Supreme Court Upholds FCC Forfeiture Regime, Clarifying Limits of Jarkesy

The U.S. Supreme Court recently issued a significant decision upholding forfeiture penalties imposed by the Federal Communications Commission (FCC) against several telecommunications carriers. The Court's June 4, 2026, decision in FCC v. AT&T Inc. held that the FCC's administrative process for assessing civil forfeiture penalties does not violate the Seventh Amendment.

The 8-1 ruling authored by Chief Justice Roberts resolved a closely watched circuit split and provided important clarity on the scope of its 2024 decision in Securities & Exch. Comm'n v. Jarkesy, 603 U.S. 109 (2024). Jarkesy held that administrative adjudications imposing civil monetary penalties without a jury trial violate the Seventh Amendment. The Court's decision in FCC v. AT&T clarifies that Jarkesy does not prohibit administrative adjudications where regulated entities retain the right to a full de novo jury trial after the administrative proceedings are concluded and before a regulated entity can be made to pay. Rather, the constitutionality of administrative adjudications turns on whether an agency's process ultimately displaces the role of Article III courts and juries in determining liability for monetary penalties.

FCC Enforcement Framework and the Court's Decision

As discussed in our prior advisories from February 2026 and May 2025, the case arose from FCC enforcement actions imposing significant monetary penalties on wireless carriers for alleged failures to safeguard customer location data under the Communications Act. The FCC ultimately issued forfeiture orders imposing tens of millions of dollars in penalties against multiple carriers. The carriers paid the FCC fines and then challenged the FCC's administrative forfeiture process in three federal courts of appeals, arguing that agencies cannot impose penalties through administrative proceedings without affording a jury trial. As a practical matter, the carriers' decision to pay meant they effectively forfeited the pathway to a de novo jury trial—by paying, they were limited to appellate review on the administrative record, without a jury. The Fifth Circuit ruled in favor of AT&T, holding that the FCC's enforcement procedures violated the Seventh Amendment because, by the time the Commission issued a forfeiture order, it had already found the facts, adjudged liability, and levied punishment—all without the involvement of a jury. FCC v. AT&T, Inc., 149 F.4th 491 (5th Cir. 2025). A few months later, the Second Circuit reached the opposite conclusion in Verizon's case, holding that the FCC's forfeiture order did not compel payment and that the Commission did not violate the Seventh Amendment because the Department of Justice (DOJ) would have to initiate a separate collection action before a carrier could be made to pay. Verizon Commc'ns Inc. v. FCC, 156 F.4th 86 (2d Cir. 2025). The Court, which agreed to hear the matter on consolidated appeals from the Second and Fifth Circuits, held that the FCC's forfeiture scheme is constitutional because defendants may choose to challenge the FCC's findings and penalties in a jury trial rather than pay the FCC's fines. Although the FCC may investigate, determine liability, and assess a forfeiture amount through administrative proceedings, it cannot itself compel payment. If a defendant refuses to pay the FCC's forfeiture order, the FCC must rely on the DOJ to bring a separate action to collect the forfeiture penalty in federal district court, where liability is decided de novo and a jury trial is available. Similarly, the carriers argued that the risk of reputational harm unduly burdens their jury trial right while awaiting an enforcement action, but the Court found that "the uncertain prospect of such harm does not improperly 'discourag[e] the exercise'" of the carriers' right to a jury trial. Because the right to a jury trial is available prior to being forced to pay a forfeiture, the Court concluded that the FCC's process does not represent a final adjudication of legal rights and therefore does not violate the Seventh Amendment.

