10:00am PT by Eriq Gardner
NY Appeals Court Overturns Donald Trump's Arbitration Win on Hush Deal
For years, Donald Trump has attempted to keep staffers silent by having them sign nondisclosure agreements and then pursuing them in arbitration when secrets are leaked. On Thursday, though, he became one of the few to ever have an arbitration victory vacated on appeal.
Trump battled with Jessica Denson, who formerly ran Hispanic engagement for his 2016 presidential campaign. She contends that during her employment, she was subjected to sexual discrimination and harassment. Denson pursued claims in both federal and state court while the Trump campaign filed an arbitration demand against her and demanded $1.5 million in damages for the way she allegedly breached confidentiality and nondisparagement obligations.
The courts compelled her to go to arbitration even as she made the case that the NDA violated public policy. She's among other former ex-Trump staffers, including Cliff Sims and Omarosa Manigault-Newman, who have wrestled with legal repercussions for making public noise after signing hush pacts. Denson's case has traveled the furthest, and in late 2018, an arbitrator awarded Trump about $50,000 in attorney's fees.
New York's First Appellate Department won't vacate the arbitration award on the ground that public policy disfavors an NDA "so broad and over-inclusive, prohibiting virtually any negative statement about the campaign and Trump."
"The inclusion of a non-disparagement provision in the NDA, which when executed, was an agreement between private parties, does not impermissibly intrude on plaintiff's rights of free expression," states the decision (read here). "Here, non-disparagement and keeping certain matters confidential during the term of plaintiff's service and thereafter were specific conditions of plaintiff's engagement with the campaign. To the extent that the plaintiff makes legal arguments concerning the scope of the NDA, any error by the arbitrator is, at most, a mistake of law that cannot serve as a predicate basis for vacating these awards."
Nevertheless, the First Appellate Department finds another reason why Trump's win must be overturned. In short, her alleged secrecy breach can't be premised on what she filed in court.
"There is a deep-rooted, long-standing public policy in favor of a person's right to make statements during the course of court proceedings without penalty," continues the decision. "[Denson's] negative statements about [Trump], for which the arbitrator made an award, were made in the context of the federal action in which she sought a declaration that the NDA was unenforceable. By concluding that the allegations in the federal action are tantamount to disclosure of confidential information violative of the NDA, the arbitrator improperly punished [Denson] for availing herself of a judicial forum."
Trump also attacked Denson's tweets and a statement on her GoFundMe page, but the appellate court says his demand to arbitrate couldn't have included events after the filing of his arbitration demand and that the award itself hadn't identified when those offending tweets and posts were made. As such, "the award was made in excess of the arbitrator's enumerated authority."