MI Southern RR v. Branch & St. Joseph

U.S. Court of Appeals for the Sixth Circuit

MI Southern RR v. Branch & St. Joseph

Opinion

5(&200(1'(' )25 )8//7(;7 38%/,&$7,21  0LFKLJDQ6RXWKHUQ55HWDOY 1R  3XUVXDQW WR 6L[WK &LUFXLW 5XOH 

%UDQFK 6WsRVHSK&RXQWLHVHWDO (/(&7521,& &,7$7,21  )(' $SS 3 WK &LU )LOH 1DPH DS

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jV 6287+(51 5$,/52$' &2 !  GHIHQVHUHVWVRQWKHLQWHUSUHWDWLRQRIIHGHUDOODZ7KHIHGHUDO ,1&  LVVXHKHUHLVHYHQPRUHUHPRWHWKDQLQ6NHOO\DVLWGRHVQRW 3ODLQWLIIV$SSHOODQWV  UHVWRQDQDQWLFLSDWHGIHGHUDOGHIHQVH  Y  7R EULQJ D FDVH SXUVXDQW WR †  m   D ULJKW RU  LPPXQLW\FUHDWHGE\WKH&RQVWLWXWLRQRUODZVRIWKH8QLWHG  6WDWHV PXVW EH DQ HOHPHQW DQG DQ HVVHQWLDO RQH RI WKH %5$1&+ 67 s26(3+  SODLQWLIIjV FDXVH RI DFWLRQl *XOO\ Y )LUVW 1DWjO %DQN  &2817,(6 5$,/ 86(56  86    6XFKLVQRWWKHFDVHKHUH7KHUHIRUH $662&,$7,21 ,1&DQG  ZHFRQFOXGHWKDWWKLVPDWWHUZDVSURSHUO\GLVPLVVHGIRUODFN ,1',$1$ 1257+($67(51  RIMXULVGLFWLRQ  5$,/52$' &203$1< ,9&21&/86,21 'HIHQGDQWV$SSHOOHHV   $FFRUGLQJO\IRUDOOWKHIRUHJRLQJUHDVRQVZH$)),50WKH 1 GLVWULFWFRXUW $SSHDOIURPWKH8QLWHG6WDWHV'LVWULFW&RXUW IRUWKH:HVWHUQ'LVWULFWRI0LFKLJDQDW.DODPD]RR 1R n5LFKDUG$(QVOHQ'LVWULFWsXGJH  7KH 6XSUHPH &RXUW H[SODLQHG LQ )UDQFKLVH 7D[ %G  86 DW   WKDW m>I@HGHUDO FRXUWV KDYH UHJXODUO\ WDNHQ RULJLQDO MXULVGLFWLRQ RYHU $UJXHG sDQXDU\ GHFODUDWRU\ MXGJPHQW VXLWV LQ ZKLFK LI WKH GHFODUDWRU\ MXGJPHQW GHIHQGDQW EURXJKW FRHUFLYH DFWLRQ WR HQIRUFH LWV ULJKWV WKDW VXLW ZRXOG 'HFLGHGDQG)LOHG $SULO QHFHVVDULO\ SUHVHQW D IHGHUDO TXHVWLRQl 7KLV FDVH GRHV QRW IDOO LQWR WKLV FDWHJRU\ RI FDVHV VLQFH LI 58$ KDG LQVWLWXWHG VXLW RQ WKH   $JUHHPHQW LWV FDXVH RI DFWLRQ ZRXOG DOVR KDYH EHHQ SUHPLVHG RQ D VWDWH ODZ EUHDFK RI FRQWUDFW FODLP ,Q WKLV VLWXDWLRQ 0620655 ZRXOG VWLOO LQWHUMHFW WKH IHGHUDO LVVXH RQO\ E\ ZD\ RI DQ DQWLFLSDWHG GHIHQVH

