00a0225p.06

7KH +RQRUDEOH 3DWULFN - 'XJJDQ 8QLWHG 6WDWHV 'LVWULFW -XGJH IRU
WKH (DVWHUQ 'LVWULFW RI 0LFKLJDQ 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
0$5,/<1 $1'(5621
3ODLQWLII$SSHOODQW
Y
352&7(5 *$0%/(
&203$1< 7+( 352&7(5
*$0%/( ',6$%,/,7< %(1(),7
3/$1
'HIHQGDQWV$SSHOOHHV
;!

1
1R
$SSHDOIURPWKH8QLWHG6WDWHV'LVWULFW&RXUW
IRUWKH:HVWHUQ'LVWULFWRI7HQQHVVHHDW-DFNVRQ
1R²-DPHV'7RGG'LVWULFW-XGJH
6XEPLWWHG$SULO
'HFLGHGDQG)LOHG-XO\
%HIRUH5<$1DQG%2**6&LUFXLW-XGJHVDQG
'8**$1'LVWULFW-XGJH

-- 1 of 8 --

$QGHUVRQY3URFWHU
*DPEOH&RHWDO
1R
BBBBBBBBBBBBBBBBB
&2816(/
21 %5,() -XVWLQ 6 *LOEHUW 7+( *,/%(57 ),50
-DFNVRQ 7HQQHVVHH IRU $SSHOODQW -DQLV : .HVVHU
%$.(5 '21(/621 %($50$1 &$/':(//
0HPSKLV7HQQHVVHHIRU$SSHOOHHV
BBBBBBBBBBBBBBBBB
23,1,21
BBBBBBBBBBBBBBBBB
%2**6&LUFXLW-XGJH7KLVLVDQ(5,6$FDVHLQZKLFK
WKH $SSHOODQW 0DULO\Q $QGHUVRQ D EHQHILFLDU\ RI WKH
$SSHOOHH¶V'LVDELOLW\%HQHILW3ODQVHHNVWRUHFRYHUIRUWKH
FRVWRIOHJDODVVLVWDQFHGXULQJKHUDGPLQLVWUDWLYHDSSHDOWRWKH
3ODQ7UXVWHHV)RUWKHUHDVRQVVHWIRUWKEHORZZHDIILUPWKH
GLVWULFWFRXUW¶VRUGHUGHQ\LQJ$QGHUVRQ¶VUHTXHVWIRUIHHV
,
3URFWHU *DPEOH 3 * KLUHG$QGHUVRQRQ1RYHPEHU
ZKHQVKHZDVWZHQW\\HDUVROG,Q$QGHUVRQ
H[SHULHQFHG QXPEQHVV RQ WKH OHIW VLGH RI KHU ERG\ ORVW
FRRUGLQDWLRQRIKHUOHIWOHJDQGORVWWKHDELOLW\WRGLVWLQJXLVK
WHPSHUDWXUHV6KRUWO\DIWHUH[SHULHQFLQJWKHVHV\PSWRPVVKH
OHDUQHGWKDWVKHZDVVXIIHULQJIURPDGHP\HOLQDWLQJLOOQHVV
'HVSLWHKHUV\PSWRPV$QGHUVRQFRQWLQXHGWRZRUNIRU3 *
XQWLORFFXS\LQJYDULRXVSRVLWLRQVLQ&DOLIRUQLD2KLR
DQGILQDOO\-DFNVRQ7HQQHVVHH%\0D\KRZHYHU
$QGHUVRQ¶VV\PSWRPVKDGEHFRPHPXFKPRUHVHYHUH6KH
VXIIHUHGIURPIDWLJXHYRPLWHGIUHTXHQWO\DQGKHUULJKWIRRW
EHJDQ WR GUDJ ZKHQ VKH ZDONHG 'U -DPHV 6SUXLOO D
QHXURORJLVWLQ-DFNVRQSHUIRUPHGYDULRXVGLDJQRVWLFWHVWVDQG
GLVFRYHUHG WKDW $QGHUVRQ ZDV VXIIHULQJ IURP PXOWLSOH
VFOHURVLV $IWHU LQIRUPLQJ $QGHUVRQ RI KHU FRQGLWLRQ 'U
6SUXLOOZURWHDOHWWHUWR3 *GDWHG-XO\LQZKLFKKH
H[SODLQHGWKHH[WHQWRI$QGHUVRQ¶VLOOQHVVDQGUHFRPPHQGHG

-- 2 of 8 --

$QGHUVRQY3URFWHU
*DPEOH&RHWDO
1R
DGPLQLVWUDWLYHSKDVHRIDEHQHILWVSURFHHGLQJZH$)),50
WKH GLVWULFW FRXUW¶V RUGHU JUDQWLQJ VXPPDU\ MXGJPHQW IRU
3 *
1R $QGHUVRQY3URFWHU
*DPEOH&RHWDO

