00a0370p.06

99-5789Court of Appeals for the Sixth CircuitOct 18, 2000

Full text

&R[HWDOY&LW\RI0HPSKLVHWDO 1R
BBBBBBBBBBBBBBBBBBBBBBB
&21&855(1&(
BBBBBBBBBBBBBBBBBBBBBBB
.$5(11(/6210225(&LUFXLW-XGJHFRQFXUULQJ,
FRQFXU EHFDXVH XQGHU RXU SUHFHGHQWV DQG WKRVH RI WKH
6XSUHPH &RXUW LW LV FOHDU WKDW SODLQWLIIV SUHVHQW FODLPV RI
FRQWLQXLQJHIIHFWVRISDVWGLVFULPLQDWRU\DFWVDQGGRQRWFODLP
GLVFULPLQDWRU\ DFWV ZLWKLQ WKH VWDWXWRU\ WLPH SHULRG
3ODLQWLIIV¶FRPSODLQWFRQVLVWVRIFODLPVEDVHGHQWLUHO\RQWKH
WHVWLQJSURFHVVXWLOL]HGE\WKH0HPSKLV3ROLFH'HSDUWPHQWWR
FRPSLOHDQHOLJLELOLW\OLVWIRUSURPRWLRQWRPDMRU7KDWWHVWLQJ
SURFHVVZDVFRPSOHWHDQGWKHHOLJLELOLW\OLVWLVVXHGRQ0D\
OLVWLQJHOLJLEOHFDQGLGDWHVLQRUGHURIUDQNEDVHGRQ
WKHWHVWDQGDVVHVVPHQWSURFHVV$IWHUWKDWSRLQWSODLQWLIIVGR
QRWFODLPWKDWDQ\IXUWKHUGLVFULPLQDWRU\DFWVRFFXUUHGDSDUW
IURP WKH 0HPSKLV 3ROLFH 'HSDUWPHQW¶V XWLOL]DWLRQ RI WKH
HOLJLELOLW\OLVWWRSURPRWHFDQGLGDWHVLQWKHLUUDQNRUGHUIURP
WKHOLVW3ODLQWLIIVGRQRWFODLPWKDWWKHSURPRWLRQVIURPWKH
HOLJLELOLW\OLVWZHUHGLVFULPLQDWRU\LQDQ\ZD\DSDUWIURPWKH
UHOLDQFHRQWKHLQLWLDODOOHJHGO\GLVFULPLQDWRU\WHVWLQJSURFHVV
*LYHQ WKHVH FLUFXPVWDQFHV RXU SUHFHGHQWV LQ $QGHUVRQ Y
&LW\ RI %ULVWRO )G WK &LU DQG 'L[RQ Y
$QGHUVRQ )G WK &LU DV ZHOO DV WKH
6XSUHPH&RXUW¶VGHFLVLRQVGLVFXVVHGLQWKHPDMRULW\RSLQLRQ
OHDG LQHYLWDEO\ WR WKH FRQFOXVLRQ WKDW SODLQWLIIV KDYH QRW
VDWLVILHG WKH UHTXLUHPHQWV WR VKRZ DSSOLFDELOLW\ RI WKH
FRQWLQXLQJYLRODWLRQVH[FHSWLRQ
7KH +RQRUDEOH 'DYLG ' 'RZG -U 8QLWHG 6WDWHV 'LVWULFW -XGJH IRU
WKH 1RUWKHUQ 'LVWULFW RI 2KLR VLWWLQJ E\ GHVLJQDWLRQ

5(&200(1'(' )25 )8//7(;7 38%/,&$7,21
3XUVXDQW WR 6L[WK &LUFXLW 5XOH
(/(&7521,& &,7$7,21 )(' $SS 3 WK &LU
)LOH 1DPH DS
81,7('67$7(6&28572)$33($/6
)257+(6,;7+&,5&8,7
BBBBBBBBBBBBBBBBB
6+$521 : &2;HWDO
3ODLQWLIIV$SSHOODQWV
Y
&,7< 2) 0(03+,6HWDO
'HIHQGDQWV$SSHOOHHV
;!

1
1R
$SSHDOIURPWKH8QLWHG6WDWHV'LVWULFW&RXUW
IRUWKH:HVWHUQ'LVWULFWRI7HQQHVVHHDW0HPSKLV
1R²-HURPH7XUQHU'LVWULFW-XGJH
$UJXHG6HSWHPEHU
'HFLGHGDQG)LOHG2FWREHU
%HIRUH*8<DQG0225(&LUFXLW-XGJHV'2:'
'LVWULFW-XGJH
BBBBBBBBBBBBBBBBB
&2816(/
$5*8(' (YHUHWW *LEVRQ %$7(0$1 *,%621
&+,/'(560HPSKLV7HQQHVVHHIRU$SSHOODQWV/RXLV3
%ULWW ,,, )25' +$55,621 0HPSKLV 7HQQHVVHH IRU

