Katherine Armstrong, Counsel in our Washington, D.C. office, contributed to this post.

Last week, U.S. District Court Judge Edward M. Chen denied AT&T Mobility’s motion to dismiss the Federal Trade Commission’s (FTC’s) October 2014 complaint alleging that AT&T engaged in unfair and deceptive practices in connection with its retail mobile broadband data services. AT&T argued that its status as a common carrier makes it exempt from enforcement of the FTC Act. The court disagreed. At issue is the scope of the common carrier exemption.

The FTC’s two-count complaint alleged that AT&T’s throttling program was unfair because it changed the terms of customers’ unlimited data plans while those customers were still under contract, and AT&T failed to adequately disclose the nature of the throttling program to consumers who renewed their unlimited data plans.

AT&T argued that its status as a communications common carrier means that it is exempt from key provisions in the FTC Act, while the FTC argued that the exemption is not tied to the “status” of an entity but rather the activities conducted by the entity—and the court agreed.

During the pendency of this proceeding, the Federal Communications Commission (FCC) reclassified retail mobile broadband data services from non–common carrier “information services” to common carrier “telecommunications services.” The court disagreed with AT&T’s argument that once the FCC’s Order becomes effective, the FTC will no longer have jurisdiction to pursue this case, noting that the FCC’s Order by its express terms is prospective and will not deprive the FTC of any jurisdiction over past alleged misconduct.

Having survived AT&T’s motion to dismiss, the FTC’s action will proceed to the next phase. No date has been set yet for trial. The case is FTC v. AT&T Mobility LLC, No. C-14-4785 (N.D. Cal.).