  0LFKLJDQ6RXWKHUQ55HWDOY 1R  1R  0LFKLJDQ6RXWKHUQ55HWDOY  %UDQFK 6WsRVHSK&RXQWLHVHWDO %UDQFK 6WsRVHSK&RXQWLHVHWDO

%HIRUH 0$57,1&KLHI&LUFXLWsXGJH 68+5+(,15,&+ ,Q6NHOO\2LO&R3KLOOLSV3HWUROHXPFRQWUDFWHGZLWK6NHOO\ &LUFXLWsXGJH 2/,9(5'LVWULFWs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sXGJPHQW$FWWKLVFDVHFRXOGRQO\EHEURXJKWDVDFRHUFLYH BBBBBBBBBBBBBBBBB DFWLRQVHHNLQJGDPDJHVRUVSHFLILFSHUIRUPDQFHXQGHUVWDWH 2/,9(5'LVWULFWsXGJH3ODLQWLIIV$SSHOODQWV0LFKLJDQ ODZIRUEUHDFKRIFRQWUDFWE\3KLOOLSVDJDLQVW6NHOO\6NHOO\jV 6RXWKHUQ5DLOURDG&RPSDQ\DQG0LFKLJDQ6RXWKHUQ5DLOURDG GHIHQVHZRXOGWKHQUHVWRQWKHQDWXUHRIWKHFHUWLILFDWHLVVXHG &R,QFDSSHDOIURPWKHGLVWULFWFRXUWjVGLVPLVVDO RI WKHLU E\WKH)HGHUDO3RZHU&RPPLVVLRQ7KH&RXUWH[SODLQHGWKDW FRPSODLQWIRUODFNRIVXEMHFWPDWWHUMXULVGLFWLRQSXUVXDQWWR LW ZRXOG mGLVWRUW WKH OLPLWHG SURFHGXUDO SXUSRVH RI WKH 5XOH  E   RI WKH )HGHUDO 5XOHV RI &LYLO 3URFHGXUH 'HFODUDWRU\ sXGJPHQW $FWl WR SHUPLW IHGHUDO MXULVGLFWLRQ 3ODLQWLIIV EURXJKW VXLW DJDLQVW WKH %UDQFK  6W sRVHSK EDVHGRQUHTXHVWVIRUGHFODUDWRU\MXGJPHQWVWKDWDUHDFWXDOO\ &RXQWLHV5DLO8VHUV$VVRFLDWLRQ,QFVHHNLQJDGHFODUDWLRQ DQWLFLSDWLRQVRIIHGHUDOGHIHQVHV6NHOO\2LO 86DW WKDWD DJUHHPHQWFRQFHUQLQJWKHXVHDQGPDLQWHQDQFHRI  FHUWDLQ UDLOURDG WUDFNV LV HIIHFWLYH DV ZHOO DV IRU VSHFLILF :HKDYHSUHYLRXVO\H[SODLQHGWKHSUHFOXVLRQRIMXULVGLFWLRQ SHUIRUPDQFHRILWVWHUPV3ODLQWLIIVVRXJKWUHOLHISXUVXDQWWR XQGHUWKHVHFLUFXPVWDQFHVDVIROORZV WKH'HFODUDWRU\sXGJPHQW$FW86&†HWVHTDQG DOOHJHGIHGHUDOTXHVWLRQMXULVGLFWLRQXQGHU86&† 7KH UDWLRQDOH  LV WKDW WKH DQWLFLSDWHG GHIHQVH PLJKW DQG 86&†† DQG RIWKH,QWHUVWDWH QHYHUEHUDLVHGRULILWLVUDLVHGQHYHUUHDFKHGEHFDXVH &RPPHUFH&RPPLVVLRQ7HUPLQDWLRQ$FW)RUWKHUHDVRQVVHW WKHSODLQWLIIIDLOVWRSUHYDLORQDSUHOLPLQDU\LVVXHRIVWDWH IRUWKEHORZZH$)),50WKHGLVWULFWFRXUW ODZ 7KHUH LV QR IHGHUDO LQWHUHVW DQG D VWURQJ VWDWH LQWHUHVWLQSURYLGLQJDIRUXPIRUWKHOLWLJDWLRQRISXUHO\ VWDWHODZLVVXHVEHWZHHQFLWL]HQVRIWKHVDPHVWDWH

