The lawsuit between Turner ‘Tfue” Tenney and FaZe Clan continued to develop today. The Southern District of New York court issued an opinion and order in response to a FaZe Clan motion for summary judgment. Summary judgment is a judgment carried out by a court without a full trial.
Today’s summary judgment from Judge Jed S. Rackoff rejected most of the requests from FaZe and rejected all requests from Tenney, while also opening the door for Tenney to take action against FaZe in California court in the future.
The decision was a blow to FaZe, which had nearly all of its claims dismissed, other than the claim that Tenney doesn’t have to answer to the Southern District of New York court. With the other counterclaims denied, that jurisdictional issue shouldn’t be a problem for Tenney and his legal team.
Read the judge’s full opinion here.
Background of the case
In May 2019, Tenney filed a lawsuit against FaZe in an attempt to get out of his contract. According to the original suit, FaZe allegedly operated as an unlicensed agency and in violation of California law, FaZe blocked Tenney’s business opportunities, and FaZe took as much as 80 percent of Tenney’s earnings. The original lawsuit also contained unrelated accusations that FaZe pressured Tenney into doing dangerous stunts in videos, which eventually led to a serious injury to Tenney’s arm.
Tenney’s legal case rests upon the argument that the contract should not apply because FaZe violated the California Talent Agency Act (TTA), which bans unlicensed talent agents from managing talent in the state of California. Tenney argued that his Gamer Agreement with FaZe should be voided since the agreement violates the law. FaZe, on the other hand, has argued that it didn’t manage Tenney in California.
In August 2019, FaZe filed a countersuit in New York, claiming that Tenney breached his contract. In its suit, FaZe claimed that, among other things, Tenney had earned $20 million from streaming without sharing any of that revenue with the organization. It was this lawsuit that came to a head today.
Today’s summary judgment
The 29-page document from the New York court addressed each claim put forth by both Tenney and FaZe, ultimately denying nearly every request from both parties.
The court granted the motion from FaZe that the New York court should have jurisdiction over Tenney. According to the ruling, any action ordered by the New York court applies and is enforceable on Tenney, despite him not living in New York. This ruling would only be important if Tenney had been found at fault by the court, which thus far has not been the case.
The court denied FaZe’s request to strike Tenney’s counterclaims regarding California’s Business and Profession code, which voids non-compete agreements for independent contractors. There are three provisions in Tfue’s contract that prevent him from competing in any way with FaZe. It’s possible we’ll see these elements of Tenney’s contract thrown out if a case goes forward in California since the case law indicates that most non-competes can’t be levied against independent contractors.
Finally, the court denied FaZe’s request to rule that Tenney breached the contract when he didn’t include FaZe in his Fortnite creator code revenue. The judge cited significant evidence that creator code revenue wasn’t intended to be included in the original Gamer Agreement. This evidence included testimony from FaZe co-owner Richard “Banks” Bengtson, who said FaZe never has “collected the creator code revenue, and up to this point in time, we had no intention to do so.”
The court denied Tenney’s motion to rule in his favor on the breach of contract claims. Tenney has argued the Gamer Agreement expired on Oct. 27, 2018 because FaZe failed to satisfy the conditions to renew the agreement. Specifically, Tenney claims that FaZe failed to pay a $2,000 monthly payment that they agreed to in the contract. Although FaZe sent the payments later, Tenney argues that because the payments weren’t sent on time, FaZe breached the contract. The court didn’t agree with Tenney’s view.
Tenney also moved for the Court to dismiss three of FaZe’s non-contract claims.
- Tenney requested the dismissal of FaZe’s claim that Tenney induced brand partners to breach contracts with FaZe. According to Tenney, he was unaware of most of FaZe’s brand partner contracts. The court disagreed with Tenney, claiming that he had admitted in a deposition that he at least knew about some of the deals.
- Tenney requested the dismissal of FaZe’s claim that he intentionally interfered with FaZe business opportunities. Specifically, FaZe CEO Lee Trink claimed that while they were negotiating with Venmo, Tenney’s negative public comments in 2019 caused the deal to fall through. The judge explained that “because a juror might arguably find FaZe Clan’s evidence more credible” the court thinks there might be merit to FaZe’s claim, and therefore will not dismiss it.
- Tenney requested the dismissal of FaZe’s claim that he engaged in unjust enrichment. According to the Cornell Law School, “Unjust enrichment occurs when Party A confers a benefit upon Party B without Party A receiving the proper restitution required by law. This typically occurs in a contractual agreement when Party A fulfills his/her part of the agreement and Party B does not fulfill his/her part of the agreement.”
FaZe is essentially claiming that Tenney benefited from FaZe doing its part of the contract, while Tenney didn’t fulfill his end. As a result, FaZe wants the court to enforce a recovery claim against Tenney. According to Tenney’s argument, the Gamer Agreement is void under the TAA, which would bar FaZe from recovery. According to the court, Tenney is misinterpreting the relevant legal precedent, and that partial recovery for an unlicensed agent under the TAA is possible.
Although this summary judgment denied all of Tenney’s requests, the claim alleging that FaZe violated the TAA is still pending. The judge said California has the exclusive rights to make a decision on that claim and the judge confirmed that California is a legitimate forum for this case. In the order, the judge pointed out that FaZe’s primary place of business is Los Angeles, Tenney lived in the state during at least part of the agreement, and he worked with FaZe employees in California.
Although today’s decision was a blow to FaZe, this situation is far from over. We can expect more litigation from both Tenney and FaZe in the near future.