Kardashians Can’t Compel Arbitration in Cosmetics Case

As the Hollywood Reporter reported, the Kardashian sisters have failed in an attempt to compel arbitration in a case involving a dispute over a makeup line.

The case was brought by Kroma Makeup, a UK company, against Kimberly, Kourtney, and Khloe Kardashian.

A company called By Lee Tillett, Inc. developed a line of cosmetics called Kroma cosmetics. Tillett entered into a contract giving Kroma EU the exclusive right to sell the cosmetics in the UK and European Union and to use the Kroma trademark.

The agreement included an arbitration clause, which stated:

If it is impossible to settle the disputes peacefully, the Parties agree that the disputes arising between them concerning the validity, interpretation, termination or performance of the present Contract, should be considered [in] independent arbitration in the State of Florida, United States.

Khroma v. Kroma

While that contract was in effect, the Kardashian sisters entered into a contract with Boldface Licensing + Branding, Inc. to create their own makeup line called “Khroma.”

After the Khroma line was released, Boldface filed a lawsuit against Tillett seeking a declaratory judgement that the Khroma name didn’t infringe the Kroma trademark.

Tillett filed a counter-claim for trademark infringement, adding the Kardashians as defendants. The lawsuit settled in 2014.

However, even though Tillett claimed to be protecting Kroma’s interests in the EU, Tillett refused to share the settlement money with  Kroma EU.

Kroma EU then sued Boldface and the Kardashians for trademark infringement, among other claims.

Arbitration

The Kardashians tried to compel arbitration, under the contract between Tillett and Kroma. The court denied their motion, and they appealed.

Normally, someone who isn’t a party to a contract can’t sue to enforce the terms of that contract. In this case, the Kardashians sought to apply the doctrine of “equitable estoppel.”

Under this doctrine, a party (in this case, Kroma) that uses an agreement to enforce its rights against a non-party to the agreement (the Kardashians) can be required by the non-party to comply with the terms of the original agreement.

However, the court found that the arbitration clause applied only to disputes between Tillett and Kroma — not to any third parties like the Kardashians.

Equitable Estoppel

In order to be entitled to arbitration under Florida law, the Kardashians would have to show:

• Kroma was relying on the agreement with Tillett when the company made its trademark claims against the Kardashians.
• The scope of the arbitration clause covered the trademark infringement dispute.

The judge concluded:

Like makeup, Florida’s doctrine of equitable estoppel can only cover so much. It does not provide a non-signatory with a scalpel to re-sculpt what appears on the face of a contract. The district court correctly denied the Kardashians’ motion to compel Kroma EU to arbitrate the dispute between them.

It’s not clear why the Kardashians picked a name that was so similar to that of an existing makeup line. That choice may have cost them at least hundreds of thousands of dollars in legal fees, plus whatever they spent to settle the original case.

It’s also not clear why they spent so much effort to have the case resolved via arbitration rather than in court.