Case: 24-60223         Document: 88-1      Page: 1     Date Filed: 04/17/2025




          United States Court of Appeals
               for the Fifth Circuit                               United States Court of Appeals
                               ____________                                 Fifth Circuit

                                                                          FILED
                                No. 24-60223                          April 17, 2025
                               ____________                          Lyle W. Cayce
                                                                          Clerk
AT&T, Incorporated,

                                                                     Petitioner,

                                     versus

Federal Communications Commission; United States of
America,

                                                                  Respondents.
                 ______________________________

     Petition for Review of the Federal Communications Commission
                             Agency No. 24-40
               ______________________________

Before Haynes, Duncan, and Wilson, Circuit Judges. ∗
Stuart Kyle Duncan, Circuit Judge:
      AT&T seeks review of a Federal Communications Commission
forfeiture order. In an internal proceeding, the Commission found that
AT&T violated section 222 of the Telecommunications Act by mishandling
customer data and fined the company $57 million. AT&T’s petition argues,
among other things, that the in-house adjudication violated the Constitution
      _____________________
      ∗
          Judge Haynes concurs in the judgment only.
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                                 No. 24-60223


by denying it an Article III decisionmaker and a jury trial. Guided by SEC v.
Jarkesy, 

 (2024), we agree with AT&T.
       Accordingly, we grant the petition and vacate the forfeiture order.
                                      I
                                      A
       We first outline section 222 of the Telecommunications Act and then
explain the Commission’s procedures for enforcing it.
                                      1
       Under section 222, telecommunications carriers must protect the
confidentiality of “customer proprietary network information” (“CPNI”).

(a). CPNI is defined as “information that relates to the
quantity, technical configuration, type, destination, location, and amount of
use of a telecommunications service subscribed to by any customer of a
telecommunications carrier, and that is made available to the carrier by the
customer solely by virtue of the carrier-customer relationship.” 

§ 222(h)(1)(A).
       Section 222 further provides that carriers “[e]xcept as required by law
or with the approval of the customer . . . shall only use, disclose, or permit
access to individually identifiable [CPNI] in its provision of (A) the
telecommunications service from which such information is derived, or
(B) services   necessary   to,   or   used      in,   the   provision   of   such
telecommunications service . . . .” Id. § 222(c)(1). Commission regulations
flesh out these responsibilities. Carriers “must take reasonable measures to
discover and protect against attempts to gain unauthorized access to
CPNI,” 

(a), and they may use or disclose CPNI only
with customers’ “opt-in approval.” 

 § 64.2007(b).




                                      2
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                                        No. 24-60223


                                              2
       The Commission assesses forfeiture penalties for violations of the
Act, including violations of section 222. 

(b)(3)(A). The
Commission adjudicates alleged violations in two ways: either by assigning a
case to an administrative law judge (“ALJ”) or by investigating and
adjudicating the case itself. 

 The choice is entirely up to the Commission.

 1 Unsurprisingly perhaps, the Commission typically opts to investigate
and adjudicate violations itself, as it did here. That process works as follows.
       First, upon receiving information about a potential violation, the
Commission’s Enforcement Bureau opens an investigation into a carrier.
The Bureau can gather information through letters of inquiry sent to the
carrier, which may include interrogatories and requests for production.
Enforcement Primer, Federal Communications Commission,
https://perma.cc/FMQ2-ZH7C. It may also compel documents and
testimony through administrative subpoenas. 

 If the Bureau suspects a
violation has occurred, it issues a charging document to the carrier called a
Notice of Apparent Liability for Forfeiture (“NAL”). 

(b)(4)(A). An NAL advises the carrier how it violated the law and
proposes a penalty.
       To assess the amount of a penalty, the Commission “shall take into
account the nature, circumstances, extent, and gravity of the violation and,

       _____________________
       1
           Section 503(b)(3)(A) provides in full:
       At the discretion of the Commission, a forfeiture penalty may be
       determined against a person under this subsection after notice and an
       opportunity for a hearing before the Commission or an administrative
       judge therefore in accordance with section 554 of Title 5. Any person
       against whom a forfeiture penalty is determined under this paragraph may
       obtain review thereof pursuant to section 402(a) of this title.




