The federal communications commission was under sharp scrutiny Tuesday as the Supreme Court weighed a challenge from AT&T and Verizon over more than $100 million in penalties. The case turned on whether the companies were denied a proper chance to fight the fines for alleged failures to protect customer location data. The justices appeared uncertain that the carriers had shown a constitutional violation, even as they pressed hard on how the enforcement process works.
Supreme Court hearing centers on federal communications commission process
At issue is whether the federal communications commission can impose large forfeiture orders through in-house proceedings without triggering an immediate jury trial. The companies say the process is unconstitutional because it gives them little opportunity to tell their side of the story in court. The government argued that the process is an essential regulatory tool and still leaves a path to court.
During arguments on Tuesday, Chief Justice John Roberts questioned whether the dispute is really about more than the practical impact on reputation. “I wonder if, at the end of the day, you’re really just talking about a PR problem, ” Roberts said. Justice Brett Kavanaugh also suggested the companies had already received an important legal benefit because they do not have to pay the penalties right away. “It seems like you’ve won on the law going forward one way or the other, ” Kavanaugh told an attorney for AT&T and Verizon.
What AT&T and Verizon are challenging
The challenge arose after the federal communications commission found that the companies sold customers’ location data without proper safeguards. The penalties totaled more than $100 million, with $57 million assessed against AT&T and $46. 9 million against Verizon. The carriers received notices, had the chance to submit written responses, and then were hit with forfeiture orders requiring payment within 30 days.
Under the process described in court, a carrier has two options after receiving a forfeiture order. It can pay the fine and seek review in a federal appeals court, or it can refuse to pay and wait for the Department of Justice to bring a lawsuit in federal district court, where a jury trial would be available. The federal communications commission says that second path preserves a chance to go before a jury.
Immediate reactions from the courtroom
The companies argue that the in-house process violates the Seventh Amendment right to a jury trial. The Supreme Court’s conservative majority has limited agency power before, but the justices on Tuesday appeared receptive to the government’s position that the fine is not final until court enforcement begins. One veteran telecom attorney, Doug Orvis, said the current choices are not workable for most companies, which is why many pay up rather than fight.
Two years ago, the court ruled in a different agency case that administrative fines imposed by the Securities and Exchange Commission violated the Seventh Amendment. That ruling now hangs over this dispute, but the justices appeared to focus closely on the distinct enforcement structure used by the federal communications commission.
What happens next
The outcome could shape how other federal regulators use similar enforcement systems, especially if the court sides with AT&T and Verizon. For now, the federal communications commission remains at the center of a case that could define how far agencies can go when they impose major penalties before a jury ever hears the dispute. The next step will come when the justices issue their decision, and that ruling could determine whether the federal communications commission keeps this enforcement power in its current form.
