EFTA01069861.pdf

1 1 IN THE CIRCUIT COURT, 15TH JUDICIAL CIRCUIT, IN AND FOR 2 PALM BEACH COUNTY, FLORIDA 3 CASE NO.: 50 2009 CA 040800XXXXMBAG 4 JEFFREY EPSTEIN, 5 Plaintiff, 6 vs. 7 SCOTT ROTHSTEIN, individually, BRADLEY J. EDWARDS, individually, 8 And L.M., individually, 9 Defendants. 10 * * * * * * * * * * * * * * * * * * * * * * * * * * * 11 12 HEARING BEFORE: HONORABLE DAVID F. CROW 13 DATE TAKEN: July 13, 2011 14 TIME: 10:34 a.m. to 4:45 p.m. 15 PLACE: Palm Beach County Courthouse 205 N. Dixie Highway, Room 9C 16 West Palm Beach, Florida 33401 17 REPORTED BY: Kathleen M. Ames, RPR 18 19 20 21 22 23 24 25 ORANGE REPORTING 800.275.7991 EFTA01069861  2 1 APPEARANCE 5: 2 JOSEPH L. ACKERMAN, JR., ESQUIRE CHRISTOPHER KNIGHT, ESQUIRE 3 OF: FOWLER, WHITE, BURNETT, P.A. 4 901 Phillips Point West 777 S. Flagler Drive 5 West Palm Beach, Florida 33401-6170 6 MARTIN WEINBERG, ESQUIRE 7 OF: MARTIN WEINBERG, P.C. 20 Park Plaza, Ste. 1000 8 Boston, Massachusetts 02116 9 JACK A. GOLDBERGER, ESQUIRE 10 OF: ATTERBURY, GOLDBERGER & WEISS, P.A. One Clearlake Centre, Ste. 1400 11 250 Australian Avenue South West Palm Beach, Florida 33401 12 APPEARING ON BEHALF OF THE PLAINTIFF 13 14 JACK SCAROLA, ESQUIRE 15 OF: SEARCY, DENNEY, SCAROLA, BARNHART & SHIPLEY, P.A. 16 2139 Palm Beach Lakes Boulevard West Palm Beach, Florida 33409 17 APPEARING ON BEHALF OF DEFENDANT, EDWARDS 18 19 20 21 22 23 24 25 ORANGE REPORTING 800.275.7991 EFTA01069862  3 1 MR. SCAROLA: Good morning, Your Honor. 2 MR. KNIGHT: Good morning, Your Honor. 3 THE COURT: Okay. We're here on Epstein versus 4 Rothstein, et al. I want to thank the party that sent me 5 the whole list of motions and I appreciate it very much. 6 And I did have a chance to go through most of the stuff 7 and, quite frankly, it's kind of hard to get my arms around 8 this. There is a lot to do. My thoughts is to first kind 9 of set-up a schedule to determine where we should go today 10 in terms of starting in one place and where we're going to 11 go. And seems to me the first place to start is try to get 12 the pleadings in order, in terms of the motions that are 13 pending that have not been ruled on. Then I would like to 14 find out, I mean, I read the, at least, the interim report 15 from Judge Carney. Is it Judge Carney? And I want to find 16 out what the status of all of that is. And then I guess 17 the best way to proceed, unless somebody has a better 18 alternative, is to start with the motions in some type of 19 chronological order. But before that, to kind of get an 20 opening from both sides as to where they feel or why they 21 feel these various issues should be decided in their favor. 22 I know they are varied but just to give me some general 23 background in terms of the case. 24 Having said that then, unless somebody has a better 25 alternative, I would like to start with there is a pending ORANGE REPORTING 800.275.7991 EFTA01069863  4 1 motion to dismiss on the, I guess, it's the second amended 2 complaint. 3 MR. ACKERMAN: It's the amended complaint, be the 4 second complaint. 5 THE COURT: Which I've read in detail the motion. 6 Also, I think, pending is still the motion for punitive 7 damages in regard to the counterclaim and I don't think 8 there is any other motions pending in regard to the 9 pleadings, are there? 10 MR. SCAROLA: There are not, sir, no. 11 THE COURT: Okay. I mean, I think I'm here to 12 talk about all of those so why don't we start with the 13 motion to dismiss because that kind of gets the thing 14 rolling so start there. It's your motion, Mr. Scarola. 15 MR. SCAROLA: Thank you, Your Honor. With the 16 Court's permission, may I address the Court from a seated 17 position today? 18 THE COURT: Yes, I prefer you do that. 19 MR. SCAROLA: Thank you. Your Honor, this case 20 started out with a thirty page, seventy-nine paragraph, 21 five count complaint that read more like a press release 22 than a legal pleading. And was the source of substantial 23 procedural difficulty, as a consequence of the imprecision 24 with which an effort was made to embroil Bradley Edwards in 25 the Rothstein Ponzi scheme. We have moved from that ORANGE REPORTING 800.275.7991 EFTA01069864  5 1 massive effuse press release to what is now a nine page, 2 single count abuse of process case. The state civil remedy 3 for criminal practices count gone. The state RICCO claim 4 gone. The fraud claim gone. The conspiracy claim gone. 5 And a whole new abusive process claim has now been asserted 6 very different from what we were looking at previously. 7 Indeed, the only allegation that attempts to associate 8 Bradley Edwards with anything having to do with Rothstein 9 is a claim that appears in Paragraph 20, which says, 10 essentially, because so many RRA personnel, Rothstein, 11 Rosenfeldt, Adler personnel, were involved in the 12 prosecutions of what were, obviously, very meritorious 13 claims on behalf of the child victims of Mr. Epstein's 14 criminal molestations, because so many RRA personnel were 15 involved in the prosecution Edward, quote, "knew or 16 reasonably should have known that his, Epstein's case 17 files, were being shown and touted to investors." 