03a0168p.06

02-5079Court of Appeals for the Sixth CircuitJun 2, 2003

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
67(3+(1 $0(/.,1HWDO
3ODLQWLIIV$SSHOODQWV
Y
$11 0&&/85(HWDO
'HIHQGDQWV$SSHOOHHV
;!

1
1R
$SSHDOIURPWKH8QLWHG6WDWHV'LVWULFW&RXUW
IRUWKH:HVWHUQ'LVWULFWRI.HQWXFN\DW/RXLVYLOOH
1R²-RKQ*+H\EXUQ,,&KLHI'LVWULFW-XGJH
$UJXHG0D\
'HFLGHGDQG)LOHG-XQH
%HIRUH.583$16.<6,/(5DQG*,/0$1&LUFXLW
-XGJHV
BBBBBBBBBBBBBBBBB
&2816(/
$5*8(' 'RQDOG / &R[ /<1&+ &2; *,/0$1
0$+$1/RXLVYLOOH.HQWXFN\IRU$SSHOODQWV-DPHV0
+HUULFN.(178&.<67$7(32/,&(/(*$/2)),&(
)UDQNIRUW.HQWXFN\-RKQ+'Z\HU-U3('/(<=,(/.(
*25',1,(5 /RXLVYLOOH .HQWXFN\ IRU $SSHOOHHV
21 %5,() 'RQDOG / &R[ 0DU\ - /LQWQHU /<1&+
&2; *,/0$1 0$+$1 /RXLVYLOOH .HQWXFN\ IRU
$PHONLQHWDOY0F&OXUHHWDO 1R
$SSHOODQWV -DPHV 0 +HUULFN .(178&.< 67$7(
32/,&(/(*$/2)),&()UDQNIRUW.HQWXFN\/DXUHQFH-
=LHONH 3('/(< =,(/.( *25',1,(5 /RXLVYLOOH
.HQWXFN\ ' %UHQW ,UYLQ 2)),&( 2) 7+( $77251(<
*(1(5$/)UDQNIRUW.HQWXFN\IRU$SSHOOHHV
BBBBBBBBBBBBBBBBB
23,1,21
BBBBBBBBBBBBBBBBB
521$/' /(( *,/0$1 &LUFXLW -XGJH $ QXPEHU RI
DWWRUQH\V DQG FKLURSUDFWRUV ILOHG VXLW WR FKDOOHQJH WKH
FRQVWLWXWLRQDOLW\RIWZR.HQWXFN\VWDWXWHVWKDWUHVWULFWWKHLU
DFFHVVWRDFFLGHQWUHSRUWVILOHGZLWKWKH'HSDUWPHQWRI6WDWH
3ROLFH7KHGLVWULFWFRXUWJUDQWHGVXPPDU\MXGJPHQWLQIDYRU
RI WKH GHIHQGDQWV )RU WKH UHDVRQV VHW IRUWK EHORZ ZH
$)),50WKHMXGJPHQWRIWKHGLVWULFWFRXUW
,%$&.*5281'
,Q .HQWXFN\ DPHQGHG † RI LWV 5HYLVHG
6WDWXWHVIRUWKHRVWHQVLEOHSXUSRVHRISURWHFWLQJWKHSULYDF\
RIDFFLGHQWYLFWLPV6XEVHFWLRQV DQG RIWKHVWDWXWH
FXUUHQWO\SURYLGHDVIROORZV
$OO DFFLGHQW UHSRUWV ILOHG ZLWK WKH 'HSDUWPHQW RI
6WDWH 3ROLFH LQ FRPSOLDQFH ZLWK VXEVHFWLRQ DERYH
VKDOOUHPDLQFRQILGHQWLDOH[FHSWWKDWWKHGHSDUWPHQWPD\
GLVFORVHWKHLGHQWLW\RIDSHUVRQLQYROYHGLQDQDFFLGHQW
ZKHQ KLV LGHQWLW\ LV QRW RWKHUZLVH NQRZQ RU ZKHQ KH
GHQLHVKLVSUHVHQFHDWDQDFFLGHQW([FHSWDVSURYLGHGLQ
VXEVHFWLRQ RIWKLVVHFWLRQDOORWKHUDFFLGHQWUHSRUWV
UHTXLUHGE\WKLVVHFWLRQDQGWKHLQIRUPDWLRQFRQWDLQHGLQ
WKHUHSRUWVVKDOOEHFRQILGHQWLDODQGH[HPSWIURPSXEOLF
GLVFORVXUHH[FHSWZKHQSURGXFHGSXUVXDQWWRDSURSHUO\
H[HFXWHGVXESRHQDRUFRXUWRUGHURUH[FHSWSXUVXDQWWR
VXEVHFWLRQ RI WKLV VHFWLRQ 7KHVH UHSRUWV VKDOO EH
PDGH DYDLODEOH RQO\ WR WKH SDUWLHV WR WKH DFFLGHQW WKH
SDUHQWV RU JXDUGLDQV RI D PLQRU ZKR LV SDUW\ WR WKH