-- 1 of 6 --

&R[HWDOY&LW\RI0HPSKLVHWDO 1R
$SSHOOHHV 21 %5,() (YHUHWW *LEVRQ %$7(0$1
*,%621 &+,/'(56 0HPSKLV 7HQQHVVHH IRU
$SSHOODQWV/RXLV3%ULWW,,,&DUULH/\QQ&ODUN)25'
+$55,6210HPSKLV7HQQHVVHHIRU$SSHOOHHV
'2:''-GHOLYHUHGWKHRSLQLRQRIWKHFRXUWLQZKLFK
*8<-MRLQHG0225(- S GHOLYHUHGDVHSDUDWH
FRQFXUULQJRSLQLRQ
BBBBBBBBBBBBBBBBB
23,1,21
BBBBBBBBBBBBBBBBB
'2:''LVWULFW-XGJH
,
7KLVLVDQDSSHDOIURPWKHGLVWULFWFRXUW¶VGLVPLVVDORIWKH
SODLQWLIIVDSSHOODQWV¶&RPSODLQWDJDLQVWGHIHQGDQWVDSSHOOHHV
WKH &LW\ RI 0HPSKLV DQG :DOWHU :LQIUH\ 'LUHFWRU RI WKH
0HPSKLV 3ROLFH 'HSDUWPHQW ³03'´ 7KH &RPSODLQW
DOOHJHG WKDW WKH &LW\ RI 0HPSKLV KDG HQJDJHG LQ UDFLDO
GLVFULPLQDWLRQ ZLWK UHVSHFW WR FHUWDLQ RIILFHUV VHHNLQJ
SURPRWLRQ LQ WKH 03' (DFK SODLQWLII LV D ZKLWH IHPDOH
KROGLQJWKHUDQNRIOLHXWHQDQWLQWKH03'2Q1RYHPEHU
WKH03'EHJDQDQHOHFWLYHSURFHVVIRUSURPRWLRQWRWKH
UDQNRIPDMRU$OORIWKHSODLQWLIIVSDUWLFLSDWHGLQWKHHOHFWLYH
SURFHVV ZKLFK LQYROYHG H[DPLQDWLRQV DQG YDULRXV
DVVHVVPHQWV 2Q 0D\ WKH 03' SXEOLVKHG DQ
,QIRUPDWLRQ %XOOHWLQ OLVWLQJ WKH HOLJLEOH FDQGLGDWHV IRU
SURPRWLRQLQRUGHURIUDQNEDVHGXSRQWKHWHVWDQGDVVHVVPHQW
UHVXOWV(OHYHQRIWKHFDQGLGDWHVZHUHZRPHQ2IWKH
HOHYHQZRPHQILYHZHUHZKLWHDQGVL[ZHUHEODFN
7KH %XOOHWLQ VWDWHG WKDW WKH SURPRWLRQDO OLVW ZRXOG EH
HIIHFWLYHIRUWZR\HDUV7KHILUVWFDQGLGDWHVLQUDQNRUGHU
LQFOXGLQJ ILYH RI WKH VL[ EODFN IHPDOHV ZHUH SURPRWHG WR
PDMRURQ0D\0RUHWKDQWZR\HDUVODWHURQ-XQH
WKH 03' PDGH LWV VHFRQG DQG ODVW URXQG RI
1R &R[HWDOY&LW\RI0HPSKLVHWDO
SURPRWHGGHVSLWHWKHDOOHJHGGLVFULPLQDWLRQ,QFRQWUDVWWKH
SODLQWLIIVLQ5LFNV(YDQVDQG%URQ]H6KLHOGVQHYHUPDGHLW
RQWRWKHHOLJLELOLW\OLVWDQGVRFRXOGQRWKDYHH[SHFWHGWKDW
WKH\ZRXOGEHKLUHG
7KH&RXUWEHOLHYHVKRZHYHUWKDWWKHPHUHSRVVLELOLW\WKDW
RQH ZLOO EH KLUHG RU SURPRWHG GHVSLWH DQ DOOHJHGO\
GLVFULPLQDWRU\ UDQNLQJ GRHV QRW PHDQ WKDW WKH IDLOXUH WR
SURPRWH RU KLUH VKRXOG EH WUHDWHG DV D GLVFULPLQDWRU\ DFW
VHSDUDWHIURPWKHRULJLQDODFWRIGLVFULPLQDWLRQ$UXOHWKDW
ZRXOGDOORZHPSOR\HHVWR³VLWRQWKHLUULJKWV´LQWKHKRSHV
WKDWSURPRWLRQZRXOGRFFXUGHVSLWHDOOHJHGGLVFULPLQDWLRQLQ
DQ HOLJLELOLW\ URVWHU ZRXOG FRQWUDGLFW WKH FRQVLGHUDWLRQV
RXWOLQHGDERYH1DPHO\DQHPSOR\HU¶VVWDIILQJDQGKLULQJ
GHFLVLRQVZRXOGHVVHQWLDOO\UHPDLQWHQWDWLYHGXULQJWKHHQWLUH
SHULRGLQZKLFKDURVWHUZDVXWLOL]HGDQGIRUDVXEVWDQWLDO
SHULRGWKHUHDIWHULIOLWLJDWLRQHQVXHV7KLVLVDQXQUHDVRQDEOH
GHPDQGWRPDNHXSRQHPSOR\HUVZKHQSRWHQWLDOSODLQWLIIV
NQRZRIDOOHJHGGLVFULPLQDWLRQLQUDQNLQJPDQ\PRQWKVRU
\HDUVEHIRUHDIDLOXUHWRSURPRWH+HQFHWKHDVVLJQPHQWRI
DQ DOOHJHGO\ GLVFULPLQDWRU\ UDQNLQJ LV WKH UHOHYDQW
GLVFULPLQDWRU\ DFW HYHQ ZKHUH WKH ORZ UDQNLQJ LV QRW D
³FHUWDLQSUHOXGH´WRDQDGYHUVHHPSOR\PHQWDFWLRQ+XHOV
)G DW FI .HQQHG\ Y &KHPLFDO :DVWH
0DQDJHPHQW,QF)G WK&LU
$JDLQLWLVWKHDFWRIGLVFULPLQDWLRQDQGQRWDQ\HIIHFWRU
FRQVHTXHQFHWKDWWULJJHUVWKHWLPHWRILOHDQ((2&FKDUJH
7KHIDFWWKDWDSDUWLFXODUHIIHFWPD\RUPD\QRWPDWHULDOL]H
GRHVQRWFKDQJHLWVFKDUDFWHUDVDQHIIHFW
9
)RUWKHUHDVRQVVHWIRUWKDERYHWKHGLVWULFWFRXUW¶V2UGHU
GLVPLVVLQJWKHSODLQWLIIV¶FRPSODLQWLV$)),50('

