Thursday, May 31, 2018

Denoument for MSU: $500,000.00 Settlement to Nassar Victims

Prof. Justine Dunlap has been following the Larry Nassar case.  She reports on the settlement between MSU and Nassar's victims.

Image1Michigan State University recently entered into a $500 million settlement with Larry Nassar’s victim/survivors. Of that amount, $425 million goes to the plaintiffs and $75 million is reserved for future claimants. The $425 million will be placed in a fund from which costs and lawyers’ fees will be extracted. Then a determination will be made as to how much each of the 332 survivors will receive; the range of payments is said to be between $250,000 and $2.5 million.

The settlement sum has drawn much attention. Naturally, it has been contrasted with the $100+ million paid out by Penn State University for the victims of Jerry Sandusky’s crimes. In that case, however, there were only a small fraction of the number of victims—approximately 10% of number that are present in the Nassar case.

Further, the anticipated settlement was central to Moody’s downgrade of MSU’s long-term bond rating in early May. Moody’s rationale was that the agreement—the mediation of which was then ongoing—could result in significant “financial ramification” to the university. Moody’s noted that the increased financial risk from Nassar-related pending lawsuits would involve “ongoing legal costs and university investment into enhanced risk management and governance issues increasing costs.”

MSU’s legal costs have not been cheap. More than a year ago, the university paid Skadden Arps attorney Patrick Fitzgerald $990 per hour for his investigation of how the university handled the matter. In the present settlement mediation, MSU was represented by Robert Young, Jr., a former Michigan Supreme Court justice, for the hourly rate $640. A veritable bargain by comparison.

How MSU will finance the settlement remains unclear. MSU interim president John Engler indicted in a statement released the day after the settlement that the university’s insurers were involved in the process and he anticipated that they would honor their contractual obligations. But even if they do, that amount won’t cover the costs. And what about state money? The $500 million price tag is almost double what the school receives from the state annually (that sum is $281). Engler, a former Michigan governor, said that he would not seek additional funds from the state to satisfy the settlement. Legislators have also made clear that they would not support such a request.

The settlement is about more than the money that the survivors (and lawyers) will receive. It is, one hopes, a further step in resolution, coming less than four months after Nassar was sentenced to 40-125 years in prison. A resolution to a case that was 20 years in the making, as Nassar’s crimes were first reported in the late 1990s. It remains to be seen whether it is also a real step in either institutional or legal reform.

On those counts, whether real change is happening at the university remains a matter of opinion. The university touts, as surely it must, all that it has done and is continuing to do. Much of the information on the President’s page of the school’s website has to do with its post-Nassar initiatives. On the other hand, other groups, such as Reclaim MSU, assert the University’s recent steps are a continuation of the problem that failed to stop Nassar 20 years ago.

As to legislative reform, the state legislature is considering legal changes, including alterations in the applicable statutes of limitations and the stripping of immunity from state actors who knew but did not act. Of course, time will tell what legislative changes are wrought. More significantly, time will tell whether any legislative changes made were ones that actually matter.

http://lawprofessors.typepad.com/human_rights/2018/05/50000000-msu-settlement-to-nassar-victims-.html

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