Will California’s New Liability Rule Increase Likelihood of Settlements?

On August 23rd, the California Supreme Court issued an opinion that changed the long-standing California rule concerning joint liability cases. Under the old law, a plaintiff’s settlement with, and release from liability of, one joint tortfeasor also released from liability all other joint tortfeasors. Known as the “common law release rule,” the rule had been based on the common law rationale that a single party should be compensated only once for the same injury, therefore payment by any single party satisfied the plaintiff’s entire claim.

Aware of the rule’s potential for unjust results, California courts in the mid-twentieth century began to permit plaintiffs to skirt the rule by settling claims with a single defendant and then entering into a “covenant not to sue” rather than a release of claims. By removing the release language from the settlement, the plaintiffs were allowed to continue to pursue the remaining defendants for additional compensation. After more than half a century, the California Supreme Court finally eliminated the need for this legal fiction, by abrogating the “common law release rule” last week.

Now non-settling defendants remain jointly and severally liable for plaintiff’s damages, regardless of the settlement or release status of any other defendant. According to some commentators, this change may lead to an increase in the willingness of plaintiffs to enter into settlements because they will no longer face the prospect of extinguishing their claims against remaining defendants.

The case is Aidan Ming-Ho Leung v. Verdugo Hills Hospital, case number S192768, in the Supreme Court of the State of California.