Trial Set for March 2021 in case deemed among “most significant lawsuits in streaming history”
Chicago—The Quinlan Law Firm LLC (QLF) revealed a San Francisco County Superior Court judge has ruled in favor of its client, influential livestreamer James “Phantoml0rd” Varga, dismissing a motion for summary judgment sought by streaming platform Twitch. The ruling allows Varga’s lawsuit to proceed against the platform for violating its terms of service after banning him in 2016. A jury trial in what has been called one of the “most significant lawsuits in streaming history” is scheduled to begin on March 29, 2021.
“This is an important decision not only for Mr. Varga to move forward in his quest to seek full compensation for the losses he suffered as a result of Twitch’s wrongful termination, but it also poses significant legal ramifications for hundreds if not thousands of other streamers who have signed contracts with Twitch and rely on the platform as their main source of income and professional standing,” said William J. Quinlan, who represents Varga. “This case has the potential to set a standard of rights and responsibilities for streamers and platform providers for years to come.”
From 2012 to 2016, Varga was one of the most popular broadcasters on Twitch, attracting millions of viewers, after having signed a contract with Twitch, including a Partnership Agreement that permitted Varga to stream content and established a revenue share. In July 2016, Twitch terminated Varga’s account but failed to cite why it was terminating his account, or provide a written notice of its intent to terminate or set 30 days to cure any alleged breach of contract, as required by the Partnership Agreement.
In 2018, Varga filed suit in California state Superior Court in San Francisco, alleging Twitch’s termination constituted a breach of contract, negligent misrepresentation, intentional misrepresentations, and a violation of California’s Unfair Competition Law.
Following two years of discovery, Twitch filed a motion for summary judgment in July 2020 seeking to have all of Varga’s claims dismissed. Twitch’s motion argued that Varga’s claims were barred by Section 230 of the federal Communications Decency Act—which ostensibly immunizes websites from litigation involving content posted on its site—and that its Terms of Service permit it to nullify streamer accounts without notice or explanation. The company also argued that Varga’s Partnership Agreement terms were pre-empted by the Terms of Service that Twitch requires all users to sign prior to joining its website.
Judge Curtis Karnow’s decision found that Section 230 did not immunize Twitch from Varga’s claims for wrongful termination because Twitch was not acting as a “publisher” when it breached Varga’s Partnership Agreement, finding that the actual contract at issue in the case is the Partnership Agreement between Varga and Twitch, not Twitch’s Terms of Service, and that Twitch had failed to even attempt to show that its actions were consistent with the Partnership Agreement.
The recent order dismissing Twitch’s motion follows Karnow’s earlier ruling that Varga can seek damages in excess of Twitch’s original $50,000 cap, noting Varga suffered potentially millions in damages and lost wages as a result of his wrongful termination.
The case, Varga v. Twitch Interactive, Inc., case number 18-1564337, is being handled by Quinlan and Associate Eric Schmitt.
About the Quinlan Law Firm LLC
The Quinlan Law Firm, LLC is a national complex litigation practice headquartered in Chicago, with offices in Phoenix and Redwood City. Founded in 2006, the firm oversees
all aspects of litigation from the circuit court to the appellate court. Principal and founder William J. Quinlan, former General Counsel to the State of Illinois and a litigator for over 20 years, brings his extensive government and litigation experience to guide clients in developing custom strategies that meet their legal needs as well as their ultimate business goals. The Quinlan Law Firm, LLC serves as outside counsel to numerous corporations, as well as litigation counsel to both businesses and individuals. The Quinlan Law Firm, LLC brings together a team of talented litigators with experience in handling complex commercial litigation, as well as the ability to assist with the day-to-day legal matters that arise in the daily operations of the business world, from employment matters to contract drafting and negotiation.
“This is an important decision not only for Mr. Varga to seek full compensation for the losses he has suffered as a result of Twitch’s wrongful termination, but it also makes the case for hundreds if not thousands of other streamers who have signed contracts with Twitch should they similarly find themselves unfairly singled out by the platform’s administrators and cut off from their main source of income,” says William J. Quinlan, the lawyer from Quinlan Law firm representing Varga.
