The Fall of the House of Zeus (19 page)

Once he was retained to represent Luckey, Merkel began pursuing Scruggs as relentlessly as Arthur Conan Doyle’s fictional detective tracked Moriarty.
Said Sherlock Holmes of Moriarty: “A criminal strain ran in his blood, which, instead of being modified, was increased and rendered infinitely more dangerous by his extraordinary mental powers.”
Said Merkel of Scruggs: “I have nothing for him. On a scale of one-to-ten, I’d put Dick Scruggs at about a two.” Merkel recognized that Scruggs was cunning, bold in his gambles, and especially astute in attracting favorable publicity. But he burned over the belief that Scruggs was essentially a scoundrel.

For more than ten years, the two men waged a legal war. Merkel insisted that Scruggs owed Luckey millions of dollars in dividends from a joint asbestos litigation project. Scruggs refused to pay. As a result, Merkel put Scruggs through a series of grinding depositions, testimony taken outside a courtroom for use in a prospective trial, where they clashed over issues both petty and significant. They addressed each
other in mocking, sarcastic tones, and occasionally the volleys between the two men grew so loud that others would threaten to leave the room.

Contending that Scruggs had used income from the asbestos victories to finance the tobacco triumph, Merkel argued that a “constructive trust” existed that would extend Luckey’s claim against Scruggs to his tobacco earnings. In an effort to find how Scruggs had expended the tobacco money, Merkel probed a Rube Goldberg–like flow chart showing the circuitous route that Scruggs’s payments took. Merkel’s questions eventually revealed P. L. Blake’s $2 million-a-year arrangement with Scruggs. Merkel deposed Blake, too, and extracted from him the laughable explanation that he had earned the income through such chores as sending Scruggs newspaper clippings.

The psychic battering troubled Diane Scruggs. She worried that the lawsuits by Luckey and Wilson were undermining her husband’s health and mental alertness, and contributing to his growing dependency on drugs. She grew to loathe Merkel, whom she considered tactless, and she feared that his persistent hounding of her husband had a deleterious effect outside the hearing rooms. She urged Dick to bring the cases to an end. But Merkel’s bargaining position asked for $60 million from Scruggs, and it was difficult for Scruggs to countenance the thought of paying anything at all.

    
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.

During 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.