Court Opinion

ID: 2969926
Source: CourtListenerOpinion
Date Created: 2015-09-22 16:00:33.845912+00
Date Added: 2024-06-11T11:43:27.108121
License: Public Domain

5(&200(1'(' )25 )8//7(;7 38%/,&$7,21
    1/5%Y)RXQGU\'LY                          1R                      3XUVXDQW WR 6L[WK &LUFXLW 5XOH 

      RI$OFRQ,QGXVWULHV                                                    (/(&7521,& &,7$7,21  )(' $SS 3 WK &LU
                                                                                         )LOH 1DPH DS

XQGHUZKLFKLWLVLPSRVVLEOHWRGHWHUPLQHmWKH XQLQKLELWHG
GHVLUHV RI WKH HPSOR\HHVl LQ WKH HOHFWLRQ E\ DSSHDOLQJ WR   81,7('67$7(6&28572)$33($/6
UDFLDOSUHMXGLFH6HH6HZHOO1/5%DW
                                                                                        )257+(6,;7+&,5&8,7
   ,QVXPZHFRQFOXGHWKDWVXEVWDQWLDOHYLGHQFHVXSSRUWVWKH                             BBBBBBBBBBBBBBBBB
%RDUGjV ILQGLQJ WKDW WKH XVH RI UDFLDO HSLWKHWV LQ WKH
FLUFXPVWDQFHVSUHVHQWHGKHUHGLGQRWFRQVWLWXWHDQDSSHDOE\
XQLRQ SURSRQHQWV WR UDFLDO SUHMXGLFH DQG ZH HQIRUFH WKH
%RDUGjVRUGHU                                                      1$7,21$/ /$%25 5(/$7,216      ;
                                                                      %2$5'                         
  ,Q DGGLWLRQ ZH KDYH FDUHIXOO\ FRQVLGHUHG 5HVSRQGHQWjV                        3HWLWLRQHU    
DUJXPHQWVWKDWWKHODZRIWKHFDVHGRFWULQHUHTXLUHVWKDWWKH                                            1R
HOHFWLRQEHVHWDVLGHDQGWKDWWKH%RDUGLQFRUUHFWO\UHMHFWHGLWV                                    
REMHFWLRQEDVHGRQDOOHJHGWKUHDWVGXULQJWKHUHSUHVHQWDWLRQ                    Y                    !
                                                                                                     
FDPSDLJQ:HILQGWKHVHDUJXPHQWVWREHZLWKRXWPHULW                                             
                                                                      )281'5< ',9,6,21 2) $/&21 
                               ,9                                    ,1'8675,(6 ,1&              
  )RU WKH IRUHJRLQJ UHDVRQV WKH %RDUGjV SHWLWLRQ IRU                             5HVSRQGHQW 
HQIRUFHPHQWLV*5$17('                                                                              
                                                                                                    1
                                                                         2Q$SSOLFDWLRQIRU(QIRUFHPHQWRIDQ2UGHURIWKH
                                                                                 1DWLRQDO/DERU5HODWLRQV%RDUG
                                                                                         1R&$
                                                                                            $UJXHG0D\
                                                                                    'HFLGHGDQG)LOHG$XJXVW
                                                                         %HIRUHs21(6DQG'$8*+75(<&LUFXLWsXGJHV
                                                                                    (&212086'LVWULFWsXGJH

                                                                         
                                                                          7KH +RQRUDEOH 3HWHU & (FRQRPXV 8QLWHG 6WDWHV 'LVWULFW sXGJH IRU
                                                                     WKH 1RUWKHUQ 'LVWULFW RI 2KLR VLWWLQJ E\ GHVLJQDWLRQ

                                                                                                         
     1/5%Y)RXQGU\'LY                          1R      1R                       1/5%Y)RXQGU\'LY         
      RI$OFRQ,QGXVWULHV                                                                                RI$OFRQ,QGXVWULHV

