Federal Judge Rejects Diocese of Oakland Settlement Plan

A federal judge rejected a $242 million settlement plan proposed by the Diocese of Oakland to resolve its bankruptcy proceedings. In an Oct. 2 decision, Judge William Lafferty ruled that the diocese failed to meet statutory requirements and did not qualify for a special religious dispensation.

Lafferty dismissed the diocese's argument that bankruptcy proceedings would impose a substantial burden on its religious rights. He also rejected a scenario suggested by the diocese involving a forced sale of all its churches, calling such an outcome impossible under the bankruptcy system. The judge further noted that the diocese's liquidation analyses were structured to favor the diocese itself.

The case involves more than 330 plaintiffs alleging they were abused as minors. While the diocese proposed a plan to pay over $200 million into a victims' fund, a committee of survivors countered with a proposal for more than $300 million, which the diocese opposed. Bishop Michael Barber, S.J., called the ruling a setback but stated the diocese remains committed to providing fair treatment for survivors.