Earlier this week, a Court of Appeals panel handed back a multi-million dollar headache to Judge Timothy Connors of the Washtenaw Circuit Court and politely told him we’re sorry, pal, but you did this to yourself.
At issue is a settlement the Michigan Department of Corrections made with a class of female inmates who claimed prison personnel sexually abused them for years.
MDOC agreed to pay $100 million dollars in installments over a six-year period paid into an escrow account and then distributed to the attorneys and class members according to an allocation plan. MDOC also agreed to waive the prohibition on prisoners maintaining accounts at financial institutions outside their MDOC institutional account.
For the record, MDOC has already paid some of those installments.
Here’s where the headache began.
The trial court … entered a protective order which prohibited the disclosure of the names of class members other than to necessary MDOC and Attorney General employees. The purpose of the protective order was to prevent retaliation against the class members.
The retaliation issue is important. Many of the class members are still behind bars. Paybacks can be rough, doubly so when made prison-style. Connors’ protective order rightfully addressed that concern.
But whenever big money is involved, there are always folks looking for a piece of the action – and, in this case, rightly so.
Some class members may owe child support, said the Department of Human Services. What about unpaid victim restitution, court costs, fines and fees, asked prosecutors and court administrators.
The government officials intervened. They collectively argued that any such obligations owed by individual class members have first priority in any settlement distribution.
So, said the intervenors, give us the names.
Judge Connors took a stab at it.
The trial court attempted to resolve the matter by having Intervenors submit a list of names of any female prisoner with an outstanding obligation who might have been a member of the class. Plaintiffs’ counsel was then to compare those lists against the names of class members and determine if any class member had an outstanding obligation.
This failed to resolve the dispute, however, because Intervenors determined that it was logistically impossible for them to generate a comprehensive list of all potential claimants. They continued to maintain that they needed the list of names of the class members to check that list against their own records. Ultimately, the trial court declined to order the parties to disclose to Intervenors the identities of the class members and this appeal followed.
Having plaintiffs’ counsel determine which class members owe an obligation and giving the intervenors those names is a bad idea, said COA Judge David Sawyer. There’s a big conflict of interest between protecting clients’ rights and the intervenors’ collection efforts.
The applicable statutes provide that MDOC can’t disburse settlement funds to class members until they have satisfied the obligations at issue in this case, Sawyer ruled. But there’s nothing in the statutes that give the intervenors a particular right to know the class members’ identities.
The intervenors’ interest in statutory compliance “does not equate with the right to receive the names of the class members,” Sawyer said.
So, Judge Connors, here comes your headache.
If the trial court is able to fashion a method to ensure that the MDOC is meeting its statutory obligations with respect to the proper disbursement of the proceeds of the settlement without the necessity of disclosing the names of the class members, it is certainly free do so. …
Our only directions are these: (1) the MDOC must comply with the statutory provisions to ensure that the restitution, fees and costs required to be paid by a class member are, in fact, paid before any disbursement to that class member, (2) plaintiffs’ counsel is not to be the gatekeeper to determine compliance or otherwise to identify which class members have such an obligation, and (3) there must be some oversight mechanism to confirm that the MDOC does, in fact, discharge its obligations. We also direct that any future disbursement of funds is to be suspended until a satisfactory method is in place to ensure compliance with the statute.
Sawyer offered some suggestions on how to accomplish all of this and acknowledged that Connors was being saddled with a difficult task.
But the trial court in essence took this burden upon itself when it entered the protective order. We do not disparage the actions of the trial court in doing so as we recognize the reasons for the protective order. But just as the unique circumstances of this case necessitated the protective order, it also necessitates greater involvement by the trial court in ensuring that the order does not impede the MDOC and DHS from meeting their statutory duties nor does it shield plaintiffs from meeting their financial obligations.
The case is Neal, et al. v. Dep’t of Corrections, et al.
The Michigan Lawyer 