May 21, 2020
The California Supreme Court has granted review to consider whether a class of workers may bring a wage and hour class action against a staffing agency, settle that lawsuit with a stipulated judgment that releases all of the staffing agency's agents, and then bring a second class action premised on the same alleged wage and hour violations against the staffing agency’s client.
A temporary staffing agency assigned plaintiff to work as a nurse at a medical center. She was named a plaintiff in a wage and hour class action against the staffing agency brought on behalf of agency employees assigned to hospitals throughout California. The staffing agency settled with the class, including plaintiff who executed a release of claims, and the trial court entered a judgment incorporating the settlement agreement.
A year later, plaintiff brought a second class action alleging the same labor law violations against the staffing agency’s client, the medical center who was not a party to the previous lawsuit. The staffing agency intervened in the action asserting plaintiff could not bring a separate lawsuit against the medical center because she had settled her claims in the prior class action. The trial court ruled that the medical center was not a released party under the settlement agreement and could not avail itself of the doctrine of res judicata because the medical center was neither a party to the prior litigation nor in privity with the staffing agency.
The Court of Appeal (opinion here) affirmed the trial court’s ruling and held that res judicata did not bar the action and the medical center was not a released party under the settlement of the previous lawsuit. The Supreme Court has now agreed to review the Court of Appeal’s decision (S261247).