SCOTUS Decision 'Guts' the Hobbs Act, Creates Additional Regulatory Uncertainty
The U.S. Supreme Court handed down a ruling Friday that likely means less certainty for FCC actions and those of other federal agencies under the Hobbs Act. The decision comes a year after SCOTUS overruled the Chevron doctrine, which had required courts to give deference to agency decisions, in the Loper Bright case (see 2406280043). The latest from the court was Friday's 6-3 decision in McLaughlin Chiropractic Associates v. McKesson, a much-watched case on the Telephone Consumer Protection Act (see 2506200011).
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The ruling is “part of an overall trend of giving less and less deference to agencies' statutory construction and [of] expansion of judicial power,” said Andrew Schwartzman, senior counselor at the Benton Institute for Broadband & Society. Schwartzman warned that the decision “raises the bar” for some of FCC Chairman Brendan Carr's initiatives, including, among other things, his “expansive view” of the commission's role in content regulation through Section 230 of the Communications Decency Act and his push to raise the national broadcast ownership cap (see 2506180082).
“This decision is a seismic shift in how the TCPA is litigated,” emailed Hall Estill’s Aaron Tifft. “By rejecting the idea that the Hobbs Act gives agencies the last word, the Court reaffirmed that judges, not regulators, interpret statutes,” he said. “Litigants must now argue from the text of the TCPA itself, not just from agency rulings.” Tifft wrote that the decision means new uncertainty for businesses as well. “FCC guidance, once seen as a safe harbor, no longer guarantees protection from TCPA lawsuits.”
The ruling could have a “broad impact,” emailed Hogan Lovell’s Mark Brennan, a TCPA attorney. It could prompt "even more TCPA litigation if the plaintiffs' bar decides to shop every TCPA issue to different district courts.” But SCOTUS also confirmed that the FCC “still has an important TCPA role,” and “district courts are required to give ‘appropriate respect’ to the FCC’s TCPA interpretations,” he said.
TCPA lawyer Eric Troutman told clients Friday: “THEY DID IT!! SCOTUS Guts the Hobbs Act!” The court “gives short shrift to the important notion that Congress wanted to protect FCC actions from independent review to assure uniformity across the country.”
Before SCOTUS was a case looking at whether the Hobbs Act requires district courts to follow the FCC’s interpretation that the TCPA doesn't prohibit faxes received through an online fax service (see 2501210056). The case revisited 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 (see 1906200055).
In PDR, four justices, led by Brett Kavanaugh, filed a concurring opinion saying the decision was too narrow. The court's conservative justices, except Chief Justice John Roberts, joined the concurrence. Justice Amy Coney Barrett wasn’t yet on the court.
Kavanaugh wrote Friday's majority opinion in the McLaughlin case. “The Hobbs Act does not bind district courts in civil enforcement proceedings to an agency’s interpretation of a statute,” he said. “District courts must independently determine the law’s meaning under ordinary principles of statutory interpretation while affording appropriate respect to the agency’s interpretation.” The Hobbs Act’s “grant of ‘exclusive jurisdiction’ to courts of appeals to ‘determine the validity’ of agency orders refers to entering declaratory judgments in pre-enforcement proceedings,” he wrote. Circuit splits followed by SCOTUS review “are common and do not justify denying judicial review in enforcement proceedings.”
The Emergency Price Control Act precedent in 1994's Yakus v. U.S. “does not control because that Act contained two key provisions working in tandem: ‘exclusive jurisdiction to determine the validity’ (similar to the Hobbs Act) and an express prohibition stating that no other court ‘shall have jurisdiction or power to consider the validity’ of covered regulations (not included in the Hobbs Act),” Friday's decision said. When Congress enacted the Hobbs Act six years after Yakus, “it chose not to include the second provision that would have clearly precluded judicial review in enforcement proceedings," Kavanaugh wrote. “There is no reason to think that Congress wanted to short-circuit that ordinary system of judicial review for the multiplicity of agency rules and orders encompassed by the Hobbs Act.”
The court’s three progressive justices joined a dissent, filed by Justice Elena Kagan. “The text of the Hobbs Act makes clear that litigants who have declined to seek preenforcement judicial review may not contest the statutory validity of agency action in later district-court enforcement proceedings,” she wrote. “And this Court’s prior decisions have said just that.”
The majority “evades the Hobbs Act’s most natural meaning by relying on a novel ‘default rule,’ which demands that Congress use a certain form of words … to preclude parties from bringing down-the-road challenges to agency action,” the dissent argued. “By its terms, the Hobbs Act gives courts of appeals exclusive authority to ‘determine the validity’ of specified agency actions.”
In December, CTIA, NCTA, USTelecom and the Wireless Infrastructure Association told SCOTUS that the Hobbs Act is important to preserve regulatory stability. “While the communications industry does not agree with every rule the FCC adopts, it depends on the adjudicative finality afforded to those rules by the Hobbs Act -- a statute of venue and repose that governs appeals of FCC orders,” their brief said (see 2412260037). The groups didn’t comment Friday.