California Department of Fair Employment and Housing v. Activision Blizzard facts for kids
Quick facts for kids California Department of Fair Employment and Housing v. Activision Blizzard |
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| Court | Los Angeles County Superior Court |
| Full case name | California Department of Fair Employment and Housing v. Activision Blizzard |
California Department of Fair Employment and Housing v. Activision Blizzard is a current lawsuit filed by the California Department of Fair Employment and Housing (DFEH) against video game developer Activision Blizzard in July 2021. The lawsuit asserts that the company maintained a "frat boy" culture, and that the company's hiring and employment practices were discriminatory against women.
After Activision Blizzard dismissed the claims in the lawsuit as false, more than 2,600 of the company's 9,500 staff signed an open letter demanding the company take the allegations seriously and make changes. While Activision CEO Bobby Kotick later promised the company would internally review the allegations, employees were not satisfied by the response. Employees walked out on July 28, 2021, joined virtually by other developers and players across the industry. DFEH's lawsuit triggered a separate class action lawsuit by Activision Blizzard's shareholders at the federal level, asserting the company failed to meet its fiduciary duties under the Securities Exchange Act. A later investigative report by The Wall Street Journal published in November 2021 claimed that Kotick had known about the allegations of misconduct for years but failed to take action, leading employees to stage a second walk-off, and they and other voices in the gaming industry called for Kotick to step down.
Coupled with allegations of misconduct and discrimination at game developers Riot Games and Ubisoft around the same time, the DFEH lawsuit is seen by analysts, academics, and media outlets such as The New York Times, The Guardian and CNN as forcing the video game industry to come to terms with the Me Too movement and consider the possibility of unionization to better protect workers.
Contents
Background
Activision Blizzard
Activision Blizzard was formed in July 2008 as a merger of Activision Inc. and Vivendi Games, a subdivision of the French media conglomerate Vivendi, which owned Blizzard Entertainment. The merger was influenced by the rapid growth of Blizzard's flagship product, the subscription-based massively multiplayer online game (MMO) World of Warcraft. At the time, Activision had yet to create any MMO games. Once the merger was approved, Activision Inc. rebranded as Activision Blizzard. Activision Publishing was established to house Activision's existing studios, and Blizzard Entertainment remained a division within the larger company. Vivendi's share in Activision Blizzard was eventually fully acquired by Activision shareholders in 2014. In February 2016, the company substantially expanded with the acquisition of King, the mobile game developer and publisher behind Candy Crush Saga. King became Activision Blizzard's third major division. Since 1991, Bobby Kotick has served as CEO for Activision and Activision Blizzard. Activision Blizzard is the largest North American publisher of video games based on revenue, surpassing Electronic Arts and Take-Two Interactive, and reported over $8 billion in revenues for their 2020 fiscal year.
Since around 2018, Blizzard Entertainment underwent corporate changes, such as the departure of Blizzard's co-founder Mike Morhaime, and a heavier focus on mobile gaming at the cost of Blizzard's more traditional PC gaming background. PC Gamer considered that some of these changes may be a result of the parent Activision's influence on managing Blizzard towards a more profitable business. Jason Schreier of Bloomberg News reported on Activision's influence on the poor quality of Warcraft 3: Reforged, a remake of Warcraft III, in 2020. Activision did not see much value in remasters at the time of its development in 2017, and instead pressured Blizzard to focus on newer games, according to Schreier. This led to the development budget for Warcraft 3: Reforged to be cut significantly, impacting the game's quality, and the Classic Games team within Blizzard to be disbanded after the game was released.
Lawsuit
As a result of a two-year investigation, on July 20, 2021, DFEH filed a lawsuit in Los Angeles Superior Court. The lawsuit alleges that Activision Blizzard has fostered a "frat boy" culture in which female employees experience discrimination and retaliation. DFEH sought an injunction to require Activision Blizzard to comply with state workforce protections, and to recover damages for female employees that would include unpaid wages, pay adjustments, back pay, and lost wages and benefits.
The lawsuit contends that Activision Blizzard and its workforce, which is 80% male, contribute to a hostile atmosphere towards female employees. The allegations mainly focus on reports of workplace misconduct at Blizzard Entertainment, though also asserts similar problems occurred within Activision and its studios. The complaint describes male employees playing video games during work hours while delegating their job to women employees.
