Is there ever any circumstances which a court would issue an injunction to prevent disclosure as a result of breaking an NDA. I thought an NDA was a contract between two private parties that says “if party A public discloses this information they are liable to pay X dollars to party B”. Surely the most you would expect a court to do if the NDA is broken is to force the party A to pay up and hand over the cash, if they find the NDA to be binding (it seems there is some doubt about the validity of the NDA in this case but that is beside the point).
Is the Trump team just saber rattling here? Or is there actually a situation where the court would actually use its powers to prevent someone breaking an NDA (on pain of prosecution for contempt of court) rather than just enforce whatever terms they agreed in the NDA.
Can a civil court do that? If I sign a contract saying I will do thing X, but don’t do it. Can they force me (under pain of being in contempt of court) to do it? As opposed to making me pay the other party for my failure to do X.
And remember in the Daniels/Trump case, the order specifically states that if Daniels violates the gag order she will have to pay up to 1.3 million, 10x what she was paid.
So there is a financial penalty inherent in the order.
In order to seek specific enforcement of the agreement, the plaintiff (Trump) has to show (1) a breach of a valid contract, (2) irreparable harm resulting from the breach, and (3) inadequacy of money damages. Specific performance is generally available to enforce contracts for possession of objects whose value is not monetary; for example, grandma’s heirloom ring.
Specific performance is very rarely available as a remedy for breach of a nondisclosure agreement in the US. Even Delaware, which is more liberal about such things, only recognizes it in IP cases for the most part. In this case, the court is extremely unlikely to award specific performance anyway because the “irreparable harm” required cannot be shown; the story is already out, so it really makes no difference whether Daniels talks about it now.
ETA: I see now that you were answering the question in the abstract. Carry on.
The OP poses the question as to whether “courts” may issue injunctions to support NDAs, but this ruling was issued by an arbitrator. Can someone describe how much power an arbitrator has to compel the parties in a dispute ? I generally think I understand the difference between an arbitrator and a mediator, but this seems like more of a sort of order I’d expect from a judge than an arbitrator. But clearly I am not too familiar with the work of arbitrators!
IANAL, but it seems to me that it would not make much sense to create an NDA that basically has a “buy-out” option for a party to reveal the information to a third-party.
Example: I’m an engineer (not really) and I take a job to fix a super-secret piece of production equipment for $1,000. I have to sign an NDA that specifically describes a penalty of $10,000 if I reveal the information on how the equipment works to any competitor. Right after I complete the work, my client’s competitor calls on me and says, “Hey! Here’s $100,000 to give us the secrets. Just mail a check to your client for $10,000 and it’s legal for you to tell us everything in detail.” Doesn’t seem right.
BTW, IRL I have in fact been on the receiving end of two separate TROs when I left one company and went to work for another. My former employer was concerned that I would take along client lists and “proprietary information.” I had to stop work until a hearing to determine if a permanent injunction would be issued. Neither hearing resulted in an injunction, so it was back to work.
Adultery is a misdemeanor in New York but the alleged acts occurred in (IIRC) Nevada and California. Not in New York in any event. The payments might violate campaign finance laws in one way or another, but criminal? Maybe. Tell me more.
Most likely the NDA itself contained a clause providing for disputes over the implementation of the agreement to be handled through an arbitration process, and in that clause each party submitted to the jurisdiction of the arbitrator. And the clause might have provided that, as between the parties, the arbitrator would have the same powers, jurisdiction, etc as a court would have. So probably Trump would argue that the arbitrator has power to issue a gag order to Daniels because Daniels herself gave the arbitrator that power in clause XXX of the NDA which Daniels signed.
I have had it happen that a government customer forbade the publication of an award. This requirement had been flowed down to all the consultants and subcontractors. One subk then advertised on its website that they had been selected to work on [MyCo]'s award from FXX to do Y and announced a briefing (aka Press Conference, but smaller.) I was under obligation then to exercise the flow down clause, send a breach letter and a Cease and Desist, and seek immediate injunctive relief as guaranteed under the contract.
Subk had 120 minutes to pull the information from their website, and not very much longer to cancel a press briefing, and provide information on whom they had told. They also had to then formally identify the information as sensitive to those already breached companies and individuals.
The CEO literally wept, as he was desperate for the stock bump it would have given him. He had also spent considerable time and money on the briefing materials and venue. It was all pretty humiliating for him. Too bad he hadn’t read the contracts before he signed them.
Immediate injunctive relief is rarely granted though. It’s pretty much the prerogative of certain Federal agencies.
NDAs will often include a clause acknowledging that damages may not be a sufficient remedy, and acknowledging that a disclosor may apply to the court for equitable relief including injunctions and/or specific performance.
Arbitrations may be either binding or not. Usually, arbitration is forced by the terms of a contract such as the NDA here, in which case they are binding. An arbitrator has the power to enter findings of fact and conclusions of law, but has no enforcement power as such. If an arbitrator enters a gag order, Trump would have to go back to court to enforce it assuming Daniels ignores it.
Injunctions enforcing NDAs are granted even more rarely to governments than to people or businesses, because of the prior restraint doctrine. Only the government-as-customer gets them.