[17-1705] PDR Network, LLC v. Carlton & Harris Chiropractic Inc.

PDR Network, LLC v. Carlton & Harris Chiropractic Inc.

Justia (with opinion) · Docket · oyez.org

Argued on Mar 25, 2019.
Decided on Jun 20, 2019.

Petitioner: PDR Network, LLC, et al..
Respondent: Carlton & Harris Chiropractic, Inc..

Advocates:

• Carter G. Phillips (for the petitioners)
• Glenn L. Hara (for the respondent)
• Rachel P. Kovner (Assistant to the Solicitor General, Department of Justice, for the United States, as amicus curiae, in support of the respondent)

Facts of the case (from oyez.org)

Petitioner PDR Network is a company that “delivers health knowledge products and services” to healthcare providers and is perhaps most known for publishing the Physicians’ Desk Reference, a popular reference book with information on various prescription drugs. In December 2013, PDR Network sent by fax to Carlton & Harris, a chiropractic office in West Virginia, an advertisement for a free eBook version of the 2014 Physicians’ Desk Reference. The material advised that the recipient had received the offer “because you are a member of the PDR Network.”

On behalf of itself and a class of similarly situated recipients of faxes from PDR Network, Carlton & Harris sued PDR Network in federal court under the Telephone Consumer Protection Act (“TCPA”), as amended by the Junk Fax Prevention Act of 2005, which generally prohibits the use of a fax machine to send “unsolicited advertisement[s].” Under that statute, the recipient of an unsolicited fax advertisement can sue the sender for damages and recover actual monetary loss or $500 in statutory damages for each violation. If a court finds the sender “willfully or knowingly violated” the TCPA, the recipient is entitled to triple damages.

As a preliminary matter, the court found that the Hobbs Act does not require the court to defer to the FCC’s interpretation of an unambiguous term. Substituting its own definition of “unsolicited advertisement” for the FCC’s definition of the term, which was promulgated by rule in 2006 (“2006 FCC Rule”), the court found that PDR Network’s fax was not an unsolicited advertisement because it lacked a “commercial aim.” Moreover, the court found that even under the 2006 FCC Rule, the fax would not be an “unsolicited advertisement.” For this reason, the district court granted PDR Network’s motion to dismiss.

Carlton & Harris appealed, and the US Court of Appeals for the Fourth Circuit vacated the lower court’s decision, finding that the Hobbs Act disallows district courts from considering the validity of orders like the 2006 FCC Rule, and that the district court’s interpretation of the rule is at odds with the plain meaning of its text.

Question

Does the Hobbs Act require the district court in this case to accept the Federal Communication Commission's legal interpretation of the Telephone Consumer Protection Act?

Conclusion

The extent to which a 2006 order by the Federal Communications Commission (FCC) is binding on a district court turns on two preliminary questions: (1) whether the order is the equivalent of a “legislative rule” with the “force and effect of law”; and (2) whether the subject of the rule (in this case, PDR Network) had a prior and adequate opportunity to seek judicial review of the order.

Justice Stephen Breyer delivered the opinion of the Court that was unanimous in its judgment. Whether an agency’s order is binding on courts depends on two preliminary considerations. First, the order must be equivalent to a “legislative rule” with the “force and effect of law,” as opposed to an “interpretive rule,” which merely “advises the public of the agency’s construction of the statutes and rules which it administers.” Second, the Administrative Procedure Act requires that an agency action be subject to judicial review except “to the extent that a prior, adequate, and exclusive opportunity for judicial review is provided by law.” The Hobbs Act requires certain challenges to FCC final orders to be brought in a court of appeals, so a court should determine whether this provision afforded PDR Network a prior and adequate opportunity for judicial review. The Court declined to resolve these questions, instead vacating the judgment of the Fourth Circuit and remanding for consideration of these preliminary questions.

Justice Clarence Thomas concurred in the judgment, joined by Justice Neil Gorsuch. Justice Thomas’s concurrence highlights, in his view, the Court’s mistaken understanding of the relationship between federal statutes and the agency orders interpreting them. Justice Thomas argues that federal courts cannot disregard the text of the governing statute when considering whether or not to treat agency orders as controlling law.

Justice Brett Kavanaugh concurred in the judgment, joined by Justices Clarence Thomas, Samuel Alito, and Neil Gorsuch. Justice Kavanaugh criticizes the majority for answering a question other than the one presented in this case. Rather than resolving a different question, Justice Kavanaugh would conclude that the Hobbs Act does not bar a defendant in an enforcement action from arguing that the agency’s interpretation of the statute is wrong. He suggests that the Fourth Circuit on remand (and other courts, when the issue arises) can employ the analysis set forth in his separate concurrence.