02a0251p.06

6SHUOHY0,'HS¶WRI&RUUHFWLRQVHWDO 1R
WKHLUDFWLRQVZHQW³EH\RQGDOOSRVVLEOHERXQGVRIGHFHQF\´
VXFKWKDWWKH\FRXOG³EHUHJDUGHGDVDWURFLRXVDQGXWWHUO\
LQWROHUDEOH LQ D FLYLOL]HG FRPPXQLW\´ :H DJUHH ZLWK WKH
GLVWULFWFRXUW¶VFRQFOXVLRQ0RVWLPSRUWDQWO\WKHGHIHQGDQWV
GLGQRWPXUGHU7DPP\6SHUOH,QVWHDG+HUQGRQDFWLQJRQ
KLVRZQFRPPLWWHGWKHFULPH$Q\FULWLFLVPRIHLWKHUWKH
+90)¶V VHFXULW\ PHDVXUHV RU WKH GHIHQGDQWV¶ IDLOXUH WR
SUHYHQW+HUQGRQDQG7DPP\6SHUOHIURPFRPLQJLQWRFRQWDFW
ZLWK HDFK RWKHU UHODWHV WR HUURUV RI MXGJPHQW WKDW WKH
GHIHQGDQWVDUJXDEO\PDGH%XWWKHLUSXUSRUWHGPLVWDNHVDUH
QRW ³DWURFLRXV DQG XWWHUO\ LQWROHUDEOH LQ D FLYLOL]HG
FRPPXQLW\´
)RUWKHVHUHDVRQVZHFRQFOXGHWKDW$OODQ6SHUOHKDVIDLOHG
WR HVWDEOLVK D FODLP RI LQWHQWLRQDO LQIOLFWLRQ RI HPRWLRQDO
GLVWUHVV7KHGLVWULFWFRXUWWKHUHIRUHGLGQRWHUULQJUDQWLQJ
VXPPDU\ MXGJPHQW WR WKH GHIHQGDQWV ZLWK UHVSHFW WR WKLV
FDXVHRIDFWLRQ
,,,&21&/86,21
)RU DOO RI WKH UHDVRQV VHW IRUWK DERYH ZH $)),50 WKH
MXGJPHQWRIWKHGLVWULFWFRXUW

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
$//$1 - 63(5/(3HUVRQDO
5HSUHVHQWDWLYHRIWKH(VWDWH
RI7DPP\/6SHUOH
3ODLQWLII$SSHOODQW
Y
0,&+,*$1 '(3$570(17 2)
&255(&7,216.(11(7+ /
0&*,11,6$1'5(:
-$&.621*(5$/',1(
:,//,$06'21$/' 3528*+
67(3+(1 0257213(7(5
=,66,026DQG&/$5(1&(
+(51'21
'HIHQGDQWV$SSHOOHHV
;!

1
1R
$SSHDOIURPWKH8QLWHG6WDWHV'LVWULFW&RXUW
IRUWKH(DVWHUQ'LVWULFWRI0LFKLJDQDW'HWURLW
1R²5REHUW+&OHODQG'LVWULFW-XGJH
$UJXHG-XQH
'HFLGHGDQG)LOHG-XO\

-- 1 of 10 --

6SHUOHY0,'HS¶WRI&RUUHFWLRQVHWDO 1R
7KH +RQRUDEOH 5LFKDUG 0LOOV 8QLWHG 6WDWHV 'LVWULFW -XGJH IRU WKH
&HQWUDO 'LVWULFW RI ,OOLQRLV VLWWLQJ E\ GHVLJQDWLRQ
%HIRUH&2/(DQG*,/0$1&LUFXLW-XGJHV0,//6
'LVWULFW-XGJH
BBBBBBBBBBBBBBBBB
&2816(/
$5*8('/DUU\:0D]H\527+(0$=(< 0$=(<
6RXWKILHOG 0LFKLJDQ IRU $SSHOODQW 7KRPDV $ .XOLFN
2)),& ( 2) 7+ ( $ 7 7 2 5 1 ( < *(1(5 $/
&255(&7,216 ',9,6,21 /DQVLQJ 0LFKLJDQ IRU
$SSHOOHHV21%5,()/DUU\:0D]H\6FRWW/0D]H\
527+( 0$=(< 0$=(< 6RXWKILHOG 0LFKLJDQ IRU
$SSHOODQW 7KRPDV $ .XOLFN 2)),&( 2) 7+(
$77251(< *(1(5$/ &255(&7,216 ',9,6,21
/DQVLQJ0LFKLJDQIRU$SSHOOHHV
BBBBBBBBBBBBBBBBB
23,1,21
BBBBBBBBBBBBBBBBB
521$/'/((*,/0$1&LUFXLW-XGJH7DPP\/6SHUOH
ZDVPXUGHUHGE\DQLQPDWHZKLOHZRUNLQJDVWKHVWRUHNHHSHU
DW WKH +XURQ 9DOOH\ 0HQ¶V )DFLOLW\ +90) D 0LFKLJDQ
VWDWH SULVRQ 7KH GHFHGHQW¶V KXVEDQG $OODQ - 6SHUOH
VXEVHTXHQWO\ EURXJKW WKLV ODZVXLW DJDLQVW WKH 0LFKLJDQ
'HSDUWPHQWRI&RUUHFWLRQV 0'2& DQGYDULRXVLQGLYLGXDOV
DVVRFLDWHGZLWKWKH0'2&DQGWKH+90)6SHUOHDOOHJHV
DPRQJRWKHUWKLQJVWKDWWKHGHIHQGDQWV YLRODWHGKLVZLIH¶V
VXEVWDQWLYH GXH SURFHVV ULJKWV E\ IDLOLQJ WR SUHYHQW KHU
PXUGHU DOORZHGDVH[XDOO\KRVWLOHZRUNHQYLURQPHQWWR
H[LVWDWWKH+90)DQG FDXVHGWKHLQWHQWLRQDOLQIOLFWLRQRI
HPRWLRQDO GLVWUHVV 7KH GHIHQGDQWV PRYHG IRU VXPPDU\
MXGJPHQW$IWHUFRQFOXGLQJWKDWWKHGHIHQGDQWVZHUHHQWLWOHG
WRMXGJPHQWDVDPDWWHURIODZWKHGLVWULFWFRXUWJUDQWHGWKHLU
PRWLRQ RQ DOO EXW RQH RI 6SHUOH¶V FODLPV 7KLV UHPDLQLQJ
1R 6SHUOHY0,'HS¶WRI&RUUHFWLRQVHWDO
FLYLOL]HGFRPPXQLW\´,GDW TXRWLQJ5HVWDWHPHQW
6HFRQG RI7RUWV†FPWG
0RUHRYHUEHFDXVH7DPP\6SHUOH¶VGHDWKRFFXUUHGGXULQJ
WKH FRXUVH RI KHU HPSOR\PHQW 0LFKLJDQ¶V ZRUNHUV¶
FRPSHQVDWLRQODZSURYLGHVWKHH[FOXVLYHUHPHG\XQOHVVKHU
HPSOR\HUFRPPLWWHGDQLQWHQWLRQDOWRUW0LFK&RPS/DZV
† ³7KH ULJKW WR WKH UHFRYHU\ RI EHQHILWV DV
SURYLGHGLQWKLVDFWVKDOOEHWKHHPSOR\HH¶VH[FOXVLYHUHPHG\
DJDLQVW WKH HPSOR\HU IRU D SHUVRQDO LQMXU\ RU RFFXSDWLRQDO
GLVHDVH7KHRQO\H[FHSWLRQWRWKLVH[FOXVLYHUHPHG\LVDQ
LQWHQWLRQDOWRUW´ $OODQ6SHUOHPXVWWKHUHIRUHHVWDEOLVKWKDW
WKH GHIHQGDQWV¶ DFWLRQV PHHW WKH VWDWXWRU\ GHILQLWLRQ RI DQ
LQWHQWLRQDOWRUW²D³GHOLEHUDWHDFWRIWKHHPSOR\HU´WKURXJK
ZKLFK³WKHHPSOR\HUVSHFLILFDOO\LQWHQGHGDQLQMXU\´,G
7UDYLVY'UHLV .UXPS0IJ &R1:G
0LFK H[SODLQLQJ WKDW ³WR VWDWH D FODLP DJDLQVW DQ
HPSOR\HU IRU DQ LQWHQWLRQDO WRUW WKH HPSOR\HU PXVW
GHOLEHUDWHO\DFWRUIDLOWRDFWZLWKWKHSXUSRVHRILQIOLFWLQJDQ
LQMXU\XSRQWKHHPSOR\HH´
$QHPSOR\HUKDVDVSHFLILFLQWHQWWRLQMXUHDQHPSOR\HH³LI
WKHHPSOR\HUKDGDFWXDONQRZOHGJHWKDWDQLQMXU\ZDVFHUWDLQ
WR RFFXU DQG ZLOOIXOO\ GLVUHJDUGHG WKDW NQRZOHGJH´ 0LFK
&RPS /DZV † 7UDYLV 1:G DW
FODULI\LQJWKDWWKLVGHILQLWLRQSURYLGHVWKHHOHPHQWVWKDWDUH
QHFHVVDU\ WR HVWDEOLVK DQ LQWHQW WR LQMXUH DQ
HPSOR\HH²³DFWXDO NQRZOHGJH´ ³FHUWDLQ WR RFFXU´ DQG
³ZLOOIXOO\GLVUHJDUGHG´²ZKHUHQRGLUHFWHYLGHQFHH[LVWVDQG
WKHLQWHQWPXVWEHSURYHGWKURXJKFLUFXPVWDQWLDOHYLGHQFH
,QWKHSUHVHQWFDVHWKHUHFRUGSURYLGHVQRHYLGHQFHWKDWDQ\
RIWKHLQGLYLGXDOGHIHQGDQWVZHUHFHUWDLQWKDW7DPP\6SHUOH¶V
PXUGHUZDVJRLQJWRRFFXUHYHQLIZHDVVXPHWKDW:DUGHQ
-DFNVRQ UHIXVHG WR PDNH KLPVHOI DYDLODEOH WR UHFHLYH D
ZDUQLQJFRQFHUQLQJDGDQJHUWR7DPP\6SHUOH¶VOLIH
7KHGLVWULFWFRXUWDOVRFRQFOXGHGWKDWWKHUHFRUGEHIRUHLW
IDLOHGWRHVWDEOLVKWKDWWKHGHIHQGDQWV¶FRQGXFWZDV³H[WUHPH
DQGRXWUDJHRXV´,WUHFRJQL]HGWKDWFHUWDLQRIWKHGHIHQGDQWV
PLJKW KDYH DFWHG QHJOLJHQWO\ EXW GHWHUPLQHG WKDW QRQH RI

