McLaughlin Chiropractic Associates, Inc. v. McKesson Corporation

LII note: The U.S Supreme Court has now decided McLaughlin Chiropractic Associates, Inc. v. McKesson Corporation

Issues

Is the district court in this case required to accept the Federal Communications Commission’s interpretation of the Telephone Consumer Protection Act without reviewing the validity of the interpretation?

Oral argument:
January 21, 2025
Court below:
United States Court of Appeals for the Ninth Circuit

This case asks the Supreme Court to decide whether a district court is required to defer to the Federal Communications Commission’s (“FCC”) interpretation of the Telephone Consumer Protection Act (“TCPA”) without reviewing the validity of the interpretation. Petitioner, McLaughlin Chiropractic Associates, Inc. (“McLaughlin”), argues that the Hobbs Act does not prevent district courts from interpreting the TCPA in private litigation. Respondents, McKesson Corporation and McKesson Technologies, Inc. (collectively “McKesson”), counter that FCC orders are binding and can only be reviewed by a court of appeals. McLaughlin asserts that FCC orders do not bind courts because they are interpretive rules. The outcome of this case will have major implications for the authority of federal administrative agencies.

Questions as Framed for the Court by the Parties

Whether the Hobbs Act required the district court in this case to accept the Federal Communications Commission’s legal interpretation of the Telephone Consumer Protection Act.

Facts

The Telephone Consumer Protection Act (“TCPA”) , as amended by the Junk Fax Prevention Act of 2005 , makes it unlawful for any person to send unsolicited advertisements to a recipient’s telephone facsimile, or fax machine. The Hobbs Act of 1950 gives exclusive jurisdiction to federal courts of appeal to review final orders of the Federal Communication Commission (“FCC ”) . This means that only a federal court of appeal can review an FCC final order, not a district court .

In 2009 and 2010, McKesson Technologies, Inc. (“McKesson”) sent unsolicited advertisements to True Health Chiropractic Inc., McLaughlin Chiropractic Associates, Inc., and other medical practices (collectively “McLaughlin”) via fax. These advertisements were received through both online fax services and stand-alone fax machines. The FCC had previously issued McKesson a citation in 2008 for violating the TCPA by sending unsolicited advertisements via fax. McLaughlin brought a putative class action suit in the United States District Court for the Northern District of California against McKesson for violating the TCPA. The district court certified the class .

On December 9, 2019, in the middle of litigation, the FCC issued its Amerifactors declaratory ruling which reversed the agency’s interpretation of the TCPA. The Amerifactors decision ruled that online fax services are not “telephone facsimile machines” for purposes of the TCPA. This ruling also determined that the TCPA’s prohibition on unsolicited advertisements does not apply to faxes sent to online fax services. In response to the FCC ruling, McKesson moved to decertify the class.

After the Amerifactors ruling, the district court granted McKesson’s motion to decertify the class. The district court ruled that due to the FCC’s Amerifactors ruling, McKesson could only be held liable for faxes sent to stand-alone fax machines rather than to online fax services. The district court divided the class into a Stand-Alone Fax Machine class and an Online Fax Services class in order to rule on them separately. The district court then granted summary judgment sua sponte to McKesson on the Online Fax Services class, based on the Amerifactors ruling. The district court also decertified the Stand-Alone Fax Machine class, ruling that a class action was no longer appropriate in this case. McLaughlin appealed the court’s class decertification to the United States Court of Appeals for the Ninth Circuit .

McLaughlin argued that the Amerifactors ruling was not an order of the FCC, nor was it a final order pursuant to the Hobbs Act. On October 25, 2023, the circuit court disagreed with McLaughlin’s argument, instead finding that Amerifactors was a final order of the FCC, and that the district court could not review the validity of a final FCC ruling according to the Hobbs Act. Further, the circuit court affirmed the district court’s decision to divide the class and decertify the Stand-Alone Fax Machine class, finding that the district court did not abuse its discretion and properly deferred to the FCC’s declaratory ruling in Amerifactors .

McLaughlin petitioned for a writ of certiorari on May 17, 2024, which the United States Supreme Court granted on October 4, 2024.

