USCA1 Opinion
UNITED STATES COURT OF APPEALS
UNITED STATES COURT OF APPEALS
FOR THE FIRST CIRCUIT
FOR THE FIRST CIRCUIT
_________________________
No. 94-1749
ERNST & YOUNG,
Plaintiff, Appellant,
v.
DEPOSITORS ECONOMIC PROTECTION CORPORATION, ET AL.,
Defendants, Appellees.
_________________________
APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF RHODE ISLAND
[Hon. Francis J. Boyle, Senior U.S. District Judge]
__________________________
_________________________
Before
Selya, Circuit Judge,
_____________
Bownes, Senior Circuit Judge,
____________________
and Cyr, Circuit Judge.
_____________
_________________________
Jerome G. Snider, with whom Daniel F. Kolb, Davis Polk &
_________________ _______________ _____________
Wardwell, Peter J. McGinn, John E. Bulman, Tillinghast, Collins &
________ _______________ ______________ ______________________
Graham, Kathryn A. Oberly, and J. Andrew Heaton were on brief,
______ __________________ ________________
for appellant.
Leonard Decof, with whom Howard B. Klein and Decof & Grimm
_____________ _______________ _____________
were on brief, for appellees.
_________________________
January 25, 1995
_________________________
SELYA, Circuit Judge. Plaintiff-appellant Ernst &
SELYA, Circuit Judge.
______________
Young (E&Y), an accounting firm, asked the United States District
Court for the District of Rhode Island to strike down R.I. Gen.
Laws 42-116-40 (1993) (the Depco Act) on constitutional
grounds. The district court dismissed the complaint because the
controversy lacked ripeness, and, alternatively, because it
invited abstention. E&Y appeals. We affirm.
I. BACKGROUND
I. BACKGROUND
In January 1991, Bruce Sundlun, newly inaugurated
Governor of Rhode Island, proclaimed a banking emergency
precipitated by the collapse of the Rhode Island Share and
Deposit Indemnity Corporation (RISDIC), a firm that had insured
deposits at no fewer than 45 Rhode Island-based financial
institutions.1 Since those institutions could not operate
legally without deposit insurance, see R.I. Gen. Laws 19-11-9,
___
the Governor closed them.
The lockout provoked a financial crisis, preventing
depositors from withdrawing their funds and causing consternation
in a myriad of other ways. Over time, many of the affected
institutions obtained insurance from sources such as the Federal
Deposit Insurance Corporation, and resumed operations. Others
were absorbed by insured entities. In the end ten financial
____________________
1The Rhode Island General Assembly chartered RISDIC in 1969
as a private deposit-insurance corporation. It began operations
in 1971, subject only to state, not federal, regulation.
Depositors tended to view RISDIC as a state-sponsored enterprise,
and its proprietors the banks and credit unions that dealt with
it did nothing to dispel this misconception.
2
institutions were unable to reopen. These financial institutions
had something in common: each of them had followed uncommonly
adventurous lending practices, and had become insolvent. They
were all placed into conservatorship. The Rhode Island General
Assembly created a public corporation, the Depositors Economic
Protection Corporation (Depco), to act as the receiver, manage
the failed banks' estates, marshal and liquidate their assets,
repay depositors, and seek recovery from those responsible for
the fiasco.2 In addition, Depco served as the receiver for
RISDIC.
A special state commission charged with investigating
the banking crisis found no shortage of miscreants. The
commission assigned blame, inter alia, to former officers and
_____ ____
directors of the failed institutions, certain large borrowers,
the state Department of Business Regulation, the General
Assembly, and a former governor. The commission reserved some of
its most stinging criticism for RISDIC and those persons who
occupied prominent positions in the RISDIC hierarchy. The
commission included E&Y, which had provided accounting services
to RISDIC and to many of its insureds, as among the parties
deserving special opprobrium.
The banks' collapse proved to be a depositor's
nightmare but a lawyer's dream, spawning a plethora of lawsuits.
For the most part, the depositors' and creditors' suits were
____________________
2As of the time the parties' briefs were filed, Depco had
managed to repay 93% of the affected depositors and to repay 90%
or more of the amounts owed to the remaining depositors.
3
consolidated in a series of master complaints (one for each
failed institution) docketed in the state superior court. Then,
in early 1992, Depco and other plaintiffs filed a civil action in
superior court against E&Y and sundry other defendants. In that
suit, the plaintiffs charged E&Y with negligence and professional
malpractice. Among other things, they alleged that E&Y issued
unqualified (or insufficiently qualified) audit opinions to
RISDIC and a number of RISDIC-insured institutions despite
obvious patterns of pervasive lending irregularities and other
clear portents of impending financial disaster.
