Latest / The Vault: The Epstein Files / Jes Staley And His Motion To Exclude JP Morgan's Expert Witness Opinions (Part 2) (10/7/26)

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Jes Staley And His Motion To Exclude JP Morgan's Expert Witness Opinions (Part 2) (10/7/26) · The Vault: The Epstein Files

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  Speaker 1: What's up everyone and welcome back to the Epstein Chronicles.
• 0:03
  Speaker 1: In this episode, we're going to continue taking a look
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  Speaker 1: at Jess Daly's attempt to bar expert testimony from JP Morgan. 2. Ms.
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  Speaker 1: Wong's Determination of the Per Victim Amount In order to
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  Speaker 1: allow apples to apples comparison, Ms. Wong reduced all settlements
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  Speaker 1: in her analysis to their per victim average. In most cases,
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  Speaker 1: this was not difficult as the number of claimants was
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  Speaker 1: a known quantity. For the J.P. Morgan and Deutsche Bank settlements, however,
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  Speaker 1: the underlying lawsuits were class actions, so Ms. Wong had
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  Speaker 1: to estimate the number of potential claimants to derive her denominator. Ms.
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  Speaker 1: Wong's approach in the former case was adequate and, in
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  Speaker 1: the latter, preposterous. As to the J.P. Morgan settlement, Ms.
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  Speaker 1: Wong's approach was straightforward. She totaled the number of victims
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  Speaker 1: who had settled with Epstein's estate, either directly or through
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  Speaker 1: the Epstein Victims' Compensation Programme, and then used the sum, 171,
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  Speaker 1: as a proxy for the Jane Doe settlement class. Ms.
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  Speaker 1: Wong's rationale was the bank's relationship with Epstein was of
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  Speaker 1: such duration that essentially anyone could recover from the estate
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  Speaker 1: could also recover from J.P. Morgan. As to the Deutsche
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  Speaker 1: Bank case, however, Ms. Wong's approach bordered on the Byzantine.
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  Speaker 1: In that case, plaintiff's counsel had publicly estimated the size
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  Speaker 1: of his client's class at 125 persons. Next part, redacted.
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  Speaker 1: Next part, redacted. This was less than the half of
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  Speaker 1: her $ 1. 7 million average of the JP Morgan settlement, but
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  Speaker 1: still significantly greater than the $ 600, 000 average that would result
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  Speaker 1: from the 125-person estimate by class council. Merely to describe Ms.
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  Speaker 1: Wong's process is to criticize it. It is simply bizarre
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  Speaker 1: to contend that an unsworn statement describing events from 14
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  Speaker 1: years earlier by a person who was a high school
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  Speaker 1: teenager at the time would provide a more reliable estimate
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  Speaker 1: of class size than a statement by class council. And Ms.
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  Speaker 1: Wong fares no better in her theorizing that victims from
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  Speaker 1: the early 2000s would have escaped Epstein's abuse by 2013
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  Speaker 1: simply based on anecdotal reports of his desire for teenagers.
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  Speaker 1: Such analytical choices are indistinguishable from guesswork and conjecture. But
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  Speaker 1: even more problematic, they were in no way random. Every
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  Speaker 1: aspect of Ms. Wong's analysis was geared to decrease the
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  Speaker 1: Deutsche Bank class size in order to inflate its per-victim
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  Speaker 1: average and thereby make the J.P. Morgan settlement look less exorbitant.
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  Speaker 1: Such an outcome-driven approach is the opposite of a reliable one. 3. Ms.
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  Speaker 1: Wong's Average of the Averages Comparison The last stage of Ms.
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  Speaker 1: Wong's analysis was the victim per average from the universe
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  Speaker 1: of comparables, which she then used for comparisons to the J.P.
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  Speaker 1: Morgan settlement, Of all the steps in Ms. Wong's analysis,
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  Speaker 1: her approach to this one was perhaps the most tendentious.
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  Speaker 1: The most straightforward way to determine the average payment, of course,
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  Speaker 1: would be simply to sum the settlement payments and divide
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  Speaker 1: by the number of victims, giving equal weight to each
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  Speaker 1: victim's case. Ms. Wong, therefore, replaced that approach with one
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  Speaker 1: in which she first categorized the settlements, determined the per-victim
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  Speaker 1: average for each category, and then averaged the averages. Her
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  Speaker 1: chart to this effect is below, redacted. Redacted end. Redacted.
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  Speaker 1: This methodological choice was again entirely outcome-driven. Next section, redacted.
