Walton v. Greenbrier Ford, Inc ( 2004 )

PUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
THEADORE CARL WALTON, JR., 
Plaintiff-Appellant,
v.
 No. 02-2432
GREENBRIER FORD, INCORPORATED, t/a
Cavalier Ford,
Defendant-Appellee.

Appeal from the United States District Court
for the Eastern District of Virginia, at Norfolk.
Raymond A. Jackson, District Judge.
(CA-02-55-2)
Argued: January 23, 2004
Decided: May 28, 2004
Before WIDENER, MOTZ, and GREGORY, Circuit Judges.
Affirmed by published opinion. Judge Gregory wrote the opinion, in
which Judge Widener and Judge Motz joined.
COUNSEL
ARGUED: Carl W. Isbrandtsen, Virginia Beach, Virginia, for Appel-
lant. Amy Jacqueline Inge, DURRETTE BRADSHAW, P.L.C., for
Appellee.
2 WALTON v. GREENBRIER FORD
OPINION
GREGORY, Circuit Judge:
Theadore Carl Walton, Jr., appeals from a district court order
granting summary judgment for his former employer, Greenbrier
Ford, Inc., trading as "Cavalier Ford," on his Fair Labor Standards
Act (FLSA), 29 U.S.C. § 201 et seq., claim for overtime pay and his
state law breach of contract claim. We find that the district court cor-
rectly determined that Walton fell within FLSA’s automobile dealer-
ship workers exemption, 29 U.S.C. § 213(b)(10)(A), and hold Walton
is not entitled to overtime pay. Additionally, Walton has failed to
establish that he had an enforceable employment contract with Cava-
lier Ford, thus we conclude that he was an at-will employee, termina-
ble subject to reasonable notice. We affirm the district court on both
issues presented.
I.
Walton is a former federal employee whose work-related injuries
forced him to discontinue his employment at Portsmouth Naval Hos-
pital. Thereafter, the federal Office of Workers’ Compensation Pro-
grams ("OWCP") helped Walton obtain vocational rehabilitation and
training, and ultimately alternative employment at Cavalier Ford, an
automobile dealership. On April 18, 2000, OWCP and Cavalier
entered into an agreement, whereby OWCP would reimburse Cavalier
for a percentage of Walton’s wages. The agreement stated that Wal-
ton would work as a "Full-time Service Advisor beginning on April
13, 2000" and would be paid $40,000 per year. The agreement then
detailed how much OWCP would reimburse Cavalier over a three-
year period, and stated the re-employment subsidy would not exceed
such period.
At the beginning of his employment, Walton and Cavalier Ford
Service Director Jerry Banks signed a pay plan agreement stating that
Walton would be paid $231.00 per week plus a commission of five
percent of parts and labor gross computed individually on repair
orders completed by Walton as a service advisor. The agreement
guaranteed that Walton would receive $3333.33 per month ($40,000
per year), or his salary plus commission, whichever sum was greater.
WALTON v. GREENBRIER FORD 3
Walton began his employment as a "Service Advisor" managing
the Quick Lane Department, which was a new quick service operation
at the dealership. Walton was to greet customers, listen to their con-
cerns about their cars, write repair orders, follow-up on repairs, and
keep customers informed about maintenance. Walton would also sug-
gest to customers additional services that needed to be preformed and
would prepare work orders. Walton worked in those capacities with
Quick Lane from April 2000 to June 2001. In June 2001, he began
training as a Service Advisor for all types of repair.1 Walton testified
that his duties were not "a whole lot . . . differen[t]" in this new capac-
ity, and his job description did not change.
On August 8, 2001, Walton gave Cavalier a doctor’s note stating
he could not work more than eight hours per day. On August 16,
2001, Cavalier informed Walton that because he could no longer
work the hours required of service advisors, the company would
move him to a greeter position, an eight-hour per day job, paying
eight dollars per hour. Walton declined this position and ceased work-
ing at Cavalier.
