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The New York Times reports on some experienced plaintiffs’ lawyers who are hoping to rip big sums out of food companies alleging mislabeling; one is particularly outraged at a yogurt maker’s use of the “evaporated cane juice” euphemism for sugar. “The lawyers are looking to base damages on products’ sales…. [They] are being selective about where these suits are filed. Most have been filed in California, where consumer protection laws tend to favor plaintiffs.” The Times article, which reads somewhat like a press release for the lawyers involved, flatteringly describes them as “the lawyers who took on Big Tobacco,” though in fact a much larger group of lawyers played prominent roles in the Great Tobacco Robbery of 1998, and no evidence is presented that most of that larger group are taking any interest in the food-labeling campaign. What’s more, the many efforts by the plaintiff’s bar to identify a suitable Next Tobacco in the intervening years have been full of false starts and fizzles, including such mostly-abortive causes as mass litigation over alcohol, slavery reparations, HMOs, and dotcom failures.

The Times does draw the link to Proposition 37, the lawyer-sponsored measure I wrote about last week, which could open up a basis for rich new suits based on failure to correctly affix labeling tracking the sometimes-fine distinctions between genetically modified foodstuffs and all others. The text of Proposition 37 proposes to base minimum damages on the total sales volume of a product sold out of compliance, not on any measure of actual harm to consumers (& Thom Forbes, Marketing Daily; Ted Frank, Point of Law). Earlier on Don Barrett here and on Walter Umphrey and Provost Umphrey here and here.

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Speculation continues to mount that central bribery-scandal figure Timothy Balducci may be cooperating with prosecutors, and perhaps has been doing so for some time; Balducci had not yet been arraigned as of this weekend, and the indictment quotes extensively from conversations he held with other defendants, in addition to those that took place in Judge Lackey’s bugged chambers. (Peter Lattman and Ashby Jones, “In Scruggs Probe, Focus Turns to Another Lawyer”, WSJ, Dec. 1)(sub-only). In the latest of his extensive posts on the case, David Rossmiller adds to the picture: “From the verbatim quotes by Balducci given in the indictment, one logically can surmise that investigators had substantial recorded evidence that would have given them tremendous leverage over Balducci in obtaining his cooperation against the others.” In addition, certain elements in the indictment’s description of Balducci’s actions suggest that by mid-October, presumably flipped by investigators, he had begun taking steps that could be used to document targets’ knowing participation in the conspiracy (in particular, his return to Dickie Scruggs to finance a purported second-round bribe, and his statement in the presence of Zach Scruggs and Sidney Backstrom that “we paid for this ruling”).

Rossmiller also analyzes the underlying Jones v. Scruggs dispute over legal fees, in which the Jones firm, formerly one of the five participants in the Scruggs Katrina Group (SKG), alleges that it was “frozen out” and ejected by the remaining four firms, allotted only token fees after shouldering the substantial work of case briefing. Why would it have been advantageous to the Scruggs firm to have Judge Lackey shunt this dispute into arbitration? One key reason is that proceeding with a court battle, even if successful, might have risked exposing to the public many of the internal workings of SKG and perhaps also of Scruggs’s own firm. (Having read the Jones complaint, I would note that Jones was alleging that Scruggs had made a common practice of squeezing collaborating lawyers out of their fee shares in earlier, unrelated litigation during his career. The evidence put forth to support such an allegation, apart from whether it turned out to support a claim for punitive damages, might result in public airing of all sorts of messy and embarrassing episodes from the past.)

John Jones and Steve Funderberg, the lawyers whose firm sued Scruggs et al in the underlying Jones v. Scruggs suit, have given an interview to the Mississippi press; Jones says he knows Scruggs well and has represented him in court, but that the relationship changed drastically “when the money hit the table”; of go-between Balducci, Funderberg said, “Knowing Tim Balducci as I do, I am utterly flabbergasted that he would ever be a part of something like that or believe he could ever get away with something like that”. (Jon Kalahar, “Former Scruggs Colleague Says Money Changed Him”, WTOK, Nov. 30).

At Y’AllPolitics, Alan Lange traces many of the recurring connections between the dramatis personae and notes that the “whole crowd” was deeply involved in the much-criticized MCI contingency-fee back taxes negotiation, which we posted on at the time at Point of Law. “Attorney General Jim Hood allowed his largest campaign contributor, Joey Langston, to be the plaintiff lawyer and also appointed Tim Balducci as a Special Assistant Attorney General in that case”. Langston, for whom Balducci used to work, is now among lawyers representing Scruggs.

Some noteworthy reactions to the indictments: “This is maybe the worst day of my life,” says longtime Scruggs friend Don Barrett, quoted in an Associated Press piece that also rounds up some of the high points of Scruggs’ career (Michael Kunzelman, “Scruggs’ career in jeopardy”, AP/Hattiesburg American, Dec. 1). “I’m disappointed in him,” Katrina client Lyman Cumbest of Pascagoula, who’s suing State Farm, said of Scruggs. “With all the money he had, he didn’t have to bribe a judge. He’s got more money than he could ever spend.” (“FBI probe in judicial bribe case to continue”, Jackson Clarion-Ledger, Nov. 30). Byron Steir at Mass Tort Litigation Blog comments (Nov. 30):

If true, all of these allegations suggest remarkable hubris in at least some of the top plaintiffs’ lawyers. One wonders about the effect of a lifestyle of private jets and multiple wins of multiple millions (or tens of millions) in fees. One also wonders about the effect of high-risk, winner-take-all, contingency fee litigation. Brash and aggressive personalities seem to thrive in such an environment — but they too must keep in mind that lawyers ultimately serve the client (not the other way around) and that no one (especially not the lawyer) is above the law.

