Court Opinion

ID: 2969791
Source: CourtListenerOpinion
Date Created: 2015-09-22 15:57:17.862606+00
Date Added: 2024-06-11T13:14:55.867559
License: Public Domain

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 DS

81,7('67$7(6&28572)$33($/6
                   )257+(6,;7+&,5&8,7
                     BBBBBBBBBBBBBBBBB

 81,7(' 67$7(6 2) $0(5,&$       ;
           3ODLQWLII$SSHOOHH    
                                  
                                     1RV
            Y                    
                                   !
                                  
 526&2( 5 %($7<                 
          'HIHQGDQW$SSHOODQW 
                                 1
      $SSHDOIURPWKH8QLWHG6WDWHV'LVWULFW&RXUW
    IRUWKH0LGGOH'LVWULFWRI7HQQHVVHHDW1DVKYLOOH
     1RV
        nsRKQ71L[RQ'LVWULFWsXGJH
                    $UJXHGsDQXDU\
                'HFLGHGDQG)LOHG$SULO
    %HIRUH%$7&+(/'(5DQG&/$<&LUFXLWsXGJHV
               32/67(5'LVWULFWsXGJH
                       BBBBBBBBBBBBBBBBB
                             &2816(/
$5*8('3HWHUs6WULDQVH781((175(.,1	:+,7(
1DVKYLOOH 7HQQHVVHH IRU $SSHOODQW  :LOOLDP &RKHQ
$66,67$17 81,7(' 67$7(6 $77251(< 1DVKYLOOH

    
     7KH +RQRUDEOH 'DQ $DURQ 3ROVWHU 8QLWHG 6WDWHV 'LVWULFW sXGJH IRU
WKH 1RUWKHUQ 'LVWULFW RI 2KLR VLWWLQJ E\ GHVLJQDWLRQ

                                    
        8QLWHG6WDWHVY%HDW\                  1RV

7HQQHVVHH IRU $SSHOOHH  21 %5,()  3HWHU s 6WULDQVH
781( (175(.,1 	 :+,7( 1DVKYLOOH 7HQQHVVHH IRU
$SSHOODQW:LOOLDP&RKHQ9DQ69LQFHQW$66,67$17
81,7('67$7(6$77251(<61DVKYLOOH7HQQHVVHHIRU
$SSHOOHH
                       BBBBBBBBBBBBBBBBB
                           23,1,21
                       BBBBBBBBBBBBBBBBB
   32/67(5 'LVWULFW sXGJH  'HIHQGDQW 5RVFRH 5 %HDW\
DSSHDOVIURPKLVMXU\FRQYLFWLRQDQGVHQWHQFHIRURSHUDWLQJDQ
LOOHJDO JDPEOLQJ EXVLQHVV DQG WKH GLVWULFW FRXUWjV JUDQW RI
VXPPDU\MXGJPHQWLQIDYRURIWKHJRYHUQPHQWLQIRXUUHODWHG
FLYLO IRUIHLWXUH DFWLRQV  )RU WKH IROORZLQJ UHDVRQV ZH
$)),50
                      ,%$&.*5281'
    $ &ULPLQDO&DVH&DVH1R
   )HGHUDO ODZ HQIRUFHPHQW RIILFHUV DUUHVWHG %HDW\ RQ
)HEUXDU\DIWHUDOHQJWK\LQYHVWLJDWLRQRIDJDPEOLQJ
ULQJ LQYROYLQJ %HDW\ DQG VHYHUDO RWKHU LQGLYLGXDOV  2Q
0DUFKDJUDQGMXU\UHWXUQHGDWZRFRXQWLQGLFWPHQW
DJDLQVW%HDW\DQGVL[RWKHUGHIHQGDQWV&RXQW2QHFKDUJHG
WKDW EHWZHHQ )HEUXDU\  DQG )HEUXDU\  WKH
GHIHQGDQWVFRQVSLUHGWRFRQGXFWDQLOOHJDOJDPEOLQJEXVLQHVV
LQYLRODWLRQRI86&&RXQW7ZRFKDUJHGWKDW
GXULQJ WKH VDPH SHULRG WKH GHIHQGDQWV UDQ D QXPEHUV
RSHUDWLRQLQYLRODWLRQRI86&DQG 

     
      %KH JUDQG MXU\ LGHQWLILHG ILYH VHSDUDWH LQVWDQFHV LQ ZKLFK WKH
GHIHQGDQWV SRVVHVVHG PRQH\ DQG JDPEOLQJ SDUDSKHUQDOLD LQ IXUWKHUDQFH
RI WKH FRQVSLUDF\ DQG LQ YLRODWLRQ RI  86&  
     
      7KH JRYHUQPHQW VXEVHTXHQWO\ ILOHG D VXSHUVHGLQJ LQGLFWPHQW
FKDUJLQJ %HDW\ ZLWK D WKLUG FRXQW VHHNLQJ IRUIHLWXUH RI  DQG
D FHOO SKRQH XVHG LQ FRPPLVVLRQ RI WKH IHORQ\ FKDUJHG LQ &RXQW 7ZR
7KH GLVWULFW FRXUW GHQLHG %HDW\jV PRWLRQ WR GLVPLVV WKH VXSHUVHGLQJ
1RV                      8QLWHG6WDWHVY%HDW\           

