The Fall of the House of Zeus

by Curtis Wilkie

  Scruggs had retained a succession of attorneys during the spasmodic life of the litigation, and as it neared a climax he chose Jack Dunbar, an old lion of the Mississippi bar, to lead his defense. For nearly a half century Dunbar had gathered accolades. He was past president of the Mississippi Bar Association and once a finalist for president of the American Bar Association. Lists of best lawyers in the land invariably included him. Though Scruggs could have hired the most high powered advocate on the East Coast, he felt he needed to go no farther than Dunbar’s office, a few steps from Scruggs’s on the Oxford Square.

  A native of the Delta, Dunbar had been valedictorian of his law school class at Ole Miss in 1957 and started his career as a young partner with the fiery Clarksdale lawyer Charlie Sullivan. Their law firm prospered because both men were smart and effective speakers. Shortly after they opened their office, Sullivan began to entertain political ambition. He ran for governor in 1959, on a platform that called for putting an end to Prohibition in Mississippi, and finished a surprising third. His opposition to Prohibition cast him as a reformer; in fact, Sullivan was quite conservative, and his candidacy had been surreptitiously supported by Senator Eastland to siphon votes from a moderate in the race. The Machiavellian move helped elect Ross Barnett governor and bring calamity to the state with Barnett’s defiance of Supreme Court integration orders. Sullivan’s true colors as a tribune of the right emerged the next year when he ran on the Constitution Party ticket as a symbolic candidate for president of the United States. For those efforts, Sullivan won eighteen thousand votes in Texas.

  Though Dunbar enjoyed war-gaming political strategy with Sullivan, his own politics were far more progressive. As a young man, he had a variety of other interests, appearing in community theater productions and socializing outside the country club crowd. When civil rights activity caused upheaval in Clarksdale later in the 1960s, Dunbar served as a public voice of reason.

  By the time Sullivan died in a plane crash, Dunbar had made a professional alliance with others, moved to Oxford to head the offices of a prestigious firm, and identified with the interests of the national Democratic Party. His views generally dovetailed with those of Scruggs. Dunbar had been offered a piece of the HALT initiative against tobacco, but decided not to make the investment, missing out on the big lick. Still, he had been successful throughout his career and had earned the adjective avuncular that is often applied to wise old lawyers.

  To help fight off Luckey, Scruggs hired others. Dunbar would be in charge, but attorneys from several firms were added to Scruggs’s team. They included Johnny Jones, the Jackson lawyer active in ICEPAC, and Joey Langston, who worked out the settlement on the secondhand smoke case. Langston brought with him his own associate, an earnest young lawyer named Timothy Balducci.

  In June 2005, twelve years after Luckey’s lawsuit was first filed, the two sides began to put an end to it in a trial in Oxford before Jerry Davis, a federal magistrate. Davis was first approached about hearing the case—which had been stuck on the docket without any action—during a chance encounter with Merkel at the Denver airport. Dunbar, knowing Davis as an impartial figure, was amenable to the idea. But first, details had to be worked out. Both sides wanted to close proceedings to the public. Davis refused. If a trial took place, it would be open and would follow normal guidelines for federal court, he told them. Luckey and Scruggs agreed. They also decided to accept Davis as the final voice; neither would appeal his verdict.

  Dunbar convinced Scruggs that a trial without a jury had tactical advantages. The logic of a judge would prevail over the emotions of a jury, and it was felt that a strong case could be made against Luckey’s conduct while associated with the Asbestos Group. But Dunbar knew Scruggs was exposed on one point. Luckey had been given 25 percent of the stock in Asbestos Group, and his ownership position had never been reconciled by Scruggs. Before the case went to trial, Scruggs’s team presented arguments before a focus group to get their soundings. One member of the group, a retired sociology professor at Ole Miss named Vaughn Grisham, kept raising the point in discussions. “What about the stock?” Grisham asked. “What about the stock?”

  Scruggs never considered Luckey’s side of the argument. Taking the same position he had held since the day he fired Luckey, Scruggs refused to make a settlement and went into the trial convinced that he would win.

