Ernst & Young v. Depositors Economic Protection Corp.

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