In July of 1993, the General Assembly revised state law
as it pertained to the RISDIC cases by passing the Depco Act,
Pub. L. 1993, ch. 85. The Act provides that potentially
responsible parties who in good faith achieve judicially approved
settlements with Depco will not be liable for contribution to
other joint tortfeasors; and that, if a putative defendant
settles with Depco on this basis, the potential liability of
other joint tortfeasors will be reduced only by the dollar amount
of the settlement, not by the settling party's pro rata share of
the aggregate liability.3
____________________
3The statute reads in relevant part:
Notwithstanding any provisions of law to the
contrary, a person, corporation, or other
entity who has resolved its liability to the
Rhode Island Depositors' Economic Protection
Corporation, the receiver of Rhode Island
Share and Deposit Indemnity Corporation or
the receiver of any state-chartered financial
institution in judicially-approved good faith
settlement shall not be liable for claims for
4
The Act transmogrifies the law of contribution for
purposes of the RISDIC cases. Prior to its passage, a non-
settling defendant in a negligence action including a non-
settling defendant in a RISDIC case could, if found liable,
seek contribution according to proportionate fault from all other
joint tortfeasors, save only those who had entered settlements
that explicitly released all claims against all potentially
responsible parties for the settling tortfeasor's proportionate
share of the overall liability. See R.I. Gen. Laws 10-6-7,
___
10-6-8, 10-6-11 (1993). In other words, prior law ensured that,
if a joint tortfeasor were held responsible for (and paid) more
than its ratable share of damages, it could seek contribution
from other joint tortfeasors who had carried less than their fair
share of the load. Under the Depco Act, however, a non-settling
tortfeasor can be held liable for more than its pro rata share of
damages, yet find that it has no remaining right of contribution
as to some (or, conceivably, all) of the overage paid.
E&Y did not go quietly into this dark night. It
____________________
contribution or equitable indemnity regarding
matters addressed in the settlement. Such
settlement does not discharge any other
tortfeasors unless its terms so provide, but
it reduces the potential liability of such
joint tortfeasors by the amount of the
settlement.
R.I. Gen. Laws 42-116-40 (1993). The idea behind the statute
is scarcely original; the Depco Act is modeled on the special
contribution provisions contained in the Comprehensive
Environmental Response Compensation & Liability Act (CERCLA), see
___
42 U.S.C. 9613(f)(2) - (3) (1988); see also United States v.
___ ____ _____________
Cannons Eng'g Corp., 899 F.2d 79, 91-92 (1st Cir. 1990)
_____________________
(explaining operation of CERCLA contribution provisions).
5
promptly sued in the federal district court,4 seeking a
declaration that the Depco Act, on its face and as applied to
E&Y, transgresses the Federal Constitution. Specifically, E&Y
urged the court to find that the Act violates the due process and
equal protection clauses, and that it constitutes an unlawful
bill of attainder.
In its complaint, E&Y makes various allegations
designed to highlight the ostensible unfairness of the legal
predicament it now faces. Stripped of animadversions, the
complaint brands the Depco Act as special legislation drafted for
the specific purpose of depriving E&Y of preexisting substantive
rights in order to intimidate E&Y and thereby force a lucrative
settlement of Depco's negligence action.5 Depco's strategy, E&Y
alleges, is to reach early settlements with most potentially
responsible parties, limited to the face value of their
respective liability insurance policies, but to treat E&Y as a
"deep pocket" from whom a huge settlement can be extracted. E&Y
asserts that the doubts surrounding the viability of this
strategy, and particularly the profound uncertainties about the
Act's constitutionality, are currently imposing a substantial
hardship on E&Y in at least two ways. First, the situation
____________________
4E&Y's complaint named Governor Sundlun, Depco, and Depco's
executive director as defendants. For simplicity's sake, we
refer to the defendants, collectively, as "Depco."
5E&Y adds various details designed to bolster this claim,
including a charge that Depco's specially retained trial counsel
lobbied for passage of the Act, telling legislators that changing
the law of contribution greatly improved Depco's bargaining
position vis-a-vis E&Y.
6
creates coercive pressure on E&Y to settle the pending state
court suit. Second, it deprives E&Y of the ability adequately to
appraise its potential exposure.
The defendants moved to dismiss the complaint for want
of subject matter jurisdiction on the ground that the case lacked
ripeness,6 and, as a back-up, invoked several abstention
theories. The district court referred the motion to a magistrate
judge, see Fed. R. Civ. P. 72(b), who recommended that the
___
complaint be dismissed for want of subject matter jurisdiction,
or, alternatively, in the exercise of the court's discretion.
E&Y objected to the magistrate's report. On de novo review, the
__ ____
district court characterized the complaint as unripe and
dismissed it under Rule 12(b)(1). See E&Y v. Depco, 862 F. Supp.
___ ___ _____
709 (D.R.I. 1994). Judge Boyle stressed that since E&Y would
only be damaged by the Depco Act if a series of contingent events
occurred in the future, it failed satisfactorily to demonstrate
that "it has sustained or is immediately in danger of sustaining
a direct injury." Id. at 714-15. The judge went on to observe
___
that, were the case ripe, comity and federalism concerns would
nonetheless prompt him to abstain.7 See id. at 715-16 (citing
___ ___
____________________
6On appeal, Depco advances the closely related argument that
E&Y lacks standing. Despite their natural imbrication, these
asseverations are distinct; the standing doctrine is concerned
with who may bring a particular suit, while the ripeness doctrine
is concerned with when a party may bring suit. Because we hold
that the controversy is not ripe, we eschew any consideration of
whether E&Y also lacks standing.
7Judge Boyle also expressed his view that the Depco Act did
not comprise a bill of attainder. See E&Y, 862 F. Supp. at 716-
___ ___
17. The court's statements on this score are gratuitous, and we
7
Younger v. Harris, 401 U.S. 37 (1971)). This appeal ensued.
