19STCV17341 Assigned for all purposes to: Stanley Mosk Courthouse, Judicial Officer: Patricia Nieto Electronically FILED by Superior Court of California, County of Los Angeles on 05/20/2019 09:08 AM Sherri R. Carter, Executive Officer/Clerk of Court, by M. Barel,Deputy Clerk 5 Bryan J. Freedman, Esq. (SBN 151990) Jesse A. Kaplan, Esq. (SBN 255059) FREEDMAN+ TAITELMAN, LLP 1901 A venue of the Stars, Suite 500 Los Angeles, CA 90067 Telephone: (31 0) 201-0005 Facsimile: (31 0) 201-0045 E-mail: bfreedman@ftllp.com jkaplan@ftllp.com 6 Attorneys for Plaintiff Turner Tenney 2 3 4 7 SUPERIOR COURT OF THE STATE OF CALIFORNIA 8 COUNTY OF LOS ANGELES, CENTRAL DISTRICT 9 10 TURNER TENNEY pka "TFUE", an individual 11 Plaintiff, 12 ) ) VS. 13 14 15 16 17 ) ) ) FAZE CLAN INC., a Delaware corporation; and DOES 1 through 25, inclusive, Defendants. ) ) ) ) ) ) ) ) ) ) 18 19 20 21 22 Case No.: Unlimited Civil Case Demand over $25,000 COMPLAINT FOR: 1. DECLARATORY RELIEF; 2. DECLARATORY RELIEF; 3. UNFAIR BUSINESS PRACTICES; 4. MONEY HAD AND RECEIVED; ) ) 5. QUANTUM MERUIT; ) 6. BREACH OF WRITTEN ) ) ) ) ) ) CONTRACT; AND 7. BREACH OF FIDUCIARY DUTY 23 24 25 26 27 28 COMPLAINT Plaintiff Turner Tenney pka "Tfue" ("Tenney") alleges causes of action against defendants Faze 2 Clan Inc. ("Faze Clan"), and Does 1 through 25 (collectively, "Defendants") as follows: INTRODUCTION 3 4 1. Esports is a new and rapidly growing entertainment format. Unlike traditional "sports", 5 significant revenue in the esports entertainment industry is driven by creative content and performances, 6 namely videos, featuring and created by the gamers themselves. In no uncertain terms, these gamers are 7 artists, entertainers and content creators- they perform, they act, they direct, they edit and they stream. 8 Moreover, the content created by these gamers is typically not found on traditional broadcast media such 9 as network or cable television. Instead of broadcasting television programs, these gamer content 10 creators "stream" their videos on online platforms such as You Tube and Twitch.' The videos created by 11 these content creator/streamers have become increasingly popular, especially amongst younger viewers. 12 Millions subscribe to the content creators/streamers' online channels and/or view these videos. As a 13 result, these videos can be extremely profitable. 14 2. Because the esports industry is so new, there is little to no regulation or oversight. There 15 are no real organizations such as unions or guilds to help protect the content creators/streamers that drive 16 the industry. Most of these content creator/streamers are also very young, and are often unsophisticated, 17 unseasoned and trusting. As a result, these young content creator/streamers are susceptible to being 18 taken advantage of and exploited - often by those that are supposed to be looking out for their best 19 interests. Unfortunately, this has become industry standard. 20 3. Tenney, professionally known as "Tfue", is a twenty-one year old professional gamer and 21 content creator/streamer. Tenney performs in and creates popular videos that he streams online. 22 Because Tenney's videos are viewed by millions, sponsors are willing to pay for Tenney to perform in 23 and create videos that will, at least in part, promote their goods, services and brands. 24 4. Defendant Faze Clan Inc. ("Faze Clan") is a so-called esports entertainment company. 25 Through Tenney's briefrelationship with Faze Clan, he has come to learn that Faze Clan subscribes to 26 the business model described above. Faze Clan's goal is to essentially "own" Tenney and other content 27 For at least the purpose of this Complaint, "streaming" includes both live and pre-recorded creative content that is made available for viewing on these various platforms. 1 28 2 COMPLAINT creator/streamers and professional gamers. Tenney signed a "Gamer Agreement" with Faze Clan when 2 Tenney was only twenty (20) years old. That Gamer Agreement is grossly oppressive, onerous, and 3 one-sided. Indeed, the Gamer Agreement purportedly entitles Faze Clan to a finder's fee of up to eighty 4 percent (80(1<>) of the revenue paid by third-parties for Tenney's services. Additionally, Faze Clan uses 5 illegal and anti-competitive provisions in the Gamer Agreement to severely limit Tenney's ability to 6 compete in the marketplace. These conspicuously anti-competitive provisions, which are probably 7 found in every Faze Clan Gamer Agreement, undoubtedly violate California Business and Professions 8 Code § 16600 et seq., ("Section 16600") which provides that "every contract by which anyone is 9 restrained from engaging in a lawful profession, trade, or business of any kind is to that extent void." In 10 simple terms, Faze Clan uses its illegal Gamer Contracts to limit Tenney to deals sourced exclusively by 11 Faze Clan and to prevent Tenney from exploring deals presented by others; deals that are potentially 12 superior to deals procured by Faze Clan; and deals that are not saddled with an eighty percent (80%) 13 finder's fee. 5. 