EDWARD M. CHEN United States District Judge.
The Federal Trade Commission ("FTC") has filed suit against Defendant AT & T Mobility LLC ("AT & T"), asserting that AT & T has engaged in acts or practices, in connection with the marketing of mobile data services,
Currently pending before the Court is AT & T's motion to dismiss. AT & T argues that it cannot be held liable for a violation of § 45(a) because it enjoys an exemption under the statute as a "common carrier[] subject to the Acts to regulate commerce." Id. Having considered the parties' briefs and accompanying submissions, the Court hereby
In its complaint, the FTC alleges as follows.
"[AT & T] is a major retailer of smartphones and provider of wireless broadband internet access service for smartphones (`mobile data')." Compl. ¶ 9. In 2007, AT & T was the exclusive mobile data provider for the Apple iPhone. Initially, AT & T
In 2010, AT & T stopped offering the unlimited mobile data plan to new smartphone customers and instead has required such customers to purchase one of its "tiered" mobile data plans (where customers who exceed the stated data allowance are charged for the additional data at the rate set forth in the tiered mobile data plan). See Compl. ¶ 11. Old customers, however, were grandfathered — in essence, to ensure that they would not switch mobile data providers. See Compl. ¶¶ 12-13.
In July 2011, AT & T
Compl. ¶ 15.
Compl. ¶ 26. Moreover, "[AT & T] does not throttle its tiered mobile data plan customers, regardless of the amount of data that a tiered mobile data plan customer uses." Compl. ¶ 29.
According to the FTC,
Compl. ¶ 28.
But "[AT & T's] wireless customer agreements do not state that an unlimited mobile data plan customer's use of more than a specified amount of data is prohibited activity." Compl. ¶ 32. Also, at the time of renewal, AT & T does not tell its unlimited mobile data plan customers about the throttling program. See Compl. ¶ 34. Disclosures about the throttling program have been limited — e.g., in a monthly bill sent prior to renewal, in a text message, and/or in an e-mail. See Compl. ¶¶ 33-37 (noting that only a minority of customers were sent a text message and/or e-mail). These disclosures, however, were not adequate. For example, the monthly
Compl. ¶ 35.
Based on, inter alia, the above allegations, the FTC has brought two claims pursuant to 15 U.S.C. § 45(a) which prohibits, inter alia, "unfair or deceptive acts
AT & T has moved to dismiss on the basis that it is exempt from § 45(a) as a "common carrier[] subject to the Acts to regulate commerce." 15 U.S.C. § 45(a)(2). In its opening brief, AT & T styled its motion as one made pursuant to Federal Rule of Civil Procedure 12(b)(1), i.e., for lack of subject matter jurisdiction. In its opposition, the FTC counters that the motion is appropriately brought under Rule 12(b)(6), not 12(b)(1), because AT & T is challenging only "the scope of the FTC's statutory authority." Opp'n at 2 n.1.
Whether the pending motion to dismiss is technically predicated on Rule 12(b)(1) or on 12(b)(6) is not material in this instance. Neither party has asserted that the choice of rule affects the disposition of the motion. Nor can the Court divine a difference in result here. Even assuming that Rule 12(b)(1) were to govern, AT & T is making a facial challenge to jurisdiction, and not a factual one. See Lacano Invs., LLC v. Balash, 765 F.3d 1068, 1071 (9th Cir.2014) (indicating that a jurisdictional attack can be facial or factual; in the former circumstance, all of the factual allegations in the complaint are taken as true and extrinsic evidence such as documents attached to a complaint may be considered). Given such a challenge, the standard is governed essentially by a Rule 12(b)(6)-type inquiry.
While the exact procedural posture is not dispositive, the Court acknowledges that recent action taken by another administrative agency, namely, the Federal Communications Commission, may impact this case. More specifically, the Federal Communications Commission recently made the decision to reclassify mobile data service from a non-common carriage service to a common carriage service. Because this "Reclassification Order" has not yet taken effect, the Court addresses first the merits of the issues raised in the parties' initial briefs. Only after assessing the merits of these issues does the Court turn to the effect of the Reclassification Order on this action.
