folo

This morning’s Daily Journal carries Patsy Brumfield’s survey of the four related cases impacted by the pleas Friday: U.S. v. Scruggs itself, of course, as well as Jones v. Scruggs, Wilson v. Scruggs, and that yet-to-be-born creature whose hyphenated surname may end up something like “Peters-DeLaughter-Scruggs-Lott.” It’s a good overview in chart-like format, listing synopses, players, and current status of each case.

Meanwhile, the editorial A sad spectacle bemoans that

The guilty plea Friday of Richard ‘Dickie’ Scruggs and his associate Sidney Backstrom in a conspiracy to bribe a circuit judge confirms the worst: Mississippi’s most feared plaintiffs’ attorney was willing to do anything – even the blatantly unethical and illegal – to win. …

After excoriating the perps and praising Judge Lackey, the piece concludes:

… There’s more to come, apparently. The case in which Langston pleaded guilty to an attempted bribe of Hinds County Circuit Judge Bobby DeLaughter – with the suggestion of Scruggs’ involvement, but not his indictment – remains to be resolved. If pulled further into that and other cases, Scruggs could be looking at more than the five-year prison sentence the government recommeded after his guilty plea Friday.

It’s a sad spectacle, and it is made all the more so by the interwoven political threads. Scruggs’ special relationship with his brother-in-law, former Republican Sen. Trent Lott, and his and the other defendants’ heavy involvement in supporting mostly Democratic candidates cast a pall on the political system as well as the courts. Attorney General Jim Hood said recently that he could not be involved in any state prosecution of Scruggs, Langston and others because of his close association with them.

As in so many instances over the years, it was the federal government that intervened to ferret out corruption in Mississippi. Our state badly needs more emphasis on keeping its own house in order – whatever the political consequences.

Had it been me, I might have italicized and bolded the word “badly.”

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One thing we know for sure about the Wall Street Journal‘s editorial board is that its members consider trial lawyers anathema. So no surprise to see their latest attack on Dickie Scruggs and Jim Hood accompanying excerpts from the November 1 and November 13, 2007, transcripts we’ve been studying.

Their excerpts are of Dickie Scruggs agreeing, “Uh, I’ll take care of it,” when Balducci asks about the extra $10,000 for Judge Lackey and of Sid Backstrom’s joke to Balducci, “We just cut out for about three minutes there and I didn’t hear any of that, but um . . . but (laughs) but uh, but I know what you’re saying (laughs)” after Balducci’s “You know, it’ll take some more money, is the other side . . . you know, I mean, we’ve given him 50 to, to get us to where we are now, but you know, for a little bit more, you know, he’s willing to play ball I think and get this thing like we want it, so. I mean, I guess . . . maybe you, maybe you should talk to, to Dick and Zach about it and see what they, you know, before we enter this order, it might be better served, you guys might wanna just keep it there.”

I guess that’s slipped my notice before — that for a second on November 13, Balducci weakly suggests even further bribery, past the $50,000 Sid thinks Judge Lackey has already received, to nail down the Jones v. Scruggs order to their exact specifications.

In any case, the editorial (with dot-drawings of smiling Dickie and glowering Hood) is more amusing to me. It tickles me to read that, “The transcripts are a rich insight into the ethics of the trial bar, and we’ve published excerpts. Readers can find more at the Mississippi blog yallpolitics.com.” Those poor ed-board skeezers are so deadset against linking directly to folo, they’ll gladly make their readers detour via Y’allP only to find Alan’s links to the transcripts NMC put up here.

WSJ’s sign-off goes, “It’d all be great fodder for John Grisham, if the novelist weren’t such an apologist for Mississippi tort lawyers. Like the Milberg Weiss and Bill Lerach indictments, this prosecution is showing everyone how the pillars of the trial bar really do business.”

So my question for y’all is: “Pillars?” Is that quite what your estimation of Scruggs and crew has been through the years? Pillars?

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The AP reports:

The Mississippi Supreme Court has been asked to accept the termination the law licenses of Joey Langston and Timothy Balducci, both tied to federal investigations of powerful plaintiffs attorney Richard “Dickie” Scruggs.

The Mississippi Bar petitioned the Supreme Court in January to accept the disciplinary action against the two men. The petitions were included on the Supreme Court’s March-April docket.

