AT&T Dodges FTC Throttling Lawsuit Using Title II Classification It Vehemently Opposed

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:

"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 and the net neutrality rules Title II allowed.

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