By Yasamin Parsafar, of Sheppard Mullin Richter & Hampton LLP
In a lawsuit filed yesterday against esports entertainment organization, FaZe Clan, Turner Tenney (“Tfue”), a twenty-one year old professional gamer and streamer alleges that the exploitation of young, unsophisticated content creators (streamers) has become standard in the esports industry, and that he is a victim.
Tenney claims that the “gamer agreement” he signed with FaZe Clan when he was twenty years old is illegal for multiple reasons — he alleges that it is “grossly oppressive, onerous, and one-sided,” because it entitles FaZe Clan to a finder’s fee of up to eighty percent (80%) of the revenue paid by third-parties for Tenney’s services and that it contains anticompetitive provisions that unlawfully restrain his ability to make deals that are not sourced by FaZe Clan. Tenney also argues that FaZe Clan is acting as his agent and has a fiduciary duty to him, which he alleges FaZe Clan breached when it rejected a sponsorship offer for Tenney because of a conflict of interest.
Tenney’s lawsuit further argues that his gamer agreement is unenforceable under California’s Talent Agencies Act (the “TAA”), which provides that a person or corporation must procure a license from the California Labor Commissioner in order to engage “in the occupation of procuring, offering, promising, or attempting to procure employment or engagements for an artist or artists.” Indeed, in addition to the complaint, Tenney has filed a petition with the California Labor Commission — which has jurisdiction over claims arising under the TAA — seeking a determination that his gamer agreement is void ab initio because FaZe Clan “continuously and systematically procures and attempts to procedure employment and engagements” for Tenney without a talent agency license. And, Tenney is requesting, among other things, that the Labor Commissioner order FaZe Clan to disgorge and repay to Tenney any and all monies received by FaZe Clan, directly or indirectly, as a result of the gamer agreement. The issue of whether a company’s actions meet this description, and thus require a license, has been litigated in the entertainment industry for years. The TAA has survived numerous legal challenges by litigants who argue, among other things, that it is unconstitutionally vague and does not clearly put managers on notice of activity that requires a license.
The statements made by Tenney’s attorneys in the complaint and related press indicate there will be further scrutiny of, and challenges to, gamer agreements and esports management activities in the courts and in the press. To avoid disputes and ensure the enforceability of gamer agreements, people and corporations who contract with professional gamers should seek legal advice in forming their agreements and encourage the talent to retain appropriate representation for the negotiation of their contracts.