J. PAUL OETKEN, 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.
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."
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.)
That same day, Monnin posted on her Facebook page, informing her fans of her resignation. She wrote the following:
(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
(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,
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.
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
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 injunctive relief. (Id. at 14.) To summarize, Arbitrator Katz awarded $5 million in monetary damages to MUO, finding that Monnin had defamed the organization with her public statements. (Id. at 16.)
MUO filed its Petition to Confirm the Arbitration Award with this Court on December 17, 2012. (Dkt. No. 1.) MUO next requested that the Court enter a default judgment against Monnin, who had been served with the Petition on December 20, 2012. (Dkt. Nos. 4, 5.) In early January, Monnin, who at the time was pro se, requested a four-week extension to respond to the Petition. (Dkt. No. 11.) This Court granted Monnin's request and set a briefing schedule in its Order of January 11, 2013. (Dkt. No. 9.) Monnin, who by this
"It is well-settled that judicial review of an arbitration award is narrowly limited," Barbier v. Shearson Lehman Hutton Inc., 948 F.2d 117, 120 (2d Cir. 1991), and the reviewing court "must grant" the petition to confirm an award "unless the award is vacated, modified, or corrected," 9 U.S.C. § 9; accord D.H. Blair & Co., Inc. v. Gottdiener, 462 F.3d 95, 110 (2d Cir.2006). Moreover, a reviewing court may vacate an Arbitration Award only in certain, specific circumstances. Id. The Federal Arbitration Act ("the FAA") limits grounds for vacatur to the following four circumstances:
9 U.S.C. § 10(a); accord Rich v. Spartis, 516 F.3d 75, 81-82 (2d Cir.2008). In addition to the grounds for vacatur specified in § 10(a), there is a fifth, "judicially-created ground, namely that `an arbitral decision may be vacated when an arbitrator has exhibited a manifest disregard of law.'" Jock v. Sterling Jewelers Inc., 646 F.3d 113, 121-22 (2d Cir.2011) (quoting Westerbeke Corp. v. Daihatsu Motor Co., 304 F.3d 200, 208 (2d Cir.2002) (footnote omitted)).
"A party moving to vacate an arbitration award has the burden of proof, and the showing required to avoid confirmation is very high." Gottdiener, 462 F.3d at 110. This limited review is designed to preserve the "twin goals" of arbitration: "settling disputes efficiently and avoiding long and expensive litigation." Willemijn Houdstermaatschappij, BV v. Standard Microsystems Corp., 103 F.3d 9, 12 (2d Cir.1997). The Second Circuit has consistently emphasized the "extremely limited" role of courts in reviewing arbitration awards, Wall Street Assoc., L.P. v. Becker Paribas, Inc., 27 F.3d 845, 849 (2d Cir. 1994) (citations omitted), and accordingly, "[o]nly `a barely colorable justification for the outcome reached' by the arbitrators is necessary to confirm the award," Gottdiener, 462 F.3d at 110 (quoting Landy Michaels Realty Corp. v. Local 32B-32J, Service Employees Int'l Union, 954 F.2d 794, 797 (2d Cir.1992)). Therefore, even when a reviewing court disagrees with the merits of an arbitrator's decision, so long as "`a ground for the arbitrator's decision can be inferred from the facts of the case,'" the award will be confirmed. Barbier, 948 F.2d at 121 (quoting Sobel v. Hertz, Warner & Co., 469 F.2d 1211, 1216 (2d Cir. 1972)).
Monnin moves to vacate the Arbitrator's award on three alternative grounds: (1) that Arbitrator Katz exceeded the scope of his powers, as proscribed by 9 U.S.C. § 10(a)(4); (2) that Monnin lacked both actual and constructive notice of the Arbitration Hearing and the claims it was to
Monnin first contends that Arbitrator Katz exceeded his powers in awarding $5 million in damages for defamation, asserting that the television interview upon which Arbitrator Katz based his findings was not raised in MUO's statement of claim, and thus, was not properly submitted to arbitration. See, e.g., 9 U.S.C. § 10(a)(4) ("where the arbitrators exceeded their powers, or so imperfectly executed them that a mutual, final, and definite award upon the subject matter submitted was not made" (emphasis added)).
