Encino Motorcars, LLC v. Navarro
138 S. Ct. 1134
| SCOTUS | 2018Background
- Respondents (service advisors) sued Encino Motorcars under the FLSA seeking unpaid overtime, alleging they were nonexempt employees.
- The statutory exemption at issue is 29 U.S.C. §213(b)(10)(A): "any salesman, partsman, or mechanic primarily engaged in selling or servicing automobiles…" at covered dealerships.
- Historically, courts and DOJ/ DOL guidance treated service advisors as exempt; a 2011 DOL regulation reversed that position and excluded service advisors.
- District Court held service advisors exempt; Ninth Circuit reversed, finding the text ambiguous and deferring to the 2011 DOL rule (Chevron).
- The Supreme Court in Encino I vacated that deference because the 2011 rule was procedurally defective, remanding the statutory-interpretation question.
- On remand the Ninth Circuit again held service advisors nonexempt; the Supreme Court granted review and reversed, holding service advisors are "salesmen… primarily engaged in… servicing automobiles" and thus exempt.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether service advisors are "salesmen" under §213(b)(10)(A) | Navarro: Service advisors do not sell automobiles; they only sell or arrange services and thus are not the statutory "salesman" | Encino: Ordinary meaning of "salesman" includes those who sell goods or services; service advisors sell auto services | Held: Service advisors are "salesmen" (ordinary meaning includes sellers of services) |
| Whether service advisors are "primarily engaged in… servicing automobiles" | Navarro: "Servicing" means physical repair/maintenance; service advisors do not perform repairs so they are not primarily engaged in servicing | Encino: "Servicing" can mean providing a service; service advisors are integral to the servicing process (sell services, record orders, follow up) | Held: Service advisors are primarily engaged in servicing automobiles (fit either sense) |
| Whether the distributive canon requires matching each noun to a specific gerund (e.g., "salesman"→selling; "partsman/mechanic"→servicing) | Navarro: Congress intended one-to-one matching so exemption excludes salesmen who are primarily engaged in servicing | Encino: "Or" is disjunctive; distributive canon is weak here given three nouns and two gerunds, statutory context, and broad wording | Held: Distributive canon does not control; the text reasonably covers salesmen primarily engaged in servicing |
| Whether FLSA exemptions must be narrowly construed and/or legislative history excludes service advisors | Navarro: Exemptions to FLSA should be narrowly construed; legislative history and contemporaneous job listings omit service advisors | Encino: No textual basis to impose narrow-construction rule; silence in legislative history cannot override clear text; other context favors breadth | Held: Exemptions get a fair reading (not narrow); legislative history and the Handbook do not overcome the text — service advisors are exempt |
Key Cases Cited
- United States v. Woods, 571 U.S. 31 (2013) ("or" is almost always disjunctive)
- Chevron U.S.A., Inc. v. Natural Resources Defense Council, Inc., 467 U.S. 837 (1984) (agency deference framework)
- Ali v. Federal Bureau of Prisons, 552 U.S. 214 (2008) (expansive meaning of "any")
- Brown v. Gardner, 513 U.S. 115 (1994) (repeated terms in a sentence presumptively mean the same thing)
- Sedima, S.P.R.L. v. Imrex Co., 473 U.S. 479 (1985) (legislative silence cannot override clear text)
- TRW Inc. v. Andrews, 534 U.S. 19 (2001) (expressio unius and limits on implying additional exemptions)
- Addison v. Holly Hill Fruit Products, Inc., 322 U.S. 607 (1944) (FLSA exemptions are particular and not to be enlarged by implication)
- Powell v. United States Cartridge Co., 339 U.S. 497 (1950) (narrow and specific exemptions remain exceptions to general FLSA coverage)
- Arnold v. Ben Kanowsky, Inc., 361 U.S. 388 (1960) (FLSA exemptions traditionally construed narrowly)