Opinion ID: 201206
Heading Depth: 2
Heading Rank: 3

Heading: Accounting for settlements of other PRPs

Text: 55 The district court concluded that R & H paid the United States government $4,636,725 for groundwater related cleanup costs. By using a pro tanto approach and subtracting the $382,807 R & H received in settlements, the district court concluded that the net total R & H paid to the United States for the groundwater cleanup was $4,253,918. Since R & H's share of the cleanup, based upon 3.23% of liability, was $1,602,080, the Capuanos were held liable for $2,651,838—the amount R & H paid in excess of their share. 56 The Capuanos argue that the district court erred in making this calculation because the district court should have determined the equitable pro-rata share of liability of the settling PRPs rather than deducting the monetary amount of the settlements from R & H's costs. CERCLA, as amended by SARA, states that [a] person who has resolved its liability to the United States or a State ... does not discharge any of the other potentially liable persons unless its terms so provide, but it reduces the potential liability of the others by the amount of the settlement. 42 U.S.C. § 9613(f)(2) (emphasis added). We have held that this plain language admits of no construction other than a dollar-for-dollar reduction of the aggregate liability. United States v. Cannons Eng. Corp., 899 F.2d 79, 92 (1st Cir.1990). 57 CERCLA also allows a private party to seek contribution from non-settling parties, but, unlike a settlement with the United States or a State, CERCLA does not instruct a court as to how a settlement agreement between two private parties affects the contribution liability of non-settling parties. See 42 U.S.C. § 9613(f)(1). Rather, CERCLA charges a district court to allocate response costs among liable parties using such equitable factors as the court determines are appropriate. 42 U.S.C. § 9613(f)(1). 58 We read this provision to give the district court discretion regarding the most equitable method of accounting for settling parties. We believe that the district court did not abuse its discretion by applying the pro tanto approach given the circumstances of this case. Courts that have addressed the issue of a private-party contribution suit involving settling parties have debated between two approaches. The first approach, the claim reduction approach, advanced by the Capuanos, follows the method of the Uniform Comparative Fault Act (UCFA), which provides that the liability of non-settlers is reduced by the proportionate share of fault attributed to the settling parties. UCFA § 2. 4 The second approach, the pro tanto approach, follows the method of the Uniform Contribution Among Tortfeasors Act (UCATA), which reduces the liability of litigants by the dollar amount of third-party settlements. UCATA § 4; see Akzo Nobel Coatings, Inc., 197 F.3d at 307-08. 59 Both of these approaches have distinct advantages and disadvantages. The claim reduction approach requires the court to determine the responsibility of all firms that have settled, as well as those still involved in the litigation. Id. at 307. Such a process can lead to a complex and unproductive inquiry and may be unrealistic in situations where waste was deposited by hundreds of polluters for years, if not decades, prior to the litigation. Id. The claim reduction approach has the benefit, however, of ensuring, in theory, that damages are apportioned equitably among the liable parties. 5 60 In contrast, under the pro tanto approach a litigating defendant's liability will frequently differ from its equitable share, because a settlement with one defendant for less than its equitable share requires the nonsettling defendant to pay more than its share. McDermott, Inc. v. AmClyde, 511 U.S. 202, 212, 114 S.Ct. 1461, 128 L.Ed.2d 148 (1994); see Lewis A. Kornhauser & Richard L. Revesz, Settlements Under Joint and Several Liability, 68 N.Y.U. L.Rev. 427, 474 (1993). Nonetheless, the pro tanto approach is easier to administer and is the approach adopted by CERCLA when there is a settlement between a person and the United States or a State. See 42 U.S.C. § 9613(f)(2). 61 The different approaches to accounting for settling parties can produce different results and, for uniformity purposes, it may be wise to choose one of these two approaches. See McDermott, Inc., 511 U.S. at 207, 114 S.Ct. 1461 (granting certiorari because the courts of appeals had differing approaches for determining how a settlement with less than all of the defendants in an admiralty case affect the liability of non-settling defendants). At this juncture, however, we decline to do so. CERCLA provides the district court with the discretion to allocate response costs among liable parties, and we believe that determining how a settlement affects the liability of the non-settling parties is within that discretion. While it is not unimaginable that the use of one of these approaches might produce a result so inequitable that it would constitute an abuse of discretion, in this case it did not and therefore we do not disturb the district court's utilization of the pro tanto approach.