The Lawyers Who Ate California: Part II
The Activision Case, and the beginning of Tesla. Taking a strategy imported from the Department of Labor, the DFEH launches a series of media-centric cases
The failure of the federal case against Oracle had wide-ranging repercussions. For one thing, the firm moved its headquarters out of Redwood City to Austin, Texas within months of the judge’s decision. Oracle announced a move in the same week as Tesla, which was destined to be targeted by some of the same lawyers who’d worked the Oracle case. CEO Elon Musk told the Wall Street Journal that California regulators had begun behaving like a “monopoly that cannot go bankrupt,” preaching a religion that “regulations are immortal,” while adding the following acid commentary:
If a team has been winning for too long, they do tend to get a little complacent, a little entitled and then they don’t win the championship anymore. California has been winning for too long.
State officials responded to the departures of Oracle, Tesla, and other companies like Hewlett-Packard by claiming that a combination of irrational resistance to the state’s strict COVID-19 laws and a reluctance by coddled white male executives to diversify was causing the exodus.
Eric Mellon, a spokesman for Democratic Governor Gavin Newsom, told The Washington Post that California’s success was “not despite our progressive policies, but because of them… These are California’s fundamental values, and we’ll continue creating more jobs than any other state.”
Newsom then nervously insisted there was nothing to worry about. He pointed to a new law offering restaurants and other small businesses more flexibility in expanding outdoor dining — “eat your heart out, Paris,” he quipped — and reassured citizens the Silicon Valley departures were no big deal. “Our best days are in front of us,” the governor said.
“The ironic thing is, he was about six months from becoming a target of all this himself,” laughs one lawyer, referring to a state case that would soon far eclipse Oracle for sheer bile and bitterness.
“There’s ugly,” he added, “and then there’s Activision ugly.”
Way back on February 18th, 2018, Fortune magazine released its annual list of “100 Best Companies to Work For.” Game giant Activision Blizzard made the list for the fourth straight year, with a Fortune survey claiming 95 percent of its employees said it was a “fun place to work.” The firm’s PR department giddily noted it also made the “Most Admired” and “Most Innovative” lists the year before. Coupled with $7 billion in revenues, the news sent their share price skyrocketing to an all-time high of $78.25, as executives appeared to have reached gamer nirvana.
That same month, the federal Equal Opportunity Employment Commission (EEOC) got an anonymous complaint from an employee of Blizzard Entertainment, a subsidiary of Activision Blizzard, alleging “a hostile work environment based on sex.” The letter triggered a chain of events that within three years completely transformed Activision’s reputation. The firm went from “most admired” to shunned as the Freddy Krueger of workplaces, the living symbol of “toxic culture.”
The coup de grace was a lawsuit filed by California’s Department of Fair Employment and Housing, or DFEH, on July 21, 2021. It described the firm as a hellscape of “frat boy” antics in which male employees regularly came in hungover and blew workdays playing video games and joking about rape while women did all the work. Not merely uncomfortable, the Activision work environment was both deadly and perverse, as laid out in a crucial passage high in the complaint (emphasis mine):
In a particularly tragic example, a female employee committed suicide during a business trip with a male supervisor who had brought butt plugs and lubricant with him on the trip…the deceased female employee may have been suffering from other sexual harassment… male co-workers were alleged to be passing around a picture of the deceased’s vagina…
This filing was followed by a “bombshell” report in the Wall Street Journal entitled, “Activision CEO Bobby Kotick Knew for Years About Sexual-Misconduct Allegations at Videogame Giant.” Expansively citing “people familiar with the matter,” the Journal piggy-backed on details used by the DFEH, which really did sound shocking. It said the company’s soft-spoken, khaki-clad CEO, Bobby Kotick, had presided over a vast empire of testosterone-driven predation, having failed to inform his board about “alleged rapes,” and “intervened to keep” a male employee accused of harassment. The paper described one executive’s particularly demeaning experience:
She described a party for an Activision development studio she attended with Mr. Kotick around 2007 in which scantily clad women danced on stripper poles.
That the alleged rape from the lede of the Journal piece was reviewed by outside counsel understandably didn’t impress reporters, but the fact that police declined to file charges should have been in any story about what the company did or didn’t “know.” The Journal put “police” up top — “The woman… reported one of the incidents to the police” — but tucked the crucial detail, “No charges were brought,” at the bottom. Most subsequent reports that mentioned Activision in connection with rape left that element out, for instance here, here, here, and elsewhere.
As for the party the Journal wrote about involving “scantily clad women” who “danced on stripper poles”? A performance of Cirque Du Soleil, according to one source who attended the event. When I asked the Journal about that and other issues, they said, “We stand by our fair and accurate reporting on Activision.”