Case 2:21-cv-06240-PA-JEM Document 78 Filed 05/18/22 Page 1 of 130 Page ID #:1735
`
`
`
`
`Laurence M. Rosen (SBN 219683)
`THE ROSEN LAW FIRM, P.A.
`355 South Grand Avenue, Suite 2450
`Los Angeles, CA 90071
`Telephone: (213) 785-2610
`Facsimile: (213) 226-4684
`Email: lrosen@rosenlegal.com
`
`Lead Counsel for Plaintiffs
`
`
`UNITED STATES DISTRICT COURT
`CENTRAL DISTRICT OF CALIFORNIA
`
`
`GARY CHENG, Individually and on
`behalf of all others similarly situated,
`
`Plaintiff,
`
`
`
`
`v.
`
`ACTIVISION BLIZZARD, INC.,
`ROBERT A. KOTICK, DENNIS
`DURKIN, SPENCER NEUMANN,
`ARMIN ZERZA, and BRIAN KELLY,
`
`Defendants.
`
`
`
`
`Case No. 2:21-cv-06240-PA-JEM
`
`SECOND AMENDED CLASS
`ACTION COMPLAINT FOR
`VIOLATIONS OF THE
`FEDERAL SECURITIES
`LAWS
`
`
`CLASS ACTION
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`JURY TRIAL DEMANDED
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`Case 2:21-cv-06240-PA-JEM Document 78 Filed 05/18/22 Page 2 of 130 Page ID #:1736
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`TABLE OF CONTENTS
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`NATURE OF THE ACTION .................................................................................... 1
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`JURISDICTION AND VENUE .............................................................................. 13
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`PARTIES ................................................................................................................. 13
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`ALLEGATIONS OF MISCONDUCT .................................................................... 16
`
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`A. Background of Activision Blizzard. .............................................................. 16
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`B. Relevant Non-Parties ..................................................................................... 18
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`C. The EEOC and DFEH Open Investigations Into Activision Blizzard for
`Systemic Sexual Harassment and Gender Discrimination Against Female
`Employees by Commissioner’s Charge and Director Complaint,
`Respectively. ................................................................................................. 22
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`1) The EEOC Initiates an Investigation of Activision Blizzard with a
`Commissioner’s Charge on September 26, 2018 ....................................... 22
`
`2) The DFEH Begins Requesting Information From Activision Blizzard in
`2017 and Initiates a Formal Investigation Into Systemic Misconduct by
`Serving the Company with a Director’s Complaint on October 12, 2018. ....
` ..................................................................................................................... 23
`
`D. Defendants Did Not Disclose the EEOC and DFEH Investigations, and
`Instead Stated Repeatedly During the Class Period that the Company was
`Party to Only “Routine…Investigations” that Arose in “the Ordinary Course
`of Business,” Were “Not Significant,” and Not Expected “to Have a Material
`Adverse Effect” on Activision Blizzard’s Business. .................................... 24
`
`E. The EEOC and DFEH Investigations Were Not “Routine” and in the
`“Ordinary Course of Business;” The EEOC and DFEH Investigations Were
`“Significant” and Likely “to Have a Material Adverse Effect” on Activision
`Blizzard’s Business. ...................................................................................... 25
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`SECOND AMENDED CLASS ACTION COMPLAINT FOR VIOLATIONS OF
`THE FEDERAL SECURITIES LAWS
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`Case 2:21-cv-06240-PA-JEM Document 78 Filed 05/18/22 Page 3 of 130 Page ID #:1737
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`1) EEOC Commissioner’s Charges and DFEH Director’s Complaints Are
`Rarely Used Mechanisms That Those Agencies Use for Investigations into
`Systemic Harassment and Discrimination. ................................................. 26
`
`a. The EEOC’s Commissioner’s Charge against Activision Blizzard was one
`of only 11 filed in 2018. ........................................................................... 26
`
`b. The DFEH Filed Only 4 Director’s Complaints in 2019 and 3 Director’s
`Complaints in 2020 and in Each of Those Years the Director’s Complaint
`Against Activision Blizzard was Only One of 10 Additional Director’s
`Complaints Under Investigation. ............................................................. 27
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`2)
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`In Response to the Investigations, Activision Blizzard Made Significant
`Changes to its Human Resources Procedures, Which Included Instituting a
`Formal Process for Investigating Sexual Harassment Complaints For the
`First Time and Instituting Regular Meetings Between Human Resources
