Stephen L. Carter: The Supreme Court gives agencies too much power to punish

07 Jun 2026, 18:21 · The Fresno Bee

Quick quiz: If a federal agency wants to fine you for alleged misconduct, it must first do which of the following?

•(A) Give you a jury trial,

•(B) Afford you a hearing, or

•(C) At least point to a clear and unambiguous statute granting it the authority.

If you picked (D), none of the above, you're in splendid company. That's because on Thursday, in a pair of closely watched cases, the U.S. Supreme Court agreed with you.

The two cases present different facts, but each raises troubling issues about the power to punish. In both Federal Communications Commission v. AT&T, Inc. and Sripetch v. Securities and Exchange Commission, the justices upheld multimillion-dollar fines imposed by federal regulators. Because the corporate interests lost, the decisions have been hailed as evidence that the justices aren't biased toward business. But the issue that should concern us isn't who won; it's how, in both cases, the court chose to give a broad rather than a narrow reading to the government's power to punish.

In a democracy, there's no power more dangerous.

Let's start with FCC v. AT&T. After an investigation, the FCC decided that Verizon and AT&T had violated rules on confidentiality of customer location data. The commission therefore "assessed" fines against the two carriers totaling $100 million. The telecoms paid, then sued to get the money back, arguing that the FCC can impose fines only after a jury trial.

Maybe so, ruled the Supreme Court, but all that means is that the companies shouldn't have ponied up the cash in the first place. Despite language in the statute stating that those on whom the FCC chooses to "impose" such fines "shall be liable to the United States," wrote Chief Justice Roberts for an 8-1 majority, the commission lacks authority to impose mandatory fines without a court order. In other words, no matter what the FCC said, the carriers had no obligation to pay a penny.

Okay, that makes sense. So now, of course, Verizon and AT&T will get the $100 million back, won't they? The money the justices ruled they weren't obliged to pay in the first place? Or did paying the fine waive their right to a trial by jury? Um, well, maybe; maybe not. Here's the court's somewhat strange concluding footnote: "We express no view on the merits of this argument, on what relief may be available to the carriers, or in what proceeding."

In other words, even though the carriers weren't required to pay the fine, they won't know until later whether they'll get a refund.

Justice Thomas, the lone dissenter, pointed out that the FCC called its order an order, and told the companies they had 30 days to pay. If telecom giants who receive a communication like that from a government agency think it the better part of valor to pay huge fines rather than fight, even when they think they don't owe the money, what hope is there for ordinary folk? Especially when the Supreme Court says to them, in effect, "Yep, you got hosed on that one, tough luck about the $100 million."

Then there's Sripetch. I wrote about the case in this space a few months ago, when the justices decided to grant review, so here I can be brief. The issue was whether the SEC can require a fraudster to disgorge the profits from the fraud without showing that any investor lost a penny. The Supreme Court ruled 9-0 that the answer is yes. I'm neither pro-fraud nor anti-government, but I'm in favor of clear notice not only of what the law forbids, but of the consequences of breaking it.

That's where the problem arises. The SEC demanded the fine under a statute that uses the term "disgorgement" without defining it. A glance at legal history tells us that sometimes the word means giving back what was taken, and other times takes a broader definition. The federal appellate courts have split on the correct interpretation. Justice Gorsuch, writing for a unanimous court, upheld the SEC's claim to that broader definition: that is, even when nobody's been harmed, the government can take all the money.

My problem isn't that the fraudster has to give up his ill-gotten gains. It's that the statute itself doesn't resolve the meaning of disgorge. When Congress chooses to leave unclear the scope of government authority to punish, it's better for the cause of liberty if the judges read that lack of clarity as narrowly as possible. That's why in Sripetch, a ruling in favor of the fraudster - that is, a smaller fine - might have had the salutary effect of encouraging Congress to say what it means.

I know that big business doesn't have a lot of friends these days, and we're supposed to root when corporations lose. But my libertarian side takes the view that government power to punish should be crystal clear, and also include as many procedural safeguards as possible - including skeptical judges. Because if that argument doesn't work for the big corporations, it certainly won't work for the rest of us.

Which is why the right answer to the question that opened this column should be (E), all of the above.

____

This column reflects the personal views of the author and does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.

Stephen L. Carter is a Bloomberg Opinion columnist, a professor of law at Yale University and author of "Invisible: The Story of the Black Woman Lawyer Who Took Down America's Most Powerful Mobster."

This story was originally published June 7, 2026 at 11:21 AM.