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Activision Asks to Pause Sex Bias Suit, Raising Ethics Clash (1)

Oct. 19, 2021, 10:53 PMUpdated: Oct. 20, 2021, 1:52 PM

Activision Blizzard Inc. petitioned a California court to temporarily halt an ongoing sexual harassment and discrimination case, asking for time to investigate ethics allegations against the state anti-bias agency that sued the company.

Activision’s request Tuesday is based on the U.S. Equal Employment Opportunity Commission’s recent claim that the California Department of Fair Employment and Housing can’t join a related federal case involving the video game company due to an ethics lapse involving two of its lawyers.

“The EEOC has alleged facts that, if substantiated, could require multiple DFEH attorneys to be barred from representing DFEH in connection with this litigation against Activision Blizzard, and could raise serious questions about the DFEH’s underlying investigation,” the company said in its filing.

Activision’s bid for a stay is the latest chapter in an unusual conflict between federal and state agencies responsible for policing discrimination in the workplace. The dispute stems from parallel efforts to go after Activision for its alleged “frat boy” culture, which has also generated a Securities and Exchange Commission probe, shareholder lawsuits, and an unfair labor practice complaint.

The EEOC reached a proposed $18 million settlement with Activision last month to resolve sweeping discrimination and retaliation claims against the company.

But DFEH objected in October, arguing that the deal includes a procedure to release Activision from state claims that the EEOC lacks standing to prosecute. The DFEH separately sued the company in state court in July, roughly two months before EEOC brought its suit.

In response, the EEOC asked the federal court last week to reject the DFEH’s bid to intervene in the case. One reason to turn aside the state agency is that it has a conflict prohibited by the California Bar Association’s rules for lawyers, according to the EEOC.

The EEOC claimed that its investigation of Activision was directed by two lawyers who later joined the DFEH, appeared in the federal case against the video game company, and play leadership roles in that state agency.

“After being informed of this conflict, DFEH retained new counsel but appears to have filed the present intervention motion just hours after this counsel was retained, strongly suggesting that the motion is a product of the prohibited representation,” the EEOC said in a brief.

Activision said that it looks forward to resolving the case with the DFEH.

“We share the EEOC and DFEH’s goal of a safe, inclusive workplace that rewards employees equitably and remain committed to the elimination of harassment and discrimination in our workplace,” the company said in a statement.

Representatives for the EEOC and the DFEH didn’t respond to telephone and email requests for comment.

The case is Dep’t of Fair Employment & Housing v. Activision Blizzard Inc., Cal. Super. Ct., No. 21STCV26571, application to stay filed 10/19/21.

(Updated with company statement in 10th and 11th paragraphs. Article originally published Oct. 19.)

To contact the reporter on this story: Robert Iafolla in Washington at riafolla@bloomberglaw.com

To contact the editors responsible for this story: Jay-Anne B. Casuga at jcasuga@bloomberglaw.com; Meghashyam Mali at mmali@bloombergindustry.com

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