Opinion ID: 781984
Heading Depth: 2
Heading Rank: 2

Heading: The Judgment Credit

Text: 14 We begin by noting the first of several issues that are not in dispute in this appeal. No party challenges the magistrate judge's determination that the nonsettling defendants' judgment credit will be calculated using a capped proportionate share formula. Under this rule, the credit given for the settlements will be the greater of the settlement amount for common damages (a  pro tanto  rule) or the proportionate share of the settling defendants' fault as proven at trial. Although we do not hold that such a formula is required, we agree with the magistrate judge's conclusion that the cap, which ensures that a judgment credit is at least the amount of the settlement for common damages, complies with this Circuit's one satisfaction rule, which prohibits a plaintiff from recovering more than one satisfaction for each injury. Singer v. Olympia Brewing Co., 878 F.2d 596, 600 (2d Cir.1989); see also Masters, 957 F.2d at 1030 ([W]here a settlement and a judgment compensate a plaintiff for the same injury, a nonsettling defendant is entitled to a judgment reduction at least in the amount of a prior settlement.). 2 By awarding a credit that is at least the settling defendants' proven share of liability, the non-settling defendants' rights are protected even without a determination of the fairness of the settlement. See id. at 1029 (Because the credit determination [under a proportionate fault method] is made after a determination of liability, the proportionate method is always consistent with fault.). 15 Despite the parties' agreement on the method of calculation of the credit, the non-settling defendants argue that the district court's orders create a possibility that they will receive less than the full amount of the settlement as a judgment credit, allegedly in violation of the one satisfaction rule. They also contend that they are entitled to know the amount of their credit, not merely the method of calculation, before trial. For the reasons that follow, we disagree. 16 The settling parties here attempted to allocate the settlements to three elements of damages purportedly suffered by the plaintiffs: out-of-pocket damages, prejudgment interest, and attorneys' fees. 3 On appeal, plaintiffs have conceded that in any of three possible scenarios, the judgment credit will be at least the full amount of the settlement for common damages. First, if plaintiffs prevail at trial on claims that entitle them to prejudgment interest (the state law claims, and, at the discretion of the trial court, the federal securities claims) or attorneys' fees (the RICO claims), they do not disagree that the nonsettling defendants may use any amounts the district court allocates to these elements of damages to set off their liability on those elements respectively. Further, plaintiffs have also agreed that if the settlement money allocated to prejudgment interest exceeds the jury's award on this element, any remaining portions can be used to offset out-of-pocket damages. Brief for Plaintiffs-Appellees at 12. (The plaintiffs presumably would concede the same with respect to the portion of the settlement allocated to attorneys' fees.) Finally, plaintiffs have acknowledged that they cannot allocate any of the settlement to attorneys' fees or prejudgment interest if plaintiffs do not prevail on claims entitling them to these types of damages: 17 If ... it is determined [that] Plaintiffs are not entitled to prejudgment interest, all portions of the settlements allocated to prejudgment interest could be used as an offset against any award of out-of-pocket damages. The same holds true for the attorneys' fees portion of Plaintiffs' settlement with the Bank if Plaintiffs do not prevail at trial on their RICO claims against the Non-settling Defendants. 18 Id. (emphasis added). As plaintiffs have conceded that the judgment credit will be at least the full amount of the settlement, regardless of how these various elements of damages are allocated at trial, the nonsettling defendants' fears that they will receive less than their full settlement credit or that the one satisfaction rule will be violated are unfounded. 4 19 Despite these concessions, the non-settling defendants express concern that the district court held that if a judgment is obtained against a nonsettling defendant, the judgment reduction shall not necessarily be calculated by using the full amounts of the settlements. The district court's order is accurate, however, insofar as only the portion of the settlement attributable to common damages will be credited. See Masters, 957 F.2d at 1031 (Absent a showing that damages are not common, a nonsettling defendant whose rights against settling defendants are to be barred is entitled to judgment reduction at least in the amount paid by all settling parties.); Singer, 878 F.2d at 600 ([W]hen a plaintiff receives a settlement from one defendant, a nonsettling defendant is entitled to a credit of the settlement amount against any judgment obtained by the plaintiff against the nonsettling defendant as long as both the settlement and judgment represent common damages.). 20 We also conclude that the non-settling defendants are not entitled to any greater degree of certainty about the amount of their judgment credit than they already have. Consistent with In re Jiffy Lube Securities Litigation, 927 F.2d 155, 157 (4th Cir.1991), relied upon by the non-settling defendants, the district court's orders informed the parties well before trial of the method that will be utilized to calculate the set-off. The non-settling defendants know that they will get a credit amounting to the greater of (1) the settlement attributed to common damages, or (2) the settling defendants' proportionate share of the total damages. They therefore know that the settling defendants' wrongdoing is relevant, and can develop their trial strategy accordingly. We find no error in the district court's decision to leave the determination of the actual amount of the judgment credit for calculation at trial because the non-settling defendants will get at least the full settlement amount as a credit, unless the settlement damages are not common, an issue which is obviously contingent on the outcome of the trial. 5 21 Accordingly, we construe the bar orders approved by the district court, consistent with plaintiffs' concessions on appeal and with Singer, as indicating that the non-settling defendants' judgment credit will be the greater of the settling defendants' proportionate share of liability or the amount of the settlements attributable to common damages, regardless of how the settlement amounts are ultimately allocated or re-allocated among out-of-pocket damages, prejudgment interest and attorneys' fees. So construed, the orders are affirmed as they relate to the calculation of the judgment credit.