Walton then filed this lawsuit, asserting that under FLSA, he was
owed compensation for 888.75 overtime hours, and that Cavalier Ford
breached a three-year employment contract. The district court granted
summary judgment for defendant on both claims. This appeal fol-
lowed.
II.
We review the district court’s grant of summary judgment de novo.
Bass v. E.I. DuPont de Nemours & Co., 324 F.3d 761, 766 (4th Cir.
2003). Summary judgment is warranted when there are no genuine
issues of material fact in dispute and the moving party is entitled to
judgment as a matter of law. Fed. R. Civ. P. 56(c); Celotex Corp. v.
Catrett, 477 U.S. 317, 322 (1986). We view the evidence in the light
most favorable to the non-movant. Anderson v. Liberty Lobby, Inc.,
477 U.S. 242, 255 (1986).
1
Walton remained in this position until his employment terminated in
August 2001.
4 WALTON v. GREENBRIER FORD
III.
Walton argues that he is entitled to overtime pay under FLSA for
approximately 888.75 hours worked. FLSA sets forth maximum work
hour limitations, requiring that an employer pay overtime at a rate of
one and one half times an employee’s regular hourly rate for all hours
worked in excess of forty per week. 29 U.S.C. § 207(a)(1); see also
Monahan v. County of Chesterfield, 95 F.3d 1263, 1267 (4th Cir.
1996). FLSA contains an exception from § 207’s overtime pay
requirement for salesmen and other employees working for automo-
bile dealerships. 29 U.S.C. § 213(b)(10)(A).
Section 213(b)(10)(A) provides that § 207 does not apply to "any
salesman, partsman, or mechanic primarily engaged in selling or ser-
vicing 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 . . . ."
This exemption, like other FLSA exemptions, is to be narrowly con-
strued. See Auer v. Robbins, 519 U.S. 452, 462 (1997). The determi-
nation of whether an employee falls within the scope of a FLSA
exemption is ultimately a legal question. See Icicle Seafoods, Inc. v.
Worthington, 475 U.S. 709, 713-14 (1986).
The Fourth Circuit has not had the opportunity to consider whether
"service advisors" or "service writers" like Walton fall within the exemp-
tion.2 In holding that Walton fit the exemption, the district court pri-
marily relied on Brennan v. Deel Motors, Inc., 475 F.2d 1095 (5th
Cir. 1973), the only circuit court authority on point. In Deel, the Fifth
Circuit held that employees designated as "service writers," "service
advisors," and "service salesmen" fell within the FLSA exemption. Id.
at 1097. Factually, Deel is nearly on all-fours with Walton’s case. The
service individuals worked with customers to coordinate the sale of
goods, services and mechanical skills provided by the dealership. Id.
at 1096. The service employees referred vehicles to an appropriate
department for repairs or additional equipment, and thereafter, the
2
In Brennan v. Bill Kirk’s Volkswagen, Inc., 497 F.2d 892, 893-94 (4th
Cir. 1974), we did, however, consider and reject an automobile dealer’s
claim that one of its employees, a "used car reconditioner," who "buff-
[ed], paint[ed], and wash[ed] used cars," was exempt under § 213(b)(10).
WALTON v. GREENBRIER FORD 5
employees monitored the work and determined whether satisfactory
work had been completed. Id. The individuals did not receive over-
time, but were compensated by a weekly wage as well as a percentage
commission on every service order they wrote. Id. In all respects, the
service employees in Deel were substantially similarly situated to
Walton.
The Fifth Circuit held that the advisors were exempt from FLSA’s
overtime requirement because they were
functionally similar to the mechanics and parts-men who
service the automobiles. All three work as an integrated
unit, performing the services necessary for the maintenance
of the customer’s automobile. The mechanic and parts-man
provide a specialized service with the service salesman
coordinating these specialties. Each of these service employ-
ees receive a substantial part of their remuneration from
commissions and therefore are more concerned with their
total work product than with the hours performed.
