In April 2024, the Federal Communications Commission (FCC) fined AT&T, T-Mobile, and Verizon for providing third-party companies with customer location information without seeking their permission. All three decided to contest the fine and AT&T has managed to get it overturned.First proposed in 2020, the fine was imposed for sharing real-time location data with aggregators who sold it to third-party location-based service providers. This information opened up the possibility of unlawful monitoring of customers.
AT&T was asked to pay $57 million. The company appealed to the Fifth Circuit in May, arguing the location data at the heart of the matter did not violate Section 222 of the Communications Act, as it was not customer proprietary network information (CPNI). It also accused the FCC of overstepping its authority. It also wasn’t happy about being asked to pay more than the maximum allowable limit of $2 million. The company also said that its right to a jury trial was denied.
On Friday, the $57 million fine was tossed out by the Fifth Circuit panel.
The Fifth Circuit has sided with AT&T and based its decision on the SEC v. Jarkesy (2024) decision. In June 2024, the Supreme Court ordered the Securities and Exchange Commission (SEC) to go to a court of law before requiring defendants to pay civil penalties, putting an end to the use of in-house tribunals for making decisions about fraud actions.
The FCC had argued that AT&T could have refused to pay the fine, in which case the United States Attorney General (DOJ) would have stepped in. However, AT&T‘s constitutional rights were violated regardless. That’s because the FCC already meted out a punishment, and AT&T only had two options: to pay the fine and lose the right to a jury trial or risk more fines without having any opportunity to challenge the reasoning behind the penalty.
In short, the court believes that AT&T should get both a fair trial and the opportunity to challenge the legal basis of the penalty.
Since Verizon and T-Mobile had presented similar arguments, it’s likely that the fines imposed on the two will also be scraped. It’s important to note that AT&T has not been deemed innocent. Rather, the court only took issue with how the FCC went about the case.
A new trial is still a possibility but customers who celebrated the FCC’s decision might feel let down after the cancelation of the fine.
