EFTA00285631.pdf

I877DOEC UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF NEW YORK x 4 Plaintiff, 5 v. 17 Civ. 616 (JGK) 6 JEFFERY EPSTEIN, GHISLAINE MAXWELL, 7 and 8 Defendants. 9 x New York, N.Y. 10 August 7, 2018 2:30 p.m. 11 Before: 12 HON. JOHN G. KOELTL 13 District Judge 14 APPEARANCES 15 BOIES SCHILLER & FLEXNER LLP 16 Attorneys for Plaintiff BY: SIGRID MCCAWLEY 17 S.J. QUINNEY COLLEGE OF LAW 18 AT THE UNIVERSITY OF UTAH Attorneys for Plaintiff 19 BY: PAUL CASSELL 20 STEPTOE & JOHNSON LLP Attorneys for Defendants Jeffery Epstein, and 21 BY: MICHAEL MILLER 22 JUSTIN CHU 23 DARREN K. INDYKE LLC Attorney for Defendant Jeffery Epstein 24 BY: DARREN K. INDYKE 25 SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300 EFTA00285631  I877DOEC APPEARANCES (Continued) HADDON MORGAN & FOREMAN P.C. Attorneys for Defendant Ghislaine Maxwell BY: LAURA MENNINGER 4 ALSO PRESENT: ALEXANDER LORENZO 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300 EFTA00285632  I877DOEC (Case called) (In open court) MS. MCCAWLEY: Sigrid McCawley for 4 plaintiff, along with my co-counsel Paul Cassell. 5 MR. MILLER: Good afternoon, your Honor. Michael 6 Miller and Justin Chu from the law firm of Steptoe & Johnson, 7 and Darren Indyke, who is counsel to Mr. Epstein. We represent 8 Jeffery Epstein and , and yesterday filed a 9 substitution of counsel with respect to , whose 10 previously existing counsel is also here today, and if the 11 Court is comfortable with the substitution of counsel, we will 12 argue for all three defendants. 13 THE COURT: I signed it already. 14 MR. MILLER: Fine. Thank you, your Honor. 15 THE COURT: And it should be on the docket, I think. 16 MS. MENNINGER: Good afternoon, your Honor. Laura 17 Menninger, on behalf of Ghislaine Maxwell, from Haddon Morgan & 18 Foreman. 19 MR. LORENZO: Good afternoon, your Honor. Alex 20 Lorenzo from Alston & Bird. As Mr. Miller indicated, we are 21 now predecessor counsel. I saw the order pop on the docket. 22 wanted to come down in case that there was some issue, but I 23 would request permission to be excused. 24 THE COURT: Yes, you can be excused. Thank you. I 25 did sign the substitution, as you saw. SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300 EFTA00285633  I877DOEC All right. OK. I know people personally and professionally at Boies Schiller. I knew Mr. Haddon when I was in private practice. I may know people at Steptoe, but I'm not 4 sure. Nothing about any of that affects anything that I do in 5 the case. 6 I also had dealings with Mr. Boise when I was in 7 private practice. Again, nothing about that affects anything 8 that I do in the case. These are motions to dismiss. I'm 9 familiar with the papers, and I'm prepared to listen to 10 argument. 11 MR. MILLER: Your Honor, can I address you from the 12 podium there? 13 THE COURT: Sure. 14 MR. MILLER: Michael Miller from Steptoe & Johnson, 15 and as I indicated we are here on behalf of and Jeffery 16 Epstein, and 17 Your Honor, we respectfully submit that the amended 18 complaint before you is legally deficient and should be 19 dismissed for several reasons, the first of which is that it 20 was not filed timely. Our belief is that the statute of 21 limitations has lapsed. 22 The amended complaint also fails, your Honor, to 23 properly allege fraud, coercion or force, which are three 24 alternative ways of proving a violation of Section 1591. More 25 broadly, your Honor, it's our view that section 1591 does not SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300 EFTA00285634  I877DOEC apply to the conduct alleged in this case. And, lastly, at least in terms of points that we will be making, is that we believe that there have been insufficient 4 allegations of personal jurisdiction. 5 In an effort to do this efficiently, your Honor, Ms. 6 Menninger and I have divided up these topics, and if it's all 7 right with the Court, I will be addressing the statute of 8 limitations issue, the allegations of fraud, the scope of 9 Section 1591, and the lack of personal jurisdiction; and Ms. 10 Menninger will be addressing the allegations of coercion and 11 force, the lack of a causal link between those allegations and 12 sexual activity, and the specific allegations with respect to 13 her client. 14 Your Honor, starting with statute of limitations, 15 Section 1591 was enacted in 2000 with a four year statute of 16 limitations. That was the statute of limitations in effect 17 when the events at issue in this case occurred, and those 18 events as alleged were in 2006 and 2007. Clearly, if the four 19 year statute of limitations applies, the lawsuit was not 20 started in a timely fashion. 