-- 1 of 6 --

1R $PHONLQHWDOY0F&OXUHHWDO
DFFLGHQWDQGWKHLQVXUHUVRIDQ\SDUW\ZKRLVWKHVXEMHFW
RIWKHUHSRUWRUWRWKHDWWRUQH\VRIWKHSDUWLHV
7KH UHSRUW VKDOO EH PDGH DYDLODEOH WR D
QHZVJDWKHULQJRUJDQL]DWLRQVROHO\IRUWKHSXUSRVHRI
SXEOLVKLQJRUEURDGFDVWLQJWKHQHZV7KHQHZVJDWKHULQJ
RUJDQL]DWLRQ VKDOO QRW XVH RU GLVWULEXWH WKH UHSRUW RU
NQRZLQJO\DOORZLWVXVHRUGLVWULEXWLRQIRUDFRPPHUFLDO
SXUSRVH RWKHU WKDQ WKH QHZVJDWKHULQJ RUJDQL]DWLRQ¶V
SXEOLFDWLRQ RU EURDGFDVWLQJ RI WKH LQIRUPDWLRQ LQ WKH
UHSRUW$QHZVSDSHUSHULRGLFDORUUDGLRRUWHOHYLVLRQ
VWDWLRQ VKDOO QRW EH KHOG WR KDYH XVHG RU NQRZLQJO\
DOORZHGWKHXVHRIWKHUHSRUWIRUDFRPPHUFLDOSXUSRVH
PHUHO\EHFDXVHRILWVSXEOLFDWLRQRUEURDGFDVW
.\5HY6WDW$QQ† 0LFKLHVXSS
$OPRVWLPPHGLDWHO\DIWHU†ZDVDPHQGHGDJURXS
RIFKLURSUDFWRUVDQGDWWRUQH\VILOHGVXLWDJDLQVW$QQ0F&OXUH
DFXVWRGLDQRIDFFLGHQWUHSRUWVDWDORFDOVWDWHSROLFHSRVW
DQGDQDVVRUWPHQWRIRWKHUJRYHUQPHQWRIILFLDOVVHHNLQJDQ
LQMXQFWLRQDJDLQVWLWVHQIRUFHPHQW,Q$XJXVWRIWKH
GLVWULFW FRXUW LVVXHG D SUHOLPLQDU\ LQMXQFWLRQ WR HQMRLQ WKH
HQIRUFHPHQWRI†DIWHUFRQFOXGLQJWKDWWKHVWDWXWH
LPSHUPLVVLEO\UHVWULFWHGFRPPHUFLDOVSHHFK7KHGHIHQGDQWV
LPPHGLDWHO\ DSSHDOHG ,Q )HEUXDU\ RI WKLV FRXUW
GLVVROYHGWKHSUHOLPLQDU\LQMXQFWLRQDQGUHPDQGHGWKHFDVH
EDFNWRWKHGLVWULFWFRXUWEHFDXVHRQHRIWKHGHIHQGDQWVKDG
QRWKDGDQRSSRUWXQLW\WRRSSRVHWKHSODLQWLIIV¶PRWLRQIRU
LQMXQFWLYHUHOLHI $PHONLQY0F&OXUH1R
:/ WK&LU-DQ $PHONLQ,
7KH SODLQWLIIV WKHQ ILOHG D VHFRQG DPHQGHG FRPSODLQW
7KHLUSULQFLSDOQHZDOOHJDWLRQZDVDFODLPWKDWGXULQJWKH
WLPHWKDW†KDGEHHQHQMRLQHGWKHGHIHQGDQWVKDG
DSSOLHG † RI WKH .HQWXFN\ 5HYLVHG 6WDWXWHV LQ DQ
XQFRQVWLWXWLRQDO PDQQHU 6HFWLRQ SURYLGHV LQ
SHUWLQHQWSDUWDVIROORZV³7KHSXEOLFDJHQF\PD\SUHVFULEH
D UHDVRQDEOH IHH IRU PDNLQJ FRSLHV RI QRQH[HPSW SXEOLF
UHFRUGVUHTXHVWHGIRUXVHIRUQRQFRPPHUFLDOSXUSRVHVZKLFK
VKDOO QRW H[FHHG WKH DFWXDO FRVW RI UHSURGXFWLRQ ´
$PHONLQHWDOY0F&OXUHHWDO 1R
$FFRUGLQJ WR WKH SODLQWLIIV WKH GHIHQGDQWV FKDUJHG WKHP
EHWZHHQ DQG SHU DFFLGHQW UHSRUW GXULQJ WKH
SHQGHQF\ RI WKH LQMXQFWLRQ DOWKRXJK EHIRUH WKDW WLPH WKH
FRS\LQJIHHZDVRQO\FHQWVSHUSDJH7KHSODLQWLIIVVRXJKW
DQLQMXQFWLRQDJDLQVWWKHHQIRUFHPHQWRI†,Q-XQHRI
WKH GLVWULFW FRXUW SUHOLPLQDULO\ DQG SHUPDQHQWO\
HQMRLQHG HQIRUFHPHQW RI ERWK †† DQG
$PHONLQY&RPP¶U'HS¶WRI6WDWH3ROLFH)6XSS
:'.\
7KHGHIHQGDQWVDSSHDOHG7KLVFRXUWDIILUPHGWKHGLVWULFW
FRXUW¶VGHFLVLRQWRHQMRLQWKHHQIRUFHPHQWRI†EXW
YDFDWHG WKH LQMXQFWLRQ DJDLQVW † DQG UHPDQGHG IRU
UHFRQVLGHUDWLRQEHFDXVHWKHGLVWULFWFRXUWKDGIDLOHGWRSURYLGH
DQ\ILQGLQJVRIIDFWRUFRQFOXVLRQVRIODZDVWRWKDWVHFWLRQ
$PHONLQY0F&OXUH)G WK&LU $PHONLQ
,, 7KH GHIHQGDQWV WKHQ VRXJKW UHYLHZ E\ WKH 6XSUHPH
&RXUW
$IWHUJUDQWLQJ FHUWLRUDULWKH6XSUHPH&RXUWYDFDWHGWKH
6L[WK &LUFXLW¶VGHFLVLRQDQGUHPDQGHGWKHFDVHIRUIXUWKHU
FRQVLGHUDWLRQLQOLJKWRI/RV$QJHOHV3ROLFH'HSDUWPHQWY
8QLWHG5HSRUWLQJ3XEOLVKLQJ&RUS86 ,Q
8QLWHG5HSRUWLQJWKH6XSUHPH&RXUWKHOGWKDWD&DOLIRUQLD
VWDWXWHWKDWSODFHGFRQGLWLRQVRQSXEOLFDFFHVVWRWKHUHFRUGV
RIUHFHQWDUUHVWHHV¶DGGUHVVHVZDVQRWVXVFHSWLEOHWRDIDFLDO
FKDOOHQJH UHJDUGLQJ LWV FRQVWLWXWLRQDOLW\ 7KLV FRXUW
FRQFOXGHG XSRQ UHPDQG WKDW † ZDV VLPLODUO\ QRW
VXEMHFWWRDIDFLDOFKDOOHQJH$FFRUGLQJO\WKHGLVWULFWFRXUW¶V
LQMXQFWLRQDJDLQVWWKHHQIRUFHPHQWRI†ZDVUHYHUVHG
DQGWKHFDVHUHPDQGHGVRWKDWWKHGLVWULFWFRXUWFRXOGFRQVLGHU
WKH SODLQWLIIV¶ FKDOOHQJH WR WKH VWDWXWH DV DSSOLHG WR WKHP
$PHONLQY0F&OXUH)G $PHONLQ,,,
,Q-XQHRIWKHGLVWULFWFRXUWGLVVROYHGDOOLQMXQFWLRQV
WKDWKDGSUHYLRXVO\EHHQHQWHUHGLQWKHFDVH%RWKSDUWLHV
WKHQ PRYHG IRU VXPPDU\ MXGJPHQW 7KH GLVWULFW FRXUW
FRQFOXGHG WKDW † GLG QRW DEULGJH WKH SODLQWLIIV¶
FRQVWLWXWLRQDOULJKWVDQGWKDWWKHFKDOOHQJHWR†ZDV
PRRWEHFDXVHWKHSODLQWLIIVZHUHQRWHQWLWOHGWRREWDLQFRSLHV