-- 2 of 10 --

6SHUOHY0,'HS¶WRI&RUUHFWLRQVHWDO 1R
IDFW DV WR HOHPHQW WZR´ DQG ³DV WR ZKHWKHU DW OHDVW VRPH
LQPDWH VXEMHFWHG 0V 6SHUOH WR XQZDQWHG VH[XDO
FRPPXQLFDWLRQ´
%XW$OODQ6SHUOH¶VDIILGDYLWFRQWUDU\WRWKHGLVWULFWFRXUW¶V
SRVLWLRQLVLQVXIILFLHQWWRFUHDWHDJHQXLQHLVVXHRIPDWHULDO
IDFW ZLWK UHVSHFW WR WKHVH LVVXHV $V WKH GHIHQGDQWV
HPSKDVL]H $OODQ 6SHUOH¶V DIILGDYLW LV QRW EDVHG XSRQ
SHUVRQDONQRZOHGJH$SDUW\RSSRVLQJDPRWLRQIRUVXPPDU\
MXGJPHQWFDQQRWXVHKHDUVD\RURWKHULQDGPLVVLEOHHYLGHQFH
WRFUHDWHDJHQXLQHLVVXHRIPDWHULDOIDFW:HEHUJY)UDQNV
)GQ WK&LU GLVUHJDUGLQJPDQ\RI
WKH SODLQWLII¶V DOOHJDWLRQV EHFDXVH WKH\ ZHUH EDVHG XSRQ
KHDUVD\UDWKHUWKDQSHUVRQDONQRZOHGJH )HG5&LY3 H
³6XSSRUWLQJ DQG RSSRVLQJ DIILGDYLWV VKDOO EH PDGH RQ
SHUVRQDONQRZOHGJHVKDOOVHWIRUWKVXFKIDFWVDVZRXOGEH
DGPLVVLEOHLQHYLGHQFHDQGVKDOOVKRZDIILUPDWLYHO\WKDWWKH
DIILDQWLVFRPSHWHQWWRWHVWLI\WRWKHPDWWHUVVWDWHGWKHUHLQ´
$OODQ 6SHUOH KDV WKHUHIRUH IDLOHG WR SUHVHQW DGPLVVLEOH
HYLGHQFH UHJDUGLQJ WKH H[LVWHQFH RI XQZHOFRPH VH[XDO
KDUDVVPHQWGLUHFWHGWRZDUGVKLVZLIH:HWKXVFRQFOXGHWKDW
WKHGLVWULFWFRXUWGLGQRWHUULQJUDQWLQJVXPPDU\MXGJPHQWWR
WKHGHIHQGDQWVZLWKUHVSHFWWRWKLVFDXVHRIDFWLRQ
' ,QWHQWLRQDOLQIOLFWLRQRIHPRWLRQDOGLVWUHVV
$OODQ6SHUOH¶VILQDODUJXPHQWLVWKDWWKHGHIHQGDQWV¶IDLOXUH
WRSUHYHQW7DPP\6SHUOH¶VPXUGHUUHQGHUVWKHPOLDEOHIRUWKH
LQWHQWLRQDO LQIOLFWLRQ RI HPRWLRQDO GLVWUHVV $ FODLP RI
LQWHQWLRQDOLQIOLFWLRQRIHPRWLRQDOGLVWUHVVXQGHU0LFKLJDQ
ODZ UHTXLUHV D SODLQWLII WR HVWDEOLVK IRXU HOHPHQWV
³ H[WUHPH DQG RXWUDJHRXV FRQGXFW LQWHQW RU
UHFNOHVVQHVV FDXVDWLRQ DQG VHYHUH HPRWLRQDO
GLVWUHVV´5REHUWVY$XWR2ZQHUV,QV&R1:G
0LFK LQWHUQDOTXRWDWLRQPDUNVRPLWWHG 7REH
FRQVLGHUHG³H[WUHPHDQGRXWUDJHRXV´WKHFRQGXFWLQTXHVWLRQ
PXVWKDYHEHHQ³VRRXWUDJHRXVLQFKDUDFWHUDQGVRH[WUHPH
LQGHJUHHDVWRJREH\RQGDOOSRVVLEOHERXQGVRIGHFHQF\DQG
WR EH UHJDUGHG DV DWURFLRXV DQG XWWHUO\ LQWROHUDEOH LQ D
1R 6SHUOHY0,'HS¶WRI&RUUHFWLRQVHWDO
FODLPEURXJKWXQGHUVWDWHODZZDVWKHQGLVPLVVHGZLWKRXW
SUHMXGLFH)RUWKHUHDVRQVVHWIRUWKEHORZZH$)),50WKH
MXGJPHQWRIWKHGLVWULFWFRXUW
,%$&.*5281'
$)DFWXDOEDFNJURXQG
7DPP\ 6SHUOH EHJDQ ZRUNLQJ DV WKH VWRUHNHHSHU DW WKH
+90)¶VSULVRQHUVWRUHLQ-XQHRI3ULVRQLQPDWHVDUH
DEOHWRSXUFKDVHSHUVRQDOLWHPVVXFKDVFLJDUHWWHVVQDFNIRRG
VWDWLRQHU\ DQG JURRPLQJ VXSSOLHV DW WKH VWRUH $V WKH
VWRUHNHHSHU 7DPP\ 6SHUOH ZDV UHVSRQVLEOH IRU RUGHULQJ
PHUFKDQGLVH IURP YHQGRUV VHOOLQJ WKH JRRGV WR LQPDWHV
NHHSLQJWUDFNRIWKHPRQWKO\LQYHQWRU\WUDQVSRUWLQJLWHPV
IURPWKH+90)¶VZDUHKRXVHWRWKHVWRUHDQGVXSHUYLVLQJ
WKUHHSULVRQHUHPSOR\HHV6KHDOVRKHOGPRQWKO\PHHWLQJV
ZLWK WZR LQPDWHV ZKR VHUYHG RQ D VXEFRPPLWWHH RI WKH
:DUGHQ¶V )RUXP D JURXS RI HOHFWHG UHSUHVHQWDWLYHV ZKR
FRQYH\HG WKH FRQFHUQV DQG FRPSODLQWV RI LQPDWHV WR WKH
+90)VWDII'XULQJWKHVHPHHWLQJVVKHZRXOGDQVZHUWKH
UHSUHVHQWDWLYHV¶ TXHVWLRQV DQG HOLFLW WKHLU YLHZV UHJDUGLQJ
ZKDWSURGXFWVWKHLQPDWHVZDQWHGWRKDYHDGGHGWRWKHVWRUH¶V
LQYHQWRU\1RRWKHU+90)HPSOR\HHZRUNHGLQWKHVWRUH
ZLWK7DPP\6SHUOH
7KH VWRUH ZKLFK ZDV ORFDWHG LQ WKH +90)¶V VFKRRO
EXLOGLQJKDGWZRHQWUDQFHV2QHZDVDVWHHOGRRUWKDWOHG
IURPWKHH[WHULRUSULVRQ\DUGLQWRWKHVWRUH7KLVGRRUZKLFK
KDGDODUJHZLQGRZWKDWSHUPLWWHGVRPHRQHLQVLGHWKHVWRUH
WRVHHSHUVRQVVWDQGLQJRXWVLGHRILWLQWKH\DUGZDVDOZD\V
NHSWORFNHG,WFRXOGEHRSHQHGIURPWKH\DUGE\XVLQJDNH\
DQG IURPLQVLGHWKHVWRUHE\SXVKLQJDEDU2QO\7DPP\
6SHUOH WKH +90) ZDUHKRXVH ZRUNHUV ZKR VRPHWLPHV
VXEVWLWXWHG IRU KHU DQG WKH \DUG VHUJHDQW KDG NH\V WR WKLV
H[WHULRUGRRU
7KHVHFRQGHQWUDQFHZDVWKURXJKDGRRUOHDGLQJIURPWKH
KDOOZD\LQVLGHWKHVFKRROEXLOGLQJWRDVHFWLRQRIWKHVWRUH
ZKHUHDODXQGU\ZDVORFDWHG7KLVGRRUKDGDORQJQDUURZ
ZLQGRZ$WVRPHSRLQWSULRUWRKHUPXUGHU7DPP\6SHUOH

