On this week’s Fast Four episode, Reputation Nation hosts Anne Marie Malecha and Stacy Bratcher break down the Cracker Barrel rebrand backlash and why monitoring and mitigating online bot-driven narratives matters more than ever. They move through the Louvre jewel heist’s operational fallout, what Twitch’s federal defamation suit could mean for creators, and how Katy Perry and Justin Trudeau’s headline-grabbing romance could be a reputation reset for both public figures. Expect the unexpected, get crisis-ready, and learn why having the right advisors in place before a crisis hits can make all the difference.

Fast Four: Brand Backlash, Bot Wars, & Heists in the Headlines Transcript

Anne Marie (00:02)

Welcome to Reputation Nation, the podcast that goes beyond the headlines to unpack corporate crises, legal battles, and the strategies that shape reputations. I’m Anne Marie Malecha the CEO of Dezenhall Resources and crisis management expert.

Stacy (00:16)

And I’m Stacy Bratcher, a lawyer who’s battled crises on the front page and in the courtroom. And sometimes those crises have led me into the foxhole with Anne Marie. Whether you’re in the C-suite, the legal department, or are just curious about controversy, we’ve got you covered. Let’s get started.

Anne Marie (00:36)

Welcome to Reputation Nation Fast Four, where Stacy and I will spend a few minutes on headlines that have caught our eye. In each Fast Four episode, we’ll dive into four timely stories where we’ll provide a quick summary of why it’s interesting to us in the Reputation Nation and leave you with an actionable insight or two. For Des Reads fans, this is the audio visual version of Des Reads, which was the brainchild of my colleague, Josh Culling, but with a slant on what’s making headlines in the legal crisis, regulatory, and reputation realm.

Stacy (01:04)

Recently, Cracker Barrel replaced its classic logo that featured a man in overalls with the barrel with a modern text only version to refresh its image to appeal to younger guests. The rebrand was meant to support a broader turnaround called the Transformation Plan that included remodels and a new marketing campaign. However, the change quickly triggered strong backlash on social media. And Anne Marie and I are going to talk about why that happened and what they could do about it now.

I’m fascinated with Cracker Barrel because this was part of a strategy that they had executed. You know, it launched last spring in May. It had results. I mean, until the actual brand, the new CEO raised their revenue every quarter, like four consecutive quarters with their transformation plan. And this new brand was just kind of like the icing on the cake.

Anne Marie (01:57)

I think it’s interesting just in and of itself that we’re talking about Cracker Barrel. It’s not one thing that I think in either of our daily lives we spend a lot of time thinking about, but I grew up in the Midwest and so did you. on every road trip, there’s how many Cracker Barrels along the highway and you think about it. And it’s interesting these sort of, I’m gonna call them.

mid-sized town chains have really come back into focus for ⁓ folks like Applebee’s, Chili’s, Cracker Barrel, Red Lobster. We’ve seen a lot of major changes. And I think part of that is like there’s this extreme desire and nostalgia from our generations of simpler times, which has made a huge opportunity both economically for the companies, but also for these communities because

Stacy (02:30)

retro.

Anne Marie (02:46)

they are in many cases the most restaurants that they have or the primary sort of gathering places. And I think that in and of itself is interesting. But the thing about any company that’s existing in a world that’s not necessarily on the coast or dealing with a Madison Avenue crowd, you can’t hire a big city design firm to do your rebrand and not think about your audience really clearly.

The company itself, I think, had thought about its audience really clearly. To your point about the transformation plan, that had been in the works for months. Great stock results, more folks coming in the door. People were happy with the product. And then they did this big launch with the new design and there was all this backlash.

Stacy (03:33)

Well, there’s so much that’s interesting to me about this Anne Marie and I really wanted to talk to you about it because I mean, first of all, while the brand, the logo is different and doesn’t have the barrel or the man on it, it’s not like it’s completely different. The colors are the same. The font is largely the same. I sort of, ⁓ you know, if I was a customer, I would sort of be like, this is all you came back with because it doesn’t seem all that different. And so

The backlash is really surprising and I’m wondering if there was something else going on in the ether that got this to have so much attention.

Anne Marie (04:11)

There definitely was and I’ll get to that in a second, but I agree the new logo was not a massive departure. In fact, I thought it was bolder, maybe a little bit more retro looking, which I think is what they were going for and holding on to the legacy of the brand and the company. But you know, what do I know when it comes to branding? That’s not my thing. What I think is super interesting here is what

the company might not have planned for and certainly didn’t expect in terms of the conversation and who was participating in the criticism conversation. So there was a lot of bot activity that was detected across social channels about the rebrand and the criticism specifically was stoked by inauthentic activity. In my work, that is something we see all the time now. It’s happening.

from motivated adversaries that were traditional motivated adversaries for companies all along. So if you’re publicly traded, it’s potentially a short seller. If you are in a highly regulated industry, it could be a NGO or a nonprofit that could fundraise off of whatever challenge you have. It could be a nation state actor, depending on what’s going on. I mean, my sense is that this is competitor driven or potentially someone in the market.

Stacy (05:25)

want to get some actionable insight here for, because I, again, sort of as somebody who is not in the marketing space, relaunching a brand, I’m sure there’s a whole workflow and campaign behind that, but it would never occur to me that managing inauthentic bot-driven content would be part of that. And so can you talk about what is that and why do people need to be aware of it?

Anne Marie (05:51)

Absolutely. This gets back to the conflict piece of crisis management. Whether you’re doing a marketing campaign or you’re dealing with a regulatory issue, if you have motivated adversaries, which every company in the world has, they look differently depending on who you are, what industry you’re in and what you’re doing. But every company has somebody that sees a vested interest in having that organization not do well or have to face problems. And in Cracker Barrel’s case, there’s a lot of potential options because they’re publicly traded.

They’ve got a decent amount of investor activity. They’ve got a decent amount of competitors and those competitors in some cases are PE backed. So there’s a lot of resources. I think of reticence to admit that this is what’s happening in the world, but it is because if you are driving people to a narrative that ultimately advances your position, whether good or bad, it has a benefit, both reputationally and often in

in a dollars and cents capacity. This is something that we’ve seen in our work for a long time. I think a lot of people think about it in the sense of the political sphere, but this is happening in ⁓ competitor on competitor or corporate violence, if you will. And we have seen this play out in major ways for companies where it’s completely tanked their stock. It has brought regulatory scrutiny to them. It’s gotten boycotts to happen or stop. It’s a nightmare.

And you have to think about it, which is why marketing.

and traditional communications doesn’t happen in a vacuum, why investor relations and financial related communications don’t happen in a vacuum, why lawsuits don’t happen in a vacuum. And if you don’t have in an organization somebody that’s sort of overseeing all of that and quarterbacking that from a holistic perspective, it’s a real detriment. And that’s why I think we’ve seen this chief corporate affairs officer become a person that really has a seat at the strategic table. And it’s a really important function because all of these things are intertwined. And more practically on the

side of things. Defending against this is something that we’ve had to find solutions to help our clients with. About two years ago, we started putting together the ability to track and then mitigate in real time this type of activity with a system we call Siren 360. And I’ll tell you, it’s almost a part of every campaign that we have for clients now and every sort of effort that we’re running, even if it’s not a traditional public affairs campaign because

If you don’t have to mitigate it, great, but you want to know what’s being said by who, how, and try and trace where it’s coming from because that information can be really important whether you’re just in the normal course of business or you are in a more crisis situation like a potential lawsuit. In the New York Times, there’s a story in just seven brazen minutes thieves grab priceless jewels from the Louvre.

If you aren’t aware of what happened in France, thieves disguised as construction workers executed a very swift, meticulously planned heist at the Louvre, stealing eight pieces of the French crown jewels worth roughly $102 million, all in broad daylight, and in just seven minutes while the museum was full.

Stacy (09:02)

I mean, it’s a movie. We just had Halloween and I was trick or treating and many of the adults were dressed up as jewel heists.

Anne Marie (09:09)

It’s a great costume. I love that people are latching onto the humor in this. It’s not funny that these crown jewels were stolen, but the Louvre is supposed to be one of the most secure museums in the world. They’ve got all sorts of treasured works. It does look like a fortress. hard to get into. And these guys used a ladder through a window.

Stacy (09:22)

It looks like a fortress.

Yeah, it’s wild. Well, ⁓ the BBC just published a story that, there was an audit that occurred before the heist and found that the Louvre prioritized artisan or staging of the art over security. And, I haven’t seen that report yet. I’m going to look it up, but to me, that is a

really big red flag if you commission an audit or review of your security, your organization, and then you don’t do anything with it. That’s a big problem.

Anne Marie (10:02)

two things that play there for me. Operations have to drive optics, whatever that looks like and whatever business you’re in. And two, it’s a really good reason to have those reports done through counsel so that they are privileged and can’t be released without your say so and willingness to do so. Bad move on the board for not recognizing that maybe we needed to move a little bit faster and upgrading our security measures. I do think the follow on I’ve seen

I mean, certainly there’s been satirical memes all over the internet, but the ladder company that had the brand of the ladder that these guys use got in on the joke and talked about that they’re, you know, they make the right tools for the job.

Stacy (10:42)

I

love it. mean, way to take a crisis and make it into an opportunity.

Anne Marie (10:46)

You and I have talked many times, Stacy, about whether things happen organically or they’re publicity stunts or there’s this Machiavellian master plan. And something that’s been interesting about the Louvre heist is there’s a movie coming out called Now You See Me. I think it’s the third iteration of it. And the internet is abuzz about whether or not this was a publicity stunt as part of the movie’s rollout. Curious what you think.

Stacy (11:13)

Well, I think we would both, if we were advising the Louvre, would advise against using a jewelry heist to promote the museum. think that that is, while interesting and, you know, very entertaining, I don’t think that it supports the brand of the Louvre. I certainly, if I was advising them as their general counsel or chief risk officer, would not want to at all indicate that there were any security breaches at

the museum. I do think this is just coincidence and I’m sure the internet and the bots that we talked about earlier are probably generating the controversy and conspiracy.

Anne Marie (11:51)

I

think you’re probably right. Also, if I’m the movie, I don’t know that I have that kind of budget to deal with police response and all the things that had to happen in order for this to go off without a hitch. And to keep a secret like that is...

I think next to impossible. An NBC affiliate in Austin, Texas has a story called Top Twitch Streamers File Defamation Lawsuit Against Fellow Streamers. A top Twitch streamer filed a federal defamation suit against three gaming companies and two fellow.

Twitch streamers, if you are unfamiliar with Twitch like I was when I read this article. It’s an online live streaming platform where users can watch and broadcast video game content, music, other creative streams in real time. Neither Stacy or I are gamers, but this is super interesting to me because the social channel itself is not one I’m familiar with, but has a ton of

users. think there’s like 240 million active users globally. That’s a huge audience. And also federal defamation law. I think this is going to potentially test the boundaries of what a public figure is considered to be. These folks put themselves out on the internet. Does that mean they are public figures?

Stacy (13:09)

Yeah, that’s one definitely one to watch something that appears to be kind of a niche area, but a ruling would certainly have broader implications. There’s so many social media influencers on platforms we’re more familiar with. don’t typically the law lags technology, so it will be very interesting to see if this defamation is expanded to folks who have a presence on a video game streaming system.

Anne Marie (13:34)

The last few Defamation Matters that I’ve been involved with have centered on YouTube, Twitter, LinkedIn, and I think that that’s the new frontier for most things because while mainstream media certainly is important still, people are getting their news from these alternative platforms. I’m also super curious how that ends up translating with these newer media channels with sub stacks, podcasts, etc.

Stacy (13:57)

Yeah, definitely one to watch. And I think like some of the other topics we’ve talked about, like with the OpenAI and New York Times, the tech is helping the law evolve and then that informs our corporate strategy and how we move forward with our business. So very interesting. I can’t wait to learn more about that. We’re going to talk about a headline in CNN, although this story has been all over.

many, many different channels. Katy Perry and Justin Trudeau are officially dating. Everyone has decided as recently as last week. ⁓ she was, this is a local story. That’s, that’s interesting to me because Katy Perry does live in Santa Barbara. she was spotted with Justin Trudeau on her boat in our Santa Barbara Harbor. ⁓ and they are, they are Instagram official, I believe. So Katie’s making headlines for her relationship with the former prime minister.

And he is certainly getting a brand refresh after his, you know, less than graceful ouster from the official position. So I’m curious about this Anne Marie, because it, I actually think more about, about it from the Justin Trudeau side of things, because he had a, political appointment. He, you know, was sort of, and you think of those folks as being more buttoned up and Katie is a pop star and a little bit, ⁓ audacious. She’s very out there.

And so it’s, you know, as I said, kind of an opportunity for him to have a rebrand. But I wonder what you think about that more globally, where you have these sort of two different worlds, people from different worlds getting together.

Anne Marie (15:29)

I think it’s interesting that there’s been a lot of chatter questioning whether this new alliance offers reputational upside or only brings more scrutiny or speculation. I think it depends on whether you’re sitting in Katy Perry’s seat and her team seat and Justin Trudeau’s seat. Cause I do think it’s a little different. Katy Perry is a musician. She’s been out in the public eye in

multiple ways. She just recently did this Blue Origin space travel. I think she likes kind of being a shock jock, if you will. She likes to push the boundaries and Justin Trudeau I think was seen as being really buttoned up and maybe he wants to be a little bit less so. Maybe he wants to break into more of a Hollywood crowd in his next iteration.

I don’t think this is a publicity stunt. think this is maybe more of a situation of opposites attract and good for them. But I do think they’re gonna have to be really mindful of where paparazzi are hanging out in the bushes and who’s interested in pushing a narrative that this is something different than it is. But I think Katie’s gonna have to maybe school him a little bit in the ways of the media in her world versus the political media.

Stacy (16:39)

Very different. you know, this is something I think a lot about with this particular pairing. And it’s a question that comes up all the time. And I always ask you about that. Is there any such thing as bad press? Because, you know, again, Justin sort of lost his job very publicly. And now with this relationship, it’s a complete refresh. Like, like no one cares about whether he’s the prime minister anymore or not. They’re interested now.

that he has a relationship with a fun, you know, engaging pop star.

Anne Marie (17:10)

I think in his case there this isn’t bad press at all. It’s always situational but

He’s got to figure out what his next act is and whether that’s writing a book or doing a documentary or philanthropy or investing. All of that will probably have some public lens on it. He is a public figure. There is a long history of politicians turning to other endeavors. The Obamas have a media company. The Clintons started the Clinton Global Initiative, which then turned into all these events and other things. think Trudeau has

mass appeal. He’s also pretty young, so there’s a lot he can do for a long time. And I think having somebody that has that experience is probably relatable both in their personal relationship and whatever business endeavors come next. I think there’s a net win for him. Now, if there’s a massive breakup or some scandal around how it ends, I might change my mind.

Stacy (18:02)

Yeah, I tend to agree with you. And I think to the extent there’s any, you know, intention behind them getting together, it certainly brings him to a younger audience. You know, I can’t don’t know how many, you know, 13 year olds were thinking about the Prime Minister of Canada.

Anne Marie (18:18)

We also don’t have Americans that really are paying that much attention to the elections and what happened in Canada. So I think if you’re going to reposition yourself in the world doing that in the States, particularly in California with the Hollywood crowd is fine. I mean, we, kind of like people that can reinvent themselves. That’s a big story in the Hollywood arc.

Stacy (18:40)

Okay, so at least no bad press about this issue.

Anne Marie (18:42)

Weeks

fast-forward doesn’t have a great through line amongst these cases, but there is something that is always a good reminder. Expect the unexpected. Cracker Barrel could have expected the unexpected.

Stacy (18:53)

The Louvre, think they could have looked at that audit report and taken action. When the unexpected happens, I think that you need to go to your crisis management expert, Anne Marie. So that’s why you’re always my Batphone call.

Anne Marie (19:04)

Have people in place. That actually I think is a useful tip for anybody in any role. Have folks in place that can be your advisors when things are challenging and have them in place when you’re in times of peace, whether that’s legal counsel, accountants, crisis managers, you name it, depending on the industry you’re in, it’s gonna look different.

You want folks to know who you are, how you operate, what your reputation baseline is, your bias for action, inaction, etc. So that you can have the best shot of getting through whatever issue you’re facing as quickly and as unscathed as possible.

Stacy (19:37)

Yeah, that’s one of my favorite maxims, which is build a relationship before you need it. That’s it for this episode of Reputation Nation. Thanks for joining us. We hope you found this episode useful. Have a crisis you want to dissect on a future episode? Connect with us on LinkedIn or email us at repnat at dezenhall.com.

Anne Marie (19:58)

to more about navigating a corporate crisis or high stakes lawfare situation, or want more hot takes from us, subscribe to Dez Reads and our take at Dezenhall.com. And be sure to check out Stacy’s The Legal Department podcast for more legal insights at LegalDepartmentPod.com. Thanks for listening. See you next time in The Reputation Nation.

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In the series finale of the Lively v. Baldoni saga, Reputation Nation hosts , Anne Marie Malecha and Stacy Bratcher dissect the headlines, crisis moments, and reputational fallout from one of Hollywood’s most watched legal battles. From Blake Lively’s lengthy post-trial statement and Taylor Swift’s rumored deposition to the strategic choices facing Justin Baldoni, this episode reveals what goes into communications and legal decision-making when stakes are the highest and everyone is watching. Packed with actionable takeaways for leaders and communicators, don’t miss these expert insights on managing your message and reputation under pressure.

Lively v. Baldoni: Controversy, Concessions & Celebrity Communications (Taylor’s Version) Transcript

Anne Marie (00:02)

Welcome to Reputation Nation, the podcast that goes beyond the headlines to unpack corporate crises, legal battles, and the strategies that shape reputations. I’m Anne Marie Malecha the CEO of Dezenhall Resources and crisis management expert.

Stacy (00:16)

And I’m Stacy Bratcher, a lawyer who’s battled crises on the front page and in the courtroom. And sometimes those crises have led me into the foxhole with Anne Marie. Whether you’re in the C-suite, the legal department, or are just curious about controversy, we’ve got you covered. Let’s get started.

Anne Marie (00:34)

In today’s episode of Reputation Nation, Stacy and I will be analyzing the legal maneuvers, public power plays, and media revelations that have reshaped the Lively v. Baldoni battle. We’ll look at the judge’s most recent ruling, Blake Lively’s new filings, and the drama surrounding the alleged Taylor Swift deposition.

I’d like to apologize for any mispronunciations of names. I have a solid Midwestern accent, which allows me to make my vowels as long, loud and throaty as possible and I understand that Justin Baldoni’s name is Justin Baldoni not Baldani. Sorry team Justin.

Special thanks to Stacy’s daughter who gave us the idea for the episode title Taylor’s Version. There’s been a lot of interesting developments in the Justin Baldoni Blake Lively case. Some have been in the courtroom, some have been in the news, some have been both. I think that

The courtroom has been particularly interesting to me and I’m very curious Stacy to get your take on what you think some of these decisive factors that Judge Lindman’s June decision to dismiss Justin Baldoni’s $400 million counterclaim. How did that come about? Was it not a great case to be before the judge? Usually when a case gets dismissed, the ruling that comes with it is fairly telling.

Stacy (01:49)

I’ll just start by saying that, you know, motions to dismiss are not readily granted. mean, federal court is its own animal. The federal rules of civil procedure govern and they really try to preserve parties rights to litigate. the rule at play is rule 12 B6, which there’s books written about, but essentially the party has to state a claim for which relief can be granted. And that’s the fundamental problem.

with the Baldoni claims. he sued for breach of contract, a really weird tort called civil extortion, which is not used very often, defamation and false light and breach of contract, tortious interference with contract. And I would say backing up, know, I think Baldoni’s team did a great job on the PR, but where the rubber meets the road, there was sizzle and no steak. So their claims were just not, not held up.

I mean, it was, I would say a case of sloppy drafting where they did not link facts to the claims they were making. And they, they kind of missed the big tide that has shifted after the Me Too movement, which is that victims or purported victims of sexual misconduct have a lot of

protections and there are lots of processes that are designed to afford them the right to be heard. And so sort of the fundamental body blow to the Baldoni case was that Blake Lively’s claims her complaint and her communications with the press were all protected because she was complaining of sexual harassment and sexual misconduct. And in California, there’s specific laws on that. So

you know, that was really, like I said, the body blow to the whole thing. And I think that his lawyers kind of missed the mark in realizing that the world is different post Me Too.

Anne Marie (03:48)

one

those things that lawyers and comms people have to get on the same page about from the outset. And you and I have talked about this a hundred times behind the scenes and now probably at least a few times within the course of Reputation Nation, too. But if you do not have an aligned objective and then a strategy that fits both the legal side of the house and the communication side of the house and they’re working together, you’re ultimately probably not going to prevail. Now, I would perhaps argue that Baldoni’s team has done much

better in the press than Lively’s has done on the whole, despite Lively having the initial real, I think, know, haymaker, if you will, if we’re going to keep using boxing analogies, with the New York Times piece at the outset of this. But the longevity of the case is different than the initial gotten a little bit boring, dare I say, with the exception of some potential celebrity involvement.

Stacy (04:44)

Yeah, I mean, I think where we’re getting into and I wonder if the public has sort of legal fatigue because all of this is motions and opinions and you know, it just is much more in the legal minutia about how parties resolve disputes in court. It’s not sexy. It’s not page six and TMZ and timelines that are on the internet. So I agree, you know, the starting

point has to be aligned. will say, I love your feedback here. mean, he was backed into a corner. She’s got receipts. had those text messages, I think are quite persuasive. I thought Friedman did an excellent job with the website and the timeline and then the counter punch, even if he was not successful ultimately with the...

a counter suit, it did give a new platform for him to spin a narrative. I’m sure that’s a tactic that you’ve seen in your travel.

