21CV375169

Santa Clara – Civil

Electronically Filed
1 NORTH RIVER LAW PLLC by Superior Court of CA,
Times Wang (State Bar No. 281077) County of Santa Clara,
2 twang@northriverlaw.com on 12/1/2021 1:39 PM
3 1300 I Street NW, Suite 400E Reviewed By: R. Walker
Washington, DC 20005 Case #21CV375169
4 Tel: (202) 838-6489 Envelope: 7766868
5 SCHONBRUN SEPLOW HARRIS HOFFMAN &
ZELDES LLP
6 Paul L. Hoffman (State Bar No. 71244)
7 hoffpaul@aol.com
200 Pier Avenue, #226
8 Hermosa Beach, CA 90245
Tel: (310) 396-0731
9
Counsel for Plaintiffs and the proposed Class
10 (Additional counsel listed on signature page)
11 SUPERIOR COURT FOR THE STATE OF CALIFORNIA
12 COUNTY OF SANTA CLARA
13 Citizen Power Initiatives for China, and Doe Case No. 21CV375169
Plaintiffs 1-6, the latter individually and on
14 behalf of all others similarly situated, PLAINTIFFS’ OPPOSITION TO
TENCENT’S SECOND PETITION TO
15 Plaintiffs, COMPEL ARBITRATION
16 v. Hon. Patricia M. Lucas
Department 3
17 Tencent America LLC and Tencent
International Service Pte. Ltd., Complaint Filed: January 8, 2021
18 Hearing Date: January 12, 2022
Defendants. Trial Date: Not set
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PLAINTIFFS’ OPPOSITION TO TENCENT’S SECOND PETITION TO COMPEL ARBITRATION

 1 TABLE OF CONTENTS

2 Table of Contents ............................................................................................................................. i

3 Table of Authorities ........................................................................................................................ ii

4 I. Introduction ......................................................................................................................... 1

5 II. Factual and procedural background .................................................................................... 3

6 A. The complaint alleges, among other things, that Tencent routinely turns
over massive amounts of private WeChat user data to the Party-state. .................. 3
7
B. Tencent petitions to compel arbitration before the American Arbitration
8 Association. ............................................................................................................. 4

9 C. The political and legal environment in Hong Kong turns against civil society,
and independent institutions come under previously unknown political
10 pressure from the Party-state. ................................................................................. 4

11 D. Hong Kong’s credibility as a forum for international arbitration is called

into serious question. .............................................................................................. 5
12
E. Tencent issues new terms of service replacing Hong Kong arbitration with
13 Singapore arbitration. .............................................................................................. 6

14 F. The federal government issues both a travel advisory and a business

advisory warning of the heightened risks of traveling to and doing business
15 in Hong Kong. ......................................................................................................... 6

16 G. The Cheung Declaration confirms the deterioration of Hong Kong’s

political and legal environment. .............................................................................. 7
17
III. Argument ............................................................................................................................ 8
18
A. Arbitrating any aspect of this action in Hong Kong would deprive Plaintiffs
19 of a fair hearing in contravention of fundamental U.S. policy. .............................. 8

20 B. It would contravene U.S. law and policy to compel arbitration of claims

requiring the determination and application of California public policy. ............. 11
21
IV. Conclusion ........................................................................................................................ 12
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PLAINTIFFS’ OPPOSITION TO TENCENT’S SECOND PETITION TO COMPEL ARBITRATION
 1 TABLE OF AUTHORITIES

2 Cases

3 Ajamian v. CantorCO2e, L.P. (2013) 203 Cal.App.4th 771 ..................................................................... 11

4 Caperton v. A.T. Massey Coal Co. (2009) 556 U.S. 868 ........................................................................ 1, 8

5 Consol. R. Corp. v. Nat. R.R. Passenger Corp. (D.D.C. 1987) 657 F. Supp. 405................................ 1, 11

6 Flextronics International USA, Inc. v. Murata Manufacturing Co. (N.D.Cal., Aug. 31, 2020)
2020 WL 5106851 ........................................................................................................................ 10
7
G.B. Goldman v. United Paperworkers (E.D. Pa. 1997) 957 F. Supp. 607................................................ 1
8
Mitsubishi Motors v. Soler Chrysler-Plymouth (1985) 473 U.S. 614 .............................................. 1, 8, 12
9
Oriental Commercial and Shipping v. Rosseel (S.D.N.Y. 1985) 609 F. Supp. 75 ................................. 1, 8
10
Pak v. EoCell, Inc. (N.D.Cal., Oct. 28, 2020, No. 20-CV-05791-VC) 2020 WL 6318725 ..................... 10
11
R.R. Comm’n v. Pacific Gas Co. (1938) 302 U.S. 388 ........................................................................... 1, 8
12
Rhone Mediterranee Compagnia v. Lauro (3d Cir. 1983) 712 F.2d 50 ................................................. 1, 8
13
State Bank of Ohio v. Knoop (1853) 57 U.S. 369 ....................................................................................... 1
14
State v. Am. Fed’n of State, Cnty. & Mun. Emps., Council 31 (Ill. 2016) 51 N.E.3d 738 ........................ 12
15
Turner v. Wade (1920) 254 U.S. 64 ........................................................................................................ 1, 8
16
U.S. WeChat Users Alliance, et al., v. Donald J. Trump, et al. (N.D. Cal. Sep. 19, 2019) No. 20-
17 cv-05910-LB ................................................................................................................................... 3

