Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-caDC-12-05246/USCOURTS-caDC-12-05246-0/pdf.json

Nature of Suit Code: 890
Nature of Suit: Other Statutory Actions
Cause of Action: 

---

United States Court of Appeals

FOR THE DISTRICT OF COLUMBIA CIRCUIT

Argued March 22, 2013 Decided July 2, 2013

No. 12-5246

MORTGAGE BANKERS ASSOCIATION,

APPELLANT

v.

SETH D. HARRIS, SUED IN HIS OFFICIAL CAPACITY, ACTING 

SECRETARY OF UNITED STATES DEPARTMENT OF LABOR, ET 

AL.,

APPELLEES

Appeal from the United States District Court

for the District of Columbia

(No. 1:11-cv-00073)

Michael W. Steinberg argued the cause for appellant. 

With him on the briefs were Sam S. Shaulson and David M. 

Kerr. 

Anthony J. Steinmeyer, Assistant Director, U.S. 

Department of Justice, argued the cause for appellees. With 

him on the brief were Stuart F. Delery, Principal Deputy 

Assistant Attorney General, Ronald C. Machen Jr., U.S. 

Attorney, and Douglas N. Letter, Director. 

Sundeep Hora and Adam W. Hansen were on the brief for 

intervenors-appellees Jerome Nickols, et al.

USCA Case #12-5246 Document #1444670 Filed: 07/02/2013 Page 1 of 11
2

Before: TATEL and BROWN, Circuit Judges, and 

SENTELLE, Senior Circuit Judge.

Opinion for the Court by Circuit Judge BROWN.

BROWN, Circuit Judge: The tandem of Paralyzed 

Veterans of America v. D.C. Arena L.P., 117 F.3d 579 (D.C. 

Cir. 1997) and Alaska Professional Hunters Ass’n v. FAA, 

177 F.3d 1030 (D.C. Cir. 1999) (“Alaska Hunters”)

announced an ostensibly straightforward rule: “When an 

agency has given its regulation a definitive interpretation, and 

later significantly revises that interpretation, the agency has in 

effect amended its rule, something it may not accomplish 

[under the APA] without notice and comment.” Alaska

Hunters, 177 F.3d at 1034. The only question properly before 

this three-judge panel is a narrow one: what is the role of

reliance in this analysis?1 Is it, as the government contends, a 

“separate and independent requirement,” Oral Arg. 10:42–

10:45, or is it just one of several factors courts can look to in 

order to determine whether an agency’s interpretation 

qualifies as definitive,2 as Mortgage Bankers Association 

(“MBA”) suggests? We find ourselves in general agreement 

with the industry association that there is no discrete reliance 

 1 Bound as we are by Paralyzed Veterans and Alaska Hunters, 

we decline the government’s invitation to “call” for “the full Court 

[to] * * * lay the Paralyzed Veterans doctrine to rest.” Letter of 

Clarification, No. 12-5246 (D.C. Cir. Mar. 25, 2013) (quoting 

Appellee Br. 47). 

2 Our case law uses the terms “definitive” and “authoritative” 

interchangeably. Compare Paralyzed Veterans, 117 F.3d at 586 

(“authoritative interpretation”), with Alaska Hunters, 177 F.3d at 

1034 (“definitive interpretation”). 

USCA Case #12-5246 Document #1444670 Filed: 07/02/2013 Page 2 of 11
3

element. Reliance is just one part of the definitiveness 

calculus.

Fortunately, this is as far as our inquiry need go. Having 

conceded the existence of two definitive — and conflicting —

agency interpretations, the government acknowledged at oral 

argument that petitioner “prevail[s] if . . . the only reason 

[courts] look to reliance is to find out if there is a definitive 

interpretation.” Oral Arg. 10:56–11:10. So stipulated, we 

reverse the District Court order dismissing MBA’s Motion for 

Summary Judgment and remand the case with instructions to 

vacate the 2010 Administrator Interpretation significantly 

revising the agency’s 2006 Opinion Letter. If the Department 

of Labor (“DOL”) wishes to readopt the later-in-time 

interpretation, it is free to. We take no position on the merits 

of their interpretation. DOL must, however, conduct the 

required notice and comment rulemaking.

I

Petitioner MBA is a national trade association 

representing over 2,200 real estate finance companies with 

more than 280,000 employees nationwide. Mortgage Bankers 

Ass’n v. Solis, 864 F. Supp. 2d 193, 197 (D.D.C 2012). We 

focus here on the mortgage loan officers who typically assist 

prospective borrowers in identifying and then applying for 

various mortgage offerings. Though the recent financial crisis 

has thrust members of this profession into the forefront of the 

news, our concern here is more mundane: the method and 

manner of their pay. 

Under the Fair Labor Standards Act (“FLSA”), 29 U.S.C. 