  %HDW\jVFULPLQDOFDVHSURFHHGHGWRWULDORQ1RYHPEHU
7KDWWULDOHQGHGLQDPLVWULDOZKHQWKHMXU\ZDVXQDEOH
WRUHDFKDYHUGLFW%HDW\jVVHFRQGMXU\WULDOFRPPHQFHGRQ
sDQXDU\    $W WULDO %HDW\ DGPLWWHG WKDW KH KDG
HQJDJHG LQ WKH FRQGXFW FKDUJHG EXW DUJXHG WKDW WKH
JRYHUQPHQW VKRXOG EH HVWRSSHG IURP SURVHFXWLQJ KLP
EHFDXVHLWKDGOHGKLPWREHOLHYHWKDWSXUFKDVLQJDIHGHUDO
JDPEOLQJVWDPSHDFK\HDUDQGSD\LQJPRQWKO\WD[HVRQKLV
JURVVZDJHUVZRXOGLPPXQL]HKLPIURPSURVHFXWLRQ%HDW\
RIIHUHG WKH WHVWLPRQ\ RI D IRUPHU IHGHUDO DJHQW ZKR
FRQILUPHGWKDWLQWKHPLGVJDPEOHUVZHUHWROGWKDWLI
WKH\ SXUFKDVHG D VWDPS WKH\ ZRXOG QRW EH WKH WDUJHW RI D
IHGHUDOLQYHVWLJDWLRQDQGWKHLUJDPEOLQJDFWLYLWLHVZRXOGQRW
EHVXEMHFWWRIHGHUDOSURVHFXWLRQ
   7KHJRYHUQPHQWFRXQWHUHGWKLVWHVWLPRQ\E\QRWLQJWKDWWKH
VWDPSLWVHOIFRQWDLQHGWKHIROORZLQJODQJXDJH
  3OHDVHQRWHWKDWWKLVLVDVSHFLDOWD[VWDPSLQUHFHLSWIRU
  SD\PHQWRI)HGHUDOWD[7KLVGRHVQRWDXWKRUL]HDQ\RQH
  WREHJLQRUFRQWLQXHWUDGHRUEXVLQHVVFRQWUDU\WR6WDWHRU
  ORFDOODZV$OVRSD\PHQWRIWKHWD[LPSRVHGE\&KDSWHU
  RIWKH,QWHUQDO5HYHQXH&RGHGRHVQRWH[HPSWDQ\RQH
  IURPSHQDOWLHVRUSXQLVKPHQWIRUYLRODWLRQRI)HGHUDO
  6WDWHRUORFDOODZVFRQFHUQLQJZDJHULQJDFWLYLWLHV
7KH JRYHUQPHQW DOVR RIIHUHG WKH WHVWLPRQ\ RI VHYHUDO
JDPEOHUVZKRDGPLWWHGWKDWWKH\NQHZWKHVWDPSZRXOGQRW
LPPXQL]H WKHP IURP IHGHUDO SURVHFXWLRQ  2QH RI WKRVH
ZLWQHVVHVWHVWLILHGWKDWGXULQJWKHFRXUVHRIWKHLQYHVWLJDWLRQ
DQDJHQWLQIRUPHGKLPWKDWWKHVWDPSRIIHUHGQRSURWHFWLRQ
IURPIHGHUDOSURVHFXWLRQIRUZDJHULQJDFWLYLWLHV7KHZLWQHVV
FODLPHGWKDWKHKDGUHODWHGKLVFRQYHUVDWLRQZLWKWKHDJHQWWR
%HDW\DIWHURQHRIWKHUDLGVRQWKHLURUJDQL]DWLRQ

LQGLFWPHQW RQ GRXEOH MHRSDUG\ JURXQGV %HDW\ DSSHDOHG WKH GHQLDO RI KLV
PRWLRQ WR WKH 6L[WK &LUFXLW ZKLFK DIILUPHG DQG WKHQ VRXJKW UHYLHZ E\
WKH 86 6XSUHPH &RXUW 7KH GLVWULFW FRXUW DOORZHG WKH FDVH WR JR WR WULDO
ZKLOH %HDW\jV SHWLWLRQ IRU FHUWLRUDUL ZDV SHQGLQJ
        8QLWHG6WDWHVY%HDW\                        1RV             1RV                     8QLWHG6WDWHVY%HDW\        

  'XULQJWKHWULDOWKHGLVWULFWFRXUWLQVWUXFWHGWKHMXU\RQWKH                    GHIHQVHKHZDVHVWRSSHGIURPDVVHUWLQJWKHGLVWULFWFRXUWGLG
GHIHQVHRIHQWUDSPHQWE\HVWRSSHO2YHUGHIHQVHFRXQVHOjV                           QRW HUU LQJUDQWLQJ WKH JRYHUQPHQWjV PRWLRQ IRU VXPPDU\
REMHFWLRQVWKHFRXUWDOVRSURYLGHGWKHMXU\ZLWKWKHIROORZLQJ                      MXGJPHQW
LQVWUXFWLRQRQGHOLEHUDWHLJQRUDQFH
                                                                                                           ,,,&21&/86,21
    1R RQH FDQ DYRLG UHVSRQVLELOLW\ IRU D FULPH E\
    GHOLEHUDWHO\LJQRULQJWKHREYLRXV,I\RXjUHFRQYLQFHG                            )RUWKHUHDVRQVVWDWHGDERYHZH$)),50WKHMXGJPHQWV
    WKDWWKHGHIHQGDQWGHOLEHUDWHO\LJQRUHGDKLJKSUREDELOLW\                       RIWKHGLVWULFWFRXUWLQERWKWKHFULPLQDOFDVH&DVH1R
    WKDW KH ZDV LQYROYHG LQ DQ LOOHJDO JDPEOLQJ RSHUDWLRQ                    DQGWKHFLYLOIRUIHLWXUHSURFHHGLQJ&DVH1R
    XQGHUWKHIHGHUDOODZVWKHQ\RXPD\ILQGWKDWKHNQHZ
    ZKDWKHZDVGRLQJ
    %XW WR ILQG WKLV \RX PXVW EH FRQYLQFHG EH\RQG D
    UHDVRQDEOHGRXEWWKDWWKHGHIHQGDQWZDVDZDUHRIDKLJK
    SUREDELOLW\WKDWKHZDVLQYROYHGLQDQLOOHJDOJDPEOLQJ
    RSHUDWLRQ  XQGHU WKH IHGHUDO ODZV DQG WKH GHIHQGDQW
    GHOLEHUDWHO\FORVHGKLVH\HVWRZKDWZDVREYLRXV
    &DUHOHVVQHVVRUQHJOLJHQFHRUIRROLVKQHVVRQKLVSDUWLV
    QRWWKHVDPHDVNQRZOHGJHDQGLVQRWHQRXJKWRFRQYLFW
7KH FRXUW DGRSWHG WKLV LQVWUXFWLRQ YHUEDWLP IURP 3DWWHUQ
&ULPLQDOsXU\,QVWUXFWLRQVIRUWKH6L[WK&LUFXLW:HVW