7KH +RQRUDEOH 6RORPRQ 2OLYHU sU 8QLWHG 6WDWHV 'LVWULFW sXGJH IRU

WKH 1RUWKHUQ 'LVWULFW RI 2KLR VLWWLQJ E\ GHVLJQDWLRQ  0LFKLJDQ6RXWKHUQ55HWDOY 1R  1R  0LFKLJDQ6RXWKHUQ55HWDOY  %UDQFK 6WsRVHSK&RXQWLHVHWDO %UDQFK 6WsRVHSK&RXQWLHVHWDO

$FFRUGLQJO\WKHGLVWULFWFRXUWSURSHUO\UHIXVHGWRH[HUFLVH ,%$&.*5281' IHGHUDOTXHVWLRQMXULVGLFWLRQ 7KH $SSHOODQWV 0LFKLJDQ 6RXWKHUQ 5DLOURDG &R IND % +DV 0620655 0HW WKH :HOO3OHDGHG &RPSODLQW :DEDVK  :HVWHUQ 5DLOZD\ &R DQ ,RZD FRUSRUDWLRQ 5XOH" m062l  DQG 0LFKLJDQ 6RXWKHUQ 5DLOURDG &R ,QF D 'HODZDUHFRUSRUDWLRQ m0655l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jVDQWLFLSDWHGGHIHQVHWR OLQH H[WHQGLQJ IURP MXVW HDVW RI 6WXUJLV 0LFKLJDQ WR 0620655jVEUHDFKRIFRQWUDFWFODLP8QGHUWKH6XSUHPH &ROGZDWHU0LFKLJDQDGLVWDQFHRIDSSUR[LPDWHO\PLOHV &RXUWjVGHFLVLRQLQ6NHOO\2LO&RY3KLOOLSV3HWUROHXP&R KHUHLQDIWHUWKHm5DLO/LQHl 7KH5DLO/LQHZDVWKHQRZQHG  86   IHGHUDOTXHVWLRQMXULVGLFWLRQFDQQRWEH E\WKH%UDQFK 6WsRVHSK&RXQWLHV5DLO8VHUV$VVRFLDWLRQ FRQIHUUHG RQ D GLVWULFW FRXUW E\ FLUFXPYHQWLQJ WKH ZHOO ,QFD0LFKLJDQQRQSURILWFRUSRUDWLRQ m58$l  SOHDGHGFRPSODLQWUXOHLQWKLVPDQQHU 2QsXQH 0655DQG58$HQWHUHGLQWRDZULWWHQ 7KH'HFODUDWRU\sXGJPHQW$FWRI SURYLGHVWKDWLQD DJUHHPHQW WKH m  $JUHHPHQWl  ZKLFK SURYLGHG LQWHU FDVHRIDFWXDOFRQWURYHUV\DFRPSHWHQWFRXUWPD\mGHFODUH DOLDWKDW0655ZRXOGVHUYLFHWKH5DLO/LQHIRUDWHUPRI WKHULJKWVDQGRWKHUOHJDOUHODWLRQVlRIDSDUW\mZKHWKHURUQRW \HDUVDQGPRQWKVDQGJUDQWHG0655DQRSWLRQWRSXUFKDVH IXUWKHUUHOLHILVRUFRXOGEHVRXJKWl86&† 3XEOLF WKH5DLO/LQH 6HUY&RPPjQRI8WDKY:\FRII86    ,WLVZHOOVHWWOHGWKDWWKH'HFODUDWRU\sXGJPHQW$FWFDQQRW 2Q'HFHPEHU 0655HQWHUHGLQWRDFRQWUDFWZLWK VHUYH DV DQ LQGHSHQGHQW EDVLV IRU IHGHUDO VXEMHFW PDWWHU :DEDVK :HVWHUQ5DLOZD\&RQRZ062ZKLFKSURYLGHG MXULVGLFWLRQ 6NHOO\ 2LO &R   86 DW  &RQJUHVV WKDW062ZRXOGOHDVH0655jVDVVHWVDQGSURYLGHUDLOVHUYLFH HQODUJHGWKHUDQJHRIUHPHGLHVDYDLODEOHLQIHGHUDOFRXUWVEXW RQ0655jVEHKDOIWRLWVOLQHVLQ0LFKLJDQDQG,QGLDQD7KH GLG QRW H[WHQG WKHLU MXULVGLFWLRQ  $HWQD /LIH ,QV &R RI FRQWUDFWDOVRJUDQWHG062DQRSWLRQWRSXUFKDVH0655jV +DUWIRUGY+DZRUWK86    H[SODLQLQJ FDSLWDOVWRFN WKDW'HFODUDWRU\sXGJPHQW$FWLVSURFHGXUDORQO\ VHHDOVR 3XEOLF6HUY&RPPjQRI8WDKY:\FRII86 2Q sXQH    0655 DQG 58$ HQWHUHG LQWR DQ    $FWFRQIHUVGLVFUHWLRQRQFRXUWVWRIDVKLRQDUHPHG\ m$PHQGHGDQG5HVWDWHG2SHUDWLQJ$JUHHPHQWl WKHm  UDWKHUWKDQDQDEVROXWHULJKWXSRQWKHOLWLJDQW $FFRUGLQJO\ $JUHHPHQWl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sRVHSK&RXQWLHVHWDO %UDQFK 6WsRVHSK&RXQWLHVHWDO

