Judge pulls 42 abuse cases out of diocese's bankruptcy, into jury trials

Bankruptcy Court Judge Louise DeCarlAdler found that leaving the 42 plaintiffs in the group that thediocese has sought to settle with in bankruptcy proceedings wouldamount to depriving them of their Seventh Amendment right to a jurytrial and "will cause severe prejudice to the plaintiffs, especiallysince these cases are intensely fact-driven."

Adler's 14-page ruling said that although thediocese filed for bankruptcy because of the lawsuits "prompt resolutionof these claims through the bankruptcy process is unlikely."

She said twice in the ruling that the $95 millionoffered to the plaintiffs in a financial reorganization plan is "farbelow the historical statewide average."

The Archdiocese of Los Angeles in July announced asettlement agreement that called for the church to pay more than 500victims of sexual abuse by priests a total of $660 million.

Adler noted that the time period for claimsagainst the San Diego Diocese will not pass until Feb. 27, 2008, theearliest date when a district court could feasibly begin to estimatethe claims. Because the diocese hasn't explained how such estimateswould be accomplished "except to indicate there will be no jurytrials," she said, "it is likely there will be significant disputesconcerning how it should be accomplished."

Further appeals are also likely, "since thedebtor's desired process will deprive plaintiffs of their SeventhAmendment right to a jury trial," she said.

Adler also said that unless the diocesesubstantially increases the amount it proposes as a settlement fund,she foresees "a lengthy confirmation process." Since the plaintiffsrequested jury trials, she said, the factors overwhelmingly favorremanding 42 cases to the state court for liquidation through trial orsettlement, rather than through estimation or liquidation through trialin a federal court.

She dismissed the diocese's argument that sendingindividual cases into the state court system will be a burden on thecourts. "The state court was already handling all of the actions andhad already absorbed the workload," she wrote. "Further, the court isonly remanding 42 of the 127 actions at this time. Based upon thehistory of the clergy cases statewide, the court believes that trying(or the possibility of trying) the first five actions may spursettlements or, at the very least, assist in placing a value on theremaining cases not remanded."

Adler also accused the diocese of "forumshopping," hoping to pay each plaintiff a lower amount by proceedingwith the cases in the federal bankruptcy court than it would have topay if the cases were litigated in a state court.

When the diocese filed for Chapter 11 bankruptcyFeb. 27, it stopped trials scheduled to begin in several of the 127cases in the following days and weeks. The 42 cases set aside from thebankruptcy case represent 58 plaintiffs, the ruling said.