18 W.R. Grace Co. v. Rubber Workers (1983) 461 U.S. 757 .......................................................................... 1

19

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PLAINTIFFS’ OPPOSITION TO TENCENT’S SECOND PETITION TO COMPEL ARBITRATION
 1 I. INTRODUCTION

2 Tencent concedes that this Court should not compel arbitration in Hong Kong if it would

3 contravene a fundamental policy of the United States. (Tencent’s Second Petition to Compel Arbitration

4 (“2nd Pet.”) at p. 18; Rhone Mediterranee Compagnia v. Lauro (3d Cir. 1983) 712 F.2d 50, 53 [“an

5 agreement to arbitrate is ‘null and void’ . . . when it contravenes fundamental policies of the forum state”];

6 Oriental Commercial and Shipping v. Rosseel (S.D.N.Y. 1985) 609 F. Supp. 75, 78 [“Under the

7 Convention, an agreement to arbitrate is ‘null and void’ . . . when it contravenes fundamental policies of

8 the forum nation.”].)

9 Meanwhile, it cannot reasonably be disputed that a fundamental policy of the United States is that

10 litigants are afforded fair hearings, including in the arbitration context. (Caperton v. A.T. Massey Coal Co.

11 (2009) 556 U.S. 868, 876 [“It is axiomatic that a fair trial in a fair tribunal is a basic requirement of due

12 process.”] [cleaned up]; R.R. Comm’n v. Pacific Gas Co. (1938) 302 U.S. 388, 393 [“The right to a fair

13 and open hearing is one of the rudiments of fair play assured to every litigant by the Federal Constitution

14 as a minimal requirement.”]; Turner v. Wade (1920) 254 U.S. 64, 70 [rejecting arbitration process because

15 it “denies to the complaining taxpayer due process of law”]; cf. Mitsubishi Motors v. Soler Chrysler-

16 Plymouth (1985) 473 U.S. 614, 634, 637 [implicitly recognizing that an international arbitration should

17 only be compelled if it satisfies due process via the retention of “competent, conscientious, and impartial

18 arbitrators,” and if “the prospective litigant effectively may vindicate its statutory cause of action in the

19 arbitral forum”].)

20 Nor can it be disputed that another fundamental policy of the United States is that its own laws be

21 followed. (State Bank of Ohio v. Knoop (1853) 57 U.S. 369, 392 [“Our prosperity, individually and

22 nationally, depends upon a close adherence to the settled rules of law, and especially to the great

23 fundamental law of the Union.”].) In the arbitration context, that includes federal law providing that, as

24 between courts and private arbitrators, public policy questions must be decided by the former. (W.R. Grace

25 Co. v. Rubber Workers (1983) 461 U.S. 757, 766 [a “question of public policy is ultimately one for

26 resolution by the courts.”]; G.B. Goldman v. United Paperworkers (E.D. Pa. 1997) 957 F. Supp. 607, 617

27 [“Questions of public policy must ultimately be resolved by the courts, not the arbitrators.”]; Consol. R.

28 Corp. v. Nat. R.R. Passenger Corp. (D.D.C. 1987) 657 F. Supp. 405, 408 [declining to compel arbitration

1
PLAINTIFFS’ OPPOSITION TO TENCENT’S SECOND PETITION TO COMPEL ARBITRATION
 1 because “[t]he Supreme Court has expressly held that public policy is not a proper subject for arbitrators”].)

2 Here, compelling arbitration in Hong Kong would contravene both of these fundamental policies.

3 First, the idea that Plaintiffs could get a fair hearing of their allegations in Hong Kong, given

4 recent developments there, does not pass the smell test. As discussed in more detail below, and as

5 explained by Dr. Alvin Y.H. Cheung, a legal academic from Hong Kong with deep knowledge of that

6 jurisdiction, the Chinese Communist Party-led (“CCP”) People’s Republic of China (“PRC,” and together

7 with the CCP, the “Party-state”) has conducted a veritable takeover of Hong Kong’s political and legal

8 environment in recent years—and especially after it unilaterally imposed the Hong Kong National

9 Security Law (“NSL”)1 on Hong Kong in June 2020.

10 As for Plaintiffs’ allegations, they include, for example, that Tencent has been routing the private

11 data of WeChat users in California—including message content and metadata such as GPS location—to

12 the Party-state’s security organs. (¶¶ 78-83. 2) Needless to say—and as confirmed by Dr. Cheung—such

13 allegations are likely to draw the negative attention of the Party-state. And given the Party-state’s influence

14 in Hong Kong, the notion that any institution based in Hong Kong can credibly, or even safely, oversee

15 the investigation and adjudication of such allegations is far-fetched. This is particularly true following the

16 NSL, which is so broad that the very making of these allegations, or assisting in uncovering evidence of

17 them, might be construed as a violation of the NSL. As such, it is no understatement to say that the personal

18 safety of Plaintiffs, their lawyers, and even of an arbitrator willing to rule in their favor, would be placed

19 at risk if this case were arbitrated in Hong Kong. The possibility of a fair hearing of this particular case

20 before any Hong Kong-based institution is therefore unlikely. That, in turn, compels denial of Tencent’s

21 petition.

