INSIGHT: SCOTUS Fax Decision Offers Little Clarity on Deference, Even Less on TCPA

In PDR Network v. Carlton & Harris Chiropractic, the U.S. Supreme Court had an opportunity to clarify two confusion-ridden statutes: the Hobbs Act and the Telephone Consumer Protection Act.

The TCPA is particularly in need of clarity, as it is an old statute that is not easily mapped onto new technology, and the FCC’s pronouncements have not always been tethered to the statute’s text. That has created many problems for scrupulous businesses that strive to comply with the statute—and just as many prospects for unscrupulous plaintiffs who strive to profit from it.

Rather than address those issues head on, the Supreme Court remanded the case and identified two questions that must now be answered whenever an agency purports to interpret a statute.

The result is of little use to businesses, but potentially great use to defendants in the many enforcement actions that continue to be filed. Indeed, there will now almost certainly be litigation regarding how the FCC’s pronouncements—of which there have been many—fare under the court’s analysis.

Just the Fax, Ma’am

This case began (like so many other TCPA cases) with a single fax. This particular fax offered a free e-book of the Physician’s Desk Reference. Apparently displeased with that offer, the plaintiff filed suit and alleged that the fax had violated the TCPA because it was an “advertisement” that had been sent without “prior express invitation or permission.”

A threshold question, then, was whether the fax was an “advertisement,” which the TCPA defines as something that promotes the “commercial availability” of goods or services. The defendant argued that it did not concern the “commercial” availability of the e-book (which it offered for free) or any medications (which it did not sell). But the plaintiff argued otherwise, citing a 2006 order in which the FCC had said that something can qualify as an “advertisement” even if it offers something “at no cost.”

The trial court dismissed the case, reasoning that the fax had no “commercial” purpose because it was not meant to sell a book or start a relationship. But the Fourth Circuit reversed, finding that the court should have deferred to the FCC.

Its holding hinged on the Hobbs Act, which requires that aggrieved parties seek judicial review of the FCC’s final orders within 60 days, and then gives one circuit court “exclusive jurisdiction” to determine “the validity” of such orders. Because there was no petition for review in 2006, the Fourth Circuit held that the trial court had no jurisdiction to review the issue today—no matter how badly the FCC misread the statute.

“A Court of ‘Review,’ Not ‘First View’”

Preferring to have its day in court, the defendant petitioned the Supreme Court to review the case. The court agreed to review the procedural question (whether the FCC’s reading was binding) but not the underlying substantive question (whether that reading was right).

Although businesses saw a missed opportunity for clarity, administrative law enthusiasts saw an opportunity for the newest justices to start chipping away at decades of deference decisions.

What we eventually got, though, was a remand to the Fourth Circuit. The majority opinion (written by Justice Stephen Breyer and joined by Chief Justice John Roberts and Justices Ruth Bader Ginsburg, Elena Kagan, and Sonia Sotomayor) preferred to vacate the judgment, as two potentially dispositive issues “were not aired” below.

Specifically, the court directed the Fourth Circuit to address whether the FCC’s interpretation is a “legislative rule” that has the “force and effect of law” (because if not, the Hobbs Act may not apply), and, if so, whether the defendant had a “prior” and “adequate” opportunity to challenge that interpretation (because if not, it may be able to do so now even if the Hobbs Act does apply).

Noting that the Supreme Court is “a court of ‘review,’ not of ‘first view,’” the majority was content to address the deference question another day.

‘A Serious Constitutional Issue’

The other four justices wrote separately to explain why they believed that the court could and should have acted now. As for Justices Clarence Thomas and Neil Gorsuch, they were prepared to reverse on separation-of-powers grounds; because Article I authorizes Congress to write statutes, and Article III authorizes courts to interpret them, giving absolute deference to an agency—no matter how wrong it happens to be—would encroach upon those branches’ constitutional roles. If at all possible, they reasoned, the Hobbs Act should be read in a way that avoids such problems.

As for Justices Brett Kavanaugh and Samuel Alito, they were prepared to reverse because the Fourth Circuit had misread the Hobbs Act. Writing for “the court on remand” and “other courts in the future,” they explained that nothing in the Hobbs Act undoes the “presumption of judicial review” or “tradition of allowing defendants . . . to argue that [an] agency’s interpretation is wrong.”

In their view, a contrary result—which would require “every potentially affected party to bring pre-enforcement Hobbs Act challenges against every agency order that might possibly affect them in the future”—would be “wholly impractical,” cause a “huge waste of resources,” and pose “a serious constitutional issue” that we should strive to avoid.

This column does not necessarily reflect the opinion of The Bureau of National Affairs, Inc. or its owners.

Author Information

Michael P. Daly is a partner with Drinker Biddle in the Philadelphia office. He is vice-chair of the law firm’s class actions practice and a leader of its TCPA, consumer contracts and retail industry teams.