Chapman v. The Higbee Company

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(77( &+$30$1 ; 3ODLQWLII$SSHOODQW    1R Y  !  7+( +,*%(( &203$1<GED  ',//$5' '(3$570(17  6725(6 ,1&  'HIHQGDQW$SSHOOHH   1 $SSHDOIURPWKH8QLWHG6WDWHV'LVWULFW&RXUW IRUWKH1RUWKHUQ'LVWULFWRI2KLRDW&OHYHODQG 1Rn3DWULFLD$+HPDQQ0DJLVWUDWHsXGJH $UJXHG0DUFK 'HFLGHGDQG)LOHG)HEUXDU\ %HIRUH0$57,1&KLHI&LUFXLWsXGJH%2**6 68+5+(,15,&+%$7&+(/'(5'$8*+75(< 0225(&2/(&/$<DQG*,/0$1&LUFXLWsXGJHV BBBBBBBBBBBBBBBBB &2816(/ $5*8('  'DYLG 5 *UDQW 60,7+  &21'(1, &OHYHODQG2KLRIRU$SSHOODQWsRKQ%/HZLV%$.(5 +267(7/(5&OHYHODQG2KLRIRU$SSHOOHH21%5,()   &KDSPDQY7KH+LJEHH&RPSDQ\ 1R 'DYLG5*UDQW60,7+ &21'(1,&OHYHODQG2KLRIRU $SSHOODQW  sRKQ % /HZLV 7KRPDV s 3LDWDN %$.(5 +267(7/(5 &OHYHODQG 2KLR IRU $SSHOOHH  *LQR s 6FDUVHOOL&OHYHODQG2KLR0LFKDHO:'RQDOGVRQ7KRPDV 0 7DUS\ 925<6 6$7(5 6(<0285  3($6( &ROXPEXV2KLRIRU$PLFL&XULDH 0$57,1 & s GHOLYHUHG WKH RSLQLRQ RI WKH FRXUW LQ ZKLFK '$8*+75(< 0225( &2/( &/$< DQG *,/0$1 ss MRLQHG  68+5+(,15,&+ s SS   GHOLYHUHGDVHSDUDWHGLVVHQWLQJRSLQLRQLQZKLFK%2**6DQG %$7&+(/'(5ssMRLQHG BBBBBBBBBBBBBBBBB 23,1,21 BBBBBBBBBBBBBBBBB %2<&()0$57,1s5&KLHI&LUFXLWsXGJH/\QHWWH &KDSPDQEURXJKWVXLWDJDLQVWWKH+LJEHH&RPSDQ\GRLQJ EXVLQHVV DV 'LOODUGjV 'HSDUWPHQW 6WRUH DIWHU D 'LOODUGjV VHFXULW\RIILFHUVWRSSHGDQGVHDUFKHGKHU&KDSPDQDOOHJHV WKDWWKHVWRSDQGVHDUFKZHUHUDFLDOO\PRWLYDWHGDQGYLRODWHG KHUULJKWWRWKHmIXOODQGHTXDOEHQHILWRIWKHODZlXQGHU 86& †  DQG KHU ULJKW WR EH IUHH IURP XQUHDVRQDEOH VHDUFKDQGVHL]XUHXQGHUWKH)RXUWK$PHQGPHQW+HUFODLP UDLVHVWZRLVVXHVRQDSSHDO  ZKHWKHUVHFWLRQSURYLGHV DFDXVHRIDFWLRQDJDLQVWDSULYDWHSDUW\XQGHULWVHTXDOEHQHILW FODXVH DQG   ZKHWKHU WKH 'LOODUGjV VHFXULW\ RIILFHU DFWHG mXQGHU FRORU RI ODZl  7KH FRXUW EHORZ IRXQG WKDW VHFWLRQ GRHVQRWSURWHFWDJDLQVWSULYDWHLPSDLUPHQWRILWVHTXDO EHQHILWFODXVHDQGWKDWWKHVHFXULW\RIILFHUGLGQRWDFWmXQGHU FRORURIODZl$GLYLGHGSDQHORIWKLVFRXUWDIILUPHG$IWHU UHKHDULQJHQEDQFZH5(9(56( , 2Q )HEUXDU\   &KDSPDQ DQ $IULFDQ$PHULFDQ ZDV VKRSSLQJ DW 'LOODUGjV 'HSDUWPHQW 6WRUH LQ &OHYHODQG 2KLR  $IWHU FKRRVLQJ VRPH FORWKLQJ &KDSPDQ HQWHUHG D ILWWLQJURRPIURPZKLFKD&DXFDVLDQZRPDQKDGMXVWH[LWHG 1R &KDSPDQY7KH+LJEHH&RPSDQ\  :KHQ&KDSPDQHQWHUHGWKHILWWLQJURRPVKHQRWLFHGDVHQVRU WDJ FDOOHG D mNQRJRl RQ WKH IORRU  $IWHU WU\LQJ RQ WKH FORWKLQJ&KDSPDQGHFLGHGQRWWRSXUFKDVHDQ\WKLQJDQGOHIW WKHILWWLQJURRPWRUHWXUQWKHFORWKLQJWRWKHUDFNV $'LOODUGjVVDOHVDVVLVWDQWQRWLFHGWKHVHQVRURQWKHIORRURI &KDSPDQjV ILWWLQJ URRP DQG VXVSHFWLQJ &KDSPDQ RI VKRSOLIWLQJQRWLILHGD'LOODUGjVVHFXULW\RIILFHU7KHRIILFHU DQRIIGXW\VKHULIIjVGHSXW\ZDVZHDULQJKLVRIILFLDOVKHULII V GHSDUWPHQWXQLIRUPEDGJHDQGVLGHDUP$VDQHPSOR\HHRI 'LOODUGjVWKHVHFXULW\RIILFHUZDVREOLJDWHGWRREH\'LOODUGjV 5XOHVDQG3URFHGXUHVIRU6HFXULW\3HUVRQQHOZKLFKSURYLGH WKH IROORZLQJ LQVWUXFWLRQV ZLWK UHVSHFW WR VWULS VHDUFKLQJ FXVWRPHUV VXVSHFWHG RI VKRSOLIWLQJ m6WULS VHDUFKHV DUH SURKLELWHG,I\RXVXVSHFWWKDWVWROHQREMHFWVDUHKLGGHQRQ >WKHVKRSSHUjV@SHUVRQFDOOWKHSROLFHl 7KH VHFXULW\ RIILFHU VWRSSHG &KDSPDQ DQG GLUHFWHG KHU EDFN WR WKH ILWWLQJ URRP  +H DQG D IHPDOH PDQDJHU WKHQ VHDUFKHG&KDSPDQjVSXUVH  $IWHUGHWHUPLQLQJ&KDSPDQjV SXUVH FRQWDLQHG QR 'LOODUGjV PHUFKDQGLVH WKH RIILFHU LQIRUPHG&KDSPDQWKDWLWZRXOGDOVREHQHFHVVDU\WRFKHFN KHUFORWKHV$WWKHRIILFHUjVEHKHVW&KDSPDQDFFRPSDQLHG WKHIHPDOHPDQDJHULQWRWKHILWWLQJURRP7KHPDQDJHUWKHQ VHDUFKHG&KDSPDQE\KDYLQJ&KDSPDQUHPRYHKHUFRDWDQG VXLW MDFNHW DQG OLIW XS KHU VKLUW  $IWHU WKH PDQDJHU IRXQG QRWKLQJVKHDSRORJL]HGDQG&KDSPDQOHIWWKHVWRUH $VDUHVXOWRIWKLVLQFLGHQW&KDSPDQEURXJKWVXLWDJDLQVW 'LOODUGjV VHHNLQJ UHOLHI   XQGHU  86& †  IRU LPSDLUPHQW RI KHU ULJKWV XQGHU WKDW VWDWXWHjV HTXDO EHQHILW FODXVHDQG  XQGHU86&†IRUYLRODWLRQVRIKHU ULJKWWREHIUHHIURPXQUHDVRQDEOHVHDUFKDQGVHL]XUHXQGHU WKH)RXUWK$PHQGPHQWDQGKHUULJKWWRGXHSURFHVVXQGHUWKH )LIWK$PHQGPHQW$PDJLVWUDWHMXGJHVLWWLQJE\WKHSDUWLHVj FRQVHQW JUDQWHG VXPPDU\ MXGJPHQW LQ IDYRU RI 'LOODUGjV ILQGLQJ  &KDSPDQFRXOGQRWVWDWHDFRJQL]DEOHFODLPXQGHU VHFWLRQ  EHFDXVH WKH VWDWXWH GRHV QRW SURWHFW DJDLQVW SULYDWH LPSDLUPHQW RI LWV HTXDO EHQHILW FODXVH DQG  &KDSPDQFRXOGQRWVWDWHDFRJQL]DEOHFODLPXQGHUVHFWLRQ  &KDSPDQY7KH+LJEHH&RPSDQ\ 1R 1R &KDSPDQY7KH+LJEHH&RPSDQ\  EHFDXVHWKHVHFXULW\RIILFHUZDVQRWDFWLQJmXQGHUFRORU QRW IHGHUDOL]DWLRQ RI WRUW ODZ , GR QRW NQRZ ZKDW LV 6HH RI VWDWH ODZl  $IWHU WKH PDJLVWUDWH GHQLHG KHU PRWLRQ IRU 6SHQFHU  ) 6XSS DW  m5HDGLQJ WKH FODXVH WR UHFRQVLGHUDWLRQ&KDSPDQDSSHDOHG$GLYLGHGSDQHORIWKLV HQFRPSDVV WKLV NLQG RI FRQGXFW KRZHYHU ULVNV FUHDWLQJ D FRXUWDIILUPHGDQGZHJUDQWHGHQEDQFUHYLHZ VHFWLRQ  DFWLRQ ZKHQHYHU D ZKLWH PDQ VWULNHV D EODFN PDQLQDEDUURRPEUDZO([WHQGLQJWKHµHTXDOEHQHILWj ,, FODXVHWRSULYDWHFRQGXFWZRXOGKDYHWKHHIIHFWRIIHGHUDOL]LQJ DOO UDFLDOO\PRWLYDWHG VWDWHODZ WRUWV WKDW LPSOLFDWH µWKH :H UHYLHZ GH QRYR D GLVWULFW FRXUWjV JUDQW RI VXPPDU\ VHFXULW\RISHUVRQVDQGSURSHUW\jl  $VWKH6XSUHPH&RXUW MXGJPHQWYLHZLQJWKHHYLGHQFHLQWKHOLJKWPRVWIDYRUDEOHWR VWDWHG LQ 3DWWHUVRQ m>D@OWKRXJK ZH PXVW GR VR ZKHQ WKHQRQPRYLQJSDUW\*UDQG5DSLGV3ODVWLFV,QFY/DNLDQ &RQJUHVVSODLQO\GLUHFWVDVDUXOHZHVKRXOGEHµUHOXFWDQW )G WK &LU 6XPPDU\MXGJPHQWLV WRIHGHUDOL]HjPDWWHUVWUDGLWLRQDOO\FRYHUHGE\VWDWHFRPPRQ DSSURSULDWH RQO\ ZKHQ WKHUH LV QR JHQXLQH LVVXH DV WR DQ\ ODZl3DWWHUVRQ86DW TXRWLQJ6DQWH)H,QGXV PDWHULDOIDFWDQGWKHPRYLQJSDUW\LVHQWLWOHGWRMXGJPHQWDV ,QF Y *UHHQ  86      $V H[SODLQHG DPDWWHURIODZ)(' 5 &,9 3 F VHHDOVR$SDULFLRY DERYH&RQJUHVVGLGQRWSODLQO\GLUHFWWKDW†DSSO\WR 1RUIRON :HVWHUQ5\&R)G WK&LU VWDWHWRUWODZ OLNHLWGLGIRUFRQWUDFWV ,QLWV]HDOWRH[SDQG m:LWKRXWZHLJKLQJWKHHYLGHQFHRUMXGJLQJWKHFUHGLELOLW\RI WKHVFRSHRIIHGHUDOODZWKHPDMRULW\KDVLJQRUHG3DWWHUVRQjV ZLWQHVVHV DQG GUDZLQJ DOO LQIHUHQFHV LQ IDYRU RI WKH QRQ FDXWLRQDU\ZRUGV PRYLQJSDUW\DGLVWULFWFRXUWXVXDOO\XQGHUWDNHVWRGHWHUPLQH ZKHWKHU WKHUH LV VXIILFLHQW HYLGHQFH WR SHUPLW UHDVRQDEOH ,,, MXURUVWRILQGIRUWKHQRQPRYLQJSDUW\l  ,QVXP,ZRXOGKROGWKDWQRQJRYHUQPHQWDODFWRUVPD\QRW $ EH VXHG XQGHU WKH HTXDO EHQHILW FODXVH RI   86& †  D  ZKLFK DSSOLHV RQO\ WR VWDWH DFWLRQ 7KHUHIRUH , 7KH YLDELOLW\ RI &KDSPDQjV VHFWLRQ  FODLP WXUQV RQ ZRXOGKROGWKDW&KDSPDQIDLOHGWRVWDWHDFRJQL]DEOH† ZKHWKHUVHFWLRQSURWHFWVDJDLQVWSULYDWHLPSDLUPHQWRI FODLPEHFDXVHWKHDOOHJHGSULYDWHGLVFULPLQDWLRQVKHVXIIHUHG LWVHTXDOEHQHILWFODXVH,QUHOHYDQWSDUWVHFWLRQUHDGV LVQRWZLWKLQWKHSXUYLHZRIWKHHTXDOEHQHILWFODXVH,FRQFXU DVIROORZV LQ WKH PDMRULW\jV DQDO\VLV RI &KDSPDQjV FODLP XQGHU  86&†EHFDXVH,EHOLHYHWKHUHLVDTXHVWLRQRIIDFWDV D 6WDWHPHQWRIHTXDOULJKWV WRZKHWKHU'LOODUGjVPD\EHFRQVLGHUHGDVWDWHDFWRUXQGHUWKH $OOSHUVRQVZLWKLQWKHMXULVGLFWLRQRIWKH8QLWHG6WDWHV QH[XVWHVW VKDOOKDYHWKHVDPHULJKWLQHYHU\6WDWHDQG7HUULWRU\WR PDNH DQG HQIRUFH FRQWUDFWV WR VXH EH SDUWLHV JLYH  )RUWKLVUHDVRQ,UHVSHFWIXOO\',66(17DVWRWKH† HYLGHQFHDQGWRWKHIXOODQGHTXDOEHQHILWRIDOOODZVDQG FODLP SURFHHGLQJVIRUWKHVHFXULW\RISHUVRQVDQGSURSHUW\DV LVHQMR\HGE\ZKLWHFLWL]HQVDQGVKDOOEHVXEMHFWWROLNH SXQLVKPHQW SDLQV SHQDOWLHV WD[HV OLFHQVHV DQG H[DFWLRQVRIHYHU\NLQGDQGWRQRRWKHU    F 3URWHFWLRQDJDLQVWLPSDLUPHQW  &KDSPDQY7KH+LJEHH&RPSDQ\ 1R 1R &KDSPDQY7KH+LJEHH&RPSDQ\  72576WRXQGHUVWDQGWKDWWKLVmOLPLWDWLRQlLVQRWWKDWEHFDXVH 7KHULJKWVSURWHFWHGE\WKLVVHFWLRQDUHSURWHFWHGDJDLQVW LWHQFRPSDVVHVLQWHUDOLDDOORIWRUWODZ LPSDLUPHQW E\ QRQJRYHUQPHQWDO GLVFULPLQDWLRQ DQG LPSDLUPHQWXQGHUFRORURI6WDWHODZ ,QFOXGHGXQGHUWKHKHDGRIWRUWVDUHPLVFHOODQHRXVFLYLO ZURQJVUDQJLQJIURPVLPSOHGLUHFWLQWHUIHUHQFHVZLWK 86&† D  F    HPSKDVLVDGGHG  WKH SHUVRQ VXFK DV DVVDXOW EDWWHU\ DQG IDOVH LPSULVRQPHQWRUZLWKSURSHUW\DVLQWKHFDVHRIWUHVSDVV m,QDOOFDVHVRIVWDWXWRU\FRQVWUXFWLRQWKHVWDUWLQJSRLQWLV RUFRQYHUVLRQXSWKURXJKYDULRXVIRUPVRIQHJOLJHQFH WKHODQJXDJHHPSOR\HGE\&RQJUHVVl$SSOHWRQY)LUVW1DWjO WRGLVWXUEDQFHVRILQWDQJLEOHLQWHUHVWVVXFKDVWKRVHLQ %DQNRI2KLR)G WK&LU 0RUHRYHU JRRGUHSXWDWLRQRULQFRPPHUFLDORUVRFLDODGYDQWDJH ZKHUHmWKHVWDWXWHjVODQJXDJHLVSODLQWKHVROHIXQFWLRQRIWKH FRXUWVLVWRHQIRUFHLWDFFRUGLQJWRLWVWHUPVl8QLWHG6WDWHV  Y5RQ3DLU(QWHUWDLQPHQW,QF866&W   /(GG    FLWDWLRQ DQG LQWHUQDO 7KHUH UHPDLQV D ERG\ RI ODZ ZKFK >VLF@ LV GLUHFWHG SXQFWXDWLRQRPLWWHG  WRZDUGWKHFRPSHQVDWLRQRILQGLYLGXDOVUDWKHUWKDQWKH SXEOLF IRU ORVVHV ZKLFK WKH\ KDYH VXIIHUHG ZLWKLQ WKH 6HFWLRQLVXQDPELJXRXV$FFRUGLQJWRVXEVHFWLRQ F  VFRSH RI WKHLU OHJDOO\ UHFRJQL]HG LQWHUHVWV JHQHUDOO\ WKH ULJKWV SURWHFWHG E\ VHFWLRQ  DUH mSURWHFWHG DJDLQVW UDWKHUWKDQRQHLQWHUHVWRQO\ZKHUHWKHODZFRQVLGHUVWKDW LPSDLUPHQW E\ QRQJRYHUQPHQWDO GLVFULPLQDWLRQl  6HFWLRQ FRPSHQVDWLRQLVUHTXLUHG7KLVLVWKHODZRIWRUWV H[SOLFLWO\SURWHFWVWKHULJKWmWRWKHIXOODQGHTXDOEHQHILW RIDOOODZVDQGSURFHHGLQJVIRUWKHVHFXULW\RISHUVRQVDQG 7KHODZRIWRUWVWKHQLVFRQFHUQHGZLWKWKHDOORFDWLRQV SURSHUW\DVLVHQMR\HGE\ZKLWHFLWL]HQVlWKHUHIRUHWKDWULJKW RIORVVHVDULVLQJRXWRIKXPDQDFWLYLWLHVDQGVLQFHWKH\ LV mSURWHFWHG DJDLQVW LPSDLUPHQW E\ QRQJRYHUQPHQWDO FRYHUDZLGHVFRSHVRGRHVWKLVEUDQFKRIODZ$ULVLQJ GLVFULPLQDWLRQl RXW RI WKH YDULRXV DQG HYHULQFUHDVLQJ FODVKHV RI WKH DFWLYLWLHVRISHUVRQVOLYLQJLQDFRPPRQVRFLHW\FDUU\LQJ  RQEXVLQHVVLQFRPSHWLWLRQZLWKIHOORZPHPEHUVRIWKDW VRFLHW\ RZQLQJ SURSHUW\ ZKFK >VLF@ PD\ LQ DQ\ RI D 'LOODUGjV DUJXHV WKDW VXEVHFWLRQ F jV SURWHFWLRQ DJDLQVW WKRXVDQGZD\VDIIHFWWKHSHUVRQVRUSURSHUW\RIRWKHUVoLQ QRQJRYHUQPHQWDOGLVFULPLQDWLRQLVOLPLWHGWRVXEVHFWLRQ D jV VKRUW GRLQJ DOO WKH WKLQJV WKDW FRQVWLWXWH PRGHUQ PDNHDQGHQIRUFHFRQWUDFWVSURYLVLRQ OLYLQJoWKHUH PXVW RI QHFHVVLW\ EH ORVVHV LQMXULHV RI PDQ\ NLQGV VXVWDLQHG DV D UHVXOW RI WKH DFWLYLWLHV RI %HFDXVHVXEVHFWLRQ F DOUHDG\H[SUHVVO\OLPLWVLWVUHDFKWR RWKHUV7KHSXUSRVHRIWKHODZRIWRUWVLVWRDGMXVWWKHVH WKRVH ULJKWV mSURWHFWHG E\ WKLV VHFWLRQl WKH SULQFLSOH RI ORVVHVDQGWRDIIRUGFRPSHQVDWLRQIRULQMXULHVVXVWDLQHG H[SUHVVLRXQLXVHVWH[FOXVLRDOWHULXVZRXOGVHHPWRSUHFOXGH E\RQHSHUVRQDVDUHVXOWRIWKHFRQGXFWRIDQRWKHU WKLVFRXUWIURPJUDIWLQJDGGLWLRQDOOLPLWDWLRQVLQWRWKHVWDWXWH 35266(5 .