01a0281p.06

98-6113Court of Appeals for the Sixth CircuitAug 23, 2001

Full text


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
%5(17:22' $&$'(0<
3ODLQWLII$SSHOOHH
Y
7(11(66(( 6(&21'$5<
6&+22/ $7+/(7,&
$662&,$7,21 5211,(
&$57(5([HFXWLYH'LUHFWRU
DQG,QGLYLGXDOO\
'HIHQGDQWV$SSHOODQWV
;!

1
1R
2Q5HPDQGIURPWKH8QLWHG6WDWHV6XSUHPH&RXUW
1R²7RGG-&DPSEHOO'LVWULFW-XGJH
$UJXHG-XO\
'HFLGHGDQG)LOHG$XJXVW
%HIRUH*8<68+5+(,15,&+DQG*,/0$1&LUFXLW
-XGJHV
BBBBBBBBBBBBBBBBB
&2816(/
$5*8('5LFKDUG/&ROEHUW&2/%(57 :,167($'
1DVKYLOOH7HQQHVVHHIRU$SSHOODQWV-DPHV)%OXPVWHLQ
9$1'(5%,/781,9(56,7</$:6&+22/1DVKYLOOH

-- 1 of 12 --

%UHQWZRRG$FDGHP\
Y766$$HWDO
1R
7HQQHVVHHIRU$SSHOOHH21%5,()5LFKDUG/&ROEHUW
&2/%(57 :,167($' 1DVKYLOOH 7HQQHVVHH IRU
$SSHOODQWV -DPHV ) %OXPVWHLQ 9$1'(5%,/7
81,9(56,7</$:6&+22/1DVKYLOOH7HQQHVVHH+/HH
%DUILHOG,,%$66%(55< 6,061DVKYLOOH7HQQHVVHH
*7KRPDV1HEHO1DVKYLOOH7HQQHVVHHIRU$SSHOOHH
BBBBBBBBBBBBBBBBB
23,1,21
BBBBBBBBBBBBBBBBB
521$/' /(( *,/0$1 &LUFXLW -XGJH 7KLV FDVH LV
EHIRUHXVRQUHPDQGIURPWKH6XSUHPH&RXUW%UHQWZRRG
$FDGHP\ D SULYDWH VFKRRO DQG PHPEHU RI WKH 7HQQHVVHH
6HFRQGDU\ 6FKRRO $WKOHWLF $VVRFLDWLRQ 766$$ VXHG
766$$SXUVXDQWWR86&†IRUWKHDOOHJHGYLRODWLRQ
RI LWV )LUVW $PHQGPHQW ULJKWV 6SHFLILFDOO\ %UHQWZRRG
FKDOOHQJHVWKHFRQVWLWXWLRQDOLW\RI766$$¶V³UHFUXLWLQJUXOH´
ZKLFK SURKLELWV PHPEHU VFKRROV IURP H[HUWLQJ ³XQGXH
LQIOXHQFH WR VHFXUH RU UHWDLQ D VWXGHQW IRU DWKOHWLF
SXUSRVHV´7KHGLVWULFWFRXUWJUDQWHGVXPPDU\MXGJPHQWLQ
IDYRURI%UHQWZRRGKROGLQJWKDWWKHUHFUXLWLQJUXOHYLRODWHV
WKHVFKRRO¶V)LUVW$PHQGPHQWULJKWV
766$$DSSHDOHGDUJXLQJWKDWLWLVQRWDVWDWHDFWRUIRUWKH
SXUSRVHVRI†DQGLQDQ\HYHQWWKDWWKHUHFUXLWLQJUXOH
GRHVQRWUXQDIRXORIWKH)LUVW$PHQGPHQW:HUHYHUVHGWKH
GHFLVLRQRIWKHGLVWULFWFRXUWRQWKHEDVLVWKDW766$$LVQRW
DVWDWHDFWRUDQGWKHUHIRUHQRWVXEMHFWWRVXLWXQGHU†
7KH6XSUHPH&RXUWJUDQWHGFHUWLRUDULDQGGLVDJUHHGZLWKRXU
RSLQLRQKROGLQJWKDW766$$LVLQIDFWDVWDWHDFWRU,WWKHQ
UHPDQGHG WKH FDVH EDFN WR XV IRU IXUWKHU SURFHHGLQJV
FRQVLVWHQWZLWKWKH&RXUW¶VRSLQLRQ
:H QRZ WXUQ WR WKH PHULWV RI 766$$¶V DSSHDO $IWHU
FRQVLGHULQJWKHSDUWLHV¶VXSSOHPHQWDOEULHIVDQGKHDULQJRUDO
DUJXPHQWVUHJDUGLQJWKHUHFUXLWLQJUXOHZHFRQFOXGHWKDWWKH
GLVWULFWFRXUWHUUHGLQJUDQWLQJVXPPDU\MXGJPHQWLQIDYRURI
%UHQWZRRG )RU WKH UHDVRQV VHW IRUWK EHORZ ZH WKHUHIRUH
1R %UHQWZRRG$FDGHP\
Y766$$HWDO

MXGJPHQWWR%UHQWZRRG766$$QRZXUJHVXVWRUHYHUVHWKH
GLVWULFWFRXUW¶VMXGJPHQWWRWKHH[WHQWWKDWLWRSHUDWHVDJDLQVW
&DUWHULQKLVLQGLYLGXDOFDSDFLW\:HGHFOLQHWRGRVR6XFK
DFWLRQ E\ XV DW WKLV WLPH ZRXOG EH SUHPDWXUH EHFDXVH WKH
GLVWULFW FRXUW¶V RSLQLRQ LV VLOHQW RQ WKH LVVXH RI &DUWHU¶V
OLDELOLW\:HWKHUHIRUHGLUHFWWKHGLVWULFWFRXUWRQUHPDQGWR
DGGUHVVWKHLVVXHRI%UHQWZRRG¶VFODLPDJDLQVW&DUWHULQERWK
KLVRIILFLDODQGLQGLYLGXDOFDSDFLWLHV
,,,&21&/86,21
)RUDOORIWKHUHDVRQVVHWIRUWKDERYHZH5(9(56(WKH
JUDQW RI VXPPDU\ MXGJPHQW LQ IDYRU RI %UHQWZRRG DQG
5(0$1' WKH FDVH WR WKH GLVWULFW FRXUW IRU IXUWKHU
SURFHHGLQJVFRQVLVWHQWZLWKWKLVRSLQLRQ

-- 2 of 12 --

%UHQWZRRG$FDGHP\
Y766$$HWDO
1R
:DWFKWRZHU%LEOH 7UDFW6RF¶\RI1<,QFY9LOODJHRI
6WUDWWRQ2KLR)G WK&LU KROGLQJ
WKDWWKHYLOODJHFRXOGUHJXODWHGRRUWRGRRUVROLFLWDWLRQEDVHG
RQDIHDURIDQ³DQWLFLSDWHGKDUP´ZLWKRXWSURRI RIDFWXDO
KDUP )LQDOO\766$$¶VQHZO\DVVHUWHGLQWHUHVWLQDOHYHO
SOD\LQJ ILHOG KDV REYLRXVO\ QRW EHHQ HYDOXDWHG E\ HLWKHU
%UHQWZRRGRUWKHGLVWULFWFRXUW
7KH OHJLWLPDF\ RI 766$$¶V ³H[SORLWDWLRQ´ DQG ³OHYHO
SOD\LQJILHOG´LQWHUHVWVFDQQRWEHGHFLGHGLQWKHDEVWUDFWDVD
PDWWHURIODZ:HWKHUHIRUHUHPDQGWKLVFDVHWRWKHGLVWULFW
FRXUW IRU DQ HYDOXDWLRQ RI WKHVH DVVHUWHG LQWHUHVWV DIWHU
766$$KDVKDGWKHRSSRUWXQLW\WRSUHVHQWZKDWHYHUVXSSRUW
LWGHHPVDSSURSULDWHWRMXVWLI\LWVSRVLWLRQ
$IWHUWKHGLVWULFWFRXUWGHFLGHVLIHLWKHURUERWKRIWKHDERYH
LQWHUHVWVDUHOHJLWLPDWHLWVKRXOGWKHQDSSO\WKRVHLQWHUHVWV
DORQJ ZLWK 766$$¶V UHFRJQL]HG LQWHUHVW LQ NHHSLQJ KLJK
VFKRRODWKOHWLFVLQWKHLUSURSHUSODFHWRWKHDOOHJHGUHFUXLWLQJ
UXOHYLRODWLRQVWKDW766$$HQIRUFHGDJDLQVW%UHQWZRRG,WV
WDVN ZLOO EH WR GHFLGH LI WKH SXQLVKPHQW H[DFWHG IRU WKHVH
DOOHJHG YLRODWLRQV UHODWLQJ WR WKH IUHH JDPH WLFNHWV VSULQJ
IRRWEDOOSUDFWLFHOHWWHUVDQGWKHIROORZXSWHOHSKRQHFDOOVZDV
DSSURSULDWH UHJXODWRU\ DFWLRQ QDUURZO\ WDLORUHG WR IXUWKHU
766$$¶VOHJLWLPDWHLQWHUHVWVDVDVWDWHDFWRU7KLVTXHVWLRQ
LVDOVRRQHWKDWFDQQRWEHGHFLGHGLQWKHDEVWUDFWDVDPDWWHU
RIODZ766$$VKRXOGWKHUHIRUHEHJLYHQWKHRSSRUWXQLW\WR
SUHVHQWZKDWHYHUVXSSRUWLWGHHPVDSSURSULDWHWRMXVWLI\WKH
QHHGIRUVXFKUHJXODWLRQV,QSURFHHGLQJZLWKWKLVFDVHRQ
UHPDQGZHFDXWLRQERWKWKHSDUWLHVDQGWKHGLVWULFWFRXUWWR
VWD\IRFXVHGRQWKHWZRDOOHJHGUHFUXLWLQJUXOHYLRODWLRQVLQ
TXHVWLRQ UDWKHU WKDQ HQJDJH LQ D ZLGHUDQJLQJ DWWDFN RU
GHIHQVHRIWKHUHFUXLWLQJUXOHDVDZKROH
* 7KHVWDWXVRI5RQQLH&DUWHU
$VDILQDOSRLQWZHQRWHWKDWWKHGLVWULFWFRXUWGLGQRWGUDZ
DQ\ GLVWLQFWLRQ EHWZHHQ 766$$ DQG 5RQQLH &DUWHU WKH
([HFXWLYH'LUHFWRURI766$$LQLWVJUDQWRISDUWLDOVXPPDU\
1R %UHQWZRRG$FDGHP\
Y766$$HWDO

