Smoot v. United Transp Union

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l:LOH\Y8QLWHG6WDWHV)G DUELWUDWLRQSURFHHGLQJV  WK&LU FLWDWLRQVRPLWWHG 7KHGLVWULFWFRXUWGLG QRWHUULQIDLOLQJWRFRQVLGHUWKHH[HFXWLYHVHVVLRQWUDQVFULSW 2Q0D\3XEOLF/DZ%RDUG1R m3/%l D ZKHQ UXOLQJ RQ VXPPDU\ MXGJPHQW EHFDXVH WKH WUDQVFULSW SULYDWH DUELWUDWLRQ SDQHO FUHDWHG SXUVXDQW WR WKH 5/$ ZRXOG KDYH EHHQ LQDGPLVVLEOH DW WULDO  $Q HYLGHQWLDU\ FRQYHQHG D KHDULQJ DW WKH %DOWLPRUH 0DU\ODQG RIILFHV RI SURYLVLRQRIWKH$FW86&†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jVUHVSRQVHWRWKLVSURYLVLRQLVWKDWGLVFORVXUHRI PDWWHUV UHPDLQLQJ IURP SUHYLRXV 3/% KHDULQJV  3ODLQWLII WKHWUDQVFULSWZRXOGQRWKDYHEHHQLQYLRODWLRQRIWKH$FWDQG ZKRKDGEURXJKWWZRWDSHUHFRUGHUVZLWKKLPWRUHFRUGWKH WKXV UHFHLYLQJ WKH WUDQVFULSW LQWR HYLGHQFH ZRXOG QRW KDYH 3/% SURFHHGLQJV OHIW WKH UHFRUGHUV LQ WKH URRP ZKLOH WKH YLRODWHG†3ODLQWLIIRIIHUVWZRJURXQGVIRUWKLVSRVLWLRQ H[HFXWLYHVHVVLRQZDVKHOG7KHH[HFXWLYHVHVVLRQZDVWKHQ )LUVWWKHSXEOLFUHFRUGH[FHSWLRQXQGHU6PLWKSURYLGHVWKDW UHFRUGHG XQEHNQRZQVW WR WKH 3/% PHPEHUV WKH WDSH RI RQFHWKHWUDQVFULSWKDGHQWHUHGWKHSXEOLFUHFRUGVXEVHTXHQW ZKLFK3ODLQWLIIOLVWHQHGWRIROORZLQJWKHKHDULQJ2QsXO\ GLVFORVXUHZRXOGQRWEHLQYLRODWLRQRIWKH$FW6HFRQGWKLV WKH3/%GHFLGHGWKDW3ODLQWLIIZDVQRWHQWLWOHGWRWKH &RXUWVKRXOGDSSO\WKHmFOHDQKDQGVlH[FHSWLRQXQGHU8QLWHG VKDUHVRI&6;VWRFNXQGHUWKHODERUDJUHHPHQW 6WDWHVY0XUGRFN)G WK&LU WRSHUPLW DGPLVVLRQRIWKHH[HFXWLYHVHVVLRQWUDQVFULSWXQGHU† $,QWHUQDO8QLRQ$FWLRQV$JDLQVW(DUOH\ )LUVWDVGLVFXVVHGDERYH6PLWKGRHVQRWVXSSRUW3ODLQWLIIjV 2Q 'HFHPEHU   3ODLQWLII ILOHG LQWHUQDO XQLRQ FODLP WKDW RQFH WKH H[HFXWLYH VHVVLRQ WUDQVFULSW KDG EHHQ FKDUJHVDJDLQVW(DUOH\3ODLQWLIIZURWHWR.17KRPSVRQ HQWHUHGLQWRWKHSXEOLFUHFRUGVXEVHTXHQWGLVWULEXWLRQVRIWKH &KDLU RI WKH 878jV ([HFXWLYH %RDUG SUHVHQWLQJ IRUPDO  6PRRWY8QLWHG 1R 1R 6PRRWY8QLWHG  7UDQVSRUWDWLRQ8QLRQHWDO 7UDQVSRUWDWLRQ8QLRQHWDO FKDUJHVDJDLQVW(DUOH\IRUEUHDFKRIGXW\RIJRRGIDLWKDQG PRVW FDVHV ZKHUH SXQLWLYH DZDUGV DUH JUDQWHG mSXQLWLYH IDLUGHDOLQJDVDXQLRQUHSUHVHQWDWLYHDWWKH3/%KHDULQJ2Q DZDUGV KDYH EHHQ PXFK KLJKHU WKDQ WKH FRPSHQVDWRU\ sDQXDU\(DUOH\ZDVQRWLILHGE\WKH([HFXWLYH%RDUG DZDUGVl,GDW WKDWLWZRXOGSURFHHGZLWKWKHFKDUJHVEURXJKWDJDLQVWKLPE\ 3ODLQWLII$GLVFLSOLQDU\KHDULQJZDVVHWIRU0DUFK 2QWKHPDWWHURIDWWRUQH\VjIHHVDQGFRVWVWKH$FWSURYLGHV WKDWDSUHYDLOLQJSDUW\PD\UHFHLYHmDUHDVRQDEOHDWWRUQH\jV 2Q0DUFK/DQFH(5XFNDPHPEHURIWKH878 IHH DQG RWKHU UHDVRQDEOH FRVWV UHDVRQDEO\ LQFXUUHGl   ILOHGDFKDUJHZLWKWKHH[HFXWLYHERDUGDJDLQVW(DUOH\DIWHU 86&† E  7KHGLVWULFWFRXUWKHOGDQDWWRUQH\VjIHHV UHYLHZLQJ ERWK WDSH DQG WUDQVFULSW FRSLHV RI WKH H[HFXWLYH KHDULQJRQ6HSWHPEHU3ODLQWLIIZDVJLYHQQRWLFHRI VHVVLRQ  6HH (DUOH\ Y ([HFXWLYH %G RI WKH 878  ) WKHKHDULQJEXWGLGQRWDWWHQG3ODLQWLIIDOVRILOHGQRWLPHO\ 6XSS   1' 2KLR    ,Q WKDW FKDUJH 5XFN UHVSRQVHWRWKHDWWRUQH\VjIHHVDQGFRVWVDSSOLFDWLRQVILOHGE\ DOOHJHGWKDW(DUOH\DUJXHGDJDLQVWWKHRIILFLDOSRVLWLRQRIWKH 878 DQG &6;  %HFDXVH 3ODLQWLII IDLOHG WR REMHFW WR WKH 878LQWKHH[HFXWLYHVHVVLRQ+HDOVRDOOHJHGWKDW(DUOH\ DZDUG RI DWWRUQH\Vj IHHV EHORZ XQGHU WKH ZDLYHU UXOH WKLV WKHUHIRUHIDLOHGWRSHUIRUPKLVGXWLHVDVUHTXLUHGE\WKH878 &RXUWZLOOQRWFRQVLGHU3ODLQWLIIjVFODLP 5XFNVWDWHGWKDWKLVFODLPVDJDLQVW(DUOH\ZHUHIRUWKHVDPH ZURQJGRLQJDVWKRVHDOOHJHGE\3ODLQWLII :HILQGWKDWWKHGLVWULFWFRXUWGLGQRWDEXVHLWVGLVFUHWLRQ ZKHQ DZDUGLQJ 878 DQG &6; SXQLWLYH GDPDJHV XQGHU %(DUOH\$FWLRQ$JDLQVW3ODLQWLII †  E   RQ WKH JURXQGV WKDW 3ODLQWLII DWWHPSWHG WR GDPDJHWKHUHSXWDWLRQRI&6;DQG878DVZHOODV3ODLQWLIIjV 2Q0DUFK(DUOH\ILOHGDQDFWLRQDJDLQVW3ODLQWLII  GLVWULEXWLRQ RI WKH WUDQVFULSW ZKLFK IROORZHG LQ WKH 8QLWHG 6WDWHV 'LVWULFW &RXUW IRU WKH 'LVWULFW RI SUHOLPLQDU\ DQG SHUPDQHQW LQMXQFWLRQV SURKLELWLQJ VXFK 0DU\ODQG UHTXHVWLQJ GHFODUDWRU\ DQG LQMXQFWLYH UHOLHI RQ DFWLRQ+RZHYHUWKHDPRXQWRISXQLWLYHGDPDJHVVKRXOGEH JURXQGV WKDW 3ODLQWLIIjV WDSLQJ RI WKH H[HFXWLYH VHVVLRQ UHH[DPLQHGRQUHPDQGLQOLJKWRIWKHUHGXFWLRQLQVWDWXWRU\ YLRODWHG WKH $FW DV ZHOO DV WKH 0DU\ODQG DQWLZLUHWDSSLQJ GDPDJHVDYDLODEOHXQGHU† F  % :HDOVRILQGWKDW VWDWXWH0'&76 s8'352&&2'($11†HW 3ODLQWLIIjVFODLPRQDWWRUQH\Vj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jVDFWLRQXQGHUWKH$FW6HH([HFXWLYH%RDUG 