01a0245p.06

8QLWHG6WDWHVY6]RND 1R
6]RNDSHQGLQJWKHFRPSOHWLRQRIWKH)&&¶VDGPLQLVWUDWLYH
UXOHPDNLQJSURFHVV
,,,
)RUWKHIRUHJRLQJUHDVRQVWKHMXGJPHQWRIWKHGLVWULFWFRXUW
LV$)),50('
7KH +RQRUDEOH 5REHUW + &OHODQG 8QLWHG 6WDWHV 'LVWULFW -XGJH IRU
WKH (DVWHUQ 'LVWULFW RI 0LFKLJDQ 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
81,7(' 67$7(6 2) $0(5,&$
3ODLQWLII$SSHOOHH
Y
-(55< 6=2.$
'HIHQGDQW$SSHOODQW
;!

1
1R
$SSHDOIURPWKH8QLWHG6WDWHV'LVWULFW&RXUW
IRUWKH1RUWKHUQ'LVWULFWRI2KLRDW&OHYHODQG
1R².DWKOHHQ0F'RQDOG2¶0DOOH\
'LVWULFW-XGJH
$UJXHG-XQH
'HFLGHGDQG)LOHG-XO\
%HIRUH%2**6DQG68+5+(,15,&+&LUFXLW-XGJHV
DQG&/(/$1''LVWULFW-XGJH
BBBBBBBBBBBBBBBBB
&2816(/
$5*8(' 0DUN , :DOODFK &$/)(( +$/7(5
*5,6:2/' &OHYHODQG 2KLR IRU $SSHOODQW 0DUN 6
'DYLHV81,7('67$7(6'(3$570(172)-867,&(

-- 1 of 12 --

8QLWHG6WDWHVY6]RND 1R
&,9,/ ',9,6,21 $33(//$7( 6(&7,21 :DVKLQJWRQ
'&IRU$SSHOOHH21%5,()0DUN,:DOODFK&$/)((
+$/7(5 *5,6:2/' &OHYHODQG 2KLR -DPHV 0
0RRG\ .(//< 329,&+ :DVKLQJWRQ '& IRU
$SSHOODQW 6XVDQ 3DFKROVNL -DFRE 0 /HZLV 81,7('
67$7(6'(3$570(172)-867,&(&,9,/',9,6,21
$33(//$7(6(&7,21:DVKLQJWRQ'&IRU$SSHOOHH
BBBBBBBBBBBBBBBBB
23,1,21
BBBBBBBBBBBBBBBBB
%2**6&LUFXLW-XGJH'HIHQGDQW-HUU\6]RNDDSSHDOVWKH
GLVWULFW FRXUW¶V GHFLVLRQ SHUPDQHQWO\ HQMRLQLQJ KLP IURP
PDNLQJXQDXWKRUL]HGUDGLRWUDQVPLVVLRQVLQYLRODWLRQRI
86&†)RUWKHIROORZLQJUHDVRQVZHDIILUP
,
,Q 6HSWHPEHU 6]RND D OLFHQVHG HOHFWULFLDQ DQG
IRUPHU WHFKQLFDO DGYLVHU DW D FROOHJH UDGLR VWDWLRQ EHJDQ
RSHUDWLQJ*ULG5DGLRRQDQHPSW\IUHTXHQF\)0ZLWK
DORZSRZHURXWSXWRIZDWWVLQ&OHYHODQG2KLR7KH
VWDWLRQZDVQDPHGIRU³7KH*ULG´D&OHYHODQGQLJKWFOXEWKDW
6]RNDSDUWLDOO\RZQV:KLOHLWZDVRQWKHDLU*ULG5DGLR
ELOOHGLWVHOIDVDQRQSURILWFRPPXQLW\RULHQWHGDOOYROXQWHHU
EURDGFDVWVWDWLRQ7KHVWDWLRQSULPDULO\SOD\HGGDQFHPXVLF
EXWDOVRVHUYHGWKHLQIRUPDWLRQDQGHQWHUWDLQPHQWQHHGVRIWKH
JD\OHVELDQDQGDUWVFRPPXQLWLHVRI&OHYHODQG
6]RNDGLGQRWDSSO\IRUDEURDGFDVWOLFHQVHIURPWKH)HGHUDO
&RPPXQLFDWLRQV &RPPLVVLRQ )&& DV UHTXLUHG E\ WKH
&RPPXQLFDWLRQV$FWRI ³WKH&RPPXQLFDWLRQV$FW´RU
³WKH$FW´ 86&†6]RNDDVVHUWVWKDWKHGLGQRW
DSSO\IRUDOLFHQVHEHFDXVHRIWKH)&&¶VEDQRQORZSRZHU
1R 8QLWHG6WDWHVY6]RND
3UD\]H )0 ZKHWKHU D EURDGFDVWHU FDQ UDLVH FRQVWLWXWLRQDO DUJXPHQWV WR
WKH GLVWULFW FRXUW LQ GHIHQVH DJDLQVW WKH JRYHUQPHQW¶V PRWLRQ IRU DQ
LQMXQFWLRQ ZKHQ DQ )&& FHDVH DQG GHVLVW RUGHU KDV QRW SUHYLRXVO\ EHHQ
LVVXHG

6]RND DOVR DUJXHV WKDW WKH GLVWULFW FRXUW ZDV UHTXLUHG WR
DZDLWWKHUHVROXWLRQRIKLVDSSHDOWRWKH'&&LUFXLWEHIRUH
UXOLQJRQWKH)&&¶VPRWLRQIRUDQLQMXQFWLRQ7KHUHLVQR
EDVLVLQODZIRUWKLVDUJXPHQW&HDVHDQGGHVLVWRUGHUVIURP
WKH)&&DUHHIIHFWLYHRQWKHGDWHRIWKHLUUHOHDVHZKLFKLQ
WKLVFDVHZDV-XQHILYHGD\VDIWHUWKH)&&DGRSWHG
LWVGHFLVLRQDIILUPLQJWKH$/-¶VFHDVHDQGGHVLVWRUGHU6HH
&)5†† D E $WWKDWSRLQWWKHDJJULHYHG
SDUW\ LV GLUHFWHG WR WKH '& &LUFXLW WR DSSHDO WKH RUGHU
SXUVXDQWWR86&† E DQGWKH)&&LVGLUHFWHGWR
WKHGLVWULFWFRXUWWRVHHNHQIRUFHPHQWSXUVXDQWWR86&
† E 6]RNDLVXQDEOHWRSRLQWWRDQ\SURYLVLRQRIWKH$FW
WKDWVWDWHVWKDWDFHDVHDQGGHVLVWRUGHULVQRWHIIHFWLYHXSRQ
LWVUHOHDVHRUWKDWDGLVWULFWFRXUWLVSUHYHQWHGIURPHQIRUFLQJ
VXFKDQRUGHUXQWLODSSHOODWHSURFHHGLQJVLQWKH'&&LUFXLW
DUHFRQFOXGHG7KLVLVXQVXUSULVLQJEHFDXVHWKHH[LVWHQFHRI
VXFKDSURYLVLRQZRXOGSUHYHQWWKH)&&IURPHQIRUFLQJLWV
UHJXODWLRQVDQGZRXOGHQDEOHDEURDGFDVWHUDJDLQVWZKRPDQ
RUGHUZDVHQWHUHGWRGHOD\WKHHQIRUFHPHQWRIWKHRUGHUE\
GUDJJLQJRXWWKHDSSHDOVSURFHVV0RUHRYHUSXUVXDQWWR
86&† F 6]RNDKDGWKHRSSRUWXQLW\WRILOHDPRWLRQWR
H[SHGLWHKLVDSSHDOLQWKH'&&LUFXLWRUDPRWLRQWRVWD\WKH
HIIHFWLYHQHVVRIWKHFHDVHDQGGHVLVWRUGHUSHQGLQJDSSHDOEXW
WKHUHLVQRLQGLFDWLRQWKDW6]RNDGLGVR6HHVXSUDQRWH
,QDGGLWLRQ6]RNDFRQWHQGVWKDWWKHGLVWULFWFRXUWVKRXOG
KDYHDZDLWHGWKHUHVROXWLRQRIWKH)&&¶VORZSRZHU)0UDGLR
DGPLQLVWUDWLYHUXOHPDNLQJSURFHHGLQJV7KLVDUJXPHQWLVDOVR
XQIRXQGHG7KH)&&WRRNDFWLRQDJDLQVW6]RNDEHFDXVHKH
ZDV EURDGFDVWLQJ ZLWKRXW D OLFHQVH QRW EHFDXVH KH ZDV
RSHUDWLQJZKDWZDVLQHIIHFWDORZSRZHU)0UDGLRVWDWLRQ
7KHUHLVQREDVLVIRUVWD\LQJWKHFXUUHQWSURFHHGLQJVDJDLQVW