-- 2 of 6 --

1R $PHONLQHWDOY0F&OXUHHWDO
RI WKH DFFLGHQW UHSRUWV DW DQ\ SULFH ,W WKHUHIRUH DZDUGHG
VXPPDU\MXGJPHQWLQIDYRURIWKHGHIHQGDQWV$PHONLQY
0F&OXUH)6XSSG :'.\ 7KLVWLPHO\
DSSHDOIROORZHG
,,$1$/<6,6
:HUHYLHZWKHGLVWULFWFRXUW¶VJUDQWRIVXPPDU\MXGJPHQW
GHQRYR6SHUOHY0LFK'HS¶WRI&RUU)G
WK&LU 6XPPDU\MXGJPHQWLVSURSHUZKHUHWKHUHLV
QRJHQXLQHLVVXHDVWRDQ\PDWHULDOIDFWDQGWKHPRYLQJSDUW\
LVHQWLWOHGWRMXGJPHQWDVDPDWWHURIODZ)HG5&LY3
F
%HFDXVHERWKVLGHVLQWKHSUHVHQWFDVHPRYHGIRUVXPPDU\
MXGJPHQW³>W@KHUHLVQRGLVSXWHUHJDUGLQJWKHPDWHULDOIDFWV
RI WKLV FDVH LQGHHG HDFK SDUW\ LQVLVWV WKDW WKH IDFWV DV
SUHVHQWHGWRWKHGLVWULFWFRXUWUHTXLUHVXPPDU\MXGJPHQWLQ
KLVRUKHUIDYRU´.LQFDLGY*LEVRQ)G WK
&LU HQEDQF :HPD\WKHUHIRUHDVVXPHDOWKRXJKZH
DUHQRWREOLJDWHGWRGRVR³WKDWWKHUHLVQRHYLGHQFHZKLFK
QHHGVWREHFRQVLGHUHGRWKHUWKDQWKDWZKLFKKDVEHHQILOHGE\
WKHSDUWLHV´,GDW
$VDQLQLWLDOPDWWHUWKHGHIHQGDQWVFRQWHQGWKDWWKHODZRI
WKH FDVH EDUV DQ\ DUJXPHQW WKDW † YLRODWHV WKH
SODLQWLIIV¶)LUVW$PHQGPHQWULJKWV7KH\FODLPWKDW³>W@KH
H[DFW LVVXH QRZ DUJXHG E\ $SSHOODQWV²ZKHWKHU .56
DEULGJHVWKHLUIUHHGRPRIVSHHFK²KDVDOUHDG\EHHQ
DQVZHUHG LQ WKH QHJDWLYH E\ WKLV &RXUW´ (PSKDVLV LQ
RULJLQDO 7KLVFRQWHQWLRQLVLQFRUUHFW7KHFRXUWLQ$PHONLQ
,,,GHFLGHGRQO\WKDW³†LVQRWVXEMHFWWRDIDFLDO
FKDOOHQJH´)GDW,WWKHUHIRUH³UHYHUVH>G@DQG
UHPDQG>HG@ WKH FDVH IRU WKH GLVWULFW FRXUW WR FRQVLGHU WKH
SODLQWLIIV¶DVDSSOLHGFKDOOHQJH´,G
$³IDFLDORYHUEUHDGWKFKDOOHQJHWRDVWDWXWHLVDQH[FHSWLRQ
WRWKHWUDGLWLRQDOUXOHWKDWDSHUVRQWRZKRPDVWDWXWHPD\
FRQVWLWXWLRQDOO\EHDSSOLHGPD\QRWFKDOOHQJHWKDWVWDWXWHRQ
WKH JURXQG WKDW LW PD\ FRQFHLYDEO\ EH DSSOLHG
XQFRQVWLWXWLRQDOO\ WR RWKHUV LQ VLWXDWLRQV QRW EHIRUH WKH
$PHONLQHWDOY0F&OXUHHWDO 1R
&RXUW´/RV$QJHOHV3ROLFH'HS¶WY8QLWHG5HSRUWLQJ3XEO¶J
&RUS 86 LQWHUQDO TXRWDWLRQ PDUNV
RPLWWHG 6HHJHQHUDOO\5LFKDUG+)DOORQ-U$V$SSOLHG
DQG)DFLDO&KDOOHQJHVDQG7KLUG3DUW\6WDQGLQJ+DUY
/5HY LGHQWLI\LQJDQGHYDOXDWLQJWKHQDWXUHRI
³IDFLDO´DQG³RYHUEUHDGWK´FKDOOHQJHV 7KLVH[FHSWLRQKDV
WZRGLVWLQFWDVSHFWVLWGHWHUPLQHV ZKRPD\FKDOOHQJHD
VWDWXWHDQG RQZKDWJURXQGVDVWDWXWHPD\EHFKDOOHQJHG
,Q 8QLWHG 5HSRUWLQJ WKH LQIRUPDWLRQJDWKHULQJ SODLQWLII
VRXJKWWRFKDOOHQJHWKHVWDWXWHRQWKHJURXQGWKDWLWYLRODWHG
WKH ULJKWV RI WKLUG SDUWLHV 8QLWHG 5HSRUWLQJ¶V FXVWRPHUV
%HFDXVH WKH 6XSUHPH &RXUW KHOG WKDW D IDFLDO RYHUEUHDGWK
FKDOOHQJHZDVXQDYDLODEOHWKHSODLQWLIIZDVQRWWKHSURSHU
SDUW\WRVHHNWKHVWDWXWH¶VLQYDOLGDWLRQ8QLWHG5HSRUWLQJKDG
QRW DWWHPSWHG WR TXDOLI\ XQGHU WKH VWDWXWH WR REWDLQ WKH
DGGUHVVHV RI DUUHVWHHV 86 DW DQG LW FRXOG QRW
SURFHHG RQ WKH WKHRU\ WKDW DOWKRXJK WKH ODZ PLJKW EH
FRQVWLWXWLRQDO DV WR LWVHOI LW FRXOG QRW EH FRQVWLWXWLRQDOO\
DSSOLHGWRRWKHUVLGDW
7KHLQVWDQWFDVHGLIIHUVLQWKDWWKHSODLQWLIIVKDYHLQIDFW
VRXJKWWRREWDLQDFFLGHQWUHSRUWVILOHGZLWKWKH'HSDUWPHQWRI
6WDWH3ROLFH7KH\DUHWKXVDVVHUWLQJWKDW†YLRODWHV
WKHLUSHUVRQDO)LUVW$PHQGPHQWULJKWV,QDVVHUWLQJWKHLURZQ
ULJKWVKRZHYHUWKHSODLQWLIIVFDQQRWSUHYDLORQWKHWKHRU\
WKDW†FXUWDLOVWKHULJKWVRIRWKHUSDUWLHVQRWEHIRUH
WKH FRXUW $PHONLQ ,, IDLOHG WR UHFRJQL]H WKLV SRLQW DQG
LQVWHDGLPSURSHUO\IRFXVHGRQWKHUHVWULFWLRQVWKDWWKHVWDWXWH
SODFHGXSRQQHZVJDWKHULQJRUJDQL]DWLRQVUDWKHUWKDQXSRQ
WKH SODLQWLIIV )G DW 5HPDQG ZDV WKHUHIRUH
UHTXLUHGE\WKH6XSUHPH&RXUWVRWKDWERWKWKHGLVWULFWFRXUW
DQGWKLVFRXUWFRXOGGHFLGHZKHWKHUWKHVWDWXWHDVDSSOLHGWR
WKHSODLQWLIIVZDVXQFRQVWLWXWLRQDO$PHONLQ,,,)GDW
7KH SODLQWLIIV¶ ³DV DSSOLHG´ FKDOOHQJH WR WKH
FRQVWLWXWLRQDOLW\RI†WKXVUHPDLQVWREHDGGUHVVHGE\
WKLVFRXUW6HH8QLWHG5HSRUWLQJ86DW 6FDOLD-
FRQFXUULQJ FODULI\LQJ WKDW ZKHWKHU WKH VWDWXWH ZDV
VXVFHSWLEOHWRDIDFLDORYHUEUHDGWKFKDOOHQJHZDV³DQHQWLUHO\
GLIIHUHQW TXHVWLRQ >WKDQ@ ZKHWKHU D UHVWULFWLRQ XSRQ DFFHVV

