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Seth Abramson @SethAbramson
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(THREAD) I'm hearing some strange legal analyses of the Daniels-Trump lawsuit. I think it's important we understand the ways in which Trump's "Hush Agreement" with Daniels was nonstandard—and why these deviations from common practice could harm Trump. Hope you'll read and share.
1/ First, let's get something out of the way: if you're going to contest an NDA in court, you should be filing with the court under seal so the NDA isn't breached unless/until the plaintiff—the person subject to the NDA—prevails in court. So that's a problem for Daniels/Avenatti.
2/ With that in mind, no, Daniels' lawyer—Avenatti—shouldn't be going on The Today Show confirming that Daniels and Trump had a sexual relationship. He seems to be doing it strategically, because in certain respects it makes it easier for Daniels to fully breach the NDA later on.
3/ And let's be clear: Daniels plans to breach the NDA. If she does, and if Trump/Cohen are stupid enough to sue her, (a) it'll open up Trump/Cohen to new public disclosures and liabilities and (b) they may or may not be able to recoup more money than Daniels makes for breaching.
4/ My point is this: the purpose of the lawsuit is clearly to breach the NDA publicly, making a counter-suit without purpose and giving potential publishers—or others who would pay Daniels for her story—a taste of what they can expect. In that sense it's mainly a publicity stunt.
5/ Daniels and her attorney are also banking on (a) her earning far *more* for telling her story than she'd face in compensatory and punitive damages from a jury, and (b) Trump and Cohen not wanting to sue her for damages because the discovery process could further endanger them.
6/ So the Daniels-Trump lawsuit is one Daniels can file with (likely) few consequences, as the man she's suing has little interest in litigation of the issue, and even if she loses there's a chance—unless the judge prohibits her from *any* profit for her story—she'll make money.
7/ Even if a judge confirms the NDA—prohibiting her from telling her story—she could still breach the NDA and thus dare Trump and Cohen to sue her. And if they did, and they won before a jury, and she lost any profit from her breach, she'd still earn non-breach-connected profits.
8/ Again, Trump wouldn't sue for breach—as he'd have to testify, which he won't let happen. (He'd try to settle, likely unsuccessfully, as Daniels would know he was afraid of court.) But let's say he sues and wins, she'll still earn more going forward because of name recognition.
9/ With that preamble out of the way, the question becomes, does Daniels have a case to have a judge declare her NDA null and void—clearing her to tell her story for cash without any fear of a lawsuit from Cohen or Trump? Legal analysts are saying absolutely not. I'm not so sure.
10/ On CNN, Paul Callan and Jeffery Toobin said Daniels has no chance because a) Trump wasn't required to sign the NDA—which is Daniels' argument for it being null and void (i.e., his refusal to sign it), and b) it's common for third parties to sign contracts on another's behalf.
11/ Callan and Toobin are right—but also missing the point. Trump's refusal to be in any way associated with this contract—and Cohen's refusal to sign the contract as himself, rather than a shell corporation—have created infirmities in the contract language Daniels could exploit.
12/ I'll analyze those infirmities here—while noting that, even if a judge finds the contract was no contract at all, Cohen sending Daniels $130,000 and Daniels accepting that money could well turn what otherwise would have been a legally infirm contract into something binding.
13/ That said, if a contract is meaningless or nonsensical on its face, there's a chance that—perhaps even for public policy reasons—a judge will void it and deem certain actions by the parties simple error, some sort of "part performance" on the contract, or an ill-advised gift.
14/ Understand that contracts are valid only when there is a "meeting of the minds"—two or more discrete parties who agree to be bound in some way and to receive consideration (value) in return. There's a problem if we don't know who the parties are and who's bound and who isn't.
15/ While it's almost certain that Cohen told Trump about this "Hush Agreement"—as if he didn't, he's going to be disbarred in New York for violating the Rules of Professional Conduct, so such a finding would be a Pyrrhic victory for Cohen—there's certainly a *chance* he did not.
