I thought I would alert the hard-core, RSS-faithful that I have a short feature story in the latest issue of Fortune (spine-dated June 9, 2008 ) of possible interest. It’s about Columbia Law Professor William Simon’s controversial forthcoming article in the Stanford Law Review, provocatively entitled “The Market For Bad Legal Advice.”

In it, Simon attempts to diagnose the circumstances under which well-credentialed lawyers and law professors are most apt to render implausible legal opinions – e.g., blessing screwy Enron deals, outlandish tax shelters, or the torture of detainees in the war on terror - and he offers some practical suggestions on how to curb the phenomenon.

He comes down particularly hard on several academic legal ethics experts, whom he suggests may be facilitating “pernicious” practices in the course of pursuing lucrative private practices as expert witnesses evaluating the conduct of other lawyers. Professors Geoffrey Hazard of the University of Pennsylvania Law School and Charles Wolfram of Cornell University Law School are prominent among Simon’s targets.

Simon’s piece, due out possibly by mid-June, according to an editor, will appear in Volume 60, Number 6, of the law review. Professor Bruce Green of Fordham School of Law - criticized for one opinion he rendered – will have a nearly 35,000-word response (twice the length of Simon’s article) in the same issue, and Simon will have a short reply.

A draft of Simon’s piece as it looked in December is still available in the SSRN library here; I don’t think I’m authorized to publish a more recent draft, Green’s draft response, or Simon’s draft reply, which Simon and Green permitted me to read in preparation of my article. When Simon’s draft article first appeared online last year, it provoked some discussion on the Legal Ethics Forum blog, catalogued here. 

Note for Scruggs-ologists: My article (or at least Simon’s) may have some added interest for Dickie Scruggs fanatics since Wolfram’s and Hazard’s names should be at least vaguely familiar to them. Hazard served as the Scruggs Katrina Group’s ethics expert when it unsuccessfully attempted to resist State Farm’s motion to disqualify it from hundreds of cases due to Scruggs’ alleged unethical conduct. Wolfram was State Farm’s expert.

In fairness to Hazard, his opinion defending Scruggs and his group was limited to defending their after-the-fact use of documents that may have been improperly obtained by their clients acting on their own. He did not purport to defend bribery of judges; “ear-wigging” of judges; hiring potential fact-witnesses as “consultants”; bullying the state insurance commissioner; bullying the state attorney general; or inducing clients and/or witnesses and/or employees to improperly obtain or photocopy confidential documents and/or gain access to a password-protected database – assuming, for the sake of argument, that any of those alleged activities may have actually occurred. See generally here.

In case you were worried, yes, I still have a job. Seems some of you read recent reports of turmoil at Fortune and, with my conspicuous absence since then, feared the worst. Well, I heart you, too. And while I was actually on vacation and not busy sprucing up my resume, your reaction got me thinking about layoffs and their effect on us Yers.

Along with 9/11, the Columbine school shootings, Hurricane Katrina and the increasingly frightening climate change conversation, the layoffs we watched our parents and their friends go through were formative for us. No wonder, when it comes to our worldview, we’re a wary bunch; we’ve seen enough immediate and unpredictable upheaval to know that we can’t wait too long to live our lives. (Put off that safari or landmark visit too long, a Yer might tell you, and those animals and monuments may not exist when you finally make the time to see them. And by the way, the company where you worked for all those years you could have been traveling may not be there for you, either.)

For those of us who saw our elders give years — even decades — of service to major corporations, only to find themselves suddenly and unceremoniously jobless, corporate America often appears just as scary and unstable (and untrustworthy) as the world at large, if not more so. And whether that’s a fair characterization or not, it certainly doesn’t help when companies operate the way some of those in this New York Times story do — creating a culture of fear and distrust by, among other things, keeping employees completely out of the loop, to the point where a bounced e-mail from a now-former colleague’s work address is the first indication s/he’s gone.

