The Fall of the House of Zeus

by Curtis Wilkie

  But in exercising their strength, some of the more zealous lawyers overplayed their hand, triggering a public reaction against their attempts to establish fiefdoms where plaintiffs could run amok. After ensuring the election of congenial judges in Jefferson and Claiborne counties, two predominantly black jurisdictions in southwest Mississippi, the courts in those areas became venues for many mass tort suits. Outlandish judgments of millions of dollars resulted from cases of dubious merit.

  Much of the litigation was initiated by lawyers outside the councils of Scruggs and his friends. Realizing that the bonanza might prove counterproductive, Scruggs worried about some of the decisions coming out of these courts, where friendly juries and complicit judges ensured big victories for plaintiffs. Aided by state laws that allowed nonresidents to join a Mississippi plaintiff in a single blockbusting suit in a favorable venue, unscrupulous lawyers took advantage of the situation. Their rush toward these targeted courts grew increasingly unseemly and fanned the “tort reform” reaction.

  Abuses also ran rampant in cases related to the diet drug Fen-Phen. Staggered by the prospect of thousands of claims growing out of a report that Fen-Phen patients were susceptible to heart valve disease, American Home Products Corporation, the maker of the product, agreed to put up $3.75 billion to compensate those who had taken the drug. A federal investigation found that dozens of bogus claims, amounting to millions of dollars, had been filed in Mississippi by people who had never actually used the drug. Some of those making false claims were eventually sent to jail, but only one attorney in the state was convicted of fraud.

  While the Fen-Phen scandal played out, lawyers brought fresh claims against the medical community through malpractice suits against doctors and hospitals. At the same time, there seemed to be a rise in the number of personal injury cases resulting from automobile accidents. To attract clients, lawyers resorted to billboards complete with leering pictures of themselves and a convenient 800 number to call. The legal profession, once so staid that advertising was thought unethical, began to assume a rapacious air. Meanwhile, Mississippi’s reputation as a plaintiff’s heaven worsened in business circles.

  At first, Scruggs tried to laugh off the unflattering image. Occasionally he introduced himself as “the nefarious, ambulance-chasing Dick Scruggs.” But for the trial lawyers, the analogy pairing them with Robin Hood began to fade. A former judge in Jackson who had sympathized with their work complained privately. “The public was willing to accept petty larceny,” he said, “but they gagged at grand larceny. The trial lawyers got greedy. They were not content with half-million-dollar verdicts. They sought more and more.”

  Business interests that were being hammered by litigation mounted a counteroffensive, tagging the Mississippi courts as “judicial hellholes” and “the jackpot justice capital of America.” The U.S. Chamber of Commerce and the Republican Party began putting up huge amounts of money of their own to arrest the power of the plaintiffs’ bar, and Mississippi was turned into a war zone where the clash for control of its legislature and its court system consumed millions of dollars and had national implications.

  The most public fight took place in the legislature, where business interests mobilized support for “tort reform” with horror stories of physicians moving out of the state, driven away by onerous premiums for malpractice insurance.

  The Medical Assurance Company of Mississippi, which wrote much of the malpractice coverage in the state, raised its rates dramatically, and other insurers withdrew from Mississippi altogether. Seizing the issue, proponents of “tort reform” juxtaposed the portrait of a kindly family doctor confronted by a predator, the trial lawyer.

  While Mississippi provided a Ground Zero for the clash between Big Business and the plaintiffs’ bar, lawyers across the country were being beaten into retreat by adverse publicity concerning “judicial hellholes.” After market research found an overwhelmingly negative reaction to the term trial lawyer, the Association of Trial Lawyers of America, the lobbying organization known for years by its acronym ATLA, changed its name to American Association for Justice.

  In conservative Mississippi, a natural constituency already existed to support moves to check the power of the trial lawyers, who were perceived as liberals and partisans of an unpopular national Democratic Party. The drumbeat for change intensified in a campaign, orchestrated by the U.S. Chamber of Commerce, to demonize the trial lawyers in Mississippi.

