Appellate court overturns dismissal of state’s lawsuits against TikTok

IL file photo

The Indiana Court of Appeals reversed a lower court’s dismissal of two amended complaints filed by the state against TikTok that alleged the California company had engaged in deceptive acts under Indiana’s Deceptive Consumer Sales Act.

In its opinion, released Monday, the appellate court stated it had little trouble concluding that Indiana’s judiciary has specific personal jurisdiction over TikTok, Inc., with the company’s contacts within Indiana well beyond the “minimum” needed to satisfy due process.

The court also noted that TikTok reported $46 million in Indiana-based income in tax year 2021.

“TikTok has millions of end-users of its app within Indiana. Its engagement with those end-users is neither passive nor fleeting—TikTok uses the internet, to which its app is connected, to knowingly and repeatedly transmit data to and from each of those millions of Indiana end-users each and every hour of each and every day,” the appellate court pointed out in its ruling.

The appellate court affirmed the Allen Superior Court’s dismissal of the state’s lawsuits filed against foreign entities ByteDance, Ltd., ByteDance, Inc., (TikTok’s Chinese parent company) and TikTok Pte., Ltd. for lack of personal jurisdiction.

Indiana Lawyer reached out to the Indiana Attorney General’s office for comment, as well as TikTok’s online press team and  Indianapolis-based attorneys from Faegre Drinker Biddle & Reath LLP listed as counsel for the company in its Indiana case.

The Attorney General’s office issued a statement that read, “The Indiana Court of Appeals took a common sense approach and agreed with our office’s argument that there’s simply no serious question that Indiana has established specific personal jurisdiction over TikTok. By earning more $46 million dollars from Hoosier consumers in 2021, TikTok is doing business in the state and is therefore subject to this lawsuit. We were the first state in the nation to file suit against TikTok and look forward to continuing this fight.”

In its opinion, the appellate court referenced the state’s amended complaints, where the state alleged that, in order to induce end-users in Indiana to download or access its app, TikTok misrepresented or falsely represented various information on which end-users within Indiana were likely to rely when deciding whether to download or access the app.

“Any reasonable business could and should have anticipated being called into an Indiana court based on those alleged actions and TikTok’s substantial Indiana contacts,” the appellate court stated.

An Allen Superior Court judge dismissed both complaints last year on the grounds that the court did not have specific personal jurisdiction over TikTok and, alternatively, that the state’s complaints failed to state a claim under the DCSA.

In November 2023, the Associated Press reported a spokesperson for Attorney General Todd Rokita said the office was “considering appellate options at this time” and maintained its position taken in the lawsuit.

“We were the first state to file suit against TikTok, but not the last, and it’s reassuring to see others take up this ongoing fight against a foreign Big Tech threat, in any jurisdiction,” the spokesperson said.

In her 2023 ruling, Allen Superior Judge Jennifer DeGroote said the court lacked personal jurisdiction over the case and reaffirmed a previous court ruling that found downloading a free app does not count as consumer transaction under the Indiana’s DCSA.

The appellate court also rejected the lower court’s interpretation of the DCSA and TikTok’s arguments that the court should limit consumer transactions to exchanges for money, agreeing with the state that DCSA’s statutory definition of a consumer transaction does not include the words “exchange for money.”

“There is no question that any of the described dispositions in the statutory definition can be, and we presume most often are, effectuated by way of an exchange for money, but the statutory language does not require such an exchange,” the appellate court ruled.

The appellate court concluded by pointing out that the state’s amended complaint also alleged that, in its privacy policy, TikTok had omitted information on which a reasonable person would likely rely in deciding whether to download and access the app—namely, that the government of China would have access to TikTok’s collected personal data.

The state also alleged that TikTok affirmatively made false public statements that the government of China does not have that access, and that TikTok’s allegedly false public statements were made to induce reasonable persons in Indiana to download and access its app.

And the state alleged that TikTok had omitted informing possible end-users that its in-app internet browser will enable TikTok to circumvent the end-user’s privacy settings, which information the state contends reasonable persons in Indiana would likely rely on in deciding whether to download and access the app.

“We agree with the State that reasonable persons might have relied on those representations and omissions, and we conclude that those allegations state a claim under the DCSA,” the appellate court ruled in remanding the case for further proceedings.

The case is State of Indiana v. TikTok Inc., ByteDance Ltd., ByteDance Inc., and TikTok Pte. Ltd., 23A-PL-3110, 23A-PL-3111.

This story has been updated.