Court Opinion

ID: 6497950
Source: CourtListenerOpinion
Date Created: 2022-07-05 19:02:16.025381+00
Date Added: 2024-06-11T08:51:34.224526
License: Public Domain

IN THE SUPREME COURT OF
         CALIFORNIA

               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.

                    S261247

     Fourth Appellate District, Division Two
              E068730, E068751

        Riverside County Superior Court
                  RIC1514281

   June 30, 2022 (reposting corrected version)
Chief Justice Cantil-Sakauye authored the opinion of the Court,
in which Justices Corrigan, Liu, Kruger, Groban, Jenkins, and
Guerrero concurred.
       GRANDE v. EISENHOWER MEDICAL CENTER
                             S261247

         Opinion of the Court by Cantil-Sakauye, C. J.

      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 (Grande), criticizing Castillo v. Glenair, Inc.
(2018) 23 Cal.App.5th 262, 278–281 (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.) 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 (DKN Holdings).)
     This case does not present a typical privity question.
Because the nurse was a party to the initial judgment, the
            GRANDE v. EISENHOWER MEDICAL CENTER
              Opinion of the Court by Cantil-Sakauye, C. J.

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.) 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.
                          I. BACKGROUND
      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.

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           GRANDE v. EISENHOWER MEDICAL CENTER
             Opinion of the Court by Cantil-Sakauye, C. J.

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. First Suit, Against the Staffing Agency
      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

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            GRANDE v. EISENHOWER MEDICAL CENTER
              Opinion of the Court by Cantil-Sakauye, C. J.

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.
      B. Second Suit, Against the Hospital
       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

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           GRANDE v. EISENHOWER MEDICAL CENTER
             Opinion of the Court by Cantil-Sakauye, C. J.

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.) 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.) The court first concluded that
preclusion was inappropriate because the hospital was not in
privity with the staffing agency. (Id., at pp. 1157–1163.) In
doing so, the court criticized the privity analysis in the Castillo
opinion. (Grande, at p. 1162.) The court also found no error in
the trial court’s conclusion that the settlement did not release
claims against the hospital. (Grande, at pp. 1163–1167.)
      Presiding Justice Ramirez dissented. He “would follow
Castillo, as a matter of stare decisis,” concluding that it was not
“so plainly wrong as to justify creating a split of authority.”

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            GRANDE v. EISENHOWER MEDICAL CENTER
              Opinion of the Court by Cantil-Sakauye, C. J.

(Grande, supra, 44 Cal.App.5th at p. 1168 (dis. opn. of Ramirez,
P. J.).)
      We granted review. Below, we first briefly confirm that
the trial court’s interpretation of the release was supported by
substantial evidence.       That interpretation may well be
dispositive of the preclusion question; there is a strong
argument — not meaningfully addressed in Castillo, the
appellate opinion below, or the briefing here — that an
agreement giving rise to a judgment should control the
preclusive effect of that judgment. Regardless, even under
ordinary principles of claim preclusion, the hospital and staffing
agency have not demonstrated that the Court of Appeal erred.
                 II. SCOPE OF RELEASE AND
                RELATIONSHIP TO PRECLUSION
      A. Scope of Release
       We begin with the text of the agreement giving rise to the
first judgment. In most pertinent part, it released “FlexCare,
LLC, . . . [several individuals], and all present and former
subsidiaries, affiliates, divisions, related or affiliated
companies, parent companies, franchisors, franchisees,
shareholders, and attorneys, and their respective successors and
predecessors in interest, all of their respective officers, directors,
employees, administrators, fiduciaries, trustees and agents, and
each of their past, present and future officers, directors,
shareholders,     employees,       agents,     principals,      heirs,
representatives, accountants, auditors, consultants, insurers
and reinsurers, and their counsel of record.” (Italics added.)
The release does not name the hospital or specify a group of
clients of the staffing agency, even though the underlying
complaint mentions the facilities at which the plaintiff nurses

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           GRANDE v. EISENHOWER MEDICAL CENTER
             Opinion of the Court by Cantil-Sakauye, C. J.

