Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-caed-2_15-cv-01514/USCOURTS-caed-2_15-cv-01514-0/pdf.json

Nature of Suit Code: 790
Nature of Suit: Other Labor Litigation
Cause of Action: 28:1332 Diversity-Petition for Removal

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UNITED STATES DISTRICT COURT

EASTERN DISTRICT OF CALIFORNIA

JOYCE MCCRAY-KEY, 

individually and on behalf of 

all similarly-situated 

persons,

Plaintiff,

v.

SUTTER HEALTH SACRAMENTO

SIERRA REGION, SUTTER SOLANO 

MEDICAL CENTER and DOES 1 

through 100,

Defendants.

No. 2:15-cv-1514-JAM-CKD

ORDER GRANTING IN PART AND 

DENYING IN PART DEFENDANTS’

MOTION TO DISMISS COMPLAINT

AND/OR STRIKE CLASS CLAIMS

Plaintiff Joyce McCray-Key (“Plaintiff”) sued Sutter Health 

Sacramento Sierra Region and Sutter Solano Medical Center

(“Defendants”), where she worked as a traveling nurse, alleging 

wage and hour violations. Defendants assert that this action is 

precluded by a prior suit in which Plaintiff sued the agency that 

placed her with Defendants. But Defendants were not parties to 

that suit, so they cannot escape liability on claim preclusion 

grounds. Nonetheless, the Court dismisses the complaint with 

leave to amend, because the allegations are conclusory as 

Case 2:15-cv-01514-JAM-DB Document 19 Filed 11/02/15 Page 1 of 11
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currently pled.1

I. FACTUAL ALLEGATIONS AND PROCEDURAL BACKGROUND

Defendants and Healthsource Global Staffing, Inc. 

(“Healthsource”) jointly employed Plaintiff as a traveling nurse. 

Compl. ¶¶ 3, 4. Healthsource “sourced” Plaintiff and placed her 

with Defendants’ medical center. Id. During her employment, she 

alleges she was afforded inadequate meal and rest periods, and 

that she was not properly paid for all hours worked. Compl. 

¶ 60. 

In March 2014, Plaintiff sued Healthsource in Alameda County 

Superior Court, alleging (1) Failure to pay compensation; 

(2) Meal period violations; (3) Rest period violations; 

(4) Failure to pay waiting time wages; (5) Wage statement and 

record keeping violations; and (6) Violations of California 

Business and Professions Code section 17203. See Defendants’

Request for Judicial Notice (“RJN”) Exh. A (Doc. #12). She 

brought these claims on behalf of herself and “[a]ll persons who 

. . . were non-exempt employees of [Healthsource] assigned to 

work in California health care facilities.” RJN Exh. A ¶ 8. 

Healthsource removed the case to the Northern District of 

California, where the parties ultimately entered into a 

stipulation dismissing the class claims and remanding Plaintiff’s 

individual claims to Superior Court. See RJN Exh. B. The 

stipulation also provided that Plaintiff would not pursue further 

 

1 This motion was determined to be suitable for decision without 

oral argument. E.D. Cal. L.R. 230(g). The hearing was 

scheduled for October 21, 2015.

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class claims “based upon any claims that have or may have arisen 

against HealthSource to date[.]” RJN Exh. B ¶ 4. Back in state 

court, the parties reached a settlement on the individual claims

and Plaintiff voluntarily dismissed the case with prejudice. See

RJN Exhs. C, D.

While that case was still pending in the Northern District, 

Plaintiff brought this action in Sacramento County Superior 

Court, alleging the same six causes of action and the same class 

claims. Defendants subsequently removed the case to this Court 

(Doc. #1). The only difference between the two complaints was 

that this latter-filed action named Defendants instead of

Healthsource. 

Defendants now move to dismiss the complaint on the basis 

that voluntary dismissal of the Healthsource action precludes the 

claims here (Doc. #11). In the alternative, Defendants move to 

strike the class claims pursuant to the Healthsource stipulation, 

or to dismiss the complaint based on the insufficiency of the 

allegations. Plaintiff opposes the motion on all three grounds 

(Doc. #16).