,I DQ HPSOR\HH UHPDLQV WRWDOO\ GLVDEOHG IRU PRUH WKDQ ZHHNV WKH
HPSOR\HH PD\ DSSO\ IRU EHQHILWV XQGHU 3 *¶V ³/RQJ7HUP 'LVDELOLW\
$OORZDQFH 3ROLF\´ 8QGHU WKLV 3ODQ HQUROOPHQW LV ³DXWRPDWLF´ DQG ³QR
DFWLRQ LV UHTXLUHG WR EH HOLJLEOH´ +RZHYHU WKH FODLPDQW PXVW
FRQWLQXH WR SURYLGH PRQWKO\ VWDWHPHQWV IURP D TXDOLILHG SK\VLFLDQ
FHUWLI\LQJ WKH FODLPDQW¶V GLVDELOLW\
ZD\V LQ ZKLFK WKH FRPSDQ\ FRXOG DFFRPPRGDWH KHU
GLVDELOLW\)ROORZLQJKHUGLDJQRVLV$QGHUVRQVDZDQRWKHU
QHXURORJLVW'U&KDUOHV&DSHZKRUHFRPPHQGHGWKDWVKH
FHDVH ZRUN DQG JR RQ GLVDELOLW\ OHDYH IRU DW OHDVW WKUHH
PRQWKV
7KH3URFWHU *DPEOH'LVDELOLW\%HQHILW3ODQ WKH3ODQ
GHILQHV³7RWDO'LVDELOLW\´DV
$PHQWDORUSK\VLFDOFRQGLWLRQUHVXOWLQJIURPDQLOOQHVV
RULQMXU\ZKLFKLVJHQHUDOO\FRQVLGHUHGWRWDOO\GLVDEOLQJ
E\ WKH PHGLFDO SURIHVVLRQ 8VXDOO\ WRWDO GLVDELOLW\
LQYROYHVDFRQGLWLRQRIVXFKVHYHULW\DVWRUHTXLUHFDUHLQ
DKRVSLWDORUUHVWULFWLRQWRWKHLPPHGLDWHFRQILQHVRIWKH
KRPH
7KH3ODQGHILQHV³3DUWLDO'LVDELOLW\´DV
$PHQWDORUSK\VLFDOFRQGLWLRQUHVXOWLQJIURPDQLOOQHVV
RULQMXU\EHFDXVHRIZKLFKWKH3DUWLFLSDQWFDQQRWSHUIRUP
UHJXODUGXWLHVEXWFDQSHUIRUPRWKHUXVHIXOGXWLHV7KXV
D FRQGLWLRQ RI 3DUWLDO 'LVDELOLW\ GRHV QRW QHFHVVDULO\
SUHYHQW WKH 3DUWLFLSDQW IURP SHUIRUPLQJ XVHIXO WDVNV
XWLOL]LQJSXEOLFRUSULYDWHWUDQVSRUWDWLRQRUWDNLQJSDUWLQ
VRFLDORUEXVLQHVVDFWLYLWLHVRXWVLGHWKHKRPH
)URP0D\WKURXJKHDUO\1RYHPEHU$QGHUVRQ
UHFHLYHG7RWDO'LVDELOLW\EHQHILWVIURP3 *IRUWKHSHULRGV
GXULQJZKLFKKHULOOQHVVFDXVHGKHUWREHDEVHQWIURPZRUN
3 *¶V'LVDELOLW\6XPPDU\3ODQ'HVFULSWLRQ 63' SURYLGHV
WKDW³7RWDO'LVDELOLW\´EHQHILWVDUHSD\DEOHIRUZHHNVIRU
DQ\RQHSHULRGRIGLVDELOLW\7RTXDOLI\IRUVXFKEHQHILWVD

-- 3 of 8 --

$QGHUVRQY3URFWHU
*DPEOH&RHWDO
1R
FODLPDQW PXVW YLVLW D GRFWRU DQG FRPSOHWH D GLVDELOLW\
DSSOLFDWLRQ,IWKHGLVDELOLW\ODVWVIRUPRUHWKDQWKLUW\GD\V
WKH FODLPDQW LV UHTXLUHG SHULRGLFDOO\ WR VXEPLW XSGDWHG
GRFWRU¶VFHUWLILFDWHVWRWKHSODQ¶VGLVDELOLW\UHYLHZLQJERDUG
)URP 0D\ WKURXJK 1RYHPEHU $QGHUVRQ
SURYLGHG3 *ZLWKWKHUHTXLVLWHFHUWLILFDWLRQVIRUWKHSHULRGV
GXULQJZKLFKVKHZDVDEVHQWIURPZRUN
$OWKRXJK'U&DSHLQIRUPHGWKH3ODQWKDW$QGHUVRQVKRXOG
FRQWLQXH WR UHFHLYH WRWDO GLVDELOLW\ EHQHILWV WKH /RFDO
'LVDELOLW\ 5HYLHZLQJ%RDUGUHMHFWHGKHUFODLPEXWGLGQRW
QRWLI\KHURILWVGHFLVLRQLQZULWLQJDQGGLGQRWDGHTXDWHO\
LQIRUPKHURIWKHSURFHVVUHTXLUHGWRFKDOOHQJHLWVRUDOGHQLDO
RI KHU UHTXHVW IRU EHQHILWV $IWHU UHFHLYLQJ QRWLFH RI WKH
%RDUG¶V GHFLVLRQ $QGHUVRQ UHWDLQHG DQ DWWRUQH\ -XVWLQ 6
*LOEHUWWRDVVLVWKHULQFKDOOHQJLQJWKH%RDUG¶VGHQLDORIKHU
FODLP *LOEHUW REWDLQHG D ZULWWHQ VWDWHPHQW RI WKH 3ODQ¶V
GHQLDORI$QGHUVRQ¶VUHTXHVWIRUEHQHILWVDQGRQ-DQXDU\
DSSHDOHGWKHGHFLVLRQE\VHQGLQJWKH7UXVWHHVDQLQH
SDJHOHWWHUZLWKH[KLELWVGRFXPHQWLQJWKHQDWXUHDQGH[WHQWRI
KHUGLVDELOLW\$OWKRXJKWKH3ODQUHMHFWHG$QGHUVRQ¶VFODLP
IRUEHQHILWV LQKHULQLWLDODSSHDOWKH7UXVWHHVODWHUUHYLVHG
WKHLUGHFLVLRQDQGKHOGWKDW$QGHUVRQZDVHQWLWOHGWRUHFHLYH
WRWDOGLVDELOLW\EHQHILWVDQGFRQWLQXLQJKHDOWKFDUHFRYHUDJH
6DWLVILHGZLWKWKH%RDUG¶VUXOLQJ$QGHUVRQGLGQRWDSSHDOWKH
3ODQ¶V GHFLVLRQ RQ WKH PHULWV 6KH GLG KRZHYHU ILOH WKLV
DFWLRQ LQ WKH GLVWULFW FRXUW WR UHFRYHU DWWRUQH\V¶ IHHV IURP
3 *IRUWKHH[SHQVHVVKHLQFXUUHGLQSXUVXLQJKHUFODLPIRU
EHQHILWVLQDGPLQLVWUDWLYHKHDULQJVEHIRUHWKH7UXVWHHV
7KHSDUWLHVGRQRWGLVSXWHWKHUHDVRQDEOHQHVVRI$QGHUVRQ¶V
IHHUHTXHVWZKLFKWKHSDUWLHVVWLSXODWHLVIRU7KH
SDUWLHVGRKRZHYHUGLVDJUHHRQZKHWKHU(5,6$DXWKRUL]HV
$QGHUVRQWRUHFRYHUDWWRUQH\V¶IHHVEHFDXVHKHUFODLPVZHUH
UHVROYHGLQDGPLQLVWUDWLYHSURFHHGLQJVDQGQHYHUUHVXOWHGLQ
OLWLJDWLRQ6SHFLILFDOO\3 *DUJXHVWKDW$QGHUVRQGLGQRW
UHTXLUHWKHVHUYLFHVRIDQDWWRUQH\WRSXUVXHKHUULJKWVXQGHU
WKH3ODQGHVSLWH$QGHUVRQ¶VFRQWHQWLRQWKDWVKHZDVIRUFHG
WRKLUHFRXQVHOEHFDXVH3 *IDLOHGDGHTXDWHO\WRLQIRUPKHU
1R $QGHUVRQY3URFWHU
*DPEOH&RHWDO