16/ We must admit that there's a chance Trump was unaware of the contract due to how Cohen wrote it—i.e., to obscure, in every sense possible, whether Trump knew it existed. And it's not just that Trump didn't sign the document, either. There are many other related oddities here.
17/ First things first: Cohen, to obscure—or perhaps to hedge his bets about—whether he'd decide to (or had) told Trump about the "Hush Agreement," writes that the parties bound are Daniels on the one hand and, on the other, his shell corporation "and/or" Donald Trump. "And/or"?
18/ The problem with an "and/or" for one of the parties to a contract is obvious: which is it? That "or" means that Cohen might be bound, or not. Trump might be bound, or not. (And remember, Cohen wrote the contract, so its content constitutes formal representations on his part.)
19/ So did Daniels contract with Trump? Maybe not, per the contract. Did she contract with "EC, LLC," Cohen's shell corp? Maybe not. Should a court encourage parties to so word their contracts that there's no clarity whatsoever—indeed no force of law—as to who the contract binds?
20/ Take a look at paragraph 1.1 ("Parties") in the "Confidential Settlement Agreement" (…) and tell me, if you're Trump's attorney, don't you claim that "and/or" means you're *not* bound? And if you're Cohen's attorney, wouldn't you make that same argument?
21/ The counter-argument is that the contract had three signature lines—Daniels, "EC, LLC," and Trump—and by "EC, LLC" signing but not Trump, it means that the "and/or" in paragraph 1.1 is automatically nullified, such that the contract is formally between "EC, LLC" and Daniels.
22/ The alternative explanation is the one Avenatti takes: the "and/or" can't be nullified, and that it requires all three parties sign the contract for it to be valid. But let's say he's wrong: let's say for a moment that this is a valid contract between "EC, LLC" and Daniels.
23/ Does "EC, LLC" have the legal authority to make representations on Trump's behalf within the body of the contract? Does "EC, LLC" have authority to legally bind Donald Trump in any fashion within the contract's four corners? Is "EC, LLC" a valid "third party" in this sense?
24/ Had Cohen signed this as Trump's lawyer, different story. But he didn't—he created a corporation, then wrote a contract that makes representations on Trump's behalf and seeks to bind him legally though he's (arguably) not a party to the contract and his tie to EC LLC is zero.
25/ What happens if Daniels signs the contract reasonably believing Trump is a party, and/or reasonably believing EC LLC has legal authority to make representations for Trump and bind Trump legally, when it fact it has no such authority, it's just Cohen trying to "protect" Trump?
26/ So—keeping in mind Cohen's defense to this suit for declaratory judgment will be that Trump wasn't a party to the contract (paragraph 1.1 notwithstanding)—how in the world will he explain 2.2(b) "[Trump] claims that he has been damaged..." How can "EC, LLC" make such a claim?
27/ The answer is that *Trump* could, were he a named party to the contract, make that claim; *Cohen*, as Trump's attorney and agent, could, were he in his own person a party to the contract, make that claim; but what *possible* authority does "EC, LLC" have to make such a claim?
28/ So what happens if Daniels says yes, I took the money, I have "unclean hands"—a legal doctrine that prohibits challenging a contract you pretended was valid so you could benefit from it—but (but!) the *reason* I took that money is I *believed Trump was bound by the contract*?
29/ In this view, the question becomes, did Cohen outsmart himself? By ensuring Trump *wasn't* a party to the contract and hiding his own identity (as EC LLC) did he falsely represent that EC LLC had the legal authority to make representations for Trump or bind him to a contract?
30/ One thing the court may look at is the signature page—not only did Cohen try to give a slightly different signature the two times he signed, but more importantly he signs *only* as "EC, LLC" and "Attorney for Essential Consultants, LLC." He claims no right to speak for Trump.
31/ So let's be clear: *no one signed this contract who asserted any right to speak for Trump*. Yet the contract makes countless—completely inoperative—legal representations *on Trump's behalf* and claims (entirely fictitiously) to *bind Trump* in numerous regards. Let's see how.
