Court rules against cell service providers over right to jury trial in FCC proceedings

The Supreme Court, in an 8-1 decision in *Federal Communications Commission v. AT&T, Inc.* (2026), affirmed the constitutionality of the Federal Communications Commission's (FCC) administrative process for imposing monetary forfeitures for violations of telecommunications laws. The Court held that this process does not violate the Seventh Amendment right to a jury trial because the FCC's forfeiture orders do not definitively resolve legal obligations, and its factual findings are not conclusive. Regulated entities retain the option to refuse payment and trigger a *de novo* collection action by the Department of Justice in an Article III court, where a jury trial would be available. This ruling provides clarity for administrative agencies regarding their enforcement powers, distinguishing the FCC's scheme from those previously found unconstitutional.

The United States Supreme Court recently delivered a significant ruling in *Federal Communications Commission v. AT&T, Inc.* (2026), upholding the FCC's authority to impose monetary penalties for violations of federal telecommunications laws without the involvement of a jury. This 8-1 decision, with Justice Clarence Thomas as the sole dissenter, resolves a notable circuit split and offers crucial guidance on the interplay between administrative agency enforcement powers and the Seventh Amendment right to a jury trial. The case stemmed from substantial penalties levied against AT&T and Verizon for alleged failures to protect customer location data, prompting a constitutional challenge to the FCC's adjudicatory process.

This landmark judgment clarifies the boundaries of administrative adjudication, particularly in the wake of recent Supreme Court scrutiny of agency power. For practicing attorneys, the decision provides a clearer roadmap for advising clients facing administrative enforcement actions, especially concerning the strategic implications of challenging agency-imposed penalties. The Court's reasoning hinges on the non-conclusive nature of FCC forfeiture orders, drawing a critical distinction from administrative schemes previously deemed unconstitutional for infringing upon jury trial rights.

The Seventh Amendment to the U.S. Constitution preserves the right to a trial by jury in "Suits at common law" where the value in controversy exceeds twenty dollars. However, this right is not absolute, particularly in the context of administrative adjudication. The Supreme Court has long recognized the "public rights doctrine," which allows Congress to assign the adjudication of certain matters involving the government in its sovereign capacity to administrative agencies, even without a jury.

The Federal Communications Act of 1934, as amended, grants the FCC broad authority to regulate interstate and foreign communication by wire and radio, including the power to investigate suspected violations and impose monetary forfeitures. The FCC's enforcement process typically begins with an investigation, followed by the issuance of a Notice of Apparent Liability for Forfeiture (NAL), which outlines the alleged violations and proposed penalty. The regulated entity then has an opportunity to respond, after which the FCC may issue a forfeiture order assessing the final penalty.

In the consolidated cases before the Supreme Court, the FCC investigated AT&T and Verizon for failing to adequately protect customer location data, leading to the issuance of forfeiture orders assessing penalties of approximately $57 million against AT&T and $47 million against Verizon. Both carriers paid the fines under protest and challenged the FCC's process in federal courts, arguing that requiring forfeiture without a jury trial violated their Seventh Amendment rights. The Fifth Circuit Court of Appeals sided with AT&T, vacating the FCC's order, while the Second Circuit denied Verizon's petition, creating a direct circuit split that necessitated Supreme Court review.

The Supreme Court, in an opinion authored by Chief Justice John Roberts, reversed the Fifth Circuit's decision, holding that the FCC's forfeiture proceedings do not violate the Seventh Amendment. The Court's reasoning centered on two key aspects of the FCC's enforcement scheme: first, that forfeiture orders issued under Section 503(b)(4) of the Communications Act do not definitively resolve the parties' legal obligations; and second, that the FCC's factual findings in these proceedings are not conclusive. The majority emphasized that a regulated entity is not compelled to pay the forfeiture immediately. Instead, it can choose to refuse payment, which would then require the Department of Justice (DOJ) to initiate a civil collection action in an Article III federal district court. In such a *de novo* proceeding, the regulated party would be entitled to a jury trial, and the FCC's prior factual findings would carry no weight.

This distinction was crucial in differentiating *FCC v. AT&T, Inc.* from the Court's recent decision in *SEC v. Jarkesy* (2024). In *Jarkesy*, the Court found that the Securities and Exchange Commission's (SEC) administrative adjudication process for civil penalties violated the Seventh Amendment because the SEC's orders were binding and its factual findings were conclusive, effectively denying a jury trial for claims that historically would have been heard in an Article III court. The FCC's concession during oral arguments that its forfeiture orders are non-binding until enforced by the DOJ in a *de novo* proceeding proved pivotal in the Court's analysis, allowing the FCC's scheme to "fit comfortably within" its Seventh Amendment precedents.

The Court also rejected the carriers' argument that the FCC's scheme imposed an unconstitutional condition by forcing them to choose between waiving their jury trial right (by paying and seeking deferential appellate review) or incurring reputational harm and potential prejudice by refusing to pay. The majority noted that Section 504(c) of the Communications Act prohibits the FCC from using unresolved forfeiture proceedings to a regulated party's prejudice in subsequent proceedings.

Justice Clarence Thomas, in his lone dissent, sharply criticized the majority's reasoning, arguing that the FCC's forfeiture orders, as historically understood and presented to the carriers, were indeed binding commands to pay. He contended that the government's post-hoc recharacterization of these orders as non-binding was a convenient shift in position, penalizing AT&T and Verizon for having paid under protest based on a good-faith belief that the orders were obligatory. Justice Thomas emphasized that the Seventh Amendment's protections should not be circumvented by such procedural nuances, particularly when the government seeks to deprive a person of property.

The Supreme Court's decision in *FCC v. AT&T, Inc.* (2026) provides welcome clarity for the FCC and other administrative agencies whose enforcement mechanisms involve non-binding penalty orders that require subsequent judicial enforcement. For telecommunications companies and other entities subject to similar administrative enforcement, the ruling confirms that while agencies can issue forfeiture orders without a jury, the ultimate determination of liability and payment can, if challenged, lead to a *de novo* jury trial in federal court.

Practitioners should advise clients that they now have a clearer understanding of their options when faced with an FCC forfeiture order: either seek appellate review under the Hobbs Act (though the Court left open the question of whether prepayment is required for such review) or refuse payment and compel the DOJ to initiate a collection action, thereby securing a *de novo* jury trial. The decision underscores the importance of carefully evaluating the binding nature of agency orders and the availability of *de novo* judicial review when assessing Seventh Amendment challenges. While the ruling affirms the FCC's enforcement structure, it also highlights the ongoing tension between administrative efficiency and the constitutional right to a jury trial, a balance that will continue to be refined by future litigation.