Activision, California Point Fingers in ‘Scorched Earth’ Fight

A judge in Los Angeles is set to decide whether Activision Blizzard Inc. must pay sanctions for what a state civil rights agency has dubbed its “scorched earth litigation playbook” in the legal fight over sexual harassment allegations at the game maker.

The hearing set for Thursday before Judge Timothy P. Dillon in the Los Angeles County Superior Court is the latest development in an increasingly contentious fight between three powerful players, Activision, California’s Department of Fair Employment and Housing, and the U.S. Equal Employment Opportunity Commission.

Both regulators separately sued Activision over allegations of sexual harassment, but the company reached an $18 million settlement with the EEOC. That settlement is being challenged by the DFEH, which is seeking to block it on the grounds that it would release Activision from any state claims. Activision has pushed back on the DFEH suit and sought to protect its settlement as it moves to complete a nearly $69 billion deal with Microsoft Corp.

Dillon must decide whether to sanction Activision for its legal tactics against DFEH, and whether to allow the company to investigate claims regarding an alleged conflict of interest at the agency involving lawyers who previously worked at EEOC during that agency’s investigation.

The hearing is crucial for Activision, and Dillon’s decision could open the door to the game maker investigating California’s own handling of the harassment allegations.

‘Harassing’ Conduct

Activision wants to pursue discovery into claims lawyers at DFEH had a conflict of interest.

DFEH, though, has accused the company of drumming up ethics questions to hamper its lawsuit and of “harassing” two former EEOC attorneys by personally subpoenaing them at their homes.

The agency is asking Dillon to quash the subpoenas and sanction Activision for its discovery behavior.

This case “is not about plaintiff Department of Fair Employment and Housing’s wrongdoing,” DFEH said in a March filing.

“Activision nevertheless continues its relentless pursuit to put DFEH on trial, and manufacture ethics issues that do not exist, as part of its scorched-earth litigation playbook to deflect from the merits of the allegations against it,” the agency said.

DFEH said Activision’s discovery requests are based on an “erroneous belief” that its lawyers obtained confidential information about the company during the EEOC investigation and brought it to the California regulator.

The agency denied any conflict of interest. There isn’t any “confidential information” that allows Activision to assert a conflict of interest because both the Civil Rights Act and the Worksharing Agreement between the agencies requires the EEOC to share information with DFEH, it said.

Even if a conflict did exist between EEOC and DFEH, Activision lacks standing to assert or explore it, the state agency told Dillon.

“Activision cannot avoid the allegations in this litigation by putting government investigations on trial.”

The California agency is also separately trying to intervene in the EEOC suit. A federal judge blocked DFEH from officially joining the federal suit and rejected its request to pause the case while it appeals that ruling to the U.S. Court of Appeals for the Ninth Circuit.

DFEH declined to comment for this story. Activision did not immediately respond to a request for comment.

‘Incurable Conflict’

Activision, for its part, has said the potential ethics questions could pose an incurable conflict for DFEH and has pushed the judge to allow the company to pursue discovery over its allegations.

EEOC representatives have attested under penalty of perjury that the attorneys “performed personal and substantial work” on the Activision case while representing the EEOC, Activision said in a February filing. Activision says the lawyers were therefore conflicted from taking a position directly adverse to the federal agency, but did so when they opposed the $18 million settlement on behalf of the DFEH.

Activision should be able to seek details regarding what confidential information the former lawyers received while working at the EEOC, company lawyers said. The company also wants information about the extent to which they shared or used that information on behalf of DFEH, and whether they used the information in ending the state investigation and filing the lawsuit.

Discovery on these topics is critical to Activision’s defense, it said, because the potential ethical violations could disqualify DFEH from pursuing any claims against the company.