SCOTUS TCPA Case Could Have Broad Implications for FCC Deference

The U.S. Supreme Court’s decision to grant certiorari earlier this month in a case from the 9th U.S. Circuit Court of Appeals, McLaughlin Chiropractic Associates v. McKesson, could have implications beyond the FCC’s legal interpretation of the Telephone Consumer Protection Act, legal experts told us. SCOTUS began its current term Oct. 7.

“This case presents a unique challenge,” especially in light of the Loper-Bright decision from last term, said Brownstein Hyatt’s Leah Dempsey. In Loper, SCOTUS overruled the Chevron doctrine, which gave agencies deference for their regulatory decisions in interpreting laws that Congress approved (see 2406280043). “It is possible that the court will take a similar approach and expand the judiciary’s ability to review the FCC’s interpretation of statutes,” Dempsey said.

SCOTUS could also find that district courts must accept the FCC’s interpretation of the TCPA “since the Hobbs Act is more explicit in taking away the ability of lower courts to review the FCC’s decisions as compared to the Administrative Procedure Act,” Dempsey said. SCOTUS’s decision “could result in an influx of litigation under the TCPA if district courts no longer have to rely on the FCC’s legal interpretations,” she said.

The case raises “very consequential” issues for the FCC, especially following the Loper Bright ruling, agreed former FCC General Counsel Peter Karanjia, now at DLA Piper. The stance of some of the courts of appeals in preventing district courts from questioning FCC interpretations in private actions offers “the last stand” for deference “that the commission has been able to invoke,” he said. “If this falls away too, then the commission really is without any argument” for deference for its interpretations of the law, he said.

In 2019, SCOTUS heard PDR Network v. Carlton & Harris Chiropractic, a case that was expected to answer questions about FCC authority to implement the TCPA, but handed down what was seen as a middle-of-the-road decision (see 1906200055). Karanjia noted that at the time, Justices Clarence Thomas and Brett Kavanaugh wrote concurring opinions indicating they saw the decision as too narrow.

“I suspect the court’s interest in this case is more than a nostalgia for a lost art of sending faxes,” said Hogan Lovell’s Mark Brennan. “It will be interesting to see where they land on the Hobbs Act,” he said. But “the absolute last thing we need to protect consumers is to reopen every single TCPA issue from the past three decades.” Brennan added that “a court-by-court approach serves no one but the plaintiffs’ bar, who undoubtedly will keep trying to pursue each issue until they can find a judge to lean their way.”

The case could prove “pivotal” for “the interpretation of the Hobbs Act and its application to FCC orders,” Troutman Pepper said in a recent blog post. “A ruling in favor of the plaintiffs could open the door for district courts to independently interpret the TCPA, creating even more uncertainty” in the wake of Loper, the firm said.

“The stage is set” for SCOTUS to “recognize that District Courts have a judicial duty to apply the best reading of the [TCPA] according to ordinary principles of statutory interpretation in enforcement actions,” emailed Seth Cooper, Free State Foundation director-policy studies. A decision that district courts “are not bound by agency interpretive rules under the Hobbs Act would parallel the Loper-Bright decision that courts are not bound by agency legislative rules” under the APA, he added.

But Andrew Schwartzman, senior counselor at the Benton Institute for Broadband & Society, said he doesn’t see the case as having broad implications for agency deference. “Under Loper Bright, the courts will not defer to agency interpretations of an ambiguous statute,” Schwartzman said in an email. This case is “an extension of the PDR case having to do with which court (court of appeals or district court) analyzes the FCC's decision, not the standard of review which is to be used,” he said.

McLaughlin was part of a group of plaintiffs that sued McKesson after one of its subsidiaries, Physician Practice Solutions, sent multiple advertisements via fax to medical offices in 2009 and 2010. Six years after litigation started, the FCC issued its Amerifactors order, which found that the TCPA excludes an “online fax service” from the definition of “telephone facsimile machine,” McLaughlin said.

California case

A district court for the Northern District of California said it was required to apply the order retroactively and decertified the class of plaintiffs suing McKesson, McLaughlin said. The court also ruled in favor of McKesson and the 9th U.S. Circuit Court of Appeals upheld the decision.

“This case presents an ideal vehicle to resolve the question presented, but left undecided, in PDR Network,” McLaughlin said in seeking certiorari: “Like PDR Network, this case involves an enforcement action brought under the TCPA in a federal district court. And like PDR Network, a party to the action argued that an FCC order incorrectly interpreted the TCPA.” McLaughlin argued that “properly construed, the Hobbs Act does not require district courts to give FCC orders ‘absolute deference’ in garden-variety enforcement actions.”

McKesson responded in its brief to SCOTUS that the case is instead “a poor candidate for revisiting” PDR. In this case, the roles are reversed. “Petitioner is the plaintiff, seeking to impose millions of dollars of liability on a defendant based on an interpretation of the TCPA that an FCC declaratory order has rejected,” McKesson said: “No traditional rule supports a plaintiff’s ability to expand a defendant’s liability in this way.”

In PDR Network, the full FCC issued the order in question “years before the case, when the defendant had no reason to challenge it through a Hobbs Act petition for review,” McKesson said. In this case, an order was issued during this litigation by the FCC’s Consumer and Governmental Affairs Bureau on delegated authority, “and the FCC is now considering an application for review of the bureau order,” the company said. If cert were granted, “the FCC could act on that application for review at any time (and judicial review under the Hobbs Act could follow),” McKesson said.

McKesson noted that the 9th Circuit didn’t address, or mention, “PDR Network or the supposed post-PDR Network split petitioner tries to invoke.” The TCPA’s “text, structure, and purpose” also “unanimously support the conclusion that it does not apply to faxes sent to online fax services.”

If SCOTUS wants to revisit the question presented in PDR, “it should await a case in which a defendant questions the statutory interpretation in an FCC order; where that order was issued by the full Commission and is no longer subject to Hobbs Act review; and where the Court’s review would actually make a difference.” McKesson said prior to the grant of cert.

McLaughlin urged SCOTUS to reject McKesson’s arguments. “The respondents do not deny that this is an important and recurring question of federal law on which the circuits are divided -- just as it was when the Court granted review in PDR Network,” the company said, in its reply brief: “Nevertheless, the respondents spend 36 pages trying to convince the Court that it should pass up the chance to finally resolve this important question. … Their arguments pose no barrier to review.”