Bell v. Johnson

U.S. Court of Appeals for the Sixth Circuit

Bell v. Johnson

Opinion

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

($51(67 %(// s5 ; 3ODLQWLII$SSHOODQW    1R Y  !  52%(57 s2+1621HWDO  'HIHQGDQWV   0$5. 67,03621 $//(1  %/$77(5   'HIHQGDQWV$SSHOOHHV 1

$SSHDOIURPWKH8QLWHG6WDWHV'LVWULFW&RXUW IRUWKH(DVWHUQ'LVWULFWRI0LFKLJDQDW'HWURLW 1R nsRKQ&RUEHWW2j0HDUD'LVWULFWsXGJH $UJXHG $XJXVW 'HFLGHGDQG)LOHG 2FWREHU %HIRUH .(,7+0225(DQG*,/0$1&LUFXLWsXGJHV BBBBBBBBBBBBBBBBB &2816(/ $5*8('   3DXO ' 5HLQJROG 81,9(56,7< 2) 0,&+,*$1 &/,1,&$/ /$: 352*5$0 $QQ $UERU

  %HOOYsRKQVRQHWDO 1R

0LFKLJDQIRU$SSHOODQWsRKQ/7KXUEHU2)),&(2)7+( $77251(<*(1(5$//DQVLQJ0LFKLJDQIRU$SSHOOHHV 21 %5,()   3DXO ' 5HLQJROG 81,9(56,7< 2) 0,&+,*$1 &/,1,&$/ /$: 352*5$0 $QQ $UERU 0LFKLJDQIRU$SSHOODQWsRKQ/7KXUEHU2)),&(2)7+( $77251(<*(1(5$//DQVLQJ0LFKLJDQIRU$SSHOOHHV BBBBBBBBBBBBBBBBB 23,1,21 BBBBBBBBBBBBBBBBB .$5(11(/6210225(&LUFXLWsXGJH7KH$SSHOODQW (DUQHVW %HOO sU D IRUPHU LQPDWH DW WKH 6WDWH 3ULVRQ IRU 6RXWKHUQ 0LFKLJDQ LQ sDFNVRQ msDFNVRQl  DSSHDOV WKH GLVWULFW FRXUWjV JUDQW RI MXGJPHQW DV D PDWWHU RI ODZ WR 'HIHQGDQWV$SSHOOHHV $ODQ %ODWWHU DQG 0DUN 6WLPSVRQ IROORZLQJWKHSUHVHQWDWLRQRISODLQWLIIjVFDVHLQFKLHILQDMXU\ WULDO%HOOjV† FODLPDOOHJHGWKDW%ODWWHUDQG6WLPSVRQ ZKRDUHERWKSULVRQJXDUGVDWsDFNVRQVKRRNGRZQKLVFHOO DQGFRQILVFDWHGKLVOHJDOSDSHUVDQGPHGLFDOGLHWVQDFNVLQ UHWDOLDWLRQIRUDFLYLOULJKWVODZVXLWILOHGE\%HOOZKLOHKHZDV DQ LQPDWH DW sDFNVRQ  7KH GLVWULFW FRXUW GHWHUPLQHG WKDW %HOOjVHYLGHQFHZDVLQVXIILFLHQWDVDPDWWHURIODZWRVKRZ WKDWDSHUVRQRIRUGLQDU\ILUPQHVVZRXOGEHGHWHUUHGE\WKH DOOHJHGUHWDOLDWRU\DFWV$OWHUQDWLYHO\WKHGLVWULFWFRXUWIRXQG WKDWWKHVWDQGDUGIRU)LUVW$PHQGPHQWFODLPVZDVQRWFOHDUO\ HVWDEOLVKHGDWWKHWLPHRIWKHHYHQWVLQTXHVWLRQ7KHGLVWULFW FRXUWFRQFOXGHGWKDWWKHHVWDEOLVKHGVWDQGDUGDWWKHWLPHRI WKHDOOHJHGUHWDOLDWRU\DFWVUHTXLUHGDQLQPDWHWRVKRZWKDWWKH GHIHQGDQWVjFRQGXFWmVKRFNHGWKHFRQVFLHQFHl)LQGLQJWKDW %HOOFRXOGQRWPHHWWKLVEXUGHQWKHFRXUWGHWHUPLQHGWKDWWKH GHIHQGDQWV ZHUH HQWLWOHG WR TXDOLILHG LPPXQLW\  )RU WKH UHDVRQV WKDW IROORZ ZH 5(9(56( WKH GLVWULFW FRXUWjV GHFLVLRQDQG5(0$1'IRUIXUWKHUSURFHHGLQJVFRQVLVWHQW ZLWKWKLVRSLQLRQ  %HOOYsRKQVRQHWDO 1R 1R %HOOYsRKQVRQHWDO 

,,,&21&/86,21 ,)$&76$1'352&('85( %DVHGXSRQWKHIRUHJRLQJGLVFXVVLRQZH5(9(56(WKH $)DFWXDO%DFNJURXQG GLVWULFWFRXUWjVJUDQWRIMXGJPHQWDVDPDWWHURIODZWRWKH GHIHQGDQWVDQG5(0$1'IRUIXUWKHUSURFHHGLQJVFRQVLVWHQW %HOOLVDIRUPHUSULVRQHUDWWKH6WDWH3ULVRQIRU6RXWKHUQ ZLWKWKLVRSLQLRQ 0LFKLJDQLQsDFNVRQ,Q  %HOOZDVVHUYLQJDVHQWHQFH IRU DUPHG UREEHU\  +H ZDV DVVLJQHG WR DGPLQLVWUDWLYH VHJUHJDWLRQ GXULQJ KLV VWD\ DW sDFNVRQ EHFDXVH KH ZDV GLDJQRVHGZLWK$,'6DQGKDGHQJDJHGLQFRQVHQVXDOVH[ZLWK DQRWKHULQPDWH%HOOZDVSDUROHGLQ %HOOUHWXUQHGWR s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jV DVVLVWDQFH %HOO ILOHG D ODZVXLW DJDLQVW VHYHQWHHQ SULVRQ JXDUGV DQG DGPLQLVWUDWRUV LQFOXGLQJ 6JW $ODQ%ODWWHUDQG2IILFHU0DUN6WLPSVRQ%HOOjVVXLWDOOHJHG DQXPEHURIFODLPVLQFOXGLQJDFKDOOHQJHWRKLVSODFHPHQWLQ DGPLQLVWUDWLYH VHJUHJDWLRQ  %HIRUH WKH ODZVXLW ZDV ILOHG SULVRQ JXDUGV DVVLVWHG %HOO E\ SURYLGLQJ KLP ZLWK ZULWLQJ PDWHULDOVDQGE\SDVVLQJSDSHUVDQGOHJDOPDWHULDOVEHWZHHQ %HOODQG7KDGGHXV; %HOOFODLPVWKDWWKHJXDUGVEHJDQWUHDWLQJKLPGLIIHUHQWO\ DIWHU WKH ODZVXLW ZDV ILOHG  7KH JXDUGV EHJDQ UHIXVLQJ WR  %HOOYsRKQVRQHWDO 1R 1R %HOOYsRKQVRQHWDO 

SURYLGH%HOOZLWKZULWLQJVXSSOLHVRUWRSDVVOHJDOPDWHULDOV LQPDWH DOOHJDWLRQV VXEVWDQWLDOO\ VLPLODU WR %HOOjV VWDWHG EHWZHHQ%HOODQG7KDGGHXV;$FFRUGLQJWR%HOODQGIHOORZ FRJQL]DEOHFODLPVIRU)LUVW$PHQGPHQWUHWDOLDWLRQXQGHUWKH LQPDWH(ULF:DGGHOO%HOOjVODZVXLWZDVFRPPRQNQRZOHGJH VDPHEDVLF)LUVW$PHQGPHQWSULQFLSOHVWKDWXQGHUOLH*LEEV DPRQJ WKH JXDUGV EHFDXVH 7KDGGHXV; IUHTXHQWO\ ERDVWHG DQG1HZVRP6HH:ULJKW )GDW  *UHHQ )G DERXW WKH VXLW DQG EHFDXVH WKH SULVRQHUV RQ WKH IORRU KDG DW   +DOO)GDW DFFRUG3HQURG )G GLVFXVVHGWKHVXLWE\VKRXWLQJIURPFHOOWRFHOO,QUHVSRQVH DW  GHQ\LQJ TXDOLILHG LPPXQLW\ EHFDXVH FOHDUO\ WRZKDWKHSHUFHLYHGWREHXQGXHKDUDVVPHQWE\VHYHUDORIWKH HVWDEOLVKHG ODZ LQ   SURKLELWHG FRQILVFDWLQJ OHJDO SULVRQ JXDUGV %HOO VHQW D m1RWLFH RI /LWLJDWLRQl WR WKH PDWHULDOVGHQ\LQJSULVRQHUVK\JLHQHLWHPVDQGWUDQVIHUULQJ VHYHQWHHQQDPHGGHIHQGDQWVLQKLVODZVXLWRQsXQH  SULVRQHUVWRVHJUHJDWLRQLQUHWDOLDWLRQIRUDFFHVVLQJFRXUWV FI 7KH QRWLFH H[SODLQHG WKDW %HOO KDG ILOHG D IHGHUDO ODZVXLW 6FKHUY(QJHONH )G   WK&LU   m7KLVLV DJDLQVWWKHQDPHGGHIHQGDQWVDQGZDUQHGWKDWm>D@Q\IXUWKHU DFOHDUFDVHRIDSULVRQHUZKRZDVVXEMHFWHGWRUHWDOLDWRU\FHOO KDUDVVPHQWRUUHWDOLDWLRQZLOOEHUHSRUWHGLPPHGLDWHO\WR>WKH VHDUFKHV DQG FRQGXFW YLRODWLRQV IRU EULQJLQJ WKH LOOLFLW GLVWULFWMXGJH@E\SODLQWLIIlsRLQW$SSHQGL[ ms$l DW FRQGXFWRIDSULVRQJXDUGWRWKHDWWHQWLRQRISULVRQRIILFLDOV 7KHODZPDNLQJUHWDOLDWLRQIRUWKHH[HUFLVHRIDFRQVWLWXWLRQDO 2QsXQH 6JW%ODWWHUFRQGXFWHGDVHDUFKRI%HOOjV ULJKWDFWLRQDEOHXQGHU† KDVEHHQHVWDEOLVKHGIRUVRPH FHOOZKLOH%HOOZDVLQWKHSULVRQ\DUGIRUKLVGDLO\KRXURI WLPHDQGDQREMHFWLYHO\UHDVRQDEOHRIILFLDOFRXOGQRWIDLOWR m\DUGWLPHl:KHQ%HOOUHWXUQHGWRKLVFHOOKHIRXQGWKHFHOO NQRZ RI LWl  FHUW GHQLHG  86      7KLV LQGLVDUUD\DQGKHQRWLFHGWKDWVRPHRIKLVOHJDOSDSHUVDQG DXWKRULW\IXUWKHULQIRUPVRXUXQGHUVWDQGLQJRIZKDWODZZDV KLVPHGLFDOGLHWVQDFNVKDGEHHQWDNHQ:DGGHOOZKRVHFHOO FOHDUO\HVWDEOLVKHGLQ 6HH&KDSSHO)GDW ,Q ZDVGLUHFWO\DFURVVWKHKDOOIURP%HOOjVVDZ%ODWWHUHQWHUWKH FRPELQDWLRQZLWKRXURZQGHFLVLRQVLQ*LEEVDQG1HZVRP FHOODQGOHDYHZLWKSDSHUVDQG%HOOjVVQDFNV%HOOWHVWLILHG ZHWKLQNWKLVDXWKRULW\ZRXOGKDYHDOHUWHGDUHDVRQDEOHSULVRQ WKDWKHZDVDOORZHGWRNHHSWKHPHGLFDOVQDFNVLQKLVFHOO RIILFLDO LQ   WKDW FRQILVFDWLQJ OHJDO SDSHUV DQG RWKHU EHFDXVHKHKDG$,'6DQGKHQHHGHGH[WUDIRRGWRVORZKLV SURSHUW\LQUHWDOLDWLRQIRUWKHSULVRQHUjVH[HUFLVHRIKLVULJKW ZHLJKWORVV$WWULDO%ODWWHUDGPLWWHGWRFRQGXFWLQJWKHFHOO RI DFFHVV WR WKH FRXUWV ZRXOG YLRODWH WKH LQPDWHjV VHDUFKDQGWRUHPRYLQJ%HOOjVPHGLFDOVQDFNVDOWKRXJKKH FRQVWLWXWLRQDOULJKWV GHQLHGWDNLQJDQ\OHJDOSDSHUV%ODWWHUDOVRDFNQRZOHGJHG WKDWWKHIRRGZDVJLYHQWR%HOOIRUPHGLFDOUHDVRQV ,Q VXP ZH FRQFOXGH WKDW WKH SODLQWLIIVj DOOHJDWLRQV LI SURYHQZRXOGHVWDEOLVKDYLRODWLRQRIWKHODZWKDWZDVFOHDUO\ %HOOILOHGWZRJULHYDQFHVFRQFHUQLQJWKHsXQHVHDUFKRI HVWDEOLVKHG LQ    2XU UHYLHZ RI WKH UHOHYDQW FDVH ODZ KLVFHOO2QsXQH %HOOVSRNHZLWK6JW%ODWWHUDQG UHYHDOVWKDWLWZDVQRWXQWLO0F/DXULQZDVLVVXHGLQ WKDW DVNHG KLP DERXW WKH OHJDO PDWHULDOV  $FFRUGLQJ WR %HOO D UHDVRQDEOH RIILFLDO PLJKW H[SHFW WR HVFDSH OLDELOLW\ IRU %ODWWHUUHVSRQGHGE\WHOOLQJ%HOOWKDWmLI>KH@NQHZZKDWZDV UHWDOLDWRU\DFWVIDOOLQJVKRUWRIFRQVFLHQFHVKRFNLQJDEXVHVRI JRRGIRUKLPWKDW>KH@EHWWHUZULWHWKHFRXUWV>DQG@KDYHWKH SRZHU3ULRUWRWKDWRSLQLRQWKHSXEOLVKHGDXWKRULW\LQRXU OLWLJDWLRQGLVPLVVHGls$DW 3O([K 2QsXQH FLUFXLWPDGHLWFOHDUWKDWWKHmVKRFNVWKHFRQVFLHQFHlWHVWGLG WKHSULVRQVWDIIPRYHG7KDGGHXV;IURPWKHVHFRQGIORRUWR QRWDSSO\WRUHWDOLDWLRQFODLPVH[SUHVVO\EURXJKWXQGHUWKH WKHEDVHOHYHORIDGPLQLVWUDWLYHVHJUHJDWLRQPDNLQJLWYHU\ )LUVW$PHQGPHQW:HWKHUHIRUHGHWHUPLQHWKDWGHIHQGDQWV DUHQRWHQWLWOHGWRTXDOLILHGLPPXQLW\  %HOOYsRKQVRQHWDO 1R 1R %HOOYsRKQVRQHWDO 

