Court Won't Dismiss FTC Suit Against AT&T Data Plan

Says FTC Has Mobile Data Jurisdiction on Pre-Title II Actions

A California U.S. District Court has rejected AT&T's motion to dismiss the Federal Trade Commission's lawsuit over AT&T's marketing of its mobile data services, which the FTC said was deceptive. AT&T said it will appeal the court's decision.

AT&T had argued that it is exempt because the FTC lacks jurisdiction due to the common-carrier exemption. The court concluded otherwise, denying the motion and saying that the exemption only applies when the entity is a common carrier and is engaged in a common-carrier activity.

At the time of the FTC complaint, the court pointed out, broadband data service was not a common-carrier service -- and won't be until the Federal Communications Commission's Title II reclassification order is finalized.

AT&T argued that once the order is final, the FTC will no longer have jurisdiction, as it would move to the FCC. But the court said that does not prevent the FTC from pursuing past actions that were under its jurisdiction before the Title II reclassification.

"Contrary to what AT&T argues, the common-carrier exception applies only where the entity has the status of common carrier and is actually engaging in common-carrier activity," the court ruled. "When this suit was filed, AT&T’s mobile data service was not regulated as common-carrier activity by the Federal Communications Commission. Once the Reclassification Order of the Federal Communications Commission (which now treats mobile data service as common-carrier activity) goes into effect, that will not deprive the FTC of any jurisdiction over past alleged misconduct as asserted in this pending action."

FTC chairwoman Edith Ramirez said of the court's decision: “We are gratified that the court concluded that the common-carrier exemption does not insulate AT&T's conduct from FTC enforcement action. We look forward to proving that AT&T's marketing of its ‘unlimited’ data plans was unfair and deceptive and returning money to the millions of consumers who were harmed by AT&T's action.”

An AT&T spokesman said, "We’re obviously disappointed in, and disagree with, the decision and will seek to appeal it as soon as possible."

The FTC filed the complaint in October, in federal court against AT&T Mobility, alleging the company misled smartphone customers by reducing data speeds -- by as much as 90% -- for millions customers it had sold "unlimited" data plans.

AT&T called the allegations baseless and asked the court to reject the suit. "“We have been completely transparent with customers since the very beginning," AT&T said at the time.