In the wake of the highly-publicized split between Bungie and Activision Blizzard, some investors and shareholders were less than happy with the fact that losing Destiny made Activision's share price take a hit. Shortly after the split, two class action lawsuits were announced on the basis that Activision had misled its investors as to the nature and possibility of Bungie's departure.
Now, it looks like a lead plaintiff is being sought for one of the class actions, but will it succeed? We take a look at the current legal state of play with the latest pending Activision Blizzard lawsuit, and where the company might go from here.
- This Page: What The Activision Blizzard / Bungie Lawsuits Are About
- Next Page: How the Latest Activision Blizzard Lawsuits Could Play Out
Activision Blizzard Lawsuit: The State of Play
Right now, it appears that the public is aware of six confirmed class action suits being brought against Activision Blizzard. From seeing samples of the complaints from Rosen Law Firm, The Schall Law Firm, and Pomerantz LLP, some common threads between the suits are clearly identifiable. At the time of writing, it looks like all six suits are still active according to the websites of the various firms.
However, the one that we're most concerned with in the meantime is the suit by Pomerantz LLP. It's now been reported by GamesIndustry.Biz that Kuznicki Law is drumming up shareholders to submit losses for Pomerantz's claim that was made earlier in the year. In particular, Pomerantz LLP's complaint centers around the following:
[...] that throughout the Class Period, Defendants made materially false and misleading statements regarding the Company’s business, operational and compliance policies. Specifically, Defendants made false and/or misleading statements and/or failed to disclose that: (i) the termination of Activision Blizzard and Bungie’s partnership, giving Bungie full publishing rights and responsibilities for the Destiny franchise, was imminent; (ii) the termination of the two companies’ relationship would foreseeably have a significant negative impact on Activision Blizzard’s revenues; and (iii) as a result, Activision Blizzard’s public statements were materially false and misleading at all relevant times. — Pomerantz LLP
As mentioned, this complaint is unsurprisingly similar to the suits filed by the other firms, with the crux of the complaints originating from Rosen Law Firm and The Schall Law Firm being that:
- Activision Blizzard kept shareholders and investors in the dark about the fact that the partnership with Bungie was going to be terminated;
- Activision Blizzard either withheld or made materially false statements regarding the impact that Destiny's sale as part of the termination would have on company revenue; and
- As a consequence of Activision Blizzard keeping its investors in the dark, they suffered damages when the real impact of the split played out.
Activision Blizzard Lawsuit: Much Ado About Being Misleading
The buzzword here in all the suits is the term "misleading". However, what does that actually mean for what's really at stake here? When examining these lawsuits, it's usually quite helpful to assess what exactly the complainants are wanting out of this. Here, the claim from Pomerantz LLP notes that the class' basis for recovering damages is going to be the Securities Exchange Act of 1934.
This particular piece of legislation and that provision in particular is concerned with curbing manipulative practices in the course of securities trading. The layman's term for that is usually "fraud", which isn't an unfamiliar term to associate with Activision Blizzard in 2019; the company was reportedly under investigation for securities fraud earlier in the year. When the lawsuits refer to conduct on the part of Activision Blizzard being misleading or materially wrong, the inference from that on top of the damages being claimed is that the company's conduct amounts to fraud in securities trading.