 of eSports, a show devoted to all things eSports. I'm your host, Katharine Noor. Today we're talking about litigating disputes in eSports. My guest is Irene Scholl Tadevosian, an attorney with Nixon Peabody Law Firm. Welcome, Irene. Hello, thank you, Katharine. Thank you for having me. All right, so we have kind of a special show today because I'm a litigator and Irene's a litigator. So between the two of us, we can tell you a lot about litigation, whether you're in the eSports business, gaming business, or you're just interested in litigation. So let's start out with the litigation process. So Irene, why do you think an eSports company should understand about litigation? You know, as with most companies, and especially now that the eSports industry is booming far more than it has before, things are getting contentious. You know, whether you're a team, whether you're a publisher, or a company that provides services adjacent to the eSports industry, we're seeing much more disputes arise. And we're also seeing a greater focus on the eSports industry, by let's say some serial plaintiffs, and whether it's in the employment context, or the, you know, disability context, we're seeing companies get hit more with suits now that eSports has really entered the mainstream of the U.S., the United States, and honestly the world. So we're seeing more and more things cropping up on the litigation dockets, both nationally and internationally. Sure, and you know, I think any business really needs to understand litigation and how it works, even if they aren't involved in litigation, they may find themselves in litigation at some point. So are there things, Irene, that you would recommend that companies do to help them prevent litigation? The, you know, depending on the subject area, there could be lots of things, right? One, the top of my thing is to either have inside counsel or outside counsel that is advising you on your deals, on your contracts, on your employment relations with your employees, and another big bucket would be the regulatory compliance, you know, privacy, depending on if you're a private or public company, whether you're touching on the gambling space or not. You know, the really hot button issues that could get you into big trouble with regulators, make sure that those are buttoned up. So that would be number one. The second thing is on just the contractual side to make sure your contracts are well, both internally and externally, internally with your management and employees, and externally with any third parties you do business with. Sure, and you know, nowadays, a lot of people think, oh, I can Google and find a contract online, and it's probably a good idea rather than doing something like that or drafting up your own contract, find an eSports lawyer who actually has expertise so that your contract actually will help prevent expensive litigation. So Irene, should a company put an arbitration or a mediation clause in their contracts? I think, good question. Let's separate those two out a sec. I think all contracts, if you don't have an arbitration provision, should at least have some sort of mediation clause, right? Before you go to litigation, those sometimes are helpful and sometimes aren't if the parties are not willing to mediate in good faith early on. On arbitration, there's lots of pros to arbitrations. There are some cons as well. And so it's really up to the company to decide, and depending on the dispute whether arbitration is something that they should put into their contracts. For business disputes, it generally makes sense to have an arbitration clause. In the employment context, you may want it, you may not want it depending on who you're dealing with. Generally, we recommend arbitration clauses and employment contracts, but sometimes it depends. And so you just have to look at the type of contract you're dealing with, understand the pros and cons of arbitration in that specific context to decide whether to put it in the clause. So for example, in the employment context, at least in California, if you put it in arbitration clause, you have to know as the employer, you're paying for the arbitration fees from beginning to end, the employee's not gonna front any part of that arbitration cost. Sure, and I have sort of special experience in this area. I'm actually a former judge and I am an arbitrator and a mediator in the eSports space as well as a litigator. And I find in most of my litigation cases, we go to arbitration or mediation, sometimes both. And mediation, usually the requirement is that the parties split the cost. We have a couple of different arbitration systems in Hawaii. One of them is free, well, it's free to the litigants and it's a court sponsored arbitration program called CAP arbitration, but that's not the case in most jurisdictions. But I feel that the uncertainty of trial it kind of makes it worth it to arbitrate or mediate depending on the situation. If you have a binding arbitration, there's more of a concern about the care of selecting the arbitrator with a mediation. You still want to make sure that each party is very, they have a buy-in and they trust the mediator because if they don't, they won't listen to the mediator in terms of what the mediators recommendations are. And then you also have to look at what type of mediator that you're getting, whether it's an evaluative mediator or whether they have another type of means of or style of mediation. So that's important. So let's, now it's really important for companies to know how a lost suit gets started. What happens? How does a lost suit begin, Irene? If you're the one filing the action, you need to actually write a formal complaint and file that. If it's in court, you file that with the court. If it's an arbitration, you file it in arbitration. But once you do that, then the lawsuit typically needs to get served on the opposing party. If you are the defendant in a lawsuit, then once you get served, then you have a certain number of days, usually 2130 or whatever it might be if you're in the state court, whatever that time limit is in that jurisdiction to respond. And there's a number of ways you can respond, but that's essentially how a lawsuit begins. Sure. And I always call a complaint, a hot potato, because a complaint, you have very little time before something has to happen. So within 24 hours, you need to be taking action. One of the first things you need to do is find out if there's insurance that covers the defense and indemnification. If there is, I mean, certainly contact your insurance company to find out if there's coverage, because if there is coverage, your insurance company has, they require you under your policy to provide them with the lawsuit within a reasonable time. They won't provide coverage if you don't, if you delay. And if they're going to be providing defense, they're going to be hiring their own attorney. But if you don't have insurance coverage, then you really truly need to be hiring an attorney and hiring the right attorney. And that attorney will need to file the answer to that complaint within the correct time, which could be depending on your jurisdiction, like you said, Irene, 20 to 30 days, but you might not be able to get an extension and if you don't file the answer on time, you might find yourself in default and have to pay. You don't want that to happen. So it's a serious issue. Yeah, one of the things that's a very wise thing to point out, one of the things that we recommend that companies do is put a ticker so that when something is filed, they know immediately that it's filed against their company. You could have your internal folks to this or your outside counsel do this. We do that for our company, because the time of responding starts from when you serve, not when it's filed. So that gives you a little bit of a buffer to figure out and respond quickly, but you're absolutely right, Catherine. It is hot potato because you do have to think and act quickly. Sure, and for anyone dealing with eSports companies, they just, they really need to know this and they can't, they will be stressed about it and you can't let that stress cause you to set the complaint aside and think I'll deal with it later, because that would be kind of a potentially a human behavior, but you can't do that in this situation. But okay, so once Irene, once a client retains you and you start talking with them, is there a privilege between you and your client? Yes, and again, it may vary in some jurisdictions, but generally as soon as you begin talking to an attorney or your attorney for the purposes of obtaining legal advice, that communication is privileged. The one caveat there is the client holds the privilege. So if whatever I tell my client, they go out and then say to the public or someone that's not in management within their company, right, the folks that have to guard the privilege, as soon as that is released and the communication is not protected anymore. And by privilege, we mean confidential, right? So anything that someone contacts me, they've been served with litigation, they have a conversation with me about what to do, that communication is privileged and confidential, of course, unless the client goes and releases like let's say to the public or someone outside of the company, the conversation that we've had. Sure, and we do have a question and this is from a viewer who has actually been a guest on the show before, Tom Leonard. If someone is setting up an eSports business in California, do they need to involve an attorney just to set it up? And if so, how important is it that it be an eSports attorney and is it important for that attorney to be local? So first of all, you need an attorney to set up the business and should the attorney be an eSports attorney and local? So you technically, in order to incorporate a business and get the basic business formation documents going, you technically don't need an attorney, there's other services that can provide the form documents for you. Now, typically I don't recommend that because depending on what you're trying to do with your business, whether it's to sell it later on or what have you, you can find a firm, including ours that can provide pretty good rates for those formation documents to have them be right from the beginning versus you having to fix them later on. I will say if you're setting up any business in California, I recommend getting a California attorney because California is one of those states that has a lot of laws that are different from other states. So if you don't know it, you could get in trouble pretty quickly, especially with its employment laws. And then in terms of do you need an eSports specific attorney? There's no eSports law, the eSports industry is its own industry, you just apply the laws of different practice areas to the industry. However, it is useful to get someone who understands the industry because they know it well. And just doing work for my clients, I find that I am also able to connect them with other stakeholders in the industry that become beneficial to them later on. So you just get the benefit of working with someone who really knows what they're doing within the space. On the technical legal side, sometimes that does make