Joshua Villanueva is JURIST’s Washington, DC Correspondent and an LL.M. candidate in National Security and U.S. Foreign Relations Law at The George Washington University Law School.
The US Supreme Court on Tuesday heard oral argument in consolidated cases asking whether the Federal Communications Commission (FCC) may assess massive monetary forfeitures through its own administrative process before any jury ever hears the dispute. The cases, FCC v. AT&T and Verizon Communications Inc. v. FCC, arise from FCC proceedings in which the agency found that AT&T and Verizon failed to protect customers’ confidential location data, in violation of federal communications law. The FCC imposed penalties of $57 million against AT&T and $46.9 million against Verizon.
The carriers challenged those forfeiture orders in separate appeals, producing a direct split over whether the FCC’s in-house enforcement process violates the Seventh Amendment. The Fifth Circuit ruled for AT&T and vacated the penalty, describing the Commission as having acted as “prosecutor, jury, and judge,” while the Second Circuit upheld the forfeiture against Verizon, concluding that the agency’s process did not violate the Constitution’s jury-trial guarantee.
The Court granted review in January to decide whether the Communications Act’s forfeiture scheme is consistent with the Seventh Amendment, which preserves the right to a jury trial in civil actions seeking legal remedies such as money, rather than equitable relief requiring a party to act or refrain from acting, where more than twenty dollars is at stake.
Tuesday’s argument turned on a narrower but decisive question: what, exactly, legal effect an FCC forfeiture order has. If the order itself finally determines liability and imposes a present legal obligation to pay, the carriers argued, then the case is controlled by the Supreme Court’s 2024 decision in SEC v. Jarkesy, which held that the SEC violated the Seventh Amendment by imposing civil penalties for securities fraud through its own administrative proceedings rather than in a court where the defendant could obtain a jury trial. If, by contrast, the order is merely a nonbinding administrative determination that authorizes the Department of Justice to sue later in district court, then the carriers’ Seventh Amendment rights remain intact, because a jury trial would be available in that later proceeding.
Under the Communications Act, a carrier that receives a forfeiture order has two options: pay the amount and seek appellate review, or refuse to pay and wait to see whether the Department of Justice files a collection action in district court. The carriers argued that this structure effectively places the jury-trial right behind an agency determination of liability. The government responded that no constitutional injury occurs unless and until the United States files suit.
Carriers argue that the FCC imposed binding penalties without a jury
Jeffrey Wall, representing AT&T and Verizon, told the justices: “The FCC imposed more than $100 million of civil penalties on AT&T and Verizon, and the companies had no way to demand a jury trial.” He added, “That’s a straightforward violation of the Seventh Amendment and this Court’s decision in Jarkesy.” Wall repeatedly cited the Communications Act, arguing that the statute’s authorization to “assess and impose penalties” is mandatory, rather than voluntary, and emphasized that the orders direct payment by a date certain. He contended that the government adopted its current reading only after certiorari to avoid Jarkesy’s implications.
Chief Justice John Roberts suggested that the companies’ concerns may relate more to reputational and practical consequences of being labeled wrongdoers than to an enforceable legal obligation. He asked whether the case was “really just talking about a PR problem,” and noted that the carriers were “not obligated to pay until you get a jury.” Wall disagreed, maintaining that the agency’s order created a current obligation to pay, even if the government would need to sue to collect. He compared the situation to a parking ticket, explaining that while one may ignore it and require further government action, the government has still determined that payment is owed.
Several justices questioned Wall on whether a later de novo jury proceeding cures any constitutional issues. Justice Elena Kagan suggested the order might be “something in between”: more than a charge, but not conclusive, since “an entire litigation of whether the agency is right can occur” later in court. Justice Ketanji Brown Jackson likewise questioned why the initial order should count as “binding” if payment cannot be compelled unless the government sues. Wall responded that Jarkesy bars the government from adjudicating liability and imposing a monetary penalty in the first instance without a jury.
Justice Samuel Alito shifted the discussion to originalist principles, questioning whether such a scheme aligns with the original understanding of a suit at common law at the time of the Seventh Amendment’s adoption. He noted that, even if modern legal claims differ from those in 1791, the key issue is “how far is it permissible for the government — for a statute to depart from what people would have understood a suit at common law to be at that time?” Wall responded by citing Justice Story’s reasoning in Parsons, asserting that the Seventh Amendment protects not only eighteenth-century causes of action, but also “the various methods by which we ascertain legal rights in the same way we did in 1791.” When Alito pressed whether Congress could “concoct a scheme that departs very radically from the substance of the jury trial” for claims that would have required a jury at the founding, Wall replied: “No.” He added that if the Founders had been asked whether “an executive branch official” could determine in-house that a party owed “a hundred million dollars not in front of a jury” and then require the party to wait years to see if the government would sue, “the founders would have been aghast.”
