Contribution Case Analysis

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The discussion of contribution is noteworthy in two respects: (1) its hostility; and (2) its use of the term "disproportionate" — rather than "discrete" — costs, to describe the only instance in which contribution for court costs would be allowed.

In most state court systems, including Wisconsin, actions for contribution amongst nonprevailing parties is the norm, rather than the exception. The U.S. Supreme Court noted in Texas Industries, Inc. v. Radcliff Materials, Inc., 451 U.S. 630, 101 S.Ct. 2061 (1981), that 39 states and the District of Columbia permit contribution.

Nevertheless, Congress has never adopted it generally, although various statutes permit it for select types of actions, and the U.S. Supreme Court has never adopted contribution as part of the federal common law. So, the Seventh Circuit would be justified in holding that contribution is never allowed, sans an explicit federal statute permitting contribution for the particular type of action at issue.

Instead, the court delivered a diatribe, arguing that permitting contribution undermines "the deterrent objectives of the law" and adds to the cost of litigation for no purpose.

That this is the opinion of Judge Posner, who wrote the opinion, is not news. In Texas Industries, when the Supreme Court was considering whether to adopt a federal common-law rule of contribution, the court cited commentary by Judges Posner and Easterbrook that criticize the contribution doctrine.

Those were law review articles, however; this is the first time that the view has been expressed in Seventh Circuit case law. Because contribution is permitted in some instances, attorneys need to be aware that, in this circuit, the general rule against contribution is not merely a quirk of federal law, but is consistent with a philosophy with which the court agrees.

Even more important, however, is that the standard for when contribution will be allowed is stated differently in this case, than it was when the court decided White v. Sundstrand Corp., 256 F.3d 580 (7th Cir. 2001), even though the court purports to follow White, and the difference is a significant one.

White was a class action in which eight named plaintiffs lost the case, and their attorneys refused to pay costs, so the issue was how to divide costs between the eight named plaintiffs. The plaintiffs sought pro rata liability, but the court held that liability must be joint and several.

The court wrote, "Plaintiffs do not contend, however, that a subset of their number was responsible for a discrete portion of defendants’ costs in this case. There is no basis for an award on other than the normal joint and several terms of liability (emphasis added)." White, 256 F.3d at 586-587. For support, the court cited cases from other jurisdictions, in which the courts used the term "segregable," rather than "discrete." Id.

Those two terms are synonymous. In the case at bar, however, "discrete" has morphed into "disproportionate": "The cases say that the presumptive rule is joint and several liability unless it is clear that one or more of the losing parties is responsible for a disproportionate share of the costs (emphasis added)(citing White)."

Later, the decision holds, "No showing has been made that particular plaintiff or plaintiffs was disproportionately responsible for the costs that the judge has awarded against them, and so each plaintiff is jointly and severally liable for the costs the judge awarded to the defendants (emphasis added)."

However, "discrete" and "disproportionate" are not synonymous. The term "discrete" contemplates whether various aspects of the litigation concerned only one party.

In the case at bar, for example, some costs could be classified as discrete, such as those related to each plaintiff’s damages. Costs expended with a view to the liability issue, on the other hand, would relate to both plaintiffs and not be "discrete" costs.

"Disproportionate" contemplates something else — one party having to pay more than his "fair" share, however "fair" may be defined. Furthermore, the change from "discrete" to "disproportionate" is aggravated, because the term is used inconsistently within the opinion.

In one instance, the opinion states, "Ordinarily when parties are jointly and severally liable, it means that each party is fully liable, subject to the constraint that the claimant cannot recover more than his total entitlement. This leaves him free to pick and choose and if he wants collect the total entitlement from one of several liable persons — unless there is a rule permitting contribution among joint tortfeasors, or in other words permitting a liable party who has been charged more than his proportionate share (but not because he was causally responsible for more than a proportionate share, in which event it would not really be disproportionate) to obtain compensation from his co-tortfeasors. A brief dictum in Concord Boat Corp. v. Brunswick Corp., supra, 309 F.3d at 497, assumes that there is such a rule of contribution in regard to court costs but does not discuss the pros and cons; the other cases that embrace the rule of joint and several liability for costs do not mention contribution at all"

In this discussion, the term "disproportionate" is used as a layman or state court would — if two parties are each 50 percent responsible, but one pays the whole judgment, he has paid a disproportionate share. In state court, where contribution is allowed, that party could then sue the other to recover half.

But contribution doesn’t apply under federal law, as the court documents (and justifies) in the next paragraph, so even though one party has paid a disproportionate amount, he is entitled to no remedy.

In the paragraph after that, however, the court makes the statement quoted supra, that, "No showing has been made that a particular plaintiff or plaintiffs was disproportionately responsible for the costs that the judge has awarded against them, and so each plaintiff is jointly and severally liable for the costs the judge awarded to the defendants."

Here, "disprop
ortionate" is used not to describe a situation in which one party pays more than his share of liability, but where one party is responsible for a disproportionate amount of liability — for example, if one nonprevailing party is only 1 percent responsible for the costs, and the other 99 percent responsible.

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The opinion thus suggests that, in an extreme instance, where a party 1 percent responsible got stuck with the whole bill, and the party 99 percent responsible got off scot-free, contribution would be appropriate, notwithstanding the general rule. "Disproportionate" in this use means what a layman or state court would consider "grossly disproportionate."

However, if both were 50 percent responsible, and one paid the whole bill, there would be no contribution allowed, even though this would be "disproportionate," as used in the earlier discussion.

Accordingly, attorneys litigating contribution issues in future cases need to be aware both that the terms "discrete" and "segregable" have been incorrectly transmogrified into "disproportionate" in this case, and that the term is used in two different ways just paragraphs apart.

The federal common law, as interpreted by the U.S. Supreme Court in Texas Industries, denies contribution even if one party winds up paying a disproportionate share. The opinion in White suggests that contribution is permissible if the costs of litigation are discrete or segregable. The opinion in the case at bar suggests that contribution will be allowed if one party winds up paying not merely a disproportionate share, but a grossly disproportionate share.

– David Ziemer

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David Ziemer can be reached by email.