Monday, September 09, 2002

I previously argued against confidential legal settlements. A Catholic Church lawyer defends them on these grounds:

  1. Many claims are settled without ever coming to court. Should private parties not be allowed to resolve their differences amicably and privately?
  2. The overwhelming majority of confidentiality provisions make the settlement amount confidential, but not the fact of the claimant's allegations of sexual abuse.
  3. Many victims desire confidentiality in a settlement, just as they do in filing a lawsuit as "John Doe," because the matters they have raised are intimate and sensitive. A rule prohibiting the confidential settlement of claims may deter victims of abuse from coming forward.
  4. Confidentiality agreements do not prohibit parties from communicating with law enforcement authorities or from testifying in court. They are aimed instead at keeping the parties off "Jerry Springer" and the like.

I don't believe (2). Every time I hear of one of these confidential settlements, the guy says he is legally prevented from commenting. And (4) is also misleading. The agreements are intended to keep the matter out of course. They cannot prevent someone from testifying, but they can make him forfeit money if he does.

To answer (1), I think that allegations of serious crimes should be turned over to the police and other authorities, and not settled privately. A private settlement just becomes a crooked deal between an extortionist and a felon that is contrary to the public interest.

Suppose that I have some evidence that my neighbor is the anthrax mailer, and I offer to keep quiet in exchange for a $100k payoff. Would that be a case of private parties resolving their differences amicably and privately? No, it's blackmail, and it is a serious crime. I am allowed to report the guy, or to keep my mouth shut, but I cannot ask for money in exchange for keeping quiet about a crime. The reasons are clear -- we don't want blackmailers, and we don't want anthrax mailers going free.

In my view, the confidential settlements of alleged sex abuse are similar to ordinary blackmail. It shouldn't be allowed.

Andy writes:

You criticize confidential settlements, likening them to blackmail. But you don't complete the logic of his complaint: the persons most responsible for the vices of confidential settlements are the plaintiffs and their attorneys. They are perfectly free to refuse confidentiality, but only agree to it to maximize their payoff. There is no faulting the defense attorneys for seeking confidentiality as a condition of settlement.

It is usually the defendant who wants the confidentiality, and is willing to pay for it. But it doesn't matter, because if they come to agreement then it is in both their interests. You are correct that in a blackmail situation, both sides profit by confidentiality. I fault the attorneys because they are the agents of blackmailers, and are often assisting in covering up serious criminal allegations and paying off a blackmailer.

John writes:

I don't know why Andy blames the plaintiffs for confidential settlements. Clearly, the bishops bear most of the blame for paying $1 billion in hush money. Even where someone is clearly engaging in blackmail (like Archbishop Weakland's accuser), I still fault the bishop for paying blackmail out of church funds.

I can't figure out his comment either. No one should be allowed to either pay or receive money for the purpose of covering up a felony.

Andy writes:

There are reasons to criticize American bishops, but not for these confidential settlements. The Church was right to demand confidentiality as a condition of settlement, and should continue to do so. Every defendant does likewise, and rightly so. Neither John nor Roger suggest a plausible alternative.

John seems to think the Church's $1 billion in payments was too much. But single jury awards can reach $100 million. I think the Dallas archdiocese, following John's implied advice, went to trial and got hit with something like a $70 million adverse judgment. State Farm Insurance is before the Supreme Court this term on a $165M judgment merely for delaying in indemnifying a policyholder in a car insurance case, with no real damages. Many think the Supreme Court should bail out State Farm at this late hour, but I don't.

Roger seems to think that companies should be prosecuted for negotiating confidential settlements. But every settlement of alleged fraud, for example, is a potential felony. So Roger's beef is with every publicly traded companies, and many private ones too. Good thing Simon never settled, eh?!

No, not every defendant pays blackmail. Honest businesses notify the police when someone alleges rape or some other serious crime. Only a crook would pay money to cover it up. Maybe we need laws limiting liability, but that is another matter. If Simon behaved criminally, and paid the plaintiff to burn the evidence, then I'd criticize him. But he did neither.

John writes:

If no one should be allowed to pay his *own* money for the purpose of covering up a felony, then "a fortiori" (all the more so) no one should be allowed to pay someone else's money for that purpose.

The key fact to keep in mind is that the $1 billion the bishops gave away was NOT THEIR MONEY. It was money dedicated to religious and charitable purposes.

The bishops are merely trustees. A legal maxim says that a trust will not fail for want of a trustee. If a bishop is criminal or negligent, he can be removed from office, but that should not jeopardize church funds.

Bear in mind that no court has ever held that church funds (charitable trusts administered by bishops) may legally be seized by plaintiffs. Bishops have used their control over these funds to make secret payoffs without any determination of legal liability.

Andy writes:

Roger replied, "You say that, but why?"

Because (1) it is freedom of contract, which I favor, (2) the settlement itself is no one else's business, and (3) it minimizes frivolous copycat suits.

John and Roger then shift their complaint away from confidentiality, and claim that the Church overpaid or paid from funds that should not have been used to settle claims. And when the mega-jury-verdicts are inevitably entered against the Church, e.g, (1) Simon case, (2) State Farm case, and (3) Dallas Archdiocese case, then what do John and Roger say? Merely that the jury got it wrong, and an appellate court should reverse it? And if it doesn't?

I don't think the Supreme Court should reverse the $165M State Farm verdict, even though it was ridiculous. Do you?

I do not think that bribery, blackmail, and extortion are just innocent private contracts. Tolerance of those things encourages criminal behavior. Here is a legal essay about it. I also agree with John that the Catholics bishops are paying with money that is not authorized for that purpose. I don't think that the payoffs minimize frivolous copycat claims either. In the last year, we have seen an avalanche of frivolous claims against the Catholic Church.

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