EFTA01072378.pdf

IN THE CIRCUIT COURT OF THE FIFTEENTH JUDICIAL CIRCUIT IN AND FOR 2 PALM BEACH COUNTY, FLORIDA 3 CASE NO.: 502009CA040800SSSSMB 4 JEFFREY EPSTEIN, 5 6 Plaintiff/Counter-Defendant, 7 vs. 8 SCOTT ROTHSTEIN, INDIVIDUALLY and BRADLEY J. EDWARDS, INDIVIDUALLY, 9 Defendants/Counter-Plaintiffs. 10 / 11 PROCEEDINGS HELD BEFORE JUDGE DONALD HAFELE 12 13 Epstein's Motion for Fees and Costs 14 15 HELD: December 8, 2014 Palm Beach County Courthouse 16 West Palm Beach, Florida 17 18 19 ORIGINAL 20 21 22 23 24 25 -- PAISMEACH REporraro NICE, INC. 361-411:29t [email protected] . . EFTA01072378  2 1 APPEARANCES: 2 ON BEHALF OF THE PLAINTIFF EPSTEIN: W. CHESTER BREWER, JR., P.A. 250 S. Australian Ave., Suite 1400 1 West Palm Beach, FL 33401 By: W. CHESTER BREWER, JR. LAW OFFICES OF TONJA HADDAD, P.A. 315 S.E. 7th St. 7 Ft. Lauderdale, FL 33301 By: TONJA HADDAD COLEMAN, ESQUIRE 8 9 ATTERBURY, GOLDBERGER & WEISS, P.A. 250 S. Australian Ave 10 Suite 1400 West Palm Beach, FL 33401 11 By: JACK GOLDBERGER, ESQUIRE 12 13 ON BEHALF OF THE DEFENDANT(S): -14 nvNNEY, gCnvOLA, ot—aL 15 2139 Palm Beach Lakes Blvd. West Palm Beach, FL 33409 16 By: JACK SCAROLA, ESQUIRE 17 18 19 20 21 22 23 24 25 PA I \1 BEACH RBI,OkTINoSERVICE, INC. 561-fil-2995- PIIRS@PalmBeackRep?rting.com EFTA01072379  3 PROCEEDINGS 2 NM' 3 THE COURT: Okay. Welcome everybody. 4 MR. BREWER: Good morning. 5 MR. SCAROLA: Good morning, your Honor. 6 THE COURT: Thank you. Good morning. 7 This is counter-defendant Epstein's motion for 8 fees and costs pursuant to an offer of settlement 9 and offer of judgment. Mr. Brewer? 10 MR. BREWER: Yes, your Honor. Would you 11 prefer we do this from the podium? 12 THE COURT: Whichever. You can stay there if 13 you want. 14 MR. BREWER: I'll stand here. 15 THE COURT: Thank you. 16 MR. BREWER: For the record, my name is 17 Chester Brewer. I represent Mr. Epstein. We have 18 with us also representing Mr. Epstein Miss Tanya 19 Haddad and Mr. Jack Goldberger. 20 Your Honor, first of all, this motion is only 21 to entitlement. 22 THE COURT: I understand. 23 MR. BREWER: Did your Honor get the different 24 handouts that we had delivered to you? 25 THE COURT: I believe so. I've got a stack of PALM BEACH REPORTING SERVICE,INC. 3614714995 itinis4pahnBeachkep?-4.* EFTA01072380  4 materials here from you and I've got the response in opposition filed by Mr. Edwards as well. MR. BREWER: As your Honor might remember, you 4 entered a summary judgment 5 THE COURT: Right. I remember the facts. I 6 presume it's on appeal now; is that correct? 7 MR. BREWER: It is, your Honor. 8 THE COURT: Okay. 9 MR. BREWER: You are also aware then probably 10 that earlier, before the granting of that motion 11 for summary judgment, that Mr. Epstein had received 12 a proposal for settlement on Mr. Edwards. We will 13 not be like the previous hearing. We've only got 14 here two people involved: Mr. Epstein and 15 Mr. Edwards. We don't have to figure out who the 16 parties are. 17 The amount of -- the proposed amount, I should 18 say, for settlement was $300,000. Attached to the 19 proposal was a written release, a written 20 stipulation, and a written proposed order of 21 dismissal. Those documents were completely or 22 would have completely done away with all of the 23 issues in the case; both the original claim and the 24 counterclaim. It would put judicial effort at an 25 end. PALIA BEACH RBPORTING SERVICE, INC. 561 471-2995 PBRS(o)PS1mBeadtRepotti I$ com EFTA01072381  5 The release contained a confidentiality clause, which was a very, very simple one. One paragraph. It essentially said that Mr. Edwards was not to reveal the amount or the reason for the settlement. Only to his attorneys, accountants, et cetera. Case law tells us that if the proposal follows 8 the requirements of the statute and the rule, if 9 any nonmonetary terms are stated with 10 particularity, and if the proposal was made in good 11 faith, then it is mandatory that the court grant 12 the motion requesting attorney's fees and costs. 13 Here, good faith. There's a number of cases 14 cited to you, your Honor, but in essence the cases 15 or the question of good faith normally turn upon •-- •._-_-_-_-••--••--- -.