AT&T Says It’s Forced to Defend On Two Fronts

SAN FRANCISCO (CN) — Telecommunications giant AT&T complained to the Ninth Circuit on Friday that it is getting hit on two fronts, after two government agencies accused it of throttling cell phone service without disclosing the practice to customers.

The Federal Trade Commission sued AT&T in Federal Court in 2013, claiming the company offered millions of customers unlimited data but actually began to artificially slow the rate of data transmission after they reached a certain data limit, making basic smartphone applications like GPS and video streaming difficult.

AT&T, which received a $100 million fine from a different federal agency, the Federal Communications Commission, has maintained the FTC has no jurisdiction over the matter and the federal case pending in San Francisco should be dismissed as a result.

On Friday morning, both parties appeared before a three-judge panel of the Ninth Circuit to argue their case.

"We still feel our disclosures and practices were good and we are eager to fight on the merits," AT&T attorney Michael Kellogg said. "But we shouldn't have to fight on a second front."

Joel Marcus, a U.S. Justice Department attorney speaking on behalf of the FTC, argued that the exemptions for common carriers, cited by AT&T, were written in an outdated 1914 law and do not apply to the case.

"The FTC has the ability to enforce the act and not the activities and the actors," Marcus said during the morning hearing.

U.S. District Judge Edward Chen has already ruled in favor of the FTC, saying the exemptions set forth in the 1914 statute do not apply. AT&T swiftly appealed the decision, arguing the case should be dismissed.

Should the Ninth Circuit not find in favor of the telecomm giant, the trial will move forward. Chen has not yet issued a decision on the merits.

The FCC ruled in 2015 that cellphone coverage is part of common carrier definitions in asserting their jurisdiction. AT&T argues the 2015 inclusion further bolsters their case that the FCC is the sole agency with jurisdiction over the matter.

"It's happened over and over, if a court loses jurisdiction, it must dismiss the case," Kellogg said during the hearing.

Ninth Circuit Judge Richard Clifton asked Kellogg if corporations "crossed lines in 1914 the way they do today," in an attempt to find the relevance of the law to the present case.

Kellogg responded by asserting common carrier corporations in the early 20th Century had to deal with the same questions, and that those entities were always judged on their status as opposed to the activity.

The judges also grilled Marcus repeatedly on whether or not the FCC's reclassification of cellphone coverage meant the FTC was limited in the type of relief it could seek in the future.

Marcus said this case was about "backward looking relief," but did not rule out the possibility of pursing relief in the future.

The three-judge panel gave little indication of which way they were leaning before adjourning the hearing.

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