FCC Defends Upward Adjustment of Verizon Data Fine
The FCC defended its 50% upward adjustment of a fine it imposed on Verizon for data violations, bringing the total penalty to $46.9 million, in a brief filed Wednesday at the 2nd Circuit U.S. Court of Appeals. The court heard Verizon’s challenge of the fine in April (docket 24-1733), with judges appearing skeptical of the carrier’s arguments (see 2504290060). This week, they asked both sides about the adjustment as they near a decision. The FCC defended the fine even though now-Chairman Brendan Carr and Commissioner Nathan Simington had opposed it (see 2504250062).
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In imposing an upward adjustment, the commission “considered, among other factors, the egregiousness of Verizon’s conduct,” said an order from the court: “During oral argument this issue was discussed, but the panel believes that the case would benefit from additional briefing.”
“The upward adjustment was appropriate and should be affirmed,” the FCC responded in Wednesday's brief. “Verizon forfeited any challenge to the adjustment by failing to brief the issue before this Court.” As the agency determined, “Verizon’s conduct was particularly egregious because the company made no serious effort to investigate or contain” the vulnerabilities found in how it handled data, “even as it continued selling location data to third parties through a system it knew was flawed,” the brief said. There were “numerous steps that could have been taken to squarely address the proven vulnerability.”
Verizon said in its own filing that the forfeiture order before the court “is unlawful for many reasons: device-location information is not [customer proprietary network information], Verizon reasonably protected its customers’ information, the disproportionately high forfeiture exceeds statutory limits, and the Order violates the Seventh Amendment.” Add to that “the FCC’s arbitrary and capricious 50% upward adjustment,” the carrier said. “If any forfeiture were lawful -- and none is -- it would be far smaller than the nearly $47 million penalty the FCC imposed.”
The 5th Circuit ruled last month that a similar AT&T fine was unconstitutional because it violated the Seventh Amendment, which provides the right to a jury trial (see 2504180021). However, 2nd Circuit judges appeared skeptical of that claim during oral argument in the Verizon case.