AT&T data throttling suit ends in $12M deal

A federal judge in San Francisco signed off Monday on a $12 million settlement in a class action accusing AT&T of deceiving customers by slowing down their data speeds despite having unlimited data plans.

Up to $3 million will go toward attorney fees.

U.S. District Judge Edward Chen wrote that the deal "provides adequate relief for the class considering the protracted nature of this litigation over more than five years, and avoids the risks and difficulties of proving damages at trial."

Upon final approval, roughly 750,000 customers who exceeded AT&T's data threshold will automatically be issued payments of $11. This is in addition to $12 they got from a $60 million settlement obtained last year by the Federal Trade Commission for the same claims.

Customers paid AT&T $30 a month for an unlimited data plan, but their internet connection was slowed, or throttled, once they hit a certain amount of use. They sued the company for failing to disclose the practice, alleging it made video streaming and web browsing nearly impossible.

Plaintiffs' attorneys at Lieff Cabraser Heimann & Bernstein LLP, Morgan & Morgan and Hattis Law did not respond to requests for comment.

The case has bounced back and forth between the courts. Roberts v. AT&T Mobility LLC, 15-cv-03418 (N.D. Cal., filed July 24, 2015).

After customers sued in 2015, Chen allowed AT&T to move the litigation to arbitration. The 9th U.S. Circuit Court of Appeals affirmed the order.

But the lawsuit was revived under the California Supreme Court's seminal ruling in McGill v. Citibank on arbitration clauses and class action waivers limiting what rights consumers forfeit in the contracts. It found arbitration agreements that waive the right to seek public injunctive relief violate public policy and the Federal Arbitration Act does not preempt state law.

In 2018, Chen granted the customers' motion to bring the lawsuit back to court.

The judge emphasized in the6 approval order the "significant motion practice in this case, including several arbitration-related motions in this court, two appeals to the 9th Circuit regarding arbitration, and AT&T's motion to dismiss, as well as the proceedings in the related FTC Action."

In a major win by the consumer protection agency, the 9th Circuit found in 2018 that the FTC has the power to regulate AT&T. It rejected arguments from the telecom giant that it's outside the scope of the FTC's authority because it's a common carrier. FTC v. AT&T Mobility LLC, 14-cv-04785 (N.D. Cal., filed Oct 28, 2014).

Plaintiffs' attorneys in this case worked in conjunction with the FTC, jointly securing roughly $23 dollars per customer in the two settlements.

"Even though it has been years since we applied this network management tool in the way described by the FTC, we believe this is in the best interests of consumers," AT&T said in a statement at the time.

The Federal Communications Commission fined the company $100 million in 2015 for failing to disclose that it throttles data.

Chen also highlighted the risks of proving damages if the case went to trial.

AT&T was expected to argue customers got some of what they paid for in the 71/2 months it slowed their data speed. Plaintiffs acknowledged throttling typically occurred toward the latter half of the monthly billing period, the judge noted.