California, EEOC Fight Over Pursuing Activision in 9th Circuit

Activision Blizzard Inc. and the EEOC told the Ninth Circuit at oral arguments that California is seeking to undo an already-implemented $18 million deal and is too late to work with its federal counterpart in addressing sexual harassment and discrimination at the game maker.

Judge Jay S. Bybee countered that California is trying to get what it can after it was denied permission to intervene in the district court.

“Much of what CRD was interested in is gone,” Bybee told US Equal Employment Opportunity Commission attorney Chelsea Sharon. “So whatever hard line it was arguing for at one time, it no longer can realistically can ask for that. So, this is the theory of the second best.”

The EEOC sued Activision for alleged sexual harassment, pregnancy discrimination, and related retaliation and simultaneously submitted a proposed consent decree. The CRD, which at the beginning of its investigation was cooperating with the federal agency, separately sued Activision in state court for alleged sexual discrimination and misconduct.

California contends that the EEOC’s consent decree required required individuals who opted to receive funds to forgo participating in whatever relief the CRD was able to negotiate, in essence knee-capping the agency from seeking relief for violations of state laws.

“This is a very rare and as far as I know an unprecedented, unique situation where the EEOC has sought to settle state law claims,” Jahan Sagafi, a partner with Outten & Golden representing the CRD, told the three-judge Ninth Circuit panel.

Because CRD was only an amicus below, it couldn’t ask the trial judge to rule on whether the release of state law claims exceeded EEOC jurisdiction, Sagafi said.

Fashioning Remedies

Given that the appeals court denied the stay CRD sought to block the consent decree, “if we thought you were right in the first instance—that you should’ve been permitted to intervene—what do we do now? That’s a very, very awkward position here,” Bybee said.

First, the court could order the EEOC to include training on California law violations and compliance for Activision employees and managers, Sagafi said. The training, required by the consent decree, is specific to federal law and is “teaching people the wrong standard” about what is harassment, discrimination, and how to complain. It also doesn’t include any training component about complying with California law.

With the consent decree final, “the better solution,” Bybee said, “might be to get you at the table to get the training in on the injunction, in which you’re seeking to join the consent decree,” Bybee said.

The state is pursuing the interests on behalf of more than 1,000 potential class members who are current or former Activision workers. Some 221 people accepted the relief, with an average per-person recovery of $80,000, Sharon said. About 40% of workers who opted in are either male or out-of-state residents who wouldn’t be covered by California’s claims.

The individuals who opted in signed a binding contract, Sharon said, adding that the state has “always sought to undo the consent decree or block its provisions.”

If the state earlier asked to be part of the training, “it is entirely possible that we could have found a way to cooperate in good faith in having them help with implementation of the decree,” she said.

Activision supported the EEOC.

Individual Intervention Denied

In separate arguments before the same panel, former Activision employee Jessica Gonzalez contends she was wrongly denied the right to intervene in the settlement. Gonzales objected to the consent decree because workers were potentially losing their rights under state law.

Michaela Foster Posner, an attorney with Weinberg Roger & Rosenfeld APC, said Gonzalez seeks guidance about defining who can be considered harmed by a court order sufficient to have standing to appeal the judge’s ruling.

Gonzalez didn’t have standing until she was constructively discharged in retaliation for comments she made supporting diversity, equity, and inclusion, Posner said. And EEOC arguments that her petition to intervene was untimely fail because the agency’s lawsuit was filed the same day as the consent decree. She also seeks to invalidate the release EEOC required claimants to sign.

Circuit Judge Morgan Christen and Judge Eric Vitaliano, sitting by designation from the US District Court for the Eastern District of New York, also sat on the panel.

Paul Hastings LLP represents Activision Blizzard. Outten & Golden LLP represents the state. Weinberg Roger & Rosenfeld APC represent Gonzalez. EEOC counsel represents the agency.

The cases are EEOC v. Activision Blizzard, Inc., 9th Cir. App., Nos. 22-55060, 22-55587, and 22-55515, oral arguments 6/13/23.