Blake Lively and Justin Baldoni reached a settlement in their lawsuit on May 4, 2026, two weeks before a federal jury trial was set to begin in New York. Lively received no money from the deal, but her right to pursue attorney fees under a California statute protecting sexual-harassment reporters was preserved, and a federal judge later ruled she was entitled to them. The Blake Lively lawsuit settlement ended nearly eighteen months of litigation growing out of the 2024 film It Ends With Us, and left both actors’ careers bruised.
What Lively Sued Over
Lively filed a complaint with the California Civil Rights Department on December 20, 2024, then a federal lawsuit in the Southern District of New York on December 31, 2024, case number 24-cv-10049. She named Baldoni, his production company Wayfarer Studios, Wayfarer CEO Jamey Heath, co-founder Steve Sarowitz, the production entity It Ends With Us Movie LLC, crisis-management consultant Melissa Nathan, her firm TAG PR, and publicist Jennifer Abel. The complaint carried thirteen causes of action, including sexual harassment, retaliation, and breach of contract.
The harassment allegations centered on Baldoni’s and Heath’s conduct during filming in 2023. The retaliation allegations centered on what Lively described as a coordinated smear campaign launched after she raised concerns, including text messages in which Nathan pitched a $175,000 strategy to “bury” Lively through seeded social media content and manufactured online sentiment. Baldoni’s attorney Bryan Freedman called the messages “cherry-picked” and said the tactics described were standard crisis communications that were never actually deployed.
A January 2024 Contract Rider Agreement, signed by Heath on behalf of the production and by Lively’s loanout company, formalized workplace-safety terms and prohibited retaliation against her for raising concerns. Paragraph 10 of that rider became central to what survived at the end of the case.
What Was Left by the Time the Case Settled
On April 2, 2026, Judge Lewis J. Liman issued a 152-page opinion dismissing ten of Lively’s thirteen claims, including the sexual harassment claims. He ruled that Lively was an independent contractor rather than an employee, which barred her Title VII claim, and that the alleged physical contact during a slow-dancing scene was not so far outside the agreed script that it supported a harassment inference on its own. He wrote that creative artists “must have some amount of space to experiment within the bounds of an agreed script without fear of being held liable for sexual harassment.”
Three claims survived and were headed to the jury:
- Retaliation under California’s Fair Employment and Housing Act against Wayfarer Studios and It Ends With Us Movie LLC, based on the alleged smear campaign directed from California.
- Aiding and abetting retaliation against TAG PR.
- Breach of the Contract Rider Agreement against It Ends With Us Movie LLC, based on Paragraph 10’s anti-retaliation clause.
Although the harassment claims were dismissed as standalone causes of action, Judge Liman ruled that the underlying allegations could still be presented to a jury as evidence supporting the surviving retaliation claims. Jury selection was scheduled for May 18, 2026.
What the Settlement Actually Did
The parties announced their agreement on May 4, 2026. In a joint statement, attorneys for both sides said the production “presented challenges” and that Lively’s concerns “deserved to be heard,” expressing hope the parties could “move forward constructively and in peace.”
Three points defined the deal:
- Lively received no direct financial compensation.
- Her pending motion for attorney fees, treble damages, and punitive damages under California Civil Code Section 47.1 remained before the court for decision. Section 47.1 is a statute designed to protect people who report sexual harassment from retaliatory defamation suits.
- Neither side would appeal whatever Judge Liman ruled on that motion. All of the Wayfarer defendants were pulled back into the case for that limited purpose.
So the settlement did not end the case cleanly. It dropped the surviving retaliation and breach-of-contract claims that would have gone to a jury, but handed one significant question to the judge to decide on the papers.
The Attorney Fees Ruling
On June 12, 2026, Judge Liman issued a 47-page opinion granting Lively’s request for attorney fees and litigation costs under Section 47.1. He found she qualified as a “prevailing defendant” under the statute because Baldoni’s defamation countersuit had been dismissed, and that her original harassment complaints were made “without malice.” He called the legal question an “issue of first impression” and noted the statute was intended to shield survivors from “burdensome and invasive discovery” and to compensate those forced to defend against meritless litigation.
He denied the request for treble and punitive damages. Those remedies, he wrote, did not fit within the federal rules governing post-judgment fee motions, and Section 47.1 “establishes a narrow exception to the usual litigation process for a specific and limited kind of relief” rather than an “end run around the entire set of carefully crafted federal procedural rules.” Lively could still pursue reputational, emotional, or lost-opportunity damages, but only through a separate lawsuit or counterclaim with formal pleadings, discovery, and potentially a jury trial.
The dollar figure has not been set. Lively’s attorneys must submit billing records for court approval. Deadline estimated the total could reach “tens of millions” given the number of attorneys involved over eighteen months of litigation.
What Happened to Baldoni’s $400 Million Countersuit
In January 2025, Baldoni filed a $400 million countersuit against Lively, her husband Ryan Reynolds, and their publicist Leslie Sloane, alleging defamation and extortion. He also added defamation claims against The New York Times over its December 2024 reporting on the dispute.
Judge Liman dismissed the entire countersuit in June 2025. He ruled that Lively’s workplace-misconduct accusations were legally protected under California law and could not support a defamation claim, and that Baldoni and Wayfarer had failed to show the defendants “would have seriously doubted” Lively’s claims. He allowed Baldoni to refile on two narrow contract-interference theories, but Baldoni let the deadline pass. On October 31, 2025, Judge Liman signed a final order ending the countersuit. The claims against the Times were dismissed at the same time under New York’s fair-report privilege.
The dismissed defamation countersuit is what triggered Lively’s status as a “prevailing defendant” under Section 47.1 and made the fees ruling possible.
Who Came Out Ahead
On paper, both sides walked away without a jury verdict. In substance, Lively secured the fees ruling and avoided paying anything; Baldoni saw his $400 million countersuit dismissed with prejudice and now faces a fee award that could run into the tens of millions.
The professional damage cut both ways. Baldoni was dropped by his talent agency, William Morris Endeavor, and stripped of an award from the nonprofit Vital Voices. Agents, producers, and studio executives told The Hollywood Reporter in May 2026 that both careers were “in jail,” though sources suggested Lively had an easier path back. One casting director said Baldoni might need to return to television acting. Sources said no one would hire him in the near term, even though Wayfarer’s billionaire backer Sarowitz could in theory finance projects internally.
Lively’s earning power dropped too. A studio executive estimated her market value fell from a projected $12 million per film to about $3 million. In court filings, she claimed the reputational damage cost her more than $100 million in potential earnings, noting she had been on track for roles paying $10 million to $15 million each. Reynolds took collateral damage as well; Apple reportedly delayed setting a release date for his film Mayday by several months.
In an April 2026 interview, Reynolds said he had “never in my life been more proud” of Lively and added that “people have no idea what’s really going on.” Lively posted on Instagram that she would “never stop doing my part in fighting to expose the systems and people who seek to harm, shame, silence and retaliate against victims.”