-- 2 of 6 --

&R[HWDOY&LW\RI0HPSKLVHWDO 1R
ZKLFKQRWHGWKDW³SODLQWLIIVGRQRWDOOHJHWKDW1HZDUNZRXOG
KDYH IROORZHG DQ\WKLQJ EXW D QHXWUDO QRQGLVFULPLQDWRU\
SURFHGXUHLQKLULQJIURPWKHOLVW´)GDW6HHDOVR
+XHOVY([[RQ&RDO86$,QF)G WK&LU
:RRGVRQY,QW¶O%URWKHUKRRGRI(OHFWULFDO:RUNHUV
/RFDO )6XSS ' 0LQQ
FRQWLQXLQJ DFWV GRFWULQH GRHV QRW DSSO\ EHFDXVH XVH RI
IDFLDOO\ QHXWUDO SROLF\ LV PHUHO\ FXUUHQW HIIHFW RI SDVW
GLVFULPLQDWRU\DFWV
0RUHRYHUWKHUHDUHLPSRUWDQWSROLF\FRQVLGHUDWLRQVWKDW
FRXQVHODJDLQVWWUHDWLQJSURPRWLRQVIURPDTXHVWLRQDEOHOLVW
DVDFRQWLQXLQJDFW)RULQVWDQFHFRXUWVPXVWWDNHFDUHQRWWR
³H[SRVH HPSOR\HUV WR D YLUWXDOO\ RSHQHQGHG SHULRG RI
OLDELOLW\´$EUDPVY%D\ORU&ROOHJHRI0HGLFLQH)G
WK&LU 7RDOORZHPSOR\HHVWRFKDOOHQJHDQ
HOLJLELOLW\URVWHUGXULQJWKHHQWLUHWLPHLWLVXVHGZRXOGEHWR
FUHDWH VXEVWDQWLDO XQFHUWDLQW\ IRU HPSOR\HUV ZKR KDYH WR
PDNHLPSRUWDQWVWDIILQJGHFLVLRQVEDVHGXSRQWKHOLVW7KLV
LV DQ LPSRUWDQW FRQVLGHUDWLRQ JLYHQ WKDW PDQ\ URVWHUV DUH
LQWHQGHG WR EH XVHG IRU VHYHUDO \HDUV DIWHU WKH\ DUH
SURPXOJDWHG&I3HQWRQ,QGXV)GDW FRXUWVPXVW
QRWUHGXFHVWDWXWHVRIOLPLWDWLRQV³WRDQXOOLW\´ +HUHIRU
LQVWDQFH WKH SODLQWLIIV ZHUH SODFHG RQ DQ DOOHJHGO\
GLVFULPLQDWRU\OLVWLQ0D\EXWWKH\GLGQRWILOH((2&
FKDUJHVXQWLO1RYHPEHU+HQFHSODLQWLIIV¶VXLWFRXOG
KDYHEHHQEURXJKWDWDPXFKHDUOLHUWLPHDQGDVDUHVXOWRI
WKH GHOD\ WKH SRWHQWLDO OLWLJDWLRQ ZRXOG KDYH FDOOHG LQWR
TXHVWLRQDQRUJDQL]DWLRQDOVWUXFWXUHWKDWKDGEHHQLQSODFHIRU
WZR\HDUV
,9
$OWKRXJKDWILUVWEOXVKWKLVFDVHIDOOVVTXDUHO\ZLWKLQSULRU
FDVHODZDGLVWLQFWLRQWKDWFDQEHPDGHLVWKDWWKHDOOHJHG
GLVFULPLQDWLRQLQWKHSUHVHQWFDVHGLGQRWUHVXOWLQSODLQWLIIV¶
H[FOXVLRQ IURP WKH OLVW RI HOLJLEOH FDQGLGDWHV EXW PHUHO\
DIIHFWHG WKHLU UDQNLQJ RQ WKDW OLVW 7KDW LV HYHQ DIWHU WKH
DOOHJHG GLVFULPLQDWLRQ WKH SODLQWLIIV ZHUH VWLOO SRWHQWLDO
SURPRWHHVDQGFRXOGKROGRXWWKHKRSHWKDWWKH\ZRXOGEH
