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Jes Staley's Reply Memo In Support Of The Motion To Dismiss The JP Morgan Claims (Part 1) (9/25/26) · The Vault: The Epstein Files

• 0:00
  Speaker 1: What's up everyone and welcome back to the Epstein Chronicles.
• 0:04
  Speaker 1: In this episode, our crawl through the sewers of Jeffrey
• 0:07
  Speaker 1: Epstein's criminal enterprise continues as we're going to take a
• 0:11
  Speaker 1: look at the third party defendant James Staley's reply memorandum
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  Speaker 1: in support of motion to dismiss. J.P. Morgan's opposition confirms
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  Speaker 1: the many flaws in its third party complaints, which require
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  Speaker 1: dismissal of this case. The brief ignores governing case law
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  Speaker 1: and fails to respond to many of Mr. Staley's arguments. Indeed,
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  Speaker 1: most of the brief is a study in distraction. To
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  Speaker 1: avoid binding case law that forecloses its claims for contribution
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  Speaker 1: and identification under the TVPA, the bank cites an opposite
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  Speaker 1: authority on conflict preemption. To paper over its failure to
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  Speaker 1: properly plead identification for its remaining claims, it offers a
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  Speaker 1: strawman argument on Mr. Staley's identification rights. To dodge the
• 0:54
  Speaker 1: untimeliness of its employment claims, it invents an illusory choice
• 0:58
  Speaker 1: of law conundrum, and that's just to name a few.
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  Speaker 1: At bottom, the opposition follows the same playbook that animated
• 1:05
  Speaker 1: the bank's third-party practice from the start. When in trouble,
• 1:09
  Speaker 1: pull in something or someone new to change the conversation,
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  Speaker 1: no matter the legal defects. Each claim is defective and
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  Speaker 1: should be dismissed with prejudice. 1. The identification and contribution
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  Speaker 1: claims are legally deficient. A. J.P. Morgan shotgun pleading warrants
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  Speaker 1: dismissal of counts 1 and 2. The TPCs improperly lump
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  Speaker 1: together plaintiff's claims under both federal and state law into
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  Speaker 1: one omnibus claim for contribution, count 1, and another for identification,
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  Speaker 1: count 2. J.P. Morgan never disputes that these claims flunk
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  Speaker 1: Rules 8 and 10b, instead asserting that the hyper-technical, i.e., correct,
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  Speaker 1: argument does not establish prejudice to Mr. Staley. Not so. Although,
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  Speaker 1: for the reasons explained in his motion and below, the
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  Speaker 1: identification and contribution claims should be dismissed, the lumping together
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  Speaker 1: of separate federal and state claims into the same count
• 2:02
  Speaker 1: shields each claim from separate consideration and the separate law
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  Speaker 1: that applies to each of the motions to dismiss stage
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  Speaker 1: as is required and appropriate. The federal rules do not
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  Speaker 1: allow claims with such clear pleading errors to proceed. B.
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  Speaker 1: The TVPA does not permit identification or contribution claims. J.P.
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  Speaker 1: Morgan does not seriously dispute that the TVPA provides no
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  Speaker 1: federal causes of action for identification or contribution. Instead, the
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  Speaker 1: bank argues that it can pursue such claims under CPLR
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  Speaker 1: Section 1401. But the Second Circuit has repeatedly held that
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  Speaker 1: federal courts recognize a right to contribution under state law
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  Speaker 1: only in cases in which state law supplies the appropriate
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  Speaker 1: rule of decision. Herman v. RSR's Secretary Servers, 172 F. 3D, 132-144,
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  Speaker 1: Second Circuit, 1999. C. Bernard Madoff, Investing Securities, LLC, 721F. 3D, 5465,
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  Speaker 1: 2nd Circuit, 2013. It's settled in this circuit that there
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  Speaker 1: is no claim for contribution unless the operative federal statute
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  Speaker 1: provides one, affirming dismissal of claim under Section 1401. Courts
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  Speaker 1: in this circuit have thus overwhelmingly held that whether a
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  Speaker 1: contribution is available in connection with a federal statutory scheme
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  Speaker 1: is a question governed solely by federal law. and the
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  Speaker 1: party cannot use New York State Common Law or CPLR
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  Speaker 1: Section 1401 as an end-around to make a claim, especially
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  Speaker 1: one that could not make under the federal statutory scheme.
