Thomas v. Cohen ( 2002 )

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 1$7$6+$ 7+20$6 686$1 ; *,%%6DQG(':,1$ /(:,6  3ODLQWLIIV$SSHOOHHV   1R  Y !   $11 &2+(1 */(11 &5$,*  s$0(6 (0%5 D@Q\DWWHPSWV $PHQGPHQW ULJKWV DOWKRXJK sXGJH &OD\ ZRXOG KROG WKDW WKDW >KH@ KDG WR GLVFXVV DQ\WKLQJ ZLWK >SODLQWLIIV@ ZDV PHW 3ODLQWLIIVj)RXUWK$PHQGPHQWULJKWVZHUHYLRODWHGDVZHOO ZLWKORXGIRXOODQJXDJHl ,%$&.*5281' 7UXH SODLQWLIIVj ZULWWHQ GHFODUDWLRQV VWDWH WKDW 1DWDVKD 7KRPDV WROG WKH RIILFHUV WKH SODLQWLIIV mSDLG UHQW DQG KDG 7KH$XJXVWD+RXVHLVORFDWHGLQ/RXLVYLOOHDQGRSHUDWHGE\ ULJKWVl%XWSODLQWLIIVQHYHUGLVSXWHWKDW7KRPDVZDVLQWKH 0LVVLRQ +RXVH ,QF  $W DOO WLPHV UHOHYDQW WR WKLV FDVH PLGVW RI DQ XQFRQWUROODEOH RXWEXUVW ZKHQ VKH WULHG WR 3ODLQWLIIVZHUHUHVLGHQWVRIWKH$XJXVWD+RXVHUHWDLQHGNH\V FRPPXQLFDWHWKLVWRWKHRIILFHUV3ODLQWLIIVjRZQEHKDYLRU WRWKHSUHPLVHVDQGKDGIXOOULJKWVRIHQWU\7KH$XJXVWD WKHQSUHYHQWHGWKHRIILFHUVIURPGHWHUPLQLQJWKHWUXHQDWXUH +RXVHFKDUJHGHDFKUHVLGHQWDPRQWKO\IHHRIWROLYH RI WKH $XJXVWD +RXVH OLYLQJ DUUDQJHPHQWV  ,Q D IRRWQRWH WKHUH  (DFK UHVLGHQW RI WKH $XJXVWD +RXVH KDG KHU RZQ sXGJH&OD\VXJJHVWVWKDW,PLVWDNHQO\YLHZWKHHYLGHQFHRQ EHGURRPEXWVKDUHGWKHUHVWRIWKHKRXVHLQFRPPRQ,QWKH WKLVSRLQWLQWKHGHIHQGDQWVjIDYRU2XUREOLJDWLRQWRYLHZWKH IDOO RI  D GLVSXWH DURVH EHWZHHQ 3ODLQWLIIV DQG WKH HYLGHQFHLQWKHSODLQWLIIVjIDYRUKRZHYHUDULVHVRQO\ZKHQ 'LUHFWRURIWKH$XJXVWD+RXVH/DXUD=LQLRXVm=LQLRXVl WKHmGHIHQGDQWGLVSXWHVWKHSODLQWLIIVjYHUVLRQRIWKHVWRU\l UHJDUGLQJ3ODLQWLIIVjDOOHJHGYLRODWLRQVRIWKH$XJXVWD+RXVH 3KHOSVY&R\)GWK&LU$V,KDYH UXOHV=LQLRXVZKRGLGQRWOLYHRQWKHSUHPLVHVGHFLGHGWR DOUHDG\ VDLG GHIHQGDQWVj WHVWLPRQ\ WKDW SODLQWLIIVj RZQ HYLFW3ODLQWLIIVIURPWKHUHVLGHQFHIRUWKHVHDOOHJHGYLRODWLRQV EHKDYLRULQVLGH$XJXVWD+RXVHSUHYHQWHGDQ\FRPPXQLFDWLRQ 0HDQZKLOH3ODLQWLIIVPHWZLWK/LQGD5REHUWVDQDWWRUQH\DW LV XQGLVSXWHG  :H PXVW WKHUHIRUH DFFHSW GHIHQGDQWVj WKHORFDO/HJDO$LG6RFLHW\ZKRLQIRUPHGWKHPWKDWLQKHU WHVWLPRQ\LQWKLVUHJDUGRQLWVIDFH OHJDORSLQLRQWKH\ZHUHmWHQDQWVlRIWKH$XJXVWD+RXVHDQG FRXOGQRWEHUHPRYHGXQOHVV=LQLRXVIROORZHG.HQWXFN\jV %HFDXVH IXUWKHU LQTXLU\ ZDV PDGH LPSRVVLEOH LW ZDV IRUFLEOHGHWDLQHUVWDWXWRU\HYLFWLRQSURFHGXUHV5REHUWV UHDVRQDEOHIRUWKHRIILFHUVWRUHO\RQWKHLULQLWLDOFRQFOXVLRQ ZURWHDOHWWHUWR=LQLRXVVWDWLQJWKLVRSLQLRQ3ODLQWLIIVDOVR WKDW $XJXVWD +RXVH ZDV D WUDGLWLRQDO VKHOWHU