Courthouse Steps Preview: PDR Network, LLC v. Carlton & Harris Chiropractic

Administrative Law & Regulation Practice Group and Regulatory Transparency Project Teleforum

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Once upon a time, businesses would offer their products or services by sending you a fax advertising them. Unfortunately, if you were on the receiving end of these faxes, they tied up your phone lines and used up your paper and ink. Addressing this and other complaints, Congress passed the Telephone Consumer Protection Act (TCPA), creating a private right of action for a variety of problematic behaviors.  

After PDR Network, LLC, faxed Carlton & Harris Chiropractic, Inc. an offer of a free Physicians Desk Reference, the Clinic sued under TCPA.  PDR countered that its offer of a free book did not constitute a solicitation subject to the TCPA’s civil liability provision. But in 2006, the Federal Communications Commission had determined that even faxes that promote goods or services for free subject the sender to civil liability.  

The Fourth Circuit held that PDR’s fax had violated the TCPA, as the FCC interprets it, and that the Hobbs Act prevented PDR from challenging the FCC’s interpretation in court. So can a federal district court review the FCC's interpretation of the TCPA? Or, because of the Hobbs Act, must a federal district court simply accept the FCC's reading the statute? These important questions are now before the Supreme Court and our experts will provide their insights heading into oral argument.

Featuring:

Bernard Bell, Professor of Law and Herbert Hannoch Scholar, Rutgers Law School

James Conde, Associate, Boyden Gray & Associates, PLLC

 

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Event Transcript

Operator:  Welcome to The Federalist Society's Practice Group Podcast. The following podcast, hosted by The Federalist Society's Administrative Law and Regulation Practice Group, was recorded on Wednesday, March 12, 2019, during a live teleforum conference call held exclusively for Federalist Society members.     

 

Micah Wallen:  Welcome to The Federalist Society's teleforum conference call. This afternoon's topic is a Courthouse Steps Preview on PDR Network v. Carlton & Harris Chiropractic. My name is Micah Wallen, and I am the Assistant Director of Practice Groups at The Federalist Society.

 

As always, please note that all expressions of opinion are those of the experts on today's call.

 

Today we are fortunate to have with us Bernard Bell, who is a Professor of Law and Herbert Hannoch Scholar at Rutgers Law School. We also have James Conde, who is an Associate at Boyden Gray & Associates. After our speakers give their remarks, we will then go to audience Q&A. Thank you for sharing with us today. Jimmy, the floor is yours.

 

James Conde:  Thank you, Micah, and thanks to The Federalist Society for inviting me to be on this call. So the question presented in PDR Network is whether the Hobbs Act required the district court in this case to accept the FCC's legal interpretation of the Telephone Consumer Protection Act. Now, let's unpack that a little bit. I'll start by describing the Hobbs Act.

 

So the Hobbs Act, also known as the Administrative Orders Review Act of 1950, is an important statute governing judicial review of specific orders of multiple agencies, including the Department of Agriculture, Interior, Transportation, Housing and Urban Development, as well as actions of the FCC, the Board of Immigration Appeals, the Nuclear Regulatory Commission, and the Surface Transportation Board. As relevant here, the Hobbs Act applies to "any proceeding to enjoin, set aside, annul, or suspend" any order of the FCC under the Communications Act of 1934, with some exceptions.

 

As a footnote for listeners that may not be used to the FCC's sometimes confusing terminology, I should clarify that the term order in the Hobbs Act includes both legally binding adjudications and rules. So when I use the term order here, I'm not using the term in the narrow, technical APA adjudication sense.

 

So there are two main provisions of the Hobbs Act at play in this case. First, the Hobbs Act's "jurisdiction-channeling" provision – that provision vests courts of appeal with "exclusive jurisdiction to enjoin, set aside, suspend, or to determine the validity of" certain agency orders, including, as I just mentioned, FCC orders reviewable under Section 4(2)(A) of the Communications Act.

 

Second, the Hobbs Act's judicial review provision – that provision allows aggrieved parties to petition a court of appeals for review within 60 days of the entry of the agency's order. This requirement is jurisdictional, meaning that if you don't file a petition within the 60-day time window, your petition will be tossed out of court as untimely.

 

Now the core statutory question disputed by the parties in PDR is the following: What does the Hobbs Act mean when it says that courts of appeals have exclusive jurisdiction to determine the validity of an order? Now, before I get into the statutory arguments made by the parties in this case, I'll provide a very brief overview of the facts and procedural history of PDR.

