Scruggs won't be prosecuted for contempt

By John O'Brien | Jul 27, 2007

BIRMINGHAM, Ala. - Despite a federal judge's request to do so, the U.S. attorney in Birmingham will not charge well-known trial lawyer Richard Scruggs with contempt over his handling of confidential documents.

Acker recommended to U.S. Attorney Alice Martin last month that she file criminal contempt charges against Scruggs, who has been heavily involved in alleging that insurance companies in Mississippi intentionally miscalculated the amount of flood damage, covered by a federal program, done to policyholders' homes by Katrina.

Acker had questioned 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 E.A. Renfroe, Inc., who said they uncovered evidence that the company was unfairly handling post-Hurricane Katrina claims.

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 to investigate hurricane-related claims.

E.A. Renfroe is suing the 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. Acker wrote that the two sisters and Scruggs' firm were "now engaged in a cooperative effort" to sue State Farm.

Martin wrote that "following a serious and thorough review of the facts surrounding this indirect criminal contempt," she had decided not to charge Scruggs with contempt.

Scruggs has ties to the Attorney General's Office in Mississippi. Scruggs' firm earned $1.4 billion when it was hired by former Attorney General Mike Moore to negotiate the Tobacco Master Settlement Agreement in the late 1990s.

This year, his firm 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. Hood is now moving to force State Farm to settle.

Scruggs is also a campaign contributor to Hood.

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