Recall that the Jones v. Scruggs case is on appeal to the Mississippi Supreme Court about whether to uphold sanctions against Scruggs Katrina Group joint venturers Lovelace law firm, Don Barrett and Barrett’s firm. Scruggs and his firm and David Nutt and his firm had earlier settled with Jones, leaving Lovelace and Barrett arguing that they should not be sanctioned by being denied referral to arbitration.
So– when a partner or joint venturer does something illegal or to advance the interests of the partnership, the partners can be liable, even though they are “innocent” in the sense of having had nothing to do with the illegal conduct. On the other hand, if the partner acting illegally is acting outside the ordinary course of the partnership business, the partners would not be liable.
When does doing-something-illegal become acting-outside-the-ordinary-course-of-business letting the other partners off the hook?
Today, the Mississippi Supreme Court, in an opinion divided 5 (Chandler writing) to 2 (both Carlson and Pierce writing) with two justices (Kitchens and Dickinson sitting it out) held that when a lawyer-joint-venturer (Dickie Scruggs) sets out to bribe a judge on behalf of himself and the other joint venturers, and where the others don’t know about the bribe, they aren’t liable for the bribe. This is so even though Scruggs papered over expensing the bribe by showing a bill for Balducci for $40,000 work on a voir dire on a trial that had not yet occurred (which the dissents both view as a red flag that should have put the other partners on notice that something was amiss).
Here’s the opinion, which has a detailed summary of the facts and procedural history of the Jones case.
More about the other cases decision list later.