  $IWHUGHOLEHUDWLQJIRUOHVVWKDQWZRKRXUVWKHMXU\UHWXUQHG
JXLOW\YHUGLFWVRQERWK&RXQW2QHDQG&RXQW7ZR3ULRUWR
WKH6HQWHQFLQJ+HDULQJD863UREDWLRQ2IILFHUSURYLGHGWKH
GLVWULFWFRXUWZLWKD3UHVHQWHQFH,QYHVWLJDWLRQ5HSRUWZKLFK
UHFRPPHQGHGWKDW%HDW\EHJUDQWHGDWZROHYHOUHGXFWLRQLQ
KLVRIIHQVHOHYHOIRUDFFHSWDQFHRIUHVSRQVLELOLW\SXUVXDQWWR
8QLWHG6WDWHV6HQWHQFLQJ*XLGHOLQHm866*l(

     
       6HFWLRQ ( VWDWHV WKDW D GHIHQGDQW PD\ UHFHLYH D WZROHYHO
GHFUHDVH LQ KLV RIIHQVH OHYHO LI KH mFOHDUO\ GHPRQVWUDWHV DFFHSWDQFH RI
                                                                                         
UHVSRQVLELOLW\ IRU KLV RIIHQVHl 86 6HQWHQFLQJ *XLGHOLQHV 0DQXDO                         'XULQJ RUDO DUJXPHQW %HDW\jV FRXQVHO DUJXHG WKDW WKH FXUUHQF\
 (  7KH $SSOLFDWLRQ 1RWHV VWDWH m,Q UDUH VLWXDWLRQV D                  VHL]HG IURP %HDW\ ZDV QRW SURFHHGV DQG WKDW DQ LQQRFHQW RZQHU GHIHQVH
GHIHQGDQW PD\ FOHDUO\ GHPRQVWUDWH DQ DFFHSWDQFH RI UHVSRQVLELOLW\ IRU KLV            VKRXOG DSSO\ %HDW\ GLG QRW UDLVH WKHVH DUJXPHQWV LQ WKH FRXUW EHORZ RU
FULPLQDO FRQGXFW HYHQ WKRXJK KH H[HUFLVHV KLV FRQVWLWXWLRQDO ULJKW WR D              LQ KLV DSSHOODWH EULHI &RQVHTXHQWO\ WKH DUJXPHQWV PXVW EH GHHPHG
WULDO 7KLV PD\ RFFXU IRU H[DPSOH ZKHUH D GHIHQGDQW JRHV WR WULDO WR               ZDLYHG 6HH HJ %DXHU Y 9DULW\ 'D\WRQ:DOWKHU &RUS  )G 
DVVHUW RU SUHVHUYH LVVXHV WKDW GR QRW UHODWH WR IDFWXDO JXLOW    l ,G DW FPW    WK &LU 
    8QLWHG6WDWHVY%HDW\                  1RV         1RV                  8QLWHG6WDWHVY%HDW\      