-- 3 of 6 --

1R $PHONLQHWDOY0F&OXUHHWDO
WKDW DOORZV DFFHVV WR WKH SUHVV EXW DW WKH VDPH WLPH
GHQLHVDFFHVVWRSHUVRQVZKRZLVKWRXVHWKHLQIRUPDWLRQIRU
FHUWDLQ VSHHFK SXUSRVHV LV LQ UHDOLW\ D UHVWULFWLRQ XSRQ
VSHHFK´DQGQRWLQJWKDWWKHODWWHUTXHVWLRQ³LVQRWDGGUHVVHG
LQWKH&RXUW¶VRSLQLRQ´ HPSKDVLVLQRULJLQDO
:H WKHUHIRUH WXUQ WR WKH PHULWV RI WKH FRQVWLWXWLRQDO
FKDOOHQJH WR † DV DSSOLHG WR WKH SODLQWLIIV 7KH\
DUJXH WKDW .HQWXFN\ KDV VRXJKW WR UHVWULFW WKHLU VSHHFK
LQGLUHFWO\ DQG WKDW ZH VKRXOG HYDOXDWH WKH VWDWXWH¶V
FRQVWLWXWLRQDOLW\E\DSSO\LQJWKHSULQFLSOHVHQXQFLDWHGE\WKH
6XSUHPH&RXUWLQ&HQWUDO+XGVRQ*DV (OHFWULF&RUSY
3XEOLF6HUYLFH&RPPLVVLRQ86 &HQWUDO
+XGVRQVHWVIRUWKDIRXUSDUWWHVWWRGHWHUPLQHWKHYDOLGLW\RI
UHVWULFWLRQVRQFRPPHUFLDOVSHHFK:HDUHRIWKHRSLQLRQ
KRZHYHUWKDWWKHSODLQWLIIV¶DUJXPHQWLVLQDSSRVLWH
6HFWLRQLQVRIDUDVLWDSSOLHVWRWKHSODLQWLIIVGRHV
QRW UHVWULFW RU HYHQ UHJXODWH H[SUHVVLRQ 5DWKHU LW VLPSO\
UHVWULFWVDFFHVVWRFRQILGHQWLDOLQIRUPDWLRQSRVVHVVHGE\WKH
JRYHUQPHQW &RXQVHO IRU WKH SODLQWLIIV FRQWHQGHG DW RUDO
DUJXPHQW WKDW † UHVWULFWV WKH XVHV WR ZKLFK WKH
SODLQWLIIVPD\SXWDFFLGHQWUHSRUWVLIDQGZKHQWKH\REWDLQWKH
UHSRUWV %XW WKH VWDWXWH LPSRVHV QR VXFK UHVWULFWLRQ ,W
SURKLELWV QHZVJDWKHULQJ RUJDQL]DWLRQV WKDW KDYH REWDLQHG
DFFLGHQWUHSRUWVIURPXVLQJWKHPIRUFRPPHUFLDOSXUSRVHV
%HFDXVH WKLV FDVH LQ LWV SUHVHQW SRVWXUH LV QRW D IDFLDO
FKDOOHQJHKRZHYHUWKHSODLQWLIIVFDQQRWSUHYDLORQWKHEDVLV
WKDWWKHVWDWXWHPD\EHXQFRQVWLWXWLRQDODVDSSOLHGWRQHZV
JDWKHULQJRUJDQL]DWLRQVWKDWKDYHREWDLQHGDFFLGHQWUHSRUWV
$VVXPLQJ WKDW WKH SODLQWLIIV FRXOG REWDLQ LQIRUPDWLRQ
UHJDUGLQJDFFLGHQWYLFWLPVWKHVWDWXWHLQTXHVWLRQSODFHVQR
UHVWULFWLRQ RQ KRZ WKH\ PD\ XVH WKDW LQIRUPDWLRQ :H
WKHUHIRUH FRQFOXGH WKDW SUHFHGHQW FRQFHUQLQJ JRYHUQPHQW
UHJXODWLRQRIFRPPHUFLDOVSHHFKGRHVQRWSURYLGHWKHFRUUHFW
IUDPHZRUNIRUDQDO\]LQJWKLVFDVH
2Q WKH RWKHU KDQG WR WKH H[WHQW WKDW WKH GHIHQGDQWV¶
DUJXPHQWH[WHQGVEH\RQGWKHLUFRQWHQWLRQWKDWWKHODZRIWKH