1R &R[HWDOY&LW\RI0HPSKLVHWDO
7KH SDUWLHV GR QRW H[SODLQ ZK\ WKH VHFRQG URXQG RI SURPRWLRQV
RFFXUUHG DIWHU WKH DSSDUHQW H[SLUDWLRQ GDWH RI WKH URVWHU KRZHYHU WKLV
SRLQW LV QRW LPSRUWDQW WR WKLV DSSHDO
SURPRWLRQVIURPWKHHOLJLELOLW\OLVW1RQHRIWKHSODLQWLIIV
ZHUHVHOHFWHGLQHLWKHUWKHILUVWRUVHFRQGURXQG
7KHUHDIWHUSODLQWLIIV6KDURQ:&R[3DWULFLD$/RYHWW
%UHQGD30DSOHVDQG3DWULFLD&3HQGOHWRQILOHGFKDUJHVZLWK
WKH (TXDO (PSOR\PHQW 2SSRUWXQLW\ &RPPLVVLRQ RQ
1RYHPEHU3ODLQWLII&DQGDFH$+DOHILOHGIRXUGD\V
ODWHU 2Q 1RYHPEHU WKH ((2& GLVPLVVHG WKH
SODLQWLIIV¶FKDUJHV²DOORIZKLFKKDGEHHQILOHGPRUHWKDQ
PRQWKVDIWHUSURPXOJDWLRQRIWKHHOLJLELOLW\OLVW²IRU³IDLOXUH
WR ILOH WKH FKDUJH ZLWKLQ WKH WLPH VSHFLILHG E\ ODZ´ 7KH
SODLQWLIIVUHFHLYHGD QRWLFHRIULJKWWRVXHDQGWLPHO\ILOHG
WKHLU&RPSODLQWLQIHGHUDOFRXUWRQ)HEUXDU\
$FFRUGLQJWRWKH&RPSODLQWPRVWRIWKHH[HFXWLYHRIILFHUV
RIWKH03'LQFOXGLQJGHIHQGDQW:LQIUH\DUHEODFNPDOHV
7KH&RPSODLQWDOOHJHVWKDWWKRVHLQFRPPDQGRIWKHWHVWLQJ
SURFHVV DV ZHOO DV WKRVH WR ZKRP PDQDJHPHQW GHOHJDWHG
UHVSRQVLELOLW\ WR FRQGXFW WKH WHVWV GHOLEHUDWHO\ VHW RXW WR
GLVFULPLQDWH DJDLQVW ZKLWH IHPDOHV LQ WKH SURPRWLRQDO
SURFHVV7KH&RPSODLQWVSHFLILFDOO\DOOHJHVWKDWWKH03'
FRDFKHGSUHIHUUHGHPSOR\HHVLQDGYDQFHRIWKHWHVWE\JLYLQJ
WKHPDQVZHUVWRTXHVWLRQVWKDWWKHPDQDJHPHQWNQHZWREH
RQ WKH WHVW DQG E\ JLYLQJ WKHP WHVW TXHVWLRQV IRU VWXG\
SXUSRVHV
3ODLQWLIIV ILOHG WKLV FLYLO DFWLRQ DOOHJLQJ UDFLDO
GLVFULPLQDWLRQ XQGHU 86& † H I 86&
†DQG7HQQHVVHH&RGH† D 2Q0DUFK
GHIHQGDQWVILOHGDPRWLRQWRGLVPLVVSUHGLFDWHGHQWLUHO\
RQVWDWXWHRIOLPLWDWLRQVJURXQGV3ODLQWLIIVUHVSRQGHGDQG
ILOHGDPRWLRQWRDPHQGWKHLU&RPSODLQWLQRUGHUWRFODULI\
WKHLUFRQWHQWLRQWKDWHDFKSURPRWLRQIURPWKHHOLJLELOLW\OLVW
FRQVWLWXWHGDVHSDUDWHDFWRIGLVFULPLQDWLRQ7KHGLVWULFWFRXUW
JUDQWHGERWKPRWLRQVRQ0D\ILQGLQJWKDWSODLQWLIIV
KDGIDLOHGWRWLPHO\ILOHWKHLU((2&FKDUJHVDQGWKDWWKHLUVXLW

