However, the expedition group maintains it did nothing wrong because there was no conclusive evidence whether it had found Earhart's plane. The searchers have seen a few man-made materials on the ocean floor in the area where it thinks Earhart's plane crashed.
Skavdahl said he will issue a ruling later but did not specify a date.
In oral arguments Thursday, lawyer John Masterson, representing the defendants, told Skavdahl that one reason the lawsuit should be dismissed is that it would force a jury to decide whether the group actually found the plane even though no experts have made that determination.
"When no one has an expert that says it's conclusively Amelia Earhart's plane, how do you then turn to a jury of lay people and say tell us whether or not Amelia Earhart's airplane is under a 1,000 feet of water in the South Pacific after 77 years?" Masterson said after the hearing.
After the hearing, Gillespie said the group would be ridiculed if it had declared it found Earhart's plane based on an undersea video of a few objects.
Tim Stubson, a Casper lawyer representing Mellon, said whether Earhart's plane has been found is central to determining whether fraud has occurred.
"I think it's a pretty simple case of did they know the wreckage was there and did they misrepresent that fact, and that's really the simple question to be answered by a jury," Stubson said.
Stubson said there's a "measure of probability" whether the Earhart wreckage has been found.
"The evidence will show that the probability is very, very high," he said.
While Skavdahl didn't immediately rule whether the lawsuit should continue, he did deny a motion by Masterson to dismiss Gillespie from the lawsuit.
Earhart was trying to become the first woman aviator to circle the globe when she and her navigator, Fred Noonan, disappeared.
The International Group for Historic Aircraft Recovery has staged repeated expeditions to search the waters around the Kiribati atoll of Nikumaroro, about 1,800 miles south of Hawaii.