How Did a Very Weak Seventh Amendment Claim Make it to the Supreme Court?
One week from today and for the 28th consecutive summer, I will participate in the Practicing Law Institute's 28th Annual Supreme Court Review. As in other years, I'll be on most of the panels during the day, sometimes commenting on cases others present and sometimes presenting cases myself. I've got some "big" cases to present but also one pretty small onet: FCC v. AT&T.
The end of the Term last month was a busy time for me. In addition to writing about the big cases for this blog, Verdict, and SCOTUSblog, I was hard at work on updates to my casebook. As a result, I didn't get around to reading FCC v. AT&T until yesterday. Although the outcome of the case is clearly correct given the Court's premises (as I'll explain momentarily), it is somewhat puzzling how the case even got to the Supreme Court. By the end of this short essay, I'll offer my best guess. But first, I'll discuss the merits.
To oversimplify somewhat, the Federal Communications Commission (FCC) conducted administrative proceedings against AT&T and Verizon for the companies' alleged improper handling of their subscribers' location data. They resulted in administrative findings and penalties of $57 million and $47 million, respectively. Under the governing statutes, at that point, the companies had a choice: (1) either pay the fines and go to a federal appeals court to contest the order under the standards of the Administrative Procedure Act (APA) in a case without a jury; or (2) do nothing and wait up to five years for the FCC to bring its own suit against the company in federal district court where there will be a trial de novo before a jury.
Both AT&T and Verizon paid their fines and went the APA appeals court route. There they argued that the scheme violates their Seventh Amendment rights to a jury trial. The Fifth Circuit (in the AT&T case) agreed, while the Second Circuit (in the Verizon case) disagreed. SCOTUS took the case to resolve the circuit split and, in an 8-1 opinion by Chief Justice Roberts, found that there was no Seventh Amendment violation.
If you were paying attention to what you just read, you're probably wondering how the case ended up in the Supreme Court at all. How did the Fifth Circuit reach a contrary decision? And why was the case not 9-0? After all, the companies chose to pay and appeal rather than to exercise their jury trial rights. It's as though a party waives jury trial and then complains that there was a Seventh Amendment violation because there was only a bench trial. Actually, it's not as though what I just wrote. It simply is that. And that is essentially what the Roberts majority opinion says.
To make sense of the existence of a dispute, let's start with the dissent by Justice Thomas. Under the influence of constitutional avoidance, he agrees with the majority that 47 U.S.C. § 504 entitles companies like AT&T and Verizon to challenge FCC penalties in a trial de novo at which they would have a jury trial. However, he says, at the time that the companies had to decide whether to challenge the FCC penalties under the APA or wait for the FCC to sue, some lower courts had held that, notwithstanding the text of § 504 ("any suit for the recovery of a forfeiture . . . shall be a trial de novo"), when the FCC sues to enforce a penalty, the courts would be required to defer to the agency in one way or another. And, he says, the FCC had sufficient to discretion in deciding where to sue that it could have chosen a district court where trial de novo meant something less than a full do-over. Thus, he says, the companies didn't freely waive their right to de novo jury trial because, when they made the decision how to proceed, they were not assured that they had such a right.
The majority responds in a footnote that it need not consider Justice Thomas's objection by noting that the parties themselves did not raise it. That's fair enough, I suppose, but that then got me wondering how it is that the Fifth Circuit ruled for AT&T's Seventh Amendment claim. So I read the Fifth Circuit opinion (authored by Trump appointee Judge Kyle Duncan). Most of it is devoted to rejecting the FCC's efforts to distinguish the Supreme Court's opinion in SEC v. Jarkesy by arguing that there's no Seventh Amendment jury trial right in a case of this sort in the first place. Although I thought that Jarkesy was wrongly decided, I find the Fifth Circuit opinion reasonably persuasive in rejecting the distinctions the government offered.
But that's not to say that the Fifth Circuit opinion is persuasive overall. It isn't.
The government also argued in the Fifth Circuit, as it later did in the Supreme Court, that any Seventh Amendment defect in an APA challenge to the FCC assessment is cured by the party's ability to litigate in a trial de novo by simply awaiting government action. In rejecting that argument, the Fifth Circuit did not rely on the argument Justice Thomas offered. It did not say that trial de novo isn't really a trial de novo.
Rather, the Fifth Circuit said that the FCC's internal proceedings resulting in an assessment of a fine carry sufficient consequences that they violate the Seventh Amendment, regardless of what comes afterwards. The Fifth Circuit said that assessments "are not mere suggestions—to the contrary, they have real-world impacts on carriers," but the real-world consequences to which it pointed are hardly the stuff of Seventh Amendment rights. They include "reputational" damage to a carrier. Yet, as the Supreme Court majority pointed out, the initiation of proceedings and many other actions can have reputational consequences without triggering the Seventh Amendment right.
In the end, then FCC v. AT&T is less about the scope of the Seventh Amendment than it is about the competition among lower court judges to establish their extreme right-wing bona fides so that President Trump will nominate them to the Supreme Court should a vacancy soon occur.
Postscript Bonus: As a panelist at the PLI Supreme Court Review session next week, I am entitled to two free passes for guests. I'm happy to distribute mine to DoL readers who expect to be in NYC, have a day free, and need the CLE credits. If I receive multiple requests, I'll prioritize friends, former students, and lawyers over readers who don't fall into any of those categories. Otherwise, first-come/first-served. Email me (michaeldorf@cornell.edu) if you're interested.
-- Michael C. Dorf