Monday, July 26, 2021

The State Of California Sues Activision Blizzard - The Initial Filing

Unless defendants are enjoined, pursuant to Government Code section 12965(c), from failing or refusing to comply with the mandates of the FEHA, female employees' right to seek or hold employment free of unlawful discrimination, harassment, and retaliation will continue to be violated.

DFEH vs Activision Blizzard, et al., initial gov't filing

On 20 July 2021, the Department of Fair Employment and Housing (DFEH) of the state of California filed suit in California state court against Activision Blizzard, Blizzard Entertainment, Activision Publishing, and Does One through Ten. Blizzard Entertainment and Activision Publishing are subsidiaries of Activision Blizzard. 

In a press release issued on 21 July, DFEH stated:

Activision Blizzard, Inc., headquartered in Santa Monica, California and known for games such as “Call of Duty,” “Battle.net,” and “World of Warcraft” allegedly fostered a sexist culture and paid women less than men despite women doing substantially similar work, assigned women to lower level jobs and promoted them at slower rates than men, and fired or forced women to quit at higher frequencies than men. DFEH also alleges that African American women and other women of color were particularly impacted by Activision Blizzard’s discriminatory practices.

In addition, DFEH alleges that women were subjected to constant sexual harassment, including groping, comments, and advances. The lawsuit also alleges that the company’s executives and human resources personnel knew of the harassment and failed to take reasonable steps to prevent the unlawful conduct, and instead retaliated against women who complained. 

Activision Blizzard responded with a statement that inflamed passions in some quarters:

The DFEH includes distorted, and in many cases false, descriptions of Blizzard’s past. We have been extremely cooperative with the DFEH throughout their investigation, including providing them with extensive data and ample documentation, but they refused to inform us what issues they perceived. They were required by law to adequately investigate and to have good faith discussions with us to better understand and to resolve any claims or concerns before going to litigation, but they failed to do so. Instead, they rushed to file an inaccurate complaint, as we will demonstrate in court. We are sickened by the reprehensible conduct of the DFEH to drag into the complaint the tragic suicide of an employee whose passing has no bearing whatsoever on this case and with no regard for her grieving family. While we find this behavior to be disgraceful and unprofessional, it is unfortunately an example of how they have conducted themselves throughout the course of their investigation. It is this type of irresponsible behavior from unaccountable State bureaucrats that are driving many of the State’s best businesses out of California.

The picture the DFEH paints is not the Blizzard workplace of today. Over the past several years and continuing since the initial investigation started, we’ve made significant changes to address company culture and reflect more diversity within our leadership teams. We’ve updated our Code of Conduct to emphasize a strict non-retaliation focus, amplified internal programs and channels for employees to report violations, including the “ASK List” with a confidential integrity hotline, and introduced an Employee Relations team dedicated to investigating employee concerns. We have strengthened our commitment to diversity, equity and inclusion and combined our Employee Networks at a global level, to provide additional support. Employees must also undergo regular anti-harassment training and have done so for many years.

Normally, the story would pretty much end after a couple of days until the next court date. But a surprising event occurred. People read past the title of the initial Bloomberg Law article and clicked on the link to the actual complaint. Some of the allegations in the 29 page complaint were disturbing. High ranking people in Activision Blizzard were named. Then came the stories from former employees. The moderators on the WoW sub-Reddit compiled the stories of 28 former employees who faced harassment. With all the information emerging from sources such as the corporate media to YouTube hot takes, I decided to read the 29 page complaint.

First, the timing. DFEH's first actions in this matter did not occur in July 2021. They occurred in October 2018. Below is a brief history of how the investigation grew.

DFEH’s director, in his or her discretion, may file a complaint on behalf of a group or class. (Gov. Code,§ 12961; Cal. Code Regs, tit. 2, §§ 10012 and 10013.) Pursuant to this authority, DFEH Director Kevin Kish (“DFEH Director”) filed and served a complain of Group or Systemic Investigation and Director's Complaint for Group/Class Relief against Blizzard Entertainment, Inc. on October 12, 2018, (DFEH Case No. 201810-03875512). On October 29, 2018, an Amended Director's Complaint was filed and served to add Activision Blizzard, Inc. On December 7, 2018, a Second Amended Director's Complaint was filed and served to add Activision Publishing, Inc. (collectively, referred as “Director's Complaints”) The Director's Complaints alleged that Defendants engaged in discrimination against their employees on the basis of sex-gender, including failing to hire, select, or employ persons because of their sex, as well as discriminating in compensation or in the terms, conditions, privileges of employment due to their sex. The Director's Complaints further alleged that Defendants failed to take all reasonable steps to prevent unlawful discrimination, harassment, or retaliation.

