Federal Trade Commission v. AT & T Mobility LLC
2016 U.S. App. LEXIS 15913
| 9th Cir. | 2016Background
- AT&T offered grandfathered “unlimited” mobile data plans for early iPhone customers; in 2011 it began throttling speeds for unlimited-plan users who exceeded a monthly data threshold.
- Throttling was applied regardless of real-time network congestion and was not regularly applied to customers on tiered plans.
- The FTC sued under Section 5 of the FTC Act, alleging AT&T’s throttling and disclosures were unfair and deceptive (Counts I & II).
- AT&T moved to dismiss, arguing it was exempt from Section 5 as a “common carrier subject to the Acts to regulate commerce” (status-based exemption); the district court denied the motion.
- While the motion was pending, the FCC reclassified mobile data as a common-carrier service; the district court held that reclassification did not strip the FTC of authority over past conduct.
- The Ninth Circuit granted interlocutory review to decide whether the Section 5 common-carrier exemption is status-based or activity-based.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Scope of Section 5 common-carrier exemption: status-based vs. activity-based | FTC: exemption applies only to common-carrier activities; FTC may regulate non-common-carrier activity of a common carrier | AT&T: exemption is status-based; any entity that is a common carrier is excluded from Section 5 for all activities | Exemption is status-based; common carriers (like AT&T) are excluded from Section 5 even for non-common-carrier activities |
| Effect of FCC reclassification on FTC authority over past conduct | FTC: reclassification does not retroactively strip FTC of authority over pre-reclassification misconduct | AT&T: FCC reclassification of mobile data to common-carrier status removes FTC authority even for past conduct | Court did not need to decide because it resolved case on status-based exemption in favor of AT&T |
Key Cases Cited
- BedRoc Ltd., LLC v. United States, 541 U.S. 176 (statutory text controls interpretation)
- Santa Fe, Prescott & Phoenix Ry. Co. v. Grant Brothers Constr. Co., 228 U.S. 177 (distinguishing carrier acts from non-carrier acts)
- Railroad Co. v. Lockwood, 84 U.S. 357 (distinguishing common vs. private carriage)
- Kansas City S. Ry. Co. v. United States, 282 U.S. 760 (common carriers may have non-common-carrier activities outside regulatory scope)
- Interstate Commerce Comm’n v. Goodrich Transit Co., 224 U.S. 194 (limitations on ICC jurisdiction for non-common-carrier activities)
- Crosse & Blackwell Co. v. FTC, 262 F.2d 600 (4th Cir.) (rejected literal exemption where small packing activity would swallow FTC jurisdiction)
- Skidmore v. Swift & Co., 323 U.S. 134 (weight of agency interpretation depends on persuasiveness)
- Lewis v. City of Chicago, 560 U.S. 205 (courts may not rewrite statutes to achieve perceived policy goals)