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U.S. Supreme Court Sidesteps Important TCPA Deference Issues

On June 20, 2019, the Supreme Court released its long-awaited decision in PDR v. Carlton & Harris Chiropractic. The Court was expected to provide greater clarity about the extent to which litigants can challenge the Federal Communications Commission’s (FCC) Telephone Consumer Protection Act (TCPA) interpretations in private litigation. Instead of deciding that issue, however, the Court vacated the Fourth Circuit’s ruling and remanded the case for further development. How the Fourth Circuit rules on remand may ultimately provide more insight on how much deference is owed to the FCC’s TCPA interpretations.

Background

The defendant in this underlying litigation, Physicians’ Desk Reference (PDR), produces a reference guide compiling information about the uses and side effects of prescription drugs. In 2013, PDR sent health care providers faxes containing information about the e-book version of the guide and stating that providers could reserve a free copy of the e-book on PDR’s website. Carlton & Harris Chiropractic, the plaintiff in this case and a recipient of the fax, brought a class action suit against PDR, alleging that PDR violated the TCPA by sending an unsolicited fax advertisement.

The district court dismissed the case in favor of PDR, holding that the faxes did not qualify as an ‘unsolicited advertisement’ as used in the TCPA. The Fourth Circuit Court of Appeals vacated this decision, ruling that the Hobbs Act required the district court to defer to the FCC’s statutory interpretation of the rule as stated in the Commission’s 2006 Junk Fax Order. In that Order, the FCC stated that even faxes containing offers of goods for free could constitute ‘unsolicited advertisements’ under the TCPA. The Fourth Circuit found that PDR was procedurally barred from challenging the FCC’s interpretation in the Junk Fax Order because PDR did not file an appeal within 60 days after the FCC issued its final order in 2006, as required by the Hobbs Act.

The Supreme Court’s Holding

Rather than address the Fourth Circuit’s holding, the Supreme Court declined to rule on whether the Hobbs Act requires a district court to defer to the statutory interpretation of the implementing agency. Rather, the Court remanded the case to the Fourth Circuit with instructions to decide two ‘preliminary issues’ before the key question could be answered.

The first question is whether the 2006 Junk Fax Order was a ‘legislative’ rule or an ‘interpretive’ rule. A legislative rule is issued by an agency pursuant to its statutory authority with ‘force and effect of law.’ An ‘interpretive rule’ would mean that the agency’s interpretation is merely guidance, even if the challenge comes after the 60 day pre-enforcement review period. If the FCC’s language about free offers qualified as an interpretive rule, the Court held, then that rule “may” not be binding on the district court.

The second question is whether PDR had a ‘prior’ and ‘adequate’ opportunity to seek judicial review of the Junk Fax Order in 2006. If so, the Court noted, then PDR “may” be barred from later challenges of the rule. The Supreme Court used the word “may” because it did not seek to decide those issues of deference, instead leaving them to the lower courts to decide in the first instance.

Justice Kavanaugh, in a concurring opinion joined by Justices Thomas, Alito, and Gorsuch, agreed with the judgement but found that the Hobbs Act does not bar a defendant in an enforcement action from arguing that the agency’s interpretation of the statute is wrong. Kavanaugh stated that “the default rule is to allow defendants in enforcement actions to argue that the agency’s interpretation of the statute is wrong, unless Congress expressly provides otherwise.” Because Congress did not expressly state that challenges were not permitted after the 60 day pre-enforcement period, they were permissible under the Hobbs Act. Further, Kavanaugh found that it would be “wholly impractical” to require parties to challenge an agency order during the pre-enforcement period because they might be impacted in the future. Finally, Kavanaugh expressed a concern that prohibiting challenges to agency rules “raises significant questions under the Due Process Clause.”

What’s Next

All eyes now point to the Fourth Circuit, which will have the task of determining whether the relevant piece of the 2006 Junk Fax Order qualified as a legislative rule, and whether the defendant had a prior and adequate opportunity to challenge that rule under the Hobbs Act.

This post was originally published on Hogan Lovells’ Global Media and Communications Watch  blog.