The lawsuit also sought to prove that the Vatican is a global business empire, engaging in "commercial activity" in Wisconsin and across the United States, and holding "unqualified power" over each diocese, parish and follower.

Jeffrey S. Lena, an American attorney for the Holy See, welcomed the withdrawal of "fallacious allegations of Holy See responsibility and liability for John Doe 16's abuse."

"A case like this one against the Holy See, which was held together by no more than a mendacious web of allegations of international conspiracy, amounted to a misuse of judicial process and a waste of judicial resources," Lena said in a statement.

The plaintiff was represented by Minnesota attorney Jeff Anderson, who has filed thousands of abuse lawsuits against priests and representatives of the Catholic Church. Anderson is still pursuing a lawsuit against the Holy See in Oregon. Another such case in Kentucky was withdrawn in 2010.

Murphy worked at the school for the deaf from 1950 to 1974. In the early 1970s, multiple allegations of sexual abuse against the priest were made to civil authorities, who investigated but never brought charges. He was placed on a leave of absence for a while and later returned to pastoral ministry in the diocese of Superior, where he worked until 1993.

In 1996, then-Archbishop Rembert Weakland of Milwaukee referred Murphy's case to the Vatican's Congregation for the Doctrine of the Faith. The Vatican decided not to laicize Murphy, but eventually suggested that he continue to be restricted in ministry, and he died four months later, in 1998.

Pope Benedict was named as a defendant in the case because of his authority to remove priests, and because of his involvement in reviewing sex abuse cases when he was cardinal, as prefect of the doctrinal congregation.

"Mythology about the Catholic Church to the contrary, the Holy See is not responsible for the supervision of the more than 400,000 priests around the world," Lena said.

Milwaukee Archbishop Jerome Listecki, currently in Rome on a periodic "ad limina" visit to the Vatican, called the outcome of the case a "reminder of the relationship of the Holy See to the dioceses."

"The Holy See offers the direction we should go," but leaves administrative decisions up to local bishops, Listecki said.

"When I studied law they said in tort action that if you wanted, you can go all the way back to blaming Adam and Eve," the archbishop said. "Reasonable people and society can say, 'this is where responsibility ends.' ”