FDVH FRQWUROV WKH PHULWV RI WKH SODLQWLIIV¶ FODLP WKH\
$PHONLQHWDOY0F&OXUHHWDO 1R
PLVFKDUDFWHUL]H † 7KH GHIHQGDQWV DVVHUW WKDW WKH
VWDWXWHLVLQHIIHFWDEODQNHWSURKLELWLRQRQWKHGLVFORVXUHRI
DFFLGHQW UHSRUWV DQG WKH\ DUJXH WKDW WKH SODLQWLIIV DUH
HVVHQWLDOO\ VHHNLQJ DQ H[HPSWLRQ WR D ODZ WKDW RWKHUZLVH
DSSOLHVHTXDOO\WRHYHU\RQH6HFWLRQKRZHYHULVQRW
DIODWEDQRQWKHGLVVHPLQDWLRQRIDFFLGHQWUHSRUWVE\WKHVWDWH
SROLFH,QVWHDGWKHVWDWXWHSHUPLWVGLVFORVXUH³WRWKHSDUWLHV
WRWKHDFFLGHQWWKHSDUHQWVRUJXDUGLDQVRIDPLQRUZKRLV
SDUW\WRWKHDFFLGHQWDQGWKHLQVXUHUVRIDQ\SDUW\ZKRLVWKH
VXEMHFWRIWKHUHSRUWRUWRWKHDWWRUQH\VRIWKHSDUWLHV´DVZHOO
DV WR ³QHZVJDWKHULQJ´ RUJDQL]DWLRQV 7KHVH H[FHSWLRQV
UHIXWHWKHGHIHQGDQWV¶DUJXPHQWWKDWWKHEDQDSSOLHVDFURVVWKH
ERDUG
1HLWKHUSDUW\WKHUHIRUHSURYLGHVDSHUVXDVLYHDQDO\VLVRI
WKHFRQVWLWXWLRQDOLW\RI†7KHVWDWXWHLVQHLWKHUD
GLUHFWUHJXODWLRQRIH[SUHVVLRQQRUDSXUHO\FRQWHQWQHXWUDO
ODZRIJHQHUDODSSOLFDWLRQ%HFDXVH.HQWXFN\¶VVWDWXWHVLWV
EHWZHHQWKHVHWZRSRVLWLRQVZHLQVWHDGFRQVLGHUWKHQDWXUH
RI WKH FRQVWLWXWLRQDO REMHFWLRQV WKDW PLJKW EH UDLVHG WR D
VWDWXWHWKDWWUHDWVFHUWDLQSRWHQWLDOVSHDNHUVPRUHIDYRUDEO\
WKDQRWKHUV
(YHU\ -XVWLFH ZKR H[SUHVVHG DQ RSLQLRQ LQ 8QLWHG
5HSRUWLQJLQGLFDWHGWKDWDVWDWH³FRXOGGHFLGHQRWWRJLYHRXW
>DFFLGHQW UHSRUWV@ DW DOO ZLWKRXW YLRODWLQJ WKH )LUVW
$PHQGPHQW´86DW%XWDPDMRULW\RIWKH-XVWLFHV
DOVRPDGHFOHDUWKDWDVWDWH³FRXOGQRWIRUH[DPSOHUHOHDVH
>DFFLGHQWUHSRUWV@RQO\WRWKRVHZKRVHSROLWLFDOYLHZVZHUHLQ
OLQH ZLWK WKH SDUW\ LQ SRZHU´ ,G DW *LQVEXUJ -
FRQFXUULQJ VHHDOVRLGDW 6WHYHQV-GLVVHQWLQJ
7KLVVHFRQGSURSRVLWLRQGHULYHVIURPWKH³XQFRQVWLWXWLRQDO
FRQGLWLRQV´GRFWULQHZKLFK³KROGVWKDWJRYHUQPHQWPD\QRW
JUDQWDEHQHILWRQWKHFRQGLWLRQWKDWWKHEHQHILFLDU\VXUUHQGHU
DFRQVWLWXWLRQDOULJKWHYHQLIWKHJRYHUQPHQWPD\ZLWKKROG
WKDW EHQHILW DOWRJHWKHU´ .DWKOHHQ 0 6XOOLYDQ
8QFRQVWLWXWLRQDO&RQGLWLRQV+DUY/5HY
)RUH[DPSOHLQ%RDUGRI&RXQW\&RPPLVVLRQHUVY
8PEHKU86 ZKLFK-XVWLFH*LQVEXUJFLWHG

