Regulatory enforcement only works if everyone understands the rules of the road. Over the past year, that road has become uneven. The Supreme Court’s 2024 decision in SEC v. Jarkesy reshaped when agencies may impose civil penalties through their own in-house processes, and subsequent appellate rulings have taken divergent paths on what Jarkesy means for the FCC. This article explains the history, the emerging split, and what it means for companies navigating FCC oversight today.
I. The legal pivot: Jarkesy and the “public-rights exception”
Jarkesy is the hinge on which today’s debate swings. The Supreme Court held that when an agency seeks civil penalties for claims that are “legal in nature”—i.e., comparable to common-law suits—defendants may be entitled to a jury trial in an Article III court. The decision tightened the public-rights exception by emphasizing substance over labels: calling a penalty “administrative” does not avoid the Seventh Amendment if the claim mirrors traditional private-law liability. At the same time, the Court left meaningful gray areas—especially for highly technical regulatory disputes that do not look like common-law claims.
Why this matters. Jarkesy therefore narrows—but does not eliminate—agencies’ ability to impose money penalties in-house. And because the Court drew principles rather than bright lines, lower courts have reached different conclusions about which agency cases fit within “public rights” versus those that must go to a jury.
Transition. Those differences came into sharp focus as federal appeals courts began applying Jarkesy to communications enforcement and adjacent regimes.
II. The emerging split: three roads after Jarkesy
In the months following Jarkesy, three distinct approaches emerged across the circuits.
Road 1 — The Fifth Circuit (hostile to in-house penalties). In AT&T v. FCC, the Fifth Circuit vacated a $57 million forfeiture tied to location-data mishandling, holding that the FCC’s internal process violated Article III and the Seventh Amendment. The court treated the penalty as punitive and the claim as analogous to common-law liability—outside the public-rights lane.
Road 2 — The D.C. Circuit (use the statutory jury off-ramp). In Sprint/T-Mobile v. FCC, the court upheld the FCC’s CPNI penalties while sidestepping the core Seventh Amendment issue: because §504(a) of the Communications Act lets carriers withhold payment and force the government to bring a de novo collection suit (with a jury), the carriers who paid and appealed had effectively waived any jury right. D.C. Circuit Court
Road 3 — The Second Circuit (similar to D.C.). Two weeks later, in Verizon v. FCC, the Second Circuit affirmed a $46.9 million CPNI forfeiture against Verizon, likewise concluding that Verizon could have preserved a jury trial by declining to pay and awaiting a §504(a) collection action. The panel also confirmed that device-location information is covered CPNI under §222.
An influential non-FCC datapoint — The Third Circuit (technical rules fit public rights). In Axalta v. FAA, the Third Circuit upheld an FAA civil-penalty adjudication involving hazardous-materials packaging rules, stressing the dispute’s technical regulatory character and finding no Seventh Amendment problem after Jarkesy. That reasoning offers a template for treating certain complex, expert-driven rules as public-rights matters—an approach some courts may analogize to the FCC’s spectrum/equipment contexts.
With three roads on the map, both the FCC and the companies it oversees now face a venue-dependent landscape that complicates planning and increases litigation risk.
III. Why this creates uncertainty—inside the FCC and across industry
Enforcement thrives on predictability; Jarkesy’s aftermath has produced the opposite. The immediate uncertainties fall into two buckets.
Inside the FCC.
- Venue-dependent strategy. In Fifth-Circuit territory, in-house penalties for “punitive, tort-like” theories are on thin ice; in D.C. and the Second Circuit, the existence of the §504(a) jury route keeps much of the current scheme intact—if parties preserve it.
- Case triage and forum choice. Expect more selective filings in Article III courts (often via DOJ) for high-impact cases, and continued administrative actions where a public-rights framing is strongest (e.g., technical rules).
- Retrospective risk. Prior forfeitures and pending appeals are ripe for Jarkesy-based challenges in “Fifth-style” venues.
For regulated companies.
- Geography matters. The same conduct can face different procedural fates depending on where the dispute lands.
- Strategic fork early. Paying and appealing can speed review but may waive jury claims in D.C./Second Circuits; withholding payment preserves a jury route but brings interest, optics, and leverage tradeoffs.
- Substance categories. Privacy/CPNI and consumer-protection theories—often framed as deterrent or punitive—invite Jarkesy arguments; technical spectrum/licensing/equipment disputes are more likely to fit the public-rights lane.
Layer on top of this the broader shift in administrative law—courts no longer defer under Loper Bright—and you see why enforcement outcomes feel less predictable than at any point in decades.
IV. The political overlay: who’s in charge matters
Legal doctrine sets the boundaries, but institutional posture determines how aggressively an agency plays the game within those lines. Since January 2025, the Commission has been led by Chairman Brendan Carr, appointed by President Trump. Carr’s tenure has drawn intense scrutiny for muscular uses of FCC authority, signaling an appetite to keep the enforcement engine running even as courts recalibrate processes and forums.
