Class Action Denied in AT&T Data Throttling Lawsuit

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AT&T won't face a class action lawsuit over throttling speeds for customers with unlimited smartphone data plans. U.S. District Court Judge Edward Chen handed down that ruling after determining the plaintiffs must all deal with AT&T individually because their contracts prohibit class action cases.

AT&T dodges class action status in iPhone data throttling lawsuitAT&T dodges class action status in iPhone data throttling lawsuit

Customers filed the lawsuit after AT&T began actively limiting the bandwidth available to iPhone customers in 2011 if they used more than 3GB or 5GB worth of data in a month on their unlimited data plans. The throttled speeds made wireless data access painfully slow at best, and for many people, their wireless data plan was essentially useless.

AT&T later bumped that cap up to about 22GB a month, and limits data throttling to high congestion network times.

The ruling is a big victory for AT&T because the likelihood thousands of iPhone owners will file individual lawsuits is low. For those who do choose to take AT&T to court, they'll have to deal with legal expenses they otherwise wouldn't have seen with class action status, and that's more than enough incentive to keep most disgruntled unlimited data plan users out of court.

This isn't, however, a total win for AT&T because Judge Chen refused to dismiss the Federal Trade Commission's lawsuit for misleading customers with unlimited data plans that get throttled. AT&T argued the FTC doesn't have jurisdiction because broadband has been reclassified as a common carrier service, according to MediaPost. Judge Chen disagreed because that new status hasn't gone into effect yet.

"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 said.

Unless another court overturns Judge Chen's ruling on the FTC case, the only solace for many iPhone users who feel cheated by AT&T will come from seeing the cell service provider hit with a big fine. And for those who still have unlimited data plans, at least they now have about 22GB to play with each month before facing slower speeds.

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Denying class action status effectively killed the hopes of many iPhone owners who wanted to see AT&T pay for what they felt was a deceptive business practice. In the end, it was the clause in their AT&T service plan contracts requiring individual arbitration that did them in—and this is exactly why companies include those terms in their service agreements.

Comments

BurmaYank

This story is actually the tip of a gigantic legal iceberg the US is actively colliding full-speed-ahead into, which distresses me at least as much as the FBI-Apple showdown over whether the US will be a Constitution-less CIA/NSA/Exelon police state, namely:

The expoding threat of Arbitration Injustice to US contract signers (how clauses buried in tens of millions of contracts have deprived Americans of one of their most fundamental constitutional rights: their day in court.) Here is a collection of recent & archived NYTimes articles about by Jessica Silver-Greenberg et.al. ( http://topics.nytimes.com/top/reference/timestopics/people/s/jessica_silvergreenberg/index.html?action=click&contentCollection=DealBook&module=Byline®ion=Header&pgtype=article ):

——————————————————————————————
- BEWARE THE FINE PRINT:  Sued Over Old Debt, and Blocked From Suing Back - NYT DEC. 22, 2015 http://www.nytimes.com/2015/12/23/business/dealbook/sued-over-old-debt-and-blocked-from-suing-back.html?ref=topics

- BEWARE THE FINE PRINT (PART I / III): Arbitration Everywhere, Stacking the Deck of Justice - NYT OCT. 31, 2015 http://www.nytimes.com/2015/11/01/business/dealbook/arbitration-everywhere-stacking-the-deck-of-justice.html

- BEWARE THE FINE PRINT (PART II / III): In Arbitration, a ‘Privatization of the Justice System’  - NYT NOV. 1, 2015
http://www.nytimes.com/2015/11/02/business/dealbook/in-arbitration-a-privatization-of-the-justice-system.html?ref=topics

- BEWARE THE FINE PRINT (PART III / III): In Religious Arbitration, Scripture Is the Rule of Law - NYT NOV. 2, 2015
http://www.nytimes.com/2015/11/03/business/dealbook/in-religious-arbitration-scripture-is-the-rule-of-law.html

- Efforts to Rein In Arbitration Come Under Well-Financed Attack - NYT Nov 16, 2015 http://www.nytimes.com/2015/11/16/business/dealbook/efforts-to-rein-in-arbitration-come-under-well-financed-attack.html?ref=topics

