Creditors Committee Chair for Milwaukee Archdiocese Bankruptcy Disputes Settlement Outline

By Marie Rohde
National Catholic Reporter
August 10, 2015

http://ncronline.org/news/accountability/creditors-committee-chair-milwaukee-archdiocese-bankruptcy-disputes-settlement

The chairman of the creditors committee for the Milwaukee archdiocese bankruptcy said the outline of the settlement released this week does not match his understanding of what was in the agreement and that neither he nor the other victims on the committee can support it in its present form.

“It makes me feel like I was duped in mediation,” said Charles Linneman, chairman of the committee, adding that on Aug. 6, the committee discussed the version released by the archdiocese two days earlier and concluded “what they announced was not what we agreed to.”

Linneman contends that the archdiocese’s Aug. 4 statement outlining the key points in the settlement does not match what the creditors committee agreed to during the mediation. The committee had gotten nothing in writing and were not given copies of the statement before it was released.

“I didn’t even know it was coming out,” Linneman said. “I didn’t know anything about it until I started getting calls from survivors.”

Whether his concerns are addressed in a final proposal and whether they will make any difference in whether the bankruptcy is approved Nov. 8 as scheduled is unclear. Even if a majority of the creditors vote against the plan, U.S. Bankruptcy Judge Susan V. Kelley can approve it, something known in bankruptcy court as a “cram down.”

Linneman said he has asked lawyers for the victims to hold the archdiocese to what the committee believes was in the agreement made during the July 15-17 mediation, attended by lawyers for both sides, the committee and mediator Paul Finn. All the lawyers involved in the case initially supported the proposal, some reluctantly.

If Linneman’s changes are accepted by the archdiocese, they would not increase the total amount of money in the pot for all victims; it would just increase the number who would be eligible for a $2,000 settlement.

According to the archdiocese’s statement, the plan sets aside $21 million to compensate 330 victims of clergy sex abuse. Some of that money will go to state court lawyers. Linneman said all but about 100 of those who filed claims are not represented by state court lawyers who will get 30 to 40 percent of the award given to those victims.

The archdiocesan statement said that the committee of claimants elected to set aside a portion of the award for a group of 92 claims that the archdiocese deemed unsubstantiated and ineligible for payment by the archdiocese. According to Linneman, at least 80 others should have been included in the category of those that would receive $2,000 if they agreed to release the archdiocese from future claims.

Instead, those 80 are part of another category that eliminates all payments for 157 claims. Those claims were excluded for a variety of reasons according to the archdiocese’s statement, including that they had lawsuits that had been dismissed earlier; were not claims of sex abuse or the specific abuser could not be identified; or that the claims were filed by individuals who had earlier received settlements from the archdiocese.

Linneman told NCR that the committee only agreed to exclude the claims of some of those that had received prior settlements. Many of those awards were larger than the average that will be paid to claimants in the bankruptcy.

“Prior litigation was never a factor in what cases would be included or excluded,” he said. “That never came up during the mediation.”

Linneman also said he fought for some who had signed releases after getting small settlements years earlier. As an example, Linneman said he insisted that a deaf man who had been abused as a child and who had gotten $5,000 from the archdiocese earlier would be included in the group that would get the $2,000 settlement.

Among those excluded from any settlement is Monica Barrett, a woman who said she was raped in the 1960s by Fr. William Effinger when she was 8-years-old. There were other allegations against Effinger and he was eventually convicted of sex abuse of a minor and died in prison. Barrett brought a civil lawsuit in state court but the case was dismissed after a 1995 Wisconsin Supreme Court decision that the church could not be sued to for negligent supervision of its priests based on the First Amendment. In 2007, the state high court opened the door to some lawsuits saying the church could be sued if the officials knew a priest was an abuser and did nothing to protect victims.

She said she did not reopen her lawsuit in state court and did nothing until she was approached by lawyers for the archdiocese who suggested she file a claim in the bankruptcy through them. She said she did not trust the archdiocese and opted to be represented by Jeff Anderson, a Minnesota lawyer who represents many of the victims. Eventually the archdiocese successfully argued in bankruptcy court in 2015 that her case should be dismissed. She accused the archdiocese of singling out the victims who had been the most outspoken.

“Anybody who spoke out against the archdiocese was targeted,” Barrett said. “All of those who brought lawsuits in the 1980s and 1990s were targeted.”

Linneman agreed with Barrett, saying “the archdiocese has a history of being vengeful with a lot of survivors.”

He said the committee was also critical of the archdiocese being able to decide who would be paid and who would not, noting that many of the claims of those excluded were only investigated by the archdiocese. The names and claims of most of the victims are not publicly available and Linneman noted that in other church bankruptcies an administrator selected by both sides makes those decisions.

Originally, there were 579 claims but nine were withdrawn. Adding the 330 victims who will receive compensation to 92 who will get $2,000 if they agree to sign off on the deal, leaves 157 who will receive nothing.

Claimants have said the amount set aside by the archdiocese is less than others have received elsewhere.

A statement put out by the Survivors Network for those Abused by Priests criticized the Milwaukee proposal saying that if all 330 got an equal payment — and they will not — the average payment will be less than $44,000. They cited the online watchdog group, BishopsAccountability.org, as saying that previous settlements netted about $300,000 per victim.

Linneman said the creditors committee is unaware of the details of the claims of those abused filed with the court because of secrecy agreements.

The bankruptcy lawyers for both the archdiocese and the creditors will receive $19.75 million, according to the archdiocese, but who gets what has not been listed. Lawyers representing the $57 million Cemetery Trust Fund, which the archdiocese tried to exclude from the bankruptcy assets, will be paid separately. Jerry Topczewski, a spokesman for the archdiocese, said it is unfair to include those legal fees in calculating the total legal fees for the bankruptcy but those on the other side disagree.

Linneman also objects to the archdiocese being able to decide which victims are in and which ones are out with no outside investigation as was done in other dioceses.

“They [the Milwaukee archdiocese officials] are trying to be judge and jury and they have a reputation of being vengeful and punitive with us,” he said. “That’s why we have been fighting for five years.”

The creditors committee wanted to maintain control over which victims would be compensated but the archdiocese refused to budge on that point, he said. “For them, if we did not agree to it, the deal was off the table,” he said.

The committee did not like the deal — they wanted more money for victims — but agreed because they were told that the archdiocese would try to have more victims removed from the settlement and that the costly litigation could continue, resulting in far less money for the group in the end, as little as $5 million.

Linneman said most of the victims are unaware of his concerns with the proposed settlement but if they were “most would not be in favor of taking it while other victims are getting shafted,” he said.

[Marie Rohde is a Milwaukee-based journalist and frequent contributor for NCR.]