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 /8&,1'$ '$55$+ ; 3ODLQWLII$SSHOODQW 1R Y ! &,7< 2) 2$. 3$5.HWDO 'HIHQGDQWV 5866(// %5$**D7UR\ SROLFHRIILFHU 'HIHQGDQW$SSHOOHH 1 $SSHDOIURPWKH8QLWHG6WDWHV'LVWULFW&RXUW IRUWKH(DVWHUQ'LVWULFWRI0LFKLJDQDW'HWURLW 1Rn*HRUJH(:RRGV'LVWULFWsXGJH $UJXHG0DUFK 'HFLGHGDQG)LOHGsXQH %HIRUH6,/(50225(DQG&/$<&LUFXLWsXGJHV BBBBBBBBBBBBBBBBB &2816(/ $5*8('.HYLQ6(UQVW/$:2)),&(2).6(5167 'HWURLW0LFKLJDQIRU$SSHOODQW/RUL*ULJJ%OXKP7UR\ 0LFKLJDQIRU$SSHOOHHV21%5,().HYLQ6(UQVW/$: 'DUUDKY&LW\RI2DN3DUNHWDO 1R 1R 'DUUDKY&LW\RI2DN3DUNHWDO 2)),&(2).6(5167'HWURLW0LFKLJDQIRU$SSHOODQW SUREDEOHFDXVHWRSURVHFXWH'DUUDKIRUREVWUXFWLQJDSROLFH /RUL*ULJJ%OXKP7UR\0LFKLJDQIRU$SSHOOHHV RIILFHU BBBBBBBBBBBBBBBBB $IWHUUHYLHZLQJWKHHYLGHQFHDQGWKHDUJXPHQWVSUHVHQWHG E\'DUUDKZHFRQFOXGHWKDWQRUHDVRQDEOHMXU\FRXOGILQGWKDW 23,1,21 2IILFHU %UDJJjV DOOHJHGO\ PLVOHDGLQJ DFWV DQG RPLVVLRQV BBBBBBBBBBBBBBBBB DIIHFWHGWKHVWDWHFRXUWjVGHWHUPLQDWLRQRISUREDEOHFDXVHLQ DQ\ZD\$FFRUGLQJO\KDYLQJUHFRJQL]HGDFODLPRI .$5(1 1(/621 0225( &LUFXLW sXGJH 3ODLQWLII PDOLFLRXVSURVHFXWLRQSXUVXDQWWR6SXUORFNZH$)),50WKH $SSHOODQW/XFLQGD'DUUDKm'DUUDKlRUmSODLQWLIIlDSSHDOV GLVWULFW FRXUWjV GHFLVLRQ JUDQWLQJ 2IILFHU %UDJJ VXPPDU\ WKHGLVWULFWFRXUWjVGHFLVLRQJUDQWLQJVXPPDU\MXGJPHQWWR MXGJPHQWRQWKLVFODLP 2IILFHU5XVVHOO%UDJJm%UDJJlRQKHUH[FHVVLYHIRUFHDQG PDOLFLRXV SURVHFXWLRQ FODLPV ERWK EURXJKW SXUVXDQW WR ,,,&21&/86,21 86&:H$)),50WKHGLVWULFWFRXUWjVGHFLVLRQ )RUWKHIRUHJRLQJUHDVRQVZH$)),50WKHGLVWULFWFRXUWjV ,%$&.*5281' GHFLVLRQ JUDQWLQJ 2IILFHU %UDJJ VXPPDU\ MXGJPHQW ZLWK UHVSHFW WR 'DUUDKjV H[FHVVLYH IRUFH DQG IHGHUDO PDOLFLRXV (DUO\LQWKHPRUQLQJRQ2FWREHU/XFLQGD'DUUDK SURVHFXWLRQFODLPV DUULYHG DW WKH 'HWURLW 1HZVSDSHU $JHQF\jV m'1$l 2DN 3DUN 0LFKLJDQ GLVWULEXWLRQ FHQWHU WR SDUWLFLSDWH LQ DQ RUJDQL]HG SLFNHWLQJ LQ VXSSRUW RI 'HWURLWjV XQLRQL]HG QHZVSDSHUZRUNHUV7KHSLFNHWLQJZDVRUJDQL]HGWRFRLQFLGH ZLWKWKH'1$j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l EHFDPH PRUH YRFDO DIWHU WKLV ZDUQLQJ DQG WKHQ EHJDQ WR $SSHOODQWjV%UDW FKDQWDWWKHRIILFHUV 7DNLQJ WKHVH DOOHJDWLRQV LQWR DFFRXQW LW LV FOHDU WKDW $IWHUWKHSLFNHWHUVLJQRUHGWKLVZDUQLQJWKHRIILFHUVWKHQ UHJDUGOHVVRIDQ\DOOHJHGPLVLQIRUPDWLRQSURYLGHGWRWKHFRXUW IRUPHGWZROLQHVDQGEHJDQWRZDONWRZDUGWKHPLGGOHRIWKH E\%UDJJWKHVWDWHFRXUWZRXOGKDYHFRQFOXGHGWKDWWKHUHZDV GULYHZD\7KHRIILFHUVSODQQHGWRH[SDQGWKHLUWZROLQHVRXW SUREDEOHFDXVHWRDUUHVW'DUUDKDQGKROGKHURYHUIRUWULDO IURPWKHPLGGOHRIWKHGULYHZD\WKXVIRUFLQJWKHSLFNHWHUVWR )LUVWWKHVWDWHFRXUWWUDQVFULSWFOHDUO\UHIXWHVSODLQWLIIjVFODLP PRYHEDFNDQGDZD\IURPWKHGULYHZD\7KHRIILFHUVLQWKH WKDWZKHWKHUVKHZDVJUDEELQJ%UDJJjVJXQEHOWRUKLVDQNOH IRUPDWLRQKDGEHHQLQVWUXFWHGWRWDNHQRVKLHOGVRUVWLFNVDQG DIIHFWHGWKHFRXUWjVGHFLVLRQWRKROGKHURYHUIRUWULDO,QWKH WRXVHQRWHDUJDV7KHRIILFHUVZHUHDOVRWROGWKDWLIWKH\PHW SUHOLPLQDU\ KHDULQJ WKH FRXUW VWDWHG WKDW WKH PHUH DFW RI DQ\ SK\VLFDO UHVLVWDQFH WKH\ VKRXOG UHWUHDW WR WKH RULJLQDO SXOOLQJRQWKHRIILFHUUHJDUGOHVVRIZKHWKHULWZDVKLVEHOWRU VWDJLQJDUHDZKHUHWKH\ZRXOGWKHQPDNHDGHFLVLRQDVWR KLVDQNOHZDVHQRXJKWRFRQVWLWXWHSUREDEOHFDXVHWRKROG ZKDWWRGR SODLQWLIIRYHUIRUWULDOs$DW3UHOLP([DPLQDWLRQ7U 3ODLQWLIIDOVRDGPLWWHGLQKHUGHSRVLWLRQWKDWVKHZDVWU\LQJWR 7KHSROLFHKDGSUHYLRXVO\DVVLJQHGYDULRXVRIILFHUVWRIRUP LQWHUIHUHZLWKWKHRIILFHUVjDFWLRQVZKHQWKH\ZHUHXVLQJIRUFH WKUHHDUUHVWWHDPVZKRVHGXW\mZDVWRDUUHVWLQGLYLGXDOVWKDW RQ'HDUPRQGs$DW'DUUDK'HS ZHUHSRLQWHGRXWWR>WKHP@E\VXSHUYLVRUVDVYLRODWLQJDFLW\ RUGLQDQFHl sRLQW $SSHQGL[ ms$l DW %UDJJ 7HVW 3ODLQWLII IXUWKHU FODLPV WKDW 2IILFHU %UDJJjV PLVOHDGLQJ 2IILFHU%UDJJZDVDVVLJQHGWRRQHRIWKHDUUHVWWHDPV SROLFHUHSRUWZKLFKDOOHJHGO\LQGLFDWHGWKDWKHZDVHQJDJLQJ LQDODZIXODUUHVWRI'HDUPRQGLQIOXHQFHGWKHVWDWHFRXUWjV $VWKHRIILFHUVH[SDQGHGWKHLUOLQHVDFURVVWKHGULYHZD\ GHFLVLRQ WR ILQG SUREDEOH FDXVH IRU SODLQWLIIjV DUUHVW DQG DSSUR[LPDWHO\KDOIRIWKHSLFNHWHUVYROXQWDULO\PRYHGRIIWR SURVHFXWLRQ RQ WKH REVWUXFWLRQ FKDUJH 7KHUH DUH WZR WKHVLGH2QHJURXSRISLFNHWHUVUHIXVHGWRPRYHKRZHYHU SUREOHPVZLWKWKLVDUJXPHQWILUVWEDVHGRQWKHIDFWVDOOHJHG DQGUHPDLQHGLQWKHPLGGOHRIWKHGULYHZD\LQDWLJKWFLUFOH E\'DUUDKDQGWKHLQIRUPDWLRQLQWKHSROLFHUHSRUWWKHUHLVQR /LHXWHQDQW5LFKDUG&DLQRQHRIWKHVXSHUYLVLQJRIILFHUVRQ LQGLFDWLRQWKDW%UDJJj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j EDFNV EHIRUH 'HDUPRQGjVEHKDOIHYHQLIVKHWKRXJKWWKHRIILFHUjVXVHRI 2IILFHU 6PLWK FRXOG UHVWUDLQ 'HDUPRQG 'HDUPRQG IRUFHZDVH[FHVVLYHWKHH[WHQWWRZKLFK%UDJJLQIRUPHGWKH EDFNSHGDOHG IXUWKHU LQWR WKH FURZG DV 2IILFHUV %UDJJ DQG FRXUWRIWKHIRUFHKHXVHGLQKLVDWWHPSWVWRGHWDLQ'HDUPRQG 3HWULGHVDJDLQDWWHPSWHGWRDUUHVWKLP7KHSODLQWLIIZKRZDV FRXOGQRWKDYHDIIHFWHGWKHVWDWHFRXUWjVGHWHUPLQDWLRQRIWKH EDFNWRRIDULQWKHFURZGWRVHHZKDWZDVKDSSHQLQJDWWKH IURQWRIWKHSLFNHWOLQHVRQO\WKHQQRWLFHG2IILFHUV3HWULGHV DQG %UDJJ DSSURDFKLQJ $FFRUGLQJ WR 'DUUDK WKH WZR 'DUUDKY&LW\RI2DN3DUNHWDO 1R 1R 'DUUDKY&LW\RI2DN3DUNHWDO RIILFHUVZHUHUXQQLQJWRZDUGWKHEDFNRIWKHFURZGSXVKLQJ DW 7KH)UDQW]FRXUWH[SODLQHGmWKDWHVWDEOLVKLQJD 'HDUPRQG DORQJ DV WKH\ ZHQW 'DUUDK WHVWLILHG WKDW WKH FDXVHRIDFWLRQUHTXLUHVDFRQVWLWXWLRQDOYLRODWLRQDQGFDQQRW RIILFHUVWKHQmUDP>PHG@l'HDUPRQGWRWKHJURXQGDQGSODFHG GLIIHUGHSHQGLQJRQWKHWRUWODZRIDSDUWLFXODUVWDWHl,G KLPLQDQDUPORFNMHUNLQJKLVDUPEDFNIXUWKHUDQGIXUWKHU s$DW'DUUDK'HS 2WKHUWKDQLWVKROGLQJWKDWDDFWLRQIRUPDOLFLRXV SURVHFXWLRQ UHTXLUHV D FRQVWLWXWLRQDO YLRODWLRQ WKH )UDQW] 8SRQ ZLWQHVVLQJ WKLV XVH RI IRUFH 'DUUDK EHQW RYHU FRXUW GLG QRW IXUWKHU H[SOLFDWH WKH HOHPHQWV RI D JUDEEHG2IILFHU%UDJJE\WKHDQNOHDQGEHJDQWXJJLQJLWZLWK PDOLFLRXVSURVHFXWLRQFODLPXQGHUWKH)RXUWK$PHQGPHQW ERWK KDQGV DOO WKH ZKLOH WHOOLQJ KLP WR VWRS KXUWLQJ EHFDXVH )UDQW] ODWHU KHOG WKDW QR VXFK FODLP H[LVWV DIWHU 'HDUPRQG'DUUDKVWDWHGWKDWVKHZDVLQWHUIHULQJZLWKWKH $OEULJKW :H QHHG QRW HQXQFLDWH D WHVW IRU PDOLFLRXV RIILFHUVj DFWLRQV EHFDXVH VKH IHOW WKHLU FRQGXFW FRQVWLWXWHG SURVHFXWLRQ XQGHU HLWKHU KRZHYHU IRU 'DUUDK FDQ SROLFHEUXWDOLW\ VKRZQRFRQVWLWXWLRQDOGHSULYDWLRQLQWKLVFDVH5HJDUGOHVVRI WKH VSHFLILF HOHPHQWV RI WKH IHGHUDO PDOLFLRXV SURVHFXWLRQ %UDJJZDVDEOHWRSXOOKLVDQNOHORRVHIURP'DUUDKjVJUDVS FODLP SODLQWLII LV XQDEOH WR DOOHJH DQ XQUHDVRQDEOH VHL]XUH \HW'DUUDKDJDLQJUDEEHGKROGRIKLVDQNOHDQGWROGKLPWR XQGHUWKH)RXUWK$PHQGPHQWLHWKDWWKHUHZDVQRSUREDEOH VWRS$WWKLVSRLQWERWK'DUUDKDQG%UDJJHVVHQWLDOO\DJUHH FDXVHWRMXVWLI\KHUDUUHVWDQGSURVHFXWLRQ6HH$OEULJKW WKDW%UDJJmWXUQHGDQGVZXQJEDFNZDUGVlZLWKKLVOHIWDUP 86DW KLWWLQJ'DUUDKLQWKHPRXWKs$DW%UDJJ7HVWs$DW 'DUUDK'HS'DUUDKZDVNQRFNHGEDFNZDUGDQGKLWKHU :HQHHGQRWSURFHHGDQ\IXUWKHUWKDQWKHSUREDEOHFDXVH KHDG RQ ZKDW VKH EHOLHYHV ZDV D SDUNLQJ EORFN 'DUUDK DQDO\VLV WR GHFLGH SODLQWLIIjV PDOLFLRXV SURVHFXWLRQ FODLP VXIIHUHG D mVSOLW OLSl IURP WKH EORZ ZKLFK UHTXLUHG VL[ RU 3ODLQWLII FODLPV LQ KHU EULHI WKDW WKH VWDWH FRXUWjV VHYHQVWLWFKHVs$DW'DUUDK'HS GHWHUPLQDWLRQ RI SUREDEOH FDXVH WR SURVHFXWH KHU RQ WKH REVWUXFWLRQFKDUJHZDVEDVHGRQIDOVHLQIRUPDWLRQSURYLGHG 2IILFHU%UDJJWHVWLILHGWKDWKHGLGQRWJHWDJRRGORRNDWWKH E\2IILFHU%UDJJ+RZHYHULIWKLVFRXUWILQGVWKDWWKHUHZDV SHUVRQZKRKHFODLPHGZDVWXJJLQJDWKLVEHOWRWKHUWKDQWR SUREDEOHFDXVHWRSURVHFXWH'DUUDKUHJDUGOHVVRIDQ\DOOHJHG VHHWKDWWKHSHUVRQZDVIHPDOH$IWHUNQRFNLQJ'DUUDKDZD\ IDOVHVWDWHPHQWVPDGHE\%UDJJWKHQVKHFDQQRWPDNHRXWD IURPKLP%UDJJZHQWEDFNWRmWU\LQJWRDUUHVWl'HDUPRQG PDOLFLRXVSURVHFXWLRQFODLPXQGHUWKH)RXUWK$PHQGPHQW ZLWK 2IILFHU 