14 Faze Clan's Gamer Agreements are illegal for yet another reason: they violate 15 California's Talent Agency Act which protects artists from those like Faze Clan that act as an unlicensed 16 talent agency. Though Faze Clan does not hold the requisite talent agency license, Faze Clan 17 continuously and systematically procures and attempts to procure employment and engagements for 18 Tenney as an artist in violation of Labor Code § 1700.5. As a result of Faze Clan's violation of 19 California's Talent Agency Act, the California Labor Commissioner is concurrently presiding over and 20 considering a Petition to Determine Controversy. A copy of that Petition is attached hereto as Exhibit 21 "1".2 22 23 24 25 26 27 28 2 Faze Clan's conduct at issue in the Labor Commissioner proceeding is summarized as follows: Under Faze Clan's illegal Gamer Agreements, Faze Clan secures the purpotied right to procure employment or engagements for young artists like Tenney. To that end, Faze Clan's primary and essential function is to promote and sell Tenney's artistic services and procure sponsorship deals which feature those services. Sponsors pay for Tenney to perform in and create online content and/or to model apparel featuring the sponsors' brands. Faze Clan then retains a grossly unconscionable commission for sourcing the deal. Because Faze Clan is unlicensed, it has avoided regulation by California's Labor Commissioner. The need for licensure and regulation, however, is dire. Not only does Faze Clan take advantage of these young artists, it jeopardizes their health, safety and welfare in violation of the Talent Agency Act, in particular Labor Code§§ 1700.33, 1700.34, 1700.35 and 1700.36. 3 COMPLAINT 6. Faze Clan's illegal contracts and illegal procurement of employment are only the 2 beginning of Faze Clan's misconduct. Though Faze Clan is supposed to be looking out for Tenney's 3 best interest, Faze Clan has done the opposite. As Tenney's agent, Faze Clan receives payment on 4 Tenney's behalf from third-parties for the sponsorship deals that included Tenney's services. In breach 5 of the Gamer Agreement and Faze Clan's common law obligations, Faze Clan has retained those 6 payments without distributing them to Tenney. Equally egregious is Faze Clan's breach of its fiduciary 7 duty of loyalty owed to Tenney. Acting in the capacity of Tenney's agent, Faze Clan rejected at least 8 one sponsorship deal on Tenney's behalf due to a glaring conf1ict of interest. 9 7. Until now, Faze Clan has enjoyed the fruits ofthis illegal business model with impunity 10 because no-one could or was willing to stand up to Faze Clan. Those days are over. Through this 11 action, Tenney seeks to shift the balance of power to the gamers and content creators/streamers, those 12 who arc actually creating value and driving the industry. As a result of this action, others will hopefully 13 take notice of what is going on and help to clean up esports. 14 15 16 17 18 19 PARTIES 8. At all relevant times, Tenney has resided in Los Angeles, California and Indian Rocks Beach, Florida. 9. Upon information and belief: Faze Clan is a Delaware corporation with its principal and only places of business in Los Angeles, California. 10. The true names and capacities, whether individual, corporate, associate or otherwise of 20 the Defendants named herein as Does 1 through 25, inclusive, are unknown to Tenney who therefore 21 sues said Defendants by such fictitious names. Tenney alleges on information and belief that each of the 22 Defendants, including those designated as a Doe, are responsible for the events alleged herein and the 23 damages caused thereby as a principal, agent, co-conspirator or aider and abettor. Tenney will seek 24 leave of Court to amend this Complaint to allege the true names and capacities of such Defendants when 25 the same have been ascertained. Upon information and belief, Defendants, at all times relevant to this 26 action, were the agents, servants, partners, joint venturers and employees of Faze Clan and, in doing the 27 acts alleged herein, were acting with the knowledge and/or consent of Faze Clan. 28 11. This Court is the proper court for trial of this matter because Faze Clan resides in Los 4 COMPLAINT Angeles County, California, the contract at issue was entered into in Los Angeles County, California, 2 and the acts and occurrences alleged herein occurred in Los Angeles County, California. Moreover, 3 California has a strong public policy and interest in preventing those that reside and conduct business in 4 California like Faze Clan from engaging in anti-competitive conduct in California in violation of Section 5 16600. 6 FIRST CAUSE OF ACTION 7 (For Declaratory Relief against Faze Clan- Termination of the Gamer Agreement) 8 12. 9 10 Tenney realleges herein by this reference each and every allegation contained in paragraphs 1 through 11, inclusive, of this Complaint as if set forth fully herein. 