Justices Mull FCC Order Deference, Finality in Fax Dispute (1)

The US Supreme Court on Tuesday signaled it could limit whether district courts must accept adjudications from the Federal Communications Commission and limit review under a federal law that says appeals courts must review the agency’s final orders.

During oral arguments, the justices grappled with questions over whether deference to orders that result from agency adjudications could impede litigants’ due process rights or whether opening review up at the trial level undermines the finality of agencies’ orders.

Two chiropractic practices sued McKesson Corp. in 2013 and alleged the medical supply company sent unsolicited online fax advertisements in violation of the Telephone Consumer Protection Act. The chiropractic practices’ class was decertified after the FCC interpreted the statute as excluding online fax services in a separate proceeding. The district court said the class had to be decertified because the order was final and subject to the Hobbs Act, a law that limits review of final orders to appellate courts.

The chiropractic practices told the Supreme Court that the order was interpretive and not subject to the Hobbs Act.

But Justice Neil M. Gorsuch noted that the order “was a final order” that arose out of an administrative adjudication.

“That would seem to me to be every day of the week and twice on Sundays an order and therefore implicate the Hobbs Act,” he added.

Gorsuch added that this could present a problem for future litigants, because the Hobbs Act says final orders must be challenged within 60 days.

“Are we going to then have a jurisprudence of adequacy,” built on whether litigants had enough opportunity to challenge an order, Gorsuch asked. “And if so, what does that look like for parties who weren’t alive at the time of the administrative proceeding, for parties who wish to present different arguments” from those the agency considered, he added.

Joseph Palmore, of Morrison & Foerster LLP and representing McKesson, responded that Congress was trying to balance “two competing interests” of “finality reliance” and due process concerns. He noted that adequacy could be more party-specific and cautioned that under the petitioners’ view, parties engaging in conduct approved by the agency could still be exposed to liability.

Justice Ketanji Brown Jackson pushed against the petitioners’ argument that litigants who weren’t party to the administrative proceeding have little recourse for direct review of binding orders due to the Hobbs Act’s limitations.

“The suggestion that the agency issues an order and the courts are suddenly divested of any opportunity to address its validity, I think, is inconsistent with the very provision we’re talking about here which allows for the courts of appeals to assess the validity,” Jackson said to Matthew Wessler, of Gupta Wessler LLP and representing the petitioners.

Wessler responded that if a challenge to the order is never brought, and consumers only learn of a potential violation years later, the consumers aren’t able to to get a review of the order under the Hobbs Act.

The ruling could be limited since the order here was issued while the case was being litigated and the litigants weren’t parties to the administrative proceeding, Justice Elena Kagan said.

“I’m wondering why you’ve argued this case quite so broadly,” Kagan noted. “It seems to me that you win this case so long as you say there’s at least a requirement that the parties bringing the suit are legally bound, and that’s not met here, and so we win on that ground.”

Matthew Guarnieri, on behalf of the Solicitor General and supporting McKesson, said the 14th Amendment “does not create any kind of freestanding entitlement to get judicial review of agency action in any court at any time that the plaintiff chooses.”

But Gorsuch pushed back and said that it does generally say that “when Congress chooses to invest courts with jurisdiction, as a rule, judges interpret the law and they have a duty to do so independently, and not automatically and reflexively have to adopt interpretations that the executive branch chooses and prescribes for them.”

The case is McLaughlin Chiropractic Assocs. Inc. v. McKesson Corp., U.S., No. 23-1226, 1/21/25.