Verizon and AT&T argue the FCC’s fines are unconstitutional as is, Supreme Court will step in

After it determined Verizon and AT&T had willfully violated the law by failing to protect customer location data, the FCC previously ordered AT&T and Verizon to pay roughly $57 million and $47 million, respectively. While both companies paid the fines as expected, they also opted to sue over the matter independently. Now the Supreme Court is getting involved as well, as reported by The Hill.

For background, two years ago, the Supreme Court ruled the SEC’s in-house civil fraud enforcement system violated a defendant’s right to a jury trial. Guided by this decision, Verizon and AT&T hoped to prove that the FCC’s penalty system was also unconstitutional.

While both Verizon and AT&T took the matter to court, two different outcomes were reached. The US Court of Appeals for the 5th Circuit ruled the FCC system was unconstitutional, siding with AT&T. Verizon’s case went before the 2nd Circuit, where the courts ruled in favor of the FCC. Now the Trump administration, AT&T, and Verizon have agreed that the Supreme Court should take up the two cases and resolve the issue for good.

For its part, the FCC argues that its setup is different from the one the courts struck down for the SEC and that removing its ability to demand large fines would deprive it of “one of its most important regulatory remedies and severely impair the agency’s ability to enforce federal communications law”.

Currently, after the FCC makes a decision on a fine, the company can decide whether or not to pay. If it refuses, the government can sue, and the company can demand a jury trial. Likewise, a company can pay and then ask for a government review. Verizon and AT&T took the latter approach.

Both AT&T and Verizon continue to assert the FCC’s fining arrangement violates the Seventh Amendment right to a civil jury trial. As Verizon stated in its petition, “The after-the-fact possibility of a jury trial does not comply with the Seventh Amendment.”

As for who the Supreme Court will rule in favor of? While the courts have been much more pro-business with the current administration, it’s really too early to call. That said, if the courts side with AT&T and Verizon, the FCC’s ability to go after telecom companies could be significantly altered, potentially requiring a full trial as part of the process.

The Supreme Court is expected to be argued near the end of the current term, which means it could be decided by the summer.