18 Now, no allegation that he knew or reasonably should 19 have known that they were part of a Ponzi scheme but on the 20 non sequitur assertion that because there were a lot of 21 people involved in these very important, very big cases. 22 Mr. Edwards knew or reasonably should have known that 23 someone was trying to attract investors to fund the 24 prosecution of these claims. 25 The first element of a motion to dismiss relating to that ORANGE REPORTING 800.275.7991 EFTA01069865  6 1 allegation is so what. A law firm has every right to raise 2 funds to prosecute legitimate claims on behalf of its 3 clients. And if all Bradley Edwards knew, which he didn't, 4 but we must take the allegations of the complaint as true, 5 if all he knew was, because there were a lot of people 6 involved in the prosecution of these claims, he must have 7 known that his files were being shown to and touted to 8 investors, that, certainly, can't form the basis of any 9 cause of action. 10 Let's take a look at what this complaint says Bradley 11 Edwards did that constituted abuse of process. 12 THE COURT: Let me just say off the top here that 13 I have one problem with the complaint because it lumps 14 defendants together in numerous allegations without 15 differentiating as to any of the defendants which one did 16 what, if any, or all did. 17 MR. SCAROLA: Your Honor has anticipated one of 18 the points that I would make and that, clearly, is one. 19 But even assuming that all the defendants did all of the 20 things that are claimed to have been done by the 21 defendants, plural, let's take a look at what they say 22 Bradley Edwards did. In the introductory paragraph they 23 say that he is liable for abuse of process because of four 24 things. One, he engaged in unreasonable and vexatious 25 discovery within the context of claims that are never ORANGE REPORTING 800.275.7991 EFTA01069866  7 1 asserted to have been anything other than legitimate 2 claims. So one is unreasonable and vexatious discovery in 3 the introductory paragraph not specified in any way. 4 The second is making unfounded allegations in his 5 lawsuits on behalf of his clients who had legitimate 6 claims. 7 The third is using improper investigative tools. 8 And the fourth, interfering with a non-prosecution 9 agreement. 10 Now, of those four generally described elements of 11 wrongful conduct, the only category that could possibly 12 involve process, which means the filing of a complaint, the 13 filing of an answer to a complaint, the filing of some 14 pleading or a subpoena. The only category that could 15 encompass abuse of process arguably could be engaging in 16 unreasonable and vexatious discovery. And we're going to 17 look at what they claim the unreasonable and vexatious 18 discovery was in just a moment. 19 We know from Paragraph 17 that the claims were not 20 initiated while Mr. Edwards was an employee of RRA. 21 Paragraph 17 tells us that he brought these legitimate 22 cases, settled for very large sums of money voluntarily by 23 the plaintiff. He brought those claims with him to the law 24 firm. So it's not the filing of the claims themselves 25 that's anywhere alleged to have been an abuse of process. ORANGE REPORTING 800.275.7991 EFTA01069867  8 1 They don't make that claim. 2 Paragraph 27 says the defendants embarked a scheme to 3 interfere with the non-prosecution agreement, quote, "for 4 the purpose of upping the stakes of the litigation." Now, 5 the non-prosecution agreement is the agreement that 6 Mr. Epstein entered into with the federal government that 7 allowed him, what we and our clients, or Mr. Edwards' 8 clients contend, was an improper and sweetheart deal. But 9 attempting to challenge unsuccessfully, at least thus far 10 unsuccessfully, a non-prosecution agreement on the basis 11 that the victims had a right under federal law to be 12 consulted regarding that agreement, which right was never 13 afforded to them. Attempting to challenge a 14 non-prosecution agreement could not possibly be abuse of 15 process. 16 And to the extent that there might be some assertion 17 that this was tortious interference in an advantageous 18 business relationship, the law is very clear, and I'm 19 prepared to cite the cases to Your Honor, if it's 20 necessary. I don't know that this is going to be 21 challenged. That unsuccessful interference is not 22 actionable interference. A case calling Scheller versus 23 American Medical International. So the allegations about 24 the non-prosecution agreement, I suggest, are an absolute 25 nullity. They can't constitute an abuse of process. ORANGE REPORTING 800.275.7991 EFTA01069868  9 1 Let's go on to Paragraph 29, because that's where 2 presumably an effort is made to set out what the 3 unreasonable and vexatious discovery is. Paragraph 29, 4 Sub-paragraph One talks about asking three airplane pilots 5 inflammatory questions during the course of the depositions 6 of those airplane pilots. Asking questions is not an abuse 7 of process. Asking airplane pilot questions cannot 8 possibly have a causal connection to the damage that is 9 alleged by Mr. Epstein in this case. 10 Curiously the damages have also changed dramatically. 