This Provision In Trump’s Infamous NDAs Could Come Back To Haunt Him

President Donald Trump during a meeting with the Interim President of the Bolivarian Republic of Venezuela Juan Guaidó after his arrival at the White House on February 5, 2020. (Photo by Mark Wilson/Getty Images)
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February 24, 2020 3:06 p.m.
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What goes around often comes around. And in the case of a former Trump campaign staffer who sued to free herself from its non-disclosure agreement, what is coming around is a provision in the NDA that could require the President’s campaign to pay her nearly $165,000 in attorneys fees.

The NDA language requires that the prevailing party in an NDA dispute have their legal fees and costs covered by the losing party.

Legal experts tell TPM that the language is fairly standard in NDAs and that it’s used as a deterrent to further discourage employees from violating disclosure agreements.

But Jessica Denson — a former official on the 2016 campaign who sought release from her NDA amid claims of discrimination and bullying — is now wielding it against the Trump campaign, after a New York appeals court decision earlier this month in her favor.

In court filings submitted last week, Denson requested that the Trump campaign award her $164,685.57 in fees and costs. She was able to make the request after securing the uncommon legal win by getting a court to reverse an arbitration decision against her.

The latest filings specifically quoted the NDA provision, which said “Any court judgment or arbitration award shall include an award of reasonable legal fees and costs to the prevailing party.”

“The fee and cost shifting clause is mandatory,” Denson’s lawyer said in the filing, adding that “in accordance with the mandatory language of Section 18(c) of the NDA, the Judgment vacating the arbitration award should include an award of reasonable costs and fees to Ms. Denson.”

It’s unclear if Denson’s gambit will be successful. The Trump campaign has the option of seeking an appeal of the recent court decision overruling the arbitration award.

However, if that underlying court decision is allowed to stand, it could have ramifications for others who have sought to get out of NDAs, particularly in Manhattan and the Bronx, the jurisdiction the appellate court covers.

Denson’s legal battle with the campaign is a complicated one that has played out in both state and federal court. It began in 2017, with a state court lawsuit in which Denson alleged that she faced discrimination, harassment and other forms of hostility while working on the campaign. (Denson did not make any claims against Trump personally.)

The campaign countered by accusing Denson of violating her NDA in making those assertions against the campaign in her court filings. A federal judge eventually ordered that the NDA dispute be moved to arbitration, an arena that is typically tilted toward the employer and where the proceedings are largely shielded from public view.

The arbitrator ultimately found that Denson, who did not participate in the arbitration proceedings, had violated the agreement and ordered that she pay the Trump campaign nearly $50,000 to cover its legal fees for litigating the dispute.

Denson then turned to a state court to overturn that arbitration judgement. She lost in a lower court, appealed, and on Feb. 6, New York’s First Department of the Appellate Division ruled in her favor and reversed those decisions.

The appeals court decision was broadly supportive of NDAs, but said in this case, the arbitrator had erred by ruling against Denson based on statements made in court filings.

“Plaintiff’s negative statements about defendant, 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,” the Manhattan-based appeals court said. “By concluding that the allegations in the federal action are tantamount to disclosure of confidential information violative of the NDA, the arbitrator improperly punished plaintiff for availing herself of a judicial forum.”

The appeals court also said the arbitrator had exceeded his authority by also ruling on the basis of conduct that was not in front of him.

The Trump campaign has until March 4 to respond to Denson’s attorneys fees request.

“This particular NDA was used as a way of retaliating against Jessica for pursuing legitimate rights in court,” Maury Josephson, one of Denson’s attorneys, told TPM.  “Most of the damages the Trump camp was awarded [in the arbitration decision that was vacated] were legal fees. Now that Jessica has prevailed, given the language of the NDA, it is only fair that she should be awarded her attorneys fees.”

Besides the question of Densons’ attorneys fees, the Feb. 6 decision could make it easier for others to get around non-disclosure agreements, one outside legal expert in NDAs told TPM.

“It’s exceptional and noteworthy to see a court go out of its way to overturn an arbitration like this,” Josh Zuckerberg — a partner at the firm Pryor Cashman, where he specializes in labor employment law — told TPM, as courts have “been very permissive and supportive of the arbiter’s authority.

But here, the court essentially said, according to Zuckerberg, that “we’re going to have a hard time upholding an NDA” for statements made under the “absolute privilege” of going to court.

Read Denson’s motion for fees and other relevant filings, including a copy of the NDA, below:

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