Latest / Beyond The Horizon / JP Morgan Responds To The USVI's Motion To Strike Affirmative Defenses (Part 4) (9/27/26)

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JP Morgan Responds To The USVI's Motion To Strike Affirmative Defenses (Part 4) (9/27/26) · Beyond The Horizon

• 0:00
  Speaker 1: What's up, everyone, and welcome back to the Epstein Chronicles.
• 0:04
  Speaker 1: In this episode, we're getting right back to the J.P.
• 0:06
  Speaker 1: Morgan Affirmative Defense Motion. A. JPMC's affirmative defenses do not
• 0:13
  Speaker 1: infringe on prosecutorial discretion. Invoking the first principle in UPS
• 0:18
  Speaker 1: and FedEx, the gravamen of USVI's motion is that JPMC
• 0:23
  Speaker 1: cannot second-guess the USVI's discretionary governance decisions. Memorandum at 7.
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  Speaker 1: See also ID at 8 and 10. Same arguments as
• 0:32
  Speaker 1: to JPMC's comparative fault defense. Docket 147 at 5. Arguing
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  Speaker 1: that JPMC may not second guess governmental policy decisions. As explained,
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  Speaker 1: JPMC does not contest the basic principle that private litigants
• 0:49
  Speaker 1: cannot dictate discretionary government policy, e.g. UPS 160 F.SUPP 3D
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  Speaker 1: at 639. It is well established in both parties on
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  Speaker 1: this motion agree that government actors have broad executive discretion
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  Speaker 1: in law enforcement decisions, but JPMC's affirmative defenses do no
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  Speaker 1: such thing. Rather, JPMC's affirmative defenses seek to hold USVI
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  Speaker 1: to account for participating in and benefiting from Epstein's criminal enterprise,
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  Speaker 1: not its failure to prosecute. See United States v. Wharton,
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  Speaker 1: 514 F. 2d, 406, 409-412, 9th Circuit, 1975. Distinguishing between the
• 1:30
  Speaker 1: mere neglect and affirmative misconduct. For example, as to the
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  Speaker 1: unclean hands, New York courts have long applied the maxim
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  Speaker 1: that ones who come to equity... must come with clean hands,
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  Speaker 1: and that no relief will lie for parties who have
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  Speaker 1: committed some unconscionable act that is directly related to the
• 1:47
  Speaker 1: subject matter in litigation. Penne, Com, B.V. v. Merrill Lynch, Inc., 372, F. 3d, 488, 493,
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  Speaker 1: 2nd Circuit, 2004. Internal citations and quotation marks omitted. Similarly,
• 2:02
  Speaker 1: the doctrine of in pari delicito may bar a claim
• 2:06
  Speaker 1: where the plaintiff bears at least substantially Equal responsibility for
• 2:10
  Speaker 1: its injury. UPS 160 F.SUPP 3D at 646. As applied here,
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  Speaker 1: these defenses share a common theme. USVI should not be
• 2:20
  Speaker 1: heard to allege that JPMC facilitated, participated in Epstein's criminality
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  Speaker 1: and was indispensable to the operation. Memorandum 1. When it
• 2:30
  Speaker 1: itself is culpable of those very allegations. In other words,
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  Speaker 1: USVI cannot claim a sovereign interest in enabling Epstein's crimes.
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  Speaker 1: Discovery has revealed the merit of these defenses and how
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  Speaker 1: they apply to this case. USVI did not simply fail
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  Speaker 1: to prosecute Epstein or protect his victims. Worst, USVI actively
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  Speaker 1: worked with Epstein, reaping the benefits of his wealth while
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  Speaker 1: lending officials services in aid of his crimes. As recounted above,
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  Speaker 1: USVI's officials accepted Epstein's cash while the USVI government doled
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  Speaker 1: out millions. USVI facilitated Epstein's transportation of young women and
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  Speaker 1: girls to and from his islands, securing visas and arranging
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  Speaker 1: for their enrollment in ESL classes. USVI's First Lady worked
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  Speaker 1: for Epstein's companies and extensively lobbied on his behalf with
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  Speaker 1: government officials, including the governor. USVI dutifully considered Epstein's input
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  Speaker 1: into its sex offender legislation, redacted, These choices have nothing
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  Speaker 1: to do with prosecutorial discretion or, in USVI's words, its
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  Speaker 1: discretionary governance decisions. Memorandum at 7. Rather, these facts demonstrate
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  Speaker 1: beneficial participation in Epstein's ventures and that the doctrines of
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  Speaker 1: unclean hands squarely apply. To grant USVI immunity from these
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  Speaker 1: defenses would be to allow it to profit from Epstein twice,
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  Speaker 1: first directly, then again in a civil suit which it
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  Speaker 1: could just as easily see reflected in a mirror. And
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  Speaker 1: just to interject, I've said that for a long time,
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  Speaker 1: that when the USVI started this lawsuit, they were going
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  Speaker 1: to open themselves up to a whole bunch of scrutiny.
