In McLaughlin Chiropractic Associates v. McKesson Corporation, the Supreme Court is set to determine whether the Hobbs Act requires district courts to follow the Federal Communications Commission’s (FCC) interpretation of the Telephone Consumer Protection Act (TCPA)—specifically, the FCC’s understanding that the TCPA does not prohibit electronically received faxes, a mundane issue that involves seemingly extinct technology (fax machines), but arising in a case that holds potentially significant constitutional consequences.
McKesson allegedly faxed unsolicited advertisements, including to McLaughlin. The advertisements were transmitted to both traditional fax machines and online fax services. McLaughlin filed a class action, arguing that they never consented to receive such faxes. The FCC subsequently issued an order stating that online fax services fall outside the TCPA’s definition of “telephone facsimile machine” because they lack the “capacity to transcribe text or images from an electronic signal… onto paper.” The FCC’s interpretation effectively excluded online faxes from TCPA liability, as they do not shift printing costs from the advertiser to the recipient.
The Hobbs Act is a federal law that limits judicial review of FCC “final orders” to appellate courts, requiring district courts to accept such FCC statutory interpretations. However, the circuits are split on whether FCC orders interpreting the TCPA are binding on district courts. The Second, Third, Fourth, and Eighth Circuits have held that such orders are not binding on district courts. The Ninth Circuit maintains that district courts defer to FCC rules, whether they are interpretive or final. The Seventh Circuit, in contrast, rejects deference to both types and holds that district courts are not bound by interpretative or final FCC rules. In this case, the district court relied on the FCC’s order, granting summary judgment to the McLaughlin class but also decertified the proposed class and denied treble damages. McKesson appealed the summary judgment to the Ninth Circuit, and the McLaughlin plaintiffs cross-appealed to contest the decertification and damages rulings. The Ninth Circuit affirmed, and the Supreme Court agreed to hear the case.
During oral argument, the justices grappled with the scope of the Hobbs Act and the authority of agency interpretation. Justices Sotomayor and Alito questioned the meaning of the phrase “determine the validity” in the statute, suggesting that there could be multiple ways to challenge an agency’s order outside of a direct validity determination. Justice Kagan explored whether the FCC’s ruling should be classified as interpretive or binding, noting that the distinction is critical to whether the Hobbs Act applies. Justice Gorsuch suggested that the ruling was a final agency action, remarking that it “would seem to be, to me, every day of the week and twice on Sundays an order and therefore implicate the Hobbs Act.” Justice Jackson questioned whether an agency order could remain permanently binding given the Hobbs Act’s mechanism for legal challenges. The Court also explored when and where litigants should challenge an agency’s rules—whether through administrative proceedings, direct judicial review, or collateral litigation.
This case comes in the wake of last term’s blockbuster decision, Loper Bright Enterprises v. Raimondo, in which the Supreme Court ended Chevron judicial deference to administrative agency actions under the Administrative Procedure Act, signaling a major shift in how federal courts view agency interpretations of ambiguous or silent statutes where the legislature has not expressly delegated the matter to the agency’s interpretation. While that shift increases the likelihood of successful challenges to agency determinations in federal court, the Court’s forthcoming decision in this Hobbs Act case may clarify how the Court will approach the judicial deference question outside the APA context and have broader implications for administrative law and judicial review of agency actions.
Stay tuned for Dykema’s update after the Court issues its opinion, which is expected later this term.
For more information, please contact Chantel Febus, James Azadian, or Monika Harris.