7KH 6XSUHPH &RXUW KDV SURYLGHG WKDW m>R@UGLQDULO\ DQ DSSHOODWH )6XSSDW7KHGLVWULFWFRXUWWKHQWUDQVIHUUHGWKH FRXUW GRHV QRW JLYH FRQVLGHUDWLRQ WR LVVXHV QRW UDLVHG EHORZl +RUPHO Y +HOYHULQJ  86     m7KH SXUSRVH EHKLQG WKH ZDLYHU DFWLRQ WR WKH 8QLWHG 6WDWHV 'LVWULFW &RXUW IRU WKH 1RUWKHUQ UXOH LV WR IRUFH WKH SDUWLHV WR PDUVKDO DOO RI WKH UHOHYDQW IDFWV DQG LVVXHV 'LVWULFWRI2KLR,G2Q2FWREHUWKHGLVWULFWFRXUW EHIRUH WKH GLVWULFW FRXUW WKH WULEXQDO DXWKRUL]HG WR PDNH ILQGLQJV RI IDFWl HQWHUHG D SHUPDQHQW LQMXQFWLRQ SURKLELWLQJ 3ODLQWLII IURP $GYRFDF\ 2UJ IRU 3DWLHQWV 3URYLGHUV Y $XWR &OXE ,QV $VVjQ   )G   WK &LU   FHUW GHQLHG   86     6PRRWY8QLWHG 1R 1R 6PRRWY8QLWHG  7UDQVSRUWDWLRQ8QLRQHWDO 7UDQVSRUWDWLRQ8QLRQHWDO RIWKHWUDQVFULSWZKLFKRFFXUUHGDIWHU3ODLQWLIIKDGEHHQSXW XVLQJ RU GLVFORVLQJ WKH WDSH UHFRUGLQJ RI WKH H[HFXWLYH RQ QRWLFH WKDW GLVFORVXUH RI WKH FRQWHQWV RI WKH H[HFXWLYH VHVVLRQ ZKLFK ZDV VXEVHTXHQWO\ YDFDWHG RQ sDQXDU\  VHVVLRQ ZDV LOOHJDO  1RWLFH KDG EHHQ SURYLGHG E\ WKH ,GDW7KHGLVWULFWFRXUWIRXQGWKDW3ODLQWLII SHUPDQHQWLQMXQFWLRQWKDWZDVYDFDWHGRQsDQXDU\ KDGLQWHQWLRQDOO\UHFRUGHGWKHH[HFXWLYHVHVVLRQLQYLRODWLRQ SULRUWRWKHGLVWULEXWLRQ RIWKH$FW 3ODLQWLIIDUJXHVWKDWWKHGLVWULFWFRXUWIDLOHGWRVKRZKRZ &3ODLQWLII$FWLRQ$JDLQVW&6;DQG878&6;DQG &6;jV UHSXWDWLRQ ZDV GDPDJHG E\ GLVWULEXWLRQ RI WKH 878&RXQWHUFODLPV WUDQVFULSW+RZHYHU3ODLQWLIIjVFRPSODLQWDOOHJHGWKDW&6; DQG 878 ZRUNLQJ WRJHWKHU OREELHG WKH 3/% DUELWUDWRU WR 2Q 0DUFK   3ODLQWLII ILOHG KLV FRPSODLQW LQ WKLV VWUXFWXUHWKHVWRFNDZDUGVRDVWRGHQ\3ODLQWLIIjVFODLPWRWKH DFWLRQDOOHJLQJWKDWWKH3/%GHFLVLRQVKRXOGEHVHWDVLGHWKDW &6; VWRFN  3ODLQWLII RIIHUV QR EDVLV IRU KLV SRVLWLRQ WKDW WKH 878 EUHDFKHG LWV GXW\ RI IDLU UHSUHVHQWDWLRQ DQG WKDW DOOHJLQJ&6;FROOXVLRQZLWK878WRGHQ\3ODLQWLIIjVULJKWV &6; EUHDFKHG WKH ODERU DJUHHPHQW  3ODLQWLII DWWDFKHG D XQGHU WKH ODERU DJUHHPHQW ZDV QRW GDPDJLQJ WR &6;jV WUDQVFULSWFRS\RIWKHH[HFXWLYHVHVVLRQWDSHVDV([KLELW$WR UHSXWDWLRQ  7KH GLVWULFW FRXUW FRQFOXGHG WKDW 3ODLQWLII KDG KLV FRPSODLQW  2Q $SULO   WKH 878 ILOHG D LQGHHGGDPDJHG&6;jVUHSXWDWLRQERWKE\KLVDOOHJDWLRQVDQG FRXQWHUFODLPDOOHJLQJWKDW3ODLQWLIIYLRODWHGWKH$FWE\WDSLQJ E\DWWDFKLQJWKHH[HFXWLYHVHVVLRQWUDQVFULSWWRKLVFRPSODLQW WKHH[HFXWLYHVHVVLRQDQGVXEVHTXHQWO\GLVFORVLQJDQGXVLQJ :HILQGWKLVFRQFOXVLRQQRWWREHFOHDUO\HUURQHRXVGXHERWK WKHLOOHJDOO\LQWHUFHSWHGFRPPXQLFDWLRQV2Q0D\ WRWKHVHYHULW\RI3ODLQWLIIjVDOOHJDWLRQVDQG3ODLQWLIIjVIDLOXUH &6;DOVRILOHGDFRXQWHUFODLPXQGHUWKH$FW WR DUWLFXODWH KRZ LQIHUULQJ KDUP WR UHSXWDWLRQ IURP VXFK DOOHJDWLRQVZDVLQIDFWLQHUURU $OVRRQ0D\&6;ILOHGDPRWLRQWRVWULNH([KLELW $IURP3ODLQWLIIj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sDQXDU\WKHGLVWULFWFRXUWJUDQWHGVXPPDU\ WKLV SRVLWLRQ  %HFDXVH WKH DZDUG RI SXQLWLYH GDPDJHV LV MXGJPHQWLQIDYRURI878DQG&6;DVWR3ODLQWLIIjVFODLPV ZLWKLQ WKH GLVFUHWLRQ RI WKH WULDO FRXUW ZH UHPDQG WKH 7KHGLVWULFWFRXUWKHOGWKDWWKH3/%DZDUGVKRXOGQRWEHVHW TXHVWLRQRIZKHWKHUSXQLWLYHGDPDJHVLQWKLVFDVHVKRXOGEH DVLGH XQGHU WKH OLPLWHG VWDQGDUG RI UHYLHZ JRYHUQLQJ UHGXFHGLQOLJKWRIWKHUHGXFWLRQLQVWDWXWRU\GDPDJHVXQGHU DUELWUDWLRQ DZDUGV XQGHU WKH 5/$  7KH GLVWULFW FRXUW DOVR † F  % 6HH6PLWKY+HDWK)G WK IRXQGQRPDWHULDOIDFWVLQGLVSXWHWRVXSSRUWDFODLPWKDWWKH &LU :HRQO\QRWHWKDWWKLV&RXUWKDVIRXQGWKDWLQ 878KDGEUHDFKHGLWVGXW\RIIDLUUHSUHVHQWDWLRQ  6PRRWY8QLWHG 1R 1R 6PRRWY8QLWHG  7UDQVSRUWDWLRQ8QLRQHWDO 7UDQVSRUWDWLRQ8QLRQHWDO 2Q0DUFKWKHGLVWULFWFRXUWFRQGXFWHGDEHQFK VWDWXWRU\GDPDJHVXQGHU† F  % VKRXOGEHOLPLWHGWR WULDORQWKH878DQG&6;FRXQWHUFODLPVXQGHUWKH$FW7KH IRU&6;DQGIRU878 GLVWULFWFRXUWIRXQG WKDW3ODLQWLIIZDVQRWFUHGLEOHDQGKDG LQWHQWLRQDOO\ UHFRUGHG WKH H[HFXWLYH VHVVLRQ DQG WKHQ ,93XQLWLYH'DPDJHV$WWRUQH\Vj)HHV GLVWULEXWHGWKHLOOHJDOLQWHUFHSWLRQLQYLRODWLRQRIWKH$FW7KH GLVWULFW FRXUW DZDUGHG  DQG  LQ VWDWXWRU\ 86&† E  RIWKH $FW H[SUHVVO\SHUPLWVWKH GDPDJHVWR878DQG&6;UHVSHFWLYHO\LQFRQQHFWLRQZLWK DZDUG RI SXQLWLYH GDPDJHV ZKHQ WKH DJJULHYHG SDUW\ WKLUWHHQYLRODWLRQVFRPPLWWHGE\3ODLQWLIIXQGHUWKH$FW7KH GHPRQVWUDWHVWKDWDmZDQWRQUHFNOHVVRUPDOLFLRXVYLRODWLRQl GLVWULFW FRXUW DOVR IRXQG WKDW 3ODLQWLIIjV YLRODWLRQV ZHUH RIWKH$FWKDVRFFXUUHG6HH'RUULV)GDW%HVV