------•---- _ • 16 the fact -- or normally come up in cases in which 17 Lhere's been a nominal offer; a few hundred dollars 18 or a thousand dollars or something like that. This 19 particular case was for -- the offer was for 20 $300,000. Not much question about good faith. 21 Even if it were -- well, they're not. I'll stop 22 there. 23 The proposal was actually drafted by Joe 24 Ackerman. And if you look at it, it follows the 25 rule and the statute page and line. I mean, bimp, PAIMBEACHREPOMINGSERVICE,Ma 561471-2995 -- EFTA01072382  6 bimp, bimp, bimp. 2 There is an issue that has been raised as to whether nonmonetary terms had been stated with particularity. A number of cases are cited, which we probably will get into in rebuttal, but there 6 were a number of cases cited, some of which, or one 7 of which, anyway, is a federal court case which 8 really has no bearing here because in federal court 9 they have a completely different rule they follow. 10 And the issue in those, or the standard, is whether 11 it was a more advantageous outcome. Those words do 12 not even appear in our rule. In fact, some of the 13 federal cases that we have cited said that the 14 federal courts are pretty much bound by the Florida 15 state courts when they're looking at our state 16 statute and rule. 17 Additionally, most of the cases that are 18. cited, or I should say some of the cases that are 19 cited, deal with situations in which the actual 20 language of the nonmonetary terms were not attached 21 to the proposal. Here, they were. That is 22 essentially the preferred practice, and that was 23 what was followed. 24 We know that our Supreme Court has said, Well, 25 if you describe essentially with some particularity _ PALM BEACH REPOR11240 SERVICE, Nc. _ 561-471-2995 rilt-S@PahnB4a0R49Ongto, EFTA01072383  7 so that you understand what's going on, you don't 2 necessarily have to attach the actual language 3 itself, but here the actual language was attached. 4 We're not dealing with multiple offerors or 5 offerees, we're not dealing with cases that deal in insurance coverage in which there are potentially multiple coverages that are being available to the insured and perhaps a proposal for settlement was 9 rade with regard to a PIP claim and then there 10 was -- it was ambiguous or unclear as to whether 11 that applied to other potential causes of action 12 like property damage or uninsured motorists. But 13 we're not. So we believe, your Honor, that here 14 everything has been attached -- 15 THE COURT: Really, the core issue here is 16 whether or not this confidentiality clause passes 17 muster based upon the appellate case law in the 18 State of Florida. So why don't we hit that head 19 on, if you would, please. 20 MR. BREWER: Certainly. Does your Honor have 21 it in front of you? 22 THE COURT: I do. 23 MR. BREWER: Okay. It is abundantly clear 24 that it is a very, very supple confidentiality 25 agreement. It's very clear. It states that PALM MACH REPORTING SERVICE,INC. 561.471-2995 Kilt,S(Val6theachfrteporting.,m EFTA01072384  8 Mr. Edwards will not reveal the amount of the 2 settlement or the reason for the settlement except 3 to his accountants, attorneys, et cetera; and if he 4 does reveal it to them, then he will request that 5 they also not reveal it. Plain and simple. It's 6 directed to Mr. Edwards only. 7 It is very clear as to -- I should say that it 8 is clear as to its term or its length. It's not 9 limited. It's forever. 10 In the counter-plaintiff's brief they talked 11 in terms of -- I just lost my train of thought. I'm 12 sorry. 13 THE COURT: That's okay. You were talking 14 about the confidentiality clause. 15 MR. BREWER: Yes. 16 They make reference to the Schwartzle case. 17 Interestingly enough, he was represented by 18 Mr. Scarola. Also represented by me at one time or 19 another. I know Kathy Schwartzle. 