‘Not a happy result’: Federal bankruptcy court rejects Diocese of Oakland settlement plan

A federal judge this month rejected a request from the Diocese of Oakland, California, to resolve its ongoing bankruptcy proceedings, arguing that the diocese had not satisfied statutory requirements to do so while dismissing claims that the diocese should be granted a special religious dispensation.

The diocese had proposed a plan earlier in the year to pay more than $200 million into an abuse victims’ fund. A committee of survivors countered with a proposed payout of more than $300 million, which the diocese itself subsequently opposed.

Judge William Lafferty said in an Oct. 2 decision that the diocese had failed to demonstrate that it was undergoing a “substantial burden” on its religious rights in being required to adhere to federal bankruptcy proceedings.

The judge dismissed as “incorrect and impossible” a scenario suggested by the diocese that would result in what Lafferty described as an “apocalyptic forced sale of all churches in the Oakland Diocese” under the federal bankruptcy court.

Such a scheme, Lafferty said, “can never be compelled in the bankruptcy system.”

Lafferty also expressed concern that the diocese’s “liquidation analyses” are “structured in a manner that tilts the playing field” in favor of the diocese itself.

The federal judge admitted that the ruling was “not a happy result” for anyone involved in the trial, including for abuse victims, who he said have been “deeply … immersed” in the trial since 2023.

The diocese, meanwhile, “has prosecuted this case honorably and with great integrity,” he said.

The judge urged the diocese and abuse victims to operate with “continuing dialogue and relentless good faith.”

“There is no guarantee of success in such endeavors, but also no reason not to begin again,” he said.

In a statement after the ruling, Oakland Bishop Michael Barber, SJ, described the decision as “a setback,” but he said the diocese remains “committed to providing fair and equitable treatment” for abuse victims while “continuing our mission to proclaim the Gospel of Jesus Christ in service to the 500,000 faithful Catholics in our community.”

The diocese would “study the court’s decision,” Barber said, before deciding how to move forward.

The diocese was in the news earlier this year after a California man was awarded a massive $16 million in a civil abuse suit there.

The ruling — rare for U.S. diocesan abuse cases, where most settlements involve groups of abuse victims rather than individual plaintiffs — represented the first jury verdict reached under the 2019 California Child Victims Act, which opened up a three-year look-back window for abuse victims to bring civil suits.

The allegations brought by the John Doe in the Oakland case concerned Father Stephen Kiesle, a priest who has faced multiple abuse allegations dating from the 1970s. The victim said Kiesle abused him during that decade.

Source: https://www.ewtnnews.com/world/us/not-a-happy-result-federal-bankruptcy-court-rejects-diocese-of-oakland-settlement-plan