Mayorga v. Ronaldo, Case No.: 2:19-cv-00168-JAD-DJA

• Decision Date: 30 September 2020
• Docket Number: Case No.: 2:19-cv-00168-JAD-DJA
• Parties: Kathryn MAYORGA, Plaintiff v. Cristiano RONALDO, Defendant
• Court: U.S. Court of Appeals — Third Circuit

491 F.Supp.3d 840

Kathryn MAYORGA, Plaintiff

v.Cristiano RONALDO, Defendant

Case No.: 2:19-cv-00168-JAD-DJA

United States District Court, D. Nevada.

Signed September 30, 2020

Larissa D. Drohobyczer, Leslie M. Stovall, Leslie Mark Stovall, Ross Heber Moynihan, Stovall & Associates, Las Vegas, NV, for Plaintiff.

Kendelee L. Works, Peter S. Christiansen, Whitney Barrett, Keely Ann Perdue, Christiansen Law Offices, Las Vegas, NV, for Defendant.

Order Sustaining in Part Objection and Adopting and Modifying in Part Report & Recommendation

[ECF Nos. 26, 29, 55, 58, 66, 67, 70]

Jennifer A. Dorsey, U.S. District Judge

More than a decade ago, Kathryn Mayorga and Cristiano Ronaldo executed a "Settlement & Confidentiality Agreement" to resolve Mayorga's allegations that Ronaldo assaulted her in a Las Vegas hotel room. In it, they agreed to resolve by arbitration "any and all future disputes or controversies" arising between them. Despite that agreement, Mayorga pleads 11 claims against Ronaldo that arise out of the alleged assault, subsequent settlement negotiations, and public release of the settlement agreement's contents by a hacker. Ronaldo moves under Nevada law for an order compelling Mayorga to arbitrate all of her claims and to stay this case.¹ He separately moves to dismiss Mayorga's claims.² Ronaldo also moves to strike two documents that Mayorga attached to her response to his motion to compel arbitration.³ Mayorga opposes all of Ronaldo's motions and moves for leave to file a response brief that exceeds the 24-page limit.⁴ Finally, Mayorga's brother Jason seeks to be appointed her guardian for this case.⁵

I referred all of these motions to Magistrate Judge Albregts, who entered a report recommending that I grant Ronaldo's motion to compel arbitration and stay this case, deny as moot Ronaldo's motion to dismiss and Jason's guardianship motion, grant Ronaldo's motion to strike two of Mayorga's exhibits, and grant Mayorga's motion for leave to file a response brief that exceeds the page limits (the R&R).⁶ Mayorga objects to all of these recommendations except as to granting her excess pages.⁷ Ronaldo responds that I should overrule Mayorga's objections and adopt the R&R in full.⁸

Having thoughtfully considered the magistrate judge's findings and recommendations and the parties' briefing, I adopt and modify the R&R in part and sustain some objections while overruling others. With the benefit of the parties' more robustly developed points and authorities at this objection stage, which the magistrate judge did not have, I find that federal arbitrability law governs the parties' arbitration agreement. Applying that law, I find that Mayorga's challenge that she lacked the mental capacity to assent to the settlement agreement is not arbitrable, but her other defenses against arbitration, e.g., the settlement agreement is illegal and violates public policy, are arbitrable. Mayorga did not comply with the correct procedure to request a jury trial of the mental-capacity issue, so I direct the parties to prepare to adjudicate it in a bench trial. Because the proper venue for resolving Mayorga's claims on their merits hinges on the mental-capacity issue, I deny without prejudice Ronaldo's motion to dismiss them. I also deny without prejudice Jason's guardianship motion because it does not have a full complement of evidentiary support. Finally, I overrule Mayorga's objection to the recommendation to strike two of her exhibits because she has not shown that the magistrate judge's determination that those documents are privileged is contrary to law.

I. Legal Standards for Reviewing a Magistrate Judge's Determinations

When a party objects to a magistrate judge's report and recommendation on a dispositive issue, the district court must conduct a de novo review of the challenged findings and recommendations.⁹ This standard is without deference to the magistrate judge's determination. Under this standard, the district judge "may accept, reject, or modify, in whole or in part, the findings or recommendations made by the magistrate judge," "receive further evidence," or "recommit the matter to the magistrate judge with instructions."¹⁰

A district judge may also reconsider any non-dispositive matter that has been finally determined by a magistrate judge "when it has been shown that the magistrate judge's order is clearly erroneous or contrary to law."¹¹ This standard of review "is significantly deferential" to a magistrate judge's determination.¹² A district court overturns a magistrate judge's determination under this standard only if it has "a definite and firm conviction that a mistake [of fact] has been committed"¹³ or a relevant statute, law, or rule has been omitted or misapplied.¹⁴

