Jessica Denson was a former employee of Trump’s Election Campaign, Donald J. Trump for President, Inc. She signed an Agreement with the Campaign, including non-disclosure and non-disparage language (as can be seen to the right).
On or about November 14, 2017, Jessica Denson, pro se, filed an action against Donald J. Trump for President, Inc., in New York Supreme Court (101616-7). The action presented claims of discrimination, harassment, a hostile work environment, defamation and intentional infliction of emotional distress, among other claims for damages allegedly sustained while Denson was an employee of the Campaign. Denson disclosed in her Complaint a series of wrongs, torts and possibly illegal activities which occurred during her time working for Donald J. Trump for President, Inc.
In a bit of a “gotcha,” on December 20, 2017, Team Trump responded with an action in arbitration for breach of contract and disparagement obligations based on the information in the Complaint. Donald J. Trump for President, Inc., allegedly sought $1,500,000 in damages from Jessica Denson.
Specifically, the Campaign claimed:
Respondent breached confidentiality and non-disparagement obligations contained in a written agreement she executed during her employment with claimant Donald J. Trump for President, Inc. She breached her obligations by publishing certain confidential information and disparaging statements in connection with a lawsuit she filed against claimant in New York Supreme Court. Claimant is seeking compensatory damages, punitive damages; and all legal fees and costs incurred in connection with this arbitration.
Denson did not respond to the arbitration process, as she was in litigation. A scheduling conference was held in arbitration on May 22, 2018 and Denson did not appear. She also failed to appear on August 20, 2018. On September 7, 2018, Denson notified the arbitrator of “pending litigation.”
The Supreme Court for the State of New York denied Donald J. Trump for President, Inc.’s demand for arbitration. In doing so, the court said, “It is a well settled principle of law in (New York) that a party cannot be compelled to submit to arbitration unless the agreement to arbitrate ‘expressly and unequivocally encompasses the subject matter of the particular dispute. Where… there is no agreement to arbitrate ‘all disputes’ arising out of the parties’ relationship but, rather, a limited arbitration clause relating to a specific type of dispute, the clause must be read conservatively if it is subject to more than one interpretation.” In doing so, the court cited Trump v. Refco Properties, 194 AD2d 70, 74, 605 NYS2d 248 [1st Dept 1993]. In other words, her state action could proceed.
Further, State Court Justice Bluth noted that the NDA’s arbitration clause at issue is narrow, permitting the Campaign to sue only over five specific kinds of conduct by Ms. Denson, and cannot preclude her claims of sex discrimination and harassment prohibited by NYCHRL and other common law claims relating to her employment from being pursued in court. It did not address whether the Campaign could otherwise separately maintain its arbitration action under the NDA.
On March 26, 2018, Jessica Denson filed an action for declaratory judgment in the United States District Court for the Southern District of New York. In the action, Denson claimed the non-disclosure agreement was void for public policy, the definition of “confidential information” was too vague and overbroad and it otherwise fails to provide any reasonable notice to employees about what is confidential.
The Federal Court denied Denson’s relief and granted the Campaign’s demand that the matter proceed in arbitration, stating, “The Rules of the American Arbitration Association (“AAA”) provide, in turn, that the arbitrator “shall have the power to rule on his or her own jurisdiction, including any objections with respect to the existence, scope, or validity of the arbitration agreement or to the arbitrability of any claim” and “shall have the power to determine the existence or validity of a contract of which an arbitration clause forms a part.”
In a parsing of words, the court added, “The (Agreement’s Arbitration) clause cannot be interpreted to apply to plaintiff’s affirmative claims arising out of her employment… (but) (h)ere, of course, Denson does not (merely) bring “affirmative claims arising out of her employment.” The State Court also held that Denson must arbitrate The Campaign’s claims against her claim regarding the validity and enforcement of the Agreement, including arbitrability, in arbitration. This matched the alleged decision of the arbitrator (Judge L. Paul Kehoe) that the arbitration process had jurisdiction.
Despite any opposition, Team Trump proceeded to arbitration without Denson or counsel involved. Trump received an award:
- $24,808.20 for legal fees incurred in defending the Federal Court Action;
- $4,291.85 supplemental attorneys fees and costs incurred in the Federal Court Action;
- $23,866.20 for legal fees incurred in the arbitration action (which represents a 15% reduction because claimant was not successful on all claims);
- $2,950 American Arbitration Association fees;
- $8050.00 Arbitrator Compensation; and
- 9% per annum interest.
Trump sought to “disgorge” any funds raised in a gofundme account and was denied.
Denson contends that the prior arbitration award was entered without her involvement was not the arbitration compelled by this Court, as it preexisted the order. She wants it set aside.
Denson’s team also argues, “there is no doubt that there would have been no Arbitration and no Award if Plaintiff had not brought this lawsuit – it is therefore retaliatory. Retaliation for bringing a sex discrimination claim is flatly illegal, and therefore against public policy.”
The Court recently disagreed and upheld the arbitration award: https://trumpsnda.com/wp-content/uploads/2019/03/3-14-19-Denson-Decision-NY.pdf.
Not So Fast:
On appeal to the First Department, Denson argued that the NDA was so broad and over-inclusive that it barred virtually any negative statement about the campaign, or those connected to Trump, and was therefore void against public policy.
After finding that statements made in court proceedings could not form the basis for an NDA violation, the panel further determined that the other statements Denson made online should likewise not have been considered, since they were made after the arbitration demand was filed.
“Since the award takes into account events occurring after the demand, which could not have been legitimately considered at arbitration, the award was made in excess of the arbitrator’s enumerated authority,” the panel said.
First Department Decision: http://www.nycourts.gov/reporter/3dseries/2020/2020_00923.htm
Read more here:
Non Disclosure Agreement / Non Disparage Agreement:
Trump’s team has created an interesting legal precedent in that, in a series of academically parsed rulings, Denson has been allowed to proceed with her harassment case, but also was ordered to arbitrate issues related to the NDA and disclosures made therein. It’s not stopping her, but is an obstacle.
There is much to sort out still.
- Denson and Trump Campaign’s Undated Employment Agreement
- Signed Arbitration Agreement
- Denson Complaint versus Trump (11/9/17)
- Entire Arbitration File
- Trump motion to compel arbitration and dismiss (6/4/18)
- Trump motion to compel arbitration and dismiss part two (7/3/18)
- State Court Order (8/7/18) – Order that the State Court Harassments, etc., could proceed in court.
- Federal Court Order (8/30/18) – The Federal Court granted the Campaign’s demand that the matter can proceed in arbitration.
- Detailed Order by Arbitrator (10/19/18)
- Final Arbitration Award (Unopposed Action) (12/11/18)
- Denson Letter to Judge re Arbitration Award (12/12/18)
- Denson Emergency Letter to the Court re Arbitration (12/24/18)
- Trump Letter to Judge Demanding Enforcement of Arbitration Award (1/3/19)
- Trump Memo Re Arbitration (1/10/19)
- Denson Memo Re Arbitration (1/18/19)
- Denson Memo Re Vacate Arbitration Award (1/24/19) – Denson’s team argues, “there is no doubt that there would have been no Arbitration and no Award if Plaintiff had not brought this lawsuit – it is therefore retaliatory. Retaliation for bringing a sex discrimination claim is flatly illegal, and therefore against public policy.”
- Denial by Court of Reversal of Arbitration.
- First Department Decision: http://www.nycourts.gov/reporter/3dseries/2020/2020_00923.htm