Famed attorney Richard “Dickie” Scruggs dodged criminal contempt charges last month that stemmed from Hurricane Katrina litigation when a U.S. district judge granted his request for a dismissal despite acknowledging that “a cloud of impropriety” surrounded Scruggs' actions.

The ruling by Senior U.S. District Judge Roger Vinson is just the latest action in a case that began in 2005 with a pair of adjusters/sisters, Cori and Kerri Rigsby. The two were contracted by independent claim-adjusting firm E.A. Renfroe to work State Farm claims that were reported following Katrina. But when they suspected State Farm of committing bad faith against policyholders, the sisters copied thousands of pages of documents and shared them with Scruggs, the U.S. attorney for Southern Mississippi, the FBI, and the producers of the television show, 20/20.

The criminal contempt charges against Scruggs involved these documents. When Judge William Acker, Jr., ordered an injunction requiring the documents to be returned to Renfroe, an alleged meeting took place between Scruggs and Mississippi Attorney General Jim Hood, which resulted in Hood “requesting” the documents from Scruggs. The end result is that this request enabled Scruggs to maintain access to the documents, with the implied reason being that it could be used as a leveraging tool to settle cases with State Farm (it is alleged that this took place without the Rigsby sisters' knowledge). The ethics of the situation were blurred due to the fact that a personal relationship existed between Scruggs and Hood. Scruggs could never ask Hood to request the documents; Hood was required to make that decision on his own. But prosecutors allege that Scruggs did exactly that.

Judge Acker first asked U.S. Attorney for the Northern District of Alabama Alice Martin to prosecute Scruggs, but Martin declined, saying, “Following a serious and thorough review of the facts surrounding this indirect criminal contempt, I respectfully decline to prosecute Mr. Scruggs or his firm.” Unwilling to take no for an answer, Acker took the surprising action of appointing two special prosecutors to pursue the case.

In the end, the case was dismissed for two reasons. The first was that Judge Vinson determined that the court had no personal jurisdiction over Scruggs, due to the fact that the Rigsby sisters were both deemed innocent of contempt. Secondly, Vinson said that even if there was jurisdiction, Scruggs did not violate the injunction as worded — despite questionable ethics.

“The injunction stated that the documents could not be given to anyone 'unless to law enforcement officials at their request,'” wrote Vinson in his verdict. “It is undisputed that Hood, as the Mississippi Attorney General, is a law enforcement official. It is likewise undisputed that Hood requested the documents. Scruggs contends that the contempt charge should be dismissed because he complied with the plain language of the injunction, and he is, therefore, innocent as a matter of law. The special prosecutors advanced two arguments in response. First, they argued that Scruggs has misinterpreted the words of the injunction because it did not permit post-injunction disclosure to law enforcement. They next argued that, even if the injunction did permit disclosure to law enforcement, the disclosure here was a 'sham.' They contend that Scruggs and Hood schemed to avoid compliance with the injunction for business purposes.”

Scruggs withdrew his law firm from further pursuing Gulf Coast insurers in Dec. 2007, due in part to the contempt charges. It remains to be seen if he will begin pursuing them again.

Special Reports /

Scruggs Dodges Contempt Charges

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