II. OPINION

A. Judicial Notice

Defendants seek judicial notice of four documents from the 

Healthsource action: (1) Plaintiff’s complaint filed in Alameda 

County Superior Court; (2) the Stipulation and Order following 

removal; (3) the Notice of Settlement following remand; and 

(4) the Request for Dismissal by Plaintiff. Defendants’ RJN at 

1. Each of these documents is in the public record and is not 

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subject to reasonable dispute, so the Court takes judicial notice 

of them. Fed. R. Evid. 201; see Santa Monica Food Not Bombs v. 

City of Santa Monica, 450 F.3d 1022, 1025 n.2 (9th Cir. 2006); 

Lee v. City of Los Angeles, 250 F.3d 662, 689 (9th Cir. 2001).

B. Analysis

1. Claim Preclusion

Defendants argue that claim preclusion bars Plaintiff’s 

suit, based on the previous Healthsource action. Mot. at 4. 

Plaintiff counters that claim preclusion does not apply, since

Defendants were not parties to the prior action. Opp. at 4. 

Federal courts apply the preclusion rules of the state where 

the first judgment was issued. Robi v. Five Platters, Inc., 838 

F.2d 318, 322 (9th Cir. 1988). Under California law, claim 

preclusion prevents relitigation of a claim previously resolved. 

Mycogen Corp. v. Monsanto Co., 28 Cal.4th 888, 896 (2002). A

second suit is barred if it involves “(1) the same cause of 

action (2) between the same parties (3) after a final judgment on 

the merits in the first suit.” DKN Holdings LLC v. Faerber, 61 

Cal.4th 813, 824 (2015), reh'g denied (Aug. 12, 2015). Even when

these criteria are met, the claim is not precluded if “injustice 

would result or if the public interest requires that relitigation 

not be foreclosed.” Consumer Advocacy Grp., Inc. v. ExxonMobil 

Corp., 168 Cal.App.4th 675, 686 (2008) (quoting Citizens for Open 

Access etc. Tide, Inc. v. Seadrift Assn., 60 Cal.App.4th 1053, 

1065 (1998)).

There is no dispute in this case that the first and third 

criteria are met. Namely, the causes of action in both suits are

identical, in that they allege the same wrongdoing at the same 

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time. And the first suit resulted in a settlement and dismissal 

with prejudice, which is a “final judgment on the merits” for 

purposes of preclusion. See Boeken v. Philip Morris USA, Inc., 

48 Cal.4th 788, 793 (2010). The parties’ disagreement concerns 

whether Defendants and Healthsource may be considered the “same 

parties.” 

Claim preclusion applies even if the parties are not exactly 

the same - if the parties are different, they must be in privity 

with each other or otherwise “shar[e] [] 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.” DNK 

Holdings, 61 Cal.4th at 825-26 (“[C]laim preclusion applies only 

to the relitigation of the same cause of action between the same 

parties or those in privity with them.”) (emphasis in original). 

Defendants argue that they shared such a relationship with 

Healthsource because they and Healthsource are allegedly jointly 

liable for the harm Plaintiff suffered. Mot. at 8. But the 

California Supreme Court recently held that “[j]oint and several 

liability alone does not create such a closely aligned interest” 

as required for claim preclusion. DNK Holdings, 61 Cal.4th at 

826. 

Defendants’ reply attempts to distinguish DNK Holdings, but 

the discussion of this case is beyond the five page limit allowed 

under this Court’s standing order. See Order re Filing 

Requirements at 1 (Doc. #5-2). Pursuant to that order, the Court 

does not consider any arguments made past the page limit. Id. 

Nonetheless, the Court will explain why DNK Holdings is 

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applicable and dispositive in this case.

