Questions over the extent to which district courts must defer to FCC rulings have had a significant impact over key legal issues that drive outcomes in the TCPA litigation. Prior to the Supreme Court’s opinion in PDR Network, LLC v. Carlton & Harris Chiropractic, Inc., 139 S. Ct. 2051 (2019), many courts had held the Hobbs Act barred district courts from considering challenges to the validity of FCC rulings, meaning private litigants could not mount such challenges no matter how wrong or arbitrary the FCC’s ruling may have been. 

In PDR the Supreme Court considered “whether the Hobbs Act required the district court in this case to accept the FCC’s legal interpretation of the Telephone Consumer Protection Act.” Rather than providing a definitive answer, the court remanded for the lower court to answer two “threshold” questions: (1) whether the FCC’s ruling was legislative or interpretive (because if interpretive, the court “may not” be bound to follow it); and (2) if the ruling was legislative, whether the challenging party had a “prior” and “adequate” opportunity for judicial review (because if not the order “may not” be binding on the district court). Moreover, since the Court equivocated over whether the existence of one of these factors might mean (instead of actually means) a district court is not bound to follow a FCC ruling, the opinion left additional questions for the lower courts to unpack.

This week, the Fourth Circuit started to consider these questions, but like the Supreme Court, stopped short providing definitive answers. Carlton & Harris Chiropractic, Inc. v. PDR Network, LLC, No. 16-2185, 2020 WL 7133865 (4th Cir. Dec. 7, 2020). Because the parties were in agreement that the FCC’s ruling at issue was interpretive, the court found it more prudent to “narrow the inquiry and remand what remains to the district court for consideration.” Specifically, the inquiry was narrowed to what level of deference must the district court afford an interpretive rule, and specifically, the 2006 FCC rule in question. And while the Fourth Circuit declined to answer the question in the first instance, it did provide “guideposts to inform the district court’s analysis,” upon remand.

Those guideposts are as follows:

  1. Chevron deference does not apply to interpretive rules, because those rules are not issued pursuant to an agency’s authority to make rules carrying the force of law.
  2. Skidmore deference applies instead. Skidmore v. Swift & Co., 323 U.S. 134, 140 (1944). Under Skidmore “an interpretive rule is entitled to respect only to the extent it has the power to persuade”
  3. The spectrum of deference under Skidmore depends upon the persuasiveness of the interpretive ruling, and ranges from “great respect” to “near indifference.”
  4. Courts determine persuasiveness by examining multiple factors, such as “the degree of the agency’s care, its consistency, formality, and relative expertness, and to the persuasiveness of the agency’s position.”

There are three key takeaways from this opinion. First, the opinion opens the door for private litigants to challenge the FCC’s interpretive rules in district courts, but expect fights over what is interpretive and what is legislative in other cases and contexts. Second, the question over deference to legislative rules remains, and since there is no dispute in PDR that the rule at issue is interpretive, the issue will need to branch off and be addressed by another court, in another case involving a legislative rule, at some other point in time. This leaves a big open-ended question when it comes to deference to FCC orders. Third, Skidmore’s relatively subjective standard provides an ample playing field to mount challenges to interpretive rulings, but could lead to inconsistent outcomes as the persuasiveness of the FCC’s interpretive rulings is examined by different courts.  

There is still much left to play out in PDR as the questions posed by the Supreme Court are addressed in the lower courts. For now, the Fourth Circuit’s opinion at least starts to build out a new, albeit piecemeal, analytical framework for examining deference to the FCC’s rules.