Supreme Court Backs FCC in Fight With Carriers Over Fines
The U.S. Supreme Court ruled in an 8 to 1 vote yesterday that wireless carriers, including AT&T, Verizon and T-Mobile, cannot use the constitutional right to a jury trial to avoid nearly $200 million in fines imposed by the FCC, notes Seeking Alpha.
The dispute stemmed from the penalties the FCC levied in 2024 against major carriers including AT&T (NYSE: T), Verizon (NYSE: VZ), T-Mobile (NASDAQ:TMUS), and Sprint for selling access to sensitive real-time location information to third parties without adequate safeguards or customer consent, Inside Towers reported. Regulators concluded the companies had failed to take reasonable steps to protect the data, exposing tens of millions of users to potential tracking and abuse.
Chief Justice John Roberts ruled the companies are not entitled to a jury trial to contest the fines. The Seventh Amendment guarantees jury trials for certain “suits at common law,” but the FCC stresses its forfeiture orders aren’t binding. It says a company that doesn’t want to pay can force a collection lawsuit, bringing its concerns before a judge and jury, reports The Hill.
“And the Commission’s factual findings are not conclusive,” Roberts agreed. “It thus does not offend the Constitution for the Commission to issue forfeiture orders without the involvement of a jury.”
The FCC fined AT&T $57 million and Verizon nearly $47 million. It fined T-Mobile $80 million and Sprint, which T-Mobile acquired in 2020, $12 million, Inside Towers reported.
Verizon and AT&T paid the fines, and filed legal challenges that eventually led to a split among regional U.S. appellate courts over the lawfulness of the FCC’s in-house procedure for imposing the penalties, notes CNBC.
Justice Clarence Thomas dissented, saying the companies had no way to ensure that a court would ultimately respect their jury right down the road when they opted to pay. “AT&T and Verizon did what courts ordinarily encourage: They paid under protest and filed suit to get their payments back,” Thomas wrote.
“Today, the Court punishes AT&T and Verizon for complying with a government order that they in good faith believed was obligatory, diligently preserving their objection to that order, and then litigating that objection so effectively as to cause the Government to change its position years later,” Thomas continued.
The FCC used its Forfeiture Order process, which allows the agency to investigate, issue a Notice of Apparent Liability, consider company responses, and then set a penalty. The carriers argued that this administrative enforcement system violated their Seventh Amendment right to a jury trial because large fines were assessed before any case reached a federal court.
The case was elevated to the Supreme Court after the Fifth Circuit held that the FCC’s system was unconstitutional in a case involving AT&T, while the Second Circuit upheld the process in a separate Verizon case.
In the government’s defense of the FCC’s in-house system, Justice Department lawyers asserted that the agency’s assessments are not binding. If the government were to bring an enforcement action in court, it would allow the companies to make their case before a jury, the lawyers argued.
In rejecting the carriers’ challenge, the Supreme Court agreed with the Justice Department. The Court highlighted that telecoms can refuse to pay and force the government to sue in district court, where the fines are reviewed from scratch and a jury is available. The upshot is that the FCC’s enforcement process remains valid.
By Leslie Stimson, Inside Towers Washington Bureau Chief