The Court also resolved a central disagreement regarding the scope of Section 504(a), the statutory provision governing DOJ actions to collect FCC forfeitures. A number of lower courts, including courts within the Fifth Circuit, had held that Section 504(a) proceedings were limited to a trial on the facts and that defendants were required to accept the FCC's legal conclusions. The Second and D.C. Circuits, by contrast, held that Section 504(a) provides for a full de novo trial in which defendants could challenge both the FCC's factual findings and legal determinations. The Supreme Court squarely adopted the latter view, emphasizing that a Section 504(a) action proceeds "as if no [prior] trial … had been had," with both factual and legal issues subject to adjudication "anew" in an Article III court. The Court also acknowledged the Commission's position that its factual findings during administrative forfeiture proceedings carry no "binding" or "preclusive effect" and are given no "special weight" in a Section 504(a) proceeding.

Distinguishing SEC v. Jarkesy

In Jarkesy, the Court held that the SEC's use of in-house administrative proceedings to impose civil penalties violated the Seventh Amendment because the SEC had the power to enforce its orders through liens, garnishments, and seizures with no jury trial available at any point. The carriers argued that Jarkesy controlled here because, like the SEC, the FCC issued findings, determined liability, and commanded payment of substantial monetary penalties before the carriers had access to a jury.

The Court rejected the carriers' argument and distinguished its Jarkesy holding on the basis that unlike the SEC, the FCC had no authority to collect on its forfeiture orders before the carriers could challenge those orders before a jury. Under the FCC's enforcement scheme, if carriers elect not to pay the forfeiture, the FCC must rely on the DOJ to commence an enforcement action that involves a de novo trial on the facts and the law and the right to demand a jury. In addition, until that enforcement action is concluded, no penalties and interests may accrue, and the FCC's forfeiture order may not be used to prejudice the carrier in any other FCC proceeding. The upshot is a clear line: Administrative enforcement processes resulting in monetary forfeitures that do not include any self-executing enforcement mechanism or other coercive consequences before a defendant has access to a trial by jury do not violate the Seventh Amendment. Under Jarkesy, enforcement processes carrying monetary penalties and collection mechanisms before the agency action can be challenged in a jury trial violate the Seventh Amendment.

Strategic Considerations for Regulated Companies

The Court's decision in FCC v. AT&T has significant implications for telecommunications carriers subject to FCC jurisdiction—and for federally regulated businesses more generally. While recent decisions in Jarkesy and Loper Bright placed significant limits on administrative power, the AT&T decision leaves the FCC's enforcement process under Section 503(b) in place. However, the FCC forfeiture orders now have limited legal effect: They do not obligate payment, and they are not preclusive on either the law or the facts. As a legal matter, the FCC's forfeiture orders are nonbinding, preliminary proceedings. This represents a significant shift because, as Justice Thomas notes in his dissent, prior to this litigation the FCC had taken the position it could enforce forfeitures prior to challenge before a jury, and the lower courts had not granted de novo trials on the law and the facts. As a result, few carriers ever exercised the right to decline to pay and defend an enforcement action, opting instead for an appeal of agency action under the Administrative Procedure Act.

But the decision is nonetheless a victory for FCC enforcement power. Even though the FCC cannot compel payment, it retains the ability to subject companies to lengthy administrative proceedings, make detailed findings of liability, and order substantial penalties—placing the burden on companies to decide whether to appeal the FCC's order on the record under a deferential standard or wait for a DOJ enforcement action that may take years to materialize, if at all, and engage in costly litigation including discovery, expert witnesses, a jury trial, and subsequent appeals from the results at trial. That dynamic gives the FCC considerable practical leverage.

In light of the Court's decision, companies should consider the following:

1. Administrative Proceedings Are Here to Stay

The Court's decision makes clear that administrative enforcement proceedings remain constitutional so long as jury trial is available before defendants can be compelled to pay—even if that jury trial only comes after months or years of agency proceedings. For agencies like the FCC, this is significant even though they cannot independently compel penalties, because agencies can make these processes lengthy and difficult, often prompting companies to seek settlement rather than endure prolonged regulatory scrutiny. Companies should expect administrative investigations to remain a central feature of regulatory enforcement, and similar enforcement models used by other agencies are likely to remain intact where statutory schemes preserve a pathway to de novo review.

