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Activision Harassment Suits Ignite EEOC-California ‘Turf War’

Nov. 29, 2021, 9:45 AM

A one-of-a-kind clash between the U.S. EEOC and a California civil rights agency over sexual harassment and bias claims against Activision Blizzard Inc. is likely to create confusion for other employers and stall efforts to overhaul the game maker’s “frat bro” culture, legal observers said.

California’s Department of Fair Employment and Housing, which accused Activision of a toxic workplace culture in a July lawsuit, is butting heads with the Equal Employment Opportunity Commission over the federal agency’s proposal to settle similar claims for $18 million.

State regulators have sought to block that deal, saying it would hurt their case, while the federal agency has hit back with ethical concerns about California’s lawyers. A federal judge scheduled a hearing Monday on the state agency’s motion to intervene in the EEOC’s case.

It’s never great when you see two government agencies fighting, because they’re using public resources to essentially have a “turf war,” said Elizabeth Tippett, an associate law professor at the University of Oregon Law School. “And generally the primary beneficiary of fighting between two agencies is the corporate employer—in this case, Activision.”

The unusual skirmish between two civil rights agencies can harm employees at the company and elsewhere in California, as it can drag out litigation and delay potential settlements, attorneys said.

“I have never seen something quite like this before between the EEOC and the state enforcement agencies,” said Mark Girouard, chair of the labor and employment practice at Nilan Johnson Lewis P.A. It “will make it more difficult to resolve claims like this because there’s going to be that concern in the background that the state agency is going to step in and try to either intervene or undermine the resolution” with the EEOC.

The commission “highly values” its cooperative relationships with state and local agencies to enforce federal anti-discrimination laws, spokesperson Victor Chen said in a statement. He said the EEOC has agreements in place with 91 state and local agencies nationwide, including California, and processed more than 42,000 bias charges in fiscal year 2021.

The DFEH didn’t respond to Bloomberg Law’s request for comment.

Volatility for Employers

Prior to filing their separate suits, the EEOC and the DFEH conducted multi-year investigations into allegations of Activision’s toxic workplace culture and bias in pay and promotions.

Attorneys say the battle between the two will cause volatility for other employers facing discrimination claims in California.

An employer sued by multiple entities generally will want to settle with one of them early if they can, Tippett said. “And if they have a suspicion that settling early would create conflict, it gives them an additional incentive to try and do so,” she said.

Activision did try to use the EEOC’s ethics concerns about California’s lawyers—allegedly based on their prior involvement in the commission’s investigation before assuming leadership roles at the DFEH— to its own benefit, suggesting that there might have been an issue with the state suit, said Rick Hoeg, a corporate attorney at the Hoeg Law Firm PLLC.

The court refused to pause the state case on those grounds, and while Activision could potentially pursue that argument, he doesn’t see the company gaining an advantage.

“In a vacuum, what you have is a delay, and Activision doesn’t necessarily want that,” Hoeg said. “It likely wants to start putting some of these lawsuits to bed.”

Girouard added,“I would say for employers in California, just to keep an eye to the fact that the other agency may be waiting in the wings to second guess what you’re doing.”

Worker Impact

The intra-agency disagreement may affect where employees file their initial bias charges, attorneys said.

“Most of the time, if you’re a California employee, you’re probably going to be better off and have more legal options available to you if you pursue your case under the state law and through the DFEH rather than the EEOC,” said Eric Bachman, principal at Bachman Law in Washington, who represents workers in discrimination cases.

Additionally, he said, litigation and settlements may be delayed in future high-profile cases depending on how the Activision case goes.

The goal is for everyone defending workers to “row in the same direction,” Hoeg said.

“We don’t see these kinds of territorial fights very often, but it’s not doing anything for developers on the ground,” he said, referring to video game workers. “In fact, I think the spat between agencies is probably not great for the overall push to get things cleaned up.”

Tippett said she expects both agencies will move forward with their cases and “Activision will face settlements with both.”

Future Collaboration

This conflict also has attorneys wondering how it might affect the agencies’ relationship and future cases on which they would traditionally team up.

“I can’t see the EEOC having as much interest in dividing up the work with the DFEH after this, and so my guess is it will result in both agencies’ resources being stretched more thin in California,” Girouard said. The result of that could be “less coordinated enforcement.”

The most recent worksharing agreement between the two agencies was extended through Sept. 30, 2021, but no new agreement or extension has been filed.

It used to be that the largest lawsuits against employers were brought through private litigation, but because of class action waivers signed by workers, the big remaining avenue for potential high-dollar judgments is government agencies, Tippett said.

“So the stakes are really high, because this is the primary remaining space where those class-based claims occur,” Tippett said.

California Effect

Attorneys added, however, that this type of federal-state clash is more likely to come into play in California than in other states.

“The DFEH has always taken I think, a more aggressive stance than the EEOC, and like in many other areas, California sets their own course and so will likely continue to do so,” Girouard said. “I would be surprised to see this type of conflict with other state agencies.”

He added that this type of government disagreement will probably crop up in large class cases and not for individual claims, which constitute the vast majority of federal and state discrimination charges.

Bachman said he’s hopeful that because the Activision case is so unique, it won’t necessarily be “a preview of some problem to come in future enforcement actions.”

“I really do hope the leaders of these agencies can figure this out and ultimately they’re all on the same side—they should be out there protecting the rights of employees,” he said.

To contact the reporters on this story: Shira Stein in Washington at sstein@bloomberglaw.com; Maeve Allsup in San Francisco at mallsup@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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