The Second Circuit has "`consistently accorded the narrowest of readings' to section 10(a)(4) permitting vacatur where the arbitrator has exceeded her powers." Jock, 646 F.3d at 122 (internal quotations omitted) (quoting ReliaStar Life Ins. Co. of N.Y. v. EMC Nat. Life Co., 564 F.3d 81, 85 (2d Cir.2009)). The central inquiry when examining vacatur under § 10(a)(4) is "whether the arbitrators had the power, based on the parties' submissions or the arbitration agreement, to reach a certain issue, not whether the arbitrators correctly decided that issue." Westerbeke Corp. v. Daihatsu Motor Co., 304 F.3d 200, 220 (2d Cir.2002) (quoting DiRussa v. Dean Witter Reynolds Inc., 121 F.3d 818, 824 (2d Cir.1997)) (quotations omitted). Thus, alleged legal errors, even those of a serious nature, will not give rise to the circumstances contemplated by § 10(a)(4). "Accordingly, an arbitrator may exceed her authority by, first, considering issues beyond those the parties have submitted for her consideration, or, second, reaching issues clearly prohibited by law or by the terms of the parties' agreement." Jock, 646 F.3d at 122. Neither circumstance is present here.
Courts especially emphasize the narrowness of § 10(a)(4) "when [it] is invoked to challenge an award deciding `a question which all concede to have been properly submitted in the first instance.'" Id. (quoting DiRussa, 121 F.3d at 824). Likewise here, all parties concede that MUO's defamation claim was properly submitted to arbitration; however, Monnin seeks vacatur on the ground that Arbitrator Katz exceeded his powers in determining that Monnin defamed MUO during her television interview, contending that the statements Monnin made on the Today Show were outside the scope of the issues submitted for arbitration. In response, MUO asserts that Monnin's Today Statements were thrice submitted to Arbitrator Katz: (1) in the Statement of Claim; (2) in MUO's pre-hearing briefing; and (3) at the Arbitration Hearing itself.
With respect to the Statement of Claim, Monnin substantially relies on the Fifth Circuit case Totem Marine Tug & Barge, Inc. v. North American Towing, Inc., 607 F.2d 649 (5th Cir.1979), claiming that the case's reasoning applies with full force here. (See Monnin Opp. at 18-20.) Totem, however, as emphasized by its progeny, is inopposite here. "In Totem, the parties, Totem and North American, entered into a charter agreement for a vessel owned by Totem, which Totem terminated before the agreement expired." Capgemini U.S. LLC v. Sorensen, No. 04 Civ. 7584(JGK), 2005 WL 1560482, at *8 (S.D.N.Y. July 1, 2005). The Totem court held that "[t]he arbitration panel exceeded its powers by awarding damages for charter hire to North American," when North American had "fail[ed] to list charter hire in its itemized statement of damages submitted
First, Monnin's Today Show statements were within the scope of the original Statement of Claim. The first allegation in the Statement of Claim is that of defamation. (See Klineburger Decl., Ex. B, at ¶¶ 32-37.) 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." (Id. at ¶ 17 (emphasis added).) Accordingly, the Today Show statements can reasonably be considered as within the scope of the Statement of Claim. Moreover, the courts, in more recent years, have readily distinguished Totem, noting that "federal law does not impose any requirements as to how specific a notice of arbitration must be," Executone Info. Sys., Inc. v. Davis, 26 F.3d 1314, 1322 (5th Cir.1994), meaning that even where a specific claim is not asserted in extreme detail in the original Statement of Claim, it remains within the arbitration's scope, so long as the issue is generally submitted to arbitration, see Carte Blanche (Singapore) Pte. Ltd. v. Carte Blanche Int'l, Ltd., 683 F.Supp. 945, 957-58 (S.D.N.Y.1988), aff'd, 888 F.2d 260 (2d Cir.1989) (holding that an award of $5.1 million in consequential damages did not exceed arbitrators' power, even though "the original pleading in the case sought total damages of approximately $6.7 million, and [] the original pleading was not amended to allow so large a claim for consequential damages"); see also Harper Ins. Ltd. v. Century Indem. Co., 819 F.Supp.2d 270, 277 (S.D.N.Y.2011) ("It is indisputable that arbitrators have no authority to rule on an issue not submitted to them. However, there is no parallel per se rule that it is beyond the authority of the arbitrators to issue a remedy directed to an issue squarely before them unless it was requested by one of the parties. The case law presented by petitioners only supports the former, uncontested, rule of law."); Capgemini, 2005 WL 1560482, at *8 ("Here, unlike in Totem, the Panel did not decide a separate theory of liability that was not at issue in the arbitration. Although Capgemini disputes the form that the damages for the 10,201 shares took, it does not dispute that liability for the shares was a central issue in the arbitration and was fully litigated. Therefore, Totem does not provide support for the argument that the Court should for vacate the Award based pursuant to § 10(a)(4).").