5(9(56(WKHMXGJPHQWRIWKHGLVWULFWFRXUWDQG5(0$1'
WKHFDVHIRUIXUWKHUSURFHHGLQJVFRQVLVWHQWZLWKWKLVRSLQLRQ
,%$&.*5281'
$ )DFWXDOEDFNJURXQG
%UHQWZRRG LV D SULYDWH VFKRRO ORFDWHG LQ %UHQWZRRG
7HQQHVVHHWKDWKDVKLVWRULFDOO\SODFHGDVWURQJHPSKDVLVRQ
DWKOHWLFV,QSDUWLFXODUWKHIRRWEDOOWHDPKDVEHHQQDWLRQDOO\
UDQNHGE\86$7RGD\DQGKDVZRQDWOHDVWVHYHQ766$$
VWDWHFKDPSLRQVKLSV %UHQWZRRG¶VEDVNHWEDOOWHDPLVDOVR
ZHOONQRZQLQDWKOHWLFFLUFOHV
766$$LVDQDVVRFLDWLRQFRPSULVHGRISXEOLFLQGHSHQGHQW
DQG SDURFKLDO VHFRQGDU\ VFKRROV IURP DFURVV WKH VWDWH RI
7HQQHVVHHZKRVHSXUSRVHLV³WRVWLPXODWHDQGUHJXODWHWKH
DWKOHWLFUHODWLRQVRIWKHVHFRQGDU\VFKRROVLQ7HQQHVVHH´7R
WKDWHQG766$$KDVHQDFWHGD³UHFUXLWLQJUXOH´GHVLJQHGWR
SODFHOLPLWVRQWKHUHFUXLWLQJSUDFWLFHVRIVHFRQGDU\VFKRROV
LQVROLFLWLQJPLGGOHVFKRROVWXGHQWDWKOHWHVWRSDUWLFLSDWHLQ
VHFRQGDU\VFKRRODWKOHWLFV7KHUHFUXLWLQJUXOHLVIRXQGLQ
$UWLFOH ,, 6HFWLRQRIWKH766$$%\ODZVDQGUHDGVDV
IROORZV
6HFWLRQ 7KH XVH RI XQGXH LQIOXHQFH RQ D VWXGHQW
ZLWKRUZLWKRXWDQDWKOHWLFUHFRUG KLVRUKHUSDUHQWVRU
JXDUGLDQVRIDVWXGHQWE\DQ\SHUVRQFRQQHFWHGRUQRW
FRQQHFWHGZLWKWKHVFKRROWRVHFXUHRUWRUHWDLQDVWXGHQW
IRUDWKOHWLFSXUSRVHVVKDOOEHDYLRODWLRQRIWKHUHFUXLWLQJ
UXOH
6HFWLRQ LV FRPSULVHG RI QRW RQO\ WKH UHFUXLWLQJ UXOH
LWVHOIEXWDOVRWKHHTXLYDOHQWRIWZRIXOOSDJHVRITXHVWLRQV
DQVZHUVDQGJXLGHOLQHVWKDWSURYLGHH[SODQDWLRQVGHWDLOVDQG
H[DPSOHVRIWKHW\SHVRIFRQGXFWWKHUHFUXLWLQJUXOHSURKLELWV
7KLVFRPPHQWDU\VHWVIRUWKSULQFLSOHVWKDWDLGWKHPHPEHU
VFKRROVLQFRPSO\LQJZLWKWKHUHFUXLWLQJUXOH)RUH[DPSOH
WKHILUVWTXHVWLRQSURYLGHVWKHIROORZLQJLQIRUPDWLRQRQZKDW
WKHWHUP³XQGXHLQIOXHQFH´PHDQV

-- 3 of 12 --

%UHQWZRRG$FDGHP\
Y766$$HWDO
1R
4 +RZLVXQGXHLQIOXHQFHLQWHUSUHWHGLQWKHUHFUXLWLQJ
UXOH"
$ $SHUVRQRUSHUVRQVH[FHHGLQJZKDWLVDSSURSULDWH
RUQRUPDODQGRIIHULQJDQLQFHQWLYHRULQGXFHPHQWWR
DVWXGHQWZLWKRUZLWKRXWDQDWKOHWLFUHFRUG
7KH WKLUG TXHVWLRQ H[SOLFLWO\ SURKLELWV FRDFKHV IURP
LQLWLDWLQJFRQWDFWZLWKVWXGHQWVSULRUWRWKHLUHQUROOPHQWLQD
VHFRQGDU\VFKRRO
4 ,VLWSHUPLVVLEOHIRUDFRDFKWRFRQWDFWDVWXGHQWRU
KLV RU KHU SDUHQWV SULRU WR KLV HQUROOPHQW LQ WKH
VFKRRO"
$ 1RDFRDFKPD\QRWFRQWDFWDVWXGHQWRUKLVRUKHU
SDUHQWVSULRUWRKLVHQUROOPHQWLQWKHVFKRRO7KLV
VKDOODSSO\WRDOOVWXGHQWVZKHWKHURUQRWWKH\KDYH
DQDWKOHWLFUHFRUG
7KHIRXUWKTXHVWLRQDVNV³:KDWDUHVRPHRIWKHJXLGHV
XVHGLQGHWHUPLQLQJZKHWKHUWKHUHKDVEHHQXQGXHLQIOXHQFH
XVHGZKLFKZRXOGUHVXOWLQDYLRODWLRQRIWKHUHFUXLWLQJUXOH"´
,WWKHQSURYLGHVVHYHQH[DPSOHV7KHWKLUGH[DPSOHUHLWHUDWHV
WKDW WKH UHFUXLWLQJ UXOH SURKLELWV ³>D@Q\ LQLWLDO FRQWDFW RU
SUHDUUDQJHG FRQWDFW E\ D PHPEHU RI WKH FRDFKLQJ VWDII RU
UHSUHVHQWDWLYHRIWKHVFKRRODQGDSURVSHFWLYHVWXGHQWDWKOHWH
HQUROOHG LQ DQ\ PHPEHU VFKRRO H[FHSW ZKHUH WKHUH LV D
GHILQLWHIHHGHUSDWWHUQ´7KHVHYHQWKH[DPSOHVSHFLILFDOO\
SURKLELWV ³>D@GPLWWLQJ VWXGHQWV WR DWKOHWLF FRQWHVWV IUHH RI
FKDUJH ZKHUH WKHUH LV DQ DGPLVVLRQ EHLQJ FKDUJHG DW WKH
FRQWHVW H[FHSW ZKHUH WKHUH LV D GHILQLWH IHHGHU SDWWHUQ
LQYROYHGZLWKWKHVFKRRO´7KHIHHGHUVFKRROH[HPSWLRQLV
QRWDSSOLFDEOHWR%UHQWZRRGEHFDXVHLWKDVQRIHHGHUSDWWHUQ
ZLWKDQ\VFKRRO
6HYHUDO UHSUHVHQWDWLYHV RI %UHQWZRRG PHW ZLWK 5RQQLH
&DUWHUWKH([HFXWLYH'LUHFWRURI766$$RQ)HEUXDU\
7KLVPHHWLQJZDVKHOGDWWKHUHTXHVWRI%UHQWZRRGIRU
WKHSXUSRVHRIFODULI\LQJZKDWW\SHVRIUHFUXLWLQJSUDFWLFHV
ZRXOGEHDFFHSWDEOHXQGHUWKHUHFUXLWLQJUXOH0LFKDHO6
1R %UHQWZRRG$FDGHP\
Y766$$HWDO

WLPH SODFH RU PDQQHU UHJXODWLRQV GRHV QRW WXUQ RQ D
MXGJH¶VDJUHHPHQWZLWKWKHUHVSRQVLEOHGHFLVLRQPDNHU
FRQFHUQLQJWKHPRVWDSSURSULDWHPHWKRGIRUSURPRWLQJ
VLJQLILFDQWJRYHUQPHQWLQWHUHVWVRUWKHGHJUHHWRZKLFK
WKRVHLQWHUHVWVVKRXOGEHSURPRWHG
:DUG 86 DW LQWHUQDO TXRWDWLRQ PDUNV
DOWHUDWLRQVDQGHOOLSVHVRPLWWHG
,Q766$$¶VUHVSRQVHWR%UHQWZRRG¶VPRWLRQIRUVXPPDU\
MXGJPHQW766$$DVVHUWHGWZRLQWHUHVWVLQMXVWLILFDWLRQRIWKH
UHFUXLWLQJ UXOH WR NHHS KLJK VFKRRO DWKOHWLFV LQ WKHLU
SURSHU SODFH VXERUGLQDWH WR DFDGHPLFV DQG WR SURWHFW
VWXGHQW DWKOHWHV IURP H[SORLWDWLRQ 766$$ SURIIHUHG DQ
DGGLWLRQDOLQWHUHVWRQDSSHDOQDPHO\WKDWRIIRVWHULQJDOHYHO
SOD\LQJILHOGEHWZHHQWKHYDULRXVPHPEHUVFKRROV7KLVODWWHU
LQWHUHVWVHHNVWRHVWDEOLVKDGHJUHHRIFRPSHWLWLYHHTXLW\LQ
KLJKVFKRRODWKOHWLFVE\UHJXODWLQJKRZWKHPHPEHUVFKRROV
UHFUXLWVWXGHQWDWKOHWHV
7KLVFRXUWSUHYLRXVO\UHFRJQL]HGWKHYDOLGLW\RI766$$¶V
ILUVW DVVHUWHG LQWHUHVW ZKHQ LW FRQFOXGHG WKDW ³>766$$@ LV
RUGLQDULO\HQWLWOHGWRHQIRUFHLWVDWKOHWLFUXOHVLQRUGHUWRGHWHU
VWXGHQWVSDUHQWVDQGVFKRRORIILFLDOVIURPWU\LQJWRWXUQKLJK
VFKRRODWKOHWLFVLQWRDQDFWLYLW\WKDWRYHUVKDGRZVRUXQGXO\
LQWHUIHUHVZLWKDFDGHPLFOLIH´&URFNHUY7HQQ6HFRQGDU\
6FK$WKOHWLF$VV¶Q)G WK&LU
7KHGLVWULFWFRXUWEHORZDOVRDFNQRZOHGJHGWKLVLQWHUHVWDVD
VXEVWDQWLDORQH766$$¶VRWKHUWZRMXVWLILFDWLRQVKRZHYHU
DUHYHU\PXFKLQGLVSXWH
%UHQWZRRGIRUH[DPSOHDUJXHVWKDWWKHUHLVQRVXSSRUWLQ
WKH UHFRUG IRU WKH SURSRVLWLRQ WKDW VWXGHQW DWKOHWHV QHHG
SURWHFWLRQIURPH[SORLWDWLRQ7KHGLVWULFWFRXUWDJUHHG,W
FRQFOXGHGWKDW766$$RIIHUHGQRSURRIWKDWH[HUWLQJXQGXH
LQIOXHQFHRQPLGGOHVFKRRODWKOHWHVWRUHFUXLWWKHPIRUDWKOHWLF
SXUSRVHVDFWXDOO\KDUPVWKRVHVWXGHQWV3URRIRIDFWXDOKDUP
KRZHYHULVQRWUHTXLUHGLQRUGHUWRUHFRJQL]HDVWDWHDFWRU¶V
LQWHUHVW LQ SUHYHQWLQJ UHDVRQDEO\ DQWLFLSDWHG KDUP 6HH

