Hoover v. Radabaugh

U.S. Court of Appeals for the Sixth Circuit

Hoover v. Radabaugh

Opinion

5(&200(1'(' )25 )8//7(;7 38%/,&$7,21  +RRYHUY5DGDEDXJKHWDO 1R 3XUVXDQW WR 6L[WK &LUFXLW 5XOH 

(/(&7521,& &,7$7,21  )(' $SS 3 WK &LU

DUJXPHQWLVQRWLQH[WULFDEO\LQWHUWZLQHGZLWKWKHTXDOLILHG )LOH 1DPH DS

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jV 3ODLQWLII$SSHOOHH  UHDVRQLQJ  )LQDOO\ ZH ODFN SHQGHQW DSSHOODWH MXULVGLFWLRQ  RYHUWKH&LW\RI&LUFOHYLOOHjVDSSHDO)RUWKRVHUHDVRQVZH  1R VKRXOG KDYH ',60,66(' WKLV DSSHDO LQ SDUW DQG Y  $)),50('WKHGLVWULFWFRXUWjVMXGJPHQWLQSDUW !  3$75,&,$ 5$'$%$8*+HWDO  'HIHQGDQWV$SSHOODQWV  1 $SSHDOIURPWKH8QLWHG6WDWHV'LVWULFW&RXUW IRUWKH6RXWKHUQ'LVWULFWRI2KLRDW&ROXPEXV 1R  n$OJHQRQ/0DUEOH\'LVWULFWsXGJH $UJXHG $SULO 'HFLGHGDQG)LOHG 2FWREHU %HIRUH 5<$1%2**6DQG&2/(&LUFXLWsXGJHV BBBBBBBBBBBBBBBBB &2816(/ $5*8('   %ULDQ 0 =HWV 6&+277(167(,1 =2; '811&ROXPEXV2KLRIRU$SSHOODQWV(PLO\ s/HZLV )$5/2:  /(:,6 //& 'XEOLQ 2KLR IRU $SSHOOHH 21%5,() %ULGJHWWH&5RPDQ6&+277(167(,1=2; '811&ROXPEXV2KLRIRU$SSHOODQWV(PLO\s/HZLV )$5/2: /(:,6//&'XEOLQ2KLRIRU$SSHOOHH

  +RRYHUY5DGDEDXJKHWDO 1R 1R +RRYHUY5DGDEDXJKHWDO 

%2**6sGHOLYHUHGWKHRSLQLRQRIWKHFRXUWLQZKLFK &RQVHTXHQWO\ ZH ODFN MXULVGLFWLRQ RYHU WKDW SRUWLRQ RI 5<$1sMRLQHG&2/(s SS GHOLYHUHGDVHSDUDWH DSSHOODQWVj DSSHDO  +DG DSSHOODQWV LQVWHDG DSSHDOHG WKH RSLQLRQFRQFXUULQJLQSDUWDQGGLVVHQWLQJLQSDUW TXDOLILHGLPPXQLW\GHQLDODVDPDWWHURIODZRQWKHEDVLVRI WKHXQGLVSXWHGIDFWVRURQSODLQWLIIjVYHUVLRQRIWKHIDFWVZH BBBBBBBBBBBBBBBBB ZRXOGKDYHMXULVGLFWLRQWRFRQVLGHUWKHLUDSSHDORIWKDWLVVXH 23,1,21 2QFHLWDGPLWVWKDWZHODFNMXULVGLFWLRQRYHUWKHSURWHFWHG BBBBBBBBBBBBBBBBB VSHHFKLVVXHWKHPDMRULW\VKRXOGJRQRIXUWKHULQFRQVLGHULQJ WKDWDUJXPHQW,QVWHDGWKHPDMRULW\FRQWLQXHVWRHYDOXDWHWKH %2**6 &LUFXLW s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j PRWLRQ IRU VXPPDU\ SURQJPHDQVWKDWWKHUHLVQRQHHGIRUXVWRDGGUHVVWKHVHFRQG MXGJPHQWRQJURXQGVRITXDOLILHGLPPXQLW\ZKHQWKDWGHQLDO SURQJDQGWKHPDMRULW\JRHVWRRIDUE\GRLQJVR LV EDVHG RQ D GHWHUPLQDWLRQ E\ WKH GLVWULFW FRXUW WKDW D TXHVWLRQ RI IDFW H[LVWV DV WR WKH HPSOR\HUjV PRWLYDWLRQ LQ 7KHPDMRULW\QH[WIDLOVWRFRQVLGHUDSSHOODQWVjDUJXPHQWV WHUPLQDWLQJ WKH SODLQWLII  :H DUH DOVR DVNHG ZKHWKHU WKH UHJDUGLQJ WKH GHQLDO RI TXDOLILHG LPPXQLW\ IRU +RRYHUjV ULJKWVLQTXHVWLRQDUHFOHDUO\HVWDEOLVKHGDVDSXUHPDWWHURI FODLPHGSURFHGXUDOGXHSURFHVVYLRODWLRQV%HFDXVHQHLWKHU ODZ  2Q WKH ILUVW TXHVWLRQ ZH FRQFOXGH WKDW ZH ODFN RIWKRVHLVVXHVLQYROYHVGLVSXWHGTXHVWLRQVRIIDFWZHKDYH MXULVGLFWLRQDQGGLVPLVVWKDWSRUWLRQRIWKHDSSHDO2QWKH MXULVGLFWLRQ WR FRQVLGHU ERWK DUJXPHQWV KHUH  5DWKHU WKDQ VHFRQGTXHVWLRQZHDIILUPWKHGHWHUPLQDWLRQRIWKHGLVWULFW EHODERUWKRVHLVVXHVKHUH,VLPSO\QRWHP\DJUHHPHQWZLWK FRXUWWKDWWKHULJKWVLQTXHVWLRQDUHFOHDUO\HVWDEOLVKHG WKHGLVWULFWFRXUWjVWKRXJKWIXOWUHDWPHQWRIWKRVHLVVXHVVHH +RRYHUY5DGDEDXJK)6XSSG 6'2KLR ,   'DOH +RRYHU ZDV HPSOR\HG LQ WKH &LUFOHYLOOH 2KLR )LQDOO\ WKH &LW\ RI &LUFOHYLOOH VHHNV WR KDYH WKLV &RXUW %XLOGLQJ'HSDUWPHQWDVDEXLOGLQJDQGHOHFWULFDOLQVSHFWRU H[HUFLVHSHQGHQWDSSHOODWHMXULVGLFWLRQRYHULWVFODLPEDVHGRQ 7KHFXUUHQWDFWLRQDULVHVRXWRI+RRYHUjVSXEOLFVWDWHPHQWV SULQFLSOHVRIPXQLFLSDOOLDELOLW\+RZHYHUWKHH[HUFLVHRI FULWLFL]LQJ WKH 'HSDUWPHQW ZKLOH KH ZDV DQ HPSOR\HH SHQGHQWDSSHOODQWMXULVGLFWLRQLVSURSHURQO\ZKHUHWKHUHLVDQ 'XULQJWKHFRXUVHRIKLVHPSOR\PHQW+RRYHUDUJXHGZLWKKLV LQH[WULFDEOHOLQNEHWZHHQWKHSHQGHQWDSSHOODWHFODLPDQGWKH VXSHUYLVRU$OO\Q6KHOGRQRYHUWKHSURSHUSURFHGXUHVWREH FODLP RYHU ZKLFK ZH KDYH MXULVGLFWLRQ  6HH 6ZLQW Y XVHG LQ LQVSHFWLQJ EXLOGLQJV  7KH GLVDJUHHPHQWV ZHUH &KDPEHUV&RXQW\&RPPjQ86   0DWWR[ RULJLQDOO\DEVWUDFW +RRYHUEHOLHYHGWKDWWKHIRUPFKHFNOLVW Y&LW\RI)RUHVW3DUN)G WK&LU  XVHG E\ LQVSHFWRUV FRQWDLQHG HUURUV WKDW OHG LQVSHFWRUV WR +HUHEHFDXVHWKHFLW\jVOLDELOLW\GHSHQGVRQDQLVVXHVHSDUDWH DSSURYHQRQFRPSOLDQWEXLOGLQJSURMHFWV0U6KHOGRQGLGQRW IURPWKHTXDOLILHGLPPXQLW\DQDO\VLVZKHWKHUWKHUHZDVD FRUUHFWWKHIRUP PXQLFLSDO SROLF\ FXVWRP RU SUDFWLFH LQ SODFH WKDW FKLOOHG HPSOR\HHVj IUHH VSHHFK ULJKWV  WKH &LW\ RI &LUFOHYLOOHjV  +RRYHUY5DGDEDXJKHWDO 1R 1R +RRYHUY5DGDEDXJKHWDO 

BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB 6RRQ DIWHU WKH GLVDJUHHPHQW EHFDPH FRQFUHWH  6KHOGRQ LQVWUXFWHG+RRYHUWRDSSURYHVHYHUDOEXLOGLQJSURMHFWVWKDW &21&855,1*,13$57',66(17,1*,13$57 GLGQRWPHHWFRGH6KHOGRQDOVRDVNHG+RRYHUWRSHUIRUP BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB SOXPELQJ LQVSHFWLRQV WKDW +RRYHU ZDV QRW TXDOLILHG WR SHUIRUP7KH&OLIWRQ%XLOGLQJGLVSXWHLQYROYHGDSOXPELQJ 5*8<&2/(s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jVSURFHGXUDOGXHSURFHVVFODLPIRUODFNRIQRWLFHRI 3DWRZVNL3DWRZVNLLQIRUPHG&OLIWRQWKDWWKHSOXPELQJZDV D SUHGLVFLSOLQDU\ PHHWLQJ  LLL  ZKHWKHU WKH GLVWULFW FRXUW QRWSURSHUO\YHQWHG HUUHGLQGHQ\LQJTXDOLILHGLPPXQLW\IRU+RRYHUj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jVDQDO\VLVRIWKHILUVWLVVXH,ZULWHVHSDUDWHO\ YLRODWLRQV DQG RYHUULGH WKH YLRODWLRQV WKDW 3DWRZVNL KDG IRXQG3DWRZVNLDOVRIRXQGSOXPELQJYLRODWLRQVDWDQRWKHU 2Q WKH ILUVW LVVXH DOWKRXJK ZH GHFOLQH LQWHUORFXWRU\ VLWH WKH &DVWOH ,QQ SURMHFW ZKLFK LQFOXGHG QRQLQVXODWHG DSSHOODWHMXULVGLFWLRQRYHUWKHGHQLDORITXDOLILHGLPPXQLW\ SOXPELQJLQWKHDWWLF6KHOGRQDVNHG3DWRZVNLWRFRQFHDOWKH IRUWKHSURWHFWHGVSHHFKFODLPZHGRVREHFDXVHDSSHOODQWV YLRODWLRQV 3DWRZVNLUHIXVHG7KH&DVWOH,QQZDVDOVREXLOW GLVSXWH IDFWV LQ WKHLU DSSHDO  2XU MXULVGLFWLRQ LQ DQ ZLWKRXW DQ DUFKLWHFWjV GUDZLQJ DV UHTXLUHG E\ WKH 2KLR LQWHUORFXWRU\DSSHDORIDGHQLDORITXDOLILHGLPPXQLW\DOORZV %XLOGLQJ&RGH XVWRFRQVLGHULVVXHVRIODZLQWKHFRQWH[WRImWKHXQGLVSXWHG IDFWVRUWKHHYLGHQFHYLHZHGLQWKHOLJKWPRVWIDYRUDEOHWR 7KH %RJJV +DLU 6DORQ ZDV DOVR EXLOW ZLWKRXW SHUPLW RU SODLQWLIIl.OHLQY/RQJ)G  WK&LU  GUDZLQJ +RRYHUIRXQGQXPHURXVFRGHYLRODWLRQVLQFOXGLQJ SHWLWLRQIRUFHUWILOHG86/: 0D\  1R D QXPEHU RI ILUH KD]DUGV  7KH SOXPELQJ ZDV LPSURSHUO\   %HUU\PDQ Y 5LHJHU  )G   WK YHQWHG+RRYHULQIRUPHG5DGDEDXJKDQGRWKHUVDERXWWKH &LU   m$GHIHQGDQWZKRLVGHQLHGTXDOLILHGLPPXQLW\ YLRODWLRQVEXWKHZDVQHYHUWKHOHVVRUGHUHGWRVLJQRIIRQWKH PD\ILOHDQLQWHUORFXWRU\DSSHDOZLWKWKLV&RXUWRQO\LIWKDW LQVSHFWLRQV+RRYHUUHIXVHGDQGLQVWHDGLQIRUPHG0U%RJJV DSSHDOLQYROYHVWKHDEVWUDFWRUSXUHOHJDOLVVXHRIZKHWKHUWKH WKDWKHKDG GD\VWRFRUUHFWWKHYLRODWLRQV:LWKRXWDILQDO IDFWVDOOHJHGE\WKHSODLQWLIIFRQVWLWXWHDYLRODWLRQRIFOHDUO\ SOXPELQJ LQVSHFWLRQ DQG ZLWKRXW DQ\ FRUUHFWLRQ 6KHOGRQ HVWDEOLVKHGODZl 'HVSLWHWKDWOLPLWDWLRQDSSHOODQWVH[WHQG LVVXHGDFHUWLILFDWHRIRFFXSDQF\SHUPLWWLQJWKH6DORQWRRSHQ WKHLUDUJXPHQWEH\RQGWKHXQGLVSXWHGIDFWVRUWKHHYLGHQFH YLHZHGLQDOLJKWPRVWIDYRUDEOHWRWKHSODLQWLIInWKH\DVN $VDUHVXOWRIWKHVHLQFLGHQWV+RRYHUEHJDQWRYRLFHKLV WKLV &RXUW WR DGGUHVV GLVSXWHG TXHVWLRQV RI IDFW FRQFHUQV SXEOLFO\  +RRYHU VSRNH WR WKH %XLOGLQJ  +RRYHUY5DGDEDXJKHWDO 1R 1R +RRYHUY5DGDEDXJKHWDO 

