The Riverside Press-Enterprise
Judge denies Activision bid to dismiss parts of state lawsuit
DFEH is contesting a settlement with the EEOC, arguing it will release the company from its claims
A judge has denied Activision Blizzard’s bid to dismiss parts of a lawsuit brought against the company by the state Department of Fair Employment and Housing, a motion in which the video game maker alleged the agency’s desire for media attention has damaged the firm’s reputation with unfounded allegations of sexual harassment and discrimination.
Los Angeles Superior Court Judge Timothy Patrick Dillon issued his decision Wednesday after having taken the case under submission on July 28 following his hearing on the second of two days of arguments.
The U.S. Equal Employment Opportunity Commission and the DFEH separately sued the Santa Monica-based company over the same allegations, but Activision reached an $18 million settlement with the federal regulator in October. The DFEH is seeking to contest that settlement, arguing it will release Activision Blizzard from any state claims.
Activision Blizzard attorneys sought dismissal of the DFEH’S causes of action for employment discrimination because of sex, retaliation and failure to prevent discrimination and harassment. The DFEH failed to investigate, mediate and negotiate those claims before filing suit, according to the Activision attorneys’ court papers.
“This motion concerns the California Department of Fair Employment and Housing’s fundamental failure to follow its governing statute in a rush to garner media attention that it hoped would prevent the federal Equal Employment Opportunity Commission from fairly resolving workplace claims for the benefit of eligible claimants,” the company’s lawyers argued. “In the process, DFEH unfairly damaged the reputation of a company and undermined the public trust.”
Activision Blizzard has long taken steps to provide a “welcoming, safe and legally compliant workplace,” the court papers state.
In their court papers, DFEH lawyers argued that with its dismissal motion, Activision “denigrates public servants working for the DFEH, complains of media attention resulting from the lawsuit and criticizes DFEH’S working relationship with the federal Equal Employment Opportunity Commission.”
Activision asserted “only wellworn arguments attacking the power of government rather than addressing the merits of the government’s claims,” according to the DFEH attorneys’ court papers.
Will deal go through with Microsoft?
Microsoft’s purchase of Activision meanwhile is bogged down, yet some traders are betting the deal ultimately will go through. If they’re right, there’s serious money to be made, given that the videogame company’s shares are still almost 20% below the offer price.
Stricter U.S, antitrust regulators, the series of international approvals needed, a broad slump in technology stocks and the size of the $69 billion deal have all contributed to keep the gap between Activision’s price and Microsoft’s $95-a-share bid stubbornly wide. That’s made it one of the most potentially lucrative opportunities for arbitrageurs who speculate on acquisitions.
The heightened attention that U.S. regulators are paying to big companies, especially in technology, has resulted in a longer period between when a deal is announced and when it finally goes through, raising the risk of a transaction falling apart.