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Anti-TikTok Political Stunts Fail in Montana and Indiana Courts

Introduction

It’s become a popular political sport to attack TikTok. Those attacks combine Sinophobia with anti-Big Tech sentiments, a double-whammy of political payoffs that’s addictive to politicians. Most anti-TikTok regulatory efforts are just political theater, intended to entertain voters without actually doing anything. But when politicians actually catch the car they are chasing and enact anti-TikTok laws, unsurprisingly, nonpolitical judges aren’t as impressed as voters are.

In particular, in 2020, the Trump administration tried to ban TikTok and WeChat. Those efforts all failed in court (see links at the bottom of this post).

This post covers two more rulings this week involving anti-TikTok efforts: Montana’s TikTok ban and Indiana’s consumer protection lawsuit against TikTok. Collectively, these two efforts failed for five independent reasons (First Amendment, federal preemption, dormant commerce clause, personal jurisdiction, and inapplicability of the consumer protection statute). A full house of legal futility. Which, to me, raises the question of what is actually a greater threat to American consumers: China’s possible back-door access to TikTok data, or elected US politicians frivolously wasting taxpayer dollars on anti-TikTok censorship theater to “entertain” those taxpayers?

Montana’s TikTok Ban

Overview

In May, Montana banned TikTok in the state so long as it is owned by a company (in this case, ByteDance) that is incorporated in China, a country designated as a foreign adversary. The state pretextually claimed this was an attempt to prevent China from siphoning off American private data, but the law was not a privacy initiative at all. The court summarizes:

Despite the State’s attempt to defend SB 419 as a consumer protection bill, the current record leaves little doubt that Montana’s legislature and Attorney General were more interested in targeting China’s ostensible role in TikTok than with protecting Montana consumers. This is especially apparent in that the same legislature enacted an entirely separate law that purports to broadly protect consumers’ digital data and privacy.

Both TikTok and a consortium of TikTok users challenged the law. The court enjoins the TikTok ban on three independent grounds: the First Amendment (applying intermediate scrutiny), federal preemption, and the Dormant Commerce Clause.

First Amendment

Montana tried to justify the TikTok ban as a regulation of TikTok’s conduct, not its content. This “regulate conduct, not content” distinction is a go-to argument for folks trying to censor social media, and it even worked in part in the social media addiction cases. Here, the court doesn’t see it that way:

First, SB 419 is not a generally applicable law like the one in Arcara, which authorized the closure of any building found to be a public health nuisance. Unlike that law, SB 419 targets one entity, which on its face makes it not generally applicable. Second, the Court in Arcara determined that the conduct there was “nonspeech,” subject to New York’s general regulation, and that it had “absolutely no connection to any expressive activity.” For both groups of Plaintiffs, SB 419 implicates traditional First Amendment speech. It does so for User Plaintiffs by banning a “means of expression” used by over 300,000 Montanans. Without TikTok, User Plaintiffs are deprived of communicating by their preferred means of speech, and thus First Amendment scrutiny is appropriate.

I suspect some Montana legislators would note that the Second Amendment doesn’t reference the right to bear scalpels

Not only does the law hinder the speech of TikTok’s users, but it affects TikTok’s independent speech interests: “SB 419 implicates TikTok’s speech because the application’s decisions related to how it selects, curates, and arranges content are also protected by the First Amendment.” The state can still regulate these activities, but the court says it must do so with a “constitutional scalpel to meet the confines of the Constitution.”

The court ultimately does not decide whether the law should be evaluated using strict scrutiny or intermediate scrutiny. To me, this is an easy call. Montana attempted to eliminate a speech venue in the state, squelching the speech of both the venue and the venue participants. It’s a brazen form of censorship, ousting one publisher from the market. To me, it’s like a legislature trying to ban a local newspaper from publishing because it doesn’t like who owns the newspaper.

Still, because everyone is trying their hardest to find reasons why not to treat social media services like traditional publishers, the court gets paralyzed on this point. The court says: “SB 419 completely bans a platform where people speak, so it directly implicates speech…[and yet] SB 419 could be seen as a restriction on the time, place, or manner that a person could speak in the public forum—that is, the Internet. Given such a proposition, intermediate scrutiny should be applied here.”

