FTC v. At&t Mobility LLC , 883 F.3d 848 ( 2018 )

FOR PUBLICATION
UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT
FEDERAL TRADE COMMISSION, No. 15-16585
Plaintiff-Appellee,
D.C. No.
v. 3:14-cv-04785-
EMC
AT&T MOBILITY LLC, a limited
liability company,
Defendant-Appellant. OPINION
Appeal from the United States District Court
for the Northern District of California
Edward M. Chen, District Judge, Presiding
Argued and Submitted En Banc September 19, 2017
San Francisco, California
Filed February 26, 2018
Before: Sidney R. Thomas, Chief Judge, and Stephen
Reinhardt, Susan P. Graber, M. Margaret McKeown,
William A. Fletcher, Johnnie B. Rawlinson, Milan D.
Smith, Jr. *, N. Randy Smith, Jacqueline H. Nguyen, Paul J.
Watford and Michelle T. Friedland, Circuit Judges.
Opinion by Judge McKeown
*
Judge Milan D. Smith, Jr. was drawn to replace Judge Alex
Kozinski, who retired after oral argument but before this opinion was
published.
2 FTC V. AT&T MOBILITY
SUMMARY **
Federal Trade Commission
The en banc court affirmed the district court’s denial of
AT&T Mobility’s motion to dismiss an action brought by the
Federal Trade Commission (“FTC”) under Section 5 of the
FTC Act, alleging that AT&T’s data-throttling plan was
unfair and deceptive.
AT&T Mobility’s data-throttling is a practice by which
the company reduced customers’ broadband data speed
without regard to actual network congestion. Section 5 of
the FTC Act gives the agency enforcement authority over
“unfair or deceptive acts or practices,” but exempts
“common carriers subject to the Acts to regulate commerce.”
15 U.S.C § 45(a)(1), (2). AT&T moved to dismiss the
action, arguing that it was exempt from FTC regulation
under Section 5.
As a threshold issue, the en banc court held that the
federal district court had federal question jurisdiction
because the dispute was one “arising under federal law,” and
the motion to dismiss was more properly treated as a Fed. R.
Civ. P. 12(b)(6) motion for failure to state a claim.
The en banc court held that the FTC Act’s common-
carrier exemption was activity-based, and therefore the
phrase “common carriers subject to the Acts to regulate
commerce” provided immunity from FTC regulation only to
**
This summary constitutes no part of the opinion of the court. It
has been prepared by court staff for the convenience of the reader.
FTC V. AT&T MOBILITY 3
the extent that a common carrier was engaging in common-
carrier services. In reaching this conclusion, the en banc
court looked to the FTC Act’s text, the meaning of “common
carrier” according to the courts around the time the statute
was passed in 1914, decades of judicial interpretation, the
expertise of the FTC and Federal Communications
Commission (“FCC”), and legislative history.
Addressing the FCC’s order, issued on March 12, 2015,
reclassifying mobile data service from a non-common-
carriage service to a common carriage service, the en banc
court held that the prospective reclassification order did not
rob the FTC of its jurisdiction or authority over conduct
occurring before the order. Accordingly, the en banc court
affirmed the district court’s denial of AT&T’s motion to
dismiss.
COUNSEL
Michael Kellogg (argued) and Mark C. Hansen, Kellogg
Huber Hansen Todd Evans & Figel P.L.L.C., Washington,
D.C.; David L. Anderson, Sidley Austin LLP, San Francisco,
California; for Defendant-Appellant.
Joel Marcus (argued), Director of Litigation; Matthew M.
Hoffman and David L. Sieradzki, Attorneys; David C.
Shonka, Acting General Counsel; Evan Rose, Matthew D.
Gold, and Linda K. Badger, Of Counsel; Federal Trade
Commission, Washington, D.C.; for Plaintiff-Appellee.
Jacob M. Lewis, Associate General Counsel; Scott M.
Noveck, Counsel; Jacob M. Lewis, Associate General
Counsel; David M. Gossett, Deputy General Counsel;
Howard J. Symons and Brendan Carr, General Counsel;
4 FTC V. AT&T MOBILITY
Federal Communications Commission, Washington D.C.;
for Amicus Curiae Federal Communications Commission.
Seth E. Mermin, Samantha K. Graff, and Thomas
Bennigson, Public Good Law Center, Berkeley, California,
for Amici Curiae Consumers Union, Consumer Federation
of America, Consumer Federation of California, Consumer
Action, National Association of Consumer Advocates,
National Consumers League, Center for Digital Democracy,
Center for Democracy & Technology, Electronic Privacy
Information Center, Benton Foundation, Common Sense
Kids Action, and Privacy Rights Clearinghouse.
Paul K. Ohm, Professor, Georgetown University Law
Center, Washington, D.C.; William McGeveran, Associate
Professor, University of Minnesota Law School,
Minneapolis, Minnesota; for Amici Curiae Data Privacy and
Security Law Professors.
Charles Duan, M. Ryan Clough, John Gasparini, Sara
Kamal, and Jaime Petenko, Public Knowledge, Washington,
D.C., for Amicus Curiae Public Knowledge.
Adin H. Rosenbaum and Sean M. Sherman, Public Citizen
Litigation Group, Washington, D.C., for Amicus Curiae
Senator Richard Blumenthal.
Andrew Jay Schwartzman and Laura Moy, Institute for
Public Representation, Georgetown University Law Center,
Washington, D.C., for Amicus Curiae Social Justice
Organizations.
Patrick J. Massari, Michael Pepson, and Cynthia Crawford,
Cause of Action Institute, Washington, D.C., for Amicus
Curiae Cause of Action Institute.
FTC V. AT&T MOBILITY 5
Henry Weissmann, Munger Tolles & Olson LLP, Los
Angeles, California; Donald B. Verrilli Jr. and Chad I.
Golder, Washington, D.C.; for Amici Curiae Charter
Communications, Comcast Corporation, Cox
Communications, and Verizon.
OPINION
McKEOWN, Circuit Judge:
Although this case began as an effort by the Federal
Trade Commission (“FTC”) to address AT&T Mobility’s
“data throttling”—a practice by which the company reduced
customers’ broadband data speed without regard to actual
network congestion—the central issue is one of agency
jurisdiction and statutory construction.
Section 5 of the Federal Trade Commission Act (“FTC
Act”), which gives the agency enforcement authority over
“unfair or deceptive acts or practices,” exempts, among
others, “common carriers subject to the Acts to regulate
commerce.” 15 U.S.C. § 45(a)(1), (2). The question is
whether the common-carrier exemption is activity-based,
meaning that a common carrier is exempt from FTC
jurisdiction only with respect to its common-carrier
activities, or status-based, such that an entity engaged in
common-carrier activities is entirely exempt from FTC
jurisdiction.