((721 21 7+( /$: 2) 72576 †  : 3DJH .HHWRQHWDO:HVW3XEOLVKLQJ&RWKHG   ,Q  &RQJUHVV DPHQGHG  86& †  E\ WKH DGGLWLRQ LQWHU 8QGHUWKHPDMRULW\jVLQWHUSUHWDWLRQWKHHTXDOEHQHILWFODXVH DOLD RI VXEVHFWLRQ F  mWR VWUHQJWKHQ H[LVWLQJ SURWHFWLRQV DQG UHPHGLHV FRQFHLYDEO\FDQEHDSSOLHGWRHYHU\JDUGHQYDULHW\VWDWHWRUW DYDLODEOH XQGHU IHGHUDO FLYLO ULJKWV ODZV WR SURYLGH PRUH HIIHFWLYH GHWHUUHQFH DQG DGHTXDWH FRPSHQVDWLRQ IRU YLFWLPV RI GLVFULPLQDWLRQl ODZFODLPZKHUHWKHSDUWLHVDUHRIGLIIHUHQWUDFHV,IWKLVLV +55HS 1R  ,,  DW  UHSULQWHG LQ  86&&$1 DW   &KDSPDQY7KH+LJEHH&RPSDQ\ 1R 1R &KDSPDQY7KH+LJEHH&RPSDQ\  :HPD\KRZHYHUORRNSDVWWKHSODLQODQJXDJHRIDVWDWXWH &RQJUHVVjVLQWHQWLQHQDFWLQJVXEVHFWLRQ F FRXOGQRWKDYH ZKHUH  WKHSODLQODQJXDJHFUHDWHVLQFRQVLVWHQFLHVZLWKLQ EHHQDQ\FOHDUHU,WLQWHQGHGWRSURKLELWUDFLDOGLVFULPLQDWLRQ WKHVWDWXWHLWVHOI  DSSOLFDWLRQRIWKHSODLQODQJXDJHUXQV mLQ DOO FRQWUDFWVl EHFDXVH WKDW LV ZKDW LV VDLG DQG RQO\ FRQWUDU\ WR FOHDUO\ H[SUHVVHG OHJLVODWLYH LQWHQW RU FRQWUDFWV EHFDXVH WKDW LV DOO LW ZURWH   7KH WLWOH RI WKH   DSSOLFDWLRQ RI WKH SODLQ ODQJXDJH ZRXOG OHDG WR DEVXUG DPHQGPHQW LV DOVR WHOOLQJ    6HH JHQHUDOO\ ,16 Y 1DWjO UHVXOWV9HUJRVY*UHJJjV(QWHUSULVHV,QF)G &HQWHUIRU,PPLJUDQWVj5LJKWV,QF86   WK&LU  FLWLQJ8QLWHG6WDWHVY7XUNHWWH86 VWDWLQJ WKDW mWKH WLWOH RI D VWDWXWH RU VHFWLRQ FDQ DLG LQ 6&W/(GG  VHHDOVR UHVROYLQJDQDPELJXLW\LQWKHOHJLVODWLRQjVWH[Wl 7KH&LYLO 7UDQV $ODVND 3LSHOLQH 5DWH &DVHV  86    5LJKWV $FW RI  LV HQWLWOHG DV IROORZV m5HVWRULQJ 6&W/(GG   m7KLV&RXUWLQLQWHUSUHWLQJ 3URKLELWLRQ$JDLQVW$OO5DFLDO'LVFULPLQDWLRQLQWKH0DNLQJ WKH ZRUGV RI D VWDWXWH KDV VRPH VFRSH IRU DGRSWLQJ D DQG(QIRUFHPHQWRI&RQWUDFWVl+55HS1R ,, DW UHVWULFWHGUDWKHUWKDQDOLWHUDORUXVXDOPHDQLQJRILWVZRUGV  HPSKDVLVDGGHG  ZKHUH DFFHSWDQFH RI WKDW PHDQLQJ ZRXOG OHDG WR DEVXUG UHVXOWVRUZRXOGWKZDUWWKHREYLRXVSXUSRVHRIWKHVWDWXWHEXW ,QVKRUWZHFDQGHWHUPLQHZKDW&RQJUHVVLQWHQGHGIURP LWLVRWKHUZLVHZKHUHQRVXFKFRQVHTXHQFHVZRXOGIROORZDQG ZKDW LW WROG XV DQG IURP ZKDW LW GLG QRW WHOO XV  , DP QRW ZKHUH >D OLWHUDO UHDGLQJ@ DSSHDUV WR EH FRQVRQDQW ZLWK WKH DZDUHRIDQGWKHPDMRULW\GRHVQRWFLWHDQ\VWDWXWRU\FDQRQ SXUSRVHVRIWKH$FWl  TXRWLQJ&RPPLVVLRQHUY%URZQ ZKLFK UHTXLUHV D FRXUW WR UHDG D SRVLWLYH ULJKW mDQG [l 866&W/(GG   LQWHUQDO XQOHVV WKH OHJLVODWXUH H[SUHVVO\ SURFODLPV mDQG QRW [ l FLWDWLRQDQGSXQFWXDWLRQRPLWWHG &URRNVY+DUUHOVRQ HVSHFLDOO\ZKHQmDQG[lLVFRQFHSWXDOO\LPSRVVLEOH&RQWUDU\ 866&W/(G   WR ZKDW WKH PDMRULW\ VD\V WKDW VLOHQFH LV QRW mHTXLYRFDOl $QGLWLVFHUWDLQO\QRWDWDEXODUDVDIRUFRXUWVWRFUHDWHULJKWV   5HO\LQJ RQ D 7KLUG &LUFXLW GHFLVLRQ DXWKRUHG EHIRUH &RQJUHVV DGGHG WKH ODQJXDJH LQ VXEVHFWLRQ F 0DKRQH Y 7KHPDMRULW\jVLQWHUSUHWDWLRQRIVXEVHFWLRQ F ZLWKUHVSHFW :DGGOH)G G&LU 'LOODUGjVVXJJHVWVWKDW WR WKH HTXDO EHQHILW FODXVH DOVR KDV WKH mDEVXUGl UHVXOW RI D SODLQ UHDGLQJ RI VXEVHFWLRQ F  FUHDWHV LQWHUQDO IHGHUDOL]LQJ VWDWH WRUW ODZ  7KH PDMRULW\ RSLQHV WKDW mLW LV LQFRQVLVWHQFLHV,Q0DKRQHWKHFRXUWKHOGWKDWDFRPSODLQW XQOLNHO\WKDWDSSOLFDWLRQRIVXEVHFWLRQ F jVSODLQODQJXDJH DJDLQVWDFLW\JRYHUQPHQWIRUYLRODWLRQRIVHFWLRQ VHTXDO ZLOOXQOHDVKWKHIORRGRIFDVHV'LOODUGjVSUHGLFWV>EHFDXVH@ EHQHILW FODXVH VWDWHG D FRJQL]DEOH FDXVH RI DFWLRQ >W@KHODQJXDJHVXUURXQGLQJWKHµIXOODQGHTXDOEHQHILWjFODXVH 5HVSRQGLQJLQGLFWDWRWKHFLW\jVFRQWHQWLRQWKDWWKHFRXUWjV VHUYHVWRFDELQERWKWKHQXPEHUDQGQDWXUHRIFODLPVWKDWPD\ EURDG FRQVWUXFWLRQ RI VHFWLRQ  ZRXOG JLYH ULVH WR D EHEURXJKWXQGHULWVDPELWl0DM2SDW7KDWLVWKH IHGHUDOFDXVHRIDFWLRQIRUHYHU\UDFLDOO\PRWLYDWHGSULYDWH PDMRULW\EHOLHYHVWKDWWKHULJKWLVVXIILFLHQWO\OLPLWHGEHFDXVH WRUW WKH 0DKRQH FRXUW VXJJHVWHG WKDW VXFK D UHVXOW ZDV WKHODQJXDJHmIRUWKHVHFXULW\RISHUVRQVDQGSURSHUW\DVLV XQOLNHO\EHFDXVHmWKHFRQFHSWRIVWDWHDFWLRQLVLPSOLFLWLQWKH HQMR\HGE\ZKLWHFLWL]HQVlOLPLWVWKHSRWHQWLDOFODVVRIFDVHV HTXDOEHQHILWFODXVHl,GDW$GRSWLQJWKH0DKRQH WKDWPD\EHEURXJKWXQGHUWKHHTXDOEHQHILWSURYLVLRQ2QH FRXUWjV GLFWD 'LOODUGjV DUJXHV WKDW D SODLQ UHDGLQJ RI QHHGORRNQRIXUWKHUWKDQWKHRSHQLQJSDJHVRI !# $$#  VXEVHFWLRQ F LVLQFRQVLVWHQWZLWKVHFWLRQ VHTXDOEHQHILW †  E :HVW    &KDSPDQY7KH+LJEHH&RPSDQ\ 1R 1R &KDSPDQY7KH+LJEHH&RPSDQ\  DQDO\WLFDOIUDPHZRUNDQDORJ\WR*ULIILQGLUHFWVWKDWSULYDWH FODXVH ZKLFK LPSOLFLWO\ LQFRUSRUDWHV WKH FRQFHSW RI VWDWH DFWLRQZRXOGQRWEHUHDGLQWR† DFWLRQ   7KH6XSUHPH&RXUWjVGHFLVLRQLQ*ULIILQY%UHFNHQULGJH 866&W/(GG  KRZHYHU 7KH PDMRULW\ DOVR FODLPV WKDW QRWKLQJ LQ WKH OHJLVODWLYH SUHFOXGHV WKLV FRXUW IURP ILQGLQJ VXEVHFWLRQ F jV SODLQ KLVWRU\ RI WKH  DPHQGPHQWV SUHYHQWV WKLV &RXUW IURP ODQJXDJH LQFRQVLVWHQW ZLWK WKH VWDWXWHjV HTXDO EHQHILW DSSO\LQJVXEVHFWLRQ F jVSODLQODQJXDJH*UDQWHG&RQJUHVV SURYLVLRQ,Q*ULIILQWKH&RXUWIRXQG86&†  jV GLGQRWVD\WKDWmE\DGGLQJWKLVVXEVHFWLRQZHPHDQWKDWWKH DQDORJRXVHTXDOSURWHFWLRQSURYLVLRQDSSOLFDEOHWRSULYDWHDV HTXDO EHQHILW FODXVH DSSOLHV RQO\ WR VWDWH DQG QRW SULYDWH ZHOO DV RIILFLDO DFWLRQ  ,G DW  VHH DOVR  86& DFWLRQl+RZHYHUZHFDQJOHDQZKDWWKHOHJLVODWXUHLQWHQGHG †   SURYLGLQJDFDXVHRIDFWLRQZKHUHmWZRRUPRUH IURPZKDWLWDFWXDOO\VDLG SHUVRQVLQDQ\6WDWHRU7HUULWRU\FRQVSLUHRUJRLQGLVJXLVHRQ WKHKLJKZD\RURQWKHSUHPLVHVRIDQRWKHUIRUWKHSXUSRVHRI 7KLV VHFWLRQ DPHQGV  86& †  FRPPRQO\ GHSULYLQJHLWKHUGLUHFWO\RULQGLUHFWO\DQ\SHUVRQRUFODVVRI