I usually try to include at least five cases in each installment of "Lower Courts Applying Kisor." This time, though, I'm making an exception because the two cases discussed below generated more analysis than I usually have for a set of five. Needless to say, they're both interesting and thought-provoking. Enjoy.

Bo v. Wilkie, No. 16-4134 (Vet. App. Aug. 15, 2019)*

This case is pretty interesting, though not for Kisor-centric reasons exactly. The case involved the interplay between the Montgomery GI Bill and the Post-9/11 GI Bill--two education-related programs that provide benefits to certain veterans. Bo served two separate stints in the military and independently qualified for the GI Bill and the Post 9/11 GI Bill.  The question was whether a veteran like Bo could obtain the fully benefits of both programs subject to an overall statutory cap.

The Court, over a dissent, held that the answer to that question is yes. In doing so, the Court had to interpret multiple provisions of chapter 30 of title 38 of the U.S. Code, which triggered the Chevron framework. The Court's explanation of the Chevron standard was pretty standard until it got to step two and said this:

Huh? I'm pretty sure that's not right, but that's exactly what the Court did. After concluding that the relevant statutory provisions didn't answer the precise question at issue, the Court concluded the statute was ambiguous. Then, true to its word, it said this:

I've never seen anything like this. I'll add that the Secretary apparently argued that the statute was unambiguous and thus didn't seek deference at all (the briefs are sealed so I couldn't read them; I base my assumption that the Secretary argued that the statute was unambiguous on (1) context clues in the Court's opinion and (2) the parties' briefing on a motion for reconsideration that wasn't sealed). So this case presents a Chevron Step One and Half problem.

So what happened here? You could argue the Court rejected the Secretary's interpretation at Chevron step two, but that doesn't seem accurate. It seems more accurate to say that the Court applied Chevron, got to step two, and only then performed a pseudo-step-zero move to conclude that Chevron doesn't apply. This raises lots of questions: Can the Secretary trump this interpretation with a contrary interpretation promulgated after notice and comment later (I think the answer must be yes under Brand X)? Is the Court's ambiguity diagnosis binding? Why did the Court apply Chevron at all if there were no Chevron-eligible regulations addressing the issue? If this regulations-only approach to Chevron is more common than I realize, please let me know!

Okay, so where does Kisor fit into all of this? Well, the Court brings it up in footnote 11 (which appears in the last quoted passage above):

A couple of thoughts. First, the Court says "we might have been called on to accord [Auer deference] ..." as if it would have made a difference, but as far as I can tell, no one asked the Court to apply Chevron either and that didn't stop the Court from applying it (before holding, confusingly, that it didn't apply). As I mentioned earlier, it appears the Secretary argued the statute was unambiguous, which, if true, would have made Chevron irrelevant. Does the Court mean to imply that agencies must seek Auer deference for it to come into play whereas Chevron is automatic? Would such an approach even make sense? Second, as uncomfortable as I am with the Court's approach to Chevron, I've got to say that assuming the Court is correct about the statute being ambiguous (a point I take no position on), it's absolutely right that Auer should not apply to the Secretary's interpretation of regulations that just parrot the ambiguous statutory text. Kisor said exactly that in a footnote citing Gonzales v. Oregon (cited in the quoted footnote above).

Isn't this stuff crazy?

Belt v. PF Chang's China Bistro, Inc., 2019 WL 3829459 (Aug. 15, 2019)

Plaintiffs brought a putative class and collective action alleging claims under the FLSA. PF Chang's moved for judgment as a matter of law. The question before the Court was whether PF Chang's violated the FLSA by taking a "tip credit" for all the hours plaintiffs worked, even though plaintiffs spent more than twenty percent of their time performing "untipped related work." The case involves FLSA provisions, DOL regulations, and a slew of DOL guidance documents interpreting and then reinterpreting those regulations. It's all far too complex to summarize here, so I won't. Instead, here's a very basic summary of the Court's holding:

