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Due Process Meets Agency Deference: TCPAWorld Analyzes the Supreme Court Argument in PDR Network v. Carlton & Harris Chiropractic.

The TCPA is caught in the middle of a tug-of-war of grand constitutional questions – due process, agency discretion, and jurisdictional limitations. The answer to these questions could have enormous impacts for TCPAWorld and beyond, particularly with the impending ATDS rulemaking. So let’s break down the argument in PDR Network v. Carlton & Harris Chiropractic, No. 17-1705.

The actual issue in PDR Network appears relatively mundane: whether the sender of an unsolicited fax offering free goods or services is liable under the TCPA. The FCC answered that question in 2006, ruling that the sender of a fax offering free goods or services is subject to the TCPA. And that’s where things get interesting. If the Hobbs Act is a jurisdictional bar, then the defendant has no ability to challenge the 2006 FCC ruling in a private lawsuit. But if the Hobbs Act is only a bar on certain types of proceedings – such as declaratory judgments and injunctive actions seeking to bar an FCC ruling or declare it inapplicable – then the defendant can still challenge the 2006 FCC ruling in private litigation.

As we noted before, the current trend at the Supreme Court is to dial back deference and grant courts more ability to interpret underlying statutes instead of deferring to agency rulemaking. That trend has led to several commentators pronouncing Chevron deference dead. But the Hobbs Act isn’t a rule of deference; it’s a jurisdictional bar. And Congress has Article One, Section Eight authority to define the jurisdiction of lower federal courts. So does that end the matter? Not so fast. Enter due process.

At least five justices, led by Breyer and Ginsburg, raised due process concerns with prohibiting a defendant in a private enforcement action from challenging an FCC rule as inconsistent with a statute. Justices Ginsburg, Breyer, Gorsuch, Kavanaugh, and Alito seemed concerned with prohibiting an entity that did not send faxes in 2006 from challenging the FCC’s interpretation years later when it was sued for doing so. These Justices, and the Petitioner, argued that such an entity would have no reason to challenge the order within the 60-day window provided in the Hobbs Act.

Chief Justice Roberts and Justices Sotomayor and Kagan appeared most likely to side with the Respondent. Chief Justice Roberts and Justice Kagan both pointed out that the Petitioner could have obtained judicial review of the 2006 ruling after it started sending faxes. Which is true, but the path to do so is circuitous at best. The Petitioner would have had to first ask the FCC to reconsider its 2006 ruling. Then, after the FCC responds to the request for reconsideration, the Petitioner could bring a Hobbs Act challenge in a circuit court of appeals. And the Petitioner would be expected to do all of this before being sued for violating the regulation. That is a lot to ask, and other justices seemed skeptical.

Justice Sotomayor raised a simpler objection: exclusive jurisdiction has to mean something. The Petitioner agreed, but responded that Hobbs Act exclusivity is limited to actions to invalidate an FCC order or declare it unenforceable. Justice Gorsuch picked up on that theme and pointed out that challenging an FCC interpretation in a private enforcement action would not result in it “disappearing” or being “declared invalid.”

The government, however, countered that Congress knew what it was doing when it vested exclusive jurisdiction in the court of appeals. Doing so allows all challenges to be consolidated into a single action in a single appellate court. The alternative is having courts throughout the country reaching contradictory results on what should be a uniform national law. That concern certainly has merit, as we are seeing with the current split on the definition of an ATDS. Should liability really depend on the district in which you are sued? But at the same time, the government’s position could make it very difficult for a defendant to challenge an FCC ruling when they are actually sued for violating it.

All of which brings us back to the FCC’s impending ATDS rulemaking. If the Supreme Court affirms the Fourth Circuit’s decision in PDR Network – and the approach of every circuit to consider the issue – the FCC’s ruling will be binding on courts across the country unless it is overturned under a Hobbs Act petition. But if the Supreme Court reverses, private litigants might have at least some daylight to challenge the FCC’s interpretation as inconsistent with the TCPA.

© 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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