Court Opinion

ID: 2970466
Source: CourtListenerOpinion
Date Created: 2015-09-22 16:14:03.294135+00
Date Added: 2024-06-11T11:42:19.392080
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

($51(67 %(// s5          ;
        3ODLQWLII$SSHOODQW 
                             
                                     1R
         Y                  
                              !
                             
52%(57 s2+1621HWDO      
               'HIHQGDQWV 
                             
0$5. 67,03621 $//(1         
%/$77(5                     
                             
      'HIHQGDQWV$SSHOOHHV 1

      $SSHDOIURPWKH8QLWHG6WDWHV'LVWULFW&RXUW
     IRUWKH(DVWHUQ'LVWULFWRI0LFKLJDQDW'HWURLW
 1RnsRKQ&RUEHWW2j0HDUD'LVWULFWsXGJH
                $UJXHG$XJXVW
          'HFLGHGDQG)LOHG2FWREHU
%HIRUH.(,7+0225(DQG*,/0$1&LUFXLWsXGJHV
                  BBBBBBBBBBBBBBBBB
                       &2816(/
$5*8('  3DXO ' 5HLQJROG 81,9(56,7< 2)
0,&+,*$1 &/,1,&$/ /$: 352*5$0 $QQ $UERU

                            
     %HOOYsRKQVRQHWDO                        1R

0LFKLJDQIRU$SSHOODQWsRKQ/7KXUEHU2)),&(2)7+(
$77251(<*(1(5$//DQVLQJ0LFKLJDQIRU$SSHOOHHV
21 %5,()  3DXO ' 5HLQJROG 81,9(56,7< 2)
0,&+,*$1 &/,1,&$/ /$: 352*5$0 $QQ $UERU
0LFKLJDQIRU$SSHOODQWsRKQ/7KXUEHU2)),&(2)7+(
$77251(<*(1(5$//DQVLQJ0LFKLJDQIRU$SSHOOHHV
                     BBBBBBBBBBBBBBBBB
                         23,1,21
                     BBBBBBBBBBBBBBBBB
   .$5(11(/6210225(&LUFXLWsXGJH7KH$SSHOODQW
(DUQHVW %HOO sU D IRUPHU LQPDWH DW WKH 6WDWH 3ULVRQ IRU
6RXWKHUQ 0LFKLJDQ LQ sDFNVRQ msDFNVRQl DSSHDOV WKH
GLVWULFW FRXUWjV JUDQW RI MXGJPHQW DV D PDWWHU RI ODZ WR
'HIHQGDQWV$SSHOOHHV $ODQ %ODWWHU DQG 0DUN 6WLPSVRQ
IROORZLQJWKHSUHVHQWDWLRQRISODLQWLIIjVFDVHLQFKLHILQDMXU\
WULDO%HOOjVFODLPDOOHJHGWKDW%ODWWHUDQG6WLPSVRQ
ZKRDUHERWKSULVRQJXDUGVDWsDFNVRQVKRRNGRZQKLVFHOO
DQGFRQILVFDWHGKLVOHJDOSDSHUVDQGPHGLFDOGLHWVQDFNVLQ
UHWDOLDWLRQIRUDFLYLOULJKWVODZVXLWILOHGE\%HOOZKLOHKHZDV
DQ LQPDWH DW sDFNVRQ  7KH GLVWULFW FRXUW GHWHUPLQHG WKDW
%HOOjVHYLGHQFHZDVLQVXIILFLHQWDVDPDWWHURIODZWRVKRZ
WKDWDSHUVRQRIRUGLQDU\ILUPQHVVZRXOGEHGHWHUUHGE\WKH
DOOHJHGUHWDOLDWRU\DFWV$OWHUQDWLYHO\WKHGLVWULFWFRXUWIRXQG
WKDWWKHVWDQGDUGIRU)LUVW$PHQGPHQWFODLPVZDVQRWFOHDUO\
HVWDEOLVKHGDWWKHWLPHRIWKHHYHQWVLQTXHVWLRQ7KHGLVWULFW
FRXUWFRQFOXGHGWKDWWKHHVWDEOLVKHGVWDQGDUGDWWKHWLPHRI
WKHDOOHJHGUHWDOLDWRU\DFWVUHTXLUHGDQLQPDWHWRVKRZWKDWWKH
GHIHQGDQWVjFRQGXFWmVKRFNHGWKHFRQVFLHQFHl)LQGLQJWKDW
%HOOFRXOGQRWPHHWWKLVEXUGHQWKHFRXUWGHWHUPLQHGWKDWWKH
GHIHQGDQWV ZHUH HQWLWOHG WR TXDOLILHG LPPXQLW\  )RU WKH
UHDVRQV WKDW IROORZ ZH 5(9(56( WKH GLVWULFW FRXUWjV
GHFLVLRQDQG5(0$1'IRUIXUWKHUSURFHHGLQJVFRQVLVWHQW
ZLWKWKLVRSLQLRQ
   %HOOYsRKQVRQHWDO                   1R     1R                          %HOOYsRKQVRQHWDO      

                   ,,,&21&/86,21                                           ,)$&76$1'352&('85(
  %DVHGXSRQWKHIRUHJRLQJGLVFXVVLRQZH5(9(56(WKH          $)DFWXDO%DFNJURXQG
GLVWULFWFRXUWjVJUDQWRIMXGJPHQWDVDPDWWHURIODZWRWKH
GHIHQGDQWVDQG5(0$1'IRUIXUWKHUSURFHHGLQJVFRQVLVWHQW         %HOOLVDIRUPHUSULVRQHUDWWKH6WDWH3ULVRQIRU6RXWKHUQ
ZLWKWKLVRSLQLRQ                                             0LFKLJDQLQsDFNVRQ,Q%HOOZDVVHUYLQJDVHQWHQFH
                                                               IRU DUPHG UREEHU\  +H ZDV DVVLJQHG WR DGPLQLVWUDWLYH
                                                               VHJUHJDWLRQ GXULQJ KLV VWD\ DW sDFNVRQ EHFDXVH KH ZDV
                                                               GLDJQRVHGZLWK$,'6DQGKDGHQJDJHGLQFRQVHQVXDOVH[ZLWK
                                                               DQRWKHULQPDWH%HOOZDVSDUROHGLQ%HOOUHWXUQHGWR
                                                               sDFNVRQODWHUWKDW\HDUDIWHUKHYLRODWHGKLVSDUROHE\IDLOLQJ
                                                               DGUXJWHVW:KHQKHUHWXUQHGWRSULVRQ%HOOZDVRQFHDJDLQ
                                                               DVVLJQHGWRDGPLQLVWUDWLYHVHJUHJDWLRQEDVHGXSRQKLVSULRU
                                                               VH[XDOPLVFRQGXFW
                                                                 ,QDGPLQLVWUDWLYHVHJUHJDWLRQSULVRQHUVDUHKRXVHGDORQHLQ
                                                               FHOOVZLWKVWHHOGRRUV3ULVRQHUVLQVHJUHJDWLRQDUHORFNHGLQ
                                                               WKHLUFHOOVIRUWZHQW\WKUHHKRXUVHDFKGD\EXWDUHDOORZHGWR
                                                               VSHQG RQH KRXU LQ WKH SULVRQ \DUG ZKHUH WKH LQPDWHV DUH
                                                               SODFHG LQ FDJHV WR LVRODWH WKHP  %HFDXVH SULVRQHUV LQ
                                                               VHJUHJDWLRQ DUH QRW DOORZHG WR FRQJUHJDWH WKH SULVRQHUV
                                                               FRPPXQLFDWHZLWKHDFKRWKHUE\\HOOLQJWKURXJKFUDFNVXQGHU
                                                               WKHFHOOGRRUVSDVVLQJQRWHVWKURXJKJXDUGVRUVOLGLQJQRWHV
                                                               EHWZHHQFHOOVXVLQJSDSHUDQGVWULQJ
                                                                  ,Q$SULO%HOOVRXJKWOHJDODVVLVWDQFHLQSXUVXLQJD
                                                               YDULHW\RIFLYLOULJKWVFODLPVIURPDMDLOKRXVHODZ\HUQDPHG
                                                               7KDGGHXV;ZKRZDVKRXVHGLQDQHDUE\FHOO2Q$SULO
                                                                %HOO DQG 7KDGGHXV; VLJQHG D OHJDO DVVLVWDQFH
                                                               DJUHHPHQWZKLFKZDVDSSURYHGE\DGHSXW\ZDUGHQ:LWK
                                                               7KDGGHXV;jV DVVLVWDQFH %HOO ILOHG D ODZVXLW DJDLQVW
                                                               VHYHQWHHQ SULVRQ JXDUGV DQG DGPLQLVWUDWRUV LQFOXGLQJ 6JW
                                                               $ODQ%ODWWHUDQG2IILFHU0DUN6WLPSVRQ%HOOjVVXLWDOOHJHG
                                                               DQXPEHURIFODLPVLQFOXGLQJDFKDOOHQJHWRKLVSODFHPHQWLQ
                                                               DGPLQLVWUDWLYH VHJUHJDWLRQ  %HIRUH WKH ODZVXLW ZDV ILOHG
                                                               SULVRQ JXDUGV DVVLVWHG %HOO E\ SURYLGLQJ KLP ZLWK ZULWLQJ
                                                               PDWHULDOVDQGE\SDVVLQJSDSHUVDQGOHJDOPDWHULDOVEHWZHHQ
                                                               %HOODQG7KDGGHXV;
                                                                 %HOOFODLPVWKDWWKHJXDUGVEHJDQWUHDWLQJKLPGLIIHUHQWO\
                                                               DIWHU WKH ODZVXLW ZDV ILOHG  7KH JXDUGV EHJDQ UHIXVLQJ WR
     %HOOYsRKQVRQHWDO                        1R       1R                         %HOOYsRKQVRQHWDO     

SURYLGH%HOOZLWKZULWLQJVXSSOLHVRUWRSDVVOHJDOPDWHULDOV          LQPDWH DOOHJDWLRQV VXEVWDQWLDOO\ VLPLODU WR %HOOjV VWDWHG
EHWZHHQ%HOODQG7KDGGHXV;$FFRUGLQJWR%HOODQGIHOORZ            FRJQL]DEOHFODLPVIRU)LUVW$PHQGPHQWUHWDOLDWLRQXQGHUWKH
LQPDWH(ULF:DGGHOO%HOOjVODZVXLWZDVFRPPRQNQRZOHGJH               VDPHEDVLF)LUVW$PHQGPHQWSULQFLSOHVWKDWXQGHUOLH*LEEV
DPRQJ WKH JXDUGV EHFDXVH 7KDGGHXV; IUHTXHQWO\ ERDVWHG           DQG1HZVRP6HH:ULJKW)GDW*UHHQ)G
DERXW WKH VXLW DQG EHFDXVH WKH SULVRQHUV RQ WKH IORRU KDG   DW+DOO)GDWDFFRUG3HQURG)G
GLVFXVVHGWKHVXLWE\VKRXWLQJIURPFHOOWRFHOO,QUHVSRQVH         DW  GHQ\LQJ TXDOLILHG LPPXQLW\ EHFDXVH FOHDUO\
WRZKDWKHSHUFHLYHGWREHXQGXHKDUDVVPHQWE\VHYHUDORIWKH          HVWDEOLVKHG ODZ LQ  SURKLELWHG FRQILVFDWLQJ OHJDO
SULVRQ JXDUGV %HOO VHQW D m1RWLFH RI /LWLJDWLRQl WR WKH      PDWHULDOVGHQ\LQJSULVRQHUVK\JLHQHLWHPVDQGWUDQVIHUULQJ
VHYHQWHHQQDPHGGHIHQGDQWVLQKLVODZVXLWRQsXQH             SULVRQHUVWRVHJUHJDWLRQLQUHWDOLDWLRQIRUDFFHVVLQJFRXUWVFI
7KH QRWLFH H[SODLQHG WKDW %HOO KDG ILOHG D IHGHUDO ODZVXLW    6FKHUY(QJHONH)GWK&LUm7KLVLV
DJDLQVWWKHQDPHGGHIHQGDQWVDQGZDUQHGWKDWm>D@Q\IXUWKHU            DFOHDUFDVHRIDSULVRQHUZKRZDVVXEMHFWHGWRUHWDOLDWRU\FHOO
KDUDVVPHQWRUUHWDOLDWLRQZLOOEHUHSRUWHGLPPHGLDWHO\WR>WKH         VHDUFKHV DQG FRQGXFW YLRODWLRQV IRU EULQJLQJ WKH LOOLFLW
GLVWULFWMXGJH@E\SODLQWLIIlsRLQW$SSHQGL[ms$lDW        FRQGXFWRIDSULVRQJXDUGWRWKHDWWHQWLRQRISULVRQRIILFLDOV
                                                                       7KHODZPDNLQJUHWDOLDWLRQIRUWKHH[HUFLVHRIDFRQVWLWXWLRQDO
  2QsXQH6JW%ODWWHUFRQGXFWHGDVHDUFKRI%HOOjV           ULJKWDFWLRQDEOHXQGHUKDVEHHQHVWDEOLVKHGIRUVRPH
FHOOZKLOH%HOOZDVLQWKHSULVRQ\DUGIRUKLVGDLO\KRXURI           WLPHDQGDQREMHFWLYHO\UHDVRQDEOHRIILFLDOFRXOGQRWIDLOWR
m\DUGWLPHl:KHQ%HOOUHWXUQHGWRKLVFHOOKHIRXQGWKHFHOO        NQRZ RI LWl FHUW GHQLHG  86    7KLV
LQGLVDUUD\DQGKHQRWLFHGWKDWVRPHRIKLVOHJDOSDSHUVDQG          DXWKRULW\IXUWKHULQIRUPVRXUXQGHUVWDQGLQJRIZKDWODZZDV
KLVPHGLFDOGLHWVQDFNVKDGEHHQWDNHQ:DGGHOOZKRVHFHOO           FOHDUO\HVWDEOLVKHGLQ6HH&KDSSHO)GDW,Q
ZDVGLUHFWO\DFURVVWKHKDOOIURP%HOOjVVDZ%ODWWHUHQWHUWKH        FRPELQDWLRQZLWKRXURZQGHFLVLRQVLQ*LEEVDQG1HZVRP
FHOODQGOHDYHZLWKSDSHUVDQG%HOOjVVQDFNV%HOOWHVWLILHG          ZHWKLQNWKLVDXWKRULW\ZRXOGKDYHDOHUWHGDUHDVRQDEOHSULVRQ
WKDWKHZDVDOORZHGWRNHHSWKHPHGLFDOVQDFNVLQKLVFHOO             RIILFLDO LQ  WKDW FRQILVFDWLQJ OHJDO SDSHUV DQG RWKHU
EHFDXVHKHKDG$,'6DQGKHQHHGHGH[WUDIRRGWRVORZKLV               SURSHUW\LQUHWDOLDWLRQIRUWKHSULVRQHUjVH[HUFLVHRIKLVULJKW
ZHLJKWORVV$WWULDO%ODWWHUDGPLWWHGWRFRQGXFWLQJWKHFHOO        RI DFFHVV WR WKH FRXUWV ZRXOG YLRODWH WKH LQPDWHjV
VHDUFKDQGWRUHPRYLQJ%HOOjVPHGLFDOVQDFNVDOWKRXJKKH              FRQVWLWXWLRQDOULJKWV
GHQLHGWDNLQJDQ\OHJDOSDSHUV%ODWWHUDOVRDFNQRZOHGJHG
WKDWWKHIRRGZDVJLYHQWR%HOOIRUPHGLFDOUHDVRQV                      ,Q VXP ZH FRQFOXGH WKDW WKH SODLQWLIIVj DOOHJDWLRQV LI
                                                                       SURYHQZRXOGHVWDEOLVKDYLRODWLRQRIWKHODZWKDWZDVFOHDUO\
   %HOOILOHGWZRJULHYDQFHVFRQFHUQLQJWKHsXQHVHDUFKRI           HVWDEOLVKHG LQ   2XU UHYLHZ RI WKH UHOHYDQW FDVH ODZ
KLVFHOO2QsXQH%HOOVSRNHZLWK6JW%ODWWHUDQG           UHYHDOVWKDWLWZDVQRWXQWLO0F/DXULQZDVLVVXHGLQWKDW
DVNHG KLP DERXW WKH OHJDO PDWHULDOV  $FFRUGLQJ WR %HOO      D UHDVRQDEOH RIILFLDO PLJKW H[SHFW WR HVFDSH OLDELOLW\ IRU
%ODWWHUUHVSRQGHGE\WHOOLQJ%HOOWKDWmLI>KH@NQHZZKDWZDV          UHWDOLDWRU\DFWVIDOOLQJVKRUWRIFRQVFLHQFHVKRFNLQJDEXVHVRI
JRRGIRUKLPWKDW>KH@EHWWHUZULWHWKHFRXUWV>DQG@KDYHWKH         SRZHU3ULRUWRWKDWRSLQLRQWKHSXEOLVKHGDXWKRULW\LQRXU
OLWLJDWLRQGLVPLVVHGls$DW3O([K2QsXQH         FLUFXLWPDGHLWFOHDUWKDWWKHmVKRFNVWKHFRQVFLHQFHlWHVWGLG
WKHSULVRQVWDIIPRYHG7KDGGHXV;IURPWKHVHFRQGIORRUWR             QRWDSSO\WRUHWDOLDWLRQFODLPVH[SUHVVO\EURXJKWXQGHUWKH
WKHEDVHOHYHORIDGPLQLVWUDWLYHVHJUHJDWLRQPDNLQJLWYHU\           )LUVW$PHQGPHQW:HWKHUHIRUHGHWHUPLQHWKDWGHIHQGDQWV
                                                                       DUHQRWHQWLWOHGWRTXDOLILHGLPPXQLW\
     %HOOYsRKQVRQHWDO                              1R        1R                           %HOOYsRKQVRQHWDO        

