Hector Navarro v. Encino Motorcars , 845 F.3d 925 ( 2017 )

FOR PUBLICATION
UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT
HECTOR NAVARRO; MIKE No. 13-55323
SHIRINIAN; ANTHONY PINKINS;
KEVIN MALONE; REUBEN CASTRO, D.C. No.
Plaintiffs-Appellants, 2:12-cv-08051-
RGK-MRW
v.
ENCINO MOTORCARS, LLC, OPINION
erroneously sued as Mercedes Benz
of Encino,
Defendant-Appellee.
On Remand from the
Supreme Court of the United States
Filed January 9, 2017
Before: Susan P. Graber and Kim McLane Wardlaw,
Circuit Judges, and James C. Mahan,* District Judge.
Opinion by Judge Graber
*
The Honorable James C. Mahan, United States District Judge for the
District of Nevada, sitting by designation.
2 NAVARRO V. ENCINO MOTORCARS
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.
**
This summary constitutes no part of the opinion of the court. It has
been prepared by court staff for the convenience of the reader.
NAVARRO V. ENCINO MOTORCARS 3
COUNSEL
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.
4 NAVARRO V. ENCINO MOTORCARS
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
1
Because the district court dismissed this case under Federal Rule of
Civil Procedure 12(b)(6), we take the facts alleged in the complaint as
true. Brown v. Elec. Arts, Inc., 724 F.3d 1235, 1247 (9th Cir. 2013).
NAVARRO V. ENCINO MOTORCARS 5
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).
6 NAVARRO V. ENCINO MOTORCARS
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. § 206imposes 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
NAVARRO V. ENCINO MOTORCARS 7
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
8 NAVARRO V. ENCINO MOTORCARS
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
2
The Secretary of Labor has informed us that, also in 2011, the
agency amended its Field Operations Handbook by removing the 1987
NAVARRO V. ENCINO MOTORCARS 9
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.”
Insert, thus reverting to its original enforcement practice. Brief for Sec’y
of Labor as Amicus Curiae Supporting Plaintiffs-Appellants at 5 n.1.
3
We do so out of an abundance of caution. If we have misunderstood
the Court’s instructions and are permitted or required to consider Skidmore
deference, then we conclude that such deference is appropriate. Although
the agency held a contrary position in intervening years, we find the
agency’s present reasoning persuasive and thorough. Moreover, the
agency’s current position is identical to the position that it took in
1970—shortly after enactment of the 1966 amendments.
10 NAVARRO V. ENCINO MOTORCARS
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
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. Then, as today, many
different types of employees—including service advisors—
worked at automobile dealerships. The Occupational Outlook
Handbook listed many common vocations. Among those
categories of workers that one might have expected to find at
automobile dealerships in 1966, three job titles—emphasized
NAVARRO V. ENCINO MOTORCARS 11
below—clearly align with the three job titles exempted by
Congress:
• 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
12 NAVARRO V. ENCINO MOTORCARS
“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”
4
We give the term “any” no significance. The term “any” “do[es] not
broaden the ordinary meaning” of the word it modifies. BP Am. Prod. Co.
v. Burton, 549 U.S. 84, 93 (2006). That principle applies with special
force here. Both before and after the 1966 amendments to the FLSA, each
of the 33 exemptions in § 213(a) and § 213(b) began with the term “any.”
See 29 U.S.C. § 213(a)(1)–(22) (1965) (beginning with “any”); id.§ 213(b)(1)–(11) (1965) (same); id. § 213(a)(1)–(14) (1967) (same); id.
§ 213(b)(1)–(19) (1967) (same). The word “any” was plainly a drafting
convention, not an expression of congressional intent that we interpret a
particular exemption expansively.
5
See Random House Dictionary of the English Language (“Random
House”) 1262 (1966) (defining “salesman” as “a man who sells goods,
services, etc.”); Webster’s Third New International Dictionary
(“Webster’s Third”) 2003 (1965) (“one employed to sell goods or services
either within a given territory or in a store”); 9 Oxford English Dictionary
(“OED”) 50 (1933) (“A man whose business it is to sell goods or conduct
sales”); see also American Heritage Dictionary of the English Language
(“American Heritage”) 1144 (1st ed. 1969) (“A man employed to sell
merchandise in a store or in a designated territory”).
NAVARRO V. ENCINO MOTORCARS 13
is exempt; the statute covers only those who are “primarily
engaged in selling or servicing automobiles.” 29 U.S.C.