-- 3 of 10 --

6SHUOHY0,'HS¶WRI&RUUHFWLRQVHWDO 1R
FRYHUHGWKLVZLQGRZWRSUHYHQWSULVRQHUVZKRZHUHLQWKH
VFKRRO EXLOGLQJ IRU FODVVHV IURP ORRNLQJ LQ DW KHU DV WKH\
SDVVHGWKHGRRUZD\RUIURPNQRFNLQJRQWKHGRRUWRDVNKHU
DERXWPHUFKDQGLVH6HYHUDORIWKHGHIHQGDQWVZHUHDZDUHWKDW
WKHZLQGRZZDVFRYHUHGSULRUWR7DPP\6SHUOH¶VPXUGHU
7KH\GLVDJUHHDVWRZKHWKHUWKHLQDELOLW\WRORRNLQWRWKHVWRUH
ZDVDVHFXULW\ULVN
'HIHQGDQWV 6WHSKHQ 0RUWRQ DQG 3HWHU =LVVLPRV ZHUH
ZRUNLQJDVFRUUHFWLRQVRIILFHUVDWWKH+90)LQ)HEUXDU\RI
7KHLU GXWLHV LQFOXGHG PDLQWDLQLQJ VHFXULW\ LQ WKH
VFKRROEXLOGLQJ0RUWRQ¶VUHVSRQVLELOLWLHVUHTXLUHGKLPWR
HQWHUHDFKFODVVURRPWZLFHDQKRXUWRPDNHFHUWDLQWKDWWKH
URRPVZHUHVHFXUH1HLWKHU0RUWRQQRU=LVVLPRVKRZHYHU
ZDVLQVWUXFWHGWRFKHFNRQ7DPP\6SHUOH
2Q)HEUXDU\7DPP\6SHUOHZDVPXUGHUHGZKLOH
ZRUNLQJLQWKHVWRUH$QLQYHVWLJDWLRQLQWRKHUGHDWKUHYHDOHG
WKDW +90) LQPDWH &ODUHQFH +HUQGRQ VWUDQJOHG 7DPP\
6SHUOHVRPHWLPHEHWZHHQSPDQGSPWKDWGD\
$0LFKLJDQVWDWHFRXUWMXU\FRQYLFWHG+HUQGRQRIILUVWGHJUHH
PXUGHULQ2FWREHURI
7DPP\ 6SHUOH¶V ILUVW HQFRXQWHU ZLWK +HUQGRQ RFFXUUHG
ZKHQ VKH EHJDQ ZRUNLQJ DW WKH +90) LQ -XQH RI
+HUQGRQZDVVHUYLQJDVDSULVRQHUVWRUHZRUNHUDWWKDWWLPH
7DPP\ 6SHUOH WHUPLQDWHG KLV HPSOR\PHQW WKH IROORZLQJ
PRQWKKRZHYHUEHFDXVHKLVPHGLFDOOLPLWDWLRQVUHVWULFWHGKLV
DELOLW\ WR SHUIRUP WKH QHFHVVDU\ ZRUN +HUQGRQ ILOHG D
JULHYDQFHWKDWVRXJKWUHDVVLJQPHQWZLWKLQWKHVWRUHEXWKLV
UHTXHVWZDVGHQLHG7DPP\6SHUOHDQG+HUQGRQFRQWLQXHG
WRVHHHDFKRWKHUDWWKH+90)DIWHUKLVGLVPLVVDO,QIDFW
&RUUHFWLRQV 2IILFHU =LVVLPRV REVHUYHG WKHP DUJXLQJ LQ
-DQXDU\RI
2QWKHPRUQLQJRIKHUPXUGHU7DPP\6SHUOHPHWZLWKWKH
WZR PHPEHUV RI WKH SULVRQHU VWRUH FRPPLWWHH D
VXEFRPPLWWHHRIWKH:DUGHQ¶V)RUXP7KHVHWZRPHPEHUV
ZHUH +HUQGRQ DQG LQPDWH 0LFKDHO 0LOOHU 7KH PHHWLQJ
ZKLFKLQFOXGHGDPRQJRWKHUWKLQJVGLVFXVVLRQVRIDVRXS
VDPSOH ODVWHG IRU DERXW DQ KRXU &RUUHFWLRQV 2IILFHU %
1R 6SHUOHY0,'HS¶WRI&RUUHFWLRQVHWDO
& +RVWLOHZRUNHQYLURQPHQW
$OODQ6SHUOHDOVRDOOHJHVWKDWKLVZLIHWROGKLPSULRUWRKHU
GHDWKWKDWVKHIUHTXHQWO\H[SHULHQFHGDJUHDWGHDORIVH[XDO
KDUDVVPHQWZKLOHZRUNLQJDVWKH+90)SULVRQVWRUHNHHSHU
+H DYHUV WKDW VKH WROG KLP WKDW WKH LQPDWHV ZKR ZHUH
FXVWRPHUV VWRUH HPSOR\HHV DQG PHPEHUV RI WKH VWRUH
FRPPLWWHHZRXOGZKLVWOHDWKHUDQGPDNHVH[XDOFRPPHQWV
DQG REVFHQH VH[XDO JHVWXUHV WR KHU DOO RI ZKLFK ZHUH
XQZHOFRPH$OODQ6SHUOHFRQWHQGVWKDWKHREVHUYHGKRZWKLV
VH[XDOKDUDVVPHQWDIIHFWHGKLVZLIHFDXVLQJKHUWRH[SHULHQFH
PHQWDODQGHPRWLRQDOVXIIHULQJWKDWLQWHUIHUHGZLWKKHUMRE
8QGHU0LFKLJDQODZDSODLQWLIIPXVWVDWLVI\ILYHHOHPHQWV
WRHVWDEOLVKDKRVWLOHZRUNHQYLURQPHQWFODLPEDVHGXSRQVH[
WKHHPSOR\HHEHORQJHGWRDSURWHFWHGJURXS WKH
HPSOR\HHZDVVXEMHFWHGWRFRPPXQLFDWLRQRUFRQGXFWRQ
WKH EDVLV RI VH[ WKH HPSOR\HH ZDV VXEMHFWHG WR
XQZHOFRPH VH[XDO FRQGXFW RU FRPPXQLFDWLRQ WKH
XQZHOFRPH VH[XDO FRQGXFW RU FRPPXQLFDWLRQ ZDV
LQWHQGHGWRRULQIDFWGLGVXEVWDQWLDOO\LQWHUIHUHZLWKWKH
SODLQWLII¶V HPSOR\PHQW RU FUHDWHG DQ LQWLPLGDWLQJ
KRVWLOH RU RIIHQVLYH ZRUN HQYLURQPHQW DQG
UHVSRQGHDWVXSHULRU
&KDPEHUV Y 7UHWWFR ,QF 1:G 0LFK
7KHGHIHQGDQWVFRQFHGHWKDWDVDZRPDQ7DPP\
6SHUOHZDVDPHPEHURIDSURWHFWHGJURXS%XWWKH\FRQWHQG
WKDWWKHUHPDLQLQJHOHPHQWVRIDKRVWLOHZRUNHQYLURQPHQW
FODLPKDYHQRWEHHQHVWDEOLVKHG
7KH RQO\ HYLGHQFH RI XQZHOFRPH VH[XDO FRPPHQWV RU
FRQGXFW DSSHDUV LQ $OODQ 6SHUOH¶V DIILGDYLW LQ ZKLFK KH
UHFRXQWHGZKDW7DPP\6SHUOHWROGKLPRQDQXQVSHFLILHG
GDWH EHIRUH KHU PXUGHU $OWKRXJK WKH GLVWULFW FRXUW
DFNQRZOHGJHGWKDW$OODQ6SHUOHKDGQRSHUVRQDONQRZOHGJH
RIDQ\KDUDVVPHQWWKDW7DPP\6SHUOHH[SHULHQFHGDQGWKDW
KLVSRWHQWLDOWHVWLPRQ\PLJKWIDFHHYLGHQWLDU\SUREOHPVLIWKH
FDVHZHUHWRSURFHHGWRWULDOLWQHYHUWKHOHVVFRQFOXGHGWKDW
³KLVDIILGDYLWSUREDEO\HVWDEOLVKHVDJHQXLQHLVVXHRIPDWHULDO

