The Quaker State can be proud of many things.  The Liberty Bell.  Andy Warhol.  Tastykake.  Trading Places.  The Immaculate Reception.  But one part of its history that Pennsylvania may wish to forget (besides dog killer Michael Vick) is the garrulous young woman chosen to represent the state in the Miss USA pageant — Sheena Monnin.  Last month, a New York arbitrator found that Monnin defamed the Miss Universe organization when she claimed that the show had been rigged and ordered her to pay $5 million in damages.  Everyone knows that beauty pageants are big business (and were even before Honey Boo Boo tragically became a household name).  But how did they suddenly become the setting for big damages awards too?

“Fraudulent, Lacking in Morals, Inconsistent, and in Many Ways Trashy”

Monnin participated in the Miss USA competition and was not one of the semifinalists selected by the pageant judges.  A different panel of celebrity judges then chose the five finalists, including the eventual Miss Universe, Olivia Culpo of Rhode Island.

Sheena-MonninMoments after learning she had not been chosen as a semifinalist, Monnin sent an email to the director of the Miss Pennsylvania USA Pageant, Randy Sanders, claiming that the contest had been “f-ing rigged Randy.”  (Wouldn’t be surprised if this phrase becomes part of the vernacular.)  Monnin resigned as Miss Pennsylvania the next day.  As her reason, she stated that the pageant system had “removed itself from its foundational principles” by allowing transgendered contestants.  That night, she publicly announced her resignation on Facebook, stating that she wanted no affiliation with an organization that was “fraudulent, lacking in morals, inconsistent, and in many ways trashy” — a sentiment that sounds like it could just as easily be a review of the clientele at many Hollywood nightclubs.

In a second Facebook post, she provided a new rationale for her resignation:  the show had been rigged.  As evidence, Monnin gave details of a conversation with another contestant who purportedly had found a list naming the top five finalists prior to the final judging.

Not surprisingly, these comments received much media attention.  Monnin repeated her accusations on NBC’s Today Show, which is broadcast nationally.

Given that allegations of corruption in judging are nothing new and are rarely substantiated (the 2002 Winter Olympics figure skating scandal notwithstanding), the Miss Universe officials might have let this go after Monnin ignored the group’s offer to review the judging process with her.  Forgiveness, however, was no longer on the agenda after the organization allegedly lost a potential $5 million sponsor who purportedly pulled out after expressing concern about the “rigging” allegations.

Miss Universe Fights Back

The Miss Universe organization commenced arbitration in New York against Monnin for defamation and breach of contract (a story we first covered when the arbitration was commenced back in June 2012).  As damages, the group sought the $5 million in lost sponsorship, plus millions more for the organization’s purported loss of market value.  Monnin claimed that she had never agreed to arbitrate the dispute and refused to participate in the arbitration.

Based on evidence provided solely by the Miss Universe organization, the arbitrator found that there was “virtually no possibility” the contest had been fixed.  Factoring into this finding was that independent auditors “tightly controlled” the preliminary judging.  Security personnel monitored the celebrity judges, all of whom had agreed to act independently or face criminal prosecution. Additionally, the contestant who purportedly had told Monnin of the list of five semifinalists, Miss Florida, disputed Monnin’s version of events.  Think of it like Rashomon, only much less interesting.

The arbitrator further found that the former beauty queen’s statements on her Facebook post and on theToday Show were made with actual malice against the organization — a concept our regular readers should recognize, which means she either knew that her statements were false or acted in reckless disregard of the truth.  The arbitrator found that Monnin had “fabricated” the story about the list of five finalists; the only list was one created solely for the practice run-through.  As motivation, the arbitrator cited her strong criticism of the decision to allow transgender contestants and her ire about failing to make it past the preliminary competition.  By not attempting to seek verification of her allegations, Monnin further showed “reckless disregard for whether there was a sound factual basis for her defamatory allegations.”

As damages, the arbitrator found that Monnin had cost the group $5 million in lost sponsorship, but that other claimed monetary damages were too speculative.  The arbitrator also refused to order Monnin to remove the statements from her Facebook page and to prohibit her from making further comments, reasoning that such an injunction was unwarranted because Monnin was merely “a disgruntled contestant who has had her day in the sun.”

The arbitrator rejected the breach of contract claim.

Lessons Learned From Miss Pennsylvania

This case might have come out differently had the former Miss Pennsylvania not made some tactical errors (not least of which was getting into a public shouting match with the Miss Universe organization’s leader, Donald Trump, who is not exactly known for shying from controversy).

Her first mistake was not confirming her recollection of events with Miss Florida and making sure they were on the same page before going public.  Instead, she complained first, in the hope that the other contestant would support her.  Putting to one side any stereotypical comments we could make about putting faith in another pageant contestant, this is an important general rule of thumb in any litigation — secure your evidence first, then go after the other side.

Other early errors were shooting off the bitter email and ignoring the Miss Universe organization’s offer to review the voting process with her.  The arbitrator found both of these acts to be evidence of actual malice.

But hands down, her biggest mistake was blowing off the arbitration.  Once Monnin learned that Miss Universe was commencing arbitration against her, she should have defended the case.  Had she been able to establish her statements to be true, that would have been a complete defense to the defamation charge.  Monnin also could have attempted to seek refuge in the First Amendment.

Moreover, actual malice requires a plaintiff to prove the defendant was lying or spouting off without any regard for the truth — usually a fairly high standard to meet.  Had Monnin provided any credible explanation for why she thought the statements were true, or been able to establish that her true motivation was concern for the integrity of the voting process, the arbitrator might have found that the proof fell short of the actual malice standard.

Monnin also missed an opportunity to contest the claim that her words actually caused damages to the Miss Universe organization.  Maybe the sponsor was planning to pull out anyway or had decided to fund another event.  The “rigging” allegation could have provided a helpful pretext for some preexisting desire to get out of the deal without hurting any feelings.  The sponsor did not appear as a witness during the arbitration, which might have given her a basis for challenging Miss Universe’s damages evidence as hearsay.

But you can’t win if you don’t play.  Instead, Monnin defaulted, claiming that she never entered into an arbitration agreement.  The inference gleaned from Monnin’s non-appearance was that she knew her statements to be false.  The former Miss Pennsylvania may now find grounds for an appeal, perhaps by relying on her existing argument that she never actually agreed to arbitration in the first place.  If that fails, Monnin will quickly find that, for the most part, arbitration awards are virtually incontestable.

Of course, the person who seems to be learning the fewest lessons from this case is Monnin herself, who has already taken to the Internet to insist that she never even knew the arbitration was happening, that her story was not fabricated, and that other contestants have since contacted her to back up her claims, including her account of Miss Florida’s infamous “list.”  Trump has already crowed about teaching Monnin an “expensive lesson,” and with her latest comments, he may be gearing up to take her to school once again.  Maybe this time she’ll decide to show up.