A Bay Area Catholic diocese filed for bankruptcy in wake of hundreds of sex abuse lawsuits

San Francisco Chronicle [San Francisco CA]

May 8, 2023

By Roland Li

The Roman Catholic Diocese of Oakland filed for bankruptcy Monday as it confronts more than 330 lawsuits over alleged sexual abuse of children by the clergy dating back decades.

“After careful consideration of the various alternatives for providing just compensation to innocent people who were harmed, we believe this process is the best way to ensure a fair and equitable outcome for survivors,” said Bishop Michael Barber in a statement. “Given our current financial resources, (the Roman Catholic Bishop of Oakland) could not shoulder the burden of litigating 330 cases.”

Bankruptcy “can provide a way to support all survivors in their journey toward healing in an equitable and comprehensive way,” he wrote in a public letter in March.

“We have limited cash reserves, and insurance may cover some of the claims,” the diocese said on its website. “We are also exploring the potential sale of assets that are underutilized or may not be critical in carrying out the mission of the Diocese.”

The diocese will continue to operate, and employees and vendors will continue to be paid during the bankruptcy filing in the United States Bankruptcy Court for the Northern District of California. The diocese’s dozens of Catholic school affiliates are separate legal entities and will continue to open normally, the diocese said.

Most of the lawsuits, which were filed between 2019 and 2022, involve allegations of abuse that date back to the 1960s, 1970s and 1980s, according to the church. As of March, three lawsuits were linked to alleged abuse that occurred over the past two decades. 

The diocese is a tax-exempt corporation and has assets estimated to be worth between $100 million and $500 million, and estimated liabilities between $100 million and $500 million, according to bankruptcy filings. There are between 200 and 999 creditors, with the largest 20 being unidentified lawsuit plaintiffs, each owed an undetermined amount of money.

A 2019 state law, AB218, temporarily lifted the statute of limitations on civil lawsuits against any institution accused of enabling abuse, leading to hundreds of new filings in the past three years.

Numerous California dioceses are now grappling with the financial fallout. The Diocese of Santa Rosa filed for bankruptcy protection in March, similarly because it said it did not have money to settle more than 150 child sexual abuse lawsuits. The Sacramento and San Diego dioceses are also considering bankruptcy.

Barber, the Oakland bishop, was the lead plaintiff in an unsuccessful challenge to AB218 that was rejected by the U.S. Supreme Court last year. The Supreme Court denied review of the bishops’ appeal without comment.

California bishops had argued the law violated a ban on new punishments for past acts, and their lawyer said the law would be “potentially ruinous liability.”

Established in 1962, the Oakland diocese has roots dating to its first parish in 1797, Mission San José in present-day Fremont. The church’s membership spans around 550,000 Catholics across Alameda and Contra Costa counties, with its headquarters at the $175 million Cathedral of Christ the Light near Lake Merritt in Oakland, which opened in 2008.

Beyond the lawsuits, the diocese said it faces declining attendance after the pandemic and an aging clergy. Oakland mass attendance was down 42% in 2021 compared with 2019, and Barber appointed a task force in 2021 to examine challenges, which has led to the merger of parishes.

As of 2018, the diocese had 45 priests, 110 deacons and 455 religious brothers and sisters in 82 parishes and 11 pastoral centers, with over 45,000 students across 41 elementary schools, eight high schools and two Catholic colleges.

In 2005, the diocese settled lawsuits with 56 victims for a total of $56 million, with individual settlements ranging from $200,000 to more than $2 million. The settlement resolved all litigation against the diocese at the time. That wave of litigation also came after California temporarily lifted the statute of limitations.

The Oakland diocese has a review board that assesses sexual abuse allegations and an Office of Victims Assistance that provides counseling and support for victims. The diocese also has a training program to prevent child sexual abuse.

“It is important we take responsibility for the damage done so we can all move beyond this moment and provide survivors with some measure of peace,” Barber said in a statement. “Sadly, for many, the pain caused by these horrific sins, no matter when they occurred, will never wash away, which is why we offer support to survivors and pray for their continued healing.”

Dan McNevin, leader of the Oakland branch of nonprofit Survivors Network of those Abused by Priests, criticized the bankruptcy practice, which shifts claims by sexual abuse victims to bankruptcy court rather than civil litigation.

“These bankruptcy actions are really designed to stiff-arm survivors by limiting their options in court,” said McNevin on Sunday, before the Oakland filing. “When bankruptcies are declared, it’s about freezing discovery and really focusing on money.”

“It’s about secrets and keeping money away from survivors who have been harmed and really deserve reparations and deserve justice,” he said. “It’s disappointing.”

The church said in March that Chapter 11 bankruptcy protection “allows all claimants equal access and an equitable share in the assets available to pay claims” and is “a court-sanctioned, public and transparent process” that gives victims a say in the process.

McNevin believes the Diocese of Oakland has plenty of real estate holdings across the East Bay that could be sold to compensate victims and a bankruptcy is unnecessary. He expects lawyers for victims to challenge the bankruptcy filing. He also wants state lawmakers and California District Attorney Rob Bonta to investigate the issue, though the bankruptcy filings were made in federal court.

“This is a business model for them,” he said. “When all else fails and they’re going to face justice, they declare bankruptcy.”

McNevin was part of the 2005 settlement between victims and the Diocese of Oakland. He said a pastor, James Clark, sexually abused him when he was an altar boy in Fremont in the late 1960s and 1970s.

In 2019, the Diocese of Oakland published the names of 45 priests and other members of the clergy and staff who have “credible accusations of sexual abuse of minors,” which included Clark, who died in 1989.

Barber said at the time that no priests or deacons who are active in the ministry have credible allegations of abuse of a minor.

During the last three years, around 10 more of Clark’s alleged victims have come forward and sued, McNevin said.

McNevin said he was 43 when he went public and informed church officials, and it can take decades for victims to come to terms with their trauma.

“Most people who come forward are in middle age,” said McNevin, who wants the hundreds of lawsuits to proceed in civil court and go through discovery, rather than ending up in bankruptcy court.

“This is the victims’ opportunity to have an equal say in the process. He or she was powerless as a child. The bankruptcy process takes it away from them,” he said.

Reach Roland Li: roland.li@sfchronicle.com; Twitter: @rolandlisf