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IN THE UNITED STATES DISTRICT COURT

NORTHERN DISTRICT OF ILLINOIS

EASTERN DIVISION

IN RE: TIKTOK, INC., ) Docket No. 20 C 4699

CONSUMER PRIVACY LITIGATION, )

) Chicago, Illinois

) April 19, 2021

) 2:00 o'clock p.m.

TRANSCRIPT OF PROCEEDINGS - VIDEOCONFERENCE STATUS

BEFORE THE HONORABLE JOHN Z. LEE

APPEARANCES:

For the Plaintiffs: CARLSON LYNCH

BY: MS. KATRINA CARROLL

111 W. Washington St., Suite 1240

Chicago, Illinois 60602

FEGAN SCOTT, LLC

BY: MS. ELIZABETH A. FEGAN

150 South Wacker Drive, 24th Floor

Chicago, Illinois 60606

For Defendants: WILSON, SONSINI, GOODRICH & ROSATI

BY: MR. ANTHONY J. WEIBELL

650 Page Mill Road

Palo Alto, California 94304

For Objector Mark S.: LOEVY & LOEVY

BY: MR. SCOTT R. DRURY

311 North Aberdeen, 3rd Floor

Chicago, Illinois 60607

For Objector Brian Behnken LABATON SUCHAROW, LLP

and Joshua Dugan: BY: MR. JONATHAN GARDNER

140 Broadway

New York, New York 10005

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APPEARANCES (Cont'd):

For Objector Dennis EDELSON PC

Litteken: BY: MR. RYAN D. ANDREWS

MR. J. ELI WADE-SCOTT

350 North LaSalle Street, 14th Fl.

Chicago, Illinois 60654

Court Reporter: MR. JOSEPH RICKHOFF

Official Court Reporter

219 S. Dearborn St., Suite 2128

Chicago, Illinois 60604

(312) 435-5562

* * * * * * * * * * * * * * * * * *

PROCEEDINGS RECORDED BY

MECHANICAL STENOGRAPHY

TRANSCRIPT PRODUCED BY COMPUTER

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(Proceedings had via videoconference:)

THE CLERK: 20 CV 4699, In Regards to TikTok, Inc.,

Consumer Privacy Litigation.

THE COURT: All right. So, first of all, why don't

the attorneys for the settling plaintiffs, the lead attorneys

who will be making arguments or anyone else from the

leadership group that will be making arguments, you can enter

your appearance for the record now, please.

MS. CARROLL: Judge, good afternoon. Katrina Carroll

on behalf of plaintiffs and the class -- for settling

plaintiffs and the class, and I will be taking the lead this

afternoon.

THE COURT: All right. Very good.

Who is appearing on behalf of defendant?

MR. WEIBELL: Good afternoon, your Honor, this is

Tony Weibell of Wilson, Sonsini, lead counsel for the

defendants.

THE COURT: Okay.

And I know that there have been several counsel for

the objectors who have also wanted to address the Court today.

Who is appearing on behalf of the Michael S. objector? Is

that Mr. Drury? Are you with us today?

MR. DRURY: Yes, your Honor. Scott Drury on behalf

of objector Mark S.

THE COURT: Okay.

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And who is appearing on behalf of objectors Behnken

and Dugan?

MR. GARDNER: Good afternoon, your Honor, Jonathan

Gardner from Labaton Sucharow on behalf of Brian Behnken and

Joshua Dugan.

THE COURT: And who is appearing on behalf of the

objector -- is it Litteken?

MR. ANDREWS: Litteken, your Honor.

Ryan Andrews and J. Eli Wade-Scott of Edelson PC on

behalf of Dennis Litteken.

THE COURT: Very good.

So, Ms. Carroll, I reviewed the supplemental filings

that the plaintiffs have submitted in response to my questions

at the last hearing on plaintiffs' motion for preliminary

approval of settlement. There you addressed a number of

issues. I know that in follow-up briefing, some of the

objectors have raised some points with regard to some of the

arguments that you've made. I'll give you a chance to make a

record now with regard to the issues that you've raised in

your supplemental brief.

MS. CARROLL: Thank you, Judge.

As you know, the Court asked us to address three

issues when we were last here. One being whether in-app

notice can be provided, in addition to the other mechanisms

that we're proposing, to provide notice to the class. The

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second was with respect to whether minors were represented

during the negotiations by us. And the third was just a

little more on the thought process that went into valuation of

the settlement.

I think we've said all we need to say on those three

topics in our papers. I have nothing to add. But briefly --

and I know this is perhaps the most discussed topic, which is

in-app notice.

As the Court knows, when we were here before, the

cornerstone of the notice plan that we were proposing is

direct e-mail notice to over 60 million e-mail addresses, in

addition to a supplemental media plan. That is still the

case. We believe -- I know initially we had estimated that

the 60 million e-mail addresses contained some duplicates, and

we were being conservative in our initial estimate that those

e-mail addresses constituted one-third of the class. Really,

it's probably two-thirds of the class, and even more. And I

think TikTok put it in a supplemental brief, as well, where

they explained that. But that is absolutely the foundation of

our notice plan.

We are proposing also a media plan in response to the

Court's questions last time. I think I explained that the

media plan is designed to target not only the TikTok users,

but also the parents of minor TikTok users that might not have

been users of the TikTok app. And for that reason, we are

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estimating that the media plan -- apart, of course, from the

direct e-mail notice -- is designed to reach 95 percent of the

targeted audience, more than five times each. That's well in

excess of the 70 percent standard pursuant to the Federal

Judicial Center guidelines.

With respect to in-app notice, after the last hearing

we made some great progress. Prior to our hearing, when we

had initially discussed the concept of in-app notice with

TikTok, TikTok was very resistant. They were resistant

because: A, users hadn't consented to receive in-app

notification where the notification itself did not relate to

an integral feature of the app.

Also, TikTok had some agreements with Google and

Apple, the app store providers; and, under those agreements,

TikTok was prohibited from sending app notifications which,

again, did not relate to the integral features of the app.

And for that reason, because our media plan and, of

course, the direct e-mail notice was sufficient in our view,

we kind of put the concept of in-app notice to the side.