   7KH GRFWULQH RI FROODWHUDO HVWRSSHO RSHUDWHV ZKHQ WKUHH       7KHJRYHUQPHQWREMHFWHGWRWKHUHFRPPHQGDWLRQDUJXLQJWKDW
UHTXLUHPHQWVDUHPHWWKHLVVXHLQWKHFXUUHQWDFWLRQDQG          %HDW\ ZDV QRW HQWLWOHG WR DQ DFFHSWDQFH RI UHVSRQVLELOLW\
WKH SULRU DFWLRQ DUH LGHQWLFDO  WKH LVVXH ZDV DFWXDOO\     UHGXFWLRQEHFDXVHKHKDGFRQWHVWHGWKHOHJDOLW\RIKLVFRQGXFW
OLWLJDWHGDQGWKHLVVXHZDVQHFHVVDU\DQGHVVHQWLDOWRWKH         $WWKH6HQWHQFLQJ+HDULQJWKHGLVWULFWFRXUWGHQLHG%HDW\WKH
MXGJPHQW RQ WKH PHULWV  6HH HJ 8QLWHG 6WDWHV Y 7KUHH    WZROHYHO UHGXFWLRQ IRU DFFHSWDQFH RI UHVSRQVLELOLW\ DQG
7UDFWV RI 3URS /RFDWHG RQ %HDYHU &UHHN .QRWW &RXQW\          LPSRVHGDVHQWHQFHRIWZHQW\RQHPRQWKVLPSULVRQPHQWWZR
.HQWXFN\)GWK&LU1RUXOHRIODZ            \HDUVRIVXSHUYLVHGUHOHDVHDQGDILQH
SUHFOXGHVDSULRUFULPLQDOFRQYLFWLRQIURPKDYLQJSUHFOXVLYH
HIIHFW LQ D VXEVHTXHQW FLYLO SURFHHGLQJ EHWZHHQ WKH                2QDSSHDO%HDW\DUJXHVWKDWWKHGLVWULFWFRXUWHUUHGE\
JRYHUQPHQW DQG WKH GHIHQGDQW  (PLFK 0RWRUV &RUS Y            JLYLQJDGHOLEHUDWHLJQRUDQFHLQVWUXFWLRQWRWKHMXURUVDQG
*HQHUDO0RWRUV&RUS86m,WLVZHOO             IDLOLQJ WR UHGXFH KLV RIIHQVH OHYHO IRU DFFHSWDQFH RI
HVWDEOLVKHG WKDW D SULRU FULPLQDO FRQYLFWLRQ PD\ ZRUN DQ        UHVSRQVLELOLW\SXUVXDQWWR866*(
HVWRSSHO LQ IDYRU RI WKH JRYHUQPHQW LQ D VXEVHTXHQW FLYLO
SURFHHGLQJl  0RUHRYHU m>L@Q WKH FDVH RI D FULPLQDO            %&LYLO)RUIHLWXUH&DVHV
FRQYLFWLRQEDVHGRQDMXU\YHUGLFWRIJXLOW\LVVXHVZKLFKZHUH
HVVHQWLDO WR WKH YHUGLFW PXVW EH UHJDUGHG DV KDYLQJ EHHQ         6XUYHLOODQFHRI%HDW\jVJDPEOLQJDFWLYLWLHVEHJDQLQHDUO\
GHWHUPLQHGE\WKHMXGJPHQWl,GDW                               ZKHQ D FRQFHUQHG FLWL]HQ FDOOHG WKH 0HWURSROLWDQ
                                                                        1DVKYLOOH3ROLFH'HSDUWPHQWm1DVKYLOOH3ROLFHlWRUHSRUWD
  7KHHQWUDSPHQWE\HVWRSSHOGHIHQVH%HDW\VHHNVWRUDLVHLQ            QXPEHUVRSHUDWLRQLQ1DVKYLOOH7HQQHVVHH2Q0DUFK
WKH IRUIHLWXUH SURFHHGLQJ LV LGHQWLFDO WR WKH GHIHQVH KH         WKH 1DVKYLOOH 3ROLFH H[HFXWHG VHDUFK ZDUUDQWV DW
SUHVHQWHGDWKLVFULPLQDOWULDO,QERWKWKHFULPLQDODQGWKH          YDULRXV ORFDWLRQV LQFOXGLQJ %HDW\jV KRPH  7KH 1DVKYLOOH
FLYLOFRQWH[WV%HDW\jVEXUGHQRISURRIIRUHVWDEOLVKLQJWKH            3ROLFH VHL]HG QXPEHUV WLFNHWV DQG  IURP
GHIHQVHLVWKHVDPHnSUHSRQGHUDQFHRIWKHHYLGHQFH6HH              %HDW\jVEHGURRP'XHWRWKHODUJHTXDQWLW\RIPRQH\VHL]HG
HJ8QLWHG6WDWHVY6WHZDUW)GG&LU            WKH1DVKYLOOH3ROLFHFRQWDFWHGWKH,QWHUQDO5HYHQXH6HUYLFH
FHUW GHQLHG  86    $W WULDO %HDW\ FDOOHG   m,56lDQGWKHWZRDJHQFLHVEHJDQDMRLQWLQYHVWLJDWLRQRI
ZLWQHVVHV DQG LQWURGXFHG HYLGHQFH LQ VXSSRUW RI KLV              %HDW\jV QXPEHUV RSHUDWLRQ  2Q 2FWREHU   WKH
HQWUDSPHQW E\ HVWRSSHO GHIHQVH  7KHUHIRUH WKHUH LV OLWWOH     JRYHUQPHQW ILOHG D FRPSODLQW VHHNLQJ IRUIHLWXUH RI
TXHVWLRQWKDWKHDFWXDOO\OLWLJDWHGWKHLVVXH1RULVWKHUHDQ\         VHL]HG LQ WKH UDLG RQ 0DUFK    2Q
GRXEWWKDWWKHMXU\jVGHWHUPLQDWLRQRQWKHLVVXHZDVQHFHVVDU\          $SULOWKHGLVWULFWFRXUWDJUHHGWRVWD\WKHSURFHHGLQJ
DQGHVVHQWLDOWRDMXGJPHQWRQWKHPHULWV$WWULDOWKHMXGJH         SHQGLQJUHVROXWLRQRIDQ\UHODWHGFULPLQDOFDVHV
VSHFLILFDOO\LQVWUXFWHGWKHMXU\WRILQG%HDW\QRWJXLOW\LIKH
HVWDEOLVKHG WKH HQWUDSPHQW E\ HVWRSSHO GHIHQVH E\ D                $IWHU FRQWLQXHG VXUYHLOODQFH RI WKH QXPEHUV RSHUDWLRQ
SUHSRQGHUDQFHRIWKHHYLGHQFH,QRUGHUWRFRQYLFW%HDW\WKH          IHGHUDOODZHQIRUFHPHQWRIILFHUVH[HFXWHGDQRWKHUVHDUFKRI
MXU\KDGWRFRQFOXGHWKDWWKHSUHSRQGHUDQFHRIWKHHYLGHQFH             %HDW\jVKRPHDQGYDULRXVRWKHUORFDWLRQVRQsXQH
GLG QRW VXSSRUW WKH HQWUDSPHQW E\ HVWRSSHO GHIHQVH              7KHRIILFHUVVHL]HGQXPEHUVWLFNHWVDQGIURP
$FFRUGLQJO\ WKH GLVWULFW FRXUW FRUUHFWO\ FRQFOXGHG WKDW DOO     %HDW\jV KRPH  2Q sXO\   WKH JRYHUQPHQW ILOHG D
WKUHHUHTXLUHPHQWVIRUFROODWHUDOHVWRSSHOKDGEHHQVDWLVILHG          IRUIHLWXUHFRPSODLQWVHHNLQJWKHIRUIHLWXUHRIPRQH\VHL]HG
                                                                        GXULQJWKHVHDUFK
  %HFDXVH%HDW\jVVROHREMHFWLRQWRWKHGLVWULFWFRXUWjVJUDQW
RIVXPPDU\MXGJPHQWGHSHQGVXSRQWKHDYDLODELOLW\RIWKH
                                                                        Q
     8QLWHG6WDWHVY%HDW\                  1RV         1RV                     8QLWHG6WDWHVY%HDW\        