FLWHGE\WKHGHIHQGDQWVZDVYDFDWHGLQDSHUFXULDPRUGHU GLIILFXOWIRU%HOOWRFRPPXQLFDWHZLWKKLPDERXWWKHODZVXLW 0F/DXULQ)G  WK&LU  XQSXEOLVKHGWDEOH 7KDW GD\ %HOO ILOHG DQ DPHQGHG FRPSODLQW GHVFULELQJ WKH GHFLVLRQ  DQG WKHUHIRUH DQ\ VWDWHPHQWV FRQWDLQHG LQ WKDW UHWDOLDWRU\FHOOVHDUFKRQsXQH RSLQLRQODFNSUHFHGHQWLDOYDOXH 2QsXQH QRWLFHRI%HOOjVODZVXLWZDVRIILFLDOO\ :H FRQFOXGH WKDW*LEEV DQG 1HZVRP VHW IRUWK WKH OHJDO UHFHLYHG E\ WKH SULVRQ OLWLJDWLRQ FRRUGLQDWRU RQ EHKDOI RI VWDQGDUGVIRUD)LUVW$PHQGPHQWUHWDOLDWLRQFODLPRIZKLFKD GHIHQGDQWV%ODWWHUDQG6WLPSVRQ2QsXQH 2IILFHU UHDVRQDEOHRIILFLDOZRXOGKDYHEHHQDZDUHLQ 8QGHU 6WLPSVRQDOOHJHGO\FDPHWR%HOOjVFHOODQGWROG%HOOWKDWKH WKLVVWDQGDUGLWZDVFOHDUWKDWDGYHUVHDFWLRQVIDOOLQJVKRUWRI mZDVJRLQJWRSD\lIRUILOLQJWKHODZVXLWs$DW 6XSS mFRQVFLHQFHVKRFNLQJlDEXVHVRISRZHUZRXOGJLYHULVHWRD &RPSO :KLOH%HOOZDVLQWKHSULVRQ\DUGRQsXQH6JW FRJQL]DEOH FRQVWLWXWLRQDO FODLP LI WKH\ ZHUH XQGHUWDNHQ LQ %ODWWHUDQG2IILFHU6WLPSVRQDJDLQVHDUFKHG%HOOjVFHOO%HOO UHWDOLDWLRQ IRU D SULVRQHUjV H[HUFLVH RI KLV RU KHU )LUVW UHWXUQHGWRILQGWKDWPRUHRIKLVOHJDOPDWHULDOVZHUHPLVVLQJ $PHQGPHQWULJKWV:HFRQFOXGHWKDWDUHDVRQDEOHRIILFLDO :DGGHOOREVHUYHGWKLVVHDUFKIURPKLVFHOODQGVDZ%ODWWHU ZRXOGKDYHEHHQDZDUHWKDWXQGHUWKH*LEEVDQG1HZVRP DQG6WLPSVRQFRQILVFDWH%HOOjVIRRGDQGOHJDOSDSHUV%HOO VWDQGDUGFRQGXFWLQJKDUDVVLQJFHOOVHDUFKHVDQGFRQILVFDWLQJ ILOHGDQRWKHUJULHYDQFHIRXUGD\VODWHUVHHNLQJWKHUHWXUQRI DQLQPDWHjVOHJDOSDSHUVDQGPHGLFDOGLHWDU\VXSSOHPHQWVLQ KLVSURSHUW\ UHWDOLDWLRQIRUWKHLQPDWHjVH[HUFLVHRIKLVULJKWRIDFFHVVWR WKHFRXUWVZRXOGJLYHULVHWRFRQVWLWXWLRQDOOLDELOLW\7KHVH 0LFKLJDQ 'HSDUWPHQW RI &RUUHFWLRQV m0'2&l  SROLF\ DFWLRQV DUH FRPSDUDEOH LQ VHULRXVQHVV ZH WKLQN WR WKH UHJXODWHV VKDNHGRZQV RI SULVRQHUVj FHOOV  0'2& 3ROLF\ ZDUGHQjVUHIXVDOWRUHDSSRLQWDSULVRQHUDVDQLQPDWHOHJDO 'LUHFWLYH  SURYLGHV WKDW mQR VHDUFK VKDOO EH DGYLVRU WKDW ZDV DW LVVXH LQ 1HZVRP  )G   7KDW FRQGXFWHG IRU WKH SXUSRVH RI KDUDVVLQJ RU KXPLOLDWLQJ D RSLQLRQ LQ SDUWLFXODU PDGH LW TXLWH FOHDU WKDW DQ LQMXU\ SULVRQHUls$DW ([K 7KHSROLF\IXUWKHULQVWUXFWV LQIOLFWHGLQUHWDOLDWLRQIRUDQLQPDWHjVSURWHFWHGFRQGXFWQHHG SULVRQVWDIIWRmXVHUHDVRQDEOHFDUHLQFRQGXFWLQJWKHVHDUFK QRWEHVHYHUHWREHDFWLRQDEOH,GDW WR SURWHFW DQG VDIHJXDUG WKH SULVRQHUjV SURSHUW\ DQG    DWWHPSWWROHDYHVHDUFKHGDUHDVLQDVLPLODUFRQGLWLRQWRZKDW 0RUHRYHU ZH QRWH WKDW DW WKH WLPH RI WKH GHIHQGDQWVj WKH\ZHUHSULRUWRWKHVHDUFKls$DW3ULVRQVWDIIDUH DFWLRQVDWDQXPEHURIFDVHVIURPRWKHUFLUFXLWVKDGKHOGWKDW DOVRGLUHFWHGWRHQWHUWKHFHOOVHDUFKLQWRWKHFHOOVHDUFKORJ DQGWRFRPSOHWHDFRQWUDEDQGUHPRYDOUHFRUGDQGDQRWLFHRI LQWHQWWRFRQGXFWDQDGPLQLVWUDWLYHKHDULQJ ZKHQHYHUQRQ GDQJHURXVFRQWUDEDQGLVUHPRYHGIURPDSULVRQHUjVFHOO1R DSSOLHG LQFRQVLVWHQW DQDO\VHV IRU >SULVRQHU@ UHWDOLDWLRQ FODLPV RIWHQ HQWU\ZDVPDGHLQWKHFHOOVHDUFKORJQRUZDVDQ\QRWLFHRI UHTXLULQJ D SULVRQHU WR GHPRQVWUDWH WKDW WKH GHIHQGDQWjV FRQGXFW µVKRFNV LQWHQWILOHGLQFRQQHFWLRQZLWKHLWKHUWKHsXQHRUWKHsXQH WKH FRQVFLHQFHjl ,G DW  :H GHFOLQH GHIHQGDQWVj LQYLWDWLRQ WR DGRSW WKH UHDVRQLQJ RI :R]QLDN :R]QLDN ZDV XQSXEOLVKHG DQG WKHUHIRUH LV QRW VHDUFKRI%HOOjVFHOO ELQGLQJ RQ WKLV SDQHO 6DODPDOHNLV  )G DW  0RUHRYHU ZH WKLQN WKDW :R]QLDN PLVFRQVWUXHG 7KDGGHXV; $OWKRXJK LW LV WUXH WKDW WKH 7KDGGHXV; HQ EDQF RSLQLRQ QRWHG WKH H[LVWHQFH RI LQFRQVLVWHQW DXWKRULW\ LQ WKLV FLUFXLW WKH 7KDGGHXV; FRXUW H[SOLFLWO\ REVHUYHG WKDW WKH mVKRFNV WKH FRQVFLHQFHl VWDQGDUG KDG EHHQ LPSRVHG mPDLQO\ LQ XQSXEOLVKHG  RSLQLRQVl  )G DW  %DVHG XSRQ RXU UHYLHZ RI WKH SXEOLVKHG %DVH OHYHO RI VHJUHJDWLRQ LV WUDGLWLRQDOO\ UHVHUYHG IRU SRWHQWLDO DXWKRULW\ DYDLODEOH LQ   ZH FRQFOXGH WKDW WKH ODZ RI )LUVW $PHQGPHQW VXLFLGHV DQG PHQWDOO\ LOO LQPDWHV DQG LV NQRZQ IRU LWV mXQSOHDVDQW DQG UHWDOLDWLRQ ZDV FOHDU DW WKDW WLPH WKDW WKH mVKRFNV WKH FRQVFLHQFHl VWDQGDUG XQKHDOWK\ FRQGLWLRQVl 7KDGGHXV; Y %ODWWHU  )G   WK GLG QRW DSSO\ WR )LUVW $PHQGPHQW UHWDOLDWLRQ FDVHV &LU  HQ EDQF   %HOOYsRKQVRQHWDO 1R 1R %HOOYsRKQVRQHWDO 

%HOOVWDWHGWKDWKLVOHJDOPDWHULDOVZHUHQHYHUUHWXUQHGWR DW6HFRQGZHWKLQNWKDW0F/DXULQLQFRUUHFWO\GHVFULEHG KLP+HHYHQWXDOO\ZDVDEOHWRREWDLQFRSLHVIURPKLVVLVWHU WKHVWDWHRIWKHODZZKHQLWREVHUYHGWKDWWKH6L[WK&LUFXLWKDG ZKRKDGNHSWGXSOLFDWHVRIVRPHRIKLVILOLQJV%HOOWHVWLILHG FRQVLVWHQWO\UHTXLUHGLQPDWHVWRVKRZmFRQVFLHQFHVKRFNLQJl WKDWKHEHFDPHDQJU\DQGDIUDLGDVDUHVXOWRIWKHDFWLRQVRI EHKDYLRU WR VWDWH UHWDOLDWLRQ FODLPV  ,Q IDFW DOO RI RXU SULVRQRIILFLDOVUHJDUGLQJKLVODZVXLW+HH[SODLQHG m,ZDV SXEOLVKHGDXWKRULW\IROORZLQJ&DOHDQGSUHFHGLQJ0F/DXULQ DQJU\,WJRWWRWKHSRLQWZKHUH,ZDVNLQGRIVNHSWLFDOIURP ZDVWRWKHFRQWUDU\2WKHUWKDQWKH&DOHRSLQLRQWKHRQO\ JRLQJ WR WKH \DUG  , KDG VWDUWHG EHLQJ DIUDLG EHFDXVH P\ DXWKRULWLHVFLWHGE\0F/DXULQRQWKHmVKRFNVWKHFRQVFLHQFHl PHGLFDOVQDFNVWKH\FRXOGKDYHVWDUWHGWRGRLQJDQ\WKLQJWR UHTXLUHPHQWZHUHXQSXEOLVKHGFDVHV,WLVZHOOHVWDEOLVKHG P\IRRGls$DW %HOO7UDW  ODZ LQ WKLV FLUFXLW WKDW XQSXEOLVKHG FDVHV DUH QRW ELQGLQJ SUHFHGHQW6DODPDOHNLVY&RPPjURI6RF6HF)G %3URFHGXUDO+LVWRU\  WK&LU &DWWLQY*HQ0RWRUV&RUS )G Q WK&LU  7KHFRQFXUUHQFHLQ0F/DXULQ 3ODLQWLIIILOHGKLVLQLWLDOSURVHFRPSODLQWRQ0D\  PDGH WKLV YHU\ SRLQW  0F/DXULQ  )G DW  5\DQ %HOOjV RULJLQDO FRPSODLQW QDPHG VHYHQWHHQ GHIHQGDQWV FRQFXUULQJ  m>7@KHPDMRULW\jVUHOLDQFHRQXQSXEOLVKHGFDVH LQFOXGLQJ 6WLPSVRQ DQG %ODWWHU DQG DOOHJHG D QXPEHU RI ODZPD\EHLQWHUHVWLQJDVDQDFDGHPLFPDWWHUEXWWKRVHFDVHV FODLPVLQFOXGLQJUDFLDOGLVFULPLQDWLRQUHWDOLDWRU\KDUDVVPHQW VLPSO\ GR QRW KDYH WKH ZHLJKW RI DXWKRULW\l   7KXV WKH SULYDF\YLRODWLRQVYLRODWLRQVRIGXHSURFHVVDQGDOOHJDWLRQV XQSXEOLVKHGFDVHVFLWHGLQ0F/DXULQFRXOGQRWKDYHSURYLGHG WKDW FHUWDLQ FRQGLWLRQV RI KLV FRQILQHPHQW ZHUH FUXHO DQG DQ\ DVVXUDQFH WR D UHDVRQDEOH RIILFLDO WKDW WKH mVKRFNV WKH XQXVXDO  2Q sXO\    %HOO ILOHG D VXSSOHPHQWDO FRQVFLHQFHl VWDQGDUG ZRXOG KDYH EHHQ DSSOLHG LQ   FRPSODLQW DGGLQJ D FODLP RI )LUVW $PHQGPHQW UHWDOLDWLRQ SDUWLFXODUO\ LQ OLJKW RI FOHDU SXEOLVKHG DXWKRULW\ WR WKH EDVHGXSRQWKHFHOOVHDUFKHVE\6WLPSVRQDQG%ODWWHU2Q FRQWUDU\  0RUHRYHU ZH QRWH WKDW WKH 0F/DXULQ RSLQLRQ $XJXVW DIHGHUDOPDJLVWUDWHMXGJHLVVXHGDUHSRUW UHFRPPHQGLQJGLVPLVVDORIDOORISODLQWLIIjVFODLPVH[FHSWIRU KLVUHWDOLDWLRQFODLPVUHODWLQJWRWKHVHDUFKHVRIKLVFHOORQ  sXQHDQGsXQH ,QDQDO\]LQJWKH)LUVW$PHQGPHQW 7HOOLQJO\ WKH RULJLQDO SDQHO GHFLVLRQ LQ 7KDGGHXV; LVVXHG DSSUR[LPDWHO\ WZR PRQWKV EHIRUH 0F/DXULQ GLVFHUQHG QR DPELJXLW\ LQ UHWDOLDWLRQ FODLP WKH PDJLVWUDWH MXGJH UHMHFWHG GHIHQGDQWVj WKH ODZ RI )LUVW $PHQGPHQW UHWDOLDWLRQ   :/   DW  WK &LU DUJXPHQW WKDW %HOO ZDV UHTXLUHG WR VKRZ WKDW WKH DOOHJHG $SULO     5DWKHU LQ VHWWLQJ IRUWK WKH JRYHUQLQJ UHWDOLDWLRQ UHWDOLDWRU\DFWLRQVmVKRFNHGWKHFRQVFLHQFHl7KHPDJLVWUDWH SULQFLSOH WKH SDQHO FLWHG =LOLFK Y /RQJR  )G    WK &LU MXGJHQRWHGWKDWWKH6L[WK&LUFXLWKDGSUHYLRXVO\UXOHGWKDW    FHUW GHQLHG  86     DQG *LEEV  )G DW  DQG

