Earlier this year, at least one Michigan school district has joined a class action lawsuit against the social media application TikTok, its parent company, ByteDance, Inc., and other social media companies. The suit alleges that the social media conglomerates are deploying algorithms designed to create a connectivity addiction to social media sites like Tik Tok, Snapchat, Instagram, Meta, YouTube, Google, and others. 

The lawsuit alleges that the addictive algorithms are causing a mental health crisis among adolescents across the country. The suit points to a string of suicides that seemed to be correlated to the decedent student's participation and use of various social media sites. 

Here is a copy of the Master Complaint; the very first allegation contained therein states: American children are suffering an unprecendented mental health crisis fueled by Defendants' addictive and dangerous social media products. There is an impressive -and growing- roster of law firms representing the various school district plaintiffs from across the nation.

While the class action suit originated in federal court in Seattle, it has now been transferred to the Northern District of California. The multi-district litigation bears the following case caption: In re: Social Media Adolescent Addiction/Personal Injury Products Liability Litigation [MDL No. 3047] 

The tort theory alleged in the case is that the social media platforms are defective to the extent that they are designed to maximize screen time. For adolescents, plaintiffs allege that this flawed design has a high potential to become addicting. The suit alleges that the addicting behavior can lead to various mental and physical harm, including death.

This phenomenon, as it pertains to adults, was detailed in the 2020 documentary The Social Dillemma. To the extent that children are perceived to be the targets of these social media companies, there will be waves of litigation to come. [Think of Joe Camel's extinction in the late 1990s.]

So far this year, the following school districts have joined the litigation:

• Cadillac Area Public Schools
• Dexter Community Schools
• Elkhart Community Schools
• Penn-Harris-Madison School Corporation
• School City of Mishawaka 
• Clarksville-Montgomery County Schools
• Concord Public Schools
• Seattle Public Schools

Surely, more school districts will join the class action law suit in the months to come. More districts from Michigan are expected to join the suit as well.

This multi-district litigation will go on for years; the stakes are high for the various communities and the social media companies. A structured settlement could cost billions of dollars. 

Jennifer Brown, the superintendent for the Cadillac Area Public Schools had this to say about her district joining the class action lawsuit:

We are seeing increases in mental health struggles with our students - anxiety, depression - and it's no secret that the research supports a direct correlation to some of the mental health challenges that we're seeing as a consequence of social media use and technology access within our youth. It is going to take a community to care enough about kids to see that the negative impacts really require more management and regulation so that kids can be kids.

We have all seen how children are drawn like gravity to the apps on a cell phone. They do not need much enticement to interact with social media; once there, most children exhibit difficulty putting the phone down. 

Earlier this year, Seattle Public Schools filed a complaint against TikTok and Snapchat asserting that those and other social media platforms purposely deliver content that is mentally and physically harmful to students. They specifically cited to the "corpse bride" diet and other harmful but viral weight-loss challenges.

Last month in NYC, state attorney general Letitia James and prosecutors from 30 other states -including Michigan Attorney General Dana Nessel- sued Meta alleging that Facebook and Instagram featured content that was addicting to children. The complaint asserts that the business model for both platforms exploits young users by deploying harmful and manipulative features designed to maximize their time and attention on the site for profit. Here is a link to the complaint; also filed in federal court in the Northern District of California. 

For their part, the social media companies, asserting a content ban, have filed motions for summary judment based on First Amendment protections. The federal judge assigned to the case found that suit is more subtle than an outright content ban. The judge denied the defendants' initial dispositive motion, holding that the plaintiffs were more concerned about the technical algorithm, not the content. 

Rather than banning specific content, the plaintiffs sought greater parental controls, easier ways to delete accounts, better age verification procedures, and the elimination of notification clustering designed to ramp up habitual use. On the heels of this law suit, many state legislatures are drafting laws proscribing certain types of emotionally disruptive content from young users.  

The Law Blogger will continue to monitor this interesting and important litigation and legislation and alert our readres to significant developments in the cases and the laws.

 Post #636

www.clarkstonlegal.com

Wow, that was quick. After only four hours of deliberation, a federal jury in Manhattan returned a guilty verdict on all sever criminal fraud counts against Crypto King and FTX co-founder Sam Bankman-Fried; SBF, as he is widely known.

During the month-long trial, the Crypto Circus came streaming into Gotham. The trial featured all manner of self-proclaimed crypto experts that waited prior to daybreak to be allowed access to the trial. 

The Crypto King was largely done in by three of his former colleagues and friends, all co-defendants in his case who turned state's evidence against Bankman-Fried. The co-defendants include FTX co-founder and former-Google employee Gary Wang, Caroline Ellison, CEO of FTX "sister" company Alameda Research, and Nishad Singh.

All three co-defendants pled guilty last December but did not receive plea deals. Instead, they traded their cooperative testimony for consideration via what is colloquially known as a 5k motion from the Manhattan United States Attorney's office. 

This plea tactic calls for the prosecutor to file a motion under section 5k1.1 of the United States Sentencing Guidelines. Usually, the motion calls for a sentence that is under the guideline range; it is unclear whether this was done in the SBF case.

The maneuver calls for the US Attorney to write a detailed letter to the sentencing judge outlining the criminal conduct of each co-defendant as well as explaining how the co-defendants aided the government's case. The letter, however, makes no sentencing recommendation to the judge. In most plea deals, the prosecuting attorney agrees to request a specific sentence. 

During his trial, SBF elected to testify on his own behalf; an always-risky proposition. He attempted to shift blame onto other players, including: FTX lawyers, and his 28-year-old co-defendant and on-again, off-again girlfriend, Caroline Ellison. 

Asserting that he was an inexperienced businessman who got in too deep over his head, he relied on the advice of his laywers. This is known as the "advice of counsel" defense. Against this backdrop, jurors were informed about SBF's extensive blog posts, writings, and detailed interviews on all things crypto. 

The United States Attorney alleged that SBF diverted FTX customers' funds to his personal use; they also alleged he diverted the funds from the Bahamas-based FTX to cover huge losses incurred by SBF's other company, Alameda Research, a crypto hedge-fund. Details in the case revealed that most of the assets of Alameda Research comprised of a specific type of digital token known as FTT; a token created by none other than FTX.

SBF and his three co-defendants are all scheduled to be sentenced before United States District Court Judge Lewis Kaplan in March 2024. For their part, Wang and Ellison both testified on cross-examination that they are hoping for a sentence of probation. 

Over the years, we here at Clarkston Legal occasionally have represented clients charged with financial crimes in federal court. One of the primary factors contained in the federal sentencing guidelines considered by the federal judge is the amount of money the scam involved; the higher the amount of money; the longer the sentence guidelines. In this case, it is billions of dollars. 

So it does not look good for these co-defendants realtive to receiving a sentence of mere probation. Some prison time is almost assured. The sentencing judge will weigh the co-defendant's cooperation and trial testimony aginst the fact that they helped misappropriate billions of dollars of other people's money.

For his part, Bankman-Fried, only 31 years old, is almost assured a sentence for a term of years that will constitute life in prison. A dastardly fate for the MIT gradiate whose parents are both law professors at Stanford Law School.

Post #635

Clarkston Legal