§ 213(b)(10)(A). We therefore consider next whether service
advisors primarily engage in selling or servicing cars.
2. “Primarily Engaged in Selling or Servicing
Automobiles”
A service advisor clearly is not a “salesman . . . primarily
engaged in selling . . . automobiles.” That category
encompasses salesmen selling a particular good—cars. It
does not cover salesmen selling other goods and, critically, it
does not cover salesmen selling services. Service advisors
may be salesmen of a sort, but they do not qualify as
salesmen primarily engaged in selling cars because they do
not sell cars.
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 “supply[]
6
Random House at 1142; accord 8 OED at 1358 (“In the first place,
first of all, pre-eminently, chiefly, principally; essentially.”); see also
American Heritage at 1039 (“Chiefly; principally”).
7
Random House at 473; accord 8 OED at 174 (“to enter upon or
employ oneself in an action”); Webster’s Third at 751 (“to employ or
involve oneself”; “to take part”); see also American Heritage at 433 (“To
involve oneself or become occupied; participate”).
14 NAVARRO V. ENCINO MOTORCARS
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.” Id.Accordingly, service advisors are not primarily engaged in
servicing automobiles.9
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
8
Random House at 1304; accord Webster’s Third at 2075 (“to repair
or provide maintenance for”); see also American Heritage at 1185 (“To
make fit for use; adjust; repair; maintain”).
9
Service advisors may occasionally perform simple repairs or
maintenance tasks before the mechanic takes over. But Defendant does
not contend that Plaintiffs spend a significant amount of time on those
minor tasks.
NAVARRO V. ENCINO MOTORCARS 15
“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 only if we actually undertake
the activity, at least in part. For example, a receptionist-
scheduler at a dental office fields calls from patients,
matching their needs (e.g., a broken tooth or jaw pain) with
the appropriate provider, appointment time, and length of
anticipated service. That work is integral to a patient’s
obtaining dental services, but we would not say that the
receptionist-scheduler is “primarily engaged in” cleaning
teeth or installing crowns. Similarly, an automobile salesman
who sells custom-made cars is integral to a purchaser’s
receiving a specialized car, but we ordinarily would not say
that the salesman is primarily engaged in manufacturing cars.
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.
16 NAVARRO V. ENCINO MOTORCARS
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.
Id. at 312. But parts countermen “employed by automobile
and truck dealers . . . may spend most of their time supplying
parts to mechanics employed by the dealer.” Id.; see also
Brief for Int’l Ass’n of Machinists and Aerospace Workers
as Amicus Curiae Supporting Respondents in Encino
Motorcars, 2016 WL 1388060, at *28 (“A partsman generally
works at one of two counters: the back counter, which opens
to the shop where the mechanics work or the front counter,
which opens into the dealership to an area where customers
may purchase accessories or parts that will not be installed by
the dealership.”). “By knowing how to use parts catalogs and
by knowing the layout of the stockroom, he can readily find
any one of several thousand items.” OOH at 312. A parts
counterman also uses specialized equipment to test parts, to
determine interchangeability of parts, and to repair parts. Id.at 312–13.
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, fan-belt 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.” Id. at 312–13. Those hands-on tasks are
qualitatively indistinguishable from—if not identical to—the
work of a mechanic. Similarly, partsmen use their expert
knowledge of parts, parts catalogs, and the stockroom to
NAVARRO V. ENCINO MOTORCARS 17
determine an appropriate replacement part and locate it for a
mechanic—tasks that contribute directly to the actual repair
of a car. Because most of the common tasks of a partsman
easily meet the ordinary meaning of primarily engaging in
servicing, we are not compelled to accept Defendant’s broad
interpretation of the exemption.10
In sum, we conclude that the phrase “primarily engaged
in selling . . . automobiles” encompasses only those who are
actually and primarily occupied in selling cars, and we
conclude that the phrase “primarily engaged in . . . servicing
automobiles” encompasses only those who are actually and
primarily occupied in the repair and maintenance of cars.
Because service advisors meet neither definition, the FLSA
does not exempt service advisors.
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
§ 213(b)(10)(A), we will examine that provision in light of
applicable principles of statutory construction.
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
10
It is true, of course, that partsmen may spend some time on tasks
unrelated to the servicing of an automobile: They may clean the
stockroom, or they may sell parts to the public, for example. But that fact
poses no interpretive problem because the exemption covers only those
who “primarily” service cars. If an individual partsman spends little time
servicing cars, the exemption does not apply.
