BIRMINGHAM, Ala. - Richard Scruggs, a trial lawyer with close ties to the Mississippi Attorney General's office, will be the subject of a civil contempt hearing Wednesday in Alabama federal court.
U.S. District Judge William Acker wants to question Scruggs about his apparent non-compliance with an injunction issued in early December. Scruggs was ordered to return documents received from two former employees of an insurance company who said they uncovered evidence that the company was unfairly handling post-Hurricane Katrina claims.
The hearing begins at 9:30 a.m.
After the Dec. 8 injunction, Scruggs delivered those documents over to Mississippi Attorney General Jim Hood instead of to the attorneys of E.A. Renfroe, a company hired by State Farm Insurance Co. to investigate hurricane-related claims.
Scruggs' firm earned $1.4 billion when it was hired by then-Mississippi Attorney General Mike Moore to negotiate the Tobacco Master Settlement Agreement, and recently made $26 million when 640 lawsuits against State Farm that made up part of Hood's class action suit against five insurance companies were settled.
A report from The Associated Press said Scruggs stood to make another $20 million if the second part of that settlement had been approved. It grouped together 35,000 policyholders who had not sued yet but still could.
E.A. Renfroe is suing former employees Kerri Rigsby and Cori Rigsby Moran.
"While engaged in work on Katrina as Renfroe employees on behalf of State Farm, Moran and Rigsby learned of acts and practices of State Farm that the two defendants concluded were inappropriate and/or illegal," Acker wrote.
"Instead of sharing their concerns with Renfroe, Moran and Rigsby clandestinely copied approximately 15,000 confidential documents off of State Farm's computer and turned them over to The Scruggs Law Firm."
No longer employees at Renfroe, Rigsby and Moran each make $150,000 a year as consultants for insurance litigation, according to a report in the Wall Street Journal. Acker wrote that the two sisters and Scruggs' firm were "now engaged in a cooperative effort" to sue State Farm.
In a recent interview, Hood referred to the Wall Street Journal as State Farm's "mouthpiece" for its public relations department.
Regardless, Acker ordered that the documents be given to Renfroe's attorneys. Only law enforcement entities like Hood -- he was undertaking his own criminal investigation -- could keep their copies.
Hood recommended Scruggs return his firm's copies to the attorney general's office instead of to Renfroe's attorneys, which Scruggs did. They were not given to Renfroe until the apparent settlement was reached in January.
On March 2, Acker denied the defendants' motion to have State Farm added as a party to the proceedings. A trial is set for April 7, 2008.