Are district courts bound by both interpretive and final rules issued by the Federal Communications Commission?

The U.S. Supreme Court‘s decision to hear the case of McLaughlin Chiropractic Associates Inc. v. McKesson Corp.[1] will determine whether under the Hobbs Act[2] district courts must fully accept the Federal Communications Commission’s interpretation of the Telephone Consumer Protection Act, or TCPA,[3][3] in private litigation.

This decision will likely resolve a current disagreement among different circuit courts on this issue.

The TCPA prohibits the sending of unsolicited advertisements to a telephone facsimile machine unless certain conditions are met. “Telephone facsimile machine” is defined to include any: 

equipment which has the capacity (A) to transcribe text or images, or both, from paper into an electronic signal and to transmit that signal over a regular telephone line, or (B) to transcribe text or images (or both) from an electronic signal received over a regular telephone line onto paper.[4][4]

In 2019, the FCC issued a declaratory ruling in the matter of Career Counseling Inc. v. AmeriFactors Financial Group Inc., in the U.S. District Court for the District of South Carolina, that online fax services — or cloud-based services that allow users to access faxes by logging into a server over the internet or by receiving a PDF attachment of a fax as an email — fall outside the scope of the TCPA’s statutory prohibition.[5]

McLaughlin concerns allegedly unsolicited advertisements sent via fax in violation of the TCPA.

The U.S. District Court for the Northern District of California ultimately held that it was bound by the FCC’s interpretation of the TCPA in the AmeriFactors decision and, as a result, decertified the McLaughlin class on the grounds that the class could not identify which faxes had been sent by an online fax service as opposed to an analog fax machine.

The U.S. Court of the Appeals for the Ninth Circuit affirmed.In its opinion, the Ninth Circuit held that the Hobbs Act’s exclusive jurisdiction provision forecloses a federal district court from considering whether the FCC’s interpretation of the TCPA is wrong. This decision highlighted a split among federal courts.

The U.S. Courts of Appeals for the Second, Third, Fourth and Eighth Circuits have held that the FCC’s interpretative orders fell outside the scope of the Hobbs Act and, therefore, were not binding on the district courts.[6] The U.S. Court of Appeals for the Seventh Circuit has held that district courts are not bound by FCC decisions, in the 2023 case of Ambassador Animal Hospital Ltd. v. Elanco Animal Health Inc., regardless of whether it is an interpretive decision or final rule.[7]

With McLaughlin, the Ninth Circuit took the view that district courts are bound by both interpretive and final rules issued by the FCC.

Will the Supreme Court further limit judicial deference to federal agencies?

The Supreme Court’s decision to grant certiorari here is notable in light of its decision in Loper Bright Enterprises v. Raimondo. It seems plausible that the court may further limit the judicial deference afforded to federal agency interpretations of statutes.

In Loper Bright, the Supreme Court overruled the long-standing Chevron doctrine — a doctrine under which courts largely had to defer to an agency’s interpretation of an ambiguous statute. The Supreme Court held that the Administrative Procedure Act — which was not addressed in Chevron — “incorporates the traditional understanding of the judicial function, under which courts must exercise independent judgment in determining the meaning of statutory provisions.”

The court rejected the “presumption” of agency expertise, reasoning that resolving statutory ambiguity is within a court’s competency, not an agency’s, and to the extent there are facts within an agency’s expertise, the agency can inform — but not bind — a court. The court also rejected the rationale that Chevron promotes uniformity, given the unevenness of its application.

The Supreme Court may very well take the same approach to FCC deference under the Hobbs Act and find that matters of statutory construction are appropriately handled by federal court judges.

The outcome of McLaughlin is difficult to predict. The Supreme Court could deviate from its Loper Bright decision and find that district courts are bound by the interpretations and rules of the FCC because the Hobbs Act is more explicit on that point than the Administrative Procedure Act at issue in Loper Bright.