We affirm the district court’s denial of AT&T’s motion
to dismiss. Looking to the FTC Act’s text, the meaning of
“common carrier” according to the courts around the time
the statute was passed in 1914, decades of judicial
interpretation, the expertise of the FTC and Federal
6 FTC V. AT&T MOBILITY
Communications Commission (“FCC”), and legislative
history, we conclude that the exemption is activity-based.
The phrase “common carriers subject to the Acts to regulate
commerce” thus provides immunity from FTC regulation
only to the extent that a common carrier is engaging in
common-carrier services.
This statutory interpretation also accords with common
sense. The FTC is the leading federal consumer protection
agency and, for many decades, has been the chief federal
agency on privacy policy and enforcement. Permitting the
FTC to oversee unfair and deceptive non-common-carriage
practices of telecommunications companies has practical
ramifications. New technologies have spawned new
regulatory challenges. A phone company is no longer just a
phone company. The transformation of information services
and the ubiquity of digital technology mean that
telecommunications operators have expanded into website
operation, video distribution, news and entertainment
production, interactive entertainment services and devices,
home security and more. Reaffirming FTC jurisdiction over
activities that fall outside of common-carrier services avoids
regulatory gaps and provides consistency and predictability
in regulatory enforcement.
Background and Procedural History 1
In 2007, AT&T Mobility LLC (“AT&T”) was the
exclusive provider of mobile data services for the Apple
iPhone. AT&T initially offered iPhone customers a service
plan with “unlimited” mobile data for a flat monthly fee. In
2010, however, AT&T stopped offering unlimited mobile
data plans to new smartphone customers. Instead, AT&T
1
This background description is drawn from the FTC’s complaint.
FTC V. AT&T MOBILITY 7
offered “tiered” mobile data plans. Under the new tiered
plans, a customer who exceeded a specified data allowance
would be charged for any additional data at a rate set by
AT&T. Legacy customers who previously signed up for
unlimited data, however, were grandfathered and allowed to
keep their existing service plans.
In 2011, AT&T began reducing the data speed for its
unlimited mobile data plan customers—a practice
commonly known as “data throttling.” For example, if a
customer with an unlimited mobile data plan exceeded a
certain usage limit, AT&T would substantially reduce the
speed at which the customer’s device would receive data for
the balance of the customer’s billing cycle. Customers
experienced reduced speed when they exceeded the preset
limit, regardless of actual network congestion. AT&T did
not apply the data-throttling practice to customers on tiered
plans.
According to the FTC, AT&T made limited disclosures
about its data-throttling practice. Although AT&T did alert
some customers about the practice via text message, a
monthly bill, or e-mail, it did not inform unlimited data
customers of the degree to which their data speed would be
reduced. AT&T’s wireless customer agreements for
unlimited data customers did not reveal that the use of more
than a specified amount of data would trigger a slowdown.
Nor did AT&T disclose that speed reductions were
intentional rather than the result of network congestion.
Based on these practices, the FTC brought suit against
AT&T under Section 5 of the FTC Act. 15 U.S.C. § 45. The
FTC alleged that AT&T’s data-throttling program was
unfair and deceptive because the company advertised
“unlimited mobile data,” but in fact imposed restrictions on
data speed for customers who exceeded a preset limit.
8 FTC V. AT&T MOBILITY
AT&T moved to dismiss the suit, arguing that it was
exempt from FTC regulation under Section 5 because it is a
“common carrier[] subject to the Acts to regulate
commerce.” 15 U.S.C. § 45(a)(2). In AT&T’s view, the
common-carrier exemption may be invoked so long as an
entity has the “status” of a common carrier. That is, if an
entity qualifies as a common carrier, all of its activities are
immune from regulation under Section 5, regardless of
whether the entity provides both common-carriage and non-
common-carriage services.
In response, the FTC claimed that AT&T was exempt
from jurisdiction only “to the extent that it provides a
common carrier service.” In the FTC’s view, the common-
carrier exemption applies only to the extent that an entity
actually engages in common-carrier activities. Under this
“activity-based” interpretation, an entity’s non-common-
carriage activities are subject to FTC regulation. At the time
the FTC filed suit, mobile data provision was not a “common
carrier service.”
While AT&T’s motion to dismiss was pending, the FCC
issued an order changing its classification of mobile data,
such that it would be treated as a common-carriage service
rather than a non-common-carriage service, but “only on a
prospective basis.” 2 See In the Matter of Protecting and
Promoting the Open Internet, 30 F.C.C. Rcd. 5601, 5734
n.792 (2015) (the “Reclassification Order”).
In response to this regulatory change, AT&T took the
position that it was a common carrier under any construction
2
The D.C. Circuit rebuffed AT&T’s challenge to the legality of the
FCC’s Reclassification Order in United States Telecom Ass’n v. FCC,
825 F.3d 674 (D.C. Cir. 2016).
FTC V. AT&T MOBILITY 9
of Section 5, and that the FTC was no longer empowered to
pursue its claims, either past or present, against the company.
The FTC countered that the lawsuit remained live against
AT&T’s pre-Reclassification Order data-throttling
practices.
The district court denied AT&T’s motion to dismiss. In
concluding that AT&T was not exempt from FTC oversight,
the court examined judicial opinions contemporaneous with
the Act’s passage. The court found that around 1914, “[a]n
entity was deemed a common carrier when it had the status
of [a] common carrier and was actually engaging in common
carriage services.” Other factors supported this historical
interpretation. The district court read the FTC Act broadly
and its exemptions narrowly because the FTC Act is a
remedial statute. The court also analyzed the legislative
history, afforded the FTC’s interpretation some deference
under Skidmore v. Swift & Co., 323 U.S. 134 (1944), and
observed that exempting AT&T from FTC jurisdiction
would “result in significant regulatory gaps.” The district
court also determined that the Reclassification Order did not
compel dismissal because it “appl[ies] only on a prospective
basis.” Upon AT&T’s motion, the district court certified for
immediate appeal the order denying dismissal.
We granted AT&T’s unopposed petition for
interlocutory review, and a panel of our court reversed. FTC
v. AT&T Mobility LLC, 835 F.3d 993 (9th Cir. 2016). The
panel “conclude[d], based on the language and structure of
the FTC Act, that the common carrier exception is a status-
based exemption and that AT&T, as a common carrier, is not
covered by section 5” of the Act. Id. at 998. In the panel’s
view, the “plain language of the common carrier exemption
casts the exemption in terms of status, contrary to the FTC’s
position.” Id. The panel stated that a status-based
10 FTC V. AT&T MOBILITY
interpretation was “bolstered by examination of the statutory
history of the Packers and Stockyards exemption [to the FTC
Act],” the FTC’s decisions before an amendment to that
exemption, and other legislative history. Id. at 999–1001.
We granted rehearing en banc. 3 FTC v. AT&T Mobility
LLC, 864 F.3d 995 (9th Cir. 2017).