-- 4 of 12 --

%UHQWZRRG$FDGHP\
Y766$$HWDO
1R
7KHDERYHSULQFLSOHVDUHIXOO\DSSOLFDEOHWRWKHFDVHEHIRUH
XV$OWKRXJKWKHUHFUXLWLQJUXOHE\LWVHOILVFHUWDLQO\VXEMHFW
WR FKDOOHQJH EDVHG RQ YDJXHQHVV DQG RYHUEUHDGWK LW LV
DFFRPSDQLHGE\WKHHTXLYDOHQWRIWZRIXOOSDJHVRITXHVWLRQ
DQGDQVZHUH[SODQDWLRQVDQGJXLGHOLQHLQWHUSUHWDWLRQ$VD
ZKROHWKHUXOHJLYHVUHDVRQDEOHQRWLFHRIZKDWLVSURKLELWHG
HVSHFLDOO\ DV DSSOLHG WR %UHQWZRRG 7KH LQWHUSUHWLYH
FRPPHQWDU\ H[SOLFLWO\ VWDWHV WKDW IUHH WLFNHWV FDQQRW EH
SURYLGHG WR SURVSHFWLYH VWXGHQWV QRU FDQ D FRDFK LQLWLDWH
FRQWDFWZLWKSRWHQWLDOSOD\HUVEHIRUHWKH\HQUROOLQWKHVFKRRO
%UHQWZRRG DOOHJHGO\ GLG ERWK RI WKHVH WKLQJV DQG ZDV
SXQLVKHG DFFRUGLQJO\ 7R FODLP QRZ WKDW WKH UXOH LV
RYHUEURDG DV DSSOLHG WR %UHQWZRRG VWUDLQV FUHGXOLW\ :H
WKHUHIRUHFRQFOXGHWKDWWKHGLVWULFWFRXUWHUUHGLQKROGLQJWKH
UHFUXLWLQJUXOHXQFRQVWLWXWLRQDORQWKHEDVLVRIEHLQJIDFLDOO\
RYHUEURDG
) 5HPDQGLVUHTXLUHGWRGHWHUPLQHLIWKHUHFUXLWLQJ
UXOH LV QDUURZO\ WDLORUHG WR PHHW 766$$¶V
VXEVWDQWLDOLQWHUHVWV
$VVHWIRUWKLQ3DUW,,'DERYHZHKDYHGHWHUPLQHGWKDWWKH
UHFUXLWLQJ UXOH LV D FRQWHQWQHXWUDO UHJXODWLRQ VXEMHFW WR
LQWHUPHGLDWH VFUXWLQ\ IRU WKH SXUSRVH RI )LUVW $PHQGPHQW
DQDO\VLV 7KLV PHDQV WKDW 766$$ KDV WKH EXUGHQ RI
HVWDEOLVKLQJ WKH OHJLWLPDF\ RI LWV DOOHJHG VXEVWDQWLDO
JRYHUQPHQWDO LQWHUHVWV DQG WKDW WKH UHFUXLWLQJ UXOH DV
DSSOLHG WR %UHQWZRRG LQ WKH FDVH EHIRUH XV LV QDUURZO\
WDLORUHGWRIXUWKHUWKHVHJRYHUQPHQWDOLQWHUHVWV7KH6XSUHPH
&RXUWKDVGHVFULEHGWKLVDQDO\VLVDVIROORZV
>$@UHJXODWLRQRIWKHWLPHSODFHRUPDQQHURISURWHFWHG
VSHHFK PXVW EH QDUURZO\ WDLORUHG WR VHUYH WKH
JRYHUQPHQW¶VOHJLWLPDWHFRQWHQWQHXWUDOLQWHUHVWVEXW
LWQHHGQRWEHWKHOHDVWUHVWULFWLYHRUOHDVWLQWUXVLYHPHDQV
RIGRLQJVR5DWKHUWKHUHTXLUHPHQWRIQDUURZWDLORULQJ
LV VDWLVILHG VR ORQJ DV WKH UHJXODWLRQ SURPRWHV D
VXEVWDQWLDOJRYHUQPHQWLQWHUHVWWKDWZRXOGEHDFKLHYHG
OHVVHIIHFWLYHO\DEVHQWWKHUHJXODWLRQ7KHYDOLGLW\RI
1R %UHQWZRRG$FDGHP\
Y766$$HWDO

3HHNDODZ\HUIRU%UHQWZRRGIROORZHGXSZLWKDOHWWHURQ
)HEUXDU\WKDWZDVLQWHQGHGWRFRQILUP%UHQWZRRG¶V
XQGHUVWDQGLQJ RI WKH QXPHURXV ZD\V LQ ZKLFK %UHQWZRRG
FRXOG FRPPXQLFDWH ZLWK SURVSHFWLYH VWXGHQWV DERXW LWV
DWKOHWLFSURJUDPVZLWKRXWYLRODWLQJWKHUHFUXLWLQJUXOH
,Q VHYHUDO FRDFKHV DW RWKHU PHPEHU VFKRROV
FRPSODLQHGWR766$$WKDW%UHQWZRRGKDGYLRODWHGYDULRXV
766$$ UXOHV &DUWHU FRQGXFWHG DQ LQYHVWLJDWLRQ RI WKH
FRPSODLQWV 2Q -XO\ &DUWHU ZURWH D OHWWHU WR
%UHQWZRRGRXWOLQLQJVL[DOOHJHGYLRODWLRQVRI766$$UXOHV
)LYHYLRODWLRQVUHODWHGWRWKHUHFUXLWLQJUXOHDQGRQHWRWKH
VSRUWVFDOHQGDUUXOH2QO\WKHUHFUXLWLQJUXOHYLRODWLRQVDUHDW
LVVXHLQWKLVDSSHDO
7KH DOOHJHG UHFUXLWLQJ UXOH YLRODWLRQV DURVH IURP WZR
LQFLGHQWV7KHILUVWLQFLGHQWRFFXUUHGZKHQ%UHQWZRRG¶VWKHQ
$WKOHWLF 'LUHFWRU DQG +HDG )RRWEDOO &RDFK &DUOWRQ )ODWW
SURYLGHG IUHH WLFNHWV WR D PLGGOH VFKRRO FRDFK IRU D
%UHQWZRRGIRRWEDOOJDPH7KHVHWLFNHWVZHUHWKHQXVHGE\
WKH PLGGOH VFKRRO FRDFK WR WDNH VHYHUDO RI KLV VWXGHQWV WR
DWWHQGWKHJDPH7KHVHFRQGLQFLGHQWDURVHZKHQ&RDFK)ODWW
VHQWOHWWHUVDQGPDGHIROORZXSWHOHSKRQHFDOOVLQWKHVSULQJRI
WRVWXGHQWVIURPRWKHUVFKRROVZKRKDGFRQWUDFWXDOO\
DJUHHGWRDWWHQG%UHQWZRRGLQWKHIDOORIEXWZKRKDG
QRW WKHPVHOYHV VROLFLWHG DQ\ LQIRUPDWLRQ UHJDUGLQJ
%UHQWZRRG¶VDWKOHWLFSURJUDP&DUWHURQEHKDOIRI766$$
LPSRVHG D QXPEHU RI SHQDOWLHV RQ %UHQWZRRG IRU WKHVH
YLRODWLRQV
%UHQWZRRGDSSHDOHGWKHVDQFWLRQVDFFRUGLQJWRWKHWZRVWHS
SURFHVVVHWIRUWKLQWKH766$$%\ODZV&DUWHUSUHVLGHGDW
WKHILUVWVWHSDQGUHGXFHGWKHVDQFWLRQVDVDFRQVHTXHQFHRI
WKH DSSHDO%UHQWZRRGQH[WDSSHDOHGWRWKHIXOO%RDUGRI
&RQWURORI766$$ZKLFKDWWKHWLPHFRQVLVWHGRQO\RISXEOLF
KLJKVFKRROSULQFLSDOV$KHDULQJZDVKHOGRQ$XJXVW
7KH %RDUG RI &RQWURO IRXQG WKDW %UHQWZRRG KDG
YLRODWHGWKHUHFUXLWLQJUXOHE\DGPLWWLQJVWXGHQWDWKOHWHVIUHH
RI FKDUJH WR DQ DWKOHWLF FRQWHVW DQG E\ FRQWDFWLQJ PLGGOH

-- 5 of 12 --

%UHQWZRRG$FDGHP\
Y766$$HWDO
1R
VFKRROVWXGHQWVZKLOHWKH\ZHUHHQUROOHGLQRWKHUVFKRROV$V
SXQLVKPHQWWKH%RDUGILQHG%UHQWZRRGSODFHGLWV
DWKOHWLFSURJUDPRQSUREDWLRQIRUIRXU\HDUVDQGVXVSHQGHG
%UHQWZRRGIURPSDUWLFLSDWLQJLQWRXUQDPHQWVDQGFRQGXFWLQJ
FHUWDLQW\SHVRIRIIVHDVRQSUDFWLFHIRUWZR\HDUV
% 3URFHGXUDOKLVWRU\
%UHQWZRRGILOHGVXLWDJDLQVW766$$LQWKH8QLWHG6WDWHV
'LVWULFW &RXUW IRU WKH 0LGGOH 'LVWULFW RI 7HQQHVVHH RQ
'HFHPEHU,WDOOHJHGWKDW766$$ZDVDVWDWHDFWRU
DQGWKDW766$$¶VHQIRUFHPHQWRIWKHUHFUXLWLQJUXOHYLRODWHG
LWV)LUVWDQG)RXUWHHQWK$PHQGPHQWULJKWV%UHQWZRRGDOVR
VRXJKW DQ LQMXQFWLRQ DJDLQVW 766$$¶V HQIRUFHPHQW RI WKH
UHFUXLWLQJ UXOH )DFHG ZLWK FURVVPRWLRQV IRU VXPPDU\
MXGJPHQWWKHGLVWULFWFRXUWJUDQWHG%UHQWZRRG¶VPRWLRQIRU
VXPPDU\ MXGJPHQW RQ LWV )LUVW $PHQGPHQW FODLP DQG
HQMRLQHG766$$IURPHQIRUFLQJWKHUHFUXLWLQJUXOH
766$$ DSSHDOHG WKH GLVWULFW FRXUW¶V JUDQW RI VXPPDU\
MXGJPHQWLQIDYRURI%UHQWZRRGDUJXLQJWKDW 766$$LV
QRW D VWDWH DFWRU WKHUHE\ UHQGHULQJ LW LPPXQH IURP
FRQVWLWXWLRQDOVFUXWLQ\DQG WKHUHFUXLWLQJUXOHLQDQ\FDVH
GRHVQRWYLRODWH%UHQWZRRG¶V)LUVW$PHQGPHQWULJKWV2XU
SULRURSLQLRQGLGQRWUHDFKWKHPHULWVRI766$$¶VFKDOOHQJH
WR WKH GLVWULFW FRXUW¶V )LUVW $PHQGPHQW UXOLQJ EHFDXVH ZH
FRQFOXGHGWKDW766$$ZDVQRWDVWDWHDFWRU6HH%UHQWZRRG
$FDGY7HQQ6HFRQGDU\6FK$WKOHWLF$VV¶Q)G
WK&LU %UHQWZRRGVRXJKWUHYLHZRIRXUGHFLVLRQE\
WKH6XSUHPH&RXUWZKLFKJUDQWHGFHUWLRUDUL6HH%UHQWZRRG
$FDGY7HQQ6HFRQGDU\6FK$WKOHWLF$VV¶Q86
7KH6XSUHPH&RXUWUHYHUVHGRXUGHFLVLRQKROGLQJ
WKDW766$$LVDVWDWHDFWRUDQGUHPDQGHGWKHFDVHWRXVIRU
IXUWKHU SURFHHGLQJV FRQVLVWHQW ZLWK LWV RSLQLRQ 6HH
%UHQWZRRG$FDGY7HQQ6HFRQGDU\6FK$WKOHWLF$VV¶Q
86 %HIRUHXVQRZDUHWKHPHULWVRI766$$¶V
DSSHDOUHJDUGLQJWKHFRQVWLWXWLRQDOLW\RIWKHUHFUXLWLQJUXOH
1R %UHQWZRRG$FDGHP\
Y766$$HWDO

