Scruggs' old partners warn company not to satisfy State Farm request

John O'Brien Mar. 19, 2008, 4:31pm

Don Barrett, head of the KLG

GULFPORT, Miss. - An engineering and analysis firm says it cannot comply with a State Farm Insurance Cos. subpoena in a Hurricane Katrina case because it would violate a settlement reached with the former Scruggs Katrina Group.

The suit, on which Glenda Shows is the lead plaintiff, has 21 policyholders alleging a violation of federal racketeering laws by State Farm during its post-Katrina claims-handling practices.

Originally a defendant in the suit, Forensic Analysis and Engineering Corp. reached a confidential settlement in November to be removed from the hundreds of lawsuits filed by the former SKG, a group of law firms that joined together to sue insurance companies.

The group's leader, high-profile trial lawyer Richard "Dickie" Scruggs, pleaded guilty last week to a federal charge that he conspired to attempt to bribe a state judge. He faces up to five years in prison. The remaining firms have renamed themselves the Katrina Litigation Group.

"FAEC submits its written objections to the subpoena at issue," wrote New Orleans attorney Larry Canada. "The subpoena seeks privileged and protected information regarding a settlement agreement, which is protected by a confidentiality agreement. As plaintiffs have objected... FAEC cannot respond to this subpoena without breaching its agreement."

The March 6 subpoena asked for "Any and all documents, in electronic format or otherwise, which describe, memorialize or contain any and all components, terms and provisions of the settlement agreement between FAEC and the plaintiffs in the instant case, as well as in McIntosh v. State Farm, 1:06cv1080 LTS/RHW."

KLG attorney Derek Wyatt e-mailed Forensic's attorneys, reminding them not to break the confidentiality agreement.

"This letter shall serve as notice... to any and all parties concerned with the subject subpoena, that KLG categorically objects to the subpoena of such confidential settlement information," he wrote.

"Further, notice is hereby given KLG will consider any disclosure of the privileged and confidential information to be a material breach of the aforementioned settlement agreement. This objection applies to any case wherein a subpoena has issued for the confidential information comprising the settlement between Forensic, its principals and the KLG."

When the settlement with Forensic was reached, Scruggs' son and law partner Zach told The Associated Press that it would "better enable us to prosecute our cases against State Farm." Weeks later, he was indicted along with his father.

Zach Scruggs is the only of the four original co-defendants who has not pleaded guilty. His trial is scheduled for March 31.

Meanwhile, State Farm wants the KLG firms disqualified from their cases because of their past associations with Scruggs. State Farm argues that Scruggs attempted to bribe material witnesses, like Forensic engineer Brian Ford, with consulting jobs.

The KLG represents 1,100 Mississippi claims and more than 450 involving State Farm.

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