Legal Document

511 U.S. 202114 S.Ct. 1461128 L.Ed.2d 148 McDERMOTT, INC., Petitioner,v.AmCLYDE and River Don Castings, Ltd. No. 92-1479. Supreme Court of the United States Argued Jan. 11, 1994. Decided April 20, Syllabus * When petitioner McDermott, Inc., attempted to use a crane purchased from respondent AmClyde move an offshore oil gas production platform, prong crane's hook broke, damaging both platform itself. The malfunction may have been caused by McDermott's negligent operation crane, AmClyde's faulty design or construction, defect in supplied Ltd., one more three companies that supporting steel slings. McDermott brought suit admiralty against respondents "sling defendants," but settled with latter for $1 million. case then went trial, jury assessed loss at $2.1 million, allocating 32% damages AmClyde, 38% Don, 30% jointly sling defendants. Among other things, District entered judgment $672,000 (32% million) $798,000 (38% million). Holding contract between precluded any recovery trial judge had improperly denied respondents' motion reduce them pro tanto settlement amount, Appeals reversed entirely reduced $470,000, which it computed determining full award be $1.47 million ($2.1 minus attributed McDermott/sling defendants), deducting settlement. Held: nonsettling defendants' liability should calculated reference jury's allocation proportionate responsibility, not giving credit dollar amount Pp. ____. (a) Supported consensus among maritime nations, scholars, judges, Court, v. Reliable Transfer Co., 421 397, 409, 95 1708, 1714, 44 251, adopted rule requiring on basis fault when such can reasonably made. No comparable has developed respect issue this case. Although is generally agreed joint tortfeasors are entitled plaintiff settles defendants, there divergence views about how determined. American Law Institute (ALI) identified principle alternatives doing so: (1) setoff right contribution settling defendant; (2) without contribution; (3) "proportionate share approach," whereby diminishes injured party's claim equitable obligation tortfeasor. (b) ALI Option 3, approach, best answers question presented 1 clearly inferior two alternatives, because discourages leads unnecessary ancillary litigation. As Options 2 approach consistent Transfer, supra, litigating defendant ordinarily pays only its judgment. Conversely, 2, even supplemented hearings determine good faith settlement, likely lead inequitable apportionments liability, contrary Transfer. Moreover, although sometimes seems better promote than must ultimately seen no clear advantage regard, since, under factors as parties' desire avoid litigation costs, uncertainty, maintain ongoing commercial relationships ensure nontrial dispositions vast majority cases. Similarly, judicial economy unless requirement good-faith hearing, course party amicus advocates large potential unfairness who might pay their fair damages. (c) Respondents' argument violates "one satisfaction rule"—which, applied some courts, reduces plaintiff's order does secure necessary compensate him his loss—is rejected, since law contains rigid overcompensation, and, indeed, several doctrines, collateral benefits rule, recognize making damage they cause important preventing overcompensation. inconsistent Edmonds Compagnie Generale Transatlantique, 443 256, 99 2753, 61 521 also was primarily statutory construction case, did address here involve read merely reaffirming well-established way abrogated tension approach. 979 F.2d 1068 (CA5 1992), remanded. STEVENS, J., delivered opinion unanimous Court. Arden J. Lea, New Orleans, LA, petitioner. William K. Kelley, Washington, DC, curiae, special leave Robert E. Couhig, Jr., respondent. Justice STEVENS A accident Gulf Mexico gave rise In advance petitioner, plaintiff, defendants Respondents, however, settle, trial. petitioner's allocated Don. whether We hold correct one. Petitioner specially designed, 5,000-ton AmClyde.1 first used attempt platform—the "Snapper deck"—from barge structural base affixed floor Mexico, main causing massive deck (River Don), (the defendants") slings.2 3 Invoking federal court's jurisdiction 28 U.S.C. § 1333(1),3 complaint sought On eve into exchange dismiss prejudice claims release all either damages, indemnify action. later ruled barred East Steamship Corp. Transamerica Delaval 476 858, 106 2295, 90 865 (1986). 