Court Opinion

ID: 2969860
Source: CourtListenerOpinion
Date Created: 2015-09-22 15:58:55.455782+00
Date Added: 2024-06-11T08:25:52.657824
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

 /2,6 &+5,67,$1 $0%(5            ;
 ('(16                            
         3ODLQWLIIV$SSHOODQWV 
                                     1R
                                   
            Y                      !
                                   
                                   
 :$/0$57 6725(6 ,1&            
           'HIHQGDQW$SSHOOHH 
                                   
                                  1
       $SSHDOIURPWKH8QLWHG6WDWHV'LVWULFW&RXUW
      IRUWKH1RUWKHUQ'LVWULFWRI2KLRDW&OHYHODQG
  1Rn3DWULFLD$*DXJKDQ'LVWULFWsXGJH
                      $UJXHG0DUFK
                'HFLGHGDQG)LOHGsXQH
 %HIRUH0$57,1&KLHIsXGJH0225(&LUFXLWsXGJH
              7$512:'LVWULFWsXGJH

    
     7KH +RQRUDEOH $UWKXU s 7DUQRZ 8QLWHG 6WDWHV 'LVWULFW sXGJH IRU
WKH (DVWHUQ 'LVWULFW RI 0LFKLJDQ VLWWLQJ E\ GHVLJQDWLRQ

                                    
     &KULVWLDQHWDOY:DO0DUW6WRUHV,QF 1R

                     BBBBBBBBBBBBBBBBB
                           &2816(/
$5*8('sRKQ:0\JUDQW0(17=(598,//(0,1	
0<*5$17 $NURQ 2KLR IRU $SSHOODQWV  &OLIIRUG &
0DVFK5(0,1*(5	5(0,1*(5&OHYHODQG2KLRIRU
$SSHOOHH  21 %5,()  sRKQ : 0\JUDQW 9DODULH s5
<RXQJ 0(17=(5 98,//(0,1 	 0<*5$17 $NURQ
2KLR IRU $SSHOODQWV  &OLIIRUG & 0DVFK 5(0,1*(5 	
5(0,1*(5&OHYHODQG2KLRIRU$SSHOOHH
                     BBBBBBBBBBBBBBBBB
                         23,1,21
                     BBBBBBBBBBBBBBBBB
   .$5(1 1(/621 0225( &LUFXLW sXGJH  3ODLQWLIIV
$SSHOODQWV /RLV &KULVWLDQ DQG $PEHU (GHQV DSSHDO WKH
GLVWULFWFRXUWjVJUDQWRIMXGJPHQWDVDPDWWHURIODZRQWKHLU
IHGHUDO DQG VWDWH FODLPV RI UDFH GLVFULPLQDWLRQ LQ D UHWDLO
HVWDEOLVKPHQW&KULVWLDQZKRLVEODFNDQG(GHQVZKRLV
ZKLWH ZHQW WR D :DO0DUW RQ 'HFHPEHU   WR EX\
&KULVWPDVSUHVHQWV$:DO0DUWHPSOR\HHRIIHUHG&KULVWLDQ
UHSHDWHG DVVLVWDQFH ZKLFK &KULVWLDQ GHFOLQHG  (GHQV ZDV
RIIHUHGQRDVVLVWDQFH7KHHPSOR\HHFODLPLQJWKDW&KULVWLDQ
ZDVVKRSOLIWLQJWKHQFDOOHGWKHSROLFH7KHUHDIWHU&KULVWLDQ
DQG(GHQVZHUHHVFRUWHGRXWRIWKHVWRUHE\SROLFHRIILFHUV
DQGZHUHQRWDOORZHGWRFRPSOHWHWKHLUSXUFKDVHV&KULVWLDQ
DQG(GHQV EURXJKWWKLVDFWLRQXQGHU86&
86&  D DQG 2KLR 5HYLVHG &RGH  *
DOOHJLQJLQWHUDOLDWKDWWKH\ZHUHUHIXVHGWKHLUULJKWWRPDNH
D FRQWUDFW ZLWK :DO0DUW EHFDXVH RI &KULVWLDQjV UDFH
%HFDXVHZHEHOLHYHWKHGLVWULFWFRXUWHUUHGE\JUDQWLQJ:DO
0DUWMXGJPHQWDVDPDWWHURIODZZHFRQFOXGHWKDWZHPXVW
5(9(56(WKHGLVWULFWFRXUWjVMXGJPHQW
                      ,%$&.*5281'
 2Q 'HFHPEHU   DW DSSUR[LPDWHO\  DP
&KULVWLDQDQG(GHQVZKRDUHFORVHIULHQGVHQWHUHGD:DO
1R &KULVWLDQHWDOY:DO0DUW6WRUHV,QF                     

0DUW LQ sDFNVRQ 7RZQVKLS 2KLR WR VKRS IRU &KULVWPDV
SUHVHQWVIRUWKHLUUHVSHFWLYH FKLOGUHQ%RWKZRPHQVWD\HG
ZLWKLQWKHWR\GHSDUWPHQWEXWWKH\VKRSSHGVHSDUDWHO\7KH\
ZHUHWKHRQO\WZRVKRSSHUVLQWKHWR\GHSDUWPHQW&KULVWLDQ
ZDONHG DURXQG ZLWK D VKRSSLQJ FDUW (GHQV RFFDVLRQDOO\
SODFHGLWHPVLQ&KULVWLDQjVFDUWEXWVKHGLGQRWKDYHKHURZQ
FDUW  $FFRUGLQJ WR &KULVWLDQ 5RVH 0RQQRW D :DO0DUW
HPSOR\HHZDWFKHGKHUDVVKHVKRSSHGDQGUHSHDWHGO\RIIHUHG
KHUDVVLVWDQFH&KULVWLDQVWDWHGWKDWVKHZDVLQLWLDOO\RIIHUHG
KHOSWZRRUWKUHHWLPHVDOWKRXJKVKHODWHUVWDWHGWKDWVKHZDV
RIIHUHGKHOSDWRWDORIVL[WLPHVWKURXJKRXWWKHKRXUDQGWKUHH
TXDUWHUVGXULQJZKLFKVKHVKRSSHGs$DW(GHQV
WHVWLILHGWKDWZLWKLQWKHILUVWPLQXWHVDIWHUWKHLUDUULYDODW
WKHVWRUH&KULVWLDQLQIRUPHGKHUWKDWVKHKDGEHHQRIIHUHG
KHOSDFRXSOHRIWLPHV(GHQVVWDWHGWKDWRQFH0RQQRWVDZ
WKDWVKHZDVZLWK&KULVWLDQ0RQQRWVWDUWHGWRIROORZKHUDV
ZHOO(GHQVKRZHYHUZDVQHYHURIIHUHGDVVLVWDQFH
  6RPHWLPHFORVHWRDP&KULVWLDQSXWKHUSXUVHRQD
VKHOI XQ]LSSHG LW DQG UHDFKHG LQWR KHU SXUVH IRU D MDU RI
YDVROLQH  s$ DW   $W WKDW PRPHQW &KULVWLDQ QRWLFHG
0RQQRWmMRJJLQJGRZQlWKHDLVOHWRZDUGKHU0RQQRWXSRQ
UHDFKLQJ&KULVWLDQDJDLQDVNHGLIVKHFRXOGEHRIDVVLVWDQFH
EXW&KULVWLDQGHFOLQHGKHUKHOS&KULVWLDQWKHQUHSRUWHGWKH
LQFLGHQWWR(GHQV
  0RQQRW WHVWLILHG WR D YHU\ GLIIHUHQW VHW RI HYHQWV
$FFRUGLQJWR0RQQRWVKHKHDUG&KULVWLDQXQ]LSKHUSXUVH
IURPZKHUHVKHZDVVWDQGLQJVL[DLVOHVDZD\6KHVD\VWKDW
VKHVDZ&KULVWLDQUHDFKZLWKKHUOHIWKDQGSLFNXSDWR\DQG

       43349
       
                FODLPV WKDW VKH RIIHUHG &KULVWLDQ DVVLVWDQFH WZLFH   s$ DW


       
       ,W LV QRW FOHDU IURP (GHQjV WHVWLPRQ\ ZKHQ 0RQQRW ILUVW VDZ WKH WZR
ZRPHQ WRJHWKHU

       
       :H UHODWH 0RQQRWjV YHUVLRQ RI WKH VWRU\ DOWKRXJK IRU SXUSRVHV RI
WKH VWDQGDUG RI UHYLHZ LQ WKLV FDVH ZH PD\ XOWLPDWHO\ FUHGLW RQO\ WKH
QRQPRYDQWjV YHUVLRQ RI DQ\ GLVSXWHG IDFWV
     &KULVWLDQHWDOY:DO0DUW6WRUHV,QF 1R              1R &KULVWLDQHWDOY:DO0DUW6WRUHV,QF           

SODFHWKHWR\LQKHUSXUVHZKLFKZDVKDQJLQJRYHUKHUOHIW                UHDVRQDEOHMXU\FRXOGKDYHEHOLHYHGWKDW0RQQRWjVDQGE\
VKRXOGHU0RQQRWWKHQVDZ&KULVWLDQSODFHKHUEDJRQDVKHOI             LPSOLFDWLRQ &ODUNjV VWDWHG UHDVRQ IRU LQWHUIHULQJ ZLWK
DQG]LSLW0RQQRWVWDWHGWKDWVKHUHFRJQL]HGZKLFKLWHPKDG             &KULVWLDQjVULJKWWRFRQWUDFWKDGQREDVLVLQIDFW%DVHGRQ
EHHQWDNHQEHFDXVHVKHKDGEHHQVWRFNLQJWKDWSDUWLFXODUWR\              WKLVGLVEHOLHIZHEHOLHYHWKDWDUHDVRQDEOHMXU\FRQIURQWHG
HDUOLHUWKDWQLJKW                                                       ZLWK WKH IDFWV EHIRUH XV FRXOG LQIHU WKH XOWLPDWH IDFW RI
                                                                          GLVFULPLQDWLRQ IURP WKH IDOVLW\ RI 0RQQRWjV H[SODQDWLRQ
   0RQQRWWHVWLILHGWKDWVKHWKHQSDJHGWKHPDQDJHU5LFKDUG              FRPELQHGZLWKWKHHYLGHQFHVXSSRUWLQJWKHSODLQWLIIVjSULPD
&ODUNDQGLQIRUPHGKLPWKDWDZRPDQKDGSODFHGDQLWHPLQ                IDFLHFDVH$WWKLVSRLQWSODLQWLIIVKDYHVXUPRXQWHGHYHU\
KHUSXUVH&ODUNWROG0RQQRWWRFDOOWKHSROLFH0RQQRWWKHQ             HYLGHQWLDU\KXUGOHEHIRUHWKHPWKHLUFDVHPXVWEHVXEPLWWHG
LQVWUXFWHG D FDVKLHU WR FDOO WKH SROLFH  &ODUN DOVR GLUHFWHG   WRWKHMXU\IRUILQDOUHVROXWLRQ7KHUHIRUHZH5(9(56(WKH
0RQQRW WR NHHS DQ H\H RQ WKH ZRPDQ  0RQQRW DQG WKH            GLVWULFWFRXUWjVJUDQWRIMXGJPHQWDVDPDWWHURIODZWR:DO
FDVKLHUWKHQUHWXUQHGWRWKHWR\GHSDUWPHQWVRWKDW0RQQRW                0DUWRQSODLQWLIIVjFODLP
FRXOGSRLQWRXW&KULVWLDQWRWKHFDVKLHU&KULVWLDQWHVWLILHG
WKDW VKH WKHQ DSSURDFKHG 0RQQRW DQG WKH FDVKLHU DQG WROG         '&KULVWLDQjV6WDWH/DZ&ODLP
0RQQRWm([FXVHPHPDjDP'R\RXEHOLHYH,jPVWHDOLQJ"
%HFDXVH,jPQRW,ZHQWLQWRP\SXUVHIRUVRPHWKLQJIRUPHl               &KULVWLDQjVVWDWHODZFODLPULVHVDQGIDOOVZLWKKHUIHGHUDO
s$ DW   0RQQRW GHQLHG WKDW VKH VXVSHFWHG KHU RI           FODLP EHFDXVH ZH HYDOXDWH 2KLR VWDWH ODZ GLVFULPLQDWLRQ
VKRSOLIWLQJ$FFRUGLQJWR(GHQVVKHWKHQVWDWHGWR0RQQRW              FODLPV JHQHUDOO\ XQGHU WKH VDPH VWDQGDUG DV IHGHUDO
m>&KULVWLDQ@KDVEHHQIHHOLQJXQFRPIRUWDEOHDQGZHjUHUHDG\               GLVFULPLQDWLRQFODLPV6HHsDFNVRQY&LW\RI&ROXPEXV
WROHDYH$QGZHKDYHDULJKWWRVKRSKHUHDQGZHZRXOG                 )G   WK &LU   7KHUHIRUH ZH PXVW
OLNH WR MXVW ILQLVK RXU &KULVWPDV VKRSSLQJl  s$ DW       5(9(56(WKHGLVWULFWFRXUWjVJUDQWRIMXGJPHQWDVDPDWWHU
(GHQVWHVWLILHGWKDW0RQQRWUHSOLHGm2KQRDWWKLVWLPHRI             RI ODZ RQ &KULVWLDQjV VWDWH ODZ FODLP EHFDXVH ZH KDYH
\HDU , QRW RQO\ ZDWFK IRU VKRSOLIWHUV \RX NQRZ SHRSOH          UHYHUVHGWKHGLVWULFWFRXUWZLWKUHVSHFWWR&KULVWLDQjVIHGHUDO
OLQJHULQJ DURXQG WKH VWRUH DQG KDYH NQLYHV DQG JXQ>V@ RQ         FODLP
WKHPls$DW
                                                                          ((GHQVjV&ODLPV
   $WVRPHSRLQWHLWKHUEHIRUHRUDIWHU&KULVWLDQDQG(GHQV
VSRNHZLWK0RQQRW&KULVWLDQKHDUGDQDQQRXQFHPHQWRYHU                      %HFDXVH(GHQVjVFODLPVRIGLVFULPLQDWLRQDUHSUHPLVHGRQ
WKHVWRUHLQWHUFRPFDOOLQJmHPSOR\HHVWRWKHWR\GHSDUWPHQWl             D ILQGLQJ RI GLVFULPLQDWLRQ DJDLQVW &KULVWLDQ ZH PXVW
DQGZKHQVKHORRNHGXSVKHIRXQGVL[RUVHYHQHPSOR\HHV                   5(9(56(WKHGLVWULFWFRXUWjVJUDQWRIMXGJPHQWDVDPDWWHU
VWDULQJDWKHUs$DW                                             RIODZRQ(GHQVjVIHGHUDODQGVWDWHODZFODLPVVLQFHZHKDYH
                                                                          UHYHUVHGWKHGLVWULFWFRXUWZLWKUHVSHFWWR&KULVWLDQjVFODLPV
   0RQQRWWHVWLILHGWKDWZKHQVKHODWHUUHWXUQHGWRWKHDLVOH
VKHUHDOL]HGWKDWWKHLWHPVKHEHOLHYHGKDGEHHQVWROHQKDG                                    ,,,&21&/86,21
EHHQUHWXUQHG0RQQRWWKHQFDOOHGWKHFDVKLHUDQGWROGKHUWR
WHOOWKHSROLFHQRWWRFRPHWRWKHVWRUHEHFDXVHWKHLWHPKDG               )RU WKH IRUHJRLQJ UHDVRQV ZH 5(9(56( WKH GLVWULFW
EHHQUHWXUQHG6KRUWO\WKHUHDIWHUDWDSSUR[LPDWHO\DP           FRXUWjVJUDQWRIMXGJPHQWDVDPDWWHURIODZDQG5(0$1'
WKHSROLFHDUULYHG0RQQRWWKHQWROGWKHSROLFHWKDWWKHLWHP            IRUDQHZWULDO
KDGEHHQUHWXUQHGDQGVKHZDVVRUU\WKH\KDGEHHQFDOOHGWR
WKH VWRUH IRU QR UHDVRQ  3ROLFH 2IILFHU 7RGG 0DFDOXVR
     &KULVWLDQHWDOY:DO0DUW6WRUHV,QF 1R                  1R &KULVWLDQHWDOY:DO0DUW6WRUHV,QF           