6HFWLRQ5HVSRQVLELOLW\ +HUHQRQHRIWKH,&&7$SURYLVLRQVFLWHGE\0620655 SURYLGHVIRUDSULYDWHFDXVHRIDFWLRQXQGHUWKHFLUFXPVWDQFHV D 7KH23(5$725>0655@VKDOOSHUIRUPRUFDXVH RIWKLVFDVH,QRWKHUZRUGVQRQHRIWKHVHSURYLVLRQVSHUPLWV WREHSHUIRUPHGDOOPDLQWHQDQFHRIZD\RQWKHUDLO DmFRHUFLYHDFWLRQlE\RQHSDUW\WRDSULYDWHFRQWUDFWDJDLQVW IDFLOLW\GHVFULEHGLQ$WWDFKPHQW,LQDFFRUGDQFHZLWK WKHRWKHUIRULWVIDLOXUHWRREWDLQ67%DSSURYDOIRURSHUDWLRQ DQGVXEMHFWWRWKHODZVUXOHVUHJXODWLRQVDQGRUGHUV RIDUDLOOLQHZKHQVXFKDSSURYDOLVPDGHDFRQGLWLRQRIWKH RIJRYHUQPHQWDODJHQFLHV7KH23(5$725VKDOO FRQWUDFW0RUHRYHU0620655GRHVQRWFRQWHQGWKDWWKH LPSURYHWKHUDLOIDFLOLW\WRDPLQLPXPRIDm&ODVV ,&&7$FRQWDLQVDQLPSOLHGSULYDWHUHPHG\SHUPLWWLQJLWWR WUDFNlDVGHILQHGE\ &)5† ZLWKLQRQH VXHGLUHFWO\XQGHUWKHVWDWXWH6HH0HUUHOO'RZ3KDUP,QF \HDUIURPWKHHIIHFWLYHGDWHRIWKLVDJUHHPHQW Y 7KRPSVRQ  86    Q    msXULVGLFWLRQ PD\ QRW EH VXVWDLQHG RQ D WKHRU\ WKDW WKH SODLQWLII KDV QRW