4 opening statement "accepted responsibility part slings played damage."4 Inc. Clyde Iron, 1068, 1070 1993). found total amounted answer interrogatories, respective parties: defendants.5 Even though sum those judgments plus proceeds exceeded jury, concluded received double covered damages.6 5 held contractual provision credit. It $470,000. arrived figure calculations. First, determined "full verdict less defendants)." F.2d, 1081. Next, deducted "$1 reach $470,000." Ibid. treated maximum could recovered non-settling Because Don's $798,000), directed entry amount. 6 we previously considered affect courts appeals different approaches question, granted certiorari. 509 ----, 113 3033, 125 721 (1993). II 7 Congress enacted significant legislation field law,7 none statutes provides us "policy guidance" imposes limit our authority fashion will See Miles Apex Marine Corp., 498 19, 27, 111 317, 322, 112 275 (1990). are, nevertheless, familiar waters "the Judiciary traditionally taken formulating flexible remedies maritime." 251 (1975). 8 decided abandon followed over century assessing parties collision fault. replaced divided required equal division property whatever relative degree been, old avoided difficulty comparative degrees negligence, "unnecessarily crude inequitable" "[p]otential problems proof cases hardly require adherence archaic unfair cases." Id., 407, S.Ct., 1714. Thus interest certainty simplicity served outweighed fairness promoted rule. 9 Our decision supported world's nations respected scholars judges. id., 403-405, 1711-1713. before today. tortfeasors, There is, judges Indeed, principal after noting "[e]ach drawbacks satisfactory," take position issue. Restatement (Second) Torts 886A, pp. 343-344 (1977). describes follows: 10 "(1) money paid extinguishes released remaining tortfeasor reached crediting received; transaction another obligation." 343. 11 "(2) seeks contribution." (As Alternative (1), subtracting damages.) 12 "(3) tortfeasor." 344.8 13 kind "pro tanto" urge adopt. difference versions recognition second. third alternative, involves share" obligation. Under suits permitted, nor necessary, 14 approach9 would make responsible precisely million).10 simple application allocate $1.1 settlement).11 Appeals, made calculation. damage," 1070, apportioned "McDermott/sling defendants" if solely own negligence. therefore, credit, reducing applying reduction This resulted $470,000 million).12 III 15 choosing ALI's considerations paramount: consistency (1975), promotion economy. 1, defendant, two, disadvantage defendant.13 If makes favorable court determines (or defendants) sue contribution. thereby loses benefit addition, burdens additional mitigate adverse effect promising contribution, here. indemnity, while removing disincentive adds yet burden indemnity action plaintiff. 16 choice clear. defendant's frequently differ share, requires share.14 Such deviations apportionment common, settlements seldom reflect accurate prediction outcome significantly loss, reflects uncertainty "war chest" finance Courts legislatures recognized "good-faith hearings" remedy.15 required, protected actions shows forecast judgment.16 Nevertheless, cannot fully remove liability.17 serve protective function effectively, minitrials merits, practice often quite cursory.18 More fundamentally, hearing were able perfect still substantial success uncertain.19 sum, hearings, 17 rules ambiguous. Sometimes settlement.20 beneficial effect, consequence inequity discussed above. encourages opportunity threatening prospect paying loss. By disadvantaging spurns offers, puts pressure settle.21 While public policy wisely settlements, settle unnecessary. sufficient cases.22 similarly