Sex abuse lawsuits against Buffalo Catholic parishes remain on hold

Buffalo News [Buffalo NY]

January 10, 2024

By Jay Tokasz

Child Victims Act lawsuits against area Catholic parishes and schools will remain on hold through mid-April or until 20 days after the U.S. Supreme Court rules on a pivotal case that could have a major impact on the future direction of the Buffalo Diocese’s Chapter 11 reorganization.

Chief Judge Carl L. Bucki of U.S. Bankruptcy Court in the Western District of New York said the pause in litigation was necessary to consider more fully whether a diocese reorganization plan can protect parishes, schools and other affiliated Catholic entities from sex abuse lawsuits.

Many dioceses in previous bankruptcy cases relied on a legal process called a channeling order, in which their parishes and schools were released from liability in state courts, in exchange for them making significant contributions to a victims settlement fund.

The Buffalo Diocese bankruptcy appeared from the beginning in 2020 to be heading in the same direction.

But a bankruptcy case involving pharmaceutical company Purdue Pharma now at the Supreme Court has called that strategy into question.

In the Purdue Pharma case, the U.S. Court of Appeals 2nd Circuit ruled in August that a bankruptcy court has the authority to approve a Chapter 11 reorganization plan with a channeling order, even in instances where some claimants object to the arrangement.

The Supreme Court agreed to consider an appeal of that case and heard oral arguments in December.

The Buffalo Diocese bankruptcy case has proceeded since 2020 under a series of temporary court-ordered injunctions that put on hold state court litigation against parishes and schools for sex abuse claims.

The Official Committee of Unsecured Creditors, which represents claimants who say they were sexually abused by priests and other diocese employees, agreed to the past stay extensions to allow for mediation, but it is opposing the diocese’s latest request for a temporary injunction.

The committee’s lead attorney, Ilan D. Scharf, argued in court that the bankruptcy was taking too long to resolve and allowing some litigation against parishes in state courts would help speed up settlement talks.

A group of about 40 plaintiffs represented by the firm of Lipsitz Green Scime Cambria has also been pushing from the start of the bankruptcy to proceed with its lawsuits against parishes and schools. Lawyers for those plaintiffs have said repeatedly that their clients aren’t interested in being part of a bankruptcy settlement and would rather move forward with litigation.

Under Bucki’s decision late Tuesday, the lawsuits against parishes and schools will continue to be on hold until April 15 or 20 days after the Supreme Court ruling, whichever comes first.

Bucki commented in a written decision that a Supreme Court reversal of the 2nd Circuit ruling in the Purdue Pharma case could throw a wrench into the diocese’s plans and impact his future decision-making on granting requests for temporary stays.

The result, the judge said, “might severely diminish any likelihood that the Diocese could confirm a plan that provides a nonconsensual channeling order for the benefit of parishes and affiliates.”

A renewed stay of the litigation against parishes also was not “inevitable” if the Supreme Court affirmed the lower court ruling, Bucki added.

The justification for the stay “will surely begin to evaporate if the debtor procrastinates in working toward a global and just settlement,” Bucki wrote, quoting from his own decision in 2021.

The 2nd Circuit ruling in the case of Purdue Pharma, makers of the opioid Oxycontin, reversed a U.S. District Court judge’s finding that federal law did not allow the releases from liability granted to members of the Sackler family as part of the company’s bankruptcy reorganization. In exchange for the releases, the Sacklers had agreed to provide $4.5 billion toward a settlement of more than 800 Oxycontin abuse and overdose lawsuits.