ReadyLink Healthcare, Inc. v. State Compensation Insurance Fund

This case involves parallel judicial proceedings, one in state court and the other in federal court. Each was initiated by ReadyLink Healthcare, Inc. (ReadyLink), and each contended that a decision by the Commissioner of the California Department of Insurance (Commissioner) was preempted by Internal Revenue Service (IRS) regulations. The federal district court abstained, relying on Younger v. Harris, 401 U.S. 37 , 91 S.Ct. 746 , 27 L.Ed.2d 669 (1971). While this appeal from the district court judgment was pending, the California Court of Appeal rejected ReadyLink’s preemption claim, and the California Supreme Court denied review.

Applying the Supreme Court’s guidance in Sprint Communications, Inc. v. Jacobs, - U.S. -, 134 S.Ct. 584 , 187 L.Ed.2d 505 (2013), we find that the district court erred by abstaining. However, because issue preclusion now bars ReadyLink’s claim, we affirm the judgment dismissing the complaint.

I. Background

ReadyLink provides temporary nurses for medical facilities. From 2000 to 2006, ReadyLink purchased workers’ compensation insurance from the State Compensation Insurance Fund (SCIF). See Cal. Ins.Code §§ 11770, 11773. Although a creature of…