State civil rights agency tries to intervene in EEOC deal with Activision

California's civil rights agency upped the ante again in the fight to change workplace culture at some of the biggest game creators, this time by attempting to intervene in a proposed deal between federal employment regulators and the gaming giant Activision Blizzard.

In a motion filed late Wednesday, the state Department of Fair Employment and Housing said the proposed $18 million settlement between the U.S. Equal Employment Opportunity Commission and Activision Blizzard would destroy stronger state civil rights claims and reduce compensation to aggrieved employees.

"This ... heavy-handed attempt to extinguish more protective state claims covered by a pending state enforcement action, through a federal consent decree, is unprecedented. Christian Schreiber, who represents the state agency, wrote in his motion to intervene. "It also raises greater alarm because, unlike the DFEH's pending action, the EEOC did not investigate state claims, allege them in its lawsuit nor seek additional relief under California's more protective standards for workers."

The state fair employment department already blocked a $10 million settlement between another big industry player, Riot Games Inc., and a class of women who said they experienced harassment, discrimination and retaliation on the job. Last week, over the objections of an agency lawyer, Los Angeles County Judge Elihu M. Berle said Riot Games and the women could return to settlement negotiations.

Victor Chen, spokesman for the U.S. EEOC, said the federal agency would not comment pending the court's decision on the state's motion to intervene.

Activision Blizzard said in a statement that it is committed to making its workplace welcoming, inclusive and safe.

"Our agreement with the EEOC reflects that commitment to significant improvements and transparency, as well as making immediate compensation available to eligible employees who choose to participate. Activision Blizzard is ensuring a workplace free from discrimination, harassment or unequal treatment of any kind," the statement said.

Lawyers for the state agency have said they are most interested in securing structural changes in an industry that has been sued by women who say it fosters a culture that is unwelcoming to anyone but straight men.

The plaintiffs' lawyers, veterans of some of California's biggest workplace lawsuits, say they too want improvements in the industry but they believe officials at the Department of Fair Employment and Housing have become too political and uninterested in compensation for actual victims.

The EEOC reached its deal with Activision Blizzard on Sept. 27, the same day the federal agency filed a Title VII complaint against the gaming giant. The deal purports to comprehensively resolve all claims against Activision Blizzard, and would cover all former and current employees who worked at the company's U.S. locations from Sept. 1, 2016 to the effective date. U.S. EEOC v. Activision Blizzard, 21-cv-7682 (C.D. Cal., filed Sept. 27, 2021).

But the state agency said the EEOC has no authority to release or prosecute state law claims. Furthermore, the proposed decree fails to provide adequate notice to the women, details of fund allocation and the scope and impact of claim releases and the right to oppose the settlement, according to Schreiber of Olivier Schreiber & Chao LLP.

Unlike the EEOC, the Department of Fair Employment and Housing has the power to prosecute federal claims in federal court including Title VII claims, Schreiber wrote. There are no limits to recovery for aggrieved employees under the Fair Employment and Housing Act, unlike Title VII, Schreiber contended, and the state also has statutory prohibitions against forced and preemptive waivers of employee rights.

The proposed agreement with the EEOC allows Activision Blizzard to destroy personnel files and references to sexual harassment claims, and only preserves specific complaints regarding harassment and retaliation in certain circumstances, Schreiber wrote. It also retroactively changes employee terminations to voluntary resignations, he added.

The decree doesn't explain how the $18 million would fairly compensate all of Activision Blizzard's current and former employees, Schreiber wrote.

An eligible claimant's share could go to a cy pres fund if the claimant fails to return paperwork or meet criteria, he wrote. Activision Blizzard also has the choice whether excess funds will be donated to a charity, or returned back to its own coffers, "given defendants' 470% increase in cash flows as of March 31, 2021 as reported by the U.S. Securities and Exchange Commission, the return of any amounts to their in-house 'diversity and inclusion' fund is unfair and unreasonable," Schreiber wrote.

In July, the Department of Fair Employment and Housing initiated an enforcement action to prosecute discrimination claims against Activision Blizzard in Los Angeles County Superior Court. Now, the proposed decree will hamper the state prosecution, Schreiber wrote. DFEH v. Activision Blizzard, 21STCV26571 (LA Super. Ct., filed July 20, 2021)

"Fairness -- and EEOC's own policy -- prohibit such an unusual arrangement," Schreiber wrote. "Even if a victim who suffered egregious sexual harassment and assault is identified, as alleged by some employees, their damages are capped under federal law."

The case is assigned to U.S. District Judge Dale S. Fischer of the Central District of California.