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California expands lawsuit against Activision-Blizzard: What you need to know

The Department of Fair Employment and Housing has reportedly accused Activision Blizzard of obstructing its investigation.

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SOPA Images/Getty

It's been a tumultuous month for Activision Blizzard, a gaming giant that was sued by the state of California. Since the company was accused in July of discriminating against its female workforce and running a toxic workplace environment, it's seen protests from hundreds of employees and several key personnel changes. Most notably, Blizzard President J. Allen Brack resigned from the company in early August.

The suit, filed by the Department of Fair Employment and Housing on July 20, argues that the company has a "frat boy" workplace culture and alleges several alarming incidents of discrimination and harassment. On Monday, DFEH expanded its suit against Activision Blizzard, and claimed the company had obstructed its investigation. 

Activision Blizzard is one of the biggest gaming companies in the world. It owns Call of Duty, World of Warcraft, Diablo, Crash Bandicoot and many more hugely popular franchises and last year recorded $2.2 billion in profit

The allegations didn't take long to make an impact. Many employees have spoken out in support of the claims, over 2,000 signed an open letter calling for action by the company and a walkout protest was staged on July 28. After initially rejecting many of the DFEH's allegations, Activision Blizzard has said it'll launch a full probe -- and its games will be changed to reflect values of diversity and inclusion.   

Here's everything you need to know about the evolving lawsuit. 

Latest update: California expands its case

On Monday, the DFEH expanded its case against Activision Blizzard, as reported by Axios, and said that the gaming giant had been obstructing internal investigations. Axios has seen the updated filing, which have not yet been made public. CNET has contacted DFEH for comment but didn't get a response. 

First, the Department changed the language throughout its suit to replace the word "employees" with "workers," according to the publication. The change reflects how anti-discrimination protections apply to not just full-time employees, but also "contingent or temporary workers."

DFEH's updating filing also alleges that Activision-Blizzard has actively blocked the Department's to investigate claims by requiring employees to talk to company management before being interviewed by investigators. It also claims that "documents related to investigations and complaints were shredded by human resource personnel," further obstructing the probe. 

"With regards to claims that we have destroyed information by shredding documents, those claims are not true," an Activision-Blizzard spokesperson told Axios. "We took appropriate steps to preserve information relevant to the DFEH investigation."   

What is Activision Blizzard accused of?

The DFEH's suit accuses Activision Blizzard of workplace discrimination. It alleges women are compensated unfairly -- paid less for the same job, scrutinized more heavily than their male peers -- and subject to considerable harassment. The agency called Activision Blizzard a "breeding ground for harassment and discrimination," in which women are subject to regular sexual advances by (often high-ranking) men who largely go unpunished.  

Illustrative of the claims DFEH is making against Activision is an office ritual referred to as "cube crawls," in which men allegedly drink "copious" amounts of alcohol, crawl through the office cubicles and engage in "inappropriate behavior" including groping. The lawsuit describes incidents including allegations that a female employee committed suicide during a business trip as a result of a toxic relationship with a supervisor.  

"Women and girls now make up almost half of gamers in America, but the gaming industry continues to cater to men," the suit reads. "Activision-Blizzard's double-digit percentage growth, 10-figure annual revenues and recent diversity marketing campaigns have unfortunately changed little." 

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And then employees reacted?

After DFEH filed its suit, Activision Blizzard responded with a lengthy statement that said the department had filed a rushed, inaccurate report with "distorted, and in many cases false, descriptions of [Activision Blizzard's] past." In an email sent to staff, published by Bloomberg's Jason Schreier, vice president of corporate affairs Frances Townsend said the site presented "a distorted and untrue picture of our company, including factually incorrect, old, and out of context stories -- some from more than a month ago." 

These statements evidently didn't satisfy employees, neither current nor former. Over 2,000 of them signed an open letter to Activision Blizzard leadership in which they criticized the company's response. (Activision Blizzard currently has around 10,000 employees.) 

"To put it clearly and unequivocally, our values as employees are not accurately reflected in the words and actions of our leadership," the open letter reads, according to Bloomberg. "To claim this is a 'truly meritless and irresponsible lawsuit' while seeing so many current and former employees speak out about their own experiences regarding harassment and abuse is simply unacceptable."

The letter signed by employees made three demands. First, that the company issue statements that acknowledge the severity of the allegations. Second, that Townsend resign from her role as executive sponsor of the ABK Employee Women's Network. Third, that Activision Blizzard's executive leadership collaborate with employees to ensure a safe workspace to "speak out and come forward." 

Activision Blizzard CEO Bobby Kotick

Activision Blizzard CEO Bobby Kotick at the Vanity Fair New Establishment Summit in San Francisco in October 2016.

Mike Windle/Getty

How did Activision Blizzard respond?   

After Activision Blizzard's first statement, along with the one made by Townsend, was so thoroughly rejected by employees, the company appears to be taking the suit more seriously. The company's CEO, Bobby Kotick, issued a letter on July 27 addressing the suit, and the concerns of employees.

"Our initial responses to the issues we face together, and to your concerns, were, quite frankly, tone deaf," it reads. "We are taking swift action to be the compassionate, caring company you came to work for and to ensure a safe environment. There is no place anywhere at our Company for discrimination, harassment, or unequal treatment of any kind."

Kotick announced that a law firm, WilmerHale, will be hired to evaluate the company's "policies and procedures." (An alliance of Activision Blizzard employees have since rejected the choice of WilmerHale.)