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  Speaker 1: As applied to the Deutsche Bank settlement, this was an
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  Speaker 1: absurd rationale. As noted above, the Jane Doe v. Deutsche
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  Speaker 1: Bank lawsuit was premised on the same theory of liability
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  Speaker 1: as the one against J.P. Morgan and compensated victims for
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  Speaker 1: the same harm. Next section, completely redacted. Moreover, even if
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  Speaker 1: one were to credit Ms. Wong's fear of overweighing the
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  Speaker 1: Deutsche Bank settlement The idea that it should be given
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  Speaker 1: less weight on a per-victim basis than the settlements in
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  Speaker 1: the outlier categories is again absurd. Next section, redacted. Absent
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  Speaker 1: a reason to think that Prince Andrew's case was also
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  Speaker 1: 48 more times comparable than the Deutsche Bank one, and Ms.
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  Speaker 1: Wong gave no such reason, any methodology would weigh as
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  Speaker 1: such cannot be deemed reliable. To J.P. Morgan's expert opinion
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  Speaker 1: on legal fees. As was the case with its $ 290
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  Speaker 1: million settlement payment, the bank must show that its redacted
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  Speaker 1: legal fees was reasonable before it can recover them from
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  Speaker 1: Jess Daly. As was also the case with its settlement payment,
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  Speaker 1: JPMorgan again starts off on its back foot, and it
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  Speaker 1: must justify, among other things, redacted. The bank's burden to
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  Speaker 1: show the reasonableness of its expenditures is only made heavier
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  Speaker 1: by the fact that its law firm's invoices are redacted
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  Speaker 1: so heavily that that any attempt to review particular attorney tasks,
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  Speaker 1: or duplication of tasks across law firms involved, is effectively impossible.
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  Speaker 1: Next section redacted. To address the reasonableness issue, J.P. Morgan
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  Speaker 1: retained Shelley Chapman, a former bankruptcy judge. For her engagement,
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  Speaker 1: Judge Chapman evaluated the bank's legal fees in a holistic
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  Speaker 1: matter from top-down perspective. Chapman deposition at 47, 71, and 79.
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  Speaker 1: As she described her methodology, Redacted. As the above description suggests,
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  Speaker 1: Judge Chapman's methodology did not involve detailed reviews of the
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  Speaker 1: law firm invoices. That is, she reviewed only the redacted versions,
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  Speaker 1: which she conceded could be opaque. And she did not
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  Speaker 1: review them to evaluate particular attorney tasks or the time
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  Speaker 1: spent thereon. Redacted, redacted, and redacted, and redacted. Consistent with
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  Speaker 1: her approach to the invoices, Judge Chapman... relied principally on
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  Speaker 1: her personal perspective in her overall evaluation of the legal
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  Speaker 1: fees and hours claimed by J.P. Morgan. Next section, redacted again.
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  Speaker 1: On the equally fundamental question of why additional 6,000 hours
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  Speaker 1: billed by Massey and Gale were necessary at all, in
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  Speaker 1: other words, why J.P. Morgan needed more than one law firm,
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  Speaker 1: Judge Chapman was quite candid that her opinion was not
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  Speaker 1: based on any subjective standard. Redacted. But rather than rely
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  Speaker 1: on her personal insight to assess the reasonableness of hiring
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  Speaker 1: Massey and Gale, Judge Chapman was clear that she relied
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  Speaker 1: on J.P. Morgan's judgment. Redacted, redacted. The same was true
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  Speaker 1: for her opinions on the reasonableness of counsel's staffing decision
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  Speaker 1: and potential duplication of effort. Judge Chapman simply deferred to J.P.
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  Speaker 1: Morgan's judgment in reviewing the bills without independent analysis. Next part, redacted.
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  Speaker 1: None of Judge Chapman's analysis comes close to meeting the
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  Speaker 1: Daubert standard. First, Judge Chapman's opinion does not aid the
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  Speaker 1: jury in making a decision as required by Rule 702. Rather,
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  Speaker 1: it undertakes to tell the jury what result to reach,
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  Speaker 1: and thus attempts to substitute the expert's judgment for the jury's.
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  Speaker 1: Judge Chapman's testimony will not provide the jury with the
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  Speaker 1: tools needed to assess the reasonableness of the legal fees,
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  Speaker 1: for example, guidance on how to evaluate excessive staffing, duplication
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  Speaker 1: of work, or the number of hours needed to prepare
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  Speaker 1: a motion. The judge acknowledged that she did not perform
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  Speaker 1: that analysis herself, notwithstanding her own view that doing so
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  Speaker 1: is necessary in some instances. Redacted. Without such analysis, Judge
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  Speaker 1: Chapman's testimony boils down to asking the jury to find
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  Speaker 1: the fees reasonable simply because she says they are, or
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  Speaker 1: as noted above, simply because J.P. Morgan decided to pay them.
