Litigation Lens: The Blake Lively Case—Worker Classification, Contracts, and Retaliation

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Michael Nail: Ogletree Podcast listeners, Michael Nail here hosting another episode of Litigation Lens, where our Ogletree attorneys bring the law to life with recent noteworthy employment law cases coupled with practical takeaways. And today, we’re diving into a blockbuster decision out of the Southern District of New York, Judge Lyman’s April 2nd of 2026 opinion in Lively v. Wayfarer Studios LLC involving allegations of sexual harassment, retaliation, breach of contract, and more all arising from the production of the film, It Ends with Us.

And with me today are Sarah Zucco and Olivia Orlando-Donovan. I’ll set the stage with the facts as I typically do and Olivia’s going to cover the employment status and contract rulings, and Sarah will take us through the retaliation analysis and some of the takeaways. So, let’s get into it, but before we do, Sarah, I know you’ve been on with me before, but why don’t you go ahead and reintroduce yourself to the listeners today.

Sarah Zucco: Hi Michael. I’m a shareholder in Ogletree’s New York City office, and I practice a mix of employment litigation and counseling, including wage and hour, discrimination, retaliation.

Michael Nail: Well, it’s good to have you back, Sarah. And Olivia, this is your first time joining us on the podcast. So why don’t you also tell the listeners about yourself and where you practice and what you focus on.

Olivia Orlando-Donovan: Thanks, Michael. I’m an associate in Ogletree’s New York and Stanford, Connecticut offices. My practice focuses on advising and defending employers on workplace law, so discrimination, harassment, retaliation, and whistleblower claims, as well as some wrongful termination claims. I also do a lot of management training where I try to make employment law accessible by weaving in real world scenarios, and yes, some pop culture references. Really happy to be here for my first episode.

Michael Nail: Let’s dive in. So, here’s the setup. Lively brought 13 causes of action against Wayfarer Studios’ Director, Justin Baldoni and affiliated parties. Baldoni, by the way, was the movie director and Lively’s costar. She agreed to star in the film through a loan out entity pursuant to an offer letter with IEWUM, the special purpose production entity. And that offer letter gave Lively extensive approval rights over the screenplay, the director, hair and makeup, and the co-lead. And the parties then began negotiating a long form agreement. The actor loan out agreement, or as you’ll hear us refer to today, the ALA covering additional terms including sexual harassment protections. But despite over a year of negotiations, the ALA was never signed. And during the WGA and SAG after a strikes, Lively raised concerns about workplace conduct and required certain protections as a condition of returning to the set. And those protections were incorporated into a separate Contract Rider Agreement, or CRA, which both parties did sign.

After the film was released, Lively alleged that the defendants launched a coordinated PR campaign to destroy her reputation and retaliation for her complaints. And the defendants moved for dispositive relief across all claims both on a motion for judgment on the pleadings and summary judgment. And the news coverage of this case seemed to focus on the hostile work environment and alleged harassment aspects because let’s face it, those issues lead to juicier headlines. And plus it’s important to keep in mind that this opinion was a whopping 152 pages. So we’re going to try to narrow it down to applicable rulings for the listeners today.
Lively did bring a plethora of claims against multiple defendants, but again, we’re going to focus on some of those key aspects of the decision. So, Olivia, I’m going to start with you and let’s start with this. Was Blake lively an employee? What did the court say?

Olivia Orlando-Donovan: So, this is the threshold question here. So, Title VII in California Labor Code Section 1102.5 only cover employees not independent contractors. The Court applied the common law agency framework from its Reid and Darden decisions, emphasizing the hiring party’s right to control the manner and means of the work. The court concluded as a matter of law that Lively was an independent contractor. She retained extensive approval rights, and in practice, exercised enormous influence, relocating filming from Boston to New Jersey, rewriting portions of the script, hiring a freelance producer, a new intimacy coordinator, and overseeing post-production.

Michael Nail: What about the argument, though, that she still had to show up when told and then take direction from Baldoni?

Olivia Orlando-Donovan: Well, the Court rejected that finding scheduling constraints are inherent to collaborative film production. It cited Alberti Velez, where the First Circuit held that classifying performers as employees based on such constraints would defy common sense as it would result in classifying all actors as employees. The Court also pointed to Lively’s project-based pay through her loan out entity, no employee benefits, no tax withholding, and substantial equity in the film success. Overall, the considerations overwhelmingly pointed to independent contractor status and the Court reached the same result under California law.

Michael Nail: All right. So now to the contract claims, then. How did the court analyze those claims and what was the outcome there?

Olivia Orlando-Donovan: So, there were two agreements at issue. The ALA, the unsigned long form agreement, that was held unenforceable. Both the offer letter and the ALA contained express conditions precedent requiring execution. Lively argued waiver through partial performance, but the court said no. Performance occurred under the offer letter, not the ALA. Lively’s own counsel had stated that at the outset of filming, that the parties would proceed in reliance upon the terms of the negotiated deal memo until long form was fully executed, which was fatal to the waiver argument.

