UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF NEW YORK x 4 JANE DOE 1, Individually and on behalf of all others similarly situated, 5 Plaintiffs, 6 v. 22 CV 10018 (JSR) 7 DEUTSCHE BANK AKTIENGESELLSCHAFT ET AL., 8 Defendants. 9 10 11 12 Before: 13 HON. JED S. RAKOFF, 14 District Judge 15 APPEARANCES 16 17 BOIES, SCHILLER & FLEXNER LLP Attorneys for Plaintiff Jane Doe BY: DAVID BOIES SIGRID S. MCCAWLEY 18 19 20 ROPES & GRAY LLP Attorneys for Defendant Deutsche Bank BY: JAMES P. DOWDEN ANDREW TODRES 21 22 23 24 25 x New York, N.Y. March 13, 2023 4:00 p.m. (Case called) MR. BOEIS: Good afternoon, your Honor. David Boies, of Boies Schiller & Flexner, for plaintiff. MS. MCCAWLEY: Good afternoon, your Honor. Sigrid McCawley, for of Boies, Schiller & Flexner, also for plaintiff. MR. CASSELL: Paul Cassell, also for plaintiff Jane Doe. MR. : Brad and Brittany from Pottinger, on behalf of plaintiff. MR. DOWDEN: Good afternoon, your Honor. James Dowden, from Ropes & Gray, on behalf of Deutsche Bank. Bank. Andrew Todres, on behalf of Ropes & Gray, for Deutsche MR. TODRES: Good afternoon, your Honor. MS. MCCAWLEY: Good afternoon, your Honor. MS. BEBCHICK: Good afternoon, your Honor. Lisa Bebchick, on behalf of defendant. MS. ELLSWORTH: Good afternoon, your Honor. Felicia Ellsworth, and Hillary 4 5 6 THE COURT: All right. My understanding is that we took all the money that was needed to pay the hourly rate of all the attorneys on these matters and contributed it instead to Signatory Bank so that bank could emerge from default but maybe that's just a rumor. 7 8 9 10 11 12 13 14 15 As I think my law clerk has already mentioned, it seemed to me that we should set some time limits. So, we'll hear first with respect to the motions involving Deutsche Bank and because their docket number is one lower than the other, and 20 minutes for moving counsel, 20 minutes for responding counsel, ten minutes for rebuttal, and then we'll move to J.P. and since many of the issues overlap, 15 minutes for moving counsel, 15 minutes for answering counsel and seven minutes for rebuttal. 16 17 I've asked my law clerk to strictly enforce those limits and he's a tough guy. So, just beware. 18 So, let me hear from moving counsel in Deutsche Bank. 19 MR. DOWDEN: Thank you, your Honor. 20 21 22 23 24 25 In our papers Deutsche Bank has raised a threshold question that applies to the claims brought against it. And that threshold question is the question of a release. Just two months prior to instituting this action, plaintiff signed a release. In exchange for that, releasee received a substantial monetary payment. And corollary to that executed a very broad Chutter-Ames, on behalf of J.P. Chase. 4 5 THE COURT: Yes. Hand it up. I left my papers upstairs. 6 MR. DOWDEN: May I approach? 7 THE COURT: Yes. 8 (Pause) 9 10 11 MR. DOWDEN: Your Honor, as shown in Exhibit A, that release was exceedingly broad. I called the Court's attention -- 12 13 THE COURT: Well, so you're not a party to this agreement, are you? 14 MR. DOWDEN: No, your Honor. However -- 15 16 17 THE COURT: And since when under applicable law does a release between two parties extend to possible claims against third parties? 18 19 MR. DOWDEN: Your Honor, when the face of the release is clear that it applies to third party beneficiaries -- 20 THE COURT: Where do you say that? 21 22 23 24 25 MR. DOWDEN: I'll point to two particular paragraphs in this agreement. In the now therefore agreement, halfway through it talks about Jeffrey Epstein, his coexecutors, coestate holders, directors, officers and go a little farther down and it says "any entities or individuals who are or have release with the Epstein estate. Your Honor turns to Exhibit A to our brief, a copy of that release -- and I have a copy for the Court. 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 ever been engaged by whether as independent contractors or otherwise, employed by or worked in any capacity for Jeffrey Epstein and/or the Epstein estate". And that is defined as a release. Your Honor, it is clear from the plain language of that test that Deutsche Bank fits within that broad release I'll start with the first applicable section. It first applies to any entity engaged by the Epstein estate, engaged by, your Honor, in ordinary common parlance under dictionary definition means to begin services for, to attain the services. And in fact courts in this jurisdiction have recognized that reviewing banking services can fall within the term "engaged". In particular, I am recalling the Parundy decision of J.P. Your Honor, if we just look at the allegations -- THE COURT: Well, looking at the sentence you're referring to -- which only a lawyer could have drafted since it goes on even longer than a Falkner page -- now, therefore, claimant for and on behalf of herself and her lawyers, devisees legalities, distributees, executors, administrators, trustees, personal representatives, successors and assigns, for and in consideration of the settlement amount, the adequacies and sufficiencies of which are hereby acknowledged, hereby releases and forever discharges the coexecutors of the estate of Jeffrey E. Epstein in both their capacity as coexecutors and individually, the cotrustees of the 1953 trust, the Epstein estate, any entity owned or controlled in whole or in part by Jeffrey Epstein or the brilliant draftsman of the the Epstein estate respective current and the -- typo there on the part of the this, the word the appears twice -- or (the Epstein entities) and their former principals, officers, directors, stockholders, managers, members, partners, limited partners, trustees, beneficiaries, administrators, agents, employees, attorneys -- I am good there are attorneys in there - predecessors, successors, assigns and affiliates. And if we stopped the music just there we're only a third through this wonderful sentence -- that would not excuse you at all, right? 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 MR. DOWDEN: No, your Honor. THE COURT: Okay. So, we go on. And any entities or individuals who are or have ever been engaged by (whether it's as independent contractors or otherwise) employed by or worked in any capacity for Jeffrey E. Epstein and are the Epstein estate jointly and severally the releasees. So, of those terms we're still only two thirds through the sentence, but who's counting? Which do you say applies to Deutsche Bank? MR. DOWDEN: Your Honor, I'll point to three exemplars. One, any entity obviously engaged by, employed by, worked in any capacity. Those are the three I focus on. 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 THE COURT: So, is it unambiguous that that applies to third parties? For example, would it apply to a restaurant where Mr. Epstein had a dinner or two? MR. DOWDEN: Your Honor, I would say, as Judge Kaplan recognized in the Prince Andrew case, when a substantial settlement amount such as this is entered into, there is a corollary broad expectation for the breadth of that release so as to bring finality to the case to avoid being brought into future litigation and future claims. So, your Honor, given that, yes, the parties' intent here was clear from the plain language to be broad. Anyone who worked for, employed by, engaged by the estate, that would, your Honor, apply to a catering service that works at an event at Jeffrey Epstein's house. THE COURT: Okay. I'm thinking, he goes into CVS and buys some very upscale hair tonic. And you say that putting aside the unlikelihood he would have a claim, but assuming for one reason or another he had a claim that CVS would be offer the hook because of his -- MR. DOWDEN: Yes, your Honor, it would. THE COURT: So, in other words, no one would be off the hook? MR. DOWDEN: That's actually not true your Honor. In fact, later on in the release there's a specific set of individuals who are carved out specifically from this 4 5 THE COURT: Well, that's an important point. I want to get to that in a minute and I'm still on your -- let's just finish this sentence because I don't want to leave the sentence hanging. 6 7 8 9 10 11 12 13 14 15 16 17 18 19 "From any and all claims demands, actions, causes of actions, suits, debts, dues, sums of money, accounts, variances, trespasses, damages and judgments, whether sounding in equity, tort, common law, contract statute, regulation or otherwise, and whether now existing, hereafter existing or revived in the future, whatsoever, in law, admiralty, equity or otherwise, including without limitation and any and all claims or causes of action that arise or may arise from or which otherwise concerns acts of sexual abuse or sex trafficking by Mr. Epstein (the claims), which against the releasees claimant ever had, now has or hereafter can, shall, or may have, for a time or by reason of any manner, clause or thing, whatsoever, from the beginning of the world through the date of the general release and settlement agreement." 