Reply Brief — PDR Network, LLC, et al., Petitioners v. Carlton & Harris Chiropractic, Inc.

No. 17-1705

IN THE

Supreme Court of the United States

___________

PDR NETWORK, LLC, et al.,

v.

Petitioners,

CARLTON & HARRIS CHIROPRACTIC, INC.,

Respondent.

___________

On Writ of Certiorari

to the United States Court of Appeals

for the Fourth Circuit

___________

PETITIONERS’ REPLY

___________

JEFFREY N. ROSENTHAL

BLANK ROME LLP

130 N. 18th Street

Philadelphia, PA 19103

(215) 569-5553

ANA TAGVORYAN

BLANK ROME LLP

2029 Century Park East

6th Floor

Los Angeles, CA 90067

(424) 239-3400

CARTER G. PHILLIPS *

KWAKU A. AKOWUAH

DANIEL J. FEITH

KURT A. JOHNSON

SIDLEY AUSTIN LLP

1501 K Street, N.W.

Washington, D.C. 20005

(202) 736-8000

cphillips@sidley.com

Counsel for Petitioners

March 11, 2019

* Counsel of Record

TABLE OF CONTENTS

Page

TABLE OF AUTHORITIES .................................

ii

INTRODUCTION .................................................

1

I. THE HOBBS ACT DOES NOT PRECLUDE

TCPA DEFENDANTS FROM OBTAINING

JUDICIAL REVIEW OF FCC LEGAL INTERPRETATIONS ..........................................

2

A. Text and Context Require Construing the

Hobbs Act More Narrowly than Respondent and the Government’s Reading ...........

3

B. The Hobbs Act Did Not Provide a Prior,

Adequate, and Exclusive Opportunity for

Judicial Review of the 2006 Order ............

11

C. Respondent and the Government’s Position Cannot Be Squared with Other

Agency-Review Statutes ............................

17

D. Constitutional Avoidance Principles Favor

PDR’s Interpretation..................................

19

II. THE

FCC’S

INTERPRETATION

OF

“UNSOLICITED ADVERTISEMENT” IS A

NON-BINDING INTERPRETIVE RULE ......

20

CONCLUSION .....................................................

22

(i)

ii

CASES

TABLE OF AUTHORITIES

Page

Adamo Wrecking Co. v. United States, 434

U.S. 275 (1978) ...........................................

16

Biggerstaff v. FCC, 511 F.3d 178 (D.C. Cir.

2007) ...........................................................

14

Bradley v. City of Richmond, 227 U.S. 477

(1913) ......................................................... 13, 14

Christopher v. SmithKline Beecham Corp.,

567 U.S. 142 (2012) ....................................

11

City of Bos. Delegation v. Fed. Energy Regulatory Comm’n, 897 F.3d 241 (D.C. Cir.

2018) ...........................................................

14

Clark v. Martinez, 543 U.S. 371 (2005) ........

19

Columbia Broad. Sys., Inc. v. United States,

316 U.S. 407 (1942) .................................. 20, 21

Direct Mktg. Ass’n v. Brohl, 135 S. Ct. 1124

(2015) ..........................................................

5

Duncan v. Walker, 533 U.S. 167 (2001) ........

5

FCC v. ITT World Commc’ns, Inc., 466 U.S.

463 (1984) ...................................................

9

Functional Music, Inc. v. FCC, 274 F.2d 543

(D.C. Cir. 1958) ........................................ 10, 13

Gage v. U.S. Atomic Energy Comm’n, 479

F.2d 1214 (D.C. Cir. 1973) .........................

10

Gen. Dynamics Land Sys., Inc. v. Cline, 540

U.S. 581 (2004) ...........................................

3

Gustafson v. Alloyd Co., 513 U.S. 561

(1995) ..........................................................

4

Perez v. Mortg. Bankers Ass’n, 135 S. Ct.

1199 (2015) .................................................

21

Physicians Healthsource, Inc. v. Boehringer

Ingelheim Pharm., Inc., 847 F.3d 92 (2d

Cir. 2017) ....................................................

15

iii

TABLE OF AUTHORITIES—continued

Page

Port of Bos. Marine Terminal Ass’n v.

Rederiaktiebolaget Transatlantic, 400 U.S.

62 (1970) ................................................ 9, 10, 15

Susan B. Anthony List v. Driehaus, 573 U.S.

149 (2014) ...................................................

14

United States v. O’Hagan, 521 U.S. 642

(1997) ..........................................................

18

United States v. Ruzicka, 329 U.S. 287

(1946) ..........................................................

9

United States v. Szabo, 760 F.3d 997 (9th

Cir. 2014) ....................................................

15

US W. Commc’ns, Inc. v. Hamilton, 224 F.3d

1049 (9th Cir. 2000) ...................................

21

Venner v. Mich. Cent. R.R., 271 U.S. 127

(1926) ..........................................................

9

Whitney Nat’l Bank v. Bank of New Orleans

& Tr. Co., 379 U.S. 411 (1965)...................

18

Woods v. Hills, 334 U.S. 210 (1948)..............

6

Yakus v. United States, 321 U.S. 414

(1944) .................................................. 6, 7, 8, 13

Yates v. United States, 135 S. Ct. 1074

(2015) ..........................................................

