Aidan Ming-Ho Leung v. Verdugo Hills Hospital

Filed 8/23/12
IN THE SUPREME COURT OF CALIFORNIA
AIDAN MING-HO LEUNG, a Minor, etc., )
)
Plaintiff and Appellant, )
) S192768
v. )
) Ct.App. 2/4 B204908
VERDUGO HILLS HOSPITAL, )
) Los Angeles County
Defendant and Appellant. ) Super. Ct. No. BC343985
____________________________________)
Six days after his birth, plaintiff suffered irreversible brain damage.
Through his mother as guardian ad litem, he sued his pediatrician and the hospital
in which he was born. Before trial, plaintiff and the pediatrician agreed to a
settlement of $1 million, the limit of the pediatrician‟s malpractice insurance
policy. At a jury trial, plaintiff was awarded both economic and noneconomic
damages. The jury found that the pediatrician was 55 percent at fault, the hospital
40 percent at fault, and the parents 5 percent at fault.
On the hospital‟s appeal, a major contention was that under the common
law “release rule,” plaintiff‟s settlement with the pediatrician also released the
nonsettling hospital from liability for plaintiff‟s economic damages. The Court of
Appeal reluctantly agreed. It observed that although this court “has criticized the
common law release rule,” it “has not abandoned it.” Considering itself bound by
principles of stare decisis, the Court of Appeal then applied the common law
release rule to this case, and it reversed that portion of the trial court‟s judgment
1
awarding plaintiff economic damages against the hospital. We granted plaintiff‟s
petition for review, which asked us, as the Court of Appeal did in its opinion, to
repudiate the common law release rule. Today, we do so.
I
Helpful in our review of this case is the Court of Appeal‟s lengthy and
detailed explanation, not in dispute here, of the relevant facts and the medical
conditions — jaundice, hyperbilirubinemia, and kernicterus — that led to
plaintiff‟s postbirth brain injury. Our brief summary follows.
A. Medical Conditions
The skin and eyes of an infant with jaundice have a yellowish tint, which
may be caused by an accumulation in the blood of bilirubin, a waste substance
produced by the normal breakdown of red blood cells. All infants have increasing
levels of bilirubin for the first three to five days after birth. Unless an
exacerbating condition exists, the bilirubin level reduces in about a week as the
infant‟s liver develops and the bilirubin is expelled. A common way of preventing
a rise in the bilirubin level is to give the infant adequate milk, resulting in
sufficient stool to expel the bilirubin.
Excessive bilirubin can lead to hyperbilirubinemia, in which bilirubin after
migrating to the brain can cause kernicterus, leading to severe brain damage.
Hyperbilirubinemia is readily treatable by exposure to light (phototherapy), or in
more serious cases by a blood-exchange transfusion. The risk of kernicterus is
higher for some infants than for others. The risk factors include these
characteristics: (1) male, (2) East Asian descent, (3) born at less than 38 weeks‟
gestation, (4) exclusively breastfed, (5) bruising, (6) jaundice within the first 24
hours, and (7) weight loss.
2
In April 2001, the Joint Commission (formerly the Joint Commission on
Accreditation of Healthcare Organizations) issued “Sentinel Event Alert No. 18”
(Alert No. 18) to warn the medical community of the reemergence of kernicterus.
The alert identified the various risk factors and recommended certain protective
measures, such as medical check-ups of all newborns within 24 to 48 hours of
birth, and educating neonatal caregivers on the danger of and risk factors for
kernicterus in newborn infants.
B. Facts Leading to Lawsuit
On Monday, March 24, 2003, Aidan Ming-Ho Leung, of East Asian
descent, was born at Verdugo Hills Hospital in Glendale, Los Angeles County. He
was born at less than 38 weeks‟ gestation (37 weeks and two days). On the day of
his birth, his mother, Nancy Leung, tried to breastfeed him five or six times, but
she could not tell whether he was taking in milk. At least three times she
expressed her concern to two of the attending nurses; two entries in Aidan‟s
hospital medical chart indicated problems with breastfeeding.
The next day, Aidan‟s pediatrician, Steven Wayne Nishibayashi, examined
Aidan at the hospital. Dr. Nishibayashi told the parents that Aidan was a healthy
baby, that two bruises on the side of Aidan‟s head were nothing to worry about,
that it was safe to take Aidan home, and that a followup appointment should be
made for the next week. Later that morning, about 24 hours after his birth, Aidan
was discharged from the hospital. The hospital gave Aidan‟s parents a manual
entitled “Caring For Yourself and Your New Baby,” and the nurses told the
parents to consult the manual if there were problems. When the parents arrived
home, Aidan‟s mother made an appointment for a followup visit with
Dr. Nishibayashi for March 31, seven days after Aidan‟s birth.