20 Boy, you know, a legal education is a wonderful thing. 21 22 23 24 MR. DOWDEN: Your Honor, counsel sitting at the table in front of us actually entered into this settlement agreement. So, they're well aware of the terms of this agreement and the breadth of this agreement. 25 THE COURT: Well, let's talk, which I frankly may be otherwise -- 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 more nicely pertinent to what you were about to turn to, which is on page 2. I'm sorry. MR. DOWDEN: The carve out, your Honor, is on page three. THE COURT: Three, yes. I'm sorry. MR. DOWDEN: It would be the paragraph that begins "while the parties". THE COURT: Thank you very much. "While the parties do not believe there is any reasonable interpretation that this general release could be construed to release Jane's Jess Staley Black or their respective entity affiliations. For clarity, this general release and settlement agreement specifically does not include Jess Staley Black or any company or entity which either is or was beneficially owned or controlled by Jess Staley or Black as a releasee or release party under this general release and settlement agreement." Now, the first part of that sentence is that "The parties, both sides do not believe there is any reasonable interpretation that this general release could be construed to release James Staley Black or their respective entity affiliations". So, aren't the parties jointly saying that if I construe this agreement the way you would like me to construe 4 5 6 7 Mr. Epstein. They're not to have alleged to have engaged in, worked for or otherwise been limited by Mr. Epstein. But rather, two specific individuals who are friends or associates that were carved out from the otherwise very broadly -- 8 9 THE COURT: But it applies to their affiliated entities? 10 11 MR. DOWDEN: To the sense that they are owned or controlled those affiliated entities. 12 THE COURT: Where does it say that? It just says 13 14 MR. DOWDEN: "Beneficially owned or controlled by", your Honor. 15 16 17 18 19 20 THE COURT: I'm sorry. No, no, no. That's the second sentence. I'm still on the first sentence. The parties do not believe there is any reasonable interpretation that this general release could be construed to release James Staley Black or their respective entity affiliations, which in the case of Mr. Staley is your co-defendant, yes? 21 MR. DOWDEN: Yes, your Honor, which envisioned 22 23 24 25 THE COURT: Do you interpret that provision as -- let me ask two questions. First, do you interpret that provision as barring any claim by plaintiffs that, against Mr. Staley's affiliate? it, they agree that would be an unreasonable interpretation? MR. DOWDEN: Your Honor, two things. First, those two individuals there are close friends and associates of 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 MR. DOWDEN: Your Honor, I would say two things. One, there may be some debatability around that point, given the subsequent language which talks about owned or beneficial owner or control. THE COURT: Well, the second sentence, the one I'm referring to says, all parties expressly acknowledge, agree and understand -- I hope some day someone will tell me what the difference is between those three items. But anyway, all parties expressly acknowledge, agree and understand that any and all claims that claimants has or may have against Jess Staley Black or any company or entity beneficially owned or controlled by Jess Staley or Black are expressly preserved. Doesn't that create an ambiguity with respect to the language I just read from the first sentence? MR. DOWDEN: With respect, perhaps, your Honor, to the entity owned or controlled by Jess Staley or Black, not for Deutsche Bank, your Honor. Because if the intent of parties was to carve out individuals or their affiliates, the parties could have and should have carved out Deutsche Bank as reserved -- instead, this carve out is exceedingly narrow from the otherwise very, very broadly drafted broad release. And, your Honor, in the paragraph right before the one you were reading, it is contemplated that this release may be used by third party beneficiaries. So, if you look at the last sentence of the paragraph beginning "neither", however, this 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 general release and settlement agreement may be introduced in any proceeding concerning or arising from, including as evidence of liability or wrongdoing and on the part of the party, as well as breached the terms hereof. THE COURT: Okay. Because I have had to limit everyone's time, although, you're all getting about twice the time you would get in the Second Circuit because they're so much smarter than this Court, let me just shift gears for a second to one other question I had growing out of your papers. When you argue that Deutsche Bank did not participate in Mr. Epstein's sex trafficking venture, you say in effect that it merely provides usual services. But doesn't the compliant allege that Deutsche Bank differentiated its services for Mr. Epstein by, for example, assisting him in structuring his cash withdrawal so as to evade alerts by failing to implement guidance recommended by its reputational risk committee, et cetera? So, isn't there enough in the complaint, take it as I must, most favorably to the plaintiff, to suggest that he was treated differently and this wasn't usual services and that it wasn't usual services because they had reason to believe that he was engaged in the -- MR. DOWDEN: Your Honor, let me start by -- courts have been very clear in interpreting the participation requirement of the TVPA, that it is not limited. However, your 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Honor, it has to have in some sort of active step, some concrete step. A mere passive facilitation is not enough. Cases have even held providing the tools that allow the venture to continue are not enough. Here, as alleged in the complaint -- THE COURT: What case that's -- on me, says that? MR. DOWDEN: Your Honor, there are two cases I call your attention to, Choice Hotels, which was decided by Judge Kogan in the Eastern District of New York. THE COURT: It's the Eastern District. MR. DOWDEN: Persuasive authority, actually. THE COURT: Of course, I always paid as close as attention to my brilliant colleagues in the Eastern District. That goes without saying, but I don't think it's binding on me. MR. DOWDEN: Yes, your Honor, Noble decided by this court by Judge Sweet in the Southern District -- THE COURT: That's one of the greatest judges ever to serve on this court. So, that give me a little more pause. MR. DOWDEN: Your Honor, in Noble, dealing with the Weinstein case, there was an allegation that Mr. Weinstein's brother actively participated in Mr. Weinstein's conduct. And the specific facts that were alleged there were that he assisted in arranging travel and actually, paid out settlement money. The Court found that that was not enough, your Honor. And that's because the Paradime case and TVPA requires more. 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 It requires that, Southern District decided in the Canosa case, the Canosa case is yet another case involving Weinstein employees who actively engaged in providing sex paraphernalia coverups and otherwise. Those are the Paradime participation cases. Even, your Honor, in the Second Circuit, the Perlis case, a head of school who traveled to a foreign country and didn't stop what was going on, was enough. Your Honor, that's why the Paradime cases under the TVPA for participation are hotel cases. Hotels that sort of allow this to continue observe sex trafficking happen, those are the Paradime cases. Extending it to a banking institution is a lot farther than -- THE COURT: All right. Unfortunately, we've more than gone the 20 minutes. So, you'll have rebuttal for a few minutes. So let's hear from your adversary. MS. MCCAWLEY: Sigrid McCawley, on behalf of the Does, your Honor. THE COURT: So, what about the settlement agreement and what about in particular, the parties went to some length to carve out from what otherwise appears to be a very broad settlement, claims against other persons and entities but not Deutsche Bank. So, why isn't that reasonable inference, maybe a binding inference that this doesn't apply or that this agreement let's Deutsche Bank off the hook? MS. MCCAWLEY: Well, your Honor was correct when you talked about the language in the agreement and how it wouldn't cover a situation like. This is a financial institution. That simply wasn't contemplated by the parties. You can tell that from the plain language of the agreement. 