Tech & Telecom Law News

Supreme Court’s Junk-Fax Case Spotlights Agency Deference

March 22, 2019, 3:32 PM

The U.S. Supreme Court is set to weigh whether district courts must defer to Federal Communications Commission interpretations of the federal robocall law.

The high court March 25 will hear oral argument in a case involving an unwanted promotional fax that healthcare information company PDR Network LLC allegedly sent to a chiropractic office.

At issue is the amount of deference courts owe to the FCC under the Telephone Consumer Protection Act, which generally bars the sending of unsolicited advertisements via fax. The FCC has said that faxes promoting free goods qualify as advertisements under the law.

“If the FCC gets its wish, other agencies will line up to seek the same insulation from judicial review for their own legal interpretations,” petitioner PDR Network said in a brief, adding that an FCC win would raise “grave constitutional concerns.”

The U.S. Court of Appeals for the Fourth Circuit reversed a dismissal of the case because the district court didn’t apply the FCC’s definition. But PDR Network, along with state and local governments, argue that ruling sparks separation-of-powers concerns by stripping the judiciary’s ability to interpret laws.

Defining ‘Advertisement’

The case began over claims by Carlton & Harris Chiropractic Inc. that PDR Network violated the law by faxing an unsolicited ad for a free e-book. Instead of using the FCC’s definition of “advertisement,” the district court held that a free e-book promotion isn’t an ad under the law and dismissed the claims.

The Fourth Circuit, in reinstating the case, said the district court erred in ignoring the FCC’s interpretation and applying its own. Under the Hobbs Act, only federal appeals courts can determine the validity of agency orders, the appeals court said. PDR Network then appealed to the Supreme Court.

PDR Network argues that the Hobbs Act only gives appeals courts exclusive jurisdiction over cases against the federal government that challenge an allegedly unlawful agency action. The Fourth Circuit’s broader interpretation of that law raises questions over whether Congress has improperly stepped on courts’ authority to “say what the law is,” the company argued.

“The district court clearly had subject-matter jurisdiction over the suit,” PDR Network said in its brief. “But under the Fourth Circuit’s view of the Hobbs Act, the district court nonetheless lacked authority to consider the dispositive legal question at the heart of that suit—the meaning of the statute that Carlton & Harris seeks to punish PDR for (supposedly) violating.”

State and local government associations, including the National League of Cities and the U.S. Conference of Mayors, wrote in a brief backing PDR that granting “blind deference” to agency interpretations of statutes “creates serious separation of power problems.”

Such deference, they said, would force state and local authorities to directly challenge new agency orders within the time frame for bringing such petitions, or “lose the chance to do so forever.” They cited FCC efforts to restrict how cities can manage the deployment of wireless towers on their properties.

‘Forfeited’ Arguments

The Justice Department, which is backing Carlton & Harris, said the Fourth Circuit’s ruling doesn’t deny the judiciary the power to consider whether agency actions are valid. The Hobbs Act doesn’t bar judicial review, but instead sets out a review process to promote the finality and uniformity of agency orders, the Justice Department said in its Supreme Court brief.

Carlton & Harris, in its brief, said the plain language of the Hobbs Act bars district courts from determining the validity of final FCC orders. But the district court, by refusing to apply the FCC’s order interpreting “advertisement,” did determine the order’s validity, it said.

Carlton & Harris also said PDR Network “forfeited” its arguments on appeal because it failed to present them to the lower court.

“PDR never argued that the district court should not accept the FCC’s interpretation,” the chiropractic office said in its brief. PDR Network instead asked the court to apply the FCC’s order in its favor, it said.

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

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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