Is it any surprise that Yers are quick to move to the next opportunity — or, to hear some recruiters tell it, be “disloyal”? Could any of us really justify staying “loyal” to a place that we’ve learned could turn us out into the street at any moment, without so much as a farewell e-mail? That sounds a lot more like stupidity than loyalty to me.

And even for those young people who — not being all that expensive anyway — manage to keep their jobs, the trauma of seeing older, experienced staffers get the proverbial boot is enough to drive you to the Peace Corps. Every time I’ve accepted a job, it’s been because I saw a great teacher in some person there, someone whom I knew I’d look forward to learning from every day, and who would help me grow in my own career. Sadly, those almost always seem to be the first people to go. And our so-called loyalty usually goes with them.

Even in my short career — which admittedly has spanned more than a couple organizations, from tiny startup to media titan — I’ve been through a half-dozen rounds of layoffs or more. And let’s just say it hasn’t exactly been an exercise in stellar management. Like when, doing double duty as a writer and the editor’s executive assistant, I had to attend a Thanksgiving party with a group of people I knew would be out of work in a week. (Yet more evidence that it pays to answer the boss’ phone, even if you find out things you’d rather not know.) By the time my boss’ boss started speechifying about how much we had to be grateful for, I was wishing Presbyterians had confession so I could admit to being the worst person on Earth. Talk about disingenuous leadership.

Then there was the time I was traveling for work and couldn’t get my editor to answer some story questions over e-mail. Assuming I’d annoyed him into silence, I practiced my apology speech all the way to his office — only to find the room dark and boxes piled outside. Not, as we say, awesome.

That isn’t to suggest we don’t understand the need for layoffs, or the legal difficulties downsizing companies may face, which can force them to behave in a less than laudable manner. But even if it isn’t an option to share information with employees via e-mail — or bring them up to speed at all — sometimes a simple “hang in there” or quick visit from a manager is all it takes to put a young person’s mind at ease. Without this sort of input or guidance, we only have the soap opera of management handling (or mishandling, as in the cases above) these situations to guide us, which isn’t much of a marketing campaign if you’re trying to retain or develop employees.

Never mind that it doesn’t do much to encourage employees to become leaders themselves. As Tammy Erickson at the Concours Institute notes on her Harvard Business Online blog, Yers aren’t necessarily eyeing the top job. “We were pretty surprised by the number of Y’s who said their boss’ job just didn’t look ‘worth it,’” she writes. Perhaps because it’s more true than ever that we want to reach our own personal best — which means having the best personal life possible, too, and maybe, you know, not having to fire all your friends — becoming CEO isn’t the holy grail it might have been.

So, all that to say, the talk of layoffs got me thinking about how some of those criticisms I so often hear leveled against us — like our “disloyalty” and lack of the “right” ambition — aren’t evidence of some sort of generational deficiency, but an almost direct result of the messages corporate America has sent us. Loyalty’s a two-way street, we’ve realized, and ambition’s only as good as the life it gets you. And if those are the lessons that we finally learn from layoffs, then I say our disloyalty and disdain for the C-suite are really a great testament to our growing common sense. Which ought to make the critics happy, since they keep telling me we need more of that, too.

Thoughts, feelings, rants? Do you guys have similar stories to share, or am I totally off on this one?

In case you were worried, yes, I still have a job. Seems some of you read recent reports of turmoil at Fortune and, with my conspicuous absence since then, feared the worst. Well, I heart you, too. And while I was actually on vacation and not busy sprucing up my resume, your reaction got me thinking about layoffs and their effect on us Yers.

Along with 9/11, the Columbine school shootings, Hurricane Katrina and the increasingly frightening climate change conversation, the layoffs we watched our parents and their friends go through were formative for us. No wonder, when it comes to our worldview, we’re a wary bunch; we’ve seen enough immediate and unpredictable upheaval to know that we can’t wait too long to live our lives. (Put off that safari or landmark visit too long, a Yer might tell you, and those animals and monuments may not exist when you finally make the time to see them. And by the way, the company where you worked for all those years you could have been traveling may not be there for you, either.)

