[Moo] Details on The Lawsuit, and some comments

[Annie Hamel]

Here, here!  We are also willing to contribute as the SCA has
tremendously enriched our lives for the past 6 years.

Lady Heloise and Lord Alexandre

On Sun, Feb 5, 2012 at 11:33 PM, Jonathan Blaine
<hourumiyamoto at gmail.com> wrote:
> I read that afterwards, but still feel the need to help. Even though the
> kingdom can write the check, it still puts a dent in the funds. I personally
> want to help rebuild those funds.
>
> On Feb 5, 2012 6:22 PM, "Lisa Mitchell" <cframwymarc at hotmail.com> wrote:
>>
>> I'm working on a couple of scenarios.
>>
>> Ceridwen
>> Exchequer
>>
>> ________________________________
>> Date: Sun, 5 Feb 2012 15:41:22 -0500
>> From: hourumiyamoto at gmail.com
>> To: moo at lists.stierbach.org
>> Subject: Re: [Moo] Details on The Lawsuit, and some comments
>>
>> And so because of the actions of one oshirinoana (asshole in Japanese),
>> everyone in the sca gets (censored). Lovely, so what's the plan, I know we
>> as a barony aren't going to sit idly by, I personally want to get this
>> monies owed business out of the way. Game plan?
>> On Feb 5, 2012 10:41 AM, "Maven" <sk8maven at yahoo.com> wrote:
>>
>> Copied from SCA-Bridge-Chat (Barony of the Bridge, East Kingdom):
>>
>>
>>
>> The SCA has announced they have settled the lawsuit. The original news
>> release can be found: http://sca.org/BOD/announcements/settlement.html
>>
>> The questions below cover the article.
>>
>> SCA Settlement FAQ
>>
>> What was the lawsuit about?
>>
>> Actually, there are two lawsuits, one filed against the SCA and one filed
>> by the SCA to protect its interests and enforce its insurance policies.
>>
>> Several years ago, a former SCA member named Ben Schragger was convicted
>> of the sexual abuse of multiple children that he allegedly met through the
>> SCA from 1999-2001. He was sentenced and is currently serving a 62-year
>> prison sentence. The Board, of course, permanently revoked his SCA
>> membership.
>>
>> After an initial civil lawsuit was filed and dismissed in 2007 against the
>> Society for Creative Anachronism, Inc. ("SCA"), a second civil lawsuit was
>> filed in 2009 claiming that the SCA should be held liable for Mr.
>> Schragger's wrongdoing. The lawsuit also asked that the SCA be held liable
>> for allegedly not having effective policies in place at that time to protect
>> these children. Three SCA participants who were local officers during this
>> time were also named as defendants in the lawsuit, and as officers of the
>> corporation, had the right to be indemnified against any ensuing legal
>> costs. The Plaintiffs in the lawsuit demanded Seven Million Dollars
>> ($7,000,000.00) in damages from the SCA.
>>
>> The SCA immediately tendered the lawsuit to its insurance companies and
>> one insurer agreed to cover the SCA's attorney's fees incurred in defending
>> the lawsuit. All other insurers refused to cover defense fees or indemnify
>> the SCA in the event of a settlement or judgment.
>>
>> In 2010, both insurance carriers threatened to file suit in Federal Court.
>> They wanted a Federal Court judge to rule that the insurance policies did
>> not cover the 2009 lawsuit and did not cover the defense or indemnification
>> of the SCA or its officers in the 2009 lawsuit. As a protective measure, it
>> was necessary for the SCA to file a pre-emptive lawsuit against both
>> insurance carriers, demanding payment under the policies. In this lawsuit
>> the SCA demanded coverage in California, where the SCA is headquartered. The
>> SCA has been required to pay the attorney representing the SCA in this
>> lawsuit against the insurance carriers. It stands to reason that payment of
>> these fees has left the SCA in a precarious financial position.
>>
>> Why is our insurance company not accepting responsibility for covering our
>> loss?
>>
>> The insurance carriers have offered a number of different reasons for
>> their position that the 2009 lawsuit should be excluded from coverage under
>> the policies. The SCA does not believe that any of these reasons have any
>> merit and is continuing its suit against the non-paying insurance carrier. A
>> trial date has been set in May, 2012.
