This is the second post in a three-part series regarding PDR Network, LLC v. Carlton & Harris Chiropractic, Inc., Dkt No. 17-1705 (certiorari granted November 13, 2018).  This post addresses the question the case nominally presents — does the Hobbs Act require district courts to apply FCC regulations, even when the court believes they conflict with the applicable underlying statute?  Thus I posit a counterfactual, namely that the FCC included in the Code of Federal Regulations a provision specifying that non-transactional offers of free goods qualify as “advertisements” subject to the Telephone Communications Protection Act of 1991 (“TCPA”) limitations on “unsolicited advertisements”?    (My first post explained that because the challenged FCC interpretation lacked “the force of law,” the Hobbs Act did not bar PDR Network’s argument before the district court that the FCC’s interpretation failed the Chevron test.)

The Meaning of the Hobbs Act

Petitioner claims that the Hobbs Act, 28 U.S.C. § 2342, which confers upon the courts of appeal exclusive jurisdiction over challenges to FCC orders, applies only to challenges raising procedural deficiencies in FCC proceedings.  PDR Network asserts: “The Hobbs Act’s jurisdictional restriction is purposefully specific; while it prohibits a challenge to the process or methodology of an order’s creation (i.e., a ‘facial’ attack), it does not prohibit a court from accepting an order as ‘valid’ and “interpreting” whether an agency’s ruling applies.”  Petition for Writ of Certiorari, PDR Network v. Carlton & Harris Chiropractic, Inc., Dkt No. 17-1705, at 14 (June 21, 2018).  Judge Thacker, in his Fourth Circuit dissent, also asserted that the Hobbs Act precluded only “facial” challenges in district courts, not “as applied” challenges asserting that an agency could not apply the regulation to a particular fax transmission.  Carlton & Harris Chiropractic, Inc. v. PDR Network, 883 F.3d 459, 471 (4^th Cir. 2018)(Thacker, J., dissenting).  While the Hobbs Act undoubtedly covers such challenges, see, e.g., FCC v. ITT World Communications, 466 U.S. 463 (1984) (failure to comply with the Government in the Sunshine Act’s open meetings requirements); American Bird Conservancy v. FCC, 408 F. Supp. 2d 987 (D. Hawaii 2006) (failure to comply with requirements imposed by the Endangered Species Act), its scope is not so limited.

The Hobbs Act places in the regional courts of appeal “exclusive jurisdiction to enjoin, set aside, suspend (in whole or in part), or determine the validity of . . . all final orders of the Federal Communications Commission made reviewable by 47 U.S.C. 402(a).”  Section 402(a), in turn, makes reviewable “[a]ny proceeding to enjoin, set aside, annul, or suspend any order of the Commission.”

Nothing in the Hobbs Act or section 402 makes the requirement that review be sought in the court of appeals inapplicable to “as applied” challenges.  Nor is the jurisdictional directive explicitly limited to procedural or “facial” challenges.  And nothing suggests that having such “as applied” challenges first be asserted in FCC proceedings and then undergo direct review by the regional courts of appeal is problematic — indeed it avoids the unnecessary duplication of judicial effort the Supreme Court cited has cited as a rational for the Hobbs Act and similar statutes, see, Florida Power & Light Co. v. Lorion, 470 U.S. 729, 744-45 (1985).  Indeed, the implications of the argument petitioner and Judge Thacker advance is that the regional courts of appeal lack jurisdiction to entertain such arguments on direct review.  Regulated entities might well have to raise the issue only after being sued by a fax recipient.  The need for uniformity underlying the Hobbs Act and section 402, see, e.g., CE Design, Ltd. v. Prism Business Media, Inc., 606 F.3d 443, 450 (7th Cir. 2010), is present even when a dispute is about the practice of a particular fax sender, as that entity may be sending the same fax to recipients all over the country.

Even if a district court purports to limit its refusal to apply an agency rule solely to the circumstances of the case before it, in common parlance such a judicial order would “set aside” or “suspend” the rule at least “in part.”  Typically such a ruling would be considered an invalidation of the regulation “as applied.”

Petitioner and the District Judge complain that a district court cannot be deprived of the ability to find unreasonable, and refuse to follow, an agency interpretation of a statute critical to resolution to a case properly before the court.  But such a complaint really challenges the concept that agencies can possess the power to promulgate legislative rules.  The application of a valid legislative rule cannot be attacked merely because it prohibits conduct the underlying statute itself does not reach — valid legislative rules can supplement statutory commands, see, e.g., Mourning v. Family Publications Services, 411 U.S. 356, 361-62, 369-73 (1973); National Petroleum Refiners Assn v. FTC, 482 F.2d 672, 690-91 (D.C. Cir. 1973).

