FOR PUBLICATION
UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT
FERNANDO RUIZ, individually and
on behalf of all others similarly No. 10-55581
situated, D.C. No.
Plaintiff-Appellant,
3:05-cv-02125-
v. JLS-CAB
AFFINITY LOGISTICS CORPORATION, OPINION
Defendant-Appellee.
Appeal from the United States District Court
for the Southern District of California
Janis L. Sammartino, District Judge, Presiding
Argued and Submitted
December 8, 2011—Pasadena, California
Filed February 8, 2012
Before: Harry Pregerson and Richard A. Paez,
Circuit Judges, and James P. Jones, District Judge.*
Opinion by Judge Pregerson
*The Honorable James P. Jones, United States District Judge for the
Western District of Virginia, sitting by designation.
1365
RUIZ v. AFFINITY LOGISTICS 1367
COUNSEL
Daniel A. Osborn, Osborn Law, P.C., New York, New York,
for the plaintiffs-appellants.
1368 RUIZ v. AFFINITY LOGISTICS
Elic Anbar, Law Offices of Elic Anbar, Phoenix, Arizona, for
the plaintiffs-appellants.
James H. Hanson, Scopelitis, Garvin, Light, Hanson & Feary,
P.C., Indianapolis, Indiana, for the defendant-appellee.
Catherine K. Ruckelshaus, National Employment Law Proj-
ect, New York, New York, for the amicus.
Cynthia L. Rice, California Rural Legal Assistance Founda-
tion, Sacramento, California, for the amicus.
OPINION
PREGERSON, Circuit Judge:
Fernando Ruiz (“Ruiz”) appeals the district court’s judg-
ment, after a bench trial, in his action against Affinity Logis-
tics Corporation (“Affinity”) for alleged violations of the Fair
Labor Standards Act (“FLSA”) and California laws. We have
jurisdiction pursuant to 28 U.S.C. § 1291. We vacate and
remand.
BACKGROUND
Affinity Logistics Corporation (“Affinity”)1 is a company
providing home delivery and transportation logistical support
services to various home furnishing retailers, including Sears.
To work as a driver for Affinity, individuals had to enter into
the Independent Truckman’s Agreement and Equipment
Lease Agreement (collectively the “Agreements”) with Affin-
ity.
The Agreements included clauses stating that (1) the parties
1
In June 2007, Affinity was acquired by 3PD, Inc.
RUIZ v. AFFINITY LOGISTICS 1369
were entering into an independent contractor relationship, and
(2) Georgia law applied to any disputes. Specifically, the
Agreements stated, among other things:
• Control and Exclusive Use. . . . The parties
intend to create an independent contractor rela-
tionship and not an employer-employee relation-
ship.
• Independent Contractor (a) Contractor, in the
performance of this Agreement, will be acting in
his own separate capacity and not as an agent,
employee, partner, joint venture or associate of
Affinity. It is expressly understood and agreed
that Contractor is an independent contractor of
Affinity in all manners and respects and that
Contractor is not authorized to bind Affinity to
any liability or obligation or to represent that it
has any such authority.
• Governing Law. This Agreement and any dispute
thereunder shall be governed by the laws of the
State of Georgia.
(emphasis in original). The Agreements also repeatedly
referred to the individual drivers as “contractors.” Affinity
hired Ruiz as a driver in 2003.
Ruiz and drivers similarly situated (collectively the “driv-
ers”) filed a class action against Affinity alleging violations of
FLSA and California laws, including failure to pay overtime,
failure to pay wages (including payment for vacation, holi-
days, sick days, and severance), improper charges for work-
ers’ compensation insurance, and the unfair business practice
of wrongfully classifying California drivers. The district court
initially granted partial summary judgment to Affinity on
Ruiz’s cause of action for violation of FLSA. Affinity then
1370 RUIZ v. AFFINITY LOGISTICS
moved for summary judgment under Federal Rule of Civil
Procedure 56(c) on the remainder of Ruiz’s claims.