21 In late 2008, effective early 2009, Section 1591 was 22 amended to permit a ten year statute of limitations. And I 23 think the preliminary, the threshold issue before the Court 24 today, is whether the four year statute of limitations or the 25 ten year statute of limitations should apply to this case. SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300 EFTA00285635  I877DOEC THE COURT: When the statute was amended to increase the statute of limitations to ten years, the claims were still alive under the four year statute of limitations had the case 4 been brought at that time. 5 MR. MILLER: That is correct, your Honor. And I am 6 aware that there are two cases here -- I believe they are 7 district court cases -- where that analysis has been applied to 8 conclude that the ten year statute of limitations applies. We 9 cited a case out of the District of Minnesota, the Abarca case, 10 that takes a different view, and the thinking in the Abarca 11 case -- which we think is the correct thinking -- 12 THE COURT: So far the thinking in this District is 13 against you. 14 MR. MILLER: I appreciate that, but I think that the 15 analysis in Abarca, which basically is that Congress had the 16 ability to articulate that it wished to apply it retroactively, 17 wished to apply it to any action that was not time barred at 18 the time of amendment and didn't do so. 19 THE COURT: But the issue then becomes a definition of 20 retroactivity. The rules against retroactivity are there to 21 prevent -- unless the legislature otherwise provides -- that t 22 cause of action is not revived or that rights are not otherwise 23 cut off. Here there is nothing that was being revived and 24 there was nothing that was being cut off. Congress simply made 25 a determination that the statute of limitations would be SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300 EFTA00285636  I877DOEC lengthened. So there was no need for Congress to say we're reviving a cause of action that is otherwise barred, which would be the core of a problem of retroactivity. So you have 4 to ask in the first instance if there is a claim of 5 retroactivity, did Congress specifically authorize the 6 retroactive application. In this case there was no retroactive 7 application to be applied; Congress simply lengthened the 8 statute of limitations, and that included all causes of action 9 that were alive at that time. That logic seems to be right. 10 MR. MILLER: Well, if I can, your Honor, I certainly 11 understand, accept and agree with the proposition as you've 12 articulated it as far as it goes, but I think that the case law 13 with respect to retroactive application isn't limited to vested 14 rights like the statute of limitations has already expired and 15 the new statute of limitations would restore an action that has 16 already ceased to be subject to prosecution under the statute 17 of limitations. It's not limited to reviving an affirmative 18 defense that has already run its course. 19 I respectfully submit that there is a significant 20 impact on defendants. At the time that the alleged activity 21 occurred here, there was a four year statute of limitations. 22 By expanding it to ten years, at the time that they engaged in 23 that conduct -- if they were even aware of the statute -- they 24 would have been operating under the assumption that there was a 25 four year statute of limitations. SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300 EFTA00285637  I877DOEC THE COURT: Yes, it would have been -- it is a difficult argument that a defendant can rely upon the statute of limitations which has not yet expired so that the defendant 4 can say, you know, you can't sue me; you have a few more years 5 to sue me, but after that you can't sue me because of this 6 statute of limitations. Much more powerful argument would be a 7 defendant who says I rely on the fact that if I did something 8 more years ago than the statute of limitations, I am now safe. 9 A defendant who is still subject to being sued cannot say to 10 himself or herself I am now safe. 11 MR. MILLER: That's undeniable, that is true, but in 12 the same breath you could say that by 2011 or thereabouts 13 certain rights that would have existed under the four year 14 statute of limitations would have matured at that point, and 15 from that date forward, from whatever that four date year was 16 forward, there were certain rights that would have existed but 17 for the amendment of the statute of limitations, and that is 18 something of value that is essentially taken away by a 19 retroactive application of the ten year statute of limitations 20 to conduct that predated the date of the amendment. 21 I sense that I'm sledding uphill, and so perhaps I 22 should push my sled in a different direction, but I do believe 23 that the two district court cases here were incorrectly decided 24 on that theory and that the ten year statute of limitations 25 should not apply. SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300 EFTA00285638  I877DOEC But even if it does apply, your Honor, according to the amended complaint, in January of 2007 -- and I guess just by way of a footnote, the original complaint was filed in this 4 case on January 26th of 2017 -- so in January of 2007, 5 according to the amended complaint in paragraphs 55 to 57, the 6 plaintiff went to to visit with her family. 