worked. Nor, viewed in context of the list of released parties, is
the hospital unambiguously an “agent[]” within the meaning of
the agreement, notwithstanding the hospital’s participation in
the nurse’s employment.
      The trial court resolved this ambiguity following a bench
trial, relying at least in part on evidence extrinsic to the
agreement. For example, the court emphasized “[t]he facts
surrounding” the first action, identifying testimony that “if
claims against [the hospital] were intended to be waived or
released, Plaintiff would have named [the hospital] and pursued
discovery against it, and obtained money from it in a
settlement — none of which occurred.” The trial court’s fact-
specific determination — construing this particular release,
based on the evidence adduced at this particular trial — is
supported by substantial evidence. We affirm on that basis.
      Our decision on this issue is thus fact- and case-specific.
We note, however, that the broader notion that a client is an
“agent” of a staffing agency is not free from doubt. We have
described “the right of control” as “the essential characteristic”
of an agency relationship.       (Edwards v. Freeman (1949)
34 Cal.2d 589, 592.) Accordingly, while some courts have relied
on the presence of a joint employment relationship as a means
of establishing agency (see, e.g., Garcia v. Pexco, LLC (2017)
11 Cal.App.5th 782), it is not self-evident that interdependence
between a client and staffing agency reflects that right of
control, nor that two entities’ joint employment of and control
over the same employee entails control over each other. We do
not resolve these issues, but courts confronted with similar
questions in the future should consider them closely, bearing in
mind the facts of each case. And, of course, future litigants can

                                  7
           GRANDE v. EISENHOWER MEDICAL CENTER
             Opinion of the Court by Cantil-Sakauye, C. J.

specify that their releases extend to staffing agency clients — if
that result is intended.
     B. Relationship Between Release and Preclusion
     There is a substantial argument that our conclusion
regarding the scope of the release should also resolve the
preclusion question. “The basically contractual nature of
consent judgments has led to general agreement that preclusive
effects should be measured by the intent of the parties.” (18A
Wright et al., Fed. Practice and Procedure (3d. ed. 2017)
Jurisdiction and Related Matters, § 4443, pp. 254–255
(hereafter FPP).) One might reasonably ask why, if the hospital
is not entitled to the benefit of the release, the hospital should
nevertheless be entitled to assert claim preclusion because of the
judgment entered upon that release. (Wojciechowski v. Kohlberg
Ventures, LLC (9th Cir. 2019) 923 F.3d 685, 689–690; U.S. ex
rel. May v. Purdue Pharma L.P. (4th Cir. 2013) 737 F.3d 908,
913; Boguslavsky v. South Richmond Securities, Inc. (2d Cir.
2000) 225 F.3d 127, 130; Keith v. Aldridge (4th Cir. 1990) 900
F.2d 736, 740–741; Bandai America Inc. v. Bally Midway Mfg.
Co. (3d Cir. 1985) 775 F.2d 70, 74–75; cf. Kim v. Reins
International California, Inc. (2020) 9 Cal.5th 73, 91–92; but see
Russell v. SunAmerica Securities, Inc. (5th Cir. 1992) 962 F.2d
1169, 1173, fn. 1; FPP, supra, § 4443, p. 271.)
      We can decide this case without resolving whether the
scope of the release controls the preclusive effect of the
judgment. If the release is controlling, then based on our
conclusion above, the judgment does not preclude the nurse’s
claim against the hospital. If the release is not controlling, the
judgment still does not preclude the nurse’s claim against the

