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Junk-Fax Case Gives New Justices Shot at Curbing Government Rules

Dec. 26, 2018, 10:31 AM

A Supreme Court decision in a case involving unwanted faxes could end up being a boon to those who want to challenge federal agency decisions in the future.

Signals from the two newest justices that they favor reining in government’s power indicate they will likely find that a district court didn’t have to follow Federal Communications Commission guidance on a federal robocall law in a suit alleging a health-care company violated the law in sending promotional faxes for free e-books, telecom attorneys said.

Both Brett Kavanaugh and Neil Gorsuch, during their time as circuit court judges, voted to cut back on the level of deference owed to federal agencies. Kavanaugh said the Obama-era net neutrality rules were unlawful because the FCC had no authority to create the “major rules.” Gorsuch has been openly skeptical of deferring to federal agencies when the law is unclear.

If the high court sides with the district court that ignored the FCC’s guidance on interpreting the Telephone Consumer Protection Act (TCPA) and tossed the claim, district courts could be empowered to question and challenge agency orders, according to attorneys.

“A ruling could free the courts to ignore FCC and other agency interpretations in more cases,” Dan Deane, who leads the TCPA team at Nixon Peabody LLP in Boston, told Bloomberg Law.

Scaling Back Deference

Carlton & Harris Chiropractic Inc. lost the first round of its federal lawsuit against PDR Network LLC when the U.S. District Court for the District of West Virginia said a free e-book promotion wasn’t an advertisement under the TCPA.

But a federal appeals court said the lower court was wrong to ignore the FCC’s interpretation of the term “advertisement” and erred in applying its own. Under the Hobbs Act, only federal appeals courts, not lower courts, can set aside agency orders, the U.S. Court of Appeals Fourth Circuit said in a 2-1 ruling.

PDR Network turned to the Supreme Court to shed light on the interplay between the Hobbs Act and Chevron deference, the legal principle that courts should defer to federal agencies when seeking clarity. Under the Hobbs Act, district courts can’t challenge agency orders. But under Chevron, they should defer to agency interpretations only when the law is ambiguous.

The West Virginia district court found the TCPA was clear, applied Chevron, and decided it could ignore the FCC’s interpretation.

The Supreme Court, in granting PDR Network’s petition, said it would review whether the Hobbs Act required the district court to accept the FCC’s interpretation. Attorneys say the new justices are likely to vote to limit the reach of Hobbs in order to limit agency deference.

Kavanaugh, as a judge on the U.S. Court of Appeals for the D.C. Circuit, argued in 2017’s United States Telecom Ass’n v. FCC that the FCC didn’t have Congress’ express authority to pass the Obama-era net neutrality rules, which banned internet service providers from blocking or slowing internet traffic.

Gorsuch, as a judge on the U.S. Court of Appeals for the Tenth Circuit judge, said in 2016 in Gutierrez-Brizuela v. Lynch that the Chevron doctrine conflates the roles of the three government branches and may conflict with separation-of-powers principles.

Scaling back Hobbs would allow district courts “to look behind the curtain and question whether the FCC correctly interpreted its rules,” said Joshua Turner, co-chair of Wiley Rein LLP’s communications enforcement and compliance practice. That could lead to conflicting rulings and “a lot of confusion,” he said.

Requiring district courts to automatically defer to agency interpretations would restrict their discretion to interpret statutes they find clear, Becca Wahlquist, head of Snell & Wilmer’s TCPA practice group, said. However, she said it would create more consistency across jurisdictions.

Wahlquist said a ruling in the case could affect a broad range of FCC orders, including a long-awaited interpretation of the term “autodialer” under the TCPA. Businesses have been waiting for the commission to rule on whether the robocall law covers predictive dialers, an issue lower courts have split on absent FCC guidance.

“How much deference is given to that ruling depends on what the Supreme Court says,” she said.

The case is PDR Network LLC v. Carlton & Harris Chiropractic Inc., U.S., No. 17-1705, petitioner’s brief due 1/8/19.

To contact the reporter on this story: Alexis Kramer in Washington at

To contact the editor responsible for this story: Keith Perine at