3

Yee v. City of Escondido, 503 U.S. 519

(1992) ........................................................ 19, 20

STATUTES AND REGULATIONS

5 U.S.C. § 703 ................................................ 1, 11

15 U.S.C. § 78y(b)(1) .....................................

18

28 U.S.C. § 1341 ............................................

5

§ 2342 ............................................ 5, 21

§ 2344 ........................................... 10, 15

§ 2349 ............................................

7

29 U.S.C. § 655(f)...........................................

18

iv

TABLE OF AUTHORITIES—continued

Page

33 U.S.C. § 1369(b)(2) ...................................

1

42 U.S.C. § 7607(b)(2) ...................................

10

Emergency Price Control Act of 1942, Pub. L.

No. 77-421, 56 Stat. 23...............................

7

Rules and Regulations Implementing the

Telephone Consumer Protection Act of

1991, 70 Fed. Reg. 75,070 (Dec. 19,

2005) ...........................................................

14

LEGISLATIVE HISTORY

H.R. Rep. No. 81-2122 (1950) .......................

S. Rep. No. 81-2618 (1950) ............................

8

8

OTHER AUTHORITY

U.S. Dep’t of Justice, Attorney General’s

Manual on the Administrative Procedure

Act (1947) .................................................. 12, 13

INTRODUCTION

As the decision below recognized, there is “nothing

unique” about the Hobbs Act. Pet. App. 8a. Like many

agency review provisions, it establishes a “special statutory review proceeding” that allows parties to directly

challenge agency action and obtain injunctive or declaratory relief against the government. 5 U.S.C.

§ 703. Such statutes are common in administrative

law and, as the Government concedes, “ordinarily” preserve the right of defendants in enforcement proceedings to judicial review of agency actions in that setting,

where their liberty or property rights are at risk. Govt.

24. Yet Respondent and the Government argue that

the Hobbs Act strips defendants of this right by requiring enforcement courts to slavishly apply legal interpretations announced in covered agency orders. Nothing in the Hobbs Act compels that disturbing and

anomalous result.

First, the text of the Hobbs Act does not support it.

Respondent and the Government’s position depends on

reading the phrase “exclusive jurisdiction ... to determine the validity” in isolation, without regard to the

surrounding text, other provisions of the Hobbs Act, or

background principles of administrative law. All those

sources support the same conclusion: the Act does not

preclude judicial review of agency legal interpretations

when enforcement actions are brought in district

court. Congress knows how to expressly strip enforcement courts of jurisdiction to consider legal questions,

e.g., 33 U.S.C. § 1369(b)(2), and did not use such language in the Hobbs Act.

Second, Section 703 of the Administrative Procedure

Act (“APA”) entitles PDR to judicial review in this case

because the Hobbs Act provided no opportunity for re-

2

view that was both prior and adequate. In arguing otherwise, the Government asserts a startlingly punitive

view of adequacy, under which the 60-day window to

obtain direct review of a generally applicable regulation is deemed adequate for all parties, even those that

lacked standing to sue at the time. But obviously, parties that lack standing do not have any opportunity to

sue—let alone an “adequate” one. In junk fax class action litigation, and other settings, the Government’s

position would deprive countless defendants of the opportunity to obtain a judicial determination of what

the statute at the heart of their case means.

Finally, Respondent and the Government ignore the

unsettling implications of their estoppel-on-steroids

position—including the grave constitutional concerns

it would raise. One such implication is that their jurisdiction-stripping arguments apply equally to a host of

other statutes that likewise create an exclusive proceeding for direct review of agency action. If the FCC

gets its wish, other agencies will line up to seek the

same insulation from judicial review for their own legal interpretations. But properly construed, the Hobbs

Act and other like statutes permit defendants facing

ruinous liability to assert the basic litigation defense

that they did not violate the law.

I. THE HOBBS ACT DOES NOT PRECLUDE

TCPA DEFENDANTS FROM OBTAINING

JUDICIAL REVIEW OF FCC LEGAL INTERPRETATIONS.

The Government attempts to recast this case as addressing “whether a litigant in a private district-court

lawsuit may collaterally attack the validity of [an order] that could have been challenged under the Hobbs

Act when it was issued.” Govt. 1. But the question presented is far narrower. It asks only whether the Hobbs

3

Act strips district courts in TCPA proceedings of jurisdiction to consider a defendant’s argument that the

law, properly construed, did not prohibit its conduct—

let alone create exposure to massive class-action damages.

As PDR’s opening brief demonstrated, the text and

context of the Hobbs Act and Section 703 show that the

Hobbs Act does no such thing. Respondent’s and the

Government’s contrary arguments are unpersuasive.

A. Text and Context Require Construing

the Hobbs Act More Narrowly than Respondent and the Government’s Reading.

The phrase at the heart of this case—“determine the

validity”—appears twice in the Hobbs Act. The Government concedes that, in § 2349(a), a judgment “determining the validity” of an order refers to a specific

“type[] of relief,” Govt. 21-22, but contends “determine

the validity” has a different meaning in § 2342. There,

it supposedly refers to authority “to settle a question

or controversy about [an order’s] validity,” without regard to any specific form of judicial relief. Govt. 11 (internal quotation marks omitted). That is wrong.

