03a0002p.06

7KH +RQRUDEOH -RVHSK + 0F.LQOH\ -U 8QLWHG 6WDWHV 'LVWULFW
-XGJH IRU WKH :HVWHUQ 'LVWULFW RI .HQWXFN\ 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
-2+1 & /$87(50,/&+
3ODLQWLII$SSHOODQW
Y
),1'/$< &,7< 6&+22/6
'HIHQGDQW$SSHOOHH
;!

1
1R
$SSHDOIURPWKH8QLWHG6WDWHV'LVWULFW&RXUW
IRUWKH1RUWKHUQ'LVWULFWRI2KLRDW7ROHGR
1R²-DPHV*&DUU'LVWULFW-XGJH
$UJXHG2FWREHU
'HFLGHGDQG)LOHG-DQXDU\
%HIRUH6,/(5DQG0225(&LUFXLW-XGJHV
0F.,1/(<'LVWULFW-XGJH
BBBBBBBBBBBBBBBBB
&2816(/
$5*8(' 'DYLG $ %U\DQ :$6(50$1 %5<$1
/$1'5< +212/' 7ROHGR 2KLR IRU $SSHOODQW &
3KLOLS%DLWKHU,,,52%,621&853+(< 2¶&211(//

-- 1 of 6 --

/DXWHUPLOFKY)LQGOD\&LW\6FKRROV 1R
7ROHGR2KLRIRU$SSHOOHH21%5,())UDQFLV-/DQGU\
:$6(50$1%5<$1/$1'5< +212/'7ROHGR
2KLR IRU $SSHOODQW & 3KLOLS %DLWKHU ,,, 52%,621
&853+(< 2¶&211(//7ROHGR2KLRIRU$SSHOOHH
6,/(5 - GHOLYHUHG WKH RSLQLRQ RI WKH FRXUW LQ ZKLFK
0F.,1/(<'-MRLQHG0225(- SS GHOLYHUHG
DVHSDUDWHRSLQLRQGLVVHQWLQJLQSDUW
BBBBBBBBBBBBBBBBB
23,1,21
BBBBBBBBBBBBBBBBB
6,/(5 &LUFXLW -XGJH 3ODLQWLII -RKQ & /DXWHUPLOFK
DSSHDOV WKH GLVWULFW FRXUW V JUDQW RI VXPPDU\ MXGJPHQW WR
'HIHQGDQW )LQGOD\ &LW\ 6FKRROV WKH 6FKRROV )RU WKH
UHDVRQVVWDWHGEHORZZH$)),50
,
,Q/DXWHUPLOFKEHJDQZRUNLQJDVDVXEVWLWXWHWHDFKHU
IRUWKH6FKRROV/LNHRWKHUVXEVWLWXWHWHDFKHUV/DXWHUPLOFK
GLGQRWVLJQDFRQWUDFWIRUHPSOR\PHQWZLWKWKH6FKRROV
,Q3ULQFLSDO.DWKOHHQ&UDWHVDQG$VVLVWDQW3ULQFLSDO
0LFKDHO.XULGHFLGHGWKDW/DXWHUPLOFKZRXOGQRWEHFDOOHG
DJDLQ DV D VXEVWLWXWH WHDFKHU 7KH\ KDG VHYHUDO FRQFHUQV
UHJDUGLQJ /DXWHUPLOFK V EHKDYLRU DV D VXEVWLWXWH WHDFKHU
LQFOXGLQJDFWLQJLQDSSURSULDWHO\ZLWK\RXQJSHRSOHWXWRULQJ
DIHPDOHVWXGHQWDWKLVKRPHWHOOLQJLQDSSURSULDWHMRNHVLQWKH
