June 13, 2011 3:04pm PT by Matthew Belloni
Kardashians Win Lawsuit Accusing Them of Ruining Credit Card Company (Exclusive)
The Kardashian family scored a pretty significant legal victory today, successfully fending off a $75 million lawsuit claiming that Kim, Khloe and Kourtney were to blame for the collapse of a credit card company that hired them as spokespersons.
As we reported in January, Revenue Resource Group, owner of the Mobile Resource Card, sued the Kardashian sisters, mother Kris Jenner and their Dash Dolls company in state court in Fresno, Calif., for allegedly walking away from a deal to promote a branded prepaid debit card known as the "Karadashian Kard." The realty TV stars allegedly agreed to say nice things about the card in the press and on social networking websites in exchange for a flat fee and a percentage of revenue from customers who signed up. But they later soured on the arrangement when the card came under fire for high fees, terminating their deal and making disparaging comments about the card.
The company's business collapsed so it sued, claiming $75 million in damages from this alleged breach of contract, arguing that the girls not only violated a simple sponsorship deal but a joint business venture -- potentially putting the Kardashian clan on the hook for the eventual failure of the company.
But the Kardashians, repped by Michael Kump and Jeremiah Reynolds at Santa Monica’s Kinsella Weitzman Iser Kump & Aldisert firm, quickly brought an anti-SLAPP motion -- a tactic used in California to escape lawsuits that arise out of people speaking their minds on issues of public import.
That raised an interesting issue, because the Kardashians were essentially accused of breaching a contract by failing to say positive things about a credit card. Does that mean the lawsuit is a standard breach-of-contract case (not subject to anti-SLAPP motions) or is it based on the ladies’ exercise of their First Amendment free speech rights (which would allow the judge to dismiss the case)?
Judge Jeffrey Hamilton chose the latter: “We do not have a mere breach of contract action here, seeking recovery from the Kardashians of the contract damages for their breach of same,” Hamilton writes in an 8-page order obtained by THR. “Instead, we have an attempt to also charge the defendants with loss of all other business unrelated to them, specifically tied to defendants’ exercise of free speech.”
The judge then finds that the credit card company likely can’t prove that the Kardashians ruined its business. “Plaintiff alleges that is (sic) was the publicity that killed off its business and ran off other potential celebrity clients,” the judgment states. “But it was not merely the Kardashian termination letter that did it – it was the onslaught of negative coverage before and after their statement about the fees and charges associated with the card. In other words, the product’s features themselves caused the problem once they became clearer to the public.”
The judge has granted the anti-SLAPP motion, essentially dismissing the case. And he awarded the Kardashians $6,825 in attorneys fees. Double ouch.
The credit card company's lawyers at Miller & Ayala in Fresno did not immediately respond to a request for comment.