  DGYDQFHGl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

  WKHDSSURYDOIURP67%XQGHUWKH,&&7$DVUHTXLUHGE\WKH  $JUHHPHQW,WLVWKHLQWHUSUHWDWLRQRIWKH,&&7$LQWKLV 6HFWLRQ  RI WKH DJUHHPHQW HQWLWOHG m([HFXWLRQl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jVFDXVHRIDFWLRQZH 0655QHYHUREWDLQHG RSHUDWLRQULJKWVIURPWKH6XUIDFH FRQFOXGHWKDWWKLVODZVXLWEDVHGRQVWDWHFRQWUDFWODZGRHV 7UDQVSRUWDWLRQ%RDUG m67%l IRUWKHH[WHQVLRQRIVHUYLFHWR QRW UDLVH D VXEVWDQWLDO RU GLVSXWHG TXHVWLRQ RI IHGHUDO ODZ 4XLQF\ 7KHUH LV QR GLVSXWH EHWZHHQ WKH SDUWLHV DV WR ZKHWKHU 0620655REWDLQHGDSSURYDOIRUWKHH[WHQVLRQRIVHUYLFH 2Q RU DERXW sDQXDU\    0655 EHFDPH D ZKROO\ WR 4XLQF\  7KH SDUWLHV DJUHH WKDW WKH DSSURYDO ZDV QRW RZQHGVXEVLGLDU\RI062E\YLUWXHRI062jVSXUFKDVHRIDOO REWDLQHG:KDWHIIHFWWKHIDLOXUHWRREWDLQDSSURYDOKDVRQ WKHRXWVWDQGLQJFDSLWDOVWRFNRI06552QsDQXDU\  WKH   $JUHHPHQW LV SXUHO\ D PDWWHU RI VWDWH ODZ  0LFKLJDQ6RXWKHUQ55HWDOY 1R  1R  0LFKLJDQ6RXWKHUQ55HWDOY  %UDQFK 6WsRVHSK&RXQWLHVHWDO %UDQFK 6WsRVHSK&RXQWLHVHWDO

