In re TikTok, Consumer Privacy Litig.

• Docket Number: MDL 2948,Master 20 C 4699
• Decision Date: 28 July 2022
• Parties: IN RE TIKTOK, INC., CONSUMER PRIVACY LITIGATION This Document Relates to All Cases
• Court: U.S. District Court — Northern District of Illinois

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IN RE TIKTOK, INC., CONSUMER PRIVACY LITIGATION This Document Relates to All Cases Master Docket No. 20 C 4699

MDL No. 2948

United States District Court, N.D. Illinois, Eastern Division

July 28, 2022

SUNIL R. HARJANI, MAGISTRATE JUDGE

MEMORANDUM OPINION AND ORDER

JOHN Z. LEE, UNITED STATES DISTRICT JUDGE

Tens of millions of Americans use the social media and entertainment application now known as TikTok (“TikTok” or “the App,” formerly known as “Musical.ly”) to view, create, and share short videos. That is all well and good, but according to the lead plaintiffs (“Plaintiffs”) in this multidistrict litigation (“MDL”), the App's widespread popularity comes at the expense of its users' privacy rights. On behalf of a putative class comprising all TikTok users in the United States (an estimated 89 million people) and a subclass of Illinois users, Plaintiffs allege that ByteDance, Inc. (the China-based company that created TikTok) and its subsidiaries-TikTok, Inc., TikTok, Ltd., ByteDance Inc., and Beijing ByteDance Technology Co., Ltd. (collectively, “Defendants”)-have used the App to surreptitiously harvest and profit from collecting the private information of users in violation of numerous federal and state consumer privacy laws.

Last year, the Court granted Plaintiffs' motion for preliminary approval of a class action settlement that would provide monetary relief to class members in the form of a $92 million settlement fund, as well as broad injunctive relief prohibiting Defendants from engaging in the alleged privacy violations going forward. See In re TikTok, Inc. Consumer Priv Litig., 565 F.Supp.3d 1076 (N.D. Ill. 2021), ECF No 161.

Now after disseminating notice to the class and receiving approximately 1.4 million claims, Plaintiffs have filed a motion for final approval of the settlement, as well as a motion for attorneys' fees, expenses, and service awards. Various objectors have filed objections to both motions, as well as their own fee and service award petitions. For the following reasons, the Court certifies the Nationwide Class and Illinois Subclass for purposes of the settlement, grants Plaintiffs' motion for approval of the settlement, approves the fee and service award petitions to the extent stated below, and makes other rulings as applicable.

TABLE OF CONTENTS

I. Background .......................................................................................................... 4

A. Factual and Early Procedural History ............................................................ 4

B. Plaintiffs' Claims .............................................................................................. 9

1. Nationwide Class Claims ........................................................................ 9

2. Illinois Subclass Claims ........................................................................ 11

C. Proposed Settlement Agreement ................................................................... 12

1. Monetary Relief ..................................................................................... 13

2. Injunctive Relief .................................................................................... 14

D. Order Granting Preliminary Approval .......................................................... 15

E. The Notice and Claims Submission Period ................................................... 17

1. Notice ..................................................................................................... 17

2. Claims and Opt-Outs ............................................................................ 20

II. Analysis ............................................................................................................... 21

A. Class Certification .......................................................................................... 21

1. Legal Standard ...................................................................................... 21

2. Rule 23(a) Factors ................................................................................. 22

i. Numerosity, Commonality, and Typicality ............................... 22

ii. Adequacy of Representation ...................................................... 23

3. Rule 23(b)(3) Factors ............................................................................. 31

i. Predominance ............................................................................. 31

ii. Superiority .................................................................................. 32

B. Rule 23's Notice Requirement ........................................................................ 33

1. Adequacy of Notice ................................................................................ 33

2. Objections to Notice Plan ...................................................................... 36

3. Motion To Accept Opt-Outs .................................................................. 41

C. Rule 23(e)'s Fairness Inquiry ......................................................................... 44

1. Legal Standard ...................................................................................... 44

2. Strength of Plaintiffs' Case And Value of the Settlement ................... 45

3. Other Settlement Factors ..................................................................... 53

D. Attorneys' Fees and Service Awards.............................................................. 56

1. Legal Standard ...................................................................................... 56

2. Class Counsel's Motion for Attorneys' Fees ......................................... 57

i. Percentage Method ..................................................................... 58

ii. Lodestar Cross-Check ................................................................ 65

iii. Allocation of Fees Among Plaintiffs' Firms ............................... 66

iv. Expenses ..................................................................................... 72

3. Objector Mark S.'s Petition for Attorneys' Fees ................................... 74

4. Incentive and Service Awards .............................................................. 77

III. Conclusion .......................................................................................................... 79

I. Background^[1]

A. Factual and Early Procedural History

The App is a social media and entertainment platform that allows users to view, create, and share short videos. Using the App, individuals can record videos and overlay them with visual effects, background music, and other enhancements. See Consol. Am. Class Action Compl. ¶¶ 127-28 (“Compl.”), ECF No. 114. After recording a video, a user can either save the video to their device or “post” the video to their TikTok account. See id. ¶¶ 146-47.

When a user posts a video to their account, the video is shared with the user's “followers” (that is, other users who subscribe to see the user's content) and also is posted publicly and displayed to users across the world using the App's proprietary content-delivery algorithm. Id. ¶¶ 2, 7-9, 128. The algorithm uses artificial intelligence technologies and machine learning to gather information about a user and to predict what types of videos the user would want to see. Id. ¶¶ 8-9. The App then shows the user a curated feed of content (and advertisements) based on those predictions.^[2] Id. ¶ 141.

The simultaneous success and secrecy of TikTok's proprietary AI technology has prompted considerable backlash from privacy advocates, politicians, and the United States government. In February 2019, the Federal Trade Commission entered into a consent decree with several Defendants over the App's purported violations of the Children's Online Privacy Protection Act (“COPPA”), 15 U.S.C. § 6501 et seq.^[3] The Department of Defense expressed concerns that its employees' use of the App raised security issues because of the App's “ability to convey location, image and biometric data to its Chinese parent company.” Compl. ¶ 6. And several United States Senators called on the intelligence community to investigate TikTok's alleged ties to the Chinese government and its potential as a “target of foreign influence campaigns like those carried out during the 2016 election on United States-based social media platforms.” Letter from Senator Charles E. Schumer and Senator Tom Cotton to Joseph Maguire, Acting Director of National Intelligence (Nov. 27, 2019) (on file with the United States Senate), https://www.democrats.senate.gov/ imo/media/doc/10232019%20TikTok%20Letter%20-%20FINAL%20PDF.pdf.

These privacy concerns also prompted a wave of putative class action lawsuits against TikTok in federal courts across the country. Beginning in 2018, several plaintiffs' law firms began to investigate whether Defendants' AI and machine learning technologies violated United States privacy laws. The investigations focused in particular on whether the App's video camera collected, retained, and distributed App users' facial recognition information or other biometric information without the users' authorization. See Pls.' Mot. Prelim. Approval Class Action Settlement (“Mot. Prelim. Approval”), Rhow Decl. ¶¶ 8-10, ECF No. 122-8. The investigations also explored whether the App harvested other types of private information, such as geolocation data, video viewing histories, unpublished TikTok videos (i.e., those not “saved” or “posted”), and personal identifying information such as email addresses, social media account information, or cell phone data, and whether Defendants transferred that data to third parties. Id.; see, e.g., Compl. ¶¶ 155-57.

The...