13. In or around April or May 2018, Faze Clan and Tenney entered into a certain written 11 Gamer Agreement with the effective date of April 27, 2018 (the "Gamer Agreement"). The Gamer 12 Agreement was entered into in California. Tenney was only twenty (20) years old at the time. The 13 Gamer Agreement had an initial term of six (6) months and would automatically be extended for an 14 additional thirty-six (36) months if certain conditions were met. 15 14. The section of the Gamer Agreement entitled "Compensation" requires Faze Clan to 16 distribute certain percentage[es] of monies (or other consideration) to Tenney "from any brand deals 17 featuring Tenney that exist on Gamer or Company's content creation platforms (e.g. Twitch/YouTube) 18 or social media sites ... and ... appearances, touring ... ". The Gamer Agreement purported to require 19 such monies to be paid directly to Faze Clan on Tenney's behalf. Faze Clan was required to then 20 distribute those funds (minus Faze Clan's illegal commission) to Tenney. Specifically, the section of the 21 Gamer Agreement entitled "Payment Terms" requires Faze Clan to distribute certain payments to 22 Tenney pursuant to the following schedule: "All Prizes and other income generated in connection with 23 this Agreement shall be payable to, and collected by, Company, and Company shall account and pay 24 Gamer his/her share of such income on a monthly basis, within thirty (30) days after the end of each 25 month; provided, however that any Prizes received from Tournaments and/or Matches over $5,000 will 26 be paid to Gamer within thirty (30) days of receipt thereof by Company." 27 28 15. Since the inception of the Gamer Agreement, Faze Clan actively participated in the procurement and negotiation of sponsorship deals which included Tenney's services as an artist. Faze 5 COMPLAINT Clan frequently and continuously presented such sponsorship opportunities to Tenney. Under these 2 proposed sponsorship deals procured by Faze Clan, sponsors would agree to pay monies so that their 3 brands, good and/or services would be promoted in connection with videos featuring Tenney's 4 performances and created by Tenney and/or live performances. Stated differently, Tenney would 5 perform creative services (performing in and creating video content and/or live performances) in 6 connection with these sponsorship deals. By way of example only, Tenney created and performed in a 7 video for sponsor Digital Storm promoting Digital Storm's products that garnered over 19 million 8 views. Faze Clan has also procured and attempted to procure modeling engagements for Tenney where 9 he would model apparel and jewelry for certain sponsors. 10 16. Upon information and belieC Faze Clan has received payment of funds on Tenney's 11 behalf from third-parties under the sponsorship deals that included Tenney's services. Faze Clan has 12 retained those payments from third-parties without distributing them to Tenney. Faze Clan's continuous 13 failure to distribute these monies to Tenney constitutes a material breach of the Gamer Agreement. 14 17. On or about September 26, 2018, Tenney, through his counsel, sent Faze Clan a letter 15 informing Faze Clan of Tenney's intent to terminate the Gamer Agreement pursuant to Section 6.d of 16 the Gamer Agreement's Terms and Conditions based on Faze Clan's numerous breaches. In response to 17 Tenney's September 26 letter, Faze Clan disputed Tenney's termination of the Gamer Agreement. 18 18. In an abundance of caution, on or about May 20, 2019, Tenney, through his counsel, sent 19 Faze Clan yet another letter reiterating that Faze Clan was in breach of the Gamer Agreement due to its 20 failure to distribute all payments (or other consideration) to Tenney as required by the Gamer 21 Agreement. 22 19. An actual controversy has arisen and now exists between Tenney and Faze Clan 23 concerning their respective rights and duties with respect to the Gamer Agreement. Faze Clan 24 apparently disputes that the Gamer Agreement was terminated based on Faze Clan's material breach. 25 Faze Clan further contends that Tenney continues to owe Faze Clan various obligations under the Gamer 26 Agreement. Conversely, Tenney contends that the Gamer Agreement was terminated based on Faze 27 Clan's material breach and/or for cause, and disputes that he continues to owe Faze Clan any further 28 contractual obligations. 6 COMPLAINT 20. A judicial declaration is necessary and appropriate at this time under the circumstances so 2 that Tenney may ascertain his rights and duties under the Gamer Agreement. Accordingly, Tenney 3 seeks a declaration that as a result of the termination of the Gamer Agreement based on Faze Clan's 4 material breach, Tenney does not continue to owe Faze Clan any further obligations under that 5 agreement (except possibly any contractual obligations that survive the Gamer Agreement's termination 6 based on a material breach). 3 7 SECOND CAUSE OF ACTION 8 (For Declaratory Relief against Faze Clan- Business and Professions Code § 16600) 9 10 11 21. Tenney realleges herein by this reference each and every allegation contained in paragraphs 1 through 20, inclusive, of this Complaint as if set forth fully herein. 22. The Gamer Agreement contains several provisions that constitute illegal and anti- 12 competitive restraints on trade in violation of Section 16600. Notably, Faze Clan uses Section 5 ofthe 13 Gamer Agreement's Terms and Conditions entitled "Exclusivity and Matching Right" ("Section 5") to 14 illegally restrain Tenney from lawfully pursuing his trade and profession. 