Both Sides Face Questions as SCOTUS Hears Much-Watched TCPA Case

The Hobbs Act gives appeals courts exclusive jurisdiction to enjoin, set aside, suspend or determine the validity of some agency orders, including most FCC orders. SCOTUS is considering whether the act requires district courts to follow the FCC’s interpretation that the TCPA doesn't prohibit faxes received through an online fax service. That interpretation was handed down in response to a ruling by the FCC Consumer and Governmental Affairs Bureau, rather than the full commission, on an Amerifactors Financial petition (see 2501130017).

McLaughlin revisits a question left unresolved in SCOTUS' 2019 decision in PDR Network v. Carlton & Harris Chiropractic on the binding nature of FCC orders in TCPA litigation. In that case, four justices, led by Brett Kavanaugh, found the PDR decision too narrow. Industry experts note that two conservative justices, Neil Gorsuch and Amy Coney Barrett, didn’t join the Kavanaugh concurrence, and if either of them now agrees with Kavanaugh, that would potentially mean a new majority.

“Consistent with the long-standing recognition that interpreting statutes is a job for the judiciary, this court should construe the Hobbs Act for what it is, a commonplace jurisdictional provision that allows parties to obtain equitable relief directly on agency orders in the courts of appeals,” said Gupta Wessler’s Matthew Wessler, arguing Tuesday on behalf of McLaughlin.

The Hobbs Act doesn’t “require district courts to treat agency orders that interpret federal statutes as binding precedent,” Wessler said. McKesson and the government urge a reading of the Hobbs Act to say that district courts are bound by interpretive decisions “that by definition don’t carry the force of law,” which would transform “even the most informal agency interpretations into permanently binding ones,” he said.

Justice Ketanji Brown Jackson noted that agency actions can be addressed, but at the court of appeals level. Why do you say a regulatory decision “forever binds” a court “if we have this mechanism in the Hobbs Act?” she asked. There is a way for any order “to be corrected.”

Justice Sonia Sotomayor questioned Wessler on why he argued the case seeking a broad decision. “Here it seems to me you can just … say ‘this is an interpretive rule -- the majority in PDR got it right that that was an important question,’” she said: “If it’s an interpretive rule, it falls outside the Hobbs Act -- end of case.”

Gorsuch questioned whether the court could issue a narrow decision as Sotomayor suggested. The Amerifactors ruling “was an adjudication, and there was a final order issued in that administrative adjudication,” he said: “That would seem to be, to me, every day of the week and twice on Sundays an order and therefore implicate the Hobbs Act and raise unavoidably the larger question in this case.”

Morrison Foerster’s Joseph Palmore, representing McKesson, argued that the law is clear. “The Hobbs Act's text, history, precedent and purpose all support the conclusion that a lower court here could not impose liability on McKesson for engaging in conduct that the FCC said did not violate the TCPA,” Palmore said.

Justice Clarence Thomas questioned Palmore’s arguments. If this case were to come before a district judge and the judge says, “'this is the most ridiculous opinion I have ever seen in my many years on the bench; however, I have no authority to review it,' ... you don't see a problem with that?” Thomas asked.

This isn’t an issue of federal agencies versus the courts, “this is an issue of which court and when,” Palmore responded.

In response to questions from Jackson, Palmore, a former FCC general counsel, said the Amerifactors decision was an adjudication and “not a rule of any kind.” But, he also said, the decision was binding. “The FCC was not just deciding a dispute between two particular parties,” but applying the TCPA “to a particular technology,” online fax businesses, he said.

Justice Elena Kagan said Palmore appears to agree with Wessler that the Hobbs Act doesn't cover mere interpretations of law. “But you think that if we limit the Hobbs Act coverage to rulings with the force of law, you think you're in” and “Wessler thinks you're out,” Kagan said. While the word "interpretation" can be read different ways, “we know what binding decisions are and what they're not.”

Assistant Solicitor General Matthew Guarnieri told the court the decision Wessler seeks goes against how the Hobbs Act has always been interpreted. A regulated party could get a final order from the FCC “determining that some particular course of conduct does not violate the TCPA,” he said: “That order could be upheld on direct review by the court of appeals … and a private plaintiff could nonetheless go into district court, sue the regulated party and ask the district court to disregard the agency's order and impose liability.”

Gaurnieri said “the FCC understands declaratory orders” are “legally binding orders issued by the agency after adjudication.” In the Amerifactors decision, the FCC sought public comment, he noted. That’s not the same “as an informal guidance document that the agency might issue to advise the public of its understanding of some preexisting statutory obligation.”

Gorsuch raised questions about how the court should deal with the 14th Amendment’s due process clause. “When Congress chooses to invest courts with jurisdiction, as a rule, judges interpret the law and they have a duty to do so independently, and not to automatically and reflexively have to adopt interpretations that the executive branch chooses and prescribes for them,” he said.