Law360 (April 19, 2021, 9:52 PM EDT) — TikTok users who accused the social media giant of privacy violations in multidistrict litigation again asked an Illinois federal judge Monday to grant initial approval to a $92 million settlement over the concerns of objectors questioning its value for the class and, most recently, the proposed procedures for opting out.
U.S. District Judge John Z. Lee didn’t rule after a second preliminary approval hearing on Monday, and instead told the parties to expect a written decision. He’ll also now consider whether to order TikTok to provide inbox notice of the settlement within the app, something the short-form video app had initially resisted but has since agreed to do, following objections to the proposed notice plan, if ordered by the court.
Co-lead attorney for the TikTok users, Katrina Carroll of Lynch Carpenter LLP, said during the hearing that that deal was a “terrific settlement” in light of threshold risks, like an arbitration clause, “that would have completely eliminated plaintiffs’ ability to get out of the gate.”
“This settlement is squarely within the range of reasonableness, and that’s why we’re recommending it,” she said.
But several objectors maintained that the deal is insufficient.
Edelson PC attorney Ryan Andrews, representing objector Dennis Litteken, told the court that the settling plaintiffs must provide concrete estimates of exactly who the in-app and direct notice will reach. And since the parties have essentially agreed to in-app notice, the claims rate is going to increase beyond what was initially predicted, he said.
“The problem is, if there are substantial claims, the relief offered begins to look inadequate,” Andrews said. A 10% claims rate would get most class members “barely enough to purchase a coffee at Starbucks,” he said, while a 5% rate would “maybe get enough to buy lunch.”
“I just think that times have changed. … The public thinks they deserve more, and courts are requiring more,” he said. “I think we need to be better.”
Judge Lee did appear skeptical of the arguments made by objectors claiming that the agreed-upon deal blocks their right to individually arbitrate their claims.
Brian Behnken, Joshua Dugan and 957 other unnamed individuals hoping to opt out of the TikTok settlement argued earlier this month that the settlement violates the Federal Arbitration Act by stopping them from entering arbitration, asking the court to either deny preliminary approval of the agreement or tweak the terms to explicitly exclude claimants who seek to enter arbitration or allow such plaintiffs to opt out online or en masse through their counsel.
Judge Lee did say Monday that he thought a website for claims ought to have an opt-out form available, with a method by which an individual could send the opt-out form to the settlement administrator electronically and not necessarily by physical mail, as required under the current deal.
But there’s nothing stopping any class member from opting out and initiating arbitration, or initiating it right now, the judge said. And he questioned how burdensome it was to ask someone to “sign a piece of paper” if they want to opt out.
“There has to be some affirmative showing of intent,” Judge Lee said.
Jonathan Gardner of Labaton Sucharow LLP, representing the opt-out objectors, said requiring them to take the affirmative step of opting out effectively adds a term to the agreement to arbitrate between TikTok and users. That very agreement was also used by TikTok as a “bludgeon against plaintiffs’ counsel to drive down the value of the settlement,” he said.
“Why, in those circumstances, would you make it as difficult as possible to make people exercise their opt-out rights and pursue arbitration?” he said.
Carroll countered that it was “suspicious” that the firm is telling the court that nearly 1,000 people want to opt out and pursue arbitration but hasn’t provided any information on who those individuals are or evidence that they want to pursue arbitration willingly.
The opt-out requirements in this case are the same standard procedures used in thousands of other class action cases, she said.
“We’re not adding any burden. What we’re asking for is basic info on who these people are,” Carroll said.
And Scott Drury of Loevy & Loevy, representing objector Mark S., again raised concerns that there’s a conflict of interest between minor plaintiffs, who have a different and stronger claim because they’re not subject to the arbitration provision, and adult users.
Minors under 13 and minors under 18 should be grouped into subclasses, he said.
Carroll argued that class counsel looked at every available claim for minors and adults and determined that they could recover both under the settlement proposed in this case and the one proposed in a similar case alleging that TikTok collected and shared personally identifiable information about minors under 13 without parental consent.
Minors have “always been at the top of our concern,” which is why notice was also targeted to parents and not just users and why counsel pushed for broad injunctive relief, she said.
Under the proposed deal, in addition to the $92 million settlement fund, TikTok has also agreed not to use the app to collect users’ biometric data, nor will it collect geolocation or GPS data, transmit U.S. user data outside of the U.S. or store U.S. user data in databases outside of the U.S., unless it makes a disclosure in its privacy policy and complies with all laws.
The social media company will also require new training on compliance with data privacy laws and company procedures for all of its incoming employees and contractors, with annual training thereafter, and TikTok will hire a third party to review the compliance training for the next three years, according to the motion for preliminary approval.
The settling plaintiffs are represented by Lynch Carpenter LLP, Fegan Scott LLC, Bird Marella Boxer Wolpert Nessim Drooks Lincenberg & Rhow PC, Freed Kanner London & Millen LLC, Susman Godfrey LLP, Bottini & Bottini Inc., Hausfeld LLP, Burns Charest LLP and Clifford Law Offices PC.
TikTok is represented by Anthony J. Weibell of Wilson Sonsini Goodrich & Rosati PC.
The objectors and arbitration claimants are represented by Michael D. Smith of the Law Office of Michael D. Smith, and Jonathan Gardner, Melissa H. Nafash and Jonathan D. Waisnor of Labaton Sucharow LLP.
Objector Dennis Litteken is represented by Jay Edelson, Ryan Andrews and J. Eli Wade Scott of Edelson PC.
Objector Mark S. is represented by Scott Drury and Michael I. Kanovitz of Loevy & Loevy.
The case is In re: TikTok Inc. Consumer Privacy Litigation, case number 1:20-cv-04699, in the U.S. District Court for the Northern District of Illinois.
–Additional reporting by Ben Kochman. Editing by Rich Mills.