In a ruling that could have broader implications on the legality of regulatory agencies levying fines through administrative proceedings, the 5th U.S. Circuit Court of Appeals has overturned a $57 million fine imposed by the Federal Communications Commission against AT&T for violating the privacy of its customers’ location data.
In an internal proceeding, the FCC found AT&T had violated Section 222 of the Telecommunications Act by mishandling customer data and fined the company $57 million.
AT&T sued the FCC, arguing, among other things, that the in-house adjudication violated the Constitution by denying it an Article III decision-maker and a jury trial.
The Court agreed and overturned the fine.
The case is notable in that the Court justified its decision in part by citing a 2023 Supreme Court’s decision in SEC v. Jarkesy. That case severely restricts regulatory agencies from levying civil monetary fines through the administrative process.
The 5th Circuit ruling indicates that other fines levied by the FCC through administrative processes could also be overturned. In a blog post about the earlier 2023 SEC v Jarkesy ruling, law firm Greenberg Traurig noted that “more broadly, the Jarkesy decision calls into question whether any federal regulatory agency—not just the SEC—can bring in-house proceedings to enforce civil penalties.”
At minimum, it means that agencies like the FCC would have to file cases in federal xourt to impose penalties, a much more expensive and labor-intensive process that could limit enforcement.
The decision vacating the AT&T fine also vindicates the decision by FCC Chair Brendan Carr (who was a commissioner when the FCC fine was issued) and FCC commissioner Nathan Simington to oppose the fines.
The full opinion can be found here.
