Cybersecurity Policy Report, Supreme Court Weighs Impact of FCC’s TCPA Interpretation, (Jan 22, 2025)

By Lynn Stanton

In a case stemming from a private dispute over unsolicited faxes under the Telephone Consumer Protection Act, Supreme Court justices yesterday focused on whether the Hobbs Act, which gives federal appeals courts exclusive jurisdiction over pre-enforcement challenges of final agency orders, allows a federal district court to reject the FCC’s interpretation of the TCPA.

Among the issues justices raised during oral argument in McLaughlin Chiropractic Association v. McKesson Corp. (case 23-1226) was whether allowing such actions by district courts would leave stakeholders that relied on agency orders permitting certain activities open to liability in cases before a district court years later.

While the dispute between McLaughlin and McKesson was still pending before the district court, the FCC issued a 2019 order holding that the TCPA does not apply to unauthorized faxes sent to online fax services, which some of the McKesson faxes to parties in the then-certified class were, according to the petition for certiorari filed by McLaughlin. McLaughlin v. McKesson came to the Supreme Court from the U.S. Court of Appeals for the Ninth Circuit (San Francisco).

In 2019, the Supreme Court sent a similar case —PDR Network LLC v. Carlton & Harris Chiropractic, Inc. (case 17-1705) — back to the Fourth Circuit (Richmond) after vacating the appeals court’s holding that a lower court should have applied the FCC’s interpretation of the TCPA to a putative class action lawsuit claiming that faxes promoting “free” goods — in this case the “Physicians’ Desk Reference” — are covered by the TCPA’s prohibition on unsolicited fax advertisements. The Supreme Court directed the Fourth Circuit to consider whether the 2006 FCC order adopting that interpretation had the force of law or was merely interpretive, in which case it might not be binding on the district court, and whether PDR had an adequate opportunity to seek review of the order.

In a concurring opinion in the PDR Networks case, Justice Brett Kavanaugh had agreed that the court should vacate the appeals court decision, but he said he would have gone further. “I would conclude that PDR may argue that the FCC’s interpretation of the TCPA is incorrect, and that the District Court is not required to accept the FCC’s interpretation of the TCPA,” he wrote.

The issues raised by the Supreme Court in PDR Network were revisited in yesterday’s oral argument.

Matthew Wessler, attorney for McLaughlin, argued that because Hobbs Act challenges must be brought within 60 days of publication of an order, parties who might not know that they would be subjected to unsolicited faxes years later did not have an adequate opportunity to challenge the order.

Justice Ketanji Brown Jackson argued that the parties still had an opportunity to challenge the order, even if they didn’t take that opportunity.

Justice Elena Kagan suggested that McLaughlin could win by arguing that the FCC’s action “is an interpretive rule … and if it’s an interpretive rule it falls outside the Hobbs Act.”

Mr. Wessler said his clients would accept a decision that went no further than that.

Justice Jackson asked how Mr. Wessler would “square” his approach with the purpose of the Hobbs Act in providing “finality, predictability, and uniformity.”

Joseph Palmore, attorney for McKesson, said that “if Congress had wanted to limit this exclusivity to declaratory judgments, it would have done so.”

Justice Jackson noted that Mr. Wessler had said that none of the affected parties in the case would have had a reason to challenge the FCC order.

Mr. Palmore said that was an adequacy question.

Justice Neil Gorsuch asked, “Are we going to have a jurisprudence of adequacy?” He added, “What does that mean for parties that weren’t alive” when the order was adopted.

He also asked, “If finality is so important, and it turns out your interpretation doesn’t do much to advance finality beyond a few parties presently, what are we about here?”

Justice Jackson asked, “Do you agree that this is an interpretive rule?”

“Absolutely not. It’s an adjudicative order,” Mr. Palmore responded.

Justice Jackson asked whether he considered the FCC order to be binding.

Mr. Palmore replied that the FCC “wasn’t just deciding a dispute between two particular parties. It was applying the statute to a particular technology.”

Justice Kavanaugh asked what Mr. Palmore thought “the force of law” meant.

Mr. Palmore said Hobbs Act reviews had applied to FCC notice-and comment declaratory orders for decades.

Matthew Guarnieri, assistant to the U.S. solicitor general, appearing as amicus curiae, also said the FCC’s declaratory orders were not merely interpretive and were “not the same thing as an informal guidance.”

However, he added that it wouldn’t violate the exclusivity granted the appeals courts by the Hobbs Act for a district court to decide the action didn’t fall into the enumerated list of agency actions covered by the Hobbs Act.

During rebuttal argument, Mr. Wessler said the Hobbs Act’s grant of exclusive jurisdiction to the appeals courts was intended for pre-enforcement facial challenges. He questioned whether the court should expand that exclusivity to any authority a district court might have in a “garden variety” case to review the agency’s interpretation of the statute.

He also argued that an adjudicatory action can still be an interpretive action.

In an interview with CPR after yesterday’s oral argument, Max Kaplan, a member of the Cozen O’Connor law firm, noted that Justice Kavanaugh’s concurring opinion in PDR Networks was joined by Justices Clarence Thomas, Samuel Alito, and Gorsuch, and that the question was whether Justice Chief Justice John Roberts Jr., who did not join the 2019 Kavanaugh concurrence, or either Justice Amy Coney Barrett or Justice Jackson, who have joined the court since 2019, could be won over to Justice Kavanaugh’s position.

He said Justices Kavanaugh, Thomas, Alito, and Gorsuch were “still in line with that concurrence—that Hobbs can’t be interpreted to deprive the district court of the ability” to rule whether the FCC was correct in its order.

He said he didn’t know that he heard anything that indicated that Chief Justice Roberts or Justice Barrett or Jackson would join the view in the PDR Networks concurrence.

“I’m not sure this will be the end of the story,” he added. “Whatever happens, we will learn a great deal about what authority a district court has to interpret” an agency ruling.

“At the end of the day we just don’t have enough information from the swing justices to know what the outcome will be,” he said, although he added that Justice Jackson “seemed interested in a middle ground.”

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