The lawsuit specifically named Alex Afrasiabi, the former creative director on World of Warcraft, as an individual at the center of several of these allegations, including an allegation in the amended lawsuit by former software engineer Cher Scarlett that she had been harassed by Afrasiabi at a work event, and that a friend told her she experienced something similar a year prior at BlizzCon. Activision Blizzard later reported that Afrasiabi had been fired for misconduct in mid-2020 after their own internal investigation found him and two others at fault for similar misconduct between 2018 and 2020. The lawsuit listed an unnamed Chief technology officer, whom Scarlett alleged in a series of tweets to be Ben Kilgore. The allegations were later corroborated by Bloomberg News and The Wall Street Journal. Kilgore, who had previously worked as a VP at Microsoft, was terminated in 2018 for misconduct. Three other employees, including one known to be involved in incidents related to the 2013 "Cosby suite", were no longer working for the company by August 11, 2021. One of these employees included Jesse McCree, who was the namesake of the Overwatch character McCree.
Other parts of the complaint were focused on the discriminatory treatment of female employees, particularly women of color, in hiring, pay, assignment, promotion, and firing and constructive dismissal. Women were reportedly universally paid less and offered less stock and incentive pay than their male colleagues, beginning when they were hired and continuing throughout their employment. The lawsuit also alleges they had to work much harder to be promoted, or were passed over entirely. Some women employees reported being denied promotions due to fears they might become pregnant, being reprimanded for needing to go pick up their children, and being kicked out of lactation rooms by male colleagues who wanted to meet in the room. Some factors alleged by the DFEH were in connection with poor reporting of workplace harassment, but the suit also contends that Activision Blizzard overall failed to properly consider diversity in hiring and promotion practices.
The suit was filed under California's Senate Bill 973, which authorizes DFEH to file lawsuits relating to violations of the state's Equal Pay Act, and which passed in October 2020 and went into effect on January 1, 2021. The bill, authored by California senator Hannah-Beth Jackson, was intended to bypass complexities that had arisen during the Trump administration over the reporting of wage information to the Equal Employment Opportunity Commission. Under the Equal Pay Act, companies of 100 employees or more are required to report pay data for specific job areas, segmented by gender, race, and ethnicity; this data is kept confidential to the state, but may be used to determine if there are pay discrepancies due to gender or race. DFEH asserted "Blizzard's double-digit percentage growth, ten-figure annual revenues, and recent diversity marketing campaigns have unfortunately changed little. Defendants' compliance with California's broad workplace protections is long overdue". According to Noah Smith of The Washington Post, DFEH normally does not pursue such cases, typically seeking to find settlements when it finds actionable issues. In the prior two years, DFEH only proceeded to take companies to court a few dozen times out of over tens of thousands of submitted complaints. The director of DFEH, Kevin Kish, stated that "Our investigations and litigation have to be strategically targeted at remedying violations that affect as many people as we can reach. Our priority has to be on systemic violation of civil rights law, given the scope of what we have to do. We were given tools by the state legislature and we should be using them." Dawn Knepper, an employment attorney, told The Washington Post that because the Equal Pay Act is relatively recent legislation, the DFEH's case against Activision Blizzard could set a major precedent for California's employment laws.
The DFEH's complaint was expanded on August 24, 2021, to include temporary and contract workers in addition to permanent employees, as California law also was intended to protect temporary work rights as well. The amended complaint also accused Activision Blizzard of interfering in DFEH's discovery for the case, claiming that their HR department had shredded key documents they had requested. Activision Blizzard stated in response that "we have complied with every proper request in support of its review even as we had been implementing reforms to ensure our workplaces are welcoming and safe for every employee." Los Angeles County Superior Court judge Timothy P. Dillon agreed to the amended complaint in February 2022, and set an expected trial start date in February 2023.
Collaborating investigations
According to Jason Schreier for Bloomberg News, the complaint's primary focus on misconduct in Blizzard Entertainment was due to the division treating its top developers and management as "rock stars", making them nearly untouchable by any complaint filed against them. Blizzard had gained a reputation as both a highly creative studio and a desirable place to work, according to Schreier. Some employees who spoke to Schreier stated that attitudes shifted in the company when World of Warcraft rapidly grew in popularity between 2003 and 2005, and this shift marked the onset of the problems named in the lawsuit. As described by Vox's Aja Romano, this type of "rock star" attitude persists across major studios like Activision Blizzard and Ubisoft, and coerces newer hires to commit to long hours to show their dedication to the craft and the company or otherwise potentially be fired. The male-dominated culture, particularly from those who grew up playing video games, can potentially bring a culture of "casual misogyny" with them which could then easily translate into a hostile workplace for women, according to Romano.