_______ ______
II. STANDARDS OF REVIEW
II. STANDARDS OF REVIEW
A district court's determination that it lacks subject
matter jurisdiction because the case before it is not ripe
usually presents a question of law reviewable de novo in the
__ ____
court of appeals. See Broughton Lumber Co. v. Columbia River
___ _____________________ ______________
Gorge Comm'n, 975 F.2d 616, 618 (9th Cir. 1992), cert. denied,
____________ _____ ______
114 S. Ct. 60 (1993); Shea v. Rev-Lyn Contracting Co., 868 F.2d
____ _______________________
515, 517 (1st Cir. 1989); Felmeister v. Office of Atty. Ethics,
__________ _______________________
856 F.2d 529, 535 n.8 (3d Cir. 1988). This case is no exception
to the rule.
The standard of review that applies to a district
court's discretionary decision to withhold a declaratory judgment
is more problematic. Some courts afford plenary review, but
others affirm unless the trial court's decision constitutes an
abuse of discretion. Compare, e.g., Allstate Ins. Co. v.
_______ ____ ___________________
Mercier, 913 F.2d 273, 277 (6th Cir. 1990) (utilizing plenary
_______
review) and Gayle Mfg. Co. v. Federal Sav. & Loan Ins. Corp., 910
___ ______________ ______________________________
F.2d 574, 578 (9th Cir. 1990) (same) with, e.g., Christopher P.
____ ____ ______________
v. Marcus, 915 F.2d 794, 802 (2d Cir. 1990) (utilizing abuse of
______
discretion standard), cert. denied, 498 U.S. 1123 (1991), and
_____ ______ ___
Kunkel v. Continental Cas. Co., 866 F.2d 1269, 1273 (10th Cir.
______ ____________________
1989) (same). We have captured a middle ground, expressing our
preference for a standard of independent review when passing upon
a trial court's discretionary decision to eschew declaratory
____________________
express no opinion on them.
8
relief. This standard encourages the exercise of independent
appellate judgment if it appears that a mistake has been made.
See El Dia, Inc. v. Hernandez Colon, 963 F.2d 488, 492 (1st Cir.
___ ____________ _______________
1992); National R.R. Passenger Corp. v. Providence & Worcester
______________________________ _______________________
R.R. Co., 798 F.2d 8, 10 (1st Cir. 1986). Thus, independent
________
review invokes a standard more rigorous than abuse of discretion,
but less open-ended than de novo review.
__ ____
III. THE DECLARATORY JUDGMENT ACT
III. THE DECLARATORY JUDGMENT ACT
The Declaratory Judgment Act, 28 U.S.C. 2201-2202
(1988), empowers a federal court to grant declaratory relief in a
case of actual controversy. The Act does not itself confer
subject matter jurisdiction, but, rather, makes available an
added anodyne for disputes that come within the federal courts'
jurisdiction on some other basis. See Franchise Tax Bd. v.
___ __________________
Construction Laborers Vacation Trust, 463 U.S. 1, 15-16 (1983).
____________________________________
The Declaratory Judgment Act serves a valuable
purpose.8 It is designed to enable litigants to clarify legal
rights and obligations before acting upon them. See Step-Saver
___ __________
Data Sys., Inc. v. Wyse Tech., 912 F.2d 643, 649-50 (3d Cir.
________________ __________
1990) (citing legislative history). Because the Act offers a
window of opportunity, not a guarantee of access, the courts, not
the litigants, ultimately must determine when declaratory
judgments are appropriate and when they are not. Consequently,
____________________
8The Declaratory Judgment Act is mirrored by Fed. R. Civ. P.
57. The statute and the rule are functionally equivalent. See,
___
e.g., 118 E. 60th Owners, Inc. v. Bonner Props., Inc., 677 F.2d
____ _________________________ ____________________
200, 205 n.8 (2d Cir. 1982) (treating Rule 57 as implementing the
remedy authorized by the Act).
9
federal courts retain substantial discretion in deciding whether
to grant declaratory relief. As we have stated, the Declaratory
Judgment Act "neither imposes an unflagging duty upon the courts
to decide declaratory judgment actions nor grants an entitlement
to litigants to demand declaratory remedies." El Dia, 963 F.2d
_______
at 493; accord Green v. Mansour, 474 U.S. 64, 72 (1985); Public
______ _____ _______ ______
Serv. Comm'n v. Wycoff Co., 344 U.S. 237, 241 (1952).
____________ __________
Not surprisingly, then, an indigenous jurisprudence has
sprouted in the fields where the seeds of declaratory actions are
sown. It is not necessary to harvest this jurisprudence today.
For present purposes, it suffices to sound a note of caution:
the discretion to grant declaratory relief is to be exercised
with great circumspection when matters of public moment are
involved, see Washington Pub. Power Supply Sys. v. Pacific N.W.
___ __________________________________ _____________
Power Co., 332 F.2d 87, 88 (9th Cir. 1964), or when a request for
_________
relief threatens to drag a federal court prematurely into
constitutional issues that are freighted with uncertainty, see El
___ __
Dia, 963 F.2d at 494.
___
IV. RIPENESS
IV. RIPENESS
In the first instance, the district court dismissed
E&Y's action due to ripeness concerns. See E&Y, 862 F. Supp. at
___ ___
713-15. E&Y assigns error. We discern none.