EDFNWRWKHSODLQWLIIZKRPXVWSURYHE\DSUHSRQGHUDQFHWKDW                  WHVWLILHG WKDW 0RQQRW H[SODLQHG WKDW VKH GLG QRW VHH D
WKHGHIHQGDQWjVVWDWHGUHDVRQZDVQRWLWVWUXHUHDVRQEXWZDV                 FXVWRPHUSODFHDQLWHPLQ KHU SXUVHMXVWWKDWDQLWHPZDV
DSUHWH[WIRUGLVFULPLQDWLRQ5HHYHV86DW7KH                PLVVLQJs$DW$FFRUGLQJWR0RQQRWWKHSROLFHDVNHG
SODLQWLII PD\ DWWHPSW WR SURYH WKDW VKH ZDV WKH YLFWLP RI            KHULIVKHZDQWHGWRKDYHWKHZRPDQZKRPVKHKDGVXVSHFWHG
LQWHQWLRQDO GLVFULPLQDWLRQ mE\ VKRZLQJ WKDW  WKH VWDWHG               RIVKRSOLIWLQJUHPRYHGIURPWKHVWRUHDQGWKHQDVNHGKHUWR
UHDVRQVKDGQREDVLVLQIDFWWKHVWDWHGUHDVRQVZHUHQRWWKH               GHVFULEHWKHWZRZRPHQ0RQQRWVWDWHGWKDWVKHGLGQRWKDYH
DFWXDOUHDVRQVDQGWKDWWKHVWDWHGUHDVRQVZHUHLQVXIILFLHQW               WKH DXWKRULW\ WR GHFLGH ZKHWKHU WKH ZRPHQ VKRXOG EH
WRH[SODLQWKHGHIHQGDQWjVDFWLRQlsRKQVRQ)GDW                 UHPRYHG$WWKDWSRLQW0RQQRWWHVWLILHGWKDWVKHLQIRUPHG
,Q UHDFKLQJ WKH XOWLPDWH FRQFOXVLRQ WKDW WKH GHIHQGDQW                  WKHSROLFHWKDWRQHZRPDQZDVZKLWHDQGWKHRWKHUZDVEODFN
LQWHQWLRQDOO\GLVFULPLQDWHGmLWLVSHUPLVVLEOHIRUWKHWULHURI               6KHWHVWLILHGWKDWWKLVZDVWKHILUVWWLPHVKHKDGPHQWLRQHG
IDFWWRLQIHUWKHXOWLPDWHIDFWRIGLVFULPLQDWLRQIURPWKHIDOVLW\             HLWKHUVKRSSHUjVUDFHWRDQ\RQH
RI WKH HPSOR\HUjV H[SODQDWLRQl  5HHYHV  86 DW 
6SHFLILFDOO\ DV WKH &RXUW H[SODLQHG LQ 6W 0DU\jV +RQRU                 &ODUN WKH VWRUH PDQDJHU WKHQ DSSURDFKHG WKH SROLFH
&HQWHUY+LFNV86m>W@KHIDFWILQGHUjV                 RIILFHUV$FFRUGLQJWR2IILFHU0DFDOXVRKHWKHQDVNHG&ODUN
GLVEHOLHI RI WKH UHDVRQV SXW IRUZDUG E\ WKH GHIHQGDQW                  ZKDW WKH RIILFHUV VKRXOG GR LI DQ\WKLQJ  &ODUN DSSHDUHG
SDUWLFXODUO\ LI GLVEHOLHI LV DFFRPSDQLHG E\ D VXVSLFLRQ RI            mLQGHFLVLYHlEXWXOWLPDWHO\GHFLGHGWKDWWKHRIILFHUVVKRXOG
PHQGDFLW\PD\WRJHWKHUZLWKWKHHOHPHQWVRIWKHSULPDIDFLH                  DVNWKHWZRZRPHQWROHDYH0RQQRWWHVWLILHGWKDWVKHQHYHU
FDVHVXIILFHWRVKRZLQWHQWLRQDOGLVFULPLQDWLRQl7KLVLVVR                 WROG&ODUNWKHUDFHRIHLWKHURIWKHWZRZRPHQ0DFDOXVR
EHFDXVH mRQFH WKH HPSOR\HUjV MXVWLILFDWLRQ KDV EHHQ                      DOVRWHVWLILHGWKDWKHQHYHUGLVFXVVHGWKHZRPHQjVUDFHZLWK
HOLPLQDWHG GLVFULPLQDWLRQ PD\ ZHOO EH WKH PRVW OLNHO\                  &ODUN0DFDOXVRWHVWLILHGWKDWKHGLGQRWNQRZ&KULVWLDQRU
DOWHUQDWLYHH[SODQDWLRQHVSHFLDOO\VLQFHWKHHPSOR\HULVLQWKH               (GHQjVUDFHXQWLO0RQQRWZDONHGKLPWRWKHWR\GHSDUWPHQW
EHVWSRVLWLRQWRSXWIRUWKWKHDFWXDOUHDVRQIRULWVGHFLVLRQl                &ODUNWHVWLILHGWKDWKHQHYHUVDZWKHWZRZRPHQQRUZDVKH
5HHYHV86DW                                                       HYHULQIRUPHGRIWKHLUUDFH
   $WWULDODMXU\ZRXOGZHLJK&KULVWLDQjVFUHGLELOLW\YHUVXV                   0RQQRWGLUHFWHGWKHSROLFHRIILFHUVWR&KULVWLDQDQG(GHQV
0RQQRWjVDQGFKRRVHWREHOLHYHRQHZLWQHVVjVWHVWLPRQ\RYHU                    0RQQRWDGPLWWHGWRWHOOLQJWKHRIILFHUVWKDWLIWKH\UHPRYHG
WKHRWKHU:HDUHQRWSHUPLWWHGWRHQJDJHLQVXFKDZHLJKLQJ                  &KULVWLDQWKH\VKRXOGDOVRUHPRYH(GHQVVRWKDWLWZRXOGQRW
SURFHVV$VZHKDYHDOUHDG\H[SODLQHGZHPXVWSUHVXPHRQ                     EHFRPHDUDFLDOLVVXHs$DW0RQQRWWKHQZHQWRQD
UHYLHZRIDMXGJPHQWDVDPDWWHURIODZWKDW&KULVWLDQGLGQRW                 EUHDN$FFRUGLQJWR&KULVWLDQWKHRIILFHUVWKHQDSSURDFKHG
VKRSOLIWDQGWKDW0RQQRWjVYHUVLRQRIWKHHYHQWVLVXQWUXH,I                KHUDQG(GHQVDQGDVNHGWKHPWROHDYHWKHVWRUH&KULVWLDQ
&KULVWLDQGLGQRWVKRSOLIWWKHQ&KULVWLDQHDVLO\UDLVHGDMXU\                WHVWLILHG WKDW WKH RIILFHUV VWDWHG m7KH\ GR QRW OLNH \RXU
LVVXHDVWRZKHWKHU0RQQRWIDEULFDWHGWKHLQFLGHQWDQGWKHQ                    EXVLQHVV7KH\ZRXOGOLNH\RXWROHDYHls$DW7KH
UHSRUWHG LW WR KHU VXSHUYLVRU NQRZLQJ WKDW KHU VXSHUYLVRU             RIILFHUVGLGQRWDFFXVH&KULVWLDQRIVKRSOLIWLQJRUVHDUFKKHU
ZRXOGWKHQRUGHUKHUWRFDOOWKHSROLFHDQGXOWLPDWHO\KDYHWKH                EDJ7KHRIILFHUVWKHQHVFRUWHG&KULVWLDQDQG(GHQVRXWRI
ZRPHQ UHPRYHG IURP WKH VWRUH
  ,Q RWKHU ZRUGV D                    WKHVWRUH&KULVWLDQZDVIRUFHGWROHDYHEHKLQGKHUVKRSSLQJ
                                                                               FDUWRIPHUFKDQGLVH
     
                                                                          $VDUHVXOWRIWKLVLQFLGHQWSODLQWLIIVEURXJKWVXLWDJDLQVW
       2I FRXUVH WKLV LQIHUHQFH ZRXOG EH ZHLJKHG DJDLQVW WKH LQIHUHQFH
FUHDWHG E\ &KULVWLDQjV WHVWLPRQ\ WKDW DOWKRXJK VKH GLG QRW DWWHPSW WR VWHDO
                                                                               :DO0DUWLQIHGHUDOGLVWULFWFRXUWDOOHJLQJFODLPVXQGHU
DQ\WKLQJ WKH DFW RI XQ]LSSLQJ KHU SXUVH FRXOG KDYH EHHQ FDXVHG 0RQQRW         86&86&DDQG2KLR5HYLVHG&RGH
WR EHOLHYH VKH ZDV VWHDOLQJ
     &KULVWLDQHWDOY:DO0DUW6WRUHV,QF 1R         1R &KULVWLDQHWDOY:DO0DUW6WRUHV,QF            

*DVZHOODVDFODLPIRULQWHQWLRQDOLQIOLFWLRQRI        ERWKZRPHQDUULYHGWRJHWKHUDQGZHUHWKHRQO\WZRVKRSSHUV
HPRWLRQDO GLVWUHVV  :DO0DUW VXEVHTXHQWO\ PRYHG IRU           LQ WKH WR\ GHSDUWPHQW  7KH RQH ZKR ZDV VHOHFWLQJ
VXPPDU\MXGJPHQW7KHGLVWULFWFRXUWJUDQWHG:DO0DUWjV             PHUFKDQGLVHDQGSODFLQJLWLQWRDVKRSSLQJFDUW&KULVWLDQ
PRWLRQDVWRWKH86&DFODLPDQGWKHLQWHQWLRQDO         ZDVLQRUGLQDWHO\RIIHUHGDVVLVWDQFHZKLOHWKHRWKHUZKRKDG
LQIOLFWLRQRIHPRWLRQDOGLVWUHVVFODLP7KHGLVWULFWFRXUWDOVR     QR VKRSSLQJ FDUW ZDV OHIW XQGLVWXUEHG  7KH RQO\ IDFWXDO
JUDQWHGVXPPDU\MXGJPHQWDVWR(GHQVjVFODLPV(GHQVWKHQ           GLIIHUHQFHEHWZHHQWKHVHWZRVKRSSHUVLHWKDW&KULVWLDQKDG
PRYHGWRKDYHWKHILUVWDQGWKLUGFRXQWVUHLQVWDWHGDVWRKHU       DVKRSSLQJFDUWUHLQIRUFHVWKHLQIHUHQFHRIGLVFULPLQDWLRQ
ZKLFKWKHGLVWULFWFRXUWJUDQWHG                                    EHFDXVH D FXVWRPHU ZLWK D FDUW SUHVXPDEO\ DSSHDUV PRUH
                                                                     VHULRXV DERXW VKRSSLQJ WKDQ D SDWURQ ZKR ZDONV DURXQG
  $WWULDO&KULVWLDQDWWHPSWHGWRSURYHWKDW:DO0DUWKDGD         ZLWKRXWDFDUW7KHHYLGHQFHVKRZVWKDW&KULVWLDQUDLVHGD
SROLF\IRUGHDOLQJZLWKVKRSOLIWHUVZKLFK0RQQRWDQG&ODUN           JHQXLQHLVVXHRIIDFWDVWRZKHWKHUVKHUHFHLYHGVHUYLFHVLQD
IDLOHGWRIROORZ&ODUNWHVWLILHGWKDWDQHPSOR\HHZKRVHHVD       PDUNHGO\KRVWLOHPDQQHUDQGLQDPDQQHUZKLFKDUHDVRQDEOH
VKRSSHU SODFH D SLHFH RI PHUFKDQGLVH RQ KLV SHUVRQ LV       SHUVRQZRXOGKDYHIRXQGREMHFWLYHO\GLVFULPLQDWRU\$JDLQ
VXSSRVHGWRNHHSWKHVKRSSHULQYLHZXQWLOWKHVKRSSHUOHDYHV        IRUSXUSRVHVRIWKLVDSSHDOZHPXVWFRQFOXGHWKDW0RQQRW
WKHODVWSRLQWRISXUFKDVH$WWKDWSRLQW&ODUNWHVWLILHGWKDW     UHSRUWHGDVKRSOLIWLQJLQFLGHQWZKLFKGLGQRWRFFXUWKHUHVXOW
WKHHPSOR\HHFRXOGVWRSWKHVKRSSHUDQGNHHSKLPLQWKHVWRUH        RIZKLFKZDVWKDW&KULVWLDQZDVIRUFHGWROHDYHWKHVWRUHDQG
XQWLOWKHSROLFHDUULYHG&ODUNVWDWHGWKDWLIWKHHPSOR\HHORVW    IRUIHLW KHU ULJKW WR FRPSOHWH KHU SXUFKDVH  9LHZHG LQ WKLV
VLJKWRIWKHVKRSSHUIRUHYHQDPRPHQWWKHHPSOR\HHZDVQRW         OLJKW&KULVWLDQUDLVHGDPDWHULDOLVVXHRIIDFWDVWRZKHWKHU
SHUPLWWHG WR VWRS WKH VKRSSHU  0RQQRW WHVWLILHG WKDW VKH   0RQQRWjV EHKDYLRU PD\ EH FKDUDFWHUL]HG DV KRVWLOH DQG
EHOLHYHG LW ZDV VWRUH SROLF\ WR QRWLI\ PDQDJHPHQW LI VKH    REMHFWLYHO\GLVFULPLQDWRU\LQWKDWLWZDVSURIRXQGO\FRQWUDU\
VXVSHFWHGDVKRSSHURIVKRSOLIWLQJ6KHDOVRVWDWHGWKDWVKH        WRWKHPDQLIHVWILQDQFLDOLQWHUHVWVRI:DO0DUWDQGIDURXWVLGH
ZDVQHYHUJLYHQDQ\VSHFLDOL]HGWUDLQLQJZLWKUHJDUGWRKRZ          RIZLGHO\DFFHSWHGEXVLQHVVQRUPV
WRGHDOZLWKVKRSOLILWLQJ
                                                                        2QFH ZH KDYH GHWHUPLQHG WKDW SODLQWLIIV KDYH SURGXFHG
   :DO0DUWIRFXVHGRQWKHLVVXHRILWVLQWHQWWRGLVFULPLQDWH      HYLGHQFH WR HVWDEOLVK WKHLU SULPD IDFLH FDVH ZH PXVW WKHQ
2Q FURVVH[DPLQDWLRQ :DO0DUWjV DWWRUQH\ UHSHDWHGO\             FRQVLGHUWKHVHFRQGSKDVHRIWKHEXUGHQVKLIWLQJIUDPHZRUN
TXHVWLRQHG&KULVWLDQDERXWWKHPRPHQWDWZKLFKVKHXQ]LSSHG          QDPHO\ ZKHWKHU :DO0DUW DUWLFXODWHG D OHJLWLPDWH QRQ
KHU SXUVH XOWLPDWHO\ HOLFLWLQJ IURP KHU DQ DGPLVVLRQ WKDW   GLVFULPLQDWRU\UHDVRQIRULWVDFWLRQV:DO0DUWDVVHUWVWKDWLWV
0RQQRWFRXOGKDYHEHOLHYHGWKDWVRPHRQHZDVVWHDOLQJZKHQ            OHJLWLPDWH UHDVRQ ZDV WKDW &KULVWLDQ ZDV VXVSHFWHG RI
0RQQRWKHDUGWKHVRXQGRIDSXUVHEHLQJXQ]LSSHG,QVWHDG           DWWHPSWHG VKRSOLIWLQJ  &ODUN WKH XOWLPDWH GHFLVLRQPDNHU
RI FRQWHVWLQJ 0RQQRWjV VXVSLFLRQV DV UDFLDOO\ PRWLYDWHG       WHVWLILHGWKDWKHZDQWHGWKHZRPHQUHPRYHGIURPWKHVWRUH
&KULVWLDQFRQFHGHGWKDWKHUDFWLRQVFRXOGKDYHJLYHQULVHWR         EXWGHQLHGWKDWKLVGHFLVLRQZDVLQIOXHQFHGE\UDFHs$DW
0RQQRWjV SHUFHSWLRQ WKDW VKH KDG FRQFHDOHG RU ZDV            %HFDXVH:DO0DUWjVEXUGHQLVRQHRISURGXFWLRQQRWRI
DWWHPSWLQJ WR FRQFHDO VWRUH PHUFKDQGLVH  s$ DW    SHUVXDVLRQZHPXVWDFFHSW:DO0DUWjVVWDWHGUHDVRQWKDWLW
6KHDOVRDGPLWWHGWKDWLWLVUHDVRQDEOHIRUDVDOHVSHUVRQZKR        KDG ERWK SODLQWLIIV H[SHOOHG IURP WKH VWRUH EHFDXVH RI
VXVSHFWVVRPHRQHLVVWHDOLQJWRDSSURDFKWKDWSHUVRQs$DW       VXVSLFLRQWKDW&KULVWLDQKDGDWWHPSWHGWRVKRSOLIW