Since the last hearing, we've had an opportunity to

revisit it; we've negotiated with TikTok; and we've gotten to

a place where TikTok has now agreed that if the Court orders

and finds that in-app notice is required and will constitute

the best notice practicable, in addition with all the other

means of notice, that they will -- and, also, secondly, that

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the benefit of providing the in-app notice outweighs the

detriment of annoying users and, of course, contravening the

agreements that are already in place and the fact that the

users have not yet consented, if the Court were to order

in-app notice to be provided, they could do it and they will

do it. So, we thought that was really good progress on that

point.

The other two -- the second thing the Court asked us

to brief was the representation of minors. I think this has

been a focus of Mr. Drury's objection. And to the extent the

Court has further questions, I'm happy to answer them within

the context of that objection; but I think we've laid out in

our papers all of the ways that we represented the minors.

28 out of 35 of the current class representatives are

minors. And one thing I want the Court to know is there is a

distinction -- a slight distinction -- or at least Mr. Drury,

I believe, is urging a distinction, or perhaps not making it

clear. Minors, in our view, are anyone under the age of 18.

Now, the minors that are covered in the T.K. case are

minors under the age of 13. When we went to the mediation

table, I believe we had one minor under the age of 13; but all

the other minors that participated, and I think the vast

majority who are in now, are minors over the age of 13. And

those minors can adequately and fairly represent the class of

all minors who stand to benefit from this terrific settlement

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that we are urging the Court to approve preliminarily.

But briefly, when we went to mediation, we looked at

every available claim, both with respect to minors and with

respect to adults. We looked at every claim and also the

unique defenses that are available to the minors,

especially --

It sounds like someone's not on mute. I'm just

getting some background noise. So, if somebody could mute if

you're not already.

But one of the main issues that we looked at with

respect to minors was -- apart from any available claims was

-- whether or not a minor could have an additional defense to

arbitration. And it's well-known that a minor can disaffirm

an arbitration agreement, unlike an adult. And, so, there is

that additional defense available. We looked at all of the

relevant law, and that went into our analysis.

We also looked exhaustively at whether or not the

minors under 13 were precluded from potentially recovering

under the settlement that we were negotiating for them. And,

so, we looked at the relief language in the related T.K.

settlement, and we determined that those minors should be able

to also recover in our settlement. And that's something we

negotiated heavily with TikTok. They very easily could have

bound or tried to bind the under-13 minors to that release,

but really we negotiated an exception to that. And that, I

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think, just underscores why and how we've protected the

under-13 minors at all times, in addition to the under-18

minors, during the entire history of our negotiations.

Putting that aside, as I've already explained -- and

I don't need to go into it in further detail, but -- the

reason we targeted notice to the parents and used social media

other than TikTok as a big component of the notice plan was in

recognition that the minors are a big part of the class here,

and that those minors should get notice and should be able to

recover.

Again, these were all things that were considered all

along. And, of course, the minors have always been at the top

of our concern, and that's why we negotiated the broad

injunctive relief that the settlement provides for, which

protects minors and, of course, you know, adults as well, but

also stops TikTok from doing the conduct that is complained

of. So, taking the -- and collecting the -- information of

minors, using their clipboards, taking the pre-uploaded,

user-generated content. And, of course, we have a compliance

training program that we negotiated.

There's no -- and we briefed this in our papers.

There was no structural -- there's no structural conflict here

between the minors and the adults. There's no reason that

they needed any separate representation or that we couldn't

have adequately represented them. And I think the fact that

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the minors can double recover under our settlement is just

proof that we did everything in our power to make sure those

minors were represented.

The third thing the Court asked us to -- or for more

information on was the information available to us on how we

valued the settlement. And I think our papers really go into

detail on this claim by claim. And I don't want to take up,

you know, a ton of time here discussing each claim, but, you

know, so many factors went into it. Clearly, we looked at a

broad array of claims available to the plaintiffs. We looked

at statutory damages. We looked at regular common law, like,

damages available.

We analyzed the strengths and weaknesses of the case.

In this particular case, there were a lot of threshold-level

risks that would have completely eliminated the plaintiffs'

ability to even get out of the gate: Arbitration, personal

jurisdiction, and failure to state a claim. All of these

things are outlined in our papers.

But we worked extensively with experts. We looked at

comparable settlements. And I think we've outlined those for

the Court in Exhibit B, which is the chart of comparable

settlements in this area. If the Court takes a look at the

chart, it will find that most of the settlements in this area

do not approach the value that we've gotten for the class and

it's not even close. And, of course, that is even with claims

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with very substantial statutory damages and theoretical

damages in the billions of dollars.

So, this settlement here is squarely within the range

of reasonableness, and that's why we're recommending it.

I think that's all for my presentation, unless the

Court has any further questions it would like me to address.

THE COURT: With regard to the in-app notice that

TikTok would be willing to provide if so ordered, I reviewed

the submission by TikTok as to kind of how that would go. But

from what I understand, it would be a -- would it be a message

into the inbox of the TikTok app and then the user would

notice that there's a new message or notification in that

notification box? Is that pretty much how it would go?

MR. RIGHT: They would receive the notification even

if the app wasn't open. So, just similar to any notification

that you normally would receive. But that assumes, of course,

that the user has enabled the notification.

THE COURT: And if the user has not enabled the

notifications, then when they open up the app, they would see

some sort of notation in the app that there is a notification

or message that needs to be viewed?

MS. CARROLL: I believe that's correct, yes.

THE COURT: All right.

Mr. Weibell, I know you're here on behalf of TikTok,

and perhaps you might have a better understanding as to how

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this goes, but is my characterization pretty much accurate or

am I missing something as to if I were to order in-app

notifications, is that how it would kind of play out?

MR. WEIBELL: That is correct, your Honor. There's

a -- the inbox feature. So, when you open the app, there's a

menu at the bottom that lists different icons. One of those

is for the inbox. If there is a notification in the inbox

that has not been read, there will be an indication. I think

some people call that a jewel notification because you see a

little indication right that there's something there. So, it

would prompt the user to click on it to read the notification

that's in there.

And, then, if the users had enabled the settings to

receive a push notification, then once that inbox notification

hits the app, it would trigger like a system notification or a

push notification. So, if their phone's in their pocket,

whatever, they would get a buzz or an alarm where they would

see it if they had enabled those features. That's correct.