-- 2 of 12 --

8QLWHG6WDWHVY6]RND 1R
2XU KROGLQJ LV QRW PHDQW WR FDVW DQ\ GRXEW RQ WKLV FRXUW¶V SULRU
KROGLQJ LQ 6WUDZFXWWHU :H KDYH GLVFXVVHG LQ GHWDLO WKH GLIIHUHQFH
EHWZHHQ WKH FLUFXPVWDQFHV RI WKLV FDVH LQ ZKLFK D EURDGFDVWHU FDQQRW
UDLVH FRQVWLWXWLRQDO DUJXPHQWV LQ GHIHQVH DJDLQVW WKH JRYHUQPHQW¶V PRWLRQ
IRU DQ LQMXQFWLRQ HQIRUFLQJ D FHDVH DQG GHVLVW RUGHU DQG WKRVH RI
6WUDZFXWWHU LQ ZKLFK D EURDGFDVWHU FDQ UDLVH FRQVWLWXWLRQDO DUJXPHQWV LQ
GHIHQVH DJDLQVW D FLYLO LQ UHP IRUIHLWXUH DFWLRQ XQGHUWDNHQ E\ WKH )&&
2XU KROGLQJ LV OLPLWHG WR WKH FLUFXPVWDQFHV RI WKLV FDVH :H UHVHUYH
IRU DQRWKHU GD\ WKH TXHVWLRQ IDFHG E\ WKH FRXUWV LQ )ULHG 'XQLIHU DQG
,G DW FLWLQJ 6DEOH &RPPXQLFDWLRQV RI &DO ,QF Y
)&&)G WK&LU $VDUHVXOWWKH
FRXUWFRQFOXGHGWKDWWKHGLVWULFWFRXUWODFNHGMXULVGLFWLRQRYHU
WKHEURDGFDVWHU¶VFRQVWLWXWLRQDODUJXPHQWVRQWKHEDVLVRI
86&† D DQG86&†
,Q3UD\]H)0Y)&&)G G&LU
WKH 6HFRQG &LUFXLW KHOG WKDW DOWKRXJK D PLFUREURDGFDVWHU
ODFNHGVWDQGLQJWREULQJDQDVDSSOLHGFKDOOHQJHWRWKH)&&
ORZSRZHU UDGLR UHJXODWLRQV VLQFH WKH EURDGFDVWHU KDG QRW
DSSOLHG IRU D OLFHQVH WKH EURDGFDVWHU FRXOG EULQJ D IDFLDO
FKDOOHQJHWRWKHUHJXODWLRQV
2XUUHDVRQLQJGLIIHUVIURPWKDWRIRWKHUFLUFXLWFRXUWVWKDW
KDYHDGGUHVVHGZKHWKHUDQXQOLFHQVHGPLFUREURDGFDVWHUFDQ
UDLVHFRQVWLWXWLRQDOGHIHQVHVDJDLQVWWKHJRYHUQPHQW¶VPRWLRQ
IRUDQLQMXQFWLRQ7KHGLIIHUHQFHLVEDVHGRQWKHIDFWWKDWLQ
WKLVFDVHWKH)&&LVVHHNLQJDQLQMXQFWLRQWRHQIRUFHDFHDVH
DQG GHVLVW RUGHU UDWKHU WKDQ DFWLQJ SXUVXDQW WR LWV JHQHUDO
HQIRUFHPHQWSRZHUVXQGHU86&† D :HEDVHRXU
GHFLVLRQ RQWKHVWDWXWRU\ODQJXDJHRIWKH&RPPXQLFDWLRQV
$FW 86& † E ZKLFK GLUHFWV WKDW DSSHDOV RI
FHDVHDQGGHVLVWRUGHUVEHPDGHWRWKH'&&LUFXLWDQG
86&† E ZKLFKDOORZVWKH)&&WRVHHNDQLQMXQFWLRQ
HQIRUFLQJLWVFHDVHDQGGHVLVWLQGLVWULFWFRXUW5HDGLQJWKHVH
VWDWXWRU\SURYLVLRQVWRJHWKHUZHGRQRWEHOLHYHWKDWZKHQ
GHWHUPLQLQJZKHWKHUWRLVVXHDQLQMXQFWLRQWKHGLVWULFWFRXUW
FDQ FRQVLGHU WKH FRQVWLWXWLRQDO DUJXPHQWV RI DQ LQGLYLGXDO
DJDLQVW ZKRP DQ )&& FHDVH DQG GHVLVW RUGHU KDV EHHQ
LVVXHG
1R 8QLWHG6WDWHVY6]RND
7KH )&& JUDQWV )0 EURDGFDVW OLFHQVHV XQGHU IRXU VHSDUDWH
FODVVLILFDWLRQV $ WKURXJK ' GHSHQGLQJ XSRQ IDFWRUV VXFK DV WUDQVPLVVLRQ
SRZHU DQWHQQD KHLJKW DQG WKH DUHD RU SODFH IURP ZKLFK WKH EURDGFDVW LV
HPDQDWLQJ &)5 † HW VHT &ODVV ' OLFHQVHV DUH DOORFDWHG WR
VRFDOOHG ³PLFUREURDGFDVW´ ORZSRZHU )0 VWDWLRQV WKDW RSHUDWH DW D
SRZHU OHYHO RI OHVV WKDQ ZDWWV DQG DQ DSSUR[LPDWH UHFHSWLRQ DUHD RI
EHWZHHQ WZR WR WZHOYH PLOHV UDGLXV IURP WKH SRLQW RI WUDQVPLVVLRQ 8QGHU
UHJXODWLRQV LQ HIIHFW IURP XQWLO HDUO\ WKH )&& IRUEDGH WKH
LVVXDQFH RI DOO IXWXUH &ODVV ' OLFHQVHV ZLWK FHUWDLQ OLPLWHG H[FHSWLRQV
&)5 †† D D F
2Q -DQXDU\ WKH )&& DGRSWHG QHZ UXOHV UHJDUGLQJ ORZ
SRZHU EURDGFDVWLQJ 6HH &UHDWLRQ RI /RZ 3RZHU 5DGLR 6HUYLFH )&&
5FG :/ UHOHDVHG -DQ 3XUVXDQW WR WKH QHZ
UXOHV WZR QHZ FODVVHV RI QRQFRPPHUFLDO HGXFDWLRQDO )0 UDGLR VWDWLRQV
DUH WR EH FUHDWHG RQH DW D PD[LPXP RI ZDWWV DQG RQH DW D PD[LPXP RI
ZDWWV ,QGLYLGXDOV ZKR FRQWLQXHG WR HQJDJH LQ XQOLFHQVHG
EURDGFDVWLQJ DIWHU )HEUXDU\ RU ZKR UHIXVHG WR VWRS XQOLFHQVHG
RSHUDWLRQV ³ZLWKLQ KRXUV RI EHLQJ DGYLVHG E\ WKH &RPPLVVLRQ WR GR
VR´ ZRXOG EH LQHOLJLEOH IRU D ORZSRZHU OLFHQVH XQGHU WKH QHZ UXOHV 6HH
LG DW SDUD
,Q OHJLVODWLRQ VLJQHG LQWR ODZ LQ ODWH &RQJUHVV PDQGDWHG DQ
HYHQ PRUH VWULQJHQW EDQ RQ WKH DELOLW\ RI SDVW XQOLFHQVHG EURDGFDVWHUV WR
REWDLQ ORZSRZHU )0 OLFHQVHV ,Q UHVSRQVH WR WKLV OHJLVODWLYH PDQGDWH
WKH )&& UHFHQWO\ PRGLILHG LWV UXOHV WR ³SURKLELW DQ\ DSSOLFDQW IURP
REWDLQLQJ D ORZSRZHU )0 OLFHQVH LI WKH DSSOLFDQW KDV HQJDJHG LQ DQ\
PDQQHU LQ WKH XQOLFHQVHG RSHUDWLRQ RI DQ\ VWDWLRQ LQ YLRODWLRQ RI VHFWLRQ
RI WKH &RPPXQLFDWLRQV $FW RI ´ &UHDWLRQ RI D /RZ 3RZHU
5DGLR 6HUYLFH )&& 1R :/ DW SDUD UHOHDVHG
$SU
6]RND KDG WKH RSSRUWXQLW\ WR ILOH DQ DSSOLFDWLRQ IRU D ORZSRZHU )0
OLFHQVH GXULQJ WKH )&&¶V ILOLQJ ZLQGRZ IRU DSSOLFDWLRQV IURP 2KLR ZKLFK
ZDV LQ -DQXDU\ 6HH /RZ 3RZHU )0 )LOLQJ :LQGRZ )&& 1R
:/ 'HF 7KH OLVW RI DSSOLFDWLRQV
UHOHDVHG E\ WKH )&& LQGLFDWHV WKDW WKH 6]RND GLG QRW DSSO\ IRU D OLFHQVH
GXULQJ WKLV ILOLQJ ZLQGRZ 6HH %URDGFDVW $SSOLFDWLRQV )&& 1R
:/ $SU (YHQ LI 6]RND KDG DSSOLHG WKH )&&¶V
UXOH SURKLELWLQJ SDVW XQOLFHQVHG EURDGFDVWHUV IURP REWDLQLQJ D ORZSRZHU
)0 OLFHQVH ZRXOG HIIHFWLYHO\ EDU 6]RND¶V DSSOLFDWLRQ 6HH )&& 1R
:/ DW SDUD VWDWLQJ WKDW WKH )&& ³ZLOO GLVPLVV
WKRVH DSSOLFDWLRQV QRZ RQ ILOH WKDW UHVSRQGHG μ1R¶ WR )&& )RUP >WKH
ORZSRZHU )0 OLFHQVH DSSOLFDWLRQ IRUP@ 6HFWLRQ ,,, 4XHVWLRQ D ´
RUPLFURUDGLR )0VWDWLRQVDEDQWKDWKHFODLPVYLRODWHVWKH

-- 3 of 12 --

8QLWHG6WDWHVY6]RND 1R
ZKLFK ³UHTXHVWV DSSOLFDQWV WR FHUWLI\ WKDW QHLWKHU WKH DSSOLFDQW QRU DQ\
SDUW\ WR WKH DSSOLFDWLRQ HQJDJHG LQ DQ\ PDQQHU LQ WKH XQOLFHQVHG RSHUDWLRQ
RI DQ\ VWDWLRQ LQ YLRODWLRQ RI 6HFWLRQ RI WKH &RPPXQLFDWLRQV $FW RI
DV DPHQGHG´
6]RND GHVFULEHV KLPVHOI DV ³SDUW RI D JUDVVURRWV PRYHPHQW RI
PLFURUDGLR μSLRQHHUV¶ FDOOHG μSLUDWHV¶ E\ WKH )&& DQG WKH 1DWLRQDO
$VVRFLDWLRQ RI %URDGFDVWHUV ´ ZKR WKURXJK ³μEURDGFDVW FLYLO
GLVREHGLHQFH¶´ DWWHPSW WR ³GHPRQVWUDWH WKH QHHG DQG YLDELOLW\ RI
PLFURUDGLR DV ZHOO DV WKH XQODZIXOQHVV RI WKH )&&¶V UHJXODWRU\ EDQ RQ
VPDOO VWDWLRQV´ 'HIHQGDQW$SSHOODQW¶V %ULHI DW Q FLWLQJ *UHJ
5XJJLHUR 0LFURUDGLR %URDGFDVWLQJ $JXDVFDOLHQWHV RI WKH $LUZDYHV =
0$*$=,1( DW 'HF TXRWLQJ 1RDP &KRPVN\ -LP &XOOHQ
3LUDWH 5DGLR )LJKWV IRU )UHH 6SHHFK 7+( 352*5(66,9( 3238/,67 $SULO