                                                                       $IWHU WKH GHIHQGDQW SURGXFHV HYLGHQFH RI LWV QRQ
  $W WKH HQG RI WKH SODLQWLIIVj FDVH :DO0DUW PRYHG IRU    GLVFULPLQDWRU\ UHDVRQ IRU LWV DFWLRQ WKH SUHVXPSWLRQ RI
MXGJPHQWDVDPDWWHURIODZ%DVHGRQ&KULVWLDQjVWHVWLPRQ\         GLVFULPLQDWLRQ IDOOV DZD\ DQG WKH SURGXFWLRQ EXUGHQ VKLIWV
    &KULVWLDQHWDOY:DO0DUW6WRUHV,QF 1R           1R &KULVWLDQHWDOY:DO0DUW6WRUHV,QF               

   $VWRWKHTXHVWLRQRIDmQH[XVlRUFDXVDOLW\WKHHYLGHQFH          RQFURVVH[DPLQDWLRQDQG0RQQRWjVWHVWLPRQ\WKDWVKHKDG
SXW IRUZDUG E\ :DO0DUW LV WKDW &ODUN QHYHU NQHZ HLWKHU       WULHG WR WHOO WKH SROLFH WR OHDYH ZKHQ VKH UHDOL]HG WKDW WKH
VKRSSHUjVUDFHWKLVLVVREHFDXVHKHGLGQRWFRQGXFWKLVRZQ          DOOHJHGO\ VWROHQ LWHP KDG EHHQ UHWXUQHG WKH GLVWULFW FRXUW
LQGHSHQGHQWLQYHVWLJDWLRQLQWRWKHDOOHJHGVKRSOLIWLQJLQFLGHQW        GHWHUPLQHGWKDW&KULVWLDQKDGIDLOHGWRHVWDEOLVKWKDW0RQQRW
EXWLQVWHDGDV:DO0DUWYLJRURXVO\DUJXHVUHOLHGH[FOXVLYHO\         KDG WKH UHTXLVLWH LQWHQW WR GLVFULPLQDWH  s$ DW 
RQ0RQQRWjVYHUVLRQRIWKHHYHQWVZKHQPDNLQJKLVGHFLVLRQ            0RUHRYHUWKHGLVWULFWFRXUWVWDWHGWKDWEHFDXVH&ODUNPDGH
,QGHHG :DO0DUW DYHUUHG LQ LWV EULHI WKDW m0U &ODUNjV        WKH GHFLVLRQ WR DVN SODLQWLIIV WR OHDYH WKH VWRUH DQG WKH
GHFLVLRQWRDVNWKHSROLFHWRUHPRYHWKHDSSHOODQWIURPWKH            HYLGHQFH ZDV XQFRQWURYHUWHG WKDW &ODUN QHYHU NQHZ HLWKHU
VWRUHZDVEDVHGVROHO\RQVXVSLFLRXV>VLF@DULVLQJIURPWKH            ZRPDQjV UDFH WKHUH ZDV QR HYLGHQFH WR GHPRQVWUDWH WKDW
µ]LSSHUjLQFLGHQWl$SSHOOHHjV%UDW:HDJUHHZLWKWKH          &ODUNjVDFWLRQVZHUHPRWLYDWHGE\UDFLDODQLPXVs$DW
GLVWULFW FRXUWjV ILQGLQJV WKDW &ODUN EDVHG KLV DFWLRQV          %HFDXVH WKH GLVWULFW FRXUW IRXQG WKHUH ZDV QR UDFLDO
H[FOXVLYHO\RQ0RQQRWjVDOOHJDWLRQVDQGRQQRQHRIKLVRZQ            GLVFULPLQDWLRQ DJDLQVW &KULVWLDQ WKH FRXUW GHWHUPLQHG WKDW
SHUFHSWLRQV  7KLV FDVH LV WKHUHIRUH FRPSOHWHO\ XQOLNH        (GHQVZDVQRWDVNHGWROHDYHEDVHGRQKHUDVVRFLDWLRQZLWKDQ
:LOVRQ LQ ZKLFK WKH GHFLVLRQPDNHU FRQGXFWHG DQ                  $IULFDQ$PHULFDQ7KHUHIRUHWKHGLVWULFWFRXUWJUDQWHG:DO
LQGHSHQGHQWLQYHVWLJDWLRQLQWRWKHFRQGXFWIRUPLQJWKHEDVLV           0DUWjV PRWLRQ DV WR ERWK SODLQWLIIV  7KH SODLQWLIIV WLPHO\
IRUWKHSODLQWLIIjVGLVFKDUJHDQGFUHGLWHGWKDWLQYHVWLJDWLRQLQ       DSSHDOHGWKHGLVWULFWFRXUWjVRUGHU
KLVGHFLVLRQWRILUHWKHSODLQWLII2QWKHFRQWUDU\WKLVFDVHLV
PRUH OLNH 6KDJHU LQ ZKLFK SODLQWLII SUHVHQWHG HYLGHQFH                                  ,,$1$/<6,6
VKRZLQJWKDWWKHFRPPLWWHHjVGHFLVLRQWRILUHSODLQWLIIZDV
WDLQWHG E\ WKH VXSHUYLVRUjV SUHMXGLFH  ,Q WKLV FDVH OLNH    $6WDQGDUGRI5HYLHZ
6KDJHUWKHUHLVHYLGHQFHWKDWWKHGHFLVLRQPDNHUmDFWHGDVWKH
FRQGXLWRIWKH>HPSOR\HHjV@SUHMXGLFHn>KHU@FDWjVSDZln                :HUHYLHZWKHGLVWULFWFRXUWjVJUDQWRIMXGJPHQWDVDPDWWHU
DQG WKDW WKH HPSOR\HHjV mLQIOXHQFH PD\ ZHOO KDYH EHHQ          RIODZXQGHU)HG5&LY3DGHQRYR:HFRQVLGHUDOO
GHFLVLYHl6KDJHU)GDW:HVWDWHGLQ:LOVRQWKDW         WKHHYLGHQFHLQWKHUHFRUGLQFOXGLQJWKRVHIDFWVWKDWDUHLQ
m>W@KH GHWHUPLQDWLYH TXHVWLRQ LV ZKHWKHU :LOVRQ KDV              GLVSXWHLQWKHOLJKWPRVWIDYRUDEOHWRWKHQRQPRYLQJSDUW\
VXEPLWWHGHYLGHQFHWKDW>WKHVXSHUYLVRUjV@UDFLDODQLPXVZDV           JLYLQJKHUWKHEHQHILWRIDOOUHDVRQDEOHLQIHUHQFHV6HH5HHYHV
DFDXVHRIWKHWHUPLQDWLRQl:LOVRQ)GDW%DVHG          Y 6DQGHUVRQ 3OXPELQJ 3URGV ,QF  86  
RQWKHHYLGHQFHZHPXVWFRQFOXGHWKDW0RQQRWjVUHSRUWRI              sDFNVRQY4XDQH[&RUS)GWK&LU
WKH ]LSSHU LQFLGHQW QRW RQO\ LQIOXHQFHG &ODUN LW ZDV WKH     7KXVmDOWKRXJKWKHFRXUWVKRXOGUHYLHZWKHUHFRUGDV
H[FOXVLYH DQG GHFLVLYH IDFWRU LQ KLV GHFLVLRQPDNLQJ  :H       D ZKROH LW PXVW GLVUHJDUG DOO HYLGHQFH IDYRUDEOH WR WKH
WKHUHIRUH FRQFOXGH WKDW &KULVWLDQ SUHVHQWHG VXIILFLHQW            PRYLQJSDUW\WKDWWKHMXU\LVQRWUHTXLUHGWREHOLHYHl5HHYHV
HYLGHQFHIRUDMXU\WRILQGWKDW0RQQRWjVUDFLDODQLPXVPD\             86 DW   :H PD\ QRW KRZHYHU PDNH FUHGLELOLW\
EHLPSXWHGWR&ODUN                                                   GHWHUPLQDWLRQVRUZHLJKWKHHYLGHQFH,G

   ,Q OLJKW RI WKLV GHWHUPLQDWLRQ ZH DUH SHUVXDGHG WKDW           )HGHUDO 5XOH RI &LYLO 3URFHGXUH D VWDWHV WKDW
&KULVWLDQSURYLGHGVXIILFLHQWHYLGHQFHWRFUHDWHDQLQIHUHQFH          MXGJPHQWDVDPDWWHURIODZLVDSSURSULDWHRQO\ZKHUHmDSDUW\
RIGLVFULPLQDWLRQWRVXSSRUWDSULPDIDFLHFDVH6RPHRIWKH          KDV EHHQ IXOO\ KHDUG RQ DQ LVVXH DQG WKHUH LV QR OHJDOO\
HYLGHQFH DGGXFHG DW WULDO GHPRQVWUDWHV WKDW &KULVWLDQ ZDV       VXIILFLHQWHYLGHQWLDU\EDVLVIRUDUHDVRQDEOHMXU\WRILQGIRU
WUHDWHG GLIIHUHQWO\ IURP D VKRSSHU VLPLODUO\ VLWXDWHG LQ DOO   WKDWSDUW\RQWKDWLVVXHl)(' 5 &,9 3 D,QRWKHU
UHOHYDQWUHVSHFWVQDPHO\(GHQV7KHWHVWLPRQ\UHYHDOHGWKDW          ZRUGVDGLVWULFWFRXUWPD\mWDNHWKHFDVHDZD\IURPWKHMXU\
                                                                       ZKHQHYHUWKHUHLVDFRPSOHWHDEVHQFHRISOHDGLQJRUSURRI
     &KULVWLDQHWDOY:DO0DUW6WRUHV,QF 1R               1R &KULVWLDQHWDOY:DO0DUW6WRUHV,QF            

