In Re: Boy Scouts of America and Delaware BSA, LLC

CourtDistrict Court, D. Delaware
DecidedMarch 29, 2021
Docket1:20-cv-00774
StatusUnknown

This text of In Re: Boy Scouts of America and Delaware BSA, LLC (In Re: Boy Scouts of America and Delaware BSA, LLC) is published on Counsel Stack Legal Research, covering District Court, D. Delaware primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
In Re: Boy Scouts of America and Delaware BSA, LLC, (D. Del. 2021).

Opinion

IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF DELAWARE IN RE: BOY SCOUTS OF AMERICA and : Chapter 11 DELAWARE BSA, LLC, : Case No. 20-10343 (LSS) : (Jointly Administered) Debtors. : ___________________________________________: CENTURY INDEMNITY COMPANY, : : Appellants, : v. : Civ. No. 20-774-RGA : BOY SCOUTS OF AMERICA and : DELAWARE BSA, LLC, : : Appellees. : ______________________________________________________________________________

MEMORANDUM OPINION

Jonathan Hacker, O’Melveny & Myers LLP, Washington, D.C.; Tancred Schiavoni, Janine Panchok-Berry, Andrew Kirschenbaum, O’Melveny & Myers LLP, New York, New York; Stamatios Stamoulis, Stamoulis & Weinblatt LLC, Wilmington, Delaware, attorneys for appellant, Century Indemnity Company. Jessica C.K. Boelter, Sidley Austin LLP, New York, New York; Thomas A. Labuda, Michael C. Andolina, Matthew E. Linder, Sidley Austin LLP, Chicago, Illinois; Derek C. Abbott, Andrew R. Remming, Eric W. Moats, Morris Nichols Arsht & Tunnell LLP, Wilmington, Delaware, attorneys for appellees, the Boy Scouts of America and Delaware BSA, LLC.

March 29, 2021 /s/ Richard G. Andrews ANDREWS, UNITED STATES DISTRICT JUDGE:

Before the Court is an appeal by Century Indemnity Company (“Century”) from an Order of the Bankruptcy Court dated May 26, 2020, which set a Bar Date and established a form for filing Proofs of Claim for “Sexual Abuse Survivors. (D.I. 1-1, B.D.I. 695)1 (the “Bar Date Order”). Boy Scouts of America and Delaware BSA, LLC (together, “BSA”) have moved to dismiss the appeal on the basis that Century lacks appellate standing to challenge the Bar Date Order, that the Bar Date Order is not a final order, and that Century has failed to seek leave to appeal the interlocutory Bar Date Order, and that the appeal does not otherwise meet the standard to warrant immediate review under 28 U.S.C. § 1292(b). (D.I. 4, 5, 6). For the reasons set forth below, the appeal is dismissed. I. BACKGROUND BSA filed voluntary petitions for relief under Chapter 11 of the Bankruptcy Code. BSA had been named “in numerous lawsuits related to historical acts of sexual abuse in its programs.” (B.D.I. 4 at 3). BSA filed a motion requesting that the Bankruptcy Court (a) set a deadline for the filing of claims against BSA, (b) establish the form and manner of notice to be given to potential claimants, and (c) approve procedures for providing notice to abuse victims. (B.D.I. 18) (the “Bar Date Motion”). The Bar Date Motion noted the “critical importance” of receiving and analyzing abuse claims promptly so that the claims could be handled in an efficient and equitable manner. (Id. ¶¶ 10-11). Sexual abuse survivors shared this goal: both the committee for tort claimants and BSA agreed that a bar date was necessary to allow the parties “to understand the body of claims that are out there” in order to “proceed with respect to the

mediation” and ultimate resolution of claims and distributions to claimants under a confirmed

1 The docket of the chapter 11 cases, captioned In re Boy Scouts of America, No. 20-10343-LSS (Bankr. D. Del.), is cited herein as “Bankr. D.I. __.” plan of reorganization. (B.D.I. 675, 5/18/2020 Hr’g Tr. at 64:14-24). As part of the Bar Date Motion, BSA also proposed procedures for confidential submission of abuse claims. (B.D.I. 18 ¶ 17, Exs. A, B-1, C-1, D). BSA proposed to send notice by first class mail to more than one thousand known claimants, plus email notifications “anticipated to reach over 10 million potential claimants,” including current and former Scouts, parents, and volunteers. (B.D.I. 557-1 ¶ 3). To further reach unknown claimants, BSA proposed to engage in an extensive media program, “estimated to reach approximately 95.9% of Men 50+ . . . , the primary target audience

