Veteran mediator tapped in Archdiocese of New Orleans bankruptcy. Is a turning point coming?

NEW ORLEANS (LA) [New Orleans, LA]

February 29, 2024

By Stephanie Riegel

John W. Perry, a seasoned and highly respected mediator of complex litigation in Louisiana, has been tapped to help the parties in the long-running Archdiocese of New Orleans bankruptcy case work towards a settlement — a development that could signal a turning point as the case approaches its fourth anniversary.

U.S. Bankruptcy Judge Meredith Grabill appointed Perry on Wednesday, following an hour-long hearing during which attorneys for the archdiocese, survivors of clergy sex abuse, and trade creditors exhibited a rare moment of solidarity.

“He is the man we all wanted,” said attorney Douglas Draper, who represents the archdiocesan affiliates — parishes, schools and charitable organizations.  “That is unprecedented in the case.”

Perry’s appointment comes nearly four years after the nation’s second-oldest archdiocese filed for Chapter 11 bankruptcy court protection amid mounting claims of child sex abuse by local clergy. Since the May 2020 filing, more than 500 claims have been submitted, many of which date back several decades. A settlement is expected to cost well in excess of $100 million.

Legal and other professional fees, meanwhile, have cost the archdiocese more than $30 million to date and counting.

On Wednesday, lawyers involved in the case signaled they still have a long way to go before they finalize a plan that will spell out how much abuse survivors will receive. Once they do, they will still need to negotiate with church insurance companies over how much of the tab — if any — insurers are willing to pay.

“We have a very small window, and it will be important to have a mediator who is available and can get these parties to a place where, perhaps, they haven’t been,” said Rick Kuebel of Locke Lord, which represents trade creditors.

A lack of progress

Perry is not the only mediator in the case. Two years ago, Grabill named U.S. Bankruptcy Judge Gregg Zive of Nevada as mediator. But Zive, who is in his late 70s, has had health problems, according to statements by attorneys in court Wednesday. They also referred to challenges with his “access and availability” dating back several months.

In December, frustrated by the slow pace of progress, Grabill asked attorneys if they wanted an additional mediator. At the time, they said no. But in mid-February, the archdiocese and the committee representing abuse survivors filed a rare joint motion requesting Perry’s appointment.

“It speaks volumes to who Mr. Perry is and his reputation that we have almost unanimous buy-in to adding this particular mediator,” Grabill said. “I’m thrilled that you changed your mind and said you wanted an additional mediator and you happened to have a good one.”

Archdiocese attorney Mark Mintz told the court that Zive had been notified of the move to appoint Perry, who is not replacing him but working with him. It is unclear how the two will divide the workload.

Sign of hope

Perry, a Baton Rouge attorney and founder of Perry Dampf Dispute Solutions, has helped resolve some of the highest-profile cases in the state, including the BP Deepwater Horizon Oil Spill case, Chinese drywall litigation and, most recently, a spate of civil suits over the Hard Rock Hotel collapse.

Attorney Jay Meuniere, who represents some of the abuse survivors in the case, worked on the Chinese drywall case with Perry and said the mass tort litigation involving numerous plaintiffs, multiple defendants and the Peoples Republic of China was one of the most difficult cases he’s ever seen.

“Mr. Perry consistently proved his ability to meet those challenges,” said Meuniere. “Any concerns are more than offset his record, his objectivity, his even-handed analysis.”

Attorneys not involved in the case see Perry’s involvement as a sign of hope for a thorny case that has been bogged down by questions about the church’s willingness to turn over information, concerns about conflicts of interest on the federal bench, and a lawsuit over a leak to the media.

“John has the capacity and ability to understand insurance issues, legal relationships and practical relationships,” said Walter Leger Jr., who represents the plaintiffs’ committee in the ongoing Hard Rock Hotel collapse civil litigation. “He is the guy to go to in big complicated cases.”

One objection

Perry’s appointment was opposed by one of the archdiocese’s insurance companies, U.S. Fire. The company has repeatedly claimed in court filings and hearings that it is being left out of settlement talks between the church and abuse survivors.

The request to appoint Perry was yet another example, company officials argued, of how they are being excluded.

The company has argued that it is concerned the two sides will agree on a settlement, and then try to pressure the insurers to help pay for it. In some church bankruptcy cases, insurers have rejected settlement plans and put forth their own plans.

Grabill was not swayed by the company’s argument.

U.S. Fire has relatively modest exposure compared to other church insurers, like Traveler’s Insurance, which did not object to Perry’s appointment.

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