ULJKW WR UHOLHI QHFHVVDULO\ GHSHQGV RQ UHVROXWLRQ RI D 0655ZURWHDOHWWHUWR58$LQIRUPLQJLWRIWKLVIDFWDQG VXEVWDQWLDOTXHVWLRQRIIHGHUDOODZl  JLYLQJQRWLFHWR58$RILWVLQWHQWWRH[HUFLVHWKHSXUFKDVH RSWLRQ DV SURYLGHG IRU E\ 6HFWLRQ  RI WKH   $ 'RHVWKH/DZVXLW,QYROYHD6XEVWDQWLDODQG'LVSXWHG $JUHHPHQW 4XHVWLRQRI)HGHUDO/DZ" 2Q0DUFK 58$QRWLILHG0655RILWVEHOLHIWKDW ,QWKLVFDVH0620655FODLPVWKDWWKHGLVWULFWFRXUWKDG WKH   $JUHHPHQW ZDV LQ HIIHFW DQG WKDW 0655 ZDV LQ IHGHUDO TXHVWLRQ MXULVGLFWLRQ WR GHWHUPLQH WKDW WKH   EUHDFK RI WKDW $JUHHPHQW LQDVPXFK DV 0655 KDG QRW $JUHHPHQWDVRSSRVHGWRWKH $JUHHPHQWZDVLQHIIHFW PDLQWDLQHGWKHWUDFNVLQm&ODVVFRQGLWLRQDVUHTXLUHGE\ LQDVPXFK DV WKHUH ZDV QHYHU DQ\ FHUWLILFDWH RI RSHUDWLRQ 6HFWLRQ   58$ IXUWKHU LQIRUPHG 0655 WKDW LW ZDV REWDLQHGZLWKLQWKHPHDQLQJRI 86&††  ZLOOLQJWRmFRQVLGHUVHOOLQJlWKH5DLO/LQHEXWZDQWHGVRPH DQG RIWKH,&&7$DVUHTXLUHGE\WKH $JUHHPHQW DVVXUDQFHWKDW0655LQWHQGHGWRUHVWRUHWKHWUDFNVDVDJUHHG 0620655DUJXHVWKDWVLQFHWKHTXHVWLRQRIZKHWKHUWKH 58$DJDLQVHQWOHWWHUVRQ$SULO DQG$SULO    $JUHHPHQW HYHU WRRN HIIHFW GHSHQGV RQ WKH UHVWDWLQJ LWV EHOLHI WKDW 0655 ZDV LQ EUHDFK RI WKH   LQWHUSUHWDWLRQ RI D IHGHUDO VWDWXWH WKLV FDVH mWXUQVl RQ D $JUHHPHQWDQGUHTXHVWLQJFRPSOLDQFH TXHVWLRQ RI IHGHUDO ODZ  %HFDXVH ZH FRQFOXGH WKDW 0620655jVFDXVHRIDFWLRQLVEDVHGRQVWDWHODZDQGWKDW 2Q0D\ 0655VHQW58$DOHWWHUGLVSXWLQJWKDW D VXEVWDQWLDO GLVSXWHG TXHVWLRQ RI IHGHUDO ODZ LV QRW D LWKDGEUHDFKHGWKH $JUHHPHQWDQGIXUWKHUGHPDQGHG QHFHVVDU\HOHPHQWRI0620655jVFODLPZHDJUHHZLWKWKH WKDW 58$ KRQRU 0655j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†DQGWKH IDFLOLWLHV RI WKRVH FDUULHUV    86& †  HQWLWOHG ,QWHUVWDWH &RPPHUFH &RPPLVVLRQ 7HUPLQDWLRQ $FW m*HQHUDO MXULVGLFWLRQl SURYLGHV WKDW WKH 6XUIDFH m,&&7$l  86&†† DQG 2Q 7UDQVSRUWDWLRQ%RDUGKDVH[FOXVLYHDQGSOHQDU\MXULVGLFWLRQ sXQH 0620655DPHQGHGLWVFRPSODLQWDGGLQJ RYHUWKHRSHUDWLRQRIUDLOURDGVLQWKH8QLWHG6WDWHV†  ,QGLDQD1RUWKHDVWHUQ5DLOURDG&RPSDQ\ m,1(l DVDSDUW\ HQWLWOHGm$XWKRUL]LQJFRQVWUXFWLRQDQGRSHUDWLRQRIUDLOURDG OLQHVlGHDOVZLWKWKHQHHGIRU67%DSSURYDORIFRQVWUXFWLRQ DQGRU H[WHQVLRQ RI UDLOURDG OLQHV DQG †   HQWLWOHG  (IIHFWLYH sDQXDU\    &RQJUHVV HQDFWHG WKH ,QWHUVWDWH

m)LOLQJ DQG SURFHGXUH IRU DSSOLFDWLRQ WR DEDQGRQ RU &RPPHUFH &RPPLVVLRQ 7HUPLQDWLRQ $FW RI   ZKLFK GLVVROYHG WKH

GLVFRQWLQXHlSUHVFULEHVWKHSURFHVVIRUDQGFLUFXPVWDQFHV ,QWHUVWDWH &RPPHUFH &RPPLVVLRQ ,W FUHDWHG WKH 6XUIDFH 7UDQVSRUWDWLRQ

XQGHUZKLFK WKH67%ZLOODSSURYHDUDLOFDUULHUjVZLVKWR %RDUG ZLWKLQ WKH 'HSDUWPHQW RI 7UDQVSRUWDWLRQ LQ LWV SODFH 7KH 67%

GLVFRQWLQXHVHUYLFH LQKHULWHG WKH ,&& V UDLO RYHUVLJKW 7KH 67% QRZ VWDQGV DV WKH FHQWUDO SRLQW

$00 JHQHUDOO\ RI UHFRUGDWLRQ RI VHFXULW\ LQWHUHVWV DQG ILQDQFLDO LQVWUXPHQWV DIIHFWLQJ

0DUN : )ORU\ HW DO 5HFHQW 'HYHORSPHQWV LQ &RPPHUFLDO UDLOURDG FDUV ORFRPRWLYHV RWKHU UROOLQJ VWRFN DQG YHVVHOV

7UDQVSRUWDWLRQ /LWLJDWLRQ  72576 ,16 /s       0LFKLJDQ6RXWKHUQ55HWDOY 1R  1R  0LFKLJDQ6RXWKHUQ55HWDOY  %UDQFK 6WsRVHSK&RXQWLHVHWDO %UDQFK 6WsRVHSK&RXQWLHVHWDO

