This post examines an opinion a federal district court judge
recently issued in a civil case: Miss Universe, LLP v. Monnin, 2013 WL
3328241 (U.S. District Court for the Southern District of New York 2013). The judge begins by noting that the case
involves a “dispute” between Sheena Monnin, “the former Miss Pennsylvania USA,”
and “Miss Universe L.P., LLLP (MUO),
which organizes and runs the Miss USA Pageant together with one of its equity
owners, Donald Trump.” Miss Universe, LLP v. Monnin, supra.
The issue in the case is whether the judge will confirm or
vacate an “Arbitration Award” entered pursuant to the Federal Arbitration Act, 9 U.S. Code § 9. Miss Universe, LLP v.
Monnin, supra. As Wikipedia
notes, arbitration, “a form of alternative dispute resolution, is a
technique for the resolution of disputes outside the courts, where the
parties to a dispute refer it to one or more persons (the `arbitrators’ . . .
or `arbitral tribunal’), by whose decision . . . they agree to be bound.”
As to how the dispute arose and what it involved, the
opinion notes that on December 4, 2012, Monnin was “crowned Miss Pennsylvania
USA 2012”, after which she met with Randy Sanders, “owner of Sanders &
Associates, Inc., which owns the franchise for the Miss Pennsylvania USA
Pageant.” Miss Universe, LLP v. Monnin,
supra. He gave her three contracts, “including
one between Monnin and MUO.” Miss
Universe, LLP v. Monnin, supra.
Monnin signed all three, and was given copies of each. Miss Universe, LLP v. Monnin, supra. She later said they were “`long, single
spaced, extremely dense, and full of legal terms [she] did not understand.’” Miss Universe, LLP v. Monnin, supra.
Monnin, who was Miss
Pennsylvania USA, “went to compete in the “Miss USA Pageant in Las Vegas,
Nevada.” Miss Universe, LLP v. Monnin,
supra. The opinion says the
telecast for the Miss USA Pageant began
on June 3, 2012, with fifty-one contestants onstage. The field . . . was
quickly limited to the top 16 contestants, based upon scoring from a prior,
preliminary round. During a commercial break, the women who did not advance,
Monnin among them, were dismissed. . . . While waiting in the wings before
returning to the dressing rooms, Monnin claims Miss Florida USA,
Karina Brez, intimated that the results . . . were predetermined, stating: `I
know who is going to be in the top 5.’ . . . Monnin contends Brez [said] she
had seen a `paper in a notebook in the back of the stage entitled ‘final show
telecast’ earlier in that day,’ in which the top 5 contestants were already
listed, despite the fact that the competition had not yet proceeded to the
finals.
Monnin texted Sanders, stating `this is
f-ing rigged Randy,’ adding various other statements such as `I'm done. This is
ridiculous’ and `It's obviously rigged so the girl they want can shine; they
kept several beautiful girls out for that reason.’ . . . Monnin asserts she remained silent for the
remainder of the competition, `hoping Brez would turn out to be wrong. . . . The
final 5 women, however, matched those on the putative list, and the overall `winner
was Miss Rhode Island USA, Olivia Culpo, just as Brez stated.’
Miss Universe, LLP v.
Monnin, supra.
The next morning, Monnin emailed her resignation to Sanders
and sent him a text message which said
`Please check your email. I have sent
you my final and unchangeable thoughts and decision. I will not change my mind
or be talked out of this decision. Time will not change my decision. I consider
my choice to be effective immediately.’ . . . She also added: `I will not keep
quiet on this. This was not fair play.’ . . . Monnin's resignation email to Sanders cited
her disagreement with the MUO decision to permit transgendered contestants to
compete in the Pageant, stating: `I refuse to be part of a pageant system that
has so far and so completely removed itself from its foundational principles as
to allow and support natural born males to compete in it. This goes against
every moral fiber of my being.’
Miss Universe, LLP v.
Monnin, supra.
That same day, Monnin posted this on her Facebook page:
`I have decided to resign my position
as Miss Pennsylvania USA 2012. Effective immediately I have voluntarily,
completely and utterly removed myself from the Miss Universe Organization. In
good conscience I can no longer be affiliated in any way with an organization I
consider to be fraudulent, lacking in morals, inconsistent, and in many ways
trashy. I do not support this system in any way. In my heart I believe in
honesty, fair play, a fair opportunity, and high moral integrity, none of which
in my opinion are part of this pageant system any longer.’
Miss Universe, LLP v.
