McDermott, Inc. v. AmClyde and River Don Castings, Ltd.
511 U.S. 202, 114 S.Ct. 1461, 128 L.Ed.2d 148 (1994)
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Rule of Law:
In an admiralty case with multiple defendants, the liability of non-settling defendants is calculated based on their proportionate share of fault as determined by the trier of fact, not by deducting the dollar amount of a settlement reached with other defendants (the pro tanto method).
Facts:
- McDermott, Inc. purchased a 5,000-ton crane from AmClyde.
- The hook for the crane was supplied by River Don Castings, Ltd.
- During its first use to move an oil and gas platform in the Gulf of Mexico, the crane's main hook broke.
- The failure of the hook caused massive damage to both the platform deck and the crane itself.
- The malfunction could have been caused by McDermott's operational negligence, AmClyde's faulty design, a defect in River Don's hook, or defects in steel slings provided by three other companies (the 'sling defendants').
- Prior to trial, McDermott settled its claims against the three sling defendants for $1 million.
Procedural Posture:
- McDermott, Inc. sued AmClyde, River Don, and three 'sling defendants' in U.S. District Court, invoking admiralty jurisdiction.
- Before trial, McDermott settled with the sling defendants for $1 million and dismissed its claims against them.
- A jury found total deck damages of $2.1 million and allocated fault: 32% to AmClyde, 38% to River Don, and 30% jointly to McDermott and the sling defendants.
- The District Court entered judgment against AmClyde and River Don for their respective percentage shares of the total damages, rejecting the defendants' motion for a pro tanto credit for the $1 million settlement.
- AmClyde and River Don (respondents) appealed to the U.S. Court of Appeals for the Fifth Circuit.
- The Court of Appeals reversed, holding that a contractual provision barred recovery from AmClyde and that the trial court should have applied a pro tanto settlement credit, which reduced River Don's liability to $470,000.
- McDermott, Inc. (petitioner) was granted a writ of certiorari by the U.S. Supreme Court.
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Issue:
In an admiralty case with multiple defendants, does a settlement with some defendants reduce the liability of the non-settling defendants by the dollar amount of the settlement (pro tanto) or by the percentage of fault allocated to the settling defendants (proportionate share)?
Opinions:
Majority - Justice Stevens
No. In an admiralty case, the liability of nonsettling defendants should be calculated using the proportionate share approach, not by giving a credit for the dollar amount of a settlement. This approach ensures that a litigating defendant pays only for its own share of the harm. The Court chose this rule over the 'pro tanto' (dollar-for-dollar credit) approach because it is more consistent with the precedent set in United States v. Reliable Transfer Co., which established proportionate fault as the governing principle in admiralty law. The Court reasoned that the proportionate share rule prevents the unfairness of a nonsettling defendant's liability being affected by the settlement negotiations of others, to which it was not a party. While acknowledging that the pro tanto rule might sometimes offer a greater incentive to settle, the Court found this came at too high a price in potential inequity and concluded that fairness and consistency with proportionate fault principles were paramount.
Analysis:
This decision establishes the proportionate share rule as the uniform federal standard for handling partial settlements in admiralty tort cases, resolving a split among the circuit courts. By prioritizing proportionate liability over the competing goals of settlement promotion and rigid application of the 'one satisfaction rule,' the Court aligned the treatment of maritime settlements with the principles of comparative fault. The ruling ensures that a non-settling defendant's liability is determined by its own degree of fault, insulating it from the strategic or financial consequences of a plaintiff's separate settlement with another party. This creates predictability and fairness in multi-party maritime litigation.
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