THE COURT: Thank you.

Ms. Carroll, one of the things that came up at the

last hearing and something I've been thinking about was the

procedures for opting out. That's something that a couple of

the objectors have raised. I know that for the Web site, the

TikTok Privacy Litigation or TikTok Privacy Settlement Web

site will have a form for claim submission. That is, a class

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member can go to the Web site, download the claim form; they

would fill it out; and, then, they would upload it back onto

the Web site or they can mail it via U.S. mail to the claims

administrator.

From what I understand, there is no similar mechanism

for opt-outs. And I was wondering whether there was a way for

the claims administrator to facilitate opt-outs by providing

just that. That is, a form on the Web site for a class

member -- individual putative class member can go onto the Web

site, download an opt-out form, fill it all out, sign it, and

then upload it up onto the claims administrator Web site, as

opposed to have to mail it via first class mail.

Is that something, number one, that the claims

administrator can do as a technical matter -- I'm assuming

that answer will be yes; and, number two, is that something

that the plaintiffs and the defendants would consider as part

of the settlement process in making opt-out -- opting out a

bit -- or facilitating opt-outs, given the current issues that

people have had with regard to USPS.

MS. CARROLL: Judge -- and that's a good question.

One thing I want to highlight for the Court is that

our settlement agreement actually provides for an opt-out form

to be agreed upon by the parties. And we haven't submitted it

for the Court's consideration, and I'm happy to do that.

In terms of submitting the opt-out form, I haven't

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been involved in any cases where an opt-out form is uploaded.

I believe the settlement administrator can set up a dedicated

e-mail address where opt-out forms are simply e-mailed to the

administrator.

But I think our position isn't, you know, that the

opt-out process itself needs to be a complicated process. I

think the courts recognize that the decision of whether to opt

out is an individual one. And our concern is that when people

exercise their right to opt out, they need to do that in a way

that is informed and voluntary. And, so, there needs to be a

signature. There needs to be the submission of basic

information by the person so as to evidence their intent that

they really, you know, aren't bound here and they want to opt

out and pursue an individual claim.

And just based on my experience in other settlements,

people are very confused. And a lot of times they think that

when they're submitting an opt-out, they believe they are a

submitting a claim. And, so, we want to make sure that as a

fraud prevention mechanism, that we do everything possible to

make sure that people understand what they're doing and that

they're not filing a claim, they're not choosing to

participate.

But in terms of process itself, you know, the

submission could be set up via dedicated e-mail, you know, if

the Post Office is what's causing the Court concern.

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THE COURT: Yeah, I think that it would be helpful to

have a method by which individual putative class members can

opt out electronically. And that doesn't mean just -- and by

electronically, what I mean is rather than mailing a form in

where they can scan it and send it to a e-mail box or in some

electronic way.

Perhaps you're right. Perhaps, you know, if we have

it uploaded to the Web site -- or to the claims administration

Web site -- that might cause some confusion. But, certainly,

it seems like an easy thing for the settlement administrator

to create a separate e-mail address for opt-outs that people

can e-mail their opt-out forms to.

I also do think that it would be helpful for the Web

site to have an opt-out form because -- and I would like to

see one that the parties have agreed to, because in other

cases, I have ordered opt-out forms to be sent out along with

notices, frankly. And I think just what it does is it

decreases the friction that an individual may encounter in

trying to exercise their rights to opt out.

And, so, that's something that I would like as part

of the settlement, is to have a method -- number one, to have

a opt-out form available on the Web site that describes

clearly what it is; and, number two, a method by which a

person can e-mail that or send it in via electronically to the

settlement administrator to voice their intent to opt out of

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the settlement.

So, given that, let's go ahead and hear from -- first

of all, from Mr. Gardner -- Jonathan Gardner -- who is

representing two individual objectors, Behnken and Mr. Dugan.

Mr. Gardner?

MR. GARDNER: Good afternoon, your Honor, and thank

you.

As an initial matter and something that kind of

underlies our entire objection, you know, we believe that the

settlement is preempted by the Federal Arbitration Act for

those TikTok users who want to pursue arbitration. The FAA

ensures enforcement of arbitration agreements according to

their terms.

THE COURT: I guess, Mr. Gardner, my --

MR. GARDNER: The agreement here --

THE COURT: Mr. Gardner, I guess I'm not quite sure I

understand that argument because, presumably, any of them can

initiate arbitration now. I don't know how many of them have.

But as part of the settlement -- so, TikTok is, basically,

waiving its right to arbitration. There's nothing that would

prohibit any putative class member from opting out and

initiating arbitration or initiating an arbitration now,

frankly.

And, so, I guess I'm a bit confused as to why or how

the FAA would preclude two parties to an arbitration agreement

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consenting to do away with the arbitration agreement and

settling a -- their claims otherwise.

If that were the case, then once -- then, basically,

what you're saying is no two parties can ever settle a claim

that has an arbitration provision unless they actually went to

arbitration.

MR. GARDNER: I'm not arguing that the -- that you

can never settle on a class basis where there's an arbitration

provision. TikTok users are free to waive their right to

arbitration if they want to participate in the settlement.

What I'm saying is you can't craft onto an

individual's right to arbitrate an additional term that's not

in the agreement itself. Here, that would be taking the

affirmative step of having to opt out under the specific

provisions of the opt-out, which we believe are burdensome in

this case.

But you're adding a term to the agreement to

arbitrate between TikTok's and users; that term being you have

to take the affirmative step of opting out. The FAA, I

believe, preempts it.

But, your Honor, we're not there yet. It's premature

argument. I just wanted to raise it because I wanted it --

because it does underlie the circumstances in this case.

Here, we're at a preliminary stage. The settlement

hasn't been preliminarily approved yet. So, what we're trying

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to do is work with the Court, work with plaintiffs' counsel to

make the opt-out procedure appropriate in this particular

case. And not every two cases are the same. Opt-out

procedures have to be crafted to the circumstances and the

context of this case.

