W.G. Fairfield Co v. OSHRC ( 2002 )

5(&200(1'(' )25 )8//7(;7 38%/,&$7,21  :*)DLUILHOG&RY26+5&HWDO 1R 3XUVXDQW WR 6L[WK &LUFXLW 5XOH  (/(&7521,& &,7$7,21  )(' $SS 3 WK &LU DFNQRZOHGJHVWKDWWKHUHDUHWLPHVZKHQFURVVLQJDQDFWLYH )LOH 1DPH DS KLJKZD\ LV HQWLUHO\ XQVDIH DQG WKDW VDIHU DOWHUQDWLYHV DUH VRPHWLPHVDYDLODEOH L@I WKH 6HFUHWDU\ LV FRQFHUQHG DERXW ODQHVWUHWFKRI,LQ2KLRDKLJKZD\FRQVWUXFWLRQFUHZRI HPSOR\HHVj IDOOLQJ IURP WKH HGJH RI D IODW URRI KH VKRXOG )DLUILHOGHPSOR\HHVXQH[SHFWHGO\VWUXFNDFDEOH7RVHHLIWKH SURPXOJDWHDUHJXODWLRQWKDWVSHFLILFDOO\DGGUHVVHVWKDWKD]DUG FDEOHKDGEHHQSXOOHGORRVHRQHRIWKHZRUNHUV)OR\G:ROIH UDWKHUWKDQVHHNWRLPSRVHOLDELOLW\RQHPSOR\HUVXQGHUWKH ZDONHGDFURVVWKHWKUHHQRUWKERXQGODQHVRIWKHLQWHUVWDWHWR JHQHUDO GXW\ FODXVH IRU IDLOXUH WR SURWHFW DJDLQVW LWl  5/ LQVSHFWDMXQFWLRQER[ORFDWHGDWWKHPHGLDQ8QDEOHWRWUDFH 6DQGHUV)GDW WKHFDEOHKHWKHQDWWHPSWHGWRFURVVWKH WKUHHVRXWKERXQG ODQHVZDVVWUXFNE\DFDUDQGVXVWDLQHGIDWDOLQMXULHV 'LDPRQG5RRILQJDQG5/6DQGHUVDUHLQDSSRVLWH)LUVW WKH\ UHYHDO QRWKLQJ DERXW ZKDW NLQG RI LQVWUXFWLRQV DQ 1RQH RI WKH LQWHUVWDWHjV ODQHV KDG EHHQ FORVHG IRU WKH HPSOR\HULVUHTXLUHGWRJLYHDERXWNQRZQKD]DUGV6HFRQG SURMHFWDQGWKHUHZDVQRIODJPDQWRGLUHFWRUVWRSWUDIILFEXW DQG PRUH LPSRUWDQWO\ WKH\ HPSKDVL]H D NLQG RI VLJQVKDGEHHQSODFHGRQWKHQRUWKERXQGVLGHRIWKHLQWHUVWDWH mREYLRXVQHVVlWKDWLVQRWDWLVVXHKHUH WR ZDUQ DSSURDFKLQJ PRWRULVWV ZKR ZHUH WUDYHOLQJ DW DQ DYHUDJH UDWH RI  PLOHV SHU KRXU WKDW ZRUN ZDV EHLQJ 7KHUHLVQRGLVSXWHWKDWEHLQJVWUXFNE\WUDIILFRUIDOOLQJ SHUIRUPHGRQWKHQRUWKERXQGVKRXOGHU7KHUHZHUHQRVLJQV RIIRIDURRILVDQREYLRXVKD]DUG:KDWjVDWLVVXHLVZKHWKHU LQGLFDWLQJ ZRUN EHLQJ GRQH RQ WKH PHGLDQ RU RQ WKH WKHKD]DUGRIFURVVLQJDQDFWLYHURDGZD\ZDVVRREYLRXVWKDW VRXWKERXQGODQHV QRLQVWUXFWLRQDERXWGRLQJVRVDIHO\ZDVUHTXLUHG)DLUILHOG  :*)DLUILHOG&RY26+5&HWDO 1R 1R :*)DLUILHOG&RY26+5&HWDO  $VRQHRIWKHPDMRULW\&RPPLVVLRQHUVQRWHGmWKHUHLVQR $IWHU DQ 26+$ LQVSHFWLRQ WKH 6HFUHWDU\ RI /DERU FLWHG UHDVRQWREHOLHYHWKDWSROLFLHVHVWDEOLVKHGWRDGGUHVVµFURVVLQJ )DLUILHOG IRU WKUHH YLRODWLRQV  'XULQJ m(= 7ULDOl DQDFWLYHURDGZD\jZLOOEHDQ\PRUHEXUGHQVRPHRUZLOOEH SURFHHGLQJV WKH $/s GLVPLVVHG RQH RI WKH YLRODWLRQV DQG WKH REMHFW RI PRUH VXEMHFWLYH DSSOLFDWLRQ DQG HQIRUFHPHQW DIILUPHG WKH UHPDLQLQJ WZR D YLRODWLRQ RI  &)5 WKDQ WKH SROLFLHV RU SURFHGXUHV QRZ LQ SODFH IRU µZRUNLQJ †EWKHHPSOR\HUjVGXW\WRLQLWLDWHDQGPDLQWDLQ DURXQG PRYLQJ WUDIILFjl  )DLUILHOG ,, DW  Q  7KH VDIHW\SURJUDPVDQGDYLRODWLRQRI&)5†E &RPPLVVLRQ GLG QRW DUELWUDULO\ RU FDSULFLRXVO\ ILQG WKDW WKHHPSOR\HUjVGXW\WRLQVWUXFWHPSOR\HHVWRUHFRJQL]HDQG )DLUILHOG KDG DFWXDO NQRZOHGJH RI D KD]DUG DERXW ZKLFK LW DYRLG XQVDIH FRQGLWLRQV  7KH $/s FRQFOXGHG mWKDW D VKRXOG KDYH SURYLGHG JXLGDQFH DQG WKH &RPPLVVLRQjV UHDVRQDEOHSHUVRQFRXOGQRWVWDQGDWWKH VLGH RIDVL[ODQH DSSOLFDWLRQ RI WKH 26+$ UHJXODWLRQV GLG QRW YLRODWH LQWHUVWDWHKLJKZD\ZLWKWUDIILFWUDYHOLQJEHWZHHQDQG )DLUILHOGjVGXHSURFHVVULJKWV PLOHVSHUKRXUDQGUDWLRQDOO\WKLQNWKH\FRXOGFURVVVDIHO\RQ IRRWlDQGWKDWWKHSUDFWLFHRIFURVVLQJWKHKLJKZD\RQIRRW  2EYLRXVQHVVRIWKH+D]DUG VKRXOGKDYHEHHQSURKLELWHG:*)DLUILHOG&R:/ DW 26+5&$XJm)DLUILHOG,l )DLUILHOGFRQWHQGVWKDWLWVH[LVWLQJWUDLQLQJZDVDGHTXDWH EHFDXVHWKH26+$UHJXODWLRQVFRXOGQRWKDYHUHTXLUHGLWWR ,Q D VSOLW GHFLVLRQ WKH 2FFXSDWLRQDO +HDOWK DQG 6DIHW\ WUDLQH[SHULHQFHGKLJKZD\ZRUNHUVDERXWWKHREYLRXVKD]DUG 5HYLHZ&RPPLVVLRQDIILUPHGWKHYLRODWLRQV6HFUHWDU\RI RI FURVVLQJ DQ LQWHUVWDWH RQ IRRW  7KLV DUJXPHQW WKRXJK /DERUY:*)DLUILHOG&R:/26+5& VXSHUILFLDOO\DOOXULQJLVXQSHUVXDVLYH 2FWm)DLUILHOG,,l$OWKRXJKWKH&RPPLVVLRQ GLVDJUHHG ZLWK WKH $/sjV FRQFOXVLRQ WKDW FURVVLQJ WKH m$QHPSOR\HUjVLQVWUXFWLRQVDUHQRWQHFHVVDULO\GHILFLHQW KLJKZD\VKRXOGKDYHEHHQSURKLELWHGLWIRXQGWKDW)DLUILHOG MXVWEHFDXVHWKH\DOORZWKHHPSOR\HHVGLVFUHWLRQDVWRKRZWR ZDVUHTXLUHGDVDUHDVRQDEO\SUXGHQWHPSOR\HUWRDGGUHVV SURFHHG SDUWLFXODUO\ ZKHUH WKH ZRUNLQJ FLUFXPVWDQFHV DUH WKH SUDFWLFH LQ LWV VDIHW\ SURJUDP DQG HPSOR\HH WUDLQLQJ VXFKWKDWQRRQHIRUPRISURWHFWLRQLVFDSDEOHRIEHLQJXVHG m>E@DVHG RQ )DLUILHOGjV DFWXDO NQRZOHGJH RI WKH KD]DUG RI HYHU\ WLPHl  (O 3DVR &UDQH DQG 5LJJLQJ &R  :/ FURVVLQJ DQ DFWLYH KLJKZD\ RQ IRRW DQG LWV IDLOXUH WR DW 26+5&6HSW26+' VSHFLILFDOO\DGGUHVVWKDWKD]DUGZKHQLWZDVDZDUHRIDWOHDVW &&+ ˆ    7KH SULPDU\ LQTXLU\ LV mZKHWKHU WKH RQHSRWHQWLDOO\VDIHUDOWHUQDWLYHl,GDW   HPSOR\HUjVSURJUDPRIVDIHW\LQVWUXFWLRQSURYLGHGDGHTXDWH JXLGDQFHl,GDW m,QGHWHUPLQLQJWKHUHDVRQDEOHQHVVRI ,, LQVWUXFWLRQVZHPXVWFRQVLGHUVXFKIDFWRUVDVWKHREYLRXVQHVV RI WKH KD]DUG    WKH H[SHULHQFH RI WKH HPSOR\HHV WKH )DLUILHOG DQG WKH DPLFXV FXULDH 2KLR &RQWUDFWRUV OLNHOLKRRGWKDWDQDFFLGHQW ZRXOGRFFXUDQGWKHGHJUHHRI $VVRFLDWLRQUDLVHDKRVWRIDUJXPHQWVUHODWHGWRGXHSURFHVV KDUPWKDWZRXOGUHVXOWIURPDQDFFLGHQWl3UDWW :KLWQH\ OHJDO HUURU DQG LQVXIILFLHQF\ RI WKH HYLGHQFH  +RZHYHU $LUFUDIW *URXS  26$+5& /(;,6  DW  26+5& $SU    26+ &DV %1$  FLWDWLRQRPLWWHG  )DLUILHOG DVVHUWV D YLRODWLRQ RI GXH SURFHVV EHFDXVH WKH 26+$ )DLUILHOGjV WUDLQLQJ LQYROYHG DGPRQLVKPHQWV UHJDUGLQJ UHJXODWLRQV GLG QRW SURYLGH IDLU ZDUQLQJ WKDW )DLUILHOG ZDV UHTXLUHG WR ZRUNLQJQHDUPRYLQJWUDIILF)RUH[DPSOHm7KLQNDERXWWKH WUDLQ HPSOR\HHV DERXW FURVVLQJ DFWLYH URDGZD\V DQG EHFDXVH WKH GULYHUVRQWKHURDGZKRZLOOEHSDVVLQJWKURXJK\RXUZRUN 6HFUHWDU\ ZDV UHTXLUHG WR DQG GLG QRW SUHVHQW HYLGHQFH RI FXVWRPDU\ WUDLQLQJ LQ WKH KLJKZD\ FRQVWUXFWLRQ LQGXVWU\ EHIRUH LPSRVLQJ WKH ]RQHlm3D\FORVHDWWHQWLRQWRWKHWUDIILFDURXQG\RXnPDNH UHTXLUHPHQWV $V WR OHJDO HUURU )DLUILHOG DVVHUWV WKDW 26+$ UHJXODWLRQV  :*)DLUILHOG&RY26+5&HWDO 1R 1R :*)DLUILHOG&RY26+5&HWDO  FRXFKHGWKHGHWHUPLQDWLYHLVVXHLVZKHWKHU)DLUILHOGDFWHGDV DFWLYHURDGZD\V7KH6HFUHWDU\FRXQWHUVWKDWWKH087&'nD D mUHDVRQDEO\ SUXGHQW HPSOR\HUl LQ FRQIRUPLQJ LWV VDIHW\ IHGHUDOO\ UHYLVHG DQG VWDWHDGRSWHG PDQXDO WKDW