Antitrust Law Daily Wrap Up, PRIVACY—6th Cir.: Hobbs Act bars TCPA action over radio station’s advertising call, (Nov 7, 2013)

By Tobias J. Gillett, J.D., LL.M.

The U.S. Court of Appeals in Cincinnati has issued an opinion, amending and withdrawing from publication a previous decision finding that the Hobbs Act permitted the federal courts to consider an individual’s Telephone Consumer Protection Act (TCPA) case against Clear Channel Broadcasting, Inc. based on a prerecorded call promoting a Clear Channel radio station (Leyse v. Clear Channel Broadcasting, Inc., November 5, 2013, Stranch, J.).

Both decisions affirmed the district court’s dismissal of the individual’s action, found that the call fell within the scope of an FCC exemption, and held that the exemption qualified for deference under Chevron U.S.A. v. Natural Res. Def. Council, 467 U.S. 837 (1984). The amended decision concluded that the Hobbs Act barred the individual’s action as a collateral attack on the FCC’s exemption.

In June 2005, a Clear Channel radio station called Mark Leyse’s residential telephone number to deliver a prerecorded advertising message. Leyse filed suit against Clear Channel, alleging that the call violated the TCPA. The district court dismissed his claims, concluding that the Federal Communications Commission’s regulations had exempted the type of call at issue—a “hybrid call” that both announced a contest and generally promoted the radio station—and ruling that the regulations were entitled to deference under Chevron U.S.A. v. Natural Res. Def. Council, 467 U.S. 837 (1984). The appellate court’s prior decision affirmed the district court, concluding that Chevron deference applied, that the regulation was valid under Chevron, and that the Hobbs Act allowed jurisdiction over the case. In its present decision, which amended its prior decision and designated it as “not recommended for full-text publication,” the appellate court also affirmed the district court, but determined that the Hobbs Act did not permit jurisdiction over the case.

FCC exemption. As in its previous decision, the court concluded that the call placed to Leyse fell within the scope of the FCC’s regulation. The court found that the FCC had consistently taken the position that telephone messages promoting free broadcast shows fell within the FCC’s exemption. Although Leys contended that the exemption covered only calls promoting a broadcast, and not calls promoting both a broadcast and the radio station generally, the court found this distinction to be “trivial.” The court observed that marketers promoting a broadcast “are also impliedly promoting the station on which that broadcast appears” and that the principle underlying the FCC’s regulation, “the idea that over-the-air broadcasts inherently are not commercial,” applied to both calls promoting specific broadcasts and calls promoting radio stations generally.

Chevron deference. As in its prior decision, the court found that the FCC’s regulation qualified for Chevron deference. The TCPA explicitly provided that “[t]he Commission shall prescribe regulations to implement the requirements” of the relevant subsection, and authorized the FCC to exempt “by rule or order” classes of calls made for commercial purposes that would not adversely affect privacy rights or “include the transmission of any unsolicited advertisement.” Therefore, the statute “both explicitly leaves gaps for the FCC to fill and authorizes and requires the FCC to engage in notice-and-comment rulemaking.” The court noted that Congress envisioned that the FCC would have a large role in creating rules under the TCPA. Moreover, the FCC had clearly shown that it was exercising its statutory authority in promulgating its rule.

The court rejected Leyse’s argument that Chevron deference did not apply because the rule was interpretive rather than legislative. The court found that, under the Supreme Court’s decision in United States v. Mead Corp., 33 U.S. 218 (2001), “the key inquiry is whether Congress delegated the necessary authority, not whether the rule is termed interpretive or legislative,” and “[t]he necessary authority was unquestionably delegated here.” Further, the FCC’s final rule was a “logical outgrowth” of its proposed rule, as required in order to provide “fair notice” of the rule.

In its previous decision, the court then proceeded to analyze whether the FCC’s rule applied to bind the court, before concluding that it did, and then addressed whether the Hobbs Act deprived the court of jurisdiction to consider Leyse’s TCPA case. Clear Channel had contended that Leyse’s case was “an impermissible collateral attack on the FCC’s decision to permit the challenged call and others like it.” The court rejected that argument and found that the Hobbs Act did permit the court to exercise jurisdiction over the case.

Hobbs Act. In its present decision, however, the court concluded that the Hobbs Act did bar the court from considering Leyse’s case. Leyse contended that, although FCC regulations may be “orders” within the scope of the Hobbs Act, a regulation was “only an ‘order’ to the extent that it has ‘force of law.’” The court rejected this argument, noting that it had previously found that there was “little question that Congress intended FCC rules of the type at issue here to have force of law.”

The court also declined to follow Leyse’s argument, pursuant to the Sixth Circuit’s decision in United States v. Any and All Radio Station Transmission Equipment, 204 F.3d 658 (2000) (“Maquina Musical”), that his TCPA lawsuit was not “a proceeding to enjoin, set aside, annul, or suspend” an FCC order, and therefore was not barred by the Hobbs Act. In Maquina Musical, the Sixth Circuit reversed a district court decision concluding that the Hobbs Act deprived it of jurisdiction to consider a microbroadcaster’s constitutional defenses to a government action seeking forfeiture of its broadcasting equipment. The court noted that later decisions had “been hesitant to allow district courts to consider claims that implicate the validity of an FCC action.”

The court found that Leyse’s action was “a far cry from Maquina Musical, raises none of the constitutional questions at issue in that case, and is not an as-applied challenge.” Instead, the court found Leyse’s case to be “exactly the kind of facial attacks on the validity of FCC orders that the Hobbs Act meant to confine.” Therefore, the court found “the district court did not have jurisdiction to consider Leyse’s arguments that the FCC’s exemption decision should be set aside because of procedural infirmities.” The court noted that the Hobbs Act would not have prevented Leyse from petitioning the FCC for a declaratory ruling or to initiate a new rulemaking, the rejection of which could then be reviewed by the courts of appeals.

The case is No. 10-3739.

Attorneys: Stephen R. Felson (Law Offices of Stephen R. Felson) for Mark Leyse. Judith A. Archer (Fulbright & Jaworski) for Clear Channel Broadcasting, Inc. C. Grey Pash, Jr. for Federal Communications Commission.

Companies: Clear Channel Broadcasting, Inc.

Cases: Privacy KentuckyNews MichiganNews OhioNews TennesseeNews