The U.S. Supreme Court’s recent decision in McLaughlin Chiropractic Associates, Inc. v. McKesson Corp. marks a sea change for judicial review of Federal Communications Commission (FCC) orders, and creates both risks and potential opportunities for the communications industry and companies engaging in FCC-regulated activities.

By a 6-3 vote in a June 20 decision authored by Justice Kavanaugh, the Court significantly limited the preclusive effect of the Hobbs Act, a statute that gives appellate courts “exclusive jurisdiction” to “determine the validity” of certain agency orders, including those issued by the Federal Communications Commission (FCC). Previously, the Hobbs Act had generally been understood as broadly prohibiting courts from questioning the legal basis of FCC orders outside the context of direct appellate review. The Supreme Court rejected this construction of the statute, holding that while the Hobbs Act limits where pre-enforcement challenges may be brought, it does not prevent courts in subsequent enforcement actions from independently determining whether a given FCC order reflects the best meaning of the statute at issue and is otherwise valid under the Administrative Procedure Act (APA).    

This decision will likely create substantial regulatory uncertainty for the communications industry as well as companies that engage in FCC-regulated activities – such as outbound calls and messages subject to the Telephone Consumer Protection Act (TCPA). The decision may benefit regulated entities by offering additional opportunities to challenge agency interpretations that may be inconsistent with the Communications Act or the APA. At the same time, McLaughlin creates risks for companies that have relied on certain existing agency interpretations and will make it more difficult to rely on FCC interpretations moving forward.