Friday, January 05, 2018

Trump Threat To Sue Over "Fire & Fury" Includes Bogus Inducement to Breach Claim Re Bannon

by Michael Dorf

When I first learned yesterday that a Trump lawyer had sent a cease-and-desist letter to the author and  publisher of Fire and Fury: Inside the Trump White House, I assumed that it was mostly bluster. Reading the letter confirmed that first impression, but it raises at least one interesting question: Can the author or publisher of a book be held liable for inducing the breach of a nondisclosure agreement (NDA)? After setting forth a few general points, I'll address that question. Spoiler alert: The answer is almost certainly no.

Lawyers, law students, and others may recall that the First Amendment almost categorically forbids so-called prior restraints--that is, judicial orders restraining publication in advance. Writers and publishers can be held liable for defamation and other torts under certain conditions, but absent something like concrete proof of a looming catastrophe, prior restraints cannot be issued. That is the core holding of the Pentagon Papers case, and it confirms just about the only modern First Amendment principle that can without question be traced to the Founding.

Accordingly, one might wonder, how can a writer or publisher have a legal duty to cease and desist from publication? And if they don't, does the letter rest on a fundamental error?

The short answer is that the letter does not threaten to sue to block publication. I believe it is best read  as making a threat: If you don't halt publication, apologize, and take various other actions, Trump will sue you for damages. And so understood, there's no contradiction with the general prohibition on prior restraints. Sure, the threat of post-hoc liability provides incentives not to publish in the first place, which makes post-hoc liability not all that different from prior restraint, but that's a general feature of free speech doctrine, not a Trump-specific oddity.

Note also that as I've summarized the gist of the letter, it makes no promise that Trump won't sue for defamation and on other grounds if the author and publisher do comply with the cease-and-desist demands. Indeed, the letter expressly reserves the right to sue anyway. Presumably, however, Trump would be entitled to less in damages after compliance--assuming any liability at all.

I take no position on whether there is potential liability for defamation here. Because Trump is a public figure/official, he must prove actual malice to recover for libel, but while that standard is high, it's not insurmountable. I suspect the threat to sue is bluster, but one never knows. Trump threatens to sue extremely frequently, but he also sues (and is sued) much more than the average bear.

For the balance of this post I want to address the claim by Trump's cease-and-desist letter that the author and publisher of Fire & Fury are liable for inducing Steve Bannon to breach the NDA that he signed with Trump, his company, and/or his campaign.

Let's begin with the basics. NDAs are not per se unenforceable. True, state contract law may limit the enforceability of an NDA on reasonableness grounds. So too, the First Amendment might stand as a bar to an overly broad NDA that covers matters of public concern. I assume that the Bannon/Trump NDA is overly broad, but, not having seen it, I'll also assume that it is at least partly enforceable.

Yet even parts of the NDA that are enforceable against Bannon are almost certainly unenforceable against the author and publisher of Fire & Fury, who are not themselves parties to the NDA.  I say "almost certainly" rather than "certainly" because there is no SCOTUS case 100% on point, but I am nonetheless very confident of my conclusion. Here's why:

(1) The cease-and-desist letter cites cases and other legal authority for just about every proposition it contains, except that it cites no authority whatsoever for the claim that a writer or publisher can be held liable for inducing the breach of an NDA signed by a third party. Presumably if there were favorable authority, Trump's lawyer would have cited it.

(2) That's consistent with my own research. I found no NY cases supporting such liability. (The cease-and-desist letter assumes that NY law applies.)

(3) Indeed, a 1998 article in the Federal Communications Law Journal, relying on a Newsday story, states: "libel specialists apparently are unaware of a case in which a media defendant has been held liable for speaking to a party to a nondisclosure agreement." The article goes on to explain why there should not be such liability.

(4) Although there is no SCOTUS precedent 100% on point, what we do have counts strongly against the Trump position here. A newspaper, reporter, author, or publisher can be held liable, consistent with the First Amendment, for the breach of an NDA to which it is a party, as the SCOTUS held in 1991. However, the 2001 case of Bartnicki v. Vopper is all but fatal to inducement claims. There the defendant received and played on the air an illegally recorded conversation. He did not participate in the illegal recording but knew or should have known that it was illegally recorded. The Supreme Court held that the First Amendment barred post-hoc civil liability.

