AT&T Uses Binding Arbitration Mouse Print To Kill Throttling Class Action
from the legal-tap-dancing dept
For years, AT&T used contract fine print to prohibit its customers from suing it. Instead, users were forced to participate in binding arbitration, a system whereby company-employed arbitrators weigh the evidence — and unsurprisingly rule in favor of the company employing them a dramatic majority of the time. Initially, lower courts repeatedly derided this behavior as an “unconscionable” curtailing of consumer rights and abuse of the law. But in 2011 the Supreme Court’s AT&T Mobility v. Concepcion ruling declared that what AT&T was doing was perfectly ok, resulting in countless companies now following AT&T’s lead.
However screwed up the class action process may be, the practice of binding arbitration is notably worse. But AT&T’s pioneering in the space continues to pay notable dividends. Last month, for example, U.S. District Court Judge Edward Chen dismantled a class action lawsuit filed against AT&T for the company’s practice of misleadingly advertising “unlimited” wireless broadband service, then throttling customers after just a few gigabytes of consumption:
“U.S. District Court Judge Edward Chen said in his ruling that the wireless consumers who are suing AT&T all signed contracts that call for arbitration of disputes on an individual basis. Chen’s ruling, quietly issued last week, means that AT&T won’t face a class-action for allegedly duping people by selling them “unlimited” data plans, but throttling them after they hit a monthly cap. The consumers can still proceed with individual arbitrations, but doing so often is prohibitively costly.”
While AT&T may have dodged a class action, it’s still being held accountable, though in a notably less expensive fashion. The company has already faced a $100 million fine from the FCC, and is currently trying to fend off an ongoing lawsuit by the FTC. In that case, AT&T continues to ironically argue that because the FCC reclassified AT&T as a common carrier under Title II last year, the FTC no longer has authority over AT&T. That’s something the courts, including Chen, continue to deny:
“AT&T is arguing that the FTC has no jurisdiction to proceed, because broadband is now classified as a “common carrier” service. The FTC has no authority over common-carrier services.
Chen rejected AT&T’s position, ruling that broadband wasn’t considered a common carrier service until the Federal Communications Commission enacted net neutrality rules in 2015. ?Once the Reclassification Order of the Federal Communications Commission … goes into effect, that will not deprive the FTC of any jurisdiction over past alleged misconduct as asserted in this pending action,? he wrote.”
You’ll recall that AT&T fought tooth and nail against the FCC’s reclassifying of ISPs under Title II. Now AT&T’s trying to argue that it’s that very reclassification that means the FTC can’t hold it accountable for throttling. This is after AT&T successfully used a few paragraphs of fine print to prevent customers from directly holding the company accountable via class action. AT&T now makes it clear that its “unlimited” users will be throttled after 22 GB of consumption, but the sheer volume of billable hours and paperwork AT&T’s generating just to defend past false advertising practices remains downright staggering.