6:52pm PT by Ashley Cullins
Weinstein Wants Bankruptcy Court to Take Over Rejected Sexual Misconduct Settlement
After a New York federal judge blasted a proposed settlement that sought to resolve a host of legal claims brought by women who accuse Harvey Weinstein of varying levels of sexual misconduct, his legal team is taking a shot at getting a revised plan approved — this time in bankruptcy court.
The original proposed settlement, which prompted swift backlash from accusers, included: an $18.875 million victims' fund to be paid by insurance companies; no admission of wrongdoing by any of the defendants; a defense fund to cover costs of defending suits from accusers who don't participate in the settlement; a perpetual release of claims against the defendants, who include Harvey Weinstein, TWC board members and execs and Bob Weinstein; and a provision that bars New York Attorney General Letitia James' office from prosecuting any related action.
U.S. District Judge Alvin K. Hellerstein during a July 14 hearing rejected the proposed settlement, calling it "obnoxious" and questioning whether the claims were even appropriate for class action. On Friday, he followed up with a written opinion.
In addition to finding that the proposed class is both too broad (potentially including women who weren't injured by Weinstein) and too narrow (potentially excluding women who were injured), he takes major issue with the fairness of the financial structure of the deal, including that it's impossible to calculate how much the women would receive because there are too many unknown variables.
"The Bankruptcy Agreement proposes major deductions from the amounts that otherwise would be available to claimants: $13,716,000 to defray the litigation costs of the TWC officers and directors, and $1,500,000 to defray the litigation costs of the Weinstein Brothers," writes Hellerstein. "At the preliminary approval hearing, I observed that favoring these groups at the expense of the people suffering sexual abuse by Harvey Weinstein was 'obnoxious.' I continue to hold to that view. Furthermore, I cannot fully assess the numerous factors related to the size of the potential awards because the proposed class is too indefinite, and the parties' proposed process gives insufficient clarity regarding how funds would be allocated."
Now, attorneys for TWC's estate want to take a revised plan directly to federal bankruptcy court judge Mary F. Walrath and remove Hellerstein from the equation.
"The revised framework provides that, in lieu of class action treatment of the sexual misconduct claims, such claims will be placed into a single class in a chapter 11 plan of liquidation and administered in much the same way that many other mass tort cases are handled in bankruptcy cases — without the need for a certified class in a class action lawsuit," states the filing. "While this is not the appropriate pleading to describe the full terms of the Revised Plan, for present purposes it is important to note two things about it: first, under the Revised Plan, releases will be granted in favor of Harvey Weinstein only on an affirmative opt-in basis; and second, the global settlement embodied in the Revised Plan will be implemented solely through the Bankruptcy Court-supervised plan process, with no further involvement of the District Court in the pending class action."
Douglas H. Wigdor and Kevin Mintzer, who represent several women with claims against Weinstein and have been vocal critics of the settlement, issued a statement Tuesday in response to the filing. "It appears that Harvey and Robert Weinstein, their insurers and corporate enablers are so desperate to secure the deal that Judge Hellerstein immediately rejected as 'obnoxious' that they are now going to ask the bankruptcy court to approve what Judge Hellerstein would not," the statement reads. "This conduct is downright offensive and the New York Attorney General should immediately make it clear that she will refuse to endorse this end-around scheme."
Two of their clients, Dominique Huett and Wedil David, on July 21 filed a motion to convert TWC's chapter 11 bankruptcy to a chapter 7, which would liquidate the remaining assets. According to their motion, it would also allow "tort victims [to] seek relief from the automatic stay to prosecute their claims, have their day in court before a jury, and pursue recoveries against insurance proceeds."
Weinstein's filing asks the court to hold off ruling on that motion to give them time to hammer out the finer points of a new deal. The hearing is currently scheduled for Aug. 4, and they think they can work out the details of the revised plan by Aug. 31.
"This is a case where all parties to the settlement are continuing to engage in good faith discussions and are working feverishly to develop a mutually acceptable alternative path to consummate the global settlement," states the filing, which is posted below. "This should not be a case where two individual sexual harassment victims pursuing their own agenda should be permitted to hijack the process and deny all other stakeholders, including dozens of sexual harassment victims, an opportunity to settle and develop an alternative plan with wide support, including from the Committee that owes fiduciary duties to all unsecured creditors."
In a statement to The Hollywood Reporter, Weinstein's lawyer Imran H. Ansari of Aidala Bertuna & Kamin defended the agreement. "While there are those who continue to rail against the settlement, the practical reality is that outside the settlement the plaintiffs face an uncertain financial recovery, with The Weinstein Company bankrupt, and Mr. Weinstein incarcerated and defending legal matters, facing debt and judgments, frozen assets, and a line of creditors looking for compensation," Ansari said. "Mr. Weinstein's current and future financial state is far from healthy, not only has his personal liberty been taken from him, but his financial liberty as well. Those yelling loudly seem to ignore that many parties want this settlement to succeed, importantly, it is not just the Weinstein defendants, but the plaintiffs themselves, who likely recognize that it is the route to a realistic recovery."
Thomas Giuffra, the attorney for former TWC employee Alexandra Canosa who's suing Weinstein for sexual assault, also sent THR a statement in response to the filing.
"After being thwarted by Judge Hellerstein who recognized the 'global' settlement was a phony class and a settlement which was unfair to the survivors, the class action lawyers, NYAG and the insurance companies are trying to do an end run to try to force this obnoxious and unfair settlement through the bankruptcy court," said Giuffra. "They are repackaging the same lousy deal to try a second time to get judicial approval. I suspect the bankruptcy court will recognize this shameful scam for what it is and prevent a grave injustice from occurring. It is so obvious that the class action lawyers have no interest in actually litigating these cases. But are only concerned with chasing a payday at all costs. I am appalled that AG James who claims to be an advocate for women would continue to put the power of her office behind a deal which is abusive to the rights of the survivors and puts money in the hands of a convicted rapist. I cannot say that I am surprised by this. It is what I would expect of these self-interested money grabbers."