3ODQ³UHYHUVHGLWVGHFLVLRQ>EHIRUHWKHSDUWLHVILOHGVXLW@
WKH3ODLQWLII>ZRXOG@QRW>EH@HQWLWOHGWRDWWRUQH\V¶IHHV´ VHH
DOVR+HGOH\:K\WHY8QXP/LIH,QV&RRI$PHULFD
:/ '0DVV DOORZLQJDSODLQWLIIZKRVHFDVH
KDGSURFHHGHGWROLWLJDWLRQWRUHFRYHUDWWRUQH\V¶IHHVIRUZRUN
GRQHERWKLQWKHDGPLQLVWUDWLYHDQGOLWLJDWLRQSKDVHVRIWKH
SURFHHGLQJEXWQRWLQJWKDWLIWKHFDVHKDGFRQFOXGHGEHIRUH
VXLW ZHUH ILOHG WKH SODLQWLII ZRXOG QRW KDYH EHHQ DEOH WR
UHFRYHUDWWRUQH\V¶IHHVXQGHU† J ,QGHHGQRFRXUWKDV
HYHUKHOGWKDWDSODLQWLIIZKRVHWWOHVDOORIKHU(5,6$FODLPV
DWWKHDGPLQLVWUDWLYHVWDJHDQGILOHVVXLWRQO\WRUHFRYHUFRVWV
LVSHUPLWWHGWRUHFRYHUDWWRUQH\V¶IHHVXQGHU† J 6HH
HJ $PLQRII Y $OO\ *DUJDQR ,QF :/
6'1< UHMHFWLQJWKHSODLQWLIIV¶FODLPIRUDWWRUQH\V¶
IHHV EHFDXVH ³>X@QGHU WKH SODLQ ODQJXDJH RI WKH VWDWXWH
SODLQWLIIVFDQQRWUHFRYHUIHHVLQFXUUHGLQVHWWOLQJWKHGLVSXWH
EHFDXVH QR OLWLJDWLRQ ZDV HYHU LQVWLWXWHG´ 6FKQHLGHU Y
:LVFRQVLQ8)&:8QLRQVDQG(PSOR\HU¶V+HDOWKSODQ)
6XSS G (' :LV VLPLODU 6ZDEDFN Y
$PHULFDQ,QIRUPDWLRQ7HFKQRORJ\&RUS:/
1',OO VDPH
,Q VKRUW DOWKRXJK $QGHUVRQ¶V EHQHILW FODLPV ZHUH
PHULWRULRXVDQGWKHIHHDZDUGVKHUHTXHVWVLVUHDVRQDEOHWKH
GLVWULFWFRXUWGLGQRWHUULQJUDQWLQJVXPPDU\MXGJPHQWIRU
3URFWHU *DPEOH EHFDXVH (5,6$ GRHV QRW DXWKRUL]H
UHFRYHU\ RI DWWRUQH\V¶ IHHV IRU ZRUN SHUIRUPHG GXULQJ WKH
DGPLQLVWUDWLYHH[KDXVWLRQSKDVHRIDEHQHILWVSURFHHGLQJ6HH
$UPLVWHDG)GDW HPSKDVL]LQJWKDWWKH³$PHULFDQ
UXOH´ SUHFOXGLQJ IHHVKLIWLQJ ³IRUPV WKH OHJDO EDFNJURXQG
DJDLQVWZKLFK† J ZDVHQDFWHG´ &DQQ)GDW
QRWLQJWKDWDGLVWULFWFRXUWGRHVQRWDEXVHLWVGLVFUHWLRQ
LQ GHQ\LQJ D SODLQWLII¶V UHTXHVW IRU IHHV LI WKH FRXUW ODFNV
VWDWXWRU\DXWKRULW\WRDZDUGWKHIHHVUHTXHVWHG
,,,
%HFDXVH6HFWLRQRI(5,6$GRHVQRWSHUPLWSDUWLHVWR
UHFRYHUDWWRUQH\V¶IHHVIRUOHJDOZRUNSHUIRUPHGGXULQJWKH

