Latest / The Vault: The Epstein Files / JP Morgan Responds To The USVI's Motion To Strike Affirmative Defenses (Part 3) (9/26/26)

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JP Morgan Responds To The USVI's Motion To Strike Affirmative Defenses (Part 3) (9/26/26) · The Vault: The Epstein Files

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  Speaker 1: What's up everyone and welcome back to the program. In
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  Speaker 1: this episode we're picking up where we left off with J.P.
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  Speaker 1: Morgan's response to the USVI and their motion to strike
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  Speaker 1: the affirmative defenses. D. USVI seeks to avoid accountability by
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  Speaker 1: moving to strike. Rather than investigating its own 20-year history
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  Speaker 1: of enabling Epstein's criminal activity, USVI filed this action against JPMC.
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  Speaker 1: JPMC filed its answer on April 24th, 2023. As relevant
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  Speaker 1: here and given the extensive record exposing USVI's complicity in
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  Speaker 1: furthering an Epstein sex trafficking venture recounted above, JPMC pleaded
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  Speaker 1: that USVI's claims are barred by the doctrines of unclean
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  Speaker 1: hands and latches, 5th, 6th, and 7th affirmative defenses, and
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  Speaker 1: that any damages suffered by the USVI should be barred
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  Speaker 1: or reduced in accordance with the doctrines of comparative and
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  Speaker 1: contributory negligence or fault. See ID 8th Affirmative Defense. In
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  Speaker 1: keeping with its efforts to avoid accountability and to purge
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  Speaker 1: the record of inconvenient facts, the USVI moved to strike
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  Speaker 1: JP's 5th, 6th, 7th, and 8th Affirmative Defenses. As grounds,
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  Speaker 1: USVI argues that it would be burdened by the additional
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  Speaker 1: discovery these defenses purportedly require. But striking J.P. Morgan's valid
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  Speaker 1: affirmative defenses will not change the scope of the USVI's
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  Speaker 1: discovery obligations. Indeed, discovery has all but ended. This motion
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  Speaker 1: does not seek to shield USVI from intrusive discovery. It
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  Speaker 1: attempts to insulate USVI from legitimate questions about its complicity
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  Speaker 1: in Epstein's sex trafficking venture. It should be denied. The
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  Speaker 1: Argument Courts should not tamper with the pleadings unless there
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  Speaker 1: is a strong reason for doing so. Lipsky v. Commonwealth,
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  Speaker 1: United Corporation, 551, F2D, 887, 893, 2nd Circuit, 1976. Accordingly,
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  Speaker 1: motions to strike an affirmative defense are generally disfavored and
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  Speaker 1: will not be granted unless it appears to a certainty
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  Speaker 1: that the plaintiffs would succeed despite any state of the
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  Speaker 1: facts which could be proved in support of the defense.
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  Speaker 1: City of New York v. FedEx Ground Package System, Inc., 314-FRD-348-354-55,
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  Speaker 1: SDNY 2015. In assessing the sufficiency of an affirmative defense,
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  Speaker 1: the court should construe the pleadings liberally to give the
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  Speaker 1: defendants a full opportunity to support its claims at trial
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  Speaker 1: after full discovery has been made. Radiancy Inc. vs. Viatech
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  Speaker 1: Consumer Products Group Inc. 138 F.SUPP 3D 303 313 SDNY 2014. Thus,
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  Speaker 1: even if the law and facts as to the propriety
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  Speaker 1: of a particular defense, a motion to strike should be denied. C.
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  Speaker 1: Index Fund Inc. vs. Hagopian 107 FRD 95100 SDNY 1985.
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  Speaker 1: If the sufficiency of the defense depends upon disputed questions
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  Speaker 1: of facts or law, then the motion to strike will
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  Speaker 1: be denied. To carry its heavy burden, USVI must satisfy
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  Speaker 1: a stringent, three-pronged test. 1. There must be no question
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  Speaker 1: of fact that might allow the defense to succeed. 2.