                     BBBBBBBBBBBBBBBBB                               WU\LQJWRDSSHDOWRUDFLDOSUHMXGLFHVKHOGE\.QLJKWRUWKDWKH
                                                                     ZDV WU\LQJ WR H[DFHUEDWH SUHH[LVWLQJ UDFLDO WHQVLRQ
                          &2816(/                                    /LNHZLVHDOWKRXJK:LOVRQWHVWLILHGWKDWRWKHUHPSOR\HHVLQ
                                                                     WKH YRWLQJ OLQH ZHUH XVLQJ WKH ZRUG mQLJJHUl DORQJ ZLWK
$5*8('  'DYLG +DEHQVWUHLW 1$7,21$/ /$%25                      ZRUGVOLNHmELWFKlDQGmZKRUHlWKHUHLVQRHYLGHQFHWKDW
5(/$7,216 %2$5' 2)),&( 2) 7+( *(1(5$/                          WKH\ZHUHGRLQJVRLQDQDWWHPSWWRJDUQHUYRWHVIRUWKHXQLRQ
&2816(/:DVKLQJWRQ'&IRU3HWLWLRQHU$ODQ*5RVV            EDVHGRQUDFLDODQLPRVLW\,QIDFW.QLJKWWHVWLILHGWKDWLWZDV
5266%5,77$,1	6&+21%(5*&OHYHODQG2KLRIRU                     MXVWDMRNHDQGWKDWWKLVNLQGRIODQJXDJHZDVXVHGVRRIWHQDW
5HVSRQGHQW21%5,()'DYLG+DEHQVWUHLW1$7,21$/                  WKHIRXQGU\WKDWKHZDVQRWHYHQVXUHZKHWKHURUQRW:LOVRQ
/$%25 5(/$7,216 %2$5' 2)),&( 2) 7+(                            KDG DFWXDOO\ XVHG WKH ZRUG mQLJJHUl DQG KH FRXOG QRW
*(1(5$/ &2816(/ :DVKLQJWRQ '& $LOHHQ $                    UHPHPEHUZKRHOVHZDVXVLQJWKLVODQJXDJH
$UPVWURQJ 8VKD 'KHHQDQ 1$7,21$/ /$%25
5(/$7,216%2$5'$33(//$7(&2857 %5$1&+                              7KXVWKLVVLWXDWLRQLVXQOLNH6HZHOOLQZKLFKWKHHPSOR\HU
:DVKLQJWRQ'&IRU3HWLWLRQHU$ODQ*5RVV'DYLG7            LQWHQWLRQDOO\ DWWHPSWHG WR DSSHDO WR HPSOR\HHVj UDFLDO
$QGUHZV )UHG 1 6HOHPDQ 5266 %5,77$,1 	                     SUHMXGLFHV VR WKDW WKH\ ZRXOG UHMHFW WKH XQLRQ RQ UDFLDO
6&+21%(5*&OHYHODQG2KLRIRU5HVSRQGHQW                         JURXQGV1/5%DW1RULVLWOLNH(XURGULYHLQ
                                                                     ZKLFK WKH XQLRQ UHSUHVHQWDWLYH UHDFKHG RXW WR ZKLWH
                     BBBBBBBBBBBBBBBBB                               HPSOR\HHV E\ SURPLVLQJ WR IRUFH WKH FRPSDQ\ WR UHKLUH D
                                                                     ZKLWHHPSOR\HHZKRKDGEHHQILUHGIRUUDFLDOO\KDUDVVLQJD
                         23,1,21                                     EODFNHPSOR\HH%\GRLQJWKLV WKHUHSUHVHQWDWLYHmSODFHG
                     BBBBBBBBBBBBBBBBB                               XQGXHHPSKDVLVRQDUDFLDOLVVXHZKLFK>KH@PXVWKDYHNQRZQ
                                                                     ZRXOG H[DFHUEDWH SUHH[LVWLQJ UDFLDO WHQVLRQ DPRQJ WKH
  1$7+$1,(/ 5 s21(6 &LUFXLW sXGJH  7KLV FDVH LV           HPSOR\HHVSULRUWRWKHHOHFWLRQl(XURGULYH)GDW
EHIRUH WKH &RXUW RQ WKH DSSOLFDWLRQ RI 3HWLWLRQHU 1DWLRQDO   6LPLODUO\ WKH VLWXDWLRQ LQ WKH LQVWDQW FDVH LV XQOLNH
/DERU 5HODWLRQV %RDUG m%RDUGl RU m1/5%l WR HQIRUFH D       &DUULQJWRQ LQ ZKLFK WKH XQLRQ GLVWULEXWHG PDWHULDOV WKDW
%RDUGRUGHULVVXHGDJDLQVW5HVSRQGHQW)RXQGU\'LYLVLRQRI            FRQWDLQHGmLPDJHVRIERQGDJHRUYLROHQFHYLVLWHGXSRQUDFLDO
$OFRQ ,QGXVWULHV ,QF m&RPSDQ\l  7KH &RPSDQ\ KDV          PLQRULWLHV E\ D ZKLWH PDMRULW\l DQG WKHUHE\ GHSLFWHG
UHIXVHGWREDUJDLQZLWKWKH8QLRQEDVHGRQREMHFWLRQVWRWKH         FDPSDLJQWKHPHVVXFKDVUHVSHFWIRUHPSOR\HHVLQPDQQHU
XQGHUO\LQJUHSUHVHQWDWLRQHOHFWLRQ7KLVDSSHDOUHTXLUHVXVWR      WKDWmFRXOGEHVHHQDVJODULQJJUDSKLFDSSHDOVWRUDFLDO
GHWHUPLQH ZKHWKHU RQ WKH IDFWV RI WKLV FDVH WKH %RDUG     SUHMXGLFHl)GDW
SURSHUO\FRQFOXGHGWKDWWKHHOHFWLRQVKRXOGQRWEHRYHUWXUQHG
RQWKHEDVLVRIWKHXVHRIUDFLDOHSLWKHWV:HKROGWKDWWKHUH          $OWKRXJK:LOVRQZDVHQFRXUDJLQJ.QLJKWWRYRWHIRUWKH
ZDV QRW D GHOLEHUDWH DSSHDO WR UDFLDO SUHMXGLFH DQG ZLOO    XQLRQ:LOVRQjVVWDWHPHQWGRHVQRWVXJJHVWWKDWPHPEHUVRI
HQIRUFHWKH%RDUGjVEDUJDLQLQJRUGHU                                RQHUDFHZHUHRUFRXOGKDYHEHHQmSHUVXDGHGWRYRWHIRURU
                                                                     DJDLQVW D XQLRQ RQ WKH EDVLV RI LQYLGLRXV SUHMXGLFHV WKH\
                                ,                                   PLJKWKDYHDJDLQVWLQGLYLGXDOVRIDQRWKHUUDFHl(XURGULYH
  2Q 0D\   WKH ,QWHUQDWLRQDO 8QLRQ 8QLWHG            )GDWQHPSKDVLVDGGHG*RLQJWRWKHKHDUWRI
$XWRPRELOH$HURVSDFHDQG$JULFXOWXUDO,PSOHPHQW:RUNHUV             WKHPDWWHU.QLJKWjVVWDWHPHQWWR:LOVRQm1LJHU>VLF@6KRUW\
RI$PHULFDm8$:lRUmWKH8QLRQlILOHGDUHSUHVHQWDWLRQ             ,NQRZ\RXjUHJRQQD>VLF@YRWH\HVlGLGQRWFUHDWHFRQGLWLRQV
       1/5%Y)RXQGU\'LY                               1R        1R                       1/5%Y)RXQGU\'LY         
         RI$OFRQ,QGXVWULHV                                                                                       RI$OFRQ,QGXVWULHV