18 NAVARRO V. ENCINO MOTORCARS
(2010) (“Courts have a duty to construe statutes, not isolated
provisions.” (internal quotation marks omitted)); see also
Sturgeon v. Frost, 136 S. Ct. 1061, 1070 (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 Partsman Mechanic
primarily primarily primarily
engaged in engaged in engaged in
selling selling selling
Salesman Partsman Mechanic
primarily primarily primarily
engaged in engaged in engaged in
servicing servicing 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
11
“Automobile salesmen” were “important links between the makers
and buyers of new cars, and between used car dealers and buyers.” OOH
at 309. “The automobile salesman spends much of his time waiting on
customers,” trying to make a sale. Id. at 310.
NAVARRO V. ENCINO MOTORCARS 19
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.
A salesman is naturally understood to be someone
primarily engaged in selling. After all, he is a salesman,
defined at the relevant time as “a man who sells.” Random
House at 1262 (emphasis added). It makes little sense, in
ordinary speech, to describe a salesman who primarily
engages in work activities other than selling.
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.
12
“Automobile mechanics keep the Nation’s rising number of
automobiles . . . in good running order. They do preventative
maintenance, diagnose breakdowns, and make repairs.” OOH at 477.
20 NAVARRO V. ENCINO MOTORCARS
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.,
16 U.S.C. § 742c(e) (referring to “the construction or repair
of vessels lost, destroyed, or damaged” by an earthquake); see
also Brief for Respondents in Encino Motorcars, 2016 WL
1298032, app. D (listing scores of statutory phrases using this
distributive construction). Scholars and courts have
recognized this method of distributive phrasing: “Where a
sentence contains several antecedents and several
consequents, courts read them distributively and apply the
words to the subjects which, by context, they seem most
properly to relate.” 2A Norman Singer et al., Sutherland
Statutes and Statutory Construction § 47:26 (7th ed. Supp.
Nov. 2016); see id. at n.1 (collecting cases); see also Antonin
Scalia & Bryan A. Garner, Reading Law: The Interpretation
of Legal Texts 214 (2012) (“Distributive phrasing applies
each expression to its appropriate referent.”); id. at 214–16
(describing cases that applied the principle).
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
NAVARRO V. ENCINO MOTORCARS 21
“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.” 29 U.S.C. § 213(b)(10) (1966). Instead,
Congress trusted courts to recognize the obvious: Congress
meant to exempt salesmen selling, not repairing, cars; and
Congress meant to exempt partsmen and mechanics repairing,
not selling, cars. Thus, the statute leaves only three
categories of exempt employees:13
Salesman Partsman Mechanic
primarily primarily primarily
engaged in engaged in engaged in
selling selling selling
Salesman Partsman Mechanic
primarily primarily primarily
engaged in engaged in engaged in
servicing servicing 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 § 213 of the FLSA “are to be narrowly
construed against the employers seeking to assert them.”
13
We address here only automobile dealerships. There is some
suggestion in the legislative history that partsmen employed by farm-
implement dealers were understood to sell farm implements. But we have
found no suggestion—in the legislative history or otherwise—that
automobile partsmen sell cars.
22 NAVARRO V. ENCINO MOTORCARS
Arnold v. Ben Kanowsky, Inc., 361 U.S. 388, 392 (1960);
accord Mitchell v. Ky. Fin. Co., 359 U.S. 290, 295 (1959)
(holding that the principle of narrow construction of the
FLSA’s exemptions is “well settled”). We must apply
exemptions only to “those [employees] plainly and
unmistakably within [the FLSA’s] terms.” A.H. Phillips, Inc.
v. Walling, 324 U.S. 490, 493 (1945). In order to conclude
that § 213(b)(10)(A) encompasses service advisors, we would
be required to do the opposite—construe the exemption
broadly. We are bound by Supreme Court precedent to
construe the exemption narrowly.
In recent years, the Supreme Court has acknowledged the
rule of narrow construction with respect to the exemptions
listed in § 213, but the Court has held that the rule does not
apply to interpretations of other provisions of the FLSA, such
as the general definitions codified in § 203. Sandifer v. U.S.
Steel Corp., 134 S. Ct. 870, 879 n.7 (2014); Christopher v.
