Tesla borrows Activision’s playbook to fight racial prejudice

A turf war between federal and California workplace civil rights agencies, which conducted dueling discrimination investigations against Activision Blizzard and Tesla, gives companies a playbook to create regulatory chaos and fight against agency actions.

Legal watchers say Tesla, which revealed it was the subject of parallel racial discrimination investigations by the US Equal Employment Opportunity Commission and the California Department of Fair Employment and Housing, is already taking a page out of the tactics of ‘Activision, which pushed back against the state agency before finalizing a sexual harassment settlement with the EEOC over California’s objections.

“I think the biggest implication of the Activision case is that it gives a playbook to a company to challenge the agency that they’re not happy with,” said Elizabeth Tippett, a law professor at the University of Oregon. “Tesla immediately saw that, based on the Activision precedent, they could gain an advantage by trying to introduce or exacerbate agency conflict.”

Tesla’s development also comes as California’s DFEH — which has stood out among state regulators as a staunch enforcer of civil workplace rights thanks to the state’s more protective employment laws — is facing upheaval at its highest levels. California Governor Gavin Newsom recently fired the agency’s chief counsel, Janette Wipper, and deputy chief counsel, Melanie Proctor, resigned in protest.

Lawyers say the apparent turmoil between the DFEH and the EEOC over pursuing high-profile cases could give companies like Tesla a litigation strategy to avoid potentially high state law claims by fighting the California regulators and seeking an agreement with the federal government.

Follow Activision’s example

The DFEH sued Activision in Los Angeles County Superior Court in July 2021, alleging a pervasive culture of sexual harassment that has reached the highest levels of leadership. The litigation has become contentious, with the state agency seeking police records on Activision executives and accusing the game maker of using a “scorched earth litigation playbook” to contest the lawsuit.

Activision fired back, calling the claims “distorted” and alleging an effort to “harass” and “embarrass” the company, before ultimately settling with the EEOC for $18 million. The DFEH fought the settlement, saying it undermined its own allegations of state harassment, and said it would appeal.

Tesla appeared to take a similar approach to the DFEH lawsuit alleging racial discrimination at its Fremont, Calif. plant, highlighting the rift between regulators. A blog post on Tesla’s website on February 9 called the lawsuit “misguided” and an April 18 filing accused the state agency of using the litigation as a “bullying tactic” to advance its turf war with the EEOC.

“The DFEH ignored its legal obligations and rushed to file a lawsuit against Tesla…perhaps out of concern that the EEOC might be the first to settle with Tesla,” the automaker said in the April filing. .

“I can totally understand why Tesla would want to take a page out of Activision’s playbook,” said Lauren Teukolsky, founder and owner of plaintiffs’ firm Teukolsky Law, who said companies facing multiple lawsuits could seek the better settlement. “We now know who the weakest claimant is.”

Neither Tesla nor Activision responded to requests for comment.

“Senseless” fight

Industry watchers on both sides of the employment dispute have called the agency’s lack of cooperation and dueling enforcement action an unusual and concerning pattern.

The dispute has rattled EEOC staff, according to John Fox, a partner at San Francisco Bay Area law firm Fox, Wang & Morgan PC, who said he heard from them directly.

“They’re upset because they’ve always had a good relationship with the states, and especially California,” he said. “California is an important piece because it’s so big.”

Fox called the turf war “stupid”. “Both agencies have significant backlogs in other work — they can split markets and thrive,” he said.

An EEOC spokesperson said in an email that the agency values ​​its “productive relationship with state partners in a shared mission to prevent and remedy unlawful employment discrimination and advance equal opportunities for all in the workplace”.

The DFEH told Bloomberg Law it believes its own actions are better suited to protect workers.

“The DFEH has a long history of working successfully with the EEOC in advancing our shared mission of protecting employee rights,” a spokesperson said. “We believe the state’s claims are stronger in this case and we will work diligently to protect the interests of California employees.”

Oregon law professor Tippett said the dispute would affect the very workers the two agencies aim to protect. Mandatory arbitration clauses — often included in employment contracts — prevent employees from bringing such lawsuits themselves in court, she said.

“Without the plaintiffs’ bar, employees have nothing to rely on but these government agencies, which makes their role more important than ever.”

The California Upheaval

Industry watchers pointed to Wipper, the ousted DFEH chief counsel, as the driving force behind the agency’s lawsuits against high-profile companies such as Tesla and Activision, and wondered how his departure would affect the company. litigation approach of the agency.

“Certainly when she joined DFEH there was a significant increase in clients and a more aggressive approach. Whether it’s more effective, I’m not sure the record would confirm,” said David Fortney, co-founder of Fortney & Scott, a Washington-based management law firm. “Will that change now? I hope so, but we’ll see.

Erin Connell, a San Francisco-based partner with Orrick Herrington & Sutcliffe who advocates for employers on employment rights, also said there has been a shift under Wipper.

“Particularly from the perspective of representing high-tech companies in California – we have noticed a change in DFEH’s approach to both litigation and investigations since becoming Chief Counsel,” Connell said.

Connell said Wipper’s approach to DFEH mirrored her tenure as head of the Pacific Region of the U.S. Department of Labor’s Office of Federal Contract Compliance Programs, where she worked from 2014 to 2018 and targeted companies such as Google and Oracle. The Department of Labor’s subagency enforces anti-bias laws and affirmative action obligations among federal contractors.

“There was always a lot of cooperation between state and federal investigations before Janette, and then it got complicated after that,” Fox said.

In a statement, Alexis Ronickher, a partner at Katz, Marshall & Banks, said Wipper and Proctor “believe that no one is above the law and that California civil rights laws should apply to everyone.” world. For this reason, my clients are proud of the work they have done in pursuing civil rights cases at DFEH, whether helping farmworkers or bringing systemic cases that challenged inequality in the workplace. workplace.

Going forward, it is unknown what effect Wipper’s departure will have on the agency’s turf war. For its part, Tesla said in an April filing with the Securities and Exchange Commission that it plans to “engage in additional dialogue” with the EEOC before that agency makes a final decision on the allegations. Fremont plant.

Any playbook that divides regulators is good neither for the agency nor for civil rights enforcement in the workplace, Tippett said.

“Especially now that companies are taking advantage of this, it may spur agencies to cooperate more, or at least present a united front in public,” she said.

– Bloomberg writer Dana Hull contributed to this report.


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