Encino Motorcars, LLC v. Navarro, 584 U.S. ___ (2018)
Encino Motorcars' current and former service advisors sought backpay under the Fair Labor Standards Act (FLSA) overtime-pay requirement, 29 U.S.C. 213(b)(10)(A). The requirement exempts “any salesman, partsman, or mechanic primarily engaged in selling or servicing automobiles, trucks, or farm implements.” The Supreme Court reinstated the dismissal of the suit. Service advisors are “salesm[e]n . . . primarily engaged in . . . servicing automobiles." The ordinary meaning of “salesman” is someone who sells goods or services, and service advisors “sell [customers] services for their vehicles,” Service advisors are also “primarily engaged in . . . servicing automobiles.” “Servicing” can mean either “the action of maintaining or repairing” or “[t]he action of providing a service.” Service advisors satisfy both definitions. They meet customers; listen to their concerns; suggest repair and maintenance services; sell new accessories or replacement parts; record service orders; follow up with customers as services are performed; and explain the work when customers return for their vehicles. While service advisors do not spend most of their time physically repairing automobiles, neither do partsmen, who are “primarily engaged in . . . servicing automobiles.” The Ninth Circuit invoked the distributive canon—matching “salesman” with “selling” and “partsman [and] mechanic” with “[servicing]” but the word “or” is “almost always disjunctive.” Using “or” to join “selling” and “servicing” suggests that the exemption covers a salesman primarily engaged in either activity. FLSA gives no textual indication that its exemptions should be construed narrowly.
Auto dealership service advisors are exempt from overtime under the Fair Labor Standards Act.
SUPREME COURT OF THE UNITED STATES
Syllabus
Encino Motorcars, LLC v. Navarro et al.
certiorari to the united states court of appeals for the ninth circuit
No. 16–1362. Argued January 17, 2018—Decided April 2, 2018
Respondents, current and former service advisors for petitioner Encino Motorcars, LLC, sued petitioner for backpay, alleging that petitioner violated the Fair Labor Standards Act (FLSA) by failing to pay them overtime. Petitioner moved to dismiss, arguing that service advisors are exempt from the FLSA’s overtime-pay requirement under 29 U. S. C. §213(b)(10)(A), which applies to “any salesman, partsman, or mechanic primarily engaged in selling or servicing automobiles, trucks, or farm implements.” The District Court agreed and dismissed the suit. The Court of Appeals for the Ninth Circuit reversed. It found the statute ambiguous and the legislative history inconclusive, and it deferred to a 2011 Department of Labor rule that interpreted “salesman” to exclude service advisors. This Court vacated the Ninth Circuit’s judgment, holding that courts could not defer to the procedurally defective 2011 rule, Encino Motorcars, LLC v. Navarro, 579 U. S. ___, ___–___ (Encino I), but not deciding whether the exemption covers service advisors, id., at ___. On remand, the Ninth Circuit again held that the exemption does not include service advisors.
Held: Because service advisors are “salesm[e]n . . . primarily engaged in . . . servicing automobiles,” they are exempt from the FLSA’s overtime-pay requirement. Pp. 5–11.
(a) A service advisor is obviously a “salesman.” The ordinary meaning of “salesman” is someone who sells goods or services, and service advisors “sell [customers] services for their vehicles,” Encino I, supra, at ___. P. 6.
(b) Service advisors are also “primarily engaged in . . . servicing automobiles.” “Servicing” can mean either “the action of maintaining or repairing a motor vehicle” or “[t]he action of providing a service.” 15 Oxford English Dictionary 39. Service advisors satisfy both definitions because they are integral to the servicing process. They “mee[t] customers; liste[n] to their concerns about their cars; sugges[t] repair and maintenance services; sel[l] new accessories or replacement parts; recor[d] service orders; follo[w] up with customers as the services are performed (for instance, if new problems are discovered); and explai[n] the repair and maintenance work when customers return for their vehicles.” Encino I, supra, at ___. While service advisors do not spend most of their time physically repairing automobiles, neither do partsmen, who the parties agree are “primarily engaged in . . . servicing automobiles.” Pp. 6–7.
(c) The Ninth Circuit invoked the distributive canon—matching “salesman” with “selling” and “partsman [and] mechanic” with “[servicing]”—to conclude that the exemption simply does not apply to “salesm[e]n . . . primarily engaged in . . . servicing automobiles.” But the word “or,” which connects all of the exemption’s nouns and gerunds, is “almost always disjunctive.” United States v. Woods, 571 U. S. 31 . Using “or” to join “selling” and “servicing” thus suggests that the exemption covers a salesman primarily engaged in either activity.
Statutory context supports this reading. First, the distributive canon has the most force when one-to-one matching is present, but here, the statute would require matching some of three nouns with one of two gerunds. Second, the distributive canon has the most force when an ordinary, disjunctive reading is linguistically impossible. But here, “salesman . . . primarily engaged in . . . servicing automobiles” is an apt description of a service advisor. Third, a narrow distributive phrasing is an unnatural fit here because the entire exemption bespeaks breadth, starting with “any” and using the disjunctive “or” three times. Pp. 7–9.
(d) The Ninth Circuit also invoked the principle that exemptions to the FLSA should be construed narrowly. But the Court rejects this principle as a guide to interpreting the FLSA. Because the FLSA gives no textual indication that its exemptions should be construed narrowly, they should be given a fair reading. P. 9.
(e) Finally, the Ninth Circuit’s reliance on two extraneous sources to support its interpretation—the 1966–1967 Occupational Outlook Handbook and the FLSA’s legislative history—is unavailing. Pp. 9–11.
