Lit Alerts—April 2022

Class Actions: Objectors Challenge Class Settlement in TikTok Data-Privacy Lawsuit

Objectors filed separate motions in April opposing a proposed $92 million class settlement as insufficient to resolve claims for TikTok’s allegedly unlawful collection of biometric and other personal data of more than 89 million users. The objectors assert that “98.6% of the Class apparently thought the terms were so bad they didn’t bother filing a claim” and “[t]he Court shouldn’t approve a deal where 98.6% of the Class gets nothing and the lawyers get more than $30 million.” 

US District Judge John Lee preliminarily approved the deal to end more than 20 proposed class actions against TikTok’s parent ByteDance Inc., a Beijing-based technology company, last October. The plan would include both monetary awards and injunctive relief in the form of TikTok agreeing not to use the TikTok app to collect or store a user’s biometric data and geolocation information or to store or transmit a user’s data outside the United States. Further, TikTok agreed to delete all pre-uploaded user-generated content from users who did not save or post the content and to design an annual training program for its employees on compliance with data privacy laws. 

The objectors, Dennis Litteken and Mark S. (for his minor son), claim that class counsel did not prove the deal has “substantial support” because they did not even meet the 1.5% claims goal they had set for themselves. Litteken argued the court should demand greater participation before the deal is approved. Mark S. had previously argued that settling minors should receive unique relief, but Judge Lee refused to entertain that bid, discerning “no reason why minor class members under thirteen would suffer harms that are different than those of older minor class members, after the settlement is implemented.”

Evidence: Admissibility of Deposition Testimony Taken in Related Action Under “Former Testimony” Hearsay Exception

Last month, the California Supreme Court issued its decision in Berroteran II v. Ford Motor Co. regarding the applicability of the former testimony hearsay exception. The case is particularly important to litigation in which a lawyer represents a client in multiple related lawsuits, at least one of which is in California state court. 

The court held that California Evidence Code section 1291(a)(2) expresses a general rule against admission at trial of prior testimony from a typical deposition. Recognizing that trial counsel may have legitimate strategic reasons for not asking questions of her own client in a deposition taken in one case, the court outlined the analysis trial courts should follow when determining whether the party against whom testimony is offered had the right and opportunity to cross-examine the declarant with an interest and motive similar to that which the objecting party would have in the present trial. 

Raul Berroteran II was a putative member of a federal multidistrict consolidated class action against Ford Motor. The complaint alleged defects in the diesel engine installed in Ford vehicles. When the federal matter settled, Berroteran and other class members opted out of the settlement in order to pursue individual suits against Ford. Berroteran filed 10 designations of testimony from depositions of current and former Ford employees taken during the original federal class action and other related opt-out cases in California. He argued the depositions were admissible under Section 1291(a)(2), which provides an exception to the hearsay rule when the party against whom testimony is offered had a right and opportunity to cross-examine the declarant with an interest and motive similar to that which the objecting party would have in the present trial. Ford objected, arguing that the interest in defending a deposition is different than at trial. 

California courts of appeal were split over the appropriate standard. Leaning on the legislature’s comments and observations in practice guides, the California Supreme Court concluded that Section 1291(a)(2) articulates a general rule (not a categorical bar) against admission of prior testimony from a typical discovery deposition at trial. The court then addressed the process trial courts should follow when determining whether a party seeking to exclude prior deposition testimony had the right and opportunity to cross-examine the declarant with an interest and motive similar to that which the same party will have at the present trial. First, courts should determine whether the parties intended, at the outset, that the deposition would serve as trial testimony. Next, courts should determine whether the parties subsequently reached agreement concerning use of the deposition at trial in that case, or in other cases. 

If neither of the above factors is present, the testimony is generally not made admissible by Section 1291(a)(2). The party proposing to introduce the testimony carries the burden of demonstrating that the opposing party had the required interest and motive. In making this determination, trial courts should look to “key practical considerations” which include: (1) the timing of the deposition within the context of the litigation; (2) the relationship of the defendant and the opposing party; (3) the anticipated availability of the deponent at trial in the proceeding in which the deposition was taken and the statutory context; (4) conduct at, and surrounding, the deposition—and degree of any examination conducted by the opposing party; (5) the particular designated testimony; and (6) similarity of position.

Class Actions: Preponderance of Evidence Standard Applies to Class Certification Prerequisites

The US Court of Appeals for the Ninth Circuit (en banc) in April held, as a matter of first impression, that the preponderance of evidence standard applies to plaintiffs’ burden of proving that the class certification prerequisites are satisfied. In Olean Wholesale Grocery v. Bumble Bee Foods, plaintiffs brought a class action against tuna suppliers alleging that the defendants’ price-fixing conspiracy caused class-wide antitrust impact. The plaintiffs introduced statistical models and evidence that the consumer class had been harmed. The Ninth Circuit held that such evidence “ha[s] been accepted as probative in a range of litigation contexts” and the “district court did not abuse its discretion in rigorously analyzing such statistical evidence,” and affirmed the district court’s decision to certify the plaintiffs’ subclasses.  

Under Federal Rule of Civil Procedure 23, for a district court to certify a class, the plaintiffs must show that there are “questions of law or fact common to the class” and demonstrate “numerosity, typicality, and adequacy of representation.” The Ninth Circuit held that “[b]ecause the application of Rule 23 to certify a class does not alter the defendants' rights or interests in a substantive way, there is no basis for applying a heightened standard of proof beyond the traditional preponderance standard.” It therefore joined the Courts of Appeals for the First, Second, Third, Fifth, and Seventh Circuits “in concluding that plaintiffs must prove the facts necessary to carry the burden of establishing that the prerequisites of Rule 23 are satisfied by a preponderance of the evidence.”

© Arnold & Porter Kaye Scholer LLP 2022 All Rights Reserved. This Advisory is intended to be a general summary of the law and does not constitute legal advice. You should consult with counsel to determine applicable legal requirements in a specific fact situation.