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Activision Hires Wilmer for Internal Probe as Workers Howl (1)

July 28, 2021, 8:50 PMUpdated: July 29, 2021, 1:47 AM

Activision Blizzard Inc., a video game maker coping with an employee revolt over claims of sexual harassment and discrimination, has hired Wilmer Cutler Pickering Hale and Dorr to investigate its corporate culture.

The review will “ensure that we have and maintain best practices to promote a respectful and inclusive workplace,” Activision CEO Bobby Kotick told employees in a Tuesday statement. “This work will begin immediately.”

WilmerHale partner Stephanie Avakian, who rejoined the firm’s Washington office earlier this year after serving as the Securities and Exchange Commission’s enforcement director during the Trump administration, will lead the inquiry. Avakian is a member of the firm’s management team and chair of its securities and financial services department.

Activision’s actions come a week after the California Department of Fair Employment and Housing accused the Santa Monica, Calif.-based company in a lawsuit of perpetuating a “frat boy” culture that routinely subjected female employees to unequal pay, sexual harassment, and retaliation.

The allegations, which Activision denied, came as the gaming industry grapples with repeated claims of gender bias and sexual misconduct.

WilmerHale has also appointed its anti-discrimination practice chair Brenda Lee and special counsel Tania Faransso to work on the Activision probe with Avakian, said Frank James, a WilmerHale spokesman, in an email to Bloomberg Law.

“The firm has extensive experience assessing workplace culture and helping organizations strengthen their workplace environments,” James said.

Kotick, in his email to all Activision employees, apologized for the company’s “tone deaf” response as current employees prepared for a walkout to demand more equitable treatment for underrepresented staff, according to Bloomberg News.

Some Activision employees were upset about a message sent by Frances Townsend, a former Bush administration lawyer-turned-former general counsel for billionaire Ronald Perelman’s holding company. Activision hired her in March as an executive vice president of corporate affairs, chief compliance officer, and company secretary.

Townsend told employees that many of the claims in the DFEH lawsuit “presented a distorted and untrue picture of our company, including factually incorrect, old, and out of context stories—some from more than a decade ago.”

Activision, one of the biggest names in video games, subsequently saw more than 2,000 current and former employees sign a petition supporting the DFEH lawsuit and calling the company’s response to the litigation “abhorrent and insulting.”

Townsend is one of at least three senior lawyers recruited by Activision in recent months. In mid-June, the company added chief legal officer Grant Dixton, who joined after spending the past year as general counsel for the Boeing Co.

Activision also hired Luci Altman last month as a senior vice president for senior securities and corporate governance. Altman joined Activision after spending the past half-dozen years at Las Vegas Sands Corp., where she was most recently a deputy general counsel for securities and corporate affairs.

Altman didn’t respond to a request for comment about her new role at Activision.

Legal Changes

Activision spokesman Kelvin Liu confirmed the company’s recent series of legal additions, as well as its hire of chief administrative officer Brian Bulatao in March.

Bulatao, who is not a lawyer, has a portfolio that includes corporate social responsibility, human resources, information technology, and workplace, information, and physical security, Liu said.

The company’s website currently lists job openings in its legal group for a vice president of employment law and an associate counsel for ethics and compliance. The latter role and Altman report into Townsend’s organization and the vice president of employment law will report into Dixton’s organization, Liu said.

Dixton, Activision’s newly appointed legal chief, succeeded longtime top lawyer Christopher Walther, who retired as of June 14.

Walther received nearly $3.3 million in total compensation from the company during 2020, according to a proxy statement filed this year by Activision, which noted in its justification for his pay package that Walther “had additional objectives regarding active legal initiatives and other ongoing investigations that were partially met.”

Activision hired Walther to succeed George Rose as its legal chief in early 2010, roughly a year after the company was formed via a merger between video game makers Activision Inc. and Blizzard Entertainment Inc. Walther currently owns $9.5 million in Activision stock, per Bloomberg data.

Compensation information for Townsend and Dixton, both of whom are members of Activison’s executive leadership team, is not yet available. The company’s most recent proxy shows that its president and COO Daniel Alegre, a Harvard Law School graduate that Activision hired last year from Google LLC, received a total pay package for 2020 valued at almost $13 million.

Paul Hastings advises the compensation committee of Activision’s board of directors, which is chaired by attorney and veteran video game executive Brian Kelly and also includes Barry Meyer, another former lawyer and the retired chairman and CEO of Warner Bros. Entertainment Inc.

WilmerHale, the firm hired by Activision to probe its policies and procedures, has an established track record of internal investigations expertise. The firm was hired last year by the University of Michigan to conduct an inquiry into sexual abuse claims involving a former doctor employed by the school. Pinterest Inc. also tapped WilmerHale last year to review its pay practices after facing allegations of racial bias.

Major League Baseball’s New York Mets retained WilmerHale and Lee earlier this year for a workplace culture probe that in June led to the resignations of two longtime team executives, including legal chief David Cohen.

WilmerHale has also previously done legal work for Activision. In a 2015 profile of Walther by The National Law Journal, WilmerHale partner Meredith Cross, a former director of the SEC’s Division of Corporation Finance, said she had advised Activision on corporate and securities law compliance matters.

Outside counsel have yet to enter an appearance for Activision in the lawsuit filed against the company by California’s DFEH. Ropes & Gray and Mitchell Silberberg & Knupp have both handled more than 25% of Activision’s U.S. federal litigation caseload over the last five years, according to Bloomberg Law data.

Other firms often hired by Activision for litigation counsel during that time include Cooley; Shook, Hardy & Bacon; Perkins Coie; and Fenwick & West.

(Clarifies reporting lines for new legal hires in 17th paragraph.)

To contact the reporter on this story: Brian Baxter in New York at bbaxter@bloomberglaw.com

To contact the editor responsible for this story: Chris Opfer at copfer@bloomberglaw.com;
John Hughes in Washington at jhughes@bloombergindustry.com

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