Hector Navarro; Mike Shirinian; Anthony Pinkins; Kevin Malone; Reuben Castro, Plaintiffs-Appellants,
v.
Encino Motorcars, LLC, erroneously sued as Mercedes Benz of Encino, Defendant-Appellee.
On
Remand from the Supreme Court of the United States D.C. No.
2:12-cv-08051-RGK-MRW
S.
Keven Steinberg (argued), Thompson Coe & O'Meara, Los
Angeles, California; Nancy Bregstein Gordon, James A.
Feldman, and Stephanos Bibas, University of Pennsylvania Law
School Supreme Court Clinic, Philadelphia, Pennsylvania; for
Plaintiffs-Appellants.
Todd
B. Scherwin (argued), Karl R. Lindegren, and Colin P.
Calvert, Fisher & Phillips LLP, Irvine, California; Wendy
McGuire Coats, Fisher & Phillips LLP, San Francisco,
California; for Defendant-Appellee.
Felicia R. Reid, Hirschfeld Kraemer LLP, San Francisco,
California; Douglas I. Greenhaus, National Automobile Dealers
Association, McLean, Virginia; for Amici Curiae National
Automobile Dealers Association and State Automobile Dealers
Associations for Alaska, Arizona, California, Hawaii, Idaho,
Montana, Nevada, Oregon, and Washington State.
Melissa A. Murphy and Laura M. Moskowitz, Senior Attorneys;
Paul L. Frieden, Counsel for Appellate Litigation; Jennifer
S. Brand, Associate Solicitor; M. Patricia Smith, Solicitor
of Labor; Office of the Solicitor, United States Department
of Labor, Washington, D.C.; for Amicus Curiae Secretary of
Labor.
Before: Susan P. Graber and Kim McLane Wardlaw, Circuit
Judges, and James C. Mahan, [*] District Judge.
SUMMARY[**]
Labor
Law
On
remand from the Supreme Court, the panel affirmed in part and
reversed in part the district court's dismissal of an
action brought under the Fair Labor Standards Act against an
automobile dealership.
Reversing
the dismissal of a federal claim for overtime compensation,
and disagreeing with the Fourth and Fifth Circuits, the panel
held that service advisors do not fall within an exemption
from the FLSA's overtime-compensation requirement for
"any salesman, partsman, or mechanic primarily engaged
in . . . servicing automobiles." Assuming without
deciding that it must give no weight to the Secretary of
Labor's interpretation, the panel interpreted 29 U.S.C.
§ 213(b)(10)(A) in the first instance.
For the
reasons given in an earlier opinion, the panel affirmed the
dismissal of plaintiffs' other federal claims and
reversed the dismissal of state-law claims. The panel
remanded the case to the district court.
OPINION
GRABER, Circuit Judge.
On
remand from the Supreme Court, Encino Motorcars, LLC v.
Navarro, 136 S.Ct. 2117 (2016), we must consider anew
whether the Fair Labor Standards Act ("FLSA"), 29
U.S.C. §§ 201-219, requires automobile dealerships
to pay overtime compensation to service advisors. The
district court held that service advisors fall within the
exemption from the overtime-compensation requirement for
"any salesman, partsman, or mechanic primarily engaged
in selling or servicing automobiles, " id.
§ 213(b)(10)(A), on the ground that a service advisor is
a "salesman . . . primarily engaged in . . . servicing
automobiles." Because we conclude that Congress did not
intend for the exemption to encompass service advisors, we
reverse and remand for further proceedings.
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."
Plaintiffs greet Mercedes-Benz owners as they arrive in the
service area of the dealership; listen to customers'
concerns about their cars; evaluate the repair and
maintenance needs of the cars; suggest services to be
performed to remedy the customers' concerns; suggest
supplemental services beyond those that will remedy the
customers' concerns; write up estimates; and, often,
follow up with the customer while the repair work is underway
to suggest further repairs and maintenance.
