Hot Topics in Business Law

Jan 2, 2019 |

Article 1: “Millionaire Sex Offender Jeffrey Epstein Apologizes in Settling Malicious Prosecution Suit”

According to the article, multimillionaire Jeffrey Epstein, an alleged serial sex abuser of girls, settled a lawsuit recently, dodging the threat for now that several of his accusers would tell their stories in open court.

The case, which had been unfolding in Palm Beach County, Florida, Circuit Court for almost six years, ends a malicious prosecution counterclaim filed by attorney Bradley Edwards, who represented some of Epstein’s accusers. Edwards filed the counterclaim after Epstein accused him and a now-disbarred attorney of wrongdoing in a civil lawsuit.

The settlement came as jury selection was set to begin. Expected to testify were at least seven alleged victims, law enforcement officers, former US attorneys and Epstein’s former associates, said Michael Fisten, an investigator on Edwards’ team.

The specifics of the settlement are confidential, but court records indicate Epstein issued an apology as part of the settlement. Epstein conceded in the apology that he tried to denigrate Edwards’ reputation as a trial lawyer, Edwards said in a statement.

“The truth is that his aggressive investigation and litigation style was highly effective and therefore troublesome for me. The lawsuit I filed was my unreasonable attempt to damage his business reputation and stop Mr. Edwards from pursuing cases against me. It did not work,” Epstein said in his apology, according to Edwards’ statement.

The girls, many from poor backgrounds, were abused for years, Fisten said. The trial was one of two remaining opportunities for them to recount the alleged crimes against them publicly — something that has never happened because the cases against Epstein have been settled, pleaded out or resulted in reduced charges.

In Epstein’s original lawsuit, he alleged that Edwards and Scott Rothstein, a former lawyer now serving time after pleading guilty in 2010 to crimes involving a massive Ponzi scheme, committed a series of crimes, including fraud and racketeering, to unearth information about Epstein and his business associates.

The purpose, Epstein alleged, was “to defraud investors and support extortionate demands for payment from Epstein,” the complaint says.

Edwards fired back in his counterclaim that Epstein was pursuing a malicious prosecution.

“Epstein’s primary purpose in both filing and continuing to prosecute each of the claims against Edwards was to inflict maximum economic burden on Edwards in having to defend against the spurious claims, to distract Edwards from the prosecution of claims against Epstein arising out of Epstein’s serial abuse of minors, and ultimately to extort Edwards into abandoning the claims he was prosecuting against Edwards,” the counterclaim alleges.

The media published a report recently saying that, when he was a U.S. attorney, Labor Secretary Alexander Acosta gave Epstein the “deal of a lifetime” despite a federal investigation identifying 36 underage victims of the hedge fund manager. The Herald said it found about 80 women Epstein allegedly molested or sexually abused over a five-year period.

The report said Acosta forged a deal with one of Epstein’s attorneys in which the multimillionaire pleaded guilty to two state prostitution charges, ultimately serving only 13 months and avoiding a federal trial. The agreement, the media said, “essentially shut down an ongoing FBI probe” and further granted immunity to “any potential co-conspirators” in the case.

As part of the plea, Epstein registered as a sex offender and paid restitution to the victims identified by the FBI.

For Acosta, the settlement short-circuits a trial that could have proved embarrassing as accusers who feel they were denied justice by the plea agreement would have taken the stand to tell graphic stories of Epstein’s alleged abuse.

Epstein’s federal indictment, which was never made public because of the deal, will stay sealed, and no testimony will be heard from former US attorneys who could paint a clearer picture of the office culture that handed the plea deal to an alleged serial abuser.

The accusers will have one more shot at justice with a victims’ rights lawsuit pending in federal court, which alleges the plea agreement didn’t provide notice to the alleged victims as required by law.

They are hoping the judge vacates the plea agreement, which means the plea would no longer be valid and the current U.S. attorney could prosecute Epstein.
Note: In addition to the article, please also see the related videos included at the above-reference internet address.

Discussion Questions

1. What is a counterclaim?

When a plaintiff files a civil complaint against a defendant, the plaintiff is claiming that the defendant wrongfully harmed him or her, and that the plaintiff is therefore entitled to recover money damages from the defendant. In addition to filing an answer that might simply deny liability for the plaintiff’s harm (and/or contend that the plaintiff did not experience harm), the defendant might file a counterclaim against the plaintiff. By way of the counterclaim, the defendant is claiming that the plaintiff wrongfully harmed him or her, and that the defendant is therefore entitled to recover money damages from the plaintiff. In the counterclaim, the defendant effectively becomes a plaintiff, and the plaintiff becomes a defendant.