A. Examining The Ossature.
A. Examining The Ossature.
______________________
In its seminal opinion on the application of the
ripeness doctrine in the declaratory judgment context, the
Supreme Court explained that the doctrine's basic rationale is to
10
"prevent the courts, through avoidance of premature adjudication,
from entangling themselves in abstract disagreements." Abbott
______
Labs v. Gardner, 387 U.S. 136, 148-49 (1967). While the doctrine
____ _______
has a prudential flavor, a test for ripeness is also mandated by
the constitutional requirement that federal jurisdiction extends
only to actual cases or controversies, see U.S. Const. art. III,
___
2; see also Wycoff, 344 U.S. at 242-45. Consequently, although
___ ____ ______
a court may, within stated limits, dismiss declaratory judgment
actions in its discretion, a court has no alternative but to
dismiss an unripe action.
Questions of ripeness that arise incident to challenged
governmental actions in the declaratory judgment context are
gauged by means of a two-part test. See Abbott Labs, 387 U.S. at
___ ___________
149. First, the court must consider whether the issue presented
is fit for review. This branch of the test typically involves
subsidiary queries concerning finality, definiteness, and the
extent to which resolution of the challenge depends upon facts
that may not yet be sufficiently developed. See, e.g., W.R.
___ ____ ____
Grace & Co. v. EPA, 959 F.2d 360, 364 (1st Cir. 1992). The
____________ ___
second branch of the Abbott Labs test requires the court to
____________
consider the extent to which hardship looms an inquiry that
typically "turns upon whether the challenged action creates a
`direct and immediate' dilemma for the parties." Id. (citation
___
omitted).
The relationship between these two parts of the test
fitness and hardship has never been precisely defined. Though
11
some commentators have suggested that either of the two showings
may suffice to allay ripeness concerns, see, e.g., Laurence H.
___ ____
Tribe, American Constitutional Law 3-10, at 80 (2d ed. 1987),
____________________________
the predominant weight of authority supports the opposite view,
see, e.g., Poe v. Ullman, 367 U.S. 497, 509 (1961) (dismissing
___ ____ ___ ______
for lack of ripeness despite the predominantly legal nature of
the question presented and the minimal need for an extensive
factual record); Cedars-Sinai Medical Ctr., v. Watkins, 11 F.3d
__________________________ _______
1573, 1581 (Fed. Cir. 1993) (holding that a ripe case must meet
both prongs of Abbott Labs); see also Erwin Chemerinsky, Federal
___________ ___ ____ _______
Jurisdiction 2.4, at 124 (2d ed. 1994) (deriving examples from
____________
Supreme Court jurisprudence). In line with the majority view, we
hold that both prongs of the test ordinarily must be satisfied in
order to establish ripeness. In so holding, however, we
acknowledge the possibility that there may be some sort of
sliding scale under which, say, a very powerful exhibition of
immediate hardship might compensate for questionable fitness
(such as a degree of imprecision in the factual circumstances
surrounding the case), or vice versa.9
We end this segment of our opinion on yet another
cautionary note. The ripeness inquiry is often sui generis.
___ _______
Most litigation has idiosyncratic features, and the various
integers that enter into the ripeness equation play out quite
differently from case to case, thus influencing the bottom line.
____________________
9We need not probe this final point, for E&Y has not made a
sufficiently strong showing under either of the test's two
prongs. See infra Part IV(C).
___ _____
12
See, e.g., State of Rhode Island v. Narragansett Indian Tribe, 19
___ ____ _____________________ _________________________
F.3d 685, 693 (1st Cir.), cert. denied, 115 S. Ct. 298 (1994).
_____ ______
B. Putting Flesh on the Bones.
B. Putting Flesh on the Bones.
__________________________
Before determining whether E&Y's initiative passes the
Abbott Labs test, we pause to flesh out the test's two parts.
___________
1. Fitness. We start with bedrock: "the critical
1. Fitness.
_______
question concerning fitness for review is whether the claim
involves uncertain and contingent events that may not occur as
anticipated or may not occur at all." Massachusetts Ass'n of
_______________________
Afro-American Police, Inc. v. Boston Police Dep't, 973 F.2d 18,
__________________________ ___________________
20 (1st Cir. 1992) (per curiam); accord Lincoln House, Inc. v.
______ ____________________
Dupre, 903 F.2d 845, 847 (1st Cir. 1990). This conclusion
_____
reflects an institutional awareness that the fitness requirement
has a pragmatic aspect: issuing opinions based on speculative
facts or a hypothetical record is an aleatory business, at best
difficult and often impossible. See, e.g., Calif. Bankers Ass'n
___ ____ ____________________
v. Schultz, 416 U.S. 21, 56 (1974) ("This Court, in the absence
_______
of a concrete fact situation in which competing associational and
governmental interests can be weighed, is simply not in a
position to determine [the question presented]."); Socialist
_________
Labor Party v. Gilligan, 406 U.S. 583, 587 (1972) (finding sole
___________ ________
remaining issue unripe and dismissing appeal because the record
lacks "the sort of proved or admitted facts that would enable
[the Court] to adjudicate th[e] claim"). Nevertheless, the raw
fact that events have not yet fully unfolded is not always fatal
to justiciability. In such straitened circumstances, courts
13
sometimes exhibit a greater willingness to decide cases that turn
on legal issues not likely to be significantly affected by
further factual development. See, e.g., Pacific Gas & Elec. Co.
