The lawsuit, filed Tuesday in the U.S. District Court for the Central District of California, also targets Activision Blizzard’s CEO, chief financial officer, and ex-CFO.
The suit accuses the company of stuffing its securities filings with vague disclosures about “routine” legal claims to deflect attention from the existential threat posed by an investigation into its “frat boy” culture by the California Department of Fair Employment and Housing.
When the agency’s lawsuit against the company came to light July 21, its stock price plunged, leading to a “precipitous decline in the market value,” the complaint says.
Activision Blizzard failed to disclose “numerous complaints about unlawful harassment” despite knowing that “the pervasive culture of harassment, discrimination, and retaliation would result in serious impairments” to its operations, according to the proposed class action.
That concealment artificially inflated the company’s stock, the suit says.
The California agency said its two-year investigation found that Activision Blizzard discriminated against female employees in several areas of employment including compensation and promotion, and that company leadership failed to take steps to prevent harassment and discrimination.
The agency asked a state court in Los Angeles to force the company to comply with workplace protections and to offer unpaid wages, pay adjustments, and lost wages to female employees.
Activision Blizzard declined to comment on the investor lawsuit.
Cause of Action: Sections 10(b) and 20(a) of the Securities Exchange Act, along with related federal regulations.
Relief: Damages, costs, and fees.
Potential Class Size: Activision investors who acquired stock between May 2017 and January 2019.
Attorneys: The plaintiff is represented by Rosen Law Firm PA.
The case is Cheng v. Activision Blizzard Inc., C.D. Cal., No. 21-cv-6240, complaint filed 8/3/21.
—With assistance from