The Illegal Audio Recording (Exhibit 1)

The most damaging claim is that Lively’s legal team submitted a highly contested audio recording, designated as Exhibit 1, that allegedly contains an illegally obtained private conversation.

The Allegation of Illegality: The recording is of a conversation with a defendant, Steve Sarowitz, and was allegedly made without his consent. If true, this violates California’s strict two-party consent law for recordings. If the evidence is deemed inadmissible by the judge due to how it was gathered, it could dismantle the credibility of her entire retaliation case.
Cherry-Picking Quotes: Sarowitz’s team is demanding the entire audio be unsealed and made public. They accuse Lively’s lawyers of selectively quoting “snippets” in public filings to present a distorted, out-of-context narrative that supports her claims, while concealing the full truth.
Fighting to Keep it Sealed: Lively’s team is reportedly fighting to keep the full audio of Exhibit 1 sealed, citing concerns over “adverse media coverage.” The defense argues that this reluctance is suspicious, as a full, unedited recording would actually support her claims if they were true.

The “Causation Chasm” and Shifting Timeline

The defense is also aggressively attacking the fundamental structure of Lively’s retaliation claim by pointing out a critical contradiction in the sequence of events:

The Eight-Month Gap: Retaliation claims rely on a close cause-and-effect timeline. Lively’s claim is that she engaged in a “protected activity” (raising internal concerns/complaints) in early January 2024, but the “smear campaign” (the alleged retaliation) did not begin until late August 2024, an eight-month gap. Defense attorneys call this a “causation chasm”—a “fatal flaw” in legal terms.
The Contradictory Statement: Lively herself previously stated that the Phase 2 filming (which occurred during this gap) went “smoothly” and was free of stress or conflict. The defense is using her own words against her, arguing that if filming was smooth, the core premise of a hostile environment and swift retaliation is false.
Moving the Goalposts: Lively’s narrative appears to have recently shifted, with her now alleging that the retaliation began “during filming” (mid-2023). Critics argue this is a “legal tactic” to “close the gap” and make the retaliation claim more plausible. This contradiction between her original statements and her current claim is seen by the defense as a sign of manipulation and could severely damage her credibility in front of a judge or jury.

The Stakes

This entire legal development has put Lively’s legal strategy on the defensive. Her attempt to control the narrative through selective evidence and redactions is backfiring, and she faces the possibility of her key evidence being ruled illegal and her core argument collapsing due to a lack of a clear timeline. The defense is strategically aiming to use her own evidence against her, confident that the full context of Exhibit 1 and the inconsistencies in her story will “unravel the foundation of her entire case.”