NLRB v. Main St Terrace

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 DS 81,7('67$7(6&28572)$33($/6 )257+(6,;7+&,5&8,7 BBBBBBBBBBBBBBBBB 1$7,21$/ /$%25 5(/$7,216 ; %2$5'  3HWLWLRQHU&URVV5HVSRQGHQW   1RV  Y !   0$,1 675((7 7(55$&( &$5(  &(17(5  5HVSRQGHQW&URVV3HWLWLRQHU   1 2Q$SSOLFDWLRQIRU(QIRUFHPHQWDQG&URVV3HWLWLRQ IRU5HYLHZRIDQ2UGHU RIWKH1DWLRQDO/DERU5HODWLRQV%RDUG 1R&$ $UJXHG0D\ 'HFLGHGDQG)LOHGsXO\ %HIRUH%$7&+(/'(50225(DQG%((=(5 &LUFXLW sXGJHV 7KH +RQRUDEOH 5REHUW 5 %HH]HU &LUFXLW sXGJH RI WKH 8QLWHG 6WDWHV &RXUW RI $SSHDOV IRU WKH 1LQWK &LUFXLW VLWWLQJ E\ GHVLJQDWLRQ   1/5%Y0DLQ6WUHHW 1RV 1RV 1/5%Y0DLQ6WUHHW  7HUUDFH&DUH&HQWHU 7HUUDFH&DUH&HQWHU BBBBBBBBBBBBBBBBB ZRXOGKDYHEHHQWHUPLQDWHGIRUWKLVEHKDYLRUUHJDUGOHVVRI KHU SURWHFWHG DFWLYLW\  7KH %RDUG DFFHSWHG WKH $/sjV &2816(/ H[SODQDWLRQ WKDW 0DLQ 6WUHHWjV SURIIHUHG UHDVRQV GLG QRW ZLWKVWDQGVFUXWLQ\m7KHUHZDVQRLQYHVWLJDWLRQ>RI&UDLJjV $5*8('  s 5DQGDOO 5LFKDUGV &ROXPEXV 2KLR IRU DOOHJHG PLVFRQGXFW@ DQG ZKDW sHIIHUV DOOHJHGO\ VDLG >WR 5HVSRQGHQW  $QGUHZ s .UDIWV 1$7,21$/ /$%25 &RFKUDQ@ ZKHQ H[DPLQHG LQ WKH OLJKW RI WKH UHFRUG PDGH 5(/$7,216%2$5'$33(//$7(&2857%5$1&+ KHUHLQZRXOGQRWMXVWLI\WHUPLQDWLQJVRPHRQHl0DLQ6WUHHW :DVKLQJWRQ'&IRU3HWLWLRQHU21%5,()s5DQGDOO  :/ DW   0DLQ 6WUHHWjV IDLOXUH WR JLYH &UDLJ DQ\ 5LFKDUGV *HRIIUH\ ( :HEVWHU &ROXPEXV 2KLR IRU ZDUQLQJEHIRUHWHUPLQDWLQJKHULQFRQWUDYHQWLRQRIFRPSDQ\ 5HVSRQGHQW  $QGUHZ s .UDIWV  $LOHHQ $ $UPVWURQJ SROLF\SURYLGHVVXEVWDQWLDOHYLGHQFHWRVXSSRUWWKH%RDUGjV 0DUJDUHW$QQ*DLQHV1$7,21$//$%255(/$7,216 ILQGLQJ6HH1/5%Y7UDQVS0JW&RUS86 %2$5' $33(//$7( &2857 %5$1&+ :DVKLQJWRQ   ILQGLQJ WKH %RDUGjV FRQFOXVLRQ WKDW WKH HPSOR\HH '&IRU3HWLWLRQHU ZRXOGQRWKDYHEHHQGLVFKDUJHGLQWKHDEVHQFHRISURWHFWHG FRQGXFWMXVWLILHGLQOLJKWRIHYLGHQFHWKDWWKHHPSOR\HHKDG BBBBBBBBBBBBBBBBB QRWEHHQGLVFLSOLQHGSULRUWRKLVWHUPLQDWLRQ DEURJDWHGRQ RWKHUJURXQGVE\'LUHFWRU2:&3Y*UHHQZLFK&ROOLHULHV 23,1,21 86  +HDOWK&DUH/RJLVWLFV,QF)GDW BBBBBBBBBBBBBBBBB  UHMHFWLQJ HPSOR\HUjV DVVHUWLRQ WKDW HPSOR\HHV ZRXOG .$5(11(/6210225(&LUFXLWsXGJH7KH1DWLRQDO KDYHEHHQILUHGIRUSHUIRUPDQFHUHODWHGUHDVRQVHYHQDEVHQW /DERU 5HODWLRQV %RDUG KHUHLQDIWHU m%RDUGl  SHWLWLRQV IRU WKHLUSURWHFWHGDFWLYLW\EHFDXVHQHLWKHUHPSOR\HHKDGEHHQ HQIRUFHPHQW RI LWV RUGHU ILQGLQJ 0DLQ 6WUHHW 7HUUDFH &DUH ZDUQHGDERXWDQ\DVSHFWRIKLVZRUNSULRUWRWHUPLQDWLRQ  &HQWHU KHUHLQDIWHU m0DLQ 6WUHHWl  JXLOW\ RI XQIDLU ODERU 'D\WRQ 7\SRJUDSKLF 6HUY ,QF Y 1/5%  )G  SUDFWLFHVDQG0DLQ6WUHHWFURVVSHWLWLRQVIRUUHYLHZRIWKH  WK &LU   UHMHFWLQJ HPSOR\HUjV DUJXPHQW WKDW RUGHU  7KH TXHVWLRQV SUHVHQWHG DUH ZKHWKHU 0DLQ 6WUHHW HPSOR\HH ZDV ODLG RII IRU KLV EDG DWWLWXGH WRZDUG ZRUN YLRODWHG †  D   RI WKH 1DWLRQDO /DERU 5HODWLRQV $FW H[SODLQLQJ WKDW ERWK RI WKH DOOHJHG LQFLGHQWV LQ ZKLFK WKH KHUHLQDIWHU m1/5$l   86& †  D   E\ HPSOR\HH GLVSOD\HG D EDG DWWLWXGH RFFXUUHG FRQVLGHUDEO\ SURPXOJDWLQJDUXOHSURKLELWLQJHPSOR\HHVIURPGLVFXVVLQJ EHIRUHKLVGLVFKDUJHDQGWKHHPSOR\HUKDGQRWGLVFLSOLQHGWKH ZDJHVDPRQJWKHPVHOYHVDQGZKHWKHU0DLQ6WUHHWYLRODWHG HPSOR\HHIRUWKHVHLQFLGHQWV  † D  E\GLVFKDUJLQJ0DU\&UDLJEHFDXVHVKHHQJDJHGLQ ,,,&21&/86,21 SURWHFWHGFRQFHUWHGDFWLYLW\7KH%RDUGFRQFOXGHGWKDW0DLQ 6WUHHWYLRODWHG† D  LQERWKZD\V%HFDXVHWKH%RDUGjV )RUWKHIRUHJRLQJUHDVRQVZH*5$17WKH%RDUGjVSHWLWLRQ ILQGLQJV DUH VXSSRUWHG E\ VXEVWDQWLDO HYLGHQFH ZH IRUHQIRUFHPHQWRILWVRUGHUILQGLQJWKDW0DLQ6WUHHWYLRODWHG (1)25&( WKH %RDUGjV RUGHU DQG '(1< 0DLQ 6WUHHWjV † D  DQG'(1<0DLQ6WUHHWjVFURVVSHWLWLRQ FURVVSHWLWLRQIRUUHYLHZ  1/5%Y0DLQ6WUHHW 1RV 1RV 1/5%Y0DLQ6WUHHW  7HUUDFH&DUH&HQWHU 7HUUDFH&DUH&HQWHU  WK &LU   VXVWDLQLQJ ILQGLQJ RI XQODZIXO ,%$&.