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Sumail loses his court case against Evil Geniuses
During the early months of last year, the Dota 2 community was swept off its feet by the surprise revelation of the court case between the game’s former prodigy, Sumail "SumaiL" Hassan, and his former team, Evil Geniuses.
Credits: Valve
The case gained everyone’s attention back then. However, it has been developing for quite some time, reaching its boiling point in November last year. The case was about the stocks given to the player during the pinnacle of his career.
What was his case?
Credits: Valve
In 2016, the organisation was keen to retain Sumail's services for the foreseeable future. Thus, the player was presented with 400,000 shares in Evil Geniuses. However, in 2019, Peak6 Strategic Capital acquired the organisation. As part of the merger, they converted the former prodigy’s stock into 265,338 units of common stock and 106,667 units of restricted common stock.
Thus, his court case against The International 2015 champions involved what happened to his equity after EG got acquired. The player argued that his former team had breached their contract as they converted the stock he held within the company from preferred units to common stock.
Image Source: Valve
Additionally, the player implied that the organisation did not give him an explanation to understand the gravity of that change. Moreover, the case alleges that at the time, no one expected Peak 6 members received Preferred units of stocks. Furthermore, the court case implies no one from the Peak6 group explained the nature of these changes or why they had to be made to Sumail when his stock was converted.
What’s the difference between stocks?
For someone who doesn’t take business as their major, it might be confusing to understand why the player sued his former organisation. Here’s a quick business 101; both types of stock have their ups and downs.
Credits: Valve
Common stocks grant their owners voting rights, but their dividend fluctuates, i.e. they don’t have a fixed amount of dividends. It grants its owner higher or lower dividend payments based on the organisation's or company’s performance. Additionally, this stock option is not convertible to preferred stocks. They are the last type of stockholders to receive their earnings. Moreover, in case of liquidation, they have the least claim on the company’s profit and assets.
On the other hand, for preferred stocks, despite not having any voting rights, they get a fixed amount of dividends. Additionally, preferred stocks are convertible into a certain number of common stocks at any time. In addition, preferred stockholders are the second in line to claim their earnings after the bondholders. Furthermore, in the case of liquidation, preferred stockholders have a higher claim to the company’s assets and profits than the bondholders.
As a result, many investors prefer the preferred stock options while investing in a business.
Sumail’s new contract
Credits: Valve
Sumail’s contract was renewed with the merger. In his first contract, the player received a 20,000 USD monthly salary with bonuses. However, after a disappointing finish at The International 2019, Sumail was presented with a pseudo-contract in September of 2019 which, he had to sign to play as a standin for other teams.
Moreover, the player’s pseudo-contract comes with its setbacks. While it freed him from most of his duties, his salary also got reduced to a mere 2000 USD. Additionally, the contract prevented him from competing at tournaments except the qualifiers of the upcoming Major with his new team. Two months later, the former TI5 champion was presented with a mutual release clause in November. It freed him from his remaining contractual obligations. The court case imposes that the contract was given to Sumail in bad faith, jeopardising his ownership stake at EG.
An Acquirement for Sumail’s stock
Credits: Twitter.
In February 2020, EG sent Sumail a proposal to acquire the former prodigy’s stock. While the purchasing price was 1 million USD, the player will receive an initial 300,000 USD. The remaining 700,000 USD will be paid in three annual instalments, starting from the day the player announces his retirement.
The Plaintiff
Credits: Valve
In summary, the court case alleges that EG didn’t provide accurate and complete information to Sumail in his purchase agreement. The plaintiff claims that despite his dedication and commitment to EG and its esports operations, he did not receive any value for his shares or units. Additionally, the defendants took advantage of the young, naive, and vulnerable plaintiff by presenting unfair and unclear terms in multiple proposed agreements, attempting to coerce him out of the rightful benefits earned through his hard work and talent.
The Defendants
Credits: Valve
EG, the defendants, denied all the allegations against them in the case. They based their defence on two points. Firstly, they stated that during the negotiation stages, the terms being explicit, Hassan was directly instructed to consult with an attorney. Additionally, they argued that the organisation does not have ill intentions, pointing out they had offered generous financial terms and been flexible about previous agreements as those didn’t hold up.
The Results
The matter proceeded to the jury trial. The jurors were given detailed instructions on how to assess the claims made by the plaintiff. The trial began on 13th February, and the verdict was officially filed on the 1st March.
Credits: Valve
The claims of breach of contract, false misrepresentation, breach of fiduciary duty, breach of the implied covenant of good faith and fair dealing, conversion and unclean hands, and false promises were all found in favour of Evil Geniuses and Peak6. As a result, it means that Suamil walks away from the lawsuit with no awards of damages.
Featured Image Source: Valve
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