Rockville Centre diocese bankruptcy update: Legal fees climb, judge may intervene

Bankruptcy proceedings by the Catholic Church on Long Island linked to clergy sexual abuse cases have gone on for nearly three years and piled up $70 million in legal fees.

Now, a federal judge says he may intervene to bring the process to an end — and effectively give clergy abuse survivors their day in court.

U.S. Bankruptcy Judge Martin Glenn said during a court hearing in Manhattan last week that he may take the highly unusual step of ending the bankruptcy proceedings because the survivors and the Diocese of Rockville Centre can’t reach an agreement.

That would send some 600 cases back to state court for civil trials.

Lawyers for survivors called it a major step forward in their fight over hundreds of cases of abuse — some of them dating back decades — in the nation’s eighth-largest Roman Catholic diocese.

The church said it still hopes to reach an agreement and avoid potentially even more costly civil trials that could hobble its ability to carry out its mission.

Glenn said he was not eager to set a precedent by becoming the first judge in the nation to kick a Catholic diocese out of bankruptcy. But he suggested he was prepared to do so.

"The survivors deserve an opportunity to be heard by a jury of their peers," Glenn said. "They've been held off too long."

He indicated his decision will come no later than October.

Lawyers for the survivors say the church is dragging its feet.

“It’s almost three years now and the sides aren’t even close,” said Jordan Merson, a Manhattan-based attorney who represents some of the survivors. “You have child sexual abuse survivors who have been deprived of their constitutional right to a trial by jury while this whole bankruptcy thing goes on.”

'Tipping point' reached?

Lawyers for the survivors last week filed a motion in federal court to end the bankruptcy and send the cases back to state court. If the survivors win, awards or settlements potentially totaling hundreds of millions of dollars would be paid.

The diocese contended it is negotiating in good faith and hopes to avoid trials.

“As it has throughout the Chapter 11 process, the diocese will continue to seek and work toward a global settlement of all claims that fairly compensates survivors and allows the diocese and parishes to continue their missions,” said Sean Dolan, a spokesman for the diocese. “The judge continues to encourage all parties to reach a resolution through mediation.”

One attorney for the diocese, Todd Geremia, told Glenn that he thinks the negotiations can still succeed.

"The sticking point is solely the parish contribution," Geremia said.

But Jeff Anderson, a Minnesota-based attorney representing some of the survivors, said the hearing was a “tipping point” in the proceedings, and that the judge is essentially instructing the diocese to reach a deal soon.

“This was the first major development for survivors in Rockville Centre,” he said. “This has been a nightmare for them.”

But “the tide has shifted. The momentum has turned,” he said. 

In court, Glenn said that although he was giving the sides additional time to reach an agreement, he would not allow the diocese to take an approach of keeping abuse survivors in bankruptcy "until we beat them down and they’ll finally relent."

'Victims want a voice'

The diocese declared bankruptcy on Oct. 1, 2020, saying the potential cost of payouts stemming from cases filed under the state Child Victims Act left it facing financial ruin.

The CVA allowed people to file lawsuits against the church, schools and other institutions regardless of how long ago the alleged abuse took place. Some of the diocesan cases go as far back as 1957, the year the diocese was founded, according to court papers.

When the diocese declared bankruptcy, the cases stopped being heard in New York State Supreme Court. Instead, they went to the U.S. Bankruptcy Court.

Glenn gave one sign he was losing patience last month when he sent about 200 of the 600 cases back to State Supreme Court in Nassau County. Lawyers for the Catholic parishes involved fought the move and are getting the cases sent back to federal court.

In January, attorneys for the survivors proposed a settlement of at least $450 million. The diocese soon countered with a proposal of $200 million, which the survivors called too little. Both proposals also would likely include hundreds of millions of dollars more paid by church insurance companies.

Attorneys for the survivors contend that much of the $70 million spent on legal fees on the prolonged bankruptcy proceedings could have gone to the survivors.

One lawyer for the diocese who works for the international law firm of Jones Day is being paid at a rate of nearly $1,600 an hour, though the firm said it deducted a 10% discount, according to court papers.

Richard Tollner, a clergy sex abuse survivor who heads a committee of eight victims who serve as the voice of all survivors in the diocese during the bankruptcy proceedings, said they are eager for a resolution.

Through the bankruptcy proceedings, the diocese has “yet to give the first survivor a dollar,” Tollner said. “Victims want a voice, and why should they wait for justice? The church has spent millions upon millions of dollars on their lawyers and now it’s time to stop that and move forward.”

The diocese noted that it has paid out a total of about $62 million to 350 survivors under the Independent Reconciliation and Compensation Program that began in 2017. The payout from the CVA cases, if they go back to court, could be far higher, according to attorneys.

Clarification: An earlier version of this story did not make note of the diocese payouts to victims under the Independent Reconciliation and Compensation Program.