22 Second, it would be unlawful and a violation of U.S. policy for a private foreign arbitrator to

23 adjudicate Plaintiffs’ public policy claims. Plaintiffs’ complaint squarely makes public policy claims (as

24 distinct from public policy arguments). For example, the complaint includes a claim that it violates public

25 policy for Tencent to employ terms of service (“TOS”) requiring certain would-be users physically located

26
1
27 The full name of the law is the “Law of the People’s Republic of China on Safeguarding National
Security in the Hong Kong Special Administrative Region.”
28 2
Citations to “¶ __” are to paragraphs in the complaint.
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PLAINTIFFS’ OPPOSITION TO TENCENT’S SECOND PETITION TO COMPEL ARBITRATION
 1 in California to adhere to the “basic principles established by the [PRC] Constitution,” including the

2 principle prohibiting “any organization or individual” from “damag[ing]” the PRC’s “socialist system,”

3 the “defining feature” of which is “[l]eadership by the Communist Party of China.” (See ¶ 165; cf. Ex. 13

4 [PRC Constitution].)

5 Federal law is clear that, regardless of their merits, these public policy claims must be adjudicated

6 by a court, as distinct from an arbitrator. Thus, it would be unlawful for these claims to be adjudicated by

7 any arbitrator, much less a foreign one. And it goes without saying that an unlawful arbitration is also one

8 that contravenes fundamental federal policy, so Tencent’s petition should be denied for this reason as well.

9 II. FACTUAL AND PROCEDURAL BACKGROUND

10 A. The complaint alleges, among other things, that Tencent routinely turns over massive
amounts of private WeChat user data to the Party-state.
11
WeChat is an irreplaceable communications platform for Chinese-speaking people, including in
12
California. (¶¶ 23-32.)4 This action, which was filed on January 8, 2021, challenges an interlocking set of
13
oppressive practices and enabling contractual provisions employed by Tencent in operating WeChat.
14
One of the most egregious such alleged practices is the PRC Data-Routing Scheme, whereby
15
WeChat allegedly turns over the private data of its users, en masse, to the PRC government’s security
16
organs. As an internet security expert discovered, on a single day in 2019, Tencent/WeChat routed 4.5
17
million WeChat messages from U.S. users, including California users, as well as related metadata, such
18
as user information and GPS location data, to police stations in the PRC. (¶¶ 78-83.) 5
19
The complaint alleges that the PRC Data-Routing Scheme, among other things, violates users’
20
right to privacy under the California Constitution; constitutes the torts of intrusion upon seclusion,
21

22
3
Citations to “Ex. __” are to exhibits to the concurrently filed Declaration of Times Wang.
23
4
A federal court recently found that “WeChat is irreplaceable for its users in the U.S., particularly in the
24 Chinese-speaking and Chinese-American community.” (¶ 32 [quoting U.S. WeChat Users Alliance, et al.,
v. Donald J. Trump, et al. (N.D. Cal. Sep. 19, 2020) No. 20-cv-05910-LB, Dkt. 59 at p. 5].)
25 5
The other practices are the blocking, suspending, or deleting of the accounts of California WeChat users
26 for discussing topics deemed politically unacceptable to the Party-state; Tencent’s profiting from the use
of California WeChat user data to improve Tencent’s censorship and surveillance algorithms; Tencent’s
27 prohibiting such users from withdrawing funds if they do not have an account with a PRC financial
institution subject to monitoring by the Party-state; and the politically motivated censorship and
28
surveillance itself. (¶¶ 33-35, 44-72, 67, 76-77, 147.)
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PLAINTIFFS’ OPPOSITION TO TENCENT’S SECOND PETITION TO COMPEL ARBITRATION
 1 negligence, and intentional infliction of emotional distress; contravenes the Unfair Competition Law, Cal.

2 Bus. Prof. Code §§ 17200, et seq.; and violates the California Invasion of Privacy Act, Cal. Penal Code

3 §§ 630, et seq.

4 B. Tencent petitions to compel arbitration before the American Arbitration Association.

5 On May 19, 2021, Tencent petitioned to compel arbitration before the American Arbitration

6 Association (“AAA”) (“1st Pet.”). In a footnote in its moving papers, it mentioned the possibility of trying

7 to compel arbitration in Hong Kong if its AAA petition were denied. (1st Pet. at p. 21 n.6.) Then, during

8 the briefing and argument process, Tencent did ask for arbitration in Hong Kong, but because Plaintiffs

9 were not given a chance to meet that request head on, the Court declined to consider it.

10 On September 30, 2021, this Court denied Tencent’s AAA petition. Tencent now squarely asks

11 for arbitration in Hong Kong, before the HKIAC.

12 The problem is that even if the HKIAC once would have been an appropriate forum for this case,

13 Hong Kong has experienced such dramatic social, political, and legal changes in recent years that it defies

14 reason to think that it would be appropriate to send this case to Hong Kong today.