For those of us who saw our elders give years — even decades — of service to major corporations, only to find themselves suddenly and unceremoniously jobless, corporate America often appears just as scary and unstable (and untrustworthy) as the world at large, if not more so. And whether that’s a fair characterization or not, it certainly doesn’t help when companies operate the way some of those in this New York Times story do — creating a culture of fear and distrust by, among other things, keeping employees completely out of the loop, to the point where a bounced e-mail from a now-former colleague’s work address is the first indication s/he’s gone.

Is it any surprise that Yers are quick to move to the next opportunity — or, to hear some recruiters tell it, be “disloyal”? Could any of us really justify staying “loyal” to a place that we’ve learned could turn us out into the street at any moment, without so much as a farewell e-mail? That sounds a lot more like stupidity than loyalty to me.

And even for those young people who — not being all that expensive anyway — manage to keep their jobs, the trauma of seeing older, experienced staffers get the proverbial boot is enough to drive you to the Peace Corps. Every time I’ve accepted a job, it’s been because I saw a great teacher in some person there, someone whom I knew I’d look forward to learning from every day, and who would help me grow in my own career. Sadly, those almost always seem to be the first people to go. And our so-called loyalty usually goes with them.

Even in my short career — which admittedly has spanned more than a couple organizations, from tiny startup to media titan — I’ve been through a half-dozen rounds of layoffs or more. And let’s just say it hasn’t exactly been an exercise in stellar management. Like when, doing double duty as a writer and the editor’s executive assistant, I had to attend a Thanksgiving party with a group of people I knew would be out of work in a week. (Yet more evidence that it pays to answer the boss’ phone, even if you find out things you’d rather not know.) By the time my boss’ boss started speechifying about how much we had to be grateful for, I was wishing Presbyterians had confession so I could admit to being the worst person on Earth. Talk about disingenuous leadership.

Then there was the time I was traveling for work and couldn’t get my editor to answer some story questions over e-mail. Assuming I’d annoyed him into silence, I practiced my apology speech all the way to his office — only to find the room dark and boxes piled outside. Not, as we say, awesome.

That isn’t to suggest we don’t understand the need for layoffs, or the legal difficulties downsizing companies may face, which can force them to behave in a less than laudable manner. But even if it isn’t an option to share information with employees via e-mail — or bring them up to speed at all — sometimes a simple “hang in there” or quick visit from a manager is all it takes to put a young person’s mind at ease. Without this sort of input or guidance, we only have the soap opera of management handling (or mishandling, as in the cases above) these situations to guide us, which isn’t much of a marketing campaign if you’re trying to retain or develop employees.

Never mind that it doesn’t do much to encourage employees to become leaders themselves. As Tammy Erickson at the Concours Institute notes on her Harvard Business Online blog, Yers aren’t necessarily eyeing the top job. “We were pretty surprised by the number of Y’s who said their boss’ job just didn’t look ‘worth it,’” she writes. Perhaps because it’s more true than ever that we want to reach our own personal best — which means having the best personal life possible, too, and maybe, you know, not having to fire all your friends — becoming CEO isn’t the holy grail it might have been.

So, all that to say, the talk of layoffs got me thinking about how some of those criticisms I so often hear leveled against us — like our “disloyalty” and lack of the “right” ambition — aren’t evidence of some sort of generational deficiency, but an almost direct result of the messages corporate America has sent us. Loyalty’s a two-way street, we’ve realized, and ambition’s only as good as the life it gets you. And if those are the lessons that we finally learn from layoffs, then I say our disloyalty and disdain for the C-suite are really a great testament to our growing common sense. Which ought to make the critics happy, since they keep telling me we need more of that, too.

Thoughts, feelings, rants? Do you guys have similar stories to share, or am I totally off on this one?

Merck, the giant pharmaceutical maker, scored two major victories Thursday in its ongoing defense of lawsuits stemming from its Vioxx painkiller. A Texas appeals court overturned one verdict and a New Jersey appeals court partially overturned another. In all, more than $35 million in damages was lifted from Merck’s shoulders. Here’s the AP story.

