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Trial Lawyers Inc.

  Trial Lawyers Inc.: Attorneys General
   A Report On The Alliance Between State AGs And The Plaintiffs' Bar 2011


Trial Lawyers Inc.: Attorneys General
A Message from the Director
Introduction: Tobacco
Securities and Finance
Public Nuisance
Leadership Team
Other Resources
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State-Sponsored Lawsuits Are Trial Bar's New Cash Cow, James Copland, Washington Examiner, 10-25-11
Obama's CFPB Nominee Abused Private Attorney Contracting in Ohio, James Copland, Washington Examiner, 10-25-11


James Copland on Wall Street Journal Live
He discussed his new report, Trial Lawyers Inc.: Attorneys General on 10-27-11.


James Copland appeared on the following radio programs to discuss his new report, Trial Lawyers Inc.: Attorneys General:
FM News Talk 97.1's "Randy Tobler Show," 10-29-11
WABC's "John Batchelor Show," 10-27-11
WTPL's "Bulldog Live with Brian Tilton," 10-26-11
SBA's "Small Business Advocate with Jim Blasingame," 10-26-11


Honorable Edwin Meese, James Copland, and Professor Lester Brickman discussed Trial Lawyers Inc: State Attorneys General in a nationwide conference call. View the event.


Hood's No-Bid Contracts Criticized, Madison County Journal, 10-27-11
Report Details The Ties That Bind AGs, Trial Lawyers, Forbes, 10-25-11
Miller Denounces Report Ranking Him Among Friendliest To Trial Lawyers' Agenda, IowaPolitics.com, 10-25-11
Politics New Report Exposes Cozy Relationship Between State AGs and Trial Lawyers, The Blaze, 10-25-11
McGraw Criticized in National Report on State Attorneys General, West Virginia Watch Dog, 10-25-11
Hood Says Political Foe Abused His Office at DPS, Picayne Item, AP, 10-25-11
Report: Obama Nominee, Some AGs Too Close To Plaintiffs Bar, Legal News Line, 10-25-11
State Attorneys General Rake in Trial Lawyer Cash, Dole Out Contracts, Watchdog.org, 10-25-11

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Trial Lawyers, Inc. Partners with State Attorneys General to
Push Katrina Insurance Litigation


The litigation industry doesn’t need contingency-fee arrangements to benefit from its closeness to legal officers. After 2005’s Hurricane Katrina, the tobacco lawsuits’ Dickie Scruggs teamed up with Mississippi’s current attorney general, Jim Hood—whom we’ve already seen to be a big player in pharmaceutical and securities litigation—in what amounted to an attempt to strong-arm insurance companies handling residents’ hurricane-injury claims. The litigation spurred by Katrina ultimately led to disbarment and federal prison for Scruggs and fellow Mississippi plaintiffs’ lawyer Joey Langston, Hood’s top two campaign contributors, who were caught up in a judicial bribery probe. Hood was not implicated in that scandal, but his partnership with Scruggs and other private counsels in the Katrina lawsuits nevertheless imperiled the rule of law itself.


Scruggs Fights to Rewrite Insurance Contracts

In the wake of Hurricane Katrina, many residents of the Gulf States faced a very difficult situation: their homes had been destroyed, but they lacked flood insurance to pay for the damage. Unlike claims stemming from death, car crashes, and medical injuries, which typically arise episodically, harms arising from floods and other large-scale natural catastrophes often arise simultaneously and in the hundreds or thousands, making insurance companies reluctant to write policies against them. Thus, standard homeowners’ insurance contracts contain provisions excluding coverage for floods, which homeowners must acquire separately through a federally backed program.[111] Moreover, these standard contracts typically contain language specifying that damage caused by flooding and other natural events arising concurrently—such as wind—is excluded from coverage.[112]

Notwithstanding the “anti-concurrent” language, insurers were lenient in handling Katrina-related claims,[113] typically honoring claims in which the damage had more than one cause, even if one of those causes was flooding.[114] Insurers, however, were loath to honor policies with riders that explicitly excluded flood coverage in cases where flooding was the only cause of damage.[115] Soon enough, a coalition of lawyers dubbed the “Scruggs Katrina Group”[116] challenged the insurers’ decisions not to pay homeowners with flood-damaged properties.