15 C. The political and legal environment in Hong Kong turns against civil society, and
independent institutions come under previously unknown political pressure from the
16 Party-state.
17 Hong Kong once had the unique distinction of being a city that, while part of the PRC, enjoyed a

18 high degree of autonomy from the Party-state. One way that autonomy manifested was in the existence of

19 a vibrant and independent civil society willing and able to engage in activities the Party-state would have

20 preferred to suppress (and did suppress elsewhere in the PRC).

21 As just one example, for thirty-odd years, Hong Kongers held large annual vigils on June 4 to

22 honor those who were killed by the Party-state during the 1989 pro-democracy movement. (Ex. 2 [“12

23 Hong Kong activists given prison sentences over June 3 vigil,” Nikkei Asia, 09/15/21].) The vigils were

24 mainly organized by the Hong Kong Alliance for Patriotic Democratic Movements of China (“Alliance”),

25 which also ran a museum dedicated to June 4. (Id.)

26 That Hong Kong, however, is no more. A large part of the reason is that in 2020, the Party-state

27 imposed a draconian law, the NSL, on the erstwhile autonomous territory. And in 2021, under the guise

28 of the NSL, authorities took a series of actions that culminated in the shuttering of the Alliance. These

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PLAINTIFFS’ OPPOSITION TO TENCENT’S SECOND PETITION TO COMPEL ARBITRATION
 1 actions included accusing the Alliance of being an agent of foreign powers (Ex. 3 [“Hong Kong police

2 arrest 4 members of group behind Tiananmen vigil,” Reuters, 09/08/21 article]); raiding the museum, (Ex.

3 4 [“Hong Kong police raid Tiananmen memorial museum,” Nikkei Asia, 09/10/21]); freezing the

4 Alliance’s assets (Ex. 5 [“Hong Kong national security police freeze HK$2.2 million worth of assets from

5 Tiananmen Massacre vigil group, as leaders charged,” Hong Kong Free Press, 09/10/21]); and arresting

6 and sentencing several Alliance members to prison, including prominent civil rights lawyers. (Ex. 2.)

7 And this is just one example. Other civil society organizations have ceased operating under similar

8 pressure, including Hong Kong’s largest independent union and a prominent newspaper. (Ex. 6 [“Largest

9 Hong Kong teachers’ union disbands amid government crackdown,” CNBC, 08/10/21]; see also Cheung

10 Decl. ¶ 40 & Exhibit N thereto.) Meanwhile, more than a hundred individuals have been arrested under

11 the NSL (Ex. 7 [“In one year, Hong Kong arrests 117 people under new security law,” Reuters, 06/29/21]),

12 while tens of thousands of others have left the territory to escape the deteriorating social, political, and

13 legal environment. (Ex. 8 [“‘This Drop Came So Quickly’: Shrinking Schools Add to Hong Kong Exodus,”

14 New York Times, 10/11/21].)

15 D. Hong Kong’s credibility as a forum for international arbitration is called into serious
question.
16
The deteriorating social, political, and legal environment has also called into serious question the
17
credibility of Hong Kong’s arbitration system—including the HKIAC. Indeed, as the Financial Times
18
reported in January 2021, international law firms in Hong Kong reported a “a surge in queries from clients,
19
mostly headquartered in the US and Japan, about whether to write Hong Kong out of governing law
20
arbitration clauses[.]” (Ex. 9 [“Companies consider writing Hong Kong out of legal contracts,” Financial
21
Times, 01/30/21].) The managing partner of one firm noted that such inquiries had “never occurred before
22
in my time[,]” and that “clients who never used to care about arbitration clauses” were now asking the
23
“question of ‘is it safe to leave Hong Kong as the seat [of arbitration]?”’ (Id.)
24
These inquiries were prompted by the developments described above. As the Financial Times
25
summarized, “Hong Kong’s legal system and judiciary have been under pressure since Beijing tightened
26
control over the territory by imposing a national security law last year to crack down on anti-government
27

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PLAINTIFFS’ OPPOSITION TO TENCENT’S SECOND PETITION TO COMPEL ARBITRATION
 1 protests. Arrests of pro-democracy campaigners, opposition politicians and journalists have led to

2 questions over whether Hong Kong’s legal system may be compromised.” (Id.)6

3 E. Tencent issues new terms of service replacing Hong Kong arbitration with Singapore
arbitration.
4
Evidently, Tencent itself recognized that the credibility of Hong Kong’s arbitration system has
5
declined. In August 2021, Tencent issued new terms of service for WeChat. Every version up until then
6
had provided for arbitration in Hong Kong before the HKIAC. Now, for the first time, that provision was
7
eliminated. It was replaced by a provision calling for arbitration in Singapore, before the Singapore
8
International Arbitration Centre. (Ex. 10 [WeChat TOS, 08/19/21].)
9
F. The federal government issues both a travel advisory and a business advisory warning
10 of the heightened risks of traveling to and doing business in Hong Kong.
11 Meanwhile, in June and July 2021, the federal government issued two separate advisories warning

12 of the heightened risks of traveling to, and doing business in Hong Kong. In a June 16, 2021 advisory, the

