State can seek recovery for employees in settled case

The state Department of Fair Employment and Housing can seek recovery on behalf of aggrieved employees who already settled their discrimination claims against the game creator Riot Games, a Los Angeles County judge ruled.

Thursday's hearing before Judge Elihu M. Berle centered on Riot Games' challenge to the department's position that it could relitigate already litigated claims on behalf of employees who signed releases with Riot Games. The department intervened in 2019 in a class action against the League of Legends creator, which was accused of facilitating a workplace environment that was hostile to anyone who wasn't a straight male. The department contends it intervened in the litigation when it realized that a preliminary $10 million settlement was inadequate.McCracken et al. v. Riot Games, 18STCV03957 (L.A. Super. Ct., filed Nov. 6, 2018).

Riot Games argued in court papers that its private agreements with former employees precluded the state's statutory authority. Katherine V.A. Smith, the Gibson, Dunn & Crutcher LLP partner who represents Riot Games, said that under the theory of the Department of Fair Employment and Housing the employer would have to pay out twice on the same claim: once to the civil plaintiff and then to the state in its enforcement action.

The agency's counsel, Melanie R. Proctor, argued in a motion for summary adjudication that she could pursue enforcement because the department is not bound by any arbitration agreement to which it is not a party. Berle agreed.

The Department of Fair Employment and Housing has a duty to safeguard workplace protections against discrimination, Berle ruled. Riot Games doesn't cite any authority holding that the resolution of some claims or issues could bar litigation of other claims asserted in the same complaint, the judge noted.

"At best, the release might affect damages that's specifically applied to an employee who has been found to have waived their right to recovery," Berle said.

Catherine A. Conway, another partner at Gibson Dunn who represents Riot Games, said she had no comment on Berle's decision.