DQG REWDLQHG D VLPLODU OHWWHU IURP WKH /RXLVYLOOH 7HQDQWV FRQVHTXHQWO\WKDWSODLQWLIIVFRXOGLQGHHGVKRXOGEHUHPRYHG $VVRFLDWLRQm/7$lDWHQDQWDGYRFDF\JURXS'HIHQGDQWV ZLWKRXW SUHHYLFWLRQ SURFHVV  ,Q KLQGVLJKW WKLV PD\ KDYH EHHQDPLVWDNH%HFDXVHLWZDVLPSRVVLEOHWRGHWHUPLQHWKH H[DFW QDWXUH RI WKH $XJXVWD +RXVH OLYLQJ DUUDQJHPHQWV KRZHYHULWZDVMXVWWKHNLQGRImUHDVRQDEOHPLVWDNH>@lWKDW WKH TXDOLILHG LPPXQLW\ GRFWULQH ZDV GHVLJQHG WR SURWHFW 6DXFLHU86DW  &3/07 WKH .HQWXFN\ 8QLIRUP 5HVLGHQWLDO /DQGORUG DQG 7HQDQW $FW 7KH OHDG RSLQLRQ PDNHV PXFK RI WKH IDFW WKDW 2IILFHU m85/7$l  .  5 D@OOWKUHHRI HYLFWLRQ  %DVHG XSRQ LQIRUPDWLRQ VXSSOLHG WR KLP E\ WKHPZHUH\HOOLQJVRORXGO\DQGFXVVLQJLWZDVKDUGWRHYHQ 3ODLQWLIIV DV ZHOO DV KLV RZQ LQGHSHQGHQW REVHUYDWLRQV WDONWRRQHRIWKHPl:KHQDVNHGLIKHZDVmDEOHWRGLVFHUQ &XVKPDQGHFOLQHGWRUHPRYH3ODLQWLIIVIURPWKHUHVLGHQFH ZKDW>SODLQWLIIV@DQJHUZDVDERXWl2IILFHU&UDLJUHVSRQGHG &XVKPDQ WKHQ DGYLVHG WKH FRPSODLQDQW WR VHHN UHGUHVV >D@JDLQQRWVSHFLILFDOO\$V,UHFDOOWKH\ZHUHMXVWoDOO WKUHHRIWKHPZHUHWDONLQJDQG\HOOLQJDOODWRQHWLPHQRW UHDOO\DQ\JRRGXVDEOHLQIRUPDWLRQIURPWKDWRWKHUWKDQ MXVWWU\LQJWRFDOPWKHPGRZQDQGPDLQWDLQRUGHUMXVWIRU VDIHW\UHDVRQVLQLWLDOO\ )XUWKHU2IILFHU)LVFKHUjVGHSRVLWLRQUHYHDOVWKHIROORZLQJ 4 $QG ZDV WKDW WKH ILUVW WKLQJ WKDW JRW VDLG WR WKHPWKDWWKH\QHHGHGWRJHWUHDG\DQGOHDYH" $ :H DVNHG WKHP LIoKRZ GLG ZH SXW WKDW  :H DVNHGWKHPLIWKH\OLYHGWKHUHRUVWD\HGWKHUHRU ZKDWHYHU WKHoZH FRXOGQjW GLVWLQJXLVK \RX NQRZIURPRQHWRWKHRWKHUEHFDXVHWKH\ZHUH DOO\HOOLQJDQGVFUHDPLQJDQGFDUU\LQJRQ7KH\ ZHUH WLFNHG RII DW KHU >=LQLRXV@ WKH\ ZHUH EHLQJEHOOLJHUHQWWRZDUGVKHUVRLWZDVKDUGWR NHHSWKHPDOOFDOPWRJHWDQ\FRPPRQVHQVH RXWRIDQ\ERG\  4 2ND\  :HUH WKHUH DQ\ GLVFXVVLRQV WKDW \RX KHDUG EHWZHHQ WKH RIILFHUV DQG WKH PDQDJHU  ZKLOH\RXZHUHDWWKHKRXVH" 7KH 85/7$ GHILQHV D mWHQDQWl DV mD SHUVRQ HQWLWOHG XQGHU D UHQWDO $ 7REHKRQHVWZLWK\RXTXLWHIUDQNZLWK\RXQR DJUHHPHQW WR RFFXS\ D GZHOOLQJ WR WKH H[FOXVLRQ RI RWKHUVl .56 EHFDXVH LW ZDV WRR ORXG  ,W ZDV KDUG WR †  $ mUHQWDO DJUHHPHQWl LV GHILQHG DV DQ\ DJUHHPHQW mZULWWHQ RU RUDO DQG YDOLG UXOHV DQG UHJXODWLRQV    HPERG\LQJ WKH WHUPV GLVWLQJXLVKZKRZDVWDONLQJWRZKR DQG FRQGLWLRQV FRQFHUQLQJ WKH XVH DQG RFFXSDQF\ RI D GZHOOLQJ DQG 4 1RERG\ZDVOLVWHQLQJWRDQ\ERG\HOVH" SUHPLVHVl .56 †   7KRPDVHWDOY&RKHQHWDO 1R 1R 7KRPDVHWDOY&RKHQHWDO  