Stonehocker v. Kindred Healthcare Operating, LLC

Background

Sarah Stonehocker filed a proposed class action alleging that Kindred Healthcare Operating, LLC failed to pay overtime wages, failed to pay wages when due, and engaged in unlawful business practices under California law. She sought to represent skilled clinicians, including physical, occupational, and speech therapists, who worked at Kindred’s skilled nursing facilities in California.

Stonehocker alleged that Kindred required these clinicians to meet minimum patient-care ratios and spend at least 87 percent of their shifts on skilled direct patient care. She alleged that clinicians performed unpaid and undocumented overtime while trying to meet those productivity requirements and complete necessary unskilled work.

Kindred’s Arguments

Kindred moved for summary judgment, which asks the court to enter judgment without a trial when there is no genuine dispute over a fact important to the outcome. Kindred argued that Stonehocker’s claims were barred by claim preclusion, a rule that can prevent parties from bringing a later case involving the same cause of action after a final decision. Kindred also argued that Stonehocker had released her claims through a class-action settlement approved in an earlier related proceeding.

In the earlier proceeding, the settlement covered people who provided skilled home healthcare services in California as clinicians or piece-rate employees from August 24, 2012, through April 20, 2018. The settlement included wage-related claims and a broad release. Stonehocker received a settlement check, did not object or request exclusion by the deadline, and cashed the check.

Claim Preclusion

The parties agreed that two requirements for claim preclusion were satisfied: the earlier proceeding ended in a final decision on the merits, and the parties in the two proceedings were the same or legally connected. The dispute concerned whether the two cases involved the same cause of action.

Applying California’s “primary rights” approach, the court focused on the harm alleged rather than merely the legal theories or requested remedies. The court found that the cases involved different primary rights. Stonehocker’s case concerned the alleged enforcement of productivity standards that caused clinicians at skilled nursing facilities to work without pay. The earlier proceeding concerned alleged failures to pay clinicians working in home and hospice settings.

The court also found that the class covered by the earlier settlement excluded the proposed class in Stonehocker’s case because the settlement was limited to clinicians who provided skilled home healthcare services. The court noted that Stonehocker’s relevant skilled-nursing-facility work occurred before she began working in the home healthcare setting, and that the settlement compensation corresponded to her home healthcare work. Because the cases did not involve the same cause of action, claim preclusion did not bar Stonehocker’s claims.

Settlement Release

The court next considered whether the release in the earlier settlement barred Stonehocker’s claims. It applied California contract principles and the Ninth Circuit rule that a settlement release generally bars a later claim only when the claim is based on the identical factual predicate—the same underlying set of facts—as the settled claims. Mere similarities between the cases are not enough.

The court found significant factual differences. The earlier settlement concerned compensation for clinicians working in home healthcare, while Stonehocker’s case concerned clinicians working in skilled nursing facilities. The evidence showed differences in the nature of the work and the pay structures. The earlier complaint did not allege anything about the minimum patient-care ratios that were central to Stonehocker’s claims, and Stonehocker’s complaint did not concern the piece-rate employees emphasized in the earlier proceeding.

The court also noted that the settlement notices repeatedly stated that only people who provided home healthcare services would be affected. As a result, the court concluded that the home-healthcare settlement group and the skilled-nursing-facility group could not be treated as the same group for purposes of barring Stonehocker’s claims. The release therefore did not preclude her from pursuing this action.

Disposition

The court denied Kindred’s motion for summary judgment and terminated Docket Number 18. The order did not decide the underlying question of whether Kindred violated California wage laws.