By Ellen M. Zavian, Esq., sports law professor at GW Law and editor in chief of Esports and the Law
It took a great deal of guts for Turner “Tfue” Tenney to sue his former employer, FaZe, over breach of contract and violation of the California Talent Agency Act, to name just a few of the claims asserted [see issue Q2 of esportsandthelaw.com for more details], and now all parties will need to deal with three venues and two jurisdictions; two in California (one in the Los Angeles Superior Court and the other with the California Labor Commissioner’s Office) as well as the third venue, the Southern New York District Court.
This multi-state decision was handed down by the NY Judge Jed S. Rakoff when he denied Tenney’s motion to dismiss or stay the court proceedings while he dealt with the matters in California.
While Tenney filed his actions in California, it was FaZe’s maneuver to file a countersuit in NY in order to enforce the venue and jurisdiction clause in the employment agreement which named NY as its “mandatory and exclusive forum selection”. In the decision, Judge Rakoff found Tenney’s arguments “…unpersuasive” and viewed Tenney’s actions as merely an attempt to “…avoid a binding and enforceable forum selection clause”.
Judge Rakoff is also not wasting anytime. He ordered a pretrial conference in March and according to filed documents (dated October 31, 2019), the parties should prepare for a jury trial to begin on March 4, 2020 [the virus has delayed all matters in the New York court docket].
In the Motion to Dismiss, Tenney’s defense heavily relied upon the Colorado River abstention doctrine (Colorado River Water Conservation Dist. V. United States, 424 U.S. 800 (1976). The doctrine requires the court to consider six factors: (1) whether the controversy involves a res over which one of the courts has assumed jurisdiction; (2) whether the federal forum is less inconvenient than the other for the parties; (3) whether staying or dismissing the federal action will avoid piecemeal litigation; (4) the order in which the actions were filed, and whether proceedings have advance more in one forum than in the other; (5) whether federal law provides the rule of decision; and (6) whether the state procedures are adequate to protect the plaintiff’s federal rights.
In defense, Faze strongly argued that the Gamer Agreement (employment agreement) contains a “mandatory and exclusive forum selection clause and choice of law clause in New York, as well as consents by both parties to personal jurisdiction in the state and federal courts of New York”.
In the end, Judge Rakoff ruled in favor of FaZe’s, denying the Motion to Dismiss, stating that it viewed Tenney’s argument was an ‘obvious attempt’ to escape the terms and conditions of his executed agreement with FaZe. Furthermore, the Court determined that only factor 3 of the Colorado River Doctrine really needed to be analyzed (the desire to avoid piecemeal litigation). In its review, the Court ultimately decided that the inconvenience of multiple forums did not rise to the level of an ‘exceptional’ circumstance that would justify abstention. In addition, should the California Labor Commissioner have exclusive jurisdiction over the TAA claim, then the risk of piecemeal litigation might even be lowered.
While we have not even gotten to the merits of the matter in any venue/forum, what we do know is that neither party will be walking away from this fight anytime soon.