 

So the dispute in PDR arises under the Telephone Consumer Protection Act of 1991, or the TCPA for short. The TCPA generally prohibits the use of a fax machine to send an "unsolicited advertisement." Now, the TCPA defines unsolicited advertisement to include "any material advertising the commercial availability or quality of any property, goods, or services which is transmitted to any person without that person's prior express invitation or permission." The TCPA also provides a private right of action, so private persons can file a class action law suit seeking statutory damages of $500 to $1,500 for each communication made in violation of the TCPA.

 

The TCPA also vests the FCC with rulemaking powers to implement the statute. As relevant here, in 2003, the FCC issued a report and order stating that, among several other things "offers for free goods and services that are part of an overall marketing campaign" that sold property, goods, or services are unsolicited advertisement under the TCPA. The FCC receives federal petitions for reconsideration of this order, and three years later in a 2006 order addressing several issues related to the TCPA, the FCC took the opportunity to address those petitions. In that 2006 order, the FCC broadly stated that "fax messages that promote goods or services, even at no cost, such as free magazine subscriptions, catalogs, or free consultations or seminars" are unsolicited advertisements under the TCPA definition.

 

The FCC justified this interpretation of the TCPA on prophylactic grounds. The FCC argued that "in many cases, free publications are often part of an overall marketing campaign or conservative pretext for marketing commercial goods." The FCC also announced that communications would "contain only information where not prohibited by the TCPA." The FCC said it would define this category as exempt informational communications on a case-by-case basis.

 

Now, to be clear, the FCC did not promulgate any of these views of the TCPA in actual roles. Instead, the FCC made these statements in what is essentially the preamble section of the FCC's orders. Now, as far as I'm aware, and maybe Professor Bell can correct me if it is wrong, I think the only rule the FCC has promulgated for inclusion in the Code of Federal Regulations that is relevant simply parrots the TCPA's statutory definition of unsolicited advertisement in the TCPA.

 

Going to the facts of the case -- so years after the FCC's 2006 order, the petitioner in this case, PDR Network, was sued for violating the TCPA. PDR is a company that publishes a widely used reference manual of prescription drug information known as the Physicians' Desk Reference. This case started when PDR sent a fax offering a free e-book version of the Physicians' Desk Reference to a medical practice in West Virginia. In response, the medical practice filed a punitive class action lawsuit in district court, alleging that PDR's free e-book offer was an unsolicited advertisement under the FCC's 2006 interpretation. PDR then moved to dismiss the lawsuit, arguing that its fax was not a covered unsolicited advertisement under the TCPA. The district court sided with PDR and dismissed the case, holding that TPCA did not cover PDR's free e-book offer.

 

On appeal, the Fourth Circuit reversed. The court of appeals held the Hobbs Act prevented the district court from even considering the text of the TCPA. Instead, the Fourth Circuit held the Hobbs Act required the district court to ignore the text of the TCPA and to blindly apply the FCC's 2006 interpretation without even attempting to harmonize it with the statute. The court of appeals reached, I think, this remarkable conclusion through sort of a broad, functionalist interpretation of the Hobbs Act. The court reasoned that allowing the district court to consider the text of the TCPA would effectively allow the district court to "determine the validity" of the FCC's 2006 interpretation, something that it thought the Hobbs Act reserves exclusively for the courts of appeals. Because this would circumvent the Hobbs Act review system, the court interpreted the statute to strip the district court of any power to consider whether the FCC's 2006 interpretation was valid.

 

The court of appeals then held that PDR violated the FCC's 2006 interpretation of the TCPA. The court read the FCC's interpretation as standing for a simple, categorical rule. An offer for free stuff violates the TCPA. PDR then petitioned for cert in the Supreme Court, and the Supreme Court granted cert limited to the question of whether the Fourth Circuit correctly applied the Hobbs Act in this case.

 

Now, before I turn it over to Professor Bell for his initial thoughts, I'll just provide a very brief sketch of the parties' basic arguments. So PDR, which is represented ably in the Supreme Court by Carter Phillips, makes one principle argument and one narrower argument in the alternative. PDR's principle argument is that the Hobbs Act only gives courts of appeals exclusive jurisdiction over suits brought to obtain injunctive or declaratory relief from agency action. In other words, PDR argues that the Hobbs Act has no application at all to enforcement proceedings in district courts. PDR makes several points in support of this argument. First, PDR argues that because the Hobbs Act's terms, "enjoin, set aside, or suspend," refer to equitable relief, the phrase "determine the validity" should also be limited to a specific form of relief, namely declaratory relief.