FODVVURRPDQGFRPPHQWLQJRQWKHVL]HRIDIHPDOHWHDFKHU V
EUHDVWV,QDGGLWLRQDVWXGHQWKDGUHSRUWHG/DXWHUPLOFKDV
VD\LQJWRKHU/LSVZKR>VLF@WRXFKDOFRKROPD\QRWWRXFK
PLQHEXWLWGRHVQRWUXOHRXWDQ\RWKHUSDUWRIP\ERG\
/DXWHUPLOFKVWDWHVWKDWKHGLGWXWRUDIHPDOHVWXGHQWLQKLV
KRPH DQG WKDW KH KDG PDGH WKH OLSV ZKR WRXFK DOFRKRO
FRPPHQW ZLWKRXW WKDW YXOJDU DGGLWLRQ WR WKH HQG RI LW
/DXWHUPLOFK VWDWHV WKDW DW D 1RYHPEHU PHHWLQJ
3ULQFLSDO&UDWHVWROGKLPWKDWKHZDVWRRPDFKRDQGWKDW
1R /DXWHUPLOFKY)LQGOD\&LW\6FKRROV
VLWXDWLRQ/DXWHUPLOFKLVDOOHJHGO\H[KLELWLQJWRRPXFKRIWKH
PDOHJHQGHUVWHUHRW\SHZKHQKLVEHKDYLRULVGHVFULEHGDV³WRR
PDFKR´ %HFDXVH , EHOLHYH LW LV LQFRQVLVWHQW WR SURWHFW D
ZRPDQIURPGLVFULPLQDWLRQRQWKHEDVLVWKDWVKHLVQRWDFWLQJ
³OLNHDZRPDQ´RUFRQYHUVHO\DFWV³WRRPXFKOLNHDZRPDQ´
ZKLOHIDLOLQJWRSURWHFWDPDQDFFXVHGRIDFWLQJ³WRRPDQO\´
,UHVSHFWIXOO\GLVVHQW8QGHUHLWKHUVFHQDULRWKHSODLQWLIILV
VXIIHULQJ VH[ GLVFULPLQDWLRQ E\ WKH DSSOLFDWLRQ RI KDUPIXO
JHQGHUVWHUHRW\SHV
:KHQDSODLQWLIIFRPHVIRUWKZLWKGLUHFWHYLGHQFHRIJHQGHU
GLVFULPLQDWLRQWKHGHIHQGDQWKDVWKHEXUGHQRISHUVXDVLRQWR
VKRZWKDWLWZRXOGKDYHWHUPLQDWHGWKHSODLQWLIIDEVHQWWKH
GLVFULPLQDWRU\ PRWLYH -DFNO\Q )G DW ,Q WKH
LQVWDQWGLUHFWHYLGHQFHFDVHTXHVWLRQVRIIDFWUHPDLQ6HH
HJ:HEHUJY)UDQNV)G WK&LU
KROGLQJWKDWUDFLDOO\GLVFULPLQDWRU\VWDWHPHQWVWKDWVHUYHDV
GLUHFW HYLGHQFH RI GLVFULPLQDWLRQ FUHDWH JHQXLQH LVVXHV RI
PDWHULDOIDFW ,GRQRWFRQWHVWWKDWWKH6FKRROVFHUWDLQO\KDYH
SURGXFHGVRPHHYLGHQFHRI/DXWHUPLOFK¶VLPSURSULHW\ZLWK
WKH VWXGHQWV 1RQHWKHOHVV D TXLQWHVVHQWLDO IDFW TXHVWLRQ
UHPDLQVUHJDUGLQJZKDWDFWXDOO\PRWLYDWHG3ULQFLSDO&UDWHVLQ
KHUGHFLVLRQWRWHUPLQDWH/DXWHUPLOFK7KLVTXHVWLRQLVRQH
IRUWKHWULHURIIDFWWRUHVROYHQRWIRUWKHFRXUWRQDPRWLRQIRU
VXPPDU\MXGJPHQW