20 In that case, they cite language that talks 21 about, you don't know what the terms of the 22 confidentiality agreement are or who they would 23 apply to, what its term was. These kinds of 24 issues. Well, that is because in that case the 25 proposal for settlement was not attached. It just PALM BEACH REPORTING SERVICE, 561-4717p95. [email protected] _ EFTA01072385  9 simply said there -- we will require a 2 confidentiality agreement, without more. Without 3 saying anything more than that. 4 Here the confidentiality agreement is clear. All they would have to do to comply would be sign 6 the release. There would be no need to revert back 7 to or require that the Court spend any time trying 8 to determine exactly what was meant. 9 If the documents that were attached, 10 specifically the Stipulation for Dismal with 11 Prejudice and Order, did not require any additional 12 judicial effort, it was a very simple, very clean 13 proposal for settlement, and we believe, your 14 Honor, that the law in Florida requires that the 15 Court grant the motion. 16 THE COURT: All right. Do you have any cases 17 that specifically relate to a confidentiality 18 clause being upheld under similar language that we 19 have here? 20 MR. BREWER: Tanya has got some brilliant 21 young people who do research, and I said, If you 22 all could find me a confidentiality agreement that 23 was contained within a proposal for settlement that 24 was in writing and attached, I would give them a 25 bonus. We can't find one, your Honor. Certainly _ PALM BEACH REPORTING SERVICE,INC. 561.471-2995 PE,S@PalmEleactilleponipp:pm EFTA01072386  not in the State of Florida. 2 THE COURT: All right. Thank you, Mr. Brewer. 3 Mr. Scarola? 4 MR. SCAROLA: Thank you very much, your Honor. 5 Your Honor, there are five reasons why this 6 Court should not grant the relief that is currently being requested. 8 The first of those is that there is not yet 9 final decision with regard to the liability issues 10 in this matter, as has been acknowledged in 11 response to the Court's question. This case is 12 still on appeal. And I know that your Honor 13 recognitions the significance of the appellate 14 issue that is presented because the Wolfe decision 15 upon which your Honor's summary judgment was based :.6 is in fact the only decision in the country that 17 applies the litigation privilege to destroy the 18 tort of malicious prosecution. 19 I suggest to your Honor that for that reason 20 alone, this motion is premature, and a decision 21 should be deferred until after the appellate court 22 has had an opportunity to address this issue. 23 THE COURT: Is there any stay issue that I 24 have to be concerned about? Has there been a 25 request for stay or -- PALM BEACH REPOICENTO SERVICE,INC. .561-471-2995 PBRS@PalmBeachReportingcom EFTA01072387  11 MR. SCAROLA: No, sir. This is not a matter 2 of jurisdiction. There's no stay issue. The Court 3 has the discretion to entertain this motion at this 4 point in time, and the Court also has the 5 discretion to defer entertaining the motion to 6 conserve the judicial resources that would be 7 necessary in order to resolve this issue now, when 8 the issue may be entirely mooted. 9 The second, third and fourth reasons why this 10 relief should not be granted all focus on the 11 confidentiality provision in the Proposal for 12 Settlement. And if your Honor takes a look at that 13 provision, the key language in the provision is, As 14 further consideration, I agree not to disclose the 15 details of this release in settlement of all -_-_•_-_•-.--- •-_-•-- - • --•- 16 claims, including the nature or the amount paid, 17 and the reasons for the payment to any person other 18 than my lawyer, accountant, income tax preparer or 19 by valid order of the court of competent 20 jurisdiction, whether directly or indirectly. 21 Your Honor asked about whether there is any 22 appellate authority that assists the Court in 23 addressing this issue, and the answer to that 24 question is there is Fourth DCA precedent that is 25 in fact very directly on point. PALM BEACH REPORTING SERVICE,INC. 561-471-2995 PJW@PalTseacWPotftscp EFTA01072388  12 1 Schwartzle versus Publix Super Markets is a 2 case in which the appellate court, the Fourth DCA, 3 was asked to address the issue of the inclusion of 4 a confidentiality provision in a proposal for 5 settlement. What that opinion says is -- and this 6 is a direct quote from the language of the case 7 it would be crucial to know what is being made 8 confidential, who is covered by the 9 confidentiality, whether there is any period to the 10 confidentiality, and what the remedies are in the 11 event of a breach. 