 

Second, PDR argues that Section 703 of the APA supports its reading of the Hobbs Act. Section 703 of the APA provided the quote, "Except to the extent that prior adequate and exclusive opportunity for judicial review is provided by law, agency action is subject to judicial review in civil or criminal proceedings for judicial enforcement." PDR argues that the term adequate in this section of the APA does something like principles of collateral estoppel for the administrative state. Here, PDR argues because PDR did not participate in the FCC proceedings, PDR had no adequate opportunity to challenge the FCC's 2006 interpretation.

 

Third, PDR argues that the canon of constitutional avoidance supports its interpretation of the Hobbs Act. In the alternative, interestingly, PDR argues that the FCC's 2006 interpretation was not a reviewable order under the Hobbs Act at all because it was an interpretive rule, not a binding rule with the force and effect of law.

 

Now, in the interest of time, I'll just skip over the arguments made by the respondent and focus instead on the arguments made by the Solicitor General in support of the respondent, which are quite interesting. So the SG reads the Hobbs Act broadly to strip enforcing courts of power to consider whether an order is "legally sound." The SG argues that its interpretation of the Hobbs Act is supported by historical context. In particular, the SG argues Congress borrowed the Hobbs Act phrase "determine the validity" from a statute called the Emergency Price Control Act of 1942. That statute had a jurisdiction-channeling provision that is quite similar to the provision of the Hobbs Act.

 

The SG then argues that in a 1944 case called Yakus v. United States, the Supreme Court interpreted the same language in the Emergency Price Control Act to foreclose a defendant from challenging the legality of price control regulation in a criminal enforcement proceeding. By incorporating the language of the Emergency Price Control Act in the Hobbs Act, the SG argues Congress "signaled its intent that the Hobbs Act grant exclusive jurisdiction to determine the validity of specified agency actions should be understood in the same sense," meaning to preclude defendants from raising the invalidity of a rule as a defense in an enforcement action.

 

The SG also argues that the Supreme Court has previously applied the Hobbs Act in an enforcement context, citing a 1970 case called Port of Boston. The SG then spent some time explaining why PDR's arguments are unpersuasive. And I think most remarkably in responding to PDR's argument in the alternative, the SG takes the position that the FCC's nonbinding guidance in a preamble is a final order under the Hobbs Act. I think if that is true, that would mean that parties lack any ability at all to challenge the FCC's interpretations in enforcement proceedings.

 

Now, with that thought, let me stop and turn it over to Professor Bell for his initial thoughts.

 

Prof. Bernard Bell:  Thank you, Jimmy. Thank you for inviting me to present on this case before your group. I want to talk about three -- well, at least two major points. One is whether the Hobbs Act is applicable at all to the disputed interpretation at issue here about fax offers of free goods, which, to me, is an antecedent question to the question that the Court seems to think it needs to focus on, at least the party is focused on, which is whether the Hobbs Act requires the district court to accept the FCC's interpretation of the TCPA in adjudicating Junk Fax Act claims in civil claims litigated before the district court.

 

So let me talk about the first question, which is is the Hobbs Act applicable at all? Really, this question, as Jimmy suggested, may turn on the question of whether the disputed interpretation has the force of law; that is, whether the rule has binding effect or lacks binding effect because, again, this was -- the disputed interpretation is not embodied in the rule itself because the junk fax rules merely parrot what the TCPA -- so the disputed interpretation is a part of the FCC's explanation in resolving its proceeding as to why it is adopting all the rules that it is adopting. And in fact, this particular disputed interpretation came about because a party expressed some concern about a particular situation that was applicable to them, and so asked a question which, in the course of the proceeding promulgating this rule, the FCC proceeded to answer as a part of its general opinion explaining why it was adopting the rule that it did.

