Stormy, don't worry about violating your NDA

Donald Trump's favorite hammer in his bully-boy toolbox is the nondisclosure agreement, backed by million-dollar pena...

Posted: Mar 26, 2018 8:17 AM
Updated: Mar 26, 2018 8:17 AM

Donald Trump's favorite hammer in his bully-boy toolbox is the nondisclosure agreement, backed by million-dollar penalties for each violation. His legal team uses it to cow less sophisticated or less wealthy adversaries into silence.

Take the case of Stormy Daniels, the porn actress who says she had an affair with Trump in 2006. Trump lawyer Michael Cohen said he negotiated an agreement with Daniels in October 2016 in which he paid her $130,000 and required she not disclose any details of the alleged affair or otherwise disparage Trump. The "hush agreement," as Daniels aptly calls it, is backed by a so-called "liquidated damages" provision, which purports to require she pay $1 million for any and all breaches.

So Daniels goes on Jimmy Kimmel and stops just short of admitting to an affair with Trump -- does that mean she now owes $1 million? Well, according to court papers formally joined by Trump and his lawyers, she has breached the hush agreement as many as 20 times (no details were provided) -- so make that $20 million.

And yet despite this court filing, Daniels will appear on "60 Minutes" Sunday night to give an extended interview to Anderson Cooper. Now imagine how many millions she could be sued for! More than enough, taunts Cohen, for him to take an "extended vacation."

Trump and Cohen's Bronx bluster notwithstanding, the "liquidated damages" clause in Daniels's hush agreement is a far less potent tool then they want her to believe. Indeed, it is not enforceable.

Contract law is pragmatic: It permits actual damages for breach, but not punishment. The breaching party is responsible for making the non-breaching party whole -- nothing more.

There is a legitimate place in a contract for the "liquidated damages" clause. For some contracts, it is very hard for the parties to determine in advance the fair measure of damages in the event of a breach. In such a setting, the parties can include a clause that sets out what the damages will be.

However, and crucially, the set amount must be a reasonable forecast of the anticipated or actual harm from a breach. A party cannot simply name an arbitrary, exorbitant figure as the presumed "damages" from a breach, even if the other party agrees. If the law were otherwise, the breaching party would be locked in even when performance was inefficient or unfair, and the non-breaching party would reap a windfall.

When courts see a party using a liquidated damages clause to punish or deter a breach, they will condemn it as a "penalty" and strike it out of the contract.

How does this standard analysis apply to Trump and Cohen's attempt to silence Daniels?

First, this does seem to be a situation in which it would be hard for the parties to determine in advance the fair measure of damages in the event of a breach. Assume, for example, that Daniels had gone public days before the election. The question of normal damages -- how to put Trump back in the position he would have been if no breach had occurred -- is hard to conceptualize, let alone calculate in terms of money.

So, now we come to the pivotal question: Is the $1 million per breach -- any and every breach (including under the agreement, any "public disparagement" of Trump unrelated to the affair) -- a "reasonable forecast of the anticipated or actual harm"?

The answer is plainly no. The initial breach, had it occurred when the election was on the knife's edge, could indeed have been cataclysmic, incalculable even. But subsequent breaches, whenever they would have occurred, would have been old news, and any additional damage would have been marginal at best.

Thus, the provision for all breaches of any type -- the 2nd, 3rd, and 100th -- to require the same $1 million payment fails the legal test of being a reasonable forecast of the anticipated or actual harm. It therefore is an impermissible penalty and should fall away, exactly as if it were never in the contract. The court (or, in the event, the arbitrator, who also should apply contract law) would then calculate the actual damages from Daniels' breach, ignoring the outlandish penalty Trump hoped to impose.

It is far from clear that Trump would suffer significant actual damages from Daniels' un-muzzling. He already stands accused by dozens of women of being a serial adulterer and sexual offender (allegations he denies), so how much more damaging is one more claim?

Moreover, when Daniels' accusation surfaced in January 2018, Cohen poo-pooed it as "an old and debunked story" that had already been published in 2011. So cast, the revelation looks to have caused only modest independent damage.

