Opinion ID: 578613
Heading Depth: 3
Heading Rank: 3

Heading: Proportionate Liability and the End of the Bar Against Contribution

Text: 40 It is now widely recognized that fundamental fairness demands a sharing of the liability. Glus v. G.C. Murphy Co., 629 F.2d 248, 252 (3d Cir.1980), rev'd on other grounds, 451 U.S. 935, 101 S.Ct. 2013, 68 L.Ed.2d 321 (1981). One way of ensuring that a joint tortfeasor will not be alone among solvent joint tortfeasors in shouldering the burden of a judgment is to allow him to sue joint tortfeasors for contribution. Seeing merit in this approach, states and commentators have almost universally rejected a per se bar against contribution. See Donovan, 752 F.2d at 1178 ([T]he common law's rejection of contribution among joint tortfeasors has itself been rejected by most states and most commentators.). 41 If a nonsettling defendant against whom a judgment had been entered were allowed to seek payment from a defendant who had settled, then settlement would not bring the latter much peace of mind. He would remain potentially liable to a nonsettling defendant for an amount by which a judgment against a nonsettling defendant exceeded a nonsettling defendant's proportionate fault. This potential liability would surely diminish the incentive to settle. 42 Recognizing that the right to contribution deters settlements but still seeking to mitigate the harshness of joint and several liability, some jurisdictions allow for judgment reduction as an alternative to contribution after a court has approved a settlement bar. There are three basic methods for determining how much a judgment against a nonsettling defendant should be reduced in light of a settlement by the remaining defendants. These are the pro rata, the proportionate fault and the pro tanto methods. See, e.g., In re Jiffy Lube Sec. Litigation, 927 F.2d 155, 160 & n. 3 (4th Cir.1991). 43 The pro rata rule apportions an equal share of the liability to each defendant in a lawsuit. Relative culpability is irrelevant under this approach. When, for example, a plaintiff settles with one defendant in a two defendant case, a judgment against the nonsettling defendant is reduced by one-half, regardless of whether the settling defendant was primarily or only minimally culpable. See id.; Harris, Washington's Unique Approach to Partial Tort Settlements: The Modified Pro Tanto Credit and the Reasonableness Hearing Requirement, 20 Gonzaga L.Rev. 69, 77-78 (1985). This method can deter plaintiffs from settling with fewer than all the parties. See Miller v. Apartments and Homes of New Jersey, 646 F.2d 101, 109 (3d Cir.1981). 44 Under the proportionate fault method (proportionate method), the jury assesses the relative culpability of both settling and non-settling defendants, and the non-settling defendant pays a commensurate percentage of the judgment. In re Jiffy Lube Sec. Litigation, 927 F.2d at 160 n. 3. Because the credit determination is made after a determination of liability, the proportionate method is always consistent with fault. The problem with the proportionate method is that a holdout defendant can make settlement difficult for the plaintiffs, who bear the risk of a bad settlement. See id. at 160-61 & n. 3. The proportionate method also makes it difficult for a district court to frame notice to a plaintiff class. Because the amount of setoff is not determined until after trial, it is difficult adequately to convey to a class the worthiness of a proposed settlement. See id. at 161. Moreover, determining the relative fault of each party imposes a considerable burden on a factfinder and obviate[s] much of the advantage of partial settlement to the judicial system. In re Atlantic Fin. Mgt. Sec. Litigation, 718 F.Supp. 1012, 1018 (D.Mass.1988). 45 The pro tanto rule, by contrast, reduces a nonsettling defendant's liability for a judgment against him in the amount paid by a settling defendant. The pro tanto method has obvious disadvantages. Like the pro rata method, it can result in judgment reduction that is inconsistent with proportionate fault. Moreover, the pro tanto method leaves the field of settlement very much open to collusive arrangement between a plaintiff and a favored joint tortfeasor. Gomes v. Brodhurst, 394 F.2d 465, 468 (3d Cir.1967). Some jurisdictions have recognized this problem and applied a pro tanto approach that requires a showing of good faith and a hearing on culpability before approval of a settlement bar. See, e.g., In re Jiffy Lube Sec. Litigation, 927 F.2d at 160 n. 3 (a hearing focussing on fairness of the settlement to the non-settling defendant is required for approval). This approach is more likely to be consistent with equitable principles suggesting that damages should be apportioned in accordance with fault. See In re Nucorp Energy Sec. Litigation, 661 F.Supp. 1403, 1408 (S.D.Cal.1987). 46