3HWULGHV \HW E\ WKLV SRLQW 'HDUPRQG KDG UHJDLQHG KLV IRRWLQJ DQG KDG WDNHQ RII WKURXJK WKH FURZG m3UREDEOHFDXVHWRPDNHDQDUUHVWH[LVWVLIWKHIDFWVDQG s$DW%UDJJ7HVW FLUFXPVWDQFHVZLWKLQWKHDUUHVWLQJRIILFHUjVNQRZOHGJHµZHUH VXIILFLHQW WR ZDUUDQW D SUXGHQW PDQ LQ EHOLHYLQJ WKDW WKH $IWHUWKHVLWXDWLRQKDGVHWWOHGGRZQRIILFHUVVSRNHZLWK >DUUHVWHH@ KDG FRPPLWWHG RU ZDV FRPPLWWLQJ DQ RIIHQVHjl 'DUUDK DQG DVNHG IRU KHU YHUVLRQ RI ZKDW KDG WUDQVSLUHG 3\OHVY5DLVRU)GWK&LUTXRWLQJ $FFRUGLQJWR/LHXWHQDQW&DLQjVSROLFHUHSRUW'DUUDKUHIXVHG %HFNY2KLR863ODLQWLIIFRQWHQGVWKDW 2IILFHU %UDJJ PLVOHG WKH VWDWH FRXUW E\ VWDWLQJ WKDW SODLQWLIIUHDFKHGIRUKLVJXQEHOWUDWKHUWKDQKLVDQNOHZKHQKH ZDVDWWHPSWLQJWRVXEGXH'HDUPRQGVWDWLQJWKDWKHZDV 2IILFHU %UDJJ FODLPV WKDW LW ZDV QRW KLV DQNOH EXW KLV JXQ EHOW WKDW FRQGXFWLQJDODZIXODUUHVWZKHQSODLQWLIILQWHUIHUHGZLWKKLP ZDV EHLQJ SXOOHG s$ DW )RU SXUSRVHV RI D VXPPDU\ MXGJPHQW PRWLRQ WKLV FRXUW PXVW YLHZ WKH IDFWV LQ WKH OLJKW PRVW IDYRUDEOH WR DQGIDLOLQJWRGLVFORVHWRWKHFRXUWmWKDWKHZDVDVVDXOWLQJ 'DUUDK WKH QRQPRYLQJ SDUW\ &DPSEHOO Y *UDQG 7UXQN : 55 &R )G WK &LU 'DUUDKY&LW\RI2DN3DUNHWDO 1R 1R 'DUUDKY&LW\RI2DN3DUNHWDO VDWLVILHGLQWKLVFDVH,QsRVH\DVLQWKLVFDVHWKHSODLQWLIIV WR LGHQWLI\ KHUVHOI WR WKH SROLFH &DLQ IXUWKHU VWDWHG LQ KLV EDVHGWKHLUPDOLFLRXVSURVHFXWLRQFODLPLQIHGHUDOFRXUWRQWKH SROLFHUHSRUWWKDWm>W@KHRQO\UHDVRQVKHZDVQRWSODFHGXQGHU JURXQGVWKDWWKHGHIHQGDQWRIILFHUVKDGNQRZLQJO\VXSSOLHG DUUHVWlDWWKDWWLPHZDVEHFDXVHVKHDVNHGWRJRWRDKRVSLWDO WKH PDJLVWUDWH ZLWK IDOVH LQIRUPDWLRQ LQ RUGHU WR HVWDEOLVK s$ DW &DLQ 3ROLFH 5HSRUW 'DUUDKjV SHUVRQDO SUREDEOH FDXVH ,G DW 7KXV WKH FRXUW KHOG SODLQWLIIV LQIRUPDWLRQZDVODWHUREWDLQHGIURPWKHDPEXODQFHVWDIIWKDW ZHUHQRWDWWHPSWLQJWRUHOLWLJDWHWKHLGHQWLFDOLVVXHRIZKHWKHU WUHDWHGKHURQWKHVFHQH$QDUUHVWZDUUDQW IRU'DUUDKIRU SUREDEOH FDXVH H[LVWV UDWKHU WKH\ ZHUH DUJXLQJ WKDW WKH REVWUXFWLQJDSROLFHRIILFHUZDVQRWLVVXHGXQWLO)HEUXDU\ RIILFHUVPLVVWDWHGPDWHULDOIDFWVLQRUGHUWRHVWDEOLVKSUREDEOH PRUHWKDQIRXUPRQWKVDIWHUWKHLQFLGHQW FDXVHDWWKHVWDWHOHYHO,GFLWLQJsRQHVY&LW\RI&KLFDJR )G WK &LU $SSO\LQJ WKH VDPH $SUHOLPLQDU\KHDULQJRQ'DUUDKjVREVWUXFWLRQFKDUJHZDV UHDVRQLQJ WR WKLV FDVH ZH KROG WKDW WKH VWDWH FRXUWjV KHOGRQ0D\DWZKLFKWLPHWKHVWDWHGLVWULFWFRXUW GHWHUPLQDWLRQRISUREDEOHFDXVHDWWKHSUHOLPLQDU\KHDULQJLV GHWHUPLQHGWKDWWKHUHZDVSUREDEOHFDXVHWRKROG'DUUDKRYHU QRW LGHQWLFDO WR WKH LVVXH 'DUUDK DUJXHV WRGD\ WKDW EHLQJ IRU WULDO 7KH FRXUW QRWHG WKDW UHJDUGOHVV RI 'DUUDK DQG ZKHWKHU2IILFHU%UDJJPDGHPDWHULDOO\IDOVHVWDWHPHQWVWRWKH %UDJJjV GLIIHULQJ DFFRXQWV RI WKH HYHQWV WKH PHUH DFW RI VWDWH MXGJH WKDW IRUPHG WKH EDVLV RI WKDW FRXUWjV SUREDEOH SXOOLQJDQRIILFHUZKLOHKHZDVODZIXOO\SHUIRUPLQJKLVGXW\ FDXVHGHWHUPLQDWLRQ$FFRUGLQJO\ZHSURFHHGWRDUHYLHZRI ZDVHQRXJKWRmFRQVWLWXWH>@UHVLVWLQJDQGREVWUXFWLRQl WKH PHULWV RI 'DUUDKjV )RXUWK $PHQGPHQW PDOLFLRXV s$ DW 3UHOLP ([DPLQDWLRQ 7U 'DUUDKjV FDVH SURVHFXWLRQFODLP SURFHHGHG WR WULDO ZKHUH VKH ZDV DFTXLWWHG E\ D MXU\ RQ $XJXVW E 7KH 0HULWV RI 'DUUDKjV 0DOLFLRXV 3URVHFXWLRQ &ODLP 2Q2FWREHUSODLQWLIIILOHGVXLWLQWKH8QLWHG6WDWHV 'LVWULFW&RXUWIRUWKH(DVWHUQ'LVWULFWRI0LFKLJDQUDLVLQJ ,Q)UDQW]WKLVFRXUWKHOGWKDWIROORZLQJ$OEULJKWjVKROGLQJ VHYHUDO FODLPV DJDLQVW 2IILFHU %UDJJ LQ KLV LQGLYLGXDO WKDWWKHm)RXUWK$PHQGPHQWLVWKHRQO\µSHJjRQZKLFKWR FDSDFLW\ DQG WKH &LWLHV RI 2DN 3DUN DQG 7UR\ 0RUH KDQJDFODLPDOOHJLQJPDOLFLRXVSURVHFXWLRQlZHPD\ VSHFLILFDOO\ 'DUUDK DOOHJHG WKDW 2IILFHU %UDJJjV FRQGXFW QRORQJHUUHO\RQWKHVWDWHODZRIPDOLFLRXVSURVHFXWLRQWR YLRODWHGKHU)RXUWK$PHQGPHQWULJKWVDQGXQGHU86& GHILQH WKH SURSHU FDXVH RI DFWLRQ IRU D IHGHUDO PDOLFLRXV VXHGKLPIRUH[FHVVLYHIRUFHLQVWULNLQJKHULQWKHIDFH