Neither Langston nor Balducci are opposing the Bar’s petition. …

Since this will be purest pro forma, some of the other bits of this article are more interesting, to wit:

In other cases involving attorneys, the Supreme Court will hear:

- Azki Shah’s request for reinstatement to the practice of law. Shah was suspended in 2007 by the Mississippi Supreme Court for three years.

It was the seventh time in less than eight years that Shah has been accused of misconduct. Shah had previously been suspended from the practice of law on two occasions, once for two years and again for six months. Shah had received three private reprimands and one informal admonition.

In the most recent incident, Shah was suspended for failing to file a complaint on behalf of a client and follow up with that client on the status of the complaint.

- The Bar’s petition calling for the indefinite suspension of the license of lawyer Robert Arledge of Vicksburg, while Arledge appeals his 2007 conviction related to an investigation of false diet drug settlement claims in Mississippi.

Arledge was convicted in federal court of seven counts of conspiracy and wire fraud in a scam bilking the drug company Wyeth out of more than $6.7 million. He was sentenced to 6-1/2 years in prison.

Arledge had been charged with knowingly allowing clients to make fen-phen claims of about $250,000 each even though they had no legitimate reason.

GEE-minny, stop horsing around, get rid of these mopes, and give Keith Shelton back his license, willya, SCOM?

(more…)

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Judge Coleman has just ruled that he has the authority to deny the Jones v. Scruggs defendants arbitration as a sanction for alleged bribery of the judge by some defendants. Saying very carefully he was not deciding guilt or innocence, and noting that this was a case of first impression, he stated that there is “little question the court has the authority to take action to punish misconduct in proceedings. None of the allegations of misconduct in the Mississippi cases to date rise to the level of the heinous crime of bribery of a judge. The harshest sanctions would be authorized, including striking the pleadings.”

He rejected the defense argument that the case had to go to arbitration first. He quoted the handbook of the American Arbitration Association from the Jones brief, that “where a sanction is available for abusive conduct depends on where the abusive conduct occurs.” (It was in the circuit court.) “To ignore the alleged misconduct would allow a win-win result for the offender. If the bribe results in a favorable result, the offender wins. If the court cannot strike the pleadings as a sanction, the offender wins again.”

He ruled that all of the members of Scruggs Katrina Group share liability as joint venturers — the action of one is the action for all.

He will hold an evidentiary hearing on the motion to strike, to determine the truth of the plaintiff’s allegations and to determine the action to be taken. He will allow the plaintiff about 60 days of discovery. They agreed no depositions before the 3/31 criminal trial.

The judge noted that the plaintiffs had taken an interlocutory appeal of some of the prior rulings. That’s news to me!

Update:

here is the Mississippi Supreme Court docket on the interlocutory appeal. From the timing, either the Jones side took up the order sending the case to arbitration, or the Scruggs side took up the order that the court was going to rule on whether it could do sanctions outside of arbitration. I lean slightly to the later, just a hunch. Can’t tell for sure, but I’m guessing the order at the end of the docket says no to an interlocutory appeal.

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When he heard Lackey had recused himself, Balducci was not upset. He testified that Lackey said that a member of the Tollison firm had discussed the Jones side of the case when meeting Judge Lackey in a social setting.

Balducci recalls no ex parte contact with Lackey in any of the criminal cases. He knows of none by the District Attorney.

At this point, they had not discussed paying the judge for the order.

He had lunch with Lackey in late May or early June. They went to lunch with Patterson and Buse. He showed Lackey the office and did not know he was wearing a body wire.

He had communications with the judge over the summer.Twice he was holding court in New Albany and Balducci took his sons to court to see him. Judge Lackey came to Balducci’s office one other time. Balducci called him — not certain the number of times — more than once and less than ten. Balducci would call the judge on his cell phone. He called several times to talk about arbitration. He does not know the dates. Balducci asked Judge Lackey for his cell phone number and Lackey gave it to him.

Judge Lackey did not raise the subject of money before 9/18.

Keker asked Balducci to go into the September period.

When Lackey said “If I help them, will he help me,” Balducci was surprised. This seemed unlike Judge Lackey. The whole thing was awkward. Balducci said think about it and get back to me.

Balducci talked to Patterson, discussed that the judge was clearly telling us he wanted money to enter the order, and had not said a specific amount. Patterson said we need to find out how much. Balducci did not tell anyone at Scruggs firm about this at this point.

Then Balducci went to see the judge and the judge said he needed money to get over a hump, needed $40K.