On June 5, 2008, the district court granted Affinity’s
motion for summary judgment on Ruiz’s second cause of
action for overtime pay under California law. The remainder
of Ruiz’s claims, however, turned on whether Ruiz should be
classified as an independent contractor or as an Affinity
employee.
Relying on the choice of law clause in the Agreements, the
district court held that Georgia law applies to determine
whether the drivers were employees of Affinity or indepen-
dent contractors. The district court applied California’s choice
of law framework to reach this conclusion. Under California’s
choice of law framework, the district court noted that “Cali-
fornia courts enforce choice-of-law clauses where . . . the cho-
sen state ‘has a substantial relationship to the parties or the
transaction.’ ” quoting ABF Capital Corp. v. Osley, 414 F.3d
1061, 1065 (9th Cir. 2005). The district court then found that
“[a] substantial relationship exists where one of the parties is
domiciled or incorporated in the chosen state” and that Affin-
ity is incorporated in Georgia and has its principal office in
Marietta, Georgia. ABF Capital Corp., 414 F.3d at 1065.
Thus, the district court enforced the parties’ choice of law
clause and applied Georgia law to resolve the employee-
independent contractor issue.
Applying Georgia law, the court concluded that there was
“sufficient evidence from which a reasonable jury could con-
clude that [Ruiz] has overcome the presumption of ‘indepen-
dent contractor’ status and established that he was [Affinity’s]
employee.” Thus, the court denied Affinity’s motion for sum-
mary judgment on those claims that turn on whether Ruiz
should be classified as an independent contractor or as an
Affinity employee. The matter was set for a bench trial on the
remaining claims.
RUIZ v. AFFINITY LOGISTICS 1371
After a three-day bench trial, the district court concluded
that under Georgia law there is a presumption of independent
contractor status. Ruiz v. Affinity Logistics Corp., 697 F.
Supp. 2d 1199, 1204 (S.D. Cal. 2010). And to rebut this pre-
sumption Ruiz must establish that an employer-employee
relationship existed. Id. The district court found that Ruiz was
unable to establish an employer-employee relationship and
thus failed to rebut Georgia’s presumption of independent
contractor status. Id. at 1220-21.
DISCUSSION
A. Waiver
On appeal, Affinity claims that “Ruiz waived any objection
to the choice of law for purposes of appeal [because] he failed
to raise this issue in the District Court.” “Although no bright
line rule exists to determine whether a matter [h]as been prop-
erly raised below, an issue will generally be deemed waived
on appeal if the argument was not raised sufficiently for the
trial court to rule on it.” In re Mercury Interactive Corp. Sec.
Litig., 618 F.3d 988, 992 (9th Cir. 2010) (internal quotation
marks and citations omitted). In this case, Ruiz’s argument
that California law, rather than Georgia law, applies was
“raised sufficiently for the trial court to rule on it.” Id.
Accordingly, we will entertain Ruiz’s argument that the dis-
trict court erroneously applied Georgia law.
Moreover, “the rule of waiver is a discretionary one.” Ack-
erman v. Western Elec. Co., 860 F.2d 1514, 1517 (9th Cir.
1988) (citing Singleton v. Wulff, 428 U.S. 106, 121 (1976)).
“We may consider issues not presented to the district court,
although we are not required to do so.” In re Mercury Interac-
tive Corp. Sec. Litig., 618 F.3d at 992 (citation omitted). This
court has stated that it has discretion to make an exception to
waiver under three circumstances: (1) “in the ‘exceptional’
case in which review is necessary to prevent a miscarriage of
justice or to preserve the integrity of the judicial process,” (2)
1372 RUIZ v. AFFINITY LOGISTICS
“when a new issue arises while appeal is pending because of
a change in the law,” and, (3) “when the issue presented is
purely one of law and either does not depend on the factual
record developed below, or the pertinent record has been fully
developed.” Bolker v. C.I.R., 760 F.2d 1039, 1042 (9th Cir.
