California’s Legal War against Activision Blizzard Shows the Process Is the Punishment

W hen California’s Department of Fair Employment and Housing opened its prosecution of Activision Blizzard in the summer of 2021, it did so with a bowel-shivering trumpet blast, a press release that declared that the game maker “fostered a sexist culture,” “paid women less than men,” “assigned women to lower-level jobs and promote them at slower rates than men,” and “fired or forced women to quit at higher frequencies than men.” Women at the Santa Monica–based firm “were subjected to constant sexual harassment, including groping, comments, and advances,” the suit alleged. Despite the second-circle-of-hell activities around them, the agency said, “the company’s executives and human rights personnel knew of the harassment and failed to take reasonable steps to prevent the unlawful conduct, and instead retaliated against women who complained.” In its lawsuit, filed in Los Angeles superior court, the department said the entire global operation was suffused with a “pervasive ‘frat boy’ workplace culture.”

And then, on December 15, 2023, the department withdrew its allegations. After two years of “investigation” and two and a half years of prosecution of the company, the parties had reached a settlement.

Activision Blizzard will pay $54 million — and the state will admit that no investigation, including its own, “has substantiated any allegations that: there has been systemic or widespread sexual harassment at Activision Blizzard.” Nor is there any evidence, California now admits, “that Activision Blizzard senior executives ignored, condoned, or tolerated a culture of systemic, harassment, retaliation, or discrimination; or that Activision Blizzard’s Board of Directors including its Chief Executive Officer, Robert Kotick, acted improperly with regard to the handling of any instances of workplace misconduct.”

Given all that, why has Activision Blizzard agreed to pay anything?

“Because they looked at the path forward and decided that future costs of litigating against a state with unlimited resources and friendly courts was a no-win proposition,” a source close to the investigation says. After nearly six years, “simply exhausted by the experience,” Activision Blizzard saw an opportunity: Of the $54 million it will pay to settle, the state will take $10 million. The company will use the remainder to boost the pay of its own female employees — who, the state now admits, did not suffer as originally alleged.

The state’s $10 million vigorish should worry companies that operate in California. It represents the state’s unique “bounty hunter” provision, which incentivizes it (and designated non-state trial attorneys) to profit from big-dollar settlements such as this one. It also explains why plaintiffs’ attorneys all over America — including, weirdly, the New York City comptroller — swarmed into California’s courts hoping to leverage their own unique claims against Activision Blizzard into million-dollar paydays.

In California, the process is the punishment — that and about $54 million. From investigation to settlement, the state’s case had taken so long that even the players had changed. Midway through, the Department of Fair Employment and Housing rebranded itself as the more noble-sounding Civil Rights Department. In October, Microsoft overcame Federal Trade Commission resistance in federal court and closed its purchase of Activision Blizzard, makers of such world-beating games as Call of Duty, World of Warcraft, and Diablo.

And the prosecutor who started it all, then–DFEH chief counsel Janette Wipper? She’s gone, after having accused Governor Gavin Newsom of interfering with her prosecution. When Wipper’s staff appeared in federal court to block an Equal Employment Opportunity Commission settlement, the judge brushed them off, and Newsom, reportedly furious, fired her. Measuring the rot at the state agency, we note that Wipper’s No. 2 quit immediately thereafter, echoing the claim of gubernatorial interference. Despite the departures, the agency remained under the same management: Wipper’s boss, longtime director Kevin Kish, kept his job despite the obvious chaos in his staff. And so, even Wipperless, the state’s case continued by inertia. (Meanwhile, in a deal that looks remarkably like the state’s settlement, the feds settled with the computer-game maker in March 2022, for $18 million.)

When the state first revealed its case, obliging reporters at major news outlets — including NBC, the Washington Post, Bloomberg, the Wall Street Journal, and the New York Times — jumped on the story so quickly that skeptics might be excused for supposing that the press was part of a state-coordinated campaign. Perhaps the reporters were just delighted to find a story that indulged the public’s current appetite for tales of piratical men and their helpless female victims, including salacious tales of sex, drugs, and “cube crawls” inside one of the world’s most prestigious gaming companies.

California’s case against the game maker “lays bare, for the public record, the gross inequalities that have long plagued a male-dominated industry that has yet to properly address its broken, sexist culture,” the Los Angeles Times explained six days after the state’s initial press release. Despite hundreds of hyped up, a-thrill-a-minute reports from media across the planet, the LA Times could still complain that “no one seems to care.”

After years of this — after hundreds of media reports repeating, even exaggerating, the state’s claims against Activision Blizzard — how will the company ever restore its good name?

Maybe it won’t. There’s an old story young Catholics were (and perhaps still are) told before their first confession that seems appropriate: The village’s inveterate gossip confesses his sin to the parish priest. His penance is to pray the rosary — and then rip apart a pillow in the church belfry. Baffled, the sinner obliges and returns to tell the priest that, remarkably, it worked: Watching the feathers take to the wind and fly out over the village and into the countryside was a revelation, like seeing his own once-freighted soul liberated at last. The priest listens without much interest and tells the sinner, “Good: Now go out and collect the feathers.”