RQ DQ LVVXH PDWHULDO WR WKH FDXVH RI DFWLRQ RU ZKHQ QR          ZDV ILUHG EHFDXVH RI KLV DJH LQ YLRODWLRQ RI WKH $JH
GLVSXWHGLVVXHVRIIDFWH[LVWVXFKWKDWUHDVRQDEOHPLQGVZRXOG             'LVFULPLQDWLRQLQ(PSOR\PHQW$FW7KHFRXUWILUVWFRQFOXGHG
QRW GLIIHUl  sDFNVRQ  )G DW  LQWHUQDO TXRWDWLRQ        WKDW 6KDJHU KDG DGGXFHG HYLGHQFH VXIILFLHQW WR VXUYLYH
RPLWWHG$GLVPLVVDOSXUVXDQWWR5XOHDLVKRZHYHU                 VXPPDU\ MXGJPHQW WKDW 6KDJHUjV VXSHUYLVRU LQWHQGHG WR
mLPSURSHUZKHUHWKHQRQPRYDQWSUHVHQWHGVXIILFLHQWHYLGHQFH                GLVFULPLQDWHDJDLQVW6KDJHUEHFDXVHRIKLVDJH7KHFRXUW
WRUDLVHDPDWHULDOLVVXHRIIDFWIRUWKHMXU\l,G                      WKHQFRQIURQWHGWKHSUREOHPSRVHGE\WKHIDFWWKDW6KDJHUZDV
                                                                           ILUHGQRWE\WKHVXSHUYLVRUEXWE\DKLULQJFRPPLWWHHZKLFK
%3ULPD)DFLH&DVH                                                ZDV XQDZDUH RI 6KDJHUjV DJH ZKHQ LW GHFLGHG WR ILUH KLP
                                                                           $FFRUGLQJWRWKH6HYHQWK&LUFXLWLIWKHFRPPLWWHHmDFWHGDV
   6HFWLRQSURKLELWVLQWHQWLRQDOUDFHGLVFULPLQDWLRQLQWKH           WKHFRQGXLWRI>WKHPDQDJHUjV@SUHMXGLFHnKLVFDWjVSDZn
PDNLQJ DQG HQIRUFLQJ RI FRQWUDFWV ZLWK ERWK SXEOLF DQG             WKHLQQRFHQFHRILWVPHPEHUVZRXOGQRWVSDUHWKHFRPSDQ\
SULYDWHDFWRUV86&7KHVWDWXWHjVSURWHFWLRQ               IURPOLDELOLW\l6KDJHU)GDW2IFRXUVHLIWKH
H[WHQGV WR mWKH PDNLQJ SHUIRUPDQFH PRGLILFDWLRQ DQG               FRPPLWWHH mZDV QRW D PHUH UXEEHU VWDPS EXW PDGH DQ
WHUPLQDWLRQRIFRQWUDFWVDQGWKHHQMR\PHQWRIDOOEHQHILWV               LQGHSHQGHQW GHFLVLRQ WR ILUH 6KDJHUl WKH FRXUW QRWHG WKDW
SULYLOHJHV WHUPV DQG FRQGLWLRQV RI WKH FRQWUDFWXDO                 WKHUHZRXOGEHQREDVLVIRUILQGLQJWKDWWKHHPSOR\HUYLRODWHG
UHODWLRQVKLSl  ,G  E  7KLV FLUFXLW KDV KHOG WKDW WR   WKH $FW  ,G DW   )LQGLQJ WKDW WKH VXSHUYLVRU mVHW XS
SUHYDLOLQDFODLPRIUDFHGLVFULPLQDWLRQXQGHUUHO\LQJ             6KDJHUWRIDLOlLQKLVMREGXWLHVDQGWKHQSRUWUD\HG6KDJHUjV
RQFLUFXPVWDQWLDOHYLGHQFHDSODLQWLIIPXVWPHHWWKHEXUGHQ              SHUIRUPDQFHmLQWKHZRUVWSRVVLEOHOLJKWlWRWKHFRPPLWWHH
VKLIWLQJVWDQGDUGRISURRIIRU7LWOH9,,FDVHVHVWDEOLVKHGE\              WKH FRXUW FRQFOXGHG WKDW WKH FRPPLWWHHjV GHFLVLRQ WR ILUH
WKH6XSUHPH&RXUWLQ0F'RQQHOO'RXJODV&RUSY*UHHQ                     6KDJHUmZDVWDLQWHGE\>WKHVXSHUYLVRUjV@SUHMXGLFHlDQGWKDW
86DQG7H[DV'HSjWRI&RPPXQLW\$IIDLUV                  WKHVXSHUYLVRUjVmLQIOXHQFHPD\ZHOOKDYHEHHQGHFLVLYHl,G
Y%XUGLQH86sDFNVRQ)GDW                DW   %DVHG RQ WKLV GHWHUPLQDWLRQ WKH 6HYHQWK &LUFXLW
+DUYLVY5RDGZD\([SUHVV,QF)GWK&LU                 FRQFOXGHGWKDWWKHIDFWWKDWWKHFRPPLWWHHZDVLJQRUDQWRI
8QGHUWKLVVWDQGDUGDSODLQWLIIPXVWILUVWHVWDEOLVKD            6KDJHUjVDJHGLGQRWLQVXODWHWKHHPSOR\HUIURPOLDELOLW\IRU
SULPDIDFLHFDVHRIGLVFULPLQDWLRQE\DSUHSRQGHUDQFHRIWKH               WKH VXSHUYLVRUjV GLVFULPLQDWLRQ DW WKH VXPPDU\ MXGJPHQW
HYLGHQFH  7KH EXUGHQ RI SURGXFWLRQ WKHQ VKLIWV WR WKH            VWDJHDQGWKDWWKHTXHVWLRQRIWKHFDXVDOOLQNEHWZHHQ6KDJHU
GHIHQGDQWWRDUWLFXODWHDOHJLWLPDWHQRQGLVFULPLQDWRU\UHDVRQ            DQGWKHFRPPLWWHHjVWHUPLQDWLRQGHFLVLRQPXVWEHVXEPLWWHG
IRULWVDFWLRQV7RSUHYDLOWKHSODLQWLIIPXVWWKHQSURYHE\D           WRDMXU\
SUHSRQGHUDQFHRIWKHHYLGHQFHWKDWWKHGHIHQGDQWjVSURIIHUHG
UHDVRQLVQRWLWVWUXHUHDVRQEXWDSUHWH[WIRUGLVFULPLQDWLRQ              :H DUH SHUVXDGHG E\ WKHVH FDVHV WKDW &ODUNjV DSSDUHQW
6HH5HHYHV86DWDSSO\LQJWKUHHSDUWWHVWLQ                LJQRUDQFH RI WKH SODLQWLIIVj UDFH GRHV QRW VKLHOG :DO0DUW
MXU\WULDO%XUGLQH86DWDSSO\LQJWKUHHSDUWWHVW            IURP OLDELOLW\ DQG WKDW LI SODLQWLIIV KDYH RIIHUHG VXIILFLHQW
LQEHQFKWULDO                                                           HYLGHQFHWRVKRZDFDXVDOQH[XVEHWZHHQ0RQQRWjVSUHMXGLFH
                                                                           DQG &ODUNjV GHFLVLRQPDNLQJ WKHQ SODLQWLIIVj FDVH PD\
  :KLOH   LV JHQHUDOO\ LQYRNHG LQ WKH HPSOR\PHQW              SURFHHG,QWKLVFDVH&ODUNZDVFOHDUO\WKHGHFLVLRQPDNHUIRU
FRQWH[W IRU HJ FODLPV RI KRVWLOH HQYLURQPHQW IDLOXUH WR       :DO0DUW+HXQHTXLYRFDOO\WHVWLILHGWKDWKHZDVWKHVHQLRU
SURPRWHRUZURQJIXOGLVPLVVDOOLWLJDQWVKDYHDOVREURXJKW                PDQDJHUDW:DO0DUWLQWKHHDUO\PRUQLQJRI'HFHPEHU
VXLWXQGHUWKHVWDWXWHIRUFODLPVRIGLVFULPLQDWLRQLQUHWDLODQG          s$DWDQGZHNQRZWKDWKHPDGHWKHXOWLPDWH
VHUYLFHVHWWLQJV:HKDYHQHYHUHVWDEOLVKHGDWHVWIRUDSULPD            GHFLVLRQWRKDYHWKHSODLQWLIIVHVFRUWHGRXWRIWKHVWRUH
IDFLH FDVH RI GLVFULPLQDWLRQ XQGHU   RXWVLGH RI WKH
    &KULVWLDQHWDOY:DO0DUW6WRUHV,QF 1R        1R &KULVWLDQHWDOY:DO0DUW6WRUHV,QF                      

DUHQRWFRQYLQFHGWKDWWKLVTXHVWLRQRIIDFWLVGLVSRVLWLYHRI      HPSOR\PHQWFRQWH[W,QLWVUXOLQJRQ:DO0DUWjVPRWLRQIRU
WKHTXHVWLRQRI:DO0DUWjVOLDELOLW\)RUJXLGDQFHZHWXUQWR     VXPPDU\MXGJPHQWWKHGLVWULFWFRXUWIRXQGWKDWLQRUGHUWR
FDVHODZIURPRWKHUFLYLOULJKWVDFWLRQV:HEHOLHYHWKDWWKH      SURYHDFODLPDSODLQWLIIPXVWGHPRQVWUDWHmWKH
PRVWDQDORJRXVFDVHVDUHWKRVHLQWKHHPSOR\PHQWFRQWH[WLQ         SODLQWLII LV D PHPEHU RI D UDFLDO PLQRULW\  DQ LQWHQW WR
ZKLFKDQHPSOR\HHFKDOOHQJHVKLVWHUPLQDWLRQDVLPSURSHUO\          GLVFULPLQDWHRQWKHEDVLVRIUDFHE\WKHGHIHQGDQWDQGWKH
PRWLYDWHGE\DVXSHUYLVRUjVGLVFULPLQDWRU\DQLPXVDQGWKHQ          GLVFULPLQDWLRQ FRQFHUQHG RQH RU PRUH RI WKH DFWLYLWLHV
VHHNVWRLPSXWHWKDWDQLPXVWRWKHQHXWUDOGHFLVLRQPDNHUZKR        HQXPHUDWHGLQWKHVWDWXWHLHPDNHDQGHQIRUFHFRQWUDFWV
XOWLPDWHO\WHUPLQDWHGWKHHPSOR\HH,QWKLVFLUFXLWZHKDYH       VXHDQGEHVXHGJLYHHYLGHQFHHWFls$DW,WDSSHDUV
KHOG WKDW WR FRPSOHWH D SULPD IDFLH FDVH XQGHU VXFK       WKDWWKHGLVWULFWFRXUWUHO\LQJRQWKH6HFRQGDQG)LIWK&LUFXLWV
FLUFXPVWDQFHV WKH SODLQWLII PXVW RIIHU HYLGHQFH WKDW WKH    IRU WKH WHVW GLVSHQVHG ZLWK WKH UHOHYDQW 0F'RQQHOO
VXSHUYLVRUjVUDFLDODQLPXVZDVWKHFDXVHRIWKHWHUPLQDWLRQRU      'RXJODV%XUGLQHEXUGHQVKLIWLQJDQDO\VLVDQGJUDSSOHGRQO\
VRPHKRZLQIOXHQFHGWKHXOWLPDWHGHFLVLRQPDNHU6HH:LOVRQ          ZLWK WKH XOWLPDWH TXHVWLRQ RI :DO0DUWjV LQWHQW WR
Y6WURK&RV)GWK&LU                   GLVFULPLQDWH6HHLGVWDWLQJWKDWmZKLOHWKH7LWOH9,,EXUGHQ
                                                                    VKLIWLQJDQDO\VLVLVXVHGLQHPSOR\PHQWGLVFULPLQDWLRQ
   ,Q:LOVRQWKHSODLQWLIIDEODFNIDFWRU\HPSOR\HHEURXJKW      PDWWHUV EDVHG RQ UDFHl WKH DOWHUQDWLYH WKUHHSDUW WHVW ZDV
D7LWOH9,,FODLPDOOHJLQJWKDWKLVVXSHUYLVRUjVUDFLDODQLPXV      DSSURSULDWHLQQRQHPSOR\PHQWFRQWH[WV
OHGWRKLVLPSURSHUWHUPLQDWLRQIURPKLVMREDW6WURKjV)RU
SXUSRVHVRIWKHDSSHDODSDQHORIWKLVFRXUWDVVXPHGWKHIDFW         7KH6HFRQG&LUFXLWZDVWKHILUVWDSSHOODWHFRXUWWRIDVKLRQ
RIWKHVXSHUYLVRUjVGLVFULPLQDWRU\DQLPXVEXWQRWHGWKDWHYHQ      WKHDERYHWKUHHSDUWVWDQGDUG6HH0LDQY'RQDOGVRQ/XINLQ
WKRXJK WKH VXSHUYLVRU DOHUWHG 6WURKjV PDQDJHPHQW WR WKH      	 sHQUHWWH 6HF &RUS  )G   G &LU 
FRQGXFWIRUZKLFK:LOVRQZDVXOWLPDWHO\ILUHG:LOVRQFRXOG         DSSO\LQJ WKUHHSDUW WHVW WR FODLP RI UDFH GLVFULPLQDWLRQ LQ
QRWUHEXW6WURKjVVKRZLQJWKDWKHZDVILUHGE\6WURKjVJHQHUDO      DUELWUDWLRQ SURFHHGLQJV EDVHG RQ ULJKW WR OHJDO SURFHVV WR
PDQDJHUXSRQWKHUHFRPPHQGDWLRQRIWKHLQGXVWULDOUHODWLRQV         HQIRUFHDFRQWUDFW,WZDVVXEVHTXHQWO\DGRSWHGE\WKH)LIWK
PDQDJHUZKRKDGFRQGXFWHGDQLQGHSHQGHQWLQYHVWLJDWLRQ             &LUFXLWLQ*UHHQY6WDWH%DURI7H[DV)G
LQWR WKH FRQGXFW IRUPLQJ WKH EDVLV RI :LOVRQjV GLVFKDUJH   WK &LU  QRWLQJ VWDQGDUG IRU   FODLP RI
$FFRUGLQJ WR WKH SDQHO WKH IDFW RI WKH LQGHSHQGHQW         GLVFULPLQDWLRQEDVHGRQULJKWWRPDNHDQGHQIRUFHFRQWUDFW
LQYHVWLJDWLRQ FRXSOHG ZLWK WKH ODFN RI HYLGHQFH WKDW WKH   WKH6HYHQWK&LUFXLWLQWKHRIWFLWHGGHFLVLRQ0RUULVY2IILFH
VXSHUYLVRU IDLOHG WR UHSRUW VLPLODU FRQGXFW E\ ZKLWH         0D[,QF)GWK&LUQRWLQJWKDWWKUHH
HPSOR\HHVDQGWKHODFNRI HYLGHQFHWKDWPDQDJHPHQWKDG            SDUWVWDQGDUGDSSOLHVWRFODLPRIGLVFULPLQDWLRQLQUHWDLOVDOHV
UHOLHG RQ D IDOVH UHFRUG FUHDWHG E\ WKH VXSHUYLVRU ZDV    WUDQVDFWLRQDQGPRVWUHFHQWO\WKH7HQWK&LUFXLWLQ+DPSWRQ
GLVSRVLWLYHRIWKHFDVH8OWLPDWHO\ZHKHOGWKDWWKHSODLQWLII    Y'LOODUG'HSjW6WRUHV,QF:/
WK&LU
FRXOG QRW PDNH RXW D SULPD IDFLH FDVH RI GLVFULPLQDWLRQ    $SULO  DSSO\LQJ WKUHHSDUW WHVW IRU SULPD IDFLH
EHFDXVHKHFRXOGQRWGHPRQVWUDWHDQ\mFDXVDOQH[XVlEHWZHHQ         FDVH &KULVWLDQZRXOGKDYHXVDSSO\WKLVWKUHHSDUWVWDQGDUG
WKHGHFLVLRQPDNHUjVGHFLVLRQWRWHUPLQDWHWKHSODLQWLIIDQGWKH
ORZHUOHYHOHPSOR\HHjVUDFLDODQLPXV6HH:LOVRQ)G
DW                                                                 
                                                                          1RWDEO\   WKH   6HFRQG   )LIWK   DQG   6HYHQWK   &LUFXLWV   GLG   QRW

