October 21, 2019

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Supreme Court Poised To Alter TCPA Landscape With Review Of Key Term “Advertisement”

On Tuesday, the Supreme Court decided to review a case that potentially carries far reaching ramifications for litigation under the Telephone Consumer Protection Act (“TCPA”), which places restrictions on phone and fax solicitations and imposes serious penalties for violations. See 47 U.S.C. § 227, et seq. By granting certiorari in PDR Network, LLC v. Carlton & Harris Chiropractic, Inc., No. 17-1705, the Court is set to resolve the question whether the Hobbs Act requires district courts to accept the FCC’s interpretation of the TCPA’s key statutory term “advertisement.”

PDR Networks involved a single fax sent by PDR Network to a West Virginia chiropractic clinic that invited the recipient to go to its website to reserve a “FREE 2014 Physicians’ Desk Reference eBook.” After receiving the fax, the clinic sued PDR Network in a putative class action alleging the fax constituted an “unsolicited advertisement” in violation of the TCPA. In resolving defendant’s motion to dismiss, the federal district court for the District of West Virginia held that, because the TCPA’s definition of advertisement was unambiguous, it was not bound under Chevron U.S.A., Inc. v. Natural Resources Defense Council, Inc., 467 U.S. 837 (1984), to defer to the FCC’s earlier determination that “facsimile messages that promote goods or services even at no cost … are unsolicited advertisements under the TCPA’s definition.” 71 Fed. Reg. 25967, 25973 (May 3, 2006). Accordingly, the district court dismissed plaintiff’s TCPA claim because the fax was not an “advertisement.” 47 U.S.C. § 227(a)(5).

On appellate review, a divided panel of the Fourth Circuit Court of Appeals later reversed the district court. The Fourth Circuit held the Hobbs Act imposes a “jurisdictional command” mandating district courts to defer to FCC interpretations of statutes the agency administers. See 883 F.3d 459, 466 (4th Cir. 2018). As a result, the district court was without discretion to decide whether the FCC Rule was entitled to deference or not under a traditional Chevron analysis.

In dissent from the majority’s opinion, Judge Thacker explained the district court did not exceed its jurisdiction under the Hobbs Act because it did not determine the validity of the 2006 FCC Rule. According to Judge Thacker, “[i]nvalidation occurs at step one of Chevron only if a court finds the agency’s construction is in conflict with the unambiguous statutory language.” Id. at 470 (Thacker, J., dissenting). But here, the district court only held that, because the TCPA was unambiguous, there was no need to defer to the agency. As such, the Hobbs Act did not come into play because PDR Network never challenged the validity of 2006 FCC Rule.

By granting certiorari to consider the proper interplay between Chevron and the Hobbs Act in TCPA cases, the Supreme Court is poised to resolve an issue that has bedeviled the Courts of Appeals for years. Given the TCPA impacts every sector of our economy, and litigation under the statute routinely presents questions of whether a challenged communication is an “advertisement” or meets other requirements keyed to FCC rules and regulations, the Court’s decision on this issue may significantly impact how courts apply FCC interpretations of the TCPA in civil litigation.

The case will likely be argued sometime early next year, with a decision to come before the end of the Court’s current Term.

Copyright © 2019, Sheppard Mullin Richter & Hampton LLP.


About this Author

Paul A. Werner, Litigation Attorney, Sheppard Mullin, Law firm

Mr. Werner is a partner in the Business Trial Practice Group in the firm's Washington D.C. office.

Mr. Werner is a seasoned first-chair litigator, whose prodigious representations over the past decade have been before all levels of courts and administrative tribunals, federal and state, and spanned a wide range of complex litigation matters. These matters have run the gamut from high-stakes, “bet the company” commercial disputes to disputes involving statutory, constitutional, communications, energy, environmental, insurance, intellectual...

David M. Poell, business law Lawyer, Sheppard Mullin

David Poell is an associate in the Business Trial Practice Group in the firm’s Chicago office with an emphasis in the areas of consumer privacy and class action litigation.

Areas of Practice

A large portion of Mr. Poell’s practice is devoted to defending companies against class and individual actions brought under various state and federal consumer protection statutes, including the Telephone Consumer Protection Act (TCPA) and the Fair and Accurate Credit Transactions Act (FACTA), as well as other consumer-privacy and unfair business practices laws and regulations. He also advises companies regarding privacy and direct-marketing matters, such as drafting privacy policies and providing guidance on compliance with FCC, FTC and state-specific rules and regulations.