a difference, sometimes that doesn't, depending on the specific thing you're looking to do. Sure, and if you already have an attorney that you've worked with before, but they're not really that familiar with eSports, you can use them, but I think it is helpful to have people that know your business. And so an eSports attorney probably makes sense if you can find it not as easy. Yeah, especially on the litigation side, I can say generally it makes a difference because someone who operates in this industry needs to understand the very public nature of the industry. And craft your litigation strategy in such a way that you're always thinking about that as you are making decisions as to what to do in litigation. You know, I think that the same is true with selecting an arbitrator or mediator. If the arbitrator or mediator understands eSports, you go a long way towards having the right arbitrator or mediator. Because keep in mind, if you go to trial, your jurors may know nothing about eSports at all. They might have to Google it to find out. The judge will probably not know much about eSports. So let's move on. After the pleadings are filed, there's something that we call discovery. Irene, tell us about the discovery. So this is where things get very, very expensive very quickly. The US system and like most systems has a really intensive discovery process. And the discovery process, what it means is that each side can essentially get a host of information from the other side that's relevant to the litigation. And that relevant can be defined very broadly. And so the other side and your side gets to ask questions of the other side, gets to ask for documents, gets to ask for certain individuals to be deposed into litigation. And it's a very exhaustive, very drawn, it could be very drawn up process where you have to turn over information in litigation that you might not necessarily want to turn over, but if it's relevant and really pertinent, then typically you have to turn that information over. I mean, we can go into lots of examples, but it just ends up, it could end up being the most costly part of litigation. So there's requests for answers to interrogatories. Those are written answers to questions. Then there's requests for production of documents. And that's what requires the other side to produce the relevant documents. And if they don't comply with those, a motion to compel can be filed and the court can issue sanctions and even attorneys fees and costs if the party doesn't comply. But then we get to the deposition. Irene, walk us through what a deposition is. Sure, and it might be, excuse me, best to do it by way of example. So let's say we have an employment lawsuit and an employee sued the company for let's say discrimination. And the employee asked to take the deposition of the manager that they say discriminated against them. What that means is that a manager has to show up and essentially probably be on video and probably have everything that they say be transcribed. I think almost all the positions you asked for a court reporter. But essentially it allows the other side to ask questions about the lawsuit and sometimes even questions that are only tangentially related to the lawsuit to the person who's asked to be deposed, which in this case would be the manager. It's a stressful, I mean, if I've defended and taken many depositions I've never been deposed myself. I mean, it's a pretty stressful situation to be in. So you wanna make sure that your counsel when prepares you adequately for it and that you will retain good counsel obviously to defend you in the deposition or to take the deposition of the other side. And you know what's interesting now is that before depositions were generally taken in person and I would travel to different states to take depositions of parties or witnesses. And now I think it's the trend is to take them by Zoom or other platforms and I'm possibly having the court reporter be in a different place. And so it's, things have changed, they've evolved because I used to take the position that a video deposition wasn't as good as an in-person deposition. But now that we have so much, we're so used to being on video, I think that may have changed, but I still would like to see them in person and get a feel for them in person. I think I can get a better feel for their credibility. What do you think about that, Irene? Absolutely. The primary parties, you know, absent the pandemic, you want it to be in person. The main players, you want it to be in person. As you're saying, Catherine, you get a better sense of the person and a host of all other things that go into it. If it's not a main party that someone you might need just for an hour or two, maybe you do it via a video and if their testimony is not gonna make or break the case, that might be an appropriate circumstance. But personally, I would like to take in the depositions of any party and other pretty relevant after in-person. Sure. And so, Irene, what is the role of the client in litigation? What do they have to do? So, I mean, the client is essentially the boss. I mean, we, as litigation counsel, we're there to advise the client and make recommendations and update the client as to what's going on in litigation. And the client will then, what the client will make hopefully the best decision that there is. I mean, with the clients I work with, I consider the clients, my partners in litigation, they might not be doing the litigating like I am, but together we are forming a plan and together we're making the decision as what to do next or what's the best strategic decision. And ultimately