15 23. Section 5.a of the Gamer Agreement's Terms and Conditions states as follows: 16 17 18 19 20 21 22 23 24 25 Throughout the Term (the "Exclusivity Period"), unless Gamer has obtained Company's prior written consent, Gamer shall not: (i) provide services or otherwise work for or be employed by a gaming company or other gaming brands or any companies that already have an agreement with Company; (ii) appear in, sponsor or be sponsored by, or otherwise promote or endorse, directly or indirectly, any brands, products or services other than the brands, products and services approved in writing by Company; (iii) promote, sponsor, endorse (using Gamer's Name and Likeness or otherwise) or render services for or on behalf of any companies with products or services competitive with a product or service of Company or a sponsor or advertiser of Company. The parties acknowledge and agree that with respect to Company's prior approval over any sponsorship and/or endorsement opportunity, that Company shall be entitled to negotiate the terms and conditions of any such opportunities presented to Gamer with the goal of increasing the value of such opportunities to Gamer and Company, and that throughout the Exclusivity Period Company will also work to source sponsorship and/or endorsement opportunities on behalf of Gamer. 26 27 28 ' This assumes that the Gamer Agreement is not void ab initio due to Faze Clan's continuous and systematic violations of California's Talent Agency Act. That issue is being adjudicated by California's Labor Commissioner. 7 COMPLAINT 24. Section 5.b of the Gamer Agreement's Terms and Conditions states as follows: 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 In addition to the foregoing, during the Exclusivity Period, Company shall have approval over any and all third-party requests for Gamer's services. Accordingly, Gamer shall notify Company immediately after Gamer's receipt of the third party request. Nothing in this paragraph shall in any way (i) obligate Company to approve any third-party request or (ii) be deemed to limit the exclusivity provisions set forth in the Agreement. Gamer shall also be prohibited from entering into any agreements, which require any third party to exploit any merchandising in connection with Gamer's business or businesses to the exclusion of Company's ability to exploit any merchandising with such third party. 25. On their face, Sections 5.a and 5.b of the Gamer Agreement's Terms and Conditions constitute illegal restraints on trade and an anti-competitive agreement in violation of Section 16600. Indeed, those provisions explicitly purport to prevent Tenney from providing certain services, working or being employed in certain spaces or otherwise competing in the marketplace. As Sections 5.a and 5.b of the Gamer Agreement's Terms and Conditions limit the ability of Tenney to compete in the marketplace and lawfully pursue his trade and profession, those sections are void and unenforceable. 26. Section 5.c ofthe Gamer Agreement's Terms and Conditions states as follows: If at any time prior to the end of the Exclusivity Period, or within three (3) months thereafter, Gamer receives an offer from another Fortnite team to join such team upon lawful termination of the Agreement by Gamer ("Offer"), Gamer shall be obligated to provide the Offer to Company and the identity of the party providing the Offer, and Company shall have the right to match such Offer during a period of fifteen ( 15) business days following Company's actual receipt of the Offer (the "Matching Right"). If Company elects to exercise the Matching Right, Company shall inform Gamer within said fifteen (15) business day period, and Company shall, automatically have exclusive rights to Gamer's services on the same terms as the Offer, as supplemented by all of the terms and conditions of the Agreement not inconsistent therewith, if Company elects to move forward with the Matching Right (provided that Company shall not be required to match any term which may not be as easily met by one person as another and/or any term which is not readily reducible to a determinable sum of money). Provided that Company decides not to go forward with the Matching Right, and provided that Gamer is not in breach of the Agreement, Gamer shall be free to enter into an agreement based on the Offer. If Gamer does not accept the Offer, then Company's Matching Right shall revive and shall apply to any future Offer. 27. On its face, Section 5.c of the Gamer Agreement's Terms and Conditions, at least in part, constitutes an illegal restraint on trade and an anti-competitive agreement in violation of Section 16600. That provision explicitly purports to prevent Tenney from providing certain services to any Fortnite 28 8 COMPLAINT team following the term of the Agreement if Faze Clan exercises certain matching rights. As Sections 2 5.c of the Gamer Agreement's Terms and Conditions limits the ability ofTenney to compete in the 3 marketplace and lawfully pursue his trade and profession, that section is void and unenforceable. 