Verizon Urges 2nd Circuit to Overturn FCC Data Fine
Verizon urged the 2nd Circuit U.S. Court of Appeals to overturn a $46.9 million penalty from the FCC for not adequately protecting subscribers’ real-time location information that commissioners approved on a 3-2 vote last year (see 2404290044). Last week, the 5th Circuit heard AT&T's oral argument against a $57 million fine the commission imposed (see 2502030050). The government defended the order in the 5th Circuit even though current FCC Chairman Brendan Carr and Republican Commissioner Nathan Simington had dissented.
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The FCC initially proposed a fine in 2020, after the Enforcement Bureau investigated reports that a Missouri sheriff used a Securus-operated location-finding service to obtain location information of wireless customers without their consent between 2014 and 2017 (see 2002280065).
Verizon told the court in a brief filed Friday (docket 24-1773) that only 11 customers’ device-location information “was accessed without authorization” and “all by a single sheriff who obtained it from a single third-party service provider.” The “magnitude” of the penalty imposed “is disproportionate to any breach involving just 11 customers,” the carrier said: “The penalty is even more unreasonable given that the breach occurred outside the statute of limitations and the FCC penalized Verizon for actions within the limitations period during which there was no evidence of any attempted, let alone successful, breach.”
Verizon asserted that the FCC knew of the violation “long before Verizon and did nothing, belying its claims that Verizon’s safeguards had fundamental flaws that required immediate corrective action.” Verizon also argued, as AT&T did before the 5th Circuit, that location data isn’t customer proprietary network information under the language of the Communications Act. Verizon added that its safeguards were “reasonable and highly effective.”
Judges for the 5th Circuit asked numerous questions about whether the FCC action violated AT&T’s Seventh Amendment rights to a trial. “The FCC does not treat its Forfeiture Order as a mere hortatory prelude to a later complaint,” Verizon said in the brief: “It is a final agency action with ordering clauses adjudicating liability and demanding prompt payment,” and “as a final order, it has real-world consequences -- including that the FCC will rely on its findings in later proceedings to increase future fines or deny license applications, and that Verizon must account for the associated liability on its books.”