The AI workspace for legal professionals
- Legal research with access to more than 1 million sources
- Document automation
- Matter management
- Hosted in the EU and Switzerland
Try it free for 14 days (10 questions/day during trial)
The AI workspace for legal professionals
Try it free for 14 days (10 questions/day during trial)
00-6484•02a0244p.06
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
$'',( 7 &2/(0$1RQEHKDOI
RIKHUVHOIDQGRWKHUVVLPLODUO\
VLWXDWHG
3ODLQWLII$SSHOOHH
Y
*(1(5$/ 027256
$&&(37$1&( &25325$7,21
'HIHQGDQW$SSHOODQW
;!
1
1R
$SSHDOIURPWKH8QLWHG6WDWHV'LVWULFW&RXUW
IRUWKH0LGGOH'LVWULFWRI7HQQHVVHHDW1DVKYLOOH
1R²$OHWD$7UDXJHU'LVWULFW-XGJH
$UJXHG0DUFK
'HFLGHGDQG)LOHG-XO\
%HIRUH1255,66,/(5DQG*,/0$1&LUFXLW-XGJHV
BBBBBBBBBBBBBBBBB
&2816(/
$5*8('-D\1)DVWRZ:(,/*276+$/ 0$1*(6
1HZ<RUN1HZ<RUNIRU$SSHOODQW&OLQWRQ::DWNLQV
%UHQWZRRG7HQQHVVHHIRU$SSHOOHH21%5,()-D\1
)DVWRZ3HWHU1&XELWD-RVHSK:*HOE:(,/*276+$/
-- 1 of 6 --
&ROHPDQY*HQHUDO0RWRUV
$FFHSWDQFH&RUS
1R
0$1*(61HZ<RUN1HZ<RUN6WHSKHQ*$QGHUVRQ
%$.(5 '21(/621 %($50$1 &$/':(//
.QR[YLOOH7HQQHVVHHIRU$SSHOODQW&OLQWRQ::DWNLQV
%UHQWZRRG7HQQHVVHH0LFKDHO(7HUU\7(55< *25(
1DVKYLOOH 7HQQHVVHH 'DUQOH\ ' 6WHZDUW %(5167(,1
/,72:,7=%(5*(5 *52660$111HZ<RUN1HZ
<RUN *DU\ .OHLQ *5$17 52''< %RVWRQ
0DVVDFKXVHWWV 6WXDUW 7 5RVVPDQ 1$7,21$/
&21680(5 /$: &(17(5 %RVWRQ 0DVVDFKXVHWWV
:\PDQ2*LOPRUH-U*,/025(/$:2)),&(*URYH
+LOO$ODEDPDIRU$SSHOOHH-HVVLFD'XQVD\6LOYHU*UHJRU\
%)ULHO81,7('67$7(6'(3$570(172)-867,&(
&,9,/5,*+76',9,6,21:DVKLQJWRQ'&IRU$PLFXV
&XULDH
BBBBBBBBBBBBBBBBB
23,1,21
BBBBBBBBBBBBBBBBB
$/$1 ( 1255,6 &LUFXLW -XGJH 'HIHQGDQW *HQHUDO
0RWRUV$FFHSWDQFH&RUSRUDWLRQ *0$& DSSHDOVWKHGLVWULFW
FRXUW¶VRUGHUFHUWLI\LQJDSODLQWLIIFODVVLQWKLVDFWLRQDOOHJLQJ
UDFLDOGLVFULPLQDWLRQXQGHUWKH(TXDO&UHGLW2SSRUWXQLW\$FW
(&2$ 86&I'HIHQGDQWFRQWHQGVWKDW
WKHGLVWULFWFRXUWDEXVHGLWVGLVFUHWLRQLQFHUWLI\LQJWKLVFODVV
XQGHU5XOH E RIWKH)HGHUDO5XOHVRI&LYLO3URFHGXUH
EHFDXVHWKHFODLPVIRULQMXQFWLYHUHOLHIGRQRWSUHGRPLQDWH
RYHUWKHPRQHWDU\GDPDJHVUHTXHVWHGLQWKHFRPSODLQW$IWHU
FDUHIXOFRQVLGHUDWLRQZHYDFDWHWKHFODVVFHUWLILFDWLRQRUGHU
DQG UHPDQG IRU IXUWKHU SURFHHGLQJV FRQVLVWHQW ZLWK WKLV
RSLQLRQ
,
3ODLQWLII$GGLH7&ROHPDQLVDQ$IULFDQ$PHULFDQZRPDQ
ZKRHQWHUHGLQWRDUHWDLOFRQWUDFWZLWK%HDPDQ$XWRPRWLYH