QRWHGWKHVHYHQWKH[DPSOHLQUHVSRQVHWRTXHVWLRQIRXUXQGHU
WKHUHFUXLWLQJUXOHLQFOXGHV³>D@GPLWWLQJVWXGHQWVWRDWKOHWLF
FRQWHVWV IUHH RI FKDUJH ZKHUH WKHUH LV DQ DGPLVVLRQ EHLQJ
FKDUJHGDWWKHFRQWHVW´)XUWKHUPRUHWKHWKLUGTXHVWLRQ
IROORZLQJWKHUHFUXLWLQJUXOHSURKLELWVDFRDFKIURPFRQWDFWLQJ
VWXGHQWVQRWHQUROOHGLQWKHLUVFKRRO
4 ,VLWSHUPLVVLEOHIRUDFRDFKWRFRQWDFWDVWXGHQWRU
KLV RU KHU SDUHQWV SULRU WR KLV HQUROOPHQW LQ WKH
VFKRRO"
$ 1RDFRDFKPD\QRWFRQWDFWDVWXGHQWRUKLVRUKHU
SDUHQWVSULRUWRKLVHQUROOPHQWLQWKHVFKRRO7KLV
VKDOODSSO\WRDOOVWXGHQWVZKHWKHURUQRWWKH\KDYH
DQDWKOHWLFUHFRUG
7KHVH TXHVWLRQV DQVZHUV DQG JXLGHOLQHV DUH HQWLWOHG WR
FRQVLGHUDWLRQ LQ HYDOXDWLQJ DQ RYHUEUHDGWK FKDOOHQJH 6HH
)RUV\WK&RXQW\86DW ³,QHYDOXDWLQJ>WKH@IDFLDO
FKDOOHQJHZHPXVWFRQVLGHUWKH>DVVRFLDWLRQ¶V@DXWKRULWDWLYH
LQVWUXFWLRQVRIWKH>UXOH@LQFOXGLQJLWVRZQLPSOHPHQWDWLRQ
DQGLQWHUSUHWDWLRQRILW´ VHHDOVR:DUG86DW
KROGLQJWKDWWKHFLW\¶VVRXQGDPSOLILFDWLRQJXLGHOLQHDQGWKH
FLW\¶V LQWHUSUHWDWLRQ RI WKH JXLGHOLQH SURYLGHG VXIILFLHQW
OLPLWLQJ LQVWUXFWLRQV WR UHQGHU WKH RUGLQDQFH¶V VWDWHPHQWV
HQVXULQJWKH³EHVWVRXQG´DQG³DSSURSULDWHVRXQGTXDOLW\´
LPPXQHIURPDQRYHUEUHDGWKFKDOOHQJH :HDOVRQRWHWKDW
WKH6XSUHPH&RXUWKDV
UHSHDWHGO\ H[SUHVVHG LWV UHOXFWDQFH WR VWULNH GRZQ D
VWDWXWHRQLWVIDFHZKHUHWKHUHZHUHDVXEVWDQWLDOQXPEHU
RIVLWXDWLRQVWRZKLFKLWPLJKWEHYDOLGO\DSSOLHG7KXV
HYHQLIWKHUHDUHPDUJLQDODSSOLFDWLRQVLQZKLFKDVWDWXWH
ZRXOG LQIULQJH RQ )LUVW $PHQGPHQW YDOXHV IDFLDO
LQYDOLGDWLRQ LV LQDSSURSULDWH LI WKH UHPDLQGHU RI WKH
VWDWXWHFRYHUVDZKROHUDQJHRIHDVLO\LGHQWLILDEOHDQG
FRQVWLWXWLRQDOO\SURVFULEDEOHFRQGXFW
3DUNHUY/HY\86 LQWHUQDOTXRWDWLRQ
PDUNVRPLWWHGDQGHOOLSVHVLQRULJLQDO

-- 6 of 12 --

%UHQWZRRG$FDGHP\
Y766$$HWDO
1R
³7RVXFFHHGWKHFRPSODLQDQWPXVWGHPRQVWUDWHWKDWWKH
ODZLVLPSHUPLVVLEO\YDJXHLQDOORILWVDSSOLFDWLRQV´9LOODJH
RI+RIIPDQ(VWDWHV86DW&DVHVWKDWKDYHKHOG
OHJLVODWLRQXQFRQVWLWXWLRQDORQLWVIDFHXQGHUWKHRYHUEUHDGWK
GRFWULQHPRUHRYHUKDYHQRWFUHDWHG³DQ\H[FHSWLRQIURPWKH
JHQHUDOUXOHWKDWFRQVWLWXWLRQDODGMXGLFDWLRQUHTXLUHVDUHYLHZ
RI WKH DSSOLFDWLRQ RI D VWDWXWH WR WKH FRQGXFW RI WKH SDUW\
EHIRUHWKH&RXUW´0HPEHUVRIWKH&LW\&RXQFLOY7D[SD\HUV
IRU 9LQFHQW 86 VHH DOVR %G RI
7UXVWHHVRIWKH6WDWH8QLYRI1<Y)R[86
³,WLVQRWWKHXVXDOMXGLFLDOSUDFWLFHKRZHYHUQRU
GR ZH FRQVLGHU LW JHQHUDOO\ GHVLUDEOH WR SURFHHG WR DQ
RYHUEUHDGWK LVVXH XQQHFHVVDULO\ ± WKDW LV EHIRUH LW LV
GHWHUPLQHGWKDWWKHVWDWXWHZRXOGEHYDOLGDVDSSOLHG6XFK
DFRXUVHZRXOGFRQYHUWXVHRIWKHRYHUEUHDGWKGRFWULQHIURP
DQHFHVVDU\PHDQVRIYLQGLFDWLQJWKHSODLQWLII¶VRZQULJKWQRW
WREHERXQGE\DVWDWXWHWKDWLVXQFRQVWLWXWLRQDOLQWRDPHDQV
RI PRXQWLQJ JUDWXLWRXV ZKROHVDOH DWWDFNV XSRQ VWDWH DQG
IHGHUDOODZV´
,QRXURSLQLRQWKHGLVWULFWFRXUWHUUHGLQVWULNLQJGRZQWKH
UHFUXLWLQJUXOHDVIDFLDOO\RYHUEURDGZLWKRXWIRFXVLQJRQKRZ
WKH UXOH ZDV DSSOLHG WR %UHQWZRRG :H WXUQ QRZ WR WKLV
DQDO\VLV766$$IRXQGWKDW%UHQWZRRG¶VWZRYLRODWLRQVRI
WKH UHFUXLWLQJ UXOH FRQVLVWHG RI DGPLWWLQJ PLGGOH VFKRRO
DWKOHWHVIUHHRIFKDUJHWRDQDWKOHWLFFRQWHVWDW%UHQWZRRGDQG
RI FRQWDFWLQJ PLGGOH VFKRRO VWXGHQWV WR LQIRUP WKHP RI
%UHQWZRRG¶V DWKOHWLF SUDFWLFHV EHIRUH WKH\ ZHUH HQUROOHG
WKHUH,QSDUWLFXODUWKHVHFRQGYLRODWLRQDURVHIURP&RDFK
)ODWW¶VOHWWHUWRLQFRPLQJVWXGHQWVUHJDUGLQJVSULQJIRRWEDOO
SUDFWLFH DQG IROORZXS WHOHSKRQH FDOOV WR WKH VWXGHQWV
3XUVXDQWWR$UWLFOH,,6HFWLRQ E RI766$$¶V%\ODZVD
VWXGHQW LV QRW FRQVLGHUHG ³HQUROOHG´ XQWLO KH RU VKH KDV
DWWHQGHG WKH VFKRRO IRU DW OHDVW WKUHH GD\V 1RQH RI WKH
LQFRPLQJVWXGHQWVPHWWKLVFULWHULRQ
%RWKRI%UHQWZRRG¶VDOOHJHGYLRODWLRQVDUHH[SOLFLWO\OLVWHG
DVSURKLELWHGFRQGXFWWKDWFRQVWLWXWHV³XQGXHLQIOXHQFH´LQWKH
FRPPHQWDU\DFFRPSDQ\LQJWKHUHFUXLWLQJUXOH$VSUHYLRXVO\
1R %UHQWZRRG$FDGHP\
Y766$$HWDO

