US Supreme Court Justice Samuel Alito has thrown a wrench into the complex apparatus created to oversee the payment of settlements to more than 80,000 sexual abuse survivors that will delay the conclusion of the largest settlement in the history of sexual abuse.
In a move that imperils the Boy Scouts of America’s (BSA) ongoing bankruptcy proceedings, the United States Supreme Court has temporarily suspended operations of the Scouting Settlement Trust.
The trust was established on April 19, 2023, from the Chapter 11 bankruptcy of BSA to fairly, consistently, and efficiently evaluate survivors’ sexual abuse claims.
This unprecedented decision, made on Friday, February 16, has put a pause on the issuance of payments, the evaluation of claims questionnaires, and the staff’s ability to respond to queries from claimants or their legal representatives.
The administrative stay, ordered by Alito, comes as a response to challenges raised by ex-scouts contesting a settlement trust designed to compensate victims of sexual abuse. The stay effectively halts the Chapter 11 case until the full Supreme Court can deliberate on the matter.
Alito, one of the top court’s conservative justices known for right-wing leanings that often encompass libertarian ideals, was born in Trenton, New Jersey on April 1, 1950.
Alito accepted a luxury vacation from Republican billionaire megadonor Paul Singer, didn’t disclose it, and then ruled on a case in his favor, earning Singer’s hedge fund a $2.4 billion payout.
At the heart of the legal tussle is the Boy Scouts’ bankruptcy plan and the creation of the Settlement Trust, which aims to address claims of childhood sexual abuse within the organization.
Opponents of the settlement argue that it should wait until the Supreme Court decides another case involving a substantial bankruptcy settlement related to opioid abuse claims.
The dispute centers on provisions within the Boy Scouts’ bankruptcy plan that seek to absolve liability for affiliates not directly involved in the restructuring process.
Alito’s order freezing the settlement gives the court more time to decide on a Feb. 9 request by abuse claimants who want to block the settlement from moving forward.
The critics argue that the deal unlawfully prevents them from pursuing lawsuits against organizations that are not bankrupt, such as churches that ran scouting programs, local Boy Scouts councils, and insurers that provided coverage to the organization.
They have argued, among other things, that non-debtors should not be allowed to escape further liability for child sexual abuse by contributing to the settlement trust would violate their due process rights.
Supporters of the $2.46 billion settlement assert that these releases are vital for the efficacy of the proposed plans.
Kennedy, an abuse survivor and co-chair of the official victims committee, called the delay a “horrible” result. Survivors have already waited for decades for their abuse to be addressed, and 86% of abuse survivors voted to support the Boy Scouts settlement in bankruptcy court, Kennedy said.
“There was finally a light at the end of the tunnel, and now this has been yanked away from them,” said Kennedy.
The trustee in charge of administering the Boy Scouts settlement, retired bankruptcy judge Barbara Houser, said Alito’s order will suspend all work on the settlement, including evaluating claims and mailing checks to abuse survivors. The settlement trust has already paid nearly $8 million to more than 3,000 men.
However, the legal landscape is further complicated by ongoing considerations within the Supreme Court regarding the broader implications of bankruptcy courts approving such releases.
This debate is highlighted in Harrington v. Purdue Pharma, a case involving a settlement against the maker of OxyContin, which includes releases against the Sackler family, owners of the pharmaceutical giant.
As the legal saga unfolds, the fate of thousands of abuse survivors seeking redress through the bankruptcy proceedings remains uncertain. While the Trust’s operations are temporarily suspended, the Trustee has pledged to uphold the integrity of its diverse assets during this period. Notably, funds paid by Claimants to participate in the Independent Review Option are safeguarded and identified within the Trust’s records.
The Supreme Court’s intervention adds another layer of complexity to an already contentious bankruptcy process. With tens of thousands of abuse claims filed against the BSA, the resolution of this case holds significant implications for survivors, the organization itself, and the broader legal landscape surrounding mass-tort litigation.
In response to the Supreme Court’s decision, the Boy Scouts expressed hope for a swift resolution, emphasizing the importance of preserving the organization’s mission while ensuring justice for survivors.
However, critics argue that the legal maneuvering underscores fundamental flaws within the bankruptcy process and raises questions about the protection of victims’ rights.
As the Supreme Court deliberates on the fate of the Boy Scouts’ bankruptcy plan, the future remains uncertain for all parties involved.
This legal battle will not only shape the course of the Boy Scouts’ restructuring but also set a precedent for future mass-tort litigations and the protection of abuse survivors’ rights in bankruptcy proceedings.
Law firms are expected to take roughly 40% of any payments from the $2.4 billion trust fund established for abuse survivors.
After it accumulated files that contained sexual abuse complaints from parents, counselors, pastors, leaders, and families, BSA began compiling reports of volunteers who were ineligible to serve due to claims of abuse as far back as 1920.
The Perversion Files had been sealed in BSA national headquarters, gathering dust, and hidden from the public until 2010, when an Oregon judge made a ruling to make such records public.
The Perversion Files demonstrated that BSA had known about repeat offenders for years but did little to nothing to protect children.
Some correspondence suggests that the boys were blamed for their participation in the abuse. Reading the Perversion Files is heartbreaking and tragic, it shows the need for youth safety measures that became a central pillar of the reorganization plan.
As a result of thousands of complaints in the Perversion Files, the Boy Scouts faced mounting liability stemming from decades of mismanagement of child sexual abuse, and in the face of dozens of states opening up windows for previously expired statutes of limitation, Boy Scouts filed a petition for Chapter 11 bankruptcy protection in February 2020.
Over eighty thousand individual sexual abuse survivors filed claims in the bankruptcy.
Those claims span over one hundred years of sexual abuse committed by various volunteers and agents within BSA, which had woefully inadequate protections for its scouts until 1988 when it established a common sense no-alone contact rule between adults and children.