you think he was thinking of, the Scruggs Law Firm or the lair of the Trailer Lawyers?  Maybe both?

In any event, he found both Scruggs and the Rigsbys were in civil contempt for failure to return all the documents that were taken -- he did not know about the trailer escapades until after his previous finding.

This court feels less reluctance to impose sanctions on the Rigsbys than it otherwise would feel because Scruggs is obligated as indemnitor to pay all monetary damages assessed in this case against the Rigsbys.

The amount of the sanctions, $65,000, representing Renfroe's attorney fees spent chasing down the documents, is barely a couple days bills for what Scruggs paid his criminal lawyer, John Keker, and I presume Scruggs can easily pay this out of his annual receipts of tobacco settlement money.  Remember that the indemnity agreement is not in writing, however, and you have to think about all the other folks who have trouble enforcing oral agreements with Scruggs.  However, the Rigsbys know stuff about Scruggs, and it might be the wisest policy not to give them any reason to become upset.

Here's an Associated Press story on Acker's ruling.  Interesting that it focused on what Acker said about Hood, not what he said about Scruggs and the Rigsbys. 

Here's an Anita Lee story in the Sun Herald, which talks about Scruggs and the Rigsbys in the lede, but also talks a lot about Hood.   Must have really stung, for Hood to come out and make crazy statements suggesting he somehow was going to intervene in the case and report the judge to ethics authorities.  The motion that Hood is going to file, what's it going to be called -- Motion To Make A Fool Of Myself? 

Lastly, so you don't have to go the prior post, here is a copy of Judge Acker's contempt order, and here is a copy of his opinion.  

Full post as published by Insurance Coverage Law Blog on June 06, 2008 (boomark / email).