*5281' PRWLYDWLRQLQSDUWEHFDXVHmLQFRQWUDVWWRRWKHUHPSOR\HHV ZKHQFRQIURQWHG>ZLWKWKHVDPHPLVFRQGXFW@)UHGHULFND 0DLQ6WUHHW7HUUDFH&DUH&HQWHURSHUDWHVDQXUVLQJKRPH QLQH\HDUHPSOR\HHZLWKQRKLVWRU\RIGLVFLSOLQDU\SUREOHPV IRU WKH HOGHUO\ LQ /DQFDVWHU 2KLR  7KLV SURFHHGLQJ DULVHV ZDV JLYHQ QR RSSRUWXQLW\ WR H[SODLQ KLV DFWLRQV EHIRUH KLV IURPDQXQIDLUODERUSUDFWLFHFKDUJHILOHGDJDLQVW0DLQ6WUHHW WHUPLQDWLRQl  1/5% Y $TXDWHFK ,QF  )G   E\IRUPHUHPSOR\HH0DU\&DWKHULQH&UDLJ WK&LU  QRWLQJWKDWmGLVFULPLQDWRU\DSSOLFDWLRQRUOD[ DGPLQLVWUDWLRQ RI SROLFLHV PD\ LQGLFDWH WKDW HPSOR\HHV DUH ,QsXQHRI0DUJLH.HLVWHUZKRZDVWKHQWKHPDQDJHU EHLQJVLQJOHGRXWIRUXQLRQDFWLYLWLHVl  RI WKH GLHWDU\ GHSDUWPHQW DW 0DLQ 6WUHHW KLUHG &UDLJ DV D GLHWDU\DLGH$WWKDWWLPHDIWHULQIRUPLQJ&UDLJRIKHUZDJH $GGLWLRQDOO\ WKH WLPLQJ RI &UDLJjV GLVFKDUJH VWURQJO\ .HLVWHUWROG&UDLJmQRWWRWHOODQ\RQH>KRZPXFKPRQH\VKH VXJJHVWVDQLPSHUPLVVLEOHPRWLYDWLRQ&UDLJZDV ILUHGRQ ZRXOGEHPDNLQJ@EHFDXVHLWFDXVHGKDUGIHHOLQJVDQGWKH 'HFHPEHU  MXVW IRXU GD\V DIWHU KHU VWDWHPHQW WKDW 0DLQ PDQDJHPHQW GLG QRW ZDQW LW NQRZQl  sRLQW $SSHQGL[ 6WUHHWZRXOGEHDEHWWHUSODFHWRZRUNLILWZHUHXQLRQL]HG KHUHLQDIWHUms$l DW 0&UDLJ7HVW &UDLJjVGDXJKWHU 6HH.HQWXFN\*HQHUDO,QF)GDW QRWLQJWKDWWKH $SULOZDVDOVRKLUHGDVDGLHWDU\DLGHDW0DLQ6WUHHWLQ0DUFK HPSOR\HUjVmGHFLVLRQWROD\RIIERWKPHQRQO\DIHZGD\VDIWHU RI   0DU\ sHIIHUV ZKR EHFDPH WKH PDQDJHU RI WKH WKH\ HQJDJHG LQ SLFNHWLQJ EROVWHUV WKH LQIHUHQFH WKDW >WKH GLHWDU\GHSDUWPHQWLQsDQXDU\RIKLUHG$SULO&UDLJDQG HPSOR\HU@WHUPLQDWHGWKHPEHFDXVHRIWKHLUXQLRQDFWLYLWLHVl  VLPLODUO\WROGKHUm>W@KDWZH>HPSOR\HHV@ZHUHQRWDOORZHGWR $TXDWHFK,QF)GDW H[SODLQLQJWKDWWKHSUR[LPLW\ GLVFXVVRXUSD\FKHFNVZLWKDQ\RQHls$DW $&UDLJ LQ WLPH RI SURWHFWHG FRQFHUWHG DFWLYLW\ DQG GLVFKDUJH LV 7HVW  VXJJHVWLYHRILPSURSHUPRWLYDWLRQ $OWKRXJKLWLVWUXHWKDW &UDLJ KDG DFWHG RQ EHKDOI RI RWKHU HPSOR\HHV LQ UHJDUG WR 'XULQJ  &UDLJ DVVLVWHG VHYHUDO GLHWDU\ GHSDUWPHQW ZDJHLVVXHVVLQFHQHDUO\WKHVWDUWRIKHUHPSOR\PHQWDW0DLQ HPSOR\HHVZLWKZDJHUHODWHGSUREOHPV)LUVWVKRUWO\DIWHU 6WUHHW&UDLJjV'HFHPEHUVWDWHPHQWZDVWKHRQO\SURXQLRQ VKH EHJDQ ZRUNLQJ DW 0DLQ 6WUHHW $SULO &UDLJ QRWLFHG VWDWHPHQWVKHKDGPDGHDQGFRXOGWKXVKDYHEHHQYLHZHGE\ QXPHURXV SUREOHPV ZLWK KHU SD\FKHFNV LQFOXGLQJ 0DLQ 0DLQ 6WUHHW DV PRUH WKUHDWHQLQJ  0RUHRYHU sHIIHUV KDG 6WUHHWjVIDLOXUHWRSD\KHUDSSURSULDWHO\IRURYHUWLPHZRUN H[SUHVVHGGLVDSSURYDORI&UDLJjVSURWHFWHGFRQFHUWHGDFWLYLW\ $SULO&UDLJDVNHGKHUPRWKHUWRVSHDNWRsHIIHUVDQGWR7UDF\ SULRUWRKHUWHUPLQDWLRQ$SULO&UDLJWHVWLILHGWKDWsHIIHUVWROG :HQW]WKHSD\UROOFOHUNDERXWWKHSUREOHPVVKHZDVKDYLQJ KHUWRUHVROYHKHUSUREOHPVZLWKRXWWKHDLGRI&UDLJ &UDLJGLGVRRQVHYHUDORFFDVLRQVDQGWKHSD\FKHFNVZHUH VRPHWLPHVFRUUHFWHG$SULO&UDLJDFFRPSDQLHGKHUPRWKHUWR %HFDXVH WKH %RDUG SURSHUO\ FRQFOXGHG WKDW WKH JHQHUDO VHYHUDORIWKHVHGLVFXVVLRQV2QRQHRFFDVLRQZKHQ$SULO FRXQVHOPDGHDSULPDIDFLHVKRZLQJWKDW&UDLJjVFRQGXFWZDV &UDLJZHQWWRVHHsHIIHUVDORQHsHIIHUVWROG$SULO&UDLJmWKDW DPRWLYDWLQJIDFWRULQWKHGHFLVLRQWRILUHKHU0DLQ6WUHHWZDV >$SULO@QHHGHGWRFRPHWR>sHIIHUV@E\>KHU@VHOIls$DW WKHQ UHTXLUHG WR HVWDEOLVK WKDW KHU WHUPLQDWLRQ ZRXOG KDYH $&UDLJ7HVW  WDNHQSODFHLQWKHDEVHQFHRISURWHFWHGFRQGXFW0DLQ6WUHHW FRQWHQGHGDWWKHKHDULQJWKDW&UDLJZDVILUHGVROHO\IRUKHU LQDELOLW\WRZRUNZLWK0RQVRQDQGWKHGLVUXSWLRQVUHVXOWLQJ IURP KHU KRVWLOLW\ WRZDUG 0RQVRQ  7KH %RDUG IRXQG WKDW 0DLQ6WUHHWKDGQRWPDGHWKHUHTXLVLWHVKRZLQJWKDW&UDLJ  0DLQ 6WUHHW LV QRW XQLRQL]HG  1/5%Y0DLQ6WUHHW 1RV 1RV 1/5%Y0DLQ6WUHHW  7HUUDFH&DUH&HQWHU 7HUUDFH&DUH&HQWHU ,QWKHVSULQJRIGLHWDU\GHSDUWPHQWHPSOR\HHsR\FH 6XEVWDQWLDOHYLGHQFHDOVRVXSSRUWVWKH%RDUGjVILQGLQJWKDW 5LJE\ DOVR GLVFXVVHG ZDJHUHODWHG SUREOHPV ZLWK &UDLJ &UDLJjV HQJDJHPHQW LQ SURWHFWHG FRQFHUWHG DFWLYLW\ ZDV D 5LJE\ ZKR ZRUNHG DV ERWK D FRRN DQG GLHWDU\ DLGH KDG PRWLYDWLQJ IDFWRU LQ KHU GLVFKDUJH  7KH PRVW FRQYLQFLQJ SUHYLRXVO\ EHHQ SDLG WZR GLIIHUHQW ZDJHV IRU WKH WZR HYLGHQFHRIXQODZIXOPRWLYDWLRQLV0DLQ6WUHHWjVGHSDUWXUH SRVLWLRQVEXWFRPSODLQHGWKDWKHUZDJHKDGEHHQFKDQJHGWR IURPLWVSURJUHVVLYHGLVFLSOLQDU\SROLFLHVLQ&UDLJjVFDVHDQG DIODWUDWH&UDLJLQIRUPLQJ5LJE\WKDW$SULO&UDLJVWLOOJRW LWV GLVSDUDWH WUHDWPHQW RI &UDLJ  8QWLO WKH WLPH RI KHU SDLGWZRGLIIHUHQWZDJHVRIIHUHGWRWDONZLWKsHIIHUVDERXW GLVFKDUJH &UDLJ KDG EHHQ DQ H[FHOOHQW HPSOR\HH DV LV 5LJE\jVFRPSODLQWDQGVXEVHTXHQWO\GLGVR$OWKRXJK&UDLJjV HYLGHQFHGE\KHU2FWREHUHYDOXDWLRQLQZKLFKsHIIHUV HIIRUWVIDLOHG5LJE\jVSD\ZDVHYHQWXDOO\FKDQJHGDQG5LJE\ JDYH KHU WKH EHVW RYHUDOO PDUN DQG UHFRPPHQGHG KHU WKDQNHG&UDLJIRUKHUDVVLVWDQFH FRQWLQXHGHPSOR\PHQW6KHZDVGLVFKDUJHGRVWHQVLEO\IRU KHULQDELOLW\WRJHWDORQJZLWKFRZRUNHU0RQVRQDQGIRUWKH )LQDOO\LQ6HSWHPEHURIsHIIHUVLQIRUPHG&UDLJDQG GLVUXSWLRQVWKDWVKHFDXVHGDVDUHVXOW0DLQ6WUHHWjVSROLF\ GLHWDU\GHSDUWPHQWHPSOR\HH7UDF\sDFNVRQWKDWWKH\ZRXOG ZDV WR JLYH HPSOR\HHV D ZDUQLQJ IRU PRVW LQVWDQFHV RI EHUHFHLYLQJDILIW\FHQWUDLVHsHIIHUVmWROG7UDF\DQG>&UDLJ@ PLVFRQGXFW  s$ DW  sHIIHUV 7HVW  VWDWLQJ WKDW WRJHWKHUQRWWRVD\DQ\WKLQJWRWKHRWKHUJLUOVLQWKHNLWFKHQ HPSOR\HHVVKRXOGILUVWUHFHLYHDZULWWHQZDUQLQJIRULPSURSHU EHFDXVHWKH\ZHUHQRWJHWWLQJDUDLVHls$DW 0&UDLJ EHKDYLRUDQGVSHHFK s$DW (PSOR\HH+DQGERRN 7HVW %\1RYHPEHU&UDLJKDGUHFHLYHGRQO\DWZHQW\ILYH QRWLQJWKDWDQRUDOUHPLQGHUVKRXOGEHJLYHQIRUm>I@DLOXUHWR FHQWUDLVHZKLOHsDFNVRQKDGUHFHLYHGQRUDLVHDWDOODQGWKH ZRUN WRJHWKHU DV D WHDP DQG GHYHORS JRRG ZRUNLQJ WZR ZRPHQ KDG GLVFXVVLRQV DERXW 0DLQ 6WUHHWjV IDLOXUH WR UHODWLRQVKLSVl DQG IRU m>U@XGH RU LPSURSHU EHKDYLRU RU LPSOHPHQWWKHSURPLVHGUDLVH2QRQHRFFDVLRQZKHQsHIIHUV VSHHFKl +RZHYHU&UDLJGLGQRWUHFHLYHDQ\UHSULPDQGV DVNHG&UDLJZKDWZDVZURQJZLWKsDFNVRQ&UDLJFRPSODLQHG ZULWWHQRUYHUEDOIRUWKHEHKDYLRUWKDWDOOHJHGO\UHVXOWHGLQ WRsHIIHUVWKDWm\RXSURPLVHGXVDUDLVHDQGZHGLGQjWJHWLW KHUGLVFKDUJH,QVWHDG&UDLJZDVLPPHGLDWHO\WHUPLQDWHG DQG 7UDF\jV PDG DERXW LWl  s$ DW  0 &UDLJ 7HVW  GHVSLWH WKH IDFW WKDW WKH HPSOR\HH KDQGERRN UHVHUYHV sHIIHUVUHVSRQGHGWKDWLWZDVDQRYHUVLJKWDQGWKDWWKHUDLVHV WHUPLQDWLRQIRUWKHPRVWVHULRXVPLVFRQGXFWVXFKDVDEXVHRI ZRXOGEHIRUWKFRPLQJ UHVLGHQWV DQG IHORQLRXV EHKDYLRU  0RUHRYHU WZR GLHWDU\ GHSDUWPHQW HPSOR\HHV ZKR KDG UHFHQWO\ EHHQ GLVFKDUJHG ,Q 2FWREHU RI  sHIIHUV FRPSOHWHG D SHUIRUPDQFH $EE\&DOGZHOO ZKRZDVGLVFKDUJHGEHFDXVH0DLQ6WUHHWKDG HYDOXDWLRQ RI &UDLJ  sHIIHUV JDYH &UDLJ DQ mRXWVWDQGLQJl UHFHLYHGFRPSODLQWVRIUXGHQHVVIURPWKHIDPLO\PHPEHUVRI UDWLQJ LQ WKH DUHDV RI GHSHQGDELOLW\ LQLWLDWLYH VHOI UHVLGHQWV DQG5XWK.RQNOHERWKUHFHLYHGUHSULPDQGVEHIRUH LPSURYHPHQW DQG SHUVRQDOLW\ DQG KLJK mDERYH DYHUDJHl WKHLU WHUPLQDWLRQ  7KH IDFW WKDW &UDLJ ZKR KDG EHHQ DQ PDUNVLQTXDOLW\RIZRUNTXDQWLW\RIZRUNDQGFRRSHUDWLRQ mRXWVWDQGLQJ HPSOR\HHl ZDV JLYHQ QR ZDUQLQJ WKDW KHU sHIIHUV JDYH &UDLJ DQ RYHUDOO mRXWVWDQGLQJl UDWLQJ DQG EHKDYLRU ZDV SUREOHPDWLF SULRU WR KHU WHUPLQDWLRQ n LQ UHFRPPHQGHGKHUFRQWLQXHGHPSOR\PHQW$OVRLQ2FWREHU FRQWUDYHQWLRQ RI 0DLQ 6WUHHWjV SROLF\ DQG SUDFWLFH n LV &UDLJ ZDV YRWHG m(PSOR\HH RI WKH 0RQWKl E\ WKH RWKHU VWURQJ VXSSRUW IRU WKH %RDUGj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s6HFRQG&UDLJWHVWLILHGWKDWWKHGLUHFWRURIQXUVLQJ D QHZ GLHWDU\ DLGH %RE 0RQVRQ  &UDLJ FRPSODLQHG WKDW ORRNHGXSZKHQ&UDLJPDGHWKLVFRPPHQWZKLFKVXJJHVWV 0RQVRQZDVUXGHWRWKHDLGHVWKDWKHLJQRUHGWKHLUUHTXHVWV WKDWWKHGLUHFWRUKHDUGWKHVWDWHPHQW)LQDOO\WKH$/sGUHZ IRUDVVLVWDQFHWKDWKHGLGQRWGRKLVMREDQGWKDWKHPDGH D QHJDWLYH LQIHUHQFH IURP WKH IDFW WKDW m>W@KH GLUHFWRU RI VQLGHUHPDUNVDERXWKHU$IWHU&UDLJPDGHWKLVVWDWHPHQW QXUVLQJGLGQRWWHVWLI\DWWKHKHDULQJKHUHLQWRGHQ\WKDWKH &RFKUDQDVNHG&UDLJm,I\RXFDQjWJHWDORQJZLWKDQ\ERG\ KHDUG ZKDW 0DU\ &UDLJ VDLG LQ KHU FRQYHUVDWLRQ ZLWK ZK\DUH\RXKHUH"ls$DW 0&UDLJ7HVW &UDLJWKHQ 0F.HQ]LHRQ7KXUVGD\'HFHPEHUl0DLQ6WUHHW VDLGmHQGRIPHHWLQJlDQGZDONHGRXWRI&RFKUDQjVRIILFH :/DW $OWKRXJK0DLQ6WUHHWWDNHVLVVXHZLWKWKH s$DW 0&UDLJ7HVW  UHOLDQFHXSRQWKLVQHJDWLYHLQIHUHQFHLWZDVQRWLPSURSHU 6HH*DWOLII&RDO&R)GDW QRWLQJWKDWWKH%RDUGjV 2QWKHHYHQLQJRI'HFHPEHU&UDLJZHQWWR0DLQ mQHJDWLYH LQIHUHQFHV DERXW WKH DEVHQFH RI WHVWLPRQ\ IURP 6WUHHW WR UHWULHYH $SULO &UDLJjV FLJDUHWWH FDVH  &UDLJ ZLWQHVVHVZKRVKRXOGKDYHEHHQDEOHWRSURYLGHVXSSRUWLQJ RYHUKHDUG0RQVRQWHOOLQJsHIIHUVWKDW$SULO&UDLJKDGEHHQ WHVWLPRQ\IRU>WKHHPSOR\HU@lVXSSRUWHGWKH%RDUGjVILQGLQJ VSUHDGLQJOLHVDERXWKLPDQGWKDWVKHKDGQRWEHHQGRLQJKHU RIXQODZIXOPRWLYDWLRQ  MRE  :KHQ &UDLJ KHDUG sHIIHUV H[SUHVV DJUHHPHQW ZLWK 0RQVRQVKHFRQIURQWHGsHIIHUVDQGDVNHGKHUKRZVKHFRXOG PDNH VXFK XQWUXH VWDWHPHQWV  %HIRUH OHDYLQJ &UDLJ WROG sHIIHUV WKDW VKH WKRXJKW sHIIHUV ZDV EHLQJ XQIDLU  sHIIHUV GLVDJUHHGDQGVDLGWKDWVKHZDVJRLQJWRILUHmZKRHYHUZDV  PDNLQJWURXEOHLQWKHNLWFKHQls$DW 0&UDLJ7HVW  &LWLQJ1/5% Y 3LRQHHU 3ODVWLFV &RUS  )G  VW &LU  &UDLJWROGsHIIHUVWKDWVKHVKRXOGQRWILUHKHUZLWKRXWDJRRG FHUW GHQLHG  86    0DLQ 6WUHHW DUJXHV WKDW FRQYHUVDWLRQV KHOG