The movie begins with a narration from Anna Fitzgerald (Abigail Breslin) discussing the nature of life from conception to birth. Anna is eleven and as such, doesn't know much about sex and believes that we are all souls in heaven before we are assigned a body on Earth through a series of coincidences. She, however, is not a coincidence as she was cultivated in a test tube specifically for the purpose of saving her sister, Kate (Sofia Vassilieva). Kate is diagnosed with acute promyelocytic leukemia at a very young age and her parents Sara (Cameron Diaz) and Brian (Jason Patric) decide to conceive a child with the same genetic match of Kate in order to use the umbilical cord tissue from the birth to help treat her cancer. This is suggested (off the record) to them by their oncologist, Dr. Wayne (Jeffrey Markle).
After this exposition, we are shown Anna accompanied by her brother Jesse (Evan Ellingson) as she walks down the street toward a pawnshop. She produces a gold locket with her picture in it (presumably the property of her mother) and declares that it has rarely been worn before pawning it off.
She then takes this money, as well as other money she's been saving (totaling only seven hundred dollars) to a local hotshot attorney, Campbell Alexander (Alec Baldwin). Campbell has a service dog, but when asked by Anna what it's for, he merely replies that he has an iron lung and the dog keeps him away from magnets. After asking Anna a series of questions regarding the case, he sees how serious and dedicated she is in becoming medically emancipated from her parents.
The scene shifts to the family sitting in Kate's hospital room, where they seem to be laughing and enjoying themselves, when a process server shows up to deliver court appearance papers to Sara. It is revealed that Sara has been on an emotional rollercoaster since Kate was diagnosed with cancer, even leaving her career as an attorney and spending every waking hour making special foods for and taking care of Kate. One scene shows Kate refusing to leave her bedroom because she feels she is ugly, only to have Sara walk right into the bathroom and shave her own head. The family then has a day of fun on a boardwalk and take many pictures.
Anna and Kate are shown as having a very positive relationship, even though Anna is trying to get out of donating a kidney to the dying Kate. Kate talks about Montana at length, as she believes it's the most beautiful place on Earth, mainly because due to her illness it is the only place she's ever been.
A flashback shows Sara first discovering the bruising that would become the cancer on Kate's back, Sara and Brian taking her to the oncologist, and finally of Sara and Brian laying in bed late at night when Sara declares that she won't let her daughter die. It is suggested that Sara will go to any lengths to save Kate, even at the expense of her other children (Jesse has been sneaking into the city at night and coming home late, to which no one responds.)
Anna declares to her mother that she wants to play soccer and become a cheerleader, which can never happen if she donates the kidney that her sister needs to survive. An argument ensues between Sara and Anna and it culminates when Sara slaps Anna, who runs away in tears.
Sara is then shown storming into Alexander Campbell's office and berating him for taking her daughter's case. Campbell is cool and collect and reminds Sara that her daughter has the right to refuse surgery. Sara proclaims that her daughter is eleven and doesn't know what she wants, and declares that she will be representing herself in the case.
Kate has been constructing a scrapbook during her time in the hospital, and the narration switches between the various members of the family, all of who have lost something because of Kate's condition.
In an aside to the audience, Kate apologizes to her brother for having all the attention when he was younger and developed dyslexia; her father for taking away his first true love and Anna for letting them hurt her.
The judge presiding over the case is Judge Joan De Salvo (Joan Cusack) who has recently returned from a six-month hiatus following the death of her daughter to a drunk driver. Sara moves to have the case dismissed as quickly as possible, and in the judge's chambers makes the mistake of saying "You know how little girls can be!" to her honor. Judge De Salvo is visibly shaken and asks to speak with Anna, who asks her what it's like to have someone you love die. The judge is brought to tears and is unable to respond, but the scene ends with her allowing the case continue.