FODLPVEDVHGXSRQH[SOLFLWFRQVWLWXWLRQDOJXDUDQWHHVVKRXOG VWDWHG VLPSO\ WKDW m>U@HWDOLDWLRQ DJDLQVW DQ LQPDWH IRU H[HUFLVLQJ KLV FRQVWLWXWLRQDO ULJKWV LV LWVHOI D YLRODWLRQ RI WKH &RQVWLWXWLRQl 7KDGGHXV; EHDQDO\]HGDFFRUGLQJWRWKHUHOHYDQWVWDQGDUGVDSSOLFDEOHWR   :/   DW  7KHUH ZDV QR VXJJHVWLRQ LQ WKH RULJLQDO WKH SDUWLFXODU ULJKW DW LVVXH UDWKHU WKDQ WKH mVKRFNV WKH 7KDGGHXV; RSLQLRQ WKDW WKH SODLQWLII KDG WR PHHW WKH KHLJKWHQHG mVKRFNV FRQVFLHQFHlVWDQGDUGDSSOLFDEOHWRVXEVWDQWLYHGXHSURFHVV WKH FRQVFLHQFHl WHVW 5DWKHU WKH FRXUW VWDWHG WKDW m>W@R WKH H[WHQW >WKH FODLPVs$DW FLWLQJ%UDOH\Y&LW\RI3RQWLDF )G GHIHQGDQWVj@ UHWDOLDWRU\ DFWLRQV JR EH\RQG GH PLQLPLV    WKH\ VXSSRUW

  WK &LU     7KH PDJLVWUDWH MXGJH WKHQ D UHWDOLDWLRQ FODLPl ,G DW 

FRQFOXGHGWKDWWKHSODLQWLIIjVDOOHJDWLRQVWDWHGDYDOLG)LUVW  $PHQGPHQWUHWDOLDWLRQFODLPLQOLJKWRIFDVHVIURPWKLVFRXUW 'HIHQGDQWV DOVR UHO\ RQ DQ XQSXEOLVKHG SHU FXULDP RUGHU LVVXHG E\ WKLV FRXUW LQ 7KDGGHXV; Y :R]QLDN  :/  WK &LU  ,Q DQGRWKHUFLUFXLWVSHUPLWWLQJ)LUVW$PHQGPHQWFODLPVWRJR :R]QLDN ZKLFK ZDV DSSHDOHG E\ WKH SODLQWLII 7KDGGHXV; SUR VH D SDQHO IRUZDUGRQVLPLODUIDFWV7KHGLVWULFWFRXUWHQWHUHGDQRUGHU RI WKLV FRXUW DIILUPHG WKH GLVWULFW FRXUWjV JUDQW RI TXDOLILHG LPPXQLW\ LQ D RQ2FWREHU DGRSWLQJWKHPDJLVWUDWHMXGJHjVUHSRUW SULVRQHU )LUVW $PHQGPHQW UHWDOLDWLRQ FODLP ,Q WKDW RUGHU ZH REVHUYHG WKDW mWKH >7KDGGHXV; HQ EDQF@ FRXUW QRWHG WKDW WKLV FLUFXLW SUHYLRXVO\ KDG  %HOOYsRKQVRQHWDO 1R 1R %HOOYsRKQVRQHWDO 

OLJKWRIWKHPRUHUHFHQW6XSUHPH&RXUWGHFLVLRQLQ*UDKDP DQGUHFRPPHQGDWLRQ3ODLQWLIIVXEVHTXHQWO\VHFXUHGFRXQVHO Y&RQQRU,DPFRQILGHQWWKDWWKH6L[WK&LUFXLWLQDQRWKHU DQG ILOHG D VHFRQG DPHQGHG FRPSODLQW RQ 0D\    FDVHLQYROYLQJDSULVRQJXDUGjVLQWHQWLRQDOLQIULQJHPHQWRIDQ %HOOjV VHFRQG DPHQGHG FRPSODLQW DVVHUWHG RQO\ WKH )LUVW LQPDWHjV)LUVW$PHQGPHQWULJKWVE\VRPHUHWDOLDWRU\DFWVRU $PHQGPHQWUHWDOLDWLRQFODLPVDULVLQJIURPWKHWZRVHDUFKHV WKUHDWV ZRXOG OLNH 1HZVRP DOORZ WKH ILQGLQJ RI D RI%HOOjVFHOORQsXQHDQGsXQH  FRQVWLWXWLRQDOWRUWZLWKRXWWKHQHHGIRUDVHSDUDWHILQGLQJ LQ D EHQFK WULDO WKDW WKLV EHKDYLRU DOVR HLWKHU µVKRFNV WKH 'HIHQGDQWVILOHGDPRWLRQIRUVXPPDU\MXGJPHQWLQ  FRQVFLHQFHj RU LV DQ µHJUHJLRXV DEXVH RI JRYHUQPHQWDO DIWHUWKLVFRXUWKDQGHGGRZQLWVGHFLVLRQLQ0F/DXULQY&ROH SRZHUjl 2XUFRQFOXVLRQLVVXSSRUWHGE\WKHIDFWWKDWLQKLV )G WK&LU  YDFDWHG)G  WK&LU  UHSRUWDQGUHFRPPHQGDWLRQWKHPDJLVWUDWHMXGJHLQWKH   XQSXEOLVKHGWDEOHGHFLVLRQ 'HIHQGDQWVFODLPHGWKDW LQVWDQW FDVH H[SUHVVHG WKH EHOLHI WKDW LW ZDV FOHDU XQGHU 0F/DXULQFODULILHGWKHOHJDOVWDQGDUGIRU)LUVW$PHQGPHQW *UDKDP 86DQG%UDOH\ )GDWWKDW UHWDOLDWLRQFODLPVLQVRIDUDVLWKHOGWKDWDQLQPDWHDOOHJLQJ WKHmVKRFNVWKHFRQVFLHQFHlWHVWGLGQRWDSSO\WR%HOOjV)LUVW )LUVW$PHQGPHQWUHWDOLDWLRQPXVWEHDEOHWRVKRZWKDWWKH $PHQGPHQWUHWDOLDWLRQFODLPVs$DW m7ZR\HDUVDIWHU DOOHJHG UHWDOLDWRU\ DFWLRQV ZHUH VR HJUHJLRXV RU RSSUHVVLYH &DOHWKH6L[WK&LUFXLWUHFRJQL]HGWKDWVXEVWDQWLYH GXH WKDW WKH\ mVKRFNHG WKH FRQVFLHQFHl  7KH PDJLVWUDWH MXGJH SURFHVVFODLPVEDVHGRQH[SOLFLWFRQVWLWXWLRQDOJXDUDQWHHV DGGUHVVHG WKLV FODLP LQ KLV 1RYHPEHU    UHSRUW DQG RIIHUDPRUHFRQFUHWHDQGWKHUHIRUHVXSHULRUJXLGHWRMXGJHV UHFRPPHQGDWLRQ  1RWLQJ WKDW 0F/DXULQ ZDV m>W@KH RQO\ WKDQ LQWXLWLYH VWDQGDUGV VXFK DV EHKDYLRU WKDW VKRFNV WKH UHFHQWSXEOLVKHGRSLQLRQE\WKH6L[WK&LUFXLWDGGUHVVLQJWKH FRQVFLHQFHl TXRWDWLRQVRPLWWHG  LVVXHRIDSULVRQHUjVFODLPRIUHWDOLDWLRQlWKHPDJLVWUDWHMXGJH FRQFOXGHG WKDW WKH mVKRFNV WKH FRQVFLHQFHl WHVW ZDV WKH 'HIHQGDQWVUHO\RQWKLVFRXUWjV RSLQLRQLQ0F/DXULQ DSSURSULDWH OHJDO VWDQGDUG IRU %HOOjV FODLP  s$ DW  )GDVHYLGHQFHWKDWWKHmVKRFNVWKHFRQVFLHQFHl 1HYHUWKHOHVVWKHPDJLVWUDWHMXGJHFRQFOXGHGWKDWWKHIDFWV WHVWDSSOLHGWRSULVRQHUUHWDOLDWLRQFODLPVDWWKHWLPHRIWKH SUHVHQWHGE\%HOOZHUHVXIILFLHQWWRVWDWHDFODLPXQGHUWKH GHIHQGDQWVj DFWLRQV  ,Q 0F/DXULQ D SDQHO RI WKLV FRXUW 0F/DXULQVWDQGDUG7KHPDJLVWUDWHMXGJHH[SODLQHG REVHUYHG WKDW mWKLV FRXUW KDV UHSHDWHGO\ GHPDQGHG WKDW UHWDOLDWLRQ FODLPV DULVLQJ IURP WKH H[HUFLVH RI )LUVW , DP VDWLVILHG WKDW VKRXOG LW EH GHWHUPLQHG WKDW $PHQGPHQWULJKWVEHVKRFNLQJWRWKHFRQVFLHQFHl,GDW 'HIHQGDQWVLQIDFWHQJDJHGLQWKHGLVSXWHGFRQGXFWWKHLU 7KXVWKH0F/DXULQFRXUWFRQFOXGHGWKDWWKHSODLQWLIILQPDWH DFWLRQVUHDFKWKHOHYHORIVKRFNLQJWKHFRQVFLHQFHDQGRI LQWKDWFDVHFRXOGQRWVWDWHDYDOLGUHWDOLDWLRQFODLPZKHUHWKH DQ HJUHJLRXV DEXVH RI JRYHUQPHQWDO SRZHU  7KH RQO\ UHWDOLDWRU\ DFW DOOHJHG ZDV WKH ILOLQJ RI D IDOVH PDMRU XQZDUUDQWHGVHL]XUHRIDSULVRQHUjVDXWKRUL]HGSURSHUW\ PLVFRQGXFWWLFNHW,GDW'HIHQGDQWVFRQWHQGWKDWWKH ZKDWHYHUWKHPRQHWDU\YDOXHRIWKDWSURSHUW\PD\EHLV 0F/DXULQ FRXUWjV REVHUYDWLRQ WKDW WKH mVKRFNV WKH DQLJQREOHDQGFRZDUGO\DEXVHRIDXWKRULW\DWEHVW,W FRQVFLHQFHl WHVW KDG EHHQ URXWLQHO\ DSSOLHG LQ WKLV FLUFXLW FRQWULEXWHV WR WKH PDOLJQDQW GLVWUXVW DQG DQWDJRQLVP SULRUWR GHPRQVWUDWHVWKDWWKLVVWDQGDUGZDVWKHFOHDUO\ ZKLFK DOO WRR RIWHQ OHDGV WR SK\VLFDO FRQIOLFW DQG HVWDEOLVKHGODZLQ  LQMXU\$WKHIWPRWLYDWHGE\DQLQWHQWWRLQWLPLGDWHD SULVRQHU WKURXJK DG KRF XQRIILFLDO GLVFLSOLQH LV 'HIHQGDQWVj UHOLDQFH RQ 0F/DXULQ LV PLVSODFHG  )LUVW SDUWLFXODUO\ RGLRXV WR WKH SRLQW RI VKRFNLQJ WKH 0F/DXULQZDVGHFLGHGVHYHUDO\HDUVDIWHUWKHHYHQWVDWLVVXH FRQVFLHQFH LQWKHLQVWDQWVXLWDQGWKHUHIRUHFRXOGQRWIRUPWKHEDVLVIRU DUHDVRQDEOHRIILFHUjVXQGHUVWDQGLQJRIWKHODZLQ ,G  %HOOYsRKQVRQHWDO 1R 1R %HOOYsRKQVRQHWDO 