>>
>> Which lawsuit is being settled by this settlement payment?
>>
>> The 2009 lawsuit against the SCA, in which plaintiffs asked for
>> $7,000,000, will be fully and finally settled and dismissed with the
>> settlement payment of $1,300,000.
>>
>> How was the settlement arrived at?
>>
>> After many years of legal process, in October of 2011, the victims agreed
>> to settle for $1,300,000.00. This settlement was promptly presented for
>> approval to both of the SCA's insurance carriers. The acceptance of this
>> offer provides the SCA with the assurance that there will be no further
>> lawsuits brought by the victims of Ben Schragger and thus brings to a close
>> the financial and legal risk to the Kingdoms, officers, and the SCA as a
>> result of the lawsuit. One insurance carrier agreed to pay $450,000 of the
>> settlement amount. The other insurance carrier has refused to contribute to
>> the settlement. Therefore, the SCA has been forced to pay the remainder of
>> this settlement, $850,000. This brings the total cost to the SCA for both
>> the settlement and the related legal fees to over $1,000,000.
>>
>> Are we sure there will be no future lawsuits related to the subject matter
>> of the 2009 lawsuit?
>>
>> We cannot be 100% positive, but we know that the plaintiffs in the 2009
>> lawsuit are all of the victims that were named in the police reports.
>>
>> If the SCA is not guilty of any wrong-doing, why are we settling the 2009
>> lawsuit instead of continuing to fight the charges?
>>
>> The simple answer is that we cannot afford it. Like any other corporation,
>> the SCA must make decisions about the most effective use of the money it
>> has, and the financial impact of the lawsuit is effectively diverting a
>> large amount of funds that could be much better used to serve the SCA by
>> fostering our mission of researching, teaching and experiencing aspects of
>> the Middle Ages and Renaissance. The SCA is not admitting to any wrong-doing
>> by settling the 2009 lawsuit, and the settlement and release agreement
>> clearly state that fact. Settling the lawsuit now, for a fraction of the
>> original demand, will allow the SCA to move forward and to concentrate on
>> rebuilding our finances and developing initiatives that can make the SCA a
>> healthier organization with which to support our mutual dreams.
>>
>> How much has the SCA paid in legal fees, and how much will it have to pay
>> before the lawsuit against the insurance carrier is decided?
>>
>> Costs arising from the 2009 lawsuit, the settlement and the associated
>> legal fees have surpassed $l,000,000. The SCA must also anticipate
>> additional legal fees as it pursues the non-paying insurance carrier and
>> seeks judgment in May 2012 that the insurance carrier must pay the SCA's
>> expenses and those of the three local officers for the 2009 lawsuit. There
>> is no way to know with certainty how much the SCA will still need to pay,
>> but those costs will probably be in the tens of thousands of dollars.
>>
>> Why is the SCA asking the Kingdoms for money?
>>
>> The SCA corporate office simply does not have this much in cash, assets or
>> cashable dollars. While the corporate office of the SCA has managed the
>> burden of our shared liability to date, it has been the entirety of Society
>> for Creative Anachronism, Inc. that has been liable for damages under this
>> lawsuit. In order to the meet the terms of the settlement without
>> financially crippling the SCA, its subsidiaries or any single branch, it has
>> thus become absolutely necessary that each Kingdom located in whole or in
>> part in North America, both Pennsic and Gulf Wars, and the subordinate
>> Corporate level checking accounts contribute an equal percentage of their
>> separate total cash assets to the settlement and associated legal fees. The
>> other wars will contribute as part of the Kingdom through which they report.
>>
>> Why are all the Kingdoms liable?
>>
>> The 2009 lawsuit was brought against the Society for Creative Anachronism,
>> Inc. and thus included all of the SCA. In order to meet the terms of the
>> settlement without crippling the SCA or any single Kingdom, all Kingdoms
>> will be required to contribute.
>>
>> Are branches outside North America expected to contribute?