Monnin, supra. She followed it up with another, very long
Facebook post that elaborated on her decision and the reasons for it. Miss
Universe, LLP v. Monnin, supra. Monnin claims that “in the aftermath of these
posts,” MOU
`went on a veritable media frenzy,’
with Trump stating on Good Morning America that Monnin suffered `loser's
remorse,’ and MUO's counsel threatening legal action. . . . Trump also appeared
on the Today Show, where he called Monnin's allegations `disgraceful,’ and
noted Brez denied she had seriously contended the show was `fixed’. . . . Brez
appeared on E! and confirmed Trump's account, explaining that she was only
joking . . . and adding that the eventual winner, Olivia Culpo, was not on that
list, and as such, the Pageant could not have been rigged.
Miss Universe, LLP v.
Monnin, supra.
Monnin allegedly
was “`overwhelmed’” by the attacks against
her “`compelled to publically respond.’” Miss Universe, LLP v. Monnin, supra. So she appeared on the Today Show on June 8,
2012 and she repeated the comments in her Facebook
posts
. . ., explaining in detail her conversation with Miss Florida. . . . In
response to Curry's statement that Brez. . . had since clarified her statements,
Monnin explained that `many years of psychological training’ had enabled her to
discern when an individual was being truthful. . . . Monnin reiterated she was
sure . . . Miss Florida had been honest
when she [said] the results of the contest were predetermined. . . .
Miss Universe, LLP v.
Monnin, supra. You can read more about the events in this case in the news story you can find here.
Since Monnin’s contract with MUO required that controversies
between the two first go to mediation and, if that failed, go to binding
arbitration, Monnin and MUP proceeded with that. Miss
Universe, LLP v. Monnin, supra. The claim MUO submitted to the arbitrator
sought damages of $10 million for “defamation, tortious interference with
prospective economic advantage and breach of contract.” Miss
Universe, LLP v. Monnin, supra. Neither Monnin nor her lawyer appeared at the
arbitration hearing that was held on November 5, 2012; Monnin’s attorney
apparently did not tell her about the hearing.
Miss Universe, LLP v. Monnin, supra.
MUO presented evidence and witnesses in support of its claim. Miss
Universe, LLP v. Monnin, supra.
On December 10, 2012, Arbitrator Theodore Katz issued his
award, in which he reviewed the facts outlined above and other relevant facts
and found that Miss Florida “clarified her statements” about the Miss USA
Pageant, despite which Monnin “repeated her allegations concerning the Pageant
during her Today Show interview.” Miss
Universe, LLP v. Monnin, supra. He also found that in the period leading up
to the 2012 Pageant, MOU had been “`planning to stage its 2013 Pageant on
the Gulf Coast’” and “engaged in significant discussions with BP as a potential
corporate sponsor, `who was prepared to pay a $5 million site fee to MUO, as a
means of burnishing its corporate image’”.
Miss Universe, LLP v. Monnin, supra.
In the “wake of Monnin’s comments,” MOU resumed discussions with BP but
after BP asked about “`rigging’” in the pageant and expressed other concerns,
it abandoned “`the proposed sponsorship.’”
Miss Universe, LLP v. Monnin, supra. MOU “`hastily’” arranged to stage
the 2013 Pageant in Las Vegas, “`where it did not receive a site fee.’” Miss Universe, LLP v. Monnin, supra.
In analyzing Monnin’s liability and the appropriate damages,
Katz found she published
defamatory statements about MUO on
Facebook and on the Today show. . . that . . . were factual, capable of proof,
false, and `obviously harmful to MUO's business reputation.’ . . . [H]e
concluded that Monnin made the statements with `actual malice.’ [He] found no
breach of contract, as Monnin had already resigned by the time she published
the June 5 Facebook statement and engaged in the Ann Curry interview.
Regarding damages, Katz found MUO
proved it lost $5 million in the form of the BP site fee. . . He denied MUO's
claims for additional damages. . . .
Miss Universe, LLP v.
Monnin, supra. (As to the importance of actual malice and
reputational harm, check out Wikipedia’s entry on defamation.)
After some other procedural maneuvers, Monnin filed a motion
to vacate the arbitration award, which is what this judge is ruling on. Miss Universe, LLP v. Monnin, supra.
He began is analysis of her arguments by noting that under 9 U.S. Code §10(a), a court can only vacate such an award if (i) it was procured by fraud,
(ii) there was evident partiality on the part of the arbitrator, (iii) the
arbitrator was guilty of misconduct for not hearing relevant evidence, refusing
to postpone a hearing or “other misbehavior” that prejudiced one of the parties
or (iv) the arbitrator “so exceeded” his powers that a valid award was not
entered. Miss Universe, LLP v. Monnin,
supra.
Monnin said the award should be vacated because Katz
exceeded his powers and/or she was not given notice of the arbitration hearing
and so was unable to attend, which prejudiced her. Miss Universe, LLP v. Monnin, supra. As to the first issue, she argued the Today
show interview was not included in MUO’s statement of its claim against her,
and so was not properly submitted for arbitration. Miss
Universe, LLP v. Monnin, supra.