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 And the provision that you talk about in the back, your Honor, where it says starts with the language "while the parties do not believe there is any reasonable interpretation", that means they didn't contemplate any reasonable interpretation that these individuals or financial institutions that were related with would be covered by this release. So, that is the death knell for them because that is the language that makes it very, very clear -- THE COURT: Why didn't the agreement end there of this sentence end there? In other words, if that sentence means everything you say it means, then you didn't need the rest of the sentence. MS. MCCAWLEY: Your Honor, I think that for the rest of the sentence they are just trying to further elaborate on what they were concerned with with respect to those two individuals, but the focus here is not on the individuals but the entities. So, when you look at the beginning os the -- and we talked about what the parties were focused on, you'll remember from our complaint that Epstein holds a lot of different companies. The bank alone opened a number of 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 accounts. He had many holding companies, many things that his estate concerned with protecting. So, that's what the focus was on. It wasn't focused on things like separate financial institutions and protecting that financial institution. It was focused on protecting the employees of the household for example, like the -- these kinds of individuals. It wasn't focused on the large financial institutions who were independent. And what guides, your Honor, in that understanding is the nondisclosure agreement. THE COURT: Well -- Go ahead. MS. MCCAWLEY: So, your Honor was talking earlier about the case law. And of course, opposing counsel mentioned the Prince Andrew case which we were counsel on. And in that case the Court focused on the fact that the agreement contained a similar to here, a nondisclosure provision and that's because the case law as you talked about in New York, you have to establish that you are an intended third-party beneficiary to the agreement. When there is a nondisclosure provision in the agreement, very strong here, Deutsche Bank didn't even know about this agreement until they got into this case. In other words, there was no intention of Epstein or Jane Doe to protect the financial institution with respect to this. THE COURT: I'm not sure -- helps me out. So, in my hypothetical say this agreement does not any away, shape or 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 form preclude me from suing CVS -- I apologize to CVS for using them as a hypo. Next time it'll be Walgreen's. That means that even though I've said in the agreement that we will not sue CVS, but I can still sue CVS? MS. MCCAWLEY: Well, no, your Honor. But when you talk about what the Court looks at when they're analyzing an agreement like, the nondisclosure does weigh on that, what the parties' intent was. So, in this instance when there are broad terms as there are in this agreement and there's no reference to a financial institution and there's a nondisclosure provision like this, as Judge Kaplan says in the Dufrey that leans in favor when you're looking at it from the perspective of whether it is unambiguous or ambiguous, that leans in lever of the nondisclosure being that they didn't intend to cover that beneficiary. It didn't intend to cover a financial institution. THE COURT: So, for the sake of argument, if I were to decide that in the relevant respects, this agreement is ambiguous, then I would have to hear extrinsic evidence from the negotiations or whatever as to what the intent of the parties was, right? MS. MCCAWLEY: That's correct, your Honor. THE COURT: You were one of the parties, one of the lawyers who negotiated this, right. MS. MCCAWLEY: I was not, your Honor. 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 THE COURT: Okay. What evidence of that sort, if any, do you think would be relevant? MR. DOWDEN: I'll start with the point that we made in our brief we think the language is clear -- THE COURT: I understand. But it's a classic contractual dispute because each side says the language is absolutely crystal clear no reasonable person could possibly think otherwise, they totally disagree. But assuming that in my confusion I decide that there might be some ambiguity, what kind of evidence should I look to? MS. MCCAWLEY: There could be evidence entered as to who they intended to cover. And certainly the Epstein estate was a party to this agreement. And I think the fact that they were obviously at Epstein's bank regularly with those banking financial institutions was the intended cover that they would have made that clear in this agreement and they didn't. So, we do believe that the agreement was very clear on the face of it. But to the extent you were to consider extrinsic evidence, it would be those types of things to get at what the parties did intend with the language that they chose. THE COURT: Lets go back to the first page, the end of the sentence that we mentioned before. Any entities or individuals who are or have ever been engaged by (whether as independent contractors or otherwise, employed by, or worked in any capacity for Jeffrey E. Epstein and or the Epstein estate), 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 why isn't Deutsche Bank an entity that was engaged by and worked in some capacity for Mr. Epstein? MS. MCCAWLEY: As your Honor noted before, that would be too broad. And it's also very clear from the language, the limiting language in the Wile paragraph in the back that they didn't intend to cover financial institutions. So entities was not intended to have that breadth. And it's also tide to the language that your Honor read in the beginning where the focus is really on the clear language deals with the coexecutors of the estate, both in their capacity as coexecutors, individually and cotrustees of the 1953 trust, the Epstein estate and any entities owned or controlled in whole or in part by Jeffrey Epstein or the Epstein estate. They were looking at protecting that inner circle, your Honor. They were making sure that Epstein wasn't getting dragged in for those types of holding companies and things that were within the inner circle of the Epstein entity. They were not looking to protect outside third parties of that nature. Certainly, not a financial institution of the size and depth of J.P. and Deutsche Bank or any significant financial institution. And certainly, if they did intend that, your Honor, then this is a very long sentence. They have plenty of room to write that in and they didn't choose to. THE COURT: So, you cannot imagine how disappointed I was that this sentence wasn't even longer. So, let me turn to some other issues in the case just because, again, we have limited time. (Continued on next page) 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 THE COURT: So with your claim for intentional infliction of emotional distress. MS. MCCAWLEY: Yes, your Honor. THE COURT: There's a case from the appellate division Shea v. Cornell University, which holds that substantial assistance requires, quote, intentional or deliberate acts directed at causing harm, which would rise to the level of actionable conduct in relation to the subject assault or, quote, overt encouragement of the offensive behavior. How do you meet either of those prongs? MS. MCCAWLEY: Well, your Honor, there's a plethora of allegations, there are a plethora of allegations in our complaint that hit this issue specifically. What we have focused on is the conduct of the banks and how extreme and outrageous and continuous that conduct was to help facilitate the trafficking. So, for example, opening over 40 accounts, having one attorney make 97 cash withdrawals in a very short time period, all within the range of \$7,500 to effectuate the structuring, and no red flags. Even when they call into the bank to report that, nothing is done. There's just a repeat of over and over red flags within the bank that we've enunciated in our complaint, and nothing is done. So over 200,000 -- THE COURT: So I guess the question I'm raising is, given