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L Brands Toxic Workplace Lawsuit Overview:
- Who: L Brands, the parent company of Victoria’s Secret, Bath & Body Works, and Pink, inks a $90 million agreement to governance reform
- Why: Multiple lawsuits were filed by investors against L Brands due to accounts of cultures of sexual harassment and misogyny at its multiple companies, allegedly leading to toxic work environments
- Where: The deal would resolve two L Brands lawsuits, one first filed in May 2020 in Ohio’s Franklin County Court of Common Pleas, and a second, filed in January 2021 in Delaware’s Chancery Court
L Brands — the parent company of Victoria’s Secret, Bath & Body Works, and Pink — has reached a $90 million settlement that includes a corporate governance reform agreement, to end multiple lawsuits filed by investors.
The settlement will resolve a May 2020 class action lawsuit in Ohio’s Franklin County Court of Common Pleas and a January 2021 class action lawsuit filed in Delaware’s Chancery Court, along with other stockholder books and records demands, Law360 reports.
According to the toxic workplace class action lawsuits, L Brands had “a culture of sexual harassment and misogyny that has plagued the company and Victoria’s Secret” for decades, and investors were demanding damages.
Company founder and former Chairman and CEO Leslie Wexner and former Chief Marketing Officer Edward Razek were central figures in the company’s sexual harassment problems, the complaints read, and L Brands also had to pay settlements and enter nondisclosure agreements for other staff members behavior, Law360 reports.
Activist investor Barington Capital Group started the actions against L Brands, calling for an examination of the ties between L Brands’ board and Wexner, as well as its failure to address consumer and investors expectations around the depiction of women in company marketing, media, and promotions.
The L Brands settlement will see a five-year corporate governance reform plan enacted that includes sexual harassment prevention, reporting and anti-retaliation policies, data collection mandates, maintenance of a diversity, equity and inclusion council, and retention of a DEI consultant to assist in the effort.
The agreement also includes changing the central corporate value statement from “inclusion makes us stronger” to “diversity, equity and inclusion make us stronger,” with those values to be integrated “into every level and aspect of our business,” Law360 reports.
L Brands said in the company’s announcement: “These measures, which continue the governance and management reforms the board has been implementing over the past year, will benefit L Brands stockholders and reflect L Brands’ ongoing commitment to fostering a safe, equitable and inclusive workplace.”
Geoffrey Johnson, of Scott + Scott Attorneys at Law LLP, the lead firm in the Ohio action, told Law360 that counsel was “extremely proud of this settlement and believe that it is a game changer” for Bath & Body Works and Victoria’s Secret.
“The $90 million funding commitment is unprecedented for a company this size and the settlement establishes significant workplace and corporate governance reforms intended to ensure that the conduct that gave rise to this action will not occur in the future.”
L Brands’ board, led by its chair, negotiated the terms of the settlement, and approval of the deal will provide “full and final resolution” of the claims, the company said. The agreement includes $21 million for attorney fees and expenses.
The Special Committee of the Board of Directors of L Brands Inc. is represented by Carole S. Rendon of BakerHostetler and Robert W. Trafford, James A. King and Kirsten R. Fraser of Porter Wright Morris & Arthur LLP.
Counsel for the settling shareholders include Scott + Scott Attorneys at Law for Milton Rudi and Detroit Police and Fire, and Bernstein Litowitz Berger & Grossmann LLP and Cohen Milstein Sellers & Toll PLLC for the Oregon Department of Justice and the Oregon Public Employee Retirement Fund.
Shareholders in Delaware Chancery Court are represented by deLeeuw Law LLC and Greenfield & Goodman LLC for Nancy A. Lambrecht, co-trustee of the Amanda Greenfield 2012 Irrevocable Trust, and Quinn Emanuel Urquhart & Sullivan LLP, Bernstein Liebhard LLP and Smith Katzenstein & Jenkins LLP for John Giarratano and Maryann Kualii.
Current and former directors of L Brands are represented by Potter Anderson & Corroon LLP. Leslie Wexner and Abigail S. Wexner are represented by Zeiger Tigges & Little LLP.
Former L Brands board member David T. Kollat is represented by Roger P. Sugarman.
The L Brands Toxic Workplace Class Action Lawsuit is Rudi v. Wexner et al., Case No. 2:20-cv-03068, in the U.S. District Court for the Southern District of Ohio.
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