And that's what makes this story all the stranger. Trump's legal team is waging a vigorous battle to keep hidden details that are largely already known. Indeed, it's hard to believe at this point that even ardent Trump supporters would be surprised to learn that the affair may have occurred.

Yet when the full story is aired -- as it may be Sunday night -- their energetic resistance will have given it that much more salience. If Daniels now seems first among equals in the cascade of accusers, it is principally because Trump's legal team has fought her so hard.

All in all, the law should provide a satisfying end to the battle of the President v. the Porn Actress. The bullies lose their bludgeon. Daniels pays, at most, reasonable damages. And the public learns the truth.

Mississippi Coronavirus Cases

Data is updated nightly.

Cases: 259117

Reported Deaths: 5668
CountyCasesDeaths
DeSoto17436187
Hinds16524328
Harrison13876199
Rankin11000217
Jackson10652187
Lee8981141
Madison8413168
Jones6552112
Forrest6101121
Lauderdale6034189
Lowndes5463119
Lafayette507393
Lamar496465
Washington4877124
Bolivar4068109
Oktibbeha401681
Panola378380
Pontotoc372155
Monroe3628105
Warren3619101
Union350563
Marshall349569
Neshoba3433152
Pearl River3380104
Leflore3079108
Lincoln300687
Sunflower289272
Hancock285360
Tate276762
Alcorn268854
Pike266580
Itawamba266261
Scott253448
Yazoo250156
Prentiss249552
Tippah245850
Copiah244549
Coahoma243654
Simpson240069
Leake234367
Grenada221171
Marion218473
Covington216972
Adams210170
Wayne206432
Winston205267
George202739
Attala195761
Newton195745
Tishomingo192461
Chickasaw186144
Jasper176038
Holmes169868
Clay162735
Tallahatchie154935
Stone148424
Clarke143562
Calhoun138021
Smith125825
Yalobusha120234
Walthall113437
Greene112129
Noxubee111425
Montgomery110936
Carroll105922
Lawrence104317
Perry103231
Amite99926
Webster94324
Tunica87621
Jefferson Davis87327
Claiborne86825
Benton84023
Humphreys83624
Kemper79120
Quitman7029
Franklin68716
Choctaw62313
Wilkinson58825
Jefferson55920
Sharkey44217
Issaquena1606
Unassigned00

Alabama Coronavirus Cases

Cases: 432536

Reported Deaths: 6379
CountyCasesDeaths
Jefferson63523957
Mobile30967562
Madison27627201
Tuscaloosa21122268
Montgomery19495326
Shelby18941126
Baldwin16798188
Lee12901102
Morgan12447129
Etowah11911178
Calhoun11365205
Marshall10322119
Houston8813156
Limestone823176
Cullman8159106
Elmore8056104
DeKalb7796102
Lauderdale773399
St. Clair7705122
Talladega6347109
Walker5993174
Jackson590341
Colbert543274
Blount541186
Autauga527061
Coffee454160
Dale405482
Franklin371948
Russell345712
Chilton340972
Covington334168
Escambia328344
Dallas310196
Chambers297370
Clarke290536
Tallapoosa2665107
Pike258830
Marion250155
Lawrence249150
Winston231442
Bibb219848
Geneva206946
Marengo205229
Pickens198631
Hale180842
Barbour177836
Fayette174528
Butler171358
Cherokee162530
Henry157523
Monroe150718
Randolph143236
Washington139527
Clay128546
Crenshaw121644
Cleburne119724
Lamar119621
Macon119637
Lowndes112536
Wilcox105822
Bullock101428
Perry99118
Conecuh96320
Sumter89726
Greene76723
Coosa62215
Choctaw51624
Out of AL00
Unassigned00
Tupelo
Clear
45° wxIcon
Hi: 57° Lo: 45°
Feels Like: 39°
Columbus
Clear
47° wxIcon
Hi: 55° Lo: 46°
Feels Like: 45°
Oxford
Clear
43° wxIcon
Hi: 55° Lo: 42°
Feels Like: 39°
Starkville
Clear
41° wxIcon
Hi: 54° Lo: 44°
Feels Like: 41°
WTVA Radar
WTVA Temperatures
WTVA Severe Weather