Partners Virginia B. Flynn, Chad R. Fuller, and Alan D. Wingfield of Troutman Sanders LLP are mentioned in a March 22 Law360 article regarding the United States Supreme Court’s decision to grant review of PDR Network v. Carlton & Harris Chiropractic, a Telephone Consumer Protection Act class action.
PDR Network is a company that sells healthcare products to doctors and other healthcare providers and is known for publishing the Physicians’ Desk Reference, a popular reference book with information on various prescription drugs. Carlton & Harris Chiropractic is a West Virginia chiropractic office. In December 2013, PDR sent by fax to Carlton & Harris an advertisement for a free e-book version of the 2014 Physicians’ Desk Reference.
Carlton & Harris sued PDR in the Southern District of West Virginia for violation of the TCPA, which prohibits unsolicited advertisements sent to fax machines. Under the TCPA, a 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.
PDR moved to dismiss the complaint, arguing the fax at issue did not constitute an advertisement as a matter of law since it did not offer a product or service for sale. The district court determined the fax was not an advertisement because PDR offered the e-book for free. Carlton & Harris argued the district court must, under the Hobbs Act, adopt the 2006 Order issued by the FCC, which offered interpretative guidance of the TCPA that would make “advertisements” encompass announcements of free products. Following the framework for deferring to administrative agencies, as set forth in Chevron USA v. NRDC, 467 U.S. 837 (1984), the Court refused to defer to the FCC’s interpretation of the TCPA since it believed the TCPA’s definition of “unsolicited advertising” was unambiguous. The district court conceded the Hobbs Act grants federal courts of appeals “exclusive jurisdiction” over challenges “to the validity of all final orders of the [FCC].” However, the district court determined that neither party was challenging the validity of the FCC order and thus retained jurisdiction. The district court granted PDR’s motion to dismiss, finding that while the plain meaning of the TCPA prohibits unsolicited faxes with a commercial purpose, it allows for the distribution of information regarding free goods or services.
Carlton & Harris appealed, arguing the Hobbs Act required the district court to defer to the FCC’s interpretation of the TCPA and that the district court erred when it held that a fax must contain a commercial aim to be considered an “advertisement.” Carlton & Harris contended the federal courts of appeals have exclusive jurisdiction over the validity of agency orders under the Hobbs Act. The United States Court of Appeals for the Fourth Circuit agreed and held the Hobbs Act limits district courts’ jurisdiction and bars them from interpreting agency orders. The Fourth Circuit reversed the district court’s decision because it should have deferred to the FCC’s interpretation of the TCPA.
The Fourth Circuit denied PDR Network’s request for further review. The Supreme Court granted PDR Network’s petition for a writ of certiorari on November 13, 2018. The question before the Supreme Court is whether the Hobbs Act required the district court in this case to accept the FCC’s legal interpretation of the TCPA. It would not be surprising if the justices’ questioning also touches on the deference and due process issues that will impact TCPA lawsuits, including any legal dispute that turns on statutory orders issued by a federal agency.
The Supreme Court’s decision will provide important guidance to the lower courts as to how much weight to give those prior FCC rules as well as new rules that are expected in the near future.
Troutman Sanders LLP will monitor the Supreme Court’s decision and the resulting impact on the TCPA.