  The trial opened with an exchange that illustrated the intimacy of the Mississippi legal community, where virtually everyone knows one another, regardless of age. Judge Davis informed the lawyers that court would recess early the coming Friday because he had tickets to an interleague game in St. Louis between the Cardinals, the baseball team he had followed for most of his life, and the Yankees. “If anybody else has got a ticket, I’ll see you in St. Louis,” he said, making a play on the name of the 1944 movie musical Meet Me in St. Louis. Turning to Merkel, Davis added, “I can’t miss the Cardinals and the Yankees. I hope you’re going to make it, Mr. Merkel.”

  “I might do that, judge,” Merkel said.

  Not all of the dialogue in the courtroom was as pleasant—especially the snarls between Merkel and Scruggs.

  Scruggs was prepped beforehand by his counselors. They submitted him to a barrage of hostile questions and helped him fine-tune his answers. They advised him to maintain a steady bearing, to be civil and respectful while on the stand. Arrogance, they told him, would tarnish the image he should seek to present.

  Scruggs performed well in his first morning of testimony. But his lawyers were disturbed by the change they noticed in his approach in the afternoon. After lunch, he became cavalier in his responses to Merkel. He traded subtle insults with his rival. Pleased with himself, Scruggs smiled overconfidently. He adopted an air of bravado that sometimes resulted in remarks damaging to his own case.

  Watching him change from focused witness to ad hoc antagonist, Scruggs’s close friends suspected the cause of the transformation. During the lunch recess, he had washed down several doses of the medication he called “happy pills.”

  During nearly two weeks of testimony much of the background for the case was revisited. Scruggs had hired Luckey, a fresh graduate of the Ole Miss law school, to go to work for his Pascagoula firm in 1985. Within months, he assigned the young lawyer to the Asbestos Group, the in-house corporation formed by Scruggs and Roberts Wilson. Over the next few years, Luckey was given increasing shares in the business; at the time Scruggs fired him in 1993, he owned one-quarter interest in Asbestos Group.

  Scruggs took action after members of his staff reported that Luckey had asked them to backdate as many as fifty medical reports of clients in order to qualify for awards processed by the Center for Claims Resolution, which dealt with asbestos claims. “The girls refused to comply with his instructions,” Scruggs testified. After checking into the complaints, Scruggs invited Luckey to a restaurant at the La Font Inn, the site of many business conversations in Pascagoula, to avoid an ugly scene in his office. Scruggs refused to accept Luckey’s explanation that no problem existed, even though his associate told him “none of the reports had left the office.” He discharged Luckey that day.

  “We were in the middle of the mother of all trials,” Scruggs said, referring to a mass tort case involving asbestos. “Mr. Luckey had just committed an incredibly unethical act.” When Merkel smirked at Scruggs’s observation, Scruggs snapped, “You can laugh if you want to, if you think it’s a laughing matter.”

  Scruggs said he was astonished when Luckey approached him after his dismissal and asked for $14 million in compensation for his interest in Asbestos Group. He called Luckey’s figure “utter fantasy.”

  “Mr. Luckey was entitled to nothing after he ceased work,” Scruggs said. “Do you pay salary to people that don’t show up for work?”

  Merkel had a caustic response. “So you were judge, jury and executioner.” But even as he parried with Scruggs, Merkel knew the charges of tinkering with the records hurt Luckey’s case.

  Duri
ng his own testimony, Luckey’s credibility suffered further damage. On cross-examination, Dunbar led Luckey through a seemingly benign discussion of his handling of asbestos cases. With no warning, Dunbar confronted Luckey with copies of medical reports, bearing his initials, that had been altered. The witness had no explanation.

  For a moment, it looked as if Luckey was lost. Judge Davis, a heavy-set, imposing figure, seemed visibly troubled by Luckey’s testimony. Shortly afterward, he ruled that Luckey was not entitled to any of Scruggs’s tobacco money. Asbestos money was still on the table, but Scruggs felt encouraged by Davis’s body language.

  Merkel, who had been using $60 million as a settlement figure, cut his negotiating position in half. Scruggs had never been willing to settle at any cost; now his position hardened because he felt his sacking of Luckey had been vindicated.

