Activision Blizzard's Investor Lawsuit Has Reached Its End
Activision Blizzard is in the news again, but it's not thanks to the recently announced "World of Warcraft: Dragonflight" expansion. Rather, it's related to the multiple lawsuits affecting the company. Activision Blizzard was hit with two major lawsuits last year — one by the Equal Employment Opportunity Commission (EEOC) and the other by the California Department of Fair Employment and Housing (DFEH). Both lawsuits alleged a 'frat boy' culture at Activision Blizzard that resulted in potential sexual assault and workplace misconduct.
Although the EEOC lawsuit has been settled for $18 million, the DFEH lawsuit is still pending. In addition, the DFEH case recently took a surprising turn when the Chief Counsel was fired for allegedly questioning the California governor's involvement in the case. However, that wasn't the end to the legal troubles at Activision Blizzard. In August 2021, a group of investors sued the video game company with claims they were misled. Just this month, the lawsuit was dismissed by a federal court judge, favoring Activision Blizzard.
Judge rules investor lawsuit against Activision Blizzard was too vague
Investors claimed Activision Blizzard failed to report the alleged rampant misconduct and sexual discrimination at the company. As Bloomberg Law explained, the investors felt "Activision made materially false and misleading statements in SEC filings, the company's Code of Conduct, and 2020 Environmental, Social, and Governance Report." Based on the suit, Activision Blizzard supposedly misled investors about the nature of the investigations by the EEOC and the DFEH.
If true, this would have meant Activision Blizzard committed fraud and should face repercussions. However, the case was dismissed by Judge Percy Anderson of the U.S. District Court for the Central District of California on April 18 due to a lack of particularized facts. Anderson explained, "The Court concludes that Plaintiffs' bare bone assertions that the ESG Report is actionable fails to satisfy the PSLRA's heightened pleading requirements," as per the court dockets.
Additionally, Anderson said, "Plaintiffs' other arguments based on post-hoc assessments and the background of the #MeToo movement are also deficient" and that "fraud-by-hindsight" is not enough to take the case any further. "Fraud-by-hindsight" is the idea that a company's mistakes can seem more fraudulent when looked back on with the present evidence.
Although the case was thrown out, the Plaintiffs have 30 days to file an amended complaint. So, there's a chance this isn't the last time courts will hear from Activision Blizzard investors.