9th U.S. Circuit Court of Appeals,
Labor/Employment,
Civil Litigation
Jan. 11, 2017
9th Circuit overturns dismissal of car dealership workers' overtime suit
A 9th U.S. Circuit Court of Appeals panel ruled unanimously Monday that service advisers at an Encino car dealership are not exempt from a Fair Labor Standards Act provision mandating overtime pay and meal and rest breaks, in a case in which the plaintiffs allege they were systematically shorted by their employer.
Daily Journal Staff Writer
A 9th U.S. Circuit Court of Appeals panel ruled unanimously Monday that service advisers at an Encino car dealership are not exempt from a Fair Labor Standards Act provision mandating overtime pay and meal and rest breaks, in a case in which the plaintiffs allege they were systematically shorted by their employer.
The ruling means the case can proceed, overturning a prior dismissal by a district court judge. A victory for plaintiffs could impact car dealerships across the country. Navarro et al v. Encino Motorcars LLC, 2017 DJDAR 186.
This is the second time a 9th Circuit panel has come to this conclusion. Originally, the court relied upon a U.S. Department of Labor regulation issued in 2011, intended to interpret and clarify an amendment made to the labor standards legislation in 1966.
But the U.S. Supreme Court ruled in June that the appellate court should have looked to the language of the amendment to ascertain the intent of the lawmakers who wrote it.
Because the language of the statute in question came from 1966, the panel looked at dictionary definitions and Department of Labor descriptions of various occupations from that time period to see what category a modern service adviser should fall.
In the opinion, Judge Susan P. Graber wrote that service advisers do not fall into the three categories Congress originally intended to exempt from overtime requirements: salesmen, "partsmen," and mechanics.
Graber reasoned that service advisers had some crossover with the other three occupations but none of those other functions were the primary purpose of the position.
"It makes little sense, in ordinary speech, to describe a salesman who primarily engages in work activities other than selling," she wrote, with emphasis.
S. Keven Steinberg, lead attorney for the plaintiffs, said he expected the defense to ask the 9th Circuit for an en banc review, due to the significance of the litigation for the auto sales industry.
"They're now funded and supported by the National Automobile Dealers Association, which I believe is one of the strongest lobbying forces in Washington, D.C. and the country," he said. "This is going to affect probably 160,000 dealerships with anywhere between five and 15 service advisers at each dealership."
Steinberg said at one point he joked with his children that they may have to inherit the case due to the length of the litigation, but he was pleased that the 9th Circuit once again found in his favor.
"I was very happy to see they analyzed it from a number of angles, and from each angle they analyzed it, they came to the same conclusion that these service advisers are not subject to the exemption."
Todd B. Scherwin, lead attorney for the defendant, Encino Motorcars LLC, did not respond to a request for comment.
joshua_sebold@dailyjournal.com
Joshua Seboldn
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