'HSDUWPHQWjV $GYLVRU\ %RDUG ZKLFK LV PDGH XS RI ORFDO VWDWLQJWKDWJHQXLQHLVVXHVRIPDWHULDOIDFWH[LVWHGl,GDW EXLOGHUV DQG UHDOWRUV DERXW WKH 'HSDUWPHQWjV LPSURSHU   SUDFWLFHV  +RRYHU FRQWDFWHG *DUU\ .UHEEV WKH VWDWH FKLHI SOXPELQJLQVSHFWRUWRLQIRUPKLPWKDWWKH'HSDUWPHQWZDV ,QWKLVFDVHWKHUHLVQRVHULRXVLQWLPDWLRQWKDWWKHGLVWULFW FRQFHDOLQJFRGHYLRODWLRQV+RRYHUDOVRZHQWWRDFLW\ZLGH FRXUW DSSOLHG WKH ZURQJ OHJDO VWDQGDUG LQ GHWHUPLQLQJ VXSHUYLVRUVj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mVSLOO WKH EDG QHZV DOO RYHU WKH DOWHUFDWLRQ DQGWKDWWKHGLVWULFWFRXUWHPSOR\HGWKHLQFRUUHFW FRPPXQLW\l+RRYHUZDVZDUQHGWKDWKLVMREZDVLQMHRSDUG\ VWDQGDUGLQHYDOXDWLQJUHDVRQDEOHQHVV LIKHFRQWLQXHGWRFULWLFL]HWKH'HSDUWPHQWSXEOLFO\ 7KHDUJXPHQWLVXQDYDLOLQJ:HGHFOLQHWRHVWDEOLVKDQHZ 6KHOGRQDQG+RRYHUKDGDSK\VLFDODOWHUFDWLRQWZRPRQWKV VWDQGDUGRIUHDVRQDEOHQHVVIRUZRUNSODFHYLROHQFH:HDJUHH ODWHU7KHSDUWLHVjGHVFULSWLRQVRIWKHLQFLGHQWGLIIHUZLGHO\ ZLWKWKHGLVWULFWFRXUWWKDWDVDPDWWHURISXUHODZWKHULJKWV KRZHYHU WKH\ DJUHH RQ WKH IROORZLQJ  +RRYHU ZDV KHUHDUHFOHDUO\HVWDEOLVKHG DUHDVRQDEOHRIILFLDOZRXOGNQRZ SKRWRFRS\LQJGRFXPHQWVLQSUHSDUDWLRQIRUDODZVXLWDJDLQVW WKDW WHUPLQDWLQJ DQ HPSOR\HH ZLWK WKH PRWLYDWLRQ HYHQ LQ WKH%XLOGLQJ'HSDUWPHQWDQG6KHOGRQ6KHOGRQHQWHUHGWKH SDUWRITXLHWLQJWKHSODLQWLIIjVSXEOLFVSHHFKDERXWWKHLOOHJDO URRP+RRYHUWROG6KHOGRQWKDWKHZDVJHWWLQJDQDWWRUQH\ DFWLYLWLHV RI WKH 'HSDUWPHQW YLRODWHV WKH &RQVWLWXWLRQ 6KHOGRQUHVSRQGHGWKDW+RRYHUVKRXOGQRWLQFOXGHKLVQDPH %H\RQGWKDWZHODFNMXULVGLFWLRQWRUHYLHZWKHGLVWULFWFRXUWjV LQWKHODZVXLW+RRYHULQIRUPHG6KHOGRQWKDW6KHOGRQZDV GHWHUPLQDWLRQDVWRIDFWXDOLVVXHVDVWKH\UHODWHWRGHIHQGDQWVj WKHUHDVRQIRUWKHODZVXLWDQGWKDWKHZRXOGEHQDPHGDVD DFWXDOPRWLYDWLRQ GHIHQGDQW6KHOGRQOHIWWKHURRPEXWLPPHGLDWHO\UHWXUQHG +RRYHUIHDUHG6KHOGRQZDVJRLQJWRGHVWUR\WKHGRFXPHQWV ,,, 7KHWZRVKRYHGHDFKRWKHU+RRYHUWKHQSXVKHG6KHOGRQRXW RI WKH URRP DQG VDLG  m,I \RX FRPH EDFN LQ KHUH ,jOO NLOO )RU WKH DERYH UHDVRQV ZH DIILUP WKH GLVWULFW FRXUWjV \RXl GHWHUPLQDWLRQ WKDW WKH ULJKWV LQ TXHVWLRQ ZHUH FOHDUO\ HVWDEOLVKHGDQGGLVPLVVWKHUHPDLQGHURIWKHDSSHDOIRUODFN ,PPHGLDWHO\WKHUHDIWHU+RRYHUZDVJLYHQQRWLFHRIDSUH RIMXULVGLFWLRQ GLVFLSOLQDU\PHHWLQJ+HVLJQHGDIRUPZDLYLQJWKDWPHHWLQJ +RRYHUFODLPVWKDWKHZDLYHGWKHSUHGLVFLSOLQDU\PHHWLQJ EHFDXVH LW KDG EHHQ VFKHGXOHG WRR VRRQ IRU KLP WR JHW DQ DWWRUQH\ KLVXQGHUVWDQGLQJZDVWKDWWKHPHHWLQJZRXOGWDNH SODFHODWHUZKHQKHKDGSURFXUHGDQDWWRUQH\7KHHPSOR\HH  +RRYHUY5DGDEDXJKHWDO 1R 1R +RRYHUY5DGDEDXJKHWDO 

