The Fall of the House of Zeus (2 page)

I have tried.

I
n the summer of 1992, a time when fortune first began to bless him with riches, Dick Scruggs received a disturbing call from his close friend Mike Moore, the attorney general of Mississippi. Moore reported that he had learned of a plot against the two of them by members of a political network that had been dealing influence throughout the state for decades. The powerbrokers were said to be indignant over a lucrative arrangement between Scruggs and Moore that enabled Scruggs, a private lawyer in the Gulf Coast city of Pascagoula, to collect $6 million in contingency fees while representing the state as a “special assistant attorney general” in legal actions against the asbestos industry.

Scruggs and Moore, regarded by the old guard as upstarts, had succeeded after a similar plan by members of the network had failed a few years earlier because of a shortfall in state revenue. Among the members of the cabal, Moore told Scruggs, were State Auditor Steve Patterson and Ed Peters, the Hinds County district attorney with jurisdiction in Jackson, the state capital. These men and their allies not only were disgruntled over Moore’s contract with Scruggs; they had determined it was illegal and planned to indict Scruggs—a move that would also serve to short-circuit Moore’s climb to political prominence.

Despite his emergence as a leader in asbestos litigation and his alliance with the attorney general, Scruggs was still naïve in the practice
of backroom politics in Mississippi. When he heard that he was likely to be indicted, fear ran through him like a fever. His head throbbed at the outrageousness of the accusation, and despair gnawed at his gut. He found himself frightened and unsure where to turn.

Scruggs knew that he faced formidable forces representing an amalgamation of old Democrats and new Republicans, the survivors and descendants of a mighty political apparatus once controlled by the late senator James O. Eastland. Working the phone, he reached out to other sources for help.

As a major donor to the state Democratic Party, Scruggs made a late night call to Jackson attorney Danny Cupit, an operative with broad connections in party affairs. “They’re out to get me,” Scruggs wailed, blaming his dilemma on hostile politicians and professing his innocence. To Cupit, it sounded as though Scruggs was weeping. He offered to make some calls on Scruggs’s behalf.

Instinctively, Scruggs also phoned his brother-in-law in Washington, Republican senator Trent Lott. The lawmaker listened while Scruggs complained about the perfidy of the charges being prepared against him. Lott made no promises—for this seemed to be the work of squabbling Democrats back home—but he assured Scruggs he would do what he could.

Others provided counsel—recommendations of good criminal defense lawyers and expressions of support—yet Scruggs remained uncomfortable. And lately he had grown accustomed to comfort. He had recently become a man of consequence in Mississippi, even before his fortieth birthday, when he hit a big lick—as lawyers like to call any sizable fees won in damage suits. With his new wealth, Scruggs had bought a sailboat, a luxury car, an airplane, a home with a view of the gulf, and he had begun to use his money to dabble in politics.

Scruggs seemed driven by a lust to become a winner, a characteristic often developed in childhood by smart but poor boys, and now he had to consider that the life he had built for himself and his family might be wiped out. An indictment could prove him unworthy for his wife, Diane, a local beauty who had been considered too regal for him when they were in high school. Criminal charges against Scruggs would also besmirch his son, Zach, on the threshold of his freshman year at Ole Miss, and the Scruggses’ younger, adopted daughter, Claire.

Scruggs’s downfall appeared to be coming at almost the same warp speed as his rise in the legal profession.

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    After treading in the backwaters of the state bar as a young lawyer specializing in bankruptcies, Scruggs had a breakthrough in the 1980s, after he devised an innovative way to attract a multitude of clients claiming to suffer from exposure to asbestos.
In Pascagoula, the shipbuilding city where he lived, asbestos litigation had become something of a local industry itself. Thousands of workers had passed through the giant Ingalls Shipbuilding facility since World War II, producing countless vessels that helped keep the U.S. Navy afloat. Over the years, the work force at Ingalls had used asbestos to wrap the pipes, reinforce the boilers, and protect the engines of the ships they built. Eventually, it began to dawn on some of them that their jobs had come at a price: inordinate numbers of the shipyard workers were succumbing to mesothelioma, an illness that could be traced directly to handling asbestos.