high rate. incentive provided comes too price unfairness.23 Furthermore, conclusion many simplifying assumptions, low costs. Recognition reality host practical stark hypotheticals persuades promoting settlements.24 18 easier administer, fault25 adjudicated preliminary unfairness, untamed hearings. Once coupled difficult promotes ascertained separate, pretrial hearing. place will, save time quicker Given cursory nature most well true. hand, reason believe reserving time. thus determination culpability little need describe role provide context dispute. argue "empty chair" hope convincing exclusively damage. economy.26 19 arguments closely matched, persuaded superior, especially IV 20 Respondents approach: rule" (1979). 21 19th early 20th centuries, tortfeasor, he another.27 version thoroughly repudiated.28 do ask original strictness, rather milder form invoke loss.29 matter, far danger super-compensatory limiting consideration fixed losses Plaintiff receive total, recover $1.798 $300,000 play assumes percent really represented contributory fault, overcompensatory percentage (70% 22 finding overcompensate apply Several rule,30 excess attributable fact unwise probable partial apt accept assess negotiations normally improves posture nonsettlors. cases, entire rest avoiding overcompensation absent. result getting amounts based rough estimates anticipated savings factors, rarely match exactly trier set. fortune striking bargain gives fact, virtues that, unlike dependent negotiated others regard interests. 23 refused shipowner stevedore whose limited Longshoremen's Harbor Workers' Compensation Act. Instead, allowed collect entirety adjusting inconsistency announced opinion. related interpretive questions posed 1972 amendments Both acknowledge resolved judge-made law. liability. pointed out, Transfer's Edmonds, U.S., 271-272, n. 30, 2762-2763, 30. Commissioners Uniform State Laws noted, settlements.31 Joint applies multiple beyond control, insolvency. limitations arise outside forces, innocent shortfall. Ibid.32 Unlike agreement settle. shortfall Just negotiates generous see ____, so shoulder disproportionate meager V 24 reversed, remanded further proceedings 25 ordered. syllabus constitutes prepared Reporter Decisions convenience reader. Detroit Lumber 200 321, 337, 26 282, 287, 50 L.Ed. 499 (1906). "AmClyde," formerly known "Clyde Iron," AMCA International, described "settling International Southwest Slings, Inc.; British Ropes, Ltd.; Hendrik Veder B.V. "The district shall jurisdiction, exclusive States, of: Any civil saving suitors otherwise entitled." motive taking upon itself obscure. Perhaps thought prevent relieve interrogatory single entity called both. combined treatment reflected acceptance noted "[t]o request thirty (30%) (no separate any, McDermott), One Million Dollars ($1,000,000.00) insisted seventy (70%) liable Four Hundred Seventy Thousand ($470,000.00) them. That unjust. . ." App. Pet. Cert. A-52—A-53. See, e.g., Longshore Act, 33 §§ 901-950; Death High Seas 46 U.S.C.App. 761-768; Public Vessels 781-790. sketched correspond detailed model Acts proposed National Conference Laws. Contribution Tortfeasors Act (1939 Act), U.L.A. 57-59 (1975) (ALI 1); Revised (1955 63-107 2); Comparative Fault (1977 45-61 (1993 Supp.) 3). options plausible, number possible. So, example, addition arguing suggest consider allows elect support proposal Texas York statutes, enact regimes respondents. Civ.Prac. & Rem.Code.Ann. 33.012(b) (Supp.1994) (nonsettling choose proportion fault); N.Y.Gen.Oblig.Law 15-108 (McKinney 1989) (pro whichever favors defendants). unwilling jurisdiction. opinion, phrase approach" denote 3. deliberately term rata," see, T. Schoenbaum, Admiralty Maritime 4-15, p. 153 (1987), re Masters Mates Pilots Pension Plan IRAP Litigation, 957 1020, 1028 (CA2 1992); Silver, Securities Acts: Pro Rata Method Revisited, 1992/1993 Ann.Survey Am.L. 273. Others terms ("proportionate method"); Kornhauser Revesz, Settlements Liability, 68 N.Y.U.L.Rev. 427, 438 (1993) ("apportioned set-off rule"); Polinsky Shavell, Claim Reduction Antitrust Defendants: An Economic Analysis, Stan.L.Rev. 447 (1981) ("claim reduction"). immune (McDermott's McDermott). calculation AmClyde. mandated principles infra, requested free replacement defective parts "shall constitute fulfillment liabilities Contract, tort, strict otherwise." 