June 20, 2019

Supreme Court Decides PDR Network, LLC v. Carlton & Harris Chiropractic, Inc.

On June 20, 2019, the United States Supreme Court decided PDR Network, LLC v. Carlton & Harris Chiropractic, Inc., No. 17-1705, holding that whether the Federal Communications Commission’s (FCC) 2006 order interpreting the term “unsolicited advertisements” binds lower courts depends on the resolution of two preliminary questions that the Fourth Circuit should address: (1) whether the order is the equivalent of a legislative rule, which has the force of law, or an interpretive rule, which does not; and (2) whether PDR Network had a prior and adequate opportunity to seek judicial review of the order.

The Telephone Consumer Protection Act (TCPA) regulates, among other things, fax advertisements. In 2006, the FCC issued an order that concluded that the term “unsolicited advertisement” in the TCPA includes faxes that promoted no-cost goods and services, such as free magazine subscriptions and catalogs. The Administrative Orders Review Act (Hobbs Act), provides that federal courts of appeal have “exclusive jurisdiction” to set aside or otherwise modify “final orders” of the FCC. Final FCC orders may be appealed within 60 days to a court of appeals.

PDR Network sent a fax to health care clinics offering a free physician’s desk reference book, and Carlton & Harris Chiropractic sued on behalf of a putative class, alleging the fax violated the TCPA. The district court dismissed the case after concluding that the fax was not an “unsolicited advertisement.” The Fourth Circuit reversed, holding that the Hobbs Act’s vesting of “exclusive jurisdiction” in courts of appeal required the district court to apply the FCC’s interpretation of the term “unsolicited advertisement,” and because that definition includes free materials, PDR Network’s fax falls within the definition.

The Supreme Court vacated the Fourth Circuit’s decision and remanded, concluding two preliminary questions needed to be addressed before the Court could consider whether district courts are bound by FCC interpretations under the Hobbs Act. First, is the 2006 FCC order a “legislative rule” that has the “force and effect of law” or is it an “interpretive rule” that advises on the agency’s construction of the law but does not have the effect of law? Second, did PDR Network have a “prior” and “adequate” opportunity to seek judicial review of the order when it was issued, within the 60 days provided for in the Hobbs Act? If not, PDR Network may be entitled to challenge the FCC’s interpretation even if the order is a legislative rule, although the Court did not decide this question.

Justice Breyer delivered the opinion of the Court, in which Chief Justice Roberts and Justices Ginsburg, Sotomayor, and Kagan joined. Justice Thomas filed an opinion concurring in the judgment, which Justice Gorsuch joined. Justice Kavanagh filed an opinion concurring in the judgment, which Justices Thomas, Alito, and Gorsuch joined.

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