Yesterday, the California Department of Fair Employment and Housing (DFEH) filed a motion to intervene in a potential settlement between the U.S. Equal Employment Opportunity Commission (EEOC) and Activision Blizzard. The motion argues that the DFEH’s own trial against Activision Blizzard will be irreparably damaged by the conditions of said settlement. The settlement includes a clause which requests that Activision Blizzard be able to remove any allegations of sexual harassment from the personnel files of settlement claimants, effectively destroying evidence that is essential to the DFEH’s own trial.
The DFEH met with both Activision Blizzard and the EEOC on the 5th of October to inform both parties of its plan to intervene. Normally, it would have to wait seven days before filing its intervention. Instead, due to the grave harm the DFEH sees in a potential settlement, it has filed the motion ex parte, which allows it to be filed instantly if the court finds it reasonable. The DFEH justifies this ex parte request by citing the settlement clause that would allow Activision Blizzard to scrub the sexual harassment allegations.
This would not be the first time Activision Blizzard has supposedly done so either. Two months ago, the DFEH accused Activision Blizzard of shredding evidence that could reflect on the company poorly during its case. This, coupled with Activision Blizzard’s recent decision to hire a union-busting firm, does not reflect well on the company’s previous claims to Kotaku that it is being totally co-operative with the DFEH’s investigation.
Kotaku reached out to the DFEH and Activision Blizzard, but neither party responded by time of publication.
The order to alter records is included as part of the settlement and reads as follows:
Within thirty (30) days of the date that the EEOC notifies [Activision Blizzard] of the names on the Distribution Lists, [Activision Blizzard] agree[s] to:
A. Remove from the personnel files of each Eligible Claimant any references to the allegations related to sexual harassment, pregnancy discrimination, and/or related retaliation except to the extent that Defendants must keep records of the allegations or any Eligible Claimant’s involvement in this Charge in order to effectuate this Decree, in which case such records must be maintained separately from Eligible Claimants’ personnel files.
The DFEH also takes umbrage with a clause in the settlement which allows Activision Blizzard to re-invest non-distributed settlement funds back into its own programs:
If any of the Settlement Fund remains undistributed after exhausting the efforts to locate the Eligible Claimants as set forth above, the excess funds will be distributed between (i) Cy Pres Fund for distribution to charitable organisations whose mission involves advancing women in the video game and technology industries or promoting awareness around sexual harassment and gender equality issues and (ii) the Diversity and Inclusion Fund to be used by Defendants exclusively for diversity, inclusion and equity efforts beyond the scope and terms of this Decree. The allocation between the Cy Pres Fund and Diversity and Inclusion Fund will be decided by Defendants but subject to approval by the EEOC.
While the EEOC has final say over how these excess funds will be allocated, that any of it could return to Activision Blizzard has the DFEH uncomfortable per its motion.
In addition to qualms regarding the status of its own case, the DFEH cites multiple procedural failures in the settlement:
In addition to EEOC’s failure to comply with notice requirements to the Court about the pending DFEH action, EEOC and Defendants also failed to provide complete information in the proposed consent decree now lodged with the Court. The proposed decree, for example, lacks a proposed notice, claim form and release. It also provides no notice of DFEH’s pending action but seeks Court-approval of a procedure whereby EEOC and Defendants arrange for outside counsel to assist with obtaining releases of state claims to which EEOC is not a party and EEOC lacks standing to prosecute under law.
The EEOC and Activision Blizzard were required to inform the courts of the existing trial between the DFEH and Activision Blizzard, and failed to do so. Normally, the EEOC would have to wait for the pending action to finish before starting their own legal action. This is especially problematic given that both trials centre on similar evidence and claims.
No information about Defendants’ potential liability, the maximum damages recoverable in successful litigation, or the allocation and distribution of monetary relief is included in the proposed decree. Unclaimed settlement funds also revert back to Defendants, and the decree proposes destruction or tampering of evidence necessary to DFEH’s case. Finally, EEOC and Defendants did not request a fairness hearing, nor explain why the settlement is fair, adequate or reasonable.
Furthermore, the EEOC and Activision Blizzard did not request a fairness hearing, which opens the door for the DFEH’s procedural and justifiability complaints. Specifics include the order to dispose of and tamper with evidence, and the fact that unused funds are funneled back into Activision Blizzard (the funds are only to be used for Diversity and Inclusion efforts and are distributed by the EEOC).
This attempted intervention marks the second time in recent memory that the DFEH has presented an issue with a proposed settlement, the first being its recent investigation into Riot Games. In Riot’s case, the DFEH pointed to the potential chilling effect that a settlement can have on an employee’s willingness to testify in a larger trial.