Summary
The Fifth Circuit granted AT&T's petition for review of an FCC forfeiture order imposing a $57 million penalty for alleged mishandling of customer location data under the Telecommunications Act. Relying on SEC v. Jarkesy, the court held that the FCC's administrative enforcement proceeding violated the Seventh Amendment right to a jury trial and the Article III requirement for adjudication by a constitutional court. Accordingly, the court vacated the forfeiture order.
Topics
Practice areas
Questions Presented
- Does the FCC's enforcement proceeding violate the Seventh Amendment right to a jury trial?
- Does the FCC's enforcement proceeding violate the Article III requirement that a judicial decision‑maker adjudicate the penalty?
Holdings
- The Fifth Circuit held that the FCC’s in‑house enforcement proceeding is a common‑law suit seeking civil penalties and therefore implicates the Seventh Amendment right to a jury trial.
- The court held that the FCC’s enforcement action must be adjudicated by an Article III court because it is a private‑right action seeking monetary penalties, not a public‑rights matter.
Key quotations
“The Commission’s civil penalties “are the prototypical common law remedy.””
““Public rights” cases, however, may be channeled to agencies instead of courts. Id. at 128.”
Factual background
AT&T operated a location‑based services program that collected customers' location data through aggregators and sold it to third‑party providers. The FCC found that AT&T failed to protect this data, issued a forfeiture order of $57 million, and AT&T challenged the constitutionality of the FCC's enforcement procedure.
Procedural history
The FCC issued a Notice of Apparent Liability for Forfeiture alleging violations of 47 U.S.C. §222 and imposed a $57,265,625 penalty. AT&T paid the penalty and sought review in the Fifth Circuit, raising Seventh Amendment and Article III challenges to the FCC's in‑house adjudication.