Today, in a mood for some history, I walked half a mile to the new federal courthouse to watch United States District Court Judge James Otero hear argument on Michael Cohen's motion to stay — that is, freeze — Stephanie Clifford's aka Stormy Daniels' lawsuit. That suit seeks a ruling that her bizarre $130,000 hush-money agreement not to tell tales about the President of the United States is void and not enforceable because, among other reasons, President Trump never signed it. I've previously described what the case is about and the nature and significance of Cohen's request for a stay. Although Judge Otero took the matter under submission — promising to rule in writing — the hearing did not disappoint.

I gathered with a scrum of press and interested citizens and surrendered my electronics at the door — an unusual move calculated to prevent livetweeting and other shennanigans. For the benefit of my readers who are federal clerks and judges that was totally unnecessary because I always obey all of your rules, naturally. Ms. Clifford was represented by the now-familiar Michael Avenatti and his associate. Michael Cohen was represented by Brent Blakely, whom I had not seen before. President Trump was represented, as narrative convention requires, by three white men with good hair whose names escape me, and who did not talk after introducing themselves to the court.

There were two themes to the hearing. One is that Michael Cohen's situation is grave. Judge Otero — a federal judge for 15 years, who has seen thousands of federal criminal cases — repeatedly commented that it was clear from the search of Cohen's office and subsequent proceedings before Judge Kimba Wood in New York that Cohen faced a strong probability of prosecution. "It's substantially likely some kind of criminal action will be filed," based on the nature of the search, Judge Otero said at one point. Later, based on his experience overseeing warrants, he opined "something big is going to follow."

The second theme of the hearing was that the parties' legal interests were at war with their political and public relations interests.

Cohen is in a bind: it's clear from the search of his office that the FBI is investigating the hush-money contract he brokered between President Trump and Stormy Daniels, and it would be imbecilic to anything but assert his Fifth Amendment privilege against self-incrimination in answer to all questions about that subject. But defending Stormy Daniels' case in Los Angeles would require him to answer questions to defend the validity and enforceability of the contract. If he takes the Fifth he almost certainly loses the civil suit and the contract is voided. There's a remedy for that dilemma — Judge Otero has the discretion to stay the civil case while the criminal case proceeds. Judge Otero is supposed to consider factors including the prejudice to Daniels if the case stops, the prejudice to Cohen if it moves forward, and the interests of the public.

But both Cohen's and Daniels' public interests conflict with their legal interests here. Most importantly, Cohen did not file a declaration stating that he was going to take the Fifth because he felt the questions in the Daniels case could incriminate him. He relied on his attorney's statements that he would. There was only one reason not to do that — because doing so would be an act that could be used against him in the court of public opinion, and if he didn't do it, he and his lawyers could continue to take the public stance that he hadn't decided yet — with the subtext that he probably didn't need to because he didn't do anything wrong. Judge Otero didn't like it, and repeatedly pointed out that though the record (for instance, the proceedings in New York) suggested that the criminal investigation and the Daniels case were on the same topic, there was nothing from Cohen confirming that he believed the proceedings would incriminate him — or explaining why his lawyers filed a declaration from him in the Daniels case even after the New York search (a genuine blunder). Avenatti pointed out that Cohen's failure to file a supporting declaration was purely tactical — he didn't even offer one in his reply after Avenatti called him out for it in the opposition. Ultimately Judge Otero didn't order him to file a declaration, but gave him until next Wednesday to do so, and strongly implied that doing so was necessary to win a stay.

Daniels' public behavior — and the behavior of her attorney, Avenatti — were just as adverse to their legal interests. One of the factors in deciding whether to stay the case is whether the stay would prejudice Daniels's interest. How, asked Judge Otero, is Daniels prejudiced, when she's repeatedly told her story on TV, and her lawyer has repeatedly been on TV to talk about the case? Hasn't she necessarily ignored the alleged chilling effect of the contract? Blakely snarked that Avenatti has talked about the case on TV 53 times — "54, if you count Bill Maher." Avenatti struggled to explain how Ms. Daniels was still laboring under Cohen's feckless bluster that he would win $1 million from each statement she made and go on vacation with the proceeds. But the judge was clearly skeptical that the threat of the hush money agreement was actually prejudicing her any more. Avenatti, too, had to eat his words. It was in his interests to argue that a stay was fruitless because the federal investigation could take years; Blakely twisted the knife quoting Avenatti's pronouncements that Cohen would be indicted within 90 days. Avenatti was forced to concede, in decorous terms, that his pronouncement was shit-talking.

In short, everyone's public bluster and press maneuvering detracted from their litigation interests. It is often thus.

Judge Otero's questions implied some meaningful points. First, there was a significant discussion of whether Cohen would be forced to take the Fifth in response to answers at a deposition, and whether the stay should be deferred until he is called upon to do so. That implies that Judge Otero is seriously considering Daniels' request for limited discovery to determine whether any contract was formed, and therefore whether Cohen and Trump can compel Daniels to arbitrate. Normally an arbitrator decides whether an arbitration agreement is enforceable — but a judge can allow limited discovery and a quick mini-trial on the question of whether the contract containing the arbitration agreement was ever formed in the first place. Daniels' theory is that it wasn't, and that a deposition of Cohen and Trump will prove it. If Daniels can compel discovery of Cohen — and maybe even the President — it will be momentous. Second, Judge Otero also suggested that he might carve out Daniels' claim for defamation against Cohen, which is premised on Cohen's comments about Daniels in the media. Cohen was filed a well-crafted anti-SLAPP motion to strike that claim and is not arguing that claim needs to be arbitrated. Because it's an issue of law, Judge Otero may reach it even if he does stay the case. Third, Judge Otero noted that if he rejects a stay, the ruling could be immediately appealable, pointing to more potential delay. (Any ruling on the anti-SLAPP motion is also immediately appealable.)

There was intensity, but there were moments of levity. Judge Otero dryly noted he might handle discovery disputes (which might include such lofty issues as executive privilege) himself rather than send them to a magistrate judge. There were audible snorts in the courtroom when Blakely characterized the matter as "just a contract case." And Avenatti and Blakely gleefully twisted knives at each other. Avenatti explained he wanted to proceed immediately because criminal proceedings could leave Cohen a pauper unable to pay a judgment; Blakely repeatedly threw shade at Avenatti's fondness for the camera.

Judge Otero asked tough questions of both sides, often asking questions which — in isolation — sounded like he was deciding one way or the other, only to point in a different direction a moment later. He was well prepared and skeptical of both sides, a model of what you want an independent judiciary to be. Both Blakely and Avenatti was well-prepared and effective advocates. Trump's lawyers looked concerned very competently.

The end result was this: Cohen has until next Wednesday to file a declaration supporting his request and establishing that he intends to take the Fifth. Avenatti can file a rebuttal within 24 hours. Then the judge will rule in writing. Based on my observation, I think that there's a strong chance that Cohen will lose the motion outright if he doesn't file the declaration. If he does, I suspect Judge Otero will grant a limited stay — not so much to preserve Cohen's interests in the civil case, but to give his lawyers a reasonable amount of time to get a grip on what is going on and make longer-term decisions about how to deal with the civil case. Judge Otero repeatedly noted that the criminal case could take a long time, but that it was reasonable for the lawyers to want to regroup to evaluate the situation and how to weigh Cohen's interests in the two matters. I also suspect Judge Otero will hear the anti-SLAPP motion against Daniels' defamation claim — it's a strong motion and a weak claim.

I'll report more as events warrant.

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