Plaintiffs
allege that Defendant has violated the FLSA by failing to pay
them overtime wages. The district court dismissed the claim,
and Plaintiffs timely appealed.
We
reversed. Navarro v. Encino Motorcars, LLC, 780 F.3d
1267 (9th Cir. 2015). We held that a regulation promulgated
by the Department of Labor in 2011 reasonably interpreted the
statutory exemption not to encompass service advisors.
Id. at 1271-77. Applying the principles of agency
deference described in Chevron U.S.A. Inc. v. Nat. Res.
Def. Council, Inc., 467 U.S. 837 (1984), we deferred to
the agency's interpretation. Navarro, 780 F.3d
at 1277.
The
Supreme Court granted certiorari and held that we erred by
applying the Chevron framework. Encino
Motorcars, 136 S.Ct. at 2124-27. The Court concluded
that
§ 213(b)(10)(A) must be construed without placing
controlling weight on the Department's 2011 regulation.
Because the decision below relied on Chevron
deference to this regulation, it is appropriate to remand for
the Court of Appeals to interpret the statute in the first
instance. Cf. United States v. Mead Corp, 533 U.S.
218, 238-39 (2001).
Id. at 2127 (citation format altered).
DISCUSSION
Congress
enacted the FLSA in 1938 to "protect all covered workers
from substandard wages and oppressive working hours."
Barrentine v. Ark.-Best Freight Sys., Inc., 450 U.S.
728, 739 (1981). To that end, 29 U.S.C. § 206 imposes a
minimum wage requirement, and § 207 requires the payment
of overtime compensation for hours exceeding a standard
workweek. But not all workers are covered by the Act's
provisions. Subsection 213(a) lists categories of employees
who are exempt from both the minimum-wage and
overtime-compensation requirements. Subsection 213(b) lists
categories of employees who are exempt from the
overtime-compensation requirement only.
In
1961, Congress amended § 213(a) to exempt from both the
minimum-wage and overtime-compensation requirements all
employees of automobile dealerships. Fair Labor Standards
Amendments of 1961, Pub. L. No. 87-30, § 9, 75 Stat. 65,
71. New paragraph (a)(19) exempted "any employee of a
retail or service establishment which is primarily engaged in
the business of selling automobiles, trucks, or farm
implements." 29 U.S.C. § 213(a)(19) (1961); 75
Stat. at 71.
In
1966, Congress repealed § 213(a)(19) but added paragraph
(b)(10). Fair Labor Standards Amendments of 1966, Pub. L. No.
89-601, § 208, 80 Stat. 830, 836. The new provision
exempted only the following employees from the
overtime-compensation requirement:
any salesman, partsman, or mechanic primarily engaged in
selling or servicing automobiles, trailers, trucks, farm
implements, or aircraft if employed by a nonmanufacturing
establishment primarily engaged in the business of selling
such vehicles to ultimate purchasers.
29 U.S.C. § 213(b)(10) (1966). In effect, unless a
separate exemption applied, the 1966 amendments narrowed the
1961 exemption and required dealerships to pay a minimum wage
to all employees and to pay overtime compensation to all
employees except those listed in § 213(b)(10).
In
1970, the Department of Labor issued a regulation defining
the terms of § 213(b)(10). 29 C.F.R. § 779.372. The
agency defined "salesman" to encompass only those
salesmen who sold vehicles. Id. §
779.372(c)(1). Under the agency's interpretation, the
exemption did not encompass service advisors. Id.;
see also id. § 779.372(c)(4) (1970).
In
1974, Congress amended § 213(b)(10) to its present-day
form to exclude from the overtime-compensation requirement
the following employees:
(A) any salesman, partsman, or mechanic primarily engaged in
selling or servicing automobiles, trucks, or farm implements,
if he is employed by a nonmanufacturing establishment
primarily engaged in the business of selling such vehicles or
implements to ultimate purchasers; or
(B) any salesman primarily engaged in selling trailers,
boats, or aircraft, if he is employed by a nonmanufacturing
establishment primarily engaged in the business of selling
trailers, boats, or aircraft to ultimate purchasers[.]