2. What is malicious prosecution?

Malicious prosecution is a common law intentional tort. Its elements include: a) intentionally (and maliciously) instituting and pursuing (or causing to be instituted or pursued) a legal action (civil or criminal) that is b) brought without just cause and c) dismissed in favor of the victim of the malicious prosecution. Essentially, the plaintiff’s claim is meritless, and the plaintiff knows or has reason to know that his or her claim is meritless.

3. In your reasoned opinion, does the victims’ rights lawsuit pending in federal court have merit? Why or why not?

This is an opinion question, so student responses may vary. As the article indicates, Epstein’s accusers are alleging that the plea agreement did not provide them notice as required by law; in other words, they are claiming that their due process rights were violated. If the plea agreement indeed violated the law, the judge will likely overturn it.

Article 2: “Hilton Sued by Woman Who Says Hotel Employee Filmed Her in the Shower, Extorted Her”

According to the article, a Chicago woman has filed a $100 million lawsuit against Hilton Worldwide, alleging that one of the hotel conglomerate’s employees filmed her in the shower without her knowledge and later attempted to extort her over the footage.

She’s accusing the hotel chain of negligence, saying it allowed the suspect, who has not yet been precisely identified, access to her personal information.

The woman, who wished to remain anonymous, said the hidden-camera recording took place during her July 2015 stay at the Hampton Inn and Suites in Albany. However, she says she was not aware of the tape’s existence until September of this year when she received an email with a link to a porn site.

The same day, she received another email from the same address demanding she provide more nude footage of herself if she didn’t want the video published along with her name and job information.

“My initial reaction was, ‘Your life is absolutely ruined, people are going to see this, they are going to see you naked and they are going to assume things,'” she said.

According to the media, the lawsuit quoted some of the emails from the blackmailer, who allegedly wrote, “I’m a perv. I don’t hurt anyone. I like to watch. No need to worry about me. I just like to watch and then I move on to the next. Promise me my own show. That’s the hottest. No need to show your face. Then I disappear and remove the videos forever before they get copied on every website.”

When she didn’t comply, the video was circulated to some of her colleagues along with a new demand: $2,000 up front and $1,000 a month for the following year.

“It was just absolutely traumatizing because these are people I went to law school with,” she recalled. “They’re friends, they’re coworkers. And they were sent a link to what looks like an email I sent.”

Since then, the woman told the morning show that she’s had to search online for the video to request its removal. She estimates it’s been posted on at least a dozen sites.

She says that every time he republished it, he posted her full name, humiliating her all over again. “It’s sadistic, and it’s designed to terrorize me and force me into a place where I feel like I have to give into his demands and give him more photos or give him money. He did this so that whenever someone googles me, they’re going to see this.”

The story also noted that the woman believes she wasn’t the only guest recorded in that room.
In a statement, Hilton said the company was not aware of the alleged breach of privacy until this recently.

“On Monday, December 3rd, we were alerted by ABC News to details of an alleged incident at the Hampton Inn and Suites Albany-Downtown in 2015,” it read. “We take the safety and well-being of our guests incredibly seriously, and find the details included in the civil filing distressing. We commit to supporting the independent ownership and management of the property as they investigate, respond, and cooperate with any law enforcement investigations.”

In a recent statement, a representative for the Albany Hampton Inn and Suites said they planned to work with law enforcement to find and punish the suspect but noted no evidence had been discovered yet.

“We were shocked and stunned to learn of the allegations raised in the complaint,” it said. “The safety and security of our guests is our highest priority, and we emphatically do not condone any form of this type of invasion of privacy. Thus far, no evidence of any kind has been found during our initial review of the situation.”

The statement also noted that “recently, the hotel underwent a complete renovation. During that process, no recording devices of any kind were uncovered. We will continue to work with the authorities to discover the perpetrator and see that s/he is held accountable.”
Note: In addition to the article, please also see the related video included at the above-reference internet address.

Discussion Questions

1. Define negligence.

Negligence is defined as the failure to do what a reasonable person would do under the same or similar circumstances. In order to prevail in a negligence case, the plaintiff must prove, by the greater weight of the evidence, that: a) the defendant owed the plaintiff a duty of care; b) the defendant breached the duty of care; c) the defendant caused the plaintiff harm; and d) the plaintiff experience damages (economic and/or physical) as a result.

2. In your reasoned opinion, should an employer be liable for the criminal action(s) of an employee committed without the direction, knowledge or approval of the employer? Why or why not?

