Gap Inc., which owns Gap, Old Navy, Banana Republic, and Athleta, has been the target of a Gap lawsuit or class action many times over the past two decades. The cases fall into a handful of recurring categories: deceptive discount pricing, securities disclosures to investors, board diversity claims, wage-and-hour violations, mass layoff notice failures, and employment discrimination. Some have produced nine-figure settlements. Others have been dismissed on the merits or on procedural grounds. Several remain active in 2026.
False Discount Pricing Settlements
The largest payouts in Gap’s litigation history come from class actions alleging that its stores advertised inflated “regular” prices to make discounts look steeper than they were.
Gap Factory and Banana Republic Factory
In Andrews, et al. v. Gap Factory, Inc., shoppers alleged that Gap Outlet, Gap Factory Store, and Banana Republic Factory Store tagged merchandise with “original” prices the stores had never actually charged. The class covered purchases from May 24, 2010, through May 10, 2019. The settlement was valued between $144 million and $288 million depending on claims volume, with eligible claimants receiving one or more $6 settlement purchase certificates. The claims deadline was January 6, 2020. Gap denied the allegations throughout.1DeNittis Law. Andrews, Et Al. v. Gap Factory, Inc.
Old Navy
Barba, et al. v. Old Navy, et al. (Case No. CGC 19-581937) consolidated four suits in San Francisco Superior Court alleging misleading sale prices at Old Navy stores. The case settled for $340 million, with preliminary approval on December 2, 2021. About 34 million customers who purchased from Old Navy between November 12, 2015, and December 2, 2021, were covered, except Missouri residents.1DeNittis Law. Andrews, Et Al. v. Gap Factory, Inc.2Top Class Actions. Old Navy Misleading Sale Prices Class Action Settlement
Actual payouts were small. Claimants without proof of purchase received a $5 store credit. Those who could document $90 or more in qualifying purchases received $10 in credits. The final approval hearing took place on March 16, 2022, the claims deadline was May 31, 2022, and payouts began by January 2023. Attorneys’ fees and costs came to $3.75 million.2Top Class Actions. Old Navy Misleading Sale Prices Class Action Settlement
Canada
The pricing theory is still being tested outside the U.S. In November 2024, Slater Vecchio filed a proposed class action in British Columbia against Gap (Canada) Inc. and Old Navy (Canada) Inc. on behalf of Canadians who bought products online at a purported discount, alleging violations of the Competition Act. As of mid-2026, the case is still seeking certification and none of the allegations have been proven in court.3Slater Vecchio LLP. Class Action Filed Against Gap Canada Inc. and Old Navy Canada Inc.4Slater Vecchio LLP. Gap and Old Navy Sales Pricing Class Action
Securities Fraud Cases
The BODEQUALITY Case
Investors sued Gap and two senior executives in December 2022, alleging that the company misled shareholders about “BODEQUALITY,” an Old Navy size-inclusivity initiative launched in August 2021 that expanded plus-size offerings in stores. The complaint, filed as Diaz v. Gap, Inc. (Case No. 22-cv-07371) in the Eastern District of New York, claimed the company overstated demand while hiding inventory imbalances and execution problems that were compressing margins. The class period ran from November 24, 2021, through July 11, 2022.5Justia. Smith v. The Gap, Inc., No. 25-11306Kessler Topaz Meltzer & Check, LLP. The Gap, Inc. Securities Fraud Class Action
The district court dismissed the complaint on March 31, 2025. On May 28, 2026, the Second Circuit affirmed in Smith v. The Gap, Inc. (No. 25-1130). The panel held that CEO Sonia Syngal’s statements that demand for extended sizes was “strong” and that customers were “craving trend choice” amounted to unactionable puffery. Gap’s risk disclosures were not misleading, the court said, because the company framed those risks as real and ongoing rather than as hypothetical.7U.S. Court of Appeals for the Second Circuit. Smith v. The Gap, Inc., No. 25-1130, Slip Op.
On knowledge, the court found that anecdotal reports from managers at two stores were not enough to show the CEO understood BODEQUALITY was failing nationwide. Gap had pulled the initiative in only about 75 of its roughly 1,200 stores by early 2022, which the court read as consistent with management initially treating the problems as localized.7U.S. Court of Appeals for the Second Circuit. Smith v. The Gap, Inc., No. 25-1130, Slip Op.