7 That's where her father and stepmother and other family members 8 live. Under the Oluch case which we cited from the Southern 9 District, a 2015 case, frankly under the Abarca case from the 10 District of Minnesota that we also cited, the cause of action, 11 if any, that the plaintiff had with respect to the defendants 12 under Section 1591 accrued as of that point in time. 13 Under Oluch the Southern District held that the claim 14 accrued when the plaintiff first left the defendant's home. In 15 the Abarca case -- which I grant is the District of 16 Minnesota -- they put it slightly different, when the plaintiff 17 traveled home to Mexico and had "physical freedom" the cause of 18 action accrued. 19 Under the complaint, the amended complaint as drafted, 20 the plaintiff left New York City, left where Mr. Epstein and 21 the defendants were allegedly located, and went home and had 22 the kind of physical freedom that the Abarca case speaks to. 23 Now, the complaint is in all candor vague about when 24 in January of 2007 that trip occurred, and the lack of detail 25 is odd because, as you may recall from earlier stages of this SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300 EFTA00285639  1C I877DOEC case, after the original complaint was filed, we worked out a process with the Court's consent whereby we provided a deficiency letter to the plaintiff, to counsel, outlining the 4 many, many issues that we had with the complaint at that time, 5 and one of those issues was statute of limitations, and one of 6 the points we made is that, to the best of our knowledge, she 7 left, she was already gone and left New York City before 8 January 26 of 2007, more than ten years before the complaint in 9 this action was actually filed. 10 There is additional evidence that was addressed in the 11 papers, and from a procedural perspective let me pause for a 12 moment. I would like to be able to speak to the evidence that 13 was gathered in the case, which is the subject of a 14 protective order. It's all before you, but I just don't know 15 if you have any reservations about me speaking about it openly 16 in court about it today. 17 THE COURT: I don't. Do any of the parties? 18 I should add that it is not clear to me -- in fact 1 19 should put it differently. I think the various items that you 20 rely on from the deposition in the other case are not properly 21 considered by me on this motion, which is a motion to dismiss 22 on several grounds. 23 The parties go to great lengths to describe the 24 plaintiff in the most uncomplimentary terms based on the 25 deposition in the other case. Those allegations are plainly SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300 EFTA00285640  11 I877DOEC not in the complaint in this action. The deposition was taken after the complaint in this action. There is no reasonable legal basis that I see for incorporating the allegations or the 4 statements in the deposition in the other case in support of 5 the motions in this case. 6 The deposition in the other case was taken after the 7 complaint in this case, was not incorporated into the complaint 8 in this case, was plainly not relied upon by the plaintiff in 9 drafting the complaint in this case, and appears to me to be 10 admitted or offered by the defendants solely for purposes of 11 influencing me against the plaintiff in this case, contrary to 12 the facts that are pleaded in this case, and that includes the 13 comments about the statute of limitations. 14 MR. MILLER: If I might, just briefly, your Honor. 15 THE COURT: Yes, sure. 16 MR. MILLER: Just two quick points. One is 17 chronologically the original complaint was filed in January of 18 2017. It's my understanding, my recollection, that the 19 depositions at issue occurred after that but before the first 20 amended complaint was drafted and filed, so from a timing 21 perspective, if that matters in your analysis -- 22 THE COURT: Thank you. It doesn't. It doesn't. Hold 23 on. I appreciate your correcting the chronology, but the 24 deposition was plainly not relied upon by the plaintiff in 25 drafting this complaint, and the plaintiff doesn't rely upon SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300 EFTA00285641  12 I877DOEC any of the allegations in that deposition for purposes of the allegations in this complaint. MR. MILLER: Well, I think we carefully articulated in 4 our motion papers that the reason we cited to the 5 evidence was to establish that if the Court agreed that the 6 first amended complaint as drafted was legally insufficient, 7 that a dismissal should be with prejudice, because based on the 8 evidence there is no available theory under which the 9 case -- the complaint could be repled properly. 