UHIHUUHGWRDVm6HFWLRQ WRRYHUWXUQ3DWWHUVRQY SHUVRQV RI WKH HTXDO SURWHFWLRQ RI WKH ODZV RU RI HTXDO 0F/HDQ&UHGLW8QLRQDQGWRFRGLI\5XQ\RQY0F&UDU\ SULYLOHJHVDQGLPPXQLWLHVXQGHUWKHODZVl ,QVRILQGLQJWKH 866&W *ULIILQ&RXUWH[SUHVVO\UHMHFWHGWKHQRWLRQWKDWWKHFRQFHSWRI 6XEVHFWLRQ F  3URKLELWLQJ GLVFULPLQDWLRQ LQ SULYDWH VWDWHDFWLRQLVLPSOLFLWLQDQHTXDOSURWHFWLRQSURYLVLRQm$ FRQWUDFWLQJo7KLV VXEVHFWLRQ LV LQWHQGHG WR FRGLI\ FHQWXU\RI)RXUWHHQWK$PHQGPHQWDGMXGLFDWLRQKDVPDGH 5XQ\RQ Y 0F&UDU\  ,Q 5XQ\RQ WKH &RXUW KHOG WKDW LW XQGHUVWDQGDEO\ GLIILFXOW WR FRQFHLYH RI ZKDW PLJKW 6HFWLRQSURKLELWHGLQWHQWLRQDOUDFLDOGLVFULPLQDWLRQ FRQVWLWXWHDGHSULYDWLRQRIWKHHTXDOSURWHFWLRQRIWKHODZVE\ LQSULYDWHDVZHOODVSXEOLFFRQWUDFWLQJ7KH&RPPLWWHH SULYDWHSHUVRQVD@OO SHUVRQVl DQG GRHV QRW VSHDN LQ WHUPV RI SHUVRQV ZLWKLQ WKH MXULVGLFWLRQ RI WKH 8QLWHG 6WDWHV    VKDOO EH VXEMHFW WR SURKLELWLQJ SULYDWH LQGLYLGXDOV IURP FHUWDLQ FRQGXFW OLNH SXQLVKPHQW SDLQV SHQDOWLHV WD[HV OLFHQVHV DQG H[DFWLRQV RI HYHU\  NLQG DQG WR QR RWKHUl  $V VWDWHG WKH DPHQGPHQW ZDV LQ GLUHFW UHVSRQVH WR WKH 6XSUHPH 7KHUH LV QRWKLQJ XQZRUNDEOH KRZHYHU DERXW WKH SURSRVLWLRQ WKDW D &RXUWjV RSLQLRQ LQ 3DWWHUVRQ Y 0F/HDQ &UHGLW 8QLRQ  86  JLYHQ VWDWXWH PD\ SURVFULEH FRQGXFW EH\RQG WKDW ZKLFK DOO RI WKRVH   3DWWHUVRQ KHOG WKDW †  SURKLELWHG GLVFULPLQDWLRQ RQO\ LQ WKH SHUVRQV WKH VWDWXWH UHJXODWHV DUH DFWXDOO\ FDSDEOH RI HQJDJLQJ LQ 7KDW WKH PDNLQJ DQG HQIRUFHPHQW RI FRQWUDFWV DQG GLG QRW H[WHQG WR SUREOHPV GULYHU RI DQ LQGXVWULDO GXPSWUXFN PD\ EH LQFDSDEOH RI YLRODWLQJ D DULVLQJ IURP FRQGLWLRQV RI FRQWLQXLQJ HPSOR\PHQW ,Q WKH &LYLO 5LJKWV VHYHQW\ILYH PLOHVSHUKRXU VSHHG OLPLW GRHV QRW SUHFOXGH XQLIRUP $FW RI  &RQJUHVV H[SOLFLWO\ UHYHUVHG WKLV DVSHFW RI !,9907843 E\ DSSOLFDWLRQ RI WKDW OLPLW ,QGHHG LI D QHFHVVDU\ FRPSRQHQW RI VWDWXWRU\ DGGLQJ VXEVHFWLRQ E WR †  ZKLFK VWDWHV WKDW mWKH WHUP µPDNH DQG FRQVLVWHQF\ ZDV D UHJXODWHG JURXS FDSDEOH RI YLRODWLQJ DOO RI D VWDWXWHjV HQIRUFH FRQWUDFWVj LQFOXGHV WKH PDNLQJ SHUIRUPDQFH PRGLILFDWLRQ DQG SURVFULSWLRQV VHFWLRQ  FRXOG QRW EH FRQVLVWHQWO\ UHDG WR DSSO\ WR VWDWH WHUPLQDWLRQ RI FRQWUDFWV DQG WKH HQMR\PHQW RI DOO EHQHILWV SULYLOHJHV DFWRUV WKH YDVW PDMRULW\ RI ZKRP DUH LQ QR SRVLWLRQ WR SXQLVK WD[ RU WHUPV DQG FRQGLWLRQV RI WKH FRQWUDFWXDO UHODWLRQVKLSl  86&$ GHQ\ OLFHQVHV WR DQ\ SHUVRQ SURWHFWHG E\ VHFWLRQ   &KDSPDQY7KH+LJEHH&RPSDQ\ 1R 1R &KDSPDQY7KH+LJEHH&RPSDQ\  WKDWUHTXLUHVWKHDFWLRQZRUNLQJWKHGHSULYDWLRQWRFRPHIURP LQWHUSUHWDWLRQ TXLWH LQFRQVLVWHQW ZLWK WKDW JLYHQ WR WKH6WDWHl,GDW HPSKDVLVDGGHG  †  LQ&ROOLQV,QFRQVWUXLQJWKHH[DFWFULPLQDO FRXQWHUSDUWRI†  WKH&RXUWLQ8QLWHG6WDWHVY ,QGHHG*ULIILQjVLQWHUSUHWDWLRQRIVHFWLRQ  jVHTXDO +DUULVVXSUDREVHUYHGWKDWWKHVWDWXWHZDVmQRWOLPLWHG SURWHFWLRQSURYLVLRQVXJJHVWVWKDWVHFWLRQ VDQDORJRXV WRWDNHHIIHFWRQO\LQFDVH>RIVWDWHDFWLRQ@lLGDW FODXVHZRXOGSURWHFWDJDLQVWSULYDWHLPSDLUPHQWHYHQDEVHQW EXWmZDVIUDPHGWRSURWHFWIURPLQYDVLRQE\SULYDWH VXEVHFWLRQ F jVH[SOLFLWLQVWUXFWLRQm>7@KHIDLOXUHWRPHQWLRQ SHUVRQVWKHHTXDOSULYLOHJHVDQGLPPXQLWLHVXQGHUWKH DQ\ VXFK >VWDWH DFWLRQ@ UHTXLVLWH FDQ EH YLHZHG DV DQ ODZV RI DOO SHUVRQV DQG FODVVHV RI SHUVRQVl LG DW LPSRUWDQW LQGLFDWLRQ RI FRQJUHVVLRQDO LQWHQW WR VSHDN LQ ,Q8QLWHG6WDWHVY:LOOLDPV86 VHFWLRQ  RIDOOGHSULYDWLRQVRIµHTXDOSURWHFWLRQRIWKH WKH&RXUWFRQVLGHUHGWKHFORVHVWUHPDLQLQJFULPLQDO ODZVjDQGµHTXDOSULYLOHJHVDQGLPPXQLWLHVXQGHUWKHODZVj DQDORJXH WR †     86& †   0U sXVWLFH ZKDWHYHUWKHLUVRXUFHl*ULIILQ86DW HPSKDVLV )UDQNIXUWHUjV SOXUDOLW\ RSLQLRQ ZLWKRXW FRQWUDYHQWLRQ DGGHG VHHDOVR8QLWHG6WDWHVY:LOOLDPV86 IURP WKH FRQFXUUHQFH RU GLVVHQW FRQFOXGHG WKDW mLI  6&W   /(G    SOXUDOLW\ RSLQLRQ RI ODQJXDJHLVWRFDUU\DQ\PHDQLQJDWDOOLWPXVWEHFOHDU )UDQNIXUWHU s  ILQGLQJ QR VWDWH DFWLRQ UHTXLUHPHQW LQ WKDWWKHSULQFLSDOSXUSRVHRI>†@XQOLNH>86& DQDORJRXV HTXDO SURWHFWLRQ SURYLVLRQ RI FULPLQDO VWDWXWH  †@ZDVWRUHDFKSULYDWHDFWLRQUDWKHUWKDQRIILFHUVRI 8QLWHG6WDWHVY+DUULV866&W D 6WDWH DFWLQJ XQGHU LWV DXWKRULW\  0HQ ZKR µJR LQ /(G   VDPH . GLVJXLVHXSRQWKHSXEOLFKLJKZD\RUXSRQWKHSUHPLVHV RI DQRWKHUj DUH QRW OLNHO\ WR EH DFWLQJ LQ RIILFLDO *LYHQWKH6XSUHPH&RXUWjVUHMHFWLRQRIWKHQRWLRQWKDWVWDWH FDSDFLWLHVl86DWm1RWKLQJLQ>WKH@WHUPV DFWLRQ LV LPSOLFLW LQ WKH FRQFHSW RI HTXDO SURWHFWLRQ ZH >RI † @ LQGLFDWHV WKDW FRORU RI 6WDWH ODZ ZDV WR EH FDQQRWILQGWKHSODLQODQJXDJHRIVXEVHFWLRQ F LQFRQVLVWHQW UHOHYDQWWRSURVHFXWLRQXQGHULWl,GDW ZLWKWKHVWDWXWHjVHTXDOEHQHILWFODXVH *ULIILQ  86 DW  IRRWQRWHV RPLWWHG HPSKDVHV  DGGHG  RYHUUXOLQJ &ROOLQV ZKLFK FRQVWUXHG †    DV UHTXLULQJSUHVHQFHRIVWDWHDFWLRQ  7KHUH LV QRWKLQJ LQ WKH OHJLVODWLYH KLVWRU\ RI WKH  DPHQGPHQWV WR VHFWLRQ  WKDW SUHYHQWV WKLV FRXUW IURP :KHQUHDGLQIXOOFRQWH[WUDWKHUWKDQWKHVHOHFWLYHH[FHUSW DSSO\LQJVXEVHFWLRQ F jVSODLQODQJXDJH2IWKHWZR+RXVH SURYLGHGE\WKHPDMRULW\LWLVFOHDUWKDWWKHH[SOLFLWPHQWLRQ &RPPLWWHH5HSRUWVRQWKH&LYLO5LJKWV$FWRIRQO\RQH RISULYDWHSHUVRQVRQWKHIDFHRIWKHVWDWXWHZDVFULWLFDOWRWKH HYHQ PHQWLRQV VXEVHFWLRQ F  DQG WKDW GLVFXVVLRQ LV WHUVH *ULIILQ FRXUWjV KROGLQJ WKDW †    DSSOLHV WR SULYDWH 7KH+RXVHsXGLFLDU\&RPPLWWHHDXWKRUHG+55HSRUW1R DFWLRQ7KDWLVXQOLNH††  H[SUHVVO\DSSOLHVWR SULYDWHDFWLRQE\H[SOLFLWO\UHIHUULQJWRmWZRRUPRUHSHUVRQVl ZKRFRQVSLUH7KHUHIRUHLIRQHDGKHUHVWRDSODLQPHDQLQJ  7KH GLIIHUHQFHV LQ JURXSV UHJXODWHG E\ VHFWLRQ   o JURXSV RI WZR RU PRUH SHUVRQV o DQG VHFWLRQ  o HLWKHU LQGLYLGXDOV RU JURXSV o  ,Q RWKHU ZRUGV UDWKHU WKDQ EHLQJ SURVFULSWLYH OLNH †   6HH *ULIILQ LQ QR ZD\ DIIHFWV ZKHWKHU WKH FRQFHSW RI VWDWH DFWLRQ LV LPSOLFLW LQ WKH VWDWXWHVj DQDORJRXV HTXDO SURWHFWLRQ SURYLVLRQV   86 DW SURYLGLQJ D FDXVH RI DFWLRQ m>L@I WZR RU PRUH SHUVRQV    FRQVSLUH RU JR  UHMHFWLQJ WKH DUJXPHQW WKDW VHFWLRQ   FRQWHPSODWHG mD LQ GLVJXLVH RQ WKH KLJKZD\ RU RQ WKH SUHPLVHV RI DQRWKHU IRU WKH SXUSRVH SULYDWHFRQVSLUDF\ VR PDVVLYH DQG HIIHFWLYH WKDW LW VXSSODQWV WKRVH >VWDWH@ RI GHSULYLQJ    DQ\ SHUVRQ RU FODVV RI SHUVRQV RI WKH HTXDO SURWHFWLRQ RI DXWKRULWLHV DQG WKXV VDWLVILHV WKH VWDWH DFWLRQ UHTXLUHPHQWl  WKH ODZV RU RI HTXDO SULYLOHJHV DQG LPPXQLWLHV XQGHU WKH ODZVl  †   &KDSPDQY7KH+LJEHH&RPSDQ\ 1R 1R &KDSPDQY7KH+LJEHH&RPSDQ\  GLVJXLVHLQSDUWLFXODULVLQWKLVFRQWH[WDQDFWLYLW\VR   ,,  ZKLFK VWDWHV RQO\ WKDW &RQJUHVV LQWHQGHG WR OLWWOH DVVRFLDWHG ZLWK RIILFLDO DFWLRQ DQG VR FRPPRQO\ FRGLI\5XQ\RQY0F&UDU\866&W FRQQHFWHGZLWKSULYDWHPDUDXGHUVWKDWWKLVFODXVHFRXOG /(GG  DQGLQWHQGHGVXEVHFWLRQ F mWRSURKLELW DOPRVW QHYHU EH DSSOLFDEOH XQGHU WKH DUWLILFLDOO\ UDFLDOGLVFULPLQDWLRQLQDOOFRQWUDFWVERWKSXEOLFDQGSULYDWHl UHVWULFWLYHFRQVWUXFWLRQRI&ROOLQV>86  @ +55HS 1R  ,,  DW    UHSULQWHG LQ  $QGVLQFHWKHmJRLQJLQGLVJXLVHlDVSHFWPXVWLQFOXGH 86&&$1    &RQJUHVVjV IDLOXUH WR GLVFXVV WKH SULYDWH DFWLRQ LW LV KDUG WR VHH KRZ WKH FRQVSLUDF\ DSSOLFDWLRQRIVXEVHFWLRQ F WRWKHRWKHUULJKWVHQXPHUDWHGLQ DVSHFWMRLQHGE\DGLVMXQFWLYHFRXOGEHUHDGWRUHTXLUH VXEVHFWLRQ D GRHVQRWSURSHUO\JLYHULVHWRDQLQIHUHQFHWKDW WKHLQYROYHPHQWRIVWDWHRIILFHUV VXEVHFWLRQ F jV UHIHUHQFH WR mWKH ULJKWV LQ WKLV VHFWLRQl DFWXDOO\ UHIHUV WR mWKH FRQWUDFWXDO ULJKWV LQ WKLV VHFWLRQl 7KH SURYLVLRQ FRQWLQXHV VSHFLI\LQJ WKH PRWLYDWLRQ &RQJUHVVjV IDLOXUH WR FRPPHQW XSRQ VWDWXWRU\ ODQJXDJH UHTXLUHGmIRUWKHSXUSRVHRIGHSULYLQJHLWKHUGLUHFWO\RU VLPSO\GRHVQRWFRQVWLWXWHDUHMHFWLRQRIWKHSODLQLPSRUWRI LQGLUHFWO\ DQ\ SHUVRQ RU FODVV RI SHUVRQV RI WKH HTXDO WKDWODQJXDJH(YHQYLHZHGLQWKHOLJKWPRVWIDYRUDEOH WR SURWHFWLRQ RI WKH ODZV RU RI HTXDO SULYLOHJHV DQG 'LOODUGjVWKHOHJLVODWLYHKLVWRU\RIVXEVHFWLRQ F LVHTXLYRFDO LPPXQLWLHVXQGHUWKHODZVl7KLVODQJXDJHLVRIFRXUVH 7KXV ZH FDQQRW VD\ WKDW JLYLQJ HIIHFW WR VXEVHFWLRQ F jV VLPLODU WR WKDW RI †  RI WKH )RXUWHHQWK $PHQGPHQW SODLQODQJXDJHIORXWV&RQJUHVVjVFOHDULQWHQWLQSDVVLQJWKH ZKLFK LQ WHUPV VSHDNV RQO\ WR WKH 6WDWHV DQG MXGLFLDO $PHQGPHQW WKLQNLQJDERXWZKDWFDQFRQVWLWXWHDQHTXDOSURWHFWLRQ GHSULYDWLRQKDVEHFDXVHRIWKH$PHQGPHQWjVZRUGLQJ  IRFXVHG DOPRVW HQWLUHO\ XSRQ LGHQWLI\LQJ WKH UHTXLVLWH mVWDWHDFWLRQlDQGGHILQLQJWKHRIIHQGLQJIRUPVRIVWDWH 'LOODUGjV DOVR DUJXHV WKDW DSSOLFDWLRQ RI VXEVHFWLRQ F jV ODZ DQG RIILFLDO FRQGXFW  $ FHQWXU\ RI )RXUWHHQWK SODLQODQJXDJHZLWKUHVSHFWWRVHFWLRQ VHTXDOEHQHILW $PHQGPHQW DGMXGLFDWLRQ KDV LQ RWKHU ZRUGV PDGH LW FODXVHZRXOGKDYHWKHmDEVXUGlUHVXOWRIIHGHUDOL]LQJVWDWHWRUW XQGHUVWDQGDEO\ GLIILFXOW WR FRQFHLYH RI ZKDW PLJKW ODZ FRQVWLWXWHDGHSULYDWLRQRIWKHHTXDOSURWHFWLRQRIWKH ODZVE\SULYDWHSHUVRQV@,QGHHG &RQJUHVVjVLQWHQWRXWVLGHWKHOLWHUDOODQJXDJHRIWKHVWDWXWH WKHIDLOXUHWRPHQWLRQDQ\VXFKUHTXLVLWHFDQEHYLHZHG RQO\ZKHQWKHVWDWXWHSURGXFHVDUHVXOWQRWZKLFKZHGLVOLNH DV DQ LPSRUWDQW LQGLFDWLRQ RI FRQJUHVVLRQDO LQWHQW WR EXW ZKLFK LV SDWHQWO\ LOORJLFDO RU FRQWUDU\ WR &RQJUHVVjV VSHDNLQ†  RIDOOGHSULYDWLRQRImHTXDOSURWHFWLRQ LQWHQW  6HH &URRNV  86 DW  m>7@R MXVWLI\ D RIWKHODZVlDQGmHTXDOSULYLOHJHVDQGLPPXQLWLHVXQGHU GHSDUWXUHIURPWKHOHWWHURIWKHODZWKHDEVXUGLW\PXVWEH WKHODZVlZKDWHYHUWKHLUVRXUFH VRJURVVDVWRVKRFNWKHJHQHUDOPRUDORUFRPPRQVHQVH$QG 7KH DSSURDFK RI WKLV &RXUW WR RWKHU 5HFRQVWUXFWLRQ FLYLOULJKWVVWDWXWHVLQWKH\HDUVVLQFH&ROOLQVKDVEHHQWR  2I FRXUVH mZH VKRXOG EH DQG DUH µUHOXFWDQW WR IHGHUDOL]Hj PDWWHUV mDFFRUG >WKHP@ D VZHHS DV EURDG DV >WKHLU@ WUDGLWLRQDOO\ FRYHUHG E\ VWDWH FRPPRQ ODZl 3DWWHUVRQ Y 0F/HDQ &UHGLW ODQJXDJHl     0RUHRYHU YHU\ VLPLODU ODQJXDJH LQ 8QLRQ  86    6&W   /(GG   FORVHO\ UHODWHGVWDWXWHV KDV HDUO\ DQG ODWH UHFHLYHG DQ LQWHUQDO TXRWDWLRQ RPLWWHG  7KLV UHOXFWDQFH KRZHYHU GRHV QRW JLYH WKLV FRXUW OHHZD\ WR LJQRUH &RQJUHVVjV SODLQ LQVWUXFWLRQV  &KDSPDQY7KH+LJEHH&RPSDQ\ 1R 1R &KDSPDQY7KH+LJEHH&RPSDQ\  WKHUHPXVWEHVRPHWKLQJWRPDNHSODLQWKHLQWHQWRI&RQJUHVV LQGLUHFWO\ DQ\ SHUVRQ RU FODVV RI SHUVRQV RI WKH HTXDO WKDWWKHOHWWHURIWKHVWDWXWHLVQRWWRSUHYDLOl  SURWHFWLRQRIWKHODZVRURIHTXDOSULYLOHJHVDQGLPPXQLWLHV XQGHUWKHODZVl86&$†   :HVW 7KH $VGLVFXVVHG DERYHWKHOHJLVODWLYHKLVWRU\RIVXEVHFWLRQ PDMRULW\QRWHVWKDWWKH*ULIILQ&RXUWH[SUHVVO\UHMHFWHGWKH F  LV DW PRVW HTXLYRFDO  7KHUH LV QRWKLQJ LQ WKDW KLVWRU\ QRWLRQWKDWWKHFRQFHSWRIVWDWHDFWLRQLVLPSOLFLWLQDQHTXDO