In this case, there is an arbitration agreement

that's unlike the Facebook BIPA case, and it's unlike every

securities class action case. Here, there's an arbitration

provision. In fact, the arbitration provision was used by

TikTok as a bludgeon against the plaintiffs' counsel in order

to drive down the value of the settlement. All parties

acknowledge that. They've said the number one risk we faced

in this case was the fact that defendants would move to

arbitrate and we would get nothing.

Why in those circumstances would you make it as

difficult as possible for people to exercise their opt-out

rights and pursue arbitration when you've then taken away the

number one argument the defendants have used to drive the

value of this case?

I would submit that the FAA requires making the

opt-out procedures easier. And what we're asking the Court to

do here is simply allow people who want to opt out to do so

through counsel without a wet-ink signature. Those

requirements -- as found by a number of judges, including

Judge Breyer in Intuit, and Judge Alsup alluded to this in

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DoorDash -- you know, in certain circumstances when you have

an arbitration provision requiring a mail-in, requiring a

wet-ink signature is burdensome when you have counsel

representing those individuals. And --

THE COURT: But, I guess, Mr. Gardner, how burdensome

is it for someone to sign a piece of paper if they want to opt

out? I mean, there has to be some sort of affirmative showing

of intent.

I mean, I've read the Intuit case. And, as you say,

Mr. Gardner, that's kind of the beauty and the painfulness of

class actions is that every case is individual, right? So,

like no two cases --

MR. GARDNER: Correct.

THE COURT: -- are unique. And, so, it comes upon

the discretion of the district court to try to fashion

something within the bounds of the Federal Rules and the

Constitution as to how cases like this can be resolved, if

they can be resolved.

And I guess in Intuit, it made sense for Judge Breyer

in that case to look toward or lean upon electronic signature

because Intuit was the creator of online tax return

submissions, right? And, so, Judge Breyer said, well, if

Intuit can't figure out how to do this via electronic

signature without worrying about authenticity and genuine

signatures, then no one can; and, surely, Intuit has the tools

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to do that.

But here, I really wonder whether in a case like this

whether having, you know, the individual putative class

members actually just sign a piece of paper -- and, you know,

a form of it would be provided on the Web site. The parties

have more or less agreed that it could be submitted via e-mail

to the settlement administrator. And, of course, they don't

have to do it, I suppose. I suppose counsel can gather those

forms up and submit it en masse.

So, I'm wondering how big of a burden is it, really?

MR. GARDNER: Well, two things, your Honor. First,

in order to become a TikTok user, all you have to do is go to

their app, put in a telephone number and e-mail and you're a

user. It's very simple. It's straightforward. No signature.

No mail. That's it.

In order to be a claimant in this settlement, all you

have to do is go to the settlement Web site, fill out a form

and submit it. No signature. No mail-in. Simple.

Why is it more complicated to opt out of this

settlement than it is to make a claim in this settlement? Why

is it more complicated to opt out of this settlement than it

is to become a TikTok user? The only reason is because the

settling parties want to make it as burdensome as possible on

people to opt out. That's the reason in this case.

Secondly, why is it that it's inappropriate for

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counsel making the affirmative representation that we are

representing these individuals and they have authorized us to

opt them out of this settlement, why is it inappropriate for

counsel to do that? Counsel take steps on behalf of their

clients all the time in all kinds of contexts. I take my

responsibility to my client seriously. I take my

responsibilities to inform my clients of their options

seriously.

If this settlement is going to be preliminarily

approved and notice is going to be disseminated, we will

communicate with our clients; we will lay out their options;

we will give them the best advice possible that we can make.

And I know how to value this case. We were

co-counsel in the Facebook BIPA case that settled for $650

million just for Illinois BIPA -- just for Illinois users.

So, I will take all those responsibilities seriously.

And, so, why is it that I can't opt out my clients

who have authorized me to do that? Why make that more

complicated? I don't understand it.

And in context, your Honor, you know, I think I would

recommend the concluding paragraph of Judge Alsup's decision

in DoorDash, where he notes the historical context we're in.

You know, for years, companies have used these mandatory

arbitration provisions to completely shield themselves from

liability, knowing that contingent plaintiffs' counsel would

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not take on individual arbitrations for most consumer cases

because they economically can't do it and individuals can't

afford to hire counsel to pursue individual arbitrations.

Corporate America has fought hard, all the way up to the

Supreme Court, to allow these mandatory arbitration provisions

to stand and act with impunity.

Now, with social media and technological advances,

contingent plaintiffs' counsel are turning this around. We've

begun to represent a large number of individuals and bring

back the economies of scale. Defendants are not happy about

this. They want to make it as hard as possible.

And because we represent numerous individual clients,

there is no doubt that requiring each one of them to print out

a form, sign it, upload it, and send it back when they've

already retained counsel will diminish the number of people

that do it. It's just clear that that's going to happen.

And, so, why require it when I can do it on their behalf? And

counsel does all sorts of things on behalf of clients.

THE COURT: Well, Mr. Gardner, I suppose -- let's say

you represent 12 individuals -- just taking a number out of

the hat -- who want to opt out and exercise their individual

arbitration rights. Couldn't you have a assistant or a

paralegal --

(Brief interruption.)

MS. FEGAN: Judge Lee, this is Beth. It's very hard

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to hear you today, for everyone.

MR. GARDNER: I was doing fine until about ten

seconds ago when I lost you completely, your Honor.

(Brief pause.)

THE COURT: So, I guess, Mr. Gardner, my question

was: If these forms are available on the settlement Web site,

if you were representing, say, 12 or 20 individuals who wanted

to opt out and pursue their individual arbitration rights,

couldn't you just have an assistant or someone just download

the forms, send them out to your clients and have them send

them back to you signed?

And, presumably, if you are going to initiate

arbitration procedures on behalf of these clients, aren't they

going to have to sign something before the AAA or whatever

arbitration forum you're going to be pursuing arbitration in?

MR. GARDNER: I mean, we certainly could do that if

we were representing 12 individuals. But as I indicated

earlier, representing 12 individuals in an arbitration of this

kind is not economically feasible for my firm and we wouldn't

do it. We are representing over a thousand individuals and

may represent more than a thousand.

THE COURT: All right. So --

MR. GARDNER: So --

THE COURT: -- I guess the question is: Couldn't

your assistant just download one form and copy a thousand of

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them and have your clients sign them?