As stated above, AT & T argues that it cannot be held liable for a violation of § 45(a) because of an exception in the statute for "common carriers subject to the Acts to regulate commerce." 15 U.S.C. § 45(a)(2). The full text of § 45(a) is as follows:
15 U.S.C. § 45(a)(2) (emphasis added). The term "Acts to regulate commerce" is defined as the Interstate Commerce Act of 1887 and the Communications Act of 1934, as well as all amendments and supplements thereto. See id. § 44. When § 45(a) was first enacted as part of the FTC Act in 1914, "Acts to regulate commerce" meant only the Interstate Commerce Act because the Communications Act had not yet been passed.
The Interstate Commerce Act was "[t]he first federal regulation to impose duties on common carriers" and "applied to `any common carrier or carriers' engaged in the railroad transportation of people or property interstate." FTC v. Verity Int'l, Ltd., 443 F.3d 48, 57 (2d Cir.2006). "In 1910, Congress passed the Mann-Elkins Act, which amended the [Interstate Commerce Act] to apply to interstate telephone companies and to deem such companies common carriers." Id. "Regulation of telephone common carriers continued to rest with the [Interstate Commerce Commission] until 1934, when Congress passed the Communications Act of 1934." Id.; see also Verizon Comms., Inc. v. FCC, 535 U.S. 467, 478 n. 3, 122 S.Ct. 1646, 152 L.Ed.2d 701 (2002) (noting that "[f]ederal regulation in the area had previously been undertaken incidentally to general interstate carrier regulation under the Interstate Commerce Act"). When § 45(a) was amended in 1938, one of the amendments made was to re-define "Acts to regulate commerce" to include the Communications Act.
The basic dispute between the parties is over the scope of the common carrier exception. According to AT & T, it falls within the scope of the exception because the exception applies so long as an entity has the "status" of a common carrier. In other words, under AT & T's position, if an entity has the status of a common carrier, it cannot be regulated under § 45(a) at all, even when it is providing services other than common carriage services. The FTC disagrees with this interpretation of § 45(a). According to the FTC, it is not just status that matters, but also the "activity" in question. That is, the common carrier exception applies only if an entity has the status of a common carrier and is actually engaging in common carriage services. Thus, under the FTC's view, an entity can be regulated under § 45(a) even if the entity is a common carrier so long as it is the entity's non-common carriage services that are being regulated.
The basic issue for the Court is one of statutory construction. Statutory construction begins, of course, with the language of the statute. See, e.g., Caraco Pharm. Labs., Ltd. v. Novo Nordisk A/S, ___ U.S. ___, 132 S.Ct. 1670, 1680, 182 L.Ed.2d 678 (2012) (noting that statutory construction begins "`with the language of the statute itself'"); United States v. Byun, 539 F.3d 982, 991 (9th Cir.2008) (indicating that ordinary tools of statutory construction include the language of the statute, the statute's legislative history, and the "practical effects to the extent necessary to illuminate the meaning of the plain language"). Here, § 45(a) carves out
The problem with AT & T's argument is it glosses over what is meant by "common carrier" in the first place. Nowhere in the FTC Act is the term "common carrier" defined. Given that fact, the Court deems it appropriate to consider what the term "common carrier" meant at the time the FTC Act was enacted in 1914. Notably, that is the approach that the Second Circuit took in a decision addressing the common carrier exception in § 45(a). See Verity, 443 F.3d at 57-58 ("decid[ing] to give meaning to `common carrier' in the FTC Act according to the ordinary sense of the word when Congress used it to create the exemption").
As the FTC points out, prior to the enactment of the FTC Act, an entity was deemed a common carrier and regulated as such under the common law only where it was actually engaged in common carriage services. For example, in Santa Fe, Prescott & Phoenix Railway Co. v. Grant Brothers Construction Co., 228 U.S. 177, 33 S.Ct. 474, 57 L.Ed. 787 (1913), the Supreme Court noted that "[t]he great object of the law governing common carriers was to secure the utmost care in the rendering of a service of the highest importance to the community" and, therefore, a "common carrier in the prosecution of its business as such is not permitted to drop its character and transmute itself by contract into a mere bailee with right to stipulate against the consequences of its negligence." Id. at 184-85, 33 S.Ct. 474 (emphasis added). The Supreme Court added that "this rule has no application when a railroad company is acting outside the performance of its duty as a common carrier." Id. at 184-85, 33 S.Ct. 474 (emphasis added); see also R.R. Co. v. Lockwood, 84 U.S. 357, 377, 17 Wall. 357, 21 L.Ed. 627 (1873) (stating that "[a] common carrier may, undoubtedly, become a private carrier, or a bailee for hire, when, as a matter of accommodation or special engagement, he undertakes to carry something which it is not his business to carry").