-- 2 of 6 --

/DXWHUPLOFKY)LQGOD\&LW\6FKRROV 1R
HPSOR\ D SDUWLFXODU IHPDOH WHDFKHU EHFDXVH VKH ZDV ³WRR
IHPLQLQH´8QGHUWKHVHFLUFXPVWDQFHVLWLVUHODWLYHO\FOHDU
WKDWWKHPDMRULW\ZRXOGKDYHUHDFKHGDGLIIHUHQWUHVXOW6HH
JHQHUDOO\3ULFH:DWHUKRXVHY+RSNLQV86
SHUPLWWLQJDZRPDQWRSURYHWKDWKHUJHQGHUSOD\HG
DSDUWLQDQDGYHUVHHPSOR\PHQWGHFLVLRQWKURXJKVWDWHPHQWV
LQFOXGLQJWKDWVKHZDVQRW³IHPLQLQH´HQRXJKWREHFRPHD
SDUWQHUDQGWKDWVKHZDV³PDFKR´ 3LYLURWWRY,QQRYDWLYH
6\V,QF)G G&LU QRWLQJWKDW7LWOH
9,,SODLQWLIIVVKRXOGQRWKDYHWRSURYHWKDWWKH\ZHUHUHSODFHG
E\ VRPHRQH RXWVLGH WKHLU FODVV EHFDXVH VH[ GLVFULPLQDWLRQ
QRQHWKHOHVVFDQH[LVWZKHQDQHPSOR\HUIDYRUVVRPHJHQGHU
EDVHG FKDUDFWHULVWLFV ZLWKLQ D VH[ RYHU RWKHUV 1LFKROV Y
$]WHFD5HVW(QWHUV,QF)G WK&LU
DSSO\LQJ 3ULFH :DWHUKRXVH WR D VLWXDWLRQ ZKHUH D PDQ LV
DFFXVHGRIEHKDYLQJWRRIHPLQLQHO\ 7KH3ULQFLSDO¶VZRUG
FKRLFHWHOOLQJ/DXWHUPLOFKWKDWKHZRXOGQRWEHUHKLUHGDVD
VXEVWLWXWHWHDFKHUEHFDXVHKHZDV³WRRPDFKR´DVRSSRVHGWR
WHOOLQJKLPKHZDV³WRRPDOH´VKRXOGQRWEHWKHEDVLVIRUD
GLIIHUHQWILQGLQJ0RUHRYHUWKHIDFWWKDW/DXWHUPLOFKZDV
SXQLVKHG IRU H[KLELWLQJ DQ RUGLQDULO\ IDYRUHG JHQGHU
VWHUHRW\SHPDOHQHVVVKRXOGQRWGLVWLQJXLVKWKLVFDVHIURP
RQH ZKHUH WKH SXQLVKPHQW LV IRU IDLOLQJ WR OLYH XS WR DQ
DFFHSWHG JHQGHU UROH &I 3LYLURWWR )G DW
LQFOXGLQJZLWKLQWKHGHILQLWLRQRIGLVFULPLQDWLRQVLWXDWLRQV
ZKHUH³>D@QHPSOR\HUPD\DFWRQJHQGHUEDVHGVWHUHRW\SHV
ILULQJZRPHQLWSHUFHLYHVDVQRWIHPLQLQHHQRXJK RUDVWRR
IHPLQLQH RU GLVFKDUJLQJ ZRPHQ ZKR DUH WRR DJJUHVVLYH
ZKLOHQRWGRLQJWKHVDPHWRPDOHHPSOR\HHV´
%RWK3ULFH:DWHUKRXVHDQGWKHFXUUHQWVLWXDWLRQLQYROYH
HPSOR\HHVDFFXVHGRIEHKDYLQJ³WRRPDQO\´²LQWKHIRUPHU
FDVHDIHPDOHSODLQWLIIZDVWROGWRDFWPRUHOLNHDZRPDQDQG
LQWKHLQVWDQWFDVHDPDOHSODLQWLIIZDVWROGWRDFWOHVVOLNHD
PDQ6HH3ULFH:DWHUKRXVH86DW7KLVLVGLUHFWO\
DQDORJRXVWRDVLWXDWLRQZKHUHDZRPDQDQGDPDQDUHERWK
