On Wednesday, White House Press Secretary Sarah Sanders surprised many when she announced that Trump had “won” his case against Stormy Daniels in arbitration. It was an odd thing for Sanders to say because it appeared to confirm that there was an agreement between Trump and the adult film star.
Later we learned that, on February 27, the shell company set up by Trump’s personal attorney, Michael Cohen, obtained a temporary restraining order against Daniels through an arbiter, purportedly preventing her from speaking about her relationship with Trump until the order is modified.
Arbitration is essentially a private, alternative judicial system. There are lots of legitimate uses for arbitration — it is cheaper, faster and more flexible than the traditional court system. But arbitration is also favored by corporations and the wealthy as it enables them to keep their misconduct secret and frequently obtain favorable decisions against less sophisticated parties.
The arbitration proceeding brought by Cohen against Daniels was supposed to be secret, but the order was leaked to numerous media outlets, including the New York Times.
Daniels’ attorney argues that the entire agreement between Trump, Cohen’s shell corporation, and Daniels is invalid because Trump never signed it. Therefore, this arbitration decision, issued pursuant to that agreement, is invalid.
But even if the courts ultimately reject that argument and find there is a binding agreement between the parties, Cohen continues to make basic legal errors.
Cohen filed the complaint with the arbiter only on behalf of his shell company, Essential Consultants, LLC. But the agreement between Trump, Daniels, and Essential Consultants only provides for arbitration between Trump and Daniels. In order to use an arbitration process, all parties must agree. Even if you accept the agreement as valid, Daniels did not agree to arbitration with Essential Consultants.
It’s all spelled out in Section 5.2 of the original agreement.
Note that this provision provides for a “voluntary system of alternative dispute resolution” between “DD on the one hand and PP on the other hand.” (DD is a pseudonym for Donald Trump and PP is a pseudonym for Stormy Daniels.) It does not talk about arbitration rights for “EC,” the shell corporation set up by Michael Cohen. Yet, it was “EC” that is listed as the claimant in the arbitration.
This could make the arbitration decision, which was obtained “ex parte,” or without the presence of Daniels or her representatives, invalid.
It’s one of a series of basic mistakes that Cohen has made in his efforts to protect Trump, his client. Notably, the secret agreement, which is no longer secret, acknowledges the existence of “still photos” documenting the relationship between Daniels and Trump. The agreement also states, in Section 4.4, that “substantial effort and expense have been dedicated to limit the efforts of the press, other media, and the public to learn of personal and business affairs involving [Trump].” At another point the agreement discusses Trump’s “sexual partners, alleged sexual actions or alleged sexual conduct, related matters or paternity information.”
Cohen also told the Federal Election Committee that the $130,000 payment was made with his personal funds, opening himself up to further legal problems if the FEC determines the payment was intended to benefit Trump’s campaign.