s$ DW   &RQVHTXHQWO\ WKH PDJLVWUDWH MXGJH WKH VDPH VWDQGDUGV DSSOLHG WR VXFK FODLPV LQ WKH RWKHU UHFRPPHQGHGWKDWGHIHQGDQWVjPRWLRQIRUVXPPDU\MXGJPHQW FRQWH[WV UDWKHU WKDQ WKH mVKRFN WKH FRQVFLHQFHl VWDQGDUG RQ WKH PHULWV DQG RQ TXDOLILHG LPPXQLW\ EH GHQLHG  7KH DSSOLFDEOHWRVXEVWDQWLYHGXHSURFHVVFODLPV GLVWULFW FRXUW DGRSWHG WKH PDJLVWUDWHjV UHSRUW DQG UHFRPPHQGDWLRQLQDQRUGHUHQWHUHGRQ'HFHPEHU  ,Q DGGLWLRQ ZH WKLQN WKDW DQ\ UHDVRQDEOH GRXEW DV WR ZKHWKHU WKH mVKRFNV WKH FRQVFLHQFHl WHVW DSSOLHG WR )LUVW 7KHGLVWULFWFRXUWSODFHG%HOOjVFDVHRQWKHLQDFWLYHGRFNHW $PHQGPHQWUHWDOLDWLRQFODLPVZDVDOPRVWFHUWDLQO\GLVSHOOHG IRU VHYHUDO PRQWKV ZKLOH LW DZDLWHG WKLV FRXUWjV HQ EDQF E\WKH6XSUHPH&RXUWjVRSLQLRQLQ*UDKDPY&RQQRU  GHFLVLRQ LQ 7KDGGHXV; Y %ODWWHU  )G  WK &LU 86     LVVXHG RQH \HDU DIWHU &DOH DQG RXU RZQ  7KHVXLWLQ7KDGGHXV;ZDVILOHGVHSDUDWHO\IURPWKH FDVHV IROORZLQJ *UDKDP  ,Q *UDKDP WKH 6XSUHPH &RXUW LQVWDQWFDVH7KDWVXLWZDVILOHGE\WKHSODLQWLII%HOODORQJ UHMHFWHGWKHXVHRIWKH)RXUWHHQWK$PHQGPHQWmVKRFNVWKH ZLWK KLV MDLOKRXVH ODZ\HU 7KDGGHXV;  $OWKRXJK WKH WZR FRQVFLHQFHl VWDQGDUG LQ FDVHV LQYROYLQJ H[FHVVLYH IRUFH FDVHV ZHUH GRFNHWHG ZLWK GLIIHUHQW GLVWULFW MXGJHV WKH\ FODLPVRWKHUZLVHFRJQL]DEOHXQGHUWKH)RXUWK$PHQGPHQW LQYROYHG VXEVWDQWLDOO\ WKH VDPH VHTXHQFH RI HYHQWV  7KH ,GDW 7KH*UDKDP&RXUWFOHDUO\LQVWUXFWHGWKDWm>W@KH LQVWDQW DSSHDO FRQFHUQV WKH RULJLQDO VXLW ILOHG E\ %HOO WR YDOLGLW\RI>D† @FODLPPXVWEHMXGJHGE\UHIHUHQFH ZKLFK%HOOjV)LUVW$PHQGPHQWUHWDOLDWLRQFODLPVUHODWLQJWR WR WKH VSHFLILF FRQVWLWXWLRQDO VWDQGDUG ZKLFK JRYHUQV WKDW WKH WZR FHOO VHDUFKHV RI sXQH  DQG    ZHUH ULJKWlUDWKHUWKDQWKHPRUHJHQHUDOmVKRFNVWKHFRQVFLHQFHl VXEVHTXHQWO\ DGGHG  7KH VXLW LQ 7KDGGHXV; DOOHJHG WHVWDSSOLFDEOHWRVXEVWDQWLYHGXHSURFHVVFODLPV,G$IWHU UHWDOLDWLRQ FODLPV RQ EHKDOI RI ERWK %HOO DQG 7KDGGHXV; WKH 6XSUHPH &RXUWjV GHFLVLRQ LQ *UDKDP ZH KHOG LQ D DULVLQJ IURP RWKHU DFWLRQV WDNHQ E\ SULVRQ RIILFLDOV LQ QXPEHURIFDVHVWKDWWKHmVKRFNVWKHFRQVFLHQFHlWHVWDSSOLHG UHVSRQVHWR%HOOjVVXLWLQDGGLWLRQWRDQ(LJKWK$PHQGPHQW RQO\ WR FODLPV WKDW FRXOG QRW EH WUDFHG WR DQ H[SOLFLW FODLP UDLVHG E\ 7KDGGHXV; FKDOOHQJLQJ WKH FRQGLWLRQV RI FRQVWLWXWLRQDOJXDUDQWHH$VRQHSDQHOH[SODLQHGLQ  LQFDUFHUDWLRQRQWKHEDVHOHYHORIDGPLQLVWUDWLYHVHJUHJDWLRQ %HOOjVFODLPLQ7KDGGHXV;VWHPPHGIURPKLVDOOHJDWLRQVWKDW ,IDSSHOODQWjV† FODLPLVFRQVWUXHGWREHEDVHGRQDQ DQRWKHU FHOOEORFN RIILFHU QDPHG .DUD]LP GHOLEHUDWHO\ DOOHJHG YLRODWLRQ RI VXEVWDQWLYH GXH SURFHVV WKHQ WKH KDUDVVHG KLP DQG WKUHDWHQHG WR VHUYH KLP RQO\ FROG PHDOV FODLPPXVWEHEDVHGHLWKHURQDYLRODWLRQRIDQH[SOLFLW XQOHVVKHGURSSHGKLVODZVXLW7KDGGHXV;)GDW  FRQVWLWXWLRQDOJXDUDQWHH HJDIRXUWKDPHQGPHQWLOOHJDO VHL]XUH YLRODWLRQ  RU RQ EHKDYLRU E\ D VWDWH DFWRU WKDW ,Q7KDGGHXV;ZHGHILQLWLYHO\VWDWHGWKDWWKHmVKRFNVWKH VKRFNVWKHFRQVFLHQFH$SSHOODQWjVFRPSODLQWDOOHJHVQR FRQVFLHQFHl WHVW ZDV QRW WKH DSSURSULDWH VWDQGDUG IRU D YLRODWLRQ RI D VSHFLILF FRQVWLWXWLRQDO JXDUDQWHH SULVRQHU)LUVW$PHQGPHQWUHWDOLDWLRQFODLP,GDW 7KHUHIRUH WKH FODLP PXVW EH EDVHG RQ EHKDYLRU WKDW ,QVWHDGZHH[SODLQHGWKDWDQDGYHUVHDFWLRQXQGHUWDNHQ VKRFNVWKHFRQVFLHQFH LQ UHWDOLDWLRQ IRU D SULVRQHUjV H[HUFLVH RI KLV RU KHU )LUVW $PHQGPHQWULJKWVFRXOGYLRODWHWKH)LUVW$PHQGPHQWmLILWLV %UDOH\ )GDW VHHDOVR0HUWLNY%ODORFN  FDSDEOH RI GHWHUULQJ D SHUVRQ RI RUGLQDU\ ILUPQHVV IURP )G   WK &LU    0DQVILHOG $SDUWPHQW H[HUFLVLQJKLVRUKHUULJKWWRDFFHVVWKHFRXUWVl,GDW  2ZQHUV$VVjQY&LW\RI0DQVILHOG )G  WK &LU  7KHVHFDVHVZHWKLQNKDGFOHDUO\HVWDEOLVKHGE\ $IWHUZHLVVXHGRXURSLQLRQLQ7KDGGHXV;WKHLQVWDQWVXLW  WKDWWKHmVKRFNVWKHFRQVFLHQFHlWHVWZRXOGQRWDSSO\WR ZDVUHWXUQHGWRDFWLYHVWDWXVDQGWKHGLVWULFWFRXUWVFKHGXOHG † FODLPVEDVHGH[SUHVVO\RQWKH)LUVW$PHQGPHQW6HH 5LOH\Y.XUW] )6XSS  ('0LFK   m,Q  %HOOYsRKQVRQHWDO 1R 1R %HOOYsRKQVRQHWDO

mHYHQPLQLPDOLQIULQJHPHQWXSRQ)LUVW$PHQGPHQWYDOXHV DMXU\WULDO7KHWULDOEHJDQRQsDQXDU\$WWKH FRQVWLWXWHVLUUHSDUDEOHLQMXU\l,GDW$OWKRXJKZHPDGH FORVH RI WKH SODLQWLIIjV FDVH WKH GHIHQGDQWV PRYHG IRU SDVVLQJUHIHUHQFHWR&DOHLQWKH1HZVRPFDVHLGDW MXGJPHQWDVDPDWWHURIODZSXUVXDQWWR)HGHUDO5XOHRI&LYLO ZH GLG QRW DSSO\ WKH )RXUWHHQWK $PHQGPHQW mVKRFNV WKH 3URFHGXUH D 7KHGHIHQGDQWVDUJXHGWKDW%HOOjVSURRIZDV FRQVFLHQFHlVWDQGDUG7RWKHFRQWUDU\ZHHPSKDVL]HGWKDW LQVXIILFLHQWWRVDWLVI\WKHVWDQGDUGIRUUHWDOLDWLRQDQQRXQFHG mGLUHFW UHWDOLDWLRQ E\ WKH VWDWH IRU KDYLQJ H[HUFLVHG )LUVW LQ7KDGGHXV;,QWKHDOWHUQDWLYHWKHGHIHQGDQWVDUJXHGWKDW $PHQGPHQWIUHHGRPVLQWKHSDVWLVSDUWLFXODUO\SURVFULEHG WKH mVKRFNV WKH FRQVFLHQFHl VWDQGDUG VKRXOG EH DSSOLHG WR E\WKH)LUVW$PHQGPHQWl,GDW  HPSKDVLVDGGHG  GHIHQGDQWVjFRQGXFWVLQFHWKDWZDVWKHVWDQGDUGLQHIIHFWDW WKHWLPHRIWKHLUDFWLRQV ,Q*LEEVDQLQPDWHmMDLOKRXVHODZ\HUlDOOHJHGWKDWSULVRQ RIILFLDOVLQWHQWLRQDOO\GHOD\HGKLVUHOHDVHIURPDGPLQLVWUDWLYH 7KHGLVWULFWFRXUWJUDQWHGGHIHQGDQWVjPRWLRQ7KHFRXUW VHJUHJDWLRQLQUHWDOLDWLRQIRUKLVDVVLVWLQJRWKHUSULVRQHUVZLWK ILUVW QRWHG LWV EHOLHI WKDW m>W@KH SURSRVLWLRQ WKDW D SODLQWLII OHJDO PDWWHUV  :H KHOG WKDW WKHVH DOOHJDWLRQV VWDWHG DQ ZRXOGEHDEOHWRXVH>VHFWLRQ@ WRSURWHFWRQHRIRXUPRVW DFWLRQDEOH)LUVW$PHQGPHQWUHWDOLDWLRQFODLP*LEEV)G VDFUHGFRQVWLWXWLRQDOULJKWVEDVHGQRWXSRQKLVRZQHIIHFWLYH DW ,QRXUGLVFXVVLRQRIWKHSODLQWLIIjVFODLPZHFLWHG0W GHSULYDO>VLF@RIWKRVHULJKWVEXWXSRQDGHSULYDO>VLF@ZKLFK +HDOWK\&LW\6FKRRO'LVWULFW%RDUGRI(GXFDWLRQY'R\OH PLJKW KDYH LQMXUHG VRPH K\SRWKHWLFDO SHUVRQ RI RUGLQDU\  86   DSXEOLFHPSOR\PHQWUHWDOLDWLRQ ILUPQHVV n ZKDWHYHU WKDW PHDQV n LV QRW D MXGLFLDOO\ RU FDVHIRUWKHSURSRVLWLRQWKDWmJRYHUQPHQWRIILFLDOVPD\QRW MXULGLFDOO\VDWLVI\LQJSURSRVLWLRQls$DW 7XUQLQJWR UHWDOLDWH DJDLQVW SHUVRQV ZKR KDYH SDUWLFLSDWHG LQ WKH PHULWV WKH FRXUW FRQFOXGHG WKDW WKH mVKRFNV WKH FRQVWLWXWLRQDOO\SURWHFWHGFRQGXFWl*LEEV)GDW FRQVFLHQFHlVWDQGDUGUDWKHUWKDQWKH7KDGGHXV;VWDQGDUG :HDOVRREVHUYHGWKDWD)LUVW$PHQGPHQWUHWDOLDWLRQFODLPLV ZDVmWKHRQO\ODZRIZKLFKJXDUGVZKRDUHGHIHQGDQWVKHUH HTXLYDOHQW WR D FODLP RI GLUHFW LQWHUIHUHQFH ZLWK )LUVW FRXOGKDYHEHHQDZDUHRQsXQH ls$DW7KHFRXUW $PHQGPHQWULJKWV FRQFOXGHGWKDWDVDPDWWHURIODZWKHSODLQWLIIKDGQRWVKRZQ WKDW GHIHQGDQWVj DFWLRQV VKRFNHG WKH FRQVFLHQFH  ,Q WKH +HUHVHJUHJDWLRQRIDmMDLOKRXVHODZ\HUlLQUHWDOLDWLRQ DOWHUQDWLYHWKHFRXUWUXOHGWKDW%HOOKDGSUHVHQWHGLQVXIILFLHQW IRU SURYLGLQJ OHJDO DLG LV HTXLYDOHQW WR WKH SULVRQ HYLGHQFHWRVKRZWKDWWKHGHIHQGDQWVjDFWLRQVZRXOGGHWHUD UHJXODWLRQEDUULQJ>LQPDWHOHJDO@DVVLVWDQFHLQ>s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n QRWHG WKDW 7KDGGHXV; KDG YROXQWDULO\ GLVPLVVHG KLV VHSDUDWH (LJKWK

ZKLFKZDVLVVXHGMXVWRQH\HDUEHIRUHWKHHYHQWVDWLVVXHLQ $PHQGPHQW FODLP ZLWK WKH UHVXOW WKDW WKH RQO\ FODLPV UHPDLQLQJ LQ HLWKHU

WKHLQVWDQWFDVHnZHWKLQNLWZDVFOHDUWKDWDQLQPDWHjV)LUVW FDVH ZHUH WKH )LUVW $PHQGPHQW UHWDOLDWLRQ FODLPV DULVLQJ IURP WKH VDPH VHTXHQFH RI HYHQWV IROORZLQJ %HOOjV LQLWLDWLRQ RI WKH LQVWDQW ODZVXLW 7KH $PHQGPHQWUHWDOLDWLRQFODLPZRXOGEHDVVHVVHGDFFRUGLQJWR GLVWULFW FRXUW HQWHUHG D RQHVHQWHQFH RUGHU RQ 1RYHPEHU   GHQ\LQJ SODLQWLIIjV PRWLRQ IRU FRQVROLGDWLRQ  %HOOYsRKQVRQHWDO 1R 1R %HOOYsRKQVRQHWDO 

