In a 2024 ruling that shook DC to its foundations, the Supreme Court upheld the Seventh Amendment in SEC v. Jarkesy (2024), affirming the right to an impartial jury trial. Until Jarkesy, the Securities and Exchange Commission had been deciding and applying its own civil penalties for securities fraud. When the time came, though, to reaffirm this right for a different agency, the Supreme Court blinked.
Must other agencies honor the Seventh Amendment in such cases too? And what about agencies who stack shadow administrative courts against Americans, operating as the enforcer, judge, and jury?
AT&T sought to answer these questions when defending itself against a Federal Communications Commission (FCC) charge of violating Sec. 222 of the Telecommunications Act, allegedly mishandling customers’ cellular data. The FCC enforced these monetary penalties against private entities entirely in-house and without the right to a jury trial. AT&T begrudgingly paid the $57 million forfeiture, but sought to overturn the enforcement action in federal court.
The Fifth Circuit Court sympathized with AT&T.
The Commission [FCC] cites no authority supporting the proposition that the constitutional guarantee of a jury trial is honored by a trial occurring after an agency has already found the facts, interpreted the law, adjudged guilt, and levied punishment.
In other words, administrative agencies cannot simply sideline Constitutional protections.
Unfortunately, the US Supreme Court did not share the Fifth Circuit’s concerns. The justices ruled 8-1 to protect the FCC’s civil penalty regime, claiming that the FCC’s forfeiture orders were not judicially enforceable, and AT&T should have refused to pay if it wished to force a jury trial. Despite the same absence of constitutional protection as the SEC’s fraud cases, the FCC was judged to have upheld the right to a jury trial — even though none was actually available.
AT&T faced two equally undesirable outcomes after receiving a Notice of Apparent Liability of Forfeiture (NAL), a formal warning of noncompliance under the Comms Act.
In one route, AT&T could have avoided paying the $57 million penalty, forcing the FCC to refer the matter to the Department of Justice for debt recovery. Only after the debt is assessed can AT&T finally pursue a trial de novo (a completely new trial) with jury access.
Or AT&T could have paid the fine in full and then challenged the forfeiture action by appealing to a nearby circuit court. But this path sees the company forfeit access to a jury trial.
A company can issue a written statement in opposition to the NAL, asking the five FCC commissioners to vote to uphold or deny the penalty. This preordained process undermines any semblance of fairness, as the commission dominates every possible outcome. Only the FCC commissioners can greenlight enforcement actions in the first place, so the targeted firm’s recourse is only to those very people who authorized the action under appeal.
In the FCC’s domain, AT&T lost its case before it even began. As Justice Clarence Thomas pointed out, AT&T should have received access to a federal jury before being forced to pay a costly fine. “In this process, which was completely in-house, the Commission acted as prosecutor, jury, and judge,” according to the Fifth Circuit’s AT&T decision.
One alternative mechanism exists: the Commission may decide to host an internal hearing to adjudicate the forfeiture order. A hand-picked FCC administrative law judge (ALJ) may be assigned to hear the dispute, but the choice to appoint one is left to the commissioners’ discretion. The FCC dominates the entire process.
This ALJ-led route has become more unlikely over time, given the commissioners’ preference to adjudicate fines on their own terms. The FCC reserves more control over the enforcement process when its five commissioners vote to uphold a NAL rather than provide the opposing party with an administrative hearing. The FCC imposed the fine, rejected AT&T’s written opposition, and demanded immediate payment — without due process.
Only a handful of agencies enjoy similar privileges. The National Labor Relations Board (NLRB), the Securities and Exchange Commission (SEC), and formerly the Consumer Financial Protection Bureau (CFPB) can all reroute cases away from their ALJs to be managed entirely by the agency leadership. This diminishes the original purpose of ALJs as the first line of review in proceedings.
The CFPB Director, until recently, reviewed all dispositive motions prior to the ALJ’s consideration, even though that same office also exercised final authority over all ALJ decisions. Thankfully, Acting CFPB Director Russ Vought rescinded this uncanny ability to control every aspect of a case, ensuring that dispositive motions were reviewed by an ALJ first.
The NLRB’s rules allow the Board to intercept and revise ALJs’ draft opinions before an initial decision — which parties can challenge — is issued. The NLRB Board exercises full influence over the ALJ’s decision and will later review challenges to that same decision.
At the SEC, commissioners have increasingly bypassed ALJ adjudication: a rise in SEC commissioner opinions since 2020 corresponds with a precipitous decline in ALJ cases. SEC commissioners increasingly choose to decide disputes absent an ALJ, as seen with the recent Ameritrust Corporation case.
Even if the FCC had held a traditional hearing on the fine, AT&T would face a near impossible challenge before an ALJ. In the unlikely event that AT&T managed to win against the agency in-house, FCC attorneys would simply appeal the matter before the full commission. Why wouldn’t those commissioners affirm the very enforcement action they approved in the first place? The SEC commissioners enjoy an identical process when affirming their own Division of Enforcement’s actions.
As the above shows, agencies like the FCC can bend the trajectory of enforcement disputes as they deem fit. In such arrangements, businesses are stripped of their procedural due process rights. Telecom firms like AT&T deserve the right to adjudicate civil penalties before a real court of law, not before an agency court with enormous conflicts of interest.
The FCC’s forfeiture orders closely resemble the SEC’s fraud penalties in the Jarkesy decision. The Seventh Amendment’s guarantee of a jury should have overridden the FCC commissioner’s adjudicatory scheme, just like it did to the SEC.
The FCC cannot withhold access to a jury until after it has already determined the facts, levied a penalty, and rendered one’s guilt. Regardless of the binding nature of the order, AT&T deserved to be heard by an impartial jury before the FCC commissioners demanded payment.
“No one denies the Commission’s authority to enforce laws requiring telecommunications companies like AT&T to protect sensitive customer data,” read the Fifth Circuit’s decision in AT&T v. FCC. “But the Commission must do so consistent with our Constitution’s guarantees of an Article III [judicial] decisionmaker and a jury trial.”
