Ruiz v. Affinity Logistics: Ninth Circuit Clarifies California’s Choice of Law Jurisprudence

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Citing policy interests in protecting workers, the Ninth Circuit recently concluded that California law applies to the interpretation of an independent contractor agreement between California truck drivers and Affinity, a Georgia transportation company.  See Ruiz v. Affinity Logistics Corp., No. 10-55581, 2012 U.S. App. LEXIS 2450 (9th Cir. Feb. 8, 2012) (available here).  The appellate court found that the agreement’s Georgia choice of law provision was unenforceable, and remanded the case to the district court to assess the drivers’ misclassification claims pursuant to California law.  Id. at *13.

The Ruiz class action arose over allegations that Affinity misclassified its truck drivers in order to avoid paying them overtime and benefits.  Id. at *2-5.  To work for the company, truck drivers were required to sign “Independent Truckman’s Agreements.”  However, the plaintiff driver claimed that Affinity exercised sufficient control over the drivers’ work to be considered their employer.  The district court applied California’s choice of law framework to find that Georgia law governed disputes arising out of the Independent Truckman’s Agreement.  Id.  After a three day bench trial, the district court concluded that under Georgia law there is a presumption of independent contractor status, which the plaintiff failed to rebut.  Id.   

However, the Ninth Circuit reversed the district court’s judgment, holding that the Georgia choice of law provision was unenforceable and finding that California law applied under the state’s choice of law framework.  Id. at *7-14.  Although the district court properly found that Georgia had a “substantial relationship to the parties,” it erred by failing to undertake two additional steps in California’s choice of law framework: “(1) whether applying Georgia’s law ‘is contrary to a fundamental policy of California,’ and then (2) ‘whether California has a materially greater interest than [Georgia] in resolution of the issue.’”  Id. at *8-9 (quoting ABF Capital Corp. v. Osley, 414 F.3d 1061, 1066 (9th Cir. 2005) (quoting Nedlloyd Lines B.V. v. Super. Ct., 834 P.2d 1148, 1152 (Cal. 1992)) (emphasis in original)).  After undertaking the omitted steps in the choice of law analysis, the Ninth Circuit concluded that California law applied.  The appellate court emphasized that California law differs from Georgia law in placing the burden on employers to rebut the presumption of an employer/employee relationship.  Id. at *7-10.  Furthermore, the drivers lived and worked in California, and the state’s public policy favors worker protections.  Id. at *11-14.

On remand, the district court will apply California law to determine whether the drivers were employees or independent contractors.