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Judge: Streamer who didn’t read contract can sue Twitch for over $50K

Ruling for ‘Phantoml0rd’ could potentially open the streaming giant to additional lawsuits

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James Varga
James “Phantoml0rd” Varga from a now-deleted YouTube video, circa 2017.

James “Phantoml0rd” Varga, the controversial streamer involved in an elaborate Counter-Strike: Global Offensive gambling scandal, has prevailed in his initial court case against Twitch. After being banned from the platform since 2016, a judge in San Francisco now says he’s free to sue for damages in excess of the $50,000 allowed by his contract. His lawyer says this could pave the way for similar suits from other banned streamers.

“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.

On July 19, 2016, Varga’s Twitch channel was deleted after reports claimed that Varga owned a site where CS:GO players could gamble with the game’s weapon skins, failed to disclose that ownership, and subsequently broadcast himself on Twitch winning rigged games of chance. The episode led to a string of legal threats against similar platforms by the game’s developer, Valve.

Nearly 600 days after his ban, Varga returned on YouTube to announce his intent to sue. The video has since been removed. While Varga has leaned into producing live gambling content on YouTube and elsewhere, his court case has been ongoing. Just last week the judge ruled in his favor, saying that the limitation of liability that capped his potential damages at $50,000 was “unconscionable.”

Unconscionable in this instance isn’t a moral term per se. Instead, it’s a legal term.

As the judge describes it, the monetary cap placed on damages in the contract he signed is “overly harsh and unreasonably and unfairly one-sided.” The judge notes that Varga was a 26-year-old living with his parents at the time, signed the contract without the help of an attorney, and made no effort to negotiate. In fact, court documents make it clear he didn’t even read it. Nevertheless, his ban may have resulted in damages well in excess of $50,000.

“From a practical point of view,” writes judge Curtis E.A. Karnow, “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.”

Polygon has reached out to Twitch for comment.

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