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FaZe Clan, Inc. v. Tenney - 407 F. Supp. 3d 440 (S.D.N.Y. 2019)

Rule:

When evaluating a motion for Colorado River abstention, courts consider six factors: "(1) whether the controversy involves a res over which one of the courts has assumed jurisdiction; (2) whether the federal forum is less inconvenient than the other for the parties; (3) whether staying or dismissing the federal action will avoid piecemeal litigation; (4) the order in which the actions were filed, and whether proceedings have advanced more in one forum than in the other; (5) whether federal law provides the rule of decision; and (6) whether the state procedures are adequate to protect the plaintiff's federal rights."

Facts:

FaZe Clan, a California-based "esports and entertainment organization," argued that a contract existed between it and Tenney, a professional video gamer and social media celebrity. Tenney's position was that FaZe Clan has breached the Gamer Agreement and that part or all of the contract was void ab initio under various California state law grounds, including the California Talent Agency Act (TAA), Cal. Lab. Code §§ 1700 et seq. In May 2010 (about ten weeks before FaZe Clan brought this action) Tenney initiated two proceedings in California to assert his claims against FaZe Clan. The first proceeding, before the California Labor Commissioner, asserted that the Gamer Agreement was void ab initio under the TAA on the ground that FaZe Clan was acting as an unlicensed talent agency. The second proceeding, in Los Angeles Superior Court, assered the other state law claims. Tenney now moved to dismiss or stay this federal district court action in favor of the two California proceedings under the Colorado River abstention doctrine.

Issue:

Should Teney’s motion to dismiss or stay the federal court action on the basis of absention be granted?

Answer:

No.

Conclusion:

The Court held that the balance of the six Colorado River factors did not justify dismissing or staying the case. The Court found that the concerns did not rise to the level of an "exceptional" circumstance that would justify abstention. As such, the Court adopted the plaintiff’s proposed case management plan.

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