Wage and Hour Double-Dip, the Sequel

Grande v. Eisenhower Med. Ctr., No. S261247 (Cal. Jun. 30, 2022)

Nurse works for a Temp Service, which placed her in a Hospital. She brought a class action against the Temp Service for employment stuff and got a settlement. The Temp Service got a release. Then Nurse then sued Hospital, again as a class action. Hospital argued that it was within the scope of Temp Service’s release and that claimed that claim preclusion from the settlement barred the action. First the trial court, then the Court of Appeal disagreed, which I first wrote about in the blissful weeks before the onset of the pandemic. But because this opinion was in tension with an earlier case—the 2018 Castillo decision—the Supreme Court granted review.

First, as to the scope of the release, it, as releases often do, listed the Temp Service, and then a long list of categories (officers, directors, etc.) which included agents. The trial court held a bench trial, and, after hearing parol evidence, found that the parties’ use of the term agents did not indicate any mutual intent to release the Hospital. There was substantial evidence in support of that finding, so it is affirmed. Court also notes a that is questionable, from a legal perspective, whether a temp service’s client is it agent. Certainly the employee can be both the temp service’s and the client’s agent, but a the relationship between a temp service and a client doesn’t have the kinds of indicia of control that are the hallmarks of an agency. 

Moving on res judicata, the Court makes the interesting point that there’s a good argument that the preclusive effect of a consent settlement should be defined by the scope of the parties’ consent. That is, if the release didn’t cover the Hospital, it’s not clear why the common law of res judicata should either. It cites a bunch of federal cases for the point. But ultimately finds it unnecessary to decide it.

After some background discussion of claim preclusion, the Court gets to the main issue. Unlike issue preclusion, claim preclusion requires mutuality of parties. They need to be either precisely the same, or in privity. If this is starting to sound like DKN Holdings, that’s because it is, just applied in reverse. And as DKN points out parties that are subject to joint and several liability are not in privity. As the Court here explains, “DKN Holdings makes clear that privity does not exist merely because two entities are allegedly liable for the same wrong to the same plaintiff.”

Court of Appeal affirmed.