Up to this point, Balducci had not done anything he thought was a crime. Balducci said “I feel sure I can do it.”

Meeting of 9/27: Went on 9/27 with Patterson. Balducci had money to give to the judge. Got it out of the bank. At this point, is not sure whether Scruggs had got word or not.

Knows he’d had conversations with Backstrom about it and understood Backstrom had talked to Dickie and Zach. The conversation with Backstrom was after the meeting where Lackey told Balducci he wanted $40K. Talked to Backstrom immediately after he left the judge and asked him, “Do you want me to go forward with this and will you pay us back?”

Backstrom said this situation with Judge Lackey sounds crazy. Backstrom called back later that day or a day or so later and said, “Yes, go forward.”

Steve more than Jim wanted direct confirmation from Dick. He wasn’t satisfied with talking to Sid. Patterson said he’d get direct confirmation from P.L. Blake. Patterson called Blake. Patterson wanted direct confirmation that the money would get paid back. $40K was a big deal for the firm at that time. Patterson and Balducci did not want to do this and not get their money back.

On redirect examination:

Was Scruggs represented? By Daniel Coker. No one from Daniel Coker participated. Lackey did not bring up Jones v. Scruggs at lunch in New Albany.

9/21 meeting: When Judge Lackey mentioned $40K, Balducci said yes, this would not be a problem.

Next: Balducci talks about another bribe attempt!

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In the Jones, Funderburg v. Scruggs case, Judge Coleman held a telephonic hearing on the defense motion to continue all issues save arbitration, and yesterday entered an order granting it.

The issue that will be on for Monday is the question of whether the case goes to arbitration. However, first the court will decide the issues raised by the Scruggs motion to quash the subpoenas. Pending that, Richard and Zach Scruggs, Sidney Backstrom, and a Scruggs firm employee’s subpoenas are amended to require production of an interesting list of documents, subject to the defense right to object to the subpoenas and the issues raised by the motion to quash. Presumably, one battle in the hearing on the motion to quash will be the Jones, Funderburg argument that the misconduct of Scruggs et al. serves to waive arbitration.

If the subpoenas are not quashed and Jones is allowed to raise the issues implied by the subpoenas, it could be interesting. Here’s parts of what the order (linked above) provides about the documents to be produced: “Copies of any checks… or ledger entries that show any payments made to Timothy Balducci during calendar year 2007″ by Scruggs firm or Scruggs Katrina Group, and any transactions at the Scruggs firm involving cash for over $1000 from September through November of last year. And, of course, Judge Lackey is under subpoena to be there with the infamous order.

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The hearing set for Monday in Jones, Funderberg, Sessums, Patterson & Lee, LLC v. Scruggs in the Circuit Court in Oxford has the possibility of real drama, although if the defense team has their way it could be anticlimactic.

As noted in a prior post, the court has entered an order setting the Jones, Funderberg motion for a preliminary injunction. The motion asks that all Katrina Group legal fees be paid into court and that the group members be made to account for the fees.

Apparently, the lawyer for Jones, Funderburg (Grady Tollison) plans on Monday to establish the basis for the injunction by proving that Dickie Scruggs attempted to bribe Judge Lackey. To that end, he has served Judge Lackey with a subpoena asking him to bring the famous order, and has (as described in the Scruggs motion to quash), subpoened Dickie and Zach Scruggs, Sid Backstom, and a couple of firm employees (asking them to bring documents), with the purpose of showing how the bribe worked.

The Scruggs side has filed a motion to continue all save the ruling arbitration and moved to quash the subpoenas and resist anything other than a referral to arbitration. They ask for immediate, urgent hearings on the continuance and the motions to quash, but (as far as is visible on the record) Judge Coleman has not given them any relief and the injunction hearing remains set for Monday.

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Fresh news — again, on behalf of, and with permission from, the Oxford Eagle:

Law firm asks court for a default judgment in Scruggs’ case
By Alyssa Schnugg
Staff Writer

A law firm fighting over legal fees with Richard "Dickie " Scruggs filed a motion this morning asking the court to enter a default judgment in its favor in light of a recent indictment against Scruggs for allegedly trying to bribe Circuit Court Judge Henry Lackey.

The motion, filed in the Lafayette County Circuit Court by the Jackson-based law firm of Jones, Funderburg, Sessums, Peterson & Lee, asks for a default judgment in its favor, as well as striking a motion to stay proceedings and compel arbitration that was ordered earlier this year; allowing an entry of default to be filed against Scruggs and the other attorneys in the Scruggs Katrina Group; determine the amount of damages to Jones’ firm and strike the defendant’s answers to the original complaint.