10 THE COURT: That really is not the way in which the 11 deposition was used. It was not used for purposes of saying 12 don't let the plaintiff amend because look at what was said in 13 the deposition. It was used, for example, to say on the 14 statute of limitations that while the complaint alleges 15 activities that continued into February of 2007, you can't 16 believe those allegations because at that time the plaintiff 17 was in fact a willing and knowledgeable person who was doing 18 other things, other things which are not alleged in the 19 complaint. And they were used for purposes of saying you 20 really can't credit the allegations in the complaint of force 21 or fraud, coercion, because look at all of the other things 22 that the plaintiff was doing. 23 MR. MILLER: Your Honor, I must say, I take ownership 24 of the drafting of that motion. It was our intention, if 25 inartfully framed, to really speak to the ability of the SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300 EFTA00285642  13 I877D0EC plaintiff to replead a legally sufficient complaint. And I would be happy to sit down with you and go over the motion papers as drafted, but -- 4 THE COURT: Well, trust me we will not sit down and go 5 over the motion papers. Trust me also that I carefully read 6 all of the motion papers, and I was more than surprised that 7 lawyers of the distinction of the lawyers in this case on the 8 defense side would do what you did. 9 Now, you may say, oh, Judge, even though our papers 10 were larded with an explicit discussion of each of the 11 plaintiff's relations with other people, right down to the most 12 recent allegations of the plaintiff's alleged other occupation, 13 all of that, we're not relying on that for our motion to 14 dismiss; we're relying on that for our argument that once 15 having dismissed this complaint you shouldn't let the plaintiff 16 replead. 17 You can say that, but I don't think that any 18 reasonable person reading these briefs would come away with 19 that as a conclusion. And also one wonders how that would even 20 make any sense. If I were to grant the motion to dismiss 21 because there are insufficient allegations in the complaint, _ 22 should then rely upon the deposition to say that the plaintiff 23 could not replead because I now can read the deposition and 24 rely upon the statements in the deposition, and conclude that 25 any new complaint would not survive a new motion to dismiss, SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300 EFTA00285643  14 I877DOEC when the new complaint would plainly not rely upon the specific allegations that the defendants are relying on in the deposition? That would be a difficult argument. Moreover, it 4 is contrary to what you said in the briefs. 5 In the briefs you attempted to come up with other 6 reasons for putting all of this in, reasons like the plaintiff 7 started it; we were able to rely upon the deposition because 8 the plaintiff relied on the deposition. Well, that's not quite 9 right, is it? 10 You made the motions to dismiss, and then the 11 plaintiff responded to the motions to dismiss. And the 12 plaintiff said, you know, the deposition doesn't really say 13 what you're saying it says. But it was in the motions to 14 dismiss, so -- but go ahead. 15 MR. MILLER: Your Honor, I will just say I apologize 16 for any unintended confusion on our part about how we intended 17 to use the evidence from the matter, and -- 18 THE COURT: I should add, the amount of the briefs 19 that are devoted to the allegations from the deposition, I 20 haven't counted up words or pages, but there is an awful lot of 21 these briefs that rely upon what was said at the deposition, 22 and under the law that's just not right. Just as a matter of 23 law it's not correct, which is what brought me to my comment of 24 surprise at the defense counsel doing that. 25 MR. MILLER: Thank you, your Honor. Understood. SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300 EFTA00285644  I877D0EC will proceed without any further reference to that body of information. In addition to the fact that the complaint itself, the 4 amended complaint itself, acknowledges that the plaintiff left 5 New York in January of 2007, the complaint also states that at 6 the time that the plaintiff left in January of 2007 and went to 7 , that when she went to she was asked 8 to look for somebody to work as a personal assistant to 9 Mr. Epstein, and she decided not to do that, having concluded 10 that the individual, rather than being treated as an assistant, 11 might be treated in another, you know, less reputable way. And 12 I believe it is fair to conclude from that language in the 13 amended complaint that by the time the plaintiff left New York 14 to go to in January of 2007, she had already come 15 to a place where in her mind she didn't believe she could trust 16 the defendants or the representations that they were making to 17 her about what they were actually seeking to accomplish with 18 THE COURT: What do I do, for example, with the 19 allegation in the amended complaint in paragraph 61? "In 20 February of 2007, in reliance on promises made by the 21 defendants, plaintiff returned to New York City, in the 22 Southern District of New York, and was promptly ordered by the 23 defendant Maxwell to have sex with defendant Epstein. 