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Encino Motorcars LLC v. Navarro (2017)

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Supreme Court of the United States
Encino Motorcars, LLC v. Navarro
Term: 2017
Important Dates
Argument: January 17, 2018
Decided: April 2, 2018
Outcome
Ninth Circuit reversed
Vote
5 - 4 to reverse
Majority
Clarence Thomas • Chief Justice John G. Roberts • Anthony Kennedy • Samuel Alito • Neil Gorsuch
Dissenting
Ruth Bader Ginsburg • Sonia Sotomayor • Stephen Breyer • Elena Kagan


Encino Motorcars, LLC v. Navarro is a case argued during the October 2017 term of the U.S. Supreme Court. Argument in the case was held on January 17, 2018. The case came on a writ of certiorari to the United States Court of Appeals for the 9th Circuit.

HIGHLIGHTS
  • The case: Service advisors employed by a car dealership filed suit against the dealership, arguing that they were entitled to overtime pay under the Fair Labor Standards Act (FLSA). The car dealership argued that service advisors were exempt from the FLSA's overtime compensation requirements because they fell into the category of "any salesman, partsman, or mechanic primarily engaged in selling or servicing automobiles" who were not covered by the FLSA. The Ninth Circuit ruled that the service advisors were non-exempt and therefore entitled to overtime compensation.
  • The issue: Are a car dealership's service advisors exempt from the FLSA's overtime compensation requirement?
  • The outcome: The Supreme Court reversed the Ninth Circuit, ruling that service providers are exempt from FLSA's overtime requirements.[1]


    • You can review the lower court's opinion here.[2]

    Background

    Legal question

    This was a case about which employees of a car dealership are covered by the Fair Labor Standards Act (FLSA).

    The FLSA states that employees who are covered under the act are entitled to overtime compensation for hours they work beyond the standard workweek. The act lists which employees are included or non-exempt under the act and which employees are not included or exempt from the act. With regard to car dealerships, "any salesman, partsman, or mechanic primarily engaged in selling or servicing automobiles" is exempt, meaning that they are not entitled to overtime compensation.[2] The issue in this case was whether a particular group of employees--service advisors--fall within the exempt category of "any salesman, partsman, or mechanic primarily engaged in selling or servicing automobiles."[2]

    Case background

    Encino Motorcars, LLC, a car dealership, employed the plaintiffs in this case as service advisors. The service advisors' job included these responsibilities:

    “ 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.[2][3] ”

    The service advisors sued, alleging that Encino Motorcars had not paid them overtime compensation to which they were entitled under the FLSA. Encino Motorcars argued in response that service advisors were exempt from the FLSA.

    This appeal was the second time the case came before the United States Supreme Court. The Ninth Circuit first ruled in the case in 2015. In that opinion, the Ninth Circuit ruled in favor of the service advisors, relying on a Department of Labor (DOL) regulation in its ruling. The court held that the regulation "reasonably interpreted the statutory exemption not to encompass service advisors." On appeal, the U.S. Supreme Court held that the Ninth Circuit should not have given the DOL regulation controlling weight and remanded the case back to the Ninth Circuit for reconsideration. That remanded appeal was at issue here.[2]

    Panel opinion

    The Ninth Circuit ruled in favor of the service advisors, concluding that they were non-exempt from the FLSA and therefore entitled to overtime compensation.[2]

    Reviewing the statutory language, the Ninth Circuit noted, "The most natural reading of the exemption is that Congress exempted only three commonly understood job titles--automobile salesmen, partsmen, and mechanics." Although the court acknowledged that service advisors "can be considered to sell services...[,] even assuming that Congress intended a broad interpretation of the term 'saleman,' not every 'salesman' is exempt; the statute covers only those who are 'primarily engaged in selling or servicing automobiles.'"[2][4]

    Concluding that the service advisors were not engaged in selling vehicles, the court turned to whether service advisors are primarily engaged in servicing cars. The court concluded:

    “ 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 waits on customers who bring their automobiles in for maintenance and repairs. The service advisor confers with the customer to determine his service needs, and arranges for a mechanic to do the work. Accordingly, service advisors are not primarily engaged in servicing automobiles.[2][3] ”

    Finally, the court turned to legislative history. The court noted, "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." By contrast, the court found no indication in the legislative history that service advisors were intended to be included. "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."[2]

    Petitioner's challenge

    Encino Motorcars, LLC, the petitioner, challenged the holding of the Ninth Circuit. It argued that the Ninth Circuit erred in concluding that service advisors are non-exempt from the FLSA's overtime requirements.