Analysis

THE HOBBS ACT

McLaughlin asserts that the Hobbs Act does not preclude district courts from interpreting the TCPA independently, even when the FCC has issued guidance on the matter. McLaughlin argues that the Hobbs Act limits jurisdiction over challenges to FCC orders to appellate courts only when such challenges seek to “determine the validity of” those orders through declaratory or equitable relief. McLaughlin contends that this allows district courts to review and interpret the TCPA’s provisions during private litigation , even if those interpretations differ from FCC guidance. McLaughlin cites Justice Kavanaugh’s concurrence in PDR Network , which states that district courts are not barred from interpreting statutes independently in private disputes, as such interpretation does not invalidate or suspend an agency order, but instead reflects the judiciary’s role in resolving cases. McLaughlin emphasizes that Congress has explicitly barred district court review in other regulatory frameworks, such as the Clean Water Act , but chose not to include such language in the Hobbs Act. McLaughlin posits that this reflects congressional intent to permit district courts to evaluate the TCPA without being bound by FCC interpretations. McLaughlin also emphasizes that judicial precedent supports a limited application of the Hobbs Act’s jurisdictional restrictions. McLaughlin asserts that courts have historically allowed district courts to interpret statutes independently when agency interpretations are not directly challenged. McLaughlin also raises concerns about undermining judicial authority, noting that restricting district court review allows agency guidance to take precedence over the judiciary’s role in interpreting statutes.

McKesson argues that McLaughlin’s interpretation of the Hobbs Act is inconsistent with the statute’s purpose and longstanding judicial precedent . McKesson asserts that the Hobbs Act grants exclusive jurisdiction to appellate courts to review FCC orders, ensuring that district courts cannot deviate from or reinterpret those orders during private litigation. McKesson also disagrees with McLaughlin’s assertion that the Hobbs Act’s language limits its scope only to challenges seeking declaratory or equitable relief. They contend that the statute’s jurisdictional grant is broad, encompassing any legal or factual disputes that would undermine the validity or application of FCC rulings. McKesson also disputes McLaughlin’s reliance on PDR Network , interpreting the case as clarifying that FCC orders carry binding authority unless directly challenged in an appropriate forum. McKesson asserts that interpreting the TCPA independently in a way that conflicts with FCC rulings constitutes an indirect challenge to the validity of those orders, which is prohibited by the Hobbs Act. McKesson also rejects McLaughlin’s argument that Congress’s omission of explicit preclusive language reflects an intent to allow district courts broader interpretative authority. McKesson asserts that the Hobbs Act structure implicitly precludes district court reinterpretation to ensure regulatory consistency. McKesson also asserts that the Hobbs Act deliberately channels review to appellate courts to ensure deference to agency expertise and consistent enforcement of federal regulations.

THE BINDING NATURE OF FCC ORDERS

McLaughlin asserts that FCC orders do not carry binding authority over district courts because they are interpretive rather than legislative rules. According to McLaughlin, the role of declaratory rulings is to clarify statutory ambiguities, not to dictate how district courts must interpret the law in private litigation. McLaughlin argues that these rulings do not carry the same legal weight as legislative rules adopted through formal rulemaking procedures. According to McLaughlin, Congress intended the TCPA to be interpreted and applied by the courts, even if an agency interpretation exists, to ensure consistency in private disputes. McLaughlin references judicial decisions where courts have declined to defer to informal agency interpretations, particularly when those interpretations conflict with statutory language or fail to account for congressional intent. McLaughlin also warns that treating FCC orders as binding would undermine the judiciary’s viability to address the unique facts and circumstances of individual cases. This may lead to overly rigid applications of the law, which may not align with congressional intent, according to McLaughlin. McLaughlin criticizes the Amerifactors ruling, which excludes online fax services from the definition of “telephone facsimile machines,” as overly narrow and inconsistent with the TCPA’s purpose of protecting consumers from unsolicited advertising. McLaughlin contends that treating Amerifactors as binding creates a loophole that undermines the statute’s effectiveness.