The court triumphs could help Merck end its Vioxx headache, more than three years after it withdrew the medication after a study showed it increased the risks of heart attack and stroke. Hit with thousands of lawsuits, Merck agreed last year to a $4.85 billion settlement, which is not yet final. Some Vioxx litigants have opted out of the settlement in the hopes of taking their case to trial. Thursday’s decisions suggest that they might be better off accepting a piece of the settlement pie.

The Texas case was the one that kicked it all off in August 2005 – a $253 million verdict that standout plaintiffs attorney Mark Lanier won for Carol Ernst, whose husband had died from a heart arrhythmia while taking Vioxx. That award had already been reduced to about $26 million, under a Texas tort reform law limiting punitive damage awards, but now it’s been thrown out altogether. It’s important to note that the court didn’t order a new trial. Instead, it found the evidence was insufficient to show that Vioxx caused Mr. Ernst’s death, period. Lanier plans to appeal the ruling to the Texas Supreme Court.

In the New Jersey case, an appeals court found the $9 million punitive-damages portion of a $15.7 million verdict awarded to John McDarby in 2006 was preempted by federal law. The court also threw out more than $2 million in attorneys fees that had been awarded to McDarby under New Jersey’s consumer fraud law.

I’m still digesting the 126-page New Jersey ruling, but the preemption part appears to stem from a 2001 U.S. Supreme Court ruling barring state claims based on alleged frauds upon the U.S. Food and Drug Administration. The court also appears to have held that the case was, for all intents and purposes a products liability case, in which the plaintiff can’t typically force the defendant to pay for attorneys fees. The ruling is here. Because the court also rejected many of Merck’s arguments concerning the compensatory portion of the award, Merck has already vowed to appeal those portions of the ruling.

The Texas ruling is not one that automatically spells doom for many other Vioxx plaintiffs. Ernst’s husband died of an arrhythmia, and proof that Vioxx can cause arrhythmias is weaker than proof that it can cause clot-induced heart attacks. Nevertheless, the case does suggest that this Texas appeals court, like the different Texas appeals panel that threw out another large Vioxx verdict two weeks ago, is imposing very high standards for proof of ’specific causation’ — i.e., proof that a plaintiff’s particular heart-related death was actually caused by Vioxx, as opposed to other cardiac risk factors. (The verdict tossed two weeks ago was that of Felicia Garza case, whom the jury awarded $32 million. That had been reduced to about $8 million under the tort reform law, before the appellate court threw the rest out.)

Most Vioxx plaintiffs with cases still outstanding against Merck (MRK) have already indicated a willingness to accept the terms of the $4.85 billion global settlement. But Thursday’s rulings may spur the opt-outs to reconsider.

CARLSBAD, Calif. – The appearance of Yahoo’s Jerry Yang and Sue Decker had to be the most anticipated session of the D conference. The room was standing room only. If you’d like to know every little thing they said in their interview with The Wall Street Journal’s Walt Mossberg, read the liveblog John Battelle wrote from the chair next to me.

For my part, I can’t imagine what the audience took away from this chat. Yang and Decker said next to nothing of value, from a news or any other perspective. They were willing to do a deal with Microsoft. Truly (Yang acknowledged that talks with Microsoft continue.) They’re working on lots of new products. Really. They’re the right people to run Yahoo. Honestly. Yahoo is uniquely positioned as a search and display advertising company. Absolutely.

Yang and Decker insist that the media’s focus has been trained too much on the battle with Microsoft (MSFT) and too little on Yahoo’s (YHOO) strategy, yet they’re not much better than ex-CEO Terry Semel was at articulating that strategy. Mossberg asked, rather long-windedly, what is Yahoo? Yang said Yahoo has to be “incredibly relevant and meaningful to users.” Decker talked, again, about how Yahoo wants to be a “starting point.”

So where is Yahoo going? Alas, it’s hard to say.