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  Speaker 1: KBL Corp v. Arnautz 646F. SUPP 2D 335341 SDNY 2009 C.
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  Speaker 1: Picard v. HSBC Bank PLC 454 BR 25, 37, and 38,
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  Speaker 1: SDNY 2021. Judge Rakoff, dismissing Section 1401 contribution claim for
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  Speaker 1: a federal statutory liability. J.P. Morgan, at 7, cites several
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  Speaker 1: cases in an attempt to argue that state contribution statutes
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  Speaker 1: do apply, when the source of the underlying liability is
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  Speaker 1: a federal statute. But these cases are unavailing. In Jackson v. Odinot,
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  Speaker 1: the court actually dismissed a contribution claim under the Federal
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  Speaker 1: Copyright Act, allowing only a contribution claim to proceed for
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  Speaker 1: the state law claim vindicating the plaintiff's right of publicity. 9F. SUPP
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  Speaker 1: 3D 342366 SDNY 2014 In 2 Inc. v. Coles Department
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  Speaker 1: Stores 213 FRD 138 SDNY 2014 2003, as other courts
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  Speaker 1: have noted the parties there did not even contest the
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  Speaker 1: state law, could not be used to support a claim
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  Speaker 1: for contribution in connection with a federal copyright action, KBL 646F. SUPP
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  Speaker 1: at 341. Moreover, 2 has received unfavorable treatment in this
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  Speaker 1: district as it is contrary to the numerous well-reasoned decisions
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  Speaker 1: coming out the other way. The bank also cites NY
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  Speaker 1: State Electric and Gas Corporation vs. First Energy Corporation 2007
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  Speaker 1: WL 14334901 at 6 and 7, NDNY May 11, 2007.
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  Speaker 1: But there the court rejected the New York law contribution
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  Speaker 1: claims seeking to reapportion federal liability, ruling that the CERCLA
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  Speaker 1: preempted state law, ID at 11. While the court posited
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  Speaker 1: that state contribution law could theoretically apply to federal liability,
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  Speaker 1: In the absence of preemption, at 7, the dicta cannot
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  Speaker 1: survive the Second Circuit's later holding that the source of
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  Speaker 1: a right of contribution under state law must be an
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  Speaker 1: obligation imposed by state law. Madoff, 721, F. 3D, at 65.
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  Speaker 1: The same is true of AB v. Marriott International Incorporated, 2020, WL, 364-2485,
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  Speaker 1: Eastern District of Pennsylvania, July 6, 2020. an out-of-circuit case
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  Speaker 1: that permitted impleter for state law contribution claims under the TVPA.
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  Speaker 1: To start, the case addressed only whether the proposed third-party
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  Speaker 1: complaint satisfied Rule 14a' s lenient standard that the non-party may
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  Speaker 1: be liable, ID at 5. Even more significantly... The parties
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  Speaker 1: did not brief whether state law contribution claims can reapportion
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  Speaker 1: federal liability, and the court's ruling contravenes the only case
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  Speaker 1: to have addressed the issue under the TVPA. In any event, J.P.
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  Speaker 1: Morgan's reading of this case is foreclosed by the binding
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  Speaker 1: of the Second Circuit Authority discussed above. J.P. Morgan, at
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  Speaker 1: 8 through 11, tries to turn decades of Supreme Court
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  Speaker 1: precedent on its head by recasting the question here as
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  Speaker 1: one of traditional conflict preemption. That neglects the binding Second
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  Speaker 1: Circuit case law and the Supreme Court's directive that contribution
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  Speaker 1: and identification for federally created liability arise only through the
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  Speaker 1: affirmative creation of a right of action by Congress, either
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  Speaker 1: expressly or by clear implication or through the power of
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  Speaker 1: federal courts to fashion a federal common law Texas Industries v. Radcliffe,
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  Speaker 1: 451 U.S. 630-638-1981. The court has carefully protected Congress's prerogative
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  Speaker 1: and implied indemnity and contribution are highly disfavored. But under J.P.