Analysis
As a threshold matter, we review de novo the district
court’s ruling on a motion to dismiss. Colony Cove Props.,
LLC v. City of Carson, 640 F.3d 948, 955 (9th Cir. 2011).
AT&T moved to dismiss under Federal Rule of Civil
Procedure 12(b)(1), framing the issue as whether the district
court possessed “subject-matter jurisdiction over the FTC’s
complaint, notwithstanding the fact that 15 U.S.C. § 45(a)(2)
deprives the FTC of regulatory jurisdiction over ‘common
carriers subject to the Acts to regulate commerce.’”
AT&T’s characterization of its motion is incorrect.
Although AT&T disputes the FTC’s regulatory jurisdiction,
the district court had federal question jurisdiction because
the dispute was one “arising under” federal law. 28 U.S.C.
§ 1331; see also United States v. Alisal Water Corp.,
431 F.3d 643, 650 (9th Cir. 2005) (noting that “absent
statutory direction to the contrary, a district court validly
exercises its jurisdiction over actions ‘arising under’ federal
3
In connection with en banc proceedings, we received eight amicus
briefs from a broad array of interested parties, including the FCC,
consumer groups, data privacy and security law professors, government
officials, media and technology companies, and non-profit
organizations. The briefs were helpful to our understanding of the
implications of this case from various points of view. We thank amici
for their participation.
FTC V. AT&T MOBILITY 11
laws”). The motion is more properly treated as a Rule
12(b)(6) motion for failure to state a claim. Although this
important point of civil procedure does not affect the
outcome here, it may have consequences in other cases.
I. THE TEXT and HISTORY OF THE FEDERAL TRADE
COMMISSION ACT
We now turn to the merits, focusing on the text and
history of the FTC Act and related statutes.
A. Section 5 and the “Common Carrier”
Exemption
We begin with the pivotal provision and its enigmatic
exemption. See Caraco Pharm. Labs., Ltd. v. Novo Nordisk
A/S, 566 U.S. 399, 412 (2012) (affirming the principle that
statutory construction starts “with the language of the statute
itself”) (internal quotation marks omitted). Section 5 of the
FTC Act prohibits “unfair methods of competition” and
“unfair or deceptive acts or practices” in or affecting
commerce. 15 U.S.C. § 45(a)(1). The section also
authorizes the FTC to enforce those prohibitions:
The Commission is hereby empowered and
directed to prevent persons, partnerships, or
corporations, except banks, savings and loan
institutions described in section 57a(f)(3) of
this title, Federal credit unions described in
section 57a(f)(4) of this title, common
carriers subject to the Acts to regulate
commerce, air carriers and foreign air carriers
subject to part A of subtitle VII of Title 49,
and persons, partnerships, or corporations
insofar as they are subject to the Packers and
Stockyards Act, 1921, as amended, except as
12 FTC V. AT&T MOBILITY
provided in section 406(b) of said Act, from
using unfair methods of competition in or
affecting commerce and unfair or deceptive
acts or practices in or affecting commerce.
Id. § 45(a)(2) (emphases added).
This appeal focuses on the part of that section exempting
“common carriers subject to the Acts to regulate commerce”
from the FTC’s enforcement authority. The statute leaves
undefined the terms “subject to” and “common carriers.”
Nonetheless, the statutory structure provides at least one
significant interpretative benchmark. “Banks” are wholly
exempt from the section, whereas common carriers are
exempted only to the extent that they are “subject to the Acts
to regulate commerce.” The defined term “Acts to regulate
commerce” currently includes both the Interstate Commerce
Act of 1887 (“ICA”), 49 U.S.C. § 10101 et seq., and the
Communications Act of 1934, 47 U.S.C. § 151 et seq.
15 U.S.C. § 44. At the time the FTC Act was passed in 1914,
however, the term “Acts to regulate commerce” referred
only to the ICA, because the Communications Act had not
yet been passed. For context, we provide a brief chronology
of relevant legislation related to the common-carrier
exemption.4
The Interstate Commerce Act, passed in 1887, was the
first federal law to impose duties on common carriers and
applied to “any common carrier or carriers engaged in the
transportation of passengers or property” interstate. Ch. 104,
§ 1, 24 Stat. 379; see FTC v. Verity Int’l, Ltd., 443 F.3d 48,
4
Because there is an alphabet-soup flavor to the history, to avoid
confusion and mind-numbing reading, we use both the full names and
abbreviations as appropriate for clarity.
FTC V. AT&T MOBILITY 13
57 (2d Cir. 2006). In addition to imposing various rules on
railroad common carriers, including nondiscrimination, anti-
collusion, tariff-filing, and reasonable-rate requirements, the
ICA also created a regulatory enforcement body, the
Interstate Commerce Commission (“ICC”). §§ 1–7, 24 Stat.
at 379–382; §§ 11–12, 24 Stat. at 383.
In 1910, Congress expanded the ICA to apply to
interstate telephone companies, which were also deemed
common carriers. Mann-Elkins Act, Pub. L. No. 61-218,
sec. 7, § 1, 36 Stat. 539, 544–45. Key here, neither the ICA
nor its 1910 amendment contained a definition of “common
carrier.”
Against this backdrop, and during the heyday of the
antitrust movement, Congress passed the FTC Act in 1914.
Pub. L. No. 63-203, 38 Stat. 717; see Marc Winerman, The
Origins of the FTC: Concentration, Cooperation, Control,
and Competition, 71 Antitrust L.J. 1, 2 (2003) (noting that
the formative antitrust movement “culminated” in passage
of the FTC Act and the Clayton Act). The Act created the
FTC as an enforcement agency and established its broad
mandate to police unfair business conduct. §§ 1–3, 38 Stat.
at 717–719; § 5, 38 Stat. at 719.
In drafting Section 5, Congress deliberately gave the
FTC broad enforcement powers. See FTC v. Sperry &
Hutchinson Co., 405 U.S. 233, 239–40 (1972) (observing
that Congress “explicitly considered, and rejected, the notion
that it reduce the ambiguity of the phrase ‘unfair methods of
competition’ by tying the concept of unfairness to a
common-law or statutory standard or by enumerating the
particular practices to which it was intended to apply”).
Concerned with “insidious” monopolistic business practices,
Congress authorized the FTC to bring suits to vindicate
public rights that individuals are “often unable to assert
14 FTC V. AT&T MOBILITY
against these great organized [business] powers.” 51 Cong.
Rec. 12,030 (1914) (statement of Sen. Newlands). Congress
in the FTC Act established a “new agency that would
prosecute if the Department [of Justice] faltered, enforcing a
flexible new standard that could reach where the Sherman
Act might not.” Winerman, supra, at 74. Because the FTC
Act is a remedial statute, we are “guided by the familiar
canon of statutory construction that remedial legislation
should be construed broadly to effectuate its purposes.”
