Activision Blizzard is facing another legal action arising out of the lawsuit filed against it in July by California's Department of Fair Employment and Housing, which alleges widespread discrimination, sexual harassment, and a “frat boy” culture throughout the company. Somewhat confusingly, this new action, available via Ars Technica, is not being filed on behalf of employees, but shareholders who have allegedly suffered losses because Activision Blizzard failed to disclose that it was under investigation.
The suit, which names Activision Blizzard as a company as well as CEO Bobby Kotick, CFO Dennis Durkin, and previous CFO Spencer Neumann as individual defendants, alleges that the company made “false and misleading statements” between August 4, 2016, and July 27, 2021, in SEC filings that failed to disclose the company was actually a hostile workplace for women and minorities, that numerous complaints had been made to its HR department over the years, and that DFEH had launched an investigation as a result.
“As a result, Defendant's 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 suit says.
The lawsuit also notes that since the DFEH action was filed, more than 2,000 current and former employees have signed a letter condemning the company's initial response to the suit, and that plans for a walkout were announced on July 27. As a result, Activision Blizzard shares fell by more than 6% on that same date, causing a loss for investors, who purchased shares in the company at “artificially inflated” prices because of misleading executive and company statements.
“Had Plaintiff and the other members of the Class been aware that the market price of Activision Blizzard securities had been artificially and falsely inflated by Defendants’ misleading statements and by the material adverse information which Defendants did not disclose, they would not have purchased Activision Blizzard securities at the artificially inflated prices that they did, or at all,” the suit states. “As a result of the wrongful conduct alleged herein, Plaintiff and other members of the Class have suffered damages in an amount to be established at trial.”
The lawsuit has not actually been certified as a class action at this point, and the Rosen Law Firm warned that until it is, nobody applying to be a part of the class actually has legal representation in the matter unless they hire their own lawyers independently. There is, however, currently no obligation to take part: Potential litigants “may also remain an absent class member and do nothing at this point,” the law firm said. It also notes in the retention agreement that it can apply to claim up to 33.3% of any amount recovered in the case, “plus disbursements,” (including travel expenses, paralegal fees, and more) which will be claimed first.
Interestingly, while Activision Blizzard employees were largely unsatisfied by the statements made in today's second quarter financial report and investors call, the market seems more impressed. The company's share price bounced back to almost $85 in after-hours trading, a 6.29% increase.