Gieg v. Ddr, Inc.

• Decision Date: 18 May 2005
• Docket Number: No. 03-35707.,No. 03-36009.,No. 03-35619.,03-35619.,03-35707.,03-36009.
• Parties: Jerry GIEG, Plaintiff-Appellee, v. DDR, INC., an Oregon corporation, dba Courtesy Ford, and Woody Howarth, Defendants-Appellants. Joseph C. Wickersham, Plaintiff-Appellee, v. Haselwood Buick-Pontiac Co., Defendant-Appellant. v. Martin Chaloupka, Lisa Bennett, Bradley Hayes, and John Inselman, Plaintiffs-Appellees, v. SLT/TAG, Inc., an Oregon corporation, fka Thomason Auto Group, Inc. and Asbury Automotive Oregon, LLC, Defendants-Appellants.
• Court: U.S. Court of Appeals — Ninth Circuit

407 F.3d 1038

Jerry GIEG, Plaintiff-Appellee, v. DDR, INC., an Oregon corporation, dba Courtesy Ford, and Woody Howarth, Defendants-Appellants.

Joseph C. Wickersham, Plaintiff-Appellee, v. Haselwood Buick-Pontiac Co., Defendant-Appellant. v. Martin Chaloupka, Lisa Bennett, Bradley Hayes, and John Inselman, Plaintiffs-Appellees, v. SLT/TAG, Inc., an Oregon corporation, fka Thomason Auto Group, Inc. and Asbury Automotive Oregon, LLC, Defendants-Appellants.

No. 03-35619.

No. 03-35707.

No. 03-36009.

United States Court of Appeals, Ninth Circuit.

Argued and Submitted November 4, 2004.

Filed May 18, 2005.

COPYRIGHT MATERIAL OMITTED

Timothy R. Volpert, Davis Wright Tremaine, LLP, Portland, OR, for defendants-appellants DDR, Inc., et al. and SLT/ TAG, Inc., etc.

Jacqueline L. Koch, Koch & Deering, Portland, OR, for plaintiff-appellee Jerry Gieg.

Ford F. Newman, U.S. Department of Labor, Washington, D.C., for amicus curiae the Secretary of Labor.

Felicia R. Reid, Curiale Dellaverson Hirschfeld Kraemer & Sloan, LLP, San Francisco, CA, for amici curiae the National Automobile Dealers Association; National Federation of Independent Business Legal Foundation; National Independent Automobile Dealers Association; Recreation Vehicle Dealers Association; and Marine Retailers Association of America in support of the defendants-appellants.

John R. Scannell, Action Employment Law, Seattle, WA, for plaintiff-appellee Joseph C. Wickersham.

Patrick M. Madden, Seattle, WA, for defendant-appellant Haselwood Buick-Pontiac Company.

Robert J. Bekken, Fisher & Phillips, LLP, Irvine, CA, Joel W. Rice, Fisher & Phillips LLP, Chicago, IL, for defendant-appellant Haselwood Buick-Pontiac Company.

David F. Sugerman, Paul & Sugerman, PC, Portland, OR, for plaintiffs-appellees Martin Chaloupka, et al.

Christopher P. Koback, Davis Wright Tremaine, LLP, Portland, OR, for defendants-appellants DDR, Inc., et al. and SLT/TAG, Inc., etc.

Appeal from the United States District Court for the District of Oregon; Ancer L. Haggerty, District Judge, Presiding. D.C. No. CV-98-01563-ALH.

Appeal from the United States District Court for the Western District of Washington; Franklin D. Burgess, District Judge, Presiding. D.C. No. CV-01-05557-FDB.

Appeal from the United States District Court for the District of Oregon; Garr M. King, District Judge, Presiding. D.C. Nos. CV-02-00743-GMK, CV-02-01053-GMK, CV-02-00065-GMK.

Before TROTT and KLEINFELD, Circuit Judges, and POLLAK,^* District Judge.

POLLAK, District Judge.

In these three appeals—Gieg v. DDR, Inc., Wickersham v. Haselwood Buick-Pontiac Co., and Chaloupka v. SLT/TAG, Inc.—arising under the Fair Labor Standards Act ("FLSA"), 29 U.S.C. § 201 et seq., the principal question we are asked to determine is whether finance and insurance managers of retail automobile dealerships, who are compensated almost exclusively by commission, are entitled to overtime pay for hours worked beyond the standard 40-hour workweek pursuant to section 7(a) of the FLSA, 29 U.S.C. § 207(a). Section 207(a) provides that, with certain exceptions, employers in interstate commerce must pay employees overtime of at least one and one-half times their regular rate of pay for any time worked in excess of 40 hours a week.¹ Section § 207(i), however, exempts employers from paying overtime to "any employee of a retail or service establishment" if the employee's regular rate of pay is more than one and one-half times the statutorily prescribed minimum wage and if "more than half his compensation for a representative period (not less than one month) represents commissions on goods or services."² The three appeals— two from the District Court of Oregon, and one from the District Court of Washington— raise largely identical issues and arguments, and hence were consolidated for oral argument.