1985). In this case, because the issue of whether the district
court properly applied California’s choice of law framework
is one of law and there is no deficiency in the record relating
to it, we exercise our discretion to consider that issue. Acker-
man, 860 F.2d at 1517 (citing In re Howell, 731 F.2d 624, 627
(9th Cir. 1984), cert. denied, 469 U.S. 933 (1984)).
B. Choice of Law
Ruiz contends that the district court after applying Califor-
nia’s choice of law framework erred when it concluded that
Georgia law applies. We agree. Whether the district court
erred when it concluded that Georgia law, not California law,
applies is a question of law subject to de novo review.
Schoenberg v. Esportadora de Sal, S.A. de C.V., 930 F.2d
777, 782 (9th Cir. 1991) (citation omitted).
[1] California’s choice of law framework is set forth in
Restatement § 187(2) and in Nedlloyd Lines B.V. v. Superior
Court, 834 P.2d 1148, 1152 (Cal. 1992). “California courts
apply the parties’ choice of law unless the analytical approach
articulated in § 187(2) of the Restatement (Second) of Con-
flict of Laws (“187(2)”) dictates a different result.” Hoffman
v. Citibank (S.D.), N.A., 546 F.3d 1078, 1082 (9th Cir. 2008)
(citation omitted). As a threshold matter, a court must deter-
mine “whether the chosen state has a substantial relationship
to the parties or their transaction, or . . . whether there is any
other reasonable basis for the parties’ choice of law.” Ned-
lloyd, 834 P.2d at 1152 (citing Rest., § 187(2)). The district
court properly found that because Affinity is incorporated in
Georgia and has its principal office in Georgia, the chosen
state (Georgia) has a substantial relationship to the parties.
See ABF Capital Corp., 414 F.3d at 1065 (“A substantial rela-
RUIZ v. AFFINITY LOGISTICS 1373
tionship exists where one of the parties is domiciled or incor-
porated in the chosen state.”). The district court then
concluded that Georgia law applied.
[2] But the district court’s inquiry should not have ended
there. Two additional steps remained in California’s choice of
law framework. The district court should have then consid-
ered (1) whether applying Georgia’s law “is contrary to a fun-
damental policy of California,” and then (2) “whether
California has a materially greater interest than [Georgia] in
resolution of the issue.” Id. at 1066 (quoting Nedlloyd, 834
P.2d at 1152) (emphasis in original). Here, the district court
in deciding to apply Georgia law, overlooked these additional
two steps of California’s choice of law framework. Accord-
ingly, we proceed to consider the two additional steps of the
inquiry.
[3] Properly applying California’s choice of law frame-
work requires us to conclude that California law applies in
determining whether the drivers are employees or indepen-
dent contractors. First, Georgia law “is contrary to a funda-
mental policy of California.” Nedlloyd, 834 P.2d at 1152
(emphasis in original). Under Georgia law, if a contract desig-
nates the relationship between the parties to be one of princi-
pal and independent contractor, this designation is presumed
to be true “unless other evidence is introduced to show that
the employer exercised control as to the time, manner and
method of performing the work sufficient to establish an
employer-employee relationship.” Fortune v. Principal Fin.
Grp., Inc., 465 S.E.2d 698, 700 (Ga. Ct. App. 1995). On the
other hand, “under California law, once a plaintiff comes for-
ward with evidence that he provided services for an employer,
the employee has established a prima facie case that the rela-
tionship 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
1374 RUIZ v. AFFINITY LOGISTICS
employee was an independent contractor.” Id. (citation omit-
ted). Thus, the starting point from which the drivers begin
their lawsuit is vastly different depending on whether Califor-
nia or Geogia law applies. In essence, the drivers are at a dis-
advantage under Georgia law because they must overcome the
presumption that they are independent contractors. By con-
trast, under California law, the presumption is that the drivers
are employees and the burden is upon Affinity to demonstrate
that the drivers are independent contractors. As such, Georgia
law directly conflicts with California law.2
[4] Additionally, Georgia law directly conflicts with a fun-
damental California policy that seeks to protect its workers.
