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“The Fifth Circuit determined that the FCC’s enforcement actions leading to a financial penalty infringed upon AT&T’s rights under the Seventh Amendment. The FCC expressed its stance to the 2nd Circuit, urging that the latter should not adopt this ruling,” the agency stated last week.
Broader Consequences of the FCC’s Loss
The FCC, led by Chairman Carr, argued that its monetary forfeiture proceedings do not violate the Seventh Amendment, as outlined in Section 504(a) of the Communications Act. This section allows carriers the option to request a de novo jury trial in federal district court prior to any government-imposed penalties. Verizon opted not to pursue this option, instead seeking direct appellate review. Similarly, the FCC made this point in its filing regarding the T-Mobile case in the District of Columbia Circuit, which can be viewed here.
A circuit split could emerge if either the 2nd Circuit or the DC Circuit favors the FCC’s position, heightening the likelihood that the Supreme Court will review the matter and clarify the agency’s enforcement capabilities.
The implications of an FCC defeat extend beyond penalties on telecom companies for privacy breaches; it may also hinder the commission’s ability to impose fines on robocallers. In February, when Carr’s FCC suggested a $4.5 million penalty for an allegedly unlawful robocall operation, Commissioner Simington reiterated his objections to the FCC issuing any fines. He highlighted that the Supreme Court’s ruling in Jarkesy constrained his ability to support the fine.
“Though the behavior highlighted in this Notice of Apparent Liability for Forfeiture is particularly egregious and merits enforcement action, I maintain that the Supreme Court’s decision in Jarkesy prevents me from voting to approve this or any measure that seeks to impose a fine,” Simington remarked at that time.
Insights from the 5th Circuit’s Decision
The ruling by the 5th Circuit against the FCC was delivered by a panel of judges who were appointed by Republican presidents. The court referenced SEC v. Jarkesy as a guiding precedent, noting that the Supreme Court had established that the Seventh Amendment prohibits agencies from compelling individuals to defend against civil penalties without a jury trial.
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arstechnica.com