SULYDWH SURJUDPWRDQ\NQRZQGXW\WRFRUUHFWDQGGHWHFWKD]DUGV6HH FRPSDQLHV DUH REOLJDWHG WR IROORZnSURYLGHV DQ REMHFWLYH 1RUWKZRRG6WRQH $VSKDOW,QF:/DW  VRXUFHIRUWKLVGXW\ 26+5& 1RY    26+ &DV %1$  DIIjG  )G  WK &LU   ,I )DLUILHOG GLG DOO LW 7KH 6HFUHWDU\jV 087&' DUJXPHQW RIIHUHG IRU WKH ILUVW QHHGHGWRGRWKH26+$UHJXODWLRQVZHUHPLVDSSOLHG,ILW WLPHRQDSSHDOLVPHUHO\GXSOLFDWLYHRIWKHSXUSRVHRI26+$ GLGQjWWKHFLWDWLRQVVKRXOGEHDIILUPHG DQG WKH FLWHG UHJXODWLRQV ZKLFK UHTXLUH DQ HPSOR\HU WR LQVWLWXWHSROLFLHVDQGWUDLQLQJDERXWNQRZQKD]DUGV6HHHJ $ 6WDQGDUGRI5HYLHZ 5D\(YHUV)GDWGLVFXVVLQJ26+$UHJXODWLRQV ZLWK UHVSHFW WR D JHQHUDO GXW\ WR UHTXLUH HPSOR\HHV WR XVH )DFWXDO ILQGLQJV E\ WKH 26+5& VKRXOG EH DIILUPHG LI DSSURSULDWH SHUVRQDO SURWHFWLRQ HTXLSPHQW  7KH GHFHGHQW mVXEVWDQWLDOHYLGHQFHLQWKHUHFRUGWDNHQDVDZKROHlVXSSRUW OHIWWKHZRUN]RQHnDWUHQFKEHVLGHWKHKLJKZD\IRUZKLFK WKHP1DWjO(QJjJDQG&RQWUDFWLQJ&RY26+$)G WKHUHZHUHVLJQVSRVWHGWRDOHUWPRWRULVWVnWRZDONDFURVVVL[   WK &LU   /HJDO FRQFOXVLRQV DUH DIILUPHG ODQHVRIWUDIILFZLWKRXWWKHDVVLVWDQFHRIDYHKLFOHVLJQVRU XQOHVVWKH\DUHmDUELWUDU\FDSULFLRXVDQDEXVHRIGLVFUHWLRQ RWKHUHPSOR\HHV)DLUILHOGSHUPLWWHGKLPIXOOGLVFUHWLRQWRGR RURWKHUZLVHQRWLQDFFRUGDQFHZLWKODZl,GFLWLQJ86& VR  8QGHU 26+$ LWV UHJXODWLRQV DQG HYHQ WKH 087&' †$RIWKH$GPLQLVWUDWLYH3URFHGXUH$FW7KHUHLV )DLUILHOG KDG D FOHDU GXW\ WR GR PRUH WKDQ H[SODLQ WKDW QRGLVSXWHRIIDFWKHUH7KHSDUWLHVGLIIHUDVWRWKHDSSOLFDWLRQ YHKLFXODU WUDIILF FDQ EH GDQJHURXV HVSHFLDOO\ LQ OLJKW RI RIWKHODZWRWKHIDFWV IHDVLEOHDOWHUQDWLYHVDQGWKHUHJXODULW\ZLWKZKLFKHPSOR\HHV XQGHUWRRNVXFKJUDYHULVNV :H GHQ\ )DLUILHOGjV UHTXHVW WKDW ZH QRW FRQVLGHU WKH 6HFUHWDU\jVDUJXPHQWDERXWWKH0DQXDORQ8QLIRUP7UDIILF )DLUILHOGDQGWKHDPLFXVDUJXHWKDWLWLVQHDUO\LPSRVVLEOH &RQWURO 'HYLFHV m087&'l EHFDXVH LW ZDV QHYHU EHIRUH WR GLVFHUQ H[DFWO\ ZKDW NLQG WUDLQLQJ LV UHTXLUHG E\ WKH &RPPLVVLRQjVUXOLQJ)RUH[DPSOHWKHDPLFXVDVNVm,VVXFK