Scruggs Enlists hood

As documents in subsequent and parallel litigation revealed (see below “‘Whistleblower’ Litigation Brings Mischief to Light”), there was a high degree of coordination between lawyers for the Scruggs Katrina Group and lawyers working for the Mississippi attorney general’s office. According to deposition testimony by David Lee Harrell, Mississippi’s deputy insurance commissioner, Scruggs met with officials in the state insurance department in December 2005 to discuss the Katrina litigation and told them that “he was going to work it the same way he and [former Mississippi attorney general] Mike Moore worked the tobacco case.”[117] The insurance commissioner balked at cooperating with Scruggs, according to Harrell, but Scruggs found a more willing ally in Attorney General Hood.



The evidence documenting the collaboration of Dickie Scruggs and Attorney General Jim Hood surfaced in litigation brought by E. A. Renfroe, an insurance adjuster hired by State Farm to evaluate Katrina claims. In June 2006, two sisters who worked for Renfroe, Kerri Rigsby and Cori Rigsby Moran, funneled documents to both Hood and the Scruggs Katrina Group, which launched a public-relations blitz hailing the sisters as “whistleblowers” and landing them in front of TV cameras, including those of the ABC news show 20/20. The sisters were subsequently hired by the Scruggs Katrina Group at annual salaries of $150,000 each.[119]

Nothing suggests that the Rigsby sisters’ motives in coming forward were anything but pure, but when Renfroe sued its former workers for violating the terms of their employment contracts and sought to obtain any documents that the sisters had turned over to Scruggs and Hood, the cooperation between Scruggs and Hood came to light. Scruggs actually drew a contempt citation from federal judge William Acker, who was overseeing the case, when he turned the documents over to Hood rather than Renfroe as Judge Acker had ordered; Hood was actively trying to block the release of all documents in question, by arguing that they were part of his criminal investigation.[120]


Incredibly, according to Harrell’s deposition testimony, Hood had brought in former attorney general Moore to “assist” with the grand jury investigation, while Moore was simultaneously working with Scruggs on the civil litigation.[118] The AG’s staff and Scruggs’s attorneys well understood the intersection of Hood’s criminal inquiries with the private litigation: according to a Scruggs Katrina Group engineer’s notes of a conversation between Scruggs lawyers and Special Assistant Attorney General Courtney Schloemer, the parties “agreed that a criminal conviction could help civil cases.’”[121] Hood’s office was so enmeshed with Scruggs’s litigation team that U.S. District Judge William Acker derided Hood as “a so-called law enforcement official” and said that Mississippi’s attorney general was such a “close confidant,” “friend,” and “associate” of Scruggs that Hood could be deemed a “co-conspirator” and “aider and abettor” in Scruggs’s effort to avoid a judicial order to turn over documents.[122]

A Semi-Happy Ending

At the end of the day, the Fifth Circuit U.S. Court of Appeals disagreed with Scruggs’s theory and gave force to the insurance policies’ exclusion of water damage.[123] But by that point, the damage was done: a multimillion-dollar public-relations barrage, early punitive damage awards (later reversed),[124] and, critically, the energetic assistance of the attorney general, having pressured insurers to settle with the Scruggs Katrina Group. Under pressure from both Scruggs and Hood, State Farm, the region’s largest home insurer, initially offered to settle with both the private and government parties for $130 million.[125]

The fact that State Farm and other insurers were essentially vindicated in court and that homeowners with valid claims were overwhelmingly paid should not obscure the tens of millions of dollars in legal fees expended in litigation as well as the threat to contract law in Mississippi, even if it was eventually rebuffed. Dickie Scruggs was imprisoned and disbarred for his role in attempting to bribe a judge overseeing the dispute over contingency fees involved in the case. But Jim Hood remains the attorney general of Mississippi.