*URXS IRU WKH SXUFKDVH RI D YHKLFOH LQ *0$&
VXEVHTXHQWO\ SXUFKDVHG WKH FRQWUDFW DQG SODLQWLII PDGH
1R &ROHPDQY*HQHUDO0RWRUV
$FFHSWDQFH&RUS
$FWLRQV$IWHUWKH&LYLO5LJKWV$FWRI%<8/
5HY QRWLQJ WKDW EDFN SD\ FDOFXODWLRQV
JHQHUDOO\FDQEHDSSOLHGZLWKPRUHHIILFLHQF\WKDQGDPDJHV
FDOFXODWLRQV LQ D FODVV DFWLRQ DQG DUH WKHUHIRUH PRUH
DSSURSULDWHIRULQFOXVLRQLQD E FODVV )RUH[DPSOH
GHWHUPLQLQJWKHGDPDJHVRIHDFKFODVVPHPEHULQWKLVFDVH
ZRXOGLQYROYHLQYHVWLJDWLRQLQWRWKHSUDFWLFHVRIPXOWLSOHDXWR
GHDOHUVKLSVZKHUHDVDEDFNSD\FODLPW\SLFDOO\LQYROYHVWKH
SUDFWLFHVRIDVLQJOHHPSOR\HU
0RUHLPSRUWDQWO\DVDQHTXLWDEOHUHPHG\EDFNSD\GRHV
QRWLQYROYHWKHPRUHVLJQLILFDQWLVVXHVRISURFHGXUDOIDLUQHVV
DQG FRQVWLWXWLRQDOLW\ UDLVHG E\ WKH LQFOXVLRQ RI SODLQWLII¶V
FRPSHQVDWRU\GDPDJHVFODLPLQWKLVFODVV6HHHJ$OOLVRQ
)GDW GLVWLQJXLVKLQJEDFNSD\IURPFRPSHQVDWRU\
GDPDJHVXQGHU7LWOH9,,DV³DQHTXLWDEOHUHPHG\VLPLODUWR
RWKHUIRUPVRIDIILUPDWLYHLQMXQFWLYHUHOLHISHUPLWWHGLQ E
FODVVDFWLRQV´ 3ODLQWLII¶VDUJXPHQWWKDWVLPLODUHIILFLHQF\
SUREOHPV DUH LQYROYHG LQ FDOFXODWLQJ EDFN SD\ DV
FRPSHQVDWRU\GDPDJHVIDLOVWRDGGUHVVWKHVHLVVXHV
$FFRUGLQJO\ ZH KROG WKDW WKH GLVWULFW FRXUW DEXVHG LWV
GLVFUHWLRQLQFHUWLI\LQJWKHSURSRVHGFODVVXQGHU5XOH E
EHFDXVH FRPSHQVDWRU\ GDPDJHV XQGHU WKH (&2$ DUH QRW
UHFRYHUDEOHE\D5XOH E FODVV
,,,
)RUWKHIRUHJRLQJUHDVRQVZHYDFDWHWKHFHUWLILFDWLRQRUGHU
RI WKH GLVWULFW FRXUW DQG UHPDQG WR WKH GLVWULFW FRXUW ZLWK
LQVWUXFWLRQV WR SURFHHG LQ D PDQQHU FRQVLVWHQW ZLWK WKLV
RSLQLRQ
-- 2 of 6 --
&ROHPDQY*HQHUDO0RWRUV
$FFHSWDQFH&RUS
1R
3ODLQWLII¶V FRPSODLQW UHTXHVWV FRPSHQVDWRU\ GDPDJHV ³HTXDO WR WKH
GLIIHUHQFH EHWZHHQ WKH PDUNXS FKDUJH LPSRVHG RQ KHU SXUVXDQW WR WKH
)LQDQFH &KDUJH 0DUNXS 3ROLF\ DQG WKH DYHUDJH PDUNXS FKDUJH LPSRVHG
RQ ZKLWH SHUVRQV GXULQJ WKH VDPH WLPH SHULRG´
DSSO\DFODVVZLGHIRUPXODWRWKHLUFDOFXODWLRQ )LQDOO\WKH
SULPDU\ MXVWLILFDWLRQ IRU FODVV WUHDWPHQW RI WKHVH FODLPV LV
ODUJHO\DEVHQWLQWKLVFDVHEHFDXVHWKH(&2$¶VSURYLVLRQIRU
WKHDZDUGRIDWWRUQH\¶VIHHVDQGFRVWVWRVXFFHVVIXOSODLQWLIIV
HOLPLQDWHVDQ\SRWHQWLDOILQDQFLDOEDUWRSXUVXLQJLQGLYLGXDO
FODLPV86&H G
3ODLQWLII FRQWHQGV WKDW LW ZDV DSSURSULDWH IRU WKH GLVWULFW
FRXUWWRLQFOXGHWKLVFODLPLQWKHFODVVFHUWLILHGEHFDXVHWKHVH
GDPDJHV DUH VXVFHSWLEOH WR GHWHUPLQDWLRQ RQ D FODVVZLGH