ZLOOIXOZDQWRQDQGUHFNOHVVDQGWKHUHE\DZDUGHG878DQG )GDW7KHGLVWULFWFRXUWDZDUGHG878DQG&6; &6;HDFKLQSXQLWLYHGDPDJHVSXUVXDQWWR86& HDFKLQSXQLWLYHGDPDJHVXQGHU† E  DVZHOO †  E  DV ZHOO DV ILQGLQJ 878 DQG &6; HQWLWOHG WR DVWR878DQGWR&6;LQDWWRUQH\VjIHHV UHDVRQDEOHDWWRUQH\VjIHHVDQGFRVWVXQGHU† E  DQGFRVWVXQGHU† E  3ODLQWLIIDUJXHVWKDWWKHGLVWULFW FRXUWHUUHGLQJUDQWLQJWKHVHDZDUGV 878 DQG &6; ILOHG PRWLRQV IRU DWWRUQH\Vj IHHV  2Q 6HSWHPEHU   WZR GD\V EHIRUH WKH GDWH VHW IRU WKH 7KLV &RXUW UHYLHZV GLVWULFW FRXUW GHWHUPLQDWLRQV RQ WKH KHDULQJRQDWWRUQH\VjIHHV3ODLQWLIIILOHGDQRSSRVLWLRQWRWKH DPRXQWRISXQLWLYHGDPDJHVDQGWKHDZDUGLQJRIDWWRUQH\Vj 878DQG&6;UHTXHVWV7KHGLVWULFWFRXUWGHWHUPLQHGWKDW IHHVIRUDQDEXVHRIGLVFUHWLRQ6HH2ZQHU2SHUDWRU,QGHS 3ODLQWLIIjVUHVSRQVHZDVQRWWLPHO\2Q6HSWHPEHU 'ULYHUV $VVjQ ,QF Y %LVVHOO  )G   WK &LU WKH GLVWULFW FRXUW KHOG D KHDULQJ RQ DWWRUQH\Vj IHHV ZKLFK  m$GLVWULFWFRXUWDEXVHVLWVGLVFUHWLRQZKHQLWUHOLHVRQ 3ODLQWLIIIDLOHGWRDWWHQG2Q6HSWHPEHUWKHGLVWULFW FOHDUO\HUURQHRXVILQGLQJVRIIDFWRUZKHQLWLPSURSHUO\ FRXUWDZDUGHG&6;LQIHHVDQGFRVWV2Q2FWREHU DSSOLHVWKHODZRUXVHVDQHUURQHRXVOHJDOVWDQGDUGl,GDW WKHGLVWULFWFRXUWDZDUGHG878LQIHHV 8QGHUWKLVVWDQGDUGWKLV&RXUWPXVWUHYLHZWKHGLVWULFW DQGFRVWV2Q2FWREHU3ODLQWLIIILOHGKLVQRWLFHRI FRXUW VOHJDOFRQFOXVLRQVGHQRYRDQGLWVIDFWXDOILQGLQJVIRU DSSHDODSSHDOLQJIURPWKHGLVWULFWFRXUWjVDZDUGVRIVXPPDU\ FOHDUHUURU,G MXGJPHQW VWDWXWRU\ DQG SXQLWLYH GDPDJHV DV ZHOO DV DWWRUQH\VjIHHVDQGFRVWVLQIDYRURI'HIHQGDQWV 7KH GLVWULFW FRXUW EDVHG LWV DZDUG RI SXQLWLYH GDPDJHV SULPDULO\RQWZRJURXQGVILUVW3ODLQWLIIDWWHPSWHGWRGDPDJH ,,6XEVWDQWLYH+LVWRU\ 878jVDQG&6;jVUHSXWDWLRQVVHFRQGWKHGLVWULEXWLRQ 3ODLQWLIILVHPSOR\HGE\&6;D9LUJLQLDFRUSRUDWLRQDQG LVDPHPEHURI878DQXQLQFRUSRUDWHGODERURUJDQL]DWLRQ  7KH GLVWULFW FRXUW IRXQG WKDW 3ODLQWLII mFRPPLWWHG WKLUWHHQ KHDGTXDUWHUHGLQ&OHYHODQG2KLR,Q2FWREHURI878 YLRODWLRQVl RI WKH $FW s$ DW  ,I WKHVH WKLUWHHQ YLRODWLRQV KDG DQG&6;QHJRWLDWHGDQHZODERUDJUHHPHQWZKLFKLQFOXGHGD RFFXUUHG RQ PRUH WKDQ  VHSDUDWH GD\V GDPDJHV XQGHU †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†  F  % DUH OLPLWHG WR  SHU FODLPDQW  6PRRWY8QLWHG 1R 1R 6PRRWY8QLWHG  7UDQVSRUWDWLRQ8QLRQHWDO 7UDQVSRUWDWLRQ8QLRQHWDO >SODLQWLIIjV@SDUWWKDWWKHWUDQVFULSWVVKRXOGQRWEHSDUWRIWKH ,Q  3ODLQWLII KHOG ERWK WUDLQ DQG HQJLQH VHUYLFH SXEOLFUHFRUGl6PLWK)GDWQ&RQYHUVHO\LQ VHQLRULW\ZLWK&6;$VRI1RYHPEHU3ODLQWLIIZDV WKLV FDVH &6; RSSRVHG 3ODLQWLIIjV ILOLQJ RI WKH H[HFXWLYH HPSOR\HG LQ HQJLQH VHUYLFH EXW QRW WUDLQ VHUYLFH ZKLFK VHVVLRQ WUDQVFULSW ZKLFK 3ODLQWLII WKHQ DJUHHG WR ZLWKGUDZ (OVZLFNLQWHUSUHWHGDVSUHFOXGLQJ3ODLQWLIIjVHOLJLELOLW\IRUWKH IURP WKH UHFRUG  )XUWKHU ERWK 6SDWDIRUH DQG )OHPLQJ &6;VWRFNGLVWULEXWLRQXQGHUWKHODERUDJUHHPHQW FRQFHUQHG DGPLVVLRQ LQWR HYLGHQFH RI OHJDOO\ REWDLQHG ZLUHWDS HYLGHQFH WKDW KDG DOUHDG\ EHHQ PDGH SDUW RI WKH 7KH 0D\   3/% KHDULQJ ZDV KHOG WR GHWHUPLQH SXEOLFUHFRUGLQSULRUFULPLQDOSURVHFXWLRQV)XOW]UHIHUHQFHG 3ODLQWLIIjVHOLJLELOLW\IRUWKH&6;VWRFN3ODLQWLIIEURXJKWWZR WKHOHJLVODWLYHKLVWRU\RIWKH$FWZKLFKVWDWHGWKDWGLVFORVXUH WDSHUHFRUGHUVWRWKHKHDULQJWRUHFRUGWKHSURFHHGLQJV$W RI LQWHUFHSWHG FRPPXQLFDWLRQ WKDW KDG DOUHDG\ EHFRPH WULDOWKHUHZDVFRQIOLFWLQJWHVWLPRQ\DVWRZKHWKHU3ODLQWLII mSXEOLF LQIRUPDWLRQl RU mFRPPRQ NQRZOHGJHl ZRXOG QRW VHWWKHWDSHUHFRUGHUVRQWKHWDEOHLQIURQWRIKLP1RRQHHOVH YLRODWHWKH$FW)XOW])GDW FLWDWLRQVRPLWWHG  DW WKH KHDULQJ VDZ RU ZDV DZDUH RI WKH WDSH UHFRUGHUV +RZHYHU)XOW]GLGQRWDGGUHVVWKHUHODWLRQVKLSEHWZHHQFRXUW 3ODLQWLIIWHVWLILHGWKDWZKHQKHZDVWROGWROHDYHWKHURRPVR ILOLQJVDQGWKRVHFDWHJRULHV1HLWKHU6PLWKQRUWKHFDVHVRQ WKDWWKH3/%PHPEHUVFRXOGKROGWKHH[HFXWLYHVHVVLRQKH ZKLFK LW UHOLHG VXSSRUW 3ODLQWLIIjV FODLP WKDW ILOLQJ WKH SODFHGDOORIKLVEHORQJLQJVLQFOXGLQJWKHWDSHUHFRUGHUVLQ H[HFXWLYHVHVVLRQWUDQVFULSWZLWKWKHGLVWULFWFRXUWIRUWKUHH DEDJZKLFKKHOHIWLQWKHURRPZKHUHWKHH[HFXWLYHVHVVLRQ PRQWKV LQ  ZKLFK &6; DFWLYHO\ DQG VXFFHVVIXOO\ ZDV WKHQ KHOG  7KH WDSH UHFRUGHUV LQVLGH 3ODLQWLIIj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sRH (O\ DQG 'DQQ\ 0LOOV ZKLFKRIWKHWKLUWHHQGLVFUHWHYLRODWLRQVIRXQGE\WKHGLVWULFW WKUHH PHPEHUV RI 878 /RFDO  ORFDWHG LQ 9LUJLQLD FRXUWVKRXOGKDYHJLYHQULVHWR5XFNjVUDWKHUWKDQ3ODLQWLIIjV 