AceShowbiz - Blake Lively and Justin Baldoni have reached a critical last-minute settlement concerning the sexual harassment allegations tied to their film It Ends With Us, avoiding a public courtroom battle that threatened to dominate headlines.

In a joint court filing submitted last Thursday, Baldoni agreed to waive his right to appeal a prior court dismissal of his $400 million defamation lawsuit against Lively. This move potentially allows the actress to recover her substantial legal expenses and seek damages under a new California statute designed to protect victims of sexual harassment from retaliatory defamation claims.

If the court approves Lively’s motion, it will proceed to determine the extent of damage to her reputation caused by the lawsuit initiated by Baldoni and his team. Additionally, she aims to obtain punitive damages intended to penalize Baldoni and his associates for what her legal team describes as egregious misconduct during the proceedings.

When the settlement was announced on Monday, both parties issued a muted joint statement highlighting their shared pride in the film and acknowledging that Lively’s concerns "deserved to be heard." However, neither side claimed a definitive win at that time.

Now, Lively is pushing to secure a clear legal and public relations advantage. Her attorneys, Michael Gottlieb and Esra Hudson, labeled the settlement a "resounding victory." They declared, "Justin Baldoni and every individual defendant now face personal liability for abusing the legal system to silence and intimidate Ms. Lively." They further emphasized that the defendants’ admission that Lively’s concerns merited attention dispels the notion that she fabricated her claims of sexual harassment and retaliation.

Thursday’s court filing also raises new questions about the potential liabilities facing Baldoni and his production company, Wayfarer, due to their defamation actions against Lively and The New York Times. Adding complexity, one of Wayfarer’s insurers, Harco National Insurance, has filed a lawsuit seeking a court ruling that it is not responsible for covering legal fees. Baldoni has accused three other insurers of breaching contracts by refusing coverage. Collectively, these insurance policies represent at least $8 million in potential coverage.

With the settlement in place, Lively has overcome a key obstacle to recovering damages from Baldoni, following the court’s dismissal of his defamation claims last year. Since Baldoni waived his appeal rights as part of the deal, that ruling now stands as final.

The California law invoked by Lively allows her to seek reimbursement for attorney fees as well as treble and punitive damages for the harm caused by defamatory claims. Enacted in 2024, this law protects individuals reporting sexual harassment and assault, provided their claims were made in good faith and had a reasonable basis.

According to the filing, Lively contends that Baldoni’s lawsuit was a retaliatory tactic. The documents highlight a statement by Wayfarer cofounder Steve Sarowitz, who reportedly declared he was "prepared to spend $100 million to ruin the lives of Ms. Lively and her family." Sarowitz further allegedly compared his defense of the studio to Israel’s military actions against Hamas, ominously warning of casualties, as cited in court papers.

Lively maintains she reported the alleged harassment in good faith, repeatedly raising concerns during production, negotiating contractual safeguards, and enduring intense public scrutiny by pursuing her own legal action.

Her lawyers argue, "The Wayfarer Parties defamation action against Blake Lively was baseless from the start." Despite warnings about the consequences of their claims, Wayfarer persisted, they say, intensifying the public dispute rather than stepping back.

Looking ahead, Lively plans to seek a multimillion-dollar award to cover her extensive legal fees and to obtain damages for the alleged harm caused by what she characterizes as a frivolous lawsuit initiated by Wayfarer.

The legal battle involved extensive teams of attorneys on both sides, with some billing rates exceeding $1,000 per hour. The volume of court activity underscores the case’s complexity, with nearly 1,500 docket entries filed in Lively’s matter alone, suggesting legal fees likely reached tens of millions of dollars.