GLVFULPLQDWHG DJDLQVW IRU EHKDYLQJ WRR IHPLQLQHO\ 6HH
1LFKROV)GDW7KHRQO\PDUNHGGLIIHUHQFHLVWKDW
LQ 3ULFH :DWHUKRXVH DQG 1LFKROV WKH SODLQWLIIV DUH QRW
FRQIRUPLQJ WR JHQGHU VWHUHRW\SHV ZKHUHDV LQ WKH FXUUHQW
1R /DXWHUPLOFKY)LQGOD\&LW\6FKRROV
3ULQFLSDO &UDWHV VSLW WKH ZRUG PDFKR RXW DV LI LW ZDV
GLVWDVWHIXO 6LQFH WKHQ WKH 6FKRROV KDYH QRW FDOOHG
/DXWHUPLOFKWREHDVXEVWLWXWHWHDFKHU
,Q /DXWHUPLOFK VXHG WKH 6FKRROV LQ WKH 1RUWKHUQ
'LVWULFW RI 2KLR DOOHJLQJ VH[ GLVFULPLQDWLRQ GXH SURFHVV
YLRODWLRQ)LUVW$PHQGPHQWYLRODWLRQDQGYDULRXVVWDWHODZ
FODLPV7KHGLVWULFWFRXUWJUDQWHGWKH6FKRROV PRWLRQ IRU
VXPPDU\MXGJPHQWRQDOOFODLPV
,,
7KLV FRXUW UHYLHZV D GLVWULFW FRXUW V JUDQW RI VXPPDU\
MXGJPHQWGHQRYR6HH6PLWKY:DO0DUW6WRUHV,QF
)G WK &LU 6XPPDU\ MXGJPHQW LV
DSSURSULDWHLIWKHUHLVQRJHQXLQHLVVXHRIPDWHULDOIDFWDQG
WKHPRYLQJSDUW\LVHQWLWOHGWRMXGJPHQWDVDPDWWHURIODZ
6HH)HG5&LY3 F $QGHUVRQY/LEHUW\/REE\,QF
86 8QGHUWKLVVWDQGDUGWKHFRXUWPXVW
GHWHUPLQH ZKHWKHU UHDVRQDEOH MXURUV FRXOG ILQG E\ D
SUHSRQGHUDQFHRIWKHHYLGHQFHWKDWWKHSODLQWLIILVHQWLWOHGWR
D YHUGLFW $QGHUVRQ 86 DW ,Q PDNLQJ WKLV
GHWHUPLQDWLRQ >W@KH HYLGHQFH RI WKH QRQPRYDQW LV WR EH
EHOLHYHGDQGDOOMXVWLILDEOHLQIHUHQFHVDUHWREHGUDZQLQKLV
IDYRU,GDW
'XH3URFHVV
7KH )RXUWHHQWK $PHQGPHQW SURKLELWV VWDWH DFWRUV IURP
GHSULYLQJDQLQGLYLGXDORIOLIHOLEHUW\RUSURSHUW\ZLWKRXW
GXHSURFHVVRIODZ/DXWHUPLOFKDUJXHVWKDWWKHWKH6FKRROV
GLGQRWDIIRUGKLPGXHSURFHVVEHIRUHGHSULYLQJKLPRIKLV
SURSHUW\LQWHUHVWLQKLVMREDVDVXEVWLWXWHWHDFKHU
,Q %DLOH\ Y )OR\G %G RI (GXF )G WK &LU
WKLVFRXUWUHYLHZHGWKHVWDQGDUGIRUILQGLQJDSURWHFWHG
SURSHUW\LQWHUHVWLQJRYHUQPHQWHPSOR\PHQW
7KHH[LVWHQFHRIDSURSHUW\LQWHUHVWGHSHQGVODUJHO\RQ
VWDWH ODZ *RYHUQPHQW HPSOR\PHQW DPRXQWV WR D
SURWHFWHGSURSHUW\LQWHUHVWZKHQWKHHPSOR\HHLVHQWLWOHG

