The request for a restraining order was filed Friday morning in Los Angeles Superior Court by venture investor Stratton Sclavos, the former VeriSign CEO and a former part-owner of the NHL’s San Jose Sharks. Sclavos said in a filing to the court that Fox took action against the wishes of his partners related to a sale of Echo Fox and its prized League of Legends slot. The judge denied the restraining order request, saying there was no clear evidence that Fox will do harm to the company within 60 days, the time period after which the partners intend to remove him from the team.
The judge further ordered the profits made from September’s League of Legends slot sale to go into a third-party account (escrow) chosen by both Fox and Vision Esports.
The Friday court battle marks the latest chapter in an ongoing struggle over the control of Echo Fox. In a letter sent to Fox Thursday night and obtained by The Washington Post, eight of Fox’s partners accused him of “willful, wanton, and intentionally destructive efforts towards the Partnership.” In the missive, Fox’s partners blame him for the valuation of Echo Fox falling from $150 million in October of last year, according to Forbes, to $31 million 10 months later, based on several purchase offers referenced in the letter.
“These are all lies, and this is collusion on the part of [business partners] Amit [Raizada] and Stratton [Sclavos] to create the narrative they need to remove me from the control of the company that we started,” Fox said in a phone interview Thursday evening.
Fox disputed that Echo Fox was ever worth $150 million and issued blanket denials on all other claims.
The relationship between Fox and his partners had deteriorated over recent months, including tensions with Raizada, an investor in Echo Fox who made his fortune via payday loan companies and real estate in the Kansas City area. Earlier this year, Fox shocked the esports world when he announced his intention to leave the organization that bears his name. The reason Fox gave at the time was sour relations with an investor, later revealed to be Raizada, stemming in part from an email that included a racial slur.
Franchise slots in the League of Legends professional circuit are highly coveted and valued in the tens of millions. The letter cites offers made by competing organizations to Echo Fox for the slot, one of them an all-cash offer of $30.5 million from esports outfit Evil Geniuses.
Fox is also accused in the letter of trying to poach Echo Fox employees and sponsorships for a new venture, as well as seeking to zero out his personal debt to the franchise, claimed in the letter to total $5.3 million, as part of a sale of the League of Legends team to his preferred buyer. According to the letter, this was at odds with a supermajority of the partners, who preferred the cash offer from Evil Geniuses.
In addition to the restraining order, Fox’s partners intend to serve him with multiple lawsuits as early as next week, according to a person familiar with their intentions. Fox said he plans to file his own lawsuits as well.
Raizada’s past business dealings in Kansas City have produced lawsuits as well, with Raizada on the losing end of a $6.1 million verdict in a 2017 case in which a jury in Jackson County, Mo., found him guilty of breaching his fiduciary duty to two holding companies. The verdict was later vacated.
The developments represent a stunning change in circumstance for Fox, a man who gained fame as an NBA player and actor, and has been noted by several investors, including Los Angeles Times owner Patrick Soon-Shiong, as a major influence in their decisions to invest millions — or more — into the esports industry.
Fox has also served as an important spokesperson for esports fans, who see Fox as a leader in helping legitimize video games for a mainstream audience, given his traditional sports background.
As recently as last year, Echo Fox was seen as a leading example of the promise surrounding esports organizations. In 2017, Echo Fox’s parent company received an investment from the New York Yankees and in 2018 closed a $38 million fundraising round that included capital from Kevin Durant, Odell Beckham Jr., the St. Louis Cardinals and an investment firm backed by leading Hollywood talent agency CAA, among others.
Fox’s partners claim that the restraining order is necessary because without it they “will be subject to the whims of a rogue [general partner] who repeatedly has demonstrated that he is unbound by the business judgment of other members of the [partnership] or the advice of its qualified professionals and governed only by his own self-interest.”
Joshua Chang contributed reporting to this story from Los Angeles.