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California Supreme Court docket Retains Staff Might Sue Staffing Agency’s Client Even Just after Settling Exact Promises Towards Company

3 min read

July 1, 2022

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Determined June 30, 2022

Grande v. Eisenhower Health-related Center, S261247

Yesterday, the California Supreme Court held that an employee who delivers an work class motion from a staffing company and executes a settlement agreement releasing the company and its brokers may deliver a next class action from the staffing agency’s client premised on the same violations.

Track record: Lynn Grande was assigned to get the job done as a nurse at Eisenhower Healthcare Center by FlexCare, LLC, a momentary staffing agency. Grande submitted a class action from FlexCare, alleging that it underpaid its workforce.  The events reached a settlement and executed a release of claims.

Eight months right after the court docket permitted the settlement and entered judgment, Grande submitted one more wage and hour course action—this time towards Eisenhower.  Grande’s statements in opposition to Eisenhower have been premised on the very same violations more than which she had sued FlexCare.

FlexCare moved to intervene in this adhere to-on scenario, arguing that Grande was precluded from suing Eisenhower due to the fact she had settled her promises versus FlexCare in the earlier case.  The trial court and the Fourth District Court of Attractiveness disagreed.  The Court docket of Attraction held Grande was not precluded from suing Eisenhower because it was neither a unveiled get together in the initially scenario nor in privity with FlexCare.  The court docket expressly disagreed with the Next District’s choice in Castillo v. Glenair, Inc. (2018) 23 Cal.App.5th 262, 266, which held that a course of staff could not “bring a lawsuit against a staffing business, settle that lawsuit, and then carry identical promises towards the firm exactly where they had been put to function.”

Problem: May possibly an worker deliver an work course action from a staffing agency, settle the situation and launch the agency and its agents from liability, and then deliver a 2nd course action based on the similar alleged violations against the staffing agency’s customer?

Court’s Holding:

Indeed, on the info of this scenario. The settlement settlement releasing FlexCare didn’t title Eisenhower or if not advise that it was meant to include Eisenhower. Nor was FlexCare in privity with Eisenhower, which include for the reason that Eisenhower would not have been bound by an adverse judgment in the to start with circumstance towards FlexCare. As a outcome, Grande wasn’t barred from asserting the similar promises from Eisenhower in a 2nd situation.

Despite the fact that the launch in the settlement arrangement amongst a nurse and her staffing agency did not consist of the medical center wherever she labored, “future litigants can specify that their releases prolong to staffing company clients—if that final result is meant.”

Main Justice Cantil-Sakauye, composing for the Courtroom

What It Suggests:

  • The Courtroom stated that its choice as to the scope of the settlement settlement was “fact- and case-specific,” but also forged some doubt on “the broader idea that a customer is an ‘agent’ of a staffing company.”
  • In drafting settlement agreements, staffing organizations and other employers must consider specially naming any appropriate client, or at minimum such as “clients” amid the releasees, as the Court’s viewpoint preserves employers’ potential to “specify that their releases prolong to staffing company clients—if that consequence is meant.”

The Court’s view is available right here.

Gibson Dunn’s lawyers are obtainable to aid in addressing any issues you may well have regarding developments at the California Supreme Courtroom. Remember to sense cost-free to get hold of the following observe leaders:

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