-- 4 of 8 --

$QGHUVRQY3URFWHU
*DPEOH&RHWDO
1R
86&† D 7KLVSXUSRVHPLJKWEHXQGHUPLQHGE\
DZDUGVZKLFKE\HQFRXUDJLQJSODQVWRSD\TXHVWLRQDEOH
FODLPVLQRUGHUWRDYRLGOLDELOLW\IRUDWWRUQH\V¶IHHVFRXOG
UHGXFHWKHLU³VRXQGQHVVDQGVWDELOLW\´6LQFHWKHYDOLGLW\
RIDSDUWLFXODUFODLPLVQRWDOZD\VLPPHGLDWHO\REYLRXV
SODQVPD\QHHGWRFKDOOHQJHWKRVHZKLFKWKHWUXVWHHLQ
JRRGIDLWKEHOLHYHVDUHLQYDOLGZLWKRXWH[SDQGLQJLWVULVN
E\DGRXEOHRUQRWKLQJEHWRQDWWRUQH\V¶IHHV$OVRVRPH
FODLPDQWV DQG VRPH SODQV PD\ XVH LQIRUPDO LQWHUQDO
UHYLHZSURFHGXUHVDFFRPSOLVKHGE\QRQODZ\HUVSHUKDSV
XQLRQ RU RWKHU HPSOR\HH UHSUHVHQWDWLYHV DQG SODQ
UHSUHVHQWDWLYHVDQRQOLWHUDOUHDGLQJRIWKHVWDWXWH>WKDW@
H[SRVHGWKHORVHUWRWKHSUHYDLOLQJSDUW\¶VDWWRUQH\V¶IHHV
PLJKWXQGHUPLQHVXFKDSURFHVV
&DQQ)GDW GLVWLQJXLVKLQJWKH6XSUHPH&RXUW¶V
GHFLVLRQVLQ6XOOLYDQDQG'HODZDUH9DOOH\
7KH1LQWK&LUFXLWKDVUHDIILUPHGWKHUHDVRQLQJLQ&DQQLQ
VHYHUDOUHFHQWGHFLVLRQVQRWDEO\0F(OZDLQHY86:HVW,QF
)GQ WK&LU LQZKLFKWKHFRXUW
FLWHG&DQQIRUWKHSURSRVLWLRQWKDW³>I@HHVDUHQRWDYDLODEOH
IRUWKHDGPLQLVWUDWLYHSRUWLRQRIDQ(5,6$DSSHDO´6HHDOVR
)UHQFKY&DQDGD/LIH$VVXUDQFH&R:/ WK
&LU DW DIILUPLQJWKHGLVWULFWFRXUW¶VGHFLVLRQWR
GHGXFWIURPWKHSODLQWLII¶VIHHDZDUGFRVWVLQFXUUHGE\WKH
SODLQWLII¶VDWWRUQH\VEHIRUHWKHFRPSODLQWZDVILOHG 7KRPNH
Y&RQQHFWLFXW*HQHUDO/LIH,QV&R:/ WK
&LU DIILUPLQJWKHGLVWULFWFRXUW¶VGHFLVLRQWRGLVPLVV
DUHTXHVWIRUDWWRUQH\V¶IHHVILOHGE\DSODLQWLIIZKRVHWWOHGKLV
(5,6$FODLPVDWWKHDGPLQLVWUDWLYHVWDJHDQGILOHGVXLWRQO\
WRUHFRYHUKLVFRVWV
$OWKRXJKVRPHFRXUWVKDYHFULWLFL]HGWKH&DQQGHFLVLRQDV
³WRRUHVWULFWLYHDQGQDUURZ´+DPLOWRQY%DQNRI1HZ<RUN
:/ ''HO HYHQWKH+DPLOWRQFRXUW
IRXQG&DQQ¶V³UHDVRQLQJDQGDQDO\VLVWREHSHUVXDVLYH´DQG
DJUHHGZLWKWKH1LQWK¶V&LUFXLW¶VODWHUGHFLVLRQLQ7KRPNH
6HH+DPLOWRQ:/DW VWDWLQJWKDWKDGWKH
1R $QGHUVRQY3URFWHU
*DPEOH&RHWDO

RIKHUDGPLQLVWUDWLYHULJKWVIROORZLQJWKH3ODQ¶VLQLWLDO RUDO
GHQLDORI7RWDO'LVDELOLW\EHQHILWV3 *IXUWKHUHPSKDVL]HV
WKDW$QGHUVRQGLGQRWSUHYDLORQKHUFODLPWKDWVKHZDVWRWDOO\
GLVDEOHG DV RI 1RYHPEHU DQG WKDW VKH IDLOHG WR
DSSHDOWKH3ODQ¶VGHWHUPLQDWLRQWKDWVKHZDVHOLJLEOHIRU7RWDO
'LVDELOLW\EHQHILWVRQO\DVRI$XJXVW
$OWKRXJK WKLV FLUFXLW KDV QHYHU UXOHG RQ WKH TXHVWLRQ
ZKHWKHU(5,6$SHUPLWVDQDZDUGRIDWWRUQH\V¶IHHVIRUOHJDO
VHUYLFHV SHUIRUPHG GXULQJ WKH DGPLQLVWUDWLYH VWDJH RI D
EHQHILWVSURFHHGLQJWKHGLVWULFWFRXUWFRQFOXGHGEDVHGRQ
FDVHODZIURPRWKHUFLUFXLWVWKDWWKHVWDWXWHGRHVQRWSHUPLW
$QGHUVRQ WR UHFRYHU IHHV 7KH GLVWULFW FRXUW WKXV JUDQWHG
3 *¶V PRWLRQ IRU VXPPDU\ MXGJPHQW FLWLQJ 86&
† J WKH (5,6$ SURYLVLRQ JRYHUQLQJ IHH DZDUGV
7KH VROH LVVXH RQ DSSHDO LV ZKHWKHU WKH GLVWULFW FRXUW KDV
GLVFUHWLRQ XQGHU (5,6$ WR DZDUG DWWRUQH\V¶ IHHV IRU OHJDO
VHUYLFHV UHQGHUHG GXULQJ DGPLQLVWUDWLYH SURFHHGLQJV IRU
GLVDELOLW\EHQHILWV
,,
7KLV FRXUW UHYLHZV GH QRYR WKH GLVWULFW FRXUW¶V JUDQW RI
VXPPDU\ MXGJPHQW IRU 3URFWHU DQG *DPEOH 6HH 6PLWK Y
$PHULWHFK )G WK &LU +DUWVHO Y
.H\V)G WK&LU FHUWGHQLHG6
&W 6XPPDU\ MXGJPHQW LV DSSURSULDWH ³LI WKH
SOHDGLQJV GHSRVLWLRQV DQVZHUV WR LQWHUURJDWRULHV DQG
DGPLVVLRQV RQ ILOH WRJHWKHU ZLWK WKH DIILGDYLWV VKRZ WKDW
WKHUHLVQRJHQXLQHLVVXHRIPDWHULDOIDFWDQGWKDWWKHPRYLQJ
SDUW\LVHQWLWOHGWRDMXGJPHQWDVDPDWWHURIODZ´)HG5
&LY3 F VHH&RSHODQGY0DFKXOLV)G
WK&LU
7KLV FRXUW UHYLHZV IRU DEXVH RI GLVFUHWLRQ WKH GLVWULFW
FRXUW¶V GHQLDO RI WKH SODLQWLII¶V UHTXHVW IRU DWWRUQH\V¶ IHHV
SXUVXDQWWR86&† J 6HHHJ$UPLVWHDGY
9HUQLWURQ&RUS)G WK&LU