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                                    No. 24-60223


with respect to the violator, the degree of culpability, any history of prior
offenses, ability to pay, and such other matters as justice may require.” 

§ 503(b)(2)(E). Any penalty “shall not exceed $100,000 for each violation or
each day of a continuing violation, except that the amount assessed for any
continuing violation shall not exceed a total of $1,000,000 for any single act
or failure to act . . . .” Id. § 503(b)(2)(B).
       Once the Commission issues an NAL, the carrier may respond in
writing to explain why it should incur no penalty. Id. § 503(b)(4)(C). After
considering this response, the Commission decides whether to affirm the
NAL. If it affirms, the Commission issues a forfeiture order. The written
response is the only way a carrier can oppose a NAL. That is, a carrier
receives neither a hearing nor a trial before it incurs a Commission forfeiture
order and accompanying penalty. See AT&T Corp. v. FCC, 

 (D.C. Cir. 2003) (alleged violators can challenge NAL in writing only).
       Two paths exist for a carrier to seek review of forfeiture orders.
       On the first path, a carrier fails to timely pay the penalty, which
becomes a debt to the United States. 

(a). The Commission
refers the debt to the United States Attorney General (DOJ) for a collection
action in federal district court. 

 If DOJ pursues the action, the carrier is
entitled to a trial de novo (we refer to this as a “section 504 trial”). At trial,
however, the carrier may challenge only the order’s factual basis, not its legal
validity. See United States v. Stevens, 

 (5th Cir. 2012) (in
section 504(a) action, district court was “limited to considering the factual
basis for the agency action” but not petitioner’s “legal arguments”).
       On the second path, a carrier timely pays the penalty and seeks review
in the appropriate court of appeals. See AT&T Corp., 

; see
also Stevens, 

 (noting “the courts of appeals[’] . . . exclusive
jurisdiction . . . to determine the validity of final FCC forfeiture orders”)




                                          4
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                                No. 24-60223


(quoting 

(1)) (cleaned up); see also 

(a). The
carrier may challenge the order’s legal validity but, by choosing this path,
forgoes a jury trial. See AT&T Corp., 

.
                                     B
       Next, we sketch this case’s factual and procedural background.
                                      1
       AT&T provides its customers with voice, text, and data services. To
make and receive calls and to transmit data, customers’ phones periodically
“register,” or “check in,” with nearby signal towers. Because AT&T knows
where these towers are, it can calculate the approximate location of its
customers’ phones. AT&T uses this location information to maintain
network function and to provide services to customers.
       At issue here is AT&T’s former location-based services program,
which it discontinued March 2019. Location-based services give users up-to-
date information about their surroundings, such as maps and traffic
information. They also include services from providers like Life Alert and
AAA, which depend upon customers’ locations.
       While nothing is wrong in principle with providing location-based
services, the Commission took issue with how AT&T protected its
customers’ location data. To implement location-based services, AT&T
contracted with “location aggregators,” who collected customers’ location
data. The aggregators, in turn, sold this data to service providers like Life
Alert or AAA.
       Before allowing those sales, however, AT&T would review a service
provider’s “use case,” where the provider described why it needed the
location data and how it obtained customers’ opt-in consent to use the data.
(That the providers—as opposed to AT&T—obtained users’ consent would




                                      5
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                                     No. 24-60223


be important in the Commission’s section 222 analysis.) AT&T’s program
also required providers to obtain and document customer consent for every
location request.
       While AT&T reviewed the providers’ consent records daily, it did
not verify customer consent before providing access to location data. AT&T
also required aggregators to monitor providers and to comply with various
security requirements, such as vulnerability scanning and encryption. At the
same time, AT&T could cut off access to customer location information at
any time.
        Beginning in May 2018, several news articles reported problems with
AT&T’s (and other carriers’) location-based services programs. Put simply,
it became clear that some service providers were misusing or failing to protect
customer location data. 2 After learning about this, AT&T promptly
terminated those providers’ access to the data. And by March 2019, AT&T
stopped providing location data to all aggregators for use by any location-
based service provider.
                                           2
       In May 2018, prompted by such news reports, the Commission’s
Enforcement Bureau began investigating AT&T and eventually sent the
company a letter of inquiry seeking information about its location-based
services program. AT&T complied with the investigation.



