Seth “Scump” Abner and Hector “H3CZ” Rodriguez Sue Activision Blizzard for $680M

Scump and H3CZ sue Activision Blizzard over Call of Duty League. Credit: Seth "Scump" Abner

Retired Call of Duty professional player Seth “Scump” Abner and OpTic Gaming founder Hector “H3CZ” Rodriguez filed a lawsuit in a Los Angeles federal court alleging that Activision Blizzard is operating a “100% monopoly” on Call of Duty esports with its Call of Duty League, which has caused financial harm to team owners and professional players.

Collectively, Rodriguez and Abner are seeking $680M USD in damages—plus attorneys’ fees, costs of the suit, and post-judgment interest. Because the claims concern willful anti-competitive behavior, they are also seeking treble damages. The case, “Rodriguez v. Activision Blizzard, Inc.,” was filed in the U.S. District Court – Central District of California Western Division on Thursday (Feb. 15) and lists Hector Rodriguez, Seth Abner, and HECZ, LLC as plaintiffs. 

The plaintiffs allege that Activision engaged in predatory anti-competitive behavior and created a 100% monopoly over Call of Duty esports with Call of Duty League. Plaintiffs assert that the company’s actions related to CDL violated:

• Section 1 and 2 of the Sherman Act. 
• Section 16720 of the California Business and Professions Code (“Cartwright Act”).
• Section 17200 et seq. of the California Business and Professions Code (the “UCL”). 
• Sections 3(2) and 3(3) of the Illinois Antitrust Act, 740 ILCS 10.

The lawsuit also cites the Justice Department’s April 2023 lawsuit and consent decree, which prohibited Activision from instituting an esports player salary cap for Overwatch League and Call of Duty League, noting that it was a “violation of the Sherman Act.” 

Activision quickly settled with the DOJ and agreed that its “upper limit on compensation for any player or players in any professional esports league,” would be prohibited. The lawsuit concerned the leagues’ “Competitive Balance Tax,” which would penalize teams who paid more for players over a certain threshold with a fee that would then be dispersed equally among the other teams in the league. The tax was meant to provide balance between richer and poorer teams, but instead—the DOJ determined—led to overall player salaries being lowered/suppressed. The lawsuit alleges that this tussle and subsequent settlement with the DOJ proves that Activision has already admitted to Sherman Act violations related to the CDL in the past.

Plaintiffs are being represented by attorneys Eric Rosen, Constantine P. Economides, and Brianna K. Pierce from Newport Beach-based law firm DYNAMIS LLP; and Aaron M. Katz of Boston-based firm Aaron Katz Law LLC. All of the attorneys except Pierce (who is a member of the California State Bar) are listed as pro hac vice forthcoming, (Latin for “this time only”), meaning they anticipate being permitted to litigate for this case within the jurisdiction. 

On Friday, Activision issued the following statement in response to the lawsuit:

“Mr. Rodriguez (aka OpTic H3CZ) and Mr. Abner (aka Scump) demanded that Activision pay them tens of millions of dollars to avoid this meritless litigation, and when their demands were not met, they filed. We will strongly defend against these claims, which have no basis in fact or in law.”

Did Call of Duty League Create a Monopoly?

The lawsuit asserts that, prior to the creation and launch of the Call of Duty League in 2020, the competitive landscape for Activision’s top-selling military shooter was open to all — there were no restrictions in place that prevented aspiring competitors from participating in Call of Duty esports events. Players, organizations, and investors who wanted to engage in the Call of Duty esports ecosystem were able to do so freely —  there was a low cost of entry, and more freedom to engage in ancillary business transactions with very few limitations. During this era, team owners had autonomy to sell or transfer their owned assets, and the ability to pay players what they thought was fair market value.

Rodriguez and Abner allege that the landscape for competitive CoD was dramatically altered in 2016 when Activision acquired Major League Gaming (MLG), the biggest third-party tournament organizer in the CoD competitive ecosystem. Activision Blizzard said at the time that the acquisition was a play towards creating the “ESPN of esports.” Ultimately, this vision was never fully realized. Prior to the CDL, CoD competitions were run by third-parties such as ESL, GameStop, and MLG, among others.