  Dunbar and Rex Deloach, Scruggs’s financial advisor, celebrated with a drink the night after Luckey’s testimony was complete. They, too, sensed that Scruggs was on the verge of winning. Deloach raised his glass in tribute to Dunbar. “They ought to charge admission to see a cross-examination like that,” Deloach said.

  But as Merkel had observed during negotiations outside the court, it didn’t matter if someone was an ax murderer. If they owned 25 percent of a corporation, they were entitled to 25 percent of its value.

  As the case wound toward a conclusion, Scruggs faced a strange diversion. One of his own attorneys, Joey Langston, began to pressure him for more money from the tobacco settlement. It involved the 3 percent share of his income that Scruggs had promised in 1997 to resolve the dispute with the family of Burl Butler, the barber who died of cancer. Langston, who brokered the agreement involving his brother, Shane, and Ron Motley, claimed that Scruggs had not calculated the “three points” accurately. Langston complained that Scruggs had used the net amount, a smaller figure, as a basis to determine the 3 percent rather than relying on the larger, gross amount. Langston said he was raising questions at the insistence of members of the Butler family. He warned that they were ready to sue for a greater payout.

  Scruggs was perplexed by the demand. He thought the ploy was, at best, crass. Deloach was outraged. He did not trust Langston. Despite the attorney’s well-groomed appearance, the accountant considered him “slick and greasy” and out to get more money for himself. Deloach met with Langston twice to explain the calculations. Unwilling to accept Deloach’s figures, Langston sent his associate Tim Balducci to Oxford to negotiate the issue.

  In a July 8, 2005, letter, Langston wrote Deloach: “You have offered no suggestion on how to resolve the outstanding issues. Regardless, I must get answers for Mrs. Butler and her present attorney as he continues to call me with questions and seeking answers.” Mrs. Butler’s “present attorney” was Langston’s brother.

  Scruggs responded with a brief note, saying, “I believe that we have fully complied with all undertakings regarding these fees over the last seven years.” Nevertheless, he promised to listen to Langston’s “concerns.”

  Deloach was more blunt in his own letter to Langston. “I am not aware of any errors in calculating the fees,” he wrote. “In the fall of 2004, your CPA audited the accounting and calculations. Following the audit, you advised me by telephone that there were no suggested changes.”

  Doubting Langston’s claims about the 3 percent misunderstanding, Deloach did some homework of his own and discovered that Langston was keeping most of the money for himself. As the disagreement intensified, Langston insisted that he was originally designated as the sole recipient of the 3 percent—which eventually amounted to more than $4 million a year. The Butler family was given a one-third share as a result of the negotiations hammered out later in Jackson and sealed in P. L. Blake’s living room in Greenwood, Langston said. Deloach found that Langston’s brother, Shane, took his own contingency fee from the Butler share, leaving the barber’s survivors with about 20 percent of the $4 million.

  When Scruggs learned of the division of the “three points,” he reproached Joey Langston for the way the funds had been distributed. Langston said Scruggs always knew of the way the money would be split, but Langston dropped his bid to get more.

  Diane Scruggs was indignant after hearing of Langston’s action. Though she kept abreast of her family’s finances through regular meetings with Deloach, she had never been privy to Scruggs’s handling of the tobacco money. This peek at one example of Scruggs’s side deals astonished her, and she wondered how her husband tolerated relationships with people like Langston.

  Inexplicably, Scruggs kept Langston as his lawyer and his friend.

  On July 20, Judge Davis issued an eight-page opinion. He found that Scruggs “had adequate grounds to terminate” Luckey’s employment and denied Luckey’s constructive trust claims, which would have led to Scruggs’s tobacco money. But on the fourth page of the judgment, the tone of the decision began to change.

  “The court finds that Scruggs’ position concerning Luckey’s status within Asbestos Group to be unreasonable and in conflict with existing law,” Davis wrote. He added that Scruggs’s refusal to pay Luckey’s fees was “frivolous” and constituted “a breach of fiduciary duty entitling plaintiff to prejudgment interest” on the money due him.

  Davis ruled that Scruggs owed Luckey $13.7 million. Nearly half of that figure represented interest that accrued during the long dispute. In addition, Scruggs was ordered to pay nearly $4 million in attorney’s fees and expenses: $4 million to Merkel, his nemesis.