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  Speaker 1: There must be no substantial question of law that might
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  Speaker 1: allow the defense to succeed. 3. The plaintiff must be
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  Speaker 1: prejudiced by the inclusion of the defense. FedEx 314 FRD
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  Speaker 1: at 355, quoting Specialty Minerals Incorporated versus Pluth Stouffer, AG
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  Speaker 1: 395 F.S.U.P.P. 2D 10911 SDNY 2005. USVI cannot satisfy any
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  Speaker 1: of these three stringent requirements. As to the first and
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  Speaker 1: second prongs, USVI cannot show that there is no question
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  Speaker 1: of fact, nor substantial questions of law, that might allow
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  Speaker 1: the defense to succeed. The facts recounted above speak for themselves.
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  Speaker 1: As to the law, USVI is correct that defendants may
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  Speaker 1: not dictate government policy nor raise certain equitable defenses to
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  Speaker 1: law enforcement actions, but JPMC's affirmative defenses offend neither principle.
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  Speaker 1: JPMC seeks to hold the government to account for its
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  Speaker 1: affirmative complicity in Epstein's crimes. and USVI cannot invoke parents'
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  Speaker 1: patrii as a talisman against civil procedure when Congress has
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  Speaker 1: afforded it a civil cause of action and nothing else. E.G.
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  Speaker 1: New York v. Kraft General Foods, Inc. 862F. SUPP 1030-1033 SDNY
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  Speaker 1: The state of New York sues as parents' patrii on
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  Speaker 1: behalf of the citizens of New York. Although the state
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  Speaker 1: of New York is a governmental actor, it is considered
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  Speaker 1: a private party. As to the third prong, USVI's sole
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  Speaker 1: claim of prejudice, burdens of discovery, should not be countenanced.
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  Speaker 1: JPMC has already taken substantial discovery, demonstrating the potent applicability
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  Speaker 1: those defenses will have at trial. Fact discovery will close
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  Speaker 1: the same day that briefing on this motion will be complete.
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  Speaker 1: There can be no prejudice arising from discovery that has
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  Speaker 1: already been provided. Rather, the only prejudice USVI seeks to
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  Speaker 1: avoid is accountability for its complicity, but that is no
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  Speaker 1: basis for striking JPMC's defenses. 1. JPMC's affirmative defenses are
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  Speaker 1: legally and factually cognizable. USVI's motions rest on a pair
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  Speaker 1: of cases arising from the government's enforcement actions in this
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  Speaker 1: district against UPS and FedEx relating to sale and transportation
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  Speaker 1: of contraband cigarettes. See New York v. United Parcel Service, Inc.
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  Speaker 1: 160 F.SUPP 3D 629 SDNY 2016. Vacated in part on
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  Speaker 1: other grounds on reconsideration. 2016 WL 106 7204 SDNY June 21, 2016.
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  Speaker 1: FedEx 314 FRD 348 SDNY 2016. In each case as
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  Speaker 1: relevant here, the government brought claims under two statutes. The
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  Speaker 1: Contraband Cigarette Trafficking Act, CCTA, and the Racketeer-Influenced and Corrupt
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  Speaker 1: Organizations Act, RICO. Both defendants pleaded several affirmative defenses. including
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  Speaker 1: unclean hands, which the government moved to strike, claiming, as
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  Speaker 1: USVI does here, that said defenses were in proper collateral
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  Speaker 1: attack on plaintiffs' enforcement decisions. UPS 160 F.SUPP 3D at 633.
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  Speaker 1: That impermissibly sought to interfere with the city and state's
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  Speaker 1: executive discretion to enforce their tax and public health laws.
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  Speaker 1: FedEx 314 FRD at 355 and 56. In each case,
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  Speaker 1: the court first rejected the breadth of the government's motion
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  Speaker 1: and declined to categorically immunize governmental plaintiffs from the equitable
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  Speaker 1: defenses generally available in civil litigation. See UPS 160 F.SUPP
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  Speaker 1: 3D at 641. Nothing stands for the sweeping proposition that
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  Speaker 1: there is no set of facts pursuant to which an
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  Speaker 1: equitable defense might be asserted against a governmental entity. FedEx
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  Speaker 1: 314 FRD at 357. The courts then identified two principles
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  Speaker 1: about affirmative defenses in government actions. The first is that
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  Speaker 1: the defendants cannot challenge a government's entity decision-making as to
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  Speaker 1: when and where and under what circumstances to enforce a statute.