)LUVW$PHQGPHQWDQGWKH$FW
6]RNDGHVFULEHV*ULG5DGLRDVRIIHULQJDYDOXDEOHSXEOLF
VHUYLFHZKLOHQRWLQWHUIHULQJZLWKRWKHUEURDGFDVWRXWOHWV+H
VWDWHV WKDW *ULG 5DGLR ZDV VHUYLQJ D QLFKH DXGLHQFH DQG
GHPRQVWUDWLQJWKHQHHGIRUDQGYDOXHRIORZSRZHU)0UDGLR
VWDWLRQV6]RNDSURYLGHVWKHFRXUWZLWKIDYRUDEOHFRPPHQWV
IURP OHWWHUV DQG HPDLOV VHQW WR *ULG 5DGLR E\ QXPHURXV
LQGLYLGXDOVLQRUGHUWRGHPRQVWUDWHWKHLPSDFW*ULG5DGLRKDG
RQLWVOLVWHQHUV6]RNDDOVRDVVHUWVWKDWKHFKRVHDQHPSW\
IUHTXHQF\ORZSRZHURXWSXWDQGDUHODWLYHO\ORZDQWHQQD
KHLJKW LQ RUGHU QRW WR FDXVH KDUPIXO LQWHUIHUHQFH ZKLOH
SURYLGLQJKLVDXGLHQFHZLWKDTXDOLW\VLJQDO
*ULG5DGLRZDVRQWKHDLUZLWKRXWFRPPHUFLDOLQWHUUXSWLRQ
VHYHQGD\VDZHHNIURPSPWRDP0RQGD\WKURXJK
)ULGD\ZLWKEURDGFDVWVEHJLQQLQJDWSPRQZHHNHQGV,Q
DGGLWLRQ WR EURDGFDVWLQJ GDQFH PXVLF WKDW LW FODLPV LV
XQDYDLODEOHLQWKH&OHYHODQGPDUNHW*ULG5DGLREURDGFDVWD
WKUHHKRXUZHHNO\SURJUDPHQWLWOHG³7KH%HDW%R\V´ZKLFK
SURYLGHGQHZVDQGLQWHUYLHZVSHUWLQHQWWRWKHJD\FRPPXQLW\
GHDOWZLWKLVVXHVVXFKDVJD\PDUULDJHDQGKDWHFULPHVDQG
SURPRWHGORFDODUWLVWLFDQGHQWHUWDLQPHQWHYHQWV*ULG5DGLR
DOVRKDGDFRPPXQLW\EXOOHWLQERDUGDQGPDGHURXWLQHSXEOLF
VHUYLFH DQQRXQFHPHQWV UHJDUGLQJ $,'6 DZDUHQHVV DQG
1R 8QLWHG6WDWHVY6]RND
7KLV GHFLVLRQ UXQV FRQWUDU\ WR WKLV FRXUW¶V GHFLVLRQ LQ 6WUDZFXWWHU
$ PHPEHU RI WKH SDQHO LQ 1HVHW GLVVHQWHG DJUHHLQJ ZLWK WKLV
FRXUW¶V GHFLVLRQ LQ 6WUDZFXWWHU DQG H[WHQGLQJ LW WR WKH GLVWULFW FRXUW¶V
UHYLHZ RI WKH )&&¶V PRWLRQ IRU DQ LQMXQFWLRQ 1HVHW )G DW
+HDQH\ - GLVVHQWLQJ
KROGLQJDQGFRQFOXGHGWKDWDQXQOLFHQVHGPLFUREURDGFDVWHU
FRXOG QRW UDLVH FRQVWLWXWLRQDO GHIHQVHV DJDLQVW D FLYLO
IRUIHLWXUHDFWLRQXQGHUWDNHQE\WKH)&&7KH)ULHGFRXUW
UHOLHG RQ VWDWXWRU\ ODQJXDJH LQGLFDWLQJ WKDW WKH FRXUWV RI
DSSHDOVKDYHH[FOXVLYHMXULVGLFWLRQWRUHYLHZDOOILQDORUGHUV
RI WKH )&& LQFOXGLQJ RUGHUV GHFLGLQJ DSSOLFDWLRQV IRU
EURDGFDVWOLFHQVHVDQGUHTXHVWVIRUZDLYHUV)GDW
6SHFLILFDOO\ WKH FRXUW UHOLHG RQ 86& † D
ZKLFKVWDWHVWKDW³>D@Q\SURFHHGLQJWRHQMRLQVHWDVLGHDQQXO
RUVXVSHQGDQ\RUGHURIWKH&RPPLVVLRQVKDOOEHEURXJKW
DVSURYLGHGE\DQGLQWKHPDQQHUSUHVFULEHGLQFKDSWHURI
7LWOH´7KHVWDWXWHWKDW† D FURVVUHIHUHQFHVVWDWHV
³7KHFRXUWRIDSSHDOVKDVH[FOXVLYHMXULVGLFWLRQWRHQMRLQ
VHWDVLGHVXVSHQG LQZKROHRULQSDUW RUWRGHWHUPLQHWKH
YDOLGLW\RI DOOILQDORUGHUVRIWKH)HGHUDO&RPPXQLFDWLRQV
&RPPLVVLRQPDGHUHYLHZDEOHE\VHFWLRQ D RIWLWOH´
86& † 7KH )ULHG FRXUW VWDWHG WKDW WKH
PLFUREURDGFDVWHUFRXOGKDYH³REWDLQHGUHYLHZE\DSSO\LQJ
IRU D OLFHQVH DQG DVNLQJ IRU D ZDLYHU RI WKH UHJXODWLRQV
UHMHFWLRQRIKLVUHTXHVWZRXOGKDYHSHUPLWWHGDSSHDOWRWKH
FLUFXLW5DWKHUWKDQIROORZWKHSURFHGXUHVHVWDEOLVKHGE\ODZ
KHKDVDWWHPSWHGDQHQGUXQEORFNHGE\WKHVWDWXWRU\FKDQQHOV
SURYLGHGIRUFRQVWLWXWLRQDOFODLPV´)GDW7KH
FRXUWLQ1HVHWFRQFOXGHGWKDW)ULHG¶V³UDWLRQDOHDSSOLHVDV
ZHOO WR DFWLRQV VHHNLQJ LQMXQFWLYH UHOLHI XQGHU 86&
† D ´)GDW
,Q8QLWHG6WDWHVY'XQLIHU)G WK
&LU WKH1LQWK&LUFXLWH[SOLFLWO\IROORZHG)ULHG7KH
FRXUWDFNQRZOHGJHGWKDWWKHEURDGFDVWHUZDVQRWFKDOOHQJLQJ
DQ )&& RUGHU EXW UHOLHG RQ SUHYLRXV FLUFXLW SUHFHGHQW
LQGLFDWLQJWKDW³FKDOOHQJLQJ)&&UHJXODWLRQVLVHTXLYDOHQWWR
DQDFWLRQWRHQMRLQDQQXORUVHWDVLGHDQRUGHURIWKH)&&´

-- 4 of 12 --

8QLWHG6WDWHVY6]RND 1R
8QOLNH WKH GLVWULFW FRXUW ZH UHIXVH WR VSHFXODWH RQ WKH
FRQVWLWXWLRQDOLW\ RI WKH )&& UHJXODWLRQV SURKLELWLQJ WKH OLFHQVLQJ RI
PLFURUDGLR VWDWLRQV WKDW ZHUH LQ HIIHFW ZKHQ 6]RND EHJDQ EURDGFDVWLQJ
*ULG 5DGLR
,Q IXOO 86& † D VWDWHV
7KH GLVWULFW FRXUWV RI WKH 8QLWHG 6WDWHV VKDOO KDYH MXULVGLFWLRQ
XSRQ DSSOLFDWLRQ RI WKH $WWRUQH\ *HQHUDO RI WKH 8QLWHG 6WDWHV DW
WKH UHTXHVW RI WKH &RPPLVVLRQ DOOHJLQJ D IDLOXUH WR FRPSO\ ZLWK
RU D YLRODWLRQ RI DQ\ RI WKH SURYLVLRQV RI WKLV FKDSWHU E\ DQ\
SHUVRQ WR LVVXH D ZULW RU ZULWV RI PDQGDPXV FRPPDQGLQJ VXFK
SHUVRQ WR FRPSO\ ZLWK WKH SURYLVLRQV RI WKLV FKDSWHU
GHVLVWRUGHU$WWKHVDPHWLPHWKH'&&LUFXLWFRXOGKDYH
DIILUPHGWKHFHDVHDQGGHVLVWRUGHUZKLFKKHOGWKDWWKH)&&¶V
EDQRQPLFURUDGLREURDGFDVWHUVZDVFRQVWLWXWLRQDO6XFKD
FRQWUDGLFWRU\UHVXOWLVRQHWKDWZHZLVKWRDYRLG,WLVDOVRD
UHVXOWWKDWWKH&RPPXQLFDWLRQV$FWZDVGHVLJQHGWRDYRLG
VLQFHWKH$FWJLYHVH[FOXVLYHMXULVGLFWLRQIRUUHYLHZRI)&&
FHDVHDQGGHVLVWRUGHUVWRWKH'&&LUFXLW2QO\WKH'&
&LUFXLW FDQ QXOOLI\ D FHDVH DQG GHVLVW RUGHU EDVHG RQ
XQFRQVWLWXWLRQDO UHJXODWLRQV SURPXOJDWHG E\ WKH )&&
7KHUHIRUH6]RNDFDQQRWUDLVHKLVFRQVWLWXWLRQDODUJXPHQWVDV
DGHIHQVHDJDLQVWWKHJRYHUQPHQW¶VPRWLRQIRUDQLQMXQFWLRQ
HQIRUFLQJ WKH FHDVH DQG GHVLVW RUGHU +H FDQ DGGUHVV KLV
FRQVWLWXWLRQDODUJXPHQWVRQO\WRWKH'&&LUFXLWGXULQJLWV
UHYLHZRIWKHFHDVHDQGGHVLVWRUGHU
2WKHUFLUFXLWFRXUWVKDYHDGGUHVVHGZKHWKHUDQXQOLFHQVHG
EURDGFDVWHU FDQ UDLVH FRQVWLWXWLRQDO GHIHQVHV DJDLQVW WKH
)&&¶VPRWLRQIRUDQLQMXQFWLRQEXWLQHDFKRIWKRVHFDVHVWKH
)&&ZDVQRWVHHNLQJWKHLQMXQFWLRQWRHQIRUFHDFHDVHDQG
GHVLVWRUGHUXQGHU86&† E EXWUDWKHUUHO\LQJRQ
JHQHUDOHQIRUFHPHQWSRZHUVXQGHU86&† D
,Q8QLWHG6WDWHVY1HVHW)G WK&LU WKH
FRXUWDSSOLHGWKH(LJKWK&LUFXLW¶VSUHYLRXVKROGLQJLQ8QLWHG
6WDWHVY$Q\DQG$OO5DGLR6WDWLRQ7UDQVPLVVLRQ(TXLSPHQW
³)ULHG´ )G WK&LU ,Q)ULHGDSDQHORI
WKH (LJKWK &LUFXLW XSRQ UHKHDULQJ UHYHUVHG LWV SUHYLRXV
1R 8QLWHG6WDWHVY6]RND
WHVWLQJ VDIH VH[ KRXVLQJ LVVXHV DQG FRXQVHOLQJ VHUYLFHV
6]RND GHVFULEHV WKH VWDWLRQ DV SURYLGLQJ DQ HIIHFWLYH
³FRXQWHUVSHHFK´YRLFHDJDLQVWKDWHVSHHFKDQGKRPRSKRELF
KXPRURQRWKHU&OHYHODQGUDGLRVWDWLRQV
2Q 1RYHPEHU WKH 'HWURLW )LHOG 2IILFH RI WKH
)&&¶V &RPSOLDQFH DQG ,QIRUPDWLRQ %XUHDX UHFHLYHG D
FRPSODLQWIURP0DUN.ULHJHURIWKH1RUWKHDVW2KLR6RFLHW\
RI%URDGFDVW(QJLQHHUVUHJDUGLQJ*ULG5DGLR¶VXQDXWKRUL]HG
RSHUDWLRQ 2Q )HEUXDU\ WKH RIILFH VHQW D OHWWHU
ZDUQLQJ*ULG5DGLRWKDWXQOLFHQVHGEURDGFDVWLQJYLRODWHGWKH
&RPPXQLFDWLRQV$FW7KH)&&ZDUQHG*ULG5DGLRWKDWLWV
RSHUDWRUFRXOGEHVXEMHFWWRVWDWXWRU\VDQFWLRQVDQGRUGHUHG
WKDW ³>R@SHUDWLRQ RI UDGLR WUDQVPLWWLQJ HTXLSPHQW ZLWKRXW
SURSHU DXWKRULW\ JUDQWHG E\ WKH &RPPLVVLRQ VKRXOG FHDVH
LPPHGLDWHO\´2Q-XQHWKH)&&VHQWWKHVWDWLRQD
VHFRQG ZDUQLQJ OHWWHU $OWKRXJK 6]RND DGPLWV WKDW KH
UHFHLYHGWKHVHOHWWHUVKHGLGQRWVWRSEURDGFDVWLQJDV*ULG
5DGLR
2Q$SULODIWHUFRQILUPLQJWKDWWKHVWDWLRQZDVVWLOO
RQWKHDLUWKH)&&UHOHDVHGDQ2UGHUWR6KRZ&DXVHZK\
6]RND³VKRXOGQRWEHRUGHUHGWR&($6($1''(6,67IURP
YLRODWLQJ 6HFWLRQ RI WKH $FW´ ,Q UH -HUU\ 6]RND
&OHYHODQG2KLR)&&1R:/DWSDUD
$SU 7KH)&&DFWHGSXUVXDQWWRLWVSRZHUXQGHU
86&† E WRLVVXHFHDVHDQGGHVLVWRUGHUVDVDPHDQV
RIHQIRUFLQJWKHOLFHQVLQJUHTXLUHPHQWDQGRWKHUSURYLVLRQVRI
WKH$FW2Q6HSWHPEHUDQDGPLQLVWUDWLYHODZMXGJH
LVVXHGDVXPPDU\GHFLVLRQILQGLQJWKDWWKHUHZHUHQRJHQXLQH
LVVXHVRIPDWHULDOIDFWVLQFH6]RNDDGPLWWHGRSHUDWLQJDUDGLR
VWDWLRQDQGGLGQRWKDYHDOLFHQVHWRGRVR,QUH-HUU\6]RND
&OHYHODQG2KLR)&&1R':/ 6HSW
7KH DGPLQLVWUDWLYH ODZ MXGJH UHMHFWHG 6]RND¶V
DUJXPHQWVWKDWKHZDVQRWUHTXLUHGWRREWDLQDOLFHQVHEHFDXVH
WKH)&&UHJXODWLRQVSURKLELWLQJWKHOLFHQVLQJRIORZSRZHU
UDGLR VWDWLRQV YLRODWHG WKH )LUVW $PHQGPHQW DQG ZHUH
LQFRQVLVWHQWZLWKWKH&RPPLVVLRQHU¶VVWDWXWRU\PDQGDWHWR
UHJXODWHLQWKHSXEOLFLQWHUHVW,GDWSDUDV