Scruggs missed out on the first wave of damage suits filed in Mississippi in the 1970s in connection with asbestos. But after setting up a clinic in 1985 that provided free medical diagnoses for those who felt they might have contracted mesothelioma, he was able to enlist hundreds of clients. Then he figured out a way to consolidate these cases into one blockbuster lawsuit so ominous that the asbestos companies were willing to pay millions in settlements negotiated outside the courtroom in order to avoid the possibility of even greater losses in a trial.

By 1992, Scruggs stood out as a paradigm in his profession, a plaintiff’s lawyer representing the powerless masses, whether they were humble shipyard workers in Pascagoula or ailing consumers bringing product liability complaints. Scruggs and his colleagues around the country called themselves “trial lawyers,” and they thought of themselves as the new guardians of the American public, stepping into a vacuum created by a lack of government regulation. During twelve years of Republican rule in Washington, a time when Big Government had been turned into anathema, the teeth had been pulled from regulatory agencies. Big Business had been given an advantage, and it seemed that the only place to hold industry accountable was in the courts.

In the 1980s and ’90s, the trial lawyers waged legal assaults on asbestos and tobacco, defective autos and dangerous chemicals, against careless physicians and deadly medications. In many cases, they won astronomical awards. They also earned a legion of enemies: boosters from chambers of commerce, rival corporate defense attorneys, Republicans protective of business interests, prosecutors suspecting legal malfeasance, even ordinary citizens simply appalled by the size of the
judgments. But along the way, men like Scruggs became as rich as the captains of Fortune 500 companies.

    Scruggs’s success coincided with the ascension of his younger friend Mike Moore, another son of Pascagoula. Though separated in age by six years, the pair got to know each other in law school when Scruggs returned to the University of Mississippi after service as a navy pilot. They were a natural fit: bright, hustling, and progressive in their political views. In a state where many of their contemporaries had begun to embrace the Republican Party, Scruggs and Moore were Democrats.

Their relationship strengthened after the two men wound up back in Pascagoula, traveling in the same social circles and sharing many of the same interests. While Scruggs grew wealthy as a private lawyer representing working-class clients, Moore became known on the Gulf Coast as a crusading prosecutor.

After winning election as district attorney in Pascagoula, Moore tackled the entrenched system that gave unchecked power to county supervisors and encouraged petty corruption. At public expense, supervisors often paved lonely back roads or delivered gravel for friends; they awarded contracts in exchange for contributions and effectively sold zoning decisions.

The practices were common around Pascagoula, the seat of government for Jackson County, and throughout the rest of the Mississippi Gulf Coast. The region is close enough to New Orleans to maintain the same loose mores, the same tolerance for official wrongdoing that characterizes south Louisiana.

Mindful that energetic prosecutors from Thomas E. Dewey in New York to Jim Thompson in Illinois had parlayed the headlines they won in pursuit of corrupt officials into political dividends that made them governors, Moore built name recognition by challenging the Jackson County bosses.

One of them was the legendary Eddie Khayat, known on the Gulf Coast as “The Godfather” long before Francis Ford Coppola made his sequence of movies with that name. Not only was Khayat the president of the Jackson County Board of Supervisors, but he had long led the statewide association of supervisors, acting as chief representative for their interests in the state legislature. He was the ultimate insider, a fixture in the vast political constellation established by Senator James Eastland.

In Washington, Eastland held power as chairman of the Senate Judiciary
Committee; he was noted for bottling up civil rights legislation and blocking the nominations of progressive candidates for federal judgeships. In Mississippi, the senator’s organization had tentacles extending to every corner of the state, with contacts in all the county courthouses and well-placed friends in each community.
The network teemed with unreconstructed segregationists. Though Eastland’s acolytes—legislators, supervisors, sheriffs and other county officials, judges, businessmen, lawyers—were capable of delivering blocs of votes in any election, the organization did not function like a big city machine, rewarding political loyalty with patronage jobs. Instead, it operated as a confederation of individuals with common, conservative interests. Eastland’s men gathered over coffee at local cafés to consider the merits of various candidates rather than holding regular meetings at political clubhouses. But ultimately they took their cues from Eastland, and following the Sphinx-like characteristics of the senator, who rarely made public speeches, they preferred to carry out their work in private.