During this time, Kate is looking again at her scrapbook and has flashbacks of her first and only true love, another cancer sufferer by the name of Taylor (Thomas Dekker). They meet while Taylor is getting a blood test done and Kate is having a consultation. They begin to chat and eventually he asks her for her phone number, which she gives him after her mother Sara clumsily produces a marker from her purse. He calls her immediately and Kate is ecstatic. The two begin to see each other often, and as Kate gets sicker with chemotherapy, Taylor is there to take care of her. There is a dance for the sick children in the hospital to recreate the proms that they all miss, and Taylor and Kate attend, with Kate wearing an elegant wig to hide her bald head. They dance, and leave the gathering half-way through to escape to an unused wing of the hospital. They are shown later naked, and laying together under a hospital bed sheet, and Taylor admits that he's glad that he got sick because he was able to meet Kate.
The scene flashes forward to three days later, where a visibly distraught Kate is upset because Taylor hasn't called her since the night of the dance. In a rage, Kate admits to her mother that she and Taylor "did it", but when prodded by her mother it is revealed that they might not have gone all the way, but something definitely happened. Sara runs to the nurse's station and demands to know where Taylor is, only to be told by the nurse that he had passed away three days ago from his own cancer. Sara sits with Kate all night as rain pours on the hospital window, and Kate cries.
The movie then flashes back to the present, where the case of Fitzgerald vs. Fitzgerald is in full swing. Various doctors are called as witnesses, and Sara is called and made to describe all of the procedures Anna has been through, including demonstrating the lengths of needles that have been put into her daughter. Campbell gets her to admit that if she was thinking strictly about Anna's well being, she had gone too far. Anna is then called to the stand, while Campbell's dog begins to bark and run around the courtroom. While Anna is being questioned by her mother, Jesse starts yelling in the courtroom, which the judge allows because she finds it "interesting". Jesse claims that Anna is lying about something, and Sara sees in her daughter's eyes that she's keeping something hidden.
Anna flashes back to a night where she and Kate are alone in the house and she hears loud music and things breaking from her sister's room. When Kate finally opens the door, she is wearing all black and is heavily made-up. She is drunk and throws a wine bottle into a mirror before flipping over some tables, knocking family pictures off of the mantle, and finally trying to consume a whole bottle of pills. Anna stops her and Kate asks her to "set her free" by putting the plan into motion that we've seen since the beginning of the film. It is revealed that Anna is only suing her parents because Kate wants to die.
Campbell's dog continues to flip out, and when he tries to get the attention of the judge, he is merely waved off. Campbell runs outside of the courtroom with his dog barking and following him, when he collapses in the hall outside and has a seizure. It is revealed that the real reason for the service dog is because Campbell is epileptic, and that's why he took Anna's case, because he is not in control of his body either.
Sara finally accepts that Kate wants to die, and at the hospital that night Kate gives her mom the scrapbook she's been keeping. Kate reminds her mother of how scared she was when she was younger and went to Summer camp, but sat on the left side of the bus by the window so she could always look back and see her parents, Kate says that when she dies she'll be sure to get the same seat. Sara cries in Kate's arms and the scene fades out.
When we fade back in, we are at Kate's funeral and Anna is back in her role as narrator. She says that nothing spectacular happened because of Kate's death, no supreme courts changed laws, and no hospital was renamed for her. However, every member of the family is changed by the existence and passing of Kate.
Sara returns to her career as an attorney, Brian retires early and starts to volunteer with inner-city youths and Jesse turns his life around and wins a scholarship to an art school in New York. Every year on Kate's birthday the family takes a vacation to Montana, where Kate has assured Anna that she will always be waiting for them.
NOTE: In the book Kate doesn't die, Anna gets into a car accident and is declared legally braindead. Her lawyer, Campbell, in the book has power of attorney over her after the case and decides to give Kate the kidney now that Anna is going to die. Kate grows up and beats her cancer and becomes a dance instructor. Also in the book, Jesse has a powerful drug addiction and it makes the change and maturation of his character really powerful. He's kind of a tertiary character in the movie.
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