,jP QRW VXUH KRZ WKLV HYLGHQFH FRXOG EH SUHVHQWHG WKDWWKHLQPDWHjVFODLPZDVEDVHGRQKLVJHQHUDOVXEVWDQWLYH IUDQNO\SHUKDSVE\DQH[SHUWLIWKHUHDUHDQ\H[SHUWV GXH SURFHVV ULJKWV DQG QRW RQ WKH )LUVW $PHQGPHQWl ,jPQRWVXUHHLWKHUWKDWZHjUHGHDOLQJZLWKDYHU\JRRG 7KDGGHXV;)GDW&DOHGUHZWKHmVKRFNVWKH OHJDOVWDQGDUGLILWUHTXLUHVMXURUVWRGLYLQHZKDWOHYHORI FRQVFLHQFHlVWDQGDUGIURPDPDOLFLRXVSURVHFXWLRQFDVHDQG FKDUDFWHUILUPQHVVZRXOGEHUHTXLUHGWRDOORZDSULVRQHU D FDVH LQYROYLQJ FKLOG FXVWRG\ ULJKWV QRW IURP )LUVW LQDGPLQLVWUDWLYHVHJUHJDWLRQWRSHUVLVW+RZGRMXURUV $PHQGPHQWFDVHV)GDW  7KH&DOHFRXUWPDGH GRWKDW"7KH\jUHWKHUHZHKRSHWKH\jUHWKHUHEDVHGRQ UHIHUHQFHWRWKH)LUVW$PHQGPHQWRQO\LQLWVFRQGHPQDWLRQRI WKHLURZQH[SHULHQFH:HOOWKDWLVDQH[SHULHQFHWKDW WKH GHIHQGDQWVj PRWLYHV  :H WKHUHIRUH GR QRW WKLQN D RQO\DUDUHMXURUZRXOGHYHUKDYH UHDVRQDEOH RIILFHU ZRXOG KDYH H[SHFWHG &DOH WR DSSO\ WR LQPDWHFODLPVUDLVHGH[SUHVVO\XQGHUWKH)LUVW$PHQGPHQW s$DW)ROORZLQJWKHGLVWULFWFRXUWj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mKDVEHHQIXOO\KHDUGRQDQLVVXHDQGWKHUH DOOHJHG WKDW WKH ZDUGHQ KDG UHIXVHG WR UHDSSRLQW WKHP DV LVQROHJDOO\VXIILFLHQWHYLGHQWLDU\EDVLVIRUDUHDVRQDEOHMXU\ LQPDWHDGYLVRUVLQUHWDOLDWLRQIRUFRPSODLQWVWKH\KDGILOHG WRILQGIRUWKDWSDUW\RQWKDWLVVXHl,QFRQVLGHULQJD5XOH ZLWK WKH SULVRQ GLVFLSOLQDU\ ERDUG  :H FRQFOXGHG WKDW PRWLRQmWKHFRXUWVKRXOGUHYLHZDOORIWKHHYLGHQFHLQWKH SODLQWLIIVKDGVKRZQVXIILFLHQWOLNHOLKRRGRIVXFFHVVRQWKHLU UHFRUGl  5HHYHV Y 6DQGHUVRQ 3OXPELQJ 3URGV ,QF  UHWDOLDWLRQFODLPWRZDUUDQWWKHLQMXQFWLRQ:HH[SODLQHGWKDW 86  m,QGRLQJVRKRZHYHUWKHFRXUWPXVW HYHQWKRXJKWKHSODLQWLIIVKDGQRSURWHFWHGSURSHUW\LQWHUHVW GUDZ DOO UHDVRQDEOH LQIHUHQFHV LQ IDYRU RI WKH QRQPRYLQJ LQPDLQWDLQLQJWKHLUSRVLWLRQVDVLQPDWHDGYLVRUVm>L@WLVZHOO SDUW\DQGLWPD\QRWPDNHFUHGLELOLW\GHWHUPLQDWLRQVRUZHLJK UHFRJQL]HG WKDW LW LV FRQVWLWXWLRQDOO\ LPSHUPLVVLEOH WR WKHHYLGHQFHl,Gm7KDWLVWKHFRXUWVKRXOGJLYHFUHGHQFHWR WHUPLQDWHHYHQDXQLODWHUDOH[SHFWDWLRQRIDSURSHUW\LQWHUHVW WKHHYLGHQFHIDYRULQJWKHQRQPRYDQWDVZHOODVWKDWHYLGHQFH LQDPDQQHUZKLFKYLRODWHVULJKWVRIH[SUHVVLRQSURWHFWHGE\ VXSSRUWLQJ WKH PRYLQJ SDUW\ WKDW LV XQFRQWUDGLFWHG DQG WKH)LUVW$PHQGPHQWl1HZVRP)GDW'UDZLQJ XQLPSHDFKHGDWOHDVWWRWKHH[WHQWWKDWWKDWHYLGHQFHFRPHV RQSXEOLFHPSOR\PHQWFDVHVZHH[SODLQHGWKDWm>H@[LVWLQJ IURPGLVLQWHUHVWHGZLWQHVVHVl,GDW TXRWDWLRQRPLWWHG  FDVH SUHFHGHQW LQGLFDWHV WKDW D IDLOXUH WR UHDSSRLQW DQ LQGLYLGXDOWRDSRVLWLRQLVLPSHUPLVVLEOHHYHQZKHUHWKHUH %4XDOLILHG,PPXQLW\ ZDV QR FRJQL]DEOH H[SHFWDWLRQ RI FRQWLQXHG VHUYLFH LI %RWK SDUWLHV FKDUDFWHUL]H WKH GLVWULFW FRXUWjV UXOLQJ DV D UHDSSRLQWPHQW ZDV GHQLHG EHFDXVH RI WKH LQGLYLGXDOjV GHWHUPLQDWLRQ WKDW WKH GHIHQGDQWV DUH DV D PDWWHU RI ODZ H[HUFLVH RI )LUVW $PHQGPHQW ULJKWVl  ,G DW   7KXV HQWLWOHGWRTXDOLILHGLPPXQLW\IURPVXLW$FFRUGLQJWRWKH 1HZVRPFOHDUO\HVWDEOLVKHGWKDWDQLQPDWHQHHGQRWVKRZWKDW GRFWULQH RI TXDOLILHG LPPXQLW\ mJRYHUQPHQW RIILFLDOV WKH UHWDOLDWRU\ DFWLRQ VWDQGLQJ DORQH ZDV VXIILFLHQWO\ SHUIRUPLQJ GLVFUHWLRQDU\ IXQFWLRQV JHQHUDOO\ DUH VKLHOGHG HJUHJLRXVWRYLRODWHWKH&RQVWLWXWLRQ,QGHHGLQILQGLQJWKDW IURPOLDELOLW\IRUFLYLOGDPDJHVLQVRIDUDVWKHLUFRQGXFWGRHV WKHSODLQWLIIVKDGVKRZQLUUHSDUDEOHLQMXU\ZHH[SODLQHGWKDW  %HOOYsRKQVRQHWDO 1R 1R %HOOYsRKQVRQHWDO 

,QVWHDGWKHGLVWULFWFRXUWGHWHUPLQHGWKDWWKHHVWDEOLVKHGODZ QRWYLRODWHFOHDUO\HVWDEOLVKHGVWDWXWRU\RUFRQVWLWXWLRQDOULJKWV LQ sXQH RI   UHTXLUHG DQ LQPDWH DVVHUWLQJ D )LUVW RIZKLFKDUHDVRQDEOHSHUVRQZRXOGKDYHNQRZQl+DUORZY $PHQGPHQW UHWDOLDWLRQ FODLP WR SURYH WKDW WKH DOOHJHG )LW]JHUDOG86   4XDOLILHGLPPXQLW\ UHWDOLDWRU\DFWLRQVZHUHVRHJUHJLRXVRURSSUHVVLYHWKDWWKH\ LQYROYHVDWZRVWHSLQTXLU\)LUVWWKHFRXUWPXVWGHWHUPLQH mVKRFNHGWKHFRQVFLHQFHl7KXVWKHGLVWULFWFRXUWFRQFOXGHG ZKHWKHUEDVHGXSRQWKHDSSOLFDEOHODZWKHIDFWVYLHZHGLQ WKDW D UHDVRQDEOH RIILFHU ZRXOG QRW KDYH EHHQ DZDUH WKDW WKH OLJKW PRVW IDYRUDEOH WR WKH SODLQWLIIV VKRZ WKDW D UHWDOLDWRU\DFWVIDOOLQJVKRUWRImFRQVFLHQFHVKRFNLQJlDEXVHV FRQVWLWXWLRQDOYLRODWLRQKDVRFFXUUHG6DXFLHUY.DW] RISRZHUZRXOGJLYHULVHWRFRQVWLWXWLRQDOOLDELOLW\%DVHG 86    6 &W      m>,@I D YLRODWLRQ XSRQRXUUHYLHZRIWKHUHOHYDQWFDVHODZZHFRQFOXGHWKDWWKH FRXOG EH PDGH RXW RQ D IDYRUDEOH YLHZ RI WKH SDUWLHVj GLVWULFW FRXUW PLVFKDUDFWHUL]HG WKH ODZ WKDW ZDV FOHDUO\ VXEPLVVLRQVWKHQH[WVHTXHQWLDOVWHSLVWRDVNZKHWKHUWKH HVWDEOLVKHGLQ 7KHFOHDUZHLJKWRISXEOLVKHGDXWKRULW\ ULJKW ZDV FOHDUO\ HVWDEOLVKHGl  ,G  VHH DOVR 'LFNHUVRQ Y LQWKLVFLUFXLWLQ GLUHFWHGFRXUWVQRWWRDSSO\WKHmVKRFNV 0F&OHOODQ)G WK&LU  8OWLPDWHO\ WKH FRQVFLHQFHl VWDQGDUG WR LQPDWH UHWDOLDWLRQ FODLPV TXDOLILHGLPPXQLW\LVDTXHVWLRQRIODZWKDWLVUHYLHZHGGH H[SUHVVO\ UDLVHG XQGHU WKH )LUVW $PHQGPHQW  8QGHU WKH QRYR6HH'LFNHUVRQ)GDW VWDQGDUGWKDWZDVDSSOLHGWRVXFKFODLPVLQ DUHDVRQDEOH RIILFLDOZRXOGKDYHEHHQDZDUHWKDWDFWLRQVVXFKDVKDUDVVLQJ )RUDULJKWWREHFOHDUO\HVWDEOLVKHGm>W@KHFRQWRXUVRIWKH FHOO VHDUFKHV DQG FRQILVFDWLRQ RI OHJDO SDSHUV DQG RWKHU ULJKW PXVW EH VXIILFLHQWO\ FOHDU WKDW D UHDVRQDEOH RIILFLDO SURSHUW\ FRXOG JLYH ULVH WR D )LUVW $PHQGPHQW UHWDOLDWLRQ ZRXOGXQGHUVWDQGWKDWZKDWKHLVGRLQJYLRODWHVWKDWULJKWl FODLP 5XVVRY&LW\RI&LQFLQQDWL )G WK&LU    TXRWLQJ $QGHUVRQ Y &UHLJKWRQ  86   7KHGHIHQGDQWVDUJXHWKDW&DOHYsRKQVRQ)G      m$OWKRXJK LW QHHG QRW EH WKH FDVH WKDW µWKH YHU\   WK &LU    HVWDEOLVKHG WKDW WKH mVKRFNV WKH DFWLRQLQTXHVWLRQKDVSUHYLRXVO\EHHQKHOGXQODZIXOLQ FRQVFLHQFHlWHVWDSSOLHGWRLQPDWHUHWDOLDWLRQFDVHVLQ  WKH OLJKW RI SUHH[LVWLQJ ODZ WKH XQODZIXOQHVV PXVW EH :HGLVDJUHH,Q&DOHDQLQPDWHDOOHJHGWKDWSULVRQJXDUGV DSSDUHQWjl,G TXRWLQJ$QGHUVRQ86DW $VWKH YLRODWHGKLVVXEVWDQWLYHGXHSURFHVVULJKWVE\IDOVHO\DFFXVLQJ 6XSUHPH&RXUWKDVUHFHQWO\H[SODLQHGmRIILFLDOVFDQVWLOOEH KLP RI SRVVHVVLQJ PDULMXDQD DQG SODFLQJ KLP LQ RQQRWLFHWKDWWKHLUFRQGXFWYLRODWHVHVWDEOLVKHGODZHYHQLQ DGPLQLVWUDWLYH VHJUHJDWLRQ LQ UHWDOLDWLRQ IRU KLV FRPSODLQWV QRYHO IDFWXDO FLUFXPVWDQFHVl  +RSH Y 3HO]HU  6 &W DERXW SULVRQ FRQGLWLRQV  7KH &DOH FRXUW IRXQG WKHVH      m$OWKRXJK HDUOLHU FDVHV LQYROYLQJ DOOHJDWLRQVVXIILFLHQWWRVWDWHDVXEVWDQWLYHGXHSURFHVVFODLP µIXQGDPHQWDOO\VLPLODUjIDFWVFDQ SURYLGHHVSHFLDOO\VWURQJ ,GDW 7KHFRXUWEHJDQLWVGLVFXVVLRQE\H[SODLQLQJWKDW VXSSRUWIRUDFRQFOXVLRQWKDWWKHODZLVFOHDUO\HVWDEOLVKHG WKHVWDQGDUGIRUmPDOLFLRXVSURVHFXWLRQW\SHVXEVWDQWLYHGXH WKH\DUHQRWQHFHVVDU\WRVXFKDILQGLQJl,G,QGHWHUPLQLQJ SURFHVVFODLPVlZDVmZKHWKHUGHIHQGDQWVjFRQGXFWµVKRFNV ZKHWKHU D FRQVWLWXWLRQDO ULJKW LV FOHDUO\ HVWDEOLVKHG ZH WKHFRQVFLHQFHjl,GDW   TXRWDWLRQVRPLWWHG $SSO\LQJ mORRN>@ ILUVW WR GHFLVLRQV RI WKH 6XSUHPH &RXUW WKHQ WR WKLVVWDQGDUGWKHFRXUWFRQFOXGHGWKDWPDOLFLRXVO\IUDPLQJDQ GHFLVLRQVRIWKLVFRXUWDQGRWKHUFRXUWVZLWKLQRXUFLUFXLWDQG LQPDWH IRU DQ RIIHQVH DQG VXEMHFWLQJ KLP WR D ULVN RI ILQDOO\ WR GHFLVLRQV RI RWKHU FLUFXLWVl  &KDSSHO Y SURORQJHGLQFDUFHUDWLRQUHVXOWLQJIURPWKHORVVRIJRRGWLPH 0RQWJRPHU\&RXQW\)LUH3URW'LVW1R)G FUHGLWVIRUQRRWKHUUHDVRQWKDQWRSXQLVKKLPIRUH[HUFLVLQJ WK&LU   TXRWDWLRQRPLWWHG  KLV )LUVW $PHQGPHQW ULJKWV ZDV DQ HJUHJLRXV DEXVH RI JRYHUQPHQWDOSRZHU,GDW $OWKRXJKLWPDGHUHIHUHQFH $OWKRXJK WKH GLVWULFW FRXUW GLG QRW H[SOLFLWO\ GLVFXVV WKH WRWKH)LUVW$PHQGPHQWm>WKH&DOHFRXUW@FOHDUO\H[SODLQHG YDULRXVDVSHFWVRIWKHTXDOLILHGLPPXQLW\VWDQGDUGWKHFRXUW  %HOOYsRKQVRQHWDO 1R 1R %HOOYsRKQVRQHWDO 