EDVLV7KLVDUJXPHQWLVXQGHUPLQHGKRZHYHUE\WKHIDFWWKDW
KHU UHTXHVW IRU FRPSHQVDWRU\ GDPDJHV GHILQHV WKHP E\
UHIHUHQFHWRWKHPDUNXSFKDUJHGWRHDFKLQGLYLGXDOPHPEHU
RI WKH FODVV 8QGHU KHU RZQ SURSRVHG IRUPXOD WKH FRXUW
ZRXOGEHUHTXLUHGWRDVFHUWDLQWKHPDUNXSFKDUJHGWRHDFK
LQGLYLGXDOPHPEHURIWKHFODVVDQGFRPSDUHLWWRWKHSURSRVHG
DYHUDJH
3ODLQWLII DOVR DUJXHV WKDW WKH QHHG IRU LQGLYLGXDOL]HG
GHWHUPLQDWLRQVFRQFHUQLQJGDPDJHVLVQRWIDWDOWRFHUWLILFDWLRQ
XQGHU5XOH E DQGSRLQWVWRRXUSUHFHGHQWVKROGLQJWKDW
EDFNSD\LVDSHUPLVVLEOHUHPHG\LQD5XOH E FODVV
6HHHJ$OH[DQGHUY$HUR /RGJH1R,QW¶O$VV¶QRI
0DFKLQLVWV DQG $HURVSDFH :RUNHUV $)/&,2 )G
WK&LU ³$UHTXHVWIRUEDFNSD\GRHVQRW
SUHFOXGH FHUWLILFDWLRQ XQGHU > E @´ FLWLQJ FDVHV
:KLOHLWLVWUXHWKDWDFODLPIRUEDFNSD\LPSOLFDWHVVRPHRI
WKHVDPHHIILFLHQF\FRQFHUQVZHKDYHFLWHGWRGD\DVSDUWRI
RXUUHDVRQLQJIRUH[FOXGLQJFRPSHQVDWRU\GDPDJHVIURPD
5XOH E FODVVEDFNSD\LVTXDOLWDWLYHO\GLIIHUHQWIURP
FRPSHQVDWRU\GDPDJHVXQGHUWKH(&2$EHFDXVHFDOFXODWLRQ
RI EDFN SD\ JHQHUDOO\ LQYROYHV OHVV FRPSOLFDWHG IDFWXDO
GHWHUPLQDWLRQVDQGIHZHULQGLYLGXDOL]HGLVVXHV6HHJHQHUDOO\
'DQLHO ) 3LDU 7KH 8QFHUWDLQ )XWXUH RI 7LWOH 9,, &ODVV
1R &ROHPDQY*HQHUDO0RWRUV
$FFHSWDQFH&RUS
SD\PHQWVWR*0$&WKURXJK0D\ZKHQVKHSDLGRIIWKH
FRQWUDFW
3ODLQWLIIILOHGWKLVVXLWXQGHUWKH(&2$DJDLQVWGHIHQGDQW
DOOHJLQJ WKDW *0$&¶V UHWDLO FUHGLW SULFLQJ V\VWHP IRU
DXWRPRELOH SXUFKDVHV UHVXOWV LQ GLVFULPLQDWLRQ DJDLQVW
$IULFDQ$PHULFDQV 3ODLQWLII VHHNV LQMXQFWLYH UHOLHI DQG
FRPSHQVDWRU\GDPDJHVXQGHUWKH(&2$7KHGLVWULFWFRXUW¶V
PHPRUDQGXP RSLQLRQ SURYLGHV D EULHI GHVFULSWLRQ RI
*0$&¶VSULFLQJV\VWHP
>7@KHUHDUHWZRFRPSRQHQWVWRWKHDQQXDOSHUFHQWDJHUDWH
³$35´ VHW LQ >*0$&¶V@ UHWDLO LQVWDOOPHQW VDOHV
FRQWUDFWV WKH ³%X\ 5DWH´ DQG WKH ³)LQDQFH &KDUJH
0DUNXS´7KH³%X\5DWH´LVWKHSRUWLRQRIWKH$35WKDW
³LVWKHULVNUHODWHGLQWHUHVWUDWHUHTXLUHGE\*0$&IRUD
SDUWLFXODUWUDQVDFWLRQ´7KH³)LQDQFH&KDUJH0DUNXS´
LV³WKHQRQULVNFKDUJHDGGHGWRWKH%X\5DWH´E\WKH
GHDOHUZKRPXVWQRWH[FHHGDOLPLWDWLRQVHWE\*0$&¶V
SROLF\$FFRUGLQJWRWKHSODLQWLIIWKHUHDUHLQFHQWLYHVLQ
*0$&¶VUHWDLOILQDQFHV\VWHPWR³HQFRXUDJHLPSRVLWLRQ
RIWKHVXEMHFWLYHQRQULVNUHODWHGPDUNXS´
&ROHPDQY*HQHUDO0RWRUV$FFHSWDQFH&RUS)5'
0'7HQQ 3ODLQWLIITXDOLILHGIRUD%X\
5DWHRIXQGHU*0$&¶VSULFLQJV\VWHPEXW%HDPDQ
$XWRPRWLYHH[HUFLVHGLWVGLVFUHWLRQXQGHUWKH)LQDQFH&KDUJH