This is an opinion question, so student responses may vary. By common law, an employer is liable for the criminal act of an employee even if the crime was committed without the direction, knowledge or approval of the employer, if the employer failed to appropriately monitor the employee. In such a situation, the aggrieved party’s claim would be based on negligence (See the definition of negligence in response to Article 2, Discussion Question 1).

3. As the article indicates, the plaintiff is claiming $100 million in damages from the defendant in this case. Comment on the propriety or impropriety of this request.

The plaintiff must make a civil claim for damages in good faith, and must prove, by the greater weight of the evidence, the legitimacy of such a claim. In the subject case, even though the nature of the damages are not specified (for example, compensatory damages versus punitive damages), your author surmises that the bulk of the plaintiff’s damages request is in the form of punitive damages. Punitive damages are designed to punish a defendant for clearly egregious behavior that would “shock the conscience” of a reasonable person. Punitive damages are not compensatory damages designed to pay the plaintiff for his or her loss; instead, they are specifically designed to “send a message” to the defendant that egregious actions will not be tolerated. The amount of punitive damages are typically related to the nature of the defendant corporation’s wrongful act, as well as the size, income, and profitability of the defendant. In the subject case, to recover punitive damages, the plaintiff must prove that the defendant Hilton Worldwide’s failure to monitor the employee to prevent such filming was egregious.

Article 3: “Johnson & Johnson Stock Price Tumbles after Report of Asbestos in Its Talcum Baby Powder”

According to the article, Johnson & Johnson shares tumbled about 10 percent recently following a Reuters report that claimed the company knew its talcum baby powder contained asbestos for decades.

Reuters examined documents, deposition and trial testimonies that showed Johnson & Johnson company executives, mine managers, scientists, doctors and lawyers knew – at least from 1971 through the early 2000s – that the company’s raw talc tested positive for small amounts of asbestos, but failed to tell regulators or the public.

About 11,700 plaintiffs have filed suit against Johnson & Johnson, claiming its talc product caused their cancers. That includes thousands of women with ovarian cancer. Scientists have long linked asbestos to mesothelioma, which is associated with ovarian and other cancers.

Earlier this year, courts in New Jersey and California awarded damages to plaintiffs who claimed Johnson & Johnson talc products tainted with asbestos caused their mesothelioma. In July, $4.7 billion was awarded in total damages to 22 women in St. Louis who said asbestos in Johnson & Johnson talc powder contributed to their ovarian cancer.

Johnson & Johnson has consistently maintained its talc is safe.

“Plaintiffs’ attorneys out for personal financial gain are distorting historical documents and intentionally creating confusion in the courtroom and in the media,” Ernie Knewitz, Johnson & Johnson’s vice president of global media relations, wrote in an email to Reuters. “This is all a calculated attempt to distract from the fact that thousands of independent tests prove our talc does not contain asbestos or cause cancer. Any suggestion that Johnson & Johnson knew or hid information about the safety of talc is false.”

Johnson & Johnson turned over thousands of documents in court proceedings — but most have been designated as confidential, shielding them from the public.

Discussion Questions

1. What specifically must a plaintiff prove in order to recover damages for product liability?

In a jurisdiction (state) that recognizes strict product liability, the plaintiff must only prove, by the greater weight of the evidence, that: a) the product the defendant introduced into commerce was defective; and b) the plaintiff was harmed (economically, physically, or both) as a result. In a jurisdiction that does not recognize strict product liability, the plaintiff must also prove that the defect was the defendant’s fault (for example, the defendant negligently manufactured the product).

2. As the article indicates, in July 2018, $4.7 billion was awarded in total damages to 22 women in St. Louis, Missouri who said asbestos in Johnson & Johnson talc powder contributed to their ovarian cancer. In order to prevail in such a case, what is the plaintiff’s burden of proof regarding liability? What is the plaintiff’s burden of proof regarding damages?

In order to prevail in a civil case, the plaintiff must prove, by the greater weight of the evidence, that the defendant wrongfully (intentionally, negligently, recklessly, etc.) caused the plaintiff harm. As part of his or her burden of proof, the plaintiff must prove both fault and damages. The “greater weight of the evidence” burden of proof in a civil case is substantially lower than the burden of proof in a criminal case (in a criminal case, the prosecution must prove beyond reasonable doubt that the defendant committed a crime—part of the prosecution’s burden of proof is to establish, by way of evidence, every element of the crime alleged, as defined by state and/or federal law).

3. In your reasoned opinion, does the St. Louis, Missouri case—and any other pending or future litigation against Johnson & Johnson for talcum powder liability—illustrate the need for tort “reform” in the United States justice system? More specifically, does this article indicate the need to cap the amount of damages recoverable by a plaintiff in a product liability case? Explain your response.

This is an opinion question, so student responses may vary.