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jV VXLW ZDV HYLGHQFHWRVKRZWKDWWKHDOOHJHGUHWDOLDWRU\DFWLRQVnWKH SURWHFWHG FRQGXFW   ,Q UHDFKLQJ WKLV FRQFOXVLRQ WKH FRXUW WZR VKDNHGRZQV RI SODLQWLIIjV FHOO DQG WKH FRQFRPLWDQW QRWHG WKDW WKH IDFW WKDW WKH VXLW GLG QRW VXUYLYH VXPPDU\ FRQILVFDWLRQRIKLVOHJDOSDSHUVDQGPHGLFDOGLHWVQDFNVn MXGJPHQWGLGQRWUHQGHUWKHDFWRIILOLQJLWDQ\OHVVSURWHFWHG ZRXOGGHWHUDSHUVRQRIRUGLQDU\ILUPQHVVIURPHQJDJLQJLQ ,G$SDQHORIWKLVFRXUWPD\QRWRYHUUXOHWKHGHFLVLRQRIWKH SURWHFWHGFRQGXFW6HFRQGDVVXPLQJWKDW%HOOFRXOGFDUU\KLV IXOO FLUFXLW VLWWLQJ HQ EDQF  /5/ 3URSV Y 3RUWDJH 0HWUR EXUGHQXQGHUWKH7KDGGHXV;VWDQGDUGWKHFRXUWFRQFOXGHG +RXV$XWK)G Q WK&LU  :HDUH WKDWWKLVVWDQGDUGZDVQRWFOHDUO\HVWDEOLVKHGLQ DQGWKDW WKHUHIRUHERXQGE\WKH7KDGGHXV;FRXUWjVGHWHUPLQDWLRQWKDW D UHDVRQDEOH RIILFHU ZRXOG QRW KDYH XQGHUVWRRG WKDW %HOOjVODZVXLWZDVSURWHFWHGFRQGXFW UHWDOLDWRU\ DFWLRQV IDOOLQJ VKRUW RI mFRQVFLHQFHVKRFNLQJl DEXVHVRISRZHUFRXOGJLYHULVHWRDFRQVWLWXWLRQDOYLRODWLRQ :KHWKHUWKH5HOHYDQW/DZ:DV&OHDUO\(VWDEOLVKHG &RQFOXGLQJWKDWQRUHDVRQDEOHRIILFHUZRXOGKDYHNQRZQWKDW VKDNLQJ GRZQ DQ LQPDWHjV FHOO DQG FRQILVFDWLQJ OHJDO 7KHGLVWULFWFRXUWKHOGWKDWHYHQLISODLQWLIIFRXOGVDWLVI\KLV GRFXPHQWV DQG IRRG FRXOG EH IRXQG WR EH mFRQVFLHQFH EXUGHQXQGHUWKH7KDGGHXV;VWDQGDUGWKLVVWDQGDUGZDVQRW VKRFNLQJl WKH FRXUW GHWHUPLQHG WKDW WKH GHIHQGDQWV ZHUH FOHDUO\ HVWDEOLVKHG DW WKH WLPH RI WKH HYHQWV LQ TXHVWLRQ HQWLWOHG WR MXGJPHQW DV D PDWWHU RI ODZ XQGHU WKH VHFRQG SURQJRIWKHTXDOLILHGLPPXQLW\WHVWDVZHOO  &RQVWLWXWLRQDO9LRODWLRQ ,Q DGGLWLRQ WKH SDUWLHV MRLQWO\ VWLSXODWHG EHIRUH WULDO LQ WKH LQVWDQW FDVH WKDW m3ODLQWLII HQJDJHG LQ FRQGXFW SURWHFWHG E\ WKH &RQVWLWXWLRQjV

7KH ILUVW VWHS LQ WKH TXDOLILHG LPPXQLW\ DQDO\VLV LV )LUVW $PHQGPHQW ULJKW WR SHWLWLRQ WKH JRYHUQPHQW IRU UHGUHVV ZKHQ KH ILOHG WKLV RULJLQDO 0D\    ODZVXLWl s$ DW  'HIHQGDQWV FDQQRW GHWHUPLQLQJ ZKHWKHU WKH SODLQWLII KDV SUHVHQWHG VXIILFLHQW QRZ PDLQWDLQ WKDW WKH SODLQWLII IDLOHG WR SURYH WKDW KLV VXLW ZDV SURWHFWHG

IDFWV WR VKRZ WKDW WKH GHIHQGDQWVj FRQGXFW YLRODWHG KLV FRQGXFW ZKHQ WKH\ KDYH DOUHDG\ VWLSXODWHG WR WKLV IDFW

FRQVWLWXWLRQDOULJKWV%HOOjVRQO\FODLPLQWKHLQVWDQWFDVHLV  WKDWWKHGHIHQGDQWVYLRODWHGKLV)LUVW$PHQGPHQWULJKWVE\ (YHQ LI ZH ZHUH WR DSSO\ WKH VWDQGDUG DQQRXQFHG LQ +HUURQ %HOOjV

FRQGXFWLQJWZRVKDNHGRZQVRIKLVFHOODQGFRQILVFDWLQJKLV VXLW ZRXOG VWLOO TXDOLI\ DV SURWHFWHG FRQGXFW +HUURQjV UXOLQJ LV OLPLWHG

OHJDO SDSHUV DQG PHGLFDO GLHW VQDFNV LQ UHWDOLDWLRQ IRU KLV WR UHWDOLDWLRQ FODLPV LQYROYLQJ VXLWV GLVPLVVHG DV IULYRORXV 7KH 6XSUHPH &RXUWjV GHFLVLRQ LQ /HZLV XSRQ ZKLFK +HUURQ UHOLHG PDNHV LW FOHDU WKDW H[HUFLVLQJKLVULJKWRIDFFHVVWRWKHFRXUWV7KHFRQWUROOLQJ D FODLP QHHG QRW EH VXFFHVVIXO WR EH QRQIULYRORXV /HZLV  86 DW OHJDOWHVWIRUSULVRQHUVj)LUVW$PHQGPHQWUHWDOLDWLRQFODLPV  QQ /HZLV H[SODLQHG IRU H[DPSOH WKDW WKH IDFW WKDW D FODLP LV ZDVVHWIRUWKLQWKLVFRXUWjVHQEDQFGHFLVLRQLQ7KDGGHXV; SURFHGXUDOO\ GHIDXOWHG GRHV QRW QHFHVVDULO\ PDNH WKH VXLW IULYRORXV ,G DW  Q 0RUHRYHU /HZLV GLVWLQJXLVKHG EHWZHHQ mDUJXDEOHl FODLPV DQG $UHWDOLDWLRQFODLPHVVHQWLDOO\HQWDLOVWKUHHHOHPHQWV   mIULYRORXVl FODLPV DQG H[SODLQHG WKDW m>G@HSULYLQJ VRPHRQH RI DQ

WKHSODLQWLIIHQJDJHGLQSURWHFWHGFRQGXFW   DQDGYHUVH DUJXDEOH WKRXJK QRW \HW HVWDEOLVKHG FODLP LQIOLFWV DFWXDO LQMXU\ EHFDXVH LW GHSULYHV KLP RI VRPHWKLQJ RI YDOXH n DUJXDEOH FODLPV DUH VHWWOHG DFWLRQZDVWDNHQDJDLQVWWKHSODLQWLIIWKDWZRXOGGHWHUD ERXJKW DQG VROGl ,G DW  Q %HOOjV VXLW ORVW DW VXPPDU\ MXGJPHQW SHUVRQRIRUGLQDU\ILUPQHVVIURPFRQWLQXLQJWRHQJDJHLQ LW ZDV QRW GLVPLVVHG DV EHLQJ IULYRORXV 7KHUHIRUH WKH +HUURQ UXOH ZRXOG QRW DSSO\ LQ WKH LQVWDQW FDVH  %HOOYsRKQVRQHWDO 1R 1R %HOOYsRKQVRQHWDO 

E3URWHFWHG&RQGXFW WKDW FRQGXFW  DQG   WKHUH LV D FDXVDO FRQQHFWLRQ EHWZHHQ HOHPHQWV RQH DQG WZR n WKDW LV WKH DGYHUVH 'HIHQGDQWVPDLQWDLQWKDWHYHQLIWKLVFRXUWGHWHUPLQHVWKHLU DFWLRQ ZDV PRWLYDWHG DW OHDVW LQ SDUW E\ WKH SODLQWLIIjV DFWLRQVWREHDGYHUVHSODLQWLIIKDVQRWVKRZQWKDWKHHQJDJHG SURWHFWHGFRQGXFW LQ SURWHFWHG FRQGXFW EHFDXVH WKH XQGHUO\LQJ VXLW ZKLFK DOOHJHGO\ SURYRNHG WKH GHIHQGDQWVj DFWV RI UHWDOLDWLRQ KDV  )G DW    m$OWKRXJK WKH HOHPHQWV RI D )LUVW EHHQ GLVPLVVHG  7KH GHIHQGDQWV FRQFHGH WKDW SURWHFWHG $PHQGPHQWUHWDOLDWLRQFODLP>DUH@FRQVWDQWWKHXQGHUO\LQJ FRQGXFWIRUWKHSXUSRVHVRID)LUVW$PHQGPHQWUHWDOLDWLRQ FRQFHSWV WKDW WKH\ VLJQLI\ ZLOO YDU\ ZLWK WKH VHWWLQJ n FODLPHQFRPSDVVHVDSULVRQHUjVHIIRUWVWRDFFHVVWKHFRXUWVLQ ZKHWKHUDFWLYLW\LVµSURWHFWHGjRUDQDFWLRQLVµDGYHUVHjZLOO GLUHFWDSSHDOVKDEHDVFRUSXVDFWLRQVDQGFLYLOULJKWVFODLPV GHSHQGRQFRQWH[Wl,GDW :HVRKHOGLQ7KDGGHXV;)GDW 1HYHUWKHOHVV WKH\DUJXHWKDWWKLVULJKWH[WHQGVRQO\WRPHULWRULRXVRUDW D$GYHUVH$FWLRQ OHDVWQRQIULYRORXVVXLWVDQGWKDWWKHGLVWULFWFRXUWjVGLVPLVVDO RI%HOOjVXQGHUO\LQJFLYLOULJKWVFODLPVRQVXPPDU\MXGJPHQW 7KHGLVWULFWFRXUWGLVPLVVHG%HOOjV FODLPRQWKHJURXQGV GHPRQVWUDWHVWKDWKLVVXLWZDVQRWSURWHFWHGFRQGXFW WKDWKHKDGIDLOHGWRSUHVHQWVXIILFLHQWHYLGHQFHWRVDWLVI\WKH VHFRQG SURQJ RI WKH 7KDGGHXV; WHVW LQVRIDU DV WKH FRXUW 'HIHQGDQWV UHO\ RQ WKLV FRXUWjV GHFLVLRQ LQ +HUURQ  GLVFHUQHGWKDWWKHGHIHQGDQWKDGmQRWSUHVHQWHGHYLGHQFHWKDW )GDW,Q+HUURQDQLQPDWHFODLPHGWKDWSULVRQJXDUGV ZRXOG DOORZ D MXU\ WR FRQFOXGH WKDW D SHUVRQ RI RUGLQDU\ UHWDOLDWHGDJDLQVWKLPDIWHUKHILOHGDVXLWXQGHUWKH5HOLJLRXV ILUPQHVV    ZRXOG KDYH EHHQ GHWHUUHG IURP DVVHUWLQJ )UHHGRP 5HVWRUDWLRQ $FW m5)5$l   $IWHU WKH 6XSUHPH FRQVWLWXWLRQDOO\SURWHFWHGULJKWVE\WKHHYHQWVRIsXQHDQG &RXUWIRXQGWKH5)5$XQFRQVWLWXWLRQDOLQ&LW\RI%RHUQHY sXQH  µ l  s$ DW   :H FRQFOXGH WKDW WKH GLVWULFW )ORUHV86   WKHGLVWULFWFRXUWGLVPLVVHGWKH FRXUWPLVDSSOLHGWKHVWDQGDUGIRUDGYHUVHDFWLRQVHWIRUWKLQ SODLQWLIIjVVXLWDVIULYRORXV+HUURQ)GDW2Q 7KDGGHXV;DQGFRQVHTXHQWO\HUUHGLQJUDQWLQJMXGJPHQWDV DSSHDODSDQHORIWKLVFRXUWGLVPLVVHGWKHUHWDOLDWLRQFODLP DPDWWHURIODZWRWKHGHIHQGDQWVRQWKLVLVVXH ILQGLQJ WKDW WKH LQPDWHjV 5)5$ VXLW ZDV QRW SURWHFWHG FRQGXFWEHFDXVHWKHGLVWULFW FRXUWKDGGLVPLVVHGWKHHQWLUH ,Q 7KDGGHXV; ZH H[SODLQHG WKDW mJRYHUQPHQW DFWLRQV FRPSODLQWDVIULYRORXV,G7KH+HUURQFRXUWQRWHGWKDWm>D@Q ZKLFK VWDQGLQJ DORQH GR QRW YLRODWH WKH &RQVWLWXWLRQ PD\ LQPDWH KDV DQ XQGLVSXWHG )LUVW $PHQGPHQW ULJKW WR ILOH QRQHWKHOHVVEHFRQVWLWXWLRQDOWRUWVLIPRWLYDWHGLQVXEVWDQWLDO JULHYDQFHVDJDLQVWSULVRQRIILFLDOVRQKLVRZQEHKDOIl,GDW SDUW E\ D GHVLUH WR SXQLVK DQ LQGLYLGXDO IRU H[HUFLVH RI D   7KH FRXUW H[SODLQHG KRZHYHU WKDW m>W@KLV ULJKW LV FRQVWLWXWLRQDOULJKWl)GDW1HYHUWKHOHVVZHDOVR SURWHFWHGRQO\LIWKHJULHYDQFHVDUHQRWIULYRORXV7KXV GHWHUPLQHGWKDWVRPHDGYHUVHDFWLRQVDUHVRGHPLQLPLVWKDW >WKH SODLQWLIIjV@ SXUVXLW RI OHJDO FODLPV    ZDV SURWHFWHG WKH\GRQRWJLYHULVHWRFRQVWLWXWLRQDOO\FRJQL]DEOHLQMXULHV FRQGXFW RQO\ WR WKH H[WHQW WKDW WKH XQGHUO\LQJ FODLPV KDG ,GDW $FFRUGLQJO\ZHKHOGWKDWDQRIILFLDODFWLRQZLOOEH PHULWl  ,G FLWLQJ /HZLV Y &DVH\  86   Q GHHPHGmDGYHUVHlRQO\LILWFRXOGmµGHWHUDSHUVRQRIRUGLQDU\    ILUPQHVVjIURPWKHH[HUFLVHRIWKHULJKWDWVWDNHl,G TXRWLQJ %DUWY7HOIRUG)G WK&LU  $OWKRXJK 'HIHQGDQWVjDUJXPHQWLVZLWKRXWPHULW7KHTXHVWLRQRI WKHmµ>HIIHFWRQIUHHGRPRIVSHHFK@QHHGQRWEHJUHDWLQRUGHU ZKHWKHU%HOOjVLQLWLDOFLYLOULJKWVODZVXLWFRQVWLWXWHGSURWHFWHG WREHDFWLRQDEOHjlZHH[SODLQHGWKDWmµ>L@WZRXOGWULYLDOL]HWKH FRQGXFWZDVFRQFOXVLYHO\UHVROYHGLQ7KDGGHXV;)G )LUVW $PHQGPHQWjl WR DOORZ SODLQWLIIV WR EULQJ )LUVW DW Q$VQRWHGDERYH7KDGGHXV;DGGUHVVHGVHYHUDO $PHQGPHQW UHWDOLDWLRQ FODLPV IRU DQ\ DGYHUVH DFWLRQ QR PDWWHU KRZ PLQRU  ,G DW   TXRWLQJ %DUW  )G DW  %HOOYsRKQVRQHWDO 1R 1R %HOOYsRKQVRQHWDO 

