Past Cases

L Brands, Inc. Derivative Litigation

Status Past Case

Practice area Securities Litigation & Investor Protection

Court U.S. District Court for the Southern District of Ohio

Case number 2:20-cv-3068


Following a Delaware General Corporate Law Section 220 books and records demand and an extensive, proprietary investigation, L Brands, Inc. and the now-standalone company Victoria’s Secret have agreed to holistic workplace reforms that include investing $45 million each, for a total $90 million, in diversity, equity and inclusion initiatives and forming DEI Advisory Councils. On May 16, 2022, the United States District Court for the Southern District of Ohio granted final approval of the settlement.

The watershed settlement, led by Cohen Milstein clients, the State of Oregon, the Oregon Public Employees Retirement Fund, as well as certain other shareholders, resolves allegations that L Brands’ officers and directors breached their fiduciary duties by maintaining ties with alleged sex offender and pedophile Jeffrey Epstein and fostering a culture of discrimination and misogyny at the company.

Together with the transformation of L Brands and Victoria’s Secret from companies with hyper-sexualized and significantly outdated ideas of the female body into companies that celebrate more inclusive visions of gender, body type, and ethnicity, and the introduction of new management and a primarily female board of directors at both Victoria’s Secret and L Brands, the settlement will substantially increase the value of both companies for their investors and help ensure their continued future growth.

The $90 million settlement will be used to fund workplace and governance reforms designed to protect employees from discriminatory treatment and to promote diversity, equity and inclusion (DEI). Key reforms of the settlement include:

  • A prohibition on the use of non-disclosure agreements (NDAs) and a release of current and former employees from their NDAs, as well as a prohibition on the use of forced arbitration of discrimination claims;
  • The establishment of DEI Councils focused on enhancing training, investing in diverse communities that are representative of the companies’ customers and employees, and auditing the effectiveness of those initiatives;
  • A complete revamp of the companies’ internal sexual harassment, discrimination and retaliation policies, procedures and training;
  • The separation of the roles of CEO and chair of the board of directors; and
  • The publication of annual reports to stockholders discussing the companies’ DEI objectives, progress in meeting those goals, and accompanying metrics.

The State of Oregon, the Oregon Public Employees Retirement Fund and other shareholders alleged that L Brands’ board of directors failed to investigate former CEO and Chairman Emeritus Leslie Wexner’s close personal ties with known pedophile Jeffrey Epstein, and ignored a widespread and pervasive culture of sexual misconduct and harassment. The shareholders further alleged that by allowing the pattern of sexual misconduct, bullying and retaliation to go unaddressed, the board of directors failed to act in the best interests of stockholders.

The Oregon Attorney General’s investigation and the subsequent departures of many of L Brands’ senior management and directors, paved the way for negotiations over impactful workplace and governance changes. It also comes on the heels of Leslie and Abigail Wexner having sold the vast majority of their holdings in L Brands.

See the full settlement agreement.

The Cohen Milstein team leading the case on behalf of the State of Oregon included Julie Goldsmith Reiser, Laura H. Posner, and investigator Jaclyn Weiner. Ms. Reiser led the Cohen Milstein team that received final approval for the $310 million settlement of a derivative lawsuit against the Alphabet board of directors, and Ms. Reiser and Ms. Posner led the $90 million settlement of a derivative lawsuit against the Wynn Resorts Ltd. board of directors, both of which similarly stemmed from allegations that the Alphabet and Wynn Resorts boards failed to properly handle longstanding allegations of sexual assault and harassment. Ms. Reiser and Ms. Posner are currently litigating a similar case against Pinterest, Inc. on behalf of the State of Rhode Island.