3
On Thursday, March 27, 2003, Aidan‟s parents noticed that his eyes looked
yellow and that his lips were chapped. They checked the care manual that the
hospital had given them. The manual said that jaundice is common in newborns,
that in most cases jaundice can be ignored, and that although jaundice can be
dangerous, it rarely is so, depending on various factors such as age, premature
birth, and “any other medical conditions.” The manual also stated that any bruises
on the head were not dangerous and would heal in a few days, and that any
questions about the baby‟s jaundice should be directed to the baby‟s treating
physician.
That same day, Aidan‟s mother telephoned the office of pediatrician
Nishibayashi and told the responding nurse about Aidan‟s yellowish tint. The
nurse told her not to worry but said she would check with the doctor. When the
nurse returned to the telephone, she asked whether Aidan was “feeding, peeing,
and pooping.” Aidan‟s mother responded, “Yes.” After saying that Aidan seemed
fine, the nurse suggested putting Aidan in the sunlight. When Aidan‟s mother
mentioned his chapped lips, the nurse told her to apply lotion. When the mother
asked whether she should bring Aidan in that day or wait for the scheduled
appointment with Dr. Nishibayashi four days later, the nurse said to wait until that
appointment.
The next day (Friday) and the day thereafter (Saturday), Aidan‟s mother
continued trying to breastfeed him and, as suggested by Dr. Nishibayashi‟s office,
put him in the sunlight, but the jaundice remained. By Saturday evening, Aidan
appeared lethargic. Early Sunday, Aidan was very sleepy and would not wake up
to be fed. His mother telephoned Dr. Nishibayashi‟s office and left a message
with his answering service. An on-call physician returned the call and, after
listening to a description of Aidan‟s symptoms, said to immediately take Aidan to
the emergency room at Huntington Memorial Hospital in Pasadena. There Aidan
4
was given a blood-exchange transfusion to reduce the level of bilirubin, but it was
too late. Aidan had already developed kernicterus, resulting in severe brain
damage.
C. The Lawsuit, the Trial, and the Court of Appeal’s Decision
Through his mother, Nancy, as guardian ad litem, Aidan brought a
negligence action against his pediatrician and the hospital in which he was born.
Before trial, plaintiff settled with defendant pediatrician for $1 million, the
limit of the pediatrician‟s malpractice insurance policy. Defendant pediatrician
agreed to participate as a defendant at trial, and plaintiff agreed to release him
from all claims. The pediatrician petitioned the trial court for a determination that
the written settlement agreement met the statutory requirement of having been
made in “good faith,” seeking to limit his liability to the amount of the settlement.
(Code Civ. Proc., § 877 [judicial determination of settlement in good faith
discharges the settling party “from all liability for any contribution to any other
parties”].)
The trial court denied that motion, as it found the settlement to be “grossly
disproportionate to the amount a reasonable person would estimate” the
pediatrician‟s share of liability would be. (See Tech-Bilt, Inc. v. Woodward-Clyde
& Associates (1985) 38 Cal.3d 488, 499 (Tech-Bilt) [a settlement is in good faith
when the trial court has determined it to be “within the reasonable range of the
settling tortfeasor‟s proportional share of comparative liability for the plaintiff‟s
injuries”].) Plaintiff and defendant pediatrician nevertheless decided to proceed
with the settlement.
At trial, a jury found both defendant pediatrician and defendant hospital
negligent. The jury awarded plaintiff $250,000 in noneconomic damages;
$78,375.55 for past medical costs; $82,782,000 (with a present value of $14
5
million) for future medical costs; and $13.3 million (with a present value of
$1,154,000) for loss of future earnings. The jury apportioned negligence as
follows: 55 percent as to the pediatrician, 40 percent as to the hospital, and 2.5
percent as to each of Aidan‟s parents. The judgment stated that, subject to a setoff
of $1 million, representing the amount of settlement with the pediatrician, the
hospital was jointly and severally liable for 95 percent of all economic damages
awarded to plaintiff. Defendant hospital appealed, and plaintiff filed a cross-
appeal.
The Court of Appeal agreed with defendant hospital that under the common
law release rule, plaintiff‟s settlement with, and release of liability claims against,
defendant pediatrician also released nonsettling defendant hospital from liability
for plaintiff‟s economic damages. The court did so reluctantly, observing that
although our court has criticized the common law release rule, it has not
abandoned it. We granted plaintiff‟s petition for review.