Current Blizzard Entertainment President J. Allen Brack was announced as the new president on 3 October 2018, nine days before DFEH filed its first complaint. While Brack had served as the executive producer of World of Warcraft since February 2014 prior to his promotion, one must look to Michael Morhaime, who stepped down as president and CEO of Blizzard Entertainment in October 2018, for some of the blame for the situation.

The DFEH concluded a two-year investigation and issued a cause finding (meaning the investigation found actionable offenses) on 24 June 2021. Before DFEH filed the suit, DFEH held three mediation sessions between Activision Blizzard's lawyers and the department's internal dispute resolution division on July 1, 2, and 15. The DFEH had a deadline of 21 July 2021 to file a lawsuit and did so on 20 July.

Before continuing, I have to point out that as of the writing of this post, we have only seen legal filings from the State of California. While Activision Blizzard has published a response to the media, its lawyers have not issued a reply to the courts. As of now, the public has no idea whether the DFEH investigators have put together a case its lawyers can prove in court. The court of public opinion, on the other hand, is another matter.

What offenses is DFEH suing over? The investigators found 10 areas. In each area, the suit claims two facts. Depending on the specific area, the wording differs slightly, but the general concepts are:

1. Defendants' actions were willful, malicious, fraudulent, and oppressive and were committed with the wrongful intent to injure employees or persons in conscious disregard of their rights.

2. Unless Defendants are enjoined, pursuant to Government Code section 12965(c), from failing or refusing to comply with the mandates of the FEHA, female employees' right to seek or hold employment free of unlawful discrimination, harassment, and retaliation will continue to be violated.

With those statements, the DFEH is saying that Activision Blizzard, Blizzard Entertainment, and Activision Publishing not only have not tried to act properly in the past but cannot be trusted to act properly without court action in the future. All of those public statements coming from Activision Blizzard? The government is basically telling the public not to trust them because they are lying.

Below are the 10 causes of action DFEH lists against the defendants.

Employment Discrimination Because of Sex - Compensation (Gov. Code, § 12940, subdivision (a)) (pp 15-17)

  • Defendants intentionally discriminate against women in compensation. For example, defendants offered women lower compensation at hire, assigned them to lower paid and less opportunity levels and roles, awarded them les incentive pay and/or equity pay opportunities, and afforded them less advancement and other opportunities than their male counterparts.

  • Defendants’ policies, practices, and/or procedures have resulted in unlawful disparate impact discrimination against women with respect to compensation opportunities. For example, Defendants offered women lower compensation at hire, assigned women to the lower paid and lower opportunity levels and roles, and afforded them less incentive and/or equity pay opportunities than their male counterparts.

Employment Discrimination Because of Sex - Promotion (Gov. Code, § 12940, subdivision (a)) (pp 18-19)

  • Defendants intentionally discriminated against women in promotion and advancement opportunities. For example, Defendants assigned women to the lower paid and lower opportunity levels and roles, delayed their career advancement, denied them promotional opportunities afforded to their male counterparts, and refused to promote women because they might get pregnant even when women performed higher level work for extended periods of time.

  • Defendants’ policies, practices, and/or procedures have resulted in unlawful disparate, impact discrimination against women with respect to promotion opportunities. Among other practices, Defendants’ quota system, lack of application process for promotional opportunities, as well as its informal and opaque decision-making process resulted in female employees being promoted at slower rates than their male counterparts

Employment Discrimination Because of Sex - Termination (Gov. Code, § 12940, subdivision (a)) (pp 19-20)

  • Defendants intentionally discriminated against women in terminations. Defendants’ policies, practices, and/or procedures have resulted in unlawful disparate impact discrimination against women with regards to termination.