                                  8
            GRANDE v. EISENHOWER MEDICAL CENTER
              Opinion of the Court by Cantil-Sakauye, C. J.

hospital, based on the ordinary principles of preclusion to which
we now turn.
                III. OVERVIEW OF PRECLUSION
      Preclusion comes in two main forms: claim preclusion and
issue preclusion. (See Samara v. Matar (2018) 5 Cal.5th 322,
326 & fn. 1 (Samara).) As the names suggest, claim preclusion
prevents relitigation of entire claims (or “causes of action”) (id.,
at p. 326), while issue preclusion prevents relitigation of specific
issues (id., at p. 327). Like many courts, we previously used the
terms “res judicata” and “collateral estoppel” when discussing
claim and issue preclusion, respectively. (Samara, supra,
5 Cal.5th at p. 326; see also id., at p. 326, fn. 1. [also noting our
prior use of “ ‘ “res judicata” as an umbrella term’ capable of
referring to claim preclusion, issue preclusion, or both”].)
     Claim and issue preclusion have different requirements.
We have described claim preclusion as applying “only when ‘a
second suit involves (1) the same cause of action (2) between the
same parties [or their privies] (3) after a final judgment on the
merits in the first suit.’ ” (Samara, supra, 5 Cal.5th at p. 327,
italics added.) Issue preclusion, by contrast, “applies only
‘(1) after final adjudication (2) of an identical issue (3) actually
litigated and necessarily decided in the first suit and (4) asserted
against one who was a party in the first suit or one in privity with
that party.’ ” (Ibid., italics added.)
      Privity is thus relevant under both doctrines, but with one
significant difference. “The loose term ‘privity’ refers to some
relationship or connection with the party that makes it proper
to hold ‘privies’ bound with the actual parties.” (7 Witkin, Cal.
Procedure (5th ed. 2008) Judgments, § 456, p. 1113; see also
pt. IV.A., post.) For both claim and issue preclusion, a judgment

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           GRANDE v. EISENHOWER MEDICAL CENTER
             Opinion of the Court by Cantil-Sakauye, C. J.

can be used against only a party to that judgment or someone in
privity with a party — in other words, against only a person or
entity that is bound by the judgment. (Samara, supra, 5 Cal.5th
at p. 327.) The doctrines diverge, however, concerning by whom
a judgment can be used. Only claim preclusion contains a
“ ‘between the same parties [or their privies]’ ” inquiry, which
restricts the set of litigants who can benefit from a prior
judgment to those who could have had the judgment used
against them. (Ibid.; but see pt. IV.C., post.)
      This between-the-same-parties-or-privies formulation
reflects claim preclusion’s longstanding mutuality requirement.
(See DKN Holdings, supra, 61 Cal.4th at p. 827, fn. 10.) “For
many years, most courts followed the general rule that the
favorable preclusion effects of a judgment were available only to
a person who would have been bound by any unfavorable
preclusion effects. This rule, known as the rule of mutuality,
established a pleasing symmetry — a judgment was binding
only on parties and persons in privity with them, and a
judgment could be invoked only by parties and their privies.”
(FPP, supra, § 4463, pp. 666–667; cf. Bernhard v. Bank of
America (1942) 19 Cal.2d 807, 811 (Bernhard) [“The estoppel is
mutual if the one taking advantage of the earlier adjudication
would have been bound by it, had it gone against him”].) In
short, litigants “could only take advantage of an earlier
judgment if that judgment would have bound them, had it been
decided differently.” (DKN Holdings, at p. 827, fn. 10.) In
Bernhard, “we repudiated the mutuality rule for issue
preclusion” (ibid.) — but not for claim preclusion. Claim
preclusion can prevent reassertion of a claim without regard to
whether a plaintiff won or lost in an initial action. (See Busick
v. Workmen’s Comp. Appeals Bd. (1972) 7 Cal.3d 967, 973

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            GRANDE v. EISENHOWER MEDICAL CENTER
              Opinion of the Court by Cantil-Sakauye, C. J.

[describing merger and bar]; see also Mycogen Corp. v. Monsanto
Co. (2002) 28 Cal.4th 888, 896–897; Rest.2d Judgments (1982)
§ 17, p. 148.) Allowing nonmutual claim preclusion would thus
exert pressure akin to a mandatory joinder rule. If claims
against nonparties would be extinguished by a judgment in an
initial action — regardless of who wins that initial action —
then a plaintiff would be required to either join the nonparties
in the initial action or lose its claims against them.
           IV. THE HOSPITAL WAS NOT IN PRIVITY
                WITH THE STAFFING AGENCY

      With this context regarding the same-parties-or-privies
requirement in mind, the hospital stands in privity with the
staffing agency only if circumstances would permit binding the
hospital to an unfavorable judgment against the staffing agency
in the first action. (See DKN Holdings, supra, 61 Cal.4th at
p. 827, fn. 10; see also id., at p. 826.) In other words, “privity” is
not merely a term that describes a close relationship between
two entities; it implies that a judgment against one could have
been used against the other, even though that entity was not a
party to the judgment. There is no such privity on the facts of
this case because the staffing agency did not adequately
represent the hospital’s interests in the first action.1
      The term privity is sometimes used more broadly, to
convey that nonparties may take advantage even of judgments
that could not bind them. There is a fair argument that such

1
      Our decision here concerns only whether the hospital
could be bound as a privy under our state-law privity inquiry.
We do not address whether a nonparty asserting claim
preclusion as a privy must further demonstrate that it would
have been constitutional to bind that nonparty to a loss. (Martin
v. Wilks (1989) 490 U.S. 755, 761–762 [discussing due process].)

