Anita Lee has broken the story that the remainder of the old Scruggs Katrina Group is disqualified from representing their insurance plaintiffs. The order entered today was in the McIntosh case but applies to all their remaining clients. I have a feeling Chip Merlin’s phone will now be ringing off the hook. Here is a copy of the order and here is a copy of Judge Senter’s opinion.
The reasoning relates to the payments made to the Rigsby sisters by Dickie Scruggs:
I have determined that disqualification is required because Scruggs, acting in furtherance of the SKG joint venture, paid the Rigsby sisters a substantial sum of money (a consulting fee of $150,000 per year) despite Scruggs’s knowledge that the Rigsby sisters were material witnesses in connection with many hurricane damage claims that were likely to become the subject of litigation. While Scruggs made the arrangements for these payments, the other members of the SKG joint venture knew or should have known that the payments were being made, and I am of the opinion that their failure to take timely and reasonable remedial steps or to object to this arrangement amounts to a ratification of Scruggs’s actions. While the other ethical misconduct alleged by State Farm and Renfroe are substantial, the payments to the Rigsby sisters are, in and of themselves, sufficient to warrant disqualification.
It is apparent to me, from my review of the deposition testimony of the Rigsby sisters, that there was no legitimate reason for these payments and that the “consulting” work that ostensibly justified these payments was a sham. Even if this were not the case, the performance of legitimate work that is closely related to a matter in litigation cannot justify an attorney’s payment of a substantial sum of money to a non-expert material witness.
We are working to ascertain the impacts of this order on the Rigsby Qui Tam suit against State Farm. We do know the remaining plaintiffs have been slabbed once again, this time by their own lawyers. Now they must start anew the quest to obtain justice. Our thoughts go out to all of them.
Here is the Anita Lee story:
U.S. District Court Judge L.T. Senter Jr. has disqualified the Katrina Litigation Group of attorneys from representing State Farm policyholders, throwing into limbo the most contentious lawsuits filed against the insurance companies.
The Katrina Litigation Group includes attorneys who continued to represent policyholders after Dickie Scruggs and his law firmed withdrew from the cases. State Farm accused all the law firms of unethical conduct and asked for their removal.
In a ruling Friday afternoon, Senter also disqualified two State Farm whistle-blowers, Cori and Kerri Rigsby, from testifying on policyholders’ behalf in those lawsuits. His order was entered Friday afternoon. The order affects at least 178 lawsuits.