Grande v. Eisenhower Med. Ctr.
| Decision Date | 30 June 2022 |
| Docket Number | S261247 |
| Citation | 13 Cal.5th 313,512 P.3d 73,295 Cal.Rptr.3d 126 |
| Parties | Lynn GRANDE, Plaintiff and Respondent, v. EISENHOWER MEDICAL CENTER, Defendant; FlexCare LLC, Intervener and Appellant. Eisenhower Medical Center, Petitioner, v. The Superior Court of Riverside County, Respondent; Lynn Grande, Real Party in Interest. |
| Court | California Supreme Court |
Downey Brand, Cassandra M. Ferrannini, Bradley C. Carroll and Alexandra K. LaFountain, Sacramento, for Intervener and Appellant.
Procopio, Cory, Hargreaves & Savitch, Kendra J. Hall and Robert G. Marasco, San Diego, for Sharp Memorial Hospital as Amicus Curiae on behalf of Intervener and Appellant and Defendant and Petitioner.
The Dion-Kindem Law Firm, Peter R. Dion-Kindem, Woodland Hills; The Blanchard Law Group and Lonnie C. Blanchard III, Los Angeles, for Plaintiff and Respondent and for Real Party in Interest.
Sheppard, Mullin, Richter & Hampton, Richard J. Simmons, Los Angeles, Ruben D. Escalante, Karin Dougan Vogel, San Diego and John D. Ellis for Defendant and for Petitioner.
Atkinson, Andelson, Loya, Ruud & Romo, Susan M. Steward, Cerritos; and Brittany Sakata for American Staffing Association as Amicus Curiae on behalf of Defendant and Petitioner.
Seyfarth Shaw, Jeffrey A. Berman and Kiran Aftab Seldon, Los Angeles, for California Hospital Association as Amicus Curiae on behalf of Defendant and Petitioner.
No appearance for Respondent.
A staffing agency (FlexCare LLC) arranged for a nurse (Lynn Grande) to work at a hospital (Eisenhower Medical Center). The nurse sued the staffing agency for violating the Labor Code and the Unfair Competition Law. The parties settled and the court entered judgment upon the settlement. The hospital was not a party to that initial lawsuit and the settlement did not name the hospital as a released party.
The nurse then sued the hospital based on the same alleged violations. The hospital argued that, because of the first judgment, claim preclusion foreclosed the nurse's second suit. The Court of Appeal disagreed, criticizing the reasoning of a published opinion that found claim preclusion on similar facts. ( Grande v. Eisenhower Medical Center (2020) 44 Cal.App.5th 1147, 1162–1163, 258 Cal.Rptr.3d 324 ( Grande ), criticizing Castillo v. Glenair, Inc. (2018) 23 Cal.App.5th 262, 278–281, 232 Cal.Rptr.3d 844 ( Castillo ).) We granted review to resolve this tension in the case law.
The core of this dispute concerns privity. Judgments bind not only parties, but also "those persons ‘in privity with’ parties." ( Armstrong v. Armstrong (1976) 15 Cal.3d 942, 951, 126 Cal.Rptr. 805, 544 P.2d 941.) Questions about privity typically arise when a litigant attempts to use a judgment against someone who was not party to that judgment. (See DKN Holdings LLC v. Faerber (2015) 61 Cal.4th 813, 826, fn. 9, 189 Cal.Rptr.3d 809, 352 P.3d 378 ( DKN Holdings ).)
This case does not present a typical privity question. Because the nurse was a party to the initial judgment, the judgment can be used against her whether or not she was in privity with some other party. But for claim preclusion, the affirmative defense asserted by the hospital, that is not enough. Instead, we have frequently explained that claim preclusion can be asserted only by a party in the first action or someone in privity with a party in the first action. In this case, a nonparty (the hospital) argues that it is in privity with a party (the staffing agency) to benefit from the claim-preclusive effect of a judgment that undoubtedly binds an opposing party (the nurse).
That argument is not persuasive. We recently explained that privity "requires the sharing of ‘an identity or community of interest,’ with ‘adequate representation’ of that interest in the first suit, and circumstances such that the nonparty ‘should reasonably have expected to be bound’ by the first suit." ( DKN Holdings , supra , 61 Cal.4th at p. 826, 189 Cal.Rptr.3d 809, 352 P.3d 378.) There is no such privity here because of the hospital and staffing agency's different legal interests. Nor can preclusion be based on a claimed indemnification or agency relationship between those litigants. We will thus affirm the judgment of the Court of Appeal.
