High Court Considers Deference to Agencies in Spam Case

WASHINGTON (CN) – In a case involving a publisher sued for faxing an advertisement to a chiropractic office, the justices of the Supreme Court questioned Monday whether a federal law really prevents federal district courts from interpreting the orders of some administrative agencies. 

Presented with the case of a company that now faces a class-action lawsuit after it faxed out information about a free e-book it publishes, Justice Neil Gorsuch was troubled that the company never got the chance to formally challenge a Federal Communications Commission order that prohibited such faxes because the company was not in that business when the agency issued it. 

Noting the company did not think the order applied to it and therefore never challenged it through the procedures outlined in a federal law called the Hobbs Act, Gorsuch conjured up his fictional Bob, who was born after the government decided to impose a yearly tax on every person in the country with that name. 

“What if the government passes a regulation under this statute saying all persons named Bob must pay the government $100 every year, all right?” Gorsuch asked. “And a young man is born after the regulation is adopted and he didn’t read the Federal Register. Shocking, huh? Maybe a lot of people don’t read the Federal Register. Maybe they can’t read it. It’s in eight-point font. At any rate, this young man is forever barred, I think, under your interpretation, from challenging the validity of that regulation under the statute?” 

Monday’s case began with a one-page fax a company called PDR Network sent out notifying health care professionals it was putting out an electronic version of its signature book that compiles details about prescription drugs. Carlton & Harris Chiropractic got the fax and filed a class action claiming the message violated the Telephone Consumer Protection Act, or TCPA.

A district court initially dismissed the case after PDR argued the fax was not the type of “unsolicited advertisement” the law was meant to bar. But the Fourth Circuit faulted the lower court for not fully adopting a 2006 order from the FCC saying faxes that promote free services count as unsolicited advertisements under the TCPA.

The appeals court’s ruling rested on the Hobbs Act, which outlines how parties can challenge orders from a handful of administrative agencies and gives federal circuit courts exclusive jurisdiction to assess whether the orders are valid.

PDR did not go to court to challenge the 2006 order within 60 days as required in the Hobbs Act, but Carter Phillips, who argued for the company Monday, said it had a good reason – its business was different at the time and it did not think the order would apply to it. 

Phillips, with the Washington, D.C., firm Sidley Austin, said without district court review of the order, his client is effectively locked out of the courtroom because it was never able to challenge the order when it was issued. He said requiring federal district courts to follow agency rules “slavishly” creates profound concerns about separation of powers.

“If you’ve never had an opportunity to obtain review of the agency’s decision-making, never could have, the idea that you are subsequently barred under these circumstances is absurd to the process,” Phillips said. 

He said the Hobbs Act gives federal circuit courts exclusive jurisdiction over court challenges to the federal rules themselves, but does not prevent district courts from reviewing them in cases such as the one his client faced. 

But Justice Elena Kagan disagreed with how Phillips was proposing the justices read the law, saying by giving a court exclusive jurisdiction over these claims, Congress was ensuring other courts cannot hear that kind of case. 

“Once you say court X has exclusive jurisdiction, you don’t need another provision saying court Y doesn’t have jurisdiction,” Kagan said. “It’s implicit in the first statement.”

Glenn Hara, who argued for the chiropractic office Monday, said Kagan’s reading of the law is correct and that Congress meant to outline a particular procedure for parties to follow in order to bring challenges to federal agency orders. 

Hara also noted parties looking to challenge agency orders can also directly ask the agency for review of a decision. 

“The party would first need to go to the agency and then if you lose there, you can petition to the court of appeals, which can determine the validity of the order,” Hara said. 

Assistant to the Solicitor General Rachel Kovner, arguing for the government in support of the chiropractors, said the meaning of “exclusive” is quite clear and easy for courts to apply.  

Outside of Gorsuch’s hypothetical about a federal Bob tax, Justice Samuel Alito wondered if the arrangement Hara and Kovner insisted is correct is fair to people who do not necessarily keep abreast of the thousands of pages of orders administrative agencies publish in the Federal Register each year.

“I once saw somebody riding home on the Metro at midnight in Washington, D.C., reading the code of federal regulations and I thought, only in Washington, D.C., would you see this sight,” Alito said. “But you think people out in other parts of the country are waiting for the latest addition to the code of federal regulations?”  

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