       _____________________
       2
          One example was Securus Technologies, which provided location services to law
enforcement and correctional facilities. Securus allegedly allowed officers to access
customer location data without a customer’s consent, so long as officers uploaded a
document (like a warrant) authorizing the location request. The problem was that Securus
did not verify whether uploaded documents actually authorized the request.




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                                   No. 24-60223


       In February 2020, the Commission issued AT&T an NAL for willful
and repeated violations of section 222 of the Act and section 64.2010 of the
Commission’s rules. The NAL proposed a $57,265,625 penalty. Responding
in writing, AT&T argued that: (1) location information is not subject to the
Act because it is not CPNI, and, in any event, AT&T lacked fair notice that
location information is CPNI; (2) AT&T acted reasonably; (3) the
forfeiture amount was arbitrary and capricious; and (4) the Commission’s
enforcement regime is unconstitutional under Article III, the Seventh
Amendment, and the nondelegation doctrine.
       In April 2024, the Commission rejected all of AT&T’s arguments
and affirmed the proposed $57 million penalty. In short, the Commission
decided that: (1) CPNI relates to the “location” of a telecommunications
service under § 222(h)(1)(A) because a carrier must be aware of and use the
device’s location for customers to send and receive calls; (2) that section
speaks for itself and thus gave AT&T notice; (3) AT&T acted unreasonably
by relying on providers to enforce safeguards against unauthorized access to
location information 3; and (4) AT&T’s constitutional arguments failed
because (a) the possibility of a section 504 trial satisfied the Seventh
Amendment and Article III, and (b) the Commission’s ability to choose
between enforcement procedures did not implicate the nondelegation
doctrine. 4
       The Commission therefore issued a forfeiture order demanding
AT&T pay the $57 million penalty within 30 days.

       _____________________
       3
           Specifically, the Commission found that AT&T committed 84 continuing
violations of the Act and that its failures were willful or repeated.
       4
          Two Commissioners dissented from the NAL. One thought CPNI does not
include customer location data; but if it did, AT&T lacked notice of that. The other
thought the forfeiture amount was unreasonable.




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                                       No. 24-60223


        AT&T elected to timely pay the penalty and seek review in our court.
Before us, the company raises the same arguments it raised before the
Commission.
        We resolve AT&T’s appeal based on its Seventh Amendment and
Article III challenges to the Commission’s enforcement regime, which we
review de novo. Loper Bright Enters. v. Raimondo, 

, 412–13 (2024).
So, we need not reach the other issues AT&T raises. 5
                                             II
        AT&T argues that the Commission’s enforcement procedures
violate its Seventh Amendment right to a jury trial and its right to
adjudication by an Article III court.
        Our analysis is governed by SEC v. Jarkesy, 

 (2024). In
that case, the Supreme Court ruled that the Seventh Amendment prohibited
the SEC from requiring respondents to defend themselves before an agency,
rather than a jury, against civil penalties for alleged securities fraud. 

.
The Court also ruled that the case did not fall within the “public rights”
exception, which would let Congress assign certain matters to an agency
instead of an Article III court. 

.
        We must determine whether, following Jarkesy, the Commission’s
enforcement regime also violates the Seventh Amendment and Article III.
                                             A
        The Seventh Amendment provides in relevant part:

        _____________________
        5
           Specifically, those issues are: whether the Commission’s discretion to choose
between an NAL or ALJ violates the nondelegation doctrine; whether the Commission
lacked statutory authority to issue the forfeiture order; and whether the forfeiture order is
arbitrary and capricious.




