Res Estoppel? Collateral Judicata?

Shine v. Williams-Sonoma, Inc., No B277513 (D2d4 May 29, 2018)

Named Plaintiff in this class action was a class member in Class Action #1, a prior wage and hour case against his Employer. Class Action #1 settled and, as a member of the settlement class, Plaintiff got some money. But now he’s a Named Plaintiff in Class Action #2, another wage and hour class action, against the same employer, with roughly the same class period, but on a new legal theory that wasn’t really litigated in Class Action #1. So the question is, do claim or issue preclusion, or the release entered in Class Action #1, bar Class Action #2?

The answer is yes. And the opinion gets that right. But it’s rather hard to follow and it does some weird stuff to getting to a result. 

First, it refers to collateral estoppel (or issue preclusion) as a species of “res judicata.” The Supreme Court has implored us to we stop doing that because it’s confusing.

Indeed, the court here seems to mix up claim and issue preclusion by suggesting that issue preclusion applies in this case. Issue preclusion, however, requires the same issue was decided in Case #1 and then re-raised in Case #2. Here, were dealing with an issue that could have been raised, but wasn’t, in a case that ultimately resulted in an entered judgment. That’s the stuff of claim preclusion, not issue preclusion. 

The Court’s purported issue preclusion discussion goes on to address the scope of the release entered by the class in Class Action #1. But release is a different defense than preclusion, although both can often apply to the same fact pattern. The overlap is especially prevalent where a new class action follows a prior settled one against the same defendant. Because a California class action settlement invariably includes a release and is required by rule result in the entry of a judgment, both defenses often apply. But the analysis is not the same. Release is a matter of contract interpretation, preclusion is a matter of the finality and scope of the prior judgment. So the old settlement probably did release the new class’s claims. But that, in itself, would be a sufficient defense on its own.

Affirmed.