New Zealand Markets closed

Weinstein’s Rage-Inducing Settlement Is the Norm for Civil Suits

Stephen L. Carter

(Bloomberg Opinion) -- Critics have their knives out for the proposed $47 million settlement of most of the civil suits filed against Harvey Weinstein and his defunct production company by women accusing him of sexual assault or other forms of misconduct. The settlement includes $25 million for the accusers, most of whom will receive about $500,000 each, although a few will get more.

Nobody’s happy. The head of victims-rights group Time’s Up called the deal “a symptom of a problematic, broken system that privileges powerful abusers at the expense of survivors.” A lawyer for one of the accusers, searching for a way to express his fury at the additional $12 million allocated for the defense of Weinstein and the company’s directors, found an unlikely metaphor: “The agreement is akin to the United States giving military aid to Iran so that it could attack Israel.” And if you want to see fury and pain more colorfully expressed, just take a peek at #metoo on Twitter these last few days.(1)

I’m not about to defend Harvey Weinstein. If only a small fraction of the allegations against him are true, the man is the definition of a monster.  But while it’s easy to understand why people are so angry and bewildered, we should take a moment to add a bit of legal context.

Let’s begin with some hard facts. Except in the movies, civil suits hardly ever go to trial. An estimated 97%  or more are settled, dropped, or dismissed. A well-regarded 2008 study found that the majority of civil plaintiffs who reject a proposed settlement wound up worse off by going to trial — either because the jury awarded damages of less than the settlement amount or because the jury ruled for the defendant.

Experienced trial lawyers understand the risks of turning down a settlement; good lawyers make sure their clients understand them, too. Some of Weinstein’s accusers are refusing to participate — among the holdouts is the actress Ashley Judd, who is suing him for defamation — but one can expect that nearly all the plaintiffs will throw in the towel, and for the same reason: They think the proposed settlement is the best they’re likely to get, and they prefer not to press on and risk getting less ... or nothing.

Here the risk of getting nothing may be particularly high. Plaintiffs who opt in must waive further legal claims against Weinstein, the Weinstein Company, or its board of directors. Those who opt out will henceforth be proceeding against a bankrupt company and a likely soon-to-be-bankrupt Weinstein. In other words, the plaintiffs who continue to litigate are unlikely to collect very much.

Part of the challenge for those who opt out is that the insurance companies will have abandoned the field. The point of the settlement is to make clear the limits of the insurers’ obligations to Weinstein and the company. For better or worse, an insurance company has no duty to those the insured has harmed. Except in a handful of jurisdictions, it’s hornbook contract law that you can sue the person who hurts you but not that person’s insurer.

Anger about the $12 million going to pay lawyers for both Weinstein and the directors is understandable but misguided. Typical “directors and officers” policies will pay the insured’s legal fees up to the policy limit, with exclusions for certain transgressions. The lawyers’ fees appear to be a settlement of a dispute over how much of the litigation cost the insurers will cover. The $12 million set aside for this purpose would not otherwise be going to compensate Weinstein’s victims.

As to the fact that Weinstein admits no wrongdoing, that, alas, is necessary to the settlement, if only because any statement of fault on his part would be admissible should criminal or other civil litigation arise out of the settled incidents. That we might all agree that he’s a monster is here beside the point. The problem is that if civil defendants, in order to settle their cases, had to admit their wrongs, every case would instead be litigated, and the waiting list for courtroom time would be decades long.

If news reports are accurate, the settlement is not much different from the one proposed over the summer. Maybe that was the moment for anger, back when there was time to renegotiate. Now it’s a fait accompli.  Yes, there was talk last year of a much larger fund for Weinstein’s victims — perhaps as much as $90 million. But that proposal was to be funded by a sale of the Weinstein Company to investors; when that deal collapsed, so did the fund.

Where does that leave Weinstein’s accusers? Probably in a space of unimaginable pain. Most will take the settlement, understanding that this is probably the best they can get. Others will fight on in court, less I suspect in the hope of uncovering some hidden assets than for the satisfaction of watching their attacker squirm on the witness stand and assert his Fifth Amendment rights.

Public justice, however, will have to await the outcome of Weinstein’s forthcoming trial on criminal charges — a trial that could prove to be the first of several. Yes, the Twitterverse is full of worry that the rich and famous never go to prison, at least for sexual assault. But Bill Cosby, who is likely much richer than Harvey Weinstein, is serving a 3 to 10 year sentence for that very crime, and just this week his appeal was rejected.

(1) A number of critics have pointed out on social media that the proposed $25 million settlement is less than Weinstein himself received last year when he sold his townhouse in the West Village.

To contact the author of this story: Stephen L. Carter at scarter01@bloomberg.net

To contact the editor responsible for this story: Sarah Green Carmichael at sgreencarmic@bloomberg.net

This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.

Stephen L. Carter is a Bloomberg Opinion columnist. He is a professor of law at Yale University and was a clerk to U.S. Supreme Court Justice Thurgood Marshall. His novels include “The Emperor of Ocean Park,” and his latest nonfiction book is “Invisible: The Forgotten Story of the Black Woman Lawyer Who Took Down America's Most Powerful Mobster.”

For more articles like this, please visit us at bloomberg.com/opinion

©2019 Bloomberg L.P.