24 Defendants Maxwell, and Epstein each fraudulently 25 promised plaintiff again that her sexual compliance would be SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300 EFTA00285645  16 I877DOEC rewarded with admission to the Fashion Institute of Technology or a comparable college, a promise which they knew to be false." 4 MR. MILLER: I think in short strokes you have an 5 individual who claims that before she left, or at the time she 6 left New York, she no longer believed the representations made 7 by the defendants to her. That is difficult to reconcile with 8 the notion that she left her family in to come 9 back to New York based on additional promises and 10 representations made by the defendants. So, we have a 11 fundamental conflict within the four corners of the complaint 12 as drafted. 13 THE COURT: It wouldn't be the first time for a fraud 14 case in which an alleged victim of a fraud came to believe that 15 the victim was defrauded, and the perpetrator goes to the 16 victim and convinces the victim to invest yet again. Those 17 cases are in fact not uncommon. 18 So, you say there are conflicting allegations in the 19 complaint. That means that they're not really susceptible to a 20 motion to dismiss. They may be susceptible to a motion for 21 summary judgment. But the only way to grant the motion on 22 statute of limitations grounds is to say that paragraph 61 is 23 simply false, it's a false allegation, you can't take it, 24 Judge. 25 And in order to support that, of course, in your SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300 EFTA00285646  17 I877DOEC papers you describe what you say the plaintiff was doing after she returned to New York. But you say, well, we're not relying on that for the motion to dismiss; we're relying on it solely 4 that she can't file an amended complaint. 5 MR. MILLER: That is correct. 6 THE COURT: But then I'm left with the unrebutted 7 paragraph 61. 8 MR. MILLER: The way we read that paragraph is that 9 the allegations were broad, they were conclusory, they don't 10 satisfy Rule 9(b) particularization, and there is no way to 11 read those additional allegations in light of the other 12 allegations in the amended complaint to demonstrate that the 13 plaintiff reasonably relied on whatever new representations 14 were made to her. 15 So, given the unique definition of Section 1591, it is 16 our view that those allegations about the conduct that occurred 17 between February and May of 2007 don't establish a violation of 18 Section 1591. 19 Whatever conduct occurred before January of 2007 -- 20 and obviously on the merits, you know, we have a different view 21 of the underlying allegations, but whatever happened before 22 January of 2007, that cause of action accrued at the time the 23 plaintiff left New York and went to under the 24 cases that we discussed earlier. 25 So, our view is that the ten year statute of SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300 EFTA00285647  18 I877DOEC limitations ran on the activity that occurred before January of 2007 and that the new allegations that were raised don't satisfy the elements of Section 1591. 4 Your Honor, Section 1591 requires that the defendants 5 know and, indeed, in some manner of conduct, know that an 6 individual is going to be subject to amongst other things 7 force, coercion or fraud. 8 We respectfully submit that the amended complaint as 9 drafted does not satisfy Rule 9(b) pleading standards. The 10 amended complaint fails to allege with particularity when any 11 representations -- specifically when any representations were 12 made to plaintiff about getting her into -- which seems to 13 have been the principal factual allegation in the amended 14 complaint -- or any other particular school, particularly 15 whether any of those representations were made before or after 16 the alleged sexual relationship began. 17 In addition, the amended complaint fails to allege 18 with particularity what any particular defendant said to her 19 about her prospects of getting into MM. or any other particular 20 school. There is a heavy reliance throughout the amended 21 complaint on group pleading, which is not embraced in this 22 Circuit, when you're talking about oral statements and 23 representations. And the allegations with respect to 24 defendants and are particularly threadbare and 25 conclusory. SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300 EFTA00285648  19 I877DOEC The amended complaint also fails to allege with particularity whether anyone promised that the plaintiff would get into §§§ or any other similar school in any particular 4 semester. 