  6XUYHLOODQFH RI %HDW\jV QXPEHUV RSHUDWLRQ EHJDQ DJDLQ           FDVHDQGRQZKLFKWKDWSDUW\ZLOOEHDUWKHEXUGHQRISURRIDW
IROORZLQJ WKH H[HFXWLRQ RI WKH sXQH  VHDUFK ZDUUDQWV       WULDOl&HORWH[&RUSY&DWUHWW86
2EVHUYDWLRQRIJDPEOLQJUHODWHGDFWLYLWLHVRYHUWKHQH[W\HDU
OHGWRWKHH[HFXWLRQRIDQRWKHUVHWRIVHDUFKZDUUDQWVLQHDUO\            ,QDIRUIHLWXUHDFWLRQWKHJRYHUQPHQWKDVWKHLQLWLDOEXUGHQ
sXQH2QFHDJDLQWKHJRYHUQPHQWVHL]HGPRQH\DQG                 RIVKRZLQJSUREDEOHFDXVHWRVXSSRUWWKHIRUIHLWXUH8QLWHG
JDPEOLQJ SDUDSKHUQDOLD IURP %HDW\jV KRPH DQG RWKHU                6WDWHVY$Q\DQG$OO5DGLR7UDQVPLVVLRQ(TXLS)G
ORFDWLRQV2QsXO\WKHJRYHUQPHQWILOHGDQRWKHU              WK&LU3UREDEOHFDXVHH[LVWVZKHUHWKHUH
IRUIHLWXUH FRPSODLQW VHHNLQJ WKH PRQH\ VHL]HG GXULQJ WKH         LVmDUHDVRQDEOHJURXQGIRUEHOLHIRIJXLOWVXSSRUWHGE\OHVV
SULRUPRQWKjVVHDUFKHV                                                 WKDQ SULPD IDFLH SURRI EXW PRUH WKDQ PHUH VXVSLFLRQl
                                                                        8QLWHG6WDWHVY7ZHQW\7ZR7KRXVDQG7ZR+XQGUHG(LJKW\
   &RQWLQXHG VXUYHLOODQFH RI %HDW\jV QXPEHUV RSHUDWLRQ             6HYHQ'ROODUV86&XUUHQF\)G
FDXVHGIHGHUDODXWKRULWLHVWRH[HFXWHDIRXUWKDQGILQDOVHWRI          WK &LU  TXRWLQJ 8QLWHG 6WDWHV Y 2QH 
VHDUFKZDUUDQWVRQ)HEUXDU\7KDWVHDUFKUHVXOWHG             &KHYUROHW ,PSDOD  )G   WK &LU   ,Q
LQWKHVHL]XUHRIFDVKQXPEHUVWLFNHWVDQGEHWWLQJSDGVDQG          DGGLWLRQ WR HVWDEOLVKLQJSUREDEOHFDXVHIRUWKHVHL]XUHWKH
OHG WR WKH DUUHVW DQG HYHQWXDO FRQYLFWLRQ RI %HDW\  2Q       JRYHUQPHQWPXVWHVWDEOLVKSUREDEOHFDXVHWKDWWKHUHZDVD
0DUFKWKHJRYHUQPHQWILOHGDIRUIHLWXUHFRPSODLQW             QH[XV EHWZHHQ WKH SURSHUW\ VHL]HG DQG WKH LOOHJDO FRQGXFW
VHHNLQJPRQH\VHL]HGLQWKHUDLGVRQ)HEUXDU\                 JLYLQJ ULVH WR LWV IRUIHLWXUH  8QLWHG 6WDWHV Y 5HDO 3URS
                                                                        .QRZQDQG1XPEHUHGDV60DLQ6W1HZ/H[LQJWRQ
   2Q)HEUXDU\WKHGLVWULFWFRXUWUHLQVWDWHGWKHILUVW        2KLR  )G   WK &LU   2QFH WKH
IRUIHLWXUHFRPSODLQWWRWKHDFWLYHGRFNHWDQGYDFDWHGWKHVWD\         JRYHUQPHQWHVWDEOLVKHVSUREDEOHFDXVHIRUWKHIRUIHLWXUHDQG
7KHGLVWULFWFRXUWFRQVROLGDWHGWKHIRXUIRUIHLWXUHSURFHHGLQJV         VDWLVILHV WKH QH[XV UHTXLUHPHQW WKH EXUGHQ VKLIWV WR WKH
