Several women who catalyzed the #MeToo movement when they accused Harvey Weinstein of sexual assault and harassment say the bankruptcy proceeding they went through to get payouts was unjust and should be changed.
In 2021, dozens of Harvey Weinstein’s accusers agreed to a settlement worked out in a federal bankruptcy court that granted them each a portion of a $17 million dollar fund for sexual misconduct claims. The majority of them supported the deal.
Such settlements are becoming a common tool used by companies and nonprofits to protect powerful people from paying for misconduct, legal experts said. The U.S. Supreme Court is set to weigh in on the constitutionality of one such case this year. What the court decides could determine whether the strategy fades in popularity or becomes even more common.
But the deal Weinstein’s accusers agreed to protected his company’s executives and officers from future lawsuits, and neither they nor Weinstein admitted wrongdoing. Now, as they watch thousands of other people bring sexual assault lawsuits in the last days to file claims under New York’s Adult Survivors Act, four women interviewed by Gothamist say they felt cheated out of a more meaningful chance at accountability.
“Here we are, as women, being told that, well, you have no choice,” said Tarale Wulff, a model and actor who testified at Weinstein’s criminal trial in Manhattan. “If you want your monetary justice, then you have to silence other women. That’s basically what it sounded like.”
Attorneys for Weinstein and his former studio did not respond to requests for comment.
The Weinstein Company filed for bankruptcy in 2018, prompting a years-long process to negotiate a deal that would allocate some money to the studio’s creditors, some to its attorneys and some to the dozens of women who said Weinstein had sexually assaulted or harassed them in the years he and his brother Robert Weinstein ran the studio. After the studio sold its assets to a private equity firm later that year, the women’s chances of winning compensation outside the bankruptcy dwindled, according to several women who sought settlements.
‘Like an ultimatum’
To determine how much money each accuser should receive, a team involved in the bankruptcy negotiations interviewed the women about Weinstein’s alleged misconduct. Based on the severity of the women’s claims, the team assigned them a number of points.
“It’s like the most perverse audition process in a way,” said Wulff, who testified in court that Weinstein sexually assaulted her. “It’s like, you signed on, and now you have to prove how traumatizing your assault was.”
Dawn Dunning, an actor who also testified in the criminal trial that Weinstein assaulted her, said it felt like she was “competing with other victims.”
“You’re recounting this horrible, traumatic experience and knowing that you’re being literally judged on it,” she said.
In 2021, a federal bankruptcy judge in Delaware signed off on a $35.2 million settlement, which included about $10 million for defense attorneys’ fees and $17 million to be split between about 40 people who claimed they had been sexually assaulted or harassed, according to court records and news reports from the time.
The settlement barred future sexual misconduct litigation against the Weinstein Company and its officers. Accusers were also prohibited from suing Weinstein, unless they agreed to accept only a quarter of their payout. Neither Weinstein nor the company admitted to wrongdoing, according to court documents.
Judge Mary Walrath wrote in a court order that the settlement was “fair and adequate” and provided “sufficient funding” for sexual misconduct claims. She said in court that “83% of the victims have expressed very loudly that they want closure through acceptance of this plan,” the New York Times reported.
Mary Kane, one of Weinstein’s former assistants who says the film producer regularly demeaned her and called her sexist epithets, told Gothamist the settlement saved her financially after she spent tens of thousands of dollars on attorney fees, therapy bills and security measures. Without it, she said, she would have had to move back in with her parents and even considered filing for bankruptcy herself.
“I was able to recoup my losses,” she said, “so I was appreciative.”
But Kane said she was disappointed that the deal didn’t include more accountability measures for the Weinstein Company executives and board members, who she felt had enabled the producer’s behavior. She blamed legislators for creating loopholes in the bankruptcy process that she said tied the hands of the Attorney General’s Office and others involved in the negotiations.
“I think it’s disgusting,” she said. “And I think that it shouldn’t be legal for those in power to be shielded or to recoup their losses when they’re complicit.”
Other women said they felt backed into a corner as they weighed whether to take a payout that would block them from suing Weinstein or members of his company.
“My option was taken away from me,” Wulff said. “It kind of felt like an ultimatum.”
Zoe Brock, a former model and actor, said agreeing to the settlement felt like “an incredible loss.”