-- 4 of 6 --

1R $PHONLQHWDOY0F&OXUHHWDO
LQ8QLWHG5HSRUWLQJWKH&RXUWKHOGWKDWWKH)LUVW$PHQGPHQW
SUHYHQWHGDFRXQW\IURPWHUPLQDWLQJWKHDWZLOOHPSOR\PHQW
RIDQLQGHSHQGHQWFRQWUDFWRURQWKHEDVLVWKDWWKHFRXQW\ZDV
XQKDSS\ZLWKWKHSROLWLFDOYLHZVH[SUHVVHGE\WKHFRQWUDFWRU
%XW†DWOHDVWDVDSSOLHGWRWKHSODLQWLIIVGRHVQRW
FRQGLWLRQWKHGLVFORVXUHRIDFFLGHQWUHSRUWVRQWKHQDWXUHRI
WKHUHFLSLHQW¶VVSHHFK,WWKHUHIRUHGRHVQRWSUHVHQWWKHW\SH
RIXQFRQVWLWXWLRQDOFRQGLWLRQVSUREOHPIRXQGLQ8PEHKU
7KHVWDWXWHZRXOGDOVREHFRQVWLWXWLRQDOO\VXVSHFWLILWKDG
VLQJOHG RXW D VPDOO JURXS IRU XQIDYRUDEOH WUHDWPHQW EDVHG
HLWKHURQWKHFRQWHQWRUWKHYLHZSRLQWRIWKHJURXS¶VVSHHFK
6HH$UNDQVDV:ULWHUV¶3URMHFW,QFY5DJODQG86
KROGLQJDVWDWHVDOHVWD[VFKHPHXQFRQVWLWXWLRQDO
WKDW WD[HG JHQHUDOLQWHUHVW PDJD]LQHV EXW H[HPSWHG
QHZVSDSHUV DQG UHOLJLRXV SURIHVVLRQDO WUDGH DQG VSRUWV
PDJD]LQHV ,I IRU H[DPSOH WKH VWDWXWH SURYLGHG IRU WKH
GLVFORVXUH RI DFFLGHQW UHSRUWV WR WKH JHQHUDO SXEOLF EXW
SURKLELWHGWKHLUGLVFORVXUHWRDWWRUQH\VDQGFKLURSUDFWRUVWKLV
SULQFLSOHZRXOGEHLPSOLFDWHG6HH/HJL7HFK,QFY.HLSHU
)G G &LU KROGLQJ D VWDWH VWDWXWH
XQFRQVWLWXWLRQDOWKDWSHUPLWWHGWKHJHQHUDOSXEOLFWRDFFHVVD
VWDWHPDLQWDLQHGGDWDEDVHRISHQGLQJOHJLVODWLRQEXWGHQLHG
VXFKDFFHVVWR³WKRVHHQWLWLHVZKLFKRIIHUIRUVDOHWKHVHUYLFHV
RIDQHOHFWURQLFLQIRUPDWLRQUHWULHYDOV\VWHPZKLFKFRQWDLQV
GDWDUHODWLQJWRWKHSURFHHGLQJVRIWKHOHJLVODWXUH´
6HFWLRQKRZHYHUGRHVQRWRSHUDWHLQWKLVPDQQHU
,WSURKLELWVGLVFORVXUHWRDOOEXWQHZVJDWKHULQJRUJDQL]DWLRQV
DQGWKRVHLQGLYLGXDOVZLWKDSHUVRQDOLQWHUHVWLQWKHDFFLGHQW
$WRUDODUJXPHQWFRXQVHOIRUWKHSODLQWLIIVVXJJHVWHGWKDWWKH
VWDWXWHJUDQWVDFFHVVWRDFFLGHQWUHSRUWVWRHYHU\RQHH[FHSW
WKRVHZKRLQWHQGWRXVHWKHUHSRUWVLQFRPPHUFLDOVSHHFK
%XWWKLVLVVLPSO\QRWDSODXVLEOHLQWHUSUHWDWLRQRI†
7KHVWDWXWHGRHVQRWVSHFLILFDOO\GLVIDYRUGLVFUHWHJURXSVRQ
FRQWHQWUHODWHGJURXQGV
,Q VXP DSSOLFDEOH 6XSUHPH &RXUW SUHFHGHQW GRHV QRW
VXJJHVWWKDW†RIIHQGVWKH)LUVW$PHQGPHQWULJKWVRI
WKH SODLQWLIIV 7KH VWDWXWH DV DSSOLHG WR WKHP LV WKHUHIRUH