Id. at 1097. The court further reasoned that it could not assume that
Congress intended to treat employees with functionally similar posi-
tions differently, "especially when the exemption by its own terms
refers to ‘any salesman . . . engaged in selling or servicing automo-
biles . . .’ This is exactly what a service salesman does." Id. at 1097-
98 (quoting 29 U.S.C. § 213(b)(10)).3 Similarly, in the instant case,
the district court held that:
3
Despite Walton’s contentions, we could find no contrary authority to
Deel, published or unpublished. In a series of unpublished decisions
other courts have followed Deel. See Yenney v. Cass County Motors, No.
76-0-294, 1977 WL 1678, at *2-3 (D. Neb. Feb. 8, 1977) (holding "Parts
and Service Manager" with same job functions as those considered in
Deel who received commissions in addition to salary fit FLSA exemp-
tion); Brennan v. Import Volkswagen, Inc., No. W-4982, 1975 WL 1248,
at *1-2 (D. Kan. Oct. 21, 1975) (holding employees known as "service
advisers," "service writers," and "service salesmen" fit the exemption
even where their "primary source of income" was their weekly salary);
Brennan v. North Bros. Ford, Inc., No. 40344, 1975 WL 1074, at *2-3
(E.D. Mich. Apr. 17, 1975) (holding service salesman who received 3/4
6 WALTON v. GREENBRIER FORD
[A] service writer/advisor [in Walton’s position], as a matter
of law, is functionally similar to a salesman, partsman or
mechanic or service salesman as defined in Deel Motors
[citation] for purposes of 29 U.S.C. § 213(b)(10). Accord-
ingly, the Court concludes as a matter of law, that Walton’s
position as a service writer/advisor is exempt from the
FLSA premium overtime pay requirement.
Dist. Ct. slip op. at 17.
Walton, however, argues that the district court erred in following
Deel and holding that he was an exempt employee. Walton contends
that Deel is contrary to the Secretary of Labor’s regulations on FLSA.
The FLSA regulations provide:
Employees variously described as service manager, service
writer, service advisor, or service salesmen who are not
themselves primarily engaged4 in the work of a salesman,
partsman, or mechanic . . . are not exempt under [29 U.S.C.
§ 213(b)(10)]. This is true despite the fact that such an
employee’s principal function may be diagnosing the
mechanical condition of vehicles brought in for repair, writ-
ing up work orders for repairs authorized by the customer,
assigning the work to various employees and directing and
checking on the work of mechanics.
29 C.F.R. § 779.372(c)(4). Walton argues that under the regulation he
was not a "salesman" because the regulations define that term as "an
of one percent to 1 1/4 percent commission in addition to salary and sold
parts and services to dealership customers fit the exemption), aff’d sub
nom., Dunlop v. North Bros. Ford, Inc., 529 F.2d 524 (6th Cir. 1976);
see also Viart v. Bull Motors, Inc., 149 F. Supp. 2d 1346, 1350-51 (S.D.
Fla. 2001) (quoting Deel with approval); Dayton v. Coral Oldsmobile,
Inc., 684 F. Supp. 290, 292 (S.D. Fla. 1988) (same).
4
The regulation explains that "primarily engaged" means "the major
part or over 50 percent of the salesman’s, partsman’s, or mechanic’s time
must be spent in selling or servicing the enumerated vehicles." Id.
§ 779.372(d).
 WALTON v. GREENBRIER FORD 7
employee who is employed for the purpose of and is primarily
engaged in making sales or obtaining orders or contracts for sale of
the vehicles." Id. § 779.372(c)(1). Walton asserts that rather than
properly applying that definition, the Fifth Circuit in Deel and district
court in this case erroneously "created and added a new category of
employees . . . called ‘service salesmen’" under the FLSA exemption.
We find Walton’s argument unavailing and conclude that the dis-
trict court created no such new category of employees. While we
decline to apply the "functionally similar" analysis in which both the
Fifth Circuit and the district court engaged because their "functionally
similar" inquiry cannot be squared with FLSA’s plain statutory and
regulatory language, we conclude that the Secretary’s definition of
"salesman" is flatly contrary to the statutory text, and Walton’s job
duties demonstrate that he was an overtime-exempt employee under
FLSA.
