In a case stemming from a trademark dispute involving a beauty
line owned by the Kardashian sisters, the US Court of Appeals for
the 11th Circuit affirmed the district court's denial of a
motion to compel arbitration filed by the Kardashians because the
sisters were not a party to the agreement containing the invoked
arbitration clause, which was explicitly limited to disputes
between the parties to the agreement. Kroma Makeup EU, LLC v.
Boldface Licensing + Branding, Inc., et al., Case No. 15-15060
(11th Cir., Jan. 18, 2017) (Carnes, J).
Beginning in 2004, US company By Lee Tillett (Tillett)
registered the KROMA trademark in connection with a line of
cosmetics, and later licensed the KROMA trademark, for exclusive
use in the United Kingdom and the European Union, to Kroma Makeup,
EU (Kroma EU). The licensing agreement between Tillett and Kroma EU
contained an arbitration clause that provided for independent
arbitration in Florida for any "disputes arising between
them" (emphasis added) that were "impossible to
settle . . . peacefully."
KROMA cosmetics were being sold in the United States and Europe
when the Kardashians entered into a licensing agreement with
Boldface Licensing + Branding to create a makeup line called
"Khroma." Shortly after releasing the Khroma line,
Boldface filed a declaratory judgment action against Tillett
asserting non-infringement of the KROMA trademark. Tillett
countered against Boldface and each of the three Kardashians
individually, filing trademark infringement claims. In April 2014,
the parties settled their disputes, and Tillett represented to
Kroma EU that it was recovering damages on the licensee's
behalf. When Tillett later refused to share the settlement
recovery, Kroma EU filed a lawsuit for trademark infringement
against Tillett and the Kardashians. The Kardashians moved to
compel arbitration. After the district court denied the motion, the
Despite not being a party to the Kroma EU-Tillett agreement, the
Kardashians asked the 11th Circuit to compel arbitration under
Florida's doctrine of equitable estoppel, which requires the
Kardashians to show that Kroma EU was relying on the agreement with
Tillett to assert its claims against them, and that the scope of
the arbitration clause covered the dispute. The 11th Circuit
acknowledged the "federal policy favoring arbitration"
but explained that arbitration is a matter of contract and only
applies to disputes that parties have agreed to arbitrate.
The 11th Circuit explained that since the Kardashians were not
"parties" to the Kroma EU-Tillett agreement, they could
not use equitable estoppel to compel arbitration under the
arbitration clause. The Court contrasted the facts of the
Kardashian case with those where a non-party seeking to compel
arbitration under a contract was an officer or agent of a signatory
agreement and received rights or obligations under the agreement.
Furthermore, the Court was adamant that the "disputes arising
between them" language in the Tillett arbitration clause
precluded the clause from applying to "any dispute."
Confirming that the district court correctly denied the
Kardashians' motion to compel Kroma EU to arbitrate the
trademark dispute, the 11th Circuit concluded that Florida's
doctrine of equitable estoppel allows a non-party to compel
arbitration under an agreement only when the dispute at hand falls
within the scope of the arbitration clause.
Practice Note: Believing that the 11th
Circuit's decision is inconsistent with other decisions
involving similar agreement language, the Kardashians have asked
the 11th Circuit to seek clarification from the Florida Supreme
Court on the meaning of the arbitration clause language, or to
rehear and reverse the case in lieu of certification to the Florida
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