North Carolina Lawyers Weekly
Holding: The district court lacked jurisdiction to consider the validity of an FCC rule regarding unsolicited faxes, and it erred in concluding that the rule applied only to faxes with a facially commercial aim.
Background
Appellee PDR Network is a company that publishes the Physicians’ Desk Reference, a widely-used compendium of prescribing information for various prescription drugs. Pharmaceutical manufacturers pay PDR for including their drugs in the compendium.
In 2013, PDR sent Appellant Carlton & Harris Chiropractic Inc. a fax addressed to “Practice Manager.” Its subject line announced: “FREE 2014 Physicians’ Desk Reference eBook – Reserve Now.” The fax touted various benefits of the e-book, noting that it contained the “same trusted, FDA-approved full prescribing information … now in a new, convenient digital format … developed to support your changing digital workflow.” It also contained a contact phone number and email.
Carlton & Harris sued PDR, asserting a claim under the Telephone Consumer Protection Act. The district court granted PDR’s motion to dismiss, finding that it was not required to follow the Federal Communication Commission’s definition of “unsolicited advertisement.” This appeal followed.
Jurisdiction
The issue on appeal is whether and when a fax that offers a free good or service constitutes an “advertisement” under the TCPA and the FCC’s implementing rule at 71 Fed. Reg. 25,967, 25,973. As an initial matter, the district court erred in deciding whether to accord Chevron deference to the FCC rule because the Hobbs Act precluded the district court from even reaching Chevron’s step one.
The Hobbs Act at 28 U.S.C. § 2342 vests the federal courts of appeals with exclusive jurisdiction to enjoin, set aside, suspend, or determine the validity of the order to which the Act applies, including FCC interpretations of the TCPA. Where, as here, Congress has specifically stripped jurisdiction from the district court regarding a certain issue, those courts lack the power and authority to reach it. Every other circuit to consider this issue has reached the same result. Thus, the district court in this case had no power to decide whether the FCC rule was entitled to deference. By refusing to defer to the FCC rule and applying Chevron analysis instead, the court acted beyond the scope of its authority.
“Advertisement”
Although this court cannot, on appeal, question the validity of the FCC rule, it must interpret and apply what it says. Its first sentence is clear and unambiguous: “Facsimile messages that promote goods or services even at no cost … are unsolicited advertisements under the TCPA’s definition.” The rule goes on to explain that offers that are purportedly “free” often have commercial strings attached. For this reason, the FCC chose to interpret the term “advertisement” broadly to include any offer of a free good or service.
From a natural reading of the text of the regulation, then, we get this simple rule: Faxes that offer free goods and services are advertisements under the TCPA. This per se interpretation advances the purpose of the underlying statute by protecting consumers from junk faxes and helps would-be violators avoid inadvertent liability by eliminating the need for a case-by-case determination of whether a fax is indeed a free offer, or merely a pretext for something more. And, given the increasing obsolescence of fax machines, there will likely be few occasions where this rule serves to block an entity wishing to offer truly free goods or services from doing so. Requiring a fax to propose a specific commercial transaction on its face takes too narrow a view of the concepts of commercial activity and promotion and ignores the reality of many modern business models.
This case illustrates why the FCC may have decided to implement so broad a rule. PDR receives money from pharmaceutical companies whose drugs are listed in the Physicians’ Desk Reference, and nothing in the record suggests that it is a charity. Thus, PDR may stand to profit when a provider accepts a free copy or may offer the e-book for free in the hopes of establishing relationships with healthcare providers that will lead to future sales of other goods or services. All told, it is entirely plausible that PDR distributes the free e-books to further its own economic interests.
Accordingly, the fax was an advertisement under the plain meaning of the FCC rule implementing relevant portions of the TCPA.
Vacated and remanded.
Dissent
(Thacker, J.) Because I believe that (1) the district court did not exceed its jurisdiction under the Hobbs Act and (2) the 2006 FCC Rule requires a commercial aim, which is not present here, I respectfully dissent.
Carlton & Harris Chiropractic Inc. v. PDR Network LLC (Lawyers Weekly No. 001-033-18, 30 pp.) (Diaz, J.) No. 16-2185; Feb. 23, 2018; SDWV at Huntington (Chambers, J.) Glenn Lorne Hara for Appellant. Jeffrey N. Rosenthal from Appellees. 4th Cir.