FLWHGE\WKHGHIHQGDQWVZDVYDFDWHGLQDSHUFXULDPRUGHU                     GLIILFXOWIRU%HOOWRFRPPXQLFDWHZLWKKLPDERXWWKHODZVXLW
0F/DXULQ)GWK&LUXQSXEOLVKHGWDEOH                      7KDW GD\ %HOO ILOHG DQ DPHQGHG FRPSODLQW GHVFULELQJ WKH
GHFLVLRQ DQG WKHUHIRUH DQ\ VWDWHPHQWV FRQWDLQHG LQ WKDW               UHWDOLDWRU\FHOOVHDUFKRQsXQH
RSLQLRQODFNSUHFHGHQWLDOYDOXH
                                                                                  2QsXQHQRWLFHRI%HOOjVODZVXLWZDVRIILFLDOO\
   :H FRQFOXGH WKDW*LEEV DQG 1HZVRP VHW IRUWK WKH OHJDO               UHFHLYHG E\ WKH SULVRQ OLWLJDWLRQ FRRUGLQDWRU RQ EHKDOI RI
VWDQGDUGVIRUD)LUVW$PHQGPHQWUHWDOLDWLRQFODLPRIZKLFKD                   GHIHQGDQWV%ODWWHUDQG6WLPSVRQ2QsXQH2IILFHU
UHDVRQDEOHRIILFLDOZRXOGKDYHEHHQDZDUHLQ8QGHU                      6WLPSVRQDOOHJHGO\FDPHWR%HOOjVFHOODQGWROG%HOOWKDWKH
WKLVVWDQGDUGLWZDVFOHDUWKDWDGYHUVHDFWLRQVIDOOLQJVKRUWRI              mZDVJRLQJWRSD\lIRUILOLQJWKHODZVXLWs$DW6XSS
mFRQVFLHQFHVKRFNLQJlDEXVHVRISRZHUZRXOGJLYHULVHWRD                     &RPSO:KLOH%HOOZDVLQWKHSULVRQ\DUGRQsXQH6JW
FRJQL]DEOH FRQVWLWXWLRQDO FODLP LI WKH\ ZHUH XQGHUWDNHQ LQ              %ODWWHUDQG2IILFHU6WLPSVRQDJDLQVHDUFKHG%HOOjVFHOO%HOO
UHWDOLDWLRQ IRU D SULVRQHUjV H[HUFLVH RI KLV RU KHU )LUVW             UHWXUQHGWRILQGWKDWPRUHRIKLVOHJDOPDWHULDOVZHUHPLVVLQJ
$PHQGPHQWULJKWV:HFRQFOXGHWKDWDUHDVRQDEOHRIILFLDO                      :DGGHOOREVHUYHGWKLVVHDUFKIURPKLVFHOODQGVDZ%ODWWHU
ZRXOGKDYHEHHQDZDUHWKDWXQGHUWKH*LEEVDQG1HZVRP                         DQG6WLPSVRQFRQILVFDWH%HOOjVIRRGDQGOHJDOSDSHUV%HOO
VWDQGDUGFRQGXFWLQJKDUDVVLQJFHOOVHDUFKHVDQGFRQILVFDWLQJ                  ILOHGDQRWKHUJULHYDQFHIRXUGD\VODWHUVHHNLQJWKHUHWXUQRI
DQLQPDWHjVOHJDOSDSHUVDQGPHGLFDOGLHWDU\VXSSOHPHQWVLQ                    KLVSURSHUW\
UHWDOLDWLRQIRUWKHLQPDWHjVH[HUFLVHRIKLVULJKWRIDFFHVVWR
WKHFRXUWVZRXOGJLYHULVHWRFRQVWLWXWLRQDOOLDELOLW\7KHVH                    0LFKLJDQ 'HSDUWPHQW RI &RUUHFWLRQV m0'2&l SROLF\
DFWLRQV DUH FRPSDUDEOH LQ VHULRXVQHVV ZH WKLQN WR WKH                UHJXODWHV VKDNHGRZQV RI SULVRQHUVj FHOOV  0'2& 3ROLF\
ZDUGHQjVUHIXVDOWRUHDSSRLQWDSULVRQHUDVDQLQPDWHOHJDO                    'LUHFWLYH  SURYLGHV WKDW mQR VHDUFK VKDOO EH
DGYLVRU WKDW ZDV DW LVVXH LQ 1HZVRP  )G   7KDW            FRQGXFWHG IRU WKH SXUSRVH RI KDUDVVLQJ RU KXPLOLDWLQJ D
RSLQLRQ LQ SDUWLFXODU PDGH LW TXLWH FOHDU WKDW DQ LQMXU\            SULVRQHUls$DW([K7KHSROLF\IXUWKHULQVWUXFWV
LQIOLFWHGLQUHWDOLDWLRQIRUDQLQPDWHjVSURWHFWHGFRQGXFWQHHG                SULVRQVWDIIWRmXVHUHDVRQDEOHFDUHLQFRQGXFWLQJWKHVHDUFK
QRWEHVHYHUHWREHDFWLRQDEOH,GDW                                   WR SURWHFW DQG VDIHJXDUG WKH SULVRQHUjV SURSHUW\ DQG   
                                                                               DWWHPSWWROHDYHVHDUFKHGDUHDVLQDVLPLODUFRQGLWLRQWRZKDW
  0RUHRYHU ZH QRWH WKDW DW WKH WLPH RI WKH GHIHQGDQWVj              WKH\ZHUHSULRUWRWKHVHDUFKls$DW3ULVRQVWDIIDUH
DFWLRQVDWDQXPEHURIFDVHVIURPRWKHUFLUFXLWVKDGKHOGWKDW                DOVRGLUHFWHGWRHQWHUWKHFHOOVHDUFKLQWRWKHFHOOVHDUFKORJ
                                                                               DQGWRFRPSOHWHDFRQWUDEDQGUHPRYDOUHFRUGDQGDQRWLFHRI
                                                                               LQWHQWWRFRQGXFWDQDGPLQLVWUDWLYHKHDULQJ ZKHQHYHUQRQ
                                                                               GDQJHURXVFRQWUDEDQGLVUHPRYHGIURPDSULVRQHUjVFHOO1R
DSSOLHG LQFRQVLVWHQW DQDO\VHV IRU >SULVRQHU@ UHWDOLDWLRQ FODLPV RIWHQ         HQWU\ZDVPDGHLQWKHFHOOVHDUFKORJQRUZDVDQ\QRWLFHRI
UHTXLULQJ D SULVRQHU WR GHPRQVWUDWH WKDW WKH GHIHQGDQWjV FRQGXFW µVKRFNV       LQWHQWILOHGLQFRQQHFWLRQZLWKHLWKHUWKHsXQHRUWKHsXQH
WKH FRQVFLHQFHjl ,G DW 
 :H GHFOLQH GHIHQGDQWVj LQYLWDWLRQ WR DGRSW
WKH UHDVRQLQJ RI :R]QLDN :R]QLDN ZDV XQSXEOLVKHG DQG WKHUHIRUH LV QRW         VHDUFKRI%HOOjVFHOO
ELQGLQJ RQ WKLV SDQHO 6DODPDOHNLV  )G DW  0RUHRYHU ZH WKLQN
WKDW :R]QLDN PLVFRQVWUXHG 7KDGGHXV; $OWKRXJK LW LV WUXH WKDW WKH
7KDGGHXV; HQ EDQF RSLQLRQ QRWHG WKH H[LVWHQFH RI LQFRQVLVWHQW DXWKRULW\
LQ WKLV FLUFXLW WKH 7KDGGHXV; FRXUW H[SOLFLWO\ REVHUYHG WKDW WKH mVKRFNV
WKH FRQVFLHQFHl VWDQGDUG KDG EHHQ LPSRVHG mPDLQO\ LQ XQSXEOLVKHG                   
RSLQLRQVl  )G DW  %DVHG XSRQ RXU UHYLHZ RI WKH SXEOLVKHG                   %DVH OHYHO RI VHJUHJDWLRQ LV WUDGLWLRQDOO\ UHVHUYHG IRU SRWHQWLDO
DXWKRULW\ DYDLODEOH LQ  ZH FRQFOXGH WKDW WKH ODZ RI )LUVW $PHQGPHQW       VXLFLGHV DQG PHQWDOO\ LOO LQPDWHV DQG LV NQRZQ IRU LWV mXQSOHDVDQW DQG
UHWDOLDWLRQ ZDV FOHDU DW WKDW WLPH WKDW WKH mVKRFNV WKH FRQVFLHQFHl VWDQGDUG   XQKHDOWK\ FRQGLWLRQVl 7KDGGHXV; Y %ODWWHU  )G   WK
GLG QRW DSSO\ WR )LUVW $PHQGPHQW UHWDOLDWLRQ FDVHV                            &LU  HQ EDQF
     %HOOYsRKQVRQHWDO                        1R       1R                               %HOOYsRKQVRQHWDO        

  %HOOVWDWHGWKDWKLVOHJDOPDWHULDOVZHUHQHYHUUHWXUQHGWR          DW6HFRQGZHWKLQNWKDW0F/DXULQLQFRUUHFWO\GHVFULEHG
KLP+HHYHQWXDOO\ZDVDEOHWRREWDLQFRSLHVIURPKLVVLVWHU         WKHVWDWHRIWKHODZZKHQLWREVHUYHGWKDWWKH6L[WK&LUFXLWKDG
ZKRKDGNHSWGXSOLFDWHVRIVRPHRIKLVILOLQJV%HOOWHVWLILHG        FRQVLVWHQWO\UHTXLUHGLQPDWHVWRVKRZmFRQVFLHQFHVKRFNLQJl
WKDWKHEHFDPHDQJU\DQGDIUDLGDVDUHVXOWRIWKHDFWLRQVRI          EHKDYLRU WR VWDWH UHWDOLDWLRQ FODLPV  ,Q IDFW DOO RI RXU
SULVRQRIILFLDOVUHJDUGLQJKLVODZVXLW+HH[SODLQHGm,ZDV         SXEOLVKHGDXWKRULW\IROORZLQJ&DOHDQGSUHFHGLQJ0F/DXULQ
DQJU\,WJRWWRWKHSRLQWZKHUH,ZDVNLQGRIVNHSWLFDOIURP         ZDVWRWKHFRQWUDU\2WKHUWKDQWKH&DOHRSLQLRQWKHRQO\
JRLQJ WR WKH \DUG  , KDG VWDUWHG EHLQJ DIUDLG EHFDXVH P\   DXWKRULWLHVFLWHGE\0F/DXULQRQWKHmVKRFNVWKHFRQVFLHQFHl
PHGLFDOVQDFNVWKH\FRXOGKDYHVWDUWHGWRGRLQJDQ\WKLQJWR          UHTXLUHPHQWZHUHXQSXEOLVKHGFDVHV,WLVZHOOHVWDEOLVKHG
P\IRRGls$DW%HOO7UDW                       ODZ LQ WKLV FLUFXLW WKDW XQSXEOLVKHG FDVHV DUH QRW ELQGLQJ
                                                                       SUHFHGHQW6DODPDOHNLVY&RPPjURI6RF6HF)G
%3URFHGXUDO+LVWRU\                                                 WK&LU&DWWLQY*HQ0RWRUV&RUS)G
                                                                       QWK&LU7KHFRQFXUUHQFHLQ0F/DXULQ
  3ODLQWLIIILOHGKLVLQLWLDOSURVHFRPSODLQWRQ0D\        PDGH WKLV YHU\ SRLQW  0F/DXULQ  )G DW  5\DQ
%HOOjV RULJLQDO FRPSODLQW QDPHG VHYHQWHHQ GHIHQGDQWV             FRQFXUULQJm>7@KHPDMRULW\jVUHOLDQFHRQXQSXEOLVKHGFDVH
LQFOXGLQJ 6WLPSVRQ DQG %ODWWHU DQG DOOHJHG D QXPEHU RI        ODZPD\EHLQWHUHVWLQJDVDQDFDGHPLFPDWWHUEXWWKRVHFDVHV
FODLPVLQFOXGLQJUDFLDOGLVFULPLQDWLRQUHWDOLDWRU\KDUDVVPHQW        VLPSO\ GR QRW KDYH WKH ZHLJKW RI DXWKRULW\l  7KXV WKH
SULYDF\YLRODWLRQVYLRODWLRQVRIGXHSURFHVVDQGDOOHJDWLRQV         XQSXEOLVKHGFDVHVFLWHGLQ0F/DXULQFRXOGQRWKDYHSURYLGHG
WKDW FHUWDLQ FRQGLWLRQV RI KLV FRQILQHPHQW ZHUH FUXHO DQG      DQ\ DVVXUDQFH WR D UHDVRQDEOH RIILFLDO WKDW WKH mVKRFNV WKH
XQXVXDO  2Q sXO\   %HOO ILOHG D VXSSOHPHQWDO          FRQVFLHQFHl VWDQGDUG ZRXOG KDYH EHHQ DSSOLHG LQ 
FRPSODLQW DGGLQJ D FODLP RI )LUVW $PHQGPHQW UHWDOLDWLRQ         SDUWLFXODUO\   LQ OLJKW RI FOHDU SXEOLVKHG DXWKRULW\ WR WKH
EDVHGXSRQWKHFHOOVHDUFKHVE\6WLPSVRQDQG%ODWWHU2Q              FRQWUDU\  0RUHRYHU ZH QRWH WKDW WKH 0F/DXULQ RSLQLRQ
$XJXVWDIHGHUDOPDJLVWUDWHMXGJHLVVXHGDUHSRUW
UHFRPPHQGLQJGLVPLVVDORIDOORISODLQWLIIjVFODLPVH[FHSWIRU
KLVUHWDOLDWLRQFODLPVUHODWLQJWRWKHVHDUFKHVRIKLVFHOORQ             
sXQHDQGsXQH,QDQDO\]LQJWKH)LUVW$PHQGPHQW                  7HOOLQJO\ WKH RULJLQDO SDQHO GHFLVLRQ LQ 7KDGGHXV; LVVXHG
                                                                       DSSUR[LPDWHO\ WZR PRQWKV EHIRUH 0F/DXULQ GLVFHUQHG QR DPELJXLW\ LQ
UHWDOLDWLRQ FODLP WKH PDJLVWUDWH MXGJH UHMHFWHG GHIHQGDQWVj     WKH ODZ RI )LUVW $PHQGPHQW UHWDOLDWLRQ  :/  DW 
 WK &LU
DUJXPHQW WKDW %HOO ZDV UHTXLUHG WR VKRZ WKDW WKH DOOHJHG      $SULO        5DWKHU LQ VHWWLQJ IRUWK WKH JRYHUQLQJ UHWDOLDWLRQ
UHWDOLDWRU\DFWLRQVmVKRFNHGWKHFRQVFLHQFHl7KHPDJLVWUDWH          SULQFLSOH WKH SDQHO FLWHG =LOLFK Y /RQJR  )G   WK &LU
MXGJHQRWHGWKDWWKH6L[WK&LUFXLWKDGSUHYLRXVO\UXOHGWKDW            FHUW GHQLHG  86   DQG *LEEV  )G DW  DQG