___ ____ _______________________
v. State Energy Resources Conserv. & Dev. Comm'n, 461 U.S. 190,
______________________________________________
201 (1983) (finding fitness for judicial review supported by the
"predominantly legal" nature of the question presented); Duke
____
Power Co. v. Carolina Envtl. Study Group, Inc., 438 U.S. 59, 81-
_________ __________________________________
82 (1978) (finding fitness for judicial review supported by the
fact that further factual development "would not . . .
significantly advance [the judiciary's] ability to deal with the
legal issues presented nor aid . . . in their resolution").
2. Hardship. The second half of the Abbott Labs
2. Hardship.
________ ____________
inquiry focuses on the hardship that may be entailed in denying
judicial review. In general, the greater the hardship, the more
apt a court will be to find ripeness. See, e.g., Pacific Gas,
___ ____ ___________
461 U.S. at 201 & n.13. Though the hallmark of cognizable
hardship is usually direct and immediate harm, other kinds of
injuries occasionally may suffice. For example, if the operation
of a challenged statute is inevitable, ripeness is not defeated
by the existence of a time delay before the statute takes effect.
See Regional Rail Reorganization Act Cases, 419 U.S. 102, 143
___ ________________________________________
(1974). And, moreover, even when the direct application of a
statute is to some degree remote or contingent, its collateral
effects may inflict present injuries that, though indirect, are
adequate to support a finding of ripeness.
Thus, in Duke Power, the plaintiffs, some of whom
___________
14
resided near a nuclear power plant, sought a declaration as to
the unconstitutionality of the Price-Anderson Act (which set a
monetary cap on damages recoverable in consequence of nuclear
accidents). Even though the Court thought the possibility of a
nuclear accident speculative, it nonetheless found the
controversy ripe. The Justices reasoned that the statute made
feasible the construction of the plant, which, in turn, posed
risks (such as fear of an accident, exposure to radiation, and
thermal pollution) that would not otherwise exist. See Duke
___ ____
Power, 438 U.S. at 81. In the Court's view, these injuries were
_____
sufficient to support a finding of ripeness. See id. at 81-82;
___ ___
see also McCoy-Elkhorn Coal Corp. v. EPA, 622 F.2d 260, 263-65
___ ____ ________________________ ___
(6th Cir. 1980).
Pacific Gas illustrates that, in special circumstances,
___________
an injury sufficient to impute ripeness may also be found when a
plaintiff must presently decide to expend substantial resources
which may turn out to be wasted, depending on later clarification
of the law. There, the Court determined that a group of
utilities could challenge a state law imposing a moratorium on
the construction of nuclear power plants. See Pacific Gas, 461
___ ___________
U.S. at 197-200. Noting the long lead time and the millions of
dollars that had to be expended simply to proceed to the
licensing stage in the course of developing a nuclear power
plant, see id. at 201 n.13, the Court envisioned enormous
___ ___
hardship were it to require the industry to chart a course of
action without knowing whether the moratorium was valid.
15
Once again, we end with watchful words. A court's
assessment of hardship need not be phrased solely in negative
terms. The key question involves the usefulness of a declaratory
judgment, that is, the extent to which the desired declaration
"would be of practical assistance in setting the underlying
controversy to rest." Narragansett Tribe, 19 F.3d at 693.
___________________
Hence, courts should not become mired in the frequently sophistic
distinction as to whether refusing declaratory relief will
actually impose a hardship or merely fail to confer a benefit.
C. Applying the Test.
C. Applying the Test.
_________________
Using Abbott Labs as the compass by which we must
____________
steer, we conclude, as did the district court, that E&Y's claims
are unripe. First, the claims are not now fit for federal
judicial review.10 Second, postponing an adjudication will not
work a substantial hardship.
____________________
10State judicial review is, however, in the offing. Shortly
before we heard oral argument, Depco asked the state superior
court to certify questions anent the constitutionality of the
Depco Act to the state supreme court. Depco made the motion in a
tort case it had commenced involving the collapse of the Brown
University Employees Credit Union, a RISDIC-insured institution.
Over E&Y's objection E&Y is a third-party defendant in the suit
the superior court granted Depco's motion. The state supreme
court received the certified questions, paired them with a
strikingly similar set of constitutional issues limned by the
Governor in a pending request for an advisory opinion, see R.I.
___
Const. art. X, 3 (authorizing the governor to request such
advisory opinions from the state supreme court), and promulgated
a consolidated briefing schedule. Although E&Y correctly
maintains that announcing a briefing schedule is not tantamount
to reaching the merits of the certified questions, it appears
likely that the Rhode Island Supreme Court will soon hear oral
arguments.
16
1. Fitness. On the fitness prong, E&Y points to the
1. Fitness.
_______
fact that its complaint challenges the Depco Act both on its face
and as applied. The former claim, it tells us, is
quintessentially legal in nature, and, therefore, suitable for
immediate judicial review. See, e.g., Pacific Gas, 461 U.S. at
___ ____ ___________
201; Duke Power, 438 U.S. at 81-82. We believe that this is too
__________
simplistic a view, for it focuses narrowly on the claim's
susceptibility to resolution and turns a blind eye to the related
but equally important matter of whether judicial resolution
is appropriate here and now.
The notion that disputes which turn on purely legal
questions are always ripe for judicial review is a myth. Even
when the "legal" emphasis of a particular claim is sufficient to
mask gaps in the factual record, a court will find ripeness
lacking if the anticipated events and injury are simply too
remote to justify contemporaneous adjudication. See Hodel v.