11 We are now told that the damages constitute fees and costs 12 incurred in the underlying litigation, any claim for which 13 was released in the underlying litigation. We will ask the 14 Court to take judicial notice of the orders of dismissal of 15 the three underlying claims, which require the parties to 16 those cases to bear their own attorney's fees and costs. 17 Mr. Epstein, having stipulated as part of the settlement 18 that he was going to bear his own fees and costs, cannot 19 claim as damages, in this case, fees and costs incurred in 20 the underlying litigation, if they could possibly form the 21 basis of any claim of liability in light of the broad 22 litigation privilege that exists in the state of Florida. 23 Let me address that very briefly. If I may approach 24 the bench, I want to provide the Court with a copy of the 25 Florida Supreme Court decision in Echevarria, ORANGE REPORTING 800.275.7991 EFTA01069869  1 E-C-H-E-V-A-R-R-I-A, vs. Echevarria. That is the most 2 recent Florida Supreme Court decision addressing the 3 litigation privilege. It contains an excellent discussion 4 of the Court's view of the scope of that privilege. And 5 upon review of that case Your Honor will find that the 6 Supreme Court has clearly and unequivocally held that 7 conduct that occurs in the course of litigation is covered 8 by the absolute litigation privilege. The Court finds, as 9 a matter of public policy, that it would be inappropriate 10 to allow the assertion of independant claims for conduct 11 that occurs within the course and scope of litigation. 12 That there are other available remedies, including ethics 13 complaints against lawyers involved in such conduct, 14 including contempt proceedings and the imposition of 15 sanctions, which appropriately can control that conduct. 16 And allowing the assertion of claims in independant actions 17 for conduct that occurs in the course and scope of 18 litigation would have an inappropriate and improper 19 chilling effect. 20 So in light of that broad privilege, anything and 21 everything that is asserted to have occurred in the context 22 of the underlying claims, such as asking three airplane 23 pilots inflammatory questions, first of all, does not 24 involve an abuse of process. And, secondly, is privileged 25 conduct. ORANGE REPORTING 800.275.7991 EFTA01069870  11 1 Next paragraph, Sub-paragraph Two of Paragraph 29. 2 Notifying Epstein of an intent to depose his high-profile 3 friends. 4 THE COURT: Let me just ask you, I've not read, 5 quite frankly, the Echevarria case but does it still stand 6 for the proposition that for there to be a litigation 7 privilege it must be related to the legal proceeding 8 itself? 9 MR. SCAROLA: Yes, sir. 10 THE COURT: It can't be something like -- okay. 11 MR. SCAROLA: If I were to issue a subpoena to 12 Mr. Edwards for the sole purpose of causing him to miss an 13 important business appointment where he was going to make a 14 lot of money and I'm requiring him to be in Court with no 15 legitimate connection whatsoever to the litigation that's 16 involved, that could constitute an abuse of process. One 17 of the elements clearly is that it must be related to the 18 litigation. But any conduct that occurs in relation to the 19 litigation is conduct that is protected by an absolute 20 privilege. 21 There is a discussion of the Levin, Middlebrooks case 22 where the Supreme Court makes clear that we're not just 23 talking about statements made in the context of litigation 24 but all tortious conduct that may be alleged. So it's a 25 very broad privilege. It covers exactly the kind of ORANGE REPORTING 800.275.7991 EFTA01069871  12 1 conduct that is alleged to have occurred here in Paragraph 2 One, which isn't conduct involving process in any case. 3 Paragraph 29, Two, notifying Epstein of an intent to 4 depose his high-profile friends. Telling somebody I'm 5 going to depose your friends isn't process. Issuing a 6 subpoena is process. Serving the subpoena is process. 7 Notifying somebody that you're going to depose his friends, 8 that's not process. 9 Asking Epstein outrageous questions in his deposition, 10 Sub-paragraph number Three, that's not process. 11 Sub-paragraph Four, requesting records from the federal 12 government regarding communications between the government 13 and Epstein lawyers. This is where the tortious 14 interference with the non-prosecution agreement is alleged 15 to have occurred because requests are made to find out 16 about communications between Epstein and the federal 17 government with regard to the very criminal activity that 18 forms the basis of the civil lawsuits that Mr. Edwards is 19 legitimately prosecuting on behalf of the child victims of 20 Mr. Epstein's criminal activity, clearly, could not 21 constitute abuse of process. 