Employment Discrimination Because of Sex - Constructive Discharge (Gov. Code, § 12940, subdivision (a)) (pp 20-21)

  • Defendants constructively discharged women in violation of Government Code section 12940, subdivision (a). For example, in denying women promotions, assignments and compensation in comparison to their male counterparts and subjecting them to sexual harassment and a hostile work environment, Defendants effectively forced female employees to leave their employment with Defendants. Female employees accepted less compensation than they were making in their prior employment or offered by other companies to work with Defendants as Defendants promised to make up the pay differential with future promotions or increased compensation. Given Defendants’ promises, female employees came to work for Defendants only to realize that the promises were empty and watch as male comparators were promoted more quickly and offered more compensation, forcing them to leave the company.

Employment Discrimination Because of Sex - Harassment (Gov. Code, § 12940, subdivisions (a) and (j)) (pp 21-22)

  • Defendants' female employees were routinely subjected to unwelcome sexual advances and other harassing conduct so severe or pervasive that it created a hostile work environment.

  • The harassment was perpetrated by Defendants’ supervisors and/or Defendants knew or should have known of the conduct and failed to take immediate and appropriate corrective action.

Retaliation (Gov. Code, § 12940, subdivision (h)) (pp 22-23)

  • After female employees engaged in protested activities, such as complaining to human resources, Defendants took adverse employment actions against female employees. Such adverse employment actions included but was not limited to denial of professional opportunities, negative performance reviews, forced transfers to less favorable units, constructive termination, and section for reductions in forces/layoffs likely based on discriminatory criteria applied to formal and/or informal evaluations of performance.

Failure to Prevent Discrimination and Harassment (On Behalf of Group) (Gov. Code, § 12940, subdivision (k)) (p 24)

  • Defendants violated Government Code section 12940 subsection (k), by failing to take all reasonable steps necessary to prevent discrimination and harassment of employees. Defendants’ failure to have and/or enforce adequate and consistent anti-discrimination and harassment policies caused harm to the Group. Defendants failed to have an effective sexual harassment policy, failed to adequately train all supervisors, managers and executives on the prevention of discrimination and harassment based on sex, and/or failed to timely discipline or stop discriminatory or harassing behavior from occurring in the workplace.

Failure to Prevent Discrimination and Harassment (On Behalf of DFEH) (Gov. Code, § 12940, subdivision (k)) (p 25)

  • Defendants violated Government Code section 12940 subsection (k), by failing to take all reasonable steps necessary to prevent discrimination and harassment of employees. Defendants’ failure to have and/or enforce adequate and consistent anti-discrimination and harassment policies caused harm to the Group. Defendants failed to have an effective sexual harassment policy, failed to adequately train all supervisors, managers and executives on the prevention of discrimination and harassment based on sex, and/or failed to timely discipline or stop discriminatory or harassing behavior from occurring in the workplace.

Unequal Pay (Labor Code, § 1197.5; Gov. Code, § 12930, subdivision (f)(5)) (pp 25-26)

  • Defendants’ female employees received less total compensation than their male counterparts while performing substantially similar work as each other, considering their combination of skill, effort, and responsibilities, as well as their similar working conditions.

  • Defendants’ female employees received less base pay than their male counterparts while performing substantially similar work as each other, considering their combination of skill, effort, and responsibilities, as well as their similar working conditions.

  • Defendants’ female employees received less incentive pay, equity and/or benefits compared to their male counterparts while performing substantially similar work as each other, considering their combination of skill, effort, and responsibilities, as well as their similar working conditions.

Waiver of Rights, Forums, or Procedures and Release of Claims (Gov. Code, §§ 12953 and 12964.5 and Labor Code § 432.6) (pp 26-28)

  • Based on information and belief, DFEH alleges that Defendants required female employees to waive rights, forums, and/or procedures as a condition of employment, continued employment, or the receipt of any employment-related benefit including but not limited to an adjustment, payment, or severance pay in violation of Labor Code Section 432.6 and Government Code Section 12053.

  • Based on information and belief, DFEH alleges that Defendants’ female employees were required to sign a release of claims and/or rights in exchange for underpayment of compensation, or an adjustment, bonus, raise or payment, and/or other employment-related benefit, in violation of Government Code Section 12964.5.

