California Budget Crisis Leads to Rare Outbreak of Common Sense

It took a state budget crisis to concentrate California bureaucrats on their own wasteful spending. That’s the clear takeaway this week after the state’s Civil Rights Department (CRD) dropped its harassment charges against Activision Blizzard.

The Department has spent several years and untold taxpayer dollars in its pursuit of the video game giant, to the detriment of everyone other than its politically ambitious leadership. This week’s settlement stops the wasteful spending, allows the parties to move on–and hopefully triggers accountability for the CRD “leaders” involved in this debacle.

For those who haven’t followed closely, here’s the backstory.

In 2021, following allegations of gender pay disparities, Activision negotiated a settlement with the federal Equal Employment Opportunity Commission (EEOC). However, when the California Civil Rights Department became aware of the settlement with their federal counterpart, CRD sued to stop it – even though a federal judge said the settlement was “fair, reasonable and adequate and advance(s) the public interest.”

The state Civil Rights Department complained that the settlement was not harsh enough. In reality, the agency’s biggest issue may have been that the deal with the EEOC wasn’t profitable for the CRD. (The Department gets a cut of any settlement it’s involved in.) A federal judge who oversaw the case rightly called the Department’s actions “unseemly.”

The CRD pulled no punches in its case, alleging that Activision Blizzard employees were subjected to “constant sexual harassment.” Apparently, none of this was true: In what the New York Times described as a “stunning reversal,” the CRD has withdrawn all allegations other than pay and promotion inequity claims.

In fact, the CRD acknowledged in the settlement agreement signed by both parties that “no court or any independent investigation has substantiated any allegations” of sexual harassment and that there wasn’t any proof that “Activision Blizzard’s Board of Directors including its Chief Executive Officer, Robert Kotick, acted improperly with regard to the handling of any instances of workplace misconduct,” as previously reported.

What happened? Cooler heads in Sacramento apparently prevailed, as the state weighed several more years of financial waste at the CRD against a quick settlement and easy payout during a budget crunch — $10M is going to CRD’s “attorneys’ fees and costs” due to the bounty hunter provision that uniquely governs the agency. Notably, the EEOC distributes the entire settlement fund to the employees without skimming off the top.

The state has been unusually active in securing settlement payouts in recent months. Earlier this month, it surprised a judge with a rare intervention in a case brought under the Private Attorneys General Act (PAGA), urging him to approve a settlement that earned the state a quick payday.

Unfortunately, the Activision case is not an isolated incident. The Civil Rights Department’s legal team has been hard at work in recent years targeting California companies like Tesla and Cisco. The toll of the CRD’s actions is evident in the mass exodus of businesses from California, including Toyota, Nestle, Jamba Juice, and Carl’s Jr. As companies relocate to states with friendlier business environments, California’s economy is left reeling, shedding thousands of jobs in the process with the unemployment rate rising from 4.3% to 4.8% this year, among the highest in the nation.

Agencies like the CRD, which have seemingly unchecked power, need to be scrutinized to keep this another Activision embarrassment from taking place. Assemblyman Phil Chen (R-Brea), from the state’s 59th legislative district, has called for an audit of the Department to ensure that taxpayer resources are being spent wisely.

(While he’s at it, he might also investigate the collusion that the state’s Department of Industrial Relations regularly engages in with politically influential labor unions.)

Rahm Emanuel, who served as chief of staff to former President Obama, famously said “You never let a serious crisis go to waste.” As California confronts a budget crisis, the Civil Rights Department must undergo a fundamental transformation in its approach, prioritizing fairness, objectivity, and the genuine promotion of civil rights. The cost of inaction will only exacerbate the Golden State’s economic woes.