The Barriester’s Dream – Plaintiffs’ Oppose Scruggs’ Motion to Dismiss

Opposition Brief

On July 1, 1999, Plaintiffs entered into written agreements with Defendants which
provided that for the Plaintiffs’ services in the tobacco litigation, each Plaintiff would receive
a percentage of Defendants’ net tobacco fees after the deduction of tobacco-related
expenses. (Complaint, Para. 13) Plaintiffs could have never predicted the events that
would subsequently occur and deprive them of the funds to which they were entitled,
specifically that Scruggs – a man they once admired and held in high esteem – would plead
guilty to attempting to bribe not one but two judges.

The contract between Plaintiffs and Defendants provided for the deduction of
tobacco-related expenses. From 1999 to July 2005, these expenses included payments
for attorneys’ fees and other expenses to defend against a lawsuit filed by Scruggs’ former
partner, Alwyn Luckey, to attempt to collect tobacco-related attorneys’ fees Luckey claimed
he was owed (“the Luckey lawsuit”). (Complaint, Para. 14) On July 20, 2005, the district
court awarded Luckey $19.5 million and entered final judgment; however, the court
rejected a “constructive trust” theory for tobacco fees and held that Luckey was not entitled
to any fees from the tobacco litigation. (Complaint, Para. 15)

In order to satisfy the $19.5 million judgment to Luckey, Defendants obtained a bank
loan. On July 25, 2005, Defendants began withholding $31,155 from each of the Plaintiffs’
quarterly tobacco payments to pay back the bank loan. (Complaint, Para. 16) Plaintiffs
were advised that Defendants felt that the award to Luckey did include tobacco fees and
therefore would not refund the sums being withheld from Plaintiffs’ compensation, nor
would the Plaintiffs be exempt from future deductions. (Complaint, Para.19)
During this time, William Roberts Wilson, another former partner with Scruggs, also
sued Defendants for non-payment of asbestos fees owed to him and again alleged that he
was also entitled to tobacco fees (“the Wilson lawsuit”). (Complaint, Para. 22) In 2006,
Plaintiffs learned that Defendants had retained Joey Langston to assist in their defense
against Wilson’s claims. Plaintiffs contributed to payment of attorneys’ fees and expenses
to Langston of approximately $3 million. (Complaint, Para. 22) In January 2007,
Defendants withheld $44,000 from each of the Plaintiffs’ quarterly payments (in addition
to $31,155 withholding for the Luckey lawsuit) as a “contribution” to a $1 million payment
to Langston. Defendants then amortized the withholding of $44,000 and withheld that
amount over four (4) quarters throughout 2007. (Complaint, Para. 24)

In November 2007, Scruggs was indicted for attempting to bribe a state court judge
to gain an advantage in a lawsuit filed by another law firm for fees Scruggs failed to pay
in relation to Hurricane Katrina insurance litigation. Scruggs originally maintained his
innocence; however, in Spring 2008, Scruggs pled guilty of conspiracy to bribe a judge.
(Complaint, Para. 25) While Plaintiffs were shocked at this admission, the worse was yet
to come.

In 2008, Plaintiffs learned that Langston had confessed to federal prosecutors that
he and Scruggs had conspired to influence the state court judge in the Wilson lawsuit, and
that Scruggs had given Langston $1 million to give to a former district attorney to use to
attempt to influence the judge. (Complaint, Para. 26) In December 2008, Scruggs entered
a guilty plea. (Complaint, Para. 27) Attorneys’ fees that were owed to Plaintiffs and to
which Plaintiffs were entitled had therefore been diverted to Langston to carry out
Defendants’ felonious bribery of a state court judge.

Plaintiffs filed their Complaint against Defendants because they are entitled to the
fees they earned and which Defendants are contractually obligated to pay them. In
addition, Plaintiffs are entitled to all damages available to them based on Defendants’
RICO violations of taking the money that should have been paid to them and instead
diverting it to Langston for the sole purpose of bribing a state court judge. Rather than
address the merits of the Plaintiffs’ allegations (as indeed there are no factual defenses
available to Defendants), Defendants have instead filed this Motion to Dismiss. The
Motion to Dismiss is without merit and should be denied, and Defendants should be
ordered to answer the allegations of the Complaint.

Slabbed
1/6/10