0DUNXS3ROLF\ ³PDUNXSSROLF\´ WRLQFUHDVHKHULQWHUHVWUDWH
WR 3ODLQWLII DOOHJHV WKDW WKH GLVFUHWLRQDU\ PDUNXS
SROLF\LVLPSOHPHQWHGLQDZD\WKDWKDVVLJQLILFDQWGLVSDUDWH
LPSDFW RQ $IULFDQ$PHULFDQV DQG FDQQRW EH MXVWLILHG E\
EXVLQHVVQHFHVVLW\
3ODLQWLIIVRXJKWWREULQJWKLVVXLWRQEHKDOIRIKHUVHOIDQGD
SURSRVHG FODVV RI SODLQWLIIV GHILQHG DV ³>D@OO $IULFDQ
$PHULFDQFRQVXPHUVZKRREWDLQHGILQDQFLQJIURP*0$&LQ
7HQQHVVHH SXUVXDQW WR *0$&¶V μ5HWDLO 3ODQ :LWKRXW
5HFRXUVH¶EHWZHHQ0D\DQGWKHGDWHRIMXGJPHQW
DQGZKRZHUHFKDUJHGDILQDQFHFKDUJHPDUNXSJUHDWHUWKDQ
-- 3 of 6 --
&ROHPDQY*HQHUDO0RWRUV
$FFHSWDQFH&RUS
1R
WKH DYHUDJH ILQDQFH FKDUJH PDUNXS FKDUJHG ZKLWH
FRQVXPHUV´ ,G DW IRRWQRWHV RPLWWHG 'HIHQGDQW
RSSRVHG FHUWLILFDWLRQ RI WKH FODVV EHFDXVH LQ LWV YLHZ WKH
LQGLYLGXDOL]HGLVVXHVUHJDUGLQJOLDELOLW\DQGGDPDJHVUHQGHU
WKHVXLWLQDSSURSULDWHIRUFODVVWUHDWPHQW
7KHGLVWULFWFRXUWFHUWLILHGSODLQWLII¶VSURSRVHGFODVVXQGHU
)HG5&LY3 E 'HIHQGDQWVVRXJKWDQLQWHUORFXWRU\
DSSHDORIWKHFODVVFHUWLILFDWLRQXQGHU)HG5&LY3 I
ZKLFKZHJUDQWHG
,,
7KLV FRXUW UHYLHZV D GLVWULFW FRXUW¶V JUDQW RI FODVV
FHUWLILFDWLRQ IRU DEXVH RI GLVFUHWLRQ 6HH 0F$XOH\ Y ,QW¶O
%XVLQHVV 0DFKLQHV &RUS )G WK &LU
$EXVHRIGLVFUHWLRQLVGHILQHGDV³DGHILQLWHDQGILUP
FRQYLFWLRQ WKDW WKH WULDO FRXUW FRPPLWWHG D FOHDU HUURU RI
MXGJPHQW´%RZOLQJY3IL]HU,QF)G WK
&LU :KLOHWKHGLVWULFWFRXUWKDVEURDGGLVFUHWLRQLQ
FHUWLI\LQJFODVVDFWLRQVLWPXVWH[HUFLVHWKDWGLVFUHWLRQZLWKLQ
WKHIUDPHZRUNRI5XOH&URVVY1DW¶O7UXVW/LIH,QV&R
)G WK&LU
,Q RUGHU WR REWDLQ FODVV FHUWLILFDWLRQ SODLQWLII PXVW ILUVW
VDWLVI\ 5XOH D ¶V UHTXLUHPHQWV RI QXPHURVLW\
FRPPRQDOLW\W\SLFDOLW\DQGDGHTXDF\RIUHSUHVHQWDWLRQ)HG
5&LY3 D 7KHGLVWULFWFRXUWGHWHUPLQHGWKDWSODLQWLII
VDWLVILHGDOOIRXURIWKHVHUHTXLUHPHQWV%HFDXVHZHKROGWKDW
WKHSURSRVHGFODVVYLRODWHVWKHUHTXLUHPHQWVRI5XOH E
ZHZLOOQRWDGGUHVVWKHTXHVWLRQRIZKHWKHUSODLQWLIIPHHWVWKH
5XOH D UHTXLUHPHQWV
,QDGGLWLRQWRVDWLVI\LQJWKHUHTXLUHPHQWVRI5XOH D
KRZHYHUSODLQWLIIPXVWGHPRQVWUDWHWKDWWKHFODVVILWVXQGHU
RQHRIWKHWKUHHVXEGLYLVLRQVRI5XOH E 3ODLQWLIIVRXJKW
FHUWLILFDWLRQXQGHUWZRRIWKHVHVXEGLYLVLRQV E DQG
5XOH E UHTXLUHVWKDW³WKHSDUW\RSSRVLQJWKHFODVVKDV
DFWHGRUUHIXVHGWRDFWRQJURXQGVJHQHUDOO\DSSOLFDEOHWRWKH
FODVV WKHUHE\ PDNLQJ DSSURSULDWH ILQDO LQMXQFWLYH UHOLHI RU
1R &ROHPDQY*HQHUDO0RWRUV