  Scruggs was staggered by the judgment. Not that he was incapable of paying such a figure; he had the resources to do that. But the magnitude of his loss to two of his bitterest rivals ate at him. Scruggs was so consumed by enmity toward Merkel, Luckey, and Roberts Wilson that he was prepared to go to extreme lengths to prevent another judgment like this.

  He walked down the hall of his office suite, pitched the order onto Zach’s desk, and expressed incredulity that Davis could have reached this decision. He quickly began to develop second thoughts about the wisdom of submitting the case to the magistrate. He wondered how Davis could have come down so hard against him.

  Years before, in 1998, he had seen Davis at one of Mississippi’s premier social events, tailgating among thousands in the Grove before an Ole Miss football game. Davis, who had long experience in the federal court system, mentioned that he was interested in an open federal judgeship. Scruggs called his brother-in-law to see if he might submit Davis’s name to the Clinton administration for consideration. Trent Lott quickly dismissed the idea. He told Scruggs that Davis was a partisan Democrat, too liberal for his tastes. (Lott didn’t tell Scruggs, but the senator intended for the nomination to go to his old college roommate and Sigma Nu brother Allen Pepper.)

  Scruggs wondered if Davis’s decision represented retaliation for Scruggs’s failure to deliver a judgeship. Scruggs’s post-trial doubts were reinforced after local lawyers said he should have known Merkel and Davis were good friends. Later, thinking back on the critical ruling, Scruggs remembered a conversation at a restaurant with Oxford lawyer Grady Tollison that especially irritated him. Tollison enjoyed baiting people, even his friends—and Scruggs was no friend—so he did not miss the opportunity to question Scruggs’s judgment. “I was surprised you took that case to Jerry Davis,” Scruggs recalled Tollison saying. “You know, he and Merkel go way back. They go to baseball games together.”

  The rumor of Merkel and Davis hobnobbing at baseball games may have been conceived during their repartee at the beginning of the trial. Though both men were ardent baseball fans, they had never gone to a game together.

  Scruggs smoldered over the judgment, but he paid. After his checks were sent, Luckey had them reproduced. He also made a copy of the glowing Newsweek article that had been headlined “Who’s Afraid of Dickie Scruggs?”—the same piece that Scruggs had framed and put on the wall of his office. Using the checks and the Newsweek piece, Luckey designed a montage that he framed and sent to Merkel. It
wound up on Merkel’s wall, too; his own big game trophy.

  With the success of Luckey’s lawsuit, Merkel took charge of related litigation, the old Roberts Wilson suit against Scruggs involving millions of dollars Wilson claimed from their joint venture in the Asbestos Group.

  After years without movement, the Wilson case now loomed ahead for Scruggs. He felt beset by a rash of misfortune and found resonance in the biblical testament of Job, the prophet who lamented, “I have no peace, no quietness; I have no rest, but only turmoil.”

  The setbacks in July bled into August, and the wound to Scruggs festered. He was angry with himself, and the balm of his drugs did little to comfort him. He would be sixty the next spring, and he began to think about pulling back from his law practice. It would be a radical step, but suddenly the thought had appeal. When he drove out to Deloach’s country estate to discuss the idea with his financial advisor, Scruggs was struck by the pastoral beauty of the place. Deloach owned many acres of fields and forests, and the road to his home cut through a landscape as tailored as a fairway at Augusta National. Scruggs had construction work under way on his own mansion in town. The time seemed favorable for him to put a halt to his frantic pace.

  “You’ve got to get me out of law,” he said when he sat down with Deloach. “Clear me out of my practice and set something up for Zach and Sid,” his son and the associate he’d brought with him from Pascagoula. With millions of dollars of income assured each year for another two decades, Scruggs was fixed for life. He was ready to turn the Scruggs Law Firm over to the next generation.

  Deloach said the transition could be accomplished without a great deal of difficulty. But he was unable to move on it right away. Deloach and his wife were leaving the next week on a trip to Greece.

  “Why don’t you and Diane come with us?” Deloach suggested. They could talk about the future there, and do it around the splendor of the Aegean Sea.