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- Supreme Court Upholds Arbitration in DirecTV Case - NYT Dec 15, 2015 http://www.nytimes.com/2015/12/15/us/politics/supreme-court-upholds-arbitration-in-directtv-case.html?ref=topics

- Consumer Financial Protection Bureau Seeks End to Arbitration-Only Clauses in Consumer Contracts - NYT Oct 7, 2015 http://www.nytimes.com/2015/10/07/business/dealbook/protection-bureau-seeks-end-to-arbitration-only-credit-clauses.html

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- Failed by Law and Courts, Troops Come Home to Repossessions - NYT Mar 17, 2015 http://www.nytimes.com/2015/03/17/business/wronged-troops-are-denied-recourse-by-arbitration-clauses.html?_r=0

- EDITORIAL - Bad Debt Collectors and Their Prey - NYT NOV. 17, 2015 http://www.nytimes.com/2015/11/17/opinion/bad-debt-collectors-and-their-prey.html

- Bipartisan Bill Would Protect Service Members’ Right to Avoid Arbitration - NYT Nov 21, 2015 http://www.nytimes.com/2015/11/21/business/dealbook/bipartisan-bill-would-protect-service-members-right-to-go-to-court.html?ref=topics

geoduck

BurmaYank
Yes, Thank You. You said what I wanted to but VASTLY more eloquently and completely.

(Of course with my academic background I’m a sucker for any post with citations.)

BurmaYank

To facilitate the reading of these Arbitration Injustice articles I have (most heartily) recommended, here they are again, with their links embedded:

——————————————————————————————
- BEWARE THE FINE PRINT: ‘Sued Over Old Debt, and Blocked From Suing Back’ - NYT Dec. 22, 2015

- BEWARE THE FINE PRINT (PART I / III): ‘Arbitration Everywhere, Stacking the Deck of Justice’ - NYT Oct. 31, 2015

- BEWARE THE FINE PRINT (PART II / III): ‘In Arbitration, a “Privatization of the Justice System”’ - NYT Nov. 1, 2015

- BEWARE THE FINE PRINT (PART III / III): ‘In Religious Arbitration, Scripture Is the Rule of Law’ - NYT Nov. 2, 2015

- ‘Efforts to Rein In Arbitration Come Under Well-Financed Attack ‘ - NYT Nov 16, 2015
——————————————————————————————
’- Supreme Court Upholds Arbitration in DirecTV Case’ - NYT Dec 15, 2015

’- Consumer Financial Protection Bureau Seeks End to Arbitration-Only Clauses in Consumer Contracts’ - NYT Oct 7, 2015
——————————————————————————————
’- Failed by Law and Courts, Troops Come Home to Repossessions’ - NYT Mar 17, 2015

- EDITORIAL - ‘Bad Debt Collectors and Their Prey’ - NYT NOV. 17, 2015

’- Bipartisan Bill Would Protect Service Members’ Right to Avoid Arbitration’ - NYT Nov 21, 2015

Scott B in DC

The arbitration issue is now a normal part of business for any company who issues contracts of these types. This is an ongoing discussion.

One attorney told me that rather than go the class action suit route, he would prefer the death by 1000 cuts. Represent as many people as possible in arbitration with a company using the same arguments that won previous cases. Find areas where there are bias in the process and use loopholes in the local consumer protection laws to show bias and nullify the arbitration clauses of the contracts. There is an attorney who is doing this in Colorado, a state thought to have a system favorable to the company. He believes there is a loophole that will allow the breaking of the arbitration part of the contract. If he wins, he will publish his work to allow others to follow. Stay tuned!!

DMO

Some states (and even some contracts) permit consumers to file in small claims. This usually costs little (around $20) is local to the consumer (so minimal time commitment), and is a pain-in-the-ass for the company. In California for example, the company must send a general employee to respond (i.e. not a lawyer nor an employee whose job is to represent the company in court).  Consumers should all be encouraged to file these claims. Imagine being a company manager faced with a thousand actions, each one potentially worth around $5000. . . .

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