ZLWKLQ KHDULQJ GLVWDQFH RI VXSHUYLVRUV mLQ DQG RI WKHPVHOYHV DUH QRW UHDVRQDQGWKUHDWHQHGWRILOHDODZVXLWLIsHIIHUVGLG D VXIILFLHQW EDVLV WR LQIHU NQRZOHGJHl ,G DW  +RZHYHU DV LQ 3LRQHHU 3ODVWLFV LQ WKLV FDVH WKHUH LV DGGLWLRQDO HYLGHQFH VXSSRUWLQJ DQ LQIHUHQFH 7KHQH[WGD\DQXUVHFDPHLQWRWKHNLWFKHQDQGWROG&UDLJ RI NQRZOHGJH n QDPHO\ WKH XQUHIXWHG WHVWLPRQ\ WKDW WKH GLUHFWRU RI WKDWVKHZDVXSVHWDERXWKDYLQJEHHQSDVVHGRYHUIRUDMRE QXUVLQJ ORRNHG XS LPPHGLDWHO\ DIWHU &UDLJjV VWDWHPHQW DQG WKH IDFW WKDW &UDLJWROGWKHQXUVHWRILOHDJULHYDQFH$OVRWKDWGD\QXUVLQJ 0DLQ 6WUHHW GLG QRW SXW RQ WHVWLPRQ\ WR WKH FRQWUDU\ DLGH'RQQD0F.HQ]LHZDVFRPSODLQLQJDERXWWKHZD\WKDW  VKHZDVEHLQJWUHDWHGE\0DLQ6WUHHW0F.HQ]LHVDLGm>Z@HOO (YHQ DVVXPLQJ WKDW WKH GLUHFWRU RI QXUVLQJ DFWXDOO\ RYHUKHDUG WKH LI ZH KDG D XQLRQl s$ DW  0 &UDLJ 7HVW  &UDLJ VWDWHPHQW 0DLQ 6WUHHW FRQWHQGV WKDW WKHUH LV QR HYLGHQFH VXSSRUWLQJ WKH LQIHUHQFH WKDW WKH GLUHFWRU WROG &UDLJjV VXSHUYLVRUV +RZHYHU ZH ZLOO QRW UHVSRQGHGE\VD\LQJm,IZHKDGDXQLRQWKH\ZRXOGQRWWUHDW GLVSODFH WKH %RDUGjV UHDVRQDEOH LQIHUHQFHV RQ UHYLHZ VHH HJ .HQWXFN\ DQ\ RI XV WKLV ZD\l  s$ DW  0 &UDLJ 7HVW   &UDLJ *HQHUDO ,QF Y 1/5%  )G   WK &LU   DQG WKH WHVWLILHG WKDW VKH PDGH WKLV VWDWHPHQW ORXG HQRXJK IRU WKH %RDUGjV LQIHUHQFH WKDW PDQDJHPHQW NQHZ RI WKH VWDWHPHQW ZDV QRW GLUHFWRU RI QXUVLQJ ZKR ZDV VWDQGLQJ QHDUE\ WR KHDU XQUHDVRQDEOH &I 1/5% Y +HDOWK &DUH /RJLVWLFV ,QF  )G  0RUHRYHU&UDLJWHVWLILHGWKDWWKHGLUHFWRURIQXUVLQJORRNHG  WK &LU  VXVWDLQLQJ $/sjV ILQGLQJ RI HPSOR\HU NQRZOHGJH RI XQLRQ DFWLYLWLHV RQ WKH EDVLV RI HYLGHQFH WKDW mWKH HPSOR\HHVj GLVFXVVLRQV XSZKHQ&UDLJPDGHWKLVVWDWHPHQW DERXW XQLRQ UHSUHVHQWDWLRQ RFFXUUHG LQ WKH PDLQ URRP RI WKH VPDOO PDQXIDFWXULQJ IDFLOLW\ GXULQJ WKH ZRUNGD\ ZLWK QR UHDO HIIRUW PDGH WR 2Q0RQGD\'HFHPEHU&RFKUDQILUHG&UDLJ$OWKRXJK FRQFHDO WKHVH FRQYHUVDWLRQV IURP PDQDJHPHQW DQG VXSHUYLVRU\ SHUVRQQHOl &UDLJ DVNHG ZK\ &RFKUDQ UHIXVHG WR SURYLGH DQ DQVZHU DQG RQ WKH EDVLV RI WKH WLPLQJ RI WKH WHUPLQDWLRQV   1/5%Y0DLQ6WUHHW 1RV 1RV 1/5%Y0DLQ6WUHHW  7HUUDFH&DUH&HQWHU 7HUUDFH&DUH&HQWHU H[SODLQLQJ WKDW VKH ZDV IROORZLQJ SHUVRQQHO SROLFLHV WKDW LQYROYLQJDTXHVWLRQRIHPSOR\HUPRWLYDWLRQWKHWULHURIIDFW DOORZHG KHU WR GLVFKDUJH ZLWKRXW FDXVH  &RFKUDQ ODWHU HPSOR\VWKHWHVWDUWLFXODWHGE\WKH%RDUGLQ:ULJKW/LQH WHVWLILHGWKDWVKHILUHG&UDLJDWWKHUHTXHVWRIsHIIHUVZKRWROG 1/5%    HQIRUFHG  )G  VW &LU &RFKUDQm>W@KDW0DU\&UDLJZDVnXKKDYLQJnZDVQRW   FHUW GHQLHG  86     m7KLV WHVW JHWWLQJDORQJZLWKKHUFRZRUNHUDQGWKDWWKHUHZDVnWKHUH DSSURYHGE\WKH6XSUHPH&RXUWLQ1/5%Y7UDQVSRUWDWLRQ ZHUHVHYHUDOGLVUXSWLRQVZLWKLQWKHZRUNSODFHVXFKDVFU\LQJ 0DQDJHPHQW&RUSUHTXLUHVWKHJHQHUDOFRXQVHORIWKH1/5% n XK ORXG YRLFH WDONLQJ YHU\ ORXGO\ RU VKRXWLQJ n XK WRPDNHDVKRZLQJVXIILFLHQWWRVXSSRUWWKHLQIHUHQFHWKDWWKH EDQJLQJSRWVDQGSDQVDURXQGnXKDQGWKDWZDVGLVUXSWLYH SURWHFWHGFRQGXFWZDVDPRWLYDWLQJIDFWRULQWKHHPSOR\HUjV WR WKH ZRUNSODFH DQG WR WKH KRPH LWVHOI EHLQJ ZKHUH WKH GHFLVLRQ$WWKDWSRLQWWKHEXUGHQVKLIWVWRWKHHPSOR\HUWR NLWFKHQ DQG WKH VHUYLQJ DUHD DUH ORFDWHGl  s$ DW  HVWDEOLVKWKDWWKHDGYHUVHDFWLRQZRXOGKDYHWDNHQSODFHLQWKH &RFKUDQ7HVW  DEVHQFH RI WKH SURWHFWHG FRQGXFW LQ WKH QDWXUH RI DQ DIILUPDWLYH GHIHQVHl  $UURZ (OHF &R  )G DW  $FWLQJ RQ DQ XQIDLU ODERU SUDFWLFH FKDUJH ILOHG E\ &UDLJ FLWDWLRQDQGIRRWQRWHRPLWWHG  DIWHUKHUWHUPLQDWLRQWKH%RDUGjV*HQHUDO&RXQVHOLVVXHGD FRPSODLQWDOOHJLQJWKDW0DLQ6WUHHWYLRODWHG† D  RIWKH %HFDXVH HPSOR\HUV UDUHO\ DGPLW WKDW DQ HPSOR\HHjV 1/5$E\SURPXOJDWLQJDUXOHSURKLELWLQJHPSOR\HHVIURP GLVFKDUJHZDVGXHWRKHUHQJDJHPHQWLQSURWHFWHGFRQFHUWHG GLVFXVVLQJZDJHVDPRQJWKHPVHOYHVDQGE\GLVFKDUJLQJ&UDLJ DFWLYLW\FLUFXPVWDQWLDOHYLGHQFHDORQHPD\EHVXIILFLHQWWR IRUHQJDJLQJLQSURWHFWHGFRQFHUWHGDFWLYLW\$IWHUDKHDULQJ VXSSRUWDILQGLQJRIXQODZIXOPRWLYDWLRQ6HH*DWOLII KHOGRQsXO\WKHDGPLQLVWUDWLYHODZMXGJH m$/sl )GDW$QHPSOR\HUjVPRWLYDWLRQLVDIDFWXDOTXHVWLRQ FRQFOXGHGWKDW0DLQ6WUHHWYLRODWHG† D  DVDOOHJHG2Q DQGWKH%RDUGjVGHWHUPLQDWLRQLQWKLVUHJDUGPXVWWKHUHIRUHEH sDQXDU\WKH%RDUGDIILUPHGWKH$/sjVILQGLQJVDQG XSKHOGLIVXSSRUWHGE\VXEVWDQWLDOHYLGHQFH6HH1/5%Y$ FRQFOXVLRQV DQG DGRSWHG