Luminosity and SK Gaming

Dissecting the SK Gaming and Luminosity Controversy

 

                By now everyone has probably seen the ESPN report from Jacob Wolf detailing the SK Gaming and Luminosity dispute.  The dispute actually resembles the situation H2K-Gaming and Team SoloMid found themselves in back in November.  Unfortunately, these disputes prove, yet again, why the eSports industry is in sore need of a universal regulatory body.

Legal Mumbo Jumbo

                To fully comprehend the ESPN report, some legal terms need to be fleshed out.  For instance, “tortious interference” is a legal claim used to recover money from a party who interferes with a contractual relationship.   Applying this legal term of art to the ESPN article, SK Gaming is the bad guy trying to “tortuously interfere” with Luminosity’s player contracts.

In the famed dispute between H2K and TSM there was a question as to whether Svenskeren had signed a “legally enforceable” contract which would otherwise bind him to H2K.  There was also discussion as to whether Sven had signed a letter of intent (a “LOI”) signifying his desire to join H2K under certain conditions. 

In this instance, it has been confirmed that the players had indeed signed an LOI with Luminosity.  Depending on the content of the LOI, that letter may bind the players to Luminosity.  Given what was reported by ESPN, it appears that SK had knowledge of the Luminosity arrangement and proceeded to poach those players anyway.

The SK-Luminosity dispute spawns several complex legal questions.  Lets consider a hypothetical to illustrate the complexity of the dispute. Let’s say SK Gaming, a German company, claims Brazilian players, who live in Atlanta and who play for an American organization incorporated in a foreign state, breached their contracts by refusing to play for SK.  Further, let’s imagine these contracts were signed while the players were in Columbus.  In this hypothetical, which court would have jurisdiction and which law would be applied over such a complicated fact pattern?.  It is unlikely the dispute will ever get to such a point where the answer to this question is necessary.  The conflict will almost certainly be resolved in the same way the H2K and TSM conflict was resolved.  There will be some sort of settlement or the parties will realize the PR nightmare and substantial legal fees to fight such an extraordinarily complicated battle are simply not worth the headache. However, the hypothetical is still useful because it demonstrates the necessity for regulation in eSports to resolve these complex issues.

Where is the Regulation?

The potential for regulation and clarity exists in eSports, but in its current form the industry is not equipped to render a clear and concise decision.  While ELeague has not made its rules or participation agreement public, it is difficult to imagine a situation where ELeague would be without power to rule on the situation.  As is the case with other eSports leagues, teams are given a license to participate conditioned upon their acceptance of certain regulations – one being an anti-poaching provision present in ELeague’s rulebook.  The implication is that SK Gaming may have violated ELeague’s rules.  As we saw with Renegades, TDK, and Team Impulse, leagues have the ability to terminate a team’s revocable participation license.  It is however important that ELeague walk a fine line lest they find themselves involved in litigation between the players of SK Gaming and Luminosity. More importantly, while ELeague may have the authority to unilaterally punish SK, they will not have the ability to resolve any legal dispute between the teams absent some sort of agreement signed by every team in the league agreeing to confer the ELeague with arbitration or mediation powers.  Without that ability, Luminosity would need to embrace the messy hypothetical spelled out above to be granted meaningful relief.

This harkens back to the all important next step for eSports.  All eSports teams must soon embrace some sort of universal regulatory body to govern conduct.  The NBA, like other professional sports, has in place a document known as the NBA Constitution and Bylaws.  All the teams in the NBA are a party to this document and, in doing so, become a member of the NBA.  That document confers power in the commissioner of the league to resolve disputes between teams. It specifically states: “following an opportunity for the affected party to submit evidence and be heard. . . [all actions taken] shall be final, binding, and conclusive, as an award in arbitration and enforceable in a court of competent jurisdiction in accordance with the laws of the State of New York.   In other words, each team must have its claims heard by a commissioner who will make a final, legally binding, judgment as an arbitrator.  If a similar controlling document existed in ELeague, the hypothetical described above is completely avoided.

ELeague may have the ability to punish teams, but it is unlikely there is a provision in the participation agreement which forces teams to submit to arbitration to resolve disputes.  Even if it did, the teams would not have the ability to regulate themselves or play any role in the arbitration process by selecting the arbitrator.  This is simply because the ELeague is a third party entity which has its own governing structure separate and apart from any of the teams unlike the NBA. 

Conclusion

Going forward there needs to be a dispute resolution process that takes the league owner out of the position of power and regulates conduct between the teams.  This body can coexist with third party league owners and should exist to ensure a less messy legal dilemma.