TikTok settlement judge allows mass opt-outs, despite claims of flawed process

The TikTok logo is pictured outside the company’s U.S. head office in Culver City, California, U.S., September 15, 2020. REUTERS/Mike Blake

(Reuters) – In a boon for consumers, the judge overseeing a $92 million class action settlement of claims that TikTok Inc improperly harvested users’ private data ruled on Thursday that 851 class members can opt out of the deal, despite TikTok’s claims that the opt-outs were improperly solicited.

U.S. District Judge John Lee of Chicago granted final approval to the $92 million nationwide settlement with video sharing service TikTok and its parent, ByteDance Inc, on Thursday. The judge also awarded about $29 million in fees to class counsel from Lynch Carpenter; Bird Marella Boxer Wolpert Nessim Drooks Lincenberg & Rhow; FeganScott and a host of other plaintiffs’ firms that did work for the class.

About 1.2 million TikTok users submitted claims, according to Thursday’s decision, out of an estimated 89 million TikTok users in the class, for an overall claims rate of 1.4%. (The claims rate was higher, 13%, for a subclass of Illinois residents who alleged violations of the state’s biometric privacy law.) TikTok has denied harvesting biometric data at all and has said it did not compromise users’ privacy.

Some members of the privacy class believe they can recover more from TikTok in individual arbitration — and Thursday’s ruling from Lee means that 851 of them can attempt to do just that. As consumers and defendants continue to tussle over class action settlements that curtail mass arbitration, it’s worth looking at how those 851 TikTok users managed to opt out of the class settlement, despite TikTok’s very best efforts.

The story begins with a loss for the wannabe opt-outs in Lee’s September 2021 decision granting preliminary approval to the proposed TikTok settlement. A handful of plaintiffs’ firms had objected to the deal’s stringent rules for opt-outs, arguing that law firms should instead be permitted to opt out their clients en masse, via a single electronic filing, rather than advising their clients to complete, sign and submit individual opt-out forms. Lee nixed that request.

The judge acknowledged that some trial courts in California have allowed mass opt-outs, often in response to allegations that defendants were attempting to use class settlements to undermine ongoing mass arbitration campaigns. But Lee said he was convinced by a long string of decisions requiring individual opt-out submissions in order to assure that class members are not under the sway of plaintiffs’ lawyers.

Four plaintiffs’ firms – the Chicago Consumer Law Center, Clarkson Law Firm, Kind Law and Swigart Law Group – subsequently submitted opt-out requests for more than 2,000 class members to the claims administrator in the TikTok case, Angeion Group LLC. Angeion rejected the opt-out requests, informing plaintiffs’ lawyers that the settlement agreement does not permit mass opt-outs.

The four plaintiffs’ firms insisted that their clients’ opt-out requests complied with the settlement agreement’s requirements. In a brief last April, they told Lee that their clients had individually completed and signed the opt-out forms – just as he had directed.

Things heated up when TikTok responded to plaintiffs’ motion. (Notably, class counsel sat out this fight.) Defense lawyers at Wilson Sonsini Goodrich & Rosati argued that the plaintiffs’ firms had improperly solicited clients with deceptive ads, then used internet technology to obtain electronic “signatures” from potentially unwitting class members.

“This technology does not change the fact that these firms are still soliciting and submitting opt-out requests en masse to disrupt the court-approved settlement,” the TikTok brief argued. “All of the same concerns discussed with traditional mass opt-outs still apply to these mass-auto-generated individual electronic opt-outs.”

There’s no doubt that big class actions can provoke questionable solicitations from plaintiffs’ firms trolling for opt-out clients. TikTok’s brief mentioned, for instance, an ad run by plaintiffs’ lawyers after preliminary approval of a $650 million biometric privacy settlement with Facebook Inc in 2020. After Facebook and class counsel complained about the ad, which seemed like a class notice but was actually an opt-out solicitation, U.S. District Judge James Donato of San Francisco ordered the firm that ran the ad to take it down and send a curative notice to thousands of class members who had responded.

But the TikTok opt-out plaintiffs’ firms said their situation is not analogous. In a fiery retort to TikTok, they said they didn’t use deceptive ads – and that if anyone is being deceptive, it’s TikTok, which accused them of running one ad they had nothing to do with and claiming another solicitation was misleading when, in fact, it contained no misrepresentations.

TikTok’s “speculative and unprofessional attacks,” the plaintiffs’ firms said, were really just an attempt to stymie class members trying to exercise their contractual right to arbitrate. “In TikTok’s view, absentee class members not only should be deprived of their due process rights to opt out, they also lose a right to hire counsel,” the brief said. “This position is contrary to the law, ethics and reason.”

TikTok lawyer Tony Weibell of Wilson Sonsini declined to provide a statement on the opt-out issue. Opt-out lawyers Yana Hart of Clarkson, Michael Kind of Kind Law and Joshua Swigart didn’t respond to my email.

On the eve of the final approval hearing in May, the Swigart firm withdrew its request to exclude about 1,400 clients from the settlement. Kind Law and Clarkson continued to press for their 851 clients to be permitted to opt out. Both firms, at Lee’s request, filed declarations after the final approval hearing attesting that all of their clients signed individual opt-out forms via electronic document sharing services.

Those declarations, in combination with sealed evidence showing that each electronic signature came from a unique IP address, convinced Lee that the opt-outs complied with the settlement agreement’s requirements. He and other judges, he said, have insisted on individualized opt-out consent to protect absent class members from inadvertently giving up their right to participate in a settlement via mass opt-outs. But absent class members also have a right, Lee said, to ditch class settlements.

TikTok claimed there are individual problems with many of the opt-out filings, and the settlement administrator can still check the 851 requests to make sure they’re complete.

If they are, Lee said, they are out of the settlement — a decision that seems to me to be a fair balance between protecting consumers from predatory solicitations and allowing them to exercise the choice to arbitrate.

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