  2WKHU FRXUWV KDYH UHOLHG XSRQ D VLPLODU FDXVDO QH[XV      FKDUDFWHUL]H WKLV WHVW DV D SULPD IDFLH WHVW   ,QVWHDG WKHVH FLUFXLWV QRWHG
                                                                    JHQHUDOO\ WKDW D SODLQWLII PXVW SURYH WKHVH WKUHH HOHPHQWV WR SUHYDLO XQGHU
UHTXLUHPHQW,Q6KDJHUY8SMRKQ&R)GWK&LU         $ IHZ VXEVHTXHQW GLVWULFW FRXUW FDVHV DQG WKH 7HQWK &LUFXLW KDYH
WKH6HYHQWK&LUFXLWUHYLHZHGDSODLQWLIIjVFODLPWKDWKH     KRZHYHU LPSOHPHQWHG WKLV WKUHHSURQJ WHVW DV WKH UHTXLUHPHQW IRU D SULPD
                                                                    IDFLH FDVH RI GLVFULPLQDWLRQ 6HH HJ +ROPHV Y 'LOODUG 'HSjW 6WRUH 1R
       &KULVWLDQHWDOY:DO0DUW6WRUHV,QF 1R           1R &KULVWLDQHWDOY:DO0DUW6WRUHV,QF              

DV RXU SULPD IDFLH WHVW LQ WKH EXUGHQVKLIWLQJ IUDPHZRUN         XQ]LSSHGKHUSXUVH"$UHDVRQDEOHMXU\ZDVQRWUHTXLUHGWR
$SSHOODQWjV%UDW                                                    LQIHUEDVHGRQ&KULVWLDQjVFRQFHVVLRQVWKDW0RQQRWjVDFWLRQV
                                                                          ZHUHPRWLYDWHGH[FOXVLYHO\E\KHUFRQFHUQWKDW&KULVWLDQZDV
  :DO0DUWDVVHUWVWKDWWKHSODLQWLIIVPXVWPHHWDGLIIHUHQW             DWWHPSWLQJWRVKRSOLIW,QGHHG&KULVWLDQjVWHVWLPRQ\GRHVQRW
IRXUSDUWSULPDIDFLHWHVWZKLFKKDVEHHQDGRSWHGE\VHYHUDO              WDUQLVK WKH UHDVRQDEOH LQIHUHQFH HVWDEOLVKHG E\ WKH UHVW RI
GLVWULFW FRXUWV  6HH HJ /DURFKH Y 'HQQ\jV ,QF  )    &KULVWLDQjVWHVWLPRQ\UHFRXQWLQJKRZVKHKDGEHHQZDWFKHG
6XSS G   6' )OD  6LQJK Y :DO0DUW          IROORZHG DQG H[FHVVLYHO\ RIIHUHG DVVLVWDQFH WKDW 0RQQRW
6WRUHV,QF1R&LY$:/
('                EHOLHYHGWKDW&KULVWLDQZDVPRUHOLNHO\WRVKRSOLIWEHFDXVHRI
3DsXQH:KLWHY'HQQ\jV,QF)6XSS             KHU UDFH  ,Q RWKHU ZRUGV D MXU\ FRXOG KDYH EHOLHYHG WKDW
'&ROR8QGHUWKLVWHVWDSODLQWLIIPXVWVKRZ            0RQQRWjVVXVSLFLRQZDVLQH[WULFDEO\OLQNHGWRUDFHLQWKDWD
VKHLVDPHPEHURIDSURWHFWHGFODVVVKHDWWHPSWHGWR            VWRUHHPSOR\HHZRXOGQHYHUKDYHEHHQVXVSLFLRXVRID]LSSHU
PDNHHQIRUFHRUVHFXUHWKHSHUIRUPDQFHRIDFRQWUDFW               QRLVHKDGVKHQRWDOUHDG\WDUJHWHGWKHFXVWRPHUDVDSRWHQWLDO
VKHZDVGHQLHGWKHULJKWWRGRVRDQGWKHRSSRUWXQLW\WR             VKRSOLIWHU VROHO\ GXH WR KHU UDFH  ,Q FRQFOXGLQJ WKDW
PDNHHQIRUFHRUVHFXUHWKHSHUIRUPDQFHRIDFRQWUDFWIRUOLNH           &KULVWLDQjVFRQFHVVLRQVRRYHUZKHOPHGWKHHYLGHQFHIDYRULQJ
JRRGV RU VHUYLFHV UHPDLQHG DYDLODEOH WR VLPLODUO\ VLWXDWHG         WKH SODLQWLIIV VXFK WKDW QR UDWLRQDO WULHU RI IDFW FRXOG KDYH
SHUVRQVRXWVLGHRIWKHSURWHFWHGFODVV$SSHOOHHjV%UDW            IRXQG WKDW SODLQWLIIV ZHUH WUHDWHG GLIIHUHQWO\ EHFDXVH RI
$FFRUGLQJWR:DO0DUWWKHSODLQWLIIVFDQRQO\SURYHDFODLP              &KULVWLDQjVUDFHWKHGLVWULFWFRXUWLPSHUPLVVLEO\VXEVWLWXWHG
RIGLVFULPLQDWRU\WUHDWPHQWLIWKH\FDQVKRZWKDWXQGHUSURQJ            LWVMXGJPHQWFRQFHUQLQJWKHZHLJKWRIWKHHYLGHQFHIRUWKH
IRXURIWKLVWHVWFRPSDUDEOHVKRSSHUVZHUHVLPLODUO\VLWXDWHG            MXU\jV
LQ mDOOUHVSHFWVlWRWKHSODLQWLII,GDW7REHGHHPHG
VLPLODUO\VLWXDWHG:DO0DUWZRXOGKDYHXVUHTXLUHDSODLQWLII              $WWKLVSRLQWLQWKHDQDO\VLVZHPXVWHQJDJHWKHTXHVWLRQ
WRILQGVKRSSHUVZKRKDYHmGHDOWZLWKWKHVDPHVXSHUYLVRU                ZKHWKHU &ODUNjV DFWLRQV PD\ EH FRQVLGHUHG DORQJ ZLWK
EHHQVXEMHFWWRWKHVDPHVWDQGDUGVDQGHQJDJHGLQWKHVDPH               0RQQRWjVIRUSXUSRVHVRIGHWHUPLQLQJZKHWKHUSODLQWLIIVFDQ
FRQGXFWZLWKRXWGLIIHUHQWLDWLQJRUPLWLJDWLQJFLUFXPVWDQFHV               HVWDEOLVKDSULPDIDFLHFDVHEHFDXVHLWZDVDIWHUDOO&ODUNjV
WKDWZRXOGGLVWLQJXLVKWKHLUFRQGXFWRUWKHWUHDWPHQWDIIRUGHG            GHFLVLRQWRUHPRYHWKHSODLQWLIIVIURPWKHVWRUHWKDWXOWLPDWHO\
WKHPl,GDW                                                        LQWHUIHUHGZLWKWKHLUULJKWWRFRQWUDFW:DO0DUWDVVHUWVWKDW
                                                                          &ODUNGLGQRWDFWZLWKGLVFULPLQDWRU\LQWHQWDQGWKDWKHLVQRW
   :HQRWHIURPWKHRXWVHWWKDWZHEHOLHYHWKHGLVWULFWFRXUW           YLFDULRXVO\OLDEOHIRU0RQQRWjVEHKDYLRU$FFRUGLQJWR:DO
ZDVZURQJLQWKHFRQWH[WRID5XOHDPRWLRQWRRPLWWKH             0DUWmWKHGRFWULQHUHVSRQGHDWVXSHULRUGRHVQRWDSSO\LQD
WUDGLWLRQDOEXUGHQVKLIWLQJIUDPHZRUNIURPLWVDQDO\VLVsXVW            FODLPl$SSHOOHHjV%UDW7KHSODLQWLIIVDUJXHWR
DVZLWK7LWOH9,,FDVHVZKHUHmWKHDOORFDWLRQRIEXUGHQVDQG             WKHFRQWUDU\:HEHOLHYHWKLVTXHVWLRQLVEHWWHUSKUDVHGDV
WKHFUHDWLRQRIDSUHVXPSWLRQE\WKHHVWDEOLVKPHQWRIDSULPD             ZKHWKHU 0RQQRWjV GLVFULPLQDWRU\ DQLPXV PD\ SURSHUO\ EH
IDFLHFDVHLVLQWHQGHGSURJUHVVLYHO\WRVKDUSHQWKHLQTXLU\LQWR          LPSXWHGWR&ODUNWKHGHFLVLRQPDNHUZKRH[FOXGHGSODLQWLIIV
WKH HOXVLYH IDFWXDO TXHVWLRQ RI LQWHQWLRQDO GLVFULPLQDWLRQl        IURPWKHVWRUHEDVHGRQ0RQQRWjVVKRSOLIWLQJDFFXVDWLRQIRU
%XUGLQH86DWQVRWRRLVWKHEXUGHQVKLIWLQJ               SXUSRVHV RI HVWDEOLVKLQJ D SULPD IDFLH FDVH RI UDFH
VFKHPH XVHIXO WR FRXUWV LQ DVVHVVLQJ   FODLPV RI            GLVFULPLQDWLRQ
                                                                            7KHGLVWULFWFRXUWFRUUHFWO\DVVHUWHGWKDWWKHUHLVQRUHFRUG
                                                                          HYLGHQFHWKDW&ODUNVDZWKHSODLQWLIIVRUNQHZWKHSODLQWLIIVj
&LY$     :/  
 (' /D 1RY   %REELWW   UDFHEHIRUHKHDVNHGWKHPWROHDYH'HVSLWHWKLVILQGLQJZH
Y 5DJH ,QF  ) 6XSS G   :'1& 
    &KULVWLDQHWDOY:DO0DUW6WRUHV,QF 1R           1R &KULVWLDQHWDOY:DO0DUW6WRUHV,QF              

  

                                                                  LQWHQWLRQDOGLVFULPLQDWLRQEDVHGRQFLUFXPVWDQWLDOHYLGHQFH
                                                                       6HH3DWWHUVRQY0F/HDQ&UHGLW8QLRQ86
  4 %HFDXVH\RXUSHUFHSWLRQZDVVKHWKRXJKW\RXKDG                   DSSURYLQJRIWKHXVHRIWKHEXUGHQVKLIWLQJVFKHPH
     FRQFHDOHG PHUFKDQGLVH RU DERXW WR FRQFHDO                   mDVDVHQVLEOHRUGHUO\ZD\WRHYDOXDWHWKHHYLGHQFHLQOLJKWRI
     PHUFKDQGLVHEHFDXVH\RXMXVWRSHQHG\RXUSXUVH"                   FRPPRQ H[SHULHQFH DV LW EHDUV RQ WKH FULWLFDO TXHVWLRQ RI
                                                                       GLVFULPLQDWLRQl IRU   FODLPV LQWHUQDO TXRWDWLRQ
  $ <HVEXW,VKRZHGKHUZKDW,KDGSXWLQP\SXUVH                 RPLWWHGsRKQVRQY8QLYRI&LQFLQQDWL)G
                                                                       WK&LUQRWLQJWKDWSODLQWLIIEULQJLQJDFWLRQ
  4 <RXUSHUFHSWLRQZDVVKHDSSURDFKHG\RXEHFDXVH                    PD\SURYHFODLPZLWKHLWKHUGLUHFWRUFLUFXPVWDQWLDOHYLGHQFH
     VKH WKRXJKW \RX ZHUH LQWHQGLQJ WR VWHDO                     RI GLVFULPLQDWLRQ DQG WKDW 0F'RQQHOO 'RXJODV%XUGLQH
     PHUFKDQGLVH"                                                      WULSDUWLWH WHVW LV DSSURSULDWH ZKHUH ODWWHU WHFKQLTXH LV
                                                                       HPSOR\HG7KHGLVWULFWFRXUWjVRPLVVLRQGRHVKRZHYHURIIHU
  $ <HV                                                              XVWKHRSSRUWXQLW\WRIDVKLRQIURPDFOHDQVODWHDQDSSURSULDWH
  4 <RXFDQXQGHUVWDQGKRZWKH]LSSLQJDQGXQ]LSSLQJ                  SULPDIDFLHWHVWLQWKHFRPPHUFLDOHVWDEOLVKPHQWFRQWH[W
     RI WKH SXUVH ODWH DW QLJKW LQ D WR\ VWRUH ZKHUH            7KHUH LV DPSOH SUHFHGHQW IRU UHTXLULQJ D GLVWLQFW
     VRPHERG\KDVEHHQDQKRXURUWZRFDQEHSHUFHLYHG                 IRUPXODWLRQ RI WKH EXUGHQVKLIWLQJ IUDPHZRUN LQ GLIIHULQJ
     WKDWZD\"                                                         IDFWXDO FLUFXPVWDQFHV  6HH %XUGLQH  86 DW  Q
  $ <HV                                                              VWDWLQJWKDWDSULPDIDFLHVWDQGDUGDUWLFXODWHGLQ0F'RQQHOO
                                                                       'RXJODVIRUFODLPRIUDFHGLVFULPLQDWLRQmLVQRWLQIOH[LEOHlDV
  4 7KH]LSSHUZDVSUHWW\ORXGZDVQjWLW"                            WKH SULPD IDFLH SURRI UHTXLUHG IURP D SODLQWLII mLV QRW
                                                                       QHFHVVDULO\ DSSOLFDEOH LQ HYHU\ UHVSHFW LQ GLIIHULQJ IDFWXDO
  $ <HV                                                              VLWXDWLRQVl VHH DOVR %REELWW  ) 6XSS G DW 
                                                                       QRWLQJGLIIHUHQWVWDQGDUGVXQGHUIRUFODLPVRIIDLOXUH
s$ DW   $FFRUGLQJ WR WKH GLVWULFW FRXUW EHFDXVH     WR KLUH IDLOXUH WR SURPRWH IDLOXUH WR JLYH PHULW SD\ UDLVH
&KULVWLDQ FRQFHGHG WKDW KHU DFWLRQV JDYH ULVH WR 0RQQRWjV      GLVSDUDWH SXQLVKPHQW ZLWKLQ WKH ZRUNSODFH DQG IDLOXUH WR
VXVSLFLRQE\&KULVWLDQjVRZQDGPLVVLRQV0RQQRWjVVXVSLFLRQ            UHQHZFRQWUDFW7KXVLWZRXOGQRWEHH[WUDRUGLQDU\IRUWKLV
ZDV QRW UDFLDOO\ PRWLYDWHG  s$ DW  m,jP JRLQJ WR   FRXUW WR DGRSW DQ LQGLYLGXDOL]HG WHVW IRU ULJKW WR FRQWUDFW
UHSHDWDJDLQE\SODLQWLIIjVRZQDGPLVVLRQVKHWHVWLILHGVKH           FODLPVLQWKHFRPPHUFLDOHVWDEOLVKPHQWFRQWH[W
XQGHUVWRRGWKDWLWFRXOGEHSHUFHLYHGDVLIVKHZHUHVWHDOLQJ
$QGWKLV&RXUWEHOLHYHVWKDWLVFULWLFDOFULWLFDOHYLGHQFHLQ          &OHDUO\ D SODLQWLII DVVHUWLQJ D   FODLP PXVW SURYH
WKLVFDVHl                                                          LQWHQWLRQDOGLVFULPLQDWLRQ*HQ%OGJ&RQWUDFWRUV$VVjQY
                                                                       3HQQV\OYDQLD  86     %XW LW GRHV QRW
   :HDUHQRWFRQYLQFHGWKDWWKLVHYLGHQFHLVDVFULWLFDODVWKH       IROORZWKDWWKHSODLQWLIIPXVWSURYHLQWHQWLRQDOGLVFULPLQDWLRQ
GLVWULFWFRXUWWKRXJKWLWZDV&KULVWLDQFRQFHGHGWREURDGO\          DVDQHOHPHQWRIWKHSULPDIDFLHFDVH$VWKH6XSUHPH&RXUW
ZRUGHG TXHVWLRQV WKDW 0RQQRW DSSURDFKHG KHU EHFDXVH              KDV H[SODLQHG WKH mGLYLVLRQ RI LQWHUPHGLDWH HYLGHQWLDU\
0RQQRWFRXOGKDYHEHOLHYHGVKHZDVVKRSOLIWLQJ:KDWLVOHIW          EXUGHQV VHUYHV WR EULQJ WKH OLWLJDQWV DQG WKH FRXUW
XQDVNHGDQGXQDQVZHUHGLVWKHQH[WORJLFDOTXHVWLRQQDPHO\            H[SHGLWLRXVO\ DQG IDLUO\ WR WKLV XOWLPDWH TXHVWLRQ >RI
GLG&KULVWLDQEHOLHYHWKDW0RQQRWWKRXJKWVKHZDVLQWHQGLQJ            LQWHQWLRQDO GLVFULPLQDWLRQ@l  %XUGLQH  86 DW 
WRVWHDOPHUFKDQGLVHEHFDXVHVKHZDVDEODFNSHUVRQZKRKDG            $FFRUGLQJWRWKH&RXUWWKHEXUGHQRIHVWDEOLVKLQJDSULPD
    &KULVWLDQHWDOY:DO0DUW6WRUHV,QF 1R            1R &KULVWLDQHWDOY:DO0DUW6WRUHV,QF            