Anne Marie (05:41)

I agree. think if I was looking at my own beliefs about Justin Baldoni and Blake Lively at the beginning of this to where they’re at now, when I read the New York Times piece I thought, well this guy is in trouble. And then when we saw

Text messages that were, you the context around the original receipts that we saw. And then we saw some of the additional things that his team put out the, their litigation website and a few other pieces of collateral along the way. ultimately thought.

guy might not be my favorite person, but I don’t think he did all of the things that were alleged in the initial complaint. if you’re trying to maintain a reputation and be able to continue to do business, that may be the best outcome you can hope for. And I think that’s a practical thing for folks to consider in crisis. Winning a lawsuit might not be the ultimate win in what you’re seeking. It would be nice at $400 million judgment. Sure. Who doesn’t want that? But if you still can maintain some credibility and you’ve

clawed back perhaps this perception that you’re the bad guy.

Stacy (06:47)

or a sexual predator.

Anne Marie (06:49)

Yeah, exactly. You move out of the villain construct and the villain victim vindicator, that’s a good thing. So I do think that his lawyers from the risk management side of things on the PR front did a great job. And his legal spokesperson was his lawyer and I can’t speak to his credibility in the courtroom, but if you’ve got somebody that can credibly defend you in the court of public opinion, there is value in that. So to say that it’s a loss through and through, I don’t think that’s the case.

Stacy (07:18)

Yeah.

Anne Marie (07:19)

where I’m at now is the, are at the fatigue point and the legal maneuvering, as you and I know, we can do our best to make it interesting to people in the world. But man, trying to take a judge’s decision that cites case law through and through and, you know, really sounds like legalese and make it a win or a loss. Sure, you might get a few stories out of it, a little bit of a rise, but it really doesn’t advance the narrative in a meaningful way unless

the judge gives you some enormous nugget of wisdom in their decision that you can use. And they are gonna be in this procedural phase for a while, where discovery happens, depositions happen. And ⁓ generally that’s fairly boring, depending on who’s on your potential deposition list.

Stacy (08:05)

Well, I know you sort of teased, you know, statements and how to make legal filings interesting or newsworthy. And I know I’m going to tease right now, we’re going to do a little bit of live editing of some of the statements that were issued, but you’re not wrong. And that is certainly how you and I have worked together and how in-house lawyers, law firm lawyers work with comms all the time is

how to tell the story because the filings, the way that you portray something to a judge is very different than the way that you try to persuade the public. I wholeheartedly agree. mean, Baldoni, first of all, no one had any idea who this dude was before this case. when they first heard about it, they thought he was a dirt bag. And now, you know, I was just talking with some friends over the weekend about it and they’re still team.

Justin so, you know despite the wins that the court has delivered There is a perception that he’s the underdog and was was bullied by Blake and Ryan Reynolds

Anne Marie (09:04)

I’m glad you brought that up because reputation baseline is something that we think a lot about because generally the starting point for the characters in our crises are never the same. So are you a big corporation that people love the product that you make because it’s you know in their house they see it every day their kids love it or are you some you know widget that goes into that product that nobody knows about or do you you know do you make missiles or do you make tide? Like there are so many things that impact that

at on the corporate level and in the personality game in terms of celebrities, they’re all brands and people you know have this belief whether it’s justified or not about who Blake Lively is, who Ryan Reynolds is, what their sort of combination as a couple, their impact on Hollywood, the things that they’ve done and then there’s this guy that nobody really knew the name of until

this film came about. So you’ve got two very different reputation baselines and if you’re thinking about it like the scales of justice, there’s a direct inverse relationship where one goes up, one goes down and we saw that like directly at play. Where Lively I think started further from the top, it’s now evened out or maybe flipped in Baldoni’s favor.

Stacy (10:20)

That was the sense I got from the conversation I had this weekend. And again, as a lawyer, I look at facts. so to see that the judge in the motion to dismiss, which again is to me is a high bar to get those to me. That was a sign that the Baldoni narrative was just that just a narrative, but folks are really dug in because of the effective job that his team has done in painting a different picture. So.

You can win one place and not another. The other thing I wanted to mention, know, winning a lawsuit is a marathon, you know, and especially compared to today’s quick, you know, immediate tick tocky type of media consumption. You know, this case, you know, by all accounts is moving on quite a quick, a fast clip, but we’re, not even a year in and there’s still a ton to do. Whereas people have already moved on.

Anne Marie (11:16)

I think that’s the challenge when it comes to celebrity cases versus corporate cases. think most

corporate entities or large organizations that enter into a lawsuit do it knowing that they’re in it for the long haul and they ultimately want the legal outcome. That being said, they’re happy to take some wins in the court of public opinion along the way, but they know that it will be episodic. I think for celebrities, that’s different because they’re used to this sort of constant drum beat around the good that they’re doing, the thing that they’re putting out in the world. They want that attention. And this gets back to the age-old question of is all press.

good press and when it comes to the corporate side of things I would generally say no. In the celebrity realm if your business is having your name in the news and people are thinking about you in your top of mind maybe so.

which I’m guessing they’re probably having fatigue with their own case too, thinking that it would be wrapped up quickly or it would force somebody into some sort of settlement and then they could win and move on. This makes me think about was this a publicity stunt? We had a conversation at some juncture about the sort Machiavellian nature of did they hatch this plan to try and get more folks to see their movies? And I do think there’s reason enough to think that that’s possibility.

given the players involved and what we’re seeing here.

Stacy (12:37)

Well, I want to talk, you know, again, we kind of tease the statement, you know, but the dismissal of Baldoni’s case is a significant development. And I’m curious about your take on how you think Lively’s team should have or should be using that, that event to refresh her brand. Because I think as we’ve both just agreed, she sort of got bruised through this whole ordeal.

Anne Marie (13:03)

very tricky place to be for her. And I think there’s a lot of ways you can go and most of them are likely going to be criticized as too little, too late, not enough. And I sort of hate that those tropes are likely to be what we’ve seen. I will say that Lively has been doing some brand building in some of her companies that don’t have names attached to her. I think that was probably smart to have those things moving. I think what is telling to me is

much she really digs in on the victim narrative versus the I’m moving on narrative. And if it were me, I would be attempting to look forward wholly and not really repeating the negative, if you will. And I hate to say being a victim as being a negative, but there’s questions of whether or not her victimhood is warranted to the extent of which from her initial claim to where it became the counterclaim. for her, it’s a

It’s a get back to business moment in my mind. And I think the more she can put distance and space between the entire movie, the entire Baldoni situation and yeah. Exactly. And getting people’s lives again in the way they were used to seeing her. think that’s important. I do think from a framing perspective, the it girl moment.

Stacy (14:12)

Turn the page already.

Anne Marie (14:24)

is probably not the right one to jump back into. It needs to be more of the behind the scenes, I’m a workhorse, I’m not a show pony, because I think in Hollywood we’ve seen that be a narrative that is tough to recover from. As a woman in business, I hate that that’s something that is an unfortunate default negative against her in this case. You is she a difficult personality to work with? That sort of thing. She’s gonna have to overcome that.

Stacy (14:50)

Yeah. Well, and again, we’re sort of teasing kind of her framing around it. And I want to can’t wait to get to looking at her statement. But one thing, you know, the I wanted a development I think we should talk about is her motion for attorney’s fees and damages following the motion to dismiss win, which this is a new thing. This is a new California has a new relatively new statute that protects victims or purported victims of sexual misconduct.

to file lawsuits and it’s kind of a kind of a counterpunch to those defamation suits exactly like the Baldoni case. I think in one of the statements, her lawyers called it sort of an own goal that Baldoni’s team just like walked right into this punch. Not, I don’t know if they didn’t do the research or thought they were going to just, you know, kick the can and maybe not be held accountable for her trying to turn the page or whatever we think she should be doing.

Attorneys fees and damages for her win is maybe not the best way to do that.

Anne Marie (15:53)

No, I have one question that comes to mind with this particular statute and it’s not something that folks can do everywhere it is. I think California specific. Does that run on its own track as a sort of separate?

piece to the other cases or does that happen as like an addendum to the current cases? I ask that because how much of the things that have been put out in court already could be relitigated in this from a narrative perspective while they’re seeking attorney’s fees? That would be the only pro I see of that road, but I don’t know if that’s a possibility.

Stacy (16:24)

Well,

so the motion and it’s the weaponized defamation lawsuits act of 2023 in California, that motion is available. That cause of action is available because of the motion to dismiss win. So it’s a motion within the larger case to the extent. mean, she’s got to have evidence to support that claim. But again, the judge’s order is

pretty much exhibit a that she, you know, was victimized by this. This is a retaliatory lawsuit. So it’s going to be quite interesting, but in terms of the comms side of it and what it does for her reputation, from my perspective, I think it puts her in a sticky position because she did win. She was vindicated, but it sort of makes her look greedy or punitive. But at the same time, he was trying to shut her down with, with the defamation lawsuit. So it’s.

exactly textbook the conduct that that 2023 law was passed to address.

Anne Marie (17:26)

it would be interesting particularly given her statement that

You know, she’s lucky that she has the resources to fight back. Now, if I was seeking attorney’s fees and I was going to potentially donate them all to some sort of nonprofit that helps others fight that, I could maybe see that, but that wasn’t a part of the conversation and doing it. And listen, if you’re looking for a narrative win, you are going to make hay out of that at the beginning. And that didn’t happen. I mean, maybe that’s still to come. Listen, it is expensive. Whether you have Ryan Reynolds movie money or Rob McElhenney movie money,

a joke that the two of them make in their show about the soccer team in Wrexham is, you know, they’re on two different stratospheres. You still don’t want to pay for frivolous lawsuits. I get that, but the optics of it are not great. Lively’s team put out two statements. The first was from her and it said, like so many others, I felt the pain of a retaliatory lawsuit, including the manufactured shame that tries to break us.

While the suit against me was defeated, so many don’t have the resources to fight back. I am more resolved than ever to continue to stand for every woman’s right to have a voice in protecting themselves, including their safety, their integrity, their dignity, and their story. With love and gratitude for the many who stood by me, many of you I know, many of you I don’t know, but I will never stop appreciating or advocating for you.

Stacy (18:54)

I have to say at the, at the jump, I don’t know how many others there are that have felt the pain of a retaliatory lawsuit. I don’t, I mean, I know that this is a tactic, but if I was reading this as sort of a member of the public, I don’t know that I would be like, yeah. When I had that retaliatory lawsuit filed against me. So I don’t know who the message is to. So I’m curious about whether you feel as you know,

If you were in the room with her comms and legal team, what do think the conversation was around this?

Anne Marie (19:28)

not

particularly relatable in my mind. The subset of people that have experienced retaliatory lawsuits, probably slim. I do think retaliation is something that people understand more broadly. And I probably would have framed that a little bit differently. The thing I have a hard time with this statement is who’s the audience? I probably would have attempted to tighten this up a little bit more and make it more to the point about the situation at hand and your experience in that. I do understand why

She included some of the things towards the end about not wanting to stop advocating for these things. And maybe that was a tell that maybe that’s the tell I was looking for on what they’re doing on the attempt to get lawyers fees back. To me, this was kind of a wishy washy statement. That’s a lot of words that didn’t say a whole lot.

Stacy (20:16)

Yeah, I felt that too. Maybe she’s trying to position herself as sort of a victim’s advocate or, you know, champion of women who’ve experienced sexual misconduct. I mean, on the legal fees side, you know, not to be cynical, but this law and these provisions are designed to encourage people to file lawsuits. And plaintiffs’ lawyers love attorney’s fees provisions. and this statute actually...

provides for both punitive and trouble damages. Trouble damages means three times your damages. So this is not an uphill battle to get a lawyer to sign on to take your case. So that felt a little hollow as a more technical reader ⁓ of this. anyway, felt it was, if you’ve got to say something, this was probably, I agree with you too much and not a focused message.

Anne Marie (21:09)

flip side I think what her attorneys put out was pretty good.

Stacy (21:12)

Well, it’s I’d say just the facts now, so I’ll take that one today’s ruling represents a complete victory and total vindication as we have maintained from the beginning this quote $400 million lawsuit was baseless and the court recognized it for what it was We are eager to proceed to the next phase which includes pursuing attorneys fees trouble damages and punitive damages So basically I like that too. She’s they’re saying like we’re not letting up like, you know

It’s on basically.

Anne Marie (21:43)

Yeah, I mean, they’re saying that we’re not done with this fight, which I get. mean, listen, a legal statement versus the statement coming from the person at the center of the case, those are going to be two different things. I would bet that there were probably some flags raised on each side about the other. I would bet that Blake didn’t love how the lawyer’s statement was and that the lawyers didn’t love how, I think, detailed maybe Blake’s direct statement was. At the end of the day,

I don’t think any of these statements are damaging, which is part of the thing to consider probably most when you’re putting something out is, is this going to hurt you in some really direct way? I don’t think so. I don’t know that it advances the ball in any way, but it also doesn’t create an additional risk. I do think that the pursuing attorney’s fees, travel damages, and punitive damages is a little bit of a, I don’t want to say veiled threat. That’s not fair, but it is.

to the Baldoni side, we’re not done.

Stacy (22:44)

Yeah, we’re coming for you. I agree, Emory, that’s a brilliant suggestion that you had that if she had framed this around helping others using the money for a victim’s fund or something like that, that could be a nice rehab to this greedy, you know, mogul reputation. And, you know, I can’t help but think about Taylor Swift’s sexual assault case that she brought against that radio station DJ and

One of the biggest factors in that case in terms of her credibility was the fact that she was not seeking big money. She’s a dollar. She got a lot of credibility and allegiance from that. So Blake maybe should have taken a page from that playbook.

Anne Marie (23:26)

I think it really says that there’s an authenticity with Taylor Swift and I don’t want to purport to be a Swiftie. I don’t know all of her music. I don’t follow her the way others do. I think she is a very smart and savvy business woman, but I think she is a

decent, upstanding person first and foremost. And that’s what you get there. I think, you know, we can sit here in armchair quarterback. Was it good? Was it bad? Do we like them? Do we not as much as we want until we’re blue in face and we’re going to keep doing that. hope you’ll stick with us and listen. But the reality is, is when people are out in the public eye, the simplest question to consider was do people find you friendly and factual? And I think that it’s almost always yes with Taylor. Some people don’t like her, but it’s very difficult to say, well,

she’s not believable. Where I think there’s so much is this true, is this not true, he said, she said, they said, well that’s their interpretation, this is mine in this case. Where she sort of took all of that out, Taylor took all of that out in her case because it was not seeking anything for myself except for the fact that somebody that did something wrong should be held accountable.

Stacy (24:33)

Okay.

So we’re teasing Taylor and we know that’s another big development in this case that one of the sort of Baldoni weapons was that they were going to bring the world’s most famous pop star into deposition to talk about dragons and all the threats that were available and all the arms that that Lively had at her disposal to shut down Justin. So shall we talk about the Taylor deposition debacle?

Anne Marie (25:03)

What practical and ethical and reputational risks do lawyers have to consider before seeking high-profile celebrity depositions like Taylor Swift? And that’s coming from the side of those seeking the deposition. And then on the flip side of that, if you are Taylor’s lawyers, what are you thinking about to attempt to avoid keeping your client from having to do this?

Stacy (25:24)

Well, so just back to the nuts and bolts of legal practice, you know, you cannot pursue discovery that is burdensome or irrelevant to the case. And I think one of the challenges that the Baldoni crew had, and when we get to Taylor’s lawyer statements, we’ll see, and and lively statements on the depot, we’ll see that that Taylor was not, despite Baldoni’s attempts to make her a key figure here, she was not.

Or that was, that’s the response that Taylor was really just not a key figure here. So then you have a burden. I mean, and this is the case with any deposition. see this a lot with what we call apex depositions where folks are trying to depose the CEO or very senior officers of a company. The folks seeking to get that deposition have to show that that that deposition is likely to lead to the discovery of admissible evidence. When you have a figure and you don’t have facts that

really connect them to sort of the underlying dispute, is defamation, sexual harassment, et cetera. You know, they’re kind of swimming upstream. And then the other thing, and I, you know, hate to kind of bag on Brian Friedman, but they were not pursuing this diligently. If you read the court’s order, they sort of like had a phone call with Taylor’s lawyers, got an idea of her availability and assumed that that meant that she had agreed to show up.

And they sort of let the clock run. They were, you know, really not on it, so to speak with discovery and their other discovery responses are also delayed. And that is why this case is sort of floundering. Baldoni hasn’t even been deposed yet because they haven’t produced documents. So this is sort of a shock and awe with the $400 million lawsuit. you know, like I said, all sizzle, no steak.

Anne Marie (27:15)

Taylor Swift Garner’s headlines and that was I think their goal. I can’t imagine even if you know she is Blake Lively’s best friend and knows everything that occurred during this time how much of that would end up being material evidence and wouldn’t almost all of it be

hearsay. She wasn’t on set very often, if at all, I don’t think at all if I recall. She didn’t necessarily witness those things. She perhaps could speak to the distress that her friend may have been under, but also for Lively, if I were her lawyers I’d be fighting to keep every high-profile friend out too. I don’t know that how’s that beneficial except for to give Baldoni’s team wore a spectacle, which I think was ultimately what they were after. listen, Taylor Swift is one of the most well-resourced women in the world, and she is a businesswoman. And you better believe she’s got just about every law firm known to those of us in this world on retainer so that she’s got all the right people to fight all the right things. And even if you’re not the biggest name in the book, you’re going to fight being deposed. Anyway, nobody wants to do that. It’s not fun.

Stacy (28:21)

It is not fun. It is not fun having done it twice myself. So, you know, just big picture. I don’t think there’s anything special about the celebrity angle of it. Cause as I said, it does ethical obligations to pursue discovery. That’s likely to lead to admissible evidence is a requirement regardless. So you can’t use.

discovery as a tool of harassment. Courts don’t like that. On the flip side, they are usually quite generous and you know, because judges can get appealed if they exclude evidence. So it is again to me telling that the court didn’t find that there was a reason to give the Baldoni team, you know, more time to get their act together to get this depot done.

Anne Marie (29:04)

Taylor was nowhere near this and rightfully so. The Lively’s Lawyers statement on Taylor Swift’s deposition was as follows. Taylor Swift never set foot on the set of this movie. She was not involved in any casting or creative decisions. She did not score the film. She never saw an edit or made any notes on the film. She did not even see It Ends With Us until weeks after its public release and was traveling around the globe during 2023 and 2024, aligning the biggest tour in history. Given that her

involvement was licensing a song for the film, which 19 other artists also did. This document, Sapina, is designed to use Taylor Swift’s name to draw public interest by creating tabloid clickbait instead of focusing on the facts of the case.

Stacy (29:48)

I love that. I love it. I think that’s a mic drop statement

Anne Marie (29:52)

There’s nothing missing in that for me. I think the comparison to the other 19 songs that were licensed in the film is key too because why wouldn’t you call all of the artists that are similarly positioned then?

Stacy (30:05)

framing and and you know again if they had some piece of evidence that you know corroborated this theory that you know Taylor was helping to you know helping lively take over the film and that might have you might have had a different ruling but I don’t think they’ve got the goods.

Anne Marie (30:23)

Even if Blake was seen at three concerts in a row, then making the inference that perhaps she was on the plane with Taylor between shows, maybe? But also, I don’t know if anybody watched any of the Ares tour coverage. I don’t think Taylor’s spending a ton of time chatting with her friends between shows. You know, it’s one show after another and they’re marathon events.

Stacy (30:45)

Well, and by the way, she was recording another album in sweet while So the fact that she would have anything to do with this movie is they just had an uphill battle to show a connection And I don’t think they did it. So, you know Taylor’s lawyers also Wrote a statement which is I think short and sweet since the inception of this matter We have consistently maintained that my client has no material role in this action further My client did not agree to a deposition

But if she is forced into a deposition, we advised after first hearing about the deposition just three days ago that her schedule would accommodate the time required during the week of October 20th. If the parties were able to work out their disputes, we take no role in those disputes. So again, you know, the Freedman team was just not organized. They’re just, yeah, hey, we can get the most busy pop star to come sit for a deposition, you know, on three days notice. What?

Like that is just really sloppy.

Anne Marie (31:46)

In terms of the statement, I like just facts.

It reads snarky to me, which I always appreciate. And it is just that, like so nice of you to consider the fact that we would bend over backwards to accommodate you and your lawsuit that we have nothing to do with. If that was going to be the TLDR, that would be the way I would write it. They’re right. The Taylor piece is ridiculous. To an extent, I hate that we’re talking about it because she doesn’t deserve to be dragged into it. But I do think it’s a really important point for anybody considering getting into legal action, whether as individual.

or corporate that yes you can try and bring in the world but if the world doesn’t have a clear piece to the pie they’re not going to end up there and it’s probably only going to cost you time and money and potentially damage relationships which when you’re dealing with lawsuits about individuals is bound to happen. Yeah.

Stacy (32:40)

Yeah, that was well said. It’ll be interesting to see what happens if our interests, our fatigue continues, or if there’s another explosive moment in this case. I do think that it’s wearing thin. And so if I was advising either lively or Baldoni, it would be like, let’s move on. yeah, Marie, I wanted to circle back on this. The court issued a kind of death nail, final nail in the coffin on Justin’s case against Blake just October 27th.

