A federal judge has granted final approval to a $92 million settlement ending a class action accusing TikTok of violating several consumer privacy statutes, including Illinois’ biometrics privacy law, a decision that trumped opposition from trial lawyers who argued the resolution provides insufficient relief to users.
U.S. District Judge John Z. Lee issued an opinion July 28 formalizing the end of multidistrict litigation of 21 class actions against TikTok over its video-based social media. The settlement calls for attorneys to collect up to a third of the settlement, nearly $30 million, in addition to expenses.
The accusations under Illinois’ Biometric Information Privacy Act involve allegations that TikTok employs facial recognition technology, analyzing images and videos to determine user ages, ethnicity and gender to recommend content and prevent minors from using the app, but without properly obtaining consent from users or adequately documenting its data retention policy. Named defendants include the U.S. and Chinese iterations of TikTok and ByteDance Technology, which are responsible for TikTok and its predecessor, Musical.ly.
According to the plaintiffs’ lead lawyers, from the firms of Lynch Carpenter, of Chicago; Fegan Scott, of Chicago; and Bird, Marella, Boxer, Wolpert, Nessim, Drooks, Lincenberg & Rhow, of Los Angeles, TikTok “infiltrates its users’ devices and extracts a broad array of private data including biometric data and content that Defendants use to track and profile TikTok users for the purpose of, among other things, ad targeting and profit.”
Lee said the combined class pool could include the estimated 89 million American TikTok users with an Illinois subclass. After preliminary settlement approval in early 2021, 1.4 million people submitted claims. Lee’s motion certified the nationwide class and Illinois subclass. Based on estimates, each nationwide class member will get $27.19, while Illinois subclass members can collect $163.13. Also, unless it makes express disclosure in its privacy policy, TikTok will refrain from collecting or storing biometric and geolocation data, transmitting or storing user data outside the United States and uploading user-generated content to its servers before a user saves or publishes.
The gross settlement fund remained at $92 million. Lee said notice and settlement administration expenses totaled $3.27 million, litigation expenses tallied $789,044 and he approved $90,000 in service awards, leaving $87.8 million. Because the firms representing plaintiffs repeatedly said they would seek only a third of the fund in legal fees, Lee said, he calculated against the net and reduced their take to $29,279,203.
Lee said objectors claimed that is still too much money and requested he apply a sliding scale to decrease the attorney payout. He rejected that position, noting “a flat percentage fee does not create a windfall to class counsel in light of the amount of work performed in this case and the risk involved.” Several lead attorneys, he continued, “devoted essentially their entire professional lives to this case over the last three years.”
The one-third flat fee is common for BIPA settlements, Lee said, as well as class action settlements in areas like antitrust litigation. He further said the rate aligns with contingency fees class attorneys charge nationwide. TikTok had argued the foreign corporate entities aren’t properly included as defendants, and further said the arbitration and class-waiver provisions in its service agreements precluded legal action.
“Data privacy law is a relatively undeveloped and technically complex body of law, which creates uncertainty and, therefore, additional risk for class counsel,” Lee wrote. “Defendants have a wide array of defenses to plaintiffs’ claims, some of which — the arbitration clause in particular — are more than ‘plausible.’ ”
TikTok has been represented by attorney Tony Weibell, of Wilson Sonsini Goodrich & Rosati, of Palo Alto, Calif., a firm Lee said has “secured victories for major technology companies in several similar consumer privacy cases.”
Lee further rejected arguments the federal government deserves outsized credit for the settlement because TikTok edged toward the agreement only after President Trump ordered ByteDance to sell its U.S. operations.
“If anything,” Lee wrote, “attorneys should be rewarded, not punished, for leveraging external pressure (of course, within ethical bounds) to zealously promote the interests of their clients.”
However, there is disagreement among the firms involved in representing plaintiffs over how to divide their share. The leading firms proposed a four-tiered system, with the tiers after themselves including one group of six firms making up the executive committee and liaison counsel, another tier for firms that participated in mediation but didn’t make the executive committee and a fourth tier for any other firm.
Two third-tier firms — Glancy Prongay & Murray and Philips, Erlewine, Given and Carlin — said the proposal undervalued their contributions. As a result, Lee said, he reviewed the proposed schedule and billing documents in order to determine how much each firm is paid across the tier structure.
In March 2021, Attorneys Scott Drury and Mike Kanovitz, of the Chicago firm of Loevy & Loevy, asked the court to reject the settlement on behalf of an objector, identified only as Mark S., who objected to an earlier settlement attempt in a different lawsuit against TikTok, with similar claims, but centered around the social media platform's alleged exploitation of minor children.
According to Loevy, its efforts resulted in $6,256,000 from the settlement fund being available to TikTok users younger than 13, which means the firm should get 25% of that amount in fees, $1,564,000. Lee said that proposition “is without merit,” noting Mark S. expended “considerable resources … in trying to unravel the settlement.”
However, Lee did agree Loevy is due some money because Mark S. was first to propose TikTok add an in-app privacy notice, which Lee said was “a material benefit to the settlement class” and worth $100,000 for the law firm.