TikTok whistleblower asks Ninth Circuit to vacate sanction order

PHOENIX (CN) — A whistleblower who claimed TikTok’s parent company ByteDance stole content and shared data with the Chinese Communist Party asked a Ninth Circuit panel Thursday to vacate a sanction order against him that resulted from a wrongful termination lawsuit.

A lower court dismissed Yintao Yu’s 2023 lawsuit after finding he fabricated evidence and lied under oath, ordering him to abide by the contracts he says he never signed and enter arbitration over his termination. Because Yu had voluntarily initiated arbitration days before the judge’s order, three Ninth Circuit judges said Thursday morning the case is likely moot.

“You don’t get out of arbitration no matter what we do, correct?” U.S. Circuit Judge Andrew Hurwitz asked in a Phoenix courtroom Thursday morning.

“We do not get out of arbitration,” answered Tanner Laiche, representing Yu.

“And in arbitration all your underlying claims are being addressed?” asked Hurwitz, a Barack Obama appointee.

“Yes,” Laiche said.

“So tell me again,” Hurwitz went on. “If we rule in your favor, how is Mr. Yu any better off than he is today?”

Laiche said Yu needs the order to be vacated because as long as it stands, ByteDance can use it as leverage in a $6 million countersuit it plans to file against Yu claiming malicious prosecution. He said Yu is entitled to the annulment of any “collateral consequences” stemming from the order to enter arbitration because Yu already did so willingly.

Hurwitz said the order, which did not decide the case on the merits or contain major factual findings, carries no consequences.

“The only consequence of signing these contracts is you’re subject to arbitration,” Hurwitz said. “And you voluntarily submitted yourself to arbitration.”

Sanctions beyond the dismissal of Yu’s claims have not yet been handed down.

If he wanted to appeal the filing, Hurwitz said he shouldn’t have voluntarily entered arbitration.

“Your client’s actions mooted this case,” he told Laiche.

In his opening brief, Yu argued his claims never should have been removed to federal court from California state court. He asked the Ninth Circuit remand to the Superior Court of San Francisco.

Yu began working for ByteDance in 2017, but was fired in 2018 as part of a 16-person layoff, according to ByteDance. Yu, however, says he was fired for blowing the whistle on ByteDance’s unethical and illegal practices, claiming that the Chinese Communist Party influenced TikTok to spread anti-Japanese sentiment and suppress content about pro-democracy protests in Hong Kong.

ByteDance claims Yu signed four different agreements that required he go through arbitration to challenge adverse employment actions. Yu said his signatures on those documents were forged, and offered an anonymous witness declaration claiming to have witnessed Yu sign a key document that would have aided his claim.

At an evidentiary hearing in October 2024, it was revealed that the anonymous witness never saw the declaration attributed to her name, and never witnessed Yu sign any documents. U.S. District Judge Susan Illston dismissed the claims and sanctioned Yu in December 2024.

ByteDance attorney Ben Snyder agreed the case is not moot because the lower court granted judgment on ByteDance’s counterclaims regarding the different agreements Yu signed. But, he said it doesn’t matter whether the appellate court decides to moot the case so long as it doesn’t vacate Illston’s order.

This confused the judges.

“Both of you are sort of arguing both sides of the coin depending on if it favors your client’s position,” U.S. Circuit Judge Roopali Desai, a Joe Biden appointee, told Snyder. “It seems pretty clear to me that this case is moot.”

U.S. Circuit Judge Susan P. Graber agreed. She said the case is no longer about whether Yu signed the contracts in question, or whether those contracts required arbitration.

“If they go to arbitration before the court gets to it, the court doesn’t get to it,” the Bill Clinton appointee said.

If the panel agrees the case is moot, Snyder conceded that he has no argument for why it shouldn’t vacate the lower court decision.

He added that even though Yu agreed to arbitration, there’s no telling whether he changes his mind down the road.

“I don’t think he can back out as a matter of law from the arbitration then return to court with his claims,” Graber countered.

Snyder agreed the law would be against Yu if that happens, but argued leaving the order in place would add a layer of protection to keep Yu engaged in arbitration.

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