Last week the Federal Trade Commission (FTC) opposed a Motion to Dismiss filed by AT&T that challenged the FTC’s attempt to exercise jurisdiction over the company in connection with certain of its mobile broadband service activities.
As we previously reported, the FTC filed a complaint against AT&T in late 2014 alleging that AT&T engaged in unfair and deceptive conduct in violation of Section 5 of the FTC Act when it “throttled” mobile broadband subscribers who were “grandfathered” into the company’s unlimited mobile data plan. AT&T filed a Motion to Dismiss the complaint in January, arguing that its overall status as a common carrier subject to the Communications Act exempts it from Section 5 of the FTC Act. The FTC, in turn, last week responded to AT&T by arguing that AT&T’s “status-based” position did not exclude it from the FTC’s jurisdiction on the theory that “the common carrier exemption applies only to the extent AT&T engages in common carrier services.”
According to the FTC’s filing, Section 5 of the FTC Act exempts from the FTC’s jurisdiction “common carriers subject to” the Communications Act. The FTC argued that an entity is a “common carrier subject to the Communications Act only to the degree it is engaged in common carrier activities and not because of its general ‘status’ as a common carrier.” Accordingly, in the FTC’s view, the common carrier exception is a narrow, “activity-based” exception that excludes only services that are subject to the Communications Act’s common carrier regulatory provisions.
The FTC argued that if Congress really intended to divide jurisdiction along industry lines, it could have exempted from the FTC’s authority everything subject to the Communications Act or the Federal Communication Commission’s (FCC’s) jurisdiction. The FTC asserted jurisdiction over AT&T in this case on the theory that the mobile data services at issue are not common carrier services. According to the FTC, a status-based reading of the common carrier exception would “open a giant loophole” that would threaten to undermine the FTC Act’s broad consumer protection purpose. For example, companies engaged in de minimis common carrier activities could immunize all of their operations from FTC scrutiny.
The FTC also argued that AT&T’s current position stands in contrast to the position it took in its comments in the FCC’s 2010 Open Internet proceeding, in which AT&T urged the FCC to not reclassify broadband Internet access service (including mobile broadband Internet access service) as a common carrier service.
In response to AT&T’s argument that the mobile data activities that the FTC is seeking to regulate already are regulated by the FCC, the FTC asserted that one agency’s jurisdiction does not nullify other legal regimes addressing the same conduct, and that “given the wide reach of the FTC Act, overlapping jurisdiction is more the rule than the exception.” To illustrate this point, the FTC noted the overlapping jurisdiction of the FTC and the Department of Justice with respect to antitrust law and the overlap between the FTC and the Food and Drug Administration with respect to food, drugs, and cosmetics. Moreover, the FTC asserted that the FCC and FTC “have a long history of cooperating and coordinating in their areas of shared jurisdiction” and that AT&T has failed to identify any actual conflict between the FCC’s rules and this enforcement action.
The District Court is expected to consider AT&T’s Motion to Dismiss at a hearing scheduled for March 12, 2015.