II
Under the traditional common law rule, a plaintiff‟s settlement with, and
release from liability of, one joint tortfeasor also releases from liability all other
joint tortfeasors. That common law rule originated in England at a time when,
under English law, a plaintiff could sue in a single action only those tortfeasors
who had acted in concert against the plaintiff. In this context, the rule developed
that if a joint tortfeasor paid compensation to the plaintiff, and received in
exchange a release from liability, the remaining joint tortfeasors were also
released. (Rest.2d Torts (appen.) § 885, reporter‟s notes, p. 162.) The common
law rule‟s rationale is that there can be only one compensation for a single injury
and because each joint tortfeasor is liable for all of the damage, any joint
tortfeasor‟s payment of compensation in any amount satisfies the plaintiff‟s entire
claim. (5 Witkin, Summary of Cal. Law (10th ed. 2005) Torts, § 70, pp. 142-143.)
6
The rule, however, can lead to harsh results. An example: A plaintiff
might have settled with a joint tortfeasor for a sum far less than the plaintiff‟s
damages because of the tortfeasor‟s inadequate financial resources. In that
situation, the common law rule precluded the plaintiff from recovering damages
from the remaining joint tortfeasors, thus denying the plaintiff full compensation
for the plaintiff‟s injuries. (Mesler v. Bragg Management Co. (1985) 39 Cal.3d
290, 298.) In an effort to avoid such unjust and inequitable results, California
courts held that a plaintiff who settled with one of multiple tortfeasors could, by
replacing the word “release” in the settlement agreement with the phrase
“covenant not to sue,” and by stating that the agreement applied only to the parties
to it, preserve the right to obtain additional compensation from the nonsettling
joint tortfeasors. (Kincheloe v. Retail Credit Co., Inc. (1935) 4 Cal.2d 21, 23;
Lewis v. Johnson (1939) 12 Cal.2d 558, 562; Holtz v. United Plumbing & Heating
Co. (1957) 49 Cal.2d 501, 504; 5 Witkin, Summary of Cal. Law, supra, Torts,
§ 70, p. 143.) As this court later recognized, “the distinction between a release
and a covenant not to sue is entirely artificial.” (Pellett v. Sonotone Corp. (1945)
26 Cal.2d 705, 711.) We explained: “As between the parties to the agreement, the
final result is the same in both cases, namely, that there is no further recovery from
the defendant who makes the settlement, and the difference in the effect as to third
parties is based mainly, if not entirely, on the fact that in one case there is an
immediate release, whereas in the other there is merely an agreement not to
prosecute a suit.” (Ibid.)
It was against that backdrop of criticism of the traditional common law
release rule that the California Legislature in 1957 enacted Code of Civil
Procedure section 877. (Stats. 1957, ch. 1700, § 1, p. 3077; see 5 Witkin,
Summary of Cal. Law, supra, Torts, § 70, p. 142.) The statute modified the
common law release rule by providing that a “good faith” settlement and release
7
of one joint tortfeasor, rather than completely releasing other joint tortfeasors,
merely reduces, by the settlement amount, the damages that the plaintiff may
recover from the nonsettling joint tortfeasors, and that such a good faith settlement
and release discharges the settling tortfeasor from all liability to others. (Code
Civ. Proc., § 877, subds. (a), (b).) But because the statute governs only good faith
settlements, and the trial court here determined that the settlement was not made in
good faith (see ante, at p. 5), the statute does not apply to this case.
We reject defendant hospital‟s contention that in enacting Code of Civil
Procedure section 877 in 1957, the Legislature signaled an intent to preclude
future judicial development of the law pertaining to settlements involving joint
tortfeasors, thus preventing us from abrogating the common law release rule. As
we observed in American Motorcycle Assn. v. Superior Court (1978) 20 Cal.3d
578 (American Motorcycle), nothing in the statute‟s legislative history suggests an
intent to foreclose the courts from rendering future decisions that would further the
statute‟s main purpose of ameliorating the harshness and the inequity of the
common law rule at issue. (Id. at p. 601.) So also here, our decision today
abrogating the common law release rule furthers the statute‟s legislative purpose.
Here, adherence to the common law release rule would, as a result of
plaintiff‟s settlement with defendant pediatrician for $1 million (the limit of the
pediatrician‟s medical malpractice insurance policy), relieve nonsettling defendant
hospital from any liability for plaintiff‟s economic damages, even though the jury
apportioned to the hospital 40 percent of the fault for plaintiff‟s severe postbirth
brain damage (assigning 55 percent of the fault to defendant pediatrician) and
calculated plaintiff‟s total economic damages at roughly $15 million. Under the
common law release rule, plaintiff, injured for life through no fault of his own,
would be compensated for only a tiny fraction of his total economic damages, a
harsh result.