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  Speaker 1: That sort of testimony does not help the fact finder
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  Speaker 1: at all. Second, Judge Chapman did not apply a reliable methodology.
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  Speaker 1: A reliable methodology requires application of the proper standard. Insofar
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  Speaker 1: as Judge Chapman purported to apply any standard of reasonableness
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  Speaker 1: at all, it was not New York state law which
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  Speaker 1: governs J.P. Morgan's request for identification of its legal fees. Redacted.
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  Speaker 1: Judge Chapman also failed to apply the governing standard reliably.
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  Speaker 1: Under New York laws, the reasonableness of attorney fees must
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  Speaker 1: be assessed. by examining billing records that specify, among other things,
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  Speaker 1: the amount of time spent on specific tasks and projects.
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  Speaker 1: A fact finder assessing the reasonableness of attorney fees must
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  Speaker 1: evaluate various distinct factors, such as whether 1. the work
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  Speaker 1: performed was necessary, 2. was duplication of work, 3. the
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  Speaker 1: case was overstaffed, and 4. the work performed was of
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  Speaker 1: legal nature. None of that can be assessed without examination
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  Speaker 1: of the time records, as Judge Chapman's own judicial opinions
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  Speaker 1: have acknowledged. Yet Judge Chapman's assessment was not based on
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  Speaker 1: that sort of analysis, and indeed she admitted that she
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  Speaker 1: could not perform any such analysis given the extensive redactions
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  Speaker 1: to the invoice. Judge Chapman's methodology therefore fails to apply
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  Speaker 1: even her own standards, much less the proper standards, and
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  Speaker 1: is unreliable. As noted above, the only ostensibly objective aspect
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  Speaker 1: of Judge Chapman's opinion was her top-line comparison of J.P.
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  Speaker 1: Morgan's fees to those in the handful of bankruptcy fee
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  Speaker 1: applications that she reviewed. But on that point, Judge Chapman
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  Speaker 1: made no attempt to assess whether the underlying bankruptcy cases
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  Speaker 1: were comparable to J.P. Morgan's on any index relevant to
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  Speaker 1: cost of litigating, e.g. complexity of legal services, quantity of documents,
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  Speaker 1: number of witnesses, or extent of potential liability. Absent a
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  Speaker 1: showing of comparability on those fronts, the fact that the
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  Speaker 1: top-line fees were in the same ballpark is meaningless, and
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  Speaker 1: any opinion based thereon is inherently unreliable. Third, the fact
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  Speaker 1: that Judge Chapman came to her conclusion first, based solely
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  Speaker 1: on looking at the top-line numbers, and only afterward looked
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  Speaker 1: at the subset of the heavily redacted invoices to see
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  Speaker 1: whether they supported her conclusion is the hallmark of an
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  Speaker 1: unreliable methodology. Indeed, by her own account, she did not
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  Speaker 1: review the fee applications from her previous bankruptcy cases, which
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  Speaker 1: were her only extrinsic point of comparison until after she
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  Speaker 1: had already submitted her expert report declaring the fees reasonable.
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  Speaker 1: In addition, it is a dead giveaway of unreliability that
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  Speaker 1: Judge Chapman applied none of the rigor that she applied
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  Speaker 1: as a judge when undertaking the identical task. Next part,
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  Speaker 1: redacted Chapman deposition at 153 and 54. If only her
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  Speaker 1: technique had been quite so involved. Finally, one of the
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  Speaker 1: critical issues bearing on reasonableness, Judge Chapman does not provide
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  Speaker 1: opinions of her own. As noted above, she expressly relied
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  Speaker 1: on JPMorgan's judgment in hiring counsel and reviewing their invoices.
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  Speaker 1: This is a fatal failing. Even more important than the
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  Speaker 1: requirement that an expert opinion be based on sufficient facts
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  Speaker 1: or data is the requirement that it be an independent
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  Speaker 1: examination of the facts or data as that is the
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  Speaker 1: whole point of bringing in an otherwise uninvolved person to
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  Speaker 1: explain complex issues to the trier of fact. For this reason,
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  Speaker 1: the ipso facto disqualifying for an expert simply to rely
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  Speaker 1: on and repeat the conclusion of others, particularly when the
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  Speaker 1: conclusions are not even those of another expert, but rather
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  Speaker 1: those of the party that retained her. Yet that is
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  Speaker 1: exactly what Judge Chapman did. In doing so, she converted
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  Speaker 1: the question from what would a client reasonably pay to
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  Speaker 1: what did this client pay. That is not the right question,
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  Speaker 1: and it will serve no purpose for Judge Chapman to
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  Speaker 1: tell the jury that she claimed fees were reasonable simply
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  Speaker 1: because J.P. Morgan saw fit to pay them. 3. J.P.