-- 5 of 12 --

8QLWHG6WDWHVY6]RND 1R
7KH)&&DIILUPHGWKHDGPLQLVWUDWLYHODZMXGJH¶VGHFLVLRQ
RQ-XQH,QUH-HUU\6]RND&OHYHODQG2KLR)&&
1R :/ -XQH 7KH
&RPPLVVLRQVWDWHGWKDW³WKH6XSUHPH&RXUWUHSHDWHGO\KDV
DIILUPHGWKDWWKHUHLVQR)LUVW$PHQGPHQWULJKWWREURDGFDVW
ZLWKRXWDOLFHQVHDQGWKDWWKH&RPPLVVLRQKDVDXWKRULW\WR
UHJXODWHWKHUDGLRVSHFWUXP´,GDWSDUD6]RNDILOHGD
SHWLWLRQWRUHFRQVLGHUZLWKWKH)&&ZKLFKWKH&RPPLVVLRQ
GHQLHGRQ2FWREHU,QUH-HUU\6]RND&OHYHODQG
2KLR)&&1R:/ 2FW
2Q1RYHPEHU6]RNDILOHGDQRWLFHRIDSSHDORI
WKH)&&¶VFHDVHDQGGHVLVWRUGHULQWKH8QLWHG6WDWHV&RXUWRI
$SSHDOVIRUWKH'LVWULFWRI&ROXPELD&LUFXLW6]RNDGLUHFWHG
KLV DSSHDO WR WKH '& &LUFXLW DV UHTXLUHG E\ 86&
† E 7KDWOLWLJDWLRQLVVWLOOSHQGLQJDV&DVH1RV
DQG DQG LV VFKHGXOHG IRU RUDO DUJXPHQW LQ
6HSWHPEHU
(YHQWKRXJKWKHFHDVHDQGGHVLVWRUGHUZDVHQWHUHGDJDLQVW
6]RND*ULG5DGLRUHPDLQHGRQWKHDLU,QRUGHUWRFRPSHO
FRPSOLDQFHZLWKWKHFHDVHDQGGHVLVWRUGHUWKH8QLWHG6WDWHV
ILOHGVXLWLQWKH8QLWHG6WDWHV'LVWULFW&RXUWIRUWKH1RUWKHUQ
'LVWULFWRI2KLRSXUVXDQWWR86&† E 7KH)&&
UHTXHVWHG D SUHOLPLQDU\ DQG SHUPDQHQW LQMXQFWLRQ WR VWRS
6]RNDIURPFRQWLQXLQJWREURDGFDVWZLWKRXWDOLFHQVH$IWHU
DFRPELQHGSUHOLPLQDU\LQMXQFWLRQKHDULQJDQGWULDORQWKH
PHULWVWKHGLVWULFWFRXUWUXOHGLQIDYRURIWKHJRYHUQPHQWDQG
HQWHUHGDQLQMXQFWLRQRUGHULQJ6]RNDWRVWRSEURDGFDVWLQJE\
0DUFK
7KH GLVWULFW FRXUW LQGLFDWHG WKDW EHFDXVH &RQJUHVV KDG
SURYLGHGDVWDWXWRU\EDVLVIRUDQLQMXQFWLRQWKHJRYHUQPHQW
QHHGRQO\VKRZWKDWWKHVWDWXWRU\UHTXLUHPHQWVZHUHPHWLQ
RUGHUIRUDQLQMXQFWLRQWREHLVVXHG7KHGLVWULFWFRXUWVWDWHG
WKDWHYHQLILWZHUHWRHQJDJHLQDQHTXLWDEOHEDODQFLQJRI
KDUPVDQGWRWDNHLQWRDFFRXQWWKHSXEOLFLQWHUHVWWKHIDFWRUV
ZRXOGZHLJKLQIDYRURIWKH8QLWHG6WDWHVDQGZRXOGPDQGDWH
WKH HQWU\ RI WKH LQMXQFWLRQ 7KH FRXUW FRQFOXGHG WKDW DQ
LQMXQFWLRQZDVQHFHVVDU\EHFDXVH³>L@IUDGLRVWDWLRQVFRXOG
1R 8QLWHG6WDWHVY6]RND
WKH)&&¶VDGPLQLVWUDWLYHSURFHHGLQJVDJDLQVWKLPDQGLQKLV
DSSHDORIWKHUHVXOWVRIWKRVHSURFHHGLQJVLQWKH'LVWULFWRI
&ROXPELD&LUFXLW
7KLVUHVXOWDOORZV6]RNDWRUDLVHKLVFRQVWLWXWLRQDOGHIHQVHV
ZLWKLQWKHVFKHPHFRQWHPSODWHGE\WKH&RPPXQLFDWLRQV$FW
,Q 6WUDZFXWWHU QR )&& RUGHU ZDV LVVXHG DJDLQVW WKH
XQOLFHQVHGPLFUREURDGFDVWHU,QVWHDGWKH)&&ZHQWGLUHFWO\
WRWKHGLVWULFWFRXUWDQGLQVWLWXWHGDQLQUHPIRUIHLWXUHDFWLRQ
DJDLQVWWKHEURDGFDVWHU7KHEURDGFDVWHUKDGQRRWKHUIRUXP
LQZKLFKWRSUHVHQWKLVFRQVWLWXWLRQDOGHIHQVHV,QWKLVFDVH
KRZHYHUDQ)&&RUGHUZDVLVVXHGDJDLQVW6]RNDPDQGDWLQJ
WKDWKHFHDVHDQGGHVLVWIURPEURDGFDVWLQJZLWKRXWDOLFHQVH
6]RNDKDGWKHRSSRUWXQLW\WRUDLVHKLVFRQVWLWXWLRQDOGHIHQVHV
LQWKHFRXUVHRIWKHDGPLQLVWUDWLYHDFWLRQXQGHUWDNHQE\WKH
)&& 7KH )&& FRQVLGHUHG DOO RI 6]RND¶V FRQVWLWXWLRQDO
GHIHQVHVDQGUHMHFWHGWKHP6HH,QUH-HUU\6]RND&OHYHODQG
2KLR)&&1R:/DWSDUDV
-XQH 6]RNDFDQUDLVHKLVFRQVWLWXWLRQDOGHIHQVHV
RQFHPRUHLQKLVDSSHDORIWKHFHDVHDQGGHVLVWRUGHUWRWKH
'& &LUFXLW 7KHUH ZDV QR QHHG IRU WKH GLVWULFW FRXUW WR
DGGUHVV 6]RND¶V FRQVWLWXWLRQDO DUJXPHQWV EHFDXVH KH ZDV
DEOHWRUDLVHWKHPLQRWKHUSURFHHGLQJV
0RUHRYHU DOORZLQJ ERWK WKH FRXUW UHYLHZLQJ WKH )&&¶V
FHDVHDQGGHVLVWRUGHUDQGWKHFRXUWFRQVLGHULQJZKHWKHUWR
JUDQW DQLQMXQFWLRQHQIRUFLQJWKHFHDVHDQGGHVLVWRUGHUWR
DGGUHVVDEURDGFDVWHU¶VFRQVWLWXWLRQDODUJXPHQWVFRXOGFUHDWH
FRQWUDGLFWRU\ KROGLQJV ZLWKLQ WKH VDPH FDVH 7KH GLVWULFW
FRXUWSURSHUO\FRQFOXGHGWKDWLWVSURFHHGLQJVZHUHOLPLWHG
VROHO\WRWKHTXHVWLRQRIZKHWKHUDQLQMXQFWLRQVKRXOGLVVXH
DJDLQVW6]RND,QRWKHUZRUGVLWKDGQRMXULVGLFWLRQWRVHW
DVLGH RU VXVSHQG WKH )&&¶V FHDVH DQG GHVLVW RUGHU VLQFH
UHYLHZRIWKHFHDVHDQGGHVLVWRUGHULVUHVHUYHGIRUWKH'&
&LUFXLW
,I WKH GLVWULFW FRXUW ZHUH WR KDYH FRQVLGHUHG 6]RND¶V
FRQVWLWXWLRQDO DUJXPHQWV LW FRXOG KDYH FRQFOXGHG WKDW WKH
)&&¶VEDQRQPLFURUDGLREURDGFDVWHUVZDVXQFRQVWLWXWLRQDO
7KLVILQGLQJFRXOGKDYHHIIHFWLYHO\QXOOLILHGWKHFHDVHDQG

