Non-Disclosure Agreements and the Public Interest

In 2019, David Hoffman and Erik Lampmann published Hushing Contracts, which among other things, specified the ways in which non-disclosure agreements (NDA) externalize the social costs of unsavory behaviors by corporations and their agents. They address the danger that NDAs can protect people against sexual harassment claims and may enable them to move from job to job despite a history of tortious or even criminal misconduct.

We posted eighteen months ago about the Speak Out Act, which rendered NDAs unenforceable with respect to allegations of sexual assault or sexual abuse. Stacey Lantagne (left) was posting about NDAs and sexual harassment on this blog long before then.  We have posted repeatedly about the limits of NDAs imposed on employees of the Trump campaign and the Trump administration. Last week, a new Trump NDA issue arose and a second one re-surfaced.

Previously, we have focused on NDAs in the #metoo and First Amendment (free speech) context.  The latest Trump NDA scandal has to do with his alleged use of the “n-word” in connection with the reality television series, The Apprentice. Former producer for the show, Bill Pruitt, published the details on Slate.  From my perspective, as someone who regards reality television as the monetization of the basest of human qualities, the story has a Leopards Ate My Face vibe to it. Mr Trump, whatever his virtues, is not known for his moral probity.  The 20-year NDA that threatened criminal sanctions for breach should have been a tip-off that this was not your usual work gig.  Is anybody surprised by this latest confirmation that there is no social convention that Mr. Trump will not flout? 

Well, I guess the pee tapes thing wasn’t true.

It is common to ruminate in such situations whether it would have have made a difference if Mr. Pruitt could have come forward with his allegations at some point between the famous descent on the tacky gold escalator and the 2016 elections. As someone who, after the release of the “Access Hollywood” video, confidently predicted “he’ll never be President,” I can’t very well say.  Perhaps with Mr. Pruitt’s NDA expiring, others will also expire and we will benefit from a series of revealing anecdotes about Mr. Trump saying the sorts of racist, sexist, homophobic, etc. things he undoubtedly routinely says when the mikes are off and all auditors are gagged by NDAs.

But being offensive is his brand.  He’s already been found liable for defamation in connection with a sexual assault, for fraud in connection with both his main business and his “charitable” foundation, and now he’s been found guilty on 34 felony counts.  While there is some dispute about the application of this particular statute in these particular circumstances, I don’t think anybody can doubt that the underlying conduct occurred and is not very Presidential.  So he used some salty language? Why would anybody care about that if they don’t mind him saying that he will be a dictator on day one of his second term, if he gets one?

But I digress, the real question is whether public policy can or ought to ban NDAs that prevent people from reporting such offensive conduct. Hofmann and Lampmann articulate an expressive theory of NDAs, arguing that we should concern ourselves not only with the law’s commands but with the messages legal actors send. If courts uphold NDAs that facilitate impunity for sexual predators, the law expresses indifference to the plights of the victims of sexual predators and to the problem of sexual predation more generally.  Beyond the use of an offensive racial epithet, here, arguably, Mr. Trump made a decision that had an adverse impact on someone’s employment based on the potential employee’s race.  Does it matter that the employment opportunity was part of a reality television show?  Would we want the law to set aside NDAs when they stand in the way of unmasking racists? How about if the racists later run for public office? 

The other Trump NDA news is that, as Michael M. Grynbaum reports in The New York Times, a NY appellate court ruled last week that Mr. Trump’s suit against his niece, Mary Trump (her book is at right), can proceed.  [Aside: the Times calls her his “estranged” niece, .  I’m not sure what it means for a niece to be “estranged.” Again, Mr. Trump operates in ways that raise questions we thought we’d never have to ask ourselves.] The issue was whether Mary Trump violated the NDA entered into in connection with a 1999 financial settlement relating to the will of Mr. Trump’s father when she shared information with the Times that resulted in article alleging that Mr. Trump had engaged in tax evasion and fraud.  The appellate division found that Mr. Trump had established a basis for a breach of contract claim, although it noted that issues regarding in the scope and enforceability of the NDA remained.  Mr. Trump’s attorney proclaimed that Ms. Trump had committed a “blatant and egregious breach of contract,” which, if nothing else, is blatant and egregious hyperbole and also irrelevant, unless New York has some statute that allows for special damages in the case of “blatant and egregious” breaches of contract.  Either it’s a breach or it’s not. Pounding the table with extra verbiage is not a sign of strength or confidence.  It’s a sign that someone is wont to behave like a toddler needing a nap rather than a professional who will develop arguments applying the law to the facts.