Activision Prevails In Shareholder Lawsuit Over Alleged Workplace Discrimination
According to a report from Courthouse News Service, Activision—the Santa Monica, CA based video game publisher—has prevailed in a shareholder lawsuit. The claim, which was filed by a group of pension funds based in New York State, alleged that the company engaged in workplace discrimination—thereby damaging their financial interests. The lawsuit was dismissed on technical grounds that the plaintiffs failed to take the issue directly to the Board of Directors before filing for litigation. Within this article, our Miami shareholder dispute attorneys explain why the company prevailed in this shareholder lawsuit.
Background: Alleged Workplace Discrimination Activision
Activision is currently embroiled in a major workplace discrimination lawsuit. In 2021, the California Department of Fair Employment and Housing sued the company for alleged discriminatory practices related to pay and hiring as well as an alleged toxic workplace environment. The lawsuit argues that management at the company engaged in, facilitated, and allowed to occur sex discrimination, sexual harassment, and other sexual misconduct. To be clear, these are still allegations. The workplace discrimination lawsuit is still ongoing in California. A trial is currently scheduled to start in February of 2023.
Understanding the Allegations of Shareholders
What is the role of shareholders in this place? They allege that their interests were harmed by the discriminatory practices at the company. In bringing the lawsuit, the shareholders alleged economic harm on the basis of the alleged workplace discrimination. More specifically, the shareholders contended that the reputational harm and potential for regulatory sanctions that the company faced due to questions about its workplace practices undermined the value of their shares. Notably, a growing number of shareholders are filing these types of lawsuits in recent years.
Shareholder Lawsuit Dismissed: Failed to Properly Raise Matter Directly to the Board
Shareholders may file a lawsuit against a company if their rights are violated. However, there are specific rules and regulations in place for shareholder lawsuits. In this case, United States District Judge Percy Anderson ruled that the shareholders—a group of pension funds—failed to meet a key procedural requirement prior to filing their lawsuit: They never raised the issue directly to the Activision Board of Directors. In most states, including in Florida, shareholders are required to “exhaust” remedies before pursuing litigation. Typically, this means proving one of two things:
- The shareholder(s) made a demand to the Board of Directors, but their issues were not addressed; or
- The shareholder(s) failed to make a demand to the Board of Directors, but doing so would have been futile.
In this case, the shareholders relied on the futility argument. However, the federal court found that insufficient evidence was provided to justify that raising a demand would have been “futile.”
Give Our Miami Shareholder Dispute Lawyers a Call Today
At Pike & Lustig, LLP, we have the professional expertise to take on the full range of shareholder cases. If you have any specific questions about the next steps to take in your case, please do not hesitate to contact us today. Our firm provides shareholder representation throughout South Florida, including in Miami, Fort Lauderdale, West Palm Beach, Wellington, and Jupiter.