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SCOTUS to Address Impact of FCC’s TCPA Rulings on Courts

11.15.18

Marlee Waxelbaum

Virginia Bell Flynn

Alan D. Wingfield

David N. Anthony

The United States Supreme Court has granted certiorari to a Telephone Consumer Protection Act (TCPA) case that could fundamentally shape the interpretation of one of the most litigated statutes in America. Its November 13, 2018, certiorari grant means that the Supreme Court should decide whether the Federal Communications Commission (FCC) or the courts will dominate the interpretation of the TCPA. Given that the Ninth Circuit Court of Appeals recently took an expansive interpretation of the TCPA and business interests are hoping that the FCC will soon issue a narrower interpretation of the same statutory provisions, the Supreme Court’s decision likely will have a significant impact on the future of the TCPA.

The case, PDR Network LLC, et al. v. Carlton & Harris Chiropractic, No. 17-1705, was originally dismissed by the district court. The district court held that an unsolicited free e-book fax sent by a major health information provider must have a commercial goal to be considered an advertisement under the TCPA. However, in dismissing the case, the district court declined to defer to a 2006 Rule promulgated by the FCC that interpreted the term “unsolicited advertisement.” Notably, the district court found that it was not required to automatically defer to the FCC’s interpretation of “unsolicited advertisement” under the Chevron doctrine because the statutory definition was “clear and easy to apply.” See Carlton & Harris Chiropractic, Inc. v. PDR Network, LLC, No. 3:15-14887, 2016 U.S. Dist. LEXIS 135310, at *10 (S.D. W. Va. Sep. 30, 2016). Under the Chevron doctrine, Courts can review agency interpretations as they come up during litigation albeit under a deferential standard of review.

Despite the alleged “clear and easy” nature of the statutory text at issue, the Fourth Circuit Court of Appeals reversed the dismissal in February. The Fourth Circuit held that the Hobbs Act deprived district courts of jurisdiction to consider the validity of orders like the 2006 FCC Rule, and that the district court's reading of the 2006 FCC Rule was at odds with the plain meaning of the text of the FCC’s ruling. The Fourth Circuit held that it, and the district court, must follow the FCC interpretation. Under the Hobbs Act, said the Fourth Circuit, FCC interpretations can only be challenged by an appeal of the FCC order itself – not collaterally during routine litigation. The goal of the Hobbs Act is to ensure the TCPA has a single, nationwide meaning, and not divergent meanings depending on what a particular court might say.

PDR Network petitioned for cert, in part, on the question of whether the Hobbs Act strips courts of jurisdiction to engage in a Chevron analysis. The Supreme Court limited its certiorari grant to the question of “[w]hether the Hobbs Act required the district court to accept the FCC’s legal interpretation of the TCPA.” The Supreme Court’s decision on this question could have far-reaching implications for TCPA jurisprudence as federal courts across the country wrestle with the impact of the FCC’s TCPA rules, regulations, and interpretative guidance in the wake of the ACA International decision from the D.C. Circuit.

Since the ACA International decision was issued, which largely if not completely wiped out prior FCC interpretations of the TCPA, federal courts have reached a variety of conclusions on key TCPA issues. The Ninth Circuit, for example, recently issued a ruling that took a broad view of the types of telephone systems that are regulated by the TCPA as automatic telephone dialing systems (ATDS). See Marks v. Crunch San Diego, LLC, 904 F.3d 1041, 1046-48 (9th Cir. 2018). (An extensive discussion of the Marks ruling and its potential impact can be found on our blog here.) Yet Marks’ broad interpretation is sharply contrasted by the narrower ATDS definition utilized by the Third Circuit in Dominguez v. Yahoo, Inc., 894 F.3d 116, 119 (3d Cir. 2018), discussed further here. These cases are just a few examples of the disparate TCPA interpretations being reached by courts post-ACA.

Meanwhile, the FCC has been collecting comments and preparing to issue an interpretative ruling as directed by the Court in ACA International. Businesses of all types have been looking to the FCC to provide needed clarity, consistency, and a narrow view of the applicability of the TCPA. (We discuss the May 2018 FCC petition filed by business trade groups seeking a narrow definition of ATDS here.) Adding to the TCPA-chatter, the current chairman of the FCC, Ajit Pai, is on record favoring an interpretation of the TCPA that is considerably more narrow than that adopted by the Marks Court. In light of such comments, businesses have hoped the FCC’s ultimate ruling will take a narrower view of the TCPA—including, perhaps, on the definition of ATDS—than that adopted by many courts such as the Ninth Circuit in Marks.

The possible conflict between the Ninth Circuit’s decision in Marks and the FCC’s position sets the stage for a potential struggle as TCPA lawsuits progress throughout the country: whose view of the TCPA should control – that of the FCC or divergent courts? Any ruling by the FCC is likely to be subject to a direct appeal that will end up in the D.C. Circuit, but whether the result of that process controls – or the views of a myriad of courts such as the Ninth Circuit – is at stake. The Supreme Court’s grant of certiorari in PDR Network may mean that it will decide much of the looming melee, which in turn may effectively determine whether the TCPA is to be construed narrowly and uniformly in accordance with an FCC interpretation or diversely and, in some important instances, more broadly by the courts.

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