Tcherepnin v. Knight, 389 U.S. 332, 336 (1967).
Congress did not intend the FTC to regulate common-
carrier business practices, however, because the Interstate
Commerce Act had already delegated that role to the ICC.
See Verity, 443 F.3d at 57; 51 Cong. Rec. 12,030 (1914)
(statement of Sen. Newlands) (“The very purpose of [the
FTC Act] is to protect small businesses against giant
competitors just as we protected the shippers of the country
against the giant railroad combinations . . . .” (emphasis
added)). Hence, Congress established Section 5’s common-
carrier exemption to avoid interagency conflict. See 38 Stat.
at 719; Verity, 443 F.3d at 57; Winerman, supra, at 69 n.413.
Once again, Congress chose not to define “common carrier.”
The legislative history sheds some light on the intended
scope of the Act, highlighting that the FTC had authority
over a company engaging in endeavors beyond common-
carrier work. Tellingly, Representative Stevens, the floor
manager of the House bill that would become the FTC Act,
explained that “where a railroad company engages in work
outside of that of a public carrier[,] . . . such work ought to
come within the scope of [the FTC] for investigation.”
51 Cong. Rec. 8,996 (1914). Given his role as floor
manager, Representative Stevens’s comments are “entitled
to substantial weight.” Ariz. Power Auth. v. Morton,
FTC V. AT&T MOBILITY 15
549 F.2d 1231, 1250 (9th Cir. 1977); see also Babbitt v.
Sweet Home Chapter of Cmtys. for a Greater Or., 515 U.S.
687, 705 (1995) (considering the statements of a floor
manager in interpreting the Endangered Species Act of
1973).
The ICC continued to regulate telephone common
carriers until Congress passed the Communications Act in
1934. Pub. L. No. 73-416, 48 Stat. 1064; see Verity,
443 F.3d at 57; Verizon Commc’ns Inc. v. FCC, 535 U.S.
467, 478 n.3 (2002). The Communications Act created the
FCC, a new agency with enforcement authority over wire
and radio communications—including telephone common
carriers. 48 Stat. at 1064. Congress established the FCC in
part because of the ICC’s mounting burden regulating
railroads and the emergence of state commissions governing
local telephone services. See James B. Speta, A Common
Carrier Approach to Internet Interconnection, 54 Fed.
Comm. L.J. 225, 263 (2002). The Communications Act
limits the FCC’s regulatory authority over common carriers
to conduct “for and in connection with [interstate or foreign]
communication service,” or “in connection with . . .
common carrier lines of communication.” 47 U.S.C.
§§ 201(b), 202(b). In 1938, Congress harmonized Section 5
of the FTC Act by expanding the term “Acts to regulate
commerce” to also include the Communications Act. Pub.
L. No. 75-447, § 2, 52 Stat. 111.
Since passage of the FTC Act over a century ago,
Congress has never defined “common carrier” or explained
the meaning of the phrase “subject to the Acts to regulate
commerce.” Nor has Congress provided absolute clarity in
the Communications Act, and the FCC has not further
defined the phrase in its regulations. The Communications
Act purports to define the term, but does so circularly: A
16 FTC V. AT&T MOBILITY
common carrier is “any person engaged as a common carrier
for hire, in interstate or foreign communication by wire or
radio or interstate or foreign radio transmission of energy
. . . .” 5 47 U.S.C. § 153(11). With the advent of the internet
and changes in communications services, the term
“telecommunications carrier” was added to the
Communications Act in the Telecommunications Act of
1996. Pub. L. No. 104-104, 110 Stat. 56, 60. A
“telecommunications carrier” is “treated as a common
carrier . . . only to the extent that it is engaged in providing
telecommunications services.” 47 U.S.C. § 153(51).
B. Section 6
With the text and history of Section 5 providing limited
guidance, albeit pointing to an activity-based interpretation,
the parties spill considerable ink discussing other provisions
of the FTC Act. One such provision, Section 6, governs the
agency’s investigatory authority. See 15 U.S.C. § 46(a)–(b).
Like Section 5, Section 6 originated in the 1914 Act and now
exempts banks and “common carriers subject to the Act[s]
to regulate commerce.” Id. § 46(a).
In 1973, Congress added a proviso to Section 6
specifying that the exception for banks and common carriers
5
One reason why the Communications Act did not include a further
statutory definition of common carrier may have been because the term
already had developed a well-understood common-law meaning. See
H.R. REP. No. 1918, at 46 (1934) (Conf. Rep.) (noting that “the definition
does not include any person if not a common carrier in the ordinary sense
of the term” (emphasis added)). As one commentator noted:
“[C]omments of various legislators during floor debate uniformly
suggest that Congress transferred the meaning of the term common
carrier intact from its use in the amended Interstate Commerce Act.” Phil
Nichols, Note, Redefining “Common Carrier”: The FCC’s Attempt at
Deregulation by Redefinition, 1987 DUKE L.J. 501, 511 (1987).
FTC V. AT&T MOBILITY 17
“shall not be construed” to limit the Commission’s authority
to gather information, investigate, or require reports “to the
extent that such action is necessary to the investigation of
any corporation, group of corporations, or industry which is
not engaged or is engaged only incidentally in banking or in
business as a common carrier subject to the Act[s] to regulate
commerce.” Pub. L. No. 93-153, § 408(e), 87 Stat. 576, 592.
The rationale for this amendment, which is buried in
multipage legislation relating to the Mineral Leasing Act of
1920, is best explained as an effort “to go directly to the
Federal Courts to seek subpoena enforcement and to obtain
preliminary injunctive relief” in order to “circumvent the
delays experienced in the past when the Commission was
required to request and persuade the Justice Department to
go to Federal Court on the Commission’s behalf.”
119 Cong. Rec. 22,980 (1973).
AT&T endeavors to turn the addition of the phrase
“incidentally in banking or in business as a common carrier”
into support for its status-based interpretation of the
common-carrier exemption. 87 Stat. at 592. But the 1973
proviso does not expand or contract the FTC’s underlying
statutory authority. See §408(e), 87 Stat. at 592. Rather, the
proviso strengthens enforcement tools with respect to
subpoenas and preliminary injunctions. The language
AT&T points to was intended only to “clarify the [FTC’s]
authority to compel production of data from pipeline
companies,” and other companies not engaged or engaged
only incidentally in banking or common-carriage activities.
119 Cong. Rec. 36,610 (1973).
Further, this amendment is a classic illustration of the
teaching that the “view of a later Congress cannot control the
interpretation of an earlier enacted statute.” O’Gilvie v.
United States, 519 U.S. 79, 90 (1996). This pronouncement
18 FTC V. AT&T MOBILITY
makes sense because, when “a later statute is offered as an
expression of how Congress interpreted a statute passed by
another Congress a half century [or more] before, such
interpretation has very little, if any, significance.” Bilski v.