4 28. Section 4.c of the Gamer Agreement's Terms and Conditions entitled "Gamer Name and 5 Likeness" ("Section 4.c") also purports to provide Faze Clan with certain limited rights to use Tenney's 6 name, image, voice and likeness (the "Tenney Publicity Rights") in connection for Tenney's purported 7 services to Faze Clan. While on its face, Section 4.c does not prevent Tenney from using or licensing 8 the Tenney Publicity Rights in connection with servic.es to others, upon information and belief, Faze 9 Clan seeks to use Section 4.c (in conjunction with Section 5) to prevent Tenney from providing certain 10 services, working or being employed in certain spaces or otherwise competing in the marketplace. To 11 the extent used to limit Tenney's ability to compete in the marketplace and lawfully pursue his trade and 12 profession, Section 4.c is void and unenforceable. 13 29. To the extent the Gamer Agreement is not void ab initio and has not been terminated, 14 Tenney is entitled to ajudicial determination that Sections 5 and 4.c ofthe Gamer Agreement's Terms 15 and Conditions are void and unenforceable pursuant to Section 16600. Accordingly, Tenney requests a 16 judicial determination declaring that those provisions in the Gamer Agreement are void, illegal and 17 unenforceable, or at least partially unenforceable, as they violate Section 16600. Tenney further seeks a 18 declaration that he does owe Faze Clan any further obligations under those provisions of the Gamer 19 Agreement. 20 THIRD CAUSE OF ACTION 21 (For Violation of Unfair Business Practices under California Business and Professions Code, 22 Section 17200 et seq., against Faze Clan) 23 24 25 30. Tenney realleges herein by this reference each and every allegation contained in paragraphs 1 through 29, inclusive, of this Complaint as if set forth fully herein. 31. This is a claim for violation of California Business and Professions Code § 17200 et seq. 26 ("Section 17200"). Section 17200 precludes a person or entity from engaging in unh1ir competition, 27 defined as business practices that are unlawful, unfair or fraudulent. 28 32. Faze Clan's use of Sections 5 and 4.c ofthe Gamer Agreement's Terms and Conditions 9 COMPLAINT restrains Tenney from engaging in his lawful profession, trade or business in violation of Section 16600, 2 and therefore constitutes an unlawful and/or unfair business practices under Section 17200. 3 33. Tenney has suffered injury in fact or is being threatened with injury in fact as a result of 4 Faze Clan's unfair and unlawful business practices described above. Such injury in fact has been 5 occasioned by the loss or threatened loss of the ability to freely engage in his lawful profession, trade 6 and/or business. 34. 7 Tenney respectfully requests that this Court permanent enjoin Faze Clan and anyone 8 acting in concert with Faze Clan, from continuing to engage in the unfair and unlawful business practice 9 alleged herein. 10 35. Tenney further respectfully requests an award of restitutionary relief requiring Faze Clan 11 to disgorge any monies earned by Faze Clan as a result of its unfair and unlawful business practices, 12 including without limitation, the revenues and profits illegally made by Faze Clan as a result of such 13 unfair and unlawful business practices. 14 FOURTH CAUSE OF ACTION 15 (For Money Had and Received against all Defendants) 16 17 36. Tenney realleges herein by this reference each and every allegation contained in paragraphs 1 through 35, inclusive, of this Complaint as if set forth fully herein. 18 37. Faze Clan and/or other Defendants received money from third-parties that belonged to 19 and/or was intended to be for the benefit of Tenney. That is, upon information and belieC Faze Clan has 20 received payment of funds on Tenney's behalf from third-parties under the sponsorship deals that 21 included Tenney's services. 22 38. Those monies were not used for the benefit of Tenney and were not provided to Tenney. 23 Faze Clan has retained payments from third-parties for Tenney's services without distributing them to 24 Tenney. 25 39. Based on Defendants' retention ofTenney's monies and failure to distribute same to 26 Tenney, Tenney is entitled to damages in an amount to be proven at trial. 27 Ill 28 /// 10 COMPLAINT FIFTH CAUSE OF ACTION 2 3 4 5 6 7 (For Quantum Meruit against all Defendants) 40. Tenney realleges herein by this reference each and every allegation contained in paragraphs 1 through 3 9, inclusive, of this Complaint as if set forth fully herein. 41. Assuming the Gamer Agreement is void and .unenforceable, Faze Clan and the other Defendants must compensate Tenney for the services he provided for various sponsors. 42. Throughout the course of his relationship with Faze Clan, and at Faze Clan's request, 8 Tenney provided the services alleged above. In particular, Tenney provided services to various 9 sponsors. Faze Clan and the other Defendants benefited from those services. 10 43. Though Faze Clan and the other Defendants benefited from the services provided by 11 Tenney, Defendants have failed to and have refused to compensate Tenney for the value of his services. 12 Again, Faze Clan has retained payments from third-parties for Tenney's services without distributing 13 them to Tenney. 