Navigating the Straits of Settlement andInsolvency: A Reconciliation of Joint andSeveral Liability and ProportionateSettlement Under the Maritime Law

I. IntroductionWho pays for a judgment-proof defendant? Does a plaintiff's interest in full compensation outweigh a defendant's interest in paying only for the harm that it caused? Multidefendant litigation raises one more question: What happens when one defendant settles, one goes to trial, and a third winds up judgment-proof?1 The law should encourage litigants to resolve disputes, but should it do so to the detriment of defendants that demand their day in court?The questions in the preceding paragraph do not have easy answers; in fact, the Third Restatement of Torts devotes an entire volume solely to the issue of damage apportionment.2 This Note considers only one aspect of the tension between comparative fault and full compensation: reallocating uncollectible damages among parties to a lawsuit. This aspect lacks a clear consensus. For example, the Third Restatement suggests no fewer than five schemes for allocating a judgment-proof defendant's share of damages among parties.3 The significance of this issue is apparent when one considers the numerous high-profile lawsuits in which nominally responsible defendants have paid grossly disproportionate damages to plaintiffs. For example, in 1987 the Supreme Court of Florida imposed 86% of a damages award against Walt Disney World, which was itself only 1% at fault for the plaintiff's injuries.4 The plaintiff's husband, 85% liable for her injuries, was immune to suit,5 so Walt Disney World bore both its 1% share and the husband's 85% share of the plaintiff's $750,000 award.6This Note examines a topic narrower than just the reallocation of uncollectible portions of plaintiffs' awards. Specifically, this Note discusses the reallocation issue in the context of partial settlements perfected under the maritime law. The maritime law is an excellent area of inquiry because it allows exploration of the interplay between "pure" joint and several liability and "pure" comparative fault.7 Furthermore, the bounds of one defendant's responsibility for another's inability to pay are unclear under the current maritime jurisprudence. Although this issue is admittedly narrow, it reaches wider in that its resolution requires one to reconcile tensions between joint and several liability and proportionate fault.Admiralty and maritime actions fall under the jurisdiction of the federal courts.8 Approximately 6.5% of tort claims in federal courts concern maritime law.9 Maritime jurisdiction applies to torts that both occur on the navigable waters of the United States and bear a significant relationship to traditional maritime activity.10 Because the maritime law is a distinct pronouncement of "federal common law,"11 maritime decisions can be highly influential in tort law's development.12 For example, the United States Supreme Court's decision in East River Steamship v. Transamerica Delaval, Inc.,13 articulating the grounds and rationales of the economic loss rule,14 has strongly influenced both state and federal causes of action.15Recently, the Court has modified the maritime law by adopting comparative fault,16 retaining joint and several liability,17 and applying "proportionate share" apportionment when parties partially settle claims.18 Notwithstanding these developments, the precise interplay of these principles in the arena of judgment-proof defendants remains unclear.19 On the one hand, joint and several liability allows a plaintiff to recover all of its damages from any concurrent tortfeasor and thus makes codefendants liable for a judgment-proof defendant's share of damages.20 On the other hand, comparative fault and proportionate share apportionment limit the liability of nonsettling defendants to their proportionate shares of the plaintiff's damages.21 The Third Restatement describes joint and several liability's imposition of the risk of insolvency on codefendants as "difficult to square with comparative responsibility."22Though this issue is not unique to the maritime law, it is one that many states do not face because of widespread legislative modification of joint and several liability principles at the state level in recent years. …