-- 5 of 8 --

$QGHUVRQY3URFWHU
*DPEOH&RHWDO
1R
5HFRYHU\RI$WWRUQH\V¶)HHV3XUVXDQWWR86&
† J
6HFWLRQRIWKH(PSOR\HH5HWLUHPHQW,QFRPH6HFXULW\
$FW (5,6$ FRGLILHGDW86&† J SURYLGHVLQ
SHUWLQHQWSDUWWKDW
,Q DQ\ DFWLRQ XQGHU WKLV VXEFKDSWHU E\ D
SDUWLFLSDQWEHQHILFLDU\RUILGXFLDU\WKHFRXUWLQ
LWVGLVFUHWLRQPD\DOORZDUHDVRQDEOHDWWRUQH\¶V
IHHDQGFRVWVRIDFWLRQWRHLWKHUSDUW\
86&† J 6HFWLRQ D GHILQHVWKH
FLUFXPVWDQFHVXQGHUZKLFKDSDUW\PD\ILOHDQDFWLRQVXEMHFW
WR† J ¶VSURYLVLRQVRQDWWRUQH\V¶IHHVDVIROORZV
$FLYLODFWLRQPD\EHEURXJKW±
E\DSDUWLFLSDQWRUEHQHILFLDU\±
$ IRUWKHUHOLHISURYLGHGIRULQVXEVHFWLRQ F RI
WKLVVHFWLRQRU
% WRUHFRYHUEHQHILWVGXHWRKLPXQGHUWKHWHUPV
RIKLVSODQWRHQIRUFHKLVULJKWVXQGHUWKHWHUPVRI
WKHSODQRUWRFODULI\KLVULJKWVWRIXWXUHEHQHILWV
XQGHUWKHWHUPVRIWKHSODQ

E\DSDUWLFLSDQWEHQHILFLDU\RUILGXFLDU\
$ WRHQMRLQDQ\DFWRUSUDFWLFHZKLFKYLRODWHV
DQ\SURYLVLRQRIWKLVVXEFKDSWHURUWKHWHUPVRI
WKHSODQRU
% WRREWDLQRWKHUDSSURSULDWHHTXLWDEOHUHOLHI L
WR UHGUHVV VXFK YLRODWLRQV RU LL WR HQIRUFH DQ\
SURYLVLRQVRIWKLVVXEFKDSWHURUWKHWHUPVRIWKH
SODQ
1R $QGHUVRQY3URFWHU
*DPEOH&RHWDO

WKH&RXUWH[SODLQHG³HQIRUFHPHQWRIWKH>FRQVHQW@GHFUHH
ZKHWKHU LQ WKH FRXUWURRP EHIRUH D MXGJH RU LQ IURQW RI D
UHJXODWRU\DJHQF\ZLWKSRZHUWRPRGLI\WKHVXEVWDQFHRIWKH
SURJUDP RUGHUHG E\ WKH FRXUW LQYROYH>V@ WKH W\SH RI ZRUN
ZKLFKLVSURSHUO\FRPSHQVDEOHDVDFRVWRIOLWLJDWLRQXQGHU
†>RIWKH&OHDQ$LU$FW@´,GDW HPSKDVLVDGGHG
%HFDXVH $QGHUVRQ LV UHTXHVWLQJ DWWRUQH\V¶ IHHV RQO\ IRU
H[KDXVWLRQ RI DGPLQLVWUDWLYH UHPHGLHV DQG EHFDXVH VKH
SUHYDLOHGRQKHUFODLPVDWWKHDGPLQLVWUDWLYHVWDJHDQGWKXV
GLG QRW VHHN UHYLHZ LQ WKH FRXUWV LW LV FOHDU WKDW QHLWKHU
6XOOLYDQQRU'HODZDUH9DOOH\VXSSRUWVKHUFODLPWKDWVKHLV
HQWLWOHGWRSUHYDLORQKHUUHTXHVWIRUIHHV
$OWKRXJK H[KDXVWLRQ RI DGPLQLVWUDWLYH UHPHGLHV LV D
SUHUHTXLVLWHWRVHHNLQJMXGLFLDOUHYLHZRI(5,6$FODLPVVHH
HJ%D[WHUY&$0XHU&RUS)G WK&LU
H[KDXVWLRQSURFHHGLQJVDUHQRW³LQWLPDWHO\FRQQHFWHG´ZLWK
MXGLFLDOSURFHHGLQJVLQWKHPDQQHUGHVFULEHGE\WKH6XSUHPH
&RXUWLQLWVGHFLVLRQVDZDUGLQJFRVWVWRSDUWLHVZKRSUHYDLOHG
LQ OLWLJDWLRQ UHODWHG WR WKH DGPLQLVWUDWLYH SURFHHGLQJV IRU
ZKLFKWKH\ZHUHDZDUGHGIHHV'HVSLWHWKLV$QGHUVRQDUJXHV
WKDWDZDUGLQJIHHVLQWKLVFDVHZRXOGDGYDQFHWKHSROLFLHV
XQGHUO\LQJ† J $OWKRXJKWKH6XSUHPH&RXUWKDV
RIWHQORRNHGWRWKHOHJLVODWLYHKLVWRU\RIYDULRXVIHHVKLIWLQJ
SURYLVLRQV LQ GHWHUPLQLQJ ZKHWKHU &RQJUHVV LQWHQGHG WR
SHUPLW IHH DZDUGV IRU FRVWV LQFXUUHG GXULQJ DGPLQLVWUDWLYH
SURFHHGLQJV ZLWK UHVSHFW WR WKLV VSHFLILF SURYLVLRQ ³QR
OHJLVODWLYHKLVWRU\H[LVWVWRSURYLGHJXLGDQFHWRWKHFRXUWV´
$UPLVWHDGY9HUQLWURQ&RUS)G WK&LU
GLVFXVVLQJWKHODFNRIOHJLVODWLYHKLVWRU\FRQFHUQLQJ
† J 7KH GLVFXVVLRQ LQ &DQQ FRQFHUQLQJ WKH
OHJLVODWLYHKLVWRU\RI(5,6$JHQHUDOO\LVKRZHYHUSHUVXDVLYH
DVWRZK\† J VKRXOGQRWEHLQWHUSUHWHGWRSHUPLWIHH
DZDUGVIRUOHJDOH[SHQVHVLQFXUUHGLQWKHFRXUVHRIH[KDXVWLQJ
DGPLQLVWUDWLYHUHPHGLHV$VWKH1LQWK&LUFXLWH[SODLQHG
>7@KH FRQJUHVVLRQDO SXUSRVH >RI (5,6$@ HPSKDVL]HG
SURPRWLRQRI³WKHVRXQGQHVVDQGVWDELOLW\RISODQVZLWK
UHVSHFWWRDGHTXDWHIXQGVWRSD\SURPLVHGEHQHILWV´