-- 3 of 6 --

/DXWHUPLOFKY)LQGOD\&LW\6FKRROV 1R
WR FRQWLQXHG HPSOR\PHQW 1HLWKHU PHUH JRYHUQPHQW
HPSOR\PHQWQRUDQDEVWUDFWQHHGRUGHVLUHIRUFRQWLQXHG
HPSOR\PHQWZLOOJLYHULVHWRDSURSHUW\LQWHUHVW5DWKHU
DSURSHUW\LQWHUHVWH[LVWVDQGLWVERXQGDULHVDUHGHILQHG
E\UXOHVRUXQGHUVWDQGLQJVWKDWVWHPIURPDQLQGHSHQGHQW
VRXUFHVXFKDVVWDWHODZUXOHVRUXQGHUVWDQGLQJVWKDW
VHFXUH FHUWDLQ EHQHILWV DQG WKDW VXSSRUW FODLPV RI
HQWLWOHPHQWWRWKRVHEHQHILWV
,GDW LQWHUQDOTXRWHVDQGFLWDWLRQVRPLWWHG
8QGHU 2KLR ODZ VXEVWLWXWH WHDFKHUV KDYH QR SURSHUW\
LQWHUHVWLQWKHLUFRQWLQXHGHPSOR\PHQW
7HDFKHUV PD\ EH HPSOR\HG DV VXEVWLWXWH WHDFKHUV IRU
WHUPVQRWWRH[FHHGRQH\HDUIRUDVVLJQPHQWDVVHUYLFHV
DUHQHHGHGWRWDNHWKHSODFHRIUHJXODUWHDFKHUVDEVHQWRQ
DFFRXQW RI LOOQHVV RU RQ OHDYHV RI DEVHQFH RU WR ILOO
WHPSRUDULO\ SRVLWLRQV FUHDWHG E\ HPHUJHQFLHV VXFK
DVVLJQPHQW WR EH VXEMHFW WR WHUPLQDWLRQ ZKHQ VXFK
VHUYLFHVDUHQRORQJHUQHHGHG