Bill Quinlan? He’s got experience advising controversial characters (starting with Rod Blagojevich, Dan Rostenkowski and Michael Madigan, to name a few).
Bill Quinlan is nothing if not connected. His father, the late William R. Quinlan, was a judge and chief counsel for three Chicago mayors. His uncle is former Cook County Board President Richard Phelan. He’s worked for Illinois House Speaker Michael Madigan, former U.S. House Ways & Means Chairman Dan Rostenkowski and former Gov. Rod Blagojevich, and has had dealings with the Daley family. Now Quinlan, 48, is representing actor Jussie Smollett, helping him fend off a city demand that he pay $130,106 for overtime costs police allege were spent on a hate-crime hoax. Quinlan, who is married with two teenage kids and lives in Old Town, is a Northwestern and White Sox season ticket holder.
What did you learn from working with your dad?
He used to say, “Be the lawyer.” He never tried to be the operator.
Why take on Smollett?
I get three phone calls a night from people that say they fought for this country, and they can’t believe that I’m representing someone like him. My response is, what we fought for is the right to a jury trial of our peers, the right to counsel and the right to due process. And God forbid that’s ever you and you’re entitled to have a hearing or a trial and everyone judges you guilty.
Do you believe his version of events?
In my dealings with him, Jussie’s been very honorable.
Here’s a lightning round. I’ll give you some names; tell me the first word that pops in your head. Dick Phelan.
How about an adjective?
Maybe it’s passionate, because everything he did was at 100 miles per hour. Zealous.
Calculated. I don’t think I’m the only one who’s used that adjective to describe him.
Passionate. The goal was, don’t let the perfect get in the way of the good.
Historian. I mean it broader than just knowing about the Chicago Fire. He understands how government works, from an ordinance level, a constitutional level, a practical level. He has this wealth of history to understand practically how to get things done through the different worlds.
Caring. Part ward boss, part somebody who literally cared and wanted to make a difference. I think that conflict existed with him a lot. The best retail politician I’ve ever seen.
Think you have a good shot with Jussie’s case? Absolutely.
Quinlan Law Firm LLC has announced three hires. David Hutchinson has been named an associate after serving as a judicial clerk at the U.S. Court of Appeals for the First Circuit. He previously worked as an associate at Jenner & Block LLP. Hutchinson’s expertise is in complex commercial litigation disputes involving breach of contract, business torts and security agreements. Kamil Merchant has been named an associate attorney, focusing on commercial litigation matters. He previously was a judicial law clerk at the Illinois Appellate Court, First District. He earned his law degree from the University of Illinois College of Law. And Eric Schmitt will lead the firm’s just-opened Silicon Valley office in Menlo Park, Calif. Schmitt previously worked at Sidley Austin LLP and also served as judicial clerk at the U.S. Court of Federal Claims in Washington, D.C. He earned his undergrad from University of Chicago.
James “PhantomL0rd” Varga was suspended from Twitch in July 2016 for violating Twitch Tv, Terms of Service (TOS). Phantoml0rd decided to sue Twitch, because they were not forthright with their TOS and his suspension cost him revenue. Bill Quinlan, Phantoml0rd’s attorney at The Quinlan Law Firm LLC, explains the Phantonl0rd case in detail and gives an update on a recent ruling in the case. Bill explains how this lawsuit will set a precedent for the video game & E-sports industry.
The legal saga between Twitch and the banned Counter-Strike: Global Offensive streamer James “PhantomL0rd” Varga continues. The judge’s latest ruling is a potential mark in the “win” column for Varga, as well as other Twitch streamers who might have grievances with Twitch in the future.
The trouble started back in 2016, when Varga was banned from Twitch after he streamed himself using CS:GO gambling sites. According to an exposé by journalist Richard Lewis, Varga allegedly had a financial stake in one of these sites. Two years later, Varga sued Twitch for lost income and damages incurred from what he now claims was a wrongful ban. Twitch responded with a counter-suit against Varga that asserted the streamer had violated multiple Twitch policies.