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  Speaker 1: Morgan's view, Congress's decision is beside the point. Any general
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  Speaker 1: state law contribution statute engrafts a right onto the federal
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  Speaker 1: scheme unless Congress specifically preempts it. That cannot be correct.
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  Speaker 1: It would make the Supreme Court's implied contribution case law nonsensical.
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  Speaker 1: The Supreme Court and Second Circuit have been clear. When
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  Speaker 1: Congress chooses not to create contribution or idemification, none exists. Moreover,
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  Speaker 1: as Mr. Staley explained in Motion 9-11, J.P. Morgan's proposed
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  Speaker 1: state law, idemnity and contribution rights, would directly undercut the
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  Speaker 1: TVPA's goal to protect victims. The TVPA provides a comprehensive
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  Speaker 1: civil and criminal scheme with various remedies. Such express provisions
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  Speaker 1: for private enforcement, in certain carefully defined circumstances, strongly counsels
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  Speaker 1: against judiciously engrafting additional remedies, Herman 172, F. 3d at 144.
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  Speaker 1: So even under the bank's analysis, idemification and contribution are
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  Speaker 1: inappropriate here. C. The idemification claim has additional defects. 1. Mr.
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  Speaker 1: Staley's contractual idemnity bars this claim. J.P. Morgan never disputes
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  Speaker 1: that it agreed to indemnify Mr. Staley without any reciprocal
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  Speaker 1: indemnity for itself. The bank instead argues that Mr. Staley
• 9:00
  Speaker 1: acted in bad faith and therefore should not receive indemnification
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  Speaker 1: under Delaware law. Opposition, 11 and 13. That misses the point. Mr.
• 9:10
  Speaker 1: Staley is not seeking, at least not right now, indemnification. Rather,
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  Speaker 1: the presence of this one-way idemification provision shows that idemification
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  Speaker 1: was clearly contemplated and expressly addressed by the parties. Serving
• 9:23
  Speaker 1: Sign Erector's Company v. Allied Outdoor Advertisement Inc. 573, NYS
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  Speaker 1: 2D 513-514, 1st Apartment, 1991. Since the parties did not
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  Speaker 1: contract for Mr. Staley to idemify the bank, any common-law
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  Speaker 1: idemification 2. The complaints against the bank do not seek
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  Speaker 1: to hold it vicariously liable for Mr. Staley's actions. 3. J.P.
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  Speaker 1: Morgan does not dispute that under New York's law, a
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  Speaker 1: party cannot obtain common law identification unless it has been
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  Speaker 1: held to be vicariously liable without proof of its existence.
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  Speaker 1: of any negligence on its own part. McCarthy v. Turner Construction,
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  Speaker 1: 953 NE 2D 794 801 NY 2011. Here, the bank
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  Speaker 1: concedes that the plaintiffs seek to hold it directly liable,
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  Speaker 1: at least in part, for its own misconduct, not for Mr. Staley's.
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  Speaker 1: This forecloses any identification claim. Indeed, the plaintiff's claims could
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  Speaker 1: not be pleaded on theory of vicarious liability, as outlined
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  Speaker 1: in motions 13 and 14 and conceded in the opposition
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  Speaker 1: at 14. Mr. Staley had no decision-making authority over Epstein's accounts,
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  Speaker 1: no knowledge of specific transactions, and no hand in ensuring
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  Speaker 1: BSA compliance relating to the same. That vicarious liability is
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  Speaker 1: missing is particularly apparent for the plaintiff's claims for obstruction
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  Speaker 1: and negligent banking which stem from the bank's failure to
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  Speaker 1: follow federal banking regulations. Without vicarious liability, idemification cannot succeed.
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  Speaker 1: See Stewart Title Insurance Company v. New York Title Corp.
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  Speaker 1: 117 NYS 3D-175-177 Dismissing idemification at the pleading stage. The
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  Speaker 1: bank fails to cite a single case to the contrary.
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  Speaker 1: All right, we're going to wrap up right here. And
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  Speaker 1: in the next episode dealing with the topic, we're going
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  Speaker 1: to pick up where we left off and finish out
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  Speaker 1: this document. All of the information that goes with this
• 11:20
  Speaker 1: episode can be found in the description box.