Kappos, 561 U.S. 593, 645 (2010) (citation and internal
alterations and quotation marks omitted). These principles
are particularly relevant in the context of the 1973
amendment to Section 6, which was passed almost six
decades after the FTC Act, and which does not modify
Section 5, the key section setting out the FTC’s authority.
C. The Packers and Stockyards Exception
Another piece of the legislative puzzle, albeit of limited
significance, is the packers and stockyards exception.
Congress passed the Packers and Stockyards Act in 1921 to
authorize the Secretary of Agriculture to regulate the
activities of “packers” and “stockyards.” Pub. L. No. 67-51,
42 Stat. 159. The Packers and Stockyards Act stripped the
FTC of jurisdiction over “any matter” that was “subject to
the jurisdiction of” the Secretary of Agriculture. Id.
§ 406(b), 42 Stat. at 169.
In 1938, Congress amended the FTC Act to exempt from
the FTC’s jurisdiction “persons, partnerships, or
corporations subject to the Packers and Stockyards Act.”
Wheeler-Lea Act, Pub. L. No. 75-447, § 3, 52 Stat. 111,
111–12 (emphasis added). A contemporaneous House
report confirmed that the amendment “conforms to the
existing practice and assures no change in view of the
amendments to the Federal Trade Act,” declaring that the
FTC “would retain its existing jurisdiction under the
provisions of the Stock Yard Act.” H.R. Rep. No. 75-1613,
at 3–4 (1937). Hence, Congress recognized that the FTC
was already exercising jurisdiction over certain activities of
entities operating as packers and stockyards and would
FTC V. AT&T MOBILITY 19
continue to do so—a state of affairs that would have been
illogical if packers and stockyards were categorically
exempt as entities.
The FTC interpreted the packers and stockyards
exception as activity-based both before and after the 1938
amendment. As the Commission found, the phrase “subject
to” in the packers and stockyards exception did not strip the
FTC of jurisdiction over “all activities” of packers and
stockyards, as had been done “in the case of banks.” In re
Food Fair Stores, Inc., 54 F.T.C. 392, 399–400 (1957).
Instead, Congress denied the FTC jurisdiction only with
respect to “any matter made subject to the jurisdiction of the
Secretary [of Agriculture] by the Packers and Stockyards
Act.” Id. at 400–01 (emphasis added).
In 1958, Congress again amended the FTC Act,
modifying the language slightly to exempt “persons,
partnerships, or corporations insofar as they are subject to
the Packers and Stockyards Act, 1921.” Pub. L. No. 85-909,
72 Stat. 1749, 1750 (emphasis added). AT&T argues that
this revision demonstrates congressional intent to change the
packers and stockyards exception from status-based to
activity-based, and that Congress therefore must have
considered the unchanged common-carrier exemption to be
status-based. But this interpretation reads far too much into
a minor textual change. Like the Section 6 revision, this
amendment—adopted more than 40 years after the FTC Act
and more than 35 years after the original packers and
stockyards exception—hardly elucidates congressional
intent in 1914. See O’Gilvie, 519 U.S. at 90.
20 FTC V. AT&T MOBILITY
D. Failed Amendments to the Federal Trade
Commission Act
We discount AT&T’s argument that failed amendments
post-dating passage of the FTC Act in 1914 illuminate the
Act’s meaning. Not surprisingly, “failed legislative
proposals are a particularly dangerous ground on which to
rest an interpretation of a prior statute.” United States v.
Craft, 535 U.S. 274, 287 (2002) (internal quotation marks
and citation omitted). Such proposals lack “persuasive
significance” because “several equally tenable inferences
may be drawn from [congressional] inaction, including the
inference that the existing legislation already incorporated
the offered change.” Pension Benefit Guar. Corp. v. LTV
Corp., 496 U.S. 633, 650 (1990) (internal quotation marks
and citation omitted). Failed bills are particularly weak
evidence compared to the more reliable sources that support
the activity-based interpretation of the FTC Act—
contemporaneous case law, the interpretations of the Act by
the FTC and FCC, and the floor manager’s comments
immediately before passage.
II. JUDICIAL INTERPRETATION OF “COMMON
CARRIER”
Because the text and history of the FTC Act do not
clearly illuminate the meaning of “common carrier,” it is
appropriate to examine the common-law meaning of the
term at the time the FTC Act was passed in 1914. In doing
so, we follow the Supreme Court’s guidance “that where
words are employed in a statute which had at the time a well-
known meaning at common law or in the law of this country,
they are presumed to have been used in that sense unless the
context compels to the contrary.” Standard Oil Co. of N.J.
v. United States, 221 U.S. 1, 59 (1911). The Court has
consistently adopted this principle to inform its statutory
FTC V. AT&T MOBILITY 21
interpretation. See, e.g., Microsoft Corp. v. i4i Ltd. P’ship,
564 U.S. 91, 103 (2011); Neder v. United States, 527 U.S. 1,
21 (1999) (“[W]here Congress uses terms that have
accumulated settled meaning under the common law, a court
must infer, unless the statute otherwise dictates, that
Congress means to incorporate the established meaning of
these terms.” (citation and internal quotation marks and
alterations omitted)). This approach is particularly
appropriate here because the language of the exemption—
“except . . . common carriers subject to the Acts to regulate
commerce”—remains unchanged since 1914.
Critical to our interpretation, a consistent line of cases
demonstrates that “common carrier” had a well-understood
meaning by 1914. Forty years before the FTC Act, the
Supreme Court observed that an entity could be considered
a common carrier for some purposes but not others: “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.” N. Y. Cent. R.R. Co. v.
Lockwood, 84 U.S. 357, 377 (1873). In other words, being
a common carrier entity was not a unitary status for
regulatory purposes. A business with common-carrier status
acted in its capacity as a common carrier only when it
performed activities that were “embraced within the scope
of its chartered powers.” Id.
AT&T points to the Supreme Court’s statement in
Lockwood that the “nature of [an entity’s] business renders
[it] a common carrier” to argue that the common-carrier
exemption is status-based. Id. at 376. But if anything, the
Court’s reference to the “nature” of the common carrier’s
business is more compatible with an activity-based
interpretation. Were the exemption status-based, the Court
22 FTC V. AT&T MOBILITY
would have had no need to refer to the nature of the common
carrier’s business activities at all, but could have stopped its
analysis after concluding that the entity had the “status” of a
common carrier for any purpose.
Similarly, after passage of the ICA, common carriers
were subject to the ICC’s jurisdiction only to the extent that
they were engaging in common-carrier activities. For
example, in ICC v. Goodrich Transit Co., the Supreme Court
highlighted the division between common-carrier and non-
common-carrier pursuits by the same company. 224 U.S.
