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Phoenix Bond & Indem. Co., et al v. John Bridge

January 2, 2012


The opinion of the court was delivered by: Matthew F. Kennelly, District Judge:


The Court has considered the parties' submissions regarding the judgment to be entered based on the claims decided by the jury at trial. The issues before the Court are: (1) whether and to what extent the defendants who lost at trial should get a setoff based on amounts plaintiffs received from other defendants in settlement; (2) whether the judgment should include the punitive damages plaintiffs were awarded on their state-law claims, in light of the fact that their compensatory damages awards under RICO are subject to trebling; (3) whether the Court should make a finding under Rule 54(b) permitting an appeal even though the claims against the Wheeler-Dealer defendants remain to be adjudicated; and (4) whether and when post-judgment interest begins to accrue.


1. The "one satisfaction" rule applies to plaintiffs' federal RICO claims. Under this rule, a plaintiff is entitled to only one satisfaction for a single injury. This rule "operates to prevent double recovery, or the overcompensation of a plaintiff for a single injury." BUC Int'l Corp. v. Int'l Yacht Council Ltd., 517 F.3d 1271, 1277 (11th Cir. 2008).

Under the one-satisfaction rule, amounts received in settlement from an alleged tortfeasor are credited against judgments for the same injury against non-settling tortfeasors. Id. at 1276; Singer v. Olympia Brewing Co., 878 F.2d 596, 600 (2d Cir. 1989). Non-settling defendants "are entitled to a reduction in the judgment against them by the amounts received by [plaintiff] in settlement of claims for the same injury." BUC Int'l Corp., 517 F.3d at 1278; Singer, 878 F.2d at 600 (under the one-satisfaction rule, "when a plaintiff receives a settlement from one defendant, a non-settling defendant is entitled to a credit of the settlement amount against any judgment obtained by the plaintiff against the non-settling defendant as long as both the settlement and judgment represent common damages.").

Plaintiffs' RICO claims involved three distinct "enterprises." The damages that plaintiffs were awarded based on injury they sustained at the hands of a defendant that participated in a particular enterprise do not represent the same injury as that caused by any other enterprise.*fn1 On the other hand, as to multiple defendants that were claimed to have participated in the same RICO enterprise, there was a single compensatory damages award that covered both the RICO claims and the state-law claims against those defendants. These compensatory damages all arose from the same course of conduct and thus arise from the same injury.

The BG defendants were claimed to be part of the "Gray Enterprise." Because it does not appear that plaintiffs received any amounts in settlement from any other defendants who were claimed to have participated in that enterprise, the BG defendants are not entitled to any setoff based on any settlements obtained by plaintiffs.

By contrast, the injury represented by the RICO damage award against the Sass defendants is the same injury as that caused by other settling defendants in the "Sabre Enterprise," the enterprise in which the Sass defendants were claimed to have participated. Thus the one satisfaction rule entitles the Sass defendants to a setoff relating to amounts paid in settlement by the other Sabre Enterprise defendants.

Plaintiffs contend that there should be no setoff because the settlements with the other defendants covered matters beyond RICO compensatory damages, specifically, the state-law tortious interference claims, punitive damages, and RICO attorney's fees. Because plaintiffs suffered a single injury at the hands of the Sabre Enterprise, the fact that the settlements with those defendants may have involved both the RICO and state-law claims is not a basis to decline a setoff.

With regard to attorney's fees, it is true that the settling defendants may well have settled based in whole or in part on their potential exposure to a statutory fee award. But this is not a separate injury; it stems from the same RICO violation. Because any attorney's fee award after a trial would not have been individualized on a defendant-by-defendant basis among the Sabre defendants, this factor affects only the amount against which any setoff should be made. Specifically, the setoff should be applied against the total amount of money to which plaintiffs are entitled to recover from the Sass defendants on the RICO claim, namely, the total damages (including trebling) plus any award of attorney's fees and expenses. Determining the setoff in this way furthers the one satisfaction rule's policy of preventing double payment.

The fact that the settling defendants were also resolving their exposure to punitive damages requires somewhat different treatment. Unlike compensatory damages, which were essentially determined on an enterprise-by-enterprise basis, punitive damages are individualized on a defendant-by-defendant basis. It is reasonable to assume that if the settling defendants had gone to trial, the overall amount of punitive damages assessed by the jury would have been greater than the overall amount that it assessed against the defendants who actually went to trial. In addition, any given settling defendant's punitive damages exposure might have been greater or lesser than that of the defendants who proceeded to trial.

Determining how to factor the punitive damages issue into the amount of setoff is no simple matter. Plaintiffs contend that because the settlements covered all types of exposure, there should be no setoff. Defendants contend that because the settlements did not specify what proportions of a settlement payment covered what aspects of the settling defendant's exposure, then the entire settlement payment should be set off. The Court is unpersuaded that this is simply a matter of the allocation of the burden of proof, as each side essentially argues.*fn2 Rather, it involves adherence to the principles underlying the one satisfaction rule, which is a rule of equity. See BG Defs.' Resp. at 4 (citing authorities). Though it is equitable to give the Sass defendants a setoff for amounts paid to settle exposure for which they would have been jointly liable -- compensatory damages and attorney's fees -- equity does not entitle them to a setoff of amounts paid to settle punitive damages exposure, for which each defendant would have been separately liable. In addition, punitive damages do not represent "common damages," Singer, 878 F.2d at 600, given their assessment on a defendant-by-defendant basis.

Neither plaintiffs nor the Sass defendants has offered a proposal for how the settlements should be allocated if the Court did not adopt the all-or-nothing approach. The Court will direct them to do so (separately if necessary) in a joint submission to be filed by no later than January 9, 2012. Each side's proposal should take the Court's rulings in this order as a given and should address how the setoff should be performed in light of those rulings. The Court also expects each side to provide a reasoned justification for its particular proposal regarding how to take account of the punitive damages issue as addressed in this decision.

The Court's conclusion that the setoff should be applied against a total that includes not-yet-assessed attorney's fees gives rise to a logistical problem, because it will be some time before the Court makes a fee award (assuming the judgment survives defendants' post-trial motions). Plaintiffs are entitled to a judgment now due to the fact that the amount the jury awarded declines in value every day that interest is not accruing -- and both sides appear to agree that interest is not yet accruing. The Court directs plaintiffs and the ...

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