Opinion ID: 417730
Heading Depth: 2
Heading Rank: 4

Heading: Plan of Attack

Text: 11 One of the initial questions we face in deciding this case is determining what source of substantive law we shall use. In making this decision we are guided by 42 U.S.C. Sec. 1988 (1976), which states: 12 The jurisdiction in civil and criminal matters conferred on the district courts by the provisions of this Title ... for the protection of all persons in the United States in their civil rights, and for their vindication, shall be exercised and enforced in conformity with the laws of the United States, so far as such laws are suitable to carry the same into effect; but in all cases where they are not adapted to the object, or are deficient in the provisions necessary to furnish suitable remedies and punish offenses against law, the common law as modified and changed by the constitution and statutes of the State wherein the court having jurisdiction of such civil or criminal cause is held; so far as the same is not inconsistent with the Constitution and laws of the United States, shall be extended to and govern the said courts in the trial and disposition of the cause .... 13 This statutory scheme establishes a three part test for finding substantive law. First, if federal law is neither deficient nor inapplicable, it will apply. Second, if federal law does not apply, state law does apply, unless, third, state law would be inconsistent with the Constitution and laws of the United States. 14 As mentioned earlier, the instant case is complicated by the fact that the settling tortfeasor was being sued for both joint and separate torts. The conspiracy claim against Denny's made Denny's potentially liable for the same elements of damages as were found against Camden. Thus, we cannot take the simple solution suggested by Dobson and hold that the settlement with Denny's was entirely separate from the claims against Camden. Accordingly, we must address the complicated issues regarding settlements. For analytical simplicity, we shall first consider the problem in the context of pure joint tortfeasors. Once that question has been resolved we may then reintroduce the complexity of a settlement for both joint and separate torts. The issue before us, the effect of a settlement on a nonsettling tortfeasor, is merely the tip of the iceberg. It is impractical to consider the effect of a settlement without also considering the problem of contribution and, indeed, the very nature of joint liability. Accordingly, we must become voyageurs, embarking on the titanic journey of circumnavigating tort law. 15 One final preliminary matter is that of vocabulary. There are at least four schemes for measuring the effects of payment by one tortfeasor on the rights of a joint tortfeasor. The traditional common law approach is to do nothing. The principal behind the no contribution rule was that the courts should not assist a wrongdoer in spreading the consequences of his or her wrongful acts among other culpable parties. See, e.g., Merryweather v. Nixon, 101 Eng.Rep. 1337 (1799); W. Prosser, Handbook of the Law of Torts 307 (4th ed. 1971). A second approach is to allow pro tanto credit. Under this scheme, a settlement with a tortfeasor would produce a dollar-for-dollar reduction in an award against a nonsettling tortfeasor. See, e.g., Unif. Contribution Among Tortfeasors Act Sec. 4 (1939). A third approach, the pro rata approach, apportions the economic consequences of a judgment equally among the joint tortfeasors. See, e.g., Unif. Contribution Among Tortfeasors Act Sec. 4 (1955); see generally Note, Settlement in Joint Tort Cases, 18 Stan.L.Rev. 486 (1966) [hereinafter cited as Stanford Note]. This might better have been called a per capita approach, but in this opinion we will retain the more common term of pro rata. Finally, under the proportional approach, each tortfeasor is responsible for a share of the damages in proportion to that tortfeasor's share of the fault. See Comment, Comparative Negligence, Multiple Parties, and Settlements, 65 Calif.L.Rev. 1264 (1977) [hereinafter cited as California Comment]. Thus, a tortfeasor found seventy-five percent at fault would be responsible for payment of seventy-five percent of the damages awarded. 