Activision Blizzard Hit with Stock-Drop Class Action in Wake of Calif. Workplace Discrimination Lawsuit [UPDATE]
by Erin Shaak
Last Updated on April 20, 2022
Cheng v. Activision Blizzard, Inc. et al.
Filed: August 3, 2021 ◆§ 2:21-cv-06240
A class action alleges Activision Blizzard injured investors financially by failing to disclose and misrepresenting that it had fostered a hostile workplace culture.
California
Case Updates
April 20, 2022 – Lawsuit Dismissed with Leave to Amend
The judge overseeing the case detailed on this page has dismissed the plaintiffs’ claims, finding that their first amended complaint was not specific enough to show that Activision had misled investors.
According to an April 18 order, U.S. District Judge Percy Anderson ruled that the plaintiffs failed to plead sufficient facts demonstrating, for example, that the videogame maker’s cautionary language was deficient or meaningful, what the condition of Activision’s workplace was, and “other context.”
“Averments of fraud must be accompanied by ‘the who, what, when, where, and how’ of the misconduct charged,” the judge wrote, quoting relevant case law.
Judge Anderson characterized the first amended complaint as “wieldy in the extreme,” with “long stretches of material” quoted from external litigation against Activision.
All told, the judge found that the plaintiffs had failed to provide “particularized, temporal facts” supporting their allegations of securities fraud and did not adequately show that Activision had intended to deceive, manipulate or defraud investors.
Judge Anderson gave the plaintiffs 30 days to amend their complaint.
Want to stay in the loop on class actions that matter to you? Sign up for ClassAction.org’s free weekly newsletter here.
A proposed class action alleges Activision Blizzard injured investors financially by failing to disclose and misrepresenting that it had fostered a hostile workplace culture fraught with complaints of harassment, discrimination and retaliation.
The 25-page case relays that Activision Blizzard, the developer behind the popular video game titles Call of Duty, StarCraft, World of Warcraft and Candy Crush, was the subject of a July 2021 California Department of Fair Employment and Housing (DFEH) lawsuit that alleged the company had discriminated against female employees and subjected them to a “pervasive frat boy culture” that went unaddressed by leadership despite numerous complaints. Media coverage of the lawsuit and the resulting backlash caused Activision’s stock price to fall more than six percent to the detriment of investors, the suit says.
“As a result of Defendants’ wrongful acts and omissions, and the precipitous decline in the market value of the Company’s common shares, Plaintiff and other Class members have suffered significant losses and damages,” the complaint charges.
The case out of California federal court alleges Activision Blizzard, its CEO and two individuals who served as CFO during the relevant timeframe failed to adequately disclose in SEC filings the nature of the company’s workplace culture, the increased risk that Activision Blizzard would be subject to legal and regulatory scrutiny and that the DFEH had been investigating the developer for harassment and discrimination. As a result, investors were blindsided when Bloomberg Law reported on July 21, 2021 that Activision Blizzard had been named in a lawsuit filed by the California regulatory agency, the suit says.
The Bloomberg Law article, cited in the complaint, reported that the DFEH, after a two-year investigation, found that Activision Blizzard had “discriminated against female employees in terms and conditions of employment, including compensation, assignment, promotion, and termination,” and that the company’s leadership had “consistently failed to take steps to prevent discrimination, harassment, and retaliation.” Per the case, the DFEH complaint highlighted examples of Activision Blizzard’s company culture, including “‘cube crawls,’ in which male employees ‘drink copious amounts of alcohol as they crawl their way through various cubicles in the office and often engage in inappropriate behavior toward female employees.’” According to the DFEH’s lawsuit, female employees were often denied promotions due to “the possibility they might become pregnant,” criticized for leaving early to pick up their children from daycare and “kicked out of lactation rooms” so male employees could utilize the rooms for meetings, the proposed class action relays.
Activision Blizzard’s response to the lawsuit, which the company reportedly described as “truly meritless and irresponsible,” gave rise to a petition signed by more than 2,000 former and current employees who condemned the developer’s statements as “abhorrent and insulting,” the case relays. As the workers planned a walkout in support of the petition, set to take place on July 28, Activision Blizzard CEO Bobby Kotick sent an internal email on July 27 apologizing for the company’s “tone deaf” response to the lawsuit, the complaint says. Upon this news, Activision Blizzard’s stock price fell over six percent to close at $84.05 per share on July 27, financially damaging investors, the lawsuit says.
The lawsuit looks to cover anyone who acquired Activision Blizzard securities publicly traded on the NASDAQ between August 4, 2016 and July 27, 2021 and were injured thereby.
Get class action lawsuit news sent to your inbox – sign up for ClassAction.org’s newsletter here.
Before commenting, please review our comment policy.