12 There are questions among those identified by 13 the Fourth DCA as necessary to be responded to that 14 remain entirely unanswered under the terms of this 15 proposal. We don't know based upon this proposal 16 what is meant by the language the reasons for the 17 payment. That phrase could clearly be interpreted 18 as including all of the underlying circumstances 19 that relate to the litigation between Mr. Edwards 20 and Mr. Epstein. And the disclosure that's 21 prohibited is both direct disclosure and indirect 22 disclosure of any of those circumstances relating 23 to the litigation. 24 We don't know what the period of 25 confidentiality is. Presumably, because it's PALM BEACH REPORTING SERVICE, INc. 56:1-471-299 [email protected] EFTA01072389  unspecified, it would be forever. And there is no reference to what the remedies would be. So under the guidance of Schwartzle, the criteria that had been laid out by the Fourth DCA have clearly not been met. That's defect Number 1 in the confidentiality provision. Defect Number 2 is that obviously because this 8 confidentiality provision is expressly identified 9 as part of the consideration for the settlement of 10 this claim, it has some monetary value to the 11 proponent of the proposal. Mr. Epstein was clearly 12 bargaining for secrecy. How much value he placed 13 upon that secrecy is a matter of speculation 14 because the value of the confidentiality provision 15 is not expressly identified. Indeed, the --•-- -•-• _•-__•_-_---•- _••-•.--... 16 circumstances of this case are such that it may 17 well have been the entire $300,000 that was being 18 paid for confidentiality in this case. 19 And so when we look at the other appellate 20 court decisions that relate to proposals for 21 settlement and the conditions imposed upon 22 proposals, we are left with an inability to compare 23 the zero result that currently stands with the 24 result under the terms of the proposal for 25 settlement because we don't know whether the value PALM BEACH REPORTING agRyjcp, PplW0Pattapcschfrticorting.com EFTA01072390  1 of the confidentiality provision itsolf was all or 7 part of the $300,000. The Fifth DCA in the case of Dryden versus 4 Pedemonti, P-e-d-e-m-o-n-t-i -- and I'm not referencing the page and line citations; they're 6 included in our memo, your Honor -- the Fifth DCA noted, again directly quoting, One might logically 8 posit, in fact, that the only enforceable 9 nonmonetary condition allowable under the rule is 10 one that does not go beyond what the offerer would 11 be entitled to by operation of law upon settlement 12 or, for that matter, upon verdict. 13 It is impossible to do an apples-to-apples 14 comparison when nonmonetary conditions such as 15 confidentiality, which are not assigned a dollar 16 value, are included in the proposal for settlement. 1./ There have been other appellate court 18 decisions that address the same issue that talk 19 about the inability to make an apples-to-apples 20 comparison; and that is certainly the circumstance 21 that exists here. 22 The last and very significant defect with 23 regard to this confidentiality provision is that 24 the circumstances under which this proposal for 25 settlement were made made it absolutely unethical _ ..pgam BEACH REPOR.T1NG SERVICE,INC. _561-471-2995 EFTA01072391  15 for Brad Edwards to have accepted this proposal for settlement. That requires an evidentiary basis, 3 and I am prepared to give testimony with regard to 4 that aspect. TEE COURT: Just summarize what your argument 6 would have been. What the evidence would have been. 8 MR. SCAROLA: Yes, sir. Bradley Edwards 9 represents multiple victims, presently represents, 10 and at the time this proposal for settlement was 11 filed represented victims of Mr. Epstein in a 12 federal proceeding under the Crime Victims Rights 13 Act. I think that those are matters that have been 14 addressed at least in argument before your Honor, 15 although I don't know the testimony has been. 16 THE COURT: I recall that I had the active cases that were filed in federal court, now :.8 inactive, closed cases in division AB. So I recall 19 that at the last hearing there was some discussion 20 with regard to those cases still pending in federal 21 court, and I don't know if they're still pending. 