Ninth Circuit grants rare rehearing concerning FTC's 'common carrier' jurisdiction

19 November 2019 4:55pm
telecom towers

9 May 2017. By Mike Swift.

The US Court of Appeals for the Ninth Circuit will take another look at whether the Federal Trade Commission can regulate any aspect of a company that offers "common carrier" telecom services, allowing a rarely granted en banc rehearing of a decision in the FTC's litigation against AT&T Mobility.

The decision handed down Tuesday afternoon nullified a 2016 Ninth Circuit ruling that effectively removed the FTC's jurisdiction to regulate net neutrality promises, privacy practices or other functions of a company like AT&T, which offers telephone, cable television, consumer broadband or any other "common carrier" service.

With the Federal Communications Commission poised to renounce its 2015 "Open Internet Order" that declared fixed and wireless broadband to be a "common carrier" service under Title II of the Communications Act, the en banc rehearing could be significant to the debate over the future of net neutrality, at least for the nine Western states within the Ninth Circuit.

A three-judge Ninth Circuit panel in August 2016 reversed a district court decision that said the FTC could pursue allegations that AT&T deceived its "unlimited" data wireless customers by slowing, or "throttling," their data speeds.

"That was a very significant ruling, because it basically got the FTC out of the picture as far as oversight of ISP's conduct was concerned, in particular with respect to the issues of marketing practices and privacy practices," said Peter Karanjia, a former deputy general counsel at the FCC, now with the firm Davis Wright Tremaine.

FCC Chairman Ajit Pai hailed the ruling Tueday, saying it "strengthens the case" for the FCC to revoke the Title II net neutrality order and allow the FTC to regulate broadband providers' privacy and data security practices.

"Today's action by the Ninth Circuit is a big win for American consumers," Pai said in a written statement. "Now that the court's prior decision is no longer effective, it will be easier for the FTC to protect consumers' online privacy."

Of course, that will only be true if the en banc panel comes to a different conclusion than the three-judge panel did last year. The FTC, which had petitioned for the en banc rehearing in October under the Obama administration, declined to comment on Tuesday's decision.

The en banc decision, which followed a majority vote by the 25 active Ninth Circuit judges, means that a panel of 11 circuit judges including Chief Judge Sidney Thomas will rehear the case. The 10 judges in addition to Thomas who will rehear the case will be chosen randomly, and could include members of the same three-judge panel that issued last year's unanimous decision.

The granting of an en banc rehearing in the Ninth Circuit and other appellate courts is exceedingly rare. In 2016, the Ninth Circuit received 816 en banc petitions on the 6,709 cases terminated on the merits.

Of the 816 petitions, just 32 were found to be worthy of a rehearing by at least one Ninth Circuit judge, and came to a vote. Of  those 32 votes, the Ninth Circuit granted an en banc rehearing in just 19 cases , said David Madden, a spokesman for the Ninth Circuit.

The FTC is blocked from regulating "common carrier" services because of a specific exemption in the FTC Act. The question in the AT&T case was whether the enforcer can police other services such as AT&T's marketing of its "unlimited" data plans, which the FTC alleged was deceptive.

In last year's Ninth Circuit decision, the three-judge panel found that US District Judge Edward Chen erred in 2015 when he relied on a series of US Supreme Court cases, including a 1913 decision involving the Santa Fe, Prescott & Phoenix Railway, to adopt the FTC's argument that the common carrier exemption was based on the specific activity at issue, rather than the company's common carrier status.

"While these cases recognize a distinction between common carrier and non-common carrier activities in the regulation of entities with common carrier status, they do not show that when Congress used the term 'common carrier' in the FTC Act, it could only have meant 'common carrier to the extent engaged in common carrier activity,'" US Circuit Judge Richard R. Clifton said in that opinion. "There is no indication that the regulatory distinction in the cases the district court cited is implicit in Congress's phrasing of the common carrier exemption."