In the two years since hurricane Katrina slammed into the gulf coast of Alabama, Mississippi and Louisiana there has been in the national psyche an urge to move on to the next big story, conveniently overlooking that utter devastation that region suffered and the high stakes legal battle between the insurance industry and residents of that area.
Politics aside and the sociological issues as to why it has taken so long for that region to rebuild, one of the biggest issues has been and continues to be the coverage battles as to what claims should be paid to homeowners and businesses that were wiped out by the storm and subsequent flood.
Just last week in the Weiss vs Allstate case a Louisiana state court ruled that the exhibits and information of that case that Allstate looked to keep sealed, must instead be kept open and part of the public record, an important ruling in that it allows for the Allstate claims practices manuals to be used in other cases involving denial of coverage cases.
However, yesterday in the most public and high stakes battles William Acker, a federal judge in Alabama overseeing the case, asked the Justice Department to prosecute charges that Mr. Scruggs and Scruggs Law Firm P.A. committed criminal contempt. Attorney William "Dickie" Scruggs is certainly one of the most well known and prolific trial lawyers of the last 15 years in the United States having been a major figure in tobacco and asbestos litigation and, as an Alabama native, he has been spear heading efforts in Alabama to require insurance companies to cover claims that they originally denied largely on the basis that most of the damage was related to flooding, which is typically excluded from most policies.
This case has brought together some major heavy hitters with Republican Senator Trent Lott, Dickie Scruggs and others working both politically and legally to bring pressure on the major insurance companies to stop denying claims on the wholesale basis that all damage was flood caused, and instead look at the combined factors that might have contributed to the destruction of certain areas such as wind driven rain, wind and then subsequent flooding. I'm no lawyer and I don't do property work so I won't even pretend to know the legal merits of their arguments, but it is undeniable that the stakes have risen dramatically with this criminal contempt charge.
At the heart of the battle are documents that found their way into the hands of the Scruggs law firm through individuals who were at one time working as either employees or consultants of State Farm. The Scruggs firm was ordered to return them and according to the history on this case failed to do so in the time frame and manner ordered by the court. You can Google "Scruggs" and "State Farm" and you will find more then you will ever care to know about this case so I won't bother to list a lot of links here on the history. What is important is that we are once again seeing a battle between state courts, politicians and attorneys against U.S. Attorney's and Federal Courts as to who is going to control the outcome of these cases, with the stakes being billion's of dollars and potential claims.
The continued federal influence on what were long the province of state courts continues unabated and the years of stuffing anti-plaintiff judges and US attorney's into the system is being felt on many levels. I'll be intrigued to see how this all plays out.