HYLGHQFLQJ &RQJUHVVjV LQWHQW WKDW D SODLQ UHDGLQJ RI SURWHFWLRQSURYLVLRQUHO\LQJRQWKHIROORZLQJH[FHUSWm$ VXEVHFWLRQ F  QRW SUHYDLO  0RUHRYHU LW LV XQOLNHO\ WKDW FHQWXU\RI)RXUWHHQWK$PHQGPHQWDGMXGLFDWLRQKDVPDGH DSSOLFDWLRQRIVXEVHFWLRQ F jVSODLQODQJXDJHZLOOXQOHDVKWKH LW XQGHUVWDQGDEO\ GLIILFXOW WR FRQFHLYH RI ZKDW PLJKW IORRGRIFDVHV'LOODUGjVSUHGLFWV7KHODQJXDJHVXUURXQGLQJ FRQVWLWXWHDGHSULYDWLRQRIWKHHTXDOSURWHFWLRQRIWKHODZVE\ WKHmIXOODQGHTXDOEHQHILWlFODXVHVHUYHVWRFDELQERWKWKH SULYDWHSHUVRQVW@KLVVWDWXWHDGGUHVVHVSULYDWHDFWVoJRLQJµLQ WUDGLWLRQDOO\FRYHUHGE\VWDWHFRPPRQODZ GLVJXLVHRQWKHKLJKZD\jLVDUHIHUHQFHWRWKH02RIWKH.X .OX[.ODQo\HWFRQGHPQVRQO\GHHGVWKDWµGHSULYHjWKHYLFWLP %HFDXVHVHFWLRQSODLQO\SURWHFWVDJDLQVWLPSDLUPHQW RIWKHµHTXDOSURWHFWLRQRIWKHODZVRURIHTXDOSULYLOHJHVDQG RI LWV HTXDO EHQHILW FODXVH E\ SULYDWH GLVFULPLQDWLRQ DQG LPPXQLWLHVXQGHUWKHODZVjVRPHWKLQJZLWKLQWKHGRPDLQRI JRYHUQPHQWH[FOXVLYHO\7KLVDGPL[WXUHRISULYDWHDQGSXEOLF DFWLRQKDVEHIXGGOHGFRXUWVHYHUVLQFHl 7KLVGLVWLQFWLRQLV  6HYHUDO FDVHV WKDW KDYH DOORZHG mIXOO DQG HTXDO EHQHILWl FODLPV WR LPSRUWDQW DQG NH\ WR WKH DQDO\VLV KHUH DV WKH IROORZLQJ JR IRUZDUG ZLWKRXW VWDWH DFWLRQ KDYH LQYROYHG VHULRXV WKUHDWV WR D SHUVRQjV SDVVDJHIURP*ULIILQUHYHDOV VHFXULW\ LQ WKH IRUP RI SK\VLFDO YLROHQFH 6HH HJ &DUH\ Y 5XGHVHDO  ) 6XSS   Q 1' *D  QRWLQJ WKDW FRXUW KDG DOORZHG :HWXUQ WKHQWRDQH[DPLQDWLRQRIWKHPHDQLQJRI mIXOO DQG HTXDO EHQHILWl FODLP DJDLQVW SULYDWH DFWRU LQYROYHG LQ .X .OX[ †  2QWKHLUIDFHWKHZRUGVRIWKHVWDWXWHIXOO\ .ODQ LQFLGHQW EHFDXVH VHFWLRQ  mSURYLGHV D FDXVH RI DFWLRQ DJDLQVW HQFRPSDVVWKHFRQGXFWRISULYDWHSHUVRQV7KHSURYLVLRQ SULYDWH LQGLYLGXDOV IRU UDFLDOO\PRWLYDWHG LQWHQWLRQDOO\LQIOLFWHG LQMXU\ DQG GRHV QRW UHTXLUH VWDWH DFWLRQ LQ WKH GHSULYDWLRQ RI ULJKWVl  +DZNV Y VSHDNVVLPSO\RImWZRRUPRUHSHUVRQVLQDQ\6WDWHRU 3HULOOR  ) 6XSS    1' ,OO  FRQVWUXLQJ 7HUULWRU\l ZKR mFRQVSLUH RU JR LQ GLVJXLVH RQ WKH ODQJXDJH DQG KLVWRU\ RI VWDWXWH WR DOORZ FODLP DJDLQVW SULYDWH LQGLYLGXDO KLJKZD\ RU RQ WKH SUHPLVHV RI DQRWKHUl  *RLQJ LQ ZKR HQJDJHG LQ YLFLRXV EHDWLQJ RI SODLQWLIIV PRWLYDWHG E\ UDFLDO DQLPXV   &KDSPDQY7KH+LJEHH&RPSDQ\ 1R 1R &KDSPDQY7KH+LJEHH&RPSDQ\  UHPDUNHG  m2QO\ WKH VWDWH LPSRVHV RU UHTXLUHV µWD[HV EHFDXVHWKHUHLVQRUHDVRQWRORRNEH\RQGVHFWLRQ VSODLQ OLFHQVHV DQG H[DFWLRQVj DQG WKH PD[LP  QRVFLWXU D VRFLLV ODQJXDJHZHILQGWKDW&KDSPDQVWDWHVDFRJQL]DEOHVHFWLRQ VXJJHVWVWKDWWKHµSXQLVKPHQWSDLQV>DQG@SHQDOWLHVjWRZKLFK FODLP WKHFODXVHUHIHUVDUHWKRVHLPSRVHGE\WKHVWDWHl0DKRQH  )G DW    $ WUHDWLVH KDV VLPLODUO\ REVHUYHG % m:KHWKHUWKLVFODXVHRIVHFWLRQLVOLPLWHGWRVWDWHDFWLRQ LW LV YLUWXDOO\ LQHYLWDEOH WKDW DQ\ FODLP EDVHG XSRQ µOLNH ,QDGGLWLRQWRKHUVHFWLRQFODLP&KDSPDQVHHNVUHOLHI SXQLVKPHQWSDLQVSHQDOWLHVWD[HVOLFHQVHDQGH[DFWLRQVRI XQGHU86&†IRUYLRODWLRQVRIKHUULJKWWREHIUHH HYHU\NLQGjZLOOLQYROYHDJRYHUQPHQWDOHQWLW\ls26(3+ * IURP XQUHDVRQDEOH VHDUFKHV DQG VHL]XUHV XQGHU WKH )RXUWK &22. s2+1 / 62%,(6., s5  &,9,/ 5,*+76 $&7,216 $PHQGPHQWDQG KHU GXH SURFHVV ULJKWV XQGHU WKH )LIWK ˆ '  0DWWKHZ%HQGHU &R  $PHQGPHQW 7RVWDWHDFODLPXQGHUVHFWLRQ&KDSPDQ PXVWVKRZWKDW'LOODUGjVWKURXJKLWVVHFXULW\RIILFHUGHSULYHG 7KHPDMRULW\jVUHDGLQJLVLQWHUQDOO\LQFRQVLVWHQWXQOHVVRQH KHU RI D ULJKW VHFXUHG E\ WKH &RQVWLWXWLRQ RU ODZV RI WKH UHDGVVXEVHFWLRQ F DVDSSO\LQJWRHYHU\FODXVHRIVXEVHFWLRQ 8QLWHG6WDWHVZKLOHDFWLQJmXQGHUFRORURIVWDWHODZl6HH D 7KLVLQWXUQOHDGVWRWKHHTXDOO\DEVXUGUHVXOWRIKROGLQJ :RORWVN\Y+XKQ)G WK&LU  WKDWWKHOLNHSXQLVKPHQWFODXVHDSSOLHVWRSULYDWHFRQGXFWDV ZHOODVVWDWHDFWLRQ $ SULYDWH SDUW\jV DFWLRQV FRQVWLWXWH VWDWH DFWLRQ XQGHU VHFWLRQZKHUHWKRVHDFWLRQVPD\EHmIDLUO\DWWULEXWDEOH  WRWKHVWDWHl/XJDUY(GPRQGVRQ2LO&R86 6&W/(GG  7KH6XSUHPH&RXUW 7KHPDMRULW\FODLPVWKDW*ULIILQY%UHFNHQULGJH86 KDV GHYHORSHG WKUHH WHVWV IRU GHWHUPLQLQJ WKH H[LVWHQFH RI    SUHFOXGHV D ILQGLQJ WKDW VXEVHFWLRQ F jV SODLQ VWDWHDFWLRQLQDSDUWLFXODUFDVH  WKHSXEOLFIXQFWLRQWHVW ODQJXDJH LV LQFRQVLVWHQW ZLWK WKH VWDWXWHjV HTXDO EHQHILW   WKH VWDWH FRPSXOVLRQ WHVW DQG   WKH V\PELRWLF SURYLVLRQ,Q*ULIILQWKH6XSUHPH&RXUWKHOGWKDW86& †  GRHVQRWUHTXLUHVWDWHDFWLRQ EXW UHDFKHVSULYDWH FRQVSLUDFLHV  6HFWLRQ    SURYLGHV D FDXVH RI DFWLRQ ZKHUH mWZR RU PRUH SHUVRQV LQ DQ\ 6WDWH RU 7HUULWRU\  FRQVSLUHRUJRLQGLVJXLVHRQWKHKLJKZD\RURQWKHSUHPLVHV ,Q VR GHFLGLQJ WRGD\ ZH DJUHH ZLWK WKH 6HFRQG &LUFXLWjV UHFHQW RI DQRWKHU IRU WKH SXUSRVH RI GHSULYLQJ HLWKHU GLUHFWO\ RU GHFLVLRQ LQ 3KLOOLS Y 8QLYHUVLW\ RI 5RFKHVWHU 1R   :/  G &LU sDQ    7ZR VLVWHU FLUFXLWV LQ %URZQ Y 3KLOLS 0RUULV ,QF  )G  G &LU   DQG D@OOSHUVRQVVKDOOEHVXEMHFWWROLNHSXQLVKPHQWSDLQV  WK&LU  SHQDOWLHVWD[HVOLFHQVHDQGH[DFWLRQVl1RRQHFDQDUJXH VHULRXVO\WKDWDQLQGLYLGXDOFDQVXEMHFWDQRWKHULQGLYLGXDOWR ,Q :KLWH IRU H[DPSOH WKH )LIWK &LUFXLW KHOG WKDW WKH XQHTXDO SXQLVKPHQW RU WD[HV  $V WKH 0DKRQH FRXUW GHWHQWLRQRIDVXVSHFWHGVKRSOLIWHULVQRWDQH[FOXVLYHVWDWH IXQFWLRQ  ,URQLFDOO\ WKH PDMRULW\ DFWXDOO\ PDNHV DQ DWWHPSW 6HH 0DM 2S DW  Q m$OWKRXJK QRW JHUPDQH WR &KDSPDQjV FODLP XQGHU