The Supreme Court grilled the Federal Communications Commission over its retreat from past arguments that the fines it levied against Verizon and AT&T were binding, after the telecommunications companies challenged the FCC’s authority to issue those fines.
The justices heard arguments in the consolidated cases FCC v. AT&T and Verizon Communications v. FCC, weighing whether the federal agency’s method for assessing and enforcing fines against telecommunications companies violated the right to jury trial guaranteed under the Seventh Amendment. The high court’s ruling in the case could have significant ramifications for the FCC’s ability to enforce and issue fines, less than two years after the Supreme Court struck down the Securities and Exchange Commission’s method of enforcing fines in a similarly structured case.
The FCC argued to the high court that the more than $100 million in fines it levied against the two companies for allegedly selling customers’ location data to third parties was more of a notice of its findings than a binding fine that created a debt that needed to be paid.
Lawyers from the Justice Department, on behalf of the FCC, argued that if the FCC wanted to collect the fines, it would have to file a civil lawsuit in federal court, where a jury would determine whether the fines the commission was seeking were valid. Multiple justices, including Neil Gorsuch and Brett Kavanaugh, grilled the DOJ over the FCC’s apparent change in stance from proceedings in lower courts.
Kavanaugh noted that the FCC had “retreated in multiple ways from the original position,” specifically on whether the fine had to be paid immediately or if AT&T and Verizon could challenge it before paying without fear of further penalty. He said it appeared the companies were “misled” about the FCC’s stance on when the fine was binding and ended up paying it as they sought to challenge it before a jury.
“The petitioners were misled by what was said and by the government’s position at that time into paying the money without realizing that you would switch positions later,’” Kavanugh said.
“I think that’s a problem for you. I think that’s a concern I have about how this is all unfolded. This does not seem regular order to me at all,” he added.
DOJ lawyer Vivek Suri denied that the FCC misled AT&T into having to pay the $57 million fine before review, asserting that AT&T had two options to seek review of the FCC’s finding: either by paying the fine and seeking review at a federal appeals court, or by waiting for the FCC to attempt to collect its fine through a civil filing in court.
Gorsuch questioned the FCC on its “retreat” from how it interprets the commission’s system for imposing fines on telecommunications companies as explained in federal law.
“It does talk about assessing and imposing liability, and that — one might normally think that that really does have a legal consequence attached to it. Now you’re running as far and as fast from that idea as you possibly can,” said Gorsuch, questioning Suri’s assertion that the fine imposed on the companies is not binding without the involvement of courts.
Justice Clarence Thomas also questioned how the language of the FCC’s fine against AT&T wouldn’t be binding, because it orders the company “liable for monetary forfeiture of $57 million.” He added that it “doesn’t appear to have any disclaimer-type language that says it’s non-binding.” Suri responded that the fine is still not binding, but acknowledged that the agency should perhaps change the language of the fine to convey that.
Jeffrey Wall, the lawyer arguing on behalf of AT&T and Verizon, argued that the high court should strike down the FCC’s current method of imposing fines, rejecting the commission’s claims that the orders are “toothless.”
“The most straightforward way to resolve this case is to say that for 50 years, everyone, including the agency, has understood these orders to impose a present and binding legal obligation to pay, and if that’s what they do — as everyone has always thought up until the government’s brief, in this case — even the government does not contest there is a Seventh Amendment violation,” Wall argued to the justices.
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The Supreme Court is set to issue its ruling in the consolidated case in the coming weeks, with a decision expected by the end of June at the latest.
The high court is scheduled to issue at least one opinion on Wednesday in one of the more than two dozen pending cases the justices already heard this term. The pending cases range from race-based redistricting to birthright citizenship to bans on biological men in women’s sports.