WUDLQLQJDOVRQHFHVVDU\ZKHQHPSOR\HHVPLJKWEHFURVVLQJD EXV\XUEDQVWUHHW"$VXEXUEDQWKRURXJKIDUHDWUXVKKRXU"$ GR QRW UHTXLUH D FRPSDQ\ WR WUDLQ DERXW REYLRXV KD]DUGV VXFK DV FURVVLQJ OLPLWHGDFFHVVVWDWHKLJKZD\LQDUXUDODUHD"l DFWLYH URDGZD\V RQ IRRW DQG WKDW WKH FRPSDQ\ VKRXOG QRW EH UHVSRQVLEOH ZKHQ FDXWLRXV ZHOOWUDLQHG HPSOR\HHV VXIIHU IURP LQH[SOLFDEOH DFFLGHQWV 7KLVDUJXPHQWLVXQSHUVXDVLYH7KH&RPPLVVLRQUXOHGWKDW 7KH DPLFXV FRQWHQGV WKDW WKH &RPPLVVLRQ HUUHG E\ DIILUPLQJ 26+$ m>D@QHPSOR\HUjVREOLJDWLRQWRLQVWUXFWDQGWUDLQLVGHSHQGHQW XSRQWKHVSHFLILFFRQGLWLRQVZKHWKHUWKRVHFRQGLWLRQVFUHDWH YLRODWLRQV ZKHUH FRQVLVWHQW ZLWK LQGXVWU\ SUDFWLFH WKH HPSOR\HU SURYLGHG JHQHUDO JXLGDQFH WR LWV HPSOR\HHV FRQFHUQLQJ DQ REYLRXV KD]DUG D KD]DUG DQG ZKHWKHU WKH HPSOR\HU RU LWV LQGXVWU\ KDV  7KH 6HFUHWDU\ FRQWHQGV WKDW m>D@ GHWHUPLQDWLRQ WKDW DQ HPSOR\HU UHFRJQL]HGWKHKD]DUGl)DLUILHOG,,DW ,QRWKHUZRUGV IDLOHG WR UHFRJQL]H WKDW D FRQGLWLRQ WR ZKLFK LWV HPSOR\HHV ZHUH H[SRVHG )DLUILHOG VKRXOG FRQGXFW LWV WUDLQLQJ RQ FURVVLQJ URDGZD\V FRQVWLWXWHG D KD]DUG WKDW D UHDVRQDEO\ SUXGHQW HPSOR\HU ZRXOG KDYH ZLWKDUHDVRQDEOHQHVVVWDQGDUGLQPLQG:HKDYHUHFRJQL]HG DGGUHVVHG LQ LWV DFFLGHQWSUHYHQWLRQ DQG WUDLQLQJ SURJUDPV LV D IDFWXDO WKDWJHQHUDOUHJXODWLRQVDUHQRWFRQVWLWXWLRQDOO\LQILUPRQGXH RQHl 7KDW VWDWHPHQW LV LQFRUUHFW WKH mUHDVRQDEO\ SUXGHQW HPSOR\HUl SURFHVVJURXQGVVRORQJDVDUHDVRQDEOHQHVVUHTXLUHPHQWLV VWDQGDUG LV XQHTXLYRFDOO\ OHJDO )DLUILHOG DGPLWV WKDW FURVVLQJ D URDG FDQ EH KD]DUGRXV DQG WKDW LW GLG QRW LQVWLWXWH D SROLF\ RU WUDLQLQJ WR VSHFLILFDOO\ UHDGLQWRWKHP6HH5D\(YHUV)GDW DGGUHVV LW RQO\ WKH OHJDO TXHVWLRQ RI ZKHWKHU )DLUILHOG ZDV UHTXLUHG WR GR VR UHPDLQV  :*)DLUILHOG&RY26+5&HWDO 1R 1R :*)DLUILHOG&RY26+5&HWDO  RSLQHG WKDW WKH SURSHU SUDFWLFH VKRXOG KDYH EHHQ WR IRUELG UDLVHGmµ,WLVZHOODFFHSWHGWKDWZLWKRXWILOLQJDFURVV HPSOR\HHV WR FURVV PXOWLSOH ODQH KLJKZD\V RQ IRRW  ,G