$FFHSWDQFH&RUS
GDPDJHVGHWHUPLQDWLRQRULVVXVFHSWLEOHWRFDOFXODWLRQRQD
FODVVZLGHEDVLV
)LQDOO\ZHDUHJXLGHGE\WKHJHQHUDOSXUSRVHVXQGHUO\LQJ
FODVVWUHDWPHQWRIFODLPV7KH6XSUHPH&RXUWKDVGHVFULEHG
WKHXQGHUO\LQJSXUSRVHRIDFODVVDFWLRQDVIROORZV
7KHDJJUHJDWLRQRILQGLYLGXDOFODLPVLQWKHFRQWH[WRID
FODVVZLGH VXLW LV DQ HYROXWLRQDU\ UHVSRQVH WR WKH
H[LVWHQFHRILQMXULHVXQUHPHGLHGE\WKHUHJXODWRU\DFWLRQ
RIJRYHUQPHQW:KHUHLWLVQRWHFRQRPLFDOO\IHDVLEOHWR
REWDLQ UHOLHI ZLWKLQ WKH WUDGLWLRQDO IUDPHZRUN RI D
PXOWLSOLFLW\ RI VPDOO LQGLYLGXDO VXLWV IRU GDPDJHV
DJJULHYHGSHUVRQVPD\EHZLWKRXWDQ\HIIHFWLYHUHGUHVV
XQOHVVWKH\PD\HPSOR\WKHFODVVDFWLRQGHYLFH
'HSRVLW*XDUDQW\1DW¶O%DQNY5RSHU86
$FFRUGLQJO\ FODVV WUHDWPHQW RI FODLPV LV PRVW
DSSURSULDWH ZKHUH LW LV QRW ³HFRQRPLFDOO\ IHDVLEOH´ IRU
LQGLYLGXDOVWRSXUVXHWKHLURZQFODLPV
,QDQDO\]LQJWKHFODVVFHUWLILHGE\WKHGLVWULFWFRXUWLWLV
DSSDUHQWWKDWWKHFRPSHQVDWRU\GDPDJHVUHTXHVWHGLPSOLFDWH
DOO RI WKHVH FRQFHUQV )LUVW WKH LQFOXVLRQ RI WKLV FODLP
XQGHUPLQHV WKH DVVXPSWLRQ RI KRPRJHQHLW\ EHFDXVH HDFK
PHPEHURIWKHFODVVKDVDQLQGLYLGXDOVWDNHLQWKHRXWFRPHRI
WKHOLWLJDWLRQWKDWFRXOGEHSURWHFWHGE\WKHRSSRUWXQLW\WRRSW
RXW RI WKH FODVV 6HH +ROPHV )G DW ³PRQH\
GDPDJHV DUH GLUHFWO\ UHODWHG WR WKH GLVSDUDWH PHULWV RI
LQGLYLGXDO FODLPV DQG DUH QRW JHQHUDOO\ DSSOLFDEOH WR WKH
FODLPVRIWKHFODVVDVDZKROH´ LQWHUQDOTXRWDWLRQVRPLWWHG
6HFRQG WKH LQGLYLGXDOL]HG GHWHUPLQDWLRQV QHFHVVDU\ WR
FDOFXODWHWKHDPRXQWRIGDPDJHVHDFKFODVVPHPEHUZRXOGEH
HQWLWOHGWRHOLPLQDWHVWKHHIILFLHQFLHVFUHDWHGE\DGMXGLFDWLQJ
WKHVHFODLPVRQDFODVVZLGHEDVLV6HHHJ%X\FNV5REHUVRQ
Y&LWLEDQN)HGHUDO6DYLQJV%DQN)5' 1'
,OO GHQ\LQJ FHUWLILFDWLRQ RI FRPSHQVDWRU\ GDPDJHV
FODLPV XQGHU 5XOH E LQ D FODVV DFWLRQ DVVHUWLQJ
GLVFULPLQDWLRQXQGHUWKH(&2$EHFDXVHRIWKHLQDELOLW\WR
-- 4 of 6 --
&ROHPDQY*HQHUDO0RWRUV
$FFHSWDQFH&RUS
1R
GDPDJHVDUHWREHLQFOXGHGLQDQ\PDQGDWRU\FODVVLQRUGHUWR
SURWHFWWKHLQGLYLGXDOLQWHUHVWVDWVWDNHDQGHQVXUHWKDWWKH
XQGHUO\LQJ DVVXPSWLRQ RI KRPRJHQHLW\ LV QRW XQGHUPLQHG
6HH ,Q UH 7HOHFWURQLFV 3DFLQJ 6\V ,QF )G DW
VWDWLQJ WKDW FHUWLILFDWLRQ RI D PDQGDWRU\ FODVV XQGHU 5XOH
E % ³PXVWEHFDUHIXOO\VFUXWLQL]HG´EHFDXVHLWODFNV
WKHSURWHFWLRQVRID5XOH E FODVV
,QDGGLWLRQWRWKHVHFRQVLGHUDWLRQVRISURFHGXUDOIDLUQHVV
ZHDUHJXLGHGE\WKHDGYLVRU\FRPPLWWHH¶VGLVFXVVLRQRIWKH