22 Paragraph Five, quite frankly, I just don't 23 understand. 24 Paragraph 29, Five, reads the representative of the 25 trustee for RRA's bankruptcy stated that there are ORANGE REPORTING 800.275.7991 EFTA01069872  13 1 thousands of documents involving RRA's employees and 2 government officials, including state and federal law 3 enforcement authorities relating to Epstein. What does 4 that mean in the context of this abuse of conduct claim 5 against Bradley Edwards? It just doesn't make any sense. 6 I can't respond to it because I clearly don't understand 7 it. 8 Six is requesting records from Dr. Bard who it is 9 claimed didn't treat Mr. Epstein. Well, okay, so what. I 10 guess one way to find out whether he treated Mr. Epstein is 11 to subpoena any records that he has about Mr. Epstein. 12 Subpoenaing records from a physician is not an abuse of 13 process outside the scope of the litigation privilege. 14 Paragraph Seven, filing a second amended complaint 15 alleging Epstein forced L.M. to engage in oral sex. Part 16 of the litigation privilege clearly. 17 Attempting to depose celebrity airplane passengers. 18 Clearly, within the course and scope of the litigation 19 privilege in the absence of any allegation that this was 20 entirely unrelated to the prosecution of the claims against 21 Mr. Epstein, which allegation appears nowhere. No such 22 allegation appears anywhere. 23 Nine, directing third-party subpoenas be used to 24 obtain Epstein's prescriptions from pharmacies. 25 Now, it doesn't say that the third-party subpoenas are ever ORANGE REPORTING 800.275.7991 EFTA01069873  14 1 issued but if we can infer that they were, this is conduct 2 that clearly falls within the scope of the litigation 3 privilege. 4 Paragraph 30 says that the defendants trespassed on 5 Epstein's property and conducted surveillance of him. Now, 6 without getting into the truthfulness of those allegations 7 which must be taken as true, if the defendants trespassed 8 on Mr. Epstein's property, then there may be a cause of 9 action for trespass. There is no cause of action for abuse 10 of process because somebody trespasses on your property. 11 There is no cause of action for abuse of process because 12 somebody decides that they are going to surveil you. 13 Paragraph 31 says that Mr. Edwards tried to plead a 14 RICCO claim. So what. 15 And Paragraph 32 says that he tried to freeze 16 Mr. Epstein's assets. So what. That does not constitute 17 abuse of process and to the extent it might be 18 characterized as a use of process in the context of the 19 litigation on behalf of his child victims of Mr. Epstein's 20 repeated extensive criminal activity, it is covered by the 21 litigation privilege. 22 There are three elements of damage that are alleged. 23 Fees and costs in the underlying litigation, which cannot 24 constitute damages in this case. And the installation of 25 an enhanced security system, which presumably may have some ORANGE REPORTING 800.275.7991 EFTA01069874  15 1 causal connection to the trespass on Epstein's property and 2 the conducted surveillance of him, but, certainly, has 3 nothing to do with any abuse of process. And the retention 4 of security personnel for Mr. Epstein's personal safety and 5 to protect his property. Now, there is no possible causal 6 connection between the alleged and privileged litigation 7 misconduct and Mr. Epstein's desire for privacy. 8 Another significant problem that this complaint faces 9 is that Mr. Epstein seeks to assert these claims by way of 10 an amended complaint when he has repeatedly and 11 persistently refused to provide any relevant or material 12 discovery as a consequence of the assertion of his Fifth 13 Amendment privilege. We have previously cited to Your 14 Honor a number of cases, a substantial body of case law 15 relating to the sword/shield doctrine. Mr. Epstein is 16 seeking affirmative relief. I don't challenge the validity 17 of his assertion of Fifth Amendment privilege. There is no 18 doubt in my mind that he faces the potential of additional 19 criminal prosecution. There are new claims that 20 Mr. Edwards himself has placed the defendants on notice 21 that he is about to file so there is no doubt about the 22 fact that Mr. Epstein faces additional potential criminal 23 liability and has a right to assert his Fifth Amendment 24 privilege against self-incrimination. But the case law is 25 absolutely clear he cannot come to this Court, sue Bradley ORANGE REPORTING 800.275.7991 EFTA01069875  16 1 Edwards and continue to assert his Fifth Amendment right as 2 to matters that are relevant and material to the claims 3 that he is attempting to prosecute. For, for all of those 4 reasons, and if the applicability of the sword/shield 5 doctrine is in any way challenged, I'll address that in my 6 response. I don't know how it can be. But for all of 7 those reasons this is a complaint, an amended complaint 8 which can, should and finally must be released. It must be 9 dismissed. Thank you, Your Honor. 