,,$1$/<6,6
$ 6WDQGDUGRIUHYLHZ
:HUHYLHZGHQRYRWKHGLVWULFWFRXUW¶VJUDQWRIVXPPDU\
MXGJPHQW6HHHJ+ROORZD\Y%UXVK)G
WK&LU 6XPPDU\MXGJPHQWLVSURSHUZKHQWKHUHDUH
QRJHQXLQHLVVXHVRIPDWHULDOIDFWLQGLVSXWHDQGWKHPRYLQJ
SDUW\ LV HQWLWOHG WR MXGJPHQW DV D PDWWHU RI ODZ )HG 5
&LY3 F ,QGHFLGLQJDPRWLRQIRUVXPPDU\MXGJPHQW
WKH FRXUW PXVW YLHZ WKH HYLGHQFH DQG GUDZ DOO UHDVRQDEOH
LQIHUHQFHVLQIDYRURIWKHQRQPRYLQJSDUW\6HH0DWVXVKLWD
(OHF,QGXV&RY=HQLWK5DGLR&RUS86
7KH MXGJH LV QRW WR ³ZHLJK WKH HYLGHQFH DQG
GHWHUPLQHWKHWUXWKRIWKHPDWWHUEXWWRGHWHUPLQHZKHWKHU
WKHUHLVDJHQXLQHLVVXHIRUWULDO´$QGHUVRQY/LEHUW\/REE\
,QF 86 $ JHQXLQH LVVXH IRU WULDO
H[LVWVRQO\ZKHQWKHUHLVVXIILFLHQW³HYLGHQFHRQZKLFKWKH
MXU\FRXOGUHDVRQDEO\ILQGIRUWKHSODLQWLII´,GDW
% %UHQWZRRGKDVQRWZDLYHGLWVULJKWWRFKDOOHQJH
WKHFRQVWLWXWLRQDOLW\RIWKHUHFUXLWLQJUXOH
766$$ QRZ UHFRJQL]HV DV LW PXVW XQGHU WKH 6XSUHPH
&RXUW¶VUXOLQJWKDWLWLVDVWDWHDFWRUVXEMHFWWRFRQVWLWXWLRQDO
FKDOOHQJHV,WQHYHUWKHOHVVDUJXHVWKDW%UHQWZRRGKDVZDLYHG
LWVULJKWWRTXHVWLRQWKHFRQVWLWXWLRQDOLW\RIWKHUHFUXLWLQJUXOH
EHFDXVHE\YROXQWDULO\FKRRVLQJWREHDPHPEHURI766$$
LW KDV DJUHHG WR DELGH E\ WKH UXOHV RI WKH RUJDQL]DWLRQ
766$$ WKXV FRQWHQGV WKDW %UHQWZRRG LV IDFHG ZLWK ³WKH
FKRLFHEHWZHHQMRLQLQJ766$$DQGFRPSO\LQJZLWKWKHUXOHV
RUFRPSHWLQJLQLQWHUVFKRODVWLFDWKOHWLFVDVDQRQPHPEHURI
766$$´
7KHILYHFDVHVWKDW766$$FLWHVWRVXSSRUWLWVDUJXPHQW
KRZHYHUDUHGLVWLQJXLVKDEOHIURPWKHFDVHDWKDQG6HH7RZQ
RI1HZWRQY5XPHU\86 KROGLQJWKDWD
FULPLQDOGHIHQGDQWFDQZDLYHLPSRUWDQWFRQVWLWXWLRQDOULJKWV
E\HQWHULQJLQWRDSOHDEDUJDLQ '+2YHUP\HU&RY)ULFN
&R 86 KROGLQJ WKDW ZKHUH WKHUH LV QR

-- 7 of 12 --

%UHQWZRRG$FDGHP\
Y766$$HWDO
1R
XQHTXDO EDUJDLQLQJ SRZHU RU RYHUUHDFKLQJ GHEWRUV FDQ
YROXQWDULO\LQWHOOLJHQWO\DQGNQRZLQJO\ZDLYHGXHSURFHVV
ULJKWVE\VLJQLQJDFRJQRYLWQRWHZKLFKLVDQDJUHHPHQWE\
ZKLFKDGHEWRUFRQVHQWVLQDGYDQFHWRDKROGHU¶VREWDLQLQJD
MXGJPHQWZLWKRXWQRWLFHRUKHDULQJ .0&&RY,UYLQJ
7UXVW&R)G WK&LU FRQFOXGLQJWKDW
ZKHQDSDUW\NQRZLQJO\YROXQWDULO\DQGLQWHQWLRQDOO\VLJQV
DMXU\ZDLYHUSURYLVLRQLQDFLYLOFDVHWKDWSDUW\KDVZDLYHG
LWVULJKWWRDMXU\WULDO ,QWHUQDWLRQDO8QLRQY'DQD&RUS
)G WK&LU KROGLQJWKDWDVHWWOHPHQW
DJUHHPHQWEHWZHHQ'DQDDQGWKHXQLRQUHQGHUHGDQDSSHDO
PRRWHYHQWKRXJKWKHDJUHHPHQW³HIIHFWLYHO\SUHYHQWHG'DQD
IURPFRPPXQLFDWLQJZLWKLWVHPSOR\HHVUHJDUGLQJ>DXQLRQ
FDPSDLJQ@DWRQHRI'DQD¶VVXEVLGLDULHV´ /DNH-DPHV&PW\
9ROXQWHHU)LUH'HS¶WY%XUNH&RXQW\)G WK&LU
FRQFOXGLQJWKDWDQDJUHHPHQWEHWZHHQDYROXQWHHUILUH
GHSDUWPHQWDQGWKHFRXQW\WKDWSURKLELWHGWKHILUHGHSDUWPHQW
IURPVXLQJWKHFRXQW\ZDVHQIRUFHDEOHHYHQWKRXJKLWZDLYHG
WKH ILUH GHSDUWPHQW¶V FRQVWLWXWLRQDO ULJKW WR SHWLWLRQ WKH
JRYHUQPHQW
7KHFRPPRQOHJDOWKUHDGDPRQJWKHDERYHILYHFDVHVLV
WKDWWKH\DOOLQYROYHSDUWLHVWKDWDFWXDOO\ZDLYHGWKHLUULJKWWR
VXH7KHUHLVQRFRPSDUDEOH766$$SURYLVLRQSURKLELWLQJ
PHPEHUV IURP FKDOOHQJLQJ WKH FRQVWLWXWLRQDOLW\ RI WKH
UHFUXLWLQJUXOH0RUHRYHU%UHQWZRRGSRLQWVRXWWKDWZKDW
ZDVRQFHFDOOHGWKH³ELWWHUZLWKWKHVZHHW´GRFWULQHKDVEHHQ
UHSODFHGZLWKWKH³XQFRQVWLWXWLRQDOFRQGLWLRQV´GRFWULQH,Q
WKHZRUGVRIWKH6XSUHPH&RXUW
5HFRJQL]LQJWKDWFRQVWLWXWLRQDOYLRODWLRQVPD\DULVHIURP
WKHGHWHUUHQWRUFKLOOLQJHIIHFWRIJRYHUQPHQWDO>HIIRUWV@
WKDWIDOOVKRUWRIDGLUHFWSURKLELWLRQDJDLQVWWKHH[HUFLVH
RI )LUVW $PHQGPHQW ULJKWV RXU PRGHUQ
XQFRQVWLWXWLRQDO FRQGLWLRQV GRFWULQH KROGV WKDW WKH
JRYHUQPHQWPD\QRWGHQ\DEHQHILWWRDSHUVRQRQDEDVLV
WKDWLQIULQJHVKLVFRQVWLWXWLRQDOO\SURWHFWHGIUHHGRP
RIVSHHFKHYHQLIKHKDVQRHQWLWOHPHQWWRWKDWEHQHILW
1R %UHQWZRRG$FDGHP\
Y766$$HWDO

VHHDOVR&LW\RI&LQFLQQDWLY'LVFRYHU\1HWZRUN,QF
86 VWULNLQJGRZQDFLW\¶VVHOHFWLYHDQG
FDWHJRULFDO EDQ RQ WKH GLVWULEXWLRQ YLD QHZVUDFN RI
³FRPPHUFLDOKDQGELOOV´DVYLRODWLYHRIWKH)LUVW$PHQGPHQW
:H FRQFOXGH WKDW 766$$¶V DUJXPHQW LQ WKLV UHJDUG LV
XQSHUVXDVLYH%UHQWZRRGLVDQHGXFDWLRQDOLQVWLWXWLRQ7KH
IDFWWKDWLWLVSULYDWHGRHVQRWUHQGHULWVDFDGHPLFDWKOHWLF
DQGVSLULWXDOJRDOVFRPPHUFLDO1RULV766$$DEOHWRFLWH
DQ\ DXWKRULW\ LQ VXSSRUW RI LWV ³FRPPHUFLDO WUDQVDFWLRQ´
DUJXPHQWDVDSSOLHGWRWKHUHFUXLWLQJRIVWXGHQWDWKOHWHVE\D
SULYDWHVFKRRO%HFDXVHZHFRQFOXGHWKDWWKHUHFUXLWLQJUXOH
GRHVQRWFRQVWLWXWHDUHJXODWLRQRIFRPPHUFLDOVSHHFKZH
PXVWQRZWXUQWR766$$¶VDOWHUQDWHFRQWHQWLRQWKDWWKHUXOH
LVQRWXQFRQVWLWXWLRQDOXQGHUWKHRYHUEUHDGWKGRFWULQH
³$IDFLDOFKDOOHQJHWRDOHJLVODWLYH$FWLVRIFRXUVHWKH
PRVW GLIILFXOW FKDOOHQJH WR PRXQW VXFFHVVIXOO\ VLQFH WKH
FKDOOHQJHUPXVWHVWDEOLVKWKDWQRVHWRIFLUFXPVWDQFHVH[LVWV
XQGHU ZKLFK WKH $FW ZRXOG EH YDOLG´ 8QLWHG 6WDWHV Y
6DOHUQR86 7KH6XSUHPH&RXUWKDV
VHW IRUWK WKH IROORZLQJ SULQFLSOHV IRU HYDOXDWLQJ IDFLDO
FKDOOHQJHVXQGHUWKHRYHUEUHDGWKGRFWULQH
9DJXH ODZV RIIHQG VHYHUDO LPSRUWDQW YDOXHV )LUVW
EHFDXVH ZH DVVXPH WKDW PDQ LV IUHH WR VWHHU EHWZHHQ
ODZIXODQGXQODZIXOFRQGXFWZHLQVLVWWKDWODZVJLYHWKH
SHUVRQRIRUGLQDU\LQWHOOLJHQFHDUHDVRQDEOHRSSRUWXQLW\
WR NQRZ ZKDW LV SURKLELWHG VR WKDW KH PD\ DFW
DFFRUGLQJO\9DJXHODZVPD\WUDSWKHLQQRFHQWE\QRW
SURYLGLQJ IDLU ZDUQLQJ 6HFRQG LI DUELWUDU\ DQG
GLVFULPLQDWRU\HQIRUFHPHQWLVWREHSUHYHQWHGODZVPXVW
SURYLGHH[SOLFLWVWDQGDUGVIRUWKRVHZKRDSSO\WKHP$
YDJXHODZLPSHUPLVVLEO\GHOHJDWHVEDVLFSROLF\PDWWHUV
WRSROLFHPHQMXGJHVDQGMXULHVIRUUHVROXWLRQRQDQDG
KRFDQGVXEMHFWLYHEDVLVZLWKWKHDWWHQGDQWGDQJHUVRI
DUELWUDU\DQGGLVFULPLQDWRU\DSSOLFDWLRQ
*UD\QHGY&LW\RI5RFNIRUG86

