California’s case against Activision Blizzard gets more complicated as the DFEH is accused of ethics violations

I am not a lawyer, and never have I been more simultaneously glad and upset about that than I am today, because the Activision Blizzard lawsuits boondoggle just got extremely complicated. More extremely complicated. To bring you up to speed, after a two-year investigation California’s Department of Fair Employment and Housing sued Activision Blizzard, alleging that the company fostered a “frat boy” corporate culture where sexual harassment, discrimination against multiple marginalized groups, and more bad behavior ran rampant. A group of shareholders then filed suit against the Activision Blizzard board for not informing them of the investigation — and its potential impact on stock prices — and the SEC is investigating whether the company deceived its shareholders. More recently, Blizzard reached a an $18 million settlement with the Equal Employment Opportunity Commission over sexual harassment complaints, and the settlement has already received criticism for the relatively puny compensation fund.

And that’s just the background for the latest twist in this case, which is substantial. The state of California is not happy with the EEOC settlement, and has filed an objection arguing that the settlement would cause “irreparable harm” to its case. Employees seeking compensation from the settlement would be required to release Activision Blizzard of additional claims, such as the DFEH lawsuit. And, further, the DFEH says the settlement would allow Activision Blizzard to destroy evidence that the state might need make its case against the company.

It’s no surprise that California doesn’t want that to happen. But what is surprising is how the EEOC responded to the DFEH objection: by pointing out that the attorneys heading up the DFEH investigation have a conflict of interest because they previously worked at the EEOC on the case that they are now objecting to. If that’s true, then it’s a breach of the California State Bar’s rules of professional conduct.

Because these attorneys were directing the DFEH investigation, EEOC says that the entire DFEH legal team shouldn’t be allowed to move forward with this objection, because the entire legal team’s activity stemmed from the initial conflict of interest. Though the DFEH has already put new attorneys in charge, the EEOC says they should all be barred from filing motions about the case. In layman’s terms, the Equal Employment Opportunity Commission wants to throw out the Department of Fair Employment and Housing’s objection, and prevent anyone from the DFEH from filing anything else relating to the case.

If the court aggress with the EEOC, that will make it much harder for the DFEH to have any say in this settlement — and it could put the DFEH’s legal team in seriously hot water. If what the EEOC says is true, Activision Blizzard’s lawyers could jump on this ethics violations part of their defense. It’s hardly a slam dunk to a dismissal, but it does muddy the waters and it could well make the entire situation far more drawn out.

The only thing that’s certain is that that this is only going to get worse — and more complicated — from here.

Updated October 13, 2021

As we predicted, things got more complicated. The DFEH motion was denied, although that doesn’t mean the settlement just goes ahead — the court has ordered the DFEH and EEOC to confer and discuss a schedule and to potentially refile a motion in seven days. But that’s hardly the only complication, as the Communication Workers of America has also filed an objection to the EEOC settlement.

It’s fairly clear from their later statements that the CWA does not think much of this settlement, and it’s hard to argue with the fact that an $18 million dollar settlement isn’t much of anything from a company worth billions. And a statement CWA secretary-treasurer Sara Steffens gave to Kotaku, the organization calls on the DFEH, the SEC, and the National Labor Relations Board — all of which have been investigating Activision Blizzard — to hold the company accountable.

It seems likely at this point that even if the EEOC gets its way and the DFEH is unable to proceed with its objections to the settlement, the CWA’s objections won’t (we hope) have the same problems — so its objection could proceed. And the CWA clearly doesn’t have any problem saying bluntly that this settlement is unfair to the workers at Activision Blizzard. And even if none of these objections go through, the DFEH investigation, the SEC investigation, and the CWA complaint aren’t going away, no matter what the court rules.