22 MR. SCAROLA: They are still pending, your 23 Honor. There have been appellate proceedings. The 24 case has been up to the 11th Circuit on issues 25 relating to the Crime Victims Rights Act. That PALM BBACH REP0R17NG SERVICE,INC.- 7. S11, 17i-i995 1431Sel'OnlileicliRep—mtinie.ac EFTA01072392  case is pending before Judge Marra. And one of the threshold issues in that case was whether victims rights attach prior to the filing of a federal indictment. And Judge Marra ruled that they did. That particularly under the circumstances of this case, the victims were required to be consulted before the federal government could enter into the 8 non-prosecution agreement with Mr. Epstein. The 9 issue is whether there will be an invalidation of 10 the non-prosecution agreement that Mr. Epstein 11 entered into with the federal government as a 12 consequence of the violation of the Crime Victims 13 Rights Act. 14 So Mr. Edwards at the time this proposal was 15 made was very much involved in the prosecution of 16 claims that arise out of the same representation of 17 victims that led to the malicious prosecution 18 claims on Mr. Edwards' behalf against Mr. Epstein. 19 My testimony would confirm those circumstances 20 and would explain, as co-counsel with Mr. Edwards, 21 why Mr. Edwards could not ethically enter into a 22 confidentiality agreement that imposed any 23 restrictions on his ability to represent existing 24 clients. 25 So this wasn't simply a matter that we were _ PALM BEACE1 REPOktTING STAVICB, INC. . 561-411-2995 PBRS@PalmBeachlteporttngsom EFTA01072393  17 dealing with a vague and ambiguous confidentiality provision, not simply a matter that we're dealing with a confidentiality provision of unknown, 4 unspecified value that made it impossible to do an apples-to-apples comparison; we were also dealing with a confidentiality provision that made it impossible for Mr. Edwards to accept the proposal 8 for settlement because he would have been imposing 9 an unethical restriction upon his legal obligations 10 to existing clients. Simply couldn't be done. 11 Now, if opposing counsel is willing to accept 12 that proffer without the necessity of my taking the 13 witness stand and swearing to those matters, I will 14 accept that agreement. Otherwise, to complete this 15 record, I believe it's necessary that I take the 16 stand and testify to those matters. 1.1 THE COURT: Mr. Brewer? 18 MR. BREWER: I think it would have to be 19 Mr. Edwards that would testify to those matters, as 20 opposed to Mr. Scarola. 21 MR. SCAROLA: We're talking about the 22 underlying facts, your Honor. I have direct 23 personal knowledge of those underlying facts, and I 24 am a competent and qualified witness to testify 25 about those matters of which I have personal PALM BEACH REPORTING SERVICE, INC.. .56!-471-29?5 !liRS(0rctImpFacb!epprtinv091 - EFTA01072394  18 knowledge. MR. BREWER: I'm sorry? We were conferencing over here. THE COURT: He's indicating he has personal 5 knowledge of these matters, and right now he's 6 simply requesting whether or not you would 7 stipulate to the facts that he has proffered 8 without being under oath. 9 MR. BREWER: Mr. Scarola is an officer of this 10 court. Whatever he says, he says without having to 11 be under oath. 12 I'm still having -- my problem, your Honor, is 13 I'm having a little trouble understanding why in a 14 case in which Mr. Edwards is suing Mr. Epstein 15 there's -- some ethical dilemma arises. 16 THE COURT: I think it's a fair question. 17 MR. SCAROLA: I am prepared to address it by 18 way of argument -- 19 THE COURT: I'd rather hear the argument first 20 so I can make a threshold determination if there's 21 any relevancy. 22 MR. SCAROLA: This is a confidentiality 23 provision which precludes the disclosure directly 24 or indirectly of any matters relating to the reason 25 for the settlement of the claims against PALM BEACH REPORTING SERVICE, INC. 561 471-2995 PB g.00m_ EFTA01072395  19 1 Mr. Epstein by Mr. Edwards. Well, the reason for 2 the settlement clearly relates to the underlying 3 merits of the claim. 