Activision Bias Settlement Draws Challenge From California (1)

A California civil rights agency plans on objecting to Activision Blizzard Inc.'s proposed $18 million settlement with the U.S. EEOC to resolve sweeping allegations of workplace sexual harassment and discrimination.

The California Department of Fair Employment and Housing on Wednesday asked a federal court for permission to file a motion to intervene in the Equal Employment Opportunity Commission’s case by Oct. 29. The state agency said the move is necessary “to avoid irreparable harm” to its ongoing litigation against the company.

In addition to creating an $18 million fund for victims of sexual harassment and discrimination, the EEOC’s settlement with the game maker includes workplace reforms and third-party oversight of company policies.

But the proposed settlement includes a procedure to release Activision from state claims, which EEOC lacks standing to prosecute, the DFEH said in its objection.

The commission’s lawsuit only alleged federal claims, and it failed to notify the federal court of the state agency’s pending suit in state court, the filing said.

The proposed agreement also contains provisions “sanctioning the effective destruction” of evidence critical to the DFEH’s own case, the agency said, such as personnel files and other documents referencing sexual harassment, retaliation and discrimination allegations.

“My overall assessment is that it would be unusual for a state agency to object to an EEOC settlement,” said Risa Lieberwitz, a professor of labor and employment law at Cornell University.

“If DFEH is arguing there is a negative impact on the state’s ability to pursue its claims — essentially arguing the federal government is interfering with the state’s ability to pursue its jurisdiction, that would seem to be quite a serious objection,” Lieberwitz said.

Parallel Lawsuits

California sued Activision Blizzard in July, roughly two months before the EEOC filed its own suit and proposed consent decree.

The state agency told a court in Los Angeles that it had conducted a two-year investigation into Activision’s internal culture and found that the company discriminated against female employees in terms and conditions of employment, including compensation, assignment, promotion, and termination. Company leadership consistently failed to take steps to prevent discrimination, harassment, and retaliation, the agency said.

Since allegations over Activision Blizzard’s “frat boy” culture surfaced over the summer, the company has also been hit with an SEC probe, shareholder lawsuits, and an unfair labor practice complaint.

The proposed EEOC settlement must be approved by Judge Dale Fischer of the U.S. District Court for the Central District of California. The state regulators also asked the judge to schedule a settlement hearing on Dec. 13.

Adam Pulver, an attorney at Public Citizen Litigation Group, said the DFEH’s objection is likely to be taken seriously by the court.

“Federal judges in California are well-aware that, in many circumstances, California law offers greater protection, and greater remedies, to workers,” Pulver said. “The settling parties will need to explain both why the EEOC has the authority to waive California claims, and why it is fair for such claims to be waived as a part of this settlement.”

An Activision spokesperson told Bloomberg Law the game maker is “committed to making Activision Blizzard the most welcoming, inclusive, and safe workplace possible.”

“Our agreement with the EEOC reflects that commitment to significant improvements and transparency, as well as making immediate compensation available to eligible employees who choose to participate.”

The EEOC declined to comment.

Olivier Schreiber & Chao LLP represents DFEH.

The case is EEOC v. Activision Blizzard, Inc., C.D. Cal., No. 2:21-cv-07682, notice filed 10/6/21.