Ernst & Young v. Depositors Economic

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.

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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).

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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.

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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

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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.

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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).

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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


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"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


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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). ___ _____

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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


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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.


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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.

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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 ___ ____________________________________ _______

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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 ___


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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