Lawyers who struck a $240 million agreement with the University of Southern California over a sexual abuse scandal involving its former campus gynecologist filed a revised deal on Friday after a federal judge flagged several problems about the class action settlement.
The amended settlement, reached for victims of George Tyndall, who worked for decades as USC’s campus gynecologist, attempted to address concerns that Judge Stephen Wilson of the U.S. District Court for the Central District of California had about the deal—most prominently, that the settlement was short on critical facts.
“Simply put, the court is not a vessel for expediency in the parties’ efforts to reach a class action settlement, and any agreement for which the parties seek approval from the court should be finalized to the maximum extent possible prior to a motion for court approval,” wrote Wilson in rejecting preliminary approval of the deal on April 18.
On Friday, lead plaintiffs attorneys for the settlement issued a statement supporting the revisions: “This settlement gives every single woman who saw Tyndall a choice in how they want to participate and hold USC accountable, while also forcing the school to change to ensure this doesn’t happen again. We are confident our renewed motion for preliminary approval will answer the court’s questions, lead to approval of this agreement and provide these survivors the relief and measure of closure they deserve.”
They have asked for a June 3 hearing for preliminary approval of the revised settlement.
The USC filing also comes one day after lawyers representing victims of Larry Nassar, the former sports doctor at Michigan State University and physician for USA Gymnastics, raised their own concerns about another sexual abuse settlement. On Thursday, 25 law firms wrote a letter to Michigan’s auditor general asking to investigate the $500 million settlement with MSU, which they say does not adequately compensate more than 100 victims who filed their suits after school officials reached the deal a year ago.
“The fund is not sufficient,” said Megan Bonanni, whose firm, Pitt McGehee Palmer & Rivers in Royal Oak, Michigan, is one of the 25 that signed the letter. She said the $75 million allocated under the settlement for future claimants isn’t enough. “We are requesting and demanding that MSU treat this second group with parity to their sister survivor group.”
Both settlements come in a raft of cases tied to incidences of sexual abuse claims at colleges and universities. The USC plaintiffs, most of whom sued anonymously, claim Tyndall made inappropriate remarks and performed unnecessary procedures on female students. They allege that USC knew about the complaints but did nothing about them. The MSU plaintiffs, all gymnasts, said Nassar sexually abused them during doctor visits.
But there is a key legal difference between the USC and MSU settlements. The MSU settlement resolved individual claims, which is more common in sexual abuse cases because of the myriad types of injuries or circumstances for each victim. The USC settlement, which includes $25 million in attorney fees and costs, and a $215 million fund that would compensate hundreds of women, comes in a class action.
Plaintiffs’ co-lead counsel Steve Berman filed the case as a class action, despite the fact that most of the lawsuits against USC are individual cases in Los Angeles Superior Court. With the #MeToo movement and heightened awareness of sexual assault and harassment, some lawyers have found opportunities to file class actions. Berman’s firm, Seattle’s Hagens Berman Sobol Shapiro, also has brought a class action against movie producer Harvey Weinstein.
The lead counsel in the MSU deal, John Manly, of Manly Stewart & Finaldi in Irvine, California, has objected to the USC class action settlement, stating that it failed to account for the school’s liability in the Tyndall matter. He said the deal, which offers a maximum individual payout of $250,000, “sells survivors down the road.”
“This is a case where it was well known for 30 years what he was doing, and they just threw women to the meat grinder,” he said. “The only cases where you see those kind of low numbers are cases where there’s really no assets available, or there’s a huge legal impediment, and we don’t have that here.”
In court documents supporting the settlement, Berman has said a class action settlement allowed victims the opportunity to make claims while not having to relive their traumatic experiences in court.
Many of Wilson’s concerns about the USC deal, however, revolved around aspects of the Dec. 1 amendments to the Federal Rule 23 of Civil Procedure, which govern class action settlements. In his order rejecting preliminary approval, the judge, who had not certified the class, said there was not enough information to provide adequate notices to class members.
“To be sure, the court takes no issue with the substantive terms of settlement between plaintiffs and defendants, and the court believes that the proposed settlement, as is, ultimately may be fair and reasonable under the prevailing standards,” he wrote.
