Leveling—or Blowing Up—the Hobbs Act Playing Field?

The Administrative Order Review Act (better known as the "Hobbs Act") grants "exclusive jurisdiction" to the federal courts of appeals to "determine the validity" of most FCC orders and rules and certain other agency orders. 28 U. S. C. § 2342. Challenges under the Hobbs Act must be filed in a federal court of appeals within 60 days of the challenged order. 28 U. S. C. § 2344. In McLaughlin Chiropractic Associates, Inc. v. McKesson Corp., the Supreme Court considered whether that exclusivity precludes later challenges to agencies' statutory interpretation in the federal district courts.

On June 20, 2025, in a 6-3 decision, the Supreme Court decided it does not. In doing so, the Court rejected the claim that other than in the context of a timely Hobbs Act challenge, the Act required courts to accept the agency's interpretation of its statute embodied in its rules and orders. Consistent with its recent rulings in Loper Bright v. Raimondo and Corner Post v. Board of Governors, McLaughlin directs lower courts to assess an agency's statutory interpretation with no more deference to the logic of the agency's reasoning merits. As a result, as long as a party had not previously sought review of a rule or order and lost, the party is free to attack the order's legality in a district court case.

Procedural History

This case arose out of a private suit filed in federal district court under the Telephone Consumer Protection Act (TCPA), which bans "unsolicited advertisement[s]" sent to a "telephone facsimile machine" that do not notify the recipient that they can opt out of future faxes. McLaughlin Chiropractic Associates filed a class action against McKesson Corporation in 2014, seeking damages and an injunction after a McKesson subsidiary sent unsolicited fax advertisements without the opt-out notice to a number of medical practices, including McLaughlin Chiropractic.

While the suit was pending, the FCC issued a declaratory order that excluded faxes to online services from the reach of the TCPA. The district court and 9th Circuit both found the FCC's statutory interpretation was binding, which meant that only entities that received McKesson's faxes on traditional hard-copy fax machines were covered. These decisions were based on the language in Section 2342 of the Hobbs Act giving the federal courts of appeals "exclusive jurisdiction to enjoin, set aside, suspend (in whole or in part), or to determine the validity of" certain agency orders, including the FCC's TCPA order. The courts held that because the window for Hobbs Act challenges had closed, McLaughlin Chiropractic could not challenge the validity of the FCC's conclusion that faxes to online services were not covered by the TCPA. The district court then decertified the class, which limited McLaughlin to only $6,000 in damages. 

The Supreme Court granted certiorari on the question of whether the Hobbs Act required the district court to follow the FCC's statutory interpretation of the TCPA. This question had been raised in PDR Network, LLC v. Carlton & Harris Chiropractic, Inc., an earlier TCPA case, but the Court there noted the FCC's TCPA rules "may not be binding": "We say 'may' because we do not definitively resolve these issues here." However, Justice Kavanaugh's concurrence in PDR Network suggested a resolution that foreshadowed his majority opinion in McLaughlin.

McLaughlin: District Courts Must Independently Assess Legality of Agency Action

In McLaughlin, considering "whether the Hobbs Act bars different parties in subsequent" civil or criminal proceedings (what the Court calls "enforcement proceedings") "from arguing—and district courts from concluding—that the agency incorrectly interpreted the statute," the Court bluntly concludes: "[t]he answer is no." Writing for the 6-3 majority, Justice Kavanaugh held that "[t]he Hobbs Act does not preclude district courts in enforcement proceedings from independently assessing whether an agency's interpretation of the relevant statute is correct." The Court thus remanded the case to the court of appeals to either apply ordinary principles of statutory interpretation to the FCC's ruling, with "appropriate respect" to the agency's interpretation, or remand to the district court for further proceedings. 

