Federal Trade Commission Seeks Rehearing of Ninth Circuit Dismissal of Throttling Suit
Last week, the Federal Trade Commission (“FTC”) filed a petition for en banc (full court) review of a Ninth Circuit opinion dismissing the FTC’s lawsuit against AT&T for violating Section 5 of the FTC Act due to its throttling practices.
In October 2014, the FTC challenged AT&T’s practice of reducing—or “throttling”—the data speeds for its unlimited data plan customers once they reached a certain data usage threshold as both unfair and deceptive under Section 5. In March 2015, the district court denied AT&T’s motion to dismiss the FTC’s action. The district court held that Section 5, which exempts, among others, “common carriers subject to the Acts to regulate commerce,” applies only when the entity has the status of a common carrier and is engaged in common carriage activity. In August 2016, a three-judge panel of the Ninth Circuit reversed the district court’s ruling on the grounds that AT&T was a common carrier and therefore exempt from the FTC Act. The panel reasoned that the common carrier exemption in Section 5 is based on the company’s status, as AT&T argued, not on the company’s activities, as the FTC argued.
In deciding whether to grant the FTC’s petition for rehearing, the Ninth Circuit will consider whether en banc review “is necessary to secure or maintain uniformity of the court’s decisions” or “the proceeding involves a question of exceptional importance.” If a majority of active judges answer either of these questions in the affirmative, a full panel will consider whether the common carrier exemption in Section 5 is status-based, such that an entity is exempt from regulation as long as it has the status of a common carrier under the “Acts to regulate commerce,” or is activity-based, such that an entity with the status of a common carrier is exempt only when the activity the FTC is attempting to regulate is a common carrier activity.