that language in the appellate division -- this 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 particular claim is a state law claim -- what you are describing are many acts of facilitation, if you will. But that's a little bit different, is it not, from either overt encouragement or intentional or deliberate acts directed at causing harm, which would rise to the level of actionable conduct in relation to the assault. Let me start with the latter. Is there any evidence of overt encouragement of the assaults? MS. MCCAWLEY: Yes, your Honor. So in the complaint, for example, we allege that Packard and Morris actually went to Jeffrey Epstein's home and witnessed the trafficking. These are high level individuals within the bank who are supposed to be protecting these people, and instead are witnessing the trafficking and they're helping facilitate it and are actively participating in it. So those are the types of allegations. While it's a little bit different, your Honor, I understand the struggle here on the intentional infliction of emotional distress count. What the case law says, like Canosa v. and also this came up again in the Prince Andrew/ case, it's that continuous, extreme, outrageous conduct, the continuous, severe conduct that comes up in this conduct, we have it here. Because without the bank providing loads and loads of cash, Jeffrey Epstein cannot commit the crimes he committed, right. He had to have a facility that was willing to disregard laws, look the other way, not pay attention to these things, not bring them to the authorities, right, in order for the trafficking to be facilitated. So yes, they are working hand in hand with him. Without the bank 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 THE COURT: I guess my last question -- then I want to move to something else before we lose the remaining time -- so it's one thing to say they gave him lots of money and disregarded the rules relating to that and all like that, and so they must have known that something fishy was going on. But at least one reading of this Shea case would be they have to know, for this particular tort, they have to know more than that; they have to actually say, use this money and go out and commit an intentional infliction of harm. MS. MCCAWLEY: And that's what we've alleged, your Honor. I mean, they were incentivized to help Epstein because they got lucrative, lucrative accounts as a result, right. They got Epstein, all of his friends, coming in, putting their money into the bank. So this was a quid pro quo. They were very, very successful in what they were doing. They were helping facilitate the trafficking, because why; they got huge benefits from it. There's emails that we have alleged in the complaint, 2 to \$4 million in a year, 3 to \$4 million in accounts coming in. The bank was very, very incentivized to make sure that 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 this trafficking continued and they kept Epstein happy because they could those accounts. So we do allege there was active participation in the trafficking in the complaint. THE COURT: How much time do we have? We've got five minutes. We've got time for more than one question. So for your claim of aiding and abetting the TVPA, doesn't the Rothstein case kind of preclude that and, more generally, isn't the civil cause of action limited to, quote, this chapter, which would not pick up Section 2 of Title 18? MS. MCCAWLEY: Your Honor, the case didn't address the argument that we've put forward in our allegations, which is - in our briefs -- which is the textual argument. So it's really not in contrast, because that argument wasn't made. So what we're saying is that, under the language, just the plain language of 18 USC Chapter 2, aiding and abetting of the TVPA is not precluded. And you'll remember, your Honor, in the cases like A.B. v. Marriott, they talk about the broad remedial purpose of the statute. And so what we're saying here is, under the text of the statute -- THE COURT: This is -- MS. MCCAWLEY: Sorry. THE COURT: -- a hybrid statute, civil and criminal. MS. MCCAWLEY: Correct, your Honor. THE COURT: So for every argument that it should be 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 broadly construed, there could be an argument that it should be narrowly construed because it's both civil and criminal, but it's one statute. MS. MCCAWLEY: I understand, your Honor. I think that what we have seen in the case law is the focus on it being a remedial statute that is supposed to be broadly construed. But nevertheless, even if you set that aside -- THE COURT: I hear that. Let me just pull out the relevant section. So this is Section 1595, yes. MS. MCCAWLEY: Correct. THE COURT: Quote, an individual who is a victim of a violation of this chapter may bring a civil action against the perpetrator or whoever knowingly benefits financially or by receiving anything of value from participation in a venture which that person knew or should have known has engaged in an act in violation of this chapter, an appropriate district court of the United States may recover damages and attorneys' fees. Now, there are two things about that. First, it's limited to someone who is a victim of a violation of this chapter. So this chapter doesn't include Section 2, does it? MS. MCCAWLEY: Well, your Honor, we contend that 18 U.S.C. Section 2 makes an aider and abetter punishable as a principal, and that means if they're a principal, they're a principal punishable under Chapter 77. THE COURT: That may be true as to the criminal 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 provisions, but here we're talking about the civil remedy. And the civil remedy speaks of this chapter, rather than the entirety of the federal criminal code. So I'm wondering if that's a problem for you. And then the other bit, which I just alluded to before, it only can be brought by an individual who is a victim of a violation and against the perpetrator, et cetera. Don't those terms have to be interpreted the same as they would be under the criminal provisions? They're directly referencing the criminal provisions. And isn't the rule of construction that criminal provisions should be narrowly construed? MS. MCCAWLEY: It's a fair point, your Honor. I would just point to the fact that it's really a textual argument. I understand that your Honor may have a different interpretation of the plain language, and we certainly accept that. But we do believe that the point of the Trafficking Victims Protection Act was to provide broad protection of victims. THE COURT: Let me take the liberty of interrupting you because, once again, we have exceeded the time. MS. MCCAWLEY: Thank you, your Honor. THE COURT: And let me hear a rebuttal from moving counsel. MR. DOWDEN: Thank you, your Honor. Before I begin, I just have one very significant 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 factual correction to make from the last presentation. There is no allegation in the complaint that anyone at Deutsche Bank saw sex trafficking victims. There is one allegation that is conclusory and hypothetical that it suggests at one meeting a sex trafficking victim was observable. That's not a fact, your Honor; that is a conclusory hypothetical found at paragraph 236. That is as far as the complaint on its face can go on that point. THE COURT: Well, let's assume that the complaint alleges enough to suggest that the bank was doing things that were different for Mr. Epstein than for most people and may be in violation of its own internal, normal practices and rules. And they knew, did they not, that he had been convicted of trying to lure an underage person into prostitution or something like that -- I can't remember the precise allegation -- so it wasn't that they were totally ignorant of a practice in which he may have engaged? MR. DOWDEN: Your Honor, what the complaint pleads is that Deutsche Bank was aware that, seven years prior, Mr. Epstein was convicted of solicitation of a minor, was sentenced, imprisoned and paid settlements. That does not mean that seven years later the bank knew that he was engaged in sex trafficking. THE COURT: Well, I understand that as a general proposition, but I'm glomming together, assuming that he seems to be seeking to get cash directly through a lawyer and so forth in ways that are suspicious, and you know that he's done this before, indeed was found guilty and it was sufficiently serious; no one thought it was an accidental matter that could lead to probation or anything like that. He got serious time. Why wasn't that a red flag flying, as they say? 