In DNK Holdings, three individual lessees signed a 

commercial lease agreement, to which each agreed to have “joint 

and separate responsibility to comply with the lease terms.” Id.

at 818 (quotation marks omitted). They later stopped paying 

rent, contending that the landlord had failed to disclose 

problems with the property. Id. One of the lessees sued the 

landlord, who counterclaimed seeking unpaid rent and other 

amounts due on the lease. Id. Judgment was entered in favor of 

the landlord for $2.8 million. Id. at 819. When the single 

lessee did not pay in full, the landlord sued the other two 

individuals who had signed the lease. Id. 

The trial court and the California appellate courts held 

that the second suit was barred by claim preclusion, but the 

California Supreme Court reversed. Id. It held that the 

relationship between the lessees was not so close as to consider 

them the “same” party or in privity with one another. Id. at 

826. 

Applying this holding, Defendants here cannot avoid 

liability in this case based on the prior suit involving 

Healthsource. DNK Holdings established that joint liability for 

the same wrongdoing does not confer privity. Although that case 

concerned obligations on a contract rather than statutory 

obligations, the California Supreme Court did not limit its 

holding to suits against obligators on a contract. Rather, the 

reasoning is widely applicable to joint obligations under the 

law. The premise of the court’s discussion was that “there is no 

conflict between the doctrines of claim preclusion and joint and 

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several liability.” Id. at 819. The court went on to analyze 

joint liability and claim preclusion in general. See id. at 819-

29. The court even explicitly affirmed the applicability of its 

reasoning to other areas of law outside of breaches of contract. 

See, e.g., id. at 822 (“The injured party has separate claims 

against each obligor, regardless of whether the obligation arises 

from a tort or a breach of contract. . . . [A] judgment for or 

against one obligor does not result in merger or bar of the claim 

that the injured party may have against another obligor.”)

(quoting Rest. 2d, Judgments, § 49) (emphasis omitted); id. at 

821 n.7 (“The same rule applies to joint and several tortfeasors. 

. . . The well-settled rule is that no bar arises as to 

[relitigation against] any of the wrongdoers until the injured 

party has received satisfaction.”) (citation and quotation marks 

omitted). 

Thus, because California law does not bar successive suits

against defendants jointly responsible for a single wrong, 

Defendants’ preclusion argument fails. 

In an attempt to get around DNK Holdings, Defendants try to 

analogize their relationship with Healthsource to relationships 

discussed in a number of other cases that applied claim 

preclusion. Mot. at 7-8. The attempt is unsuccessful for two 

reasons. First, the cited cases do not apply California law and 

are therefore inapplicable. Second, the factual scenarios 

presented by these cases are distinguishable under California 

law. 

Along these lines, Defendants cite multiple cases in which 

the liability of one defendant derives from the liability of a 

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formerly sued defendant. For example, in Lillard v. Service

Solutions Corporation, 2007 WL 1623903, at *1 (M.D. Tenn. June 1, 

2007), an employee sued his supervisor in state court claiming 

that she withheld overtime pay because of his race. He lost, but

later sued the supervisor again, as well as her employer, in 

federal court. Id. Because an employer is liable for the 

employment law violations of a supervisor, the company’s 

liability derived from the supervisor’s liability. Under 

California law, such derivative liability gives rise to a privity 

relationship. DNK Holdings, 61 Cal.4th at 828 (“Derivative 

liability supporting preclusion has been found between a 

corporation and its employees.”) (citing Sartor v. Superior 

Court, 136 Cal.App.3d 322, 328 (1982) & Lippert v. Bailey, 241 

Cal.App.2d 376, 382 (1966)). 

But derivative liability is not analogous to joint 

liability. Id. at 828. The DNK Holdings court in fact 

specifically distinguished derivative liability from joint 

liability for purposes of claim preclusion. Id. at 827-28 (“The 

cases [defendant] relies on do not suggest otherwise. They 

involve derivative liability, not joint and several liability. 

. . . The concepts of joint and several liability and derivative 

liability are not coextensive.”) (emphasis in original). 

Here, the allegations show no indication that Defendants’

liability is derivative of Healthsource’s liability. Instead, 

Defendants and Healthsource were allegedly jointly responsible 

for the wrong done to Plaintiff; the liability of each “is 

independent, although [both] have contributed to the same loss.” 