DVVHUWLQJ D FODLP DJDLQVW LW IRU WRUWLRXV LQWHUIHUHQFH ZLWK WKHPRWLRQWRGLVPLVVE\VKRZLQJmDQ\DUJXDEOHEDVLVLQODZl EXVLQHVV EDVHG RQ WKH EHOLHI WKDW ,1( KDG HQWHUHG LQWR DQ IRUWKHFODLPVVHWIRUWKLQWKHFRPSODLQW,G DJUHHPHQWZLWK58$WRRSHUDWHRYHUWKHGLVSXWHG5DLO/LQH ,QFRQGXFWLQJRXUUHYLHZZHmFRQVWUXHWKHFRPSODLQWLQD $OWKRXJKWKHGLVWULFWFRXUWLQLWLDOO\JUDQWHG0620655jV OLJKW PRVW IDYRUDEOH WR WKH SODLQWLII DFFHSW DV WUXH DOO RI 0RWLRQIRU7HPSRUDU\5HVWUDLQLQJ2UGHUEDUULQJ,1(IURP SODLQWLII V ZHOOSOHDGHG IDFWXDO DOOHJDWLRQV DQG GHWHUPLQH RSHUDWLQJ RQ WKH 5DLO /LQH WKH GLVWULFW FRXUW XOWLPDWHO\ ZKHWKHUWKHSODLQWLIIFDQSURYHQRVHWRIIDFWVVXSSRUWLQJ>WKH@ GLVPLVVHGWKHDFWLRQIRUODFNRIVXEMHFWPDWWHUMXULVGLFWLRQ FODLPVWKDWZRXOGHQWLWOHKLPWRUHOLHIl/XGZLJY%RDUGRI 7KHFRXUWFRQFOXGHGWKDWWKH'HFODUDWRU\sXGJPHQW$FWGRHV 7UXVWHHV RI )HUULV 6WDWH 8QLY  )G   WK QRWSURYLGHDQLQGHSHQGHQWEDVLVIRUIHGHUDOVXEMHFWPDWWHU &LU  :HUHYLHZIRUFOHDUHUURUDQ\IDFWXDOILQGLQJVWKH MXULVGLFWLRQ DQG WKH SURYLVLRQV RI WKH ,&&7$ FLWHG E\ GLVWULFW FRXUW PDGH LQ GHFLGLQJ WKH PRWLRQ WR GLVPLVV 6HH 3ODLQWLIIV GHDOW RQO\ ZLWK WKH DXWKRULW\ RI WKH 6XUIDFH *DIIRUG Y *HQHUDO (OHF &R  )G   WK 7UDQVSRUWDWLRQ%RDUGWRUHJXODWHLQWHUVWDWHUDLOVHUYLFHDQG &LU   GLG QRW SURYLGH WKH FRXUW ZLWK MXULVGLFWLRQ RYHU 3ODLQWLIIVj FODLPV ,,,$1$/<6,6 ,,67$1'$5'2)5(9,(: 7KHVROHLVVXHEHIRUHWKLVFRXUWLVZKHWKHUWKHGLVWULFWFRXUW HUUHGLQGHWHUPLQLQJWKDWWKHUHZDVQREDVLVIRUIHGHUDOVXEMHFW 7KLVFRXUWUHYLHZVGHQRYRWKHGLVWULFWFRXUW VGHFLVLRQWR PDWWHUMXULVGLFWLRQLQWKLVFDVH86&†SURYLGHV GLVPLVV0620655jVFRPSODLQWIRUODFNRIVXEMHFWPDWWHU WKDWWKHmWKHGLVWULFWFRXUWVVKDOOKDYHRULJLQDOMXULVGLFWLRQRI MXULVGLFWLRQ6HH $QGHUVRQ Y /LEHUW\ /REE\ ,QF  86 DOO FLYLO DFWLRQV