The U.S. Supreme Court has upheld the Federal Communications Commission’s authority to issue monetary forfeiture orders through its traditional administrative enforcement process, rejecting a significant constitutional challenge brought by AT&T and Verizon.
In an 8-1 decision in FCC v. AT&T, Inc., the Court reversed the Fifth Circuit’s decision vacating a roughly $57 million FCC forfeiture against AT&T and affirmed the Second Circuit’s decision upholding a roughly $47 million forfeiture against Verizon. The penalties arose from the FCC’s investigation into wireless carriers’ handling of customer location data and alleged failures to take reasonable steps to protect that data from unauthorized access.
The ruling is an important win for the FCC and will likely have consequences well beyond the wireless privacy context. It preserves the Commission’s ability to investigate alleged violations, issue Notices of Apparent Liability, and enter forfeiture orders without first providing a jury trial — so long as the agency’s order is not treated as finally enforceable unless and until the Department of Justice brings a civil collection action in federal court.
What the Court Held
The carriers argued that the FCC’s forfeiture process violated the Seventh Amendment because the Commission found facts, determined liability, and assessed substantial civil penalties without a jury. That argument gained force after the Supreme Court’s 2024 decision in SEC v. Jarkesy, which held that the Securities and Exchange Commission could not impose certain civil penalties through in-house administrative adjudication without affording the respondent a jury trial.
The Supreme Court rejected the carriers’ challenge, focusing on a key feature of the Communications Act: an FCC forfeiture order issued under Section 503(b)(4) does not, standing alone, allow the FCC to collect money. If the target of the forfeiture does not voluntarily pay, the Government must bring a collection action in federal district court under Section 504(a). That action must be a trial de novo.
In the Court’s view, that matters. The FCC’s administrative order may announce the agency’s position, but it does not conclusively determine the respondent’s legal obligation to pay. The Commission cannot execute on the order, seize assets, create a lien, impose interest for nonpayment, or otherwise collect the penalty without going to court. And in that later court proceeding, the respondent is entitled to contest both the facts and legal conclusions anew.
Put more simply: the Court treated the FCC forfeiture order as a non-final, non-self-executing step in the enforcement process — not as the final adjudication of a monetary penalty.
Practical Impact for FCC-Regulated Companies
The decision preserves the FCC’s core enforcement model. Regulated entities should expect the Commission to continue using Notices of Apparent Liability and forfeiture orders as central enforcement tools across the communications marketplace, including in matters involving privacy, consumer protection, robocalling, numbering, outage reporting, universal service, licensing, equipment authorization, and other compliance obligations.
At the same time, the decision clarifies an important limitation on the FCC’s authority. A forfeiture order is not supposed to be treated as a final, enforceable judgment. Unless the respondent pays voluntarily, the Government must prove its case in federal court before the penalty can be collected. The Court’s reasoning also underscores that the FCC’s findings should not receive binding or preclusive effect in that later trial de novo.
That clarification may be meaningful in future enforcement negotiations. Companies facing large proposed forfeitures should understand that the FCC’s order may be the end of the agency’s internal process, but it is not necessarily the end of the legal process. A respondent that elects not to pay may force the Government to decide whether to pursue a collection action and prove the case in federal court.
That said, refusing to pay is not a risk-free strategy. Even if the Court characterized FCC forfeiture orders as nonbinding for Seventh Amendment purposes, such orders can still create business, regulatory, reputational, financing, disclosure, transactional, and licensing concerns. The practical pressure to resolve an FCC enforcement matter may remain substantial, especially for companies that regularly interact with the Commission.
Does the Decision Narrow — or Water Down — Jarkesy?
Yes, but in a targeted way.
The Court did not overrule Jarkesy. To the contrary, it repeatedly distinguished the FCC’s forfeiture process from the SEC process at issue in Jarkesy. In Jarkesy, the SEC imposed civil penalties through an administrative proceeding that resulted in an immediately enforceable penalty, with no later jury trial available on the underlying liability. The Supreme Court held that this violated the Seventh Amendment where the Government was seeking civil penalties of the kind traditionally associated with legal claims.
By contrast, the Court held that the FCC’s forfeiture process survives because the agency’s order does not itself finally impose an enforceable payment obligation. The Government must still bring a civil action to collect, and that action must be tried de novo. In the Court’s words, for purposes of the collection action, it is as if the FCC never found the facts at all.
That distinction narrows Jarkesy in practical effect. After Jarkesy, many regulated entities hoped the decision would broadly undermine agency penalty regimes that rely on administrative enforcement. FCC v. AT&T makes clear that Jarkesy is not a universal bar against agencies issuing penalty-related orders through administrative processes. The constitutional problem arises when the agency itself finally and conclusively imposes a civil penalty without a jury trial. Where the agency’s order is merely a predicate to a later de novo collection action in federal court, the Seventh Amendment concern is significantly reduced.
In that sense, the decision waters down the broadest readings of Jarkesy. It gives agencies — and Congress — a roadmap for preserving administrative penalty systems: make the agency’s penalty determination non-self-executing, require the Government to bring a collection action in Article III court, and ensure that the respondent can obtain a true trial de novo before being compelled to pay.
But the decision also contains a warning for the FCC. The Court’s ruling depends heavily on the premise that FCC forfeiture orders have no binding legal effect unless paid voluntarily or reduced to judgment by a court. If the Commission treats unpaid forfeiture orders as effectively final, uses them to prejudice parties in other proceedings, or attempts to give its factual findings binding force in later litigation, future constitutional challenges may be stronger.
Justice Thomas’s dissent focused on precisely that concern. He agreed that agencies may collect penalties only after court adjudication through a trial de novo, but he concluded that AT&T and Verizon had not actually received that protection when the FCC issued the challenged orders. In his view, the Commission’s orders looked and operated like mandatory payment commands, and the carriers paid under protest in a system that had not clearly recognized the de novo jury-trial protections the majority now says are required.
Key Takeaways
For FCC-regulated businesses, the decision has three immediate implications.
First, the FCC remains very much in the enforcement business. The decision removes a major constitutional cloud over the Commission’s use of monetary forfeitures.
Second, large forfeiture orders should be evaluated not only as agency decisions, but as potential precursors to federal court litigation. The procedural posture matters. A company’s options after a forfeiture order may include payment, appellate review, settlement, or nonpayment followed by a possible DOJ collection action.
Third, Jarkesy remains important, but its reach is now more limited. It continues to constrain agency systems that finally impose civil penalties without a jury. It does not necessarily invalidate administrative penalty processes that preserve a later, meaningful, de novo jury trial before money can be collected.
The bottom line: the Supreme Court has preserved the FCC’s forfeiture framework, but it did so by emphasizing that FCC forfeiture orders are not self-executing judgments. That distinction will likely shape future FCC enforcement strategy — and future defense strategy — for years to come.
Businesses facing FCC investigations, Notices of Apparent Liability, or forfeiture orders should carefully assess both the regulatory and litigation consequences before deciding whether to pay, settle, seek review, or preserve the right to force the Government to prove its case in court.
For more information or to discuss how these developments may affect your organization, please contact your assigned Relationship Partner or reach out to Jonathan Marashlian at jsm@commlawgroup.com.