Wickline v. Mitchell

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 :,//,$0 ' :,&./,1( ; 3HWLWLRQHU$SSHOODQW    1R Y  !  %(77< 0,7&+(//:DUGHQ  5HVSRQGHQW$SSHOOHH  1 $SSHDOIURPWKH8QLWHG6WDWHV'LVWULFW&RXUW IRUWKH6RXWKHUQ'LVWULFWRI2KLRDW&ROXPEXV 1RnsDPHV/*UDKDP'LVWULFWsXGJH $UJXHG6HSWHPEHU 'HFLGHGDQG)LOHGsDQXDU\ %HIRUH0$57,1&KLHI&LUFXLWsXGJH6,/(5DQG '$8*+75(<&LUFXLWsXGJHV BBBBBBBBBBBBBBBBB &2816(/ $5*8('  'DYLG & 6WHEELQV &ROXPEXV 2KLR IRU $SSHOODQW  1RUPDQ ( 3ODWH $77251(< *(1(5$/j6 2)),&( 2) 2+,2 &$3,7$/ &5,0(6 6(&7,21 &ROXPEXV 2KLR IRU $SSHOOHH  21 %5,()  'DYLG & 6WHEELQV&ROXPEXV2KLR%HQVRQ$:ROPDQ:2/0$1 *(16+$)7 *(//0$1&ROXPEXV2KLRIRU$SSHOODQW 1RUPDQ(3ODWH$77251(<*(1(5$/j62)),&(2)   :LFNOLQHY0LWFKHOO 1R 1R :LFNOLQHY0LWFKHOO  2+,2&$3,7$/&5,0(66(&7,21&ROXPEXV2KLRIRU ZHLJK WKH DJJUDYDWLQJ FLUFXPVWDQFHV  ,Q DGGLWLRQ WKH $SSHOOHH VXSUHPH FRXUW PHUJHG WKH GXSOLFDWLYH DJJUDYDWLQJ FLUFXPVWDQFHV DQG LQGHSHQGHQWO\ ZHLJKHG WKH PHUJHG BBBBBBBBBBBBBBBBB DJJUDYDWLQJ FLUFXPVWDQFH DJDLQVW WKH PLWLJDWLQJ IDFWRUV $FFRUGLQJO\ QR FRQVWLWXWLRQDO YLRODWLRQ LV VWDWHG  )R[ Y 23,1,21 &R\OH )G WK&LU FHUWGHQLHG BBBBBBBBBBBBBBBBB 86/:  86 2FW    1R   :LFNOLQHjVFODLPWKDWWKH2KLR6XSUHPH&RXUWIDLOHGWRJUDQW 6,/(5&LUFXLWsXGJH3HWLWLRQHU:LOOLDP':LFNOLQHDQ KLPPHDQLQJIXOSURSRUWLRQDOLW\UHYLHZRIKLVGHDWKVHQWHQFH 2KLRGHDWKURZLQPDWHDSSHDOVWKHGHQLDORIKLV5XOH H DOVRIDLOV%HFDXVHmSURSRUWLRQDOLW\UHYLHZLVQRWUHTXLUHGE\ PRWLRQ WR DOWHU RU DPHQG WKH GLVWULFW FRXUWjV MXGJPHQW WKH&RQVWLWXWLRQVWDWHVKDYHJUHDWODWLWXGHLQGHILQLQJWKHSRRO GLVPLVVLQJKLVSHWLWLRQIRUDZULWRIKDEHDVFRUSXV)RUWKH RIFDVHVXVHGIRUFRPSDULVRQl%XHOO)GDW,Q IROORZLQJUHDVRQVZH$)),50 OLPLWLQJSURSRUWLRQDOLW\UHYLHZWRSUHYLRXVFDVHVLQZKLFKWKH GHDWKSHQDOW\KDVEHHQLPSRVHGWKH2KLR6XSUHPH&RXUWKDV ,%$&.*5281' DFWHGZLWKLQWKHZLGHODWLWXGHDOORZHG6HHLG7KHUHIRUHWKH :LFNOLQH ZDV FRQYLFWHG E\ D WKUHHMXGJH FRXUW RI WZR 2KLR 6XSUHPH &RXUW GLG QRW HUU LQ IDLOLQJ WR FRPSDUH FRXQWVRIDJJUDYDWHGPXUGHUIRUWKHGHDWKVRI&KULVWRSKHU :LFNOLQHjVVHQWHQFHWRRWKHUFDVHVLQZKLFKWKHGHDWKSHQDOW\ DQG 3HJJ\ /HUFK  7KH SDQHO VHQWHQFHG :LFNOLQH WR OLIH ZDVQRWLPSRVHG LPSULVRQPHQWRQRQHFRXQWDQGWRGHDWKRQWKHRWKHU$IWHU $)),50(' XQVXFFHVVIXO GLUHFW DSSHDOV DQG VWDWH SRVWFRQYLFWLRQ SURFHHGLQJV :LFNOLQH ILOHG D SHWLWLRQ IRU D ZULW RI KDEHDV FRUSXVSXUVXDQWWR86&†)LQGLQJWKDW:LFNOLQHjV IRUW\WZRFODLPVZHUHHLWKHUSURFHGXUDOO\GHIDXOWHGRUODFNHG VXIILFLHQWPHULWWRZDUUDQWJUDQWLQJWKHZULWWKHGLVWULFWFRXUW GLVPLVVHGKLVSHWLWLRQ%RWK:LFNOLQHDQGUHVSRQGHQW WKH m6WDWHl  ILOHG PRWLRQV WR DOWHU RU DPHQG WKH MXGJPHQW SXUVXDQWWR)HG5&LY3 H 7KHGLVWULFWFRXUWJUDQWHG WKH6WDWHjVPRWLRQDQGDPHQGHGWKHMXGJPHQWWRKROGWKDWWKH $QWLWHUURULVPDQG(IIHFWLYH'HDWK3HQDOW\$FWRI3XE / 1R   6WDW    m$('3$l  LV DSSOLFDEOH WR :LFNOLQHjV SHWLWLRQ  :LFNOLQHjV 5XOH  H PRWLRQZDVGHQLHG ,,67$1'$5'2)5(9,(: $ $('3$ ,QDKDEHDVSURFHHGLQJWKLVFRXUWUHYLHZVDGLVWULFWFRXUWjV OHJDOFRQFOXVLRQVGHQRYRDQGLWVIDFWXDOILQGLQJVIRUFOHDU HUURU/XFDVY2j'HD)G WK&LU   :LFNOLQHY0LWFKHOO 1R 1R :LFNOLQHY0LWFKHOO  &RXUWUHMHFWHG:LFNOLQHjV%UDG\ FODLPVDVGLGWKHGLVWULFW %HFDXVH:LFNOLQHILOHGKLVKDEHDVSHWLWLRQRQ0D\ FRXUW%RWKWKHGLVWULFWFRXUWDQGWKLVFRXUWGHFOLQHGWRJUDQW DIWHU WKH HIIHFWLYH GDWH RI $('3$ WKLV FRXUW UHYLHZV WKH D FHUWLILFDWH RI DSSHDODELOLW\ DV WR WKH %UDG\ FODLPV SHWLWLRQXQGHUWKHVWDQGDUGVVHWIRUWKLQ$('3$6HH/LQGK GHPRQVWUDWLQJWKDW:LFNOLQHKDVIDLOHGWRPDNHmDVXEVWDQWLDO Y0XUSK\86  :LOOLDPVY&R\OH VKRZLQJRIWKHGHQLDORIDFRQVWLWXWLRQDOULJKWl86& )G WK&LU  m>$@IHGHUDOKDEHDVFRUSXV †  F    $Q\ FRQVWLWXWLRQDO HUURUV FRQVLGHUHG FDVH LV ILOHG RU SHQGLQJ IRU WKH SXUSRVHV RI /LQGK DQG WKH FXPXODWLYHO\ZHUHQRWVRJUHDWDVWRUHQGHU:LFNOLQHjVWULDO $('3$RQO\ZKHQWKHSHWLWLRQIRUWKHZULWLVILOHGl $V IXQGDPHQWDOO\ XQIDLU RU KLV VHQWHQFH DQG FRQYLFWLRQ DPHQGHG86&† G SURYLGHVDVIROORZV XQUHOLDEOH $QDSSOLFDWLRQIRUDZULWRIKDEHDVFRUSXVRQEHKDOIRID :LFNOLQHjVYDULRXVDUJXPHQWVWKDWWKH2KLRGHDWKSHQDOW\ SHUVRQ LQ FXVWRG\ SXUVXDQW WR WKH MXGJPHQW RI D 6WDWH VFKHPHLVXQFRQVWLWXWLRQDOOLNHZLVHIDLO+LVDVVHUWLRQVWKDW FRXUWVKDOOQRWEHJUDQWHGZLWKUHVSHFWWRDQ\FODLPWKDW WKHVWDWXWHFUHDWHVDPDQGDWRU\GHDWKSHQDOW\DQGDOORZVWULDO ZDVDGMXGLFDWHGRQWKHPHULWVLQ6WDWHFRXUWSURFHHGLQJV FRXUWVWRDSSO\WKHGHDWKSHQDOW\LQDQDUELWUDU\FDSULFLRXV XQOHVVWKHDGMXGLFDWLRQRIWKHFODLPo DQGGLVFULPLQDWRU\PDQQHUZHUHUHMHFWHGLQ%XHOOY0LWFKHOO  )G   WK &LU    :LWK UHJDUG WR   UHVXOWHG LQ D GHFLVLRQ WKDW ZDV FRQWUDU\ WR RU :LFNOLQHjVDUJXPHQWWKDWWKHVWDWXWHJUDQWVSURVHFXWRUVEURDG LQYROYHG DQ XQUHDVRQDEOH DSSOLFDWLRQ RI FOHDUO\ GLVFUHWLRQDVWRZKHWKHUWRVHHNFDSLWDOLQGLFWPHQWVWKHUHE\ HVWDEOLVKHG)HGHUDOODZDVGHWHUPLQHGE\WKH6XSUHPH DOORZLQJDUELWUDU\FKDUJLQJGHFLVLRQVWKH6XSUHPH&RXUWKHOG &RXUWRIWKH8QLWHG6WDWHVRU LQ*UHJJY*HRUJLD86  WKDWWKHVH mGLVFUHWLRQDU\ VWDJHVl GR QRW LPSOLFDWH WKH FRQFHUQV   UHVXOWHG LQ D GHFLVLRQ WKDW ZDV EDVHG RQ DQ H[SUHVVHG LQ )XUPDQ Y *HRUJLD  86    XQUHDVRQDEOH GHWHUPLQDWLRQ RI WKH IDFWV LQ OLJKW RI WKH :LFNOLQHjV FRQWHQWLRQ WKDW 2KLRjV GHDWK SHQDOW\ VFKHPH HYLGHQFHSUHVHQWHGLQWKH6WDWHFRXUWSURFHHGLQJ HQFRXUDJHVFDSLWDOO\FKDUJHGGHIHQGDQWVWRZDLYHWKHLUULJKW WRDMXU\WULDODQGWRSOHDGJXLOW\LVSURFHGXUDOO\GHIDXOWHG DQG LQ WKH DOWHUQDWLYH IDLOV EHFDXVH   :LFNOLQH GLG QRW SOHDGJXLOW\DQG  WKH6XSUHPH&RXUWKDVIRXQGWKDWSOHDV DUHQRWLQYDOLGVLPSO\EHFDXVHRIWKHSRVVLELOLW\RIWKHGHDWK  :LFNOLQHjV ILUVW LVVXH RQ DSSHDO LV ZKHWKHU WKH GLVWULFW FRXUW HUUHG LQ SHQDOW\  6HH %UDG\ Y 8QLWHG 6WDWHV  86   DSSO\LQJ $('3$ WR KLV KDEHDV SHWLWLRQ +H DUJXHV WKDW EHFDXVH KH ILOHG   D QRWLFH RI LQWHQW DQG D PRWLRQ IRU DSSRLQWPHQW RI FRXQVHO SULRU WR $SULO   $('3$jV HIIHFWLYH GDWH KLV SHWLWLRQ ZDV SHQGLQJ RQ WKDW :LFNOLQHjV DUJXPHQWV WKDW WKH WULDO FRXUW LPSURSHUO\ GDWH 7KH 6L[WK &LUFXLW UHMHFWHG WKLV DUJXPHQW LQ :LOOLDPV Y &R\OH   WK &LU   :LFNOLQHjV DUJXPHQW WKDW WKH 6L[WK &LUFXLWjV FRQVLGHUHG GXSOLFDWLYH DJJUDYDWLQJ FLUFXPVWDQFHV DQG WKDW )G UHDVRQLQJ LQ :LOOLDPV KDV EHHQ RYHUUXOHG E\ D VXEVHTXHQW 6XSUHPH &RXUW 