Intervener FlexCare LLC is a temporary staffing agency. Plaintiff Lynn Grande is a nurse. FlexCare assigned Grande to work at defendant Eisenhower Medical Center, which she did for about a week in February 2012. Under the terms of an agreement between the staffing agency (FlexCare) and the hospital (Eisenhower), the staffing agency purportedly "retain[ed] ... exclusive and total legal responsibility as the employer of Staff," including "the obligation to ensure full compliance with and satisfaction of" wage and hour requirements. The hospital retained discretion to assign shifts. Nurses were to use the hospital's time and attendance system. The staffing agency agreed to indemnify the hospital for certain obligations concerning this staffing arrangement. The two lawsuits relevant here, described below, relate to that arrangement.
A person not party to the case now before us filed a putative class action against the staffing agency and others in state court. The nurse who filed the present case (Grande) joined the prior action as a named plaintiff, alleging wage and hour violations during the time she worked at the hospital. Both plaintiffs sought to represent a class that included a broad group of the staffing agency's employees, not merely nurses placed at Eisenhower.
The hospital was not named as a defendant in this prior action and did not intervene in it.
The parties to the first suit reached a stipulation and settlement agreement, with the staffing agency to pay no more than $750,000. The trial court approved the agreement and entered judgment. For purposes of the judgment, the court certified a class of " ‘all persons who at any time from or after January 30, 2008 through April 8, 2014 were non-exempt nursing employees of [the staffing agency] employed in California.’ " Contingent on payment of the amounts due, the court "barred and enjoined" all class members "from prosecuting" certain claims "against the Released Parties." The term "Released Parties" was defined to include the staffing agency and its agents but did not mention the hospital by name. The court further ordered that "the Released Parties" could use records from the case "to support a defense of res judicata, collateral estoppel, release, waiver or other theory of claim preclusion, issue preclusion or similar defense." By the time of judgment, the hospital had not communicated with the staffing agency regarding the settlement. There is no dispute that the staffing agency paid the amounts owed.
After the judgment in the first suit became final, the nurse filed this putative class action against the hospital. The suit is based on alleged wage and hour violations while the nurse worked there. The scope of the (putative) class at issue in this second action differs from the class at issue in the first. Unlike the first suit, which concerned nonexempt employees of the staffing agency placed throughout the state (not just at Eisenhower), this second suit concerns nonexempt employees of the hospital placed by any staffing agency (not just by FlexCare).
The staffing agency (FlexCare) filed a complaint in intervention, seeking declaratory relief. The staffing agency and the hospital argued both that the hospital was entitled to the benefit of the earlier release, and that the first judgment precludes the nurse from bringing this second suit.
The court held a bench trial on the release and preclusion issues. The court found that "the language in the release clause cannot reasonably be construed to extend to claims Plaintiff may have against [the hospital] in this case." The court further concluded that because the hospital "is not in privity with [the staffing agency], as that term is understood for claim preclusion (res judicata ) purposes, Plaintiff's claim against [the hospital] in this case is not barred by the Final Judgment" in the first action. The court reasoned that "if Plaintiff were attempting to hold [the hospital] derivatively liable for [the staffing agency's] violation of the Labor Code, one might be able to argue that claim preclusion should apply to bar this suit." But the court "found no support for the proposition that joint employer liability is a derivative claim"; on the contrary, "case law supports the view that joint employer liability is joint and several, with each employer having a separate and independent duty to comply with the Labor Code."
The staffing agency and the hospital sought review in the Court of Appeal. The trial court entered judgment on the staffing agency's complaint in intervention, from which the staffing agency appealed. At the hospital's request, the trial court issued an interlocutory order certifying that the litigation between the nurse and the hospital presented an issue warranting immediate review. (See Code Civ. Proc., § 166.1 ; McMillin Albany LLC v. Superior Court (2018) 4 Cal.5th 241, 248, 227 Cal.Rptr.3d 191, 408 P.3d 797.) The hospital petitioned for writ of mandate. The Court of Appeal issued an order to show cause and consolidated the matter with the staffing agency's appeal.
A divided panel of the Court of Appeal affirmed the trial court's judgment against the staffing agency and denied the hospital's petition for writ of mandate. ( Grande , supra , 44 Cal.App.5th at p. 1168, 258 Cal.Rptr.3d 324.) The court first concluded that preclusion was inappropriate because the hospital was not in privity with the staffing agency. ( Id. , at pp. 1157–1163, 258 Cal.Rptr.3d 324.) In doing so, the court criticized the privity analysis in the Castillo opinion. ( Grande , at p. 1162, 258 Cal.Rptr.3d 324.) The court also found no error in the trial court's...
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