WKH $/sjV UHFRPPHQGHG RUGHU DV  7 0IJ &R  )G   WK &LU   ZULWWHQ6HH0DLQ6WUHHW7HUUDFH&DUH&HQWHU1/5% )XUWKHUPRUH mFUHGLELOLW\ GHWHUPLQDWLRQV PXVW EH DFFHSWHG 1R1R&$:/  1/5% XQOHVV LW LV FOHDU WKDW WKHUH LV QR UDWLRQDO EDVLV IRU WKHPl sDQ  7DOVRO&RUS)GDW TXRWDWLRQRPLWWHG  :LWKUHJDUGWRWKHILUVWDOOHJDWLRQWKH$/sIRXQGWKDW0DLQ 0DLQ 6WUHHW ILUVW DUJXHV WKDW WKH %RDUG LPSURSHUO\ 6WUHHW KDG SURPXOJDWHG D UXOH SURKLELWLQJ HPSOR\HHV IURP FRQVLGHUHG &UDLJjV UHPDUN WR 0F.HQ]LH DV HYLGHQFH RI GLVFXVVLQJWKHLUZDJHVDVm>W@ZRGLIIHUHQWGLHWDU\PDQDJHUV XQODZIXOPRWLYDWLRQEHFDXVHLWFRQWHQGVWKHUHLVQRHYLGHQFH WROGHPSOR\HHVDERXWWKLVUXOHl0DLQ6WUHHW:/DW  WKDWLWKDGNQRZOHGJHRIWKHUHPDUN+RZHYHUWKH%RDUGjV 7KH$/sWKHQH[SODLQHGWKDWmWKHPHUHH[LVWHQFHRIWKHUXOH ILQGLQJ WKDW 0DLQ 6WUHHW ZDV DZDUH RI WKLV VWDWHPHQW LV LQKLELWLQJSURWHFWHGFRQGXFWHYHQLIQRWHQIRUFHGFRQVWLWXWHV VXSSRUWHGE\VXEVWDQWLDOHYLGHQFH)LUVW&UDLJWHVWLILHGWKDW DQXQODZIXOLQWHUIHUHQFHLQYLRODWLRQRI6HFWLRQ D  RIWKH $FWl,G7KH$/sDOVRIRXQGWKDW0DLQ6WUHHWWHUPLQDWHG &UDLJIRUHQJDJLQJLQSURWHFWHGFRQFHUWHGDFWLYLW\LQYLRODWLRQ WR WKH KRPH LWVHOIl s$ DW  &RFKUDQ 7HVW  RI †  D    )LUVW WKH $/s IRXQG WKDW &UDLJ HQJDJHG LQ SURWHFWHGFRQFHUWHGDFWLYLW\ZLWKUHJDUGWR$SULO&UDLJ5LJE\  0DLQ 6WUHHW GRHV QRW FRQWHVW WKH %RDUGjV ILQGLQJ WKDW m>Z@LWKRXW sDFNVRQWKHQXUVHDQG0F.HQ]LHDQGWKDWRQ'HFHPEHU TXHVWLRQ >0DLQ 6WUHHW@ NQHZ DERXW WKH FRQFHUWHG QDWXUH RI 0DU\ &UDLJjV 0DLQ6WUHHWZDVDZDUHRIWKLVDFWLYLW\6HHLGDW  DFWLYLWLHV ZLWK UHVSHFW WR $SULO &UDLJ 5LJE\ DQG sDFNVRQl0DLQ 6WUHHW  :/ DW   1/5%Y0DLQ6WUHHW 1RV 1RV 1/5%Y0DLQ6WUHHW  7HUUDFH&DUH&HQWHU 7HUUDFH&DUH&HQWHU 7KH%RDUGIRXQGWKDWWKHHPSOR\HHjVGLVFKDUJHDVDUHVXOWRI 7KH$/sIXUWKHUIRXQGWKDW&UDLJjVWHUPLQDWLRQZDVPRWLYDWHG WKLVKHDWHGGLVSXWH YLRODWHG† D  EXWWKH)LIWK&LUFXLW E\KHUSURWHFWHGFRQFHUWHGDFWLYLW\DQGWKDW0DLQ6WUHHWKDG GHQLHG HQIRUFHPHQW RI WKH RUGHU FRQFOXGLQJ WKDW WKH QRWGHPRQVWUDWHGWKDWLWZRXOGKDYHWHUPLQDWHG&UDLJHYHQLQ HPSOR\HHjVFRPPHQWGLGQRWFRQVWLWXWHDSURWHFWHGFRQFHUWHG WKHDEVHQFHRIWKHSURWHFWHGFRQGXFW6HHLGDW   DFWLYLW\  7KH )LIWK &LUFXLW H[SODLQHG WKDW WKH HPSOR\HHjV DFWLRQZDVQRWFRQFHUWHGEHFDXVHWKHHPSOR\HHZDVQRWDFWLQJ 2Q$SULOWKH%RDUGILOHGWKHLQVWDQWSHWLWLRQIRU RQEHKDOIRIKHUIHOORZHPSOR\HHVDQGEHFDXVHVKHKDGQHYHU HQIRUFHPHQWRIWKHRUGHUDQG0DLQ6WUHHWVXEVHTXHQWO\FURVV GLVFXVVHG WKH SRVVLELOLW\ RI XQLRQL]DWLRQ ZLWK RWKHU SHWLWLRQHGIRUUHYLHZ:HKDYHMXULVGLFWLRQRYHUWKH%RDUGjV HPSOR\HHV  +HU UHPDUN WKHUHIRUH mZDV WKH SURGXFW RI D SHWLWLRQDQG0DLQ6WUHHWjVFURVVSHWLWLRQSXUVXDQWWR†† H SXUHO\SHUVRQDOGLVSXWHl,GDW DQG I RIWKH1/5$86&†† H   I  ,Q6FRRED0DQXIDFWXULQJWKHHPSOR\HHjVUHPDUNZDVQRW ,,$1$/<6,6 FRQFHUWHG EHFDXVH QR FROOHFWLYH ZRUNHU DFWLRQ ZDV FRQWHPSODWHG WKH HPSOR\HH KDG VLPSO\ XVHG WKH ZRUG :KHQUHYLHZLQJ%RDUGGHFLVLRQVWKHVFRSHRIRXULQTXLU\ mXQLRQlLQDSHUVRQDOGLVSXWHZLWKDVXSHUYLVRU,QFRQWUDVW LV OLPLWHG  m7KH ILQGLQJV RI WKH %RDUG ZLWK UHVSHFW WR &UDLJjVUHPDUNZDVPDGHGXULQJDFRQYHUVDWLRQZLWKDIHOORZ TXHVWLRQVRIIDFWLIVXSSRUWHGE\VXEVWDQWLDOHYLGHQFHRQWKH HPSOR\HHUHJDUGLQJXQLRQL]DWLRQ  $GGLWLRQDOO\XQOLNHWKH UHFRUGFRQVLGHUHGDVDZKROHVKDOOEHFRQFOXVLYHl86& HPSOR\HH LQ 6FRRED 0DQXIDFWXULQJ &UDLJ KDG HQJDJHG LQ † H VHHDOVR1/5%Y7DOVRO&RUS)G RWKHUSURWHFWHGDFWLYLW\RQEHKDOIRIIHOORZHPSOR\HHVLQWKH WK&LU m:HDOVRUHYLHZWKH%RDUGjVDSSOLFDWLRQRI SDVW&RQWUDU\WR0DLQ6WUHHWjVDUJXPHQWV&UDLJjVUHPDUN WKH ODZ WR SDUWLFXODU IDFWV XQGHU WKH VXEVWDQWLDO HYLGHQFH ZDV QRW WKH SURGXFW RI D SXUHO\ SHUVRQDO GLVSXWH VWDQGDUGl  7DOVRO  )G DW  TXRWDWLRQ RPLWWHG  $FFRUGLQJO\WKH%RDUGjVILQGLQJWKDWWKLVFRQYHUVDWLRQZDV 6XEVWDQWLDOHYLGHQFHFRQVLVWVRImVXFKUHOHYDQWHYLGHQFHDVD SURWHFWHGFRQFHUWHGDFWLYLW\LVUHDVRQDEOHDQGLVDIILUPHG UHDVRQDEOH PLQG PLJKW DFFHSW DV DGHTXDWH WR VXSSRUW D FRQFOXVLRQl,G TXRWDWLRQRPLWWHG $GGLWLRQDOO\m>Z@KHUH 0DLQ6WUHHWjV0RWLYDWLRQ WKH HYLGHQFH VXSSRUWV WZR FRQIOLFWLQJ YLHZV ZH PD\ QRW GLVWXUEWKH%RDUGjVILQGLQJVDQGLWVRUGHUPXVWEHHQIRUFHGl 0DLQ 6WUHHW KDV FRQVLVWHQWO\ PDLQWDLQHG WKDW &UDLJ ZDV ,G TXRWDWLRQRPLWWHG VHHDOVR.HQWXFN\*HQHUDO,QFY GLVFKDUJHG QRW IRU KHU HQJDJHPHQW LQ SURWHFWHG FRQFHUWHG 1/5%)G  WK&LU  m>7@KH%RDUGjV