Editor's note: In response to The Post and Courier's queries concerning allegations made in a complaint filed with the S.C. Supreme Court by Greenville attorney David Flowers, the Catholic Diocese of Charleston media spokesman Steve Gajdosik offered the following comments. In his response, Gajdosik emphasized that victims' settlement awards were determined independently from attorneys' fees, and were not affected in any way by the amount received by class counsel. "I think the important thing to remember is that no victim received a dollar less in their claim due to attorney's fees," Gajdosik wrote in an e-mail. "Even after fees were paid, there were excess dollars returned to the Diocese. Would the Court have awarded lower attorney fees, the Diocese would have realized a larger return of its deposit."
Q: In his complaint, Flowers alleges or implies that moving the case form Charleston County to Dorchester County Circuit Court was part of an effort to gain the cooperation of Judge Goodstein. Why did the diocese agree to let Larry Richter decide where to move the case, and why did the diocese agree to have the case heard in Dorchester County, filing in two distinct courts the same case?
A: The mediation occurred in June 2006 which lead to the core basis of the agreement. The Diocese did not specifically agree to move the case to Dorchester County. At the conclusion of the mediation session, Mr. Richter offered to commence the process of presenting the case for approval. He had experience in this process and we agreed for him to take the lead. The first draft of the Settlement Agreement contained the caption of Dorchester County. When we asked Mr. Richter about the caption listing Dorchester County he said he wanted to file the Class Action in Dorchester County in order to have the approval process proceed in what he expected to be an expedited process.
The Diocese had filed several motions in the cases filed by Mr. Richter and Mr. Haller, which were filed in Charleston County. These motions were delayed in being scheduled and thus had the effect of frustrating what was perceived as a speedy resolution to the original Charleston County cases. The individual Charleston County cases were dismissed after the filing of the class action case in Dorchester County.
Q: How did the parties determine what the fee for class counsel would be ($2.5 million)? And why did the diocese agree to pay class counsel before claimants?
A: The Diocese agreed to a range of $950,000 to $2.5 million for attorney's fees. The Diocese did not agree on a specific fee. In addition the Diocese reserved the right to challenge the fee award. The Diocese did challenge the fee award at the hearing in March 2007. It was the burden of Mr. Richter and Mr. Haller to convince the court as to the amount of their fee.
Q: Was it agreed that class counsel's $2.5 million fee would be drawn from the $12 million settlement amount, or would be paid from another funding source? How do you account for what Flowers' alleges is a discrepancy in the public documents, specifically that John P. Freeman in an affidavit stated that the fee was to be paid separately from the $12 million potential settlement pool, yet it was (presumably) paid from the $12 million? Why, as Flowers alleges, did no one, including Judge Goodstein, notice the discrepancy described by Flowers and correct it?
A: The attorney's fees were part of the $12 million pool. The Diocese cannot interpret the one line in Mr. Freeman's affidavit, "separately by the Diocese." That one line, however, is immaterial when the entire affidavit is read as to the overall justification of the award of the fees since Mr. Freeman himself outlines different reasons why the request for fees is reasonable.
Q: Do you think Richter's active membership in the Catholic Church and his relationship with some of its people represented a potential conflict of interest in this case, as Flowers' alleges? If not, why not?
A: No. Every lawyer, regardless of his religious affiliation, has a duty to represent clients. Meyers stated at a March 2008 hearing that he is Catholic. Is he automatically suspect? Richter's participation as an extraordinary minister is part of his expression of faith and does not put him in any special relationship with the Church on legal matters.
Q: Why would the diocese have agreed to pay the fee to class counsel based on billing records that contain so many items that have since been alleged by Flowers to be questionable? Did the diocese have a chance to review class counsel's billing thoroughly before agreeing to pay? Did the diocese express any concerns about the calculations? Was the diocese unable, unwilling or uninterested in challenging any of class counsel's fees, even as Judge Goodstein prepared to issue her order to pay?
A: The question contains a false assumption. The Diocese did not agree on any specific award of attorney's fees. The Diocese did not agree that the fees be paid on the basis of billing records. The Diocese challenged the amount of the award at the March 9, 2007 hearing. [Editor's note: If class counsel's fee is calculated as a percentage, it represents a little more than 20 percent of the total payout, less than the typical 33 percent awarded lawyers involved in a settlement.]
Q: What is your response to Flowers' statement in his complaint that the settlement "was the product of collusion between Defendants Richter, Haller, Richter & Haller, LLC, Shahid, Baker, The Diocese of Charleston, and The Bishop of Charleston"? Flowers goes on to write that "Judge Diane Goodstein either actively participated in the collusion or acquiesced in it by failing to provide any meaningful judicial oversight in a series of cases that had already been settled and which were rife with serious legal and ethical issues, which are apparent from even a cursory review. She had ample evidence of a fraud being perpetrated on the court but she chose to either ignore it or acquiesce in it." What is your view of Judge Goodstein's actions?
A: Evidence and history demonstrate there was no collusion participated in by the Diocese, the Bishop or any of its lawyers, including Peter Shahid. Peter testified against Mr. Richter in his judicial review appointment in 1988. Furthermore, Mr. Richter's actions at the March 9, 2007 hearing caused the Diocese to be criminally investigated. Richter caused the issuance of a Rule to Show Cause seeking to have the Bishop and Chief Financial Officer held in contempt of Court and thus punished by a possible jail sentence. He also filed two Motions for Sanctions against the Diocese. Any statements by Flowers and Meyers as to "fraud" "rife with serious legal and ethical issues" are totally baseless. There are no facts to support these unmerited claims.
Judge Goodstein was judicious in her review of this case. Meeting with the parties, expressing her concerns and guiding this case in a fair resolution.
Judge Goodstein has the reputation of being a fair, honest and judicious judge.