Seyfarth Synopsis: The Child Victim Act is now law and is likely to have a significant impact on many of New York’s institutions. Educational, religious or other civic organizations that care for children.

What is the Child Victim Act?

The Child Victim Act (“CVA”) is New York based legislation designed to protect childhood victims of sexual abuse. Its passage yesterday will drastically change New York’s strict statute of limitations for sex abuse cases and rectify the fact that many victims of sexual abuse had forfeited their right to redress by not reporting their abuse until after the statutory limitations period had expired. Its passage was celebrated loudly in the halls of the New York State Capitol, as for many years its passage was doubtful.

The previous law, one of the strictest in the nation, required alleged victims of sexual abuse to initiate any civil lawsuit before their twenty-third birthday. The CVA was passed yesterday with every Senator--Republican and Democrat--voting for the Bill, and it passing in the Assembly with a 130-3 majority. It allows alleged victims to bring civil lawsuits until their fifty fifth birthday and further, provide an open one-year window to revive old cases where the statute of limitations has passed.

The New York Legislature first introduced the CVA bill thirteen years ago but faced tough opposition from a Republican controlled State Senate. Since the measure was first introduced, support for the CVA and its public awareness has steadily increased. A February 2018 Quinnipiac Poll showed that 90% of New York voters supported the Act. Finally, in the November 2018 midterm elections, and for just the third time in fifty years, the Democrats took control of both legislative houses. Passage of the CVA was atop their list of proposed legislation. Yesterday they made good on their promise, with Republicans now overwhelmingly joining in the initiative. Governor Andrew Cuomo has promised to sign the bill into law, and he has ten days to do so.

This initiative has garnered considerable attention for well over a decade. The reason is clear: there are likely to be significant ramifications for many institutions that care for children in New York. The one year “look back” provision is expected to create an onslaught of litigation and could lead to bankruptcy for various civic institutions.

What Does This Mean for Your Institution?

Any educational, religious or other civic organization that cares for children, such as a school camp or day care facility, will be subject to the CVA. This means that a significant number of people may now come forward, recognizing that they have broad-based legislative and public support, and that they will not be faced with the immediate dismissal of their claims on statute of limitations grounds. As an institution providing services to children, even if you are currently unaware of any pending issues as to children previously in the institution’s care, any individual under fifty five years old would be entitled to initiate a public lawsuit against your organization. The defense of such cases is often extremely difficult as memories have faded and witnesses have disappeared. Evidence such as student records, medical records, witnesses to the abuse, individuals who might have received the victim’s outcry, and even the wrongdoers themselves, may be long gone. In many respects the lack of any evidence, other than the statement of the victim, can make an institution essentially defenseless when such claims are asserted. The significantly expanded period of time to assert a claim, and the creation of a one year window to revive old claims will likely lead to opening the floodgates as to old child sex abuse claims.

What Are the Next Steps?

Your institution’s consideration of the ramifications of the CVA is a necessary and critical first step in addressing this potential problem.

(1) Determine Your Potential Risk:

  • Are there lawsuits against your organization that were dismissed on statute of limitations grounds that will likely be resurrected?
  • Have you ever received a complaint or other information suggesting sexual abuse may have occurred? Have you dealt with such information in a reasonable and prudent manner? Who might potential Plaintiffs be?
  • If lawsuits are commenced, do you still have access to witnesses or documents? Is the alleged abuser still alive? Are they still involved with your institution? What evidence is there that your institution knew, in real time, about the allegations and how did it respond? In short, is this a lawsuit you can defend?
  • Consider what could be done now to address any concerns and avoid potential litigation. An outreach to victims, offering truth and reconciliation efforts, and perhaps including funds earmarked for counseling, may be a good starting point. Or consider the creation of a victims fund that can administer compensation to those victims that seek monetary relief but would rather not file a public lawsuit.

(2) What Other Options Should My Institution Consider?

Supporting Organization:

If you are a charitable organization, consider establishing a separate legal entity called a “supporting organization” for purposes of autonomy or limitation of liability. Supporting organizations have been used to provide support to a variety of public charities including potential funding of a separate endowment for the public charity. However, the “supporting organization” regulations are intricate and detailed, and require careful planning in coordination with its public charity.

Bankruptcy Court Protection:

A last resort may include bankruptcy protection should a flood of lawsuits make survival of the entity doubtful. The Boy Scouts and USA Gymnastics Association believe they have potential liability far in excess of their assets. The USA Gymnastics Association recently filed for Chapter 11 bankruptcy protection and the Boy Scouts is considering it. The goal is to re-organize and preserve assets to carry out their charitable missions while attempting to settle lawsuits.

Filing for bankruptcy is a costly and time consuming step, and there are many caveats as to its use. Consideration should be given as to the reputational harm, as well as certain legal challenges after bankruptcy is declared.

Conclusion

The sexual abuse of children has impacted countless victims in many different ways. There is no dispute that such conduct is reprehensible and must be stopped. The enactment of the CVA is sweeping legislation that addresses this issue. While your institution has a responsibility to the children it serves, it must also take reasonable and prudent steps to prepare itself to respond to any complaints or lawsuits that may now be brought. Whether through the legislative process, risk assessment, or proactive remediation efforts, taking steps to best prepare your institution requires careful consideration of all available options. Seyfarth Shaw would be happy to discuss these alternatives with you in more detail, and share our collective wisdom.