Playboy Sues Sheppard Mullin Law Firm for $7.6 Million

LOS ANGELES — Playboy Enterprises Inc. on Friday filed a $7.6 million malpractice suit against the international law firm of Sheppard Mullin Richter & Hampton LLP for allegedly exposing the adult entertainment company to millions of dollars in damages by failing to settle an employee’s claim of retaliation out of court.

The professional negligence suit, filed at Los Angeles Superior Court, said that the law firm lost the case against former Playboy controller Catherine Zulfer in "spectacular fashion" after she claimed she was fired as payback for exposing a scheme to award company executives $1 million bonuses without board approval.

Playboy had a chance to settle the Zulfer’s whistleblower suit for $1 million, but Sheppard Mullin recommended that it take its chances at trial.

Playboy claims that Sheppard Mullin gave it a 75 percent chance of prevailing in the case after it formulated a mock jury trial and polled participants. The firm estimated wage losses of between $1.5 million-$3.24 million if Zulfer prevailed in the case in a worst-case scenario, according to the suit.

But in March 2014, a Los Angeles jury returned with a verdict of $6 million in compensatory damages and a finding of malice.

Playboy’s new counsel — Engstrom, Lipscomb & Lack — said in the suit that an "attorney of ordinary skill and capacity" would have advised the company to settle the case, noted that a more thorough analysis would have showed that Playboy could be liable for an award beyond its $5 million policy limit.

Zulfer's suit maintained that Playboy violated the California Whistleblower Act and that she was terminated because of her age, which was 56 at the time.

The Playboy veteran was fired on Dec. 31, 2011, after refusing a second request to dole out unwarranted bonuses in January 2011. At that time she blew the whistle on the scheme and reported what she saw as questionable accounting practices to Playboy’s general counsel and the Securities and Exchange Commission.

Related:  

Copyright © 2026 Adnet Media. All Rights Reserved. XBIZ is a trademark of Adnet Media.
Reproduction in whole or in part in any form or medium without express written permission is prohibited.

More News

Naughty America Launches AR Video Format 'Shows' on Real Girls Now Platform

Naughty America has launched "Shows," a new AR video format, on its Real Girls Now platform.

Alexis James Makes Her Kink.com Debut

Alexis James has made her Kink.com debut alongside Vince Karter in "Three Hole Domination."

Eris Jolie, Leah Hayes Front Latest From TransAngels

Eris Jolie and Leah Hayes star with Baxxx in the latest release from TransAngels, titled “Varsity Vixens.”

Olivia Del Rio Returns to Dorcel for 'PL4Y Vol. 2'

Olivia Del Rio stars in the new Dorcel title “PL4Y Vol. 2.”

Eve Sweet Leads Dorcel's 'Couture No. 3'

Reigning Euro XMAs Female Performer of the Year Eve Sweet headlines the latest release from Dorcel, titled “Couture No. 3.”

AEBN Reveals Ariel Demure as Top Trans Star for 2025

AEBN has revealed its top 10 trans stars list for 2025, with reigning XMAs Trans Performer of the Year Ariel Demure landing atop the leaderboard.

YourPaysitePartner Rebrands as Paysite.com

YourPaysitePartner has officially been rebranded as Paysite.com.

SWR Data Announces 2026 'State of Creator' Winter Report

Adult industry market research outfit SWR Data has announced that it will release data from its annual State of the Creator survey at an XBIZ LA workshop, taking place at the Kimpton Everly Hotel.

Holly Randall Launches Marketing Firm, Signs Stripchat Deal

Holly Randall has launched her new marketing firm, Holly Randall Agency, and signed the agency’s first deal with Stripchat.

Agatha Vega Returns to Dorcel for 'Agatha's Secrets'

2024 Euro XMAs Performer of the Year Agatha Vega stars in the new Dorcel title “Agatha’s Secrets.”

Show More