-- 4 of 10 --

6SHUOHY0,'HS¶WRI&RUUHFWLRQVHWDO 1R
ZRUNZLWKWKHSODLQWLIIGHVSLWHWKHIDFWWKDWVKHKDGEHHQWROG
WKDW VKH ZRXOG QRW KDYH WR ZRUN DORQH ZLWK YLROHQW VH[
RIIHQGHUV,GDW$VWKHFRXUWQRWHGWKHLQPDWH¶VILOHV
LQGLFDWHG WKDW KH ³ZDV FRQVLGHUHG YHU\ OLNHO\ WR FRPPLW D
YLROHQWFULPHLISODFHGDORQHZLWKDIHPDOH´,G
7KH1LQWK&LUFXLWKHOGWKDWWKHVHIDFWVZHUHVXIILFLHQWWR
VWDWHD†FODLPEHFDXVHWKHGHIHQGDQWVKDGFUHDWHGWKH
GDQJHU WKDW UHVXOWHG LQ WKH SODLQWLII¶V UDSH E\ VHOHFWLQJ WKH
LQPDWHWRZRUNZLWKWKHSODLQWLIIDQGEHFDXVHWKHSODLQWLII¶V
DOOHJDWLRQV HVWDEOLVKHG WKDW WKH GHIHQGDQWV DFWHG ZLWK
GHOLEHUDWHLQGLIIHUHQFHWRKHUVDIHW\,GDW,QWKH
SUHVHQWFDVHKRZHYHUWKHUHFRUGGRHVQRWVXSSRUWDILQGLQJ
WKDWWKHGHIHQGDQWVDOORZHG+HUQGRQWREHDORQHZLWK7DPP\
6SHUOH+LVHQWUDQFHLQWRWKHSULVRQHUVWRUH DW WKHWLPHRI
7DPP\6SHUOH¶VPXUGHUUDWKHUWKDQEHLQJRUFKHVWUDWHGE\WKH
GHIHQGDQWVDVLQ/:ZDVXQDXWKRUL]HG,QDGGLWLRQHYHQ
DIWHUKDYLQJDQDUJXPHQWZLWK+HUQGRQDERXWDPRQWKEHIRUH
KHUPXUGHU7DPP\6SHUOHQHYHUREMHFWHGWRKDYLQJSHULRGLF
FRQWDFWZLWKKLP
$OODQ6SHUOHDOVRFRQWHQGVWKDW+HUQGRQZDVFORDNHGZLWK
WKHDXWKRULW\RIWKHVWDWHDQG WKXV VKRXOGEHFRQVLGHUHGD
VWDWH DFWRU 7KLV SRVLWLRQ KRZHYHU FRQWUDGLFWV KLV
UHSUHVHQWDWLRQV WR WKH GLVWULFW FRXUW ZKHUH $OODQ 6SHUOH¶V
FRXQVHOLQIRUPHGWKHFRXUWWKDWKHZDVQRWFRQWHQGLQJWKDW
+HUQGRQ ZDV D VWDWH DFWRU $V WKLV FRXUW KDV SUHYLRXVO\
H[SODLQHG³>W@KHWKHRU\XSRQZKLFKWKHFDVHZDVVXEPLWWHG
DQG DUJXHG LQ WKH GLVWULFW FRXUW FDQQRW ZKHQ DQ DGYHUVH
MXGJPHQW UHVXOWV EH GLVFDUGHG DQG D QHZ FRQWUDGLFWRU\
WKHRU\EHVXEVWLWXWHGDQGVXFFHVVIXOO\LQYRNHGRQDSSHDO´
&RUELQY%DOWLPRUH 25&R)G WK&LU
SHUFXULDP :HWKHUHIRUHGHFOLQHWRFRQVLGHU$OODQ
6SHUOH¶VFRQWUDU\DUJXPHQWRQDSSHDO
)RUDOORIWKHVHUHDVRQVZHFRQFOXGHWKDW$OODQ6SHUOHKDV
IDLOHGWRHVWDEOLVKWKDWWKHLQGLYLGXDOGHIHQGDQWVYLRODWHGKLV
ZLIH¶V ULJKW WR VXEVWDQWLYH GXH SURFHVV 7KH GLVWULFW FRXUW
WKHUHIRUH GLG QRW HUU LQ JUDQWLQJ WKH GHIHQGDQWV VXPPDU\
MXGJPHQWZLWKUHVSHFWWRWKHVXEVWDQWLYHGXHSURFHVVFODLP
1R 6SHUOHY0,'HS¶WRI&RUUHFWLRQVHWDO
&KULVWLDQVSRNHZLWK7DPP\6SHUOHDWDERXWDPDIWHU
WKHPHHWLQJKDGHQGHGDQGDVNHGKHUZKDWVKHKDGSODQQHG
IRUWKHGD\6KHWROGKLPWKDWQRLQPDWHVZRXOGEHLQWKH
VWRUH DQG WKDW VKH ZRXOG EH ZRUNLQJ RQ WKH LQYHQWRU\ E\
KHUVHOI&KULVWLDQZDVWKHQUHOLHYHGE\7DPP\6SHUOHRIDQ\
VWRUHGXWLHVDQGZDVUHDVVLJQHGE\WKH+90)DGPLQLVWUDWLRQ
WRDVVLVWLQSURYLGLQJFXVWRG\IRUDQLQPDWHZKRZDVEHLQJ
WDNHQWRWKHKRVSLWDO,IWKHVWRUHKDGEHHQRSHQIRULQPDWHV
WRSXUFKDVHLWHPVRQHFRUUHFWLRQVRIILFHUZRXOGKDYHEHHQ
DVVLJQHGWRWKHVWRUHDQGDVHFRQGRIILFHUZRXOGKDYHEHHQ
PRQLWRULQJWKHOLQHRXWVLGHWKHVWRUH
$IWHUWKHPHHWLQJRIWKHSULVRQHUVWRUHFRPPLWWHH+HUQGRQ
OHIWWKHVFKRROEXLOGLQJDQGFKHFNHGLQWRKLVKRXVLQJXQLWDW
DP+HOHIWWKHKRXVLQJVHFWLRQDWDPZKHQKLV
XQLWZDVFDOOHGIRUOXQFK+HUQGRQZDVODWHUREVHUYHGLQKLV
KRXVLQJXQLWDWSP
3HUU\7D\ORUD+90)HPSOR\HHZKRKDGEHHQZRUNLQJDW
WKHSULVRQ¶V7HFKQLFDO5XOHV9LRODWLRQ&HQWHUIRXQG7DPP\
6SHUOHO\LQJLQDSRRORIEORRGRQWKHIORRURIWKHSULVRQHU
VWRUH DW SP (IIRUWV WR UHVXVFLWDWH KHU ZHUH
XQVXFFHVVIXO3ULRUWR7D\ORU¶VILQGLQJ7DPP\6SHUOH¶VERG\
+90)RIILFLDOVKDGWHOHSKRQHGWKHVWRUHDWSPDQG
SPEXWWKRVHFDOOVZHQWXQDQVZHUHG
6HYHUDOGHWDLOVUHODWLQJWRWKHHYHQWVVXUURXQGLQJ7DPP\
6SHUOH¶VPXUGHUDUHWKHVXEMHFWRIGLVDJUHHPHQWEHWZHHQWKH
SDUWLHV7KHILUVWGLVSXWHSHUWDLQVWRWKH\DUGVHUJHDQW¶VNH\
ULQJZKLFKLQFOXGHGDNH\WRWKHVWRUH¶VH[WHULRUGRRU%RWK
SDUWLHV DJUHH WKDW WKH NH\ ULQJ ZDV UHSRUWHG PLVVLQJ RQ
'HFHPEHU %XW $OODQ 6SHUOH FRQWHQGV WKDW LWV
ZKHUHDERXWV ZDV QRW IXOO\ HVWDEOLVKHG SULRU WR KLV ZLIH¶V
PXUGHU$OWKRXJKDQHPDLOPHVVDJHVWDWHGWKDWWKHNH\ULQJ
ZDV IRXQG RQ WKH SHULPHWHU URDG RXWVLGH RI WKH +90)¶V
IHQFLQJRQ-DQXDU\$OODQ6SHUOHHPSKDVL]HVWKDWWKH
UHWXUQRIWKHNH\ULQJZDVQHYHUGRFXPHQWHGLQDQ\ORJERRN
7KH VHFRQG VXEMHFW RI GLVDJUHHPHQW UHODWHV WR WKH
DYDLODELOLW\RISHUVRQDOSURWHFWLRQGHYLFHV 33'V IRU+90)
HPSOR\HHVZRUNLQJLQWKHVFKRROEXLOGLQJ$33'HPLWVDQ