The FLSA, under Section 203(m), allows employers to take the tip credit for hours worked by “tipped employees.” 29 U.S.C. § 203(m)(2)(A). A tipped employee, under Section 203(t) of the FLSA, is “any employee engaged in an occupation in which he customarily and regularly receives more than $30 a month in tips.” 29 U.S.C. § 203(t). Therefore, the question before the Court is whether Plaintiffs are tipped employees, that is, “engaged in an occupation in which [they] customarily and regularly receive[ ] ... tips”, when they spend more than twenty percent of their time performing untipped related work. The Court concludes that they are not tipped employees during the time they spend performing untipped related work. Therefore, Plaintiffs' claims may proceed.

The Court first explained that because section 203(t) of the FLSA is ambiguous and DOL's interpretation of the provision was reasonable, the Court deferred to DOL's view under Chevron. The Court then proceeded to interpret the regulation, which is where Kisor kicked in. The Court states the basic standard correctly, although it does say that if the Court concludes that neither Auer nor Skidmore deference applies, it must then apply the traditional tools of construction to determine the meaning of the regulation without any deference to the agency's interpretation. I'm not sure that's exactly right. The Court is supposed to exhaust the tools of construction right off the bat to determine whether the regulation is genuinely ambiguous. As such, there should be no tools of construction left to apply by the time the Court has concluded that neither Auer nor Skidmore deference is appropriate. Instead, the Court should presumably just reject the agency's interpretation.

Of course, that does raise a common sense question: If there are no more tools left to apply and if the Court has rejected the agency's interpretation, then what interpretation does it give the regulation? Does it simply adopt the alternative interpretation of the other party in the case automatically? If not, how does it decide what other interpretation to supply? According to Kisor, once the tools of construction run out, all that's left is policy judgment. So is the judge just supposed to consult his or her own policy preferences at that point? Hmmm.

Anyway, the Court proceeds to conclude that (1) DOL's "Dual Jobs" regulation is ambiguous and (2) not entitled to deference. The Court explains that both parties--PF Chang's and the putative class plaintiffs--agree that DOL's interpretation of the regulation doesn't warrant deference. The Court agrees and even says "it is obvious why: the current interpretation is unreasonable and doesn't reflect DOL's fair and considered judgment." Bewilderingly, though, the Court immediately declares it must "nevertheless ... independently evaluate whether the DOL's current interpretation ... warrants either Auer or Skidmore deference." Huh? How on earth could an obviously unreasonable interpretation merit deference of any sort? The Court never explains.

Fortunately, the Court proceeds to walk through various reasons DOL's interpretation is indeed not entitled to deference, including that it is internally inconsistent, inconsistent with the regulatory language, not reflective of the agency's fair and considered judgment etc. Of course, as I've mentioned, the Court already reached at least one of those conclusions earlier in the opinion, so again, it's not clear to me why any further discussion was necessary. In any event, there you have it: A case concluding that an agency's interpretation of an ambiguous regulation is not entitled to deference under Kisor.  

Next, the Court explains that the agency's interpretation doesn't merit Skidmore deference for the same reasons. Then, finally, the Court interprets the regulation on its own. As already discussed, however, I find this step in the Court's analysis confusing as well because in explaining its reasons for concluding that "The Dual Jobs Regulation Places a twenty percent limit on untipped related work," the Court applies traditional tools of construction like "the ordinary and natural meaning of the regulatory language" considered "within its context and the regulation's overarching purpose." But wasn't the Court supposed to have exhausted all tools of construction, including the ones just mentioned, before concluding the statute was ambiguous? If so, how is there any interpreting left for the Court to do? I find this approach impossible to follow.

One case did defer to DOL's interpretation of the Dual Jobs Regulation, and it was decided by a district court in the Fifth Circuit. See Shaffer v. Perry's Restaurants, Ltd., 2019 WL 2098116, at *1 (W.D. Tex. Apr. 24, 2019). Importantly, though, Shaffer was decided before Kisor, was never appealed, and is contrary to every other federal court decision to address the issue.

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