3ODLQWLIIODWHUFDOOHG5XFND878PHPEHULQ7H[DVDQGWROG OLDELOLW\7KLV&RXUWGHHPVLVVXHVSUHVHQWHGLQDSHUIXQFWRU\ KLPDERXWWKHWDSHV,QsXQHRI3ODLQWLIIVHQW5XFND PDQQHURQDSSHDOWRKDYHEHHQZDLYHG6HH86Y+D\WHU FRS\RIWKHWDSHV 2LO&R)G WK&LU  6HYHUDOPRQWKVODWHU3ODLQWLIIPDGHDUUDQJHPHQWVWRKDYH :HILQGIRUWKHDERYHVWDWHGUHDVRQVWKDWWKHGLVWULFWFRXUW WKH WDSHV WUDQVFULEHG E\ D FRXUW UHSRUWHU LQ 9LUJLQLD  2Q HUUHG LQ DSSO\LQJ WKH  OLTXLGDWHG GDPDJHV DPRXQW 2FWREHU   3ODLQWLII VHQW FRSLHV RI WKH WUDQVFULSW WR XQGHU† F  % SHUYLRODWLRQRIWKH$FW:HDOVRILQG *7KRPDV'X%RVH,QWHUQDWLRQDO3UHVLGHQWRIWKH878DW KRZHYHUWKDW3HWLWLRQHUjVDWWHPSWWRIXUWKHUUHGXFHOLDELOLW\ KLVRIILFHLQ&OHYHODQG2KLRDQGWRDQRWKHU878RIILFLDO E\UHIHUHQFHWRWKHGHIHQVHDGMXGLFDWLRQDQGSXEOLFUHFRUG 5.6DUJHQWLQDQDWWHPSWWRKDYH878LQYHVWLJDWH(DUOH\jV H[FHSWLRQV DV ZHOO DV DFWLRQV E\ 5XFN LV XQDYDLOLQJ FRQGXFW'XERVHGHWHUPLQHGWKDWWKHUHZDVQRWKLQJLPSURSHU $FFRUGLQJO\ LQ OLJKW RI RXU DGRSWLRQ RI WKH 'HVLOHWV UXOH LQ (DUOH\jV FRQGXFW  3ODLQWLII DOVR SURYLGHG FRSLHV RI WKH WUDQVFULSWWR7KRPSVRQORFDWHGLQ0LVVRXULLQVXSSRUWRIKLV LQWHUQDOXQLRQILOLQJ3ODLQWLIIDOVRSURYLGHGDFRS\RIWKH  6PRRWY8QLWHG 1R 1R 6PRRWY8QLWHG  7UDQVSRUWDWLRQ8QLRQHWDO 7UDQVSRUWDWLRQ8QLRQHWDO WUDQVFULSWWRKLVDWWRUQH\LQ.HQWXFN\ZKRWKHQDWWDFKHGWKH GHIHQGLQJDJDLQVWFKDUJHVEURXJKWXQGHUWKH$FW6HH1L[ WUDQVFULSWWR3ODLQWLIIjVFRPSODLQWLQWKLVFDVH )GDW ,Q $XJXVW RI  3ODLQWLII GLVWULEXWHG WKH WUDQVFULSW WR 6HFRQG3ODLQWLIIjVILOLQJRIWKHH[HFXWLYHVHVVLRQWUDQVFULSW 878PHPEHUVDWWHQGLQJD878FRQYHQWLRQLQ$WODQWD ZLWK WKH GLVWULFW FRXUW LQ 0DUFK RI  GRHV QRW XQGHU 6PLWKVKLHOG3ODLQWLIIIURPOLDELOLW\LQFRQQHFWLRQZLWKWKH ',6&866,21 GLVWULEXWLRQ7KH6PLWKFRXUWIRXQGDVIROORZV ,6WDQGLQJ $OWKRXJK WKH >$FW@ SURYLGHV IRU D VHSDUDWH FDXVH RI DFWLRQ IRU HDFK LQGLYLGXDO GLVFORVXUH RI DQ XQODZIXOO\ 3ODLQWLIIDUJXHVWKDWQHLWKHU&6;QRU878KDGVWDQGLQJWR LQWHUFHSWHG FRPPXQLFDWLRQ LW GRHV QRW SURVFULEH WKH EULQJFODLPVXQGHUWKH$FW86&†SURYLGHVIRU GLVFORVXUH RI LQIRUPDWLRQ WKDW KDV EHFRPH SDUW RI WKH FLYLOUHOLHIXQGHUWKH$FWIRUmDQ\SHUVRQZKRVHZLUHRUDORU SXEOLFUHFRUG HOHFWURQLF FRPPXQLFDWLRQ LV LQWHUFHSWHG GLVFORVHG RU LQWHQWLRQDOO\ XVHG LQ YLRODWLRQ RI WKLV FKDSWHUl   86& 6PLWK)GDW FLWLQJ)XOW]Y*LOOLDP)G †  GHILQHV mSHUVRQl DV mDQ\ LQGLYLGXDO SDUWQHUVKLS  WK&LU 6SDWDIRUHY8QLWHG6WDWHV)G DVVRFLDWLRQ MRLQW VWRFN FRPSDQ\ WUXVW RU FRUSRUDWLRQl  WK&LU )OHPLQJY8QLWHG6WDWHV)G :KHWKHUDFODLPDQWKDVVWDQGLQJXQGHUWKH$FWLVDTXHVWLRQ  WK&LU  RIODZZKLFKWKLVFRXUWUHYLHZVGHQRYR6HH8QLWHG6WDWHVY %ULGZHOOjV*URFHU\DQG9LGHR)G WK&LU 3ODLQWLIIDUJXHVWKDWEHFDXVHWKHH[HFXWLYHVHVVLRQWUDQVFULSW   EHFDPHSDUWRIWKHSXEOLFUHFRUGZKHQKHILOHGWKHWUDQVFULSW ZLWKKLVFRPSODLQW3ODLQWLIILVQRWOLDEOHXQGHU6PLWKIRUWKH $&6;6WDQGLQJ VXEVHTXHQWGLVWULEXWLRQ+RZHYHULQUHVSRQVHWR&6;jV PRWLRQWRVWULNHWKHWUDQVFULSWIURP3ODLQWLIIjVFRPSODLQWWKH 3ODLQWLIIDUJXHVWKDW&6;GLGQRWKDYHVWDQGLQJWREULQJLWV WUDQVFULSW ZDV UHPRYHG IURP WKH UHFRUG LQ 0D\ RI  FRXQWHUFODLPEHFDXVHWKHUHZDVQRHYLGHQFHWKDWWKHUHFRUGHG (YHQ DVVXPLQJ WKDW WKLV &RXUW LQ 6PLWK XQGHUVWRRG H[HFXWLYHVHVVLRQFRQFHUQHG&6;EXVLQHVV+RZHYHUWKLV mLQIRUPDWLRQWKDWKDVEHFRPHSDUWRIWKHSXEOLFUHFRUGlWR FODLP LV LQFRQVLVWHQW ZLWK WKH UHFRUG LQFOXGLQJ 3ODLQWLIIjV LQFOXGH LQIRUPDWLRQ WKDW ZDV SXEOLFDOO\ DYDLODEOH IRU WKUHH RZQ FRPSODLQW  3ODLQWLII VHFUHWO\ WDSH UHFRUGHG (PHULFN PRQWKVLQWKHSXEOLFUHFRUGH[FHSWLRQXQGHU6PLWK &6;jV6HQLRU'LUHFWRU RI(PSOR\HH5HODWLRQVDWWKH3/% )XOW]6SDWDIRUHDQG)OHPLQJGRHVQRWVKLHOG3ODLQWLIIIURP H[HFXWLYH VHVVLRQ  (PHULFN ZDV &6;jV GHVLJQDWHG OLDELOLW\LQWKLVFDVH UHSUHVHQWDWLYH RQ WKH 3/%  (PHULFNjV MRE GXWLHV LQFOXGHG UHSUHVHQWLQJ&6;DW3/%PHHWLQJV$WWKHH[HFXWLYHVHVVLRQ ,Q 6PLWK SODLQWLII KDG QRW RSSRVHG D PRWLRQ E\ WKH (PHULFN ZDV PHHWLQJ ZLWK WZR RWKHU SHUVRQV RQ &6; 6HFXULWLHV DQG ([FKDQJH &RPPLVVLRQ WR XQVHDO WUDQVFULSWV SURSHUW\WRDGMXVWJULHYDQFHVE\&6;HPSOR\HHV3ODLQWLIIjV ILOHG ZLWK WKH 8QLWHG 6WDWHV 'LVWULFW &RXUW IRU WKH &HQWUDO RZQFRPSODLQWVWDWHG 'LVWULFW RI &DOLIRUQLD mWKHUHE\ REYLDWLQJ DQ\ DUJXPHQW RQ $OODFWLRQVWDNHQE\0U(PHULFNDVDPHPEHURI3/%  ZHUH ZLWKLQ WKH VFRSH RI 0U (PHULFNjV  7KH FKDUJHV DJDLQVW 3ODLQWLII RQO\ DURVH LQ WKH &6; DQG 878 HPSOR\PHQWZLWK&6;DOVR0U(PHULFNSHUIRUPHGDOO