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$90 Million Settlement with Victoria’s Secret Parent

December 2021

Quinn Emanuel has reached a resolution, subject to court approval, of its shareholder books-and-records action against L Brands, the parent company of Victoria’s Secret. The complaint alleged that a “culture of sexual harassment and misogyny” had “plagued the Victoria’s Secret for decades.”

            Just days after the New York Times published an in-depth exposé that revealed the pervasive toxic culture at L Brands, on behalf of shareholder John Giarratano, we served a books and records demand on the Company to investigate any wrongdoing. In June 2020, the firm commenced a books and records action against the Company in Delaware Chancery Court based on the Company’s failure to produce documents. Two other shareholders also filed derivative actions making similar allegations. After months of discussion, the parties reached a ground-breaking settlement that addresses past harms and puts in place corrective measures to prevent future harassment and discrimination.

            The Notice of Settlement has been filed with the federal court in Ohio and, if approved, will resolve all stockholder derivative claims alleging workplace misconduct, including claims made in derivative stockholder litigations pending in Ohio and Delaware and in stockholder demands sent to the Board of Directors since February 2020.

            The settlement provides that L Brands will commit to a $90 million fund to implement corporate reforms, including: (a) maintenance of a Diversity, Equity and Inclusion (“DEI”) Council, (ii) revamping policies on sexual harassment, anti-retaliation, and reporting and investigating sexual harassment complaints, including annual audits and surveys of employees and models, (iii) hiring a DEI consultant and use of data metrics to ensure DEI metrics are being met, (iv) elimination of Non-Disclosure Agreements (NDAs) and an agreement not to enforce past NDAs, and (v) increased training and oversight of outside contractors, including photographers.

            The settlement recognizes that the efforts of Quinn Emanuel and other plaintiffs’ counsel “substantially and materially contributed” to the corporate governance reforms and changes made at L Brands since February 2020.  A final settlement hearing is scheduled for January 2022.

Update: On May 16, 2022, the Court granted final approval of the settlement resolving the shareholder claims against L Brands, including the measures described above. In approving the settlement, the Court found that the shareholders conducted “comprehensive investigations,” engaged in “significant discovery”—including reviews of L Brands’ policies and protocols, special committee minutes, severance and settlement agreements, and internal complaints—and held “protracted arm’s length negotiations” with the Company before reaching the settlement.  The Court also found that counsel’s extensive experience and the “substantial benefit” the settlements confers weighed in favor of final approval.  In granting final approval of the settlement, Judge Watson agreed that the game-changing settlement is fair and reasonable and would benefit L Brands stockholders and the Company.