SmithKline Beecham Corp., 132 S. Ct. 2156, 2172 n.21
(2012). Because this case involves interpretation of terms
appearing in § 213 and not defined in § 203, the Supreme
Court’s longstanding principle of narrow construction applies
here. We recognize that some members of the Supreme
Court have questioned the soundness of the rule of narrow
construction. E.g., Encino Motorcars, 136 S. Ct. at 2131(Thomas, J., dissenting). But we may not disregard the
Court’s existing, binding precedent. See, e.g., Bosse v.
Oklahoma, 137 S. Ct. 1, 1 (2016) (per curiam) (“It is this
Court’s prerogative alone to overrule one of its precedents.”
(internal quotation marks and brackets omitted)); id. (“Our
decisions remain binding precedent until we see fit to
reconsider them, regardless of whether subsequent cases have
NAVARRO V. ENCINO MOTORCARS 23
raised doubts about their continuing vitality.” (internal
quotation marks omitted)).14
In sum, we are convinced that Congress intended to
exempt only salesmen selling cars, partsmen servicing cars,
and mechanics servicing cars. We agree with Defendant that,
under an expansive interpretation of the literal category of a
“salesman . . . primarily engaged in . . . servicing
automobiles,” the statute could be construed as exempting
service advisors. But in light of the ordinary meaning of the
exemption’s words and the rule that we must interpret
exemptions narrowly, we find that interpretation implausible.
We nevertheless assume that Defendant’s interpretation
creates an ambiguity. Accordingly, we examine legislative
history below.
B. Legislative History
As we have noted, in 1966, Congress enacted new
§ 213(b)(10), exempting from the overtime-compensation
requirement “any salesman, partsman, or mechanic primarily
engaged in selling or servicing automobiles” at a dealership.
During hearings before subcommittees of the House and the
Senate, the National Automobile Dealership Association had
sought an overtime exemption for two specific categories of
14
For the sake of judicial economy, we note that we would reach the
same ultimate holding—that the exemption does not encompass service
advisors—even if the rule of narrow construction did not apply.
Defendant’s interpretation creates, at most, an ambiguity. Because
legislative history strongly suggests that Congress did not intend to
exempt service advisors, our ultimate holding is the same, whether or not
we apply the principle of narrow construction.
24 NAVARRO V. ENCINO MOTORCARS
employees: automobile salesmen and mechanics.15
According to the Association, automobile salesmen and
mechanics were well paid, and they often worked unusual
hours; accordingly, overtime compensation would be both
unnecessary and challenging to calculate. 1965 House
Hearings at 368–69; 1965 Senate Hearings at 1237–38. The
testimony was not new. The Association had given similar
testimony in 1961, 1960, 1959, and 1957,16 in response to
15
Minimum Wage-Hour Amendments: Hearings on H.R. 8259 Before
the Gen. Subcomm. on Labor of the H. Comm. on Educ. & Labor, 89th
Cong. 366–77 (1965) (“1965 House Hearings”) (statement of Sam H.
White, Chairman, Govt’l Relations Comm., Nat’l Auto. Dealers Ass’n);
Amendments to the Fair Labor Standards Act: Hearings on S. 763 et al.
Before the Subcomm. on Labor of the S. Comm. on Labor & Pub. Welfare,
89th Cong. 1236–38 (1965) (“1965 Senate Hearings”) (statement of Sam
H. White, Chairman, Govt’l Relations Comm., Nat’l Auto. Dealers
Ass’n).
16
Amendments to the Fair Labor Standards Act: Hearings on S. 256
et al. Before the Subcomm. on Labor of the S. Comm. on Labor & Pub.
Welfare, 87th Cong. 175–82 (1961) (statement of S.E. Kossman,
Chairman, Nat’l Affairs Comm., Nat’l Auto. Dealers Ass’n); Minimum
Wage-Hour Legislation: Hearings Before the Subcomm. on Labor
Standards of the H. Comm. on Educ. & Labor, 86th Cong. 1391–94
(1960) (“1960 House Hearings”) (statement of William J. Cleveland,
Director, Nat’l Auto. Dealers Ass’n); To Amend the Fair Labor Standards
Act: Hearings on S. 25 et al. Before the Subcomm. on Labor of the S.
Comm. on Labor & Pub. Welfare , 86th Cong. 205–14 (1959) (“1959
Senate Hearings”) (statement of William J. Cleveland, Nat’l Auto.