FRXQWHUFODLPV LQ UHVSRQVH WR 3ODLQWLIIjV FRPSODLQW  6PRRWY8QLWHG 1R 1R 6PRRWY8QLWHG  7UDQVSRUWDWLRQ8QLRQHWDO 7UDQVSRUWDWLRQ8QLRQHWDO LQWHQWLRQDO XVH  $ SDUWLFXODU GHIHQGDQWjV OLDELOLW\ XQGHU DFWVUHIHUUHGWRKHUHLQZLWKWKHIXOOFORDNRIDXWKRULW\DQG † F  % VKRXOGQRWWXUQRQWKHFRQVLVWHQF\RUYDULHW\ ZLWKFRPSOHWHDJUHHPHQWDQGDFTXLHVFHQFHRI&6;LQDOO RI KLV YLRODWLRQV  :KLOH PHDVXULQJ GDPDJHV E\ GD\V RI DFWLRQVKHWRRNDVDPHPEHURI3/%)LQDOO\DOO YLRODWLRQ GRHV FUHDWH WKH SRVVLELOLW\ RI WUHDWLQJ GLIIHUHQW DFWLRQVRI0U(PHULFNjVDQGWKHFRQVHTXHQFHVWKHUHRI GHIHQGDQWVVLPLODUO\ VLQFHVLQJOHDQGPXOWLSOHYLRODWLRQVRQ DUHGLUHFWO\LPSXWDEOHWR&6; DQ\ JLYHQ GD\ ERWK FRXQW DV RQH  DW OHDVW WKLV LPEDODQFH DULVHVIURPWKHSODLQODQJXDJHRI† F  % UDWKHUWKDQ s$DW WUHDWLQJ RQH GLVFORVXUH DQG RQH XVH GLIIHUHQWO\ IURP WZR LQWHUFHSWLRQVDSRVLWLRQZKRVHVWDWXWRU\IRXQGDWLRQZHKDYH &6; FLWHV WZR FDVHV LQ VXSSRUW RI RUJDQL]DWLRQV KDYLQJ QRWEHHQDEOHWRGLYLQH VWDQGLQJ WR EULQJ FODLPV XQGHU WKH $FW  ,Q +DWFKLJLDQ Y /RFDO8QLRQ1R1R86'LVW/(;,6 %\IROORZLQJWKH'HVLOHWVXQGHUVWDQGLQJRI† F  %   ('3D6HSW WKHFRXUWIRXQGWKDWDODERU ZH DQVZHU WKH XQH[SORUHG TXHVWLRQ LQ 'RUULV ZKHWKHU XQLRQ KDG VWDQGLQJ WR EULQJ D FODLP XQGHU †  RQ WKH YLRODWLRQV RI WKH $FW mZLGHO\ VHSDUDWHG E\ WLPH SODFH RU IROORZLQJJURXQGV SHRSOHl ZRXOG OHDG WR D UHVXOW GLIIHUHQW IURP DSSO\LQJ WKH OLTXLGDWHGGDPDJHVDPRXQWSHUFODLPDQWUDWKHUWKDQ >'@HIHQGDQW/RFDORIWKH,QWHUQDWLRQDO%URWKHUKRRGRI SHUYLRODWLRQ'RUULV)GDW7KXVWKHSURYLVLRQDO (OHFWULFDO :RUNHUV DOVR KDV VWDQGLQJ  m3HUVRQl LV mLQWHUUHODWHGDQGWLPHFRPSDFWHGlTXDOLILHULQ'RUULVQHHG GHILQHG E\ >† @ WR LQFOXGH    DQ\ mDVVRFLDWLRQl QRW DSSO\ WR TXHVWLRQV RI GDPDJHV XQGHU †  F  %  WKHUHE\LQFOXGLQJDXQLRQORFDO7KHXVHRIWKHWHUP UDWKHU WKH VWUDLJKWIRUZDUG UXOH RI'HVLOHWV WKDW D FODLPDQW mZKRVHlLQWKHVWDWXWHFRQIHUVVWDQGLQJXSRQWKRVH PD\ EH DZDUGHG PRUH WKDQ  LQ GDPDJHV XQGHU ZKR KDYH D SRVVHVVRU\ LQWHUHVW LQ WKH FRPPXQLFDWLRQ † F  % RQO\LIYLRODWLRQVRIWKH$FWRFFXUUHGRQPRUH >,QGLYLGXDOGHIHQGDQW@0DFNLQZDVWKHORFDOjVEXVLQHVV WKDQ RQH KXQGUHG VHSDUDWH GD\V PD\ QRZ FRQWURO  7KH PDQDJHU7KHFRQYHUVDWLRQDOOHJHGO\WRRNSODFHRYHUD OLTXLGDWHGGDPDJHVDPRXQWXQGHU† F  % LV XQLRQWHOHSKRQHDQGFRQFHUQHGWKHORFDOjVDIIDLUV8QGHU GHVLJQHGWRFRPSHQVDWHDFODLPDQWIRUDOORIDWUDQVJUHVVRUjV WKHVHDOOHJHGFLUFXPVWDQFHVWKHORFDOKDGDSRVVHVVRU\ PLVGHHGVXQGHUWKH$FWXQOHVVWKDWWUDQVJUHVVRUKDVYLRODWHG LQWHUHVW LQ WKH FRPPXQLFDWLRQ VXIILFLHQW WR FRQIHU WKH$FWRQPRUHWKDQRQHKXQGUHGVHSDUDWHGD\VLQZKLFK VWDQGLQJXSRQLW FDVHFRPSHQVDWLRQLVIRUHDFKVXFKGD\ +DWFKLJLDQ86'LVW/(;,6DW  :KLOH DGRSWLQJ WKH 'HVLOHWV UXOH ZLOO UHGXFH 3ODLQWLIIjV OLDELOLW\LQWKLVFDVH3ODLQWLIILVQRWIXUWKHUDVVLVWHGE\DQ\RI &6;DOVRFLWHV3%$/RFDO1RY:RRGEULGJH3ROLFH WKHYDULRXVOLDELOLW\H[FHSWLRQVWKDWKHKDVDUJXHGRQDSSHDO 'HSjW  ) 6XSS  '1s   ZKLFK DOWKRXJK )LUVWWKHGHIHQVHDQGDGMXGLFDWLRQH[FHSWLRQVXQGHU1L[GR ILQGLQJWKHXQLRQQRWWRKDYHVWDQGLQJWREULQJDFODLPXQGHU QRWDSSO\WR3ODLQWLIIjVGLVWULEXWLRQRIWKHH[HFXWLYHVHVVLRQ †  GLG VR RQ JURXQGV WKDW WKH XQLRQ GLG QRW KDYH DQ WUDQVFULSWWRKLVODZ\HURUWKHDWWDFKPHQWRIWKHWUDQVFULSWWR LGHQWLILDEOHLQMXU\XQGHUWKH$FW6SHFLILFDOO\WKHUHZDVQR 3ODLQWLIIjVFRPSODLQWEHFDXVH3ODLQWLIIZDVQRWDWWKDWWLPH HYLGHQFHWKDWDQ\FRQYHUVDWLRQVUHODWHGWRXQLRQDFWLYLW\KDG DFWXDOO\ EHHQ LQWHUFHSWHG m>Z@KHUH WKHUH KDV EHHQ QR LQWHUFHSWLRQ WKHUH FDQ KDYH EHHQ QR LQMXU\l   3%$ /RFDO 1R)6XSSDW FLWDWLRQRPLWWHG ,QWKLVFDVH 3ODLQWLIIQRWRQO\DWWDFKHGWKHLQWHUFHSWHGFRQYHUVDWLRQWRKLV  6PRRWY8QLWHG 1R 1R 6PRRWY8QLWHG  7UDQVSRUWDWLRQ8QLRQHWDO 7UDQVSRUWDWLRQ8QLRQHWDO FRPSODLQW KH WKHQ ZHQW RQ WR VSHFLILFDOO\ DOOHJH WKDW 0RUHRYHU 'HDO DQG &DPSLWL IRXQG GD\V RU ZHHNV QRW (PHULFNjVLQWHUFHSWHGFRQGXFWZDVLQIDFW&6;FRQGXFW PRQWKV RI DFWLYLW\ WR KDYH RFFXUUHG ZLWKLQ RQH GLVFUHWH YLRODWLRQ 3ODLQWLIIDUJXHVWKDW3%$/RFDO1RDQG+DWFKLJLDQGR QRWFXUHRQHSDUWLFXODUIODZLQ&6;jVVWDQGLQJDUJXPHQWQR 8SRQUHYLHZRISHUWLQHQWFDVHODZZHILQGLWLPSODXVLEOH HYLGHQFH KDV VKRZQ WKH FRQWHQWV RI WKH LQWHUFHSWHG WKDWPRUHWKDQRQHKXQGUHG mGD\VRIYLRODWLRQlZRXOGIDOO FRQYHUVDWLRQWRKDYHEHORQJHGWR&6;DQGWKXVQRHYLGHQFH XQGHURQHRYHUDUFKLQJYLRODWLRQRIWKH$FW%HFDXVHVXFKDQ KDV HVWDEOLVKHG WKDW &6; ZDV D SHUVRQ mZKRVHl