Say what? How is a BAN on TikTok a time/place/manner restriction? The ban displaces the speech of TikTok users, so in that sense they can speak at X and Y but not Z. But that’s like saying that authors can publish at any newspaper, so it’s OK to nuke one newspaper out of the ecosystem. That makes no sense. More importantly, from TikTok’s perspective, this is not a time/place/manner restriction–it’s a categorical ban on publishing their app in the state. So the court can use the time/place/manner paradigm only by disregarding TikTok’s speech interests entirely. Disappointing.

On the plus side, the ban doesn’t even survive intermediate scrutiny. That doesn’t bode well for other TikTok bans. On the minus side, because legislatures can take different approaches to banning TikTok, intermediate scrutiny leaves open the possibility that a different ban could be constitutional. Also disappointing.

The court exhibits the same schizophrenia when discussing why the law isn’t a prior restraint:

like the ban on WeChat, SB 419 completely shuts off TikTok to Montana users. But unlike WeChat, TikTok users may be able to use other platforms on the Internet, assuming they are willing to forego its benefits. There is evidence to support Plaintiffs’ position that TikTok is not interchangeable with other social media applications. The State provides no support for the conclusion that User Plaintiffs may simply substitute another social media site in place of TikTok and achieve the same effect. It is a “no harm no foul” argument. That said, the State persuasively counters that unlike in WeChat, there is no language barrier preventing User Plaintiffs from accessing other social media applications. There is perhaps an economic consequence, but not a ban on the users’ sole means of communicating. This does not mean that those other channels are sufficient to satisfy the intermediate scrutiny analysis, but they may be sufficient to satisfy the prior restraint analysis.

Again, say what? The court says that TikTok users persuasively showed that they had unique audiences on TikTok that couldn’t be aggregated on other social media, yet the court distinguishes the WeChat ruling as purely being about Chinese-language audiences. It’s like the state gets extra credit for only nuking one player in the ecosystem. If the state had gotten greedy and nuked multiple players, that would be a prior restraint, but nuking one is fine? That makes no sense. And once again, the court ignores TikTok’s independent speech interests. The whole point of the law is to effectuate a prior restraint on TikTok. The court doesn’t address TikTok’s concern as a publisher of its own app.

The court says that if intermediate scrutiny applies, the law doesn’t survive it: “the law is not narrowly tailored, nor does it leave open any alternative channels for targeted communication of information.”

State’s Interest. The law, in its preamble, stated these objectives:

WHEREAS, the People’s Republic of China is an adversary of the United States and Montana and has an interest in gathering information about Montanans, Montana companies, and the intellectual property of users to engage in corporate and international espionage….

WHEREAS, TikTok fails to remove, and may even promote, dangerous content that directs minors to engage in dangerous activities.”

The court questions how the law advances these goals. First, “the law’s foreign policy purpose is not an important Montana state interest.” Indeed, the state’s arguments reflect a “pervasive undertone of anti-Chinese sentiment.” Second, protecting kids could be an important state interest, but Montana didn’t address it in its advocacy. Plus, the state’s claims the law advances consumer protection are also hollow because the state provided no evidence of that. Thus:

Because Montana does not have an important government interest in regulating foreign affairs, and because the State has not demonstrated the Legislature’s consumer protection interest in passing the bill, it is likely that Plaintiffs will succeed in showing SB 419 does not advance an important government interest as stated in the Act’s preamble and text.

I’ll note that if the state had doubled down on the child protection argument, it would have exacerbated its dilemma because the law banned the app for both children and adults. States can’t protect children by overly burdening adult speech, which is what a categorical ban does. Banning the app only for kids would raise the intractable age authentication problem.

Tailoring. The court says the law isn’t narrowly tailored to advance important state interests. Instead, it’s a piece of political showboating. (The court doesn’t actually say that; it said “the Legislature used an axe to solve its professed concerns when it should have used a constitutional scalpel”).

The court explains that any concerns about Chinese data snarfing are obviously pretextual:

SB 419 completely bans TikTok in Montana. It does not limit the application in a targeted way with the purpose of attacking the perceived Chinese problem….

it is well-established that other social media companies, such as Meta, collect similar data as TikTok, and sell that data to undisclosed third parties, which harms consumers. Additionally, there are many ways in which a foreign adversary, like China, could gather data from Montanans….it is not clear how SB 419 will alleviate the potential harm of protecting Montanans from China’s purported evils

With respect to child safety, the court says: “SB 419 does not reasonably prevent minors from accessing dangerous content on the Internet. It is not hard to imagine how a minor may access dangerous content on the Internet, or on other social media platforms, even if TikTok is banned.”

