Preserving Article III Adjudication and Seventh Amendment Jury Rights in FCC Forfeiture Proceedings

Introduction

This commentary examines the Fifth Circuit’s decision in AT&T v. FCC, which vacated a $57 million forfeiture order against AT&T for mishandling customer location data under § 222 of the Telecommunications Act. The case arose after the FCC—without an Article III adjudicator or jury trial—investigated AT&T’s location-based services program, issued a Notice of Apparent Liability (NAL), and imposed a large penalty. AT&T challenged the process as violative of its Seventh Amendment right to a jury and its Article III right to an independent judge. Guided by the Supreme Court’s ruling in SEC v. Jarkesy (2024), the Fifth Circuit agreed and struck down the in-house procedure.

Summary of the Judgment

The Fifth Circuit held that (1) the FCC’s forfeiture proceeding enforced a “common‐law–style” civil penalty akin to money damages for negligence; (2) the Seventh Amendment therefore guarantees a jury trial; (3) Article III requires an independent judge, not an agency adjudicator; and (4) the FCC’s back-end option of a Department of Justice trial under § 504(a) could not cure the constitutional defect because it occurs only after punishment and does not permit legal challenges to the Commission’s order. The court vacated the forfeiture order in its entirety.

Analysis

Precedents Cited

SEC v. Jarkesy, 603 U.S. 109 (2024)
Held that an agency-only securities fraud penalty proceeding violated the Seventh Amendment and Article III because it imposed punitive money penalties historically adjudicated in courts of law.
Tull v. United States, 481 U.S. 412 (1987)
Confirmed that suits for statutory penalties at common law are “actions in debt” requiring jury trials where the amount in controversy exceeds twenty dollars.
Granfinanciera, S.A. v. Nordberg, 492 U.S. 33 (1989)
Explained the Seventh Amendment’s “legal” vs. “equitable” distinction and the two-part test (cause of action and remedy) for jury right analysis.
Stern v. Marshall, 564 U.S. 462 (2011)
Reaffirmed that private rights claims must be adjudicated by Article III courts and that Congress cannot strip constitutional jurisdiction under the “public rights” exception.
Murray’s Lessee v. Hoboken Land & Improvement Co., 18 How. 272 (1856)
Established that private common-law disputes must remain within Article III courts, absent a narrow, historical public‐rights exception.
United States v. Stevens, 691 F.3d 620 (5th Cir. 2012)
Held that in a § 504(a) DOJ collection action the district court may review only the factual basis of an FCC forfeiture order, not its legal validity.
AT&T Corp. v. FCC, 323 F.3d 1081 (D.C. Cir. 2003)
Described the FCC’s written‐response‐only procedure for contesting Notices of Apparent Liability and the carrier’s two-path review options.

Legal Reasoning

The court applied the two-part Seventh Amendment test from Granfinanciera. It first examined the remedy—the FCC’s civil forfeiture penalty—which is clearly punitive, non-remedial, and analogous to common-law money damages. That determination “is all but dispositive” of the jury‐trial requirement. The court then looked at the cause of action, finding close parallels to common-law negligence: § 222 penalizes carriers for unreasonable failures to safeguard “CPNI,” including location data, mirroring tort law’s focus on “reasonable care.”

Turning to Article III, the court invoked Stern and Murray’s Lessee to hold that private‐rights disputes—here, negligence-style enforcement against a regulated carrier—cannot be assigned to an agency. The “public rights” exception does not encompass § 222 forfeitures: common‐carrier regulation has deep common-law roots and negligence claims against carriers historically belonged in courts of law.

Finally, the FCC’s reliance on a possible back-end § 504(a) trial was rejected. That process occurs only after the agency has adjudicated guilt and imposed fines, precludes legal challenges, and thus cannot satisfy the constitutional guarantees of an independent judge and jury.

Impact

This decision signals that any agency enforcement scheme imposing punitive, common-law–style penalties must offer a jury trial and Article III process. It constrains the FCC’s discretion to choose in-house proceedings for non-delegable private-rights disputes. More broadly, it empowers regulated entities to insist on constitutional safeguards in administrative enforcement and may reshape agency practices across sectors—prompting Congress or agencies to embed jury-trial options or shift enforcement into Article III courts.

Complex Concepts Simplified

Article III Adjudication: The Constitution vests federal judicial power only in courts with life-tenured, salary-protected judges. Private disputes historically required such courts.
Seventh Amendment “Common-Law” Suits: The right to jury trial applies in “legal” (as opposed to “equitable”) cases at common law where money damages are sought and the amount exceeds $20.
Public Rights vs. Private Rights: “Public rights” (e.g., tariff settings, immigration) may be assigned to agencies; “private rights” (e.g., negligence claims) must go to Article III courts.
Notice of Apparent Liability (NAL): A charging document the FCC issues when it believes a carrier violated the law, proposing a forfeiture and triggering a written-response procedure.
Section 504(a) Trial: A post-forfeiture DOJ lawsuit in district court limited to the case’s factual basis, without review of legal questions.

Conclusion

The Fifth Circuit’s ruling in AT&T v. FCC enshrines the principle that administrative enforcement of private-rights, common-law–style penalties cannot bypass the Constitution’s twin guarantees of an independent federal judge and jury trial. Agencies seeking to impose punitive forfeitures must either incorporate full judicial safeguards or refer enforcement to Article III courts. This precedent reinforces separation of powers, ensures robust procedural protections for regulated entities, and will shape the future design of administrative enforcement across the federal government.