Ninth Circuit Rules All Common Carriers Beyond Reach of FTC’s Consumer Protection Authority

[Commentary] In a decision that could significantly impact the scope of the Federal Trade Commission’s consumer protection authority under Section 5 of the FTC Act, the US Court of Appeals for the Ninth Circuit ruled on August 29, 2016, that common carriers are entirely exempt from the FTC’s jurisdiction, even when engaged in “non-common carrier” activities. The court’s decision in FTC v. AT&T Mobility LLC reflects a major rebuke of the FTC’s prior interpretation of its authority under Section 5, under which the agency regulated the non-common carrier activities and services of companies otherwise classified as common carriers. Unless reversed or modified, the decision will result in a dismissal of the FTC’s current action alleging that AT&T’s inadequate notice to its customers regarding data “throttling” practices was an unfair practice under Section 5. The decision also raises a host of new questions regarding who falls within (or outside of) the FTC’s jurisdiction.

If this is the outcome, is there any federal agency (as opposed to the 50 states) with jurisdiction to enforce consumer protection issues? Could the Federal Communications Commission rely on other sections of the Communications Act to bring enforcement actions against Google? Stay tuned to the Privacy and Security Law Blog for answers to these questions as we provide updates on this decision, the FTC’s response, and the pending FCC proceeding.