New Level in Gaming

Whoever said, “playing games, doesn’t pay the bills” clearly didn’t realize the impact it would have.  The gaming industry, growing at an exponential rate and reportedly worth Five Billion Dollars, is, unfortunately, yet to be regulated to protect the respective involved parties and their interests.  That was until head honcho gamer Turner Tenny p/k/a “Tfue” decided to file suit against gaming organization, Faze Clan, Inc.  This case could conceivably reshape the industry. 

In the suit, Tfue claims that his agreement with Faze is “over oppressive” and “violates California Labor Code Section 1660 and the Talent Agency Act” making the agreement unenforceable and void. 

California Labor Code Section 1660 states “every contract by which anyone is restrained from engaging in a lawful profession, trade, or business of any kind is to that extent void.”  Tfue claims that his agreement with Faze “limit[s] [him] to deals sourced exclusively by Faze and prevents [him] from exploring deals that are superior to deals procured by Faze.”  In applying Section 1660, the Ninth Circuit in Golden v. California Emergency Physicians Medical Group stated that  “a provision need not completely prohibit the business or professional activity at issue, …[b]ut its restraining effect must be significant enough that its enforcement would implicate the policies of open competition and employee mobility that animate Section 16600.”  In this instance, because Faze failed to narrowly tailor the sponsorship restriction (i.e., to specific games, specific brands etc.) it is likely that the courts will find the sponsorship restriction in violation of Section 16600.  More specifically, it is probable that the restriction will be found to be significant as it prevents Tfue from procuring his own sponsorships for the betterment of his profession and business, all due to Faze’s attempt to secure its whopping 80% commission. 

Tfue’s claim that the agreement is unenforceable because it violates the Talent Agency Act is also colorable.  The Talent Agency Acts requires “any company who engages in the occupation of offering, promising or attempting to procure employment or engagements for an artist” to be licensed by the labor commission.  According to the complaint, Faze is not licensed by the labor commission.  Should Tfue be considered an artist? The Talent Agency Act broadly defines artist as “persons rendering professional services in motion picture, theatrical, radio, television and other entertainment enterprises.”  Tfue – along with many other gamers – stream live, drawing millions of viewers to watch them perform.  These fans not only support via live stream, but they also purchase tickets to tournaments to watch their favorite gamers compete.  Thus, because Tfue is streaming and creating content that his fans can enjoy the court will likely find that he is an “artist” as defined by the Talent Agency Act, making this agreement voidable for Faze’s violation of such act. 

All in all, this is new for the courts and the gaming industry.  Because of the novelty, the courts have discretion to introduce new precedent.

This article is written by Zita R. Brack, Esq. or Morrison Rothman LLP. Contact Zita at zita@morrisonrothman.com.

By | 2019-08-26T14:38:20-07:00 August 26th, 2019|Member Articles|1 Comment