Richard Scruggs

[MarylandQuitter]

Plaintiff's attorney from Mississippi, head negotiator and top lawyer in the Medicaid cases; Scruggs and Michael Moore have been lead negotiators for the national settlement. After Moore suggested the idea of the Medicaid cases, Scruggs became Moore's partner and together they gathered all the elements necessary to bring Big Tobacco to the negotiating table. Scruggs also brought famous trial attorney Ron Motley into the team, so they would be ready to go to trial if necessary.

 

Scruggs' brother-in-law is the Senate Majority Leader Trent Lott, who provided some of the key national connections. Scruggs' and Moore have been spending a great deal of time in Washington, DC convincing lawmakers to legislate the settlement into law.

Scruggs first became successful in national class action suits against the asbestos industry.

He brought that experience to bear on the tobacco industry, "making the stakes so high that neither side can afford to lose." He had the guts to protect two whistleblowers -- Jeff Wigand and Merrell Williams -- who no one else would touch. And he helped convince Bennett LeBow to defect from the tobacco industry's united front and turn state's evidence.Under normal contingency fee agreements, Scruggs would stand to make over $1 billion dollars on the tobacco cases. He defused this issue by agreeing to have his fees decided by a national panel of judges.

 

FRONTLINE interviewed Scruggs several times in late 1997 and early 1998.

Q. Did you ever think you would be sitting at a table and deciding that you were going to walk away from $250 billion dollars and what did that feel like? Scruggs: It wasn't that we were going to walk away from $250 billion. It was that the far-reaching health care reforms and tobacco control reforms that we had negotiated might be lost. I am still concerned that if Congress doesn't act that... [the] opportunity will be lost to reform the tobacco industry.

The money was an important public health tool. It was important to reimburse the states for their health care expenditures and to create a pool of money to fund the enforcement actions of the FDA. Other than that, it was the regulatory mechanisms that we were trying to put into place.

The restrictions on marketing of this product to children. To sort of, to try to reverse the trend in the proliferation of tobacco.

Q. You want people to believe, people who are looking at you as a personal injury lawyer, a pirate in the courtrooms of America, that you really just care about the public health? The money didn't matter.

Scruggs: The money mattered. It didn't matter as much as the public health. It is not often in life that you have a chance to make a mark on humanity. And we all got caught up in the opportunity that this presented to us.

Q. You got into the asbestos litigation. What did you learn about the value of representing masses of people?

Scruggs: It is a unique, it is unique type of law practice. On the one hand, you are not able to develop the unique lawyer/client relationship with your clients when you represent thousands of people. You can't spend the time you would like to spend with your client on an individual basis with each one of them. You have got to sort of organize the thing so that you can get them all to the doctor, get them all diagnosed, get them...the ones who have the disease. And you have to screen for exposures and that sort of thing. And then you have to get their cases filed and managed so it requires a great deal of organization to get that done properly.

Q. But it raises the stakes, right, in terms of what you can go after. I mean you can actually show up at the defendant corporation's door, in this case, and say I don't want just a hundred thousand, I want ten million.

Scruggs: It raises the stakes only if you have a judicial system that permits the aggregation or consolidation of a large number of cases at one time such that if they lose one case, they are losing, essentially, 4,000 cases.

And the costs are prohibitive. You have raised the stakes to the point where they really can't afford to go to trial and lose. We were able to, to convince the judge in our county to, to consolidate some 7,000 cases. Pick a representative sample of those cases to go to trial. And let that verdict be binding on all the rest.

Q. And that leads to a quote that I saw from you that says, "I like to get the stakes so high that neither side can afford to lose." Now what does that mean?

Scruggs: That means that ordinarily in mass tort cases there is no way to, to try any individual case because the defendant has the advantage. He can beat you one at a time or, even if you beat them one at a time, you have not put them in mortal danger.

