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.
No. 13-55323
United States Court of Appeals, Ninth Circuit.
Filed January 9, 2017
845 F.3d 925
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.
OPINION
GRABER, Circuit Judge:
On remand from the Supreme Court, Encino Motorcars, LLC v. Navarro, — U.S. —, 136 S.Ct. 2117, 195 L.Ed.2d 382 (2016), we must consider anew whether the Fair Labor Standards Act (“FLSA“),
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, 104 S.Ct. 2778, 81 L.Ed.2d 694 (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. 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, 121 S.Ct. 2164, 150 L.Ed.2d 292 (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, 101 S.Ct. 1437, 67 L.Ed.2d 641 (1981). To that end,
In 1966, Congress repealed
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.
In 1970, the Department of Labor issued a regulation defining the terms of
In 1974, Congress amended
(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[.]
In 1978, the Department of Labor issued an opinion letter stating that, contrary to the agency‘s regulation, service advisors were exempt under
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
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, 65 S.Ct. 161, 89 L.Ed. 124 (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.”
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, 100 S.Ct. 311, 62 L.Ed.2d 199 (1979). To determine the common meaning, we consult dictionaries and other sources in use in 1966. Taniguchi v. Kan Pac. Saipan, Ltd., 566 U.S. 560, 132 S.Ct. 1997, 2002-04, 182 L.Ed.2d 903 (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 servicing cars, and mechanics servicing cars. Congress did not intend to exempt service advisors.
A. Statutory Text
1. “Any Salesman, Partsman, or Mechanic”
In 1966, Congress repealed the exemption for all employees of an automobile dealership and replaced it with a limited exemption for only three specific vocations: salesmen, partsmen, and mechanics.
- Automobile body repairmen
- Automobile mechanics
- Automobile painters
- Automobile parts countermen
- Automobile salesmen
- Automobile service advisors
- Automobile upholsterers
- Bookkeeping workers
- Cashiers
- Janitors
- Purchasing agents
- Shipping and receiving clerks
OOH at XIII-XVIII (Table of Contents). Hence, looking only at the statutory exemption‘s list of job titles, service advisors were excluded. Congress’ choice to exempt three—not four—job titles suggests that service advisors are not exempt. If, as Defendant posits, Congress intended to exempt service advisors, it could have included “service advisors” in the statutory list. In sum, the most natural reading of the exemption is that Congress exempted only three commonly understood job titles—automobile salesmen, partsmen, and mechanics—and Congress therefore excluded service advisors.
It is possible to read the exemption‘s list of job titles more broadly, to encompass all persons whose functional roles meet the dictionary definitions of the terms “salesman,” “partsman,” or “mechanic.”4 A service advisor can be considered to sell services. Accordingly, if we read the exemption‘s list of job titles broadly, a service advisor qualifies, in a generic sense, as a “salesman.”5
But even assuming that Congress intended a broad interpretation of the term “salesman,” not every “salesman” is exempt; the statute covers only those who are “primarily engaged in selling or servicing automobiles.”
2. “Primarily Engaged in Selling or Servicing Automobiles”
A service advisor clearly is not a “salesman ... primarily engaged in selling
We turn, then, to whether service advisors are “primarily engaged in ... servicing automobiles.” We begin with the contemporary meaning, in 1966, of the statute‘s terms. “Primarily” means “essentially; mostly; chiefly; principally.”6 “To be engaged in” an activity means “to occupy oneself; become involved” in the activity.7 In the context of an automobile dealership, to “service” means to “sup-ply[] maintenance and repair.”8 Thus, to be “primarily engaged in ... servicing automobiles” means to “occupy oneself principally in maintaining and repairing cars.”
Whether we look to the contemporaneous dictionary definitions or to the terms of the phrase itself, the phrase most naturally encompasses only those who are actually occupied in the repair and maintenance of cars—the partsmen and mechanics who, for example, repair defective brakes or flush the transmission. A service advisor neither performs any repairs nor provides any maintenance. Instead, a service advisor “wait[s] on customers who bring their automobiles in for maintenance and repairs.” OOH at 314. The service advisor “confers with the customer to determine his service needs, and arranges for a mechanic to do the work.”
Defendant suggests that we adopt a more expansive definition, one that encompasses all employees who are “integral” to the customer‘s overall experience of having a car serviced. Supp. Brief for Defendant-Appellee at 14 (filed Aug. 16, 2016). The statutory text is arguably flexible enough to accommodate Defendant‘s suggestion. Using the dictionary definitions most favorable to Defendant, the exemption encompasses those principally “involved” in “supplying maintenance and repair.” If one interprets “supplying” to mean “the overall process of supplying,” then service advisors can be said, in a general sense, to be “primarily engaged in ... servicing automobiles.”