Second, even if the Statement of Claim were to be considered too vague to reasonably include the Today Show statements, these comments were directly submitted to Arbitrator Katz as aspects of the defamation claim at two other "critical junctures" of the arbitration process: namely, (1) in MUO's pre-hearing brief; and (2) at the Arbitration Hearing itself. (See MUO Rep. at 12.) MUO submitted its pre-hearing brief to Arbitrator Katz on October 26, 2012, in which MUO dedicated substantial attention to the statements made by Monnin on the Today Show. (See generally
The centrality of the Today Show statements throughout MUO's brief is sharply contrasted with the situation in Totem, where the party seeking damages not only "fail[ed] to list charter hire in its itemized statement of damages submitted to Totem," but also "conceded" in its brief that "charter hire was not an issue in the arbitration." Totem, 607 F.2d at 651. Thus, when Totem arbitrators awarded damages associated with charter hire, it clearly reflected a use of power outside the scope of the issues submitted to arbitration, whereas here, MUO's briefing underscored the Today Show statements as bases for defamation liability. Similarly, evidence presented at the Arbitration Hearing itself highlighted the importance of the Today Show statements within MUO's narrative. (See MUO Rep. at 13 (noting that MUO President Shugart referred to the Today Show statements nearly 20 times during the course of her testimony before Arbitrator Katz and adding that the Today Show interview was screened during the Arbitration Hearing, and both the DVD and the transcript were accepted as exhibits to the Arbitration).)
Thus, in light of the narrowness of the § 10(a)(4) exception, together with the marked presence of the Today Show statements throughout the Arbitration process, Arbitrator Katz cannot be said to have exceeded his powers in issuing the $5 million award for defamation.
Monnin also alleges that she never received due notice of the Arbitration Hearing, and therefore that the process lacked the requisite fundamental fairness. (See Monnin Opp. at 20-23.) In response, MUO contends that Monnin and her attorney refused to participate in the Arbitration process, despite repeated and adequate attempts to keep them apprised of the proceedings.
Upon her receipt of the Miss Pennsylvania USA title, Monnin undisputedly signed a contract that provided for mediation and binding arbitration in the event of "any controversy or claim arising out of or relating to [the] Agreement, the breach of any term hereof, or [Monnin's] participation in or connection with the Pageant [that could not] be settled through direct discussions." (Balber Decl., Ex. A, at ¶ 22.) While Monnin raises various claims about the circumstances under which she signed this contract (see Monnin Opp. at 4-5), she undisputedly initialed each page, including the page containing the arbitration clause, and signed the agreement, certifying that she had read it. (Balber Decl., Ex. A, at 18.) Accordingly, Monnin does not seriously contend that she was not bound by the contract's terms requiring that disputes be submitted to arbitration —
It is axiomatic that while arbitration "is much less formal than a trial in court," all parties to such a proceeding are nevertheless "entitled to notice and an opportunity to be heard." Totem, 607 F.2d at 651. Accordingly, in examining alleged misconduct by an arbitrator, as contemplated in § 10(a)(3), "[t]he relevant inquiry under both the federal and New York arbitration statutes is whether misconduct by the Arbitrator resulted in a denial of `fundamental fairness.'" Euromarket Designs, Inc. v. McGovern & Co., LLC, No. 08 Civ. 7908(LTS)(DCF), 2009 WL 2868725, at *4 (S.D.N.Y. Sept. 3, 2009) (citations omitted). Here, Monnin construes her purported lack of notice as misconduct on the part of Arbitrator Katz, which in turn denied her a fundamentally fair hearing, compelling vacatur. Monnin's assertions, however, are belied by the record.