When you raise the stakes through consolidations or bringing large numbers of claims together, you have... You have given them an incentive to settle what would not otherwise be present. And usually a good settlement is far superior to trench warfare, trial-by-trial litigation. Because then only a few clients get paid and the rest have to wait in line.

Q. So, when you and Motley appear on the scene in the tobacco litigation, you are already veterans of the asbestos situation.

Scruggs: The idea of the tobacco suit came up in the midst of the four month trial, asbestos trial in 1993. And we pretty much had that case in hand after about three months. We thought we were going to win it. We were mostly mopping up. The defendants were putting on their case and we were pretty much mopping up in the case. And I remember, one day in court when I mentioned to Motley that Mike Moore was interested in bringing a suit on behalf of the poor people of Mississippi, or the taxpayers of Mississippi, to collect, recover against the tobacco industry the cost to the state for treating poor people.

I thought I was going to have to put a seat belt on Motley. He was about to blast off.

He wanted to try the case right then. And we weren't even through with the asbestos trial. He was inspired, to say the least.

And Motley is a quick study and the idea of doing something on that scale inspired him. I mean, he was, he needed sedation after I told him about it.

Q. We think of Ole' Miss and, I mean I am old enough to remember the riots and what went on. And we don't think of Ole Miss as a bunch of lawyers who are going to get together, veterans of Ole Miss, and sue the pants off major industries in the United States. Is that just a Yankee stereotype?

Scruggs: It may be. I don't know that there is anything unique about Ole Miss or about Mississippi in this particular area. It turned out to be a coincidence, I think, more than anything else, that we took advantage of.

The coincidence being that Mike Moore was the Attorney General. He was our classmate and our friend. We had represented Mike in previous litigation against the asbestos industry, very successfully. The partnership had worked well.

We had gotten involved in tobacco legislation. We had money in our pockets as a result of the asbestos litigation, so all of these...all of these elements, by chance, came together. And I think that almost simultaneously we realized the potential we had there. With a war chest, with legal talent, with an Attorney General, a state official who was willing to do it. Is enthusiastic about doing it. And some bright legal ideas about how to get it done.

Q. And you did some thinking about what court to file it in, right?

Scruggs: We did, we did.

Q. With a judge who was another Ole Miss graduate?

Scruggs: That's right. Not our classmate again. And not a judge that we knew very well or had any prior dealings with to speak of. But, in fact, we didn't know for sure what judge we would end up with in the case. We went through two judges before we ended up with the judge that actually tried the case.

But the type of lawsuit that we filed, was dictated, really, by two things. We hired Dick Morris to do an in depth public opinion survey of Mississippians.

Q. Dick Morris of recent Clinton fame?

Scruggs: That is right, that is right.

Q. And how did you get to him? Through Trent Lott, right?

Scruggs: I had met Dick several years earlier through Trent. I think back in 1989. I asked Trent... I was representing the state, again Mike Moore, in a suit against the asbestos industry on behalf of the state.

Q. So you needed him to do what? To poll?

Scruggs: To poll the state. To poll public attitudes about asbestos companies. This is back in 1989 and Trent said, "Well look, Dick Morris is a guy who can do that for you, use him." So I called Dick, hired him, used him. And when we were anticipating the tobacco litigation, I did the same thing.

Q. And what did his polling show?

Scruggs: It showed that it would be very problematic to win the case. It identified the demographic groups who would be most like to be for us and against us. The poll results were fairly discouraging.

Q. Why would you guys want to take on tobacco? I mean, at that point, you also knew that there was a lot of down sides to tobacco. They weren't the asbestos industry. They could wipe you out.

Scruggs: This was an industry that had never been beaten. That had fortified itself for decades against litigation. Had prepared and covered every conceivable litigation angle. It was sort of like the challenge of climbing Mount Everest the first time. It had never been done. Uh, in theory you could do it. But nobody had ever done it.