-- 6 of 12 --

8QLWHG6WDWHVY6]RND 1R
7KH/D9R]FRXUWVWDWHGWKDWLQ6WUDZFXWWHU³WKLVFRXUWKHOG
WKDWZKHQWKH)&&GRHVQRWSURFHHGDGPLQLVWUDWLYHO\DJDLQVW
DQXQOLFHQVHGPLFUREURDGFDVWHUEXWLQVWHDGLQLWLDWHVDQLQUHP
DFWLRQLQWKHGLVWULFWFRXUWVHHNLQJWKHIRUIHLWXUHRIRIIHQGLQJ
EURDGFDVWLQJ HTXLSPHQW WKH PLFUREURDGFDVWHU LV QRW
SUHFOXGHG IURP FKDOOHQJLQJ WKH OHJDO EDVLV RI WKH
JRYHUQPHQW VIRUIHLWXUHFDVHLQWKHGLVWULFWFRXUW´,GDW
7KH/D9R]FRXUWHPSKDVL]HGWKHGLIIHUHQWFLUFXPVWDQFHVWKDW
H[LVW ZKHQ D FHDVH DQG GHVLVW RUGHU LV LVVXHG DJDLQVW DQG
FKDOOHQJHGE\DPLFUREURDGFDVWHU7KHFRXUWVWDWHGWKDW³>R@I
FULWLFDOLPSRUWDQFHLQ6WUDZFXWWHUZDVWKHIDFWWKDWQR)&&
RUGHUZDVEHLQJFKDOOHQJHG´DQGWKDWUHYLHZRIFHDVHDQG
GHVLVW RUGHUV ³LV FRPPLWWHG WR WKH 'LVWULFW RI &ROXPELD
&LUFXLW´,GDWVHHDOVR5LSSHY)&&)G
WK&LU 7KHFRXUWVWDWHGWKDWXQGHU6WUDZFXWWHU
³DPLFUREURDGFDVWHUPD\UDLVHFRQVWLWXWLRQDODUJXPHQWVDVD
VKLHOGWRGHIHQGLWVHOILQDIRUIHLWXUHDFWLRQEURXJKWE\WKH
JRYHUQPHQWZKHQWKHIRUIHLWXUHDFWLRQZDVQRWSUHFHGHGE\
DQ\IRUPDODGPLQLVWUDWLYHDFWLRQ´,ELG
:KLOHWKHFLUFXPVWDQFHVRIWKLVFDVHGLIIHUIURPWKRVHRI/D
9R] WKH FRQWUROOLQJ OHJDO SULQFLSOHV GR QRW /D 9R]
HPSKDVL]HGWKDWZKHQFKDOOHQJLQJWKHFRQVWLWXWLRQDOLW\RIWKH
)&&¶V UHJXODWLRQV DJDLQVW PLFUREURDGFDVWHUV FHUWDLQ UXOHV
PXVW EH IROORZHG :KHQ WKH )&& LQVWLWXWHV DQ LQ UHP
IRUIHLWXUHDFWLRQDQGQRWDQDGPLQLVWUDWLYHDFWLRQDJDLQVWD
PLFUREURDGFDVWHUWKHEURDGFDVWHUFDQUDLVHDQGWKHGLVWULFW
FRXUWFDQFRQVLGHUFRQVWLWXWLRQDOGHIHQVHV+RZHYHULIWKH
)&& LQVWLWXWHV DGPLQLVWUDWLYH SURFHHGLQJV VXFK DV WKH
LVVXDQFH RI D FHDVH DQG GHVLVW RUGHU DJDLQVW D
PLFUREURDGFDVWHU WKH PLFUREURDGFDVWHU PXVW SXUVXH KLV
FRQVWLWXWLRQDOFODLPVWKURXJKWKHPHDQVJLYHQE\&RQJUHVV
ZKLFKLVWKHDGPLQLVWUDWLYHSURFHVVXQGHUWDNHQE\WKH)&&
DQGLWVUHYLHZLQWKH'&&LUFXLW-XVWDVWKHSODLQWLIILQ/D
9R]FRXOGQRWXVHDFRQVWLWXWLRQDOFODLPDVDVZRUGWRODXQFK
DSUHHPSWLYHVWULNHDJDLQVWWKH)&&VRWRRLV6]RNDXQDEOH
WRXVHKLVFRQVWLWXWLRQDOFODLPDVDVKLHOGLQGHIHQVHDJDLQVW
WKH)&&¶VPRWLRQIRUDQLQMXQFWLRQHQIRUFLQJWKHFHDVHDQG
GHVLVWRUGHU7KDWGRHVQRWPHDQWKDW6]RND¶VVKLHOGLVWDNHQ
DZD\IURPKLP,WMXVWPHDQVWKDWKHFDQXVHLWRQO\GXULQJ
1R 8QLWHG6WDWHVY6]RND
EURDGFDVW ZLWKRXW D OLFHQVH VR ORQJ DV WKH\ FODLP WR VHUYH
VRPH VHJPHQW RI WKH SXEOLF QRW FXUUHQWO\ EHLQJ VHUYHG E\
RWKHUUDGLRVWDWLRQVWKHVWUXFWXUHVHWXSE\&RQJUHVVLQWKH
&RPPXQLFDWLRQV$FWWRVWRSDμFDFRSKRQ\RIFRPSHWLQJ
YRLFHVQRQHRIZKLFKFRXOGEHFOHDUO\DQGSUHGLFWDEO\KHDUG¶
ZLWKRXWVRPHFRQWUROZRXOGEHLPSRWHQW´7KHFRXUWVWDWHG
WKDW ³HYHQ LI 6]RND LV FRUUHFW LQ KLV EHOLHI WKDW WKH )&&¶V
UHJXODWLRQVDUHXQFRQVWLWXWLRQDO6]RNDKDVQRULJKWWR
VLPSO\EURDGFDVWZLWKRXWDOLFHQVH´
7KH FRXUW QHYHUWKHOHVV ZHQW RQ WR RSLQH RQ WKH )&&¶V
UHJXODWLRQV VWDWLQJ LQ GLFWD WKDW ³>E@DVHG RQ WKH OLPLWHG
UHFRUGEHIRUHLWWKH&RXUWLVLQFOLQHGWRDJUHHWKDWWKH)&&¶V
QRQFRPPHUFLDO ORZSRZHU EURDGFDVWLQJ EDQ VPDFNV RI
IDYRULWLVPWRZDUGVZHDOWKLHULQWHUHVWJURXSVZKRGRQRWZLVK
WR VKDUH WKH DLUZDYHV ZLWK QRQFRPPHUFLDO VWDWLRQV´ ,W
DSSHDUHG WR WKH FRXUW WKDW WKH )&&¶V EDQ RQ ORZSRZHU
VWDWLRQV ZRXOG UXQ ³FRQWUDU\ WR WKH )&&¶V REOLJDWLRQ WR
GLVWULEXWHWKHDLUZDYHVLQDPDQQHUWKDWIXUWKHUVWKHμSXEOLF
LQWHUHVW¶ DQG WKXV ZRXOG EH LQFRQVLVWHQW ZLWK WKH )LUVW
$PHQGPHQW´7KHFRXUWFRQFOXGHGKRZHYHUWKDW³WKLVLV
QRWWKHFRUUHFWIRUXPWREULQJDGLUHFWFKDOOHQJHWRWKH)&&¶V
EDQRQORZSRZHUUDGLRPDNLQJWKLV&RXUW¶VYLHZRIWKDWEDQ
LUUHOHYDQW´ 7KH FRXUW QRWHG WKDW WKH '& &LUFXLW LV WKH
SURSHU IRUXP IRU VXFK FODLPV ZKLFK 6]RND FDQ PDNH LQ
DUJXLQJWKDWWKHFHDVHDQGGHVLVWRUGHUVKRXOGEHOLIWHG
2Q )HEUXDU\ WKH GLVWULFW FRXUW GHQLHG 6]RND¶V
PRWLRQWRVXVSHQGWKHLQMXQFWLRQ2Q0DUFK6]RND
ILOHGDWLPHO\QRWLFHRIDSSHDODQGDQHPHUJHQF\PRWLRQWR
VWD\WKHLQMXQFWLRQSHQGLQJDSSHDO7KLVFRXUWGHQLHG6]RND¶V
HPHUJHQF\PRWLRQRQ0DUFK
,,
$
7KLVFRXUWUHYLHZVWKHJUDQWRIDSUHOLPLQDU\DQGSHUPDQHQW
LQMXQFWLRQWRGHWHUPLQHZKHWKHUWKHGLVWULFWFRXUWDEXVHGLWV
GLVFUHWLRQ6HH8QLWHG6WDWHVY$Q\DQG$OO5DGLR6WDWLRQ
7UDQVPLVVLRQ(TXLSPHQW)G WK&LU

-- 7 of 12 --

8QLWHG6WDWHVY6]RND 1R
,Q SHUWLQHQW SDUW 86& † VWDWHV
1R SHUVRQ VKDOO XVH RU RSHUDWH DQ\ DSSDUDWXV IRU WKH
WUDQVPLVVLRQ RI HQHUJ\ RU FRPPXQLFDWLRQV RU VLJQDOV E\ UDGLR D
IURP RQH SODFH LQ DQ\ 6WDWH 7HUULWRU\ RU SRVVHVVLRQ RI WKH
8QLWHG 6WDWHV RU LQ WKH 'LVWULFW RI &ROXPELD WR DQRWKHU SODFH LQ
WKH VDPH 6WDWH 7HUULWRU\ SRVVHVVLRQ RU 'LVWULFW H[FHSW
XQGHU DQG LQ DFFRUGDQFH ZLWK WKLV FKDSWHU DQG ZLWK D OLFHQVH LQ
WKDW EHKDOI JUDQWHG XQGHU WKH SURYLVLRQV RI WKLV FKDSWHU
³6WUDZFXWWHU´ :DVWH0JPW,QFRI7HQQY0HWUR*RY¶W
RI1DVKYLOOHDQG'DYLGVRQ&RXQW\)G WK
&LU 7KH GLVWULFW FRXUW DEXVHV LWV GLVFUHWLRQ LI LW
³DSSOLHVWKHZURQJOHJDOVWDQGDUGPLVDSSOLHVWKHFRUUHFWOHJDO
VWDQGDUG RU UHOLHV RQ FOHDUO\ HUURQHRXV ILQGLQJV RI IDFW´
:DVWH0JPW)GDWVHHDOVR6WUDZFXWWHU)G
DW7KHGLVWULFWFRXUW¶VGHFLVLRQWKDWLWODFNHGWKHSRZHU
WR FRQVLGHU HTXLWDEOH GHIHQVHV LV UHYLHZDEOH GH QRYR DV D
TXHVWLRQRIODZ6HH5RFN 5ROO+DOORI)DPHDQG0XVHXP
,QF Y *HQWLOH 3URGXFWLRQV )G WK &LU

%
6]RND EHOLHYHV KH LV ILJKWLQJ D QREOH EDWWOH LQ IDYRU RI
PLFURUDGLR EURDGFDVWLQJ LQ JHQHUDO DQG KLV FRPPXQLW\ RI
OLVWHQHUVLQSDUWLFXODU7KDWPD\EHWKHFDVHEXWLWLVQRWIRU
WKLVFRXUWWRSDVVMXGJPHQWRQ7KLVFDVHFRQFHUQVWKHVROH
TXHVWLRQRIZKHWKHUWKHGLVWULFWFRXUWDFWHGSURSHUO\LQLVVXLQJ
DQLQMXQFWLRQWRSUHYHQW6]RNDIURPEURDGFDVWLQJZLWKRXWD
OLFHQVH2XUDQDO\VLVPXVWEHJLQDQGHQGZLWKWKDWTXHVWLRQ
HYHQWKRXJK6]RNDZLVKHVLWWRJRIXUWKHU
$W LWV FRUH WKLV LV D VLPSOH FDVH $Q LQGLYLGXDO FDQQRW
EURDGFDVWZLWKRXWDOLFHQVH86&†7KH)&&KDV
WKH SRZHU WR LVVXH D FHDVH DQG GHVLVW RUGHU DJDLQVW DQ
LQGLYLGXDO ZKR EURDGFDVWV ZLWKRXW D OLFHQVH 86&
1R 8QLWHG6WDWHVY6]RND
,Q IXOO 86& † D VWDWHV
$Q\ HOHFWURQLF HOHFWURPDJQHWLF UDGLR IUHTXHQF\ RU VLPLODU
GHYLFH RU FRPSRQHQW WKHUHRI XVHG VHQW FDUULHG PDQXIDFWXUHG
DVVHPEOHG SRVVHVVHG RIIHUHG IRU VDOH VROG RU DGYHUWLVHG ZLWK
ZLOOIXO DQG NQRZLQJ LQWHQW WR YLRODWH VHFWLRQ RU D RI WKLV
WLWOH RU UXOHV SUHVFULEHG E\ WKH &RPPLVVLRQ XQGHU VXFK VHFWLRQV
PD\ EH VHL]HG DQG IRUIHLWHG WR WKH 8QLWHG 6WDWHV
E\WKH)&&SXUVXDQWWR86&† D 6]RNDFRQWHQGV
WKDW6WUDZFXWWHUDSSOLHVHTXDOO\WRKLVFDVHZKLFKLQYROYHVD
GLIIHUHQW IRUP RI HQIRUFHPHQW D PRWLRQ IRU DQ LQMXQFWLRQ
VHHNLQJ WR HQIRUFH DQ DGPLQLVWUDWLYH RUGHU :H DUH QRW
SHUVXDGHG:HEHOLHYHWKDWWKHUHDUHIXQGDPHQWDOGLIIHUHQFHV
EHWZHHQWKHJRYHUQPHQWXQGHUWDNLQJDFLYLOIRUIHLWXUHDFWLRQ
DJDLQVWDQXQOLFHQVHGEURDGFDVWHUDVLQ6WUDZFXWWHUDQGWKH
JRYHUQPHQW VHFXULQJ D FHDVH DQG GHVLVW RUGHU DJDLQVW DQ
XQOLFHQVHGEURDGFDVWHUDQGWKHQVHHNLQJLQMXQFWLYHUHOLHIIURP
WKHGLVWULFWFRXUWWRHQIRUFHWKDWDFWLRQDVLQWKLVFDVH
7KLV FRXUW UHFHQWO\ GLVFXVVHG WKLV GLVWLQFWLRQ LQ /D 9R]
5DGLR GH OD &RPPXQLGDG Y )&& )G WK &LU
,Q /D 9R] D PLFUREURDGFDVWHU HQJDJHG LQ D
SUHHPSWLYHVWULNHDJDLQVWWKH)&&E\VHHNLQJDQLQMXQFWLRQWR
SUHYHQW WKH )&& IURP WDNLQJ DQ\ DFWLRQ WR VWRS WKH
PLFUREURDGFDVWHUIURPEURDGFDVWLQJZLWKRXWDOLFHQVH7KLV
FRXUWDIILUPHGWKHGLVWULFWFRXUW¶VGLVPLVVDORIWKHDFWLRQIRU
ODFNRIVXEMHFWPDWWHUMXULVGLFWLRQ7KHSODLQWLIIUHOLHGRQD
FRQVWLWXWLRQDOFODLPXQGHUWKH5HOLJLRXV)UHHGRP5HVWRUDWLRQ
$FWDVDEDVLVIRUGLVWULFWFRXUWMXULVGLFWLRQ,GDW7KLV
FRXUWUHMHFWHGWKHDUJXPHQWUXOLQJWKDWWKHEURDGFDVWHUFRXOG
QRWUDLVHDFRQVWLWXWLRQDOFODLP³DVSDUWRIDSUHHPSWLYHDFWLRQ
GHVLJQHGWRVWRSWKH)&&IURPDYDLOLQJLWVHOIRILWVVWDWXWRU\
UHPHGLHVDJDLQVWXQOLFHQVHGPLFUREURDGFDVWHUV´,GDW
7KHFRXUWQRWHGWKDWDOWKRXJKWKHEURDGFDVWHUFRXOGQRWUDLVH
LWV FRQVWLWXWLRQDO DUJXPHQWV DV SDUW RI D SUHHPSWLYH DWWDFN
DJDLQVWWKH)&&¶VUHJXODWLRQVLWFRXOGUDLVHWKHPDVSDUWRI
³WKHPHWKRGSUHVFULEHGE\&RQJUHVVIRUWKHUHYLHZRI)&&
DFWLRQV´,ELG