Prior to the enactment of the FTC Act, common carriers were viewed in a similar way for purposes of the Interstate Commerce
Thus, as the FTC argues, at the time the FTC Act was enacted, the term "common carrier" encompassed not only a "status" but also an "activity" component: An entity was deemed a common carrier when it had the status of common carrier and was actually engaging in common carriage services.
Moreover, even if there were some doubt that "common carrier" was to be so understood, the broader phrase used in § 45(a) for the common carrier exception must be taken into account. Section 45(a) refers to an exemption for "common carriers subject to the Acts to regulate commerce." 15 U.S.C. § 45(a)(2) (emphasis added). This language can fairly be read to mean that the exemption applies only when the common carrier is subject to regulation as such. Cf. Verity, 443 F.3d at 57 (stating that Congress created the common carrier exemption because it "did not intend the FTC to enforce unfair-competition law against common carriers because the ICC already regulated common carriers under the Interstate Commerce Act"). As indicated by the case law discussed above, an entity was subject to regulation as a common carrier only when it was actually engaging in common carriage activity. AT & T's interpretation to the contrary is not convincing because in essence, AT & T asks that § 45(a) be broken into two separate inquiries: (1) Is an entity a common carrier (for any purpose)? and (2) if so, is the entity subject to the Acts to regulate commerce? See Reply at 4. AT & T does not explain why the Court should apply this two-part disjunctive construction rather than evaluate the exemption holistically.
51 Cong. Rec. 8996 (1914) (emphasis added).
Although AT & T argues the purpose of the common carrier exception is to ensure that there is no agency overlap in terms of regulation, it appears that the more precise purpose was to prevent overlap between common carrier regulations. As the Second Circuit observed in Verity, Congress created the common carrier exemption because it "did not intend the FTC to enforce unfair-competition law against common carriers because the ICC already regulated common carriers under the Interstate Commerce Act." Verity, 443 F.3d at 57 (emphasis added). AT & T points to nothing in the legislative history suggesting that Congress intended to prevent any and all regulatory overlap (as opposed to focusing on the Interstate Commerce Commission's regulation of common carriers as such). Indeed, it is not uncommon for any particular activity of a business to be subject to multiple sets of regulations.
That the common carrier exception in § 45(a) requires consideration of both status and activity, and not just status alone, is also supported by the tool of statutory construction which counsels a court to consider a statute's "practical effects to the extent necessary to illuminate the meaning of the plain language." Byun, 539 F.3d at 991. AT & T's interpretation of the common carrier exception would result in significant regulatory gaps. For example, as the FTC points out in its brief,
Opp'n at 16; cf. Crosse & Blackwell Co. v. Fed. Trade Comm'n, 262 F.2d 600, 604-05 (4th Cir.1959) (in discussing the scope of entities exempt from § 45(a) because they are subject to the Packers and Stockyards Act, noting that "Congress did not anticipate that a giant steel company might attempt to escape the restraint of the antitrust laws by operating a small packing plant" and thus be subject to the exemption).
In response, AT & T contends that any such gap has not caused an adverse effect: "If the FTC's inability to regulate in these gaps were such a problem, one would imagine that Congress would have stepped in at some point in the past century to address this." Reply at 6. But this argument misses the point. Congress would not need to step in if the common carrier exemption were always understood to apply only when an entity is a common carrier and is engaging in common carrier activity. As discussed above, that indeed appears to have been Congress's understanding at the time of the FTC Act's enactment. In fact, that seems to have been the general understanding of the common carrier exemption even years later, as noted by AT & T's predecessor during a 1937 congressional hearing. See To Amend the Federal Trade Comm'n Act, House Committee on Interstate and Foreign Commerce Hearing, 75th Cong., 1st Sess. on H.R. 3143 (Feb. 18-19, 1937) (AT & T's predecessor company proposing to Congress that § 45(a) be amended to include the following proviso: "provided that common carriers under the latter act are excepted as common carriers under this act only in respect of their common-carrier operations"; stating that "[a]ll this does is to make clear that so far as the fair trade practice provisions of the Federal Trade Commission Act are concerned, the exception which has always been in the act shall be preserved, and by my amendment, ... it will make clear one thing, ... namely, that where common carriers engage in activities that are not in the common carrier field, beyond the field that the Government is regulating, then and in that case, they are subject to the jurisdiction of the Federal Trade Commission ....").
AT & T contends that there would be a conflict if both the FTC and the Federal Communications Commission were to assert jurisdiction over mobile data service (as a non-common carriage service) because, in Count I,
Reply at 14-15.
The problem with AT & T's position is that, even though the FTC has characterized Count I as implicating an unfair practice, the gravamen of the FTC's complaint is based on AT & T's failure to disclose its throttling practice to certain customers. More specifically, in Count I, the FTC asserts that AT & T's throttling program is unfair because AT & T "entered into numerous mobile data contracts that were advertised as providing access to unlimited mobile data, and that do not provide that [AT & T] may modify, diminish, or impair the service of customers who use more than a specified amount of data for permissible activities." Compl. ¶ 45 (emphasis added). Thus, the FTC is not arguing in the case at bar that the throttling program is unfair per se; instead it challenges AT & T's failure to disclose the practice to certain customers and afford them alternative options.
To the extent AT & T suggests that there could also be a conflict (either with respect to Court I or even Count II, which is the claim that characterizes AT & T's conduct as deceptive, not just as unfair) because the Federal Communications Commission has also passed its own "transparency rule, 47 C.F.R. § 8.3, which itself requires an `accurate' disclosure," Reply at 15, the Court sees no obvious conflict between 47 U.S.C. § 8.3 and
AT & T protests still that "common carrier" must be viewed solely in terms of status because: (1) § 45(a) repeatedly uses status-based terms, such as "persons," "partnerships," "corporations," "banks," "savings and loan institutions," "credit unions," "air carriers," and "common carrier" (as opposed to common carriage) in its text; (2) § 45(a) does contain one activity-based exemption which uses markedly different language, thus demonstrating that the lack of activity-based language with respect to the common carrier exemption is telling; and (3) there is case law to support its position. But ultimately, none of these arguments is availing.
AT & T's first argument has facial appeal but is problematic based on the understanding of the term "common carrier" at the time of the FTC Act's enactment in 1914 and Congress's intent to encompass that understanding.
AT & T's second argument is based on the 1958 amendment to § 45(a). Prior to the 1958 amendment, § 45(a) included an exemption related to the Packers and Stockyards Act. More specifically, that exemption existed for "persons, partnerships, or corporations subject to the Packers and Stockyards Act, 1921." 52 Stat. 111 (1938). In 1958, that exemption was amended to read "persons, partnerships, or corporations insofar as they are subject to the Packers and Stockyards Act, 1921." 27 Stat. 1749 (1958) (emphasis added). AT & T argues that this is evidence that the Packers/Stockyards exemption used to be a status-based exemption but then, in 1958, was changed into an activity-based exemption.
The Fourth Circuit, however, has explained that this change to the Packers/Stockyards exemption was not consequential. More specifically, in Crosse & Blackwell, the Fourth Circuit noted that, pre-amendment, it was
Crosse & Blackwell, 262 F.2d at 604-05 (emphasis added). "A literal interpretation of the exemption ... must be laid aside for it is `plainly at variance with the policy of the legislation as a whole,' and if held to grant a more extensive exemption than the [Agriculture] Secretary's regulatory power would produce an absurd result." Id. at 606; see also Foxgord v. Hischemoeller, 820 F.2d 1030, 1034 (9th Cir.1987) (noting that "`departure from the literal construction of a statute is justified when such a construction ... would clearly be inconsistent with the purposes and policies of the act in question'"). Hence, if anything, the legislative history of the Packers and Stockyards exemption as explained in Crosse & Blackwell supports the FTC's argument. According to the Fourth Circuit, the pre-amendment language — which like the common carrier exemption contained no activity-based language (merely covering businesses "subject to" the 1921 Packers and Stockyards Act) — nonetheless encompassed activity, not just status.
As for the third argument that case law supports its status argument, AT & T relies primarily on Federal Trade Commission v. Miller, 549 F.2d 452 (7th Cir. 1977).
Id. at 458 (emphasis added).