But the CRA survived. The Court found it was supported by independent consideration. Lively’s agreement to return to production after the strikes when her obligation to do so was genuinely uncertain. The Court also rejected the argument that the CRA was contingent on the ALA’s execution, finding the reference was forward-looking and refused to import the ALA’s notice and cure provisions into the CRA.

Michael Nail: So, to recap that, Title VII and Section 1102.5 were dismissed on independent contractor grounds. The ALA is dead, but the CRA does survive. Now, Sarah, what about the remaining claims? What did the court do there?

Sarah Zucco: Yes. So, the FIHA sexual harassment claim, which is the California State law claim regarding harassment and discrimination, was dismissed on extraterritoriality grounds because the Court conduct occurred on set in New Jersey and not California. The defamation claim was dismissed under the fair report privilege, and the false light claim failed because New York doesn’t recognize that tort, and the civil conspiracy claims fell with the underlying torts.

Michael Nail: But the FIHA retaliation claim survived, didn’t it?

Sarah Zucco: It did. And this is the big one. So, FIHA protects not just employees, but any person who engages in a protected activity. So, Lively’s independent contractor status didn’t bar this claim. The court found triable issues on protected activity. It pointed to Lively’s protection letters and private messages that expressed distress, plus Baldoni’s own statements acknowledging the letter insinuates he was sexually harassing.

With respect to adverse action, the Court drew a critical line here, engaging PR professionals to defend your reputation and assert that allegations are untrue. That’s reasonable defensive measures and that’s permissible, but the evidence here suggested the campaign crossed the line from defense into attack. It generated over 176 million online impressions calling Lively a bully and a mean girl with polling showing a 30% increase in negative attitudes. The court here found a reasonable jury could conclude this material impaired her career.

And then for the causation on that retaliation claim, FIHA uses a substantial motivating factor standard, which is lower than Title VII’s But-For test. Evidence showed Baldoni felt angry, furious, and embarrassed after the complaints, and a jury could infer he waited until after the film’s released to act.

Michael Nail: So even though this is a very lengthy opinion, Lively brought a plethora of claims against all these defendants, and we’ve done a good job of narrowing it down to what I think is the most applicable. Can you recap for the listeners what claims did survive?

Sarah Zucco: So, there’s three that survived. The FIHA retaliation claim that we just discussed against IEWUM and Wayfarer, the aiding and abetting retaliation claim against TAG, and the breach of the CRA claim against IEWUM. Notably, the individual defendants, Nathan and Abel, were dismissed from the aiding and abetting claim. The Court found individual non-employer agents can’t be held personally liable under FIHA.

Michael Nail: Thank you for that recap. So, in other words, a lot was dismissed, but there were significant claims that survived and this opinion was issued in early April of this year, 2026. And the case was actually set to go to trial in mid-May and actually be left in the hands of a jury if it did. But this claim, as you know, and we recently found out, it settled. So, this case is not going to trial. They were able to resolve it, but there’s still important takeaways from this case.
Sarah, back to you. Why don’t you kick it off with some of the takeaways here?

Sarah Zucco: Yeah. So, one is with respect to the employment status, which is whether an employee is considered an employee or an independent contractor. Control loan does not establish employment in collaborative project-based work, which was here. Where the worker retains meaningful independence, approval rights, project-based pay, equity participation, which is what the court determined Lively had here. Courts will respect the independent contractor classification. So, employers document the independence of the relationship, is what the Court’s saying.

Second, get your agreement signed. The Court’s refusal here to enforce the unexecuted ALA is a cautionary tale. Conditions precedent requiring execution will be enforced as written, but the CRA shows that targeted side agreements can carry independent force when supported by clear consideration.

Olivia Orlando-Donovan: And I’ll pop in here just to say third on retaliation, the line between reasonable defensive measures and retaliatory conduct targeting the complainant’s livelihood is going to be fact intensive. You can defend your reputation. You could say the allegations are unfounded, but if the response extends to attacking the complainant’s professional standing, especially through coordinated public campaigns, you risk actionable retaliation. Interestingly, here, their adverse action was not termination or reduction in pay. Rather, a more subtle or informal adverse action that could be harder to detect in real time. And remember, Theo’s retaliation protections extend beyond traditional employees. Even properly classified independent contractors are covered under California law. Other states may extend similar rights to independent contractors in addition to employees.

Also, with respect to retaliation claims, it’s a good reminder to employers that employees do not have to show the underlying harassment actually occurred. They only have to show that they engage in a protected activity. Here, under the FIHA, employees only have to show that the employer had noticed that they were complaining of purported harassment.

Michael Nail: So to wrap up, employers should think about classifying workers carefully, and typically, as we see here, get your agreement signed, and when disputes arise, especially public ones, you may want to coordinate your legal and PR strategies carefully because the line between defending yourself and retaliating is one the courts will scrutinize closely. So, Sarah, Olivia, thanks for joining me today.

Olivia Orlando-Donovan: Thank you, Michael.

Sarah Zucco: Thanks, Michael. Thanks for having us.

Michael Nail: And to our listeners, thanks again for tuning into another episode of Litigation Lens. Until next time.

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