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.

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. 

Is This Charles Guy Privy With Everyone?

Charles v. Sutter Home Winery, Inc., No. B275295 (D2d4 May 9, 2018)

This is a Prop. 65 case about whether there needs to be a disclosure about trace amounts of arsenic that appears in some wine. There’s already a disclosure about alcohol. But plaintiffs want a more general disclosure about other bad chemical stuff too. 

The issue is that most of the defendants in the case settled very similar claims in a prior litigation that resulted in a consent decree. The court holds that, for these defendants, the prior case is claim preclusive to this one.

Which seems mostly fine, except that the plaintiffs in this case aren’t the same plaintiffs who brought the the first case. As good should 1Ls know—and the Supreme Court made super duper clear a few years ago—claim preclusion (i.e., res judicata) only works when the same parties, or those in privity with those parties, are in both cases. Now, maybe there’s something about Prop. 65 litigation that makes every plaintiff privy with every other. Perhaps they are all bringing some quitamish thing on behalf of the public? I’m not a Prop. 65 guy, so I don’t know. But one would at least expect some discussion of the point, and there’s not any in the opinion here. So I’m confused.

Affirmed.

Some Tricky Stuff About Privity

Cal. Sierra Dev., Inc. v. George Reed, Inc., No. C080397 (D3 Aug. 22, 2017)

MineCo and SurfaceCo share rights to some land. Under their agreement, MineCo has the right to mine for gold and SurfaceCo has the right to the surface. SurfaceCo licenses its right to OppCo to build a plant on the surface. Problem is, that interferes with MineCo’s operations. 

Hercules and the Not Very Hard Case

DKN Holdings v. Faerber, No. S218597 (Cal. Jul 13, 2015)

In a unanimous opinion written by Justice Corrigan, the California Supreme Court unanimously reverse the court of appeal’s strange ruling on res judicata on more or less exactly the same grounds as I pointed out in a post last year. (That post is one of my best-read ever.) So maybe Justice Corrigan is amongst those who read this blog and take note of the science dropped herein. Or maybe the court of appeal shouldn’t have rested its rationale on the grounds that an earlier Supreme Court decision, clearly on point, was “wrong.” We can only imagine.

Reversed.

Taking Primary Rights (Too) Seriously

DKN Holdings v. Faerber, No. E055732 (D4d2 Apr. 25, 2014).  

The court holds that a judgment that plaintiff won against one of three jointly and severally liable defendants is res judicata as to the other two because the claims against all three defendants assert the same primary right. Thus, as to these defendants—who were sued in the original case but dismissed without prejudice because they weren’t served—plaintiff cannot get any recovery in a later filed action. I’m not so sure.