Latest / The Vault: The Epstein Files / JP Morgan And Their Opposition To Jes Staley Dismissing The Lawsuit (Part 4) (9/5/26)

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JP Morgan And Their Opposition To Jes Staley Dismissing The Lawsuit (Part 4) (9/5/26) · The Vault: The Epstein Files

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  Speaker 1: What's up everyone and welcome back to the Epstein Chronicles.
• 0:04
  Speaker 1: In this episode we're picking up where we left off
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  Speaker 1: with the paperwork from J.P. Morgan, Jess Daly, and the USVI.
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  Speaker 1: JPMC's breach of fiduciary duty and faithless servant cause of
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  Speaker 1: action would survive dismissal of the identification and contribution claims.
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  Speaker 1: Even if the court were to dismiss JPMC's identity claim
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  Speaker 1: and contribution claim and JPMC respectfully submits it should, This
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  Speaker 1: court should not dismiss the remaining state law, fiduciary duty,
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  Speaker 1: and faithless servant claims. Under U.S. Code 28, Section 1367C,
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  Speaker 1: the court may decline to exercise supplemental jurisdiction over a
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  Speaker 1: claim even if 3. The district court has dismissed all
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  Speaker 1: claims over which it has original jurisdiction. The court should
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  Speaker 1: assess four factors to evaluate whether to exercise its discretion
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  Speaker 1: to do so. Judicial economy, convenience, fairness, and comity. Carnegie
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  Speaker 1: Mellon University v. Cohill, 484, U.S., 343, 350, N. 7, 1988.
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  Speaker 1: This discretion applies equally to third-party complaints. CEG, Dairy v. Wire, 265, F. 2D, 804, 807,
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  Speaker 1: and 8, 2nd Circuit, 1959. Amtex Fabrics, Inc. v. Justin Materials, Inc., 140, F. 3D, 101, 105,
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  Speaker 1: and 6, 2nd Circuit, 1998. Staley ignores this familiar standard
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  Speaker 1: and the factors that govern this court's discretion. In fact,
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  Speaker 1: he fails even to acknowledge that this court has discretion. Instead,
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  Speaker 1: Staley analyzes supplemental jurisdiction as if JPMC had in the
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  Speaker 1: first instance filed a third-party complaint based solely on on
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  Speaker 1: non-derivative claims that the cases he cites only address that situation.
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  Speaker 1: LeMayor Beauty Investment Partners LLC vs. Mattire Tribeca LLC 2015
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  Speaker 1: WL7078641 at 3 SDNY November 12, 2015 State National Insurance
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  Speaker 1: Company vs. Certain Interested Underwriters at Lloyds London 2022 WL
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  Speaker 1: 454744 at 3, SDNY, September 29, 2022. None of those
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  Speaker 1: cases address the standard for retaining jurisdiction over non-derivative cases
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  Speaker 1: and causes of action after dismissal of contribution or identification claims.
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  Speaker 1: That inquiry is governed by the factors articulated in Carnegie Mellon,
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  Speaker 1: and those factors counsel in favor of retaining jurisdiction even
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  Speaker 1: if the court dismisses the identity and contribution claims. JPMC's
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  Speaker 1: breach of fiduciary duties and faithless servant claims substantially overlap
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  Speaker 1: with the underlying DOE and USVI actions where, as described above,
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  Speaker 1: Staley's alleged conduct and knowledge form a significant part of
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  Speaker 1: the plaintiff's claims, where, as here the claims substantially overlap,
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  Speaker 1: there is very substantial judicial economy in maintaining supplemental jurisdiction,
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  Speaker 1: FEI Hang Chen, versus Jing Fong Rest Incorporated, 582 F.S.U.P.P., 2D602,
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  Speaker 1: 603 and 604, SDNY 2008. See also Zurich American Life
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  Speaker 1: Insurance Company, versus Nagel 2021, WL3077681, at 4 and 5, SDNY,
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  Speaker 1: July 20th, 2021. Holding that cases involve substantial overlap of
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  Speaker 1: the factual issues in both cases, making them more efficiently resolved,
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  Speaker 1: in the same court, under the same rules of evidence
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  Speaker 1: and discovery. The parties, including Staley, have already engaged in
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  Speaker 1: substantial discovery, received numerous procedural rulings, and are scheduled for
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  Speaker 1: trial in October of 2023. Judicial economy would be thwarted
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  Speaker 1: were this court to decline to exercise supplemental jurisdiction as
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  Speaker 1: JPMC would, as a result, be forced to restart the
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  Speaker 1: third-party claims in state court. Fei-Hang Chen, 582 F.SUPP 2D,
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  Speaker 1: at 603. See also Zurich American Life Insurance 2021 WL
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  Speaker 1: 307-7861 at 5. Section 6. Staley's challenges to the breach
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  Speaker 1: of fiduciary duty and faithless servant claims are without merit. A.