7HDFKHUVHPSOR\HGDVVXEVWLWXWHVRQDFDVXDORUGD\WR
GD\ EDVLV VKDOO QRW EH HQWLWOHG WR WKH QRWLFH RI QRQUH
HPSOR\PHQWSUHVFULEHGLQVHFWLRQRIWKH5HYLVHG
&RGH
25&†
(YHQ ZLWKRXW D VWDWXWRU\ SURSHUW\ LQWHUHVW /DXWHUPLOFK
FRXOGFODLPDSURSHUW\LQWHUHVWLQKLVHPSOR\PHQWKDGVXFKDQ
LQWHUHVWEHHQFRQIHUUHGE\FRQWUDFW6HH%DLOH\)GDW
+HUHEHFDXVH/DXWHUPLOFKGLGQRWHQWHULQWRDZULWWHQ
FRQWUDFW ZLWK WKH )LQGOD\ &LW\ 6FKRROV KH LV DQ DW ZLOO
HPSOR\HH6HH+HQNHOY(GXF5HVHDUFK&RXQFLORI$PHULFD
1(G 2KLR 7KHPRGHUQUXOHLVWKDWLQ
WKHDEVHQFHRIIDFWVDQGFLUFXPVWDQFHVZKLFKLQGLFDWHWKDWWKH
DJUHHPHQW LV IRU D VSHFLILF WHUP DQ HPSOR\PHQW FRQWUDFW
ZKLFK PDNHV QR SURYLVLRQ DV WR WKH GXUDWLRQ RI WKH
1R /DXWHUPLOFKY)LQGOD\&LW\6FKRROV
7KH GHILQLWLRQ FRQWLQXHV ³DOVR PDQOLQHVV YLULOLW\ DQ LPSUHVVLRQ
RI WKLV´ 2;)25' (1*/,6+ ',&7,21$5< G HG 7KH
DGMHFWLYH XVH RI ³PDFKR´ LV GHILQHG DV ³>R@VWHQWDWLRXVO\ RU QRWDEO\ PDQO\
RU YLULOH´ ,G VHH DOVR 0(55,$0 :(%67(5 21/,1( DW
KWWSZZZPZFRPKRPHKWP ODVW YLVLWHG 'HF ³PDFKR´
GHILQHG DV ³DJJUHVVLYHO\ YLULOH´ )XUWKHU GHILQLWLRQV RI ³PDFKR´ LQFOXGH
³DVVHUWLYH RU DJJUHVVLYH PDQOLQHVV´ DQG ³DQ DVVHUWLYHO\ YLULOH GRPLQDWLQJ
RU GRPLQHHULQJ PDOH´ 5$1'20 +286( 81$%5,'*(' ',&7,21$5<
G HG
GLVFULPLQDWLRQ6HH7UDQV:RUOG$LUOLQHV,QFY7KXUVWRQ
86 7KLVLVVREHFDXVH³>W@KHVKLIWLQJ
EXUGHQVRISURRIVHWIRUWKLQ0F'RQQHOO'RXJODVDUHGHVLJQHG
WRDVVXUHWKDWWKHμSODLQWLII>KDV@KLVGD\LQFRXUWGHVSLWHWKH
XQDYDLODELOLW\RIGLUHFWHYLGHQFH¶´,G FLWDWLRQRPLWWHG
7KH(TXDO3URWHFWLRQ&ODXVHSURKLELWVGLVFULPLQDWLRQRQWKH
EDVLV RI JHQGHU ² ZKLFK LQFOXGHV GLVFULPLQDWLRQ DJDLQVW
PDOHV6HHJHQHUDOO\&UDLJY%RUHQ86
DSSO\LQJ LQWHUPHGLDWH VFUXWLQ\ WR VWDWXWH
GLVFULPLQDWLQJ DJDLQVW PDOHV $FFRUGLQJ WR WKH 2[IRUG
(QJOLVK'LFWLRQDU\WKHZRUG³PDFKR´KDVLWVRULJLQVLQWKH
6SDQLVKODQJXDJHDQGLVGHILQHGDV³DPDQ>VSHFLILFDOO\@D
μWRXJKJX\¶´2;)25' (1*/,6+ ',&7,21$5< GHG
,QGLUHFWFRQWUDVWWRWKHPDMRULW\,FRQWHQGWKDWLWLV
SUHFLVHO\EHFDXVHWKHJHQGHUEDVHGFRPPHQWZDVPDGHE\WKH
XOWLPDWH GHFLVLRQPDNHU ³LQ WKH FRQWH[W RI D WHUPLQDWLRQ
KHDULQJ´ WKDW RQH UHDVRQDEO\ FDQ LQIHU WKDW JHQGHU ZDV D
PRWLYDWLQJIDFWRULQ3ULQFLSDO&UDWHV¶VGHFLVLRQ0RUHRYHU
WKH FRPPRQSODFH XVDJH RI WKH ZRUG ³PDFKR´ UHIHUV
H[FOXVLYHO\WREHKDYLRUVRUTXDOLWLHVDVVRFLDWHGZLWKWKHPDOH
JHQGHU%RWKWKHQDWXUHRIWKHFRPPHQWDQGWKHPDQQHULQ
ZKLFKLWZDVGHOLYHUHGVXJJHVWWKDWVXPPDU\MXGJPHQWZDV
LPSURSHU EHFDXVH D UHDVRQDEOH MXURU FRXOG ILQG E\ D
SUHSRQGHUDQFH RI WKH HYLGHQFH WKDW /DXWHUPLOFK¶V JHQGHU
³ZDVDWOHDVWDPRWLYDWLQJIDFWRULQWKHHPSOR\HU¶VDFWLRQV´
/DGHUDFK)GDW
6XSSRVH3ULQFLSDO&UDWHVKDGVDLGWRDQ$IULFDQ$PHULFDQ
VXEVWLWXWHWHDFKHUWKDWWKH6FKRROVZHUHXQDEOHWRXWLOL]HKLV
VHUYLFHVEHFDXVHKHZDV³WRREODFN´RUWKDWVKHKDGIDLOHGWR