DSSHDORUFURVVSHWLWLRQDQDSSHOOHHPD\UHO\XSRQDQ\PDWWHU $OWKRXJKWKH&RPPLVVLRQPDMRULW\GLVDJUHHGWKDWDQRXWULJKW DSSHDULQJLQWKHUHFRUGLQVXSSRUWRIWKHMXGJPHQWEHORZj SURKLELWLRQZDVWKHRQO\DOWHUQDWLYHDYDLODEOHLWQRWHGWKDW 7KHVWDWXWRU\DUJXPHQWUDLVHGE\WKHDSSHOOHHVDOWKRXJKQRW m>W@KUHH RI )DLUILHOGjV IRUHPHQ DJUHHG WKDW WKH SUDFWLFH >RI SUHVHQWHGLQWKH'LVWULFW&RXUWPD\EHGHFLGHGRQWKHEDVLV FURVVLQJWKHKLJKZD\RQIRRW@FDQEHGDQJHURXVGHSHQGLQJ RIWKHUHFRUGGHYHORSHGLQWKDWFRXUWl6FKZHLNHUY+RJDQ XSRQWKHFLUFXPVWDQFHV,QGHHG)DLUILHOGjVRZQHPSOR\HHV 86QFLWDWLRQRPLWWHGTXRWLQJ WHVWLILHG WKDW WKH FRPSDQ\ ZDV DZDUH RI DQG VRPHWLPHV %OXPY%DFRQ86QVHH3LQQH\ XWLOL]HGWKHSRWHQWLDOO\VDIHUDOWHUQDWLYHRIGULYLQJDYHKLFOHWR 'RFN  7UDQVS &R Y 3HQQ &HQW &RUS  )G  WKHRSSRVLWHVLGHRIDQDFWLYHLQWHUVWDWHKLJKZD\l)DLUILHOG  WK &LU  TXRWLQJ 'DQGULGJH Y :LOOLDPV  ,, DW   )DLUILHOG GLG QRW UHVWULFW HPSOR\HH GLVFUHWLRQ 86QIRUSURSRVLWLRQWKDWm>W@KHSUHYDLOLQJSDUW\ UHJDUGLQJWKHSURSHUPHWKRGDQGWLPLQJIRUFURVVLQJDFWLYH PD\DVVHUWLQDUHYLHZLQJFRXUWDQ\JURXQGLQVXSSRUWRI URDGZD\V EH\RQG JHQHUDO ZDUQLQJV DERXW VWD\LQJ DZDUH RI KLV MXGJPHQW ZKHWKHU RU QRW WKDW JURXQG ZDV UHOLHG RQ RU WUDIILF7KLVDPSO\LOOXVWUDWHV)DLUILHOGjVDFWXDONQRZOHGJHRI HYHQ FRQVLGHUHG E\ WKH WULDO FRXUWl  $ FRS\ RI 2KLRj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‡  &)5 † E m,W VKDOO EH WKH )DLUILHOGjVDFWXDONQRZOHGJHRIWKHKD]DUGDQGLWVIDLOXUHWR UHVSRQVLELOLW\ RI WKH HPSOR\HU WR LQLWLDWH DQG DGGUHVV WKDW KD]DUG LQ LWV VDIHW\ SURJUDP DQG HPSOR\HH PDLQWDLQ VXFK SURJUDPV DV PD\ EH QHFHVVDU\ WR WUDLQLQJYLRODWHGWKHFLWHG26+$UHJXODWLRQV6HH)DLUILHOG FRPSO\ZLWKWKLVSDUWl ,,DW  Q ‡  &)5 † E m7KH HPSOR\HU VKDOO )DLUILHOGDWWHPSWVWRVDOYDJHLWVDUJXPHQW E\FRQWHQGLQJ LQVWUXFW HDFK HPSOR\HH LQ WKH UHFRJQLWLRQ DQG WKDW WKH 6HFUHWDU\ FDQ SRLQW WR QR VRXUFH IRU WKH GXW\ WR DYRLGDQFHRIXQVDIHFRQGLWLRQVDQGWKHUHJXODWLRQV LQVWLWXWH SURJUDPV DQG WUDLQLQJ IRU HPSOR\HHV RQ FURVVLQJ  7KH )HGHUDO +LJKZD\ &RPPLVVLRQ UHYLVHV WKH 087&' DQG UHTXLUHV VWDWHV WR DGRSW D FRPSDUDEOH 087&' 2KLR KDV GRQH VR DQG SULYDWH  )DLUILHOG UHOLHV SULPDULO\ RQ WKH IROORZLQJ TXRWH m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l 5D\ (YHUV QHLWKHU WKH $/s QRU WKH &RPPLVVLRQ GLVFXVVHG WKH 087&' LQ DIILUPLQJ :HOGLQJ Y 26+5&  )G   WK &LU  FLWDWLRQ RPLWWHG WKH 26+$ YLRODWLRQV  :*)DLUILHOG&RY26+5&HWDO 1R 1R :*)DLUILHOG&RY26+5&HWDO  DSSOLFDEOH WR KLV ZRUN HQYLURQPHQW WR FRQWURO RU  $VSKDOW ,QF  :/  DW   8QGHU HOLPLQDWHDQ\KD]DUGVRURWKHUH[SRVXUHWRLOOQHVVRU †EDQHPSOR\HUmPXVWLQVWUXFWLWVHPSOR\HHVLQ LQMXU\l WKHUHFRJQLWLRQDQGDYRLGDQFHRIWKRVHKD]DUGVRIZKLFKD UHDVRQDEO\ SUXGHQW HPSOR\HU ZRXOG KDYH EHHQ DZDUHl 7KH †EYLRODWLRQZDVIRUmIDLOLQJWRHVWDEOLVK 3UHVVXUH &RQFUHWH &RQVWU &R  :/   DW  SROLFLHV RU SURFHGXUHV UHODWHG WR WKH VDIH PRYHPHQW RI 26+5&'HF26+&DV%1$ HPSOR\HHVDFURVVDFWLYHURDGZD\Vl)DLUILHOG,,DW 7KH † E YLRODWLRQ ZDV IRU mIDLOLQJ WR LQVWUXFW LWV ,QLQWHUSUHWLQJVXFKJHQHUDOVWDQGDUGVWKHFRXUWH[DPLQHV HPSOR\HHVH[SRVHGWRYHKLFXODUWUDIILFZKHQFURVVLQJDPDMRU ZKHWKHUmµDUHDVRQDEOHSHUVRQjH[DPLQLQJWKHJHQHUDOL]HG LQWHUVWDWH DV WR D VDIH PHDQV RI DFFHVV WR PHGLDQV DQG WKH VWDQGDUG LQ OLJKW RI D SDUWLFXODU VHW RI FLUFXPVWDQFHV FDQ RSSRVLWHVLGHRIWKHURDGl,G6WDWHGVLPSO\RQHFLWDWLRQ GHWHUPLQHZKDWLVUHTXLUHGRULIWKHSDUWLFXODUHPSOR\HUZDV ZDVIRUQRWPDNLQJWKHSURSHUSROLFLHVDQGWKHRWKHUZDVIRU DFWXDOO\DZDUHRIWKHH[LVWHQFHRIDKD]DUGDQGRIDPHDQVE\ QRWLQVWUXFWLQJHPSOR\HHVRQWKRVHSROLFLHV ZKLFK WR DEDWH LWl  5  5 %XLOGHUV ,QF  26$+5& /(;,6DW 26+5&1RY26+ 1HLWKHU )DLUILHOG QRU WKH DPLFXV GLVSXWH WKH KD]DUGRXV &DV%1$HPSKDVHVDGGHG$VZHKHOGLQDQDO\]LQJ QDWXUHRIFURVVLQJDFWLYHURDGZD\V7KHLUP\ULDGDUJXPHQWV WKHDQDORJRXV26+$JHQHUDOGXW\FODXVHm>W@KHTXHVWLRQRI PD\ EH GLVWLOOHG GRZQ WR WZR SULPDU\ FRQWHQWLRQV  WKH ZKHWKHUDKD]DUGLVUHFRJQL]HGJRHVWRWKHNQRZOHGJHRIWKH &RPPLVVLRQ HUUHG E\ DSSO\LQJ WKH UHJXODWLRQV LQ DQ HPSOR\HURULIKHODFNVDFWXDONQRZOHGJHWRWKHVWDQGDUGRI XQFRQVWLWXWLRQDOO\DUELWUDU\PDQQHUDQGZLWKRXWUHIHUHQFHWR NQRZOHGJHLQWKHLQGXVWU\nDQREMHFWLYHWHVWl&RQWLQHQWDO LQGXVWU\VWDQGDUGVDQGWKH&RPPLVVLRQHUUHGE\UHTXLULQJ 2LO &R Y 26+5&  )G   WK &LU  WUDLQLQJ DERXW WKH REYLRXV KD]DUG RI FURVVLQJ DQ DFWLYH HPSKDVLVDGGHG URDGZD\RQIRRW 7KHFRQMXQFWLRQmRUlLVLPSRUWDQW7KH6HFUHWDU\QHHGQRW  $UELWUDU\$SSOLFDWLRQDQG,QGXVWU\6WDQGDUGV SURYHDYLRODWLRQRILQGXVWU\VWDQGDUGVLIVKHSURYHVDFWXDO NQRZOHGJH RI D KD]DUG  6HH 1HOVRQ 7UHH 6HUYLFHV ,QF Y )DLUILHOGDUJXHVWKDWDUHDVRQDEO\SUXGHQWHPSOR\HUZRXOG 26+5&)GWK&LUKROGLQJWKDW QRWKDYHNQRZQWKDWWKH26+$UHJXODWLRQVUHTXLUHGWUDLQLQJ HPSOR\HUjVDFWXDONQRZOHGJHRISRWHQWLDOKD]DUGHVWDEOLVKHG HPSOR\HHVDERXWWKHKD]DUGVRIFURVVLQJDQDFWLYHURDGZD\ UHFRJQLWLRQ XQGHU *HQHUDO 'XW\ &ODXVH  86& $V VXSSRUW )DLUILHOG QRWHV WKDW DOO WKUHH &RPPLVVLRQHUV †DVHHHJ%UHQQDQY26+5&)G DJUHHGWKDWWKH6HFUHWDU\IDLOHGWRSURYHHLWKHUWKDW)DLUILHOG WK &LU  H[DPLQLQJ mUHFRJQL]HGl KD]DUGV XQGHU IHOO EHORZ LQGXVWU\ VWDQGDUGV RU WKDW WKH HQWLUH KLJKZD\ 26+$jV *HQHUDO 'XW\ &ODXVH DQG QRWLQJ WKDW mWKH WHUP FRQVWUXFWLRQLQGXVWU\ZDVQHJOLJHQW)DLUILHOGjVDUJXPHQWLV UHFRJQL]HG ZDV FKRVHQ E\ &RQJUHVV QRW WR H[FOXGH DFWXDO XQSHUVXDVLYHLQOLJKWRIWKHIDFWXDOILQGLQJWKDWLWKDGDFWXDO NQRZOHGJHEXWUDWKHUWRUHDFKEH\RQGDQHPSOR\HUjVDFWXDO NQRZOHGJHDERXWWKHFRPPRQSUDFWLFHRIHPSOR\HHVFURVVLQJ NQRZOHGJHWRLQFOXGHWKHJHQHUDOO\UHFRJQL]HGNQRZOHGJHRI DFWLYHURDGZD\V WKHLQGXVWU\DVZHOOl 8QGHU†EmDQHPSOR\HUPD\UHDVRQDEO\EH 7KH$/sIRXQGWKDW)DLUILHOGmNQHZWKDWLWVHPSOR\HHV0U H[SHFWHGWRFRQIRUPLWVVDIHW\SURJUDPWRDQ\NQRZQGXWLHV :ROIHLQFOXGHGUHJXODUO\FURVVHGODQHVRILQWHUVWDWHKLJKZD\V DQGDVDIHW\SURJUDPPXVWLQFOXGHWKRVHPHDVXUHV IRU RQIRRWl)DLUILHOG,DW 7KHFRPSOLDQFHRIILFHUDQGD GHWHFWLQJDQGFRUUHFWLQJKD]DUGVZKLFKDUHDVRQDEO\SUXGHQW VKHULIIjVGHSXW\ZLWKH[WHQVLYHH[SHULHQFHLQKLJKZD\VDIHW\ HPSOR\HUVLPLODUO\VLWXDWHGZRXOGDGRSW1RUWKZRRG6WRQH