In a setback for AT&T, a federal judge has ruled that wireless customers who live in California and purchased "unlimited" data plans can proceed with false advertising claims against the company.
In the ruling, issued last week, U.S. District Court Judge Edward Chen reversed his earlier decision to send the case to arbitration. Two years ago, Chen ruled that AT&T's contract with users required arbitration of disputes. But he changed course last week, ruling that a recent decision by the California Supreme Court supports the conclusion that the arbitration agreement is unenforceable.
The dispute dates to 2014, when several consumers alleged in a class-action complaint that AT&T duped customers by selling "unlimited" mobile broadband plans, but throttling users who hit monthly caps that ranged from 3 GB to 5 GB. From 2011 until 2015, AT&T allegedly throttled more than 3.5 million customers with "unlimited" data plans. (The company subsequently revised its throttling practices, and now only slows down "unlimited" subscribers who exceed 22 GB in a month, and only when the network is congested.)
After Chen sent the case to arbitration, the users appealed to the 9th Circuit. That court upheld Chen's ruling in December.
The consumers subsequently asked Chen to reconsider, arguing that the California Supreme Court recently invalidated arbitration agreements that prohibit consumers from seeking injunctions against companies. Chen partially granted that request last week, ruling that California residents could proceed in court.
In addition to the lawsuit by consumers, AT&T is facing a Federal Trade Commission enforcement action over the mobile slowdowns.