-- 8 of 12 --

8QLWHG6WDWHVY6]RND 1R
LQGLYLGXDOVZKRZDQWWREURDGFDVWWKDQWKHUHDUHIUHTXHQFLHV
WR DOORFDWH LW LV LGOH WR SRVLW DQ XQDEULGJHDEOH )LUVW
$PHQGPHQW ULJKW WR EURDGFDVW FRPSDUDEOH WR WKH ULJKW RI
HYHU\LQGLYLGXDOWRVSHDNZULWHRUSXEOLVK´,GDW
,QUHFHQWFDVHVFRQVLGHULQJFRQVWLWXWLRQDOFKDOOHQJHVUDLVHG
LQ IRUIHLWXUH SURFHHGLQJV LQVWLWXWHG E\ WKH )&& DJDLQVW
PLFURUDGLREURDGFDVWHUVWKLVFRXUWQRWHGWKHVHORQJVWDQGLQJ
SULQFLSOHV6HH8QLWHG6WDWHVY$Q\DQG$OO5DGLR6WDWLRQ
7UDQVPLVVLRQ (TXLSPHQW )G WK &LU
VWDWLQJ WKDW EURDGFDVWHU ³GRHV QRW KDYH D )LUVW
$PHQGPHQWULJKWWR EURDGFDVWKLVYLHZVRQDQXQOLFHQVHG
UDGLRVWDWLRQ´ 6WUDZFXWWHU)GDW QRWLQJWKDWWKHUH
LVQRFRQVWLWXWLRQDOULJKWWREURDGFDVWZLWKRXWDOLFHQVHDQG
WKDW ³QRERG\ KDV D )LUVW $PHQGPHQW ULJKW WR KHDU UDGLR
EURDGFDVWV IURP D VWDWLRQ WKDW GRHV QRW KDYH D )LUVW
$PHQGPHQWULJKWWREURDGFDVWWKHP´
E
(YHQWKRXJK6]RNDFRQFHGHVWKDWKHKDVQRFRQVWLWXWLRQDO
ULJKWWREURDGFDVWZLWKRXWDOLFHQVHKHFKDOOHQJHVWKH)&&¶V
DFWLRQVDJDLQVWKLPRQWKHEDVLVWKDWWKH)&&¶VIRUPHUEDQRQ
PLFURUDGLREURDGFDVWHUVFRQVWLWXWHGDYLRODWLRQRIWKH)LUVW
$PHQGPHQW,QHIIHFW6]RNDDUJXHVWKDWWKH)&&¶VEDQRQ
PLFURUDGLREURDGFDVWHUVPDGHLWIXWLOHIRUKLPWRHYHQDWWHPSW
WRREWDLQDOLFHQVH7KHGLVWULFWFRXUWSURSHUO\FRQFOXGHGWKDW
6]RNDZDVXQDEOHWRXVHKLVFRQVWLWXWLRQDODUJXPHQWV DVD
GHIHQVHDJDLQVWWKH)&&¶VPRWLRQIRUDQLQMXQFWLRQ
7KLVFDVHLVWKHQH[WVWHSLQDORJLFDOSURJUHVVLRQRIFDVHODZ
GHYHORSHGE\WKLVFRXUWLQUHFHQW\HDUVUHJDUGLQJWKHDELOLW\RI
ORZSRZHU UDGLR EURDGFDVWHUV WR UDLVH FRQVWLWXWLRQDO
DUJXPHQWVDVDGHIHQVHDJDLQVW)&&HQIRUFHPHQWDFWLRQV,Q
6WUDZFXWWHU)GDWWKLVFRXUWKHOGWKDWDGLVWULFW
FRXUW FDQ FRQVLGHU DQ XQOLFHQVHG PLFURUDGLR EURDGFDVWHU¶V
FRQVWLWXWLRQDOGHIHQVHVWRDQLQUHPIRUIHLWXUHDFWLRQLQVWLWXWHG
1R 8QLWHG6WDWHVY6]RND
,Q SHUWLQHQW SDUW 86& † E VWDWHV
:KHUH DQ\ SHUVRQ KDV YLRODWHG RU IDLOHG WR REVHUYH DQ\
RI WKH SURYLVLRQV RI WKLV FKDSWHU WKH &RPPLVVLRQ PD\ RUGHU
VXFK SHUVRQ WR FHDVH DQG GHVLVW IURP VXFK DFWLRQ
,Q IXOO 86& † E VWDWHV
$SSHDOV PD\ EH WDNHQ IURP GHFLVLRQV DQG RUGHUV RI WKH
&RPPLVVLRQ WR WKH 8QLWHG 6WDWHV &RXUW RI $SSHDOV IRU WKH
'LVWULFW RI &ROXPELD LQ DQ\ RI WKH IROORZLQJ FDVHV
%\ DQ\ SHUVRQ XSRQ ZKRP DQ RUGHU WR FHDVH DQG GHVLVW KDV
EHHQ VHUYHG XQGHU VHFWLRQ RI WKLV WLWOH
,Q IXOO 86& † E VWDWHV
,I DQ\ SHUVRQ IDLOV RU QHJOHFWV WR REH\ DQ\ RUGHU RI WKH
&RPPLVVLRQ RWKHU WKDQ IRU WKH SD\PHQW RI PRQH\ ZKLOH WKH
VDPH LV LQ HIIHFW WKH &RPPLVVLRQ RU DQ\ SDUW\ LQMXUHG WKHUHE\
RU WKH 8QLWHG 6WDWHV E\ LWV $WWRUQH\ *HQHUDO PD\ DSSO\ WR WKH
DSSURSULDWH GLVWULFW FRXUW RI WKH 8QLWHG 6WDWHV IRU WKH
HQIRUFHPHQW RI VXFK RUGHU ,I DIWHU KHDULQJ WKDW FRXUW
GHWHUPLQHV WKDW WKH RUGHU ZDV UHJXODUO\ PDGH DQG GXO\ VHUYHG
DQG WKDW WKH SHUVRQ LV LQ GLVREHGLHQFH RI WKH VDPH WKH FRXUW VKDOO
HQIRUFH REHGLHQFH WR VXFK RUGHU E\ D ZULW RI LQMXQFWLRQ RU RWKHU
SURSHU SURFHVV PDQGDWRU\ RU RWKHUZLVH WR UHVWUDLQ VXFK SHUVRQ
RU WKH RIILFHUV DJHQWV RU UHSUHVHQWDWLYHV RI VXFK SHUVRQ IURP
IXUWKHU GLVREHGLHQFH RI VXFK RUGHU RU WR HQMRLQ XSRQ LW RU WKHP
REHGLHQFH WR WKH VDPH
† E 2QFHWKHFHDVHDQGGHVLVWRUGHULVHQWHUHGWKH
LQGLYLGXDOPXVWVWRSEURDGFDVWLQJ7KHLQGLYLGXDOLVJLYHQ
WKHRSSRUWXQLW\WRDSSHDOWKHFHDVHDQGGHVLVWRUGHUEXWWKH
DSSHDOPXVWJRWRWKH8QLWHG6WDWHV&RXUWRI$SSHDOVIRUWKH
'LVWULFWRI&ROXPELD&LUFXLWZKLFKKDVH[FOXVLYHMXULVGLFWLRQ
RYHUVXFKPDWWHUV86&† E ,IDQLQGLYLGXDO
GRHVQRWREH\DFHDVHDQGGHVLVWRUGHUWKH$FWDOORZVWKH
)&&WRVHHNHQIRUFHPHQWLQWKHDSSURSULDWHIHGHUDOGLVWULFW
FRXUW 86& † E $FFRUGLQJ WR † E WKH
GLVWULFWFRXUWLVWRFRQGXFWDKHDULQJDQGHQIRUFHWKH)&&¶V
RUGHU LI WKH FRXUW GHWHUPLQHV WKDW ³WKH RUGHU ZDV UHJXODUO\

-- 9 of 12 --

8QLWHG6WDWHVY6]RND 1R
PDGHDQGGXO\VHUYHG´DQGWKDW³WKHSHUVRQLVLQGLVREHGLHQFH
RIWKHVDPH´
6]RNDZDVEURDGFDVWLQJZLWKRXWDOLFHQVH7KH)&&LVVXHG
DFHDVHDQGGHVLVWRUGHUDJDLQVWKLP6]RNDKDVDSSHDOHGWKH
FHDVHDQGGHVLVWRUGHUWRWKH'&&LUFXLW,QWKHPHDQWLPH
6]RNDGLGQRWREH\WKHFHDVHDQGGHVLVWRUGHUDQGFRQWLQXHG
WR EURDGFDVW 7KH )&& VRXJKW LQMXQFWLYH UHOLHI LQ IHGHUDO
GLVWULFWFRXUW7KHGLVWULFWFRXUWGHWHUPLQHGWKDWWKH³RUGHU
ZDV UHJXODUO\ PDGH DQG GXO\ VHUYHG´ DQG WKDW 6]RND
GLVREH\HG LW 7KHUHIRUH WKH GLVWULFW FRXUW HQWHUHG DQ
LQMXQFWLRQDJDLQVW6]RND7KHGLVWULFWFRXUWDFWHGSURSHUO\
6]RNDSUHVHQWVQRFUHGLEOHHYLGHQFHLQGLFDWLQJWKDW KHZDV
QRWEURDGFDVWLQJZLWKRXWDOLFHQVH WKHFHDVHDQGGHVLVW
RUGHUZDVQRWUHJXODUO\PDGHDQGGXO\VHUYHGDQG KHZDV
QRWGLVREH\LQJWKHRUGHU:HDJUHHZLWKWKHGLVWULFWFRXUW¶V
FRQFOXVLRQ³6]RNDKDVQRULJKWWRVLPSO\EURDGFDVWZLWKRXW
D OLFHQVH´ 7KHUHIRUH ZH PXVW DIILUP WKH GLVWULFW FRXUW¶V
GHFLVLRQ
&
6]RNDUDLVHVDQXPEHURIDUJXPHQWVWKDWDGGDIHZZULQNOHV
WRZKDWRWKHUZLVHVHHPVDVWUDLJKWIRUZDUGFDVH6]RNDFODLPV
WKDWWKHGLVWULFWFRXUWHUUHGE\ QRWSURSHUO\FRQVLGHULQJ
WUDGLWLRQDO HTXLWDEOH IDFWRUV IRU LVVXDQFH RI DQ LQMXQFWLRQ
QRWFRQVLGHULQJ6]RND¶VFRQVWLWXWLRQDODUJXPHQWVDJDLQVW
WKH)&&¶VEDQRQPLFURUDGLREURDGFDVWHUVDQG QRWVWD\LQJ
HQIRUFHPHQW RI WKH )&&¶V FHDVH DQG GHVLVW RUGHU XQWLO
FRPSOHWLRQRI6]RND¶VDSSHDORIWKHFHDVHDQGGHVLVWRUGHUWR
WKH '& &LUFXLW DQG WKH )&&¶V RQJRLQJ DGPLQLVWUDWLYH
UXOHPDNLQJSURFHVVUHJDUGLQJORZSRZHU)0UDGLR:HZLOO
DGGUHVVHDFKRIWKHVHDUJXPHQWVLQWXUQ

