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Perez v. CRST International, Inc.

United States District Court, N.D. Iowa, Cedar Rapids Division

December 20, 2018

JESUS PEREZ, Plaintiff,


          C.J. Williams United States District Judge

         This matter is before the Court on cross motions for a determination of the applicable body of law. (Docs. 69, 70). The parties timely filed resistances to the opposing party's motion. (Docs. 73, 74; see also Doc. 67 (setting scheduling order deadlines, including the deadlines for briefing the choice of law issues)). For the following reasons, the Court finds that Iowa law is to govern this case.


         Defendant CRST Expedited is a trucking company based out of Cedar Rapids, Iowa, and defendant CRST International is an affiliated company.[1] (Doc. 70-1, at 8). Plaintiff formerly worked as part of a two-person, long-haul truck driving team for defendants, first as an “employee, ” then later as an “independent contractor.” (Doc. 75, at 3, 8-9). Although plaintiff signed an independent contractor agreement with defendants, plaintiff now argues that he was misclassified as an independent contractor and, instead, should have been classified as an employee. (Doc. 75, at 12-13). The independent contractor agreement that plaintiff signed included both a forum selection clause and a choice of law provision. (Doc. 70-2, at 30).

         The operative complaint in this case was initially filed in the Superior Court of California, and plaintiff brought ten claims “on behalf of himself, all others similarly situated, and the general public.”[2] (Doc. 75, at 2). All of the claims are based on California law: 1) misclassification of employee as independent contractor, Cal. Lab. Code § 226.8; 2) failure to pay meal and rest period compensation, Cal. Lab. Code §§ 226.7, 512; 3) failure to pay compensation for all hours worked and minimum wage violations, Cal. Lab. Code §§ 216, 1194, 1194.2, 1197; 4) failure to provide accurate itemized statements, Cal. Lab. Code §§ 226, 226.2; 5) waiting time penalties, Cal. Lab. Code, § 203; 6) failure to pay all wages by the appropriate pay period, Cal. Lab. Code § 204; 7) failure to reimburse business expenses, Cal. Lab. Code § 2802; 8) failure to pay minimum wage and rest and recovery period compensation separate from any piece-rate compensation, Cal. Lab. Code § 226.2; 9) Private Attorneys General Act, Cal. Lab. Code §§ 2698, et. seq.; and 10) unfair business practices, Cal. Bus. & Prof. Code §§ 17200, et. seq. (See Doc. 75).

         Defendants removed this case to the United States District Court for the Central District of California and asserted diversity jurisdiction as the basis for the federal court's jurisdiction. (Doc. 1). Defendants subsequently filed a motion to transfer venue. (Doc. 31). The Central District of California found that the forum selection clause contained in the independent contractor agreement was valid and enforceable and, based on the forum selection clause, transferred the case to this Court. (Doc. 35).

         The parties agree that this case presents the potential for a conflict of laws issue. Specifically, plaintiff contends that California law governs, and defendants contend that Iowa law governs. Plaintiff asserts that the parties are in agreement that the choice of law clause in the independent contractor agreement is inapplicable to this case (Doc. 69, at 11 n.1), and defendants do not argue for application of the choice of law provision (see Doc. 70-1, at 17 (arguing that the choice of law provision indicates that the parties expected Iowa law to govern disputes regarding the parties' contractual relationship, but not arguing for strict application of the choice of law provision)). At the parties' request, the Court set a briefing schedule for the parties to follow in briefing the conflict of laws issue. (Doc. 67). The parties timely filed their briefs in accordance with that schedule.


         To determine which body of law applies to a dispute, a court must apply the conflict of laws rules of the state in which it sits. Klaxon Co. v. Stentor Elec. Mfg. Co., 313 U.S. 487, 496-97 (1941). This holds true even when, pursuant to a valid forum selection clause, a case is transferred to a district other than the one in which it was originally filed. Atl. Marine Constr. Co. v. U.S. Dist. Court for the W. Dist. of Tex., 571 U.S. 49, 64-66 (2013). When confronted with a potential conflict of laws issue, the first step is to determine whether there is a “true conflict” between the different bodies of law that could govern. Phillips v. Marist Soc'y of Wash. Province, 80 F.3d 274, 276 (8th Cir. 1996). If there is no difference in the relevant laws of the different states, the conflict is a false conflict that need not be resolved. Baron v. Ford Motor Co. of Can. Ltd., 965 F.2d 195, 197 (7th Cir. 1992); see also Leonards v. S. Farm Bureau Cas. Ins. Co., 279 F.3d 611, 612 (8th Cir. 2002) (declining to resolve a conflict of laws issue where the conflict was a “false conflict”).

         In tort cases, Iowa applies the Restatement (Second) Conflict of Laws' “most significant relationship” test in considering conflict of laws issues. Veasley v. CRST Int'l, Inc., 553 N.W.2d 896, 897 (Iowa 1996). The Restatement provides as follows:

(1) The rights and liabilities of the parties with respect to an issue in tort are determined by the local law of the state which, with respect to that issue, has the most significant relationship to the occurrence and the parties under the principles stated in § 6.
(2) Contacts to be taken into account in applying the principles of § 6 to determine the law applicable to an issue include:
(a) the place where the injury occurred,
(b) the place where the conduct causing the injury occurred,
(c) the domicil, residence, nationality, place of incorporation and place of business of the parties, and
(d) the place where the relationship, if any, between the parties is centered.
These contacts are to be evaluated according to their relative importance with respect to the particular issue.

         Restatement (Second) of Conflict of Laws § 145 (Am. Law. Inst. 2018). Section 6 of the Restatement, as referred to in Section 145, reads as follows:

(1) A court, subject to constitutional restrictions, will follow a statutory directive of its own state on choice of law.
(2) When there is no such directive, the factors relevant to the choice of the applicable rule of law include
(a) the needs of the interstate and international systems,
(b) the relevant policies of the forum,
(c) the relevant policies of other interested states and the relative interests of those states in the determination of the particular issue,
(d) the protection of justified expectations,
(e) the basic policies underlying the particular field ...

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