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  Speaker 1: And well, here we are. B. USVI is acting as
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  Speaker 1: a private civil litigant subject to all applicable defenses. Nor
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  Speaker 1: can USVI avail itself on the second principle in FedEx
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  Speaker 1: and UPS that shields the government when acting in its
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  Speaker 1: traditional law enforcement capacity. As the FedEx and UPS courts
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  Speaker 1: recognized in allowing the defense, Of unclean hands to proceed
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  Speaker 1: against New York City's civil RICO claims, there is a
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  Speaker 1: fundamental distinction between government actions brought as a public enforcer
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  Speaker 1: and those more akin to that of a private actor.
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  Speaker 1: UPS 160, F.SUPP 3D at 647-49, FedEx 314, FRD at 358.
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  Speaker 1: Comparing USVI's civil TVPA claims in the civil RICO claims
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  Speaker 1: in UPS and FedEx demonstrates that USVI is acting as
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  Speaker 1: a civil plaintiff like any other. RICO claims like TVPA
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  Speaker 1: claims can be brought in two ways. First, the United
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  Speaker 1: States may seek criminal RICO penalties under U.S. Code 18,
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  Speaker 1: Section 1963. In so doing, everyone agrees the government acts
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  Speaker 1: in a traditional public capacity. e.g. UPS 160 F.SUPP 3D
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  Speaker 1: at 634, but Congress also afforded civil remedies to any
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  Speaker 1: person injured by a RICO violation, including treble damages and
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  Speaker 1: attorney fees. U.S. Code 18, Section 1964c. The distinction is critical.
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  Speaker 1: When governments sue under this civil provision, unlike the provision
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  Speaker 1: providing for RICO's criminal penalties, which are recoverable only by
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  Speaker 1: the United States, FedEx 314 FRD at 354. They act
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  Speaker 1: in a role that is more akin to that of
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  Speaker 1: a private actor rather than that in the role of
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  Speaker 1: a public enforcer of the public interest. UPS 160 F.SUPP.3D
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  Speaker 1: at 648. FedEx 314 FRD at 358. As such, courts
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  Speaker 1: allow affirmative defenses to stand as to the government's civil
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  Speaker 1: RICO claims. The same analysis applies here. USVI brings these
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  Speaker 1: claims pursuant To the TVPA's civil remedy provision, it cannot
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  Speaker 1: do so otherwise. In doing so, USVI is vindicating civil interests.
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  Speaker 1: Section 1595D does not authorize any other remedy. And USVI
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  Speaker 1: seeks from JPMC damages, including exemplary damages and attorney's fees,
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  Speaker 1: quintessential civil remedies. SAC at 40 and 42. FedEx 314
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  Speaker 1: FRD 354. A civil RICO plaintiff can recover treble damages, costs,
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  Speaker 1: and attorney fees. USVI is thus a civil plaintiff subject
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  Speaker 1: to standard applicable defenses, just as UPS and FedEx held
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  Speaker 1: as to New York's RICO claims. It is no answer
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  Speaker 1: that the USVI claims immunity as parents' patriae. Memorandum 7.
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  Speaker 1: This district recently rejected similar arguments in the antitrust context.
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  Speaker 1: In Google Digital Advertising Antitrust Litigation, 2022 WL 422-693-2, at
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  Speaker 1: 41 SDNY, September 13, 2022. Several state attorneys, general, like
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  Speaker 1: USVI here, asserted claims in their prospective sovereign capacities as
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  Speaker 1: parents' patriots on behalf of the citizens. Google raised latches
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  Speaker 1: in defense, and the attorneys general, like USVI here, argued
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  Speaker 1: that as sovereigns acting to vindicate the rights of the public,
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  Speaker 1: principles of equity afford them power not granted to private litigants.
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  Speaker 1: ID at 42. The court disagreed. First, the court noted
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  Speaker 1: that originally only the United States could enforce federal antitrust law.
