Activision going after EA in West-Zampella suit, seeking $400 million

[jkipp82]

Publisher believes rival company induced Infinity Ward co-founders to break contracts during development of Call of Duty: Modern Warfare 2, EA dismisses suit as "a PR play filled with pettiness and deliberate misdirection.

Perhaps the biggest news of 2010 was Activision's firing of Infinity Ward heads Jason West and Vince Zampella, even after the pair helped produce the blockbuster hit Call of Duty: Modern Warfare 2. Those terminations led to an ongoing saga that saw mass defections from developer Infinity Ward, the creation of West and Zampella's new studio Respawn Entertainment, and a volley of litigation between the pair, Activision, and current and former Infinity Ward employees.

Activision is taking aim at a new target in the West-Zampella suit.

As 2010 draws to a close, the story is receiving one more plot twist. Activision today told GameSpot it asked a federal judge for permission to file an amended cross-complaint in its legal spat with West and Zampella. In addition to expanding on its claims against the pair, Activision wants to make Electronic Arts a defendant in the case. According to a copy of the filing provided by the Call of Duty publisher, Electronic Arts tampered with West and Zampella, inducing the pair to break their existing contracts with Activision, freeing them to establish Respawn and sign with the EA Partners program.

According to the filing, "Starting as early as July 30, 2009, Electronic Arts and [West and Zampella]--with full knowledge that the executives were under contract and legally committed to Activision for more than two additional years--conspired to set up an independent company."

It continued, "The unlawful conduct came from the highest levels at Electronic Arts, including EA Chief Executive Officer, John Riccitiello, and Chief Operating Officer, John Schappert, with direct support from the high profile talent agency, Creative Artists Agency, and even a former member of Activision's Board of Directors and former Activision lawyer."

The cross-complaint, which EA declined to comment on, alleged a number of shady dealings between EA execs and West and Zampella. Specifically, it referenced an e-mail exchange between West and Schappert, in which the EA COO said he was thrilled to have a "super secret way into Jason."

As a result of the exchange, brokered by CAA agent Seamus Blackley, West and Zampella were flown to Riccitiello's home by private jet on August 28, 2009 for a meeting with the CEO. The pair later admitted that at said meeting, they told the executive that they had over two years remaining on their contract with Activision.

The suit further focused on Harold Brown, a former board member of Activision and attorney who represented West and Zampella at the behest of CAA. A scan of an e-mail purportedly from Blackley to Zampella read, "[Brown] was the one I mentioned in the context of taking a look at your deal as a sanity check. So I mentioned to him that there might be a big developer who'd want someone good to take a look at an agreement, wink wink, and he was VERY INTERESTED." (Emphasis in the original.) The e-mail is dated August 19, 2009.

The suit notes that Brown would have had prior knowledge of Activision's incentive practices and suggests CAA brought him in to cloak negotiations with EA under an attorney-client privilege. The only direct tie alleged between Brown and EA in the non-redacted sections of the filing is that the former was a law school classmate of an EA executive.

In the cross-complaint, Activision is seeking $400 million in actual and punitive damages from EA, West, and Zampella, "including profits Activision would have made but for EA's interference, costs incurred in rebuilding the affected studio, and damages suffered as a result of delays and disruptions." Activision also hopes "to recapture compensation previously awarded to its faithless executives," to unseal a number of documents that have been deemed confidential, and to prevent EA, West, and Zampella from benefiting from their allegedly illegal conduct. It is unclear if the formation and operation of Respawn would count as "benefiting."

Though this is Activision's first attempt to include its rival in the suit, Electronic Arts has been alluded to essentially from the dispute's beginning. In Activision's original countersuit against West and Zampella, the publisher accused the two of embarking "on a secret trip by private jet to Northern California, arranged by their Hollywood agent, to meet with the most senior executives of Activision's closest competitor."

[UPDATE] The new suit goes on to allege that as a result of their negotiations with EA, West and Zampella began to act "in a manner that was in breach of their contractual and fiduciary obligations to Activision." This behavior allegedly includes providing "confidential and proprietary Activision information" to Electronic Arts, as had been alleged in Activision's prior countersuit.

The suit contends that "West and Zampella made exceedingly aggressive demands to Activision to enrich themselves at the expense of Activision's shareholders, including that they be permitted to 'spin out' from Activision, set up their own independent company and produce games on terms that were far less favorable to Activision than the terms of West's and Zampella's existing exclusive employment agreements that…had years left to run and for which they received tens of millions of compensation."

If true, one example of insubordinate behavior may come as a shock to Infinity Ward employees past and present. The suit alleges that "West and Zampella’s self-interest in executing their secret plan to leave Activision corrupted their judgment so fully that they actually attempted to damage the very Infinity Ward employees they purported to lead. In July 2009, West and Zampella were asked by Activision management to provide the names of the Infinity Ward employees that should receive millions of dollars of Activision stock grants in connection with the development of a Wii version of Call of Duty 4: Modern Warfare. West and Zampella adamantly refused."

The complaint continues, "Again, in October 2009, when Activision planned to include Infinity Ward in its annual equity grants, West and Zampella refused to provide Activision with a list of the names it needed of the Infinity Ward employees that deserved awards of valuable stock and options. In responding to the President and CEO of Activision Publishing concerning the equity grant, West wrote, 'You can give all the options to Vince and I . . . .,' thereby depriving their own Infinity Ward employees of additional compensation."

A full copy of Activision's amended complaint can be found here.
[UPDATE 2]EA has responded to the lawsuit. Jeff Brown, EA's vice-president of corporate communications, dismissed the suit, saying "This is a PR play filled with pettiness and deliberate misdirection. Activision wants to hide the fact that they have no credible response to the claim of two artists who were fired and now just want to get paid for their work."