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

X3 Expo Kicks Into Gear With an All-Star Lineup

Outside the historic Hollywood Palladium on Friday, a huge line of fans lined Sunset Boulevard, eagerly awaiting the opening of the 2026 X3 Expo and their big chance to meet the cream of the crop of adult stars.

2026 XMAs: Watch the Global Live Broadcast

The 2026 XMAs, presented by Fansly, will stream live to a global audience via the official event website, welcoming fans worldwide to join a celebration of excellence in adult entertainment.

2026 XBIZ Honors Salutes Resilience Across the Online Adult Industry

The 2026 XBIZ Honors packed house Wednesday night, turning the Kimpton Everly Hotel’s Nichols Ballroom into a gala celebration of industry excellence.

Zara Makes Her Studio Debut for Blacked

Newcomer Zara has made her studio debut for Vixen Media Group studio imprint Blacked, alongside Anton Harden.

Elevated X Adds CCBill Integration for Payment Processing

Elevated X has added CCBill integration for payment processing to its ELXNexus traffic management and affiliate program software.

Kylie Rocket Leads Dorcel's 'Couture No. 4'

Kylie Rocket headlines the latest release from Dorcel, titled “Couture No. 4.”

Anna de Ville Toplines Latest 'Desperate Anal MILFs' From David Perry

Anna de Ville headlines the seventh volume of director David Perry's "Desperate Anal MILFs," now available from Evil Angel.

Alexa Leigh Makes Her WIFEY Debut

Alexa Leigh stars with her husband Keith and Dan Damage in the latest release from Vixen Media Group studio imprint WIFEY.

Angela White Stars in Latest From Brazzers

Multi-XMAs winner Angela White stars with Derek Savage and Jack Blaque in the latest release from Brazzers, titled "Meet and Skeet."

Cléa Gaultier Directs 'Follow Me #2' From Dorcel

Cléa Gaultier directs in latest release from Dorcel, titled “Follow Me #2.”

Show More