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  Speaker 1: ID at 43. Congress later expanded antitrust enforcement to permit
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  Speaker 1: civil actions by the states to But, as the court explains,
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  Speaker 1: states proceeding under that law do not act in the
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  Speaker 1: capacity of a sovereign but as a private enforcer. Accordingly,
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  Speaker 1: equitable defenses may be applied to the state's claims, i.d.
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  Speaker 1: the court in New York v. Facebook Inc. 549 F.S.U.P.P.
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  Speaker 1: 3D6 D.D.C. There, New York, like U.S.V.I. here, invoked Perrin's
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  Speaker 1: Patriot as a shield against equitable defenses. The court observed
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  Speaker 1: Congress' distinction between actions brought by the United States and
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  Speaker 1: those brought by states pursuant to a civil cause of
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  Speaker 1: action and held equitable defenses apply against the latter. The
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  Speaker 1: fact that the states bring this parents' patriarchy suit in
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  Speaker 1: the public interest does not counsel a different result. 549. F.S.U.P.P.
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  Speaker 1: 3D at 39. See also Kraft General Foods Incorporated 862. F.S.U.P.P.
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  Speaker 1: at 1033. Although the state of New York is a
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  Speaker 1: government actor, it's considered a private party. Those analyses map
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  Speaker 1: exactly onto USVI's claims here. The TVPA, like the Sherman Act,
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  Speaker 1: analyzed by the Facebook and Google courts, is first and
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  Speaker 1: foremost a federal statute enforceable only by the United States.
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  Speaker 1: When the United States enforces the TVPA, it acts in
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  Speaker 1: law enforcement capacity, and ordinarily, applicable equitable defenses do not apply.
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  Speaker 1: UPS 160 states, FSUPP 3D at 647 and 648. As
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  Speaker 1: it did with the Sherman Act via the Clayton Act,
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  Speaker 1: Congress separately codified a civil remedy for private citizens at U.S.
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  Speaker 1: Code 18, Section 1595A. And later, Congress expanded that civil
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  Speaker 1: remedy to include State Attorneys General, Section 1595D. But like
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  Speaker 1: with the Sherman-Clayton Acts, Congress did not authorize State Attorneys
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  Speaker 1: General to enforce the TVPA. Compare Facebook 549F. SUPP 3D at 39. Congress, however,
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  Speaker 1: specifically rejected an amendment that would have authorized the Attorney
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  Speaker 1: General of any state to bring suit in the name
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  Speaker 1: of of the united states to enforce any of the
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  Speaker 1: antitrust laws internal quotation marks omitted rather congress granted the
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  Speaker 1: states a tvpa remedy akin to the civil cause of
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  Speaker 1: action afforded to all citizens as such Just as in
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  Speaker 1: the antitrust context, when a state acts pursuant to the
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  Speaker 1: TVPA's civil cause of action, it does so not in
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  Speaker 1: the capacity as a sovereign, but as a private enforcer,
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  Speaker 1: subject to standard, equitable defenses. Indeed, this court has already
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  Speaker 1: recognized as much in permitting retroactive application of the TVPA's
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  Speaker 1: civil remedy. As this court explained in 2018, when Congress
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  Speaker 1: empowered state attorney generals to assert TVPA claims, it merely
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  Speaker 1: gave a new set of plaintiffs the right to vindicate
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  Speaker 1: potential liabilities which already existed, and thus did not expand
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  Speaker 1: any party's liability. OP in order on motion to dismiss
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  Speaker 1: docket 130 at 23, idea 21. The quasi-sovereign interests that
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  Speaker 1: give states standing to sue under section 1595d are tied
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  Speaker 1: to injuries that would give individual plaintiffs a right to
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  Speaker 1: sue under section 1595a. Had Congress in fact authorized the
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  Speaker 1: states as sovereigns to enforce criminal law like the TVPA,
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  Speaker 1: certainly they could not do so retroactively. UPS and the
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  Speaker 1: FedEx are USVI's principal authorities, and they along with Google
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  Speaker 1: and Facebook plainly require denying the motion. That is critical
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  Speaker 1: as the burden is on USVI, not JPMC, to demonstrate
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  Speaker 1: to the court a certainty and that it would succeed
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  Speaker 1: despite any set of facts which could be proved in
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  Speaker 1: support of the defenses. Walsh v. City of New York, 585F. SUPP
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  Speaker 1: 2D 555-557 SDNY 2008. Internal quotation marks omitted. Emphasis added.
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  Speaker 1: There must be no question of fact, nor any substantial
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  Speaker 1: question of law that might allow the defense to succeed.