5 The amended complaint fails to allege facts 6 demonstrating that at the time whatever statements were made 7 about MI., that they were false when made. The law is clear in 8 this jurisdiction that the question is were the statements 9 false at the time they were made. And the fact that there has 10 been inaction in connection with the promises isn't sufficient 11 to show that the statements were false when made. 12 The amended complaint contains allegations, your 13 Honor, that strongly suggest to the contrary. The allegations 14 in the complaint are that Mr. Epstein promised to take care of 15 this individual and that he in fact gave her access to an 16 apartment, a car, telephone, and that with respect to the 17 school, that the complaint acknowledges that Epstein reminded 18 the plaintiff about completing her application and reviewing it 19 for her. None of those facts contained in the amended 20 complaint are consistent with the notion that at the time 21 whatever statements were made those statements were false. 22 THE COURT: One of the arguments made in the papers is 23 that it was incredible for the plaintiff to believe that 24 defendant Epstein could impact, derail her application to I'M 25 and derail her career, that is simply incredible, or SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300 EFTA00285649  20 I877DOEC the papers say. MR. MILLER: Well, we do make the argument that the plaintiff's reliance on those representations was not 4 reasonable. 5 THE COURT: Not reasonable because it was incredible 6 to believe that a person of the alleged wealth and prestige of 7 defendant Epstein could in fact derail the plaintiff's 8 education and career. That's the argument. 9 MR. MILLER: I think the allegations in the amended 10 complaint, your Honor, are that the threat was you'll never go 11 to college anywhere, you'll never get a career going 12 anywhere, and I think that is a pretty broad statement for 13 somebody to reasonably rely upon, regardless of the wealth and 14 power of the individual who is making the statement. 15 THE COURT: So, it is incredible as a matter of law 16 that a person of alleged wealth and prestige sufficient to own 17 an island could in fact blackball someone from education and a 18 career presumably in New York? I am expected to rule as a 19 matter of law that that's incredible as a matter of law, that 20 that is not reasonable reliance, it just couldn't happen, and 21 no reasonable person could believe that it could happen. 22 Right? I mean your argument is asking me to rule as a matter 23 of law that such a conclusion is incredible as a matter of law, 24 and that, therefore, there is no reasonable reliance. 25 MR. MILLER: Yes. The argument is specifically that SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300 EFTA00285650  I877DOEC relying on the affirmative promises, relying on the alleged very broad allegations of threat, was not reasonable under the circumstances. 4 THE COURT: What comparable case do you think stands 5 for that proposition? 6 MR. MILLER: Well, I think the threat is just so broad 7 as to be as a practical matter -- regardless of the wealth or 8 prestige of the individual -- an impossible threat to carry 9 through on. The notion that an individual could prevent 10 another individual from going to school anywhere, from pursuing 11 a career anywhere, it stretches the boundaries of what 12 is reasonable reliance. That's the point we were making. 13 THE COURT: And my question is what case do you rely 14 on for that proposition with any similar set of circumstances: 15 An alleged -- for purposes of the complaint -- young person 16 versus a person of wealth and prestige, that the kind of 17 promises and alleged threats that were being made were 18 unreasonable as a matter of law? 19 I mean I understand the reasonable reliance cases in 20 terms of investors and in terms of what should and shouldn't be 21 done in terms of reasonably pursuing an investigation of a 22 company. But is there any comparable case that has said that 23 in a situation such as this, such as alleged in the amended 24 complaint, it should be dismissed as a matter of law on a 25 motion to dismiss? SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300 EFTA00285651  22 I877DOEC MR. MILLER: Your Honor, most of the cases that we looked at did deal with reasonable reliance in the context of investment scenarios with relatively sophisticated parties on 4 both sides. I can't say that we found a case that is 5 specifically on point, so we're really arguing more from the 6 facts than a specific case. 7 THE COURT: OK. 8 MR. MILLER: Your Honor, the last point that I'd like 9 to address is the issue of lack of personal jurisdiction. 10 I think it's fair to say, based on some of the dialog 11 we've had so far, that it's your view that there are sufficient 12 allegations of conduct in the February to May 2007 time period. 