So you might recall that the court granted ⁓ Blake’s motion to dismiss his case, his $400 million defamation case against her. people may not know this, but courts typically give parties the opportunity to amend their pleadings, to change their lawsuit. If you, if your case is dismissed, if there’s other facts, if you have other claims. And so the court did that in this matter and Justin’s team did not.

take another bite at the apple, just just the 27th. They that was sort of the court’s deadline and they did not. And I am very fascinated by that because his counterpunch was a great way for him to reset the narrative. And now a court has finally determined that he has no claim. So what do make of that?

Anne Marie (34:01)

effectively the case for him is over, which he really came out swinging with his counterpunch. is a real shift. Now understanding the risk calculus behind the scenes is something that, you know, we don’t necessarily have the privilege of knowing all of the information that’s on the table, but I’m surprised that they didn’t amend their comp- Maybe it’s a cut your losses moment, but as I understand it, and please correct me if I’m wrong, the Lively team has the potential to try and seek attorney’s fee.

Stacy (34:19)

I am too.

There is a motion for attorney’s fees that are statutory by the way, I don’t know what they do. I really don’t know what Justin’s next pivot is going to be.

Anne Marie (34:40)

And maybe it is a reputational calculus of I don’t want to be in this anymore. This is not valuable to my family, my career, my objectives. But it really does seem like a departure from where the case started. I just can’t imagine that they’re done. Both Justin’s team, himself, his lawyers have really dug in in a way that this is sort of a unsatisfying conclusion. I hate to say that, but it’s a little disappointing as an armchair quarterback.

Stacy (35:08)

Yeah, but if you don’t have the goods, you know, and I, we talked about this earlier, you know, again, there is a specific statute that protects plaintiffs who bring forward concerns and complaints about sexual harassment. It’s a, you know, specifically bars defamation claims. And I don’t know if his team didn’t know what we didn’t realize that or just said, Hey, I’ve got to get something out there and get some sort of reframing of the narrative.

Anne Marie (35:35)

That raises the something that happens early in a lot of reputational issues with principles of saying, want to respond, I want to do something. Doing something will often make you feel better in the moment, but isn’t strategically the best choice. ⁓ happens, those conversations happen in sort of every case. And it’s, I’m sure somebody probably raised some potential risk of this might not be something we win, but you go in with a different attitude too.

You’ve mentioned this multiple times in many of the cases we’ve talked about, where lawyers are willing to run the long game, whereas the principals at the center of a lawsuit, whether that’s an individual or a company, often want to see action and conclusion much faster. And I think that’s even more the case when you’re dealing with an individual versus a company. And if I’m either Justin or Blake’s team, I don’t want to be doing this. This is not beneficial to me. ⁓

in the long term. What those risks are, what those challenges are, we don’t need to outline again. There’s, there are many and ⁓ we probably don’t even know the interplay of all of them at this juncture in time for either Blake or Justin.

Stacy (36:47)

It’s going to be really interesting over the next, you know, six, seven months. The case goes to dry allegedly in March, 2026. you know, Justin may have some defenses, but he doesn’t have any affirmative claims at the moment. So somebody needs to decide it ends with us now.

That’s it for this episode of Reputation Nation. Thanks for joining us. We hope you found this episode useful. Have a crisis you want to dissect on a future episode? Connect with us on LinkedIn or email us at repnat at dezenhall.com.

Anne Marie (37:20)

to more about navigating a corporate crisis or high stakes lawfare situation, or want more hot takes from us, subscribe to Des Reads and our take at Desenhall.com. And be sure to check out Stacy’s The Legal Department podcast for more legal insights at LegalDepartmentPod.com. Thanks for listening. See you next time in The Reputation Nation.

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On this episode of Reputation Nation, Anne Marie Malecha and Stacy Bratcher take you straight into the heart of the Lively v. Baldoni showdown, focusing on the role of subpoenas, the impact stakeholder interests have on legal decisions, and the strategy behind each move in this ongoing dispute. They break down how tactical filings and evidence gathering set the tone for both courtroom proceedings and public perception, and leave their listeners with practical insights for anyone navigating legal and PR challenges in high stakes situations.

Lively v. Baldoni: Subpoenas, Stakeholders, & Legal Strategy Transcript

Anne Marie (00:02)

Welcome to Reputation Nation, the podcast that goes beyond the headlines to unpack corporate crises, legal battles, and the strategies that shape reputations. I’m Anne Marie Malecha, the CEO of Dezenhall Resources and crisis management expert.

Stacy (00:16)

And I’m Stacy Bratcher, a lawyer who’s battled crises on the front page and in the courtroom. And sometimes those crises have led me into the foxhole with Anne Marie. Whether you’re in the C-suite, the legal department, or are just curious about controversy, we’ve got you covered. Let’s get started.

Anne Marie (00:37)

Today we’re going to examine the Blake Lively vs. Justin Baldoni legal and public relations battle. This case is more than a celebrity feud. It’s a case in how to use lawsuits as PR weapons, how public opinion influences outcomes, and how perception is everything. For those not familiar with this case, here’s a 30 second date of play. Blake Lively and Justin Baldoni co-starred in the movie adaptation of It Ends With Us, a story centered on domestic violence.

The film was released in August 2024 with Lively facing significant online backlash for what many deemed tone deaf marketing. In December 2024, Lively filed a sexual harassment complaint with the California Civil Rights Department against Baldoni and a separate retaliation lawsuit in New York. This was accompanied by a New York Times expose alleging that Baldoni orchestrated a smear campaign.

against Lively to tarnish her reputation. Baldoni quickly responded by filing a libel lawsuit against the New York Times on December 31st, followed by another lawsuit against Lively, her husband Ryan Reynolds, and other defendants, including PR people, accusing them of extortion, defamation, and other claims. Over recent months, the high stakes legal battle between Justin Baldoni and Blake Lively continued to intensify with a trial date set for March 2026.

Today we’re putting Stacy Bratcher, our very own legal strategist and powerhouse litigator in the spotlight. We’re unpacking legal strategy behind the Blake Lively versus Justin Baldoni case, the power plays, the calculated risks, and how litigation becomes a weapon in a reputational war.

When you file lawsuits in cases like the Baldoni Lively case, is there a strategy behind the types of claims that are included, the number of claims? Do you put everything in there? Do you take a more targeted approach? Can you explain when you’re thinking about the strategic framing of a case on the legal side, what goes into that and sort of why maybe they made some of the choices they did here?

Stacy (02:43)

At the baseline, you need to make sure that you have facts and evidence to support claims. So that is sort of like table stakes. Lawyers have ethical duties to make sure that they are making true and accurate representations to the court. you know, whether and how many of those claims you can come up with is another story. I think one thing that is a strategic decision is the ordering of claims. You know, the complaint tells a story about what happened and the best complaints are really captivating. And so as you reveal the facts, as you address your claims, you should be thoughtful about which ones, what order. know, to the point of the kitchen sink complaint, because you can, especially here in California, you can come up with any number of different complaints. There’s many laws that people violate, but that’s not always successful. You know, that strategy can undermine your credibility with the court and with the public. So I absolutely think it’s a strategic decision, but the facts and evidence have to support it.

Anne Marie (03:46)

To that end, in the drafting process of the complaint, I assume you think about the audience in some ways as well, which on the court of public opinion side is sort of first line of thinking for us. Obviously you have to make sure it’s legal and it has the merits to stand up, but how much credence is given to a potential judge or a jury or the jurisdiction in which you’re filing the suit as you put the claims together?

Stacy (04:12)

Well, mean, the court is obvious for lawyers is your first audience. And I think that’s, Anne Marie, when we talk about, the relationship with comms and legal, that is one of those key tension points, the friction points, because the lawyers were officers of the court. want to make sure we have credible claims that we can support. And so for lawyers, typically the court is your first audience. And so you want to make sure you pass, you know, what they tell you in law school is the red face test. And from an in-house perspective, you think about your investors, you think about your board, your consumers, you think about if you’re a regulated company, you know, what do the regulators care about, because how you frame the claims you choose can have business implications as well. And so being very thoughtful about the claims that you bring and sort of the collateral impacts that a lawsuit can have on your business is really important.

Anne Marie (05:08)

The stakeholder matrix that you just explained is exactly where a lot of our work really comes together. Something that impacts an investor positively could negatively impact a regulator and vice versa. That’s where picking the best of bad options becomes very, very “fun” in these cases.

I want to talk about named parties in cases. So in Baldoni’s defamation suit, he names Lively and Ryan Reynolds. From a legal perspective, is that smart targeting to bring Ryan Reynolds into the fold or does that risk over reaching and diluting the focus of his defense.

Stacy (05:41)

I’m sure it was a very strategic decision. And I’m sure that team spent a lot of time talking about that. And I got to tell you, and I’m sure we agree here that looking at this whole mess, you know, it’s clear there’s emotions on both sides. And so it’s really hard to determine whether decisions were made strategically or because people had big feelings. ⁓ One of the things I note about Ryan Reynolds is that he’s really rich. And he has a lot of different businesses. I think it might have opened up more avenues for Baldoni to seek assets and, and exert pressure. So, I think that maybe that’s what won out or it also, as you add other parties gives you more, more witnesses, more discovery to seek. So, you know, from that standpoint and Brian Freeman, I think is a pretty aggressive lawyer. that, that kind of rings true to me.

Anne Marie (06:34)

It makes a lot of sense. There’s been some other company names and entities that have come into focus. Blake Lively has a company called Vanzan that filed a lawsuit that’s since been withdrawn, but that was done in an effort to subpoena the allegedly incriminating text message from Baldoni’s now former PR team without Lively’s name being attached. What’s your take on this strategy as part of a way to construct their legal narrative and the next steps of this case?

Stacy (07:04)

You know, it’s been maligned a little bit in the press, you know, the Daily Mail, I think called it shady or a sham. And I got to say, I think it was a really strategic move. I’ve done it myself in other cases, you know, she must, I presume that they had a kernel, they saw some evidence somewhere, either because the Jones folks, you know, leaked it or they just came across a piece of evidence and the best way to get the receipts is through a subpoena process. That is a court ordered process. Folks have to respond. So I think it was a really good move.

I mean, otherwise, you know, I think that it potentially compromised the Jones firm in their relationship with Baldoni and Wayfair. And, you know, you have the shield of a court process to respond. So I think it was a really smart strategic move on the lively team.

Anne Marie (07:57)

And I think the way the press is framing it now makes it very clear where that was pitched from. And I can see why they’re doing it as well. But I think we always think about what intelligence exists before you make a filing, before you get to the front end of a case where the public is going to be involved. And whether you call that opposition research or intelligence gathering, you want to know what’s there. And I think it’s brilliant. And they obviously got some things that they thought were helpful to them.

Stacy (08:25)

And you know, it’s funny, you were absolutely right. Someone came forward with some information that framed these stories. so it’s interesting to me, you know, that Blake is really, the lively team is really sort of villainized here. Yet the Freeman team, when they put up the litigation website and leaked all text messages and footage, et cetera, that was seen as truth telling. You know, it’s just a very interesting how, ⁓ and you know, this is your world, how media and communications really shaped.

the characters in these cases.

Anne Marie (08:56)

It’s all perception and perception isn’t just based on the information you put out. It’s also based on the moment too. And I think there’s this inherent skepticism of the starting party these days. part of that’s from the political atmosphere we find ourselves in. Part of it’s from this erosion of trust in quote legacy media. Some of it’s just people are bored and looking for a fight. ⁓ And you can’t necessarily gauge how something is going to be received. I think the sequencing of all of this is interesting. I also don’t think it’s a

an accident that the Vanzan suit information came out just ahead of the information about subpoenas being put forward to Hugh Jackman and Taylor Swift.

Stacy (09:36)

For sure. Nothing’s an accident. The other thing you mentioned legacy media. think the, you know, the YouTube culture that we have, the social media, the influencer, there’s such an importance on grabbing headlines and grabbing views that, you know, it just shapes the way these issues are framed because the sham shady, those are really attractive words that are going to get attention. so

I certainly look forward to your position on framing just in today’s new media world.

Anne Marie (10:07)

Unfortunately clickbait is...

is real. That term is incredibly legitimized in ways I wish was not the case, but no one reads an entire article anymore. And if you look at the way some of these more rag publications like Page Six and the Daily Mail put together their layout, you’ve got a huge headline, a small one or two sub line, then a big picture, and then there’s a little bit of text and then a bunch of ads and then another big picture and a little bit of text. So you’re really not getting a story and frankly, nobody wants to read that. Something

that we see in crises all the time is that people repost things that they didn’t watch the entire video of or read the entire article. And so then they end up attaching themselves to something that is different than what the headline is. So the headline really is what matters. And I’m sure that’s what the PR teams on both sides are really driving for.

Stacy (10:56)

Well, and that so that drives public opinion, right? TBD, how that affects the outcome. I really think that that’s going to be interesting to watch here because I think more it’s such a poignant case of all of these external forces driving.

the framing and narrative around dispute and courts. don’t know if trust is eroded in the courts. You would probably know better than me actually, but you know, courts are the place you’re supposed to go to hear the evidence and have a fair and final result. And so it’ll be interesting on whether the jurors, if I mean, if they’re ever in paneled and the judge, cetera, makes decisions based on kind of how the public framing has come out.

Anne Marie (11:42)

At Reputation Nation, we’re not just here to comment on the headlines. We’re here to give you real, actionable insight. That’s why we close every series with our Fast Four, four key takeaways you can apply when it’s time to litigate and communicate.

Define the objective. Be clear on what a win looks like. Whether it’s a legal victory, reputational recovery, or public sympathy, without a clear goal, your strategy can become unfocused and counterproductive.

Stacy (12:09)

Understand the pitfalls. Before filing lawsuits or engaging in PR warfare, evaluate the risk thoroughly. Missteps in legal strategy or media manipulation can lead to backlash, loss of credibility, or unintended consequences.

Anne Marie (12:22)

Spin isn’t strategy. While sensational narratives may dominate headlines, real media relations requires transparency, consistency, and accountability. Avoid relying solely on leaks or selective storytelling to shape public opinion.

Stacy (12:36)

Balance legal and PR strategies. Collaboration between legal counsel and PR experts is essential to manage courtroom outcomes while protecting public image. A poorly coordinated approach can jeopardize both legal success and reputation recovery.

That’s it for this episode of Reputation Nation. Thanks for joining us. We hope you found this episode useful. Have a crisis you want to dissect on a future episode? Connect with us on LinkedIn or email us at RepNat@dezenhall.com.

Anne Marie (13:08)

Want to learn more about navigating a corporate crisis or high stakes lawfare situation, or want more hot takes from us? Subscribe to Des Reads and our take at Desenhall.com. And be sure to check out Stacy’s The Legal Department podcast for more legal insights at LegalDepartmentPod.com. Thanks for listening. See you next time in the Reputation Nation.

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Reputation Nation hosts Anne Marie Malecha and Stacy Bratcher return for part 2 of the Blake Lively vs. Justin Baldoni series with defamation expert Joe Meadows to explore how lawsuits, leaks, and “receipts” collide in court and the media. From the timing of administrative complaints to the strategic use of litigation websites and selective disclosures, this episode examines how courtroom tactics and crisis PR intertwine when public perception often decides the outcome long before a verdict does. This episode provides practical insights into managing reputational risk, aligning legal and communications strategies, and navigating crises where every move matters.

Lively v. Baldoni: Lawsuits, Leaks, and Receipts with Defamation Expert Joe Meadows Transcript:

Anne Marie:

Welcome to Reputation Nation, the podcast that goes beyond the headlines to unpack corporate crises, legal battles, and the strategies that shape reputations. I’m Anne Marie Malecha the CEO of Dezenhall Resources and crisis management expert.

Stacy:

And I’m Stacy Bratcher, a lawyer who’s battled crises on the front page and in the courtroom. And sometimes those crises have led me into the foxhole with Anne Marie. Whether you’re in the C-suite, the legal department, or are just curious about controversy, we’ve got you covered. Let’s get started.

Anne Marie:

Today we’re going to examine the Blake Lively vs. Justin Baldoni legal and public relations battle. This case is more than a celebrity feud. It’s a case in how to use lawsuits as PR weapons, how public opinion influences outcomes, and how perception is everything.

Stacy:

Joe Meadows is our guest today. He’s a litigation partner at Gordon Reese, a former DOJ trial attorney. His practice focuses on business and contract disputes, defamation, intellectual property issues, cyber attacks, and privacy matters. Joe is the author of The Law of Defamation in Virginia, a frequent lecturer, writer and commentator on defamation and host of the Defamation Download Podcast. Hi, Joe, how are you?

Joe:

Good, Hi Stacy, Hi Anne Marie.

Anne Marie:

Thanks for joining us.

Why would the Lively Camp file the administrative complaint rather go straight to filing a civil suit?

Joe:

Well, it depends on the claim. And in this case, she had an employment based claim where the California courts had the jurisdiction. she had to essentially find out, file an administrative claim with the California agency, have them look at it, potentially investigate it, potentially even prosecute the claim on her behalf or the agency could have decided to dismiss the claim or in this case, I believe they gave her a right to sue letter and she then had the right to file her claim in court. If she filed her claim in court without going through the administrative process, then that would have been a defense that the other side could have raised and had the case dismissed on a jurisdictional defense.

Stacy:

Joe, I think that’s an important fact that I think gets overlooked in all of the fanfare and sensationalism about this case because an independent agency did look into her claims and gave her a right to sue letter.

We don’t know the extent of that investigation if they interviewed people, if they just took the facts on the complaint as true. The other thing I think is important is that that’s signed under penalty of perjury. So, you know, again, there’s so much fanfare with the receipts and collateral evidence, but the, quote, legal filings that have been made in front of, you know, administrative agencies and courts are holding up.

Anne Marie:

Most people don’t understand the administrative process at all. And I do think that that was a leg up for her and having somebody else give some credence to the next steps that she undertook, particularly given in mind that they were going to be heavy in the court of public opinion with the New York Times and what came next. Everything for me in these types of cases, especially when I’m working on them, is what does a win look like? What’s the ultimate outcome that you want to see when engaging in high stakes lawfare? And I do think the administrative complaint was probably helpful to her and her team in that calculus. But, you know, her team lively, I assume they had a lot of conversations before they launched the administrative complaint and then steps thereafter. What calculus do you think they looked at before going down this road of the one to punch of the administrative complaint and then the New York Times piece?

Joe:

Well, I mean, anytime you’re a plaintiff in a lawsuit or you’re bringing a claim, that is a voluntary act.You don’t have to inject yourself into the court system and bring a claim and seek relief. You could do nothing. And I think the calculus was we have to do something. What is that going to be? And between Blake Lively, her legal team, her PR team, other people working with her, they did an analysis of the issues and decided we’re not going to go straight to PR and get our message out through the New York Times or some other media going do that. Plus, we’re going to do something on the legal front. And she believes that she was harmed in the employment context, that she has a right to a remedy in California. And that law says that you have to file an administrative claim first. And that’s what they did. Now, simply because she got a right to sue letter based on her filing under oath in California, I don’t know how much you can read into that and the merits of her claim.

First of all, it’s a requirement that she had to go to that process to sue. And I don’t know who at the agency looked at it and whether they looked at it from a deep dive or not. And maybe they said, well, you’ve checked all the boxes. You’re going to get the right to sue letter. Certainly you can make the other argument that if she had submitted something to the agency and it was defective in some way, it was missing something. They would have bounced that. So you can read into it that it wasn’t on its face, something that was defective.

But in terms of the strength of the case, I think that’s going to bear out in the court proceeding.

Anne Marie:

I think that’s a very interesting thing to consider that was it rubber stamped or was it really investigated? I don’t know that we’ll know that until the case goes to trial, if it goes to trial. Something that I’ve been thinking about a lot is Stacy and I talk about the PR legal continuum all the time. And essentially when you’re in these high stakes lawfare situations, it’s a negotiation between what to keep back, what to put forward, when to do all those things. Do you think that her team expected the blowback that they got after the New York Times and that they were prepared for that?

Joe:

I’m sure they did. I mean, these are very smart, sophisticated people. When you make a big move, whether it’s in the media or in the courtroom, you are looking at five steps ahead, what’s going to happen next? Like a chess game. And I’m sure that they thought of, how is Justin going to respond to this? And that was a factor in deciding to move forward, that they’ll deal with it.

I certainly agree with the first thing you said. There is always kind of a push and pull between the legal team and the PR team. And I would say, and you could probably comment on this as well, nine times out of 10, the lawyers are saying, do less, don’t do this, taking a conservative approach. And the PR, the media team, the crisis management folks, they’re on the flip side, which is fine because having the one extreme versus the other extreme, in the end, you’re going to get a good work product for the client.

Anne Marie:

I agree. I think it’s really important. Often as the crisis management firm that’s not a traditional PR person, I’m sort of in the middle. But the thing that I found interesting here and that I struggled to understand with the Lively Camp’s response to Baldoni’s counterpunch is they had all of the information that was going to go into the complaint from the PR person that left the Baldoni team and defected essentially to the lively team. You knew that those two text messages had the five text messages on the other side of them. Why choose to put out such a narrow scope knowing that the counterpunch was pretty significant if anybody took the time to read through the claim.

Stacy:

Yeah, Joe, you know, this is an area you and I probably overlap in a lot with how do you vet those, what the kids are calling receipts, but we call evidence. It is somewhat shocking as Anne Marie said that they kind of, you know, selected only certain of those texts. So what are your thoughts about that?

Joe:

Maybe the Blake Lively team didn’t have enough time to gather everything that they needed to do when they fired their first shot. And the case is going to take a long time as it goes along and there will be time to amend complaints and bring in new evidence. And it could be they made that calculus and they said, well, we know what he’s going to come back with with all this, these other messages, and we’ve got a response for that and we’ll deal with that at the right time. And maybe the right time is not right now.