&RQWUDU\WRWKH&RPSDQ\jVDUJXPHQW6HZHOOGRHVQRWUHTXLUH                    SHWLWLRQZLWKWKH1/5%VHHNLQJFHUWLILFDWLRQDVWKHFROOHFWLYH
WKDWWKH&RXUWVHWDVLGHWKHHOHFWLRQLQWKLVFDVH                           EDUJDLQLQJ UHSUHVHQWDWLYH RI SURGXFWLRQ DQG PDLQWHQDQFH
                                                                               HPSOR\HHV DW )RXQGU\ 'LYLVLRQ RI $OFRQ ,QGXVWULHV ,QF
   (YHQ ZKHQ ZH FRQVLGHU mWKH FRQWH[W LQ ZKLFK WKH                     3XUVXDQW WR D VWLSXODWHG HOHFWLRQ DJUHHPHQW WKH %RDUG
VWDWHPHQWVZHUHPDGHDQGWKHWRWDOFRQGXFWRIWKHSHUVRQZKR                   FRQGXFWHGDVHFUHWEDOORWHOHFWLRQRQsXO\6HYHQW\
PDGHWKHVWDWHPHQWVl(XURGULYH)GDWLQWHUQDO                     RQHRXWRIVHYHQW\ILYHHOLJLEOHYRWHUVFDVWEDOORWV7KLUW\VL[
FLWDWLRQVRPLWWHGZHDUHXQDEOHWRILQGDQ\WKLQJWRVXJJHVW                  YRWHVZHUHFDVWIRUWKH8QLRQDQGWKLUW\WZRZHUHFDVWDJDLQVW
WKDWZKHQ(UYLQ:LOVRQVDLGWR(QULTXH.QLJKWm1LJHU>VLF@                   WKH8QLRQ7KUHHEDOORWVDQXPEHULQVXIILFLHQWWRDIIHFWWKH
6KRUW\ , NQRZ \RXjUH JRQQD >VLF@ YRWH \HVl :LOVRQ ZDV               RXWFRPHZHUHFKDOOHQJHG7KH&RPSDQ\ILOHGREMHFWLRQVWR
                                                                               FRQGXFWDIIHFWLQJWKHUHVXOWVRIWKHHOHFWLRQ7KH5HJLRQDO
                                                                               'LUHFWRU LVVXHG D UHSRUW UHFRPPHQGLQJ WKDW WKH %RDUG
                                                                               RYHUUXOH WKH &RPSDQ\jV REMHFWLRQV  7KH &RPSDQ\ ILOHG
     :H
     
