McLaughlin Chiropractic Associates, Inc. v. McKesson Corp.: An Early Look at the Waning Power of the Administrative State Post-Chevron

On the final day of the 2023–2024 term, the U.S. Supreme Court issued a seminal decision that is likely to have a massive impact on the future of the administrative state. Loper Bright Enterprises v. Raimondo, a case that was closely watched by the legal and business communities, resulted in a 6–3 decision in which the Court’s supermajority eliminated the deference that the federal judiciary had traditionally afforded to administrative agencies’ interpretations of ambiguous federal statutes. 144 S. Ct. 2244, 2273 (2024) (overruling Chevron, U.S.A., Inc. v. Nat. Res. Def. Council, Inc., 467 U.S. 837 (1984)). The ruling overturned the landmark 1983 case Chevron, U.S.A., Inc. v. Natural Resources Defense Council, Inc. and fundamentally shifted the balance of power between the executive and judicial branches of the federal government.

In the wake of Loper Bright, federal courts are empowered to independently interpret ambiguous federal statutes and are no longer required to defer to the executive branch’s views, as Chevron had required. As Chief Justice Roberts wrote for the majority:

Courts must exercise their independent judgment in deciding whether an agency has acted within its statutory authority, as the [Administrative Procedure Act (“APA”)] requires. Careful attention to the judgment of the Executive Branch may help inform that inquiry. . . . But courts need not and under the APA may not defer to an agency interpretation of the law simply because a statute is ambiguous.

Loper Bright, 144 S. Ct. at 2273. Ever since Loper Bright was issued at the end of June 2024, the country has been eager to see exactly how it would play out in the lower courts and, in turn, how it would shape future terms of the high court.

As it turns out, we will not have long to wait. In the first week of its 2024–2025 term, the Court granted certiorari in McLaughlin Chiropractic Associates, Inc. v. McKesson Corp. No. 23-1226, 2024 WL 4394119, at *1 (U.S. Oct. 4, 2024). This case is expected to resolve a question that has split several circuits: how much deference, if any, a district court must afford to an agency’s interpretation of a disputed and ambiguous provision of the Telephone Consumer Protection Act (TCPA) involving unsolicited faxes. 47 U.S.C. § 227. The twist in this case—which differentiates it from Loper Bright—is that the agency in question (the Federal Communications Commission (FCC)) formulated its interpretation of the ambiguous TCPA provision under the aegis of the Hobbs Act, not the APA.

Hobbs Act Process

The Hobbs Act operates differently from the APA. It creates a single, streamlined review process for the orders of specific agencies (including the FCC) by giving federal courts of appeals “exclusive jurisdiction to enjoin, set aside, suspend (in whole or in part), or to determine the validity of” covered orders that those agencies issue, including agency interpretations of ambiguous federal statutes. 28 U.S.C. § 2342. The Hobbs Act also imposes a time limit and consolidates all challenges to such an order in a single court of appeals—allowing for one final determination of the agency order’s validity, subject only to certiorari review. Id. §§ 2112, 2344, 2348, 2350. By its express terms, this “exclusive” review process means that other courts may not “determine the validity” of the agency order.

Factual and Procedural Background

In this case, McLaughlin and another plaintiff filed a putative class action against the McKesson defendants for allegedly sending unsolicited fax advertisements without proper opt-out notices, in violation of the TCPA. True Health Chiropractic Inc. v. McKesson Corp., No. 13-CV-02219-HSG, 2022 WL 1239346, at *1 (N.D. Cal. Apr. 27, 2022), aff’d, No. 22-15710, 2023 WL 7015279 (9th Cir. Oct. 25, 2023).

As the case developed, it transpired that some putative class members had received the disputed faxes via online fax services rather than by traditional fax machine. The relevant TCPA provision, which was enacted before the widespread use of online fax services, is ambiguous as to whether an individual who receives an unsolicited fax through an online fax service has a private right of action, similar to the right of action that a recipient with a traditional fax machine would have. 47 U.S.C. § 227.

Faced with this fact pattern, the district court created a “Stand-Alone Fax Machine” class and an “Online Fax Services” class. It then granted summary judgment in favor of the defendants with respect to the Online Fax Services class, concluding that the TCPA did not confer a private right of action on recipients in that class.

