In AT&T v. FCC, the Fifth Circuit vacated a $57 million forfeiture order issued by the Federal Communications Commission, ruling that the agency’s internal enforcement process violated AT&T’s constitutional rights under Article III and the Seventh Amendment. The opinion, authored by Judge Stuart Kyle Duncan, represents one of the most significant applications yet of the Supreme Court’s 2024 decision in SEC v. Jarkesy, which curtailed the use of in-house agency adjudication for cases involving civil penalties.

At issue in AT&T was the company’s location-based services program, which had allowed third-party providers to access customers’ location data. Although AT&T had protocols in place—such as requiring daily audits and customer opt-in consent—some of its partners allegedly misused the data. After media reports surfaced in 2018, AT&T terminated the program entirely by 2019. Nonetheless, the FCC issued a Notice of Apparent Liability in 2020, finding that AT&T had failed to reasonably protect customer data in violation of Section 222 of the Communications Act and its implementing regulations. After reviewing AT&T’s written response, the FCC affirmed the penalty in 2024.

Rather than address the statutory or factual merits of the forfeiture, the Fifth Circuit focused squarely on AT&T’s constitutional claims. The court held that the FCC’s adjudication of civil penalties (which occurs without a jury and outside of an Article III court) violated both the Seventh Amendment and the structural protections of Article III. Citing Jarkesy, the panel reasoned that civil penalties of this nature are “prototypical common law remedies” akin to money damages for tortious conduct. The court emphasized that the penalties were not designed to compensate victims or restore the status quo, but rather to punish and deter, making them fundamentally legal in nature.

The court went further by analogizing the FCC’s enforcement of Section 222 to a common law negligence action. AT&T was penalized not for intentional misconduct but for allegedly failing to take “reasonable measures” to safeguard customer data—language that closely mirrors traditional negligence standards. Because such actions would have been decided by juries in courts of law at the time of the Founding, the Fifth Circuit held that AT&T was entitled to the same procedural protections today.

Importantly, the court also rejected the FCC’s argument that its enforcement fell within the so-called “public rights” exception to Article III. Though administrative adjudication is permitted in areas historically left to the political branches—like immigration, public benefits, or military affairs—the Fifth Circuit found no such tradition in cases involving common carriers and money damages. On the contrary, the court emphasized that tort actions against common carriers have a long history in the courts and that allowing agencies to adjudicate such disputes unilaterally would represent a significant expansion of the public rights doctrine.

Finally, the court dismissed the FCC’s argument that judicial review is preserved through the agency’s two-track review system. While companies like AT&T can choose to either (1) pay the penalty and seek direct appellate review or (2) refuse to pay and risk a collection action in district court, the court found that neither option preserved the full scope of constitutional protections. In particular, district courts reviewing FCC forfeiture orders in collection actions are limited to evaluating the factual basis of the penalty—not its legal validity—and appellate courts do not offer jury trials. This structure, the court concluded, forced companies to choose between their right to a jury and their right to legal review, which the court considered an unconstitutional tradeoff.

The Fifth Circuit’s decision seems faithful to the letter of Jarkesy, but it also reflects a broader judicial trend that raises complex questions about the future of agency enforcement. For decades, Congress has tasked agencies like the FCC with enforcing specialized statutory regimes efficiently and consistently, relying on internal processes designed to reflect both legal standards and sector-specific expertise. These mechanisms have often allowed agencies to act swiftly and fairly, particularly in cases involving sensitive consumer data or rapidly evolving technologies. Of course, this decision makes that enforcement work much more difficult. Going forward, Congress will need to find ways to ensure constitutional protections without unduly weakening the ability of expert agencies to carry out their missions. It’s a tall task that will demand careful calibration—and with decision like Jarkesy and AT&T, I’m not sure they should expect much help from the courts.

Damonta D. Morgan is an associate at a law firm in Washington, D.C.