'LVWULFW&RXUWGHHPHGVXIILFLHQWO\VXSSRUWHGIRUSXUSRVHVRI UHVSRQVLEOHIRUFROOHFWLQJWKHZDLYHU0U6WDUNH\WHVWLILHG VXPPDU\MXGJPHQWPHWWKHVWDQGDUGRIµREMHFWLYHOHJDO WKDW+RRYHUVLJQHGWKHZDLYHUTXLFNO\EXWGHQLHGWKDW+RRYHU UHDVRQDEOHQHVVjl%R\G)GDW TXRWLQJ7XUQHUY UHTXHVWHGWLPHWRVHHNDQDWWRUQH\+RZHYHU+RRYHUDFWHG 6FRWW )G WK&LU  %R\GQRWHG m>:@H FRQVLVWHQWO\ZLWKKLVEHOLHIDQGFDOOHGWKDWQLJKWWRLQIRUP EHOLHYH WKDW WKH GLVWULFW FRXUWjV DVVHUWLRQ WKDW WKHUH ZHUH 6WDUNH\WKDWKHFRXOGQRWILQGDODZ\HU+RRYHUWKHQVRXJKW JHQXLQH LVVXH>V@ RI PDWHULDO IDFW GRHV QRW GHVWUR\ WKH WRKDYHWKHKHDULQJVFKHGXOHG1RKHDULQJZDVVFKHGXOHG DSSHDODELOLW\ RI LWV TXDOLILHG LPPXQLW\ UXOLQJ    l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j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mREMHFWLYHO\UHDVRQDEOH WR XVHGHDGO\IRUFH +HVXHGERWKWKHPXQLFLSDOLW\DQGDQXPEHURILQGLYLGXDO ZKHUH  DVXVSHFWLVUXQQLQJDZD\IURPWKHRIILFHUVLQDQ GHIHQGDQWV7KHLQGLYLGXDOGHIHQGDQWVPRYHGIRUVXPPDU\ DWWHPSWWRHVFDSH   WKHRIILFHUVGLGQRWZLWQHVVWKHVXVSHFW MXGJPHQW RQ WKH JURXQGV RI TXDOLILHG LPPXQLW\  WKH ILUH WKH ZHDSRQ   DQG   QR YHULILHG SURRI H[LVWV DV WR PXQLFLSDOLW\PRYHGIRUVXPPDU\MXGJPHQWRQWKHJURXQGV ZKHWKHUWKHVXVSHFWFRPPLWWHGWKHFULPHl,ELG7KHGLVWULFW WKDWWKHUHZDVQRFLW\SROLF\WRUHVWULFWIUHHGRPRIVSHHFK FRXUWDSSOLHGWKLVmIOHHLQJIHORQlWHVWIRXQGWKDWWKHUHZDVD JHQXLQHLVVXHRIPDWHULDOIDFWDVWRZKHWKHURQWKLVVWDQGDUG 8SRQHYDOXDWLQJ+RRYHUjVVSHHFKFODLPWKHGLVWULFWFRXUW WKHRIILFHUVKDGDFWHGUHDVRQDEO\DQGWKHUHIRUHGHQLHGWKH IRXQG WKDW KH KDG VXIILFLHQWO\ PDGH RXW KLV FDVH WR GHIHDW RIILFHUVj PRWLRQ IRU VXPPDU\ MXGJPHQW RQ JURXQGV RI VXPPDU\ MXGJPHQW EHFDXVH   WKH VSHHFK ZDV RI SXEOLF TXDOLILHGLPPXQLW\ FRQFHUQ   WHUPLQDWLRQZRXOGFKLOOVXFKVSHHFK DQG  WKH GHIHQGDQWVjPRWLYDWLRQLQWHUPLQDWLQJ+RRYHUZDVmDTXHVWLRQ +RZHYHU DV %R\G QRWHG D GLIIHUHQW OHJDO WHVW IRU RI IDFW EHVW OHIW WR WKH MXU\ WR GHFLGHl  :LWK UHVSHFW WR GHWHUPLQLQJUHDVRQDEOHQHVVDSSOLHVZKHQDFULPLQDOGRHVQRW +RRYHUjVGXHSURFHVVFODLPWKHGLVWULFWFRXUWKHOGWKDWKLV PHUHO\IOHHEXWWKUHDWHQVWKHOLIHRIDQRIILFHU  7KH%R\G ZDLYHUZDVQRWNQRZLQJO\PDGH FRXUWGHWHUPLQHGWKDWWKHGLVWULFWFRXUWVKRXOGKDYHDSSOLHGD mVHOI GHIHQVHl UDWKHU WKDQ D mIOHHLQJ IHORQl VWDQGDUG RI 7KHGLVWULFWFRXUWGHQLHGGHIHQGDQWjVPRWLRQIRUVXPPDU\ UHDVRQDEOHQHVV  7KH %R\G SDQHO GLVWLQJXLVKHG +RDUG E\ MXGJPHQWRQWKHLVVXHRITXDOLILHGLPPXQLW\7KHFRXUWIRXQG QRWLQJWKDWWKHGLVWULFWFRXUWLQ%R\GKDGDSSOLHGWKHZURQJ WKDWWKHGHIHQGDQWVGLGQRWPHHWWKHLUEXUGHQRIVKRZLQJWKDW OHJDOVWDQGDUGWRGHWHUPLQHVHOIGHIHQVH,GDW  7KH WKH\ ZRXOG KDYH WHUPLQDWHG +RRYHU HYHQ LI KH KDG QRW %R\GFRXUWQRWHGWKDWFRXUWVRIDSSHDOVUHWDLQmMXULVGLFWLRQ HQJDJHGLQSURWHFWHGVSHHFK7KHLQGLYLGXDOGHIHQGDQWVILOHG RYHU SXUHO\ OHJDO TXHVWLRQV GHVSLWH D GLVWULFW FRXUWjV RUGHU  +RRYHUY5DGDEDXJKHWDO 1R 1R +RRYHUY5DGDEDXJKHWDO 

WKLVLQWHUORFXWRU\DSSHDOIRUUHYLHZRIWKHTXDOLILHGLPPXQLW\ VSHHFKYLRODWLRQ8QGHURXUSUHFHGHQWZHODFNMXULVGLFWLRQ LVVXH WRUHYLHZWKHGHWHUPLQDWLRQRIDGLVWULFWFRXUWZKHQLWPDNHV VXFKDIDFWXDOGHWHUPLQDWLRQ+RDUG )GDW :KLOH WKLV DSSHDO ZDV SHQGLQJ +RRYHU PRYHG IRU GLVPLVVDORIWKHLQGLYLGXDOGHIHQGDQWVjDSSHDODVVHUWLQJWKDW  &OHDUO\(VWDEOLVKHG&RQVWLWXWLRQDO5LJKWV WKLVFRXUWODFNVMXULVGLFWLRQWRKHDUDQ LQWHUORFXWRU\DSSHDO EDVHGRQDIDFWXDOGHWHUPLQDWLRQPDGHE\WKHGLVWULFWFRXUW $VQRWHGDERYHWKH6L[WK&LUFXLWXVHVDWZRSDUWWHVWWR +RRYHUDOVRPRYHGWKLVFRXUWWRGLVPLVVWKHPXQLFLSDOLW\jV GHWHUPLQH ZKHWKHU DQ RIILFLDO LV SURWHFWHG E\ TXDOLILHG DSSHDORQWKHJURXQGVWKDWWKHPXQLFLSDOLW\PD\QRWDWWDFKLWV LPPXQLW\  ,I D SODLQWLIIjV IDFWV PDNH RXW D FRQVWLWXWLRQDO DSSHDO WR WKH LQWHUORFXWRU\ DSSHDO E\ WKH LQGLYLGXDO YLRODWLRQWKHFRXUWPXVWWKHQSURFHHGWRGHWHUPLQHZKHWKHU GHIHQGDQWV7KHPRWLRQVZHUHUHIHUUHGWRWKHKHDULQJSDQHO RUQRWWKDWULJKWZDVFOHDUO\HVWDEOLVKHG6RZDUGVY/RXGRQ &RXQW\  )G   WK &LU    7KH WHVW IRU ,, ZKHWKHUDULJKWLVFOHDUO\HVWDEOLVKHGZDVVHWRXWLQ+DUORZY )LW]JHUDOG86   FOHDUO\HVWDEOLVKHGULJKWV $ sXULVGLFWLRQDQG4XDOLILHG,PPXQLW\ IRUWKHSXUSRVHRITXDOLILHGLPPXQLW\DUHmFOHDUO\HVWDEOLVKHG VWDWXWRU\RUFRQVWLWXWLRQDOULJKWVRIZKLFKDUHDVRQDEOHSHUVRQ :HDUHDVNHGWRGHWHUPLQHZKHWKHUZHKDYHMXULVGLFWLRQWR ZRXOGKDYHNQRZQl,GDW$ULJKWLVFOHDUO\HVWDEOLVKHG KHDUDQLQWHUORFXWRU\DSSHDOIURPDGLVWULFWFRXUWjVGHFLVLRQWR LIDUHDVRQDEOHRIILFLDOZRXOGXQGHUVWDQGWKDWZKDWKHLVGRLQJ GHQ\VXPPDU\MXGJPHQWRQTXDOLILHGLPPXQLW\ZKHUHWDNLQJ YLRODWHV WKDW ULJKW  %HFDXVH WKLV TXHVWLRQ FRPHV WR XV RQ WKHSODLQWLIIjVIDFWVDVWUXHWKHUHLVDJHQXLQHLVVXHRIPDWHULDO LQWHUORFXWRU\ DSSHDO ZH KDYH MXULVGLFWLRQ WR UHYLHZ WKH IDFWDVWRGHIHQGDQWVjPRWLYDWLRQLQWHUPLQDWLQJDQHPSOR\HH GLVWULFW FRXUWjV UXOLQJ RQO\ LI D SXUH TXHVWLRQ RI ODZ LV :HKROGWKDWZHGRQRW SUHVHQWHGsRKQVRQYsRQHV86    sXULVGLFWLRQ LQ WKH FDVH VWHPV IURP  86& †   ,QWKLVFDVHWKHGLVWULFWFRXUWVWDWHG    WKLVVWDWXWHJUDQWVXVMXULVGLFWLRQWRKHDUDSSHDOVIURP ILQDO MXGJPHQWV RI GLVWULFW FRXUWV  $ GHQLDO RI VXPPDU\ 5HDVRQDEOHRIILFLDOVVXFKDVWKH'HIHQGDQWVLQWKLVFDVH MXGJPHQWLVJHQHUDOO\QRWDILQDOMXGJPHQW3KHOSVY&R\ ZRXOG XQGHUVWDQG IRU H[DPSOH WKDW GLVFLSOLQLQJ OHW )G  WK&LU sRKQVRQYsRQHV86 DORQHWHUPLQDWLQJDQHPSOR\HHIRUVSHDNLQJSXEOLFDOO\        +RZHYHU GLVWULFW FRXUW GHQLDOV RI TXDOLILHG DERXW D PDWWHU RI SXEOLF FRQFHUQ YLRODWHG KLV )LUVW LPPXQLW\PD\EHDSSHDOHGDVFROODWHUDORUGHUVZKHUH  WKH $PHQGPHQWULJKWV GHIHQGDQWLVDSXEOLFRIILFLDODVVHUWLQJWKHGHIHQVHRITXDOLILHG LPPXQLW\DQG  WKHLVVXHDSSHDOHGFRQFHUQVQRWZKLFKIDFWV $OWKRXJKZHODFNMXULVGLFWLRQWRUHYLHZRQLQWHUORFXWRU\ WKHSDUWLHVPLJKWEHDEOHWRSURYHEXWZKHWKHUFHUWDLQDOOHJHG DSSHDODGLVWULFWFRXUWjVGHWHUPLQDWLRQWKDWDJHQXLQHLVVXHRI IDFWVUHIOHFWDYLRODWLRQRIFOHDUO\HVWDEOLVKHGODZ&RKHQY IDFW DV WR WKH GHIHQGDQWjV PRWLYDWLRQ UHPDLQV IRU WULDO ZH %HQHILFLDO ,QGXVWULDO /RDQ &RUS  86    UHWDLQ MXULVGLFWLRQ RYHU WKH SXUHO\ OHJDO TXHVWLRQ RI ZKDW 0LWFKHOOY)RUV\WK86   $GGLQJRQHILQDO FRQVWLWXWHVDFOHDUO\HVWDEOLVKHGFRQVWLWXWLRQDOULJKW0DWWR[ ZULQNOHWKH6XSUHPH&RXUW KHOGLQsRKQVRQYsRQHV )GDW  86     WKDW FLUFXLW FRXUWV GR QRW DOZD\V KDYH MXULVGLFWLRQRYHULQWHUORFXWRU\DSSHDOVIURPDGLVWULFWFRXUW 'HIHQGDQWVUHO\RQ%R\GY%DHSSOHU)G  WK GHQLDO RI VXPPDU\ MXGJPHQW RQ TXDOLILHG LPPXQLW\ &LU   ZKLFK KHOG WKDW D GHIHQGDQW PD\ mFODLP RQ MXULVGLFWLRQ H[LVWV RQO\ ZKHUH WKH GLVWULFW FRXUWjV UXOLQJ LV >LQWHUORFXWRU\@ DSSHDO WKDW DOO RI WKH FRQGXFW ZKLFK WKH  +RRYHUY5DGDEDXJKHWDO 1R 1R +RRYHUY5DGDEDXJKHWDO 