2KLRjVDSSHOODWHUHYLHZGLGQRWFXUHDQ\HUURUDUHXQDYDLOLQJ FDVH 6ODFN Y 0F'DQLHO  86    ZDV UHMHFWHG LQ D UHFHQW %RWK 6XSUHPH &RXUW SUHFHGHQW DQG 2KLR ODZ DOORZ 6L[WK &LUFXLW GHDWK SHQDOW\ FDVH &RRH\ Y &R\OH  )G  WK &LU UHZHLJKLQJ E\ WKH DSSHOODWH FRXUWV ZKHQ WKH VHQWHQFHU KDV   SHWLWLRQ IRU FHUW ILOHG 86 6HSW   1R   FRQVLGHUHGDQLQYDOLGDJJUDYDWLQJFLUFXPVWDQFH+HUHWKH $FFRUGLQJO\ WKLV FRXUW ZLOO IROORZ :LOOLDPV DQG DSSO\ $('3$ WR :LFNOLQHjV KDEHDV FRUSXV SHWLWLRQ 6HH DOVR 0DUWLQ Y 0LWFKHOO  )G 2KLR6XSUHPH&RXUWDVVXPHGWKDWWKHWKUHHMXGJHSDQHOGLG   WK &LU   FHUW GHQLHG 1R   :/ QRW mDUWLILFLDOO\ LQIODWHl WKH DJJUDYDWLQJ FLUFXPVWDQFHV  86 1RY   KROGLQJ $('3$ DSSOLFDEOH ZKHQ SHWLWLRQ LPSOLFLWO\FRQFOXGLQJWKDWWKHWULDOFRXUWGLGQRWLPSURSHUO\ ZDV ILOHG LQ sXQH  EXW PRWLRQ WR VWD\ H[HFXWLRQ ZDV ILOHG LQ 1RYHPEHU    :LFNOLQHY0LWFKHOO 1R 1R :LFNOLQHY0LWFKHOO  86&† G m7KHWKUHVKROGTXHVWLRQXQGHU$('3$ )LQDOO\:LFNOLQHUDLVHVDKRVWRIRWKHUFODLPVRQDSSHDODOO LVZKHWKHU>WKHSHWLWLRQHU@VHHNVWRDSSO\DUXOHRIODZWKDW RI ZKLFK DUH XQDYDLOLQJ  +LV FODLPV RI SURVHFXWRULDO ZDVFOHDUO\HVWDEOLVKHGDWWKHWLPHKLVVWDWHFRXUWFRQYLFWLRQ PLVFRQGXFWDUHSURFHGXUDOO\GHIDXOWHGDQGLQWKHDOWHUQDWLYH EHFDPHILQDOl:LOOLDPVY7D\ORU86   IDLORQWKHPHULWV6SHFLILFDOO\:LFNOLQHDVVHUWVWKDWGXULQJ 7KHSKUDVHmFOHDUO\HVWDEOLVKHG)HGHUDOODZDVGHWHUPLQHGE\ WKHSHQDOW\SKDVHWKHSURVHFXWRU  LQIODPHGWKHSDVVLRQV WKH 6XSUHPH &RXUW RI WKH 8QLWHG 6WDWHVl UHIHUV WR mWKH DQG SUHMXGLFHV RI WKH WKUHHMXGJH SDQHO   FUHDWHG KROGLQJVDVRSSRVHGWRWKHGLFWDlRIWKH6XSUHPH&RXUW,G QRQVWDWXWRU\DJJUDYDWLQJFLUFXPVWDQFHVDQG  LPSURSHUO\ DW FRPPHQWHGRQKLVULJKWWRUHPDLQVLOHQW7KHILUVWDUJXPHQW IDLOVEHFDXVHWKHSURVHFXWRUjVVWDWHPHQWVDUHQRWOLNHO\WRKDYH % 3URFHGXUDO'HIDXOW PLVOHGWKHWKUHHMXGJHSDQHORUSUHMXGLFHG:LFNOLQH:LWK UHJDUG WR WKH VHFRQG DVVHUWLRQ HYHQ DVVXPLQJ WKDW WKH 7KHGLVWULFWFRXUWFRQFOXGHGWKDWPDQ\RI:LFNOLQHjVFODLPV SURVHFXWRUjVDUJXPHQWVZHUHLPSURSHUWKHSDQHOGLGQRWOLVW DUH SURFHGXUDOO\ GHIDXOWHG IRU IDLOXUH WR UDLVH WKHP DW WKH :LFNOLQHjV H[WHQVLYH FULPLQDO KLVWRU\ WKH DEVHQFH RI HDUOLHVW RSSRUWXQLW\ :KHQ D SHWLWLRQHU GHIDXOWV RQ KLV PLWLJDWLQJ IDFWRUV RU EHKDYLRU LQ SULVRQ DV DJJUDYDWLQJ mIHGHUDOFODLPVLQVWDWHFRXUWSXUVXDQWWRDQLQGHSHQGHQWDQG FLUFXPVWDQFHV:LFNOLQHjVWKLUGDVVHUWLRQIDLOVEHFDXVHWKH DGHTXDWHVWDWHSURFHGXUDOUXOHIHGHUDOKDEHDVUHYLHZRIWKH SURVHFXWRUjVUHIHUHQFHWRWKHXQVZRUQQDWXUHRIKLVWHVWLPRQ\ FODLPVLVEDUUHGXQOHVVWKHSULVRQHUFDQGHPRQVWUDWHFDXVHIRU ZDVLVRODWHGLVQRWOLNHO\WRKDYHPLVOHGWKHWKUHHMXGJHSDQHO WKH GHIDXOW DQG DFWXDO SUHMXGLFH     RU GHPRQVWUDWH WKDW RU SUHMXGLFHG KLP DQG GLG QRW UHQGHU WKH HQWLUH WULDO DQG IDLOXUH WR FRQVLGHU WKH FODLPV ZLOO UHVXOW LQ D IXQGDPHQWDO VHQWHQFLQJIXQGDPHQWDOO\XQIDLU)XUWKHUWKHSURVHFXWRUjV PLVFDUULDJHRIMXVWLFHl&ROHPDQY7KRPSVRQ86 LVRODWHGFRPPHQWUHJDUGLQJDQDEVHQFHRIUHPRUVHZDVQRW    PDQLIHVWO\LQWHQGHGWRUHIOHFWRQ:LFNOLQHjVIDLOXUHWRWHVWLI\ QRUZRXOGWKHSDQHOKDYHXQGHUVWRRGWKHVWDWHPHQWDVVXFK ,Q0DXSLQY6PLWK)G WK&LU WKLVFRXUW VHW IRUWK D IRXUVWHS DQDO\VLV IRU