1. The Government construes “determine the validity” based solely on dictionary definitions of each word.

Govt. 11-12. It then seeks to brush aside PDR’s argument that context suggests a narrower definition, by

asserting that the phrase is “unambiguous[].” Govt.

20. “Whether a statutory term is unambiguous,” however, “does not turn solely on dictionary definitions of

its component words.” Yates v. United States, 135 S.

Ct. 1074, 1081 (2015) (plurality opinion). “[S]tatutory

language must be read in context since a phrase gathers meaning from the words around it.” Gen. Dynamics

Land Sys., Inc. v. Cline, 540 U.S. 581, 596 (2004) (alterations and internal quotation marks omitted).

4

Here, every contextual clue supports PDR’s position.

The Government concedes that § 2349 uses “determining the validity” to “specif[y] the type[] of relief that a

court may enter.” Govt. 22. The natural inference is

that the phrase “determine the validity” has the same

import in § 2342, because the “normal rule of statutory

construction” is that “identical words used in different

parts of the same act are intended to have the same

meaning.” Gustafson v. Alloyd Co., 513 U.S. 561, 570

(1995) (internal quotation marks omitted).

The Government attempts to circumvent this interpretive rule by contending that § 2349(a) describes the

“judicial relief that the Hobbs Act authorizes,” while

§ 2342 defines the judicial action the Act “forecloses.”

Govt. 21-22. Both provisions, however, are phrased as

affirmative grants of authority; neither expressly forecloses anything. Moreover, the contention that

§ 2349(a) authorizes judicial actions while § 2342 forecloses them sheds no light on whether the judicial actions discussed in the two provisions are the same or

different. Again, because Congress used the same

phrase twice, the “normal” interpretation is that Congress meant in both places to refer to the same actions.

Gustafson, 513 U.S. at 570.

The Government also stresses that § 2342 “does not

contain the word ‘judgment,’” Govt. 22, but never explains why that difference matters. If the word’s absence in § 2342 affected the meaning of “determine the

validity,” it would also affect the meaning of the remaining verbs listed in the string. The Government,

however, never explains how the presence or absence

of “judgment” would, for example, affect the understanding of “enjoin,” and no answer is apparent. In

both provisions, “enjoin” refers to injunctive relief that

may issue as part of a judgment.

5

The Government likewise makes no effort to connect

its construction of “determine the validity” to the adjoining terms “enjoin,” “set aside,” and “suspend.” 28

U.S.C. § 2342. In Direct Marketing Association v.

Brohl, this Court recognized that the words “‘enjoin’

and ‘suspend’ are terms of art in equity” that “refer to

different equitable remedies that restrict or stop official action to varying degrees.” 135 S. Ct. 1124, 1132

(2015). The Court thus construed the adjacent term

“restrain” in the Tax Injunction Act—which provides

that district courts “shall not enjoin, suspend or restrain the assessment, levy or collection of any tax under State law,” 28 U.S.C. § 1341—to also refer to equitable relief, rejecting the broader dictionary-based construction adopted by the lower court that “restrain”

means any action that might have a “negative impact”

on State tax collection. 135 S. Ct. at 1132-33. The same

logic applies here. Just as “enjoin,” “suspend,” and “set

aside” denote specific remedies available in administrative litigation, “determine the validity” likewise denotes a remedy available against an agency—declaratory relief.

Finally, the Government’s expansive reading of “determine the validity” conflicts with the interpretive

“duty to give effect, if possible, to every clause and

word of a statute.” Duncan v. Walker, 533 U.S. 167,

174 (2001) (internal quotation marks omitted). The

Government reads “determine the validity” to refer to

any determination of whether an agency’s action is

“sound,” “good,” or “legally sufficient or efficacious.”

Govt. 12. If that were correct, the terms “enjoin,” “set

aside,” and “suspend” in § 2342 would be superfluous

because a court could not “enjoin” or “suspend” an

agency action without finding that it is not “sound” or

“good.”

6

PDR’s construction avoids such surplusage. “Enjoin,” “set aside,” and “suspend” each refer to a different type of injunctive relief, and “determine the validity” correspondingly refers to declaratory relief.

2. History also refutes the Government’s position.

The Government asserts that the phrase “determine

the validity” was “obviously transplanted” from the

Emergency Price Control Act (EPCA), which this

Court had interpreted to give “clear indication” of a

congressional intent to preclude district courts from

considering the validity of war-time price regulations

as a defense in civil and criminal enforcement actions.

Yakus v. United States, 321 U.S. 414, 429-31 (1944);

see also Woods v. Hills, 334 U.S. 210, 213-14 (1948). By

supposedly taking this language from the EPCA, the

Government contends, Congress “br[ought] the old soil

with it,” imparting to the Hobbs Act the same preclusive effect. Govt. 14 (quoting Stokeling v. United

States, 139 S. Ct. 544, 551 (2019)).

This argument, however, overlooks stark textual differences between the EPCA and the Hobbs Act.

Unlike the Hobbs Act, the EPCA expressly addressed

whether Congress intended to preclude enforcement

courts from considering the validity of agency action.

Contrary to the Government’s suggestion, the EPCA

did not merely grant the Emergency Court of Appeals

“exclusive jurisdiction to determine the validity of a

covered order,” and leave all else to implication. Govt.

