In a very important decision, FTC v. AT&T Mobility (9th Cir. 2018 en banc), the U.S. Court of Appeals for the 9th Circuit en banc reversed an earlier panel decision that severely limited the FTC’s jurisdiction to protect privacy and data security. I strongly criticized the panel decision in an previous blog post.
The FTC has taken the lead role in protecting privacy and data security through the FTC Act Section 5, 15 U.S.C. § 45, which prohibits “unfair or deceptive acts” affecting commerce. Section 5(a)(2) contains a list of industries that are carved out from FTC jurisdiction. This list includes banks, airlines, and common carriers. A “common carrier” is defined in the Communications Act of 1934, 47 U.S.C. § 153: “The term ‘common carrier’ or ‘carrier’ means 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.” Common carriers are regulated by the Federal Communications Commission (FCC).
In FTC v. AT&T Mobility the FTC brought a Section 5 enforcement action against AT&T for a part of AT&T’s business that was not regulated by the FCC. However, the 9th Circuit panel concluded that the common carrier exception to FTC jurisdiction was status-based — it applied to common carriers no matter what activities they were engaged in. This means that if a company engages in a non-minor amount of common carrier activities, then everything that it does, including many activities beyond its functions as a common carrier, fall outside the FTC’s power to regulate under Section 5. Because these are non-common-carrier activities, the FCC often can’t regulate them either. This opens up an odd no man’s land where a company can engage in certain activities and escape regulatory enforcement while other companies engaging in the same activities cannot.
Here’s what I wrote about why the earlier 9th Circuit panel decision was problematic: