Court Opinion

ID: 2969703
Source: CourtListenerOpinion
Date Created: 2015-09-22 15:55:26.370954+00
Date Added: 2024-06-11T15:02:07.183509
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

*$,/ 0,1*(5DV3HUVRQDO         ;
5HSUHVHQWDWLYHRIWKH(VWDWH      
RI0LFKDHO+RZDUG0LQJHU         
                                     1R
          3ODLQWLII$SSHOODQW    
                                   !
                                  
           Y                     
                                  
s26(3+ *5((1'LUHFWRU           
3XEOLF6DIHW\'HSDUWPHQW         
0XUUD\6WDWH8QLYHUVLW\          
                                  
'$9,' :,/621$VVRFLDWH           
'LUHFWRU+RXVLQJ0XUUD\         
6WDWH8QLYHUVLW\                 
       'HIHQGDQWV$SSHOOHHV 
                                  
                                 1
      $SSHDOIURPWKH8QLWHG6WDWHV'LVWULFW&RXUW
    IRUWKH:HVWHUQ'LVWULFWRI.HQWXFN\DW3DGXFDK
   1Rn7KRPDV%5XVVHOO'LVWULFWsXGJH
             $UJXHG6HSWHPEHU
         'HFLGHGDQG)LOHG)HEUXDU\

                           
        0LQJHUY*UHHQHWDO                      1R       1R                        0LQJHUY*UHHQHWDO      

    %HIRUH%2**6DQG68+5+(,15,&+&LUFXLWsXGJHV                    LPSOHPHQWDWLRQ RI D VHFXULW\ V\VWHP LV D GLVFUHWLRQDU\
               DQG$/'5,&+'LVWULFWsXGJH
                            IXQFWLRQ  7KH .HQWXFN\ 6XSUHPH &RXUW KDV GHILQHG D
                                                                        GLVFUHWLRQDU\ IXQFWLRQ DV ZKHQ mWKH SHUVRQ RU SHUVRQV
                       BBBBBBBBBBBBBBBBB                                H[HUFLVLQJ LW PD\ FKRRVH ZKLFK RI VHYHUDO FRXUVHV ZLOO EH
                                                                        IROORZHGl  0DORQH  6:G DW   *UHHQ H[HUFLVHG
                             &2816(/                                    MXGJPHQW LQ GHFLGLQJ KRZ EHVW WR LPSOHPHQW D VHFXULW\
                                                                        V\VWHP LQ +HVWHU +DOO  :KHQ D VWDWH HPSOR\HH RU RIILFLDO
$5*8('  sHQQLIHU s +DOO /RXLVYLOOH .HQWXFN\ IRU             H[HUFLVHVDGLVFUHWLRQDU\IXQFWLRQZLWKLQWKHVFRSHRIWKHLU
$SSHOODQWsRQDWKDQ)UHHG%5$'/(<	)5(('3DGXFDK                   DXWKRULW\ WKDW LQGLYLGXDO LV LPPXQH IURP OLDELOLW\ XQGHU
.HQWXFN\ IRU $SSHOOHH  21 %5,()  sHQQLIHU s +DOO          .HQWXFN\ ODZ  6HH LELG  6LQFH *UHHQ ZDV H[HUFLVLQJ D
/RXLVYLOOH .HQWXFN\ IRU $SSHOODQW  sRQDWKDQ )UHHG             GLVFUHWLRQDU\ IXQFWLRQ ZLWKLQ WKH VFRSH RI KLV DXWKRULW\ DV
%5$'/(< 	 )5((' 3DGXFDK .HQWXFN\ sRKQ 3 5DOO                068jV'LUHFWRURI3XEOLF6DIHW\KHLVHQWLWOHGWRLPPXQLW\
0855$<67$7(81,9(56,7<*(1(5$/&2816(/                               IURP 0LQJHUjV FODLP DOOHJLQJ WKDW KH ZDV QHJOLJHQW LQ WKH
0XUUD\.HQWXFN\IRU$SSHOOHHV                                        SHUIRUPDQFHRIKLVGXWLHV
                       BBBBBBBBBBBBBBBBB                                                                ,9
                           23,1,21                                         )RUWKHIRUHJRLQJUHDVRQVWKHMXGJPHQWRIWKHGLVWULFWFRXUW
                       BBBBBBBBBBBBBBBBB                                LV$)),50('LQSDUWDQG5(9(56('LQSDUW7KHGLVWULFW
                                                                        FRXUWjVGHFLVLRQJUDQWLQJGHIHQGDQWsRVHSK*UHHQjV)(' 5
     %2**6&LUFXLWsXGJH3ODLQWLIIDSSHOODQW*DLO0LQJHU           &,9 3 E PRWLRQ WR GLVPLVV LV $)),50('  7KH
DSSHDOVDGLVWULFWFRXUWGHFLVLRQJUDQWLQJWKH)(' 5 &,9 3          GLVWULFWFRXUWjVGHFLVLRQJUDQWLQJGHIHQGDQW'DYLG:LOVRQjV
EPRWLRQVRIGHIHQGDQWDSSHOOHHVsRVHSK*UHHQDQG               )(' 5 &,9 3 EPRWLRQWRGLVPLVVLV5(9(56('
'DYLG:LOVRQWRGLVPLVV0LQJHUjVZURQJIXOGHDWKGLYHUVLW\              7KH FDVH LV UHPDQGHG WR WKH GLVWULFW FRXUW IRU IXUWKHU
DFWLRQ  )RU WKH IROORZLQJ UHDVRQV ZH DIILUP LQ SDUW DQG     SURFHHGLQJVQRWLQFRQVLVWHQWZLWKWKLVRSLQLRQ
UHYHUVHLQSDUW
                                    ,
  *DLO0LQJHULVWKHPRWKHUDQGSHUVRQDOUHSUHVHQWDWLYHRI
WKH(VWDWHRI0LFKDHO+RZDUG0LQJHU,Q0LFKDHOD
VWXGHQW IURP 1LFHYLOOH )ORULGD HQUROOHG DW 0XUUD\ 6WDWH
8QLYHUVLW\ 068 LQ 0XUUD\ .HQWXFN\ DV D YRFDO
SHUIRUPDQFHPDMRU$OO068ILUVWDQGVHFRQG\HDUVWXGHQWV
DUHUHTXLUHGWROLYHLQRQFDPSXVGRUPLWRULHV0LFKDHOKDG
GRFXPHQWHGGLVDELOLWLHVLQFOXGLQJDWWHQWLRQGHILFLWGLVRUGHU
G\VOH[LDDQGSHUFHSWLRQVSDWLDOGLVRULHQWDWLRQ$FFRUGLQJWR

     
      7KH +RQRUDEOH $QQ $OGULFK 8QLWHG 6WDWHV 'LVWULFW sXGJH IRU WKH
1RUWKHUQ 'LVWULFW RI 2KLR VLWWLQJ E\ GHVLJQDWLRQ
    0LQJHUY*UHHQHWDO                       1R       1R                         0LQJHUY*UHHQHWDO        

                                &                                     0LQJHUjV FRPSODLQW 0LFKDHO DQG KLV SDUHQWV VRXJKW DQ
                                                                      H[HPSWLRQ IURP WKH GRUPLWRU\ UHVLGHQF\ UHTXLUHPHQWV
   ,QFRQWUDVWWRKHUFODLPDJDLQVW:LOVRQ0LQJHUGRHVQRW           EHFDXVH RI 0LFKDHOjV GLVDELOLWLHV EXW WKHLU UHTXHVWV ZHUH
DOOHJH WKDW *UHHQ 068jV 'LUHFWRU RI 3XEOLF 6DIHW\            GHQLHG,QODWHDWWKHEHJLQQLQJRI0LFKDHOjVVHFRQG
FRPPLWWHGDQLQWHQWLRQDOWRUW2QDSSHDOKRZHYHU0LQJHU            \HDUDW0680LFKDHOPRYHGLQWR5RRPLQ+HVWHU+DOO
DUJXHVWKDW*UHHQDFWHGRXWVLGHWKHVFRSHRIKLVDXWKRULW\$V
D UHVXOW 0LQJHU FRQWHQGV WKDW *UHHQ LV QRW LPPXQH IURP        (DUO\RQWKHPRUQLQJRI6HSWHPEHUDILUHVWDUWHG
OLDELOLW\ VLQFH XQGHU .HQWXFN\ ODZ VWDWH RIILFHUV RU         RQ0LFKDHOjVIORRULQ+HVWHU+DOO$FFRUGLQJWR0LQJHUjV
HPSOR\HHV FDQQRW DVVHUW LPPXQLW\ ZKHQ D FODLP DOOHJHV          FRPSODLQWLQYHVWLJDWRUVVXVSHFWHGDUVRQ0LQJHUjVFRPSODLQW
mDFWLRQRXWVLGHWKHVFRSHRIDXWKRULW\l0DORQH6:G          DOVRVWDWHVWKDWEHWZHHQ6HSWHPEHUDQG068UHFHLYHG
DW0LQJHUFODLPVWKDW*UHHQIDLOHGWRFRPSO\ZLWKKLV           IDOVHUHSRUWVRIILUHVRQ0LFKDHOjVIORRU2Q6HSWHPEHU
OHJDOGXWLHVDVGLUHFWRURISXEOLFVDIHW\E\QRWUHSRUWLQJWKH        *DLO0LQJHUFDOOHGWKH068KRXVLQJRIILFHWRLQTXLUH
VXVSHFWHGDUVRQRI6HSWHPEHUWRWKHVWDWHILUHPDUVKDOjV           DERXWWKHFDXVHRIWKH6HSWHPEHUILUH6KHVSRNHZLWK
RIILFHDQGE\EHLQJFLWHGE\WKHVWDWHILUHPDUVKDOjVRIILFHLQ       'DYLG:LOVRQWKH$VVRFLDWH'LUHFWRURIWKHKRXVLQJRIILFH
DQGIRUIDLOXUHWRFRPSO\ZLWKVWDWHILUHFRGHVLQ          0LQJHUjVFRPSODLQWVWDWHVWKDW:LOVRQGLGQRWWHOO*DLOWKDW
+HVWHU+DOODQGRWKHUEXLOGLQJV$VDUHVXOW0LQJHUDUJXHV         DUVRQZDVWKHVXVSHFWHGFDXVHRIWKHILUH,QVWHDG:LOVRQ
*UHHQZDVDFWLQJRXWVLGHWKHVFRSHRIKLVDXWKRULW\E\IDLOLQJ        FDOOHGWKHILUHmPLQRUlDQGmQRWKLQJWRZRUU\DERXWlDQGWROG
WRFRPSO\ZLWKVWDWXWRU\VHFXULW\DQGVDIHW\FRGHV*UHHQ            KHUWKDWWKHGRUPUHVLGHQWVZHUHVDIH:LOVRQGLVFRXUDJHG
SRLQWVRXWKRZHYHUWKDWLQKHUDPHQGHGFRPSODLQW0LQJHU            *DLOIURPFDOOLQJWKHILUHGHSDUWPHQW
VWDWHG WKDW *UHHQ ZDV mDW DOO WLPHV UHOHYDQW KHUHLQ DFWLQJ
ZLWKLQWKHFRXUVHDQGVFRSHRIKLVHPSOR\PHQWl0RUHRYHU               2Q6HSWHPEHUDVHFRQGILUHZDVVHWRQ0LFKDHOjV
0LQJHUQHYHUUDLVHGWKHVHIDFWXDODOOHJDWLRQVLQWKHGLVWULFW         IORRU LQ WKH VDPH ORFDWLRQ DV WKH ILUVW ILUH  0LFKDHO ZDV
FRXUW7KLVFRXUWKDVKHOGWKDWmLVVXHVQRWOLWLJDWHGLQWKHWULDO   VOHHSLQJLQKLVURRPDWWKHWLPH+HDURVHDQGDWWHPSWHGWR
FRXUW DUH JHQHUDOO\ QRW DSSURSULDWH IRU DSSHOODWH               HVFDSH+HVWHU+DOOEXWKHGLHGRIVPRNHLQKDODWLRQ0LFKDHO
FRQVLGHUDWLRQl7DIW%URDG&RY8QLWHG6WDWHV)G           ZDVWKHRQO\VWXGHQWZKRGLHGLQWKHILUH
WK&LU:KLOHWKHUHKDYHEHHQH[FHSWLRQV
WRWKLVUXOHLQFHUWDLQFDVHVm>W@KHIDFWWKDWWKHLVVXHQHZO\         *DLO0LQJHUILOHGDFRPSODLQWLQIHGHUDOGLVWULFWFRXUWRQWKH
UDLVHGRQDSSHDOUHTXLUHVRUQHFHVVLWDWHVDGHWHUPLQDWLRQRI          EDVLVRIGLYHUVLW\MXULVGLFWLRQRQ0D\DVVHUWLQJVWDWH
IDFWVLVJHQHUDOO\GHHPHGJRRGUHDVRQWRUHIXVHFRQVLGHUDWLRQ         ODZ FODLPV DJDLQVW :LOVRQ DQG sRVHSK *UHHQ 'LUHFWRU RI
RIWKHLVVXHIRUWKHILUVWWLPHLQWKHDSSHOODWHFRXUWl,GDW      3XEOLF6DIHW\DW068,QKHUFRPSODLQW0LQJHUVWDWHGWKDW
,QRUGHUWRGHWHUPLQHLI*UHHQDFWHGRXWVLGHWKHVFRSHRI       ZKHQVKHFDOOHG:LOVRQRQ6HSWHPEHUWRLQTXLUH
KLVDXWKRULW\E\IDLOLQJWRFRPSO\ZLWKVWDWHODZVZHZRXOG          DERXWWKHFDXVHRIWKH6HSWHPEHUILUH:LOVRQ
EHUHTXLUHGWRH[DPLQHWKHQHZFRQWHQWLRQVWKDW0LQJHULV
UDLVLQJRQDSSHDO:HGHFOLQHWRGRVRDQGWKHUHIRUHZHZLOO           QHYHUDWDQ\WLPHLQUHVSRQVHWR*DLO0LQJHUjVLQTXLULHV
QRWDGGUHVV0LQJHUjVFODLPWKDW*UHHQDFWHGRXWVLGHWKHVFRSH           UHYHDOHGWRKHUWKDWWKH6HSWHPEHUILUHZDVVXVSHFWHG
RIKLVDXWKRULW\                                                     WR EH D VHW ILUH  ,QVWHDG ZKHQ *DLQ >VLF@ 0LQJHU
                                                                        LQGLFDWHG WKDW VKH ZDV JRLQJ WR FDOO WKH 0XUUD\ )LUH
  0LQJHUjVRQO\UHPDLQLQJFODLPDJDLQVW*UHHQLVWKDWKHZDV            'HSDUWPHQWWRILQGRXWKRZWKH6HSWHPEHUILUHVWDUWHG
QHJOLJHQW LQ WKH SHUIRUPDQFHV RI KLV GXWLHV E\ IDLOLQJ WR      DQGWRJHWVRPHRQHIURPWKHILUHGHSDUWPHQWWRFKHFNRXW
PDLQWDLQ DQ DGHTXDWH VHFXULW\ V\VWHP LQ +HVWHU +DOO  7KH      KHUVRQjVURRP'HIHQGDQW'DYLG:LOVRQWROGKHUµ1R
                                                                        QR QR  <RX GRQjW QHHG WR GR WKDWj  +H VDLG WKH
      0LQJHUY*UHHQHWDO                        1R    1R                             0LQJHUY*UHHQHWDO        

    6HSWHPEHU  ILUH ZDV µPLQRUj DQG WKDW µWKHUH ZDV        FRUUHFWLRQRIWKHOHJDOWKHRU\GRHVQRWSUHMXGLFHWKHRSSRVLQJ
    QRWKLQJWRZRUU\DERXWj                                         SDUW\   )G DW   :LOVRQ LV QRW SUHMXGLFHG E\ WKLV
                                                                     FRXUWjV GHWHUPLQDWLRQ WKDW 0LQJHU VWDWHG D FODLP IRU
s$$VDUHVXOW0LQJHUFODLPHGWKDW:LOVRQ                  LQWHQWLRQDO PLVUHSUHVHQWDWLRQ  7KH IDFWV DOOHJHG LQ WKH
                                                                     FRPSODLQWDQGWKHVWDWHPHQWVLQWKHFRPSODLQWGHVFULELQJWKH
    QHJOLJHQWO\PLVUHSUHVHQWHGWKHFDXVHRIWKH6HSWHPEHU         FODLPDVLQYROYLQJmPLVUHSUHVHQWDWLRQlSURYLGHGIDLUQRWLFHWR
    ILUHWR*DLO0LQJHUE\QRWUHYHDOLQJWR*DLO0LQJHUWKDW         :LOVRQ RI WKH JURXQGV IRU 0LQJHUjV FODLP DQG WKH W\SH RI
    WKHILUHZDVVXVSHFWHGWREHDUVRQDQGE\GLVFRXUDJLQJ           OLWLJDWLRQLQYROYHG
    *DLO0LQJHUIURPWKHQHHGWRLQYHVWLJDWHWKHILUHIXUWKHU
    +DG KH UHYHDOHG WR *DLO 0LQJHU WKDW WKH ILUH ZDV           8QGHU .HQWXFN\ ODZ LQGLYLGXDO VWDWH HPSOR\HHV ZKR
    VXVSHFWHG WR EH DUVRQ RU KDG KH QRW GLVFRXUDJHG *DLO   NQRZLQJO\FRPPLWLQWHQWLRQDOWRUWVRUZURQJIXODFWVDUHQRW
    0LQJHUIURPWKHQHHGWRLQYHVWLJDWHWKHILUHIXUWKHU*DLO       HQWLWOHG WR LPPXQLW\  6HH 8SFKXUFK  6:G DW 
    0LQJHU ZRXOG KDYH GHWHUPLQHG WKDW WKH ILUH ZDV D VHW    7KLVLVWUXHUHJDUGOHVVRIZKHWKHUWKHHPSOR\HHZDVDFWLQJ
    ILUH                                                          ZLWKLQWKHVFRSHRIKLVDXWKRULW\6HH&DUU6:GDW
                                                                      6SLOOPDQ Y %HDXFKDPS  6:G   .\
,ELG0LQJHUFODLPHGWKDWLIVKHKDGNQRZQWKDWWKHFDXVHRI          0LQJHU KDV VWDWHG D FODLP DJDLQVW :LOVRQ IRU
WKH 6HSWHPEHU  ILUH ZDV VXVSHFWHG WR EH DUVRQ 0LFKDHO    LQWHQWLRQDOO\PLVUHSUHVHQWLQJWKHFDXVHRIWKH6HSWHPEHU
ZRXOG KDYH LPPHGLDWHO\ YDFDWHG WKH GRUPLWRU\  ,QVWHDG       ILUH  7KHUHIRUH :LOVRQ LV QRW HQWLWOHG WR LPPXQLW\ XQGHU
0LQJHU FODLPHG WKDW LQ UHOLDQFH RQ :LOVRQjV VWDWHPHQWV       .HQWXFN\ODZ6LQFHZHKDYHFRQFOXGHGWKDW0LQJHUVWDWHG
UHJDUGLQJ WKH 6HSWHPEHU  ILUH 0LFKDHO UHPDLQHG LQ WKH     DFODLPDJDLQVW:LOVRQIRUDQLQWHQWLRQDOWRUW0LQJHUjVFODLP
GRUPLWRU\,QDGGLWLRQ0LQJHUDOOHJHGWKDW:LOVRQNQHZRU          FDQQRORQJHUEHFKDUDFWHUL]HGDVDQHJOLJHQFHDFWLRQDJDLQVW
VKRXOG KDYH NQRZQ WKDW *DLO DQG 0LFKDHO ZRXOG UHO\ RQ       ZKLFK:LOVRQFDQDVVHUWDQLPPXQLW\GHIHQVH
:LOVRQjVVWDWHPHQWVFRQFHUQLQJWKHFDXVHRIWKHILUH
  0LQJHUDOOHJHGWKDW*UHHQKDGDVWDWXWRU\GXW\WRSUHYHQW
XQODZIXOFRQGXFWDQGWRSURWHFWDOOSHUVRQVORFDWHGRQFDPSXV            
IURPKDUP6KHDOVRDOOHJHGWKDWWKHDUVRQZDVDUHDVRQDEO\              0LQJHU DOOHJHG RQO\ D VLQJOH FODLP DJDLQVW :LOVRQ     $OWKRXJK VKH

IRUHVHHDEOHFULPLQDODFWDQGWKDW*UHHQEUHDFKHGKLVGXW\WR         ODEHOHG WKH FODLP DV RQH LQYROYLQJ mQHJOLJHQW PLVUHSUHVHQWDWLRQl ZH KDYH

0LFKDHOE\QRWKDYLQJDQDGHTXDWHVHFXULW\V\VWHPLQSODFHWR        FRQFOXGHG DIWHU DQ DQDO\VLV RI WKH XQGHUO\LQJ VXEVWDQFH RI WKH FRPSODLQW
                                                                     WKDW WKH FODLP ZDV PLVODEHOHG DQG WKDW 0LQJHU KDV VWDWHG D FODLP IRU
DVVXUHKLVVDIHW\                                                  LQWHQWLRQDO PLVUHSUHVHQWDWLRQ    7KHUHIRUH 0LQJHU KDV QRW VWDWHG D FODLP
                                                                     IRU mQHJOLJHQW PLVUHSUHVHQWDWLRQl RU IRU DQ\ RWKHU IRUP RI QHJOLJHQFH RQ

   *UHHQDQG:LOVRQILOHGPRWLRQVWRGLVPLVVFODLPLQJWKDW          :LOVRQjV SDUW

0LQJHUjVVXLWZDVEDUUHGE\WKH(OHYHQWK$PHQGPHQWRIWKH
8QLWHG6WDWHV&RQVWLWXWLRQDVLWZDVEURXJKWDJDLQVWHDFKRI             8QGHU .HQWXFN\ ODZ WKH GHIHQVH RI LPPXQLW\ FDQ RQO\ EH DVVHUWHG

WKHP LQ WKHLU RIILFLDO FDSDFLW\  0LQJHU ILOHG DQ DPHQGHG   E\ VWDWH HPSOR\HHV SHUIRUPLQJ GLVFUHWLRQDU\ IXQFWLRQV ZLWKLQ WKH VFRSH

                                                                                                                                     6HH 0DORQH
                                                                     RI WKHLU DXWKRULW\   RU PLQLVWHULDO IXQFWLRQV ZLWKLQ WKH VFRSH RI WKHLU
FRPSODLQWRQsXQH7KHRQO\FKDQJHLQWKHDPHQGHG          DXWKRULW\ DQG QRW RXWVLGH WKH WUDGLWLRQDO UROH RI JRYHUQPHQW                
FRPSODLQW ZDV WKH VWDWHPHQW WKDW *UHHQ DQG :LOVRQ ZHUH        6:G DW       (YHQ LI WKH\ SHUIRUP WKHVH W\SHV RI IXQFWLRQV

EHLQJVXHGLQWKHLULQGLYLGXDOFDSDFLWLHV7KHGLVWULFWFRXUW       VWDWH HPSOR\HHV FDQ DVVHUW LPPXQLW\ RQO\ DJDLQVW FODLPV EDVHG RQ WKHLU

UXOHGWKDWVLQFH0LQJHUjVVXLWZDVQRORQJHUDVXLWDJDLQVWD       QHJOLJHQW DFWLRQV   6HH LELG   6LQFH 0LQJHU KDV QRW VWDWHG D QHJOLJHQFH

VWDWHLWZDVQRWEDUUHGXQGHUWKH(OHYHQWK$PHQGPHQW               FODLP DJDLQVW :LOVRQ ZH QHHG QRW DGGUHVV WKH TXHVWLRQ RI ZKHWKHU
                                                                     :LOVRQ ZDV XQGHUWDNLQJ WKH W\SH RI JRYHUQPHQW IXQFWLRQ WKDW ZRXOG
                                                                     HQWLWOH KLP WR LPPXQLW\
    0LQJHUY*UHHQHWDO                         1R       1R                             0LQJHUY*UHHQHWDO      

$57+85 5 0,//(5 )('(5$/ 35$&7,&( $1' 352&('85(                          *UHHQDQG:LOVRQILOHGQHZPRWLRQVWRGLVPLVVRQWKHEDVLV
GHG5XOHEUHTXLUHVWKDWmWKH              WKDWWKH\ZHUHHQWLWOHGWRLPPXQLW\XQGHU.HQWXFN\VWDWHODZ
FLUFXPVWDQFHVFRQVWLWXWLQJIUDXGRUPLVWDNHVKDOO EH VWDWHG           2Q6HSWHPEHUWKHGLVWULFWFRXUWJUDQWHGWKHPRWLRQV
ZLWKSDUWLFXODULW\lEXWWKDWm>P@DOLFHLQWHQWNQRZOHGJHDQG         E\*UHHQDQG:LOVRQDQGGLVPLVVHGWKHFDVH
RWKHU FRQGLWLRQ RI PLQG RI D SHUVRQ PD\ EH DYHUUHG
JHQHUDOO\l  0LQJHU KDV VWDWHG ZLWK SDUWLFXODULW\ WKH                                              ,,
FLUFXPVWDQFHV RI KHU FRQYHUVDWLRQ ZLWK :LOVRQ DQG KHU
VXEVHTXHQW UHOLDQFH RQ KLV VWDWHPHQWV DQG KDV DYHUUHG               :KHWKHUWKHGLVWULFWFRXUWSURSHUO\GLVPLVVHGDFODLPXQGHU
JHQHUDOO\:LOVRQjVLQWHQWLQPDNLQJWKHVWDWHPHQWVWR0LQJHU           )(' 5 &,9 3 E LV D TXHVWLRQ RI ODZ VXEMHFW WR GH
                                                                        QRYRUHYLHZ6HH*DRYsHQQLIHU)GWK
   :LOVRQDUJXHVWKDW0LQJHUFRXOGQRWKDYHVWDWHGDFODLPIRU          &LU6LVWUXQNY&LW\RI6WURQJVYLOOH)G
LQWHQWLRQDOPLVUHSUHVHQWDWLRQEHFDXVHVKHUHSHDWHGO\XVHGWKH           WK&LU:ULJKWY0HWUR+HDOWK0HG&WU)G
ODEHO mQHJOLJHQW PLVUHSUHVHQWDWLRQl  7KLV DUJXPHQW LV            WK&LU0RWLRQVWRGLVPLVVVKRXOGEH
XQFRQYLQFLQJKRZHYHUVLQFHZHPXVWORRNEH\RQGODEHOVWR              JUDQWHG mRQO\ LI LW LV FOHDU WKDW QR UHOLHI FRXOG EH JUDQWHG
WKHIDFWVDOOHJHGLQWKHFRPSODLQW6HH/DEUDP)GDW             XQGHUDQ\VHWRIIDFWVWKDWFRXOGEHSURYHGFRQVLVWHQWZLWKWKH
 /RXLVYLOOH 	 1DVKYLOOH 55 &R  )G DW          DOOHJDWLRQVl 6LVWUXQN  )G DW   ,Q FRQVLGHULQJ WKH
,QGHHGRQHRIWKHFDVHVFLWHGE\:LOVRQLQGLFDWHVWKDWWKLVLV         PRWLRQDOOIDFWXDODOOHJDWLRQVLQWKHFRPSODLQWDUHDFFHSWHG
WKHSURSHUDQDO\VLV,Q7DIR\DY%REURII)6XSS            DVWUXH6HH*DR)GDW
'10WKHSODLQWLIIEURXJKWDZURQJIXOGHDWKFODLP
RQEHKDOIRIKHUGHFHDVHGKXVEDQGjVHVWDWH7KHFRPSODLQW                                                ,,,
DOOHJHG WKDW YDULRXV VWDWH HQWLWLHV DQG VWDWH RIILFLDOV DFWHG
QHJOLJHQWO\LQGHSULYLQJWKHGHFHGHQWRIKLVULJKWVXQGHUWKH             7KHGLVWULFWFRXUWUXOHGWKDW*UHHQDQG:LOVRQZHUHHQWLWOHG
8QLWHG6WDWHVDQG1HZ0H[LFR&RQVWLWXWLRQV7KHSODLQWLII              WRLPPXQLW\XQGHU.HQWXFN\ODZRQWKHEDVLVWKDWWKH\ZHUH
WKHQDUJXHGWKDWKHUFDVHZDVQRWEDVHGRQVLPSOHQHJOLJHQFH           SHUIRUPLQJGLVFUHWLRQDU\DFWVZLWKLQWKHJHQHUDOVFRSHRIWKHLU
EXWRQmUHFNOHVVGLVUHJDUGRIRUGHOLEHUDWHLQGLIIHUHQFHWRlWKH        DXWKRULW\  :H ZLOO UHYLHZ .HQWXFN\ ODZ UHJDUGLQJ WKH
GHFHGHQWjVULJKWV,GDW7KHFRXUWUXOHGKRZHYHUWKDW       LPPXQLW\ RI VWDWH RIILFHUV DQG HPSOR\HHV DQG WKHQ DVVHVV
mWKHIDFWVLQ3ODLQWLIIjV&RPSODLQWVLPSO\GRQRWVXSSRUWVXFK          0LQJHUjVFODLPVDJDLQVW:LOVRQDQG*UHHQLQWXUQ
DQDOOHJDWLRQl,ELG7KHFRXUWLQ7DIR\DGLGQRWGLVUHJDUG
WKH SODLQWLIIjV DOOHJDWLRQ WKDW WKH RIILFLDOV DFWHG UHFNOHVVO\                                     $
VROHO\EHFDXVHVKHKDGVWDWHGLQKHUFRPSODLQWWKDWWKH\DFWHG             ,W LV D ZHOOHVWDEOLVKHG SULQFLSOH RI .HQWXFN\ ODZ WKDW D
QHJOLJHQWO\  ,QVWHDG WKH FRXUW UHYLHZHG WKH FRPSODLQW WR      VWDWHRIILFHURUHPSOR\HHLVOLDEOHIRUmGHOLEHUDWHZURQJGRLQJ
GHWHUPLQHLIWKHIDFWVDOOHJHGVXSSRUWHGWKHSODLQWLIIjVFODLP          UHJDUGOHVVRIZKHWKHUKHZDVDFWLQJZLWKLQWKHVFRSHRIKLV
RIUHFNOHVVQHVV,Q7DIR\DWKHFRXUWUXOHGWKDWWKHIDFWVLQWKH      DXWKRULW\l&DUUY:ULJKW6:G.\
FRPSODLQWZHUHLQVXIILFLHQWWRVXSSRUWWKHSODLQWLIIjVFODLP           7KLV LV EDVHG RQ WKH SUHPLVH WKDW ZKLOH D VWDWH RIILFHU RU
+HUH ZH KDYH GHWHUPLQHG WKDW WKH IDFWV DOOHJHG LQ WKH         HPSOR\HH PD\ EH HQWLWOHG WR RIILFLDO LPPXQLW\ IRU DFWLRQV
FRPSODLQW DUH VXIILFLHQW WR VWDWH D FODLP WKDW :LOVRQ           DXWKRUL]HGE\ODZZKHQDVWDWHRIILFHURUHPSOR\HHmH[FHHGV
LQWHQWLRQDOO\PLVUHSUHVHQWHGWKHFDXVHRIWKHILUH                   LJQRUHVRUGLVUHJDUGVWKHOLPLWVVHWWRKLVDXWKRULW\KHFDQQRW
  7KHFRXUWLQ/DEUDPHVWDEOLVKHGWKDWGLVPLVVDORQWKHEDVLV           WKHQMXVWLI\KLVDFWDWDOOEXWPXVWUHVSRQGWRWKHSDUW\LQMXUHG
RI D PLVODEHOHG OHJDO FODLP LV QRW ZDUUDQWHG DV ORQJ DV       OLNHDQ\RWKHUZURQJGRHUl8SFKXUFKY&OLQWRQ&RXQW\
                                                                        6:G   .\   7KLV SULQFLSOH UHFHQWO\ ZDV
     0LQJHUY*UHHQHWDO                         1R       1R                          0LQJHUY*UHHQHWDO         

UHDIILUPHGE\WKH.HQWXFN\6XSUHPH&RXUWZKHQLWVWDWHGWKDW            WKHVHUHTXLUHGHOHPHQWV)LUVW0LQJHUDOOHJHVWKDWm'DYLG
DVWDWHRIILFHURUHPSOR\HHLVQRWLPPXQHIURPVXLWZKHQD              :LOVRQ QHYHU DW DQ\ WLPH LQ UHVSRQVH WR *DLO 0LQJHUjV
FODLP DOOHJHV mLOOHJDO DFWLRQ RU DFWLRQ RXWVLGH WKH VFRSH RI   LQTXLULHV >UHJDUGLQJ WKH FDXVH RI WKH 6HSWHPEHU  ILUH@
DXWKRULW\l)UDQNOLQ&RXQW\Y0DORQH6:G             UHYHDOHGWRKHUWKDWWKH6HSWHPEHUILUHZDVVXVSHFWHGWREH
.\   7KHUHIRUH D VWDWH RIILFHU RU HPSOR\HH LV QRW    D VHW ILUHl  6HFRQG WKH FRPSODLQW DOOHJHV WKDW :LOVRQ
LPPXQHIURPVXLWXQGHU.HQWXFN\ODZZKHQWKHLQGLYLGXDO                 mGLVFRXUDJHG*DLO0LQJHUIURPWKHQHHGWRLQYHVWLJDWHWKHILUH
NQRZLQJO\FRPPLWVDQLQWHQWLRQDOWRUWZURQJIXODFWRURWKHU           IXUWKHUl:KHQ0UV0LQJHUVDLGVKHZDVJRLQJWRFRQWDFW
IRUPRIGHOLEHUDWHZURQJGRLQJ                                          WKH0XUUD\)LUH'HSDUWPHQW:LOVRQVDLGmµ1RQRQR<RX
                                                                        GRQjWQHHGWRGRWKDWj+HVDLGWKH6HSWHPEHUILUHZDV
   ,QFRQWUDVWDVWDWHRIILFHURUHPSOR\HHZKRLVQHJOLJHQWLQ         µPLQRUjDQGWKDWµWKHUHZDVQRWKLQJWRZRUU\DERXWjl7KLUG
WKHSHUIRUPDQFHRIWKHLQGLYLGXDOjVGXWLHVPD\EHLPPXQH                WKH FRPSODLQW DOOHJHV WKDW :LOVRQ mNQHZ RU VKRXOG KDYH
IURPVXLWXQGHU.HQWXFN\ODZ,Q0DORQHLWVPRVWUHFHQW               NQRZQ WKDW *DLO 0LQJHU DQG 0LFKDHO ZRXOG UHO\ RQ KLV
SURQRXQFHPHQWRQWKHH[WHQWRIWKHLPPXQLW\RIVWDWHRIILFHUV           VWDWHPHQWV DERXW WKH FDXVH RI WKH 6HSWHPEHU  ILUH DQG
DQGHPSOR\HHVWKH.HQWXFN\6XSUHPH&RXUW DQDO\]HGWKH                 UHIUDLQ IURP WDNLQJ IXUWKHU VWHSV WR SURWHFW 0LFKDHO LQ WKH
VLWXDWLRQVLQZKLFKVWDWHRIILFHUVDQGHPSOR\HHVDUHLPPXQH             HYHQWRIDQRWKHUILUHRFFXUULQJLQ+HVWHU+DOOl)LQDOO\WKH
IURPOLDELOLW\IRUDFWLRQVWKH\SHUIRUPQHJOLJHQWO\7KLVFRXUW        FRPSODLQWDOOHJHVWKDWDVDUHVXOWRIWKH0LQJHUVjUHOLDQFHRQ
DSSOLHVWKH.HQWXFN\6XSUHPH&RXUWjVDQDO\VLVLQ0DORQHWR              :LOVRQjVVWDWHPHQWVWKHVWDWHPHQWVZHUHmDVXEVWDQWLDOIDFWRU
WKH IDFWV RI WKLV FDVH EHFDXVH m>L@Q WKRVH IHZ LQVWDQFHV LQ   LQFDXVLQJ0LFKDHOWRVXIIHUIDWDOSHUVRQDOLQMXULHVl7KXV
ZKLFK WKH KLJKHVW VWDWH FRXUW KDV UHFHQWO\ VSRNHQ WR WKH       WKHVH SRUWLRQV RI 0LQJHUjV FRPSODLQW DOOHJH WKDW :LOVRQ
SUHFLVHTXHVWLRQDWLVVXHLQDSDUWLFXODUVHWWLQJWKHGXW\RIWKH      NQRZLQJO\PLVUHSUHVHQWHGWKHFDXVHRIWKH6HSWHPEHUILUH
IHGHUDOFRXUWWRGHWHUPLQHDQGDSSO\VWDWHODZLVHDVLO\PHWl          OHDGLQJWKH0LQJHUVWRUHO\RQ:LOVRQjVVWDWHPHQWVDQGQRWWR
0F.HQQDY2UWKR3KDUPDFHXWLFDO&RUS)G                WDNH IXUWKHU DFWLRQ WR LQYHVWLJDWH WKH ILUH WKHUHE\ FDXVLQJ
G&LU                                                         LQMXU\  7KH DOOHJDWLRQV DUH VXIILFLHQW WR VWDWH D FODLP IRU
                                                                        LQWHQWLRQDOPLVUHSUHVHQWDWLRQ
   ,Q0DORQHWKH.HQWXFN\6XSUHPH&RXUWQRWHGWKHORQJ
VWDQGLQJ SULQFLSOH RI .HQWXFN\ ODZ WKDW VWDWH RIILFHUV DQG        7KHVWDWHPHQWVDOVRPHHWWKHKHLJKWHQHGSOHDGLQJVWDQGDUGV
HPSOR\HHV DUH HQWLWOHG WR LPPXQLW\ ZKHQ SHUIRUPLQJ                VHWIRUWKLQ)(' 5 &,9 3 E:KLOHVWDWHODZJRYHUQVWKH
GLVFUHWLRQDU\ IXQFWLRQV ZLWKLQ WKH JHQHUDO VFRSH RI WKHLU        EXUGHQRISURYLQJIUDXGDWWULDOLQDGLYHUVLW\DFWLRQLQIHGHUDO
DXWKRULW\   6:G DW   ,Q DGGLWLRQ WKH .HQWXFN\     FRXUWWKHSURFHGXUHIRUSOHDGLQJIUDXGLQDOOGLYHUVLW\VXLWVLQ
6XSUHPH&RXUWUHFRJQL]HGWKDWLQHQDFWLQJDPHQGPHQWVWR                 IHGHUDOFRXUWLVJRYHUQHGE\WKHVSHFLDOSOHDGLQJUHTXLUHPHQWV
.HQWXFN\jV%RDUGRI&ODLPV$FWLQWKH.HQWXFN\VWDWH              RI)(' 5 &,9 3 E6HH+D\GXNY/DQQD)G
OHJLVODWXUHHQODUJHGWKHFLUFXPVWDQFHVLQZKLFKVWDWHRIILFHUV          VW&LUVHHDOVR&+$5/(6 $/$1 :5,*+7 	
DQGHPSOR\HHVDUHHQWLWOHGWRLPPXQLW\ZKHQDFWLQJZLWKLQ
WKH VFRSH RI WKHLU HPSOR\PHQW  6HH LG DW  FLWLQJ .<
5(9 67$7 $11   HW VHT  $V D UHVXOW RI WKLV          
OHJLVODWLRQ .HQWXFN\ VWDWH RIILFHUV DQG HPSOR\HHV DUH                 2I FRXUVH WKLV FRQFOXVLRQ LV PDGH RQO\ IRU SXUSRVHV RI GHWHUPLQLQJ

LPPXQHIURPVXLWZKHQWKH\QHJOLJHQWO\SHUIRUPPLQLVWHULDO              ZKHWKHU 0LQJHU VWDWHG D FODLP WKDW VXUYLYHV :LOVRQjV )     5 &,9 3
                                                                        E PRWLRQ :H PDNH QR MXGJPHQW DV WR WKH PHULWV RI 0LQJHUjV
                                                                        FODLP 2Q UHPDQG :LOVRQ LV IUHH WR PRYH IRU VXPPDU\ MXGJPHQW RQ WKH
                                                                        EDVLV WKDW 0LQJHU KDV QRW GHPRQVWUDWHG WKH H[LVWHQFH RI D JHQXLQH LVVXH
                                                                        RI PDWHULDO IDFW DV WR ZKHWKHU :LOVRQ LQWHQWLRQDOO\ PLVUHSUHVHQWHG WKH
                                                                        FDXVH RI WKH 6HSWHPEHU  ILUH
       0LQJHUY*UHHQHWDO                       1R       1R                               0LQJHUY*UHHQHWDO      

ZKLFK UHTXLUHV RQO\ WKDW D FRPSODLQW LQFOXGH D mVKRUW DQG       IXQFWLRQV ZLWKLQ WKH VFRSH RI WKHLU HPSOR\PHQW
SODLQ VWDWHPHQW RI WKH FODLP VKRZLQJ WKDW WKH SOHDGHU LV        'LVFUHWLRQDU\IXQFWLRQVDUHWKRVHWKDWLQYROYHSROLF\PDNLQJ
HQWLWOHGWRUHOLHIl,ELG                                             RUVLJQLILFDQWMXGJPHQWZKLOHPLQLVWHULDOIXQFWLRQVLQYROYH
                                                                         FDUU\LQJ RXW URXWLQH GXWLHV  6HH LELG VHH DOVR &ROOLQV Y
   7KH FRXUW QRWHG WKDW GLVPLVVDO XQGHU )(' 5 &,9 3            &RPPRQZHDOWKRI.\1DWXUDO5HV	(QYWO3URW&DELQHW
ELVSURSHUmRQO\LILWFDQEHVDLGWKDWRQWKHFODLPDV          6:G.\7KH.HQWXFN\6XSUHPH
SOHDGHG WKH FODLPDQW FDQ SURYH QR VHW RI IDFWV WKDW ZRXOG
HQWLWOHKHUWRUHOLHIl,ELG$FFRUGLQJWRWKHFRXUWm>O@HJDO
ODEHOV FKDUDFWHUL]LQJ D FODLP FDQQRW VWDQGLQJ DORQH                   
                                                                                6SHFLILFDOO\ WKH VWDWXWH VWDWHV
GHWHUPLQH ZKHWKHU LW IDLOV WR PHHW WKLV H[WUHPHO\ PRGHVW
VWDQGDUG  (YHQ ZKHUH VXFK D ODEHO UHIOHFWV D IODW                   7KH %RDUG RI &ODLPV VKDOO KDYH SULPDU\ DQG H[FOXVLYH
PLVDSSUHKHQVLRQE\FRXQVHOUHVSHFWLQJDFODLPjVOHJDOEDVLV                  MXULVGLFWLRQ RYHU DOO QHJOLJHQFH FODLPV IRU WKH QHJOLJHQW
GLVPLVVDORQWKDWJURXQGDORQHLVQRWZDUUDQWHGVRORQJDVDQ\                SHUIRUPDQFH RI PLQLVWHULDO DFWV DJDLQVW WKH &RPPRQZHDOWK DQ\
                                                                              RI LWV FDELQHWV GHSDUWPHQWV EXUHDXV RU DJHQFLHV RU DQ\
QHHGHG FRUUHFWLRQ RI OHJDO WKHRU\ ZLOO QRW SUHMXGLFH WKH              RIILFHUV DJHQWV RU HPSOR\HHV WKHUHRI ZKLOH DFWLQJ ZLWKLQ WKH
RSSRVLQJSDUW\l,ELG7KHFRXUWORRNHGEH\RQGWKHODEHORI                 VFRSH RI WKHLU HPSOR\PHQW E\ WKH &RPPRQZHDOWK RU DQ\ RI LWV
mVH[XDO PROHVWDWLRQl DQG DQDO\]HG WKH VXEVWDQFH RI WKH                 FDELQHWV GHSDUWPHQWV EXUHDXV RU DJHQFLHV
SODLQWLIIjV FRPSODLQW FRQFOXGLQJ WKDW WKH SOHDGLQJ VWDWHG D
FODLPIRUFRPPRQODZEDWWHU\6LQFHWKHSOHDGLQJJDYHWKH                <
                                                                         . 5     (9 67$7 $11  
GHIHQGDQWIDLUQRWLFHRIWKHmQDWXUHDQGEDVLVRUJURXQGVRI                 ,Q DGGLWLRQ WKH VWDWXWH VWDWHV WKDW mVWDWH LQVWLWXWLRQV RI KLJKHU
WKHFODLPlDQGVHUYHGDVDmJHQHUDOLQGLFDWLRQRIWKHW\SHRI            HGXFDWLRQ XQGHU .56 &KDSWHU  DUH DJHQFLHV RI WKH VWDWHl .  5<    (9
OLWLJDWLRQLQYROYHGlWKHFRXUWGHWHUPLQHGWKDWWKHGHIHQGDQW            67$7 $   11
                                                                                       068 LV D VWDWH LQVWLWXWLRQ RI KLJKHU HGXFDWLRQ
ZDVQRWSUHMXGLFHG,GDW                                                 < (9 7$7
                                                                         XQGHU .  5     6   $    11
                                                                                                      

   $FORVHUHDGLQJRI0LQJHUjVFRPSODLQWLQGLFDWHVWKDWVKH                   
                                                                               ,Q 0DORQH WKH .HQWXFN\ 6XSUHPH &RXUW HODERUDWHG RQ WKH
VWDWHGDFODLPIRULQWHQWLRQDOPLVUHSUHVHQWDWLRQ,QRUGHUWR           GLVWLQFWLRQ EHWZHHQ GLVFUHWLRQDU\ DQG PLQLVWHULDO IXQFWLRQV 7KH FRXUW
HVWDEOLVK VXFK D FODLP XQGHU .HQWXFN\ ODZ D SDUW\ PXVW         VWDWHG WKDW m>W@KH HVVHQFH RI D GLVFUHWLRQDU\ SRZHU LV WKDW WKH SHUVRQ RU
                                                                         SHUVRQV H[HUFLVLQJ LW PD\ FKRRVH ZKLFK RI VHYHUDO FRXUVHV ZLOO EH
DOOHJH D PDWHULDO PLVUHSUHVHQWDWLRQ WKDW LV   IDOVH         IROORZHG 7KH SRZHU WR H[HUFLVH DQ KRQHVW GLVFUHWLRQ QHFHVVDULO\ LQFOXGHV
NQRZQWREHIDOVHRUPDGHUHFNOHVVO\PDGHZLWKLQWHQW           WKH SRZHU WR PDNH DQ KRQHVW PLVWDNH RI MXGJPHQWl  6:G DW 
WREHDFWHGXSRQDFWHGLQUHOLDQFHWKHUHRQDQGWKH             FLWLQJ &RPPRQZHDOWK Y )URVW  6:G  .\ &W $SS 
FDXVHRILQMXU\6HH8QLWHG3DUFHO6HUY&RY5LFNHUW
6:G.\$QDQDO\VLVRIWKHVWDWHPHQWV                  7KH FRXUW ZHQW RQ WR TXRWH 8SFKXUFK Y &OLQWRQ &RXQW\  6:G
DOOHJHGE\0LQJHULQKHUFRPSODLQWLQGLFDWHVWKHSUHVHQFHRI               

                                                                              'LVFUHWLRQDU\    GXWLHV DUH VXFK DV QHFHVVDULO\ UHTXLUH WKH
                                                                              H[HUFLVH RI UHDVRQ LQ WKH DGDSWDWLRQ RI PHDQV WR DQ HQG DQG
                                                                             GLVFUHWLRQ LQ GHWHUPLQLQJ KRZ RU ZKHWKHU WKH DFW VKDOO EH GRQH
      7KH 5LFNHUW FRXUW VWDWHG WKDW WKHVH HOHPHQWV IRUP WKH EDVLV RI D        RU WKH FRXUVH SXUVXHG      'LVFUHWLRQ LQ WKH PDQQHU RI WKH
FODLP IRU IUDXG XQGHU .HQWXFN\ FRPPRQ ODZ +RZHYHU .HQWXFN\ FRXUWV           SHUIRUPDQFH RI DQ DFW DULVHV ZKHQ WKH DFW PD\ EH SHUIRUPHG LQ
KDYH UHFRJQL]HG WKDW LQWHQWLRQDO PLVUHSUHVHQWDWLRQ DQG IUDXG KDYH WKH         RQH RI WZR RU PRUH ZD\V HLWKHU RI ZKLFK ZRXOG EH ODZIXO DQG
VDPH PHDQLQJ XQGHU .HQWXFN\ FRPPRQ ODZ 6HH HJ 0RUWRQ Y %DQN             ZKHUH LW LV OHIW WR WKH ZLOO RU MXGJPHQW RI WKH SHUIRUPHU WR
RI WKH %OXHJUDVV DQG 7UXVW &R  6:G   .\ &W $SS         GHWHUPLQH LQ ZKLFK ZD\ LW VKDOO EH SHUIRUPHG +RZHYHU DQ DFW
m:H FRQFOXGH KRZHYHU WKDW WKH WULDO FRXUW HUUHG LQ GLVPLVVLQJ              LV QRW QHFHVVDULO\ WDNHQ RXW RI WKH FODVV VW\OHG PLQLVWHULDO
>SODLQWLIIjV@ LQWHQWLRQDO PLVUHSUHVHQWDWLRQ IUDXG FODLPl                 EHFDXVH WKH RIILFHU SHUIRUPLQJ LW LV YHVWHG ZLWK D GLVFUHWLRQ
     0LQJHUY*UHHQHWDO                        1R      1R                        0LQJHUY*UHHQHWDO        