GHWHUPLQLQJ ZKHWKHU D :LFNOLQHFODLPVWKDWHYHQLIQRVLQJOHHUURULVVXIILFLHQWWR SHWLWLRQHUjV IHGHUDO FRQVWLWXWLRQDO FODLPV DUH EDUUHG E\ WKH PHULW JUDQWLQJ WKH ZULW WKH FXPXODWLYH HIIHFW RI WKH HUURUV SHWLWLRQHUjV IDLOXUH WR IROORZ D VWDWH SURFHGXUDO UXOH UHQGHUHG KLV WULDO IXQGDPHQWDOO\ XQIDLU  $FFRUGLQJ WR :LFNOLQHWKHFXPXODWLYHHIIHFWLVPRVWSHUYDVLYHZLWKUHVSHFW WRWKHGLVFRYHU\DQG%UDG\YLRODWLRQV7KH2KLR6XSUHPH  )LUVW WKH FRXUW PXVW GHWHUPLQH ZKHWKHU WKHUH LV D VWDWH SURFHGXUDO UXOH WKDW LV DSSOLFDEOH WR WKH SHWLWLRQHUjV FODLP DQG ZLWK ZKLFK WKH SHWLWLRQHU IDLOHG WR FRPSO\ ,G DW  m6HFRQG WKH FRXUW PXVW GHFLGH  ZKHWKHU WKH VWDWH FRXUWV DFWXDOO\ HQIRUFHG WKH VWDWH SURFHGXUDO VDQFWLRQl 2KLRjV FRQWHPSRUDQHRXV REMHFWLRQ UXOH UHTXLUHG :LFNOLQH WR REMHFW ,G 7KLUG WKH FRXUW PXVW GHWHUPLQH ZKHWKHU WKH VWDWH SURFHGXUDO UXOH mLV WR WKH SURVHFXWRUjV VWDWHPHQWV DW WULDO ZKLFK KH IDLOHG WR GR 7KH 2KLR DQ DGHTXDWH DQG LQGHSHQGHQW VWDWH JURXQG RQ ZKLFK WKH VWDWH FDQ UHO\ WR 6XSUHPH &RXUWjV UHYLHZ IRU SODLQ HUURU FRQVWLWXWHV HQIRUFHPHQW RI WKLV IRUHFORVH UHYLHZ RI D IHGHUDO FRQVWLWXWLRQDO FODLPl ,G LQWHUQDO TXRWDWLRQ SURFHGXUDO UXOH ZKLFK WKLV FRXUW KDV UHFRJQL]HG DV DQ DGHTXDWH DQG PDUNV RPLWWHG  m$ SURFHGXUDO UXOH LV DGHTXDWH RQO\ ZKHQ LW LV ILUPO\ LQGHSHQGHQW VWDWH JURXQG EDUULQJ IHGHUDO KDEHDV UHYLHZ +LQNOH Y HVWDEOLVKHG DQG UHJXODUO\ IROORZHG DW WKH WLPH LW ZDV DSSOLHG     >DQG LV@ 5DQGOH  )G   WK &LU   :LFNOLQH KDV IDLOHG WR DQ LQGHSHQGHQW EDVLV IRU GLVSRVLWLRQ RI D FDVH LI WKH VWDWH FRXUWV DFWXDOO\ GHPRQVWUDWH WKDW WKHUH LV D mUHDVRQDEOH SUREDELOLW\l WKDW EXW IRU KLV UHOLHG RQ WKH SURFHGXUDO EDUl :LOOLDPV Y &R\OH  )G   WK FRXQVHOjV IDLOXUH WR REMHFW WR WKH SURVHFXWRUj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m:KHWKHUDVWDWHFRXUWUHVWHGLWVKROGLQJRQSURFHGXUDOGHIDXOW LVDOVRSURFHGXUDOO\GHIDXOWHGEHFDXVHKHQHYHUSUHVHQWHGWKH VR DV WR EDU IHGHUDO KDEHDV UHYLHZ LV D TXHVWLRQ RI ODZl FODLPRQGLUHFWDSSHDOUDLVLQJLWIRUWKHILUVWWLPHLQKLVVWDWH UHYLHZHGGHQRYR&RPEVY&R\OH)G WK SRVWFRQYLFWLRQ SURFHHGLQJV  (YHQ LI WKLV FODLP ZDV QRW &LU 7KLVFRXUWORRNVWRWKHODVWH[SODLQHGVWDWHFRXUW SURFHGXUDOO\GHIDXOWHGWKH2KLR&RXUWRI$SSHDOVjDOWHUQDWLYH MXGJPHQWZKHQDQVZHULQJWKDWTXHVWLRQ,G UXOLQJWKDWWKHFODLPIDLOVRQWKHPHULWVLVQRWFRQWUDU\WRRU DQ XQUHDVRQDEOH DSSOLFDWLRQ RI WKH SUHMXGLFH SURQJ RI ,,,',6&866,21 6WULFNODQG $ ,QHIIHFWLYH$VVLVWDQFHRI&RXQVHO :LFNOLQH IXUWKHU DVVHUWV WKDW KH UHFHLYHG LQHIIHFWLYH DVVLVWDQFHRIDSSHOODWHFRXQVHO m,$$&l +LVFODLPVLQWKLV :KLOH:LFNOLQHDVVHUWVDQXPEHURIJURXQGVIRUUHOLHILQKLV UHJDUGDUHSURFHGXUDOO\GHIDXOWHGGXHWRKLVIDLOXUHWRFRPSO\ SHWLWLRQ WKH SDUWLHV IRFXVHG SULPDULO\ RQ RQH LVVXH DW RUDO ZLWKWKHUXOHVHWIRUWKLQ6WDWHY0XUQDKDQ1(G DUJXPHQWoDOOHJHGLQHIIHFWLYHDVVLVWDQFHRIWULDOFRXQVHO:H 2KLR   DQG FRGLILHG LQ 2KLR 5 $SS 3  %   ,Q ZLOOWKHUHIRUHDGGUHVVWKDWLVVXHILUVW:LFNOLQHFODLPVWKDW 0XUQDKDQWKH2KLR6XSUHPH&RXUWKHOGWKDW,$$&FODLPV KLVWULDOFRXQVHOZDVLQHIIHFWLYHLQVHYHUDODUHDVPRVWQRWDEO\ DUHQRWFRJQL]DEOHLQSRVWFRQYLFWLRQSURFHHGLQJVSXUVXDQWWR LQ WKH DOOHJHG IDLOXUH WR LQYHVWLJDWH RU SUHVHQW PLWLJDWLQJ 2KLR5HY&RGH†EXWPXVWEHUDLVHGLQDPRWLRQIRU HYLGHQFH  8QGHU 6WULFNODQG Y :DVKLQJWRQ  86  UHRSHQLQJEHIRUHWKHFRXUWRIDSSHDOVZLWKLQQLQHW\GD\VIURP   D YLRODWLRQ RI WKH ULJKW WR HIIHFWLYH DVVLVWDQFH RI MRXUQDOL]DWLRQRIWKHDSSHOODWHMXGJPHQWSXUVXDQWWR2KLR5 FRXQVHOKDVWZRFRPSRQHQWV $SS3 % :LFNOLQHIDLOHGWRFRPSO\ZLWK5XOH % VLQFHKHILOHGKLVPRWLRQWRUHRSHQRQ1RYHPEHU )LUVW WKH GHIHQGDQW PXVW VKRZ WKDW FRXQVHOjV VL[\HDUVDIWHUKLVDSSHOODWHMXGJPHQWZDVMRXUQDOL]HGWZR SHUIRUPDQFHZDVGHILFLHQW7KLVUHTXLUHVVKRZLQJWKDW \HDUVDIWHU0XUQDKDQZDVGHFLGHGDQGVL[WHHQPRQWKVDIWHU FRXQVHO PDGH HUURUV VR VHULRXV WKDW FRXQVHO ZDV QRW 5XOH % EHFDPHHIIHFWLYHDQGIDLOHGWRGHPRQVWUDWHJRRG IXQFWLRQLQJDVWKHmFRXQVHOlJXDUDQWHHGWKHGHIHQGDQWE\ FDXVHIRUWKDWGHOD\(YHQLI:LFNOLQHjV,$$&FODLPVZHUH WKH6L[WK$PHQGPHQW6HFRQGWKHGHIHQGDQWPXVWVKRZ QRW SURFHGXUDOO\ GHIDXOWHG KLV FODLPV IDLO RQ WKH PHULWV WKDW WKH GHILFLHQW SHUIRUPDQFH SUHMXGLFHG WKH GHIHQVH :LFNOLQH FRQWHQGV WKDW KLV DSSHOODWH FRXQVHO ZDV 7KLV UHTXLUHV VKRZLQJ WKDW FRXQVHOjV HUURUV ZHUH VR FRQVWLWXWLRQDOO\LQHIIHFWLYHIRUIDLOLQJWRUDLVHWKHIROORZLQJ VHULRXVDVWRGHSULYHWKHGHIHQGDQWRIDIDLUWULDODWULDO LVVXHV RQ GLUHFW DSSHDO    WKH WKUHHMXGJH SDQHOjV ZKRVHUHVXOWLVUHOLDEOH NQRZOHGJH RI LQDGPLVVLEOH SUHMXGLFLDO LQIRUPDWLRQ  H[WHQVLYHSUHMXGLFLDOPHGLDFRYHUDJHDQGWKHIDLOXUHWR ,G DW   5HYLHZ RI FRXQVHOjV SHUIRUPDQFH LV KLJKO\ UHTXHVW D FKDQJH RI YHQXH   DUELWUDU\ DQG FDSULFLRXV GHIHUHQWLDO DQG UHTXLUHV WKDW FRXUWV mLQGXOJH D VWURQJ DSSOLFDWLRQRIWKHGHDWKSHQDOW\  IDLOXUHWRUHTXHVWGHIHQVH SUHVXPSWLRQ WKDW FRXQVHOjV FRQGXFW IDOOV ZLWKLQ WKH ZLGH H[SHUWV   2KLR 6XSUHPH &RXUWjV DSSOLFDWLRQ RI D OHVVHU UDQJHRIUHDVRQDEOHSURIHVVLRQDODVVLVWDQFHl,GDW7R VWDQGDUGRISURRIIRUKDUPOHVVHUURUDQG  IDLOXUHWRSUHVHQW GHPRQVWUDWH WKDW FRXQVHOjV SHUIRUPDQFH ZDV GHILFLHQW D PLWLJDWLQJHYLGHQFH(DFKRIWKHVL[DOOHJHGO\RPLWWHGLVVXHV mGHIHQGDQWPXVWVKRZWKDWFRXQVHOjVUHSUHVHQWDWLRQIHOOEHORZ HLWKHUODFNVPHULWRUZDVUDLVHGE\DSSHOODWHFRXQVHORQGLUHFW DQ REMHFWLYH VWDQGDUG RI UHDVRQDEOHQHVVl  ,G DW   7R DSSHDO$VVXFK:LFNOLQHKDVIDLOHGWRVKRZWKDWKHZDV HVWDEOLVKSUHMXGLFHKHmPXVWVKRZWKDWWKHUHLVDUHDVRQDEOH GHQLHGHIIHFWLYHDVVLVWDQFHRIFRXQVHORQDSSHDO )G DW   :LFNOLQHY0LWFKHOO 1R 1R :LFNOLQHY0LWFKHOO  SUREDELOLW\WKDWEXWIRUFRXQVHOjVXQSURIHVVLRQDOHUURUVWKH % 2WKHU$UJXPHQWV UHVXOW RI WKH SURFHHGLQJ ZRXOG KDYH EHHQ GLIIHUHQW  $ UHDVRQDEOHSUREDELOLW\LVDSUREDELOLW\VXIILFLHQWWRXQGHUPLQH :LFNOLQHjVDOOHJDWLRQVWKDWKLVWULDOFRXQVHOZDVLQHIIHFWLYH FRQILGHQFHLQWKHRXWFRPHl,GDW7KHUHLVQRTXHVWLRQ LQRWKHUDUHDVDUHOLNHZLVHZLWKRXWPHULW+HFRQWHQGVWKDW WKDW 6WULFNODQG TXDOLILHV DV FOHDUO\ HVWDEOLVKHG IHGHUDO ODZ KLV FRXQVHO ZDV XQDEOH WR SUHSDUH IRU WULDO RU WR SURSHUO\ XQGHU$('3$:LOOLDPVY7D\ORU86DW DGYLVH KLP RQ WKH LVVXH RI MXU\ ZDLYHU GXH WR WKH VWDWHj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jV DVPLWLJDWLQJHYLGHQFH7KH2KLR6XSUHPH&RXUW