A New Securities Suit in June 2026
Days after the Second Circuit ruled, the Gross Law Firm filed a new securities class action against Gap in June 2026. The proposed class period runs from May 29, 2021, through May 29, 2026, and focuses on the company’s first-quarter 2026 results. The complaint alleges Gap issued misleading statements about its financial health before revealing that Old Navy comparable sales grew only 1% (below the 3% consensus estimate) and that Athleta’s inventory clearance was taking longer than anticipated. Management then cut its full-year 2026 net sales guidance. JPMorgan downgraded the stock from “Overweight” to “Neutral” and cut its price target from $35 to $27 after shares fell more than 14% in after-hours trading. The case is in its earliest stages.8PR Newswire. Gap Shareholder Alert: The Gap, Inc. Securities Class Action Lawsuit
Board Diversity Derivative Suit
Shareholder Noelle Lee filed a derivative suit in 2020 alleging that Gap’s 2019 and 2020 proxy statements misrepresented its commitment to board diversity, pointing to a workforce where 23% of distribution center workers were Black compared with 4% at corporate headquarters and 9% in store leadership, and to the absence of Black or additional minority board nominees despite public pledges.9San Francisco Chronicle. Gap False Diversity Claims
The case never reached the merits. Gap invoked a bylaw requiring derivative suits to be filed in Delaware’s Court of Chancery. On June 1, 2023, in a 6–5 en banc decision, the Ninth Circuit upheld the forum-selection bylaw and dismissed the case in Lee ex rel. Gap, Inc. v. Fisher. The majority held that the clause did not impermissibly waive federal securities law rights because a shareholder could still bring a direct claim, rather than a derivative one, in federal court.10Harvard Law Review. Lee Ex Rel. Gap Inc. v. Fisher
Wage-and-Hour and Layoff Cases
Gap and its subsidiaries have paid millions to settle wage-and-hour claims. A 2005 state suit against Gap Inc. settled for $1.8 million, and in 2016 Old Navy paid $3.5 million to resolve claims by roughly 26,000 California retail employees.11Violation Tracker (Good Jobs First). Gap Inc. Violation Tracker
The most recent wage case is Weitz v. Banana Republic, LLC and The Gap, Inc. (Case No. 23STCV19287), filed in July 2023 by Laura Weitz and Laila Faiz on behalf of nonexempt California retail employees. It alleges unpaid minimum and overtime wages, missed meal and rest breaks, inaccurate wage statements, and unreimbursed expenses. The parties reached a $1.95 million settlement covering roughly 9,600 employees who worked between October 27, 2022, and July 4, 2025. The court granted preliminary approval, and the final approval hearing is set for November 9, 2026, in Los Angeles Superior Court. Class members receive automatic payments based on pay periods worked, with no claim form required.12ClaimDepot. Weitz v. Banana Republic Settlement13Weitz/BR Settlement. Weitz v. Banana Republic Settlement Information
After Gap cut more than 1,800 jobs in April 2023, former supply chain operations manager Ian O’Reilly filed a proposed class action in the Northern District of California alleging violations of the federal Worker Adjustment and Retraining Notification (WARN) Act, which requires 60 days’ notice before a mass layoff. O’Reilly said he was told on April 27, 2023, that his termination would take effect on May 12, only 15 days later. His theory was that while employees at Gap’s San Francisco headquarters may have received adequate notice, remote workers whose “site of employment” was legally tied to that office did not.14WWD. Gap Inc. Lawsuit WARN Act Violation15ClassAction.org. O’Reilly v. The Gap Inc. Complaint The case has since settled, according to Bloomberg Law, on undisclosed terms.16Bloomberg Law. Laid-Off Gap Inc. Remote Employee Settles Lack of Notice Lawsuit
Discrimination Lawsuits
Gap has defended discrimination claims across several protected categories.
In Laxton v. Gap Inc. (2003), a former Old Navy manager alleged she was fired because of her pregnancy, in violation of the Pregnancy Discrimination Act. A jury awarded her $484,000. The district court set the verdict aside, but the Fifth Circuit reversed, finding substantial evidence that Gap’s stated reasons for the firing were pretextual and noting that Gap produced no contemporaneous written documentation of the employee complaints it relied on, despite having rigorous record-keeping policies.17FindLaw. Laxton v. Gap Inc. A separate federal employment discrimination lawsuit settled for $538,000 the same year.11Violation Tracker (Good Jobs First). Gap Inc. Violation Tracker
In 2021, the Department of Justice found that Gap had routinely discriminated against certain non-U.S. citizens by demanding unnecessary documentation and performing unauthorized reverification of work permission. Gap agreed to pay more than $73,000 in civil penalties, compensate affected workers, retrain employees, and submit to ongoing monitoring.18The Hill. DOJ Reaches Settlement in Discrimination Claims Against Gap
The most recent discrimination case is Chisholm v. The Gap, Inc., filed in October 2025 in the Southern District of New York. Richard Chisholm, a former employee who has diabetes and a prostate condition, alleges that Gap failed to accommodate his medical needs — including snack breaks, restroom access, and recovery time after hypoglycemic episodes — and then retaliated by fabricating performance deficiencies and firing him.19Bloomberg Law. Gap Sued by Former Employee for Disability Accommodation Claims As of June 2026, the defendants have answered the second amended complaint, the case has been referred to mediation, and a scheduling conference is set for August 3, 2026.20PACER Monitor. Chisholm v. The Gap, Inc. Et Al.
Workplace Safety Penalties
Gap and Old Navy have drawn about $49,880 in Occupational Safety and Health Administration penalties across six recorded violations between 2010 and 2025, at locations in Ohio, California, New York, and Texas. The most recent was an $8,440 penalty against an Old Navy store in Texas in 2025.11Violation Tracker (Good Jobs First). Gap Inc. Violation Tracker The sums are small next to the pricing and wage cases, but the citations have been steady over 15 years.