LQWRRQHFDVHRQ6HSWHPEHU,Q2FWREHUWKH              FODLPDQWZKRPXVWSURYHE\DSUHSRQGHUDQFHRIWKHHYLGHQFH
JRYHUQPHQWPRYHGIRUVXPPDU\MXGJPHQW%HDW\RSSRVHG                   WKDW WKH SURSHUW\ LV QRW VXEMHFW WR IRUIHLWXUH  $Q\ DQG $OO
WKHPRWLRQIRUVXPPDU\MXGJPHQWE\DUJXLQJWKDWWKHUHZDV               5DGLR 7UDQVPLVVLRQ (TXLS  )G DW   m,W LV ZHOO
D JHQXLQH LVVXH RI PDWHULDO IDFW UHJDUGLQJ KLV DOOHJHG          VHWWOHG WKDW WKH JRYHUQPHQW LV HQWLWOHG WR D MXGJPHQW RI
HQWUDSPHQWE\WKHIHGHUDOJRYHUQPHQW                                 IRUIHLWXUHXSRQDQXQUHEXWWHGVKRZLQJRISUREDEOHFDXVHl,G
                                                                        TXRWLQJ8QLWHG6WDWHVY+HQGULFNVRQ%OYG)G
  2Q sXO\   WKH GLVWULFW FRXUW JUDQWHG WKH              WK&LU
JRYHUQPHQWjV PRWLRQ DQG HQWHUHG D GHFUHH RI IRUIHLWXUH
%HDW\ILOHGDWLPHO\1RWLFHRI$SSHDODIWHUZKLFKWKHGLVWULFW           %HDW\ FRQWHQGV WKDW WKH GLVWULFW FRXUW HUUHG LQ JUDQWLQJ
FRXUWLVVXHGDQRUGHUH[SODLQLQJLWVUHDVRQVIRUJUDQWLQJWKH           VXPPDU\ MXGJPHQW EHFDXVH KLV HQWUDSPHQW E\ HVWRSSHO
PRWLRQ  ,Q WKH RUGHU WKH GLVWULFW FRXUW LQGLFDWHG WKDW LW   GHIHQVH UDLVHV D JHQXLQH LVVXH RI PDWHULDO IDFW DV WR WKH
JUDQWHGWKHPRWLRQIRUVXPPDU\MXGJPHQWDIWHUFRQFOXGLQJ                H[LVWHQFHRISUREDEOHFDXVH7KHJRYHUQPHQWDUJXHVWKDWWKH
WKDW %HDW\ KDG OLWLJDWHG WKH HQWUDSPHQW E\ HVWRSSHO LVVXH       GLVWULFW FRXUWjV DZDUG RI VXPPDU\ MXGJPHQW ZDV SURSHU
GXULQJWKHUHODWHGFULPLQDOSURFHHGLQJDQGWKDWDVDUHVXOWWKH        EHFDXVHWKHGRFWULQHRIFROODWHUDOHVWRSSHOSUHFOXGHG%HDW\
GHIHQVHZDVEDUUHGE\WKHGRFWULQHRIFROODWHUDOHVWRSSHO2Q          IURPUDLVLQJWKHHQWUDSPHQWE\HVWRSSHOGHIHQVH5DWKHUWKDQ
DSSHDO%HDW\DUJXHVWKDWWKHGLVWULFWFRXUWHUUHGE\JUDQWLQJ          DGGUHVVLQJ WKH DSSOLFDELOLW\ RI WKH GRFWULQH RI FROODWHUDO
WKHJRYHUQPHQWjVPRWLRQIRUVXPPDU\MXGJPHQWEHFDXVHKLV                HVWRSSHO%HDW\LQVWHDGIRFXVHVXSRQWKHIDFWLQWHQVLYHQDWXUH
GHIHQVHRIHQWUDSPHQWE\HVWRSSHOUDLVHGIDFWXDOLVVXHVWKDW            RIWKHHQWUDSPHQWE\HVWRSSHOGHIHQVH
VKRXOGKDYHSUHFOXGHGDQDZDUGRIVXPPDU\MXGJPHQW
       8QLWHG6WDWHVY%HDW\                  1RV            1RV                   8QLWHG6WDWHVY%HDW\       