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            GRANDE v. EISENHOWER MEDICAL CENTER
              Opinion of the Court by Cantil-Sakauye, C. J.

preclusion should be instead described as nonmutual claim
preclusion. (See pt. IV.C., post.) But as we will discuss, no
matter the label, such preclusion is inappropriate in this case.
      A. General Principles
      As mentioned, “[t]he loose term ‘privity’ refers to some
relationship or connection with the party that makes it proper
to hold ‘privies’ bound with the actual parties.” (7 Witkin, Cal.
Procedure, supra, § 456, p. 1113; cf. Taylor v. Sturgell (2008) 553
U.S. 880, 894, fn. 8.)
      The circumstances recognized as creating privity have
evolved over time. Our older decisions often define privity in
terms of a nonparty’s acquisition of an interest in the subject
matter of litigation. Bernhard, for example, described “[a]
privy” as “one who, after rendition of the judgment, has acquired
an interest in the subject matter affected by the judgment
through or under one of the parties, as by inheritance,
succession, or purchase.” (Bernhard, supra, 19 Cal.2d at p. 811.)
Other decisions and a statutory provision are to similar effect.
(See Code Civ. Proc., § 1908, subd. (a)(2); see also, e.g., Holt Mfg.
Co. v. Collins (1908) 154 Cal. 265, 273–274; Flandreau v.
Downey (1863) 23 Cal. 354, 357.) More recently, privity has been
described as “such an identification in interest of one person
with another as to represent the same legal rights” or “a
relationship between the party to be estopped and the
unsuccessful party in the prior litigation which is ‘sufficiently

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            GRANDE v. EISENHOWER MEDICAL CENTER
              Opinion of the Court by Cantil-Sakauye, C. J.

close’ so as to justify” preclusion. (Clemmer v. Hartford
Insurance Co. (1978) 22 Cal.3d 865, 875 (Clemmer).)2
       Our latest decision to address the concept described
privity as “requir[ing] 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.) We apply that inquiry
below.
      B. The Hospital Would Not Have Been Bound by
         an Adverse Judgment in the Initial Action
      As the litigants asserting preclusion, the hospital and
staffing agency bear the burden of establishing that they were
in privity in the first action. (Vella v. Hudgins (1977) 20 Cal.3d
251, 257; cf. Lucido v. Superior Court (1990) 51 Cal.3d 335, 341.)
As mentioned, to do so here, they must establish that they
shared “ ‘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.) Our recent decision in DKN Holdings
illustrates this inquiry.
      In DKN Holdings, a litigant purported to be in privity with
a party to an earlier judgment to assert claim preclusion based

2
       It may sometimes be appropriate to bind a nonparty to a
loss, without allowing that nonparty to benefit from a win. (See,
e.g., FPP, supra, § 4451, pp. 366–367 [discussing nonparties
that secretly control litigation]; Dillard v. McKnight (1949)
34 Cal.2d 209, 216 [suggesting such nonparties should not be
termed “privies”].)

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            GRANDE v. EISENHOWER MEDICAL CENTER
              Opinion of the Court by Cantil-Sakauye, C. J.

