FaZe Clan Inc. v. Tenney

Background

FaZe Clan sued Turner Tenney, also known as “TFue,” over an April 2018 “Gamer Agreement.” The agreement required Tenney to play on FaZe Clan’s team and participate in training, promotional, marketing, and social-media activities. In return, FaZe Clan agreed to pay him a monthly fee, share certain tournament and other revenues, and provide career support.

The relationship deteriorated in 2019, when Tenney publicly said he wanted to end his affiliation with FaZe Clan and create a competing esports organization. Tenney had filed proceedings in California seeking to have the agreement declared void, including a claim under California’s Talent Agency Act. FaZe Clan then sued in New York under the agreement’s mandatory New York forum-selection clause. The California Labor Commissioner proceeding on the Talent Agency Act claim remained pending.

The parties filed cross-motions for summary judgment. Summary judgment may be entered only when there is no genuine dispute about a material fact and the moving party is entitled to judgment as a matter of law.

FaZe Clan’s motion concerning personal jurisdiction

FaZe Clan sought judgment rejecting Tenney’s defense that the New York court lacked personal jurisdiction over him. The court granted that motion. It held that the Gamer Agreement contained a mandatory New York forum-selection clause and that Tenney consented to jurisdiction in New York courts. The court rejected Tenney’s argument that the entire agreement, including the forum-selection clause, was void. It also held that the forum-selection clause could be enforced separately from Tenney’s foreign-law challenges to the agreement’s validity.

Talent Agency Act claims

FaZe Clan sought summary judgment rejecting Tenney’s defenses and counterclaims under California’s Talent Agency Act. The court denied that motion. It held that the California Labor Commissioner has exclusive original authority to decide not only the merits of claims under the Act, but also whether the Act applies in the first place. The court also found a genuine factual dispute about whether FaZe Clan’s work for Tenney occurred entirely outside California, because evidence indicated that California-based FaZe Clan employees worked on Tenney’s account.

California restrictions on competition

FaZe Clan sought summary judgment against Tenney’s defenses and counterclaims under California Business and Professions Code section 16600, which generally voids contracts restraining someone from engaging in a lawful profession, trade, or business. The court denied the motion. It concluded that several restrictions in the Gamer Agreement—including exclusivity, limits on working for other gaming organizations or endorsing products, and FaZe Clan’s approval rights—fell within the statute. The court rejected FaZe Clan’s argument that California law permits these in-term restrictions in agreements between independent contractors. It also denied FaZe Clan’s motion concerning a three-month post-contract right to match another Fortnite team’s offer, because Tenney could seek declaratory relief and a factual dispute existed about whether the agreement remained in force.

FaZe Clan’s revenue-sharing claim

FaZe Clan sought summary judgment on its claim that Tenney breached the agreement by failing to share revenue from Fortnite’s Support-A-Creator program. The agreement required Tenney to share specified types of compensation, including 50 percent of “in-game merchandise,” defined only as “in-game/sticker.” The court denied the motion because the agreement’s language was unclear and evidence supported Tenney’s position that the parties did not intend Support-A-Creator revenue to be shared. The court also stated that the evidence could support an argument that FaZe Clan was prevented from recovering that revenue because of its public statement that Tenney’s contract did not cover Support-A-Creator codes.

Tenney’s motions concerning FaZe Clan’s claims

Tenney sought summary judgment on FaZe Clan’s three breach-of-contract claims and on claims for intentional interference with contract, intentional interference with prospective business advantage, and unjust enrichment. The court denied his motions in their entirety.

On the contract claims, Tenney argued that the Gamer Agreement expired on October 27, 2018, because FaZe Clan did not make required monthly payments on time. The court did not decide whether the written agreement was renewed as a matter of law. Instead, it found a genuine factual dispute about whether the parties formed a contract implied by their conduct. After the alleged expiration, Tenney continued playing for FaZe Clan, using its branding with permission, and accepting monthly payments, while FaZe Clan continued promoting him and providing services.

On intentional interference with contract, the court found factual disputes about whether Tenney knew of FaZe Clan’s contracts with brand partners and intentionally caused breaches. Evidence included Tenney’s knowledge of deals with two partners, the use of a partner’s logo on FaZe Clan jerseys, and evidence that Tenney negotiated a separate sponsorship with Digital Storm and affected a Wix deal. The claim could therefore proceed to trial.

On intentional interference with prospective business advantage, the court found a genuine factual dispute about whether Tenney’s public statements interfered with FaZe Clan’s proposed deal with Venmo and other potential partnerships. On unjust enrichment, the court rejected Tenney’s argument that a possible future ruling that the agreement violated the Talent Agency Act would automatically bar FaZe Clan from recovering under that theory.

Disposition

The court granted FaZe Clan’s summary-judgment motions in part and denied them in part. It granted the motion rejecting Tenney’s personal-jurisdiction defense and denied the remaining motions discussed in the opinion. Tenney’s summary-judgment motions were denied in their entirety. The court directed the parties to jointly contact the court to set a trial date.