Is Trump’s Most Recent Sexual Assault NDA Enforceable?

An NDA, or a Non-Disclosure Agreement, is a type of contract categorized as a “Restrictive Covenant.”

A restrictive covenant refers to any contract or agreement in which one party’s liberties are restricted in exchange for some sort of bargain.

Restrictive covenants have been around since Adam and Eve. God said “Don’t eat the apple, and in exchange you get to live in a paradisiacal garden for eternity.” God restricted their liberty to eat the apple and in exchange they were offered the chance to continue living in a paradisiacal garden.

In modern times, these types of contracts typically arise in the context of employment law. They’re mainly used in concert with non-compete agreements, or transactions involving secrecy, intellectual property, trade secrets, or other confidentiality agreements.

NDAs generated significant outrage in 2017 during the #metoo era, when employers were requiring employees to sign NDAs that basically waived the employee’s rights to report or talk about sexual harassment in the workplace.

As you’ll see, these NDAs should have never been legally enforceable to begin with (because they’re against public policy), but consider that it wasn’t until recently that Connecticut (and other states) started seeing more female representation on the bench which impacted the way in which these cases were reviewed. By the way, it is now illegal to uphold such NDAs under federal law following the 2022 “Speak Out Act” that was signed into law to prevent the encouragement of sexual assault in the workplace.

The #Metoo movement didn’t just bring positive change to employment law, it also redefined the public perception of what an NDA is.

The term “NDA” suggests something sinister. People think they’re used to cover up a company’s deepest darkest secrets. Really, most NDAs are just standard clauses regularly found in employment contracts that say “if you quit, please don’t go around spilling all of our trade secrets,” which, is a pretty reasonable request.

Take Sally’s pizza for example, or Frigo’s deli. Lets say they hire a cook and teach him their cooking methods that took decades to curate and develop through trial and error and experimentation, etc.

Lets say the cook lasts 3 months, learns all their methods and goes and opens his own Frigo’s or Sally’s…

Should he be allowed to do this????

My point is, NDAs can be used to protect sinister things, but they also have tremendous value to preserving a fair market in society.

Courts recognize this balance. When deciding the validity of an NDA, courts ask whether the agreement was “reasonable,” based on a variety of factors.

Preventing the cook from ever working at another restaurant again would be unreasonable.

But asking the cook to refrain from discussing trade secrets (which have their own legal definition guided by caselaw and statute), or asking the cook not to work in close proximity to the restaurant for a year or two… isn’t unreasonable. An NDA like that would likely be upheld.

Use of NDAs in the #metoo era

The types of NDAs that came to light during the #Metoo crusade against serial sexual assailants can be categorized more specifically as non-disparagement clauses and pre-dispute confidentiality clauses.

You have “Restrictive covenants” as an umbrella term that encompasses non-competes, NDAs, non-solicitation, etc.

Then under “non-disclosure agreement” you have the type of clauses that were in every sexual abusers toolkit: “non-disparagement clauses” and “pre-dispute confidentiality clauses.”

These types of clauses mean exactly what they sound like… Non-disparagement, i.e. you can’t disparage the company (or the people)

Pre-dispute confidentiality, i.e. if you do have a dispute with us you have to keep it a secret, including disputes that involve claims of sexual harassment.

Courts will enforce these types of clauses, but if they’re against public policy, or in some states (MA being one) if they prevent disparagement of a police officer in the line of duty then they won’t be.

Before #metoo, Hollywood producers were using NDAs as licenses to sexually harass employees with absolute immunity.

If an employee came out and settled a claim with the abuser, they were barred from speaking out about it. If they did, they’d have to return their settlement money.

Contracts don’t typically prescribe any more damages than what is required to make the contract whole again. Meaning, if a victim did violate an NDA, the worst thing that would happen would probably involve returning their settlement money. They wouldn’t get arrested and likely wouldn’t be sued for slander or libel, although that would be a possibility with a vicious employer.

To address the obvious harm to society in awarding sexual predators immunity for assault, the “Speak Out Act” was signed into law in 2022 (among other statewide and IRS reforms.)

The act says that the types of NDAs made before a sexual assault dispute arises are not enforceable.

Was Trumps NDA Enforceable?

A former server, Alice Bianco, at Trump National Golf Club in Bedminster alleges she was sexually harassed and coerced into sex by a supervisor, then tricked into signing an illegal non-disclosure agreement by Trump’s lawyer, Alina Habba.

She claims that the club food and beverage manager Pavel Melichar harassed her and forcibly attempted to kiss her; retaliated against her with “unfair job assignments”; and eventually required her “to engage in sex as a quid pro quo for continued employment and ‘protection,’”

After she reported this to the higher ups, Trump’s lawyer urged her to sign an NDA: “…Habba then allegedly invited Bianco to her car during her shift and discouraged her from going public with her story, saying she could “protect her” if Bianco signed a “simple” non-disclosure agreement that included a penalty of $1,000 a day if she violated it, in exchange for what the lawsuit described as a “paltry sum.””

Was that NDA enforceable?

Probably not.

Not even going into state specific laws, a basic tenet of contract law is that punitive damages (or damages that punish people for breach) are highly disfavored and avoided.

You could consider this a “liquidation clause,” which is a clause that provides for what one party will be owed if the other breaches the agreement. But liquidation clauses must generally can’t be grossly exessive and they have to stay within the ballpark of actual losses incurred. Though $1,000/day may be argued as a potential loss to the Trump brand if she came forward with allegations of sexual harassment… it’s way too speculative and the Trump brand has already been tarnished, and proven to withstand such allegations.

Furthermore, a sum which is designed to or has the effect of coercing performance of the contract by making a breach so expensive that it forces adherence to the contract, is generally unenforceable. One injured by a breach of contract is entitled only to such compensation as is just and adequate to compensate him or her for his or her injury and a liquidated damages provision that attempts to do more than compensate a plaintiff for the approximate actual damages caused by the breach is therefore unreasonable.

The three factors courts will look at when determining if a liquidation clause was reasonable (and enforceable) OR punitive (and unenforceable) are listed below:

• the amount specified in the provision is a reasonable forecast of the probable damage likely to result from the breach
• the injury caused by a breach of the contract is difficult or impossible to estimate accurately
• the parties intended the provision to be compensatory rather than punitive

Just by looking over these factors and hearing the allegations from the victim, it really sounds like the $1,000/day fine was intended to be punitive rather than compensatory, however, it could certainly be argued that the breach would be impossible to be estimated accurately and therefore the clause was compensatory rather than punitive.

But who knows. I don’t think it would be enforced. I think it was more of a scare tactic.