When a whole city is sueing you, a video game company, things are not heading your way in the slightest. Such is the case of Activision Blizzard, which is facing a lawsuit filed by New York City.

More specifically, the lawsuit is courtesy of the New York City Employees’ Retirement System and pension funds representing the city’s fire department, police, and teachers. A report on Axios claims that CEO Bobby Kotick was “unfit to negotiate a sale of the company” to Microsoft, stating that the deal was made to “escape liability” for his role in enabling workplace misconduct and abuse.

The plaintiffs said the lawsuit stemmed from the October 2021 demand to inspect the company’s books and records as part of an investigation into its board of directors. While the company partially complied, it announced the acquisition deal with Microsoft, which the plaintiff argued that it undervalues Activision Blizzard to a degree. In fact, if and when Activision Blizzard works under Microsoft, the claims from the harassment and misconduct will go away and Bobby Kotick himself may escape liability.

“With the announced merger, Kotick will be able to escape liability and accountability entirely, and will instead continue to serve as an executive after the merger closes. Worse, despite his potential liability for breaches of fiduciary duty, the Board allowed Kotick himself to negotiate the transaction with Microsoft. The Board’s decision to entrust Kotick with the negotiation process is inexcusable for the additional reason that Kotick stands to personally receive substantial material benefits whose value is not directly aligned with the merger price.”

The lawsuit also points out the March 2022 purchase of US$108 million of Activision shares by Alexander von Furstenburg, Barry Diller, and David Geffen. These three are associates of Kotick, meaning that this part smells like potential insider trading and is worth scrutinizing by the US Justice Department and Securities and Exchange Commission.

“These highly suspicious trades stand to deliver the three Kotick affiliates a windfall of more than $100 million. Kotick’s continued suspected misconduct even after the merger was agreed to further underscores the fact that Kotick was unfit to negotiate the merger on behalf of the company.”

If you want to get more technical and accurate, attorney Richard Hoeg of Hoeg Law stated that the lawsuit is a “books and records request”. Long story short, the lawsuit is unlikely to have a bearing on the acquisition, which was already approved by shareholders last week.

Ok, so this is a books and records request (not a more substantive lawsuit), it's not filed by the city but by funds that have an investment interest in Activision, and, to be frank, the 98% shareholder approval really harms the "value is too low/improperly negotiated argument". https://t.co/CzUumoauWz

— Richard Hoeg (@HoegLaw) May 4, 2022

Activision Blizzard has stated (via PC Gamer) that the company will fight this lawsuit.

“We disagree with the allegations made in this complaint and look forward to presenting our arguments to the Court.”