As previously reported (read here), the federal courts have been confronting many issues involving The Administrative Orders Review Act (“Hobbs Act”), 28 U.S.C. § 2342, in TCPA litigation, particularly in cases where defendants have sought to challenge the validity of FCC rules promulgated under the TCPA. The Hobbs Act provides that the federal appellate courts have exclusive jurisdiction to review and determine the validity of FCC orders. Otherwise, a challenge to a specific FCC rule needs to be raised by petition for reconsideration, petition for declaratory ruling or a new rulemaking before the FCC.
In Nack v. Walburg, 715 F.3d 680 (8th Cir. 2013), the Eighth Circuit, in May, 2013, relying on an FCC amicus brief, reversed a summary judgment for the defendant attorney handbook publisher in a TCPA class action in which the plaintiff sued not because he did not consent to receive the fax advertisement, but because the fax lacked the required fax opt-out language required by the FCC rule. The Eighth Circuit held that the Hobbs Act “generally precludes our court from holding the contested regulation invalid outside the statutory procedure mandated by Congress.” 715 F.3d at 686. The Eighth Circuit agreed with the Seventh Circuit that it “makes no difference” whether the question of a regulation’s validity arises in a private suit between two parties because the Hobbs Act’s jurisdictional limitations apply whether a litigant seeks to challenge the rule “‘directly…or indirectly.’” Id., quoting CE Design, Ltd. v. Prism Business Media, Inc., 606 F.3d 443, 448 (7th Cir. 2010). The Eighth Circuit encouraged the district court to stay the proceedings pending any further FCC determinations that the defendant might pursue. Subsequently, as previously reported, the defendant Walburg filed a petition for declaratory ruling challenging FCC Rule 64.1200(a)(3)(iv) in August, 2013.
While the petition for declaratory ruling was pending, the defendant filed a petition for certiorari to the U.S. Supreme Court in October, 2013. The defendant argued that the Eighth Circuit decision is irreconcilable with the Sixth Circuit’s decision in Leyse v. Clear Channel Broadcasting, Inc., 697 F.3d 360 (6th Cir. 2012), in which the Sixth Circuit held that it had authority to review the plaintiff’s arguments that an FCC rule exempting certain broadcaster prerecorded calls to consumers as regulated “advertisements” under the TCPA was unlawful. The Sixth Circuit reasoned that the “central object” of plaintiff’s action was not to enforce or undercut an FCC order, but to seek damages and an injunction against Clear Channel, and that the plaintiff was not a “party aggrieved” by the final FCC order to institute an appeal under the Hobbs Act. The Sixth Circuit was influenced by the fact that the FCC was not a party to the proceeding which “increases the likelihood that the action could be defined as a proceeding to enjoin or annul an FCC order” under Section 402(a) of the Communications Act. Importantly however, though the Sixth Circuit found that the court below and the court of appeal had jurisdiction over plaintiff’s lawsuit despite the Hobbs Act, it affirmed the district court’s summary judgment below that the broadcaster exemption under the FCC’s rule was entitled to Chevron deference. So the collateral review of the FCC rule in Leyse ultimately resulted in the FCC rule remaining undisturbed.
On March 24, 2014, the Supreme Court denied defendant Walburg’s petition for certiorari of the Eighth Circuit’s decision. This result is not particularly surprising, even if there may be an apparent split between the circuits (with the 7th & 8th Circuits on one side, and the 6th Circuit on the other) as to whether the Hobbs Act precludes collateral review of the FCC’s rules in litigation between private parties. What may be easily missed is that the Sixth Circuit’s Leyse decision, while not decided the way the FCC might have preferred, was not a successful collateral attack upon an FCC rule that might have inspired the Supreme Court to grant a petition for certiorari to resolve conflicting decisions involving collateral attacks upon an FCC agency rule. In the meantime, the Hobbs Act remains a formidable obstacle to collateral challenges to the FCC’s TCPA rules, and until the FCC decides many pending petitions for reconsideration and declaratory ruling of its TCPA rules, those rules will likely be enforced by the courts in litigation, whether stayed or not.