13 But, you know, as we have noted in the papers, virtually all of 14 the conduct that's at issue in this case predated January of 15 2007, predated the plaintiff's departure from New York to go to 16 17 The only allegations in the complaint as to the 18 defendants and their current ties to New York relate to 19 Mr. Epstein and a particular piece of real estate. We 20 respectfully submit that the absence of concrete evidence of 21 violations of Section 1591 in 2007 -- as opposed to before the 22 defendant left -- should lead to the conclusion that there is 23 no personal jurisdiction over the defendants. 24 THE COURT: OK, thank you. 25 MR. MILLER: Thank you. SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300 EFTA00285652  23 I877DOEC THE COURT: Ms. Menninger. MS. MENNINGER: Thank you, your Honor. On behalf of defendant Ghislaine Maxwell, I would ask the Court to dismiss 4 the first amended complaint filed on June 5, 2017. In some 5 ways I want to start in the same place that Mr. Miller did, and 6 that is with the statute itself and its passage. 7 Your Honor, in 2007 -- 2006 and 2007 -- when the 8 allegations in the complaint purportedly took place, there was 9 no civil cause of action at all under this chapter other than a 10 violation of 1591. The same amendment which added these ten 11 year statute of limitations also broadened who could be sued 12 and for what. 13 The statute that existed in 2006 and 2007 read, "An 14 individual who is a victim of violation of Section 1589, 1590 15 or 1591 of this chapter, may bring a civil action against the 16 perpetrator in an appropriate district of the U.S. and may 17 recover damages and reasonable attorney fees." 18 The persons who could be sued under that chapter were 19 perpetrators of the crimes specified in 1589, 1590 and 1591, 20 and the person who could sue was an individual who was a victim 21 under those three statutes. Notably absent is any reference to 22 lawsuits, civil causes of action brought pursuant to other 23 sections of that chapter. Those would include 1592, 1593 and 24 1594, as well as 1593(a), which was added in December of 2008 25 and did not previously exist. SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300 EFTA00285653  L^ I877DOEC Paragraphs -- you look like you had a question. THE COURT: The same arguments that I was raising with your colleague would apply to all of these arguments also. At 4 the time that the statute was amended to include the ten year 5 statute of limitations, there was no bar, if you will, to a 6 claim against all of the defendants. 7 MS. MENNINGER: Your Honor, I respectfully would 8 contend that there is a fundamental difference between a 9 statute of limitations that is extended as to conduct that has 10 already occurred versus creating a new cause of action or a new 11 civil remedy. The support for that, your Honor, is the U.S. 12 Supreme Court in Landgraf v. USI Film Products, which I cited 13 in my papers for a different proposition, but it's found at 511 14 U.S. 244. 15 In that case, your Honor, the U.S. Supreme Court was 16 considering a very similar situation with respect to a sexual 17 harassment claim under Title VII. In that case, Title VII, 18 prior to the defendant at issue's conduct, only provided for 19 back pay or equitable remedies, and then in 1991 Congress added 20 a compensatory damage provision. 21 The U.S. Supreme Court spent a great deal of time in 22 Landgraf, explaining that adding a cause of action for 23 damages -- as was done in this statute -- did not retroactively 24 apply unless there was an express finding by Congress to do so. 25 And they distinguished things like extending statutes of SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300 EFTA00285654  25 I877DOEC limitations and, rather, relied on the fact that a new action for damages was being created. And that is what happened in this case with respect to this statute as well, your Honor. 4 THE COURT: OK. 5 MS. MENNINGER: Paragraphs 69 through 77 of the first 6 amended complaint purport to state causes of action under each 7 of those other chapters -- excuse me -- sections of the same 8 chapter, your Honor, and I would ask at the outset that those 9 particular requests be stricken from the first amended 10 complaint. 11 THE COURT: But there would still be the action under 12 1591. 13 MS. MENNINGER: Yes, your Honor. I'm starting from 14 the ones that are really easy, in my opinion, and then moving 15 to 1591, which would be the other one. But it does, your 16 Honor, significantly affect some of the allegations within the 17 first amended complaint. For example, 1592 is the provision 18 that criminalized the taking of the passport, for example. 19 THE COURT: Right. But, in a way, each of the other 20 provisions is subsidiary to 1591. The plaintiff doesn't break 21 out the four separate subsidiary statutes, 1591 and the other 22 three; the plaintiff has only one cause of action for a 23 violation of 1595. 24 MS. MENNINGER: She requests specific damages under 25 some of those statutes, your Honor, for example, forfeiture and SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300 EFTA00285655  2 I877D0EC restitution. She relies on a conspiracy theory that is articulated in one of those statutes. She relies on the attempt provision that's included in one of those statutes and, 4 as I mentioned, the passport. 