SURVHFXWLRQFODLPXQGHU)UDQW]:/ DIWHUVKHDWWHPSWHGWRSUHYHQWKLPIURPVXEGXLQJ'HDUPRQG DQG IRU PDOLFLRXV SURVHFXWLRQ EDVHG RQ KHU FODLP WKDW WKH VWDWH FRXUWjV SUREDEOH FDXVH ILQGLQJ ZDV IRXQGHG XSRQ %UDJJjVPDWHULDOO\IDOVHVWDWHPHQWVLQFOXGLQJ%UDJJjVFODLP ,Q OLJKW RI $OEULJKWjV KROGLQJ WKH )UDQW] FRXUW GLVDYRZHG DQ\ WKDW'DUUDKKDGJUDEEHGKLVJXQEHOW IXUWKHU UHOLDQFH RQ &RRJDQ )G DW ZKLFK KDG SUHYLRXVO\ KHOG WKDW D DFWLRQ IRU PDOLFLRXV SURVHFXWLRQ LV GHILQHG LQ SDUW E\ WKH HOHPHQWV RI WKH VWDWH ODZ WRUW RI PDOLFLRXV SURVHFXWLRQ :H DUH ERXQG 7KHGHIHQGDQWVWKHQILOHGDPRWLRQIRUVXPPDU\MXGJPHQW E\ WKH )UDQW] FRXUWjV KROGLQJ GLVDYRZLQJ RXU SULRU GHFLVLRQ LQ &RRJDQ :KLOHLWLVXQFOHDUIURPWKHUHFRUGLWDSSHDUVWKDWWKHSODLQWLII EHFDXVH )UDQW] DSSOLHG WKH QHZ 6XSUHPH &RXUW GHFLVLRQ LQ $OEULJKW WR WKH WKHUHDIWHUYROXQWDULO\GLVPLVVHGKHUFODLPVDJDLQVWWKH&LWLHV &RRJDQ FDVH WKDW KDG SUHFHGHG $OEULJKW :H DUH QRW ERXQG E\ WKH )UDQW] RI2DN3DUNDQG7UR\7KHGLVWULFWFRXUWWKHQ JUDQWHGWKH FRXUWjV LQWHUSUHWDWLRQ RI 6SXUORFN KRZHYHU EHFDXVH 6SXUORFN XQOLNH &RRJDQ ZDV GHFLGHG DIWHU $OEULJKW DQG KDG LQWHUSUHWHG $OEULJKW LQ GHIHQGDQWVjPRWLRQIRUVXPPDU\MXGJPHQWZLWKUHVSHFWWRWKH FRQFOXGLQJ WKDW D FDXVH RI DFWLRQ IRU PDOLFLRXV SURVHFXWLRQ GRHV UHPDLQLQJ FODLPV RI H[FHVVLYH IRUFH DQG PDOLFLRXV H[LVW XQGHU WKH )RXUWK $PHQGPHQW 1R QHZ 6XSUHPH &RXUW FDVH MXVWLILHG WKH )UDQW] FRXUWjV GHFLVLRQ WR GLVUHJDUG 6SXUORFN 'DUUDKY&LW\RI2DN3DUNHWDO 1R 1R 'DUUDKY&LW\RI2DN3DUNHWDO SURVHFXWLRQDJDLQVW2IILFHU%UDJJ'DUUDKQRZDSSHDOVWKHVH SXUVXDQW WR KHU )RXUWK $PHQGPHQW ULJKW DJDLQVW XQODZIXO UHPDLQLQJFODLPVDJDLQVW2IILFHU%UDJJWRWKLVFRXUW VHL]XUHVs$DW&RPSO ,,$1$/<6,6 D&ROODWHUDO(VWRSSHO $6WDQGDUGRI5HYLHZ $VVWDWHGHDUOLHUSODLQWLIIEULQJVKHU)RXUWK$PHQGPHQW PDOLFLRXV SURVHFXWLRQ FODLP RQ WKH JURXQGV WKDW WKH VWDWH 7KLVFRXUWUHYLHZVGHQRYRDGLVWULFWFRXUWjVGHFLVLRQWR FRXUWjVSUREDEOHFDXVHILQGLQJZDVEDVHGRQ2IILFHU%UDJJjV JUDQWVXPPDU\MXGJPHQW&DPSEHOO)GDW7KH IDOVHVWDWHPHQWVDQGRPLVVLRQV7KHGLVWULFWFRXUWLQJUDQWLQJ PRYLQJSDUW\KDVWKHEXUGHQRIHVWDEOLVKLQJWKDWWKHUHDUHQR GHIHQGDQWjV PRWLRQ IRU VXPPDU\ MXGJPHQW ZLWK UHVSHFW WR JHQXLQH LVVXHV RI PDWHULDO IDFW DQG WKDW LW LV HQWLWOHG WR D 'DUUDKjVPDOLFLRXVSURVHFXWLRQFODLPEDVHGLWVGHFLVLRQLQ MXGJPHQWDVDPDWWHURIODZ)HG5&LY3F$GLVSXWH SDUWRQWKHGRFWULQHRIFROODWHUDOHVWRSSHO7KHGLVWULFWFRXUW RYHUDPDWHULDOIDFWFDQQRWEHmJHQXLQHlXQOHVVDUHDVRQDEOH VWDWHGWKDWSODLQWLIIZDVSUHFOXGHGIURPUDLVLQJWKHLVVXHRI MXU\FRXOGUHWXUQDYHUGLFWIRUWKHQRQPRYLQJSDUW\$QGHUVRQ SUREDEOHFDXVHIRUDVHFRQGWLPHDIWHUWKHVWDWHFRXUWLQDQ Y /LEHUW\ /REE\ ,QF 86 ,Q DGYHUVDU\SURFHHGLQJKDGDOUHDG\GHWHUPLQHGWKDWWKHUHZDV UHYLHZLQJ WKH GLVWULFW FRXUWjV GHFLVLRQ WR JUDQW VXPPDU\ SUREDEOHFDXVHWRKROGKHURYHUIRUWULDO6HH&RRJDQY&LW\ MXGJPHQWWKLVFRXUWPXVWYLHZDOOHYLGHQFHLQWKHOLJKWPRVW RI:L[RP)GWK&LUmZKHUHWKHVWDWH IDYRUDEOH WR WKH QRQPRYLQJ SDUW\ &DPSEHOO )G DW DIIRUGV DQ RSSRUWXQLW\ IRU DQ DFFXVHG WR FRQWHVW SUREDEOH FDXVH DW D SUHOLPLQDU\ KHDULQJ DQG WKH DFFXVHG GRHV VR D ILQGLQJRISUREDEOHFDXVHE\WKHH[DPLQLQJPDJLVWUDWHRUVWDWH %'DUUDKjV([FHVVLYH)RUFH&ODLP MXGJH VKRXOG IRUHFORVH UHOLWLJDWLRQ RI WKDW ILQGLQJ LQ D VXEVHTXHQWDFWLRQl :KLOHH[FHVVLYHIRUFHFODLPVDUHRIWHQEHVWDQDO\]HGXQGHU WKH )RXUWK $PHQGPHQWjV SURWHFWLRQ DJDLQVW XQUHDVRQDEOH $VWKH6XSUHPH&RXUWKDVKHOGZHPXVWDSSO\WKHVWDWHODZ VHL]XUHV*UDKDPY&RQQRU86WKH RIFROODWHUDOHVWRSSHOZKHQGHFLGLQJZKHWKHUWKHVWDWHFRXUWjV 6XSUHPH &RXUW KDV UHFHQWO\ FDXWLRQHG WKDW QRW mDOO GHWHUPLQDWLRQRISUREDEOHFDXVHDWWKHSUHOLPLQDU\KHDULQJ FRQVWLWXWLRQDO FODLPV UHODWLQJ WR SK\VLFDOO\ DEXVLYH KDVSUHFOXVLYHHIIHFWLQWKLVDFWLRQ+DULQJY3URVLVH JRYHUQPHQW FRQGXFW PXVW DULVH XQGHU HLWKHU WKH )RXUWK RU 86 8QGHU 0LFKLJDQ ODZ LVVXH (LJKWK$PHQGPHQWV>@l8QLWHG6WDWHVY/DQLHU86 SUHFOXVLRQDSSOLHVZKHQWKHUHLVLGHQWLW\RISDUWLHVDFURVV Q,QVWHDGWKH&RXUWQRWHGWKDWm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l ,G 7KXV ZKLOH WKH )RXUWK 3HRSOH Y *DWHV 1:G 0LFK FHUW $PHQGPHQW mREMHFWLYHUHDVRQDEOHQHVVlDQDO\VLVVKRXOGEH GHQLHG86 XVHGLQH[FHVVLYHIRUFHFDVHVLQYROYLQJVHDUFKHVDQGVHL]XUHV ZKHUHWKHUHLVQRVHDUFKRUVHL]XUHWKH6XSUHPH&RXUWKDV )ROORZLQJ RXU UHDVRQLQJ LQ sRVH\ Y 6DOLVEXU\ 1R KHOG WKDW WKH VXEVWDQWLYH FRPSRQHQW RI WKH )RXUWHHQWK :/ WK &LU 1RY DQ $PHQGPHQWj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jQ )G WK &LU UHYjG RQ RWKHU VKRZLQJRIH[FHVVLYHIRUFHXQGHUWKH)RXUWHHQWK$PHQGPHQW JURXQGV6&W WKDQXQGHUWKHmREMHFWLYHUHDVRQDEOHQHVVlWHVWRI*UDKDPLQ ZKLFKH[FHVVLYHIRUFHFDQEHIRXQGLIWKHRIILFHUjVDFWLRQVLQ $OWKRXJKZHEHOLHYHWKH6SXUORFNFDVHWREHELQGLQJUDWKHU OLJKWRIWKHWRWDOLW\RIWKHFLUFXPVWDQFHVZHUHQRWREMHFWLYHO\ WKDQ )UDQW] EHFDXVH WKLV FRXUWjV GHFLVLRQ LQ )UDQW] KDV UHDVRQDEOH*UDKDP86DW/HZLV86DW FORXGHGWKHDOUHDG\PXUN\ZDWHUVRI$OEULJKWDQGDSODLQWLIIjV 7KHVXEVWDQWLYHGXHSURFHVVULJKWVRIWKH)RXUWHHQWK ULJKWWREULQJDPDOLFLRXVSURVHFXWLRQFODLPXQGHUWKH)RXUWK $PHQGPHQW SURWHFW FLWL]HQV IURP WKH DUELWUDU\ H[HUFLVH RI $PHQGPHQWZHZLOOH[DPLQH'DUUDKjVPDOLFLRXVSURVHFXWLRQ JRYHUQPHQWDO SRZHU /HZLV 86 DW 7KH WHVW FODLP XQGHU ERWK 6SXUORFN DQG )UDQW] 8QGHU HLWKHU DSSOLHG E\ WKH 6XSUHPH &RXUW WR GHWHUPLQH ZKHQ DSSURDFK 'DUUDKjV PDOLFLRXV SURVHFXWLRQ FODLP ZLOO EH JRYHUQPHQWDOFRQGXFWUHDFKHVWKLVWKUHVKROGLVWRDVNZKHWKHU XQVXFFHVVIXO WKHDOOHJHGFRQGXFWmVKRFNVWKHFRQVFLHQFHl,GDW,Q /HZLV WKH 6XSUHPH &RXUW H[SODLQHG WKDW ZKHWKHU )UDQW] JRYHUQPHQWDOFRQGXFWVKRFNVWKHFRQVFLHQFHGHSHQGVRQWKH IDFWXDO FLUFXPVWDQFHV RI WKH FDVH ,G DW 0RUH ,IZHZHUHWRDSSO\)UDQW]WRWKLVFDVHZHZRXOGKDYHWR VSHFLILFDOO\LQVLWXDWLRQVZKHUHWKHLPSOLFDWHGJRYHUQPHQW GLVPLVV'DUUDKjVPDOLFLRXVSURVHFXWLRQFODLPEHFDXVHVKHKDV DFWRUV QRVHSDUDWHDFWLRQIRUPDOLFLRXVSURVHFXWLRQXQGHUWKH )RXUWK$PHQGPHQW)UDQW]:/DW Q DUH DIIRUGHG D UHDVRQDEOH RSSRUWXQLW\ WR GHOLEHUDWH ,I )UDQW] ZHUH ELQGLQJ LW DSSHDUV WKDW DW PRVW D SODLQWLII YDULRXVDOWHUQDWLYHVSULRUWRHOHFWLQJDFRXUVHRIDFWLRQ FRXOGUHFRYHUDGGLWLRQDOGDPDJHVDVSDUWRIKHURYHUDOO)RXUWK WKHLUDFWLRQVZLOOEHGHHPHGFRQVFLHQFHVKRFNLQJLI $PHQGPHQWFODLPLIIROORZLQJDQDUUHVWZLWKRXWSUREDEOH WKH\ZHUHWDNHQZLWKmGHOLEHUDWHLQGLIIHUHQFHlWRZDUGV FDXVHLQYLRODWLRQRIWKH)RXUWK$PHQGPHQWDSURVHFXWLRQ WKH SODLQWLIIjV IHGHUDOO\ SURWHFWHG ULJKWV ,Q IROORZV,GDW 1RDGGLWLRQDOGDPDJHVZRXOGEHDYDLODEOH FRQWUDGLVWLQFWLRQ LQ D UDSLGO\ HYROYLQJ IOXLG DQG WR'DUUDKEDVHGRQKHUSURVHFXWLRQIRUREVWUXFWLQJDSROLFH GDQJHURXV SUHGLFDPHQW ZKLFK SUHFOXGHV WKH OX[XU\ RI RIILFHUKRZHYHUIRUZHHDUOLHUDIILUPHGWKHGLVWULFWFRXUWjV FDOPDQGUHIOHFWLYHSUHUHVSRQVHGHOLEHUDWLRQSXEOLF GHFLVLRQWKDWQRUHDVRQDEOHMXU\FRXOGILQGLQ'DUUDKjVIDYRU VHUYDQWVjUHIOH[LYHDFWLRQVmVKRFNWKHFRQVFLHQFHlRQO\ RQKHUXQGHUO\LQJH[FHVVLYHIRUFHFODLP,QDFFRUGDQFHZLWK LI WKH\ LQYROYHG IRUFH HPSOR\HG mPDOLFLRXVO\ DQG )UDQW]ZHZRXOGKDYHWRGLVPLVV'DUUDKjVIHGHUDOPDOLFLRXV VDGLVWLFDOO\IRUWKHYHU\SXUSRVHRIFDXVLQJKDUPlUDWKHU SURVHFXWLRQFODLP WKDQ mLQ D JRRG IDLWK HIIRUW WR PDLQWDLQ RU UHVWRUH GLVFLSOLQHl 6SXUORFN &OD\EURRNY%LUFKZHOO)GWK&LU $VVXPLQJ DV ZH GR WKDW 6SXUORFN VWLOO ELQGV WKLV FRXUW TXRWLQJ/HZLV86DW HYHQDIWHU)UDQW]DSODLQWLIIKDVDFRQVWLWXWLRQDOO\FRJQL]DEOH FODLPRIPDOLFLRXVSURVHFXWLRQXQGHUWKH)RXUWK$PHQGPHQW 7KH ILUVW TXHVWLRQ LQ WKLV FDVH WKHQ LV ZKHWKHU 2IILFHU ,QWKLVFDVH'DUUDKEULQJVKHUPDOLFLRXVSURVHFXWLRQFODLP %UDJJjVFRQGXFWLQVWULNLQJSODLQWLIILQWKHIDFHZKLOHSODLQWLII ZDV DWWHPSWLQJ WR SUHYHQW %UDJJ IURP H[HFXWLQJ DQ DUUHVW 'DUUDKY&LW\RI2DN3DUNHWDO 1R 1R 'DUUDKY&LW\RI2DN3DUNHWDO