-- 8 of 12 --

%UHQWZRRG$FDGHP\
Y766$$HWDO
1R
( 7KHUHFUXLWLQJUXOHLVQRWIDFLDOO\RYHUEURDGLQ
YLRODWLRQRIWKH)LUVW$PHQGPHQW
7KHGLVWULFWFRXUWDOVRKHOGWKDWHYHQLIWKHUHFUXLWLQJUXOHLV
QRWDQXQFRQVWLWXWLRQDOFRQWHQWEDVHGUHJXODWLRQLWUXQVDIRXO
RI WKH )LUVW $PHQGPHQW EHFDXVH WKH ODQJXDJH RI WKH UXOH
SURYLGHV766$$ZLWKWKH³XQEULGOHGGLVFUHWLRQWRSHQDOL]H
WKRVHH[SUHVVLQJSRLQWVRIYLHZZLWKZKLFKLWGLVDJUHHV´,Q
VRUXOLQJWKHGLVWULFWFRXUWUHOLHGRQ)RUV\WK&RXQW\*DY
1DWLRQDOLVW0RYHPHQW86 )RUV\WK
&RXQW\LQYROYHGDIDFLDOFKDOOHQJHXQGHUWKH³RYHUEUHDGWK
GRFWULQH´WRDFRXQW\RUGLQDQFHWKDWUHTXLUHGSDUWLHVWRREWDLQ
DSHUPLWDQGSD\DIHHLQRUGHUWRJDLQDXWKRUL]DWLRQWRVSHDN
SXEOLFO\ KROG D SXEOLF SDUDGH RU DVVHPEOH $ FKDOOHQJH
XQGHU WKLV GRFWULQH FDQ EH PRXQWHG LQ ³FDVHV ZKHUH HYHU\
DSSOLFDWLRQFUHDWHVDQLPSHUPLVVLEOHULVNRIVXSSUHVVLRQRI
LGHDV VXFK DV DQ RUGLQDQFH WKDW GHOHJDWHV RYHUO\ EURDG
GLVFUHWLRQ WR WKH GHFLVLRQPDNHU´ ,G DW 7KH GLVWULFW
FRXUW FRQFOXGHG WKDW WHUPV VXFK DV ³XQGXH LQIOXHQFH´ DQG
³DSSURSULDWHRUQRUPDO´LQWKHUHFUXLWLQJUXOHDUHVRXQGHILQHG
DQGSURYLGH766$$ZLWKVXFKDUELWUDU\GLVFUHWLRQWKDWWKH
UXOHLVDQLPSHUPLVVLEO\RYHUEURDGUHJXODWLRQ
766$$ ILUVW DWWHPSWV WR DYRLG D FKDOOHQJH XQGHU WKH
RYHUEUHDGWK GRFWULQH E\ DUJXLQJ WKDW WKH UHFUXLWLQJ UXOH
UHJXODWHVFRPPHUFLDOVSHHFK6HH9LOODJHRI+RIIPDQ(VWDWHV
Y)OLSVLGH+RIIPDQ(VWDWHV,QF86
³WKH RYHUEUHDGWK GRFWULQH GRHV QRW DSSO\ WR FRPPHUFLDO
VSHHFK´ ,W FODLPV WKDW EHFDXVH %UHQWZRRG LV D SULYDWH
VFKRROUHFUXLWLQJVWXGHQWVLVDFRPPHUFLDODFWLYLW\:HDJUHH
ZLWKWKHGLVWULFWFRXUWWKDWWKHUHFUXLWLQJUXOHGRHVQRWLQYRNH
WKH FRPPHUFLDO VSHHFK DQDO\VLV 7KH ³WHVW IRU LGHQWLI\LQJ
FRPPHUFLDO VSHHFK´ LQYROYHV GHWHUPLQLQJ ZKHWKHU D
UHJXODWLRQ UHODWHV WR D ³FRPPHUFLDO WUDQVDFWLRQ´ %G RI
7UXVWHHVRIWKH6WDWH8QLYRI1<Y)R[86
GHWHUPLQLQJWKDW$PHULFD)XWXUH6\VWHPV,QF¶V
³WXSSHUZDUHSDUW\´OLNHOHFWXUHVRQLWVKRXVHZDUHVLQFROOHJH
GRUPLWRULHVFRQVWLWXWHGFRPPHUFLDOVSHHFKDQGUHPDQGLQJ
WKHFDVHIRUUHYLHZXQGHUWKHLQWHUPHGLDWHVFUXWLQ\VWDQGDUG
1R %UHQWZRRG$FDGHP\
Y766$$HWDO

%GRI&RXQW\&RPP¶UVY8PEHKU86
LQWHUQDOTXRWDWLRQPDUNVDQGFLWDWLRQRPLWWHG DOWHUDWLRQVLQ
RULJLQDO
8PEHKULQYROYHGD†FODLPIRUXQODZIXOUHWDOLDWLRQ
EURXJKW DJDLQVW WKH FRXQW\¶V JRYHUQLQJ ERG\ E\ DQ
LQGHSHQGHQWFRQWUDFWRUZKRSURYLGHGWUDVKFROOHFWLRQVHUYLFHV
WRWKHFRXQW\7KH&RXUWKHOGWKDWWKHFRQWUDFWRUKDGVWDWHG
DFDXVHRIDFWLRQEDVHGRQWKHDOOHJDWLRQWKDWKLVFRQWUDFWZDV
WHUPLQDWHG LQ UHWDOLDWLRQ IRU KLV FULWLFLVP RI WKH FRXQW\
FRPPLVVLRQ 8PEHKU LV DQ H[WHQVLRQ RI WKH SURWHFWLRQV
SURYLGHGWRSXEOLFHPSOR\HHVXQGHUWKH)LUVW$PHQGPHQW
6HH3LFNHULQJY%GRI(GXF86 KROGLQJ
WKDWWKHERDUGRIHGXFDWLRQYLRODWHGDVFKRROWHDFKHU¶V)LUVW
$PHQGPHQW ULJKWV E\ GLVPLVVLQJ KLP EHFDXVH KH KDG
FULWLFL]HGWKHERDUGLQDOHWWHUWRWKHORFDOQHZVSDSHU :H
EHOLHYHWKDWWKH6XSUHPH&RXUW¶VUXOLQJVWKDWSDUWLHVGRQRW
JLYHXS)LUVW$PHQGPHQWULJKWVE\FRQWUDFWLQJZLWKRUEHLQJ
HPSOR\HGE\DSXEOLFDJHQF\IRUHFORVHV766$$¶VDUJXPHQW
WKDW %UHQWZRRG JDYH XS LWV ULJKW WR FKDOOHQJH WKH
FRQVWLWXWLRQDOLW\RIWKHUHFUXLWLQJUXOHEHFDXVHLWYROXQWDULO\
MRLQHG766$$
766$$ DUJXHV KRZHYHU WKDW WKH )LUVW $PHQGPHQW
SURWHFWLRQDIIRUGHGE\8PEHKUDQG3LFNHULQJDSSOLHVRQO\
ZKHQ WKH FRQWHQW RI D FRQWUDFWRU¶V RU HPSOR\HH¶V VSHHFK
LQYROYHVD³PDWWHURISXEOLFFRQFHUQ´8PEHKU86DW
VHHDOVR3LFNHULQJ86DW,WFODLPVWKDWWKH
UHFUXLWLQJUXOHGRHVQRWLPSOLFDWHDPDWWHURISXEOLFFRQFHUQ
DQGLVWKHUHIRUHXQZRUWK\RI)LUVW$PHQGPHQWVFUXWLQ\%XW
766$$FDQQRWKDYHLWERWKZD\V$VVHWIRUWKLQ3DUW,,)
EHORZ766$$ZLOOKDYHWRHVWDEOLVKWKDWWKHUHFUXLWLQJUXOH
HPERGLHVVXEVWDQWLDOJRYHUQPHQWDOLQWHUHVWVDVDQHFHVVDU\
HOHPHQW RI WKH UXOH¶V HQIRUFHDELOLW\ 7KHVH VXEVWDQWLDO
LQWHUHVWV ZLOO E\ GHILQLWLRQ LPSOLFDWH D ³PDWWHU RI SXEOLF
FRQFHUQ´6HH3LFNHULQJ86DW KROGLQJWKDWLVVXHV
LQYROYLQJWKHORFDOERDUGRIHGXFDWLRQZHUH³PDWWHUVRISXEOLF
LPSRUWDQFH´

-- 9 of 12 --

%UHQWZRRG$FDGHP\
Y766$$HWDO
1R
:HWKHUHIRUHFRQFOXGHWKDW%UHQWZRRGKDVQRWZDLYHGLWV
ULJKWWRFKDOOHQJHWKHFRQVWLWXWLRQDOLW\RIWKHUHFUXLWLQJUXOHE\
YROXQWDULO\MRLQLQJ766$$7KLVPHDQVWKDWZHPXVWQRZ
UHDFK WKH PHULWV RI WKH GLVWULFW FRXUW¶V )LUVW $PHQGPHQW
DQDO\VLVRIWKHUHFUXLWLQJUXOH
& 7KH GLVWULFW FRXUW HUUHG LQ KROGLQJ WKDW WKH
UHFUXLWLQJUXOHLVDFRQWHQWEDVHGUHJXODWLRQIRU
WKHSXUSRVHVRI)LUVW$PHQGPHQWDQDO\VLV
766$$¶V DSSHDO EURDGO\ FKDOOHQJHV WKH DQDO\WLFDO
IUDPHZRUN WKDW WKH GLVWULFW FRXUW XVHG WR GHWHUPLQH WKH
FRQVWLWXWLRQDOLW\ RI WKH UHFUXLWLQJ UXOH 7KH SULPDU\
FRQWHQWLRQ RI 766$$ LV WKDW WKH GLVWULFW FRXUW HUUHG LQ
FRQFOXGLQJ WKDW WKH UHFUXLWLQJ UXOH LV D FRQWHQWEDVHG
UHJXODWLRQWKDWIDLOVVWULFWVFUXWLQ\UHYLHZ:HDJUHH
$IXQGDPHQWDOSUHPLVHRI)LUVW$PHQGPHQWMXULVSUXGHQFH
LVWKDWWKH³JRYHUQPHQWPD\QRWUHJXODWHVSHHFKEDVHGRQLWV
VXEVWDQWLYHFRQWHQWRUWKHPHVVDJHLWFRQYH\V´5RVHQEHUJHU
Y5HFWRU 9LVLWRUVRI8QLYRI9LUJLQLD86
6XFKUHJXODWLRQVDUHVXEMHFWWR³WKHPRVWH[DFWLQJ
VFUXWLQ\´7XUQHU%URDG6\V,QFY)&&86
ZKLFKPHDQVWKDWWKHVWDWHDFWRUPXVWVKRZ³WKDWLWV
UHJXODWLRQLVQHFHVVDU\WRVHUYHDFRPSHOOLQJVWDWHLQWHUHVWDQG
LVQDUURZO\GUDZQWRDFKLHYHWKDWHQG´$UNDQVDV:ULWHUV¶
3URMHFW,QFY5DJODQG86 2QWKH
RWKHUKDQGFRQWHQWQHXWUDOUHJXODWLRQVWKDWVLPSO\UHVWULFWWKH
WLPHSODFHDQGPDQQHURIVSHHFKDUHVXEMHFWWRLQWHUPHGLDWH
VFUXWLQ\6HH:DWFKWRZHU%LEOH 7UDFW6RF¶\RI1<,QFY
9LOODJHRI6WUDWWRQ2KLR)G WK&LU
FLWLQJ&ODUNY&PW\IRU&UHDWLYH1RQ9LROHQFH86
8QGHU WKDW DQDO\VLV FRQWHQWQHXWUDO
UHJXODWLRQVPXVWEH³QDUURZO\WDLORUHGWRVHUYHDVLJQLILFDQW
JRYHUQPHQWDO LQWHUHVW WKDW OHDYH RSHQ DPSOH
DOWHUQDWLYHFKDQQHOVIRUFRPPXQLFDWLRQRIWKHLQIRUPDWLRQ´
:DUGY5RFN$JDLQVW5DFLVP86
1R %UHQWZRRG$FDGHP\
Y766$$HWDO

