Scruggs' Downslide: His Cases Had 'Big Enemies and Bad Results'
Recently indicted plaintiffs lawyer Richard Scruggs bolstered his reputation as a legendary plaintiffs lawyer in the 1990s when he won settlements for shipyard workers exposed to asbestos and helped force tobacco companies to pay a $248 billion settlement.
But in more recent years, Scruggs foundered as he pursued difficult cases funded with the money he made from Big Tobacco, a downslide that culminated with his indictment in an alleged conspiracy to bribe a judge, according to a lengthy article in the American Lawyer.
Scruggs took on “a series of quixotic cases,” the story says. “These matters were much ballyhooed in the press, but in the end they shared two things: big enemies and bad results.”
Scruggs appeared to believe that the big money he made in tobacco litigation was given to him so he could help make the world a better place, the story says. But his lawsuits fared poorly, the publication says, including ones that alleged:
–HMOs failed to disclose that cost-cutting rather than medical necessity drove treatment decisions. A judge refused class certification for the plaintiff patients, and Scruggs and his co-counsel recovered less than $250,000 for a dozen people. A class action brought on behalf of physicians by different lawyers was more successful, producing settlements of more than $2 billion.
–Lehman Brothers Inc. was responsible for predatory practices of a subprime lender it helped fund. A lawyer for Lehman told American Lawyer that Scruggs refused to settle for $500 million before a jury awarded $51 million, trimmed to $5 million under a provision in an earlier settlement with the subprime lender in which plaintiffs agreed to limit their claims against Lehman to its proportionate share of fault. The case later settled for $2 million.
–Insurance companies improperly denied homeowners’ claims for Hurricane Katrina damage under policy provisions that excluded flood but not wind damage. In the first case that went to trial, Scruggs recovered just $1,228 for the plaintiffs. The judge did issue a favorable ruling on policy language in the case, but a federal appeals court later reversed. Scruggs then settled “a slew of suits” but he withdrew from the cases after his indictment, which alleged that Scruggs took part in a conspiracy to bribe a judge hearing a fee dispute in the Katrina cases.