HPSOR\HHVZHUHUHOHDVHGDQGQRWUHKLUHGE\DQHZO\HOHFWHG FRQILQHGSXUHO\WRTXHVWLRQVRIODZ7KHUHIRUHRIILFLDOVPD\ FRXQW\ RIILFLDO  WKH HPSOR\HHV WKHQ EURXJKW D FLYLO ULJKWV LPPHGLDWHO\ DSSHDO DQ DGYHUVH UXOLQJ RQ WKHLU GHIHQVH RI DFWLRQFODLPLQJXQODZIXOGLVFKDUJHIRUSDUW\DIILOLDWLRQ,GDW TXDOLILHG LPPXQLW\  KRZHYHU WKH\ PD\ RQO\ GR VR LI WKH    7KH GHIHQGDQW PRYHG IRU VXPPDU\ MXGJPHQW RQ DSSHDOSUHVHQWVDmQHDWDEVWUDFW>LVVXH@RIODZUDWKHUWKDQWKH TXDOLILHG LPPXQLW\7KHGLVWULFWFRXUWGHQLHGWKLVPRWLRQ TXHVWLRQRIZKHWKHUWKHUHFRUGGHPRQVWUDWHVDJHQXLQHLVVXH DQGWKHGHIHQGDQWDSSHDOHG,GDW 7KH6L[WK&LUFXLW RIIDFWIRUWULDOl3KHOSV)GDW TXRWLQJ%HUU\PDQ KHOGWKDWEHFDXVHWKHGLVWULFWFRXUWKHOGWKDWDJHQXLQHLVVXH Y 5LHJHU  )G   WK &LU    LQWHUQDO RIPDWHULDOIDFWH[LVWHGDVWRZKHWKHUWKHGHIHQGDQWjVUHIXVDO TXRWDWLRQVDQGFLWDWLRQVRPLWWHG  WRUHKLUHZDVEDVHGRQSROLWLFDODIILOLDWLRQWKHDSSHDOVFRXUW KDG QR MXULVGLFWLRQ WR FRQVLGHU WKH VXIILFLHQF\ RI WKH m>*@RYHUQPHQWRIILFLDOVSHUIRUPLQJGLVFUHWLRQDU\IXQFWLRQV SODLQWLIIjVHYLGHQFHDVWRGHIHQGDQWjVPRWLYDWLRQ,GDW JHQHUDOO\DUHVKLHOGHGIURPOLDELOLW\IRUFLYLOGDPDJHVLQVRIDU DVWKHLUFRQGXFWGRHVQRWYLRODWHFOHDUO\HVWDEOLVKHGVWDWXWRU\ ,QWKLVFDVHGHIHQGDQWVDVVHUWDQRQUHWDOLDWRU\UHDVRQIRU RUFRQVWLWXWLRQDOULJKWVRIZKLFKDUHDVRQDEOHSHUVRQZRXOG +RRYHUjV WHUPLQDWLRQ  WKH\ DUJXH WKDW KH ZDV ILUHG VROHO\ KDYH NQRZQl  +DUORZ Y )LW]JHUDOG  86   EHFDXVHRIKLVGHDWKWKUHDWDJDLQVW6KHOGRQ+RZHYHUVHYHUDO   ,ITXDOLILHGLPPXQLW\LVDSSOLFDEOHWKHRIILFLDOLVQRW SLHFHVRIHYLGHQFHSRLQWWRDIDFWXDOFRQIOLFWUHJDUGLQJWKH RQO\ LPPXQH IURP GDPDJHV EXW LV LPPXQH IURP VXLW DFWXDOPRWLYDWLRQRIGHIHQGDQWV)LUVWDFFRXQWVGLIIHUDVWR 0LWFKHOO Y )RUV\WK  86       7KH 6L[WK ZKHWKHU WKH SK\VLFDO FRQIURQWDWLRQ EHWZHHQ 6KHOGRQ DQG &LUFXLWHPSOR\VDWZRVWHSSURFHVVLQGHFLGLQJTXHVWLRQVRI +RRYHU ZRXOG MXVWLI\ +RRYHUjV WHUPLQDWLRQ  %\ +RRYHUjV TXDOLILHGLPPXQLW\)LUVWWKHFRXUWFRQVLGHUVZKHWKHURQWKH GHVFULSWLRQ 6KHOGRQ LQLWLDWHG WKH SK\VLFDO FRQWDFW ZDV SODLQWLIIjV IDFWV WKHUH KDV EHHQ D FRQVWLWXWLRQDO YLRODWLRQ H[WUHPHO\DJJUHVVLYHDQGWKUHDWHQLQJDQGPD\KDYHLQWHQGHG 6HFRQGWKHFRXUWFRQVLGHUVZKHWKHUWKDWYLRODWLRQLQYROYHG WRGHVWUR\GRFXPHQWVWKDW+RRYHULQWHQGHGWRXVHLQDODZVXLW mFOHDUO\ HVWDEOLVKHG FRQVWLWXWLRQDO ULJKWV RI ZKLFK D 6KHOGRQ DOOHJHG LQ WXUQ WKDW +RRYHU ZDV WKUHDWHQLQJ DQG UHDVRQDEOH SHUVRQ ZRXOG KDYH NQRZQl  'LFNHUVRQ Y KRVWLOHWKDW+RRYHULQLWLDWHGSK\VLFDOFRQWDFWVKRYHGKLPRXW 0F&OHOODQ)G WK&LU   RIWKHURRPDQGWKUHDWHQHGKLVOLIH7KLVLVDTXLQWHVVHQWLDO IDFWXDOTXHVWLRQ 7KH FUX[ RI WKLV FDVH LV WKH GHIHQGDQWVj PRWLYDWLRQ LQ WHUPLQDWLQJ +RRYHU  ,I WKH\ ILUHG KLP EHFDXVH RI KLV )XUWKHU HYLGHQFH DGGXFHG DW WULDO LQGLFDWHG WKDW +RRYHU SURWHFWHGVSHHFKTXDOLILHGLPPXQLW\VKRXOGEH GHQLHG,I ZDV GLVFLSOLQHG IRU DWWHPSWLQJ WR VSHDN SXEOLFO\ DERXW WKH WKH\ WHUPLQDWHG KLP EHFDXVH RI KLV LQVXERUGLQDWLRQ WKH DFWLRQV RI WKH 'HSDUWPHQW  +RRYHU ZDV FHQVXUHG IRU RSSRVLWHLVWUXH7KHGLVWULFWFRXUWGHFLGHGWKDWWKHUHZDVD DWWHPSWLQJ WR DWWHQG WKH VXSHUYLVRUjV PHHWLQJ  +H ZDV TXHVWLRQ RI PDWHULDO IDFW DV WR ZKHWKHU WKH GHIHQGDQWV ZDUQHGWKDWKLVMREZRXOGEHLQMHRSDUG\LIKHFRQWLQXHGWR HQWHUWDLQHG LPSHUPLVVLEOH PRWLYHV LQ GLVFKDUJLQJ +RRYHU GLVFXVVSXEOLFO\WKH'HSDUWPHQWjVIDLOXUHWRFRPSO\ZLWKWKH :HPXVWGHFLGHZKHWKHUWKLVGHFLVLRQDVWRPRWLYDWLRQLVD ODZ+RRYHUjVWHUPLQDWLRQQRWLFHVWDWHGWKDWKHKDGEHHQILUHG OHJDORUIDFWXDORQH IRUUHIXVLQJWRFDUU\RXWZRUNDVVLJQPHQWV6RPHRIWKRVH DVVLJQPHQWVZHUHWKRVHWKDWKHKDGEHHQRUGHUHGWRDSSURYH 8QGHU 'LFNHUVRQ ZH DUH ILUVW WDVNHG ZLWK GHWHUPLQLQJ KDGUHIXVHGDQGKDGWKHQGLVFXVVHGSXEOLFO\ ZKHWKHU WKH SODLQWLIIjV IDFWV VSHOO RXW D FRQVWLWXWLRQDO YLRODWLRQDQGWKHQZLWKGHWHUPLQLQJZKHWKHUWKDWYLRODWLRQ 7KHGLVWULFWFRXUWUXOHGWKDWWKLVHYLGHQFHFUHDWHGDJHQXLQH ZDV RI D FOHDUO\ HVWDEOLVKHG FRQVWLWXWLRQDO ULJKW  :H KROG LVVXHRIPDWHULDOIDFWDVWRWKHPRWLYDWLRQHOHPHQWRIDIUHH WRGD\WKDWZHGRQRWKDYHMXULVGLFWLRQWRUHYLHZWKHIDFWXDO  +RRYHUY5DGDEDXJKHWDO 1R 1R +RRYHUY5DGDEDXJKHWDO