VHFWLRQ  V HTXDO EHQHILW FODXVH RQH FRXOG PDNH D VLPLODU DUJXPHQW RQ WKH EDVLV RI VXEVHFWLRQ D jV OLNH SXQLVKPHQW FODXVHl  7KH PDMRULW\ WKHQ SRVLWV WKDW  :HVW Y $WNLQV m>W@KHUH LV QRWKLQJ XQZRUNDEOH KRZHYHU DERXW WKH SURSRVLWLRQ WKDW D &LWLQJ   86    6&W   )ODJJ %URV Y %URRNV JLYHQ VWDWXWH PD\ SURVFULEH FRQGXFW EH\RQG WKDW ZKLFK DOO RI WKRVH /(GG   SXEOLF IXQFWLRQ WHVW    86 $GLFNHV Y 6+ SHUVRQV WKH VWDWXWH UHJXODWHV DUH DFWXDOO\ FDSDEOH RI HQJDJLQJ LQl DQG    6&W   /(GG   VDPH  PD\ .UHVV &R SURYLGHV WKH H[DPSOH RI DQ LQGXVWULDO GXPSWUXFN GULYHU ZKR EH   86    6&W   /(G G   %XUWRQ Y :LOPLQJWRQ 3DUNLQJ $XWK LQFDSDEOH RI YLRODWLQJ D KLJKVSHHG OLPLW 7KH PDMRULW\jV DUJXPHQW LV VWDWH FRPSXOVLRQ WHVW    86 IDOODFLRXV +HUH XQOLNH WKH LQGLYLGXDO LQGXVWULDO GXPSWUXFN GULYHU ZKRVH    6&W   /(GG   V\PELRWLF UHODWLRQVKLS WUXFN PLJKW QRW EH DEOH WR H[FHHG  PLOHV SHU KRXU SULYDWH LQGLYLGXDOV WHVW  DUH FRQFHSWXDOO\ LQFDSDEOH RI LPSRVLQJ WD[HV OLFHQVHV DQG SXQLVKPHQWV  &KDSPDQY7KH+LJEHH&RPSDQ\ 1R 1R &KDSPDQY7KH+LJEHH&RPSDQ\  LQWHUQDOTXRWDWLRQRPLWWHGFLWLQJLQWHUDOLD0DKRQH FHUW $PHUFKDQWjVGHWHQWLRQRISHUVRQVVXVSHFWHGRIVWHDOLQJ GHQLHG6&W  $GDPVH[UHO+DUULVY%R\ VWRUH SURSHUW\ VLPSO\ LV QRW DQ DFWLRQ H[FOXVLYHO\ 6FRXWVRI$P&KLFNDVDZ&RXQFLO)G WK DVVRFLDWHG ZLWK WKH VWDWH  ([SHULHQFH WHDFKHV WKDW WKH &LU  VDPHFLWLQJXQGHUWKHIXOODQG PXVW GHPRQVWUDWH WKDW WKHUH LV D VXIILFLHQWO\ FORVH QH[XV HTXDO EHQHILW FODXVH@ LV XQWHQDEOH DQG DV D UHVXOW LW LV EHWZHHQWKHJRYHUQPHQWDQGWKHSULYDWHSDUW\jVFRQGXFWVR IULYRORXVl 6WHUOLQJY.D]PLHUF]DN)6XSS WKDWWKHFRQGXFWPD\EHIDLUO\DWWULEXWHGWRWKHVWDWHLWVHOI6HH 1',OO /HZLVYs&3HQQH\&R)6XSS :RORWVN\  )G DW  VHH DOVR %UHQWZRRG $FDG Y  ''HO 6SHQFHUY&DVDYLOOD)6XSS 7HQQHVVHH6HFRQGDU\6FK$WKOHWLF$VVjQ86  6'1<  m0RVWRIWKHGHFLVLRQVKDYHKHOG  6&W   /(GG    QRWLQJ WKDW D WKDWVWDWHDFWLRQLVUHTXLUHGWRVWDWHDFODLPXQGHUWKHµHTXDO FKDOOHQJHGDFWLYLW\PD\EHVWDWHDFWLRQmZKHQLWLVHQWZLQHG EHQHILWjDQGµOLNHSXQLVKPHQWjFODXVHVRI†l %URRNVY ZLWKJRYHUQPHQWDOSROLFLHVRUZKHQJRYHUQPHQWLVHQWZLQHG $%&,QF)6XSS 1'2KLR YDFDWHG LQ>LWV@PDQDJHPHQWRUFRQWUROl  LQWHUQDOTXRWDWLRQRPLWWHG  LQ SDUW RQ RWKHU JURXQGV  )G  WK &LU   /D\QHY6DPSOH\)G WK&LU  KROGLQJ 5RFKRQY'LOORQ)6XSS 1',OO  WKDWRIILFHUZKRVKRWSODLQWLIIZKLOHRIILFHUZDVRIIGXW\DFWHG 7KRPSVRQ Y :LVH *HQHUDO +RVS  ) 6XSS   XQGHUFRORURIVWDWHODZEHFDXVHRIILFHUjVDXWKRULW\WRFDUU\ :' 9D   DIIjG  )G  WK &LU   ZHDSRQ GHULYHG IURP KLV VWDWXV DV SROLFH RIILFHU FRQIOLFW 3URYLVLRQDO*RYjWRI5HSXEOLFRI1HZ$IULNDY$%&,QF EHWZHHQ RIILFHU DQG SODLQWLII DURVH RXW RI RIILFHUjV RIILFLDO )6XSS ''& (JJOHVWRQY3ULQFH GXWLHV DQG SODLQWLII WKUHDWHQHG RIILFHU LQ RIILFHUjV RIILFLDO (GZDUG9ROXQWHHU5HVFXH6TXDG,QF)6XSS FDSDFLW\  6WHQJOH Y %HOFKHU  )G   WK &LU  ('9D DIIj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l  :LOPLQJWRQ 3DUNLQJ $XWK  86   6&W   /(GG  $OWKRXJKmLWLVSRVVLEOHWRGHWHUPLQH 7KH ULJKWV LQ VXEVHFWLRQ D  DUH QRW DOO RI WKH VDPH LON ZKHWKHUDSHUVRQDFWHGXQGHUFRORURIVWDWHODZDVDPDWWHURI KRZHYHU VRPH SURWHFW DJDLQVW LQIUDFWLRQV WKDW PD\ EH ODZ WKHUH PD\ UHPDLQ LQ VRPH LQVWDQFHV XQDQVZHUHG FRPPLWWHGE\ERWKSXEOLFDQGSULYDWHDFWRUVDQGVRPHSURWHFW TXHVWLRQVRIIDFWUHJDUGLQJWKHSURSHUFKDUDFWHUL]DWLRQRIWKH DJDLQVWFRQGXFWWKDWQHFHVVDULO\LQYRNHVDQ\VWDWHDFWLRQ)RU DFWLRQV IRU WKH MXU\ WR GHFLGHl  /D\QH  )G DW  H[DPSOH ERWK SULYDWH DQG SXEOLF EHLQJV PD\ HQWHU LQWR LQWHUQDOFLWDWLRQVDQGTXRWDWLRQVRPLWWHG  FRQWUDFWV,QIDFWm>L@WLVXVXDOO\ZLWKDQRWKHULQGLYLGXDOQRW WKHVWDWHWKDWDEODFNSHUVRQZRXOGVHHNWRPDNHDFRQWUDFW +HUH WKH 'LOODUGjV VHFXULW\ RIILFHU ZKR VWRSSHG DQG LWLVWKDWRWKHULQGLYLGXDOjVUDFLDOO\PRWLYDWHGUHIXVDOWRPDNH VHDUFKHG&KDSPDQZDVDQRIIGXW\VKHULII VGHSXW\ZHDULQJ D FRQWUDFW ZKLFK FDQ FDXVH KDUP WR WKH EODFN SHUVRQl KLVRIILFLDOVKHULIIjVGHSDUWPHQWXQLIRUPEDGJHDQGVLGHDUP 0DKRQH Y :DGGOH  )G   G &LU  0RUHRYHUWKH'LOODUGjVVHFXULW\RIILFHUZDVREOLJDWHGWRREH\ GLFWD   7KXV VXEVHFWLRQ F  PD\ ORJLFDOO\ DSSO\ WR WKH 'LOODUGjVSROLFLHVDQGUHJXODWLRQVZKLOHRQGXW\DWWKHVWRUH FRQWUDFWFODXVHRI D  $OWKRXJKWKHVWDWHSOD\HGQRSDUWLQWKHSURPXOJDWLRQRIWKHVH SROLFLHVWKHLUVWULSVHDUFKLQJSURYLVLRQGLUHFWO\LPSOLFDWHVWKH WKHVKRSSHUjV@SHUVRQFDOOWKHSROLFHl &LUFXLW 'XULQJWKHLQFLGHQWDWLVVXHWKH'LOODUGjVVHFXULW\RIILFHU 7KH ZRUGV mIXOO DQG HTXDO EHQHILW RI DOO ODZV DQG GLGQRWUHSUHVHQWKLPVHOIDVDSROLFHRIILFHUWKUHDWHQWRDUUHVW SURFHHGLQJV IRU WKH VHFXULW\ RI SHUVRQV DQG SURSHUW\l &KDSPDQZDYHKLVEDGJHRUZHDSRQRUHVWDEOLVKDQ\FRQWDFW HPSKDVLVVXSSOLHG RQWKHRWKHUKDQGVXJJHVWDFRQFHUQ ZLWKWKHVKHULII VGHSDUWPHQW+HGLGKRZHYHULQLWLDWHDVWULS ZLWKUHODWLRQVEHWZHHQWKHLQGLYLGXDODQGWKHVWDWHQRW VHDUFKE\UHTXLULQJ&KDSPDQWRHQWHUDILWWLQJURRPZLWKWKH EHWZHHQWZRLQGLYLGXDOV7KHVWDWHQRWWKHLQGLYLGXDO VDOHV PDQDJHU WR LQVSHFW KHU FORWKLQJ  %HFDXVH 'LOODUGjV LVWKHVROHVRXUFHRIODZDQGLWLVRQO\WKHVWDWHDFWLQJ SROLF\PDQGDWHVSROLFHLQWHUYHQWLRQLQVWULSVHDUFKVLWXDWLRQV WKURXJKLWVDJHQWVQRWWKHSULYDWHLQGLYLGXDOZKLFKLV DUHDVRQDEOHMXU\FRXOGYHU\ZHOOILQGWKDWWKHLQLWLDWLRQRID FDSDEOHRIGHQ\LQJWREODFNVWKHIXOODQGHTXDOEHQHILWRI