Q. So, you went into the trenches and thought about it, and schemed, and came up with this unique plan.

Scruggs: Yeah, that's right. And we did it, I think initially, uh, just out of a professional, uh, inspiration to try to do something that had never been done before, to try to take on this industry that had literally defied the judicial system and the regulatory system for decades. And yet, was killing millions of people. Uh, you know, it was just a challenge that cried out for somebody to do it.

Q. You got a lawsuit, but you know that you're going to have discovery problems, you always do with this industry. They'll fight you to the Supreme Court. Then comes Merrell Williams. Who was Merrell Williams?

Scruggs: Merrell Williams was a former paralegal at a law firm in Kentucky that was hired by Brown & Williamson Tobacco Company to review all of its, uh, dirty linen, all of its documents. And Merrell Williams decided, uh, some time well prior to the time we knew about him, to photocopy and secrete away those documents, the ones that were explosive. And, uh, go about somehow making them public.

Q. Well, he went through a number of machinations, but these documents as I understand it, were so hot that before you ever met Merrell Williams, a variety of people backed off.

Scruggs: I'm just now learning about that. ... When he came to us, he initially came to Don Barrett, I spoke of him earlier. And, uh, asked for a meeting. We had a meeting with him, uh, in a restaurant in Jackson, Mississippi.

The old time deli in Jackson, Mississippi. And Don and I and another lawyer that worked for Don named Cindy Langston met with Merrell. He looked like warmed over death. He looked unkempt. Not quite like he'd been sleeping under a bridge but close to it. He was obviously very ill, very nervous, had been drinking.

Q. He thought you were an FBI agent apparently.

Scruggs: He did. I guess because I have short hair and out of town, he asked me two or three times if I were with the FBI. And I reassured him that I was not. But he was very apprehensive.

Q. He's nervous because he's got stolen documents.

Scruggs: We knew about a little of his background from press clips at that time. But he never admitted at the time that he had any documents. He talked in circles. I think he was basically taking our measure to see if we were likely to be people who would back him up or people who would turn him in.

Q. Now, eventually he does trust you. You. . . he says to you let's go to Orlando.

Scruggs: That's right. After some discussions with him over the coming, over the following two or three months in early 1994, uh, he, uh, confided to me and to Don that he had indeed had documents that were very explosive.

Q. In sum, when you looked through these documents, what was your reaction?

Scruggs: I looked at Merrell, and I said, "These guys are toast." We've got them. And it turned out that that was one of the more explosive documents in the group.

Q. Now, you've got a pile of stolen documents which Brown and Williamson knows are out there, right.

Scruggs: No, I don't think they knew they were out there.

Q. Well, they knew Merrell had something.

Scruggs: But they were not sure that he had not turned over all the documents he had. He had been ordered by a court up there to turn them all back over to Brown & Williamson and they didn't know for sure whether he had or not at this time.

Q. But you and Mike Moore, decide that the only way you can use the documents is to get them out there.

Scruggs: No, actually, it was on our mind at the time to use the documents in litigation. After reading those documents that day, I think it was a Saturday. I called Mike Moore who's in Jackson. I said, you've got to see these documents. Flew up about night down, had a couple of other lawyers on the team including Don Barrett, uh, look at the documents as well. Uh, and it was pretty clear that these documents were clear evidence that the testimony that the CEOs of the industry had just given to Congress a month earlier.

Q. That's where they go, we believe that nicotine is not addictive.

Scruggs: Well, they all seven raise their right hands and swore that in their opinion nicotine was not addictive and swore to other things. That it was clear that they had either lied, deceived, or misled Congress in that testimony. And that these documents showed that. Our view then, was that these documents, evidenced a fraud. And that we should take them to the people who were investigating the tobacco industry. That is the very Congressmen who are asking those questions. The congressional subcommittee that was at the time chaired by Congressman Henry Waxman. So, about ten days later, we got an appointment with Congressman Waxman. And we. . . Mike Moore and I flew up there. And personally hand carried those documents to him. It was about that time, uh, that or shortly thereafter that the documents appeared in the press.