$PHONLQHWDOY0F&OXUHHWDO 1R
FRQVWLWXWLRQDO LI LW VDWLVILHV WKH UHTXLUHPHQWV RI WKH (TXDO
3URWHFWLRQ&ODXVH7KDWLV†PXVWUDWLRQDOO\IXUWKHU
DOHJLWLPDWHVWDWHLQWHUHVW5RPHUY(YDQV86
³>,@IDODZQHLWKHUEXUGHQVDIXQGDPHQWDOULJKWQRU
WDUJHWV D VXVSHFW FODVV ZH ZLOO XSKROG WKH OHJLVODWLYH
FODVVLILFDWLRQVRORQJDVLWEHDUVDUDWLRQDOUHODWLRQWRVRPH
OHJLWLPDWHHQG´
3ODLQWLIIV¶FRXQVHOVXJJHVWHGDWRUDODUJXPHQWWKDWWKHFRXUW
DOUHDG\GHFLGHGWKLVLVVXHLQ$PHONLQ,,DQGWKDWWKHODZRI
WKHFDVH GRFWULQH SUHFOXGHV LWV UHFRQVLGHUDWLRQ KHUH :H
GLVDJUHH $OWKRXJK WKH FRXUW LQ $PHONLQ ,, GLG VWDWH WKDW
³>W@KHUHLVQRUDWLRQDOEDVLVIRUDVWDWXWHZKLFKSXUSRUWVWR
DGYDQFHWKHJRYHUQPHQWDOLQWHUHVWLQSURWHFWLQJWKHSULYDF\RI
DFFLGHQW YLFWLPV WR DOORZ WKHLU QDPHV DQG DGGUHVVHV WR EH
SXEOLVKHGRUEURDGFDVWWRWKHJHQHUDOSXEOLF´)GDW
WKLVVWDWHPHQWZDVPDGHLQWKHFRQWH[WRIGHFLGLQJZKHWKHU
WKHVWDWXWHVDWLVILHGWKHUHTXLUHPHQWVRIWKH)LUVW$PHQGPHQW
IRU UHVWULFWLRQV RQ FRPPHUFLDO VSHHFK 7KH FRXUW GLG QRW
SXUSRUWWRDGGUHVVWKHHTXDOSURWHFWLRQLVVXH
,Q DQ\ HYHQW WKH 6XSUHPH &RXUW YDFDWHG WKLV FRXUW¶V
MXGJPHQWLQ$PHONLQ,,7KH6L[WK&LUFXLW¶VUHDVRQLQJLQWKH
YDFDWHGGHFLVLRQWKXVGRHVQRWRSHUDWHDVWKHODZRIWKHFDVH
6HH6DIHFR,QV&RRI$PY&LW\RI:KLWH+RXVH)G
WK &LU KROGLQJ WKDW ZKHUH WKH FRXUW RI
DSSHDOVKDGYDFDWHGDGLVWULFWFRXUW¶VMXGJPHQWDQGWKHGLVWULFW
FRXUWXSRQUHPDQGKDGUHFRQVLGHUHGWKHLVVXHRIGDPDJHVWKH
³ODZRIWKHFDVH´GLGQRWEDUDSSHOODWHUHYLHZRIWKHDZDUGRI
GDPDJHV &RPPHUFLDO8QLRQ,QV&RY:DOEURRN,QV&R
)G VW&LU ³7KHGRFWULQHRIWKHODZRI
WKHFDVHGLUHFWVWKDWDGHFLVLRQRIDQDSSHOODWHFRXUWRQDQ
LVVXHRIODZXQOHVVYDFDWHGRUVHWDVLGHJRYHUQVWKHLVVXH
GXULQJ DOO VXEVHTXHQW VWDJHV RI OLWLJDWLRQ LQ WKH QLVL SULXV
FRXUWDQGWKHUHDIWHURQDQ\IXUWKHUDSSHDO´ ILUVWHPSKDVLV
DGGHGVHFRQGHPSKDVLVLQRULJLQDO
:H WKHUHIRUH DGGUHVV WKH PHULWV RI WKH HTXDOSURWHFWLRQ
LVVXH 3URWHFWLQJ WKH SULYDF\ RI DFFLGHQW YLFWLPV LV D
OHJLWLPDWH VWDWH LQWHUHVW %\ OLPLWLQJ SXEOLF GLVFORVXUH RI