8
The rationale for the common law release rule was “that there could be only
one compensation for a joint wrong and since each joint tortfeasor was responsible
for the whole damage, payment by any one of them satisfied plaintiff‟s claim
against all.” (Tech-Bilt, supra, 38 Cal.3d at p. 493; see Lamoreux v. San Diego
etc. Ry. Co. (1957) 48 Cal.2d 617, 624; 5 Witkin, Summary of Cal. Law, supra,
Torts, § 70, p. 142.) That rationale assumes that the amount paid in settlement to a
plaintiff in return for releasing one joint tortfeasor from liability always provides
full compensation for all of the plaintiff‟s injuries, and that therefore anything
recovered by the plaintiff beyond that amount necessarily constitutes a double or
excess recovery. The assumption, however, is unjustified. For a variety of
reasons — such as the settling defendant‟s limited resources or relatively minor
role in causing the plaintiff‟s injury — a plaintiff may be willing to release one
tortfeasor for an amount far less than the total necessary to fully compensate the
plaintiff for all injuries incurred. As Dean Prosser observed in his criticism of the
common law release rule: “There is a genuine distinction between a satisfaction
and a release.” (Prosser & Keeton on Torts (5th ed. 1984) § 49, p. 332.)
In light of the unjust and inequitable results the common law release rule
can bring about, as shown in this case, we hold that the rule is no longer to be
followed in California.1
We now consider our holding‟s effect on the apportionment of liability
among joint tortfeasors when, as here, one tortfeasor‟s settlement, resulting in a
1 Overruled are this court‟s decisions in Tompkins v. Clay Street R.R. Co.
(1884) 66 Cal. 163, Chetwood v. California Nat. Bank (1896) 113 Cal. 414, Bee v.
Cooper (1932) 217 Cal. 96, Kincheloe v. Retail Credit Co., Inc., supra, 4 Cal.2d
21, Pellett v. Sonotone Corp., supra, 26 Cal.2d 705, Lamoreux v. San Diego etc.
Ry. Co., supra, 48 Cal.2d 617, and their progeny, to the extent they are
inconsistent with the views expressed here.
9
release of liability, was determined by the trial court not to have been made in
“good faith,” thus rendering inapplicable the apportionment scheme under Code of
Civil Procedure section 877.
III
In deciding how to apportion liability in a negligence action when a
plaintiff‟s settlement with one of several defendants has been determined by a trial
court not to have been made in good faith, we begin with two legal concepts that
are central to California negligence law. The first concept is comparative fault,
the second is joint and several liability. Under comparative fault, “liability for
damage will be borne by those whose negligence caused it in direct proportion to
their respective fault.” (Li v. Yellow Cab Co. (1975) 13 Cal.3d 804, 813.) Under
joint and several liability, “each tortfeasor whose negligence is a proximate cause
of an indivisible injury remains individually liable for all compensable damages
attributable to that injury.” (American Motorcycle, supra, 20 Cal.3d at p. 582.)
As has been recognized, “[n]o perfect method exists for apportioning
liability among a plaintiff, a settling tortfeasor, and a nonsettling tortfeasor.”
(Rest.3d Torts, Apportionment of Liability, § 16, com. c, p. 133.) Three
alternative approaches have developed. (Rest.2d Torts, § 886A, com. m, pp. 343-
344.) We describe each.
Under the first approach, the money paid by the settling tortfeasor is
credited against any damages assessed against the nonsettling tortfeasors, who are
allowed to seek contribution from the settling tortfeasor for damages they have
paid in excess of their equitable shares of liability. (Rest.2d Torts, § 886A, com.
m, p. 343.) We will call this the setoff-with-contribution approach.
Under the second approach, as under the first, nonsettling tortfeasors are
entitled to a credit in the amount paid by the settling tortfeasor. But, unlike under
the first alternative, nonsettling tortfeasors may not obtain any contribution from
10
the settling tortfeasor. (Rest.2d Torts, § 886A, com. m, p. 343.) We will call this
the setoff-without-contribution approach.
The third approach differs from the first and second by subtracting from the
damages assessed against nonsettling tortfeasors the settling tortfeasor‟s
proportionate share of liability, rather than the amount paid in settlement. (Rest.2d
Torts, § 886A, com. m, p. 344.) We will call this the proportionate-share
approach.
Which of these three approaches should we apply when, as here, one
tortfeasor settles but another does not, and the settlement is judicially determined
not to meet Code of Civil Procedure section 877‟s “good faith” requirement? That
is the issue we explore and resolve below.
The second approach — setoff without contribution by the settling
tortfeasor to the nonsettling tortfeasor — is easy to dispose of, as it is not an
option here. Although the Legislature has statutorily adopted this apportionment
method, it has expressly limited its application to settlements made in good faith.
