Yan Tang, Plaintiff, v. TikTok Inc., Defendant. (2026)

Recitation, as required by CPLR 2219(a), of the papers numbered 1 to 9 read and considered in determining the motion by defendant seeking dismissal of the complaint pursuant to CPLR 3211(a)(1), (7) by Notice of Motion and supporting papers 1, 2, 3; Answering Affidavit in Opposition and supporting papers 5; Replying papers in support of Motion to dismiss and supporting papers 6; Other Memorandum of Law in Support of Motion to dismiss 4; Sur Reply of plaintiff with supporting papers filed with Court on 04/13/2025 7; Sur-Sur Reply of defendant in support of defendant's motion to dismiss filed with Court on 05/26/2026 8; Sur Sur Sur Reply of plaintiff filed with Court on 06/01/2026 9; and due deliberation and consideration having been had herein, the Decision and Order of the Court on the motion is as follows: it is

ORDERED that the motion by defendant seeking an order of dismissal of the complaint pursuant to CPLR 3211(a)(1) and (7), on the grounds of improper venue and failure to state a claim, is DENIED, and the Court hereby grants judgment in favor of the plaintiff in the sum of $1,524.07, plus interest, statutory costs and disbursements. The Clerk of the Court is directed to enter judgment accordingly.

Plaintiff pro se ("plaintiff"), a resident of Smithtown, New York, filed a Summons and Verified Complaint with this Court on 09/04/2025 against defendant TikTok Inc, a California Corporation with a principal place of business at 5800 Bristol Parkway, Culver City, California ("TTI"), which was duly served on defendant on 09/29/2025, with Proof of Service filed with the Court on 09/30/2025.

The Verified Complaint alleges that defendant unlawfully withheld from plaintiff the sum of $1,524.07 for over 100 days, for two completed sales on the TikTok Marketplace platform under her account name of Kelly Marketplace (shop code USLCQKE8DL). Plaintiff alleges she successfully sold and shipped her products to her customers on 04/20/2025, with no return or dispute concerning the shipped products, as confirmed by attached FedEx Home Delivery tracking numbers. Plaintiff asserts that pursuant to TikTok Marketplace Seller Terms and Conditions, payment was required to have been released shortly after order delivery and confirmation, but the sum of $1,524.07 was never deposited into her TikTok account. Plaintiff alleges she made several attempts for resolution through the TikTok platform support channels, which finally resulted in a representative of TikTok telling plaintiff that she would get the money on July 24, 2025, and then on July 31, 2025, but this never materialized. Plaintiff commenced this action seeking judgment in the sum of $1,524.07, plus interest, statutory costs and disbursements.

Defendant appears in the action by motion of its counsel, seeking dismissal of the complaint (see CPLR 320), pursuant to CPLR 3211(a) (1), on the grounds of improper venue, and CPLR 3211(a)(7), on the grounds of failure to state a cause of action.

Defendant contends that "TTI operates the TikTok app which ... provides features on the TikTok platform such as TikTok Shop, which allows a TikTok Shop account holder to promote and sell products or services and to receive payments for same via the TikTok platform."

Defendant's Risk Manager for Seller Governance Intelligence and Enforcement at TTI, Vince Albano ("Risk Manager"), affirms his personal knowledge of the business records of defendant, especially the part of the business records wherein a TikTok Shop account holder such as plaintiff, is required to receive notice of and accept the Commercial Terms and the Seller Terms. A hyperlink permits an account creator such as plaintiff herein to review the Terms in full before clicking the button to continue with account creation, however, like all TikTok Shop Sellers, it is not possible to open their account on TikTok Shop unless they have agreed to the TikTok for Business Commercial Terms of Service ("Commercial Terms") and the U.S. Seller Terms of Service for TikTok Shop ("Seller Terms"). A true copy of both the Commercial Terms updated March, 2025, and the Seller Terms updated June 5, 2024, were attached to defendant's papers.

As per Albano's affirmation, in April, 2025, plaintiff's TikTok Shop was "flagged for suspicious activity." After a purported investigation on or about April 24, 2025, "TTI claims it discovered that the transactions on Plaintiff's TikTok Shop appeared fake given suspicious purchasing behavior."

Defendant acknowledges the following language would have appeared once a button was clicked to continue the account creation process: "By signing up as a Seller or signing up with a TikTok account, you agree to the TikTok Commercial Terms of Service, which incorporate by reference the U.S. Seller Terms of Service for TikTok Shop," and further indicate that "your use of the Commercial Products will constitute acceptance of these Commercial Terms (citing Commercial Terms § 1.3), and "by using Commerce Products, you agree to be bound by these Seller Terms" (citing Seller Terms § 1.2).