           UHFRJQL]H WKDW WKH FDVH DW EDU LV GLIIHUHQW IURP WKH FDVHV          ([FHSWLRQVWRWKH5HJLRQDO'LUHFWRUjVUHSRUWDQGWKH1/5%
GLVFXVVHG DERYH LQ WKDW D WKLUG SDUW\ PDGH WKH FRPPHQWV DW LVVXH KHUH
:KHQ GHWHUPLQLQJ ZKHWKHU WR VHW DVLGH DQ HOHFWLRQ FRXUWV SODFH PRUH            LVVXHGDGHFLVLRQDQGRUGHUGLUHFWLQJWKH5HJLRQDO'LUHFWRUWR
ZHLJKW RQ PLVFRQGXFW E\ WKH HPSOR\HU RU WKH XQLRQ WKDQ RQ FRQGXFW E\           FRQGXFWDKHDULQJUHJDUGLQJWKH&RPSDQ\jVREMHFWLRQV
WKLUG SDUWLHV *HQHUDOO\ ZKHQ WKH FRQGXFW RI WKLUG SDUWLHV LV WKH EDVLV RI
DQ HOHFWLRQ FKDOOHQJH WKH DSSURSULDWH WHVW LV mZKHWKHU WKH DFWLRQV RI D PHUH     $ +HDULQJ 2IILFHU KHOG D WZRGD\ KHDULQJ DQG LVVXHG D
8QLRQ µDGKHUHQWj ZHUH µVXIILFLHQWO\ VXEVWDQWLDO LQ QDWXUH WR FUHDWH D          UHSRUWUHFRPPHQGLQJWKDWWKHREMHFWLRQVEHRYHUUXOHGDQGWKDW
JHQHUDO HQYLURQPHQW RI IHDU DQG UHSULVDO VXFK DV WR UHQGHU D IUHH FKRLFH       D&HUWLILFDWLRQRI5HSUHVHQWDWLYHLVVXHLQIDYRURIWKH8QLRQ
RI UHSUHVHQWDWLRQ LPSRVVLEOH    j 1/5% Y 6XSHULRU &RDWLQJV ,QF 
)G   Q WK &LU  TXRWLQJ +LFNPDQ +DUERU 6HUY Y
                                                                               $JDLQWKH&RPSDQ\ILOHG([FHSWLRQV$WKUHHPHPEHUSDQHO
1/5%  )G   WK &LU  :KHUHDV ZKHQ WKH FRQGXFW LV          RIWKH%RDUGLVVXHGDVXSSOHPHQWDOGHFLVLRQDQG&HUWLILFDWLRQ
DWWULEXWDEOH WR WKH XQLRQ RU WKH HPSOR\HU WKH WHVW LV ZKHWKHU WKH FRQGXFW      RI5HSUHVHQWDWLYHDGRSWLQJWKHKHDULQJRIILFHUjVILQGLQJVDQG
mUHDVRQDEO\ WHQG>HG@ WR LQWHUIHUH ZLWK WKH HPSOR\HHjV IUHH DQG XQFRHUFHG       UHFRPPHQGDWLRQV  7KH %RDUG DJUHHG ZLWK WKH +HDULQJ
FKRLFH LQ WKH HOHFWLRQl 6XSHULRU &RDWLQJV  )G DW  TXRWLQJ
                                                                               2IILFHUWKDWWKHHPSOR\HHVjDOOHJHGXVHRIUDFLDOHSLWKHWVDV
%DMDjV 3ODFH  1/5%   DOWHUDWLRQ LQ 6XSHULRU &RDWLQJV
,W GRHV QRW DSSHDU WKDW WKH 6L[WK &LUFXLW KDV DSSOLHG WKH 6HZHOO WHVW WR WKH
                                                                               WKH\ZHUHZDLWLQJLQOLQHWRYRWHZDVQRWREMHFWLRQDEOHEXW
FRQGXFW RI D WKLUG SDUW\ 2WKHU FLUFXLWV KDYH GRQH VR DQG WKHUH KDV EHHQ      VDLGm,QVRILQGLQJZHUHO\VROHO\RQWKHIDFWWKDWWKHXVHRI
VRPH GLVDJUHHPHQW DV WKH DSSURSULDWH VWDQGDUG 6HH HJ 1/5% Y .DW]         VXFK HSLWKHWV LQ WKH FLUFXPVWDQFHV SUHVHQW KHUH GLG QRW
 )G   WK &LU  DSSO\LQJ IROORZLQJ WHVW WR UHPDUNV E\       FRQVWLWXWHDQDSSHDOWRUDFLDOSUHMXGLFHls$DW
WKLUGSDUW\ mZKHWKHU WKH LQIODPPDWRU\ UHPDUNV FRXOG KDYH LPSDLUHG WKH
HPSOR\HHVj IUHHGRP RI FKRLFH LQ WKH VXEVHTXHQW HOHFWLRQl 'LG %OGJ
                                                                                 7KHUHDIWHUWKH8QLRQUHTXHVWHGWREDUJDLQFROOHFWLYHO\ZLWK
6HUYV ,QF Y 1/5%  )G   WK &LU  UHMHFWLQJ     .DW]    WKH &RPSDQ\ DQG WKH &RPSDQ\ UHIXVHG  $V D UHVXOW WKH
VWDQGDUG DV WRR LQFOXVLYH DQG LQVWHDG KROGLQJ WKDW mDQ HPSOR\HHjV DSSHDO
WR SUHMXGLFH PXVW VR WDLQW WKH HOHFWLRQ DWPRVSKHUH DV WR UHQGHU IUHH FKRLFH    8QLRQ ILOHG DQ XQIDLU ODERU SUDFWLFH FKDUJH  7KH 1/5%
RI UHSUHVHQWDWLRQ LPSRVVLEOHl DFFRUG0	06XSHUPDUNHWV,QFY1/5%              5HJLRQDO'LUHFWRULVVXHGD&RPSODLQW7KH&RPSDQ\ILOHGDQ
 )G   WK &LU  VWDWLQJ WHVW DV ZKHWKHU WKH           DQVZHU WR WKH &RPSODLQW LQ ZKLFK WKH &RPSDQ\ DGPLWWHG
HPSOR\HHjV DFWV mGHVWUR\HG WKH DWPRVSKHUH QHFHVVDU\ WR WKH H[HUFLVH RI         UHIXVLQJWKHUHTXHVWWREDUJDLQEXWFKDOOHQJHGWKHYDOLGLW\RI
D IUHH FKRLFH LQ WKH UHSUHVHQWDWLRQ HOHFWLRQl TXRWLQJ   1/5% Y &DUURO       WKH UHSUHVHQWDWLRQ HOHFWLRQ  7KH *HQHUDO &RXQVHO ILOHG D
&RQWUDFWLQJ 	 5HDG\ 0L[ ,QF       )G   WK &LU  ,Q
                                                                               PRWLRQ IRU VXPPDU\ MXGJPHQW RQ 0D\   DQG LQ
WKH FDVH DW EDU KRZHYHU LW LV XQQHFHVVDU\ IRU WKH &RXUW WR HQWHU WKLV
GHEDWH EHFDXVH HYHQ DVVXPLQJ WKDW WKH FRQGXFW KDG EHHQ DWWULEXWDEOH WR         UHVSRQVHWKH%RDUGLVVXHGDQRUGHUWRVKRZFDXVHZK\WKH
WKH 8QLRQ WKH FRQGXFW GRHV QRW VDWLVI\ WKH VWDQGDUG IRU LQYDOLGDWLQJ WKH      PRWLRQ VKRXOG QRW EH JUDQWHG  7KH &RPSDQ\ ILOHG D
HOHFWLRQ DV H[SUHVVHG LQ 6HZHOO (XURGULYH
                                              DQG &DUULQJWRQ
       1/5%Y)RXQGU\'LY                            1R     1R                            1/5%Y)RXQGU\'LY              
        RI$OFRQ,QGXVWULHV                                                                                      RI$OFRQ,QGXVWULHV