Or, the Supreme Court could find, in line with the Loper Bright decision, that the Hobbs Act does not mandate judicial deference to FCC interpretation and that district courts have a judicial duty to apply the best reading of the TCPA in light of ordinary rules of statutory construction. Such a ruling could open the door for district courts to independently interpret the TCPA, which would necessarily create uncertainty for businesses attempting to comply with the TCPA.

This uncertainty was recognized by the dissent in the Loper Bright decision. In the dissent, several justices raised concerns that by negating agency deference, courts will be empowered to interpret statutes independently, which will increase the possibility of divergent interpretations by different courts.

Such a decision could affect not only businesses engaged in fax-based communications, but also all businesses that use digital marketing. A lack of certainty as to what the TCPA and corresponding regulations mean could aid in providing additional arguments to be raised against class certification in TCPA class actions. Businesses fighting off a putative TCPA class action will no longer be bound by FTC interpretations and may have more flexibility in arguing that individual issues predominate based on different interpretations of the TCPA and its regulations.

How will the Supreme Court decision affect businesses that rely on digital marketing?

The Supreme Court’s decision to grant certiorari in this case is a pivotal moment for the interpretation of the Hobbs Act and its application to FCC orders.

The question of whether district courts must treat FCC interpretations of the TCPA as binding in private litigation has significant implications. A ruling in favor of the plaintiffs could open the door for district courts to independently interpret the TCPA. This could lead to greater litigation under the TCPA to the extent the FCC would no longer be able to rely on its authority under the Hobbs Act to interpret what exactly the TCPA means.

The FCC has relied on the TCPA to regulate new technologies, including technologies related to consumer lead generation and text message marketing. If the Supreme Court follows the Loper Bright decision, litigation may seek judicial review of the enforceability of these FCC regulations. And such litigation will likely lead to inconsistent interpretations across districts regarding term meanings and applicability, which will mean that businesses need to have heightened awareness of evolving case law.

For those industries that rely on digital marketing, especially fax-based marketing, such as healthcare and communications industries, each company will need to take a fresh look at their compliance strategies to determine whether any current FTC regulations that apply to their industry or marketing are indeed within its authority.

Attorneys will need to prepare their clients for the evolving regulatory landscape should this sea change come to pass — not only to examine the legality of certain FTC regulations, but to also advise their clients of any change in interpretation by the federal bench that could affect their client’s liability under the TCPA.

The role of the Hobbs Act in McLaughlin highlights a critical intersection of administrative law and telecommunication regulations. The Supreme Court’s decision will likely clarify the degree of deference owed to FCC interpretations under the TCPA and could reshape the legal landscape for businesses relying on automated communication tools.

If the Supreme Court upholds strict adherence to FCC definitions, companies relying on automated communication tools will continue to need to ensure that their practices align closely with FCC rulings to avoid liability. Alternatively, a decision allowing courts to reinterpret the TCPA could create a patchwork of standards, complicating compliance for businesses.

This article first appeared in Law360 on January 29, 2025 and is republished here with permission from the publication.

[1] No. 23-1226.

[2] 28 U.S.C. § 2342(1).

[3] 47 U.S.C. § 227(b)(1)(C).

[4] Id.§ 227(a)(3).

[5] In the Matter of Amerifactors Fin. Grp., LLC , 34 F.C.C. Rcd. 11950 (2019).

[6] Carlton & Harris Chiropractic, Inc. v. PDR Network, LLC,  982 F.3d 258, 262–63 (4th Cir. 2020). Panzarella v. Navient Sols., Inc.,  37 F.4th 867, 873 n.7 (3d Cir. 2022). Gorss Motels, Inc. v. Lands’ End, Inc.,  997 F.3d 470, 477 n.4 (2d Cir. 2021). Golan v. FreeEats.com, Inc.,  930 F.3d 950, 960 n.8 (8th Cir. 2019)

[7] Ambassador Animal Hosp., Ltd. v. Elanco Animal Health Inc. , 74 F.4th 829, 832 (7th Cir. 2023).