IDFLH FDVH RI GLVFULPLQDWRU\ WUHDWPHQW LV QRW PHDQW WR EH         7KHUHDUHKRZHYHUXQGLVSXWHGIDFWVWKDWWHPSHUWKRVHWKDW
mRQHURXVl,G7KHSXUSRVHRIWKHSULPDIDFLHFDVHLVVLPSO\          HVWDEOLVK D SULPD IDFLH FDVH  )LUVW DV WKH GLVWULFW FRXUW
WRmHOLPLQDWH>@WKHPRVWFRPPRQQRQGLVFULPLQDWRU\UHDVRQV               LQGLFDWHG0RQQRWDWWHPSWHGWRFDQFHOWKHFDOOWRWKHSROLFH
IRUWKHSODLQWLIIjVlWUHDWPHQWLGDWDSULPDIDFLHFDVH          7KLVSLHFHRILQIRUPDWLRQLVVLJQLILFDQWEHFDXVHLWFUHDWHVWKH
mUDLVHV DQ LQIHUHQFH RI GLVFULPLQDWLRQ RQO\ EHFDXVH ZH           LQIHUHQFHWKDW0RQQRWFDOOHGWKHSROLFHVROHO\WRSUHYHQWZKDW
SUHVXPH>WKHGHIHQGDQWjV@DFWVLIRWKHUZLVHXQH[SODLQHGDUH           VKH SHUFHLYHG ZDV VKRSOLIWLQJ QRW WR H[FOXGH D EODFN
PRUH OLNHO\ WKDQ QRW EDVHG RQ WKH FRQVLGHUDWLRQ RI              FXVWRPHU IURP VKRSSLQJ DW :DO0DUW  +DG 0RQQRWjV
LPSHUPLVVLEOHIDFWRUVl,GTXRWLQJ)XUQFR&RQVWU&RUSY           PRWLYDWLRQ EHHQ WR SUHYHQW RU LQWLPLGDWH &KULVWLDQ IURP
:DWHUV86                                      SXUFKDVLQJ PHUFKDQGLVH VKH ZRXOG DUJXDEO\ KDYH KDG QR
                                                                        UHDVRQWRWU\WRFDOORIIWKHSROLFH%HFDXVHZHPXVWFRQVWUXH
   ,Q WKH HPSOR\PHQW FRQWH[W D SODLQWLII PD\ HVWDEOLVK D       DOO IDFWV LQ IDYRU RI WKH QRQPRYDQW DW WKLV VWDJH RI WKH
SULPDIDFLHFDVHRILQWHQWLRQDOGLVFULPLQDWLRQZLWKRXWKDYLQJ           SURFHHGLQJV KRZHYHU ZH FDQQRW DWWDFK WRR PXFK
GLUHFW HYLGHQFH RI WKH GHIHQGDQWjV LQWHQW WR GLVFULPLQDWH       VLJQLILFDQFH WR WKH IDFW WKDW 0RQQRW DWWHPSWHG WR WXUQ WKH
LQGHHGWKHUDWLRQDOHIRUHPSOR\LQJDSULPDIDFLHFDVHLVWR            SROLFH DZD\ LQ OLJKW RI WKH IDFW WKDW ZH PXVW SUHVXPH WKDW
DOORZ D SODLQWLII WR FUHDWH D mOHJDOO\ PDQGDWRU\ UHEXWWDEOH    0RQQRWIDEULFDWHGWKHVKRSOLIWLQJLQFLGHQW$OWKRXJKERWK
SUHVXPSWLRQl RI GLVFULPLQDWLRQ ZLWK RQO\ FLUFXPVWDQWLDO            SDUWLHVDGPLWWKDWDSXUVHZDVXQ]LSSHGZHPXVWEHOLHYHWKDW
HYLGHQFH,GDWQ7KHUHIRUHZHILQGLWFXULRXVWKDWVRIHZ       &KULVWLDQZHQWLQWRKHUSXUVHIRUDSHUVRQDOLWHPQRWWKDWVKH
FRXUWV KDYH SDXVHG WR UHPDUN XSRQ WKH LQFRQJUXLW\ RI            UHDFKHGZLWKRQHKDQGWRSODFHDWR\LQKHUSXUVHDQG]LSSHG
GLVSHQVLQJZLWKDSULPDIDFLHWHVWRUUHTXLULQJDSODLQWLIIWR         KHUSXUVHZLWKKHURWKHUKDQGDV0RQQRWWHVWLILHG2QWKH
SURYH LQWHQWLRQDO GLVFULPLQDWLRQ DV DQ HOHPHQW RI D SULPD       IDFWV EHIRUH XV DV ZH PXVW ILQG WKHP ZH EHOLHYH WKDW D
IDFLH FDVH LQ WKH FRPPHUFLDO HVWDEOLVKPHQW FRQWH[W DV WKH      UHDVRQDEOHMXU\FRXOGKDYHLQIHUUHGWKDW0RQQRWjVPRWLYDWLRQ
SODLQWLIIV ZRXOG KDYH XV GR  5HFHQWO\ D GLVWULFW FRXUW LQ   IRU FDQFHOLQJ WKH FDOO WR WKH SROLFH ZDV EHFDXVH 0RQQRW
0DU\ODQGHQJDJHGLQDQDQDO\VLVRIWKHSURSHUHOHPHQWVRID             EHFDPH DVKDPHG RU HPEDUUDVVHG E\ KHU DFWLRQV RU GLG QRW
SULPDIDFHFDVHLQWKHFRPPHUFLDOHVWDEOLVKPHQWFRQWH[W                ZDQW WR FDXVH D VFHQH DOWKRXJK VKH KDG ZDQWHG WR KDYH
                                                                        &KULVWLDQUHPRYHGIURPWKHVWRUH%\HPSKDVL]LQJWKHIDFW
  ,Q&DOOZRRGY'DYH	%XVWHUjV,QF)6XSSG             WKDW 0RQQRW WULHG WR FDQFHO WKH FDOO WR WKH SROLFH ZLWKRXW
'0GWKHGLVWULFWFRXUWUHFRJQL]HGWKDWWKHUH             FRQVLGHULQJ WKDW SLHFH RI HYLGHQFH LQ WKH FRQWH[W RI
ZHUHWZRFRPSHWLQJWHVWVIRUFODLPVLQWKHFRPPHUFLDO            &KULVWLDQjVYHUVLRQRIWKHHYHQWVWKHGLVWULFWFRXUWHUUHG
HVWDEOLVKPHQWFRQWH[W&ULWLTXLQJWKHWKUHHSDUWWHVWXWLOL]HG
E\WKHGLVWULFWFRXUWLQWKHLQVWDQWFDVHWKH&DOOZRRGFRXUW             7KHRWKHUDOOHJHGO\QHJDWLYHIDFWUHOLHGXSRQKHDYLO\E\WKH
QRWHG                                                                  GLVWULFWFRXUWZDVWKDW&KULVWLDQWHVWLILHGWKDWKHUDFWLRQVDV
                                                                        RSSRVHGWRKHUUDFHJDYH0RQQRWFDXVHWREHOLHYHVKHZDV
  >7@KLV IRUPXODWLRQ HUURQHRXVO\ FROODSVHV WKH RYHUDOO             VKRSOLIWLQJ7KHIROORZLQJWHVWLPRQ\ZDVHOLFLWHGE\:DO
  HOHPHQWVRIDVHFWLRQFODLPZLWKWKHHOHPHQWVRID               0DUWjVDWWRUQH\IURP&KULVWLDQRQFURVVH[DPLQDWLRQ
  SULPD IDFLH FDVH  ,Q SDUWLFXODU WR WKH H[WHQW WKDW DQ\
  IRUPXODWLRQ RI WKH HOHPHQWV RI D SULPD IDFLH FDVH               4 ,VQjWLWWUXHLWZDV\RXUSHUFHSWLRQLVZKDWPDGHKHU
  LQFOXGHV D UHTXLUHPHQW WKDW WKH SODLQWLII VKRZ WKDW WKH            >0RQQRW@MRJXSWR\RXZDVWKHIDFWWKDW\RXRSHQHG
  GHIHQGDQWKDGDQLQWHQWWRGLVFULPLQDWHRQWKHEDVLVRI                    DQGFORVHG\RXUSXUVH"
  UDFHVXFKDIRUPXODWLRQLVLQDSSURSULDWHEHFDXVHWKHYHU\
  SRLQWRIWKHSULPDIDFLHFDVHUHTXLUHPHQWLVWRSURYLGHD               $ <HV
        &KULVWLDQHWDOY:DO0DUW6WRUHV,QF 1R                       1R &KULVWLDQHWDOY:DO0DUW6WRUHV,QF               

UHDVRQDEOH     LQIHUHQFHV UHJDUGLQJ 0RQQRWjV GLVFULPLQDWRU\                          EDVLV IRU LQIHUULQJ WKH H[LVWHQFH RI D GLVFULPLQDWRU\
DFWV   0RQQRW ZDWFKHG DQG IROORZHG &KULVWLDQ EXW QRW                        PRWLYH
(GHQVGHVSLWHWKHIDFWWKDW&KULVWLDQKDGDVKRSSLQJFDUWZKLOH
(GHQV ZDV VKRSSLQJ ZLWKRXW D FDUW  0RQQRW RIIHUHG                           ,GDW,QFUDIWLQJLWVRZQSULPDIDFLHFDVHWKH&DOOZRRG
&KULVWLDQ DVVLVWDQFH VL[ WLPHV EXW QHYHU RIIHUHG WR DVVLVW                    FRXUWDWWHPSWHGWR DFFRXQWIRUWKHGLIIHUHQFHVEHWZHHQWKH
(GHQV0RQQRWFRPPHQFHGWRZDWFK(GHQVDIWHUUHDOL]LQJ                              FRPPHUFLDO HVWDEOLVKPHQW DQG WKH HPSOR\PHQW FRQWH[WV
WKDWWKHWZRZRPHQZHUHWRJHWKHU0RQQRWUHSRUWHGWRKHU                            6SHDNLQJWRWKHSUREOHPRIGHYHORSLQJDmVLPLODUO\VLWXDWHGl
PDQDJHUWKDWVKHZLWQHVVHGDVKRSOLIWLQJLQFLGHQWZKLFKGLG                           SURQJIRUDFRPPHUFLDOHVWDEOLVKPHQWWHVWWKDWFRXUWQRWHG
QRWRFFXUDQG0RQQRWGLUHFWHGWKHSROLFHWRUHPRYH(GHQV                           WKDWHPSOR\PHQWGHFLVLRQVDUHmUHJXODUL]HGDQGSHULRGLFDUH
IURPWKHVWRUHEHFDXVHVKHZDVZLWK&KULVWLDQ7DNHQDORQH                           PDGHE\VXSHUYLVRU\SHUVRQQHODQGE\WKHLUYHU\QDWXUHDUH
WKHVHLQIHUHQFHVDUJXDEO\FUHDWHWKHSUHVXPSWLRQRIDQLQWHQW                          DOPRVWDOZD\VGRFXPHQWHG>7KH\@OHDYHEHKLQGDSDSHU
WR GLVFULPLQDWHLQWKDWWKHVHDFWVmDUHPRUHOLNHO\WKDQQRW                          WUDLORIHYLGHQFHZKLFKWRDJUHDWHURUOHVVHUH[WHQWZLOOEH
EDVHG RQ WKH FRQVLGHUDWLRQ RI LPSHUPLVVLEOH IDFWRUVl                            DYDLODEOHGXULQJGLVFRYHU\RURWKHUZLVHWRDGLVFULPLQDWLRQ
%XUGLQH86DW2WKHUIDFWVEURXJKWRXWDWWULDODOVR                       YLFWLPl,GDW7KHUHIRUHLQWKHHPSOR\PHQWFRQWH[WLW
VXSSRUWWKHLQIHUHQFHRIGLVFULPLQDWLRQ0RQQRWWHVWLILHGWKDW                       PDNHV VHQVH WR LQVLVW XSRQ HYLGHQFH RI mVLPLODUO\ VLWXDWHG
HYHQ SULRU WR WKH ]LSSHU LQFLGHQW VKH ZDV VXVSLFLRXV RI                      DSSOLFDQWV RU HPSOR\HHVl  ,G  ,Q WKH FRPPHUFLDO
&KULVWLDQDQG(GHQVEHFDXVHWKH\KDGVSHQWDORQJWLPHLQWKH                          HVWDEOLVKPHQW FRQWH[W RQ WKH RWKHU KDQG WKH FOLHQWHOH LV
WR\GHSDUWPHQWDQGWKH\GLGQRWDSSHDUWRKDYHPDQ\LWHPVLQ                           mODUJHO\ LWLQHUDQWl DQG WKH WDVN RI SURGXFLQJ VLPLODUO\
WKHLU FDUW  s$ DW   &KULVWLDQ RQ WKH RWKHU KDQG KDG               VLWXDWHGSHUVRQVRXWVLGHWKHSURWHFWHGJURXS LVPXFKPRUH
WHVWLILHGWKDWKHUFDUWZDVKDOIIXOODWWKHPRPHQWZKHQWKH                           GLIILFXOW,G
]LSSHU LQFLGHQW RFFXUUHG  6KH VWDWHG WKDW VKH KDG LQ LW D
%DWPDQ VSDFH VKLS D ODUJH EDE\ VWUROOHU FRORULQJ ERRNV                        :LWK WKHVH GLVWLQFWLRQV LQ PLQG WKH &DOOZRRG FRXUW
ERRNVFUD\RQVDQGDFWLRQILJXUHVs$DW&KULVWLDQjV                         GHWHUPLQHG WKDW D SODLQWLII PXVW VKRZ WKH IROORZLQJ IRU D
WHVWLPRQ\ZKHQWDNHQLQWKHOLJKWPRVWIDYRUDEOHWRKHUFDVWV                        SULPD IDFLH FDVH RI GLVFULPLQDWLRQ LQ D FRPPHUFLDO
GRXEWXSRQ0RQQRWjVDVVHUWLRQWKDW&KULVWLDQZDVEHKDYLQJ                              HVWDEOLVKPHQW
XQXVXDOO\RUVXVSLFLRXVO\SULRUWRWKH]LSSHULQFLGHQW
                                                                                          VKHLVDPHPEHURIDSURWHFWHGFODVV
                                                                                          VKHPDGHKHUVHOIDYDLODEOHWRUHFHLYHDQGSD\
                                                                                             IRU VHUYLFHV RUGLQDULO\ SURYLGHG E\ WKH
      