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 MR. DOWDEN: Your Honor, a couple things I would say. That separate sort of AML type conduct was the subject of other litigation, a subject of a DFS penalty that Deutsche Bank has already paid. It does not give a basis for a private cause of action for sex trafficking. As Choice Hotels says, failing to adequately detect signs of sex trafficking and potentially violation of other statutes does not give rise to liability under the statute. was MR. DOWDEN: That was Justice Hogan, again. Choice Hotels, your Honor, that One other point, your Honor, I want -- THE COURT: What case were you referring to? One other thing I want to make clear, in the release in the /Prince Andrew case, there was a specific carve out for third-party beneficiaries. The agreement said, there is no third-party beneficiaries here. That is not present in the carve out in this release. And it intended the release to carve out broad swaths of institutions engaged by or worked by that should have been in the release. Plaintiffs can't have 4 5 6 7 8 MR. DOWDEN: Your Honor, in the complaint, there is very specific allegations of engagement, of sort of providing services, providing investment in long-term securities, wires. Your Honor, that's engaged, that's work, that's the plain language of the unambiguous release, not carved out to third-party beneficiaries. 9 10 11 12 THE COURT: Let me ask the question I asked your adversary. If I were to find this agreement ambiguous -- I know you think it's not -- but if I were to find it ambiguous, what kind of extrinsic evidence should I be looking at? 13 14 15 16 17 18 19 20 21 MR. DOWDEN: Your Honor, for example, there are public statements, including in filings, where the plaintiffs have said, counsel has said, other third parties were intended to be released by these releases. Ms. Maxwell, for example, was intended to be released in these purposefully because the Epstein estate was looking for finality. In exchange for a substantial payment, a broad release was executed. There are good policy reasons for that, and that was recognized, again, by Judge Kaplan in the case. 22 23 THE COURT: Did you want to respond to anything on the aiding and abetting or any of that stuff? 24 MR. DOWDEN: No, your Honor. I think the law 25 THE COURT: Very good. Thank you so much. their cake and eat it too. THE COURT: I wish I had said that. Let's turn to JPMorgan. Let me hear from moving counsel. 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 MS. ELLSWORTH: Thank you, your Honor. Felicia Ellsworth for JPMorgan. With the privilege of going second, let me jump into the questions that you asked counsel in the first argument. The allegations of the complaint against JPMorgan contain no nonconclusory allegations of any activity by JPMorgan that was anything other than routine banking activity. And the courts in the Second Circuit and New York are clear that routine banking activity, provision of routine banking activity does not give rise to any sort of duty, doesn't give rise to a negligence claim, and also doesn't give rise to any liability for any use that might be made of the funds that is illicit, even if -- THE COURT: So what about the situation, if what is otherwise a routine transaction is one, in my hypothetical, that the bank knows is being used for an illegal purpose, doesn't that change the situation? MS. ELLSWORTH: So first of all, there's no allegations like that in the complaint. But second, to answer your question -- THE COURT: I will see about that, but go ahead. MS. ELLSWORTH: To answer your question, if it were pled adequately and in a nonconclusory fashion that there was 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 actual knowledge that the bank would use the funds -- excuse me -- that the customer might use the funds for illicit ends, then perhaps there could be some liability. But even in the terrorism context, in cases like the Lerner case, this court's case in Rothstein, there are similar allegations about suspicions for what the funds might be going towards, knowledge of public information similar to what's being alleged in the complaint here, and that's been held to be insufficient. THE COURT: Let's assume arguendo that Mr. Staley knew that the bank was being used to facilitate Mr. Epstein's trafficking, his improper activity, isn't that knowledge imputed to the bank? MS. ELLSWORTH: So the allegations of the complaint and the allegations of the third-party complaint are that, to the extent that Mr. Staley had knowledge, that knowledge was of sexual misconduct and not of trafficking. As your Honor is well aware, the statute has very specific requirements, trafficking is a legal definition, and it requires commercial sex obtained by force, fraud or coercion. There are no allegations in the complaint that Mr. Staley had any knowledge as to, number one, any corrupt sex acts or, number two, force, fraud or coercion. THE COURT: Assuming all that for the moment, you're not contesting, though, are you, that whatever knowledge he did 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 have is imputed to the bank? MS. ELLSWORTH: No, I am contesting that, your Honor. Particularly because -- THE COURT: Why? MS. ELLSWORTH: -- the knowledge would have been obtained in the course of committing an alleged crime, as is outlined in our third-party complaint. Case law is clear that that would be outside the scope of his employment, to be sure, it is contrary to the interest of JPMorgan, obviously, and would serve only Mr. Staley's personal interests, which would mean that it's not within the scope of his employment and it should not be imputed to JPMorgan because it is contrary to JPMorgan's own interest. But even if -- we do contest imputation -- but even assuming that that knowledge is imputed to JPMorgan, it's still insufficient to show a violation under the TVPA. THE COURT: So again, maybe I'm not fully capturing your argument, the complaint, I think, if I recall, alleges that JPMorgan provided services for Jeffrey Epstein that were special, for lack of a better word, structuring his cash withdrawals so as to avoid or evade alerts, delaying filing of suspicious activity reports, et cetera. So why isn't that enough to take this case out of the case law regarding the usual services? MS. ELLSWORTH: I'll say a couple things in response. 25 I think your Honor has correctly identified what the complaint has attempted to plead, in terms of what makes the activity, the bank activity unusual. The suggestion that structuring transactions were ignored or not reported, the suggestion that suspicious activity reports should have been filed -- of course, the evidence has not yet come in on whether or not they were and then there's a suggestion that THE COURT: Yes, but of course -- and you all know this, but I'll state it for the record -- on these motions, I have to take every well pleaded allegation most favorably to the plaintiff. MS. ELLSWORTH: Agreed. And I don't think those allegations are sufficient to take this outside of the routine banking activity paradigm. He was allowed to withdraw his own money, and it was allowed to be used. To the extent that there are claims, as Mr. Dowden suggests, that money laundering rules were not sufficiently followed, that is not a basis for some private liability under the TVPA. And let me just move to the sort of three things that plaintiff needs to demonstrate under the TVPA; they need to show knowledge, participation and benefit. I would note, at the outset, that the plaintiff in the JPMorgan case, the allegations are outside of the ten-year statute of limitations for the TVPA, because the banking relationship with JPMorgan actually ended in 2013. There are no allegations in the 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 complaint about a specific act involving plaintiffs after November 24th, 2012, which would be required to bring it inside the statute of limitations. But putting aside that, we talk about knowledge already and the imputation of Mr. Staley's knowledge. Even if we assume that his knowledge is imputed to JPMorgan, there are no allegations that he was aware of trafficking. But again, putting that to the side, there is insufficient allegations of participation and benefit, which are two additional requirements of the statute. As to participation, the three SDNY cases that have addressed the TVPA; Canosa, Geist and Noble, in Geist and Noble, as Mr. Dowden was indicating, in both of those cases, the allegations were that the defendant had made what are called hush payments to