Bartnicki is not exactly on point because it involved unlawful recording rather than an NDA, but that distinction seems to render Trump's claim especially weak. If the public interest in information is sufficiently great to overcome federal and state criminal and civil prohibitions on intercepting communications, surely it is sufficiently great to overcome whatever private contractual interest an NDA serves.

To be sure, one distinction with Bartnicki cuts in the other direction. The radio commentator in that case played no role in the initial illegality, only acquiring the recording after the fact. Here, by contrast, Fire & Fury author Michael Wolff did participate in the act that violated Bannon's NDA.

But that distinction does not seem sufficient to make the general principle inapplicable. Underlying Pentagon Papers and Bartnicki is the idea that it is not the press's job to worry about other people breaching their legal duties: If information in the public interest can be obtained, reporters should be allowed to go out and get it, then distribute it to the public. That idea appears to be controlling here as well. It was Bannon's job, not Wolff's, to worry about the NDA. The fact that there is no legal authority to the contrary confirms the impression.

Accordingly, I conclude that if Trump were to sue--a big IF--his claim that the author and publisher of Fire & Fury induced Bannon to breach his NDA would not survive a motion to dismiss.


Shag from Brookline said...

In my dotage, I thought back to when our four kids, all born within a four year period, all still in diapers, reading to them, with the current brouhaha bringing to mind:

"Who's Afraid of the Big Bad Wolff [sick!]?"

It's pretty obvious.

Shag from Brookline said...

I enjoyed the legal analysis. A few random but not substantive thoughts:

1) Might Trump be damage proof beyond NYT v. Sullivan on a defamation claim?

2) I expect that Mike's (second paragraph) " ... and it confirms just about the only modern First Amendment principle that can without question be traced to the Founding." might upset the "usual suspects" at the Originalism Blog.

3) Mike's (6th paragraph) " ... but he [Trump] also sues (and is sued) much more than the average bear." suggests Mike was a fan of Yogi Bear, who was "smarter than the average bear." I was also a fan as much of the humor of Yogi Bear was adult (as was the case with the earlier "Time for Beany" that entertained me during my law school years).

4) Recall Trump's "Fire and Fury" tirade against NOKO's Dear Leader. Did Trump file for a trademark as he has a history of believing he discovered certain words and phrases?

On a general substantive note, courts in reviewing NDAs have to dig deeper in their effects on public policy, including with respect to sexual harassment/abuse settlements of recent vintage.

John Barron said...

De minimis non curat lex. Trump's brand is so toxic that he has become libel-proof, and even his lawyers know it. But when your entire life has been about winning by intimidation, that is your only hole card.

On the positive side, the DPRK and South are getting together for peace talks. That is 50+ years overdue.

Shag from Brookline said...

Defamation was not a major part of Torts in my first year of law school (1951-2), long before NYTimes v. Sullivan. I dabbled a bit in libel in the early years of my practice, focusing on the early stages of development of right of privacy that Brandeis and another had addressed in an early 20th century article. One thing I learned about defamation and whether or not to bring litigation was the repetitions of the alleged defamatory statements that might result. Advising a client claiming to have been defamed of not only the legal costs involved with litigation but of such repetitions that would result in the course of such litigation often convinced the client not to litigate. But Trump is not your average bear, having been influenced by his lawyer Roy Cohn in his early business career. Trump and Cohn took a shine to each other. In the dust-up to Trump's reaction to Wolff's "Fire and Fury" the name and role of Roy Cohn with Trump has resurfaced.

Asher Steinberg said...

I guess I'm not at all sure that Bartnicki comes out the same way if the reporters solicited their sources to illegally record conservations. I think in order for you to be right, Bartnicki would have to come out the same way in that case. There's a lot of talk in Bartnicki about the reporters not participating in the illegality, or being "law-abiding possessors of information" who are being punished for what some non-law-abiding third party did, or for a "stranger's illegal conduct." That's a rather odd framing, of course, since the case came to them on the assumption that what the reporters did violated the statute and the whole case was about whether that application of the statute was unconstitutional, but I think it would be impossible to frame actively soliciting the recording in that fashion.

Eric Rasmusen said...

The claim is that Bannon signed a contract part of which was not to disclose X, and Wolff induced him to disclose X and actively helped him disclose it, knowing of the contract. Assume that the contract was valid and Wolff actually did know of it. Why should it matter that Wolff is an author rather than anything else?

