PHILADELPHIA (PA)
Reuters [London, England]
November 6, 2024
By Dietrich Knauth
A U.S. appeals court panel on Wednesday appeared unlikely to overturn the Boy Scouts of America’s $2.46 billion settlement of sex abuse claims, suggesting it would be impractical to upend the deal long after the youth organization emerged from bankruptcy.
A three-judge panel of the 3rd U.S. Circuit Court of Appeals in Philadelphia heard oral arguments in appeals of a 2022 bankruptcy court ruling approving the deal, which resolved the claims of 82,500 men who alleged that they were sexually abused by troop leaders as children.
The settlement has been challenged by 144 sex abuse survivors and a minority of the youth organization’s insurers. The abuse survivors have argued that they should be allowed to sue organizations, like local Boy Scouts councils and churches, that ran scouting programs where abuse occurred. Those organizations received immunity from lawsuits in exchange for contributions to the Boy Scouts’ bankruptcy settlement, despite not filing for bankruptcy themselves.
Delia Lujan Wolff, an attorney for 75 survivors, argued that since the U.S. Supreme Court clearly ruled against that type of release of liability for non-debtors in an appeal of OxyContin maker Purdue Pharma’s bankruptcy, the Boy Scouts shouldn’t be able to protect organizations that ran scouting programs where abuse occurred, like the Catholic Archdiocese of Agana in Guam.
Lujan Wolff argued that the Boy Scouts settlement could be unwound, because only a small amount of the settlement funds had been paid.
“Nobody can bargain away my clients’ claims without their consent, not even other survivors,” Lujan Wolff said.
The judges’ probed the practical impact of re-opening the Boy Scouts bankruptcy and sending it back to the drawing board.
“All the money gets returned and now there will be suits left and right against the institutions, the local chapters,” U.S. Circuit Judge Marjorie Rendell said. “It’s going to implode, is it not?”
Attorneys for the Boy Scouts of America, as well as insurers and abuse survivors who support the deal, said that upending the settlement would have devastating emotional and financial consequences.
The Boy Scouts organization said that it would have to demand money back from abuse claimants who had only just begun receiving settlement money decades after being abused. It would also be unable to recover assets – like real estate contributed by its local councils – that had been sold to fund the settlement.
Evan Smola, an attorney representing abuse survivors who support the deal, said that overturning the settlement would cause “devastation” for tens of thousands of claimants who “tore away the scar tissue and faced their abuse head on” during the bankruptcy proceedings.
Abuse survivors submitted detailed descriptions of their abuse during the bankruptcy, sometimes being questioned for hours so that bankruptcy professionals could “dissect their abuse” and evaluate what they should be paid, Smola said.
Supporters of the settlement said the Supreme Court’s Purdue ruling did not apply to already-approved cases, like the Boy Scouts bankruptcy. They said the court could also uphold the deal under a judicial doctrine of “equitable mootness,” which prevents the unwinding of bankruptcy settlements when it would be unfair to do so.
The Boy Scouts filed for bankruptcy in February 2020 after several U.S. states enacted laws allowing accusers to sue over decades-old abuse allegations.
The case is: In re: Boy Scouts of America, U.S. Court of Appeals for the Third Circuit, No. 23-1664.