Nondisclosure Agreements and Herman Cain

Five Percent Chance of Being the Nominee. Zero Percent Chance of Recovering Damages in a Breach of Contract Lawsuit for Violation of an NDA.

Let’s pretend for a moment that Herman Cain had a legitimate chance of becoming the Republican nominee for President.  Now imagine that he actually engaged in unlawful behavior toward at least one female employee of the National Restaurant Association.  That employee would like to talk about what happened, but she is worried that she’ll breach a 1998 severance and nondisclosure agreement if she talks to the press.

Now, let our imagination run wild. The accuser – angered by Cain’s denials of bad conduct- decides to throw caution to the wind and go public.  Her allegations are salacious & they portray Cain in the worst possible light.  Notwithstanding her claims, Herman Cain actually gets a bump in the polling and becomes the nominee.  During the general election campaign, other women come forward – sparked by the original accuser’s courage.  Nevertheless, given the dominance of deterministic macro-economic factors over political strategy and common sense, Cain wins a tight election to become the next President of the United States.  At that point, emboldened, he decides to sue the woman who released the information about him for breach of contract, on a theory that he was a third-party beneficiary of the nondisclosure agreement.  (Let’s pretend that this is a doctrinal possibility.)

Last year, in a discussion with Larry Cunningham and Dan Solove, I argued that it’s exceedingly unlikely that any state court in the Union would award damages for breach of a nondisclosure agreement under circumstances like these, where (i) the information to be protected relates to sexual misconduct; (ii) the information is of immense value to the public at large; and (iii) it’s basically impossible for the promisee to prove damages with any certainty.  I am still convinced this is true, and that the media too uncritically reports that parties are “bound” by NDAs that would have almost no effect if tested in Court.

This line of thinking makes me doubt that fear of a breach of contract lawsuit is playing any role at all in the refusal of Cain’s accuser to come forward.  Rather, as her lawyer said today, she is afraid of the reputational damage that disclosure would bring, even if she’s entirely in the right.

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10 Responses

  1. fresno dan says:

    I think that’s a good analysis.
    I despair of any principaled discussion of the matter though. The only thing that makes the whole thing bearable is the entertainment value of the hypocrisy of both team “red” and team “blue”

  2. Brett Bellmore says:

    Well, that, or she doesn’t want to come forward because if she did the details would come out, and the goal of harming Cain’s prospects is advanced more by salacious imaginings than the lame reality of a meritless case being settled to avoid court costs.

    I suppose we’ll find out in time which it is.

  3. Ken Rhodes says:

    Stipulate the scenario postulated by Dave. And stipulate (for this interesting conversation) that Cain could sue and win some award for “damages.” Now calculate the damages.

    In the stipulated scenario, Cain got nominated and elected. Hard for his counsel to estimate “damages.” OTOH, the woman’s counsel could claim that the brouhaha generated sympathy for the candidate, who used it in the campaign to show how his adversaries were simply trying to smear him, instead of focusing on real issues.

    Counsel for the woman would thus claim that the “damages” were “negative,” and that payment should also therefore be negative, which would imply that if the woman owed “negative damages” to Cain, then the direction of flow of the payment should be from Cain to her.

    Has there ever been a recorded case of a jury finding for the plaintiff, then awarding negative damages, requiring the plaintiff to pay money to the defendant?

  4. Doug Richmond says:

    I also expect that the woman does not want to be identified for fear of reputational harm. But the fact that Cain would be unlikely to win any damages does not mean that the woman should not be concerned about breaching a confidentiality provision in a settlement agreement. If Cain were to sue, the woman would have to defend the lawsuit, and would presumably have to pay a lawyer to do that. If the Association were to sue, might not it seek the disgorgement of the monies paid in settlement?

  5. Shag from Brookline says:

    Brett’s reference to:

    ” … the lame reality of a meritless case being settled to avoid court costs.”

    is humorous when considering multi-million (including billion) dollar settlements by securities/financial firms with the SEC while denying the legitimacy of the claims being settled.

    I haven’t had to address a privacy provision in several decades, but as I recall exceptions to disclosure would often be spelled out, including in connection with a court order. I wonder what the privacy provision in the NRA settlement agreement spelled out. Would disclosure of the existence of the provision only, but not its details, constitute a violation of the agreement?

  6. Brett Bellmore says:

    In this case the settlement, or so I’ve heard, was on the order of $30-40k, an amount quite possible to achieve with a meritless case, when one figures avoided bad publicity and legal costs.

    As I say, in the next few days either some specific allegation will emerge, or we may reasonably conclude we’ve been witnessing nothing more than a political smear.

  7. I can’t think of any woman who has over accused a public figure of sexual harassment (or even assault) who has not suffered in the public eye. Growing up in the Anita Hill/William Kennedy Smith v. the Blue Dot era, I can’t imagine wanting to take that risk unless the behavior was objectively atrocious on its face and amply documented. As for contract damages, I would think there are a number of groups and individuals who would offer to indemnify her to provide negative information on a candidate.

  8. Brett Bellmore says:

    Growing up in the Twana Brawley era, I can easily imagine somebody wanting to take that risk.

  9. Shag from Brookline says:

    It seems the non-2d Amendment NRA provided a release of the privacy provision and acknowledged the statement of the claimant’s attorney. Apparently “Sugar” Cain had no say in the decision of the NRA in doing so. The NRA seems to have recognized the need of the claimant to protect herself under the circumstances described, in varying ways, by Cain. It seems clear that any political smear of Cain did not result from the claimant.

  10. Bobbi says:

    I think they should file charges for her breech of contract.

    Whether he is awarded damages or not, I think she should be required to pay back damages she was awarded PER her contractual agreement with the company.