Hector Navarro v. Encino Motorcars

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. § 206

imposes 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.