4 THE COURT: Well, it actually says, quote, As 5 further consideration, I agree not to disclose the 6 details of this release and settlement of all 7 claims, including the nature or the amount paid and 8 the reasons for the payment, to any person other 9 than my lawyer, accountant, income tax preparer, or 10 by valid order of a court of competent 11 jurisdiction, whether directly or indirectly, end 12 quote. There's further language, but that's the 13 pertinent quote. 14 MR. SCAROLA: Exactly. Reasons for the 15 payment. Reasons for the payment means, why was 16 this case settled? Why this case was settled has 17 to do with a total analysis of all of the 18 surrounding factual circumstances. 19 Mr. Edwards would have been precluded from 20 disclosing even to his own clients, because there's 21 a specific list of those to whom he can make a 22 disclosure and his own clients are not included on 23 that list, he could not even disclose to his own 24 clients the circumstances that led to the claims 25 between Mr. Edwards and Mr. Epstein, going both _ PALM BEACHREPORT1}19 sawicEt iNp, _ 561-471-2925. F.931.9(4TalmEleachltepor1:1400m EFTA01072396  1 ways, which relate to the merits of the underlying case. THE COURT: Unless he chose to seek a court order in that regard. MR. SCAROLA: Which may or may not be granted. 6 Yes, sir. 7 THE COURT: I agree. 8 MR. SCAROLA: So the point is -- 9 THE COURT: Go ahead. 10 MR. SCAROLA: I didn't mean to interrupt the 11 Court. I apologize. 12 THE COURT: No, I was just going to say I 13 would have difficulty managing a scenario where if 14 that was accepted, a judge would not allow 15 disclosure of the fact that Mr. Epstein settled 16 with Mr. Edwards and Mr. Edwards settled with 17 Mr. Epstein and accepted the amount proffered, that 18 he could not state to his client that, I have 19 accepted whatever was proposed, and I would think 20 that the amount would be included in a court order. 21 Again, you're right; it is speculative. And 22 there is the axiom that these types of offers are 23 to reduce the amount of judicial labor, not to 24 increase it. So I can understand the position 25 you're taking. I'AU4 BEACH REPORTING SERVICE, INC. 561-471-2995 [email protected] EFTA01072397  21 And I think that, obviously -- I mean, you 2 understand the underlying reasons for Mr. Scarola's argument, Mr. Brewer, correct? 4 MR. BREWER: No, quite frankly, I don't. THE COURT: Well, my thinking is that there would then be an issue of whether or not Mr. Edwards stands in a conflict with his client 8 once he accepts that amount and is unable to 9 disclose that to the client. 10 Do you understand? In other words -- 11 MR. BREWER: When we talk about apples and 12 oranges -- 13 THE COURT: No, I'm not so sure that's the 14 case because if Mr. Edwards stands in the position 15 to gain through a payment made by Mr. Epstein, and 16 gain hundreds of thousands of dollars but is 17 precluded from telling his clients that, in my view 18 he stands in a position of potential conflict. 19 I mean, is that the point you made -- 20 MR. SCAROLA: Yes, sir. 21 THE COURT: -- or one of the points you're 22 making? 23 MR. SCAROLA: There are a number of other 24 scenarios that make this even clearer. 25 Your Honor is aware of how high profile a l'A I M BEACH SPORTING SERVICE,INC. 561-471-2995 PERS@PahnBeachReportingsOM EFTA01072398  matter this has been. THE COURT: Sure. MR. SCAROLA: And one of the aspects of my 4 testimony if I were to testify would be that on a regular basis, even since this lawsuit has been a summary judgment has been granted and there has been no active litigation, I receive telephone calls regularly from members of the International Press continuing to ask about what the status of the lawsuit is, continuing to be concerned about 11 Mr. Epstein, continuing to be concerned about 12 Mr. Edwards, and there is a tremendous focus of 13 public attention that continues to exist with 14 regard to these matters. 