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Activision Blizzard asks to pause harassment lawsuit, citing dispute between two government agencies

(The Washington Post illustration; Photo by David McNew/AFP via Getty Images)

Major video game company Activision Blizzard, known for titles such as “World of Warcraft,” “Call of Duty” and “Candy Crush,” requested Tuesday that the ongoing lawsuit with the state of California’s Department of Fair Employment and Housing (DFEH) be moved to a separate court. The filing also asked to pause proceedings to examine alleged ethical violations by the DFEH, including that it hired lawyers from another government agency already investigating Activision Blizzard. The DFEH filed a gender-based discrimination, inequality and sexual harassment lawsuit against Activision Blizzard in July, alleging the company had a “frat boy culture.”

The ethical violations alleged in Activision Blizzard’s filing stem from a feud between the federal Equal Employment Opportunity Commission (EEOC) and the DFEH, two agencies that launched separate investigations into the company over sexual harassment and discrimination allegations. The gaming company moved to settle with the EEOC in late September, announcing it would create an $18 million fund to compensate harassment and discrimination victims. The courts have yet to approve the agreement.

The EEOC, a federal agency, and the DFEH, a state agency, share jurisdiction over workplace sexual harassment cases, and both agencies received anonymous tips in 2018 to investigate Activision Blizzard. The conflict has worsened over a disagreement with how much victims should be paid, and concerns that if the EEOC were to settle with Activision Blizzard on a federal level, it could bar the DFEH from being able to pursue further damages at the state court level.

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The $18 million amount with the EEOC would be the second largest sexual harassment settlement the agency has ever negotiated. But to critics of the settlement, including the DFEH, a significant number of Activision Blizzard workers and their ally, media labor union Communications Workers of America (CWA), that sum is insufficient for potentially hundreds or more victims. In a letter addressed to the EEOC on Oct. 6, the CWA called $18 million “woefully inadequate,” and said Activision Blizzard employees and the CWA had “grave concerns” over the settlement agreement.

In a court document filed Oct. 8, the EEOC argued, “It is extremely speculative to argue, from outside the negotiating process, that more could have been obtained.”

Through a spokesperson, Activision Blizzard released a statement Tuesday regarding the status of the lawsuit. “We look forward to resolving the case with the DFEH fairly in an appropriate court,” it read. “We share the EEOC and DFEH’s goal of a safe, inclusive workplace that rewards employees equitably and [we] remain committed to the elimination of harassment and discrimination in our workplace.”

Lawyers who spoke with The Washington Post said that, historically, government agencies on the same side don’t fight like this, especially over civil rights and workplace discrimination cases.

Richard Hoeg, a managing member of the Hoeg law firm and a YouTuber who discusses gaming legal issues, pointed out similarities to when the DFEH intervened in the 2018 class-action gender discrimination lawsuit brought against Riot Games, another major video game developer. In that instance, the DFEH objected to a settlement payment of $10 million to the women at Riot, as agreed upon by the women’s lawyers and the game studio. The DFEH blocked the agreement with a court filing in which the agency said it believed the victims should be entitled to $400 million. That case is still ongoing.

“The EEOC’s philosophical response [to the DFEH] is: True, okay, maybe if you went to litigation, [but] you’ve never won one that big, especially in this industry, so we’d like to get definite money on the table to these people, rather than say … roll the dice on litigation," Hoeg said. "Neither side is necessarily wrong there, but it’s a fundamental difference in philosophy.”

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Further fueling the interagency dispute, the EEOC pointed out in its Oct. 8 filing that two lawyers from its organization who helped direct the investigation into Activision Blizzard then went on to work in leadership roles at the DFEH. The commission alleges that these lawyers took their work with them without permission. The lawyers’ names are redacted from court filings.

If those allegations are true, the lawyers could have violated attorney ethics rules, according to lawyers that spoke with The Post.

“For its part, DFEH has accused EEOC of revealing privileged communications between the two agencies in one of its affidavits,” said P. Andrew Torrez, who owns a law firm and hosts the Opening Arguments podcast, which has covered the Activision Blizzard suit. “It’s ugly. … It cannot be overemphasized how weird this situation is.”

The two lawyers switching jobs may give Activision Blizzard a way to challenge the DFEH suit if the court finds issue with how the sexual harassment investigation was conducted. It would not clear the company of any wrongdoing, but it might reset the DFEH case.

“That gives Activision an arrow in its quiver, right?” Hoeg said. “If the DFEH is prohibited from doing what it did under California rules, if the court decides that it is a big deal that should have been screened, then the DFEH’s entire legal force could be barred from representing the state of California in this action. That might mean that all of what they have done so far essentially has to go back to the drawing board.”

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In a filing Wednesday, the DFEH denied that any ethical violations had taken place, instead accusing Activision of attempting to “conjure a scandal.” According to the DFEH, the two attorneys in question had minimal involvement in the investigation while working at the EEOC. In its filing, the regulator invited Activision to pursue appropriate relief if they felt that wasn’t accurate.

The DFEH also pointed to an agreement between the two government agencies that required sharing of information. “Activision can point to no actual or even hypothetical harm,” reads the filing. “The alleged harm (that the DFEH lawyers ‘obtained confidential information about Activision Blizzard during their employment with the EEOC’) is simply the typical harm of being a litigation defendant.”

On Tuesday, Activision Blizzard also sent out an email to all employees from its executive vice president for corporate affairs, Fran Townsend, who served under President George W. Bush as Homeland Security adviser from 2004 to 2008. The email said that more than 20 people have “exited” the company over behavioral complaints, and 20 additional employees have faced reprimand. Townsend wrote that 19 more positions would be added to the company’s ethics and compliance team.

When reached for comment Tuesday, employees at Activision Blizzard said the overall fight between government agencies has been a major distraction.

“It seems in the big legal battles that are going on, the most important thing about them is being forgotten: the people who were wronged,” said a current Blizzard employee who requested anonymity for fear of retaliation. “It feels incredibly bad all over.”

Inside the Activision Blizzard lawsuit

On July 20, California’s Department of Fair Employment and Housing (DFEH) filed a lawsuit against video game publisher Activision Blizzard, alleging widespread, gender-based discrimination and sexual harassment. Here’s what you need to know:

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