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Activision Blizzard officially settles federal sexual harassment suit for $18 million

(Washington Post illustration; Activision Blizzard)

A judge approved an $18 million settlement between Activision Blizzard and the U.S. Equal Employment Opportunity Commission Tuesday that resolves the federal sexual harassment lawsuit faced by the video game publisher. The company still faces multiple suits from shareholders, former employees and the California Department of Fair Employment and Housing (DFEH).

U.S. District Judge Dale Fischer said during the March 29 virtual Zoom hearing on the settlement that she couldn’t stop anyone from filing appeals, but her intent was to sign the agreement.

“I’m going to sign the consent decree, which will close this case,” Fischer said to a DFEH representative on the call, which had sued Activision Blizzard first and asked to delay the settlement approval. “You’ve already filed a motion. Your request is untimely. Talk to the 9th circuit.”

Anyone who worked at Activision Blizzard between Sept. 1, 2016 to present day can submit a claim, specifically about sexual harassment, retaliation or pregnancy discrimination. The EEOC settlement is opt-in only, so claimants have to submit paperwork to be considered for relief.

Those who choose to become part of the EEOC settlement will be waiving their rights to be part of the California state agency’s lawsuit on the specific issues of harassment, retaliation or pregnancy discrimination. If they have other claims — for instance, pay inequity, which isn’t covered by the EEOC’s agreement with Activision Blizzard — these former or current Activision Blizzard employees can still continue with the California state suit. Each individual’s case will depend on their experiences at the company.

“You don’t get to double dip. That’s the reality of these settlements,” said Anna Park, regional attorney for the EEOC’s Los Angeles district. “There’s been a lot of confusion around that. … We want to encourage everyone to make a very informed decision.”

In a news release following the settlement Tuesday, Activision Blizzard CEO Bobby Kotick said the company’s goal is to become “a model for the industry, and we will continue to focus on eliminating harassment and discrimination from our workplace. The court’s approval of this settlement is an important step in ensuring that our employees have mechanisms for recourse if they experienced any form of harassment or retaliation.”

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Following the settlement, EEOC spokeswoman Nicole St. Germain said the committee was pleased with the outcome.

Two women who previously worked for Activision Blizzard but have left the company told The Post they would apply to be claimants in the EEOC case because they wanted to see the company held accountable.

“For me, I just want a resolution. I want something to happen,” said one former Activision Blizzard employee from Texas who said she faced sexual harassment, discrimination and sexism while at the company. “I don’t want it to be drawn out anymore. I think that’s the most important thing at this point because I think people need to see that it has an ending and an outcome.”

Activision Blizzard was first sued last July by the DFEH, which accused the video game publisher of having a " 'frat boy’ workplace culture.” In September, Activision Blizzard agreed to create an $18 million fund for harassment and discrimination victims, following another lawsuit from the EEOC.

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 two agencies became embroiled in a disagreement with how much victims should be paid in the settlement, and concerns that a settlement between the EEOC and Activision Blizzard on a federal level could bar the DFEH from pursuing further damages at the state level. Final approval of the September settlement was pushed to March, due to a continuous back-and-forth between the agencies.

“The DFEH will continue to vigorously prosecute its action against Activision in California state court,” DFEH spokesperson Fahizah Alim said in a statement last week. “In recent weeks, DFEH defeated Activision’s request that the Court dismiss DFEH’s case, and DFEH has sought documents and other evidence of sexual harassment, discrimination and retaliation violations over many years by Activision. The Court has set a trial date in February 2023.”

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Critics of the EEOC settlement, apart from the DFEH, include a significant number of Activision Blizzard workers and their ally, media labor union Communications Workers of America (CWA). They believe the $18 million 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. The EEOC lawyers say that $18 million is still a significant amount of money, and that since the majority of the 10,000 Activision Blizzard employees are male, it’s unlikely that there will be thousands of claimants divvying up the funds. The $18 million settlement with the EEOC is the second largest sexual harassment settlement the agency has ever negotiated.

“We certainly believe that there’s more than adequate funds in that $18 million,” Elena Baca, partner at law firm Paul Hastings and legal counsel for Activision Blizzard in the EEOC suit, told The Post. “When you look at other settlements, sometimes people think of ‘Well, everybody who is employed is going to need to be paid.’ But that’s not the case here. ... It’s to the extent that there are people who have valid concerns and claims that they want the EEOC to evaluate and to make an assessment.”

Last December, Riot Games announced it was settling a 2018 gender-based discrimination class action suit with California state agencies and current and former female employees for $100 million. That suit has been brought up as a point of comparison in court filings about the proposed Activision Blizzard-EEOC settlement.

“I know the focus has always been on money, but it’s not just the money and it can’t be about the money,” Park said. “As an enforcement agency, it has to be about how do you move forward and bring the company to compliance because that affects the day-to-day lives of a lot of people.”

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P. Andrew Torrez, who owns a law firm and hosts the Opening Arguments podcast, which has covered the Activision Blizzard suit, said last week the judge’s ruling is a victory for Activision Blizzard and could help deflate the lawsuit from the DFEH.

“It’s a clear win for Activision Blizzard the company. They lose a small amount and they are effectively undercutting the state law proceedings where the state agency was far more aggressive,” Torrez said, referring to the DFEH suit. Activision recorded $2.16 billion in revenue in the quarter ending in December and a total of $8.8 billion in 2021.

Baca, legal counsel for Activision, said it was “fair to characterize” the settlement as a win for the company.

“I actually think it’s more of a win for people who have claims,” Baca said. “This idea of waiting for different lawsuits — who knows what will happen with that lawsuit? People could always bring their claims, they will never stop, they could file an arbitration, they can file a lawsuit, they can file whatever they felt was appropriate… This actually brings finality and a process to people that is not available elsewhere.”

In addition to the $18 million to be paid to claimants, Activision Blizzard must also establish harassment and discrimination prevention programs at the company that would be audited by the EEOC. Leftover funds may go to charities for advancing women in gaming or spreading awareness about gender equality issues, the company announced in a news release to investors last September. Activision is legally required to deposit the funds into an escrow account within 30 days.

As part of the agreement with the EEOC and in addition to the $18 million, Activision is required to expand mental health counseling services and will add a new personnel evaluation process where employees can leave feedback about their bosses. An independent, equal employment opportunity expert hired by the company will report to the EEOC. The company must also give mandatory sexual harassment training that is live and interactive.

The agreement would be in effect for three years. If Activision does not comply, the EEOC could seek all forms of relief, including monetary or sanctions in an extreme case. The EEOC lawyers say that if compliance is not up to standards, they could ask for an extension.

“I have a college daughter and another one coming out of high school and they’re entering the workforce,” Park said. “And you never want their first employment experience to be one where they’re harassed. We try to create and improve upon a work environment. That’s our job to serve that public interest.”