CARLSBAD, Calif. – Barry Diller defines the calm, cool, collected CEO. At least on stage, when he’s on his best behavior. He called his recent (successful) litigation with partner Liberty Media a wrenching three-month distraction. Come Aug. 1, he says, IAC (IACI) will complete its split into five companies, including the “new” IAC, a pure Web company.

Diller was more interesting about other people’s businesses than his own. About Hollywood, which he knows well, he said: “It’s a community that’s so inbred it’s a wonder the children have any teeth.” His point is that other than theatrical talent there’s no creativity coming out of Southern California. He expressed dismay that Yahoo (YHOO) let Microsoft (MSFT) walk away and implied that the only way he would have turned down such an offer would be if he knew – and not simply desired – that his business plan would produce a better return.

Diller has been around, so his thoughts on management are illuminating. He said the reason for breaking up IAC is that its more than 50 brands are too much for one company to handle. There’s always trouble somewhere with that many brands, he said. And as a manager, “what you tend to do is go where the trouble is,” as opposed to making trouble, which is far more enjoyable and profitable. Asked his opinion of the digital prowess of the major media conglomerates, he praised only one, News Corp. (NWS)

How do you define Dell (DELL) these days? Listening to Michael Dell speak, I have no idea. Dell himself noted that the company’s former “monolithic” strategy – its famous direct-to-customer manufacturing technique – didn’t work so well toward the end of its run. He cited five areas where Dell missed the boat: consumers, emerging markets, notebook computers, data centers and small- and medium-sized businesses. (Dell is the leader in PC sales to large businesses.) So instead Dell now emphasizes all those things, or at least is trying to. It dabbles in retail. It targets smaller businesses. Its growth has been impressive, but is that over a weak base, what Wall Streeters call an “easy compare?” Perhaps Dell eventually will do many things as well as it used to do one thing. For now, it’s a still a computer maker that spends a tiny percentage of its revenues on R&D ($600 million out of $65 billion in sales) and therefore sells me-too products, though often more efficiently than the competition.

CARLSBAD, Calif. – The cool kids at the D: All Things Digital conference  like to say that the real action is in the hallways, not on stage. That’s mostly true. Still, there are bits of intelligence and insight when the giants of the tech industry subject themselves to interviews in front of a live audience. Some snippets …

Jeff Bezos, CEO of Amazon.com, recently demonstrated his Very Loud Laugh that Josh Quittner amusingly described recently in Fortune. He’s got a lot to laugh about, as Amazon’s (AMZN) business is humming. He spoke at length about the Kindle, Amazon’s electronic book. He says the product will keep getting better and that he hopes Kindle eventually includes a really good Web browser. Bezos was at his best when venture capitalist Stewart Alsop asked why Amazon.com keeps trying to sell him a Kindle even though the Web site knows Alsop already owns a Kindle. “You’ve only bought one,” Bezos shot back.  Bezos broke a small amount of news – that Amazon’s online entertainment store will begin showing ad-supported streams, in addition to its for-fee downloads.

Bobby Kotick, CEO of Activision (and a Yahoo (YHOO) board member) gave a lucid explanation of his company’s acquisition of Blizzard. (He steadfastly said nothing about Yahoo’s non-merger with Microsoft.) The combined video game maker will have revenues of more than $4 billion and operating profits of $1 billion. Blizzard, he said, has the kind of business in massive multiplayer online gaming and a major presence in China and Korea that would have been too expensive for Activision to develop on its own.

Kotick, an amusing fellow with a seemingly thinly repressed naughty sense of humor, turned serious when asked about competition. He thinks Electronic Arts (ERTS), Nintendo, Sony (SNE) and Microsoft (MSFT) are here to stay in the games business, but not much more. He says people underestimate the complexities of running a games business, including how Activision (ATVI) compensates its games developers. He says the company has more than 250 measurements of performance, for example. Twenty percent-plus operating margins are the result, says Kotick. Not bad.

