A Supreme Court case offers a possible route to appealing a forfeiture without having to pay it first.
A pair of California raisin farmers might have made it easier to challenge an FCC forfeiture.
A party dinged with a forfeiture that it thinks is unfair now has two options under the Communications Act. One is to challenge the forfeiture order directly in the Court of Appeals. The problem with that approach is that, as a condition to getting into the Court of Appeals, the challenger must first pay the forfeiture. Since forfeitures can reach up into six and seven figures and, let’s face it, not everyone has that much spare cash lying around, that condition poses a serious disincentive to direct appeals.
The other option is to not pay the forfeiture and wait for the FCC (assisted by their friends from the Department of Justice) to bring suit in your nearest federal District Court. In that case, the burden is on the government to prove that you are in fact really liable for the forfeiture, which gives you an arguable advantage going in. But at least one appellate court has held that a party choosing this option is not allowed to raise the full panoply of defenses that might normally be available in challenging the forfeiture.
What does this have to do with raisins?
Enter Marvin and Laura Horne, mom-and-pop raisin growers, who failed to turn over a stated portion of their crop, as required, to the Department of Agriculture’s Raisin Administrative Committee. (Who knew that raisin growers are required, by a Great Depression-era law, to turn over a percentage of their crop to the government? Details here – it’s worth the read, because you can’t make this stuff up.) The powers-that-be in the Agriculture Department were not pleased, and they brought the enforcement hammer down. The fines and penalties for the Hornes’ alleged offense totaled more than $650,000.
Mr. and Ms. Horne sought to challenge these sanctions, arguing in part that the requirement to surrender their raisins was an unconstitutional “taking” under the Fifth Amendment.
Their dispute reached the U.S. Supreme Court on the question of how the Hornes could bring their case: (1) by a direct challenge through the routine federal courts (the Hornes’ preference); or (2) by paying the fines and penalties and suing to get the money back in a different court under the Tucker Act, which governs many kinds of claims against the federal government.
The Ninth Circuit had concluded that, if the Hornes wanted to press their “taking” argument, they would have to do it under the Tucker Act after paying the penalties because otherwise their claim, in an ironic turn of judicial phrase for a raisin-related case, would be “unripe”.
A unanimous Supreme Court reversed that holding. It found that the Hornes could and should have been permitted to make their “taking” argument in their direct challenge to the Agriculture Department’s enforcement efforts, rather than having to wait to raise that argument in a separate Tucker Act lawsuit after the fine was paid. The Supremes said in passing, and of interest to us:
In the case of an administrative enforcement proceeding, when a party raises a constitutional defense to an assessed fine, it would make little sense to require the party to pay the fine in one proceeding and then turn around and sue for recovery of that same money in another proceeding.
The regulatory scheme (and related judicial review provisions) governing the raisin business are very different from those of the Communications Act, so it’s by no means a given that the Supreme Court’s decision will necessarily be applicable to FCC enforcement actions. But the quoted passage could arguably be read to apply in that context, at least where the target of an FCC fine mounts a constitutional defense. The Horne case thus opens the possibility that an FCC forfeiture defendant – especially one with a constitutional defense – might get directly into the Court of Appeals without first paying the forfeiture. That could afford a small but important tilt in the balance between the FCC and the people it regulates.