-- 6 of 8 --

$QGHUVRQY3URFWHU
*DPEOH&RHWDO
1R
&RXUW¶VSROLF\UDWLRQDOHIRUDOORZLQJWKHSUHYDLOLQJSDUW\LQ
6XOOLYDQ WR UHFRYHU DWWRUQH\V¶ IHHV IRU DGPLQLVWUDWLYH
SURFHHGLQJVGRHVQRWDSSO\KHUH,Q6XOOLYDQWKH&RXUWIRXQG
WKDWLQOLJKWRIWKH³PDQGDWRU\QDWXUHRIWKHDGPLQLVWUDWLYH
SURFHHGLQJV´DQGWKHLU³FORVHUHODWLRQLQODZDQGIDFWWRWKH
LVVXHVEHIRUHWKH'LVWULFW&RXUWRQMXGLFLDOUHYLHZ´GHQ\LQJ
IHHVIRUDGPLQLVWUDWLYHSURFHHGLQJVVXEVHTXHQWWROLWLJDWLRQ
ZRXOGFUHDWHDQLQFHQWLYHIRU³DWWRUQH\VWRDEDQGRQFODLPDQWV
DIWHUMXGLFLDOUHPDQG´DUHVXOWWKDW³UXQVGLUHFWO\FRXQWHUWR
ORQJHVWDEOLVKHGHWKLFDOFDQRQVRIWKHOHJDOSURIHVVLRQ´,G
DW 'HQ\LQJ IHHV IRU SUHOLWLJDWLRQ H[KDXVWLRQ RI
DGPLQLVWUDWLYHUHPHGLHVZRXOGQRWSUHVHQWDQ\VXFKGLIILFXOW\
,QWKLVFDVHXQOLNHLQ6XOOLYDQWKHDGPLQLVWUDWLYHSURFHHGLQJV
ZHUHQRWFRQGXFWHGSXUVXDQWWRDFRXUWRUGHUDQGWKHSODLQWLII
GLG QRW HYHQ VHHN MXGLFLDO UHYLHZ RI KHU EHQHILWV FODLP
EHFDXVHVKHSUHYDLOHGDWWKHDGPLQLVWUDWLYHVWDJH6HHLGDW
XSKROGLQJWKHSODLQWLII¶VIHHDZDUGIRUDGPLQLVWUDWLYH
H[SHQVHV EHFDXVH ³>D@V LQ 'HODZDUH 9DOOH\ WKH
DGPLQLVWUDWLYHSURFHHGLQJVRQUHPDQGZHUHFUXFLDOWRWKH
YLQGLFDWLRQ RI >WKH SODLQWLII¶V@ ULJKWV´ 6XOOLYDQ WKHUHIRUH
GRHV QRW SURYLGH D EDVLV IRU UXOLQJ WKDW WKH GLVWULFW FRXUW
DEXVHGLWVGLVFUHWLRQLQGHQ\LQJ$QGHUVRQ¶VUHTXHVWIRUIHHV
$QGHUVRQ¶VUHOLDQFHRQWKH6XSUHPH&RXUW¶VGHFLVLRQLQ
'HODZDUH9DOOH\LVVLPLODUO\XQDYDLOLQJ,WLVWUXHWKDWLQ
'HODZDUH9DOOH\WKH6XSUHPH&RXUWKHOGWKDWUHIHUHQFHLQD
IHHVKLIWLQJSURYLVLRQWRUHFRYHU\IRUH[SHQVHVLQFXUUHGLQDQ\
³DFWLRQ´ DVRSSRVHGWRDQ\³DFWLRQRUSURFHHGLQJ´ GLGQRW
DXWRPDWLFDOO\ SUHFOXGH IHH DZDUGV IRU ZRUN GRQH LQ
DGPLQLVWUDWLYHSURFHHGLQJV6HH'HODZDUH9DOOH\86
DW+RZHYHUXQOLNH$QGHUVRQ EXWOLNHWKHFODLPDQW
LQ6XOOLYDQ WKHSODLQWLIIVLQ'HODZDUH9DOOH\FKDOOHQJHGWKH
PHULWV RI WKH DGPLQLVWUDWLYH SURFHHGLQJ LQ FRXUW DQG RQO\
UHFRYHUHG IHHV LQFXUUHG GXULQJ DGPLQLVWUDWLYH DSSHDOV WKDW
WRRNSODFHDIWHUWKH\ILOHGVXLWWRHQIRUFHDFRXUWDSSURYHG
FRQVHQWGHFUHH6HHLGDW VWDWLQJWKDWOHJDOIHHVLQFXUUHG
GXULQJDGPLQLVWUDWLYHSURFHHGLQJVPD\EHUHFRYHUDEOHLIWKH
ZRUNLV³XVHIXODQGRIDW\SHRUGLQDULO\QHFHVVDU\WRVHFXUH
WKHUHVXOWREWDLQHGIURPWKHOLWLJDWLRQ´ HPSKDVLVDGGHG $V
1R $QGHUVRQY3URFWHU
*DPEOH&RHWDO

