Legal News

Scruggs Scores Dismissal in Alabama Contempt Case

By Jamie Heller

Though we tried to log off for the night, news calls, and this time it’s good news for Dickie Scruggs. A federal judge has dismissed the criminal contempt charge that had been pending in Alabama against the famed plaintiffs lawyer. The development doesn’t affect the lawyer’s Mess in Mississippi, where he’s been charged in an alleged judicial bribery scheme. But it reduces the criminal cases against him from two to one. Here’s the AP story and here’s the judge’s ruling.

A quick backgrounder: In June, William Acker, a federal judge in Birmingham, asked the DOJ to bring criminal charges against Scruggs and his law firm for allegedly violating the judge’s protective order over documents in a case relating to Katrina insurance claims. After the DOJ declined, the judge appointed three private attorneys in Birmingham as special prosecutors, who filed criminal charges against Scruggs. Here’s the charging document. (Click here, here, here, here and here for Law Blog Background on the case and how it is that Judge Acker has the authority to do this.)

The case involves former employees (sisters), of E.A. Renfroe, an insurance services company hired by State Farm to evaluate Katrina claims in the wake of the 2005 hurricane. They photocopied documents that they thought contained evidence of misconduct by State Farm. They retained Scruggs to act as their lawyer and provided him with State Farm documents. At the time, Scruggs was pursuing litigation against State Farm and other insurers for denying Katrina claims.

Renfroe then sued the sisters, alleging they violated their employment agreements and stole trade secrets. (Scruggs didn’t represent them in that action.) In December 2006, Judge Acker ordered that all documents be returned to Renfroe’s counsel; this past June he ruled that Scruggs “willfully violated” the December injunction.

A different federal judge, Roger Vinson, today held that Acker did not have jurisdiction over Scruggs for the contempt charge because Scruggs was neither a party nor an attorney of record in the Renfroe case, nor was he and aidor or abettor, because there was no evidence or claim that the sisters themselves violated the injunction. Vinson held further that Scruggs was protected by a “law enforcement exception” to the judge’s decree because he had given the documents to Mississippi AG Jim Hood.

Vinson did say that a “cloud of suspicion surrounded the agreement between Scruggs and Hood” and that there are “ethical issues that should be examined.” But as for the criminal contempt charge, he dismissed it, with prejudice.

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In the keeping-score category, the ruling is another win for John Keker, Scruggs’s counsel, who last year negotiated a plea deal for lawyer Bill Lerach that kept his prison term to two years on a charge in an alleged kickback scheme. At the sentencing this month, the judge indicated he might have been inclined to hand down a more severe sentence were it not for that deal.

Full post as published by Law Blog - WSJ.com on February 29, 2008 (boomark / email).