    Certiorari granted

    On May 10, 2017, Encino Motorcars, LLC, the petitioner, initiated proceedings in the Supreme Court of the United States in filing a petition for a writ of certiorari to the United States Court of Appeals for the 9th Circuit. The U.S. Supreme Court granted Marinello's request for certiorari on September 28, 2017. Argument in the case was held on January 17, 2018.[5]

    Question presented

    Question presented:

    "Whether service advisors at car dealerships are exempt under 29 U.S.C. §213(b)(10)(A) from the FLSA's overtime-pay requirements."[5]

    Audio

    • Audio of oral argument:[6]



    Transcript

    • Transcript of oral argument:[7]

    Outcome

    Decision

    The Supreme Court reversed the Ninth Circuit in a 5 - 4 decision.[1]

    Majority opinion by Justice Thomas

    Justice Clarence Thomas authored the majority opinion, which was joined by Chief Justice John Roberts and Justices Anthony Kennedy, Samuel Alito, and Neil Gorsuch.[1]

    Thomas rejected the reasoning of the Ninth Circuit. "Under the best reading of the text," he wrote, "service advisors are 'salesm[e]n,' and they are 'primarily engaged in . . . servicing automobiles.' The distributive canon, the practice of construing FLSA exemptions narrowly, and the legislative history do not persuade us otherwise." Reviewing service advisors' work, he concluded that they were "primarily engaged in ... servicing automobiles," even though they did not participate in the physical repairs:

    “ True, service advisors do not spend most of their time physically repairing automobiles. But the statutory language is not so constrained. All agree that partsmen, for example, are 'primarily engaged in . . . servicing automobiles.' But partsmen, like service advisors, do not spend most of their time under the hood. Instead, they 'obtain the vehicle parts . . . and provide those parts to the mechanics.' In other words, the phrase 'primarily engaged in . . . servicing automobiles' must include some individuals who do not physically repair automobiles themselves but who are integrally involved in the servicing process. That description applies to partsmen and service advisors alike.[1][8][3] ”

    Thomas also rejected the Ninth Circuit's conclusions that FLSA exemptions should be read narrowly. Quoting the late Justice Antonin Scalia, Thomas wrote, "Because the FLSA gives no 'textual indication' that its exemptions should be construed narrowly, there is no reason to give [them] anything other than a fair (rather than a narrow) interpretation.”[9] The majority reversed the Ninth Circuit's ruling.[1]

    Dissenting opinion by Justice Ginsburg

    Justice Ruth Bader Ginsburg authored the dissent, which was joined by Justices Stephen Breyer, Sonia Sotomayor, and Elena Kagan. Justice Ginsburg wrote that the majority's ruling would enlarge the overtime exemption to occupations "outside Congress' enumeration." "Because service advisors neither sell nor repair automobiles," she wrote, "they should remain outside the exemption and within the Act’s coverage." Ginsburg criticized the majoirty's broader approach to FLSA exemption interpretation:

    “ This Court once recognized that the 'particularity' of FLSA exemptions 'preclude[s] their enlargement by implication.' Employees outside the Act’s 'narrow and specific' exemptions, the Court affirmed, 'remain within the Act.' The Court today, in adding an exemption of its own creation, veers away from that comprehension of the FLSA’s mission. I would instead resist, as the Ninth Circuit did, diminishment of the Act’s overtime strictures.[1][10][3] ”

    The opinion

    See also

    Footnotes

    1. ↑ 1.0 1.1 1.2 1.3 1.4 1.5 United States Supreme Court, "Encino Motorcars LLC v. Navarro Opinion," April 2, 2018
    2. ↑ 2.0 2.1 2.2 2.3 2.4 2.5 2.6 2.7 2.8 United States Court of Appeals for the 9th Circuit, Encino Motorcars, LLC v. Navarro, January 9, 2017
    3. ↑ 3.0 3.1 3.2 3.3 Note: This text is quoted verbatim from the original source. Any inconsistencies are attributable to the original source.
    4. ↑ The court acknowledged that a broad interpretation of the exempt categories could arguably include service advisors as employees who sell car parts. However, under supreme court precedent, the FLSA exemptions "are to be narrowly construed against the employers seeking to assert them." Narrowly construed, the court continued, the exemption could not be said to include service advisors.
    5. ↑ 5.0 5.1 Supreme Court of the United States, Encino Motorcars, LLC v. Navarro Question Presented, September 28, 2017
    6. ↑ Supreme Court of the United States, Encino Motorcars LLC v. Navarro (2017), argued January 17, 2018
    7. ↑ Supreme Court of the United States, Encino Motorcars LLC v. Navarro (2017), argued January 17, 2018
    8. ↑ Internal citations omitted.
    9. ↑ Internal quotations omitted.
    10. ↑ Internal citations omitted.
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