13 (quoting EPCA, Pub. L. No. 77-421, § 204(d), 56

Stat. 23, 33 (1942)). Rather, in the sentence immediately following the passage quoted by the Government,

the EPCA stated:

Except as provided in this section, no court, Federal, State, or Territorial, shall have jurisdiction

7

or power to consider the validity of any such regulation, order, or price schedule, or to stay, restrain, enjoin, or set aside, in whole or part, any

provision of this Act authorizing the issuance of

such regulations or orders ... or any provision of

any such regulation, order, or price schedule....

§ 204(d), 56 Stat. at 33 (emphasis added).

The Government excises this latter sentence even

though it was critical to the Court’s statutory holding

in Yakus. See Govt. 13-14. The Court’s specific holding

was that the sentence highlighted by the Government,

when “coupled with the provision that ‘no court ... shall

have jurisdiction or power to consider the validity of

any such regulation,’” was “broad enough in terms to

deprive the district court of power to consider the validity of the Administrator’s regulation or order as a

defense to a criminal prosecution for its violation” Yakus, 321 U.S. at 429-30 (quoting § 204(d), 56 Stat. at

33) (emphases added). Thus, Yakus did not “authoritatively construe” the language supposedly linking the

Hobbs Act and EPCA. Govt. 14. It instead construed

that language in combination with a far broader provision expressly prohibiting other courts from “consider[ing] the validity” of covered orders—a provision

the Hobbs Act conspicuously lacks.

Furthermore, Congress used the phrase “determine

the validity” differently in the Hobbs Act than in the

EPCA. In the EPCA, the phrase stands alone; in the

Hobbs Act, it is one component in a list of terms in

which every other term plainly describes a type of judicial relief. And unlike the Hobbs Act, the EPCA nowhere uses the phrase “determine the validity” in a

manner that can only refer to a grant of declaratory

relief. See 28 U.S.C. § 2349(a). The two statutes thus

employ the same phrase, but in very different ways.

8

The Government errs badly in ignoring those textual

and contextual differences. See supra 3-6.

The Hobbs Act’s legislative history further undermines the Government’s assertion that the Act descends from the EPCA. Neither the House nor Senate

report even mentions the EPCA. Instead, these reports

make clear that the Act was modeled on “the pattern

established for review of orders of the Federal Trade

Commission in 1914 and followed by other laws since

then in relation to many other agencies,” including the

SEC and NLRB. H.R. Rep. No. 81-2122, at 4 (1950) (citation omitted); see S. Rep. No. 81-2618, at 3 (1950).

Context again helps explain why. The EPCA was

“adopted as a temporary wartime measure” linked to

the grave “circumstances attending its enactment,”

i.e., the nation’s ramp-up to total war after Pearl Harbor. Yakus, 321 U.S. at 419, 431-32. There was no reason for Congress to look to an exceptional wartime

statute for Hobbs Act inspiration when it had available many other ordinary direct review statutes that

applied to civilian agencies in peacetime.

3. The Government’s sweeping view of the Hobbs

Act also lacks support in this Court’s decisions interpreting the Act and its predecessor, the Urgent Deficiencies Act. None of the cases cited by the Government embraces the view that the Hobbs Act precludes

defendants subjected to enforcement actions from

seeking review of an agency’s generally applicable legal interpretation.

To begin, FCC v. ITT World Communications, Inc.

and Venner v. Michigan Central Railroad were not enforcement actions at all. Both involved obvious efforts

to circumvent available direct review proceedings by

seeking to enjoin not agency orders themselves, but

conduct the orders blessed. In Venner, the Interstate

Commerce Commission entered an order approving a

9

specific transaction between railroad companies; the

next day the plaintiff sued to block that very transaction. 271 U.S. 127, 128-29 (1926). In ITT, the petitioner simultaneously sought relief under the Hobbs

Act and in district court. 466 U.S. 463, 465-66 (1984).

In both cases, the Court saw through the ploys, making clear that “[l]itigants may not evade” the Hobbs

Act through such maneuvers. Id. at 468.

Port of Boston Marine Terminal Ass’n v. Rederiaktiebolaget Transatlantic similarly involved an attempt to

evade Hobbs Act review of a party-specific order.

There, a vessel owner claimed it was not liable for fees

that had been approved by the Federal Maritime Commission because the fees were supposedly invalid. 400

U.S. 62, 67-68 (1970). The vessel owner argued that it

had not participated in the Maritime Commission proceedings that approved the fees and therefore was not

bound by the commission’s order. Id. at 71. Tellingly,

in rejecting this argument, the Court did not state that

§ 2342 flatly foreclosed the defendant’s district court

challenge. Instead, the Court emphasized that the defendant “was in fact represented before the Commission,” “its interests were clearly at stake,” and it “had

every opportunity to participate before the Commission and then to seek timely review in the Court of Appeals,” which it “chose not to do.” Id. at 71-72. Port of

Boston thus held that when an administrative proceeding settles specific parties’ rights, those parties

must seek review under the Hobbs Act and cannot circumvent it through “collateral” challenges. Id. at 72;

accord United States v. Ruzicka, 329 U.S. 287 (1946).