10 THE COURT: Just one second. Let me read 11 something here. 12 MR. SCAROLA: The motion to dismiss reaches those 13 arguments through the incorporation of all of the arguments 14 in the summary judgment. 15 THE COURT: You must be some kind of psychic. 16 MR. SCAROLA: I anticipated that is where the 17 Court was going. The motion to dismiss, Your Honor, 18 expressly incorporates the arguments that were made during 19 the summary judgment hearing. And, clearly, one of the 20 principal arguments that was made in the summary judgment 21 hearing was an argument with regard to the sword/shield 22 doctrine. I apologize for having intruded upon your 23 thoughts. 24 THE COURT: Go ahead. 25 MR. KNIGHT: Your Honor, Christopher Knight on ORANGE REPORTING 800.275.7991 EFTA01069876  17 1 behalf of Jeffrey Epstein. And let me back you up as to 2 where we are and why we are. When we came into this 3 lawsuit there was the original complaint, which Mr. Scarola 4 talked about and Your Honor was allowing us to move forward 5 with discovery before we amended the complaint, which from 6 day one we said we will be amending the complaint to plead 7 the cause of action that we felt was appropriate. We tried 8 to go down that angle but plaintiffs -- I mean, excuse me, 9 the defendants asserted privilege to pretty much each and 10 every document which we will ever be able to get our hands 11 on. We did get some limited privilege logs, which will 12 come up in part of my argument, which is talks about why 13 the frivolity of this motion to dismiss. If they want to 14 move for a motion for summary judgment on down the line if 15 they have the facts after we get the document, that's a 16 horse of a different color. 17 But you asked us to -- first, let's take the 18 discovery. Unfortunately between Mr. Rothstein not being 19 able to be deposed, which we, of course, need to talk to 20 Mr. Rothstein about what Mr. Edwards' involvement was, and 21 their blanket assertion of privilege -- 22 THE COURT: Let me back up. I don't -- I 23 directed you to do discovery. I think I questioned why 24 there was never a motion to dismiss to the original 25 complaint and I said but this is the complaint we have to ORANGE REPORTING 800.275.7991 EFTA01069877  18 1 deal with. And I can't tell from reading this thing what 2 in the world the cause of action is and it created a lot of 3 problems in terms of what the scope of discovery was. 4 Without knowing what you are suing for it's very difficult 5 to figure out the scope of discovery and that's why I 6 directed Mr. Ackerman to file an amended complaint so we 7 would be able to focus in on what is discoverable, what 8 isn't, what the cause of action is and that sort of thing. 9 MR. KNIGHT: Correct. And then we went forward 10 with what we had to date, which is a reasonable basis for 11 abuse of process claim which has been made. The complaint 12 on its four corners meets all the standards which are 13 required. And these are the cases that are already cited 14 in our briefing and the response, is the Donna Della case, 15 which is the 4th DCA case out of 1987, and goes through the 16 various factors, which leads to what I must give you, which 17 is a little bit of background so that you have it. 18 Mr. Epstein came over to the Rothstein firm with three 19 cases. Excuse me. Mr. Edwards. Mr. Edwards came over to 20 the Rothstein firm with three of these files. After he got 21 to the Rothstein firm Mr. Rothstein, Mr. Edwards, and 22 others used the cases to pump up the Ponzi scheme. The 23 documents that we need and the privilege logs -- 24 MR. SCAROLA: Excuse me, Your Honor, I'm sorry. 25 THE COURT: That's not even alleged. ORANGE REPORTING 800.275.7991 EFTA01069878  19 1 MR. SCAROLA: It is not alleged. And I cannot 2 allow counsel to make those kinds of statements in open 3 court in the presence of the press and leave them 4 unchallenged. That's exactly what has repeatedly gone on 5 in this case to besmirch Mr. Edwards' reputation. 6 THE COURT: Let me stop you. What I'm concerned 7 about with this complaint, okay, and what concerns me is 8 that there are allegations that the defendants did this, 9 the defendants did this without specifying who did what to 10 whom and why. It seems to me if you are going to sue 11 Mr. Edwards or anyone else, for that matter, you need to be 12 specific as to what he did or what you accuse him of before 13 I -- I dismiss routinely complaints like this, which 14 generically say the defendant did something without 15 specifying who did what to whom and why. Because it does 16 not spell out what your claims are I don't know what 17 Mr. Rothstein did. What Mr. Edwards did. Or -- and you 18 also say and others. Who? I don't know who they are. 19 And the other problem I have with it, aside from, I 20 think there are some other issues, but your prayer for 21 damages is specific as to some things but also has that, 22 that, that, phrase that, that we all, you know, perk up our 23 ears on, including but not limited to, which leads me to 24 believe there is something else there that you're claiming 25 in terms of damages, which is not, in fact, spelled out in ORANGE REPORTING 800.275.7991 EFTA01069879  20 1 the complaint. And if there are, in fact, special damages, 2 I think they have to be pled, as compared to general 3 damages. So I don't know whether you're asking for and it 4 makes a big difference, ultimately, what, what -- if we get 5 to the point of the discovery issue -- what the defendants 6 can get from the plaintiff and vice-versa. I mean, if 7 you're claiming damage to reputation, lost profit, I don't 8 know what it is you're claiming. I don't know what 9 including but not limited to means, quite frankly. 