‘Toothless’ or Unconstitutional? SCOTUS Hears Case on FCC’s $100M Fines on Verizon, AT&T

Most Supreme Court justices seemed to side with the government against a claim by telecom giants that the Federal Communications Commission violated the companies’ right to a jury trial by issuing fines.

Justices heard arguments Tuesday in a case involving AT&T and Verizon and more than $100 million in fines that the government argues are warnings.

Chief Justice John Roberts noted that, under the Telecommunications Act of 1996, FCC fines aren’t binding.

“I’m just wondering, in terms of the substantive legal issue, though, you are not obligated to pay until you get a jury trial,” Chief Justice John Roberts asked.

Arguing for the telecommunications companies, Jeffrey Wall replied, “If I get a parking ticket from the government, I can ignore it and make them come after me. But I still owe it.”

The questions in the case could hinge on whether the FCC was “imposing” fines or merely “assessing” them.

The FCC had found that both companies violated the 1996 law, which requires carriers to protect the confidentiality of customer data. The FCC fined AT&T $57 million and fined Verizon $46.9 million.

Both companies sued, saying the fines imposed by an administrative body violate the right to a jury trial.

The government argued that, as an indictment is only a notice of charges before a criminal trial, similarly, an FCC fine is an assertion that the government could proceed with a lawsuit.

The high court ruled in 2024 that the Securities and Exchange Commission violated the Seventh Amendment by imposing heavy civil fines through administrative proceedings.

However, the reason an FCC fine might be different from the SEC case is that the 1996 communications law specifically says a company can refuse to pay the fine. Furthermore, if it does so, the Justice Department has five years to file a lawsuit. The lawsuit would entitle the company to a jury trial, thus giving the FCC an effective loophole around a Seventh Amendment argument.

Justice Brett Kavanaugh noted the government seemed to be “in retreat.”

“It seems like you’ve won on the law going forward, one way or the other,” Kavanaugh said to Wall. “The government’s in retreat.”

However, he suggested the government’s new grounding might be defensible.

“But what you’re complaining about, and it’s understandable, is you think you were misled into paying the money without getting the jury trial,” Kavanaugh said to Wall. “Is there something we can do about that?”

Wall said the first step would be requiring the government to return the money but added the second step could be more important.

“The second thing I want to say is, in effect, that the orders are toothless,” Wall argued.

Previously, the U.S. Court of Appeals for the 5th Circuit sided with AT&T and tossed the FCC fine. However, the U.S. Court of Appeals for the 2nd Circuit sided with the FCC against Verizon. When there is a circuit split, a case is decided by the Supreme Court.

Justice Neil Gorsuch noted the statute says a carrier has the right to allow the Justice Department to chase the fine.

“Are we saying it doesn’t mean what it says it means?” he continued, asking the court to assume the FCC fine is “a notice, a charge, a serious piece of paper, but it isn’t a final determination or adjudication of any liability.”

Wall said that could be the “worst of all possible worlds” by allowing the government to allege an offense without having to adjudicate the matter. He later added, “It has occurred to no one for decades that orders were nonbinding.”