&RXUWVXEVHTXHQWO\OLPLWHGWKHVFRSHRIWKH.HQWXFN\             WKDW KHU FODLP DJDLQVW :LOVRQ LV EDVHG RQ KLV QHJOLJHQW
OHJLVODWLRQUXOLQJWKDWLWGRHVQRWH[WHQGWRVWDWHRIILFHUVDQG     PLVUHSUHVHQWDWLRQ RI WKH FDXVH RI WKH 6HSWHPEHU  ILUH
HPSOR\HHVZKRHQJDJHLQDFWLYLWLHVRXWVLGHWKHmWUDGLWLRQDO           +RZHYHUZKHQZHDQDO\]H0LQJHUjVFRPSODLQWE\ORRNLQJ
UROHRIJRYHUQPHQWl0DORQH6:GDW                      EH\RQGODEHOVWRWKHVXEVWDQFHRIWKHDOOHJDWLRQVZHVHHWKDW
                                                                      0LQJHU VWDWHG D FODLP DJDLQVW :LOVRQ IRU NQRZLQJO\
   7KHUHIRUHVWDWHRIILFHUVDQGHPSOR\HHVDUHLPPXQHIURP            FRPPLWWLQJDZURQJIXODFWLQWHQWLRQDOO\PLVUHSUHVHQWLQJWKH
VXLWXQGHU.HQWXFN\ODZZKHQWKH\QHJOLJHQWO\SHUIRUP            FDXVHRIWKH6HSWHPEHUILUH
GLVFUHWLRQDU\IXQFWLRQVZLWKLQWKHVFRSHRIWKHLUDXWKRULW\RU
QHJOLJHQWO\SHUIRUPPLQLVWHULDOIXQFWLRQVZLWKLQWKHVFRSH           )HGHUDO 5XOH RI &LYLO 3URFHGXUH I VWDWHV WKDW m$OO
RI WKHLU DXWKRULW\ EXW QRW RXWVLGH WKH WUDGLWLRQDO UROH RI   SOHDGLQJVVKDOOEHVRFRQVWUXHGDVWRGRMXVWLFHl7KLVUXOH
JRYHUQPHQW6WDWHRIILFHUVDQGHPSOR\HHVDUHQRWLPPXQH              GLUHFWV FRXUWV WR FRQVWUXH SOHDGLQJ OLEHUDOO\ ZLWKLQ WKH
IURP VXLW XQGHU .HQWXFN\ ODZ ZKHQ WKH\   FRPPLW DQ      VWDQGDUGV RI WKH QRWLFHSOHDGLQJ UHJLPH PDQGDWHG E\ WKH
LOOHJDODFWLRQRUVLPLODUIRUPRIZURQJGRLQJRUDFWRXWVLGHWKH       )HGHUDO5XOHVRI&LYLO3URFHGXUH$VWKLVFRXUWKDVVWDWHG
VFRSHRIWKHLUDXWKRULW\RUQHJOLJHQWO\SHUIRUPPLQLVWHULDO       mWKHIXQGDPHQWDOWHQRURIWKH5XOHVLVRQHRIOLEHUDOLW\UDWKHU
IXQFWLRQVZLWKLQWKHVFRSHRIWKHLUDXWKRULW\EXWRXWVLGHWKH         WKDQWHFKQLFDOLW\DQGLWFUHDWHVDQLPSRUWDQWFRQWH[WZLWKLQ
WUDGLWLRQDOUROHRIJRYHUQPHQW                                       ZKLFKZHGHFLGHFDVHVXQGHUWKHPRGHUQ)HGHUDO5XOHVRI
                                                                      &LYLO3URFHGXUHl0LOOHUY$PHULFDQ+HDY\/LIW6KLSSLQJ
                                %                                      )G   WK &LU   7KHUHIRUH WKH 5XOHV
                                                                      UHTXLUHWKDWZHQRWUHO\VROHO\RQODEHOVLQDFRPSODLQWEXW
   7KH GLVWULFW FRXUW IRXQG WKDW :LOVRQ 068jV $VVRFLDWH       WKDW ZH SUREH GHHSHU DQG H[DPLQH WKH VXEVWDQFH RI WKH
'LUHFWRURI+RXVLQJZDVLPPXQHIURPVXLWXQGHU.HQWXFN\              FRPSODLQW,QGHHGWKLVFRXUWKDVPDGHFOHDUWKDWmWKHODEHO
VWDWHODZ7KHFRXUWFRQFOXGHGWKDW:LOVRQZDVEHLQJVXHG            ZKLFKDSODLQWLIIDSSOLHVWRDSOHDGLQJGRHVQRWGHWHUPLQHWKH
RQO\ IRU QHJOLJHQFH DQG ZDV LPPXQH EHFDXVH KH ZDV             QDWXUHRIWKHFDXVHRIDFWLRQZKLFKKHVWDWHVl8QLWHG6WDWHV
SHUIRUPLQJ D GLVFUHWLRQDU\ DFW ZLWKLQ WKH VFRSH RI KLV        Y/RXLVYLOOH	1DVKYLOOH55&R)GWK
DXWKRULW\:HGLVDJUHH:HKROGWKDW0LQJHUVXIILFLHQWO\            &LU
DOOHJHGWKDW:LOVRQLQWHQWLRQDOO\PLVUHSUHVHQWHGWKHFDXVHRI
WKH6HSWHPEHUILUHLQKLV6HSWHPEHUFRQYHUVDWLRQZLWK             7KH )RXUWK &LUFXLW UHFHQWO\ DSSOLHG WKHVH SULQFLSOHV LQ
*DLO0LQJHU$VDUHVXOW:LOVRQLVQRWLPPXQHIURPVXLW             /DEUDPY+DYHO)GWK&LU,Q/DEUDP
XQGHU.HQWXFN\ODZWRWKHH[WHQWKHFRPPLWWHGDQLQWHQWLRQDO          WKHSODLQWLIIUHSHDWHGO\XVHWKHODEHOmVH[XDOPROHVWDWLRQlWR
WRUW                                                               GHVFULEHRQHRIWKHFODLPVLQKHUFRPSODLQW7KHGLVWULFWFRXUW
                                                                      GLVPLVVHGWKHFODLPRQWKHEDVLVWKDW1HYDGDODZZKLFKZDV
  7KHGLVWULFWFRXUWGHWHUPLQHGWKDW:LOVRQZDVEHLQJVXHG            EHLQJ DSSOLHG LQ WKH FDVH UHFRJQL]HV QR VXFK VHSDUDWH WRUW
IRU QHJOLJHQW SHUIRUPDQFH RI KLV GXWLHV DQG WKDW KH ZDV      DFWLRQ2QDSSHDOWKH)RXUWK&LUFXLWVWDWHGWKDWZKLOHWKH
LPPXQHIURPOLDELOLW\XQGHU.HQWXFN\ODZEHFDXVHKHZDV               GLVWULFWFRXUWjVDFWLRQmPD\EHWHFKQLFDOO\FRUUHFWlWKHFODLP
SHUIRUPLQJ GLVFUHWLRQDU\ IXQFWLRQV ZLWKLQ WKH VFRSH RI KLV     VKRXOGQRWKDYHEHHQGLVPLVVHGmLQDSURSHUDSSOLFDWLRQRI
DXWKRULW\  ,W LV XQGHUVWDQGDEOH WKDW WKH GLVWULFW FRXUW      IHGHUDOµQRWLFHSOHDGLQJjSULQFLSOHVl,GDW7KHFRXUW
FRQFOXGHG WKDW :LOVRQ ZDV EHLQJ VXHG IRU QHJOLJHQW             KHOG WKDW WKH SODLQWLII KDG VWDWHG D FODLP IRU FRPPRQODZ
SHUIRUPDQFHRIKLVGXWLHVEHFDXVH0LQJHUjVFRPSODLQWVWDWHV           EDWWHU\DQGUHYHUVHGWKHGLVWULFWFRXUWjVGHFLVLRQWRGLVPLVVWKH
                                                                      SODLQWLIIjVFODLPRQWKHGHIHQGDQWjV)(' 5 &,9 3 E
                                                                      PRWLRQ6HHLELG7KHFRXUWUHOLHGRQ)(' 5 &,9 3D
    UHVSHFWLQJ WKH PHDQV RU PHWKRG WR EH HPSOR\HG