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  Speaker 1: The breach of the fiduciary duty and faithless servant claims
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  Speaker 1: are timely. Staley argues that JPMC's breach of fiduciary duty
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  Speaker 1: and faithless servant claims are untimely because he left JPMC
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  Speaker 1: in 2013. But under the Delaware Discovery Rule, which governs
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  Speaker 1: the breach of fiduciary duty claim, the three-year limitation period
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  Speaker 1: under 10 Declaration C, Section 8106 is told where the
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  Speaker 1: injury is inherently unknowable and the claimant is blamelessly ignorant
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  Speaker 1: of the wrongful act and injury complained of. Walmart Stores, Inc. vs.
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  Speaker 1: AIG Life Insurance Company, 860-A.2-D, 312-319, Delaware, 2004. This is
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  Speaker 1: a low threshold for plaintiff to meet. CertainTeed Corporation vs.
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  Speaker 1: Celotex Corporation, 2005, WL-217032, at 9, Delaware, 2004. January 24, 2005,
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  Speaker 1: Service Incorporated v. Service Master Company, LLC, 2022, WL, 116-4859,
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  Speaker 1: at 5. Under New York law, the limitations period for
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  Speaker 1: actions based upon fraud like faithless servant claim or barred
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  Speaker 1: extends two years from the time the plaintiff or the
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  Speaker 1: person under whom the plaintiff claims discovered the fraud or
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  Speaker 1: could with reasonable diligence have discovered it. NYCPLR, Section 213-8
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  Speaker 1: As the third-party complaint makes clear, Staley concealed his activities,
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  Speaker 1: and JPMC did not discover his alleged behavior and active
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  Speaker 1: concealment until Doe and the USVI brought these actions, from
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  Speaker 1: which basis of JPMC's third-party complaint. See JPMC Complaint 36
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  Speaker 1: and 42. For instance, JPMC did not know nor could
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  Speaker 1: have it reasonably known of Doe's allegations that Staley personally
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  Speaker 1: spent time with young girls whom he met through Epstein
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  Speaker 1: on several occasions, personally visited young girls at Epstein's apartments
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  Speaker 1: located at 301 East 66th Street, personally observed Epstein around
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  Speaker 1: young girls, and personally observed Epstein sexually grab young women
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  Speaker 1: in front of him. Doe, FAC 227. See also ID
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  Speaker 1: at 226. Indeed, JPMC. did not know that Doe's allegation
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  Speaker 1: that the powerful financial executive sexually assaulted her with Epstein's
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  Speaker 1: permission was Staley until she revealed as much in discovery
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  Speaker 1: in this case. Staley protests that JPMC could and should
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  Speaker 1: have discovered Staley's activities earlier. But that claim is flawed.
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  Speaker 1: It involves a mixed question of law and fact. Where
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  Speaker 1: the record does not conclusively demonstrate that a plaintiff had
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  Speaker 1: knowledge of facts from which the alleged fraud might be
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  Speaker 1: reasonably inferred, The cause of action should not be disposed
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  Speaker 1: of summarily on statute of limitation grounds. Epiphany Community Nursery
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  Speaker 1: School v. Levy 171 AD 3D 1 7 94 NYS
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  Speaker 1: 3D 1 2019 It's premature to resolve this factual issue
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  Speaker 1: based on the assertions of a motion to dismiss. It's
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  Speaker 1: premature to resolve this factual issue based on the assertions
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  Speaker 1: in a few newspaper articles. without discovery and further factual inquiry,
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  Speaker 1: a few tidbits including a Miami Herald article about Epstein's activities,
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  Speaker 1: with no mention of Staley, and that Epstein had been
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  Speaker 1: arrested hardly provide dispositive evidence that JPMC should have known
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  Speaker 1: that Staley may have participated in Epstein's sex trafficking. Staley
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  Speaker 1: offers no reasons why the fact that JPMC provided banking
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  Speaker 1: services to Epstein means it should have discovered Staley's misconduct
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  Speaker 1: merely from Epstein's arrest. Even if no statutory discovery rule applied,
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  Speaker 1: Staley's active concealment of his activities tolls the limitations period.
