On Monday, the Federal Trade Commission (FTC) received clearance to pursue its long-standing lawsuit against the mobile data throttling practices of AT&T after an en banc panel of eleven judges sitting on the Ninth Circuit Court of Appeals declared that the FTC “common carrier exemption” is activity-based. Monday’s ruling reverses a unanimous decision, handed down in August 2016 by a three-judge Ninth Circuit panel, which sided with AT&T’s claim that the common carrier exemption—which prohibits the FTC from regulating the activities of common carriers because they fall under FCC jurisdiction—is a status-based exemption that also extends to the non-common carrier activities of common carriers.

The case at hand originated in 2014, a year before the FCC reclassified fixed and wireless broadband access services as common carrier telecommunications services under Title II of the 1934 Communications Act. Targeting AT&T’s practice of throttling customers who had purchased unlimited data plans, the FTC filed suit against the company on the premise that non-common carrier broadband network services provided by common carriers such as AT&T are not subject to the common carrier exemption. Although the U.S. District Court for the Northern District of California ruled initially in the FTC’s favor in concluding that the common carrier exemption applies “only where the entity . . . is actually engaging in common carrier activity,” the three-judge Ninth Circuit panel overturned that decision at the behest of AT&T, reasoning: “the plain language of the common carrier exemption casts the exemption in terms of status, contrary to the FTC’s position.”

Last May, the Ninth Circuit accepted the FTC’s request for rehearing by an en banc panel. The FCC, meanwhile, reversed its classification of wireline and wireless broadband services as common carrier services pursuant to the Internet Freedom Order issued last December. Ruling this week in the FTC’s favor, the en banc panel cited the definition of “common carrier” at the time the FTC Act was passed in 1914 as well as “decades of judicial interpretation, the expertise of the FTC and the [FCC], and legislative history” in concluding that the common carrier exemption is activity-based. In so doing, the court proclaimed that the phrase “‘common carriers subject to the Acts to regulate commerce’ thus provides immunity from FTC regulation only to the extent that a common carrier is engaging in common carrier services.” Writing for the court, Judge M. Margaret McKeown explained that such an interpretation “accords with common sense” in view of the fact that the FTC “is the leading federal consumer protection agency and, for many decades, has been the chief federal agency on privacy policy and enforcement.” Returning the case to the U.S. District Court for further consideration, McKeown spoke for the en banc panel in declaring that “reaffirming FTC jurisdiction over activities that fall outside of common carrier services avoids regulatory gaps and provides consistency and predictability in regulatory enforcement.”

As acting FTC Chairwoman Maureen Ohlhausen welcomed the court’s ruling as “good news for consumers” which “ensures that the FTC can and will continue to play its vital role in safeguarding consumer interests,” FCC Chairman Ajit Pai praised the decision as “a significant win for American consumers” which “reaffirms that the [FTC] will once again be able to police Internet service providers.” A spokesman for AT&T told reporters, however, that “we are reviewing the opinion and continue to believe we will ultimately prevail.”