       $OWKRXJK    &KULVWLDQ DWWHPSWHG WR IUDPH 0RQQRWjV YLRODWLRQ RI :DO                   GHIHQGDQWWRDOOPHPEHUVRIWKHSXEOLFLQWKH
0DUWjV SROLF\ IRU VKRSOLIWHUV DV SURRI RI 0RQQRWjV LQWHQW WR GLVFULPLQDWH                   PDQQHULQZKLFKWKH\DUHRUGLQDULO\SURYLGHG
&KULVWLDQjV HYLGHQFH n WKDW 0RQQRW IDLOHG WR NHHS KHU H\HV RQ &KULVWLDQ
                                                                                             DQG
DW DOO WLPHV DQG WKDW WKH SROLFH ZHUH VXPPRQHG EHIRUH &KULVWLDQ UHDFKHG
                                                                                          VKHGLGQRWHQMR\WKHSULYLOHJHVDQGEHQHILWVRI
                                                                                             WKH FRQWUDFWHG IRU H[SHULHQFH XQGHU IDFWXDO
WKH FDVK UHJLVWHU n DUH RXWZHLJKHG E\ 0RQQRWjV XQGLVSXWHG WHVWLPRQ\
WKDW VKH ZDV XQDZDUH RI :DO0DUWjV SROLF\ ZLWK UHJDUG WR VKRSOLIWHUV WKDW
VKH EHOLHYHG LW ZDV KHU UHVSRQVLELOLW\ WR WHOO KHU PDQDJHU DERXW VXVSLFLRXV                  FLUFXPVWDQFHV ZKLFK UDWLRQDOO\ VXSSRUW DQ
DFWLYLW\ DQG WKDW VKH FDOOHG WKH SROLFH EHFDXVH KHU PDQDJHU RUGHUHG KHU                     LQIHUHQFHRIXQODZIXOGLVFULPLQDWLRQLQWKDW
WR   GR   VR   0RQQRW      FDQQRW    KDYH   GHOLEHUDWHO\   YLRODWHG   :DO0DUWjV
VKRSOLIWLQJ SROLF\ LQ DQ HIIRUW WR H[FOXGH $IULFDQ$PHULFDQ VKRSSHUV LI
VKH ZHUH XQDZDUH RI WKH SROLF\ 7KHUHIRUH ZH FRQFOXGH WKDW WKLV DVSHFW
                                                                                           
RI   &KULVWLDQjV   WKHRU\   RI   LQWHQWLRQDO   GLVFULPLQDWLRQ   LV   LQDGHTXDWH   WR        2I FRXUVH DIWHU HVWDEOLVKLQJ D SULPD IDFLH FDVH WKH GLVWULFW FRXUW
HVWDEOLVK D SULPD IDFLH FDVH        :H ZLOO KRZHYHU FRQVLGHU WKH SUREDWLYH          QRWHG WKDW WKH RWKHU DVSHFWV RI WKH 0F'RQQHOO 'RXJODV%XUGLQH EXUGHQ
YDOXH RI WKH YDULRXV DFWV ZKLFK ZHUH DOOHJHG DW WULDO                                 VKLIWLQJ IUDPHZRUN PXVW EH FRQVLGHUHG
       &KULVWLDQHWDOY:DO0DUW6WRUHV,QF 1R              1R &KULVWLDQHWDOY:DO0DUW6WRUHV,QF             

          D VKH ZDV GHSULYHG RI VHUYLFHV ZKLOH                        RQWKHDVVXPSWLRQWKDW&KULVWLDQZDVRIIHUHGDVVLVWDQFHE\
              VLPLODUO\VLWXDWHGSHUVRQVRXWVLGHWKH                         0RQQRWVL[WLPHVGXULQJWKHKRXUDQGWKUHHTXDUWHUVWKDWVKH
              SURWHFWHG FODVV ZHUH QRW GHSULYHG RI                      ZDV LQ WKH VWRUH WKDW &KULVWLDQ GLG QRW SODFH D WR\ LQ KHU
              WKRVHVHUYLFHVDQGRU                                         SXUVHDQGWKDWVKHKDGDVKRSSLQJFDUWZLWKVHYHUDOWR\VLQLW
          E VKH UHFHLYHG VHUYLFHV LQ D PDUNHGO\                       ZKHQVKHZDVDVNHGWROHDYHWKHVWRUH
              KRVWLOHPDQQHUDQGLQDPDQQHUZKLFK
              D UHDVRQDEOH SHUVRQ ZRXOG ILQG                                :KHQZHDQDO\]H&KULVWLDQjVFDVHXQGHURXUSULPDIDFLH
              REMHFWLYHO\XQUHDVRQDEOH                                      WHVW ZH HDVLO\ FRQFOXGH WKDW &KULVWLDQ PHHWV WKH ILUVW WZR
                                                                             SURQJVRIWKHWHVW)LUVWDVDQ$IULFDQ$PHULFDQVKHLVD
,GDW                                                                 PHPEHU RI D SURWHFWHG FODVV  6HFRQG ZH KDYH QR WURXEOH
                                                                             FRQFOXGLQJWKDW&KULVWLDQPDGHKHUVHOIDYDLODEOHWRHQWHULQWR
   $FFRUGLQJWR&DOOZRRGVXESDUWVDQGDUHFRQVLVWHQW                DFRQWUDFWXDOUHODWLRQVKLSIRUVHUYLFHVRUGLQDULO\SURYLGHGE\
ZLWKWKHVWDQGDUGSULPDIDFLHHOHPHQWVDVDGRSWHGE\RWKHU                   :DO0DUW WKH UHFRUG UHIOHFWV WKDW VKH KDG VHOHFWHG
FRXUWV6XESDUWDLVGHVLJQHGWRLQYRNHWKHmVLPLODUO\                 PHUFKDQGLVH WR SXUFKDVH KDG WKH PHDQV WR FRPSOHWH WKH
VLWXDWHGlWHVWEXWLVZULWWHQZLWKWKHXQGHUVWDQGLQJWKDWmWKH              WUDQVDFWLRQDQGZRXOGLQIDFWKDYHFRPSOHWHGKHUSXUFKDVH
FRPSDULVRQZLOOQHYHULQYROYHSUHFLVHO\WKHVDPHVHWRI                KDGVKHQRWEHHQDVNHGWROHDYHWKHVWRUH7KLVFDVHLQYROYHV
>FRQGXFW@RFFXUULQJRYHUWKHVDPHSHULRGRIWLPHDQGXQGHU                   QRQHRIWKHGLIILFXOWLHVWKDWRWKHUFRXUWVKDYHHQFRXQWHUHGLQ
WKHVDPHVHWVRIFLUFXPVWDQFHVl,GDWLQWHUQDOTXRWDWLRQ             GHWHUPLQLQJ ZKHWKHU WKHUH ZDV D YDOLG FRQWUDFW LQWHUHVW DW
RPLWWHG  0RUHRYHU WKH SKUDVH mGHSULYHG RI VHUYLFHVl LQ            VWDNH&I%DJOH\Y$PHULWHFK&RUS)GWK
VXESDUW D LV ZULWWHQ WR HQFRPSDVV PRUH WKDQ MXVW DQ            &LUKROGLQJWKDWDVVLVWDQWPDQDJHUjVVWDWHPHQWm,ZLOO
RXWULJKWGHQLDORIVHUYLFHVm%\HQFRPSDVVLQJWKHGHSULYDWLRQ               QRWVHUYH>\RX@lSOXVKHUXVHRIWKHPLGGOHILQJHUGLUHFWHG
RIVHUYLFHVVXESDUWDSURWHFWVDJDLQVWGLVFULPLQDWRU\           WRZDUGSODLQWLIIGLGQRWHVWDEOLVKFODLPIRUUHIXVDORI
FRQGXFWE\UHWDLOHUVZKLFKZKLOHQRWQHFHVVDULO\FRQVWLWXWLQJ               VHUYLFHEHFDXVHSODLQWLIIFRXOGKDYHWULHGWRUHFHLYHVHUYLFH
DGHQLDORIVHUYLFHVQHYHUWKHOHVVLPSLQJHVRQWKHµEHQHILWV                IURPRWKHUVDOHVSHRSOHLQVWRUH0RUULV)GDW
SULYLOHJHV WHUPV DQG FRQGLWLRQV RI WKH FRQWUDFWXDO                   QRWLQJWKDWmFODLPIRULQWHUIHUHQFHZLWKWKHULJKWWRPDNHDQG
UHODWLRQVKLSjl,GFLWDWLRQRPLWWHG                                     HQIRUFHDFRQWUDFWPXVWDOOHJHWKHDFWXDOORVVRIDFRQWUDFW
                                                                             LQWHUHVW QRW PHUHO\ WKH SRVVLEOH ORVV RI IXWXUH FRQWUDFW
   6XESDUW E LV ZULWWHQ DV DQ DOWHUQDWLYH WR D WR         RSSRUWXQLWLHVl DQG UHMHFWLQJ SODLQWLIIVj FODLP EHFDXVH WKH\
DFFRXQW IRU VLWXDWLRQV LQ WKH FRPPHUFLDO HVWDEOLVKPHQW                 IDLOHGWRGHPRQVWUDWHWKDWWKH\ZRXOGKDYHPDGHDSXUFKDVH
FRQWH[W LQ ZKLFK D SODLQWLII FDQQRW LGHQWLI\ RWKHU VLPLODUO\         KDGWKH\QRWEHHQDVNHGWROHDYHWKHVWRUH7KHUHIRUHRXU
VLWXDWHG SHUVRQV  6HH LG DW   8QGHU WKLV VXESDUW D         DQDO\VLVZLOOIRFXVRQWKHWKLUGSDUWRIRXUSULPDIDFLHWHVW
UHWDLOHUjV mPDUNHGO\ KRVWLOHl FRQGXFW PD\ mJLYH ULVH WR D            ZKHWKHU&KULVWLDQDOOHJHGVXIILFLHQWIDFWVWRFUHDWHDPDWHULDO
UDWLRQDO LQIHUHQFH RI GLVFULPLQDWLRQ VXIILFLHQW WR VXSSRUW D          LVVXHRIIDFWWKDWVKHZDVGHSULYHGRIVHUYLFHVZKLOHVLPLODUO\
SULPD IDFLH FDVHl ZLWKRXW DQ\ HYLGHQFH RI KRZ VLPLODUO\              VLWXDWHGSHUVRQVRXWVLGHWKHSURWHFWHGFODVVZHUHQRWDQGRU
VLWXDWHGSHUVRQVZHUHWUHDWHG,G)DFWRUVUHOHYDQWWRVXESDUW             WKDWVKHUHFHLYHGVHUYLFHVLQDPDUNHGO\KRVWLOHPDQQHUDQGLQ
EjVmPDUNHGO\KRVWLOHlFRPSRQHQWLQFOXGHZKHWKHUWKH                    DPDQQHUZKLFKDUHDVRQDEOHSHUVRQZRXOGILQGREMHFWLYHO\
                                                                             GLVFULPLQDWRU\
                                                                              +DYLQJWKRURXJKO\UHYLHZHGWKHWULDOWUDQVFULSWVZHEHOLHYH
     $W OHDVW RQH RWKHU GLVWULFW FRXUW KDV DGRSWHG WKH WHVW SXW IRUZDUG LQ
&DOOZRRG    6HH /L]DUGR Y 'HQQ\jV ,QF   1R &9 )s6 *.'         WKDW WKH WHVWLPRQ\ FRXOG KDYH SURGXFHG WKH IROORZLQJ
 :/  
 1'1< 
    &KULVWLDQHWDOY:DO0DUW6WRUHV,QF 1R             1R &KULVWLDQHWDOY:DO0DUW6WRUHV,QF                  