And more: “It just boggles the mind,” said Biloxi trial lawyer Jack Denton. “Here is a man who has had an enormous amount of success, who reached a level very few attorneys, if any, have reached. Why would he risk everything over a legal dispute over attorneys’ fees?” David Rossmiller, quoted in the same story, has one possible reply, which is that people may begin reevaluating “how this amazingly successful man got to be so amazingly successful.” (Richard Fausset and Jenny Jarvie, “Katrina lawyer at the eye of a storm”, Los Angeles Times, Nov. 30)(& welcome Tom Kirkendall readers).

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Scruggs indictment, day two

by Walter Olson on November 30, 2007

David Rossmiller at Insurance Coverage Blog (who’s also a co-blogger of mine at Point of Law) continues to be the must-read source on this sensational story and its fast-breaking developments. He’s posted a PDF of Jones v. Scruggs, the lawsuit before Judge Lackey by lawyers who say they were cut out of Katrina fees. He also offers some answers to the question posed by a commenter at Above the Law, who asks, “What kind of cheap-o offers a $40,000 bribe to resolve a dispute over $26.5 million in attorneys fees?!” (To begin with, the ruling sought from Judge Lackey would not have disposed of the fee claim, just sent it to arbitration.) Martin Grace scents a ripe irony in the fee-dispute lawsuit, noting that it charged Scruggs with engaging in the same sorts of tactics toward fellow lawyers that he regularly accused insurers of practicing toward their insureds: “lowballing claims and producing fake documents in support of the claims.”

Jeralyn Merritt at TalkLeft writes that Judge Lackey “presumably [agreed] to tape his calls with the defendants. I suspect the F.B.I. also got a wiretap on Scruggs’ or his co-defendants’ phones, since there are several calls described in the Indictment that don’t involve Judge Lackey. Getting a wiretap on a law firm’s telephone is unusual — particularly due to the substantial and cumbersome minimization efforts required to ensure that calls of clients and lawyers unrelated to the criminal investigation are not overheard.” At the Jackson Clarion-Ledger, columnist Sid Salter has more on co-defendants Tim Balducci and Steve Patterson. A PDF of the indictment is here.

The internal cohesion of the anti-insurer lawyer consortium known as the Scruggs Katrina Group (SKG) appears at present to be under extreme pressure. Rossmiller reports that “policyholder lawyers in general tell me they are seething over Scruggs” and in particular that at least some lawyers who have been his allies “don’t want their names and their cases tarnished with the Scruggs name”. On Thursday an extraordinary contretemps developed in which SKG co-founder Don Barrett of Lexington, Miss. sent a letter (PDF) to a judge hearing Katrina cases against State Farm, suggesting that SKG was being re-formed without Scruggs and would take over the litigation with he, Barrett, as lead counsel (Lattman, WSJ). Within hours, Scruggs had dispatched a letter of his own (PDF) saying that Barrett was misinformed, that it was up to plaintiff families to decide who they wanted to represent them, and that many would undoubtedly wish to retain Scruggs (second posts at Lattman and Rossmiller). As of Thursday evening, the Scruggs Katrina Group website has prominently posted the Scruggs letter but not the Barrett one; one might speculate that if some sort of split within SKG is imminent, the website operation, at least, may have maintained loyalty to the Scruggs side.

On the statewide political repercussions, see Majority in Mississippi, Sid Salter at the Clarion-Ledger, and Chris Lawrence at Signifying Nothing, who also quotes Salter in a comment thread predicting: “The next sob story will be that Dickie’s indictment is about Bush administration persecution of trial lawyers and a rehash of Paul Minor’s problems.” Take it away, Adam Cohen and Scott Horton!

On political repercussions nationally, it didn’t take long for the Hillary Clinton campaign to cancel the Scruggs-hosted fundraiser that was to have been headlined by husband Bill Clinton next month (Associated Press, WSJ Washington Wire). The North Dakota political blog Say Anything thinks politicos in that state should return the (rather substantial) sums they have received from Scruggs and colleagues, but one may reasonably assume that such calls will be ignored, just as elected officials have been in no hurry to divest themselves of the booty collected from such figures as felon/mega-donor William Lerach.

Where are Scruggs’s admirers and defenders? One can only suppose that somber music is playing in the corridors at the business section of the New York Times, which has run one moistly admiring profile of the Mississippi attorney after another in the past couple of years. As of 3 p.m. Thursday, the Times’s very restrained story on the indictment was in a suitably inconspicuous position on the paper’s online business page — the 15th highest story in the left column, in fact. The story, by serial Scruggs profiler Joseph B. Treaster, quotes the relatively ambiguous line attributed to defendant Timothy Balducci — “All is done, all is handled and all went well.” — but omits the far more smoking-gunnish “We paid for this ruling; let’s be sure it says what we want it to say.” And things are anything but upbeat at Mother Jones, where Stephanie Mencimer concedes that she finds the indictment “pretty damning“.

More links: Paul Kiel, TPM Muckraker (indictment “devastating… it doesn’t look good for Scruggs”); Legal Schnauzer (defender of Paul Minor distinguishes the two cases); WSJ interview with Judge Lackey (sub-only) and editorial (free link), Rossmiller Friday morning post (certain details in indictment suggest that a conspiracy insider, possibly Balducci, may have cooperated with prosecutors)(& welcome Instapundit, Point of Law, TortsProf, Adler @ Volokh, Open Market, Y’allPolitics, Majority in Mississippi, Rossmiller readers).

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