In a highly anticipated opinion authored by Justice Breyer, the U.S. Supreme Court declined to resolve the issue of whether an FCC order interpreting the Telephone Consumer Protection Act (TCPA) was binding on the Federal District Court, holding that the answer hinged on two preliminary sets of questions. The high court in PDR Network, LLC v. Carlton & Harris Chiropractic, Inc., No. 17-1705, 2019 U.S. LEXIS 4181 (June 20, 2019) vacated the Fourth Circuit’s judgment and remanded the case for resolution of the initial inquiries. Unfortunately, the Supreme Court never addressed the ultimate question of whether District Courts must defer to agency decisions under the Hobbs Act.
By way of background, respondent Carlton & Harris filed a putative class action alleging that a fax sent by PDR offering a free Physicians’ Desk Reference e-book violated the TCPA. Carlton & Harris relied on a 2006 FCC Order interpreting the TCPA to prohibit unsolicited faxes even if they offer goods for free. The District Court dismissed the case, concluding the fax was not an unsolicited advertisement under the TCPA and noted that it was not required to accept the FCC’s interpretation of “unsolicited advertisement.” The Court of Appeals reversed, explaining that the jurisdictional command of the Hobbs Act vested the ability to challenge the validity of final orders of the FCC solely with the Court of Appeals, therefore necessitating the District Court’s adherence to the FCC interpretation. The Fourth Circuit held that under the FCC’s interpretation, the facts as alleged demonstrated the fax was an unsolicited ad.
The U.S. Supreme Court granted certiorari to determine whether the Hobbs Act required the District Court to accept the FCC’s legal interpretation of the TCPA. The Supreme Court held that the issue could not be addressed until two preliminary questions were resolved. The first question was whether the 2006 FCC Order was equivalent to a legislative rule, in that it was issued by an agency pursuant to statutory authority and has the force and effect of law, or whether it was an interpretive rule, which merely advises the public of the agency’s construction of the statute and lacks the full force and effect of law. The Court noted that if the relevant portion of the 2006 Order was the equivalent of an interpretive rule it may not be binding on the District Court. The opinion goes on to clarify that “we say ‘may’ because we do not definitively resolve these issues here.”
The second question for the Fourth Circuit to consider is whether PDR had a “prior” and “adequate” opportunity to seek judicial review of the 2006 Order. Pursuant to the Administrative Procedure Act an agency action is subject to judicial review except “to the extent that [a] prior, adequate, and exclusive opportunity for judicial review is provided by law.” The crux of the issue is whether the Hobbs Act’s exclusive review provision afforded PDR a prior and adequate opportunity for judicial review of the Order. If the answer is no, the Administrative Procedure Act may permit PDR to challenge the validity of the order in an enforcement proceeding notwithstanding whether the order constitutes a “legislative” or “interpretive” rule. Since the Supreme Court is “a court of review and not first review” the case was remanded for consideration of the two preliminary issues.
Justice Thomas authored a three-page concurrence joined by Justice Gorsuch explaining that the Fourth Court of Appeals’ holding rested on a mistaken and potentially unconstitutional understanding of the relationship between federal statutes and agency orders. Justice Thomas explained that interpreting a statute does not in itself determine the validity of an agency order interpreting the same statute and that a contrary view would run afoul the constitution. Justice Thomas cited the Supreme Court’s decision in Marbury v. Madison in explaining that if the Hobbs Act required the district court to automatically accept the FCC interpretation as authoritative it would violate Article III of the Constitution, which vests judicial power in the courts. Justice Thomas concluded his concurrence by emphasizing the fundamental flaw underlying the notion of judicial deference to agency interpretations without regard to the text of the statute.
Justice Kavanaugh authored a separate concurrence joined by Justice Thomas, Justice Alito, and Justice Gorsuch, explaining that while he agreed that the Fourth Circuit’s judgment should be vacated he would have resolved the broader deference question. Justice Kavanaugh explained that there are two categories of statutes that allow for facial, pre-enforcement review of agency orders. The first category expressly precludes review in subsequent enforcement actions and the second are silent as to whether the party may argue against the agency’s interpretation in subsequent enforcement proceedings. The Hobbs Act resembles the latter. Justice Kavanaugh asserted that in the absence of statutory language to the contrary, a default rule allowing for the review of agency decisions should apply. He proffered several reasons why judicial review should be the default rule, namely that “[w]hen Congress intends to eliminate as-applied judicial review of agency interpretation of statutes in enforcement actions, Congress can, must, and does speak clearly.” Justice Kavanaugh also emphasized the practical implications of expecting every potentially affected party to bring a pre-enforcement Hobbs Act challenge against every agency order that could potentially affect them in the future. Further, barring parties from challenging the authority of agency rules in as-applied enforcement actions would implicate the due process clause.
This dispute has been highly anticipated because it is cast in a larger jurisprudential context due to the potential implications on the doctrine of deference to administrative agencies as well as the specific ability of district courts to question FCC guidance. This is especially important in the context of TCPA actions. While the majority declined to resolve the issue, Justice Kavanaugh expressly noted that his analysis is “available to the court on remand” and “to other courts in the future.” Stay tuned ….