The End of the Trump Administration: Investigations and Non Disclosure Agreements

The End of the Trump Administration: Government Investigations and Nondisclosure Agreements

Anyone paying attention to any media coverage over the past three years has seen the use of Nondisclosure Agreements (NDAs) by the Trump Administration used as a means to attempt to control government employees who either work with or come in contact with Donald Trump. In the corporate world, NDAs are frequently used to protect sensitive trade secrets information, financial data or any other information that would be damaging to the company if it were to become publicly known. In civil litigation or the settlement of claims that have not yet been litigated, a typical settlement agreement will contain a non-disclosure provision preventing either party from disclosing the terms of the settlement. Oftentimes, a civil settlement agreement will also contain a “non-disparagement clause”. The non-disparagement clause prevents one or more party to the settlement from making derogatory statements about another party or parties.

NDAs have been a fixture of the Trump Organization for years. Part of the modus operandi of the Trump organization was to combine the use of NDAs with aggressive legal threats to prevent information damaging to the reputation of Donald Trump from becoming public. In the case of Stormy Daniels, for example, Ms. Daniels, an actress who had appeared in numerous pornographic movies, allegedly had an affair with Donald Trump. During the 2016 campaign, Ms. Daniels scheduled an appearance on one of the new shows. She was approached by Trump’s legal team and, ultimately, received a payment of $130,000. In exchange for $130,000, she agreed not to disclose her relationship with Donald Trump and signed an NDA. This would be an example of the use of an NDA to keep embarrassing information from the upcoming public. Ultimately, as is now well known, the NDA was not enforced, and the President’s attorney, Michael Cohen, received a lengthy prison sentence for campaign law violations.

One of the new changes brought to Washington by Donald Trump was the use of NDAs to attempt to muzzle government employees who worked with the president. Recent press reports even indicate that the Trump Administration sought to have military doctors who treated the President from making any public statements about the President’s treatment. The terms of these NDAs are onerous. They purport to prevent whoever signs one from making any statements about anything they know to anyone. Sometimes these NDAs contain significant penalty provisions. In the case of Ms. Daniels, the NDA contained a liquidated damages clause requiring her to pay Trump $1 million if she were to ever disclose any information covered by the NDA. The NDAs themselves, combined with aggressive legal threats from Trump attorneys, are frequently sufficient to keep people from telling what they know.

The enforceability of these NDAs is controversial in the civil context. The case of Omarosa Manigault Newman is instructive. Following her publication of Unhinged, Trump’s attorneys filed multiple arbitration claims against her for violating her NDA. Another feature of the Trump NDAs is that they provide for arbitration thereby keeping the resolution of the disputes a secret since arbitration itself is an action between private parties. Whether the NDA ultimately is determined to be enforceable or not, however, is beside the point. The litigation tactics of Trump’s attorneys are designed to cost Omarosa more money than she has, thereby driving her into bankruptcy whether the claim is successful or not.

This article, however, concerns the enforceability of an NDA in the context of a criminal investigation. With the end of the Trump Administration, many of the actions of Donald Trump himself, members of the Trump family and other senior advisors will likely come under criminal scrutiny for violations of a plethora of federal laws. There are also press reports indicating that the Manhattan District Attorney’s Office and the New York Attorney General office are conducting investigations. The issue to be addressed in this article is whether NDAs prevent potential witnesses of crimes from cooperating with government investigators. The short answer is that they generally do not.

What is a Nondisclosure Agreement?

A Nondisclosure Agreement is essentially a contractual provision that appears typically in an employment agreement or in the settlement of a civil dispute. Two private parties are free to agree to a wide range of provisions in a contract. An NDA has long been considered a valid provision of an employment agreement or a civil settlement agreement. They are also used to protect intellectual property, financial data and other sensitive information during business negotiations. They may be combined with other terms and provisions that limit the parties’ rights to take certain actions. Some of these common provisions are non-disparagement clauses that prevent a party from saying bad things about another party, whether they are true or not, and arbitration clauses which require any dispute over the agreement to be resolved by arbitration, a form of private litigation where nothing will be filed on a public court docket.

The use of private NDAs for government employees, however, is something new. There are instances where a President’s communications are protected from disclosure by law. For certain senior political appointees who provide advice to the President, the Supreme Court has recognized an Executive Privilege that prevents those employees from discussing the advice they have provided to the President. This is a legal protection the President has, however, whether the appointee has signed an NDA or not. The other type of information protected from disclosure is Classified Information. Classified information, however, is governed by legislation and by the terms of a Classified Information NDA set forth in federal regulations. The violation of a Classified Information NDA is a serious felony under federal law. However, the Classified Information NDA, as the title implies, is limited to information properly classified as confidential, secret, or top-secret under federal law.

Can it be used to Prevent Someone from talking to Government Investigators?

One thing that can be said with certainty is that an NDA cannot be used to prevent a witness from cooperating with government investigations. The issue arises frequently in white collar investigations where corporate executives are approached by FBI special agents or other government investigators. Quite often, these individuals have signed NDAs which prohibit them from talking to “anyone” about internal company operations. For example, in one case under the Foreign Corrupt Practices Act (FCPA) in which I represented a witness, the company suggested that an NDA prevented the witness from appearing before a grand jury. This suggestion was quickly dropped, however, when the company retained a qualified white-collar counsel. In fact, in the prosecution of Michael Cohen, President Trump’s former attorney, the use of an NDA was part of the scheme to conceal unlawful payments to Ms. Daniels.

Investigations into the Trump Administration will be unique. For certain high- level political appointees, the possibility of asserting a claim of Executive Privilege may exist. However, the protection only applies to certain high-level appointees in limited circumstances. In United States v. Nixon, the Supreme Court held that Executive Privilege does not apply in criminal cases. Likewise, criminal investigations are likely to touch upon Classified Information, and the existence of a Classified Information NDA might prohibit disclosure of information or, more likely, require additional steps to be taken before the information could be disclosed.

Conclusion

Anyone who finds himself or herself involved in a federal criminal investigation, regardless of whether they are the subject or target of an investigation, or merely a witness, requires the assistance of a qualified white-collar criminal defense attorney. This is particularly true when the legal and contractual obligations of an individual are conflicting or unclear. In addition to determining whether a witness can be prevented from talking to federal agents, there is the separate issue as to whether the witness can be compelled to talk to federal agents. There is also an issue as to whether the witness should cooperate or not. The resolution of these issues is intensely fact specific and requires the assistance of counsel to properly navigate these extraordinarily difficult waters.