44 Cal.App.5th 1147
Cal. Ct. App.2020Background
- FlexCare (a travel/temporary nurse staffing agency) employed Lynn Grande and assigned her to work at Eisenhower Medical Center; contracts designated nurses as FlexCare employees but gave Eisenhower operational control while on assignment.
- Grande first joined a statewide class action against FlexCare (Santa Barbara), which settled; she received $162.13 as a class member and $20,000 as the class representative; the settlement released FlexCare and listed categories of affiliates/agents but did not name hospital clients.
- Grande later filed a separate putative class action against Eisenhower (Riverside) for the same wage-and-hour and UCL claims based on her Eisenhower assignment; FlexCare intervened, asserting Eisenhower was released and that res judicata barred the suit.
- The trial court held a limited bench trial and ruled Eisenhower was not a released party under the FlexCare settlement and that res judicata did not bar Grande’s suit because FlexCare and Eisenhower were not in privity.
- FlexCare appealed and Eisenhower petitioned for a writ; the Court of Appeal affirmed the trial court: (1) Eisenhower is not a released party under the settlement’s language, and (2) FlexCare and Eisenhower are not in privity for res judicata purposes, so Grande’s Riverside action may proceed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Eisenhower is a "Released Party" under the FlexCare class settlement | The release did not name Eisenhower or clients; terms like "affiliate"/"related" have legal meaning (control/subsidiary) and do not cover arm's‑length hospital clients | The release’s broad categories ("related or affiliated companies," agents, principals) were intended to include FlexCare’s hospital clients | Eisenhower is not a released party — release language does not reasonably encompass hospital clients; "affiliate"/"related" means entities under common control and the record shows no such relationship |
| Whether res judicata (claim preclusion) bars Grande’s suit because FlexCare settled first | FlexCare and Eisenhower are not in privity; joint and several liability does not create privity; their legal interests diverge so FlexCare did not adequately represent Eisenhower | Joint‑employer status and overlapping subject matter justify privity and preclusion (relying on Castillo) | Res judicata does not apply: DKN controls — joint and several obligors are not necessarily in privity; FlexCare could not reasonably bind Eisenhower |
| Whether FlexCare and Eisenhower were agents/affiliates (supporting release/privity) | The staffing agreement disclaims agency; Eisenhower exercised primary operational control over nurses; no evidence of mutual control or ownership | Operational interconnection (placement, wage/payment relations) shows affiliation or an agency-like relationship | No agency/affiliate relationship — contractual disclaimer, operational control by Eisenhower, and ordinary legal meaning of "affiliate" support the trial court’s finding of independence |
| Whether Castillo v. Glenair compels a different outcome | Castillo is distinguishable and improperly collapsed the privity inquiry into subject‑matter overlap; DKN is the controlling standard | Castillo supports finding privity when staffing agency settled and clients share the litigation subject matter | Court declines to follow Castillo; applies DKN and Serrano to conclude no privity and affirms trial court |
Key Cases Cited
- DKN Holdings LLC v. Faerber, 61 Cal.4th 813 (Cal. 2015) (privity for preclusion requires identity/community of interest and adequate representation; joint and several liability alone insufficient)
- Serrano v. Aerotek, Inc., 21 Cal.App.5th 773 (Cal. Ct. App. 2018) (staffing agencies and client employers have distinct duties; joint‑employer findings do not create vicarious liability for the other’s statutory duties)
- Castillo v. Glenair, Inc., 23 Cal.App.5th 262 (Cal. Ct. App. 2018) (held staffing‑agency settlement could bar identical claims against client; court here distinguishes and declines to follow Castillo)
- Mycogen Corp. v. Monsanto Co., 28 Cal.4th 888 (Cal. 2002) (res judicata prevents relitigation of same cause of action between same parties or parties in privity)
- Hess v. Ford Motor Co., 27 Cal.4th 516 (Cal. 2002) (settlement interpretation: omission of a party from release suggests they were not intended to be covered)