A Nevada court has granted a temporary restraining order against PlayUp US chief executive Laila Mintas over an alleged breach of contract.
In granting the order in part, the presiding judge argued that while PlayUp had not provided sufficient evidence that Mintas had breached trade secret laws or confidentiality agreements, they accepted that she could cause “irreparable harm” to the business.
It comes in the wake of talks to sell the business to cryptocurrency exchange FTX collapsing.
In July 2020, Australia-based PlayUp hired Mintas to lead its US division, which has since secured approval to launch in Colorado and New Jersey.
As part of her contract, Mintas agreed to a “confidentiality, non-competition, non-solicitation and non-disparagement” clause. Under this provision, she could not share confidential information about PlayUp except as part of the “good faith performance” of her duties as US CEO.
In addition, the clause said that Mintas could not engage “in any form of conduct or make any statements or representations that disparage, portray in a negative light, or otherwise impair the reputation or commercial interests of the company”.
In November, Mintas and PlayUp opened discussions to extend her contract.
In these negotiations, Mintas requested she replace Daniel Simic as global CEO. She also asked for her salary to be doubled to $1m, and her shareholding increased to 15%.
The two parties “did not reach an agreement” on the new contract.
PlayUp alleged that, in response to it refusing Mintas’ terms, she “engaged in conduct directly in violation of [her contract]”.
The operator claims Mintas contacted Sam Bankman-Fried of cryptocurrency exchange business FTX, which was negotiating to acquire PlayUp’s Australian business in a $450m deal, warning him of “systemic issues” and that “the company is not clean”.
These statements, PlayUp argues, ultimately led to that deal collapsing.
In addition, the operator claims Mintas “threatened to damage [PlayUp’s] reputation to gaming regulators, commercial and business trading partners, and customers”.
It noted that on 10 November, Mintas “threatened to ‘burn PlayUp to the ground’”. An advisor to PlayUp’s board noted that Mintas had sufficient access to the operator’s technology, records, operations, data and contracts to carry out those threats.
As a result, on 30 November, PlayUp filed suit in the United States District Court for Nevada. It alleged breach of contract, breach of implied covenant of good faith and fair dealing and breach of fiduciary duty, and violation of the Nevada Uniform Trade Secrets Act, among other similar laws.
It filed for an emergency motion for a temporary restraining order, intended to “prevent […] irreparable harm just so long as is necessary to hold a hearing, and no longer.”
The operator argued that continuing to allow Mintas to have access to PlayUp information could cause irreparable harm to the business.
The judge, Gloria M. Navarro, did not believe PlayUp had provided sufficient proof that Mintas had violated any trade secret laws or confidentiality agreements. She noted that any statements allegedly made by Mintas did not contain specific information that could be classed as confidential.
However, she agreed it was likely Mintas breached her contract by disparaging the company, and may have breached the non-compete clause through private negotiations with FTX. As a result, Navarro determined that PlayUp was likely to win a breach-of-contract case.
With this proven, Navarro then set out to determine if Mintas could cause “irreparable harm” to PlayUp without a restraining order. Given the “burn PlayUp to the ground” statement, she determined that this was likely.
Navarro also pointed out that the downside of opting not to issue a restraining order was more serious than the downside of issuing one.
“If [Mintas] does not carry out her threats of spreading false information about [PlayUp], then imposition of this temporary restraining order will not harm [Mintas],” the court said. “Conversely, even if [Mintas] disparages [PlayUp’s] reputation and standing, imposing this temporary restraining order will not harm any of [Mintas’] personal interest.”
As a result, Navarro issued a temporary restraining order. Under its terms, Mintas is restrained from “engaging in any form of conduct or making statements or representations that disparage, portray in a negative light, or otherwise impair the reputation or commercial interest of plaintiff PlayUp”.