845 F. 3d 925, reversed and remanded.
Thomas, J., delivered the opinion of the Court, in which Roberts, C. J., and Kennedy, Alito, and Gorsuch, JJ., joined. Ginsburg, J., filed a dissenting opinion, in which Breyer, Sotomayor, and Kagan, JJ., joined.
JUDGMENT ISSUED. |
Judgment REVERSED and case REMANDED. Thomas, J., delivered the opinion of the Court, in which Roberts, C. J., and Kennedy, Alito, and Gorsuch, JJ., joined. Ginsburg, J., filed a dissenting opinion, in which Breyer, Sotomayor, and Kagan, JJ. joined. |
Argued. For petitioner: Paul D. Clement, Washington, D. C. For respondents: James A. Feldman, Philadelphia, Pa. |
Reply of petitioner Encino Motorcars, LLC filed. (Distributed) |
The record for the U.S.C.A. is electronic and located on PACER. |
Record requested from the U.S.C.A. 9th Circuit. |
Brief amici curiae of U.S. SENATORS PATTY MURRAY, SHERROD BROWN, AND JACK REED filed. (Distributed) |
Brief amici curiae of Law Professors James Brudney, et al. filed. (Distributed) |
Brief of respondents Hector Navarro, et al. filed. (Distributed) |
Brief amicus curiae of National Employment Lawyers Association filed. (Distributed) |
Brief amicus curiae of International Association of Machinists and Aerospace Workers, AFL-CIO filed. (Distributed) |
CIRCULATED. |
SET FOR ARGUMENT ON Wednesday, January 17, 2018 |
Brief amici curiae of Chamber of Commerce of the United States of America, et al. filed. |
Brief amici curiae of National Automobile Dealers Association and State Automobile Dealers Associations for Alaska, et al. filed. |
The time to file respondents' brief on the merits is extended to and including December 8, 2017. |
Joint appendix filed. |
Brief of petitioner Encino Motorcars, LLC filed. |
Blanket Consent filed by Petitioner, Encino Motorcars, LLC |
Blanket Consent filed by Respondents, Hector Navarro, et al. |
Petition GRANTED. |
DISTRIBUTED for Conference of 9/25/2017. |
Reply of petitioner Encino Motorcars, LLC filed. (Distributed) |
Brief of respondents Hector Navarro, et al. in opposition filed. |
Brief amici curiae of National Automobile Dealers Association, et al. filed. |
Order extending time to file response to petition to and including July 24, 2017. |
Petition for a writ of certiorari filed. (Response due June 12, 2017) |
Application (16A940) granted by Justice Kennedy extending the time to file until May 10, 2017. |
Application (16A940) to extend the time to file a petition for a writ of certiorari from April 9, 2017 to May 10, 2017, submitted to Justice Kennedy. |
Prior History
- Navarro v. Encino Motorcars, No. 13-55323 (9th Cir. Jan. 09, 2017)
- Encino Motorcars, LLC v. Navarro, No. 15-415 (U.S. Jun. 20, 2016)
- Navarro v. Encino Motorcars, LLC, No. 13-55323 (9th Cir. Mar. 24, 2015)
The Fair Labor Standards Act (FLSA) requires employers to pay overtime compensation to covered employees who work more than 40 hours in a week; a 1966 exemption covers “any salesman, partsman, or mechanic primarily engaged in selling or servicing automobiles” at a covered dealership, 29 U.S.C. 213(b)(10)(A). In 1970, the Department of Labor defined “salesman” to mean “an 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 . . . which the establishment is primarily engaged in selling.” The regulation excluded service advisors, who sell repair and maintenance services but not vehicles, from the exemption. Several courts rejected that exclusion. In 1978, the Department changed its position, stating that service advisors could be exempt. In 1987, the Department confirmed its new interpretation, amending its Field Operations Handbook. In 2011, the Department issued a final rule that followed the original 1970 regulation and interpreted the statutory term “salesman” to mean only an employee who sells vehicles. The Ninth Circuit reversed dismissal of a suit by service advisors, alleging violation of the FLSA by failing to pay overtime compensation. The Supreme Court vacated. Section 213(b)(10)(A) must be construed without placing controlling weight on the 2011 regulation. Chevron deference is not warranted where the regulation is “procedurally defective.” An agency must give adequate reasons for its decisions. An “[u]nexplained inconsistency” in agency policy is “a reason for holding an interpretation to be an arbitrary and capricious change from agency practice,” not entitled to deference. The 2011 regulation was issued without the reasoned explanation that was required in light of the Department’s change in position and the significant reliance interests.
Defendant, a car dealership, employed or employs Plaintiffs as “service advisors.” Plaintiffs filed this action alleging, inter alia, that Defendant violated the Fair Labor Standards Act (FLSA) by failing to pay overtime wages. The district court dismissed the overtime claim, concluding that Plaintiffs fell within a statutory exemption from the the FLSA’s overtime pay requirements for “any salesman, parts man, or mechanic primarily engaged in selling or servicing automobiles.” Plaintiffs appealed, arguing that the courts must defer to the United States Department of Labor’s regulatory definitions. The Ninth Circuit reversed the dismissal of the FLSA overtime claim and supplemental state-law claims, holding that, where there are two reasonable ways to interpret the exemption, and the Department has chosen one interpretation, the Court must defer to that choice pursuant to Chevron; and (2) because Plaintiffs did not meet the regulatory definitions, they are not exempt from the FLSA’s overtime wage provisions. Remanded.