Supreme Court holds that Hobbs Act does not bind courts adjudicating private litigation or government enforcement proceedings to an agency’s interpretation of a statute
Case Name and Number: McLaughlin Chiropractic Assocs. v. McKesson Corp., No. 23-1226
Today, the Supreme Court held 6-3 that the Hobbs Act’s provisions governing judicial review of actions by certain federal agencies do not require district courts to adopt an agency’s interpretation of a statute when adjudicating a private lawsuit or government enforcement proceeding. Instead, “a district court must independently determine for itself whether the agency’s interpretation of a statute is correct.”
Background: The Hobbs Act provides for pre-enforcement judicial review of orders by certain agencies, including the Federal Communications Commission. To obtain pre-enforcement review, a party must file a petition in a federal court of appeals within 60 days of the FCC order. (The Hobbs Act also governs review of certain actions of the Department of Agriculture, Department of Transportation, Federal Maritime Commission, Nuclear Regulatory Commission, Surface Transportation Board, and Department of Housing and Urban Development.)
In this case, McLaughlin (a medical practice) brought a putative class action under the Telephone Consumer Protection Act (TCPA) alleging that McKesson (a healthcare company) sent unsolicited fax advertisements in violation of the statute. The district court certified a class of recipients of McKesson’s advertisements, which included those who received the advertisements through traditional faxes as well as those who received the advertisements through online fax services, either through email or an online portal.
While the lawsuit was pending and after the class was certified, the FCC issued an order concluding that online fax services are not faxes within the meaning of the TCPA. The district court determined that the Hobbs Act required it to follow the FCC’s interpretation, and it decertified the class. The Ninth Circuit affirmed, agreeing with the district court that the Hobbs Act requires courts to adhere to the FCC’s interpretation.
Issue: Whether the Hobbs Act required the district court in this case to accept the Federal Communications Commission’s interpretation of provisions of the Telephone Consumer Protection Act.
Court’s Holding: In an opinion authored by Justice Kavanaugh and joined by Chief Justice Roberts and Justices Thomas, Alito, Gorsuch, and Barrett, the Supreme Court held that the Hobbs Act does not require courts in civil cases to apply an agency’s interpretation of a statute. The Court explained that the Hobbs Act, unlike certain other statutes that authorize pre-enforcement judicial review of agency rules and orders, does not expressly preclude judicial review in subsequent proceedings. The Court also noted that the Hobbs Act, also unlike certain other statutes, does not expressly authorize or contemplate judicial review of the agency’s actions or orders in subsequent proceedings. Instead, it is silent on the issue, and the Court framed the question before it as determining the appropriate “default rule” for statutes, like the Hobbs Act, that “neither expressly preclude nor expressly authorize judicial review in subsequent enforcement proceedings.”
The Court concluded that the appropriate default rule is that “a district court must independently determine for itself whether the agency’s interpretation of a statute is correct.” Echoing its reasoning in last year’s ruling overturning Chevron U.S.A. v. National Resources Defense Council, the Court held that courts should “determine the meaning of the law under ordinary principles of statutory interpretation, affording appropriate respect to the agency’s interpretation.” The Court reasoned that under background principles of administrative law, there is a strong presumption in favor of judicial review of agency action, and Congress must expressly preclude judicial review to displace that presumption.
The Court also observed that “[b]arring defendants in enforcement actions from raising arguments about the legality of agency rules or orders enforced against them raises significant questions under the Due Process Clause—especially for parties that did not exist or had no good or reasonably foreseeable reason to sue when the agency rule or order was first issued.”
The Court rejected McKesson’s arguments, supported by the Government, that the text of the Hobbs Act suffices to override the presumption of judicial review and that the potential for inconsistent judicial interpretations of a statute warrants deference to an agency’s interpretation.
The Court declined to address whether the FCC’s interpretation of the TCPA is correct, leaving that issue for the lower courts on remand.
Justice Kagan, joined by Justices Sotomayor and Jackson, dissented. In their view, “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 they expressed concern that regulated parties will forgo prompt pre-enforcement review proceedings under the Hobbs Act and challenge an agency’s interpretation only “down-the-road” in future civil proceedings.
Read the opinion here.
“When Congress wants to bar a district court in an enforcement proceeding from reviewing an agency’s interpretation of a statute, Congress can and must say so. We do not presume that Congress silently intended to preclude judicial review in enforcement proceedings. Rather, the default rule is that district courts in enforcement proceedings may conclude that an agency’s interpretation of a statute is incorrect.”
– Justice Kavanaugh, for the Court