(Code Civ. Proc., §§ 877, 877.6, subd. (c).) The Legislature did not define what
“good faith” means in this context, but this court has held that the trial court
should “inquire, among other things, whether the amount of the settlement is
within the reasonable range of the settling tortfeasor‟s proportional share of
comparative liability for the plaintiff‟s injuries.” (Tech-Bilt, supra, 38 Cal.3d 488,
499.) We further explained that the factors to be considered in determining
whether a settlement was made in good faith include the settling defendant‟s
financial condition and insurance policy limits, a rough approximation of the
plaintiff‟s total recovery and the settling defendant‟s proportionate share of fault,
and any evidence of collusion or fraud, as well as “a recognition that a settlor
should pay less in settlement than he would if he were found liable after a trial.”
(Ibid.)
11
Here, as we noted earlier, the trial court ruled that plaintiff‟s settlement
with defendant pediatrician was not made in good faith. The pediatrician
challenged that ruling by petitioning the Court of Appeal for a writ of mandate,
but that court summarily denied the petition, and the issue is not before us here.
For purposes of our discussion, we accept that the settlement was not in good
faith. As we noted earlier, the Legislature has expressly limited the second
apportionment method, setoff without contribution, to settlements made in good
faith. (Code Civ. Proc., § 877.) Applying the setoff-without-contribution
approach to settlements not made in good faith would effectively nullify that
statutory provision. Consequently, that apportionment method is not available
here.
Of the two remaining alternatives — setoff with contribution and
proportionate share — nonsettling defendant hospital argues that we should adopt
the latter. Plaintiff, however, prefers the setoff-with-contribution approach. In
deciding which of these two alternatives to adopt, we evaluate their practical
implications for tort plaintiffs and for settling and nonsettling joint tortfeasor
defendants, their consistency with established legal principles, and their likely
effect on the public policy to promote settlement and on the interest of judicial
economy. (See McDermott, Inc. v. AmClyde (1994) 511 U.S. 202, 211
(McDermott) [identifying, as criteria for selecting an approach, consistency with
principles of comparative fault, promotion of settlement, and judicial economy].)
We begin by considering the practical effect of the two apportionment
approaches in terms of the amounts ultimately paid by each joint tortfeasor and the
total amount recovered by the plaintiff. We also consider the extent to which each
approach is consistent with the two basic legal concepts we mentioned earlier:
comparative fault, and joint and several liability.
12
Under the setoff-with-contribution approach, the settlement has little or no
practical effect on the defendants‟ ultimate liabilities or the plaintiff‟s ultimate
recovery, nor is the resulting apportionment inconsistent with either the
comparative fault principle or the rule of joint and several liability. Without the
settlement, each tortfeasor is, under the principle of joint and several liability, fully
liable for all of the plaintiff‟s damages less only the amount of fault attributed to
the plaintiff. If another joint tortfeasor is for any reason unable to satisfy its share
of liability, the remaining tortfeasors are still liable for all the economic damages
awarded to the plaintiff, even though the amount exceeds their proportionate
shares of liability.
With the settlement, under the setoff-with-contribution approach, this
liability exposure of joint tortfeasors is not affected. In a suit against the
nonsettling defendants, the plaintiff may recover damages less the settlement
amount and the amount attributable to the plaintiff‟s own fault. Consistent with
the comparative fault principle, the nonsettling tortfeasors may then seek
contribution from the settling tortfeasor for any amount they must pay to the
plaintiff in excess of their proportionate shares of liability. If in such a
contribution action the settling tortfeasor is for any reason unable to fully
discharge its share of liability, each nonsettling tortfeasor, consistent with the rule
of joint and several liability, remains liable for the difference.
The net result, under the setoff-with-contribution approach, is that the
plaintiff recovers the total economic damages amount (less an amount attributable
to the plaintiff‟s own negligence), with the settlement amount providing part of
that recovery and the judgment against the nonsettling tortfeasors providing the
rest. An action for contribution remains available to ensure that the amounts
ultimately paid by each tortfeasor are, so far as possible, consistent with that
party‟s proportionate share of fault for the plaintiff‟s damages. For the parties, the
13
only practical difference that the settlement makes is that the settling tortfeasor‟s
proportionate share of liability is paid in two parts rather than one, with the first
part being paid to the plaintiff in the form of the settlement amount, and the
second part to the nonsettling tortfeasors as contribution.
We next consider the proportionate-share approach. As explained below, it
does have a significant practical impact on the liability positions of the parties.
Moreover, it is not consistent with California‟s law of joint and several liability.
Under proportionate-share apportionment, the plaintiff‟s total recovery for
economic damages is limited to the settlement amount plus the proportionate
shares of the nonsettling tortfeasors. If the settlement payment turns out to be less
than the settling tortfeasor‟s proportionate share, as determined by the trial court
or the jury, the plaintiff may not recover the difference from any of the tortfeasors
and thus is precluded from obtaining full compensation. Therefore, the settling
tortfeasor‟s liability is not its proportionate share, but only the amount paid in
settlement. Because the nonsettling tortfeasors‟ liability to the plaintiff for
economic damages cannot exceed their proportionate shares, their liability is not
joint and several, but several only.