Activision’s Esports Franchise Experiment

In 2016, Activision announced Overwatch League (OWL), a city-based franchised league for Overwatch featuring 12 teams across the United States, Europe, and Asia. However, potential investors seeking a spot in the league would have to pay $20M in franchise fees in order to secure a spot in OWL. The 12 spots in the franchised league were quickly snapped up by billionaire sports team owners, who we can reasonably assume saw this as an opportunity to diversify their investment portfolios. 

In February 2019, after testing the concept with OWL, Activision announced that it would end its existing esports for Call of Duty (Call of Duty Pro League and Call of Duty World League) in favor of a city based franchised league, the Call of Duty League. Many of the team owners who had secured franchises in OWL were given the first shot at launching an additional team in CDL for around $27.5M.

This decision to terminate the CWL, the lawsuit alleges, allowed Activision to create a monopoly — by shutting down the third-party tournament ecosystem, the entirety of the Call of Duty esports ecosystem was now completely under the control of Activision. With the arrival of the CDL, Activision was now in a position to make demands of the competitive community. The first of these was financial in nature, and on a scale previously unseen in the industry — organizations who wanted to field a competitive CoD team would need to purchase a franchise slot in the new league. The cost of a franchise slot? Approximately $25 million USD.  

From item 14, page 6, of the lawsuit:

“Activision’s acquisition of Major League Gaming in late 2016 already had resulted in an extreme concentration of the professional Call of Duty market. Activision then cemented a complete monopoly over the professional Call of Duty market by refusing to grant Call of Duty licenses to organizers and operators of other commercial Call of Duty competitions. Thus, if a team of professional Call of Duty players wanted to continue to compete in professional Call of Duty leagues and tournaments—which is essential to the players’ and teams’ maintaining their ability to secure sponsorships and other “off-field” revenue opportunities—their only choice was to do so in the Activision CoD League on terms dictated by Activision.”

The lawsuit also notes that—while Activision wanted to create a franchised league modeled after traditional sports leagues such as the NFL, NBA, and MLB—the CDL was “not the result of a collective bargaining agreement between team owners and players.”

Finally, the lawsuit claims that teams were “involuntary co-conspirators” with Activision. From page 11, item 30:

“The League Office and each of the Admitted Teams, through their respective owners, officers, directors, members, affiliates, parents and/or agents, participated as co-conspirators with the Defendant in the offenses alleged in this Complaint and have performed acts and made statements in furtherance of the conspiracy or in furtherance of the anti-competitive conduct. To be clear, the Admitted Teams were involuntary co-conspirators, in that Activision forced them to agree to contractual terms, and to agree to engage in conduct, that unreasonably restrained trade, as a condition of Activision allowing them to participate in the relevant market.”

Personal Financial Injury to Hector Rodriguez? 

Rodriguez claims that in late-2020 he signed a binding term sheet with Immortals Gaming Club to reacquire the OpTic brand and buy its slot in the CDL in a bid to become an independent team owner, but because Activision had an existing agreement with “Admitted Teams in the Activision CoD League” it claimed that it had a “unilateral, unfettered right to review and approve (or deny) the transaction.” 

The lawsuit asserts that Activision asked Rodriguez to provide proof that he had at least $3M in capital (which he provided), then asked him prove that he could secure a $10M on letter of credit. But before Rodriguez could satisfy that demand (which he claims he could have done at the time), Activision told him that “it would never allow him to own and operate a team on his own.” 

Excerpt from page 16, item 62, lines 1-2:

“On a conference call, one Activision executive explicitly told Rodriguez that he was not the “type of owner” Activision wanted for the league. Activision made clear to Rodriguez that he would be required to “partner” with billionaire investors who “looked” like Activision’s ideal or leave the professional Call of Duty market altogether.”

It is unclear what is being alleged here; whether this was a matter of discrimination based on his image as a gamer, his financial status (not being a billionaire sports team owner or investment banker), his general outspoken nature, or other factors such as his promotion of/views on the use of cannabis (he launched a cannabis company in October 2021). Lawsuits are often filled with antagonistic prose meant to paint defendants in the worst possible light—and that could be all that this is.

In the lawsuit, Rodriguez alleges he was “forced to partner with investors that met Activision’s approval,” and under the terms of that “forced partnership,” he “had to agree to relinquish more than 90% of the equity in his OpTic brand.” 

From page 20, item 63, lines 5 -7:

“Rodriguez would have operated his own team, under his newly re-acquired OpTic brand, and would not have partnered with Hard Carry Gaming or Envy Gaming, Inc., absent the economic duress imposed on Rodriguez by Activision, which left him with no viable alternatives.”

