AT&T DODGES FTC THROTTLING CLASS ACTION LAWSUIT

AT&T DODGES FTC THROTTLING CLASS ACTION LAWSUIT

Using Title II Classification It Vehemently Opposedfrom the some-fine-tap-dancin' dept

Back in 2011, AT&T stopped selling unlimited wireless data plans, and began heavily pushing more expensive capped and metered plans. Existing unlimited users at the time were grandfathered, but the company engaged in all manner of sneaky behavior to try and make life as unpleasant as possible for these users, ranging from blocking them from using Facetime unless they migrated to metered plans, to heavily throttling these "unlimited" users after only consuming a few gigabytes of data. Ultimately AT&T faced a $100 million fine by the FCC (currently being contested by AT&T), and a 2014 lawsuit by the FTC for misleading consumers and dramatically changing the terms of service while users were under contract. 

Originally we noted how AT&T had used a Schrodinger-esque attempt to derail the lawsuit by claiming that since it would soon be a common carrier under Title II of the Communications Act (something its lawyers fought and continue fighting to this day), it didn't technically qualify as a common carrier under the FTC Act. At the time, consumer groups like Free Press found AT&T's tap dancing rather funny:

AT&T DODGES FTC THROTTLING CLASS ACTION LAWSUIT

AT&T DODGES DATA-THROTTLING CLASS-ACTION LAWSUIT

A California judge decided that the class-action lawsuit filed against AT&T for throttling unlimited data will not be allowed to proceed. According to AT&T, customers should only have their complaints heard on an individual basis through arbitration, and it seems as though Judge Edward Chen from the U.S. District Court in Northern California agrees with the company.

Many customers, however, suggest that arbitration would violate the First Amendment right to petition a court for a grievance. Arbitration would allow claims to be brought to the small claims court, but some suggest that the small claims court is not an adequate forum.

Related: AT&T is suing the Louisville Metro Council over Google Fiber

Chen’s decision comes from a 2011 case, in which the Supreme Court upheld AT&T’s argument for arbitration. According to the Supreme Court, the Federal Arbitration Act preempts a California state law which limits a company’s power to force customers into arbitration.

Customers first filed the lawsuit when AT&T started throttling iPhone users if they used more than 3GB or 5GB of data in one month — even if they had unlimited data plans. The data speeds were far slower than standard speeds, so the customers argue that their unlimited data plans weren’t truly unlimited or useful.

The ruling is a pretty big one for AT&T. It’s unlikely that thousands of iPhone users will file individual lawsuits to the small claims court. Not only that, but those who do take their case to court will have to deal with the legal fees that they wouldn’t otherwise need to pay in a class-action lawsuit.

Still, AT&T isn’t completely out of the woods yet, and will face punishment from the Federal Communications Commission and Federal Trade Commission. The FCC has proposed a fine of $100 million to AT&T, saying that the company violated FCC transparency laws by labeling plans as “unlimited.”

The FTC has also separately sued AT&T for millions of dollars of refunds for customers, and while AT&T argues that the FTC has no jurisdiction in this case, that claim was rejected by the court. Of course, AT&T is still trying to avoid any punishment whatsoever.

Read more: http://www.digitaltrends.com/mobile/att-class-action-lawsuit-dismissed/#ixzz4IqD59fPv 

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"It is rich to see AT&T in two different appellate courts at once, simultaneously arguing in this case that its mobile broadband is a common carriage service -- and therefore not subject to FTC jurisdiction -- while telling the DC Circuit that AT&T's mobile broadband cannot be treated as a common carrier service."

Initially it seemed like the laugh would be on AT&T, with a court last year denying AT&T's motion for dismissal (pdf), ruling it was "unambiguously clear" that only AT&T wireless voice, not wireless data, was classified as common carrier when the lawsuit was filed last fall. But this week an appeals court in California contradicted this finding and dismissed the FTC's case entirely, the ruling (pdf) stating AT&T can no longer be held in violation of the FTC Act because it's now classified as a common carrier under the Communications Act:

"The common carrier exemption in section 5 of the FTC Act carves out a group of entities based on their status as common carriers. Those entities are not covered by section 5 even as to non-common carrier activities. Because AT&T was a common carrier, it cannot be liable for the violations alleged by the FTC. The district court’s denial of AT&T’s motion to dismiss is reversed, and the case is remanded for entry of an order of dismissal."

There's some indications in the ruling that the court wasn't sure that the FTC ever had authority over AT&T under the FTC Act (Title II or no). But it's still amazing to realize that AT&T was simultaneously arguing before two different courts that ISPs should not be classified as common carriers under Title II, while at the same time using this pending reclassification as grounds to dismiss the FTC lawsuit. Fancy footwork, that. AT&T may still face the $100 million FCC fine for lying to its customers, provided its lawyers can't tap dance out of that punishment as well. This all occurs, of course, as AT&T's lawyers and trade groups continue their original assault on Title II

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