`and its Legal Team. ..................................................................................... 27
`
`3) The EEOC and DFEH Investigations Caused Activision Blizzard to Fire
`Important Employees Before the Investigations Became Public. .............. 29
`
`4) Activision Blizzard’s Board of Directors was Informed About the EEOC
`and DFEH Investigations. ........................................................................... 33
`
`5) The EEOC and DFEH Investigations Were Both Very Extensive — Both
`Interviewed More Than 100 Witnesses — and the DFEH Served
`Activision Blizzard With a Broad Subpoena Duces Tecum After it Had
`Already Been Investigating For More Than Two Years ............................ 34
`
`6) Endemic Sexual Harassment and Discrimination at Activision Blizzard and
`The Inevitable Fact that the that the EEOC and DFEH Would Discover It
`Rendered the Investigations Non-Routine and Significant, and Precluded
`the Possibility that they Would Not Have a Material Effect on the
`Company. .................................................................................................... 36
`
`a. Sexual Harassment Was Pervasive at Blizzard, Including Among High-
`Level Employees. ..................................................................................... 37
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`Case 2:21-cv-06240-PA-JEM Document 78 Filed 05/18/22 Page 4 of 130 Page ID #:1738
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`b. Activision Blizzard Employees Who Complained About Sexual
`Harassment to Human Resources or their Supervisors Suffered
`Retaliation. ............................................................................................... 49
`
`c. Defendant Kotick Knew for Years About Sexual-Misconduct at Blizzard
`and Other Parts of the Company. ............................................................. 56
`
`d. J. Allen Brack and Michael Morhaime — Who Served as Blizzard’s
`Presidents During and Right Before the Class Period, Were Each Aware
`of the Pervasive Harassment. ................................................................... 59
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`e. The DFEH, EEOC, and Bloomberg also Found that Activision Blizzard
`Discriminated Against its Female Employees, Especially Those Who
`Were Pregnant, Mothers, or of Color, by Giving Them Fewer
`Opportunities and Lower Pay. ................................................................. 63
`
`f. As With Sexual Harassment, President Brack and Human Resources Were
`Aware of the Discrimination and Women Who Complained Were Either
`Ignored or Suffered Retaliation. ............................................................... 67
`
`7) Activision Blizzard Repeatedly Stated That the Company’s Reputation as a
`Good Place to Work and its Commitment to Diversity and Inclusion was
`Important to the Success of the Company During the Class Period. ......... 69
`
`8) Starting in October 2017, the #MeToo Movement Led to the Firing of
`Numerous High Profile Executives at Other Companies, Making it Clear
`that the Company Could Not Handle the DFEH and EEOC Investigations
`as Routine Matters and that They Were Significant and Could Have a
`Material Effect on the Company. ............................................................... 70
`
`9) Defendants Admitted That the Investigations Were Material, Not Routine
`and Significant by Stating in its Public Filings Two Weeks After the
`DFEH Complaint Was Filed That its Business Could be Adversely
`Impacted. ..................................................................................................... 71
`
`F. On July 20, 2021, the DFEH Publicly filed its Complaint Against Activision
`Blizzard, Revealing the Pervasive Misconduct at the Company, and Leading
`to Enormous Reputational Damage, Employee Walkouts, and the Decline of
`the Company’s Share Price. .......................................................................... 72
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`Case 2:21-cv-06240-PA-JEM Document 78 Filed 05/18/22 Page 5 of 130 Page ID #:1739
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`G. The Fallout From the DFEH Lawsuit Continues, Including the Resignations
`of Blizzard’s President and Head of Human Resources and the Firing of the
`Director of Diablo IV. ................................................................................... 79
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`H. The DFEH Amends Its Complaint to Add Claims that Activision Blizzard
`Obstructed its Investigation. .......................................................................... 81
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`I. The SEC Opens an Investigation into Sexual Harassment and Workplace
`Discrimination at Activision Blizzard and Subpoenas Defendant Kotick;
`Blizzard’s Chief Legal Officer and Executive Producer of Overwatch Leave
`the Company. ................................................................................................. 83
`
`J. On September 27, 2021, the EEOC Files a Sexual Harassment, Sex
`Discrimination, and Retaliation Complaint under Title VII Against