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                                  No. 24-60223


       In Suits at common law, where the value in controversy shall
       exceed twenty dollars, the right of trial by jury shall be
       preserved[.]
U.S. Const. amend. VII. The threshold question is whether the
Commission’s enforcement proceeding qualifies as a “suit at common law.”
A common law suit is one that is “legal in nature,” as opposed to one
sounding in the realm of equity or admiralty. See Jarkesy, 

(quoting Granfinanciera, S. A. v. Nordberg, 

 (1989)); see 

(“[T]he Framers used the term ‘common law’ in the Amendment in
contradistinction to equity, and admiralty, and maritime jurisprudence.”
(quoting Parsons v. Bedford, 

 (1830))).
       How do we tell whether a suit is legal in nature? By considering two
things: the cause of action and the remedy provided. Id. at 123.
                                       1
       We start with the remedy because it is the “more important”
consideration. Ibid. (quoting Granfinanciera, 

).
       The Commission’s civil penalties “are the prototypical common law
remedy.” 

 They are money damages designed to “punish or deter”
violators of section 222. 

 This is evident from the statutory factors, which
instruct the Commission to set penalties by reference to “the nature,
circumstances, extent, and gravity of the violation” as well as the violator’s
“degree of culpability.” 

(b)(2)(E). It is also evident from the
considerations the Commission used to set AT&T’s penalty, such as
whether AT&T acted “willfully” and “repeatedly” and whether the
violations were “serious.” Cf. Jarkesy, 

 (noting the statutory
penalty factors included whether a defendant was a repeat offender and
whether its conduct was deliberate).




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                                   No. 24-60223


       Moreover, the penalties are not remedial. They are not designed
“solely to ‘restore the status quo.’” 

 (quoting Tull v. United States., 

 (1987)); see also United States v. Hoffman, 901, F.3d 523, 560–
61 (5th Cir. 2018) (“As opposed to restitution which is remedial, forfeiture
is punitive.”). Nor are they meant to compensate victims whose location data
was compromised. See 

(a) (“The forfeitures provided for in
this chapter shall be payable into the Treasury of the United States”); cf.
Jarkesy, 

 (noting SEC was “not obligated to return any money
to victims”).
       So, like the penalties in Jarkesy, the civil penalties here are “a type of
remedy at common law that could only be enforced in courts of law.” 

 at
125 (quoting Tull, 

). That “is all but dispositive” of the
Seventh Amendment issue. Id. at 123.
                                         2
       Saying nothing about the remedy, the Commission instead focuses on
the second consideration, the nature of the cause of action. It argues that an
action to enforce section 222 does not bear a “close relationship” to any
common law cause of action and that, as a result, the Seventh Amendment
does not apply. We disagree.
       As AT&T argues, the section 222 action is analogous to common law
negligence. 6 The action punishes carriers for failing to take reasonable
measures to protect customers’ personal data. See 

(a)
(“[Carriers] must take reasonable measures to discover and protect against
attempts to gain unauthorized access to CPNI.”). The Commission decided


       _____________________
       6
         AT&T also argues the action is analogous to common law actions for intrusion
upon seclusion and eavesdropping. We need not address that argument.




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                                 No. 24-60223


whether AT&T violated section 222 by repeatedly asking whether the
company had acted reasonably.
       For example, the Commission found AT&T unreasonably failed to
protect customer data by relying on aggregators to enforce procedural
safeguards, instead of enforcing the safeguards itself. The Commission also
found AT&T’s safeguards to be unreasonable because the company
continued to provide customer location data to aggregators, despite reports
of unauthorized disclosures. And the Commission found AT&T acted
unreasonably by failing to “rectify the systemic vulnerabilities at the heart of
its [] program.” In sum, the Commission assessed AT&T’s protection of
customer location data entirely in terms of the reasonableness of the
company’s actions.
       Such analysis is a staple of the common law. “An act or an omission
may be negligent if the actor realizes or should realize that it involves an
unreasonable risk of harm to another through the conduct of the other or a
third person which is intended to cause harm, even though such conduct is
criminal.” Restatement (Second) of Torts § 302B (2024). This
familiar tort mirrors the Commission’s analysis of AT&T’s actions:
“[AT&T’s] failure to adequately protect CPNI for a protracted amount of
time caused substantial harm by making it possible for malicious actors to
identify the exact locations of AT&T subscribers who belong to law
enforcement, military, government, or other highly sensitive positions—
thereby threatening national security and public safety . . . .” The
Commission’s action, then, is analogous to common law negligence.
       The Commission responds that section 222 is not analogous to
negligence but instead is a “highly reticulated and technical scheme” for
safeguarding customer data. That is a false choice. The Seventh Amendment
applies to common law suits “whatever may be the peculiar form which they