-- 5 of 10 --

6SHUOHY0,'HS¶WRI&RUUHFWLRQVHWDO 1R
HOHFWURQLFVLJQDOWKDWHQDEOHVHPSOR\HHVWRFRPPXQLFDWHZLWK
WKH+90)¶VVHFXULW\JXDUGVLQWKHHYHQWRIDQHPHUJHQF\,I
WKH EXWWRQ RQ D 33' LV SUHVVHG DQ DODUP VRXQGV LQ WKH
SULVRQ¶VFRQWUROFHQWHUWRLQGLFDWHWKDWWKHVWDIIPHPEHUWR
ZKRPWKHWUDQVPLWWLQJ33'KDVEHHQDVVLJQHGLVLQGDQJHU
DQG QHHGV DVVLVWDQFH 7KH GHIHQGDQWV DFNQRZOHGJH WKDW
7DPP\ 6SHUOH ZDV QRW ZHDULQJ D 33' RQ WKH GD\ RI KHU
PXUGHU DQG KDG QRW SUHYLRXVO\ EHHQ LVVXHG D 33' $OODQ
6SHUOH FRQWHQGV WKDW KLV ZLIH ZDV XQDEOH WR REWDLQ D 33'
EHFDXVH&RUUHFWLRQV2IILFHU0RUWRQKDGVWRUHGWKH33'VIRU
WKHVFKRROEXLOGLQJLQDORFNHGFDELQHWDQGKDGQHYHULVVXHG
WKHPWRWKHEXLOGLQJ¶VHPSOR\HHV0RUHRYHUQRWDOORIWKH
33'VDYDLODEOHDWWKH+90)ZRUNHGLQWKHVFKRROEXLOGLQJ
7KHWKLUGGLVSXWHGVXEMHFWLVWKHPHWKRGE\ZKLFK+HUQGRQ
HQWHUHGWKHVWRUHEHIRUHVWUDQJOLQJ7DPP\6SHUOH$OWKRXJK
WKHGHIHQGDQWVFRQWHQGWKDW7DPP\6SHUOHPXVWKDYHVHHQ
+HUQGRQWKURXJKWKHZLQGRZDQGYROXQWDULO\DOORZHGKLPWR
HQWHUWKHVWRUHE\RSHQLQJWKHSULVRQ\DUGGRRUIRUKLP$OODQ
6SHUOHQRWHVWKDWWKHDEVHQFHRIDQ\H\HZLWQHVVHVSUHYHQWV
DQ\RQHIURPNQRZLQJIRUVXUHKRZ+HUQGRQHQWHUHG$OODQ
6SHUOHUDLVHVWKHSRVVLELOLW\WKDW+HUQGRQPLJKWKDYHRSHQHG
WKHGRRUZLWKWKHNH\IURPWKH\DUGVHUJHDQW¶VNH\ULQJRUD
FRS\RIWKDWNH\%XWWKLVVFHQDULRLVLQFRQVLVWHQWZLWK$OODQ
6SHUOH¶V DOWHUQDWH FRQWHQWLRQ WKDW +HUQGRQ FDPH WR WKH
SULVRQHUVWRUH³FORDNHGZLWKWKHDXWKRULW\JLYHQWRKLPE\
:DUGHQ -DFNVRQ DQG 'HSXW\ :DUGHQ :LOOLDPV DV WKH
&KDLUPDQ RI WKH :DUGHQ¶V )RUXP DQG DV D 3ULVRQHU 6WRUH
&RPPLWWHH0HPEHU SXUVXDQWWR0'2&3ROLF\'LUHFWLYHV
DQG +90) 2SHUDWLQJ 3URFHGXUHV SXUSRUWHGO\ WR GLVFXVV
RIILFLDOVWRUHEXVLQHVVZLWK7DPP\6SHUOHUHJDUGLQJWKHVRXS
VDPSOHWKDWVKHJDYHKLPHDUOLHUWKDWGD\DQGKHXVHGKLV
DXWKRULW\WRJHW7DPP\6SHUOHWRRSHQWKH\DUGGRRUWRWKH
VWRUHDQGWREHFRPHKLVYLFWLP´
7KH IRXUWK PDWWHU LQ FRQWHQWLRQ SHUWDLQV WR ZKHWKHU WKH
+90)YLRODWHGDQ\0'2&SROLF\GLUHFWLYHVE\IDLOLQJWR
HVFRUW WKH LQPDWHV WR WKH SULVRQ FDIHWHULD +HUQGRQ ZDV
XQVXSHUYLVHG IRU DERXW PLQXWHV RQ WKH GD\ RI 7DPP\
6SHUOH¶V PXUGHU LQFOXGLQJ WKH WLPH ZKHQ WKH PXUGHU
1R 6SHUOHY0,'HS¶WRI&RUUHFWLRQVHWDO
DWWHPSWVWRVHFXUH1REOHV¶VUHOHDVH,GDW%XWWKLV
FRXUWH[SODLQHGWKDW³>K@RZHYHUGHUHOLFWLQWKHLUGXWLHVWKH
SULVRQRIILFLDOVPD\KDYHEHHQKHUHLWFDQQRWEHVDLGWKDWWKH\
GHOLEHUDWHO\GHFLGHGWRKDYHSODLQWLII1REOHVWDNHQFDSWLYH
DQGUDSHG´,GDW HPSKDVLVLQRULJLQDO 7KLVFRXUW
DOVR UHMHFWHG 1REOHV¶V DUJXPHQW ³WKDW WKH FRQGXFW RI WKH
GHIHQGDQWVDPRXQW>HG@WRGHOLEHUDWHLQGLIIHUHQFHZKLFK
VKRFNV WKH FRQVFLHQFH´ ,G DW LQWHUQDO TXRWDWLRQ
PDUNVRPLWWHG
:HILQG1REOHV¶VFRQFOXVLRQVWREHHTXDOO\DSSOLFDEOHWR
WKHSUHVHQWFDVH$OWKRXJK$OODQ6SHUOHDUJXHVWKDW1REOHVLV
GLVWLQJXLVKDEOH EHFDXVH LW LQYROYHG D SULVRQ FRUUHFWLRQV
RIILFHU ZKR KDG EHHQ WUDLQHG LQ VHOIGHIHQVH UDWKHU WKDQ D
FLYLOLDQHPSOR\HHZKRZDVUHVSRQVLEOHIRUKHURZQVHFXULW\
ZHEHOLHYHWKDWWKLVLVDGLVWLQFWLRQZLWKRXWDOHJDOGLIIHUHQFH
%RWK 1REOHV DQG WKH SUHVHQW FDVH LQYROYH SULVRQ LQPDWHV
LQIOLFWLQJKDUPXSRQDSULVRQHPSOR\HH,Q1REOHVWKHUDSLVW
KDGHQJDJHGLQSUHYLRXVDFWLRQVLQGLFDWLQJWKDWKHPLJKWEH
GDQJHURXV WR RWKHUV DQG PRUH HIIHFWLYH QHJRWLDWLRQ
WHFKQLTXHV PLJKW KDYH SUHYHQWHG WKH SODLQWLII¶V UDSH
6LPLODUO\:DUGHQ-DFNVRQZDVDOOHJHGO\XQUHVSRQVLYHWRDQ
LQPDWH¶VDWWHPSWWRFRQYH\DZDUQLQJDERXW7DPP\6SHUOH¶V
PXUGHUDQGWKHGHIHQGDQWVLQWKHSUHVHQWFDVHDUJXDEO\FRXOG
KDYHWDNHQPRUHHIIHFWLYHVWHSVWRHQKDQFH7DPP\6SHUOH¶V
VHFXULW\ 7KHVH GHILFLHQFLHV KRZHYHU DUH LQVXIILFLHQW WR
GHPRQVWUDWHWKDWWKHGHIHQGDQWVZHUHGHOLEHUDWHO\LQGLIIHUHQW
WRWKHHYHQWVSUHFHGLQJ7DPP\6SHUOH¶VPXUGHUMXVWDVWKH
HUURUV LQ 1REOHV GLG QRW HVWDEOLVK WKDW WKH SULVRQ RIILFLDOV¶
DFWLRQVDPRXQWHGWRPRUHWKDQQHJOLJHQFH
$OODQ6SHUOHKRZHYHUDUJXHVWKDWWKHSUHVHQWFDVHLVPRUH
FORVHO\DQDORJRXVWR/:Y*UXEEV)G WK&LU
WKDQWR1REOHV,Q/:WKH1LQWK&LUFXLWKHOGWKDWWKH
SODLQWLIIDUHJLVWHUHGQXUVHHPSOR\HGE\WKHVWDWHRI2UHJRQ
DW D PHGLXPVHFXULW\ FXVWRGLDO LQVWLWXWLRQ IRU \RXQJ PDOH
RIIHQGHUVVWDWHGD†FODLPEDVHGXSRQYLRODWLRQVRIKHU
)RXUWHHQWK$PHQGPHQWVXEVWDQWLYHGXHSURFHVVULJKWV,GDW
7KHSODLQWLIIZDVDVVDXOWHGDQGUDSHGE\DQLQPDWHZKR
ZDVDYLROHQWVH[RIIHQGHUWKDWWKHGHIHQGDQWVKDGVHOHFWHGWR

-- 6 of 10 --

6SHUOHY0,'HS¶WRI&RUUHFWLRQVHWDO 1R
7DPP\ 6SHUOH E\ SURYLGLQJ 33'V WR VFKRRO EXLOGLQJ
HPSOR\HHVDGGLQJH[WUDVHFXULW\JXDUGVRULQVXULQJJUHDWHU
VXSHUYLVLRQ RI +HUQGRQ WKH\ GLG QRW DFW LQ DQ DUELWUDU\
PDQQHU WKDW ³VKRFNV WKH FRQVFLHQFH´ RU WKDW LQGLFDWHV DQ\
LQWHQWWRLQMXUHKHU/HZHOOHQY0HWUR*RYWRI1DVKYLOOH
'DYLGVRQ&RXQW\)G WK&LU ³:KDW
WKHGHIHQGDQWVLQWKLVFDVHFOHDUO\GLGQRWGRZDVHQJDJHLQ
DUELWUDU\ FRQGXFW LQWHQWLRQDOO\ GHVLJQHG WR SXQLVK
VRPHRQH²HJ JLYLQJ D ZRUNHU μD SDUWLFXODUO\ GDQJHURXV
DVVLJQPHQWLQUHWDOLDWLRQIRUDSROLWLFDOVSHHFKRUEHFDXVH
RIKLVRUKHUJHQGHU¶´ TXRWLQJ&ROOLQV86DW
LQWHUQDOFLWDWLRQVRPLWWHG
2XU FRQFOXVLRQ GRHV QRW FKDQJH ZKHQ ZH DSSO\ WKH
GHOLEHUDWHLQGLIIHUHQFHVWDQGDUG³'HOLEHUDWHLQGLIIHUHQFHKDV
EHHQHTXDWHGZLWKVXEMHFWLYHUHFNOHVVQHVVDQGUHTXLUHVWKH
†SODLQWLIIWRVKRZWKDWWKHVWDWHμRIILFLDONQRZVRIDQG
GLVUHJDUGV DQ H[FHVVLYH ULVN WR >WKH YLFWLP¶V@ KHDOWK RU
VDIHW\¶´ (ZROVNL )G DW IRRWQRWH RPLWWHG
TXRWLQJ )DUPHU Y %UHQQDQ 86
3XUVXDQWWRWKLVGHILQLWLRQ³WKHRIILFLDOPXVWERWKEHDZDUHRI
IDFWV IURP ZKLFK WKH LQIHUHQFH FRXOG EH GUDZQ WKDW D
VXEVWDQWLDOULVNRIVHULRXVKDUPH[LVWVDQGKHPXVWDOVRGUDZ
WKHLQIHUHQFH´)DUPHU86DW2QFHWKHVWDWHDFWRU
GUDZVWKHQHFHVVDU\LQIHUHQFH³WKHRIILFLDOPXVWDFWRUIDLOWR
DFWLQDPDQQHUGHPRQVWUDWLQJUHFNOHVVRUFDOORXVLQGLIIHUHQFH
WRZDUG WKH LQGLYLGXDO¶V ULJKWV´ (ZROVNL )G DW
LQWHUQDO TXRWDWLRQ PDUNV RPLWWHG 7KH IDFWV EHIRUH XV
VLPSO\IDLOWRGHPRQVWUDWHWKLVGHJUHHRIFXOSDELOLW\RQWKH
SDUWRIWKHGHIHQGDQWV
$Q LQVWUXFWLYH FDVH WKDW YHU\ PXFK SDUDOOHOV WKH SUHVHQW
VLWXDWLRQLV1REOHVY%URZQ)G WK&LU
,Q 1REOHV WKLV FRXUW KHOG WKDW D IHPDOH VWDWH FRUUHFWLRQV
RIILFHUZKRZDVWDNHQFDSWLYHE\DQLQPDWHDQGVXEVHTXHQWO\
UDSHG IDLOHG WR HVWDEOLVK D YLRODWLRQ RI WKH 'XH 3URFHVV
&ODXVH,GDW7KHLQPDWHZKRUDSHG1REOHVZDVNQRZQ
WREHGDQJHURXVDQGKHKDGWDNHQDIHPDOHFRUUHFWLRQVRIILFHU
KRVWDJHILYHPRQWKVEHIRUH0RUHRYHUWKHSULVRQRIILFLDOV
KDG QRW XVHG DSSURSULDWH QHJRWLDWLRQ WHFKQLTXHV LQ WKHLU
1R 6SHUOHY0,'HS¶WRI&RUUHFWLRQVHWDO
RFFXUUHG $FFRUGLQJ WR $OODQ 6SHUOH WKLV XQVXSHUYLVHG
SHULRGZRXOGQRWKDYHRFFXUUHGLIWKH+90)KDGDGKHUHGWR
LWV RSHUDWLQJ SURFHGXUH IRU SULVRQHU PRYHPHQW 7KH
GHIHQGDQWV KRZHYHU LQVLVW WKDW +HUQGRQ¶V XQVXSHUYLVHG
VWDWXVGLGQRWYLRODWHDQ\0'2&SROLF\
)LQDOO\ WKH SDUWLHV GLVDJUHH DV WR ZKHWKHU GHIHQGDQW
$QGUHZ-DFNVRQWKHZDUGHQDWWKH+09)UHIXVHGWRPDNH
KLPVHOIDYDLODEOHWR/DUU\7KRPDVDQLQPDWHZKRZDQWHGWR
ZDUQKLPDERXWLPSHQGLQJGDQJHUWR7DPP\6SHUOH,QD
QRWHZULWWHQRQSULVRQHUVWDWLRQHU\WKHGD\DIWHUWKHPXUGHU
7KRPDVVWDWHGWKDWKHKDGDWWHPSWHGWRVSHDNZLWK:DUGHQ
-DFNVRQDERXWDWKUHDWRQ7DPP\6SHUOH¶VOLIHLQ-DQXDU\RI
%XW-DFNVRQWHVWLILHGLQKLVGHSRVLWLRQWKDWKHGLGQRW
UHFDOODQ\DWWHPSWE\7KRPDVWRWHOOKLPRIDSODQWRPXUGHU
7DPP\6SHUOH
% 3URFHGXUDOEDFNJURXQG
7KLVODZVXLWZDVRULJLQDOO\ILOHGLQD0LFKLJDQVWDWHFRXUW
7KHGHIHQGDQWVUHPRYHGWKHFDVHWRWKH8QLWHG6WDWHV'LVWULFW
&RXUW IRU WKH (DVWHUQ 'LVWULFW RI 0LFKLJDQ LQ )HEUXDU\ RI
$OODQ 6SHUOH¶V FRPSODLQW DQ DPHQGHG YHUVLRQ RI
ZKLFKZDVILOHGLQ1RYHPEHURIFRQWDLQVVL[FDXVHVRI
DFWLRQ7KHILUVWWZRFRXQWVDVVHUWFODLPVXQGHU86&
†IRUYLRODWLRQVRIWKH)RXUWHHQWK$PHQGPHQW¶V(TXDO
3URWHFWLRQ&ODXVHDQGRIWKHVXEVWDQWLYHFRPSRQHQWRIWKH
'XH3URFHVV&ODXVHUHVSHFWLYHO\&RXQW,,,DOOHJHVWKDWWKH
GHIHQGDQWV YLRODWHG 0LFKLJDQ¶V (OOLRW/DUVHQ &LYLO 5LJKWV
$FW 0LFK &RPS /DZV † L E\ SHUPLWWLQJ D
VH[XDOO\KRVWLOHZRUNHQYLURQPHQWWRH[LVW7KHIRXUWKFRXQW
DVVHUWVDFODLPIRUJURVVQHJOLJHQFH&RXQW9DOOHJHVWKDWWKH
GHIHQGDQWVDUHOLDEOHIRUWKHLQWHQWLRQDOLQIOLFWLRQRIHPRWLRQDO
GLVWUHVV )LQDOO\ &RXQW 9, VHHNV UHOLHI XQGHU 0LFKLJDQ¶V
ZURQJIXOGHDWKVWDWXWH0LFK&RPS/DZV†
7KH GHIHQGDQWV ILOHG D PRWLRQ IRU VXPPDU\ MXGJPHQW
SXUVXDQWWR5XOHRIWKH)HGHUDO5XOHVRI&LYLO3URFHGXUH
LQ$SULORI$IWHUFRQGXFWLQJKHDULQJVRQWZRVHSDUDWH
RFFDVLRQV DQG UHTXHVWLQJ WKDW WKH SDUWLHV ILOH DGGLWLRQDO
EULHILQJVWKHGLVWULFWFRXUWJUDQWHGWKHGHIHQGDQWV¶PRWLRQIRU

