Wage and Hour Double Dip

Grande v. Eisenhower Med. Ctr., No. E068730 (D4d2 Feb. 6, 2020)

Plaintiff is a nurse who works for a Temp Service who assigned her to work at Hospital. She brought a wage and hour class action against Temp Service in Santa Barbara Superior. A year later, Nurse sued Hospital, in Riverside Superior, for basically the same violations, albeit with a slightly different class period. Hospital sent Temp Service a letter demanding indemnification under the terms of their staffing agreement.

Four years later, the Sana Barbara case settled. Nurse got paid and Temp Service got a release. The record seems to reflect that the settlement amount was low because Temp Service had solvency issues. The court entered the settlement as a judgment, as is required for class actions in California.
Temp Service—still facing Hospital’s indemnification demand—then intervened in the Riverside case and sought dismissal based on the release or res judicata. The trial court held a bench trial on these issues and ultimately denied both defendants. Hospital wasn’t a release, even under the typically expansive “agents, officers, affiliates, etc.” in the release. And Hospital and Temp Service weren’t in privity, which precludes res judicata. Temp Service appealed and Hospital took a writ. 

The Court of Appeal affirms. On res judicata, the Court—relying on the Supreme Court’s 2015 decision in DKN Holdings—explains how joint and several liability and privity are not the same thing. The distinction is particular evident here, given that each defendant was responsible only for its own wage and hour violations. Given that, for instance, Temp Service could have defended its case by claiming that the violations were as a result of on-site conditions put in place by Hospital, it’s hard to say that the two defendants’ interests were sufficiently enough aligned that they could be in privity. 

Nor did the existence of the indemnity create privity. Indeed, that created a dis-alignment of interests that actually pushes in the other direction. Interestingly, the Court’s result here puts this case in some tension with the 2D’s 2018’s decision in Castillo which the Court here (likely correctly) explains applied a test for privity that is inconsistent with DKN Holdings.

So far as the release goes, despite the expansive listing of categories of releasees, none of them really encompass the provider-client relationship between the Temp Service and the Hospital. The defendants make a play at arguing that they are “affiliates” or “agents” of each other. But affiliates generally connotes some level of common control or interlinking equity interests. And agency requires a fiduciary relationship coupled with a measure of control. A vanilla contractual relationship is not enough to meet those ordinary definitions. And broader, more unusual definitions aren’t called for under edjusdem generis and noscitur a sociis-type rules of contractual interpretation.

Justice Ramirez dissents. He does not believe that Castillo is so wrongly decided that it is not worth following on stare decisis grounds. 

Affirmed.