 :KHWKHUDUHWDOLDWRU\DFWLRQLVVXIILFLHQWO\VHYHUHWR %HOOKLPVHOIZDVQRWGHWHUUHGIURPSHUVLVWLQJLQWKLVODZVXLW GHWHUDSHUVRQRIRUGLQDU\ILUPQHVVIURPH[HUFLVLQJKLVRUKHU 7KDGGHXV; PDNHV FOHDU KRZHYHU WKDW WKH DGYHUVHQHVV ULJKWVLVDTXHVWLRQRIIDFW6HHLGDW  'DYLGVRQY LQTXLU\LVDQREMHFWLYHRQHDQGGRHVQRWGHSHQGXSRQKRZ &KHVWQXW   )G   G &LU   QRWLQJ WKDW WKH SDUWLFXODU SODLQWLII UHDFWHG   )G DW    DFFRUG TXHVWLRQ RI ZKHWKHU RQHGD\ GHQLDO RI LQPDWHjV H[HUFLVH 6DQGHUV Y 6W /RXLV &RXQW\  )G   WK &LU RSSRUWXQLWLHVZDVGHPLQLPLVZDVmIDFWXDOLQQDWXUHl     m,WLVQRWQHFHVVDU\WKDWWKHLQPDWHVXFFXPEHQWLUHO\RU HYHQSDUWLDOO\WRWKHWKUHDWVRORQJDVWKHUHWDOLDWRU\DFW 2XU GLVFXVVLRQ RI WKH mDGYHUVH DFWLRQl UHTXLUHPHQW LQ ZDV LQWHQGHG WR OLPLW WKH LQPDWHjV ULJKW RI DFFHVV >WR WKH 7KDGGHXV;PDNHVLWFOHDUWKDWLQPRVWFDVHVWKHTXHVWLRQRI FRXUWV@l 7KHUHOHYDQWTXHVWLRQLVZKHWKHUWKHGHIHQGDQWVj ZKHWKHU DQ DOOHJHG UHWDOLDWRU\ DFWLRQ SRVHV D VXIILFLHQW DFWLRQV DUH mFDSDEOH RI GHWHUULQJ D SHUVRQ RI RUGLQDU\ GHWHUUHQW WKUHDW WR EH DFWLRQDEOH ZLOO QRW EH DPHQDEOH WR ILUPQHVV l WKHUH LV QR UHTXLUHPHQW WKDW WKH SODLQWLII VKRZ UHVROXWLRQDVDPDWWHURIODZ DFWXDOGHWHUUHQFH7KDGGHXV;)GDW  HPSKDVLV DGGHG 'HIHQGDQWVjDUJXPHQWZRXOGHIIHFWLYHO\IRUHFORVHDOO :HHPSKDVL]HWKDWZKLOHFHUWDLQWKUHDWVRUGHSULYDWLRQV UHWDOLDWLRQFODLPVVLQFHWKHIDFWWKDWDFODLPZDVEHIRUHWKH DUHVR GH PLQLPLVWKDWWKH\GRQRWULVHWRWKHOHYHORI FRXUW ZRXOG EH FRQFOXVLYH SURRI WKDW WKH SODLQWLII ZDV QRW EHLQJFRQVWLWXWLRQDOYLRODWLRQVWKLVWKUHVKROGLVLQWHQGHG GHWHUUHG:HHPSKDVL]HDJDLQWKDWWKHmRUGLQDU\ILUPQHVVl WRZHHGRXWRQO\LQFRQVHTXHQWLDODFWLRQVDQGLVQRWD VWDQGDUG LV mLQWHQGHG WR ZHHG RXW RQO\ LQFRQVHTXHQWLDO PHDQV ZKHUHE\ VROHO\ HJUHJLRXV UHWDOLDWRU\ DFWV DUH DFWLRQVl  ,G  7KH IDFWXDO TXHVWLRQ LV ZKHWKHU WKH LQMXU\ DOORZHGWRSURFHHGSDVWVXPPDU\MXGJPHQW LQIOLFWHGLVVRVOLJKWWKDWLWFRXOGQRWUHDVRQDEO\EHH[SHFWHG WRGHWHUSURWHFWHGFRQGXFW7KHVWDQGDUGLVQRWLQWHQGHGWR 7KDGGHXV;)GDW  HPSKDVLVDGGHG VHHDOVR%DUW IRUHFORVH UHOLHI WR DOO EXW WKH VXSHUILUP SODLQWLIIV ZKR DUH )GDW7KXVXQOHVVWKHFODLPHGUHWDOLDWRU\DFWLRQ ZLOOLQJ DQG DEOH WR SHUVLVW LQ WKHLU VXLWV LQ WKH IDFH RI LVWUXO\mLQFRQVHTXHQWLDOlWKHSODLQWLIIjVFODLPVKRXOGJRWR UHWDOLDWRU\ DFWLRQV WKDW ZRXOG FDXVH PRVW SODLQWLIIV WR WKHMXU\7KDGGHXV;)GDW  FUXPSOH  5DWKHU WKH SXUSRVH RI WKH VWDQGDUG LV WR DYRLG WULYLDOL]LQJWKH)LUVW$PHQGPHQWE\HOLPLQDWLQJVXLWVEDVHG $SSO\LQJWKLVVWDQGDUGLQ7KDGGHXV;DPDMRULW\RIWKHHQ XSRQLQVLJQLILFDQWDFWVRIUHWDOLDWLRQ6HH%DUW)GDW EDQFFRXUWGHFLGHGWRUHPDQG%HOOjVUHWDOLDWLRQFODLPVWRWKH  m,WZRXOGWULYLDOL]HWKH)LUVW$PHQGPHQWWRKROGWKDW GLVWULFWFRXUWIRUGHWHUPLQDWLRQRIZKHWKHUmWKHUHLVDJHQXLQH LI WKH 0D\RU RI 6SULQJILHOG KDG IURZQHG DW 0LVV %DUW IRU LVVXH RI PDWHULDO IDFW UHJDUGLQJ WKH GHWHUUHQW HIIHFW RI WKH UXQQLQJ IRU SXEOLF RIILFH KH ZRXOG EH OLDEOH IRU GDPDJHV FODLPHG GHOLEHUDWH KDUDVVPHQW DQG FROG PHDOV WKDW ZRXOG l  FRQWLQXHXQOHVVDQGXQWLOKHGURSSHGKLVODZVXLWDJDLQVWWKH ZDUGHQl,GDW ,QVRKROGLQJWKHPDMRULW\RIWKHHQ ,QVXPZHFRQFOXGHWKDW%HOOjVHYLGHQFHLVVXIILFLHQWWR EDQFFRXUWUHMHFWHGWKHDUJXPHQWRIWKHGLVVHQWHUVWKDWWKHVH GHPRQVWUDWHWKDWWKHFODLPHGUHWDOLDWRU\DFWVZHUHQRWPHUHO\ DOOHJDWLRQVZHUHLQVXIILFLHQWDVDPDWWHURIODZWRGHWHUDQ GHPLQLPLVDFWVRIKDUDVVPHQW7KLVLVDOOWKDWLVUHTXLUHGWR LQPDWHIURPSXUVXLQJDODZVXLW,GDW 6XKUKHLQULFKs UHDFKDMXU\RQ WKH LVVXHRIZKHWKHUWKHUHWDOLDWRU\DFWLRQV GLVVHQWLQJ VHHDOVRLGDW .HQQHG\sGLVVHQWLQJ ,Q FRXOGGHWHUDSHUVRQRIRUGLQDU\ILUPQHVVIURPHQJDJLQJLQ FRQWUDVWWR%HOOjVFRPSODLQWVZKLFKSUHVHQWHGDFORVHFDVH SURWHFWHGFRQGXFW WKHHQEDQFFRXUWREVHUYHGWKDWLWmQHHGQRWSDXVHIRUORQJLQ WKHFDVHRISODLQWLII; KLVDOOHJDWLRQVLIWUXHFHUWDLQO\PHHW WKHVWDQGDUG+DUDVVPHQWSK\VLFDOWKUHDWVDQGWUDQVIHUWRWKH DUHDRIWKHSULVRQXVHGWRKRXVHPHQWDOO\GLVWXUEHGLQPDWHV  %HOOYsRKQVRQHWDO 1R 1R %HOOYsRKQVRQHWDO 

