When Blake Lively settled her lawsuit against Justin Baldoni’s production company, averting a contentious celebrity trial, each side depicted itself as the victor.
Mr. Baldoni’s lawyers celebrated a deal that did not involve any financial payout to Ms. Lively, who said she had been targeted by a retaliatory online campaign after complaining of sexual harassment on the set of the 2024 movie “It Ends With Us.”
Ms. Lively’s lawyers, however, have projected confidence that money would soon be on its way. The mechanism, they say, is a two-year-old California law that was adopted to prevent the weaponization of defamation suits to intimidate those who make harassment complaints.
Mr. Baldoni and his associates did file a defamation suit against Ms. Lively, and it was dismissed last year by the judge who presides in her case. But will Judge Lewis J. Liman, sitting in a federal court in New York, now choose to hand down penalties through a state law that has barely been put to the test in California?
That is the question on which the two sides have placed very different bets.
Ms. Lively has staked her last chance at a payout in her case on this final legal motion, which seeks legal fees and damages. The settlement that resolved her larger case specifically exempted the issue of whether she might be due damages under the California statute, and her legal team has framed it as an opportunity to tread new ground on a #MeToo-era law.
“Ms. Lively hopes that her case, and the application of this important statute, will deter others from abusing the legal system and filing frivolous retaliatory defamation suits against people who speak out against sexual harassment and retaliation,” Esra Hudson, a lawyer for Ms. Lively, said in a statement.
Mr. Baldoni’s lawyers have depicted the remaining dispute as far less significant and unlikely to succeed.
“I think it’s a procedural motion that’s left in the case — it’s pretty standard,” Bryan Freedman, a lawyer for Mr. Baldoni and his company, said in an interview with Entertainment Tonight this month. “But when you want to parade around and call a loss a victory, this is your attempt to do so.”
The law in question was passed in 2023, six years after the #MeToo movement opened the floodgates of sexual misconduct complaints. Another trend soon emerged: defamation lawsuits filed against those who aired accounts of harassment or assault.
The legal organizations that backed the bill argued that the very threat of such a lawsuit could silence a victim fearful of expensive litigation.
“Even if they ultimately prevail, it’s still at a cost — both financial and psychological,” said Jessica Ramey Stender, policy director for Equal Rights Advocates, a legal organization that cosponsored the legislation.
Ms. Lively’s larger suit that has now been settled accused Mr. Baldoni and his associates of waging an all-out effort to turn the internet against her.
Their motive, the suit said, was to discredit her in the event that her sexual harassment complaints became public. Among the conduct she cited by Mr. Baldoni — her co-star in “It Ends With Us” and the movie’s director — were remarks about her appearance (she said he once told her that she looked “pretty hot”) and a comment to members of the production that she had never seen pornography.
Mr. Baldoni’s side quickly countersued, accusing Ms. Lively of twisting innocuous interactions into harassment allegations in an effort to assert control over the making of the movie.
When Judge Liman dismissed Mr. Baldoni’s defamation claims, he found that Ms. Lively’s accusations were protected because she had made them in a legal filing. He also dismissed a defamation claim filed against The New York Times, which published an article in December 2024 based on the same filing.
The trial over Ms. Lively’s original suit was to have started last week. Her case had been narrowed significantly by Judge Liman, who tossed her claims of sexual harassment based on legal technicalities. But still outstanding was the question of whether efforts by Mr. Baldoni’s crisis public relations team to shape conversations online crossed a line into retaliation.
After the settlement, the remaining dispute revolves around the contention by Ms. Lively’s legal team, made in court papers, that under the California law Mr. Baldoni’s dismissed defamation countersuit was a legally baseless attack on her credibility. They asked for the full scope of compensation allowed under the law, including legal fees, treble damages (which means any figure would be tripled) and punitive damages.
Lawyers for Mr. Baldoni and his production company, Wayfarer Studios, have said that they had every right to defend themselves and that any blow to Ms. Lively’s reputation was a problem of her own making.
The crux of the dispute centers on whether, under the terms of the California law, Ms. Lively made her sexual harassment complaints “without malice.” Arguing it was clear that she acted in good faith, her lawyers have pointed to a text message sent by Mr. Baldoni to a member of his crisis communications team in 2024, before the legal fight began:
“I just know her personality and this is the kind of person that genuinely believes she’s right and that all of this is unjust,” Mr. Baldoni wrote.
But Mr. Baldoni’s team has pointed to a series of allegations that they described as “fabricated, materially mischaracterized or grossly exaggerated.”
One example that they cite was a claim from Ms. Lively, made in legal filings, that Mr. Baldoni had behaved inappropriately on set by “caressing Ms. Lively with his mouth” during a slow dance scene where she did not expect any intimacy. Mr. Baldoni’s side released footage of the scene, saying that her allegations of untoward behavior were disproved by the video.
Federal judges regularly apply state law, but they typically have precedent from state courts to help guide them. In this case, there are not many cases out of California for Judge Liman to reference.
In one, a hospital custodian was sued for defamation after reporting that a colleague had made sexually harassing comments toward her. The defamation suit was dismissed, and a judge found last year that she was entitled to legal fees and damages under the California law. The custodian reached a settlement on the amount owed to her and did not pursue the possibility of a larger financial payout.
Some lawyers have expressed concern that, in seeking to ensure that sexual harassment victims are not silenced, the law may risk chilling speech by the accused.
“If you’ve been falsely accused of something as serious as sexual assault, sexual harassment, and you actually feel you have a strong lawsuit,” said Dustin Pusch, a lawyer with expertise in First Amendment cases, “this law is going to make you think twice about taking this to court and trying to defend your reputation.”
At a hearing in Ms. Lively’s case in April, before the settlement, Judge Liman underscored how seriously he takes a person’s right to seek redress through the court system, indicating that he is likely to closely scrutinize the issue of whether the Baldoni counterclaim was retaliatory.
Since the settlement, the judge has not betrayed much, writing in a one-sentence directive that he “does not require additional briefing at this time” on the issues raised by the California law.
Once he does rule, it would seem he will have the last word. As part of the settlement deal, the adversaries came to an unusual agreement in a case known for its aggressive lawyering: neither side will appeal the decision.