It was Eastland who intervened when Eddie Khayat first faced indictment for income tax evasion in connection with a kickback scheme in the 1960s. The senator summoned Khayat to a rendezvous in his car, parked on a roadside in south Mississippi. Eastland was a laconic man, and he had just a few words for Khayat: Go plead nolo contendere, the equivalent of not contesting a criminal charge, but at the same time not admitting guilt. U.S. District Judge Harold Cox would take care of it, Eastland told Khayat. He should not worry about going to jail.

Judge Cox was Eastland’s close friend. The senator had exacted Cox’s nomination as a federal judge from President John F. Kennedy in exchange for Eastland’s agreement not to block Kennedy’s choice of a prominent black attorney, Thurgood Marshall, to serve on a federal appellate court.

Years later, after Hurricane Frederic ripped across the Gulf Coast in 1979, much of the landscape lay in tatters, and Khayat’s constituents called for his services. As usual, he responded. He deployed county workers and public equipment to clear private property, repair private roads, and install culverts contrary to law. It was the old-fashioned approach to government, but the new district attorney, Mike Moore, found it unacceptable and was willing to confront the system.

Moore indicted Khayat on eight counts of misusing public property. By this time, Eastland had retired from the Senate and his organization was diffused. It still existed, but some of the hard-core conservatives looked to a rising young Republican—Trent Lott, a congressman who
would soon become a senator—for guidance from Washington, while others still called themselves Democrats and huddled around old guard legislators.
Khayat fought the charges for a while, but in the end, he agreed to plead guilty to a misdemeanor, paid nearly $80,000 in restitution for questionable expenditures, and resigned from the post he had held for more than three decades.

The case broke Eddie Khayat as a political leader in 1982, but it sent the district attorney to new heights. By the time he was thirty-five, Moore ran a statewide campaign to win election as attorney general. Looking lean and polished—in contrast to the old-school politicians of the state—he seemed on his way to becoming governor.

    
Emboldened by success, Moore—like Scruggs—was willing to test new methods of procedure, to challenge ingrained practices. After watching Scruggs beat the asbestos industry into submission, Moore decided in 1988, a year after his statewide victory, to appoint Scruggs “special assistant attorney general.” He gave Scruggs authority to file claims against asbestos producers and distributors on behalf of the state.

At first, nothing appeared sinister about the pact. Operating with the official mandate from the attorney general, Scruggs presided over the legal end of a massive “tear-out” project in which asbestos was stripped from scores of public buildings, many of them on college campuses. In the name of the state of Mississippi, Scruggs filed lawsuits against manufacturers of the product and smaller targets, the companies that sold or installed asbestos, to recover the cost of the work. He won $8 million from W. R. Grace Co. alone, and reached settlements totaling nearly $20 million more from such companies as US Gypsum and Owens-Corning Fiberglas Corp.

Under the terms of his 1988 contract with Moore, Scruggs’s law firm would be paid on a contingency fee basis, getting 25 percent of all the money recovered for the state. He would also be reimbursed for expenses out of the settlement funds from asbestos producers and distributors.

As money poured in for the state, funds were deposited into a trust account in Scruggs’s and Moore’s names at the Citizens National Bank in Pascagoula. To reimburse Scruggs for expenses submitted to Moore, funds were withdrawn from the same account. The arrangement may have disregarded a state law requiring settlement funds to be deposited into the state treasury. There was also a question of whether the attorney
general had the authority to hire someone on a contingency basis without the approval of the legislature.

It might have been a mere oversight on the part of the two men from Pascagoula, but the moves by Scruggs and Moore did not escape the attention of powerful men in the state capital.

To some members of the old network, Scruggs was seen as an arriviste who had not properly paid his political dues and who deserved neither his state contract nor the title Moore had given him. Meanwhile, Moore was perceived as a brash newcomer, aggressive, excessively pious, and eager to leapfrog past others with stronger credentials waiting for their own chance to run for governor. If Scruggs was thought to be a bit too slick, Moore seemed a shade too virtuous.