## Facts

- AT&T Mobility marketed smartphone data plans as “unlimited.”
- Beginning in 2011, AT&T implemented a throttling program that substantially reduced customers’ mobile data speeds after specified usage thresholds, allegedly without regard to actual network congestion.
- The FTC alleged some customers experienced speed reductions up to roughly 90%, impairing ordinary data use.
- The FTC sued under § 5 of the FTC Act, alleging both deceptive advertising and unfair practices based on inadequate disclosure of throttling.
- AT&T provided mobile voice service as a common carrier regulated under the Communications Act and overseen by the FCC.
- When the FTC sued in 2014, mobile data service had not been classified by the FCC as a common-carrier service; in 2015 the FCC reclassified mobile broadband as a Title II telecommunications service.

## Issues

1. Whether the district court had federal-question subject-matter jurisdiction, or whether AT&T’s “common carrier” argument was jurisdictional rather than merits-based.
2. Whether the FTC Act’s “common carrier” exemption is status-based (exempting an entity that is a common carrier for all activities) or activity-based (exempting only common-carrier services).
3. Whether the FCC’s 2015 reclassification of mobile broadband as a common-carrier service barred the FTC’s action, including as to conduct occurring before reclassification.

## Decision

- The en banc Ninth Circuit affirmed the denial of AT&T’s motion to dismiss.
- The district court had federal-question jurisdiction under 28 U.S.C. § 1331; the common-carrier exemption concerned the merits, not subject-matter jurisdiction.
- The FTC Act’s common-carrier exemption is activity-based, applying only to the extent an entity is engaged in common-carrier services.
- The FCC’s 2015 reclassification did not retroactively immunize AT&T’s earlier mobile data conduct from FTC enforcement.

## Legal Principles

- A dispute over whether a statutory exemption defeats an agency’s claim can be a merits question (failure to state a claim) rather than a subject-matter jurisdiction defect.
- The FTC Act’s exemption for “common carriers subject to the Acts to regulate commerce,” 15 U.S.C. § 45(a)(2), excludes from FTC authority only common-carrier activities, not all conduct by a company that also provides common-carrier services.
- Statutory interpretation should avoid constructions that create enforcement gaps where neither the FTC nor the FCC can address allegedly unfair or deceptive conduct.
- Subsequent regulatory reclassification does not, without clear direction, retroactively eliminate enforcement authority over conduct occurring before reclassification.

## Conclusion

The Ninth Circuit held that AT&T’s common-carrier status for mobile voice service did not categorically exempt it from FTC Act § 5 scrutiny for its mobile data practices, and that later FCC reclassification did not retroactively bar FTC claims based on earlier alleged deception and unfairness.


Fed. Trade Comm’n v. AT&T Mobility LLC, 883 F.3d 848 (9th Cir. 2018) (en banc)