ZDV QRW ZDUUDQWHG LQ WKLV FDVH  7KHUH LV QRWKLQJ LQ WKH                            ,,,668(621$33($/
UHFRUG WR VXJJHVW WKDW WKLV GHWHUPLQDWLRQ ZDV FOHDUO\
HUURQHRXV)RUWKLVUHDVRQZHDIILUPWKHGHWHUPLQDWLRQRIWKH                 $ 'HOLEHUDWH,JQRUDQFH,QVWUXFWLRQ
FRXUWEHORZ
                                                                                &LWLQJ8QLWHG6WDWHVY/DUD9HODVTXH])G
  & &ROODWHUDO(VWRSSHO                                                      WK&LU%HDW\FRQWHQGVWKDWWKHGLVWULFWFRXUWHUUHGE\
                                                                              JLYLQJ D GHOLEHUDWH LJQRUDQFH LQVWUXFWLRQ LQ WKH DEVHQFH RI
  :LWKUHJDUGWRWKHFLYLOIRUIHLWXUHDFWLRQ%HDW\DUJXHVWKDW               HYLGHQFHVKRZLQJWKDWWKHGHIHQGDQWZDVVXEMHFWLYHO\
WKH GLVWULFW FRXUW HUUHG E\ JUDQWLQJ VXPPDU\ MXGJPHQW LQ              DZDUHRIDKLJKSUREDELOLW\RIWKHH[LVWHQFHRILOOHJDOFRQGXFW
IDYRURIWKHJRYHUQPHQWDIWHUGHWHUPLQLQJWKDWKLVHQWUDSPHQW                 DQGWKHGHIHQGDQWSXUSRVHO\FRQWULYHGWRDYRLGOHDUQLQJRI
GHIHQVHZDVSUHFOXGHGE\WKHGRFWULQHRIFROODWHUDOHVWRSSHO                 WKHLOOHJDOFRQGXFW%HDW\DUJXHVWKDWEHFDXVHWKHJRYHUQPHQW
                                                                              IDLOHGWRPDNHVXFKDVKRZLQJWKHUHLVDVXEVWDQWLDOULVNWKDW
  :HUHYLHZDGLVWULFWFRXUWjVJUDQWRIVXPPDU\MXGJPHQWGH                   WKHMXU\FRQYLFWHGKLPEDVHGXSRQDPHUHQHJOLJHQFHVWDQGDUG
QRYRPDNLQJDOOUHDVRQDEOHLQIHUHQFHVLQIDYRURIWKHQRQ                    UDWKHUWKDQSURRIEH\RQGDUHDVRQDEOHGRXEW
PRYLQJSDUW\((2&Y8QLYHUVLW\RI'HWURLW)G
WK&LU6XPPDU\MXGJPHQWLVSURSHULImWKH                   :H UHYLHZ D GLVWULFW FRXUWjV FKRLFH RI MXU\ LQVWUXFWLRQV
SOHDGLQJV GHSRVLWLRQV DQVZHUV WR LQWHUURJDWRULHV DQG                  DFFRUGLQJWRDQDEXVHGLVFUHWLRQVWDQGDUG8QLWHG6WDWHVY
DGPLVVLRQVRQILOHWRJHWKHUZLWKWKHDIILGDYLWVLIDQ\VKRZ                3ULQFH)GWK&LUFHUWGHQLHG:KLWHY
WKDWWKHUHLVQRJHQXLQHLVVXHDVWRDQ\PDWHULDOIDFWDQGWKDW               8QLWHG6WDWHV6&W$WULDOFRXUWKDVEURDG
WKHPRYLQJSDUW\LVHQWLWOHGWRDMXGJPHQWDVDPDWWHURIODZl               GLVFUHWLRQLQGUDIWLQJMXU\LQVWUXFWLRQVDQGGRHVQRWDEXVHLWV
)(' 5 &,9 3 F  :KHQ ZH UHYLHZ D PRWLRQ IRU                GLVFUHWLRQXQOHVVWKHMXU\FKDUJHmIDLOVDFFXUDWHO\WRUHIOHFWWKH
VXPPDU\MXGJPHQWWKHHYLGHQFHDOOIDFWVDQGDQ\LQIHUHQFHV                 ODZl8QLWHG6WDWHVY/D\QH)GWK&LU
WKDWPD\EHGUDZQIURPWKHIDFWVPXVWEHYLHZHGLQWKHOLJKW                  FHUWGHQLHG86TXRWLQJ8QLWHG
PRVWIDYRUDEOHWRWKHQRQPRYLQJSDUW\0DWVXVKLWD(OHF                     6WDWHV Y %XVDFFD  )G   WK &LU 
,QGXV&RY=HQLWK5DGLR&RUS86                   0RUHRYHU QR VLQJOH SURYLVLRQ RI WKH MXU\ FKDUJH PD\ EH
7RSUHYDLOWKHSDUW\RSSRVLQJVXPPDU\MXGJPHQWPXVWVKRZ                     YLHZHGLQLVRODWLRQUDWKHUWKHFKDUJHPXVWEHFRQVLGHUHGDV
VXIILFLHQWHYLGHQFHWRFUHDWHDJHQXLQHLVVXHRIPDWHULDOIDFW               DZKROH8QLWHG6WDWHVY/HH)GWK&LU
.OHSSHUY)LUVW$P%DQN)GWK&LU                     :HZLOOUHYHUVHDMXGJPHQWEDVHGXSRQDQLPSURSHU
$PHUHVFLQWLOODRIHYLGHQFHLVLQVXIILFLHQWDVmWKHUH               MXU\LQVWUXFWLRQmµRQO\LIWKHLQVWUXFWLRQVYLHZHGDVDZKROH
PXVWEHHYLGHQFHRQZKLFKWKHMXU\FRXOGUHDVRQDEO\ILQGIRU                  ZHUHFRQIXVLQJPLVOHDGLQJRUSUHMXGLFLDOjl8QLWHG6WDWHVY
WKH>QRQPRYDQW@l$QGHUVRQY/LEHUW\/REE\,QF86                 +DUURG)GWK&LUFHUWGHQLHG86
(QWU\RIVXPPDU\MXGJPHQWLVDSSURSULDWH                    TXRWLQJ%HDUGY1RUZHJLDQ&DULEEHDQ/LQHV
mDJDLQVW D SDUW\ ZKR IDLOV WR PDNH D VKRZLQJ VXIILFLHQW WR          )GWK&LU
HVWDEOLVKWKHH[LVWHQFHRIDQHOHPHQWHVVHQWLDOWRWKDWSDUW\jV
                                                                                 %HDW\jV FODLP WKDW WKH GLVWULFW FRXUW HUUHG E\ JLYLQJ D
                                                                              GHOLEHUDWHLJQRUDQFHLQVWUXFWLRQLQWKHDEVHQFHRIVXIILFLHQW
                                                                              HYLGHQFHLVFRQWUROOHGE\8QLWHG6WDWHVY0DUL)G
                                                                             WK&LU,Q0DULWKLV&RXUWKHOGWKDWZKHQDGLVWULFW
     $W WKH 6HQWHQFLQJ +HDULQJ WKH MXGJH VWDWHG m, DP QRW JRLQJ WR JLYH
                                                                              FRXUWJLYHVDGHOLEHUDWHLJQRUDQFHLQVWUXFWLRQWKDWGRHVQRW
                                                                              PLVVWDWHWKHODZEXWLVXQVXSSRUWHGE\VXIILFLHQWHYLGHQFHLW
0U %HDW\ FUHGLW IRU DFFHSWDQFH RI UHVSRQVLELOLW\   , GRQjW WKLQN LW IDOOV
ZLWKLQ WKH UDUH LQVWDQFH RI JRLQJ WR WULDO DQG EHLQJ JLYHQ FUHGLW IRU
DFFHSWDQFH RI UHVSRQVLELOLW\l                                                LVDWPRVWKDUPOHVVHUURU,G,QVXEVHTXHQWFDVHVZHKDYH
     8QLWHG6WDWHVY%HDW\                   1RV         1RV                    8QLWHG6WDWHVY%HDW\           