Beyond the probe, Kotick outlined several changes that would be made effective immediately. The company would be investigating "each and every claim" of discrimination and harassment being made, and will host listening sessions to collaborate with employees on how to improve the workplace culture. Activision Blizzard will also be "evaluating managers and leaders" across the company and making personnel changes as appropriate. Finally, changes will be made to in-game content.

"We have heard the input from employee and player communities that some of our in-game content is inappropriate. We are removing that content," Kotick wrote.

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Employees at Wednesday's walkout.

David McNew/Getty

What about the walkout?

Alongside the open letter signed by over 2,000 employees, workers at the company planned a strike for July 28. Seeking now to be more collaborative with aggrieved workers, Activision Blizzard sent an email to staff saying they would get paid time off for attending the protest.

Hundreds of employees took up the offer, as they set up a picket line outside of Activision Blizzard's Irvine, California headquarters. Employees held signs that read "every voice matters", "fight bad guys in game, fight bad guys IRL" and "nerf male priviledge." (When developers weaken characters in games like Overwatch it's known as "nerfing" them.) 

The walkout participants acknowledged Kotick's letter, but had four additional demands, as seen in the tweet above. These include greater pay transparency and employee participation in hiring and promotion policies.

What has the industry reaction been?

On Aug. 30 Strauss Zelnick, the CEO of Take-Two Interactive, the studio behind Grand Theft Auto and Red Dead Redemption, assured investors that his company wouldn't tolerate a workplace environment like the one allegedly seen within Activision Blizzard.

"We will not tolerate harassment or discrimination or bad behavior of any kind. We never have," he said. "Is there more we can do? I'm certain there is. Do we feel like we're in a pretty good place? We're grateful that we do feel that way right now."

Zelnick is the latest industry figure to weigh in on the lawsuit. 

"It's our responsibility to ensure this type of behavior is not tolerated at Bungie at any level," developer Bungie, owned by Activision Blizzard, tweeted, "and that we never excuse it or sweep it under the rug. While the accounts in this week's news are difficult to read, we hope they will lead to justice, awareness, and accountability."

Chris Metzen, a co-creator of Blizzard franchise Diablo who left the company in 2016, said: "We failed, and I'm sorry... to all of you at Blizzard -- those of you I know and those of you whom I've never met -- I offer you my very deepest apologies for the part I played in a culture that fostered harassment, inequality, and indifference."

Has anyone resigned?

Yes, most notably Blizzard's president.

On Tuesday, Aug. 3, it was announced that Blizzard President J. Allen Brack had resigned. Brack started with Blizzard in 2006, and had been president since 2018. Prior to that, he was executive producer of World of Warcraft, Blizzard's most successful game ever. DFEH's lawsuit alleges Brack was aware of the toxic culture at Blizzard. 

Former Vicarious Visions leader Jen Oneal and one-time Xbox executive Mike Ybarra will step up to co-lead Blizzard.

"I am confident that Jen Oneal and Mike Ybarra will provide the leadership Blizzard needs to realize its full potential and will accelerate the pace of change," Brack said in a statement. "I anticipate they will do so with passion and enthusiasm and that they can be trusted to lead with the highest levels of integrity and commitment to the components of our culture that make Blizzard so special."

Oneal, the executive vice president of development at Blizzard, has overseen Blizzard games Diablo and Overwatch. Ybarra, the executive vice president and general manager of platform and technology at Blizzard, has been responsible for the Battle.net game launcher. 

"No one person is responsible for the culture of Blizzard," employees of the company Tweeted after Brack's resignation, "the problems at ABK go beyond Blizzard and require systemic change. We stand by our demands, and we remain committed to taking action until they are met."

Three more senior employees have left the company, as reported on Aug. 12 by Kotaku: Diablo 4 director Luis Barriga, the game's lead designer Jesse McCree and World of Warcraft designer Jonathan LeCraft. No specific reason for their departure has been given.

"We can confirm Luis Barriga, Jesse McCree, and Jonathan LeCraft are no longer with the company," a spokesperson for the company said. "We have a deep, talented roster of developers already in place and new leaders have been assigned where appropriate. We are confident in our ability to continue progress, deliver amazing experiences to our players, and move forward to ensure a safe, productive work environment for all."

The senior vice president of human relations, Jesse Meschuk, has also left the company, reported the Washington Post in early August. 

And there's a second lawsuit?

A second lawsuit has been filed against Activision Blizzard, this time by an aggrieved investor. Gary Cheng filed a class action lawsuit against Activision Blizzard on Aug. 3 for violation of securities laws -- in essence alleging that company executives mislead investors by not disclosing the DFEH investigation. 

The filing argues that Activision Blizzard failed to notify investors of the "frat boy" workplace culture, outlined in the DFEH suit, and that the omission of this information exposed shareholders to unknown risks. It also says Activision Blizzard didn't notify shareholders of the DFEH's investigation. 

"Activision Blizzard failed to inform shareholders that the California Department of Fair Employment and Housing ("DFEH") had been investigating Activision Blizzard for harassment and discrimination; and as a result, Defendants' statements about Activision Blizzard's business, operations and prospects, were materially false and misleading and/or lacked a reasonable basis at all relevant times," the filing reads.   

"As a result of Defendants' wrongful acts and omissions and the precipitous decline in the market value of the Company's common shares, Plaintiff and other Class members have suffered significant losses and damages."