DOCKET NO.: 92-1479
DECIDED BY: Rehnquist Court (1993-1994)
LOWER COURT: United States Court of Appeals for the Fifth Circuit
CITATION: 511 US 202 (1994)
ARGUED: Jan 11, 1994
DECIDED: Apr 20, 1994
Arden J. Lea - for the petitioner
Robert E. Couhig, Jr. - for the respondent
William K. Kelley - for the United States as amicus curiae, by special leave of the Court
Facts of the case
Media for McDermott, Inc. v. AmClyde & River Don Castings
Audio Transcription for Oral Argument - January 11, 1994 in McDermott, Inc. v. AmClyde & River Don Castings
William H. Rehnquist:
We'll hear argument first this morning in number 92-1479, McDermott, Inc., v. AmClyde and River Don Castings Limited.
Arden J. Lea:
Mr. Chief Justice, Justices of this honorable Court, may it please the Court:
Petitioner McDermott, Incorporated, is here today to obtain relief from the double penalty placed upon it by the Fifth Circuit, which left in place a trial judge's reduction of its judgment, pursuant to the proportionate fault rule; which, at the same time, it rejected and, then, from that reduced amount, compounded injustice by further deducting from the judgment the full dollar amount of a settlement with another codefendant... to the detriment, obviously, of the injured plaintiff, McDermott.
Encapsulated in these facts, which, on their own, would require reversal, is a disputed issue of admiralty law requiring resolution by this Court... namely, which rule on settlement contribution should be adopted by the Court: the proportionate fault rule or the pro tanto rule?
Interestingly, all parties agree that three fundamental principles surrounding the resolution of this issue... which are, initially, all agree that the principle of joint and several liability is, and should continue to be, the rule of this Court.
All agree that liability among co-tort phases is and should continue to be determined proportionately at trial and, also, in any contribution action.
All agree that settlement should be encouraged, but not at the expense of the two preceding principles; nor at the expense of needlessly altering the rights of the parties to the remain... of the non-settling defendant in the proceeding at trial that will later follow.
The disputed issue before the Court is whether the adoption of the proportionate or the dollar-for-dollar settlement... so-called tanto... pro-tanto contribution rule... will best effectuate these fundamental principles mentioned above, and which should be incorporated by this Court into admiralty law.
The Court today has to accommodate its historical favoring of settlement of claims entered into by the injured plaintiff, and the need to protect the rights of the non-settling defendant, who is not a party to the settlement agreement.
McDermott urges this Court to hold that the proportionate settlement contribution rule is the faires and, thus, the best.
The plaintiff is permitted, under this rule, to become... to remain a master of its own destiny with regard to its claim.
He can choose, with consultation of counsel, which method best serves the resolution of the claim that is his anyway.
He, by settling, accepts both the benefits and the detriment of the contract, as is the case with respect to any contract.
On the other hand, most importantly, the non-settle... settling defendant's contribution rights remain unaltered because, at trial, they will be decided proportionately.
Now, there are certain alleged perceived benefits to the adoption of the pro tanto rule.
But McDermott suggests to this Court that in all--
William H. Rehnquist:
Mr. Lea, you... you refer to the... the rule your espousing, I believe, you're referring to as the proportionate fault rule?
Arden J. Lea:
--Proportionate fault rule, yes, sir, Your Honor.
Which was basically the rule of comparative fault that was outlined by this Court by its adoption of that in non-collision cases in reliance transfer, and which has been the rule of this case with regard to personal injury since the country has existed.
The alleged benefits of the pro tanto, or the dollar-for-dollar credit, usually advanced to justify its adoption, can... are usually couched in terms of: It ensures full compensation to the plaintiff; it's easy to apply; the dollar-for-dollar credit satisfies the one satisfaction rule; and that it avoids potentially confusing or unnatural realignments of the parties at trial.
McDermott contends that these benefits are merely perceived and, when examined carefully, do not result in the benefits advocated by proponents of the pro tanto rule: initially, full compensation to the plaintiff.
If you really think about that, that presupposes liability on the non-settling defendant.
Otherwise, there would be no full compensation to the plaintiff.
It also wrongfully equates, as the Leger opinion pointed out, settlement dollars were judgment dollars.
And the way they are determined... or the amount is determined that is fair... are subject to completely different rules... one are personal concerns of the parties to the settlement.
Things like, in a corporation, not tying up key employees by the time necessarily consumed in defending any... or prosecuting any trial.
Another thing that would be considered would be litigation expenses, which, as everyone is quite aware, are costly these days.
The judgment dollars are merely what the trier of fact, be it a judge or a jury, think, after a hearing of the evidence, the case is worth... no more, no less.
This Court has favored, in recent years, the settlement of cases without resort to extra judicial means... with its favoring of the arbitration proceedings, for instance.