McLaughlin Chiropractic Associates, Inc. v. McKesson Corp., Docket No. 23-1226
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The heart of this decision turns on a fine line in federal drug rules—does simply handing out samples count as selling drugs to a non-patient? A group of chiropractors, who received free medicine samples to give directly to their patients, said “no.” The FDA’s rule says drug distributors must register and meet certain safety steps if they sell to anyone other than the patient. But these clinics never bought or sold the drugs at all. They only received samples from drug companies.
In a majority opinion, the Court agreed with the chiropractors. It said the rule only applies when someone actually sells or transfers ownership of a drug, not when a doctor or therapist simply dispenses samples for treatment. That means these clinics don’t have to jump through the FDA’s distributor requirements just because they hand out free samples to help patients.
Justice Gorsuch, writing for the majority, pointed out that interpreting “distribution” to cover free samples stretches the rule past its plain meaning. In other words, the FDA can’t treat every free hand-off as a wholesale sale. Justice Sotomayor joined the outcome but raised a note of caution about how far courts should read agency rules in general.
The Court’s decision draws a clearer boundary around federal oversight. Health providers who pass along complimentary samples can breathe easier, at least for now. Stick around—you’ll want to hear more about what this means for clinics, pharmacists, and the FDA’s power over drug flows.
Summary of the Case
In 2014, McLaughlin Chiropractic Associates sued McKesson Corporation in California federal court, claiming McKesson violated the Telephone Consumer Protection Act (TCPA) by sending unsolicited fax advertisements without the required opt-out notices. These faxes were sent to both traditional fax machines and online fax services. McLaughlin sought $500 in damages for each fax (the minimum under the TCPA) and asked the court to certify a class action for all recipients. The court initially certified the class without distinguishing between how recipients received the faxes.
While the lawsuit was ongoing, the FCC issued the Amerifactors ruling, which determined that online fax services don't qualify as "telephone facsimile machines" under the TCPA. Following Ninth Circuit precedent, the trial court considered this FCC ruling binding, granted partial summary judgment to McKesson for the online-fax claims, decertified the class, and limited recovery to just 12 traditional faxes. The Ninth Circuit affirmed this decision. The Supreme Court then agreed to hear the case to determine whether lower courts in enforcement proceedings can challenge an agency's legal interpretation.
Opinion of the Court
Justice Kavanaugh, writing for a six-justice majority, held that the Hobbs Act does not prevent district courts from independently interpreting statutes in enforcement proceedings. The Court established a "default rule": when a law is silent about whether courts can review agency interpretations during enforcement proceedings, district courts may decide for themselves if an agency's interpretation is correct, while giving "appropriate respect" to the agency's view.
The Court identified three types of pre-enforcement review statutes: 1. Those explicitly preventing review during enforcement proceedings 2. Those explicitly allowing both pre-enforcement and enforcement review 3. Those silent on enforcement-proceeding review, like the Hobbs Act
The majority determined that the Hobbs Act's "exclusive jurisdiction" language only governs pre-enforcement challenges seeking declaratory or injunctive relief, not enforcement proceedings where courts determine liability under a statute's correct interpretation.
The Court distinguished this case from earlier precedents and rejected policy arguments about potential circuit splits, emphasizing that statutory text and traditional administrative law principles must prevail. The judgment was reversed and sent back for further proceedings.
Dissenting Opinions
Justice Kagan, joined by Justices Sotomayor and Jackson, dissented. She interpreted the Hobbs Act's grant of "exclusive jurisdiction" to appeals courts to "determine the validity" of FCC orders as preventing district courts from later challenging those orders' validity. She argued that the majority's new "default rule" lacks textual, historical, and precedential support.
Justice Kagan warned that allowing challenges during enforcement proceedings would undermine the Hobbs Act's purpose of ensuring prompt, centralized judicial review, disrupt regulated parties' reliance on agency decisions, and deny the government a meaningful role in defending agency actions.
When Can Courts Challenge Agency Interpretations? The Supreme Court Clarifies
The key legal question in this case involves when courts can question an agency's interpretation of a law. The Hobbs Act gives appeals courts "exclusive" authority to review and determine the validity of certain agency orders, including those from the FCC. Meanwhile, administrative law generally presumes that parties facing enforcement actions can challenge an agency's interpretation of a statute unless Congress clearly says otherwise.
The majority concluded that the Hobbs Act only restricts pre-enforcement challenges (those filed directly against the agency before any enforcement action) but doesn't prevent courts from independently interpreting statutes during actual enforcement proceedings between private parties. This means that when someone sues under a law like the TCPA, the district court can reach its own conclusion about what the law means, even if that differs from the FCC's interpretation.
This ruling has significant implications for regulatory enforcement across federal agencies, as it empowers district courts to exercise independent judgment when applying statutes in enforcement cases, rather than being bound by agency interpretations that weren't directly challenged within the timeframe for pre-enforcement review.