Supreme Court arguments suggest FCC fines are nonbinding

At a glance:

• The justices questioned whether FCC forfeiture orders are binding, hinting they may only become enforceable after a jury trial.
• AT&T and Verizon face a combined $104 million penalty for selling real‑time location data without consent.
• The case could reshape how the FCC enforces privacy and other rules if the court adopts the carriers’ view.

What the case hinges on

The Supreme Court heard oral arguments from AT&T and Verizon, who argue that the Federal Communications Commission’s forfeiture process violates their Seventh Amendment right to a jury trial. The carriers were fined a total of $104 million for improperly sharing users’ real‑time location data. Their legal team, led by attorney Jeffrey Wall, contends that the FCC’s orders are presented as compulsory penalties, yet the agency treats them as nonbinding until a court enforces them.

Justices repeatedly pointed out that the carriers could have chosen to refuse payment and wait for the government to initiate an enforcement action, thereby preserving their right to a de novo jury trial. Justice Brett Kavanaugh even told Wall, “It seems like you’ve won on the law going forward, one way or the other,” suggesting the Court may recognize a procedural shift.

Government’s stance and historical context

Assistant to the Solicitor General Vivek Suri argued that the FCC has not misled the carriers. He cited language in AT&T’s forfeiture order that explicitly allows a trial de novo in federal district court before any payment is required. Suri likened the order to an indictment: it authorizes a lawsuit but does not itself impose a final penalty.

The government also noted that the FCC has described its forfeiture orders as nonbinding since the 1970s. Suri suggested a simple change in wording could avoid the litigation, but the agency appears reluctant to amend its long‑standing language.

Prior appellate outcomes

• 5th Circuit Court of Appeals – overturned AT&T’s fine.
• 2nd Circuit Court of Appeals – upheld Verizon’s fine.
• D.C. Circuit Court of Appeals – ruled against T‑Mobile in a similar matter (not part of the Supreme Court review).

These divergent rulings underscore why the carriers are pushing the issue to the nation’s highest court. The Supreme Court’s decision could harmonize the legal landscape for all FCC‑regulated entities.

Potential impact on FCC enforcement

If the Court sides with AT&T and Verizon, the FCC could lose its primary enforcement lever. As the government brief warned, “If the FCC cannot pursue forfeitures against carriers, and no other agency can perform that role, significant rules concerning matters ranging from privacy to national security might go effectively unenforced.”

The agency currently relies on the Department of Justice to collect fines, especially in cases involving robocall violations. A ruling that fines are truly nonbinding would force the FCC to seek judicial enforcement for every penalty, potentially slowing down compliance actions and increasing litigation costs.

Connection to the SEC’s Jarkesy ruling

The carriers also raised the June 2024 SEC v. Jarkesy decision, which affirmed a defendant’s Seventh Amendment right to a jury trial for civil penalties. Wall warned that the FCC’s approach could “carve a huge hole” in that precedent, allowing agencies to label penalties nonbinding while still expecting compliance.

Suri countered that the SEC’s enforcement tools differ—such as garnishment and tax‑refund offsets—making a direct comparison imperfect. He also noted that interest on FCC fines accrues only after a jury determination, unlike the SEC’s immediate interest accrual, further distinguishing the two regimes.

Looking ahead

The Court’s next steps remain uncertain, but the arguments suggest a possible doctrinal shift. Even if AT&T and Verizon ultimately lose, the acknowledgment that FCC fines are nonbinding could give carriers leverage to negotiate payment timelines or seek quicker appellate review. For the FCC, the outcome may prompt a rewrite of forfeiture orders to clarify enforceability, or even a legislative push to grant the agency direct collection authority.

Stakeholders—from telecom operators to privacy advocates—will be watching closely, as the decision could set a precedent for how regulatory agencies across the United States structure penalty schemes in the digital age.