Scouts Mass Tort Shows How Victims Can Be Left Behind
By O.H. Skinner (February 25, 2022, 3:36 PM EST)
Victims and everyday consumers can be a forgotten part of our legal system. With consumer protection becoming more politicized, and lawyers collecting big
fees, it is the victims who are at risk of being left behind.
Without meaningful reforms that prioritize victims — like judges more aggressively policing their cases for abuse, and assigning independent examiners at the outset to keep everyone on their best behavior — even compelling victims will be at risk of getting lost in the shuffle.
For a tragic example, look no further than the unprecedented Boy Scouts of America bankruptcy that is coming toward a final set of court hearings in the middle of March.
The Boy Scouts filed for federal bankruptcy protection in the U.S. Bankruptcy Court for the District of Delaware in February 2020.[1] The bankruptcy was driven by sexual abuse allegations, which had lingered over the organization for years, especially after a landmark case in 2010 and a court-ordered release in 2012 of internal files.[2]
Following the modern method for dealing with these tragedies, the bankruptcy is designed to resolve all liability for sexual abuse claims. At the time of the initial bankruptcy filing, the Scouts acknowledged 275 abuse lawsuits, plus another 1,400 potential claims.[3]
The Scouts bankruptcy — In re: Boy Scouts of America and Delaware BSA LLC — no longer resembles to the estimates on potential sexual abuse claims that were included in the early bankruptcy filings. Mass tort plaintiff lawyers have run a no-holds-barred client generation operation surrounding the bankruptcy that has transformed the case.
Driven by television advertising and other tools, there are now over 80,000 claims of sexual abuse in the case, at least 55,000 of which came from a group of 10 law firms that banded together under the name Coalition of Abused Scouts for Justice.[4]
As the mass tort plaintiff lawyers have brought waves of claims of sexual abuse into the bankruptcy, changing the dynamics surrounding the final negotiations over the confirmation of a bankruptcy plan, accusations have flown from all sides.
The Boy Scouts have alleged that mass tort lawyers were using television advertisements with false and misleading information to recruit new plaintiffs, which drew Judge Laurie Selber Silverstein — who is presiding over the case — to issue an order saying that the advertisements contained statements that were “false and misleading and shall be removed.”[5]
Insurers have alleged that mass tort plaintiff lawyers working on the case gathered hundreds of claims that were signed by the same lawyers on the same day, without any real investigation, corroboration, or even direct communication with the alleged victims.[6]
And the law firms that represent victims who are claiming sexual abuse have been in running skirmishes over who speaks for victims, who should control the path of the case, and what settlement approach is best.
For example, the tort claimant committee that the court originally assigned to speak on behalf of victims resisted the Coalition of Abused Scouts formally joining the case with their tens of thousands of claims, saying that the coalition “is nothing more than a marketing term that was concocted” by a team of law firms “who were unhappy they could not control the Tort Claimants’ Committee to implement their agenda in the case.”[7]
There are other cases where some of these same tactics and problems have played out alongside allegations that attorneys are failing to properly put victims — their clients — before their own bottom line.
Take the Flint water crisis, where, in In re: Flint Water Cases, decided by the U.S. District Court for the Eastern District of Michigan in November 2021, plaintiff lawyers bought industrial bone scanners that were not designed for use on human beings, and used them on victims on the way to a nearly $180 million plaintiff attorney pay day.[8]
Consider also the thousands of largely unsubstantiated, fraudulent, robo-signed disability lawsuits with excessive fee demands — such as Strojnik v. Driftwood Hospitality Management LLC, decided by the U.S. District Court for the District of Arizona in January 2021 — that one now-disbarred Arizona attorney filed against small businesses across Arizona, in a coordinated shakedown effort that flooded the state’s court system with over 1,700 lawsuits.[9]
Or think of the class-action plaintiffs lawyers who have taken millions in fees from privacy cases against tech companies like Google — for example, see In re: Benjamin Joffe et al. v. Google Inc., decided by the U.S. Court of Appeals for the Ninth Circuit Court December 2021 — even as they resolve their clients’ claims in exchange for charitable donations by the offending company to special interest groups and universities, leaving the victims of the alleged privacy violations with nothing.[10]
The Boy Scouts case is a searing example because it brings together a whole host of problematic behaviors in one massive case, showing how counsel can quickly undermine the interests of victims. The sad consequence has been skyrocketing fees that are threatening the assets available to acknowledged victims of abuse.
Thanks to infighting between camps of plaintiff lawyers, the disputes over the wave of questionable claims, and other maneuvering by the professionals in the case, including the rates demanded by counsel for the Boy Scouts, the assets available to acknowledged victims of abuse — those who are most deserving — are dwindling fast.[5]
Experts have noted with alarm that, whereas in past mega-bankruptcy cases the professional fees are typically single-digit percentiles — in the range of 2% to 3% — the bills for lawyers and other professionals in the Scouts case are on track to be as much as 40% of the Boy Scouts of America’s self-reported assets, squeezing what can go to acknowledged victims.[11].
The actions taken by some plaintiffs attorneys in the Boy Scouts bankruptcy leave victims behind. Seeing this all play out suggests that too many of the lawyers, bureaucrats and other professional operators who capitalize on the system have a misguided set of motivations and are not serving those most in need, despite what they may say in public or the courthouse.
Hopefully, before final approval of any bankruptcy plan, the course of the case will turn back toward the acknowledged victims of abuse — the people who should be the primary beneficiaries of the proceedings.