PHPRUDQGXP LQ RSSRVLWLRQ WR WKH PRWLRQ IRU VXPPDU\               VKRXOG KDYH FRQGXFWHG  D KHDULQJ RQ WKH HPSOR\HUjV
MXGJPHQW LQ ZKLFK LW UHDVVHUWHG LWV FRQWHQWLRQV WKDW            REMHFWLRQV,GDW
PLVFRQGXFW GHVWUR\HG WKH FRQGLWLRQV QHFHVVDU\ IRU DQ
HOHFWLRQ                                                                  %HIRUHSURFHHGLQJIXUWKHUZHIHHOFRPSHOOHGWRIRUWKULJKWO\
                                                                        DGGUHVV WKH RIIHQVLYH ODQJXDJH LQ TXHVWLRQ  7KH ZRUG
   2Q sXO\   WKH %RDUG LVVXHG D GHFLVLRQ DQG RUGHU     mQLJJHUlRUmQLJHUlDVVHWRXWLQWKHUHFRUGLVDUDFLDOVOXU
JUDQWLQJVXPPDU\MXGJPHQWDQGIRXQGWKDWWKH&RPSDQ\KDG                7KLV LV VR LUUHVSHFWLYH RI LWV FRPPRQ XVDJH DQG ZLWKRXW
YLRODWHG 6HFWLRQ D DQG  RI WKH 1DWLRQDO /DERU          UHJDUGIRUWKHUDFHRIWKRVHZKRXVHLW1RHPSOR\HUVKRXOG
5HODWLRQV$FW86&DDQG7KH%RDUG              WROHUDWHXVHRIWKHODQJXDJHWKDWLVDSSDUHQWO\FRPPRQSODFH
VDLGWKDWWKHmUHSUHVHQWDWLRQLVVXHVUDLVHGE\5HVSRQGHQWZHUH          DW5HVSRQGHQWjVZRUNSODFHLHmQLJJHUlmELWFKlmZKRUHl
RU FRXOG KDYH EHHQ OLWLJDWHG LQ WKH SULRU UHSUHVHQWDWLRQ        HWF  ,W ZRXOG EHKRRYH D SUXGHQW HPSOR\HU DQG XQLRQ
SURFHHGLQJlDQGWKDWWKH&RPSDQ\GLGQRWRIIHUWRSURGXFH               FRQFHUQHGZLWKWKHFOLPDWHLQWKHZRUNSODFHDQGUHFRJQL]LQJ
HYLGHQFH RU DOOHJH VSHFLDO FLUFXPVWDQFHV WR PHULW                 WKH GLYHUVLW\ RI WRGD\jV ZRUNIRUFH WR FRQGHPQ DOO VXFK
UHFRQVLGHUDWLRQ  s$ DW  7KH %RDUG RUGHUHG WKH          ODQJXDJHDQGFRXQVHOHPSOR\HHVDQGPHPEHUVDJDLQVWWKHXVH
&RPSDQ\WREDUJDLQXSRQUHTXHVWIURPWKH8QLRQDQGWRSRVW              RIDQ\WHUPVWKDWGHQLJUDWHDQGVOXU1RQHWKHOHVVWKHIDFWV
FRSLHVRIDUHPHGLDOQRWLFH2QsDQXDU\WKH%RDUG            LQYROYHGLQWKHLQVWDQWFDVHGRQRWDOORZWKH&RXUWWRDSSO\
ILOHGDQ$SSOLFDWLRQIRU(QIRUFHPHQWRILWVRUGHUZLWKWKLV             WKH YHU\ ORJLFDO DQG DSSURSULDWH UXOH VHW IRUWK LQ 6HZHOO
&RXUW
   7KRXJKRWKHUZLWQHVVHVWHVWLILHGEHIRUHWKH+HDULQJ2IILFHU
WKHWHVWLPRQ\RI$IULFDQ$PHULFDQHPSOR\HH(QULFR.QLJKW
LV WKH PRVW FHQWUDO WR WKH LVVXHV ZH ZLOO DGGUHVV LQ WKLV
RSLQLRQ  .QLJKW WHVWLILHG WKDW KH ZDV WKH VHFRQG RU WKLUG        
                                                                              ,Q&DUULQJWRQ    WKH HPSOR\HU VRXJKW D KHDULQJ E\ WKH %RDUG RQ LWV
SHUVRQLQOLQHWRYRWHDQGWKDWZKLOHKHZDVLQOLQHDQRWKHU            REMHFWLRQV WR WKH HOHFWLRQ 7KXV WKH &RXUW KDG WR mGHWHUPLQH ZKHWKHU D
HPSOR\HH(UYLQ:LOVRQDOVR$IULFDQ$PHULFDQVDLGWRKLP              VXEVWDQWLDO DQG PDWHULDO IDFWXDO LVVXH H[LVWHG ZLWK UHVSHFW WR WKH
m1LJHU>VLF@6KRUW\,NQRZ\RXjUHJRQQD>VLF@YRWH\HVl             >HPSOR\HUjV@ FRPSODLQWl  )G   WK &LU  ,Q WKH LQVWDQW
s$DW.QLJKWDOVRWHVWLILHGWKDW:LOVRQPD\RUPD\            FDVH WKH %RDUG DOUHDG\ FRQGXFWHG D KHDULQJ 1RQHWKHOHVV WKH &RXUWjV

QRWKDYHXVHGWKHZRUGmQLJJHUl:KHQDVNHGDERXWWKHXVH              GLVFXVVLRQ DQG DSSOLFDWLRQ RI 6HZHOO LV SHUWLQHQW DQG LQVWUXFWLYH

RIUDFLDOWHUPV.QLJKWVDLGWKDWLWZDVMXVWDMRNH)XUWKHU             
ZKHQDVNHGLIRWKHUSHRSOHZHUHXVLQJUDFLDOWHUPV.QLJKW                     7KDW WKH ZRUG mQLJJHUl LV D VOXU LV QRW GHEDWDEOH 7KH UHFHQW HGLWLRQ
                                                                        RI WKH $PHULFDQ +HULWDJH 'LFWLRQDU\ RI WKH (QJOLVK /DQJXDJH GHILQHV
UHVSRQGHGm$W$OFRQWKDWjVDOOWKH\GRls$DW+H           mQLJJHUl DV IROORZV
VDLG WKDW LQ WKH YRWLQJ OLQH SHRSOH ZHUH VD\LQJ WKLQJV OLNH        2IIHQVLYH 6ODQJ , 8VHG DV D GLVSDUDJLQJ WHUP IRU D %ODFN
m1LJHU>VLF@ELWFKZKRUHDOOWKDWls$DW+HVDLGKH           SHUVRQ m<RX FDQ RQO\ EH GHVWUR\HG E\ EHOLHYLQJ WKDW \RX UHDOO\
FRXOGQRWUHFDOOZKRVDLGWKHVHWKLQJVm7KHOLQHZDVVRORQJ               DUH ZKDW WKH ZKLWH ZRUOG FDOOV D QLJJHUl sDPHV %DOGZLQ s