-- 3 of 6 --

&R[HWDOY&LW\RI0HPSKLVHWDO 1R
,I D FKDUJH LV SXUVXHG ZLWK WKH HTXLYDOHQW VWDWH DJHQF\ D SODLQWLII
KDV GD\V LQ ZKLFK WR EULQJ D FKDUJH ZLWK WKH ((2& 86&
† H H 7KLV H[WHQGHG ILOLQJ SURYLVLRQ GRHV QRW DIIHFW WKH
SUHVHQW FDVH H[FHSW WKDW FHUWDLQ SUHFHGHQWV GLVFXVV D GD\ UXOH
$OWKRXJK WKH ³GLVFULPLQDWRU\ DFW´ LQ WKLV FDVH PD\ EH WKH FRDFKLQJ
RI SUHIHUUHG HPSOR\HHV WKH SDUWLHV DQG PRVW RI WKH FDVH ODZ DSSDUHQWO\
ILQG LW PRUH FRQYHQLHQW WR LGHQWLI\ WKH SURPXOJDWLRQ RI DQ HOLJLELOLW\ URVWHU
DV WKH LQLWLDO GLVFULPLQDWRU\ DFW
$SSHOODQWV DSSDUHQWO\ FRQFHGH WKDW D UXOLQJ RQ ³FRQWLQXLQJ DFWV´
XQGHU † H H LV GLVSRVLWLYH RQ ZKHWKHU SODLQWLIIV ILOHG WLPHO\
XQGHU 86& † DQG 7HQQHVVHH &RGH † D
WKHUHIRUH FRXOG QRW SURFHHG 7KH GLVWULFW FRXUW HQWHUHG
MXGJPHQWRQ0D\DQGSODLQWLIIVWLPHO\ILOHGD1RWLFH
RI$SSHDORQ-XQH
,,
,QRUGHUWRUHFRYHUIRUDGLVFULPLQDWRU\DFWXQGHU7LWOH9,,
RIWKH&LYLO5LJKWV$FWRI86&††HHWVHT
D SODLQWLII PXVW WLPHO\ ILOH D FKDUJH ZLWK WKH ((2& 6HH
((2&Y)RUG0RWRU&UHGLW&R)G WK&LU
$ FKDUJH RI GLVFULPLQDWLRQ PXVW EH ILOHG ZLWK WKH
((2&ZLWKLQGD\VDIWHUWKHDOOHJHGXQODZIXOHPSOR\PHQW
SUDFWLFHRFFXUUHG86&†H H 7KHXVXDO
UXOH LQ GLVFULPLQDWLRQ FDVHV LV WKDW WKLV WLPH IRU ILOLQJ LV
³WULJJHUHG DW WKH WLPH WKH DOOHJHG GLVFULPLQDWRU\ DFW
RFFXUUHG´'L[RQY$QGHUVRQ)G WK&LU
TXRWLQJ3HQWRQ,QGXV3XE&R)G
WK &LU 7KH SDUWLHV VHHP WR DJUHH WKDW WKH
³GLVFULPLQDWRU\ DFW´ LQ WKLV FDVH RFFXUUHG ZLWK WKH
SURPXOJDWLRQRIWKHHOLJLELOLW\OLVWRQ0D\7KH
SDUWLHV GLIIHU KRZHYHU RQ ZKHWKHU WKH GRFWULQH RI
³FRQWLQXLQJDFWV´ZKLFKFUHDWHVDQDUURZH[FHSWLRQWRWKH
XVXDO UXOH EULQJV WKH SODLQWLIIV¶ &RPSODLQW ZLWKLQ WKH
OLPLWDWLRQVSHULRG
1R &R[HWDOY&LW\RI0HPSKLVHWDO
NQRZQKHZDVQRWJRLQJWREHSURPRWHG´ 9DQ=DQWY
./05R\DO'XWFK$LUOLQHV)G G&LU
VWDWLQJ LQ GLFWD WKDW WKH FRQWLQXLQJ YLRODWLRQ H[FHSWLRQ
DSSOLHVZKHQWKHUHLVHYLGHQFHRIDQRQJRLQJGLVFULPLQDWRU\
SUDFWLFH³VXFKDVWKHXVHRIGLVFULPLQDWRU\VHQLRULW\OLVWVRU
HPSOR\PHQWWHVWV´
7KLV&RXUWEHOLHYHVWKHEHWWHU YLHZLVWKDWSURPRWLRQRU
KLULQJIURPDQDOOHJHGO\WDLQWHGSURPRWLRQVURVWHULVQRWD
³FRQWLQXLQJ DFW´ EXW LV PHUHO\ WKH HIIHFW RI SUHYLRXV
GLVFULPLQDWLRQ,WLVDWWKHSRLQWRISURPXOJDWLRQRIWKHURVWHU
WKDWDSRWHQWLDOSODLQWLIILVDZDUHWKDWDOOHJHGGLVFULPLQDWLRQ
LV OLNHO\ WR SOD\ D SLYRWDO UROH LQ KHU IXWXUH DGYDQFHPHQW
+HQFHWKHSURPXOJDWLRQRIDQDOOHJHGO\WDLQWHGURVWHULVDQ
HYHQW WKDW ³μVKRXOG DOHUW> @ WKH DYHUDJH OD\ SHUVRQ WR
SURWHFWKLVULJKWV¶´&RQOLQY%ODQFKDUG)G
WK &LU FLWDWLRQ RPLWWHG )XUWKHU WKH DOOHJHGO\
WDLQWHGURVWHULQWKLVFDVHZDVWREHXVHGLQWKHSURPRWLRQV
SURFHVVIRUWZR\HDUVDIWHULWVSURPXOJDWLRQ,WWKHUHIRUH³KDG
μWKHGHJUHHRISHUPDQHQFHWKDWVKRXOGWULJJHUDQHPSOR\HH¶V
DZDUHQHVVRIDGXW\WRDVVHUWKLVRUKHUULJKWV¶´$QGHUVRQ
)GDW FLWDWLRQRPLWWHG
,Q DGGLWLRQ WKH IDFW WKDW WKH 03'¶V HOLJLELOLW\ OLVW ZDV
QHXWUDORQLWVIDFHDQGWKDWWKHKLULQJSURFHGXUHRSHUDWHGLQ
DQHXWUDOPDQQHUDIWHUWKHOLVWZDVFRPSLOHGEULQJVWKLVFDVH
XQGHUWKHUXOHVDUWLFXODWHGLQ(YDQVDQG/RUDQFH$VWKH
SODLQWLIIVFRQFHGHWKHSURPRWLRQVZHUHPDGHQHXWUDOO\LH
LQUDQNRUGHUIURPWKHHOLJLELOLW\OLVWDQGDQ\GLVFULPLQDWLRQ
RFFXUUHGLQWKHFRPSLODWLRQRIWKHOLVW6XFKIDFLDOQHXWUDOLW\
SOD\HGDUROHLQ'L[RQY$QGHUVRQ)G WK&LU
ZKHUHWKHSODLQWLIIVDOOHJHGWKDWWKHLUQRQPHPEHUVKLS
LQDUHWLUHPHQWV\VWHPZDVWKHUHVXOWRIGLVFULPLQDWLRQDQG
FODLPHGWKDWWKHXVHRIWKHV\VWHPFRQVWLWXWHGDFRQWLQXLQJ
YLRODWLRQ 7KH FRXUW VWDWHG WKDW ³>R@QFH WKH GLYLVLRQ LQWR
PHPEHUVDQGQRQPHPEHUVKDVEHHQPDGHWKHV\VWHP
RSHUDWHGQHXWUDOO\´DQGWKDW³SODLQWLIIV¶FDXVHRIDFWLRQZDV
WULJJHUHG ZKHQ WKH\ OHDUQHG RI WKHLU FODVVLILFDWLRQ DV QRQ
PHPEHUV´ ,G DW 7KH IDFLDO QHXWUDOLW\ RI DQ
HOLJLELOLW\ OLVW DOVR LQIOXHQFHG WKH FRXUW LQ %URQ]H 6KLHOGV