The judge began his ruling on that argument by noting that
the U.S. Court of Appeals for the 2d Circuit, the rulings of which his court is bound
to follow, has held that the fourth issue noted above is to be construed very
narrowly. Miss Universe, LLP v. Monnin, supra. He noted, first, that Monnin’s comments on
the Today show
were within the scope of [MUO’s]
original Statement of Claim. The first allegation in the Statement of Claim is
that of defamation. . . . As is common practice, the defamation claim
incorporates the factual allegations of the entire Statement -- factual
allegations that include the assertion that `[t]he libelous [Facebook] post
concerning MUO has been republished and widely disseminated by the media in
print, radio, television and via the internet.’
Miss Universe, LLP v.
Monnin, supra. He therefore found that the Today show statements
“can reasonably be considered as within” the scope of the statement of claim in
the arbitration proceeding. Miss Universe, LLP v. Monnin, supra.
He noted that even if MUO’s statement of claim was “considered too
vague” to include the Today Show comments, they were “directly submitted” to
Katz in MUO’s brief submitted prior to the hearing and at the hearing
itself. Miss Universe, LLP v. Monnin, supra. “Accordingly, Monnin's statements during the
Today Show were highlighted in the pre-hearing brief as a basis for defamation
liability, and it could thus have come as no surprise that the statements were
later considered by Arbitrator Katz in making his eventual determination.” Miss
Universe, LLP v. Monnin, supra.
As to Monnin’s claim that she never received notice of the
arbitration hearing which made the hearing unfair, the judge found, first, that
when she signed the contract with MUO after becoming Miss Pennsylvania USA, she
initialed each page of the contract, “including the page containing the
arbitration clause,” and signed it, which certified that she had read it. Miss
Universe, LLP v. Monnin, supra. He also noted that she did not “seriously contend”
she was not bound by the contract’s requirement that she submit to arbitration
and so moved on to the other issue. Miss Universe, LLP v. Monnin, supra.
As to the notice issue, he pointed out that MUO consistently
communicated, by email, Fed Ex and hand-delivered documents, with Monnin about
filings and other proceedings in the arbitration process from the time it
began. Miss Universe, LLP v. Monnin, supra. He also noted that essentially from
the beginning of the arbitration process, her attorney insisted she was “`not
subject to the terms of the “Official Entry Form/Contract” for the 2012 Miss
USA Pageant,’ and . . . would `not be participating in . . . arbitration.’” Miss Universe, LLP v. Monnin, supra.
On August 29, 2012, her attorney was notified about an upcoming
conference call as part of the arbitration; he responded by sending a letter
and “copying Monnin” on it, in which he said that neither he nor Monnin would
participate in the call. Miss Universe,
LLP v. Monnin, supra.
This continued until on November 2, 2012, when all of the
parties – including Monnin and her attorney – were contacted and told the
arbitration hearing would take place on November 5, 2012. Miss
Universe, LLP v. Monnin, supra. Her lawyer then sent a civil complaint to
Trump and MUO, informing that unless MUO “withdrew the arbitration”, he would
file the complaint in a federal district court, which would have initiated a
federal civil suit against them. Miss Universe, LLP v. Monnin, supra.
Neither Monnin nor her lawyer appeared at the arbitration hearing. Miss
Universe, LLP v. Monnin, supra.
On December 13, a copy of the arbitration award was sent to
Monnin’s lawyer, after which he sent a letter to MUO stating, among other
things, that
`I do not represent Ms. Monnin with
regard to this matter. I did not sign any documentation subjecting either
myself or Ms. Monnin through this process. Please stop bothering me. This is
annoying.’
Miss Universe, LLP v.
Monnin, supra. The same day,
Monnin received “correspondence” from her lawyer which said the arbitration had
gone ahead “`without anyone present on your behalf’” and that since he was
“`not licensed to practice law’” in New York, he could not “`give you advice on
this arbitration matter.’” Miss Universe,
LLP v. Monnin, supra.
The judge found that while it was “unfortunate and perhaps
unfair” that her lawyer, “likely in violation of the Model Rules of Professional Conduct, failed to communicate with his client for several months,
despite receiving repeated . . . status updates regarding the Arbitration,” it
is “well established that notice to an attorney constitutes notice to the
represented client.” Miss Universe, LLP v. Monnin, supra.
As a result, he held that
the record establishes that Monnin
received ample notice -- both actual and constructive through her counsel -- of
the Arbitration proceedings. The onus was on her to inquire as to the status of
those proceedings when she had heard nothing from her counsel [or] MUO . . . for
several months. Moreover, Monnin's apparent objections to arbitrability could
have been preserved despite her participation. Thus, the Arbitration was not
fundamentally unfair.
Miss Universe, LLP v.
Monnin, supra. He therefore confirmed the entry of the
arbitration award against Monnin. Miss
Universe, LLP v. Monnin, supra.
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