In FTC v. AT&T Mobility, the United States Court of Appeals for the Ninth Circuit dismissed an action brought by the Federal Trade Commission (FTC) against AT&T under Section 5 of the FTC Act, for failing to disclose to its customers its practice of throttling data speeds for consumers with unlimited mobile data plans. In interpreting the Section 5 common carrier exemption to be status-based, the Court held that AT&T is immune from Section 5 liability due to its status as a common carrier. Convoluting the jurisdictional boundaries between the FTC and the Federal Communications Commission (FCC), the Court's analysis in FTC v. AT&T Mobility LLC exposes the possibility that even engaging in a negligible amount of common carrier service may be enough to qualify all of an entity's activities for the common carrier exemption.
Pursuant to Section 5 of the FTC Act, the FTC is authorized to "prevent persons, partnerships, or corporations, except... common carriers subject to the Acts to regulate commerce... from using... unfair or deceptive acts or practices in or affecting commerce." (1) Section 5(a)(2) contains a list of industries that enjoy a jurisdictional carve-out from FTC authority. This list includes banks, airlines, federal credit unions, and of particular relevance in the instant case, common carriers. (2)
The FTC Act contains no explicit definition of "common carrier." (3) However, "common carrier" is defined in the Communications Act of 1934 as "any person engaged as a common carrier for hire, in interstate or foreign communication by wire or radio or interstate or foreign radio transmission of energy." (4) Pursuant to the Communications Act of 1934, the FCC enjoys regulation and enforcement capabilities of common carriers. (5)
Giving rise to a jurisdictional overlap between the FTC and the FCC, "[a]cts to regulate commerce" is defined in the FTC Act as including the Interstate Commerce Act of 1887, (6) the Communications Act of 1934, and "all Acts amendatory thereof and supplementary thereto." (7)
In the instant case, the FTC filed suit against AT&T in 2014 under its Section 5 enforcement authority asserting that, despite AT&T's unequivocal marketing promises of unlimited data, the company began throttling data speeds for its customers with unlimited mobile data plans. (8) At the core of the FTC's claim was that AT&T was promising unlimited mobile data to its customers that it failed in fact to provide. The FTC's initial...