The Supreme Court recently considered the constitutionality of fines imposed on AT&T and Verizon by the Federal Communications Commission (FCC), brought about through a challenge questioning the companies’ Seventh Amendment right to a jury trial in such administrative proceedings. This case, FCC v. AT&T, raises significant questions following a previous verdict in SEC v. Jarkesy, where the court ruled against the Securities and Exchange Commission under similar circumstances.
The FCC fined AT&T and Verizon over $100 million collectively after the agency found that the carriers violated a provision of the Telecommunications Act of 1996, which mandates the protection of customer data. The process allows companies to respond in writing, but not through hearings, before receiving a “forfeiture order” demanding payment of these penalties within 30 days. The objection raised is that this process bypasses a jury trial, typically guaranteed under the Seventh Amendment when such fines are imposed.
According to the FCC, the fines are non-binding until enforced by the Department of Justice, at which point a jury trial becomes available. The distinction was supported in oral arguments by FCC representative Vivek Suri, who stated that these fines, unlike those in Jarkesy, require court enforcement, thus presenting an opportunity for due process via a jury trial. This position seemed to resonate with several justices, including Chief Justice John Roberts, who suggested during oral arguments that such orders might only create public relations challenges rather than legal obligations without a jury trial.
Nevertheless, AT&T and Verizon emphasized the severe implications and constant historical compliance with these orders, arguing that the labels and fines affect their reputations deeply. They insist they are compelled to pay immediately to avoid being branded as egregious lawbreakers. Jeffrey Wall, representing the carriers, asserted that positioning the FCC’s orders as non-binding does not mitigate the fact that enforceable penalties without jury trials penalize the exercise of a constitutional right.
Justices, notably Justice Neil Gorsuch, expressed concern over the broader repercussions of these forfeiture orders, questioning their impacts beyond initial financial penalties. The government’s reassurances that these have no legal consequence absent a trial did not go unchallenged. Wall’s rebuttal warned against construing the orders as non-binding if that means they influence further proceedings without a jury, advocating for the orders to be deemed irrelevant unless granted a jury trial at first.
The Supreme Court’s decision on this matter, expected by mid-2023, will provide further clarity on the balancing of administrative enforcement and the right to jury trials for substantial corporate penalties.