Reading through the courses of action, the suit reads more like a sexual discrimination lawsuit, not a sexual harassment suit. Not exactly how the lawsuit is portrayed in the press and gaming circles. Given some of the specific allegations though, a totally understandable development. Selecting some of the events can make a narrative that makes Activision Blizzard look really bad.

First, the allegation that the environment at Activision Blizzard is so bad, women are killing themselves.

48.    In a tragic example of the harassment that Defendants allowed to fester in their offices, a female employee committed suicide while on a company trip due to a sexual relationship that she had been having with her male supervisor. The male supervisor was found by police to have brought a butt plug and lubricant on this business trip. Another employee confirmed that the deceased female employee may have been suffering from other sexual harassment at work prior to her death. Specifically, at a holiday party before her death, male co-workers were alleged to be passing around a picture of the deceased's vagina. (p. 15)

I think most news accounts refer to the "frat house" office environment described in the case filing.

46.    Female employees almost universally confirmed that working for Defendants was akin to working in a frat house, which invariably involved male employees drinking and subjecting female employees to sexual harassment with no repercussion. “Cube crawls” in Defendants’ offices were common and male employees proudly came into work hungover. Similarly, male employees would play video games during work, engage in banter about their sexual encounters, talk openly about female bodies, and make numerous jokes about rape. As a product of this “frat boy” culture, women were subjected to numerous sexual comments and advances, groping and unwanted physical touching, and other forms of harassment. A female employee noted that random male employees would approach her on Defendants’ work site and comment on her breasts. Female employees working for the World of Warcraft team noted that male employees and supervisors would hit on them, make derogatory comments about rape, and otherwise engage in demeaning behavior. This behavior was known to supervisors and indeed encouraged by them, including a male supervisor openly encouraging a male subordinate to “buy” a prostitute to cure his bad mood. (p. 14)

Many stories referred to men playing video games while women worked. Although the suit only refers to one game by name, the context is really bad.

37.    Similarly, other female employees at Blizzard Entertainment were assigned to lower level roles, denied equal pay and further delayed or passed over for promotions in favor of male counterparts who lacked the same experience or qualifications but who were friends with the male head of the unit. A newly promoted male supervisor delegated his responsibilities to his now female subordinates in favor of playing Call of Duty. Other male supervisors would refuse to communicate with female employees, going to their male counterparts for information. (p. 12)

The DFEH also called out racist behavior that backed up the suit's "constructive discharge" claim.

40.    Women of color were particularly vulnerable targets of Defendants’ discriminatory practices. An African American employee noted that it took her two years to be made into a permanent employee while men hired after her were made permanent employees. She also was micromanaged such that her male coworkers were known to be playing video games without any intervention by her supervisor, but her supervisor would call and check on her if she took a break to go on a walk. Another African American employee, who worked on information technology, was similarly micromanaged by her manager unlike the men on her team. When she requested time off of work, her manager made her write a one-page summary of how she would spend that time off of work when no one else had to do any write-up. The male supervisor also criticized her body language despite male counterparts slouching in meetings and she was scolded for asking for assistance while others could get help on similar tasks without the same criticism. These experiences led female employees to leave their employment with Defendants. (p. 12)

One area of concern involved the company's attitude towards pregnancy and child care. While not as popular to point out, I find the matter rather bizarre.

39.     Female employees were also not promoted because of Defendants’ discriminatory practices against pregnant female employees. A female employee working on one game team had assumed some of the responsibilities of a manager but when she asked her male supervisor about being fairly paid for the work she was actually doing and promoted into that position, the manager commented that they could not risk promoting her as she might get pregnant and like being a mom too much. In general, female employees were further treated negatively due to their pregnancies. Supervisors ignored medical restrictions given to female employees and gave them negative valuations while they were out on maternity leave. Other female employees reported that they were criticized for leaving to pick up their children from daycare while their male counterparts were playing video games and female employees were kicked out of lactation rooms so employees could use the room for meetings. (pp. 12-13)

In laying the groundwork that Activision Blizzard, Blizzard Entertainment, and Activision Publishing can not be trusted to take corrective action on their own, the DFEH lawsuit points to what it judges as the ineffectiveness of the human resources departments. The first passage is as much an indictment of the leadership of Michael Morhaime as of anyone else.