___ _____
Virginia Surface Mining & Reclam. Ass'n, Inc., 452 U.S. 264, 304
______________________________________________
(1981); Lincoln House, 903 F.2d at 847; Benson v. Superior Court,
_____________ ______ ______________
663 F.2d 355, 360-61 (1st Cir. 1981). Put bluntly, the question
of fitness does not pivot solely on whether a court is capable of
resolving a claim intelligently, but also involves an assessment
of whether it is appropriate for the court to undertake the task.
Federal courts cannot and should not spend their scarce
resources in what amounts to shadow boxing. Thus, if a
plaintiff's claim, though predominantly legal in character,
depends upon future events that may never come to pass, or that
may not occur in the form forecasted, then the claim is unripe.
See Mass. Ass'n of Afro-American Police, 973 F.2d at 20; Lincoln
___ ____________________________________ _______
17
House, 903 F.2d at 847; see also Maryland Cas. Co. v. Pacific
_____ ___ ____ __________________ _______
Coal & Oil Co., 312 U.S. 270, 273 (1941) (admonishing that a
_______________
declaratory action is not ripe unless "the facts alleged, under
all the circumstances, show that there is a substantial
controversy . . . of sufficient immediacy and reality"). For
this reason, the mere fact that E&Y asserts a challenge to the
Depco Act on its face, without more, cannot carry the day.
Here, there is very little more: E&Y's claim lacks the
needed dimensions of immediacy and reality. The challenge is not
rooted in the present, but depends on a lengthy chain of
speculation as to what the future has in store. Tracing the
links in this chain demonstrates their fragility. In order for
E&Y to be harmed by the operation of the statute, these events
must come to pass: (1) at least one person, firm, or corporation
other than E&Y must admit fault, or be found to have been at
fault, and must have caused recoverable damages arising out of
the banking crisis;11 (2) that other party must settle with
Depco; (3) the settlement must be entered into in good faith and
approved by a competent court; (4) under the bargained terms, the
settlor must pay less than its pro rata share, measured by
relative fault; (5) perhaps most critically, E&Y which, to this
____________________
11Depco apparently has reached one settlement that is
expressly conditioned on the constitutionality of the Depco Act
being upheld by the Rhode Island Supreme Court. See supra note
___ _____
10. In the settlement papers the settling defendants disclaim
any wrongdoing, and Depco agrees not to treat the fact of
settlement as an admission of liability. The more widespread
this pattern of settlement becomes, the more arduous it will be
to fulfill the "other tortfeasor" requirement.
18
date, has steadfastly denied fault must be found to have been
negligent, and its negligence must be found to have caused or
contributed to the damages; (6) Depco must attempt to collect an
amount greater than E&Y's pro rata share of the damages; (7) a
court must find E&Y liable for, and order it to pay, the tribute
demanded; and (8) E&Y must then seek contribution from one or
more of the "underpaying" joint tortfeasors (who, presumably,
will interpose the statute as a defense). This is a long string
of contingencies so long that E&Y's assertion of fitness for
judicial review trips over it and falls.
Courts should always be hesitant to answer hypothetical
questions. See Poe, 367 U.S. at 503. That hesitancy does not
___ ___
evaporate merely because a suit is couched as a plea for
declaratory relief. See, e.g., Aetna Life Ins. Co. v. Haworth,
___ ____ ____________________ _______
300 U.S. 227, 240-41 (1937) (explaining that courts, in the guise
of declaratory judgment, should not issue opinions "advising what
the law would be upon a hypothetical state of facts"). The
manifold uncertainties that attend this case in its present
posture bring to mind this principle: even though the legal
question presented by E&Y's facial challenge to the Depco Act is
not likely to be placed in sharper focus by further factual
development, the claim is unripe because any application of the
challenged statute to E&Y depends on serendipitous events that
may not occur as anticipated or may not occur at all. The case
that E&Y argues is, at this stage, largely hypothetical, and such
cases are seldom fit for federal judicial review. Cf. William
___
19
Shakespeare, Macbeth, act I, sc. iii, ll. 133-34 (1605)
_______
(reminding readers that "present fears are [often] less than
horrible imaginings").
This recital does not come close to exhausting E&Y's
problems on the fitness prong of the Abbott Labs test. Over and
___________
beyond the potential waste of judicial resources that
entertaining a remote and speculative claim would risk, there are
other telltale signs that a finding of fitness is not warranted
here. We mention two such indicators.
The first telltale has a prudential cast. Were we to
permit E&Y's action to be decided now, we would be setting in
motion a constitutional adjudication that not only could have a
thunderous impact on important state interests but that might
well prove to be completely unnecessary (if, say, E&Y were later
found to have exercised due care, or if the parties settled for
an amount that did not exceed E&Y's pro rata share of the
recoverable damages). Courts should strive to avoid gratuitous
journeys through forbidding constitutional terrain. See Poe, 367
___ ___
U.S. at 502-04; see also El Dia, 963 F.2d at 494 (counselling
___ ____ ______
that "[u]ncertain questions of constitutional law should be
addressed only when absolutely necessary").
A second disincentive to a finding of fitness relates
to the absence of other parties having a stake in the
controversy. E&Y has sued a stage agency and two state
officials. See supra note 4. While we do not doubt that these
___ _____
parties will defend the Act's constitutionality, E&Y's suit lacks
20
full adverseness. See generally Narragansett Tribe, 19 F.3d at
___ _________ __________________
692-93 (discussing adverseness requirement).12 We explain
briefly.