FODLPVEDVHGXSRQH[SOLFLWFRQVWLWXWLRQDOJXDUDQWHHVVKRXOG            VWDWHG VLPSO\ WKDW m>U@HWDOLDWLRQ DJDLQVW DQ LQPDWH IRU H[HUFLVLQJ KLV
                                                                       FRQVWLWXWLRQDO ULJKWV LV LWVHOI D YLRODWLRQ RI WKH &RQVWLWXWLRQl 7KDGGHXV;
EHDQDO\]HGDFFRUGLQJWRWKHUHOHYDQWVWDQGDUGVDSSOLFDEOHWR           :/  DW 
 7KHUH ZDV QR VXJJHVWLRQ LQ WKH RULJLQDO
WKH SDUWLFXODU ULJKW DW LVVXH UDWKHU WKDQ WKH mVKRFNV WKH    7KDGGHXV; RSLQLRQ WKDW WKH SODLQWLII KDG WR PHHW WKH KHLJKWHQHG mVKRFNV
FRQVFLHQFHlVWDQGDUGDSSOLFDEOHWRVXEVWDQWLYHGXHSURFHVV             WKH FRQVFLHQFHl WHVW 5DWKHU WKH FRXUW VWDWHG WKDW m>W@R WKH H[WHQW >WKH
FODLPVs$DWFLWLQJ%UDOH\Y&LW\RI3RQWLDF)G        GHIHQGDQWVj@ UHWDOLDWRU\ DFWLRQV JR EH\RQG GH PLQLPLV    WKH\ VXSSRUW

  WK &LU   7KH PDJLVWUDWH MXGJH WKHQ         D UHWDOLDWLRQ FODLPl ,G DW 


FRQFOXGHGWKDWWKHSODLQWLIIjVDOOHJDWLRQVWDWHGDYDOLG)LUVW             
$PHQGPHQWUHWDOLDWLRQFODLPLQOLJKWRIFDVHVIURPWKLVFRXUW                 'HIHQGDQWV DOVR UHO\ RQ DQ XQSXEOLVKHG SHU FXULDP RUGHU LVVXHG E\
                                                                       WKLV FRXUW LQ 7KDGGHXV; Y :R]QLDN  :/  WK &LU ,Q
DQGRWKHUFLUFXLWVSHUPLWWLQJ)LUVW$PHQGPHQWFODLPVWRJR             :R]QLDN ZKLFK ZDV DSSHDOHG E\ WKH SODLQWLII 7KDGGHXV; SUR VH D SDQHO
IRUZDUGRQVLPLODUIDFWV7KHGLVWULFWFRXUWHQWHUHGDQRUGHU         RI WKLV FRXUW DIILUPHG WKH GLVWULFW FRXUWjV JUDQW RI TXDOLILHG LPPXQLW\ LQ D
RQ2FWREHUDGRSWLQJWKHPDJLVWUDWHMXGJHjVUHSRUW             SULVRQHU )LUVW $PHQGPHQW UHWDOLDWLRQ FODLP ,Q WKDW RUGHU ZH REVHUYHG
                                                                       WKDW mWKH >7KDGGHXV; HQ EDQF@ FRXUW QRWHG WKDW WKLV FLUFXLW SUHYLRXVO\ KDG
    %HOOYsRKQVRQHWDO                          1R       1R                         %HOOYsRKQVRQHWDO       

OLJKWRIWKHPRUHUHFHQW6XSUHPH&RXUWGHFLVLRQLQ*UDKDP                DQGUHFRPPHQGDWLRQ3ODLQWLIIVXEVHTXHQWO\VHFXUHGFRXQVHO
Y&RQQRU,DPFRQILGHQWWKDWWKH6L[WK&LUFXLWLQDQRWKHU        DQG ILOHG D VHFRQG DPHQGHG FRPSODLQW RQ 0D\  
FDVHLQYROYLQJDSULVRQJXDUGjVLQWHQWLRQDOLQIULQJHPHQWRIDQ           %HOOjV VHFRQG DPHQGHG FRPSODLQW DVVHUWHG RQO\ WKH )LUVW
LQPDWHjV)LUVW$PHQGPHQWULJKWVE\VRPHUHWDOLDWRU\DFWVRU              $PHQGPHQWUHWDOLDWLRQFODLPVDULVLQJIURPWKHWZRVHDUFKHV
WKUHDWV ZRXOG OLNH 1HZVRP DOORZ WKH ILQGLQJ RI D               RI%HOOjVFHOORQsXQHDQGsXQH
FRQVWLWXWLRQDOWRUWZLWKRXWWKHQHHGIRUDVHSDUDWHILQGLQJ
LQ D EHQFK WULDO WKDW WKLV EHKDYLRU DOVR HLWKHU µVKRFNV WKH      'HIHQGDQWVILOHGDPRWLRQIRUVXPPDU\MXGJPHQWLQ
FRQVFLHQFHj RU LV DQ µHJUHJLRXV DEXVH RI JRYHUQPHQWDO             DIWHUWKLVFRXUWKDQGHGGRZQLWVGHFLVLRQLQ0F/DXULQY&ROH
SRZHUjl2XUFRQFOXVLRQLVVXSSRUWHGE\WKHIDFWWKDWLQKLV          )GWK&LUYDFDWHG)GWK&LU
UHSRUWDQGUHFRPPHQGDWLRQWKHPDJLVWUDWHMXGJHLQWKH              XQSXEOLVKHGWDEOHGHFLVLRQ'HIHQGDQWVFODLPHGWKDW
LQVWDQW FDVH H[SUHVVHG WKH EHOLHI WKDW LW ZDV FOHDU XQGHU      0F/DXULQFODULILHGWKHOHJDOVWDQGDUGIRU)LUVW$PHQGPHQW
*UDKDP86DQG%UDOH\)GDWWKDW               UHWDOLDWLRQFODLPVLQVRIDUDVLWKHOGWKDWDQLQPDWHDOOHJLQJ
WKHmVKRFNVWKHFRQVFLHQFHlWHVWGLGQRWDSSO\WR%HOOjV)LUVW           )LUVW$PHQGPHQWUHWDOLDWLRQPXVWEHDEOHWRVKRZWKDWWKH
$PHQGPHQWUHWDOLDWLRQFODLPVs$DWm7ZR\HDUVDIWHU              DOOHJHG UHWDOLDWRU\ DFWLRQV ZHUH VR HJUHJLRXV RU RSSUHVVLYH
&DOHWKH6L[WK&LUFXLWUHFRJQL]HGWKDWVXEVWDQWLYH GXH            WKDW WKH\ mVKRFNHG WKH FRQVFLHQFHl  7KH PDJLVWUDWH MXGJH
SURFHVVFODLPVEDVHGRQH[SOLFLWFRQVWLWXWLRQDOJXDUDQWHHV         DGGUHVVHG WKLV FODLP LQ KLV 1RYHPEHU   UHSRUW DQG
RIIHUDPRUHFRQFUHWHDQGWKHUHIRUHVXSHULRUJXLGHWRMXGJHV           UHFRPPHQGDWLRQ  1RWLQJ WKDW 0F/DXULQ ZDV m>W@KH RQO\
WKDQ LQWXLWLYH VWDQGDUGV VXFK DV EHKDYLRU WKDW VKRFNV WKH        UHFHQWSXEOLVKHGRSLQLRQE\WKH6L[WK&LUFXLWDGGUHVVLQJWKH
FRQVFLHQFHlTXRWDWLRQVRPLWWHG                                     LVVXHRIDSULVRQHUjVFODLPRIUHWDOLDWLRQlWKHPDJLVWUDWHMXGJH
                                                                         FRQFOXGHG WKDW WKH mVKRFNV WKH FRQVFLHQFHl WHVW ZDV WKH
   'HIHQGDQWVUHO\RQWKLVFRXUWjVRSLQLRQLQ0F/DXULQ             DSSURSULDWH OHJDO VWDQGDUG IRU %HOOjV FODLP  s$ DW 
)GDVHYLGHQFHWKDWWKHmVKRFNVWKHFRQVFLHQFHl               1HYHUWKHOHVVWKHPDJLVWUDWHMXGJHFRQFOXGHGWKDWWKHIDFWV
WHVWDSSOLHGWRSULVRQHUUHWDOLDWLRQFODLPVDWWKHWLPHRIWKH           SUHVHQWHGE\%HOOZHUHVXIILFLHQWWRVWDWHDFODLPXQGHUWKH
GHIHQGDQWVj DFWLRQV  ,Q 0F/DXULQ D SDQHO RI WKLV FRXUW        0F/DXULQVWDQGDUG7KHPDJLVWUDWHMXGJHH[SODLQHG
REVHUYHG WKDW mWKLV FRXUW KDV UHSHDWHGO\ GHPDQGHG WKDW
UHWDOLDWLRQ FODLPV DULVLQJ IURP WKH H[HUFLVH RI )LUVW               , DP VDWLVILHG WKDW VKRXOG LW EH GHWHUPLQHG WKDW
$PHQGPHQWULJKWVEHVKRFNLQJWRWKHFRQVFLHQFHl,GDW              'HIHQGDQWVLQIDFWHQJDJHGLQWKHGLVSXWHGFRQGXFWWKHLU
7KXVWKH0F/DXULQFRXUWFRQFOXGHGWKDWWKHSODLQWLIILQPDWH                DFWLRQVUHDFKWKHOHYHORIVKRFNLQJWKHFRQVFLHQFHDQGRI
LQWKDWFDVHFRXOGQRWVWDWHDYDOLGUHWDOLDWLRQFODLPZKHUHWKH           DQ HJUHJLRXV DEXVH RI JRYHUQPHQWDO SRZHU  7KH
RQO\ UHWDOLDWRU\ DFW DOOHJHG ZDV WKH ILOLQJ RI D IDOVH PDMRU     XQZDUUDQWHGVHL]XUHRIDSULVRQHUjVDXWKRUL]HGSURSHUW\
PLVFRQGXFWWLFNHW,GDW'HIHQGDQWVFRQWHQGWKDWWKH               ZKDWHYHUWKHPRQHWDU\YDOXHRIWKDWSURSHUW\PD\EHLV
0F/DXULQ FRXUWjV REVHUYDWLRQ WKDW WKH mVKRFNV WKH                    DQLJQREOHDQGFRZDUGO\DEXVHRIDXWKRULW\DWEHVW,W
FRQVFLHQFHl WHVW KDG EHHQ URXWLQHO\ DSSOLHG LQ WKLV FLUFXLW        FRQWULEXWHV WR WKH PDOLJQDQW GLVWUXVW DQG DQWDJRQLVP
SULRUWRGHPRQVWUDWHVWKDWWKLVVWDQGDUGZDVWKHFOHDUO\              ZKLFK DOO WRR RIWHQ OHDGV WR SK\VLFDO FRQIOLFW DQG
HVWDEOLVKHGODZLQ                                                   LQMXU\$WKHIWPRWLYDWHGE\DQLQWHQWWRLQWLPLGDWHD
                                                                           SULVRQHU WKURXJK DG KRF XQRIILFLDO GLVFLSOLQH LV
   'HIHQGDQWVj UHOLDQFH RQ 0F/DXULQ LV PLVSODFHG  )LUVW           SDUWLFXODUO\ RGLRXV WR WKH SRLQW RI VKRFNLQJ WKH
0F/DXULQZDVGHFLGHGVHYHUDO\HDUVDIWHUWKHHYHQWVDWLVVXH               FRQVFLHQFH
LQWKHLQVWDQWVXLWDQGWKHUHIRUHFRXOGQRWIRUPWKHEDVLVIRU
DUHDVRQDEOHRIILFHUjVXQGHUVWDQGLQJRIWKHODZLQ,G
     %HOOYsRKQVRQHWDO                          1R       1R                          %HOOYsRKQVRQHWDO     