Stacy:

Can I ask Joe, in your experience, you know, I would, especially with celebrities at this level, I would think it would be somewhat challenging to say like, Hey, give me your phone. Have you in your career had to, you know, extract text messages from clients or gather that type of evidence. I don’t know that her lawyers were equipped to get what they needed to, you know, sort of see the whole waterfront.

Joe:

Yeah, I’ve been involved in this many times and for the client, it’s super intrusive. But in any event, we have to take the phone. We have to take that phone, give it to a forensic investigator or a digital evidence vendor and have that vendor go through the entire phone and save the material on it. But from the client’s perspective, one, you’ve lost your phone for however long. Two, you know other people are looking at all your things on your phone. Three, you have to spend time working with the lawyers and the vendor to tell them which parts of the phone you use, what it might have on there, and how any of that is relevant to the matter at hand. It’s a little less intrusive now because a lot of this can be done online. Apps can be downloaded onto the phone, and then that app itself will do the preservation and downloading of the data that the vendor can use. still an intrusive process, but I guess slightly less.

Stacy:

But I can imagine, you know, as a lawyer representing a very high profile celebrity who has a celebrity husband and celebrity friends, etc, that there could be a they could try to negotiate a different way to access that information. I can’t imagine, you know, just just the Taylor texts just to, you know, kind of grab the lightning rod there. I mean, that Blake Lively phone is quite valuable. I also can’t even imagine her wanting to turn that over. So I wonder if there was some alternate way that the that the information was gathered.

Anne Marie:

Well, that brings me back to a point Joe made a few minutes ago about how you don’t always get all the information you need from your client upfront. As lawyers, you should be the box of the vault where everything should go. And as a crisis manager, I usually rely on the lawyers to say, all right, these are the things we really need to be thinking about and looking around corners on. But if your client doesn’t tell you, I can’t tell you how many cases I’ve worked on where you’re six months into a case and something new pops up. And sometimes it’s because it was concealed.

Sometimes it’s because it wasn’t known to the client and it’s another situation that arises. But that inability to know what you’re dealing with in the entire landscape, I think is the biggest challenge of any of these cases. And I can’t fault the lively lawyers for that in any way.

Joe:

I mean, trust but verify, right? And have I had clients that have told me things that I’ve been unable to verify? Absolutely. But you deal with it.

Stacy:

I just want to call that out because I do think that depending on the type of client you have, it may be challenging to really get the straight scoop. So I think it’s important for people to know this phone is going to go somewhere and all of your pictures, your texts, your DMs will be available to many people, including court reporters and the media. So you have to be really have a good gut to get through that, think.

Joe:

It’s an intrusive thing for both sides. My guess is from knowledge and experience that in celebrity cases, many times their interactions with legal team and maybe even PR crisis management team is not always direct. There are people in between. There are handlers, there are assistants, there are other counselors. Sometimes there are even lawyers who are not the litigators who are in between the celebrity and the litigation team. And in that way, it’s easier for the celebrity client to do and go about their life, notwithstanding the litigation, which is always a distraction. And it’s easier for the lawyers. They don’t have to be worried about asking certain questions and getting information from the celebrity client. They can do that through an intermediary.

Stacy:

You know, she’s not available. She’s shooting something. You know, they have a different life and different schedules than us. So when you were talking about the having to meet with forensics folks and lawyers, like they’re, they may not be meeting with Blake. So I think hamstrings that legal team.

Joe:

Yes.

Anne Marie:

The intermediaries have a duty to both protect their principle and also sort of be the buffer between. And that often changes their behavior. You don’t necessarily know if you’re getting the full story or you’re being spun a little bit. And I think most of us that have done this kind of work have a spidey sense at some point of you know, what you’re getting, but those layers can be difficult. And I’ve seen that really negatively impact celebrities that have taken on litigation claims because the people around them are yes people. And the lawyers get the information and evidence and say, I don’t know what you think you’re going to do here, but this is not going to bode well for you.

Joe:

100 percent agree. These, the filter between the client and the lawyer is not always a helpful filter in the end. I think, I think the most successful lawyers can be the ones that can break through that filter and work directly with the end client.

Stacy:

The other thing I want to note about this is, and especially when you’re in the pit with some of these rough and tumble plaintiff’s lawyers in other cases, is that while we all strive to have the highest ethics, once that evidence is out, you know, in discovery, you might not have an ethical colleague on the other side.

Once those Taylor Swift texts are in, you know, Brian Friedman’s hands, TBD, what’s done with them, which is, think, one of the reasons the lively camp is really pushed to, you know, have Friedman have to adhere to the rules of professional responsibility and try to get a protective order in those sorts of things.

So my goal is to help folks realize that we can puff our chest up and think we’ve got the best case. But when you’re in the trenches, it’s very invasive and you don’t know where your data could end up.

Anne Marie:

I want us to talk about defamation and why filing defamation happened here, why it’s important. think on the corporate side of things, we’re seeing more defamation cases filed than ever before. And I think people are taking some control of some of the things that are being put out that are wrong and damaging to their businesses. And you know, this is about sexual harassment at the start, but ultimately Baldoni’s team came back and filed a defamation claim against the New York Times. What’s the calculus of using defamation as a vehicle?

Joe:

For these celebrity cases and, and all the ones of the like, money is not probably the primary goal. What is a primary goal is to publicly refute what is being said about you in the public. And one of the best ways to do that is through an actual lawsuit. I mean, one, you can do it through the media, but doing it in lawsuit kind of has a formality to it and a strength behind it that you might not get when you’re putting out your own press release.

I guess the other reason sometimes people bring defamation lawsuits is deterrence. You know, they want to show that if somebody is going to say falsehoods about them that injure their reputation, they’re not going to back down. They’re going to come after you.

Finally, I guess the attention, know, sometimes people are bringing defamation suits, you know, not only because they think they’ve been harmed, but maybe it’s going to help bring attention to their issues. And maybe even there’s some self-serving interest in getting some attention to themselves that they’re otherwise not getting. I’m not saying that happened here, but that has happened.

Anne Marie:

The attention seeking piece, obviously the media side of things is where I dwell and I think that this case, in my opinion, was made for a TV movie, if you will. And I think they’ve used that to, I think both sides have tried to use that to their advantage. What’s your feeling about the leaking of information outside of court filings and backgrounding of reporters and the process outside of what happens in the courtroom to be potentially advantageous to your ultimate legal goals?

Joe:

Well, I guess before I answer that, do you think it’s at all possible that this whole thing was engineered by both sides together?

Anne Marie:

I’m actually not against that theory at all because it has kept them all in the news in a way that in some ways is valuable. Now, my only counter to that is what I know about the Ryan Reynolds camp and their production camp. I think this is not looking good for them at the moment. So I’m very curious what end game they get to that would make it a net win for both sides. Because right now it really seems like there’s going to be a winner and a loser, but maybe I’m missing something.

Joe:

Well it seems wild. It also seems that there are some people that got caught in the crossfire of this engineered plan.

Anyway, you asked about information and getting things leaked out from a court case. Things get leaked out. Is that because one side or the other side is breaking the order or breaking the agreement and disclosing things to the public? Possibly. Could it be that this information is held by somebody who’s not covered by the confidentiality order and they have the right to disclose it to whomever they want to? That’s possible too. As to why things would be disclosed by one side or the other, I think it’s part of getting your narrative out there. And you want the public to see what these receipts are.

Sometimes it’s designed also to show the other side the strength of your case in terms of considering settlement. mean, you want to, through anything that you do in the litigation, you want to present to the other side that you have a strong case. Hey, this is what it’s going to look like if we go to trial and you’re going to lose. And, and leaking things or disclosing things to the public, if they in fact were leaked and seeing how the public reacts to that kind of gives you real time insight into how maybe potential jurors see the issues. And if that favors one side, then they have the upper hand in the leverage in terms of negotiations and so on.

Stacy:

Well, in this case, we have sort of the extreme, right? Brian Freeman, we’ll see how it plays in the actual litigation, but in terms of the public narrative and public sentiment about Baldoni, that litigation website, that timeline, it was, it’s brilliant. It’s a masterclass actually. And I think I’m curious, you know, he is showing the other side of his case. There’s no discovery. mean, there will be discovery following up on all this, all the receipts that are published. But I’m curious about your opinions about the litigation website and the timeline in this case.

Joe:

Yeah, I think done correctly and done safely. I think it can be an effective tool. It’s, it’s sort of like your own PR piece of what’s going on here and a form of education to the public and getting your message out there besides what’s going on in the courtroom.

I think it sometimes can be done in a way that could be harmful. I have seen press releases and whether it’s a press release, whether it is an article or some other form of commentary by a lawyer or a non-lawyer about a litigation lead to a defamation lawsuit in and of itself. Lawyers are not immune. Lawyers and PR people and crisis management people are not immune from defamation lawsuits. In fact, even in this Baldoni-Lightly case, I think there are PR people who aren’t named defendants in the lawsuit for their statements.

So you have to be really careful when you put out these timelines and these press releases. The safest thing to do, and maybe perhaps this is what’s being done here, is to make sure that you are fairly and accurately reporting on what’s going on in the court proceedings with the actual documents and not adding any extra commentary that didn’t come out in the court. That way, actually, if you are threatened with defamation, can rely on what’s called the Fair Report Privilege, which is pretty much universal in all 50 states.

Anne Marie:

I think the point you just made is really critical and something that anyone thinking about undertaking this kind of effort must remember that when you put that together, all of that information needs to exist in your legal filing because if it is opinion or conjecture, or goes beyond the scope of what’s there publicly, you do open yourself up to risk. And that is a risk as the consultants that are working on it. It’s a risk as those that are filing them and to sort of anyone else that uses that information as well.

Stacy:

The other thing about the litigation website, because I had a case where there was a litigation website, which was not actually put out by the other party. was put out by an affiliate of the other party, is it creates a whole other forum, a whole other circus that you’re managing. And it drives a lot of emotion and energy at the client because they’re feeling like they want to get something out. I’m sure Anne Marie’s had this where somebody issues a press release or does something and they want to counterpunch. as the lawyer, you’re sort of like, well, we can say whatever we want in the, in the public, but we still have to try to win this case and so you need to realize that balance between dealing with that instinct to fight back.and the long-term impact it might have on your case.

Anne Marie:

I mean, at the corporate level, these become emotional because nobody wants to be perceived as trashed or on the losing end of anything even if you’ve come out strong and you’ve got a really good case and you know what your strategy is and you know what your objective is, keeping people focused on that when someone else takes an action that by nature, human nature, you want to respond to, it’s really problematic. And I think that’s where a lot of these cases go sideways is if the legal team and the PR team are not coordinated and they’re not on the same page about, well, we’re going to let this one pass. It doesn’t make sense for us to respond or no, we need to dig into this because this is materially false or really impacts our strategy.

You’ve got to run your own race and it’s hard when you’re getting bombarded all the time. And I think the Baldoni team, in my opinion, has done a pretty good job of letting some of the noise be the noise, at least from what I’ve seen in more recent reports.

Joe:

Yeah, I think there certainly has to be a level of trust between the legal team and the crisis management PR team, because if there isn’t, coming from the perspective of the legal team, it’s a distraction to worry about what the PR crisis management team is doing. The lawyer wants to focus on the case, maybe spend a little time helping on the PR side. If the PR side is overtaking the activities in the case, that does become a distraction.

The lawyers don’t want to worry about whether or not the PR people are putting things out there that are false or that are different than what’s being said in the court case. So now you have an inconsistency between what is being presented by the PR people versus what is being presented by the legal team, and by the way, those inconsistencies could be attributed to the client because they’re agents of the client.

Anne Marie:

Something that I have come to learn is key is having language that is approved by legal ahead of time so that comms can move in a rapid manner because it is faster. We do have to move faster and sometimes react to things more quickly, but making sure that both the strategic considerations and the actual language being used are things that are pre-approved so that

I can move fast without saying, Stacy, Joe, let’s get on the phone. got to spend 20 minutes negotiating this next statement before we get anywhere. And we already missed the moment to address the issue we need to before it’s here and gone.

Stacy:

I still think, you know, all of this goes back to a core question, which we started with, which is why, you know, what is the end goal with these lawsuits? And, you know, and I’m sure Joe, in your career, you’ve done this as well. Like, we are the lawyers. We are focused on the legal result. You wanted to file a lawsuit. Our goal is win the lawsuit.

But the client is, you know, they have a larger goal. Like they just want this problem to go away. They want to win or whatever. And the legal process can take a long time. And so there is that tension. It’s an inherent tension between Anne Marie’s work, the client’s desires and the legal goals.

Joe:

Well, you know, the goals of either money, refuting what is publicly said out there, deterrence, bringing light to your side. Those obviously outweigh the burdens of getting involved in a court case in this situation for both sides because, you know, Ms. Lively didn’t have to bring her suit and Mr. Baldoni, he didn’t have to bring his counter suit either. But they weighed the burdens of being involved in a long and expensive litigation against not doing anything. And they decided they had to do something.

And speaking of the delays of litigation, that is something that a lot of clients don’t immediately appreciate. Civil court cases take a very long time. Clients may think that, well, I’m going to file this lawsuit and we’re going to get this effective relief and then it’s going to be done with and I can move on to other things. Rarely does it happen in short order. Most court cases, you have two, three, four years before you get a resolution. I don’t think clients quite appreciate that at the outset.

Stacy:

They definitely don’t. can tell you having managed several high profile strategic lawsuits that, you know, every time I would report there was just like, why is this still going on? Why does it take forever? And it’s, it’s, it’s completely out of your hands.

That’s why I keep going back to the why, you know, especially on the Lively side of things. I feel like Baldoni didn’t have a choice. Who even knew this guy before this whole kerfuffle, right? Like we didn’t even, I never heard of him. And now, you know, he’s been defamed as a me too, you know, as a sexual predator, apparently. And then, you know, he has no choice but to take the gloves off.

Joe:

Well, I didn’t know anything about this movie, but…

Stacy:

I had no desire to see the movie, but I watched it. But so by the way, I asked Anne Marie and her team, like, do we have data on if the movie has gotten more views or more popular because of this whole nightmare?

Anne Marie:

I watched it because of this. I wouldn’t have otherwise. It’s interesting. It was a book and it’s a two part series and the people that read the book and saw the movie didn’t like the movie. The people that didn’t read the book but saw the movie generally thought it was an interesting story and this was supposed to be a two film series.

So to go back to Joe’s potential theory of was this all orchestrated, maybe there is a quote settlement that is them coming together and rekindling all this and then having a second film and putting a bow on it. Now I’m not sure that I believe that, but never say never. I mean, we’ve seen people orchestrate PR stunts that are far more convoluted and creative than this.

But the thing that I come back to too on the why is they’re really dragging both of their own reputations through the mud in doing this. If it was orchestrated, I think there is a much more reasonable way to have approached it.

Stacy:

Yeah. I mean, Joe, in particular, like what else did Baldoni have? You know, I think that what’s interesting to me here is that this is one of the first, you know, counter punches to a MeToo case. You know, it was sort of starting in 2017 me too. You know, people are canceled. Like we don’t want to see Mario Batali. We don’t want to see any of these people again. Right. And here Baldoni is hitting back, which is just, you know, unheard of. So I’’m curious about your thoughts about that.

Joe:

It’s certainly a high profile example of pushing back on, on this type of allegation in the, in the MeToo era, but it’s not, it’s not the first time.

And in fact, there’s, there may even be more high profile examples of something like this, whether you’re a person on the left or whether you’re a person on the right, all you need to do is look at our current president. And when he was accused of similar type wrongdoing, he pushed back with his defamation lawsuit, Stormy Daniels. He kind of pushed back on her allegations and was able to have that case dismissed. And he actually was awarded a attorneys fees in that case for what happened.

But he also has been on the other end and E. Jean Carroll has been successful in her claims against him. But I think the concept of pushing back against somebody accusing you of wrongdoing, whether it’s sexual misconduct or something of the like, that has happened in the past before and will continue to happen. This is just one of those high profile instances and we’ll see how it shakes out in the end.

Anne Marie:

I think that raises an important point if you’re thinking about the calculus of taking on a case of any kind, but one particularly where there’s going to be media attention is you have to meet the moment. Five years ago, MeToo cases were very different than they are now, the culture around us is different. We’ve sort of had this cultural arc and we’re in the pendulum swing of where we started hard on one side, we’ve gone hard to the other and I think in the next couple of years, things will sort of level out and we’ll move on to whatever the next cultural and social movement of the day is.

But meeting the moment matters. And the idea that these cases happen in a vacuum is completely false. And I think one of the jobs that the three of us have in these types of situations is weighing all of that to say, yeah, the moment might be right for you to bring this case and have it be successful or maybe not. Let’s explore other options.

Joe:

Yeah, I think you’re exactly right. And your pendulum analogy is perfect for where we are right now because we certainly were on one, what do you call it, extreme or not. And now we’re on perhaps a different extreme. In the end, it’ll be somewhere in the middle, but there’s always a place for bringing claims in suit to defend what’s being said against you. And there’s a place for that outside of court in the context of what you guys do.

Anne Marie:

Do you think that this case ever makes it to trial? Well, odds are it doesn’t. Most lawsuits settle, certainly settle when you have sophisticated parties on both sides who weigh the cost benefit. And I don’t necessarily mean the money, but weigh the cost benefit of going the distance. This one, I’m not so sure because there are a lot of people involved, a lot of passionate people involved. Sometimes the passion overrides the kind of business sense of continuing to pursue the litigation. And while most cases, civil litigation does settle, there’s a track record of some fairly recent defamation cases that have gone the distance to trial. We’ve got the Johnny Depp case. I think Cardi B was involved in a defamation case. We’ve got the election workers against Giuliani, that was tried. We’ve got the Sandy Hook cases against Alex Jones. Those were tried.

A lot of things go into the mix as to whether or not something will end up going to trial. This one may have those features.

Stacy:

Lawyers always talk about, you know, the reputation of the lawyer on the other side or, you know, Joe’s known for blah, blah, blah, or Joe’s hard to deal with and sort of the, you know, demeanor and the tactics of the reputation of the other lawyer. It becomes such a big part, I think of the calculus in managing the case. And, you know, there’s a lot of flashy names that people know. I’m not going to list them here. And I think folks are perceived as, you know, being good lawyers because they’ve got big brands. But then when the lawyers are in their little, little caucus, a lot of times like, so-and-so is a terrible, terrible in court. They never win.

You know, I wonder about advice you might have for folks when they are choosing counsel in these type of cases.

Joe:

Flashy lawyers can be good. Flashy lawyers can be not so good. My view is experience matters. How many times has this lawyer handled that type of case? That’s number one. And number two, what is that lawyer’s reputation within the legal community? Because that means a lot too. Lawyers respect other lawyers who are good and are playing by the rules.

Whether a lawyer is on TV or not doesn’t really matter too much to me one way the other, frankly. And the same is true for whether or not a lawyer has a high win rate versus a lawyer that has a low win rate. There are lawyers, self-included, that have won cases that they should have lost. They’ve lost cases they should have won. Who the lawyer is is really not a, you know, maybe people disagree, in my opinion, not a determined factor.

The determined factor are the facts. The facts don’t change no matter who the lawyer is. Now, can a lawyer screw up a case and then it’s worth nothing? Yes, but assuming that there’s no negligence involved by a lawyer, the facts of the case and how those facts are weaved into a story are the most important.

Anne Marie:

Joe, is there anything else you would like to let the Reputation Nation listeners know about defamation or you or anything?

Joe:

I’m often asked, well, defamation cases, they are just on the rise. That may be the case, or it may just be that defamation cases are more visible now than they used to be. Simply because people are communicating more and spreading information about these types of cases online. What I will agree with is that given the expansion of online and internet speech, compared to say where it was 15 years ago, 20 years ago, that increases the rise of there being some reputational harm to someone who then may want to bring a defamation claim. But it also increases the odds of somebody being accused of defamation, whether they’ve been correctly accused or incorrectly accused.

And those things give rise to more of these issues that we’re talking about more today than we ever did before.

Stacy:

That’s it for this episode of Reputation Nation. Thanks for joining us. We hope you found this episode useful. Have a crisis you want to dissect on a future episode? Connect with us on LinkedIn or email us at RepNat@dezenhall.com.

Anne Marie:

Want to learn more about navigating a corporate crisis or high stakes lawfare situation? Or want more hot takes from us? Subscribe to Des Reads and our take at dezenhall.com

And be sure to check out Stacy’s The Legal Department podcast for more legal insights at LegalDepartmentPod.com. Thanks for listening. See you next time in the Reputation Nation.

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Reputation Nation hosts Anne Marie Malecha and Stacy Bratcher examine high stakes litigation through the Blake Lively v. Justin Baldoni case, exploring the critical relationship between legal strategy and crisis communications when every filing makes headlines and every statement goes viral. They break down why “no comment” is never neutral, crisis management as a containment discipline and the use of litigation websites as strategic first-strike tools to frame narratives. The episode covers the pressure to speak versus the benefits of staying quiet, publicity for different stakeholder types and practical advice on vetting crisis firms.

Lively v. Baldoni: Media Strategy, Missteps, & Reputational Fallout Transcript:

Anne Marie:

Stacy and I are excited to welcome you to the Reputation Nation. Today we’re kicking off a multi-episode series about the Blake Lively vs. Justin Baldoni legal and public relations battle. This case is more than a celebrity feud. It’s a case in how to use lawsuits as PR weapons, how public opinion influences outcomes, and how perception is everything. So why are a corporate lawyer and a crisis manager talking about this celebrity case? Because it’s a textbook example of high stakes lawfare how to do it, how not to do it, and we’re going to examine the ins and outs of this case, deconstructing it and providing actionable insights for both our corporate colleagues and celebrity gossip fans.

