Riot has officially responded to the State of California in a series of legal documents objecting to the whopping increase in settlement funds.
Just yesterday we reported on the ongoing sage of Riot Games sexual discrimination lawsuit. While it seemed the studio was finally in the clear following the announcement that a settlement of $10 million dollars was reached in December of 2019. What appeared to be a dramatic situation finally coming to a close suddenly exploded once again when it was discovered that the state would be intervening in the settlement process with the possibility of increasing the settlement to $400 million. Which is, you might not realise, an enormous amount of money.
Riot Games is obviously aware of this and they aren’t just bowing to the intervention. Riot’s Corporate Comms Lead, Joe Hixon, reached out to us to provide the latest on the filings, made last night, in response to the Department of Fair Employment and Housing (DFEH). These documents, are your standard dense legal read so to save you some time I’ve helpfully gone through them and pulled out the most important parts. Riot’s argument against the state’s invention seemingly boils down to information that has been purposely misinterpreted and misconstrued so as to place Riot under heavy public scrutiny.
The filing states, “The DFEH’s claim that the “maximum exposure in back pay owed to female employees alone exceeds $400 million” is outrageous, reckless, and without any basis in fact or law. Indeed, there are numerous methodological deficiencies in how the DFEH reaches this number, each of which makes the ultimate conclusion wholly unsound.” The first of these errors concerns the “inconsistent” comparison of wage rates under the Equal Pay Act as the $400 million has been drawn from Riot’s employees’ yearly “gross earnings” and “federal wages” without taking into consideration “overtime or double-time hours worked”.
Beyond this, and perhaps most significantly, the comparison in earned wages does not factor in income from “equity-related taxable events, such as the exercise of nonqualified stock options (NSOs), settlement of restricted stock units (RSUs), or the sale proceeds of purchased options or RSUs. Including such income in a pay equity analysis improperly attributes to alleged wage discrimination what is most likely the result of equity-specific circumstances and individual decision points. Indeed, there are several circumstances that were unknown or uncertain to Riot, or out of its control at the time equity was granted…”
The second issue raised is that the DFEH is alleged to have stated to have used the “plaintiffs’ methodology” to calculate the total $400 million settlement but without “ever actually condoning or adopting that methodology”. The $400 million is said to have been the final number as the comparison in pay differences did not take into account “job titles, duties, skills, experience, performance, education etc.” and was just a flat comparison of wage earnings. Without taking into account these extra factors and instead relying solely on a “total wage differential” is both inaccurate and irrelevant.
The last issue raised is that while the DFEH faulted Riot for “not supplying an expert declaration (that supported) their pay disparity estimates”, the DFEH themselves have ironically not supplied their own expert analysis. “Instead, the agency proffers a conclusory declaration of its attorney, Irina Trasovan, who merely claims to have applied “Plaintiffs’ methodology,” with no meaningful explanation of how this was done…the only logical conclusion to be drawn from the DFEH’s failure to provide its own analysis is that the DFEH knows that an accurate analysis would produce a maximum exposure significantly less than $400 million—and one much more consistent with the range of this proposed settlement.”
There are other factors that come into play here, but these are three core issues with the figure being provided by the DFEH. To summarise Riot’s whole position on this intervention, I’ll draw a quote from one of the documents that I believe best describes their take on things: “Thus, it appears that the DFEH’s intent is not to provide a meaningful analysis of the alleged pay disparities here, but to proffer the most outlandish figure possible, in order to garner sensational headlines and pressure Riot in the public.”
“Riot, like many employers, did not settle this case because it believes there is class-wide liability; instead, the Company wants to focus its resources to being the best possible place to work, engaging in industry-wide discussions around diversity and inclusion, and creating amazing digital games, rather than engaging in years of litigation, endless press cycles, and resulting employee fatigue. The proposed settlement is fair, reasonable, and stands to provide significant relief to the putative class. The DFEH’s Objection—which is wrought with misinformation and misdirection—seeks only to stand in the way of such relief. The Court should disregard the DFEH’s Objection and preliminarily approve the settlement,” concludes the document.
Last Updated: January 24, 2020