s$ DW   &RQVHTXHQWO\ WKH PDJLVWUDWH MXGJH                  WKH VDPH VWDQGDUGV DSSOLHG WR VXFK FODLPV LQ WKH RWKHU
UHFRPPHQGHGWKDWGHIHQGDQWVjPRWLRQIRUVXPPDU\MXGJPHQW                 FRQWH[WV UDWKHU WKDQ WKH mVKRFN WKH FRQVFLHQFHl VWDQGDUG
RQ WKH PHULWV DQG RQ TXDOLILHG LPPXQLW\ EH GHQLHG  7KH        DSSOLFDEOHWRVXEVWDQWLYHGXHSURFHVVFODLPV
GLVWULFW FRXUW DGRSWHG WKH PDJLVWUDWHjV UHSRUW DQG
UHFRPPHQGDWLRQLQDQRUGHUHQWHUHGRQ'HFHPEHU                    ,Q DGGLWLRQ ZH WKLQN WKDW DQ\ UHDVRQDEOH GRXEW DV WR
                                                                         ZKHWKHU WKH mVKRFNV WKH FRQVFLHQFHl WHVW DSSOLHG WR )LUVW
  7KHGLVWULFWFRXUWSODFHG%HOOjVFDVHRQWKHLQDFWLYHGRFNHW           $PHQGPHQWUHWDOLDWLRQFODLPVZDVDOPRVWFHUWDLQO\GLVSHOOHG
IRU VHYHUDO PRQWKV ZKLOH LW DZDLWHG WKLV FRXUWjV HQ EDQF        E\WKH6XSUHPH&RXUWjVRSLQLRQLQ*UDKDPY&RQQRU
GHFLVLRQ LQ 7KDGGHXV; Y %ODWWHU  )G  WK &LU       86   LVVXHG RQH \HDU DIWHU &DOH DQG RXU RZQ
7KHVXLWLQ7KDGGHXV;ZDVILOHGVHSDUDWHO\IURPWKH             FDVHV IROORZLQJ *UDKDP  ,Q *UDKDP WKH 6XSUHPH &RXUW
LQVWDQWFDVH7KDWVXLWZDVILOHGE\WKHSODLQWLII%HOODORQJ           UHMHFWHGWKHXVHRIWKH)RXUWHHQWK$PHQGPHQWmVKRFNVWKH
ZLWK KLV MDLOKRXVH ODZ\HU 7KDGGHXV;  $OWKRXJK WKH WZR         FRQVFLHQFHl VWDQGDUG LQ FDVHV LQYROYLQJ H[FHVVLYH IRUFH
FDVHV ZHUH GRFNHWHG ZLWK GLIIHUHQW GLVWULFW MXGJHV WKH\          FODLPVRWKHUZLVHFRJQL]DEOHXQGHUWKH)RXUWK$PHQGPHQW
LQYROYHG VXEVWDQWLDOO\ WKH VDPH VHTXHQFH RI HYHQWV  7KH         ,GDW7KH*UDKDP&RXUWFOHDUO\LQVWUXFWHGWKDWm>W@KH
LQVWDQW DSSHDO FRQFHUQV WKH RULJLQDO VXLW ILOHG E\ %HOO WR     YDOLGLW\RI>D@FODLPPXVWEHMXGJHGE\UHIHUHQFH
ZKLFK%HOOjV)LUVW$PHQGPHQWUHWDOLDWLRQFODLPVUHODWLQJWR              WR WKH VSHFLILF FRQVWLWXWLRQDO VWDQGDUG ZKLFK JRYHUQV WKDW
WKH WZR FHOO VHDUFKHV RI sXQH  DQG   ZHUH             ULJKWlUDWKHUWKDQWKHPRUHJHQHUDOmVKRFNVWKHFRQVFLHQFHl
VXEVHTXHQWO\ DGGHG  7KH VXLW LQ 7KDGGHXV; DOOHJHG               WHVWDSSOLFDEOHWRVXEVWDQWLYHGXHSURFHVVFODLPV,G$IWHU
UHWDOLDWLRQ FODLPV RQ EHKDOI RI ERWK %HOO DQG 7KDGGHXV;         WKH 6XSUHPH &RXUWjV GHFLVLRQ LQ *UDKDP ZH KHOG LQ D
DULVLQJ IURP RWKHU DFWLRQV WDNHQ E\ SULVRQ RIILFLDOV LQ          QXPEHURIFDVHVWKDWWKHmVKRFNVWKHFRQVFLHQFHlWHVWDSSOLHG
UHVSRQVHWR%HOOjVVXLWLQDGGLWLRQWRDQ(LJKWK$PHQGPHQW              RQO\ WR FODLPV WKDW FRXOG QRW EH WUDFHG WR DQ H[SOLFLW
FODLP UDLVHG E\ 7KDGGHXV; FKDOOHQJLQJ WKH FRQGLWLRQV RI          FRQVWLWXWLRQDOJXDUDQWHH$VRQHSDQHOH[SODLQHGLQ
LQFDUFHUDWLRQRQWKHEDVHOHYHORIDGPLQLVWUDWLYHVHJUHJDWLRQ
%HOOjVFODLPLQ7KDGGHXV;VWHPPHGIURPKLVDOOHJDWLRQVWKDW               ,IDSSHOODQWjVFODLPLVFRQVWUXHGWREHEDVHGRQDQ
DQRWKHU FHOOEORFN RIILFHU QDPHG .DUD]LP GHOLEHUDWHO\                 DOOHJHG YLRODWLRQ RI VXEVWDQWLYH GXH SURFHVV WKHQ WKH
KDUDVVHG KLP DQG WKUHDWHQHG WR VHUYH KLP RQO\ FROG PHDOV          FODLPPXVWEHEDVHGHLWKHURQDYLRODWLRQRIDQH[SOLFLW
XQOHVVKHGURSSHGKLVODZVXLW7KDGGHXV;)GDW               FRQVWLWXWLRQDOJXDUDQWHHHJDIRXUWKDPHQGPHQWLOOHJDO
                                                                           VHL]XUH YLRODWLRQ RU RQ EHKDYLRU E\ D VWDWH DFWRU WKDW
  ,Q7KDGGHXV;ZHGHILQLWLYHO\VWDWHGWKDWWKHmVKRFNVWKH               VKRFNVWKHFRQVFLHQFH$SSHOODQWjVFRPSODLQWDOOHJHVQR
FRQVFLHQFHl WHVW ZDV QRW WKH DSSURSULDWH VWDQGDUG IRU D            YLRODWLRQ RI D VSHFLILF FRQVWLWXWLRQDO JXDUDQWHH
SULVRQHU)LUVW$PHQGPHQWUHWDOLDWLRQFODLP,GDW              7KHUHIRUH WKH FODLP PXVW EH EDVHG RQ EHKDYLRU WKDW
,QVWHDGZHH[SODLQHGWKDWDQDGYHUVHDFWLRQXQGHUWDNHQ               VKRFNVWKHFRQVFLHQFH
LQ UHWDOLDWLRQ IRU D SULVRQHUjV H[HUFLVH RI KLV RU KHU )LUVW
$PHQGPHQWULJKWVFRXOGYLRODWHWKH)LUVW$PHQGPHQWmLILWLV             %UDOH\)GDWVHHDOVR0HUWLNY%ODORFN
FDSDEOH RI GHWHUULQJ D SHUVRQ RI RUGLQDU\ ILUPQHVV IURP          )G   WK &LU  0DQVILHOG $SDUWPHQW
H[HUFLVLQJKLVRUKHUULJKWWRDFFHVVWKHFRXUWVl,GDW          2ZQHUV$VVjQY&LW\RI0DQVILHOG)GWK
                                                                         &LU7KHVHFDVHVZHWKLQNKDGFOHDUO\HVWDEOLVKHGE\
 $IWHUZHLVVXHGRXURSLQLRQLQ7KDGGHXV;WKHLQVWDQWVXLW             WKDWWKHmVKRFNVWKHFRQVFLHQFHlWHVWZRXOGQRWDSSO\WR
ZDVUHWXUQHGWRDFWLYHVWDWXVDQGWKHGLVWULFWFRXUWVFKHGXOHG           FODLPVEDVHGH[SUHVVO\RQWKH)LUVW$PHQGPHQW6HH
                                                                         5LOH\Y.XUW])6XSS('0LFKm,Q
    %HOOYsRKQVRQHWDO                        1R      1R                             %HOOYsRKQVRQHWDO         

mHYHQPLQLPDOLQIULQJHPHQWXSRQ)LUVW$PHQGPHQWYDOXHV                DMXU\WULDO7KHWULDOEHJDQRQsDQXDU\$WWKH
FRQVWLWXWHVLUUHSDUDEOHLQMXU\l,GDW$OWKRXJKZHPDGH       FORVH RI WKH SODLQWLIIjV FDVH WKH GHIHQGDQWV PRYHG IRU
SDVVLQJUHIHUHQFHWR&DOHLQWKH1HZVRPFDVHLGDW          MXGJPHQWDVDPDWWHURIODZSXUVXDQWWR)HGHUDO5XOHRI&LYLO
ZH GLG QRW DSSO\ WKH )RXUWHHQWK $PHQGPHQW mVKRFNV WKH         3URFHGXUHD7KHGHIHQGDQWVDUJXHGWKDW%HOOjVSURRIZDV
FRQVFLHQFHlVWDQGDUG7RWKHFRQWUDU\ZHHPSKDVL]HGWKDW            LQVXIILFLHQWWRVDWLVI\WKHVWDQGDUGIRUUHWDOLDWLRQDQQRXQFHG
mGLUHFW UHWDOLDWLRQ E\ WKH VWDWH IRU KDYLQJ H[HUFLVHG )LUVW   LQ7KDGGHXV;,QWKHDOWHUQDWLYHWKHGHIHQGDQWVDUJXHGWKDW
$PHQGPHQWIUHHGRPVLQWKHSDVWLVSDUWLFXODUO\SURVFULEHG             WKH mVKRFNV WKH FRQVFLHQFHl VWDQGDUG VKRXOG EH DSSOLHG WR
E\WKH)LUVW$PHQGPHQWl,GDWHPSKDVLVDGGHG                GHIHQGDQWVjFRQGXFWVLQFHWKDWZDVWKHVWDQGDUGLQHIIHFWDW
                                                                      WKHWLPHRIWKHLUDFWLRQV
   ,Q*LEEVDQLQPDWHmMDLOKRXVHODZ\HUlDOOHJHGWKDWSULVRQ
RIILFLDOVLQWHQWLRQDOO\GHOD\HGKLVUHOHDVHIURPDGPLQLVWUDWLYH          7KHGLVWULFWFRXUWJUDQWHGGHIHQGDQWVjPRWLRQ7KHFRXUW
VHJUHJDWLRQLQUHWDOLDWLRQIRUKLVDVVLVWLQJRWKHUSULVRQHUVZLWK     ILUVW QRWHG LWV EHOLHI WKDW m>W@KH SURSRVLWLRQ WKDW D SODLQWLII
OHJDO PDWWHUV  :H KHOG WKDW WKHVH DOOHJDWLRQV VWDWHG DQ     ZRXOGEHDEOHWRXVH>VHFWLRQ@WRSURWHFWRQHRIRXUPRVW
DFWLRQDEOH)LUVW$PHQGPHQWUHWDOLDWLRQFODLP*LEEV)G         VDFUHGFRQVWLWXWLRQDOULJKWVEDVHGQRWXSRQKLVRZQHIIHFWLYH
DW,QRXUGLVFXVVLRQRIWKHSODLQWLIIjVFODLPZHFLWHG0W     GHSULYDO>VLF@RIWKRVHULJKWVEXWXSRQDGHSULYDO>VLF@ZKLFK
+HDOWK\&LW\6FKRRO'LVWULFW%RDUGRI(GXFDWLRQY'R\OH             PLJKW KDYH LQMXUHG VRPH K\SRWKHWLFDO SHUVRQ RI RUGLQDU\
86DSXEOLFHPSOR\PHQWUHWDOLDWLRQ             ILUPQHVV n ZKDWHYHU WKDW PHDQV n LV QRW D MXGLFLDOO\ RU
FDVHIRUWKHSURSRVLWLRQWKDWmJRYHUQPHQWRIILFLDOVPD\QRW          MXULGLFDOO\VDWLVI\LQJSURSRVLWLRQls$DW7XUQLQJWR
UHWDOLDWH DJDLQVW SHUVRQV ZKR KDYH SDUWLFLSDWHG LQ              WKH PHULWV WKH FRXUW FRQFOXGHG WKDW WKH mVKRFNV WKH
FRQVWLWXWLRQDOO\SURWHFWHGFRQGXFWl*LEEV)GDW          FRQVFLHQFHlVWDQGDUGUDWKHUWKDQWKH7KDGGHXV;VWDQGDUG
:HDOVRREVHUYHGWKDWD)LUVW$PHQGPHQWUHWDOLDWLRQFODLPLV          ZDVmWKHRQO\ODZRIZKLFKJXDUGVZKRDUHGHIHQGDQWVKHUH
HTXLYDOHQW WR D FODLP RI GLUHFW LQWHUIHUHQFH ZLWK )LUVW       FRXOGKDYHEHHQDZDUHRQsXQHls$DW7KHFRXUW
$PHQGPHQWULJKWV                                                     FRQFOXGHGWKDWDVDPDWWHURIODZWKHSODLQWLIIKDGQRWVKRZQ
                                                                      WKDW GHIHQGDQWVj DFWLRQV VKRFNHG WKH FRQVFLHQFH  ,Q WKH
  +HUHVHJUHJDWLRQRIDmMDLOKRXVHODZ\HUlLQUHWDOLDWLRQ            DOWHUQDWLYHWKHFRXUWUXOHGWKDW%HOOKDGSUHVHQWHGLQVXIILFLHQW
  IRU SURYLGLQJ OHJDO DLG LV HTXLYDOHQW WR WKH SULVRQ         HYLGHQFHWRVKRZWKDWWKHGHIHQGDQWVjDFWLRQVZRXOGGHWHUD
  UHJXODWLRQEDUULQJ>LQPDWHOHJDO@DVVLVWDQFHLQ>sRKQVRQ            SHUVRQRIRUGLQDU\ILUPQHVVIURPH[HUFLVLQJKLVRUKHU)LUVW
  Y@$YHU\>86@(DFKLQVWDQFHLV            $PHQGPHQW ULJKWV  ,Q UHDFKLQJ WKLV FRQFOXVLRQ WKH FRXUW
  DQ H[DPSOH RI VWDWH DFWLRQ E\ SULVRQ RIILFLDOV ZKLFK        H[SODLQHG
  SRWHQWLDOO\PD\UHVXOWLQDGHQLDORIDFFHVVWRWKHFRXUWV
  ,I SURYHQ WR EH WUXH VDLG DFWLRQV DUH FRQVWLWXWLRQDOO\
  LPSHUPLVVLEOH
*LEEV)GDW7KH*LEEVFDVHPDGHLWFOHDUWKDWD
UHWDOLDWLRQFODLPPD\OLHHYHQZKHQWKHDOOHJHGO\UHWDOLDWRU\            
                                                                              $IWHU WKLV FRXUW HQ EDQF GHFLGHG   7KDGGHXV; %HOO UHQHZHG KLV
FRQGXFW LWVHOI ZRXOG QRW EH DFWLRQDEOH LI WDNHQ IRU           HDUOLHU PRWLRQ WR FRQVROLGDWH WKH LQVWDQW FDVH ZLWK  7KDGGHXV; %HOO
QRQUHWDOLDWRU\ UHDVRQV  ,G DW   7KXV DIWHU *LEEV n   QRWHG WKDW 7KDGGHXV; KDG YROXQWDULO\ GLVPLVVHG KLV VHSDUDWH (LJKWK

ZKLFKZDVLVVXHGMXVWRQH\HDUEHIRUHWKHHYHQWVDWLVVXHLQ          $PHQGPHQW FODLP ZLWK WKH UHVXOW WKDW WKH RQO\ FODLPV UHPDLQLQJ LQ HLWKHU

WKHLQVWDQWFDVHnZHWKLQNLWZDVFOHDUWKDWDQLQPDWHjV)LUVW       FDVH ZHUH WKH )LUVW $PHQGPHQW UHWDOLDWLRQ FODLPV DULVLQJ IURP WKH VDPH
                                                                      VHTXHQFH RI HYHQWV IROORZLQJ %HOOjV LQLWLDWLRQ RI WKH LQVWDQW ODZVXLW 7KH
$PHQGPHQWUHWDOLDWLRQFODLPZRXOGEHDVVHVVHGDFFRUGLQJWR            GLVWULFW FRXUW HQWHUHG D RQHVHQWHQFH RUGHU RQ 1RYHPEHU   GHQ\LQJ
                                                                      SODLQWLIIjV PRWLRQ IRU FRQVROLGDWLRQ
    %HOOYsRKQVRQHWDO                        1R       1R                         %HOOYsRKQVRQHWDO    