32/ Daniels was induced to sign the contract by Cohen's false representation in paragraph 2.3, in which he asserts legal authority to say Trump will "release any claims against [Daniels]" if Daniels agrees to do certain things. But in fact Trump was *not* so releasing any claims.
33/ It'll be *easy* for Daniels to say to a judge, "Your Honor, I took the money in good faith—I thought Mr. Trump was releasing all claims against me. It turns out Mr. Cohen was colluding with my prior lawyer. My *current* lawyer tells me Mr. Trump hasn't released *any* claims."
34/ In that view, Daniels simply needs to return the money and say, "I didn't get anything for this money—I got false representations that I had 'repose' from a lawsuit from Mr. Trump." And in that view, Trump staying away from the contract would be the thing that kills the NDA.
35/ But wait! Cohen's an even worse lawyer than I've let on so far. Because in fact, *in a contract he wrote and whose representations are his*, he represents to Daniels that Donald Trump *is*, in fact, a necessary signatory to the agreement (as he *is*, in fact, a party to it):
36/ So, as "EC LLC," with *no authority* to make representations for Trump or legally bind him whatsoever, Cohen represented that he *did* have such authority to represent and bind *and* claimed repeatedly that Trump had "entered" into an agreement which—actually—he never signed.
37/ Any reasonable person would—on the receiving end of such misrepresentations—believe that in signing such a contract they were getting something of value *besides* money: the right of repose from lawsuits by one of the richest men in America. Daniels was getting no such thing.
38/ And lest you wonder whether Cohen's gross misrepresentations of legal authority were "material" misrepresentations that could void the contract in which they appear, never fear! Michael Cohen himself made that fact *explicit* in paragraph 2.6 of the Agreement with Daniels.
39/ So Callan and Toobin should look again at the contract. And so should Trump and Cohen—as they really *can't* file a counter-suit. The timing of the contract confirms it was an illegal campaign contribution by Cohen—who used his own money—to Trump, which Trump never reported.
40/ Why does all this matter? Because the world isn't yet insane: a presidential candidate illegally paying off a porn star over an adulterous affair days before a close election—then lying to cover it up—is a national scandal. If you doubt it, imagine it happening to Obama. /end
PS/ Of course, I didn't even touch, here, all the *other* issues that we could discuss with respect to this ridiculous agreement, such as the (reasonable) allegation that Cohen may have violated it already (by acknowledging the affair publicly) and in so doing it invalidated it.
PS2/ (To be very clear, it's not that a contract suddenly doesn't exist in the eyes of the court system if it's breached, so much as that one party breaching it, as Cohen may have, makes it impossible for them to expect redress if and when the other party *also* breaches it.)
PS3/ I also haven't discussed how this episode *proves* that the Kremlin *would* be able (i.e., may presently be able) to successfully blackmail Trump over his past sexual exploits.

Nor have I laid out in full all the campaign finance laws Cohen and Trump may have broken here.
PS4/ An intriguing argument I'd have to think a bit more about is the claim that this contract is *per se invalid* as a matter of public policy, on the grounds that it was part of a conspiracy to cover up a criminal act (violation of federal election laws).

That may well be so.
PS5/ One thing that's clear is that, whatever questionable motives her and her attorney may have here, Daniels has many more legal arguments to beat Trump senseless over this agreement (and thus, this affair) than pundits are now implying.

And Trump can't *really* fight back.
NOTE/ Some contract lawyers in the weeds on this point out Daniels may have received the money at a time she still reasonably believed Trump *would* sign the agreement, and her attorney should've put Cohen's money in escrow until then—an error that may not be imputed to Daniels.
NOTE2/ A point someone made to me by DM: can EC LLC collect $1 million in liquidated damages per breach when there's no indication EC LLC is harmed by breach (i.e., there's no reasonable relationship to actual damages)? Breach harms Trump—not a party to the contract—*not* EC LLC.
NOTE3/ Trump sent Sanders out today to say words whose meaning she clearly didn't understand—"This case had already been won in arbitration." No—Cohen won a temporary gag order without Daniels/her lawyer present in a case Trump wasn't part of. Or did he just concede he's a party?
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