Why this matters now. Administration priorities influence whether the FCC tests the outer limits in court or retranches to lower-risk forums and remedies. Carr’s public posture indicates continuity of enforcement, with tactical adjustments (e.g., more Article III filings in hostile circuits) rather than retreat.
Ultimately, however, only the Supreme Court can harmonize the clashing approaches that now define FCC enforcement across circuits.
V. What the Supreme Court could do
The conditions for review are ripening: the Fifth Circuit invalidated an FCC forfeiture; the D.C. and Second Circuits preserved FCC penalties by emphasizing §504(a)’s jury option; and other agency contexts (like the FAA) have blessed in-house penalties for technical rules. That is the textbook setup for the Court to step in.
Likely clarifications.
- How far agencies can go imposing monetary penalties in-house post-Jarkesy;
- Where to draw the public-rights line for modern, technical regimes;
- Whether a statutory jury off-ramp (like §504(a)) cures Seventh Amendment concerns when an agency enters a forfeiture first.
Until those answers arrive, regulated parties should prepare for a world in which venue and remedy framing can be as consequential as the merits of the alleged violation.
VI. Practical guidance: how to operate in the gray
You cannot eliminate uncertainty, but you can manage it. Here are steps that general counsel, compliance leaders, and boards can take now.
For boards and GCs.
- Map your exposure. Align compliance and litigation strategies to the circuits where you do business, especially for privacy/CPNI or consumer-protection risks.
- Preserve options early. If a Notice of Apparent Liability is looming, model the consequences of pay-and-appeal versus withhold-and-litigate under §504(a); the D.C./Second Circuit opinions show how quickly jury arguments can be deemed waived.
- Re-characterize remedies. Where feasible, structure outcomes as remedial (compliance upgrades, restitution-like relief) rather than punitive forfeitures—especially for tort-like theories.
- Document the “technical.” For spectrum, equipment, and licensing rules, build records underscoring their technical, regulation-specific character—supporting a public-rights framing.
For compliance and operations.
- Treat privacy/CPNI as high-risk. These cases tend to look punitive and invite Jarkesy defenses in some venues; invest in documented safeguards, vendor oversight, and incident response. Recent D.C. and Second Circuit decisions scrutinized carriers’ practices closely.
- Expect more courtroom enforcement. In “hostile” circuits, the FCC may shift major matters to Article III courts: more discovery, longer timelines, higher costs—yet outcomes that, if the government prevails, are less vulnerable on appeal.
Even with smart planning, clients will still ask: what does all of this mean, in plain English, for business decisions you have to make this quarter?
VII. What this means in plain English
There is no single national playbook right now. In some courts, the FCC’s traditional in-house penalty model is vulnerable when penalties look punitive; in others, the existence of a jury off-ramp (and parties’ decisions to use it) keeps the scheme intact; for technical rules, agencies often remain on firmer footing.
The takeaway. Decide early whether to preserve a jury route, frame outcomes as remedial when possible, and budget for more Article III litigation in high-stakes cases. Combine that with stronger privacy/CPNI controls and careful vendor governance. With Loper Bright removing Chevron deference, expect courts to second-guess agency readings more often—adding yet another layer of uncertainty to enforcement strategy.
Until the Supreme Court reconciles the split—or Congress adjusts the statutes—both the FCC and the regulated community will be driving through fog. The best you can do is use the headlights you have: venue awareness, option preservation, and disciplined compliance.
Author
Jonathan S. Marashlian is Managing Partner of Marashlian & Donahue, PLLC, The CommLaw Group, where he also supports its AI-focused practice, the VisionAI+ Law Group. He is the Founder of both The Commpliance Group and VisionAI+ Consulting Group, and the architect of the firm’s pioneering “full-spectrum” professional services delivery model — ensuring the Right Professionals handle the Right Projects at the Right Price Points.
In his law practice, Marashlian advises communications and technology companies on regulatory strategy, communications taxes and fees, privacy and data-security compliance, and defense in investigations and enforcement actions across the telecom and tech sectors. A recognized thought leader, he writes and speaks frequently on the evolving intersection of administrative law and communications regulation.
DISCLAIMER: The information contained in this article is for informational purposes only and does not constitute legal advice. No attorney-client relationship is created between the reader and Jonathan S. Marashlian or his firm by reading this article or any content contained herein. The law varies by jurisdiction and changes frequently, and readers are strongly advised to seek experienced counsel for guidance on their specific legal matters. The views and opinions expressed in this article are those of Jonathan S. Marashlian and do not necessarily reflect the official policy or position of The CommLaw Group or any of its other attorneys or personnel.