New CA Settlement Case

 

 

 

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To get my free summaries of the 22 new civil cases published by the California Supreme Court in 2021, click here.

Below is a discussion of a new CA civil case published last month.

Settlement

When a case settles, an issue that can arise later is whether the settlement of the case bars a later-filed case under the doctrine of claim preclusion. Last month, the California Supreme Court published a new case addressing the issue of whether claim preclusion applied to the settlement of a wage and hour case against a hospital employer of plaintiff after plaintiff had settled an earlier case alleging similar claims against a staffing company. A video discussing the case is above and my summary of the case is below.

New Settlement Decision  

Grande v. Eisenhower Medical Center (2022) __ Cal.5th __ , 2022 WL 2349762: The California Supreme Court affirmed the Court of Appeal's decision that had affirmed the trial court's ruling, following a bench trial, concluding that the language in a settlement and release agreement whereby plaintiff had settled an earlier class action wage and hour action against a staffing company (FlexCare LLC) did not bar the claims the plaintiff had against defendant hospital (Eisenhower Medical Center) in this class action wage and hour case. Staffing company FlexCare LLC arranged for a nurse, plaintiff Lynn Grande, to work at defendant hospital. The staffing company agreed to indemnify defendant hospital for certain obligations relating to the staffing arrangement. Plaintiff nurse sued the staffing company for violating the Labor Code and the Unfair Competition Law. That case settled and the trial court entered judgment upon the settlement. The hospital was not a named party in that action. Plaintiff nurse then sued defendant hospital, based on the same alleged violations. The trial court rejected defendant's argument that because of the first judgment, claim preclusion foreclosed plaintiff's second suit. The California Supreme Court agreed. 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 (defendant hospital) argued that it was in privity with a party (the staffing agency) to benefit from the claim-preclusive effect of a judgment that undoubtedly binds an opposing party (plaintiff nurse). 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 LLC v. Faerber (2015) 61 Cal.4th 813, 826.) There was no such privity in this case because of the hospital and staffing agency's different legal interests. Moreover, preclusion could not be based on a claimed indemnification or agency relationship between the hospital and the staffing company. The California Supreme Court disapproved of Castillo v. Glenair, Inc. (2018) 23 Cal.App.5th 262, 278–281 to the extent it was inconsistent with this decision. (June 30, 2022.)