on that judgment. (DKN Holdings, supra, 61 Cal.4th at pp. 825–
826 & fn. 19.) A landlord had prevailed on a claim against one
of three jointly and severally liable lessees. (Id., at pp. 818–819.)
The landlord sued the other two lessees in a separate action.
(Id., at p. 819.) A defendant in the second action argued that
the landlord’s “rights under the lease had been adjudicated” in
the first action, precluding the second suit. (Ibid.)
       We disagreed. After setting out the privity inquiry quoted
above, we explained, “A nonparty alleged to be in privity must
have an interest so similar to the party’s interest that the party
acted as the nonparty’s ‘ “ ‘virtual representative’ ” ’ in the first
action. [Citation.] Joint and several liability alone does not
create such a closely aligned interest between co-obligors. The
liability of each joint and several obligor is separate and
independent, not vicarious or derivative.” (DKN Holdings,
supra, 61 Cal.4th at p. 826.) We distinguished Court of Appeal
decisions addressing situations in which “a defendant’s liability
[was] entirely deriv[ative] [of] that of a party in an earlier
action.” (Id., at pp. 827–828, italics added.) “The concepts of
joint and several liability and derivative liability,” we explained,
“are not coextensive.” (Id., at p. 828.) Instead, “[e]ach joint and
several obligor is separately responsible for breach of the
contract; the basis of each one’s liability is independent,
although all have contributed to the same loss.” (Ibid.)3
     DKN Holdings makes clear that privity does not exist
merely because two entities are allegedly liable for the same

3
      Although we held that virtual representation was
necessary to sustain the theory of privity at issue, we had no
occasion to consider precisely what sort of representation would
have justified preclusion.

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            GRANDE v. EISENHOWER MEDICAL CENTER
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wrong to the same plaintiff. Likewise, then, privity does not
exist merely because two entities share an interest in
establishing that no wrong occurred. Accordingly, whether the
staffing agency had an interest in showing that neither it nor
the hospital was liable to the nurse cannot end the inquiry.
       Here, even if, as a factual matter, the hospital and staffing
agency worked together to satisfy their payment obligations,
that does not mean their legal interests were not distinct.
Although the staffing agency describes this second case as
concerning “the exact same wage and hour violations” that were
at issue in the first action, at oral argument the staffing agency
declined to concede that it would need to indemnify the hospital
for all liability arising from the conduct at issue in this second
action. The implication is that at least some of the alleged
violations could, in the staffing agency’s view, result in liability
for the hospital but not for the staffing agency. This suggests a
conflict of incentives rather than adequate representation.
Likewise, the hospital may have had an interest in shifting fault
to the staffing agency had it been party to that action — and the
staffing agency, quite obviously, would not have represented
that interest.     (Cf. Clemmer, supra, 22 Cal.3d at p. 874
[“plaintiffs’ interests in litigating the issue of willfulness
differed from those of Dr. Lovelace and were therefore not
adequately represented by him in his prior criminal trial”].)
      The hospital and staffing agency nevertheless contend
that their position is supported by the Court of Appeal’s decision
in Castillo. Castillo concerned a temporary staffing agency
(GCA), the agency’s employees, and its client (Glenair). (See
Castillo, supra, 23 Cal.App.5th at p. 266.) A lawsuit was filed
against the staffing agency on behalf of a class that included
employees Andrew and David Castillo. (Id., at pp. 266–267.)

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            GRANDE v. EISENHOWER MEDICAL CENTER
              Opinion of the Court by Cantil-Sakauye, C. J.

The action resulted in a court-approved settlement, which
included a release. (Id., at pp. 267–268.) The Castillos
separately sued the staffing agency’s client Glenair, at which
they had been placed to work. (Id., at p. 266.) The Court of
Appeal concluded, in portions of its opinion not essential to our
discussion here, that Glenair was entitled to summary judgment
on the theory that the release in the class action extinguished
the Castillos’ claims against Glenair. (See id., at pp. 281–282.)
      The court further held that client-employer Glenair was in
privity with staffing agency GCA for purposes of claim
preclusion. (Castillo, supra, 23 Cal.App.5th at pp. 278–281.)
The court reasoned that “privity, ‘ “as used in the context of res
judicata or collateral estoppel, does not embrace relationships
between persons or entities, but rather it deals with a person’s
relationship to the subject matter of the litigation.” ’ ” (Castillo,
at p. 277.) Applying that understanding, the court thought it
was “clear” that the client-employer and staffing agency were in
privity for purposes of the claim involved. (Id., at p. 279.) “The
subject matter of this litigation is the same as the subject matter
of the [other] litigation — namely, both cases involve the same
wage and hour causes of action arising from the same work
performed by the same GCA employees (the Castillos) at GCA’s
client company Glenair. Based on the undisputed facts, it is
apparent Glenair and GCA share the same relationship to the
Castillos’ claims here. Both Glenair and GCA were involved in
and responsible for payment of the Castillos’ wages. Glenair
was authorized by GCA and responsible for recording, reviewing
and transmitting the Castillos’ time records to GCA. GCA paid
the Castillos based on those time records. And, by virtue of the
[other] settlement, the Castillos were compensated for any
errors made in the payment of their wages. Thus, with respect

