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Miss Universe L.P. v. Monnin

United States District Court, S.D. New York

July 2, 2013

MISS UNIVERSE L.P., LLLP., Petitioner,

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[Copyrighted Material Omitted]

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For Miss Universe L.P., L.L.L.P., Petitioner: Scott Sonny Balber, Cooley LLP (NY), New York, NY; Timothy L. Foster, Cooley Godward Kronish L.L.P. (San Diego), San Diego, CA.

For Sheena Monnin, Respondent: Damian Leonard Albergo, LEAD ATTORNEY, Cole Schotz Meisel Forman & Leonard, P.A. (NJ), Hackensack, NJ; Steven R. Klein, LEAD ATTORNEY, PRO HAC VICE, Cole, Schotz, Meisel, Forman & Leonard, P.A., Hackensack, NJ; Michael Redmond Yellin, Cole, Schotz, Meisel, Forman & Leonard, P.A (NYC), New York, NY.


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J. PAUL OETKEN, United States District Judge.

Respondent Sheena Monnin (" Monnin" ) is the former Miss Pennsylvania USA, and this matter relates to a dispute between Monnin and the Miss Universe L.P., LLLP (" MUO" ), which organizes and runs the Miss USA Pageant together with one of its equity owners, Donald Trump. Before the Court are Petitioner MUO's petition to confirm the Arbitration Award entered in its favor, pursuant to the Federal Arbitration Act, 9 U.S.C. § 9, and Respondent Monnin's cross-petition to vacate that award. For the reasons that follow, MUO's petition is granted, Monnin's cross-petition is denied, and the Arbitration Award is confirmed.

I. Background

A. Factual Background

1. The Pageants

On December 4, 2012, Monnin was crowned Miss Pennsylvania USA 2012. (Memorandum of Law in Opposition, Dkt. No. 17 (" Monnin Opp." ), at 4.) In the wake of her victory, Monnin met with Randy Sanders (" Sanders" ), the owner of Sanders & Associates, Inc., which owns the franchise for the Miss Pennsylvania USA Pageant. Sanders provided Monnin with three contracts, including one between Monnin and MUO. ( Id.) According to Monnin, the documents were " long, single spaced, extremely dense, and full of legal terms that [Monnin] did not understand." ( Id.) Although Monnin asserts that she " barely [had] read through the first few pages (which did not contain an arbitration clause)," when Sanders returned and asked her if she had questions ( id. at 4-5), a copy of the relevant contract reveals that Monnin initialed every page, and signed the final one. (Declaration of Scott S. Balber, Dkt. No. 23 (" Balber Decl." ), Ex. A.) Sanders later provided Monnin with a signed copy of the two contracts with Sanders & Associates, as well as with an unsigned copy of the agreement with MUO. With respect to this latter document, Monnin contends that " [h]aving only read the first few pages, [she] could not confirm that the third document was an actual copy of the Miss USA agreement that she had signed." (Monnin Opp. at 5.)

Monnin, as Miss Pennsylvania USA, went on to compete in the Miss USA Pageant in Las Vegas, Nevada. The telecast for the Miss USA Pageant began on June 3, 2012, with fifty-one contestants onstage. The field, however, 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 from the stage. ( Id. at 5-6.) While waiting in the wings before returning to the dressing rooms, Monnin claims that Miss Florida USA, Karina Brez (" Brez" ), intimated that the results of the contest were predetermined, stating: " I know who is going to be in the top 5."

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( Id. at 6.) After inquiring further, Monnin contends that Brez explained that 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. ( Id.) Immediately, 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." (Declaration of Richard F. Klineburger, III, Dkt. No. 18 (" Klineburger Decl." ), Ex. P (" Final Award" ), at 4; Declaration of Respondent Sheena Monnin, (" Monnin Decl." ), Ex. A.)[1] Monnin asserts that she remained silent for the remainder of the competition, " hoping that Brez would turn out to be wrong." (Monnin Opp. at 6.) 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." ( Id.)

The morning after the pageant, on June 4, 2012, Monnin emailed Sanders her resignation; she also sent Sanders a text message which stated as follows: " 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." (Monnin Decl., Ex. A.) She also added: " I will not keep quiet on this. This was not fair play." ( Id.) 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." (Final Award, at 5.)