Wall also argued that, even on the government’s reading, the scheme burdens the jury-trial right by forcing regulated parties either to pay and accept deferential appellate review or refuse and wait to see whether the government sues. In practice, he said, companies cannot realistically absorb a nine-figure finding from their primary regulator while awaiting possible enforcement action.
Justice Brett Kavanaugh appeared especially concerned with how the government’s position had shifted. Referring to AT&T and Verizon’s reply brief, Kavanaugh said “the government’s in retreat,” adding, “That’s absolutely correct.” Later, he described the government’s change in position as something that “does not seem regular order to me at all.” Justice Neil Gorsuch likewise showed skepticism toward the government’s effort to strip the orders of legal force while preserving their practical significance. When Wall said the government’s theory left the carriers in “the worst of all possible worlds,” Gorsuch replied, “I know you don’t like it.” Wall pushed back, saying his objection went beyond personal preference. Gorsuch then quipped, “I don’t like any of it, but I’m trying to figure it out,” sparking laughter throughout the courtroom, particularly from the students and interns in attendance.
Government argues that the FCC order is a nonbinding step toward later judicial enforcement
Assistant to the Solicitor General Vivek Suri, representing the government, sought to focus the case on the FCC’s specific role rather than Jarkesy. He identified three distinctions between this regime and the SEC scheme invalidated in Jarkesy. First, the FCC cannot collect penalties independently because it must file a collection suit, which provides a jury trial. Second, unlike the SEC process, the subsequent court proceeding offers a de novo jury determination of whether a law was violated. Third, interest accrues only after the jury’s determination, as that is when the obligation arises.
Suri argued that the FCC’s forfeiture order does not impose a final penalty. Instead, he described the order as “just a prerequisite to the suit” and “not the suit itself.” He clarified the government’s position by stating, “We think that this operates much like an indictment. It authorizes a lawsuit to go forward. It does not itself impose the final penalty. That is done only after the jury trial.” According to this view, there is no Seventh Amendment violation at the agency stage because a “suit at common law” does not exist until the Department of Justice files a recovery action in district court.
Pressed by Justice Gorsuch on collateral consequences, Suri said the FCC could not use the orders themselves, or a failure to pay them, to enhance penalties or shape future proceedings. “There’s only one legal consequence that attaches, and that is the Department of Justice can bring a lawsuit,” he said. He added that the orders would have “no preclusive effect” and “no special weight” elsewhere.
Kavanaugh focused on whether the carriers were misled by the orders’ language and the government’s prior position. Suri denied that AT&T was misled, citing the FCC order, which stated the company was entitled to “a trial de novo in federal district court before it can be required to pay the forfeiture.” He argued this language made clear that carriers had a jury-trial option if the government sought collection. Justice Thomas, however, noted that the operative clauses stated AT&T “is liable for monetary forfeiture” and that payment “shall be made,” without any disclaimer indicating the agency’s determination was nonbinding. Suri acknowledged the absence of disclaiming language in the ordering clauses and conceded, “we would have avoided this litigation potentially if we had done so,” adding that “it might be a good idea” to revise the orders’ language in the future.
Suri received support from several justices regarding the unconstitutional conditions issue. Jackson told Wall she was unsure how the doctrine applied, since the carriers argued they had no immediate right to a jury before the government filed suit. Suri agreed and seized the moment, stating that “for there to be a right to a jury trial, there must be a suit at common law,” and if the government never files one, there is no jury-trial right on which an unconstitutional condition can operate.
On rebuttal, Wall stated, “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.” He noted that the FCC’s regulation states a forfeiture “must be paid,” and argued that the government’s current theory “doesn’t bear any resemblance to the scheme everybody understood in the lower courts.”
Wall warned that if the orders are treated as nonbinding while still carrying practical consequences, the constitutional problem will “cascade.” If the government is right, he said, the order is “truly just a piece of paper.” If it is wrong, the agency has adjudicated liability and imposed a penalty without a jury.
By the close of oral argument, the carriers seemed to be fighting an uphill battle with their sweeping constitutional argument. Yet the government also emerged from the fray with some bruises. Several justices also appeared uneasy with the FCC orders’ mandatory language and the government’s late effort to characterize them as legally toothless. The decision is expected by late June or early July.