Q. Stop for a second here. You walk into Congressman Waxman's office. This is his, in a sense, life work to get the tobacco industry.

Scruggs: Right.

Q. And you put on his desk 4,000 pages of files.

Scruggs: Right. Two huge boxes.

Q. And say to him, what?

Scruggs: We have documents that would indicate that the testimony that was, given before your community last month was a lie. And we felt that you were the person who should have these documents. You're the congressional oversight committee. And we don't know what else to do with them. We're certainly not going to give them back to the industry without making them known to some agency of the Federal government or someone who is in a position to do something about this.

Q. Did you tell him that they were basically stolen documents?

Scruggs: Yes. I think that we didn't tell him so much that they were stolen documents but that we had received them through a whistle blower. I think that it was implied that they were stolen documents.

Q. Well, you didn't have a subpoena, you didn't get them by subpoena. But they didn't give them to you.

Scruggs: No, they didn't. I don't think we ever used the word that these are stolen documents.

Q. You came by them through some fortuitous means.

Scruggs: Sure, through whistle blower action, that we got these documents. And clearly, uh, we were not supposed to have them. And I think, uh, Congressman Waxman was a little ambivalent.

Q. He didn't dive into the box.

Scruggs: No, he didn't. Not, right in front of us, he didn't.

Q. Did he step back?

Scruggs: He did. It was almost as if it was radioactive. He wanted to embrace them, but at the same time, he was afraid of them. It was like, almost a physical reaction. But, after some initial discussion about the documents and our characterization of what they were and why we had. . . how we had come into possession of them. And why we were bringing to them. Then asked us to meet with his staff. And his staff then proceeded to go through them like a hungry lion. They were just. . . they were amazed at the documents.

Q. Now, at the same time contemporaneously, a set of these documents we know wound up at the FDA.

Scruggs: That's right.

Q. And then shortly thereafter someone from the FDA apparently supplied them to The New York Times.

Scruggs: You know, I never did know how The New York Times obtained them. But I would imagine that the genesis of all that was through Waxman's office.

Q. According to Stan Glantz, then a Mr. Butts sends him a set of documents.

Scruggs: That's right.

Q. Are you Mr. Butts' father.

Scruggs: No, I'm not. I'm not Mr. Butts. Nor is Mike Moore. I may be subject to a paternity suit. But I am not Mr. Butts. Did not, uh. . . The only agency that we gave those documents to were - were the Congress -- Congressman Waxman. Later we gave copies to the Justice Department.

Q. And the FDA.

Scruggs: And the FDA.

Q. Why were these documents so important?

Scruggs: Because they showed the depth of the tobacco industries research to the pharmacological effects of nicotine. They showed the elaborate system that the tobacco industry's lawyers had set up to shield these documents from public view, abusing the attorney client privilege. They showed that the tobacco industry itself considered nicotine to be an addictive drug and that they were in the business of selling nicotine an addictive drug through the very words of one of their principle scientists and attorneys back in 1963. Those sorts of revelations, uh, were especially important to the Food and Drug Administration because the tobacco industry had denied that nicotine was. . . that cigarettes were being sold for the nicotine content. They were claiming, of course, if you remember, that nicotine was just a component of taste. And that it was just simply something that went along with the cigarette. When in fact, these documents showed the depths to which they had researched the pharmacological effects of nicotine.

Q. So, now you're at first what many people called hopeless lawsuit, had a documentary base.

Scruggs: That's right. Now, the documents, you'll recall. We didn't file the lawsuit until about a month later. But at the time we got the documents.

Q. And somehow through your delivering them to Washington, they go to Stan Glantz and they wind up on the Internet.

Scruggs: That's right. That's right.

Q. And eventually, they do become admissible.

Scruggs: Well, we were not sorry to see that happen.

Q. Now, fast forward a little over a year, and you wind up with a live witness to go with the documents. Who was the witness, and why was he so important?

