Phoenix Bond & Indemnity Co. et al v. Bridge et al

Filing 953

MEMORANDUM OPINION AND ORDER signed by the Honorable Matthew F. Kennelly on 1/31/12. (mk)

IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ILLINOIS
EASTERN DIVISION

PHOENIX BOND & INDEM. CO., et al.,

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)
Plaintiffs,
)
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vs.
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JOHN BRIDGE, et al.,
)
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Defendants.
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------------------------------------------------------------- )
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BCS SERVS., INC., et al.,
)
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Plaintiffs,
)
)
vs.
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HEARTWOOD 88, LLC, et al.,
)
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Defendants.
)

Case No. 05 C 4095
consolidated with
Case No. 07 C 1367

MEMORANDUM OPINION AND ORDER
MATTHEW F. KENNELLY, District Judge:
The Sass defendants have moved the Court to reconsider the methodology it
used for the setoff in this case. In their motion, they propose a methodology they did
not suggest in any of the five submissions they made regarding the setoff issue. They
have therefore forfeited the point.
Even were this not the case, the Court would deny the motion. The “one
satisfaction” doctrine is an equitable doctrine. The cases adopting it do not set an
algebraic formula for its application, because none exists. The Court concluded that
allocating the settlement payments between compensatory and punitive damages in the

same proportions determined by the jury was a fair and equitable allocation that did not
unduly favor either side, and it continues to believe that was the case.
The Sass defendants contend that the Court should have taken account of the
fact that when the settling defendants settled, they took into account not just their
potential exposure to compensatory and punitive damages, but also their exposure to
RICO trebling of a compensatory award. They argue that if the Court took this into
account, they would be entitled to a greater setoff. Perhaps so. But it is also likely that
when the other defendants settled, they were also paying to avoid other potential harms
that, if taken into account on the setoff issue, might reduce the amount of the Sass
defendants’ setoff. Among these additional factors the settling defendants likely took
into account were the fact that they themselves would incur significant legal fees in
preparing for and trying what was then expected to be a six-week jury trial; the fact that
the need to meet with lawyers to prepare would divert their attention from business and
other activities; the significant possibility of reputational damage if they lost; the
likelihood of having to pay additional legal fees for an appeal irrespective of the result of
the trial; and so on. Indeed, were the Court to attempt to account for these factors, it
might be led to deny a setoff altogether on the ground that the payments by the settling
defendants do not actually offset, or do not offset in a material way, the amount of
compensatory and punitive damages awarded against the Sass defendants at trial.
Assuming a setoff is appropriate, there is no doubt that there are other
methodologies the Court could have used. For example, the Court could have
assumed that the settlement, if nothing else, included an attorney’s fee component
given the availability of fee-shifting under RICO, factored that in, offset a much smaller
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sum against the amounts awarded by the jury, and then figured out later whether the
Sass defendants were entitled to an offset against a RICO fee award (unlikely, because
the fees likely would have been greater had the other defendants remained in the
case). Some of these methodologies might have been better for the Sass defendants,
and some of them might have been worse. But the availability of other methodologies
does not render infirm the one the Court used. The Court remains convinced that the
setoff methodology it used was appropriate.
Conclusion
For the reasons stated above, the Court denies the Sass defendants’ motion to
reconsider [Case No. 05 C 4095, docket no. 943].

________________________________
MATTHEW F. KENNELLY
United States District Judge
Date: January 31, 2012

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