2. The Relevant Statements

That same day, Monnin posted on her Facebook page, informing her fans of her resignation. She wrote the following:

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.

( Id. at ¶ 47.) Monnin received some initial support from fellow Pageant contestants, with one sending her a Facebook message stating: " I'm so proud of you. I was there with you backstage when it all went down. Didn't Kelly O[2] also confirm the script? So crazy. Love u sista. Flo-Reeeeda!" Monnin responded, thanking the unnamed contestant for her support, to which the woman replied: " This is kind of cool. You started a big buzz and the blogs actually

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agree with you. Go girl!" (Monnin Decl., Ex. B.) Monnin also received a text message from another Pageant participant, who applauded Monnin for speaking out and added, " hopefully this brings more awareness to how shady this particular competition really was." ( Id., Ex. C.) Bolstered by this support, Monnin wrote another Facebook post on June 5, 2012:

I agree that it is my moral obligation to state what I witnessed and what I know to be true. I will relay to you the reasoning behind my resignation. I witnessed another contestant who said she saw the Top 5 BEFORE THE SHOW EVER STARTED proceed to call out in order who the Top 5 were before they were announced on stage. Apparently the morning on June 3rd she saw a folder lying open to a page that said 'FINAL SHOW telecast, June 3, 2012'. After the Top 16 were called and we were standing backstage she hesitantly said to me and another contestant that she knew who the Top 5 were. I said 'who do you think they will be? She said that she didn't 'think' she 'knew' because she saw the list that morning. She relayed whose names were on the list. Then we agreed to wait and see if that was indeed the Top 5 called that night. After it was indeed the Top 5 I knew the show must be rigged; I decided at that moment to distance myself from an organization who did not allow fair play and whose morals did not match my own. That is all I know about this. If this contestant would like to step forward as an eye witness and as being the one who saw the sheet with the Top 5 already selected before the judges ever saw the Top 16, then perhaps action can be taken. As for me, I believe her words and I will not encourage anyone to compete in a system that in my opinion and from what I witnessed was dishonest.

( Id. at ¶ 51.) In the aftermath of these two Facebook posts, Monnin claims that MUO " 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. (Monnin Opp. at 8.) Trump also appeared on the Today Show, where he called Monnin's allegations " disgraceful," and noted that Brez denied that she had seriously contended the show was " fixed" or predetermined. Later, Brez appeared on E! and confirmed Trump's account, explaining that she was only joking when she spoke about the rehearsal list and adding that the eventual winner, Olivia Culpo, was not on that list, and as such, the Pageant could not have been rigged. ( Id. at 8-9.)

Monnin claims that, " overwhelmed" with the attacks against her, and supported by some of her fellow contestants,[3] she " felt compelled to publically respond." ( Id. at 9.) It is this compulsion which gave rise to an appearance by Monnin on the Today

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Show, and eventually, resulted in the Arbitration Award against her. During Monnin's discussion with Ann Curry, airing on June 8, 2012, Monnin repeated the substance of her Facebook posts and beliefs on national television, explaining in detail her conversation with Miss Florida USA. (Final Award, at 6.) In response to Curry's statement that Brez, Miss Florida, had since clarified her statements, Monnin explained that " many years of psychological training" had enabled her to discern when an individual was being truthful. ( Id. at 7.) Accordingly, Monnin reiterated that she was sure, without a doubt, that Miss Florida had been honest when she had stated that the results of the contest were predetermined. ( Id.) Monnin also added that she had no intention of utilizing the Today Show interview in order to " destroy" or " bad talk" anybody, but rather, simply wanted to provide her version of events. ( Id. at 9.) The day following the interview, Monnin received another text of support from a fellow contestant, who wrote, inter alia : " Wow I can't believe FL is denying what she said now." (Monnin Decl., Ex. E.)