14 44. Tenney is entitled to the fair and reasonable value of the services he provided, which 15 would equal at least any amounts paid to Defendants by third-parties for or related to Tenney's services, 16 if not more. Tenney has been damaged based on Defendants' retention of monies paid for Tenney's 17 services and failure to distribute same to Tenney. Tenney is entitled to damages in an amount to be 18 proven at trial. 19 SIXTH CAUSE OF ACTION 20 (For Breach of Written Contract against Faze Clan) 21 22 23 45. Tenney realleges herein by this reference each and every allegation contained in paragraphs 1 through 44, inclusive, of this Complaint as if set forth fully herein. 46. Assuming the Gamer Agreement is a valid and enforceable agreement, Tenney did all, or 24 substantially all, of the significant things that the Gamer Agreement required Tenney to do. In 25 particular, Tenney provided artistic services to sponsors. 26 47. Faze Clan has retained payments from third-parties for Tenney's services without 27 distributing them to Tenney. Accordingly, Faze Clan has breached the Gamer Agreement by failing to 28 distribute payments to Tenney. Based on such breach, Tenney is entitled to damages in an amount to be 11 COMPLAINT proven at trial. 2 SEVENTH CAUSE OF ACTION 3 (For Breach of Fiduciary Duty against Faze Clan) 4 5 48. Tenney realleges herein by this reference each and every allegation contained in paragraphs 1 through 4 7, inclusive, of this Complaint as if set forth fully herein. 6 49. Irrespective of whether Faze Clan qualifies as a "talent agency" as that term is defined by 7 California's Talent Agency Act, Faze Clan acted as Tenney's agent. In particular, Faze Clan acted as 8 Tenney's agent in sourcing and negotiating sponsorship deals that would offer Tenney's services. 9 Accordingly, Faze Clan owed Tenney a fiduciary duty by virtue of such agent/principal relationship. 50. 10 As a fiduciary, Faze Clan owed Tenney a duty of undivided loyalty and was required to 11 act with the utmost good faith and in Tenney's best interest, in particular in connection with sponsorship 12 (or any other deals) that may be brought to Tenney. 51. 13 Faze Clan knowingly acted against Tenney's interest by passing on and/or preventing 14 Tenney from moving forward with a sponsorship/brand deal with HyperX. Upon information and 15 belief~ 16 HyperX was a competitor of another sponsor that did business with Faze Clan. As a result, Faze Clan 17 elected to cause Tenney to pass on the Hyper X sponsorship deal because that deal conf1icted with Faze 18 Clan's own interests- its interest not to upset another sponsor and potentially jeopardize and negatively 19 impact its relationship with that sponsor. Faze Clan also knowingly acted against Tenney's interest by 20 preventing third-parties from helping Tenney source sponsorship (or other) deals. Consequently, Faze 21 Clan breached its fiduciary duty of undivided loyalty owed to Tenney. 22 Faze Clan passed on that sponsorship deal due to a conf1ict of interest. Faze Clan perceived that 52. Upon information and belief, at least some of the other Defendants aided and abetted in 23 Faze Clan's breach of fiduciary duty as alleged above. Those Defendants knew that Faze Clan was 24 acting against Tenney's best interests as alleged above. Moreover, upon information and belief, those 25 other Defendants gave substantial assistance and/or encouragement to Faze Clan by actively 26 participating in Faze Clan's rejection of HyperX sponsorship deal on Tenney's behalf as well as the 27 decision to preclude Tenney from using third-parties to help source deals. 28 53. As a direct and proximate result of Faze Clan and the other Defendants' conduct, Tenney 12 COMPLAINT has suffered and continues to suffer damages in an amount to be proven at trial. Specifically, Tenney 2 was prevented from moving forward with certain deal(s) that would have realized substantial revenue 3 for Tenney. Faze Clan and the other Defendants were .substantial factors in causing this harm. 4 54. The acts of Faze Clan and the other Defendants as alleged herein were willful, wanton, 5 and oppressive, and were taken with the knowledge that they would harm Tenney. As a result, Tenney 6 is entitled to an award of punitive and exemplary damages in an amount sufficient to punish Defendants 7 and to deter similar conduct. 8 9 WHEREFORE, ·renney prays for judgment in its favor against Defendants, and each ofthem, as follows: ON THE FIRST CAUSE OF ACTION 10 11 12 13 14 15 16 1. For a declaration that that as a result of the termination of the Gamer Agreement based on Faze Clan's material breach, Tenney does not owe Faze Clan any further obligations under that agreement (except possibly any contractual obligations that survive the Gamer Agreement's termination based on a material breach); 2. For the costs of suit incurred herein; and 3. For such other and further relief as this Court may deem just and proper. ON THE SECOND CAUSE OF ACTION 17 1. For a declaration that Sections 5 and 4.c of the Gamer Agreement are void, illegal and 18 unenforceable and that Tenney does not owe any further obligations under same; 19 20 2. For the costs of suit incurred herein; and 3. For such other and further relief as this Court may deem just and proper. 