There is a fair body of jurisprudence in the federal courts about what constitutes an "indispensable party" to an action.  It's not all that surprising, given how finicky those federal courts are about having jurisdiction.  In California, on the other hand, where jurisdiction is, in kind terms, flexible, you have a tougher time finding authority about indispensable parties (a person or entity whose presence is necessary to adjudicate the action).

The Court of Appeal (Third Appellate District) recently had an opportunity to at least discuss the concept of indispensable parties.  In Tracy Press, Inc. v. The Superior Court of San Joaquin County (July 16, 2008), the Court considered whether the failure to name a city councilmember as a party to the Petition for Writ of Mandate before the Court of Appeal was a fatal defect to that Petition, given that the councilmember had been a party to a petition filed in the Superior Court.

First, the Court considered whether the omitted party could be overlooked as a defect in the pleading.  The Court concluded that such an omission could not be disregarded as a defect, due to the possibility that the outcome would affect the absent party's rights:

“Failing to name an individual as a real party in interest in the pleading that initiates the action is not a defect.  It does not render the pleading defective; it merely defines the parties, leaving out the individual not named. . . .

Issuing an order requiring Tucker to act in a mandamus proceeding in which she was not named and has not appeared would affect Tucker’s substantial rights.  This court obtains jurisdiction to enter an order against a person only if the person is named as a party and duly served with notice of the action.  “[T]he rights of a person cannot be affected by a suit to which he is a stranger.”  (Whitney v. Higgins (1858) 10 Cal. 547, 551.)

(Slip op., at pp. 7-8.)

Having determined that Tucker wasn't a party to the action and couldn't be deemed a party to the action, the Court then considered whether Tucker was an indispensable party, defining the concept and the consequences:

“A person must be made a party of a proceeding if “(1) in his absence complete relief cannot be accorded among those already parties or (2) he claims an interest relating to the subject of the action and is so situated that the disposition of the action in his absence may (i) as a practical matter impair or impede his ability to protect that interest or (ii) leave any of the persons already parties subject to a substantial risk of incurring double, multiple, or otherwise inconsistent obligations by reason of his claimed interest.”  (Code Civ. Proc., § 389, subd. (a).)  If such a person cannot be joined, “the court shall determine whether in equity and good conscience the action should proceed among the parties before it, or should be dismissed without prejudice, the absent person being thus regarded as indispensable.  The factors to be considered by the court include:  (1) to what extent a judgment rendered in the person’s absence might be prejudicial to him or those already parties; (2) the extent to which, by protective provisions in the judgment, by the shaping of relief, or other measures, the prejudice can be lessened or avoided; (3) whether a judgment rendered in the person’s absence will be adequate; (4) whether the plaintiff or cross-complainant will have an adequate remedy if the action is dismissed for nonjoinder.”  (Code Civ. Proc., § 389, subd. (b).)

(Slip op., at p. 8-9.)  Importantly, the Court explained that the absence of an indispensable party does not deprive a Court of jurisdiction over the matter:

““‘Failure to join an “indispensable” party is not “a jurisdictional defect” in the fundamental sense; even in the absence of an “indispensable” party, the court still has the power to render a decision as to the parties before it which will stand.  It is for reasons of equity and convenience, and not because it is without power to proceed, that the court should not proceed with a case where it determines that an “indispensable” party is absent and cannot be joined. [Citation.]’  [Citation.]”  (Save Our Bay, supra, 42 Cal.App.4th at p. 692, quoting Sierra Club, Inc. v. California Coastal Com. (1979) 95 Cal.App.3d 495, 500.)

(Slip op., at p. 10.)  Further, the Court retains discretion as to whether to dismiss the action for failure to name the indispensable party.  (Slip op., at p. 10-11, citing Kaczorowski v. Mendocino County Bd. of Supervisors (2001) 88 Cal.App.4th 564, 568.) 

Ultimately, the Court decided that it could not issue an Order that would potentially conflict with an Order of the Superior Court granting protection to a party not present before the Court of Appeal. Unfortunately, Tracy Press, Inc. never had its Petition heard on the merits.  It probably lost the Petition on the procedural issue due to a mistake in the formatting of its Petition.  It appears from the Opinion that Tracy Press, Inc. failed to designate "Real Parties in Interest" in its Petition:

“Tracy Press claims that it failed to name any real party in interest and that the clerk of this court added the City as a real party in interest.  The City makes no argument that it was not properly named in the petition, only that Tucker, an indispensable party, was not named.

(Slip op., at p. 5, fn. 6.)