For those not familiar with this case, here’s a 30 second, TLDR on the state of play. Blake Lively and Justin Baldoni co-starred in the movie adaptation of It Ends With Us, a story centered on domestic violence. The film was released in August, 2024. with Lively facing significant online backlash for what many deemed tone deaf marketing. In December 2024, Lively filed a sexual harassment complaint with the California Civil Rights Department against Baldoni and a separate retaliation lawsuit in New York. This was accompanied by a New York Times expose alleging that Baldoni orchestrated a smear campaign against Lively to tarnish her reputation. Baldoni quickly responded by filing a libel lawsuit against the New York Times on December 31st, followed by another lawsuit against Lively, her husband, Ryan Reynolds, and other defendants, including PR people, accusing them of extortion, defamation, and other claims.

Over recent months, the high stakes legal battle between Justin Baldoni and Blake Lively continued to intensify with Baldoni fighting to keep his $400 million defamation lawsuit alive. A judge approved new protective measures in the case and Baldoni is expanding his claims to target Ryan Reynolds and the New York Times. There’s been significant media coverage, multiple documentary series release and very interesting legal maneuvering from both sides with a trial date set for March 2026.

Stacy:

Today I’m in the hot seat with Anne Marie Malecha, crisis comms expert and battle tested advisor to examine the media strategy behind the Blake Lively vs Justin Baldoni case. We’re talking strategic silence, shaping public perception and what it really takes to manage or mismanage a high stakes legal crisis. So Anne Marie, there is just this persistent tension, you know, in all the matters I’ve worked on, even the ones we’ve worked on very well together, there is a tension between the pressure to respond, to get your story out there, to push your narrative. And on the legal side, wanting to keep things very contained because you are in a more structured environment and anything you say can be used against you as sort of the tagline. And so I’m wondering if you could share a little bit about how you navigate the sort of don’t say a word, the lawyer’s telling you no comment and the client telling you, we’ve got to tell our story. Like, how do you split that difference?

Anne Marie:

I am the splitting of the difference if we’re gonna be really glib on that. So the interesting thing for everyone to consider in these situations is that crisis management is a containment discipline. Public relations is the exact opposite. Now when you’re dealing with the media, people inherently think it’s public relations. In this case, it’s not. We are trying to contain a message. most lawyers understand that if nothing is said, you cannot add any additional risk within the courtroom. If you don’t say anything, however, you can add risk in the court of public opinion with employees, with shareholders, with regulators, with all of those other stakeholders that we’ve discussed. And that is where the risk calculus of to say or not to say really comes into play.

If you say no comment, that is a comment. You are providing something on the record to say, I’m not addressing this. And I think worse than no comment is we can’t comment on active litigation. Sometimes-

Stacy:

You don’t like that?

Anne Marie:

Sometimes you have to say that, especially when you got a filing 20 minutes ago and you’ve already got a reporter calling you saying, what’s your reaction to that? Then the response is, we’ve received the filing, we’re reviewing it. We intend to preserve our ability to defend ourselves, but we haven’t had a chance to review this thoroughly or sort of whatever the framing is, but you don’t want to necessarily be dismissive.

Also part of it is you have to use the media in some capacity, whether you like it or not. They’re gonna take you along for a ride and do you want to be in the passenger seat being able to guide some of the navigation at all? Or do you wanna sit in the back seat and get thrown around with every turn and twist that comes? And that’s the way I look at framing how you engage with media specifically and the relationship between legal and public relations. And it is making sure that everything you do does layer up to the ultimate legal strategy because at the end of the day, it has to hold up in court. And some of the cases that we’ve been involved in, there have been stakeholders that we didn’t have full control over message discipline on because they decided to go off script or say, we’re gonna promise X and that’s not something that could be delivered on and that comes back to bite you.

So it’s making sure that you go as far as you can within the bounds of the strategy that you have, understanding that you’re not saying everything that you’d like to say because you might need to preserve the ability to drop that piece later. Or if you get into it, you’re opening up a line of questioning or discovery that the other side has that you don’t want them to have yet. And I think that’s where crisis management and communicators and legal teams have to be really honest with each other.

A lot of times there are lawyers that don’t want to share the legal strategy with the communications team. And I understand that leaks happen and that’s why having a really trusted team is critical. We keep our teams super small. I mean, think back to some of the war rooms we were in, there were four of us at most and we were working on, you know, huge issues.

So ensuring that there is that trust because if I can understand your legal strategy and you can understand the communications objectives, then we can create something that is cohesive and understand there will be give and take. There were times we didn’t talk to reporters. We completely stonewalled them because that was the right thing for us to be doing. A good crisis manager isn’t going to be opposed to that if there is a smart strategy around it.

Stacy:

Yeah, you know what’s interesting, I think in the Lively Baldoni case is that it’s not the normal, you know, reporters with questions and you know, there’s every time there’s a court appearance, there’s a story where the court calendar is driving content. What’s so fascinating to me is that this has become, I mean, just our podcast, there are dozens of other podcasts and articles and social all around this case. Like the comms part has a life of its own largely because I think, you know, the, the complaints have text messages and that Friedman litigation lawsuit, which are a website, which I think was really strategic. And I wanted to talk with you, Anne Marie, about those litigation websites. And you know, that’s an aggressive move. I don’t think Baldoni had a choice, but I wonder from the comms perspective. What are your thoughts on that? know, you’re in the foxhole.

Anne Marie:

We love litigation websites and we them all the time. It’s not always the right choice. It’s the best opportunities when you’re able to come out with it first. So if you’re the one that’s launching the site, because then you’ve got the first bite at the apple, you really have the framing there. Part of it is resource management. So a lot of court filings, you need different accounts with the courts to have access to. want reporters to be able to get them quickly. You also want to have a hub where all the information can live and they really serve as that.

What you’re also doing with them is taking all of the information that you put in the court and cherry picking it into the narrative and positioning and framing that you want to have. It’s all available in the full scale, hundreds of pages of filings that are there, but you’re calling out the pieces in a story format that both reporters and the public can have access to. You can always link back to it. You send people there and people get information based on how it’s added into the ecosystem through the internet.

Most people have Google alerts or you know search alerts for things that mention their name in it. So anytime something is added there that’s a natural benefit and they’re sort of creating this own pipeline for themselves. It’s also a way to sort of trash the other side without trashing the other side because you’ve got this all framed from one position.

In cases that are really complicated, we like them even more because it’s a way to make complex legal matters like bankruptcy or class actions become digestible to the audiences that are parties to the cases or might want to know more.

Stacy:

Yeah, that’s an angle I hadn’t thought about the resource management and using it to tell a story to those stakeholders. That’s really a smart move. I want to ask kind of an age old question, you know, and it’s sort of a tagline, you know, there’s no such thing as bad publicity. Having had my name in the paper, I don’t know if I agree with that, but is that the case? And what does this Baldoni suit tell us about that? I never watched that movie. I had no intention to watch. ends with us and, you know, this whole shit storm just got my attention and got our attention to work on this together and so I watched it so you know they at least got one set of eyeballs they wouldn’t have gotten so is there any such thing as bad publicity?

Anne Marie:

Make that two. And our team behind us, I think that probably makes four sets of eyeballs that might not have watched it. I think it depends on who the sort of party and play is, whether any press is bad press. So in the case of celebrities, they’re a commodity and the commodity they’re selling is based on other people consuming their content, whether that’s, you know, products that they’re hocking or movies that they’re in or TV shows they’re a part of, cetera. So any attention on their name that could potentially draw someone to them and the things they’re doing could have a net benefit in theory from a monetary value and a reputational value. I think for corporate parties, it is different, because the eyes that are on you are often significantly different than a celebrity, particularly the regulatory audience.

I worked on Capitol Hill for a long time and one of the places we went to find things we were gonna make an investigative priority of a committee was the media. And had it not been a headline we saw we wouldn’t have known that Company X had a food recall that impacted however many people in our district and perhaps that’s something we should look at. So it’s not a simple yes or no answer, unfortunately, which I know no one wants to hear, but I think in the Baldoni Lively case specifically, I have a difficult time seeing any press as being a net negative.

Stacy:

Yeah, agreed. Although, you know, for Baldoni, the initial punch, as we called it, was, was damaging, but, know, did you know his name before all this? did not. mean, yes, he got dropped by his agency, but I mean, I’m sure he’s had many other opportunities. He’s just been relevant in a way that he certainly wasn’t before all this.

Anne Marie:

I agree with that entirely and listen, I don’t know the behind the scenes for him, but I’m sure there were plenty of other agents that were willing to pick that up, especially in the climate that we’re in right now, sort of the defending, the defenseless, if you will. And I would bet he’s also probably trying to keep other projects quiet because any sort of indication that he’s doing well doesn’t benefit the claims they’re making in this case.

Stacy:

Well, I think that that is a really interesting question. He is in a better position after this whole situation. There’s just no two ways about it. And so to say he lost $400 million is just at that point is just laughable. And I think that that will be a very interesting line of discovery to see, you know, what, are up to now, Justin?

Anne Marie:

Right. I think the timing is something that I’ve thought a lot about and I’m sort of curious what some of these next steps are because if you are putting together another movie, those do have long timelines, but you don’t want to be in discovery forever because you’re having to pause these other activities that are, could be profitable to you in the future if you need to sort of preserve this position of I’m unable to work, I’m unable to do the thing that, you know, creates the economic engine for me and my family or my business.

Stacy:

Yeah, yeah, litigation is no fun. mean, people need to realize it.

Anne Marie:

It’s not, and it takes a real undertaking. It’s also an incredibly emotional process. There is the emotional component and the logical component, which you and I have talked about, that one day you’re really steeled to the fact that, this is the right thing to do. And six months later, a settlement looks pretty good because it is costly. It takes an emotional toll. That’s something that no lawyer, no crisis manager, no other advisor can prepare somebody for because you don’t know sort of when that dam is just gonna break of I’ve had enough.

Stacy:

Well, the other thing is that litigation is, as you said, a long tail. It sounds, you know, I’m going to lawyer up. I’m going to bury you. You know, you can think about scorched earth, all these sort of metaphors that go around the litigation process, but it is a slow roll. It is painful. You know, I think that what’s interesting to me from the Baldoni Lively situation is and to all of us is that it is a peek into this Hollywood world and, you know, depositions of the biggest stars in our nationwide or globally.

For day-to-day people, like the receipts, getting into your phone and your text messages, et cetera, it’s a very invasive process. And so you really do have to think carefully about going forward with that.

Anne Marie:

You’re inviting continual invasion because discovery isn’t just one and done. You do a deposition and you get more information and then that gives you an opportunity to say, well, I want to get into that now. So who do I go after for this? mean, getting to the discovery process for clients is both the most exciting and most sort of terrifying moment because you don’t know what you’re signing up for at that point. Like sure, there’s some timelines that you assume might be followed, but that can go on forever. And there are cases that we’ve worked on that it’s been decades and if you’re a multi-trillion dollar multinational, that’s a different proposition to sign up for than if you’re an individual person.

Stacy:

Yeah, well, let’s talk about, you know, the crisis management here and, you know, the receipts that came out through there. And I’m particularly interested. Do you think that there were missteps here, especially, you know, as we’re learning that there was another lawsuit that subpoenaed these records from Jones?

As you see with the receipts in the Baldoni-Lively case, that you can take a lot of things out of context very quickly and use it to your advantage or twist things. And that happens, you know, even if you’re not the one in the lawsuit, you are sort of on the side of it. And reporters often want to get records. And if you’re dealing with an issue that’s foible, they’ll find things. If they can try and file subpoenas, they will. You know, it’s a calculus for how you do business on the side of the Jones firm.

I can’t speak for what their contract looked like. I don’t know sort of the back end of that, but the double dealing is a tricky place to be to go from one side to the other and have that be how you operate. At the end of the day, relationships are everything in any business, but particularly in one where you’re being asked to hold someone’s hand and guide them through some of the most challenging things that they’re gonna face. So that’s pretty tricky. I think a lot of firms say they do crisis management and many big firms do, but the difference is I don’t prioritize my relationships with reporters or other parties more so than my clients. I’m never gonna trade that information or leak if it’s not strategic to the effort that we’re putting forward. I do strategically leak information at times and that’s a part of the job, but it’s not for my benefit, it’s for the ultimate goals of the case and the client.

Stacy:

So if you were advising somebody that was hiring a crisis firm, because I do think this is really, you know, and I always just, this is a Bratcher free advice, build relationships before you need them. You never want to be like, you know, having the reporter on the phone and then, my gosh, I’ve got to hurry up and find Anne Marie or another, another crisis firm to help me. But what is advice that you would give to companies or individuals that are looking to retain a crisis firm? How do you validate trust? How do you know that they’re going to let you know that there’s a subpoena like what advice do have for people who are shopping for crisis comms?

Anne Marie:

Like any referral you look for in business, go to trusted sources of people that you know you have a relationship with that you can ask, do you know someone that does this? That’s why most of our business is through word of mouth.

Most traditional PR firms have a crisis practice, but I’m of the mindset of someone parachuting in that doesn’t know anything about your business or how you operate at this sort of 11th hour doesn’t help. I think you need to ask your potential crisis manager some tough questions. And that’s not just have you worked on cases potentially like those we find ourselves in, but can you have an intelligent conversation that you feel comfortable with that person? And they give you tough advice.

Anybody that finds a crisis manager that is a yes person, I find to be a challenge. And we have long often been the second firm hired because a firm like that was hired first. And I don’t mean to disparage other people in the discipline, but you can’t tell people what they want to hear and expect they’re going to get a result that’s going to be the right result for them.

That’s just not how it works and some people don’t like that and interestingly celebrity clients are the ones that like it the least in my experience because they’re used to surrounding themselves with people that you know think the sun rises and shines out of them.

Stacy:

Yeah, that’s a tough business, tough business. I imagine it always looks exciting and sexy to be around somebody like that. And then you get into the orbit and you’re like, I don’t know. That’s a little harder than I thought.

Anne Marie:

There’s often disagreements when you’re putting together a crisis strategy and a legal strategy and that conversation and discourse is really critical to generally getting to the right strategy, the right way to handle these situations. But in your experience, Stacy, how do you navigate the who wins between comms and legal?

Stacy:

Well, I mean, let’s just say ultimately the client decides right I mean the legal objectives the PR and Reputational objectives, you know, the client has to decide what what’s their first and foremost priority? You never want to fight in front of the kids, right? And so the best relationships if there is a disagreement between legal incomes my advice is have that discussion outside of the client you want you really want your and legal team to sing from the same sheet of music for many reasons, you know, and if there is an issue of disagreement, frame it up in a constructive way, know, frame it up with curiosity.

The PR, this strategy, we really feel like we need to answer this question, but we understand that could have an impact on this claim that you’re bringing. What is your priority? And so I think that’s a more constructive way. I don’t really think there’s a who wins. I think it’s ultimately what is best for the client and what the client wants to do.

Anne Marie:

That is a great answer. You handled my framing of that question negatively so well, because it is, it’s not about winning and losing, it’s about getting the client the best outcome. And at the end of the day, whether you’re working with a general counsel that’s in-house at a company, or you’re working with outside counsel and outside comps people, it is the client’s ultimate decision maker to say, okay, we’re gonna go this path. You give them the options and you give them what the potential risks and rewards are of each. And I agree, fighting in front of the kids is never good. And I think the discourse is critical though.

You have to have those discussions because more often than not in my experience, when we’re trying to look at the other’s position from a different lens or take in these sort of challenging pieces of, I don’t think we should do it that way. Or maybe you have a point there is where you get to really all the scenario planning and all the potential pitfalls and all the potential successes. And that’s where the magic happens. Do it with decorum.

Stacy:

Yes, I’ll say, know, relationships is my big thing. you know, if I’ve had a bad experience with a firm, Tom’s firm, like, we fought all the time, they were, they didn’t understand, they didn’t have your curiosity to learn about the lawsuit. I’m not going to recommend them. I’m not going to, we’re not going to call them again. so, you know, how you work with people matters. Like, it’s not just, you know, it’s not a win. We have to collaborate. We have to work together. So

Anne Marie:

It’s the same with lawyers. There are a lot of lawyers I work with a lot and that’s great because I know their style. I know their sentiment, how they operate, how they treat their clients. At the end of the day, you’re right. It’s about the people and how we see others and it’s really funny in our business to think about the golden rule when people are usually at each other’s throats and something, but we can still be decent people along the way. And even if we’re giving you bad news or telling you tough information, it’s not being told to you because we don’t like you or think that it’s fun to do that. It’s the reality of the situation you face and handling that with some decency and delicacy is important.

Stacy:

That’s it for this episode of Reputation Nation. Thanks for joining us. We hope you found this episode useful. Have a crisis you want to dissect on a future episode? Connect with us on LinkedIn or email us at RepNat at dezenhall.com.

Anne Marie:

Want to learn more about navigating a corporate crisis or high stakes lawfare situation, or want more hot takes from us? Subscribe to Des Reads and our take at Desenhall.com. And be sure to check out Stacy’s The Legal Department podcast for more legal insights at LegalDepartmentPod.com.

Thanks for listening. See you next time in the Reputation Nation.

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Reputation Nation hosts Anne Marie Malecha and Stacy Bratcher examine how AI is reshaping crisis, regulatory, and reputation landscapes, spotlighting Penske Media’s antitrust lawsuit alleging Google’s AI Overviews siphon traffic from outlets like Rolling Stone and threaten digital media economics.

They break down a federal ruling that lets Particle Health’s antitrust claims proceed against Epic Systems, a pivotal test of alleged EMR market power and data-access gatekeeping with industry-wide implications for health data competition. The episode also unpacks Shein’s AI-generated model controversy as a cautionary tale on vendor oversight and human-in-the-loop approvals, then turns to the Workday hiring-bias case, where a rare collective action highlights algorithmic discrimination risks for employers at massive scale.

Actionable takeaways. Pressure-test AI vendor practices, add human review to AI workflows, and prepare legal-comms strategies now for antitrust and bias scrutiny in the AI gold rush era.

Fast Four: The Reality, Ethics, and Risks of AI Transcript

AMM (00:00)

Welcome to Reputation Nation Fast Four where Stacy and I will spend a few minutes on headlines that have caught our eye. In each Fast Four episode, we’ll dive into four timely stories where we’ll provide a quick summary of why it’s interesting to us in the Reputation Nation and leave you with an actionable insight or two. For Dez Reads fans, this is the audio visual version of Dez Reads, which was the brainchild of my colleague, Josh Culling, with a slant on what’s making headlines in the legal crisis, regulatory, and reputation realm.

Stacy (00:09)

This week’s Fast Four has a two letter through line, AI. Artificial intelligence may be changing the way we work, the technology we use and how we live our lives, but it’s also making an impact legally and reputationally. We may be in an AI gold rush, but it can and will be cooled by crisis. Let’s get into it.

AMM (00:29)

We’re kicking things off in the fast forward today with Rolling Stone Publishers Sues Google over AI summaries. This was in the Wall Street Journal. Penske Media Corporation, they’re the publisher of Rolling Stone, sued Google claiming that its AI generated summaries, which if you’re Googling anything you’re seeing now, unlawfully uses its journalism and has led to significant drop in traffic and revenue for its sites.

This lawsuit specifically challenges Google’s use of AI to create these summaries, arguing that they diminish user engagement with the original articles and threaten the future of digital media. And I’ll admit, I have looked at these summaries if I just needed quick info and I have moved on, not clicking on any of the sources that they come from, which I think is the problem.

You know, what I find really interesting about this particular suit with Penske and Google is that they filed an antitrust lawsuit, whereas others have filed class action cases when it comes to publishing rights. I think this is going to be one that maybe sets a tone, but I’m really curious your take on that.

Stacy (12:59)

Well, Anne Marie, companies engage in anti-competitive, you know, market controlling behavior all the time. And it is a business tactic. I was recently talking with an antitrust defense lawyer and he was telling me about a great result that he got for a client. A CEO gave him a high five with a $500 million settlement. And the defense lawyer was sort of, you know, shocked by that. And the CEO said, $500 million for a monopoly I had for 20 years is the sale of the century. So these tactics are, there’s a business reason behind them.

AMM (13:35)

Yeah, absolutely. I mean that gets to an artwork defining what your objective is. In so many litigation cases, the goal isn’t necessarily to get them thrown out. It’s to reduce the liability that you’re facing and to the point of the attorney that you talked about with their client.

$500 million was a fee that they were happy to pay because think of what the upside was on that. And for anybody that is potentially up against a company like a Google or in an antitrust monopoly situation, don’t expect regulators to do your bidding. And you may need to find other solutions to create revenue. And if you’re on the other side of that and you’re the one that is being the subject of potentially the antitrust litigation, If it works, it works.

Stacy

Well, headline number two is Particle Health versus Epic Systems. Judge rules Epic must face monopoly claims. This was in Stat News and this is a case that I’m following closely. For those of you not acquainted, Epic Systems is really the largest and most pervasive electronic medical record system in the country. And Particle Health is kind of an up and comer looking at building a payer platform and other information sharing services for Health care related entities. So a federal court found that Particle Health could maintain an antitrust case against Epic. This has an interesting story to it. A little over a year and a half ago, Particle Health was caught up in allegations that they misused protected health information as part of a health information exchange. Folks may not be aware, but there are these sort of collectives where providers and others that have a legitimate reason to access what’s called PHI can do so through a collective. And Particle Health got investigated by Cary Quality, which is one of those Health information exchanges for inappropriate use of PHI. And Epic is a very big member, an influential member in Cary quality and got Particle. They allege that that Particle was banned and had their access curtailed. So Particle responded. They’re represented by Quinn Emmanuel, which is a very aggressive law firm. They alleged antitrust against Epic, which I thought was a brilliant move. And just recently, the court held that that case could go forward, challenging epics near monopoly in the EMR field. So I’m watching this one, my popcorn is out. I could give folks a lot of tips on maintaining good business practices and not having a monopoly. There’s gonna be more that comes out in this case and I’m gonna be watching it closely, Anne Marie.

