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Activision sued for up to $125 million by current, former Infinity Ward employees [updated]

April 27, 2010 |  2:22 pm

MW2a Activision's Call of Duty-related headaches just leveled up.

More than three dozen former and current employees of Infinity Ward, the Encino-based development studio that made the hugely successful Call of Duty: Modern Warfare video games for Activision Blizzard Inc., have sued the publisher claiming that they are owed between $75 million and $125 million in unpaid royalties and potentially more in compensatory damages.

The move by the 38 current and former staffers comes a little over a month after former Infinity Ward heads Jason West and Vince Zampella were fired by Activision and filed their own $36-million lawsuit against the Santa Monica-based publisher over allegedly unpaid royalties.

Two weeks ago, West and Zampella formed a new development studio called Respawn Entertainment and signed a deal with Activision's chief rival, Electronic Arts, Inc.

Since West and Zampella left Infinity Ward, a number of other employees have left the studio, some of whom have joined Respawn. Of the 38 employees involved in the lawsuit, 21 are former employees of Infinity Ward;  17 still work there. Approximately 95 people worked at Infinity Ward on last November's Modern Warfare 2, meaning that about 40% of its employees at that time are now suing Activision.

The ongoing dispute puts the future of the Call of Duty franchise, one of the pillars of Activision's success, in doubt. Modern Warfare 2 was the most successful video game of 2009 in the U.S. It sold about 20 million units around the world and generated an estimated $1.3 billion in revenue.

The lawsuit says that Activision owes Infinity Ward employees a bonus pool of at least $118 million, of which $82 million is supposed to go to employees other than West and Zampella.

It alleges that the publisher has withheld royalty payments in order to keep them from leaving as their former bosses did, putting at risk the potentially hugely lucrative release of Call of Duty: Modern Warfare 3 planned for late 2011.

"Activision engaged in this inappropriate course of conduct in an attempt to force employees of Infinity Ward to continue to work at a job that many of them did not want just so Activision could force them to complete the development, production and delivery of Modern Warfare 3," the suit says.

It goes on to allege that Activision representatives told Infinity Ward employees that if West and Zampella had not been fired, the employees would have received bonuses approximately 2.5 times higher than what they were paid on March 26.

"Activision believes the action is without merit," a company spokesman said in response to the suit. "Activision retains the discretion to determine the amount and the schedule of bonus payments for [Modern Warfare 2] 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." [Updated at 2:35 p.m. with Activision response.]

The complaint filed Tuesday in Los Angeles Superior Court in Santa Monica is based in part on the same allegations contained in West and Zampella's suit. The plaintiffs' attorney has asked that the two cases be consolidated.

-- Ben Fritz

Photo: A scene from Call of Duty: Modern Warfare 2. Credit: Activision

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