The Kardashians have been hit with a $180 million dollar lawsuit in connection with their ever-troubled Kardashian Beauty collection. According to the lawsuit, which was filed this week in state court in California by Hillair Capital Management, the reality television sisters breached their contract with Hillair in connection with their beauty line for “failing to provide marketing and promotional support as they had for nearly two years leading up to the signing of their contract [with Hillair].” As a result, Hillair has filed suit against the sisters for breach of contract, breach of the covenant of good faith and fair dealing, fraud, and negligent misrepresentation, amongst other claims.
Per Hillair’s complaint, which was filed against sisters Kourtney, Khloe, and Kim Kardashian and their respective corporations, 2Die4Kourt, Inc.; KhloMoney, Inc.; and KimsAPrincess, Inc., it purchased the Kardashian Beauty assets from Boldface Licensing + Branding, the company that originally owned the right to license the sisters’ collection, in 2014. According to an agreement between the Kardashians and Hillair, the sisters were to continue to promote the collection.
However, according to the suit, shortly after Hillair “agreed to put up millions of dollars to help the Kardashian salvage their struggling Kardashian Beauty makeup line,” the sisters halted all work in connection therewith. Hillair alleges: “The Kardashians almost immediately stopped marketing, promoting and supporting the line and began courting new potential investors to buy out Hillair’s stake. In short: the Kardashians wanted a better, more lucrative deal than they had struck with Hillair.”
In particular, the lawsuit claims that the reality TV sisters are liable for: “Failing to effect and/or preventing the equity transfers (and other transaction) specified in the [parties’ contract]; promising to and then failing and refusing to market and promote the beauty line; making representations [regarding to the promotion and marketing of the collection] with a reckless disregard for their truth.”
Hillair, which is known for investing in the growth and expansion initiatives of small-cap and micro-cap public companies, further alleges: “The Kardashians’ wrongful conduct has destroyed any opportunity for Hillair to obtain the benefit of its bargain under the terms [of the parties’ contract]. Hillair, having bailed out the Kardashian Beauty line from insolvency, has expended over $10 million in reliance on the Kardashians’ good faith and their promises to continue to actively market and support the Kardashian Beauty line. After acting in good faith for over a year and a half to support and finance the venture with the Kardashians while the Kardashians did nothing but undermine it, Hillair was finally left with no choice but to bring this action.”
Lawyers for the Kardashians have shot back, claiming the suit “is an obvious attempt to create leverage by hedge fund operators who took over the Kardashians’ cosmetics brand.”
THE MESSY LEGAL HISTORY OF KARDASHIAN BEAUTY
This is just the latest development in the Kardashian Beauty saga. You may recall that the Kardashians have been sued again and again over their Kardashian Beauty Collection (originally called Khroma Beauty). The sisters launched the makeup venture in 2013, only to be slapped with multiple trademark infringement lawsuits, including one from Lee Tillett, the owner of the federally registered Kroma trademark.
Boldface Licensing + Branding, the company that originally owned the right to license Khroma Beauty, filed a lawsuit seeking declaratory relief that it was not infringing Tillett’s mark and in response, the Florida-based makeup artist filed a $10 million trademark infringement suit against the Kardashian sisters, alleging that they began marketing their competing makeup line after Tillett began discussions with Kim Kardashian to represent the Kroma collection.
Following a preliminary ruling in Tillett’s favor from the U.S. District Court for the Central District of California Judge Audrey B. Collins, the famous sisters agreed to change the name of their company to Kardashian Beauty in order to avoid infringing Tillett’s mark any further. Then, Kroma Makeup EU, the exclusive European licensee of the Kroma collection, filed suit in the U.S. District Court for the Middle District of Florida, for various trademark-related claims against the sisters.