AT&T (NYSE: T) believes the FCC’s process for issuing fines is unconstitutional. The telecom wants the Supreme Court to find in its favor in a dispute with the Commission. Verizon (NYSE: VZ) too, thinks the agency’s fine process is unconstitutional and previously asked the justices to come to the same conclusion. The FCC asked the court to uphold its forfeiture process.
Under the Communications Act of 1934, the FCC may assess monetary “forfeiture penalties” for violations of the Act, including the requirement that telecommunications carriers take reasonable measures to protect certain customer data, the carrier says in its 22-page brief. “The Commission may impose such forfeiture penalties in administrative proceedings. If a carrier wants to guarantee judicial review, it must pay the penalty and then seek review in a court of appeals, which reviews the agency’s order on the administrative record under the deferential standards of the Administrative Procedure Act,” states AT&T in the filing.
AT&T gets to the heart of the issue here: “If the carrier wants a jury trial, by contrast, it must defy the Commission’s order and refuse to pay, after which the Department of Justice (DOJ) may, but is not required to, file a lawsuit in district court to collect the unpaid forfeiture. While waiting for that DOJ lawsuit that might never come, the carrier suffers serious practical and reputational harms from the final Commission order.”
At issue is: “Whether the Communications Act violates the Seventh Amendment and Article III by authorizing the Commission to order the payment of monetary penalties for failing to reasonably safeguard customer data, without guaranteeing the defendant carrier a right to a jury trial,” states the carrier.
The D.C. Circuit and the Second Circuit have both upheld materially identical Commission forfeiture orders and rejected identical constitutional challenges pressed by similarly situated wireless carriers, according to AT&T. The carrier explains Verizon seeks a review of the Second Circuit decision and asks the same question presented as in AT&T’s case. “This Court should grant both cases, consolidate them for briefing and oral argument, and realign the parties so that the carriers are on one side and the Commission is on the other,” states AT&T.
The Supreme Court has not yet agreed to take up the case, however a 2-1 circuit court split makes review by the justices likely, according to Broadband Breakfast.
By Leslie Stimson, Inside Towers Washington Bureau Chief