We conclude that the practical implications of the two available
apportionment approaches and their consistency or inconsistency with basic tort
principles support our adoption of the setoff-with-contribution alternative over the
proportionate-share alternative. As explained earlier, setoff-with-contribution
apportionment does not change the respective positions of the parties and is fully
consistent with both the comparative fault principle and the rule of joint and
several liability. In contrast, proportionate-share apportionment alters the parties‟
positions and would require us to recognize a new exception to our established law
of joint and several liability.
14
We next consider the relative merits of the setoff-with-contribution
approach and the proportionate-share approach in regard to promoting the public
policy of settling a case before trial. (See Cassel v. Superior Court (2011) 51
Cal.4th 113, 132 [public policy of encouraging resolution of disputes short of
litigation]; T.M. Cobb Co. v. Superior Court (1984) 36 Cal.3d 273, 281 [public
policy of encouraging settlements].) That public policy‟s laudable goals —
decreasing the substantial litigation cost to the parties and lessening the burden
that litigation imposes on scarce judicial resources — are not necessarily satisfied
in all pretrial settlements. Although good faith settlements are to be encouraged,
the same cannot be said of settlements not made in good faith. Indeed, by
providing in Code of Civil Procedure section 877 that only good faith settlements
will preclude a nonsettling tortfeasor‟s contribution action against the settling
tortfeasor, the Legislature indicated that settlements not made in good faith should
be discouraged. (See Tech-Bilt, supra, 38 Cal.3d at p. 495.) As explained below,
the public policy of encouraging good faith pretrial settlements is furthered by the
setoff-with-contribution approach, but not by the proportionate-share approach.
As we have pointed out (ante, at pp. 13-14), the setoff-with-contribution
approach does not change the respective liabilities of the joint tortfeasors. Thus, it
provides no incentive for them to enter into a settlement that is not in good faith.
In contrast, the proportionate-share approach would encourage settlements not
made in good faith: by limiting the liability of the settling tortfeasor (who would
be liable only for the settlement amount irrespective of the settling tortfeasor‟s
proportionate share of liability), and by limiting the liability of the nonsettling
tortfeasor (who, under principles of joint and several liability, would no longer be
liable for the settling tortfeasor‟s proportionate share). Consequently, with respect
to a settlement not made in good faith, the setoff-with-contribution approach is
15
superior to the proportionate-share approach in furthering the statutory scheme‟s
goal of encouraging settlements made in good faith.
With respect to the public interest in promoting judicial economy, we
conclude that neither approach is better than the other. Under both approaches, all
issues can be resolved in a single action. Under the settlement-with-contribution
approach, nonsettling tortfeasors may seek contribution from the settling
tortfeasor, but their claims may be combined with the plaintiff‟s action against the
nonsettling defendants, so that the respective shares of liability can be determined,
and all issues resolved, in the same trial. Under the proportionate-share approach,
the liability of all tortfeasors is likewise determined in one action, at which the
court or jury will establish the total damages and the proportionate fault share of
the plaintiff and each of the tortfeasors.
On balance, we conclude that here the settlement-with-contribution
approach is preferable to the proportionate-share approach. Unlike proportionate
share, settlement with contribution does not change the liability position of the
parties from what it would be without a settlement; nor does it require
modification of, or a new exception to, our established rule of joint and several
liability. Also, the settlement-with-contribution method is, as explained earlier,
superior to the proportionate-share approach in serving the policy of promoting
settlements made in good faith.
The United States Supreme Court‟s decision in McDermott, supra, 511
U.S. 202, deserves mention. There, the high court selected the proportionate-share
method of apportioning liability, a view later adopted in the Restatement Third of
Torts, section 16. McDermott involved a plaintiff‟s pretrial settlement with some
of the joint tortfeasors. The settling tortfeasors agreed to pay $1 million, an
amount that, as later determined at trial, far exceeded their proportionate liability.
Because the jury found that the settling tortfeasors were only 30 percent at fault,
16
their proportionate share of liability came to only $630,000 out of the $2.1 million
assessed in total damages. A significant difference exists, however, between
McDermott and the case now before us. Here, unlike in McDermott, the pretrial
settlement was determined not to have been made in good faith. (See ante, p. 5.)
Thus, in McDermott no need existed to decide which method of apportioning
liability to select in a case involving a settlement not made in good faith, and
hence McDermott did not address that issue.
Also, as we have explained (ante, at pp. 11-12), the good-faith settlement
provisions of California law preclude us from considering the setoff-without-
contribution approach, thus limiting us to choosing between the setoff-with-
contribution approach and the proportionate-share approach. The high court in
McDermott, supra, 511 U.S. 202, was not under any similar restraint. This
difference in the choices available to the high court (and the authors of the
Restatement) and to this court fundamentally changes the analysis.