Activision Blizzard employees speaking to Schreier said some complaints about the company's hostile environment went unreported because some senior management was known to disregard such incidents. Blizzard was also averse to reporting these problems to its parent Activision, which internally had been called the "Eye of Sauron", fearing retribution if the problems became known.
An investigative report by The Wall Street Journal published on November 16, 2021, stated that Kotick had been well aware of the misconduct at the company but had done little to stem it. The report describes one example: Dan Bunting, the co-founder of Treyarch Studios, had been accused of misconduct in 2017. An internal investigation had led to the suggestion of firing Bunting, but Kotick had reportedly vetoed this move due to his studio's success with the Call of Duty series, and instead he was ordered to see counseling. A second, external review in 2020 of Bunting's behavior found the same conclusion to firing Bunting, but only until the Wall Street Journal began their investigation was Bunting actually removed from the company. The report also describes specific cases of Kotick involved in misconduct, including a case where he threatened to kill an assistant in 2006 which he settled out of court.
Concurrent EEOC lawsuit
A separate investigation by the Equal Employment Opportunity Commission (EEOC) had been revealed at the same time as the DFEH's and SEC's, having been ongoing since around May 2020. Activision Blizzard and the EEOC were in settlement talks around September 2021 when this investigation was publicly made known. The EEOC filed a formal suit against Activision Blizzard on September 27, 2021, in the Federal District Court for Central California, as it "was unable to secure through informal methods an acceptable conciliation agreement". The lawsuit sought a jury trial to review the EEOC's charges of discrimination, as well as an injunction for the company to cease unlawful behavior and pay restitution to affected employees. That day, Activision Blizzard announced it had reached a settlement with the EEOC, pending judicial approval. Among terms of the settlement, the company stated they will create an $18 million compensation fund for employees seeking relief from the prescribed workplace harassment. In a statement, Kotick stated "There is no place anywhere at our company for discrimination, harassment, or unequal treatment of any kind, and I am grateful to the employees who bravely shared their experiences. I am sorry that anyone had to experience inappropriate conduct, and I remain unwavering in my commitment to make Activision Blizzard one of the world's most inclusive, respected, and respectful workplaces."
The settlement offer was criticized by the Campaign to Organize Digital Employees, a project of the Communications Workers of America (CWA), calling the $18 million "mere pennies" compared to the estimated $72 billion net worth of Activision-Blizzard, and "a slap in the face to workers [who have] dealt with toxic working conditions for [years]." The CWA itself also formally objected to the settlement, seeking to involve itself in the legal resolution.
DFEH also stated that the settlement would impact its case and filed their own formal compliant to challenge the settlement. DFEH said that the settlement would remove the employees from protection of California's law which is outside of the jurisdiction of the EEOC, and that provisions of the settlement would allow destruction of evidence needed for its case. EEOC asserted that due to a portion of DFEH's legal team having previously worked on EEOC's own case against Activision Blizzard, that the complaint was an ethics violation and conflict of interest under California law. EEOC requested the complaint to be removed and should DFEH seek to file a new complaint, they would need to do so with new legal counsel and without the information used by the prior one. Activision Blizzard petitioned the court to pause the proceedings of the DFEH case in light of these ethics issues raised by the EEOC as to allow time for limited discovery by their own counsel, as well as to request a change of venue due to the new complexity of the case. The court denied Activision-Blizzard's request to halt the suit in October 2021, but did grant them the ability to evaluate the ethics issue at the basis of the dispute. The court also denied California's request to intervene in the EEOC suit by December 2021, allowing the settlement terms to stand.
Attorney Lisa Bloom, representing a female Activision Blizzard employee who claimed she was fired for whistleblowing in regards to the workplace misconduct, claimed that the $18 million fund the company had set up was too low, and demanded the company increase that to $100 million with victims of the workplace harassment having stronger influence on the fund's use.
The court accepted the terms of the $18 million settlement between EEOC and Activision Blizzard on March 29, 2022, with terms that prevented those employees that took the settlement offer from being part of the ongoing DFEH action.
Wrongful death lawsuit
Parents of a former Activision Blizzard employee who had died in 2017 during a corporate retreat filed a wrongful death lawsuit against the company in March 2022 in Los Angeles Superior Court. The lawsuit used findings from the DFEH lawsuit that referred to events of the retreat in more detail than previously known. The lawsuit alleges that Activision did not fully cooperate with the policy investigation into the death.