6]RNDFRQWHQGVWKDWWKHGLVWULFWFRXUWHUUHGLQGHWHUPLQLQJ
WKDWLWQHHGQRWFRQVLGHUWUDGLWLRQDOHTXLWDEOHIDFWRUVZKHQ
HQWHULQJLQMXQFWLYHUHOLHILQIDYRURIWKHJRYHUQPHQW,QPRVW
FDVHV D GLVWULFW FRXUW PXVW FRQVLGHU IRXU IDFWRUV ZKHQ
GHWHUPLQLQJ ZKHWKHU WR LVVXH D SUHOLPLQDU\ LQMXQFWLRQ
1R 8QLWHG6WDWHVY6]RND
IRUPHU EDQ RQ PLFURUDGLR EURDGFDVWHUV LV XQFRQVWLWXWLRQDO
EHFDXVH LW YLRODWHV WKH )LUVW $PHQGPHQW $V D UHVXOW KH
FODLPVWKDWWKH)&&FDQQRWVHHNDQLQMXQFWLRQHQIRUFLQJLWV
FHDVHDQGGHVLVWRUGHU
D
:H QRWH DV DQ LQLWLDO PDWWHU WKDW 6]RND¶V FRQVWLWXWLRQDO
DUJXPHQWV DJDLQVW WKH )&&¶V DFWLRQV DUH OLPLWHG WR KLV
FKDOOHQJH RI WKH )&&¶V IRUPHU EDQ RQ PLFURUDGLR
EURDGFDVWHUV 6]RND GRHV QRW FRQWHQG WKDW KH KDV D
FRQVWLWXWLRQDO ULJKW WR EURDGFDVW ZLWKRXW D OLFHQVH ,Q WKLV
FDVH6]RNDGLGQRWDSSO\IRUDOLFHQVHDQGIDLOEHFDXVHKH
ZDVDPLFURUDGLREURDGFDVWHURUIRUVRPHRWKHUUHDVRQ1RU
GLGKHVHHNUHYLHZRIWKH)&&UHJXODWLRQV,QVWHDGKHVLPSO\
VWDUWHG EURDGFDVWLQJ ZLWKRXW D OLFHQVH DV D IRUP RI FLYLO
GLVREHGLHQFHDJDLQVWUHJXODWLRQVKHIRXQGREMHFWLRQDEOH7KH
)&& WRRN DFWLRQ DJDLQVW 6]RND QRW EHFDXVH KH ZDV
EURDGFDVWLQJDVDPLFURUDGLRVWDWLRQRUEHFDXVHKHREMHFWHGWR
WKH)&&UHJXODWLRQVEXWEHFDXVHKHZDVEURDGFDVWLQJZLWKRXW
D OLFHQVH 7KHUH LV QR FRQVWLWXWLRQDO EDUULHU WR WKH )&&¶V
DELOLW\WRWDNHDFWLRQWRHQIRUFHLWVOLFHQVLQJSURFHGXUHV
7KH6XSUHPH&RXUWDQGWKLVFRXUWKDYHUHSHDWHGO\KHOGWKDW
WKHUHLVQRFRQVWLWXWLRQDOULJKWWREURDGFDVWZLWKRXWDOLFHQVH
7KLV SULQFLSOH GDWHV EDFN WR WKH ODQGPDUN 6XSUHPH &RXUW
GHFLVLRQ1DWLRQDO%URDGFDVWLQJ&RPSDQ\Y8QLWHG6WDWHV
86 ,Q1DWLRQDO%URDGFDVWLQJWKH6XSUHPH
&RXUWXSKHOGWKHFRQVWLWXWLRQDOLW\RIWKH&RPPXQLFDWLRQV$FW
DQG LWV OLFHQVLQJ SURFHGXUHV DV YDOLG H[HUFLVHV RI
FRQJUHVVLRQDOSRZHUDQGKHOGWKDW³WKHULJKWRIIUHHVSHHFK
GRHVQRWLQFOXGHKRZHYHUWKHULJKWWRXVHWKHIDFLOLWLHVRI
UDGLRZLWKRXWDOLFHQVH´,GDW7KHVHKROGLQJVZHUH
UHDIILUPHGLQ5HG/LRQ%URDGFDVWLQJ&RPSDQ\Y)&&
86 ,Q5HG/LRQWKH6XSUHPH&RXUWVWDWHGWKDW
WKH &RPPXQLFDWLRQV $FW ZDV QHFHVVDU\ WR SUHYHQW D
³FDFRSKRQ\ RI FRPSHWLQJ YRLFHV QRQH RI ZKLFK FRXOG EH
FOHDUO\ DQG SUHGLFWDEO\ KHDUG´ ,G DW 7KH &RXUW
GHFODUHGWKDWWKHUHZDVQRFRQVWLWXWLRQDOULJKWWREURDGFDVWRQ
WKHDLUZDYHVVWDWLQJ³>Z@KHUHWKHUHDUHVXEVWDQWLDOO\PRUH

-- 10 of 12 --

8QLWHG6WDWHVY6]RND 1R
WKH FHDVH DQG GHVLVW RUGHU DQG SUHVXPDEO\ DQ\ LQMXQFWLRQ
LVVXHGE\DGLVWULFWFRXUWHQIRUFLQJDFHDVHDQGGHVLVWRUGHU
ZKLOHWKHEURDGFDVWHU¶VDSSHDOLVSHQGLQJ
6]RNDDOVRFRQWHQGVWKDWHYHQLIWKHGLVWULFWFRXUW FRXOG
RQO\ FRQVLGHU LI ³WKH RUGHU ZDV UHJXODUO\ PDGH DQG GXO\
VHUYHG´DQG³WKHSHUVRQLVLQGLVREHGLHQFHRIWKHVDPH´WKH
GLVWULFW FRXUW HUUHG LQ GRLQJ VR 6]RND UHOLHV RQ &6; WR
VXSSRUWKLVDUJXPHQW,Q&6;WKHFRQJUHVVLRQDOO\PDQGDWHG
VWDQGDUG ZDV ³UHDVRQDEOH FDXVH WR EHOLHYH´ D VWDWXWRU\
YLRODWLRQ ZDV RFFXUULQJ 7KLV FRXUW REVHUYHG WKDW WKH
VWDQGDUG³FHUWDLQO\FDQQRWEHPHWE\VLPSO\VKRZLQJWKH
SRVVLELOLW\ RI D >VWDWXWRU\@ YLRODWLRQ´ )G DW
,QVWHDGWKHFRXUWKHOGWKDW³>W@KHGLVWULFWFRXUWPXVWPDNHD
SUHOLPLQDU\ GHWHUPLQDWLRQ EDVHG RQ WKH HYLGHQFH WKDW KDV
EHHQVXEPLWWHGE\WKHSODLQWLIIDQGWKHUHVSRQVHVPDGHDWWKDW
SRLQWZKHWKHUWKHUHLVUHDVRQDEOHFDXVHWREHOLHYHWKDWWKH
$FWKDVEHHQYLRODWHG´,ELG6LPLODUO\6]RNDDUJXHVWKDWWKH
)&& FDQQRW REWDLQ DQ LQMXQFWLRQ VLPSO\ E\ VKRZLQJ WKH
SRVVLELOLW\WKDW6]RNDYLRODWHGWKH&RPPXQLFDWLRQV$FW
7KLV DUJXPHQW ODFNV FUHGLELOLW\ 7KH WHVW LQ &6; ZDV D
GLIIHUHQW ORRVHU RQH WKDQ LQ WKLV FDVH DQG UHTXLUHG D
VRPHZKDW PRUH VXEVWDQWLDO VKRZLQJ IURP WKH SDUW\
DWWHPSWLQJWRREWDLQWKHLQMXQFWLRQ,QWKLVFDVH WKH )&&
QHHGHGRQO\WRVKRZWKDW³WKHRUGHUZDVUHJXODUO\PDGHDQG
GXO\VHUYHG´DQGWKDW³WKHSHUVRQLVLQGLVREHGLHQFHRIWKH
VDPH´7KH)&&GLGVRE\GHPRQVWUDWLQJWKDWWKHFHDVHDQG
GHVLVWRUGHUZDVYDOLGO\HQWHUHGDQGVHUYHGDQGWKDW6]RND
FRQWLQXHG WR EURDGFDVW LQ WKH IDFH RI LW %\ PDNLQJ WKLV
VKRZLQJWKH)&&SURSHUO\REWDLQHGDQLQMXQFWLRQSXUVXDQWWR
86&† E ZKLFKVWDWHVWKDWRQFHWKLVVKRZLQJLV
PDGH³WKHFRXUWVKDOOHQIRUFHREHGLHQFHWRVXFKRUGHUE\D
ZULWRILQMXQFWLRQ´