>>
>> No, Kingdoms and affiliates outside of North America are not being
>> required to contribute to the settlement (although voluntary donations would
>> be gratefully accepted!). First, the affiliates were not named in the
>> lawsuit. Second, these branches were incorporated under different tax IDs
>> and non-U.S. jurisdictions, with their own Boards of Directors and
>> responsibility for their own financial matters and insurance policies. With
>> regard to Canadian Provinces, the SCA is incorporated as a foreign
>> non-profit corporation so that Canadian branches are part of the overall
>> Society for Creative Anachronism, Inc.
>>
>> Are the subsidiaries exempt from having to contribute?
>>
>> No. At the time of the filing of the lawsuit, the subsidiaries did not
>> exist. All kingdoms were branches directly under the umbrella of the Society
>> for Creative Anachronism, Inc. Regardless, all subsidiaries are wholly-owned
>> by the SCA, and as the sole owner, the SCA has the authority to use or
>> direct the use of the subsidiaries' assets for the benefit or objectives of
>> the SCA as a whole.
>>
>> Why are Pennsic and Gulf War singled out among the inter-Kingdom wars?
>>
>> Pennsic and Gulf War both report independently to the Society Exchequer's
>> office and have separate bank accounts that do not fall under a Kingdom's
>> authority. All other inter-Kingdom wars will contribute as part of the
>> Kingdom through which they report.
>>
>> Will the SCA branches that are contributing to the settlement get their
>> money back if the SCA wins the lawsuit against the insurance company?
>>
>> Absolutely! If the SCA prevails in its lawsuit against the non-paying
>> insurance carrier, any funds recovered will be distributed to the kingdoms,
>> on a pro rata basis, after payment of any remaining legal fees.
>>
>> Will the funds collected be kept separately from the general SCA funds?
>>
>> The settlement funds will not be kept separate because a check will be cut
>> almost immediately in order to meet the deadline for payment of the
>> settlement. The funds that will go toward any future legal fees will be kept
>> in a separate checking account, earmarked for use only in paying the SCA's
>> legal fees.
>>
>> Are there penalties if Kingdoms or the named inter-Kingdom events don't
>> produce their share of the funds to SCA?
>>
>> Yes. The bank accounts owned by the various U.S. branches are, directly or
>> indirectly, legal assets of the Society for Creative Anachronism, Inc., and
>> the SCA would have the right to freeze all funds in such accounts, although
>> it would take any such step very reluctantly.
>>
>> What has the SCA done to prevent this type of problem from happening in
>> the future?
>>
>> The SCA has worked to improve its policies and institute new policies
>> where needed. Some of the new policies include the two-deep rule and
>> criminal background checks on anyone wishing to administer youth activities.
>> The Board will be addressing long-range plans for improving its governance
>> structure during 2012, after consultation with internal and outside counsel,
>> as well as the SCA's financial advisors.
>>
>> How was the amount each branch would contribute determined? Who determined
>> it?
>>
>> The SCA's financial advisors conducted extensive financial evaluations,
>> taking into account financial reports from all SCA branches. Data was
>> collected from the 2010 Consolidated Doomsday reports and the most recent
>> Kingdom level quarterly reports to determine the estimated available cash
>> assets held in the SCA and its subsidiaries. Using that total, a calculation
>> was performed to determine what percentage of funds each Kingdom had in
>> relationship to the total amount of cash needed. The percentage per Kingdom
>> was used to calculate the amount each Kingdom would have to contribute to
>> the settlement. To be fair, each Kingdom will be paying the same percentage
>> of its assets. That percentage is 18% of the cash assets each branch had as
>> of the last relevant financial report filed by the branches and Kingdoms.
>> The analysis was presented to the Board of Directors, who approved this
>> method of calculating the contributions from each Kingdom.
>>
>> In general, how will the contribution of funds work?
>>
>> Each Kingdom will send to the Corporate Office an amount equal to 18% of
>> all monies in the checking accounts of all branches within that Kingdom as
>> of the last relevant financial report filed by the branches and Kingdoms.
>> Each Kingdom will have discretion in determining how it will collect the
>> funds internally, from each of its branches.
>>
>> Does each branch have to contribute the same amount? What if another
>> branch holds a branch's money such as a Barony holding funds for a Canton?
