The Fifth Circuit on April 17 vacated a $57 million FCC forfeiture against AT&T, ruling the agency violated the company’s Seventh Amendment right to a jury trial under the Supreme Court’s 2024 decision in SEC v. Jarkesy. This decision reinforces that federal agencies imposing fines, forfeitures, and other monetary penalties must afford targets access to an Article III decision maker and a jury trial in order to perfect the penalty.
In 2024, the FCC under then Chairwoman Jessica Rosenworcel imposed the forfeiture for AT&T’s failure to protect the customer proprietary network information (CPNI) of its mobile customers, in particular for sharing their location geolocation data with data aggregators. AT&T challenged the order at the Fifth Circuit, which ruled in its favor because the forfeiture was imposed without a jury trial in a district court. According to the court, targets of such agency monetary punishments must be afforded full adjudications by Article III courts with jury trials: “No one denies the Commission’s authority to enforce laws requiring telecommunications companies like AT&T to protect sensitive customer data. But the Commission must do so consistent with our Constitution’s guarantees of an Article III decisionmaker and a jury trial.”
In response to the forfeiture order, AT&T could have paid the fine and appealed, or not paid the fine and waited for the Justice Department to file a collection action in district court. But because neither option would provide AT&T with an unrestricted jury trial, the court held the penalty was unconstitutional under the Seventh Amendment’s guarantee of a jury trial: “If AT&T wants an Article III court to review the forfeiture order’s legality, it has to give up a jury trial. If it wants a jury trial, it has to defy a multi-million-dollar penalty, wait for DOJ to sue, and, even then, relinquish its ability to challenge the order’s legality. Either way, AT&T’s Seventh Amendment rights have been denied.”
The decision has two immediate effects. First, at the FCC, it reduces the risk of enforcement actions, most directly by reducing the likelihood the agency will impose FCC fines and forfeitures against parties found in violation of FCC rules. This is already being seen, as both FCC Chairman Brendan Carr and Republican Commissioner Nathan Simington have demonstrated reluctance to use the Enforcement Bureau to take enforcement actions that could result in the imposition of forfeitures. More broadly, the decision will further bolster arguments that SEC v. Jarkesy has wide application to all agency monetary punishments imposed without a jury trial, not just those imposed by the SEC or the FCC.