6]RND DOVR FODLPV WKDW WKH GLVWULFW FRXUW HUUHG ZKHQ LW
UHIXVHG WR FRQVLGHU 6]RND¶V FRQVWLWXWLRQDO GHIHQVHV WR WKH
JRYHUQPHQW¶VPRWLRQIRUDQLQMXQFWLRQ6]RNDDUJXHGWRWKH
GLVWULFWFRXUWDQGFRQWLQXHVWRDUJXHRQDSSHDOWKDWWKH)&&¶V
1R 8QLWHG6WDWHVY6]RND
ZKHWKHUWKHPRYDQWKDVDVWURQJOLNHOLKRRGRIVXFFHVVRQ
WKHPHULWV ZKHWKHUWKHPRYDQWZRXOGVXIIHULUUHSDUDEOH
LQMXU\ ZLWKRXW WKH LQMXQFWLRQ ZKHWKHU LVVXDQFH RI WKH
LQMXQFWLRQ ZRXOG FDXVH VXEVWDQWLDO KDUP WR RWKHUV DQG
ZKHWKHUWKHSXEOLFLQWHUHVWZRXOGEHVHUYHGE\LVVXDQFHRI
WKHLQMXQFWLRQ6HH%OXH&URVV %OXH6KLHOG0XWXDORI2KLR
Y%OXH&URVVDQG%OXH6KLHOG$VV¶Q)G WK
&LU ,QPRVWFDVHVLQZKLFKDGLVWULFWFRXUWFRQVLGHUV
ZKHWKHUWRLVVXHDSHUPDQHQWLQMXQFWLRQWKHFRXUWPXVWDOVR
FRQVLGHU ZKHWKHU WKH SODLQWLII KDV GHPRQVWUDWHG D
FRQWLQXLQJ LUUHSDUDEOH LQMXU\ LI WKH FRXUW IDLOV WR LVVXH WKH
LQMXQFWLRQDQG WKHODFNRIDQDGHTXDWHUHPHG\DWODZ6HH
.DOOVWURPY&LW\RI&ROXPEXV)G WK&LU
7KHGLVWULFWFRXUWLQWKLVFDVHGHWHUPLQHGWKDWLWZDV
QRW UHTXLUHG WR FRQVLGHU WKHVH HTXLWDEOH IDFWRUV EHFDXVH
&RQJUHVV SURYLGHG E\ VWDWXWH WKH EDVHV IRU WKH LQMXQFWLYH
UHOLHIVRXJKWE\WKHJRYHUQPHQW7KHFRXUWEULHIO\VWDWHGWKDW
LILWZHUHUHTXLUHGWRFRQVLGHUWUDGLWLRQDOHTXLWDEOHIDFWRUVLW
VWLOOZRXOGEHFRPSHOOHGWRLVVXHWKHLQMXQFWLRQLQIDYRURIWKH
JRYHUQPHQW
7KH GLVWULFW FRXUW GLG QRW HUU $FFRUGLQJ WR 86&
† E WKHJRYHUQPHQWQHHGHGRQO\WRPHHWWKHVWDWXWRU\
UHTXLUHPHQWVIRUWKHLVVXDQFHRIDQLQMXQFWLRQHQIRUFLQJWKH
FHDVHDQGGHVLVWRUGHU,QWKLVVHQVH&RQJUHVVKDVUHSODFHG
WKHWUDGLWLRQDOHTXLWDEOHIDFWRUVZLWKDGLIIHUHQWLQTXLU\6HH
&6;7UDQVS,QFY7HQQHVVHH6WDWH%GRI(TXDOL]DWLRQ
)G WK&LU KROGLQJWKDWZKHUH&RQJUHVV
H[SUHVVO\ DXWKRUL]HG JUDQWLQJ RI LQMXQFWLYH UHOLHI WR KDOW
GLVFULPLQDWRU\ VWDWH WD[DWLRQ RI UDLOURDGV E\ VKRZLQJ RI
³UHDVRQDEOH FDXVH´ RI D VWDWXWRU\ YLRODWLRQ WUDGLWLRQDO
HTXLWDEOHFULWHULDGRQRWJRYHUQWKHLVVXDQFHRIDSUHOLPLQDU\
LQMXQFWLRQ ,OOLQRLV %HOO 7HO &R Y ,OOLQRLV &RPPHUFH
&RPP¶Q)G WK&LU FRXUWQHHGQRW
DGGUHVVWUDGLWLRQDOHTXLWDEOHIDFWRUVVXFKDVLUUHSDUDEOHKDUP
ZKHQUHYLHZLQJPRWLRQIRULQMXQFWLRQXQGHU† E VLQFH
FRXUW³RQO\QHHGILQGWKDWμWKHRUGHUZDVUHJXODUO\PDGHDQG
GXO\VHUYHG¶´DQGWKDWGHIHQGDQW³LVLQGLVREHGLHQFHRIWKH
VDPH´ ,WZDVQRWQHFHVVDU\IRUWKHGLVWULFWFRXUWQRULVLW

-- 11 of 12 --

8QLWHG6WDWHVY6]RND 1R
QHFHVVDU\ IRU WKLV FRXUW WR FRQVLGHU WUDGLWLRQDO HTXLWDEOH
IDFWRUV
6]RNDUHOLHVRQDQXPEHURILQDSSRVLWHFDVHVLQFODLPLQJ
WKDW WKH GLVWULFW FRXUW ZDV UHTXLUHG WR FRQVLGHU WUDGLWLRQDO
HTXLWDEOHIDFWRUV7KHSULPDU\FDVHXSRQZKLFK6]RNDUHOLHV
:HLQEHUJHU Y 5RPHUR%DUFHOR 86
FRQFHUQHGDQDFWLRQEURXJKWSXUVXDQWWRWKH)HGHUDO:DWHU
3ROOXWLRQ&RQWURO$FW ):3&$ VHHNLQJWRHQMRLQWKH8QLWHG
6WDWHV 1DY\ IURP GLVFKDUJLQJ RUGQDQFH LQWR WKH ZDWHUV
VXUURXQGLQJ 9LHTXHV ,VODQG LQ 3XHUWR 5LFR ZLWKRXW ILUVW
REWDLQLQJ D SHUPLW IURP WKH (QYLURQPHQWDO 3URWHFWLRQ
$JHQF\ 7KH 6XSUHPH &RXUW UHYHUVHG WKH )LUVW &LUFXLW¶V
GHFLVLRQPDQGDWLQJWKDWWKH1DY\FHDVHWKHGLVFKDUJHVXQWLO
LWREWDLQHGDSHUPLW7KHORZHUFRXUWUXOHGWKDWWKH1DY\KDG
DVWDWXWRU\REOLJDWLRQWRVWRSWKHGLVFKDUJHVXQWLOWKHSHUPLW
SURFHGXUHV KDG EHHQ IROORZHG ,G DW 7KH 6XSUHPH
&RXUWKHOGWKDWWKHDSSHOODWHFRXUWHUUHGE\QRWFRQVLGHULQJ
WUDGLWLRQDOHTXLWDEOHIDFWRUV,GDW,Q:HLQEHUJHUWKH
&RXUWVSHFLILFDOO\QRWHGWKDW&RQJUHVVGLGQRWIRUHFORVHWKH
H[HUFLVHRIHTXLWDEOHGLVFUHWLRQLQHQDFWLQJWKH):3&$,ELG
7KHFRXUWLQGLFDWHGWKDW&RQJUHVVGLGQRWUHTXLUHDGLVWULFW
FRXUW WR LVVXH DQ LQMXQFWLRQ IRU ³DQ\ DQG DOO VWDWXWRU\
YLRODWLRQV´ XQGHU WKH ):3&$ EXW RQO\ ZKHQ WKH FRXUW
FRQVLGHUVWKHUHOLHI³QHFHVVDU\WRVHFXUHSURPSWFRPSOLDQFH
ZLWKWKH$FW´,ELG
7KDWLVVLPSO\QRWWKHFDVHKHUH6]RNDLVXQDEOHWRSRLQW
WKLV FRXUW WR DQ\ SRUWLRQ RI WKH &RPPXQLFDWLRQV $FW
LQGLFDWLQJWKDW&RQJUHVVLQWHQGHGWRJLYHFRXUWVWKHDELOLW\WR
H[HUFLVHGLVFUHWLRQLQFRQVLGHULQJZKHWKHUWRLVVXHLQMXQFWLRQV
SXUVXDQWWR86&† E 7KHODQJXDJHRIWKHVWDWXWH
LQGLFDWHVWKDW&RQJUHVVLQWHQGHGWKDWWKHGLVWULFWFRXUWLVVXH
LQMXQFWLYHUHOLHILQIDYRURIWKHJRYHUQPHQWIRUDQ\YLRODWLRQV
RIWKH&RPPXQLFDWLRQV$FWLQZKLFKDEURDGFDVWHUFRQWLQXHV
WRGLVREH\DUHJXODUO\PDGHDQGGXO\VHUYHGFHDVHDQGGHVLVW
RUGHU%\VWDWLQJLQ86&† E WKDWLIDGLVWULFWFRXUW
³GHWHUPLQHV WKDW WKH RUGHU ZDV UHJXODUO\ PDGH DQG GXO\
VHUYHGDQGWKDWWKHSHUVRQLVLQGLVREHGLHQFHRIWKHVDPHWKH
FRXUW VKDOO HQIRUFH REHGLHQFH WR VXFK RUGHU E\ D ZULW RI
1R 8QLWHG6WDWHVY6]RND
,Q KLV 1RWLFH RI $SSHDO DQG 3HWLWLRQ IRU 5HYLHZ WR WKH '& &LUFXLW
6]RND UDLVHG WKH LVVXH ³>Z@KHWKHU WKH FHDVH DQG GHVLVW RUGHU VKRXOG EH
VWD\HG XQWLO WKH &RPPLVVLRQHU JUDQWV *ULG 5DGLR D OLFHQVH HLWKHU E\
ZDLYLQJ H[LVWLQJ UXOHV RU DV SDUW RI D QHZ ORZSRZHU )0 VHUYLFH ´
6]RND DVVHUWHG WKLV LVVXH DV RQH RI KLV EDVHV IRU DSSHDO QRW DV D UHTXHVW
IRU WHPSRUDU\ UHOLHI IURP WKH '& &LUFXLW SXUVXDQW WR 86& † F
7KHUH LV QR LQGLFDWLRQ WKDW 6]RND IRUPDOO\ UHTXHVWHG WKH '& &LUFXLW WR
VWD\ WKH FHDVH DQG GHVLVW RUGHU SHQGLQJ KLV DSSHDO
LQMXQFWLRQ´&RQJUHVVXVHGODQJXDJHWKDWHIIHFWLYHO\OLPLWVWKH
GLVFUHWLRQRIWKHGLVWULFWFRXUW
7KHOLPLWHGGLVFUHWLRQJLYHQWRDGLVWULFWFRXUWUHYLHZLQJ
WKH JRYHUQPHQW¶V PRWLRQ IRU DQ LQMXQFWLRQ DJDLQVW D
EURDGFDVWHUWKDWGLVREH\VDFHDVHDQGGHVLVWRUGHULVEDODQFHG
E\WKHEURDGHUGLVFUHWLRQJLYHQWRWKH'LVWULFWRI&ROXPELD
&LUFXLW LQ UHYLHZLQJ D UHTXHVW E\ WKH EURDGFDVWHU IRU
WHPSRUDU\UHOLHIIURPWKHFHDVHDQGGHVLVWRUGHU8SRQWKH
UHOHDVHRIDFHDVHDQGGHVLVWRUGHUWKHDJJULHYHGSDUW\PD\
DSSHDOWRWKH'LVWULFWRI&ROXPELD&LUFXLWDV6]RNDGLGLQ
WKLVFDVH$FFRUGLQJWR86&† F ³>X@SRQILOLQJRI
VXFK QRWLFH WKH >'LVWULFW RI &ROXPELD &LUFXLW@ VKDOO KDYH
MXULVGLFWLRQ RI WKH SURFHHGLQJV DQG RI WKH TXHVWLRQV
GHWHUPLQHGWKHUHLQDQGVKDOOKDYHSRZHUE\RUGHUGLUHFWHGWR
WKH&RPPLVVLRQRUDQ\RWKHUSDUW\WRWKHDSSHDOWRJUDQWVXFK
WHPSRUDU\ UHOLHI DV LW PD\ GHHP MXVW DQG SURSHU´ 7KLV
VWDWXWRU\ODQJXDJHJLYHVWKH'&&LUFXLWSRZHUWRLVVXHDVWD\
RIWKHFHDVHDQGGHVLVWRUGHUDQGSUHVXPDEO\JLYHVWKH'&
&LUFXLW WKH DELOLW\ WR FRQVLGHU HTXLWDEOH IDFWRUV JLYHQ WKH
VWDWXWH¶V ODQJXDJH WKDW WKH FRXUW PD\ JUDQW UHOLHI WKDW LW
³GHHP>V@MXVWDQGSURSHU´,ELG
8QGHUWKHVFKHPHHQYLVLRQHGE\WKH$FWWKHGLVWULFWFRXUW¶V
SRZHUV DQG WKH '& &LUFXLW¶V SRZHUV DUH FRPSOHPHQWDU\
UDWKHUWKDQFRQWUDGLFWRU\:KLOHWKHGLVWULFWFRXUWUHYLHZLQJ
WKH JRYHUQPHQW¶V PRWLRQ IRU DQ LQMXQFWLRQ WR HQIRUFH WKH
FHDVHDQGGHVLVWRUGHUPXVWHQWHUWKHLQMXQFWLRQVRORQJDVWKH
FHDVHDQGGHVLVWRUGHUZDVUHJXODUO\PDGHDQGGXO\VHUYHG
DQGWKHEURDGFDVWHUFRQWLQXHVWRGLVREH\LWWKH'&&LUFXLW
KDVWKHDELOLW\WRJLYHWKHEURDGFDVWHUWHPSRUDU\UHOLHIIURP

-- 12 of 12 --