In a decision signed last week, an arbitrator found that the comments from Miss Pennsylvania USA Sheena Monnin were false, harmful and malicious. Monnin had alleged that the five finalists had been selected in advance of the pageant's live telecast.
The arbitrator, Theodore Katz, said Monnin had two motives: "She was a disgruntled contestant who failed to make it past the preliminary competition" and she objected to the pageant's decision to allow transgender contestants. He wrote that the way the contest is judged "precludes any reasonable possibility that the judging was rigged."
Monnin, of Cranberry, Pa., resigned her state title after the pageant. Her allegations on Facebook and NBC's "Today" show cost the pageant a $5 million fee from a potential 2013 sponsor, Katz said.
Monnin's lawyer, Richard Klineburger III, had no comment on the decision, his office said.
Katz said Monnin agreed to arbitrate any disputes when she became a Miss USA contestant, but he wrote in his decision that she and her lawyer didn't participate in the process and claimed they were not required to do so.
The winner of the Miss USA pageant, Olivia Culpo of Rhode Island, competes Wednesday in the Miss Universe pageant.