Fight over Langston's and Balducci's millions appears headed for state court

By John O'Brien | Mar 24, 2008



NEW YORK - Two former attorneys at the center of Mississippi's judicial bribery scandal want a federal bankruptcy judge's rulings before their fight to preserve fees earned performing state work is transferred to a state court.

Joey Langston and Timothy Balducci made $14 million in a 2005 state settlement with MCI and are fighting a multi-court battle against former state Auditor Phil Bryant and current Auditor Stacey Pickering. A federal judge in Jackson last week ruled the suit should be heard Hinds County Circuit Court.

The fight started in MCI's case in bankruptcy court in New York, and Bryant filed the Hinds County action in December. Langston and Balducci moved to have it transferred to the federal court in Jackson, but Judge Henry Wingate told them that he will remand the action. Langston and Balducci want to delay that until Bankruptcy Judge Arthur Gonzalez has a chance to catch up on requests made to him.

"In the Bankruptcy proceedings, Judge Gonzalez is considering the Langston Firm's Motion for Summary Judgment and the State's Motion to Abstain," wrote attorney C. York Craig of Jackson on Tuesday. "The parties in those proceedings have been advised that a ruling on their respective motions is imminent.

"In order to avoid the possibility of inconsistent restuls on the remand and abstention issues as well as the possibility of duplicitous litigation, the Langston firm requests that the Court delay the entry of its remand order until such time as Judge Gonzalez issues his rulings in the Bankruptcy proceedings."

Bryant and Pickering claim that the $14 million awarded to attorneys in the MCI case should have passed through the state's Legislature for disbursement. The motion for abstention asked Gonzalez to put the case on hold while the state court handled it.

Bryant argued that The Langston Law Firm wants to keep the suit in federal court because it "may be forum-shopping to avoid having the Mississippi state courts interpret and enforce the Mississippi statutes that would require the Langston firm to repay its fees to the State of Mississippi for proper approval and appropriation by the legislature."

Langston claims Bryant's complaint was politically motivated, with the intention of helping his successful run for Lt. Gov., and the motion for abstention is "baseless" and does not pass several tests used by courts to determine proper jurisdiction.

"Judge Wingate has properly found that the dispute at issue here involves Mississippi parties and Mississippi law, and should be heard by the Mississippi state court," wrote the auditors' attorney, Andrew Kramer of New York, to Gonzalez. "Accordingly, the Abstention Motion should be granted and both plaintiffs' motions for summary judgment in this action should be denied."

Bryant had insisted in November that state Attorney General Jim Hood represent him in the lawsuit, though Hood, who had hired the Langston firm to pursue the case in 2004, declined. In the case, the State alleged MCI owed back taxes after its predecessor Worldcom collapsed in 2002, resulting in a $100 million settlement.

MCI and the State agreed that $17 million would go to attorneys fees, though the Langston firm, headed by Hood contributor Joey Langston, could only collect $14 million. The extra $3 million went to a $4.2 million donation to the Children's Justice Center of Mississippi.

Bryant asked the center to return the money to the State, and it did. He also asked Langston to do the same, and Langston refused.

Langston and Balducci, who worked at The Langston Law Firm at the time of the settlement but left thereafter to start his own firm, have recently pleaded guilty to separate judicial bribery schemes. Both involve prominent trial lawyer Richard "Dickie" Scruggs.

Balducci was charged last year with conspiring with Scruggs to bribe state judge in a dispute over at least $26.5 million in attorneys fees earned in Hurricane Katrina settlements with insurance companies and began cooperating with federal investigators. He wore a wire to several meetings with members of the Scruggs Law Firm and gathered the evidence that led to guilty pleas from Scruggs and associate Sidney Backstrom.

Scruggs' son and law partner Zach pleaded guilty to knowing about the scheme but not participating in or reporting it.

Langston faces a maximum prison sentence of five years after pleading guilty in January to a charge that he attempted to bribe Hinds County Circuit Judge Bobby Delaughter with consideration for a job as a federal judge. The attempt, Langston says, happened when he represented Scruggs in a dispute over attorneys fees earned in asbestos settlements. Balducci also represented Scruggs in the case.

DeLaughter did not agree with a special master's recommendation that Scruggs pay his former partner $15 million and ruled Scruggs only owed $1.5 million. The Mississippi Commission on Judicial Performance has recommended his temporary suspension while complaints against him are sorted out.

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