State Farm paid witness really well – much more than the "substantial sum" disqualifying SKG/KLG member firms (a Rigsby qui tam update)

“I agree whole heartedly with the SF hypocrisy on display. However, I am not aware of any rule that prohibits a witness from being both a “fact” and “expert” witness.” NRB, Comment

Since NRB appears to be an attorney and, clearly, I am not, it was State Farm’s “hypocrisy” on my mind when I wrote State Farm “dickin” around in Kentucky (part 2) –  “hypocrisy” evident in State Farm paying the “substantial sum” State Farm was paying adjusters to appear as material witnesses.

Sop, as the resident CPA of SLABBED, may correct my math but, with 260 workdays in a year, the $750 per day fee State Farm paid claims adjuster Lorrie Beno to give her deposition in a Louisiana Katrina case calculates to “substantial sum” of $195,000 per year for this material witness – “substantially” more than the $150,000 consulting fee (approximately $577 per day)  Dick Scruggs paid the Rigsby sisters.  Not only were the Rigsby sisters paid less than the lesser-qualified Beno, their consulting arrangement resulted in the disqualification of the member and associated firms of the Katrina Litigation Group, the successor to SKG:

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…the payments to the Rigsby sisters are, in and of themselves, sufficient to warrant disqualification. Judge Senter’s April 4, 2008 Memorandum Opinion on Motion to Disqualify Members of the Katrina Litigation Group and Associated Council

Before we move to the documentation of State Farm’s compensation agreement with Beno, consider this text from a document on the McIntosh case saved in my research notes:

…payment for these activities…[attending depositions, preparing for depositions, reviewing documents and the like]…is not contrary to the case law and ethical rules, but is instead supported by both. Pursuant to rule 3.4(b), “occurrence witnesses may be reasonably compensated for time spent in attending a deposition or trial; for time spent in pretrial interviews with the lawyer in preparation for testifying; and for time spent in reviewing and researching records that are germane to his or her testimony.” Centennial Mgmt. Servs. v. Axa Re Vie, et al., 193 F.R.D. 671,682 (D. Kan. 2000), citing ABA Comm. on Ethics and Professional Responsibility, Formal Op. 96-402 (1996). A witness may also be compensated for “consulting on a litigation matter in addition to the time spent providing testimony in a deposition or trial.” Prasad, et al., v. MML Investors Servs, Inc., 2004 U.S. Dis!. LEXIS 9289, *17-18 (S.D.N.Y.), citing Centennial Mgmt. Servs., Inc. v. Axa Re Vie, 193 F.R.D. 671, 679-80 (D. Kan. 2000) and New York v. Solvent Chemical Co., 166 F.R.D. 284, 289 (W.D.N.Y.).

Again, the issue here is State Farm’s “hypocracy”- the “sham” of filing to disqualify opposing attorneys for payments to the Rigsby sisters while, at the same time, State Farm was paying material witnesses who would testify on the Company’s behalf  – adjusters like Lorri Beno:

Q. Who paid for your flight to be here, Ms. Beno?

A. It came through the attorneys that are here.  I believe that would have been provided by State Farm.

Q. In addition to your flight, meals, and lodging, were those all being paid by State Far or by the lawyers?

A. The flight, lodging, the rental care, I don’t know if we ever even discussed the meals.

Q. Are you being paid anything above and beyond the cost of flight, rental car, lodging and potentially the meals?

A. Yes, I am paid a daily rate that I have worked in the past.

Q. What is that daily rate?

A. $750 (seven hundred fifty dollars) a day.

Q. So for being here Sunday, Monday, Tuesday, you are being paid $3,000 (three thousand dollars) in addition to the cost of the hotel, the light, and meals?

A. Sunday, Monday, Tuesday, Wednesday, that is correct.

Q. So, yes, $3,000 (three thousand dollars), correct?

A. Yes

Q. Are you currently doing any work right now?

A. Yes, I still have something opened.

Q. For whom?

A. For GAB Robbins, the Texas wind claim, and a claim in Cincinnati for wind there, and I also have a fire loss claim that I am doing pro bono, which I guess you guys would say.

Q. And, if asked to produce documentation that you do, in fact, make $750 (seven hundred and fifty dollars) a day, would you be able to provide that to your lawyers and have them to get it to me?
A. I would have to go back to the day that happened, which was a few days ago, down in Florida, but, yes, that is what I made a day in Florida.  I would think that I can find that.

Q.  Is that what you’re making now?

A.  Is that what I’m making now?

Q. Yes.

A. No, I’m making considerably more than that on claims that I’m finishing.

Q. How much are you making a day now?

A. It’s not a daily rate. It is a percentage of what I write.  My percentage would come to well over $20,000 (twenty thousand dollars).

(Deposition of Lorrie Beno, pages 420-15 to 423-3)

What’s good for the goose is good for the gander – particularly when both goose and gander are weighed on the same scale of justice.  The Mississippi Supreme Court used such a scale in overturning sanctions that held the two SKG/KLG member firms liable for fees and costs to former SKG member firm Jones, Funderburg, Sessums, Peterson & Lee, LLC (the Jones Firm):

The Circuit Court of Lafayette County imposed sanctions against all members of the Scruggs Katrina Group (SKG), a joint venture, along with Don Barrett and Richard Scruggs individually, based upon the misconduct of Richard F. Scruggs, who pleaded guilty to conspiracy to bribe the trial judge in the underlying lawsuit over attorneys’ fees…We find that the trial court had the discretionary authority to impose sanctions against SKG based upon the acts of a single partner that occurred in the ordinary course of business of SKG. However, we conclude that the trial court erred by finding that Richard Scruggs’s misconduct occurred in the ordinary course of SKG business. Therefore, we reverse the order of sanctions against the appellants…

I have no idea how many individual attorneys were disqualified as a result of State Farm’s hypocrisy but I do know that justice will not be done until a court removes the injustice of hanging a scarlett “D” on these attorney from the record and prohibits State Farm from making any further  reference:

“State Farm is stuck in a shell game with felons and disqualified lawyers, with each pointing the finger at the other. The only way to win this shell game is to turn over every shell.” (State Farm Reply brief filed in the Company’s Kentucky Motion to Compel Compliance of Dick Scruggs)

The shell the Kentucky court needs to turn over is one that honors Judge Senter’s Order limiting discovery to the merits of the Rigsby qui tam claim and disqualifies State Farm attorneys for abuse of same.

Without equal justice there is none at all.

3 thoughts on “State Farm paid witness really well – much more than the "substantial sum" disqualifying SKG/KLG member firms (a Rigsby qui tam update)”

  1. Did I read a much earlier post wherein this Lorie Beno shit-canned State Farm in some statements she gave over the phone, but which she did not know were being recorded? But then, after State Farm laid cash on her, she fellated State Farm in her deposition. And then she denied being afraid that she would be treated like those girls from Mississippi (Rigsby sisters)?

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