Calif. State Court Rules on Arbitration in WeChat User Privacy Case

Per an opinion issued on Wednesday by Judge Patricia M. Lucas, Tencent’s petition to arbitrate WeChat users’ privacy case has been ordered off calendar. The five-page opinion comes after the parties submitted dueling briefs, with Tencent urging the court to send the class action to Hong Kong for arbitration, and the plaintiffs resisting, in part due to the claimed unfairness inherent to the proposed forum.

The court briefly recounted facts of the case, starting with the plaintiffs’ allegation that WeChat has a monopoly on how the Chinese-speaking world communicates with each other electronically. The plaintiffs took issue with Tencent America LLC and Tencent International Service Pte. Ltd.’s (together Tencent) alleged practice of turning over California users’ private data and communications to the People’s Republic of China, claiming that the company has committed tort, contract, and privacy-related abuses.

The court noted that previously, Tencent moved to compel arbitration before the American Arbitration Association (AAA). In September 2021, the court denied that motion finding that the contract’s delegation clause “did not clearly and unmistakably delegate gateway questions of arbitrability to an arbitrator and therefore the court would decide whether Plaintiffs could be compelled to arbitration.”

Subsequently, Tencent sought review with the California Court of Appeals, and the same day, filed a second petition seeking to compel arbitration in Hong Kong.

The still-pending appeal, Judge Lucas said, affects Tencent’s entire case, reasoning that “[t]he proceeding itself is inherently inconsistent with a possible outcome on appeal.” The opinion explained that one outcome of the appeal would require the plaintiffs to arbitrate before AAA, a result “irreconcilable” with the current petition’s request, which would require the plaintiffs to arbitrate in Hong Kong under an entirely different set of rules.

The second petition violates the stay imposed by virtue of Tencent’s notice of appeal, the court said in deciding to cancel Tencent’s petition by taking it off calendar.

The plaintiffs are represented by North River Law PLLC, Schonbrun Seplow Harris Hoffman & Zeldes LLP, and The Lanier Firm P.C. Tencent is represented by Gibson, Dunn & Crutcher LLP.