In re TikTok, Inc., Consumer Privacy Litigation
| Citation | 565 F.Supp.3d 1076 |
| Decision Date | 30 September 2021 |
| Docket Number | MDL No. 2948,Master Docket No. 20 C 4699 |
| Parties | IN RE: TIKTOK, INC., CONSUMER PRIVACY LITIGATION This Document Relates to All Cases |
| Court | U.S. District Court — Northern District of Illinois |
In August 2018, the Beijing-based technology company ByteDance, Ltd. ("ByteDance") launched a social media platform and entertainment application known today as TikTok ("TikTok" or "the App," formerly known as Musical.ly) in the United States and elsewhere abroad. The App, which allows users to share relatively short homemade videos, quickly became one of the most ubiquitous in the world, and boasts more than 800 million active users across the globe today.
Soon after the App exploded in popularity across the United States, however, so too did concerns, and litigation, about its handling of user data. The lead plaintiffs ("Plaintiffs") in this multidistrict litigation ("MDL") are United States residents who allege that the subsidiaries of ByteDance—TikTok, Inc. (formerly Musical.ly, Inc.), TikTok, Ltd., ByteDance Inc., and Beijing ByteDance Technology Co., Ltd. (collectively, "Defendants")—have been flouting U.S. privacy law by surreptitiously harvesting and profiting from Plaintiffs’ private information, including their biometric data, geolocation information, personally identifiable information, and unpublished digital recordings, through the App. Following months of negotiations, Plaintiffs have reached a settlement agreement with Defendants that would provide $92 million in monetary relief and an array of injunctive relief for the putative settlement class.
Before the Court is Plaintiffs’ motion for preliminary approval of the settlement agreement, as well as various objections from putative class members. For his part, Objector Dennis Litteken contends that the settlement agreement is not fair, reasonable, and adequate, because it does not reflect the net expected value of continued litigation to the class, and that the proposed notice plan is deficient. Objector Mark S., as parent and legal guardian of his minor son, A.S., echoes these contentions and adds that the settlement does not account for conflicts between minor and non-minor class members and that the proposed release is overly broad vis-à-vis the proposed settlement in a somewhat related case pending in this judicial district. Finally, Objectors Brian Behnken and Joshua Dugas insist that the proposed opt-out procedure is so onerous as to violate due process and the Federal Arbitration Act. For the reasons set forth below, the objections are overruled, and Plaintiffs’ motion for preliminary approval is granted.
The first of the twenty-one putative class actions comprising this MDL was filed in the Northern District of California in November 2019. See Hong v. ByteDance, Inc. , No. 19 C 7792 (N.D. Cal.) (Koh, J.). Led by one of the future members of Plaintiffs’ Interim Co-Lead Counsel team, the parties in Hong first engaged in mediation in April 2020. The mediation was facilitated by Layn R. Phillips, a former United States District Judge for the Western District of Oklahoma and founder of Phillips ADR Enterprise, an experienced and well-respected alternative dispute resolution firm.
Beginning in late April 2020, the other twenty putative class actions were filed in four separate federal districts: the Northern District of California, the Central District of California, the Southern District of Illinois, and the Northern District of Illinois. On May 15, 2020, counsel from one of these cases filed a motion with the Judicial Panel on Multidistrict Litigation ("JPML") to consolidate the then-nineteen related actions and to transfer them to one district court for pretrial proceedings pursuant to 28 U.S.C. § 1407. After some contentious litigation, the JPML selected this district, and specifically this Court, on August 12, 2020. See 8/12/20 JPML Transfer Order, MDL No. 2948, ECF No. 2.
The next day, on August 13, 2020, Defendant's counsel and Plaintiffs’ counsel from eleven of the MDL member cases participated in a second round of mediation with Judge Phillips. Spearheaded by another future member of Plaintiffs’ Interim Co-Lead Counsel team, this mediation had been months in the making. By that time, extraordinary political pressure had mounted against TikTok's U.S. operations, culminating in an August 6, 2020, executive order by then-President Trump declaring that TikTok presented "a national emergency" that "threaten[s] the national security, foreign policy, and economy of the United States." Exec. Order No. 13,942, 85 Fed. Reg. 48,637 (Aug. 6, 2020).
The executive order gave ByteDance forty-five days to sell TikTok's U.S. operations to a U.S. company before the App would be banned in this country, although the White House later extended the deadline. See Proclamation No. 10,061, 85 Fed. Reg. 51,297 (Aug. 14, 2020). In light of this ultimatum, Defendants were motivated at the second mediation session to resolve this litigation in order to shed TikTok's existing liabilities and maximize its value in preparation for sale.1 After more than twelve hours of negotiation, this mediation session ended in an agreement in principle for class-wide resolution. The terms were later memorialized in a signed agreement on September 4, 2020, although it remained confidential, even from the Court, for some time thereafter.