 

The question of whether something has the force of law is, of course, probably a familiar question because it comes up in a variety of contexts and has often given the Court difficulties. So it comes up in distinguishing binding legal rules from noninterpretive guidance. It comes up in questions of assessing finality for purposes of reviewability. It comes up with regard to the applicability of APA's notice and comment requirements for rulemaking. And it comes up in determining the agency's entitlement to either Chevron or Skidmore deference. And to date, the Court seems to have been chary about trying to come up with a definitive, comprehensive definition or approach to defining when something has the force of law and when it doesn't.

 

So I think that the question is does every statement in an order promulgating a regulation have the force of law? And one way of thinking about this is to think about judicial opinions. In a judicial opinion, there are some statements that are the holding, and of course, there's an order, generally at the end of a decision, and then there are other statements that are dicta. So the holdings are, of course, binding on other courts; the dicta are not binding. So here we have a situation where the FCC promulgates the text of a rule by order that concludes the proceeding, and at the same time discusses how that regulation might apply in certain scenarios, again, a response to concerns raised by an entity that participated in the proceeding. Arguably, by analogy with judicial opinions, one could argue that the junk fax rules themselves have the force of law, but the statements regarding the application of those rules and the application to particular sets of circumstances is really advice and is not necessarily binding.

 

So again, the question of whether the disputed interpretation have the force of law or not could really come out either way under the D.C. Circuit cases that have talked about force of law in various contexts. So on the side of finding this disputed interpretation a binding one that has the force of law, I would note that the interpretation is framed in mandatory terms. It's not really phrased in advisory terms, and it is the product of what's essentially a notice-and- comment proceeding. On the non-binding side is that the disputed interpretation was not published in the Code of Federal Regulations, which is sometimes used to suggest that an interpretation is not binding. And the interpretation is, whether you agree with it or not, is fairly encompassed in the TCPA's statutory text and is not particularly distinct from or additive to it, so that language also used in D.C. Circuit cases with regard to whether something has the force of law or not.

 

And, of course, often what is helpful in making a determination is the agency practice with regard to how the agency treats a particular statement or rule. And of course, given the 60-day period in which one would have to seek review of an order from the FCC, there's hardly any time to figure out how the agency treats such interpretations that are not a part of the rule. So if the FCC's disputed interpretation is binding, then we face the question of whether the Hobbs Act precludes the district court from refusing to accept the interpretation in a civil TCPA case. If it's not binding, if the FCC's advice is not binding, or if the FCC's disputed interpretation is not binding, the interpretation can be questioned, but it actually probably is only entitled to Skidmore deference, which is generally what's applicable to non-binding interpretations as opposed to Chevron.

 

So that really, then, brings us to the second question. Let's assume that the FCC's disputed interpretation is considered binding. So essentially, PDR Network and the district judge essentially argue that a district court can't be deprived of the ability to find unreasonable and refuse to follow an agency interpretation of a statute critical to the resolution of a case properly before it. That concern does seem to reflect the statement of Marbury v. Madison that is emphatically the province and duty of the judicial department to say what the law is. Those who apply the rule to particular cases must, of necessity, expound and interpret that rule.

 

The question is does that mean that agency interpretations of law must be decided in the same form or proceeding in which the facts of a case are tried? So under the Hobbs Act, agency interpretations that have rule of law effect are subject to judicial review; it's just that they're subject to judicial review in the courts of appeal, not the district court that is trying the civil action for violation of those rules. And the Hobbs Act channeling approach makes sense for several reasons that numerous courts of appeal have pointed out. It promotes judicial efficiency by giving judicial review of agency orders to an appellate panel rather than to individual district judges. It facilitates a uniform, nationwide interpretation of the TCPA by the Federal Communications Commission by, in effect, limiting the fora in which its interpretations can be challenged. And it avoids duplication of effort because in questions of law involving interpretation of statutes, the district court's factfinding capabilities are largely unnecessary.

 

So there's two concerns that one can raise. The first is that the entity may not have been in existence at the time of the 2006 FCC Junk Fax Rule proceeding. So you could have someone who wants to send faxes that could not possibly have been involved in the 2006 proceeding because the company didn't exist. Secondly, even if the company did exist, the company might not have anticipated every sort of situation in which it might have wanted to send a fax advertisement at some indefinite time in the future.

 

So how are those problems dealt with? Well, the first is one that courts have raised before in contexts where there are strict time limits to seeking judicial review, almost generally in the criminal enforcement proceedings context. And such short time limitations for review can operate, in effect, to compel a district court to enforce an interpretation at odds with a particular statute merely because the regulated entity either lacked notice of the rule or didn't have the foresight to seek review immediately after the regulation's adoption.

