AT&T Loses California Case After Lying To Consumers About 'Unlimited' Data Throttling

Legal Issues

from the ill-communication dept

Back in 2014 the FTC sued AT&T for selling “unlimited” wireless data plans with very real and annoying limits. The lawsuit noted that, starting in 2011, AT&T began selling “unlimited” plans that actually throttled upwards of 90 percent of your downstream speeds after using just two or three gigabytes of data. AT&T spent years trying to wiggle out of the lawsuit via a variety of legal gymnastics, including at one point trying to claim that the very same net neutrality and FCC Title II rules AT&T was trying to kill prevented the FTC from holding it accountable.

Nearly a decade after the battle began, the company agreed last fall to a $60 million settlement with the FTC without actually admitting any wrongdoing. That $60 million, after lawyers get a cut, will be split among millions of customers who signed up for AT&T unlimited data plans before 2011. Moving forward, AT&T also has to clearly disclose any limits on its “unlimited data plans” in a conspicuous manner (read: not hidden via fine print or embedded in a hyperlinked asterisk).

But AT&T took another hit last week in a different five-year-old case in California over the throttling. There, AT&T’s attempt to ban consumers from suing it for bad behavior was initially upheld by a court ruling in 2016. But a 2017 California Supreme Court decision effectively changed the state’s arbitration law, resulting in that AT&T victory being overturned in 2018. AT&T appealed that decision but last week lost the appeal, allowing the case to proceed:

“AT&T appealed that ruling to the US Court of Appeals for the Ninth Circuit, but a three-judge panel at that court rejected AT&T’s appeal in a ruling issued Tuesday. Judges said they must follow the California Supreme Court decision?known as the McGill rule?”which held that an agreement, like AT&T’s, that waives public injunctive relief in any forum is contrary to California public policy and unenforceable.”

“Because we are bound by our decision in Blair [another case involving the McGill rule], we hold that AT&T’s arbitration agreement is unenforceable. Accordingly, we affirm the district court’s order denying AT&T’s motion to compel arbitration,” judges wrote Tuesday.”

While class action lawsuits certainly have problems (lawyers getting new boats while plaintiffs get pennies being chief among them), they have been known to shift corporate behavior now and again. And however flawed the US class action system is, the binding arbitration system is arguably worse, giving even more power to giant corporations like AT&T, who’ve already successfully lobbied federal consumer protection and antitrust enforcement into an apathetic coma.

Folks upset at states amping up their consumers protection efforts (see: net neutrality, privacy) should place the blame where it belongs: a wholly corrupted federal government that threw serious consumer protection and corporate accountability overboard thirty to forty years ago.

Filed Under: california, class action, data throttling, fcc, ftc, truth in advertising, unlimited
Companies: at&t