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.”

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.

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.”

Full Story at Game Spot