The last speaker of the morning session was the ever-entertaining Howard Stringer, CEO of Sony, who is making gradual progress getting the Japanese giant to think about making money. A classic Stringerism: “As you know, culturally the word profit is not high on anyone’s agenda in Japan.” He says Sony is “halfway up the mountain” of being a proper business. That’s particularly tough in Sony’s unprofitable TV business, given, says Stringer, that it’s still difficult to lay off white-collar engineers in Japan, that televisions are a commoditized business and that the global race for TV marketshare is brutal.

Stringer showed an amazing new product, a 27-inch OLED TV that is 0.3 millimeters wide. Stringer said only that the TV will be “quite expensive” and that it’s not ready for the market. The demo version was encased in glass. It’s fair to say the rich guys in the room salivated over owning one. Oh, he also crowed about Sony’s recent victory in the battle of HD-DVD standards. He says he wish people had focused more on the amazing quality of Blu-ray, Sony’s format, than the format war with Toshiba. He says 4 million Blu-ray players will enter the market in June, which, if he’s right, will spread the Blu-ray love.

CARLSBAD, Calif. – I’m attending the All Things D conference this week in Carlsbad, Calif., north of San Diego. It’s as close as a conference gets to being the Who’s Who of the technology industry. How do I know? When I walked in the door Tuesday evening at the lush Four Seasons Aviara hotel, I immediately spotted IAC (IACI) CEO Barry Diller chatting in the hallway with Howard Stringer, CEO of Sony (SNE). That was after flying down on the same plane as Yahoo (YHOO) President Sue Decker and David Eun, Google’s (GOOG) vice-president for content partnerships. (Decker sat in the first row of the plane; Eun sat in the last; I was in between.) On my way to the room I bumped into a trio of Facebook execs: CEO Mark Zuckerberg, COO Sheryl Sandberg and PR poo-bah Elliot Schrage. On my way to the elevator I traded hellos with Yusuf Mehdi, Microsoft’s senior vice-president for strategic partnerships.

Not impressed yet with the firepower here? Okay, consider the plain folks in the cheap seats around me for the main event of the evening, a joint interview with Bill Gates and Steve Ballmer. A row behind me investment banker Frank Quattrone and VCs Jim Breyer of Accel Partners and Redpoint’s Geoff Yang sat together like three boys in the back of the class. AOL founder Steve case sat a few rows in front of them, just in front of Slide’s Max Levchin. Intuit founder Scott Cook was just behind me.

Oh, yes, there was that interview with Gates and Ballmer. They didn’t say a whole lot, actually. They do a nice buddy act, with Gates playing the Gracie to Ballmer’s Allen. A few highlights … Gates said he remains Microsoft’s (MSFT) largest shareholder. Ballmer is the third largest, with an institution between them. (It is Capital Research.) Ballmer claims not to be frustrated that Microsoft’s bid to buy Yahoo didn’t work out and essentially confirmed there are ongoing talks between the two companies about a partnership that falls short of a merger. Gates was surprisingly candid about the disappointing launch of Vista, Microsoft’s latest operating system. And as I said, other than a handful of yucks, there wasn’t much more to report.

Oh, as I was heading for bed, News Corp. (NWS) CEO Rupert Murdoch was checking into the hotel. Should be an interesting couple days.

What do you think of this year’s list of top MBA employers? Have you worked for any of the companies? Would you want to work for them? Are they a good place to start a career? What should new MBAs consider when deciding where to work after graduation? When starting their first post-MBA jobs? The best replies will be published here, and possibly in a future story on CNNMoney.com.

As another shoe fell Monday in the saga of former tort king Dickie Scruggs – with a federal judge tossing two more of Scruggs’ co-counsel law firms from a case found to have been tainted by Scruggs’ misconduct (see the judge’s order and a previous blog item providing background) – Scruggs’ many nemeses continued to dog his heels, sniffing for still more improprieties and seeking yet more retribution.

