Opinion ID: 677610
Heading Depth: 2
Heading Rank: 4

Heading: Reduction of damages in accordance with settlement.

Text: 86 Shortly before trial, plaintiffs concluded an agreement to agree with five of the former officers of FPI. This agreement was essentially a settlement, by which plaintiffs would receive $500,000 in disputed insurance proceeds and assignment of all rights to certain other property. The parties deferred the finalization of the agreement until after resolution of plaintiffs' case against AY. The district court granted preliminary approval to the settlement and subsequently severed plaintiffs' claims (and AY's cross-claims) against the five FPI principals for adjudication in a separate trial. After the verdict was returned against AY, plaintiffs finalized their agreement with the five on precisely the same terms agreed upon earlier, and the district court approved the settlement. 87 AY would have been able to argue that this agreement was a settlement entitling AY to a Kaypro instruction, which would have instructed the jury to determine the percentage of culpability attributable to the nonsettling defendants, including AY. Those defendants would then be required to pay only the percentage of the total damages amount for which they were responsible. See Franklin v. Kaypro Corp., 884 F.2d 1222, 1231 (9th Cir.1989), cert. denied, 498 U.S. 890 (1990). 88 After the severance, plaintiffs and AY entered into a stipulation whereby AY relinquished the right to seek a verdict reduction on Kaypro grounds and the plaintiffs agreed to reduce any verdict in their favor by the greater of 27.5 percent of the verdict (excluding punitive damages) or $2,291,150. The district court approved this agreement. Based upon the agreement, AY did not request a Kaypro verdict form. 89 However, at a post-trial hearing, the district court refused sua sponte to reduce the Sec. 11 verdict as contemplated by the agreement. The district court did not clearly state its reasons for not doing so, but it appears that the judge believed that Sec. 11 does not provide for joint and several liability among defendants, and that therefore it was proper to exclude the Kaypro credit. 90 This finding was erroneous. Section 11(f) specifically provides that all persons liable shall be jointly and severally liable. 15 U.S.C. Sec. 77k(f) (1988). Furthermore, the parties had stipulated to the verdict reduction and the district court had approved their stipulation. Therefore, we reverse the district court's refusal to reduce the Sec. 11 verdict in accordance with the parties' stipulation, and remand for the district court to do so. 91