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  Speaker 1: UPS 160, F.SUPP 3D at 641. Nothing stands for the
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  Speaker 1: sweeping proposition that there is no set of facts pursuant
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  Speaker 1: to which an equitable defense might be asserted against a
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  Speaker 1: governmental entity. FedEx 314, FRD at 357. The courts then
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  Speaker 1: identified two principles about affirmative defenses in government actions. In
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  Speaker 1: the first, the defendants cannot challenge a government entity's decision-making
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  Speaker 1: as to when and under what circumstances to enforce a statute,
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  Speaker 1: UPS 160, F.SUPP 3D at 640, FedEx 314 FRD at 356,
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  Speaker 1: noting the existence of a basic principle against allowing a
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  Speaker 1: party to dictate when and under what circumstances a particular
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  Speaker 1: law is to be enforced or not enforced. Accordingly, each
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  Speaker 1: court struck the affirmative defenses that specifically sought to dictate
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  Speaker 1: or assign fault to the government's discretionary tax enforcement decisions.
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  Speaker 1: See FedEx 314, FRD 357-359. Striking three defenses that were
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  Speaker 1: nothing more than FedEx requests that plaintiffs collect lost taxes
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  Speaker 1: from other parties. Another defense that would stand as a
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  Speaker 1: judicial mandate forcing the city and state to reprioritize their
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  Speaker 1: tax enforcement efforts. and another whose core premise was that
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  Speaker 1: the government was negligent in their discretionary tax enforcement. UPS
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  Speaker 1: 160 SUPP 3D at 634. Only striking defenses that were
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  Speaker 1: purely and properly cast as seeking redress based solely on
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  Speaker 1: a law enforcement choice. The second principle is that certain
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  Speaker 1: equitable claims are unavailable when the government enforces certain laws
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  Speaker 1: in their traditional public capacity. UPS 160 F.SUPP 3D at 634,
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  Speaker 1: but are available when the government acts akin to a
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  Speaker 1: private actor ID at 648. FedEx 314 FRD at 358. Thus,
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  Speaker 1: both courts allowed the affirmative defenses, including unclean hands, to
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  Speaker 1: stand as the government's RICO claims as those claims were
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  Speaker 1: brought pursuant to RICO's civil remedy provision. See UPS 160 F.SUPP
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  Speaker 1: The Rico claims must be distinguished because, as to these claims,
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  Speaker 1: plaintiffs are acting in a role that is more akin
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  Speaker 1: to that of a private actor. FedEx 314 FRD 358.
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  Speaker 1: Same reasoning. In contrast, the court stuck the equitable affirmative
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  Speaker 1: defenses as to enforcement of the CCTA because unlike the TVPA,
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  Speaker 1: the law afforded no private right of action. FedEx 314
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  Speaker 1: FRD 357 and 358. and can be pursued exclusively by
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  Speaker 1: local government entities, such that in every CCTA case, the
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  Speaker 1: government acts in a law enforcement capacity seeking civil penalties.
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  Speaker 1: UPS 160, F.SUPP, 3D at 646 and 648. J.P. Morgan's
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  Speaker 1: affirmative defenses abide by the guardrails established by these cases. J.P.
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  Speaker 1: Morgan does not ground its defenses of unclean hands and
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  Speaker 1: prosecutorial inaction, but rather in affirmative governmental complicity, which no
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  Speaker 1: case or principle immunizes. And USVI is not here enforcing
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  Speaker 1: its own statute pursuant to an exclusive law enforcement prerogative,
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  Speaker 1: but instead seeks damages under the TVPA's civil remedy, which
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  Speaker 1: does nothing more than give the USVI the same standing
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  Speaker 1: its residents already enjoy. In short, the USVI is a
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  Speaker 1: civil TVPA plaintiff like any other, and must answer to
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  Speaker 1: the affirmative defenses raised against its pursuit for civil damages. Alright,
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  Speaker 1: we're going to wrap up this episode right here, and
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  Speaker 1: in the next episode dealing with the topic, we'll wrap
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  Speaker 1: up the document as a whole. All of the information
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  Speaker 1: that goes with this episode can be found in the
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  Speaker 1: description box.