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.

Confirmed Cases: 112123

Reported Deaths: 3223
CountyConfirmedDeaths
Hinds7796173
DeSoto670178
Harrison484483
Jackson435081
Rankin383786
Madison373993
Lee344979
Forrest296377
Jones283782
Washington252197
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Lamar217138
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Neshoba1814111
Lowndes174962
Panola166337
Leflore160787
Sunflower157649
Warren152755
Monroe145972
Pontotoc143819
Pike137256
Lincoln135555
Copiah135036
Marshall134826
Scott123829
Coahoma123436
Grenada120038
Yazoo119333
Simpson118649
Union115225
Holmes113560
Leake113340
Tate113239
Itawamba110424
Pearl River108958
Adams104343
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Wayne98721
Alcorn96012
George93917
Marion92942
Covington92525
Tippah85921
Newton84427
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Winston82221
Tallahatchie81825
Tishomingo79341
Hancock78127
Attala77626
Clarke72349
Clay67621
Jasper67417
Walthall63327
Calhoun61412
Noxubee59617
Smith58316
Claiborne53216
Montgomery52923
Tunica52217
Lawrence49914
Yalobusha49314
Perry48122
Carroll46312
Greene45518
Stone45014
Amite41713
Quitman4146
Humphreys41216
Jefferson Davis39811
Webster36613
Wilkinson33020
Kemper32015
Benton3154
Sharkey27814
Jefferson27010
Franklin2373
Choctaw2036
Issaquena1063
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Alabama Coronavirus Cases

Confirmed Cases: 153016

Reported Deaths: 2633
CountyConfirmedDeaths
Jefferson22563372
Mobile14335314
Tuscaloosa10023133
Montgomery9759196
Madison904893
Shelby709960
Lee644966
Baldwin640569
Marshall428248
Calhoun412759
Etowah405749
Morgan396833
Houston364632
DeKalb319628
Elmore310752
St. Clair282142
Limestone270828
Walker268892
Talladega258435
Cullman227623
Lauderdale208740
Autauga201029
Jackson200915
Franklin199731
Colbert192228
Russell19053
Dallas185627
Blount184824
Chilton181731
Escambia171328
Coffee16669
Covington166029
Dale163451
Pike130512
Chambers130143
Tallapoosa128686
Clarke127117
Marion104729
Butler99840
Barbour9889
Marengo97221
Winston90413
Geneva8417
Pickens80517
Lawrence80031
Randolph79814
Bibb79114
Hale74529
Cherokee72214
Clay71912
Lowndes70127
Henry6376
Bullock63517
Monroe6319
Washington62212
Crenshaw59330
Perry5806
Wilcox55912
Conecuh55713
Fayette55312
Cleburne5287
Macon52820
Sumter46721
Lamar4565
Choctaw38712
Greene33916
Coosa1973
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