In Victory for Plaintiffs, California Supreme Court Alters Rule on Joint and Several Liability

2012 | Topics: Business Litigation, Class Actions, Product Liability, Warranty

In a setback for the defense bar, the California Supreme Court abrogated the common law "release rule," which held that a plaintiff who settled with one joint tortfeasor released all the others from liability.

The case, Leung v. Verdugo Hills Hospital (2012) 55 Cal.4th 291, involved an infant allegedly injured as a result of inadequate medical care provided by his pediatrician and the hospital that employed the doctor. Before trial, plaintiff settled with the pediatrician for $1 million, but the trial court ruled that the settlement had not been made in good faith. At trial, the jury found the hospital to be 40% liable and the doctor to be 55% liable (plaintiff’s parents were found to be 5% liable), and awarded $15 million in economic damages. Bound by principles of stare decisis, the Second District Court of Appeal expressed its disapproval of the release rule, but set aside the judgment against the hospital.

Writing the opinion for the Supreme Court, Justice Kennard repudiated the common law rule, explaining that “[u]nder 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.” Id. at p. 302. In deciding how to apportion liability, the court settled upon a “setoff-with-contribution” apportionment 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. Id. at p. 303. The court noted that “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.” Id. at p. 306.