However, by June 2022, the family filed a request for dismissal of the suit with prejudice.
Harassment and discrimination lawsuit
A separate lawsuit using information discovered by DFEH was filed by attorney Lisa Bloom on behalf of a current employee going as "Jane Doe" asserting that she faced discrimination and harassment at Activision Blizzard, was discouraged from reporting incidents to management, and faced repercussions in her employment status when she did report these matters.
Allegations of interference by governor's office
DFEH chief counsel Janette Wipper and her deputy Melanie Proctor both stood down from the case early in April 2022 for undisclosed reasons; Wipper was later fired as chief counsel by California Governor Gavin Newsom. Proctor resigned on April 12, 2022, in protest to Wipper's firing. She accused Newsom and his office of interfering with the lawsuit, particularly that the governor's office "repeatedly demanded advance notice of litigation strategy and of next steps in the litigation" and was "mimicking the interests of Activision's counsel", and wrote that Wipper had attempted to protect the agency's independence, which resulted in her termination. Newsom's office has denied the allegations.
Impact
The lawsuit forced Blizzard to cancel its planned livestream reveal of an upcoming Hearthstone expansion in early August, as the company frequently seeds information through streamers before their own official broadcast, and these streams had boycotted Blizzard. Instead, the company posted an announcement related to the new expansion with minimal fanfare. Lead designer for Hearthstone, Dean Ayala, stated that "Having any celebration is a hard sell right now. I can assure you the only hesitation we have with moving forward with things like streams or card reveals is out of the respect for our co-workers". The development team for World of Warcraft stated they would be removing content from both the main game and World of Warcraft Classic that is "not appropriate for our world" in light of the lawsuit, including in-game characters made in reference to Afrasiabi, and that their team is "committed to taking the actions necessary to ensure we are providing an inclusive, welcoming, and safe environment both for our team and for our players in Azeroth". Casters for the Overwatch League opted to avoid saying the name of McCree, one of the game's playable characters, and instead used "the cowboy", following reports that the character's namesake, Jesse McCree, was no longer with the company in August 2021. Subsequently, late that August, Blizzard confirmed it will change McCree's name to "something that better represents what Overwatch stands for", though will need to review their narrative state of the game to determine what the new name will be. McCree's new name, Cole Cassidy, was introduced and replaced the McCree name in an October 2021 patch to Overwatch, and a special in-game event planned for McCree was pushed out until November 2021, now named for Cassidy and featuring a digital comic that spoke to Cassidy finding a new identity. Blizzard stated that they will cease naming any characters in any of their games after employees in the future and will be "more thoughtful and discerning about adding real world references". The Warcraft team within Blizzard also announced similar plans to rename characters that had been based on employee names following the Overwatch announcement, as well as renaming quests and other items with offensive titles.
Blizzard opted not to hold their annual BlizzCon event for 2022, stating that they would instead spend the time "supporting our teams and progressing development of our games and experiences", and that for future events "we also need to ensure that it feels as safe, welcoming, and inclusive as possible".
T-Mobile had sponsored both the Overwatch League and Call of Duty League, but about two weeks after the DFEH lawsuit was announced, reporters for Polygon and Dexerto observed that both Leagues had removed all T-Mobile branding from the website and online broadcasts, and had covered up T-Mobile's logo on player uniforms. These sites believe that T-Mobile pulled its support of the Leagues due to the lawsuit, though they were unable to confirm with T-Mobile. Both Coca-Cola and State Farm issued statements that they would step back from Overwatch League sponsorship and reconsider their position in light of the lawsuit. Kellogg's stated they would not continue their sponsorship of the Overwatch League. Sports Business Journal observed that IBM's branding was removed from all Overwatch League media, including the league's official partners' page and power rankings. Furthermore, The U.S. Army has pulled its sponsorship from the Call of Duty Esports League.
Geoff Keighley, the creator and host of The Game Awards, said that he was reevaluating the show's relationship with Blizzard, adding that he wanted the show to support employees and developers without diminishing individual achievements. After Kotaku's Ethan Gach criticized Keighley for refusing to "take sides" and noted that the show's advisory board included Activision president Rob Kostich, Keighley stated that Blizzard would not be part of the 2021 ceremony outside of its nominated games.
