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Activision Wins End to 1 of 2 Ex-Managers’ Fraud Claims

March 5 (Bloomberg) -- Activision Blizzard Inc., the No. 1 U.S. publisher of video games, won dismissal of one of two fraud claims in its litigation against the former heads of its Infinity Ward studio, whom the company fired in 2010.

State Superior Court Judge Elihu Berle in Los Angeles agreed today with Activision that a fraudulent-inducement claim made by Jason West and Vincent Zampella, creators of the blockbuster game “Call of Duty: Modern Warfare 2,” shouldn’t go forward. He let stand a claim for promissory fraud.

West and Zampella said that they were considering leaving Activision when their contracts expired in October 2008. They alleged that Activision made false promises to string them along and create “Modern Warfare 2,” which became the bestselling game of 2010, before firing them.

“We’re very pleased,” Robert Schwartz, a lawyer for West and Zampella, said after the hearing. “The judge ruled there is admissible evidence, including from a senior executive, that Activision never intended to honor the contract.”

The former executives added the fraud claims to a 2010 breach-of-contract and wrongful-termination suit in which they alleged that Activision, based in Santa Monica, California, fired them to avoid paying millions of dollars in royalties for the game.

Activision maintains they were fired because they were in talks with rival Electronic Arts Inc. to set up a new development studio while they still had two years left on their contracts with Activision.

Activision Cross-Complaint

In a December 2010 cross-complaint, Activision asked for $400 million in damages from Electronic Arts for interfering with the contracts of its employees.

At today’s hearing, the judge denied a request by West and Zampella for a ruling that two provisions of their contracts with Activision can’t be enforced. One prohibits them from soliciting Activision employees. The other prohibits them from using proprietary Activision information,

The judge granted Activision’s request to rule that Todd Alderman and 39 other former Infinity Ward employees can’t proceed on conversion and breach of oral contract claims. The workers quit after West and Zampella were fired and joined their new studio, Respawn Entertainment,

The judge refused the company’s request to rule the 40 ex-employees can’t seek bonuses for time after they quit the company. Berle said he didn’t want to rule on parts of the workers claims, as Activision asked him to do, rather than each one as a whole.

Activision Lawyer

“All in all it was a very good day for Activision,” Steve Marenberg, a lawyer for the company, said after the hearing. “When the judge reached the substance of our claims, he ruled for us.”

The remaining fraud claim by West and Zampella survived only because “peculiarities of the California summary judgment procedure,” Marenberg said.

Bruce Isaacs, a lawyer for the 40 former Infinity Ward employees, said he was pleased because his clients’ claims for more than $275 million in compensatory damages remaining alive and are moving forward.

A trial is scheduled for May 7.

The case is West v. Activision, SC107041, California Superior Court (Los Angeles County).

To contact the reporter on this story: Edvard Pettersson in Los Angeles at epettersson@bloomberg.net.

To contact the editor responsible for this story: Michael Hytha at mhytha@bloomberg.net.

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