Instead, the Court finds more persuasive the reasoning of the district court in Federal Trade Commission v. Verity International, 194 F.Supp.2d 270 (S.D.N.Y. 2002), and the Second Circuit's observation on appeal. There, the FTC sued the defendant with regard to its billing practices. The defendant argued that it was a common carrier — indeed, had a license from the Federal Communications Commission to be a facilities- or retail-based international common carrier — and therefore exempt from the reach of § 45(a). The court rejected the defendant's contention, explaining that
Id. at 274; see also Computer & Comms. Industry Ass'n v. FCC, 693 F.2d 198, 210 n. 59 (D.C.Cir.1982) (stating that "[i]t is clear that an entity can be a common carrier with respect to only some of its activities[;][i]n this opinion the term `common carrier' will be used to indicate not an entity but rather an activity as to which an entity is a common carrier"). The Verity district court acknowledged Miller but found it to be "inconsistent with [the] common sense proposition that the carrier exemption to the FTC Act should be construed no more broadly than its purpose — to avoid interfering with the regulation of carriers by agencies to which their regulation is committed." Id. at 275.
On appeal, the Second Circuit disagreed with the district court's analysis in part, concluding that "common carrier" as used in the FTCA had to be "defined by reference to the common law of carriers and not to the Communications Act, even though the common law definition does not meaningfully differ from the Communications Act definition for purposes of this appeal." Verity, 443 F.3d at 57. However, the Second Circuit went on to indicate that it agreed with the district court that "common carrier" was predicated on both an entity's status and its activity, and not just status alone. More specifically, the court noted that
Id. at 60 n. 4; cf. Crosse & Blackwell, 262 F.2d at 604-05 (interpreting pre-1958 version of Packers and Stockyards Act exemption as activity based).
As a final point, the Court notes that two other considerations counsel in favor of the FTC's interpretation over AT & T's. First, because the FTC Act is a remedial statute, it should be read broadly and its exemptions narrowly. See, e.g., United States v. An Article, 409 F.2d 734, 741 n. 8 (2d Cir.1969) (stating that the FTCA has a remedial purpose — i.e., to protect the public, "`that vast multitude which includes the ignorant, the unthinking and the credulous'"); In re Smith, 866 F.2d 576, 581 (3d Cir.1989) (noting that "[s]tatutes prohibiting unfair trade practices and acts have routinely been interpreted to be flexible and adaptable to respond to human inventiveness[;] [i]n construing section 5 of the Federal Trade
Second, the FTC's interpretation — although not necessarily entitled to Chevron deference (which the FTC disavowed at the hearing) — should still be afforded some deference pursuant to Skidmore v. Swift & Co., 323 U.S. 134, 140, 65 S.Ct. 161, 89 L.Ed. 124 (1944) (holding that a non-controlling agency opinion may carry persuasive weight, depending on "the thoroughness evident in its consideration, the validity of its reasoning, its consistency with earlier and later pronouncements, and all those factors which give it power to persuade, if lacking power to control"); see also United States v. Mead Corp., 533 U.S. 218, 234, 121 S.Ct. 2164, 150 L.Ed.2d 292 (2001) (stating that "an agency's interpretation may merit some deference whatever its form"). In this regard, the Court notes that, contrary to what AT & T argues, the FTC has seemed to consistently take the position that the common carrier exemption should be viewed both in terms of status and activity, and not just status alone. See, e.g., FTC Reauthorization, Hearing Before the Subcommittee on Consumer Affairs, Foreign Commerce and Tourism, S. Hrg. 107-1147, at 28 (July 17, 2002) (statement of Hon. Sheila F. Anthony, FTC) (noting that "Defendants often argue that the exemption protects every action of a company that enjoys common carrier status" and that "[t]he Commission firmly believes that only the common carrier activities of such companies are exempted, but litigating this issue, as the Commission has been repeatedly forced to do, raises the cost of pursuing enforcement actions"), available at http://www.gpo.gov/fdsys/pkg/CHRG-107shrg91729/pdf/CHRG-107shrg91729.pdf; Prepared Statement of the Fed. Trade Comm'n, 2003 WL 21353573, at *19 (June 11, 2003) (statement before the Subcommittee on Commerce, Trade and Consumer Protection to support the FTC's reauthorization request for fiscal years 2004 to 2006) (stating that, "[w]hile common carriage has been outside the FTC's authority, the agency believes that the FTC Act applies to non-common-carrier services of telecommunications firms, even if the firms also provide common carrier services"); see also FTC Amendments of 1977 and Oversight, Hearings before the Subcommittee on Consumer Protection and Finance, 95th Cong., 1st Session on H.R. 3816, 1767, and 2483 (1977) (letter from FTC to Rep. Eckhardt) (asking for an amendment to the FTC Act, not "to extend the Commission's jurisdiction into those areas that are subject to regulation by other federal agencies, but rather, as we explained in our formal statement, ... intend[ing] to close a `regulatory gap' under exceptions in Sections 5 and 6 of the FTC Act as interpreted in a recent court decision [i.e., Miller]") (emphasis added). To the extent AT & T argues that the FTC has taken a different position in other lawsuits, see Mot. at 13, the Court does not agree. In those cases, the FTC argued that an entity did not meet the status requirement of common carrier but it did not disavow that there was an activity component as well.