As the post says, Trump can't get prior restraint, but that's equally true of any tortious interference claim---- the plaintiff can't stop the new merger from going through, but he can sue the new acquirer for inducing the target to breach its contract with him.

The illegal tape case is not on point, because the key is not that someone aided in illegal publication, it's that someone induced breach of contract.

This is exactly parallel with the nondisclosure agreements in legal settlements (which the new tax bill penalizes). Question: If John Doe agrees not to disclose Richard Roe's secret as part of a tort settlement, and People magazine pays $100,000 to Doe to release the secret, can Roe sue People as well as Doe?

Shag from Brookline said...

For a "narrative"view check out at the VC:

Trump v. Bannon et al.
"Does Donald Trump have a cause of action for breach of contract against Steve Bannon?"
David Post|January 5, 2018 1:13 pm

Eric Rasmusen said...

Thnanks for the link, Shag. The David Post article is pretty useless. It says the agreement is overbroad, which it is, and then slides over whether the serious part of it is enforceable.

Shag from Brookline said...

Is this from Post's post "pretty useless"?

"But as I said, I doubt it will come to that; even Trump is aware that such a suit will put the question of the truth or falsity of Bannon's accusations on the table, and one can hardly imagine that that will end happily for the president."

Live by the NDA, die by the NDA. What is the impact of Trump's NDAs on National Security? Contract law and rules of evidence are not controlling in the court of public opinion.

Eric Rasmusen said...

Yes, Shag, though really it's worse than useless; it's false. Such a suit will NOT put the question of truth on the table. Truth is irrelevant. The question is whether Bannon violated his nondisclosure agreement, not defamation, which would be a separate claim, one which Trump would likely lose since he'd have to prove malice. Stephen Carter has a good op0-ed in Bloomberg on this. As he notes, discovery would not include anything on whether the claims in the book are true, because that's irrelevant.

As for public opinion, that is indeed important, probably more important. Esetablising in court that Bannon broke a contract would help Trump. Also, Trump coudl agree to not file suit if author and publisher eat humble pie and agree to say their claims are false.

Eric Rasmusen said...

I posted this paragraph at Bloomberg, but it fits here too. I'd really like for a contract expert to address these issues.

But you only address the easy issues--- the contract enforcement--- not the interesting and harder one, which is tortious interference with contract. Are the author and publisher liable? Does it depend on whether they knew of the nondisclosure contract before publication? What is the remedy? Would it include, for example, disgorgement of any profits they may make from the book? Is it limited to objective monetary damage, or does a jury get to decide as it sees fit? Can they forum shop and sue in rural Idaho since Amazon sells the book to people there?

David Ricardo said...

This is an interesting discussion, but another aspect is that typically NDA's do not cover otherwise confidential information that becomes public from actions other than the person who executed the Agreement.

So, for example, disclosure by Bannon and others that Trump is a moron, an idiot, a near illerate fool etc. or that Jared and Ivanka are clueless cannot be a violation of the NDA since that information is already been made public and is widely acknowledged by just about everyone.

Shag from Brookline said...

Adhesion provisions in contracts can be sticky. Eric, I suspect you are of the view that Trump is a victim here. I note you do not include questions about defenses that might be asserted if a suit were to be commenced on behalf of Trump, such as matters of public policy. I'm patient and willing to wait until such a suit is commenced to review the claims asserted and the theories underlying the claims. Right now there are threats of a suit. Perhaps such a suit as it works its way through discovery might raise more 25A concerns based upon recent tweets by the Twit-in-Chief about, inter alia, being a genius. (Trump did graduate from an Ivy League school after spending only two years there.)

By the way, Eric, did you come up with this:

"Also, Trump coudl agree to not file suit if author and publisher eat humble pie and agree to say their claims are false."

on your own? Maybe Trump's attorney might be interested in your ideas. Just desserts?

Eric Rasmusen said...

Yes, the humble pie idea is mine. The letter is a demand letter, after all. The idea is to (a) preserve evidence, and (b) start negotiations that would make a lawsuit unnecessary.

I don't see any public policy justification whatsoever. That sounds like a "Trump is a bad person" defense. Bannon could have gone to the police if he wanted to whistleblow. I think Stephen Carter's article has some examples of corporate NDA cases where the defendant lost even tho his disclosures were that the corporation was doing illegal things.