Between the two alternatives available to us for consideration, we adopt the
setoff-with-contribution approach. As explained earlier, that approach is more
consistent with our comparative fault principle and our rule of joint and several
liability. Accordingly, we hold that when a settlement with a tortfeasor has
judicially been determined not to have been made in good faith (see Code Civ.
Proc., §§ 877, 877.6, subd. (c)), nonsettling joint tortfeasors remain jointly and
severally liable, the amount paid in settlement is credited against any damages
awarded against the nonsettling tortfeasors, and the nonsettling tortfeasors are
entitled to contribution from the settling tortfeasor for amounts paid in excess of
their equitable shares of liability.
17
IV
Defendant hospital challenges the Court of Appeal‟s determination that the
evidence was sufficient to prove that negligence by the hospital was a legal cause
of plaintiff‟s injuries. We agree with the Court of Appeal, as explained below.
The Court of Appeal correctly noted that in evaluating a claim of
insufficiency of evidence, a reviewing court must resolve all conflicts in the
evidence in favor of the prevailing party and must draw all reasonable inferences
in support of the trial court‟s judgment. (See, e.g., Scott v. Pacific Gas & Electric
Co. (1995) 11 Cal.4th 454, 465.) Thereafter, the Court of Appeal stated that in a
medical negligence case, causation is adequately established if the evidence is
sufficient to permit the jury to infer that without the negligence there is a
reasonable medical probability the plaintiff would have obtained a better result. It
then quoted this language from Raven H. v. Gamette (2007) 157 Cal.App.4th
1017, 1029-1030: “ „If, as a matter of ordinary experience, a particular act or
omission might be expected to produce a particular result, and if that result has in
fact followed, the conclusion may be justified that the causal relation exists. In
drawing that conclusion, the triers of fact are permitted to draw upon ordinary
human experience as to the probabilities of the case.‟ ”
Disagreeing with that observation, defendant hospital contends that in a
medical negligence action, common human experience is insufficient to support a
trier of fact‟s causation determination. Rather, defendant hospital argues, an
actual causal link between the negligence and the injury must be shown; the
evidence of causation must show a reasonable medical probability that the
plaintiff‟s injury was more likely than not the result of the negligence, and only
18
expert testimony can establish causation. The hospital asserts that because
plaintiff‟s expert witness, Dr. Vinod Bhutani, testified at trial that he could not say
what plaintiff Aidan‟s bilirubin level was on the third day after his birth, plaintiff
did not satisfy his burden of proof that negligence by the hospital was a legal
cause of plaintiff‟s injury.
Even assuming that the appropriate standard applicable to plaintiff‟s claims
against the hospital in this case is one of reasonable medical probability and that
expert testimony is required (see generally Flowers v. Torrance Memorial
Hospital Medical Center (1994) 8 Cal.4th 992, 996-999 [discussing standard of
care in “ordinary” and “professional” negligence actions]), the evidence presented
at trial was sufficient to support the jury‟s finding that the hospital‟s negligence
was a legal cause of plaintiff‟s injury.
Arthur Shorr, plaintiff‟s expert witness on hospital administration, testified
that defendant hospital was negligent in failing to implement any of the
recommendations of the Joint Commission‟s Alert No. 18. Dr. Bhutani, another
expert witness for plaintiff, testified that defendant hospital was negligent when its
staff failed to tell plaintiff‟s parents that a followup appointment with his
pediatrician within two or three days was needed, failed to assess plaintiff‟s risk of
developing hyperbilirubinemia, failed to discuss that risk with his parents, failed to
appropriately educate plaintiff‟s parents about jaundice, and failed to instruct
plaintiff‟s mother on breastfeeding so that she knew whether plaintiff was getting
an adequate amount of milk, which is a primary way of preventing the buildup in
the blood of the bilirubin that caused plaintiff‟s injury. Also, plaintiff presented
19
evidence that defendant hospital provided his parents with misleading information
in the manual given to them upon plaintiff‟s discharge from the hospital some 24
hours after his birth. We agree with the Court of Appeal that this evidence
sufficiently supports the jury‟s determination that defendant hospital‟s negligence
was a legal cause of plaintiff‟s injury.
Defendant hospital contends that because a hospital does not practice
medicine, as a matter of public policy its conduct should not be considered a legal
cause of plaintiff‟s injuries. Defendant hospital asserts it should not be required to
provide medical advice “beyond directing the patient to call the doctor with
concerns.” We disagree.