\RXNQRZ,KHDULWDQG,GRQjWKHDULW,jPXVHWRKHDULQJLW               8VHG DV D GLVSDUDJLQJ WHUP IRU D PHPEHU RI DQ\ GDUNVNLQQHG
                                                                             SHRSOH  8VHG DV D GLVSDUDJLQJ WHUP IRU D PHPEHU RI DQ\
HYHU\GD\IURPWKHPls$DW.QLJKWVDLGWKDW$IULFDQ              VRFLDOO\ HFRQRPLFDOO\ RU SROLWLFDOO\ GHSULYHG JURXS RI SHRSOH
                                                                             m*XQ RZQHUV DUH WKH QHZ QLJJHUV    RI VRFLHW\l sRKQ
                                                                             $TXLOLQR

                                                                       7+( 0(5,&$1 (5,7$*( ,&7,21$5< 2) 7+( 1*/,6+ $1*8$*(
                                                                             $           +         '                     (        /            WK
     .QLJKW H[SODLQHG WKDW KH LV FDOOHG m6KRUW\l s$ DW         HG 
      1/5%Y)RXQGU\'LY                            1R    1R                            1/5%Y)RXQGU\'LY          
       RI$OFRQ,QGXVWULHV                                                                                     RI$OFRQ,QGXVWULHV

VWDWHPHQWVLQWKHFRQWH[WRIWKHUDFLDOWHQVLRQDOUHDG\H[LVWLQJ      $PHULFDQVDWWKH&RPSDQ\RIWHQXVHGWKHZRUGmQLJJHUlDQG
DWWKHWLPHWKHDOOHJHGVWDWHPHQWVZHUHPDGHDQGXOWLPDWHO\           WKDWKHGLGQRWFRQVLGHULWDUDFLDOVOXUs$DW,Q
UHIXVHGWRHQIRUFHWKH%RDUGjVEDUJDLQLQJRUGHU,GDW         IDFW ODWHU LQ WKH KHDULQJ .QLJKW WHVWLILHG WKDW KH FRXOG QRW
   7KH &RXUW KHOG WKDW WKH XQLRQ UHSUHVHQWDWLYH KDG     UHPHPEHU ZKHWKHU :LOVRQ KDG XVHG WKH ZRUG mQLJJHUl
HQJDJHGLQDmGHOLEHUDWHDWWHPSWWRH[DFHUEDWHUDFLDOIHHOLQJV        .QLJKW VDLG mKH PLJKW KDYH ,jP QRW IRU VXUH LWjV EHHQ VR
DPRQJWKHHPSOR\HHVSULRUWRWKHHOHFWLRQlDQGWKDWXQGHUWKH        ORQJ:HXVHLWHYHU\GD\ls$DW
IDFWXDO FLUFXPVWDQFHV VXUURXQGLQJ WKH FRQGXFW WKLV mZDV
OLNHO\WRKDYHKDGDQDSSUHFLDEOHDIIHFWXSRQWKHHPSOR\HHVj             ,QDGGLWLRQDQHPSOR\HHRIWKH&RPSDQ\jVKXPDQUHVRXUFH
IUHHGRPRIFKRLFHl,GDW                                      GHSDUWPHQWWHVWLILHGEHIRUHWKH+HDULQJ2IILFHUWKDWVHYHUDO
                                                                      \HDUVEHIRUHWKHYRWHVKHKDGUHFHLYHGDIHZFRPSODLQWVE\
  ,Q&DUULQJWRQ6RXWK+HDOWK&DUH&HQWHU,QFY1/5%WKH           HPSOR\HHVUHJDUGLQJWKHXVHRIUDFLVWWHUPVDWWKHZRUNSODFH
&RXUWIRXQGWKDWWKHLPDJHU\XVHGLQFDUWRRQVGLVWULEXWHGE\          s$DW
WKHXQLRQm>FRXOG@EHFRQVWUXHGDWDJODQFHDVLQYRNLQJWRNHQV
RIVODYHU\DQGUDFLDORSSUHVVLRQDQGWKDWWKHFDUWRRQVFRXOG                                          ,,
WKHUHIRUHEHFRQVWUXHGDVDGHOLEHUDWHH[DFHUEDWLRQRIUDFLDO
IHHOLQJVE\LUUHOHYDQWDQGLQIODPPDWRU\DSSHDOVl)G              m7KHLVVXHEHIRUHXVLVZKHWKHUWKH%RDUGLQRYHUUXOLQJWKH
WK&LU,QGLVFXVVLQJWKHDSSOLFDEOHFDVH          &RPSDQ\jVREMHFWLRQVDQGFHUWLI\LQJWKH8QLRQDFWHGZLWKLQ
ODZWKH&RXUWQRWHGWKDW                                             WKHµZLGHGHJUHHRIGLVFUHWLRQjHQWUXVWHGWRLWE\&RQJUHVVLQ
                                                                      UHVROYLQJTXHVWLRQVDULVLQJGXULQJWKHFRXUVHRIUHSUHVHQWDWLRQ
    >W@KHUHKDYHEHHQWZRPDLQOLQHVRIFDVHVVWHPPLQJIURP           SURFHHGLQJVl7RQ\6FRWW7UXFNLQJ,QFY1/5%)G
    6HZHOO  7KH ILUVW LV UHSUHVHQWHG E\ FDVHV LQ ZKLFK D   WK&LUTXRWLQJ1/5%Y$s7RZHU&R
    SUHMXGLFLDOUHPDUNLVGLUHFWHGWRZDUGDVSHFLILFSHUVRQRU        86$VORQJDVWKH%RDUGjVILQGLQJV
    JURXS  ,Q WKHVH FDVHV WKH 1/5% JHQHUDOO\ UHTXLUHV D    RIIDFWDUHVXSSRUWHGE\VXEVWDQWLDOHYLGHQFHRQWKHUHFRUG
    KHDULQJEHFDXVHWKHUHLVQRTXHVWLRQEXWWKDWDQDSSHDO          FRQVLGHUHGDVDZKROHZHZLOOQRWGLVWXUEWKHP86&
    ZDVPDGHWRUDFLDOSUHMXGLFHLQDPDQQHUXQUHODWHGWRDQ\         HVHHDOVR1/5%Y6HDZLQ,QF)G
    OHJLWLPDWHFDPSDLJQWKHPH                                         WK &LU   m6XEVWDQWLDO HYLGHQFH FRQVLVWV RI
                                                                      VXFKUHOHYDQWHYLGHQFHWKDWDUHDVRQDEOHPLQGPLJKWDFFHSWDV
,GDW(XURGULYHLVLQFOXGHGLQWKLVJURXS,Gm7KH          DGHTXDWHWRVXSSRUWDFRQFOXVLRQ.HQWXFN\*HQHUDO,QFY
VHFRQGOLQHRIWKH6HZHOOSURJHQ\FRPSULVHVFDVHVLQZKLFK            1/5%)GWK&LULQWHUQDOTXRWDWLRQ
FRXUWVJHQHUDOO\KDYHQRWUHTXLUHGDKHDULQJDQGHPEUDFHV            RPLWWHG  m7KH %RDUG
V UHDVRQDEOH LQIHUHQFHV PD\ QRW EH
FLUFXPVWDQFHV LQ ZKLFK DQ XQLRQ KDV DWWULEXWHG UDFLDO          GLVSODFHGRQUHYLHZHYHQWKRXJKWKHFRXUWPLJKWMXVWLILDEO\
GLVFULPLQDWLRQWRWKHHPSOR\HURULQZKLFKWKHUHDSSHDUVDQ          KDYH UHDFKHG D GLIIHUHQW FRQFOXVLRQ KDG WKH PDWWHU EHHQ
LVRODWHGUDFLDOVOXUl,GDW7KH&RXUWSODFHGWKHIDFWV      EHIRUH LWGH QRYRl  7RQ\ 6FRWW 7UXFNLQJ  )G DW 
RI &DUULQJWRQ LQ WKH ILUVW JURXS DQG KHOG WKDW WKH %RDUG    FLWLQJ8QLYHUVDO&DPHUD&RUSY1/5%86
                                                                      0RUHRYHUm>W@KH%RDUG
VFRQFOXVLRQVRIODZPXVWEH