 

PDR Network does seem to have a potential remedy for that problem. They can petition the FCC for relief from the FCC's directive involving faxed offers of free goods, and then if the FCC denies that, then they can challenge that denial in a petition under the Hobbs Act. And in fact, the law firm Akin Gump just last month filed a request for clarification with respect to another explanatory statement in the 2006 order in which the FCC adopted the Junk Fax rules. However, if the FCC declines to take up the issue in response to a petition, it's not clear how robust the review of that refusal to take up the issue will be. And certainly in cases like Massachusetts v. EPA give agencies fairly broad leeway.

 

The second issue is must courts disregard all statutes that conflict with the TCPA or FCC regulations implementing the statute? So must district courts do that in resolving civil claims? And I make a distinction here. One type of issue or one type of determination involves whether a regulation is either partially inconsistent or simply unauthorized by the statute that is being implemented. And that ultimately is a determination of the statute's validity and presumably is really the Hobbs Act focus.

 

There are other types of statutes as well. In some cases, a district court may be called upon to reconcile the TCPA where it's implementing regulations with other statutes enacted at a different time. And these seemingly conflicting statutes may have been enacted after the TCPA regulations were promulgated and may well be a sign to agencies other than the FCC to implement. So had PDR Network involved such a statute or invoked such a statue in its defense, there'll be a stronger argument that the Hobbs Act does not require acceptance of the FCC's interpretation and that the courts should be allowed to reconcile the TCPA with another statute.

 

In Traynor v. Turnage, involving veterans' education benefits, is illustrative of this distinction. So in Traynor, several veterans sought to extend their eligibility for veterans' educational benefits due to "a physical or mental disability which was not the result of the veteran's own willful conduct." And the plaintiffs sought an extension, citing their alcoholism. The Veterans Administration determined that the petitioners' alcoholism constituted willful misconduct, and so they couldn't the extension. 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."

 

The Supreme Court held that the district court had jurisdiction to determine whether the Veterans Administration's decision was consistent with Section 504 of the Rehabilitation Act, despite the statutory bar to judicial review. And the Court held that there was such jurisdiction and noted that the resolution of plaintiffs' claims centered on "whether the law sought to be administered as valid in light of a subsequent statute whose enforcement is not exclusive domain of the Veterans Administration."

 

So basically, I think this case raises two questions, whether the Hobbs Act requires a law, which turns on whether the interpretation of fax offers of free goods being covered is actually binding and has the force of law. And the then the second, the question that seems to be the focus of the parties' attention, which is the question of whether the Hobbs Act does deprive district courts adjudicating cases of the ability to revisit the validity of the regulation that's been violated.

 

With that, I think I will stop, and I think maybe, Jimmy, you may have some additional comments to make.

 

James Conde:  Yes, just a few brief remarks. So on the question of whether PDR could have sought a declaratory ruling from the FCC in this case, the petitioner, PDR, argues, I think, correctly that the FCC has a policy of not issuing declaratory rulings to resolve enforcement cases. So at least to the extent that that was a possibility, I think PDR has a good argument that the FCC would have sort of blocked that avenue.

 

And then I really just want to agree with everything Professor Bell said and maybe just make a few general observations about the SG's brief, which I really thought was quite remarkable. And the first thing to note is, I think, the overall tone of the brief. So the brief reads like a little bit of a New Deal ode to the administrative state, stressing values of expertise, efficiency, uniformity, convenience, but it really shows very little concern for principles of the rule of law, fairness, and due process. So in another administration, that wouldn't really surprise me coming from the SG's office, but I do think that this brief doesn't jive very well with the administration's purported focus on rule of law principles writ large.

 

In particular, I thought the SG's brief sets forth really what I think is a very impoverished vision of due process of law. So according to the SG, any opportunity to challenge the validity of a rule in sort of a rarified, abstract, pre-enforcement context with just a 60-day time window is really enough to satisfy due process in prosecutions, even, perhaps, criminal prosecutions. So to be fair to the SG, this sort of vision of due process of law is supported by a case the SG cites repeatedly, Yakus v. United States, a 1944 case involving the Emergency Price Control Act of 1942. But be that as it may, I don't think the Roberts Court is particularly likely to embrace the reasoning of a wartime case like Yakus. It was just decided weeks before D-Day, and it repeatedly cites the Japanese internment cases for support. So I don't think that Yakus v. United States really does it for me, and I wish the SG had articulated maybe a more narrow -- or sort of a broader conception of due process than it did in this brief.