  ICEPAC lost its hold on the legislature while the Scruggs-sponsored lieutenant governor, Amy Tuck, went over to the business interests. Even Governor Musgrove, a Democrat favored by the plaintiffs’ bar, capitulated in the face of the “tort reform” movement by approving legislation in 2003 that established ceilings for damages awarded in malpractice cases.

  The next year, a new Republican governor, Haley Barbour, Scruggs’s SAE pledge brother at Ole Miss, advocated even more sweeping changes in laws to restrict the trial lawyers. Tighter caps were imposed on judgments in all types of litigation, and favorable trial venues became less accessible for plaintiffs.

  A related struggle taking place at the same time did not get as much notice, but it was no less important and just as rancorous: a bruising, expensive conflict for control of the state supreme court.

  Though seats on the supreme court were won by election, there had been little passion involved in the process. Voters rarely showed much interest in determining who served on the court, and the justices themselves were not well known. Oddly enough, during the period that Mississippi was being transformed from a Democratic state to a Republican one, the supreme court wound up with a majority that tended to side with plaintiffs.

  The trial lawyers enjoyed this advantage, actively recruiting candidates and backing their campaigns with big contributions. One judge received a letter from a prominent lawyer that put the trial lawyers’ desires quite bluntly. Support our interests and it will put money in your pocket. He thought: They want to make sure we know we are being bought.

  On the other hand, attorneys who represented corporations and defended businesses in civil actions—the natural rivals of the plaintiffs’ bar—had been gripped by lassitude for years. They could be seen at the country clubs after hours, shedding their three-piece suits for golfing outfits. They had little interest in dirtying their hands in the combat of local politics. As a result, they ceded the supreme court to the trial lawyers for a number of years.

  All of that began to change. Nationally, the American Medical Association and other professional organizations founded a lobby called the American Tort Reform Association to challenge the work of the trial lawyers. On top of their effort, the U.S. Chamber of Commerce and the Republican Party trained its guns on Mississippi. To counter the pocketbooks of the newly rich lawyers, business groups poured hundreds of thousands of dollars into the state, concentrating on winning back the supreme court.

  Scruggs threw his own money and influence into the fight, but some of his efforts appeared erratic to those trying to maintain a majority in favor of the trial lawyers. In one instance, after a vacancy occurred on the court, Scruggs prevailed upon Governor Musgrove to appoint George Carlson, the uncle of Amy Scruggs, the lawyer’s daughter-in-law, to fill the seat. Musgrove had intended to name Richard “Flip” Phillips, who had the backing of most trial lawyers, until Scruggs intervened. In other cases, Scruggs’s political confidant P. L. Blake encouraged him to stay out of court races where candidates of the “dark side” were involved rather than fund candidates whom he might ordinarily favor.

  After the U.S. Chamber of Commerce invested more than $1 million in one set of state supreme court contests, the majority was reversed. Big Business had regained the upper hand by the time its ally, Haley Barbour, became governor.

  A Jackson attorney, Alex Alston, was troubled by the ensuing drift. In a 2008 opinion piece published in The Clarion-Ledger, the biggest newspaper in Mississippi, Alston made an argument that reverberated in legal circles in the state:

 
; If you are a victim of personal injury, malpractice or corporate fraud, you have almost no chance of having a jury verdict in your favor affirmed by the state supreme court.

  In the past the supreme court rarely overturned a jury verdict, especially if it was based on a dispute over a factual issue. That day is gone. During the past four and one-half years, according to my research, an astonishing 88 percent of all jury verdicts in favor of the wronged victims have been reversed by the state supreme court.

  But what about the jury trials won by defendants, in which the victim takes an appeal to correct an error? Here, again, the numbers are staggering.

  Over the same four and one-half-year period, a plaintiff’s success rate in reversing a jury verdict for the defendant is an astonishing zero.

