My UNLV colleague, Nancy Rapoport, sent me In re: The Roman Catholic Bishop of Sacramento, a decision written by Bankruptcy Judge Christopher Klein, who sits in the Eastern District of California. It is a smart decision. It is beautifully written. This judge allows abuse survivors to speak in the bankruptcy court even though the insurers said allowing the survivors’ comments would be illegal.
I regularly tell Professor Rapoport that churches use bankruptcy to avoid their liability to survivors of sexual abuse. Bankruptcy stalls their abuse lawsuits. It drags out the proceedings, perhaps making survivors less willing to keep filing their lawsuits. Some of the survivors are old enough to get sick and die. Can the church outlast the survivors of abuse? Sometimes I think yes, especially due to bankruptcy law.
Fortunately, this time Professor Rapoport and Judge Klein showed me bankruptcy courts will listen to abuse victims and hear their painful messages.
The Background
As the name suggests, this case is about California’s Sacramento Diocese. The bankruptcy court is in the Eastern District of California. Survivors of abuse asked the bankruptcy court “to afford sex abuse victim-claimants the option of personally telling the Bishop, in the Court’s presence, how the various abuses have affected their lives.” The Bishop’s insurers protested, saying that bankruptcy courts and the judge did not have the power to hold such a hearing.
Judge Klein ruled the survivors could speak. At the beginning, he says the “opposition evinces stunning ignorance of basic judicial powers. Moreover, why the insurers object is a puzzle.” That is a strong statement in the second paragraph of the opinion.
Klein powerfully reminds readers that he was involved in the Bishop of Stockton, California’s, 2014 bankruptcy, where he heard the emotions expressed by a few victims of abuse. “That experience (perhaps the most poignant day in this judge’s 37 years in office) illustrated the inadequacy of the chapter 11 process in bringing closure to victims without having such an opportunity.”
What was inadequate about those proceedings? Human dignity requires survivors be heard. Money is not enough to end their abuse trauma. “[P]rofound human, psychological, and spiritual aspects of church sex abuse cases transcend tort damages.”
The Reasoning
Nonetheless the insurers argued the victims’ testimony is not permitted in bankruptcy.
Klein rebutted them repeatedly. Why isn’t it to the insurers’ advantage to have the claims asserted now, “so that there is no residuum of stragglers who might have to be dealt with after the chapter 11 case ends”? He notes the Bishop’s insurers are “now basking in the shelter of the automatic stay.” Bankruptcy stays all those abuse cases. Without bankruptcy, insurers would instead be spending lots of money for the Bishop’s defense in the stalled state cases.
Moreover, the insurers “have sought to cadge as much information as possible about the individual plaintiffs while they are enjoying their free ride on the automatic stay.” Cadge is not a word I see very often, but it makes the point. In other words, the insurers were trying to get much more information about the plaintiffs, which would usually be part of tort litigation, and so is giving the insurers free discovery. They had the stay on their side, but wanted to subject the victims to pre-tort tort litigation.
Judge Klein then makes clear the bankruptcy court is not the trier of fact. It will be the state’s judge who later makes the decisions about tort law, once bankruptcy is over. Judge Klein is not trying the facts of the victims’ claims.
Then he adds it is “nonsense” for the insurers to say bankruptcy cannot allow survivor statements. The statements are not testimony. They are not made under oath or penalty of perjury. Their credibility is not at issue in bankruptcy. The rules of bankruptcy allow “various conferences and similar sessions that are neither trials nor hearings to be done in chambers or elsewhere on or off the record.” These are pretrial proceedings that a bankruptcy judge can hold.
The Conclusion
The conclusion is these survivors’ statements will not be on the record. They will be held in a private setting, and will not be recorded. This “listening session” will not run longer than two and a half hours, and will not have responses. Invited are victims who wish to speak, the Victims’ Committee counsel, the Bishop, and the Bishop’s Chapter 11 counsel.
The insurers had been invited to the listening session in the past. The “insurers are no longer invited.” Why not? In the past, they discussed their concerns that other victims’ statements were reported in the media. The insurers want confidentiality. To support confidentiality, the judge concludes, the insurers’ representatives are excluded.
They will have to trust that the court will follow its order and that the court will be faithful to the “Judicial Canons, including avoiding an appearance of impropriety.”
I trust the court to do that.
Thank you, Judge Klein.
Stephan is the sports journalist for the Maple Grove Report.
