FaZe Clan, Inc. v. Tenney

467 F. Supp. 3d 180 (2020)

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FaZe Clan, Inc. v. Tenney

United States District Court for the Southern District of New York
467 F. Supp. 3d 180 (2020)

Facts

FaZe Clan, Inc. (Faze Clan) (plaintiff), an esports and entertainment entity that competed in videogame tournaments, signed a contract with Turner Tenney, a social-media celebrity and professional videogame player (defendant). Under the contract, Tenney was to play on Faze Clan’s team and engage in other activities for Faze Clan for which he was to be paid by and receive other benefits from Faze Clan as an independent contractor, not as an employee. The contract had three covenants that restricted Tenney’s right to compete: Tenney was barred from working for anyone other than Faze Clan, could not endorse any products not approved by Faze Clan, and granted Faze Clan exclusive use of his name and image. Without informing Faze Clan, Tenney entered into a business relationship with a third-party vendor to design and sell in-game stickers. Faze Clan sued Tenney for breach of contract in not sharing his profits from the in-game-sticker income. Tenney introduced overwhelming evidence showing that the parties did not intend Tenney’s design of these in-game stickers and their sale by a third-party vendor to be part of the agreement with Faze Clan. Tenney filed several counterclaims and raised an affirmative defense that the noncompete provision in his contract with Faze Clan as to not endorsing other products was void under California law. Faze Clan moved for summary judgment, which was denied. Faze Clan appealed.

Rule of Law

Issue

Holding and Reasoning (Rakoff, J.)

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