  With Big Business now entrenched in power on the state supreme court, John Grisham, an erstwhile compatriot of the trial lawyers, grew so distressed by the spectacle of electing judges that he set his 2008 novel, The Appeal, in Mississippi, loosely basing the plot on a real campaign to unseat a justice. In Grisham’s book, the villain is the CEO of a corporation who wants to buy a pivotal supreme court seat to be sure that a pro-business majority on the court will hear the company’s appeal of a $41 million verdict awarded to a woman who lost her husband and son to cancer caused when factory runoff poisoned a town’s drinking water.

  Though Democrats still counted on Scruggs in most statewide races, his political interests could no longer be categorized. Much of what he did he did in private. It was assumed that he did business with Trent Lott, but Scruggs’s alliance with P. L. Blake, one of the most stealthy of Lott’s political confederates, was largely unknown. Few knew that his former adversary Steve Patterson also helped coordinate Scruggs’s spending as he dabbled in the “dark side.”

  Public interest groups in Washington attempt to track campaign contributions, but it was hard to follow Scruggs’s money trail. He took unusual steps in his choice of candidates, and channeled some of the donations through family members to political committees designed to circumnavigate disclosure guidelines.

  In 2000, instead of supporting Vice-President Al Gore in his race for president, Scruggs directed $250,000 to Gore’s opponent, George W. Bush. Scruggs was limited in what he could give Bush directly, so he passed the bulk of the money through the Republican National Committee. It was Scruggs’s form of retaliation to Gore. Despite Gore’s long record of opposing the tobacco industry, Scruggs felt the vice-president had helped scuttle the national settlement in 1998 in order to keep the issue alive for his 2000 campaign.

  The next year, Scruggs returned to the form expected of him. He quietly furnished much of the money to finance a campaign led by his hero, former governor William Winter, to change the state flag. Mississippi was the last state in the Union to feature the Confederate battle flag in its own banner. The Stars and Bars, used by the Confederate Army, had occupied a corner of the Mississippi flag since 1894. But during the civil rights movement, the battle flag was adopted by the Ku Klux Klan, giving the symbol a certain infamy. Saying that the Mississippi flag might best be relegated to a museum, Winter and other progressives wanted to replace it with a new flag. Despite Scruggs’s backing, the effort failed in a statewide referendum.

  In the early part of the new millennium, Scruggs would have a hand in many other elections. But none would better serve as a precursor to the events that later convulsed the legal world than his involvement in a bitter 2000 race for a seat on the state supreme court between Oliver Diaz, a Gulf Coast favorite of the trial lawyers, and Keith Starrett, whose candidacy had the strong support of the Republican Party and the U.S. Chamber of Commerce.

  Though the election was decided that year, it would take the rest of the decade for the contest to unwind, spinning through federal investigations and indictments, charges of political prosecution said to be instigated by officials at the highest levels of the U.S. government, the selection of a federal judge, allegations that Senator Lott intervened to save his brother-in-law, and the tarring of the reputation of several judges and lawyers.

  CHAPTER 7

  Following the death of Mississippi Supreme Court justice Michael D. Sullivan in February 2000, it became clear to a small group of influential trial lawyers that they needed to rally quickly behind a candidate to recommend to Governor Musgrove to fill the open seat.

  Their choice was William Myers, the chancery judge in Pascagoula who had presided over the first Medicaid-tobacco litigation. In telephone calls with his colleagues, Dick Scruggs argued that Myers would be compatible with their interests. He had proven open to the plaintiffs during his handling of the tobacco case without appearing too one-sided. Scruggs felt he would be politically acceptable.

  But when Scruggs, Danny Cupit, and a formidable Biloxi lawyer, Paul Minor, met with Musgrove in the governor’s office within days of Sullivan’s death, Musgrove resisted their choice. Picking Myers, the governor said, made him uncomfortable. It would subject him to criticism that the appointment had been dictated by Scruggs, the leader in the tobacco case and a major donor to Musgrove’s campaign.

  The lawyers were prepared with a fallback position if their recommendation failed. Their second choice was Oliver Diaz, another Gulf Coast figure who already sat on the state court of appeals.

