Since first reporting on the filing of criminal contempt charges against prominent Mississippi attorney Richard F. Scruggs (USA v. Scruggs, N.D. Ala., No. 07-325), special prosecutors have filed a reply to the attorney's response to show cause order and claim that Scruggs willfully violated a judge's preliminary injunction order in order to further his own economic interests. Prosecutors say the evidence will prove "that his [Scruggs'] plan was to pretend to misinterpret the injunction so as to permit him to ship the documents to a friendly third party."
Scruggs, who represents numerous Hurricane Katrina victims seeking insurance coverage for losses sustained as a result of the hurricane, is charged with violating a preliminary injunction order forbidding the disclosure of documents regarding State Farm's alleged improper handling of Hurricane Katrina claims. The documents were obtained by Cori Rigsby Moran and Keri Rigsby, former employees of the claims adjuster, E.A. Renfroe & Co.
The Rigsbys, represented by Scruggs, filed a qui tam action in the U.S. District Court for the Southern District of Mississippi ( USA, ex rel Cori Rigsby and Keri Rigsby v. State Farm, No. 06-433), alleging State Farm fraudulently handled Hurricane Katrina insurance coverage claims. Renfroe then filed suit in the U.S. District Court for the Northern District of Alabama against the Rigsbys seeking a preliminary injunction order to return the documents to Renfroe pending a full trial (E.A. Renfroe v. Rigsby, No. 06-1752). U.S. District Judge William Acker Jr. for the Northern District of Alabama granted the preliminary injunction. The judge then appointed special prosecutors to file criminal contempt charges against Scruggs, claiming that the attorney failed to return the documents pursuant to the order.
Further updates on this case will be provided in the November edition of Mealey's Litigation Report: Catastropic Loss. Stay tuned ...