194, 204–05 (1912). The Court held that the ICC had
authority to require an accounting system for a common
carrier engaging in both common-carriage and non-
common-carriage activities. Id. at 211–12. As the Court
explained, “[i]f the [ICC] is to successfully perform its duties
. . . it must be informed as to the business of the carriers” it
seeks to regulate, and could only “properly regulate such
matters as are really within its jurisdiction.” Id. at 211
(emphasis added). Of importance, the Court assumed that
certain non-common-carriage activities or kinds of
“business” were “not within the jurisdiction of the [ICC].”
Id.
In 1913, the year before the passage of the FTC Act, the
Supreme Court observed 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 that 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.” Santa Fe, Prescott, & Phx. Ry. Co. v. Grant
Bros. Constr. Co., 228 U.S. 177, 184–85 (1913) (emphasis
added). In other words, public policy dictates that common
FTC V. AT&T MOBILITY 23
carriers cannot contract away their liability for negligence.
But as the Court noted, “this rule has no application when a
railroad company is acting outside the performance of its
duty as a common carrier.” Id. at 185. As these
contemporary decisions illustrate, entities were regulated as
common carriers to the extent that they engaged in common-
carrier activities.
In the years preceding the FTC Act, it also was well
understood that a common carrier might be involved in
other, completely different lines of business (i.e., non-
common-carriage activities). For example, a railroad could
also engage in purely private transportation. See Lockwood,
84 U.S. at 377 (“[I]f a carrier of produce, running a truck
boat between New York City and Norfolk, should be
requested to carry a keg of specie, 6 or a load of expensive
furniture, which he could justly refuse to take, such
agreement might be made in reference to his taking and
carrying the same as the parties chose to make . . . .”). A
common carrier might also operate amusement parks,
“deriv[ing] revenue from lunch stands, merry-go-rounds,
bowling alleys, bath houses, etc., and collect[ing] admission
fees from people entering the parks.” Goodrich, 224 U.S. at
205. These examples belie AT&T’s argument that in 1914
common carriers were single-purpose entities engaged only
in common-carriage activity.
Cases decided after passage of the FTC Act further
support an activity-based interpretation of the exemption. In
1931, the Supreme Court definitively stated that “[t]here is
6
This archaic term can refer either to money in the form of coins
rather than paper tender, or to a specific or precise form or amount. See
Specie, OXFORDDICTIONARIES.COM, https://en.oxforddictionaries.com/d
efinition/specie (last visited Jan. 17, 2018).
24 FTC V. AT&T MOBILITY
no doubt that common carriers, subject to the Interstate
Commerce Act, may have activities which lie outside the
performance of their duties as common carriers and are not
subject to the provisions of the act.” Kan. City S. Ry. Co. v.
United States, 282 U.S. 760, 764 (1931). This proclamation
reflected the Court’s historical treatment of common-carrier
activities. To be sure, an entity “that is subject to the [ICA]”
cannot change its character by calling itself something else,
such as a private carrier. See id.
Our approach is consistent with the Ninth Circuit’s
longstanding interpretation of “common carrier” under the
Communications Act. We have recognized that a company
may be an interstate common carrier “in some instances but
not in others, depending on the nature of the activity which
is subject to scrutiny.” McDonnell Douglas Corp. v. Gen.
Tel. Co. of Cal., 594 F.2d 720, 724–25 n.3 (9th Cir. 1979).
McDonnell aligns with the Supreme Court’s interpretation
of the Communications Act later that year. See FCC v.
Midwest Video Corp., 440 U.S. 689, 701 n.9 (1979) (“A
cable system may operate as a common carrier with respect
to a portion of its service only.”). More recently, we
reiterated that “[w]hether an entity in a given case is to be
considered a common carrier or [not] turns on the particular
practice under surveillance.” Telesaurus VPC, LLC v.
Power, 623 F.3d 998, 1005 (9th Cir. 2010) (quoting Sw. Bell
Tel. Co. v. FCC, 19 F.3d 1475, 1481 (D.C. Cir. 1994)). This
authority is particularly illuminating because the common-
carrier exemption in the FTC Act explicitly references the
Communications Act. 15 U.S.C. §§ 44, 45(a)(2). AT&T
provides no persuasive argument for why we should
overturn these precedents and adopt a novel, status-based
interpretation.
FTC V. AT&T MOBILITY 25
Our reading also aligns with the views of our sister
circuits. In a case involving regulation of cable television
operators under the Communications Act, the D.C. Circuit
emphasized that “one can be a common carrier with regard
to some activities but not others.” Nat’l Ass’n of Regulatory
Util. Comm’rs v. FCC, 533 F.2d 601, 608 (D.C. Cir. 1976).
Indeed, “it has long been held that a common carrier is such
by virtue of . . . the actual activities he carries on.” Id.
(citation and internal quotation marks omitted). Resort to
the common law of carriers is appropriate because of “the
circularity and uncertainty of the common carrier definitions
set forth in the statute and regulations.” Id. (footnote
omitted). The D.C. Circuit has since confirmed that it “is
clear that an entity can be a common carrier with respect to
only some of its activities,” and reiterated that the term
“common carrier” is “used to indicate not an entity but rather
an activity as to which an entity is a common carrier.”
Comput. & Commc’ns Indus. Ass’n v. FCC, 693 F.2d 198,
209 n.59 (D.C. Cir. 1982).
The Eleventh Circuit, in construing the Communications
Act, has interpreted common carriers to be “entities that are
engaged in providing communication services.” Eagleview
Techs., Inc. v. MDS Assocs., 190 F.3d 1195, 1197 (11th Cir.
1999) (per curiam) (internal quotation marks omitted).
Noting that the Communications Act describes a common
carrier as “any person engaged as a common carrier for
hire,” 47 U.S.C. § 153(11) (emphasis added), and that the
FCC’s regulations interpreting the Communications Act
described a common carrier as “[a]ny person engaged in
rendering communication service for hire to the public,”
47 C.F.R. § 101.3 (2017), the court concluded that “an entity
is not considered a common carrier unless it is ‘engaged’ in
rendering services.” Eagleview, 190 F.3d at 1197.
26 FTC V. AT&T MOBILITY
The Second Circuit also has joined the chorus. In FTC
v. Verity International, the court conducted a careful
historical investigation of the term “common carrier”
beginning with some of the phrase’s earliest appearances in
English common law and the writings of Lord Chief Justice
Hale circa 1670. 443 F.3d at 58. Tracing legislative history
and judicial interpretations of the term through 2006, the
court explained that “[r]ather than rely[ing] on what an entity
is authorized to do, courts must examine the actual conduct
of an entity to determine if it is a common carrier for
purposes of the FTC Act exemption.” Id. at 60. The court
characterized the “notion of some indelible common carrier
status” as “highly questionable.” Id. at 59 n.4 (internal
quotation marks omitted).
