SCOTUS Delivers 8-1 Blow to AT&T, Verizon in $100M FCC Case

The Supreme Court on Thursday sided 8-1 with the Federal Communications Commission against two telecom giants over a combined $100 million in fines.

Chief Justice John Roberts wrote for the majority. The lone dissenter was Justice Clarence Thomas.

Telecom companies AT&T and Verizon claimed the FCC violated their rights to a jury trial by issuing fines for an alleged violation of the law.

The FCC had found that both companies violated the 1996 Telecommunications Act, which requires carriers to protect the confidentiality of customer data. The commission 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 the fines are similar to an indictment. 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 government argued. The companies paid the penalties but later claimed they were misled and sought to retrieve the payments.

The chief justice and the longest-serving justice on the high court wrote clashing opinions.

“The carriers contend that the FCC’s forfeiture proceedings violate the Seventh Amendment. We disagree,” Roberts wrote for the 8-1 majority. “Forfeiture orders issued under §503(b)(4) do not definitively resolve the parties’ legal obligations. And the Commission’s factual findings are not conclusive. It thus does not offend the Constitution for the Commission to issue forfeiture orders without the involvement of a jury.”

However, Thomas agreed with the majority on procedures going forward, but argued the procedures that the FCC now applies were not used in issuing the hefty fines against Verizon and AT&T.

“And, when AT&T and Verizon paid their penalties, no carrier had ever received a jury trial in a §504 enforcement action,” Thomas wrote in the dissent. “AT&T and Verizon therefore had no way to ensure that they would proceed in a court that would respect their constitutional right to an Article III trial.”

Thomas further pointed to the FCC notice to cast doubt on the majority’s view that the companies should have known they could challenge in court.

“In the orders, the Commission took the position that it could issue the orders not because they were nonbinding, but because such orders could be imposed, from start to finish, without the involvement of ‘Article III courts,’” he wrote.

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

However, the court held that an FCC fine is different, as 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 an argument that it was violating the Seventh Amendment by issuing the fines.

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.