DFWLYLW\EXWUDWKHUIRUGLVUXSWLYHEHKDYLRUVWHPPLQJIURPKHU UHDVRQDEOHLQIHUHQFHVPD\QRWEHGLVSODFHGRQUHYLHZHYHQ LQDELOLW\WRJHWDORQJZLWKFRZRUNHU%RE0RQVRQ,QFDVHV WKRXJK >ZH PD\@ MXVWLILDEO\ KDYH UHDFKHG D GLIIHUHQW FRQFOXVLRQl TXRWDWLRQ RPLWWHG  VHFRQG DOWHUDWLRQ LQ RULJLQDO   )XUWKHUPRUH WKH %RDUGjV LQWHUSUHWDWLRQ RI WKH  1/5$PXVWEHXSKHOGLIUHDVRQDEO\GHIHQVLEOH6HH/RUDO 0DLQ 6WUHHW DVVHUWV LQ LWV EULHI WKDW &UDLJ ZDV DOVR GLVFKDUJHG IRU LQVXERUGLQDWLRQ UHIHUULQJ WR KHU EHKDYLRU DW WKH 1RYHPEHU  PHHWLQJ 'HIHQVH6\VWHPV$NURQY1/5%)G WK&LU DQG WR WKH LQFLGHQW ZLWK sHIIHUV RQ WKH HYHQLQJ RI 'HFHPEHU    m7KH%RDUGjVFRQFOXVLRQVRIODZPXVWEHDIILUPHGLI +RZHYHU WKHUH LV QR HYLGHQFH LQ WKH UHFRUG WR VXSSRUW WKLV FRQWHQWLRQ WKH\DUHEDVHGXSRQDUHDVRQDEOHGHIHQVLEOHFRQVWUXFWLRQRI &RFKUDQ WHVWLILHG WKDW &UDLJ ZDV ILUHG VROHO\ RQ sHIIHUVjV UHFRPPHQGDWLRQ DQG WKDW sHIIHUV WROG KHU &UDLJ mZDV QRW JHWWLQJ DORQJ ZLWK KHU FRZRUNHU WKH$FWl 1/5%Y:HEFRU3DFNDJLQJ,QF)G DQG WKDW    WKHUH ZHUH VHYHUDO GLVUXSWLRQV ZLWKLQ WKH ZRUNSODFH VXFK DV  WK&LU  H[SODLQLQJWKDWFRXUWVPXVWGHIHUWRWKH FU\LQJ n XK ORXG YRLFH WDONLQJ YHU\ ORXGO\ RU VKRXWLQJ n XK EDQJLQJ %RDUGjV LQWHUSUHWDWLRQ RI WKH 1/5$ LI WKH %RDUGjV SRWV DQG SDQV DURXQG n XK DQG WKDW ZDV GLVUXSWLYH WR WKH ZRUNSODFH DQG  1/5%Y0DLQ6WUHHW 1RV 1RV 1/5%Y0DLQ6WUHHW  7HUUDFH&DUH&HQWHU 7HUUDFH&DUH&HQWHU FRQVWUXFWLRQLVDUHDVRQDEOHRQH FHUWGHQLHG86 IXUWKHULQJ JURXS JRDOVl  &RPSXZDUH &RUS  )G DW    $ 3URPXOJDWLRQ RI D 5XOH 3URKLELWLQJ 'LVFXVVLRQ RI m&RQFHUWHGHPSOR\HHDFWLYLWLHVDUHSURWHFWHGE\†ZKHUH :DJHV WKHDFWLYLWLHVFDQUHDVRQDEO\EHVHHQDVDIIHFWLQJWKHWHUPVRU FRQGLWLRQVRIHPSOR\PHQWl*DWOLII&RDO&RY1/5% 6HFWLRQRIWKH1/5$JLYHVHPSOR\HHVmWKHULJKWWRVHOI )G WK&LU :HKDYHKHOGWKDWSURWHVWVRI RUJDQL]DWLRQWRIRUPMRLQRUDVVLVWODERURUJDQL]DWLRQVWR ZDJHV KRXUV DQG ZRUNLQJ FRQGLWLRQV DV ZHOO DV WKH EDUJDLQ FROOHFWLYHO\ WKURXJK UHSUHVHQWDWLYHV RI WKHLU RZQ SUHVHQWDWLRQRIMREUHODWHGJULHYDQFHVDUHDFWLYLWLHVSURWHFWHG FKRRVLQJDQGWRHQJDJHLQRWKHUFRQFHUWHGDFWLYLWLHVIRUWKH E\†6HH/OR\G$)U\5RRILQJ&R)GDW SXUSRVH RI FROOHFWLYH EDUJDLQLQJ RU RWKHU PXWXDO DLG RU SURWHFWLRQl86&†6HFWLRQ D  PDNHVLWDQ 7KH %RDUG FRQFOXGHG WKDW &UDLJ HQJDJHG LQ SURWHFWHG XQIDLU ODERU SUDFWLFH IRU DQ HPSOR\HU mWR LQWHUIHUH ZLWK FRQFHUWHGDFWLYLW\ZLWKUHVSHFWWR$SULO&UDLJ5LJE\sDFNVRQ UHVWUDLQRUFRHUFHHPSOR\HHVLQWKHH[HUFLVHlRIWKHVHULJKWV WKHQXUVHZKRPVKHWROGWRILOHDJULHYDQFHDQG0F.HQ]LH  86& †  D    7KH %RDUG GHWHUPLQHG WKDW 0DLQ m7KH %RDUGjV GHWHUPLQDWLRQ WKDW DQ HPSOR\HH HQJDJHG LQ 6WUHHWYLRODWHG† D  E\SURPXOJDWLQJDUXOHSURKLELWLQJ SURWHFWHG FRQFHUWHG DFWLYLW\ LV HQWLWOHG WR JUHDW GHIHUHQFHl HPSOR\HHVIURPGLVFXVVLQJZDJHVZLWKRQHDQRWKHU &RPSXZDUH &RUS  )G DW   7KH %RDUGjV GHWHUPLQDWLRQWKDW&UDLJjVHIIRUWVWRUHPHG\WKHZDJHUHODWHG :H KDYH QRW SUHYLRXVO\ H[DPLQHG ZKHWKHU VXFK D UXOH SUREOHPV RI $SULO &UDLJ 5LJE\ DQG sDFNVRQ FRQVWLWXWHG FRQVWLWXWHVDQXQIDLUODERUSUDFWLFHXQGHU† D  m7KHWHVW SURWHFWHGFRQFHUWHGDFWLYLW\LVFOHDUO\FRUUHFW$V0DLQ6WUHHW IRU GHWHUPLQLQJ ZKHWKHU DQ HPSOR\HU KDV YLRODWHG VHFWLRQ DFNQRZOHGJHVDOWKRXJK&UDLJRIWHQFRQIURQWHGPDQDJHPHQW  D  LVZKHWKHUWKHHPSOR\HUjVFRQGXFWWHQGVWREHFRHUFLYH DORQHVKHZDVDWDOOWLPHVDFWLQJDVDUHSUHVHQWDWLYHRIDWOHDVW RU WHQGV WR LQWHUIHUH ZLWK WKH HPSOR\HHVj H[HUFLVH RI WKHLU RQH RWKHU HPSOR\HH  )XUWKHUPRUH &UDLJjV FRPSODLQWV ULJKWVl9 63UR*DOY,QFY1/5%)G WK FRQFHUQHGPDWWHUVSURWHFWHGE\†DVWKH\UHODWHGWRZDJHV &LU  TXRWLQJ1/5%Y2NXQ%URV6KRH6WRUH,QF )G WK&LU FHUWGHQLHG86 0DLQ6WUHHWjVSULQFLSDODUJXPHQWLVWKDW&UDLJjVVWDWHPHQW   LQWHUQDO TXRWDWLRQ PDUNV RPLWWHG   7KH 6XSUHPH WR0F.HQ]LHWKDWm>L@IZHKDGDXQLRQWKH\ZRXOGQRWWUHDW &RXUW KDV H[SODLQHG WKDW mWKH ULJKW RI HPSOR\HHV WR VHOI DQ\RIXVWKLVZD\lZDVQRWFRQFHUWHGDFWLYLW\EXWZDVUDWKHU RUJDQL]HDQGEDUJDLQFROOHFWLYHO\HVWDEOLVKHGE\†RIWKH WKHSURGXFWRIDSHUVRQDOGLVSXWH)RUWKLVSURSRVLWLRQ0DLQ 1/5$86&†QHFHVVDULO\HQFRPSDVVHVWKHULJKW 6WUHHW UHOLHV RQ WKH )LIWK &LUFXLWjV GHFLVLRQ LQ 6FRRED HIIHFWLYHO\WRFRPPXQLFDWHZLWKRQHDQRWKHUUHJDUGLQJVHOI 0DQXIDFWXULQJ&RY1/5%)G WK&LU  SHU RUJDQL]DWLRQDWWKHMREVLWHl%HWK,VUDHO+RVSY1/5% FXULDP  FHUW GHQLHG  86     ,Q 