-- 4 of 6 --

&R[HWDOY&LW\RI0HPSKLVHWDO 1R
$V WR WKH SODLQWLIIV ZKR KDG SDVVHG WKH H[DPLQDWLRQ DQG PDGH WKH
OLVW WKH FRXUW GLVPLVVHG WKHLU FKDUJHV EHFDXVH WKH FRPSODLQW KDG EHHQ
ILOHG RYHU RQH DQG D KDOI \HDUV DIWHU H[SLUDWLRQ RI WKH OLVW )G DW

SURPRWLRQVWRWKHSODLQWLIIVZDVQRWDFRQWLQXLQJYLRODWLRQ
EHFDXVH WKH GHQLDO RI SURPRWLRQV ZDV D VHSDUDWH DQG
LQHYLWDEOHFRQVHTXHQFHRIWKHIDFWWKDWSODLQWLIIVZHUHQRWRQ
WKH KLULQJ OLVW ,G DW 7KH 7KLUG &LUFXLW DSSOLHG
%URQ]H6KLHOGVLQ+RRGY1HZ-HUVH\'HSWRI&LYLO6HUYLFH
)G G&LU ZKHUH1HZ-HUVH\ILUHILJKWHUV
FKDOOHQJHGWKHYDOLGLW\RIDFLYLOVHUYLFHH[DPLQDWLRQWKDWZDV
XVHG WRHVWDEOLVKWKHUDQNLQJRUGHURIDSURPRWLRQVURVWHU
7KHFRXUWDJDLQKHOGWKDWWKHVWDWXWHRIOLPLWDWLRQVEHJDQWR
UXQRQWKHGD\WKHURVWHUZDVSURPXOJDWHGDWOHDVWDVWRWKRVH
SODLQWLIIVZKRKDGQRWPDGHWKHOLVW,GDW
,QFRQWUDVWWRWKH7KLUG&LUFXLWWKH6HFRQG&LUFXLWWUHDWV
KLULQJ IURP DQ DOOHJHGO\ WDLQWHG URVWHU DV DQ DFW RI
GLVFULPLQDWLRQ GLVWLQFW IURP WKH RULJLQDO DFWV RI
GLVFULPLQDWLRQ,Q*XDUGLDQV$VV¶QRI1HZ<RUN&LW\3ROLFH
'HSWY&LYLO6HUYLFH&RPP¶QRI&LW\RI1HZ<RUN)G
G &LU SODLQWLIIV DOOHJHG WKDW WKH 1HZ <RUN
3ROLFH 'HSDUWPHQW¶V FLYLO VHUYLFH H[DPV DGPLQLVWHUHG LQ
ZHUHGLVFULPLQDWRU\7KHTXHVWLRQLQ*XDUGLDQVZDV
ZKHWKHUWKHGHIHQGDQWKDGFRPPLWWHGDQ\GLVFULPLQDWRU\DFWV
DIWHUWKH\HDULQZKLFK7LWOH9,,ZDVPDGHDSSOLFDEOHWR
PXQLFLSDOLWLHV,GDW7KH6HFRQG&LUFXLWXSKHOGWKH
GLVWULFW FRXUW¶V KROGLQJ WKDW ³WKH GHSDUWPHQW¶V UHOLDQFH RQ
HOLJLELOLW\ OLVWV UHIOHFWLQJ SHUIRUPDQFH RQ GLVFULPLQDWRU\
H[DPLQDWLRQVFRQVWLWXWHGDSURJUDPRIGLVFULPLQDWRU\KLULQJ
ZKLFKWHUPLQDWHGRQO\ZKHQWKHODVWSHUVRQZDVKLUHGRIIWKH
OLVWV²WKDWLVLQ2FWREHURI´,GDW7KHFRXUW
UHMHFWHG WKH YLHZ WKDW WKH RSHUDWLYH HYHQW LQ WKH KLULQJ
SURFHGXUHZDVWKHSURPXOJDWLRQRIWKHHOLJLELOLW\OLVWVDQGWKDW
WKHGHSDUWPHQW¶VUHIXVDOVWRKLUHZHUHPHUHO\HIIHFWVRIHDUOLHU
GLVFULPLQDWRU\FRQGXFW,GDWVHHDOVR+DUULVY
&LW\RI1HZ<RUN)G G&LU GXW\WR
ILOHFKDUJHVGLGQRWFRPPHQFHXQWLOHOLJLELOLW\OLVWH[SLUHG
EHFDXVHLWZDVDW WKDWSRLQWWKDWWKHSODLQWLII³VKRXOGKDYH
1R &R[HWDOY&LW\RI0HPSKLVHWDO
7KH DSSHOODQWV DOVR DSSHDU WR FRQFHGH WKDW WKH VHFRQG FDWHJRU\ RI
FRQWLQXLQJ DFWV ZKLFK DULVHV ZKHQ WKHUH LV D ORQJVWDQGLQJ DQG
GHPRQVWUDEOH SROLF\ RI GLVFULPLQDWLRQ VHH 'L[RQ )G DW GRHV
QRW DSSO\ WR WKLV FDVH
7KHUHDUHWZRFDWHJRULHVRI³FRQWLQXLQJDFWV´DQGRQO\WKH
ILUVW LV JHUPDQH WR WKLV DSSHDO 7KH ILUVW FDWHJRU\ RI
FRQWLQXLQJDFWVDULVHVZKHQWKHUHLVDQRQJRLQJFRQWLQXRXV
VHULHVRIGLVFULPLQDWRU\DFWV6HH+DLWKFRFNY)UDQN
)G WK&LU ,QVXFKDFDVHWKHVHULHVRI
DFWVPD\EHFKDOOHQJHGLQWKHLUHQWLUHW\DVORQJDVRQHRIWKRVH
GLVFULPLQDWRU\ DFWV IDOOV ZLWKLQ WKH OLPLWDWLRQV SHULRG ,G
+RZHYHUDFULWLFDOGLVWLQFWLRQLQWKHFRQWLQXLQJDFWVGRFWULQH
LV WKDW WKH OLPLWDWLRQV SHULRG EHJLQV WR UXQ LQ UHVSRQVH WR
GLVFULPLQDWRU\DFWVWKHPVHOYHVUDWKHUWKDQLQUHVSRQVHWRWKH
FRQWLQXLQJ HIIHFWV RI SDVW GLVFULPLQDWRU\ DFWV 'L[RQ
)GDW FLWLQJ'HODZDUH6WDWH&ROOHJHY5LFNV86
DQG8QLWHG$LUOLQHVY(YDQV86