3. The Arbitration

Monnin's contract with MUO, titled " Official Entry Form/Contract 2012 Miss USA Pageant," provided that in the event that " any controversy or claim arising out of or relating to this Agreement, the breach of any term hereof, or [] participation in or in connection with the Pageant" could not " be settled through direct discussions," the parties agreed to " endeavor first to settle the controversy or claim by mediation . . . administered by JAMS," and if unable to resolve the issues, agreed to submit to " binding arbitration . . . administered by JAMS." (Final Award, Ex. B, ¶ 22.) Accordingly, on June 25, 2012, after Monnin failed to participate in mediation, MUO filed its Demand for Arbitration and Statement of Claim with JAMS, serving it on Monnin. (Monnin Opp. at 10.) MUO's Statement of Claim sought compensatory damages of $10 million, for alleged defamation, tortious interference with prospective economic advantage, and breach of contract. ( See Balber Decl., Ex. D.) Over the course of the next several months, JAMS and MUO's counsel engaged in significant correspondence with both Monnin and her attorney Richard Klineburger, III. (See Reply Memorandum of Law in Further Support, Dkt. No. 22 (" MUO Rep." ), at 3-5.) However, neither Monnin nor Klineburger participated in the arbitration process, and they both failed to appear at the Arbitration Hearing, which took place on November 5, 2012.[4] It appears that Monnin was unaware that the Arbitration Hearing was going forward, as her attorney had not told her as much. (See Monnin Opp. at 13 (" [T]otally unbeknownst to Sheena, on November 5, 2012, an arbitration hearing had proceeded before Arbitrator Katz." ).) In addition to engaging in pre-hearing briefing, at the day-long Hearing, MUO provided various exhibits, including a videotape of Monnin's Today Show interview, and live testimony from four witnesses: (1) Paula Shugart, MUO's President; (2) Tal Goldhammer, an Ernst and Young partner responsible for monitoring the Pageant's judging process; (3) Craig Heitkamp, a state director and franchisee of MUO; and (4) Jonathan Low, an expert witness who testified regarding damages. ( See MUO Rep. at 6-7.)

On December 10, 2012, Arbitrator Theodore H. Katz issued his Arbitration Award. ( See generally Final Award.) In his Award, Arbitrator Katz meticulously reviewed the background circumstances of

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the dispute between Monnin and MUO, describing the various statements made by Monnin--via text message; on Facebook; and finally, during her television interview on the Today Show. ( Id. at 4-6.) The Award noted that " when questioned by MUO officials, Miss Florida expressed shock that Monnin was claiming that she had identified the five finalists before they were announced." ( Id. at 7.) Arbitrator Katz wrote that despite the fact that Miss Florida had clarified her statements, Monnin nonetheless repeated her allegations concerning the Pageant during her Today Show interview. ( Id.) Additionally, the Award detailed the " many comments and questions" MUO received from " the press, the general public, as well as franchisees and other business-related entities" in the wake of Monnin's public comments. ( Id.)

Arbitrator Katz also discussed how, " [i]n the months preceding the 2012 Miss USA Pageant, MUO had been planning to stage its 2013 Pageant on the Gulf Coast." ( Id.) In an effort to do so, MUO met with " members of the local Congressional delegation and other local politicians, who endorsed the locale of the Pageant and viewed it as a means of increasing tourism on the storm-ravaged Gulf Coast." ( Id.) In keeping with this theme, MUO 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." ( Id.) However, Arbitrator Katz cited testimony showing that, in the wake of Monnin's comments, when " MUO resumed discussions with [BP]," the sponsor inquired as to " the allegations of 'rigging', [and] expressed concern about the effect on its image," eventually choosing to " abandon[] the proposed sponsorship." Furthermore, the Award explained that, as a result of this sponsorship loss, MUO was forced to " hastily" make " arrangements to stage the Pageant in Las Vegas, where it did not receive a site fee." ( Id.)

In analyzing liability, Arbitrator Katz found that Monnin published defamatory statements about MUO on Facebook and on the Today show, and furthermore, that the statements were factual, capable of proof, false, and " obviously harmful to MUO's business reputation." ( Id.) Moreover, he concluded that Monnin made the statements with " actual malice." ( Id. at 9-10.) However, Arbitrator Katz 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, Arbitrator Katz found that MUO had proved that it lost $5 million in the form of the BP site fee, as the sponsorship failed to go forward due to the " rigging allegations." ( Id. at 12-13.) He denied MUO's claims for additional damages, citing a lack of " sound basis to fix a reasoned and reasonably precise amount of loss of [market] value," and also declined to award MUO ...

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