Supreme Court Breaks Back to Weigh In on Agency Deference

TCPA Connect

In big Telephone Consumer Protection Act (TCPA) news, the U.S. Supreme Court granted certiorari in a junk fax case brought under the statute.

The dispute began when Carlton & Harris Chiropractic received a fax in December 2013 from PDR Network. The subject line announced: “FREE 2014 Physicians’ Desk Reference eBook – Reserve Now.” The fax, which invited the recipient to reserve the ebook by visiting PDR Network’s website and included a contact email address and phone number, touted the various benefits of the ebook.

Carlton & Harris sued PDR Network in West Virginia federal court, asserting a claim under the TCPA. PDR Network moved to dismiss the complaint, arguing that the fax could not be considered an unsolicited advertisement as a matter of law because it did not offer anything for sale.

In response, Carlton & Harris pointed to a 2006 Federal Communications Commission (FCC) Rule interpreting the term “unsolicited advertisement” that provided: “facsimile messages that promote goods or services even at no cost … are unsolicited advertisements under the TCPA’s definition.” The plaintiff told the district court that the fax met this definition of an unsolicited advertisement and that the court was obligated to follow the 2006 FCC Rule pursuant to the Hobbs Act.

The district court disagreed and granted the motion to dismiss. The Hobbs Act did not compel the court to defer to the FCC’s interpretation of an unambiguous statute, the court wrote. Pursuant to the doctrine laid out by the Supreme Court in Chevron v. Natural Resources Defense Council, Inc., the court was not required to defer to the FCC’s Rule because the statutory definition of “unsolicited advertisement” was “clear and easy to apply.”

Even under the 2006 FCC Rule, PDR Network’s fax was still not an ad because it had no “commercial aim,” the district court added.

On appeal, the U.S. Court of Appeals, Fourth Circuit reversed in a split decision. A district court must defer to an FCC interpretation of the TCPA, the federal appellate panel wrote and, applying the 2006 FCC Rule, held that a fax that offers a free good or service constitutes an advertisement under the statute.

The Hobbs Act does permit challenges to agency rules, the panel majority noted, providing a 60-day period after a rule is issued for an action to be filed in federal court. However, the defendant missed the window to challenge the FCC’s 2006 Rule, the majority said, so both the district court and the Fourth Circuit were bound by the FCC’s interpretation.

PDR Network then filed a writ of certiorari to the Supreme Court. The justices agreed to answer the question: “Whether the Hobbs Act required the district court in this case to accept the FCC’s legal interpretation of the TCPA?” The Court passed on a second question presented by the defendant, specifically related to the TCPA’s fax regulations.

Oral argument will be scheduled for the spring, with a decision by the end of the term in June 2019.

To read the Fourth Circuit opinion in Carlton & Harris Chiropractic, Inc. v. PDR Network, LLC, click here.

Why it matters: The Supreme Court has not had much occasion to hear TCPA cases, so this case is significant for that reason alone. Beyond that, the case has huge implications not just for the TCPA—i.e., what if the justices agree with the West Virginia district court and hold that FCC determinations are not entitled to deference?—but also for agency deference more generally, as the Hobbs Act applies to rules and orders issued by a broad range of federal agencies. Several justices have signaled their unhappiness with the current deference standard and their desire to revisit Chevron. Manatt’s TCPA Compliance and Class Action Defense team will be keeping a close eye on this case.



pursuant to New York DR 2-101(f)

© 2023 Manatt, Phelps & Phillips, LLP.

All rights reserved