15 Now, it would be in Mr. Edwards' clients' best 16 interest to continue that focus of public 17 attention; to hold press conferences, to make 18 disclosures about underlying facts, to talk about 19 the fact that Mr. Epstein has now paid another 20 $300,000 to try to keep quiet the circumstances 21 that led to his criminal prosecution. That would 22 serve Mr. Edwards' client's best interests. 23 THE COURT: I mean, that may or may not be 24 true. And certainly he has the ability to accept 25 or reject the terms and conditions of a given REPORTING SERVICE,INC. 561-471-2995 [email protected]! EFTA01072399  23 offer. Whether strategically he finds it better to reject is of no moment to the Court. The ethical issue may have some impact. Strategy and whether or not it is better for him to talk about his case so that in the eyes of public opinion, or whomever he's trying to convince, his clients are in better stead, I'm not really interested in, frankly. 8 MR. SCAROLA: Well, I obviously haven't made 9 my point clear, and let my try again. 10 What I am saying is if it is in Mr. Edwards' 11 client's interest to make statements about the 12 status of this case, the reasons for the 13 settlement, why Mr. Epstein paid and how much he 14 paid, if that's in his clients' interest and he has 15 entered into a contract that prohibits him from 16 doing that, he has entered into an unethical 17 contract because he can no longer take that 18 strategic step. He has for his own purposes 19 that is, to put $300,000 into his own pocket he 20 sold away the strategic ability to be able to 21 advance his client's interests in that manner. 22 He can't do that. He cannot sell away that 23 strategic option. He's ethically prohibited from 24 doing it. 25 THE COURT: I think my argument may make PALM BEACH thIPORTiNG 61.4.7!,4950$ [email protected], EFTA01072400  24 better -- may make more of an ethical statement than yours. But I'll accept the rationale. MR. SCAROLA: I'm not presenting it as an alternative, I'm suggesting to your Honor that there are multiple reasons why this is unethical. THE COURT: I respect that. MR. SCAROLA: That's all that I am suggesting to the Court. 9 THE COURT: Okay. 10 MR. SCAROLA: The last aspect of my objection 11 to this proposal is that it is the burden of the 12 proponent of this proposal for settlement to prove 13 that it was made in good faith. And it is our 14 position that a $300,000 offer, pre-Wolfe, that 15 included a confidentiality provision of obviously - • • . -••. __•-- -•-• 16 very substantial value to Mr. Epstein, who has been 17 doing everything he can to avoid publicity 18 regarding this matter, that constitutes a nominal 19 offer and was made in bad faith, considering the 20 fact that a punitive damage claim had been 21 approved, that this case was proceeding on the 22 basis of both compensatory and punitive damages 23 against a billionaire, and there has been no proof 24 that would satisfy the burden of the proponent that 25 this was a good faith offer under those PALfriBEACHREPoiansidi SERVICE, INC. 561471-2995 PB1t5®PatrnBeachlteporting.copi EFTA01072401  25 circumstances. So for all of those reasons: The decision's 3 not final until the mandate issues on the pending 4 appeal; we ought to conserve judicial resources; a 5 failure to assign monetary value, which prohibits an apples-to-apples comparison; the vagueness of the confidentiality provision because we don't know 8 what direct or indirect disclosure of the reasons 9 for the settlement mean; we don't know how long the 10 confidentiality provision is to last; we don't know 11 what the sanctions would be for violation of the 12 confidentiality provision; and because the 13 confidentiality provision is unethical; as well as 14 because there has been a failure to satisfy the 15 good faith burden, the relief being requested 16 should be denied. 17 THE COURT: All right. Thank you again, 18 Mr. Scarola. 19 All right, Mr. Brewer. I'll give you a few 20 minutes. 21 MR. BREWER: Thank you, your Honor. 