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                                 No. 24-60223


may assume.” Jarkesy, 

 (quoting Parsons, 

); see
also Tull, 481 U.S. at 418–19 (“Actions by the Government to recover civil
penalties under statutory provisions therefore historically have been viewed
as one type of action in debt requiring trial by jury.”). However “technical”
section 222 may be, its substance is closely analogous to a negligence action.
       The Commission also points out that, unlike the securities laws in
Jarkesy, section 222 does not borrow common law terms like “negligence”
or “reasonable care.” Cf. Jarkesy, 

 (noting “Congress
deliberately used ‘fraud’ and other common law terms of art” in the
securities laws). That is partially true—the scheme does not use the term
“negligence” but does speak of “reasonable measures”—but in any event it
is not determinative. Yes, a statute’s borrowing common law terms may show
its kinship to a common law action. Cf. 

 (“Congress’s decision to draw
upon common law fraud created an enduring link between federal securities
fraud and its common law ‘ancestor.’”) (cleaned up). The key inquiry,
though, is not what terminology the statute uses but whether the statute
“target[s] the same basic conduct” as the common law claim. 

 The
answer here is yes: section 222 action targets a carrier’s negligence in
handling customer data.
       Moreover, as Jarkesy explained, the statutory action need not be
“identical” to a common law analogue. See 

 (“That is not to say that
federal securities fraud and common law fraud are identical.”); 

(“[I]f the action resembles a traditional legal claim, its statutory origins are
not dispositive.” (citing Granfinanciera, 

)). All that is needed
is a “close relationship,” Jarkesy, 

, and section 222 satisfies
that requirement.
       To be sure, the relationship between the section 222 action and a
common law analogue is not as obvious as it was in Jarkesy. But ambiguity on




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                                      No. 24-60223


this second consideration points us back to the “more important” first
consideration—remedy. Jarkesy, 

. As noted, section 222
imposes the archetypal common law remedy of money damages, which is “all
but dispositive” of the Seventh Amendment issue. 

                                            B
        The Commission next defends its enforcement proceeding under the
“public rights” exception, which, it contends, lets Congress assign the
proceeding to an agency rather than a court. We disagree.
                                            1
        Suits at common law presumptively concern “private rights” and
must be adjudicated by Article III courts. Jarkesy, 

 (citing
Stern v. Marshall, 

 (2011)). “The Constitution prohibits
Congress from ‘withdraw[ing] [such matters] from judicial cognizance.’”

 (quoting Murray’s Lessee v. Hoboken Land & Improvement Co., 

 (1856) (second brackets added)). “Public rights” cases, however,
may be channeled to agencies instead of courts. 

        This narrow exception to Article III applies only to matters that
“historically could have been determined exclusively by [the executive and
legislative] branches.” 

 at 128 (quoting Stern, 

). While the
Supreme Court has not “definitively explained” what divides public from
private rights, it has pointed to “historic categories of adjudications”
occurring outside Article III. Id. at 131, 130. Examples include revenue
collection, foreign commerce, immigration, tariffs, tribal relations, public
lands, public benefits, and patents. Id. at 128–30. 7 That said, the exception

        _____________________
        7
           See Murray’s Lessee, 

 (action to compel federal customs
collector to pay public funds into Treasury); Oceanic Steam Nav. Co. v. Stranahan, 

 (1909) (action to enforce fine on steamship company for disobeying federal




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                                       No. 24-60223


must be handled “with care.” Id. at 131. “[E]ven with respect to matters that
arguably fall within the scope of the ‘public rights’ doctrine, the presumption
is in favor of Article III courts.” Id. at 132 (quoting Northern Pipeline Constr.
Co. v. Marathon Pipe Line Co., 

, 69 n.23 (1982)).
                                              2
        The Commission argues its enforcement action falls within the public
rights exception because it involves common carriers. See Nat’l Cable &
Telecommunications Ass’n v. Brand X Internet Servs., 