Defendant asserts that any dispute "arising out of or relating to these Seller Terms" pursuant to § 14.2 of the Commercial Terms, and § 15 of "Dispute Resolution," must be resolved through a two-step process, the first of which requires the parties to seek resolution of the dispute "amicably" and second, any remaining claim will be resolved by binding individual arbitration or small claims. The Court notes that it is uncontested that plaintiff unsuccessfully engaged in the administrative review process and then resorted to litigation in a New York forum rather than California, based on her objections to the process.

Defendant points to the Seller Terms, wherein it states it is at the sole discretion of TTI without notice to plaintiff, to determine when TikTok Shop account holders are in violation of the parties' contract and to take appropriate enforcement actions, such as by freezing, delaying, or withholding payments to TikTok Shop account holders, and it specifically reserved the right to disable TikTok Shop accounts on the platform and withhold payments, as occurred herein (citing § 7.7). Defendant reserved the right to "suspend or permanently disable access to your Seller Center account, your ability to offer and sell products on TikTok Shop, and your TikTok account if we reasonably believe that you have violated our terms or policies.

Defendant assesses plaintiff's claim as one for breach of contract, predicated on TTI's admitted acts of withholding funds in the sum of $1,524.07, pursuant to the language consented to in defendant's Commercial and Seller Terms. Defendant argues that plaintiff's claim belongs either in arbitration or small claims court in Los Angeles, not venued in Fourth District Court, Hauppauge, New York, pursuant to its forum selection clause, thereby requiring dismissal pursuant to CPLR 3211(a) (1).

Defendant alternatively moves for dismissal pursuant to CPLR 3211(a)(7), for failure to state a claim, asserting plaintiff has failed to plead specific facts substantiating a breach of contract action, and in their absence, the Court cannot accept bare legal conclusions as true, either under California or New York law.

In contrast, plaintiff asserts in its numerous opposition papers permitted by the Court, in deference to the pro se status of plaintiff, as well as obvious short-comings requiring the production of a Court interpreter for plaintiff, that despite the lengthy arguments of defendant's counsel, defendant has not provided specific factual statements demonstrating the basis of the substantive aspects of plaintiff's claim against defendant, explaining its alleged "suspicious behavior." In addition, plaintiff asserts that despite the Court's urging the parties to try and resolve the matter before trial, her efforts were "flatly and aggressively refused to [be] engage[d] in [by] settlement or mediation" by counsel for defendant, thereby showing bad-faith. Plaintiff also avers that after redundant hearings before the Court, which resulted in exhausting the psychological and financial resources of plaintiff, defendant's strategy appears to seek plaintiff's abandonment of the claim.

Plaintiff argues in her papers that various provisions of the contract, if enforced, are "substantively unconscionable and must be invalidated." Plaintiff further argues that TikTok Inc. "aggressively conducts continuous, systematic, commercial business within the State of New York... targets New York residents, recruits New York businesses to open digital storefronts, and profits substantially from transactions processed within this state." Plaintiff also asserts that under CPLR 302 (New York's long-arm statute), defendant has shown more than sufficient "Minimum Contacts" within this state, and "the financial injury- the freezing and unauthorized seizure of the Plaintiff's business funds- occurred right here in New York where the Plaintiff is registered and operates,- resulting in "New York having a compelling interest in protecting its local merchants from predatory corporate actions."

The Court does not take issue with the contract's internal administrative process for complaints, the adoption of a State's judicial format, including the use of arbitration and/or small claims proceedings to resolve disputes, or forum selection. However, the inclusion of such provisions does not make the contract otherwise valid when other provisions are applied that violate the concepts of due process and fair play by being overreaching and egregious by assigning unbalanced and excessive authority to the contract, as shown by TickTok's adoption of the authority to seize funds in its sole discretion, without notice, and offering no substantive explanation for the basis of such action. In fact, the Court's have found in some instances the adoption of such provisions, specifically forum selection, can be invalid when plaintiff demonstrates the terms are "unreasonable, unjust, in contravention of Public Policy, invalid due to fraud or overreaching..." (see Prestige Lawn Care of WNY, LLC. v Facility Source, LLC., 233 AD3d 1515 [4' Dept 2024]).

The Court finds that defendant has demonstrated it acted in its sole discretion, without notice to plaintiff, when it determined that plaintiff was in violation of TTI's contractual terms or policies, by a purported reasonable belief which was factually unspecified and unsupported.