`Activision Blizzard, and the Company Enters Into a Consent Decree as a
`Condition of Settlement. ............................................................................... 85
`
`K. Due to the Ongoing Scandal, Activision Blizzard Fires 20 Employees;
`Cancels its Yearly Showcase; Institutes a “New Zero-Tolerance Harassment
`Policy”; Waives Required Arbitration of Sexual Harassment and
`Discrimination Claims; and Defendant Kotick Cuts his Own Base Salary to
`$62,500. ......................................................................................................... 87
`
`L. Activision Blizzard Admits That Leadership Changes to Their Diablo and
`Overwatch Franchises, Forced by the Ongoing Sexual Harassment Scandal,
`Would Cause the Latest Installments of Those Games to be Delayed and that
`Jennifer Oneal was Departing from her Position as Co-leader of Blizzard,
`Leading to a Huge Drop in the Company’s Stock. ....................................... 88
`
`M. The November 16 Wall Street Journal Article is Published Revealing That
`Defendant Kotick Knew About Sexual-Misconduct Allegations at Activision
`Blizzard for Years, the Company had Received More Than 500 Harassment
`and Discrimination Reports From Current and Former Employees Since the
`DFEH Complaint was Filed, and That Jennifer Oneal Sent an Internal Email
`Saying She Was “Tokenized, Marginalized, and Discriminated Against”
`Prior to Her Resignation. ............................................................................... 92
`
`N. The SEC Widens its Investigation of Activision Blizzard and the DFEH
`Subpoenas the Police Departments in the Los Angeles Area for Records
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`Case 2:21-cv-06240-PA-JEM Document 78 Filed 05/18/22 Page 6 of 130 Page ID #:1740
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`About Defendant Kotick and 18 Other Current and Former Activision
`Employees. .................................................................................................... 93
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`FALSE AND MATERIALLY MISLEADING STATEMENTS ISSUED DURING
`THE CLASS PERIOD ............................................................................................. 94
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`A. Activision Blizzard’s SEC Filings Repeatedly Misstated That The Company
`Was Only “party to routine…investigations” that arose in the “ordinary
`course of business” and were “not significant” or expected to have “a
`material adverse effect.” ................................................................................ 94
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`LOSS CAUSATION ............................................................................................. 103
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`ADDITIONAL SCIENTER ALLEGATIONS ..................................................... 104
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`A. The Defendants Acted Intentionally or Recklessly. .................................... 104
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`1) The Individual Defendants Were Aware of the DFEH and EEOC
`Investigations and That the Board of Directors Had Been Informed About
`Them. ........................................................................................................ 104
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`2) The Significant Changes to the Procedures of Human Resources and Firing
`of Senior Employees Due to the Investigations Rendered the Individual
`Defendants’ Statements, at Minimum, Reckless. ..................................... 105
`
`3) The Individual Defendants Were Aware of or Recklessly Disregarded the
`Pervasive Sexual Harassment and Discrimination at Activision Blizzard
`and, Therefore, Knew or Should Have Known That Their Statements Were
`False and Misleading. ............................................................................... 107
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`4) Defendants’ Obstruction of the DFEH’s Investigation Supports a Strong
`Inference of Scienter. ................................................................................ 109
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`5) Given the #MeToo Movement and Activision Blizzard’s Lip Service to
`Diversity, Equity, and Inclusion, Defendants Cannot Reasonably Argue
`that They Did Not or Should Not Have Realized the Importance of the
`DFEH and EEOC Investigations. ............................................................. 110
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`Case 2:21-cv-06240-PA-JEM Document 78 Filed 05/18/22 Page 7 of 130 Page ID #:1741
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`6) Defendants Admitted that the Investigations Were Material and Not
`“Routine” by Stating in the Company’s 2Q 2021 10-Q, Filed on August 3,
`2021, That its Business Could be Adversely Impacted. ........................... 110
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`B. The Individual Defendants Were Motivated to Make the Misstatements. .......