Varga was suing for lost income, and while the legal system has yet to determine whether his ban was actually wrongful and that he should therefore be repaid, his lawsuit has revealed some unusual fine print in the contract he signed with Twitch. Apparently, Varga’s contract stated that he wouldn’t be allowed to receive anything more than $50,000 from a suit against Twitch.
The judge’s full ruling, first reported by Dexerto and also obtained by Kotaku, deemed that this $50,000 cap was “overly harsh and unreasonably and unfairly one-sided… There is no reason to limit Varga to $50,000 when he might well be entitled to a much, much higher sum.”
The judge continued, “From a practical point of view, which I think is an essential consideration, limiting recovery to $50,000 virtually kills off the odds of a suit against Twitch at all. The agreement doesn’t appear to have an attorney fees clause, and few—if any—lawyers would take on a contingency case against Twitch for some reasonable percentage of $50,000. The cap is unconscionable.”
Varga admitted in court that he hadn’t actually read the contract before first signing it in 2012, nor did he read it when he signed a re-upped version of it two years later. He claimed he didn’t know “if that’s what needed to be done.” According to the judge’s summary: “Varga, who spent virtually all his waking hours on computers, and was familiar with a variety of programs, did not know he could scroll through the agreement. He had time, both in 2012 and 2014, to do so, and if he had, he would have seen [the relevant section]. He simply chose not to do so.”
If Varga had read the contract, the judge theorized that the streamer could have tried to push back against it before signing. Nonetheless, the judge ultimately ruled that the language in the contact was “unconscionable,” meaning the court can ignore this clause when deciding how much money (if any) to award Varga. One mark in Varga’s favor was the “significant difference” between him and Twitch “in their legal sophistication. Varga in 2014 was 26 years old living with his parents, and he had little to no legal experience.” In contrast, Twitch had paid a legal team to draft their end of the bargain, putting the platform at a clear advantage.
Although Varga’s case is not particularly sympathetic, since most people just associate him with the CS:GO gambling streams that led to his ban, his case has nonetheless revealed one way that Twitch had been unfair in its contract. Varga may or may not win his overall suit for lost income, but if he does, he’ll now be able to ask for more than $50,000. (According to the ruling, Varga’s income “averaged over $5,000 per month and appeared to cluster around $10,000 per month,” so multiple years of lost income would have exceeded the cap.) The case will proceed, but regardless of its outcome, this ruling could potentially help other streamers who have a similar clause in their contract and who may bring a suit against Twitch in the future. Most important of all, it’s a reminder to read anything you sign.
For Immediate Release Media Contact: Natalie Bauer Luce Culloton + Bauer Luce firstname.lastname@example.org
Chicago—The Quinlan Law Firm LLC (QLF) today announced a San Francisco County Superior Court judge has ruled in favor of its client, influential livestreamer James “Phantoml0rd” Varga, with a decision that rendered streaming platform Twitch’s limited liability clause in its players’ contract as “unconscionable” and therefore unenforceable. The decision allows Varga to seek damages in excess of Twitch’s original $50,000 cap and marks a significant legal victory for potentially thousands of content producers who have signed contracts with Twitch.
Varga sued Twitch for violating its terms of service after banning him in 2016 from the platform, alleging claims of breach of contract, intentional misrepresentation, negligent misrepresentation and unfair competition, with the damages Varga suffered as a result of his wrongful termination potentially amounting to millions of dollars. The lawsuit, which went to trial in August over the validity of the $50,000 cap on damages contained in Twitch’s contract, has been characterized as one of the “most significant lawsuits in streaming history.”
“This is an important decision not only for Mr. Varga to seek full compensation for the losses he has suffered as a result of Twitch’s wrongful termination, but it also makes the case for hundreds if not thousands of other streamers who have signed contracts with Twitch should they similarly find themselves unfairly singled out by the platform’s administrators and cut off from their main source of income,” said William J. Quinlan, who represents Varga.
