Scruggs Nation, Day 8: the scruggsing of Scruggs

How much of the Scruggs position in Katrina litigation was real and how much was hype?

I ask this question for several reasons, one of them relating to the “whistleblower” Rigsby sisters and the State Farm claims documents they took from their employer E.A. Renfroe, a State Farm contractor. From what I can see, the claims of the Rigsby sisters and the 5,000 to 15,000 documents they took from Renfroe are mostly if not totally hype with little if any substantial value. Of the documents that they took, few have even been offered up as evidence of State Farm’s supposed misdeeds — those engineering report e-mails, the State Farm wind-water protocol and a few other documents are all that appear to have emerged from this “data dump” by the Rigsby sisters.

Were the documents themselves merely a prop, a Potemkin village, a bluff to increase State Farm’s opinion of the threat posed by Scruggs? Read this passage from this recent Anita Lee story about the Jones v. Scruggs lawsuit.

The settlement [of 640 SKG cases, not announced until January] was reached in November 2006, according to a letter State Farm sent Scruggs.

In January, Jones e-mailed Scruggs and SKG partner Sidney A. Backstrom, according to copies State Farm has filed in a lawsuit to stop Hood’s investigation.

In the first e-mail, Jones said his firm had lost $2 million in revenue alone on the insurance litigation until his firm was “excommunicated” from SKG in December 2006. “And what member of the joint venture committed to the work on the chance he would simply be made whole?” Jones said. “Certainly none I know of.”

Backstrom fired back: “… the whistle-blowers came to Dick and they were the sole basis for Hood’s interest which really was 80 percent of why SF wanted to settle; Trent Lott and Gene Taylor signed up with our office, as did (U.S.) Judge (Louis) Guirola – that mattered big time to SF too… ”

In the next e-mail Jones thanked Backstrom for his candor and said he didn’t want any of the SKG partners to be shortchanged. Jones closed with this prediction: “I want to avoid this as bad as I need to be paid for committing 2½ years of my law practice to what Dick has asked of me, but if that is where it is headed this is going to be awful for all of us.”

So this e-mail above by Backstrom, a lawyer in the Scruggs Law Firm and one of the indicted alleged bribery conspirators, says that Hood’s interest in the criminal investigation of State Farm was solely based on the “insider” Rigsby sisters — who after doing a massive copy job of Renfroe documents quit and immediately went to work for Scruggs as consultants at annual salaries of $150,000 each, with no specified duties — and that in Backstrom’s opinion, which one could surmise reflected Dickie Scruggs’ own opinion, Hood’s criminal investigation was 80 percent of the reason State Farm settled. Do you see the implications of that? I’ll examine the question of hype versus reality further in the coming days, but with the Backstrom e-mail fresh on our minds, this is an opportune time for the follow up below regarding Hood and Scruggs’ involvement.

David Rossmiller
Insurance Coverage Blog