6FRRED 86   0DQXIDFWXULQJDQHPSOR\HHKDGDYLJRURXVDUJXPHQWZLWK KHUVXSHUYLVRUWKDWZDVVSDUNHGE\WKHHPSOR\HUjVGHFLVLRQWR ,QWKHLQVWDQWFDVHVXEVWDQWLDOHYLGHQFHLQWKHUHFRUGDVD ILUH KHU VRQ  7KH DUJXPHQW HVFDODWHG DQG WXUQHG WR WKH ZKROH VXSSRUWV WKH %RDUGjV GHWHUPLQDWLRQ  7KH XQUHIXWHG HPSOR\HHjVRZQZRUNSHUIRUPDQFHDQGDEVHQWHHLVP%HIRUH WHVWLPRQ\DWWKHKHDULQJHVWDEOLVKHGWKDWWZRGLIIHUHQWGLHWDU\ OHDYLQJ KHU VXSHUYLVRUjV RIILFH WKH HPSOR\HH DQJULO\ PDQDJHUV WROG 0DU\ DQG $SULO &UDLJ QRW WR GLVFXVV ZDJHV SURFODLPHGm,WZRXOGEHQLFHLILW>VLF@ZDVDXQLRQKHUH$ ZLWKRWKHUHPSOR\HHV,QIDFWsHIIHUVWHVWLILHGWKDWVKHWROG ZKROHORWRIWKLQJVJRLQJRQZRXOGQjWEHJRLQJRQl,GDW  1/5%Y0DLQ6WUHHW 1RV 1RV 1/5%Y0DLQ6WUHHW  7HUUDFH&DUH&HQWHU 7HUUDFH&DUH&HQWHU %'LVFKDUJHRI0DU\&UDLJ HPSOR\HHV WKDW WKH RZQHU RI WKH IDFLOLW\ GLG QRW ZDQW HPSOR\HHVWDONLQJZLWKHDFKRWKHUDERXWZDJHVs$DW 0DLQ 6WUHHW QH[W FKDOOHQJHV WKH %RDUGjV ILQGLQJ WKDW LW sHIIHUV 7HVW   $ UXOH SURKLELWLQJ HPSOR\HHV IURP YLRODWHG †  D   E\ GLVFKDUJLQJ &UDLJ IRU HQJDJLQJ LQ FRPPXQLFDWLQJ ZLWK RQH DQRWKHU UHJDUGLQJ ZDJHV D NH\ SURWHFWHG FRQFHUWHG DFWLYLW\  ,W LV ZHOO HVWDEOLVKHG WKDW REMHFWLYH RI RUJDQL]DWLRQDO DFWLYLW\ XQGRXEWHGO\ WHQGV WR GLVFKDUJLQJDQHPSOR\HHIRUHQJDJLQJLQDFWLYLW\SURWHFWHGE\ LQWHUIHUH ZLWK WKH HPSOR\HHVj ULJKW WR HQJDJH LQ SURWHFWHG †FRQVWLWXWHVDYLRODWLRQRI† D  6HHHJ$UURZ(OHF FRQFHUWHGDFWLYLW\6HHHJ:LOVRQ7URSK\&RY1/5% &RY1/5%)G WK&LU  HQIRUFLQJ )G   WK &LU   m$V >WKH HPSOR\HU@ %RDUGjV GHWHUPLQDWLRQ WKDW HPSOR\HU YLRODWHG †  D   E\ FRQFHGHVDQXQTXDOLILHGUXOHEDUULQJZDJHGLVFXVVLRQVDPRQJ GLVFKDUJLQJ HPSOR\HHV IRU DFWLYLW\ SURWHFWHG E\ †    :H HPSOR\HHV ZLWKRXW OLPLWDWLRQV DV WR WLPH RU SODFH LV PXVW WKHUHIRUH GHWHUPLQH ZKHWKHU WKH %RDUG SURSHUO\ SUHVXPSWLYHO\ LQYDOLG XQGHU WKH $FWl sHDQQHWWH &RUS Y FRQFOXGHG    WKDW &UDLJ HQJDJHG LQ SURWHFWHG FRQFHUWHG 1/5%  )G   G &LU   VXVWDLQLQJ WKH DFWLYLW\ XQGHU †  DQG   WKDW &UDLJ ZDV GLVFKDUJHG IRU %RDUGjVILQGLQJWKDWWKHHPSOR\HUjVUXOHEURDGO\SURKLELWLQJ HQJDJLQJLQWKLVDFWLYLW\ ZDJHGLVFXVVLRQVZDVDQXQIDLUODERUSUDFWLFHXQGHU† D   UHDVRQLQJWKDWmZDJHGLVFXVVLRQVFDQEHSURWHFWHGDFWLYLW\DQG 3URWHFWHG&RQFHUWHG$FWLYLW\ WKDWDQHPSOR\HUjVXQTXDOLILHGUXOHEDUULQJVXFKGLVFXVVLRQV KDV WKH WHQGHQF\ WR LQKLELW VXFK DFWLYLW\l   7KH %RDUG ,W LV ZHOO VHWWOHG WKDW mDQ LQGLYLGXDO HPSOR\HH PD\ EH WKHUHIRUH SURSHUO\ FRQFOXGHG WKDW 0DLQ 6WUHHWjV UXOH HQJDJHGLQFRQFHUWHGDFWLYLW\ZKHQKHDFWVDORQHl1/5%Y FRQVWLWXWHVDQXQIDLUODERUSUDFWLFHLQYLRODWLRQRI† D   &LW\'LVSRVDO6\V,QF86  m)RUDQ LQGLYLGXDOjV FRPSODLQWV WR FRQVWLWXWH FRQFHUWHG DFWLRQ WKLV 0DLQ6WUHHWGRHVQRWFRQWHVWWKHJHQHUDOSURSRVLWLRQWKDWD FRXUWUHTXLUHVWKDWWKHFRPSODLQWVµPXVWQRWKDYHEHHQPDGH UXOHSURKLELWLQJHPSOR\HHVIURPGLVFXVVLQJZDJHVDEVHQWD VROHO\RQEHKDOIRIDQLQGLYLGXDOHPSOR\HHEXW>WKH\@PXVWEH VXEVWDQWLDO DQG OHJLWLPDWH EXVLQHVV MXVWLILFDWLRQ YLRODWHV PDGHRQEHKDOIRIRWKHUHPSOR\HHVRUDWOHDVWZLWKWKHREMHFW †  D    0DLQ 6WUHHW LQVWHDG FRQWHQGV WKDW sHIIHUVjV RILQGXFLQJRUSUHSDULQJIRUJURXSDFWLRQjl7DOVRO&RUS LQVWUXFWLRQVWRHPSOR\HHVGLGQRWHVWDEOLVKDQXQODZIXOUXOH )GDW TXRWLQJ0DQLPDUN&RUSY1/5%)G 0DLQ6WUHHWSURIIHUVWKHIROORZLQJWKUHHDUJXPHQWVLQVXSSRUW   WK &LU   DOWHUDWLRQ LQ RULJLQDO  VHH DOVR RI LWV FRQWHQWLRQ    LWV UXOH ZDV QRW ZULWWHQ RU 1/5%Y/OR\G$)U\5RRILQJ&R)G WK DFNQRZOHGJHG  QHLWKHUsHIIHUVQRUDQ\RWKHUPDQDJHUKDG &LU   m$Q LQGLYLGXDO HPSOR\HHjV FRPSODLQW LV WKHDXWKRULW\WRSURPXOJDWHVXFKDUXOHDQG  WKHUXOHZHQW µFRQFHUWHGjLILWLVUHODWHGWRJURXSDFWLRQIRUWKHPXWXDODLGRU XQHQIRUFHG7KHVHDUJXPHQWVKRZHYHUPXVWIDLO SURWHFWLRQRIRWKHUHPSOR\HHVl &RPSXZDUH&RUSY1/5% )G WK&LU FHUWGHQLHG86 )LUVWWKHIDFWWKDWWKHUXOHZDVSURPXOJDWHGRUDOO\UDWKHU   TXRWLQJ WKLV ODQJXDJH   $GGLWLRQDOO\ LW LV QRW WKDQZULWWHQLQDQHPSOR\HHKDQGERRNIRUH[DPSOHPDNHVQR QHFHVVDU\ WKDW DQ HPSOR\HH EH DSSRLQWHG E\ KLV IHOORZ HPSOR\HHV LQ RUGHU WR UHSUHVHQW WKHLU LQWHUHVWV  6HH HJ 7DOVRO &RUS  )G DW   7KH UHOHYDQW LQTXLU\ LQ  GHWHUPLQLQJ ZKHWKHU DQ HPSOR\HHjV DFWLRQ ZDV FRQFHUWHG 7KH 6XSUHPH &RXUW KDV H[SODLQHG WKDW mLW LV RQO\ ZKHQ LQWHUIHUHQFH ZLWK †  ULJKWV RXWZHLJKV WKH EXVLQHVV MXVWLILFDWLRQ IRU WKH WKH