In ruling Twitch’s contract as “unconscionable” and the $50,000 cap to be invalid, Judge Curtis E.A. Karnow found that the platform’s $50,000 cap was “so incommensurate” with the amount the parties would have expected Varga to earn at the time he signed his contracts with Twitch that it was “overly harsh and unreasonably and unfairly one-sided.” The ruling also points out that the absence of any reasonable competitors to Twitch gave it superior bargaining power over Varga and that Twitch had failed to present any evidence demonstrating that other livestreamers had been able to negotiate the terms of their contracts with Twitch. Judge Karnow further found that the unfair circumstances surrounding the signing of the contracts were exacerbated by the “significant difference” in the parties’ legal sophistication at the time the second contract was signed, when “Varga was a 26 years old living with his parents” with “little to no legal experience,” while Twitch had retained the services of the large law firm Wilson Sonsini to draft the form contracts it used with all of its livestreamers.
The victory comes as QLF prepares to open a new office in Menlo Park, Calif., where it will be able to better serve its growing list of clients in the gaming and tech industries in Silicon Valley.
The case, Varga v. Twitch Interactive, Inc., case number 18-1564337, is being handled by Quinlan and Associate Eric Schmitt.
About the Quinlan Law Firm LLC The Quinlan Law Firm, LLC is a national complex litigation practice headquartered in Chicago, with offices in Phoenix and Redwood City. Founded in 2006, the firm oversees all aspects of litigation from the circuit court to the appellate court. Principal and founder William J. Quinlan, former General Counsel to the State of Illinois and a litigator for over 20 years, brings his extensive government and litigation experience to guide clients in developing custom strategies that meet their legal needs as well as their ultimate business goals. The Quinlan Law Firm, LLC serves as outside counsel to numerous corporations, as well as litigation counsel to both businesses and individuals. The Quinlan Law Firm, LLC brings together a team of talented litigators with experience in handling complex commercial litigation, as well as the ability to assist with the day-to-day legal matters that arise in the daily operations of the business world, from employment matters to contract drafting and negotiation. For more information, visit www.quinlanfirm.com.
Politically connected Chicago lawyer Bill Quinlan can already tout a fresh Bay Area victory in an online gamer’s case against Twitch.
As live-streamed gaming continues to generate ever-larger revenues, Chicago lawyer Bill Quinlan is expanding his small firm to Silicon Valley, betting on future tech clients and on a burgeoning practice representing online video gamers.
· Quinlan, whose family has political ties in Illinois, is representing gamer James “Phantoml0rd” Varga, who is suing Twitch in San Francisco County Superior Court after the Amazon-owned streaming platform terminated his account and content partner agreement in 2016.
The Quinlan Law Firm earlier this month opened its office in Menlo Park, California, the firm’s second outpost outside Chicago. That office will be led by Eric Schmitt, who was an associate at Sidley Austin and a judicial clerk on the U.S. Court of Federal Claims in Washington. D.C. The firm now has 10 attorneys working in Chicago, Phoenix and California and is hiring two more, Quinlan said.
“That is the toughest thing we’re trying to do, making sure we’re growing the right way with the right people,” Quinlan said. “We have a lot of people who are on the road a lot. … You have to get your work done, no matter where you’re sitting.”
· · The lawsuit between Varga and Twitch, which one gaming website described as one of “the most significant lawsuits in streaming history,” has entered a key phase. On Friday, Judge Curtis Karnow held in a proposed ruling that the limited liability provision within Varga‘s contracts with Twitch were unconscionable, expanding the amount in damages he can recoup under his lawsuit.
· “I feel good about my case no matter what,” Quinlan said days before Karnow issued his ruling. “From an efficiency standpoint, it makes sense to deal with that issue, and then you can decide what the universe of damages are.” Twtich’s lawyers at Davis Wright Tremaine didn’t respond to a request for comment.
· Quinlan said there are not a lot of regulations or case precedent that dictate the relationship between streamers such as Varga and platforms such as Twitch. “How do you protect someone from being taken advantage of? What are the limitations?” Quinlan said.
· Quinlan said he’s been approached by other people who have their own issues with streaming platforms. Although he’s not participating in any other lawsuits yet, he is physically expanding his firm so that he and his colleagues can represent not only streamers, but other tech clients.
· Varga’s lawsuit is the first of its kind, Quinlan said. Before he was booted off the platform, Varga had over 1 million followers on Twitch and 16,000 paid subscribers. As part of their 2012 contract, Varga and Twitch shared the revenue that came from advertising on Vargas’ account as well as paid subscription.