-- 7 of 10 --

6SHUOHY0,'HS¶WRI&RUUHFWLRQVHWDO 1R
VXPPDU\MXGJPHQWZLWKUHVSHFWWR$OODQ6SHUOH¶VILUVWILYH
FDXVHVRIDFWLRQDQGGLVPLVVHGWKHUHPDLQLQJZURQJIXOGHDWK
FODLP ZLWKRXW SUHMXGLFH DOO LQ 0DUFK RI 7KH FRXUW
FRQFOXGHGWKDW QRHYLGHQFHRILQYLGLRXVGLVFULPLQDWLRQ
H[LVWHG WKHVXEVWDQWLYHGXHSURFHVVFODLPIDLOHGEHFDXVH
WKH 0'2& DQG +90) HPSOR\HHV KDG QRW LQWHQWLRQDOO\
LQMXUHG7DPP\6SHUOHEHHQGHOLEHUDWHO\LQGLIIHUHQWWRKHU
VDIHW\RUFUHDWHGRUH[SRVHGKHUWRDQ\GDQJHUVDSDUWIURPWKH
RUGLQDU\ZRUNLQJFRQGLWLRQVRIDVWDWHSULVRQ $OODQ6SHUOH
GLG QRW HVWDEOLVK D SULPD IDFLH FDVH RI VH[XDO KDUDVVPHQW
EDVHG XSRQ D KRVWLOH ZRUN HQYLURQPHQW WKH JURVV
QHJOLJHQFHFODLPZDVQRWYLDEOHEHFDXVH0LFKLJDQ¶VZRUNHUV¶
FRPSHQVDWLRQODZLVWKHH[FOXVLYHUHPHG\IRUZRUNUHODWHG
LQMXULHVLQWKHDEVHQFHDQLQWHQWLRQDOWRUWE\WKHHPSOR\HU
ZKLFKKDGQRWRFFXUUHGDQG WKHUHFRUGIDLOHGWRVXSSRUW
DOORIWKHHOHPHQWVQHFHVVDU\IRUWKHLQWHQWLRQDOLQIOLFWLRQRI
HPRWLRQDOGLVWUHVV
7KLVWLPHO\DSSHDOFKDOOHQJHVWKHGLVWULFWFRXUW¶VJUDQWRI
VXPPDU\MXGJPHQWZLWKUHVSHFWWRWKH†FODLPSUHPLVHG
XSRQ D GHSULYDWLRQ RI 7DPP\ 6SHUOH¶V VXEVWDQWLYH GXH
SURFHVVULJKWVWKHVH[XDOKDUDVVPHQWFDXVHRIDFWLRQDQGWKH
DOOHJHG LQWHQWLRQDO LQIOLFWLRQ RI HPRWLRQDO GLVWUHVV $OODQ
6SHUOHKDVQRWFRQWHVWHGWKHUHPDLQLQJDVSHFWVRIWKHGLVWULFW
FRXUW¶VRUGHURQDSSHDO
,,$1$/<6,6
$ 6WDQGDUGRIUHYLHZ
$GLVWULFWFRXUW¶VJUDQWRIVXPPDU\MXGJPHQWLVUHYLHZHG
GHQRYR+ROORZD\Y%UXVK)G WK &LU
6XPPDU\MXGJPHQWLVSURSHUZKHUHQRJHQXLQHLVVXH
RI PDWHULDO IDFW H[LVWV DQG WKH PRYLQJ SDUW\ LV HQWLWOHG WR
MXGJPHQW DV D PDWWHU RI ODZ )HG 5 &LY 3 F ,Q
FRQVLGHULQJVXFKDPRWLRQWKHFRXUWPXVWYLHZWKHHYLGHQFH
DQGGUDZDOOUHDVRQDEOHLQIHUHQFHVLQIDYRURIWKHQRQPRYLQJ
SDUW\0DWVXVKLWD(OHF,QGXV&RY=HQLWK5DGLR&RUS
86 7KH FHQWUDO LVVXH LV ³ZKHWKHU WKH
HYLGHQFH SUHVHQWV D VXIILFLHQW GLVDJUHHPHQW WR UHTXLUH
VXEPLVVLRQWRDMXU\RUZKHWKHULWLVVRRQHVLGHGWKDWRQH
1R 6SHUOHY0,'HS¶WRI&RUUHFWLRQVHWDO
SULVRQVWRUHNHHSHUZLWKRXWLQFLGHQWIRUWZR\HDUVSULRUWRKHU
PXUGHU0RUHRYHUDOWKRXJKWKH\DUGVHUJHDQW¶VNH\ULQJZDV
UHSRUWHG PLVVLQJ LQ 'HFHPEHU RI LW ZDV DSSDUHQWO\
IRXQGWKHQH[WPRQWKGHVSLWHWKHIDFWWKDWLWVUHFRYHU\ZDV
QRWRIILFLDOO\ORJJHGLQSULRUWR7DPP\6SHUOH¶VPXUGHU:H
DOVR QRWH WKDW LI DV $OODQ 6SHUOH K\SRWKHVL]HV +HUQGRQ
SHUVXDGHG7DPP\6SHUOHWRDOORZKLPWRHQWHUWKHSULVRQHU
VWRUHE\FODLPLQJWKDWKHZDQWHGWRGLVFXVVWKHVRXSVDPSOH
ZLWK KHU WKHQ WKH VLJQLILFDQFH RI WKH ORVW NH\ GLPLQLVKHV
7KLV SRVVLEOH VFHQDULR DOVR VXJJHVWV WKDW +HUQGRQ JDLQHG
DFFHVVWRWKHVWRUHEHFDXVHRI7DPP\6SHUOH¶VGHFLVLRQWR
RSHQ WKH GRRU IRU KLP GHVSLWH +HUQGRQ¶V ODFN RI
DXWKRUL]DWLRQWREHDWWKHVWRUHGXULQJKLVOXQFKEUHDN7KHVH
FRQVLGHUDWLRQVLQGLFDWHWKDW7DPP\6SHUOHPLJKWKDYHIDFHG
QRWKLQJPRUHWKDQWKHRUGLQDU\ULVNVRIZRUNLQJLQDSULVRQ
DQG PLJKW HYHQ KDYH XQZLWWLQJO\ FRQWULEXWHG WR KHU RZQ
GHPLVH
2Q WKH RWKHU KDQG WKH UHFRUG SHUPLWV WKH LQIHUHQFH WKDW
:DUGHQ -DFNVRQ ZDV XQUHVSRQVLYH WR LQPDWH 7KRPDV¶V
DWWHPSWWRZDUQKLPRIDSODQWRPXUGHU7DPP\6SHUOHWKDW
&RUUHFWLRQV 2IILFHU =LVVLPRV REVHUYHG 7DPP\ 6SHUOH DQG
+HUQGRQDUJXLQJLQ-DQXDU\RIEXWWRRNQRVXEVHTXHQW
DFWLRQVDQGWKDWWKHGHIHQGDQWVIDLOHGWRSURYLGHWKH+90)
HPSOR\HHVZKRZRUNHGLQWKHVFKRROEXLOGLQJZLWK33'V
0RUHRYHULQZKDW$OODQ6SHUOHFRQWHQGVZDVDYLRODWLRQRI
WKH+90)¶VRSHUDWLQJSROLF\+HUQGRQZDVQRWVXSHUYLVHG
IRUDERXWPLQXWHVRQWKHGDWHRI7DPP\6SHUOH¶VPXUGHU
GXULQJ ZKLFK WLPH WKH PXUGHU RFFXUUHG 7KLV HYLGHQFH
VXJJHVWVWKDWWKHGHIHQGDQWV¶DFWLRQVDQGLQDFWLRQVUHVXOWHGLQ
DPRUHGDQJHURXVZRUNLQJHQYLURQPHQWWKDQZRXOGRWKHUZLVH
KDYHH[LVWHGIRU7DPP\6SHUOH
:H ZLOO WKHUHIRUH DVVXPH ZLWKRXW GHFLGLQJ WKDW WKH
GHIHQGDQWV¶VDFWLRQVDQGRPLVVLRQVLQFUHDVHGWKHGDQJHURI
7DPP\ 6SHUOH EHLQJ KDUPHG E\ DQ LQPDWH DW WKH SULVRQ
1HYHUWKHOHVV ZH FRQFOXGH WKDW WKH GHIHQGDQWV GLG QRW DFW
ZLWKWKHGHJUHHRIFXOSDELOLW\QHFHVVDU\WRKROGWKHPOLDEOH
IRUDVXEVWDQWLYHGXHSURFHVVYLRODWLRQ(YHQLIWKHLQGLYLGXDO
GHIHQGDQWVFRXOGKDYHPDGHWKHZRUNLQJFRQGLWLRQVVDIHUIRU

