FaZe Clan Strikes Back – Brings Breach of Contract Suit Against TFUE in New York
In May if 2019, Turner Tenney (aka “TFUE”) brought suit in the Superior Court of California in an attempt to have the Court invalidate a “Gamer Agreement” he signed the year prior with FaZe Clan on the grounds that the Gamer Agreement was either: i) breached by FaZe Clan; or ii) unenforceable as being illegal or anti-competitive in light of California Law.
The filing of this lawsuit by TFUE tore through the eSports community and has opened up a discussion as to how eSports players are to be treated under the law and put a microscope on a relatively new and largely underregulated industry that is skyrocketing in popularity. In an industry where gamers like TFUE can go from relative unknowns to making $20 million in one year, actions such as these are inevitable.
Even though the Gamer Agreement had a clear choice of law and forum selection clause that indicated the laws and courts of New York would be exclusively used to adjudicate disputes, TFUE’s legal team brought the initial suit in the Superior Court of California. The reasons are obvious, in that California’s laws are much more protectionary than those of New York, and TFUE’s legal team tries to leverage provisions in California’s Talent Agency Act to claim that Faze Clan is in violation operating as an unlicensed talent agency, as well as certain provisions under California’s Business and Professions Code.
Now just a few months later, FaZe Clan strikes back by filing its own suit in the Federal District Court for the Southern District of New York (SDNY) for breaches of the Gamer Agreement by TFUE. The complaint alleges that TFUE breached the Gamer Agreement by: i) failing to make payments to FaZe Clan in amounts owed under the agreement; ii) working with other organizations in violation of the agreement; iii) breaching confidentiality and trade secret clauses; iv) breach of non-disparagement obligations; and v) intentional interference with contracts (e.g., by taking actions that would induce others to leave or not engage in contracts with Faze Clan.
It is interesting to see these claims, as the main social media push from FaZe Clan representatives, such as Ricky Banks, in response to TFUE’s filing of the California based lawsuit was that they purposefully did not collect on TFUE’s earnings under the Gamer Agreement, and that they had no intention to collect. However, there is little doubt that, regardless of social media posturing, or actual intent to collect, using these contractually agreed upon terms to force settlement by TFUE on all matters, is just what one would do in this situation.
Also important to note is that concurrent with the filing of this lawsuit, FaZe Clan’s attorney’s filed a motion to dismiss the California suit as being brought in the incorrect forum (per the Gamer Agreement’s requirement that such suit be brought exclusively in New York), or, in the alternative, stayed until FaZe Clan’s action in the SDNY concludes. This will be an interesting motion to watch and see how it plays out, given the non-contract related claims in the California matter.
TFUE’s attorney for the California Matter has already issued a statement on FaZe Clan’s lawsuit against TFUE to the Hollywood Reporter, stating:
“Faze Clan’s lawsuit in New York is a ridiculous and obvious attempt to avoid the consequences of its clear violations of California law. Filing the lawsuit in New York is actually an admission that Faze Clan has no defense to these violations of California law. Ask yourself, why is Faze Clan is afraid to litigate its wrongful conduct in California? The answer is obvious. Faze Clan will lose. In the New York lawsuit, Faze Clan actually admits to violating California’s Talent Agencies Act by procuring employment without a license. Equally egregious is the fact that Faze Clan is suing Turner under its illegal contract for the monies it publicly represented that it was not collecting. This is the first time in the history of Esports that an Organization has had the audacity to try and enforce contractual provisions that are so clearly illegal against one its gamers.”
While understandable that TFUE’s attorney would want to present his client’s actions in a positive light, I believe his assertions in his statement may be a bit of an embellishment. I have read FaZe Clan’s compliant, and I am not so sure that it acts as an admission that FaZe Clan has no defense against the matter brought in California or an admission that they violated the Talent Agency Act – in fact, I believe that statement is a stretch. I also find slightly humorous the engagement of, FaZe being “afraid” to litigate in California. As attorneys, we rightfully select choice of law and forum provisions so that we can provide certainty to our clients as to what laws each party could expect to be bound by. It’s a bit odd to say that a party is “afraid” to go to a forum they did not agree to when both parties agreed to a different forum. However, ultimately, these statements, coupled with the goading of Faze Clan by chiding them for filing a suit for fees they publicly said they had no interest in collecting on, are clearly meant for the court of public opinion, not the actual adjudicating bodies themselves.
We will have to wait to see what the public and social media backlash is against FaZe Clan, if any, for filing such a suit, after making claims that it had no intention of collecting on the amounts it was potentially due under the agreement. If we learned anything from the filing of TFUE’s lawsuit, it should be an interesting couple days on the social media networks, as each side presents their case in the court of public opinion, while their lawsuits slowly make their way through the legal process.