SCOTUS wrap-up: class action over unsolicited faxes revived

Federal courts hearing claims for violations of the Telephone Consumer Protection Act are not bound by a Federal Communications Commission ruling excluding from the scope of the act the sending of unsolicited advertisements to online fax services, the U.S. Supreme Court has ruled 6-3 in reversing a decision from the 9th Circuit.

The Telephone Consumer Protection Act prohibits unsolicited fax advertisements to “telephone facsimile machines” in the absence of an opt-out notice informing recipients that they can choose not to receive future faxes.

In response to a request from the business community, in 2019 the FCC issued a declaratory ruling in In re Amerifactors Financial Group that an online fax service is not a “telephone facsimile machine” within the meaning of 47 U.S.C. §227.

The case before the court involved a class action alleging that McKesson Corporation, a healthcare company, through a subsidiary sent unsolicited fax advertisements in 2009 and 2010 to various medical practices, including plaintiff McLaughlin Chiropractic Associates.

McLaughlin sought to represent a class of those medical practices that had received unsolicited McKesson faxes sent to both traditional fax machines and online fax services.

Following the filing of the complaint in 2014 — and only months before the FCC’s ruling concerning online fax services — a federal judge in California certified a class of plaintiffs without distinguishing between the methods by which the faxes were received.

However, upon the FCC’s issuance of Amerifactors, the judge felt compelled to follow 9th Circuit precedent that, pursuant to the Hobbs Act, district courts lacked the authority to question the validity of FCC final orders.

Accordingly, the judge granted summary judgment to McKesson on the plaintiffs’ claims involving online fax services. The lower court’s subsequent decertification of the class left claims for only 12 faxes received on a traditional machine and statutory damages of $6,000.

The 9th Circuit affirmed.

In reversing the 9th Circuit, the Supreme Court held that the Hobbs Act does not preclude district courts in civil enforcement proceedings from independently assessing whether an agency’s interpretation of the relevant statute is correct.

Click here to read the full text of the June 20 decision in McLaughlin Chiropractic Associates v. McKessen Corp.

• “The Hobbs Act dictates how, when, and in what court a party can challenge a new agency order before enforcement. The Act does not purport to address, much less preclude, district court review in enforcement proceedings. So the District Court in this enforcement proceeding can decide what the statute means under ordinary principles of statutory interpretation, affording appropriate respect to the FCC’s interpretation. By doing so, the District Court will not ‘determine the validity’ of the FCC’s Amerifactors order and thus will not contravene the Hobbs Act.
  “One additional note: Even if the text of the Hobbs Act were ambiguous as to whether it precludes judicial review of an agency interpretation in enforcement proceedings, ambiguity does not suffice to deprive a party of that judicial review. To deny a party like McLaughlin the opportunity to contest the agency’s interpretation in an enforcement proceeding, Congress must clearly preclude such review. The Hobbs Act does not do so.”
  — Justice Brett M. Kavanaugh, opinion of the court

• “The text of the Hobbs Act makes clear that litigants who have declined to seek pre-enforcement judicial review may not contest the statutory validity of agency action in later district-court enforcement proceedings. And this Court’s prior decisions have said just that. Today’s majority evades the Hobbs Act’s most natural meaning by relying on a novel ‘default rule,’ which demands that Congress use a certain form of words —really, that Congress create statutory redundancy — to preclude parties from bringing down-the-road challenges to agency action. That rule has no foundation in our law; it emerges fully formed today from the majority’s head. And it prevents the Hobbs Act from functioning as Congress wanted — by allowing regulated parties to end-run the Act’s pre-enforcement judicial review scheme, and thereby undermine the stability and efficacy of administrative programs.”
  — Justice Elena Kagan, joined by Justices Sonia Sotomayor and Ketanji Brown Jackson, dissenting