21 22 23 24 25 ON THE THIRD CAUSE OF ACTION 1. For an order temporarily, preliminarily and permanently enjoining Faze Clan, and anyone acting in concert with Faze Clan, from attempting to enforce Section 5 and the illegal portions of Section 4.c ofthe Gamer Agreement; 2. For disgorgement and restitution of any monies received by Faze Clan as a result of its 26 unfair business practices and unlawful conduct, including without limitation, the revenues and profits 27 illegally made by Faze Clan as a result of such unfair competition; 28 3. For the costs of suit incurred herein; and 13 COMPLAINT 4. For such other and further relief as this Court may deem just and proper. ON THE FOURTH CAUSE OF ACTION 2 1. 3 4 For damages in an amount in excess of the Court's general jurisdiction, to be proven at the time oftrial; 5 2. For pre-judgment interest at the maximum rate permitted by law 6 3. For the costs of suit incurred herein; and 7 4. For such other and further relief as this Court may deem just and proper. ON THE FIFTH CAUSE OF ACTION 8 1. 9 10 For damages in an amount in excess of the Court's general jurisdiction, to be proven at the time of trial; 11 2. For pre-judgment interest at the maximum rate permitted by law 12 3. For the costs of suit incurred herein; and 13 4. For such other and further relief as this Court may deem just and proper. ON THE SIXTH CAUSE OF ACTION 14 1. 15 16 For damages in an amount in excess ofthe Court's general jurisdiction, to be proven at the time of trial; 2. 17 ,.., 18 19 20 Ill 21 Ill 22 Ill 23 Ill 24 Ill 25 Ill 26 Ill 27 Ill 28 Ill For pre-judgment interest at the maximum rate permitted by law .), For the costs of suit incurred herein; and 4. For such other and further relief as this Court may deem just and proper. 14 COMPLAINT ON THE SEVENTH CAUSE OF ACTION 2 3 1. For damages in an amount in excess of the Court's general jurisdiction, to be proven at the time of trial; 4 2. Punitive and exemplary damages; 5 4. For pre-judgment interest at the maximum rate permitted by law 6 5. For the costs of suit incurred herein; and 7 6. For such other and further relief as this Court may deem just and proper. 8 9 Dated: May 20, 2019 + TAITELMAN, LLP 10 11 By: n J. Freedman, Esq. esse A. Kaplan, Esq. /Attorneys for plaintiff Turner Tenney 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 15 COMPLAINT EXHIBIT 1 5 Bryan J. Freedman, Esq. (SBN 151990) Jesse A. Kaplan, Esq. (SBN 255059) FREEDMAN+ TAITELMAN, LLP 1901 A venue of the Stm·s, Suite 500 Los Angeles, California 90067 Telephone: (31 0) 201-0005 Facsimile: (31 0) 201-0045 E-mail:bfreedman@ftllp.com jkaplan @ftllp.com 6 Attorneys for Petitioner Turner Tenney 8 2 ~d) 3 © 4 ~ ~ MAY 15 2019 7 BEFORE THE LABOR COMMISSIONER 8 OF THE STATE OF CALIFORNIA 9 10 TURNER TENNEY, an individual, 11 Petitioner, 12 13 14 15 16 17 18 19 20 vs. FAZE CLAN INC., a Delaware corporation, Respondent. ) ) ) ) ) ) CaseNo.S2 70~ PETITION TO DETERMINE CONTROVERSY (Labor Code Section 1700.44) ~ ) ) ) ) ) ) ) ) ) ) ) _____________________________) 21 22 23 24 25 26 27 28 PP'rT'T'TnN Tn f)P'T'PRMTNP rnhl'T'JUYVPP «V 1 2 This petition is filed pursuant to the authority of Section 1700.44 of the Labor Code of the State of California. Petitioner Turner Tenney ("Tenney") alleges the following: INTRODUCTION 3 4 1. Tenney, professionally known as "Tf11e", is a twenty-one year old gamer and content 5 creator. Tenney performs in and creates videos featured on online platfonns which have become 6 increasingly popular, and in tum, lucrative. Because Tenney's videos are viewed by millions, 7 sponsors are willing to pay for Tenney to perform in and create videos that will, at least in part, 8 promote their goods, services and brands. 9 2. Respondent Faze Clan Inc. ("Faze Clan") is a so-called esports entertainment 10 company. Faze Clan's business model is illegal and designed to take advantage of and exploit 11 young artists. To make matters worse, Faze Clan knowingly if not intentionally subjects these 12 young artists to derelict and even dangerous conditions. 13 3. Faze Clan; which is not a licensed talent agency, exploits young rutists like Tenney 14 through oppressive and predatory long-term contracts whereby Faze Clan essentially "owns" the 15 artist and the ru·tist's career. Under Faze Clan's illegal Gruner Agreements, Faze Clan secures the 16 purported right to procure employment or engagements for young artists like Tenney. To that end, 17 Faze Clan's primary and essential function is to promote and sell Tenney's artistic services and 18 procure sponsorship deals which feature those services. That is, sponsors pay for Tenney to perform 19 in and create online content and/or to model apparel featuring the sponsors' brands. Faze Clan then 20 retains a grossly unconscionable commission for sourcing the deal- up to eighty percent (80%). To 21 add insult to injury, Faze Clan uses the Gruner Agreement to prevent Tenney from procuring or 22 negotiating such employment opportunities without Faze Clan, and prevents Tenney from using the 23 services of a legitimate and licensed talent agency. 