FRQVWLWXWHVDVHL]XUH,IVRWKLVFRXUWVKRXOGDSSO\WKH)RXUWK LQWHUSUHWDWLRQRI$OEULJKWWKH)UDQW]FRXUWKHOGWKDWEHFDXVH $PHQGPHQWmREMHFWLYHUHDVRQDEOHQHVVlDQDO\VLVDUWLFXODWHG RQO\WKHSODLQWLIIjV)RXUWK$PHQGPHQWPDOLFLRXVSURVHFXWLRQ LQ*UDKDP,IQRWWKLVFRXUWPXVWGHWHUPLQHZKHWKHU%UDJJjV FODLPZDVEHIRUHLWDQGEHFDXVHWKHUHZDVQRVHSDUDWHFODLP FRQGXFWJLYHQWKHVHFLUFXPVWDQFHVVKRFNVWKHFRQVFLHQFH RIPDOLFLRXVSURVHFXWLRQXQGHUWKH)RXUWK$PHQGPHQWDIWHU 8OWLPDWHO\ ZH FRQFOXGH WKDW UHJDUGOHVV RI ZKLFK WHVW LV $OEULJKWWKHSROLFHRIILFHUjVUHTXHVWIRUTXDOLILHGLPPXQLW\ DSSOLHG'DUUDKLVXQDEOHWRFUHDWHDJHQXLQHLVVXHRIPDWHULDO IURPWKLVQRQH[LVWHQWFODLPZDVXQQHFHVVDU\,GDW IDFWZLWKUHVSHFWWRKHUH[FHVVLYHIRUFHFODLP7KHUHIRUHZH QHHG QRW DQG GR QRW GHFLGH ZKHWKHU %UDJJjV FRQGXFW :KHWKHUWKLVZDVDSURSHUUHDGLQJRI$OEULJKWLVQRWRXU FRQVWLWXWHVDVHL]XUH SODFHWRVD\IRUm>D@SDQHORIWKLV&RXUWFDQQRWRYHUUXOHWKH GHFLVLRQ RI DQRWKHU SDQHO 7KH SULRU GHFLVLRQ UHPDLQV m6KRFNWKH&RQVFLHQFHl7HVW FRQWUROOLQJDXWKRULW\XQOHVVDQLQFRQVLVWHQWGHFLVLRQRIWKH 8QLWHG 6WDWHV 6XSUHPH &RXUW UHTXLUHV PRGLILFDWLRQ RI WKH $SSO\LQJWKHmVKRFNWKHFRQVFLHQFHlWHVWWKHPRUHGLIILFXOW GHFLVLRQ RU WKLV &RXUW VLWWLQJ HQ EDQF RYHUUXOHV WKH SULRU VWDQGDUGIRUWKHSODLQWLIIWRPHHWLWLVFOHDUWKDWWKHGLVWULFW GHFLVLRQl6DOPLY6HFj\RI+HDOWK +XPDQ6HUYV FRXUWj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mUDSLGO\ HYROYLQJ IOXLG DQG 6DWWHUILHOG)G QVHHDOVR)UDQW] GDQJHURXVSUHGLFDPHQW>V@ZKLFKSUHFOXGHVWKHOX[XU\RIFDOP :/ DW GLVUHJDUGLQJ 6SXUORFN &RQWUDU\ WR DQGUHIOHFWLYHSUHUHVSRQVHGHOLEHUDWLRQ>@l&OD\EURRN )UDQW]LQ6SXUORFNWKLVFRXUWH[SUHVVO\GHVFULEHG$OEULJKWDV )GDW2IILFHU%UDJJZKHQJUDEEHGIURPEHKLQGLQD HVWDEOLVKLQJWKDWmPDOLFLRXVSURVHFXWLRQRIDQLQGLYLGXDODQG ORXG DQG XQUXO\ FURZG RI SHRSOH GLG QRW KDYH WLPH WR FRQWLQXHGGHWHQWLRQRIDQLQGLYLGXDOZLWKRXWSUREDEOHFDXVH GHOLEHUDWHWKHEHVWSRVVLEOHFRXUVHRIDFWLRQsXVWWKHRSSRVLWH FOHDUO\YLRODWHULJKWVDIIRUGHGE\WKH)RXUWK$PHQGPHQW>@l LVWKHFDVH,QWKHVHLQVWDQFHVWKH&RXUWKDVVWDWHGWKDWWKH 6SXUORFN )G DW 7KXV 6SXUORFN LQWHUSUHWHG JRYHUQPHQWDFWRUjVFRQGXFWVKRFNVWKHFRQVFLHQFHRQO\LIWKH $OEULJKW DV DXWKRUL]LQJ D )RXUWK $PHQGPHQW PDOLFLRXV IRUFHZDVDSSOLHGmPDOLFLRXVO\DQGVDGLVWLFDOO\IRUWKHYHU\ SURVHFXWLRQFODLP$VZHKDYHSUHYLRXVO\QRWHGZKHQDODWHU SXUSRVHRIFDXVLQJKDUPl/HZLV86DWTXRWDWLRQ RPLWWHG*LYHQWKHIDFWVRIWKLVFDVHWKHSODLQWLIIVLPSO\ FDQQRWVKRZWKDWDQ\UHDVRQDEOHMXU\FRXOGILQGWKDW2IILFHU 1HYHUWKHOHVV LW GRHV DSSHDU WKDW WKH )UDQW] FRXUW PD\ KDYH EHHQ %UDJJjVFRQGXFWZDVPDOLFLRXVVDGLVWLFDQGLPSRVHGQRWWR UHDGLQJ WRR PXFK LQWR WKH $OEULJKW &RXUWjV GHFLVLRQ QRW WR DGGUHVV WKH UHVWRUHRUGHUEXWRQO\WRFDXVHKDUP )RXUWK $PHQGPHQW LVVXH 7KH $OEULJKW &RXUW DW QR WLPH H[SOLFLWO\ VWDWHG WKDW WKHUH LV QR VHSDUDWH FRQVWLWXWLRQDO FODLP IRU PDOLFLRXV SURVHFXWLRQ m2EMHFWLYH5HDVRQDEOHQHVVl7HVW EDVHG RQ WKH )RXUWK $PHQGPHQW ,Q DGGLWLRQ E\ mQRW>LQJ@ WKH )RXUWK $PHQGPHQWjV UHOHYDQFH WR WKH GHSULYDWLRQV RI OLEHUW\ WKDW JR KDQG LQ KDQG (YHQLIZHZHUHWRDSSO\WKH)RXUWK$PHQGPHQWmREMHFWLYH ZLWK FULPLQDO SURVHFXWLRQV>@l LW GRHV QRW DSSHDU WKDW WKH &RXUW ZDV LQWLPDWLQJ WKDW LQ FDVHV EDVHG RQ )RXUWK $PHQGPHQW YLRODWLRQV D UHDVRQDEOHQHVVl WHVW DQ HDVLHU VWDQGDUG IRU WKH SODLQWLII WR SODLQWLII FRXOG QHYHU KDYH D VHSDUDWH )RXUWK $PHQGPHQW FODLP RI PHHW WKHUH VWLOO LV QR JHQXLQH LVVXH WKDW 2IILFHU %UDJJjV PDOLFLRXV SURVHFXWLRQ $OEULJKW 86 DW 'DUUDKY&LW\RI2DN3DUNHWDO 1R 1R 'DUUDKY&LW\RI2DN3DUNHWDO ZRXOG mH[SUHVV QR YLHZ DV WR ZKHWKHU >KLV PDOLFLRXV FRQGXFWGLGQRWDPRXQWWRH[FHVVLYHIRUFH,QGHWHUPLQLQJ SURVHFXWLRQ@ FODLP ZRXOG VXFFHHG XQGHU WKH )RXUWK ZKHWKHU DQ RIILFHUjV DFWLRQV ZHUH REMHFWLYHO\ UHDVRQDEOH $PHQGPHQW>@l,GDW FRXUWVPXVWYLHZWKHUHDVRQDEOHQHVVRIDQ\VHL]XUHLQOLJKWRI