§ 201 et seq., an old law DOL must adapt to new 

circumstances, employers are generally required to pay 

overtime wages to employees who work longer than 40 hours 

USCA Case #12-5246 Document #1444670 Filed: 07/02/2013 Page 3 of 11
4

per week. See 29 U.S.C. § 207(a). The Act provides several 

exceptions to this rule. Those “employed in a bona fide 

executive, administrative, or professional capacity[,] . . . or in 

the capacity of outside salesman,” for example, are exempt 

from the statute’s minimum wage and maximum hour 

requirements. 29 U.S.C. § 213(a)(1). Whether mortgage loan 

officers qualify for this “administrative exemption” is a 

difficult and at times contentious question. So difficult, in 

fact, DOL has found itself on both sides of the debate. In 

2006, the agency issued an opinion letter concluding on the 

facts presented that mortgage loan officers with archetypal job 

duties fell within the administrative exemption. Just four 

years later, in 2010, Deputy Administrator Nancy J. Leppink

issued an “Administrator’s Interpretation” declaring that 

“employees who perform the typical job duties” of the 

hypothetical mortgage loan officer “do not qualify as bona 

fide administrative employees.” J.A. 259. The 2010 

pronouncement “explicitly withdrew the 2006 Opinion 

Letter.” Mortgage Bankers Ass’n, 864 F. Supp. 2d at 201.

Citing Paralyzed Veterans and its progeny, MBA

challenged DOL’s decision to change their “definitive 

interpretation” without first undergoing notice-and-comment 

rulemaking as a violation of the APA. Compl. ¶ 38. [J.A. 22]

The District Court rejected the argument. After assuring itself 

that Paralyzed Veterans remains good law, see Mortgage 

Bankers Ass’n, 864 F. Supp. 2d at 204–05, the court read our 

recent decision in MetWest Inc. v. Secretary of Labor, 560 

F.3d 506 (D.C. Cir. 2009), to require a showing of 

“substantial and justifiable reliance on a well-established 

agency interpretation.” See id. at 207 (internal quotation 

marks and emphasis omitted). Although petitioner had argued 

reliance in the alternative, the court concluded MBA was

unable to “satisfy the standard for demonstrating reliance 

recognized in MetWest.” Id. at 208. The court then denied 

USCA Case #12-5246 Document #1444670 Filed: 07/02/2013 Page 4 of 11
5

MBA’s Motion for Summary Judgment, but not before 

dismissing the association’s substantive challenge to the 2010 

interpretation as inconsistent with the agency’s 2004 

regulation, 29 C.F.R. § 541.203(b). The present appeal 

followed.

II

On its face, the Paralyzed Veterans analysis contains just 

two elements: definitive interpretations (“definitiveness”) and

a significant change (“significant revision”).3 But as with 

most things doctrinal, the devil is in the details.

Despite its age, few cases discuss Paralyzed Veterans at 

length.

4 One critical question — and a dispositive one here —

 3 The doctrine’s operative assumption — the belief that a 

definitive interpretation is so closely intertwined with the regulation 

that a significant change to the former constitutes a repeal or 

amendment of the latter — is established law in this Circuit, see, 

e.g., Envtl. Integrity Project v. EPA, 425 F.3d 992, 997–98 (D.C. 

Cir. 2005), but the Courts of Appeals are split on the issue. 

According to one recent survey, the Fifth Circuit has adopted our 

approach and “the Eighth and Third Circuits have mentioned [it] in 

dicta,” but “[t]he First, Second, Fourth, Sixth, Seventh, and Ninth 

Circuits agree that changes in interpretations do not require notice 

and comment because both the original and current position 

constitute interpretive rules.” Warshauer v. Solis, 577 F.3d 1330, 

1338 (11th Cir. 2009); see also United States v. Magnesium Corp. 

of Am., 616 F.3d 1129, 1138–39 (10th Cir. 2010) (noting a slightly 

different circuit split between the Third, Fifth, and Sixth Circuits on 

one hand, and the First and Ninth Circuits on the other).

4 It need not reflect poorly on the doctrine that so few of our 

cases haven taken up Paralyzed Veterans’s banner — and still 

fewer have used its reasoning to invalidate an agency interpretation 

for failing to conduct notice and comment rulemaking. See

USCA Case #12-5246 Document #1444670 Filed: 07/02/2013 Page 5 of 11
6

concerns the role of reliance. Borrowing heavily from 

MetWest and Honeywell International, Inc. v. NRC, 628 F.3d 

568 (D.C. Cir. 2010), two recent cases that draw on our 

Alaska Hunters decision, DOL suggests that the Paralyzed 

Veterans analysis contains an independent third element: 

substantial and justified reliance. MBA takes a different 

approach to Alaska Hunters altogether. In its view, that case

stands only for the proposition that reliance can elevate an 

otherwise non-definitive interpretation into a definitive 

interpretation; as such, it falls squarely within the existing 

definitiveness element. Of the two, we believe MBA’s 

approach better explains Alaska Hunters.