 (2005)
(“The [Communications] Act regulates telecommunications carriers . . . as
common carriers.”). Given that common carriers like AT&T are “affected
with a public interest,” Munn v. Illinois, 

 (1876), the
Commission contends Congress could assign adjudication of civil penalties
against them to agencies instead of courts. For several reasons, we disagree.
        First, the Commission’s proposal would blow a hole in what is meant
to be a narrow exception to Article III. Myriad enterprises might be said to
implicate the “public interest.” 8 And Congress’s power to regulate common
carriers is broad. See Glob. Crossing Telecommunications, Inc. v. Metrophones
Telecommunications, Inc., 

 (2007) (“When Congress enacted
the Communications Act of 1934, it granted the FCC broad authority to
        _____________________
prohibition on allowing immigration by aliens with contagious diseases); Ex parte Bakelite
Corp., 

 (1929) (assessment of President’s tariffs on goods imported by
“unfair methods of competition”); United States v. Jicarilla Apache Nation, 

 (2011) (relations with Indian tribes); Crowell v. Benson, 

, 51 & n.13 (1932)
(administration of public lands); 

 (public benefits such as veterans benefits and
pensions); United States v. Duell, 

, 582–83 (1899) (patent rights).
        8
           See NetChoice, L.L.C. v. Paxton, 

, 445 (5th Cir. 2022) (social media
activity), overruled on other grounds by Moody v. NetChoice, L.L.C., 

 (2024); Fed.
Power Comm’n v. Hope Nat. Gas Co., 

 (1944) (natural gas operations);
Nat’l Union Fire Ins. Co. v. Wanberg, 

 (1922) (hail insurance); New York v.
FERC, 

 (2002) (electric energy).




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                                        No. 24-60223


regulate interstate telephone communications.”). If injected into the public
rights exception, this combination would empower Congress to bypass
Article III adjudication in countless matters. But the Supreme Court has
cautioned that the doctrine is a narrow and extra-textual “exception” to
presumptively mandatory Article III jurisdiction. Jarkesy, 

.
        Second, the common carrier doctrine is deeply rooted in the common
law. See, e.g., NetChoice, 49 F.4th at 469 (“The common carrier doctrine is a
body of common law dating back long before our Founding.”). 9 Negligence
claims against common carriers have been routinely adjudicated in state and
federal courts. See, e.g., Cole v. Goodwin & Storey, 

 (N.Y.
Sup. Ct. 1839) (a “coach proprietor’s” common carrier status made it
strictly liable in tort). 10 In light of that, it would be bizarre to situate a
negligence action against carriers within the “historic categories of
adjudications” falling outside Article III. Jarkesy, 603 U.S. at 130. 11



        _____________________
        9
           See 19 Charles Alan Wright, Arthur R. Miller & Edward H.
Cooper, Federal Practice and Procedure § 4514 (3d ed. 2024) (citing cases placing common
carriers’ liability within the federal common law because such liability involves significant
federal interests); see also Robert J. Kaczorowski, The Common-Law Background of
Nineteenth-Century Tort Law, 51 Ohio State L.J. 1127, 1132 (1990) (explaining that
“the common law imposed on persons engaged in a common calling a duty of reasonable
care and a standard of professional competence”).
        10
           See also New Jersey Steam Nav. Co. v. Merch.’s Bank of Bos., 

 (1848)
(steamboat operator liable for losses at sea); S. Exp. Co. v. Purcell, 

 (1867)
(railroad for loss of cotton bales); Duggan v. New Jersey & W. Ferry Co., 

 (Del.
Super. Ct. 1909) (ferry operator for personal injuries); Goldstein v. Northern Pac. Ry. Co.,

 (1917) (railroad for conversion); Korner v. Cosgrove, 

 (1923)
(taxicab operator for employee’s assault of a passenger); Callaway v. Hart, 

(5th Cir. 1944) (railroad for negligently leaving doors open) Andrews v. United Airlines, Inc.,

 (9th Cir. 1994) (airline for luggage falling on passenger).
        11
        Nor does it matter that this action is brought by the Government. The Supreme
Court “ha[s] never held that ‘the presence of the United States as a proper party to the




