Scruggs apparently not in the clear yet

BIRMINGHAM, Ala. - Apparently unhappy that his advice went unheeded, federal judge William Acker showed Friday that he isn't ready to give up on prosecuting nationally known trial lawyer Richard Scruggs for contempt.

Acker appointed two Birmingham attorneys as special prosecutors to prosecute the criminal contempt charge, a move that came not long after U.S. Attorney Alice Martin decided not to. Acker had earlier recommended to Martin that she do so.

Joel Williams and Charles Sharp of Sadler, Sullivan were picked by Acker, a judge for the Northern District of Alabama.

"By separate order, the court will sever the charges of criminal contempt from the main case and create a charging document, so that in accordance with the order of June 15, 2007, the matter of contempt can be randomly reassigned to another judge of this court," Acker wrote.

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.

Williams, 53, was a judge advocate in the Army before he began practicing, and Sharp, 77, is a former president of the Alabama Defense Lawyers Association.

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.