AMM (04:49)

I think we’re going to have a lot to talk about. And I think you raised the point of the fact that this is competitor on competitor violence. This didn’t start with this lawsuit. This is now the next piece in the corporate law fair that’s occurring. And I’m from Madison, Wisconsin, which is where Epic is based out of. So I have just a natural interest in what happens here. And I think this case is going to have some likes and really potentially set some serious precedent. And the company that’s doing this, Particle, is venture backed.

These are aggressive, maybe up and comers that have an investment they want to protect and they are the first, but they probably will not be the last.

Stacy (05:25)

Amen. I second that. So the actionable insight in the Particle versus Epic is when you’re up against it, against a big Goliath, like a Google, like an Epic, you need to think creatively about how you can get out of that corner. And I think that’s what we saw, what we’re seeing in the case that Particle brought against Epic. Actually, when the case was announced last summer in 2024, I was actually quite impressed because Particle, as I said earlier, was banned, was getting banned from these Health information exchanges, which basically, you know, obfuscated their whole business. having creative counsel, folks that can think outside the box. And as I think we’re going to see, Particle Health is opening the door for a lot more criticism against the Goliath of Epic Systems.

AMM (15:09)

I would guess that we’re going to see Particle Health out in the world in a bigger way throughout this process and that this lawsuit set the foundation for them to do that. And this is the exact kind of work that we like to do from a high stakes lawfare perspective. And Quinn Emanuel’s filing read just like a strategy plan. It’s going to be really great to see.

AMM (05:28)

All right, next up we have clothing manufacturer Shein pulls listing that used Luigi Mangione’s likeness to model a shirt. This was an NBC News headline. It was covered pretty broadly. So Shein is a company that sells clothes. They put up product photos all the time, all over their website and their social channels and their advertising. They used a model that appeared to look like Luigi Mangione, despite the fact he’s incarcerated and alleged of committing murder. It really sparked questions about both the marketing side of things, how that impacts the business overall, and also using AI. Shein’s reaction when called to the coin on this was that, you know, we use a third party vendor that uses AI and they put together a picture that just happened to look like this guy. You know, I’ve got two schools of thought here.

One, If I’m Shein and I’m looking to make headlines and I need to juice sales, no better way to get folks to go look at your website than to do something like this. That is a classic PR stunt. However, as a company, they have a lot of reputational challenges already. And I’m more inclined to think somebody didn’t talk to somebody else in the marketing department. And this came to be by accident. You know, they’re a Chinese company. They’re a fast fashion company.

They’ve got a decent amount of Washington issues. There’s a lot of regulatory and tariff conversation around things between China and the US right now. So my hope is that they are smart enough to fall into the category of we don’t want to actively do any harm. And this was just an unforced error, not something that was orchestrated. But for me, there’s a few things that this raises on the AI side of things.

these AI systems, these LLMs are being trained in part by what’s available on the internet. So if there’s a news story about an alleged murderer that is really getting a lot of traffic and that face is in all of the photos that are in Getty Images and elsewhere, that’s likely gonna be something that AI picks up on more so than my picture, which just happens to be in a few places on the internet. That’s gonna be a real challenge and I think it’s gonna be something that both the tech companies running these AI platforms need to look at and also anybody using AI generated images needs to be mindful of. And the other thing it raises for me is that companies need checks and balances that include humans before things go out. Particularly when it comes to marketing organizations need clear approval processes that include the human element that can discern something that they may have seen or just have a little spidey sense that says maybe we should look at this one more time.

What’s interesting here with Shein, and I think the actionable insight for anyone to take away is if you’re going to use AI, you still need human involvement in some capacity. In the marketing case, they need clear approval processes that include real people. So someone is looking at those images and going, maybe that doesn’t look quite right. For those using AI for efficiency’s sake, you still need to check work because AI is not in a place where it is human.

We cannot expect artificial intelligence to fully understand cultural flashpoints, particularly in real time. These LLMs are moving fast, but not fast enough to know that yesterday’s news is gonna be something that my marketing campaign needs to take into account.

Stacy (08:22)

The only thing I would add, Anne Marie, is that, you know, knowing the volume of clothing that Shein puts out, we talked about this before, it seems very challenging that if they’re going to use a different model for all of their pieces that they would be able to catch, even if they had a human in the loop. So your caution is well taken that folks need to really look closely at the vendors they’re using and what their AI tools are trained on.

And this is a great segue into the next headline, which is about another vendor of many companies called Workday. The headline is What the Workday Lawsuit Reveals About AI Bias and How to Prevent It. This was in Forbes. This is a very interesting case to me. It is a lawsuit that was brought by Derek Mobley, who is an African-American. He purports to be over 40 and have certain health issues.

He applied for more than 100 jobs at different employers, all who used the Workday hiring recruitment platform. And all of those applications were rejected. Some of them were rejected in the middle of the night. Some of them after, you know, an hour after he applied. And I don’t know how he got the goods, but he got information about the algorithm and was able to show commonality among, at least at this stage, the judge recently approved a collective action, which is a discrimination lawsuit, which is very rare. It is very difficult to show that there’s been uniform common practices that have discriminated against groups of people. AI tools are a great way to show that because they’re built on algorithms and trained on a certain data set.

So this is gonna be very interesting for those of you who may not be aware, Workday is a pervasive, widely used ERP system. And the company themselves said that they, in their court filings, said that 1.1 billion applications have been screened using their tool. So this is a class action of a magnitude we have not ever seen. So again, there’s more and more tools out there, and this Workday is a vendor for many employers. So similar to the Shein situation, you have vendors using tools and puts an incumbency on the companies that work with those vendors to ensure that they are using those tools fairly and that they’re designed fairly.

AMM (10:52)

in hiring, it’s, you post one job on LinkedIn and you get thousands of resumes. I guess the one advantage of LinkedIn is that you generally see, maybe it’s not an advantage, you see a photo. So you would, if you were using the Workday system and you would see that on LinkedIn and you don’t see any African-Americans, that might be a flag to you that something is wrong. I’m curious if it will become apparent throughout the course of this litigation of what folks saw on the hiring manager side versus the ERP itself of, I went in there and I saw a bunch of resumes and everybody’s name was Jane Smith. Or what comes to bear? Because you know that there will be a very interesting and probably long discovery process. Depositions there could be fascinating. And you and I came together initially on a class action that was pretty large. And this one’s going to blow that out of the water.

Stacy (11:41)

No question, no question. And to your point, this is a tip of the iceberg because this is a case against the vendor. But I would anticipate that the companies that used this tool will then be next in line. So it really is a call to action for folks to just really do your diligence. You know, we are, as we said at the outset, in an AI gold rush. Everyone is excited. People are moving fast. but sometimes you gotta go slow to go fast.

AMM (12:09)

Here’s your actionable insight on this one. If you use Workday at your organization, or if you don’t know if you use Workday at your organization and you’re in comms and legal, you need to find out. To start prepping for what may be next, because it is Workday that’s in the hot seat right now. But if we know anything about what class action litigation looks like, it’s always the downline companies next, and there is nothing stopping that. So look hard, look quickly, and get ready.

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In this Reputation Nation case study, Anne Marie Malecha and Stacy Bratcher examine the fallout from 23andMe’s data breach beyond the technical incident—focusing on board oversight, founder optics, and crisis communications that shaped public perception and legal exposure.

They discuss how a $30M class action paled in comparison to the erosion of trust, why blaming customers for password reuse backfired, and how rolling out MFA post-incident didn’t meaningfully restore credibility without transparent progress updates. The episode also explores directors’ fiduciary duties during a crisis, the implications of an entire board resigning, and the reputational and operational stakes when a founder seeks to buy back a company during bankruptcy.

Trust on Trial: Governance, Board Resignations, and Crisis Comms Lessons from 23andMe Episode Transcript

Stacy (00:00)

In this episode, we’re tapping into Anne Marie’s crisis expertise to break down how 23andMe’s response to a deeply personal data breach and the company’s overall downfall. We’ll explore how their actions in messaging, or lack thereof, worsen the damage, what lessons this holds for companies in high trust sectors, and why getting comms right is just as critical as getting the legal strategy right. Hey, Anne Marie, how are you?

AMM (00:23)

Good to be here today.

Stacy (00:25)

It’s super fun and 23andMe is sort of a use case in what not to do, think, from a comms and a legal standpoint. I want to just dig in a little bit about if you’re thinking about the whole issue, what was the first communications mistake that 23andMe made once the breach became public?

AMM (00:44)

I’d say the first mistake they made is not protecting their data, but the first mistake they made once the breach became public is blaming their consumers for poor data security and saying that the repeat use of passwords was the problem that created the data breach. One, that’s probably not true. Two, it’s almost impossible to know what is the cause of a data breach in such short order. And three,

In the villain-victim-vindicator construct that we see all of these crises play out, the last thing you want is who is going to inevitably be the villain to be blaming the victim for the issue and the kickoff of the crisis.

Stacy (01:25)

Yeah, I’m going to take a note here. No victim-blaming.

AMM (01:27)

No, no victim blaming. It doesn’t really matter what the type of crisis is. I think we talked a lot about no victim blaming in the cases of individuals versus institutions. And we saw a lot of that in the Me Too movement, but it still stands. Even if it is their fault, it doesn’t generally benefit you from a communications perspective or a legal one.

Stacy (01:50)

Yeah, absolutely. Well, a related question. You know, what is the right tone to take in the case of especially where there’s a breach involving something as sensitive as a breach of DNA data? How should a company show empathy and restore credibility?

AMM (02:06)

it’s really important that you don’t dig yourself in a deeper hole. So having some acknowledgement of the fact that that data that folks find to be very personal to them is out in the world requires an element of empathy. You’re not going to be able to come in and say, we’re so sorry, we did all the wrong things here. That’s going to negate your insurance coverage and cause other legal liability as you go along. But to have a little bit of a human touch and say something to the effect of you know, this is an unfortunate situation. We’re doing everything we possibly can to close off the breach and determine what the cause is. Just to have some element of we’re human, we made a mistake, we’re working on it, it’s going to help. You’re never going to please everyone. So, you know, it’s really easy for people to be the armchair quarterbacks and say, well, they got it totally wrong. I don’t generally like to do that. But the 23andMe initial communication was not great. They would have been better, honestly, not saying anything and waiting a few more hours or even days to get language in place that sounded like they gave any sort of modicum of a care.

Stacy (03:13)

Well, in my experience, we focused on some of the go forward like, yeah, this thing happened, but let’s turn the page. Let’s talk about how things are going to be better. Two factor authentication was rolled out after the breach, but not before. When you’re advising a company post incident, how do you turn late action into a moment of regained trust?

AMM (03:33)

You have to communicate progress. That’s one of the most important things in a crisis and one of those things that some companies struggle with in the sense of, if we say we’re doing something more, we’re bringing attention back to the problem we had at the outset. But if you’re not doing that, then the belief is you’re not doing anything at all. And unfortunately, people really like being told what’s going on in addition to being shown what’s going on. You have to do both today. You know, two factor authentication is great.

And the technology has evolved across the board since 23andMe started. And forgive me, I’m not a two-factor authentication expert, but my guess is that that wasn’t really commonplace when 23andMe started and then it became something that was. And if you’re protecting other people’s information in whatever form or fashion it is, you have a duty to do that. And if two-factor authentication was a technology that was being used in other places, then that’s part of 23andMe’s business model of continuing to improve their standards and systems. I don’t think it wins you a ton of favors to come out and say, okay, hey, we had this breach, look at what we’re doing now, but it is a baseline of which you need to do that and you need to communicate it. And you probably in the communication of that should have acknowledged to an extent that, you know, we’re glad we’re rolling this out now. This will help us avoid the problem we had in the past. You can’t say we should have done it sooner, but you know, to the extent you can have a tone attached to it of, know, we wish we would have been able to do this sooner, but these, you know, these technology onboardings are not a flip of a switch. These take months to plan in many cases. So they, they’re not going to gain back credibility overnight for doing any action of any kind because trust is earned.

Stacy (05:17)

Yeah, no, totally. And I want to go back to, you know, the first 24 hours you were talking earlier about how that’s kind of the pressure cooker. And, you know, I know from my own experience, you know, somebody is something’s happened or there’s a news article, somebody saying something about your company and, there’s a lot of pressure. We’ve got to get our story out. And, you know, that that isn’t always the best thing to shoot first or shoot back right away.

How do you advise leaders to strike that balance in the first 24 hours?

AMM (05:47)

You need to gather as much information as you can in the time that you have before you make a decision. Now that’s hours or minutes, not usually days anymore. And in the culture we live in where everybody’s on their phones, news is breaking faster than anyone knows what to do with. The breaking news moniker doesn’t really mean anything anymore. Everything is breaking news, but this is where strong leadership really comes to bear. And whether you have a dedicated crisis team in place or not, you do generally in an organization of any size have a leadership team of some sort and having the ability for that team to very quickly say, all right, this is what we know, how far can we go with what we can say and what are we able to do from an action perspective are kind of the recipe of the three things you want to have in hand as you go out with a statement.

You don’t want to be accused by the media of saying no comment. That does not help you. So being able to say something of we’re assessing this situation, we plan to come back and update you at X time is much better than saying nothing at all. If you can come out with a little bit more detailed information of we understand this is what the problem is, we’re working to address it as quickly as possible. Our focus is there instead of speaking with the media right now, we will come back and address our staff, colleagues, customers, other stakeholders, including the media in time. You used to be able to buy yourself a little bit more time before I think you had to put a statement out right away and that time window is shifting. However, there are times where it is worth waiting an extra hour because you know you’re going to get an additional piece of information rather than going out ahead of that and then having to correct or retract or shift.

And it’s a delicate balance. There is no perfect, if you do A, then B will happen, and C will happen. Or if these three things are the case, then here’s your formula. It is really situation dependent. And that’s where being able to make decisions quickly with limited information and understanding that you might have to deal with some additional fallout for whatever you put out in the first 24 hours is a part of crisis management.

Stacy (07:54)

Like in today’s day and age of like we are deluged with news you know how much attention like once that initial story breaks and you get out your we’re assessing it whatever I mean don’t people move on? it feels like sometimes the company gets like not everybody is paying that close attention you’re not that important like once the once the initial splash has happened.

What are the scenarios where those stories keep percolating?

AMM (08:24)

In most cases, the crises clients are facing, they’re paying the most attention to. That’s human nature, it’s happening to you. One of the things we do with our clients immediately is to start monitoring for what’s happening around us in these situations. If we’re engaged long before, we generally have that sort of monitoring happen, so you’ve got a real-time risk assessment as you’re going. If we’re engaged on the back end, that’s one of the first things we want to do because proportional response is everything you do not want to make your crisis front page news when it is, you know, page 10 of the city section. That’s an old reference for people that know what a physical paper looks like. But people aren’t paying attention to it in the same way you are, which is why often you really have to think about your audience and who matters most in a crisis. It’s going to be your employees. It’s going to be the people that have a direct touch to what your business is. So is that customers, clients, your supply chain, the neighbors around your building, if it’s a physical issue, those are the things that you want to take into account first and foremost, probably more so than the media. You may have to address them publicly. And sometimes the media is a useful tool to be able to say, hey, stay away from this area, it’s unsafe. Or we will have more information on where people can turn back in their food that’s been recalled or here’s the website to go to, etc.

So that’s something to think about but monitoring really matters. And I often have to be the one that says, all right, I’m looking at the chatter and you’re registering as like a 0.5 on a Richter scale, if you will. Let’s not make it bigger than it is. We talk about needing to communicate progress with crisis management as you go along. To that end, you also don’t want to tell

you know, all of the however, eight billion users on Twitter that exists now or X, some information when you could have sent an email to your 15,000-customer newsletter list. So segmenting audiences is really critical in a crisis too and understanding who’s in your universe and who really matters.

Stacy (10:30)

Yeah, let’s talk just a little more granularly about, you know, an internal audience is an audience that I think sometimes people forget. You get so focused on the story and the external, but you know, in my experience, employees can make up if there’s a void, they’ll fill it with whatever information or gossip or rumors they think they know. So, let’s talk about internal communications and how you approach that.

AMM (10:56)

There’s a phrase that all politics is local. And I think that’s something that applies in a crisis, particularly to employees, maybe vendors, sort of your inner ring of constituents of an organization. Your internal audience is probably the most important audience you have. Now, if you’re a publicly traded company and you have shareholders and you’re going to see an immediate drop in your stock price in a crisis, yes, that’s important too. And you need to address that. There’s regulatory bodies that might be important, but your internal audience

They can be for you, with you, and help you through, or they could be your, one of your motivated adversaries that you have to handle and address at every step along the way. It’s not always an either or. You probably have some sets of people that are really with you and some that are not, and so you have to manage that accordingly. But speaking to your audience that is the closest to the organization, I think is really important. To the end, that I think a lot of firms like ours are focused on having internal specific teams that can quickly get up to speed of how does a company generally talk to itself. You might have a crisis warning system where there’s a text message that goes out to everyone, or you may only communicate via an email once a week. Understanding how a team wants to hear from its company is critical and we really try and work to have our clients focus on their internal audiences so that there isn’t a vacuum created because there’s nothing anyone loves more than water cooler gossip. And if you don’t have something to say, someone will create a narrative for you.

Stacy (12:30)

No question. One of the things I wanted to ask you about is, know, there’s 23andMe in particular, you know you had the board resign en masse and the founder kind of rebuying, trying to take the company over herself. To what extent do you wish that boards and leadership, what would you like boards and leadership to understand before their next breach?

AMM (12:55)

You’re always picking between the best of bad options and the belief that there’s going to be some easy one and done solution that’s going to get everybody out of this quickly doesn’t exist. I have yet to see that except for if there becomes a bigger crisis somewhere, somewhere else that everyone else can pay attention to. Which listen, I’d rather be lucky than good. and that’s something to think about, but boards really need to realize that

They have a responsibility to ensure that there’s clear objective and direction in what you want the ultimate outcome of the crisis to be and make sure that everyone working within the team, both day-to-day management, the board itself, special committees that exist within the board, and any external advisors are rowing in the same direction because infighting in a crisis is very common. If you’ve got personalities that existed in times of peace, in a crisis they are times ten and you can’t have that. There just simply isn’t time for ego to be involved in the process and a board is one of the few places that can go to an executive and understand your concerns this is what’s in the best interest of the business and this is the way that we’re moving and boards often do have to exert a level of I’d say day-to-day administration that many of them don’t want to have because I think most folks that sit on corporate boards have done their time in the trenches of active management and prefer to have a more passive role, but in a crisis, the board is really important.

Stacy (14:22)

Can you share some perspective on the optics both publicly and internally when a founder steps down and then turns around and tries to buy the company back?

AMM (14:30)

I wish I knew more of the ins and outs of what was going on at 23andMe because generally if a founder steps down there’s good reason for it. And I would imagine that there was some serious clash among the management with the board, other executives. Founder syndrome is real. Founders have a very different view of what they’ve built and that’s fair. They’ve built something that has taken time, you know been a labor of love for most of them and if they don’t feel that it’s working well that’s a tactic. We’ve seen this happen with other companies some AI companies that are in the news these days. Buying it makes me really believe in it. Now, I’m not a particularly altruistic person being in my line of work, that’s a difficult thing to be.

So I would say the word ego comes to mind. I would imagine that this person doesn’t want to see the thing that they built fail and feels that perhaps they could turn it around. And maybe that’s true. We’ve certainly seen companies emerge from bankruptcy to become better, stronger, different, more agile organizations. And that might be a possibility, but It’s difficult as a founder if you’ve been labeled as part of the problem or part of the downfall to sort of come back from the ashes. You’ve got, you know, this former founder of WeWork who’s now got a venture fund and every story that mentions his new venture fund, you know, former founder of bankrupt WeWork is in each story.

Stacy (15:56)

Can his comms team help with that?

AMM (15:58)

They could but it’s true so you can’t tell a reporter to take it out. I think he’s done a pretty good job of reframing. I think one of the unfortunate challenges here is that you have a female executive and they’re held to a different standard in terms of the media as well. Ouch. Which is an unfortunate reality but one that she’ll have to think about as she tries to regain trust and potentially reshape a new organization if that ever comes to bear.

Stacy (16:23)

Yeah, I want to, want to, me, 23andMe, the crisis is about trust. And, you know, we talked on an earlier episode about, you know, DNA data being so personal and people having a certain expectation about how that’s going to be managed. And, you know, the data breach and the victim blaming all of that, you know, just, I think added fuel to this fire. And I’m wondering, you know, if you have thoughts about when trust is lost at this scale and when that’s such an important, I feel like a core part of a business like this, is recovery possible or does the brand just have to reboot start over?

