Legal Articles

Another Supreme Court Ruling With Major Implications for Performance Marketing

The recent Supreme Court decision to overrule the Chevron Doctrine could have sweeping implications for performance marketers and companies subject to federal regulations like the TCPA. This landmark ruling shifts judicial power, potentially leading to increased legal uncertainty across various industries.

On Friday, June 28, the US Supreme Court issued a ruling in a case that has major implications for performance marketers and any company subject to federal rules enforcing the Telephone Consumer Protection Act (TCPA), or any other regulation. Learn more about the Chevron Doctrine.

Loper Bright Enterprises v Raimondo

The Chevron Doctrine

The Ruling

The Fallout

Loper Bright Enterprises v. Raimondo

The case is Loper Bright Enterprises v. Raimondo, which concerned a pair of challenges to a rule issued by the National Marine Fisheries Service (the “NMFS”) that required herring fishermen to carry observers on their vessels to monitor their catches to prevent overfishing.

The NMFS further required the herring industry to pay the costs associated with having the observers on board, which were approximately $700 per day.

However, the law under which the NMFS operated, the Magnuson–Stevens Fishery Conservation and Management Act (the “Magnuson–Stevens Act” or “MSA”) did not explicitly include the cost reimbursement requirement. In February of 2020, that requirement was challenged by in a lawsuit filed in the US District Court for the District of Columbia by a herring company called Loper Bright Enterprises, which argued that the MSA did not authorize the NMFS to mandate industry-funded monitoring of herring fisheries.

The Chevron Doctrine

In considering the matter, the District Court applied a long-standing principle of administrative law known as the Chevron Doctrine, named for the 1984 Supreme Court decision that birthed it, Chevron USA Inc. vs. Natural Resources Defense Council, Inc. In a nutshell, the Chevron Doctrine states that when a legislative delegation to an administrative agency on a particular issue is not explicitly addressed in the underlying statute, a court may not substitute its own interpretation of the statute for a reasonable interpretation made by the agency.

In other words, under Chevron, a regulator’s statutory interpretation of an ambiguous law trumps that of a court. Applying Chevron, the District Court granted summary judgment in favor of the NMFS. The plaintiff appealed, and the DC Court of Appeals upheld the District Court’s ruling. On November 10, 2022, the plaintiff petitioned the Supreme Court to determine whether granting the lower courts properly applied Chevron, and also asked the Court to limit the application of Chevron or overrule the 40-year-old precedent entirely.

The Ruling

In a 35-page ruling drafted by Chief Justice John Roberts, the justices overruled Chevron by a 6-3 vote, calling it “fundamentally misguided.” Justice Elena Kagan dissented, in an opinion joined by Justices Sonia Sotomayor and Ketanji Brown Jackson. Kagan predicted that Friday’s ruling “will cause a massive shock to the legal system.”

In this the dissenting justices are entirely correct. Over the course of the past 40 years, the Chevron doctrine has been used to decide thousands of cases and stands as one of the most important rulings on federal administrative law. Because Chevron applies virtually any time a federal agency issues a rule to implement a federal statute, overruling it will have far-reaching and profound implications, with countless regulations across the country subject to judicial review, including FCC and FTC rules implementing the TCPA.

The Fallout of Overruling The Chevron Doctrine

While this ruling will likely be celebrated by many, it should not be forgotten that there were important reasons behind the Chevron doctrine, not the least of which is the fact that federal agencies employ tens of thousands of professionals to carefully consider and evaluate the critical policy issues associated with crafting regulations to implement a statute.

Thanks to Loper Bright, their collective judgment is subject to being superseded by a single cranky judge. Love them or hate them, before this ruling, regulations were at least something that companies could predict and deal with.

Now nothing is certain, and uncertainty leads to chaos. In the immortal words of a classic Seinfeld episode, “That’s not going to be good for business. That’s not going to be good for anybody.”

Supreme Court overruled Chevron Doctrine