Auer Deference on the Docket

Among this morning’s cert grants was Christopher v. SmithKline Beecham Corp., in which the Court will have to determine whether pharmaceutical sales representatives are subject to the “outside sales” exemption from the Fair Labor Standards Act’s overtime requirements.  At first glance, Christopher may seem like a rather pedestrian labor law case.  Don’t be fooled. Christopher has the potential to be an important administrative law case concerning the extent to which courts should defer to agency interpretations of their own regulations.

The underlying labor law question — whether drug companies must pay pharmaceutical sales representatives overtime — divided the lower courts. The U.S. Court of Appeals for the Second Circuit, in In re Novartis Wage & Hour Litigation, answered “yes,” deferring to the Department of Labor’s interpretation of its own regulations implementing the FLSA.  In Christopher, however, the U.S. Court of Appeals for the Ninth Circuit reached the opposite result, in the process rejecting the Labor Department’s interpretation of its own regulations offered in an amicus brief.  The two courts divided not only on the overtime question, but also the scope of Auer deference to subsequent agency interpretations of ambiguous regulations.  The Second Circuit found the Labor Department’s interpretation “controlling,” while the Ninth Circuit concluded that (under Gonzales v. Oregon) no such deference is due when an agency’s regulation does little more than “parrot” the underlying statutory language.

The split over the applicability of Auer deference was expressly noted in SmithKline’s response to the petition for certiorari.  Indeed, this split was one of the reasons that SmithKline supported the cert petition.  SmithKline’s brief stressed that the uncritical application of Auer deference can empower agencies to circumvent the normal process for revising regulatory requirements and evade the limitations on Chevron deference imposed by Christensen and Mead.  It further noted the serious questions about Auer deference Justice Scalia raised last term in Talk America v. Michigan Bell. In all likelihood, these concerns contributed to the Court’s decision to grant cert.

What the Court will do with Auer deference is anyone’s guess.  The Court may be content to clarify the limitations on the doctrine hinted at in Gonzales. On the other hand, the Court could take the opportunity to pare back the doctrine to bring it into line with other recent changes in administrative law doctrine, the post-Mead reformulation of Chevron in particular.  In any event, for those interested in administrative law, this will definitely be a case worth watching.