SUHGRPLQDWLRQ UHTXLUHPHQW LQ WKH 5XOH E FRQWH[W
ZKLFK H[SOLFLWO\ UHTXLUHV WKDW ³TXHVWLRQV RI ODZ RU IDFW
FRPPRQ WR PHPEHUV RI WKH FODVV SUHGRPLQDWH RYHU DQ\
TXHVWLRQVDIIHFWLQJRQO\LQGLYLGXDOPHPEHUV´)HG5
&LY3 E 7KHFRPPLWWHH¶VGLVFXVVLRQRIWKLV5XOH
E UHTXLUHPHQWLVUHOHYDQWKHUHEHFDXVHWKHLQFOXVLRQRI
FRPSHQVDWRU\GDPDJHVFODLPVLQD5XOH E FODVVUDLVHV
WKHVDPHFRQFHUQVWKDWDUHSUHVHQWLQD5XOH E FODVV
6HH $OOLVRQ )G DW ³>7@KH SUHGRPLQDWLRQ
UHTXLUHPHQW RI 5XOH E VHUYHV HVVHQWLDOO\ WKH VDPH
IXQFWLRQV DV WKH SURFHGXUDO VDIHJXDUGV DQG HIILFLHQF\ DQG
PDQDJHDELOLW\VWDQGDUGVPDQGDWHGLQ E FODVVDFWLRQV´
7KHDGYLVRU\FRPPLWWHHVWDWHVWKDWDFRXUWLVUHTXLUHGWR
ILQGWKDWFRPPRQLVVXHVSUHGRPLQDWHLQD5XOH E FODVV
EHFDXVH ³>L@W LV RQO\ ZKHUH WKLV SUHGRPLQDQFH H[LVWV WKDW
HFRQRPLHV FDQ EH DFKLHYHG E\ PHDQV RI WKH FODVVDFWLRQ
GHYLFH´)HG5&LY3 E DGYLVRU\FRPPLWWHH¶VQRWH
6LPLODU FRQFHUQV DUH LPSOLFDWHG LQ WKH GHWHUPLQDWLRQ RI
ZKHWKHU LQMXQFWLYH UHOLHI SUHGRPLQDWHV LQ D 5XOH E
FODVVEHFDXVH³WKHXQGHUO\LQJSUHPLVHRI E FHUWLILFDWLRQ
WKDWWKHFODVVPHPEHUVVXIIHUIURPDFRPPRQLQMXU\WKDWFDQ
EHDGGUHVVHGE\FODVVZLGHUHOLHIEHJLQVWREUHDNGRZQZKHQ
WKHFODVVVHHNVWRUHFRYHUEDFNSD\RURWKHUIRUPVRIPRQHWDU\
GDPDJHV WR EH DOORFDWHG EDVHG RQ LQGLYLGXDO LQMXULHV´
(XEDQNV Y %LOOLQJWRQ )G '& &LU
7KXVLQGHWHUPLQLQJZKHWKHULQMXQFWLYHUHOLHISUHGRPLQDWHV
LQ D 5XOH E FODVV RQH FULWLFDO IDFWRU LV ZKHWKHU WKH
FRPSHQVDWRU\ UHOLHI UHTXHVWHG UHTXLUHV LQGLYLGXDOL]HG
1R &ROHPDQY*HQHUDO0RWRUV
$FFHSWDQFH&RUS
FRUUHVSRQGLQJGHFODUDWRU\UHOLHIZLWKUHVSHFWWRWKHFODVVDVD
ZKROH´)HG5&LY3 E 7KHDGYLVRU\FRPPLWWHH¶V
QRWHVH[SODLQWKDWWKLVVXEGLYLVLRQ³GRHVQRWH[WHQGWRFDVHV
LQ ZKLFK WKH DSSURSULDWH ILQDO UHOLHI UHODWHV H[FOXVLYHO\ RU
SUHGRPLQDQWO\WRPRQH\GDPDJHV´)HG5&LY3 E
DGYLVRU\FRPPLWWHH¶VQRWH5XOH E UHTXLUHV³WKDWWKH
TXHVWLRQVRIODZRUIDFWFRPPRQWRWKHPHPEHUVRIWKHFODVV
SUHGRPLQDWH RYHU DQ\ TXHVWLRQV DIIHFWLQJ RQO\ LQGLYLGXDO
PHPEHUVDQGWKDWDFODVVDFWLRQLVVXSHULRUWRRWKHUPHWKRGV´
RIDGMXGLFDWLRQ)HG5&LY3 E
7KH GLVWULFW FRXUW IRXQG WKDW WKH SURSRVHG FODVV PHW WKH
UHTXLUHPHQWVRI5XOH E EHFDXVHSODLQWLIIDOOHJHVWKDW
*0$&¶VSULFLQJV\VWHPKDGDGLVSDUDWHLPSDFWRQ$IULFDQ
$PHULFDQVDQGWKHSULPDU\UHOLHIVKHUHTXHVWVLVLQMXQFWLYHLQ
QDWXUH7KHFRXUWIRXQGWKDWFHUWLILFDWLRQXQGHU5XOH E