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                                         No. 24-60223


        Third, the cases cited by the Commission fail to show that the public
rights exception generally applies to common carriers. Some of the cases
involved actions far afield from this one, such as public benefits or actions
falling within federal admiralty jurisdiction.12 Those actions arguably fall
within the historical categories of non-Article III adjudications listed in
Jarkesy. See 603 U.S. at 130. Whether they do or not, though, they do not
involve anything like a negligence action against a common carrier for money
damages.
        It is true that federal agencies like the Commission have long had
regulatory authority over common carriers, such as when setting rates or
granting licenses. See, e.g., Virginian Ry. Co. v. United States, 

(1926) (discussing the Interstate Commerce Commission’s oversight of
railroad carriers). 13 But that does not imply, as the Commission seems to
think, that any regulatory action concerning common carriers implicates the
public rights exception and can therefore be “siphon[ed] . . . away from an
Article III court.” Jarkesy, 

.




        _____________________
proceeding is . . . sufficient’ by itself to trigger the [public rights] exception.” Jarkesy, 

.
        12
          See Scripps-Howard Radio v. FCC, 

 (1942) (addressing FCC order
granting application for a construction permit and station license); Red Lion Broad. Co. v.
FCC, 

 (1969) (addressing “fairness doctrine” governing content carriers could
broadcast over radio frequency); Crowell, 

 (addressing challenge to the
Longshoremen’s and Harbor Workers’ Compensation Act of 1927).
        13
          See also Burlington N., Inc. v. United States, 

 (1982) (discussing
Commission’s authority to set rates); Regents of Univ. Sys. of Ga. v. Carroll, 

 (1950) (discussing Commission’s authority to grant licenses); Belluso v. Turner
Commc’ns Corp., 

 (5th Cir. 1980) (discussing the Commission’s authority
to sanction licensees).




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                                         No. 24-60223


        Not even the first modern administrative agency thought that was
so. 14 The Interstate Commerce Commission, while empowered to regulate
common carriers and recommend monetary penalties, believed its
enforcement actions were subject to the Seventh Amendment and so,
necessarily, to Article III adjudication. The agency’s 1887 report, issued the
year it was created, stated that its power “must be so construed as to
harmonize with the seventh amendment to the Federal Constitution, which
preserves the right of trial by jury in common-law suits.” 1887 Interstate
Com. Comm’n Ann. Rep. 27; see also Richard L. Jolly, The
Administrative State’s Jury Problem, 

, 1242 (2023)
(quoting Report’s conclusion that it was “unquestionable that parties can not
[sic] be deprived of [the jury] right through conferring authority to award
reparation upon a tribunal that sits without a jury as assistant”). The
Commission takes no account of this history, which is flatly inconsistent with
exempting its enforcement action from Article III adjudication. 15
                                     *        *         *
        Ultimately, “what matters” for Article III purposes “is the substance
of the suit, not where it is brought, who brings it, or how it is labeled.”
Jarkesy, 

. As explained, this matter involves an action closely

        _____________________
        14
           See Lawrence M. Friedman, A History of American Law 439 (2d
ed. 1985). The ICC was the FCC’s predecessor.
        15 Consistent with this history is Meeker v. Lehigh Valley R.R. Co., 

(1915), which involved an ICC action targeting a railroad’s unreasonable rates. The
Supreme Court addressed whether a provision treating the ICC’s initial factfinding as a
“rebuttable presumption” that could be reconsidered in a later jury trial comported with
the Seventh Amendment. 

 Unlike the Commission’s action against AT&T here, the
ICC action there (rate setting) had no common law analogue. Even so, the Court assumed
the railroad had a jury right in the action and held the provision does not violate the Seventh
Amendment because “[i]t cuts off no defense, interposes no obstacle to a full contestation
of all the issues, and takes no question of fact from either court or jury.” 