VWULS VHDUFK E\ DQ DUPHG XQLIRUPHG VKHULIIjV GHSXW\ WKH ODZ  7KXV ZKLOH SULYDWH GLVFULPLQDWLRQ PD\ EH FRQVWLWXWHGDQDFWWKDWPD\IDLUO\EHDWWULEXWHGWRWKHVWDWH LPSOLFDWHG E\ WKH FRQWUDFW FODXVH RI VHFWLRQ  WKH $GGLWLRQDOO\LI&KDSPDQGLGQRWIHHOIUHHWROHDYHDVDUHVXOW FRQFHSW RI VWDWH DFWLRQ LV LPSOLFLW LQ WKH HTXDO EHQHILW RIWKHVHFXULW\RIILFHUjVVKHULIIjVXQLIRUPKLVEDGJHRUKLV FODXVH VLGHDUPDUHDVRQDEOHMXU\FRXOGILQGWKHGHWHQWLRQZDVDWDFLW DUUHVWDQGIDLUO\DWWULEXWDEOHWRWKHVWDWH ,GDW GLFWD  (YHU\FRXUWRIDSSHDOVWKDWKDVFRQVLGHUHGWKLVLVVXHERWK SULRUDQGVXEVHTXHQWWRWKHDPHQGPHQWKDVVKDUHGWKH  0DKRQH FRXUWjV YLHZ  6HH E@HFDXVHWKHVWDWHLVWKHVROHVRXUFHRIWKHODZLWLVRQO\WKH WKDW VKH ZDV VWULS VHDUFKHG XQGHU WKH 'LOODUGjV SROLF\ VWDWH WKDW FDQ GHQ\ WKH IXOO DQG HTXDO EHQHILW RI WKH ODZl  &KDSPDQY7KH+LJEHH&RPSDQ\ 1R 1R &KDSPDQY7KH+LJEHH&RPSDQ\  D 6WDWHPHQWRIHTXDOULJKWV 7KHUHIRUHZHILQGWKDWWKHUHLVDJHQXLQHLVVXHRIPDWHULDO $OOSHUVRQVZLWKLQWKHMXULVGLFWLRQRIWKH8QLWHG6WDWHV IDFWDVWRZKHWKHUWKHVHFXULW\RIILFHUDFWHGXQGHUmFRORURI VKDOOKDYHWKHVDPHULJKWLQHYHU\6WDWHDQG7HUULWRU\WR VWDWHODZlZKHQKHDVNHG&KDSPDQWRHQWHUWKHILWWLQJURRP PDNH DQG HQIRUFH FRQWUDFWV WR VXH EH SDUWLHV JLYH ZLWKWKHVDOHVPDQDJHUVRWKDW&KDSPDQjVFORWKHVDQGSHUVRQ HYLGHQFHDQGWRWKHIXOODQGHTXDOEHQHILWRIDOOODZVDQG FRXOGEHVHDUFKHG SURFHHGLQJVIRUWKHVHFXULW\RISHUVRQVDQGSURSHUW\DV LVHQMR\HGE\ZKLWHFLWL]HQVDQGVKDOOEHVXEMHFWWROLNH ,,, SXQLVKPHQW SDLQV SHQDOWLHV WD[HV OLFHQVHV DQG H[DFWLRQVRIHYHU\NLQGDQGWRQRRWKHU )RUWKHIRUHJRLQJUHDVRQVZH5(9(56(DQG5(0$1' IRUIXUWKHUSURFHHGLQJVFRQVLVWHQWZLWKWKLVRSLQLRQ E m0DNHDQGHQIRUFHFRQWUDFWVlGHILQHG )RU SXUSRVHV RI WKLV VHFWLRQ WKH WHUP mPDNH DQG HQIRUFH FRQWUDFWVl LQFOXGHV WKH PDNLQJ SHUIRUPDQFH PRGLILFDWLRQ DQG WHUPLQDWLRQ RI FRQWUDFWV DQG WKH HQMR\PHQW RI DOO EHQHILWV SULYLOHJHV WHUPV DQG FRQGLWLRQVRIWKHFRQWUDFWXDOUHODWLRQVKLS F 3URWHFWLRQDJDLQVWLPSDLUPHQW 7KH ULJKWV SURWHFWHG E\ WKLV VHFWLRQ DUH SURWHFWHG DJDLQVWLPSDLUPHQWE\QRQJRYHUQPHQWDOGLVFULPLQDWLRQ DQGLPSDLUPHQWXQGHUFRORURI6WDWHODZ  86&$ †   :HVW   HPSKDVLV DGGHG  &RQJUHVV DPHQGHG †  LQ  E\ DGGLQJ VXEVHFWLRQV E DQG F DQGGHVLJQDWLQJWKHRULJLQDOVHFWLRQDVVXEVHFWLRQ D 3XE/†6WDW    &KDSPDQjVDUJXPHQWKLQJHVRQVXEVHFWLRQ F ,GRQRW GLVDJUHH WKDW VXEVHFWLRQ F  VWDQGLQJ DORQH SODLQO\ VWDWHV m>W@KHULJKWVSURWHFWHGE\WKLVVHFWLRQDUHSURWHFWHGDJDLQVW LPSDLUPHQWE\QRQJRYHUQPHQWDOGLVFULPLQDWLRQl5HDGLQ LVRODWLRQVXEVHFWLRQ F LVXQDPELJXRXV%XWVXEVHFWLRQ F UHTXLUHVRQHWRORRNHOVHZKHUHoSUHVXPDEO\VXEVHFWLRQ D oWR GHWHUPLQHZKLFKmULJKWVlDUHSURWHFWHGIURPQRQJRYHUQPHQWDO GLVFULPLQDWLRQ&I/,() + &$57(5 7+20$6 ) %85.( 5($621 ,1 /$:  /RQJPDQWKHG  m(YHQZKHQ ZRUGV LQ LVRODWLRQ GR VHHP XQDPELJXRXV WKH SURFHVV RI  &KDSPDQY7KH+LJEHH&RPSDQ\ 1R 1R &KDSPDQY7KH+LJEHH&RPSDQ\  BBBBBBBBBBBBBB /DNH&RXQW\Y5ROOLQV86  ,QRWKHU ZRUGV WKH SODLQ PHDQLQJ FRPPDQG RI OLWHUDOQHVV LV ',66(17 QRQHWKHOHVV VXEMHFW WR ERWK LQWHUQDO DQG H[WHUQDO FRQWH[W BBBBBBBBBBBBBB ',&.(5621VXSUDDW VWDWLQJWKDWWKHSODLQPHDQLQJUXOH GRHV m>Q@RW TXLWHl GHPDQG OLWHUDOQHVV mEHFDXVH LQWHUQDO 68+5+(,15,&+&LUFXLWsXGJHGLVVHQWLQJ FRQWH[WLVQRWH[FOXGHGDQGH[WHUQDOFRQWH[WPD\EHWDNHQ LQWR DFFRXQW WR WKH H[WHQW RI ZHLJKLQJ WKH FKDQFHV RI , DEVXUGLW\l  ,I WKHUH LV D ILUVW SULQFLSOH DPRQJ FDQRQV RI VWDWXWRU\ 7KHPDMRULW\DFNQRZOHGJHVWKDWWKHmSODLQODQJXDJHlUXOH LQWHUSUHWDWLRQLWLVWKDWDVWDWXWHLVWREHHQIRUFHGDFFRUGLQJWR LVVXEMHFWWRH[FHSWLRQV6HH0DM2SDW,WVHHVQRQHHGWR WKHSODLQPHDQLQJRILWVWHUPV6HH8QLWHG6WDWHVY5RQ3DLU UHVRUW WR WKRVH H[FHSWLRQV KRZHYHU EHFDXVH LW ILQGV WKDW (QWHUV,QF86  9HUJRVY*UHJJjV †LVXQDPELJXRXVLQWKDWVXEVHFWLRQ F VWDWHVWKDWmWKH (QWHUV ,QF  )G   WK &LU    7R VRPH ULJKWV SURWHFWHG E\ WKLV VHFWLRQ DUH mSURWHFWHG DJDLQVW H[WHQWWKRXJKWKHSODLQPHDQLQJUXOHLVDWDXWRORJ\m:RUGV LPSDLUPHQWE\QRQJRYHUQPHQWDOGLVFULPLQDWLRQlDQGRQHRI VKRXOG EH UHDG DV VD\LQJ ZKDW WKH\ VD\l   6HH 5((' WKHULJKWVHQXPHUDWHGLQVXEVHFWLRQ D mH[SOLFLWO\SURWHFWVWKH ',&.(5621 7+( ,17(535(7$7,21 $1' $33/,&$7,21 2) ULJKWµWRWKHIXOODQGHTXDOEHQHILWRIDOOODZVDQGSURFHHGLQJV 67$787(6 /LWWOH%URZQ &R ,QRWKHUZRUGV IRUWKHVHFXULW\RISHUVRQVDQGSURSHUW\DVLVHQMR\HGE\ZKLWH m>W@KHUXOHWHOOVXVWRUHVSHFWPHDQLQJEXWLWGRHVVRZLWKRXW FLWL]HQVjl   )URP WKLV WKH PDMRULW\ LQIHUV WKDW WKLV ULJKW LV GLVFORVLQJZKDWWKHVSHFLILFPHDQLQJLVl,G7KXVDVRQH mµSURWHFWHG DJDLQVW LPSDLUPHQW E\ QRQJRYHUQPHQWDO FRPPHQWDWRUKDVREVHUYHG GLVFULPLQDWLRQjl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m,QDOOFDVHVRIVWDWXWRU\FRQVWUXFWLRQWKHVWDUWLQJSRLQWLV WKHODQJXDJHHPSOR\HGE\&RQJUHVVl9HUJRV)G /LNHPRVWUXOHVLQODZKRZHYHUWKLVEHGURFNSULQFLSOHRI  WK &LU   LQWHUQDO TXRWDWLRQV PDUNV RPLWWHG  VWDWXWRU\ FRQVWUXFWLRQ LV TXDOLILHG DV UHIOHFWHG LQ DQ HDUO\ 6HFWLRQDVDPHQGHGLQUHDGVDVIROORZV LQYRFDWLRQRIWKHGRFWULQH ,IWKHZRUGVFRQYH\DGHILQLWHPHDQLQJZKLFKLQYROYHV QRDEVXUGLW\QRUDQ\FRQWUDGLFWLRQRIRWKHUSDUWVRIWKH LQVWUXPHQWWKHQWKDWPHDQLQJDSSDUHQWRQWKHIDFHRIWKH LQVWUXPHQWPXVWEHDFFHSWHGDQGQHLWKHUWKHFRXUWVQRU WKHOHJLVODWXUHKDYHWKHULJKWWRDGGWRLWRUWDNHIURPLW