Since Scruggs pleaded guilty in March to a federal charge of conspiring to bribe a state judge in Oxford, Miss., in 2007, the big question mark hovering over him has been, of course, the ongoing federal criminal inquiry surrounding whether he tried to bribe a second state judge in Jackson in 2006. (For background, here’s a feature story on the Scruggs affair.)

But in the meantime, State Farm and others for whom Scruggs made life Hell prior to his indictment continue to scour every rabbit trail searching for evidence of additional foul play on his part, large and small. Some of the searches get pretty arcane.

A discovery ruling by a federal magistrate judge on Thursday promises to shed some light on one of the most obscure mysteries that Scruggs-ologists have debated over the past two years: whether Scruggs ever had a third “insider.” (This issue is so obscure, that even Scruggs chronicler David Rossmiller admitted not previously having known about it, which is like Phil Schaap admitting that he’d never known about a surviving Charlie Parker acetate.)

In his post-Hurricane Katrina assault upon the insurance industry (again, for background, see here), Scruggs was famously assisted by two insiders working in State Farm’s Gulfport “cat” (for catastrophe) office, Cori and Kerri Rigsby. (A separate tempest rages about precisely when Scruggs began teaming up with the sisters – was it December 2005, as most Scruggs-ologists suspect, or was it not till February 2006 as the Rigsbys and Scruggs have steadfastly insisted – but we put that aside for another day.)

The notion that there may have been a third insider was born at 2:45 p.m. on April 5, 2006, when Bloomberg terminals around the country lit up with an otherwise unprepossessing story, co-bylined by Jesse Westbrook and Laurence Viele Davidson. It was about the grand jury investigation Mississippi attorney general Jim Hood had commenced to look into State Farm’s post-Katrina claims-handing practices. The ninth and tenth paragraphs (or tenth and eleventh paragraphs in the 5:30 p.m. update) read as follows:

“Scruggs said in an interview on March 30 [2006] that he plans to share [with Hood] documents from a ‘highly placed’ State Farm source. He had flown to Bloomington a week earlier to pick up a package from the source.

“‘They gave me a bunch of good stuff and I’m going through it now and turning it over to the attorney general,’ he said. State Farm’s [Fraser] Engerman declined to comment.”

The notion that Scruggs had a third insider located in Bloomington, Illinois – i.e., State Farm’s corporate headquarters – is one that Scruggs does not appear to have ever floated again in any context, be it media appearance or court filing. Scruggs-ologists have wondered, therefore: Had Scruggs just made this story up out of whole cloth, as some sort of psychological warfare gambit? Was he was hoping to psych State Farm out or to coax genuine potential whistleblowers to come out of the woodwork? Or had there really been a third insider? Or had there been static over the phone line, resulting in a reporter’s having simply misunderstood what Scruggs had been saying? (An email sent yesterday to Scruggs’ lead attorney John Keker was not returned, nor was one to Bloomberg reporter Westbrook; an email to Bloomberg reporter Davidson triggered an on-vacation auto-response.)

There is no question that Scruggs believed in psychological warfare. His Scruggs Katrina Group actually went so far as renting a billboard near State Farm’s headquarters in Bloomington, from May to July 2007, to carry the message that “Katrina only destroyed homes. Big insurance has destroyed hope.” (A story about the billboard was carried in the May 24, 2007, issue of the [Bloomington, Illinois] Pantograph, available for a fee at the Pantograph’s web site.)

Back in January, in one of the policyholder cases that Scruggs had filed against State Farm prior his indictment, State Farm issued subpoenas to Scruggs seeking a variety of documents in his possession, including those that he had referenced in the Bloomberg interview of March 30, 2006. Scruggs initially refused to provide them, objecting on relevance and attorney-client privilege grounds “to the extent that they were provided by individuals who are [his] clients or former clients.”

On Thursday, however, a federal magistrate rejected Scruggs’s arguments and ordered any documents responsive to the request to be produced. So Scruggs-ologists may yet be getting an answer shortly to this admittedly less-than-earthshaking, yet tantalizing, little mystery.