In each case, the District Court, while recognizing that an automobile dealership is a "retail or service establishment," concluded that a finance and insurance manager, who handles financing and insurance aspects of the sale of an automobile, is not engaged in the dealership's retail activity and hence is not an employee for whom the employer can claim exempt status. Accordingly, in all three instances, the District Court granted summary judgment for the plaintiff employees, awarding overtime payments. Each dealership has appealed.³ We reverse.

BACKGROUND

The facts of each case are essentially undisputed. Appellants are retail automobile dealerships that sell or lease new and used vehicles to their customers. Appellees were each employed by appellants as finance and insurance managers.⁴ Their duties in this capacity included verifying information about the terms of the transactions agreed upon between the customer and the sales staff and inputting that information into a computer; completing the necessary bank and Department of Motor Vehicles ("DMV") forms; and obtaining the customer's signature on the paperwork. Appellees sold insurance policies to facilitate continuing payment for the vehicle in case of illness, disability, or death. They also sold extended warranties, alarm systems, and paint and fabric protection packages to dealership customers. Appellees were compensated almost exclusively through commissions on the products they sold. None of the appellees earned any commission from the sale or lease of the vehicle itself. The factual and procedural history of Gieg is set out in the text below. For the relevant histories of the companion cases, Wickersham and Chaloupka, see infra notes 8 and 9.

(A) Gieg

Between June 10, 1998 and September 23, 1998, appellee Jerry Gieg was employed by Courtesy Ford as a "Finance Writer." During the three and a half months he worked for Courtesy Ford, Gieg earned $24,025.16 in commissions. On an hourly basis, his compensation each month markedly exceeded one and one-half times the prescribed minimum wage.

This is the second time Gieg's claim has been before this Court. On December 15, 1998, Gieg filed this FLSA action against Courtesy Ford and its manager, Woody Howarth, in the District Court for the District of Oregon seeking overtime wages under § 207(a). The District Court granted partial summary judgment in favor of defendants on the ground that Gieg's claim was barred by § 213(b)(10)(A), which excludes from overtime eligibility "any salesman, partsman, or mechanic primarily engaged in selling or servicing automobiles, trucks, or farm implements, if he is employed by a non-manufacturing establishment primarily engaged in the business of selling such vehicles or implements to ultimate purchasers."⁵ On appeal, this Court reversed on the ground that an employee whose primary duties were selling financing and warranties did not qualify as a vehicle "salesman" within the § 213(b)(10)(A) exemption⁶ and remanded the case for further proceedings. Gieg v. Howarth, 244 F.3d 775 (9th Cir.2001).

On remand, Courtesy Ford and Howarth moved for summary judgment under § 207(i), claiming that the dealership was exempt from the Act's overtime provisions because: (1) Gieg was an employee of a retail automobile dealer; (2) his regular rate of pay exceeded 150% of the federal minimum wage in 1998; and (3) more than half of his compensation represented commissions from the sale of goods and services. Gieg filed a cross-motion for summary judgment, claiming § 207(i) does not apply to the dealership's finance employees.

On February 14, 2003, the District Court entered an opinion and order granting Gieg's cross-motion for summary judgment with respect to his FLSA overtime claim. The District Court concluded that "invoking the Section 207(i) exemption requires a clear showing that more than half of an employee's compensation represents commissions on retail goods and services, and not all goods and services as long as they are sold by a retail or service establishment." Gieg v. DDR, Inc., 2003 WL 21087602 at *4 (D.Or. March 14, 2003) (emphasis in original). In reaching this conclusion, the court observed that FLSA exemptions are to be narrowly construed. Citing Mitchell v. Kentucky Fin. Co., 359 U.S. 290, 79 S.Ct. 756, 3 L.Ed.2d 815 (1959), the District Court also noted, "the Supreme Court has held that finance companies, insurance brokerages and claim adjusters all lack a retail `concept.' ... Since the duties of such [finance] employees fall outside the scope of the employers' retail or service business, those employees therefore also fall outside of any FLSA exemption that is based upon the employers being a retail or service establishment." Gieg, 2003 WL 21087602, at *5.

On March 17, 2003, the Department of Labor ("DOL") issued an opinion letter concluding that § 207(i) excludes finance and insurance salespersons employed by a retail automotive dealership from FLSA overtime eligibility.⁷ The opinion letter concluded that "employee duties are irrelevant" if other requirements of the exemption are met. On March 21, 2003, Courtesy Ford and Howarth filed a motion for reconsideration in light of the DOL opinion letter. The District Court denied the motion and entered an order finding Courtesy Ford and Howarth liable to Gieg for overtime wages.

Footnotes 8 and 9 summarize the quite similar facts and the pertinent procedural histories of Wickersham⁸ and of Chaloupka.⁹

STANDARD OF REVIEW

Interpretations of the FLSA and its regulations are questions of law, and appellate courts review district court interpretations de novo. See, e.g., Magana v. Commonwealth of the Northern Mariana Islands, 107 F.3d 1436, 1438 (9th Cir.1997) ("We review de novo district court decisions regarding exemptions to the Fair Labor Standards Act"). We also review a district court's grant or denial of summary judgment de novo. United States v. Alameda Gateway, Ltd., 213 F.3d 1161, 1164 (9th Cir.2000). Viewing the evidence in the light most favorable to the nonmoving party, an appellate court must determine whether there are any genuine issues...