>>
>> Each Kingdom will be required to contribute the same percentage of the
>> combined total cash assets of each of its branches as of the last relevant
>> financial report filed by the branches and Kingdoms. Each Kingdom will be
>> given great flexibility in how it raises this amount from the branches under
>> its authority. Your Monarchs, Seneschal and Exchequer will make the
>> determination of how the gathering of funds will be handled within your
>> Kingdom, and the Corporate Treasurer and Society Exchequer will work with
>> each Kingdom to facilitate the gathering of the funds.
>>
>> Is each branch going to have to send their money to the corporate office?
>>
>> No. Each branch will need to send its contribution to its Kingdom
>> Exchequer.
>>
>> How is the money going to be collected from each branch?
>>
>> Each Kingdom will receive an invoice from the corporate office stating the
>> amount of money it is required to contribute. It is the responsibility of
>> the leadership in each Kingdom to determine how to collect the money from
>> each of its branches. The Corporate Treasurer and the Society Exchequer will
>> work with the Kingdom Exchequers to discuss the best options for each
>> Kingdom.
>>
>> How soon does the money have to be sent to the corporate office?
>>
>> The due date for each invoice that will be sent to the Kingdoms will be 10
>> business days from receipt of the invoice. We do realize that some Kingdoms
>> may not have the full amount immediately available within the Kingdom
>> account, so the corporate office will work with these particular Kingdoms to
>> discuss different methods of collecting the funds and/or making the required
>> payment.
>>
>> What happened to the $600K the corporate office had in reserve from
>> previous years?
>>
>> Between rising costs in operating expenses, the loss from investments due
>> to the general global economic downturn, and the expenses of the 2009
>> lawsuit, this money has been depleted.
>>
>> What if I want to hold a fundraiser or make a personal donation?
>>
>> You are free to do so, and the SCA deeply appreciates your efforts and
>> your support of our shared organization. We would suggest that you make any
>> such donations directly to your Kingdom to help it pay the amount it will be
>> required to contribute as its part of the SCA's obligations in the
>> settlement.
>>
>> Will the Board be holding any meetings or town halls where we can talk
>> face-to-face to ask questions and discuss this?
>>
>> Yes. Meetings have already been held for Kingdom Royalty, Seneschals, and
>> Exchequers. We will also be holding town halls at Gulf War, Estrella and
>> Pennsic. Check the war schedules for dates and times. Your Crown, Coronet
>> and Kingdom Seneschal and Exchequer have all been briefed, understand the
>> obligations involved and can answer many of your questions. We recognize you
>> will naturally have many questions, and we ask that these be addressed to
>> the appropriate Kingdom Ombudsman, who will endeavor to respond as soon as
>> possible. While we are committed to getting get back to you as quickly as
>> possible, we do ask for some patience and understanding as this process is
>> extremely difficult.
>>
>> The Board of Directors, Corporate officers, and Society officers are doing
>> everything possible to resolve this issue to the best outcome possible. Your
>> understanding and support of our mutual responsibilities are deeply and
>> fervently appreciated as we move forward.
>>
>> -------------------------------------------------
>> Comments (Medhbhin):
>> This is good news and bad news. It's good news that the Looming Doom of
>> the Lawsuit has been settled at a discount rate. It's bad news that the
>> monies must be raised so broadly in such a short time, and will seriously
>> impact groups and people that had absolutely nothing to do with the original
>> crime.
>>
>> It is also bad news that we are finding out that insurance carriers cannot
>> be trusted to live up to their ends of their contracts with us. (Or is this
>> really news?)
>>
>> It is bad news that the Board now has all the excuse it ever needed to
>> continue to increase the financial burden on individual members.
>>
>> It is bad news that they are apparently not considering that it is WAY WAY
>> WAY past time to think about radical reorganization of the SCA - at the very
>> least, separation into individual Kingdoms under an overall nominal umbrella
>> organization. Better still would be reversing the current structure - from
>> top-down to bottom-up. In neither of those cases would there have been the
>> perception of one single huge pot of money to be accessed via lawsuit -
>> which is what has caused so much of the trouble. (Tip of the turban to Duke
>> Cariadoc, who said such things for years before his worst forebodings came
>> true, and who has had the graciousness not to shout, "I TOLD YOU SO, YOU
>> MORONS!" all over every available  communications source.)
>>
>>
>>
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>>
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