"If the court finds in our favor, we will only then have to go before the court to argue how much is owed to us, " said John Jones, a partner in the Jones Funderburg, Sessums, Peterson & Lee law firm.

Scruggs was indicted last week on charges of trying to bribe Lackey to get a favorable ruling in the Jones’ lawsuit.

"All facts as alleged indicate that because Judge Lackey was participating in a "sting’ operation with the (FBI), that all efforts — motions, briefs, arguments at a hearing on the issue on the part of the plaintiff — were pointless, " the motion reads. "Judge Lackey could not consider the plaintiff’s arguments on their merits as his focus was on bringing the alleged criminal actions of the indictees to the fore. "

The initial lawsuit against Scruggs was filed March 15 by Grady F. Tollison Jr. on behalf of the Jones’ firm. The lawsuit claims Scruggs is withholding money the Jones firm was owed for working on Hurricane Katrina insurance-related litigation. The Jones firm claims it is entitled to 20 percent of the all past attorney fees collected by the Scruggs Katrina Group it was once a part of before being "frozen out " by Scruggs and the other attorneys in the group who are also listed in the lawsuit — the Barrett Law Office, Nutt & McAlister and Lovelace law firms.

Scruggs was arrested last week, along with his son and law partner, Zach Scruggs, former state auditor Steven Patterson, Timothy Balducci and Sidney Backstrom on charges they engaged in a scheme to bribe Lackey. A federal grand jury indicted them on a 13-page indictment that accuses them of conspiring to bribe Lackey with more than $40,000 in cash during the Jones’ lawsuit.

Balducci entered a plea of guilty Tuesday and is awaiting his sentencing hearing. In his plea, he agreed to continue working with prosecutors in their case against the others.

On Wednesday, Jones’ firm filed a motion asking the court to take control of all fees collected by the Scruggs Katrina Group until the lawsuit is settled.

"Under our rules of professional conduct, when lawyers have to sue one another, the ones holding the funds are ethically bound to segregate those funds and place them into escrow, " Jones said. "The lawyer cannot spend or disperse the funds that the other lawyer claims they are entitled to. "

Jones said he wrote a letter to the Scruggs firm about two months ago asking them to provide proof they had in fact placed the funds into an escrow account.

"We never heard back from them, " Jones said. "We began to get nervous whether they weren’t complying. Once they were charged with trying to bribe Judge Lackey, we felt it was time to enforce their ethical obligation with this motion. "

–alyssa@oxfordeagle.com

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Our guest poster this afternoon is treasured “n miss commenter” — about whom all I can tell you is that s/he’s (I don’t even know that) a resident of North Mississippi familiar with the legal community there and who is following these cases closely and with interest. Take it away, NMC!

Are we curious about the court file in the fee case against Scruggs?

I thought we were. Here’s what I saw:

1) First, the news. Today, the plaintiffs filed a “Motion for Court Ordered Control of Partnership Assets, Disgorgement of Funds, Payment of Undisputed Funds, and other relief.” Guess what indictment is attached as an exhibit.

2) Also filed was a motion to amend the complaint, which notes dryly that there have been new developments in the case since the case was filed.

Now the old news:

Balducci never entered an appearance in the case. He had no public role. Folks saying “what was he doing talking ex parte” apparently don’t know this. As I’ve said, we have no idea what he told Lackey was the reason he was coming to see Lackey.

There are a ton of law-firm bills from Jones firm to Scruggs, billing him for work done from roughly 2005 through 9/06 in a case where Scruggs is being sued concerning asbestos litigation. No clue what the case is about; the style looks to be a federal district court cause number. The bills are in the file apparently to rebut Jones’s argument he had no time to work on anything else during the Katrina litigation.

The two orders early on (in March) were both orders to seal the file temporarily, the second sealing it pending resolution of Scruggs’ motion to go to arbitration. I’m guessing, then, that this became Lackey’s case after he entered the order on plaintiff’s motion to seal.

It hadn’t registered to me that Scruggs had the local branch of Daniel Coker, a firm with largely an insurance defense practice, handling the lawsuit for him.

Oh, and nice detail: One reason Jones’s motion argues for disgorgement is that the defendants are asserting they didn’t do everything they could do to mitigate damages.

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