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  Speaker 1: Morgan's expert opinion on income subject to clawback The final
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  Speaker 1: element of J.P. Morgan's damages, that is, the subject of
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  Speaker 1: expert testimony, is its claim to clawback Mr. Staley's compensation.
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  Speaker 1: To quantify this claim, J.P. Morgan plans to rely upon
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  Speaker 1: the opinions of Carlin Irwin, a forensic accountant, who tallied
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  Speaker 1: up Mr. Staley's compensation by J.P. Morgan over the last
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  Speaker 1: 20 years. Ms. Irwin's methodology and analysis were mechanical in
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  Speaker 1: that she, I, reviewed J.P. Morgan's payroll records for Mr. Staley, 2,
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  Speaker 1: manually entered every instance of compensation into an Excel spreadsheet, 3,
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  Speaker 1: checked her work against Mr. Staley's W-2s and the year-end
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  Speaker 1: totals within the payroll records, and four sum the total.
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  Speaker 1: She then assumed three potential dates of breach, dates that
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  Speaker 1: were given to her by counsel, and calculated Mr. Staley's
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  Speaker 1: net compensation after each date to determine amounts potentially subject
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  Speaker 1: to clawback. In addition, Ms. Irwin calculated prejudgment interest on
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  Speaker 1: the amounts clawed back using the 9% simple rate prescribed
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  Speaker 1: by New York law running from the date of each
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  Speaker 1: clawback payment. None of the above is the stuff of
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  Speaker 1: expert testimony. An expressed requirement for the admissibility of expert
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  Speaker 1: testimony under Rule 702 is that by bringing specialized knowledge
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  Speaker 1: to bear on the evidence, the testimony will help the
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  Speaker 1: trier of fact to understand the evidence or to determine
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  Speaker 1: a fact in issue. Inherent in this helpfulness requirement is
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  Speaker 1: the idea that the subject matter of the expert testimony
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  Speaker 1: lies beyond the ken of lay jurors. Rule 702 ensures
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  Speaker 1: the expert witness will not testify about lay matters which
• 13:01
  Speaker 1: a jury is capable of understanding and deciding without the
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  Speaker 1: expert's help. Thus, where an expert performs calculations or provides
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  Speaker 1: analysis that the jury is equally capable of performing on
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  Speaker 1: its own, the testimony is not helpful and therefore should
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  Speaker 1: not be admitted. By this standard, Ms. Irwin's proposed testimony
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  Speaker 1: is inadmissible. The mere transportation of numbers from J.P. Morgan's
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  Speaker 1: payroll to an Excel spreadsheet and the performance of of
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  Speaker 1: simple arithmetic, thereon are tasks well within the competence of
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  Speaker 1: the ordinary person. Ms. Irwin's accounting skills were completely unnecessary
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  Speaker 1: for those tasks. Even the deduction necessary to convert gross
• 13:40
  Speaker 1: income into net were already present in the payroll run
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  Speaker 1: that served as Ms. Irwin's starting point. All she did
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  Speaker 1: was figure out how much Mr. Staley had been paid.
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  Speaker 1: That's information that can be obtained with reasonable accuracy simply
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  Speaker 1: by reference to Mr. Staley's W-2s, a type of document
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  Speaker 1: that every juror is familiar with. Even more difficult to
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  Speaker 1: justify is Ms. Irwin's opinion calculating prejudgment interest. Simple interest
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  Speaker 1: is not called simple for no reason, and it's well
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  Speaker 1: within the grasp of any person with a calculator, which,
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  Speaker 1: given the ubiquity of smartphones, means everyone. But even more fundamentally,
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  Speaker 1: the jury needs no instruction on prejudgment interest, because the
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  Speaker 1: calculation of such interest is not a jury task. Under
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  Speaker 1: the very statute that Ms. Irwin cites as providing for
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  Speaker 1: prejudgment interest in the first place, interest is computed by
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  Speaker 1: the clerk of the court, not the trier of fact.
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  Speaker 1: There is no need for the jury to be educated
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  Speaker 1: on a task that it will not be asked to perform. Conclusion.
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  Speaker 1: For the foregoing reasons, Mr. Staley respectfully requests that the
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  Speaker 1: exclude J.P. Morgan's expert opinions identified above. respectfully submitted by
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  Speaker 1: John M. Nichols, and this was dated September 20th, 2023.
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  Speaker 1: Alright folks, that's going to do it for this document,
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  Speaker 1: and like usual, we'll just keep it moving right into
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  Speaker 1: the next one. All of the information that goes with
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  Speaker 1: this episode can be found in the description box.