29 U.S.C. § 213(b)(10) (2016); Fair Labor Standards
Amendments of 1974, Pub. L. No. 93-259, § 14, 88 Stat.
55, 61. The 1974 amendments had no effect on the text
pertinent to car dealerships-the same exemptions as in 1966
continued to apply.
In
1978, the Department of Labor issued an opinion letter
stating that, contrary to the agency's regulation,
service advisors were exempt under 29 U.S.C. §
213(b)(10)(A). Dep't of Labor, Wage & Hour Div.,
Opinion Letter No. 1520 (WH-467), 1978 WL 51403 (July 28,
1978). In 1987, the agency amended its Field Operations
Handbook along the same lines, stating in an Insert that the
agency would "no longer deny the [overtime]
exemption" for service advisors. Dep't of Labor,
Wage & Hour Div., Field Operations Handbook, Insert No.
1757, 24L04-4(k) (Oct. 20, 1987).
In
2008, the Department of Labor proposed to amend its formal
regulation-which had remained the same since 1970 despite the
agency's shift in position-to conform to its practice of
allowing the exemption for service advisors. Updating
Regulations Issued Under the Fair Labor Standards Act, 73
Fed. Reg. 43, 654-01 (July 28, 2008). After receiving public
comments, however, the agency issued a final rule in 2011
that reaffirmed the agency's original position: service
advisors are not exempt under 29 U.S.C. § 213(b)(10)(A).
76 Fed. Reg. 18, 832-01 (Apr. 5, 2011).[2]
The
parties dispute whether we owe deference to the Secretary of
Labor's interpretation that the statute does not exempt
service advisors. Plaintiffs argue that deference under
Skidmore v. Swift & Co., 323 U.S. 134 (1944), is
appropriate. Defendant urges us to give no weight to the
agency's interpretation. We decline to resolve this
dispute because, as we explain below, the answer does not
affect the outcome. Instead, we assume without deciding that
we must give no weight to the agency's interpretation and
the regulation, and we "interpret the statute in the
first instance."[3]Encino Motorcars, 136 S.Ct. at
2127.
The
FLSA exempts from the overtime-compensation requirement
"any salesman, partsman, or mechanic primarily engaged
in selling or servicing automobiles, trucks, or farm
implements, if he is employed by a nonmanufacturing
establishment primarily engaged in the business of selling
such vehicles or implements to ultimate purchasers." 29
U.S.C. § 213(b)(10)(A). Defendant is an automobile
dealership within the meaning of the exemption. We limit our
discussion to the exemption's coverage of employees of an
automobile dealership. Thus, the relevant statutory passage
is: "any salesman, partsman, or mechanic primarily
engaged in selling or servicing automobiles."
Unless
defined by the FLSA, we consider the "ordinary,
contemporary, common meaning" of the terms at the time
that Congress added the relevant clause-1966. Perrin v.
United States, 444 U.S. 37, 42 (1979). To determine the
common meaning, we consult dictionaries and other sources in
use in 1966. Taniguchi v. Kan.Pac. Saipan, Ltd., 132
S.Ct. 1997, 2002-04 (2012). For an understanding of job
descriptions, we look to the 1966-1967 edition of the
Department of Labor, Bureau of Statistics, Occupational
Outlook Handbook ("OOH"). See, e.g.,
United States v. Charles, 722 F.3d 1319, 1324 (11th
Cir. 2013) (consulting the Occupational Outlook Handbook).
We
proceed as follows. First, we conclude that, under the most
natural reading of the statute, Congress did not intend to
exempt service advisors. Second, even if the text were
ambiguous, the legislative history confirms that Congress
intended to exempt only salesmen selling cars, partsmen
...