I mean, because after all, like I said, if you're

going to start an arbitration proceeding for each of them --

which I guess is your intent if you're going to opt out, so

they can exercise their arbitration rights -- when they submit

an arbitration claim, don't they have to sign it? Or perhaps

I'm wrong. Perhaps --

MR. GARDNER: They actually don't, your Honor. The

arbitration forms don't require individual signatures, the

same as a complaint in federal court doesn't require a

individual plaintiff to sign the complaint. Counsel signs

those things on their behalf.

THE COURT: All right.

But, presumably, you send them all to your -- you

would send them all to your clients for their review and

approval, right, before you submit them. So, I guess, I'm

just not --

MR. GARDNER: Of course.

THE COURT: I'm sure that's the case. I have no

reason to doubt that you would.

And, so, I guess I'm still just trying to understand

why that would be so burdensome to do.

Anyway, that's something that I'll just have to kind

of consider.

MR. GARDNER: Not every individual has a scanner.

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Not every individual -- I mean, it's just a unnecessary

administrative step that these folks would have to do.

And I don't think it's a leap to infer and believe

that requiring that additional administrative step to have

somebody print out a form, sign it and scan it and send it

back is going to involve attrition. And it's not necessary.

I mean, counsel before in her presentation said this

is necessary as a fraud prevention mechanism. She's accusing

me of fraud, like I'm going to send in -- you know, I will be

communicating with these folks electronically. Technology has

allowed that to happen. We will make every effort to make

sure these individuals have accounts.

There is a mechanism in place where we're supposed to

work with TikTok's counsel. There's a 30-day time frame

within which we discussed, you know, these claims. We

submitted our list of proposed arbitration clients, that is

required by the terms of service. We've given them notice.

There's a provision in there where counsel is

supposed to work together. If they believe some of these

people don't exist or don't have accounts, tell us who they

are. We'll go back to them and we'll straighten it out.

That's the arbitration process. But there's no

reason why that can't happen through counsel.

THE COURT: Okay. Thank you, Mr. Gardner.

Do you have anything else that you'd like to add on

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the record today?

MR. GARDNER: I think that pretty much covers it.

And I appreciate the time your Honor took to hear that.

THE COURT: Thank you, Mr. Gardner.

MS. CARROLL: Judge, can I --

THE COURT: Hold on, Ms. Carroll. I'm going to ask

you to address all of them -- all of the various points -- at

once at the end. Okay?

Let's move on, then, to Mr. Andrews for Objector

Litteken.

MR. ANDREWS: Thank you, Judge.

Ryan Andrews, Edelson PC, on behalf of Mr. Litteken.

Thank you for giving me a chance to address the Court again.

What's happening here at preliminary approval where

we have three very experienced class action firms all

independently sounding the alarm on the inadequacy of this

proposed settlement I find strange. And I do appreciate the

Court taking the time to hear all of us out on these initial

issues.

So, just with notice that we've talked about, one of

the main issues that our client was concerned about was that

there was a very easy way to give the required direct notice,

and the settling parties here are ignoring it. It's the inbox

feature of the app. TikTok has agreed to give notice via that

particular function, as we suggested, and we request that the

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Court order them to do it.

While I think that will go a long way toward making

notice adequate, we're still getting mixed messages about the

reach on the direct notice from the parties. The focus has

shifted now to this e-mail campaign for the initial

preliminary approval brief focused on publication notice.

They initially said they only had a third of the e-mails for

the class. Now they have two-thirds or 60 million.

The parties were able to give very specific numbers

for how many people their publication notice plan would reach.

I just think they should provide the Court and the class

members with the same type of concrete estimates that their

in-app and e-mail notice will reach before the Court approves

the notice plan. There's no real notice plan in writing that

involves the direct notice. I just think we need to see it.

We need to make sure it's getting to all the right people, and

that they've done all the work they need to do to get people

direct notice of this deal.

Now, so the parties have essentially agreed to an

in-app form of notice. And I would have expected the

supplemental presentation to acknowledge that the claims rate

is going to increase beyond the 1.5 that they initially

predicted. But the prediction is staying the same.

And everyone is focused on this Facebook BIPA deal.

But that's not the only recent privacy case with a high claims

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rate. Say what you will about the Equifax settlement, but

there were 147 million class members there, and they got over

a ten percent claims rate. There are others similar to the

VPPA claims that are being released here. There are several

cases. One, Edwards vs. Hearst that had 4 million class

members. They got a seven-and-a-half percent claims rate.

And we just did a BIPA case with several hundred thousand

class members that got a 12-and-a-half percent claims rate.

It can be done if effort is going into it. And

really the best notice track of all is what is being given.

Class members will file claims.

But the problem, I think, here is if there are

substantial claims, the relief that's being offered begins to

look inadequate. Our client is a non-Illinois class member

that even half the claims rate of the Facebook deal, most

class members will get six dollars, which is barely enough to

purchase a coffee at Starbucks. If they had a five percent

claims rate -- which is highly probable here -- many class

members will maybe get enough to buy lunch.

So, these amounts continue to tend to be justified by

references to other settlements, many reached over a decade

ago. I just think that times have changed. So has most

people's view of what sufficient relief for privacy cases is.

The public thinks they deserve more. The courts are requiring

more. Congress and enforcement agencies are taking note of

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privacy violations. I think we need to do better.

And just what's left from their presentations and

their supplemental papers, it's still unclear why there is a

six-to-one allocation. As TikTok pointed out in its

supplemental brief, co-lead counsel agreed to a warranty

that's in the settlement agreement that TikTok's not violating

BIPA the way that's alleged in the complaint. If there was

never a BIPA violation, I do not understand why non-Illinois

class members are going to get a check that's so small they

won't bother cashing it or they probably won't even bother

making a claim.

One final point just to wrap up, we're not taking any

position on Labaton's opt-out argument, but opposed to the

papers, we are not in any secret agreement with Labaton. We

haven't discussed this matter with anyone at Labaton. We have

no involvement with the retention of any of their clients for

arbitration. Any assertion to the contrary is completely

baseless.