` ..................................................................................................................... 111
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`1) Defendant Kotick Was Motivated to Make Misstatements by Shareholder
`Value Creation Incentives in His Employment Agreement. .................... 111
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`2) Defendants Sold Millions of Dollars in Activision Blizzard Stock in 2020
`and 2021, Before the DFEH and EEOC Filed their Public Complaints. . 112
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`C. The Individual Defendants Acted Intentionally or Recklessly When They
`Approved and Failed to Correct the Aforementioned Misstatements. ....... 113
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`D. There is a Strong Inference That Activision Blizzard Acted with Scienter.
` ..................................................................................................................... 113
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`NO SAFE HARBOR ............................................................................................. 114
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`PLAINTIFFS’ CLASS ACTION ALLEGATIONS ............................................. 116
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`COUNT I ............................................................................................................. 118
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`COUNT II ........................................................................................................... 121
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`PRAYER FOR RELIEF ........................................................................................ 122
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`JURY TRIAL DEMANDED ................................................................................. 122
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`SECOND AMENDED CLASS ACTION COMPLAINT FOR VIOLATIONS OF
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`Case 2:21-cv-06240-PA-JEM Document 78 Filed 05/18/22 Page 8 of 130 Page ID #:1742
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`Lead Plaintiff Jeff Ross (“Ross”) and named Plaintiffs Gary Cheng
`(“Cheng”), Micah Ernst (“Ernst”), Michael Noon (“Noon”), Nick Baldwin
`(“Baldwin”), Chris Martin (“Martin”), and Alejandro Toiber (“Toiber”)
`(collectively, “Plaintiffs” or “Investors”), individually and on behalf of all other
`persons similarly situated, allege the following based on personal knowledge as to
`Investors’ own acts and upon information and belief as to all other matters based
`on the investigations conducted by and through Investors’ own attorneys. This
`investigation included, among other things: review and analysis of U.S. Securities
`and Exchange Commission (“SEC”) filings by Activision Blizzard, Inc.
`(“Activision Blizzard” or the “Company”); Activision Blizzard’s press releases
`and earnings call transcripts; public information regarding Activision Blizzard,
`including information on Activision Blizzard’s website; analyst reports and media
`reports about Activision Blizzard; interviews with former employees of Activision
`Blizzard and information readily obtainable on the Internet. Plaintiffs believe that
`substantial evidentiary support will exist for the allegations set forth herein after a
`reasonable opportunity for discovery.
`NATURE OF THE ACTION
`1.
`Investors bring this securities class action on behalf of persons or
`entities who purchased publicly traded Activision Blizzard common stock on the
`NASDAQ between November 8, 2018 and November 16, 2021, inclusive (the
`“Class Period”), and who held such shares on July 27, 2021, and/or September 20,
`2021, and/or November 3, 2021, and/or November 16, 2021, and suffered
`compensable damages thereby (the “Class”).1
`
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`1 Excluded from the Class are: Defendants and their immediate families; the officers and
`directors of Activision Blizzard at all relevant times; their subsidiaries, affiliates, legal
`representatives, heirs, successors, or assigns; and any entity in which Defendants or any
`excluded persons have or had a controlling interest.
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`SECOND AMENDED CLASS ACTION COMPLAINT FOR VIOLATIONS OF
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`Case 2:21-cv-06240-PA-JEM Document 78 Filed 05/18/22 Page 9 of 130 Page ID #:1743
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`2.