WKHWRWDOLW\RIWKHFLUFXPVWDQFHVDQDO\]LQJWKHIDFWVmIURPWKH 7KH )UDQW] FRXUW DQDO\]LQJ WKLV GLVFXVVLRQ LQ $OEULJKW SHUVSHFWLYHRIDUHDVRQDEOHRIILFHURQWKHVFHQHUDWKHUWKDQ LQWHUSUHWHGWKHSOXUDOLW\DVVWDWLQJmWKDWDQ\UHFRYHU\EDVHGRQ ZLWKWKHYLVLRQRIKLQGVLJKWl*UDKDP86DW DFODLPRIPDOLFLRXVSURVHFXWLRQLQDFDVHLQYROYLQJDQLOOHJDO 7KH*UDKDP&RXUWHPSKDVL]HGWKDWZKHQFRQGXFWLQJ VHL]XUHLVOLPLWHGWRWKDWZKLFKLVUHFRYHUDEOHXQGHUD)RXUWK WKHUHDVRQDEOHQHVVLQTXLU\ZHPXVWNHHSLQPLQGWKHmWHQVH $PHQGPHQW LOOHJDO VHL]XUH FODLP>@l )UDQW] :/ XQFHUWDLQ DQG UDSLGO\ HYROYLQJl FLUFXPVWDQFHV LQ ZKLFK DW ,Q RWKHU ZRUGV WKH )UDQW] FRXUW KHOG WKDW RIILFHUV DUH IRUFHG WR PDNH GLIILFXOW GHFLVLRQV DERXW WKH SODLQWLIIV KDYH QR VHSDUDWH FODLP IRU PDOLFLRXV DSSURSULDWHOHYHORIIRUFHWREHXVHG,GDW,QDGGLWLRQ SURVHFXWLRQ LQ FDVHV EDVHG RQ DOOHJHG )RXUWK $PHQGPHQW ZKHQGHWHUPLQLQJWKHUHDVRQDEOHQHVVRIWKHIRUFHXVHGFRXUWV YLRODWLRQVLQFDVHVZKHUHWKHYLRODWLRQRI)RXUWK$PHQGPHQW VKRXOGSD\SDUWLFXODUDWWHQWLRQWRmWKHVHYHULW\RIWKHFULPHDW ULJKWVLVQRWDWLVVXHKRZHYHUWKHFRXUWLQWHUSUHWHG$OEULJKW LVVXHZKHWKHUWKHVXVSHFWSRVHVDQLPPHGLDWHWKUHDWWRWKH DVVWDWLQJWKDWPDOLFLRXVSURVHFXWLRQFODLPVPD\VWLOO VDIHW\ RI WKH RIILFHUV RU RWKHUV DQG ZKHWKHU KH LV DFWLYHO\ EH DYDLODEOH SXUVXDQW WR WKH )RXUWHHQWK $PHQGPHQWjV UHVLVWLQJDUUHVWRUDWWHPSWLQJWRHYDGHDUUHVWE\IOLJKWl,GDW VXEVWDQWLYHGXHSURFHVVULJKWV,GDW Q ,WDSSHDUVWKDWLQUHDFKLQJWKLVFRQFOXVLRQWKH)UDQW]FRXUW ,QWKLVFDVH2IILFHU%UDJJDQGWKHRWKHUPHPEHUVRIKLV ZDVLQIOXHQFHGE\WKH6XSUHPH&RXUWjVGHFLVLRQWRGLVPLVV DUUHVW WHDP ZHUH LQ WKH PLGGOH RI D ERLVWHURXV DQG XQUXO\ $OEULJKWjV PDOLFLRXV SURVHFXWLRQ FODLP ZLWKRXW GHFLGLQJ JURXS RI SLFNHWHUV DWWHPSWLQJ WR PDNH DQ DUUHVW RI DQ ZKHWKHU WKH FODLP ZRXOG EH VXFFHVVIXO XQGHU WKH )RXUWK LQGLYLGXDOZKRZDVUHVLVWLQJWKHLUHIIRUWV2QHSLFNHWHUKDG $PHQGPHQW ,Q$OEULJKW WKH SOXUDOLW\ H[SOLFLWO\ UHIUDLQHG MXVW MXPSHG RQ WKH EDFNV RI 2IILFHUV %UDJJ DQG 3HWULGHV IURP GHFLGLQJ WKH LVVXH ZKHWKHU SODLQWLIIjV PDOLFLRXV EHIRUHWKHWKLUGRIILFHUZDVDEOHWRUHVWUDLQKLP7KHFURZG SURVHFXWLRQ FODLP ZRXOG VXFFHHG XQGHU WKH )RXUWK ZDVFKDQWLQJLQRSSRVLWLRQWRWKHSROLFHDQGWKHQRLVHJUHZ $PHQGPHQW EHFDXVH WKH SODLQWLII KDG mQRW SUHVHQWHG WKDW ORXGHUDVWKHRIILFHUVDWWHPSWHGWRFOHDUWKHGULYHZD\,QWKH TXHVWLRQLQKLVSHWLWLRQIRUFHUWLRUDULl$OEULJKW86DW PLGVWRIWKLVWXPXOWSODLQWLIIJUDEEHG%UDJJjVDQNOHZLWKERWK 7KH )UDQW] FRXUW GLG QRW LQWHUSUHW WKH SOXUDOLW\jV RI KHU KDQGV DQG WULHG WR SUHYHQW KLP IURP H[HFXWLQJ GHFLVLRQ DV H[SUHVVLQJ D GHVLUH WR DGGUHVV RQO\ WKH QDUURZ 'HDUPRQGjVDUUHVW:KLOH2IILFHU%UDJJIUHHGKLPVHOIIURP LVVXHSUHVHQWHGKRZHYHU,QVWHDGWKH)UDQW]FRXUWIURPRXU KHUJUDVS LQLWLDOO\SODLQWLIIJUDEEHGKLVDQNOHDJDLQ2QO\ UHDGLQJ EHOLHYHG WKDW WKH &RXUWjV UHIXVDO WR DGGUHVV WKH WKHQGLG%UDJJVZLQJKLVDUPEDFNZDUGDWWKHSODLQWLIIVRDV )RXUWK $PHQGPHQW LVVXH VWRRG IRU WKH SURSRVLWLRQ WKDW WRIUHHKLPVHOIDQGIXUWKHUDWWHPSWWRVXEGXH'HDUPRQG EHFDXVHWKHUHZDVQRXQGHUO\LQJ)RXUWK$PHQGPHQWFODLPRI LOOHJDOVHL]XUHXSRQZKLFK$OEULJKWjVFODLPZDVEDVHGKHKDG 9LHZLQJWKHVHIDFWVmIURPWKHSHUVSHFWLYHRIDUHDVRQDEOH SUHYLRXVO\ZDLYHGDQ\)RXUWK$PHQGPHQWFODLPVDULVLQJRXW RIILFHURQWKHVFHQHl*UDKDP86DWLWLVFOHDUWKDW RI WKH LQLWLDO VHL]XUH WKDW RFFXUUHG ZKHQ KH VXUUHQGHUHG 2IILFHU %UDJJ WRRN UHODWLYHO\ PLQLPDO PHDVXUHV WR IUHH KLPVHOI WR WKH 6WDWH IROORZLQJ WKH 6WDWHjV LVVXDQFH RI D KLPVHOIIURPSODLQWLIISDUWLFXODUO\DIWHUKLVILUVWDWWHPSWDW ZDUUDQW IRU KLV DUUHVW WKH &RXUW FRXOG QRW DGGUHVV DQ\ VKDNLQJKHUORRVHZDVRQO\WHPSRUDULO\HIIHFWLYH,QOLJKWRI mVHSDUDWHlFODLPRIPDOLFLRXVSURVHFXWLRQXQGHUWKH)RXUWK WKHWRWDOLW\RIWKHFLUFXPVWDQFHVLQZKLFK2IILFHU%UDJJZDV $PHQGPHQW)UDQW]:/DW %DVHGRQLWV 'DUUDKY&LW\RI2DN3DUNHWDO 1R 1R 'DUUDKY&LW\RI2DN3DUNHWDO