PSU lawyers: "Good faith" settlement talks begin

Former Penn State University assistant football coach Jerry Sandusky exits the courthouse after the defense rested it's case at the Centre County Courthouse in Bellefonte, Pa., Wednesday, June 20, 2012. Nabil K. Mark,AP Photo/Centre Daily Times

STATE COLLEGE, Pa. Talks over potential settlements between Penn State and roughly two dozen men who accuse ex-assistant football coach Jerry Sandusky of sexual abuse have started in "good faith," said the attorneys assisting the school with negotiations.

One of the attorneys, Michael Feinberg also told university trustees Friday that the school hasn't set aside a certain amount of money for potential settlements.

A related resolution approved by the Board of Trustees after Feinberg's presentation did give the authority for a trustees legal subcommittee to approve possible settlements, along with the ability to also set "dollar limits." There was no estimate yet because talks were at such an early stage, trustees chairwoman Karen Peetz said afterward.

The meeting of the board was called specifically to discuss settlement issues. Another attorney, Michael Rozen, estimated that 20 to 25 accusers have come forward, including the eight who testified at Sandusky's trial in June.

Sandusky, 68, was sentenced to at least 30 years in jail this month following his conviction on 45 criminal counts of child sex abuse. Authorities said the allegations occurred on and off campus.

No settlements have been reached yet. Lawyers for both sides are in still the process of gathering information, Rozen said.

"The discussions have gone exceedingly well, although they are at a very preliminary stage," he told reporters. "Where it goes from here remains to be seen, but I think everybody has agreed to engage with us and has, in fact, engaged with us in good faith. It's our expectation that will continue."

At least five lawsuits have been filed from victims or accusers in the scandal. Besides the trial witnesses and those who have sued, the school said the claims also include those who have come forward through counsel, either privately or publicly.

There was no deadline yet for other accusers to come forward, Peetz said. The attorneys and Peetz also signaled the process may not be wrapped up by year's end, as was initially hoped by the university, in part given the number of attorneys for accusers with which the university must negotiate.

Feinberg has overseen the Sept. 11 victim fund and other major victim compensation efforts. He and Rozen have met face-to-face with the lawyers for all accusers thus far, while the board's legal subcommittee has been meeting every Monday since February to discuss settlement issues.

Feinberg said that while he was still optimistic claims could be resolved by Jan. 1, "it was made very clear to us earlier today, whether it takes two months, three months, five months, six months. — it will take whatever time it takes to get it done."

An alumni watchdog group, Penn Staters For Responsible Stewardship, had urged the board to table Friday's vote on the settlement issue until the criminal case against former school officials Tim Curley and Gary Schultz are resolved. They asked a judge this week to delay their Jan. 7 perjury trial stemming from the child abuse investigation into Sandusky.

The watchdog group said in a statement this week that it remained sympathetic with victims and the need for those responsible to "pay the price" for failing to protect them. But the group also said trustees should "not to act in haste, but rather to allow the judicial process to take its course before addressing possible victim settlement claims."

Asked if the board shared the concerns, Peetz only said "We decided that wasn't a super-relevant point."

The trustees didn't have to get involved with the settlements, Peetz said, but thought it was appropriate given the magnitude of the cases. The subcommittee could approve settlements without having to run it by the full board, though it will still remain in regular contact.

"As we said from the beginning, we wanted to make this a fair process that wasn't overly burdensome for the victims," Peetz said.

Also Friday, ratings agency Moody's Investors Service downgraded the university's long-term rating because of the expected financial costs from pending lawsuits related to the Sandusky scandal. It added that the university had moved forward by embracing reforms set forth by former FBI director Louis Freeh, who led Penn State's own investigation into the scandal, and said that the school's research, fundraising and enrollments remained strong.

Moody's action followed last week's announcement by Standard & Poor's that it had also revised Penn State's outlook to negative from stable citing the litigation over the Sandusky child sex abuse scandal. Penn State now has each agency's third-highest investment grade.

Peetz said the downgrade wasn't a "big deal," and might have an impact only if the school were to issue debt. "We're not planning on issuing debt."

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