The California Supreme Court has developed a multi-factor
test for determining employment status. S.G. Borello & Sons,
Inc. v. Dep’t of Indus. Rel., 769 P.2d 399, 404-07 (Cal. 1989).
The California Supreme Court recognized that this test “must
be applied with deference to the purposes of the protective
legislation” that the worker seeks to enforce. Id. at 406
(emphasis added). “[T]he employee-independent contractor
issue cannot be decided absent consideration of the remedial
statutory purpose” behind the statute the worker seeks to
2
Affinity asserts that any error in applying Georgia law was harmless
because the district court applied the common law factors that California
considers and concluded that Ruiz was an independent contractor. Such an
assertion, however, disregards the district court’s repeated references to
the Georgia presumption of independent contractor status and its general
reliance on Georgia law to resolve the employee-independent contractor
issue. See Ruiz, 697 F. Supp. 2d at 1204 (“Under Georgia law, if the con-
tract designates the relationship between the parties to be one of principal
and independent contractor, this designation is presumed to be true. . . .);
Id. at 1217 (“The court finds that the Georgia test regarding [Affinity’s]
control over the [drivers’] time, manner, and method of work indicates an
independent contractor relationship, especially in light of the presumption
arising from the language in the [Independent Truckman’s Agreement]”)
(emphasis added); Id. at 1220 (“Under Georgia law and the language of
the [Agreements], a presumption of independent contractor arises).
Accordingly, applying Georgia, rather than California law, is not harmless
error.
RUIZ v. AFFINITY LOGISTICS 1375
enforce. Id. at 405. Thus, under Georgia law, while the drivers
are presumptively independent contractors, under California
law, the court must consider protective legislation designed to
aid employees to determine the employee-independent con-
tractor issue. Therefore, application of Georgia law in this
case would contravene the fundamental California public pol-
icy in favor of ensuring worker protections.
[5] Second, California also has a materially greater interest
than Georgia in the outcome of this case. To determine
whether California has a materially greater interest than Geor-
gia, we must analyze the following factors: (1) the place of
contracting; (2) the place of negotiation of the contract; (3)
the place of performance; (4) the location of the subject mat-
ter of the contract; and, (5) the domicile, residence, national-
ity, place of incorporation, and place of business of the
parties. 1-800-Got Junk? LLC v. Superior Court, 116 Cal.
Rptr. 3d 923, 932 n.10 (Cal. Ct. App. 2010) (citing Rest.,
§ 188). Here, the drivers entered into the contract with Affin-
ity 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.
[6] Moreover, Affinity has not produced any evidence to
suggest that Georgia has a material interest in the resolution
of this case. In determining which state has a materially
greater interest, California courts “consider which state, in the
circumstances presented, will suffer greater impairment of its
policies if the other state’s law is applied.” Brack v. Omni
Loan Co., Ltd., 80 Cal. Rptr. 3d 275, 287 (Cal. Ct. App. 2008)
(citation omitted). Affinity has not explained how Georgia
will suffer if California law is used to determine whether the
drivers are employees or independent contractors. See Bridge
1376 RUIZ v. AFFINITY LOGISTICS
Fund Capital Corp. v. Fastbucks Franchise Corp., 622 F.3d
996, 1004 (9th Cir. 2010).
[7] For these reasons, we hold that the parties’ choice of
Georgia law is unenforceable in California. We also hold that
under California’s choice of law framework, the law of Cali-
fornia applies. Accordingly, on remand the district court shall
apply California law to determine whether the drivers are
employees or independent contractors.
This panel retains jurisdiction over any future appeals.
VACATED and REMANDED.