On September 28, 2020, the Court appointed three attorneys to serve as Plaintiffs’ Co-Lead Counsel, one to serve as Plaintiffs’ Liaison Counsel, and five to serve as members of the Plaintiffs’ Steering Committee (collectively, the "Plaintiffs’ Leadership Group"). See Case Management Order No. 3, ECF No. 94. In making these selections, the Court drew upon the attorneys’ efforts "in identifying or investigating potential claims in the action"; their "experience in handling class actions, other complex litigation, and the types of claims asserted in the action"; their "knowledge of the applicable law"; and the resources that they would "commit to representing the class"; as well as among other factors pertaining to their "ability to fairly and adequately represent the interests of the class." See Fed. R. Civ. P. 23(g)(1)(A)–(B). The Court also was driven by a desire to diversify the members of the Plaintiffs’ Leadership Group in terms not only of their individual experiences, locations, attributes, and qualifications, but also of their relationship to and involvement in the settlement efforts thus far, in hopes that such diversity would promote more robust efforts to represent the interests of the putative class as a whole.
Once the Court designated the members of the Plaintiffs’ Leadership Group, they engaged in an extensive effort to evaluate the September 4, 2020, settlement agreement. Members were tasked with analyzing an array of legal, factual, and strategic issues; evaluating confirmatory discovery, including interrogatories, document requests, depositions by written question; reviewing the results of a weeks’-long, on-site inspection of TikTok's source code conducted by a world-renowned expert; and engaging in further negotiations with Defendants. See Pls.’ Mot. Prelim. Approval Class Action Settlement ( ), Ex. F, Carroll Decl. ¶¶ 29–37, ECF No. 122-6. Through these efforts, the Plaintiffs’ Leadership Group achieved an addendum to the settlement agreement that strengthens many of its terms, especially with regard to injunctive relief, as well as a consensus amongst Plaintiffs on the terms now presented before the Court.
Amid these settlement efforts, Plaintiffs filed a consolidated amended class action complaint on December 18, 2020. See Consolidated Am. Class Action Compl. ("Compl."), ECF No. 114. The complaint identifies a Nationwide Class, defined as all United States residents who have used the App prior to preliminary approval, and an Illinois Subclass, defined as all Illinois residents who have used the App to create one or more videos prior to preliminary approval, which is premised on alleged violations of Illinois's Biometric Information Privacy Act ("BIPA"), 740 Ill. Comp. Stat. 14/1 et seq. Compl. ¶ 322.
In addition to the BIPA claim (brought on behalf of the putative Illinois Subclass), the complaint asserts nine counts on behalf of the putative Nationwide Class: violation of the Computer Fraud and Abuse Act ("CFAA"), 18 U.S.C. § 1030 ; violation of the Video Privacy Protection Act ("VPPA"), id. § 2710; violation of California's Comprehensive Computer Data Access and Fraud Act ("CCDAFA"), Cal. Penal Code § 502 ; violation of California's Unfair Competition Law ("UCL"), Cal. Bus. & Prof. Code § 17200 et seq. ; violation of California's False Advertising Law ("FAL"), id. § 17500 et seq. ; violation of the right to privacy under the California Constitution, see Cal. Const. art. I, § 1 ; intrusion upon seclusion under California common law; unjust enrichment under California common law; and violation of consumer protection statutes in various other states. Compl. ¶¶ 338–427.2
After five months of vetting and working to improve upon the original settlement agreement, Plaintiffs moved for preliminary approval on February 25, 2021, at which time its terms were first unveiled. See Pls.’ Mot., Ex. A, Settlement Agreement and Release ("Settlement Agreement"), ECF No. 122-1. In brief, the Settlement Agreement provides as follows.
First, the Settlement Agreement provides for monetary relief in the form of a $92 million escrow account that Defendants would fund within 90 days for the benefit of Settlement Class members. Settlement Agreement § 4.1. After deducting all Court-approved settlement-related costs and fees, including reasonable attorneys’ fees, the fund would be divided into a total number of pro rata shares equal to the sum of (1) the number of Nationwide Class...
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In re TikTok, Consumer Privacy Litig.
...approval on September 30, 2021. See generally In re TikTok, 565 F.Supp.3d 1076; Order Granting Prelim. Approval Class Action Settlement, In re TikTok (N.D. Ill. Oct. 1, (setting forth procedures for notice, filing claims and objections, and the final approval process) (“10/1/21 Order”), ECF......