1075 (emphasis omitted). viewing quasi-settlement tort claims. Viewed such, properly takes account (and McDermott) leaves For simplicity, ignore Appeals. 1075-1076. holding. spent considerable replacing hook, included Whether correctly question. Fortunately, adopt it. Commissioners' Comment, (1975); N.Y.U.L.Rev., 474; Stan.L.Rev., 458-459, 462, 463. assumes, accordance jurisdictions, Against 1(d), 63 4(b), 54 Supp.); 886A(2) Comment f, 339 Suppose, sues each equally responsible, $250,000. At liable, 75% ($750,000, $250,000). possible nonsettlor if, greater settlors' share. complex example illustrating Revesz 455-456 37.5% 25% 31.25%). 1020 Miller Christopher, 887 902, 906-907 (CA9 1989); Tech-Bilt, Woodward-Clyde Assocs., 38 Cal.3d 488, 213 Cal.Rptr. 698 P.2d 159 (1985); 98 (enacted statute 81 Supp.)). Cal.3d, 499, Cal.Rptr., 263, P.2d, 166; Miller, 907; Masters, 1031; Noyes Raymond, Mass.App. 186, 190, 548 N.E.2d 196, 199 (1990) (judge scrutinize look "collusion, fraud, dishonesty, wrongful conduct"). Franklin Kaypro 884 1222, 1230 1989). 500, 264, 167 ("[T]he affidavits"); TBG Bendis, 811 F.Supp. 596, 605, 17, 608 (Kan.1992) "mini trial" required; "best available measure liability"). Suppose again, footnote 14, culpable persuasively demonstrates faith, 50% chance prevailing expected prevails again 50%. disallow $500,000, policy, carries grave cost. extraordinarily impossible result, every conducts inquiry 907-908; 265, F.Supp., 600. Illustration effects assumptions. risk neutral, costless, suppose everyone agrees $100, And suppose, happens, optimistic chances defendants: thinks winning 60%, whereas think unlikely, reluctant $30 (60% times $100) neither disposed offer $25 (50% $100). willing offer, 60% recovering $75 ($100 settlement) defendant. Accepting give $70 ($25 $75), $60 expect thorough discussion 447-465. H. Hovenkamp, Economics Federal 14.6, 377 (1985), summarizing Easterbrook, Landes, Posner, Legal J.Law Econ. 331, 353-360 (1980). Less five filed end Administrative Office Courts, Annual Report Director, 217 (1991) (Of 211,713 terminated July 1990, June 1991, 11,024 involved trials). terminations adjudications, summary contested motions dismiss, bulk settlements. Kritzer, Adjudication Settlement: Shading Gray, 70 Judicature 161, 163-164 408, ("Congestion justify legal produces unjust results simply encourage speedy out-of-court accommodations"). excellent various Settlement 427 After considering strategic behavior, probabilities being "independent" "correlated," conclude "neither consistently other." 492. comparing rules, assume implemented Good-faith "mak[e] relatively desirable perspective inducing [i.e. proportionate] rule." Id. 476. unique like one, covers items litigated argued deck, deck. apportion portion 1080. refusal greatly discourage unable party. referring parties, express disapproval lower courts' "causation" 1081-1082. cost incurred 24, supra. To discouraging out what Presumably done covered. Ascertaining least ascertaining absent already subject 27 Conway Pottsville Union Traction 253 Pa. 211, 97 A. 1058 (1916); Rogers Cox, 66 N.J.L. 432, 143 (1901); Prosser, 109, 1105-1111 (1941). W. Keeton, D. Dobbs, R. Owen, Prosser Keeton 49, 333-334 (5th ed. 1984); 885(1), b, 334 29 Rose Associated Anesthesiologists, 501 806, 809 (CADC 1974); Sanders Cole Municipal Finance, 489 117, 120 (Ind.App.1986). 30 F. Harper, James O. 25.22 (2d 1986) (injured person whole insurance compensatory payment); 920A(2) once payments non-parties well, diminishing situations now permit 1105-1107 31 "Joint Liability Equitable Shares Obligation," 51 Supp.). 32 (reallocation insolvent share). 50.

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