Scruggs: The witness was, Dr. Jeffrey Wigand who was the vice president in charge of research and development for the same company for Brown & Williamson Tobacco Company. Uh, we had searched in vain for about a year or more, even longer than that because we first met Jeff Wigand, I think, in October 1996, 1995.

Q. 1995.

Scruggs: Prior to that the litigation had been going on for a year and a half at that time. And we had been researching it for probably two and a half years. We had searched in vain for a tobacco industry mole. Someone who was in the know, in tobacco, who would tell us what really went on inside that industry. There was no one out there who could speak from an insider's perspective. We had no one. There wasn't anyone that would do it.

He was the one person who had come forward, who - who came forward and talked about what really went on inside tobacco.

Q. What makes Wigand so important?

Scruggs: Jeff Wigand was able to bring the documents to life.

He could tell things that were not in the documents. The genesis of the documents. What led to various studies. Strangely enough, many of the documents he had not ever seen before and was amazed himself when he saw them.

As the Director of Research, the Vice President in charge of Brown & Williamson's research, many of these documents had been secreted even from him. So he was amazed himself when he saw some of the research that had gone on in the company that he was not even allowed to look at. Or not made privy to.

He also, of course, knew about things that had gone in Brown & Williamson subsequent to the date of most of these documents. These documents ended sometime, I think, in the late 1980s. Wigand was there up through about 1993.

So things that went on under Wigand's purview, international conferences he attended of other tobacco scientists within his company add greatly to the information we learned from the documents. Especially about nicotine and nicotine pharmacology.

Q. You bought Merrell Williams a boat. You bought him a house. Jeffrey Wigand, you paid his expenses, flew him around in your plane. Got him a lawyer. Sounds like you are on the edge there, ethically.

Scruggs: Some have said that, but I disagree. I think what we did was to grant a safe harbor for those who were willing to risk whatever they were risking. Intimidation and threats from the tobacco industry. We were willing to grant a safe harbor for those who were willing to step up and tell the truth about the industry.

I helped Merrell Williams. I didn't buy him these things. These were, in essence, loans that I made to him and he has, at the time, agreed to repay me one day for that. And I hope that he will. I trust that he will. I can understand how it might look like it was some sort of a payoff, but it wasn't.

Q. Wigand?

Scruggs: We both represented Jeff Wigand in defending him against Brown & Williamson and we found lawyers in Kentucky and paid them to defend him against Brown & Williamson.

Q. I guess the question is, with Merrell Williams, you knew that he did not come by these documents through a legal process. He walked out the door with the documents.

Scruggs: I disagree with that.

Q. Well it made a whole bunch of other people real nervous. I mean people who are dedicated anti-tobacco activists wouldn't even go near him.

Scruggs: That is true. I don't think you have a right to conspire against the public health and then cry foul when someone takes the documents that show that you have done that and make them public. Especially when you turn them over to law enforcement officials or the Congress of the United States.

I don't see... I think you almost have an obligation to do that. To, when you catch someone in the process of committing a crime or a fraud on the public health and you don't make that public, I think that is the crime. And so that what Merrell Williams did, regardless of whatever his motives were, and what we did was, in our minds then and now, a civic duty. A civic responsibility.

Q. But you had some great risk involved in there. Once the tobacco industry, once Brown & Williamson found out, they sued you.

Scruggs: They did.

Q. They had investigators after you.

Scruggs: They did. They followed us, they followed me. They put me under surveillance, did the same to my family. Sued us in federal court. Sued me. Sued Merrell. Sued any other lawyer, had a long list of John Doe defendants who had seen or had participated in turning these documents over. Presumably Mike Moore. And unleashed more or less a smear campaign of their own that we were paying for stolen documents is the way they spun that. Even though we turned the documents over, as we were compelled to do, to the proper enforcement authorities.

Q. And once you facilitated, let's put it that way, Jeffrey Wigand giving testimony in your case.

Scruggs: That is right.

