Activision Discrimination Deal Arms It Against New Wave of Suits

New employment suits against Activision Blizzard Inc. can’t “piggyback” off of the video game maker’s proposed settlement with California as easily as new litigants typically might because of its stricter-than-usual clause not admitting liability.

Activision workers filed two new lawsuits in the weeks since the video game giant announced a $55 million proposed settlement with the California Civil Rights Department over allegations of discrimination against women employees.

The new suits filed in Los Angeles Superior Court bring fresh allegations of discrimination against the Santa Monica, Calif.-based Activision. They include allegations that a web designer was demoted for complaining about sexist treatment and that the company discriminates against “old white guys.”

The proposed settlement says that “no court and no independent investigation has substantiated any” of the allegations at hand, Southern California Gould School of Law professor Adam Zimmerman said. The uniquely strict language adds an extra layer of bubble wrap to the settled allegations, making them harder to point to for other would-be plaintiffs.

“If they didn’t have all this language, you could definitely imagine plaintiffs pointing to the investigation and the settlement to say, ‘There’s smoke and fire here,’” Zimmerman said. These plaintiffs don’t have “the same extra momentum that might ordinarily follow a major deal with a federal or state regulator,” he said, but they can still sue.

Unlike many class action settlements that plaintiffs would have to intentionally exclude themselves from in order to pursue independent litigation, no one was swept up automatically into Activision’s settlement with California.

Although different in their specifics, the allegations of worker discrimination broadly echo those that Activision settled in December: Women employees alleged in the state department’s 2021 suit that Activision denied women equal pay and promotions and that male employees engaged in a “frat boy culture” where they joked openly about rape and harassed female employees.

One woman employee took her own life while on a trip with her male supervisor, and the state’s complaint said she was subject to intense sexual harassment prior to her death.

A Drop in The Bucket

Although larger than the US Equal Employment Opportunity Commission’s $18 million settlement with Activision Blizzard in 2022, this $55 million settlement is still “kind of a drop in the bucket” for a company that Microsoft Corp. spent $68.7 billion to acquire last year, said University of Kansas School of Law Professor Alexander Platt.

The size of the company could encourage plaintiffs to pursue their own claims rather than accept the settlement.

But future plaintiffs inclined to pursue litigation independently from the settlement will likely find the proposed settlement more useful if their allegations—like these two—target pay and promotion discrimination, Platt said. The proposed settlement only appears to be based on pay and promotion allegations, not harassment, he said.

Activision web designer Chloe Nairne alleged that managers improperly discredited her work and undermined her position in a sexist way and said she was demoted and called a “flight risk” because she spoke up, according to her Jan. 2 complaint filed in Los Angeles Superior Court.

Meanwhile, former Activision executive James Reid Venable alleged Jan. 2 in Los Angeles Superior Court that he was laid off because of a campaign to “get rid of ‘old white guys’” within the company. Younger, non-white employees took more leadership roles after former CEO Bobby Kotick said “the ‘problem’ with Activision Blizzard is ‘there are too many old white guys,’” Venable said in his complaint.

Neither discusses the government’s investigation of the company—likely due to the proposed settlement’s elaborate “no admission” section.

In response to the new lawsuits, an Activision spokesperson said that the company doesn’t make employment decisions on the basis of any protected identity and “any allegations to the contrary are taken seriously and thoroughly investigated.”

Urska Velikonja, a Georgetown University Law Center professor who studies securities regulation and enforcement, said the mere existence of the parallel cases could be a boon to future private plaintiffs.

A 2010 study of securities class actions that found individuals pay more out-of-pocket to settle such cases when the Securities and Exchange Commission has also brought a case against them, she noted.

New plaintiffs can point to the dollar amount of Activision’s settlement, and that “the government agency thought it was significant enough that they did bring an investigation,” Velikonja said.

“They don’t bring investigations against every company,” she said, “but they brought it against this company.”