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A judge blessed a deal between Activision Blizzard and a federal agency that resolves one of numerous sexual harassment lawsuits the video game publisher faces, despite concerns that the agreement may undermine California’s pursuit of further damages in a separate case. The company, which awaits permission to be acquired by Microsoft in an deal that could upend the gaming world, is fighting legal battles on multiple fronts waged by former employees, state regulators and shareholders.
U.S. District Judge Dale Fischer on Tuesday approved Activision Blizzard’s $18 million settlement with the U.S. Equal Employment Opportunity Commission over the objection of the California Department of Fair Employment and Housing, which sued first and has looked to halt confirmation of the deal.
“I’m going to sign the consent decree, which will close this case,” Fischer told a lawyer for DFEH. “You already filed a motion. Your request is untimely. Talk to the Ninth Circuit.”
Activision Blizzard chief executive Bobby Kotick said in a statement the company will “continue to focus on eliminating harassment and discrimination from our workplace.”
Kotick added: “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.”
The case arises from multiple claims of sexual harassment and workplace misconduct at Activision Blizzard. It featured allegations of male employees excessively drinking and joking about rape in addition to a story about the “Cosby Suite,” where one executive known for his unwanted sexual advances harassed women, and another of a female employee who committed suicide after colleagues shared a nude picture of her.
The claims were first detailed in a complaint filed in July by the DFEH. The EEOC followed by bringing a lawsuit of its own in September. The case soon erupted into a turf war between the federal and state agencies in a dispute that ultimately led to Activision’s favored outcome: a settlement that eliminates some uncertainty of its liability stemming from extensive accusations of sexual harassment amid Microsoft’s $68.7 billion bid to purchase the company.
Anyone who was employed by Activision Blizzard at any time since September 2016 can participate in the EEOC’s deal. They can submit claims for sexual harassment, pregnancy discrimination or retaliation, get their estimated settlement value and choose to opt in to the agreement. But those who choose to do so waive their right to be a part of California’s pursuit of damages in parallel state court proceedings on those claims.
The two agencies, which share authority to handle workplace sexual harassment claims, both received an anonymous tip in 2018 from a human resources employee complaining of a hostile work environment. They became entangled in a feud over the value of victims’ claims and concerns that the EEOC’s settlement may undercut California’s case against the company in Los Angeles Superior Court.
During the March 29 hearing, a lawyer for DFEH urged the court to delay approving the deal until the EEOC can ensure that its settlement won’t derail California’s lawsuit.
“The consent decree cannot interfere with the DFEH,” said Jahan Sadafi. “Activision has indicated its intent to use it to undermine our case.”
Fischer curtly answered, “I’m going to sign the consent decree. If you’re going to file something, file something. I’m telling you it’s untimely.”
Some Activision Blizzard workers and the Communications Workers of America have opposed the EEOC’s settlement. The CWA argues that the $18 million deal is “woefully inadequate” and attempts to preempt the lawsuit brought by DFEH. It emphasizes that California law provides for greater remedies and that the DFEH appears much more willing to aggressively pursue the case.
CWA secretary-treasurer Sara Steffens told The Hollywood Reporter that the court’s “approval of the EEOC’s consent decree with Activision Blizzard is disappointing and premature, and the court ignored concerns raised by former Activision employee Jessica Gonzalez,” who objected to the deal.
“Under the decree, workers who have suffered from years of toxic workplace misconduct at the hands of Activision Blizzard must give up their rights under California state law to receive compensation from this company’s history of wrongdoing,” Steffens said. “Meanwhile, Activision Blizzard’s management is not being held truly accountable for the harm they have done.”
Critics of the settlement have pointed to Riot Games’ $100 million settlement of a gender discrimination class action with California state agencies.
Richard Hoeg, a mergers and acquisitions attorney at the Hoeg law firm, believes approval of EEOC’s settlement advances Microsoft’s proposed acquisition of the video game publisher.
“In terms of Activision and Microsoft, this is a good day,” Hoeg says. “At bare minimum, it’s certainty for those companies, and certainty is what you want when you’re making a giant acquisition. For Microsoft, which was buying into trouble, they’re happy they know what that trouble is on EEOC’s side.”
He also highlights that workers have no obligation to participate in the EEOC’s deal and that they can choose to be a part of the DFEH’s case if they want.
The DFEH did not immediately respond to a request for comment.
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