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Keywords

settlementdefendantdamagesliabilityappealtrial
contractsettlementdefendantliabilityappealtrialmotion

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McDermott, Inc. v. AmClyde, 511 U.S. 202, 114 S.Ct. 1461, 128 L.Ed.2d 148, 1994 A.M.C. 1521, 62 USLW 4241, Prod.Liab.Rep. (CCH) P 13,826

Facts

McDermott, Inc. purchased a crane from AmClyde to move an offshore oil and gas production platform. During the operation, a prong of the crane's hook broke, causing significant damage to both the platform and the crane. McDermott brought suit against AmClyde, River Don Castings, and three sling suppliers, settling with the sling suppliers for $1 million before trial. The jury assessed McDermott's total damages at $2.1 million, allocating fault among the parties, which led to a complex legal dispute regarding the calculation of liability for the nonsettling defendants.

Petitioner McDermott, Inc., purchased a specially designed, 5,000–ton crane from AmClyde. When petitioner first used the crane in an attempt to move an oil and gas production platform—the 'Snapper deck'—from a barge to a structural steel base affixed to the floor of the Gulf of Mexico, a prong of the crane's main hook broke, causing massive damage to the deck and to the crane itself.

Issue

Whether the liability of nonsettling defendants in an admiralty case should be calculated based on the jury's allocation of proportionate responsibility or by giving nonsettling defendants credit for the dollar amount of the settlement.

The question presented is whether the liability of the nonsettling defendants should be calculated with reference to the jury's allocation of proportionate responsibility, or by giving the nonsettling defendants a credit for the dollar amount of the settlement.

Rule

The liability of nonsettling defendants should be calculated with reference to the jury's allocation of proportionate responsibility, not by giving them a credit for the dollar amount of the settlement.

Held: The nonsettling defendants' liability should be calculated with reference to the jury's allocation of proportionate responsibility, not by giving them a credit for the dollar amount of the settlement.

Analysis

The Supreme Court analyzed the differing approaches to calculating liability for nonsettling defendants and concluded that the proportionate share approach aligns with the principles established in previous cases, particularly Reliable Transfer. This approach ensures that each defendant pays only their fair share of the damages based on the jury's findings, rather than allowing for a reduction based on the settlement amount, which could lead to inequitable outcomes.

In choosing among the ALI's three alternatives, three considerations are paramount: consistency with the proportionate fault approach of United States v. Reliable Transfer, promotion of settlement, and judicial economy.

Conclusion

The Supreme Court reversed the Court of Appeals' decision and remanded the case, establishing that nonsettling defendants' liability should be determined by the jury's allocation of fault rather than by deducting the settlement amount.

The judgment of the Court of Appeals is reversed, and the case is remanded for further proceedings consistent with this opinion.

Who won?

McDermott, Inc. prevailed in the Supreme Court, as the Court ruled in favor of calculating nonsettling defendants' liability based on the jury's allocation of responsibility.

The Court of Appeals held that a contractual provision precluded any recovery against AmClyde and that the trial judge had improperly denied a pro tanto settlement credit.

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