· His videos had been viewed 88 million times. If every single follower of Varga’s were in one place, the gathering would be the size of a U.S. city, Quinlan said.
· “It’s a world where, when you talk about the business of law, what’s the future look like, we see there might not be TV stations. I see it with my 15-year-old son. He looks for direct content. He goes to YouTube or Twitch or various websites to do that,” Quinlan said. “It’s the Wild West to the degree it’s unregulated, there has not been a deep history as there would be TV or radio and the like.”
· In his complaint, Varga alleged that Twitch improperly suspended him from the platform, at first not telling him why he was being booted or giving him a chance to appeal.
· Twitch countersued, alleging that Varga was frequently warned about streaming a website where people could use real money to purchase random weapon skins that were used in the game “CounterStrike: Global Offensive.” The company further alleged that Varga had an undisclosed financial interest in CSGOShuffle, and it’s because of that Varga was portrayed as getting a desirable in-game weapon skin better than they were.
· Varga countered that these were “unsubstantiated allegations” from a Breitbart reporter and that Twitch never asked him about it.
· Quinlan rents office space in the 110-story Willis Tower from the Chicago outpost of Tressler, an insurance industry defense firm. Quinlan said there’s no professional relationship between his firm and Tressler.
· Quinlan has previously worked for a variety of Illinois political heavyweights, including House Speaker Michael Madigan, former U.S. Ways and Means Chairman Dan Rostenkowski and former Illinois Gov. Rod Blagojevich. His father, William R. Quinlan, was a Cook County and Illinois appellate judge and was the Chicago city government’s top attorney under three mayors. His uncle was the former president of the Cook County Board of Commissioners.
A clause limiting James ‘Phantoml0rd’ Varga to just $50,000 in damages has been ruled legally ‘unconscionable.’
James “PhantomL0rd” Varga was suspended from Twitch in 2016 over his association with CSGO skin gambling site CSGOShuffle. He used and promoted the site on his channel, but emails reported by esports journalist Richard Lewis were found to “heavily suggest, almost to a degree of certainty” that Varga actually owned the site, which he did not disclose while promoting it, and that he was using “house money” rather than his own when he gambled on it.
In early 2018, Varga filed a lawsuit against Twitch for lost income, claiming that his suspension was the result of “unsubstantiated, false accusations leveled at Varga by a third party.” Furthermore, he claims that he was not provided any written notices of his violations, or a 30-day window to correct them, both of which were required by his contract.
As reported by Dexerto, Varga recently won a small victory in that suit when the judge in the case ruled that a clause in his contract limiting the amount of damages he can claim in his legal action to $50,000 is “unconscionable.” What that means, simplistically, is that the judge found the clause so unjustly one-sided that it cannot be enforced, meaning that Varga can claim much higher damages in his lawsuit.
The judge rejected some of Varga’s claims about the contract, including that he didn’t read the digital copy he received because he didn’t know that he could scroll through the pages to view them. The judge described that defense as “incredible,” declaring that Varga, who “spent virtually all his waking hours on computers and was familiar with a variety of programs knew he could scroll through the agreement … He simply chose not to do so.”
Despite that, the judge ruled that while Varga “had some college education [and] had been in contractual relationships before” his deal with Twitch, “there was a significant disparity in legal sophistication and Varga did not use an attorney. These factors on balance suggest some oppression.” He also noted that Varga’s average monthly income was over $5000 “and appeared to cluster around $10,000 per month … so the $50,000 cap is incommensurate as to be unconscionable.”
The ruling is strictly on the amount of damages that Varga can claim in his suit and has no impact on the validity of his actual claims. But regardless of how his case works out, this particular decision in it could have a far-reaching impact. Dexerto said the clause limiting damages is also present in contracts with other streamers, and they’ll presumably benefit from the precedent—it opens the door to greater damage claims than their contract allows, but it may also help enable them to take action in the first place. The judge also said that “from a practical point of view,” capping damages at that relatively small amount effectively insulates Twitch against lawsuits because there is no clause for legal fees, and there aren’t many lawyers who would be willing to take a case against Twitch for a “reasonable percentage” of $50,000.
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