The 9th Circuit Upholds FTC Action Against AT&T

Last week, the 9th Circuit upheld a district court denial of AT&T’s motion to dismiss a Federal Trade Commission (“FTC”) action alleging that AT&T’s mobility unit data-throttling plan is unfair and deceptive under Section 5 of the FTC Act. The court unanimously ruled that the FTC has jurisdiction over the non-common-carrier activities of common carriers, like AT&T. AT&T argued that it was exempt from the FTC regulation because as a common carrier, it could invoke the exemption for any activities regulated under Section 5, regardless of whether it provides both common-carrier and non-common-carrier services.

The 9th Circuit full panel reversed the appeal to a three-judge panel and affirmed the District Court denial of the motion, finding that the FTC common-carrier exemption is “activity based” and “provides immunity from FTC regulation only to the extent that a common carrier is engaging in common-carrier services.” The court also said that this ruling “accords with common sense,” and “reaffirming FTC jurisdiction over activities that fall outside of common-carrier services avoids regulatory gaps and provides consistency and predictability in regulatory enforcement.”

Chairman Pai released a statement that the decision was a victory for the Internet Freedom Order and for consumers. He explained that it reaffirms that the FTC will “once again be able to police Internet service providers after the Restoring Internet Freedom Order takes effect,” and the FCC looks forward to working closely with the FTC to ensure protection of an open Internet. FTC Chairman Maureen Ohlhausen said it “ensures that the FTC can and will continue to play its vital role in safeguarding consumer interests including privacy protection, as well as stopping anticompetitive behavior.”

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