But the fact “[t]hat a definition is broad enough to encompass one sense of a word does not establish that the word is ordinarily understood in that sense.” Taniguchi, 132 S.Ct. at 2003. Defendant‘s interpretation represents a considerable stretch of the ordinary meaning of the statute‘s words. We usually do not say that we primarily engage in an activity that we do not perform personally (and that we may lack the skills to perform). We typically say that we primarily engage in an activity
Defendant nevertheless asserts that we must adopt its broad definition because a narrower interpretation would read “partsman” out of the statute. Defendant contends that, because partsmen do not actually perform the repairs and maintenance, Congress must have intended to include all employees involved in the overall process of providing repair and maintenance services. We are unpersuaded.
The Occupational Outlook Handbook described the position of an “automobile parts counterman” who is employed by automobile dealers. OOH at 312-14. Parts countermen may spend some time selling parts to customers.
Accordingly, Defendant‘s premise is wrong: Partsmen “may repair parts, using equipment such as brake riveting machines, brake drum lathes, valve refacers, and engine head grinders.” OOH at 313. Under any definition, fixing a defective part qualifies as servicing a car. Partsmen also “may use micrometers, calipers, fanbelt measurers, and other devices to measure parts for interchangeability. They may also use coil-condenser testers, spark plug testers, and other types of testing equipment to determine whether parts are defective.”
Our interpretive task could end here, with the words of the statute as commonly understood in 1966. But, to ensure that we have not overlooked a relevant way of reading
3. Principles of Statutory Interpretation
Our interpretation comports with a holistic reading of the statutory exemption. See, e.g., Graham Cty. Soil & Water Conservation Dist. v. U.S. ex rel. Wilson, 559 U.S. 280, 290, 130 S.Ct. 1396, 176 L.Ed.2d 225 (2010) (“Courts have a duty to construe statutes, not isolated provisions.” (internal quotation marks omitted)); see also Sturgeon v. Frost, — U.S. —, 136 S.Ct. 1061, 1070, 194 L.Ed.2d 108 (2016) (“It is a fundamental canon of statutory construction that the words of a statute must be read in their context ...” (internal quotation marks omitted)). Read literally, the exemption encompasses six categories of employees:
| Salesman primarily engaged in selling | Partsman primarily engaged in selling | Mechanic primarily engaged in selling |
| Salesman primarily engaged in servicing | Partsman primarily engaged in servicing | Mechanic primarily engaged in servicing |
Three of the literal categories describe common employees at a dealership: salesmen selling cars, partsmen servicing cars, and mechanics servicing cars. A “salesman ... primarily engaged in selling ... automobiles” neatly describes a car salesman.11 As noted above, many parts countermen likely qualify as “partsm[e]n ... primarily engaged in ... servicing automobiles.” And it is unassailable that most (if not all) automobile mechanics service cars.12 The remaining three literal categories are: a “salesman ... primarily engaged in ... servicing automobiles,” a “partsman ... primarily engaged in selling ... automobiles,” and a “mechanic primarily engaged in selling ... automobiles.” Reading the exemption as a whole, we conclude that Congress did not intend to give meaning to those categories.
Moreover, we know that Congress did not intend for us to give effect to all six literal categories. Read literally, the statute exempts partsmen and mechanics primarily engaged in selling cars, but those categories do not exist in the real world. Neither partsmen nor mechanics occupy themselves regularly, let alone most of the time, with selling cars. By definition, they spend most of their time repairing cars, maintaining cars, repairing parts, determining interchangeability of parts, finding suitable replacement parts in the stockroom, and so on. Congress indisputably did not intend to connect “partsman” and “mechanic” with “selling” automobiles; Congress intended to connect “partsman” and “mechanic” only with “servicing” automobiles.
Putting it all together, the most natural reading of the statute is that Congress intended the gerunds—selling and servicing—to be distributed to their appropriate subjects—salesman, partsman, and mechanic. A salesman sells; a partsman services; and a mechanic services.