10 MR. KNIGHT: Your Honor, let me break these down. 11 THE COURT: Okay. 12 MR. KNIGHT: You brought up the subject early on 13 about lumping the defendants together and there was an 14 early paragraph which did so. The Paragraph 29, which Mr. 15 Scarola went through, is going through allegations relative 16 to Mr. Edwards and if it needs to be divided out relative 17 to Rothstein and Edwards, we will do so as it relates to 18 damages. The law under abusive process is even nominal 19 damages are enough to survive for a cause of -- 20 THE COURT: Don't misunderstand, Counsel, I don't 21 disagree with that proposition that you allege damages that 22 you claim are a result of this. What I'm concerned about 23 is you have thrown in the kitchen sink in that, which is 24 included not limited, does that mean you're claiming other 25 damages or not claiming other damages? I don't know what ORANGE REPORTING 800.275.7991 EFTA01069880  21 1 that means. 2 MR. KNIGHT: At this time we're claiming the 3 three areas of specified damages which we went into but the 4 reason that catch-all is in there it goes back to this 5 whole issue relative to the documents that we have been 6 unable to receive. We believe that there will be other 7 damages that maybe would be asserted at that time. If Your 8 Honor is saying what he would rather have us do is once we 9 get the documents, amend again, I fully understand. We can 10 do so. But at the same time we don't want to be precluded 11 from being able to move forward with our cause of action. 12 The abuse of process cause of action is spelled out in 13 all four corners under the Della Donna decision and, also, 14 the SCI Funeral comments relevant to it, which have been 15 provided in the earlier briefings. Here at the motion to 16 dismiss stage that is where we, that's what the Court needs 17 to look at, as we have discussed. The areas relative to 18 litigation privilege, which Mr. Scarola went at length 19 into, deals with tortious interference causes of action and 20 do not deal with abuse of process. It would be nonsensical 21 for abuse of process to have a privilege because, 22 therefore, you will never be able to bring a cause of 23 action for abuse of process. 24 THE COURT: Let me disagree with you. I think 25 that the litigation privilege would go to any process ORANGE REPORTING 800.275.7991 EFTA01069881  1 served in the litigation that's relevant to the litigation. 2 It doesn't give you the right to go out and subpoena the 3 president of the United States in a case just to get, for 4 some reason, unrelated to the purposes of the litigation. 5 So, I mean, there is, I read these cases. Unless this has 6 changed the law. At least, it allows abuse of process in 7 civil litigation if, in fact, the processes are not for a 8 legitimate purpose. 9 MR. KNIGHT: If the unrelated areas are -- 10 THE COURT: His point was how can these be 11 illegitimate, I think is what his point was. 12 MR. KNIGHT: If that's his point but what I was 13 taking he was using the cases of tortious interference. 14 THE COURT: I don't think it matters what 15 tort it is. I think the litigation privilege applies 16 whether it's libel, slander, tortious interference, you 17 know, abuse of process, malicious prosecution, all of those 18 there is a litigation privilege associated with that. And 19 it's a natural privilege. That's how I understand the law. 20 I may be misquoting it but that's what I understood the law 21 is. 22 MR. KNIGHT: Understood. And the allegations 23 which are in Paragraph 29 go into some of those areas which 24 are outside, including Mr. Edwards' own deposition. I 25 mean, in his lawsuit, his clients were never on these ORANGE REPORTING 800.275.7991 EFTA01069882  23 1 airplanes yet they went forward and took the depositions of 2 these pilots, et cetera, on the airplane causing excess 3 fees. And really what this was being used for is to be 4 able to gain information which could be used in the 5 underlying promotion in the Rothstein cases. And that's 6 why I brought it up earlier when I was interrupted by Mr. 7 Scarola. It is relevant to what we're talking about today. 