US Supreme Court leans toward FCC in clash with wireless carriers over fines
FILE PHOTO: United States Federal Communications Commission logo and U.S. flag are seen in this illustration taken April 23, 2025. REUTERS/Dado Ruvic/Illustration/File Photo
WASHINGTON, April 21 : The U.S. Supreme Court appeared inclined on Tuesday to preserve the Federal Communications Commission's system for levying fines in a challenge by major wireless carriers to the agency's regulatory power.
During arguments in the case, most of the court's nine justices seemed skeptical of the claim by a lawyer for Verizon Communications and AT&T that the agency's in-house proceedings deprived the companies of their right to a jury trial under the U.S. Constitution.
President Donald Trump's administration defended the FCC's system for assessing financial penalties, known as forfeiture orders. Verizon and AT&T were fined a total of more than $100 million after the FCC concluded they had failed to safeguard customer data.
Most of the justices seemed ready to accept the administration's argument that the FCC's forfeiture orders are not binding until they are enforced in court, raising doubts about the argument made by the companies that the orders violate the right to a jury trial.
Conservative Justice Amy Coney Barrett likened the process to a plea bargain in a criminal case in which a prosecutor offers a defendant a deal.
"'You can roll the dice and go and have a jury trial. Otherwise, I'll give you a sweetheart deal, and you can forget all that.' Well, that's the same kind of choice, in some ways, that the carriers are facing here," Barrett told a lawyer for the companies, Jeffrey Wall.
Wall said that, unlike criminal defendants, the companies cannot simply choose to take their chances in front of a jury.
"We just have to wait to see if they come after us. And if we don't, it hangs over our head for years," Wall said.
Liberal Justice Ketanji Brown Jackson told Wall that the agency's order was essentially a "charge" that his clients could pay or contest in court.
"I don't understand why you suggest that that initial determination by the agency is 'binding,'" Jackson told Wall.
The FCC levied nearly $200 million in fines in 2024 against wireless carriers that were found to have unlawfully sold access to customer location data to third parties without securing the consent of users.
'A PR PROBLEM'
Conservative Chief Justice John Roberts suggested to Wall that the companies may be at most suffering a public relations issue as a result of the FCC proceedings.
"I wonder if, though, at the end of the day you're really just talking about a PR problem, right?" Roberts said.
"In terms of the substantive legal issue, though, you are not obligated to pay until you get a jury," Roberts added.
Some justices aired misgivings about whether the FCC has been consistent in portraying its fines as not legally binding without court-ordered enforcement.
Conservative Justice Brett Kavanaugh told Justice Department lawyer Vivek Suri he was concerned the companies had been misled into believing they were required to pay the fines.
"I think that's a problem for you," Kavanaugh told Suri.
"I don't think AT&T was misled because the order was extremely clear that it had a right to a jury trial before it could be required to pay," Suri responded.
Other justices sought reassurance from Suri that FCC forfeiture orders do not have spillover consequences for companies, such as making it harder for them to obtain a license from the agency.
A 2024 SEC RULING
The Supreme Court, which has a 6-3 conservative majority, has taken a narrow view of federal agency power in several major decisions in recent years.
The FCC dispute marked the latest case to test whether a federal agency's internal enforcement arrangement violates the constitutional right to a jury trial after the Supreme Court in 2024 curbed the power of in-house proceedings at the Securities and Exchange Commission. The justices on Tuesday did not appear to view that ruling as dictating a similar outcome in the FCC case.
The FCC fined AT&T $57 million and Verizon nearly $47 million. It also fined T-Mobile $80 million and Sprint, which T-Mobile acquired in 2020, $12 million. Verizon and AT&T paid the fines. They also filed legal challenges that eventually led to a split among U.S. appellate courts over the lawfulness of the FCC's in-house procedure for imposing the penalties.
The New York-based 2nd U.S. Circuit Court of Appeals upheld the FCC's fine against Verizon, prompting Verizon's appeal to the Supreme Court. In AT&T's case, the New Orleans-based 5th U.S. Circuit Court of Appeals ruled that the FCC's initial assessment of wrongdoing and a fine deprived the company of its constitutional right to a jury trial. That ruling led the FCC to appeal to the Supreme Court.
The Supreme Court is expected to rule by the end of June.