So, this whole discussion about the opt-outs in the

papers I just want to comment on because it's all focused

around Facebook, and there are several things all the parties

failed to mention. One is that in the Facebook settlement, we

allowed opt-outs by e-mail without a wet-ink signature. We've

done this for every case that has occurred via the pandemic.

Your Honor was right on. The class -- the claims

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administrator can acquire an e-mail address. People should be

able to send an e-mail, including all the required information

and stating they want to opt out.

I will also note that there was an objection in

Facebook by a lawyer who wanted to opt out several of his

clients without requiring any of that, and the parties let him

do it.

That is all, unless the Court has any questions for

me.

THE COURT: All right. Thank you very much.

MR. ANDREWS: You're welcome. Thank you.

THE COURT: Mr. Drury, you are next.

MR. DRURY: Thank you, your Honor. Good afternoon,

your Honor.

Given the amount of argument that has gone into

talking about the notice and the return on the claims, I want

to focus on the unique aspect of our objection, which is the

conflict of interest that we've raised.

Ms. Carroll did raise the point that there are two

separate subclasses that we say should be represented.

There's a subclass of minors under the age of 13, which is

approximately 6.1 million children; and, then, there's a

subclass of children under the age of 18, because those

children are not subject to the arbitration and class action

waiver provisions that are set forth in TikTok's agreements.

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With respect to the subclass of minors under the age

of 13, as we set forth in our recent reply, there are very

serious issues as to the representation that plaintiffs -- in

turn, plaintiffs' class counsel -- was able to provide to the

class members under the age of 13.

As your Honor is well aware, there's another case

pending in the Northern District, T.K. vs. ByteDance

Technology Company, Inc. That case had a preliminary

settlement proposed to Judge Blakey back in December of 2020.

It was preliminarily approved on December 19th, 2020, at which

point a preliminary injunction was put into place that

prevented settlement class members from filing any new claims

that are encompassed in the T.K. matter or from amending any

existing claims to include the claims that existed in T.K.

Our position has always been that the overlap between

T.K. and this case when it comes to privacy claims, and

specifically the Video Privacy Protection Act in BIPA, were

encompassed and are encompassed in the T.K. case. We brought

a motion to enforce that injunction in front of Judge Blakey.

And, as we've stated, he hasn't ruled on it yet, but he set a

status hearing for this Wednesday to talk about the overlap

and what may be the violation of the injunction by class

members in this case who brought claims.

Why is that important? Because when the class

members in this case and when counsel in this case went to the

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settlement hearing on August 13th, which was just six days

after the hearing on final approval in the T.K. matter, your

Honor, they had the concern -- and TikTok put this in their

papers -- that they were in violation of the injunction in

T.K., and that they shouldn't even be bringing claims on

behalf of the six million children that were under 13. And

with that and knowing that, your Honor, they went ahead and

they pressed ahead and they tried to settle claims on behalf

of all of these members.

However, other than the members that were involved in

the MDL settlement negotiations, the other six million

children weren't burdened by any potential violation of a

preliminary injunction order. And the way they would view

these claims might be vastly different had independent counsel

been there.

Now, plaintiffs' counsel takes the position that but

for them negotiating this settlement, the T.K. class members

wouldn't have gotten anything. And I submit to your Honor

that that's the wrong analysis there because the proper

procedure to have been pursued is what Mark S. was doing in

T.K., which was objecting to the settlement and objecting to

the broad release of claims in T.K. because the relief wasn't

valuable enough, awaiting for Judge Blakey to make his ruling;

and, if his ruling said that that release was too broad or

didn't cover the Video Privacy Protection Act claims or didn't

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cover the BIPA claims, then those claims would not be

released.

But what the plaintiffs' counsel in this case want to

do, they essentially want to be rewarded for violating or

potentially violating an injunction. And that can't be the

right result here on behalf of six million class members. And

as Ms. Carroll acknowledged, while maybe 28 of the 35

representative class members are minors, it sounds like only

one of them was under 13.

And what's important, your Honor, to know is that the

original complaint that Ms. Carroll filed in this case, the

class was defined as minors ages 14 to 17. And that was

actually filed after the injunction was put into place. It

wasn't until after the objections were filed in T.K. that the

complaints were amended in the MDL to include all class

members under 18 including class members under 13, which was

in direct violation or seeming violation of the language in

Judge Blakey's preliminary injunction.

Another issue that was raised in the supplemental

papers of plaintiff's counsel is that when there's an

injunction for -- or when there's an arbitration agreement for

children under -- for children -- in order to disaffirm, some

courts have stated that the -- that the minor trying to

disaffirm has to stop using the app, even -- and must have

stopped using the app at the time the complaint was filed.

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Here, we don't have any information about these 28

plaintiffs and whether or not they had stopped using the

TikTok app at the time they filed their application. If they

hadn't, your Honor -- and we just don't have the discovery on

that -- those 28 plaintiffs are in a different position than

plaintiffs who had stopped using the app and wouldn't have any

issue disaffirming the arbitration provision here.

And, so, that, again, is another way in which these

plaintiffs' counsel were not adequately representing the

millions of minors at stake here.

And while they say that they tried to do their best

-- and I'm not here to say that they didn't go into those

negotiations and try to get a good result -- they were saddled

with these conflicts. One was that there was a violation of

the injunction, and two was that we don't know the status of

their clients' use of the TikTok app.

Now, they state that the -- that what we're trying to

get through this is a different value, a different settlement

amount for the minor plaintiffs. That's not the case at all,

your Honor. What our objection is stating is that these minor

plaintiffs have a different claim and the strength of their

claim is stronger than the adult members because they're not

subject to the arbitration provision.

And on Page 17 of the plaintiffs' supplemental

papers, they flat-out state that the arbitration provision and

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class action waiver provisions in this case made the class

values potentially worth zero. That's true for people over

18, your Honor, but it was never true and is not true for

class members that are under the age of 18, and certainly not

for class members under the age of 13.

Finally, your Honor, I want to highlight one aspect

unique to class members under 13 because there seems to be

some issue as to the injunctive relief that those class

members are entitled to.

We don't dispute that there's injunctive relief

that's part of the proposed settlement in front of your Honor.

But that injunctive relief does not go far enough for the

class members that are under the age of 13. For those class

members, TikTok never should have taken any information about

those minors. And any information that TikTok has about

minors under the age of 13 should be deleted.