LPSODXVLELOLW\ ZRXOG EH UHTXLUHG XQGHU D mSHU YLRODWLRQl FRPPXQLFDWLRQZDVLQWHUFHSWHGXQGHU†+RZHYHULI UHDGLQJRI† F  % WKDWQHYHUWKHOHVVUHWDLQHGPHDQLQJ &6;GRHVQRWKDYHDSRVVHVVRU\LQWHUHVWLQWKHFRQILGHQWLDO IRU WKH m D GD\l SURYLVLRQ ZH ILQG WKDW WKH  VWDWHPHQWV PDGH E\ LWV 6HQLRU 'LUHFWRU RI (PSOR\HH OLTXLGDWHGGDPDJHVDPRXQWXQGHU† F  % VKRXOGQRW 5HODWLRQVDFWLQJDVWKHGHVLJQDWHGUHSUHVHQWDWLYHIRU&6;RQ EHDSSOLHGSHUYLRODWLRQRIWKH$FW WKH3/%DWWKHH[HFXWLYHVHVVLRQSRUWLRQRID3/%SURFHHGLQJ KHOGRQ&6;SURSHUW\UHJDUGLQJJULHYDQFHDGMXVWPHQWVE\ :HDOVRDJUHHZLWKWKH)LUVW&LUFXLWWKDWOLTXLGDWHGGDPDJHV &6; HPSOR\HHV WKHQ LW LV GLIILFXOW WR FRQFHLYH RI D XQGHU †  F  %  VKRXOG QRW EH DZDUGHG SHU W\SH RI FRUSRUDWLRQRUDVVRFLDWLRQHYHUKDYLQJVWDQGLQJXQGHUWKH$FW YLRODWLRQRIWKH$FWm&HUWDLQO\HDFKLQWHUFHSWLRQVHSDUDWHO\ :HILQGWKDW&6;DVDFRUSRUDWLRQKDGVWDQGLQJWREULQJLWV LQMXUHVDYLFWLPDVGRHVHDFKGLVFORVXUHDQGHDFKLQWHQWLRQDO FRXQWHUFODLP DV D SHUVRQ ZKRVH FRPPXQLFDWLRQ ZDV XVH RI LQWHUFHSWHG FRQYHUVDWLRQV  %XW >†  F  % @ LQWHUFHSWHG DQG GLVFORVHG LQ YLRODWLRQ RI WKH $FW XQGHU  GHVFULEHV RQO\ RQH LQFOXVLYH PHWKRG IRU FDOFXODWLQJ 86&† GDPDJHVl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†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†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jV@FODLP $PHULFDQ 6LJQDO &R  )G   WK &LU  7KH878UHSUHVHQWDWLYHV(DUOH\(OVZLFNDQG6DUJHQW 7KHUHIRUHZHPXVWFRQVLGHUWKHPHDQLQJRIWKHmDGD\ DORQJZLWK>3ODLQWLII@OHIWWKHURRPIRUDERXWWHQPLQXWHV IRU HDFK GD\ RI YLRODWLRQl SURYLVLRQ ZLWKLQ WKH VWDWXWRU\ DQGZKHQWKH\UHWXUQHG(DUOH\DVNHGRQEHKDOIRI GDPDJHVVFKHPHRI† F  %  >3ODLQWLII@ZKHWKHU>3ODLQWLII@FRXOGVXEPLWSRVWKHDULQJ LQIRUPDWLRQ &RQJUHVV LQ LWV  DPHQGPHQW WR †  UDLVHG WKH PLQLPXP OLTXLGDWHG GDPDJHV DPRXQW IURP  WR s$DW 3ODLQWLIIRIIHUVQRDXWKRULW\LQVXSSRUWRIKLV EXWOHIWWKHmDGD\IRUHDFKGD\RIYLRODWLRQl SRVLWLRQWKDWUHSUHVHQWLQJXQLRQPHPEHUVLVQRWSDUWRIWKH SURYLVLRQ XQFKDQJHG  ,I WKH  DPRXQW ZHUH WR EH ZRUNRIXQLRQUHSUHVHQWDWLYHV$EVHQWVXFKDXWKRULW\ZHILQG DSSOLHG SHU YLRODWLRQ WKH RQO\ ZD\ IRU WKH m D GD\l WKDW(DUOH\jVUROHDWWKH3/%PHHWLQJDV878UHSUHVHQWDWLYH SURYLVLRQWRUHWDLQPHDQLQJWKDWLVWRSRVVLEO\UHVXOWLQDQ IRU3ODLQWLIIUDWKHUWKDQDV878UHSUHVHQWDWLYHSHUVHGRHV DZDUGRIGDPDJHVJUHDWHUWKDQZRXOGEHLIRYHURQH QRW VHYHU WKH DJHQF\ UHODWLRQVKLS EHWZHHQ (DUOH\ DQG WKH KXQGUHGmGD\VRIYLRODWLRQlZHUHVRPHKRZLQFOXGHGZLWKLQ 878sXVWDV3ODLQWLIILQKLVFRPSODLQWLPSXWHG(PHULFNjV RQH GLVFUHWH YLRODWLRQ RI WKH $FW  6RPH FRXUWV KDYH DFWLRQVDWWKH3/%PHHWLQJWR&6;(DUOH\jVDFWLRQVDV878 XQGHUVWRRGmYLRODWLRQlLQDPDQQHU WKDWPD\EHFRQVLVWHQW UHSUHVHQWDWLYHDUHLPSXWDEOHWR8787KHUHIRUH878DQ ZLWK VXFK DQ DSSURDFK ILQGLQJ VHYHUDO GD\V RI SURKLELWHG DVVRFLDWLRQKDGVWDQGLQJDVDSHUVRQZKRVHFRPPXQLFDWLRQ DFWLYLW\ WR FRQVWLWXWH RQH YLRODWLRQ  +RZHYHU ILQGLQJ ZDVLQWHUFHSWHGDQGGLVFORVHGLQYLRODWLRQRIWKH$FWXQGHU PXOWLSOH GD\V RI SURKLELWHG DFWLYLW\ DV IDOOLQJ XQGHU RQH 86&† YLRODWLRQ LV GLUHFWO\ FRQWUDU\ WR WKLV &RXUWjV GHFLVLRQ LQ 'RUULVDVZHOODVWKH)LUVW&LUFXLWLQ'HVLOHWVDQGWKH(LJKWK ,,6XEVWDQWLDO(YLGHQFH &LUFXLWLQ%HVVZKLFKDOOIRXQGYLRODWLRQVFRUUHVSRQGLQJWR SDUWLFXODUDFWLRQVRUWRVHYHUDODFWLRQVRQDSDUWLFXODUGD\ 3ODLQWLIIDUJXHVWKDWWKHGLVWULFWFRXUWjVILQGLQJWKDW3ODLQWLII LQWHQWLRQDOO\UHFRUGHGWKH3/%H[HFXWLYHVHVVLRQZDVDJDLQVW WKH ZHLJKW RI WKH HYLGHQFH  7KLV &RXUW UHYLHZV D GLVWULFW FRXUWj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mLQWHUFHSWLRQV DQG GLVFORVXUHV >WKDW@ ZHUH LQFLGHQWV RI RQH VLQJOH LQYHVWLJDWLRQ ZKLFK WRRN SODFH ZLWKLQ DSSHOODWHFRXUWLVOHIWZLWKWKHGHILQLWHDQGILUPFRQYLFWLRQ D WHQGD\ SHULRGl  WKDWDPLVWDNHKDVEHHQFRPPLWWHG,G FLWDWLRQVDQGLQWHUQDO TXRWDWLRQV RPLWWHG   m:KHQ IDFWXDO ILQGLQJV UHVW XSRQ  6HH 'RUULV  )G DW  ILYH YLRODWLRQV IURP SDUWLFXODU DFWLRQV FUHGLELOLW\GHWHUPLQDWLRQVWKLV&RXUWDIIRUGVJUHDWGHIHUHQFH RI RQH LQWHUFHSWLRQ WZR GLVFORVXUHV DQG WZR LQWHQWLRQDO XVHV RI WKH LQWHUFHSWHG FRQWHQW  'HVLOHWV  )G DW  DQ XQOLPLWHG QXPEHU RI  6PRRWY8QLWHG 1R 1R 6PRRWY8QLWHG  7UDQVSRUWDWLRQ8QLRQHWDO 7UDQVSRUWDWLRQ8QLRQHWDO WRWKHILQGLQJVRIWKHGLVWULFWFRXUWl6FKUR\HUY)UDQNHO GDPDJHVXQGHUWKHIRUPHU†2QDSSHDOWKH%HVVFRXUW )G WK&LU  IRXQGWKDWDQDGGLWLRQDOYLRODWLRQRFFXUUHGLQZKLFK