Court documents state Lively is now seeking damages under a California law introduced in 2023.
Her attorney, Michael Gottlieb, argued in a legal filing the legislation permits “severe and mandatory penalties against any party who files unsuccessful retaliatory defamation actions against sexual harassment and retaliation complainants”.
According to the filing, Lively’s claim is based on provisions designed to protect individuals who come forward with allegations of misconduct from retaliatory legal action.
Gottlieb wrote: “The California Legislature intended for [the law] to deter litigation that would otherwise force survivors to defend against a long and expensive retaliatory defamation lawsuit by imposing ‘significant remedies for successful defendants in defamation claims’.”
He also described Baldoni’s legal action as the “prototypical suit” the legislation was designed to address.
The dispute follows Baldoni’s $400 million defamation lawsuit, dismissed due to privileged communications. Photo / Getty Images
Gottlieb added: “Thus, as the prevailing defendant, Ms Lively is entitled not just to attorneys’ fees and costs, but also compensatory damages tripled, and punitive damages.”
The hearing will take place in federal court in Manhattan, with each side expected to receive 30 minutes to present arguments.
Neither Lively nor Baldoni is expected to attend in person.
The pair’s initial legal dispute began after Lively sued Baldoni, alleging sexual harassment and accusing him of orchestrating a “smear campaign” following her complaints about alleged conduct during the production of It Ends With Us.
Baldoni subsequently filed a $400 million defamation lawsuit against Lively, Reynolds and The New York Times in January 2025, arguing the allegations against him were false.
According to reports, the lawsuit was later dismissed because Lively’s original allegations had been made to the California Civil Rights Department and were therefore considered privileged communications.
The legal fight has reportedly generated enormous costs, with estimates suggesting both sides have collectively spent around $60 million on lawyers throughout the dispute.
The case has also prompted debate among legal experts regarding the broader implications of the California statute.
Dustin Pusch, a lawyer specialising in First Amendment cases, told The New York Times: “If you’ve been falsely accused of something as serious as sexual assault, sexual harassment, and you actually feel you have a strong lawsuit, this law is going to make you think twice about taking this to court and trying to defend your reputation.”
According to reports, another unusual feature of the proceedings is that once the judge issues a ruling, neither side will have the right to appeal the decision.
The hearing is expected to determine whether Lively is entitled to damages and legal costs following the dismissal of Baldoni’s defamation claim.