AT&T Uses Binding Arbitration Mouse Print To Kill Throttling Class Action

from the legal-tap-dancing dept

Fri, Mar 18th 2016 3:30am — Karl Bode

For years, AT&T used contract fine print to prohibit its customers from suing it. Instead, users were forced to participate in binding arbitration, a system whereby company-employed arbitrators weigh the evidence -- and unsurprisingly rule in favor of the company employing them a dramatic majority of the time. Initially, lower courts repeatedly derided this behavior as an "unconscionable" curtailing of consumer rights and abuse of the law. But in 2011 the Supreme Court's AT&T Mobility v. Concepcion ruling declared that what AT&T was doing was perfectly ok, resulting in countless companies now following AT&T's lead.

However screwed up the class action process may be, the practice of binding arbitration is notably worse. But AT&T's pioneering in the space continues to pay notable dividends. Last month, for example, U.S. District Court Judge Edward Chen dismantled a class action lawsuit filed against AT&T for the company's practice of misleadingly advertising "unlimited" wireless broadband service, then throttling customers after just a few gigabytes of consumption:

"U.S. District Court Judge Edward Chen said in his ruling that the wireless consumers who are suing AT&T all signed contracts that call for arbitration of disputes on an individual basis. Chen's ruling, quietly issued last week, means that AT&T won't face a class-action for allegedly duping people by selling them "unlimited" data plans, but throttling them after they hit a monthly cap. The consumers can still proceed with individual arbitrations, but doing so often is prohibitively costly."

While AT&T may have dodged a class action, it's still being held accountable, though in a notably less expensive fashion. The company has already faced a $100 million fine from the FCC, and is currently trying to fend off an ongoing lawsuit by the FTC. In that case, AT&T continues to ironically argue that because the FCC reclassified AT&T as a common carrier under Title II last year, the FTC no longer has authority over AT&T. That's something the courts, including Chen, continue to deny:

"AT&T is arguing that the FTC has no jurisdiction to proceed, because broadband is now classified as a "common carrier" service. The FTC has no authority over common-carrier services. Chen rejected AT&T's position, ruling that broadband wasn't considered a common carrier service until the Federal Communications Commission enacted net neutrality rules in 2015. “Once the Reclassification Order of the Federal Communications Commission ... goes into effect, that will not deprive the FTC of any jurisdiction over past alleged misconduct as asserted in this pending action,” he wrote."

You'll recall that AT&T fought tooth and nail against the FCC's reclassifying of ISPs under Title II. Now AT&T's trying to argue that it's that very reclassification that means the FTC can't hold it accountable for throttling. This is after AT&T successfully used a few paragraphs of fine print to prevent customers from directly holding the company accountable via class action. AT&T now makes it clear that its "unlimited" users will be throttled after 22 GB of consumption, but the sheer volume of billable hours and paperwork AT&T's generating just to defend past false advertising practices remains downright staggering.

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Filed Under: arbitration, binding arbitration, class action, throttling
Companies: at&t

15 Comments

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That One Guy (profile), 18 Mar 2016 @ 2:52am

Why stop halfway?
Initially, lower courts repeatedly derided this behavior as an "unconscionable" curtailing of consumer rights and abuse of the law. But in 2011 the Supreme Court's AT&T Mobility v. Concepcion ruling declared that what AT&T was doing was perfectly ok, resulting in countless companies now following AT&T's lead.

At this point companies in the US might as well go all the way and include a clause stating that using their service means that a customer is barred from bringing any legal action against them at all. The result would be the same either way and without having to go through the hassle of the hilariously biased arbitration process both sides would be able to save time and money that would have otherwise been wasted.
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Anonymous Coward, 18 Mar 2016 @ 3:39am

Maybe the FTC should be getting involved already as the consumer protection watchdog....
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Anonymous Coward, 18 Mar 2016 @ 3:45am

Re: Why stop halfway?
The Corporation comes first.
The Corporation is always right.
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mcherm (profile), 18 Mar 2016 @ 4:04am

Flip-Flop is Fine
> You'll recall that AT&T fought tooth and nail against [..X..]. Now AT&T's trying to argue that it's that [..X..] means [..something in its favor..].

That is a very reasonable and consistent position to take. One may believe that certain rules apply, but if they don't, then at least the other rules apply.

(The part where they say that the other rules apply retroactively is an interesting and creative approach. I wonder whether they believe that the FTC's lack of jurisdiction in the past is paired with the FCC having jurisdiction over AT&T's past behavior. Somehow I doubt it.)
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Anonymous Coward, 18 Mar 2016 @ 4:41am

Seems the courts and AT&T are the problem. I go without before doing business with AT&T, And as for the courts, this time it won't be tea we are dumping in the harbor.
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Ninja (profile), 18 Mar 2016 @ 4:46am

Re: Why stop halfway?
That. This would be a small step above just fully eliminating the courts from the possible venues of dealing with corporate misconduct. And the courts have already shown they'd rather be relieved of their jobs.
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Anonymous Coward, 18 Mar 2016 @ 4:52am

Re: Re: Why stop halfway?
The Corporation comes first.
The Corporation is always right.

You sound like a Supreme Court judge.
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Anonymous Coward, 18 Mar 2016 @ 5:03am

Before there was Comcast...
...we hated AT&T most.

Remember Coburn's Our Man Flint? Remember Tomlin's character "Earnestine"? Comcursed is the johnny-come-lately, punk-bitch of evil business practices compared to AT&T.
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Anonymous Coward, 18 Mar 2016 @ 6:38am

Re: Why stop halfway?
There's a relevaqnt xkcd where a geeky-type stewal's Satan's soul through EULA.

AT&T learned the wrong lessons from this.
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Adam Wood (profile), 18 Mar 2016 @ 6:47am

It's all or nothing.
The reality is that the mouse print catches our mouse balls in the mouse trap. There are no alternatives that the mouse print isn't ridiculously and overwhelmingly in favor of the provider on every aspect. Contracts, if we can call them that, offer ZERO consumer protection, are non-negotiable and bind us to things whether or not we agree. The only solution is to just not sign the contract and go without. Sure, there ARE alternatives but you are still agreeing to terms and they have you by the mouse balls too.
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jupiterkansas (profile), 18 Mar 2016 @ 8:00am

Re: Before there was Comcast...
Remember "The President's Analyst"
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PRMan (profile), 18 Mar 2016 @ 1:18pm

Why?
Why does anyone continue to do business with this evil company? I gave them a lifetime ban over a decade ago.
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Anonymous Coward, 18 Mar 2016 @ 4:49pm

Re: Re: Why stop halfway?
All hail Corporation!
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That One Guy (profile), 18 Mar 2016 @ 11:00pm

Re: Why?
Same reason people still pay companies like Comcast, because for far too many they really don't have any other choice. You either go with them or you go without.
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Wendy Cockcroft, 24 Mar 2016 @ 8:46am

Re: Re: Re: Why stop halfway?
Anyone who doesn't is a dirty commie pinko, so there.
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