Activision Blizzard beats shareholder class action over sex bias claims, for now

NEW YORK (REUTERS, BLOOMBERG) - Activision Blizzard has won the dismissal of a lawsuit in California accusing the video game maker of misleading investors by downplaying the severity of alleged sexual harassment and discrimination against female employees.

Los Angeles-based United States District Judge Percy Anderson, in a decision released on Tuesday (April 19), found that a group of Activision shareholders had failed to cite specific false statements the company made amid investigations by three government agencies, and could not prove fraud claims.

Judge Anderson gave the plaintiffs 30 days to file an amended complaint against Activision, which has denied tolerating discrimination and misleading shareholders.

The company and lawyers for the shareholders did not immediately respond to requests for comment.

Judge Anderson in his ruling said the plaintiffs failed to allege that Activision and its executives knowingly made specific false statements about the discrimination claims, writing that the complaint was "wieldy in the extreme and rambles through long stretches of material quoted from external lawsuits".

Microsoft in January said it is buying Activision, the maker of Call Of Duty and other games, for US$68.7 billion (S$93.6 billion), in the biggest gaming industry deal on record.

The US Federal Trade Commission is conducting an anti-trust review of the deal.

The US Equal Employment Opportunity Commission and a California anti-discrimination agency filed separate lawsuits last year accusing Activision of tolerating widespread bias against women, and the US Securities and Exchange Commission is probing the company's disclosures about workplace misconduct.

Activision settled the EEOC case last month for US$18 million.

The California Department of Fair Employment and Housing's lawsuit is pending.

In a proposed class action lawsuit filed in August, the shareholders said Activision's failure to disclose the scale of workplace discrimination artificially inflated the value of the company's stock.

Activision stock declined sharply last year in response to news reports about the SEC probe and the company's alleged failure to address bias and sexual harassment.

Meanwhile, Activision said Thursday it will add two women to its board.

The new appointments will bring diversity to a panel that has been criticised for leaning heavily on longtime friends of chief executive officer Bobby Kotick.

To make room for the new members, Mr Hendrik Hartong and Mr Casey Wasserman will step down, Activision said in a statement.

Joining the board are Ms Lulu Cheng Meservey, the vice-president of communications at the newsletter software maker Substack who was appointed on April 16, and Ms Kerry Carr, a senior vice-president at the liquor company Bacardi who will be nominated at Activision's upcoming annual shareholder meeting.

If the appointments are confirmed, the board will consist of four women and six men. Last week's appointment of Ms Cheng Meservey, an advocate of Internet free speech who tweets prolifically and in a polarising way, brought Activision into compliance with a California law requiring boards of its size to have at least three women.

The additions are set to bring more diverse perspectives to the leadership of a company that has faced widespread criticism for its treatment of women.

Earlier this month, Bloomberg reported that a top lawyer on the California lawsuit was fired and her deputy resigned in protest, accusing California Governor Gavin Newsom's office of interfering with the case in Activision's favour.

Mr Wasserman, the departing board member, donated US$100,000 to Mr Newsom for his recall election last year.