When the FCC speaks, everyone must listen... maybe

That a district court could not ignore or refuse to follow an order by the Federal Communications Commission related to the Telephone Consumer Protection Act was once sacrosanct. It was, in fact, one of the few things on which all stakeholders -- courts, plaintiffs, defendants -- agreed. But the U.S. Supreme Court just threw that understanding into question in PDR Network v. Carlton & Harris Chiropractic, 2019 DJDAR 5567 (June 20, 2019).

The specific issue in PDR Network is whether the FCC's 2006 order regarding unsolicited fax advertisements is binding in private litigation. The 4th U.S. Circuit Court of Appeals -- following every circuit to address the issue -- held that the 2006 order is binding and that neither it nor the district court has jurisdiction to question it. Every circuit court that confronted that issue was in agreement, which provided at least some degree of clarity: When the FCC speaks, everyone must listen. And outside of a Hobbs Act petition, everyone is bound. Now that universally held belief is up for debate, as the Supreme Court questioned it in PDR Network, but did not actually decide the issue.

In PDR Network, the Supreme Court remanded the case to the 4th Circuit to have two preliminary questions answered. First, whether the 2006 order is a "legislative rule" or a mere "interpretive rule." Second, adopting a standard from the Administrative Procedure Act, whether PDR had a "prior and adequate opportunity" to seek judicial review of the order under a Hobbs Act petition.

Led by Justice Stephen Breyer, the PDR Network majority stated that the first issue is important because an interpretive rule "may not be binding on a district court." (Emphasis added.) The key word there is may -- the Supreme Court did not actually hold that an interpretive rule would not be binding; the answer to that question remains up in the air, too. So the Supreme Court posed a question, that may or may not answer another question, that may or may not answer the actual question on which it granted certiorari.

If the order is held to be an interpretive rule, and interpretive rules are held not to be binding or subject to the Hobbs Act's exclusive jurisdiction provision, the results could be far reaching. Many significant FCC orders were issued pursuant to petitions and other abbreviated proceedings rather than full Administrative Procedure Act-style notice and comment rulemaking. Yet courts and parties treated them as binding because of the Hobbs Act. PDR Network could upend that practice and create uncertainty where it did not otherwise exist, as parties may have more freedom to challenge FCC orders as non-binding interpretive rules.

The second question could pose a very interesting scenario, where the validity of an FCC order -- be it an interpretive rule or a legislative rule -- could depend on the defendant challenging it. As the Supreme Court notes, a Hobbs Act petition has to be filed within 60 days after entry of an agency order. But what about an entity that did not even exist until years after an order was entered? Or an entity that did not engage in regulated conduct when the order was entered? Are those entities then stuck with such an order in private litigation or an enforcement proceeding, even though they literally had no opportunity to challenge it?

Under PDR, the answer to these questions is... maybe. The Supreme Court posed those questions, but closed by saying: "We again say 'may' because we do not definitively decide this issue here." So maybe an entity that did not have an opportunity to challenge an FCC order through a Hobbs Act petition can challenge it in an enforcement proceeding. Or maybe not. All we can say now is that this issue is now an open one.

Perhaps even more interesting than the majority opinion is Justice Brett Kavanaugh's concurrence. Joined by Justices Clarence Thomas, Samuel Alito and Neil Gorsuch, Justice Kavanaugh reasoned that the Hobbs Act does not strip district courts of jurisdiction to ignore FCC orders in private litigation at all. Instead, he would have held that a statute can only bind courts to administrative orders and strip them of jurisdiction if Congress specifically says that they are stripping courts of jurisdiction to hear a particular challenge in a private enforcement action. He then states that because the Hobbs Act does not include such a clear statement, it does not strip district courts of authority to ignore or disagree with an FCC interpretation of a statute in private litigation.

So could Congress address Justice Kavanaugh's concerns by including a clear jurisdictional-stripping statement? Perhaps not. Justice Kavanaugh also reasoned that a court would not be limiting or setting aside an FCC order by disagreeing with it, or declining to follow it, in private litigation because the result would only be binding in that particular case. But although that opinion has some facial appeal, in practice it would pose challenges, because an appellate order disagreeing with an FCC order would be binding on district courts within the circuit, even though it was rendered in private litigation.

Significantly, Justice Kavanaugh was very concerned with the due process implications of prohibiting an entity like PDR Network from arguing that its conduct is not prohibited by statute. Justice Breyer's majority opinion potentially addresses that concern through the second question posed -- whether the APA's "prior and adequate opportunity" requirement is somehow incorporated into the Hobbs Act. The majority does not, however, indicate how a requirement under the APA can be incorporated sub silencio into another statute, the Hobbs Act. The Supreme Court could conceivably reason that the "prior and adequate opportunity" standard must be incorporated to the Hobbs Act under the doctrine of constitutional avoidance, as the only means of finding the Hobbs Act constitutional. Until these questions work their way through the court system, though, we will be left to speculate as to the ability to challenge prior FCC orders in private litigation.

The one thing PDR Network made abundantly clear is that the Supreme Court remains concerned with ceding too much authority to administrative agencies to interpret and define federal statutes. None of the justices -- not a single one -- were willing to say that the Hobbs Act stripped the district court of jurisdiction, despite universal acceptance of that interpretation among circuit courts. In that regard, the TCPA and FCC orders issued under it were simply caught in the crosshairs of this ongoing trend that, recently, has gained steam among judges from across the political spectrum. 