3ODLQWLIIV FRQWHQG WKDW GHIHQGDQWV FRPPLWWHG D VHSDUDWH
GLVFULPLQDWRU\DFWHDFKWLPHWKH\SURPRWHGVRPHRQHRQWKH
EDVLVRIWKHDOOHJHGO\IODZHGHOLJLELOLW\OLVW3ODLQWLIIVSRLQW
RXWWKDW³HDFKWLPHSURPRWLRQVDUHJUDQWHGMRERSHQLQJVPXVW
EHHYDOXDWHGFKDQJHGFRQGLWLRQVPXVWEHWDNHQLQWRDFFRXQW
DQG WKH GHFLVLRQPDNLQJ SURFHVV PXVW EH UHQHZHG WR
GHWHUPLQHZKHWKHUSURPRWLRQVVKRXOGEHDZDUGHGLQWKHILUVW
SODFH DQG ZKHWKHU WKH OLVW VWLOO FRQWUROV WKH SURPRWLRQDO
SURFHVV´2QWKHRWKHUKDQGWKHGHIHQGDQWVDUJXHWKDWWKH
SURPRWLRQV DUH QRW LQ WKHPVHOYHV GLVFULPLQDWRU\ DFWV
$FFRUGLQJ WR GHIHQGDQWV WKH GLVWULFW MXGJH ZDV FRUUHFW LQ
VWDWLQJWKDW³WKHDFWXDOSURPRWLRQVWKHPVHOYHVDWIXWXUHGDWHV
FRQVWLWXWHGDQHIIHFWRIWKHRULJLQDOGLVFULPLQDWRU\DFW´
,,,
7KH6L[WK&LUFXLWKDVQRSUHFHGHQWRQZKHWKHUSURPRWLRQV
IURPDQDOOHJHGO\WDLQWHGHOLJLELOLW\OLVWFRQVWLWXWHFRQWLQXLQJ
DFWV+RZHYHUWKHUHDUHDIHZ6XSUHPH&RXUWFDVHVWKDW
ZKLOH QRW GLUHFWO\ RQ SRLQW VXJJHVW WKDW WKH\ DUH QRW ,Q

-- 5 of 6 --

&R[HWDOY&LW\RI0HPSKLVHWDO 1R
'HODZDUH6WDWH&ROOHJHY5LFNV86 WKH
SODLQWLIIZDVD/LEHULDQSURIHVVRUZKRFODLPHGGLVFULPLQDWLRQ
RQWKHEDVLVRIKLVQDWLRQDORULJLQ5LFNVZDVQRWLILHGDWWKH
EHJLQQLQJRIWKHVFKRRO\HDUWKDWKHZRXOGQRWUHFHLYHWHQXUH
$V LV XVXDOO\ WKH SUDFWLFH WKH XQLYHUVLW\ RIIHUHG KLP D
³WHUPLQDOFRQWUDFW´ WKDWDOORZHGKLPWRWHDFKIRURQH\HDU
EHIRUHKHZDVUHOHDVHG,GDW5LFNVDUJXHGWKDWWKH
WLPHIRUILOLQJKLV((2&FKDUJHFRPPHQFHGZKHQKHZDV
WHUPLQDWHGDQGQRWZKHQKHZDVGHQLHGWHQXUH
7KH &RXUW GLVDJUHHG ILQGLQJ WKDW ³WHUPLQDWLRQ RI
HPSOR\PHQWDW'HODZDUH6WDWHLVDGHOD\HGEXWLQHYLWDEOH
FRQVHTXHQFH RI WKH GHQLDO RI WHQXUH´ ,G DW 7KH
&RXUW QRWHG WKDW WKH SURSHU IRFXV LV XSRQ WKH WLPH RI WKH
GLVFULPLQDWRU\ DFWV QRW XSRQ WKH WLPH DW ZKLFK WKH
FRQVHTXHQFHVRIWKHDFWVEHFDPHPRVWSDLQIXO,GDW
7KH&RXUWDGGHGWKDW³>W@KHHPSKDVLVLVQRWXSRQWKHHIIHFWV
RIHDUOLHUHPSOR\PHQWGHFLVLRQVUDWKHULWLVXSRQZKHWKHU
DQ\SUHVHQWYLRODWLRQH[LVWV´,G FLWLQJ(YDQV86DW