But, he concluded, the settlement failed to provide enough detail to certain class members about how much they would get. The settlement offers three tiers of claims. All class members would be Tier 1 claimants who could receive checks for $2,500 each. A special master would review claims in Tier 2 and Tier 3, which offer payouts of up to $250,000 but would require women to describe their experiences and its impact on them. Tier 3 claims would require the special master to work with a “team of experts,” including a forensic psychologist, to interview the women.
Under the original settlement, lawyers had suggested appointing one of two retired judges as special master: Judge Irma Gonzalez of the U.S. District Court for the Southern District of California or Judge Irma Raker of the Maryland Court of Appeals, who was special master in the $190 million class action settlement involving a former gynecologist at John Hopkins University.
But the settlement also provides for “pro rata adjustments” to Tier 2 and Tier 3 claims, in the event that the $215 million fund is too much or not enough—something that Wilson said wasn’t fully explained to class members in the notice. That’s even more relevant, he wrote, because the settlement did not estimate how many claimants could be in Tier 2 or Tier 3.
“If it is substantially likely that enough claimants may become eligible for a Tier 3 claim that would easily exhaust the settlement balance, the court would be concerned about class members being misled into believing that their award will be higher than their actual amount of compensation received, based on the representations in the settlement agreement,” he wrote.
Moreover, he wrote, having the special master decide the payment amounts on her own also “invites the possibility of arbitrary decision-making and inequitable treatment of class members for non-meritorious reasons.”
He suggested that the settlement instead have three individuals deciding the settlement payouts for Tier 2 and Tier 3 claimants—perhaps a special master, a gynecologist and a forensic psychologist.
In the revised deal, Berman adopted the idea of a three-person panel. He also clarified the average amount that each tier of claimants could potentially get and how that would change under the “pro rata adjustment.” Estimating about 15,000 claimants, he calculated that about $170 million of the settlement fund would pay for the top two most expensive tiers.
Wilson also asked for more information on what changes USC would make going forward to prevent future sexual abuse by staff—a request that prompted lawyers in the revised settlement to cite ”sweeping reforms at USC and its health facilities.”
Another concern of Wilson’s based on the Rule 23 amendments was that the settlement did not adequately address the risks of going forward with the litigation based on the strength of plaintiffs’ claims and USC’s defenses. For instance, Wilson wrote, what information do plaintiffs’ attorneys have that “would implicate USC for having knowledge of Dr. Tyndall’s wrongdoing?” He ordered plaintiffs’ attorneys to submit actual complaints against Tyndall under seal.
And, if class members didn’t participate, Wilson wrote, what risks would they have in bringing a lawsuit on their own?
“Nowhere in the settlement documents is there a legitimate assessment of what a potential class member might be able to recover in an individual action, even in vague or broadly estimated terms,” he wrote.
In the revised settlement, Berman wrote that a jury’s calculation of damages, especially in cases involving emotional and psychological trauma, were uncertain and that Tyndall has denied that his practice “departed from the standard of care.”
“All these women were harmed, and all are entitled to compensation, but the reality is that a jury might not assign a high dollar value to these claims, especially in an individual case,” he wrote in Friday’s renewed motion for preliminary settlement approval.
Manly and two other lawyers representing USC victims raised similar concerns in separate court filings (although Wilson rejected the objections outright as premature). In court documents, Manly called the $2,500 minimum payout “grotesque” under the circumstances.
He told Law.com that, even though he had not yet seen the amended version filed on Friday, he would likely opt out of the class action settlement so that his clients could pursue their claims on their own.
“If you represent survivors, and you understand the law, and care about survivors, you don’t file class cases like this,” he said. “The only ones who benefit are the class lawyers and the institutions.”
In the MSU case, Thursday’s letter said the 332 victims who resolved their claims each received nearly $1.3 million based on a $425 million fund in last year’s settlement. But 168 victims remain, of whom 110 haven’t settled. Those victims stood to get $410,000 each.
Such discrepancies, the letter said, are unfair.
“We just know it’s not a sufficient amount of money, and we’ve been asking MSU to come to the table to have that discussion, and they refuse,” Bonanni said.
When asked about the MSU settlement, Manly said he negotiated on behalf of victims who had pending suits at the time, not future claimants. The $75 million was MSU’s arbitrary number, not a cap, he said.
“Quite honestly, I think all of our clients hope that those women are successful and that they get justice,” he said. “If the state of Michigan and MSU had any lick of sense, they would settle with those women and pay them a fair amount and be done with it.”