FCC Wants Court to Reinstate Its Ability to Levy Fines

The FCC has written to the US Court of Appeals for the Second Circuit, asking the court to disregard a lower court’s decision to bar it from levying fines.

The FCC fined Verizon, AT&T, and T-Mobile for illegally selling customer location data to third-party companies without notifying customers or obtaining consent. The FCC fined Verizon $47 million, AT&T $57 million, and T-Mobile $80 million, plus another $12 million for Sprint, which the magenta carrier now owns.

The Fifth Circuit Court concluded that the fines were illegal, saying “in this process, which was completely in-house, the Commission acted as prosecutor, jury, and judge.”

Interestingly, while now-Chair Brendan Carr was in favor of the Fifth Circuit’s decision, his FCC is now asking the appeals court to disregard that decision and allow the agency to continue levying fines.

The Fifth Circuit concluded that the FCC’s enforcement proceeding leading to a monetary forfeiture order violated AT&T’s Seventh Amendment rights. This Court shouldn’t follow that decision.

The Commission’s monetary forfeiture order proceedings pose no Seventh Amendment problem because Section 504(a) affords carriers the opportunity to demand a de novo jury trial in federal district court before the government can recover any penalty. Resp. Br. 47-53. Verizon elected to forgo that opportunity and instead sought direct appellate review.

The Fifth Circuit thought the Section 504(a) process was insufficient because “the Commission would have already adjudged a carrier guilty” before the carrier obtained a jury trial in federal district court. Slip op. 18-19. That view is contrary to Capital Traction Co. v. Hof, 174 U.S. 1 (1899), which held that an initial tribunal can lawfully enter judgment without a full jury trial if the law permits a subsequent “trial [anew] by jury, at the request of either party, in the appellate court.” See id. at 4, 37-39, 45-46. Nor do the Fifth Circuit’s concerns (at 18-19) about “reputational harm” or other impacts while awaiting review implicate the Seventh Amendment’s jury trial right for certain monetary penalties. See Resp. Br. 49-51; Pleasant Broad. Co. v. FCC, 564 F.2d 496, 502 (D.C. Cir. 1977).

The Fifth Circuit also relied on circuit precedent holding that “[i]n a section 504 trial, a defendant cannot challenge a forfeiture order’s legal conclusions.” Slip op. 19. This Court, however, has never adopted such a limitation, and the Fifth Circuit’s premise is in doubt. Resp. Br. 52-54; see McLaughlin Chiropractic Assocs., Inc. v. McKesson Corp., No. 23-1226 (U.S., argued Jan. 21, 2025). Regardless, the proper approach would be to challenge any such limitation in the trial court and seek to strike the limitation—not to vacate the forfeiture order. Resp. Br. 54.

Finally, the Seventh Amendment is not implicated here because the forfeiture order involves public rights, not private rights with a common-law analogue. See Resp. Br. 54-65.

Ultimately, the FCC’s new stand likely has nothing to do with the original case, and it is unlikely to reinstate the fines against the three carriers. Instead, the FCC has been cracking down on broadcasters and news outlets, targeting what it claims is bias and propaganda. Given that the Fifth Circuit’s ruling effectively crippled the FCC’s ability to regulate companies, the agency will be at a severe disadvantage carrying out Carr’s agenda without the ability to levy fines.