But even if things do turn around, and deserving victims ultimately prevail, the Scouts bankruptcy will long be a reminder of what some plaintiff lawyers are focused on, how the professional class in big cases like this overlook victims, and why it is so important to affirmatively protect victims.
Putting more money — real, meaningful money — into victims’ pockets matters. The Boy Scouts bankruptcy case is a reminder that we cannot always rely on lawyers, especially mass tort plaintiff lawyers, to make that happen. The recent changes to Rule 23[12] were a good start toward putting consumers first.
But more is needed, including rule changes that impose a blanket ban on settlements where no direct value goes to consumers or victims. And judges should be more aggressive in policing their cases for abuse, readily assigning fee examiners and claims examiners at the outset of cases to keep everyone on their best behavior well before the eventual deal is struck and the pressure is on to wrap up the case and move on.
Simple changes like these can go a long way to correcting the excesses that we are seeing in the Scouts bankruptcy, and in some other cases.
Oramel H. Skinner is the executive director at Alliance for Consumers.
Disclosure: The author served an attorney for Arizona Attorney General Mark Brnovich in Advocates For American Disabled Individuals LLC v. 1639 40th Street LLC, one of the wave of Arizona disability cases discussed in this article. The author also filed an amicus brief on behalf of Brnovich in In re: Google LLC Street View Electronic Communications Litigation.
The opinions expressed are those of the author(s) and do not necessarily reflect the views of the organization, its clients or Portfolio Media Inc., or any of its or their respective affiliates. This article is for general information purposes and is not intended to be and should not be taken as legal advice.
[1] In re: Boy Scouts of America and Delaware BSA LLC, case number 1:20-bk-10343, U.S. Bankruptcy Court for the District Court of Delaware. Case filed: 2/16/2020.
[2] See, e.g., Becky Yerak & Soma Biswas, “Boy Scouts Draw Plan to Settle With Sex-Abuse Victims, Exit Bankruptcy. Here’s What We Know,” The Wall Street Journal (Sept. 15, 2021); Cara Kelly, Nathan Bomey and Lindsay Schnell, “Boy Scouts Files Chapter 11 Bankruptcy In The Face Of Thousands Of Child Abuse Allegations,” USAToday (Feb. 18, 2020).
[3] Cara Kelly,”Boy Scouts of America Bankruptcy Update: Key Agreement Reached Ahead Of Confirmation Hearing,” USAToday (Dec. 15, 2021).
[4] Rachel Axon, “Nearly 90,000 File Sexual Abuse Claims Against The Boy Scouts in Unprecedented Case,” USAToday (Nov. 16, 2020); Rachel Axon & Cara Kelly, “Boy Scouts Abuse Claims May Become Largest Case Against A Single National Organization,” USAToday (Oct. 23, 2020).
[5] Elise Hansen, “Boy Scouts Seek To Curtail ‘Misleading’ Abuse Claim Notices,” Law360 (Aug. 25, 2020); Eric T. Chaffin, “Amid Increasing Lawsuits, Boy Scouts Complain About Legal Ads,” New York Legal Examiner (Oct. 1, 2020); Andrew Karpan, “Firms Told To Stop Running ‘Misleading’ Ads In Scouts’ Ch. 11,” Law360 (Sept. 17, 2020).
[6] Max Mitchell, “Plaintiffs Firms Flooded Boy Scouts Bankruptcy With Unvetted, Potentially Fraudulent Civil Claims, Insurers Allege,” Law.com (Feb. 4, 2021).
[7] Rachel Axon and Cara Kelly, “Boy Scouts Abuse Claims May Become Largest Case Against A Single National Organization,” USAToday (Oct. 23, 2020).
[8] In re: Flint Water Cases, case number 5:16-cv-10444, in the U.S. District Court for the Eastern District of Michigan. Case decided:
11/10/2021: https://www.michigan.gov/documents/ag/FWC_Final_Approval_Order_741122_7.pdf; htt ps://www.bridgemi.com/michigan-environment-watch/lawyers-may-get-close-180-million-flint-water-crisis-settlement.
[9] Strojnik v. Driftwood Hospitality Management LLC et al., No. CV-20-01532-PHX-DJH in the U.S. District Court for the District of Arizona. Case decided:
1/6/2021: https://ewscripps.brightspotcdn.com/4b/3c/193851cb4be5bb2d58c31828fec0/new-crescent-driftwood-
doc.%2049%20%20Order%20Dismissing%20Claims%20and%20Granting%20Vexatious%20Litigant%20M otion%201-6-2021.pdf; https://www.azag.gov/press-release/serial-litigant-permanently-enjoined-filing-frivolous-ada-lawsuits-against-az.
[10] Benjamin Joffe et al. v. Google Inc., case number 20-15616, in the U.S. Court of Appeals for the Ninth Circuit; In re: Google LLC Street View Electronic Communications Litigation, case number 3:10-md-02184, in the U.S. District Court for the Northern District of California. Case decided:
12/27/2021: https://hlli.org/wp-content/uploads/2020/01/20-15616.65.Opinion-affirming-settlement.pdf; https://www.law360.com/articles/1461821.
[11] Cara Kelly, “Big winners in the Boy Scouts bankruptcy? Attorneys, who could walk away with $1 billion,” Yahoo News (Dec. 10, 2021).
[12] Andre Regard, “The Five Changes to Rule 23 Every Class Action Attorney Needs to Know, American Bar Association Practice Points (March 21, 2019).
