Supreme Court arguments make it clear that FCC fines are “nonbinding”

Justice Ketanji Brown Jackson told the carriers’ lawyer, “Your argument is that you don’t have the right to invoke a jury trial unless the government comes after you in terms of the enforcement proceeding, and I’m really struggling with why you aren’t happy that the government is not coming after you. If the government is abandoning its claim by not seeking enforcement of it, I don’t know why you would need the right to a jury trial, and why isn’t that a good thing for you?”

Wall argued that when a company’s primary regulator “tells us we owe $100 million… you can’t sit around and do nothing.” He said an unpaid FCC fine could harm a company in future FCC proceedings.

The FCC could “use the fact that we didn’t pay and are a law-breaker when it considers character or persistent disregard of the law, statutory circumstances that the commission can consider under a host of different provisions that deal with things like licenses and spectrum,” Wall said.

SEC fine system was struck down

One question is whether the FCC ran afoul of the Supreme Court’s June 2024 ruling in Securities and Exchange Commission v. Jarkesy, which held that “when the SEC seeks civil penalties against a defendant for securities fraud, the Seventh Amendment entitles the defendant to a jury trial.”

Wall argued that the FCC’s strategy “would carve a huge hole in Jarkesy.” Agencies with schemes like the one ruled illegal in Jarkesy could simply describe their forfeiture orders as nonbinding even if regulated companies “effectively have to comply,” he said.

Suri countered that the two agencies’ enforcement powers were different, as the SEC could deduct penalties from tax refunds or garnish wages. If the SEC went after a non-payer in court, a trial “would be limited to the issue of whether you had paid the penalty,” without any “review of whether the underlying order was correct,” he said.

SEC fine decisions also resulted in interest accruing immediately, whereas interest on FCC fines only accrues after a jury makes a determination, he said. “For the FCC, the only way to get to the penalties is to file a collection suit where you do get a jury trial,” Suri said.