16 With this vocabulary in place we shall proceed first, to see if federal law is deficient regarding settlements, second, to examine the state law applicable to this question, and third, to determine whether the result provided by state law is consistent with federal law. We find that federal law is deficient in this area and that application of state law would result in a pro tanto reduction in the judgment against the nonsettling tortfeasor. This result, however, is inconsistent with the policies underlying section 1983. As a result, we must fashion a rule that is consistent with these policies. This approach leads us to adopt a rule of proportional reduction. Finally, we find that reintroducing the complexity of separate as well as joint torts has no effect on the rule of proportional reduction.II. SECTION 1988--STATE LAW AND FEDERAL POLICIES 17 Initially we note that federal law is deficient on the effect of a plaintiff's settlement with a joint tortfeasor on a judgment against a nonsettling tortfeasor. In Miller v. Apartments and Homes of N.J., Inc., 646 F.2d 101 (3d Cir.1981), the court found that federal law was not deficient on this subject. The Third Circuit, however, relied upon the power of federal courts to generate common law rules to fill out the interstices of federal statutory schemes. We do not follow that line of reasoning. Indeed, section 1988 would make no sense if Miller were correct on that point. Section 1988 assumes as a trigger the presence of a federal statutory scheme. If that same statutory scheme carried with it the power to generate common law rules, section 1988's reference to a federal law deficiency would make no sense. Instead, we follow Johnson v. Rogers, 621 F.2d 300 (8th Cir.1980), in holding that federal law is deficient on the effect of a settlement with a joint tortfeasor on the liability of a nonsettling tortfeasor. Consequently, we must turn to an examination of the state law governing this issue. A. State Law Regarding Settlements 18 Section 1988 requires that we apply state law to a section 1983 action where federal law is deficient, unless that state law conflicts with other federal law or policies. Having found that federal law is deficient on the effect of a settlement on the liability of a nonsettling tortfeasor, we must now examine state law. This case comes to us from the Southern District of Texas, so we must examine Texas law. 19 When a joint tortfeasor settles before trial, Texas applies a one satisfaction rule. 1 20 It is a rule of general acceptation that an injured party is entitled to but one satisfaction for the injuries sustained by him .... There being but one injury, there can, in justice, be but one satisfaction for that injury .... Bradshaw v. Baylor University, 126 Tex. 99, 84 S.W.2d 703, 705 (1935). Accord T.L. James & Co. v. Statham, 558 S.W.2d 865, 868 (Tex.1977); McMillen v. Klingensmith, 467 S.W.2d 193, 196 (Tex.1971); Palestine Contractors, Inc. v. Perkins, 386 S.W.2d 764, 766 (Tex.1964). Application of this rule would result in a pro tanto credit for a settlement, which would ensure precisely one satisfaction for a wrong. In this case, assuming Denny's settled for the same injury for which Camden was found liable, the Texas rule would result in a take nothing judgment. Denny's settled for $30,000, the jury and judge found damages of $21,135.96, so Dobson has been fully compensated. Our next task is to determine whether the Texas pro tanto reduction rule conflicts with federal law. 21 B. Federal Law and Policies Regarding Damages 22 In resolving questions of inconsistency between state and federal law raised under Sec. 1988, courts must look not only at particular federal statutes and constitutional provisions but also at the policies expressed in [them]. Robertson v. Wegmann, 436 U.S. 584, 590, 98 S.Ct. 1991, 1995, 56 L.Ed.2d 554 (1978) (quoting Sullivan v. Little Hunting Park, Inc., 396 U.S. 229, 240, 90 S.Ct. 400, 406, 24 L.Ed.2d 386 (1969)). Dobson's action is under section 1983, so we must examine the policies of section 1983. The policies underlying Sec. 1983 include compensation of persons injured by deprivation of federal rights and prevention of abuses of power by those acting under color of state law. Id. 436 U.S. at 590-91, 98 S.Ct. at 1995-96. See also City of Newport v. Fact Concerts, Inc., 453 U.S. 247, 101 S.Ct. 2748, 2759-60, 69 L.Ed.2d 616; Owen v. City of Independence, 445 U.S. 622, 651, 100 S.Ct. 1398, 1415, 63 L.Ed.2d 673 (1980); Carey v. Piphus, 435 U.S. 247, 256-57, 98 S.Ct. 1042, 1048-49, 55 L.Ed.2d 252 (1978). Thus, section 1983 embodies two policies: compensation and deterrence. These two goals have different theoretical underpinnings, which suggest different perspectives on section 1983 actions. First we will discuss compensation, then we will discuss deterrence. 23 1. Section 1983, Fairness, and Compensation.