Kardashians Left Blushing, Can’t Compel Arbitration in Makeup Case

Kimberly, Kourtney, and Khloe Kardashian will find themselves back in court after the Eleventh Circuit affirmed the denial of their motion to compel arbitration in Kroma Makeup EU, LLC v. Boldface Licensing + Branding, Inc., No. 15-15060 (11th Cir. Jan. 18, 2017). The Kardashians sought to enforce an arbitration clause against a party to the underlying contract despite the fact that the Kardashians had not been parties to the contract. The court ruled that under Florida law the Kardashians could not enforce the contractual arbitration clause because it was limited by its terms to disputes between parties to the agreement, and so this dispute was beyond the clause’s scope.

The case arose after a settlement in a prior trademark infringement action. The Kardashians had entered into a licensing agreement with Boldface Licensing + Branding, Inc. to create a Kardashian makeup line called “Khroma.” But, they ended up in trademark infringement litigation with By Lee Tillett, Inc., the owner and developer of Kroma cosmetics, for which Tillett had a registered trademark. Tillett settled with the Kardashians and Boldface, but then refused to share any of the settlement with Kroma EU, with whom Tillett had an exclusive rights agreement to sell and distribute Kroma in the United Kingdom and European Union. So, Kroma EU sued Tillett, Boldface, and the Kardashians—Tillett for promissory estoppel, Boldface for trademark infringement and tortious interference, and the Kardashians for vicarious liability for trademark infringement. Tillett successfully moved to compel arbitration of Kroma EU’s claim against it, but the district court denied the Kardashians’ motion to compel arbitration of the claims against them.

The Eleventh Circuit noted that Florida’s equitable estoppel doctrine allows a non-party to enforce a contractual arbitration clause against a party to the agreement if (1) the party relies on the terms of the written agreement in asserting its claims against the non-party and (2) the dispute is within the scope of the contractual arbitration clause. Because the arbitration clause in the contract here limited its application to disputes between parties—“the Parties agree that the disputes arising between them concerning . . . the present Contract, should be considered [in] independent arbitration in the State of Florida” (emphasis added)—the court found that a dispute between Kroma EU, a party, and the Kardashians, non-parties, was beyond the scope of the agreement. The arbitration clause could not be extended to allow a non-party to enforce it under the doctrine of equitable estoppel. This result, the court explained, is consistent with the rationale supporting the doctrine of equitable estoppel, to deny one the ability to pick and choose which parts of a contract to enforce. The doctrine is simply inapplicable where a party refuses to arbitrate a dispute that is not covered by the contract.

Posted by Danny Wells.

Back to top