8 This is a matter where Mr. Edwards' deposition said I had 9 very little contact with Mr. Rothstein. But at the same 10 time we learn once we get to the privilege log and also the 11 only time he dealt with Mr. Jenny was when Mr. Jenny, who 12 is the investigator approached him, that they are claiming 13 privilege related to, we counted it up, dealing with 14 eighteen to twenty attorneys, nine paralegals, plus 15 investigators. 16 MR. SCAROLA: Excuse me, Your Honor, I thought 17 we were arguing the motion to dismiss and not the privilege 18 issue. 19 MR. ACKERMAN: I am. But Your Honor's specific 20 question -- I would ask Mr. Scarola to hold his 21 arguments -- but Your Honor's specific question dealt with 22 what are these areas which are outside of the tort or 23 whatever is being sued on. And if those are being done for 24 some purpose other than the underlying litigation, which 25 were the L.M. and the Jane Doe and E.M. cases here, then ORANGE REPORTING 800.275.7991 EFTA01069883  1 that is abuse of process. This is at the point of 2 allegations without us being able to get discovery. The 3 allegations we have put into Paragraph 29 in specificity, 4 especially, when you get into Paragraph Four under, under 5 29, which deals with Mr. Edwards going to the Court 6 relative to what should be something relating to the three 7 lawsuits that he has, when what it really is undermine the 8 non-prosecution agreement. Why is that relevant to abuse 9 of process? Well, all that is being used for is to find a 10 way to ramp up our client relative to other worries, which 11 are unrelated to the prosecution of those individual victim 12 cases so that he ends up having to be in a situation where 13 he has to pay exorbitant dollars, which otherwise would 14 multiply what the amount of the actual value of those 15 underlying cases otherwise would be. The complaint itself 16 goes through all that is required under Della Donna. 17 THE COURT: I presume in those underlying cases 18 there were claims of punitive damages; is that correct. 19 MR. KNIGHT: There are claims of punitive 20 damages, correct. 21 THE COURT: Okay. 22 MR. KNIGHT: By the same thing, even looking into 23 that, the efforts to freeze assets, things like that. 24 There was no indication at any point that Mr. Epstein would 25 be unable to cover whatever the compensatory damages and, ORANGE REPORTING 800.275.7991 EFTA01069884  25 1 if punitive damages were ever to be allowed, any type of 2 punitive award. All of this was done to ramp up these 3 cases outside of these three, which were the ones that 4 Mr. Rothstein, and as we get through discovery, we believe 5 Mr. Edwards were using to sell to the various investors to 6 ramp up the Ponzi scheme. They are tied together. They 7 are in the same firm. These are the lawsuits that were 8 used when the various investors came into the office with 9 Mr. Rothstein. Mr. Edwards is claiming, I believe, that I 10 had no idea that this was going on with my lawsuits. 11 Although, we know in the privilege log they're claiming 12 that he's dealing with the eighteen to twenty attorneys, 13 the nine paralegals and the investigators. They just don't 14 add up both ways. 15 But relative to what we're here on today, the motion 16 to dismiss, this amended complaint does plead a cause of 17 action under Florida law. If Your Honor wants us to go 18 back and plead with more specificity relative to where we 19 put in defendants, we will do so. I would suggest it would 20 be better for us to be able to get the discovery. And the 21 reason we have so many people here is we have 22 Mr. Weinberg here to represent -- to talk about privilege 23 issues. Mr. Ackerman to talk about various issues that may 24 come up, including sword and shield. Get to those so that 25 we don't constantly have to be coming back to the Court. ORANGE REPORTING 800.275.7991 EFTA01069885  26 1 This complaint does plead a cause of action under Florida 2 law and the motion to dismiss should be denied. Thank you. 3 THE COURT: Speak to the fact that some of these 4 things I, I mean, I understand how, even though they ask 5 you, the question in and of itself may not be abuse of 6 process. The actual subpoenaing somebody and then asking 7 of the questions may be abuse of process, at least, in my 8 view. If, in fact, the only purpose of doing that is to, 9 like you have alleged here, to somehow or another for 10 illegal purposes or for improper purposes. But there are 11 some of these things that you've alleged here I don't know 12 how ever could be abuse of process. Like notifying 13 somebody that they intend to do something, how could that 14 possibly be abuse of process? Or saying -- or how can 15 investigation be an abuse of process, or surveillance be an 16 abuse of process. That's not using the process of the 17 Court for anything. Maybe I'm missing something. 18 Or what does this mean, the representative of the 19 trustee for RRA's bankruptcy stated there are thousands of 20 documents involving RRA employees and government officials 21 including state and federal law enforcement authorities 22 relating to Epstein. What does that have to do with abuse 23 of process? 24 MR. KNIGHT: That one -- 25 THE COURT: Let me finish and then you can ORANGE REPORTING 800.275.7991 EFTA01069886  27 1 respond. 