4th Circuit Rules That Hobbs Act Precludes Chevron Deference Inquiry in Federal District Courts

The Fourth Circuit has ruled that the Hobbs Act—also known as the Administrative Orders Review Act—prevents district courts from refusing to defer to FCC final orders, which explain the agency’s interpretation of a governing statute.  The Hobbs Act allows only federal courts of appeals to review the validity of an agency-issued order.

In this class action suit, a group of medical offices sued a health communications company from whom they had received fax messages advertising a free e-book about the company’s products and services.  The TCPA prohibits the use of a fax machine to send “unsolicited advertisements,” which it defines as “any material advertising the commercial availability or quality of any property, goods, or services” sent to a person without the person’s prior permission or invitation.  However, a 2006 FCC Rule interpreted the term “unsolicited advertisement” to include fax messages promoting goods or services at no cost, pursuant to the TCPA.

Ordinarily, in a case interpreting the meaning of an agency rule, Chevron deference requires a court to ask first whether the underlying statute is ambiguous, and if the meaning is clear, the inquiry ends and the court applies the clear meaning of the provision.  However, the medical offices argued that the Hobbs Act required the court to automatically defer to the FCC rule’s interpretation of “unsolicited advertisement.”

The district court refused to defer to the FCC’s interpretation, engaged in its own Chevron analysis, and ruled that the TCPA’s interpretation of “unsolicited advertisement” controlled.  The Fourth Circuit reversed, finding that the district court acted beyond the scope of its congressionally granted authority by asking the “step one” Chevron question.  The panel wrote that the jurisdictional command of the Hobbs Act required the district court to apply the FCC’s interpretation of the TCPA.  As such, the district court erred by declining to defer to the FCC rule.

Every other circuit to consider this issue has reached the same result.  The Eleventh, Eight, and Sixth Circuits have each ruled that the Hobbs Act precludes a district court from considering the validity of an FCC ruling on the agency’s interpretation of the TCPA.

The opinion, Carlton & Harris Chiropractic, Inc. v. PDR Network, LLC, is accessible here.