Ruiz v. Affinity Logistics

Under California's choice of law framework, parties' choice of Georgia law to govern an employment agreement is unenforceable because Georgia law is contrary to a fundamental policy of California and California has a materially greater interest in the case.

Ruiz brought suit against Affinity Logistics Corp., alleging violations of the Fair Labor Standards Act ("FLSA") and California law. The District Court granted partial summary judgment as to the FLSA claims but the remaining claims under California law went to a bench trial on the question of whether Ruiz should be classified as an employee or independent contractor of Affinity. The contract Ruiz signed with Affinity stated that Georgia law would govern the agreement, as well as disputes rising under it. The district court applied Georgia law and ruled that Ruiz was not employee. The Ninth Circuit held that the district court failed to properly apply California's choice of law framework, and consider whether applying Georgia's law would be "contrary to a fundamental policy of California," and whether "California has a materially greater interest than [Georgia] in resolution of the issue." Nedlloyd Lines B.V. v. Superior Court, 834 P.2d 1148, 1152 (Cal. 1992). On de novo review, the Court ruled that Georgia law regarding employment status conflicts with a fundamental California policy due to California' protective legislation on the topic. Additionally, the Court found that California has a materially greater interest in the outcome of the case, applying the five-factor test set out in 1-800-Got Junk? LLC v. Superior Court, 116 Cal. Rptr. 3d 923, 932 n.10 (Cal. Ct. App. 2010). The Court held that the choice of Georgia law in the contract was unenforceable and that California law applies under California's choice of law framework. VACATED and REMANDED.