Maria Kristina Dominguez sued rap mogul Sean Combs and Vibe magazine over a topless picture of her.
The photo shows the hedge fund manager and two other women in topless mermaid costumes at a party thrown by Combs.
It was published in the November 2006 issue of Vibe.
A New York judge has tossed out the three million dollar lawsuit.
The judge noted the woman can't claim an invasion of privacy when she was only wearing pasties.
A lawyer says Dominguez is considering her legal options.