Despite Monnin's characterization of events, it appears that both Monnin and her counsel "received routine, consistent communications about the Arbitration from both the MUO and JAMS and were fully aware of each stage of the proceedings." (MUO Rep. at 4.) First, on June 6, 2012, in the wake of Monnin's Facebook posts, MUO notified Monnin by hand delivered letter and email that it "intend[ed] to assert" claims "arising out of false and defamatory statements [Monnin had] made concerning the 2012 Miss USA Pageant." (Balber Decl., Ex. C.) In that letter, MUO directed Monnin to "retain any and all documents and electronic information in any form ..., relating in any way to the MUO or the Miss USA Pageant." (Id.) The next day, on June 7, 2012, MUO began mediation proceedings, through JAMS, in accordance with Monnin's contract with MUO. Monnin was also sent a copy of that commencement letter — via both email and federal express. (Id., Ex. D.) On June 12, 2012, MUO — through counsel — emailed Monnin in an attempt to schedule a mediation session for June 20, 2012, detailing the foregoing attempts to contact Monnin and stating "I am trying to connect with you so that we can move forward with the mediation which we hope will resolve the dispute between you and the MUO." (Id. at E.) Monnin did not participate in the mediation, and accordingly, on June 25, 2012, MUO commenced a JAMS arbitration against Monnin. The following day, Monnin was served with copies of the Demand, Statement of Claim, and Official Entry Form and Contract for the 2012 Miss USA Pageant. (See Balber Decl., Ex. B.)
According to Monnin, she immediately turned these documents over to Klineburger, her attorney, who, in turn, told Monnin that "she was not bound by any agreement to arbitrate and that Sheena need not respond to any communications from JAMS." (Monnin Opp. at 10.) On June 28, 2012, Klineburger corresponded with MUO, writing that he had been retained to represent Sheena Monnin "with regard to the [JAMS Mediation] along with a ancillary [sic] claim against [MUO] and/or relevant third parties." (Balber Decl., Ex. G.) Klineburger not only copied Monnin on the letter, he also stated that he would "reach out to your [sic] early next week to discuss this matter further." (Id.) JAMS officially commenced the Arbitration on July 2, 2012, sending notice to both MUO's attorneys and Monnin. (Id. at Ex. G.) In the Official Commencement, JAMS enclosed a list of available arbitrators, and gave the
Ten days later, on July 13, 2013, JAMS appointed retired Magistrate Judge Theodore H. Katz as the arbitrator for the case, sending notice of that appointment to MUO's counsel and Monnin. (Balber Decl., Ex. H.) Klineburger next wrote to JAMS on July 18, 2012, confirming that he represented Monnin in the JAMS Arbitration, copying Monnin and MUO on the correspondence. (Klineburger Decl., Ex. D.) In that correspondence, Klineburger reiterated that Monnin was "not subject to any arbitration provisions, has not entered into an agreement with [JAMS] and [would] not be participating in any JAMS resolution services." (Id.) In August, Meredith Stockman, the Case Coordinator for the Monnin matter at JAMS, repeatedly emailed Monnin directly regarding the case, discussing outstanding invoices for the proceedings and scheduling. (Id., Exs. F, G.) On August 27, 2012, in response to these emails, Klineburger contacted JAMS via email and stated that Monnin "never contracted with [JAMS] for any services whatsoever," and as such, had "no intention of going forward with anything involving such dispute resolution." (Id., Ex. H.) Klineburger also mandated that as Monnin was represented by counsel, JAMS was never to "contact her directly ever again." (Id.) Again, Monnin was copied on this correspondence.
On August 29, 2012, JAMS notified MUO and Monnin, via counsel, of a scheduled conference call with Arbitrator Katz on September 14, 2012. (Id., Ex. I.) Klineburger, copying Monnin, responded to this notice with another letter to JAMS, stating: "Neither myself [sic] nor Ms. Monnin will have a conference call in the above captioned matter since there is nothing to have a conference call about." (Id., Ex. J.) Accordingly, the conference call proceeded without Monnin or Klineburger. On September 4, 2012 Case Manager Stockman emailed Klineburger regarding the balance owed to JAMS for the arbitration. (Id., Ex. K.) Klineburger responded and asked for a "signed agreement with [JAMS] wherein either myself [sic] and/or my client agreed to utilize your services." (Id., Ex. L.) Klineburger concluded his September 5 email to JAMS by asking that JAMS "leave [him] and Ms. Monnin alone." (Id.)