The district court reached this conclusion because the relevant TCPA provision is currently undergoing Hobbs Act review by the FCC. That process is still in a preliminary stage: in response to a petition, an FCC bureau has issued a declaratory order concluding that an online fax service is “not a ‘telephone facsimile machine’ and thus falls outside the scope of the statutory prohibition.” True Health, 2023 WL 7015279, at *2 (quoting Petition for Expedited Declaratory Ruling, In re Amerifactors Fin. Grp., LLC, 34 FCC Rcd. 11950, 11951 (2019)). An application for review of this order by the full FCC remains pending; and after that, Hobbs Act review by a federal court of appeals will likely kick in. Until the lengthy review process is completed, however, the FCC bureau’s interpretation of the ambiguous TCPA statute is the agency’s official word on that subject. The district court determined that Hobbs Act review is the exclusive avenue for reviewing the FCC’s interpretation of the ambiguous TCPA provision on unsolicited faxes, and therefore it held that the bureau’s interpretation was binding for purposes of the Online Fax Services class.

With the Online Fax Services class thus disposed of, the only class left standing in McLaughlin’s case was the Stand-Alone Fax Machine class, but here plaintiff’s counsel ran into problems with ascertainability. Because no members of this class could be identified, the district court decertified the entire class and awarded judgment for TCPA violations on an individual basis only.

The U.S. Court of Appeals for the Ninth Circuit upheld these rulings, concluding that the Hobbs Act’s exclusive jurisdiction provision forecloses a federal district court from considering whether the FCC’s interpretation of the TCPA is wrong. Under the Hobbs Act, in the Ninth Circuit’s view, that ruling is subject to judicial review only by federal courts of appeals—a process that has not yet been completed.

A Circuit Split

In affirming the district court, the Ninth Circuit was following its own established precedent. The Fourth, Ninth, and Eleventh Circuits have all interpreted the Hobbs Act as “unambiguously depriv[ing]” the federal district courts of the authority to question FCC orders even in private enforcement proceedings. Mais v. Gulf Coast Collection Bureau, 768 F.3d 1110, 1120 (11th Cir. 2014); accord Carlton & Harris Chiropractic, Inc. v. PDR Network, LLC, 883 F.3d 459, 469 (4th Cir. 2018); Wilson v. A.H. Belo Cop., 87 F.3d 393, 400 (9th Cir. 1996).

By contrast, the Second, Sixth, and Seventh Circuits have all recognized that parties in a private enforcement action may challenge FCC interpretations of the TCPA. Courts in those circuits remain free to consider challenges under the usual principles of statutory interpretation, affording appropriate deference to the agency’s interpretation. See Physicians Healthsource, Inc. v. Boehringer Ingelheim Pharms., Inc., 847 F.3d 92, 95 (2d Cir. 2017); Sandusky Wellness Ctr., LLC v. Medco Health Sols., Inc., 788 F.3d 218, 223 (6th Cir. 2015); Ira Holtzman, C.P.A. v. Turza, 728 F.3d 682, 688 (7th Cir. 2013). But in the wake of Loper Bright, of course, “appropriate deference” would be no deference at all.

Observations and Predictions

In Loper Bright, the plaintiffs’ bar (and the three justices in the minority) were cheering for agency deference. By contrast, business interests generally favored the elimination of agency deference and the overruling of Chevron. But in McLaughlin, the bleachers are filled on the opposite sides: consumer advocates looking to expand putative classes under the TCPA would have the courts dispense with Hobbs Act deference and wade in with their own interpretation of the ambiguous TCPA provision governing unsolicited faxes. Business interests, on the other hand, tend to prefer letting the FCC bureau interpretation stand, as it offers a more limited view of plaintiffs’ rights under the TCPA.

This shifting sea of opinion is a good reminder that the firestorm of debate released by Loper Bright and the overruling of Chevron will not always break along predictable red-blue, plaintiff-defendant, consumer-business axes. There are more subtle issues at play here, involving the delicate balances of power among the various branches of government—not only between the executive and judicial branches but also between those branches and Congress, which, after all, is the body that sometimes passes ambiguous statutes with which the other two branches must grapple. The purpose of the Constitution, according to Alexander Hamilton, is to “establish good government from reflection and choice,” rather than from “accident and force.” The Federalist No. 1 (Alexander Hamilton)aH. The McLaughlin case is merely the latest showcase for determining which branch of government gets the first crack at engaging in that “reflection and choice.”

And how will this case, which was argued on January 21, 2025, come out? If these authors had to guess, we think there’s a good chance that the moderate centrists on the Court will unite with the three liberals to affirm the Ninth Circuit, restricting the broad sweep of Loper Bright. The fact that Loper Bright eliminates all deference makes the approach adopted by the Second, Sixth, and Seventh Circuits far more extreme, and we think that the Court will therefore reject it. This would not be the first time that the Court might choose to make a broad sea change—and then walk it back incrementally as new and unthought-of consequences heave into view.