The last two weeks has seen a ton of activity around the Qui Tam case filed by the Rigsby Sisters against State Farm. This lawsuit was always held up by those in the Scruggs orbit as the “smoking gun” that would determine once and for all their contention that State Farm fraudulently denied claims.

First of all, there have been a lot of discovery and depositions. For those of you who tuned in about the Rendon Group debacle, State Farm filed a memorandum saying that the Rendon Group would be turning over 2500 emails with attachments relating to Scruggs/Rigsby Gals. I feel quite sure if history is any indicator that we will see portions of any interesting emails filed in State Farm motion attachments as they have in the past. Also, in the last two weeks, the Rigsby Gals, Beth Jones (one of the Scruggs Law firm secretaries), Rex DeLoach (Scruggs’s “financial consultant”) (on behalf of SLF, Inc. – the successor entity to the Scruggs Law Firm) and others have been deposed. There has been a running ton of information that has come out of this.

Let’s start with the SLF deposition. In true Dickie Scruggs style, the Scruggs camp fought the deposition tooth and nail and there was actually a legal skirmish between Scruggs’s crew and State Farm in Kentucky where Scruggs/SLF tried to quash the subpoena to testify. Rex DeLoach was appointed to testify on SLF, Inc.’s behalf, and didn’t seem to know much. A read of the depo looked more like the “rope-a-dope” routine. What he did know, however was that the original Rigsby Gal document haul that was in Scruggs possession before prison was shipped to Don Barrett in Lexington.

Q. It has been represented to us that a number of documents related to Katrina litigation were – that were being within the custody of SLF and Scruggs Law Firm were at some point sent to the Katrina Litigation Group and, particularly, to Don Barrett. Are you — do you know anything about that process or what I’m talking about?
A. I do. I instructed Charlene [Bosarge] to pack them all up and send them to Don Barrett.
A. I don’t know whether there were or not. What I — my instructions to Charlene was — is to — anything that relates to Katrina, to ship that to Don Barrett. And that’s what the attorneys told me to do. Now, I did not make a
distinction between the Rigsbys [documents]. In fact, I probably didn’t know at that time that Scruggs was even involved in the qui tam case. I thought that was some other lawyer.

Probably most interesting was the deposition of Beth Jones. Jones was asked in her deposition about the now infamous “sticky note”. The Rigsby Gals, Dickie Scruggs and even Attorney General Jim Hood all claimed that the original file with the sticky note that said “Put in Wind File, Do Not Discuss, Do Not Pay” was destroyed by State Farm even though the Rigsby Gals had made a copy, which wound up in the hands of Scruggs and the AG. From Jones’s deposition, however, we now seem to find out that the sticky note was in Scruggs’s office.

Q. It appears that Exhibit 7 [the October 12 Ford report], the first page is obscured by what looks to be a sticky note. Do you see that?
A. I do.
Q. Have you seen the original sticky note?
A. Yes.
Q. Where did you see it?
A. On the document.
Q. And would that have been at the Scruggs Law Firm in Oxford?
A. Correct.
Q. Where is the original sticky note now?
A. I do not know.
Q. What color was the sticky note?
A. I do not remember.
Q. Where was the report with the original sticky note kept?
A. I cannot remember.
Q. Was it kept in a filing cabinet or in a drawer?
A. I would suspect in a filing cabinet.
Q. Where would those filing cabinets have been located at the Scruggs Law Firm?
A. Either behind all the legal assistants or behind my desk.

The only logical explanation is that someone with a vested interest in making State Farm look bad lifted the original file, got it to Scruggs. The lack of the original of the sticky note was something both Scruggs and Hood hammered State Farm on repeatedly and was used as public leverage to try and show that State Farm was acting in bad faith. Hood subpoenaed the documents through the Grand Jury and implied that criminal charges were coming against State Farm execs if they didn’t produce the originals of those docs. In fact, both seemed eerily confident that State Farm would not produce the now infamous “sticky note” document.

“Hood has stated in open court in Harrison County, on April 11, 2006, that he already had many of the State Farm documents that he was requesting through grand jury subpoenas: “We know what a lot of it that they’re going to produce and we’re just going to see if they actually give us what is written on them and stuck to them and so forth.”

Now, we may well know why. Could it be it was because they had it all along? As we discuss in Kings of Tort (second edition available now), this is straight out of the playbook and very similar to many of the tactics used in the tobacco cases.

The implications of Scruggs having the originals and them being presumably supplied to him by the Rigsbys has pretty large implications on the Qui Tam case as it goes to further shred the credibility of the Rigsby Gals. Though the mainstream press went gaga (crazy, not lady) over the revelations of the missing sticky note, there seems to be ZERO media coverage at this point. I keep thinking a point will come when the mainstream national press will turn on the Scruggs camp after being used and lied to so many times.

Stay tuned. The harder the Scruggs inner sactum fights, the more data that comes out to connect the dots on.