Activision Blizzard is facing (what feels like) its 8,583,129th lawsuit, as first reported by Axios. This one’s from New York City, and alleges that longtime CEO Bobby Kotick raced to find a buyer for the mega-publisher he has been leading for 30 years to explicitly avoid consequences for turning a blind eye to claims of widespread instances of harassment at the company.
Activision Blizzard, which publishes franchises like Call of Duty and World of Warcraft, has faced a serious reckoning over the past year. Last summer, the California Department of Fair Employment and Housing (DFEH) filed suit against the publisher, alleging a deep-seated culture of abuse, harassment, and discrimination, accounts of which were further detailed in a series of press investigations. A July 2021 report from Kotaku, for instance, exposed the so-called “Cosby Suite” at BlizzCon, the company’s annual festival. In November, the Wall Street Journal reported that Kotick wasn’t just aware of some abhorrent behaviour during his tenure — he also allegedly engaged in some pretty shitty shit himself.
Earlier this year, in an extraordinarily unprecedented deal, Microsoft scooped up Activision Blizzard for nearly $US70 ($97) billion. Talks for that acquisition, which was approved by investors but still needs to get the green light from regulators, began three days after the Wall Street Journal’s bombshell report. Since then, Activision Blizzard has been sued multiple times, both by official agencies and by individual plaintiffs. Last September, the Equal Employment Opportunity Commission filed suit against the company, though that was settled for $US18 ($25) million. In March, one unnamed woman sued the publisher, claiming she was retaliated against for reporting sexual harassment to its HR department. The company is also facing down a class action suit.
This latest suit, which was filed by NYC’s Employees’ Retirement System in Delaware court late last month, essentially stipulates that Activision Blizzard open up its books and prove that industry-shaking deal wasn’t designed to provide cover for Kotick. (In February, the DFEH subpoenaed the Los Angeles Police Department for any potential criminal records for Kotick’s.) As Axios notes, New York City has pushed Activision Blizzard for access to these documents for months.
“With the announced merger, Kotick will be able to escape liability and accountability entirely, and will instead continue to serve as an executive after the Merger closes,” the plaintiffs write in the complaint. “Worse, despite his potential liability for breaches of fiduciary duty, the [company’s] Board allowed Kotick himself to negotiate the transaction with Microsoft. The Board’s decision to entrust Kotick with the negotiation process is inexcusable for the additional reason that Kotick stands to personally receive substantial material benefits whose value is not directly aligned with the Merger price.”
If the deal goes through, Kotick personally stands to gain hundreds of millions of dollars in what is commonly referred to as a ‘golden parachute’; Microsoft offer values Activision Blizzard at a price of $US95 ($132) per share, roughly at the price point it hovered around last summer, before the DFEH’s suit was made public.
As for what happens if it’s approved, Microsoft hasn’t publicly confirmed one way or the other on whether or not Kotick will remain in his capacity as the company’s chief executive. In a January investor call, Microsoft CEO Satya Nadella said he’s “grateful to [Kotick’s] leadership” but did not give any indication about Kotick’s future role. Further, a press release at the time did not specifically clarify whether or not Kotick would remain as CEO following the deal, saying instead, “the Activision Blizzard business will report to Phil Spencer,” who runs Microsoft’s gaming division.
Representatives for Kotick did not immediately respond to a request for comment.
When reached for comment, a representative for Activision Blizzard sent Kotaku the following statement: “We disagree with the allegations made in this complaint and look forward to presenting our arguments to the Court.”