On September 19, 2012, Arbitrator Katz issued a Report of Preliminary Conference and Scheduling Order, noting Monnin's failure to respond to the Statement of Claim and scheduling the Hearing for November 5, 2012. This Order was sent to Klineburger. (Balber Decl., Ex. J.) JAMS also sent Klineburger a separate notice of hearing. (Id., Ex. K.) As Arbitration proceeded, Monnin remained non-participatory, failing to respond to the document requests that MUO served on Klineburger on September 21, 2012 (id., Ex. L), and choosing not to conduct any discovery of her own. Additionally, neither Monnin nor Klineburger on her behalf submitted a pre-hearing memorandum, exhibits, or a witness list, as directed by Arbitrator Katz's Order of September 20. On November 2, 2012, JAMS again contacted all parties, including Klineburger, confirming
Neither Monnin nor Klineburger appeared for the Arbitration Hearing on November 5, 2012. (See Monnin Decl., Ex. K.) On December 10, 2012, Klineburger received an email from Monnin's father, Phillip Monnin, thanking him for "successfully removing [the MUO] threat of arbitration[,]" and inquiring as to the status of the complaint against Mr. Trump. (Klineburger Decl., Ex. O.) Klineburger did not "immediately respond" to Mr. Monnin's correspondence, and three days later, JAMS sent Klineburger a copy of the Final Arbitration Award entered by Arbitrator Katz. (Id. at ¶¶ 27-28.) Klineburger claims that this email from JAMS was the first time he learned, "contrary to Philip Monnin's December 10, 2012 email and unbeknownst to Monnin, that the Arbitration had proceeded before Arbitrator Katz on November 5, 2012." (Id. at ¶ 30.) At this juncture, Klineburger sent a letter to JAMS Case Manager Stockman, stating as follows:
(Id., Ex. R.)
In a declaration, Klineburger states that since he never received a substantive response from JAMS regarding the signed agreement he requested, he "believed the matter to be resolved." (Id. at ¶ 24.)
(Monnin Decl., ¶ 81.) Monnin was "shocked" to receive this last of Klineburger's correspondence, as she was under the impression that the situation had been handled by counsel, and had been told repeatedly by Klineburger that she was not required to participate in the Arbitration proceedings. (Monnin Opp. at 16.)
First and foremost, as discussed above, Monnin herself received consistent communication from MUO, counsel to MUO, JAMS, and later, Arbitrator Katz, detailing the various stages of the Arbitration proceedings. Not only was she initially served with the Statement of Claim, but several of the aforementioned parties were in constant contact with Monnin via email and letter for several months. Monnin ceased receiving correspondence only when Klineburger confirmed and emphasized his representation of Monnin, and mandated that all future correspondence regarding the Arbitration be directed at Klineburger, rather than his client. MUO, counsel to MUO, and JAMS all complied with this directive, and were subsequently in constant contact with Klineburger. While it is unfortunate and perhaps unfair that Klineburger, likely in violation of the Model Rules of Professional Conduct, failed to communicate with his client for several months, despite receiving repeated entreaties and status updates regarding the Arbitration, it is well established that notice to an attorney constitutes notice to the represented client. See Ogodor v. City of New York, No. 98 Civ. 5353(LAK)(RLE), 2001 WL 210192, at *3 (S.D.N.Y. Feb. 26, 2001), report and recommendation adopted, March 14, 2001 ("Notice to an attorney qualifies as notice to a client and thus Taubman's receipt of the EEOC Right To Sue letter constituted Ogodor's receipt of the letter."); accord McKinney v. Waterman S.S. Corp., 925 F.2d 1, 5 (1st Cir.1991) ("Notice to an attorney is notice to the client." (citing Fed.R.Civ.P. 5(b); Irwin v. Veterans Administration, 498 U.S. 89, 111 S.Ct. 453, 112 L.Ed.2d 435 (1990))).