UHDIILUPHGRXUWKLQNLQJLQ0DUL6HHHJ8QLWHG6WDWHVY            VWDQGDUGRIUHYLHZ8QLWHG6WDWHVY&DUUROO)G
0RQXV)GWK&LUm>(@YHQLIWKHUH            WK&LU$VWKLV&RXUWKDVQRWHG
KDG EHHQ LQVXIILFLHQW HYLGHQFH WR VXSSRUW D GHOLEHUDWH
LJQRUDQFHLQVWUXFWLRQZHPXVWDVVXPHWKDWWKHMXU\IROORZHG               %HFDXVH WKH WULDO FRXUWjV DVVHVVPHQW RI D GHIHQGDQWjV
WKH MXU\ FKDUJH DQG GLG QRW FRQYLFW RQ WKH JURXQGV RI            FRQWULWLRQZLOOGHSHQGKHDYLO\RQFUHGLELOLW\DVVHVVPHQWV
GHOLEHUDWHLJQRUDQFHl                                                   WKH mFOHDUO\ HUURQHRXVl VWDQGDUG ZLOO QHDUO\ DOZD\V
                                                                           VXVWDLQ WKH MXGJPHQW RI WKH GLVWULFW FRXUW LQ WKLV DUHD
   7KHFRXUWEHORZVWULFWO\DGKHUHGWRWKHZRUGLQJRIWKH6L[WK            ,QGHHG WKH JXLGHOLQHV VSHFLILFDOO\ VWDWH WKDW m>W@KH
&LUFXLW3DWWHUQsXU\,QVWUXFWLRQZKLFKDFFXUDWHO\VWDWHVWKH               VHQWHQFLQJMXGJHLVLQDXQLTXHSRVLWLRQWRHYDOXDWHWKH
ODZRIWKLV&LUFXLW6HHHJ8QLWHG6WDWHVY*XOOHW)G         GHIHQGDQWjVDFFHSWDQFHRIUHVSRQVLELOLW\)RUWKLVUHDVRQ
  WK &LU  m>,QVWUXFWLRQ ZKLFK SHUPLWV             WKHGHWHUPLQDWLRQRIWKHVHQWHQFLQJMXGJHLVHQWLWOHGWR
NQRZOHGJH WR EH LQIHUUHG@ GRHV QRW DXWKRUL]H D FRQYLFWLRQ          JUHDWGHIHUHQFHRQUHYLHZDQGVKRXOGQRWEHGLVWXUEHG
EDVHGRQQHJOLJHQWEHKDYLRUEXWUDWKHUSUHYHQWVDFULPLQDO                XQOHVVLWLVZLWKRXWIRXQGDWLRQl
GHIHQGDQWIURPHVFDSLQJFRQYLFWLRQPHUHO\E\GHOLEHUDWHO\
FORVLQJ KLV H\HV WR WKH REYLRXV ULVN WKDW KH LV HQJDJLQJ LQ   ,GTXRWLQJ8QLWHG6WDWHVY7KRPDV)GWK
XQODZIXO FRQGXFWl   7KH SDWWHUQ LQVWUXFWLRQ GRHV QRW          &LU
HQFRXUDJH D FRQYLFWLRQ EDVHG XSRQ PHUH QHJOLJHQFH DQG
LQGHHG H[SUHVVO\ FDXWLRQV DJDLQVW VXFK D ILQGLQJ  3DWWHUQ         ,QVXSSRUWRIKLVFRQWHQWLRQWKDWKHLVHQWLWOHGWRDUHGXFWLRQ
&ULPLQDOsXU\,QVWUXFWLRQVIRUWKH6L[WK&LUFXLW:HVW            LQKLVRIIHQVHOHYHO%HDW\FLWHV8QLWHG6WDWHVY)OHHQHU
m&DUHOHVVQHVVRUQHJOLJHQFHRUIRROLVKQHVVRQKLVSDUW            )GWK&LU,Q)OHHQHUZHKHOGWKDWDGLVWULFW
LVQRWWKHVDPHDVNQRZOHGJHDQGLVQRWHQRXJKWRFRQYLFWl            FRXUW GLG QRW HUU LQ JUDQWLQJ D UHGXFWLRQ IRU DFFHSWDQFH RI
0RUHRYHUDWVHYHUDORWKHUSRLQWVGXULQJLWVMXU\FKDUJHWKH            UHVSRQVLELOLW\ZKHUHDGHIHQGDQWZHQWWRWULDOLQRUGHUWRUDLVH
GLVWULFWFRXUWUHPLQGHGWKHMXU\WKDWLWFRXOGQRWFRQYLFW%HDW\         DQHQWUDSPHQWGHIHQVH,G$OWKRXJKRXUGHFLVLRQLQ)OHHQHU
XQOHVVLWIRXQGKLPJXLOW\EH\RQGDUHDVRQDEOHGRXEW                    UHFRJQL]HVWKDWLWLVZLWKLQDGLVWULFWFRXUWjVGLVFUHWLRQWRJUDQW
                                                                         D UHGXFWLRQ IRU DFFHSWDQFH RI UHVSRQVLELOLW\ WR D GHIHQGDQW
  %HFDXVHWKHGLVWULFWFRXUWGLGQRWPLVVWDWHWKHODZUHJDUGLQJ          ZKRSURFHHGVWRWULDOWRUDLVHDQHQWUDSPHQWGHIHQVHLWGRHV
GHOLEHUDWHLJQRUDQFHDQGWKHLQVWUXFWLRQVYLHZHGDVDZKROH            QRWVWDQGIRUWKHSURSRVLWLRQWKDWDQ\GHIHQGDQWZKRUDLVHVDQ
ZHUHQRWFRQIXVLQJPLVOHDGLQJRUSUHMXGLFLDOZHFRQFOXGH              HQWUDSPHQWGHIHQVHLVHQWLWOHGWRDUHGXFWLRQLQKLVRIIHQVH
WKDWWKHGLVWULFWFRXUWGLGQRWFRPPLWUHYHUVLEOHHUURULQJLYLQJ        OHYHOIRUDFFHSWDQFHRIUHVSRQVLELOLW\5DWKHU)OHHQHUVWDQGV
WKHGHOLEHUDWHLJQRUDQFHLQVWUXFWLRQ                                    IRU WKH SURSRVLWLRQ WKDW WKH GHFLVLRQ RI ZKHWKHU WR JUDQW D
                                                                         UHGXFWLRQIRUDFFHSWDQFHRIUHVSRQVLELOLW\WRDGHIHQGDQWZKR
    % $FFHSWDQFHRI5HVSRQVLELOLW\                                      KDVSURFHHGHGWRWULDOWRSUHVHQWDQHQWUDSPHQWGHIHQVHUHVWV
                                                                         ZLWKWKHGLVFUHWLRQRIWKHWULDOMXGJH7KHWULDOMXGJHLQWKLV
  %HDW\ IXUWKHU FRQWHQGV WKDW WKH GLVWULFW FRXUW HUUHG E\        FDVHH[SUHVVO\UHFRJQL]HGWKDWLQUDUHFLUFXPVWDQFHVDFRXUW
UHIXVLQJ WR UHGXFH KLV RIIHQVH OHYHO IRU DFFHSWDQFH RI           PD\JUDQWDGHIHQGDQWZKRSURFHHGVWRWULDODUHGXFWLRQIRU
UHVSRQVLELOLW\:HGLVDJUHH                                            DFFHSWDQFHRIUHVSRQVLELOLW\EXWIRXQGWKDWVXFKDUHGXFWLRQ
  $GLVWULFWFRXUWjVGHFLVLRQUHJDUGLQJZKHWKHUWRUHGXFHD
GHIHQGDQWjVRIIHQVHOHYHOIRUDFFHSWDQFHRIUHVSRQVLELOLW\LVD
IDFWXDO GHWHUPLQDWLRQ WKDW LV VXEMHFW WR D FOHDUO\ HUURQHRXV