`Activision Blizzard is one the largest developers and publishers of
`video games for video game consoles, personal computers, and mobile devices.
`The Company also operates Esports leagues, which are competitive leagues for
`video game players.
`3.
`Unbeknownst to investors, on September 26, 2018 and October 12,
`2018, respectively, the U.S. Equal Employment Opportunity Commission (the
`“EEOC”) and the California Department of Fair Employment and Housing (the
`“DFEH”) informed the Company they each had opened investigations into the
`Company (the “Investigations”). In 2017, prior to formally opening its
`investigation, the DFEH began requesting information from Activision Blizzard.
`4.
` The Investigations concerned sexual harassment, sexual assault and
`various forms of gender-based discrimination. The peril this posed to Activision
`Blizzard would have been readily apparent to Defendants since the EEOC and
`DFEH opened these Investigations in the wake of the #MeToo Movement, which
`intensified in late 2017.
`5.
`The commencement of the Investigations posed grave risks to
`Activision Blizzard given the disturbing reality that sexual harassment and
`gender-based employment discrimination were endemic at Activision Blizzard —
`especially at Blizzard Entertainment (“Blizzard”), one of the Company’s three
`segments. Defendants’ knowledge of the existence of the Investigations, coupled
`with Defendants’ knowledge that the Company’s modus operandi was one in
`which pervasive sexual harassment, sexual abuse and gender discrimination was
`not only tolerated but was celebrated, (as described herein) apprised Defendants of
`the fact that the Investigations posed grave risks to Activision Blizzard at the time
`they began.
`6.
`Notwithstanding the above, during the more than two years between
`the initiation of the DFEH and EEOC Investigations and when the DFEH publicly
`filed a complaint against the Company, Activision Blizzard’s 10-Ks and 10-Qs
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`stated only that the Company was subject to “routine….investigations” that arose
`“from the ordinary course of business,” were “not significant,” and not expected
`“to have a material adverse effect.”
`7.
`These statements were highly misleading because the EEOC and
`DFEH Investigations were not “routine” and in the “ordinary course of business”
`and were “significant” and likely to have a “material adverse effect” for numerous
`reasons.
`8.
`First, the EEOC and DFEH, respectively, initiated the Investigations
`with unusual, non-routine mechanisms — an EEOC Commissioner’s Charge and
`a DFEH Director’s Complaint. The EEOC and the DFEH employ these
`mechanisms only in investigations of serious systemic misconduct. The EEOC
`only filed 11 Commissioner’s Charges in 2018, which decreased further to 9 in
`2019 and 3 in both 2020 and 2021. The DFEH only filed 4 Director’s Complaints
`in 2019 and 3 in 2020. Furthermore, during 2019 and 2020, the DFEH’s
`investigation of Activision Blizzard was one of only 10 additional ongoing
`investigations based on a Director’s Complaint.
`9.
`Second, according to a confidential witness who was serving as an
`Activision Blizzard Human Resources Senior Manager/Human Resources
`Business Partner at the time, the Investigations led to immediate and significant
`changes in how the Company’s Human Resources Department conducted
`business. The confidential witness stated that in the fall of 2018, right after the
`Investigations began, the Company’s Human Resources department began
`holding regular meetings with the Company’s legal team and that the Company’s
`executives instructed Human Resources that because of the EEOC Investigation
`they must document all sexual harassment complaints. Prior
`to
`the
`commencement of the EEOC Investigation, regular meetings between the human
`resources department and the legal department did not take place, and the human
`resources department did not have a formal process for investigating complaints.
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`Case 2:21-cv-06240-PA-JEM Document 78 Filed 05/18/22 Page 11 of 130 Page ID #:1745
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`10. The above-described confidential witness
`that
`further stated
`Defendant Robert Kotick — the Chief Executive Officer (“CEO”) of Activision
`Blizzard would have certainly known about these changes given that he had
`regular one-on-one meetings with the Company’s Chief People Officer, Claudine
`Naughton, who was head of Human Resources for all of Activision Blizzard.
