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Melania Trump libel suit settled, another filed

First Lady Melania Trump and U.S. President Donald Trump (not pictured) attend the 60th Annual Red Cross Gala at Mar-a-Lago club in Palm Beach, Florida, U.S., February 4, 2017. 

REUTERS/Carlos Barria - RTX2ZNRL

First Lady Melania Trump has settled her libel lawsuit against a Maryland blogger who wrote about rumors that Melania Trump had been a “high-end escort” and that she had “a mental breakdown” during the presidential campaign. As part of the settlement, the blogger, Wester Griffin Tarpley, has issued a written statement and will, according to a statement from Trump’s lawyer, “pay a substantial sum as a settlement.”

Tarpley’s retraction reads:

I posted an article on August 2, 2016 about Melania Trump that was replete with false and defamatory statements about her.  I had no legitimate factual basis to make these false statements and I fully retract them.  I acknowledge that these false statements were very harmful and hurtful to Mrs. Trump and her family, and therefore I sincerely apologize to Mrs. Trump, her son, her husband and her parents for making these false statements.

The first lady’s lawsuit against the Daily Mail -- which published Tarpley’s post -- was dismissed in Maryland last week. The Daily Mail had argued that Maryland wasn’t the appropriate venue for the lawsuit, and Trump refiled it in New York on Monday. 

At the heart of Trump’s argument is the claim that she lost out on earnings she could have generated while first lady, because the Daily Mail published the false allegation that she once worked as an escort. Her lawyers’ brief alleges that as a result of the statements about her, Melania Trump’s brand “has lost significant value, and major business opportunities that were otherwise available to her have been lost and/or substantially impacted.”

In the lawsuit that was refiled in New York, Trump’s lawyers argue that she “had the unique, once-in-a-lifetime opportunity,” presumably as first lady, “to launch a broad-based  commercial brand in multiple product categories, each of which could have garnered multi-million dollar business relationships for a multi-year term during which Plaintiff (Trump) is one of the most photographed women in the world.” 

Trump’s lawyers also wrote in their brief, “These product categories would have included, among other things, apparel, accessories, shoes, jewelry, cosmetics, hair care, skin care and fragrance.”

This raises unprecedented ethics concerns, although the argument she’s making largely stems from the very high bar set for a libel plaintiff who happens to be an all-purpose public figure. Her lawyer is trying to prove she suffered commercial and economic injury. She is seeking $150 million in this lawsuit, and her lawyer needs to make a case that rises to that injury claim -- which is why her lost business profits are a part of the brief submitted to the court. 

Outside of the context of the litigation, however, the claim raises real ethical questions about profiting from being first lady. This is an unprecedented claim – alleging that a first lady expected to make millions for her brand as the most photographed woman in the world.

Her legal argument could be problematic for her husband and for White House Chief of Staff Reince Priebus. Richard Painter, former Bush White House Chief Ethics lawyer, pointed out that the first lady is not a public official and not a federal employee, but her husband and Priebus are responsible for ensuring that the White House is not exploited for private gain.  

If it were to be exploited by the first lady, Painter says, it would be a violation of the standards and conduct for federal employees. For example, the president and chief of staff cannot let the White House building to be used for private gain -- including photographs of the White House or photographs of the first lady at official White House events.

In any case, it is clear that Melania Trump has taken these accusations personally, given that she took the time to appear at a small courthouse to attend a procedural hearing and make the point that she felt heavily invested in this case. Trump has the resources to fight this case, so she is likely to continue to do so even if it threatens to pose an ethical dilemma.

CBS News’ Laura Strickler contributed to this report.