Infinity Ward employees sue Activision for $150 million-$625 million

Group of 38 developers allege publisher withheld $75 million-$125 million in royalties, bonuses, and stock options related to Modern Warfare 2 sales and technology during Q1 2010; massive punitive payout also sought; Activision says case "without merit."

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Following Activision's dismissal of Infinity Ward founders Jason West and Vince Zampella in March, the two executives responded with a $36 million lawsuit. Weeks later, Activision responded in kind, filing a countersuit accusing the two developers of being "self-serving schemers" trying to set up a new studio with the help of an unnamed Northern California publisher.

This is going to get ugly…
This is going to get ugly…

Now, two weeks after West and Zampella announced the formation of independent studio Respawn Entertainment with seed money from Electronic Arts, a third lawsuit has been filed by members of the Infinity Ward rank-and-file. The legal action, which has been obtained by GameSpot, shows 38 members of the Call of Duty: Modern Warfare 2 team are now suing Activision, accusing the publisher of "breach of contract," "breach of the implied covenant of good faith and fair dealing," "unjust enrichment," and "violation of the California labor code."

Specifically, the 38 current and former Infinity Ward staffers are claiming the publisher only paid out $28 million of a $118 million bonus pool it had accumulated during the fourth quarter of last year. Excluding the share of that pool that was to be paid West and Zampella, the suit says the employees are entitled to at least $82 million. It also claims that Activision has withheld $40 million to $55 million in fourth-quarter Modern Warfare 2 royalties it was due to pay out to ensure delivery of Call of Duty: Modern Warfare 3.

As of January 13, Modern Warfare 2 had grossed over $1.1 billion worldwide and is on record as being the biggest entertainment launch in history. The suit contends that Activision made a profit of at least $900 million off the game by the end of last year.

Overall, the group of 38 wants $75 million to $125 million in compensatory damages for unpaid royalties, bonuses, stock options, and technology-related payments it claims Activision withheld. It is also seeking punitive damages of between $75 million and $500 million as a result of Activision's withholding of the bonuses, which the suit says was tantamount to holding "employees hostage so that Activision could reap the benefit of the completion of Modern Warfare 3."

However, the legal filing contends that the publisher violated California state labor law by not paying out bonuses and any other owed monies within 72 hours of the termination of their employment. Since West and Zampella's dismissal, at least 26 Infinity Ward staffers have left the Encino, California-based studio. Among the employees named in the suit who have since jumped ship to Respawn are lead designer Todd Alderman, lead software engineer Francesco Gigliotti, lead environment artist Chris Cherubini, lead animator John Paul Messerly, lead animator Mark Grigsby, senior software engineer Chris Lambert, senior level designer Jason McCord, senior artist Ryan Lastimosa, and game designer Brent McLeod.

Representatives of an external PR company employed by Activision quickly rebutted the allegations in the new lawsuit. "Activision believes the action is without merit," said the rep. "Activision retains the discretion to determine the amount and the schedule of bonus payments for MW2 and has acted consistent with its rights and the law at all times. We look forward to getting judicial confirmation that our position is right."

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