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  Speaker 1: Specialty Minerals Incorporated, 395F. SUPP 2D at 111. And if there
• 12:05
  Speaker 1: are no disputed questions of law or fact, then the
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  Speaker 1: motion to strike will be denied. Index Fund Incorporated, 107,
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  Speaker 1: FRD at 100. The fact is, the law, as to
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  Speaker 1: the applicability of equitable defenses to government agencies, is not
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  Speaker 1: as settled as plaintiffs suggest. And even where the defense
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  Speaker 1: presents a purely legal question, the courts are very reluctant
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  Speaker 1: to determine disputed or substantial issues of law on a
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  Speaker 1: motion to strike. EEOC v. UPS, 2017. WL 2829513 at 12.
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  Speaker 1: Eastern District of New York, June 29, 2007. USVI neither
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  Speaker 1: acknowledges this burden nor shoulders it. 2. USVI cannot demonstrate
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  Speaker 1: prejudice from past discovery. Finally, USVI fails to meet the
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  Speaker 1: third prong. A motion to strike will not be granted
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  Speaker 1: unless the plaintiff can show that it's prejudiced by the
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  Speaker 1: inclusion of the defense. Estee Lauder, Inc., versus Fragrance Counter Incorporated,
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  Speaker 1: 189 FRD 269 272 SDNY 1999. Where there is no
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  Speaker 1: prejudice that could possibly result from the inclusion of an
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  Speaker 1: affirmative defense, USVI's own authority indicates that a court will
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  Speaker 1: decline to strike it. FedEx 314 FRD at 366. That's
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  Speaker 1: the case here. USVI argues that prejudice will result from
• 13:26
  Speaker 1: additional discovery. But fact discovery closes the same-day briefings On
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  Speaker 1: this motion is complete and USVI has already produced documents
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  Speaker 1: relevant to JPMC's affirmative defenses as evidenced in the background provided.
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  Speaker 1: JPMC's defenses have not and will not extend the discovery
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  Speaker 1: period and their continued existence in the pleadings cannot harm
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  Speaker 1: a party that has already substantially complied with the discovery
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  Speaker 1: obligations attendant to those defenses. In short, there is no
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  Speaker 1: extra cost and delay in bringing this case to trial.
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  Speaker 1: FDIC v. Eckert, Siemens, Cherin, and Malott, 754, F.SUPP, 23
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  Speaker 1: Eastern District of New York, 1990. USVI's motion to strike
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  Speaker 1: is baseless. USVI should not be heard to complain about
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  Speaker 1: expanding trial time on questions about its complicity in an
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  Speaker 1: Epstein sex trafficking venture, as that complicity will be an
• 14:21
  Speaker 1: issue at trial regardless of JPMC's affirmative defenses. Memorandum at 7.
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  Speaker 1: For example, USVI's complicity goes directly to issues surrounding its
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  Speaker 1: obstruction charge, including the existence and nature of any USVI
• 14:35
  Speaker 1: investigation into Epstein's crimes and USVI's continued knowledge of Epstein's enterprise. Further,
• 14:41
  Speaker 1: USVI alleged damages must be balanced against the considerable benefits
• 14:46
  Speaker 1: that USVI reaped from its facilitation of Epstein's crimes. At bottom,
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  Speaker 1: USVI will not be able to present a prima facie
• 14:53
  Speaker 1: case that JPMC violated the TVPA or obstructed its enforcement
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  Speaker 1: without confronting questions about USVI's own actions. USVI may indeed
• 15:03
  Speaker 1: feel prejudiced by the nature of its actions coming to light,
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  Speaker 1: but that is no basis to grant the motion to strike. Conclusion.
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  Speaker 1: For the foregoing reasons, the court should deny the USVI
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  Speaker 1: motions to strike JPMC's affirmative defenses. This was signed by
• 15:19
  Speaker 1: Felicia Ellsworth and it was dated May 23, 2023. All right,
• 15:24
  Speaker 1: that's going to do it not only for this episode,
• 15:26
  Speaker 1: but for the document as a whole. And I think
• 15:29
  Speaker 1: that document gives you a little bit of a glimpse
• 15:31
  Speaker 1: into how the blueprint for the survivors came about to
• 15:35
  Speaker 1: go after the USVI in the same manner that the
• 15:38
  Speaker 1: USVI went after JP Morgan. So very, very interesting stuff.
• 15:43
  Speaker 1: And certainly a little bit of a look behind the
• 15:46
  Speaker 1: curtain at the strategy of the survivors. All of the
• 15:49
  Speaker 1: information that goes with this episode can be found in
• 15:52
  Speaker 1: the description box.