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  Speaker 1: See Alaska Election Pension Fund vs. Bank of America Corporation,
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  Speaker 1: 175 SUPP 3D 4466 SDNY 2016. Under federal and New
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  Speaker 1: York law, the statute of limitations is told where a
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  Speaker 1: plaintiff shows that a defendant committed fraudulent acts intended to
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  Speaker 1: conceal its misconduct and that the plaintiff's ignorance of the
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  Speaker 1: concealed misconduct was not a product of its own lack
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  Speaker 1: of reasonable diligence. As the third-party complaint alleges, Staley hid
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  Speaker 1: his activities from his JPMC colleagues. That he did so
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  Speaker 1: should come as no surprise as both Doe and the
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  Speaker 1: USVI allege that Staley engaged in misconduct so serious, even criminal,
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  Speaker 1: that Staley could not dare reveal it to JPMC. Staley
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  Speaker 1: allegedly learned of Epstein's sex trafficking operation By engaging in
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  Speaker 1: sexual activity with young women, Epstein procured, and according to Doe,
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  Speaker 1: sexually assaulted her with force and aggression. Staley affirmatively and
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  Speaker 1: falsely stated in his separation agreement that he had reported
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  Speaker 1: all code of conduct violations. JPMC Complaint 21 In doing so,
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  Speaker 1: he acted to protect himself and Epstein, who could have
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  Speaker 1: exposed Staley's misconduct. That concealment tolls the limitations period in
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  Speaker 1: this case. B The third-party complaint states a claim for
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  Speaker 1: a breach of fiduciary duty. Staley's contention that the third-party
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  Speaker 1: complaint does not adequately allege breach of fiduciary duty is
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  Speaker 1: without merit. To establish breach of fiduciary duty, one must allege, one,
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  Speaker 1: that a fiduciary duty existed, and two, that the defendant
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  Speaker 1: breached that duty. Beard, Rush Incorporated v. Cates, 8A3D573, 601 Delaware.
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  Speaker 1: The third-party complaint alleges both elements. See JPMC complaint at
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  Speaker 1: 58 and 65. Staley's contention that JPMC allegations are insufficiently
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  Speaker 1: specific under FedR's Civ P9B ignores key aspects of JPMC's complaint,
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  Speaker 1: which in turn incorporates the USVI and Doe's complaint. For instance,
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  Speaker 1: JPMC alleged that Staley acknowledged in writing... that he had
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  Speaker 1: a duty to act in JPMC's best interest, to avoid
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  Speaker 1: conflicts of interest, and to avoid any activities that would
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  Speaker 1: damage JPMC, either financially or reputationally. JPMC complaint 17-20, and
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  Speaker 1: Staley plainly breached that duty as made clear by those
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  Speaker 1: allegations recounted above, that Staley personally observed Epstein, sex trafficking,
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  Speaker 1: spent time with young girls he met through Epstein, and
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  Speaker 1: even sexually assaulted her with force and aggression while saying
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  Speaker 1: he had Epstein's permission to do what he wanted to her.
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  Speaker 1: JPMC further alleges that Staley concealed this highly relevant information
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  Speaker 1: from JPMC, which is not at all surprising given the
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  Speaker 1: serious legal jeopardy Staley would face if the alleged misconduct
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  Speaker 1: were revealed. See JPMC complaint at 34 and 36. And
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  Speaker 1: contrary to Staley's argument to the contrary, JPMC alleged citing
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  Speaker 1: the Doe and USVI complaints that Staley promised to use
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  Speaker 1: his clout within JPMorgan to make Epstein untouchable. Indeed, Doe
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  Speaker 1: alleges that Staley was generally in charge of Epstein's accounts,
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  Speaker 1: and was Epstein's protector at JPMC, who prevented JPMC from
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  Speaker 1: getting rid of Epstein as a client. before Staley left
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  Speaker 1: in 2015. The USVI likewise alleges that Staley was a
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  Speaker 1: decision maker with respect to Epstein's accounts and even talked
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  Speaker 1: to Epstein regarding trafficking allegations as part of JPMC's January
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  Speaker 1: 2011 review of his account. These allegations are sufficient to
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  Speaker 1: establish Staley's breach of fiduciary duty. Staley's contention that JPMC
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  Speaker 1: failed to plead that it was damaged by his breach
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  Speaker 1: of fiduciary duty is wrong. The complaint expressly alleges that
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  Speaker 1: Staley's fiduciary duty breach was a direct and proximate cause
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  Speaker 1: of JPMC's decision to do business with Epstein until 2013
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  Speaker 1: and that Staley's breach caused JPMC to suffer both adverse
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  Speaker 1: publicity for which it seeks reputational damages and the cost
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  Speaker 1: of litigation from the Doe and USVI lawsuits. JPMC complaint
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  Speaker 1: at 63 through 65 that though in the USVI also
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  Speaker 1: tender independent allegations against JPMC, which of course have not
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  Speaker 1: been proven, does nothing to remove Staley from the chain
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  Speaker 1: of causation. Finally, Staley's argument that holding him responsible to
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  Speaker 1: JPMC for damages awarded in the Doe and USVI cases
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  Speaker 1: is improperly speculative ignores the plaintext of Rule 14, which
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  Speaker 1: allows JPMC to implede Staley, who is or may be
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  Speaker 1: liable to JPMC, for all claims against JPMC. FedR Civ 14. C.