 

Now, on the statutory arguments that the parties are making, setting aside the question of interpretive rules versus substantive rules for a moment, I think the SG is actually probably correct that the Hobbs Act phrase "determine the validity of an order" was borrowed from the Emergency Price Control Act of 1942. Aditya Bamzai makes the same argument in the amicus brief in the Supreme Court. I'm also willing to concede that the SG might be right that the Hobbs Act forecloses defendants from raising the validity of an order in enforcement proceedings, although I have some doubts for reasons I can explain later.

 

But even if the SG is correct on the broader statutory argument, I think the SG is just really dead wrong to argue that interpretive rules are final rules under the Hobbs Act for the reasons that Professor Bell suggests. If you look at Supreme Court cases under the Urgent Deficiencies Act of 1913, which is the predecessor of the Hobbs Act, you'll find that the Supreme Court consistently interpreted that statute to cover only orders that imposed sanctions on people who failed to obey them; namely, imposed orders that carry a force of law, as Professor Bell was suggesting. Here in this case, the FCC's interpretation of TCPA doesn't impose any sanctions on anyone. It's just an interpretation. The sanctions, if any, arise directly under the TCPA itself.

 

I should note that Professor Aditya Bamzai of UVA offers a very simple test in amicus brief for determining what carries the force of law under the Hobbs Act. He argues that a court only determines the validity of an order when a violation of the order is a necessary element of the cause of action. So for example, in Yakus, the district court in that case necessarily had to hold that Yakus had violated the price control regulation at issue in that case because a violation of the regulation was a necessary element of the crime. In other words, without alleging that Yakus had violated the regulation, the indictment would have been tossed out of court. I think that's actually a pretty simple test the Court could apply here, and we'll see what happens.

 

Now, before turning it over to the audience, I'll just say a word about the constitutional issues that lurk in the background. So setting aside Yakus for a moment and just thinking about how the Constitution ought to operate, I think the Hobbs Act as interpreted by the SG does some pretty serious violence to the separation of powers. For the moment, I'll willingly accept the idea that Congress has brought authority to strip courts of jurisdiction to hear particular cases, but I'm not willing to accept the idea that Congress can force the judiciary to enforce orders and at the same time strip the judiciary of their power to say whether those orders are lawful. The core principle of the separation of powers and due process is that judges can't deprive individuals of their property except as authorized by statute. So in my view, requiring that judges ignore the statute and blindly enforce executive decrees requires the judiciary, an independent branch, to violate the due process of law.

 

Now, the SG's response to this is, as Professor Bell suggests, is, "Well, PDR could have sought review of the FCC's 2006 interpretation in a pre-enforcement suit or in some other way." That doesn't really impress me, first because, as Professor Bell suggested, as a practical matter, it requires a very large degree of foresight on behalf of entities like PDR. It's probably unrealistic. And second, I think this is really a structural problem of the separation of powers, not something that can be waived by an individual.

 

And so with that, I think I'm ready to turn it over to the audience for questions.

 

Prof. Bernard Bell:  Could I just say one more thing about that, which is, I mean, it seems to me that if you have a circumstance where there's a case challenging an agency's rule or interpretation of a rule, and let's say it's a legislative rule. So it's authorized by the statute but it's going beyond the text of the statute, an appellate court affirms that the agency has the power to promulgate such a legislative rule and that the legislative rule is lawful. If a subsequent case is brought in the district court for violation of that rule, surely the district court doesn't have the power to revisit the validity of the agency's interpretation. So there's certainly situations where district courts do not have the power to revisit the validity of a rule that's being violated.

 

And the difference here, of course, is that the particular parties that had an opportunity and had an interest in appealing the FCC's determination initially either didn't do it or didn't raise it this particular issue. And I'm not sure that should put them in a better position than if they had raised it and had lost. So some of the problem here is the effect of a valid legislative rule that can add obligations that are not in the statute. And in that circumstance, there's a limited ability for the district court to invalidate that rule.

