In the Midst of the Stormy: The Top 4 Legal Issues Surrounding the Controversy
By Carlos Méndez Pérez
Esq.Me Team Member
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The name on everybody’s lips is Stormy Daniels. The adult film actress became the center of attention after speaking out about her sexual affair with president Donald Trump, and the non-disclosure agreement she was made to sign to keep quiet. Now, her fight to void the agreement and tell her story has many questioning the legal ramifications, from contract enforcement to campaign contribution violations. Here are 4 legal issues that you should be following.
1. Can You Keep It?: Enforceability and Breach
One Stormy Night in 2006, Daniels had a sexual encounter with Donald Trump. Then, days prior to the 2016 presidential election, Trump’s Attorney, Michael Cohen, sent Daniels a non-disclosure agreement (NDA) to prevent her from speaking out about the affair and subsequent encounters.
In March 2018, Daniels and her attorney, Michael Avenatti, filed a civil suit in California challenging the validity of the NDA on the grounds that Trump never signed it. While both Daniels and Cohen signed the Agreement, there is a blank signature line where Trump was expected to sign the contract. They argue Trump’s failure to sign makes the non-disclosure agreement void.
Daniel also argues that, even if Trump’s lack of a signature on the Agreement does not render the Agreement void, Cohen violated the terms of the Agreement himself by making statements about the affair, including statements in a New York Times article where he admitted paying Daniels $130,000 out of his own pocket.
Some question the conscionability and sweeping language that is included in the Agreement. Specifically, the Agreement does not only bar Daniels from speaking about her sexual affair with Trump, but from doing anything that might “publicly disparage” Trump. Such a broad provision could be deemed unconscionable and thus invalid due to the greater power given to Trump as opposed to Daniels. Many argue that the Agreement is vague and ambiguous, and could even be in violation of Daniels’ First Amendment rights to free speech. Further, if it’s in the public’s greater interest, once could argue that this information should be rightfully disseminated. There is also a potential news and media exception to her rights under the Agreement.
It’s important to understand the provisions included in the Agreement and the timeline of events to understand why this Agreement has raised so many red flags in regards to Trump and his administration.
2. This One You’ll Save: Use of Campaign Contributions or Funds
Michael Cohen paid Stormy Daniels $130,000 for her silence just days before the election. Cohen stated he paid Daniels out of his own pocket, through a company named Essential Consultants LLC, and that he was never reimbursed by the Trump Campaign or the Trump Organization.
Common Cause, a government watchdog group, filed a complaint with the Federal Election Commission stating that the payment, which occurred days before election day, was an in-kind contribution, and a violation of federal campaign laws. Campaign Legal Center's Larry Noble explains how the payment could be interpreted to be funds spent to boost Trump’s campaign. “What Trump did as a private citizen is not relevant to the campaign finance laws," Noble explains, but states that Trump’s actions as a presidential candidate, and what his campaign did, may be relevant to the campaign finance laws.
3. Taking this One to the Grave: The Arbitration Clause
One of the provisions within the Agreement stated that the parties agreed to binding arbitration, and therefore waive their right to a lawsuit over any breaches. The Agreement states that “Any and all claims or controversies … shall be resolved by binding confidential Arbitration to the greatest extent permitted by law,” and that “by agreeing to arbitration as provided herein, each of the Parties is giving up any right […] to a trial by judge or jury...”
The validity of the Agreement affects Daniels’ method of resolution because if there was no signature by Trump, then there was no valid NDA and, therefore, no Agreement to arbitration. However, MSNBC legal analyst Danny Cevallos argues that even if the contract itself is invalid, the arbitration clause might still prevail. “Arbitration clauses are generally independent of the larger contract in which they are embedded,” Cevallos explains. “Unless there is a specific attack on the arbitration agreement itself, that part must be enforced.” Trump already obtained a restraining order from an arbitrator to keep Daniels from “disclosing or inducing, promoting, or actively inspiring anyone to disclose Confidential information.”
The path in which Daniels is able to resolve her lawsuit against Trump could make or break the other issues, and leave Trump open to further scrutiny under depositions.
4. Now You’re Telling Lies: Deposing the President
Daniels amended her lawsuit and included a defamation claim against Michael Cohen. Along with the amended complaint, Daniels' attorney demanded to depose both Trump and Cohen about their knowledge and involvement in relation to the NDA and $130,000 payment. Avenatti's motion would require the President to explain, under oath, what he knew about the Agreement and when he knew about it. Trump’s testimony could potentially play a role in determining whether campaign finance laws were violated by the President, Mr. Cohen, or the Trump campaign.
As of March 30 of 2018, Judge Otero of the US District Court for the Central District of California denied Daniel’s motion. The judge deemed it “premature” since neither Trump nor Cohen’s LLC company’s have yet filed a petition to compel arbitration, even though they have claimed they’re going to do so.
Avenatti’s requests to have Trump testify in a deposition is important because of precedent. Many compare Daniels’ lawsuit to the Paula Jones’ sexual harassment lawsuit against former President Bill Clinton, which led to his impeachment after lying about his affair with Monica Lewinsky. Daniel’s lawyer even cites to the Clinton case in his motion, and how the majority in that case concluded that the "Constitution does not offer a sitting President significant protections from potentially distracting civil litigation."
Everyone Tells
Stormy Daniels is not going away any time soon. Despite moral, ethical, or personal views people may have about the affair, Daniels’ legal battle will continue, and so will Trump’s reprisals against her. This is not the end of the ongoing legal dilemmas that continue to arise from the controversy.
I am a current law student at New York Law School and hope that this information can help you in your law practice. Please note that none of the above in this article should be construed as legal advice, and are instead, my opinion and research.
For more information on the subject:
Stormy Daniels Shares Graphic Details About Alleged Affair With Trump
Stormy Daniels Files Suit, Claims NDA Invalid Because Trump Never Signed It
Michael D. Cohen, Trump’s Longtime Attorney, Says He Paid Stormy Daniels Out of His Own Pocket
Stormy Daniels Lawsuit Opens Doors to Further Trouble for Trump
Stormy Daniels Sues Trump Lawyer for Defamation
Stormy Daniel’s Lawyer Seeks to Depose President Tump, Michael Cohen
Judge Denies Stormy Daniels’ Motion to Depose Pres. Trump & Michael Cohen
Could Stormy Daniels’ Lawsuit Open the Door to Trump Depositions and a ‘Fishing Expedition’?
Stormy Daniels’ Legal Battle Against Trump, Explained
White House says Trump Won Arbitratior order Against Stormy Daniels
Trump Lawyer Obtained Restraining Order to Silence Stormy Daniels
60 Minutes interview with Stormy Daniels