-- 8 of 10 --

6SHUOHY0,'HS¶WRI&RUUHFWLRQVHWDO 1R
SURFHVVYLRODWLRQVLVWKHDELOLW\RIWKHRIILFLDOVWRFRQVLGHU
WKHLUDFWLRQVLQDQXQKXUULHGGHOLEHUDWLYHPDQQHU/HZLV
86 DW ³$V WKH YHU\ WHUP μGHOLEHUDWH LQGLIIHUHQFH¶
LPSOLHVWKHVWDQGDUGLVVHQVLEO\HPSOR\HGRQO\ZKHQDFWXDO
GHOLEHUDWLRQLVSUDFWLFDODQGLQWKHFXVWRGLDOVLWXDWLRQRID
SULVRQ IRUHWKRXJKW DERXW DQ LQPDWH¶V ZHOIDUH LV QRW RQO\
IHDVLEOH EXW REOLJDWRU\ XQGHU D UHJLPH WKDW LQFDSDFLWDWHV D
SULVRQHU WR H[HUFLVH RUGLQDU\ UHVSRQVLELOLW\ IRU KLV RZQ
ZHOIDUH´ LQWHUQDOFLWDWLRQDQGIRRWQRWHRPLWWHG (ZROVNL
)GDW FRQFOXGLQJWKDWWKHGHOLEHUDWHLQGLIIHUHQFH
VWDQGDUG DSSOLHG WR WKH SODLQWLIIV¶ VXEVWDQWLYH GXH SURFHVV
FODLPEHFDXVHWKHGHIHQGDQWVQRWRQO\KDGVXIILFLHQWWLPHWR
GHOLEHUDWHDERXWWKHLUDFWLRQVEXWDOVRHQJDJHGLQGHOLEHUDWLYH
DFWLRQV
$SSO\LQJWKHVHFRQVLGHUDWLRQVWR7DPP\6SHUOH¶VPXUGHU
ZH ILUVW QRWH WKDW WKH GHIHQGDQWV GLG QRW UHVWUDLQ 7DPP\
6SHUOH¶VOLEHUW\E\SODFLQJKHULQWKHVWDWH¶VFXVWRG\EHFDXVH
VKH YROXQWDULO\ VRXJKW KHU MRE DV WKH VWRUHNHHSHU DW WKH
+90)&ROOLQVY&LW\RI+DUNHU+HLJKWV86
³3HWLWLRQHUFDQQRWPDLQWDLQKRZHYHUWKDWWKHFLW\
GHSULYHG &ROOLQV RI KLV OLEHUW\ ZKHQ LW PDGH DQG KH
YROXQWDULO\ DFFHSWHG DQ RIIHU RI HPSOR\PHQW´
1HYHUWKHOHVV7DPP\6SHUOHZRUNHGLQD³FXVWRGLDOVHWWLQJ´
DQHQYLURQPHQWZKHUHWKHGHIHQGDQWVKDGWKHRSSRUWXQLW\WR
GHVLJQWKHVHFXULW\SUHFDXWLRQVDWWKH+90)DQGWRUHVSRQG
WRDQ\JHQHUDOGDQJHUVWKDWH[LVWHG:HWKHUHIRUHFRQFOXGH
WKDWWKH³GHOLEHUDWHLQGLIIHUHQFH´VWDQGDUGLVDQDSSURSULDWH
RQHIRUHYDOXDWLQJKHU†FODLP(ZROVNL)GDW
DSSO\LQJ WKH GHOLEHUDWHLQGLIIHUHQFH VWDQGDUG ZKHUH WKH
GHIHQGDQWVFRQWHPSODWHGWKHLUVWUDWHJ\IRUILYHKRXUVEHIRUH
LQLWLDWLQJWKHLUILUVWDWWHPSWWRUHVROYHWKHKRVWDJHVLWXDWLRQ
DQGZDLWHGVHYHUDOPRUHKRXUVSULRUWRGHSOR\LQJDQDUPRUHG
YHKLFOHDWWKHVLWHRIWKHVWDQGRII
7KH ILUVW TXHVWLRQ LQ RXU DQDO\VLV RI 7DPP\ 6SHUOH¶V
VXEVWDQWLYH GXH SURFHVV FODLP LV ZKHWKHU WKH GHIHQGDQWV
FUHDWHGDULVNRIKDUPWR7DPP\6SHUOHRUUHQGHUHGKHUPRUH
YXOQHUDEOH WR GDQJHU $V ERWK WKH GLVWULFW FRXUW DQG WKH
GHIHQGDQWVKDYHSRLQWHGRXW7DPP\6SHUOHZRUNHGDVWKH
1R 6SHUOHY0,'HS¶WRI&RUUHFWLRQVHWDO
SDUW\PXVWSUHYDLODVDPDWWHURIODZ´$QGHUVRQY/LEHUW\
/REE\,QF86
% 6XEVWDQWLYHGXHSURFHVV
$OODQ 6SHUOH¶V VXEVWDQWLYH GXH SURFHVV FDXVH RI DFWLRQ
DOOHJHV WKDW WKH LQGLYLGXDO GHIHQGDQWV H[KLELWHG GHOLEHUDWH
LQGLIIHUHQFHWRWKHOLIHDQGOLEHUW\RIKLVZLIH+HFRQWHQGV
WKDW WKH GHIHQGDQWV FUHDWHG WKH ULVN RI +HUQGRQ PXUGHULQJ
7DPP\ 6SHUOH DQG UHQGHUHG KHU PRUH YXOQHUDEOH WR WKDW
GDQJHU ,Q VXSSRUW RI KLV FODLP $OODQ 6SHUOH DUJXHV WKDW
+HUQGRQ¶V FULPLQDO UHFRUG UHYHDOHG KLV YLROHQW
SURSHQVLWLHV &RUUHFWLRQV 2IILFHU =LVVLPRV KDG VHHQ
+HUQGRQDQG7DPP\6SHUOHDUJXLQJLQ-DQXDU\RIEXW
QHYHU UHSRUWHG WKH LQFLGHQW WKH GHIHQGDQWV DOORZHG
+HUQGRQ WR VHUYH RQ WKH SULVRQHU VWRUH FRPPLWWHH
+HUQGRQZDVQRWSURSHUO\VXSHUYLVHGRQWKHGD\WKDWKH
PXUGHUHG7DPP\6SHUOH LQPDWH7KRPDVUHSRUWHGWKDW
:DUGHQ-DFNVRQZDVXQUHVSRQVLYHWRKLVDWWHPSWVWRLQIRUP
KLPRIDWKUHDWDJDLQVW7DPP\6SHUOHLQ-DQXDU\RI
HPSOR\HHVZRUNLQJLQWKHVFKRROEXLOGLQJZHUHQRWDEOH
WRXVH33'V WKHUHFRYHU\RIWKH\DUGVHUJHDQW¶VNH\ULQJ
ZDV QRW UHFRUGHG LQ WKH ORJ ERRN EHIRUH 7DPP\ 6SHUOH¶V
PXUGHUDQG FRUUHFWLRQVRIILFHUVGLGQRWUHJXODUO\FKHFNRQ
7DPP\6SHUOHZKHQVKHZDVZRUNLQJDORQHLQWKHVWRUH
7R EULQJ D VXFFHVVIXO FODLP XQGHU 86& † D
SODLQWLIIPXVWHVWDEOLVK³WKDW DSHUVRQ DFWLQJXQGHU
FRORURIVWDWHODZ GHSULYHGWKHSODLQWLIIRIDIHGHUDOULJKW´
%HUJHUY&LW\RI0D\ILHOG+HLJKWV)G WK
&LU 7KHLQGLYLGXDOGHIHQGDQWVFRQFHGHWKDWWKH\ZHUH
DFWLQJ XQGHU FRORU RI VWDWH ODZ DW DOO WLPHV UHOHYDQW WR WKH
SUHVHQW ODZVXLW $V D UHVXOW WKH GLVDJUHHPHQW FHQWHUV RQ
ZKHWKHU WKH GHIHQGDQWV GHSULYHG 7DPP\ 6SHUOH RI KHU
VXEVWDQWLYHGXHSURFHVVULJKWWROLIHDQGOLEHUW\
7KH 'XH 3URFHVV &ODXVH SURKLELWV DQ\ VWDWH IURP
³GHSULY>LQJ@DQ\SHUVRQRIOLIHOLEHUW\RUSURSHUW\ZLWKRXW
GXH SURFHVV RI ODZ´ 86 &RQVW DPHQG ;,9 ,Q PRVW
FLUFXPVWDQFHV ³D 6WDWH¶V IDLOXUH WR SURWHFW DQ LQGLYLGXDO
DJDLQVWSULYDWHYLROHQFHVLPSO\GRHVQRWFRQVWLWXWHDYLRODWLRQ