  ,jP QRW VXUH KRZ WKLV HYLGHQFH FRXOG EH SUHVHQWHG            WKDWWKHLQPDWHjVFODLPZDVEDVHGRQKLVJHQHUDOVXEVWDQWLYH
  IUDQNO\SHUKDSVE\DQH[SHUWLIWKHUHDUHDQ\H[SHUWV             GXH SURFHVV ULJKWV DQG QRW RQ WKH )LUVW $PHQGPHQWl
  ,jPQRWVXUHHLWKHUWKDWZHjUHGHDOLQJZLWKDYHU\JRRG              7KDGGHXV;)GDW&DOHGUHZWKHmVKRFNVWKH
  OHJDOVWDQGDUGLILWUHTXLUHVMXURUVWRGLYLQHZKDWOHYHORI         FRQVFLHQFHlVWDQGDUGIURPDPDOLFLRXVSURVHFXWLRQFDVHDQG
  FKDUDFWHUILUPQHVVZRXOGEHUHTXLUHGWRDOORZDSULVRQHU             D FDVH LQYROYLQJ FKLOG FXVWRG\ ULJKWV QRW IURP )LUVW
  LQDGPLQLVWUDWLYHVHJUHJDWLRQWRSHUVLVW+RZGRMXURUV             $PHQGPHQWFDVHV)GDW7KH&DOHFRXUWPDGH
  GRWKDW"7KH\jUHWKHUHZHKRSHWKH\jUHWKHUHEDVHGRQ              UHIHUHQFHWRWKH)LUVW$PHQGPHQWRQO\LQLWVFRQGHPQDWLRQRI
  WKHLURZQH[SHULHQFH:HOOWKDWLVDQH[SHULHQFHWKDW              WKH GHIHQGDQWVj PRWLYHV  :H WKHUHIRUH GR QRW WKLQN D
  RQO\DUDUHMXURUZRXOGHYHUKDYH                       UHDVRQDEOH RIILFHU ZRXOG KDYH H[SHFWHG &DOH WR DSSO\ WR
                                                                       LQPDWHFODLPVUDLVHGH[SUHVVO\XQGHUWKH)LUVW$PHQGPHQW
s$DW)ROORZLQJWKHGLVWULFWFRXUWjVGLVPLVVDORIKLV
FODLPVSODLQWLIIILOHGDWLPHO\QRWLFHRIDSSHDO                        :HFRQFOXGHWKDWWKHHVWDEOLVKHGODZJRYHUQLQJSULVRQHU
                                                                       )LUVW$PHQGPHQWUHWDOLDWLRQFODLPVLQZDVLQVWHDGVHW
                        ,,$1$/<6,6                                  IRUWK LQ WZR FDVHV IURP WKLV FLUFXLW GHFLGHG DIWHU &DOH
                                                                       1HZVRPY1RUULV)GWK&LUDQG*LEEV
$6WDQGDUGRI5HYLHZ                                                 Y +RSNLQV  )G  WK &LU   ,Q 1HZVRP ZH
                                                                       DIILUPHG WKH JUDQW RI D SUHOLPLQDU\ LQMXQFWLRQ GLUHFWLQJ D
   8QGHU)HGHUDO5XOHRI&LYLO3URFHGXUHDWKHPRYLQJ          SULVRQZDUGHQWRUHDSSRLQWFHUWDLQSULVRQHUVWRWKHLUIRUPHU
SDUW\ LV HQWLWOHG WR MXGJPHQW DV D PDWWHU RI ODZ LI WKH     SRVWV DV LQPDWH OHJDO DGYLVRUV  7KH SODLQWLIIV LQ 1HZVRP
QRQPRYLQJSDUW\mKDVEHHQIXOO\KHDUGRQDQLVVXHDQGWKHUH            DOOHJHG WKDW WKH ZDUGHQ KDG UHIXVHG WR UHDSSRLQW WKHP DV
LVQROHJDOO\VXIILFLHQWHYLGHQWLDU\EDVLVIRUDUHDVRQDEOHMXU\       LQPDWHDGYLVRUVLQUHWDOLDWLRQIRUFRPSODLQWVWKH\KDGILOHG
WRILQGIRUWKDWSDUW\RQWKDWLVVXHl,QFRQVLGHULQJD5XOH       ZLWK WKH SULVRQ GLVFLSOLQDU\ ERDUG  :H FRQFOXGHG WKDW
PRWLRQmWKHFRXUWVKRXOGUHYLHZDOORIWKHHYLGHQFHLQWKH            SODLQWLIIVKDGVKRZQVXIILFLHQWOLNHOLKRRGRIVXFFHVVRQWKHLU
UHFRUGl  5HHYHV Y 6DQGHUVRQ 3OXPELQJ 3URGV ,QF        UHWDOLDWLRQFODLPWRZDUUDQWWKHLQMXQFWLRQ:HH[SODLQHGWKDW
86m,QGRLQJVRKRZHYHUWKHFRXUWPXVW           HYHQWKRXJKWKHSODLQWLIIVKDGQRSURWHFWHGSURSHUW\LQWHUHVW
GUDZ DOO UHDVRQDEOH LQIHUHQFHV LQ IDYRU RI WKH QRQPRYLQJ       LQPDLQWDLQLQJWKHLUSRVLWLRQVDVLQPDWHDGYLVRUVm>L@WLVZHOO
SDUW\DQGLWPD\QRWPDNHFUHGLELOLW\GHWHUPLQDWLRQVRUZHLJK         UHFRJQL]HG WKDW LW LV FRQVWLWXWLRQDOO\ LPSHUPLVVLEOH WR
WKHHYLGHQFHl,Gm7KDWLVWKHFRXUWVKRXOGJLYHFUHGHQFHWR       WHUPLQDWHHYHQDXQLODWHUDOH[SHFWDWLRQRIDSURSHUW\LQWHUHVW
WKHHYLGHQFHIDYRULQJWKHQRQPRYDQWDVZHOODVWKDWHYLGHQFH           LQDPDQQHUZKLFKYLRODWHVULJKWVRIH[SUHVVLRQSURWHFWHGE\
VXSSRUWLQJ WKH PRYLQJ SDUW\ WKDW LV XQFRQWUDGLFWHG DQG          WKH)LUVW$PHQGPHQWl1HZVRP)GDW'UDZLQJ
XQLPSHDFKHGDWOHDVWWRWKHH[WHQWWKDWWKDWHYLGHQFHFRPHV           RQSXEOLFHPSOR\PHQWFDVHVZHH[SODLQHGWKDWm>H@[LVWLQJ
IURPGLVLQWHUHVWHGZLWQHVVHVl,GDWTXRWDWLRQRPLWWHG        FDVH SUHFHGHQW LQGLFDWHV WKDW D IDLOXUH WR UHDSSRLQW DQ
                                                                       LQGLYLGXDOWRDSRVLWLRQLVLPSHUPLVVLEOHHYHQZKHUHWKHUH
%4XDOLILHG,PPXQLW\                                                 ZDV QR FRJQL]DEOH H[SHFWDWLRQ RI FRQWLQXHG VHUYLFH LI
  %RWK SDUWLHV FKDUDFWHUL]H WKH GLVWULFW FRXUWjV UXOLQJ DV D   UHDSSRLQWPHQW ZDV GHQLHG EHFDXVH RI WKH LQGLYLGXDOjV
GHWHUPLQDWLRQ WKDW WKH GHIHQGDQWV DUH DV D PDWWHU RI ODZ    H[HUFLVH RI )LUVW $PHQGPHQW ULJKWVl  ,G DW   7KXV
HQWLWOHGWRTXDOLILHGLPPXQLW\IURPVXLW$FFRUGLQJWRWKH            1HZVRPFOHDUO\HVWDEOLVKHGWKDWDQLQPDWHQHHGQRWVKRZWKDW
GRFWULQH RI TXDOLILHG LPPXQLW\ mJRYHUQPHQW RIILFLDOV             WKH UHWDOLDWRU\ DFWLRQ VWDQGLQJ DORQH ZDV VXIILFLHQWO\
SHUIRUPLQJ GLVFUHWLRQDU\ IXQFWLRQV JHQHUDOO\ DUH VKLHOGHG         HJUHJLRXVWRYLRODWHWKH&RQVWLWXWLRQ,QGHHGLQILQGLQJWKDW
IURPOLDELOLW\IRUFLYLOGDPDJHVLQVRIDUDVWKHLUFRQGXFWGRHV         WKHSODLQWLIIVKDGVKRZQLUUHSDUDEOHLQMXU\ZHH[SODLQHGWKDW
    %HOOYsRKQVRQHWDO                       1R      1R                          %HOOYsRKQVRQHWDO      

,QVWHDGWKHGLVWULFWFRXUWGHWHUPLQHGWKDWWKHHVWDEOLVKHGODZ      QRWYLRODWHFOHDUO\HVWDEOLVKHGVWDWXWRU\RUFRQVWLWXWLRQDOULJKWV
LQ sXQH RI  UHTXLUHG DQ LQPDWH DVVHUWLQJ D )LUVW        RIZKLFKDUHDVRQDEOHSHUVRQZRXOGKDYHNQRZQl+DUORZY
$PHQGPHQW UHWDOLDWLRQ FODLP WR SURYH WKDW WKH DOOHJHG         )LW]JHUDOG864XDOLILHGLPPXQLW\
UHWDOLDWRU\DFWLRQVZHUHVRHJUHJLRXVRURSSUHVVLYHWKDWWKH\        LQYROYHVDWZRVWHSLQTXLU\)LUVWWKHFRXUWPXVWGHWHUPLQH
mVKRFNHGWKHFRQVFLHQFHl7KXVWKHGLVWULFWFRXUWFRQFOXGHG        ZKHWKHUEDVHGXSRQWKHDSSOLFDEOHODZWKHIDFWVYLHZHGLQ
WKDW D UHDVRQDEOH RIILFHU ZRXOG QRW KDYH EHHQ DZDUH WKDW    WKH OLJKW PRVW IDYRUDEOH WR WKH SODLQWLIIV VKRZ WKDW D
UHWDOLDWRU\DFWVIDOOLQJVKRUWRImFRQVFLHQFHVKRFNLQJlDEXVHV       FRQVWLWXWLRQDOYLRODWLRQKDVRFFXUUHG6DXFLHUY.DW]
RISRZHUZRXOGJLYHULVHWRFRQVWLWXWLRQDOOLDELOLW\%DVHG         86   6 &W     m>,@I D YLRODWLRQ
XSRQRXUUHYLHZRIWKHUHOHYDQWFDVHODZZHFRQFOXGHWKDWWKH       FRXOG EH PDGH RXW RQ D IDYRUDEOH YLHZ RI WKH SDUWLHVj
GLVWULFW FRXUW PLVFKDUDFWHUL]HG WKH ODZ WKDW ZDV FOHDUO\      VXEPLVVLRQVWKHQH[WVHTXHQWLDOVWHSLVWRDVNZKHWKHUWKH
HVWDEOLVKHGLQ7KHFOHDUZHLJKWRISXEOLVKHGDXWKRULW\        ULJKW ZDV FOHDUO\ HVWDEOLVKHGl  ,G VHH DOVR 'LFNHUVRQ Y
LQWKLVFLUFXLWLQGLUHFWHGFRXUWVQRWWRDSSO\WKHmVKRFNV     0F&OHOODQ)GWK&LU8OWLPDWHO\
WKH FRQVFLHQFHl VWDQGDUG WR LQPDWH UHWDOLDWLRQ FODLPV          TXDOLILHGLPPXQLW\LVDTXHVWLRQRIODZWKDWLVUHYLHZHGGH
H[SUHVVO\ UDLVHG XQGHU WKH )LUVW $PHQGPHQW  8QGHU WKH       QRYR6HH'LFNHUVRQ)GDW
VWDQGDUGWKDWZDVDSSOLHGWRVXFKFODLPVLQDUHDVRQDEOH
RIILFLDOZRXOGKDYHEHHQDZDUHWKDWDFWLRQVVXFKDVKDUDVVLQJ           )RUDULJKWWREHFOHDUO\HVWDEOLVKHGm>W@KHFRQWRXUVRIWKH
FHOO VHDUFKHV DQG FRQILVFDWLRQ RI OHJDO SDSHUV DQG RWKHU     ULJKW PXVW EH VXIILFLHQWO\ FOHDU WKDW D UHDVRQDEOH RIILFLDO
SURSHUW\ FRXOG JLYH ULVH WR D )LUVW $PHQGPHQW UHWDOLDWLRQ    ZRXOGXQGHUVWDQGWKDWZKDWKHLVGRLQJYLRODWHVWKDWULJKWl
FODLP                                                               5XVVRY&LW\RI&LQFLQQDWL)GWK&LU
                                                                      TXRWLQJ $QGHUVRQ Y &UHLJKWRQ  86  
   7KHGHIHQGDQWVDUJXHWKDW&DOHYsRKQVRQ)G            m$OWKRXJK LW QHHG QRW EH WKH FDVH WKDW µWKH YHU\
 WK &LU  HVWDEOLVKHG WKDW WKH mVKRFNV WKH     DFWLRQLQTXHVWLRQKDVSUHYLRXVO\EHHQKHOGXQODZIXOLQ
FRQVFLHQFHlWHVWDSSOLHGWRLQPDWHUHWDOLDWLRQFDVHVLQ        WKH OLJKW RI SUHH[LVWLQJ ODZ WKH XQODZIXOQHVV PXVW EH
:HGLVDJUHH,Q&DOHDQLQPDWHDOOHJHGWKDWSULVRQJXDUGV          DSSDUHQWjl,GTXRWLQJ$QGHUVRQ86DW$VWKH
YLRODWHGKLVVXEVWDQWLYHGXHSURFHVVULJKWVE\IDOVHO\DFFXVLQJ      6XSUHPH&RXUWKDVUHFHQWO\H[SODLQHGmRIILFLDOVFDQVWLOOEH
KLP RI SRVVHVVLQJ PDULMXDQD DQG SODFLQJ KLP LQ                RQQRWLFHWKDWWKHLUFRQGXFWYLRODWHVHVWDEOLVKHGODZHYHQLQ
DGPLQLVWUDWLYH VHJUHJDWLRQ LQ UHWDOLDWLRQ IRU KLV FRPSODLQWV   QRYHO IDFWXDO FLUFXPVWDQFHVl  +RSH Y 3HO]HU  6 &W
DERXW SULVRQ FRQGLWLRQV  7KH &DOH FRXUW IRXQG WKHVH             m$OWKRXJK HDUOLHU FDVHV LQYROYLQJ
DOOHJDWLRQVVXIILFLHQWWRVWDWHDVXEVWDQWLYHGXHSURFHVVFODLP     µIXQGDPHQWDOO\VLPLODUjIDFWVFDQ SURYLGHHVSHFLDOO\VWURQJ
,GDW7KHFRXUWEHJDQLWVGLVFXVVLRQE\H[SODLQLQJWKDW       VXSSRUWIRUDFRQFOXVLRQWKDWWKHODZLVFOHDUO\HVWDEOLVKHG
WKHVWDQGDUGIRUmPDOLFLRXVSURVHFXWLRQW\SHVXEVWDQWLYHGXH         WKH\DUHQRWQHFHVVDU\WRVXFKDILQGLQJl,G,QGHWHUPLQLQJ
SURFHVVFODLPVlZDVmZKHWKHUGHIHQGDQWVjFRQGXFWµVKRFNV             ZKHWKHU D FRQVWLWXWLRQDO ULJKW LV FOHDUO\ HVWDEOLVKHG ZH
WKHFRQVFLHQFHjl,GDWTXRWDWLRQVRPLWWHG$SSO\LQJ        mORRN>@ ILUVW WR GHFLVLRQV RI WKH 6XSUHPH &RXUW WKHQ WR
WKLVVWDQGDUGWKHFRXUWFRQFOXGHGWKDWPDOLFLRXVO\IUDPLQJDQ       GHFLVLRQVRIWKLVFRXUWDQGRWKHUFRXUWVZLWKLQRXUFLUFXLWDQG
LQPDWH IRU DQ RIIHQVH DQG VXEMHFWLQJ KLP WR D ULVN RI     ILQDOO\ WR GHFLVLRQV RI RWKHU FLUFXLWVl  &KDSSHO Y
SURORQJHGLQFDUFHUDWLRQUHVXOWLQJIURPWKHORVVRIJRRGWLPH         0RQWJRPHU\&RXQW\)LUH3URW'LVW1R)G
FUHGLWVIRUQRRWKHUUHDVRQWKDQWRSXQLVKKLPIRUH[HUFLVLQJ       WK&LUTXRWDWLRQRPLWWHG
KLV )LUVW $PHQGPHQW ULJKWV ZDV DQ HJUHJLRXV DEXVH RI
JRYHUQPHQWDOSRZHU,GDW$OWKRXJKLWPDGHUHIHUHQFH           $OWKRXJK WKH GLVWULFW FRXUW GLG QRW H[SOLFLWO\ GLVFXVV WKH
WRWKH)LUVW$PHQGPHQWm>WKH&DOHFRXUW@FOHDUO\H[SODLQHG          YDULRXVDVSHFWVRIWKHTXDOLILHGLPPXQLW\VWDQGDUGWKHFRXUW
    %HOOYsRKQVRQHWDO                        1R       1R                              %HOOYsRKQVRQHWDO          