“I didn’t know what to do. I didn’t want to take it,” she said. “It felt like I was being robbed again of something — like, the chance to face these people and hold them accountable.”
Brock remembers driving in her car the day she called her lawyer and told him she was going to accept it.
“I had to pull over on the side of the road, because I thought I was going to throw up,” she said. “I cried and I cried and I cried, and then I put it all in a little box in my soul and moved on, because there was nothing else to do.”
Bankruptcy as a ‘reputation management tool’
Pamela Foohey, a bankruptcy expert at Cardozo School of Law, said bankruptcy settlements can be helpful for some, but should not be a substitute for civil litigation.
“There is a significant chunk of people who have been harmed who get tied up in these bankruptcy cases, and they feel like their voices are squashed,” Foohey said. “They end up losing a lot more than the little they gain by getting what might be a quick payout of a small amount of money.”
Foohey recently co-authored an article in the Virginia Law Review that chronicles the growing popularity of bankruptcy proceedings among both nonprofit and for-profit entities facing widespread allegations of misconduct.
She cited USA Gymnastics, which settled in bankruptcy court with athletes who accused former team doctor Larry Nassar of sexual assault, Johnson & Johnson, which filed for bankruptcy amid widespread claims that its baby powder caused cancer, and the many Catholic dioceses across the country that have also pursued bankruptcy as they grapple with allegations of sexual abuse. Her article argues these types of cases have morphed bankruptcy into a “reputation management tool” that reduces the incentive to monitor employees or products that cause harm.
“They know that if something goes horribly wrong across the company, that company can file bankruptcy at some point and force everyone to come together and settle,” Foohey said in an interview.
Oftentimes, like in the Weinstein case, company executives will be protected from litigation as part of the settlement, she said.
The U.S. government plans to challenge those kinds of protections later this year, when the Supreme Court considers the legality of a bankruptcy settlement involving Purdue Pharma, the maker of the highly addictive drug OxyContin, which prosecutors say helped fuel the opioid epidemic.
The Department of Justice is disputing an aspect of the settlement that would shield the Sackler family, which owned Purdue Pharma, from opioid-related lawsuits, according to court papers. In an application to halt the agreement this summer, Solicitor General Elizabeth Prelogar called the deal “an abuse of the bankruptcy system.”
If the Supreme Court rules that the settlement is legal, such a decision could pave the way for even more companies and organizations to use bankruptcy as a way to avoid litigation and protect their executives, legal experts said. But if the justices find it unconstitutional, Foohey said, the tactic would likely stop being used.
Douglas Wigdor, an attorney who represented several Weinstein accusers and unsuccessfully objected to the bankruptcy settlement, said the Purdue Pharma case is unlikely to affect his clients, regardless of the outcome. But he hopes that in future negotiations for cases like these, that victims who want to pursue justice in court aren’t pressured into a bankruptcy agreement that strips them of that right.
“What our clients got paled in comparison to what they should have gotten and what they would have gotten had they been permitted to pursue these legal claims on their own,” Wigdor said.
Since the Weinstein Company’s bankruptcy deal was approved, it has become easier for survivors of sexual assault in New York to sue their perpetrators, regardless of when the assault occurred.
In May 2022, Gov. Kathy Hochul signed the Adult Survivors Act, a bill proposed in the midst of the bankruptcy negotiations, which gave survivors of sexual assault one year to file civil lawsuits if the statute of limitations has passed. More than 2,000 lawsuits have been filed so far, according to the office of state Sen. Brad Holman-Sigal, who sponsored the legislation. The deadline is next Thursday.
Dominique Huett, the first woman to sue Weinstein’s film studio in 2017, said she wishes she could have convinced others involved in the bankruptcy settlement to hold out for the Adult Survivors Act to pass, which would have provided another path for some survivors to seek accountability. She also wishes that Attorney General Letitia James, whose office was involved in negotiating the bankruptcy deal, could have used her platform as the state’s top law enforcement officer and an advocate for survivors to help secure a settlement that held the Weinstein Company’s executives accountable.
“It was just so disappointing,” Huett said.
A spokesperson for the attorney general’s office said they did not have a vote in the settlement but did not respond to additional questions.
Huett, who now runs an organization that supports survivors of sexual abuse, is hoping for changes to the country’s bankruptcy laws, so others won’t have to drop their lawsuits like she did.
“I think everyone has the right to their day in court,” she said.