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Supreme Court kicks fax case back to appeals court


The U.S. Supreme Court did not provide any definitive guidance in a long-awaited ruling Thursday on the issue of fax messages, sending a case back to a federal appellate court to decide two underlying issues in the case.

An expert said it is unclear whether the court’s ruling in PDR Network LLC v. Carlton & Harris Chiropractic is favorable to business.

The issue before the court was whether district courts are bound by the Federal Communication Commission’s “final orders,” although a more definitive ruling could have impacted other agencies as well.

The court said in its unanimous ruling that its decision may depend “upon the resolution of these preliminary issues.”

In 2006, the FCC issued an order stating the term “unsolicited advertisement” in the TCPA includes certain faxes that “promote goods or services even at no cost,” including “free magazine subscriptions” and “catalogs.”

The case hinges on a single fax sent to a chiropractic practice in December 2013. Montvale, New Jersey-based PDR faxed Carlton & Harris, which is in Huntington, West Virginia, the offer of a free e-book copy of the Physician’s Desk Reference, according to the Supreme Court ruling.

The practice filed suit against PDR in U.S. District Court in Huntington in a putative class action, claiming the fax violated the Telephone Consumer Protection Act of 1991 and was an unsolicited advertisement prohibited by the law.

Under the TCPA, recipients of unsolicited fax advertisements can seek damages from the sender and recover $500 for each violation.

The District Court found in PDR’s favor and dismissed the cases concluding the fax was not an unsolicited advertisement under the TCPA.

The 4th U.S. Circuit Court of Appeals in Richmond, Virginia, vacated that ruling, holding that the Hobbs Act requires a District Court to apply the FCC’s interpretation of the TCPA, and the District Court should have adopted the interpretation of “unsolicited advertisement” set forth in the 2006 order.

The Supreme Court said one question before it is the “legal nature” of the 2006 FCC order and whether it is an “interpretive rule” that “may not be binding on a District Court, and a District Court therefore may not be required to adhere to it,” or whether it is a legislative rule that has statutory authority.

The second question is whether PDR had an adequate opportunity to seek judicial review of the order, said the ruling.

“Because the Court of Appeals has not yet addressed the preliminary issues we have described, we vacate the judgment of the Court of Appeals and remand this case so that the Court of Appeals may consider these preliminary issues, as well as any other related issues that may arise in the course of resolving this case,” said the opinion, which was delivered by Justice Stephen G. Breyer. Concurring opinions were written by Justice Clarence Thomas and Justice Brett M. Kavanaugh.

Attorneys in the case had no comment or could not be reached.

Stephen J. Newman, a partner with Stroock & Stroock & Lavan LLP in Los Angeles, said overall, it is unclear whether the ruling is good for business

“Certainly it expands the scope of issue and may lead to increased litigation costs until some of these issues get sorted out, but I can’t say whether this particular ruling over the long term is going to be good or bad for defendants in TCPA cases,” Mr. Newman said.

In a TCPA-related insurance coverage case, faced with conflicting lower state court rulings, the 9th U.S. Circuit Court of Appeals in San Francisco has asked the California Supreme Court for its opinion on whether an American International Group Inc. unit must defend Yahoo Inc. in TCPA litigation. The case is Yahoo Inc. v. National Union Fire Insurance Co. of Pittsburgh, Pa.



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