GLHWDU\VXSSOHPHQWVDVWKHSULFHRISHWLWLRQLQJWKHFRXUWV,G HVSHFLDOO\ FRPELQHG ZLWK WKH FRQGLWLRQV DOOHJHGO\ SUHVHQW DW  WKHUHZRXOGOLNHO\KDYHDVWURQJGHWHUUHQWHIIHFWl,GDW  VHH DOVR +HUURQ Y +DUULVRQ  )G   WK &LU 7KHGHIHQGDQWVKDYHRIIHUHGQRDXWKRULW\WRWKHFRQWUDU\   KROGLQJ WKDW FRPPLWWLQJ SULVRQHU WR DGPLQLVWUDWLYH ,QVWHDGWKH\DUJXHWKDWWKHSODLQWLIIIDLOHGWRSUHVHQWH[SHUW VHJUHJDWLRQIRUILYHGD\VZDVDGYHUVH  WHVWLPRQ\ RU RWKHU HYLGHQFH DERXW WKH GHWHUUHQW HIIHFW WKH GHIHQGDQWVjDFWLRQVZRXOGKDYHRQDQRUGLQDULO\ILUPSULVRQHU %DVHGXSRQWKHIRUHJRLQJSULQFLSOHVZHFRQFOXGHWKDWWKH LQ VHJUHJDWLRQ  'HIHQGDQWV DSSDUHQWO\ FRQWHQG WKDW GLVWULFW FRXUW HUUHG LQ UXOLQJ WKDW %HOO KDG SUHVHQWHG 7KDGGHXV; LPSRVHV D EXUGHQ RQ WKH SODLQWLII WR SUHVHQW LQVXIILFLHQW HYLGHQFH WR VKRZ WKDW WKH GHIHQGDQWVj DFWLRQV LQGHSHQGHQW ZLWQHVV WHVWLPRQ\ WKDW D JLYHQ VHW RI DFWLRQV FRXOGGHWHUDSHUVRQRIRUGLQDU\ILUPQHVVIURPHQJDJLQJLQ ZRXOGGHWHUDK\SRWKHWLFDOSULVRQHURIRUGLQDU\ILUPQHVVIURP SURWHFWHGFRQGXFW,QLWLDOO\ZHQRWHWKDWDQXPEHURIFDVHV HQJDJLQJLQSURWHFWHGFRQGXFW7KHGLVWULFWFRXUWH[SUHVVHG IURPRWKHUFLUFXLWVKDYHKHOGWKDWFRQILVFDWLQJDQLQPDWHjV VLPLODULGHDV1RWKLQJLQRXURSLQLRQLQ7KDGGHXV;RUDQ\ OHJDOSDSHUVDQGRWKHUSURSHUW\FRQVWLWXWHVVXIILFLHQWLQMXU\WR VXEVHTXHQWFDVHKRZHYHUVXJJHVWVWKDWVHSDUDWHWHVWLPRQ\ VXSSRUWD)LUVW$PHQGPHQWUHWDOLDWLRQFODLP6HH3HQURGY DERXW WKH OLNHO\ HIIHFWV RI FHUWDLQ DFWLRQV RQ SULVRQHUV RI =DYDUDV )G  WK&LU   UHYHUVLQJJUDQW RUGLQDU\ILUPQHVVLQWKHDEVWUDFWLVUHTXLUHG2XUFRQFOXVLRQ RIVXPPDU\MXGJPHQWWRGHIHQGDQWVRQLQPDWHjVFODLPWKDW LQ 7KDGGHXV; WKDW SK\VLFDO WKUHDWV DQG D WUDQVIHU WR EDVH JXDUGV FRQGXFWHG KDUDVVLQJ FHOO VHDUFKHV VHL]HG OHJDO OHYHORIVHJUHJDWLRQZRXOGEHVXIILFLHQWWRGHWHUDSHUVRQRI PDWHULDOVUHIXVHGWRSURYLGHLQPDWHZLWKK\JLHQHLWHPVDQG RUGLQDU\ ILUPQHVV IURP HQJDJLQJ LQ SURWHFWHG FRQGXFW IRU WUDQVIHUUHGLQPDWHWRVHJUHJDWLRQLQUHWDOLDWLRQIRUVXLWDJDLQVW H[DPSOHZDVQRWEDVHGXSRQDQ\LQGHSHQGHQWWHVWLPRQ\LQ SULVRQRIILFLDOV *UHHQYsRKQVRQ )G   WKHUHFRUGSUHGLFWLQJKRZDQDYHUDJHSULVRQHUZRXOGUHDFWWR WK&LU   KROGLQJWKDWLQPDWHjVDOOHJDWLRQWKDWJXDUGV WKHVHDFWLRQV)GDW 7KLVZDVDFRQFOXVLRQWKDW GHVWUR\HG KLV OHJDO PDWHULDOV LQ UHWDOLDWLRQ IRU KLV ILOLQJ RI FRXOGEHGUDZQVLPSO\IURPWKHIDFWVFRQFHUQLQJWKHQDWXUH VXLWV DQG JULHYDQFHV VWDWHG D FRJQL]DEOH )LUVW $PHQGPHQW RIWKHWKUHDWVDQGWKHFRQGLWLRQVRIFRQILQHPHQWRQWKHEDVH FODLP  :ULJKW Y 1HZVRPH   )G   WK &LU OHYHO7KHSODLQWLIIjVHYLGHQWLDU\EXUGHQLVPHUHO\WRHVWDEOLVK    VDPH +DOOY6XWWRQ)G WK&LU WKH IDFWXDO EDVLV IRU KLV FODLP WKDW WKH UHWDOLDWRU\ DFWV    KROGLQJWKDWLQPDWHDOOHJHGVXIILFLHQWIDFWVWRVWDWHD DPRXQWHGWRPRUHWKDQDGHPLQLPLVLQMXU\$FFRUG'DZHV FODLPRI)LUVW$PHQGPHQWUHWDOLDWLRQEDVHGXSRQWKHDOOHJHG Y :DONHU   )G     G &LU   KROGLQJ WKDW FRQILVFDWLRQ RI KLV WHQQLV VKRHV LQ UHWDOLDWLRQ IRU D SULRU SULVRQHUjV HYLGHQWLDU\ EXUGHQ XQGHU mRUGLQDU\ ILUPQHVVl ODZVXLW DJDLQVW SULVRQ RIILFLDOV  VHH DOVR =LPPHUPDQ Y VWDQGDUG ZDV WR VKRZ WKDW JXDUGVj UHIHUHQFHV WR KLP DV DQ 7ULEEOH  )G   WK &LU   UHYHUVLQJ mLQIRUPDQWlRUmUDWlmDFWXDOO\ULVNHGLQFLWLQJRWKHULQPDWHV GLVPLVVDORIFODLPWKDWSULVRQODZOLEUDULDQUHSHDWHGO\GHQLHG DJDLQVWWKH>SODLQWLII@l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m>L@Q WKH FRXUVH RI WKH VHDUFK >WKH GHIHQGDQWV@ GHVWUR\HG VHYHQ RI >WKH SODLQWLIIjV@ SKRWRJUDSKV DQG VRPH 'HIHQGDQWVIXUWKHUDUJXHWKDW%HOOFDQQRWSURYHWKDWWKHLU OHJDOSDSHUV>DQG@DOVRVHL]HGOHJDOSOHDGLQJVFRQFHUQLQJ DFWLRQVZHUHVXIILFLHQWWRGHWHUSURWHFWHGFRQGXFWJLYHQWKDW >WKHSODLQWLIIjV@FKDOOHQJHWRKLVFRQYLFWLRQDQGDODZERRNl  %HOOYsRKQVRQHWDO 1R 1R %HOOYsRKQVRQHWDO 

ZKLFKZHUHQHYHUUHWXUQHG:ULJKW )GDW 7KH IDYRURIWKHSODLQWLIIRQKLVUHWDOLDWLRQFODLP$OWKRXJKWKH FRXUW FRQFOXGHG WKDW WKH SODLQWLII KDG mVXIILFLHQWO\ DOOHJHG HQWU\RIMXGJPHQWIRUWKHSODLQWLIIZDVQRWEHIRUHXVRQDSSHDO IDFWVEULQJLQJDFWLRQVWKDWPLJKWQRWRWKHUZLVHEHRIIHQVLYHWR LQ:DONHUZHREVHUYHGWKDWm>X@QGHUWKHDSSOLFDEOHVWDQGDUG WKH&RQVWLWXWLRQVXFKDVWKHVHDUFKLWVHOIRUWKHFRQILVFDWLRQ >DQQRXQFHGLQ7KDGGHXV;@WKHQ>WKHSODLQWLII@KDGSURYHQ DQGGHVWUXFWLRQRI>OHJDODQG@QRQOHJDOPDWHULDOVZLWKLQ D )LUVW $PHQGPHQW UHWDOLDWLRQ YLRODWLRQl EDVHG RQ WKH WKHVFRSHRIWKH&RQVWLWXWLRQE\DOOHJLQJWKDWWKHDFWLRQVZHUH UHWDOLDWRU\VKDNHGRZQDQGVHL]XUHRIGRFXPHQWV,G WDNHQ LQ UHWDOLDWLRQ IRU ILOLQJ ODZVXLWV DQG DGPLQLVWUDWLYH JULHYDQFHVl,GDW $OWKRXJK:ULJKWGLGQRWH[SOLFLWO\ :HILQGWKHVHFDVHVSHUVXDVLYHDQGFRQVHTXHQWO\ZHKROG FRQVLGHUWKHmRUGLQDU\ILUPQHVVlTXHVWLRQWKHFRXUWDSSOLHG WKDW%HOOKDVSUHVHQWHGVXIILFLHQWHYLGHQFHWRPHHWKLVEXUGHQ HVVHQWLDOO\ WKH VDPH ZHOOHVWDEOLVKHG SULQFLSOHV RI )LUVW XQGHUWKHDGYHUVHDFWLRQSURQJRIWKH7KDGGHXV;WHVW%HOOjV $PHQGPHQW UHWDOLDWLRQ ODZ WKDW IRUPHG WKH EDVLV IRU WKLV HYLGHQFHVKRZVWKDWWKHGHIHQGDQWVWZLFHOHIWWKHSODLQWLIIjV FRXUWjVGHFLVLRQLQ7KDGGHXV; FHOOLQGLVDUUD\FRQILVFDWHGKLVOHJDOSDSHUVZLWKRXWUHWXUQLQJ WKHP DQG VWROH WKH PHGLFDO GLHW VQDFNV WKDW KDG EHHQ ,QDGGLWLRQZHKDYHSUHYLRXVO\VXJJHVWHGLQGLFWDWKDWD SURYLGHGWRKLPWRDOOHYLDWHKLVZHLJKWORVVIURP$,'6%HOO UHWDOLDWRU\ FHOO VHDUFK DQG VHL]XUH RI DQ LQPDWHjV OHJDO WHVWLILHGWKDWWKHVHDFWLRQVFDXVHGKLPWRIHDUOHDYLQJKLVFHOO GRFXPHQWVVDWLVILHVWKHDGYHUVHDFWLRQSURQJRIWKH7KDGGHXV DQGOHGKLPWRZRUU\WKDWWKHJXDUGVZHUHWDPSHULQJZLWKKLV ;WHVW:DONHUY%DLQ)G WK&LU  IRRG  ,I EHOLHYHG WKLV HYLGHQFH WHQGV WR VKRZ WKDW WKH FHUWGHQLHG6&W   ,Q:DONHUDMXU\LQD GHIHQGDQWVjDFWLRQVKDGDQLQWLPLGDWLQJHIIHFWRQWKHSODLQWLII FLYLOWULDOFRQFHUQLQJDQLQPDWHjV)LUVW$PHQGPHQWUHWDOLDWLRQ DQG WKHUHIRUH FRXOG KDYH GHWHUUHG RWKHUV  7KH IDFW WKDW FODLP UHWXUQHG VSHFLDO LQWHUURJDWRULHV ILQGLQJ WKDW mERWK GHIHQGDQWVUHSHDWHGO\VWROHSODLQWLIIjVOHJDOSDSHUVFHUWDLQO\ GHIHQGDQWV LPSURSHUO\ FRQILVFDWHG DQG UHPRYHG >WKH KDGWKHSRWHQWLDOWRGLUHFWO\LPSHGHKLVSXUVXLWRIKLVFODLP SODLQWLIIjV@SHUVRQDOSDSHUVIURPKLVFHOOWKDW>WKHSODLQWLIIjV@ DQGPD\KDYHFDXVHGRWKHUVWREHOLHYHWKDWDQ\HIIRUWVWKH\ SUHYLRXVILOLQJRIJULHYDQFHVDQGODZVXLWVZDVDVXEVWDQWLDO PLJKWH[SHQGLQSUHSDULQJOHJDOFODLPVZRXOGEHZDVWHGVLQFH DQG PRWLYDWLQJ IDFWRU EHKLQG WKLV FRQGXFW EXW WKDW WKH DQ\ PDWHULDOV WKH\ SUHSDUHG FRXOG HDVLO\ EH GHVWUR\HG RU GHIHQGDQWVjDFWLRQVGLGQRWFRQVWLWXWHDQHJUHJLRXVDEXVHRI FRQILVFDWHG,QDGGLWLRQDMXU\FRXOGLQIHUWKDWGHOLEHUDWHO\ SRZHU RU RWKHUZLVH VKRFN WKH FRQVFLHQFHl  ,G DW   $ GHSULYLQJ D SULVRQHU RI GLHWDU\ VXSSOHPHQWV GHVLJQHG WR YHUGLFWLQLWLDOO\ZDVHQWHUHGIRUWKHGHIHQGDQWVEDVHGXSRQWKH DPHOLRUDWH WKH ZHLJKWORVV HIIHFWV RI D GHDGO\ GLVHDVH OLNH MXU\jVFRQFOXVLRQWKDWWKHUHWDOLDWRU\DFWVZHUHQRWFRQVFLHQFH $,'6FRXOGGHWHUDSHUVRQRIRUGLQDU\ILUPQHVVIURPSXUVXLQJ VKRFNLQJ6KRUWO\DIWHUWKHWULDOWKHHQEDQFFRXUWKDQGHG KLV RU KHU OHJDO ULJKWV  7KHVH DFWLRQV DUH FHUWDLQO\ PRUH GRZQLWVRSLQLRQLQ7KDGGHXV;%DVHGXSRQWKHVWDQGDUGVHW VHYHUHWKDQWKHWKUHDWVRIFROGIRRGDQGQRQFRRSHUDWLRQE\WKH IRUWKLQ7KDGGHXV;WKHGLVWULFWFRXUWJUDQWHGWKHSODLQWLIIjV SULVRQJXDUGVWKDWSODLQWLII%HOODOOHJHGLQ7KDGGHXV;:H PRWLRQ WR DPHQG WKH MXGJPHQW DQG HQWHUHG D MXGJPHQW LQ WKLQNWKDW%HOOjVHYLGHQFHDWOHDVWLVVXIILFLHQWWRVKRZWKDWWKH DFWLRQV WDNHQ WRZDUG %HOO ZHUH QRW mLQFRQVHTXHQWLDOl 7KDGGHXV;)GDW $OWKRXJKLWLVWUXHWKDWmWKH  GHILQLWLRQRIDGYHUVHDFWLRQLVQRWVWDWLFDFURVVFRQWH[WVlDQG 7KH GLVWULFW FRXUWjV GHFLVLRQ WR UHTXLUH D ILQGLQJ RI mFRQVFLHQFH m>S@ULVRQHUV PD\ EH UHTXLUHG WR WROHUDWH PRUH WKDQ SXEOLF VKRFNLQJl EHKDYLRU ZDV SURPSWHG E\ WKLV FRXUWjV   GHFLVLRQ LQ 0F/DXULQ  )G DW  :DONHU  )G DW  7KXV IRU WKH HPSOR\HHV>DQG@DYHUDJHFLWL]HQVlZHVHHQREDVLVIRU SXUSRVHV RI RXU GLVFXVVLRQ LQ 3DUW ,,%D RI WKLV RSLQLRQ ZH QRWH WKDW FRQFOXGLQJWKDWSULVRQHUVVKRXOGEHUHTXLUHGWRWROHUDWHWKH WKH DSSOLFDWLRQ RI WKH mVKRFNV WKH FRQVFLHQFHl VWDQGDUG LQ :DONHU KDV WKHIWRIWKHLUSURSHUW\LQFOXGLQJOHJDOGRFXPHQWVDQGPHGLFDO OLWWOH EHDULQJ RQ ZKHWKHU WKH mVKRFNV WKH FRQVFLHQFHl VWDQGDUG ZDV UHJXODUO\ DSSOLHG WR LQPDWH UHWDOLDWLRQ FODLPV EHIRUH 0F/DXULQ

Reference

Status
Published