86&† D
%HFDXVH$QGHUVRQGLGQRWILOHDFLYLODFWLRQIRUDQ\RIWKH
UHDVRQVVHWIRUWKLQ† D EXWILOHGVXLWRQO\WRUHFRYHU
DWWRUQH\V¶ IHHV IRU OHJDO ZRUN SHUIRUPHG GXULQJ KHU
DGPLQLVWUDWLYHFODLPVSURFHHGLQJZHILQGWKDW† J GRHV
QRWSHUPLWKHUWRUHFRYHUKHUFRVWV
$OWKRXJKQHLWKHUWKLVFRXUWQRUWKH8QLWHG6WDWHV6XSUHPH
&RXUW KDV UXOHG RQ ZKHWKHU † J SHUPLWV D SDUW\ WR
UHFRYHUDWWRUQH\V¶IHHVIRUOHJDOVHUYLFHVUHQGHUHGGXULQJDQ
DGPLQLVWUDWLYHFODLPVSURFHHGLQJWKHGLVWULFWFRXUWFRQFOXGHG
EDVHG RQ GHFLVLRQV IURP WKH 1LQWK &LUFXLW DQG IURP RWKHU
IHGHUDOGLVWULFWFRXUWVWKDW(5,6$GLGQRWSHUPLW$QGHUVRQWR
UHFRYHU DWWRUQH\V¶ IHHV IRU ZRUN SHUIRUPHG GXULQJ WKH
DGPLQLVWUDWLYH DSSHDOV SURFHVV ,Q &DQQ Y &DUSHQWHU¶V
3HQVLRQ7UXVW)XQGIRU1RUWKHUQ&DOLIRUQLD)G
WK&LU WKH1LQWK&LUFXLWKHOGWKDW† J GRHVQRW
SHUPLWSDUWLHVWRUHFRYHUDWWRUQH\V¶IHHVIRUWKHDGPLQLVWUDWLYH
SKDVHRIDQ(5,6$SURFHHGLQJEXWOLPLWVDZDUGVWRH[SHQVHV
LQFXUUHGDIWHURQHRIWKHSDUWLHVKDVILOHGDFRPSODLQWLQFRXUW
6HHLGDW KROGLQJWKDWWKHRSHQLQJSKUDVHRI† J
³>L@Q DQ\ DFWLRQ´ OLPLWV UHFRYHU\ WR IHHV LQFXUUHG GXULQJ
³OLWLJDWLRQLQFRXUW´ VHHDOVR0LQWNHQEDXJKY&HQWUDO6WDWHV
6RXWKHDVWDQG6RXWKZHVW$UHDV+HDOWKDQG:HOIDUH)XQG
:/ :'.\ DGRSWLQJWKHUHDVRQLQJLQ
&DQQDQGGLVPLVVLQJWKHSODLQWLII¶VFODLPIRUDWWRUQH\V¶IHHV
/D6HOOHY3XEOLF6HUY&RRI&RORUDGR)6XSS
'&ROR VLPLODU
,Q &DQQ WKH 1LQWK &LUFXLW UHDVRQHG WKDW † J
UHVWULFWVUHFRYHU\RIDWWRUQH\V¶IHHVWR(5,6$FDVHVOLWLJDWHG
LQFRXUWEHFDXVHLI&RQJUHVVKDGLQWHQGHGWRSURYLGHIRUWKH
UHFRYHU\RIDWWRUQH\V¶IHHVLQDGPLQLVWUDWLYHSURFHHGLQJVLW
ZRXOGKDYHLQGLFDWHGDVPXFKE\DOORZLQJIRUWKHUHFRYHU\RI
IHHVLQDQ\³DFWLRQRUSURFHHGLQJ´&DQQ)GDW
HPSKDVL]LQJWKDWWKHZRUG³DFWLRQ´JHQHUDOO\UHIHUVRQO\WR
³SURFHHGLQJVLQFRXUWQRWDGPLQLVWUDWLYHSURFHHGLQJVHYHQ
WKRXJK QHFHVVDU\ DQG YDOXDEOH´ HPSKDVLV DGGHG FLWLQJ