DSSDUHQWO\ FRQFOXGHG WKDW GHIHQGDQWV ZHUH HQWLWOHG WR            GLVWLQFWUHWDOLDWLRQFODLPVDOOHJHGE\WKHSODLQWLIILQWKHLQVWDQW
MXGJPHQWDVDPDWWHURIODZDVWRERWKSURQJVRIWKHTXDOLILHG         FDVH%HOODQGKLVMDLOKRXVHODZ\HU7KDGGHXV;ZKLFKDURVH
LPPXQLW\WHVW)LUVWWKHFRXUWIRXQGWKDW%HOOKDGQRWVKRZQ         IURPWKHVDPHQXFOHXVRIIDFWVDWLVVXHKHUH7KHSURWHFWHG
VXIILFLHQWIDFWVWRHVWDEOLVKWKDWDFRQVWLWXWLRQDOYLRODWLRQKDG      FRQGXFWDVVHUWHGLQ7KDGGHXV;ZDVWKHYHU\VDPHODZVXLW
RFFXUUHGXQGHUWKHFRQWUROOLQJOHJDOVWDQGDUGDQQRXQFHGLQ             DVVHUWHGWREHWKHSURWHFWHGFRQGXFWLQWKHLQVWDQWFDVH7KH
7KDGGHXV;  ,Q SDUWLFXODU WKH FRXUW IRXQG LQVXIILFLHQW        HQ EDQF FRXUW LQ7KDGGHXV; KHOG WKDW %HOOjV VXLW ZDV
HYLGHQFHWRVKRZWKDWWKHDOOHJHGUHWDOLDWRU\DFWLRQVnWKH            SURWHFWHG FRQGXFW   ,Q UHDFKLQJ WKLV FRQFOXVLRQ WKH FRXUW
WZR VKDNHGRZQV RI SODLQWLIIjV FHOO DQG WKH FRQFRPLWDQW          QRWHG WKDW WKH IDFW WKDW WKH VXLW GLG QRW VXUYLYH VXPPDU\
FRQILVFDWLRQRIKLVOHJDOSDSHUVDQGPHGLFDOGLHWVQDFNVn             MXGJPHQWGLGQRWUHQGHUWKHDFWRIILOLQJLWDQ\OHVVSURWHFWHG
ZRXOGGHWHUDSHUVRQRIRUGLQDU\ILUPQHVVIURPHQJDJLQJLQ             ,G$SDQHORIWKLVFRXUWPD\QRWRYHUUXOHWKHGHFLVLRQRIWKH
SURWHFWHGFRQGXFW6HFRQGDVVXPLQJWKDW%HOOFRXOGFDUU\KLV         IXOO FLUFXLW VLWWLQJ HQ EDQF  /5/ 3URSV Y 3RUWDJH 0HWUR
EXUGHQXQGHUWKH7KDGGHXV;VWDQGDUGWKHFRXUWFRQFOXGHG              +RXV$XWK)GQWK&LU:HDUH
WKDWWKLVVWDQGDUGZDVQRWFOHDUO\HVWDEOLVKHGLQDQGWKDW        WKHUHIRUHERXQGE\WKH7KDGGHXV;FRXUWjVGHWHUPLQDWLRQWKDW
D UHDVRQDEOH RIILFHU ZRXOG QRW KDYH XQGHUVWRRG WKDW             %HOOjVODZVXLWZDVSURWHFWHGFRQGXFW
UHWDOLDWRU\ DFWLRQV IDOOLQJ VKRUW RI mFRQVFLHQFHVKRFNLQJl
DEXVHVRISRZHUFRXOGJLYHULVHWRDFRQVWLWXWLRQDOYLRODWLRQ           :KHWKHUWKH5HOHYDQW/DZ:DV&OHDUO\(VWDEOLVKHG
&RQFOXGLQJWKDWQRUHDVRQDEOHRIILFHUZRXOGKDYHNQRZQWKDW
VKDNLQJ GRZQ DQ LQPDWHjV FHOO DQG FRQILVFDWLQJ OHJDO              7KHGLVWULFWFRXUWKHOGWKDWHYHQLISODLQWLIIFRXOGVDWLVI\KLV
GRFXPHQWV DQG IRRG FRXOG EH IRXQG WR EH mFRQVFLHQFH           EXUGHQXQGHUWKH7KDGGHXV;VWDQGDUGWKLVVWDQGDUGZDVQRW
VKRFNLQJl WKH FRXUW GHWHUPLQHG WKDW WKH GHIHQGDQWV ZHUH        FOHDUO\ HVWDEOLVKHG DW WKH WLPH RI WKH HYHQWV LQ TXHVWLRQ
HQWLWOHG WR MXGJPHQW DV D PDWWHU RI ODZ XQGHU WKH VHFRQG
SURQJRIWKHTXDOLILHGLPPXQLW\WHVWDVZHOO
                                                                           
  &RQVWLWXWLRQDO9LRODWLRQ                                              ,Q DGGLWLRQ WKH SDUWLHV MRLQWO\ VWLSXODWHG EHIRUH WULDO LQ WKH LQVWDQW
                                                                       FDVH WKDW m3ODLQWLII HQJDJHG LQ FRQGXFW SURWHFWHG E\ WKH &RQVWLWXWLRQjV

  7KH ILUVW VWHS LQ WKH TXDOLILHG LPPXQLW\ DQDO\VLV LV
                                                                       )LUVW $PHQGPHQW ULJKW WR SHWLWLRQ WKH JRYHUQPHQW IRU UHGUHVV ZKHQ KH
                                                                       ILOHG WKLV RULJLQDO 0D\   ODZVXLWl s$ DW  'HIHQGDQWV FDQQRW
GHWHUPLQLQJ ZKHWKHU WKH SODLQWLII KDV SUHVHQWHG VXIILFLHQW       QRZ PDLQWDLQ WKDW WKH SODLQWLII IDLOHG WR SURYH WKDW KLV VXLW ZDV SURWHFWHG

IDFWV WR VKRZ WKDW WKH GHIHQGDQWVj FRQGXFW YLRODWHG KLV        FRQGXFW ZKHQ WKH\ KDYH DOUHDG\ VWLSXODWHG WR WKLV IDFW

FRQVWLWXWLRQDOULJKWV%HOOjVRQO\FODLPLQWKHLQVWDQWFDVHLV           
WKDWWKHGHIHQGDQWVYLRODWHGKLV)LUVW$PHQGPHQWULJKWVE\                  (YHQ LI ZH ZHUH WR DSSO\ WKH VWDQGDUG DQQRXQFHG LQ      +HUURQ   %HOOjV

FRQGXFWLQJWZRVKDNHGRZQVRIKLVFHOODQGFRQILVFDWLQJKLV             VXLW ZRXOG VWLOO TXDOLI\ DV SURWHFWHG FRQGXFW   +HUURQjV   UXOLQJ LV OLPLWHG

OHJDO SDSHUV DQG PHGLFDO GLHW VQDFNV LQ UHWDOLDWLRQ IRU KLV   WR UHWDOLDWLRQ FODLPV LQYROYLQJ VXLWV GLVPLVVHG DV IULYRORXV 7KH 6XSUHPH
                                                                       &RXUWjV GHFLVLRQ LQ /HZLV  XSRQ ZKLFK +HUURQ UHOLHG PDNHV LW FOHDU WKDW
H[HUFLVLQJKLVULJKWRIDFFHVVWRWKHFRXUWV7KHFRQWUROOLQJ         D FODLP QHHG QRW EH VXFFHVVIXO WR EH QRQIULYRORXV /HZLV  86 DW
OHJDOWHVWIRUSULVRQHUVj)LUVW$PHQGPHQWUHWDOLDWLRQFODLPV            QQ /HZLV H[SODLQHG IRU H[DPSOH WKDW WKH IDFW WKDW D FODLP LV
ZDVVHWIRUWKLQWKLVFRXUWjVHQEDQFGHFLVLRQLQ7KDGGHXV;          SURFHGXUDOO\ GHIDXOWHG GRHV QRW QHFHVVDULO\ PDNH WKH VXLW IULYRORXV ,G
                                                                       DW  Q 0RUHRYHU /HZLV GLVWLQJXLVKHG EHWZHHQ mDUJXDEOHl FODLPV DQG
  $UHWDOLDWLRQFODLPHVVHQWLDOO\HQWDLOVWKUHHHOHPHQWV         mIULYRORXVl FODLPV DQG H[SODLQHG WKDW m>G@HSULYLQJ VRPHRQH RI DQ

  WKHSODLQWLIIHQJDJHGLQSURWHFWHGFRQGXFWDQDGYHUVH           DUJXDEOH WKRXJK QRW \HW HVWDEOLVKHG FODLP LQIOLFWV DFWXDO LQMXU\ EHFDXVH
                                                                       LW GHSULYHV KLP RI VRPHWKLQJ RI YDOXH n DUJXDEOH FODLPV DUH VHWWOHG
  DFWLRQZDVWDNHQDJDLQVWWKHSODLQWLIIWKDWZRXOGGHWHUD            ERXJKW DQG VROGl ,G DW  Q %HOOjV VXLW ORVW DW VXPPDU\ MXGJPHQW
  SHUVRQRIRUGLQDU\ILUPQHVVIURPFRQWLQXLQJWRHQJDJHLQ             LW ZDV QRW GLVPLVVHG DV EHLQJ IULYRORXV 7KHUHIRUH WKH +HUURQ UXOH ZRXOG
                                                                       QRW DSSO\ LQ WKH LQVWDQW FDVH
    %HOOYsRKQVRQHWDO                           1R       1R                           %HOOYsRKQVRQHWDO      

     E3URWHFWHG&RQGXFW                                                  WKDW FRQGXFW DQG  WKHUH LV D FDXVDO FRQQHFWLRQ
                                                                            EHWZHHQ HOHPHQWV RQH DQG WZR n WKDW LV WKH DGYHUVH
   'HIHQGDQWVPDLQWDLQWKDWHYHQLIWKLVFRXUWGHWHUPLQHVWKHLU            DFWLRQ ZDV PRWLYDWHG DW OHDVW LQ SDUW E\ WKH SODLQWLIIjV
DFWLRQVWREHDGYHUVHSODLQWLIIKDVQRWVKRZQWKDWKHHQJDJHG              SURWHFWHGFRQGXFW
LQ SURWHFWHG FRQGXFW EHFDXVH WKH XQGHUO\LQJ VXLW ZKLFK
DOOHJHGO\ SURYRNHG WKH GHIHQGDQWVj DFWV RI UHWDOLDWLRQ KDV         )G DW   m$OWKRXJK WKH HOHPHQWV RI D )LUVW
EHHQ GLVPLVVHG  7KH GHIHQGDQWV FRQFHGH WKDW SURWHFWHG             $PHQGPHQWUHWDOLDWLRQFODLP>DUH@FRQVWDQWWKHXQGHUO\LQJ
FRQGXFWIRUWKHSXUSRVHVRID)LUVW$PHQGPHQWUHWDOLDWLRQ                FRQFHSWV WKDW WKH\ VLJQLI\ ZLOO YDU\ ZLWK WKH VHWWLQJ n
FODLPHQFRPSDVVHVDSULVRQHUjVHIIRUWVWRDFFHVVWKHFRXUWVLQ           ZKHWKHUDFWLYLW\LVµSURWHFWHGjRUDQDFWLRQLVµDGYHUVHjZLOO
GLUHFWDSSHDOVKDEHDVFRUSXVDFWLRQVDQGFLYLOULJKWVFODLPV           GHSHQGRQFRQWH[Wl,GDW
:HVRKHOGLQ7KDGGHXV;)GDW1HYHUWKHOHVV
WKH\DUJXHWKDWWKLVULJKWH[WHQGVRQO\WRPHULWRULRXVRUDW                  D$GYHUVH$FWLRQ
OHDVWQRQIULYRORXVVXLWVDQGWKDWWKHGLVWULFWFRXUWjVGLVPLVVDO
RI%HOOjVXQGHUO\LQJFLYLOULJKWVFODLPVRQVXPPDU\MXGJPHQW                 7KHGLVWULFWFRXUWGLVPLVVHG%HOOjV FODLPRQWKHJURXQGV
GHPRQVWUDWHVWKDWKLVVXLWZDVQRWSURWHFWHGFRQGXFW                     WKDWKHKDGIDLOHGWRSUHVHQWVXIILFLHQWHYLGHQFHWRVDWLVI\WKH
                                                                          VHFRQG SURQJ RI WKH 7KDGGHXV; WHVW LQVRIDU DV WKH FRXUW
   'HIHQGDQWV UHO\ RQ WKLV FRXUWjV GHFLVLRQ LQ +HUURQ         GLVFHUQHGWKDWWKHGHIHQGDQWKDGmQRWSUHVHQWHGHYLGHQFHWKDW
)GDW,Q+HUURQDQLQPDWHFODLPHGWKDWSULVRQJXDUGV             ZRXOG DOORZ D MXU\ WR FRQFOXGH WKDW D SHUVRQ RI RUGLQDU\
UHWDOLDWHGDJDLQVWKLPDIWHUKHILOHGDVXLWXQGHUWKH5HOLJLRXV          ILUPQHVV    ZRXOG KDYH EHHQ GHWHUUHG IURP DVVHUWLQJ
)UHHGRP 5HVWRUDWLRQ $FW m5)5$l  $IWHU WKH 6XSUHPH               FRQVWLWXWLRQDOO\SURWHFWHGULJKWVE\WKHHYHQWVRIsXQHDQG
&RXUWIRXQGWKH5)5$XQFRQVWLWXWLRQDOLQ&LW\RI%RHUQHY                sXQH  µl  s$ DW   :H FRQFOXGH WKDW WKH GLVWULFW
)ORUHV86WKHGLVWULFWFRXUWGLVPLVVHGWKH             FRXUWPLVDSSOLHGWKHVWDQGDUGIRUDGYHUVHDFWLRQVHWIRUWKLQ
SODLQWLIIjVVXLWDVIULYRORXV+HUURQ)GDW2Q              7KDGGHXV;DQGFRQVHTXHQWO\HUUHGLQJUDQWLQJMXGJPHQWDV
DSSHDODSDQHORIWKLVFRXUWGLVPLVVHGWKHUHWDOLDWLRQFODLP            DPDWWHURIODZWRWKHGHIHQGDQWVRQWKLVLVVXH
ILQGLQJ WKDW WKH LQPDWHjV 5)5$ VXLW ZDV QRW SURWHFWHG
FRQGXFWEHFDXVHWKHGLVWULFW FRXUWKDGGLVPLVVHGWKHHQWLUH                 ,Q 7KDGGHXV; ZH H[SODLQHG WKDW mJRYHUQPHQW DFWLRQV
FRPSODLQWDVIULYRORXV,G7KH+HUURQFRXUWQRWHGWKDWm>D@Q           ZKLFK VWDQGLQJ DORQH GR QRW YLRODWH WKH &RQVWLWXWLRQ PD\
LQPDWH KDV DQ XQGLVSXWHG )LUVW $PHQGPHQW ULJKW WR ILOH            QRQHWKHOHVVEHFRQVWLWXWLRQDOWRUWVLIPRWLYDWHGLQVXEVWDQWLDO
JULHYDQFHVDJDLQVWSULVRQRIILFLDOVRQKLVRZQEHKDOIl,GDW           SDUW E\ D GHVLUH WR SXQLVK DQ LQGLYLGXDO IRU H[HUFLVH RI D
  7KH FRXUW H[SODLQHG KRZHYHU WKDW m>W@KLV ULJKW LV        FRQVWLWXWLRQDOULJKWl)GDW1HYHUWKHOHVVZHDOVR
SURWHFWHGRQO\LIWKHJULHYDQFHVDUHQRWIULYRORXV7KXV          GHWHUPLQHGWKDWVRPHDGYHUVHDFWLRQVDUHVRGHPLQLPLVWKDW
>WKH SODLQWLIIjV@ SXUVXLW RI OHJDO FODLPV    ZDV SURWHFWHG   WKH\GRQRWJLYHULVHWRFRQVWLWXWLRQDOO\FRJQL]DEOHLQMXULHV
FRQGXFW RQO\ WR WKH H[WHQW WKDW WKH XQGHUO\LQJ FODLPV KDG        ,GDW$FFRUGLQJO\ZHKHOGWKDWDQRIILFLDODFWLRQZLOOEH
PHULWl  ,G FLWLQJ /HZLV Y &DVH\  86   Q     GHHPHGmDGYHUVHlRQO\LILWFRXOGmµGHWHUDSHUVRQRIRUGLQDU\
                                                                  ILUPQHVVjIURPWKHH[HUFLVHRIWKHULJKWDWVWDNHl,GTXRWLQJ
                                                                          %DUWY7HOIRUG)GWK&LU$OWKRXJK
   'HIHQGDQWVjDUJXPHQWLVZLWKRXWPHULW7KHTXHVWLRQRI                WKHmµ>HIIHFWRQIUHHGRPRIVSHHFK@QHHGQRWEHJUHDWLQRUGHU
ZKHWKHU%HOOjVLQLWLDOFLYLOULJKWVODZVXLWFRQVWLWXWHGSURWHFWHG         WREHDFWLRQDEOHjlZHH[SODLQHGWKDWmµ>L@WZRXOGWULYLDOL]HWKH
FRQGXFWZDVFRQFOXVLYHO\UHVROYHGLQ7KDGGHXV;)G                 )LUVW $PHQGPHQWjl WR DOORZ SODLQWLIIV WR EULQJ )LUVW
DWQ$VQRWHGDERYH7KDGGHXV;DGGUHVVHGVHYHUDO                $PHQGPHQW UHWDOLDWLRQ FODLPV IRU DQ\ DGYHUVH DFWLRQ QR
                                                                          PDWWHU KRZ PLQRU  ,G DW  TXRWLQJ %DUW  )G DW
    %HOOYsRKQVRQHWDO                         1R       1R                           %HOOYsRKQVRQHWDO     