Justice Kavanaugh reaches this conclusion based on a textual and historical analysis of the Hobbs Act. After focusing on the statute's authorization of challenges to agency actions before they take effect, he concludes that the "default rule" permits challenges to agency orders in subsequent enforcement proceedings by distinguishing three classes of judicial review statutes. The three types of statutes are:

• Those that authorize pre-enforcement judicial review and expressly preclude judicial review in enforcement proceedings;
• Those that authorize pre-enforcement judicial review and expressly authorize judicial review in subsequent enforcement proceedings; and
• Those that do not expressly address review in the enforcement context.

The Hobbs Act falls into the third category because it authorizes pre-enforcement judicial review, but it is silent on whether judicial review is allowed in subsequent enforcement proceedings. In determining whether judicial review is allowed in enforcement proceedings, Justice Kavanaugh relies on "fundamental principles of administrative law," specifically, the "'basic presumption of judicial review'" of agency action.[1] Given that presumption, he holds that review is appropriate "unless there is persuasive reason to believe" that Congress intended to preclude judicial review.[2] He then applies Loper Bright's central holding to the Hobbs Act: "District courts are not bound by the agency's interpretation, but instead must determine the meaning of the law under ordinary principles of statutory interpretation, affording appropriate respect to the agency's interpretation." Justice Kavanaugh then relies on Corner Post to identify a basic presumption that "parties may always assail a regulation as exceeding the agency's statutory authority in enforcement proceedings against them."

While McLaughlin dealt with whether an FCC ruling was consistent with the language of the TCPA—a question of statutory interpretation—the Court made clear that attacks on agency orders in enforcement proceedings can also include claims that the agency's decision was arbitrary and capricious or otherwise unlawful under the APA. The Court also made clear that the Hobbs Act is a narrow exception to the general APA rule that "agency action is subject to judicial review in civil or criminal proceedings for judicial enforcement." This means that FCC rulings can be challenged both in enforcement actions brought by the government and in civil suits brought by private parties alleging violations of a statute, regulation, or order.

Justice Kagan's dissent argued that the "natural reading" of the Hobbs Act is that the only opportunity anyone has to challenge the validity of an agency order is by review in a court of appeals within 60 days of the order's issuance. She predicted that the new ruling will lead to circuit splits on the validity and meaning of agency rulings and the correct interpretation of statutes that agencies administer. In response, the majority noted that circuit splits are commonplace in our system, which facilitates judicial review by the Supreme Court to resolve the splits. Comparing the wording of the Hobbs Act to other acts where Congress expressly precluded review, the majority concluded that Congress did not intend the Hobbs Act to do so.

Trend in Administrative Jurisprudence: Limiting Agency Discretion

McLaughlin is the latest Court decision in a line from West Virginia v. EPA, Biden v. Nebraska, Ohio v. EPA, Loper Bright, and Corner Post that limits the discretion of agencies in administering and interpreting their underlying statutes. West Virginia v. EPA and Biden v. Nebraska held that agencies cannot decide "major questions" arising in their areas of expertise without specific congressional authorization. Ohio v. EPA clarified the arbitrary and capricious standard, requiring agencies to provide more satisfactory explanations for their actions that include "rational connection[s]" between the facts found and the decision made. Loper Bright held that even when an agency may properly consider what a statute means, courts are not bound to defer to the agency's interpretation. And Corner Post—and now, McLaughlin—expand parties' opportunities to challenge agency decisions and statutory interpretations.

Impact and Takeaways

After McLaughlin, as with Loper Bright, we expect agencies (including the FCC) to take greater care than previously to explain and justify their specific interpretations of the statutes they administer, and to be mindful that their interpretations will be subject to judicial review long after any pre-enforcement review (which is still limited by the Hobbs Act). We also expect litigants to be more aggressive in attacking agency rulings with which they disagree and maybe even hold back in the comment and Hobbs Act review phases to challenge issues in front of a district court judge who may be more inclined to disagree with the agency's ruling or interpretation. Finally, we expect regulated parties to have these rulings in mind as they advocate before the FCC.

DWT's communications practice group is continuing to analyze McLaughlin and its implications for our clients in the communications space. We invite interested readers to reach out with any questions about how McLaughlin may affect their businesses and customers.