13 State Department warned would-be travelers to “[r]econsider travel to the PRC’s Hong Kong Special

14 Administrative Region (SAR) due to . . . arbitrary enforcement of local laws[.]” (Ex. 11 [Hong Kong

15 Travel Advisory, 06/16/21.) With respect to the NSL in particular, the State Department warned:

16 Since the imposition of the National Security Law on June 30, 2020, the PRC unilaterally
and arbitrarily exercises police and security power in Hong Kong. The PRC has
17 demonstrated an intention to use this authority to target a broad range of activities it defines
as acts of secession, subversion, terrorism, and collusion with foreign entities. The National
18 Security Law also covers offenses committed by non-Hong Kong residents or
organizations outside of Hong Kong, which could subject U.S. citizens who have been
19 publicly critical of the PRC to a heightened risk of arrest, detention, expulsion, or
prosecution. PRC security forces, including the new Office for Safeguarding National
20

21
6
The article was poorly received by officials and practitioners in Hong Kong, who defended Hong Kong’s
22
arbitration system, largely on the ground that Hong Kong arbitral forums had a special relationship with
23 mainland China in that Hong Kong arbitrations were the only arbitrations outside of mainland China where
the parties could obtain provisional asset protection remedies in the mainland. (Ex. 14 [“FT Article on
24 Hong Kong Arbitration Raises Hackles in City,” Asian Legal Business, 03/16/21].) The Hong Kong
Secretary of Justice Theresa Cheng even wrote to the Financial Times to specifically tout the HKIAC, as
25 well as “Hong Kong’s advantages in matters related to doing business in China.” (Ex. 15 [“Letter: Hong
Kong’s role as a hub for arbitration is growing,” Financial Times, 02/09/21].)
26
These defenses, of course, only underscore the surpassing importance to Hong Kong officials and
27 institutions of staying in the Party-state’s good graces. And whatever they say about the propriety of
arbitrating run-of-the-mill commercial cases before the HKIAC, they eviscerate the notion that the
28
HKIAC can credibly oversee the adjudication of this case.
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PLAINTIFFS’ OPPOSITION TO TENCENT’S SECOND PETITION TO COMPEL ARBITRATION
 1 Security, now operate in Hong Kong and are not subject to oversight by the Hong Kong
judiciary.
2
(Id.)
3
A month later, the State Department was joined by the Treasury, Commerce, and Homeland
4
Security Departments in issuing a “Hong Kong Business Advisory,” in which they warned that “the PRC’s
5
imposition of the NSL on Hong Kong in June 2020 led to major structural changes that significantly
6
reduced Hong Kong’s autonomy. As a result, business and rule of law risks that were formerly limited to
7
mainland China are now increasingly a concern in Hong Kong.” (Ex. 12 [Hong Kong Business Advisory,
8
07/16/21].) They further noted that “[i]ndividuals in Hong Kong have been arrested under the NSL for
9
publishing newspaper articles, participating in routine democratic processes, expressing an opinion
10
regarding the government or the Chinese Communist Party, and attending public gatherings.” (Id.)
11
G. The Cheung Declaration confirms the deterioration of Hong Kong’s political and
12 legal environment.

13 The foregoing is broadly confirmed by the Cheung Declaration. Dr. Cheung is a legal academic

14 and former practitioner from Hong Kong, and is intimately familiar with how its social, political, and legal

15 institutions have deteriorated in recent years. As Dr. Cheung explains, the social, political, and legal

16 environment in Hong Kong has declined significantly from a rule of law perspective, with the Party-state

17 exerting more and more influence, particularly through the imposition of the NSL. (Cheung Decl. ¶¶ 14-

18 45.)

19 Indeed, as Dr. Cheung explains, Hong Kong is now best described not as a place with the rule of

20 law at all, but as a “dual state,” where even ostensibly commercial disputes are liable to be decided in

21 accordance with the prerogatives of political authorities rather than the law. (Id. ¶¶ 42-44.)

22 Meanwhile, as Dr. Cheung observes, this case is highly likely to attract the negative attention of

23 the Party-state, given the nature of the allegations. (Id. ¶¶ 46-50.) Indeed, Dr. Cheung notes that the NSL

24 is drafted in such broad terms that the mere assertion of certain allegations may very well be construed as

25 a violation of the NSL, to say nothing of assisting in the investigation of such allegations. (Id. ¶ 51.) That,

26 in turn, creates hitherto unknown risks and uncertainties in terms of whether any institution based in Hong

27 Kong can credibly oversee the investigation and adjudication of such allegations. (Id.) As for the prospect

28 of conducting substantive arbitration proceedings of this action in Hong Kong, before the HKIAC, Dr.

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PLAINTIFFS’ OPPOSITION TO TENCENT’S SECOND PETITION TO COMPEL ARBITRATION
 1 Cheung is clear that that would likely deprive Plaintiffs of a fair hearing, not least because of the personal