22 Your Honor, this ethical thing, quote, 23 dilemma, it's the first time it's been raised. It 24 was not raised in any pleading, nor has it been 25 raised in any of the memorandum. I will attempt, _ _ PALM BEACH REPORTING SERVIcB,1Nc. 561-471-2995 13B4S®PablaBeachR4p6r6pg.con? EFTA01072402  26 though, to respond to it. First of all, we are dealing with a situation 3 in which the people that supposedly will be heard 4 are not even parties to this litigation. We're 5 talking about Mr. Edwards' clients. The issue of an ethical dilemma has, I think, very little to do 7 with whether or not the prerequisites of the 8 proposal for settlement had been met. And the 9 prerequisites are, in essence, have the terms -- 10 have the nonmonetary terms been set forth with 11 particularity? And they have. They have. 12 Then we have the argument that was made 13 THE COURT: But what about the Court's 14 concern -- and I think it's a valid one, and I 15 recognize that it was not raised in the spirit of 16 the response -- I recognize also that he took the 17 affirmative step in a public proceeding -- and 18 there was no, to my recollection, similar to what 19 was done with the minors in the actual abuse cases 20 that were brought by the minors, there was no 21 hiding of-- hiding is a bad word -- but what I 22 meant to say is there was no use of any initials or 23 anything like that. 24 MR. SCRROLA: That's not the case, your Honor. 25 I don't mean to interrupt, but there's still PALM BBACH REPORTING SERVICE,INC. 561-471-2995 PBRS®faltoBeachttcporting.corp EFTA01072403  27 anonymity of the plaintiffs in the federal action. 2 THE COURT: I understand that. I'm talking 3 about the anonymity against the claims of 4 Mr. Edwards against Mr. Epstein. There was no 5 attempt at anonymity here in this particular case 6 either by Epstein or Edwards. 7 But recognizing all of that, the thought is 8 that would there not be the potential of an 9 inherent conflict if Mr. Edwards was not permitted 10 to disclose to his clients the fact that he settled 11 with the very individual against whom he is suing 12 in these pending federal actions? 13 MR. BREWER: I don't know that by that 14 language he is precluded from revealing that there 15 was a settlement. It's the terms that are 16 confidential. 17 THE COURT: But the details, like they say on 18 one of my shows that I watch on CABC, the devil is 19 in the detail. And in this case, a client would 20 have every right to know, in my view, not only that 21 there was a settlement -- because a settlement 22 could be a dollar. There are many cases that just 23 go away for reasons that both sides just want an 24 end to the litigation. But I think it somewhat 25 erodes Mr. Scarola's argument relative to the bad PALM BEACH REPORTING SERVICE, INC. 561.471-2995 PEIRS®PalmBeachReporting.cxn EFTA01072404  28 faith -- or the lack of good faith -- it erodes his 2 ethics argument, at least the argument that I find 3 more persuasive, and then the conflict argument by 4 suggesting on the one hand that it would be a 3 detriment ethically to his clients and on the other 6 hand suggest that the offer was not made in good 7 faith if it was accepted. 8 I reject that in terms of the nominal amount. 9 I reject it also because of the presence of the 10 Etchaverria case and the other case that involves 11 the law firm that slips my mind. 12 MS. HADDAD: Levin. 13 THE COURT: The Levin case. 14 So there was language principally used in the 15 Wolfe case -- that's the underlying case that you primarily relied upon, correct? MR. SCAROLA: Yes, your Honor. 18 THE COURT: Okay. So the language was 19 utilized from Levin and Etchaverria in order to 20 support the oral decision in the Fourth District 21 Court of Appeal. But again, the fact that the 22 argument in good faith may erode the ethics 23 argument doesn't dispel the concern that the Court 24 has, and I think it's a valid one, relative to the 25 chilling effect that this may have on Mr. Edwards 'PAID BEACH REPORTING SERVICE,INC. 561.471-2995 PBRS®PalmBeachReponing.com EFTA01072405  29 if he would have accepted it vis-a-vis discussing 2 the details to his clients, because they would then be in a position to reject or accept his continued representation. But they would have to know about the amount that the settlement was for. Especially 6 lay people. When they hear the sum of $300,000 '7 being exchanged, despite what some of you folks may 8 think is nominal