:KHWKHUDUHWDOLDWRU\DFWLRQLVVXIILFLHQWO\VHYHUHWR          %HOOKLPVHOIZDVQRWGHWHUUHGIURPSHUVLVWLQJLQWKLVODZVXLW
GHWHUDSHUVRQRIRUGLQDU\ILUPQHVVIURPH[HUFLVLQJKLVRUKHU          7KDGGHXV; PDNHV FOHDU KRZHYHU WKDW WKH DGYHUVHQHVV
ULJKWVLVDTXHVWLRQRIIDFW6HHLGDW'DYLGVRQY           LQTXLU\LVDQREMHFWLYHRQHDQGGRHVQRWGHSHQGXSRQKRZ
&KHVWQXW  )G   G &LU  QRWLQJ WKDW        WKH SDUWLFXODU SODLQWLII UHDFWHG   )G DW  DFFRUG
TXHVWLRQ RI ZKHWKHU RQHGD\ GHQLDO RI LQPDWHjV H[HUFLVH          6DQGHUV Y 6W /RXLV &RXQW\  )G   WK &LU
RSSRUWXQLWLHVZDVGHPLQLPLVZDVmIDFWXDOLQQDWXUHl                  m,WLVQRWQHFHVVDU\WKDWWKHLQPDWHVXFFXPEHQWLUHO\RU
                                                                        HYHQSDUWLDOO\WRWKHWKUHDWVRORQJDVWKHUHWDOLDWRU\DFW
  2XU GLVFXVVLRQ RI WKH mDGYHUVH DFWLRQl UHTXLUHPHQW LQ          ZDV LQWHQGHG WR OLPLW WKH LQPDWHjV ULJKW RI DFFHVV >WR WKH
7KDGGHXV;PDNHVLWFOHDUWKDWLQPRVWFDVHVWKHTXHVWLRQRI          FRXUWV@l7KHUHOHYDQWTXHVWLRQLVZKHWKHUWKHGHIHQGDQWVj
ZKHWKHU DQ DOOHJHG UHWDOLDWRU\ DFWLRQ SRVHV D VXIILFLHQW         DFWLRQV DUH mFDSDEOH RI GHWHUULQJ D SHUVRQ RI RUGLQDU\
GHWHUUHQW WKUHDW WR EH DFWLRQDEOH ZLOO QRW EH DPHQDEOH WR      ILUPQHVVl WKHUH LV QR UHTXLUHPHQW WKDW WKH SODLQWLII VKRZ
UHVROXWLRQDVDPDWWHURIODZ                                          DFWXDOGHWHUUHQFH7KDGGHXV;)GDWHPSKDVLV
                                                                        DGGHG'HIHQGDQWVjDUJXPHQWZRXOGHIIHFWLYHO\IRUHFORVHDOO
  :HHPSKDVL]HWKDWZKLOHFHUWDLQWKUHDWVRUGHSULYDWLRQV               UHWDOLDWLRQFODLPVVLQFHWKHIDFWWKDWDFODLPZDVEHIRUHWKH
  DUHVR GH PLQLPLVWKDWWKH\GRQRWULVHWRWKHOHYHORI             FRXUW ZRXOG EH FRQFOXVLYH SURRI WKDW WKH SODLQWLII ZDV QRW
  EHLQJFRQVWLWXWLRQDOYLRODWLRQVWKLVWKUHVKROGLVLQWHQGHG           GHWHUUHG:HHPSKDVL]HDJDLQWKDWWKHmRUGLQDU\ILUPQHVVl
  WRZHHGRXWRQO\LQFRQVHTXHQWLDODFWLRQVDQGLVQRWD                VWDQGDUG LV mLQWHQGHG WR ZHHG RXW RQO\ LQFRQVHTXHQWLDO
  PHDQV ZKHUHE\ VROHO\ HJUHJLRXV UHWDOLDWRU\ DFWV DUH             DFWLRQVl  ,G  7KH IDFWXDO TXHVWLRQ LV ZKHWKHU WKH LQMXU\
  DOORZHGWRSURFHHGSDVWVXPPDU\MXGJPHQW                             LQIOLFWHGLVVRVOLJKWWKDWLWFRXOGQRWUHDVRQDEO\EHH[SHFWHG
                                                                        WRGHWHUSURWHFWHGFRQGXFW7KHVWDQGDUGLVQRWLQWHQGHGWR
7KDGGHXV;)GDWHPSKDVLVDGGHGVHHDOVR%DUW            IRUHFORVH UHOLHI WR DOO EXW WKH VXSHUILUP SODLQWLIIV ZKR DUH
)GDW7KXVXQOHVVWKHFODLPHGUHWDOLDWRU\DFWLRQ           ZLOOLQJ DQG DEOH WR SHUVLVW LQ WKHLU VXLWV LQ WKH IDFH RI
LVWUXO\mLQFRQVHTXHQWLDOlWKHSODLQWLIIjVFODLPVKRXOGJRWR          UHWDOLDWRU\ DFWLRQV WKDW ZRXOG FDXVH PRVW SODLQWLIIV WR
WKHMXU\7KDGGHXV;)GDW                                 FUXPSOH  5DWKHU WKH SXUSRVH RI WKH VWDQGDUG LV WR DYRLG
                                                                        WULYLDOL]LQJWKH)LUVW$PHQGPHQWE\HOLPLQDWLQJVXLWVEDVHG
   $SSO\LQJWKLVVWDQGDUGLQ7KDGGHXV;DPDMRULW\RIWKHHQ           XSRQLQVLJQLILFDQWDFWVRIUHWDOLDWLRQ6HH%DUW)GDW
EDQFFRXUWGHFLGHGWRUHPDQG%HOOjVUHWDOLDWLRQFODLPVWRWKH           m,WZRXOGWULYLDOL]HWKH)LUVW$PHQGPHQWWRKROGWKDW
GLVWULFWFRXUWIRUGHWHUPLQDWLRQRIZKHWKHUmWKHUHLVDJHQXLQH         LI WKH 0D\RU RI 6SULQJILHOG KDG IURZQHG DW 0LVV %DUW IRU
LVVXH RI PDWHULDO IDFW UHJDUGLQJ WKH GHWHUUHQW HIIHFW RI WKH   UXQQLQJ IRU SXEOLF RIILFH KH ZRXOG EH OLDEOH IRU GDPDJHV
FODLPHG GHOLEHUDWH KDUDVVPHQW DQG FROG PHDOV WKDW ZRXOG          l
FRQWLQXHXQOHVVDQGXQWLOKHGURSSHGKLVODZVXLWDJDLQVWWKH
ZDUGHQl,GDW,QVRKROGLQJWKHPDMRULW\RIWKHHQ              ,QVXPZHFRQFOXGHWKDW%HOOjVHYLGHQFHLVVXIILFLHQWWR
EDQFFRXUWUHMHFWHGWKHDUJXPHQWRIWKHGLVVHQWHUVWKDWWKHVH           GHPRQVWUDWHWKDWWKHFODLPHGUHWDOLDWRU\DFWVZHUHQRWPHUHO\
DOOHJDWLRQVZHUHLQVXIILFLHQWDVDPDWWHURIODZWRGHWHUDQ            GHPLQLPLVDFWVRIKDUDVVPHQW7KLVLVDOOWKDWLVUHTXLUHGWR
LQPDWHIURPSXUVXLQJDODZVXLW,GDW6XKUKHLQULFKs          UHDFKDMXU\RQ WKH LVVXHRIZKHWKHUWKHUHWDOLDWRU\DFWLRQV
GLVVHQWLQJVHHDOVRLGDW.HQQHG\sGLVVHQWLQJ,Q         FRXOGGHWHUDSHUVRQRIRUGLQDU\ILUPQHVVIURPHQJDJLQJLQ
FRQWUDVWWR%HOOjVFRPSODLQWVZKLFKSUHVHQWHGDFORVHFDVH            SURWHFWHGFRQGXFW
WKHHQEDQFFRXUWREVHUYHGWKDWLWmQHHGQRWSDXVHIRUORQJLQ
WKHFDVHRISODLQWLII;KLVDOOHJDWLRQVLIWUXHFHUWDLQO\PHHW
WKHVWDQGDUG+DUDVVPHQWSK\VLFDOWKUHDWVDQGWUDQVIHUWRWKH
DUHDRIWKHSULVRQXVHGWRKRXVHPHQWDOO\GLVWXUEHGLQPDWHV
    %HOOYsRKQVRQHWDO                        1R       1R                           %HOOYsRKQVRQHWDO      

