October 21, 2019

October 21, 2019

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Confusion Abounds: Supreme Court Questions Hobbs Act Deference Without Actually Deciding Hobbs Act Deference In PDR Network.

We’ve seen this play before. Everyone in TCPAWorld – plaintiffs, defendants, regulators, mere enthusiasts – anxiously awaits an appellate decision that will certainly bring clarity to the confusing morass that would make Rube Goldberg proud. But then when the opinion finally drops, it creates even more uncertainty than existed before.

I’m talking, of course, about ACA International, where the D.C. Circuit overturned the 2015 FCC Order’s definition of an ATDS, and arguably the 2003, 2008, and 2012 Orders as well, without actually replacing it with anything. Instead the court kicked the question back to the FCC, which has yet to announce a new definition over a year later.

The Supreme Court may have just created even more confusion on an even more fundamental issue than the definition of an ATDS in today’s opinion in PDR Network v. Carlton & Harris Chiropractic. Only this time, the Court called into question a rule on which seemingly everyone agreed: that courts do not have jurisdiction to question FCC rules and orders made pursuant to the TCPA unless they are overturned by an appellate court in a Hobbs Act petition, as happened in ACA International.

Every Circuit Court that confronted that issue was in agreement, which provided at least some degree of clarity in TCPAWorld: when the FCC speaks, everyone must listen. And outside of a Hobbs Act petition, everyone is bound. Now that universally held belief is up for debate, as the Supreme Court questioned it in PDR Network, but did not actually decide the issue.

The specific issue in PDR Network is whether the FCC’s 2006 Order regarding unsolicited fax advertisements is binding in private litigation. The Fourth Circuit – following every circuit to address the issue – held that the 2006 Order is binding and that neither it nor the district court has jurisdiction to question it.

But despite universal agreement on the answer to that question, the Supreme Court remanded the case to the Fourth Circuit to have two preliminary questions answered. First, whether the 2006 FCC Order is a “legislative rule” or a mere “interpretive rule.” Second, whether PDR had a “prior and adequate opportunity” to seek judicial review of the 2016 FCC Order under a Hobbs Act petition.

The PDR Network majority stated that the first issue is important because an interpretive rule “may not be binding on a district court.” Emphasis added. The key word there is may – the Supreme Court did not actually hold that an interpretive rule would not be binding; the answer to that question remains up in the air too. So the Supreme Court posed a question, that may or may not answer another question, that may or may not answer the actual question on which it granted certiorari.

Welcome to TCPAWorld, where questions do not actually get answer – they only get asked. Even if no one actually asked it.

If the 2006 Order is held to be an interpretive rule, and interpretive rules are held not to be binding or subject to the Hobbs Act’s exclusive jurisdiction provision, the results could be far reaching. Many significant FCC TCPA orders were issued pursuant to petitions and other abbreviated proceedings rather than full, Administrative Procedure Act style notice and comment rulemaking. Yet courts and parties treated them as binding because of the Hobbs Act. PDR Network could upend that practice and create uncertainty where it did not otherwise exist, as parties may have more freedom to challenge FCC Orders as non-binding interpretive rules. 

The second question could pose a very interesting scenario, where the validity of an FCC Order – be it an interpretive rule or a legislative rule – could depend on the defendant challenging it. As the Supreme Court notes, a Hobbs Act petition has to be filed within 60 days after entry of an agency order. But what about an entity that did not even exist until years after an order was entered? Is the entity then stuck with such an order in private litigation or an enforcement proceeding, even though it literally had no opportunity to challenge it?

Under PDR, the answer to these questions is, “who knows”? The Supreme Court posed those questions, but closed by saying: “We again say ‘may’ because we do not definitively decide this issue here.” So maybe an entity that did not have an opportunity to challenge an FCC Order through a Hobbs Act petition can challenge it in an enforcement proceeding. Or maybe not. All we can say now is that this issue is now an open one.

Stay tuned, folks. We will have continuing coverage and analysis of the Supreme Court’s PDR Network decision here at TCPAWorld, including a breakdown on which FCC Orders could potentially be classified as “interpretive rules” and an analysis of the Justice Kavanaugh’s very interesting concurrence.

© Copyright 2019 Squire Patton Boggs (US) LLP

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About this Author

Daniel Delnero specializes in representing companies facing high-stakes consumer class action litigation, with a particular emphasis on consumer financial services matters. He has successfully represented clients in large, complex matters, including the Telephone Consumer Protection Act (TCPA), Fair Debt Collection Practices Act (FDCPA), mergers and acquisitions litigation, First Amendment litigation, libel and defamation, contract disputes and business torts. Daniel also routinely represents companies and individuals facing intrusive governmental investigations,...

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