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                                 No. 24-60223


analogous to a common law negligence action—and, importantly, one where
the Commission seeks “civil penalties, a punitive remedy that [the Supreme
Court] ha[s] recognized ‘could only be enforced in courts of law.’” 

 at 134
(quoting Tull, 

). Accordingly, the public rights exception does
not apply and Article III adjudication is mandatory. Id. at 128.
                                      C
       Finally, the Commission argues that, even if the Seventh Amendment
and Article III apply, the proceeding here meets their demands.
       The Commission points to the possibility of a back-end section 504
trial. Recall that a carrier who fails to timely pay a forfeiture penalty may be
sued by DOJ in federal district court. See 

(a). The
Commission suggests this would give a carrier everything promised by the
Seventh Amendment and Article III. We disagree.
       To begin with, by the time DOJ sues (if it does), the Commission
would have already adjudged a carrier guilty of violating section 222 and
levied fines. This case shows how the process works. The Commission
investigated AT&T, issued a charging document (the NAL), and received
AT&T’s written objections. The Commission then affirmed the NAL by
making fact findings, interpreting section 222, and applying that
understanding to the facts it had found. This resulted in a forfeiture order
concluding AT&T had violated the law and imposing $57 million in
penalties. So, in this process, which was completely in-house, the
Commission acted as prosecutor, jury, and judge.
       Such forfeiture orders, furthermore, are not mere suggestions—to the
contrary, they have real-world impacts on carriers. For example, the
Commission must consider any history of prior adjudicated offenses in
imposing future penalties. See 

(b)(2)(E) (“In determining the
amount of such a forfeiture penalty, the Commission or its designee shall take




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                                       No. 24-60223


into account . . . any history of prior offenses . . . .”). Unsurprisingly, they
also cause reputational harm to carriers because they can be widely publicized
and reported. See FCC v. Fox Television Stations, Inc., 

(2012) (explaining forfeiture orders’ impact on carriers’ reputations). And
consider the risks to a carrier of even getting to the section 504 trial: the
carrier must refuse to pay a penalty and wait for DOJ to drag it into court.
        In light of this, we reject the Commission’s argument that a section
504 enforcement proceeding satisfies Article III and the Seventh
Amendment. The Commission 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.
        But put all that aside for a moment and consider another glaring
problem. In a section 504 trial, a defendant cannot challenge a forfeiture
order’s legal conclusions. As our court has explained, in a section 504(a)
action, the district court is “limited to considering the factual basis for the
agency action” but not petitioner’s “legal arguments.” Stevens, 

. 16 So, even assuming an after-the-fact jury trial could potentially satisfy
the demands of the Constitution, the one provided here amputates the
carrier’s ability to challenge the legality of the forfeiture order.


        _____________________
        16
           The Commission tries to distinguish Stevens on the ground that it involved legal
challenges to a rule outside of a statutorily imposed deadline, but Stevens’ reasoning was
not limited to such challenges. See 

 (“Persons aggrieved by a final FCC forfeiture
order must raise legal challenges to the validity of the order in a timely petition for review
in the appropriate court of appeals.”). And, contrary to the Commission’s argument, PDR
Network, LLC v. Carlton & Harris Chiropractic, Inc., 

 (2019), does not support a
narrow reading of Stevens. There, the Supreme Court expressly refused to decide whether
the Hobbs Act’s exclusive-review provision affords a prior and adequate opportunity for
judicial review of Commission orders interpreting statutory provisions. 

.




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                                   No. 24-60223


       True, AT&T could challenge the Commission’s legal conclusions by
doing what it did in this case—paying the forfeiture and seeking direct
appellate review. See 

(a); see also AT&T Corp., 

. But that only underscores the dilemma in which AT&T finds itself. If
AT&T wants an Article III court to review the forfeiture order’s legality, it
has to give up a jury trial. If it wants a jury trial, it has to defy a multi-million
dollar penalty, wait for DOJ to sue, and, even then, relinquish its ability to
challenge the order’s legality.
       Either way, AT&T’s Seventh Amendment rights have been denied.
                                        IV
       No one denies the Commission’s authority to enforce laws requiring
telecommunications companies like AT&T to protect sensitive customer
data. But the Commission must do so consistent with our Constitution’s
guarantees of an Article III decisionmaker and a jury trial.
       Accordingly, we GRANT AT&T’s petition and VACATE the
Commission’s forfeiture order.




                                         20