`11. The Company also conducted an internal investigation of Human
`Resources’ practices and policies in 2018 and changed the reporting structure of
`Human Resources in 2019 by having it report directly to the corporate office. An
`Activision Blizzard spokeswoman admitted to the Wall Street Journal that the
`Company changed the reporting structure of Human Resources because the prior
`setup ‘occasionally allowed some employees to conduct themselves in truly
`regrettable ways.”
`12. Third, the Investigations caused the Company to abruptly fire three
`Blizzard senior leaders: 1) Ben Kilgore, Blizzard’s Chief Technology Officer and
`heir apparent to then Blizzard President Mike Morhaime, in August 2018; 2) Tyler
`Rosen, Senior Manager of Global Business Strategy & Operations, in October
`2018; and 3) Alex Afrasiabi, Senior Creative Director of World of Warcraft
`(Blizzard’s most profitable asset), in May 2020. Prior to their sudden firings those
`three men had sexually harassed women for years with few repercussions due to
`their importance to the Company. The Wall Street Journal reported, based on
`conversations with people familiar with Defendant Kotick’s leadership, that he
`was typically aware of high profile hirings and firings and had personally
`approved Kilgore’s termination.
`13. Fourth, Activision Blizzard’s Board of Directors gave a statement to
`the Wall Street Journal that they were informed about the Investigations at all
`relevant times. Given that at a company the size of Activision Blizzard
`management would only inform the board of a small percentage of legal matters
`— the most significant legal matters with potential for material effects on the
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`Case 2:21-cv-06240-PA-JEM Document 78 Filed 05/18/22 Page 12 of 130 Page ID #:1746
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`Company, this is another strong indication that the Investigations were not
`“routine,” in the “ordinary course of business” and were “significant” and likely to
`have a “material adverse effect.”
`14. Fifth, the Investigations were both extensive. The EEOC and DFEH
`both interviewed more than 100 witnesses and the EEOC sent a survey to all of
`Activision Blizzard’s employees. The EEOC also interviewed 10 of Activision
`Blizzard’s current and former managers and executives and the DFEH took 7
`depositions.
`15. Additionally, Activision Blizzard admitted in its First Amended
`Answer to Plaintiff DFEH’s First Amended Complaint, filed on May 9, 2022, see
`DFEH v. Activision Blizzard, Inc., et al., 21 ST CV 26571 (Cal. Supr. Ct.)
`(“Answer to the DFEH Amended Complaint”), that the DFEH served an
`extremely broad Subpoena Duces Tecum on the Company on May 4, 2021, after
`the DFEH had already been officially investigating for more than two years. The
`DFEH then ignored Activision Blizzard’s requests to meet and confer about the
`subpoena. Despite this, Activision Blizzard filed a 10-Q a month later that
`continued to represent that the Investigations were “routine” and in the “ordinary
`course of business” and were “not significant” or expected to have a “material
`adverse effect.”
`16.
`the pervasive sexual harassment and discrimination at
`Sixth,
`Activision Blizzard and especially at Blizzard meant that the Investigations were
`not routine because they were certain to uncover significant illegal conduct, the
`discovery of which posed grave risks to the Company both qualitatively and
`quantitatively. In other words, at the very moment Defendants learned that law
`enforcement was on the Company’s trail, Defendants knew that the Investigations
`posed grave risks to the Company and were thus extraordinary. Indeed, the DFEH
`found that “[f]emale employees are subjected to constant sexual harassment,
`including having to continually fend off unwanted sexual comments and advances
`5
`SECOND AMENDED CLASS ACTION COMPLAINT FOR VIOLATIONS OF
`THE FEDERAL SECURITIES LAWS
`
`

`

`Case 2:21-cv-06240-PA-JEM Document 78 Filed 05/18/22 Page 13 of 130 Page ID #:1747
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`by their male co-workers and supervisors” and “[h]igh-ranking executives and
`in blatant sexual harassment without repercussions.”
`creators engaged
`(emphasis added). In “a particularly tragic example,” the DFEH confirmed that a
`female employee committed suicide during a business trip after male co-workers
`passed around a picture of the deceased employee’s genitalia at a Company
`holiday party.
