John Doe v. Archdiocese of Milwaukee
2014 U.S. App. LEXIS 21114
| 7th Cir. | 2014Background
- John Doe (deaf) alleged sexual abuse by Father Lawrence Murphy in 1974 and settled claims against the Archdiocese of Milwaukee in a 2007 voluntary mediation for $80,000, signing a confidentiality clause and a broad release resolving all claims arising from the abuse.
- Four years later the Archdiocese filed Chapter 11; Doe submitted a proof of claim for the same sexual abuse in the bankruptcy proceedings.
- The Archdiocese objected, moved for summary judgment and sought disallowance of Doe’s claim based on the 2007 mediated settlement and release.
- Doe resisted, asserting he was fraudulently induced into the settlement and relying on statements allegedly made during mediation (e.g., misrepresentations about other survivors’ payments, Archdiocese’s ability to pay, and undisclosed facts about Murphy).
- Wisconsin law generally bars admission of mediation communications (Wis. Stat. §904.085(3)(a)), but contains an exception permitting admission in an action “distinct from the dispute” settled by mediation when necessary to prevent manifest injustice.
- The bankruptcy court (after reconsideration) and the district court held the bankruptcy claim was not distinct from the mediated dispute, so mediation communications were inadmissible; summary judgment was granted to the Archdiocese and Doe’s claim was disallowed. The Seventh Circuit affirmed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Wisconsin's mediation confidentiality exception for actions “distinct from the dispute” permits admitting mediation communications in Doe’s bankruptcy fraudulent-inducement claim | Doe: The bankruptcy action is distinct because fraudulent-inducement elements and alleged conduct differ from the original mediation claims; admission is necessary to prevent manifest injustice | Archdiocese: The bankruptcy claim and mediation concern the same dispute (Archdiocese’s responsibility for Murphy’s abuse); communications are barred by §904.085 and exception does not apply | Held: Not distinct; exception doesn’t apply; mediation communications inadmissible and summary judgment for Archdiocese affirmed |
| Whether state (Wisconsin) privilege law governs admissibility in federal bankruptcy proceedings | Doe: Federal privilege law should control because this is a federal bankruptcy case | Archdiocese: Wisconsin law governs because Doe’s claim is based on Wisconsin state law (fraudulent inducement), so state privilege rules supply the rule of decision | Held: Wisconsin privilege law applies under Fed. R. Evid. 501 / Fed. R. Bankr. P. 9017 because state law furnishes the rule of decision |
Key Cases Cited
- Anderson v. Liberty Lobby, 477 U.S. 242 (U.S. 1986) (standard for summary judgment)
- In re Solis, 610 F.3d 969 (7th Cir. 2010) (standard of review for bankruptcy summary judgment)
- State ex rel. Kalal v. Circuit Court of Dane Cnty., 681 N.W.2d 110 (Wis. 2004) (statutory interpretation focuses on plain language)
- Kailin v. Armstrong, 643 N.W.2d 132 (Wis. Ct. App. 2002) (fraudulent inducement in Wisconsin law)
- Northwestern Memorial Hospital v. Ashcroft, 362 F.3d 923 (7th Cir. 2004) (distinguishing when state privilege law applies in federal proceedings)