In interpreting the validity of agency regulations, our standard of
review depends upon whether such regulation is legislative or inter-
pretive. Pelissero v. Thompson, 170 F.3d 442, 446 (4th Cir. 1999).
Legislative regulations are those in which "Congress has explicitly
left a gap for the agency to fill, [thus] there is an express delegation
of authority to the agency to elucidate a specific provision of the stat-
ute by regulation." Chevron U.S.A., Inc. v. Natural Res. Def. Council,
Inc., 467 U.S. 837, 843-44 (1984). We give such regulations "control-
ling weight unless they are arbitrary, capricious, or manifestly con-
trary to the statute." Id. at 844. An interpretive regulation serves to
"clarify ambiguous terms found in the statute or explain how a provi-
sion operates." Pelissero, 170 F.3d at 446. We accord those regula-
tions "considerable weight," Chevron, 467 U.S. at 844, and will
uphold them "if they implement the congressional mandate in a rea-
sonable manner." Pelissero, 170 F.3d at 446 (citing Nat’l Muffler
Dealers Ass’n, Inc. v. United States, 440 U.S. 472, 476 (1979)); see
also Skidmore v. Swift & Co., 323 U.S. 134, 140 (1944) (recognizing
as a general rule, the Department of Labor’s interpretative regulations
under FLSA "constitute a body of experience and informed judgment
to which courts . . . may properly resort for guidance").
Here, we find that 29 C.F.R. § 779.372(c)(1) is interpretative as it
construes the statutory term "salesman." We hold, however, that the
8 WALTON v. GREENBRIER FORD
Secretary’s interpretation of that term is unreasonable, as it is an
impermissibly restrictive construction of the statute. FLSA itself
exempts any salesman "primarily engaged in selling or servicing
automobiles" from the overtime requirements. 29 U.S.C.
§ 213(b)(10)(A) (emphasis added). However, the regulation conflicts
with FLSA’s statutory mandate in that it restricts the definition of
"salesman" to those employees "primarily engaged in making sales or
obtaining orders or contracts for sales of the vehicles." 29 C.F.R.
§ 779.372(c)(1) (emphasis added). Because that restrictive regulatory
definition of "salesman" unreasonably implements the congressional
mandate, we reject the Secretary’s interpretation in 29 C.F.R.
§ 779.372(c)(1).
Having rejected the Secretary’s interpretation of "salesman," we
must determine whether Walton comes within the statutory exemption
as "any salesman . . . primarily engaged in . . . servicing automobiles."
29 U.S.C. § 213(b)(10)(A). The district court recognized that the
undisputed facts showed that Walton promoted and attempted to sell
goods and services provided by Cavalier, openly solicited business by
telephone, and his hours were irregular, based on the needs of Cava-
lier’s customers. Indeed, the undisputed facts of Walton’s employ-
ment demonstrate that he was the dealer’s "first line . . . service sales
representative," and his job required the "satisfaction of customer and
vehicle related problems, [and] meeting pre-determined service sales
objectives." Dist. Ct. slip op. at 12 (J.A. 604) (emphasis removed).
Specifically, Walton was required to interact with customers to deter-
mine their reasons for seeking service, and based on such interactions,
he was to "[o]ffer logical diagnostic services or repairs to satisfy cus-
tomer’s concerns . . . .[,] [p]rovide accurate estimates for all the ser-
vices or repairs recommended . . . . [and] [s]ell the proper repairs
and/or services responsive to customer’s perceived needs." Id.
(emphasis removed) (citation omitted). Despite these facts, Walton
largely asks us to find that he was a non-exempt employee by placing
great weight on his job title, rather than the duties he actually per-
formed under that title. Cf. Ale v. Tenn. Valley Auth., 269 F.3d 680,
688-89 (6th Cir. 2001) (stating "courts must focus on the actual activ-
ities of the employee in order [to] determine whether or not he is
exempt from FLSA’s overtime regulations"). However, based on the
above-detailed facts in this case regarding Walton’s duties, we hold
that Walton was indeed a salesman under the statute.