AMM (17:04)

Recovery probably is possible because people’s memories are short, but what does the new company look like and how are you going to, as an organization, assure people that the same issues that happened in the past will not happen in the future? If you want to recover and you want to keep going, people are willing to often give you a second chance if they feel some of those assurances are there. And the phrase trust is earned is real. You can lose someone’s trust in an instant. Gaining it back takes time, effort, resources, and it’s also not a linear path. So every mistake that could be made in the course of regular business is going to be seen through a heightened lens when you’re in a recovery phase. Which means you’ve got to plan really well, you’ve got to execute really well, and there’s not a lot of room for error. Which leads me back to why would a founder really want to pursue that if they don’t feel something, if there’s an economic opportunity, an opportunity to innovate, change, etc, I wouldn’t take it on. You know, the founder of 23andMe obviously feels differently than I do about this, but...

Stacy (18:10)

She’s got 10 million DNA samples.

AMM (18:14)

and there is a value in having 10 million DNA samples. What exactly that value is unclear and how that value can be monetized. You know the other thing about trust is trust is a value judgment. It’s not what trust means to you and what trust means to me might be slightly different and people know it when it exists and they know it when it doesn’t. And so you’re trying to attack, with logic, an intangible feeling that people have about you. And if you think about elections, people will say, well, I just didn’t like that candidate. Doesn’t have anything to do with what they thought or what their platforms are. It’s a feeling. And unfortunately, trust, I think, in corporate executives can be similar. So there’s probably going to have to be both the exercise of trusting the executive and then trusting the company and the product. And that’s a multifaceted, multi-pronged effort that they’re going to have to undertake.

Stacy (19:04)

Yeah, not an overnight fix.

AMM (19:06)

At Reputation Nation, we’re not just here to comment on the headlines. We’re here to give you real actionable insight. That’s why we close every series with our fast four, four key takeaways you can apply when it’s time to litigate and communicate. 

Number one, deflection isn’t a defense. In a crisis, accountability builds trust. Deflection destroys it. If you have to deflect, know it’s a stall, not a long-term solution.

Stacy (19:28)

Number two, bankruptcy does not erase accountability. The court may clear the balance sheet, but the reputational debt remains.

AMM (19:35)

Number three, if data is the product, law has to be the foundation. The more personal the data, the more unforgiving the court of public opinion and the court of law may be.

Stacy (19:45)

Number four, Trust is the first thing to go and it’s the last thing to return. People won’t just question what you did. They will question everything you say next.

This episode of Reputation Nation features data privacy attorney Alya Sulaiman in a deep dive on the 23andMe breach—how a credential stuffing attack spread through opt-in features like DNA Relatives, why HIPAA didn’t apply, how the FTC and state attorneys general responded, and the governance, consent, and trust lessons leaders need now. The conversation connects legal obligations, product design choices, and communications strategy for high-sensitivity data incidents.

23andMe Data Breach: Legal, Privacy, & Reputation Fallout with Alya Sulaiman Episode Transcript

AMM (00:00)

We’re excited to welcome by Alya Sulaiman, Chief Compliance and Privacy Officer and Senior Vice President of Regulatory Affairs at Datavant. Alya is a recognized expert in healthcare data privacy, AI governance, and regulatory compliance.

Together with Alya, we’ll explore the fall out from 23andMe’s data breach which exposed the personal information of nearly 7 million users.

Stacy:

All right, so just jumping off here, I think what is kind of captivating about the 23andMe story is that it concerns genetic data that consumers or customers of the site have submitted. And there’s been a lot written and there’s curiosity around, well, why isn’t this protected by HIPAA? And what are the data privacy laws that protect this genetic information? And I thought it would be helpful to sort of set the table on where we are with a for-profit company and individuals voluntarily submitting their genetic data? 

Alya:

Yeah, it’s a great question. And I think one of the most common misconceptions about HIPAA for anyone who doesn’t live and breathe health information privacy in kind of traditional context is that it applies to data.

It does not apply to data. It applies to entities that meet certain requirements that handle health information. And when you look at the privacy laws that have sprung up across, you know, I think it’s close to 20 states and counting, as well as some of the proposals that have, you know, percolated up through the federal legislature, but haven’t actually landed.

You continue to see that focus on entities as a threshold requirement for whether or not a law applies. So, HIPAA applies to covered entities, primarily healthcare providers, health systems, health insurers, clearing houses for claims, and their business associates that serve and partner with them. 23andMe is none of these.

They are a direct-to-consumer company, Stacy. And as you mentioned, people are making a choice affirmatively to share data with 23andMe and use their services. It happens to be that the data 23andMe is collecting and analyzing and making available in digital form is health information, but that doesn’t mean it is protected health information under HIPAA. I think that is really shocking.

AMM (02:13)

I do think I agree. I was just thinking, you know the types of

companies that this information seems sort of similar to is almost like financial information. It’s protected in a way, but not the way HIPAA is like credit bureaus, social media companies, when you use your credit card, that sort of thing. I’m curious if in your mind how 23andMe fits into that versus sort of the healthcare ecosystem, which I think is where most general consumers sort of believe turning over 23andMe data sits as opposed to being more like putting in your credit card to buy something.

Alya (02:45)

Yeah, the good news is that it’s not a totally lawless environment out there. There are some rules that apply to any really direct to consumer company that handles particular types of identifiable information about individuals but also make statements to those individuals and the public about the safeguards and controls that they want to put in place to protect that data. So, for example, the Federal Trade Commission has the FTC Act, Section 5 of the FTC Act is really a main backstop for financial companies, for direct-to-consumer companies, for lots of companies doing things with health data that again, isn’t protected health information under HIPAA. And the idea there is that if you say you were going to do something, and you don’t do it, you could be held accountable under the FTC Act for engaging in unfair and deceptive trait practices. The FTC has in the past cracked down on companies for this, even health apps. And there are a couple more recent enforcement actions that have specifically had genetic data companies in the crosshairs.

I would say that FTC enforcement, that’s a pretty lengthy and involved kind of process to go from investigation to resolution. And that’s where I think you see states really stepping up and those state consumer protection laws are that kind of second layer and that combination of rules that apply that I think is really relevant here. And I know Stacy, you have some very interesting thoughts on how states stepped up in this particular scenario.

Stacy: 

 I mean, I am like chomping at the bit to talk about this because I think you have state attorneys general like out there in a way we haven’t seen before. You know, they put out notices giving consumers the step-by-step ways to opt out and get their data deleted. I wanted to ask you about that. We haven’t really seen that before. And I wanted to get your thoughts about, you know, I’m trying to see what the political connection is, but just your thoughts on AG’s activities here. 

Alya: 

And, you know, I mean, they’re absolutely when I when I start to think about the AG’s that that got involved proactively in the ways that you mentioned, there’s definitely a lean right politically. But I want to just emphasize what you said. This is almost unheard of for regulators to tell victims right after a breach, No, don’t just change your passwords or freeze your credit, but go demand that a company purge your records. I think that that chorus of state attorney generals really effectively, like indirectly flexing the strength of their own state consumer protection laws in this way was really striking. And it started with California’s AG, Rob Bonta. No surprise there for anyone who’s familiar with our state AG. Then you had AGs from New York, Massachusetts, all following suit. And this kind of collective stance I thought was really interesting because it kind of takes a page out of the European data protection playbooks that really enshrines this right to be forgotten or this right to erasure and flex it in a way that was really, again, more of an ethical stance around deletion being the best safeguard when trust is broken.

And so regulators typically prefer companies to fix problems, right? Like a lot of their enforcement actions typically end up in a long list of recommended corrective actions that companies should take. Here, you’ve got a bunch of very powerful AGs hinting that the better solution might just be for consumers to pull their data out and people listened. I read one report that said almost 2 million people, you know, submitted deletion requests after these alerts from state consumer protection leads. that’s a pretty huge segment of the overall impacted user base here, exercising a deletion rate all at once. I think there were even reports of capacity and processing issues just because of the volume of deletion requests that were coming in.

AMM (07:11)

Anecdotally, I know folks that trafficked in that conversation for a handful of weeks. It was “have you deleted your data from 23andMe from your family?” And it was something that I think really stuck in people’s minds. We’ve become a little bit numb to data breaches. think generally you see them in the news, Equifax lost all of however many users data or social security. I mean it’s really rampant, but this was just a completely different level. And I’m glad you brought up GDPR and European regulations because that’s what I thought of immediately. This felt very much like a sort of European action.

Being on my side of the fence dealing with sort of the crisis management aspects of these issues the fact that the AGs were California New York and Massachusetts is I think no accident that’s where we see sort of all state regulations started, on both coasts and it’s those three states in particular. But I want to get to the trust piece of this because you raised you know there was a huge trust concern, and I think that you know the AGs were probably well within their right certainly but It was probably not bad advice to send folks to delete that data. But if 23andMe comes back as a new entity, how do you either get your data back in the system if you want it, maybe you don’t, or how does 23andMe build trust to sort of move forward in some manner with this type of data so it either doesn’t happen again or there’s new safeguards?

Alya (08:34)

It’s such a great question because in, I know Stacy, you’ve lived this too, in healthcare, trust is our lifeblood, especially for any of us working on data intensive projects. And it is sometimes used opportunistically, right? to justify practices that you know, curb or slow innovation. But at the end of the day, if people don’t feel like you’re going to keep their information safe, they’re not going to want to work with you. And they’re not going to want to use your service in the case of, you know, direct to consumer companies. So I do think that there were lots of lessons learned from what 23andMe experienced very publicly, right, about, you know, explaining what happened, providing transparency to end users, really being willing to partner potentially, invite independent kind of oversight that there are probably lots of things that looking back that team thinks, okay, we could have maybe done that a little differently. I work for a company where health data is literally all we do.

And, you know, at DataVant, we sit at the intersection of every corner of the healthcare industry. We work with life sciences and pharmaceutical companies, genomics companies, and specialty diagnostics labs. We work with health plans. We work with healthcare providers, 80,000 of them, in fact. And they all trust us to make the right data available at the right time for their most critical use cases.

We know that having the level of investment into our internal privacy and security infrastructure to actually execute on our commitments, but also being really transparent to our customers about what we are doing and why. And, you know, even, you know, not just when they send us a thousand-line questionnaire to complete as a part of an annual kind of vendor security review, but really on an ongoing basis, it’s just so critical to approaching privacy, security, and trust in a collaborative way, making sure that expectations are clear. I also think this idea of bringing in third parties to either certify, assess, you know validate your environments can really bolster credibility. In certain pockets of health care, you hear about different third-party certification frameworks, whether that’s high trust or getting a SOC 2 type 2 report or getting your ISO 27001. There’s so many acronyms and numbers out there that map to different levels of assurance. But it’s something where I really believe that it is doing so effectively and volunteering for that rigorous testing in achieving, you know, hopefully those top tier certifications. It can not only be sort of tangible proof that you take trust seriously, but it also just helps you internally, like continue to hold yourself to a really high standard and create continuity in how the company and your customer is going to talk about what privacy security trust mean to you. I would have loved to see more of that independent oversight angle. you know, in the context of this issue. I think, you know, it’s definitely an area for improvement for any company that’s looking to figure out how to reposition themselves on the trust front.

Stacy: 

I want to build off that, Alya, and it kind of ties back to a recent action by the attorneys general, which there’s 28 of them, not just the blue staters. I’ll note my home state of Missouri is actually one of the plaintiffs in bankruptcy filing. And those attorneys general note that sort of the terms of use, the click through, you know, privacy statements, etc. aren’t sufficient for transparency in what’s required for the sharing of and granting of use rights to individuals data.

So I wondered about, you know, what do you think If you were advising a company that had this kind of data, and it sounds like you work with customers like that all the time these days, I feel like the terms of service are sort of like baseline, but maybe companies need to be even more in the face of consumers explaining what they’re doing when they’re sharing data. 

Alya:

There’s such a long debate here about the balance between meaningful transparency and what constitutes express, informed, and affirmative consent. And many of the state privacy statutes that those 28 AGs rely on have that express, informed, affirmative consent concept. I do think that there are definitely some key state statutes that support those arguments.

You know, California’s privacy laws are a really good example where they have really intentionally evolved in a way to, remove an exemption that a bankruptcy sale, carved out right from the definition of a sale of data and that to ensure that folks retain some rights to opt out of particular data transfers. So that’s another issue, right? Like on top of consent, like what about changing your mind later on?

And does the state law that you’re under the jurisdiction of give you that right? I do think that the strong companies out there really are developing creative ways to help patients, consumers, individuals understand what’s going to happen.

to their data and why, and what they can do about it. I see all different variations of consent forms, consent forms that link to guides, kind of annotating and explaining them online, consent forms that aren’t just blocks of text in a PDF that you click to sign, but walk you through in an interactive way, section by section, to ensure that you really understand what you’re agreeing to.

But the reality is that no one whether it’s a federal perspective and even some at the state level is saying this is the right way to do it. And so of course you have different companies approaching, you know, transparency, express, you know, express affirmative consent, informed consent in different ways. I hate to bring this into it, but until we have a federal law that kind of normalizes what the expectations are on that front, I think you’re going to continue to see a lot of variation. And I don’t think it’s necessarily illegal, right? Because these are, in many cases, reasonable interpretations of the rules we have to go off of at the moment.

AMM (15:26)

I’m actually glad you brought up federal regulation because the patchwork of state regulations for many of the clients I have is almost impossible to navigate. And so then you sort of move to either the highest common denominator or the lowest common denominator. And there’s generally differences between them. And just from an operational perspective, that makes doing business more complicated. And not to say that you shouldn’t always go to the heaviest regulatory burden, but oftentimes they are burdensome to shift things and we all know technology is generally ahead of the regulatory landscape. That’s just the way it’s always worked in our country. I’m curious what you think of how to help businesses from a practical perspective navigate those things because they can be costly, they can be sort of major pieces of how you operate and sort of shifting that. Do you have any thoughts on that front of navigating sort of the difference between federal and state regulatory landscapes, particularly in this area?

Alya (16:21)

So my first reaction is don’t navigate it for the first time when you’re in the middle of a crisis. You have to have a plan and you have to be doing regular tabletop exercises with the ugly, scary facts and areas that you hope in your, you know, that only would have happened in your worst nightmares. Like you have to be doing that level of planning, preparation and testing in order to avoid a whole lot of swirl when, you know, it’s really when not if a major issue happens. And I do think that there’s a lot out there about the textbook sort of incident response in kind of protocols, like isolating the breach, enlisting experts, informing law enforcement. And then of course, begin notifying your stakeholders, whether that’s your customers or your patients. But responding to a breach isn’t just about sort of containment and tech fixes, as you mentioned, dictated by a patchwork of notification laws and regulations. And in the US, almost every state has a breach notification statute of some kind that when you hit a certain threshold, whether it’s volume of individuals impacted or the type of data that was impacted, you’ve got to promptly alert affected individuals and in some cases, regulators.

So there are tons of resources out there that are free and make, you know, matrix out those different state laws and their notification requirements. Making sense of a resource like that requires you to have a really deep understanding of the data you maintain and the jurisdictions that it’s regulated under. And one of the least understood parts about just your overall incident response playbook is that you actually need incredibly strong data governance on the front end to execute on that playbook. Like you need to know where your data lives, what it is used for, where you got it, right? Who you’re, what your accountability points are for any data within your systems in order to actually respond appropriately when there’s a threat. And so in addition to practice and prepare, I think it is definitely worth your time. It is worth the investment to think about what data governance means that your organization and whether you can answer some again basic provenance questions about the information you trade in, where it comes from and who would be upset if something happened to it.

AMM (18:59)

I love that you brought up tabletop exercises. We try and do that with our clients during times of peace whenever possible for all the worst possible outcomes that exist. We say, what’s the question that keeps you up at two in the morning? And usually there are six or seven and anybody that’s dealing with, think data, particularly sensitive data, that should be high on their list. But the piece that you raised about provenance and understanding on the front end, where things come from, all of that.

Do you think that maybe we’re far enough into the data life cycle of how we all use data sort of constantly in our lives where companies on the whole are doing a good job of that on the front end or are we behind? I hit consent on things all the time because I want the app or I want to just get through the paperwork and the thought of saying no to not have the thing is just not something I generally do. I just get it done. I’m curious your thoughts there.

Alya(19:55)

Yeah, I, and this is really my personal perspective here, but I don’t think it’s realistic to expect people, individual people to sort of manage and account for all of the different places where their data may exist. I mean, just in healthcare, for example, if you are operating under the umbrella of HIPAA, there are hundreds of different use cases and contexts where your most sensitive data may be processed, because that’s just what it takes to deliver and pay for and measure the quality of healthcare today. And it can be processed without your consent because that’s how we set up the law to facilitate the delivery and payment and measurement of healthcare. So I do think, this is relevant because, you know, who hasn’t at this point in your life received a breach notification in the mail or, hey, you may be eligible to participate in our class action lawsuit. It’s really just become a normal part of life in the 21st century.

I think because of just the, again, just the necessity for these data flows and these data uses to happen in complex ways with lots of interconnected systems and players really has to be, each kind of company’s responsibility in the ecosystem to take data governance seriously. And for any company that lived through the early implementation of the GDPR, I know that was my job when I was in-house at Epic, had the printed-out version of the entire GDPR on my desk and highlighted for almost every daily reference. There were some, yes, painful parts of that experience, but also some incredible resources and insights that came out of it, like doing a data map.

Where does personal data come in to the company? Who touches it? For what purposes, What third party systems or vendors do they use to touch and process it? And then what’s the eventual disposition of that data? Where does it live long-term? How long does it live there? When and how could we delete it? And that’s obviously relevant to the 23andMe story too. So that data mapping exercise was one of the most valuable things that I ever led in my career. You know, also gave me a leg up for the ensuing years because I kind of like knew, we do handle credit card information and here’s how, you know, yes, we do sometimes receive genomic and genetic data. And here’s the context and why. And it allows for anyone who’s in the legal or policy space, it’s really an incredible foundation to provide insight, advice, guidance going forward.

But it’s a huge lift to do it. So you have to have buy-in from your senior leaders to undertake a project like that. and you have to stay focused while you’re doing it because it’s super easy to, you know turn over rocks in the process and see all sorts of little things that you want to start chasing and running down.

You’ve got to stay focused on the end state and recognize that just getting that version one of the data map and then eventually that version 1.1 and 1.2 is going to provide you with more peace of mind and just context to prioritize things like how you want to invest in privacy and security than really anything else you could do. So I do think it is a responsibility for companies. And even if you’re not GDPR regulated, it is a really worthwhile investment to put a data map together.

AMM (23:37)

The data map is an interesting concept and one that as a crisis management consultant that comes in when things are bad, I would love to see because you could point me to exactly where something came in, went out, how the problem happened, and having that context can be really important when you’re putting together a message map of, well, what’s missing? Who do we need to talk to? How does this fit in? That’s a really great takeaway that anybody that deals with these types of issues should consider both having the tactical operational piece of the data privacy map, and then how do you marry that with what you would need to deal with if you did have a worst-case scenario.

Alya (24:11)

Totally agree and going back to the 23andMe example, when this breach was announced in a very interesting way, right? It was a file leaked on a dark web forum where someone was essentially claiming to have a whole bunch of data for millions of 23andMe customers.

And I’m sure in the first 24 to 48 hours, they were very focused on just verifying the breach. But once you get past the verification point, you then have to immediately turn to containment. To your point, Anne Marie, that data map gives you all the places you need to look for from a containment perspective. for example, they had to shut off data exports. That would be in your data map. That data could leave systems in this way, If the following things were true, that’s the type of detail that you would hope would be captured in a data map. So, you’re essentially doing a little bit of pre-work for yourself in that worst case scenario. So, you know exactly which switches you need to turn off and levers you need to pull down in order to effectively contain the incident. 

Stacy:

I’ll just jump in here and say, it all sounds great, but, and you alluded to this a little bit, It is a gargantuan task. It is super hard, both from a volume perspective, from a culture perspective, from a bandwidth perspective. And Anne Marie, I agree, it would be amazing to have just this is where all the data lives and this is who we share it with. But I think not everyone has an Alya Sulaiman on their team. So it’s sage advice, but just it’s not an easy lift is my take.

Alya:

 I totally agree. And at DataVant now we are growing at a breakneck pace, and we’ve announced a couple, you know, significant acquisitions in recent months and my mind is, OK, great. All these great integration tasks. Lots of excitement for the business, but I am thinking about how do we understand data flows? How do we get our arms around that sooner rather than later? And I think, Stacy, my only answer to the Gargantuan task point, which is a really good point, is that it doesn’t have to be perfect. It doesn’t have to be comprehensive to start. And maybe you just prioritize your highest risk area, you know, if you’ve got teams that are doing research with lots of identifiable data, maybe it’s just a deep dive for one quarter with that team to understand exactly where they’re getting data from, how they use it and its eventual disposition. And that’s your V1 and maybe V1 moves to another team. Getting it up to date is a whole separate scenario, you know, kind of issue, but there are also privacy tools for that, right? Like introducing the concept of a privacy impact assessment in an organization and really educating people that, when you do any of the following things, like this might trigger the need to do a privacy impact assessment. And we’ve made it as easy as possible for you with this web form you fill out. And I do think that there’s a lot of ways to automate now, especially.

Capturing the information and having it spit out into, again, at least an initial draft of a spreadsheet. And again, it can be a spreadsheet. It doesn’t need to be this, don’t need to buy a multimillion dollar, you know, kind of system or like module of software to do this. Like you can start with a spreadsheet. The key thing is just, again, not having to do that mapping exercise for the first time when you are trying to figure out the implications of a massive incident.

AMM (27:57)

This is something Stacy and I have dealt with together in the crisis that we’ve managed in the foxhole. But you can’t not start. And no matter what information you have, as imperfect as it is, you’ve got to start somewhere. And the most important thing, if you don’t have the map you’re mentioning, is having at least a crisis team of who are the people that you know can be responsible for the thing. You might not have all the answers, but you know, in my case, as the communications person, it’s who knows what, where, when, how, how do we get things out. And Stacy as the legal side, it’s okay, what are the potential implications of this in all the different places this may happen?