                                                                          
                                                                          .QLJKW WHVWLILHG WKDW WKH IRXQGU\ ZRUNIRUFH ZDV SULPDULO\ $IULFDQ
                                                                      $PHULFDQ s$ DW 
      1/5%Y)RXQGU\'LY                             1R     1R                           1/5%Y)RXQGU\'LY             
       RI$OFRQ,QGXVWULHV                                                                                      RI$OFRQ,QGXVWULHV

DIILUPHG LI WKH\ DUH EDVHG XSRQ D UHDVRQDEOH GHIHQVLEOH           :KDWZHKDYHVDLGLQGLFDWHVRXUEHOLHIWKDWDSSHDOVWR
FRQVWUXFWLRQ RI WKH $FWl /RUDO 'HIHQVH 6\VWHPV$NURQ Y          UDFLDO SUHMXGLFH RQ PDWWHUV XQUHODWHG WR WKH HOHFWLRQ
1/5%)GWK&LUVHHDOVR1/5%Y                 LVVXHVRUWRWKHXQLRQ
VDFWLYLWLHVDUHQRWPHUHSUDWWOHRU
'LFNLQVRQ 3UHVV ,QF  )G   WK &LU          SXIILQJ 7KH\ KDYH QR SODFH LQ %RDUG HOHFWRUDO
m7KHFRXUWVPXVWUHVSHFWWKH%RDUG
VOHJDOLQWHUSUHWDWLRQVLI            FDPSDLJQV7KH\LQMHFWDQHOHPHQWZKLFKLVGHVWUXFWLYH
UHDVRQDEOHl                                                           RIWKHYHU\SXUSRVHRIDQHOHFWLRQ7KH\FUHDWHFRQGLWLRQV
                                                                          ZKLFKPDNHLPSRVVLEOHDVREHULQIRUPHGH[HUFLVHRIWKH
                                  ,,,                                    IUDQFKLVH 7KH %RDUG GRHV QRW LQWHQG WR WROHUDWH DV
                                                                          HOHFWRUDOSURSDJDQGDDSSHDOVRUDUJXPHQWVZKLFKFDQ
   7KHVHPLQDOFDVHLQWKHDUHDRIUDFHDQGXQLRQHOHFWLRQVLV            KDYHQRSXUSRVHH[FHSWWRLQIODPHWKHUDFLDOIHHOLQJVRI
6HZHOO 0DQXIDFWXULQJ &R  1/5%    ,Q WKDW           YRWHUVLQWKHHOHFWLRQ
FDVHGXULQJDUHSUHVHQWDWLRQHOHFWLRQDWSODQWVLQ*HRUJLDWKH
HPSOR\HUGLVWULEXWHGWRLWVHPSOR\HHVYDULRXVLWHPVUHODWLQJ            ,GDW7KH%RDUGIXUWKHUVWDWHGKRZHYHUWKDWLImDSDUW\
WRUDFHLQFOXGLQJDSLFWXUHRIDZKLWHZRPDQGDQFLQJZLWKD             OLPLWVLWVHOIWRWUXWKIXOO\VHWWLQJIRUWKDQRWKHUSDUW\jVSRVLWLRQ
EODFNPDQDSLFWXUHRIDEODFNZRPDQGDQFLQJZLWKDZKLWH              RQPDWWHUVRIUDFLDOLQWHUHVWDQGGRHVQRWGHOLEHUDWHO\VHHNWR
PDQ LGHQWLILHG DV D XQLRQ OHDGHU DQG DUWLFOHV DQG OHWWHUV     RYHUVWUHVV DQG H[DFHUEDWH UDFLDO IHHOLQJV E\ LUUHOHYDQW
VWDWLQJ WKDW WKH XQLRQ GRQDWHG PRQH\ WR WKH 1DWLRQDO            LQIODPPDWRU\DSSHDOVZHVKDOOQRWVHWDVLGHDQHOHFWLRQRQ
$VVRFLDWLRQIRUWKH$GYDQFHPHQWRI&RORUHG3HRSOHDQGWKH               WKLVJURXQGl,GDW$SSO\LQJWKHVHUXOHVWRWKHIDFWV