--Compensation, the first goal of section 1983, is easily understood, at least on a superficial level. The initial point of compensation is to make the plaintiff whole for damages caused by a violation of federal rights under color of state law. The jury need merely look back at the harm suffered by the plaintiff and place a dollar value on those injuries. When the plaintiff has received that dollar amount, the goal of compensation has been satisfied. 24 The principle of compensation carries with it two additional characteristics. First, it is concerned with fairness, and second, it is backward-looking. The reason for compensating a plaintiff under this theory, the reason Congress and the courts went to the effort of providing a remedy, is that it seems wrong for someone to suffer harm from a lawless action. That person deserves, in some moral sense, to be made whole. See, e.g., F. Harper & F. James, The Law of Torts 743 (1956); Epstein, A Theory of Strict Liability, 2 J. Legal Stud. 151 (1973); Fletcher, Fairness and Utility in Tort Theory, 85 Harv.L.Rev. 537 (1972). Because deterrence also relies in part on a measure of compensation, see infra Part I.B.2, we shall refer to the theory underlying section 1983's goal of compensation as the fairness theory. 25 It is this same moral sense that suggests that on some occasions compensation alone is not enough. Some wrong actions under color of state law may be so egregious that our sense of justice is not satisfied by compensation alone. So, for example, if a deprivation of constitutional rights is prompted by malice, a jury might find that punitive damages were warranted. See City of Newport v. Fact Concerts, Inc., 453 U.S. 247, 101 S.Ct. 2748, 2759-60, 69 L.Ed.2d 616 (1981). Restatement (Second) of Torts Sec. 908 (1979); W. Prosser, Handbook of the Law of Torts 9-10 (4th ed. 1971). 26 The second characteristic of this fairness theory is that it is backward looking. Acts that may or may not occur are hypothetical and not yet subject to a consideration of fairness. The inquiries into compensation and punitive damages, based on fairness, of necessity involve looking backward to determine what has happened. 27 This discussion provides a brief look at the characteristics of one of section 1983's goals. It is a moral inquiry, involving concepts of fairness. It is also a retrospective inquiry, involving a rectification of past events. This backward looking moral theory provides a rationale for asking the jury questions on both compensatory and punitive damages. 28 2. Section 1983 and Deterrence.--The second goal of section 1983 is deterrence. Again, on a superficial level the policy of deterrence is easily understood. Society does not want persons to have their federal rights violated under color of state law. If people considering doing such things know that they will have to pay money if they do violate someone's federal rights, they will be less likely to do so. 2 29 Of course, a simple mechanism for deterring violations such as this would be to amend section 1983 to provide that violators will be drawn and quartered. This seems like a very powerful deterrent and might substantially reduce violations of federal rights under color of state law. Aside from problems relating to fairness, however, this solution also poses problems in the deterrence framework. A powerful deterrent such as drawing and quartering offenders might also deter worthwhile conduct--police officers might decide never to arrest anyone because the risks to the police officer would be too great. So, the deterrence rationale calls for neither too much nor too little deterrence; we need to find the right amount. 30 The science of economics can provide us with some insight as to how to reach the correct level of deterrence. Each activity produces costs and benefits. An action is appropriate, from this economic point of view, when the benefits outweigh the costs. If the person contemplating an action will reap the benefits but will not pay the costs, we have no assurance that the socially correct decision will be made. The solution to this problem is to force the decisionmaker to absorb the costs as well as the benefits of a given action. This concept is known as cost internalization. See, e.g., G. Calabresi, The Cost of Accidents 68-129 (1970). 31 Cost internalization provides us with a mechanism for reaching the correct level of deterrence for official misconduct. If people acting under color of state law know that they will bear the consequences of their actions, they will be deterred from violating a person's federal rights, but will not be over-deterred. The correct level of deterrence will be established. The costs of a violation of a person's federal rights are the damages suffered by that person as a consequence of the violation. Thus, under a deterrence theory, one of the questions put to the jury would involve the damage suffered by the plaintiff. 32 On some occasions, however, the actions of the violator may generate costs to people other than the plaintiff. See Webster v. City of Houston, 689 F.2d 1220, 1237-38 (5th Cir.1982). (Goldberg, J., concurring). For example, if the actions of a violator were particularly egregious, those actions might produce trauma within the society at large. Merely assessing the officer with the amount of damage suffered by the plaintiff will not adequately internalize all of the societal costs of the officer's actions. Accordingly, to deter official misconduct adequately the jury should be asked in an appropriate case to levy punitive damages against the offender. See City of Newport, supra, 101 S.Ct. at 2760; Owen v. City of Independence, supra, 445 U.S. at 651, 100 S.Ct. at 1415; Carlson v. Green, 446 U.S. 14, 22, 100 S.Ct. 1468, 1473, 64 L.Ed.2d 15 (1980), Carey v. Piphus, supra, 435 U.S. at 257 n. 11, 98 S.Ct. at 1049 n. 11. 33 This discussion, though brief, serves to sketch the outlines of the theory underlying the deterrence goal of section 1983. That theory, in contrast to the fairness theory discussed earlier, is forward looking--it seeks to govern future activity. It is somewhat agnostic as to the moral elements involved, except as they provide a guide to what kind of future activities should be promoted or deterred. It sets the appropriate level of deterrence by internalizing to the violator the costs of violating federal rights. Interestingly, this theory provides a separate and distinct justification for asking the jury the same two questions regarding compensatory and punitive damages that we asked under the fairness rationale. 34 3. Consistency of State Law with the Policies of Section 1983.--Section 1983, as just discussed, embodies two policies: compensation of plaintiffs and deterrence of wrongdoers. The Texas pro tanto rule is based upon one policy, the one satisfaction rule. See, e.g., Bradshaw v. Baylor University, 26 Tex. 99, 84 S.W.2d 703 (1935). The Texas rule is designed to ensure compensation and nothing more. [A]n injured party is entitled to but one satisfaction for the injuries sustained by him .... Id. 84 S.W.2d at 705. This rule rather clearly supports the section 1983 policy of compensation. But being designed to promote solely a policy of compensation, the Texas rule does not perform as well in the context of deterrence. 35 The basic problem of the Texas rule in deterring wrongdoers is quite evident from the facts of this case. If the Texas rule were applied to this case, Camden would pay nothing because Dobson has been (presumably) fully compensated by Denny's. Section 1983 deters wrongdoing by imposing damages upon the wrongdoer. See supra Part II.B.2. A rule that removes the burden of damages from the wrongdoer certainly conflicts with the policy of deterrence. We must always be conscious that one of the functions of section 1983, if not the primary function, is therapeutic, seeking to eradicate the disease of violations of federal rights under color of state law. The one satisfaction rule, as this case well demonstrates, would tend to eliminate this constitutional medication. Accordingly, we hold that application of the Texas one satisfaction rule to this case would contravene the deterrence policy of section 1983, and thus is impermissible under section 1988. C. Through the Looking Glass 36 We now have a problem. Federal law is deficient concerning the effect of settlements on section 1983 judgments, and state law conflicts with federal policies, so we may not apply state law. At this point section 1988 runs out of gas. The logical alternative, however, is to create federal common law to fill the void. It is interesting that, finally, we reach the same point that the court in Miller, supra, used as its starting point. We, too, resort to federal common law for a rule of decision, but only after following the route prescribed by section 1988. We emphasize the contrast between our position and that of the Third Circuit in Miller. We decide this case under federal common law not out of a belief that we have the general power to generate rules of decision, see, e.g., Texas Industries, Inc. v. Radcliff Materials, Inc., 451 U.S. 630, 101 S.Ct. 2061, 68 L.Ed.2d 500 (1981) (no common law power to create rule of contribution in antitrust), but rather, we apply federal common law pursuant to section 1988's implicit grant of authority to do so when federal law is deficient and state law would conflict with federal law. See, e.g., Shaw v. Garrison, 545 F.2d 980 (5th Cir.1977), rev'd on other grounds, 436 U.S. 584, 98 S.Ct. 1991, 56 L.Ed.2d 554 (1978).