Judge: Laura A. Matz Los Angeles County Ct.App. 2/4 B204908 Super. Ct. No. BC343985
The opinion of the court was delivered by: Kennard, J.
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 non-economic 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 non-settling 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 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.
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.
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 breast-fed, (5) bruising, (6) jaundice within the first 24 hours, and (7) weight loss.
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 follow-up 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 follow-up visit with Dr. Nishibayashi for March 31, seven days after Aidan's birth.
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 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 non-economic damages; $78,375.55 for past medical costs; $82,782,000 (with a present value of $14 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 non-settling 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.
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.)
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 non-settling 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 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 non-settling 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 ...