The flurry of legal blows between Dead or Alive designer, Tomonobu Itagaki, and the alleged target of his devastating groping attacks continue this week with demotions being handed out and countersuits being considered. Earlier this month, Itagaki fell into the dubious spotlight after a woman, previously working under him at Tecmo, filed charges of sexual harassment. Though it was somewhat unclear at the time, it was implied that Itagaki had been demoted and that his employers wanted nothing more than to sweep the whole affair under the rug.

A Gamespot report details Tecmo's official response, which is firmly on the side of the eccentric (and occasionally drunk) developer. "The alleged sexual harassment of the former employee by Itagaki never took place, and Tecmo did not issue an unjustified notice of dismissal to the former employee." The company insists that the female employee left of her own volition following an internal investigation.

Their own conclusion was that her actions stemmed from personal problems, despite the fact that she and Itagaki "mingled personal affairs with their corporate responsibilities." They were both demoted and had their salaries chopped down. Meanwhile, Itagaki is planning to launch a countersuit in order to avenge his pristine and generally likeable reputation.

[Via Xbox 360 Fanboy]