-- 9 of 10 --

6SHUOHY0,'HS¶WRI&RUUHFWLRQVHWDO 1R
RIWKH'XH3URFHVV&ODXVH´'H6KDQH\Y:LQQHEDJR&RXQW\
'HSWRI6RF6HUYV86 ³>2@XUFDVHV
KDYHUHFRJQL]HGWKDWWKH'XH3URFHVV&ODXVHV>RIWKH)LIWK
DQG)RXUWHHQWK$PHQGPHQWV@JHQHUDOO\FRQIHUQRDIILUPDWLYH
ULJKW WR JRYHUQPHQW DLG HYHQ ZKHUH VXFK DLG PD\ EH
QHFHVVDU\WRVHFXUHOLIHOLEHUW\RUSURSHUW\LQWHUHVWVRIZKLFK
WKHJRYHUQPHQWLWVHOIPD\QRWGHSULYHWKHLQGLYLGXDO´
$Q H[FHSWLRQ WR WKLV JHQHUDO UXOH H[LVWV ZKHUH ³WKH
SODLQWLII DQG WKH VWDWH DFWRUV KDG D VXIILFLHQWO\ GLUHFW
UHODWLRQVKLSVXFKWKDWWKHGHIHQGDQWVRZHGKHUDGXW\QRWWR
VXEMHFWKHUWRGDQJHU´DQG ³WKHRIILFHUVZHUHVXIILFLHQWO\
FXOSDEOHWREHOLDEOHXQGHUDVXEVWDQWLYHGXHSURFHVVWKHRU\´
6WHPOHUY&LW\RI)ORUHQFH)G WK&LU
FRQFOXGLQJ WKDW WKH GHIHQGDQW SROLFH RIILFHUV YLRODWHG WKH
SODLQWLII¶V VXEVWDQWLYH GXH SURFHVV ULJKWV E\ IRUFLQJ KHU WR
OHDYHWKHVFHQHRIDSROLFHVWRSLQKHUGUXQNER\IULHQG¶VWUXFN
IROORZLQJZKLFKVKHZDVNLOOHGZKHQWKHWUXFNKLWDKLJKZD\
JXDUGUDLOGHVSLWHWKHSROLFHNQRZLQJWKDWWKHSODLQWLIIZDV
LQFDSDFLWDWHGDQGWKDWKHUER\IULHQGKDGDVVDXOWHGKHUHDUOLHU
WKDW HYHQLQJ :LWK UHVSHFW WR WKH ILUVW HOHPHQW RI WKLV
H[FHSWLRQWKHH[LVWHQFHRIDGXW\WRSURWHFWSULYDWHFLWL]HQV
IURPKDUPLQIOLFWHGE\WKLUGSDUWLHVDULVHVLIWKHVWDWHSODFHV
DQLQGLYLGXDOLQDFXVWRGLDOVHWWLQJFUHDWHVDULVNRIKDUPWR
DQLQGLYLGXDORUUHQGHUVDSHUVRQPRUHYXOQHUDEOHWRGDQJHU
(ZROVNLY&LW\RI%UXQVZLFN)G WK
&LU H[SODLQLQJ WKDW ³VWDWH RIILFLDOV PD\ YLRODWH WKH
'XH3URFHVV&ODXVHZKHQWKHLUDIILUPDWLYHDFWLRQVGLUHFWO\
LQFUHDVHWKHYXOQHUDELOLW\RIFLWL]HQVWRGDQJHURURWKHUZLVH
SODFHFLWL]HQVLQKDUP¶VZD\´EXWKROGLQJWKDWWKHGHIHQGDQWV
GLGQRWYLRODWHWKHSODLQWLIIV¶VXEVWDQWLYHGXHSURFHVVULJKWV
ZKHQ WKH\ XQVXFFHVVIXOO\ DWWHPSWHG WR UHVROYH D KRVWDJH
VLWXDWLRQ 'DYLV Y %UDG\ )G WK &LU
³%HFDXVHWKHGHIHQGDQWRIILFHUVKDGFXVWRG\RI'DYLV
WKH\RZHGKLPDGXW\RISURWHFWLRQWKDWZDVYLRODWHGZKHQ
WKH\ DEDQGRQHG KLP LQ D IRUORUQ SODFH´ LQWHUQDO
TXRWDWLRQPDUNVDQGFLWDWLRQRPLWWHG
7KLVREOLJDWLRQWRSURWHFWSHUVRQVIURPKDUPLQIOLFWHGE\
WKLUG SDUWLHV KRZHYHU GRHV QRW DXWRPDWLFDOO\ UHQGHU VWDWH
1R 6SHUOHY0,'HS¶WRI&RUUHFWLRQVHWDO
RIILFLDOVOLDEOHIRUWKHLQMXULHVWKDWDQLQGLYLGXDOVXIIHUVGXH
WRWKHDFWLRQVRIWKHVHSULYDWHDFWRUV,QVWHDGZKHUHVXFKD
GXW\ H[LVWV VWDWH DFWRUV DUH OLDEOH IRU EUHDFKLQJ WKHLU
REOLJDWLRQWRWKHSODLQWLIIRQO\LIWKH\HQJDJHGLQFRQGXFWWKDW
³ZDVVRμHJUHJLRXV¶WKDWLWFDQEHVDLGWREHμDUELWUDU\LQWKH
FRQVWLWXWLRQDO VHQVH¶´ (ZROVNL )G DW TXRWLQJ
&RXQW\RI6DFUDPHQWRY/HZLV86
7KLVVWDQGDUGQHFHVVDULO\ODFNVSUHFLVHERXQGDULHVEXWWKH
6XSUHPH&RXUW³KDVUHSHDWHGO\LQVWUXFWHGWKDWWKH)RXUWHHQWK
$PHQGPHQWSURWHFWVRQO\DJDLQVWDEXVHRIH[HFXWLYHSRZHU
ZKLFKμVKRFNVWKHFRQVFLHQFH¶´,G TXRWLQJ/HZLV86
DW
&RQVLVWHQWZLWKWKLVSULQFLSOHVLPSOHQHJOLJHQFHGRHVQRW
ULVHWRWKHOHYHORIDVXEVWDQWLYHGXHSURFHVVYLRODWLRQ,G
³$W D PLQLPXP WKH VWDQGDUG UHTXLUHV D VKRZLQJ EH\RQG
PHUHQHJOLJHQFH´ 7KHLQWHQWLRQDOLQIOLFWLRQRILQMXU\RQ
WKH RWKHU KDQG JHQHUDOO\ UHQGHUV VWDWH DFWRUV OLDEOH IRU
YLRODWLRQV RI D SODLQWLII¶V )RXUWHHQWK $PHQGPHQW ULJKW WR
VXEVWDQWLYHGXHSURFHVV,G H[SODLQLQJWKDW³LWLVJHQHUDOO\
DJUHHG WKDW )RXUWHHQWK $PHQGPHQW OLDELOLW\ ZLOO DWWDFK WR
μFRQGXFWLQWHQGHGWRLQMXUHLQVRPHZD\XQMXVWLILDEOHE\DQ\
JRYHUQPHQWDO LQWHUHVW¶´ HPSKDVLV LQ RULJLQDO TXRWLQJ
/HZLV86DW
:KHWKHUFRQGXFWWKDWOLHVEHWZHHQVLPSOHQHJOLJHQFHDQG
LQWHQWLRQDOKDUPVKRFNVWKHFRQVFLHQFHRIWKHFRXUW³GHSHQGV
XSRQ WKH IDFWV DQG FLUFXPVWDQFHV RI WKH LQGLYLGXDO FDVH´
(ZROVNL)GDW&XVWRGLDOVHWWLQJVIRUH[DPSOH
SUHVHQWDVLWXDWLRQZKHUHVWDWHDFWRUVZLOOEHKHOGOLDEOHIRU
YLRODWLQJDSODLQWLII¶VVXEVWDQWLYHGXHSURFHVVULJKWVLIWKH\
H[KLELW GHOLEHUDWH LQGLIIHUHQFH WR WKH ULVN RI LQMXU\ IURP D
SULYDWHSDUW\6WHPOHU)GDW ³>:@KHUHWKHSODLQWLII
VXIIHUHG LQMXU\ DV D UHVXOW RI EHLQJ SODFHG LQ WKH VWDWH¶V
FXVWRG\ LW KDV FRQVLVWHQWO\ DQG XQFRQWURYHUVLDOO\ EHHQ WKH
UXOH WKDW D FRQVWLWXWLRQDO FODLP DULVHV ZKHUH WKH LQMXU\
RFFXUUHGDVDUHVXOWRIWKHVWDWH¶VGHOLEHUDWHLQGLIIHUHQFHWRWKH
ULVN RI VXFK DQ LQMXU\´ 7KH NH\ IDFWRU LQ FXVWRGLDO
HQYLURQPHQWV DQG RWKHU VLWXDWLRQV ZKHUH GHOLEHUDWH
LQGLIIHUHQFH UHQGHUV VWDWH DFWRUV OLDEOH IRU VXEVWDQWLYH GXH

-- 10 of 10 --