                                   16
            GRANDE v. EISENHOWER MEDICAL CENTER
              Opinion of the Court by Cantil-Sakauye, C. J.

to the Castillos’ wage and hour causes of action, the interests of
Glenair and GCA are so intertwined as to put Glenair and GCA
in the same relationship to the litigation here. Accordingly, we
conclude they are in privity for purposes of the instant
litigation.” (Id., at pp. 279–280.)
      The court also remarked on our decision in DKN Holdings.
“This case is distinguishable” from DKN Holdings, the Castillo
court reasoned, “because, assuming Glenair and GCA are jointly
and severally liable, our finding of privity does not rely on any
such relationship. Rather, as explained above, Glenair and GCA
are in privity for present purposes based both on their
interdependent relationship with respect to payment of the
Castillos’ wages as well as on the fact that this litigation
revolves around alleged errors in the payment of the Castillos’
wages. DKN Holdings does not preclude our conclusion here.”
(Castillo, supra, 23 Cal.App.5th at p. 280; see also id., at p. 287.)
In doing so, Castillo appears to have focused on the factual
circumstances surrounding defendants’ compliance with wage
and hour obligations, rather than the nature of defendants’ legal
obligations to the plaintiffs. (But see DKN Holdings, supra,
61 Cal.4th at pp. 822–823.)
      Building on Castillo, the hospital and the staffing agency
here contend that they are in privity because of their similar
relationship to the “subject matter” of the initial action. None
of their briefing on this point explores the fact that the initial
suit concerned a different class of plaintiffs than this second
suit — and thus, at least arguably, concerned a rather different
“subject matter.” Recall, too, that the first suit concerned
nonexempt employees of the staffing agency placed throughout
California. The hospital and staffing agency’s reliance on their
similar relationship to the “subject matter” of the initial action

                                   17
            GRANDE v. EISENHOWER MEDICAL CENTER
              Opinion of the Court by Cantil-Sakauye, C. J.

seems to imply that all California clients of the staffing agency
were in privity in the first action — effectively requiring the
nurse to join them all as defendants and threatening to bind
them to a judgment based on little more than their contractual
relationship with the agency. This concept of privity would
stretch remarkably broadly.
      To be sure, Castillo is correct that the privity inquiry
focuses on the relationship between supposed privies in the
context of the litigation — not a static analysis of the
relationship between them. Two litigants may be privies in
some circumstances yet strangers in others. But even viewed in
the context of the initial litigation, the staffing agency and
hospital’s divergent interests prevent a finding of privity.4
      C. The Hospital Is Not Otherwise Entitled to
         Benefit from Claim Preclusion
      The briefing reflects two other theories of privity
suggesting that, in the hospital’s view, the hospital is entitled to
benefit from the claim preclusive effect of the first judgment
even if it could not have been bound by that judgment. Although
we recognize that the term privity is sometimes used in this
manner, such preclusion might more appropriately be termed
nonmutual claim preclusion. A doctrine of privity that allows a
nonparty to benefit from a judgment, but not to be bound by a
judgment, is in effect an exception to the mutuality
requirement. (FPP, supra, § 4463, p. 667.) “[F]indings of

4
       We do not address whether the nurse’s suit against the
hospital concerns the same cause of action as her suit against
the staffing agency, nor whether considerations unique to the
class action context would alone authorize splitting such a cause
of action across multiple suits.