victims of Harvey Weinstein. Those were decisions by Judge Sweet and Judge Hellerstein to show participation. The Canosa case has very, very different allegations, I won't go through them again -- I'm sure your Honor is familiar with it -- but they involve direct assistance with the actual sexual misconduct. We don't have any allegations like that in this case. And then moving to benefit, in the Geist case, the benefit there was alleged to be that the Weinstein companies were allowed to continue to employ Harvey Weinstein. That was found also to be insufficient to show benefit from knowing participation in a venture, which is what's required under the 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 TVPA. So none of that is pled. This case is much more similar to Noble and Geist than it is to Canosa to be sure. THE COURT: I understand the argument from the first part. On benefit, maybe I'm missing your point. So assuming -- which I know you contest -- but assuming that they knew what was going on, then there was an obvious benefit in the structuring, in going along with the way he wanted to structure these various transactions and withdrawals and so forth because you got money from doing that. MS. ELLSWORTH: But the benefit needs to be more than just receiving money. The Weinstein companies received money. The benefit needs to be benefit from participating in a sex trafficking venture. That's the Salesforce case, that's the Eleventh Circuit Red Roof Inn case. The benefit needs to be tied to the participation in the venture. And the participation needs to be overt acts that are sort of participating in something together. The venture as referred to by the plaintiffs in their complaint is a sex trafficking venture, and so what the plaintiffs need to have pled and what they have not pled, is that there was in fact a meeting of the minds between JPMorgan Chase and Epstein to participate in a sex trafficking venture. There's nothing in the complaint that would allow that conclusion to be drawn. THE COURT: Let me, again, with apologies, shift gears. 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 You make the argument that a plaintiff here doesn't count as a victim of obstruction under 18 U.S.C. Section 1595(a) because the victim was the government. But why isn't the effect of obstructing a government investigation into sexual assaults or whatever also something that victimizes the persons who suffer from the assaults? MS. ELLSWORTH: So, your Honor, two responses to that. The first is the in our brief holds that in fact there is I guess I would have Doe case that we cite no private right of action under the TVPA's obstruction clause because the victim is the government. Even putting that to the side, there's no allegation of an ongoing investigation that JPMorgan was aware of and that these actions alleged in the complaint would have obstructed. So the time period that we are talking about here is a time period during which there's no at least publicly known federal investigation. There's no allegations of any attempts by JPMorgan to obstruct anything like that. There is one allegation in the complaint -- or maybe it's in the motion to dismiss briefing -- about responding to a subpoena. As we said in our reply brief, it was the product of a motion that was granted by default against JPMorgan. So I don't think there's any facts that get to the obstruction, putting aside the fact of a private right of action or whether the victim is somebody like Jane Doe or is in fact the government. Just briefly on a few of the other TVPA claims that plaintiff has attempted to bring, aiding and abetting, the Noble case, again, Judge Sweet says there's no aiding and abetting liability under the TVPA, because it's to be covered by the secondary liability provision. Conspiracy and attempt, those were -- 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 THE COURT: For me to remain, as I always will, in the law of Judge Sweet, who was still actively hearing cases in this court when he was in his mid to late 90s -- and then went off, I think he was 97 or so, for his usual winter skiing trip to Lake Tahoe, skied all day and then did not wake up that evening -- if you got to go, that's the way to go -- but go ahead, that was just unfortunate, but something I couldn't help myself from mentioning. MS. ELLSWORTH: Understood, your Honor. Understood. The attempt and conspiracy claims of the TVPA, those are not added until January of this year. Many courts have held that additional liability amendments to the TVPA that provide additional liability are not retroactive. These do expand the scope of liability substantially, and of course are not themselves retroactive, so those claims are barred. They don't apply. The statute didn't allow it. The last point I would make, your Honor, on the common law claims, I talked a little about the negligence and the duty, I think your Honor correctly pointed out in the prior argument that for intentional affliction of emotional distress, and I would say for the aiding and abetting battery claim, an overt act is required, more than what is alleged in the complaint here, in addition to all the other faiilings, including particular causation. 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 THE COURT: Where do we stand? You have a full minute. I have run out of questions. MS. ELLSWORTH: I can keep going, your Honor. THE COURT: Yes, please. MS. ELLSWORTH: I also wanted to make the point that in the TVPA context, in particular, the requirement is -- and again, this comes from the Eleventh Circuit in the Red Roof Inn case, as well as other cases, the knowledge needs to be of a particular violation, a single violation of the statute for this 1595(a) participation civil liability. So there needs to be an allegation that, in fact, as to this plaintiff there was knowledge by JPMorgan of her trafficking. And again, there are no such allegations. THE COURT: I'm not quite sure what the reasoning is to that argument. If, hypothetically, I know trafficking is going on, I intentionally participate and facilitate it, I've got to know exactly who is the victim? MS. ELLSWORTH: You do, your Honor. THE COURT: Why? MS. ELLSWORTH: Because the way the statute works for 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 the secondary liability is it sweeps back into 1591, which requires an actual violation of the trafficking statute. So in order to be liable for -- under secondary liability -- in addition to knowledge, participation and benefit, that knowledge needs to be a violation of the underlying statute. And that violation of the underlying statute needs to be as to a particular individual. You don't necessarily need to know that individual's name, but, for example, in the hotel cases, which are the TVPA cases, typically, when these cases are brought, sometimes they're brought against franchisees and sometimes against franchisors. The franchisees were people on the ground who might see a victim, hear cries for help, et cetera. Most of the cases find that allegations that are sufficiently well pleaded as to those defendants, can proceed forward. But allegations against franchisors, like Marriott or a Wyndham hotel where the allegations simply are that there was sex trafficking going on in one of their franchise hotels, those are held to be insufficient under the TVPA because there's no, among other things, specific knowledge of a specific violation of the statute. THE COURT: All right. I hear you. It still sounds a little strange to me, but okay, I need to look more at those cases. So let me hear from your adversary. MS. ELLSWORTH: Thank you, your Honor. 4 5 6 7 8 9 Let me just try to clear up what the complaint alleges. The complaint does allege that they had specific knowledge of the trafficking, for example, of the plaintiff, the named plaintiff here. That's in, for example, paragraphs 107 and 115 of the complaint. In paragraphs 227 and 226 of the complaint, we also lay out what top executives of JPMorgan knew about, knew personally about, in terms of the sex trafficking. 10 11 12 13 14 15 16 17 This is not a case like the Noble case, your Honor. And I have the privilege and Ms. McCawley as well, had the privilege of trying one of the last cases in front of Judge Sweet, which was a case in which we represented sex trafficking victims. And what Judge Sweet ruled in the Noble case is that with respect to Weinstein, there was no proof that he knew about the illegal activity going on. Here, we have proof in paragraphs 226, 227, 107, 115 18 19 THE COURT: If those are fairly short paragraphs, can you read them to me. 20 MR. BOIES: Sure. 21 22 23 24 25 In 107, "There came a time when Epstein forced Jane Doe to give massages to his powerful friends. During some of these massages, Jane Doe was sexually abused by force and against her will by Epstein's friends, by whom she had been required to do massage. At least one of Epstein's friends used MR. BOIES: May it please the Court. 