Now, the plaintiffs state, well, the Children's

Online Privacy Protection Act doesn't have a private right of

action. And we don't dispute that, your Honor. But this is a

settlement. And if they're there negotiating on behalf of six

million minors under the age of 13, one thing that should be

pressed for is that these minors should be put in the same

position they would have been had TikTok not violated the law

to begin with and not invaded their privacy.

And here, TikTok has information on minors. The New

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York Times did a big article stating that TikTok keeps track

of all minors under 14, and I think it's 40 percent of their

users are under 14 but not valid in stating their ages.

TikTok shouldn't have that information, and that information

should be deleted.

So, for these reasons, your Honor, the plaintiffs'

counsel and plaintiffs' representatives -- and I don't say

this in a demeaning way -- had an antagonistic or conflicting

interest to those of the six million class members under the

age of 13 and the millions of class members under the age of

18. And for that reason, this settlement shouldn't be

approved and there should be subclasses for both of these

minor victims, your Honor.

I could talk more about the notice provisions and the

value of the settlement, but I think -- and I haven't been

working with co-counsel on preparing our arguments. But I

don't want to waste the Court's time in stating things that

it's already heard. But I'm certainly happy to answer any

questions on any of the issues that we've raised in our

objections.

THE COURT: Thank you, Mr. Drury.

Ms. Carroll?

MS. CARROLL: There's a lot to unpack there. We'll

start with the opt-out procedure.

The opt-out procedures that are being proposed here,

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Judge, are not burdensome. These are the same opt-out

procedures that are used in thousands of class action cases.

This is standard operating procedure. We've cited in our

papers several current settlements that the Labaton firm is

doing in the securities arena that have the same signature

requirement as what we're proposing to the Court. In fact,

this opt-out procedure is the exact same procedure that they

used in their Facebook case.

We're not adding any burden here. What we're asking

for is basic information on who these people are. And we need

to know that they're exercising their right to arbitrate

voluntarily and individually.

And as the Court knows, agreements to arbitrate are

made in an individual way between the defendant and a

plaintiff. And if someone has not agreed to arbitrate, then

they can't proceed in this case where TikTok is not asserting

its rights to arbitrate. And that is why the case law that is

cited by Labaton is not controlling here.

And, actually, Judge Breyer in the Intuit case -- if

the Court takes a look at Page 11, Footnote 9 -- Judge Breyer

went out of his way to distinguish the circumstances there

because defendant had not asserted its right to arbitrate --

here, defendant is not asserting its right to arbitrate. In

Intuit, defendant filed a motion to compel arbitration. They

went all the way up to the Ninth Circuit; the Ninth Circuit

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upheld that arbitration agreement; and, then, they got a

hundred thousand demands for arbitration. This was not a case

where people were soliciting mass opt-outs for arbitrations,

which is what is the case here.

Judge Breyer, at Page 11, Footnote 9 of Intuit

specifically cited the CenturyLink case -- which we put in our

papers before the Court -- which is the exact situation that

is happening here, where a law firm is attempting to solicit

people for arbitration, putting aside whether they're doing it

in an ethical way or not. I don't think that is a question

for today. But I do think it is suspicious that they've told

this Court that 957 people want to opt out and pursue

arbitration but haven't given the Court any single iota of

information regarding those 957 people, or any evidence that

they are actually wanting to opt out and they're choosing to

opt out.

And, again, whether or not their clients are, in

fact, wanting to opt out and pursue arbitration is perhaps

something that is not for today. Today we're just talking

about the process itself. But if the Court reviews the

CenturyLink opinion, which dealt with this exact issue --

where the court required not only signatures, but for the

class members to supply additional information about the case

and their account information to make sure that this was an

informed process -- the Court will find that that CenturyLink

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case is far more persuasive.

And there, Keller Lenkner -- which was soliciting the

arbitration opt-outs -- got like 16,000 of them, or that's

what they told the Court. But after the Court made them

comply with basic opt-out procedures -- again, similar to the

ones Labaton is doing in all of these other settlements and in

its Facebook case -- the 16,000 dwindled to less than five

people who actually wanted to arbitrate. I think those

results speak for themselves, as we said in our brief.

And, again, I'm not accusing anyone of committing

fraud. All I'm saying is that we need to know that

arbitration is the route that these people are choosing

voluntarily. And the way to do that is to make sure the

process is easy for them, but also that they are making these

decisions voluntarily.

Now -- and that's all I've got to say about the

Labaton objections and their opt-outs.

The next objector, Mr. Litteken, I think we've talked

exhaustively about notice. I don't know why they keep

bringing up the concept of us not giving direct notice. We

are giving direct notice. Again, the cornerstone of our

notice program is direct e-mail notice to 60 million e-mail

addresses.

Again, we have a supplemental media plan that reaches

95 percent of our target audience, more than five times. And

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now we're adding to that in-app notification, which we didn't

think was necessary before but the Court can order if it wants

it. I don't think there's anything more to say about notice

other than the notice in this case far exceeds the standard

for best notice practicable.

In terms of the claims rate predictions, we never

said at any point that the claims rate in this case was

expected to be 1.5 percent. What we did was we took the

numbers that counsel from Facebook gave to Judge Donato, which

also included a declaration -- actually, more than one

declaration -- from Professor Rubenstein, who did an

exhaustive analysis of claims rates in class action

settlements. And we gave data regarding large classes of

millions of millions of people and expected claims rate when

you're dealing with that many people. And we created a chart

for the Court of hypothetical scenarios where the claims

rate -- of course, here, there's an Illinois subclass and a

nationwide class. The nationwide class is much larger, and

the Illinois subclass is obviously just a fraction of that.

At Page 32 of our preliminary approval brief, we made

a chart for the Court of the range of possible scenarios. Of

course, here we're just at preliminary approval. The claims

haven't come in. So, we're just speculating on what we can

expect to find.

But even if our Illinois claims rate -- this is the

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key takeaway. Even if our Illinois claims rate is the same as

what they got in Facebook of 22 percent and we applied their

own Professor Rubenstein claims rate for the nationwide class,

which was 1.5 percent -- as he said, it was actually 1.4

percent, is what he postulated; but we put 1.5 in our chart --

the approximate claim value is still well within the range of

not only reasonableness, but probably at the high end of what

class members are getting in similar privacy settlements.

