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Navarro v. Encino Motorcars, LLC

United States Court of Appeals, Ninth Circuit

March 24, 2015

HECTOR NAVARRO; ANTHONY PINKINS; KEVIN MALONE; and REUBEN CASTRO, Plaintiffs-Appellants,
v.
ENCINO MOTORCARS, LLC, erroneously sued as Mercedes Benz of Encino, a corporation, Defendant-Appellee

Argued and Submitted, Pasadena, California: February 11, 2015.

Page 1268

Appeal from the United States District Court for the Central District of California. D.C. No. 2:12-cv-08051-RGK-MRW. R. Gary Klausner, District Judge, Presiding.

Dismissal of claims 3, 5, and 7 AFFIRMED; dismissal of claim 1 and the supplemental state-law claims REVERSED; case REMANDED. Costs on appeal awarded to Plaintiffs.

SUMMARY[**]

Labor Law

Affirming in part and reversing the dismissal of an action under the Fair Labor Standards Act, the panel held that " service advisors" who worked at a car dealership did not fall within a statutory exemption under 29 U.S.C. § 213(b)(10)(A) from the Act's overtime pay requirements for " any salesman, partsman, or mechanic primarily engaged in selling or servicing automobiles."

Disagreeing with the Fourth and Fifth Circuits, the panel deferred to the United States Department of Labor's regulatory definitions, set out at 29 C.F.R. § 779.372(c), because the statute was ambiguous, and under the Chevron standard, the regulation was reasonable.

The panel reversed the dismissal of the FLSA overtime claim and supplemental state-law claims. It affirmed the dismissal of other federal claims not challenged on appeal.

S. Keven Steinberg (argued), Fink & Steinberg, Los Angeles, California, for Plaintiffs-Appellants.

Todd B. Scherwin (argued), Karl R. Lindegren, and Colin P. Calvert, Fisher & Phillips LLP, Irvine, California, for Defendant-Appellee.

Before: Susan P. Graber and Kim McLane Wardlaw, Circuit Judges, and James C. Mahan,[*] District Judge. Opinion by Judge Graber.

OPINION

Page 1269

GRABER, Circuit Judge:

We consider here a question of first impression for our circuit: Are " service advisors" who work at a car dealership exempt from the overtime pay requirements of the Fair Labor Standards Act (FLSA) of 1938, 29 U.S.C. § § 201--219, under 29 U.S.C. § 213(b)(10)(A), which exempts " any salesman, partsman, or mechanic primarily engaged in selling or servicing automobiles" ? Reviewing de novo, Fortyune v. City of Lomita, 766 F.3d 1098, 1101 (9th Cir. 2014), petition for cert. filed, U.S.L.W. (U.S. Jan. 26, 2015) (No. 14-920), we answer that question " no" and, accordingly, reverse the district court's holding to the contrary.

FACTUAL AND PROCEDURAL HISTORY

Defendant Encino Motorcars, LLC, sells and services new and used Mercedes-Benz automobiles.[1] Defendant employed or employs Plaintiffs Hector Navarro, Mike Shirinian, Anthony Pinkins, Kevin Malone, and Reuben Castro as " service advisors." The complaint alleges:

The job duties and obligations of . . . Service Advisors . . . are to meet and greet Mercedes Benz owners as they enter the service area of the dealership and then to evaluate the service and/or repair needs of the vehicle owner in light of complaints given them by these

Page 1270

vehicle owners. Upon evaluation of the service needs of the vehicle, the Service Advisors . . . then solicit and suggest[] that certain service[s] be conducted on the vehicle to remedy the complaints of the vehicle owner by conducting certain repairs at [Defendant's dealership] and through [Defendant's] own mechanics. The Service Advisors . . . are also duty bound and obligated by [Defendant] to solicit and suggest that supplemental service be performed on the vehicle above and beyond that which is required in response to the initial complaints of the vehicle owner. The Service Advisors . . . then write up an estimate for the repairs and services and provide[] that to the vehicle owner. The vehicle is then taken to the mechanics at [Defendant] for repair and maintenance.
As required by [Defendant] and oftentimes while the vehicle is with [Defendant's] mechanics, the Service Advisors . . . will then call the vehicle owner and solicit and suggest that additional work be performed on the vehicle at additional cost.

Defendant pays service advisors on a commission basis only; Plaintiffs receive neither an ...


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