Supreme Court declines to halt Boy Scouts of America bankruptcy settlement for the moment

By John Fritze, CNN

Washington (CNN) — The Supreme Court declined Thursday to halt a $2.46 billion bankruptcy settlement for the Boy Scouts of America, rejecting an emergency request from a group of childhood sex-abuse victims who said the agreement unlawfully bars them from suing groups that ran local scouting programs.

There were no noted dissents from the court’s brief order. It would have taken five votes to grant the emergency request.

The group of victims – 144 people out of more than 82,000 who filed claims against the Boy Scouts – argued the Supreme Court should halt the settlement while it considers a similar legal dispute in a separate and significant appeal involving Purdue Pharma, the maker of the opioid OxyContin.

The justices heard arguments in the Purdue case in December.

“BSA can justly take pride in its many accomplishments for this country’s youth,” the victims told the high court in a brief this month. “But over the past several decades, it has had to come to grips with its history of turning a blind eye to sexual abuse.”

At issue in both cases are provisions of the agreements that prohibit victims from suing third parties for damages. In the case of Purdue, for instance, the Sackler family that ran the pharmaceutical firm and made its fortune selling the highly addictive drug, agreed to pay $6 billion in exchange for being shielded from future civil lawsuits.

Some victims of the opioid crisis say the Sacklers shouldn’t be able to avoid those costly lawsuits for damages.

In the Boy Scouts matter, some of the victims want to be able to sue independent councils that ran local scouting programs and third-party organizations, such as churches and civic groups, that supported those programs. Those third-party groups contributed more than $2.4 billion to a settlement trust for victims and, under the agreement, are shielded from future civil lawsuits.

Critics of such arrangements say courts are generally not authorized to block such lawsuits. Supporters say that without the protections for third-party groups, major bankruptcy deals like the ones for Purdue and the Boy Scouts would never take effect.

The Boy Scouts of America filed for bankruptcy in 2020 after spending more than $150 million to settle hundreds of abuse lawsuits between 2017 and 2019, according to court records. In 2022, a federal bankruptcy court in Delaware approved the reorganization plan, clearing the way for the Boy Scouts of America to reemerge and creating a fund to pay victims.

The 3rd US Circuit Court of Appeals, which is reviewing a broader appeal of the settlement, denied a request last year to pause the agreement in the meantime. A lower court found that, unlike the Purdue case, the Boy Scout reorganization was so much further along that it would have been difficult to halt.

After nearly two hours of oral argument in the Purdue case in December it wasn’t clear which way the justices were leaning on the issues of third-party liability protection. Justices Elena Kagan, a Barack Obama nominee, and Brett Kavanaugh, who was named by Donald Trump, both questioned disrupting a plan that the vast majority of opioid victims and their families supported.

The Supreme Court temporarily halted the Purdue settlement in August.

“It’s overwhelming, the support for this deal, and among people who have no love for the Sacklers, among people who think that the Sacklers are pretty much the worst people on earth, they’ve negotiated a deal which they think is the best that they can get,” Kagan said during the December arguments.

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CNN’s Devan Cole contributed to this report.