DNK Holdings, 61 Cal.4th at 828. Preclusion does not bar 

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Plaintiff from seeking compensation for Defendants’ independent 

wrongdoing. 

As a final argument, Defendants assert that “[n]othing about 

[Plaintiff’s] litigation strategy comports with due process for 

the defendants in the two actions or the putative class members.” 

Reply at 5. Defendants raised this argument for the first time 

in their reply, and Plaintiff has not had an opportunity to 

respond to it. The Court therefore exercises its discretion not 

to reach this issue. See Zamani v. Carnes, 491 F.3d 990, 997 

(9th Cir. 2007) (“The district court need not consider arguments 

raised for the first time in a reply brief.”) (citation omitted).

2. Bar to Class Claims

Defendants next seek to strike Plaintiff’s class claims on 

the basis that the Stipulation and Order in the Healthsource 

action bars her from bringing them. Mot. at 9-10. The

stipulation states in relevant part: “Plaintiff shall not seek, 

pursue, voluntarily participate in or be a representative in any 

class or collective action claims, including, but not limited to, 

any potential claims under the California Private Attorney 

General Act of 2004, based on any claims that have or may have 

arisen against Healthsource to date[.]” Defendants’ RJN Exh. B

¶ 4. Defendants argue that the present claims against Defendants

fall within the scope of this order. Mot. at 9-10. 

The Court disagrees. The order precludes Plaintiff from 

bringing certain claims “against Healthsource”; it says nothing 

about Defendants. As previously discussed, Defendants’ alleged 

liability in this action is independent of Healthsource’s 

liability, even though the two were jointly responsible for the

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harm Plaintiff allegedly suffered. The stipulation therefore 

does not bar Plaintiff’s class claims here. 

3. Sufficiency of the Allegations

Finally, Defendants argue that Plaintiff’s factual 

allegations are insufficient to meet federal pleading standards. 

Mot. at 10-13. Plaintiff does not offer argument in opposition. 

She simply states that “Plaintiff believes she has sufficiently 

alleged facts putting Defendants on notice of the nature of her 

claims under the applicable federal standard,” and requests leave 

to amend. Opp. at 8.

The Court agrees with Defendants that the claims are 

inadequately pled. Each cause of action describes the law and 

states in a conclusory manner that Defendants violated it. See, 

e.g., Compl. ¶ 21 (“In violation of [California Labor Code] 

Section 1197 and paragraph 4 of the applicable Wage Order, 

Defendants did not pay Plaintiff and class members the minimum 

wage for all hours worked.”). Such conclusory allegations are 

insufficient. See Anderson v. Blockbuster Inc., 2010 WL 1797249, 

at *2-*3 (E.D. Cal. May 4, 2010) (“Under each cause of action, 

Plaintiff only recites the law before making a legal conclusion 

referencing the Defendant. . . . Plaintiff fails to state when 

or how Defendant failed to pay the required wages. Without more, 

such legal conclusions do not suffice.”). The Court therefore 

dismisses each cause of action with leave to amend. 

III. ORDER

For the reasons set forth above, the Court DENIES 

Defendants’ motion with respect to preclusion and the class 

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claims. But the Court GRANTS the motion WITH LEAVE TO AMEND

based on the insufficiency of the allegations. 

As a final matter, Defendants’ reply is four pages longer 

than the page limit allowed by this Court’s standing order. See

Order re Filing Requirements at 1. In accordance with that 

order, Defendants’ counsel, Grube Brown & Geidt LLP, is 

sanctioned in the amount of $200. Id. (“A violation of this 

Order will result in monetary sanctions being imposed against 

counsel in the amount of $50.00 per page . . . .”). Counsel is 

to pay this amount within five days of the date of this Order.

Plaintiff shall file her Amended Complaint within twenty 

days of this Order. Defendants’ responsive pleading shall be 

filed within twenty days thereafter.

IT IS SO ORDERED.

Dated: October 30, 2015

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