The real parties in interest are presumably the other
joint tortfeasors (if any there be). After all, because
tortfeasors are jointly and severally liable under Rhode Island
law, Depco can collect the total amount of damages from E&Y
regardless of what regime governs tortfeasors' rights of
contribution. Thus, Depco's only interest in the Act relates to
its efficacy as a negotiating tool.
It follows that, if E&Y is harmed at all, the parties
most directly adverse to it will be underpaying tortfeasors
those who settle for less than their proportionate shares and who
would, without the prophylaxis of the Depco Act, face liability
to overpaying tortfeasors for contribution. These persons cannot
be made parties to this litigation now because there is no way of
predicting at this early date who they will be or even if they
will exist. Hence, E&Y's action, under current conditions, is
incompletely adverse. This is a serious indictment, for a
lawsuit that is hobbed in this manner is much less likely to be
____________________
12E&Y touts Narragansett Tribe, a case in which we found
__________________
disputed issues ripe, as directly applicable precedent. We do
not agree. There, unlike in this case, the state's suit fully
satisfied the adverseness requirement. See Narragansett Tribe,
___ __________________
19 F.3d at 692-93. Other distinctions abound; the arguably
unripe issues in that case were not of constitutional stature,
the public interest favored immediate adjudication, comity was
not a problem (as, there, unlike here, the state urged the
federal court to proceed), the hardship that would flow from non-
adjudication was starkly apparent, and the utility of a prompt
decision was more easily discernible.
21
ripe for judicial review.13 See Connecticut Mut. Life Ins. Co.
___ _______________________________
v. Moore, 333 U.S. 541, 549-50 (1948) (considering the absence of
_____
affected parties relevant to ripeness).
We think it is reasonably plain from what we have said
that E&Y's claim, as it now stands, is not only incompletely
adverse, but also remote, speculative, premature, and lacking in
practical value. These factors, coupled with E&Y's desire to
hurry the federal courts toward a tangled constitutional
adjudication that may, in the end, prove to be inutile, render
its suit inappropriate for immediate judicial review. Ergo,
E&Y's challenge fails to satisfy the fitness prong of the Abbott
______
Labs test.14
____
2. Hardship. By like token, we do not think that
2. Hardship.
________
E&Y's case passes muster under the hardship prong of Abbott Labs.
___________
E&Y alleges that it is currently suffering two kinds of adverse
effects from the Act, namely, increased pressure to settle
Depco's suit and an inability to evaluate its exposure therein.
____________________
13The absence of affected parties also has implications for
the hardship vel non of denying review, see infra Part IV(C)(2).
___ ___ ___ _____
Even if E&Y were to prevail in the instant action, it seems
likely that settling joint tortfeasors, not parties here, would
be entitled to relitigate the Depco Act's constitutionality in
defending subsequent contribution actions brought by E&Y. See
___
NLRB v. Donna-Lee Sportswear Co., 836 F.2d 31, 33-34 (1st Cir.
____ ________________________
1987) (explaining requirements for collateral estoppel); E.W.
____
Audet & Sons, Inc. v. Fireman's Fund Ins. Co., 635 A.2d 1181,
___________________ ________________________
1186-87 (R.I. 1994) (similar; elucidating Rhode Island law).
14We have discussed only E&Y's challenge to the
constitutionality of the Depco Act on its face. To go further
would be supererogatory. Because the facial challenge is unfit
for review, it follows a fortiori that the "as applied" challenge
_ ________
to a freshly minted statute that has yet to make its maiden
voyage is also unfit.
22
These harms are indirect. And although it is true that present
indirect effects occasionally may wreak a sufficient hardship to
support a finding of ripeness, see, e.g., Pacific Gas, 461 U.S.
___ ____ ____________
at 201, the effects of which E&Y complains are not so pernicious.
There is quite a difference between increasing the risk of
exposure to radiation, Duke Power, 438 U.S. at 81-82, and
___________
increasing the difficulty of evaluating a money damages claim for
settlement purposes.
The uncertainty of which E&Y complains in this case
arises in the context of bilateral negotiations, not yet under
way, in which opposing parties will explore the possibility of
settling a hotly disputed case based partly on the expected
results of the litigation. That situation presents a type of
hardship that is qualitatively different than those displayed in
Pacific Gas and Duke Power, for resolving the challenge to the
___________ __________
Depco Act will help the challenger only marginally. Either way,
E&Y still will be faced with the incubus of pending litigation.
Either way, E&Y still will have to make an evaluative judgment
anent the desirability of settlement on various terms a
judgment that depends on many factors other than its right to
contribution (and, accordingly, on many factors that will not be
clarified by an immediate determination of the statute's
constitutionality). The usefulness that may satisfy the hardship
prong of Abbott Labs is not met by a party showing that it has
___________
the opportunity to move from a position of utter confusion to one
of mere befuddlement.
23
This is not to deny that a declaratory decree might
have some utility. If the declaratory action proceeds to a
conclusion, the parties will obtain an additional piece of
information that will help them to determine a settlement
strategy. The point, however, is that E&Y though it will be
better informed still will not be spared the need to make the
very sort of evaluative judgment that it tells us it is striving
to avoid. What is more, E&Y still will not control its own
destiny in respect to settlement, for Depco might (or might not)
be willing to settle on E&Y's terms, and other tortfeasors might
(or might not) leave themselves open to contribution claims,
regardless of whether the declaratory judgment action proceeds.
