The logo and ticker for L Brands is displayed on a screen at the New York Stock Exchange (NYSE) in New York City, U.S., July 15, 2021. REUTERS/Brendan McDermid
(Reuters) – Victoria’s Secret parent company L Brands Inc has agreed to settle Ohio and Delaware lawsuits that accused its board of allowing a “culture of harassment,” including by maintaining ties to convicted and now-deceased sex offender Jeffrey Epstein.
Under the proposed settlement, filed Friday in Ohio federal court, L Brands will invest $90 million to improve sexual harassment and anti-retaliation discipline practices ahead of the planned Aug. 2 separation of its Bath & Body Works Inc and Victoria’s Secret & Co units into separate publicly traded companies.
The agreement with shareholders would also require the company to stop enforcing non-disclosure agreements that prohibit the discussion of a sexual harassment claim’s underlying facts; require mandatory sexual harassment training for employees and board members; and create a diversity, equity and inclusion counsel to regularly assess the new reforms’ effectiveness.
The financial portion of the settlement will be allocated over the course of at least five years, with equal portions contributed by Bath & Body Works and Victoria’s Secret. The company also agreed to pay $21 million in attorney fees for the settling shareholders.
U.S. District Judge Michael Watson in Columbus, Ohio, still needs to approve the proposed deal. The defendants still deny any wrongdoing.
The lead attorney in the Ohio action, Scott+Scott partner Geoffrey Johnson, said in a statement Friday that the proposed settlement is a “game changer” for the L Brands companies.
“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,” Johnson said.
L Brands Board Chairman Sarah Nash in a statement called the settlement an “overwhelmingly positive result” for the company and its shareholders. Nash headed a special board committee tasked with investigating claims made in the shareholder suits.
Columbus, Ohio-based L Brands formed the special committee in May 2020, shortly after L Brands shareholder Milton Rudi sued executives and board members, including Wexner, for allegedly failing to address a “hostile abusive environment rife with sexual harassment” that was worsened by top executives and Epstein. The convicted sex offender, who was formerly Wexner’s financial adviser, allegedly posed as a Victoria’s Secret recruiter to “prey on” female models, the suit alleged.
Rudi claimed in his Ohio federal court complaint that the board’s “laissez-faire” oversight hurt the company’s reputation and prevented Victoria’s Secret from being sold off.
A similar suit was later filed this January in the Delaware Court of Chancery.
Representatives for L Brands were not immediately available to comment on the settlement. Attorneys for the L Brands board and special committee, including William Savitt of Wachtell, Lipton, Rosen & Katz, did not immediately respond to requests for comment.
A spokesperson for former L Brands CEO and founder Leslie Wexner declined to comment.
Along with the Ohio and Delaware actions, the proposed settlement also resolves several books and records inspection and litigation demands made by other shareholders.
Manisha Sheth, co-chair of Quinn Emanuel Urquhart & Sullivan’s sexual harassment and employment discrimination practice and counsel for some of the other settling shareholders, said in a statement that the litigation should serve as a lesson for other companies “to investigate these allegations in an objective and independent manner, and then take appropriate steps to try and correct the problem.”
The cases are Rudi v. Wexner et al, U.S. District Court for the Southern District of Ohio, No. 2:20-cv-3068; and Lambrecht v. Wexner et al, Delaware Court of Chancery, No. 2021-0029.
For shareholders: Geoffrey Johnson of Scott+Scott; and Richard Greenfield of Greenfield & Goodman; P. Bradford deLeeuw of deLeeuw Law; Manisha Sheth of Quinn Emanuel Urquhart & Sullivan; Julie Reiser of Cohen Milstein Sellers & Toll; Mark Lebovitch of Bernstein Litowitz Berger & Grossmann; and Stanley Bernstein of Bernstein Liebhard
For L Brands special committee: William Savitt of Wachtell, Lipton, Rosen & Katz and Robert Trafford of Porter Wright Morris & Arthur
For L Brands directors: John Zeiger of Zeiger, Tigges & Little and Carole Rendon of Baker & Hostetler
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