at the end of the day, it's a business decision, because litigation can get expensive, it's a business decision and it's up to the client to decide whether, am I gonna see this case through? Do I wanna go to trial or do I wanna settle it? Is there a point earlier than trial that it makes sense to not have to deal with the action anymore and settle it hopefully favorably for them? So most people what they know about litigation is on TV and the primary message that we get from the media is that all these cases go to trial and that the trials are very dramatic and everyone's stomping their feet and their fists on desks and things like that. And so in real life, Irene, do these cases actually go to trial? I think the number is less than 3% of cases go to trial and I think that number might be even less now after the pandemic and the backlog in the course. And really what folks see on TV is really so different from what occurs in real life. I find it interesting and I don't blame the general public for having this idea that your litigation team should be hyper aggressive and crazy. I mean, honestly, crazy is what they think you have to be. And that's actually the last thing you want your litigation counsel to be. You want your litigation counsel obviously to be very good but if you are dealing with someone who's a bulldog for no reason, it's actually gonna be more expensive and costly for the client. So you need a, I mean, honestly, you just need a professional who knows what they're doing and by being good at their job, you get that bulldog personality without being a bull in the China shop, right? It happens, the litigation has to be very measured and strategic if you want to get certain results. I completely agree with you. In Hawaii, we have a very civil environment for litigation, in fact, it's required. And what I've noticed and I think the plaintiffs attorneys notice it if they are civil and work well with the other side and with the insurance company involved, then they can resolve cases faster and they can do better. The more contentious things are sometimes don't have as good of results. And with regard to the case is going to trial, I think we'll absolutely write about that 3%. It's actually true of Hawaii. We have about 3% of civil cases that go to trial and we are talking about civil cases rather than criminal cases here today. So the next question is, what should a client expect if the case goes to trial? Depends on the type of trial. So there's essentially largely three buckets that can fall in. There's a jury trial, there's a bench trial and then there's arbitration or some administrative proceeding. The jury trial, which is what a lot of trials fall under unless you're in an arbitration tribunal, is the trials gonna be judged by a jury of however many jurors, the jurisdiction says, 8, 9, 12. And so essentially the fate of your case is in hands of folks that are not necessarily lawyers or judges, as you were saying, Catherine, or arbitrators who understand the industry or the nuances of what's going on. So you have to essentially educate the jury at the trial, not only of the law, but of the facts. And then the jury makes the decision. In the arbitration or bench trial setting, you have one or maybe a panel of people, but typically one arbitrator or one judge making the decision based on the facts they see in the law. And as you said, Catherine, there's benefits of being before an arbitrator or a judge and not a jury. Depending on the type of dispute, the trial could be very long. It could be anywhere from a day to sometimes a month or longer. And it's a really drawn out process. I mean, when you go to trial, at least your counsel is looking at sometimes 10 to 15 plus hour days. It's really expensive. It really takes a drains a lot out of both parties. With that said, sometimes it's worth it, depending on the dispute, you need to go to trial. They're rare, but they do happen. And in some cases it's necessary to do it. Sure, and it's expensive. I mean, definitely, I think that's a really good point. So you have to be, and the outcome is completely uncertain. You can't expect, even if you have, believe you have a great case, you're gonna prevail. So let me ask you, Irene, what happens after the verdict? Can the parties appeal the decision? Let's just break it up again. If you get an arbitrator's decision, it's very difficult to appeal that decision. It has to be, the standard is very, very high. So in the arbitration context, and this is one of the pros, and you could say sometimes cons of arbitration, but I think it's largely a pro, is the decision you get is largely final. Now, obviously that's not great if you're the one who lost in arbitration. In the, before the courts though, you have a right to appeal at least once. And so even if you get a, let's say you're the plaintiff and you get this amazing verdict, it's not over, it can be appealed and that verdict can be overturned. Sure. So Irene, how can people find you if they're interested in retaining you or your firm? Yeah, I mean, you can just Google my very long name and you'll find the Nixon Peabody website, but you could go to the firm's website as well and my information is listed, both my email and my contact information. Terrific. Well, thank you so much, Irene. We learned a lot today. Yeah, thank you, Katherine. And thank you for essentially pitch-hitting this with me. All right, so anyway, thank you to our viewers for joining us today and thank you for our viewer who sent in a question. Make sure to tune in next week. My guest will be Brendan Busman to discuss China's gaming policies. See you then.