DULVLQJ XQGHU WKH &RQVWLWXWLRQ ODZV RU        0XVVRQ 7KHDWULFDO ,QF Y )HGHUDO WUHDWLHVRIWKH8QLWHG6WDWHVl   ,Q GHWHUPLQLQJZKHWKHUDQ ([SUHVV&RUS )G WK&LU   DFWLRQ mDULVHV XQGHUl IHGHUDO ODZ ZH DUH JRYHUQHG E\ WKH ZHOOSOHDGHG FRPSODLQW UXOH ZKLFK UHTXLUHV WKDW D IHGHUDO /DFNRIVXEMHFWPDWWHUMXULVGLFWLRQLVDQDIILUPDWLYHGHIHQVH TXHVWLRQ EH SUHVHQWHG RQ WKH IDFH RI WKH FRPSODLQW 6HH WKDWDGHIHQGDQWPD\DVVHUWLQDPRWLRQWRGLVPLVV)HG5 &DWHUSLOODU ,QF Y :LOOLDPV  86      &LY3 E  ,QUH'H/RUHDQ0RWRU&R )G /RXLVYLOOH 1DVKYLOOH55&RY0RWWOH\86   WK&LU   HPSKDVL]LQJWKDWWRVXUYLYHDPRWLRQWR     $FFRUGLQJO\ D FDVH DULVHV XQGHU IHGHUDO ODZ IRU GLVPLVVDFRPSODLQWPXVWFRQWDLQHLWKHUGLUHFWRULQGLUHFW SXUSRVHVRI†ZKHQLWLVDSSDUHQWIURPWKHIDFHRIWKH DOOHJDWLRQV UHVSHFWLQJ DOO PDWHULDO HOHPHQWV WR VXVWDLQ D SODLQWLIIjVFRPSODLQWHLWKHUWKDWWKHSODLQWLIIjVFDXVHRIDFWLRQ UHFRYHU\ XQGHU VRPH YLDEOH OHJDO WKHRU\  :KHUH VXEMHFW ZDVFUHDWHGE\IHGHUDOODZ0RWWOH\86DW RULIWKH PDWWHU MXULVGLFWLRQ LV FKDOOHQJHG SXUVXDQW WR  E   WKH SODLQWLIIjVFODLPLVEDVHGRQVWDWHODZDVXEVWDQWLDOGLVSXWHG SODLQWLII KDV WKH EXUGHQ RI SURYLQJ MXULVGLFWLRQ LQ RUGHU WR TXHVWLRQ RI IHGHUDO ODZ LV D QHFHVVDU\ HOHPHQW RI WKH VWDWH VXUYLYH WKH PRWLRQ 6HH 0RLU Y *UHDWHU &OHYHODQG 5HJ O FDXVHRIDFWLRQ*XOO\Y)LUVW1DWjO%DQN 86  7UDQVLW$XWK )G  WK&LU  6SHFLILFDOO\     )UDQFKLVH 7D[ %G Y &RQVWUXFWLRQ /DERUHUV WKHSODLQWLIIPXVWVKRZWKDWWKHFRPSODLQWmDOOHJHVDFODLP 9DFDWLRQ7UXVW86    m>2@QO\WKRVHFDVHV XQGHUIHGHUDOODZDQGWKDWWKHFODLPLVµVXEVWDQWLDOjl0XVVRQ LQ ZKLFK D ZHOOSOHDGHG FRPSODLQW HVWDEOLVKHV HLWKHU WKDW 7KHDWULFDO,QF )GDW7KHSODLQWLIIZLOOVXUYLYH IHGHUDOODZFUHDWHVWKHFDXVHRIDFWLRQRUWKDWWKHSODLQWLIIjV

Reference

Status
Published