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 aggressive force in his sexual assault of her and informed Jane Doe 1 that he had Epstein's permission to do what he wanted to her. Out of fear, Jane Doe has still not named this powerful executive publicly." Thereafter, in this case, that powerful executive was identified as Jes Staley. THE COURT: All right. So there were other things you wanted to -- MR. BOIES: There were other ones. And the other gives comparable information. But more important, your Honor, there is no requirement that the defendant know the name or the identity of the individual. If you know that there's sex trafficking going on, if you rent a room for people to engage in sex trafficking and you profit from that, there is no requirement that you take names at the door, that you see the people going in, that you even know how many people go in. If you know that the sex trafficking is going on there, it is sufficient. And there's no case to the contrary. The Choice Hotel situation, your Honor, is a situation in which the franchisor was not held liable because the franchisor didn't know that there was sex trafficking going on in the individual hotels. But the franchisee, the owner of the hotel, was held liable. And there was nothing in there that suggested the franchisee had to know the name of every person who came in and out and who was subject to the sex trafficking. THE COURT: Let me segue from that to a different question, which was sort of quickly alluded to, but I want to focus on it a little bit more, which is the statute of limitations. 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Does that require proof or allegations that your plaintiff, Jane Doe, was abused within the limitations period, or is it sufficient to simply say -- as I'm sure the complaint does, if I recall correctly -- that the sex trafficking venture, so to speak, continued beyond the cutoff of the statute of limitations? MR. BOIES: I think it was -- because of our conspiracy allegation -- I think it is sufficient that the sex trafficking continued on. We do allege that Jane Doe was trafficked and abused in 2013. And whatever ambiguity there might have been about that prior to the time that she was deposed -- and she's already been deposed in this case -- her deposition made clear that she continued to be trafficked into 2013. So the allegation THE COURT: I don't think I can consider that on this motion. MR. BOIES: No, no. But all I'm saying -- THE COURT: It might be a basis for leave to amend, but that would be -- MR. BOIES: And all I'm saying, your Honor, is our complaint alleges it goes into 2013. 4 MR. BOIES: I'm just saying it's been confirmed. They raise some doubt in their papers as to whether our allegations have it or not. 5 THE COURT: Okay. 6 MR. BOIES: We do allege it as 2013 in the complaint. 7 8 9 10 11 And in addition to that, we also allege, because they were participating in a conspiracy and they never withdrew from that conspiracy, at least until 2019, they continue to be liable for acts of that conspiracy even if they are not continuing to take affirmative actions themselves. 12 13 14 THE COURT: What about -- again, if I can, with apologies, shift gears -- what about the issues I was questioning your adversary about aiding and abetting? 15 16 17 MR. BOIES: With respect to aiding and abetting, your Honor, we think all of the three requirements of aiding and abetting are met here. There's knowledge of the underlying -- 18 19 20 21 THE COURT: No, the question was a more, if you will, picky question about if the statute for this only applies to this chapter, how do you get aiding and abetting, which is not part of this chapter. 22 23 24 25 MR. BOIES: Well, I think there's an argument, your Honor, that aiding and abetting is part of the chapter in the following sense: 18 Section 2, which makes aiding and abetting -- what Section 2 says there is that if you aid and THE COURT: You're saying it's been confirmed. 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 abet, you are liable as a principal. And as the Court is aware, when people are indicted for aiding and abetting in 1591, the indictment begins with 1591, and so what they're being charged with is a violation of 1591. Aiding and abetting simply makes them a principal under 1591. THE COURT: I guess -- and I don't want to dwell on this -- Section 2, a criminal statute, on its face applies to the entirety of Title 18. But by contrast, in the civil context, the cause of action is limited to a victim of this chapter. And the question, therefore, is: Does that then not import Section 2? MR. BOIES: It's almost metaphysical. I guess it really just depends on sort of how you look at it. They're being charged with violating 1591. And what Section 2 says is you violate 1591 where you are a principal or as a principal, whether you are the principal or whether you are an aider and abetter, and I -- THE COURT: Okay. I understand the argument. MR. BOIES: The other thing, your Honor, is that with respect to -- your Honor raised the question about Rothstein. And Rothstein, of course, related to Section 2333. And the language in 1591, 1595 is broader than 2333 at the time that Rothstein was decided. Now, after Rothstein was decided, Congress amended 2333 to in effect reverse Rothstein. And I think that the 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Court can take into account here, in interpreting 1591, that congressional expression, it was clear that Congress thought the court got it wrong in interpreting 2333. THE COURT: Well, I don't know if I can read it that way. I mean, I agree with you that Rothstein is distinctual. But whether I can infer more than that from Congress -- Congress can reverse a ruling without necessarily saying we think the court got it wrong. They can reverse a ruling because they want to make sure that in the future the statute will cover those kinds of things. MR. BOIES: I think the Court is correct. It's very hard to interpret. THE COURT: What about this issue -- again, this is a little bit metaphysical -- what about the question of whether obstruction of a government investigation gives rise to a claim under the statute for someone who was the victim of what was being covered up or obstructed from the investigation? MR. BOIES: I think, again, that's a difficult question because the question, I think, is, were you damaged by the obstruction. And if the obstruction comes after you have suffered your damage, you may not have that -- I think that if you go back to the early -- and this may be a problem with any class action or maybe you have to have certain classes -- but I think that if you really think about it, the obstruction harms the people that come after the obstruction. And I think it's a complicated -- (Continued on next page) 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 THE COURT: I'll have to think about it. I'm not sure how I think about that. Let me ask my law clerk how we are doing time-wise. You've got three minutes. You've got an eternity. MR. BOIES: Let me say one thing. This was not a team banking activity. They were structuring. There were dozens and dozens of \$7,500 withdrawals all in cash all at the same time. They were not filing the suspicious activity report. They were taking the plans from a Highbridge. And there may be some doubt about exactly what a Highbridge's ownership was but there's no doubt that high bridge was controlled by the defendant here. And they were using the Highbridge planes to transport girls. Jeff daily was himself participating in the sexual abuse, in the sex trafficking and witnessing it. There can't be any doubt that what JP Chase did here was nothing like routine banking services. There's nothing like the kind of situation where somebody provides a neutral product, neutral service without any knowledge about how it's being used. Here, they were actually structuring what they were doing in order to make sex trafficking possible. The complaint alleges and the proof will clearly show that this sex trafficking could not have gone on the way it did without the financial support of an institution like J.P. and they knew that at the time and they were profiting at the