A peruse of Twitter the last couple of days showed a lot of Creators on the platform get a bit worried about the fan-supported platform going away. Why? The reason just might be comedian Owen Benjamin.
The former Sullivan & Son star become a lighting rod for controversy the last few years as he began to grow disillusioned with Hollywood and take progressively more aggressive and controversial stances online and in his webcasts. He’s been accused of all different kinds of hate speech and anti-semitism which eventually let to his suspension and later banning from most social platforms and Youtube. Leading the comedian to self-produce his own specials and host a subscription show on his own website.
One of those platforms that Benjamin was kick off was the fan-subscription site Patreon, where Benjamin could continue to work and get funded by his fans. Upon his ouster Benjamin sued the site for the dismissal at the cost of $3.5M and encouraged his fans to do the same. His fans answered and followed suit, 72 of them in fact, filed claims against Patreon citing the same reasons Benjamin claimed that by banning a Creator it disrupts the economic relationship between Creator and Backer. A legal term called “tortious interference with a business relationship.”
In the past, tech companies were almost totally protected from these types of lawsuits due to the Congressional law that encourages free speech on the week. However, because of this autonomy, many companies have gotten sloppy with their Terms of Service. Patreon’s TOS stated that anyone who wants to sue the company must do so with arbitration, bans class actions or any joint actions, and pays for the arbitration fees. In theory this makes sense because individual consumers with small claims can do so without a lawyers. Enter the loophole where all individual claims can’t be class action…
In California, the law states that arbitration fees must be paid in advance. So if the average arbitration costing around $10,000 the costs for Patroen could total $750,000 before they even get into arbitration adding the idea that the platform could be bankrupted before any money (if any) is given to the claimants.
Even moreso, Patreon changed its TOS at the top of the year as a direct result of these actions. Previously, their Terms of Service states those wanting arbitration must alert the company that they planned on doing this. Once these notifications happened, the tech company updated its TOS to bar claims the parties were going to bring. Stating that as a fan, they could not bring a claim against Patreon on behalf of the banned or suspended Creator. So they were informed these claims were coming upon request, then they changed the TOS as a direct result.
Patreon also filed a Mass Action suit against the claimants and sought an injunction to stop the arbitration moving forward upon realizing fees were going to mount up.
Just the other day the court issued a tentative order denying Patreon’s injunctions.
During the hearing, Patreon’s counsel brought up additional cases that it claimed applied to the lawsuit. Many legal experts believe Patron will probably lose and should in its actions of essentially demanding to be informed, then attempting to change its TOS because of being informed.
Because of this preliminary decision by the court, many of Patreon Creators are getting scared about the idea of the platform possibly going away. Many have grown reliant on the platform to support their livelihood and projects. The longterm effect of this could leave Creators, including many large comedy podcasts without a revenue stream and a large one for some. Just off the top of our heads, comedy podcasts like Chapo Trap House, Cumtown, and History Hyenas earn in one month on Patreon what some could earn in an annual salary.
Other tech companies should pay close attention to this case and tighten up their Terms of Service immediately. Not only does this leave them open but this isn’t the first case of this “loophole” being utilized. Similarly DoorDash was hit with a similar lawsuit from its drivers over tip compensation.