By Quinn Cummings, Georgetown Law, 2L
This summer there has been no scarcity of headlines on player’s contracts in football, baseball, and the like. What’s more novel is a contract dispute between professional Fortnite player Turner “Tfue” Tenney and the esports team that represented him, FaZe Clan (“FaZe”). Following a public split, in which Tenney announced on social media his intention to start a rival team, Tenney sued FaZe in California state court, claiming the gamer contract was void and that FaZe violated of the California Talent Agency Act (TAA) [see Summer 2020 issue of esportsandthelaw.com for more details].
In the wake of a chaotic series of lawsuits in California and the Southern District of New York, the parties voluntarily settled at the end of August. However, their previous courtroom showdowns have set a precedent for contract and employment law in the burgeoning realm of e-sports, which has seen little legal action before now.
The legal battle between FaZe and Tenney didn’t get easier as Judge Rankoff of SDNY addressed the pretrial motions of the lawsuit initiated by FaZe Clan in early August, prior to settlement. Both sides submitted multiple motions to dismiss and for summary judgement, with scant victories.
Tenney asserted that SDNY lacked personal jurisdiction. The relevant contract, “the Gamer Agreement”, requires consent of both parties to the mandatory forum selection clause which favors New York. Judge Rankoff rejected this; under New York law, forum selection clauses are enforceable unless proven unreasonable and Tenney had failed to prove that it was.
Tenney’s luck did not improve as he moved for partial summary judgement on FaZe’s breach of contract claims. He was to be given two-thousand dollars a month per the Gaming Agreement. FaZe missed several months of payment, so Tenney considered the contract voided. Judge Rankoff ruled that an implied-in-fact contract had been created because the parties had continued after the missed payments to provide services to one another. Tenney argued in response that the implied-in-fact contract would not have the same terms as the Gamer Agreement, but Judge Rankoff found the intent to terminate the original contract unclear where these parties’ behaviors never changed. Second, Tenney cited the Gamer Agreement that a “company’s use of Gamer’s Services after termination of the Agreement shall not be deemed
a . . . renewal of the Agreement without the [parties’] written agreement.” Judge Rankoff again pointed to the extensive relationship between FaZe and Tenney, which was beyond a “Company’s use of Gamer’s Services.”
Tenney’s attempts to dismiss non-contract claims through summary judgement failed as well. FaZe claimed that Tenney had tortiously and intentionally induced brand partners to breach their contracts to work with Tenney. Instead, Tenney asserted lack of knowledge of these contracts. Based on depositions from Tenney and FaZe partners, and Tenney’s public comments against FaZe, Judge Rankoff ruled a genuine issue of fact as to Tenney’s knowledge of the contracts still remained.
Judge Rankoff cited similar evidence to deny Tenney’s motion for summary judgement against FaZe’s claims of intentional interference of prospective business. He ruled that there were conflicting evidentiary statements on the matter, by the CEO of FaZe and Tenney, which presented a genuine issue of fact for a juror.
The final loss for Tenney was on conditional summary judgement against FaZe’s alternative pleading for breach of contract claims, unjust enrichment. Tenney claimed that under precedent from the California Court of Appeals, Yoo v. Robi (2005), the “. . . the TAA . . . forbids unlicensed talent agents from recovering from their clients . . .” Judge Rankoff relied on precedent from Marathon Entertainment, Inc. v. Blasi (Cal. 2008) to determine that the TAA may “permit partial recovery for an unlicensed talent agency operating in violation of the statute.”
Outside of their win for personal jurisdiction, FaZe fared no better than Tenney in other pretrial issues. Tenney raised §16600 of California’s Business and Professions Code, which voids a contract where “anyone is restrained from engaging in a lawful . . . business . . .” as a defense to FaZe’s breach of contract claim. He claimed that the Gamer Agreement limited his business activity as an independent contractor. Judge Rankoff rejected FaZe’s argument that “California has interpreted this statute not to prohibit in-term restraints in contracts between independent contractors.” by reading the opposite mandate from case law.
On their second motion for summary judgement, FaZe failed to prove that Tenney breached the Gamer Agreement by failing to share a source of revenue. Tenney had designed “skins,” or outfits worn by characters in a video game, for Epic Games and kept his revenue from this. The contract gave FaZe claim on “in-game merchandise,” but Tenney submitted persuasive evidence that FaZe Clan did not consider skins “in-game merchandise.” Most damning was a YouTube video in which a FaZe representative stated that in-game merchandise “had nothing to do” with skins.
Ellen Zavian, Esq., a professorial lecturer of law at The George Washington University Law School (https://www.law.gwu.edu/ellen-m-zavian) and editor in chief of Esports and the Law, wrote about this case in the Summer 2020 edition of ESL, noting that “neither party will be walking away from this fight anytime soon.”
Given the recent settlement between FaZe and Tenney, it would seem they did finally give up on the fight. However, the complex and bitter legal battle, which led them to this settlement demonstrates how unchartered the legal territory of esports employment and contract law is; there is no doubt that cases like FaZe Clan Inc. v. Tenney will only become more common as the world of esports — and the legal questions that accompany esports — grows.
