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January 15, 2019

Autodialers Under the Telephone Consumer Protection Act:  Will There be Certainty Soon?  (Part II)

(Second in a Series on the TCPA's ATDS Definition)

This is part two of a continuing series on the definition of an automatic telephone dialing system (“ATDS”) pursuant to the Telephone Consumer Protection Act of 1991 (“TCPA”). Refer to part one for a more detailed discussion of ACA Int’l v. Fed. Commc’ns Comm’n (“ACA International”), 885 F.3d 687 (D.C. Cir. 2018) and subsequent Circuit Court opinions.

District Courts across the nation continue to struggle to interpret the TCPA in light of the differing Circuit Court interpretations of ACA International. On October 3, 2018, the Federal Communications Commission (“FCC”) issued a Public Notice following the decision of the Ninth Circuit in Marks v. Crunch San Diego (“Marks”), LLC, 904 F. 3d 1041 (9th Cir. 2018), requesting comments on what constitutes an ATDS. The Marks court expanded the definition of an ATDS by holding that the phrase “using a random or sequential number generator” not only includes the capacity to call numbers produced by “a random or sequential number generator,” but also includes devices with the capacity to store numbers and to dial those stored numbers automatically. Further guidance from the FCC on this issue may be imminent.

Precedential Value of Future FCC Rulings is Uncertain

The potential for future FCC guidance on this issue provides the TCPA realm with another question: Will future FCC rulings pertaining to the definition of an ATDS override Circuit Court interpretations of the TCPA after ACA International? The framework for answering this question is on the precipice of change.

Near the end of 2018, the United States Supreme Court granted certiorari in PDR Network, LLC v. Carlton & Harris Chiropractic, Inc. (“PDR”), 139 S. Ct. 478 (2018) and presumably will address the following question: Does the Hobbs Act require courts to accept the FCC’s legal interpretation of the TCPA? The Supreme Court’s answer will determine whether or not lower courts are bound by future administrative decisions issued by the FCC with respect to the definition of an ATDS pursuant to the TCPA.

The Current Framework – Hobbs Act and Chevron Deference

The Communications Act (47 U.S.C. 402(a)) specifies that any challenge to a final order of the FCC must be brought under the Hobbs Act. Federal courts of appeals are given “exclusive jurisdiction” to determine the validity of these FCC orders. The Act also sets forth the time and manner in which the validity of certain administrative orders may be challenged.

The Chevron Deference doctrine originated in Chevron, U.S.A., Inc. v. Natural Resources Defense Council, Inc. (“Chevron”), 467 U.S. 837 (1984). Chevron established a “presumption that Congress, when it left ambiguity in a statute meant for implementation by an agency, understood that the ambiguity would be resolved, first and foremost, by the agency, and desired that the agency (rather than the courts) maintain whatever degree of discretion the ambiguity allows.” (Smiley v. Citibank (S. Dakota), N.A. , 517 U.S. 735, 740-741.)

As a result, under the Chevron Doctrine, courts need only defer to the FCC if the statute is ambiguous. Otherwise, if the statute is unambiguous, courts will not defer to the FCC’s interpretation. The Ninth Circuit applied this standard to the TCPA’s ATDS definition in Satterfield v. Simon & Schuster, Inc. (“Satterfield”) , 569 F.3d 946 (9th Cir. 2009). In Satterfield , after finding that the TCPA definition of ATDS is “clear and unambiguous,” the Ninth Circuit did not examine the FCC’s interpretation of ATDS but instead, applied the statutory language.

The PDR Case

Background Facts

Carlton & Harris, a chiropractic firm, sued PDR following its receipt of an unsolicited fax inviting it to download a free copy of PDR’s e-publication, Physician’s Desk Reference. Carlton & Harris claimed the fax violated the TCPA because the fax was an “unsolicited advertisement” sent without its consent. PDR’s primary defense was that the fax was not an “advertisement” because it offered a free e-book. While PDR does not charge for the book, drug companies pay PDR to list their drugs in the book along with prescribing information. The TCPA defines “unsolicited advertisement” as “any material advertising the commercial availability or quality of any property, goods or services” sent without prior permission. 47 U.S.C. § 227(b). However, the FCC, authorized by statute to “implement” the TCPA, promulgated a final rule, in 2006, stating that faxes that “promote goods or services even at no cost, such as free magazine subscriptions, [or] catalogs … are unsolicited advertisements under the TCPA’s definition.”

Tension Between the Hobbs Act and Chevron Deference Revealed

The District Court decided it was not bound by the FCC’s 2006 ruling under the Hobbs Act because the Act only prohibited parties from challenging the validity of an FCC interpretation, and no such challenge was being made in the case. It also found that it was not required to automatically defer to the FCC’s interpretation under the Supreme Court’s Chevron Deference doctrine because the statutory definition of “unsolicited advertisement” was “clear and easy to apply.” Essentially, the district court applied the inverse of Chevron Deference and found that when a statute is unambiguous, courts need not defer to the agency ruling. Accordingly, the District Court found that the fax was not an “unsolicited advertisement” under the TCPA because the fax did not have a “commercial aim,” and dismissed the case.

The Fourth Circuit reversed the District Court, holding that the District Court was required to follow the FCC’s 2006 ruling. The Fourth Circuit found that the Hobbs Act requires automatic application of administrative rulings because lower courts lack jurisdiction to consider validity of those administrative rulings. The Fourth Circuit concluded that the District Court’s decision not to follow the FCC’s ruling was equivalent to considering the “validity” of the ruling, and therefore, improper.

The history of PDR highlights the tension between the judiciary’s inherent power to interpret statutory language and the jurisdictional limits imposed on that power by the Hobbs Act and Chevron Deference. The Supreme Court’s decision in PDR will directly affect how lower courts apply future administrative rulings issued by the FCC with respect to the TCPA’s definition of an ATDS. Stay tuned for further reporting and analysis as this case unfolds.

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