24 4. Faze Clan's continuous and systematic procurement and attempted procurement of 25 employment and engagements for Tenney a$ an artist is illegal and is a brazen violation of 26 California's Talent Agency Act, in particulru· Labor Code§ 1700.5 which protects artists from those 27 like Faze Clan that act as an unlicensed talent agency. Because Faze Clan has illegally procured and 28 attempted to procure employment and engagements without the required license from the California 1 1 Labor Corrunissioner, the Gamer Agreement should be deemed void and unenforceable. Likewise, 2 Faze Clan must disgorge all commissions, monies or other consideration that it has retained under 3 the Gamer Agreement. 4 5. Because Faze Clan is unlicensed, it has avoided regulation by California's Labor 5 Commissioner. The need for licensure and regulation, however, is dire. Not only does Faze Clan 6 take advantage of these young artists, it jeopardizes their health, safety and welfare in violation of 7 the Talent Agency Act, in particular Labor Code §§ 1700.33, 1700.34, 1700.35 and 1700.36. Faze 8 Clan pressures and encourages young artists like Tenney to perform dangerous stunts. In one 9 instance, Tenney suffered an injury (a deep wound that likely required stitches) which resulted in 10 permanent disfigurement. Faze Clan also encourages underage drinldng and gambling in Faze 11 Clan's so-called "Clout House" and "FaZe House", where Faze Clan talent live and frequently 12 "party". It is also widely publicized that Faze Clan has attempted to exploit at least one artist who is 13 a minor. 14 6. Unfmtunately, Tenney is not alone. Faze Clan has a roster of other high-profile 15 garners and content creators who have all entered into similarly oppressive contracts with Faze Clan. 16 Like Tenney, Faze Clan also pressures and encourages other young artists to perform dangerous and 17 derelict activities. This Petition to Determine Controversy will not only relieve Tenney from the 18 illegal and oppressive Gamer Agreement, but will hopefully send a message to Faze Clan and 19 prevent it from continuing to illegally profit from and take advantage of other young artists. Faze 20 Clan's illegal and dangerous business model must end. FACTUAL ALLEGATIONS 21 22 23 24 7. At all relevant times, Tenney has resided in Los Angeles, California and Indian Rocks Beach, Florida. 8. Tenney is an individual who is an artist as that term is defined by Labor Code § 25 1700.4(b). Tenney both creates and performs in audio-video/motion picture content that is featured 26 on popular online platforms such as YouTube, Twitch, Instagram and elsewhere. Tenney's 27 performance in and creation of such videos is the primary source of his economic value, especially 28 due to the millions who view videos that feature Tenney's performances. Notably, Tenney's 2 PP1"'T1"'T()N 1"'() llP'T'PDl\A'Tl\TP rnl\T1"'D(),mJJ QV 1 YouTube channel which streams videos created by Tenney and featuring Tenney's performances has 2 grown to over ten million subscribers. Tenney has also modeled and promoted brands on his 3 Instagram channel. 4 9. Upon information and belief, Faze Clan is a Delaware corporation with its principal 5 place of business in Los Angeles, California. Faze Clan is an esports entertainment compRA YER FOR RELIEF 15 16 WHEREFORE, Tenney respectfully seeks the following determinations and relief: 17 1. 18 A determination that Faze Clan has violated Labor Code § 1700.5 by procuring and/or attempting to procure employment and/or engagements for Tenney as an artist; 19 2. A determination that the Gamer Agreement is void ab initio and unenforceable; 20 3. A determination that Tenney owes no further monies to Faze Clan under the Gamer 21 22 Agreement which is void ab initio and unenforceable; 4. A determination that Faze Clan is not permitted to continue to act as Tenney's talent 23 agency, that Faze Clan is not permitted to procure or attempt to procure employment or engagement 24 for Tenney as an artist, and that that Faze Clan is not permitted to continue to negotiate the tenns of 25 any employment or engagements for Tenney as an artist; 26 5. A determination that Faze Clan is not entitled to and ccmnot retain any portion of 27 monies paid by third-parties in connection with Tenney's artistic services based on the Gamer 28 Agreement which is void ab initio and unenforceable; PP.TTTT()N T() f)P.TFRMTNP. rONTROVFl~~y 1 6. An order requiring Faze Clan to disgorge and repay to Tenney any and all monies, 2 consideration or things of value received by Faze Clan, directly or indirectly, as a result of the 3 Gamer Agreement, including without limitation, any and all commissions, fees, profits, advances, 4 plus interest thereon at the rate of then percent ( 10%) per annum; 5 7. An accounting by Faze Clan to Tenney of all monies consideration or things of value 6 received by Faze Clan, directly or indirectly, as a result of the Gamer Agreement, including without 7 limitation, any and all commissions, fees, profits, advances; 8 9 10 8. An order permanently enjoining Faze Clan, and anyone acting in concert with Faze Clan, from continuing to violate Labor Code §§ 1700.33, 1700.34, 1700.35 and 1700.36; and 9. Such other relief as the Labor Commissioner may deem just and proper. 11 12 Dated: May 15, 2019 FREEDMAN+ TAITBLMAN, LLP 13 14 15 16 By: =~:d~~~:::::::=====Br · reedman sse Kaplan Attorneys for Petitioner Turner Tenney 17 18 19 20 21 22 23 24 25 26 27 28 6