These decisions do not support the Government’s argument that the Hobbs Act precludes enforcement review of generally applicable rules. Such rules, by definition, apply to indeterminate parties, whose specific

rights and interests may not have been “clearly at

10

stake” in the administrative proceeding that produced

the rule, and who may not have had “every opportunity” to participate before the agency. Port of Boston,

400 U.S. at 72; see Gage v. U.S. Atomic Energy

Comm’n, 479 F.2d 1214, 1218 (D.C. Cir. 1973) (“Unlike

those subject to adjudicative orders, persons who may

ultimately be affected by regulations may have legitimate grounds for deciding not to join in the formulation of the rules.”). Indeed, every court of appeals to

consider the issue has held that when such rules are

applied in subsequent enforcement proceedings, respondents can challenge the rules’ validity even if the

Hobbs Act’s 60-day review period has run. Br. 27; see,

e.g., Functional Music, Inc. v. FCC, 274 F.2d 543, 546

(D.C. Cir. 1958).

The Government attempts to distinguish those decisions on the ground that they still require review to

occur “in the court of appeals under the Hobbs Act procedures.” Govt. 30. This misses the point: If the Government’s reading of § 2342 were correct, Functional

Music would be wrong. That is, if § 2342 actually precluded enforcement review, the only opportunity to

challenge a rule would be in the 60 days after it issued.

28 U.S.C. § 2344. By its terms, that limitations period

would apply regardless whether subsequent enforcement occurred in an administrative or judicial forum.

See id. Once that window closed, defendants could dispute only whether a rule applied to them, not whether

the rule itself is lawful. Cf. 42 U.S.C. § 7607(b)(2) (restricting review of certain Clean Air Act regulations in

this manner). Thus, the ability under Functional Music to challenge an “underlying rule” in an enforcement

action is further proof that the “exclusive jurisdiction”

over covered orders in § 2342 is “exclusive” only as to

direct review. 274 F.2d at 546. It does not displace the

11

review traditionally available in the event of enforcement. Functional Music also demonstrates that the

Hobbs Act does not pursue the goal of “quick, nationwide resolution of the validity of covered agency actions,” Govt. 18, at the cost of enforcement review.1

B. The Hobbs Act Did Not Provide a Prior,

Adequate, and Exclusive Opportunity for

Judicial Review of the 2006 Order.

Neither Respondent nor the Government disputes

that the preclusive effect of the Hobbs Act is limited by

the APA, which provides, “[e]xcept to the extent that

prior, adequate, and exclusive opportunity for judicial

review is provided by law, agency action is subject to

judicial review in civil or criminal proceedings for judicial enforcement.” 5 U.S.C. § 703. Instead, they contend that the Hobbs Act gave PDR two “prior, adequate, and exclusive” opportunities for review of the

2006 Order: prior to its release, through participation

in the underlying FCC proceeding; and after Respondent sued, by filing a new petition to the FCC (whether

for reconsideration, a declaratory order, or rulemaking). Resp. 25-42; Govt. 24-29. They are wrong.

1 Nor do the reliance interests invoked by the Government justify eliminating enforcement review. The Government raises the

specter of TCPA plaintiffs challenging FCC orders creating safe

harbors on which defendants relied. Govt. 19. But even if those

safe harbors were held impermissible, imposing retroactive liability on parties that relied on them would raise due process questions not presented here. See Christopher v. SmithKline Beecham

Corp., 567 U.S. 142, 156 (2012) (refusing to defer to agency interpretation that would “impose potentially massive liability on respondent for conduct that occurred well before that interpretation

was announced” because such deference “would seriously undermine the principle that agencies should provide regulated parties

fair warning of the conduct a regulation prohibits or requires” (internal quotation marks and alteration omitted)).

12

1. The Government claims that PDR had an “adequate” opportunity to challenge the 2006 Order during

the 60-day window after its release. Relying on the Attorney General’s Manual on the Administrative Procedure Act (1947) [hereinafter APA Manual], the Government contends that Section 703 is “most naturally

understood to incorporate the concept of ‘adequacy’

that the Court articulated in Yakus.” Govt. 25. The

Government appears to view that “concept of ‘adequacy’” to mean that if an agency review scheme permits parties to “present their claims to the agency and

then seek judicial review within a particular time,” it

is categorically “adequate,” except (perhaps!) as applied to parties that did not exist during the direct review period. Govt. 25-26.

That cannot be correct. Even the Government concedes that Section 703 was intended to establish a

“general rule that, when a defendant’s liability depends in part on the propriety of an agency action, that

action ordinarily can be challenged in a civil or criminal enforcement suit.” Govt. 24. Under the Government’s “concept of adequacy,” however, Section 703

would be meaningless. Every review scheme that offers direct review would qualify as “adequate,” and so

defendants could never obtain review in enforcement

proceedings.

The Government misunderstands “adequacy” because it misreads Yakus. There, the discussion of “adequacy” was part of the Court’s due process holding. In

sustaining the EPCA, Yakus did not adopt a myopic

rule that all review schemes that run through agency

processes to a court are “adequate” at all times and for

all purposes, as the Government suggests. Rather, it

upheld the EPCA’s rigid 60-day review window as adequate—even with respect to enforcement proceed-

13

ings—because of “the urgency and exigencies of wartime price regulation.” 321 U.S. at 435. In those circumstances, the Government’s regulatory interests

were at their zenith, and parties could reasonably have

been expected to be—and Mr. Yakus in fact was—attuned to the Government’s dictates. Id.

