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Activision v. West settled before trial

By Steve Peterson

Activision v. West settled before trial

Thu 31 May 2012 8:59pm GMT / 4:59pm EDT / 1:59pm PDT

[UPDATE] Activision and attorneys comment

Activision Blizzard

Headquartered in Santa Monica, California, Activision Blizzard, Inc. is a worldwide pure-play online...


Update: Bruce Isaacs, attorney for the Infinity Ward Employee Group, confirmed that the case has been settled in full, and that all attorneys have no further comment. Activision's complete statement on the matter, just released to the media:

"Activision Blizzard, Inc. (Nasdaq: ATVI) today announced that all parties to the litigation have reached a settlement of the dispute, the terms of which are strictly confidential."

"The company does not believe that the incremental one-time charges related to the settlement will result in a material impact on its GAAP or non-GAAP earnings per share outlook for the current quarter or the calendar year, due to stronger-than-expected operating performance in the current quarter."

Interestingly, the second paragraph of that statement does reveal something about the settlement. The scope of the settlement would seem to be not much more than any additional revenue Activision was expecting in this quarter (or some amount less, but the wording implies that there has been some substantial amount of money being paid out). In a typical quarter Activision would generate revenues somewhere between $1 billion and $1.5 billion, with net income of around $400 million to $500 million. If Activision has a really good quarter, better than they announced to investors, it might mean an extra $100 million in income for the quarter. So the settlement is probably not much more than that.

Activision is required to state substantial changes in its earnings and expenditures, according to SEC rules, and to notify investors when Activision becomes aware of such events. That's why Activision has said this much, despite the desire to keep the matter strictly confidential. It's possible that the settlement was much lower, but then there would have been no reason for Activision to put in the phrase "due to stronger-than-expected operating performance in the current quarter."

It's also worth noting that the settlement amount is a fraction of the total amount sought, which was over $1 billion with all damages included.

Original Story: Word has come from LA Times reporter Ben Fritz that "all parties have reached a settlement in the dispute, the terms of which are strictly confidential." That, apparently, "is the agreed upon party line quote." An attorney for West and Zampella confirmed that a settlement has been reached, but terms are confidential. The trial was scheduled to begin tomorrow in Los Angeles Superior Court.

Jason West and Vince Zampella, co-founders of Infinity Ward, sought more than $1 billion in unpaid bonuses and damages related to their contract with Activision regarding Call of Duty and its sequels. They were joined by dozens of former Infinity Ward staffers in seeking unpaid bonuses and damages. Activision had countersued, claiming breach of contract.

Recent moves by Activision, including settling a $400 million lawsuit against Electronic Arts related to the case and paying $42 million to former Infinity Ward employees, indicated that a settlement might be in the offing. Legal observers think it's probably no coincidence that all this came about after Activision brought in a new attorney, Beth Wilkinson, to head up the case after the end of the discovery period (when all information to be presented at trial by both sides has been disclosed).

It's not surprising that the terms of the settlement would be confidential; that's typical. Part of the reason a company settles such cases, even when they feel they are in the right, is to avoid bad publicity. As a consequence, the terms of the settlement deals are usually kept secret.

We have reached out to attorneys seeking more information.

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Sam Brown Programmer, Cool Games Ltd.

235 164 0.7
Drat (throws popcorn in bin). Right journalists, it's over to you. Get either West or Zampella absolutely blind drunk at E3 and try and get some details out of them at least.

Posted:4 years ago


Adrian Herber

69 23 0.3
Congrats Respawn, now you can focus on making games again! It is a bit of a shame that the alleged behaviour of Bobby Kotick did not get a chance to be brought out into the open though. If the spying etc was really true, I think it would have been good for the industry for this to have been brought before a judge and punitive damages awarded as a message to other publishers.

Posted:4 years ago


David Radd Senior Editor, IndustryGamers

361 80 0.2
I'm not surprised by this - there had already been some embarrassing revelations for Activision - why drag it out and potentially get hit with a big money payment from an unsympathetic jury? Just pay out some money and don't put people's lives through the wringer.

Posted:4 years ago


Steve Peterson Marketing Consultant

135 142 1.1
Going to trial is always a roll of the dice; you just never know how a jury will decide things. It's best for everybody to avoid it if possible. I suspect that Activision paid out a healthy sum, which no doubt they found annoying. And the plaintiffs didn't get as much as they were seeking, which they also found annoying. So everybody leaves somewhat unhappy, but everyone can get back to making games.

Posted:4 years ago

Yes, now we can all get back to making games without any more mud slinging.

The proof is in the pudding and they can duke it out in the vid game charts instead

Posted:4 years ago


Aleksi Ranta Product Manager - Hardware

386 316 0.8
No suprise really that this was settled out of court. The bigger PR mess this would have made if it had gone to trial....oh dear indeed.

Posted:4 years ago


Sam Maxted Journalist / Community / Support

155 65 0.4
I'd imagine at the very least they got the money they were originally owed. At this point, Activision was probably more concerned with PR and avoiding punitive damages.

Posted:4 years ago


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