Alaska Hunters is an exceptional case with an otherwise

straightforward premise. In 1963, the Federal Aviation 

Administration’s Alaska office (the “Alaskan Region”) began 

a thirty year practice of “uniformly advis[ing] all guides, 

lodge managers and guiding services in Alaska that they 

could meet their regulatory responsibilities by complying with 

the requirements of [14 C.F.R. Part 91] only.” Alaska 

Hunters, 177 F.3d at 1035. It was not until 1997 that officials 

in FAA’s Washington, D.C. headquarters formally pushed 

back against the regional office’s long-standing 

interpretation.5 Through a “Notice to Operators” published in 

 

Appellee Br. 40–41 (counting Alaska Hunters and arguably 

Environmental Integrity Project as the lone exceptions). Paralyzed 

Veterans may very well serve as a prophylactic that discourages 

agencies from attempting to circumvent notice and comment 

requirements in the first instance. We are unable to quantify these 

effects by reference to case citations alone.

5 It is “uncertain” whether the D.C.-based officials had 

knowledge of the Alaskan Region’s interpretive position prior to 

the 1990s — that is, before FAA consolidated power in its national 

headquarters following a near three-decade-long experiment with a 

USCA Case #12-5246 Document #1444670 Filed: 07/02/2013 Page 6 of 11
7

the Federal Register without notice and opportunity for 

comment, the agency announced that certain Alaskan guides 

would now have to comply with other, more onerous 

regulations. Individuals who had “opened lodges and built up 

businesses dependent on aircraft” in reliance on the Alaskan 

Region’s interpretation promptly brought suit challenging the 

agency’s about-face. Id. at 1035.

In relevant part, FAA argued Paralyzed Veterans was 

“inapposite” because the Alaskan Region’s interpretation was 

not definitive; it “represented simply a local enforcement 

omission, in conflict with the agency’s policy in the rest of the 

country.” Id. at 1034–35. We disagreed. Although a local 

office’s interpretation of a regulation or provision of advice to 

a regulated party “will not necessarily constitute an 

authoritative administrative position, particularly if the 

interpretation or advice contradicts the view of the agency as 

a whole,” the situation in Alaska Hunters was “quite 

different.” Id. at 1035.

For one thing, there was no evidence in the record of any

conflicting interpretation. The Alaskan Region uniformly 

enforced its interpretive position for thirty years and both 

FAA and the National Transportation Safety Board had at 

some point referred to it as FAA policy. See id. at 1035. And 

even if “FAA as a whole somehow had in mind an 

interpretation different from that of its Alaskan Region, 

guides and lodge operators in Alaska had no reason to know 

this.” Id. All the regulated parties had before them was the 

 

decentralized organizational structure “that transferred much 

authority to regional organizations.” Alaska Hunters, 177 F.3d at 

1032.

USCA Case #12-5246 Document #1444670 Filed: 07/02/2013 Page 7 of 11
8

formal,6 uncontradicted, and uniformly-applied interpretation 

of a local office — an interpretation Alaskan guide pilots 

reasonably relied on for three decades. Such advice might not 

necessarily qualify as definitive, but here, we concluded, it

“became an authoritative departmental interpretation, an 

administrative common law applicable to Alaskan guide 

pilots” that could not be rewritten without notice and 

comment rulemaking. Id.

Alaska Hunters’s takeaway is clear: reliance is but one 

factor courts must consider in assessing whether an agency 

interpretation qualifies as definitive or authoritative. Or to put 

matters more precisely, because regulated entities are unlikely 

to substantially — and often cannot be said to justifiably —

rely on agency pronouncements lacking some or all the

hallmarks of a definitive interpretation, significant reliance 

functions as a rough proxy for definitiveness. The converse 

also holds true. Agency pronouncements effectively ignored 

by regulated entities are unlikely to bear the marks of an 

authoritative decision. See Ass’n of Am. R.R., 198 F.3d at

949–50 (finding no definitive interpretation in part because 

“[n]othing in th[e] record suggests that railroads relied on the 

[agency statements] in any comparable way” to the Alaska 

guides).7 This is more art than science. Courts must weigh the 

 6 “[T]he regional office’s position was reflected in official 

agency adjudications holding that Alaskan guides need not comply 

with commercial pilot standards.” Ass’n of Am. R.R. v. DOT, 198 

F.3d 944, 949 (D.C. Cir. 1999).

7 Obviously, this is not to suggest any measure of reliance will 

automatically render an interpretation definitive. 

USCA Case #12-5246 Document #1444670 Filed: 07/02/2013 Page 8 of 11
9

role reliance plays on a case-by-case basis to ascertain its 

value. 

