Results

Troutman Pepper Hamilton Sanders LLP

01/13/2021 | News release | Distributed by Public on 01/13/2021 23:08

Northern District of California Refuses to Examine Declaratory FCC Ruling for Validity in TCPA Class Case

In True Health Chiropractic Inc., et al. v. McKesson Corp., et al., the Northern District of California held that it was divested of jurisdiction by the Hobbs Act, 28 U.S.C. ยง 2342, and thus could not reconsider the validity of a declaratory ruling rendered by the Consumer and Government Affairs Bureau of the Federal Communications Commission ('FCC'), reaching a contrary result to the Fourth Circuit's holding on a similar question in Carlton & Harris Chiropractic Inc. v. PDR Network, LLC, et al.

The District Court considered this question pursuant to a Motion to Decertify Class, which was the most recent activity in litigation that started in 2013 when True Health Chiropractic, Inc. filed a putative class action alleging that McKesson Corporation sent unsolicited advertisements by facsimile ('fax') in violation of the Telephone Consumer Protection Act ('TCPA').

At this stage in the litigation, the Defendants had identified three groups of plaintiffs that they alleged had given express permission to receive faxes. The Ninth Circuit previously found that one of these groups met the predominance requirements of Rule 23(b)(3) of the Federal Rules of Civil Procedure and that one of these groups did not, however predominance of the group identified by the Defendants in Exhibit B of a prior filing was left for the District Court to decide on remand.

On remand, the crux of the issue was whether a recent decision by the FCC would require individualized inquiries to determine whether class members of the Exhibit B group received the advertisements through online fax services or traditional analog fax machines. This decision, referenced by the District Court as 'Amerifactors,' considered whether faxes received by 'online fax services' are covered under the TCPA. The FCC answered in the negative, ruling that 'an online fax service that effectively receives faxes 'sent as email over the Internet' and is not itself 'equipment which has the capacity . . . to transcribe text or images (or both) from an electronic signal received over a regular telephone line onto paper' is not a 'telephone facsimile machine' and thus falls outside the scope of the statutory prohibition.'

The parties disputed whether this ruling in Amerifactors was a final order binding upon the District Court that would justify decertification of the class. Thus, the Court was required to decide whether the Hobbs Act, which limits judicial review of FCC 'final orders' to the Courts of Appeals, was applicable in this instance. The Supreme Court addressed whether the Hobbs Act applies in private litigation in PDR Network, LLC, et al. v. Carlton & Harris Chiropractic Inc., but remanded that case reasoning that the Fourth Circuit needed to determine whether an order was a 'legislative rule' with the force of law or an 'interpretive rule' that is merely advisory. The District Court found that the Supreme Court's ruling 'ultimately did not resolve whether the Hobbs Act requires a district court to follow a particular FCC order interpreting the TCPA.' In light of this lack of resolution, the District Court determined that it must treat Amerifactors as authoritative in light of Ninth Circuit precedent that bars district courts from determining the validity of a final FCC order.

This decision is notable because the Fourth Circuit had determined just three weeks prior in Carlton & Harris Chiropractic Inc. that it was up to a district court to determine how much deference, if any, should be given to an FCC ruling. Thus, this decision by the Northern District of California highlights how federal courts have split upon this issue. Given the contrary holdings in these two cases, this issue is one that may lead to reexamination by the Supreme Court before it is put to rest. Regardless, the question of how much deference must be given to FCC rulings in any given circuit remains an evolving controversy for TCPA cases at this point in time.