Stephanie Clifford, the adult film star who uses the name Stormy Daniels, was interviewed last Thursday by Anderson Cooper for CBS News. Now Buzzfeed reports President Trump’s attorneys are considering legal action against CBS News to stop the network from broadcasting the interview.
Stormy Daniels claims she had an intimate relationship with Donald Trump in 2006 and 2007, shortly after his son Barron was born to Trump’s third wife, Melania. A White House spokesman last week said that Trump denies all of Daniels’ allegations. But now lawyers for Trump are threatening to file a lawsuit to bar CBS News from airing an interview with Daniels. If Trump had no involvement with Daniels, what legal basis does he have to get in the way of a TV broadcast involving Daniels?
Let’s break it down.
— Michael Avenatti (@MichaelAvenatti) March 8, 2018
1. Hush Agreement
Days before the 2016 election, Daniels, using the pseudonym Peggy Peterson, entered into a written agreement with “EC, LLC and/or David Dennison.” Daniels claims that David Dennison refers to Donald Trump. Essential Consultants, LLC, referred to as EC, LLC, is a corporate entity formed by Trump Organization attorney Michael Cohen. In the agreement, Daniels promised to turn over all text messages, emails, photos and other physical objects relating to Dennison and to keep confidential all information she gained about Dennison. In return, she received $130,000.
We learned these details last week when Daniels filed a lawsuit against Trump and EC, LLC in California state court in Los Angeles, seeking to declare the agreement null and void. A copy of the hush agreement is attached as an exhibit to the complaint, as is a side letter agreement that spells out who Peggy Peterson and David Dennison are. Dennison’s real name is blacked out.
Daniels claims that Cohen pressured her into what she calls the Hush Agreement to protect Trump with a week or so left before the election in 2016. She filed the lawsuit in Los Angeles to have the agreement thrown out because Trump never signed it, even though there’s a signature line in the agreement for “David Dennison.”
Trump has not yet responded to the complaint. Under California law, a defendant must respond to an initial complaint within 30 days of when he’s “served” with the legal pleading, unless the parties agree to an extension.
2. Arbitration provision
In the Hush Agreement, the parties agreed that any disputes between them would be resolved in a private arbitration, and not in court. This is standard practice in settlement agreements arising from or avoiding litigation. California law encourages and protects arbitration agreements. That means courts will typically defer all questions about the legality and enforceability of an agreement with an arbitration clause to an arbitrator. It’s a little circular, but nonetheless the law: the arbitrator has the power to decide if the agreement conferring jurisdiction on her is valid or not.
Trump claims that he knows nothing about the agreement with Daniels, didn’t sign it, and didn’t authorize Cohen and EC. LLC to enter into the agreement on his behalf. Because if Trump admitted that he paid off Daniels for her silence before the election, he’d be in violation of campaign finance laws (The ethics advocacy group Common Cause has filed complaints with the Justice Department and the Federal Election Commission seeking an investigation into Hush Agreement payment). He’d also be admitting that he paid off a porn star a week before the election.
EC, LLC, on the other hand, is a party to the agreement and a defendant in Daniels’ state court action. My best guess is the EC, LLC will respond to the Daniels’ complaint by filing a motion to compel arbitration, and ask the court to dismiss Daniels’ complaint against it, and send the parties to arbitration to resolve their disputes. The problem for EC is that Trump hasn’t signed the agreement and disclaims any knowledge of it. So while EC may be able to force its dispute with Daniels into arbitration, it’s not clear that Trump can.
In fact, EC, LLC has already availed itself of the arbitration provision. A few days before Daniels filed her state court complaint, Cohen and EC, LLC asked an arbitrator to grant a restraining order on an emergency basis to keep Daniels from revealing any of the information she promised to keep confidential in the Hush Agreement. Jacqueline A. Connor, a retired Los Angeles County Superior Court judge who now handles arbitrations for ADR Services, issued such a restraining order on Feb. 27, 2017.
What is the force and effect of the arbitrator’s restraining order? How can EC, LLC enforce the order against Daniels? Good questions, and the answers are a bit uncertain.
Court orders are enforceable through a variety of legal mechanisms, but, in general, parties are obligated to abide by court orders. Penalties for violating court orders range from fines, to civil contempt, to criminal contempt of court (and possible jail time). But arbitration orders are not self-effectuating.
In order to have the full weight and effect of a court order, the party who’s obtained a favorable arbitration decision must ask a court to confirm it. Depending on the language of the arbitration provision, it may be proper to seek court confirmation in federal court under the Federal Arbitration Act, or in state court.
So far, neither Michael Cohen nor EC, LLC has asked a court to give its seal of approval to the arbitrator’s restraining order. If Daniels doesn’t abide by the restraining order — and it appears she has at least disclosed certain confidential about Trump to her current attorney, if not to Anderson Cooper — the most the arbitrator can do is find Daniels in breach of the Hush Agreement and the restraining order and award damages to EC, LLC.
The Hush Agreement contains a “liquidated damages” provision — essentially an agreement in advance that any violation of the Hush Agreement would trigger a $1 million damages award in favor of EC and against Daniels. Her current lawyer, Michael Avenatti, told CNN that several individuals have come forward and offered to pay any damages award against Daniels if she publicly discussed her alleged affair with Trump.
— Michael Cohen (@MichaelCohen212) March 9, 2018
3. Is the Hush Agreement null and void without Trump’s signature?
Daniels’ claim to undo the Hush Agreement looks weak to me because the very first line of it states that it’s an agreement entered into by EC, LLC and/or David Dennison, on the one hand, and Peggy Peterson, on the other hand. Now, let’s put aside the fact that you should ever use “and/or” in a legal document because it will lead to all sorts of confusion. By its own words, the agreement suggests that EC, LLC is standing in for David Dennison and has the legal authority to enter into the agreement on his behalf. That might be enough for an arbitrator to overlook the fact that Dennison (aka Trump) never signed the agreement.
Then there’s the letter Avenatti sent to Cohen on Monday, in which Daniels offered to give back the $130,000 she received, so that she can be released from the confidentiality provisions of the Hush Agreement. Cohen isn’t going to accept this offer; he’s spent nearly 18 months pressuring Daniels to keep quiet about her relationship with Trump. By making the offer, and making the letter public, Avenatti showed how weak his litigation position is.
4. No court is going to stop CBS News from broadcasting the Daniels interview
Daniels may be on the hook for damages if she discloses confidential information about her relationship with Trump, but that doesn’t implicate CBS in any way. CBS isn’t a party to the Hush Agreement, didn’t agree to arbitrate any dispute with Trump, Cohen, or anyone else involved in this situation, and isn’t bound in any way by the arbitrator’s restraining order.
It is a core First Amendment principle that a news network can broadcast matters of public concern about the President of the United States. Any effort to stop the public or broadcast of such information is considered a prior restraint. The Reporters Committee for Freedom of the Press notes that the U.S. Supreme Court considers prior restraints “the most serious and the least tolerable infringement on First Amendment rights.” The Court repeatedly has found that such attempts to censor the media are presumed unconstitutional.