WKHUHIRUHmLVZKHWKHUWKHHPSOR\HHDFWHGZLWKWKHSXUSRVHRI HPSOR\HUjVDFWLRQ WKDW †  D  LV YLRODWHGl 7H[WLOH :RUNHUV 8QLRQ Y 'DUOLQJWRQ 0IJ &R  86     ,Q WKH LQVWDQW FDVH KRZHYHU 0DLQ 6WUHHW KDV SURIIHUHG QR EXVLQHVV MXVWLILFDWLRQ IRU LWV UXOH  1/5%Y0DLQ6WUHHW 1RV 1RV 1/5%Y0DLQ6WUHHW  7HUUDFH&DUH&HQWHU 7HUUDFH&DUH&HQWHU GLIIHUHQFHWRWKH† D  DQDO\VLV$VZHKDYHH[SODLQHG UHVSRQVLEO\WRGLUHFWWKHPRUWRDGMXVWWKHLUJULHYDQFHVRU DQ\UXOHSURKLELWLQJHPSOR\HHZDJHGLVFXVVLRQVnZKHWKHU HIIHFWLYHO\WRUHFRPPHQGVXFKDFWLRQl86&†   ZULWWHQRURUDOnKDVDWHQGHQF\WRGLVFRXUDJHVXFKSURWHFWHG ,QIDFWsHIIHUVWHVWLILHGDWWKHKHDULQJWKDWDVGLHWDU\PDQDJHU GLVFXVVLRQV,QIDFWYHUEDOZDUQLQJVIURPDVXSHUYLVRUZKR VKH m>GLG@ WKH KLULQJ ILULQJ VFKHGXOLQJ RUGHULQJ KDV WKH DXWKRULW\ WR GLVFLSOLQH DQG WR GLVFKDUJH PD\ EH VXSHUYLVLQJls$DW sHIIHUV7HVW  SHUFHLYHG E\ DQ HPSOR\HH DV SDUWLFXODUO\ FRHUFLYH  0DLQ 6WUHHWjVDUJXPHQWZRXOGSHUPLWHPSOR\HUVURXWLQHO\WRHYDGH 0DLQ6WUHHWjVILQDOFRQWHQWLRQWKDWQRUXOHH[LVWHGEHFDXVH WKHGLFWDWHVRIWKH1/5$E\DFFRPSOLVKLQJWKURXJKDQRUDO LWZDVQRWURXWLQHO\HQIRUFHGDOVRODFNVPHULW$VZHKDYH UXOH ZKDW FDQQRW EH GRQH WKURXJK D ZULWWHQ RQH DQG ZH H[SODLQHGLQDQDO\]LQJD† D  FODLPmWKHDFWXDOHIIHFWRI DFFRUGLQJO\UHMHFWWKLVDUJXPHQW DVWDWHPHQWLVQRWVRLPSRUWDQWDVLVLWVWHQGHQF\WRFRHUFHl 1/5%Y2NXQ%URV6KRH6WRUH,QF)G WK 0DLQ 6WUHHW QH[W PDNHV WKH UHODWHG DUJXPHQW WKDW LWV &LU   FHUW GHQLHG  86     m:H ZLOO PDQDJHPHQWKDGQRNQRZOHGJHRIWKHUXOH$WWKHKHDULQJ XSKROGDILQGLQJRIDYLRODWLRQLIWKHHPSOR\HHVUHDVRQDEO\ EHIRUHWKH$/s$GPLQLVWUDWRU&RFKUDQWHVWLILHGWKDWVKHVHWV FRXOGKDYHFRQFOXGHGWKDWWKHHPSOR\HUZDVFRHUFLQJWKHPl WKHUXOHVIRU0DLQ6WUHHWDQGWKDWVKHKDVQHYHUDGRSWHGVXFK 8IRUPD6KHOE\ %XV )RUPV ,QF Y 1/5%  )G  DUXOH&RFKUDQIXUWKHUWHVWLILHGWKDWsHIIHUVKDVQRDXWKRULW\  WK &LU    ,Q WKH LQVWDQW FDVH 0DU\ DQG $SULO WR DGRSW UXOHV IRU WKH FRPSDQ\  +RZHYHU 0DLQ 6WUHHW &UDLJ UHDVRQDEO\ VR FRXOG KDYH FRQFOXGHG  6HH 1/5% Y VWLSXODWHGWKDWsHIIHUVZDVDVXSHUYLVRUZLWKLQWKHPHDQLQJRI 9DQJXDUG 7RXUV ,QF  )G   G &LU  †    RI WKH 1/5$  86& †     6HH :LOVRQ m9DQJXDUGjV HPSOR\HH KDQGERRN FRQWDLQHG D UXOH 7URSK\ &R  )G DW  UHMHFWLQJ DUJXPHQW WKDW SURKLELWLQJ HPSOR\HHV IURP PDNLQJ VWDWHPHQWV FRQFHUQLQJ ZDUHKRXVH VXSHUYLVRUjV VWDWHPHQW SURKLELWLQJ DQ HPSOR\HH ZDJHVKRXUVWKHFRQGLWLRQRIEXVHVHWF%HFDXVHRIWKH IURP RSHQLQJ SD\FKHFNV LQ WKH ZDUHKRXVH ZDV QRW PDGH OLNHO\FKLOOLQJHIIHFWRIVXFKDUXOHWKH%RDUGPD\FRQFOXGH ZLWKLQ WKH VFRSH RI KLV DXWKRULW\ EHFDXVH WKH HPSOR\HU WKDWWKHUXOHZDVDQXQIDLUODERUSUDFWLFHHYHQDEVHQWHYLGHQFH VWLSXODWHG WKDW WKH ZDUHKRXVH VXSHUYLVRU ZDV D VXSHUYLVRU RIHQIRUFHPHQWl :DFR,QF1/5%  ZLWKLQ WKH PHDQLQJ RI †     sHIIHUV WKHUHIRUH KDG WKH UHMHFWLQJ WKH $/sjV ILQGLQJ WKDW QR †  D   YLRODWLRQ DXWKRULW\mWRKLUHWUDQVIHUVXVSHQGOD\RIIUHFDOOSURPRWH RFFXUUHGEHFDXVHHPSOR\HHVGLGQRWIHHOLQKLELWHGE\WKHUXOH GLVFKDUJHDVVLJQUHZDUGRUGLVFLSOLQHRWKHUHPSOR\HHVRU m,QDVVHVVLQJWKHODZIXOQHVVRIWKH>HPSOR\HUjV@UXOHZHDUH QRW FRQFHUQHG ZLWK WKH VXEMHFWLYH LPSDFW RI WKH UXOH RQ SDUWLFXODUHPSOR\HHV,QVWHDGZHPXVWGHWHUPLQHZKHWKHU  0DLQ 6WUHHWjV FRQWHQWLRQ WKDW m>W@KH RQO\ FDVHV LQ ZKLFK WKH 1/5% WKHUXOHUHDVRQDEO\WHQGHGWRFRHUFHHPSOR\HHVLQWKHH[HUFLVH KDV DQDO\]HG VXFK D UXOH LV ZKHUH WKH UXOH ZDV D ZULWWHQ RU DFNQRZOHGJHG RIWKHLU6HFWLRQULJKWVl IRRWQRWHRPLWWHG  SROLF\ RI WKH FRPSDQ\l 5HVSRQGHQWjV %U DW  LV VLPSO\ ZURQJ ,Q )UDQNOLQ ,URQ 0HWDO &RUS   1/5%    HQIRUFHG   7KHUHIRUH ZH DIILUP WKH %RDUGjV FRQFOXVLRQ WKDW 0DLQ )G  WK &LU   IRU H[DPSOH WKH %RDUG IRXQG WKDW WKH HPSOR\HU 6WUHHWjVUXOHSURKLELWLQJHPSOR\HHZDJHGLVFXVVLRQVYLRODWHV SURPXOJDWHG DQ RUDO UXOH SURKLELWLQJ HPSOR\HH ZDJH GLVFXVVLRQV LQ †  D   GHVSLWH WKH IDFW WKDW WKH UXOH ZDV XQZULWWHQ DQG YLRODWLRQ RI †  D  RQ WKH EDVLV RI WKH WHVWLPRQ\ RI WZR HPSOR\HHV WKDW WKH SODQW PDQDJHUV KDG WROG WKHP QRW WR GLVFXVV ZDJHV GHVSLWH WKH IDFW URXWLQHO\XQHQIRUFHG WKDW RQH SODQW PDQDJHU GHQLHG KDYLQJ PDGH VXFK VWDWHPHQWV 6HH LG DW  VHH DOVR :LOVRQ 7URSK\ &R  )G DW  DIILUPLQJ %RDUGjV ILQGLQJ WKDW WKH HPSOR\HU SURPXOJDWHG D UXOH LQ YLRODWLRQ RI †  D  ZKHUH WKH ZDUHKRXVH VXSHUYLVRU WROG HPSOR\HHV QRW WR GLVFXVV ZDJHV