At first blush, it may seem odd for Congress to choose phrasing that, read literally, joins nouns with inapplicable verbs. But Congress sometimes makes that choice. See, e.g.,
The most natural reading of these statutes is not that Congress wanted to give legal effect to each literal category. Rather, Congress merely used expedient wording to avoid tedious repetition of surrounding text, with the expectation that courts would read the statutes sensibly. This statute provides a good example. Congress could have separated out the treatment of salesmen from the treatment of partsmen and mechanics. But that would have required repeating the “primarily engaged in” text, the list of vehicles—“automobiles, trailers, trucks, farm implements, or aircraft“—and the clause concerning employment at a dealership—“if employed by a nonmanufacturing establishment primarily engaged in the business of selling such vehicles to ultimate purchasers.”
| | ||
| Partsman primarily engaged in servicing | Mechanic primarily engaged in servicing |
4. Narrow Construction of the FLSA‘s Exemptions
We find Defendant‘s expansive interpretation particularly implausible in light of the longstanding rule that the exemptions in
In recent years, the Supreme Court has acknowledged the rule of narrow construction with respect to the exemptions listed in
B. Legislative History
As we have noted, in 1966, Congress enacted new
The legislative history thus contains repeated, detailed concerns about applying the overtime-compensation requirement to automobile salesmen, partsmen, and mechanics. By contrast, Defendant does not direct us to any portion of the legislative history that reveals a similar concern for
Viewed in light of the clear concerns about overtime compensation for automobile salesmen, partsmen, and mechanics, the legislative history‘s apparent silence on concerns about overtime pay for service advisors strongly suggests that Congress did not intend to exempt service advisors. If Congress meant for the exemption to encompass service advisors, we would expect that concern to be plain from—or at least mentioned in—the legislative record of the 1966 amendments.
In 1974, Congress amended paragraph (b)(10) to its present-day form.
Both the House and the Senate were provided with written summaries of the revised exemption. In the House, Representative Dent‘s report described the overall effect of the new
Provides an overtime exemption for any salesmen primarily engaged in selling automobiles, trailers, trucks, farm implements, boats, or aircraft if employed by a nonmanufacturing establishment primarily engaged in the business of selling such vehicles to ultimate purchasers. Also provides an overtime exemption for partsmen and mechanics of automobile, truck, and farm implement dealerships.
120 Cong. Rec. 8602 (1974) (emphasis added). That summary makes clear that “salesman” applies only to “selling” goods. There is no mention of salesmen primarily engaged in servicing automobiles, even though the literal terms of the exemption could encompass that category. Instead, the summary applied only the verb “selling” to the subject “salesman.”
In the Senate, Senator Williams’ report described the changes between the then-existing exemption and the new
[A]mends section 13(b)(10) relating to salesmen, partsmen, and mechanics by repealing the overtime exemption for partsmen and mechanics in nonmanufacturing establishments primarily engaged in selling trailers; by repealing the overtime exemption for partsmen and mechanics in nonmanufacturing establishments engaged in selling aircraft; and by providing an overtime exemption for salesmen engaged in the sale of boats.
120 Cong. Rec. 8763 (1974). That summary also makes clear that “salesman” applies only to “selling” goods. Reviewing the words of the statute literally, as Defendant urges us to do, the amendment also repealed the exemption for salesmen primarily engaged in servicing trailers and aircraft. But the summary does not mention
So, too, did the National Automobile Dealers Association. During hearings before subcommittees of the House and the Senate, the Association submitted a prepared statement that urged Congress not to change
The primary purpose of minimum wage and overtime legislation is to take care of people who receive substandard salaries. As already noted, automobile salesmen average $10,036 per year, automobile mechanics average $8.00 per hour and partsmen average $3.42 per hour.
As with the 1966 amendments, Defendant has not pointed us to any passage of the legislative history suggesting that Congress intended to exempt service advisors, and we have found none. To the contrary, the only reference to service advisors that we have found suggests that Congress had no concern about overtime compensation for service advisors.20
In sum, the legislative history of the 1966 amendments and of the 1974 amendments reveal clear concerns with applying the overtime-compensation requirement to exactly three categories of a dealership‘s employees: automobile salesmen, partsmen, and mechanics. The extensive legislative record—tens of thousands of pages spanning a decade and a half—contains hardly a mention of service advisors, and the few references that exist display no concern about overtime compensation for service advisors. We are firmly persuaded that Congress did not intend to exempt service advisors.
C. Conclusion
After a thorough, de novo review of congressional intent, we hold that the exemption in
This opinion addresses only Plaintiffs’ federal claim for overtime compensation. For the reasons given in our earlier opinion, id. at 1270 n.2, we affirm the dismissal of all other federal claims, and we reverse the dismissal of the state-law claims.
AFFIRMED in part, REVERSED in part, and REMANDED. Costs on appeal awarded to Plaintiffs-Appellants.