time. And 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 when people -- and this is alleged in the complaint and it'll be proven if we get a chance do it at trial. When people at the bank went to the high-level people and said we're supporting the sex trafficker and we ought to stop, the top management because they wanted to keep those fees and keep what was going on, said no. We're going to continue to do that. So, this was a situation which they had complete knowledge and they were not -- and it is not a situation which is no overt act. This is not a situation like the Cornell case where the Court in effect says there's no overt act that is done. Here, there were overt acts with Highbridge. There were overt acts with structuring. There were overt acts with not complying with the responsibility to file the suspicious activity reports and there were overt acts which the top executives, JPMorgan Chase participated personally in the sex trafficking. So, this is a situation that is unlike any of the cases that they cite and clearly fits the mold of what 1595 was trying do. And it is both a criminal and civil statute. The one thing that is clear in terms of construction is that when you are thinking about the scope of civil remedy for the violation, that is certainly remedial and that is certainly where it ought to be given its broad stroke. what they're trying to say, yes, there may have been a violation but you ought to shrink down the remedies that you ought to limit remedies. you ought to impose all of these special requirements on who is able to receive the remedy. That's where the broad construction of this remedial statute is because what you have -- no doubt that there was sex trafficking here. 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 There is no doubt that what J.P. did made that possible. There's no doubt that they knew what they were doing at the time. we got a lot of causes of action here, and some of them are overlapping. And by the time we get to trial we are going to have to probably pare it down, but none of that affects discovery. All these causes of action, I think we met the legal requirements to get to the story stage and decide after that how we ultimately try the case. THE COURT: All right. Now, we have reached the time. MR. BOIES: Thank you very much, your Honor. THE COURT: Let me hear your adversary. MS. ELLSWORTH: Your Honor, Paragraph 107 of the complaint that Mr. Boies just recited to you, the conduct alleged in that paragraph is abhorrent but it is not sex trafficking. It is sexual assault. And the Trafficking Victims Protection Act is not a federal sexual assault statute. It has to do with trafficking. It has very specific definitions. The other paragraphs that Mr. Boies cited to you, they also do not contain allegations that Mr. Staley witnessed trafficking. They contain allegations that Mr. Staley 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 witnessed abuse, that he participated in abuse or assault. That is different than trafficking. On the suggestion that there's an allegation or that there is evidence of Highbridge, which is not a subsidiary in the corporate form, is more complicate than that. But in any event, there is a single, unadorned by factual -- THE COURT: Just going back to your point for a minute, I'm looking at 1591 is what we're talking about, yes? MS. ELLSWORTH: Correct. That is the underlying conduct, yes. THE COURT: Whoever knowingly recruits, entices, harbors, transports, provides, obtains, advertises, maintains, patronizes or solicits by any means, a person or who benefits financially or by receiving anything of value from participation in a venture which has been engaged in an act described in violation of Paragraph One, commits a crime -- I'm leaving some important language out but why do you say -- I don't have the complaint in front of me, but why do you say it doesn't fit that? MS. ELLSWORTH: For the secondary liability in 1595(A) there needs to be a showing that there is trafficking in the form of a commercial sex act, procured by force, fraud or coercion or for an individual under the age of 18 which is not a plaintiff in this case. The plaintiff in case was not under the age of 18 at the time that she became involved with Epstein. 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 So, the requirement is that the victim be forced to engage in commercial sex acts by force, fraud or coercion. THE COURT: So, I should read a little further after the portion I just read. Knowing or except where the act constituting the violation of Paragraph One is advertising in reckless disregard of the fact. That means a forced threat of forced fraud or coercion described in Subsection (E) (2) or any combination of such means will be used to cause the person to engage in a commercial sex act or that the person has not attained the age of 18 years and will be caused to engage in a commercial sex act shall be punished, et cetera. So, why isn't it reckless disregard? MS. ELLSWORTH: Well, again, there's no evidence pled as against the paragraphs of the complaint that Mr. Boies pointed to are the allegations as to Mr. Staley's conduct. There are no allegations that Mr. Staley was aware of commercial sex acts at all and was aware of any force, fraud or coercion being used to cause, again, the plaintiff in this case to engage in commercial sex act. There's no allegation of money exchanging hands as to the allegation in Paragraph 107 and the other paragraph -- THE COURT: I'll have to take a closer look at those paragraphs. 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 MS. ELLSWORTH: We don't think that knowledge should be excluded. But even to the extent it's not knowledge of trafficking and that's an important distinction. THE COURT: Okay. MS. ELLSWORTH: Allegations as to Highbridge, there is no factual support for it at all in the complaint. It is in Paragraph 170 and it is a legal conclusion. It says that the Highbridge plane was used to traffic women. That's it. I'm paraphrasing but that's the language. That's insufficient. On the statute of limitations, I would just point out to the Court that this plaintiff filed a prior case in which alleged the trafficking ended in 2012. She alleged that her interactions with Epstein ended in 2012. THE COURT: Given what's alleged here and given what according to your adversary might be a basis to amend if an amendment was necessary, isn't that ultimately a jury question? be, your Honor. But it is an inconsistent pleading filed by the same lawyers. THE COURT: Wait. Wait a minute. An inconsistent pleading by the same lawyers? MS. ELLSWORTH: It is. THE COURT: Is that a capital offense? MS. ELLSWORTH: It's an allegation signed to Rule 11 is that the conduct ended in 2012. It's important. The ten years statute of limitation. 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 THE COURT: All right. MS. ELLSWORTH: The idea that, again, Mr. Boies finished his argument by noting that Epstein's conduct was made possible by the financing or the fact that J.P. served as a bank for Epstein, I think that is belied by the fact that then Epstein would go to Deutsche Bank and the same conduct is alleged by Deutsche Bank. So, the chain of causation is broken, if not established by the complaint here. The fact that this conduct was made possible by the fact that JP having a bank account or bank accounts for Mr. Epstein. The last point I would make again is aiding and abetting. In addition to all of the reasons why it shouldn't apply here, including the Noble case and Perlis case in the Circuit of the District of Connecticut finding that aiding and abetting is not common place. Putting all of that to the side, aiding and abetting also required a deliberate act of some sort and nothing like that is pled in the complaint as to conduct of JP THE COURT: Okay. Well, I want to thank all counsel for this excellent argument, which is very helpful to the Court. It is possibly you may have heard I like to move my cases along. I will get you at least a bottom-line ruling on these motions and on the various prongs of these motions by the end of this month. I hope to do better than that but I will at least guaranty you that much so that we can move along with the case and you'll know at that point at least what is in discovery and what is not in discovery. Anything else that anyone needs to raise with the Court? 4 5 6 7 a 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 MR. BOIES: Not for the plaintiffs, your Honor. MR. DOWDEN: Nothing from Deutsche Bank, your Honor. THE COURT: Very good. Thanks again. (Adjourned)