GLHWDU\VXSSOHPHQWVDVWKHSULFHRISHWLWLRQLQJWKHFRXUWV,G      HVSHFLDOO\ FRPELQHG ZLWK WKH FRQGLWLRQV DOOHJHGO\ SUHVHQW
DW                                                                WKHUHZRXOGOLNHO\KDYHDVWURQJGHWHUUHQWHIIHFWl,GDW
                                                                       VHH DOVR +HUURQ Y +DUULVRQ  )G   WK &LU
   7KHGHIHQGDQWVKDYHRIIHUHGQRDXWKRULW\WRWKHFRQWUDU\            KROGLQJ WKDW FRPPLWWLQJ SULVRQHU WR DGPLQLVWUDWLYH
,QVWHDGWKH\DUJXHWKDWWKHSODLQWLIIIDLOHGWRSUHVHQWH[SHUW        VHJUHJDWLRQIRUILYHGD\VZDVDGYHUVH
WHVWLPRQ\ RU RWKHU HYLGHQFH DERXW WKH GHWHUUHQW HIIHFW WKH
GHIHQGDQWVjDFWLRQVZRXOGKDYHRQDQRUGLQDULO\ILUPSULVRQHU             %DVHGXSRQWKHIRUHJRLQJSULQFLSOHVZHFRQFOXGHWKDWWKH
LQ VHJUHJDWLRQ  'HIHQGDQWV DSSDUHQWO\ FRQWHQG WKDW              GLVWULFW FRXUW HUUHG LQ UXOLQJ WKDW %HOO KDG SUHVHQWHG
7KDGGHXV; LPSRVHV D EXUGHQ RQ WKH SODLQWLII WR SUHVHQW        LQVXIILFLHQW HYLGHQFH WR VKRZ WKDW WKH GHIHQGDQWVj DFWLRQV
LQGHSHQGHQW ZLWQHVV WHVWLPRQ\ WKDW D JLYHQ VHW RI DFWLRQV      FRXOGGHWHUDSHUVRQRIRUGLQDU\ILUPQHVVIURPHQJDJLQJLQ
ZRXOGGHWHUDK\SRWKHWLFDOSULVRQHURIRUGLQDU\ILUPQHVVIURP          SURWHFWHGFRQGXFW,QLWLDOO\ZHQRWHWKDWDQXPEHURIFDVHV
HQJDJLQJLQSURWHFWHGFRQGXFW7KHGLVWULFWFRXUWH[SUHVVHG           IURPRWKHUFLUFXLWVKDYHKHOGWKDWFRQILVFDWLQJDQLQPDWHjV
VLPLODULGHDV1RWKLQJLQRXURSLQLRQLQ7KDGGHXV;RUDQ\            OHJDOSDSHUVDQGRWKHUSURSHUW\FRQVWLWXWHVVXIILFLHQWLQMXU\WR
VXEVHTXHQWFDVHKRZHYHUVXJJHVWVWKDWVHSDUDWHWHVWLPRQ\             VXSSRUWD)LUVW$PHQGPHQWUHWDOLDWLRQFODLP6HH3HQURGY
DERXW WKH OLNHO\ HIIHFWV RI FHUWDLQ DFWLRQV RQ SULVRQHUV RI   =DYDUDV)GWK&LUUHYHUVLQJJUDQW
RUGLQDU\ILUPQHVVLQWKHDEVWUDFWLVUHTXLUHG2XUFRQFOXVLRQ       RIVXPPDU\MXGJPHQWWRGHIHQGDQWVRQLQPDWHjVFODLPWKDW
LQ 7KDGGHXV; WKDW SK\VLFDO WKUHDWV DQG D WUDQVIHU WR EDVH    JXDUGV FRQGXFWHG KDUDVVLQJ FHOO VHDUFKHV VHL]HG OHJDO
OHYHORIVHJUHJDWLRQZRXOGEHVXIILFLHQWWRGHWHUDSHUVRQRI          PDWHULDOVUHIXVHGWRSURYLGHLQPDWHZLWKK\JLHQHLWHPVDQG
RUGLQDU\ ILUPQHVV IURP HQJDJLQJ LQ SURWHFWHG FRQGXFW IRU       WUDQVIHUUHGLQPDWHWRVHJUHJDWLRQLQUHWDOLDWLRQIRUVXLWDJDLQVW
H[DPSOHZDVQRWEDVHGXSRQDQ\LQGHSHQGHQWWHVWLPRQ\LQ               SULVRQRIILFLDOV*UHHQYsRKQVRQ)G
WKHUHFRUGSUHGLFWLQJKRZDQDYHUDJHSULVRQHUZRXOGUHDFWWR           WK&LUKROGLQJWKDWLQPDWHjVDOOHJDWLRQWKDWJXDUGV
WKHVHDFWLRQV)GDW7KLVZDVDFRQFOXVLRQWKDW           GHVWUR\HG KLV OHJDO PDWHULDOV LQ UHWDOLDWLRQ IRU KLV ILOLQJ RI
FRXOGEHGUDZQVLPSO\IURPWKHIDFWVFRQFHUQLQJWKHQDWXUH             VXLWV DQG JULHYDQFHV VWDWHG D FRJQL]DEOH )LUVW $PHQGPHQW
RIWKHWKUHDWVDQGWKHFRQGLWLRQVRIFRQILQHPHQWRQWKHEDVH           FODLP :ULJKW Y 1HZVRPH  )G   WK &LU
OHYHO7KHSODLQWLIIjVHYLGHQWLDU\EXUGHQLVPHUHO\WRHVWDEOLVK      VDPH+DOOY6XWWRQ)GWK&LU
WKH IDFWXDO EDVLV IRU KLV FODLP WKDW WKH UHWDOLDWRU\ DFWV     KROGLQJWKDWLQPDWHDOOHJHGVXIILFLHQWIDFWVWRVWDWHD
DPRXQWHGWRPRUHWKDQDGHPLQLPLVLQMXU\$FFRUG'DZHV               FODLPRI)LUVW$PHQGPHQWUHWDOLDWLRQEDVHGXSRQWKHDOOHJHG
Y :DONHU  )G   G &LU  KROGLQJ WKDW    FRQILVFDWLRQ RI KLV WHQQLV VKRHV LQ UHWDOLDWLRQ IRU D SULRU
SULVRQHUjV HYLGHQWLDU\ EXUGHQ XQGHU mRUGLQDU\ ILUPQHVVl           ODZVXLW DJDLQVW SULVRQ RIILFLDOV VHH DOVR =LPPHUPDQ Y
VWDQGDUG ZDV WR VKRZ WKDW JXDUGVj UHIHUHQFHV WR KLP DV DQ    7ULEEOH  )G   WK &LU  UHYHUVLQJ
mLQIRUPDQWlRUmUDWlmDFWXDOO\ULVNHGLQFLWLQJRWKHULQPDWHV           GLVPLVVDORIFODLPWKDWSULVRQODZOLEUDULDQUHSHDWHGO\GHQLHG
DJDLQVWWKH>SODLQWLII@lDQGZDVQRWPHUHO\KDUPOHVVQDPH            SULVRQHU DFFHVV WR WKH SULVRQ ODZ OLEUDU\ LQ UHWDOLDWLRQ IRU
FDOOLQJ2QFHWKLVWKUHVKROGKDVEHHQSDVVHGLWLVXSWRWKH        SURWHFWHG FRQGXFW  ,Q :ULJKW WKH (OHYHQWK &LUFXLW
WULHURIIDFWWRGHWHUPLQHZKHWKHUXQGHUWKHFLUFXPVWDQFHV           GHWHUPLQHG WKDW D SULVRQHU KDG DOOHJHG VXIILFLHQW LQMXU\ WR
WKH DFWV ZHUH FDSDEOH RI GHWHUULQJ D SHUVRQ RI RUGLQDU\       VWDWHD)LUVW$PHQGPHQWUHWDOLDWLRQFODLPE\DVVHUWLQJWKDW
ILUPQHVVIURPHQJDJLQJLQWKHSURWHFWHGFRQGXFW6XSSDQY            FRUUHFWLRQDORIILFHUVFRQGXFWHGDUHWDOLDWRU\VHDUFKRIKLVFHOO
'DGRQQD)GG&LU                          DQG WKDW m>L@Q WKH FRXUVH RI WKH VHDUFK >WKH GHIHQGDQWV@
                                                                       GHVWUR\HG VHYHQ RI >WKH SODLQWLIIjV@ SKRWRJUDSKV DQG VRPH
  'HIHQGDQWVIXUWKHUDUJXHWKDW%HOOFDQQRWSURYHWKDWWKHLU           OHJDOSDSHUV>DQG@DOVRVHL]HGOHJDOSOHDGLQJVFRQFHUQLQJ
DFWLRQVZHUHVXIILFLHQWWRGHWHUSURWHFWHGFRQGXFWJLYHQWKDW         >WKHSODLQWLIIjV@FKDOOHQJHWRKLVFRQYLFWLRQDQGDODZERRNl
       %HOOYsRKQVRQHWDO                           1R       1R                          %HOOYsRKQVRQHWDO     

ZKLFKZHUHQHYHUUHWXUQHG:ULJKW)GDW7KH                    IDYRURIWKHSODLQWLIIRQKLVUHWDOLDWLRQFODLP$OWKRXJKWKH
FRXUW FRQFOXGHG WKDW WKH SODLQWLII KDG mVXIILFLHQWO\ DOOHJHG          HQWU\RIMXGJPHQWIRUWKHSODLQWLIIZDVQRWEHIRUHXVRQDSSHDO
IDFWVEULQJLQJDFWLRQVWKDWPLJKWQRWRWKHUZLVHEHRIIHQVLYHWR              LQ:DONHUZHREVHUYHGWKDWm>X@QGHUWKHDSSOLFDEOHVWDQGDUG
WKH&RQVWLWXWLRQVXFKDVWKHVHDUFKLWVHOIRUWKHFRQILVFDWLRQ              >DQQRXQFHGLQ7KDGGHXV;@WKHQ>WKHSODLQWLII@KDGSURYHQ
DQGGHVWUXFWLRQRI>OHJDODQG@QRQOHJDOPDWHULDOVZLWKLQ             D )LUVW $PHQGPHQW UHWDOLDWLRQ YLRODWLRQl EDVHG RQ WKH
WKHVFRSHRIWKH&RQVWLWXWLRQE\DOOHJLQJWKDWWKHDFWLRQVZHUH              UHWDOLDWRU\VKDNHGRZQDQGVHL]XUHRIGRFXPHQWV,G
WDNHQ LQ UHWDOLDWLRQ IRU ILOLQJ ODZVXLWV DQG DGPLQLVWUDWLYH
JULHYDQFHVl,GDW$OWKRXJK:ULJKWGLGQRWH[SOLFLWO\                  :HILQGWKHVHFDVHVSHUVXDVLYHDQGFRQVHTXHQWO\ZHKROG
FRQVLGHUWKHmRUGLQDU\ILUPQHVVlTXHVWLRQWKHFRXUWDSSOLHG                 WKDW%HOOKDVSUHVHQWHGVXIILFLHQWHYLGHQFHWRPHHWKLVEXUGHQ
HVVHQWLDOO\ WKH VDPH ZHOOHVWDEOLVKHG SULQFLSOHV RI )LUVW              XQGHUWKHDGYHUVHDFWLRQSURQJRIWKH7KDGGHXV;WHVW%HOOjV
$PHQGPHQW UHWDOLDWLRQ ODZ WKDW IRUPHG WKH EDVLV IRU WKLV             HYLGHQFHVKRZVWKDWWKHGHIHQGDQWVWZLFHOHIWWKHSODLQWLIIjV
FRXUWjVGHFLVLRQLQ7KDGGHXV;                                              FHOOLQGLVDUUD\FRQILVFDWHGKLVOHJDOSDSHUVZLWKRXWUHWXUQLQJ
                                                                             WKHP DQG VWROH WKH PHGLFDO GLHW VQDFNV WKDW KDG EHHQ
  ,QDGGLWLRQZHKDYHSUHYLRXVO\VXJJHVWHGLQGLFWDWKDWD                  SURYLGHGWRKLPWRDOOHYLDWHKLVZHLJKWORVVIURP$,'6%HOO
UHWDOLDWRU\ FHOO VHDUFK DQG VHL]XUH RI DQ LQPDWHjV OHJDO             WHVWLILHGWKDWWKHVHDFWLRQVFDXVHGKLPWRIHDUOHDYLQJKLVFHOO
GRFXPHQWVVDWLVILHVWKHDGYHUVHDFWLRQSURQJRIWKH7KDGGHXV                DQGOHGKLPWRZRUU\WKDWWKHJXDUGVZHUHWDPSHULQJZLWKKLV
;WHVW:DONHUY%DLQ)GWK&LU                  IRRG  ,I EHOLHYHG WKLV HYLGHQFH WHQGV WR VKRZ WKDW WKH
FHUWGHQLHG6&W,Q:DONHUDMXU\LQD                GHIHQGDQWVjDFWLRQVKDGDQLQWLPLGDWLQJHIIHFWRQWKHSODLQWLII
FLYLOWULDOFRQFHUQLQJDQLQPDWHjV)LUVW$PHQGPHQWUHWDOLDWLRQ               DQG WKHUHIRUH FRXOG KDYH GHWHUUHG RWKHUV  7KH IDFW WKDW
FODLP UHWXUQHG VSHFLDO LQWHUURJDWRULHV ILQGLQJ WKDW mERWK              GHIHQGDQWVUHSHDWHGO\VWROHSODLQWLIIjVOHJDOSDSHUVFHUWDLQO\
GHIHQGDQWV LPSURSHUO\ FRQILVFDWHG DQG UHPRYHG >WKH                      KDGWKHSRWHQWLDOWRGLUHFWO\LPSHGHKLVSXUVXLWRIKLVFODLP
SODLQWLIIjV@SHUVRQDOSDSHUVIURPKLVFHOOWKDW>WKHSODLQWLIIjV@           DQGPD\KDYHFDXVHGRWKHUVWREHOLHYHWKDWDQ\HIIRUWVWKH\
SUHYLRXVILOLQJRIJULHYDQFHVDQGODZVXLWVZDVDVXEVWDQWLDO                 PLJKWH[SHQGLQSUHSDULQJOHJDOFODLPVZRXOGEHZDVWHGVLQFH
DQG PRWLYDWLQJ IDFWRU EHKLQG WKLV FRQGXFW EXW WKDW WKH              DQ\ PDWHULDOV WKH\ SUHSDUHG FRXOG HDVLO\ EH GHVWUR\HG RU
GHIHQGDQWVjDFWLRQVGLGQRWFRQVWLWXWHDQHJUHJLRXVDEXVHRI                 FRQILVFDWHG,QDGGLWLRQDMXU\FRXOGLQIHUWKDWGHOLEHUDWHO\
SRZHU RU RWKHUZLVH VKRFN WKH FRQVFLHQFHl  ,G DW   $         GHSULYLQJ D SULVRQHU RI GLHWDU\ VXSSOHPHQWV GHVLJQHG WR
YHUGLFWLQLWLDOO\ZDVHQWHUHGIRUWKHGHIHQGDQWVEDVHGXSRQWKH              DPHOLRUDWH WKH ZHLJKWORVV HIIHFWV RI D GHDGO\ GLVHDVH OLNH
MXU\jVFRQFOXVLRQWKDWWKHUHWDOLDWRU\DFWVZHUHQRWFRQVFLHQFH             $,'6FRXOGGHWHUDSHUVRQRIRUGLQDU\ILUPQHVVIURPSXUVXLQJ
VKRFNLQJ6KRUWO\DIWHUWKHWULDOWKHHQEDQFFRXUWKDQGHG                KLV RU KHU OHJDO ULJKWV  7KHVH DFWLRQV DUH FHUWDLQO\ PRUH
GRZQLWVRSLQLRQLQ7KDGGHXV;%DVHGXSRQWKHVWDQGDUGVHW                 VHYHUHWKDQWKHWKUHDWVRIFROGIRRGDQGQRQFRRSHUDWLRQE\WKH
IRUWKLQ7KDGGHXV;WKHGLVWULFWFRXUWJUDQWHGWKHSODLQWLIIjV              SULVRQJXDUGVWKDWSODLQWLII%HOODOOHJHGLQ7KDGGHXV;:H
PRWLRQ WR DPHQG WKH MXGJPHQW DQG HQWHUHG D MXGJPHQW LQ              WKLQNWKDW%HOOjVHYLGHQFHDWOHDVWLVVXIILFLHQWWRVKRZWKDWWKH
                                                                             DFWLRQV WDNHQ WRZDUG %HOO ZHUH QRW mLQFRQVHTXHQWLDOl
                                                                             7KDGGHXV;)GDW$OWKRXJKLWLVWUXHWKDWmWKH
                                                                            GHILQLWLRQRIDGYHUVHDFWLRQLVQRWVWDWLFDFURVVFRQWH[WVlDQG
     7KH GLVWULFW FRXUWjV GHFLVLRQ WR UHTXLUH D ILQGLQJ RI mFRQVFLHQFH      m>S@ULVRQHUV PD\ EH UHTXLUHG WR WROHUDWH PRUH WKDQ SXEOLF
VKRFNLQJl EHKDYLRU ZDV SURPSWHG E\ WKLV FRXUWjV  GHFLVLRQ LQ
0F/DXULQ  )G DW  :DONHU  )G DW  7KXV IRU WKH
                                                                             HPSOR\HHV>DQG@DYHUDJHFLWL]HQVlZHVHHQREDVLVIRU
SXUSRVHV RI RXU GLVFXVVLRQ LQ 3DUW ,,%D RI WKLV RSLQLRQ ZH QRWH WKDW
                                                                             FRQFOXGLQJWKDWSULVRQHUVVKRXOGEHUHTXLUHGWRWROHUDWHWKH
WKH DSSOLFDWLRQ RI WKH mVKRFNV WKH FRQVFLHQFHl VWDQGDUG LQ    :DONHU KDV     WKHIWRIWKHLUSURSHUW\LQFOXGLQJOHJDOGRFXPHQWVDQGPHGLFDO
OLWWOH EHDULQJ RQ ZKHWKHU WKH mVKRFNV WKH FRQVFLHQFHl VWDQGDUG ZDV
UHJXODUO\ DSSOLHG WR LQPDWH UHWDOLDWLRQ FODLPV EHIRUH   0F/DXULQ