HPEURLOHGZHDUHFRQYLQFHGWKDWDQ\UHDVRQDEOHMXU\ZRXOG DUUHVWH[FHVVLYHIRUFHDQGPDOLFLRXVSURVHFXWLRQ)ROORZLQJ ILQGWKDW%UDJJjVFRQGXFWZDVREMHFWLYHO\UHDVRQDEOH WKHGLVWULFWFRXUWjVGHQLDORIWKHRIILFHUjVPRWLRQIRUVXPPDU\ MXGJPHQWWKHRIILFHUILOHGDQLQWHUORFXWRU\DSSHDOZLWKWKLV 7KXVUHJDUGOHVVRIWKHVWDQGDUGWKDWDSSOLHVSODLQWLIIKDV FRXUW DVVHUWLQJ TXDOLILHG LPPXQLW\ RQO\ IURP SODLQWLIIjV IDLOHGWRFUHDWHDJHQXLQHLVVXHRIPDWHULDOIDFWZLWKUHVSHFWWR PDOLFLRXVSURVHFXWLRQFODLP WKH UHDVRQDEOHQHVV RI %UDJJjV FRQGXFW $FFRUGLQJO\ WKH GLVWULFWFRXUWjVGHFLVLRQJUDQWLQJ%UDJJVXPPDU\MXGJPHQWDV $IWHUGHFLGLQJWKDWLWKDGMXULVGLFWLRQWRUHYLHZWKHRIILFHUjV WRWKLVFODLPLV$)),50(' LQWHUORFXWRU\DSSHDOWKHFRXUWGHFLGHGWKDWEHIRUHH[DPLQLQJ ZKHWKHUWKHRIILFHUZDVHQWLWOHGWRTXDOLILHGLPPXQLW\LWPXVW &'DUUDKjV0DOLFLRXV3URVHFXWLRQ&ODLP ILUVW GHWHUPLQH ZKHWKHU WKH SODLQWLIIjV )RXUWK $PHQGPHQW PDOLFLRXVSURVHFXWLRQFODLPIURPZKLFKTXDOLILHGLPPXQLW\ 3ODLQWLII EULQJV KHU PDOLFLRXV SURVHFXWLRQ FODLP DJDLQVW ZDVVRXJKWZDVHYHQDmFRJQL]DEOHFRQVWLWXWLRQDOFODLPl,G 2IILFHU%UDJJXQGHU86&FODLPLQJWKDWWKHVWDWH DW ,QPDNLQJWKLVGHWHUPLQDWLRQWKHFRXUWORRNHGWRWKH FRXUWjV SUREDEOH FDXVH ILQGLQJ UHJDUGLQJ KHU REVWUXFWLRQ 6XSUHPH&RXUWjVSOXUDOLW\RSLQLRQLQ$OEULJKWIRUJXLGDQFH FKDUJHmZDVEDVHGRQWKHPDWHULDOO\IDOVHVWDWHPHQWVDQGRU RPLVVLRQVRI'HIHQGDQW%UDJJl$SSHOODQWjV%UDW0RUH 7KH VWDWH RI WKH ODZ IRU PDOLFLRXV SURVHFXWLRQ FODLPV VSHFLILFDOO\SODLQWLIIFODLPVWKDWKDG%UDJJQRWOLHGLQVWDWLQJ EURXJKWSXUVXDQWWR86&KDVEHHQXQVHWWOHGVLQFH WKDWKHZDVLQYROYHGLQDODZIXODUUHVWRI'HDUPRQGDQGKDG WKH6XSUHPH&RXUWjVGHFLVLRQLQ$OEULJKW6HHsRKQ75\DQ KHQRWIDLOHGWRUHYHDOWKDWKHZDVDVVDXOWLQJ'HDUPRQGEHIRUH 1RWH0DOLFLRXV3URVHFXWLRQ&ODLPV8QGHU6HFWLRQ'R SODLQWLIILQWHUYHQHGWKHUHZRXOGQRWKDYHEHHQSUREDEOHFDXVH &LWL]HQV +DYH )HGHUDO 5HFRXUVH" *HR :DVK / 5HY WRKROGSODLQWLIIRYHUIRUWULDORQWKHREVWUXFWLRQFKDUJH QRWLQJ WKH FRQIXVLRQ DPRQJ ORZHU IHGHUDOFRXUWVDIWHU$OEULJKW,Q$OEULJKWDSOXUDOLW\RIWKH ,PSRUWDQW WR RXU DQDO\VLV RI SODLQWLIIjV PDOLFLRXV FRXUWDJUHHGWKDWWKHVXEVWDQWLYHFRPSRQHQWRIWKH)RXUWHHQWK SURVHFXWLRQFODLPLVWKLVFLUFXLWjVUHFHQWRSLQLRQLQ)UDQW]Y $PHQGPHQWjV'XH3URFHVV&ODXVHmZLWKLWVVFDUFHDQGRSHQ 9LOODJH RI %UDGIRUG )G 1R :/ HQGHGJXLGHSRVWVlPD\QRWVHUYHDVWKHEDVLVIRUD WK &LU $SU 7KH )UDQW] FRXUW PDOLFLRXV SURVHFXWLRQ FODLP $OEULJKW 86 DW LQWHUSUHWLQJWKH6XSUHPH&RXUWjVSOXUDOLW\RSLQLRQLQ$OEULJKW TXRWDWLRQRPLWWHG7KHSOXUDOLW\GLGH[SODLQKRZHYHUWKDW Y2OLYHU86EURNHIURPWKHUDQNVRIQLQH m>Z@KHUHDSDUWLFXODU$PHQGPHQWSURYLGHVDQH[SOLFLWWH[WXDO RWKHU FLUFXLW FRXUWV RI DSSHDOV LQ KROGLQJ WKDW mWKH )RXUWK VRXUFHRIFRQVWLWXWLRQDOSURWHFWLRQDJDLQVWDSDUWLFXODUVRUWRI $PHQGPHQW GRHV QRW VXSSRUW D VHSDUDWH PDOLFLRXV JRYHUQPHQW EHKDYLRU WKDW $PHQGPHQW QRW WKH PRUH SURVHFXWLRQ FODLP LQGHSHQGHQW RI WKH XQGHUO\LQJ LOOHJDO JHQHUDOL]HGQRWLRQRIVXEVWDQWLYHGXHSURFHVVPXVWEHWKH VHL]XUHl)UDQW]:/DW ,Q)UDQW]D JXLGH IRU DQDO\]LQJ WKHVH FODLPVl ,G DW TXRWDWLRQ SROLFHRIILFHUZDVVXHGSXUVXDQWWRIRUYLRODWLQJDQ RPLWWHG $V IRU DQ\ VSHFLILF FRQVWLWXWLRQDO SURYLVLRQV DUUHVWHHjV)RXUWK$PHQGPHQWULJKWVWREHIUHHIURPXQODZIXO UHODWLQJWRIHGHUDOPDOLFLRXVSURVHFXWLRQFODLPVWKHSOXUDOLW\ H[SODLQHG WKDW WKH &RXUW KDV mLQ WKH SDVW QRWHG WKH )RXUWK $PHQGPHQWjVUHOHYDQFHWRWKHGHSULYDWLRQVRIOLEHUW\WKDWJR KDQG LQ KDQG ZLWK FULPLQDO SURVHFXWLRQVl ,G DW %HFDXVH DQ\ UHDVRQDEOH MXU\ ZRXOG ILQG WKDW %UDJJjV FRQGXFW ZDV REMHFWLYHO\ UHDVRQDEOH ZH QHHG QRW GHWHUPLQH ZKHWKHU %UDJJjV FRQGXFW 1HYHUWKHOHVV VWUHVVLQJ WKH mYHU\ OLPLWHGl QDWXUH RI WKH ZDV TXDOLILHGO\ LPPXQH 6HH 0DUWLQ Y +HLGHPDQ )G SODLQWLIIjVFODLPWKHSOXUDOLW\VWDWHGWKDWEHFDXVHSODLQWLIIKDG WK &LU :DOWRQ Y &LW\ RI 6RXWKILHOG )G WK QRW SUHVHQWHG WKH TXHVWLRQ LQ KLV SHWLWLRQ IRU FHUWLRUDUL LW &LU