Alternative channels. Finally, the court comes back to the problem of disconnecting TikTok publishers from their TikTok audiences: “SB 419 prevents Plaintiffs, especially User Plaintiffs, from communicating in their preferred channel of communication. Each User Plaintiff testifies in their affidavits that TikTok provides them a way to communicate with their audience and community that they cannot get elsewhere on the Internet.” This concern will be true with any other effort to ban specific social media services because each service aggregates different audiences.

Federal Preemption

The court then turns to arguments that federal law preempts Montana’s ban. The court finds two places where it does:

Foreign affairs preemption. “Despite the State’s attempt to make an ex post facto argument that SB 419’s only purpose was consumer protection, the language of the statute and the political context under which it was enacted do not support that conclusion….the purpose of the statute is to prevent and prohibit the ‘international espionage’ of one of the United States’ few enumerated foreign adversaries, not to merely protect Montana consumers.”

Thus, this puts Montana in the role of trying to establish U.S. foreign policy:

SB 419 attempts to establish a foreign policy for Montana…from the very first line of the bill, the Legislature makes a distinct foreign policy statement, which is that TikTok is owned by a Chinese corporation that is taking Montanans’ TikTok user data and sharing it with the Chinese government for nefarious purposes….Montana’s foray into foreign affairs interprets the United States’ current foreign policy interests and intrudes on them. Because it does so, SB 419 is likely preempted.

Defense Production Act. Separately, the court says that Montana’s law may be preempted by the Defense Production Act: “the [Committee on Foreign Investment in the United States’] ongoing engagement with TikTok under the provisions of the Defense Production Act likely implicates the exact type of conflict the preemption doctrine seeks to prevent.”

Dormant Commerce Clause

Finally, in a surprise turn, the court says that Montana’s law may violate the Dormant Commerce Clause. This is unexpected because a lot of experts think the DCC is dead. The court says the law would fail two different DCC tests.

First, the court says it fails the Pike balancing test:

SB 419 imposes a burden on interstate commerce. SB 419 would burden User Plaintiffs by prohibiting them from conducting business on the app, and it would also burden TikTok by requiring the company to completely change its business to operate in Montana by selling to an owner based in a non-adversarial country. While the State argues that the law’s local benefits are significant, and they may be, it has not provided any evidentiary support for those benefits. Thus, Plaintiffs have demonstrated a likelihood that SB 419 puts a burden on interstate commerce that exceeds its local benefits.

Second, the court says the ban facially discriminates against non-Montanans because it goes away if TikTok changes ownership.

Irreparable Harm

Having found two different constitutional problems with the bill, the court unsurprisingly says that the law creates irreparable harm:

Because a fundamental constitutional violation is likely, TikTok has established the likelihood of irreparable harm….TikTok’s business harms are irreparable both because they are economic in nature and because they constitute a damage to goodwill of the business…

User Plaintiffs establish a likelihood of irreparable harm too. In shutting off TikTok, the Legislature has both harmed User Plaintiffs’ First Amendment rights and cut off a stream of income on which many rely.

Case Citation: Alario v. Knudsen, 2023 WL 8270811 (D. Mt. Nov. 30, 2023)

* * *

Indiana’s Enforcement Over TikTok’s Disclosures

The Indiana state AG’s office filed a lawsuit against TikTok, claiming that it had misrepresented its ties to China. The court dismisses the lawsuit both on procedural and substantive grounds.

Jurisdiction

The court says Indiana can’t establish specific jurisdiction over TikTok’s allegedly deceptive representations. First, TikTok’s statements were directed to a national audience, not just an Indiana one:

The Amended Complaint does not allege that Defendants made any of their allegedly deceptive statements or omissions in Indiana, nor does it allege that those statements or omissions were specifically directed at Indiana users. The statements and alleged omissions are found in multiple sources, all of which can be characterized as directed to the U.S. market as a whole….the State does not allege that TikTok specifically targeted Indiana.

