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(Updated at 1 p.m. EST with new AP link.) The Associated Press reports that the Supreme Court will allow a clergy abuse lawsuit against the Holy See to move forward, despite the Vatican’s claim of foreign sovereign immunity.

The lawsuit, originally filed in 2002 in Oregon, seemed to falter last month, when a White House brief filed by Solicitor General and Supreme Court nominee Elena Kagan — whose confirmation hearings begin today — sided with the Vatican.

According to the AFP story:

Allowing a federal appeals court ruling to stand, the decision means Vatican officials including theoretically Pope Benedict XVI could face questioning under oath related to a litany of child sex abuse cases.

The Supreme Court effectively confirmed the decision of an appellate court to lift the Vatican’s immunity in the case of an alleged pedophile priest in the northwestern state of Oregon.

The Oregon case, which was filed in 2002, does not directly address questions raised in a separate lawsuit in Kentucky alleging that US bishops are employees of the Holy See.

I just checked in with U.S. Vatican attorney Jeffrey Lena, who has spoken to me before about the Vatican’s foreign sovereign immunity, as well as its contention that Catholic priests are not its employees. Here’s his response:

Today the Supreme Court decided not to grant the Holy See’s petition for certiorari. These decisions are made based upon the Supreme Court’s docket and what cases it wishes to hear each term. The decision not to hear the case is not a comment on the merits of our case (importantly, the United States does agree that we are correct on the merits). The effect of the Supreme Court’s decision is to cause the case to return to the district court in Oregon, where the additional remaining defenses will be heard.

Plaintiff currently has one jurisdictional theory left. That theory is that the priest who committed the abuse was an “employee” of the Holy See. We will, of course, point out to the district court that the priest in question is not an employee of the Holy See, and that, therefore, the district court does not have jurisdiction over the case.

As expected, the Survivors Network of those Abused by Priests (SNAP) is thriled with this news, while also denouncing Pope Benedict’s criticism yesterday of the police raid on Catholic Church headquarters and cardinal’s home in Belgium.

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