Are courts bound by Federal Communications Commission (FCC) rulings and orders in deciding Telephone Consumer Protection Act (TCPA) cases? The United States Supreme Court has agreed to take on a case raising this very issue. On November 13, 2018, the Supreme Court granted certiorari in PDR Network, LLC v. Carlton & Harris Chiropractic, Inc., Case No. 17-1705 (styled in the US Court of Appeals for the Fourth Circuit as Carlton & Harris Chiropractic, Inc. v. PDR Network, LLC, 883 F.3d 459 (4th Cir. 2018)) to address whether the Hobbs Act requires federal district courts to defer to the FCC’s legal interpretation of the TCPA.
The Hobbs Act grants the federal courts of appeal, with the exception of the United States Court of Appeals for the Federal Circuit, exclusive jurisdiction to set aside, suspend or rule on the validity of orders, rules and regulations issued by certain federal agencies, including final orders issued by the FCC. 28 U.S.C. § 2342. In light of the act’s exclusive grant of jurisdiction to federal appellate courts, the debate has centered on whether federal district courts, in deciding private litigation, must forego what is known as the Chevron analysis and instead follow FCC guidance interpreting the TCPA.
Should the Supreme Court find that the Hobbs Act does not require district courts to adhere to FCC guidance, TCPA private litigants would be free to make arguments against FCC rulings and orders in private cases. This would upend the rules that currently apply to most TCPA litigation, where most courts strictly apply the FCC’s rules.
United States Supreme Court to Address Application of the Hobbs Act
As happens so often in TCPA cases, PDR Network began with one fax. In December 2013, PDR Network, LLC (PDR), sent a fax offering a free eBook version of a medical reference book to Carlton & Harris, a chiropractic office. Following the adage that no good deed goes unpunished, Carlton & Harris sued, alleging that PDR violated the TCPA, which prohibits the use of facsimile communications to send unsolicited advertisements. 47 U.S.C. § 227(b)(1)(C).
The TCPA defines an unsolicited advertisement, in part, as “any material advertising the commercial availability or quality of any property, goods, or services” sent without the recipient’s consent. Id. at § 227(a)(5). An FCC rule adopted in 2006 further expounds upon the definition by including “facsimile messages that promote goods or services even at no cost, such as free magazine subscriptions, catalogs, or free consultations or seminars.” 21 FCC Rcd. 3787, 3814 ¶ 52 (2006).
Applying the traditional Chevron standard, the district court found that because the language of the TCPA is clear, it did not need to afford “substantial deference” to FCC guidance and interpretation of the statute. Importantly for the district court, neither party in the litigation challenged the validity of the 2006 FCC rule, and thus did not trigger the Hobbs Act’s provision that exclusively reserves jurisdiction to federal appellate courts for challenges regarding the validity of agency orders.
The district court, in relying upon the TCPA’s text, read the statutory definition to require that the fax have a “commercial aim.” The district court found that PDR’s fax was not an unsolicited advertisement because the medical reference book was free, and thus PDR did not “hope to make a profit” by offering the book. The district court further held that even if the 2006 FCC rule were operative, PDR’s fax would not constitute an unsolicited advertisement because it did not promote a good in a commercial manner.
On appeal, a 2-1 Fourth Circuit panel vacated the district court’s ruling and remanded the case to the district court, holding that the Hobbs Act set forth a “jurisdictional command” to the district court to apply the FCC’s interpretation of the TCPA. The Fourth Circuit held that the Hobbs Act prevented the district court from ever applying Chevron by effectively “strip[ping] jurisdiction from the district court[]” to engage in the Chevron analysis. As a result, the Fourth Circuit held that the district court acted beyond the scope of its authority as set forth in the Hobbs Act by not deferring to the FCC’s interpretation.
The Fourth Circuit, in applying the 2006 FCC rule, held that even the promotion of free goods and services constitutes an unsolicited advertisement. The fact that PDR’s medical reference book was free did not, therefore, shield PDR from liability.
In its petition for certiorari, PDR asserted that should the Fourth Circuit’s application of the Hobbs Act stand, its ruling would effectively place federal agencies above the judiciary by restricting courts’ charge and duty to interpret the law. As suggested by PDR, this case involves one of the most fundamental aspects of American jurisprudence – the balance of powers and the respective roles among the Executive, Congress and the Judiciary in determining who has the power to determine what the law is and how it should be defined. Notably, the Supreme Court will not address the question of whether faxes that promote free goods and services are per se advertisements under the 2006 FCC rule.
Conclusion
PDR Network presents a number of compelling issues, including whether district courts are free to engage in the Chevron analysis, thus looking only to FCC guidance if the TCPA is ambiguous or whether the Hobbs Act requires that they automatically look to the FCC to interpret the TCPA. In the ever-evolving landscape of TCPA litigation and the interplay between the statutory text and the FCC’s regulatory guidance, the Supreme Court’s decision in PDR Network may provide TCPA litigants with clearer precedent and much sought-after answers. The Supreme Court’s ruling, in either limiting or expanding the weight of FCC orders, will likely play a significant role in TCPA jurisprudence and the ability of litigants to both maintain and defend TCPA claims.
[View source.]