DWDVWDWHIDLUWRGRVRRQO\DWDUHQWDOERRWKLQWKHGHVLJQDWHG
DUHD
7KH 6XSUHPH &RXUW KDV UHFRJQL]HG WKDW FRQWHQWQHXWUDO
UHJXODWLRQVFDQKDYHDGDPSHQLQJHIIHFWRQWKHVXEVWDQFHRI
WKH SURWHFWHG VSHHFK EXW WKDW VXFK OLPLWDWLRQV DUH
FRQVWLWXWLRQDOO\ SHUPLVVLEOH ³$ UHJXODWLRQ WKDW VHUYHV
SXUSRVHV XQUHODWHG WR WKH FRQWHQW RI H[SUHVVLRQ LV GHHPHG
QHXWUDOHYHQLILWKDVDQLQFLGHQWDOHIIHFWRQVRPHVSHDNHUVRU
PHVVDJHVEXWQRWRWKHUV´:DUGY5RFN$JDLQVW5DFLVP
86 XSKROGLQJWKHUHJXODWLRQRIQRLVHOHYHOV
DW PXVLFDO SHUIRUPDQFHV LQ D SXEOLF SDUN WR DYRLG XQGXH
LQWUXVLRQ RQ WKH WUDQTXLOLW\ RI WKH VXUURXQGLQJ SXEOLF DQG
UHVLGHQWLDO DUHDV $VVXPLQJ WKDW 766$$ LV DEOH WR
VXFFHVVIXOO\ HVWDEOLVK WKDW LW KDV VXEVWDQWLDO JRYHUQPHQWDO
LQWHUHVWV LQ VXSSRUW RI WKH UHFUXLWLQJ UXOH VHH 3DUW ,,)
EHORZ ZH FDQQRW VD\ WKDW WKH UXOH¶V LQFLGHQWDO HIIHFW RI
SUHYHQWLQJ PHPEHUV RI KLJK VFKRRO FRDFKLQJ VWDIIV IURP
LQLWLDWLQJ FRQWDFW ZLWK PLGGOH VFKRRO VWXGHQWV LV IDWDO WR
FRQWHQW QHXWUDOLW\ 6HH 8QLWHG 6WDWHV Y 3OD\ER\ (QWP¶W
*URXS ,QF 86 ³:KHQ WKH
*RYHUQPHQW UHVWULFWV VSHHFK WKH *RYHUQPHQW EHDUV WKH
EXUGHQRISURYLQJWKHFRQVWLWXWLRQDOLW\RILWVDFWLRQV´
%DVHGRQRXUFRQFOXVLRQWKDWWKHUHFUXLWLQJUXOHLVFRQWHQW
QHXWUDOLWLVVXEMHFWWRDQLQWHUPHGLDWHVFUXWLQ\VWDQGDUGRI
UHYLHZ6HH:DWFKWRZHU%LEOH 7UDFW6RF¶\RI1<,QFY
9LOODJHRI6WUDWWRQ2KLR)G WK&LU
³μ>&@RQWHQWQHXWUDO¶WLPHSODFHDQGPDQQHUUHJXODWLRQVDUH
DFFHSWDEOHVRORQJDVWKH\DUHGHVLJQHGWRVHUYHDVXEVWDQWLDO
JRYHUQPHQWDO LQWHUHVW DQG GR QRW XQUHDVRQDEO\ OLPLW
DOWHUQDWLYHDYHQXHVRIFRPPXQLFDWLRQ´&LW\RI5HQWRQ
86DWVHHDOVR:DUG86DW ³WKHWLPHSODFH
RUPDQQHURISURWHFWHGVSHHFKPXVWEHQDUURZO\WDLORUHGWR
VHUYHWKHJRYHUQPHQW¶VOHJLWLPDWHFRQWHQWQHXWUDOLQWHUHVWV
EXWLWQHHGQRWEHWKHOHDVWUHVWULFWLYHRUOHDVWLQWUXVLYH
PHDQVRIGRLQJVR´

-- 10 of 12 --

%UHQWZRRG$FDGHP\
Y766$$HWDO
1R
' 7KH UHFUXLWLQJ UXOH LV D FRQWHQWQHXWUDO
UHJXODWLRQVXEMHFWWRLQWHUPHGLDWHVFUXWLQ\
:HDUHRIWKHRSLQLRQWKDWWKHUHFUXLWLQJUXOHLVDFRQWHQW
QHXWUDOUHJXODWLRQDQDORJRXVWRFHUWDLQ]RQLQJRUGLQDQFHVWKDW
KDYH EHHQ GHHPHG WR FRQWDLQ UHDVRQDEOH WLPH SODFH DQG
PDQQHUUHVWULFWLRQV,Q&LW\RI5HQWRQY3OD\WLPH7KHDWUHV
,QF 86 IRU H[DPSOH DQ RUGLQDQFH
SURYLGHGVSHFLILF]RQLQJUHTXLUHPHQWVIRUDGXOWWKHDWHUV7KH
6XSUHPH&RXUWIRXQGWKDW³WKH5HQWRQRUGLQDQFH>ZDV@DLPHG
QRWDWWKHFRQWHQWRIWKHILOPVVKRZQDWμDGXOWPRWLRQSLFWXUH
WKHDWUHV¶EXWUDWKHUDWWKHVHFRQGDU\HIIHFWVRIVXFKWKHDWHUV
RQ WKH VXUURXQGLQJ FRPPXQLW\´ ,G DW HPSKDVLV LQ
RULJLQDO $VORQJDVWKH]RQLQJRUGLQDQFHGLGQRWEDQWKH
H[LVWHQFHRIWKHVHWKHDWHUVRXWULJKWWKH6XSUHPH&RXUWIRXQG
LWWREHFRQWHQWQHXWUDO6HHLGDW ³7KH5HQWRQRUGLQDQFH
GRHVQRWEDQDGXOWWKHDWHUVDOWRJHWKHUEXWPHUHO\SURYLGHV
WKDWVXFKWKHDWHUVPD\QRWEHORFDWHGZLWKLQIHHWRIDQ\
UHVLGHQWLDO]RQHVLQJOHRUPXOWLSOHIDPLO\GZHOOLQJFKXUFK
SDUN RU VFKRRO´ 6LPLODUO\ WKH UHFUXLWLQJ UXOH GRHV QRW
FRPSOHWHO\ EDQ DOO FRPPXQLFDWLRQV EHWZHHQ FRDFKHV DQG
SURVSHFWLYHVWXGHQWVEXWGRHVNHHSWKHP³DWDGLVWDQFH´E\
SURKLELWLQJWKHFRDFKHVDQGWKRVHDFWLQJRQWKHLUEHKDOIIURP
LQLWLDWLQJWKHFRQWDFW
2WKHU H[DPSOHV RI UHJXODWLRQV WKDW KDYH EHHQ XSKHOG
DJDLQVW)LUVW$PHQGPHQWFKDOOHQJHVGHVSLWHOLPLWLQJWKHWLPH
SODFHDQGPDQQHURIWKHWDUJHWHGDFWLYLWLHVLQFOXGH0DGVHQY
:RPHQ¶V +HDOWK &WU ,QF 86
XSKROGLQJDVWDWHFRXUWLQMXQFWLRQWKDWUHVWULFWHGWKHXVHRI
VRXQG DPSOLILFDWLRQ HTXLSPHQW DQG RWKHU QRLVH FUHDWHG E\
DQWLDERUWLRQSURWHVWHUVWRFHUWDLQKRXUVDQGGD\V 0HPEHUV
RIWKH&LW\&RXQFLOY7D[SD\HUVIRU9LQFHQW86
XSKROGLQJDQRUGLQDQFHWKDWSURKLELWHGWKH
SRVWLQJRIVLJQVRQSXEOLFSURSHUW\EDVHGRQWKHJRYHUQPHQW¶V
LQWHUHVW LQ SURPRWLQJ DHVWKHWLFV +HIIURQ Y ,QW¶O 6RF IRU
.ULVKQD&RQVFLRXVQHVV,QF86 XSKROGLQJ
D VWDWH UHJXODWLRQ UHTXLULQJ D UHOLJLRXV RUJDQL]DWLRQ WKDW
GHVLUHGWRGLVWULEXWHUHOLJLRXVPDWHULDOVDQGVROLFLWGRQDWLRQV
1R %UHQWZRRG$FDGHP\
Y766$$HWDO