                                   18
           GRANDE v. EISENHOWER MEDICAL CENTER
             Opinion of the Court by Cantil-Sakauye, C. J.

privity” made under such a doctrine “may cloud reasoning as
later courts confront real privity questions[] and may prevent
the present court from considering and articulating the factors
that make it appropriate to allow nonmutual claim preclusion.”
(Id., § 4464.1, p. 705; cf. DKN Holdings, supra, 61 Cal.4th at
p. 824 [imprecise terminology can impede careful preclusion
analysis].) For purposes of this case, however, the terminology
is not critical; the theories, however named, lack merit.5
         1. Contractual Indemnification Provision
      The hospital contends that claim preclusion is appropriate
because the staffing agency agreed to indemnify it. We can
assume for purposes of this argument that the agreement covers
all the hospital’s potential liability in this action.
      We acknowledge the position that an indemnitee should,
in at least some circumstances, be able to assert claim
preclusion based on a judgment in favor of an indemnitor. (FPP,
supra, § 4463, p. 671; cf. Bradley v. Rosenthal (1908) 154 Cal.
420, 425.) If a plaintiff were to lose to an indemnitor and then
prevail against an indemnitee, a question would arise regarding
the right to indemnification.          “To allow the right of
indemnification would be to destroy the victory won by the
indemnitor in the first action.          To deny the right of
indemnification would be to destroy the indemnitee’s right by
the result of an action in which he took no part.” (FPP, supra,
§ 4463, p. 673.) One might afford the benefit of claim preclusion

5
       Although the hospital appears to argue for nonmutual
preclusion, we express no view concerning whether the theories
discussed below could support the use of a judgment against a
nonparty. (See fn. 1, ante.) We conclude only that the theories
lack force on the facts of this case.

                                  19
           GRANDE v. EISENHOWER MEDICAL CENTER
             Opinion of the Court by Cantil-Sakauye, C. J.

to the nonparty indemnitee based on a view that it is “better to
preclude the [plaintiff], who has already had one opportunity to
litigate, and who often could have joined both adversaries in the
first action.” (Ibid.; cf. Lamb v. Wahlenmaier (1904) 144 Cal. 91,
93–97 [surety entitled to benefit of judgment in favor of
principal, lest surety be held liable to plaintiff but unable to
recover from principal].)
      Regardless, this argument fails at least because the
hospital has not established that the staffing agency was sued
in its capacity as indemnitor.            (Cf. Grande, supra,
44 Cal.App.5th at p. 1161 [“[the nurse] sued [the staffing
agency] based on labor law violations [the staffing agency]
committed on its own. She didn’t allege it was derivatively or
vicariously liable as [the hospital’s] indemnitor.”].) When a
contractual indemnitor is sued based on its own conduct, it is
possible to simultaneously allow (i) the plaintiff to then sue the
indemnitee for the indemnitee’s conduct, (ii) the indemnitee to
obtain indemnification, and (iii) the indemnitor to retain any
initial (own-conduct-related) victory. That possibility renders
this argument for preclusion unpersuasive. (See F.T.C. v.
Garvey (9th Cir. 2004) 383 F.3d 891, 898 [“If the indemnitor is
sued for its own actions and is not sued as an indemnitor for the
acts of another, the rationale favoring preclusion no longer
holds”].)6

6
      The staffing agency and the hospital do not appear to
press, and in any event have not adequately briefed, any
argument that preclusion should arise from a duty to indemnify
imposed on the staffing agency by operation of law.

                                  20
           GRANDE v. EISENHOWER MEDICAL CENTER
             Opinion of the Court by Cantil-Sakauye, C. J.

         2. Derivative Liability
      In DKN Holdings, we identified Court of Appeal decisions
indicating that “[w]hen a defendant’s liability is entirely derived
from that of a party in an earlier action, claim preclusion bars
the second action because the second defendant stands in privity
with the earlier one.” (DKN Holdings, supra, 61 Cal.4th at
pp. 827–828, italics added.) The hospital and staffing agency
argue that this case concerns such derivative liability and, at
least implicitly, they suggest that our case law should or does
include the “entirely deriv[ative]” doctrine.
      Here, too, DKN Holdings provides important context. Our
decision in that case makes clear that liability cannot be
“entirely deriv[ative]” (DKN Holdings, supra, 61 Cal.4th at
p. 827) merely because, as a matter of factual causation, the
alleged liability of two defendants is related. Joint and several
obligors on a contract can extinguish each other’s liability by
paying a shared debt, for example, but it would be odd to treat
their relationship as creating privity merely because one obligor
could discharge the debt of the other. (Id. at p. 825.) The nature
of the duty at issue matters. Put somewhat differently, a joint
and several obligor may no longer be liable if a co-obligor has
already satisfied the obligation at issue, but that does not mean
the obligor’s liability is or was “derivative” of its co-obligor’s.
      With this context in mind, the hospital and staffing
agency’s arguments fail to persuade. The staffing agency
contends that the hospital’s liability “is necessarily entirely
derivative because [the staffing agency] was responsible for
paying [the nurse]” based on a private agreement between the
agency and the hospital. But at issue here is the hospital’s
independent duty to comply with the Labor Code, and the

