Appeals court affirms district court decision compelling arbitration in AT&T case

By John Sammon | Dec 20, 2017

SAN FRANCISCO – The U.S. District Court of Appeals for the Ninth Circuit on Nov. 11 affirmed a decision of the U.S. District Court for the Northern District of California compelling the plaintiffs to seek arbitration in a class action alleging that broadband carrier AT&T falsely advertised mobile services as “unlimited,” when, in fact, they weren't.

The case is a small part of a wider issue, a struggle currently taking place in courts over whether the FTC (Federal Trade Commission) has jurisdiction to regulate AT&T for alleged false advertising and deceptive business practices. 

The class action against AT&T contends the broadband giant had secretly slowed data at certain levels of usage---- giving lie to its claim of unlimited usage.

The plaintiffs, led by representatives Marcus A. Roberts, Kenneth A. Chewey, Ashley M. Chewey and James Krenn on behalf of other AT&T customers, allege statutory and common law protection violations and false advertising claims under California and Alabama law.

Alysa Hutnik  

Attorneys for AT&T moved to compel arbitration (settle out of court) in the case, but the plaintiffs opposed the idea on First Amendment freedom of speech grounds.

The district court disagreed with the plaintiffs and compelled arbitration.

The matter revolved around the issue of web loading speeds. The plaintiffs contend that AT&T falsely advertised that its mobile service customers could use unlimited data, but actually “throttled down” the data speeds of customers once they reached a secret cap level of between two and five gigabytes. The plaintiffs complained that a phone’s key functions, such as streaming a video or browsing a web page, became useless at the slower speeds.

In opposing arbitration, the plaintiffs contended it violated their constitutional rights as they did not knowingly and voluntarily give up their right to have a court adjudicate the case and they could not file a claim in small claims court.

The district court, instead ,decided to compel arbitration because there was no action in the suit specific to the state. The appeals court agreed.

“There is no state action here,” the court brief read. “AT&T’s conduct must be fairly attributable to the state. State action is a necessary threshold which the [plaintiffs] must cross before we can even consider whether AT&T infringed on the plaintiffs’ First Amendment rights.”

The appeals court affirmed the district court’s decision.

Alysa Z. Hutnik, a Washington D.C., attorney with the law firm Kelley Drye who has been following the AT&T matter, said a wider issue is whether the FTC has jurisdiction over AT&T and the ability to enforce claims of deceptive advertising or unfair business practice, security and privacy issues.

“In 2014 the FTC sued AT&T over alleged deceptive advertising claims that subscribers could have unlimited data,” Hutnik told The Northern California Record. “The FTC asserted the unlimited claim was deceptive because according to the allegations, the slowed speed was not sufficiently conveyed---so it was not truly unlimited.” 

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