2. Align Enforcement Strategy Early: Administrative Process as the First Phase of Litigation

The Court's decision underscores that a forfeiture order should not be treated as final, even after the FCC has made findings and assessed a penalty. The government must still prevail in a separate judicial proceeding before any payment can be compelled. As a result, companies should evaluate forfeiture orders not only as regulatory determinations, but as potential precursors to litigation—requiring a parallel assessment of legal defenses, evidentiary strategy, and litigation risk.

At the same time, the Court's decision clarifies (and heightens) the strategic importance of how companies should respond to enforcement actions from the outset. Because the Court confirmed that a jury trial need only be available after administrative enforcement proceedings, companies facing forfeiture orders must evaluate early whether to resolve matters at the agency level or position themselves for a potential court challenge. That decision is inherently strategic and fact-specific, turning not only on legal considerations but also on business, reputational, and timing concerns.

Accordingly, the administrative proceeding should no longer be viewed as a standalone regulatory process, but as the first phase of a potential two-stage litigation pathway.

The Court's decision also sharpens the strategic significance of a company's response to a forfeiture order. After an order is issued, a regulated entity effectively faces two divergent paths:

• Pay the forfeiture and seek appellate review, which limits review to the administrative record and does not involve a jury.
• Decline to pay and await a potential enforcement action, which triggers a de novo proceeding in federal court where liability must be proven anew and a jury may decide disputed facts.

The choice is consequential and should be evaluated early. It affects not only the standard of review and forum, but also timing, litigation posture, public exposure, and the degree of control a company retains over the development of the factual record. At the same time, declining to pay a forfeiture order does not guarantee an immediate judicial forum. The DOJ retains discretion over whether and when to bring an enforcement action, which may introduce uncertainty and prolong the resolution of the dispute. In some cases, that delay may carry business or reputational costs independent of the ultimate merits.

3. Build the Record for a Jury: Rethinking Evidence and Narrative at the Agency Stage

As discussed above, the Court held that a Section 504(a) enforcement action is a true trial de novo—the government must prove its case from scratch, and the FCC's prior factual and legal findings carry no binding or preclusive effect and receive no special weight. That means a Section 504(a) action is not limited to what was presented to the agency. Unlike appellate review, where the court is confined to the administrative record, a de novo trial starts "anew." The government must reestablish every element of its case, and defendants are free to raise new arguments and present new evidence.

That distinction has important implications for how companies approach the administrative stage. Because the issues in a potential jury trial years down the road may look very different from those the FCC focused on during the administrative proceedings, companies should preserve evidence broadly—not just narrowly tailored to the specific points the agency has raised. The FCC may be focused on particular regulatory violations, but a federal jury may need to evaluate the company's conduct more holistically, and evidence that seems peripheral during the agency stage may be critical at trial.

Companies should also consider whether their submissions to the FCC tell a clear and compelling story about their conduct—not just for a technical regulatory audience, but in terms that would be intelligible and persuasive to a jury. What satisfies the FCC will not necessarily translate to a litigation setting; the gap between those audiences can be outcome-determinative.

Conclusion

The Court's decision resolves a key question left open after Jarkesy and affirms an enforcement framework that is central to the FCC's regulatory authority.

For communications providers and other regulated entities, the takeaway is twofold. First, administrative enforcement is here to stay, and companies should expect continued scrutiny at the agency level. Second, the path to judicial review remains available, but must be navigated strategically. As agencies and litigants test the boundaries of this framework, companies should expect continued evolution in how enforcement actions are structured, challenged, and resolved.

Davis Wright Tremaine's communications, privacy, and security teams are advising clients on how this decision affects enforcement risk, compliance strategy, and litigation posture across a range of regulatory contexts.

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Soraya Mohamed, Michael T. Borgia, and Adam S. Caldwell all have extensive experience advising on matters at the intersection of communications, privacy, and cybersecurity enforcement. For more insights, please contact Soraya, Mike, Adam, or another member of DWT's FCC & communications industry enforcement team, or sign up for our alerts.