Ruiz v. Affinity Logistics: District Court Erroneously Applied Georgia Law to California Independent Contractor Dispute

In Ruiz v. Affinity Logistics Corporation (9th Cir. 2/8/12) --- F.3d ----, 2012 WL 388171, Ruiz worked as a furniture delivery person. He entered into an agreement with Affinity stating that he was an independent contractor and that any dispute with Affinity would be governed by Georgia law. Ruiz filed a putative class action alleging violations of federal and California wage and hour laws. After a three-day bench trial, the district court (S.D.Cal., Judge Janis L. Sammartino) found that Ruiz was an independent contractor under Georgia law, which applies a presumption of independent contractor status.

The Ninth Circuit reversed. Although the district court properly found that the chosen state, Georgia, had a substantial relationship to the parties because Affinity was incorporated there, it should have continued the analysis to determine (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." Slip op. at 7-8.

On the first point, the Court held that Georgia law "is contrary to a fundamental policy of California law" because it applies a presumption of independent contractor status, rather than employee status.

[U]nder California law, once a plaintiff comes forward with evidence that he provided services for an employer, the employee has established a prima facie case that the relationship was one of employer/employee.” Narayan v. EGL, Inc., 616 F.3d 895, 900 (9th Cir. 2010) (citing Robinson v. George, 16 Cal.2d 238, 243-44 (1940)). “Once the employee establishes a prima facie case, the burden shifts to the employer, which may prove, if it can, that the presumed employee was an independent contractor.” Id.

Slip op. at 8-9.

On the second point, the Court held that California also has a "materially greater interest" than Georgia in the outcome of this case. Slip op. at 10.

Here, the drivers entered into the contract with Affinity in California. The drivers completed the work for Affinity in California. The subject matter of the contract deals with completing deliveries in California. Finally, the domicile of the drivers is California. The only connection with Georgia is that Georgia is where Affinity is incorporated. Accordingly, California has a materially greater interest than Georgia in determining whether the drivers are independent contractors or employees of Affinity.

Ibid. Further, Affinity did not explain "how Georgia would suffer" if the court applied California law. Ibid.

The Court remanded the case to the district court to determine Ruiz's status under California, rather than Georgia, law.

The opinion is available here.