Thus, when a court lacks jurisdiction to consider a rule’s validity, in whole or in part, because such jurisdiction is conferred elsewhere, it lacks the power to determine whether the rule is overbroad in relation to the underlying statutory authority conferred upon the agency. The Hobbs Act and section 402 do not make such questions entirely immune from judicial review, they merely limit review of such matters to the courts of appeal.  PDR Network’s true complaint is that the FCC’s discussion of the TCPA’s applicability to offers of free goods is not a legislative rule at all, leaving district courts free to interpret the TCPA’s definition of “unsolicited advertisements,” albeit with the appropriate level of deference to the agency’s views.  As I argued in the first post in this series, PDR Network has a strong argument on this score.

Addressing Two Concerns

The court of appeals’ uniform interpretation of the Hobbs Act, see, Respondent’s Brief In Opposition To The Petition For Writ Of Certiorari, PDR Network v. Carlton & Harris Chiropractic, Inc., Dkt. No. 17‑1705, at 7 (August 29, 2018), may seem troubling nevertheless in at least two respects. First, must a regulated entity have anticipated all the types of faxes it might send when the FCC proceeding was being conducted over a decade ago?  Second, must district courts disregard all statutes that conflict with the TCPA or FCC regulations implementing the statute?

With respect to the first, courts have expressed concern about the implications statutes setting time strict time limits for seeking judicial review have for later enforcement proceedings brought in district court, particularly in the context of criminal enforcement.  Such limitations can operate to compel a district court to enforce an interpretation at odds with a statute merely because the regulated entity lacked actual notice of the rule or did not have the foresight to seek review immediately after the regulation’s adoption.  United States v. Mendoza-Lopez, 481 U.S. 828, 837-38 (1987)(criminal enforcement); see, Chrysler Corp. v. EPA, 600 F.2d 904, 912-913 (D.C. Cir. 1979); Adamo Wrecking Co. v. United States, 434 U.S. 275, 289, (1978)(Powell, J., concurring)(criminal prosecution); see, Administrative Conference of the United States, Recommendation 76-4, 41 FED. REG. 56767, 56768 (Dec. 30, 1976).   It is quite easy to envision a company only coming into existence well after the promulgation of the 2006 regulation or a company not envisioning all of the unsolicited promotional messages it might wish to transmit by fax in the unforeseeable future.  Granted, private damages actions for TCPA violations are civil, not criminal, and the potential damages awards relatively modest (though they could be quite substantial if the unsolicited fax advertisements were sent to a large class of recipients).

However, had PDR Network believed that itself to be in some jeopardy from an overly broad regulation, it had an available remedy.  It could have filed a petition with the FCC for relief from the FCC’s directive, and then challenged the denial of its petition.  See, Mais v. Gulf Coast Collection Bureau, 768 F.3d 1110, 1121 (11th Cir. 2014)(regarding TCPA provisions limiting autodialed and prerecorded phone calls); Self v. BellSouth Mobility, Inc., 700 F.3d 453, 462 (11th Cir. 2012).[1]  Thus, those contemplating transmission of a message potential covered by the FCC “rule” need not have realized the problem and participated in the proceeding while it was ongoing from 2002 to 2006.  Granted, if the FCC declines to take up the issue in response to a petition, such a response may be subject to only “extremely limited” and “highly deferential” review.  Massachusetts v. EPA, 549 U.S. 497, 527-28 (2007)(quoting National Customs Brokers & Forwarders Assn. v. United States, 883 F.2d 93, 96 (D.C. Cir. 1989)(“[w]e will overturn an agency’s decision not to initiate a rulemaking only for compelling cause, such as plain error of law or a fundamental change in the factual premises previously considered by the agency,” id. at 96-97).

With respect to the second concern raised above, namely whether the Hobbs Act places all statutory conflicts relating to FCC orders outside the district courts’ jurisdiction, we might distinguish one set of claims from the claim raised in PDR Network.  PDR Network is asserting an alleged tension between regulations and the very statute they purport to implement — more specifically, a tension between the TCPA regulations and the TCPA itself.  But in some cases a district court may be called upon to reconcile the TCPA or its implementing regulations with other statutes enacted at different times.  Indeed, the seemingly conflicting statute may have been enacted after the revised TCPA regulations were promulgated and, unlike the TCPA, may not have been assigned to the FCC to implement. Had the claim against PDR Network involved a statute outside of the FCC’s jurisdiction that appeared to run counter to the TCPA or its implementing regulations, a court would have to find either an implied repeal of the earlier statute or reconcile the two statutes.  See, e.g., Radzanower v. Touch Ross & Co., 426 U.S. 148, 154-55 (1976); Morton v. Mancari, 417 U.S. 535, 550-51 (1974).  That is a “classic judicial task.”  FDA v. Brown & Williamson, 529 U.S. 120, 143 (2000)(quoting U.S. v. Fausto, 484 U.S. 439, 453 (1988)) (“reconciling many laws enacted over time, and getting them to ‘make sense’ in combination,” is the “classic judicial task”); see, Marbury v. Madison, 5 U.S. 137, 177-78 (1803).