UHMHFWHG DOOHJHGO\VXEVWDQGDUGSHUIRUPDQFH7KLVDVVHUWLRQLVZLWKRXW :LFNOLQHjV DUJXPHQW QRWLQJ WKDW XQOLNH PRVW FDVHV WKH PHULWLQWKDW  WKHUHFRUGGHPRQVWUDWHVWKDWWULDOFRXQVHOGLG UHFRUGFRQWDLQHGDVWDWHPHQWRIFRXQVHOjVVWUDWHJ\ZKLFKOHG QRW FRQFHGH WKH HOHPHQW RI SULRU FDOFXODWLRQ DQG GHVLJQ WKHFRXUWWRFRQFOXGHWKDWmWKHPDQQHULQZKLFKDSSHOODQWZDV  :LFNOLQHKDVIDLOHGWRSUHVHQWDQ\HYLGHQFHWRRYHUFRPH UHSUHVHQWHG DW WKH PLWLJDWLRQ SKDVH ZDV WKH UHVXOW RI DQ WKH SUHVXPSWLRQ WKDW WKH WKUHHMXGJH SDQHO LJQRUHG DQ\ LQIRUPHGDQGWDFWLFDOVWUDWHJ\l6WDWHY:LFNOLQH1(G LPSURSHUHYLGHQFHFRXQVHOIDLOHGWRUHGDFWIURPKLV%UDG\   2KLR    7KH FRXUW GLG QRW ILQG WKDW WKH PRWLRQDQG  :LFNOLQHKDVQRWVKRZQWKDWKLVFRXQVHOjV VHQWHQFLQJ GHFLVLRQ ZRXOG KDYH GLIIHUHG HYHQ DVVXPLQJ FRQGXFW IHOO EHORZ D VWDQGDUG RI REMHFWLYH UHDVRQDEOHQHVV FRXQVHOjVSHUIRUPDQFHZDVGHILFLHQW UHJDUGLQJ KLV GHFLVLRQ WR FDOO sD\ 0F&DUW\ DV D ZLWQHVV :LFNOLQHj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m>:@KHQDFOLHQWIDFHVWKHSURVSHFWRIEHLQJSXW  WR GHDWK XQOHVV FRXQVHO REWDLQV DQG SUHVHQWV VRPHWKLQJ LQ :LFNOLQHjV FODLPV SXUVXDQW WR %UDG\ Y 0DU\ODQG  86  PLWLJDWLRQ PLQLPDO VWDQGDUGV UHTXLUH VRPH LQYHVWLJDWLRQl   DUH QRW EHIRUH WKLV FRXUW 7KH 2KLR 6XSUHPH &RXUW UHMHFWHG WKRVH ,G HPSKDVLVLQRULJLQDO &RQVHTXHQWO\WKLVFRXUWKDVKHOG FODLPV DQG WKH GLVWULFW FRXUW DJUHHG WKDW :LFNOLQH ZDV QRW SUHMXGLFHG E\ WKH DOOHJHG GLVFRYHU\ YLRODWLRQV %RWK WKH GLVWULFW FRXUW DQG WKLV FRXUW WKDW IDLOXUH WR LQYHVWLJDWH SRVVLEOH PLWLJDWLQJ IDFWRUV DQG GHFOLQHG WR JUDQW D FHUWLILFDWH RI DSSHDODELOLW\ ZLWK UHVSHFW WR WKH %UDG\ IDLOXUH WR SUHVHQW PLWLJDWLQJ HYLGHQFH DW VHQWHQFLQJ FDQ FODLPV  :LFNOLQHY0LWFKHOO 1R 1R :LFNOLQHY0LWFKHOO  )LQDOO\:LFNOLQHFODLPVWKDWKLVWULDOFRXQVHOHUUHGLQQRW FRQVWLWXWHLQHIIHFWLYHDVVLVWDQFHRIFRXQVHO6HH&ROHPDQY SUHVHQWLQJ DQ\ HYLGHQFH UHJDUGLQJ KLV DOOHJHGO\ WURXEOHG 0LWFKHOO &ROHPDQ,, )G WK&LU  XSEULQJLQJ+HYDJXHO\VWDWHVWKDWKLVUHODWLRQVKLSZLWKKLV FHUWGHQLHG6&W  6NDJJVY3DUNHU IDWKHU mZDV FUXFLDO WR KLV GHYHORSPHQW DQG WKH ZD\ KH )G WK&LU FHUWGHQLHG6&W KDQGOHGIUXVWUDWLRQDQGUDJHl:LFNOLQHDOVRDVVHUWVWKDWWKH   &DUWHUY%HOO)G WK&LU  GHDWKRIKLVPRWKHUmGHYDVWDWHGKLPl7KH6WDWHFRQWHQGV WKDW :LFNOLQHjV IDPLO\ H[SHULHQFHV GR QRW SURYLGH D $IWHU EHLQJ FRQYLFWHG DQG VHQWHQFHG WR GHDWK :LFNOLQH MXVWLILFDWLRQ RU H[SODQDWLRQ IRU WKLV FULPH  6HH 6WDWH Y PRYHGIRUDQHZWULDOEDVHGLQSDUWRQKLVFRXQVHOjVIDLOXUHWR 'LFNHUVRQ1(G 2KLR  m:KLOHWKHVH LQYHVWLJDWHPHQWDOKHDOWKHYLGHQFH$WDKHDULQJEHIRUHWKH H[SHULHQFHVDUHXQIRUWXQDWHWKH\DUHQRWXQFRPPRQ,WWDNHV RULJLQDOWKUHHMXGJHSDQHO'DQ+XQWRQHRI:LFNOLQHjVWULDO QRFLWDWLRQRIDXWKRULW\WRVWDWHWKDWPDQ\RWKHUSHRSOHKDYH DWWRUQH\VWHVWLILHGUHJDUGLQJKLVVWUDWHJ\DWWKHSHQDOW\SKDVH HQGXUHGVLPLODUH[SHULHQFHVZLWKRXWUHVRUWWRODZOHVVQHVVl  %HIRUHWULDOFRXQVHOKLUHGDSULYDWHLQYHVWLJDWRUZKRKDGEHHQ DKRPLFLGHGHWHFWLYHZLWKWKH&ROXPEXV3ROLFH'HSDUWPHQW :LFNOLQH KDV IDLOHG WR GHPRQVWUDWH WKDW WKHUH LV D IRU WZHQW\ \HDUV  $FFRUGLQJ WR +XQW WKLV LQYHVWLJDWRU mUHDVRQDEOHSUREDELOLW\lWKDWEXWIRUKLVWULDOFRXQVHOjVIDLOXUH LQWHUYLHZHGmMXVWDERXWHYHU\ERG\l:LFNOLQHjVWULDOFRXQVHO WRSUHVHQWWKLVHYLGHQFHWKHUHVXOWRIWKHSHQDOW\SKDVHZRXOG SHUVRQDOO\LQWHUYLHZHGNH\ZLWQHVVHVLQFOXGLQJ:LFNOLQHjV KDYHEHHQGLIIHUHQW7KHUHIRUHKLVFODLPWKDWKLVFRXQVHOZDV EURWKHUDQGKLVFRPPRQODZZLIH+XQWjVFRFRXQVHOsRKQ LQHIIHFWLYH IRU IDLOLQJ WR LQYHVWLJDWH DQG SUHVHQW PLWLJDWLQJ :ROHU\ZKRKDGUHSUHVHQWHG:LFNOLQHIRUPDQ\\HDUVNQHZ HYLGHQFH IDLOV 6WULFNODQGjV SUHMXGLFH SURQJ  7KH 2KLR :LFNOLQHjV IULHQGV DQG WDONHG ZLWK KLV IDWKHU  $OWKRXJK 6XSUHPH&RXUWjVGHWHUPLQDWLRQWKDW:LFNOLQHjVFRXQVHOZDV FRXQVHOGLGQRWSHUIRUPDVHSDUDWHPLWLJDWLRQLQYHVWLJDWLRQ QRWGHILFLHQWDWWKHSHQDOW\SKDVHDQGWKDWHYHQLILWZHUHWKH FRXQVHO WHVWLILHG WKDW WKHLU SUHWULDO LQYHVWLJDWLRQ ZDV VHQWHQFLQJ GHFLVLRQ ZRXOG QRW KDYH EHHQ GLIIHUHQW LV QRW FRQGXFWHGIRUERWKJXLOWSKDVHDQGPLWLJDWLRQSKDVHSXUSRVHV FRQWUDU\ WR RU DQ XQUHDVRQDEOH DSSOLFDWLRQ RI 6WULFNODQG DQGWKDWKHFRXOGQRWVHSDUDWHWKHWZR $FFRUGLQJO\ :LFNOLQH LV QRW HQWLWOHG WR DQ\ UHOLHI RQ WKLV JURXQG $IWHU WKH WKUHHMXGJH SDQHO UHWXUQHG D JXLOW\ YHUGLFW :LFNOLQHjVFRXQVHOWXUQHGWRWKHPLWLJDWLRQVWDWXWHDQGWKH VHFWLRQRIWKH2KLR3XEOLF'HIHQGHUjVPDQXDOGHDOLQJZLWK  $W RUDO DUJXPHQW WKH SDUWLHV GLVSXWHG ZKHWKHU :LFNOLQH KDG WKHPLWLJDWLRQKHDULQJ&RXQVHOZHQWWKURXJKHDFKPLWLJDWLQJ UHTXHVWHG DQ HYLGHQWLDU\ KHDULQJ LQ GLVWULFW FRXUW RQ KLV LQHIIHFWLYH IDFWRUZLWK:LFNOLQH&RXQVHODGYLVHG:LFNOLQHWKDWKHFRXOG DVVLVWDQFH RI FRXQVHO FODLP ,Q D GRFXPHQW VXEPLWWHG DIWHU RUDO DUJXPHQW KDYHDSV\FKLDWULFUHSRUWEXWFRXQVHOFKRVHQRWWRKDYHRQH :LFNOLQH FRQWHQGV WKDW KLV UHTXHVW RI DQ HYLGHQWLDU\ KHDULQJ LV LQGLFDWHG IRUWZRUHDVRQV)LUVW:LFNOLQHmZDQWHGQRWKLQJWRGRZLWK E\ WKH GLVWULFW FRXUWjV RUGHU RI 6HSWHPEHU   ZKLFK VSHFLILFDOO\ SV\FKLDWULVWVRUSV\FKRORJLVWVl6HFRQGFRXQVHOIHOWWKDWD DGGUHVVHG :LFNOLQHj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mZDQWHGQRWKLQJWRGRZLWKWKHSUREDWLRQRIILFHUl WKDW DGGLWLRQDO HYLGHQFH GHPRQVWUDWLQJ LQHIIHFWLYH DVVLVWDQFH RI FRXQVHO &RXQVHO UHTXHVWHG WR VSHDN ZLWK :LFNOLQHjV IDPLO\ ZRXOG EH SURGXFHG LQ DQ\ HYLGHQWLDU\ KHDULQJ EHIRUH LW $V VWDWHG DERYH DQ HYLGHQWLDU\ KHDULQJ ZDV FRQGXFWHG LQ WKH WULDO FRXUW RQ :LFNOLQHjV $FFRUGLQJWR+XQW:LFNOLQHmZDVYHU\VWURQJRQWKLVKHGLG PRWLRQ IRU D QHZ WULDO DW ZKLFK KLV FRXQVHO WHVWLILHG 'HVSLWH WKLV IDFW QRWZDQWWRGUDJKLVIDPLO\LQWRWKLVWKLQJDQGEDVLFDOO\WROG WKHUH KDV QHYHU EHHQ DQ\ SURIIHU RI HYLGHQFH QRU DQ\ DIILGDYLW UHJDUGLQJ XVQRDVIDUDVKLVIDPLO\ZDVLQYROYHGl&RXQVHOZDVDOVR DQ\ DGGLWLRQDO PLWLJDWLQJ IDFWV LQ :LFNOLQHjV KLVWRU\ %HFDXVH KH ZDV  :LFNOLQHY0LWFKHOO 1R 1R :LFNOLQHY0LWFKHOO  FRQFHUQHGWKDWLIWKH\SXWZLWQHVVHVRQWKHVWDQGWHVWLI\LQJWR WRIRFXVRQWKHLUVWURQJHVWPLWLJDWLQJIDFWRUWKDWWKH/HUFKHV :LFNOLQHjV JRRG FKDUDFWHU LW ZRXOG RSHQ WKH GRRU IRU WKH IDFLOLWDWHGWKHPXUGHUVE\SDUWLFLSDWLQJLQGUXJGHDOLQJDQG SURVHFXWLRQWREULQJLQHYLGHQFHRIEDGDFWVFRPPLWWHGE\ DWWHPSWLQJDGUXJULSRII:LFNOLQHPDGHWKHILQDOGHFLVLRQ KLP DQG WKDW VXFK HYLGHQFH ZRXOG JUHDWO\ GDPDJH DQ\ WRSURFHHGZLWKWKLVVWUDWHJ\%DVHGRQWKHUHFRUGHYLGHQFH PLWLJDWLQJ IDFWRUV WKH\ SUHVHQWHG  &RXQVHO UHYLHZHG RI:LFNOLQHjVVWUDWHJLFFKRLFHVFRXQVHOjVLQYHVWLJDWLRQDQG :LFNOLQHj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jV SULPDU\ GHIHQVH o WKDW QR PXUGHUV KDG WDNHQ IXUWKHUSV\FKRORJLFDORUSV\FKLDWULFWHVWLQJ %XWVHH&ROHPDQ SODFH &RXQVHOIHOWWKDWLWZRXOGEHEHVWWRIRFXVRQWKHLU ,,  )G DW  ILQGLQJ WKDW mFRXQVHOjV SHUIRUPDQFH VWURQJHVWPLWLJDWLQJIDFWRUDYRLGWKHGDQJHURIRSHQLQJWKH JLYHQWKHFRPELQDWLRQRI3HWLWLRQHUjVXQLQYHVWLJDWHGSHUVRQDO GRRUWRKDUPIXOLQIRUPDWLRQDQGQRWmFORXGLWXSZLWKVWXII KLVWRU\DQGWKHFRQVHTXHQWO\GHILFLHQWSHQDOW\SKDVHFORVLQJ ZHFRXOGQjWSURYHl+XQWWHVWLILHGWKDW:LFNOLQHPDGHWKH DUJXPHQWWREHREMHFWLYHO\XQUHDVRQDEOHl  ILQDOGHFLVLRQWRSURFHHGDVWKH\GLG (YHQ LI FRXQVHO ZHUH GHILFLHQW LQ LQYHVWLJDWLQJ DQG ,Q 6WULFNODQG WKH 6XSUHPH &RXUW QRWHG WKDW m>W@KH SUHVHQWLQJPLWLJDWLQJHYLGHQFH:LFNOLQHIDLOVWRVDWLVI\WKH UHDVRQDEOHQHVV RI FRXQVHOjV DFWLRQV PD\ EH GHWHUPLQHG RU SUHMXGLFHSURQJRI6WULFNODQG:LFNOLQHDUJXHVWKDWKLVWULDO VXEVWDQWLDOO\LQIOXHQFHGE\WKHGHIHQGDQWjVRZQVWDWHPHQWVRU FRXQVHOFRXOGKDYHSUHVHQWHGPHQWDOKHDOWKHYLGHQFH7KH DFWLRQV&RXQVHOjVDFWLRQVDUHXVXDOO\EDVHGTXLWHSURSHUO\ PHQWDOKHDOWKHYLGHQFHVXEPLWWHGZLWKKLVSHWLWLRQIRUSRVW RQLQIRUPHGVWUDWHJLFFKRLFHVPDGHE\WKHGHIHQGDQWDQGRQ FRQYLFWLRQUHOLHILQGLFDWHVWKDW:LFNOLQHGLGQRWVXIIHUIURP LQIRUPDWLRQVXSSOLHGE\WKHGHIHQGDQWl6WULFNODQG86 DQ\PHQWDOFRQGLWLRQUHOHYDQWWRWKHPXUGHUVRIWKH/HUFKHV DW)XUWKHUPRUHm>D@QDWWRUQH\jVFRQGXFWLVQRWGHILFLHQW 7KH UHFRUGV VWDWH WKDW m>W@KHUH LV QR HYLGHQFH RI D WKRXJKW VLPSO\IRUIROORZLQJKLVFOLHQWjVLQVWUXFWLRQVl&ROHPDQY GLVRUGHURUSV\FKRWLFUHDFWLRQlWKDWm>S@V\FKRORJLFDOWHVWLQJ 0LWFKHOO &ROHPDQ ,   )G   WK &LU  FHUW UHYHDOVWKDWKHLVIXQFWLRQLQJLQWKHVXSHULRUUDQJHRIJHQHUDO GHQLHG  6&W    DQG  FHUW GHQLHG  6&W LQWHOOLJHQFHlDQGWKDWKHKDVDQ,4RI7KHPHQWDOKHDOWK    HYLGHQFHLQGLFDWHVWKDW:LFNOLQHVXIIHUHGIURPGHSUHVVLRQ KRZHYHUWKHUHLVQRHYLGHQFHWKDWKLVGHSUHVVLRQDIIHFWHGKLV +HUH:LFNOLQHjVFRXQVHOLQYHVWLJDWHGSULRUWRWULDOKLULQJ FRQGXFWKHUH6HH6WDWHY:KLWH1(G 2KLR DSULYDWHLQYHVWLJDWRUWRLQWHUYLHZSHUVRQVZLWKNQRZOHGJH   m,Q FRQWUDVW GHIHQGDQWjV PLOG GHSUHVVLRQ ZDV DERXW WKH FDVH DQG SHUVRQDOO\ LQWHUYLHZLQJ NH\ ZLWQHVVHV XQGLVSXWHGEXWLWLVXQFOHDUZKDW UROH LIDQ\ LWSOD\HGLQ 7KLVLQYHVWLJDWLRQZDVSHUIRUPHGIRUWKHSXUSRVHVRIERWKWKH WKHVH FULPHV 7KLV LV DW EHVW D ZHDN PLWLJDWLQJ IDFWRUl  JXLOWSKDVHDQGWKHSHQDOW\SKDVH$IWHUWKHSDQHOUHWXUQHGD :LFNOLQH DOVR DUJXHV WKDW KLV WULDO FRXQVHO VKRXOG KDYH JXLOW\ YHUGLFW FRXQVHO GLVFXVVHG PLWLJDWLRQ VWUDWHJ\ ZLWK LQWURGXFHG HYLGHQFH RI KLV JRRG EHKDYLRU GXULQJ SULRU :LFNOLQHWZRRUWKUHHWLPHV:LFNOLQHGLGQRWZDQWWRVSHDN LQFDUFHUDWLRQV&RXQVHOUHYLHZHG:LFNOLQHjVSULVRQUHFRUGV ZLWKDSV\FKLDWULVWRUDSUREDWLRQRIILFHURULQYROYHKLVIDPLO\ DQGGHFLGHGQRWWRSUHVHQWWKHPEHFDXVHWKH\ZRXOGKLJKOLJKW &RQVHTXHQWO\:LFNOLQHDQGKLVFRXQVHOUHDFKHGWKHGHFLVLRQ :LFNOLQHjVH[WHQVLYHFULPLQDOKLVWRU\