The cases cited in Yakus’s adequacy discussion confirm that adequacy requires a real, rather than theoretical, opportunity to litigate. Bradley v. City of Richmond, 227 U.S. 477 (1913), for example, involved a

constitutional challenge to a municipal tax scheme.

The Court upheld the scheme, subject to this qualifier: “If the right to appear and be heard and to obtain

a review should prove illusory, there would, under general principles of jurisprudence, remain the right to judicial review....” Id. at 483.

The APA Manual supports this same contextualized

notion of “adequacy.” In a passage ignored by the Government, the Manual states that in considering

whether judicial review is available in enforcement

proceedings under Section 703, “the extent to which

the ‘opportunity’ for judicial review prior to the enforcement proceeding has been waived or disregarded

by the defendant in those proceedings must also be considered.” APA Manual 101 (emphasis added). The

Manual thus anticipates decisions such as Port of Boston. Where an agency order specifically determines a

party’s particular rights and that party chooses not to

pursue immediate review, it will often be fair to say

that the “defendant in [the] proceedings” has “waived

or disregarded” its opportunity for review.

This logic, however, does not hold for orders promulgating generally applicable rules. “[U]nlike ordinary

adjudicatory orders, administrative rules and regulations are capable of continuing application.” Functional Music, 274 F.2d at 546. They apply to any party

14

whose conduct falls within their scope, regardless of

whether the party was engaged in that activity, planning to engage in that activity, or even in existence at

the time the rules were issued. The Government refuses to say whether it thinks Hobbs Act review is adequate for parties that did not exist when a rule was

promulgated, see Govt. 28, but its argument that the

60-day window suffices for any party that did exist at

that time is little better. Mere existence, after all, does

not confer standing, without which a party cannot obtain direct review even if it participates in agency proceedings. See City of Bos. Delegation v. Fed. Energy

Regulatory Comm’n, 897 F.3d 241, 248 (D.C. Cir.

2018). Unless a party can show that it was at least imminently planning to engage in the regulated activity,

the path to direct review is closed. See Susan B. Anthony List v. Driehaus, 573 U.S. 149, 158 (2014).2 In

such circumstances, the opportunity for direct Hobbs

Act review is “illusory,” Bradley, 227 U.S. at 483, and

Section 703’s “adequacy” standard is properly read to

permit judicial review of agency action within an enforcement proceeding.

PDR’s circumstances provide a case-in-point. Nothing in the record indicates that, in 2006, PDR was engaged or planning to engage in activity subject to the

2006 Order. Therefore, even if PDR could travel back

in time to December 19, 2005, review the 384 pages of

the Federal Register published that day, when the

FCC “open[ed] a new docket” to “seek[] comment” on

its “unsolicited facsimile advertising rules,” 70 Fed.

Reg. 75,070, and submit comments in that proceeding,

2 The FCC knows this full well. It challenged the constitutional

standing of both parties that sought Hobbs Act review of the 2006

Order, and prevailed as to one. See Biggerstaff v. FCC, 511 F.3d

178, 184 (D.C. Cir. 2007). The Government now describes that

victory as resting on “procedural grounds.” Govt. 5.

15

it still could not have sued under the Hobbs Act. An

abstract interest in administrative proceedings does

not create Article III standing.

For PDR, the opportunity for direct Hobbs Act review of the 2006 Order was illusory because PDR

lacked statutory standing to raise such a challenge. Br.

25-27. In 2006, PDR was a stranger to the FCC proceedings, and thus not “aggrieved” by the 2006 Order.

28 U.S.C. § 2344. Nor did it know how the FCC’s interpretation would one day be construed by the Fourth

Circuit or any other court (many of which disagree

with the Fourth Circuit’s view of what the 2006 Order

means). See Physicians Healthsource, Inc. v.

Boehringer Ingelheim Pharm., Inc., 847 F.3d 92, 96 n.1

(2d Cir. 2017) (citing cases).3 And once Respondent

sued PDR in 2014, it was far too late for PDR to seek

direct review.

The Government’s primary response is “too bad.” In

its view, “a mode of judicial review is not inadequate

simply because a particular litigant fails to satisfy the

statutory prerequisites for invoking it.” Govt. 26. But

the cases the Government cites for this proposition involved parties whose interests were clearly and concretely at stake at a time when direct review was available. See Port of Boston, 400 U.S. at 71-72; United

States v. Szabo, 760 F.3d 997, 1006-07 (9th Cir. 2014)

(finding direct review adequate because the defendant

3 Contrary to the Government’s suggestion (at 27), this Court

need not blind itself to the lower courts’ divergent views. That is

particularly true because the Fourth Circuit’s conclusion about

the meaning of the FCC rule rested on its aberrant view that it

was improper to consider the TCPA in construing the FCC’s interpretation of that statute. See Pet. App. 14a. The Government

properly declines to defend that aspect of the Fourth Circuit’s

analysis, Govt. Br. 27 n.6, and this Court should make clear that

it is wrong.

16

had standing to seek pre-enforcement review of the

regulation at issue and had specific grounds, based on

his own prior conduct, to do so). Neither case supports

the underpinnings of the Government’s position—

namely, that parties must exercise perfect foresight

about how their conduct and the law might evolve, and

must file lawsuits based on those prophecies regardless of standing.

