In a 6-3 decision along partisan lines, the Supreme Court issued its opinion in McLaughlin Chiropractic Associates, inc. v. McKesson Corp.  While the decision may potentially have sweeping changes to how district courts interpret agency guidance in general, it also has practical short-term impacts on pending and future consumer protection litigation.

McKesson Corporation, a healthcare company, sent unsolicited fax advertisements through a subsidiary in 2009 and 2010 to medical practices in an effort to promote McKesson’s products.  One of the recipients, McLaughlin Chiropractic Associates, sued McKesson in the Northern District of California in 2014 for violation of the Telephone Consumer Protection Act of 1991 (“TCPA”).  In addition to requesting damages and an injunction against McKesson, McLaughlin also sought to represent a class of others who received the transmission via traditional telephonic fax and through online fax services (in other words, through email or an online portal).  The district court certified a class and its definition included recipients of both traditional telephonic fax and online fax services, without drawing any distinction between the two.  However, during the pendency of the case, the Federal Communications Commission (the “FCC”) issued an order, known as the Amerifactors order, at the behest of an unrelated party in an unrelated inquiry.  In the Amerifactors order, the FCC determined that online fax services do not fall under the auspice of the TCPA.  Following the order, the district court held that, in accordance with the Administrative Orders Review Act (commonly known as the “Hobbs Act”), the Amerifactors order was binding and dictated the district court’s interpretation of the TCPA.  The district court granted summary judgment in favor of McKesson regarding online fax services, which ultimately led to decertification of the class and limited the overall relief in the lawsuit to individual damages for McLaughlin in the amount of $6,000.  The United States Court of Appeals for the Ninth Circuit affirmed the district court’s ruling, but in McLaughlin, the Supreme Court reversed and held that the district court should not have concluded that the Amerifactors order was binding and the district court owed the FCC no deference in interpreting the TCPA.

The Supreme Court, delving into the various categories of statutes that call for “pre-enforcement review” under the Hobbs Act, held that the TCPA falls into a silent category of laws where Congress did not expressly preclude or authorize judicial review of agency interpretations in enforcement proceedings. In its decision, the Supreme Court set out to create a “default rule” for these circumstances.  Justice Brett Kavanaugh, writing for the majority, devised the following rule, citing the Supreme Court’s recent landmark decision in Loper Bright v. Raimondo:  “In an enforcement proceeding, a district court must independently determine for itself whether the agency’s interpretation of a statute is correct. District courts are not bound by the agency’s interpretation, but instead must determine the meaning of the law under ordinary principles of statutory interpretation, affording appropriate respect to the agency’s interpretation.”  Notably absent from the Supreme Court’s rule is the word “deference.”

Unsurprisingly, the majority opinion follows a trend in Chief Justice John Robert’s Supreme Court.  As set forth in Loper Bright, the Supreme Court has peeled back deference to agency interpretations of statutes where Congress is silent on any particular substantive or procedural issue.  Judges and courts, rather than agencies, have primary authority to determine a statute’s meaning and application where Congress did not make its intent explicit. 

Accordingly, the Supreme Court held that the district court erred in holding itself bound by the FCC’s Amerifactor order.  The case was remanded to the district court so that it may interpret the TCPA independently, all while affording “appropriate respect” to the FCC, but not outright deferring to it.

Justice Elena Kagan, writing for the minority, was predictably less concerned with the application of the majority’s opinion to the TCPA itself, as a consumer protection statute, but instead took concern with the broader implications of the Supreme Court’s decision on other administrative agencies. Justice Kagan highlighted a pragmatic problem with the majority’s decision—now, it appears that the only way to challenge an agency determination (such as the Amerifactors order) is through a declaratory judgment action at the intermediate court level, a shift the minority highlights is a departure from longstanding precedent.

For financial services companies, there are several takeaways—the direct takeaway is that FCC orders will not be binding in district courts in TCPA litigation, so any TCPA lawsuit that was decided along such grounds may potentially be open to relitigation. 

Less directly, TCPA precedent that has relied heavily on FCC guidance may be challengeable.  To be clear, this does not disturb the Supreme Court’s landmark decision in Facebook, Inc. v. DuGuid, in which the Court sharply curtailed the definition of an “autodialer.”  To a degree, the Court’s decision in McLaughlin is consistent with Facebook, where the FCC had previously interpreted “autodialer” broadly, and the Supreme Court significantly narrowed the definition.  Nevertheless, lower-level precedent from various district and circuit courts, to the extent they rely on any other relevant FCC guidance, may lose its potence.

Finally, there may now be a new incentive to reexamine regulatory frameworks and evaluate whether pursuing a declaratory judgment action in an intermediate appellate court is the most effective way to safeguard business operations.  For instance, because an FCC agency determination may not be afforded anything more than “respect” by the district court, financial institutions may weigh whether it is worth an independent judicial review of the substantive statutory provision at issue, affording only mere “respect” to the FCC, or if a direct declaratory relief challenge is more appropriate.