Accordingly, for all of the reasons stated above, the Court rejects AT & T's contention that the common carrier exemption in § 45(a) is predicated on status alone, and rather agrees with the FTC that § 45(a) can be applied to an entity that has the status of a common carrier so long as what
After initial briefing was completed in this case, the parties notified the Court that the Federal Communications Commission had made the decision to reclassify mobile data service from a non-common carriage service to a common carriage service. The Reclassification Order was released on March 12, 2015, but apparently will not go into effect until it is published in the Federal Register. See Docket No. 45, at 1 n.2 (FTC's sur-reply). The Reclassification Order expressly states that reclassification will "apply only on a prospective basis." Reclassification Order at 134 n.792.
The FTC argues that the Reclassification Order will have minimal impact on this case because it will apply only prospectively. In other words, the FTC focuses on the fact that, through this case, the Court can still address AT & T's past misconduct which allegedly violates § 45(a). In response, AT & T contends that the FTC is missing the point — i.e., once the Reclassification Order goes into effect, then the FTC will no longer have jurisdiction to pursue this case, even if limited to past conduct by AT & T. See, e.g., Docket No. 46, at 1 (AT & T surreply) (stating that "[t]he issue is whether a change to an agency's jurisdiction takes effect immediately and divests the agency of authority to prosecute past conduct that is the subject of pending litigation") (emphasis in original).
The FTC disputes that § 45(a) is a jurisdictional statute. But, even assuming that it is, the Court is not persuaded by AT & T's argument. Hughes Aircraft Co. v. United States, 520 U.S. 939, 117 S.Ct. 1871, 138 L.Ed.2d 135 (1997), provides guidance as to how this issue should be resolved.
In Hughes, the plaintiff-whistleblower brought a qui tam action against a company for violation of the False Claims Act ("FCA"). Before 1986, qui tam suits were barred if the information on which they were based was already within the government's possession. In 1986, there was an amendment to the FCA which partially removed that bar. The question for the Supreme Court was whether that amendment applied retroactively to the plaintiff's suit. The Supreme Court held that the 1986 amendment was not retroactive and therefore the plaintiff's action was barred. See id. at 941-42, 117 S.Ct. 1871.
One of the arguments made by the plaintiff in favor of retroactivity was that the 1986 amendment was "jurisdictional, and hence ... an exception to the general Landgraf presumption against retroactivity." Id. at 950, 117 S.Ct. 1871. The Supreme Court noted first that "[t]he fact... courts often apply newly enacted jurisdiction-allocating statutes to pending cases merely evidences certain limited circumstances failing to meet the conditions for our generally applicable presumption against retroactivity, not an exception to the rule itself." Id. at 951, 117 S.Ct. 1871. The Court then went on to note that
Id. (emphasis in original).