Finally, standing considerations also rebut the suggestion (Govt. 29) that Federal Register publication

creates an “adequate” opportunity for review. Mere

constructive notice of agency action does not create

standing to challenge it. That is, no doubt, among the

reasons this Court has expressed qualms about the

“severity” of a rule requiring parties to “protect themselves against arbitrary administrative action only by

daily perusal of ... the Federal Register and by immediate initiation of litigation.” Adamo Wrecking Co. v.

United States, 434 U.S. 275, 283 n.2 (1978). The Government provides no reason to cast these concerns

aside, especially when all that hangs in the balance is

an unwanted fax.

2. The Government and Respondent also suggest

that it is fine to deny review in enforcement settings,

even where direct review was only hypothetically

available, because the defendant may seek a kind of

back-door agency review by initiating a petition for

rulemaking, reconsideration, or a declaratory order.

This argument is meritless. Section 703 preserves

judicial review in enforcement settings unless the defendant had a “prior” opportunity for review. In context, “prior” must mean “before the enforcement proceeding began”—neither Respondent nor the Government argues otherwise, and neither seeks to explain

how a proceeding that begins “after a defendant has

17

been sued,” Resp. 27 (emphasis added), qualifies as a

“prior” opportunity.

Respondent and the Government also sidestep the

practical inadequacies of this option. Neither acknowledges the FCC’s past practice of refusing to initiate declaratory ruling proceedings in such circumstances.

See Br. 36. Neither acknowledges that such a petition

would not permit review of the original order; rather,

the “agency action” reviewed would be the new order

resolving the petition. Br. 36. And neither disputes

that even if a district court agrees to stay a TCPA suit

while the defendant seeks FCC review—which Respondent concedes district courts are not required to

do, Resp. 36—that administrative odyssey is so

lengthy and expensive that most defendants, facing

ruinous class action liability, will be forced into settlement. Br. 37-39.

To be sure, there are instances where all of these

hurdles were cleared and back-door review obtained.

But even Respondent’s primary exemplar involves a

five-year lag from the time the defendant petitioned

the FCC to the time the D.C. Circuit decided the case.

See Resp. 28-31 (citing Bais Yaakov of Spring Valley v.

FCC, 852 F.3d 1078 (D.C. Cir. 2017)); Br. 36. That is

neither a “prior” nor “adequate” substitute for being

able to raise a legal defense before the court where the

enforcement action is pending.

C. Respondent and the Government’s Position Cannot Be Squared with Other

Agency Review Statutes.

PDR’s opening brief also explained that agency review provisions akin to the Hobbs Act have never been

construed to preclude enforcement review. See Br. 3133. Respondent and the Government seek to distinguish those statutes because they do not expressly vest

18

the courts of appeals with “exclusive jurisdiction” to

“determine the validity” of agency orders. Resp. 41;

Govt. 30.

This argument fails, however, because the language

of those statutes is just as broad as the Hobbs Act’s.

The SEC’s review statute covers all “review” of SEC

orders, without qualification. 15 U.S.C. § 78y(b)(1).

OSHA’s review statute encompasses all suits “challenging the validity” and seeking “judicial review” of

OSHA standards. 29 U.S.C. § 655(f). The statutes do

not use the word “exclusive,” but that is irrelevant.

Even when “Congress has not expressly provided that

the statutory procedure is to be exclusive,” “specific

statutory scheme[s] for obtaining review” are deemed

“to be exclusive” with respect to direct review. Whitney

Nat’l Bank v. Bank of New Orleans & Tr. Co., 379 U.S.

411, 420-422 (1965).

These statutes thus possess the very features that

Respondent and the Government describe as distinguishing features of the Hobbs Act: They confer “exclusive” jurisdiction over “review” of agency action. Yet

courts have never interpreted them to preclude judicial review of agency action in enforcement proceedings brought in district court. See, e.g., United States

v. O’Hagan, 521 U.S. 642, 666-76 (1997).

Respondent and the Government also cannot square

their interpretation with statutes like the Clean Air

Act and CERCLA, which contain direct review provisions comparable to the Hobbs Act’s but also expressly

preclude review in enforcement proceedings. Br. 34-35.

The Government claims these statutes shed no light

on the Hobbs Act because they were enacted later in

time. Govt. 23. But the Government ignores that the

EPCA, enacted before the Hobbs Act, also contained an

express preclusion provision, see supra 6-7. And these

later enacted statutes reinforce that Congress speaks

19

clearly when it intends to eliminate judicial review of

agency action in enforcement proceedings. The Hobbs

Act contains no such clear statement—moreover, Section 703 manifests Congress’s general intent to preserve judicial review in those settings.

D. Constitutional Avoidance

Favor PDR’s Interpretation.

Principles

Respondent and the Government also attempt to

sidestep the grave constitutional problems their reading of the Hobbs Act creates. See Br. 39-45. They claim

PDR forfeited its avoidance arguments and that those

arguments lack merit. Resp. 42-44; Govt. 31-33. Both

contentions are wrong.

