April 02, 2026|Franchise Frontlines
April 2, 2026 | United States District Court for the Southern District of New York | Unpublished Opinion
Executive Summary
In an unpublished decision, Judge Lewis J. Liman of the United States District Court for the Southern District of New York granted in part and denied in part motions for judgment on the pleadings and summary judgment in a high-profile dispute arising from film production. Plaintiff Blake Lively asserted numerous claims, including sexual harassment, retaliation, breach of contract, and related tort claims against Wayfarer Studios and affiliated parties. Defendants argued that Lively was an independent contractor rather than an employee, that key agreements were unenforceable, and that the remaining claims failed as a matter of law. The court agreed in substantial part, holding that Lively was an independent contractor under both federal and California law and that the primary long-form agreement was never formed due to lack of execution. The court further dismissed multiple statutory and tort claims, but allowed a narrow set of retaliation claims and a claim under a separately executed contract rider agreement to proceed.
Relevant Background
The dispute arose from the production of the film It Ends With Us, developed and produced by Wayfarer Studios through a special-purpose entity. Lively agreed to perform the lead role through a loan-out entity pursuant to an offer letter, with the parties contemplating a more detailed long-form agreement governing her services.
Although the parties exchanged multiple drafts of the long-form agreement over an extended period, the agreement was never executed. Nevertheless, production proceeded, and Lively performed her role while continuing to negotiate contractual terms, including provisions addressing sexual harassment and related protections.
During a production hiatus, Lively raised concerns regarding workplace conduct and required certain protections as a condition of returning to filming. Those protections were incorporated into a separate “Contract Rider Agreement,” which was executed by the parties.
Following the film’s completion and release, Lively alleged that defendants engaged in a coordinated campaign to damage her reputation in retaliation for her complaints, including through public relations efforts and media engagement. Defendants moved for dispositive relief across all claims.
Decision
The court first addressed whether Lively qualified as an employee for purposes of her statutory claims. Applying the common law agency framework, the court held that she was an independent contractor as a matter of law. The court emphasized that the “right to control” remains the most important factor, but that control must be evaluated in context. Here, Lively retained extensive contractual approval rights over key aspects of the production, exercised significant influence over creative and operational decisions, and maintained economic independence through project-based compensation and the ability to accept other work.
The court rejected the argument that creative direction and scheduling constraints transformed the relationship into employment, noting that such coordination is inherent in collaborative productions and does not, standing alone, establish the level of control necessary for employee status. Based on the totality of the circumstances, no reasonable factfinder could conclude that an employment relationship existed.
Turning to the contract claims, the court held that the unexecuted long-form agreement was unenforceable. The agreement expressly required execution as a condition precedent to binding obligations, and the parties’ conduct confirmed an intent not to be bound absent a fully executed document. The court rejected arguments based on partial performance and waiver, finding that performance occurred under the earlier offer letter and that there was no clear and unequivocal relinquishment of the execution requirement.
In contrast, the court held that the separately executed Contract Rider Agreement was enforceable. The court found that it was supported by independent consideration—specifically, Lively’s agreement to return to production under modified conditions—and that it imposed binding obligations notwithstanding the absence of a finalized long-form agreement.
The court also addressed multiple statutory and tort claims. It dismissed sexual harassment claims under California law on extraterritoriality grounds, concluding that the core alleged conduct occurred outside California and lacked a sufficient nexus to the state. The court further dismissed defamation claims based on the fair report privilege, finding that statements made by counsel were tied to ongoing judicial proceedings and constituted protected reporting.
However, the court denied summary judgment on certain retaliation claims under California law. The court found that there were genuine disputes of material fact as to whether defendants engaged in conduct that could materially harm Lively’s professional reputation and opportunities, including through alleged coordinated media and digital campaigns. The court emphasized that retaliation claims are highly fact-specific and that issues of motive and intent are generally reserved for the jury.
Looking Forward
This decision provides several instructive takeaways for franchisors and operators navigating complex, multi-party business relationships.
First, the court’s analysis reinforces that control—standing alone—does not establish an employment relationship. Even extensive coordination, brand-level involvement, and operational oversight may not give rise to employee status where the counterparty retains meaningful independence, negotiates terms at arm’s length, and participates as a sophisticated economic actor. This distinction remains critical in franchise systems, where control is necessary to maintain brand standards but must be carefully structured to avoid unintended employment exposure.
Second, the decision highlights the importance of disciplined contract formation. The court’s refusal to enforce the unexecuted long-form agreement underscores that conditions precedent—particularly execution requirements—will be enforced as written. Parties that proceed with performance while leaving key agreements unsigned risk losing the benefit of negotiated protections. At the same time, the court’s enforcement of the Contract Rider Agreement demonstrates that targeted, properly supported side agreements may carry independent legal force when supported by clear consideration and defined obligations.
Third, the case illustrates the growing intersection between operational disputes and reputational risk. The court’s willingness to allow retaliation claims to proceed based on alleged reputational harm reflects an evolving recognition that adverse actions may extend beyond traditional employment decisions. For franchisors, this underscores the need for careful coordination between legal, operational, and public-facing strategies, particularly in disputes that may attract public attention.
Finally, the decision confirms that courts will closely scrutinize attempts to expand liability theories across multiple frameworks. The dismissal of several claims—despite high-profile allegations—demonstrates that statutory and contractual boundaries remain enforceable when properly structured and asserted.
Taken together, the case serves as a reminder that structural clarity, contractual discipline, and strategic consistency remain central to managing risk in complex, multi-entity systems.
This article is based solely on the opinion of the Court in this matter. The author has not conducted any independent investigation into the facts. For the avoidance of doubt, each statement related to the law and facts in this article is drawn from the Court’s opinion in this case.
Thomas O’Connell is a Partner at Buchalter LLP and Chair of the firm’s Franchise Practice Group. For questions about this article or media inquiries, you can contact Tom at toconnell@buchalter.com.
This communication is not intended to create, and does not create, an attorney-client relationship or any other legal relationship. No statement herein constitutes legal advice, nor should it be relied upon or interpreted as such. This communication is for general informational purposes only and is not a substitute for legal counsel. Readers should not act or refrain from acting based on any information provided without seeking appropriate legal advice specific to their situation. For more information, visit www.buchalter.com.