&RQJUHVVRI5DFLDO(TXDOLW\LQFOXGLQJDOHWWHUH[SODLQLQJWKDW         RI WKDW FDVH WKH %RDUG GHWHUPLQHG WKDW mWKH (PSOR\HU
V
WKHSUHVLGHQWRIWKHHPSOR\HUFRPSDQ\ZRXOGYRWHDJDLQVWWKH            SURSDJDQGDGLUHFWHGWRUDFHH[FHHGHGSHUPLVVLRQOLPLWVDQG
XQLRQEHFDXVHRILWVFRQWULEXWLRQVWRWKHVHRUJDQL]DWLRQV,G         VRLQIODPHGDQGWDLQWHGWKHDWPRVSKHUHLQZKLFKWKHHOHFWLRQ
DW7KH%RDUGUHFRJQL]HGWKDWLWVIXQFWLRQLVWR                ZDV KHOG WKDW D UHDVRQHG EDVLV IRU FKRRVLQJ RU UHMHFWLQJ D
                                                                        EDUJDLQLQJUHSUHVHQWDWLYHZDVDQLPSRVVLELOLW\l,GDW
    FRQGXFW HOHFWLRQV LQ ZKLFK WKH HPSOR\HHV KDYH WKH
    RSSRUWXQLW\ WR FDVW WKHLU EDOORWV IRU RU DJDLQVW D ODERU     7KH6L[WK&LUFXLWKDVDSSOLHGWKLVUXOHLQVHYHUDOFDVHV)RU
    RUJDQL]DWLRQLQDQDWPRVSKHUHFRQGXFLYHWRWKHVREHUDQG            LQVWDQFHLQ1/5%Y(XURGULYH,QFDXQLRQUHSUHVHQWDWLYH
    LQIRUPHG H[HUFLVH RI WKH IUDQFKLVH IUHH QRW RQO\ IURP      WROGZKLWHHPSOR\HHVSULRUWRWKHHOHFWLRQWKDWXQOLNHWKHRQO\
    LQWHUIHUHQFHUHVWUDLQWRUFRHUFLRQYLRODWLYHRIWKH$FW          EODFN HPSOR\HH WKH ZKLWH HPSOR\HHV QHHGHG WKH XQLRQ WR
    EXWDOVRIURPRWKHUHOHPHQWVZKLFKSUHYHQWRULPSHGHD              SURWHFWWKHLUMREV)GWK&LU7KH
    UHDVRQHGFKRLFH                                                   UHSUHVHQWDWLYH FLWHG DV DQ H[DPSOH D VLWXDWLRQ LQYROYLQJ D
                                                                        ZKLWH HPSOR\HH ZKR KDG UHFHQWO\ EHHQ ILUHG IRU UDFLDO
,GDW,Q6HZHOOWKH%RDUGKHOGWKDWDQDSSHDOWRUDFLDO           KDUDVVPHQWDQGLQVLVWHGWKDWWKHXQLRQZRXOGJHWKLPUHKLUHG
SUHMXGLFH FRXOG SUHYHQW UHDVRQHG FKRLFH 7KH %RDUG                ,G DW   7KH &RXUW FRQVLGHUHG LW QHFHVVDU\ WR YLHZ WKH
H[SODLQHG
    :HWDNHLWDVGDWXPWKDWSUHMXGLFHEDVHGRQFRORULVD                  
    SRZHUIXOHPRWLRQDOIRUFH:HWKLQNLWDOVRLQGLVSXWDEOH                   7KH %RDUG IXUWKHU H[SODLQHG WKDW mWKH EXUGHQ ZLOO EH RQ WKH SDUW\
                                                                        PDNLQJ XVH RI D UDFLDO PHVVDJH WR HVWDEOLVK WKDW LW ZDV WUXWKIXO DQG
    WKDWDGHOLEHUDWHDSSHDOWRVXFKSUHMXGLFHLVQRWLQWHQGHG          JHUPDQH DQG ZKHUH WKHUH LV GRXEW DV WR ZKHWKHU WKH WRWDO FRQGXFW RI VXFK
    RUFDOFXODWHGWRHQFRXUDJHWKHUHDVRQLQJIDFXOW\                  SDUW\ LV ZLWKLQ WKH GHVFULEHG ERXQGV WKH GRXEW ZLOO EH UHVROYHG DJDLQVW
                                                                        KLPl 6HZHOO 0IJ &R  1/5%   