-- 7 of 8 --

$QGHUVRQY3URFWHU
*DPEOH&RHWDO
1R
1HZ <RUN *DVOLJKW &OXE ,QF Y &DUH\ 86

$QGHUVRQLVFRUUHFWWKDWWKH6XSUHPH&RXUWLQ3HQQV\OYDQLD
Y'HODZDUH9DOOH\&LWL]HQV¶&RXQFLO86
KHOG WKDW LQ LQWHUSUHWLQJ D VWDWXWRU\ SURYLVLRQ DXWKRUL]LQJ
DWWRUQH\V¶IHHVUHIHUHQFHWRDQ³DFWLRQ´UDWKHUWKDQDQ³DFWLRQ
RUSURFHHGLQJ´LV³QRWDVXIILFLHQWLQGLFDWLRQWKDW&RQJUHVV
LQWHQGHG>WKHIHHVKLIWLQJSURYLVLRQ@WRDSSO\RQO\WRMXGLFLDO
DQGQRWDGPLQLVWUDWLYHSURFHHGLQJV´,GDW GLVFXVVLQJ
WKHIHHVKLIWLQJSURYLVLRQLQ6HFWLRQ G RIWKH&OHDU$LU
$FW FRGLILHG DW 86& † G $QGHUVRQ LV DOVR
FRUUHFWWKDWLQ6XOOLYDQY+XGVRQ86 WKH
&RXUW KHOG WKDW ³DGPLQLVWUDWLYH SURFHHGLQJV PD\ EH VR
LQWLPDWHO\ FRQQHFWHG ZLWK MXGLFLDO SURFHHGLQJV DV WR EH
FRQVLGHUHG SDUW RI >D@ FLYLO DFWLRQ IRU SXUSRVHV RI D IHH
DZDUG´,GDW GLVFXVVLQJWKHVFRSHRIWKHIHHVKLIWLQJ
SURYLVLRQV LQ WKH (TXDO $FFHVV WR -XVWLFH $FW FRGLILHG DV
DPHQGHGDW86& G +RZHYHUQHLWKHU6XOOLYDQ
QRU'HODZDUH9DOOH\VXSSRUWVDQDZDUGRIDWWRUQH\V¶IHHVLQ
WKLVFDVH
,Q6XOOLYDQWKH6XSUHPH&RXUWDOORZHGWKHSUHYDLOLQJSDUW\
WR UHFRYHU DWWRUQH\V¶ IHHV IRU OHJDO ZRUN GRQH LQ DQ
DGPLQLVWUDWLYH SURFHHGLQJ KHOG SXUVXDQW WR D GLVWULFW FRXUW
RUGHUUHPDQGLQJWKHSODLQWLII¶VVRFLDOVHFXULW\FODLPVWRWKH
6HFUHWDU\RI+HDOWKDQG+XPDQ6HUYLFHV6HH6XOOLYDQ
86DW8QOLNH$QGHUVRQWKHSODLQWLIILQ6XOOLYDQKDG
DOUHDG\ ILOHG VXLW DJDLQVW WKH 6HFUHWDU\ DIWHU KLV FODLP IRU
VRFLDOVHFXULW\EHQHILWVKDGEHHQGHQLHG6HHLGDW
$OWKRXJKWKHGLVWULFWFRXUWDIILUPHGWKH6HFUHWDU\¶VGHFLVLRQ
WKH(OHYHQWK&LUFXLWUHYHUVHGDQGGLUHFWHGWKHGLVWULFWFRXUWWR
UHPDQGWKHFDVHWRWKH6HFUHWDU\IRUUHFRQVLGHUDWLRQ6HHLELG
7KHIHHDZDUGDSSURYHGE\WKH6XSUHPH&RXUWLQFOXGHGRQO\
H[SHQVHV LQFXUUHG GXULQJ WKH DGPLQLVWUDWLYH SURFHHGLQJV
IROORZLQJ QRWDVKHUHSUHFHGLQJ WKHPHULWVOLWLJDWLRQLQWKH
GLVWULFWFRXUWDQGWKHGLVWULFWFRXUWUHWDLQHGMXULVGLFWLRQRYHU
WKHDFWLRQRQUHPDQGIRUWKHSXUSRVHRIFRQVLGHULQJDSHWLWLRQ
IRUDWWRUQH\V¶IHHV6HHLGDW
1R $QGHUVRQY3URFWHU
*DPEOH&RHWDO

&RGLILHG DW 86& † J
,Q KROGLQJ WKDW WKH SODLQWLII FRXOG UHFRYHU IHHV IRU FRVWV
LQFXUUHGGXULQJWKHDGPLQLVWUDWLYHUHPDQGWKH6XSUHPH&RXUW
HPSKDVL]HGWKH³VRPHZKDWXQXVXDO´SURYLVLRQIRUMXGLFLDO
UHYLHZRIDJHQF\DFWLRQLQ† J RIWKH6RFLDO6HFXULW\
$FW
7KHGHWDLOHGSURYLVLRQVIRUWKHWUDQVIHURISURFHHGLQJV
IURPWKHFRXUWVWRWKH6HFUHWDU\DQGIRUWKHILOLQJRIWKH
6HFUHWDU\¶VVXEVHTXHQWILQGLQJVZLWKWKHFRXUWVXJJHVWD
GHJUHHRIGLUHFWLQWHUDFWLRQEHWZHHQDIHGHUDOFRXUWDQG
DQDGPLQLVWUDWLYHDJHQF\DOLHQWRWUDGLWLRQDOUHYLHZRI
DJHQF\DFWLRQ
,G DW HPSKDVLV DGGHG 7KXV DOWKRXJK WKH 6XOOLYDQ
&RXUW KHOG WKDW ³DGPLQLVWUDWLYH SURFHHGLQJV PD\ EH VR
LQWLPDWHO\ FRQQHFWHG ZLWK MXGLFLDO SURFHHGLQJV DV WR EH
FRQVLGHUHG SDUW RI >D@ FLYLO DFWLRQ IRU SXUSRVHV RI D IHH
DZDUG´LWLVFOHDUIURPWKH&RXUW¶VUHDVRQLQJWKDWIHHVIRU
DGPLQLVWUDWLYHSURFHHGLQJVXQGHU86&† J VKRXOG
EHUHFRYHUDEOHRQO\ZKHQWKHILQDOMXGJPHQW RUHQIRUFHPHQW
WKHUHRI LQ WKH SUHYDLOLQJ SDUW\¶V VXLW GHSHQGV RQ WKH
DGPLQLVWUDWLYHSURFHHGLQJVIRUZKLFKIHHVDUHEHLQJFODLPHG
6HH LG DW HPSKDVL]LQJ WKDW WKHUH ZRXOG EH ³QR ILQDO
MXGJPHQW LQ WKH FODLPDQW¶V FLYLO DFWLRQ IRU MXGLFLDO UHYLHZ
XQWLO WKH DGPLQLVWUDWLYH SURFHHGLQJV RQ UHPDQG >ZHUH@
FRPSOHWH´ $V WKH &RXUW H[SODLQHG ³WKH 6RFLDO 6HFXULW\
FODLPDQW¶VVWDWXVDVDSUHYDLOLQJSDUW\DQGWKHILQDOMXGJPHQW
LQKHUFLYLODFWLRQDUHRIWHQFRPSOHWHO\GHSHQGHQWRQWKH
VXFFHVVIXO FRPSOHWLRQ RI UHPDQG SURFHHGLQJV EHIRUH WKH
6HFUHWDU\´ ,ELG VHH DOVR LG DW QRWLQJ WKDW WKH
³SURYLVLRQV RI WKH 6RFLDO 6HFXULW\ $FW FRQWHPSODWH DQ
RQJRLQJ FLYLO DFWLRQ RI ZKLFK WKH >DGPLQLVWUDWLYH@ UHPDQG
SURFHHGLQJVDUHEXWDSDUW´
6XOOLYDQLVGLVWLQJXLVKDEOHIURPWKHSUHVHQWFDVHQRWRQO\
EHFDXVHRIGLIIHUHQFHVLQWKHJRYHUQLQJVWDWXWHVWKH6XSUHPH

-- 8 of 8 --