The Court notes that the standards of a contract's "unconscionability" requires it to be "grossly unreasonable or unconscionable in light of the mores or business practices of the time and place as to be unenforceable ..." which includes application of this rule with an analysis of both procedural and substantive unconscionability, requiring a "showing of an absence of meaningful choice" on the part of one of the parties (see Gillman v Chase Manhattan Bank N.A., 73 NY2d 1 [1988]).

Pursuant to the affirmation of the Risk Manager for TTI, plaintiff's TikTok Shop was "flagged for suspicious activity," and after a purported investigation on or about April 24, 2025, "TTI claims it discovered that the transactions on Plaintiff's TikTok Shop appeared fake given 'suspicious' purchasing behavior." There are no supporting factual statements, nor is any documentation provided to substantiate this belief, rendering the Risk Manager's statements as merely conclusory.

The Court further notes that the procedural component of assessing contract unconscionability requires a lack of choice at the time of contract formation, with a focus on size and commercial setting of the transaction, deceptive high pressure tactics, the use of fine print, the experience and education of the party claiming unconscionability and any disparity in bargaining power (see Gillman, supra).

Here, the Court finds that plaintiff had no real bargaining power with regard to the terms of the "boiler plate" contract, which appears to be the standard form used for potential TikTok Shop account holders such as plaintiff. Plaintiff, as a lay person, actually asserts that various terms of the contract appear to her as "unreasonable, unjust, or ... [the] knuckling under" of a litigant. Plaintiff had no "meaningful choice," nor any real opportunity to negotiate, as an on-line consumer transacting business through an exclusively "boiler plate" contract, that could not be tailored by plaintiff from discussions with defendant. Moreover, realistically, the on-line contract formation would not include benefit of counsel for plaintiff, from a practical standpoint, for an on-line contract, nor would it be financially practical from the likely deminimus value of transactions from parties such as plaintiff. However, though in today's high tech on-line world, it may not be feasible to negotiate hundreds or thousands of transactions per day, contracts still must be reasonable and not unconscionable.

The Gillman Court also noted consideration of "the size and commercial setting" of the contract, as a factor as well. In situations similar to plaintiff's, a multi-million dollar defendant could conceivably and audaciously seize and withhold pursuant to its contract, a substantial amount of sale proceeds from numerous unsuspecting account holders, in its sole discretion and without notice to them, based upon purportedly reasonable, but undisclosed, factual standards.

Under such unbalanced circumstances, public policy must intervene to prevent the unbalanced grant of power and authority to one party over the other, in its sole discretion and without notice, to freeze and seize legitimately earned sales of its account holder. Moreover, since binding arbitration is one of the litigation remedies under California law, an arbitrator may likely resort to a literal reading of the contract and rule in favor of the defendant under such circumstances, relying simplistically on the fact that the plaintiff agreed to the contractual terms, that ultimately may be invalid as against Public Policy.

Furthermore, the substantive component of unconscionability can be a contract's inherent unfairness. The Court in Gillman, noted the unconscionability provision of UCC 2-302, "is to prevent oppression and unfair surprise, not to readjust the agreed allocation of the risks, in the light of some perceived imbalance in the parties' bargaining power (Id., at 13 and 14). In effect, plaintiff asks this Court to hold that the TikTok agreement is unconscionable, based upon being unreasonably favorable to defendant because of its inherent unfairness. The Court finds that TikTok has set itself up as the sole party to decide the undisclosed propriety of its own actions, which demonstrates the weakness and disparity of the bargaining power of the parties, and is thereby unfair and oppressive.

Succinctly stated, the Court finds that sole reliance on the terms of the contract for determination of this matter, begs the greater fundamental question, as to whether the contract has certain terms brought to light by plaintiff's circumstances, which are unconscionable and impermissible as being against Public Policy. Therefore, the Court finds that Public Policy must recognize the "overreaching" business practice of defendant in its excessive and unequal granting to itself of unfair and oppressive contractual powers. Accordingly, the Court determines that defendant's motion for dismissal, is denied, as certain terms in the contract, are unconscionable, both procedurally and substantively, and are void as against public policy. Therefore, the Court grants judgment in favor of plaintiff in the sum of $1,524.07, plus interest, statutory costs and disbursements.

Any remaining requests are unavailing or have been rendered academic.

This constitutes the decision and order of this Court.

Dated: August 11, 2026

Hon. Paul L. Damato #137

Paul L. Damato, J.