In contrast to this long line of cases, AT&T’s position
that the case law supports a status-based interpretation of
“common carrier” does not withstand scrutiny. AT&T
highlights a passage in Goodrich that the ICC, in order to
regulate a common carrier, “might require a knowledge of
the business of the carrier.” 224 U.S. at 211. But there is
nothing profound about that statement. It is common sense
that a regulator would need to understand the scope of a
business in order to determine how and whether to regulate
it. Significantly, the Court pointed out that the ICC has a
legitimate interest in the overall business of a carrier so that
the Commission can “regulat[e] that which is confessedly
within its power.” Id. at 214.
AT&T’s reliance on FTC v. Miller is similarly
misplaced. 549 F.2d 452 (7th Cir. 1977). There, the Seventh
Circuit stated that it “need not decide whether the FTC is
correct in its statement that the non-carrier activities of a
common carrier do not fall within the scope of the [Section]
6 exemption [to the FTC’s jurisdiction].” Id. at 458. The
FTC V. AT&T MOBILITY 27
court further explained that “[a]ssuming that to be correct, it
does not follow that a corporation engaged solely in carrier
activities steps outside the exemption whenever those
activities are not of a type ordinarily regulated by the ICC.”
Id. Because the case involved a carrier “engaged solely in
[common] carrier activities,” the court did not need to
wrestle with the issue we confront. Id. 7
Nor do the other cases cited by AT&T—all of which
endorse the FTC’s expansive enforcement authority—
support AT&T’s position. In Official Airline Guides, Inc. v.
FTC, for example, a non-airline publisher of airline
schedules argued that it was free from FTC oversight under
the FTC Act’s analogous exemption for “air carriers . . .
subject to the Federal Aviation Act.” 630 F.2d 920, 923–24
(2d Cir. 1980) (quoting 15 U.S.C. § 45(a)(2)). The Second
Circuit rejected that end run around the “broad mandate
given to the [FTC] to enforce section 5.” Id. at 923. Because
the publisher was not an “air carrier” that was “subject to the
Federal Aviation Act” under any approach, it hardly
mattered to the court that the publisher engaged in some
activities that “affect[ed] competition among air carriers.”
Id.
AT&T repackages the failed arguments made by
regulated parties in such cases: it claims company-wide
protection from the FTC because it engaged in some
activities performed by an exempted party—in this case, a
common carrier. Courts routinely rejected such arguments
7
We do acknowledge, however, that the court hinted at a conflicting
interpretation despite its disclaimer that it was not deciding the question.
See Miller, 549 F.2d at 458.
28 FTC V. AT&T MOBILITY
in these cases, instead favoring the FTC’s broad enforcement
authority.
III. AGENCY INTERPRETATION OF THE COMMON-
CARRIER EXEMPTION
Consistent with the longstanding judicial interpretation
of the exemption, the FCC and the FTC both urge us to adopt
an activity-based interpretation of the term “common
carrier.” As the FCC states in its amicus brief, “the agencies
have historically understood the FTC to have jurisdiction
over non-common-carrier services of entities that also
engage in common carriage services within the exclusive
jurisdiction of the FCC.”
According to the FCC, “the Communications Act and the
FTC Act fit hand-in-glove to ensure there is no gap in the
federal regulation of telecommunications companies, while
also conferring the FCC with exclusive jurisdiction over
common-carrier services.” That regulatory harmony results
from the cross-reference between the FTC Act and the
Communications Act. See 15 U.S.C. §§ 44, 45(a)(2). As the
FCC explains, the Communications Act “authorizes
comprehensive common-carriage regulation of
telecommunications providers only when they are engaged
in common carrier activities.” See, e.g., 47 U.S.C.
§§ 153(51), 332(c)(1). And because “the provisions of the
Communications Act cross-referenced by the FTC Act’s
common-carrier exception are activity-based, not status-
based,” the common-carrier exemption “is activity-based as
well.” By contrast, a novel, status-based interpretation could
“open a potentially substantial regulatory gap and greatly
disrupt the federal regulatory scheme.” In the FCC’s view,
the activity-based approach is therefore “the only plausible
interpretation of the common carrier exemption” in Section
5.
FTC V. AT&T MOBILITY 29
Despite the cross-reference between the statutes, there
may be some overlap between the agencies’ jurisdiction
when the FCC’s regulations of common carriers affect the
non-common-carrier activities of those entities. In a 2015
Memorandum of Understanding, the two agencies
“express[ed] their belief that the scope of the common
carrier exemption in the FTC Act does not preclude the FTC
from addressing non-common carrier activities engaged in
by common carriers.” FCC-FTC Consumer Protection
Memorandum of Understanding, 2015 WL 7261839, at *1
(Nov. 16, 2015). The Memorandum also reflects the
agencies’ view that the FTC’s enforcement authority cannot
impinge on the FCC’s concurrent authority in regulating
common carriers. See id. (“[N]o exercise of enforcement
authority by the FTC should be taken to be a limitation on
authority otherwise available to the FCC, including FCC
authority over activities engaged in by common carriers and
by non-common carriers for and in connection with common
carrier services . . . .”).
This Memorandum reflects a classic example of
concurrent jurisdiction with two agencies sharing regulatory
oversight. In the administrative context, two cops on the
beat is nothing unusual. See Thompson Med. Co. v. FTC,
791 F.2d 189, 192 (D.C. Cir. 1986) (“[O]urs is an age of
overlapping and concurring regulatory jurisdiction.”). It has
long been established that where two statutes apply to “the
same subject, effect should be given to both if possible.”
Posadas v. Nat’l City Bank of N.Y., 296 U.S. 497, 503
(1936).
For example, the FTC and the Department of Justice
(“DOJ”) (and the FCC with regard to certain
telecommunications matters) have long had concurrent
enforcement responsibilities with respect to antitrust
30 FTC V. AT&T MOBILITY
matters. See FTC v. Cement Inst., 333 U.S. 683, 694–95
(1948) (upholding the concurrent jurisdiction of the FTC and
the DOJ over the same conduct by the same parties). It is
well accepted that the FTC “may proceed against unfair [or
deceptive] practices even if those practices violate some
other statute that the FTC lacks authority to administer.”
FTC v. Accusearch Inc., 570 F.3d 1187, 1195 (10th Cir.
2009).
Such concurrent jurisdiction makes sense, as different
federal agencies bring to the table discrete forms of expertise
and specific enforcement powers. The numerous examples
of the FTC participating in multiagency proceedings against
the same conduct belie AT&T’s argument that
telecommunications providers must be regulated by the FCC
alone. See, e.g., FTC v. Pantron I Corp., 33 F.3d 1088, 1091
(9th Cir. 1994) (where the FTC, the Food and Drug
Administration (“FDA”), and the Postal Service took action
against a hair loss company due to the company’s
advertisements); United States v. Lane Labs-USA Inc.,
427 F.3d 219, 221–22 (3d Cir. 2005) (where the FTC and the
FDA both commenced actions against a health product
manufacturer due to the manufacturer’s advertisements).