DOL pushes back against this framework by treating

reliance as a separate and independent third element.8 That, 

the agency claims, is exactly what our MetWest decision did

in (1) addressing reliance only in the alternative, i.e., after

assuming a definitive interpretation, see MetWest, 560 F.3d at 

510–11, and (2) speaking of Alaska Hunters’s “substantial 

and justifiable reliance on a well-established agency 

interpretation,” id. at 511, a phrase “most natural[ly] read[]” 

to distinguish definitiveness and reliance as “separate 

 8 The agency never develops the implications of its alternative 

vision, but we think two points obvious. First, by dissociating

reliance from definitiveness and calling it an independent 

requirement, DOL believes courts will have to address the reliance 

issue in all cases, including cases like the present in which 

definitiveness has been established. Second, DOL assumes the third 

element would be satisfied only if the reliance is equal to or greater 

than that of Alaska Hunters, a unique case. Meaning, the Paralyzed 

Veterans doctrine would only ever apply where the parties can 

demonstrate substantial and justified reliance akin to that of the 

Alaska Guides — a reliance interest the government describes as 

“especially strong” since affected parties uprooted their lives to 

move to Alaska to start businesses. Appellee Br. 19; see also

MetWest, 560 F.3d at 511; Mortgage Bankers Ass’n, 864 F. Supp. 

2d at 207 (“[T]his Court is convinced that MetWest intended to set 

the bar for what a plaintiff must establish to satisfy the reliance 

component of the Paralyzed Veterans doctrine.”). If adopted, this 

position effectively renders Paralyzed Veterans dead letter law by 

limiting its application to a most extreme fact pattern — one 

unlikely to ever be duplicated. 

USCA Case #12-5246 Document #1444670 Filed: 07/02/2013 Page 9 of 11
10

requirements,” Appellee Br. 23–24; see also Mortgage 

Bankers Ass’n, 864 F. Supp. 2d at 205–08.

9

We do not think this characterization of MetWest’s dicta 

could possibly be correct. “Definitive” is a term of art as used 

in the Paralyzed Veterans context. Once a court has classified 

an agency interpretation as such, it cannot be significantly 

revised without notice and comment rulemaking. No 

intervening decision of this Court ever read Alaska Hunters to 

require anything to the contrary, and that includes Association 

of American Railroads, the lone pre-MetWest case DOL cites 

as having treated “reliance and definitive interpretation as two 

independent requirements.” Appellee Br. 24.10 Whether 

reliance played a significant role in the analysis, see, e.g.,

Alaska Hunters, 177 F.3d at 1035–36; Ass’n of Am. R.R., 198 

F.3d at 950; or took a back seat where the definitive nature of 

the interpretation was treated as self-evident, see Envtl. 

Integrity Project, 425 F.3d at 998; Monmouth Med. Ctr. v. 

Thompson, 257 F.3d 807, 814 (D.C. Cir. 2001), we have 

always considered it as part of the first element. In short, we 

have been too consistent in our treatment of these so-called 

agency flip-flops to now read dictum in MetWest as sub 

 9 Because Honeywell unceremoniously adopts MetWest’s 

language and approach, see Honeywell, 628 F.3d at 579–80, we 

focus our discussion primarily on MetWest. 

10 See Ass’n of Am. R.R., 198 F.3d at 948 (“We find nothing in 

these materials, individually or taken together, that comes even 

close to the definitive interpretation that triggered notice and 

comment rulemaking in Alaska Professional Hunters.”); see also

Devon Energy Corp. v. Kempthorne, 551 F.3d 1030, 1041 (D.C. 

Cir. 2008); Air Transp. Ass’n of Am. v. FAA, 291 F.3d 49, 56–58 

(D.C. Cir. 2002); Envtl. Integrity Project, 425 F.3d at 997–98.

USCA Case #12-5246 Document #1444670 Filed: 07/02/2013 Page 10 of 11
11

silentio reconfiguring the doctrine in the absence of either a 

unanimous Irons footnote or a decision of the en banc court.

Finally, we disagree with the suggestion that the only 

way to protect agencies from inadvertently locking in 

disfavored, informally promulgated positions is to impose a 

separate and independent reliance element. Practically 

speaking, reliance considered as part of the definitiveness 

determination will more than adequately protect agencies 

from this ossification threat. We thus decline DOL’s 

invitation to spin a third requirement from whole cloth. 

Emphatically, that is an issue for the full Court to take up at 

its discretion, not this three-judge panel. 

III

In view of the government’s concession that the case 

need go no further than this, we reverse the District Court 

order denying MBA’s Motion for Summary Judgment and 

remand the case with instructions to vacate DOL’s 2010 

Administrator Interpretation. 

So Ordered.

USCA Case #12-5246 Document #1444670 Filed: 07/02/2013 Page 11 of 11