Dealers Ass’n); Fair Labor Standards Act: Hearings Before a Subcomm.
of the H. Comm. on Educ. & Labor, 85th Cong. 251–77 (1957) (“1957
House Hearings”) (statement of Frederick M. Sutter, President, Nat’l
Auto. Dealers Ass’n); Proposals to Extend Coverage of Minimum Wage
Protection: Hearings on S. 1135 et al. Before the Subcomm. on Labor of
the S. Comm. on Labor & Pub. Welfare, 85th Cong. 113–33 (1957) (“1957
Senate Hearings”) (statement of Frederick J. Bell, Rear Admiral USN
(Ret.), Executive Vice President, Nat’l Auto. Dealers Ass’n); see also id.
NAVARRO V. ENCINO MOTORCARS 25
earlier proposals for the FLSA to cover dealerships’
employees. In sum, when the full Congress took up the
proposal, the automobile-dealership industry had made clear
its concerns about applying the overtime-compensation
requirement to two specific categories of employees:
automobile salesmen and mechanics.
The legislative history contains only one probative
discussion by members of Congress: a debate in the Senate
about whether to exempt partsmen in addition to automobile
salesmen and mechanics. 112 Cong. Rec. 20,502–06 (1966).
Everyone agreed that automobile salesmen17 and mechanics
work irregular hours, sometimes away from the dealership.
See, e.g., id. at 20,504 (“Salesmen are a little different breed
of cats, because they go out at unusual hours . . . .” (statement
at 1160–61 (letter dated Mar. 29, 1957, from the South Carolina
Automobile Dealers Association, expressing similar sentiments).
17
Notably, the Senators implicitly assumed that “salesman” referred
to someone who sells cars. See 112 Cong. Rec. 20,504 (“[An amendment]
would not affect the salesman. He can go out and sell an Oldsmobile, a
Pontiac, or a Buick all day long and all night. He is not under any
overtime.” (statement of Sen. Yarborough)); id. (“The salesman tries to
get people mainly after their hours of work. In some cases a man will
leave his job, get his wife, and go to look at automobiles.” (statement of
Sen. Yarborough)); id. (“Salesmen . . . go out at unusual hours, trying to
earn commissions.” (statement of Sen. Bayh)). One commentator has
interpreted a passage by Senator Javits as implicitly mentioning service
advisors as a form of salesman. Note, Show Me the Money: On Whether
Car Dealership Service Advisors Are Entitled to or Exempt From
Overtime Pay Under the FLSA, 91 Notre Dame L. Rev. 1707, 1731 (Apr.
2016). We draw the opposite inference from the transcript. Senator Javits
noted that “the mechanic and the salesman [are] subject to call at any time
that a fellow’s car broke down.” 112 Cong. Rec. 20,506. We read that
comment to mean simply that, when one’s car fails, there are two
options—fix it (via a mechanic) or replace it (via a car salesman).
26 NAVARRO V. ENCINO MOTORCARS
of Sen. Bayh)); id. (“My experience with automobiles has
been that the mechanic goes out and answers calls in the rural
areas.” (statement of Sen. Yarborough)). The debate centered
on whether the same was true of partsmen. Some Senators
thought that partsmen had to work irregular hours and,
accordingly, should also be exempt. See, e.g., id. at 20,502(“In many instances it is essential that partsmen work longer
hours or at other than regular times. This is especially true in
the farm equipment business . . . . Because of these factors,
it would not be easy to place partsmen on a time-clock basis
and to compute overtime compensation in an equitable
manner.” (statement of Sen. Bayh)); id. at 20,503 (“The
partsman does occupy a significant and unusual position in
the agricultural economy. He has to be available during the
harvesting season—and before and after, to a lesser
extent—at all hours of the day.” (statement of Sen.
Mansfield)). Other Senators thought that partsmen worked
inside only and, accordingly, like all other ordinary
employees of a dealership, should not be exempt. See id. at
20,504 (“The mechanics and the salesmen . . . do not get
overtime because their work is outside. . . . The partsman
works inside.” (statement of Sen. Yarborough)); id. (“[A]
partsman is an inside man. The reason for exempting the
salesmen and the mechanics was the difficulty of their
keeping regular hours.” (statement of Sen. Yarborough)); id.
at 20,505 (“[T]here is no excuse whatever for including
partsmen in the overtime exemption, because the partsman,
like the stenographer, would be working inside.” (statement
of Sen. Clark)). Nothing in the legislative record suggests
that Congress thought that service advisors worked anything
but ordinary business hours—to the extent that Congress
thought about service advisors at all. See OOH at 314–17
(describing the work of service advisors without anywhere
suggesting that they worked unusual hours).