2 safety risks such would entail. (Id. ¶¶ 52-55.)7

3 III. ARGUMENT
4 A. Arbitrating any aspect of this action in Hong Kong would deprive Plaintiffs of a fair
hearing in contravention of fundamental U.S. policy.
5
Tencent’s petition should be denied in full because sending this case to the HKIAC would
6
contravene the fundamental U.S. policy of ensuring litigants are afforded due process and a fair hearing.
7
Tencent concedes that under the Federal Arbitration Act (“FAA”) and the Convention on the
8
Recognition and Enforcement of Foreign Arbitral Awards (“New York Convention”), this Court should
9
not compel arbitration before the HKIAC if doing so would contravene fundamental federal policy. (2nd
10
Pet. at p. 18; Rhone, supra, 712 F.2d at 53 [“an agreement to arbitrate is ‘null and void’ . . . when it
11
contravenes fundamental policies of the forum state”]; Oriental, supra, 609 F. Supp. at 78 [“Under the
12
Convention, an agreement to arbitrate is ‘null and void’ . . . when it contravenes fundamental policies of
13
the forum nation.”].)
14
Moreover, it cannot reasonably be disputed that a fundamental policy of the United States is that
15
litigants are not compelled to resolve their disputes without due process, which requires a fair hearing
16
before a fair tribunal, or that this policy applies to arbitration. (Caperton, supra, 556 U.S. at 876 [“It is
17
axiomatic that a fair trial in a fair tribunal is a basic requirement of due process.”] [cleaned up]; R.R.
18
Comm’n, supra, 302 U.S. at 393 [“The right to a fair and open hearing is one of the rudiments of fair play
19
assured to every litigant by the Federal Constitution as a minimal requirement.”]; Turner, supra, 254 U.S.
20
at 70 [rejecting arbitration process because it “denies to the complaining taxpayer due process of law”];
21
cf. Mitsubishi, supra, 473 U.S. at 634, 637 [implicitly recognizing that an international arbitration should
22
only be compelled if it satisfies due process via the retention of “competent, conscientious, and impartial
23

24
7
25 Dr. Cheung also points out that it would be a violation of substantive Hong Kong law for this case to be
arbitrated before the HKIAC, given that substantive Hong Kong law requires that consumers agree in
26 writing to arbitration after the dispute has arisen. (Cheung Decl. ¶¶ 10-12.) And given that Tencent
previously argued against Plaintiffs’ unconscionability argument by citing the AAA Consumer Rules, as
27 opposed to the AAA Commercial Rules, (see Tencent’s Reply in Support of Petition to Compel Arbitration
(“1st Pet. Reply”) at p. 14), it cannot now be heard to say that the Doe Plaintiffs should not be considered
28
consumers.
8
PLAINTIFFS’ OPPOSITION TO TENCENT’S SECOND PETITION TO COMPEL ARBITRATION
 1 arbitrators,” and if “the prospective litigant effectively may vindicate its statutory cause of action in the

2 arbitral forum”].)

3 Here, there can be little doubt that compelling Plaintiffs to arbitrate their claims before the HKIAC

4 would deprive them of the chance at a fair hearing, in violation of fundamental U.S. policy. That is because

5 the nature of Plaintiffs’ allegations, combined with recent developments in Hong Kong, make it unlikely

6 that any institution based in Hong Kong, including the HKIAC, can fairly, credibly, and effectively

7 oversee the investigation and adjudication of those allegations.

8 Indeed, as Dr. Cheung opines, “the nature of Plaintiffs’ allegations, combined with recent social,

9 political, and legal developments in Hong Kong, especially after June 2020 [when the NSL was imposed],

10 create risks and uncertainties regarding the ability of any institution based in Hong Kong to effectively

11 oversee the investigation and adjudication of those allegations.” (Cheung Decl. ¶ 8, italics added.) And as

12 he further opines, “the Party-state is likely to attempt to pressure any Hong Kong-based institution

13 adjudicating [Plaintiffs’] allegations to bend the proceedings in the Party-state’s interests, undermining

14 Plaintiffs’ ability to obtain a fair hearing of those allegations.” (Id. ¶ 54, italics added.)

15 In fact, as Dr. Cheung explains, “the mere act of making some the allegations pleaded in the

16 Complaint could be construed as a violation of the NSL. So too could the act of assisting in the

17 investigation of such allegations.” (Id. ¶ 51, italics added.) As such, compelling arbitration in Hong Kong

18 may well risk the personal safety of the Plaintiffs themselves, as well as their lawyers.

19 Indeed, in connection with the 2019 pro-democracy movement in Hong Kong, Party-state media

20 (falsely) accused Plaintiff Citizen Power Initiatives for China (“CPIFC”) of having hosted a “camp” for

21 “‘anti-China and separatist’ organizations to study how to confront China every year.” (Ex. 13 [Global

22 Times 08/18/19 article].) And it (falsely) accused CPIFC’s founder and president Dr. Jianli Yang—who’d

23 previously been imprisoned by the Party-state for five years between 2002 and 2007 (¶¶ 122-127)—as “a

24 spy for Taiwan.” (Id.) Given that, if CPIFC were compelled to arbitrate its claims in Hong Kong, its

25 employees and representatives are virtually guaranteed to be at risk of arrest, if not worse. 8

26

27 8
So too certain of the Doe Plaintiffs, which include persons who had participated in political activities in
the PRC that drew the ire of the Party-state, and which include persons who have applied for political
28
asylum in the United States.
9
PLAINTIFFS’ OPPOSITION TO TENCENT’S SECOND PETITION TO COMPEL ARBITRATION
 1 Moreover, it is not only Plaintiffs and their representatives who might be at risk, but also “any

2 arbitrator or panel of arbitrators based in Hong Kong [that might] issue rulings favoring the Plaintiffs[.]”