 

James Conde:  Yeah, can I just respond to that really quickly? So I think there were two individuals or entities that actually challenged the broad order, the FCC issue in this case, but one of them lacked standing. And I'm not really sure exactly what happened to the other party, but it ended up nobody challenged this order at all. And I think I'd be willing to live with a system in which the courts sort of enter a binding judgement interpreting a rule and whether it falls under the statute, and then sort of foreclose that defense in district court in enforcement cases. But I think it's quite different when no court at all has ruled on the validity or invalidity of a particular rule. I think that would present a much different situation.

 

Micah Wallen:  While we're waiting for a question to come in from the audience, Professor, what do you think about the FCC's underlying -- their legal interpretation of this case? Do you think it's correct?

 

Prof. Bernard Bell:  Yes, I think that on the merits of the interpretation, the FCC is in a pretty strong position. The Junk Fax Act provisions of the TCPA are really not so much an anti-fraud provision as an anti-nuisance provision. And the nuisance is that with faxes in particular, when you send an unsolicited fax, you are imposing costs on the recipient in terms of it's their paper that the message is being printed out on, and it's their fax machine that you're tying up so that they can't receive faxes that they actually want. So given that, even faxes that are for free goods have those same detrimental facts.

 

And the definition of advertisement is in the disjunctive, so it talks about commercial availability or touting the quality of your products. And it's clear that this fax was touting the quality of the Physician's Desk Reference e-edition. And in addition, even with regard to the business nexus approach that the district court used that the fax has to somehow lead to some sort of sale of a product, it seems to me that it's not particularly appropriate here because what's going on here with regard to PDR Network is that they aren't selling the -- well, I mean, actually, the Physician's Desk Reference is available for sale, but what they're doing with the e-edition is they're trying to build up their subscriber base so they can charge more through the pharmaceutical companies for having their drugs included in the Physician's Desk Reference. That seems to me to be, again, economic motive that is being furthered by burdening fax recipients who are paying for the privilege of receiving these faxes, so it seems certainly well within both the text of the statute and its intent.

 

And moreover, the district court's approach that starts to get you into complicated questions about what exactly is the business advantage of sending free faxes, and that then starts to get you into more extensive discovery that makes these cases more complicated rather than simpler. So for all those reasons, I think the FCC -- actually, if it ever gets to an examination of the soundness of the FCC's interpretation, the FCC is in a good position, either under -- probably under Skidmore, and certainly under Chevron.

 

Micah Wallen:  All right. Thank you, professor. Still not seeing any other questions in the queue. I believe both of you have explained the case thoroughly, leaving nothing unclear to the audience, so I'll give you both an opportunity to wrap up with any closing remarks.

 

James Conde:  I don't really have anything else to add. If Professor Bell wants to add anything, he can go ahead, I think.

 

Prof. James Bell:  Sure. So in general, it seems to me that splitting up interpretation of the validity of a rule and adjudication of violations of the rule makes sense. I think it does help uniformity, and I think it does help kind of efficient, smooth running of the administrative process. I do think it is important that there be some realistic means for contesting either the rule or the application of the rule in a reasonable basis. So to me, it would be important to look at how receptive the FCC is to these petitions for clarification, which some courts of appeals have relied upon to uphold the reasonableness and the validity of the Hobbs Act, and that seems to me to be right.

 

Other than that, again, I think that the Court may actually have ended up backing itself into a question of trying to provide a more rigorous analysis or definition of the difference between statements that have the force of law and statements don't have the force of law. And I think that might not have been anticipated when they granted cert on this case. So it'll be interesting to see if the Supreme Court decides to grapple with that, and then what they have to say about the Hobbs Act barring district court reexamination of the law.

 

James Conde:  Micah, if I can just add one more thing about the arguments made by the parties in this case. So PDR is arguing that Section 703 of the APA supports its narrow reading of the Hobbs Act. I'm not sure they're correct about that because I do think that section of the APA is really referencing the decision in Yakus v. United States which held a very similar sort of statutory scheme was adequate under the Constitution. And I think the term adequate in Section 703 of the APA is really referring to the Court's opinion in that case. So I'm not really sure the APA's really doing much work for them here. Be that as it may, I do think they should end up prevailing in this case.

 

Micah Wallen:  All right. Well, on behalf of The Federalist Society, I'd want to thank both of our experts for the benefit of their valuable time and expertise today. We welcome listener feedback by email at info@fedsoc.org. Thank you all for joining us. We are adjourned.

 

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