-- 4 of 6 --

/DXWHUPLOFKY)LQGOD\&LW\6FKRROV 1R
BBBBBBBBBBBBB
',66(17
BBBBBBBBBBBBB
.$5(11(/6210225(&LUFXLW-XGJHGLVVHQWLQJLQ
SDUW,GLVVHQWZLWKUHVSHFWWRWKHPDMRULW\¶VGLVSRVLWLRQRI
/DXWHUPLOFK¶V HTXDO SURWHFWLRQ FODLP EHFDXVH 3ULQFLSDO
.DWKOHHQ &UDWHV¶V FRPPHQW WKDW /DXWHUPLOFK ZDV ³WRR
PDFKR´PDGHDWWKHWLPHVKHLQIRUPHGKLPRIWKHGHFLVLRQWR
GHQ\ KLP IXWXUH RSSRUWXQLWLHV DV D VXEVWLWXWH WHDFKHU
FRQVWLWXWHVGLUHFWHYLGHQFHRIVH[GLVFULPLQDWLRQVXIILFLHQWWR
GHIHDW WKH 6FKRROV¶ PRWLRQ IRU VXPPDU\ MXGJPHQW 7KH
PDMRULW\ LPSURSHUO\ XSKROGV WKH GLVWULFW FRXUW¶V JUDQW RI
VXPPDU\MXGJPHQWFRQFOXGLQJWKDWDQ\UHDVRQDEOHSHUVRQ
ZRXOGGHWHUPLQHWKDW3ULQFLSDO&UDWHV¶VUHPDUNZDVPHUHO\
³FULWLFDORI/DXWHUPLOFK¶VEHKDYLRUQRWKLVVH[RUJHQGHU´,Q
UHMHFWLQJ/DXWHUPLOFK¶VHTXDOSURWHFWLRQFODLPXQGHU†
WKH PDMRULW\ KROGV WKDW RQH ³RIIKDQG FRPPHQW´ GRHV QRW
³UHTXLUH>@WKHFRQFOXVLRQWKDWXQODZIXOGLVFULPLQDWLRQZDVDW
OHDVW D PRWLYDWLQJ IDFWRU LQ WKH HPSOR\HU¶V DFWLRQV´ 7KH
PDMRULW\LJQRUHVWKHNH\IDFWVWKDWWKH³WRRPDFKR´FRPPHQW
ZDVPDGHE\WKHGHFLVLRQPDNHUDWWKHWHUPLQDWLRQKHDULQJ
³>'@LUHFW HYLGHQFH LV WKDW HYLGHQFH ZKLFK LI EHOLHYHG
UHTXLUHVWKHFRQFOXVLRQWKDWXQODZIXOGLVFULPLQDWLRQZDVDW
OHDVW D PRWLYDWLQJ IDFWRU LQ WKH HPSOR\HU¶V DFWLRQV´
/DGHUDFKY8+DXORI1RUWKZHVWHUQ2KLR)G
WK&LU TXRWDWLRQRPLWWHG :KHQDSODLQWLIIFRPHV
IRUWKZLWKFUHGLEOHGLUHFWHYLGHQFHRIJHQGHUGLVFULPLQDWLRQ
³WKHEXUGHQRISHUVXDVLRQVKLIWVWRWKHGHIHQGDQWWRVKRZLW
ZRXOGKDYHWHUPLQDWHGWKHSODLQWLII´DEVHQWWKHGLVFULPLQDWRU\
PRWLYH-DFNO\QY6FKHULQJ3ORXJK+HDOWKFDUH3URGV6DOHV
&RUS )G WK &LU 7KH PDMRULW\
DSSHDUV WR KROG WKDW WKH ³WRR PDFKR´ FRPPHQW E\ WKH
GHFLVLRQPDNHUDWWKHWHUPLQDWLRQKHDULQJGRHVQRWFRQVWLWXWH
GLUHFW HYLGHQFH DQG HYHQ LI LW ZHUH GLUHFW HYLGHQFH WKH
PDMRULW\ FRQFOXGHV WKDW /DXWHUPLOFK KDV IDLOHG WR VKRZ
SUHWH[W 7KH 6XSUHPH &RXUW KRZHYHU KDV PDGH LW
DEXQGDQWO\FOHDUWKDWWKH0F'RQQHOO'RXJODVWHVWGRHVQRW
DSSO\ ZKHUH WKH SODLQWLII SUHVHQWV GLUHFW HYLGHQFH RI
1R /DXWHUPLOFKY)LQGOD\&LW\6FKRROV
HPSOR\PHQWLVQRWDFRQWUDFWIRURQH\HDUEXWLVWHUPLQDEOH
DWZLOOE>\@HLWKHUSDUW\
7KHGLVWULFWFRXUWFRUUHFWO\IRXQGWKDW/DXWHUPLOFKKDVQRW
LGHQWLILHG VXIILFLHQW IDFWV DQG FLUFXPVWDQFHV IURP ZKLFK D
UHDVRQDEOHMXU\FRXOGILQGWKDWKHZDVDQ\WKLQJRWKHUWKDQDQ
DWZLOOHPSOR\HH
6H['LVFULPLQDWLRQ
/DXWHUPLOFK DUJXHV WKDW WKH GLVWULFW FRXUW HUURQHRXVO\
DQDO\]HG KLV VH[ GLVFULPLQDWLRQ FODLPV XQGHU D 7LWOH 9,,
DQDO\VLV UDWKHU WKDQ D † DQDO\VLV $OWKRXJK
/DXWHUPLOFK VFRPSODLQWQHYHUPHQWLRQV7LWOH9,,>W@RSURYH
DYLRODWLRQRIWKHHTXDOSURWHFWLRQFODXVHXQGHU†>D
SODLQWLII@ PXVW SURYH WKH VDPH HOHPHQWV DV DUH UHTXLUHG WR
HVWDEOLVK D GLVSDUDWH WUHDWPHQW FODLP XQGHU 7LWOH 9,, LH
XQGHUWKH0F'RQQHOO'RXJODV%XUGLQHIUDPHZRUN-DFK\UD
Y&LW\RI6RXWKILHOG1R:/DW
WK&LU6HSWHPEHU FLWLQJ*XW]ZLOOHUY)HQLN
)G WK&LU
8QGHUWKH0F'RQQHOO'RXJODV%XUGLQHIUDPHZRUN
>W@KHFRPSODLQDQWLQD7LWOH9,,WULDOPXVWFDUU\WKHLQLWLDO
EXUGHQ XQGHU WKH VWDWXWH RI HVWDEOLVKLQJ D SULPD IDFLH
FDVHRIGLVFULPLQDWLRQ7KLVPD\EHGRQHE\VKRZLQJ
L WKDWKHEHORQJVWRD>SURWHFWHG@PLQRULW\ LL WKDWKH
DSSOLHG DQG ZDV TXDOLILHG IRU D MRE IRU ZKLFK WKH
HPSOR\HUZDVVHHNLQJDSSOLFDQWV LLL WKDWGHVSLWHKLV
TXDOLILFDWLRQV KH ZDV UHMHFWHG DQG LY WKDW DIWHU KLV
UHMHFWLRQWKHSRVLWLRQUHPDLQHGRSHQDQGWKHHPSOR\HU
FRQWLQXHG WR VHHN DSSOLFDQWV IURP SHUVRQV RI
FRPSODLQDQW VTXDOLILFDWLRQV
0F'RQQHOO 'RXJODV &RUS Y *UHHQ 86