So, if the Court takes a look at our chart, on Line 4

is where that analysis appears, where there's a 22 percent

hypothetical Illinois claims right and a 1.5 percent

nationwide claims rate -- which, again, is like 90 million

people -- the Illinois claim value comes out to be $174.57 per

class member, and then the nationwide class would get $29.10

per class member, where if you take a look at the comparable

settlements that we've laid out for the Court in our chart,

where a lot of these settlements have settled for no money and

just cy pres relief; where other settlements have actually

gotten monetary recovery for the class, they've averaged a

dollar, we far, far, far surpassed that. And this is really a

terrific settlement, especially in light of all the threshold

risks and the very early stage in litigation at which we've

achieved this settlement.

But we never said that the claims rate was going to

be 1.5 percent. And, of course, we want the claims rate to be

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as high as possible, and we want people to take advantage of

the settlement and to make their claims.

I think counsel brought up an allocation point

questioning why do we have a six-to-one allocation. And I can

address for the Court any process questions your Honor may

have. But we appointed independent allocation counsel to vet

the BIPA claim in comparison to the claims of the nationwide

class. And they negotiated, vetted, reviewed all the relevant

facts, including facts that we got from our expert relating to

the factual underpinnings of those claims. And this

allocation was negotiated. And that's what they came up with.

And it's premised on our views of the BIPA claims as

being meritorious and looking at their strengths and

weaknesses. That was negotiated and arrived at in a

meaningful way, and it was done in an independent way, through

experienced counsel who knows -- or was well-acquainted with

these issues.

And just for the Court's understanding, we appointed

Mr. Rotter, who was representing the claims of the nationwide

class, and Mr. Zouras who was representing the claims of the

BIPA class. And Mr. Rotter was involved with Mr. Rhow very

early on in this case. He's probably the one with the largest

amount of background and investigation into all of the claims

that resulted in where we are today on the nationwide class.

And Mr. Zouras is a very experienced BIPA litigator. He's

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probably done more BIPA cases than anybody in the State of

Illinois.

So, we appointed the two of them to handle the issues

relating to the allocation. They met. I believe they put in

declarations on preliminary approval, each separate,

describing their process. There was nothing improper about

that. And the number that they arrived at takes into

consideration the strengths and weaknesses of all the claims.

On to Mr. Drury.

So, I think I talked about our representation of the

minors earlier on in the presentation. I do want to just

touch on the concept of the injunction. We didn't violate any

injunction in going to the settlement table. Again, I think

Mr. Drury just pointed out that my original plaintiff in this

case, and the way I pled my class, was that the minor was over

the age of 13. So, that person could not have violated the

injunction. And I understand that that motion is pending in

T.K. We're not in T.K., and I don't know how Judge Blakey is

going to rule.

But the big takeaway is that the reason the

injunction is there, Judge, is for TikTok's benefit.

TikTok -- or a defendant -- when you settle a case, they want

an injunction because they don't want to be sued by more

people who come out of the woodwork when there's a settlement

pending.

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In this case -- or in the T.K. case, Mr. Drury came

out and objected, and they're hashing those arguments out. If

TikTok wanted to argue that we didn't have authority to settle

some of these claims because of an injunction, it was TikTok's

right to do so. But they didn't raise that.

And the reason why the injunction is there was not to

protect an objector and also, even worse, have an objector

come into this court and tell you, Judge, that you need to

throw out a $92 million settlement, which would benefit the

class, because we violated an injunction.

The goal here, obviously, is to get the best result

possible for the class. And it just shows that the objectors'

interest is not aligned with that of the class and of class

counsel.

One thing I do want to talk about is these COPPA

claims. As Mr. Drury said, these claims are available to

under-13 minors. There's no private right of action for those

claims. And, so, there's no justification of why these

under-13 minors could not be adequately represented by counsel

representing minors who were 18 or just under the age of 18.

Because there's no additional claim, the defense that Mr.

Drury alludes to for disaffirmance was also available to my

client, who is under the age of 18. Therefore, you know, I

and my co-counsel were fully entitled to negotiate on their

behalf, and we recognize that this was a defense that was

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available.

As we said in our papers, disaffirmance, again, is

available to an individual; but as of right now, there's not a

single case anywhere that says that disaffirmance can be made

on behalf of a class.

So, as Mr. Drury said, hey, we need to look at the

individual circumstances of, did their minors stop using the

app or didn't they? Well, that just shows that disaffirmance

could present an individualized issue, and that a class of

minors disaffirming this agreement would not be possible.

So, you know, in sum, there's not -- there's no

additional claim available to the under-13. Disaffirmance

would also apply to the under-18. We fully looked at their

claim and, you know, got to the conclusion that we got to.

And, again, the Fraley case is the one that stands

for the prop- -- in the Ninth Circuit. It stands for the

proposition that sometimes people or minors may have an extra

argument against, you know, a defendant, but that doesn't mean

there was a structural conflict in the negotiation of the

settlement or that they need a separate subclass for some

reason.

And, again, here we've gotten great monetary relief.

We've gotten broad injunctive relief. And the injunctive

relief says that TikTok has to comply with all of the laws.

And to the extent Mr. Drury says we need more for someone who

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is under 13, that's going to protect them. And, of course, if

they violate the injunction, then we'll be able to proceed

accordingly.

But in this case, there's nothing -- there was

nothing improper. We've represented everyone well. And the

settlement is a great result, and we think it should be

approved.

THE COURT: All right. Thank you, Ms. Carroll.

So, as I said, I've reviewed all of the submissions

that were submitted by the parties. The parties have raised

some points today that gave me some additional food for

thought. I'm going to take the motion under advisement, and I

will issue a written opinion with regard to my decision.

Thank you, everyone.

MR. DRURY: Thank you, Judge.

MS. CARROLL: Thank you, Judge.

MR. GARDNER: Thank you, your Honor.

* * * * *

I certify that the foregoing is a correct transcript from the

record of proceedings in the above-entitled matter.

/s/ Joseph Rickhoff April 25, 2021

Official Court Reporter

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