Blake Lively and Justin Baldoni have settled their lawsuit — but the legal battle between them is not entirely over, and the next chapter may be the most consequential one yet.

Lively agreed on Monday to drop her three remaining claims against Wayfarer Studios and its publicists, avoiding a federal trial that had been scheduled to begin May 18. No money changed hands. Baldoni's attorney Bryan Freedman said his client was "ecstatic" with the outcome. Lively's attorneys called it "a resounding victory." Both statements cannot fully be true — and the remaining court action will go a long way toward determining which side's spin holds up.

How the Case Got Here

The dispute between Lively and Baldoni — co-stars of the 2024 Sony film It Ends With Us — became one of the most closely followed celebrity legal battles in recent memory after Lively filed a sexual harassment complaint against Baldoni in California civil court in December 2024. She alleged Baldoni had repeatedly crossed boundaries during intimate scenes on set. He denied all of it.

Lively subsequently filed a federal lawsuit with the same allegations. In January 2025, Baldoni responded by filing his own lawsuit — a $400 million defamation claim against Lively, her husband Ryan Reynolds, and their publicists, alleging they had fabricated harassment claims to damage his reputation and take control of the film's narrative.

The case generated a staggering volume of headlines, legal filings, leaked text messages, and dueling public statements over the following year and a half. Then, in April 2026, Judge Lewis Liman threw out ten of Lively's thirteen claims — including all of the sexual harassment allegations — dealing her side a significant blow. Baldoni's $400 million countersuit had already been dismissed by Liman back in June 2025, on the grounds that Lively's harassment claims were contained in legal filings and therefore immune from defamation liability.

With a trial looming and much of her case stripped away, Lively agreed to settle.

What the Settlement Actually Says

The terms were not disclosed. What is confirmed is that Lively received no financial compensation from Baldoni or Wayfarer Studios. Both sides avoided the cost and exposure of a federal trial. A joint statement acknowledged that Lively's allegations "deserved to be heard" — language that Lively's legal team has since argued is a significant concession by the Baldoni side.

Freedman pushed back on that framing directly. "This case started with her seeking $300 million and a sexual harassment claim against Justin Baldoni," he told Variety. "On April 2 that was gone. That's when the victory happened."

Lively's attorney Sigrid McCawley offered a different view: "This settlement is a resounding victory for Blake Lively."

The Part That Isn't Over

The settlement resolved Lively's remaining claims. It did not resolve a separate motion she filed in September 2025 seeking attorneys' fees, treble damages, and punitive damages under California's Protecting Survivors from Weaponized Defamation Lawsuits Act — a 2023 law designed to protect sexual abuse accusers from retaliatory defamation suits.

When Liman dismissed Baldoni's $400 million countersuit in June 2025, he declined to rule on whether the California law applied. He denied Lively's initial claim for fees and damages under the act but invited her to renew the motion — which she did. That motion was not resolved by the settlement and is now the central remaining legal question.

Lively's team argues they have already established the threshold required to claim damages under the California law. The joint statement acknowledging her allegations "deserved to be heard," they contend, amounts to a concession by Baldoni's side that her claims were made in good faith — which is exactly what the law requires. If the court agrees, damages under the act can be tripled.

"By agreeing to this settlement, and waiving their right to appeal, Justin Baldoni and every individual defendant now face personal liability for abusing the legal system to silence and intimidate Ms. Lively," her attorneys said in a statement.

Freedman dismissed the motion as procedural. "I think it's a procedural motion that's left in the case — it's pretty standard — but when you want to parade around and call a loss a victory, this is your attempt to do so," he told Entertainment Tonight.

What Lively Says She's Really After

McCawley framed the remaining motion in terms that go beyond Lively's own case. "This is really a space where she's been able to do some great good for survivors, and she wants to continue that work," McCawley told Variety. "It allows her to help pave the way here."

That framing positions the California law motion not just as a financial claim but as an advocacy effort — an attempt to establish legal precedent that would make it harder for powerful defendants to use defamation suits as a tool to silence people who come forward with harassment allegations.

Whether that argument succeeds will be determined by the court. In the meantime, both sides are claiming victory, neither side is talking about what was actually agreed to, and the legal proceedings continue.

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