Supreme Court Considers FCC Telecoms Privacy Fines

The United States Supreme Court heard oral arguments Tuesday in cases brought by AT&T and Verizon challenging fines imposed by the Federal Communications Commission (FCC) over alleged failures to protect consumers’ personal location data. The cases, consolidated before the court, involve FCC forfeiture orders fining AT&T $57 million and Verizon $48 million.

The Arguments Presented

AT&T’s attorney, Jeffrey Wall, argued that the FCC’s enforcement actions violated the Seventh Amendment and denied AT&T and Verizon the right to demand a jury trial. He stated the FCC initially indicated penalties were nonbinding and would only be assessed after a jury trial at the companies’ request. Wall also claimed the FCC’s position had shifted, suggesting the government would only seek enforcement if the matter was referred to the Department of Justice and ultimately upheld in court.

Department of Justice Assistant to the Solicitor General Vivek Suri countered that the suggestion the FCC’s fines were compulsory without judicial review was incorrect. He stated that AT&T and Verizon could have petitioned for a declaratory judgment action to resolve the matter in a more condensed timeframe, which would have been subject to a judicial proceeding. Suri argued that the Seventh Amendment requires a jury trial only when a lawsuit is filed, which is consistent with the FCC’s enforcement scheme.

The Case History

The case originated in 2020 when the FCC proposed fines for AT&T, T-Mobile, and Verizon, alleging the sale of customer location data to third parties compromised sensitive information. This violated portions of the Telecommunications Act, which requires carriers to take reasonable steps to safeguard customer location data.

In 2024, commissioners voted 3-2 along party lines to issue fines totaling approximately $200 million to the three companies. T-Mobile’s case was rejected on appeal by the U.S. Court of Appeals for the Federal Circuit. Each telecom company initially paid the fines but subsequently sued in federal court to vacate them, citing Seventh Amendment violations. Split decisions from the U.S. Court of Appeals for the Fifth and Second Circuits led to the Supreme Court agreeing to hear AT&T and Verizon’s cases.

Justices’ Perspectives

Despite a 6-3 conservative majority on the Supreme Court, the justices’ questioning suggested a potential ideological consensus to rule in favor of the government. Chief Justice John Roberts questioned whether the issue was a “public relations problem” and inquired if the companies’ case would change if the FCC modified its forfeiture orders to allow for judicial redress. Justice Elena Kagan stated the FCC’s orders represented a determination of liability, but that determination was not final until the affected party accepted the penalty or pursued the matter in court.

Justice Brett Kavanaugh expressed some sympathy for the telecom companies’ argument that the FCC’s final forfeiture orders were unclear regarding the right to judicial review. He questioned whether the companies were misled into paying the fines before seeking judicial review, noting the FCC appeared to be retracting its initial argument that the fines were compulsory.

FCC’s Position and Potential Remedy

The FCC, through Suri, argued that the final order was not misleading and contained verbiage stating the companies had a right to a jury trial. Suri suggested the Supreme Court could ask the FCC to clarify the wording of its forfeiture orders to explicitly state that a noticed party is not obligated to immediately pay penalties before taking the matter to court. He requested the court affirm the government’s authority and remand the question of whether the waiver of the right to a jury trial was knowing and voluntary.

A decision from the Supreme Court is expected in June or early July.