The situation here is akin to that in Euromarket, 2009 WL 2868725. In that case, Respondent McGovern & Co., LLC sought vacatur of an arbitration award entered against it, citing a lack of fundamental fairness due to the lack of notice, as McGovern itself never had any actual notice of the hearing, because its General Counsel, Michael P. Goldsmith "handled all aspects of the underlying arbitration between the parties," and chose to keep "the arbitration proceeding a secret, and [] never informed McGovern that an arbitration hearing had been scheduled." Id. at *2. As here, McGovern did not appear at the Arbitration Hearing, and was unaware of its existence until much later. Id. Despite these circumstances, and despite the fact that Goldsmith turned out to be a disbarred attorney incapable of actual representation,
Id. at *5 (internal citations omitted) (emphasis added). At bottom, Arbitrator Katz, together with MUO and JAMS, like the arbitrator and petitioners in Euromarket, "provided the requisite notice to Respondent's representative," "did not prevent Respondent from presenting evidence, or limit the type of evidence that Respondent could present, nor ... prevent Respondent from cross-examining witnesses or otherwise defending its position." Id. In sum, Klineburger's "alleged failure to communicate properly with his client and the resultant [award] [] cannot be attributed to any flaw in the arbitral proceedings." Id. Moreover, as in Euromark, Arbitrator Katz "did not merely enter a default judgment against Respondent for failure to appear at the hearing." Id. Instead, he carefully considered the evidence presented and the relevant law.
Second, both Monnin and Klineburger contend that the lack of valid notice is underscored by the fact that neither JAMS nor MUO ever provided Klineburger with a copy of the signed contract in which Monnin agreed that all disputes with MUO would be submitted to mediation and, if unresolvable, to arbitration. (See Klineburger Decl., ¶ 24 ("Having received no substantive response from JAMS, I believed the matter to be resolved. No signed arbitration agreement had been produced between Miss Universe and Monnin; even if there was a signed agreement it terminated when she resigned; and there was no signed agreement with JAMS."); id., ¶ 33 ("The first time I saw any signed arbitration agreement was when Miss Universe attached one to its Petition to Confirm the Final Arbitration Award filed in this Court.").) These assertions, however, do not nullify the valid notice of the Arbitration proceedings, nor do they present a valid excuse for non-participation. It is well established that "[r]efusal to participate in an arbitration proceeding is not required in order to preserve an objection to arbitrability. On the contrary, the purpose of the Federal Arbitration Act is to encourage participation." Nat'l Ass'n of Broadcast Employees & Technicians AFL-CIO v. Nat'l Broadcasting Co., 707 F.Supp. 124, 130 (S.D.N.Y. 1988); cf. Bridgepointe Master Fund Ltd. v. Biometrx, Inc., No. 09 Civ. 6874, 2009 WL 4756440, at *3 (S.D.N.Y. Dec. 11, 2009) ("While BMRX complains of short notice, in fact, it had ample notice of the arbitration. Instead, it deliberately chose not to participate. Indeed, it appears in light of its non-performance of the financial agreement and failure to pay the amount due and owing, which it does not contest, the BMRX made a tactical choice to absent itself from the arbitration."); see also Michaels v. Mutual Marine Office, Inc., 472 F.Supp. 26, 31 (S.D.N.Y.1979)
In sum, 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, MUO, or JAMS for several months. Moreover, Monnin's apparent objections to arbitrability could have been preserved despite her participation. Thus, the Arbitration was not fundamentally unfair.
Although not grounds for vacatur, the Court notes the apparent deficiency of Klineburger's representation of his client, Monnin, throughout these proceedings.
Klineburger undisputedly held himself out as Monnin's counsel and representative for both the Arbitration and other "ancillary proceedings," only to later disavow this relationship, informing Monnin that he is not licensed to practice in New York, and thus, was unable to give her advice on the Arbitration matter. Additionally, Klineburger directed JAMS and MUO to cease all direct contact with Monnin, but admittedly failed to communicate with her regarding the status of the Arbitration for months at a time, in clear contravention of the Rules of Professional Conduct. See, e.g., Model Rules of Prof'l Conduct R. 1.4(a)-(b) ("A lawyer shall: ... reasonably consult with the client about the means by which the client's objectives are to be accomplished; [] keep the client reasonably informed about the status of the matter;... and ... [][a] lawyer shall explain a matter to the extent reasonably necessary to permit the client to make informed decisions regarding the representation.").