ZDVLQDSSURSULDWHEHFDXVHSODLQWLIIKDGIDLOHGWRVKRZWKDW
LQGLYLGXDOL]HGIDFWRUVGRQRWSOD\DUROHLQWKHILQDQFHFKDUJH
PDUNXS'HIHQGDQWDUJXHVWKDWWKHGLVWULFWFRXUWDEXVHGLWV
GLVFUHWLRQLQFHUWLI\LQJWKLVFODVVXQGHU5XOH E EHFDXVH
SODLQWLII¶VFODLPIRUFRPSHQVDWRU\GDPDJHVLQYROYHVKLJKO\
LQGLYLGXDOL]HGGHWHUPLQDWLRQVWKDWDUHQRWDSSURSULDWHIRUD
5XOH E FODVV
$
7KLV FRXUW KDV QRW H[SOLFLWO\ DGGUHVVHG WKH TXHVWLRQ RI
ZKHWKHU FRPSHQVDWRU\ GDPDJHV DUH UHFRYHUDEOH E\ D 5XOH
E FODVV $V QRWHG DERYH KRZHYHU WKH DGYLVRU\
FRPPLWWHH¶V QRWHV FRQWHPSODWH WKLV SRVVLELOLW\ DQG RWKHU
IHGHUDOFLUFXLWFRXUWVWRFRQVLGHUWKHTXHVWLRQKDYHKHOGWKDW
PRQH\GDPDJHVDUHUHFRYHUDEOHE\D5XOH E FODVVLQ
FHUWDLQVLWXDWLRQV6HHHJ0XUUD\Y$XVODQGHU)G
WK&LU /HPRQY,QW¶O8QLRQRI2SHUDWLQJ
(QJ¶UV )G WK &LU $OOLVRQ Y
&LWJR3HWUROHXP&RUS)G WK&LU
(XEDQNV Y %LOOLQJWRQ )G '& &LU
%RXJKWRQY&RWWHU&RUS)G WK&LU
=LPPHUPDQY%HOO)G WK&LU ,Q
-- 5 of 6 --
&ROHPDQY*HQHUDO0RWRUV
$FFHSWDQFH&RUS
1R
UH6FKRRO$VEHVWRV/LWLJDWLRQ)G G&LU
(LVHQY&DUOLVOH -DFTXHOLQ)G QG
&LU
1RWZLWKVWDQGLQJ WKLV DSSDUHQW FRQVHQVXV WKDW PRQH\
GDPDJHVDUHUHFRYHUDEOHWRVRPHH[WHQWLQD5XOH E
FODVV DFWLRQ WKH 6XSUHPH &RXUW KDV UHSHDWHGO\ H[SUHVVHG
FRQFHUQRYHUWKHFRQVWLWXWLRQDOLW\RIFHUWLI\LQJDPDQGDWRU\
FODVVWKDWLQFOXGHVFODLPVIRUPRQH\GDPDJHV6HH2UWL]Y
)LEUHERDUG &RUS 86 QRWLQJ WKDW
FHUWLILFDWLRQ RI D PDQGDWRU\ FODVV WKDW LQFOXGHV PRQH\
GDPDJHVSRWHQWLDOO\FRPSURPLVHVWKH6HYHQWK$PHQGPHQW
DQGGXHSURFHVVULJKWVRILQGLYLGXDOFODLPDQWV FI7LFRU7LWOH
,QV&RY%URZQ86 GLVPLVVLQJZULW
RI FHUWLRUDUL RQ WKH TXHVWLRQ RI ZKHWKHU WKHUH LV D
FRQVWLWXWLRQDOULJKWWRRSWRXWRIDQ\FODVVDFWLRQLQYROYLQJ
PRQHWDU\GDPDJHVEXWVWDWLQJWKDWLWLV³DWOHDVWDVXEVWDQWLDO
SRVVLELOLW\´ WKDW FODVV DFWLRQV VHHNLQJ PRQH\ GDPDJHV FDQ
RQO\ EH FHUWLILHG XQGHU 5XOH E LQ OLJKW RI WKH
FRQVWLWXWLRQDO FRQVLGHUDWLRQV LPSOLFDWHG VHH DOVR ,Q UH
7HOHFWURQLFV3DFLQJ6\V,QF)G WK&LU
VWDWLQJ WKDW WKH 6XSUHPH &RXUW KDV VWUHVVHG LQ
LQWHUSUHWLQJ 5XOH WKDW ³SULQFLSOHV RI VRXQG MXGLFLDO
PDQDJHPHQWDQGFRQVWLWXWLRQDOFRQVLGHUDWLRQVRIGXHSURFHVV
DQGWKHULJKWWRMXU\WULDODOOOHDGWRWKHFRQFOXVLRQWKDWLQDQ
DFWLRQ IRU PRQH\ GDPDJHV FODVV PHPEHUV DUH HQWLWOHG WR
SHUVRQDO QRWLFH DQG DQ RSSRUWXQLW\ WR RSW RXW´ ,W LV
XQQHFHVVDU\IRUXVWRUHDFKWKHTXHVWLRQRIZKHWKHUPRQH\
GDPDJHV DUH HYHU UHFRYHUDEOH LQ D E FODVV DFWLRQ
