The 30-year-old socialite was accused of missing a launch party for HairTech International products in 2007, and was also seen wearing a competitor’s extensions.
The company had paid her $3.5 million to be the face of their Dream Catchers range of clip-in locks.
However, the company’s founder and CEO Chris Volek has now admitted the allegations were wrong and has dropped the case against her.
The blond star – who had counter-sued for $2.1 million in damages and had missed the launch party because she was in jail for violating the terms of her probation as a result of a reckless driving charge - admits she is pleased with the decision.
She said: “It is certainly not unusual for businesspeople to have their disagreements, but I am glad that Chris has acknowledged the hard work and dedication I put into promoting his products.”
Discussing why he had dropped the case, Chris – who had claimed her failure to turn up to the party had lost the company $6.6 million in lost revenue on its own – confessed the information he had received about her actions had been incorrect.
He said in a statement: “The information I received from others and on which I based the lawsuit was not accurate."