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  Speaker 1: Customs v. Tax Administration of Kingdom of Denmark Tax Refund
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  Speaker 1: Litigation 2021 W.L. 499-353-6 at 9, SDNY, October 26, 2021.
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  Speaker 1: The secondary or derivative liability notion is central and thus
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  Speaker 1: in pleader has been successfully utilized when the basis of
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  Speaker 1: the third party claim is identity, subrogation, contribution, express or
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  Speaker 1: implied warranty, or some other theory. C. Third party complaint
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  Speaker 1: states a faithless servant claim. One who owes a duty
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  Speaker 1: to fidelity to a principle and who is faithless in
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  Speaker 1: the performance of his service is generally disentitled to recover
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  Speaker 1: his compensation, whether commissions or salary. Figer v. Jewelry Limited,
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  Speaker 1: 41 NY2D 928, 928 NY 1977. New York courts require
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  Speaker 1: either a misconduct that rises to the level of a
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  Speaker 1: breach of a duty of loyalty or good faith. Stefanovich v.
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  Speaker 1: Old Heidelberg Corporation, 2022 WL 3928370-7 SDNY, August 31, 2022
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  Speaker 1: JPMC's third-party complaint, adequately states a faithless servant claim against
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  Speaker 1: Staley under either standard. As noted above, JPMC's third-party complaint
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  Speaker 1: alleges that, despite having a duty of loyalty to JPMC,
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  Speaker 1: Staley abandoned JPMC's interest in favor of his own interest
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  Speaker 1: and that of Epstein. Staley allegedly knew of Epstein's sex
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  Speaker 1: trafficking operation, engaged in sexual activity with young women procured
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  Speaker 1: by Epstein, and according to Doe, sexually assaulted her with
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  Speaker 1: force and aggression. Staley not only concealed that information, but
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  Speaker 1: thwarted any efforts within JPMC to sever ties with Epstein.
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  Speaker 1: In doing so, he acted to protect himself and Epstein.
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  Speaker 1: Who could have exposed Staley's misconduct? And Staley persisted for
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  Speaker 1: years in protecting Epstein in the face of attempts by
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  Speaker 1: JPMC personnel to end the company's relationship with Epstein on
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  Speaker 1: reputational grounds. made misrepresentations in the process and continued to
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  Speaker 1: do so to the end of his JPMC tenure, stating
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  Speaker 1: in his separation agreement that he was unaware of any
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  Speaker 1: violations of JPMC's Code of Conduct. That is sufficient to
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  Speaker 1: state a faithless servant claim. CEG Morgan Stanley v. Scowron,
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  Speaker 1: 989 F.S.U.P.P., 2D. 356, 362, SDNY, 2013. employee who admitted to
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  Speaker 1: one instance of insider trading nevertheless permeated his service because
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  Speaker 1: he lied and covered up his involvement for years afterwards.
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  Speaker 1: Staley's argument to the contrary assumes faithless servant claims are
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  Speaker 1: limited to cases of embezzlement or usurpation of the employer's
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  Speaker 1: business opportunities. But Ebel vs. Geo Media Inc. 2021 WL
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  Speaker 1: 2037867 SDNY May 21st, 2021, upon which Staley relies, merely
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  Speaker 1: offers embezzlement as one example of the broader category of
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  Speaker 1: cases in which the faceless servant doctrine applies, where the
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  Speaker 1: employee has acted directly against the employer's interests. That is
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  Speaker 1: exactly what JPMC complaint alleges. An employee acts directly contrary
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  Speaker 1: to an employer's interests when he acts to protect himself
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  Speaker 1: and an alleged sex trafficker by concealing important information from
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  Speaker 1: his employer or including, according to Doe, his own crime. Finally,
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  Speaker 1: Staley's suggestion that JPMC has not adequately alleged damage from
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  Speaker 1: Staley's disloyalty overlooks the allegations of the impleter complaints discussed above.
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  Speaker 1: and the obvious long-term damage from his activities with Epstein
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  Speaker 1: and concealment of them. It also ignores the Second Circuit's
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  Speaker 1: clear pronouncement that it does not make any different that
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  Speaker 1: the services were beneficial to the principal or that the
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  Speaker 1: principal suffered no provable damage as a result of the
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  Speaker 1: breach of fidelity by the agent. Conclusion. Staley's motion to
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  Speaker 1: dismiss should be denied. This was dated May 8, 2023,
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  Speaker 1: and it was signed by Leonard Gale and Felicia Ellsworth.
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  Speaker 1: All of the information that goes with this episode can
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  Speaker 1: be found in the description box.