A federal judge in Indianapolis ruled Tuesday that former model Melania Trump had a valid contract to market skin-care products for Indianapolis-based New Sunshine LLC, despite claims from hardware store magnate John Menard that the agreement should be voided.
U.S. District Court Judge Jane Magnus-Stinson ruled that Trump, the wife of billionaire Donald Trump, can proceed with an arbitration hearing in New York, where she is seeking $50 million in damages from New Sunshine and another Menard-controlled company, Merchant Capital LLC.
Trump has sued the two companies for failing to live up to their five-year agreement signed in 2012 that would let her company, Melania Marks Skincare LLC, develop and market a product line called Melania.
Menard had sued to cancel the contract, based on a dispute with Indianapolis businessman and former friend Stephen Hilbert.
"The license agreement is a valid and enforceable contract," Magnus-Stinson wrote in her decision. "Merchant Capital and New Sunshine have not sustained their burden of showing any circumstances justify declaring the license agreement void."
Hilbert was CEO of a private equity firm founded in 2005 that was funded by Menard. Its holdings included New Sunshine.
Menard’s lawsuit alleged that he sent a letter to Hilbert in June 2012 removing him as CEO, but that Hilbert refused to leave and continued to make unauthorized business decisions for New Sunshine. Big moves by New Sunshine during that period included the licensing deal with Trump.
In February, Menard won a court battle with Hilbert that allowed him to regain control of New Sunshine. Soon thereafter, New Sunshine sent a letter to Trump canceling a promotional deal for the launch of her skin-care products. Trump filed a lawsuit with an arbitrator, claiming New Sunshine’s actions had resulted in $50 million in damages.
Menard alleged that Hilbert did not have the authority to cut a deal with Trump. However, Magnus-Stinson found that New Sunshine's president at the time, Eric Weber, did have the authority to do so, and thus the contract was valid.
Weber received approval from New Sunshine's board to sign such agreements "on New Sunshine’s behalf and to bind New Sunshine to its terms," Magnus-Stinson wrote.
"The efforts to remove Mr. Hilbert from his positions at companies 'upstream' from New Sunshine have no effect on the license agreement’s validity. There was no fraud, corporate waste, or any other wrongdoing attributable to Melania Marks that would warrant undoing the deal that the parties’ reached," Magnus-Stinson concluded.