7KH 6XSUHPH &RXUW KDV UHFRJQL]HG WKDW ³>G@HFLGLQJ
ZKHWKHUDSDUWLFXODUUHJXODWLRQLVFRQWHQWEDVHGRUFRQWHQW
QHXWUDOLVQRWDOZD\VDVLPSOHWDVN´7XUQHU%URDG86
DW,QWKLVLQVWDQFHWKHGLVWULFWFRXUWFRQFOXGHGWKDWWKH
UHFUXLWLQJUXOH³LVFRQWHQWEDVHGEHFDXVHWKHLQWHUHVWVDVVHUWHG
E\>766$$@WRVXSSRUWWKHEDQIRFXVRQWKHFRQWHQWRIWKH
PHVVDJHDQGWKHHIIHFWRIWKHPHVVDJHRQWKHOLVWHQHU´:H
UHVSHFWIXOO\GLVDJUHH
,QRXURSLQLRQWKHUHFUXLWLQJUXOHGRHVQRWLPSRVHDWRWDO
EDQ RU D ³%HUOLQ :DOO´ DV %UHQWZRRG FDOOV LW RQ
FRPPXQLFDWLRQV EHWZHHQ VHFRQGDU\ VFKRROV DQG PLGGOH
VFKRRODWKOHWHVUHJDUGLQJKLJKVFKRRODWKOHWLFV5DWKHUWKH
UHFUXLWLQJUXOHSURKLELWVVHFRQGDU\VFKRROVIURPH[HUWLQJDQ
³XQGXHLQIOXHQFH´RQVWXGHQWVZLWKWKHJRDORI³VHFXU>LQJ@RU
UHWDLQ>LQJ@DVWXGHQWIRUDWKOHWLFSXUSRVHV´:HGRQRWVHH
KRZWKHUHFUXLWLQJUXOHDVGHILQHGE\WKHTXHVWLRQVDQVZHUV
DQGJXLGHOLQHVFRQWDLQHGZLWKLQWKH766$$%\ODZVEDQVWKH
VXEVWDQWLYHFRQWHQWRIDQ\SDUWLFXODUPHVVDJH,WLVFOHDUWRXV
WKDWWKHJUHDWHVWUHVWULFWLRQLPSRVHGE\WKHUHFUXLWLQJUXOHLV
WKH SURKLELWLRQ RQ FRDFKHV FRDFKLQJ VWDII DQG VFKRRO
UHSUHVHQWDWLYHV IURP LQLWLDWLQJ FRQWDFW ZLWK PLGGOH VFKRRO
VWXGHQWVIRUWKHSXUSRVHRIUHFUXLWLQJVWXGHQWDWKOHWHV
,Q RXU YLHZ SURKLELWLQJ FRDFKHV IURP LQLWLDWLQJ FRQWDFW
ZLWKVWXGHQWVRUWKHLUSDUHQWVSULRUWRHQUROOPHQWLQWKHVFKRRO
LVDOLPLWDWLRQRQWKHPDQQHULQZKLFKVHFRQGDU\VFKRROVFDQ
FRPPXQLFDWHZLWKVWXGHQWVDERXWWKHLUDWKOHWLFSURJUDPV,W
GRHVQRWPHDQKRZHYHUWKDW%UHQWZRRGKDVQRRWKHURXWOHW
IRUSURYLGLQJVXFKLQIRUPDWLRQWRSURVSHFWLYHVWXGHQWVRUWKDW
PLGGOH VFKRRO VWXGHQWV KDYH QR ZD\ RI ILQGLQJ RXW WKLV
LQIRUPDWLRQRUOHDUQLQJDERXWWKHLUHGXFDWLRQDORSWLRQV
3HUKDSVWKHVWURQJHVWHYLGHQFHLQWKHUHFRUGWKDWVXSSRUWV
RXUYLHZWKDWWKHUHFUXLWLQJUXOHGRHVQRWFRQVWLWXWHDWRWDOEDQ
RQ FRPPXQLFDWLRQV EHWZHHQ VHFRQGDU\ VFKRROV DQG
SURVSHFWLYHVWXGHQWVUHJDUGLQJDWKOHWLFSURJUDPVLVWKHOHWWHU
WKDW%UHQWZRRGDWWRUQH\0LFKDHO3HHNZURWHWR5RQQLH&DUWHU
IROORZLQJ WKHLU PHHWLQJ LQ )HEUXDU\ RI 7KH OHWWHU

-- 11 of 12 --

%UHQWZRRG$FDGHP\
Y766$$HWDO
1R
GHWDLOV QXPHURXV ZD\V LQ ZKLFK %UHQWZRRG FDQ JHW LWV
PHVVDJH DERXW DWKOHWLFV RXW WR SURVSHFWLYH VWXGHQWV
([DPSOHV RI FRQGXFW WKDW 3HHN FODLPV ZHUH H[SOLFLWO\
DSSURYHG E\ &DUWHU RQ EHKDOI RI 766$$ LQFOXGH WKH
IROORZLQJ DGPLVVLRQV RIILFHUV DQG UHSUHVHQWDWLYHV RI
%UHQWZRRGFDQVXSSO\LQIRUPDWLRQWKDWUHDOHVWDWHDJHQWVPD\
JLYHWRQHZIDPLOLHVPRYLQJWRWKHFRPPXQLW\%UHQWZRRG
FDQUHVSRQGWRGLUHFWLQTXLULHVIURPVWXGHQWVRUWKHLUIDPLOLHV
WKDW KDYH FRQWDFWHG LW IRU LQIRUPDWLRQ %UHQWZRRG FDQ
DGYHUWLVHLQDQ\SXEOLFDWLRQLWFKRRVHVDQG%UHQWZRRGFDQ
FRQWDFWWKDQGWKJUDGHUVLQDQ\VFKRROUHJDUGOHVVRIWKHLU
H[WUDFXUULFXODUDFWLYLWLHVDQGLQWHUHVWVLIVXFKFRQWDFWLVPDGH
LQWKHFRQWH[WRIDOHWWHURURWKHUFRPPXQLFDWLRQGLUHFWHGWR
PHPEHUVRIWKHFODVVDVDZKROH:HEHOLHYHWKDWWKLVUDQJH
RI RSWLRQV ZKLFK LV QRW H[FOXVLYH DFNQRZOHGJHV WKDW
%UHQWZRRGKDVPXOWLSOHZD\VRIFRPPXQLFDWLQJZLWKPLGGOH
VFKRROVWXGHQWVWRSURYLGHWKHPZLWKLQIRUPDWLRQDERXWWKH
DFDGHPLF DWKOHWLF DQG VSLULWXDO DVSHFWV RI WKH HGXFDWLRQDO
H[SHULHQFHDW%UHQWZRRG
:HIDLOWRVHHKRZWKHUHFUXLWLQJUXOH³HIIHFWLYHO\GULYH>V@
FHUWDLQLGHDVRUYLHZSRLQWVIURPWKHPDUNHWSODFH´6LPRQ
6FKXVWHU,QFY0HPEHUVRIWKH1<6WDWH&ULPH9LFWLPV
%G86 %XW%UHQWZRRGPDLQWDLQVWKDW
WKHUHFUXLWLQJUXOHFRQVWLWXWHVDFRQWHQWEDVHGUHJXODWLRQRI
VSHHFK LQ DW OHDVW WKUHH ZD\V )LUVW LW DUJXHV WKDW WKH
UHFUXLWLQJ UXOH SURKLELWV LQGHSHQGHQW VFKRROV DQG WKHLU
UHSUHVHQWDWLYHVIURP³GLVFXVV>LQJ@DQHQWLUHWRSLF´&RQVRO
(GLVRQ&RY3XE6HUY&RPP¶Q86
6HFRQG%UHQWZRRGFODLPVWKDWWKHUXOHSUHYHQWVSURVSHFWLYH
VWXGHQWVDQGWKHLUSDUHQWVIURPOHDUQLQJDERXWLQGHSHQGHQW
HGXFDWLRQDO RSWLRQV )LQDOO\ LW PDLQWDLQV WKDW 766$$
HQDFWHG WKH UHFUXLWLQJ UXOH WR SUHYHQW SURVSHFWLYH VWXGHQWV
IURP OHDUQLQJ DERXW DWKOHWLF SURJUDPV DW LQGHSHQGHQW
VHFRQGDU\VFKRROV
%UHQWZRRG¶V WKUHH FRQWHQWLRQV KRZHYHU DUH QRW
SHUVXDVLYH $V GHVFULEHG DERYH WKH SURKLELWLRQV RI WKH
UHFUXLWLQJUXOHGRQRWSUHYHQWUHSUHVHQWDWLYHVRI%UHQWZRRG
1R %UHQWZRRG$FDGHP\
Y766$$HWDO

IURP GLVFXVVLQJ WKH HQWLUH WRSLF RI LWV DWKOHWLF SURJUDPV
3URVSHFWLYHVWXGHQWVDQGWKHLUSDUHQWVDOVRKDYHDZLGHUDQJH
RIDYDLODEOHPHDQVWRUHFHLYHLQIRUPDWLRQDERXWWKHDWKOHWLF
DQGHGXFDWLRQDORSSRUWXQLWLHVWKDW%UHQWZRRGSURYLGHV1RU
LVWKHUHHYLGHQWLDU\VXSSRUWIRU%UHQWZRRG¶VSRVLWLRQWKDWWKH
UHFUXLWLQJ UXOH LV D FRQWHQWEDVHG UHJXODWLRQ GHVLJQHG E\
766$$RXWRIIHDURIZKDWSURVSHFWLYHVWXGHQWVZRXOGOHDUQ
DERXWWKHDWKOHWLFSURJUDPVDWLQGHSHQGHQWVHFRQGDU\VFKRROV
,I766$$KDGEHHQPRWLYDWHGE\DIHDURIWKHLPSDFWWKDW
LQIRUPDWLRQ UHJDUGLQJ DWKOHWLF SURJUDPV ZRXOG KDYH RQ
VWXGHQWV LW ZRXOG SUHVXPDEO\ KDYH EDQQHG UHFUXLWLQJ DQG
FRPPXQLFDWLRQVDOWRJHWKHU7KLVLWGLGQRWGR
)LQDOO\ ZH UHMHFW %UHQWZRRG¶V FRQWHQWLRQ WKDW WKH
UHFUXLWLQJUXOHLVXQFRQVWLWXWLRQDOEHFDXVHLWFRQWUROVZKRFDQ
VSHDN IRU %UHQWZRRG 7KH UHFUXLWLQJ UXOH LV QRW DQ
XQFRQVWLWXWLRQDOUHJXODWLRQWKDW³GLFWDW>HV@WKHVSHDNHUV
ZKRPD\DGGUHVVDSXEOLFLVVXH´)LUVW1DW¶O%DQNRI%RVWRQ
Y%HOORWWL86 KROGLQJWKDWDVWDWH
VWDWXWH SURKLELWLQJ H[SHQGLWXUHV E\ EDQNV DQG EXVLQHVV
FRUSRUDWLRQVIRUWKHSXUSRVHRILQIOXHQFLQJWKHYRWHRQDQ\
TXHVWLRQ RWKHU WKDQ RQH PDWHULDOO\ DIIHFWLQJ WKH EXVLQHVV
LQWHUHVWV RI WKH FRUSRUDWLRQ XQFRQVWLWXWLRQDOO\ LQIULQJHG RQ
WKHLU)LUVW$PHQGPHQWULJKWV $OWKRXJKWKHUXOHHPSKDVL]HV
WKDWFRDFKHVDQGPHPEHUVRIWKHFRDFK¶VVWDIIPXVWUHIUDLQ
IURP H[HUWLQJ ³XQGXH LQIOXHQFH´ E\ LQLWLDWLQJ FRQWDFW ZLWK
SURVSHFWLYHVWXGHQWVWKHUXOHGRHVQRWEDQWKHVHSHUVRQVIURP
FRPPXQLFDWLQJZLWKVWXGHQWVZKRWKHPVHOYHVLQLWLDWHFRQWDFW
,QVXPZHFRQFOXGHWKDWWKHGLVWULFWFRXUWHUUHGLQKROGLQJ
WKDWWKHUHFUXLWLQJUXOHLVDFRQWHQWEDVHGUHJXODWLRQVXEMHFWWR
DQDO\VLVXQGHU³WKHPRVWH[DFWLQJVFUXWLQ\´7XUQHU%URDG
6\V,QFY)&&86 :HWKHUHIRUH
WXUQWRDQDQDO\VLVRIWKHUXOHDVDFRQWHQWQHXWUDOUHJXODWLRQ

-- 12 of 12 --

Continue your research in ChatGPT or Claude

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