-- 5 of 6 --

1R $PHONLQHWDOY0F&OXUHHWDO
DFFLGHQWUHSRUWV†UDWLRQDOO\IXUWKHUVWKDWLQWHUHVW
3HUPLWWLQJQHZVJDWKHULQJRUJDQL]DWLRQVWRDFFHVVWKHUHSRUWV
GRHV QRW FRPSOHWHO\ QHJDWH WKLV OHJLWLPDWH LQWHUHVW
.HQWXFN\¶V OHJLVODWXUH PLJKW ZHOO KDYH FRQFOXGHG WKDW WKH
RFFDVLRQDOSXEOLFDWLRQRILQIRUPDWLRQFRQWDLQHGLQDQDFFLGHQW
UHSRUWEHFDXVHRILWVQHZVZRUWK\QDWXUHLVOHVVLQYDVLYHWRWKH
RYHUDOOFODVVRIDFFLGHQWYLFWLPVWKDQWKHP\ULDGRWKHUXVHVWR
ZKLFKVXFKUHSRUWVFRXOGEHSXW7KHOHJLVODWXUHFRXOGKDYH
HDVLO\DVVXPHGWKDWWKHQXPEHURIDFFLGHQWUHSRUWVRILQWHUHVW
WR QHZVJDWKHULQJ RUJDQL]DWLRQV ZRXOG EH LQILQLWHVLPDO DV
FRPSDUHGWRWKHRYHUDOOQXPEHURIDFFLGHQWUHSRUWVRQILOH
6HH:LOOLDPVRQY/HH2SWLFDO&R86
KROGLQJ WKDW DEVHQW LQYLGLRXV GLVFULPLQDWLRQ JRYHUQPHQW
PD\IXUWKHULWVOHJLWLPDWHLQWHUHVWVLQFUHPHQWDOO\
7KH SODLQWLIIV DOVR FODLP WKDW WKH GLVWULFW FRXUW HUUHG LQ
GHWHUPLQLQJ WKDW WKHLU FRQVWLWXWLRQDO FKDOOHQJH WR WKH
DSSOLFDWLRQ RI † ZDV PRRW 7KH\ DUJXH WKDW LI WKH
GLVWULFWFRXUW¶VUXOLQJRQ†LVUHYHUVHGWKH\ZLOODJDLQ
EH VXEMHFW WR H[FHVVLYH IHHV IRU WKH FRS\LQJ RI DFFLGHQW
UHSRUWV,IZHKDGGHFLGHGWKDW†LVXQFRQVWLWXWLRQDO
DVDSSOLHGWRWKHSODLQWLIIVWKHGLVWULFWFRXUWRQUHPDQGZRXOG
KDYHLQGHHGQHHGHGWRFRQVLGHUWKHSODLQWLIIV¶FKDOOHQJHWRWKH
DSSOLFDWLRQRI†%HFDXVHWKHSODLQWLIIVDUHQRWHQWLWOHG
WRWKHDFFLGHQWUHSRUWVWKH\VHHNKRZHYHUWKHGLVWULFWFRXUW
FRUUHFWO\GHFLGHGWKDWWKHLUFKDOOHQJHWR†LVPRRW6HH
7KRPSVRQ Y $VKH )G WK &LU
³%HFDXVH 7KRPSVRQ KDV VKRZQ QR YLRODWLRQ RI KLV
FRQVWLWXWLRQDO ULJKWV WKH TXHVWLRQ RI ZKHWKHU WKH &LW\ RI
.QR[YLOOHLWV0D\RUDQG3ROLFH&KLHIDUHOLDEOHIRUYLRODWLQJ
SODLQWLIIV¶FLYLOULJKWVE\HQIRUFLQJWKHSROLF\LVPRRW´ *RDU
Y &LYLOHWWL )G WK &LU KROGLQJ WKDW
ZKHUH D IRUPHU SULVRQHU DOOHJHG WKDW KLV FRQGLWLRQV RI
FRQILQHPHQW ZHUH XQFRQVWLWXWLRQDO ³WKH LQMXQFWLYH UHOLHI
VRXJKWLVQRZPRRWVLQFH*RDULVQRORQJHULPSULVRQHG´
,,,&21&/86,21
)RU DOO RI WKH UHDVRQV VHW IRUWK DERYH ZH $)),50 WKH
MXGJPHQWRIWKHGLVWULFWFRXUW

-- 6 of 6 --

Continue your research in ChatGPT or Claude

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