Finally, Rodriguez alleges that Activision has baked in terms, conditions, and restrictions in its Team Participation Agreement and Player Professional Services Agreement that favor its own enrichment above team owners/players including—but not limited to—the following:

• An unconditional 50% share of the revenue teams generated from ticket sales, sponsorships, and other revenue streams.
• The exclusive right to contract with the best sponsors.
• The exclusive right to contract with broadcasters (cable television, streaming networks, etc.).
• A prohibition on teams participating in any professional Call of Duty leagues or tournaments other than the Activision CoD League.
• A Prohibition on team players participating in or supporting any professional Call of Duty leagues or tournaments other than the Activision CoD League.
• Prohibition on team players engaging in any commercialized Call of Duty game play outside the Activision CoD League. 
• Prohibition on team players promoting game-related properties outside of Call of Duty/Activision-owned IP—including during “off field” time.

It should be noted that throughout the lawsuit the plaintiffs do not mention the sale of in-game items and whether or not Activision takes the lion’s share of profits from those transactions.

Player’s Perspective: Seth “Scump” Abner

Abner echos the claims in the lawsuit that Activision has enriched itself at the expense of team owners and players.

The lawsuit specifically cites two instances related to Abner. The first involves a mandatory make-up “Call of Duty League Player Summit” on or around Jan. 21, 2020, to prepare for the upcoming 2021 CDL season. According to the complaint “Activision demanded that Abner sign an acknowledgment binding him to the ‘Official Rules, Terms and Conditions’ of the Call of Duty League.” According to Abner, this was the first time he had seen the document, which was described as “dozens of pages long, single-spaced, and replete with anti-competitive and unlawful restrictions, such as precluding players from accepting sponsorships or brand deals.” The accompanying Player Streaming Agreement prohibited players, while streaming, from receiving ‘any direct or indirect compensation’ from publishers of ‘Non Activision Blizzard Games.’ 

When Abner asked for more time so that his legal counsel could review the agreement, he was told that “if he did not immediately execute the Rules, Abner would be removed from Hector Rodriguez’s team (known at the time as Chicago Huntsmen) in the Activision CoD League.” 

He reluctantly signed it because the first tournament of the season was “just days away,” according to the lawsuit.

In another specific instance detailed in the lawsuit, Abner was subjected to a disciplinary action for advertising a game during “off field” time:

“Activision’s restrictions upon professional players substantially lessened players’ compensation inside and outside of the league. For example, on October 9, 2020, Activision’s ‘Vice President, Leagues Administration’ issued a disciplinary letter to Plaintiff Abner for ‘promoting a sponsored Raid: Shadow Legends stream, as well as an affiliate link to download the game.’ Abner’s post was made during the off-season on his personal X (formerly Twitter) page. Activision claimed that Abner’s conduct was in violation of the Call of Duty League Official Rules and the Player Streaming Policy because ‘Call of Duty League Players are permitted to stream non-Activision Blizzard games, but are prohibited from encouraging viewers to purchase them, receiving compensation from the game publisher, and otherwise advertising, endorsing or promoting such games in their streaming or social media channels.”

More broadly, Abner alleges that Activision—because it holds a monopoly with CDL—has forced players to sign away rights, and restricts them in conducting “off field” and “off season” business:

• Players are forced to grant Activision a “royalty-free, fully paid-up, worldwide right and license (with the right to grant sublicenses) to use players’ names, nicknames, gamer tags, likenesses, images, voices, videos, biographies, and personal backstories for nearly any purpose related to esports in general, beyond related to the Activision CoD League” without additional compensation. 
• Through its Team Participation Agreement and Player Professional Services Agreement, Activision binds teams and players to the terms of the Activision CoD League’s Charter, including a provision labeled a “Competitive Balance Tax” (which we detailed earlier). Abner, one of the most well-known and accomplished CoD players in the world CoD players in the world) “was among the players most substantially harmed by the illegal Competitive Balance Tax,” the lawsuit asserts.
• Abner was prohibited by Activision from taking on “lucrative commercial opportunities such as sponsorships and streaming” while part of the league, costing him “millions of dollars over the relevant time period.”
• Abner claims he was financially injured due to Activision’s monopoly on CoD competitions with CDL, and that if those third-party run opportunities existed they would have provided Abner additional opportunities to earn significant ‘on field’ income in the form of prize purses.