As chickens come home to roost for the Boy Scouts of America, the organization is attempting to shield its local councils from liability by claiming that each council is a “franchise.” The problem with that argument, according to plaintiffs’ counsel, is that the central organization pays council employees directly and contributes to employee retirement plans – and they screen all local applicants.
One of the plaintiffs’ lawyers, John Manly, told the New York Times it was “like arguing that General Motors doesn’t have any relation to its factories.” He compares the recent BSA moves to those of the Roman Catholic Church, which has used a similar strategy. According to Manly, the Church achieved only very limited success.
Since the BSA filed for Chapter 11 bankruptcy earlier in February, all tort actions against the organization have been stayed while they develop a “reorganization” or “restructuring” of their debts and other present or potential liabilities. So far, the BSA has proposed establishing a $1 billion compensation fund for victims and survivors of sex abuse.
According to the organization’s most recent tax filing, the BSA had approximately $1.4 billion in assets in 2018, with nearly $876 million in liabilities. Most of its assets are in the form of investments, such as securities and bonds, or property. The BSA has only about $55 million in cash reserves.
Most of the real estate used for BSA functions, such as camps, event centers, and other facilities, are owned by the local councils – and many of these properties have considerable value.
The most recent research of what the BSA calls its “Ineligible Volunteer Files” (more commonly known as the “Perversion Files”) indicates there were more than 16,000 sexual assaults or abuses perpetrated by over 7,800 Scouting volunteers and employees over the course of nearly eight decades.
As of February 18th, National Public Radio reported there were approximately 300 sex abuse lawsuits pending against the BSA. Add to that the fact that BSA enrollment and revenues have been in decline for a number of years, and the future of the venerable organization that failed to protect the very children entrusted to them appears to be very much in doubt.