Moreover, Klineburger, without citing any authority, and without any apparent consideration of the consequences of non-participation, repeatedly asserted that his client was simply not required to engage in mediation or arbitration, as provided for in the applicable Agreement. Seemingly oblivious to the facts that (1) the Arbitration could, and would, proceed in Monnin's absence; and (2) the law permitted Monnin to participate without conceding arbitrability, Klineburger ignored all entreaties and document requests, failed to draft a pre-hearing brief, and did not represent his client in the Arbitration, despite claiming to serve as her counsel and representative. See id. R. 1.1 ("A lawyer shall provide competent representation to a client. Competent representation requires the legal knowledge, skill, thoroughness and preparation reasonably necessary for the representation."); id. R. 1.3 ("A lawyer shall act with reasonable diligence and promptness in representing a client."). Klineburger's contention that he, in good faith, believed that Monnin was not bound by the Agreement excuses neither his failure to communicate with her, nor his choice not to engage in document discovery or exhibit designations, which would have likely resulted in production of the very Agreement he repeatedly claimed to disavow.
Finally, Monnin seeks vacatur of the Arbitration Award on the ground that Arbitrator Katz exhibited a manifest disregard for the law, as defined by the Second Circuit in Jock. See 646 F.3d at 121-22 ("In addition to the section 10(a) grounds for vacatur, we have recognized a judicially-created ground, namely that `an arbitral decision may be vacated when an arbitrator has exhibited a manifest disregard of law.'" (quoting Westerbeke Corp., 304 F.3d at 208 (footnote omitted))).
"A party seeking to vacate an arbitration award on the basis of manifest disregard of the law must satisfy a two-pronged test, proving that: `(1) the arbitrator knew of a governing legal principle yet refused to apply it or ignored it altogether, and (2) the law ignored by the arbitrator was well defined, explicit, and clearly applicable to the case.'" Gottdiener, 462 F.3d at 110-11. Manifest disregard is a rigorous standard, and it reflects far "more than error or misunderstanding with respect to the law." Id. at 111 (quoting Merrill Lynch, Pierce, Fenner & Smith, Inc. v. Bobker, 808 F.2d 930, 933 (2d Cir.1986) (quotations omitted)). The Second Circuit clarified in DiRussa that manifest disregard does not refer to merely a "controlling legal principle" and "obvious error" in ignoring it; by contrast, "the term `disregard' implies that the arbitrator appreciates the existence of a clearly governing legal principle but decides to ignore or pay no attention to it." DiRussa, 121 F.3d at 821 (quoting Bobker, 808 F.2d at 933).
Here, Monnin contends that Arbitrator Katz correctly stated, and was accordingly well aware of, the controlling precedent on defamation, but nevertheless refused to apply the law. (See Monnin Opp. at 24-25.) The crux of Monnin's argument is that "there was absolutely no evidence offered at the arbitration hearing to suggest Sheena's comments caused BP to cancel its sponsorship." (Id. at 25.) The Court disagrees.
First, Arbitrator Katz carefully considered the evidence before him, describing various ways in which Monnin's statements resulted in "immediate economic consequences" for MUO, including the loss of BP's sponsorship. (See Final Award, at 14.) The Award painstakingly examines the evidence provided with respect to the traditional relationship between the Miss Universe Pageant and the host site, discussing the importance of the "site fee" as a source of revenue for MUO. (Id. at 12.) Accordingly, there is far more than a "barely colorable" justification for the result reached in Arbitrator Katz's decision. And second, Monnin's argument with respect to manifest disregard is ultimately a disagreement with Arbitrator
The Court does not take lightly that Monnin is compelled to pay what is a devastating monetary award. Moreover, Monnin undeniably is suffering from her poor choice of counsel, who unconscionably chose to absent himself from the Arbitration proceedings, advised Monnin to do the same, and presented no evidence on her behalf over the course of several months. Although Monnin should have initially engaged in mediation and later, remained diligent over the course of the Arbitration process, it is clear from the record that she was woefully unaware of both the consequences of her disengagement and the severity of the allegations in the Statement of Claim.
That being said, a court's role in reviewing an arbitration award is necessarily limited, and such decisions may be set aside only in certain, enumerated circumstances. Accordingly, the Court is bound by the law, and its review may not exceed the scope defined for it by this Circuit's precedent. Sympathy, or apparent inequity, may play no role in a court's legal analysis, and here, the law is clear.
For the foregoing reasons, the Arbitration Award entered by Arbitrator Theodore H. Katz, is CONFIRMED and Respondent's petition to vacate the Award is DENIED.
The Clerk of Court is directed to enter judgment accordingly, to close the motion at docket entry number 16, and to close the case.
SO ORDERED.
(Id., Ex. E.)