2 MR. KNIGHT: Yes, sir. 3 THE COURT: Why is making an allegation in a -- 4 well, I guess that could -- I can see that. Attempting to 5 discover information. You know, it's like -- what I'm 6 getting at do you have any case law that says abuse of 7 process can be not actually issuing process but thinking 8 about it or threatening it or something like that? 9 MR. KNIGHT: The Della Donna case doesn't go into 10 investigation. The privilege issue really comes up as an 11 affirmative defense, Your Honor, and that's what the cases 12 say also. 13 THE COURT: I'm not talking about privilege. 14 MR. KNIGHT: As it relates to these allegations, 15 though, if some of them can be taken apart to say, well, 16 this one could be connected back to the process, i.e. the 17 pilots being deposed, et cetera, and the other one is more 18 flavor for the complaint. But to be able to spell out this 19 complaint so the Court can understand where we're 20 eventually going, because we haven't had these documents, I 21 think putting that into the pleadings is the correct thing 22 to do so that the Court can understand the complexity of 23 this and what's involved and why we need to find out more 24 so that we can get into the specifics. Clearly, we have 25 enough for abuse of process. Whether or not some of these ORANGE REPORTING 800.275.7991 EFTA01069887  28 1 individual paragraphs would not survive or individual 2 sub-part As or Bs, you may be correct. But I think the 3 Court needs that in the amended complaint to get the 4 overall flavor of what the abuse of process cause of action 5 is. 6 THE COURT: That may be. But what you've, you've 7 alleged these as specific acts of abuse, though. You don't 8 allege this as some kind of background or context or 9 something like that. 10 MR. KNIGHT: And we did -- we allege it but I 11 understand Your Honor's point saying how is that connected 12 to the process because they did go forward and actually -- 13 THE COURT: It says -- 14 MR. KNIGHT: -- they didn't serve the celebrities 15 they just threatened to serve the celebrities. 16 THE COURT: I'm just reading what you said. This 17 is not my words. It says the defendants made illegal, 18 improper and perverted use of the process by utilizing 19 unreasonable discoveries, unnecessary discovery, or 20 threatening to take discovery and then you list. And some 21 of these it seems to me are not actionable as a matter of 22 law, the way you've pled it anyway. I mean, maybe -- 23 MR. KNIGHT: I think Your Honor's point is that 24 it should have been more to the general allegations of the 25 preamble rather than the specifics. ORANGE REPORTING 800.275.7991 EFTA01069888  29 1 THE COURT: I'm also concerned about the fact 2 that you've lumped all the defendants together in one -- 3 two defendants, I guess, together without specifying which 4 did which. And I understand it's kind of a chicken before 5 the egg, egg before the chicken. 6 MR. KNIGHT: Chicken or egg or cart before the 7 horse, Your Honor, it's all the same thing. When we look 8 at these privilege logs we see the involvement of so many 9 people and the Court rightfully said let's try to amend the 10 complaint. Now, we did the best we can with the facts we 11 have but they are still playing this we're not going to 12 give you anything defense, which puts us, you know, in a 13 position where certainly they should not be able to take 14 that as an advantageous position and now say, oh, let's go 15 ahead and dismiss this complaint and we'll still hide all 16 of these documents from you we haven't given. Certainly, 17 these documents, many of them are waived. Many of them are 18 privileged on their face, et cetera. We want to know the 19 who, the how, the when. And then there could be additional 20 abuse of process allegations in there with more specificity 21 but at it relates to this complaint itself, it has enough 22 of the four corners to survive the motion to dismiss. 23 THE COURT: Anything further? 24 MR. SCAROLA: Yes, sir, Your Honor. What we have 25 heard is, indeed, a cart before the horse argument. We ORANGE REPORTING 800.275.7991 EFTA01069889  30 1 filed this defective complaint because we haven't gotten 2 the discovery that will enable us to file an appropriate 3 complaint. You need to have the basis to sue first. And 4 you need to state a viable cause of action first. You 5 don't excuse obvious defects in your pleading on the basis 6 that you haven't yet gotten the discovery that you hope is 7 going to provide a basis for some cause of action and I 8 don't know what it is. What Echevarria says is, quote, in 9 the Levin case the 11th Circuit certified a question to 10 this Court asking whether Florida's litigation privilege 11 protects the acts of certifying to a trial Court an intent 12 to call opposing counsel as a witness at trial in order to 13 obtain counsel's disqualification. And later failing to 14 subpoena and call that person as a witness from a claim of 15 tortious interference with a