of potential claimants, with an average frequency of 6.5 times in the United States.” (B.D.I. 557- 1 ¶ 4). The total estimated cost of this notice plan was $6.8 million. (B.D.I. 556 ¶ 5). After months of negotiations and consultation with experts, BSA submitted a proposed claim form for abuse survivors that, in BSA’s view, appropriately balanced the need for information with the need to be sensitive to victims of child sexual abuse. The supplement to the Bar Date Motion included a proposed Abuse Survivor Proof of Claim Form (B.D.I. 557-9) (“Claim Form”), as well as proposed notices directed to abuse survivors (B.D.I. 557-6, 557-7, 557-8). Appellant Century, one of BSA’s insurers, objected to the proposed Claim Form on several bases. Following additional negotiations and revisions to the proposed Claim Form, the Bankruptcy Court held an evidentiary hearing on the Bar Date Motion, which included expert

testimony and oral argument on the remaining objections. Century argued that the Claim Form should not be used as a proof of claim within the meaning of 11 U.S.C. § 502(a), which states that when a proof of claim is filed, it “is deemed allowed, unless a party in interest … objects.” Instead of constituting prima facie proof of a claim as § 502(a) provides, Century argued that submitted claim forms should be used solely “to preserve claims for voting purposes and to collect information for mediation.” (B.D.I. 675, 5/18/2020 Hr’g Tr. at 58:12-16). The Bankruptcy Court rejected this position as contrary to the terms of § 502(a): “I’m going to permit a proof of claim form to go out and the return of that proof of claim form has the effect that the code gives it. I am not going to alter the effects that the code gives it.” (Id. at 70:2-6). Century (and other insurers) also challenged the content of the proposed Claim Form, arguing that if the Claim Form were to be used as a proof of a sexual abuse survivor’s claim against BSA, then the form would need “[f]ar more detailed questions and documentary support … to satisfy the requirements of the bankruptcy code.” (B.D.I. 656 at 1, 6). Insurers asked, for

example, that claimants be required to “identify by name and address, all the schools they attended to the best of their recollection, beginning with elementary school and continuing to secondary school and post-secondary school” (B.D.I. 675, 5/18/2020 Hr’g Tr. at 107:19-22; “all of their employment history dates … for each job and location” (id. at 108:16-18); and “if they suffered other unrelated forms of abuse, unrelated to Boy Scouts” (id. at 109:14-17). The Tort Claimants Committee’s expert, Jon Conte, provided testimony that sexual abuse claimants could be harmed by being compelled to answer extensive narrative questions – which, Mr. Conte explained, would not even make it possible to discern whether a claim was valid or not – and opined that it was “much better” to request more limited information at the outset with further questioning later as appropriate. (Id. at 20:7-21, 24:12-25:12). The Bankruptcy Court, expressly

crediting Mr. Conte’s testimony, declined to order the additional questions sought by Century and the other insurers. (Id. at 121:12-122:9). The Bankruptcy Court explained, “I don’t know that more information is better and I do have a concern that the more intrusive the information is … , it will discourage parties, abuse victims, from coming forward and we don’t want to do that. So I’m not going to require that additional information.” (Id. at 122:3-9). The Bankruptcy Court on May 26, 2020 issued the Bar Date Order, which approved the proposed Claim Form without Century’s additional questions, as well as the related noticing procedures. (B.D.I. 695). Century filed a timely notice of appeal with respect to the Bar Date Order on June 8, 2020. (D.I. 1). BSA moved to dismiss the appeal (D.I. 4), and the Motion to Dismiss is fully briefed. (D.I. 5, 12, 16).

Free access — add to your briefcase to read the full text and ask questions with AI

Related

Harold C. Lampe, Jr V.
665 F.3d 506 (Third Circuit, 2011)
Hulmes v. Honda Motor Company, Ltd.
936 F. Supp. 195 (D. New Jersey, 1996)
In Re Cable & Wireless USA, Inc.
338 B.R. 609 (D. Delaware, 2006)
Maxwell v. Novell, Inc. (In Re Marchfirst, Inc.)
431 B.R. 436 (N.D. Illinois, 2010)
Patrick v. Dell Financial Services
366 B.R. 378 (M.D. Pennsylvania, 2007)
In Re MK Lombard Group I, Ltd.
301 B.R. 812 (E.D. Pennsylvania, 2003)
In Re O'Brien
440 B.R. 654 (E.D. Pennsylvania, 2010)
Chemetron Corp. v. Jones
72 F.3d 341 (Third Circuit, 1995)
Ritzen Group, Inc. v. Jackson Masonry, LLC
589 U.S. 35 (Supreme Court, 2020)
Energy Future Holdings v.
949 F.3d 806 (Third Circuit, 2020)

Cite This Page — Counsel Stack

Bluebook (online)
In Re: Boy Scouts of America and Delaware BSA, LLC, Counsel Stack Legal Research, https://law.counselstack.com/opinion/in-re-boy-scouts-of-america-and-delaware-bsa-llc-ded-2021.