Karen McDougal, a former Playboy Playmate who alleges an affair with President Trump, filed a complaint for declaratory relief in California on Tuesday. She wants the court to find that her contract with tabloid giant American Media, Inc.—the company bought rights to her story so it could suppress it and she got $150,000 and a promise to boost her career in exchange—is void by reason of fraud and illegality. And she has a decent case.
McDougal claims that she understood the contract to guarantee a certain level of exposure via regular columns and covers, for example. While AMI hasn’t refuted reports (and there are many) that characterize their representations to McDougal as promises, the company is refusing to hold up its end of the bargain.
A.M.I.’s general counsel ... promis[ed] to boost McDougal’s career and offer[ed] to employ a publicist to help her handle interviews. E-mails show that, a year into the contract, the company suggested it might collaborate with McDougal on a skin-care line and a documentary devoted to a medical cause that she cares about, neither of which has come about. The initial contract also called for A.M.I. to publish regular columns by McDougal on aging and wellness, and to “prominently feature” her on two magazine covers. She has appeared on one cover and is in discussions about another, but in the past seventeen months the company has published only a fraction of the almost one hundred promised columns. “They blew her off for a long time,” [McDougal friend John] Crawford said. A.M.I. said that McDougal had not delivered the promised columns.
The only subsequent discussions about AMI’s promises to elevate McDougal took place after journalists began seeking her out.
A.M.I. responded quickly, however, when journalists tried to interview McDougal. In May, 2017, The New Yorker’s Jeffrey Toobin, who was writing a profile of [AMI chair and Trump friend] David Pecker, asked McDougal for comment about her relationships with A.M.I. and Trump. [Chief content officer Dylan] Howard, of A.M.I., working with a publicist retained by the company, forwarded McDougal a draft response with the subject line “SEND THIS.” In August, 2017, Pecker flew McDougal to New York and the two had lunch, during which he thanked her for her loyalty. A few days later, Howard followed up by e-mail, summarizing the plans that had been discussed, including the possibility of McDougal hosting A.M.I.’s coverage of awards shows such as the Golden Globes, Grammys, and Oscars. None of that work materialized. (A.M.I. said that those conversations related to future contracts, not her current one.)
As with the 2016 conversation, AMI did not follow through. Instead, it’s been relying on a turn of phrase McDougal says she never knew about.
McDougal grants to AMI, for two years from the Effective Date, the right to identify McDougal as the author of, and use McDougal’s name, likeness, and image in connection with [monthly columns in several magazines].”
The contract gives AMI the right to publish McDougal’s columns, but doesn’t obligate them to do so, as she’d allegedly been led to believe by both AMI and her own attorney, Keith Davidson. That’s particularly devastating according to her because the columns were “the central feature of AMI’s promise to create ongoing positive exposure.”
What strengthens McDougal’s case?
At a basic level, it seems unlikely that apprising McDougal of a right to identify her as an author would count as “consideration,” or a thing of value, a requisite feature of valid contracts. (A promise to publish obviously would count.) The broadness of the agreement, too, is facially odd: They’ve used the term “then-married man” in lieu of “Donald Trump” and seem to ban McDougal, perhaps indefinitely, from every discussing any relationship with any married man.
Then there’s the fact that the lawyer representing McDougal in negotiations, Keith Davidson, has ties to Trump’s personal lawyer, Michael Cohen—and represented Stormy Daniels.
Over the years Mr. Cohen had come to know Ms. McDougal’s lawyer, Mr. Davidson, well enough that when New York magazine profiled Mr. Davidson last week, Mr. Cohen offered an enthusiastic endorsement: “He has always been professional, ethical and a true gentleman.” (The California State Bar suspended Mr. Davidson’s law license for 90 days in 2010, for four counts of misconduct.) [….]
[Davidson] was a natural choice for Ms. Clifford, also known as Stormy Daniels, when she sought to sell her own Trump story.
She was alleging that she had had a consensual sexual relationship with Mr. Trump after they met at a celebrity golf tournament about 10 years earlier (Mr. Trump denies her claims).
Just two months after Ms. McDougal’s story was effectively muted by her contract with American Media, Mr. Davidson set about brokering the silence of the adult film actress. This time, the negotiator on the other end of the transaction was Mr. Cohen.
McDougal was not pleased to learn of these ties after the fact. The complaint she filed in California details her thoughts on the relationship.
Ms. McDougal did not seek hush money from Mr. Trump. But she also didn’t sit back and wait to become tabloid fodder. If the story was going to become national news, she wanted to be the one to tell it to ensure that the account was accurate and not lurid grist for the tabloid mill. She hired entertainment lawyer Keith Davidson, who assured her that the rights to publish her story were worth millions. Unknown to Ms. McDougal, Mr. Davidson was working closely with representatives for Mr. Trump while pretending to advocate on her behalf.
Here’s where it gets problematic—for the Trump camp—contract-wise. The complaint alleges that:
AMI and Mr. Davidson failed to tell Ms. McDougal that the contract’s fine print did not actually obligate AMI to run her columns—the central feature of AMI’s promise to create ongoing positive exposure for Ms. McDougal. AMI and Mr. Davidson also failed to mention that they were secretly negotiating deals with other women to kill negative stories for Mr. Trump.
McDougal alleges that Davidson was in touch with Cohen in his capacity as a Trump representative. Moreover, McDougal alleges that she was not apprised of these communications. That fact both lends credence to her claim that Davidson wasn’t looking out for her best interests, at a minimum, and provides yet another starting point for a campaign finance investigation.
If her allegations prove true, McDougal has lodged a colorable challenge to the validity of the contract, which means she has a shot at staying in court rather than being forced into arbitration.
The court also maintained that, under California law, “a challenge to the legality of an entire contract that contains an arbitration provision must be determined by the trial court, not the arbitrator.” In coming to this conclusion, the court relied on cases such as Loving & Evans v. Blick, 33 Cal. 2d 603, 610 (1949), which stated that “[t]he power of an arbitrator to determine rights under a contract is dependent upon the existence of a valid contract under which this right may arise, and the question of the validity of the basic contract is essentially a judicial question, which cannot be finally determined by an arbitrator.”
This is an early battle, but a crucial one. If AMI manages to push McDougal into arbitration, it’s unlikely we’ll hear much about the adjudication—or the result.