“Once a federal claim is properly presented, a party

can make any argument in support of that claim; parties are not limited to the precise arguments they

made below.” Yee v. City of Escondido, 503 U.S. 519,

534 (1992). Accordingly, PDR may advance the constitutional-avoidance canon in support of its construction

of the Hobbs Act. The canon is but another “means of

giving effect to congressional intent.” Clark v. Martinez, 543 U.S. 371, 381-82 (2005).4

With respect to the canon’s application, Respondent

and the Government barely respond. They simply ignore repeated statements by this Court and others

that Yakus-like constraints on judicial review in enforcement proceedings would raise grave constitutional concerns in peacetime settings. See PDR Br. 41

n.6. The purpose of the avoidance canon is to resolve

disputes between competing plausible constructions of

a statute in a manner that avoids confronting such

concerns. PDR has demonstrated that its proposed

4 Respondent’s other forfeiture arguments (at 8, 22, 25-26) fail

for the same reason.

20

construction of the Hobbs Act is more than plausible.

Avoidance principles thus strongly favor that construction.

II. THE FCC’S INTERPRETATION OF “UNSOLICITED ADVERTISEMENT” IS A NONBINDING INTERPRETIVE RULE.

Alternatively, the district court was not bound to follow the FCC’s interpretation of “unsolicited advertisement” because that statement constitutes an interpretive rule, binding neither parties nor courts. Br. 45-50.

Respondent and the Government offer no meritorious

response.

First, both argue that PDR forfeited this argument

by not “‘disput[ing] that the 2006 FCC Rule is the sort

of “final order” contemplated by the Hobbs Act.’” Govt.

33 (quoting Pet. App. 7a n.1.). PDR does not dispute

that the 2006 Order is a final order—in part, it promulgated binding regulations that indisputably carry

the “force of law.” Columbia Broad. Sys., Inc. v. United

States (“CBS”), 316 U.S. 407, 418 (1942); Br. 48-49.

But the question here is whether the Hobbs Act required the district court to follow the specific portion

of the 2006 Order interpreting “unsolicited advertisement” in the TCPA. PDR argued below that the Hobbs

Act did not impose this requirement. See Brief of Appellees at 20, Carlton & Harris Chiropractic, Inc. v.

PDR Network LLC, 883 F.3d 459 (4th Cir. 2018) (No.

16-2185). Its argument here is “in support of that

claim,” Yee, 503 U.S. at 534, and fairly encompassed

by the question presented. Therefore, this argument is

properly before the Court.

Second, without disputing that the relevant portion

of the 2006 Order is an interpretive rule, the Government argues that the Hobbs Act makes no distinction

between legislative and interpretive rules. Govt. 34.

21

That is wrong. Only FCC “final orders” reviewable under 47 U.S.C. § 402 are reviewable under the Hobbs

Act, 28 U.S.C. § 2342(1), and FCC “final orders” are

limited to orders carrying the “force of law,” CBS, 316

U.S. at 418. Even the Government’s principal case recognizes that general principles of finality, which include whether an action is “‘one by which rights or obligations have been determined, or from which legal

consequences will flow,’” govern the “understanding of

‘final order’ for the purposes of the Hobbs Act.” US W.

Commc’ns, Inc. v. Hamilton, 224 F.3d 1049, 1054-55

(9th Cir. 2000) (quoting Bennett v. Spear, 520 U.S. 154,

177-78 (1997)). Interpretive rules do not qualify. They

“do not have the force and effect of law and are not accorded that weight in the adjudicatory process.” Perez

v. Mortg. Bankers Ass’n, 135 S. Ct. 1199, 1204 (2015)

(internal quotation marks omitted).

Indeed, the Government recently acknowledged this

basic principle in its brief in Kisor v. Wilkie, No. 18-15.

There, the Government urged the Court to rework

Auer deference so as to end the “seeming incongruity

of giving controlling weight to an interpretive rule that

is not meant to carry the force of law.” Brief for the

Respondent at 26. But here, the Government seeks an

interpretation of the Hobbs Act that would create

much the same “incongruity”—but through the more

extreme mechanism of making agency interpretive

rules unreviewable outside of a narrow period in which

(as shown, supra at 11-16) judicial review will be unavailable to most parties against whom the rule could

someday be enforced.

Whatever else may be said about the Hobbs Act,

there is no reasonable argument that it was intended

to give binding effect to interpretive rules that the

APA classifies as non-binding. And that suggests a

narrow alternative answer to whether the Hobbs Act

22

“required the district court in this case to accept the

FCC’s legal interpretation.” Br. (i) (emphasis added).

Because the FCC’s interpretation of “unsolicited advertisement” is a mere interpretive rule, it binds no

one. Br. 45-46.

CONCLUSION

For the foregoing reasons, the Fourth Circuit’s judgment should be reversed.

Respectfully submitted,

JEFFREY N. ROSENTHAL

BLANK ROME LLP

130 N. 18th Street

Philadelphia, PA 19103

(215) 569-5553

ANA TAGVORYAN

BLANK ROME LLP

2029 Century Park East

6th Floor

Los Angeles, CA 90067

(424) 239-3400

CARTER G. PHILLIPS *

KWAKU A. AKOWUAH

DANIEL J. FEITH

KURT A. JOHNSON

SIDLEY AUSTIN LLP

1501 K Street, N.W.

Washington, D.C. 20005

(202) 736-8000

cphillips@sidley.com

Counsel for Petitioners

March 11, 2019

* Counsel of Record