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NORTHERN CALIFORNIA RECORD

Tuesday, November 5, 2024

Streamer Sues Video Platform Over Contract Breach Allegations

State Court
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A high-profile legal battle has emerged in the tech world, with a popular live streamer challenging a major video streaming platform over allegations of wrongful suspension and breach of contract. On July 17, 2024, James Varga filed a complaint against Twitch Interactive, Inc. in the Court of Appeal of the State of California, First Appellate District, Division One.

James Varga, a well-known figure in the gaming community, claims that Twitch Interactive breached their agreement by suspending his account without proper notice or cause. The partnership between Varga and Twitch began in 2012 when they entered into a "Content License and Base Network Agreement," allowing Varga to create gaming-related content exclusively for Twitch. This agreement was set to renew automatically unless either party provided 90 days' written notice before the end of the term. However, things took a turn when Varga's account was suspended in June 2016 after numerous alleged violations of Twitch's Content Guidelines and Terms of Service.

According to court documents, Varga faced multiple accusations from Twitch's moderation team for content deemed sexually explicit or related to gambling activities—both prohibited under their agreement. Despite these allegations, internal communications revealed that Varga’s account manager often downplayed his conduct. For instance, one message indicated that while certain actions were "borderline," they did not break the terms of service. However, this leniency ended abruptly when Varga was suspended following a series of incidents including groping his girlfriend on stream and running a controversial $100,000 skins giveaway.

Varga's lawsuit contends that Twitch violated their contract by suspending him without giving him an opportunity to rectify any breaches as stipulated in their agreement. He further alleges that Twitch misrepresented its policies regarding non-gaming content and gambling activities. These misrepresentations led him to believe he was compliant with Twitch’s guidelines until his sudden suspension.

The jury trial concluded with mixed results for both parties. While the jury found in favor of Varga on claims of breach of contract and negligent misrepresentation, awarding him $20,720 in damages for the first 30 days post-suspension, they awarded zero tort damages. The jury also dismissed all counterclaims from Twitch alleging breach of contract and fraud by Varga.

Post-trial proceedings saw Varga seeking either an increase in damages or a new trial on grounds that the awarded damages were inadequate given the remaining nine months on his contract at the time of suspension. He argued that the jury’s decision was inconsistent with their findings and insufficient as per legal standards. Conversely, Twitch defended its position by emphasizing repeated breaches by Varga which justified limiting damages to just 30 days’ notice period as per their agreement.

Ultimately, while upholding most parts of the judgment favoring Twitch—including nearly $170,000 awarded for electronic discovery costs—the court agreed with some aspects raised by Varga regarding cost recoverability under section 1033.5 and remanded for recalculating appropriate electronic discovery costs.

Representing James Varga is attorney Langhorne Wilson. 

The case was presided over by judges Humes P.J., Banke J., and Langhorne Wilson J., under Case ID A166747.

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