  Diaz’s name had been promoted by Minor, whose success in asbestos and tobacco litigation was almost as legendary as Scruggs’s. He had scored big licks in asbestos cases before Scruggs made his breakthrough, and as a partner in the HALT group, Minor had enjoyed a share in the settlement that amounted to about $140 million.

  Minor was often compared to Scruggs. They were friends, the same age, who practiced on the Gulf Coast. Both had admirable military backgrounds, Minor as a decorated veteran of the Vietnam War; Scruggs as a navy jet pilot. Together they owned a condominium in Biloxi as investment property. And they had just returned from an adventurous trip to New Zealand, arranged by Scruggs, to cheer on the dashing American sailor Dennis Conner in the America’s Cup competition. Scruggs offered his yacht as a hotel for his guests; it also served as a floating hospitality suite for Conner’s wealthy supporters to watch the races. As their wealth and renown grew, Minor and Scruggs enjoyed this ability to hobnob with celebrities as much as they relished their influence to sway political decisions.

  Back home, Minor was also known as one of the principal benefactors of local Democratic candidates. Like Scruggs, he tended to operate as a lone wolf in dispensing his largesse rather than coordinating it through party functionaries. Many of Minor’s beneficiaries were considered, by Mississippi standards, liberal.

  Minor’s political leanings could be traced directly to his father, Bill Minor, a respected newspaperman who had been reporting on the Mississippi scene since the days when Jim Eastland was a freshman senator. For more than a half century, the elder Minor had assailed demagogues and alerted his readers to the unfortunate consequences of racist policies. During the civil rights movement, visiting correspondents invariably sought out Bill Minor for guidance and perspective on Mississippi matters. In 1997, he had been the first recipient of the $25,000 John Chancellor Award for Excellence in Journalism, an honor given annually to courageous reporters.

  The son, Paul, had become something of a celebrity in Mississippi, too, though in a different field. And unlike the gregarious Scruggs, Paul Minor exuded an air of arrogance and superiority. Sometimes his brusque behavior was burnished by alcohol. Minor did not hold his liquor well. His bristling, aloof manner often offended others, even his close associates, and it would work against him when trouble descended.

  Yet he was persuasive in presenting to the governor the case for appointing Diaz. Though Diaz was considered plaintiff-friendly, he had served in the legislature as a Republican, and it was thought that this should spare Musgrove from partisan complaints.

  Musgrove agreed to make Diaz his interim appointment. For consolation, the governor put Scruggs’s choice, Judge Myers, into a state court
of appeals seat being vacated by Diaz.

  After their meeting with Musgrove, Minor and Scruggs went to lunch. As they walked into the restaurant, Minor used his cell phone to deliver the good news to Diaz. Before ending the conversation, he passed the phone to Scruggs, who added his congratulations.

  Over their meal, Minor and Scruggs mused about their latest thrust of political power. They had succeeded in putting their man on the state supreme court. But only for a few months. In November, Diaz would have to run for a full eight-year term.

  Four of the court’s nine seats were up for election that fall when the U.S. Chamber of Commerce flooded Mississippi with money and a massive campaign of television commercials, the greatest involvement ever by outside forces in a state supreme court election.

  The Chamber’s candidate in the race against Diaz was Keith Starrett, a South Mississippi lawyer with strong ties to the Republican Party. Though judicial candidates do not run with party designation, it was no secret that Starrett was favored by the GOP. Following the first round of voting, which essentially produced a standoff between candidates favored by the plaintiffs’ bar and those perceived as pro-business, in late November Diaz and Starrett wound up in a runoff that provoked a new wave of spending by business interests.

  To meet the threat posed by the U.S. Chamber of Commerce, Minor guaranteed an $80,000 loan to Diaz and urged Scruggs to do the same. Scruggs was told the money was needed to finance the purchase of TV time for Diaz to offset a million-dollar blitz on Starrett’s behalf. He was given a private screening of Diaz’s ads at the Green Oaks Bed and Breakfast, operated by Diaz’s wife, Jennifer. Convinced of the soundness of the campaign, Scruggs agreed to guarantee another $80,000 loan from Merchants and Marine Bank of Pascagoula, where he did much of his business.