And I think what I’m hearing from you is if you have data in your organization, you better know that somebody on your crisis team knows who to call, who your insurance carriers are, at the very least the passwords, those like very basic things, at least to start that process. Because in my experience in a breach, even if you have the best IT systems and the best folks, you don’t know where it’s coming from right away. It takes a little bit of time. That time might be hours, it might be days and you know, people are still important. Automating it is great, love relying on tools, but if you’ve at least got a handful of folks in the foxhole with you that can get to the root, you’ve got a fighting chance to contain.

Alya (29:13)

Totally and on the people point, something I’m experimenting with at DataVant and I kind of have an unfair advantage because our privacy and security and compliance culture is just incredible. I’ve never worked at a place where people are excited to see me and my team.

Stacy: 

They’re in your book of highlights. 

Alya: 

Yeah, exactly. They’re inviting us to things proactively and want our input, but we’re trying to leverage that enthusiasm to identify what we’re calling sort of a data steward per department. So that’s a great idea. Yeah. On our people team, who’s going to be the person. And I do find that there are some folks who are just like personally interested in this stuff. So we’ve had some luck with folks just raising their hand. I work with a data scientist at DataVant who has really become kind of my data steward person for our data science team, partnering on all things from how do we use data in support of our data science initiatives to how do we use AI responsibly with that data? And there’s a clear personal interest and by educating that one steward on the accountability points that matter, right, from a legal or regulatory perspective, from a communication stakeholder perspective, they can then translate to their teams and their peers what exactly you care about and why, and why it’s important to maybe take a more formalized or structured approach to how certain decisions around data use and other things are made so that it can all filter up into that broader data map. But I do think that this concept of a data steward, maybe not for every department, but for your really kind of high risk and high impact departments is going to help you build that contact list, Anne Marie, that you mentioned is so critical when you’re actually in the foxhole dealing with a crisis.

AMM (31:14)

Love it.

So 23andMe has been reclaimed again by its original founder, Anne Wojcicki, and she did so through her nonprofit, which I believe is called TTAM Research Institute. I think the deal covers both the DNA business, the telehealth unit, and all that genetic data. Why would you do that? Why would you go from a for-profit entity to having this in a nonprofit entity, does that change the regulatory landscape for 23andMe or what will be whatever the new company is called?

Alya (31:46)

I think there are a whole lot of governance considerations there that I’m not going to speak to, but that definitely were undoubtedly a core part of the decision making here. From the privacy law perspective, it is well understood in the privacy legal space that privacy laws, especially at the state level, have been drafted in ways to define covered businesses or covered data controllers as for-profit entities. In some cases, there are even revenue thresholds that apply to determine whether or not an entity fits under the umbrella of a state privacy law. So it is definitely possible that TTAM as a tax-exempt nonprofit could, evade some of the regulatory pressures that a for-profit direct to consumer company may face. With that said, there’s really, I think, again, this kind of goes back to this question about like how we think about privacy law as a society, right? And how we, as a country, evolve towards a different standard because if we continue to think about these laws as applicable to entities versus data, I think you’re always going to have those gray areas, those gaps, or those open questions about, you know, can you just change the attributes of the business or the structure of a business or organism, you know, or entity and be in a totally different space from kind of a regulatory oversight perspective when it comes to use of what is otherwise still, you know, sensitive health-related, health-ish data. So it’ll be fascinating to see if, whether it’s this Congress or next Congress, that all the drafts that have been circulating for years of a federal privacy bill, take this issue head on about applicability to an entity versus applicability to data. But there’s definitely implications for TTAM being a tax-exempt nonprofit from a privacy law perspective.

Stacy: 

 I wonder though, it doesn’t address the trust issue. Like if that’s kind of a workaround to get a little more flexibility with privacy laws, I don’t know that that helps the cause. Or, Ann Marie would probably know this, is there greater trust in nonprofits than there are in for-profit companies?

AMM (34:11)

I think usually there is a sort of underlying belief that a nonprofit has a more altruistic view or goal or desire to do good in the world.

Stacy (34:21)

My jumping off question, which we didn’t start with, but I just wanted to get your take. you’ve been in house counsel as well and you know sort of advise your clients about the importance of managing security and data privacy and you said earlier, you know, people sort of assume, you know, it’s not if it’s when there’s going to be a breach, but I wonder, you know, and when we always talk about, you know, the, the boogeyman or the bad parade of horribles that can happen. I wonder if bankrupting the company was, was ever forecast as a possible outcome of a data breach. 

Alya: 

I do think that this entire 23andMe saga from recent years is going to be studied. It’s going to be analyzed and it’s going to be evaluated both in terms of the trust angle, the breach response, the communications that were made both to consumers and to regulators, but also really this open question of, you know, who controls certain types of data. And that was something that I think was really striking for me as this saga was playing out was you had, you know, senators tweeting with concern, right, about this, about this incident, focusing on who controls Americans DNA and whether there is this gap between where current law suits and how data uses and data collection and just certainly the data availability has evolved where the laws just haven’t caught up. I think the other thing that I would highlight here is that, I do think that in the court of public opinion from a policy perspective, when you are handling some data like genomic data or all sorts of health related information, people in our space, Stacy, have heard this a million times, but you can change your credit card number, but you can’t change your blood type. Well, I’d take that a step further with genomic data because it’s not just about you, it’s your identity encoded, it’s your lineage encoded, it’s about your family, it’s about your loved ones and I think that this was a really bad scenario, you know, as far as crises go for a company, based on the outcome, but I still wouldn’t put it at like a nine out of 10 or 10 out of 10, because I think the nine out of 10 or 10 out of 10 bad scenario would be the genetic data actually being used to blackmail individuals in mass, like the harm, right? That could come.

Stacy: 

 Well, you might still see that. We don’t know who got that data or what they’re going to do with it or what they are doing with it, right? We only know one of the outcomes, which I think that’s a really powerful message and I think has broader appeal than just to people that worry about crises. But, you know, it always struck me how casual folks were about, you know, 23andMe spit parties or whatever when everyone just wants to know, you know, who they’re related to. And you sent your sample off to a company and people you didn’t know. I just thought that the whole concept was a little uncomfortable to me. We’re not going to know what’s been done with that data. it could crop up anywhere, right? 

Alya: 

So, yeah, I think the long-term consequences absolutely remain to be seen. And I think the intangible damage, just the, you were, you were someone who was skeptical before, you know, I think that there are a whole host of folks out there that might’ve lost trust in an entire, you know, really innovative industry segment over this. And my kind of takeaway really is that the bankruptcy really isn’t just kind of, you know, a business failure. I do think this is a bigger kind of crisis and data stewardship. Yeah. And the, you know, it’ll be really just interesting to see, you know, one who shows up to fill this gap. I mean, the ability to drive really meaningful and actual insights from our DNA is just getting better and better and frankly more trustworthy and more impressive. And eventually, we’re going to have to bridge this gap that’s been created around trust in the companies that are stepping up to solve really pressing healthcare problems like with responsible use of this data

you know, just all the innovation and promise that there is out there. But yeah, it’s a, I think a really sensitive time right now. And it’s, it’s funny, you talked about the spit parties. What also always bothered me personally is that I can’t control whether my parents or my sibling takes this test and, you know, so, and, we share this DNA. So,I think that there’s this really interesting angle too about the kind of, you know, butterfly effect really across whole populations and whole communities of people that were folks who have never done 23andMe may still, you know, 

Stacy: 

just swept up in it. That’s a haunting thought actually.

And with that, I’d really like to thank you for being here today. I’ve really missed working with you personally So it was really cool to connect. And this is a topic that I think we could talk hours and hours about because there are just so many layers. So thank you for sharing your expertise with us.

Alya:

Thank you for inviting me, really wonderful and insightful conversation and appreciate the opportunity to reconnect as always.

What starts as a breach becomes a full-company stress test when the data is genetic, the brand is consumer-facing, and the stakes are personal. In this Reputation Nation conversation, Anne Marie Malecha and Stacy Bratcher unpack 23andMe’s legal exposure vs. reputational debt, the rare en masse board resignation and its liability implications, and the optics of a founder seeking to repurchase the company during bankruptcy.

They break down why blaming users for password reuse invited backlash and risk, how to communicate progress when rolling out MFA post-incident, and the strategy for the first 24 hours: verified facts, timed updates, and audience-by-audience messaging that doesn’t overpromise or accuse. The result is a practical, plain-language guide for CEOs, GCs, and comms leaders navigating crises where governance, product, and public trust collide.

Data Rights, Oversight & Founder Control in 23andMe Episode Transcript

AMM (00:00)

In this episode, Stacy will be leading the legal deep dive of the chaos surrounding 23andMe. We’ll look at how the breach of personal genetic data led to a $30 million lawsuit, how boardroom dysfunction played into legal exposure, and what happens when a company that holds your DNA files for bankruptcy. From governance failures to data ownership debates, this story is a legal case study in how biotech risks get personal.

Let’s get into it.

A lot of companies get hit with cyber-attacks these days. We’ve seen all kinds of them probably over the last 10 years. They’ve only increased and many in healthcare and other spaces that we all spend a lot of time and have a lot of data in. But 23andMe’s legal exposure seems different. What made this case stand out from a liability perspective?

Stacy (00:45)

Well, Anne Marie I think there’s a lot that just the foundation of the business where you have people giving their most private personal data to a company and what they do with that data, how they protect that data and the fact that they didn’t do a great job of that undermines the trust in the company. I think also, you know, just the, founder being, you know, such a public person. A lot of the people involved, the Google layer. There were a lot of celebrities. Richard Branson financed the company. You and I have this shared experience when you are a company that is so public and so broadly out there. I think that just ups the stakes. I’ll have to say that, you know, for class action purposes, a $30 million class action is really not that big. But what it did was undermine trust in the company. And I think we’re still seeing even today, you know Congress is involved. You know, there’s concerns about what’s going to happen in the bankruptcy with the data, etc. And so really, it’s the size, scale, and public nature of the company and then the sensitive information that they have that I think is really setting the pace in this case.

AMM (01:58)

I want to talk a little bit more about the public nature of how they operated in the world and the celebrities that they used and that additional layer that that has brought to them now when they’re in this sort of phase of the company’s existence. 23andMe relied really heavily on PR and marketing for their commercials and financial success. I remember there were a number of holidays where they were the primary ad that I would see anywhere of, you know, get your family DNA testing.

They also had a model that was sort of one and done, which from a financial perspective, you buy a kit once, you don’t really need to do it again. That obviously creates some challenges in and of itself as you’re looking to bring in new customers. But do you think that both the business model and the way they relied on marketing and their image of being the sort of innovator hurt them in a different way than we’ve seen other companies that have had to deal with bankruptcies?

Stacy (02:54)

Well, I think, you when you talk about, you know, the holiday marketing part of it, making medical testing into sort of a consumer good, think is, you know, not risky is a way to describe it, but it’s, you know, people have certain expectations around their healthcare and around medical testing. And when you package that as something that you can get at Target, or buy online and you have, ‘spit parties’, you know, you’re making light of something that people have expectations around that’s taken very seriously and, protected, you know, there’s been a lot written about HIPAA, the health insurance portability and accountability act, those privacy rules don’t apply to 23andMe. And I think people are surprised about that.

Just because the product is healthcare adjacent. And again, that just sort of undermines the trust of the company that they are taking a more consumer retail approach to private information.

AMM (03:56)

In some ways, there some similarities with Theranos which I don’t want to us off track here but I think most people know about that case and the idea that your health care is anything but sensitive information it’s a different way of operating and I think it causes a different sort of set of circumstances and how these have to be addressed from a crisis management and legal perspective.

Stacy (04:17)

Yeah, no question. I think, you know, with 23andMe, you talked about their one and done sort of model really not being a sustainable business. They were getting into drug discovery. They want to get into medical testing. They bought Lemonade, which was a telehealth provider. So while they’re, you know, seemingly had one sort of product, they were really, you know, getting more, wading more into health care, which again carries with it higher expectations for conscientiousness and protection of data.

AMM (04:48)

Yeah, health information is a very different game than just an app on your phone. And I think we still don’t fully understand all of the privacy implications of the things that we like to use in our daily life. And this was a big reminder for people. And I think a really interesting story for journalists in particular, because there just wasn’t anything like it. 23andMe was sort of the first of their kind. And yes, they have competitors now, but we haven’t seen this anywhere else. And I think that as a consumer facing brand, you have a different standard that you have to adhere to than when you’re B2B or you’re not holding onto people’s personal information, particularly their most sensitive data.

23andMe initially pointed the finger at their users for reusing passwords as one of the primary causes of this breach. From a legal standpoint, do you think that deflection will help or hurt them in terms of the lawsuit?

Stacy (05:40)

Well, when there’s a breach, the established playbook is that you don’t say anything about how or why it happened. It can compromise your insurance coverage. It can create a roadmap for plaintiffs’ lawyers. So just as sort of general table stakes, the prevailing advice is don’t say. And by the way, it takes a long time and expensive forensic analysis to actually know. It can be years before you actually know how a breach occurred. So I think it’s incredibly risky to go out with any sort of statement. And from a business perspective, I don’t know that it’s ever a good idea to blame the victim. You know, I don’t really see that.

I mean, certainly they could have phrased it as, let’s give you some advice. Please, folks,

don’t reuse your passwords. They could’ve framed it in that way. But using it as a deflection tool, I don’t think was a good move. And I think that it will come back to bite them both in litigation and possibly with other investigations and with their insurance coverage, to the extent they have any.

AMM (06:52)

You know, I think you’re absolutely right. The victim-blaming is a huge issue. And even if they were correct that reusing passwords is the reason, you almost never know the entirety of that in short order, much less weeks, months, years afterwards. Over promising and under delivering is the easiest way to do yourself more harm. And the first rule of crisis management is do no harm. And I can’t imagine the conversation that was happening in the room when they were thinking about, well let’s just put it back on the people that use the same passwords over and over again. Somebody had to be saying that was a bad idea. I have to imagine if not, that goes to show you really need to know who’s on your crisis team before a crisis strikes. There’s no winning in that. also, you know, to your point, you are going to have to communicate progress throughout these challenges.

You don’t have to have all the answers in the immediate term. And in fact, you can buy yourself some time by saying, you know, we’ve closed the breach, or our forensic investigators are working to close the breach. Like, that’s what you want to start with as opposed to, you guys did it wrong.

Stacy (08:01)

Right totally totally

AMM (08:04)

You know, one of the important aspects to me in this case is just the willingness that we have as individuals to give a company that we don’t really know a whole lot about our DNA. Do users actually have any control or legal recourse over how their DNA data is used once they hand it over?

Stacy (08:23)

Well, certainly, I mean, with any sort of data sharing, there are terms of use, know, you don’t any kind of company, especially in California. Many states have consumer privacy laws. There are specific and there’s also the GDPR ⁓ regulations in the EU. There are many, many rules around what consumers rights are with regard to their data.

So I don’t know what extent 23andMe was adhering to those. DNA is a little different in that it’s not defined, at least in California, as one of the protected consumer pieces of data. But there are states that are trying to have a more specific regulation on that. There’s a federal law called Gina that is really about protecting genetic information from misuse by insurance companies or employers. I think that the 23andMe, I think we can predict that that will give rise to more regulation. But yes, generally your private information, your social security number, your birthday, your address, those things that you give over to companies, you have rights to tell companies not to use that anymore. And actually, we’ve seen in the case of 23andMe, many, many states, attorneys general have issued directions to consumers on how to get their data back from 23andMe, which I don’t know that the company predicted that that would occur.

AMM (09:51)

I don’t think I’ve ever seen that either. It was really fascinating to me when that first came out and you had states advising and it was sort of all over the media and social channels for a handful of weeks of go get your data before you can’t and it’s held up in the bankruptcy proceedings. I certainly think there’s some precedent setting that’s gonna happen in this case in more ways than one and that will be interesting for us to see as we go along here.

Speaking of interesting as we go along here, I want to talk about the founder of 23andMe, Anne Wojcicki. She still holds almost half of the company’s voting power and is now trying to buy it back during bankruptcy. There have been plenty of stories about her leadership and her tenure at the company and I don’t necessarily want to get into that yet, though I think we may unpack that in future episodes. But do you think from a corporate governance perspective that laws are keeping pace, especially in high sensitivity sectors like biotech to keep things like this from happening?

Stacy (10:52)

I would say through the courts. So you’re not seeing a lot of legislation directed at boards. The boards typically have the standard fiduciary duties of the duty of care, the duty of loyalty, duty of inquiry, and exercise sound business judgment. What you’re seeing, ⁓ especially out of the Delaware courts, you know, the Boeing case, it’s a meaty one, but encourage folks to look at that. The courts are setting standards around expectations of boards with regard to monitoring risks. So in the case of 23andMe, I think you know, courts would be questioning how much the board was overseeing the cybersecurity.

That’s a standard sort of again, table stakes report that most boards should be getting if they are, if the business relies on any sort of technology or data. So I think we’ll see more and more of that Anne-Marie, but it’s going to be through the courts.

AMM (11:46)

The board’s role is one of those pieces that every board operates a little bit differently, in the companies that we’ve helped over the years that have had both board governance issues and issues where the board have stepped in to sort of oversee when management’s been a problem. There’s so many layers to that. And in this case, we saw an entire board resign after clashing with the CEO over the company’s direction. And...

What happens when a board does that? I mean, are they allowed to just walk away as part of their fiduciary duty and duty of care and all of those pieces that you mentioned? And then what responsibilities do they still have if they step down in the middle of a situation like this in particular?

Stacy (12:28)

I’ll say it’s very uncommon that an entire board resigns. That has not happened very frequently. With regard to the boards on the board members, ongoing liability, they will be held to account for anything that happened during their tenure on the board. I mean, once they resign, you know, anything going forward, they’re not connected with, but,you know, certainly the data breach, the failure to have adequate safety and precautions, security measures over the data will be things that they could be held to account for. Now, I’d assume that 23andMe had a DNO policy so these board members might not have personal liability, but you never know startups are, you know, founders are fast moving quickly and maybe they don’t have everything completely buttoned up.

Maybe they didn’t have a robust cyber policy. I mean, there’s a lot that, you know, kind of the boring infrastructure that board members should really make sure they investigate before they join a company’s board. So yeah, I think we can expect, you know, that there could be some lagging liability. You know, there, as I mentioned, Congress, three different committees announced an investigation into 23andMe.

So maybe those board members could be called to testify, know, just the gift that keeps on giving.

AMM (13:43)

We always love regulatory follow-on. Can you define what a DNO is for our listeners? Because I think some folks might not be familiar with that.

Stacy (13:50)

Sure. Directors and officers’ policy. It’s a type of insurance that protects key individuals in the company, including the board directors. For any person, a lot of people aspire to be on corporate boards and it’s great. It’s a nice way to make connections and have an impact and make some money. But making sure that your company has an adequate director and officers’ insurance policy and that the bylaws of the company provide that the board directors will be indemnified by the company are two practical takeaways I would give to folks that are interested in serving on corporate boards.

AMM (14:27)

I think that the board in this case had a strategic reason for filing there, or for all leaving en masse at the same time when they did, because to your point, they wanted to have a line in the sand of where their liability stopped. And whether you know it’s going to get worse, or you just suspect it’s going to get worse, I assume they all wanted to be as free and clear of it as possible. And they’re still going to be stuck with some of these challenges as we go forward. But that is also something to think about both from a business and a communications strategy perspective. It sends a message and it does have an impact.

Stacy (15:03)

No question.

AMM (15:03)

When a company is in crisis, financial, legal, reputational, how does the board’s fiduciary duty shift? Are they expected to protect the company, the shareholders, the customers, or all three at once? And let’s in this case, for the sake of argument, assume the board didn’t resign. But as they were still in their capacity of board members, what role did they have in that?

Stacy (15:25)

Well, ultimately the board’s fiduciary duty is to the company, and they’re supposed to, as I said, be executing those fiduciary duties of loyalty, of care, inquiry and business judgment. you know, crisis can be very unsteadying, as you know, you know, that a lot of times I think people look into like what’s in it for me, you know, how am I exposed? You can have situations where folks want to distance themselves from the company or, I’ve certainly been in a situation where board members were resigning during a crisis or tried to resign. You know, that’s because there is a friction point with those fiduciary duties. You are supposed to put the company above all else. And ultimately, you know, the shareholders and the customers are still part of that.

You know, your customer, is the business. Without the customers, there is no business. So, you would hope and predict that what’s good for the company is also good for the customers. Shareholders don’t always agree. And, you know, there’s, I feel like these days, even more so, you see a lot more shareholder derivative lawsuits that are challenging company directions and board members specifically. So, you know, again, It’s tough, especially where the shareholders don’t agree with the leadership, puts the board in a tough spot.

AMM (16:45)

Shareholder activism is a huge part of our business and has been growing over the last handful of years as shareholders have exerted their power or disdain about control and how management decisions are made. But I think it’s interesting to think about the fact that you’ve got a board with a responsibility to do what’s in the best interest of the company. And unfortunately, in crisis in particular, there’s always competing objectives.

You’ve got a management team that often wants to save their jobs or protect pieces of their control, their power, their fiefdom. And then you’ve got the bottom line to protect. And one of the things we encourage all of our clients to do and really sort of force their hand at doing early in an engagement is what does a win look like for you? Because it’s not going to be that you’re going to make everybody happy. There’s no way. And if you can’t coalesce around doing what’s best for the organization as a whole, you’ll never get out of it in any sort of fashion where you can get back to business quickly. It’s going to just be another mess.