UDLVHGWKHWRWDOQXPEHURIYLRODWLRQVWRWKLUWHHQ7KH%HVV 7KHIROORZLQJIDFWVDUHXQGLVSXWHG3ODLQWLIIEURXJKWWZR FRXUW DZDUGHG FODLPDQW DQ DGGLWLRQDO  LQ GDPDJHV WDSHUHFRUGHUVWRWKH3/%KHDULQJWRKDYHDFRPSOHWHUHFRUG EULQJLQJFODLPDQWjVWRWDOVWDWXWRU\GDPDJHVXQGHU†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†$OWKRXJK H[HFXWLYHVHVVLRQFRXOGEHKHOGOHIWKLVEDJLQWKHKHDULQJ WKH%HVVFRXUWQRWHGWKDWFODLPDQWPDGHmQRDUJXPHQWWKDWWKH URRP ZKLFK FRQWDLQHG WKH WDSH SOD\HUV WKDW UHFRUGHG WKH VWDWXWH HQWLWOHG KHU WR PRUH WKDQ WKH  SHU GD\ ILJXUHl H[HFXWLYHVHVVLRQ:KHQILQGLQJRQWKHVHIDFWVWKDW3ODLQWLII %HVV)GDWQWKH'HVLOHWVFRXUWLQWHUSUHWHGWKLV LQWHQGHGWRLQWHUFHSWRUDOFRPPXQLFDWLRQVPDGHGXULQJWKH VWDWHPHQW DV UHIHUULQJ WR WKH SRVVLELOLW\ RI FROOHFWLQJ PRUH H[HFXWLYHVHVVLRQWKHGLVWULFWFRXUWQRWHG WKDQSHUGD\EHFDXVHWKHYLRODWLRQRQWKHDGGLWLRQDOGD\ ZDV RI D GLIIHUHQW W\SH EHLQJ D GLVFORVXUH UDWKHU WKDQ DQ >3ODLQWLII@WHVWLILHGDWWULDOWKDWKHLQDGYHUWHQWO\OHIWWKH LQWHUFHSWLRQ'HVLOHWV)GDW*LYHQFODLPDQWjV WDSHUHFRUGHUVRQGXULQJWKH([HFXWLYH6HVVLRQ7KLV VWDWXWRU\DZDUGLQ%HVVDQGWKH%HVVFRXUWjVDPELJXRXVQRWH &RXUWKRZHYHUGLGQRWILQG>3ODLQWLII@WR>EH@DFUHGLEOH WKDWFODLPDQWKDGRQO\DUJXHGIRUWKHSHUGD\ILJXUHZH ZLWQHVV     6HYHUDO WLPHV GXULQJ KLV WHVWLPRQ\ DJUHHZLWKWKH)LUVW&LUFXLWLQ'HVLOHWVWKDWLI%HVVVXSSRUWV >3ODLQWLII@ ZDV LPSHDFKHG ZLWK KLV RZQ DQVZHUV WR DQ\ YLHZ RQ VWDWXWRU\ GDPDJHV XQGHU †  F  %  LW 'HIHQGDQW &6;jV 5HTXHVW IRU $GPLVVLRQV DQG WKH VXSSRUWV D YLHZ FRQVLVWHQW ZLWK WKH 'HVLOHWV UXOH WKDW D 6WDWHPHQWRI$GPLWWHGRU6WLSXODWHG)DFWV7KLV&RXUW FODLPDQWPD\EHDZDUGHGRYHULQVWDWXWRU\GDPDJHV GRHV QRW FUHGLW >3ODLQWLIIjV@ WHVWLPRQ\ WKDW KH GLG QRW RQO\ LI YLRODWLRQV RI WKH $FW RFFXUUHG RQ PRUH WKDQ RQH LQWHQWLRQDOO\ LQWHUFHSW GLVFORVH DQG XVH WKH KXQGUHGVHSDUDWHGD\V FRPPXQLFDWLRQVPDGHGXULQJWKH([HFXWLYH6HVVLRQRI WKH 3XEOLF /DZ %RDUG  7KLV &RXUW GLG ILQG WKH WULDO :HILQGWKDWWKHOLTXLGDWHGGDPDJHVDPRXQWXQGHU WHVWLPRQ\RI+RZDUG(PHULFN5REHUW(DUOH\DQG.LP † F  % LVQRWWREHDSSOLHGSHUYLRODWLRQRIWKH$FW 7KRPSVRQ FUHGLEOH  $FFRUGLQJO\ DOO FRQIOLFWLQJ IRUWKUHHUHDVRQV)LUVWWKHSUHFHGHQWLDOVXSSRUWRI'RUULV WHVWLPRQ\LVUHVROYHGDJDLQVW>3ODLQWLII@ 'HVLOHWVDQG%HVV6HFRQGDVWKLV&RXUWH[SODLQHGLQ'RUULV WKHDPRXQWXQGHU† F  % XQOLNHWKH s$DW DPRXQW KDV QR mSHU YLRODWLRQl DXWKRUL]DWLRQ  m&RQJUHVV NQRZVKRZWRVSHFLI\DQDZDUGWKDWLVWREHPXOWLSOLHGRQWKH 3ODLQWLIIjVWHVWLPRQ\FRQIOLFWHGZLWKWKHWHVWLPRQ\RI(DUOH\ EDVLVRIWKHIUHTXHQF\RIWKHYLRODWLRQEHFDXVHLWGLGVRE\ DQG (PHULFN  3ODLQWLII WHVWLILHG WKDW KH SODFHG WKH WDSH SURYLGLQJ IRU GDPDJHV RI  SHU GD\ IRU HDFK GD\ RI UHFRUGHUVRQWKHWDEOHLQWKHKHDULQJURRPEHIRUHWKHVWDUWRI YLRODWLRQl'RUULV)GDW7KLUGDVGHWDLOHGEHORZ SURFHHGLQJV(DUOH\DQG(PHULFNWHVWLILHGWKDWWKH\GLGQRW DSSO\LQJWKHDPRXQWSHUYLRODWLRQZRXOGUHQGHUWKH VHH DQ\ WDSH UHFRUGHUV DW DQ\ WLPH  (DUOH\ VWDWHG m$W WKH mDGD\lSURYLVLRQPHDQLQJOHVV  6PRRWY8QLWHG 1R 1R 6PRRWY8QLWHG  7UDQVSRUWDWLRQ8QLRQHWDO 7UDQVSRUWDWLRQ8QLRQHWDO )G VW&LU WKH)LUVW&LUFXLWKHOGWKDWIRU FRPPHQFHPHQWRIWKHKHDULQJWKHRQO\WKLQJWKDWZDVRQWKH HDFKFODLPDQWVWDWXWRU\GDPDJHVXQGHU† F  % DUH WDEOHZDVWKHWDEOHWVWKHEULHIVWKDWZHUHILOHGDQGSHQVDQG OLPLWHGWRXQOHVVYLRODWLRQVRIWKH$FWRFFXUUHGRQ SHQFLOVl s$DW (DUOH\UHVSRQGHGVSHFLILFDOO\WKDWKH PRUH WKDQ RQH KXQGUHG VHSDUDWH GD\V  7KH 'HVLOHWV FRXUW GLGQRWVHHDQ\WDSHUHFRUGHUVRQWKHWDEOHGXULQJWKHKHDULQJ IRXQGWKDWDQ(LJKWK&LUFXLWFDVH%HVVY%HVV)G (PHULFNWHVWLILHGWKDWDWWKHKHDULQJKHVDWmDOPRVWGLUHFWO\ WK&LU GLGQRWVXSSRUWDSHUYLRODWLRQDSSOLFDWLRQRI DFURVVlWKHQDUURZHQGRIWKHWDEOHmSUREDEO\QRPRUHWKDQ VWDWXWRU\GDPDJHVXQGHU† F  % 6SHFLILFDOO\WKH IRXUIHHWlIURP3ODLQWLII s$DW (PHULFNDOVRWHVWLILHG 'HVLOHWVFRXUWIRXQGWKHIROORZLQJ WKDWKHGLGQRWVHHDQ\WDSHUHFRUGHUVRQWKHWDEOHZKLFKKDG WKH\EHHQWKHUHKHZRXOGmDVVXUHGO\lKDYHEHHQDEOHWRVHH 7KH %HVV FRXUW GLG QRW KROG WKDW LQWHUFHSWLRQ DQG s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jVGHWHUPLQDWLRQWKDW 3ODLQWLIILQWHQGHGWRUHFRUGWKHH[HFXWLYHVHVVLRQQRWWRKDYH :HDJUHHWKDW%HVVLVFRQVLVWHQWZLWKWKH'HVLOHWVUXOHWKDW EHHQFOHDUO\HUURQHRXV VWDWXWRU\ GDPDJHV XQGHU †  F  %  DUH OLPLWHG WR XQOHVVYLRODWLRQVRIWKH$FWRFFXUUHGRQPRUHWKDQ ,,,6WDWXWRU\'DPDJHV RQHKXQGUHGVHSDUDWHGD\V&ODLPDQWjVDFWLRQLQ%HVVZDV EURXJKWSULRUWRWKHDPHQGPHQWWRWKH$FW8QGHUWKH 