WALTON v. GREENBRIER FORD 9
Finally, we conclude that as a salesman, Walton was primarily
engaged in servicing automobiles. The facts make clear that Walton
was an integral part of the dealership’s servicing of automobiles. For
example, the district court recognized that Walton had a "key role" in
the dealership’s service operations, and that of Walton’s twelve spe-
cific job responsibilities, "at least half of them are service and sales
related functions." Dist. Ct. slip op. at 12-13. See also id. at 13 ("[A]
service writer/advisor wears many hats, and during any work day he
is part salesman, partsman and mechanic."). Based on those uncon-
tested facts, the court held that Walton’s position as a service writ-
er/advisor was exempt from the FLSA premium overtime pay
requirement. See Dist. Ct. slip op. at 17. Given the absence of genuine
issues of material fact, we hold that the district court correctly deter-
mined, as a matter of law, that Walton’s job activities exempted him
from FLSA’s overtime pay provisions. See Icicle Seafoods, 475 U.S.
at 714 (stating "[t]he question of how the [employees] spent their
working time . . . is a question of fact. The question whether their par-
ticular activities excluded them from the overtime benefits of the
FLSA is a question of law . . . ."). Accordingly, we affirm the district
court’s grant of summary judgment on Walton’s FLSA claim because
he was, for the purposes of 29 U.S.C. § 213(10)(A), a "salesman,
partsman, or mechanic primarily engaged in . . . servicing automo-
biles."
IV.
We now turn to Walton’s arguments that the district court erred in
holding that Walton did not have an enforceable three-year employ-
ment contract with Cavalier. Virginia remains an employment-at-will
jurisdiction. Bailey v. Scott-Gallagher, Inc., 480 S.E.2d 502, 503-04
(Va. 1997). The employment relationship is presumed to be termina-
ble by either party given reasonable notice. Id. Furthermore, contracts
that cannot be performed within one year and those terminable only
for cause must comply with the statute of frauds. Falls v. Va. State
Bar, 397 S.E.2d 671, 672-73 (Va. 1990).
First, Walton argues that the April 18, 2000 agreement between
OWCP and Cavalier constitutes an employment contract. The district
court correctly determined the April 18, 2000 letter neither offers nor
purports to create a three-year employment contract. The first para-
10 WALTON v. GREENBRIER FORD
graph explicitly states: "This letter constitutes the agreement between
Cavalier Ford and the U.S. Department of Labor, [OWCP], explain-
ing the terms and procedures whereby OWCP will reimburse you for
wages paid to [Walton]." Nowhere is a promise of employment
extended to Walton for any definite term. There is no evidence sug-
gesting that the agreement was intended as an employment agree-
ment.
Next, Walton attempts to rely on his employee policy manual as
establishing a definite term of employment. The manual states that
Cavalier employees are "assured of steady employment as long as
[they] adhere to [Cavalier’s] policies and personnel standards, and as
long as [they] are producing at a satisfactory level (barring of course,
economic or other conditions over which we have no control." This
provision falls far from providing a definite term of employment, and
the proviso evidences that this is an employment at-will situation.
Moreover, the manual states: "This manual does not impose contrac-
tual obligations upon either the company or its employees." A clear
disclaimer in an employee manual effectively negates any other pro-
visions or attempts to rebut the at-will presumption. Nguyen v. CNA
Corp., 44 F.3d 234, 239 (4th Cir. 1995) (applying Virginia law);
accord Graham v. Cent. Fidelity Bank, 428 S.E.2d 916, 918 (Va.
1993). Finally, Walton attempts to rely on alleged oral promises that
Cavalier made regarding a three-year employment contract. The dis-
trict court correctly rejected Walton’s argument based on the Virginia
statute of frauds. See Va. Code § 11-2.5
V.
For the foregoing reasons, we affirm the district court’s entry of
summary judgment for Cavalier Ford.
AFFIRMED
5
Indeed, Walton concedes the statute of frauds may serve as a bar, see
Appellant’s Br. at 25, before advancing several unavailing arguments
regarding how the oral agreement is supported by the above-discussed
written "memorandums" of the three-year agreement.