June 6, 2019
Derek Helling
A high-profile lawsuit between one of the most successful Fortnite streamers in the world and the esports company that signed him to a promotional deal has brought new attention to the industry. The lesson is that esports can no longer be treated as a fringe extension of the entertainment industry but rather as another component just as legitimate as film and theater.
Tfue, whose given name is Turner Tenney, is a popular Fortnite player whose live and recorded streams of himself playing the game draw millions of viewers. Tenney is able to monetize that content via Twitch and YouTube Gaming revenue share programs along with third-party endorsement deals for products endemic to his art.
FaZe Clan, one of the world’s premier esports organizations, signed Tenney to a contract in 2018 that promised to put its promotional power behind him in exchange for a cut of the revenue his content produces. It’s the details of that contractual relationship which are the subject of the complaint.
On May 20, lawyers on Tenney’s behalf filed suit against FaZe Clan in the Los Angeles Superior Court for the Central District of Calif. Tenney is asking the court to declare his contract with FaZe Clan void, award him damages plus restitution and to enjoin FaZe Clan against enforcing terms similar to those in his contract he alleges are a violation of Calif. law in other contracts.
Among those allegations are that FaZe Clan illegally restricted Tenney’s ability to partner with third parties on endorsement deals, that FaZe Clan kept up to 80 percent of the revenue his content produced in violation of state law and that FaZe Clan is acting as Tenney’s talent agent without the proper licensure from the state.
Whether this complaint will actually proceed to trial remains to be seen as it’s questionable to perceive much benefit for FaZe Clan in proceeding to discovery and deposition. What’s more important for the entertainment industry at large is to view this situation as a wake-up call.
The first contingent of individuals who should see this as a warning is future content creators like Tenney. Justin Jacobson, an attorney who has experience in representing gamers in such negotiations, stresses the importance of being aware and prepared.
“I believe that any individual entering into an agreement, especially one for an extended period of time, should have some form of independent representation or legal counsel advising them on the document,” Jacobson stated. “This could be a licensed attorney or some other representative familiar with contract language. This is especially important in situations where an unsophisticated party, such as a young professional gamer, is contracting with a more sophisticated one, such as a major esports organization; so, that this young person fully understands what they are signing as well as the potential short-term and long-term ramifications of the contract’s provisions. As they say, it is better to be safe than sorry. Having a full understanding of a document that you are signing, especially a lengthy one, is the prudent course of action.”
“In addition, there is also a general misunderstanding on the part of many players, as they either think they don’t need any assistance in negotiating the agreement or do not want to incur the expense of hiring experienced representation,” Jacobson continued. “Hopefully, gamers begin to understand how such a professional can help and situations such as this, with FaZe Clan, may highlight the need for such assistance.”
Even if successful gamers are aware of their need for legal aid, the question remains of whether the bigger issue is ignorance of the need or availability of counsel qualified to represent such individuals in these situations. Jacobson also spoke to that.
“In recent years, there has been an increase in professionals attempting to represent gamers; but, with the new influx of ‘representation,’ it is important to ensure that they have adequate prior experience in the professional gaming and streaming realm to truly understand the implications and how the provisions work in practice,” said Jacobson. “It is best to try to network and connect with other individuals currently involved in the industry; and, hopefully, opportunities to work on these types of agreements will present themselves in the future.”
These concerns over the ignorance of the talent to its need for representation and unavailability of qualified individuals to act as counsel isn’t such a problem in more established segments of the entertainment industry because of the existence of labor organizations. The Screen Actors Guild, Screen Writers Guild and the Directors Guild of America are examples of such organizations. These trade organizations didn’t achieve their success through the mere solidarity of their members, however. They were supported by regulatory structures in our society.
The intervention of the courts in the film industry has a long and full history. One of the most significant players in that drama was James Bumgarner, an actor and writer better known as James Garner. In the late 1950s, Garner was the first film celebrity to take his fight against a production studio for what he deemed was an equitable share of the profits off his work not only to the courts but the court of public opinion as well. In 1960, he won a dispute against Warner Bros. as a court declared his contract void and awarded him damages.
There is a history of intervention by the National Labor Relations Board in the entertainment industry as well. Most recently, the NLRB ruled in favor of SAG-AFTRA members against Quincy Media in 2017. The NLRB ruling prohibited Quincy Media from inserting language into contracts for on-air talent that barred discussions about compensation and rules against employees taking consecutive days off.
The presence of labor organizations in esports is in its infancy but growing. Riot Games, the company behind the world’s most popular esports enterprise League of Legends, has assisted with the formation of an organization for members of its North American teams. There is also an organization for Counterstrike: Global Offensive players around the world. Other leagues with regional franchises, like Blizzard’s Overwatch and Ubisoft’s Rainbow Six Siege, have yet to form labor organizations and are reliant upon the individual franchises to handle labor terms with their members.
A great example of how labor organizations and regulatory bodies can help individual creators is found in another facet of the entertainment industry. It’s the story of Jack Kurtzberg or Jack Kirby to his fans. Many of the Marvel Comics characters which have been the subjects of recent blockbuster Hollywood films like the Avengers series were his creations in the early-mid 20th century when he was working as a freelance artist for Marvel. Kurtzberg’s only compensation for his creations of the characters and storylines surrounding them was his freelance per-page rate, which was a paltry $18-$20 per page adjusting for inflation.
Kurtzberg died in 1994 before many of his creations like several Fantastic Four and X-Men characters hit the big screen. His estate, which hadn’t seen any residuals or royalties off the continued use of the characters Kurtzberg created despite Marvel’s making billions off them over decades, filed suit against Marvel in 2009 to relinquish Marvel’s copyright claim over the characters. The dispute went all the way to seek a writ of certiorari from the United States Supreme Court. Amicus briefs from trade organizations such as the Screen Actors Guild, Federation of Television and Radio Artists, Directors Guild of America, Writers Guild of America, West, and the Artists Rights Society were filed in support of the Kurtzberg estate petition. Support from legal/regulatory influencers came in form of amicus briefs from the California Society of Entertainment Lawyers, Bruce Lehman (a former director of the US patent and trademark office and US assistant secretary of commerce) and Ralph Oman (a former US registrar of copyrights). As a result of the pressure, Marvel settled with the estate in 2014.
If everything Tenney alleges in his complaint is true, then it is a glance into an industry that can treat content creators in this medium similarly to how Kurtzberg was treated by Marvel. Individuals like Tenney can be catalysts in creating change like Garner was in the film industry but in order for that change to be widespread, such individuals need solidarity from other artists and the support of regulatory edifices erected by our society for exactly such purposes. Esports isn’t a group of kids playing video games on the weekends. It’s a worldwide industry that generates hundreds of millions of dollars in revenue and employs thousands of people. The time for structures that have protected the interests of content creators in other mediums to do the same for individuals like Tenney has come.
Lawsuit PDF:
Tenney v FaZe Clan Lawsuit (Text)
Derek Helling is a journalist out of Chicago. Illinois, who covers the intersections of entertainment and sports with business, law, media and technology. He publishes a newsletter, "The Ninth Circle of Helling," that focuses on labor issues in North American sport.