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111. See Mark Jewell, Hurricane-Related Flood Damage? Few Homes Covered, Associated Press, Aug. 29, 2011, http://www.mainstreet.com/print/23581 (“Nearly all flood coverage is purchased through the government’s National Flood Insurance Program. Homeowners, renters and business owners in about 21,000 communities nationwide are eligible to purchase federally backed flood policies, typically through private insurers that market the coverage.”); see also Homeowners Insurance Guide, A Homeowner’s Guide to Natural Disasters: Preparing for a Flood, http://homeownersinsuranceguide.flash.org/prepareflood.htm (last visited Sept. 29, 2011).
112. See John Egan, Anti-concurrent Causation Clause: A ‘Trap Door’ in your Home Insurance Policy, insurancequotes.com, http://www.insurancequotes.com/anti-concurrent-causation-clause/ (last visited Sept. 29, 2011) (“anti-concurrent causation clause – legal jargon tucked into many home insurance policies – could prevent you from being paid for both the wind and flood damage”).
113. David Rossmiller, George Dale: Insurance Companies Paid Katrina Money They Did Not Owe, insurance coverage law blog (Nov. 7, 2007), http://www.insurancecoverageblog.com/archives/industry-developments-george-dale-insurance-companies-paid-katrina-money-they-did-not-owe.html
114. See id.
115. See id.
116. Joseph B. Treaster, A Lawyer Like a Hurricane, N.Y. Times,  Mar. 16, 2007, http://www.nytimes.com/2007/03/16/business/16scruggs.html?pagewanted=print.
117. McIntosh v. State Farm, et al., Harrell Dep. 332:1-334:25 (S.D. Miss. 2007), available at http://www.insurancecoverageblog.com/Exh%20B%20to%20SF%20Opp%20to%20Hood%20Mtn%20to%20Clarify%2011062007.pdf.
118. Id.
119. See McIntosh v. State Farm, No. 1:06CV1080, 2008 WL 941640, at *1 (S.D. Miss. Apr. 04, 2008); see also Press Release, State Farm, State Farm Asks Court to Dismiss False Claims Act Suit and to Hold Rigsby Sisters and Their Lawyers Accountable for Conspiracy and Fraud (Apr. 8, 2008) available at http://www.statefarm.com/about/media/media_releases/rigsby.asp.
120. See John O’Brien, Scruggs’ contempt hearing set for Wednesday, Legal Newsline.com (Mar. 19, 2007, 3:16 PM), http://www.legalnewsline.com/news/192155-scruggs-contempt-hearing-set-fo.
121. See Walter Olson, The Other Scruggs Katrina Scandal, PointofLaw.com (Dec. 19, 2007 9:55AM), available at http://www.pointoflaw.com/archives/2007/12/the-other-scrug.php.
122. See E.A. Renfroe & Co. v. Rigsby, et al., Case 2:06-cv-01752-WMA (N.D. Ala. 2007) (memorandum decision), available at http://www.insurancecoverageblog.com/Acker%20memo%20re%20civil%20contempt.pdf.
123. See Tuepker v. State Farm, 507 F.3d 346(5th Cir. 2007) (No. 06-61075), http://caselaw.findlaw.com/us-5th-circuit/1018441.html; see also Broussard v. State Farm, 523 F.3d 618, (5th Cir. 2008) ( No. 07-60443), http://scholar.google.com/scholar_case?case=6178719537054621648&hl=en&as_sdt=2&as_vis=1&oi=scholarr.
124. See Broussard v. State, 523 F.3d 618.
125. See Editorial, Mississippi Justice, Wall St. J., Mar. 15, 2007, http://online.wsj.com/article/SB117392424758037698.html.




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