The limited utility of the judgment that E&Y seeks here
is highlighted by the fact that the "value" of a case for
settlement purposes is always a moving target. Phrased another
way, settlement value is at best an estimate, subjective in
nature, reflecting the worth that the parties themselves, for
myriad reasons, attach to their case. See Mathewson Corp. v.
___ ________________
Allied Marine Indus., Inc., 827 F.2d 850, 855 (1st Cir. 1987).
___________________________
It follows inexorably that the settlement value of Depco's claim
against E&Y will not be determined by the incidence of rights of
contribution alone. See generally Note, Private Settlement as
___ _________ ______________________
Alternative Adjudication: A Rationale for Negotiation Ethics, 18
________________________ __________________________________
U. Mich. J. L. Ref. 503, 515 n. 16 (1985) (explaining that one
cannot "presum[e] that projected legal rights are the principal
_____
determinants of negotiated agreements. . . . [O]ther
24
considerations incident to bargaining power, such as relative
financial strength and eagerness to avoid trial, are often
vitally important to both the process and ultimate content of
private settlements"). Because settlement evaluations typically
"are the product of intangible criteria which defy
quantification," Mathewson, 827 F.2d at 855, the present
_________
uncertainty will only be lessened somewhat, not avoided, should
the action proceed.15
Of course, a litigant's plaints of hardship cannot be
assessed in a vacuum. Rather, a claim of hardship demands an
assessment of the complainant's position in light of all the
attendant circumstances. See State Farm Mut. Auto. Ins. Co. v.
___ _______________________________
Dole, 802 F.2d 474, 479 (D.C. Cir. 1986) (noting that application
____
of Abbott Labs is not "a matter of weaving complicated legal
___________
distinctions divorced from reality," but, rather, requires the
exercise of "practical common sense") (internal quotation marks
omitted), cert. denied, 480 U.S. 951 (1987); cf. Narragansett
_____ ______ ___ ____________
Tribe, 19 F.3d at 692-93 (explaining that the inquiry into
_____
adverseness likewise requires an assessment of all the attendant
____________________
15It perhaps bears noting that the lack of certitude both
helps and hurts E&Y. On one hand, the uncertainty admittedly
generates pressure on E&Y to pay more by way of settlement. But
on the other hand, the uncertainty also encourages Depco to
settle for less than it would demand if it knew beyond any
peradventure of doubt that the Act would withstand constitutional
scrutiny. By the same token, a resolution of the constitutional
question would cut both ways. If a court upholds the Depco Act,
E&Y probably will be faced with the prospect of paying more for a
release, whereas, if a court invalidates the Act, E&Y probably
will be able to pay less. This shifting array of possibilities,
tilting first in one direction and then in the other, further
dilutes E&Y's claim of an intolerable hardship.
25
circumstances). Here, three facts soften the sharp edges of
E&Y's professed hardship, and, therefore, counsel restraint.
First, the contingent nature of E&Y's claim has
implications for hardship as well for fitness. Given the
stretched chain of events that must transpire before the Act can
harm E&Y, and the speculative nature of many of those events, we
remain unconvinced either that E&Y's ability to negotiate is
unfairly handicapped or that its ability to settle will be
substantially enhanced by an immediate decision about the
constitutionality of the Act. Second, E&Y is not without other
options. Proceedings are underway in the state court that offer
a vehicle for the expedited constitutional adjudication that E&Y
seeks, unaccompanied by the disadvantages that deter us in this
case. See supra note 10. E&Y is already a party to the
___ _____
underlying state-court litigation and can, if it chooses to do
so, participate in the proceedings before
the Rhode Island Supreme Court. Finally, as some other
defendants reportedly have done, E&Y can enter into negotiations
with Depco aimed at fashioning a settlement that is contingent on
an adjudication of the Act's constitutionality. See supra note
___ _____
11.
In sum, the Depco Act does not work a sufficient
hardship, gauged by present effects, to justify a finding of
ripeness. Though E&Y may feel some discomfiture over the
threatened impairment of its anticipated right to contribution,
the burden of which it complains is for the most part indigenous
26
to the litigation process, and, thus, it cannot be made
weightless by the desired declaratory relief.
V. CONCLUSION
V. CONCLUSION
We need go no further.16 E&Y yearns for the blossom
when only the bud is ready. Because its challenge to the
constitutionality of the Depco Act satisfies neither the fitness
nor the hardship prong of the Abbott Labs test, it is not yet
____________
ripe for federal judicial review. Accordingly, the district
court's dismissal of E&Y's complaint for lack of subject matter
jurisdiction must be
Affirmed.
Affirmed.
________
____________________
16Although lack of ripeness is dispositive here, we do not
in any way suggest that the lower court's alternate ground for
dismissal abstention lacks force. In particular, to the
extent that the court's abstention ruling rests on the discretion
provided by the Declaratory Judgment Act, see, e.g., El Dia, 963
___ ____ ______
F.2d at 493-95, it appears fully sustainable. As we have
indicated, the constitutional questions presented by a challenge
to the Depco Act are of great import to Rhode Island, and lie at
the core of the massive litigation that is proceeding glacially
in its court system. Even if no individual abstention doctrine
requires federal courts to forgo review a matter on which we do
not opine the comity and federalism concerns that animate the
various doctrines strongly suggest that dismissal of E&Y's
declaratory action mirrors the course of prudence.
27