Because the motions to strike documents and appoint a guardian are not dispositive, they are subject to the deferential standard of review.¹⁵ Ronaldo's Federal Civil Procedure Rule 12(b)(6) dismissal motion raises issues that are dispositive of many of Mayorga's claims,¹⁶ so I review the magistrate judge's resolution of that motion de novo.¹⁷ What remains is Ronaldo's motion to compel arbitration. The Ninth Circuit has not decided whether such a motion is dispositive, and reasonable district courts are split on this issue.¹⁸ Out of an abundance of caution and because Judge Albregts phrased his resolution of the motion to compel as a recommendation, not an order, I also review the magistrate judge's resolution of that motion under the de novo standard.

II. Ronaldo's motion to compel arbitration and stay this case [ECF No. 26]

As it relates to the magistrate judge's recommendation that I grant Ronaldo's motion to compel arbitration and stay this case, Mayorga objects that (1) the parties' arbitration agreement is governed by federal law, not Nevada law; (2) the parties did not agree to arbitrate questions of arbitrability; and (3) a judge and a jury, not an arbitrator, must determine all three of her challenges against arbitration.¹⁹ Ronaldo argues in response that Nevada's arbitrability law governs the arbitration agreement and Mayorga's challenges must be decided by an arbitrator because they go to the entire agreement, not just the arbitration clause.²⁰ I begin my analysis by resolving the parties' dispute about which law governs their arbitration agreement.

A. Choice of arbitrability law

The Federal Arbitration Act (FAA) states that "[a] written provision in any ... contract evidencing a transaction involving commerce to settle by arbitration a controversy" arising out of the contract or transaction "shall be valid, irrevocable, and enforceable save upon such grounds as exist at law or in equity for the revocation of any contract."²¹ The magistrate judge ultimately recommends finding that Nevada's arbitrability law governs the parties' arbitration agreement because the settlement agreement contains a general provision choosing Nevada law for its governance, interpretation, and enforcement.²² Before reaching that conclusion, however, the magistrate judge determined that the settlement agreement "fall[s] within the FAA's coverage" because it "involves an exchange of money for a release of rights by one out-of-state resident [Ronaldo] and one Nevada resident [Mayorga]."²³ Mayorga does not challenge this determination but Ronaldo does, arguing in his response brief that the settlement agreement falls outside the FAA's scope because it merely "resolves a personal injury claim based upon alleged events that transpired only in Nevada" and has "nothing to do with the exchange of goods or services."²⁴

Although Ronaldo's points are both valid, they are distinctions without a difference. The FAA defines "commerce" to mean "among the several States or with foreign nations ...."²⁵ The Supreme Court has "interpreted the term ‘involving commerce’ in the FAA as the functional equivalent of the more familiar term ‘affecting commerce’—words of art that ordinarily signal the broadest permissible exercise of Congress' Commerce Clause power."²⁶ This means "that the FAA encompasses a wider range of transactions than those actually ‘in commerce’—that is, ‘within the flow of interstate commerce.’ "²⁷

The Ninth Circuit explained in U.S. v. Cummings that "Congress's Commerce Clause authority is broad enough to stretch beyond the simple regulation of commercial goods traveling in interstate and foreign commerce to include regulation of non-economic activities—such as racial discrimination or growing wheat for personal consumption—that affect, impede, or utilize the channels of commerce."²⁸ The Supreme Court has identified three categories of activity that Congress may regulate and protect under its commerce power: (1) "the use of the channels of commerce"; (2) "the instrumentalities of commerce or persons in interstate commerce, even though the threat may come only from intrastate activities"; and (3) "activities that have a substantial effect on commerce."²⁹ "Congress has broader power" "in the context of foreign commerce ...."³⁰

The facts in this case implicate commerce. Ronaldo and Mayorga are citizens of different countries—Portugal and the United States.³¹ The settlement agreement required Ronaldo to pay Mayorga $375,000 in exchange for a release of her claims against him, payable via check or wire transfer to the client trust account of Mayorga's Nevada attorney.³² Although not a party to this case, an image-management company that Ronaldo retained is also a party to the settlement agreement and co-obligated to pay Mayorga the settlement amount.³³ There is no allegation or evidence that the company is a Nevada entity or even a domestic one. The settlement agreement states that payment is to be made upon Mayorga's attorney's delivery of payment instructions and a W-9 tax form.³⁴ There is no allegation or evidence that payment deviated from the contractual obligations. Nor is there allegation or evidence that the settlement funds originated in Nevada. Ronaldo's American...