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AT&T dodges data-throttling class-action lawsuit

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A California judge decided that the class-action lawsuit filed against AT&T for throttling unlimited data will not be allowed to proceed. According to AT&T, customers should only have their complaints heard on an individual basis through arbitration, and it seems as though Judge Edward Chen from the U.S. District Court in Northern California agrees with the company.

Many customers, however, suggest that arbitration would violate the First Amendment right to petition a court for a grievance. Arbitration would allow claims to be brought to the small claims court, but some suggest that the small claims court is not an adequate forum.

Chen’s decision comes from a 2011 case, in which the Supreme Court upheld AT&T’s argument for arbitration. According to the Supreme Court, the Federal Arbitration Act preempts a California state law which limits a company’s power to force customers into arbitration.

Customers first filed the lawsuit when AT&T started throttling iPhone users if they used more than 3GB or 5GB of data in one month — even if they had unlimited data plans. The data speeds were far slower than standard speeds, so the customers argue that their unlimited data plans weren’t truly unlimited or useful.

The ruling is a pretty big one for AT&T. It’s unlikely that thousands of iPhone users will file individual lawsuits to the small claims court. Not only that, but those who do take their case to court will have to deal with the legal fees that they wouldn’t otherwise need to pay in a class-action lawsuit.

Still, AT&T isn’t completely out of the woods yet, and will face punishment from the Federal Communications Commission and Federal Trade Commission. The FCC has proposed a fine of $100 million to AT&T, saying that the company violated FCC transparency laws by labeling plans as “unlimited.”

The FTC has also separately sued AT&T for millions of dollars of refunds for customers, and while AT&T argues that the FTC has no jurisdiction in this case, that claim was rejected by the court. Of course, AT&T is still trying to avoid any punishment whatsoever.

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