Second, Indiana users downloading apps isn’t sufficient for jurisdiction either: “the unilateral act of a third party, such as a Hoosier downloading and using TikTok, or third-party app store offering TikTok in Indiana, cannot establish specific jurisdiction.”

Third, it doesn’t matter that TikTok may serve ads and content targeted to Indiana: “Indiana-focused content and advertisements have nothing to do with the State’s claims, which address nationally-directed statements. The State has not pled that this allegedly inappropriate content is targeted to Indiana residents in any manner different than it is to users in other states.”

Finally, TikTok files an Indiana tax return, but that point of contact isn’t related to the claims at issue.

As a result, Indiana has no personal jurisdiction over TikTok for the disclosure claims.

Indiana Deceptive Consumer Sales Act

Even if there was jurisdiction, the court says that the substantive claims against TikTok fail for several independent reasons.

First, the consumer protection law doesn’t reach situations where money doesn’t change hands: “the DCSA definition of consumer transaction does not include the downloading of a free app. No consumers in Indiana have exchanged money for their use of TikTok. As the downloading of a free app is not a consumer transaction, the DCSA does not apply to this case.”

Second, TikTok’s statements weren’t made in advertising. The AG’s office cobbled together a variety of other public statements, such as “(i) letters and testimony to legislators; (ii) interviews with news outlets; (iii) statements on TikTok’s website; (iv) generalized allegations regarding TikTok lnc.’s purported public relations strategy; and (v) court filings.” None of these statements were made “in connection with a consumer transaction, as the statute requires.”

Third, TikTok’s statements didn’t violate the law’s substantive requirements:

The Amended Complaint alleges TikTok violated the DCSA in four ways: (1) by failing to disclose that individuals and entities in China can access TikTok U.S. user data; (2) by representing that TikTok U.S. user data is not subject to Chinese law; (3) by downplaying the influence and control exercised over TikTok Inc. by its ultimate parent company, ByteDance Ltd.; and (4) by failing to disclose that the TikTok platform uses an in-app browser and the “data collection capabilities and practices” of that browser. These allegations do not state a cognizable claim under the DCSA.

These statements fail for various reasons: some are puffery, some are time-barred by the statute of limitations, some are non-disclosures where the omission isn’t material.

Case Citation: State v. TikTok, Inc., 02D03.2212-PL-401 (Ind. Superior Ct. Nov. 29, 2023)

Conclusion

I’m sure both of these rulings will be appealed. Why not? Until the calculus changes, politicians will keep going to the same well for the same political payoffs.

These rulings do not say that governments never can impose non-censorial regulations on TikTok. For example, if legislatures are truly concerned about consumer privacy, they can pass privacy laws of general applicability–as Montana did.

Further, the anti-TikTok efforts highlight how state actors can collect and weaponize information about private individuals. However, this concern isn’t limited to China spying on Americans. Indeed, the EU has repeatedly banned the export of EU consumer data to the United States because our NSA spies on everyone. We need to have a global conversation about the abusive practices of governments profiling and spying on both citizens and non-citizens and how we are going to restrict such abuses. Until we’ve had that meta-conversation, anyone positioning this critical social issue as just a TikTok/China problem is myopic or not acting in good faith.

For those of you desperate to find some way to stick it to TikTok, be careful what you wish for. The California court rulings on social media addiction pose existential threats to TikTok, but they also pose existential threats to all other social media services. The courts may very well reach legal conclusions that functionally kick TikTok and all other social media services out of the market. This would eliminate all opportunities to talk with each other online. I don’t see how the end of user conversations online will constitute a “win” for society, but it does nominally give the anti-TikTok pro-censorship partisans what they seek.

Some Related Posts

* Court Again Enjoins Anti-TikTok Executive Order–TikTok v. US
Another Court Rejects Trump’s Censorial Anti-TikTok EO–Marland v. Trump
Court Enjoins Trump Administration’s Attempt to Kick TikTok Out of App Stores–TikTok v. Trump
WeChat Executive Order Enjoined Because (Of Course) It’s Unconstitutional–WeChat Users v. Trump

The post Anti-TikTok Political Stunts Fail in Montana and Indiana Courts appeared first on Technology & Marketing Law Blog.

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