North Carolina Supreme Court: Hears TikTok Jurisdiction Challenge

• North Carolina's highest court is currently reviewing a lawsuit against TikTok and ByteDance concerning personal jurisdiction.
• The state alleges TikTok's addictive design features constitute unfair and deceptive trade practices impacting North Carolina consumers.
• North Carolina argues ByteDance has a virtual presence, millions of contracts, and systematically exploits the state's market, justifying jurisdiction.
• TikTok counters that its platform is internationally accessible, features are not customized for North Carolina, and it has not purposefully conducted business in the state.
• This case could establish a significant precedent for how state courts assert personal jurisdiction over out-of-state digital platforms.

This case will set a precedent for how North Carolina courts establish personal jurisdiction over out-of-state tech companies with a significant virtual presence.

North Carolina's highest court recently heard arguments in a significant legal challenge brought by the state against social media giant TikTok and its parent company, ByteDance. The core dispute revolves around whether North Carolina courts possess the necessary personal jurisdiction to oversee the state's claims. This pivotal hearing could determine the future of the state's lawsuit, which alleges that TikTok's platform employs an addictive design and engages in unfair and deceptive trade practices.

The lawsuit, filed in October 2024 by North Carolina and then-Attorney General Josh Stein, who now serves as the state's governor, contends that TikTok intentionally induces compulsive use among its users. Specific features cited include autoplay functionalities, infinite scroll mechanisms, and content designed to disappear quickly. These elements, the state argues, contribute to a pattern of behavior that negatively impacts consumers within North Carolina.

During the recent court proceedings, Special Deputy Attorney General Joshua Abram presented North Carolina's case for jurisdiction, asserting that TikTok maintains a substantial virtual presence within the state. Abram highlighted that ByteDance has established millions of contractual relationships with North Carolina residents, enabling it to collect user data and deliver geotargeted advertisements. He emphasized that due process fundamentally requires fairness, making it equitable to compel ByteDance to appear in North Carolina courts.

Abram further argued that ByteDance consistently and deliberately exploits the North Carolina market through TikTok, and the state's claims directly relate to this product. Drawing a comparison, he suggested that TikTok's market penetration in North Carolina far surpasses that of traditional companies like Ford, noting that a poll of any classroom or courtroom would likely reveal more TikTok users than Ford drivers. He concluded that foreign companies, while benefiting from North Carolina's markets, contract enforcement, and property protections, must also submit to its courts for claims stemming from their in-state conduct, particularly when they deliberately exploit those markets to the detriment of citizens, including children and families.

Representing ByteDance and TikTok, attorney Jon Hacker countered the state's arguments, asserting that the companies should not be subject to North Carolina's judicial authority. Hacker contended that TikTok's activities are not specifically customized for users in the state, nor is jurisdiction automatically triggered simply by users choosing to access the platform. He emphasized that the challenged features were neither designed in North Carolina nor tailored for its residents, and any allegedly deceptive statements were not made or specifically targeted within the state.

Hacker further argued that TikTok does not sell a physical product in North Carolina and has not purposefully initiated business within its borders. Instead, he described TikTok as an internationally accessible platform, indifferent to the geographical location of users receiving push notifications, and not actively seeking out North Carolina residents. He maintained that any advertising seen in the state was general, national-level promotion, and the mere presence of users does not confer jurisdiction. Hacker concluded that for the court to have jurisdiction, the companies would need to have consciously decided to conduct business in North Carolina, which he argued they did not, asserting that TikTok is merely an internationally accessible website that North Carolina residents can use.

The ongoing TikTok North Carolina jurisdiction challenge carries significant implications for how state courts establish personal jurisdiction over out-of-state technology companies with a substantial virtual footprint. The outcome of this case could set a crucial precedent, influencing the compliance risks for any online business operating across state lines and impacting the landscape of personal jurisdiction for social media platforms.

Legal professionals are closely monitoring the ruling to understand the evolving standards for state-level regulatory enforcement against digital platforms. The state's insistence that ByteDance systematically exploited the North Carolina market by collecting data from millions of adult and juvenile users underscores the broader debate about the reach of state laws in the digital age, particularly concerning the NC unfair deceptive trade practices TikTok is accused of.

This case will set a precedent for how North Carolina courts establish personal jurisdiction over out-of-state tech companies with a significant virtual presence, impacting compliance risk for any online business operating across state lines. Lawyers should monitor the ruling to understand the evolving standards for state-level regulatory enforcement against digital platforms.

Source: Original reporting via news reports.