TASK DEFINITION: In this task, you will be shown a prompt from a judicial decision and multiple holding statements derived from citations following text in a legal decision.  Holdings represent the governing legal rule when the law is applied to a particular set of facts. There are five answer choices for each citing text. The correct answer is the holding statement that corresponds to the citing text. The four incorrect answers are other holding statements. You should find the correct option. There is a <HOLDING> token in the position of the citing text prompt where the holding statement was extracted.
PROBLEM: (3) the de fendant’s culpability in the fraud perpetrated by the controlled person. See Securities & Exchange Com’n v. First Jersey Securities, Inc., 101 F.3d 1450, 1472 (2d Cir.1996). First, as the Court has found, plaintiffs have failed properly to plead a violation of the 1934 Act. Second, as we also have noted, plaintiffs have failed properly to allege scienter and/or culpability on the part of “Merrill Lynch.” Even had we found a properly pled violation of the 1934 Act, we would not automatically impute this violation to “Merrill Lynch” as a controlling entity. See Baesa, 969 F.Supp. at 242 (“[T]he law in this circuit is clear that a subsidiary’s fraud cannot be automatically imputed to its corporate parent.”). See also Chill v. General Elec. Co., 101 F.3d 263, 270 (2d Cir.1996) (<HOLDING>). Novak, 997 F.Supp. at 435. Finally the Court 
 Holding statements: (A) holding that a parent must exercise some control over the subsidiarys activities which does not require that the subsidiary be controlled to an ultimate degree by its parent  although something more than mere passive investment by the parent is required the parent must have and exercise control and direction  over the affairs of its subsidiary in order for venue to be proper (B) holding that district court has the power to decide what portion of subsidiarys income should be reallocated to its parent (C) holding that a parent company would at the very least have to have been deliberately blind to its subsidiarys fraud in order to have the requisite scienter (D) holding that even in separate trial other crimes evidence would not have been admissible and identification testimony would have been admissible (E) holding that a subsidiarys contacts can be imputed for purposes of service of process where a parent uses the subsidiary to do what it otherwise would have done itself 

SOLUTION: (C)

PROBLEM: the sentencing information balancing test urged by the dissent. The ongoing confusion concerning the breach of Wisconsin plea agreements is further highlighted by this district's issuance of an unusual, three-legged opinion. ¶ 24. While I have some sympathy with the dissent's concern about the continued integrity of the plea bargaining process, I disagree that the facts in this case can result in an unwarranted sentencing "clam up" restriction. The prosecutor not only has a right but a duty to provide information to the sentencing court. Moreover, there is nothing wrong with the prosecutor providing his or her opinion of the defendant's character, even if negative, to the sentencing court so long as the opinion is used to support the recommendation. See Ferguson, 166 Wis. 2d at 324-25 (<HOLDING>). But it makes no sense to allow the prosecutor 
 Holding statements: (A) holding that erroneous use of statutorily unqualified person to prepare posttrial recommendation requires new recommendation and action (B) recognizing the importance of congressional findings in determining the appropriateness of congresss remedial measures (C) recognizing prosecutors task to attempt to convince the court of the appropriateness of the recommendation (D) holding that the court will review the report and recommendation for clear error (E) holding that if counsel raises an issue the failure to convince the court to rule in an appellants favor is not ineffective performance

SOLUTION: (C)

PROBLEM: 15.7(a)’s general grant of authority, skirts the more stringent requirements of the contempt remedy authorized by Rule 15.7(a)(3). ¶ 51 Neither can the majority’s holding be explained as an exercise of its inherent authority apart from Rule 15.7. In Alyeska Pipeline Service Co. v. Wilderness Society, 421 U.S. 240, 257-58, 95 S.Ct. 1612, 44 L.Ed.2d 141 (1975), the United States Supreme Court affirmed the continuing vitality of the “American Rule” that requires each party to bear the cost of its own attorneys’ fees absent express statutory authority except in the following exceptional circumstances: (1) the common fund doctrine applies; (2) a party willfully disobeys a court order; or (3) a party acts in bad faith. See also Zambrano v. City of Tustin, 885 F.2d 1473, 1482 (9th Cir.1989) (<HOLDING>) (footnote omitted). ¶ 52 Similarly, in 
 Holding statements: (A) holding that absent explicit congressional authorization the factual prerequisites of bad faith misconduct or willful disobedience laid out in alyeska must be met (B) holding that a bad faith claim is a tort (C) holding that remedial scheme afforded by federal tort claims act was not exclusive absent explicit congressional declaration that it was (D) holding that a bad faith claim must be met through the clear and convincing evidence standard (E) holding that a bad faith claim arises out of contract for attorney fee statute

SOLUTION:
(A)