KRZHYHUEHFDXVHZHKROGWKDWFRPSHQVDWRU\GDPDJHVXQGHU
WKH(&2$DUHQRWUHFRYHUDEOHE\D E FODVV
%
$VVXPLQJDUJXHQGRWKDWWKHDGYLVRU\FRPPLWWHH¶VQRWHVDUH
FRUUHFWWKDWPRQH\GDPDJHVPD\EHUHFRYHUDEOHE\D5XOH
E FODVVZHPXVWGHWHUPLQHZKHQRQHIRUPRIUHOLHI
SUHGRPLQDWHVRYHUDQRWKHU7KHDGYLVRU\FRPPLWWHH¶VQRWHV
GRQRWSURYLGHJXLGDQFHIRUDQVZHULQJWKLVTXHVWLRQ)RUWKH
1R &ROHPDQY*HQHUDO0RWRUV
$FFHSWDQFH&RUS
UHDVRQV GLVFXVVHG EHORZ ZH FRQFOXGH WKDW WKH LQMXQFWLYH
UHOLHIUHTXHVWHGLQWKLVFDVHGRHVQRWSUHGRPLQDWHRYHUWKH
PRQHWDU\ GDPDJHV GXH WR WKH KLJKO\ LQGLYLGXDOL]HG
GHWHUPLQDWLRQV WKDW ZRXOG EH UHTXLUHG WR GHWHUPLQH WKRVH
GDPDJHV
5XOH E FDQEHGLYLGHGLQWRWZRJHQHUDOFDWHJRULHVRI
FODVVDFWLRQVEDVHGRQWKHSURFHGXUDOUHTXLUHPHQWVWKDWWKH\
HQWDLO5XOH E DQG DUHUHIHUUHGWRDV³PDQGDWRU\´
FODVVHVGXHWRWKHIDFWWKDWWKH\GRQRWUHTXLUHWKDWDFRXUW
SURYLGHLQGLYLGXDOPHPEHUVRIWKHFODVVZLWKQRWLFHDQGWKH
RSSRUWXQLW\WR³RSWRXW´RIWKHFODVVDFWLRQ7KHVHSURFHGXUDO
SURWHFWLRQVDUHFRQVLGHUHGXQQHFHVVDU\IRUD5XOH E
FODVVEHFDXVHLWVUHTXLUHPHQWVDUHGHVLJQHGWRSHUPLWRQO\
FODVVHVZLWKKRPRJHQRXVLQWHUHVWV6HH+ROPHVY&RQW¶O&DQ
&R )G WK &LU ³7KH UHOLHI
SURYLVLRQVRIWKHUXOHUHIOHFWWKHQHHGIRUKRPRJHQHLW\LQWKH
ULJKWV DQG LQWHUHVWV RI WKH FODVV ´ LQWHUQDO TXRWDWLRQ
PDUNVRPLWWHG :HW]HOY/LEHUW\0XW,QVXUDQFH&R
)G G&LU ³7KHYHU\QDWXUHRID E
FODVV LV WKDW LW LV KRPRJHQHRXV ZLWKRXW DQ\ FRQIOLFWLQJ
LQWHUHVWVEHWZHHQWKHPHPEHUVRIWKHFODVV´
5XOH E LVUHIHUUHGWRDVDQ³RSWRXW´FODVVGXHWRWKH
VSHFLDO UHTXLUHPHQWV VHW IRUWK LQ 5XOH F WKDW DOO
SRWHQWLDOPHPEHUVRIWKHFODVVEHSURYLGHGUHDVRQDEOHQRWLFH
DQG WKH RSSRUWXQLW\ WR GHFOLQH WR SDUWLFLSDWH LQ WKH DFWLRQ
)HG 5 &LY 3 F 7KH DGGLWLRQDO UHTXLUHPHQWV RI
QRWLFHDQGWKHRSSRUWXQLW\WRRSWRXWDUHQHFHVVDU\LQ5XOH
E FODVVHVSUHFLVHO\EHFDXVHFODLPVIRUPRQH\GDPDJHV
LQYROYHLQGLYLGXDOLQWHUHVWVWKDWDUHQHFHVVDULO\KHWHURJHQRXV
LQQDWXUH)HG5&LY3 F DGYLVRU\FRPPLWWHH¶VQRWH
VHHDOVR+ROPHV)GDW ³+HWHURJHQHLW\DQGLWV
DWWHQGDQWSRWHQWLDOIRUGLYHUJLQJLQWHUHVWVQHFHVVLWDWHGVSHFLDO
UXOHVRISURFHGXUHWRSURWHFWDEVHQWPHPEHUVRIWKH E
FODVV´ 0RUHRYHUWKHFODVVWUHDWPHQWRIFODLPVIRUPRQH\
GDPDJHVLPSOLFDWHVWKH6HYHQWK$PHQGPHQWDQGGXHSURFHVV
ULJKWVRILQGLYLGXDOFODVVPHPEHUV6HH2UWL]86DW
$FFRUGLQJO\ FORVH VFUXWLQ\ LV QHFHVVDU\ LI PRQH\
-- 6 of 6 --
Connect Omnilex to search the legal corpus from your AI assistant.