42.    When women complained to human resource personnel about the lack of equal employment opportunities, especially in comparison to their male counterparts, their complaints fell on deaf ears or were met with an empty promise to investigate the issue. Indeed, despite having retained Paul Hastings LLP from 2015 to 2017 and Miller Law Group in 2018 to allegedly provide analysis related to compensation data, Defendants failed to take effective and reasonable steps to prevent pay discrimination as the pay disparity between male and female employees was not remedied and continued. (pp. 13-14)

The next paragraph concerning human resources departments was even more condemning.

50.    Female employees had raised further complaints to various human resources personna1 about the discrimination they faced, including but not limited to complaints about unfair pay and assignments, male co-workers belittling them or minimizing their contributions, and male counterparts being promoted quickly despite their lack of seniority. Similarly, female employees also complained of the harassment they suffered, including that male co-workers groped them, that male supervisors asked them on dates, and of other unwanted harassment. Defendants failed to take reasonable action in responses to these complaints. Such lack of effective remedial measures was not surprisingly given Defendants’ own internal investigation into their human resources unit noted that there was a “big lack of trust” and that “HR not held in high regard.” Multiple employees also noted that their complaints were not kept confidential. (p. 16)

The final point I'll make is the argument that J. Allen Brack doesn't take allegations of sexual harassment seriously. First, the handling of misbehavior of former Senior Creative Director of World of Warcraft Alex Afrasiabi. Afrasiabi quietly left the company in June 2020.

47.    In a blatant example of Defendants’ refusal o deal with a harasser because of his seniority/position, Alex Afrasiabi, the former Senior Creative Director of World of Warcraft at Blizzard Entertainment, was permitted to engage in blatant sexual harassment with little to no repercussions. During a company event (an annual convention called Blizz Con) Afrasiabi would sit on female employees, telling him he wanted to marry them, attempting to kiss them, and putting his arms around them. This was in plain view of other male employees, including supervisors, who had to intervene and pull him off female employees. Afrasiabi was so known to engage in harassment of females that his suite was nicknamed the “Crosby Suite” after alleged rapist Bill Crosby. Afrasiabi would also call females derogatory names at company events. Afrasiabi's conduct was known to Blizzard Entertainment's executives, who took no effective remedial measures. J. Allen Brack, President of Blizzard Entertainment, allegedly had multiple conversations with Afrasiabi about his drinking and that he had been “too friendly” towards female employees at company events but gave Afiasiabi a slap on the wrist (ie. verbal counseling) in response to these incidents. Subsequently, Afrasiabi continued to make unwanted advances towards female employees, including grabbing a female employee's hand and inviting her to his hotel room and groping another woman. (p. 15)

(Yes, the above reference I believe was to Bill Cosby, not Bill Crosby.)

The DFEH also claims Brack failed to act regarding another senior member of the company.

49. The problems of harassment and discrimination extended to and at a minimum were known to those at the top. Defendants’ former Chief Technology Officer was observed by employees groping inebriated female employees at company events and was known for making hiring decisions based on female applicants’ looks. An employee complained to Blizzard Entertainment President J. Allen Brack in early 2019 that employees were leaving due to sexual harassment and sexism. Specifically, this employee noted that women on the Battle.net team were subjected to disparaging comments, the environment was akin to working in a frat house, and that women who were not “huge gamers” or “core gamers” and not into the party scene were excluded and treated as outsiders. (pp. 15-16)

As I mentioned before, so far we have only seen a legal filing from the Department of Fair Employment and Housing. I doubt Activision Blizzard's lawyers will succeed in convincing a judge to dismiss the case without a trial. I initially believed Activision Blizzard would settle the case quietly, but now I'm not so sure. The leadership at the company may believe they need to clear the companies' names. Also, the allegation of maintaining a work environment so toxic someone committed suicide may prove a poison pill to a settlement. But will the public pressure force a quick settlement? Having read the 29 page suit, I think the Department of Fair Employment and Housing hopes so.

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