US Supreme Court's Alito pauses Boy Scouts $2.46 billion abuse settlement

[February 17, 2024]  By Dietrich Knauth

(Reuters) -U.S. Supreme Court Justice Samuel Alito on Friday temporarily halted the Boy Scouts of America's $2.46 billion settlement of decades of sex abuse claims, which is being appealed by a group of 144 abuse claimants.

Alito's brief order freezing the settlement gives the court more time to decide a Feb. 9 request by these abuse claimants to block the settlement from moving forward. They contend the deal unlawfully stops them from pursuing lawsuits against organizations that are not bankrupt, such as churches that ran scouting programs, local Boy Scouts councils and insurers that provided coverage to the Boy Scouts organization.

Alito stepped in to halt the settlement because he handles certain requests involving cases from a group of states including Delaware, where the Boy Scouts matter was decided.

The settlement involves more than 82,000 men who have said they were abused as children by troop leaders while in the Boy Scouts.

Doug Kennedy, an abuse survivor who co-led the official committee representing abuse claimants in the bankruptcy, called the delay a "horrible" result. Survivors have already waited for decades for their abuse to be addressed, and 86% of abuse survivors voted to support the Boy Scouts settlement in bankruptcy court, Kennedy said.

"There was finally a light at the end of the tunnel, and now this has been yanked away from them," Kennedy added.

The trustee in charge of administering the Boy Scouts settlement, retired bankruptcy judge Barbara Houser, said Alito's order will suspend all work on the settlement, including evaluating claims and mailing checks to abuse survivors. The settlement trust has already paid nearly $8 million to more than 3,000 men.

The Boy Scouts of America noted that Alito's order was only a short-term measure and said that it hopes the Supreme Court will swiftly deny the request for a longer pause, which would "inflict severe harm on both the Scouting movement and Scouting-abuse survivors."

Gilion Dumas, a lawyer representing 67 of the men who challenged the settlement, said, "Our sex abuse claimants are excited that the Supreme Court issued this stay, even if it is only temporary."

The U.S. Supreme Court building is seen on the day that Justices Clarence Thomas and Samuel Alito released their delayed financial disclosure reports and the reports were made public in Washington, U.S., August 31, 2023. REUTERS/Kevin Wurm/File Photo

Dumas added that the pause showed that the Supreme Court was taking the legal arguments of the appellants seriously, Dumas added.

The Supreme Court already is considering whether U.S. bankruptcy courts are allowed to wipe away legal claims against non-bankrupt people and organizations in an appeal of OxyContin maker Purdue Pharma's bankruptcy.

In that case, the court will decide whether the company's owners, members of the wealthy Sackler family, can receive immunity in exchange for paying up to $6 billion to settle thousands of lawsuits over the company's allegedly misleading marketing of its powerful pain medication.

The Boy Scouts filed for bankruptcy in 2020 after several U.S. states enacted laws letting accusers sue over decades-old abuse allegations. The organization ultimately reached a settlement, approved in court in 2022, that would pay between $3,500 and $2.7 million to abuse victims.

The abuse claimants appealing the settlement had argued that an immediate halt was necessary due to a Friday deadline for claimants to decide whether to opt into a more thorough review of their sex abuse claims. People who chose that option would have to pay $10,000 up front, but they could be eligible for a higher payout than a default formula for evaluating claims under the settlement.

Trustee Houser said on Thursday that the claimants who filed the appeal should have acted sooner to challenge the deadline, rather than citing the deadline as a reason to stop the entire settlement in its tracks.

(Reporting by Dietrich Knauth; Editing by Will Dunham)

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