Pacitti v. Macy's
193 F.3d 766 (1999)
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Rule of Law:
When a promoter makes a public offer for a prize-winning contest, an enforceable unilateral contract is formed upon an offeree's performance. If the terms of the offer as stated in promotional materials are susceptible to more than one reasonable interpretation, the contract is ambiguous, and its interpretation is a question of fact for the jury.
Facts:
- Macy's East, Inc. ('Macy's') and the producers of the musical 'Annie' entered into an agreement for Macy's to sponsor a talent search for the lead role.
- The agreement specified that the winner would be offered a 'standard Actors’ Equity Production Contract,' which allows producers to replace an actor.
- Macy's advertised the event as 'Macy’s Search for Broadway’s New ‘Annie’,' stating the 'starring role ... could be yours!'
- Joanna Pacitti, then eleven years old, received an application with 'Official Rules' which she and her mother signed. Neither the ads nor the rules disclosed that the prize was a standard, terminable actor's contract.
- Pacitti won the competition, and Macy's issued press releases referring to her as 'Broadway’s New ‘Annie’.'
- Pacitti and her mother signed the standard Actors’ Equity contract with the producers, which contained a clause allowing the producers to replace her.
- After performing as Annie for four months in over 100 performances on a national tour, the producers replaced Pacitti three weeks before the scheduled Broadway opening.
Procedural Posture:
- Stella and Joseph Pacitti sued Macy’s East, Inc. in Pennsylvania state court on behalf of their daughter, Joanna.
- Macy's removed the case to the U.S. District Court for the Eastern District of Pennsylvania.
- The District Court limited the scope of discovery available to the Pacittis.
- Macy’s filed a motion for summary judgment.
- The District Court granted summary judgment in favor of Macy’s on all claims.
- The Pacittis, as appellants, appealed the summary judgment order to the U.S. Court of Appeals for the Third Circuit.
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Issue:
Are the promotional materials and official rules for a talent search, which offer the winner the chance to 'star' in a Broadway production, ambiguous as a matter of law when they do not disclose that the winner will only receive a standard actor's contract that permits replacement at the producers' discretion?
Opinions:
Majority - Alito, Circuit Judge
Yes. The contract is ambiguous because it is susceptible to more than one reasonable interpretation. Under Pennsylvania law, a promoter's public contest rules constitute an offer for a unilateral contract, which is accepted by performance. The court found that Macy's promotional language, such as offering the 'starring role' to 'star in the 20th Anniversary Broadway production,' could reasonably be interpreted by a participant as an offer for the actual role, not merely the opportunity to enter a standard actor's contract that allowed for replacement. Macy's never disclosed this significant limitation in any of its public-facing materials. The fact that Pacitti later signed the standard contract does not retroactively clarify the ambiguity of Macy's initial offer. Because the contract's terms are ambiguous, determining the parties' intent is a question for the fact-finder, and the district court erred in granting summary judgment.
Dissenting - Stafford, Senior District Judge
No. The contract was not ambiguous. Macy’s offered Joanna Pacitti the opportunity to star in the production, and she received that opportunity. She auditioned, was selected by the producers, signed a contract, and performed the role in over one hundred shows on a national tour. The district court correctly concluded that Pacitti received the benefit of her bargain with Macy’s, as there was no guaranteed promise that she would appear on Broadway, only that she would be selected for the role, which she was.
Analysis:
This case establishes that the terms of a public contest are defined by the reasonable interpretation of its promotional materials, not by undisclosed agreements between the promoter and third parties. It underscores the duty of a contract's drafter, particularly in a consumer context, to be clear and unambiguous about the terms of an offer, especially regarding any limitations on the prize. By finding the contract ambiguous, the court shifts the power to interpret the agreement from the judge to a jury, making it more difficult for contest sponsors to dismiss lawsuits on summary judgment when their promotional language is vague. This holding places a higher burden on promoters to explicitly state all material conditions and qualifications of a prize to avoid misleading participants.
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