In its Superior Court lawsuit filed in December, Hydroderm accused the actress, 43, of breaching their 2005 "exclusive endorsement deal" by endorsing rival City Cosmetics.
The Desperate Housewives star even posed for pictures applying CityLips pout plumper (a direct competitor to Hydroderm's Volumizing Lip Serum), the $2.8 million suit alleged.
"Hatcher's name, image and likeness have been linked to so many competitors' products," according to the suit, "that it is anyone's guess as to what product keeps her skin and lips youthful."
Hatcher responded to the claim by insisting she has "done absolutely nothing wrong."
Contractually Bound to ArbitrateIn her ruling Monday, Judge Helen I. Bendix said that both Hatcher and Hydroderm are bound by a prior agreement to arbitrate all of the company's claims rather than litigate them in court, the Associated Press reports.
Hatcher's attorney Alan Wertheimer has labeled the suit an "unjustified and public assault on Teri Hatcher's good name, reputation and celebrity."