AT&T is trying to force customers into arbitration in order to avoid a class-action complaint over the telecom's former practice of selling users' real-time location data.
In a motion to compel arbitration filed last week, AT&T said that plaintiffs agreed to arbitrate disputes with AT&T when they entered into wireless service contracts. The plaintiffs, who are represented by Electronic Frontier Foundation (EFF) attorneys, will likely argue that the arbitration clause is invalid.
The case is pending in US District Court for the Northern District of California. In March 2018, a judge in the same court ruled that AT&T could not use its arbitration clause to avoid a class-action lawsuit over the company's throttling of unlimited mobile data plans. That's because the California Supreme Court had ruled in McGill v. Citibank "that an arbitration agreement that waives the right to seek the statutory remedy of public injunctive relief in any forum is contrary to California public policy and therefore unenforceable," the District Court judge wrote at the time.
In the new case, AT&T argues that the McGill decision does not apply "because the injunctive relief Plaintiffs seek is directed at a subgroup of AT&T customers, not the general public as a whole."
"Indeed, numerous district courts in this Circuit have held McGill inapplicable when—as here—plaintiffs seek what amounts to private injunctive relief on behalf of a class rather than an injunction benefiting the public in general," AT&T wrote in its motion to compel arbitration.
AT&T also claims that the Federal Arbitration Act (FAA) preempts the McGill standard but acknowledged that a panel of judges on a federal appeals court "recently held that the FAA does not preempt the McGill rule." AT&T claims that federal appeals court ruling "contravene[s] Supreme Court precedent" and noted that "En banc review is being sought" in the case.
AT&T also told the court that AT&T itself shouldn't be a defendant in the case because AT&T Inc. is just "a holding company organized in Delaware and headquartered in Texas" that does no business in California. This motion wouldn't end the case, because two AT&T Inc. subsidiaries, AT&T Mobility and AT&T Services, would still be defendants.
When contacted by Ars, EFF staff attorney Aaron Mackey said the EFF "look[s] forward to responding to the motions" but declined comment on how the group will respond.
Data sales were “dangerous breach of... privacy”
The class-action complaint was filed in July against AT&T and two location data aggregators called LocationSmart and Zumigo. "AT&T used LocationSmart and Zumigo to manage the buying and selling of its customers' real-time location data," the lawsuit said. The lawsuit seeks monetary damages for customers, an injunction preventing AT&T from selling location data, and certification of a class including all AT&T wireless subscribers between 2011 and the present "whose carrier-level location data AT&T permitted or caused to be used or accessed by any third party without proper authorization."
The lawsuit says:
Despite vowing to its customers that it does not "sell [their] Personal Information to anyone for any purpose," AT&T has been selling its customers' real-time location data to credit agencies, bail bondsmen, and countless other third parties without the required customer consent and without any legal authority. AT&T's practice is an egregious and dangerous breach of Plaintiffs' and all AT&T customers' privacy, as well as a violation of state and federal law.
AT&T previously denied that selling phone location data was illegal, even though Section 222 of the Communications Act says phone companies may not use or disclose customer location information "without the express prior authorization of the customer." The lawsuit alleges that AT&T violated the Communications Act, the California Unfair Competition Law, the California Constitution's right to privacy, and the California Consumers Legal Remedies Act.
A series of reports by Motherboard beginning in January 2019 showed that T-Mobile, Sprint, and AT&T continued selling customers' real-time location data after all the major cellular carriers promised to stop doing so. The data "end[ed] up in the hands of bounty hunters and others not authorized to possess it, letting them track most phones in the country," Motherboard reported at the time. The news site also wrote about AT&T's motion to compel arbitration yesterday.
Wireless carriers now say they've really stopped the controversial data sales. In addition to the case against AT&T in California, more class action suits seeking refunds for customers were filed in May against AT&T, Verizon, T-Mobile, and Sprint in US District Court for the District of Maryland.
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