McKesson argues that FCC orders are legally binding and must be followed by district courts under the Hobbs Act. Declaratory rulings are issued pursuant to the FCC’s delegated authority, which Congress explicitly authorized to address and interpret statutory ambiguities within the TCPA. According to McKesson, these orders are not merely advisory, but they are legally enforceable decisions that define the application of the TCPA in specific contexts. McKesson asserts that under 47 U.S.C § 155(c) , decisions made by FCC bureaus under delegated authority carry the same legal force as decisions issued directly by the full Commission unless formally overturned or stayed . Thus, McKesson asserts that the Amerifactors ruling–—which clarified that online fax services do not meet the statutory definition of “telephone facsimile machines”—binds district courts in all TCPA cases involving similar issues. McKesson argues that such procedures confer legitimacy comparable to formal rulemaking and highlight the binding nature of FCC declaratory rulings. McKesson also argues that it was issued following notice-and-comment procedures. This provided an opportunity for stakeholders to present their views and ensured that the decision reflected thorough consideration of both legal and practical implications.

Discussion

UNPREDICTABLE USE OF AGENCY DECISIONS IN COURT

Public Citizen, in support of McLaughlin, argues that the FCC’s and other agency judgments are not binding legal authority under the Hobbs Act. Public Citizen claims that if these agency opinions were indeed binding authority on the court, the general public would face negative consequences in the form of a more difficult judicial timeline to challenge decisions. Public Citizen argues that the process for challenging these agency judgments would become extremely complicated, as there is no way to determine whether an agency judgment is a “final agency action.” McLaughlin furthers this by pointing out that even parties that are not born or incorporated during the 60-day window to challenge a decision will be bound by a district court’s order regardless. Public Citizen believes the Supreme Court can stop this complicated process from becoming the norm by ruling that a district can always review non-binding agency opinions in enforcement actions.

The CTIA—The Wireless Association, NCTA—The Internet & Television Association, USTELECOM—The Broadband Association, and The Wireless Infrastructure Association (collectively “the CTIA”), in support of McKesson, argues that litigation would be unpredictable for parties if the Supreme Court were to hold that the FCC’s opinions are not binding legal authority. The CTIA argues that if the Court rules that federal agency decisions can be binding authority at times and not binding at other times, the Court would not be able to release fully informed decisions because it would be unclear whether an agency decision was binding or not, putting judicial uniformity at risk. The CTIA believes that if FCC opinions were not binding authority, opposing parties could still use the decisions as persuasive authority.

CONSTITUTIONAL AND DUE PROCESS CONCERNS

The Local Government Legal Center (“LGLC”), in support of McLaughlin, argues that requiring district courts to defer to agency decisions is unconstitutional because requiring district courts to defer to agencies in private litigation would threaten the separation of powers. LGLC explains that allowing agency decisions to be binding would violate Article III of the Constitution, which reserves judicial power to federal courts alone. Additionally, LGLC argues that binding federal agency decisions would violate Article I of the Constitution, which gives Congress the exclusive ability to exercise legislative power. These violations, according to LGLC, would threaten the system of checks and balances , as proscribed in the Constitution. Furthermore, LGLC explains that if agency decisions were binding on federal courts, the executive branch would gain disproportionately greater power over both the legislative and judicial branches. LGLC concludes that this would force the judiciary to give deference to federal agencies for judicial decisions, impacting a significant number of cases because federal agencies touch almost every aspect of American life.

The United States, in support of McKesson, argues that McLaughlin’s policy concerns over constitutionality are unfounded. The United States supports this claim by arguing that any policy concerns from McLaughlin are mitigated by prior judicial precedent from PDR Network . The United States also argues that McLaughlin brings no substantial rebuttal to counter McKesson’s claim that the PDR Network decisions are meritless. Finally, the United States argues that allowing a party in a private suit to attack the merits of an agency determination in an attempt to broaden the scope of the opposing party’s liability would also hinder individual due process rights. The United States further contends that allowing merit attacks but not challenge suits would greatly impact due process rights, explaining that restricting parties from challenging a prior agency decision would impair an individual’s right to appeal, thus hampering their due process rights.

Conclusion

Authors


Written by: Zaria Goicochea , Zachary Jacobson and Johanna Hussain

Edited by: Jae Choi

Additional Resources