DWWHPSWHG WR FUHDWH D SUHVXPSWLRQ RI LQWHQWLRQDO                   FRQGXFW mLV  VR SURIRXQGO\ FRQWUDU\ WR WKH PDQLIHVW
GLVFULPLQDWLRQ E\ SURYLQJ WKDW 0RQQRWjV DQG &ODUNjV                ILQDQFLDOLQWHUHVWVRIWKHPHUFKDQWDQGRUKHUHPSOR\HHV
LQWHUDFWLRQ ZLWK &KULVWLDQ GHYLDWHG IURP :DO0DUWjV                 VRIDURXWVLGHRIZLGHO\DFFHSWHGEXVLQHVVQRUPVDQGVR
HVWDEOLVKHGSURFHGXUHVUHJDUGLQJVKRSOLIWHUV$FFRUGLQJWR              DUELWUDU\ RQ LWV IDFH WKDW WKH FRQGXFW VXSSRUWV D UDWLRQDO
SODLQWLIIVjWKHRU\&ODUNLVOLDEOHIRU0RQQRWjVEHKDYLRUXQGHU          LQIHUHQFHRIGLVFULPLQDWLRQl,G
WKHGRFWULQHRIUHVSRQGHDWVXSHULRU:DO0DUWFRXQWHUVWKDW
&KULVWLDQ KDV QRW SURYLGHG DQ\ HYLGHQFH RI GLVSDUDWH                 :HEHOLHYHWKDWZKLOHWKHWKUHHSDUWWHVWHPSOR\HGE\WKH
WUHDWPHQWDVFRPSDUHGZLWKRWKHUVLPLODUO\VLWXDWHGVKRSSHUV            GLVWULFW FRXUW LQ WKH LQVWDQW FDVH DGHTXDWHO\ UHSUHVHQWV WKH
                                                                         SODLQWLIIjVXOWLPDWHEXUGHQRISURRILQDDFWLRQLWLV
  7KH GLVWULFW FRXUW HYDOXDWLQJ &KULVWLDQjV HYLGHQFH WR           LQDSSURSULDWH IRU XVH DV D SULPD IDFLH VWDQGDUG  $OWKRXJK
GHWHUPLQHZKHWKHUmWKHUHLVDQ\OHJDOO\VXIILFLHQWHYLGHQWLDU\           SODLQWLIIVDGYRFDWHLWVXVHZHEHOLHYHWKDWLWSURSDJDWHVWKH
EDVLVIRUDUHDVRQDEOHMXU\lWRILQGLQWHQWLRQDOGLVFULPLQDWLRQ         IDOVHQRWLRQWKDWDSODLQWLIIPXVWSURYLGHGLUHFWHYLGHQFHRI
GHWHUPLQHGWKDW&KULVWLDQFRXOGQRWHVWDEOLVKDFODLP             WKH GHIHQGDQWjV mLQWHQW WR GLVFULPLQDWHl DV SDUW RI WKH ILUVW
EDVHGHLWKHURQ0RQQRWjVRU&ODUNjVDFWLRQVs$DW7KH          VWDJH RI WKH 0F'RQQHOO 'RXJODV%XUGLQH EXUGHQVKLIWLQJ
GLVWULFW FRXUW ILUVW VWDWHG WKDW m>W@KH LVVXH LV ZKHWKHU 5RVH   IUDPHZRUN%HFDXVHWKHLPSOHPHQWDWLRQRIWKHWKUHHSDUWWHVW
0RQQRW UHDVRQDEO\ SHUFHLYHG D VKRSOLIWLQJ VLWXDWLRQ DQG            ZRXOGWXUQWKHSXUSRVHRIWKHSULPDIDFLHFDVHRQLWVKHDGZH
WKHUHIRUH DFWHG RQ WKDW SHUFHSWLRQ DQG QRW RQ WKH EDVLV RI     UHMHFWWKDWWHVW
UDFHls$DW$FFRUGLQJWRWKHGLVWULFWFRXUWWKHUHZDV
QRHYLGHQFHmWKDW5RVH0RQQRWWUHDWHGWKLVEODFNZRPDQ/RLV                :H DOVR FDQQRW DGRSW WKH IRXUSDUW WHVW SXW IRUWK E\ WKH
&KULVWLDQDQ\GLIIHUHQWO\IURPWKHPDQQHULQZKLFKVKHZRXOG             GHIHQGDQW LQ WKLV FDVH EHFDXVH LW QDUURZV WKH PHWKRGV
KDYH WUHDWHG D ZKLWH SHUVRQl RU WKDW &KULVWLDQ ZDV mXQGHU       DYDLODEOHWRDSODLQWLIIWRSURYHLQWHQWLRQDOGLVFULPLQDWLRQ
FRQVWDQW VXUYHLOODQFHl  s$ DW   7KH GLVWULFW FRXUW    %\ KROGLQJ D SODLQWLII WR WKH UHTXLUHPHQW WKDW VKH SURGXFH
FRQFOXGHGWKDWmWKHUHLVQRHYLGHQFHWKDW>&KULVWLDQ@GLGQRW            VLPLODUO\VLWXDWHGSHUVRQVZKRZHUHQRWGLVFULPLQDWHGDJDLQVW
KDYHWKHVDPHULJKWWRPDNHDQGHQIRUFHDFRQWUDFWEHFDXVH               ZHZRXOGEHIRUHFORVLQJRWKHUPHWKRGVRISURYLQJLQWHQWLRQDO
VKHZDVDOOHJHGO\EHLQJZDWFKHGls$DW7KHFRXUW               GLVFULPLQDWLRQ7KLVWHVWLVDOVRSDUWLFXODUO\RQHURXVEHFDXVH
DOVRVWDWHGWKDW&KULVWLDQZDVQRWGLVFULPLQDWHGDJDLQVWZKHQ            RI WKH GLIILFXOW\ LQ UHSOLFDWLQJ D SDUWLFXODU VKRSSHUjV
VKHZDVDVNHGWROHDYHWKHVWRUHEHFDXVHm>W@KHHYLGHQFHLV              H[SHULHQFH  7KH FKDOOHQJH RI ORFDWLQJ VLPLODUO\ VLWXDWHG
XQFRQWURYHUWHGWKDW5LFKDUG&ODUNLVWKHRQHZKRPDGHWKH                SHUVRQVLVKLJKOLJKWHGE\WKHFDVH6LQJKY:DO0DUW6WRUHV
GHFLVLRQlWRDVNWKHSODLQWLIIVWROHDYHDQGKHZDVXQDZDUHRI           ,QF 1R &LY$   :/  
 (' 3D
&KULVWLDQjVUDFHs$DW                                          sXQH   WR ZKLFK :DO0DUW FLWHV DSSURYLQJO\  ,Q
                                                                         6LQJK WKH GLVWULFW FRXUW UHMHFWHG D SODLQWLIIjV   FODLP
  :H PXVW HQJDJH LQ D GH QRYR UHYLHZ RI DOO WKH UHFRUG        ZKHUHWKHSODLQWLIIFRXOGQRWVKRZKHZDVVLPLODUO\VLWXDWHG
HYLGHQFHWRGHWHUPLQHZKHWKHU&KULVWLDQFRXOGHVWDEOLVKE\              LQ DOO UHVSHFWV WR RWKHU FXVWRPHUV ZKR ZHUH SURYLGHG D
D SUHSRQGHUDQFH RI WKH HYLGHQFH D SUHVXPSWLRQ RI
GLVFULPLQDWLRQ WKURXJK FLUFXPVWDQWLDO HYLGHQFH  :H PXVW
UHYHUVHWKHGLVWULFWFRXUWLIWKHSODLQWLIIVSUHVHQWHGVXIILFLHQW            
HYLGHQFH WR UDLVH D PDWHULDO LVVXH RI IDFW IRU WKH MXU\             7KH GHIHQGDQWjV IRXUSDUW WHVW ZRXOG UHTXLUH D SODLQWLII WR SURYH 
                                                                         VKH LV D PHPEHU RI D SURWHFWHG FODVV  VKH DWWHPSWHG WR PDNH HQIRUFH
&RQVWUXLQJDOOGLVSXWHGIDFWVLQIDYRURIWKHSODLQWLIIVDVZH          RU VHFXUH WKH SHUIRUPDQFH RI D FRQWUDFW  VKH ZDV GHQLHG WKH ULJKW WR GR
PXVWGRZKHQUHYLHZLQJDMXGJPHQWJUDQWHGDVDPDWWHURI                 VR DQG  WKH RSSRUWXQLW\ WR PDNH HQIRUFH RU VHFXUH WKH SHUIRUPDQFH RI
ODZDQGJUDQWLQJWKHPDOOUHDVRQDEOHLQIHUHQFHVZHSURFHHG             D FRQWUDFW IRU OLNH JRRGV RU VHUYLFHV UHPDLQHG DYDLODEOH WR VLPLODUO\
                                                                         VLWXDWHG SHUVRQV RXWVLGH RI WKH SURWHFWHG FODVV
    &KULVWLDQHWDOY:DO0DUW6WRUHV,QF 1R             1R &KULVWLDQHWDOY:DO0DUW6WRUHV,QF          

GLIIHUHQW OHYHO RI VHUYLFH  $FFRUGLQJ WR WKH GLVWULFW FRXUW   FODLPZKHQVLPLODUO\VLWXDWHGSHUVRQVDUHQRWDYDLODEOHIRU
SODLQWLIIjVFODLPIDLOHGEHFDXVHKHFRXOGQRWSRLQWWRDQ\RWKHU         FRPSDULVRQ DV ZLOO RIWHQ EH WKH FDVH LQ WKH FRPPHUFLDO
FXVWRPHU ZKRmKDGDWWHPSWHGWRUHWXUQDQRXWRIZDUUDQW\                HVWDEOLVKPHQWFRQWH[W
DSSOLDQFH SXUFKDVHG DQRWKHU LGHQWLFDO DSSOLDQFH DQG WKHQ
DJDLQ DWWHPSWHGWRPDNHDUHWXUQWKHQH[WGD\DWWKHVDPH                  6HFRQG WKH ODQJXDJH LQ VXESDUW D ZKLFK PDNHV
VWRUH LQ WKH SUHVHQFH RI DQ HPSOR\HH ZKR ZLWQHVVHG WKH          DFWLRQDEOH WKH GHSULYDWLRQ RI VHUYLFH DV RSSRVHG WR DQ
HYHQWVRIWKHSULRUGD\DQGKDGEHHQDOHUWHGWRDFRQYHUVDWLRQ           RXWULJKWUHIXVDORIVHUYLFHEHWWHUFRPSUHKHQGVWKHUHDOLWLHVRI
LQZKLFKWKHFXVWRPHURUKLVFRPSDQLRQGLVFXVVHGUHSOLFDWLQJ             FRPPHUFLDO HVWDEOLVKPHQW FDVHV LQ ZKLFK DQ DJJULHYHG
WKHSXUFKDVHDQGXVLQJWKHQHZUHFHLSWWRGRDVZDSl6LQJK            SODLQWLIIPD\KDYHEHHQDVNHGWROHDYHWKHSODFHRIEXVLQHVV
 :/  
  %\ YLUWXH RI LWV LQIOH[LELOLW\ DQG        SULRUWRFRPSOHWLQJKHUSXUFKDVHUHIXVHGVHUYLFHZLWKLQWKH
VHYHULW\WKH6LQJKFRXUWjVmVLPLODUO\VLWXDWHGlWHVWYLUWXDOO\          HVWDEOLVKPHQWRUUHIXVHGRXWULJKWDFFHVVWRWKHHVWDEOLVKPHQW
IRUHFORVHV WKH SRVVLELOLW\ WKDW D SODLQWLII FRXOG HYHU            ,WLVWKXVLQKDUPRQ\ZLWKWKHSURPLVHRIEZKLFK
VXFFHVVIXOO\UDLVHDGLVSDUDWHWUHDWPHQWFODLPLQWKH             JXDUDQWLHV DOO SHUVRQV HTXDO ULJKWV LQ mWKH PDNLQJ
FRPPHUFLDOHVWDEOLVKPHQWFRQWH[W                                        SHUIRUPDQFHPRGLILFDWLRQDQGWHUPLQDWLRQRIFRQWUDFWVDQG
                                                                         WKHHQMR\PHQWRIDOOEHQHILWVSULYLOHJHVWHUPVDQGFRQGLWLRQV
  8SRQFRQVLGHUDWLRQZHFRQFOXGHWKDWWKH&DOOZRRGFRXUWjV              RIWKHFRQWUDFWXDOUHODWLRQVKLSl
WKUHHSDUW SULPD IDFLH WHVW LV WKH PRVW XVHIXO WR FRXUWV
HYDOXDWLQJFODLPVRIUDFHGLVFULPLQDWLRQLQWKHFRPPHUFLDO                  )LQDOO\WKLVEURDGHUSURWHFWLRQDOVRDFFRUGVZLWKRXUFLUFXLW
HVWDEOLVKPHQWFRQWH[WDQGZHWKHUHIRUHDGRSWLWDVRXURZQ              SUHFHGHQW,Q:DWVRQY)UDWHUQDO2UGHURI(DJOHV)G
,QDFRPPHUFLDOHVWDEOLVKPHQWFDVHDSODLQWLIIPXVW              WK&LUWKLVFRXUWKHOGWKDWLQRUGHUWRVWDWH
SURYH                                                                   DFODLPIRUGLVFULPLQDWLRQXQGHUDSODLQWLIIQHHGQRW
                                                                         DFWXDOO\EHUHIXVHGVHUYLFHE\DSULYDWHFOXEEHFDXVHVXFKD
   SODLQWLIILVDPHPEHURIDSURWHFWHGFODVV                        VWDQGDUGZRXOGDOORZmFRPPHUFLDOHVWDEOLVKPHQWV>WR@DYRLG
   SODLQWLII VRXJKW WR PDNH RU HQIRUFH D FRQWUDFW IRU         OLDELOLW\ PHUHO\ E\ UHIXVLQJ PLQRULWLHV HQWUDQFH WR WKH
      VHUYLFHVRUGLQDULO\SURYLGHGE\WKHGHIHQGDQWDQG                 HVWDEOLVKPHQW EHIRUH WKH\ KDG WKH FKDQFH WR RUGHUl  ,G
   SODLQWLIIZDVGHQLHGWKHULJKWWRHQWHULQWRRUHQMR\              8QGHU:DWVRQWKHSODLQWLIIQHHGRQO\VKRZWKDWVKHLQWHQGHG
      WKH EHQHILWV RU SULYLOHJHV RI WKH FRQWUDFWXDO                WRPDNHDSXUFKDVHDQGZDVDVNHGWROHDYHWKHHVWDEOLVKPHQW
      UHODWLRQVKLS LQ WKDW D SODLQWLII ZDV GHSULYHG RI          LQRUGHUWRSUHYHQWKHUIURPPDNLQJWKHSXUFKDVHRQDFFRXQW
      VHUYLFHVZKLOHVLPLODUO\VLWXDWHGSHUVRQVRXWVLGHWKH              RI KHU UDFH LQ RUGHU WR VDWLVI\ WKH mPDNH DQG HQIRUFH
      SURWHFWHGFODVVZHUHQRWDQGRUESODLQWLIIUHFHLYHG             FRQWUDFWVlFODXVHRI
      VHUYLFHV LQ D PDUNHGO\ KRVWLOH PDQQHU DQG LQ D
      PDQQHU ZKLFK D UHDVRQDEOH SHUVRQ ZRXOG ILQG                  &&KULVWLDQjV&ODLP
      REMHFWLYHO\GLVFULPLQDWRU\
                                                                           +DYLQJGHWHUPLQHGWKHDSSURSULDWHWHVWWRDSSO\ZHPXVW
   7KHWHVWjVDGYDQWDJHVDUHPDQ\)LUVWLWEHVWDFFRXQWVIRU          QRZHYDOXDWHSODLQWLIIVjFODLPVWRGHWHUPLQHZKHWKHUSODLQWLIIV
WKH GLIIHUHQFHV LQ FLUFXPVWDQFHV EHWZHHQ HPSOR\PHQW DQG            ZHUHLQWHQWLRQDOO\GLVFULPLQDWHGDJDLQVWGXULQJWKHPDNLQJRU
FRPPHUFLDOHVWDEOLVKPHQWFODLPV7KHWHVWRIIHUVWKHPRVW               HQIRUFHPHQW RI D FRQWUDFW ZLWK :DO0DUW  3ODLQWLIIV KDYH
WUDGLWLRQDO PHWKRG RI SURYLQJ GLVFULPLQDWLRQ QDPHO\ E\
GHPRQVWUDWLQJ GLVFULPLQDWRU\ WUHDWPHQW ZLWK UHVSHFW WR
VLPLODUO\VLWXDWHGSHUVRQV,WDOVRDOORZVDSODLQWLIIWRVWDWHD           
                                                                              $OWKRXJK  :DWVRQ     ZDV GHFLGHG EHIRUH WKH  DPHQGPHQWV WR
                                                                           WKLV SRUWLRQ RI LWV KROGLQJ LV VWLOO JRRG ODZ