5 THE COURT: But she one claim, one cause of action for 6 a violation of 1595. What the argument that you have been 7 making so far comes down to is I should give the complaint a 8 haircut by striking some of the allegations in the complaint, 9 even though the case goes forward, and even though allegations 10 like holding the passport could be used in support of a 11 violation of 1591. 12 MS. MENNINGER: Your Honor, I was not about to just 13 sit down after that particular argument; I was going to move on 14 to the next one. 15 THE COURT: OK. 16 MS. MENNINGER: So, I guess it would be the first chop 17 in the haircut that I propose that this Court make a complete 18 shaving of the head by the time that we're done. But, in any 19 event, I think those particular statutes clearly do not grant a 20 cause of action to the plaintiff for conduct that occurred 21 prior to Congress authorizing the civil action. 22 With respect to 1591, your Honor, moving there, the 23 statute as it read at the time permitted a cause of action 24 against the perpetrator, not against someone who was alleged to 25 have been a person who benefited from a venture, which is SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300 EFTA00285656  27 I877DOEC something else that is seen replete through the first amended complaint. And it requires, your Honor, the statute 1591 as it existed in 2016, that an individual either recruit, entice, 4 harbor, transport, provide, or obtain by any means a person or 5 benefit financially. Those are what I would -- drawing upon 6 criminal law -- call the actus reus of this particular offense 7 that has been granted a civil cause of action. 8 Your Honor asked earlier with respect to the statute 9 of limitations question why does paragraph 61 of the first 10 amended complaint -- which talks about reliance on promises 11 that occurred after January of 2007 -- how can we just read 12 those out of the first amended complaint. Your Honor, I 13 believe that the way 1591 is read, the act is accomplished -- 14 the offense accrues when the recruiting, enticing, harboring, 15 etc. occurs. 16 This is not a general fraud statute. Although fraud 17 rears its head in the mens rea element, fundamentally the act 18 that is sought to be covered here occurs at the time of the 19 recruitment, the enticement, the harboring, etc., or at the 20 time of benefiting financially. Those are the two provisions 21 of 1591. 22 So, your Honor, the allegations contained in paragraph 23 61 of the first amended complaint are not allegations of a 24 recruitment, or an enticement, or a harboring; they are 25 allegations that go to the mens rea. Therefore, I would submit SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300 EFTA00285657  28 I877DOEC to your Honor that the act has accrued once the recruitment or the enticement happened, not because further acts of purported fraud occurred later. 4 Your Honor, moving on to the sections not already 5 covered by Mr. Miller, I would point your Honor to the 6 requirement that one of those two acts has to occur knowing 7 that fraud, force or coercion will be used to cause that person 8 to engage in a commercial sex act. 9 With respect to knowing that force will be used, there 10 is no allegation of force in the first amended complaint. 11 With respect to fraud, Mr. Miller has already 12 addressed the absence of particular allegations with respect to 13 fraud: The dates, times and circumstances that any particular 14 statement was made. And, your Honor, I will move to the last 15 of those three permitted means of stating a claim, and that is 16 with respect to coercion. 17 In their response, plaintiff has pointed to two 18 particular paragraphs that they claim adequately state a claim 19 for coercion -- although they plead it in the alternative, 20 noting as the statute does, that there are three ways that 21 could accomplish the final goal. And they point to paragraph 22 48, which just says simply that there were threats of serious 23 harm, without stating what any such threats were; and they 24 point to paragraph 49, which is that she was physically 25 returned to the main island on house by a search party at some SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300 EFTA00285658  29 I877DOEC point in time. And, again, without any dates, it's difficult for the Court or the parties to understand any particular sequence of events, but it is up to the plaintiff to allege 4 sufficient facts that would state a claim, if they were there. 5 And, your Honor, there are no facts that show -- I 6 think it's important to look at the statute again, which 7 defines what coercion means in this context, and coercion means 8 under 1591 in existence at the time, threats of serious harm 9 to, or physical restraint against any person, is the primary 10 definition. 11 There are not facts ot