Antitrust Law Daily Wrap Up, CONSUMER PROTECTION—N.D. Cal.: AT&T, FTC dispute over FCC Reclassification Order certified for appeal, (May 18, 2015)

By Greg Hammond, J.D.

AT&T Mobility LLC has obtained certification of an order denying the company’s motion to dismiss FTC claims that AT&T violated the FTC Act by changing the terms of customers’ unlimited data plans while those customers were still under contract. The federal district court in San Francisco granted the motion to certify the dismissal order for immediate appeal, finding that AT&T raised two controlling questions of law that have substantial grounds for difference of opinion (FTC v. AT&T Mobility LLC, May 15, 2015, Chen, E.).

The FTC filed its complaint against AT&T in October 2014, alleging that the company failed to adequately disclose to customers on unlimited data plans that, if they reached a certain amount of data use in a given billing cycle, AT&T would reduce or “throttle” their data speeds, in some cases up to 90 percent. The suit charged that AT&T violated the FTC Act by changing the terms of customers’ unlimited data plans while those customers were still under contract and by failing to adequately disclose the nature of the throttling program to consumers who renewed their unlimited data plans.

In January 2015, AT&T moved to dismiss the complaint, contending that the company was a common carrier under the Communications Act regulated by the Federal Communications Commission (FCC) and therefore exempt from the FTC’s enforcement authority under the FTC Act. The motion to dismiss was denied by the district court, which found that AT&T’s mobile data services were not regulated as common carrier activity by the FCC and therefore were not exempt from FTC enforcement authority under the FTC Act as a common carrier.

AT&T subsequently filed a motion to certify the court’s March 31 order denying dismissal. The court granted the motion to certify, finding that both issues raised in the motion to dismiss—that (1) the common carrier exception in 15 U.S.C. § 45(a) applied to AT&T and (2) the FCC’s recent “Reclassification Order” stripped the FTC of jurisdiction to pursue this case, even if limited to the past misconduct of AT&T—represented controlling questions of law, under which there is a substantial ground for difference of opinion. Specifically, the court found that circuit courts are split on the first legal issue, which was sufficient to establish a substantial ground for difference of opinion. The second issue also raised novel and difficult questions, and was intimately related to the first legal issue.

The case number is C-14-4785 EMC.

Attorneys: David Michael Newman, FTC. Benjamin Stark Softness (Kellogg, Huber, Hansen, Todd, Evans and Figel, PLLC) for AT&T Mobility LLC.

Companies: AT&T Mobility LLC

Cases: Advertising ConsumerProtection CaliforniaNews