As the Court of Appeal observed in Mejia v. Community Hospital of San
Bernardino (2002) 99 Cal.App.4th 1448, 1453, quoting Bing v. Thunig (1957) 2
N.Y.2d 656 [143 N.E.2d 3, 8]: “ „Present-day hospitals, as their manner of
operation plainly demonstrates, do far more than furnish facilities for treatment.
They regularly employ on a salary basis a large staff of physicians, nurses and
internes [sic], as well as administrative and manual workers, and they charge
patients for medical care and treatment, collecting for such services, if necessary,
by legal action. Certainly, the person who avails himself of “hospital facilities”
expects that the hospital will attempt to cure him, not that its nurses or other
employees will act on their own responsibility.‟ ” Although hospitals do not
practice medicine in the same sense as physicians, they do provide facilities and
services in connection with the practice of medicine, and if they are negligent in
doing so they can be held liable. Here, defendant hospital implicitly recognized
that point when it requested, and the trial court gave, this jury instruction: “A
20
hospital must provide procedures, policies, facilities, supplies, and qualified
personnel reasonably necessary for the treatment of its patients.”
For the reasons given above, the evidence presented at trial was sufficient
to support the jury‟s finding that defendant hospital‟s acts or omissions were a
legal cause of plaintiff‟s brain injury.
V
The Court of Appeal reversed the judgment against defendant hospital
insofar as the hospital was held liable for plaintiff‟s economic damages.
Consequently, the Court of Appeal did not address the hospital‟s contentions that
the trial court erred in excluding evidence of future insurance coverage, in
calculating interest on future periodic payments, and in requiring the hospital to
provide security for future periodic payments. Nor, for the same reason, did the
Court of Appeal address on its merits plaintiff‟s cross-appeal contending the trial
court erred in allowing defendant hospital to acquire an annuity payable to itself as
security for the future periodic payments it had been ordered to pay under the
judgment.
Having concluded that the common law release rule is no longer to be
followed in California, and that therefore defendant hospital remains jointly and
severally liable for plaintiff‟s economic damages, we must reverse the Court of
Appeal‟s judgment. On remand, the Court of Appeal will address the unresolved
contentions, as noted in the preceding paragraph, raised by defendant hospital and
by plaintiff.
21
DISPOSITION
The judgment of the Court of Appeal is reversed, and the case is remanded
to that court for further proceedings consistent with the views expressed in this
opinion.
KENNARD, J.
WE CONCUR:
CANTIL-SAKAUYE, C. J.
BAXTER, J.
WERDEGAR, J.
CHIN, J.
CORRIGAN, J.
LIU, J.
22
See next page for addresses and telephone numbers for counsel who argued in Supreme Court.
Name of Opinion Leung v. Verdugo Hills Hospital
__________________________________________________________________________________
Unpublished Opinion
Original Appeal
Original Proceeding
Review Granted XXX 193 Cal.App.4th 971Rehearing Granted
__________________________________________________________________________________
Opinion No. S192768
Date Filed: August 23, 2012
__________________________________________________________________________________
Court: Superior
County: Los Angeles
Judge: Laura A. Matz
__________________________________________________________________________________
Counsel:
The Phan Law Group, LKP Global Law, Luan K. Phan; Esner, Chang & Ellis, Esner, Chang & Boyer,
Andrew N. Chang and Stuart B. Esner for Plaintiff and Appellant.
Thomas and Thomas, Michael Thomas, Maureen F. Thomas; Greines, Martin, Stein & Richland, Feris M.
Greenberger, Jennifer C. Yang and Robert A. Olson for Defendant and Appellant.
Gibson, Dunn & Crutcher, Robert L. Weigel, Marshall R. King, Theodore J. Boutrous, Jr., Julian W. Poon,
Blaine H. Evanson, Kimberly A. Nortman; National Chamber Litigation Center, Inc., Robin S. Conrad,
Kate Comerford Todd; Erika Frank; and Fred J. Hiestand for Chamber of Commerce of the United States
of America, California Chamber of Commerce, the Civil Justice Association of California and Artemis,
S.A., as Amici Curiae on behalf of Defendant and Appellant.
Cole Pedroza, Curtis A. Cole and Cassidy E. Cole for California Medical Association, California Hospital
Association and California Dental Association as Amici Curiae on behalf of Defendant and Appellant.
Horvitz & Levy, David M. Axelrad and David S. Ettinger for California Medical Association, California
Hospital Association and California Dental Association as Amici Curiae on behalf of Defendant and
Appellant.
Counsel who argued in Supreme Court (not intended for publication with opinion):
Stuart B. Esner
Esner, Chang & Boyer
234 East Colorado Boulevard, Suite 750
Pasadena, CA 91101
(626) 535-9860
Robert A. Olson
Greines, Martin, Stein & Richland
5900 Wilshire Boulevard, 12th Floor
Los Angeles, CA 90036
(310) 859-7811