Here, even if the change to the common carrier exception, resulting from the Reclassification Order, could be deemed a change in tribunal (i.e., because enforcement with respect to mobile data would be delegated to the Federal Communications Commission instead of the FTC and this Court would have jurisdiction only in the former instance), the fact remains that substantive rights are affected by that change as well. As the FTC explains out in its sur-reply:
FTC Sur-Reply at 5 n.5 (emphasis added). This impairment of substantive rights (and AT & T's liability) is comparable to that in cases such as Matthews v. Kidder, Peabody & Co., 161 F.3d 156, 157, 166 & n. 17 (3d Cir.1998) (holding that amendment to Private Securities Litigation Reform Act, which eliminated securities fraud-based RICO claims, was not retroactive; also indicating that there be no retroactivity for, e.g., an amendment that reduced the statute of limitations under RICO or that eliminated treble damages under RICO), and Mabary v. Home Town Bank, N.A., 771 F.3d 820, 826 (5th Cir.2014) (stating, that before the amendment to the Electronic Funds Transfer Act, the plaintiff "had a cause of action based upon [the defendant's] alleged actions, but afterward she would not" and "the amendment thus `may be seen as destroying a cause of action and impairing a party's rights'"). As in Matthews, the applicable limitation period would effectively be shortened given the Communications Act's one-year limitations period. Moreover, as in Mabary, the remedy of refunds to injured consumers sought by the FTC (but not available to the Federal Communications Commission) would be impaired.
The authority that AT & T cited in its papers and at the hearing is unavailing. For example, in Duldulao v. INS, 90 F.3d 396 (9th Cir.1996), the Ninth Circuit simply indicated that deprivation of judicial review in the immigration context (more specifically, judicial review of deportation orders involving aliens convicted of firearms offenses) merely affected the power of the court and not the rights or obligations of the parties. See id. at 398-99 (noting that, "[a]s a general rule, we presume that statutes affecting substantive rights or obligations apply prospectively only" and that "[t]his presumption applies when a new statute impairs rights a party possessed when he acted, increases a party's liability for past conduct, or imposes new duties with respect to transactions already completed"; adding that "[a] jurisdictional statute usually takes away no substantive right but simply changes the
As for Southwest Center for Biological Diversity v. United States Department of Agriculture, 314 F.3d 1060 (9th Cir.2002), there, the plaintiff brought suit after failing to get a response to a request for information pursuant to the Freedom of Information Act ("FOIA"). While the action was pending, Congress enacted the 1998 Parks Act, which included a provision allowing for a withholding of information in response to a FOIA request. The district court applied that provision, which led the plaintiff to argue on appeal that the district court had given impermissible retroactive effect to the Parks Act provision. The Ninth Circuit disagreed, rejecting the plaintiff's contention that the Parks Act provision impaired a right it possessed when it acted because it had a right to the information when it filed its suit and then lost that right by application of the exemption. See id. at 1062. The court explained: "[T]he `action' of the [plaintiff] was merely to request or sue for information; it was not to take a position in reliance upon existing law that would prejudice the [plaintiff] when that law was changed." Id. The Ninth Circuit also noted that "application of the exemption furthers Congress's intent to protect information regarding threatened or rare resources of the National Parks" and thus "[t]his case ... presents one of the many situations in which courts appropriately apply the law in existence at the time of their decision." Id. Here, the action taken by the FTC is not comparable to a mere FOIA request; what is at stake is not simply a request for information, but substantive rights directly affecting financial interest. In this case, the FTC took a substantive position in reliance upon existing law that would prejudice it, as well as the public on whose behalf it acted, when that law was changed — and notably, not by Congress directly but rather by a sister agency.
For the foregoing reasons, the Court denies AT & T's motion to dismiss. Contrary to what AT & T argues, the common carrier exception applies only where the entity has the status of common carrier and is actually engaging in common carrier activity. When this suit was filed, AT & T's mobile data service was not regulated as common carrier activity by the Federal Communications Commission. Once the Reclassification Order of the Federal Communications Commission (which now treats mobile data serve as common carrier activity) goes into effect, that will not deprive the FTC of any jurisdiction over past alleged misconduct as asserted in this pending action.
This order disposes of Docket No. 29.
IT IS SO ORDERED.
Prior to March 12, 2015, the Federal Communications Commission deemed mobile data service a private mobile service, i.e., non-common carriage. See Verizon v. FCC, 740 F.3d 623, 650 (D.C.Cir.2014) (noting that the Federal Communications "Commission has classified mobile broadband service as a `private' mobile service" and therefore mobile broadband providers are not common carriers). On March 12, 2015, the Federal Communications Commission issued its Reclassification Order in which it essentially reclassified mobile data service as common carriage in nature. The Court addresses the impact of the Reclassification Order infra.