NAVARRO V. ENCINO MOTORCARS 27
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 applying the overtime-compensation requirement to
service advisors, and we have found none. To the contrary,
the only references to service advisors that we have found
suggest that dealerships had no concern about overtime
compensation for service advisors.18
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. 29 U.S.C. § 213(b)(10) (2016); 88 Stat. at
61. The law created new subparagraph (b)(10)(A), which
exempted “any salesman, partsman, or mechanic primarily
18
See 1960 House Hearings at 1393 (testimony by a Ford dealer from
rural Louisiana, merely comparing the average pay at his dealership with
the average pay at dealerships in New Orleans for mechanics, painters,
body repairmen, upholsterers, parts-department men, and “service
salesmen [service advisors]”); 1959 Senate Hearings at 208 (same); 1957
House Hearings at 1188 (same); 1957 Senate Hearings at 1160–61 (letter
from the South Carolina Auto. Dealership Ass’n expressing no concern
about paying overtime to its employees other than automobile salesmen
and mechanics).
28 NAVARRO V. ENCINO MOTORCARS
engaged in selling or servicing automobiles, trucks, farm
implements” and new subparagraph (b)(10)(B), which
exempted “any salesman primarily engaged in selling trailers,
boats, or aircraft.”
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 § 213(b)(10)(A) & (B):
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
§ 213(b)(10)(A) & (B):
NAVARRO V. ENCINO MOTORCARS 29
[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 p art s m en and m echani cs 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 such an effect, strongly
suggesting that Congress did not think that “salesman”
connected to “servicing.” Thus, the summaries of the 1974
amendments before the House and the Senate both
understood the exemption to encompass only salesmen
“selling,” not salesmen “servicing.”
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 § 213(b)(10) as it applied to
salesmen, partsmen, and mechanics at automobile
dealerships.19 The statement explained that Congress’ 1966
19
To Amend the Fair Labor Standards Act: Hearings on H.R. 10948
and H.R. 17596 Before the Gen. Subcomm. on Labor of the H. Comm. on
Educ. & Labor, 91st Cong. 109–11, 259–61 (1970) (“1970 House
30 NAVARRO V. ENCINO MOTORCARS
creation of the exemption in § 213(b)(1) “was a recognition
of the fact that these categories of employees work long hours
during peak periods, but receive high commissions, and,
accordingly should not be subject to overtime requirements.”
1970 House Hearings at 109, 259. To prove the high-pay
assertion, the statement then detailed the average earnings of
“all car and truck salesmen,” “mechanics,” and “partsmen.”
Id. (emphasis added). To prove that salesmen, mechanics,
and partsmen work long hours, the statement described each
position. The paragraph describing salesmen plainly refers to
persons who sell cars, not to service advisors. Id. The
statement summarized:
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 $5.00
per hour and partsmen average $3.42 per
hour.
Id. (emphasis added).
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
Hearings”); Fair Labor Standards Amendments of 1971: Hearings on S.
1861 and S. 2259 Before the Subcomm. on Labor of the Senate Comm. on
Labor & Pub. Welfare, 92nd Cong. 789–94 (1971) (“1971 Senate
Hearings”).
NAVARRO V. ENCINO MOTORCARS 31
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 § 213(b)(10)(A) does not
encompass service advisors. We acknowledge that our
holding conflicts with published decisions by the Fourth and
Fifth Circuits and by the Supreme Court of Montana. Walton
v. Greenbrier Ford, Inc., 370 F.3d 446 (4th Cir. 2004);
Brennan v. Deel Motors, Inc., 475 F.2d 1095 (5th Cir. 1973);
Thompson v. J.C. Billion, Inc., 294 P.3d 397 (Mont. 2013).
We are unpersuaded by the analysis of those decisions for the
reasons stated above and for the reasons stated in our earlier
opinion (except those reasons concerning deference to the
agency). Navarro, 780 F.3d at 1274–77.
20
We found only one portion of the legislative record that mentions
a “service adviser.” 1971 Senate Hearings at 780–81. That testimony
merely described what a service advisor does; it does not suggest that the
exemption applied to service advisors. Id.
32 NAVARRO V. ENCINO MOTORCARS
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.