Not long ago we covered the story of an FCC forfeiture penalty issued against Telnyx related to a robocall scam targeting the FCC itself.
The Commission had determined Telnyx seemingly violated vague know-your-customer rules and was set to hit Telnyx with a multi-million dollar penalty. Telnyx fought back aggresively but the FCC was still left to determine how much it would fine Telnyx for the behaviour.
If that seems weird its because it is.
The FCC was simultaneously acting as victim, witness, prosecutor, judge and jury.
Telnyx’ response noted that Commission staff that received calls at issue should recuse themselves since they were directly involved with the underlying claim– which just makes common sense.
But there is a larger issue– one that AT&T just used to its high advantage. The FCC is weighing the evidence and then imposing a penalty without a court or a jury’s involvement.
And that, my friends, rather obviously violates the Constitution.
None of us can be harmed in any way without: i) a law that makes conduct illegal in place before we engaged in illegal conduct; and ii) a judge and/or jury determining that we, in fact, violated that law based on admissible evidence.
That’s the bedrock of due process and the bedrock of what makes us “free.”
But AT&T was recently denied that freedom by the FCC when it unilaterally determined AT&T was guilty of misusing consumer data and fined it $57MM without a jury’s involvement.
And while that might not sound too scary–I mean, why was AT&T misusing customer location data?–consider that Mr. Trump has recently ordered the FCC to do his exclusive bidding. In theory allowing the FCC to unilaterally determine and assign penalties to any communications company in America could very quickly escalate into something highly political and unpleasant.
The Fifth Circuit Court of Appeals cut all of that off at the pass, however, with a ruling in favor of AT&T holding the FCC’s actions violated the constitution.
In AT&T v. FCC the Court determined the forfeiture penalty at issue was a remedy akin to damages and not akin to equitable relief. The difference is critical– Americans (and companies) have a right to a jury and judge determinations for any relief that is properly considered a damage recovery. Further although the FCC argued it had the exclusive right to determine matters related to common carriers as a “public right” the Court disagreed noting claims against common carriers are often litigated by private rights in court.
The ruling itself is pretty straightforward: outside of very narrow situations, no penalties can be handed down in this country without a judge and jury. There were no exceptions to that rule present here. So out goes the award.
So where does this leave the FCC’s forfeiture power?
Well, unless there is an appeal to the Supreme Court–probably will be–I’d say it is dead, at least in so far as the penalties handed down are monetary awards. That is a MASSIVE change for the FCC that has just lost one of its most potent enforcement tools.
One wonders whether other extra-judicial penalties– such as “shut down orders” targeting intermediate and upstream carriers permitting robocalls to traverse their network–might also be set aside under this doctrine. Very fascinating to consider how deeply this new ruling cuts.
For now though, AT&T gets to walk away from $57MM in penalties–it already paid the money so will be curious to see how it gets it back– and Telnyx is sitting pretty.
Will keep an eye on all of this.