GHWHUPLQDWLRQRIWKHGLVWULFWFRXUWWKDWWKHUHZDVDJHQXLQH XQGHUPLQH D OHJLWLPDWH JRDO RU PLVVLRQ RI WKH HPSOR\HU LVVXH RI PDWHULDO IDFW DV WR ZKHWKHU RU QRW WKH GHIHQGDQWV FUHDWHGLVKDUPRQ\DPRQJFRZRUNHUVLPSDLUGLVFLSOLQHE\ HQWHUWDLQHG XQFRQVWLWXWLRQDO PRWLYDWLRQV  %HFDXVH WKH VXSHULRUV RU GHVWUR\ WKH UHODWLRQVKLS RI OR\DOW\ DQG WUXVW GHWHUPLQDWLRQ RI WKH GLVWULFW FRXUW ZDV IDFWXDO DQG GLG QRW UHTXLUHG RI FRQILGHQWLDO HPSOR\HHVl  :LOOLDPV Y UDLVHVLJQLILFDQWOHJDOTXHVWLRQVZHGLVPLVVWKDWLVVXHIRUODFN &RPPRQZHDOWKRI.\)G WK&LU   RIMXULVGLFWLRQ 6HFRQG WKH GHIHQGDQWVj DGYHUVH DFWLRQ PXVW FRQVWLWXWH DQ LQMXU\WKDWZRXOGOLNHO\FKLOODSHUVRQRIRUGLQDU\ILUPQHVV  &RQVWLWXWLRQDO9LRODWLRQ IURPHQJDJLQJLQWKHSURWHFWHGDFWLYLW\%ORFK)GDW 7KLUGmWKHDGYHUVHDFWLRQ>PXVWEH@PRWLYDWHGDWOHDVW 7KHWKUHVKROGLQTXLU\DFRXUWPXVWXQGHUWDNHLQDTXDOLILHG LQ SDUW DV D UHVSRQVH WR WKH H[HUFLVH RI WKH SODLQWLIIjV LPPXQLW\DQDO\VLVLVZKHWKHUSODLQWLIIjVDOOHJDWLRQVLIWUXH FRQVWLWXWLRQDOULJKWVl,ELG HVWDEOLVKDFRQVWLWXWLRQDOYLRODWLRQ+RSHY3HO]HU6&W    TXRWLQJ 6DXFLHU Y .DW]  86    +HUH+RRYHUjVVSHHFKLQFOXGHGLQIRUPLQJVWDWHRIILFLDOV  +HUH+RRYHUKDVVWDWHGDFODLPIRUDYLRODWLRQRIKLV DQGFLWL]HQERDUGVDERXWWKHLPSURSHUSURFHGXUHVEHLQJXVHG ULJKWVWRIUHHVSHHFKXQGHUWKH)LUVW$PHQGPHQW:KHQD E\WKH&LUFOHYLOOH%XLOGLQJ'HSDUWPHQW:KHQDQLQVWLWXWLRQ SXEOLFHPSOR\HHDOOHJHVWKDWKHZDVWHUPLQDWHGLQUHWDOLDWLRQ RYHUVHHVVRPHDVSHFWRISXEOLFVDIHW\WKHFRUUHFWRSHUDWLRQRI IRUSURWHFWHGVSHHFKZHORRNWRWKUHHHOHPHQWV)LUVWWKH WKDWLQVWLWXWLRQLVDPDWWHURISXEOLFFRQFHUQ0DWWR[Y&LW\ VSHHFKPXVWEHFRQVWLWXWLRQDOO\SURWHFWHG%ORFKY5LEDU RI )RUHVW 3DUN  )G   WK &LU  )G WK&LU  6SHHFKLVSURWHFWHGLILWLV ZURQJGRLQJ E\ D PXQLFLSDO ILUH GHSDUWPHQW KHOG WR EH RI RQDVXEMHFWRISXEOLFFRQFHUQ&RQQLFNY0\HUV86 VXIILFLHQW SXEOLF LQWHUHVW WR PHULW )LUVW $PHQGPHQW      PRUHRYHU WKH VXEMHFW PDWWHU PXVW EH RI SURWHFWLRQ   $V WKH GLVWULFW FRXUW FRUUHFWO\ FRQFOXGHG WKH VXIILFLHQWLPSRUWDQFHWRRXWZHLJKWKHLQWHUHVWRIWKHVWDWHLQ LQWHUHVW LQ SXEOLF VDIHW\ RXWZHLJKV WKH VWDWHjV LQWHUHVW LQ FRQGXFWLQJLWVDIIDLUVLQDFROOHJLDOPDQQHU3LFNHULQJY%G FRQGXFWLQJLWVDIIDLUVFROOHJLDOO\7HUPLQDWLRQLVDQDGYHUVH RI(GXF 86   m,QVWULNLQJWKHEDODQFH DFWLRQ WKDW ZRXOG FKLOO VSHHFK LQ D SHUVRQ RI RUGLQDU\ FRXUWV VKRXOG FRQVLGHU ZKHWKHU DQ HPSOR\HHjV FRPPHQWV ILUPQHVV0DWWR[)GDW PHDQLQJIXOO\ LQWHUIHUH ZLWK WKH SHUIRUPDQFH RI KHU GXWLHV 7KHWKLUGSDUWRID)LUVW$PHQGPHQWVSHHFKFODLPORRNVWR WKHGHIHQGDQWVjPRWLYDWLRQLQWHUPLQDWLQJ+RRYHU:KHQWKH  GHIHQGDQWVj LQWHQW LV DW LVVXH mVXPPDU\ MXGJPHQW LV sRKQVRQ GRHV QRW FRQWHPSODWH ZKHWKHU RU QRW ZH ZRXOG KDYH SDUWLFXODUO\LQDSSURSULDWHl0DURKQLFY:DONHU)G MXULVGLFWLRQ WR UHYLHZ RQ LQWHUORFXWRU\ DSSHDO DQ XWWHUO\ LQFRUUHFW  WK&LU  $QDFWWDNHQLQUHWDOLDWLRQIRUWKH GHWHUPLQDWLRQ E\ WKH GLVWULFW FRXUW WKDW D JHQXLQH LVVXH RI PDWHULDO IDFW H[HUFLVH RI D FRQVWLWXWLRQDOO\ SURWHFWHG ULJKW LV DFWLRQDEOH sRKQVRQ FRQVWUDLQHG UHYLHZ RQ LQWHUORFXWRU\ H[LVWHG EHWZHHQ WKH SDUWLHV DSSHDO WR OHJDO QRW IDFWXDO TXHVWLRQV 7KH GHWHUPLQDWLRQ DV WR ZKHWKHU HYHQ LI WKH DFWLRQ ZRXOG KDYH EHHQ SURSHU LI WDNHQ IRU D RU QRW D JHQXLQH LVVXH RI PDWHULDO IDFW H[LVWV EHWZHHQ WKH SDUWLHV LV LQ GLIIHUHQWUHDVRQ%ORFK)GDW WUXWK D OHJDO GHWHUPLQDWLRQ DOWKRXJK LW GRHV LQYROYH UHIHUHQFH WR IDFWV +RZHYHU sRKQVRQ DOVR KHOG WKDW D GLVWULFW FRXUW IDFWXDO GHFLVLRQ :HILQGWKLV&LUFXLWjVGHFLVLRQLQ+RDUGY6L]HPRUH  LQFOXGLQJ WKH GHFLVLRQ WKDW D JHQXLQH LVVXH RI PDWHULDO IDFW H[LVWV LV QRW )G  WK &LU   GLVSRVLWLYH RQ WKH TXHVWLRQ RI D mILQDO GHFLVLRQl DSSHDODEOH XQGHU †   WKLV ZDV GHVSLWH WKH IDFW WKDW ZKHWKHUZHKDYHMXULVGLFWLRQWRKHDUDQLQWHUORFXWRU\DSSHDO UHYLHZ RI WKDW GHWHUPLQDWLRQ ZRXOG EH SXUHO\ OHJDO %HFDXVH ZH GR QRW EHOLHYH LQ WKLV FDVH WKDW WKH GLVWULFW FRXUW LQFRUUHFWO\ GHWHUPLQHG WKDW IURPDGLVWULFWFRXUWjVGHWHUPLQDWLRQWKDWDJHQXLQHLVVXHRI WKHUH ZDV D JHQXLQH LVVXH RI PDWHULDO IDFW ZH QRWH EXW GR QRW DQVZHU WKLV PDWHULDO IDFW H[LVWV DV WR PRWLYH  ,Q +RDUG D QXPEHU RI TXHVWLRQ

Reference

Status
Published