The activity-based interpretation embraced by the FTC-
FCC Memorandum of Understanding is consistent with the
FTC’s position more than three decades earlier that, if an
“ICC-regulated common carrier [were] to engage in
activities unrelated to interstate transportation, such as real
estate or manufacturing, which could not be regulated by the
ICC, those other activities would not be exempt from FTC
jurisdiction merely because they were undertaken by a
common carrier subject to the ICA.” In re Mass. Furniture
& Piano Movers Ass’n, 102 F.T.C. 1176, 1983 WL 486277,
at *27 (1983), ord. rev’d in part on other grounds sub nom.
FTC V. AT&T MOBILITY 31
Mass. Furniture & Piano Movers Ass’n v. FTC, 773 F.2d
391 (1st Cir. 1985).
The FTC echoed this view more recently in a 2002
Senate hearing, stating that it “firmly believes that only the
common carrier activities of . . . companies are exempted.”
FTC Reauthorization: Hearing Before the Subcomm. on
Consumer Affairs, Foreign Commerce and Tourism of the S.
Comm. on Commerce, Science, and Transp., 107th Cong. 28
(2002) (statement of Hon. Sheila F. Anthony, FTC)
(emphasis added); see also Reauthorization of the Federal
Trade Commission: Positioning the Commission for the
Twenty-First Century: Hearing Before the Subcomm. on
Commerce, Trade & Consumer Protection of the H. Comm.
on Energy and Commerce, 108th Cong. 27 (2003) (“[T]he
agency believes that the FTC Act applies to non-common-
carrier activities of telecommunications firms, even if the
firms also provide common carrier services.”).
We are mindful that regulatory agencies such as the FTC
and FCC “can bring the benefit of specialized experience to
bear on the subtle questions in this case.” United States v.
Mead Corp., 533 U.S. 218, 235 (2001). While the FTC has
disclaimed reliance on Chevron, U.S.A., Inc. v. Natural
Resources Defense Council, Inc., 467 U.S. 837 (1984), we
afford the agencies some deference under Skidmore v. Swift
& Co., 323 U.S. 134 (1944). Indeed, the FTC and FCC’s
“power to persuade” is buttressed by the robust continuum
of case law supporting their activity-based interpretation.
See id. at 140.
AT&T points to language in a few of the FTC’s briefs in
other cases that may suggest the agency has not been wholly
consistent in its position. Read in context, however, these
cases do not squarely address the issue we consider. Nor do
they represent a change in the FTC’s position.
32 FTC V. AT&T MOBILITY
Ultimately, the structure of the statute and its
contemporaneous legislative history, coupled with more
than a century of judicial interpretation, align with the
preferred reading and expertise of the two most important
regulators with an interest in this appeal. We conclude that
the exemption in Section 5 of the FTC Act—“except . . .
common carriers subject to the Acts to regulate
commerce”—bars the FTC from regulating “common
carriers” only to the extent that they engage in common-
carriage activity. By extension, this interpretation means
that the FTC may regulate common carriers’ non-common-
carriage activities.
IV. EFFECT OF THE RECLASSIFICATION ORDER
Finally, we address whether the FCC’s order
reclassifying mobile data service from a non-common-
carriage service to a common-carriage service changes the
outcome of this appeal. The Reclassification Order was
issued on March 12, 2015—five months after the FTC filed
its suit against AT&T—and unambiguously states that the
order will “apply only on a prospective basis.” 30 F.C.C.
Rcd. 5601, 5734 n.792. AT&T’s data-throttling program
spanned from at least 2011 until the time that the FTC filed
its complaint in 2014, well before the Reclassification Order
became effective.
The Reclassification Order’s explicit text and the
“generally applicable presumption against retroactivity”
confirm that the FTC’s Section 5 authority to bring cases
concerning mobile data services has been curtailed only for
services rendered after the order became effective. See
Hughes Aircraft Co. v. United States ex rel. Schumer,
520 U.S. 939, 950–51 (1997); see also Landgraf v. USI Film
Prods., 511 U.S. 244, 272 (1994) (“[C]ongressional
enactments and administrative rules will not be construed to
FTC V. AT&T MOBILITY 33
have retroactive effect unless their language requires this
result . . . .” (internal quotation marks omitted)).
The presumption against retroactivity applies with
particular strength here because the Reclassification Order
affects the substantive rights of the parties. See Hughes
Aircraft, 520 U.S. at 951. Specifically, the enforcement
powers of the FTC and FCC differ in material respects. The
FCC is not authorized to seek refunds for injured consumers,
and its enforcement authority is limited to conduct going
back one year. See 47 U.S.C. § 503(b)(6). Hence, applying
the Reclassification Order retroactively would strip the
government of the opportunity to seek restitution on behalf
of millions of customers affected by AT&T’s data-throttling
program.
Contrary to AT&T’s position, the prospective
Reclassification Order does not rob the FTC of its
jurisdiction or authority over conduct occurring before the
order. The FTC’s power to bring enforcement lawsuits in
federal court derives from the FTC Act, which authorizes the
agency to sue in any case involving “any provision of law
enforced by” the FTC. 15 U.S.C. § 53(b)(1). Before the
reclassification, the FTC had the authority to pursue this suit.
The prospective reclassification can hardly be viewed to
retrospectively strip the FTC of that enforcement authority.
Nor does the Reclassification Order render this suit moot, as
the FTC can still potentially achieve monetary relief for
AT&T’s past violations. See FTC v. Phoebe Putney Health
Sys., Inc., 568 U.S. 216, 224 n.3 (2013) (“A case becomes
moot only when it is impossible for a court to grant any
34 FTC V. AT&T MOBILITY
effectual relief whatever to the prevailing party[.]” (internal
quotation marks omitted)). 8
For the reasons outlined above, we affirm the district
court’s denial of AT&T’s motion to dismiss.
AFFIRMED.
8
In early 2018, the FCC reversed its 2015 Reclassification Order
and once again classified broadband internet as a non-common-carrier
service. See In the Matter of Restoring Internet Freedom, W.C. Dkt. No.
17-108, 2018 WL 305638, at *1 (Jan 4, 2018). The 2018 order explicitly
stated that it applies “only on a prospective basis.” Id. at n.973. The
parties spar over whether this order moots the appeal. AT&T renews its
argument that the FTC lost jurisdiction to press this suit after the FCC’s
2015 Order and so all litigation must cease. We conclude the appeal is
not moot. The FTC derived its jurisdiction from the FTC Act, and
neither of the FCC’s Reclassification Orders applies retroactively.