2QFHDFRPSODLQDQWIXOILOOVKLVLQLWLDOREOLJDWLRQWKHEXUGHQ
VKLIWV WR WKH HPSOR\HU WR DUWLFXODWH VRPH OHJLWLPDWH
QRQGLVFULPLQDWRU\UHDVRQ IRUWKHHPSOR\HH VUHMHFWLRQ ,G

-- 5 of 6 --

/DXWHUPLOFKY)LQGOD\&LW\6FKRROV 1R
2QFH WKH HPSOR\HU DUWLFXODWHV VRPH OHJLWLPDWH
QRQGLVFULPLQDWRU\UHDVRQIRUWKHDFWLRQWKHFRPSODLQDQWKDV
DQRSSRUWXQLW\WRVKRZWKDWWKHVWDWHGUHDVRQIRUUHMHFWLRQZDV
LQIDFWSUHWH[W,GDW
%HFDXVH/DXWHUPLOFKKDVQRWSURYLGHGDQ\HYLGHQFHWKDWKH
ZDVUHSODFHGE\VRPHRQHRXWVLGHKLVSURWHFWHGFODVV RQHZD\
WR IXOILOO WKH IRXUWK SURQJ RI 0F'RQQHOO 'RXJODV KH KDV
IDLOHGWRHVWDEOLVKDSULPDIDFLHFDVHXQGHUWKHIRXUSURQJVRI
0F'RQQHOO 'RXJODV $OWHUQDWLYHO\ /DXWHUPLOFK VHHNV WR
HVWDEOLVK KLV SULPD IDFLH VH[ GLVFULPLQDWLRQ FDVH WKURXJK
GLUHFWHYLGHQFHRIGLVFULPLQDWLRQ,Q/DGHUDFKY8+DXORI
1RUWKZHVWHUQ2KLR)G WK&LU WKLVFRXUW
KHOGWKDWDSODLQWLIIPD\HVWDEOLVKDSULPDIDFLHFDVHRIVH[
GLVFULPLQDWLRQWKURXJKGLUHFWHYLGHQFHRIGLVFULPLQDWLRQ,G
DW'LUHFWHYLGHQFHLVWKDWHYLGHQFHZKLFKLIEHOLHYHG
UHTXLUHVWKHFRQFOXVLRQWKDWXQODZIXOGLVFULPLQDWLRQZDVDW
OHDVWDPRWLYDWLQJIDFWRULQWKHHPSOR\HU VDFWLRQV,G2QFH
WKHUH LV FUHGLEOH GLUHFW HYLGHQFH WKH EXUGHQ RI SHUVXDVLRQ
VKLIWVWRWKHGHIHQGDQWWRVKRZWKDWLWZRXOGKDYHWHUPLQDWHG
WKH SODLQWLII V HPSOR\PHQW KDG LW QRW EHHQ PRWLYDWHG E\
GLVFULPLQDWLRQ ,G ,Q /DGHUDFK WKH SODLQWLII SUHVHQWHG
FUHGLEOHGLUHFWHYLGHQFHRIGLVFULPLQDWLRQWKHVKRSIRUHPDQ
WHVWLILHGWKDWRQWZRRFFDVLRQVWKHGHIHQGDQWWROGKLPWKDWKH
ZRXOGQRWSURPRWH/DGHUDFKEHFDXVHRIKHUVH[DQGWKDWKH
GLG QRW ZDQW /DGHUDFK WR DQVZHU KRWOLQH WHOHSKRQH FDOOV
EHFDXVHZRPHQDUHQRWPHFKDQLFDOO\LQFOLQHG,G
/DXWHUPLOFKDWWHPSWVWRKDQJKLVHQWLUHSULPDIDFLHFDVHRQ
RQHRIIKDQGFRPPHQWE\3ULQFLSDO&UDWHV WKDWKHZDVWRR
PDFKR 7KLVHYLGHQFHGRHVQRWUHTXLUH>@WKHFRQFOXVLRQ
WKDWXQODZIXOGLVFULPLQDWLRQZDVDWOHDVWDPRWLYDWLQJIDFWRU
LQ WKH HPSOR\HU V DFWLRQV DQG WKHUHIRUH KH KDV QRW
HVWDEOLVKHG D SULPD IDFLH FDVH XQGHU /DGHUDFK ,G
6SHFLILFDOO\ZKHQWKHFRPPHQWLVSODFHGLQWKHFRQWH[WRIWKH
WHUPLQDWLRQ KHDULQJ GRFXPHQWLQJ VSHFLILF DOOHJDWLRQV RI
PLVFRQGXFWDQ\UHDVRQDEOHWULHURIIDFWZRXOGFRQFOXGHWKDW
WKHFRPPHQWZDVFULWLFDORI/DXWHUPLOFK VEHKDYLRUQRWKLV
VH[RUJHQGHU
1R /DXWHUPLOFKY)LQGOD\&LW\6FKRROV
(YHQLI/DXWHUPLOFKKDGHVWDEOLVKHGDSULPDIDFLHFDVHRI
VH[GLVFULPLQDWLRQWKH6FKRROVZRXOGEHHQWLWOHGWRVXPPDU\
MXGJPHQW 7KH 6FKRROV KDYH DUWLFXODWHG D OHJLWLPDWH
QRQGLVFULPLQDWRU\ UHDVRQ IRU /DXWHUPLOFK V GLVFKDUJH DQG
/DXWHUPLOFKKDVQRWSURYLGHGDQ\VLJQLILFDQWHYLGHQFHWKDWWKH
VWDWHGUHDVRQVIRUKLVWHUPLQDWLRQZHUHSUHWH[WXDO
)LUVW$PHQGPHQW
,Q GHWHUPLQLQJ ZKHWKHU /DXWHUPLOFK V VSHHFK ZDV
FRQVWLWXWLRQDOO\SURWHFWHGWKHFRXUWPXVWGHWHUPLQHZKHWKHU
/DXWHUPLOFK V VSHHFK FDQ EH IDLUO\ FKDUDFWHUL]HG DV
FRQVWLWXWLQJVSHHFKRQDPDWWHURISXEOLFFRQFHUQ&RQQLFN
Y0\HUV86 :KHWKHUDQHPSOR\HH V
VSHHFK DGGUHVVHV D PDWWHU RI SXEOLF FRQFHUQ PXVW EH
GHWHUPLQHG E\ WKH FRQWHQW IRUP DQG FRQWH[W RI D JLYHQ
VWDWHPHQWDVUHYHDOHGE\WKHZKROHUHFRUG,GDW
5HYLHZLQJ WKH UHFRUG LQ D OLJKW PRVW IDYRUDEOH WR
/DXWHUPLOFKQRQHRI/DXWHUPLOFK VVSHHFKDGGUHVVHVDPDWWHU
RISXEOLFFRQFHUQ
$)),50('

-- 6 of 6 --