FTC v. AT&T Mobility LLC.

• Date: 01 September 2018

Millicent Usoro (100)

883 F.3D 848 (9TH CIR. 2018)

1. BACKGROUND

   In FTC v. AT&T Mobility, the Ninth Circuit, sitting en banc, affirmed the district court's denial of AT&T's motion to dismiss an action brought by the Federal Trade Commission (FTC) under Section 5 of the FTC Act (Act), alleging that AT&T's data-throttling plan was unfair and deceptive. (101) Data throttling is a practice by which a company intentionally reduces customers' data speeds for exceeding the threshold usage of the customer's data plan, regardless of network congestion. (102) The court initially reversed the district court's denial of the motion to dismiss, but conducted a rehearing on the issue.

   AT&T argued that it is exempt from Section 5 because it fell under the common carrier exemption of the Act. (103) In its view, AT&T is an entity that has the "status" of a common carrier and therefore, all of its acts are immune from FTC authority under Section 5, "regardless of whether the entity provides both common-carriage and non-common-carriage services." (104) Furthermore, while AT&T's motion to dismiss was pending, the FCC issued an order that would prospectively classify mobile data as a common-carriage service instead of a non-common-carriage service. (105) AT&T subsequently argued that the FTC no longer had the authority to bring suit against it because of this order. (106)

   The FTC argued that the common-carrier exception only applies to the common-carrier activities of an entity--thus, an entity is still subject FTC regulation for its non-common carriage activities. (107) Additionally, the agency argued that because the FCC order only applies prospectively, mobile data was not considered a common carrier service when the FTC filed its suit against AT&T. (108)

2. ANALYSIS

   As a threshold issue, the court held that the district court had federal question jurisdiction because the "dispute was one arising under federal law." (109) The court then began its statutory interpretation analysis by reviewing the text and history of FTC Act and the definition of "common carrier." The court concluded that the text and history of the Act gave limited guidance, but did point to an activity-based definition of a common carrier. The court noted that Congress intentionally gave the FTC broad enforcement powers through the Act when it was enacted in 1914, and that Congress established the common-carrier exemption to avoid "interagency conflict" with Interstate Commerce Commission, an agency established in 1887 that regulated common carriers. (110) While the court noted that Congress has never defined the term "common carrier," the Communications Act defined it 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." (111) The definition was extended to telecommunications carriers in the Telecommunications Act of 1996. (112)

   The court rejected AT&T's argument that Section 6 of the Act, which was enacted in 1973 and governs the FTC's investigative authority, illuminates on the...