`17. The DFEH specifically highlighted Afrasiabi as a “blatant example of
`Defendants’ refusal to deal with a harasser because of his seniority/position.” The
`DFEH found that “Afrasiabi was so known to engage in harassment of females
`that his suite was nicknamed the ‘Crosby Suite’ [sic] after alleged rapist Bill
`Crosby [sic].” Afrasiabi was allowed to operate with impunity at Blizzard for
`more than a decade until his firing in 2020.
`18. After the DFEH filed a public complaint against Activision Blizzard,
`on July 20, 2021, the Washington Post and Bloomberg both produced
`investigative reports that confirmed a culture of sexual abuse at Blizzard that
`reached the highest levels, highlighting the misconduct of Afrasiabi, Kilgore, and
`Rosen.
`19. A lawsuit filed by an employee in Kilgore’s technology department
`and multiple witnesses Plaintiffs’ investigator interviewed further confirm that
`harassment and humiliation at Blizzard were common.
`20. The women who were brave enough to report misconduct to the
`Company’s Human Resources department were frequently retaliated against by
`their supervisors. The DFEH found that numerous women complained to Human
`Resources about harassment and discrimination, but that their complaints were
`either ignored or retaliated against. The DFEH noted that Human Resources’ lack
`of effectiveness was unsurprising given
`that “Defendants’ own
`internal
`investigation into their human resources unit noted that there was a ‘big lack of
`trust’ and that ‘HR was not held in high regard.’”
`6
`SECOND AMENDED CLASS ACTION COMPLAINT FOR VIOLATIONS OF
`THE FEDERAL SECURITIES LAWS
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`

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`Case 2:21-cv-06240-PA-JEM Document 78 Filed 05/18/22 Page 14 of 130 Page ID #:1748
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`21. The Washington Post and Bloomberg also concluded that Human
`Resources was ineffective and enabled retaliation against victims of sexual
`harassment and discrimination. A former male Blizzard senior leader told the
`Washington Post: “I know for a fact that HR was aware” of harassment
`complaints. A long-time female Blizzard employee told The Washington Post that
`“[HR was] almost like a gang that would ruin your career if you reported
`certain individuals.”
`22. The Company’s top leadership was fully aware of the endemic sexual
`harassment and discrimination at Activision Blizzard. In its November 16, 2021
`Article entitled “Activision CEO Bobby Kotick Knew for Years About Sexual-
`Misconduct Allegations at [Activision Blizzard],” The Wall Street Journal
`reported based on an extensive review of documents that included memos, emails
`and regulatory requests, and interviews with former employees and others familiar
`with the Company that Defendant Kotick “knew about allegations of employee
`misconduct in many parts of the company,” including Blizzard and other
`Activision Blizzard studios. The Wall Street Journal also found that Defendant
`Kotick himself has a disturbing history of mistreating women.
`23. The two men who served as President of Blizzard during and right
`before the Class Period, J. Allen Brack and Michael Morhaime, were also aware
`of the pervasive sexual harassment and discrimination and did little to prevent it.
`24. The DFEH found that “[n]umerous complaints about unlawful
`harassment, discrimination, and retaliation were made to Defendants’ human
`resources personnel and executives, including to Blizzard Entertainment's
`President J. Allen Brack.” The DFEH further found that Brack, who was Blizzard
`President from October 2018 to August 3, 2021, was aware of Afrasiabi’s
`behavior and did not stop it. Additionally, three different women who worked for
`Blizzard informed Brack about sexual harassment and retaliation at Blizzard in
`early 2019.
`
`7
`SECOND AMENDED CLASS ACTION COMPLAINT FOR VIOLATIONS OF
`THE FEDERAL SECURITIES LAWS
`
`

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`Case 2:21-cv-06240-PA-JEM Document 78 Filed 05/18/22 Page 15 of 130 Page ID #:1749
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`25.
`In its Answer to the DFEH Amended C