Tech & Telecom Law News

Justices Skeptical of Agency Deference in Junk-Fax Case (1)

March 25, 2019, 4:25 PMUpdated: March 25, 2019, 9:28 PM

Several U.S. Supreme Court justices appeared skeptical during a March 25 oral argument that district courts should defer to the Federal Communications Commission’s definition of an advertisement under a federal robocall law.

Justice Neil M. Gorsuch joined Stephen G. Breyer and other justices in questioning whether forcing a lower court to defer to the FCC effectively denies petitioners the chance to challenge the agency’s stance. The high court is weighing whether courts must defer to the FCC’s interpretation of the Telephone Consumer Protection Act.

The high court may decide to scale back the amount of deference courts owe to federal agencies. Gorsuch and Justice Brett M. Kavanaugh both voted to cut back on agency deference during their tenures as circuit court judges.

“What happens if a young man is born after the regulation is adopted and he didn’t read the Federal Register?” Gorsuch asked. “This young man is forever barred” from challenging the validity of that regulation, he said.

The justices are reviewing a ruling by the U.S. Court of Appeals for the Fourth Circuit that reinstated junk-fax claims against health-care information company PDR Network LLC. A district court had decided not to use the FCC’s definition of “advertisement” under the TCPA to determine whether the fax at issue violated the law. But the Fourth Circuit said that under the Hobbs Act, only appeals courts can determine the validity of agency orders.

Individuals and businesses can fight a federal agency’s order interpreting the law by directly challenging the agency while its creating the order or by filing a complaint in court.

Justices asked whether companies could still challenge an order such as the FCC’s interpretation of the TCPA if they were unable to go to court. New businesses formed after the deadline to directly challenge the agency, or those affected by the order after the deadline passed, would have little to no recourse, they said.

“What about the very basic argument, someone who is going to be subject to an enforcement proceeding has a right to notice and an opportunity to be heard on the issue?” Justice Ruth Bader Ginsburg said. “The way this thing came up, PDR had no reason to think that it was a party aggrieved.”

Glenn L. Hara, counsel for Carlton & Harris Chiropractic Inc. which had initially sued PDR Network for the junk fax, said that the publication of a rulemaking in the Federal Register gives parties notice and an opportunity to challenge an agency order. The party would first need to petition the agency, and then if it loses, it can petition the appeals court, Hara, an attorney at Anderson + Wanca, said.

Breyer said that if an agency rejects the challenge, “there’s virtually nothing that you can do about it in court.” The FCC issued its TCPA order in 2006; Carlton & Harris sued in 2015 after it was affected by the order.

Kavanaugh said that while some statutes explicitly preserve or preclude judicial review, the Hobbs Act is silent on the issue. He asked whether judicial review should be the default rule given due process concerns, the fact that Congress could be more explicit, and the absence of case law on the issue.

“Judicial review has always been assumed in enforcement proceedings, unless it’s explicitly barred,” Kavanaugh said.

The case is PDR Network LLC v. Carlton & Harris Chiropractic Inc., U.S., No. 17-1705, argued 3/25/19.

(Updated with additional reporting throughout)

To contact the reporter on this story: Alexis Kramer in Washington at akramer@bloomberglaw.com

To contact the editors responsible for this story: Rebecca Baker at rbaker@bloomberglaw.com; Keith Perine at kperine@bloomberglaw.com

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