By contrast, determining whether a regulation is either partially inconsistent with or simply unauthorized by the statute being implemented ultimately is a determination of the regulation’s validity.  That too, of course, is a quintessentially judicial task, but one the Hobbs Act and section 402 assign to the regional courts of appeal with respect to FCC orders.  If an FCC regulation conflicts with the statute, “harmonizing” the regulation with the statute (which the District Judge purported to do in this case) is never appropriate. Rather the regulation is simply invalid to the extent of the conflict, even if the invalidity is quite narrow — namely it is invalid “as applied” in a particular case.

Traynor v. Turnage, 485 U.S. 535 (1988), while not precisely on point, is somewhat illustrative of the distinction suggested.   In Traynor, several veterans sought to extend their eligibility for educational benefits under the applicable veterans’ benefits statutes.  Id. at 538.  Eligibility for such benefits generally expires 10 years after discharge from active military service, but may be extended, if the veteran was suffering “a physical or mental disability which was not the result of such veteran’s own willful misconduct.” Id. (citing 38 U.S.C. § 1662(a)(1) (1982)).  Plaintiffs sought an extension citing their alcoholism. Id.  The Veterans’ Administration determined that petitioners’ alcoholism constituted “willful misconduct,” citing 38 CFR § 3.301(c)(2) (1987), and thus denied their requests.  Id.  By statute, Congress barred judicial review of “the decisions of the Administrator on any question of law or fact under any law administered by the Veterans’ Administration providing benefits for veterans,”[2]  Id. at 539; 38 U.S.C. § 211(a)(1982).[3]

The Supreme Court held that the district court had jurisdiction to determine whether the Veteran Administration’s decision was consistent with the section 504 of the Rehabilitation Act of 1973, Pub. L. 93-112, 87 Stat. 355, 394 (codified at 29 U.S.C. § 794), despite the statutory bar to judicial review.  Id. at 543-45.  The Rehabilitation Act prohibits federal programs from discriminate against individuals solely due to a handicap.  The Court noted: “There is no claim that the regulation at issue is inconsistent with the statute under which it was issued; and there is no challenge to the Veterans’ Administration’s construction of any statute dealing with veterans’ benefits, except to the extent that its construction may be affected by the Rehabilitation Act.”  Id. at 544.

The Court found no clear and convincing evidence of any congressional intent to preclude claims that Rehabilitation Act section 504 “had invalidated an otherwise valid regulation issued by the Veterans’ Administration and purporting to have the force of law.”  Id. at 543.  It noted that resolution of the plaintiffs’ claims centered on “whether the law sought to be administered is valid in light of a subsequent statute whose enforcement is not the exclusive domain of the Veterans’ Administration.”  Id. at 543-44.  Moreover, it said, there was no reason “to believe that the Veterans’ Administration has any special expertise in assessing the validity of its regulations construing veterans’ benefits statutes under a later passed statute of general application.”  Id. at 544.

Perhaps the Hobbs Act applies even when a defendant in a TCPA suite alleges that an FCC regulation conflicts with some statute other than the TCPA itself, but that appears to present a more difficult question that the one presented in our hypothetical Carlton & Harris Chiropractic v. PDR Network.

Conclusion

In short, the Hobbs Act should clearly apply to channel claims such as PDR Network’s, alleging an incongruity between the TCPA and its implementing regulation, even as applied to a particular fax, to the regional courts of appeal.

* * * * *

[1] For example, see In re Rules and Regulations Implementing the Telephone Consumer Protection Act of 1991 and the Junk Fax Prevention Act of 2005, Application for Review filed by Anda, Inc. and Petitions for Declaratory Ruling, Waiver, and/or Rulemaking Regarding the Commission’s Opt-Out Requirement for Faxes Sent with the Recipient’s Prior Express Permission, FCC 14-164, ¶¶17, 22-31 (October 30, 2014).

[2] This provision was not a jurisdiction-channeling provision, but sought to preclude judicial review altogether.  Thus it presents a stronger case for narrow interpretation than the Hobbs Act.

[3] The provision was replaced by provisions providing for broader judicial review, 38 U.S.C. § 511.