3ODLQWLIIDUJXHVWKDWWKHGLVWULFWFRXUWjVDZDUGRI IRUPHU †  D FODLPDQW FRXOG FROOHFW VWDWXWRU\ GDPDJHV LQ VWDWXWRU\ GDPDJHV WR 'HIHQGDQWV ZDV LQ YLRODWLRQ RI  HTXDOWRWKHJUHDWHURISHUGD\RIYLRODWLRQRU 86& †  F  %  DV ZHOO DV VHYHUDO H[FHSWLRQV WR 7KHDPHQGPHQWWR†UDLVHGWKHOLTXLGDWHG GDPDJHV UHFRJQL]HG E\ WKLV &RXUW  6SHFLILFDOO\ 3ODLQWLII GDPDJHV DPRXQW WR   &ODLPDQW LQ %HVV KDG DUJXHVWKDW L XQGHU'RUULVY$EVKHU)G WK&LU LQWURGXFHGWZHOYHWDSHVRILQWHUFHSWHGSKRQHFRQYHUVDWLRQV  † F  % HVWDEOLVKHVDmVLQJOHVXPl HDFK WDSH UHSUHVHQWLQJ RQH GD\ RI LQWHUFHSWLRQ  %HVV  VWDWXWRU\DZDUGSHUFODLPDQW LL XQGHU1L[Y2j0DOOH\ )G DW   7KH LQWHUFHSWLRQV RFFXUUHG  LQ   7KH )G  WK &LU   WKH DGMXGLFDWLRQ DQG GHIHQVH PDJLVWUDWHMXGJHILQGLQJWKHLQWHUFHSWLRQVWRKDYHRFFXUUHG H[FHSWLRQVVKRXOGKDYHVKLHOGHG3ODLQWLIIIURPOLDELOLW\DVWR RQWZHOYHVHSDUDWHGD\VDZDUGHGFODLPDQWLQVWDWXWRU\ 3ODLQWLIIjVGLVWULEXWLRQRIWKHWUDQVFULSWWRKLVODZ\HUDQGWKH DWWDFKPHQWRIWKHWUDQVFULSWWRKLVFRPSODLQW LLL XQGHU6PLWK Y6HFXULWLHVDQG([FKDQJH&RPPLVVLRQ)G WK &LU 3ODLQWLIIjVILOLQJRIWKHH[HFXWLYHVHVVLRQWUDQVFULSW  (OHFWURQLF &RPPXQLFDWLRQV 3ULYDF\ $FW RI  3XE / 1R  ZLWKWKHGLVWULFWFRXUWLQ0DUFKRIVKRXOGKDYHVKLHOGHG   6WDW     6PRRWY8QLWHG 1R 1R 6PRRWY8QLWHG  7UDQVSRUWDWLRQ8QLRQHWDO 7UDQVSRUWDWLRQ8QLRQHWDO 3ODLQWLIIIURPOLDELOLW\DVWRWKHGLVWULEXWLRQDQG LY WKXVKLVVWDWXWRU\GDPDJHVVKRXOGEHOLPLWHGWRDVLQJOHVXP 3ODLQWLIIVKRXOGQRWEHOLDEOHIRUDQ\GLVFORVXUHE\5XFNZKR RISHUFODLPDQWXQGHU† F  % %RWK878 ZDVQRW3ODLQWLIIjVDJHQW7KLV&RXUWUHYLHZVDGLVWULFWFRXUWjV DQG &6; DUJXH WKDW 3ODLQWLIIjV YLRODWLRQV ZHUH ZLGHO\ DZDUGRIGDPDJHVEDVHGRQVWDWXWRU\LQWHUSUHWDWLRQGHQRYR VHSDUDWHG E\ WLPH SODFH DQG SHRSOH UHTXLULQJ VHSDUDWH 6HH 86 6WUXFWXUHV ,QF Y s3 6WUXFWXUHV ,QF  )G VWDWXWRU\DZDUGVXQGHUWKH'RUULVUHDGLQJRI† F  %   WK&LU  878DUJXHVWKDWQLQHRI3ODLQWLIIjVYLRODWLRQVRIWKH$FWGR 7KHFRPSHQVDWRU\GDPDJHVSURYLVLRQRIWKH$FW86& QRWIRUPDFORVHO\UHODWHGFRXUVHRIFRQGXFWHLJKWRIZKLFK † F UHDGVDVIROORZV RFFXUULQJRYHUDWHQPRQWKSHULRGDQGWKHQLQWKIRXU\HDUV DIWHU 3ODLQWLIIjV LQLWLDO YLRODWLRQ  3ODLQWLIIjV YLRODWLRQV DOVR F FRPSXWDWLRQRIGDPDJHV RFFXUUHGLQVL[VWDWHVLQYROYLQJGLVFORVXUHWRDWOHDVWHOHYHQ GLIIHUHQWSHUVRQV  ,QDQ\RWKHUDFWLRQXQGHUWKLVVHFWLRQWKHFRXUWPD\ DVVHVVDVGDPDJHVZKLFKHYHULVWKHJUHDWHURIo 8QOLNH'RUULVWKHYLRODWLRQVLQWKLVFDVHGLGQRWRFFXURYHU $   WKH VXP RI WKH DFWXDO GDPDJHV VXIIHUHG E\ WKH DQ HLJKWGD\ VSDQ RU LQYROYH D KDQGIXO RI SHRSOH LQ RQH SODLQWLIIDQGDQ\SURILWVPDGHE\WKHYLRODWRUDVDUHVXOW ORFDWLRQ5DWKHUDVGHWDLOHGDERYHWKHYLRODWLRQVRFFXUUHG RIWKHYLRODWLRQRU RYHU D VHULHV RI PRQWKV DQG LQ RQH FDVH \HDUV LQYROYLQJ %   VWDWXWRU\ GDPDJHV RI ZKLFKHYHU LV WKH JUHDWHU RI PXOWLSOHSDUWLHVLQPXOWLSOHVWDWHV:HWKHUHIRUHPXVWDGGUHVV DGD\IRUHDFKGD\RIYLRODWLRQRU WKHmZLGHO\VHSDUDWHGlTXHVWLRQOHIWXQDQVZHUHGE\WKLV&RXUW LQ'RUULV 7KLV&RXUWLQ'RUULVKHOGWKDWXQGHU† F  % WKH OLTXLGDWHGGDPDJHVDPRXQWPD\QRWEHDSSOLHGSHU &XUUHQWO\RQO\RQHFLUFXLW KDV GLUHFWO\DGGUHVVHGLQWKH YLRODWLRQ RI WKH $FW LI WKH YLRODWLRQV DUH mVXIILFLHQWO\ FDVHRIZLGHVSUHDGYLRODWLRQVRIWKH$FWZKHWKHUWKH LQWHUUHODWHGDQGWLPHFRPSDFWHGl'RUULV)GDW OLTXLGDWHGGDPDJHVDPRXQWXQGHU† F  % LVWREH 6SHFLILFDOO\ mWKH  LV GHVLJQHG WR FRPSHQVDWH D DSSOLHGSHUYLRODWLRQ,Q'HVLOHWVY:DO0DUW6WRUHV,QF SODLQWLIIIRUDOORIWKHWUDQVJUHVVRUjVPLVGHHGVXQGHUWKH>$FW@ DULVLQJRXWRIDFORVHO\UHODWHGFRXUVHRIFRQGXFWWKDWWDNHV SODFHRYHUDUHODWLYHO\VKRUWSHULRGRIWLPHl,G7KLV&RXUW  LQ 'RUULV DOVR QRWHG m>Z@H QHHG QRW GHFLGH ZKHWKHU 3ODLQWLIIjV LQLWLDO LQWHUFHSWLRQ RI WKH H[HFXWLYH VHVVLRQ RFFXUUHG RQ YLRODWLRQV RI WKH >$FW@ ZLGHO\ VHSDUDWHG E\ WLPH SODFH RU 0D\   LQ 0DU\ODQG 3ODLQWLII WKHQ WRRN WKH WDSHV WR 9LUJLQLD SHRSOHZRXOGOHDGWRDGLIIHUHQWUHVXOWEHFDXVHWKHTXHVWLRQ ZKHUH KH SOD\HG WKHP IRU WKUHH 878 PHPEHUV ,Q sXQH RI  3ODLQWLII VHQW RQH RI WKH WDSHV WR 5XFN LQ 7H[DV 6HYHUDO PRQWKV ODWHU 3ODLQWLII LVQRWFXUUHQWO\EHIRUHXVl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jV FRPSODLQW DQG ILOHG ZLWK WKH 3ODLQWLIIDUJXHVXQGHU'RUULVWKDWKLVFRQGXFWZDVFORVHO\ GLVWULFW FRXUW 3ODLQWLIIjV ILQDO YLRODWLRQ ZDV LQ $XJXVW RI  DW D 878 UHODWHGDQGRFFXUUHGRYHUDUHODWLYHO\VKRUWSHULRGRIWLPHDQG FRQYHQWLRQ RYHU IRXU \HDUV DIWHU KLV LQLWLDO YLRODWLRQ