Getting Trumped: Court tosses out arbitrator's award based on violation of NDA

Public policy generally favors the arbitration of disputes, and the right to arbitrate is protected by the Federal Arbitration Act (FAA). New York and federal courts rarely vacate (overturn) or modify arbitration awards. A court will normally vacate an arbitrator's award only if it violates public policy, is totally irrational, or exceeds the arbitrator's authority under the agreement to arbitrate.

Recently, the Appellate Division, First Department, reviewed an arbitrator's decision in a case involving discrimination claims brought by a former employee of the company that ran Donald Trump's 2016 presidential campaign. In an interesting move, the court vacated the arbitrator's award based on the employee's alleged violation of a restrictive covenant the company required her to sign. Let's take a closer look.

Background

Jessica Denson was employed as the director of Hispanic engagement by Donald J. Trump for President, Inc., the company that ran Trump's presidential campaign in 2016. Denson signed a comprehensive nondisclosure, nondisparagement, and noncompetition agreement (collectively, the NDA) as a condition of her employment. The NDA provided that if she took any legal action against the company, it could force the matter into arbitration.