                                  21
           GRANDE v. EISENHOWER MEDICAL CENTER
             Opinion of the Court by Cantil-Sakauye, C. J.

staffing agency’s alleged failure to make full payment did not
give rise to that duty.7 It may be possible for the parties to
satisfy their statutory duties by contract, but the duties exist
independent of those efforts. The hospital relatedly urges that
it is “sufficient to show that the two companies’ alleged liability
is ‘derivative’ of one another” to point out that “[the nurse’s]
nine-day assignment at [the hospital], and [the hospital’s] time
records, provision of meal and rest periods, and day-to-day
control of [the nurse’s] work formed part of the basis of her wage-
hour claims.” As discussed, DKN Holdings counsels that this
factual overlap between the claims does not establish derivative
liability in the relevant sense.
      For these reasons, the hospital and staffing agency have
not demonstrated that the Court of Appeal erred in rejecting
their claim preclusion argument. We do not decide whether
preclusion would have been appropriate on any other ground.

7
      The Court of Appeal held that joint employers are each
independently liable for their own conduct. (Grande, supra,
44 Cal.App.5th at p. 1160.) We decline to reach that subsidiary
conclusion; we express no opinion on the nature of liability
under the Labor Code, nor on the significance, if any, of recent
legislative activity in this area. (See Lab. Code, § 2810.3.)

                                  22
            GRANDE v. EISENHOWER MEDICAL CENTER
             Opinion of the Court by Cantil-Sakauye, C. J.

                         V. DISPOSITION
     We affirm the judgment of the Court of Appeal and
disapprove Castillo v. Glenair, Inc., supra, 23 Cal.App.5th 262
to the extent it is inconsistent with this opinion.

                                       CANTIL-SAKAUYE, C. J.

We Concur:
CORRIGAN, J.
LIU, J.
KRUGER, J.
GROBAN, J.
JENKINS, J.
GUERRERO, J.

                                  23
See next page for addresses and telephone numbers for counsel who
argued in Supreme Court.

Name of Opinion Grande v. Eisenhower Medical Center
__________________________________________________________

Procedural Posture (see XX below)
Original Appeal
Original Proceeding
Review Granted (published) XX 44 Cal.App.5th 1147
Review Granted (unpublished)
Rehearing Granted
__________________________________________________________

Opinion No. S261247
Date Filed: June 30, 2022
__________________________________________________________

Court: Superior
County: Riverside
Judge: Sharon J. Waters
__________________________________________________________

Counsel:

Downey Brand, Cassandra M. Ferrannini, Bradley C. Carroll and
Alexandra K. LaFountain for Intervener and Appellant.

Procopio, Cory, Hargreaves & Savitch, Kendra J. Hall and Robert G.
Marasco 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; The Blanchard
Law Group and Lonnie C. Blanchard III for Plaintiff and Respondent
and for Real Party in Interest.

Sheppard, Mullin, Richter & Hampton, Richard J. Simmons, Ruben D.
Escalante, Karin Dougan Vogel and John D. Ellis for Defendant and
for Petitioner.

Atkinson, Andelson, Loya, Ruud & Romo, Susan M. Steward; 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 for
California Hospital Association as Amicus Curiae on behalf of
Defendant and Petitioner.

No appearance for Respondent.
Counsel who argued in Supreme Court (not intended for
publication with opinion):

Cassandra M. Ferrannini
Downey Brand LLP
621 Capitol Mall, 18th Floor
Sacramento, CA 95814
(916) 444-1000

Richard J. Simmons
Sheppard, Mullin, Richter & Hampton LLP
333 South Hope Street, 43d Floor
Los Angeles, CA 90071
(213) 620-1780

Peter R. Dion-Kindem
The Dion-Kindem Law Firm
2945 Townsgate Road, Suite 200
Westlake Village, CA 91361
(818) 883-4900