$QRWKHUSHUWLQHQW6XSUHPH&RXUWFDVHLV8QLWHG$LUOLQHVY
(YDQV86 LQZKLFKDIOLJKWDWWHQGDQWZDV
IRUFHGWRUHVLJQLQEHFDXVHVKHYLRODWHGWKHFRPSDQ\¶V
SROLF\DJDLQVWHPSOR\LQJPDUULHGIOLJKWDWWHQGDQWV$FRXUW
ODWHU IRXQG WKH PDUULDJH SROLF\ WR EH LOOHJDO DQG 8QLWHG
$LUOLQHVGLVFRQWLQXHGLWEXWWKHSODLQWLIIKDGQRWEHHQDSDUW\
LQ WKH HDUOLHU FDVH DQG KDG QRW ILOHG ((2& FKDUJHV
FKDOOHQJLQJ KHU IRUFHG UHVLJQDWLRQ ,G DW ,Q
1RYHPEHU 8QLWHG SURYLGHG IRU WKH UHLQVWDWHPHQW RI
FHUWDLQIOLJKWDWWHQGDQWVZKRKDGEHHQWHUPLQDWHGSXUVXDQWWR
LWVQRPDUULDJHUXOH7KHSODLQWLIIZDVQRWUHLQVWDWHGZLWKWKH
RWKHUVEXWZDVUHKLUHGLQDVDQHZHPSOR\HHZLWKRXW
KHUSUHYLRXVVHQLRULW\VWDWXV,GDW6KHVXHGFODLPLQJ
WKDWWKHIDLOXUHWRUHLQVWDWHZDVD³FRQWLQXLQJDFW´EHFDXVH
³WKHVHQLRULW\V\VWHPJLYHVSUHVHQWHIIHFWWRWKHSDVWLOOHJDODFW
DQG WKHUHIRUH SHUSHWXDWHV WKH FRQVHTXHQFHV RI IRUELGGHQ
GLVFULPLQDWLRQ´,GDW
1R &R[HWDOY&LW\RI0HPSKLVHWDO
7KH VSHFLILF KROGLQJ LQ /RUDQFH ZDV VXSHUVHGHG E\ VWDWXWH LQ
6HH 86& † H H
7KH&RXUWUHMHFWHGWKDWDUJXPHQWVWDWLQJWKDWDOWKRXJKWKH
VHQLRULW\V\VWHPKDVDFRQWLQXLQJLPSDFWRQWKHSODLQWLII¶VSD\
DQG IULQJH EHQHILWV ³WKH FULWLFDO TXHVWLRQ LV ZKHWKHU DQ\
SUHVHQWYLRODWLRQH[LVWV´,GDW)LQGLQJWKDWWKHUHZDV
QRSUHVHQWYLRODWLRQWKH&RXUWHPSKDVL]HGWKDW³WKHV\VWHP
LVQHXWUDOLQLWVRSHUDWLRQ´EHFDXVHWKHUHZDVQRLQGLFDWLRQ
WKDWLWGLVFULPLQDWHVDJDLQVWIRUPHUIHPDOHHPSOR\HHVRUWKDW
LW WUHDWV IRUPHU HPSOR\HHV GLVFKDUJHG IRU D GLVFULPLQDWRU\
UHDVRQGLIIHUHQWO\IURPWKRVHZKRZHUHQRW,G
$QRWKHUUHOHYDQW6XSUHPH&RXUWFDVHLV/RUDQFHY$7 7
7HFKQRORJLHV,QF86 LQZKLFKWKH&RXUW
KHOGWKDWDFODLPRIGLVFULPLQDWLRQEDVHGRQDIDFLDOO\QHXWUDO
VHQLRULW\V\VWHPEHJLQVWRUXQDWWKHWLPHRIDGRSWLRQRIWKH
VHQLRULW\V\VWHP/RUDQFHVWDQGVIRUWKHSURSRVLWLRQWKDW
WKH GLVWLQFWLRQ GRHV QRW WXUQ RQ WKH W\SH RI
GLVFULPLQDWLRQ EXW RQ ZKHWKHU WKH SUDFWLFH DW LVVXH LV
SDUWRIRUDUHSHWLWLRQRIDSDVWGLVFULPLQDWRU\DFWLQ
ZKLFKFDVHWKHUHLVDFRQWLQXLQJYLRODWLRQRUZKHWKHULW
LV IDFLDOO\ QHXWUDO VLPSO\ JLYLQJ HIIHFW WR SULRU
GLVFULPLQDWLRQ LQ ZKLFK FDVH WKHUH LV QR FRQWLQXLQJ
YLRODWLRQ
$QGHUVRQY&LW\RI%ULVWRO)G WK&LU
FLWDWLRQRPLWWHG
2QO\DKDQGIXORIORZHUFRXUWVKDYHJUDSSOHGZLWKWKHLVVXH
RIWDLQWHGHOLJLELOLW\OLVWV7KHGHIHQGDQWVUHO\SULPDULO\RQ
7KLUG&LUFXLWFDVHVKROGLQJWKDWWKHSURPXOJDWLRQRIDIDFLDOO\
QHXWUDOSURPRWLRQVURVWHUWULJJHUVWKHWLPHIRUILOLQJDQ((2&
FKDUJHDQGVXEVHTXHQWSURPRWLRQVRUKLULQJGHFLVLRQVEDVHG
RQVXFKDOLVWDUHQRWFRQWLQXLQJDFWV,Q%URQ]H6KLHOGV,QF
Y1HZ-HUVH\'HSWRI&LYLO6HUYLFH)G G&LU
SODLQWLIIVKDGIDLOHGDFLYLOVHUYLFHH[DPLQDWLRQXVHG
E\ WKH &LW\ RI 1HZDUN WR GHWHUPLQH HOLJLELOLW\ IRU KLULQJ
SROLFHRIILFHUV7KHFRXUWKHOGWKDWXVHRIWKHOLVWLQGHQ\LQJ

-- 6 of 6 --

Continue your research in ChatGPT or Claude

Connect Omnilex to search the legal corpus from your AI assistant.