3 (Cheung Decl. ¶ 53.)

4 This is especially true of that Plaintiffs’ allegations about the PRC Data-Routing Scheme. As Dr.

5 Cheung explains, “the Party-state would have a strong interest in concealing evidence of this allegation,

6 and that the PRC and Hong Kong governments may construe the provision of such evidence as a violation

7 of the NSL.” (Id. ¶ 50.)

8 Of course, no U.S. court, including this one, is likely to refrain from compelling Tencent to comply

9 with discovery of these or other allegations merely because it would be against the interests of the Party-

10 state. But as Dr. Cheung makes clear, the same cannot be said for the HKIAC—or, indeed, any institution

11 based in Hong Kong—following the imposition of the NSL. 9 As such, sending this case to the HKIAC is

12 likely to prevent Plaintiffs from being able to conduct meaningful discovery of the PRC Data-Routing

13 Scheme, and likely other aspects of their complaint as well. That, of course, would be the functional

14 equivalent of depriving Plaintiffs of an opportunity at a fair hearing of their claims. Such a deprivation

15 plainly violates a fundamental policy of the United States and compels denial of Tencent’s petition. 10

16 All this is exacerbated by the fact that Hong Kong officials and arbitration practitioners have

17 recently touted the close integration between the PRC and Hong Kong as a unique selling point of

18 arbitration in Hong Kong, including the HKIAC. (Exs. 14 & 15.) Considering that, the HKIAC has a clear

19
9
20 Instead, it is obvious that it would take unusual fortitude for an arbitrator with significant ties to Hong
Kong to risk their career, if not more, to issue rulings in favor of Plaintiffs and against Tencent, such as
21 by compelling discovery of the PRC Data-Routing Scheme. But it cannot possibly be consistent with
fundamental U.S. policy to base Plaintiffs’ chances of getting a fair hearing on their being lucky enough
22
to draw an arbitrator or panel of arbitrators possessed of surpassing personal courage. That is simply
23 asking too much of the international arbitration system, and of individual arbitrators.
10
Importantly, Plaintiffs do not argue that no case should ever be sent to the HKIAC. Rather, Plaintiffs’
24
position is based on the unique facts of this case. Thus, Flextronics International USA, Inc. v. Murata
25 Manufacturing Co. (N.D.Cal., Aug. 31, 2020) 2020 WL 5106851 and Pak v. EoCell, Inc. (N.D.Cal., Oct.
28, 2020, No. 20-CV-05791-VC) 2020 WL 6318725 are inapposite. Unlike here, neither case involved
26 facts or claims that were likely to draw the ire or even attention of the Party-state; Flextronics was an
unremarkable antitrust case involving American and Japanese corporations, while Pak was an ordinary
27 business dispute involving a battery company. And unlike here, nobody in either case argued that the
HKIAC would be unable to credibly oversee the investigation and adjudication of either case, much less
28
that the nature of the allegations would make a fair hearing in Hong Kong unlikely.
10
PLAINTIFFS’ OPPOSITION TO TENCENT’S SECOND PETITION TO COMPEL ARBITRATION
 1 institutional interest in maintaining good relations with the Party-state, further undermining Plaintiffs’

2 chances of obtaining a fair hearing if this petition were granted.

3 At bottom, it defies reality to suggest that the HKIAC, or any institution in Hong Kong, can offer

4 a fair hearing of Plaintiffs’ allegations, given the specific nature of those allegations, and given the political

5 and legal developments in Hong Kong over the last few years. Thus, Tencent’s petition to compel

6 arbitration should be denied.11

7 B. It would contravene U.S. law and policy to compel arbitration of claims requiring the
determination and application of California public policy.
8
Separately, Tencent’s petition should be denied because it would contravene U.S. law and policy
9
to compel arbitration of claims requiring the determination and application of California public policy.
10
In the domestic arbitration context, it is well-established that, as between courts and arbitrators,
11
questions of public policy must be resolved by the former. And while most cases deal with the issue at the
12
award-enforcement stage, if public policy questions are among the questions to be resolved in the first
13
instance, courts will decline to compel arbitration in the first instance as well. (Consol. R. Corp., supra,
14
657 F. Supp. at 408 [declining to compel arbitration in the first instance because “[t]he Supreme Court
15
has expressly held that public policy is not a proper subject for arbitrators”].)
16
This makes sense. After all, if arbitrators do not have the power to pass on public policy questions,
17
it would be an exercise in futility at best, and a violation of law at worst, to send such questions to them
18
in the first place. Indeed, even if a court wanted an arbitrator to make an initial determination of public
19
policy, the existence of numerous authorities stating that such would be ultra vires the arbitrator’s power
20
would likely lead the arbitrator to decline—and rightly so.
21
11
22 As for delegation, Tencent concedes that under this Court’s September 30, 2021 order and Ajamian v.
CantorCO2e, L.P. (2013) 203 Cal.App.4th 771, there is no colorable argument that Doe Plaintiffs 1, 3,
23 and 5 agreed to delegate arbitrability to the HKIAC. (2nd Pet. at 13 n. 3.) As for the remaining Doe
Plaintiffs, it would violate fundamental U.S. policy to ask the HKIAC to resolve arbitrability on these
24
facts, for two independent reasons. First, given that Plaintiffs’ arbitrability argument is based on
25 fundamental U.S. policy, it would be unlawful, and against fundamental U.S. policy, for the HKIAC to
decide arbitrability here, for much the same reasons as it would be unlawful and against fundamental U.S.
26 policy for the HKIAC to hear Plaintiffs’ claims sounding in California public policy. Second, given that
Plaintiffs’ arbitrability argument is in part that Hong Kong-based institutions are fatally subject to the
27 Party-state’s pressure, asking a Hong Kong-based institution like the HKIAC to make such a ruling would
necessarily deprive Plaintiffs of an impartial adjudicator, in violation of the fundamental U.S. policy of
28
ensuring Plaintiffs get a fair hearing.
11
PLAINTIFFS’ OPPOSITION TO TENCENT’S SECOND PETITION TO COMPEL ARBITRATION
 1 As the arbitrator in one Illinois case put it:

2 “Questions of public policy—like statutory and Constitutional interpretations—are for the

courts and not arbitrators. And that makes sense. As an arbitrator, I am a private citizen
3 who holds no elected or appointed authority by the citizens of this state. Our elected and
appointed officials including lawmakers, administrators and judges—and not me—should
4 make public policy decisions.”
5 (State v. Am. Fed’n of State, Cnty. & Mun. Emps., Council 31 (Ill. 2016) 51 N.E.3d 738, 746.)

6 If this is true of domestic arbitration, it is a fortiori true of international arbitration. After all, if a

7 private citizen of the United States or of a particular state has no right or power to make making federal

8 or state public policy decisions in arbitration, someone who is not a citizen has even less basis to do so.

9 Such is the law of the United States. For this Court to send Plaintiffs’ public policy claims to the

10 HKIAC would violate that law. Needless to say, it would be against the fundamental policy of the United

11 States for a court to compel an arbitration that would violate U.S. law. Thus, Tencent’s petition should be

12 denied for this additional reason. 12

13 IV. CONCLUSION
14 For the foregoing reasons, Tencent’s petition should be denied.

15 Dated: December 1, 2021 Respectfully submitted,

16
NORTH RIVER LAW PLLC
17 By: /s/ Times Wang
Times Wang (State Bar No. 281077)
18 twang@northriverlaw.com
1300 I Street NW, Suite 400E
19 Washington, DC 20005
Tel: (202) 838-6489
20

21 SCHONBRUN SEPLOW HARRIS HOFFMAN

& ZELDES LLP
22

23 12
Because Tencent has previously misconstrued Plaintiffs’ position on this score (see 1st Pet. Reply at pp.
10-11) it bears emphasizing that Plaintiffs are not just making public policy “arguments” against
24
arbitration of this case, but are asserting public policy claims about Tencent’s TOS that—regardless of
25 how they are ultimately disposed of—will require the determination and application of California public
policy on the merits. Thus, cases compelling the arbitration of disputes under various statutory schemes
26 are inapposite, because such cases did not require the arbitrator to determine or apply public policy, and
only required them to apply pre-existing law. (See, e.g., Gilmer v. Interstate/Johnson Lane Corp. (1991)
27 500 U.S. 20 and Mitsubishi, supra, 473 U.S. 614 [no public policy claims—as distinct from arguments—
asserted].) And as discussed above, the argument here is not that arbitrating Plaintiffs’ public policy claims
28
would be against public policy, but that it would be unlawful.
12
PLAINTIFFS’ OPPOSITION TO TENCENT’S SECOND PETITION TO COMPEL ARBITRATION
 1 Paul L. Hoffman (State Bar No. 71244)
hoffpaul@aol.com
2 200 Pier Avenue, #226
3 Hermosa Beach, CA 90245
Tel: (310) 396-0731
4
Helen I. Zeldes (State Bar No. 220051)
5 hzeldes@sshhzlaw.com
Ben Travis (305641)
6 btravis@sshhzlaw.com
7 501 W. Broadway, Suite 800
San Diego, CA 92101
8 Tel: (619) 400-4990

9 THE LANIER LAW FIRM, P.C.

W. Mark Lanier (pro hac vice forthcoming)
10 wml@lanierlawfirm.com
11 Kenneth W. Starr (State Bar No. 58382 (inactive))
ken.starr@lanierlawfirm.com
12 Kevin P. Parker (pro hac vice forthcoming)
kevin.parker@lanierlawfirm.com
13 Alex J. Brown (pro hac vice forthcoming)
alex.brown@lanierlawfirm.com
14
Zeke DeRose (pro hac vice forthcoming)
15 zeke.derose@lanierlawfirm.com
Benjamin T. Major (pro hac vice forthcoming)
16 ben.major@lanierlawfirm.com
Caroline Allen (pro hac vice forthcoming)
17 caroline.mcleod@lanierlawfirm.com
10940 W. Sam Houston Pkwy N, Suite 100
18
Houston, Texas 77064
19 Tel: 713-659-5200

20 Counsel for Plaintiffs and the proposed Class

21

22

23

24

25

26

27

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13
PLAINTIFFS’ OPPOSITION TO TENCENT’S SECOND PETITION TO COMPEL ARBITRATION