A federal judge Friday requested that the U.S. attorney prosecute prominent Mississippi attorney Richard F. Scruggs and his law firm for criminal contempt in a Hurricane Katrina insurance dispute.
U.S. District Judge William M. Acker Jr. said if the federal prosecutor in Birmingham declines the court's request, Acker will appoint another attorney to handle the prosecution.
Acker ruled that Scruggs "willfully violated" a Dec. 8, 2006 preliminary injunction that required him to deliver "all documents" about State Farm Insurance Co. that whistleblowers Cori and Kerri Rigsby secretly copied after Katrina. Acker's ruling came in a suit by E.A. Renfroe and Co. Inc., a claims adjusting firm that fired the Rigsbys after finding out they had taken internal documents. Renfroe and Co. worked for State Farm, and the sisters were heavily involved in processing claims for the insurance giant.
"It is undisputed that Scruggs had in his possession the exact documents that fell within the scope of the injunction and that were and are the whole subject of the controversy," the judge wrote in his order. Instead of complying, Scruggs promptly sent the documents to Mississippi Attorney General Jim Hood's office, Acker says, "for the calculated purpose of ensuring noncompliance with or avoidance" of the injunction.
He said Scruggs's motive seems clear from the undisputed facts. "Even after Hood `voluntarily' sent the documents to counsel for Renfroe at Scruggs's request, Scruggs wrote to Hood requesting another copy of the same documents for himself and ostensibly for the Scruggs Katrina Group," the judge wrote.
He called Scruggs' action a "brazen disregard" of the court's order, calling it "precisely the type of conduct that criminal contempt sanctions were designed to address." Richard Scruggs called the judge's actions "bizarre." "Our firm fully cooperated with the court's injunction. We did what was asked of us and the information that we turned over was strong evidence of fraud by the insurance industry," Richard Scruggs told The Associated Press Friday evening. "We're going to vigorouly oppose it and we are willing to accept what consequences this Alabama judge might impose for complying with his own injunction," he said. Zack Scruggs, his son and law partner in Oxford, Miss. said an appeal of Acker's ruling is possible.
The elder Scruggs had argued that he did not violate the injunction because the injunction, as he interpreted it, contained an express "carve-out for law enforcement," Acker noted. But the judge wrote: "To read the preliminary injunction to permit Scruggs to deliver the documents to Hood rather than to counsel for Renfroe is such a strained construction and so contrary to the injunction's clear terms as to lack any credibility whatsoever."
The Rigsbys, from Ocean Springs, Miss., have admitted copying thousands of pages of records to back up their allegations that State Farm wrongly denied claims after Katrina. The sisters gave the documents to law enforcement agents and Scruggs, who signed them each to a $150,000-a-year consulting contract. The sisters say they made about 15,000 copies -- three sets of 5,000 separate records.
Scruggs, a highly successful plaintiffs' lawyer who is the brother-in-law of U.S. Sen. Trent Lott, R-Miss., is suing State Farm on behalf of hundreds of Mississippi residents.