Q. What... He did that at some risk.

Scruggs: At great risk to Jeff. They sued him, of course. They sued a number of news organizations in connection with Williams and threatened to in Wigand's case, to try to intimidate everyone into being silent.

It was great risk to Jeff. He was, he was a school teacher at a public high school in Louisville, Kentucky, having gone from making hundreds of thousands of dollars a year to making what a school teacher makes in a public school system. They unleashed an unprecedented smear campaign against him. They hired investigative firms in the world to go into every aspect of his past. Drag out every, every piece of paper or transaction that Jeff Wigand had ever conducted to try to put a false light on it and on him.

They tried to show that he was a mental case, that he was a wife beater, that he was a shoplifter. I mean they came in with all sorts of allegations to actually smear him.

Q. Let me take you back to, let's say, November of 1995 when Jeff Wigand testifies. He is under possible threat of arrest in Kentucky.

Scruggs: Yes.

Q. And you are being sued. Did you ever worry about that was going on?

Scruggs: Sure. But when you are in the middle of combat like that with people like we were fighting, all your thoughts are to whip--to beating them. We were going to beat them, no matter what the cost.

I mean it was one of these things that becomes a cause, a crusade. You are inspired to do it, regardless of the risk. You feel that there is so much justice in the cause that you are willing to take those sorts of risks to get what you consider to be a proper result.

Obviously Jeff Wigand felt that. Obviously Merrell Williams felt it. And all of the lawyers an the Attorney General felt that that's what, we were on a crusade.

Q. Didn't your wife, didn't your brother-in-law, didn't somebody come to you and say, what are you doing?

Scruggs: No. My wife was incredibly supportive throughout this. My brother-in-law had nothing to say or do about this. We didn't discuss it.

Q. But he did encourage you, at one point, to get into discussions with the tobacco industry.

Scruggs: Actually that is, it was the other way around. After the first Liggett settlement, this would have been in April of 1996, I read in the newspaper where the, where Steve Goldstone from. the CEO of R. J. Reynolds, when asked would R. J. Reynolds ever settle, like Liggett just did, responded, "We would be interested in a comprehensive resolution but not a piecemeal series of settlements."

It dawned on me then that there may be room to open up a dialogue to resolve these issues.

Q. Were the stakes now high enough so neither side could afford to lose.

Scruggs: The stakes were getting up to the point where neither side could afford to lose. And this was the first signal, or overture from the industry proper, not just a dissident like LeBow, but from a mainstream large tobacco industry, R. J. Reynolds, one of the target defendants in the case, that they were willing to consider a compromise.

I called Mike Moore. I said, "Mike I have got an idea that if, that I'd like to call Trent and see if he would be willing to try to broker a meeting with the industry, based on what Feldstone had said in the press." Mike said, "Okay, give it a try."

So I called Trent and I said, "Trent, you haven't been involved in any of this. You are probably considered to be tobacco friendly by the tobacco industry. You are someone that they would probably trust. You are someone that I would trust. Would you like to... Would you consider trying to set up a meeting to see if anything can be worked out on a national basis?"

Q. You are claiming that your main motivation here was the public health, doing something good and through all of this your brother-in-law is the majority leader of the Senate, one of the most powerful Republicans in the United States. And you never went to him? You never talked to him. And he never talked to you? You are in the headlines every day, you are killing his political party.

Scruggs: At the time, in early 1996, he was not the majority leader. In fact I think at the time he was not even the assistant majority leader. He was just a United States Senator. Not that I am belittling being a United States Senator.

Q. There were risks involved here that weren't normal to a regular law suit. This wasn't just a risk to the overhead of your law office by putting too much money into a case. What were the risks to you back then?

Scruggs: There was a risk of, I think, public humiliation was the worst one. If you are unsuccessful after taking on a task like this. Financial ruin. Discreditation, professionally. The wear and tear it puts on your family to read unfavorable things in the newspaper every day when you are not used to--not only not used to publicity, you are not used to national adverse publicity. Those sorts of things.

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