RIILFHUFRQIURQWV$QRIILFHUPLJKWFRUUHFWO\SHUFHLYHDOO WKURXJK SURSHU OHJDO FKDQQHOV E\ ILOLQJ HYLFWLRQ SDSHUV RIWKHUHOHYDQWIDFWVEXWKDYHDPLVWDNHQXQGHUVWDQGLQJ 2IILFHU&XVKPDQLVQRWDSDUW\WRWKLVDFWLRQ DV WR ZKHWKHU >KLV UHVSRQVH WR WKRVH IDFWV@ LV OHJDO LQ WKRVHFLUFXPVWDQFHV,IWKHRIILFHUjVPLVWDNHDVWRZKDW WKH ODZ UHTXLUHV LV UHDVRQDEOH KRZHYHU WKH RIILFHU LV HQWLWOHGWRWKHLPPXQLW\GHIHQVH  ,Q KLV GHSRVLWLRQ &XVKPDQ VWDWHG KLV UHDVRQV IRU QRW IRUFLQJ ,GDW 3ODLQWLIIV WR OHDYH :LWKUHVSHFWWRWKHLQLWLDOLQTXLU\,DJUHHZLWKWKHPDMRULW\ 8SRQ DUULYLQJ DW WKH VFHQH , LQIRUPHG GLVSDWFK , ZDV WKHUH DQG WKDW SODLQWLIIV KDG D FRQVWLWXWLRQDO ULJKW WR SUHGHSULYDWLRQ WKH LQGLYLGXDO ZDV RXWVLGH DQG , PHW KLP RXWVLGH +H VDLG KH KDG , EHOLHYH WKUHH VXEMHFWV LQVLGH WKDW QHHGHG WR EH HYLFWHG , SURFHVVoDVVXPLQJDVZHDUHIRUSXUSRVHVRIWKLVDSSHDOWKDW DVNHG KLP LI KH KDG SURSHU GRFXPHQWDWLRQ ZKLFK KH VKRZHG PH SODLQWLIIV ZHUH GHSULYHG RI D SURSHUW\ LQWHUHVW E\ YLUWXH RI D SLHFH RI SDSHU DQG , FDQj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jW UHFDOO H[DFWO\ ZKDW WKH\ VDLG EXW , EHOLHYH WKLV FDVH WKDW SODLQWLIIV KDG D SURSHUW\ LQWHUHVW LQ DQG WKDW WKH\ ZHUH EHLQJ DFFXVHG RI WKHIW RU VRPHWKLQJ $QG , DVNHG WKHUHIRUHDULJKWQRWWREHSUHPDWXUHO\HYLFWHGIURP$XJXVWD WKHP LI WKH\ KDG EHHQ VHUYHG DQ HYLFWLRQ QRWLFH D WHQGD\ QRWLFH +RXVH  6HH +DUORZ  86 DW  m2Q VXPPDU\ RU DQ\WKLQJ OLNH WKDW DQG , EHOLHYH WKH\ LQIRUPHG PH DW WKDW SRLQW MXGJPHQWWKHMXGJHDSSURSULDWHO\PD\GHWHUPLQHQRWRQO\WKH LQ WLPH WKH\ KDG QRW $QG EDVLFDOO\ , GLGQjW VHH DQ\ LOOHJDO FXUUHQWO\ DSSOLFDEOH ODZ EXW ZKHWKHU WKDW ODZ ZDV FOHDUO\ GRLQJV JRLQJ RQ LQ P\ SUHVHQFH , IHOW WKHUH ZDV QRW PXFK , FRXOG GR , JDYH WKHP VRPH EDVLF LQIRUPDWLRQ WKDW LI WKH\ IHOW HVWDEOLVKHGDWWKHWLPHDQDFWLRQRFFXUUHGl WKDW WKH\ ZHUH EHLQJ IDOVHO\ DFFXVHG RU SXW RXW WKDW WKH\ VKRXOG FDOO WKH /RXLVYLOOH /DQGORUG7HQDQWV $VVRFLDWLRQ $QG , ZHQW &RQVLGHU WKH FLUFXPVWDQFHV  3ODLQWLIIV ZHUH OLYLQJ LQ D EDFN RXWVLGH DQG , WROG WKH LQGLYLGXDO RXW WKHUH WKDW , KDG QR WUDQVLWLRQDOZRPHQjVVKHOWHURUKDOIZD\KRXVH1RUPDOO\ OHJDO o , IHOW DW WKDW SRLQW LQ WLPH , KDG QR OHJDO ULJKW WR SXW WKHP VKHOWHURFFXSDQWVLQ.HQWXFN\KDYHQRSURSHUW\LQWHUHVWLQWKH RXW RQ WKH VWUHHW DQG UHIXVHG WR GR VR VKHOWHUDQGWKXVQRULJKWWRSUHHYLFWLRQSURFHVVHLWKHUEHFDXVH  WKH RFFXSDQW LV QRW D WHQDQW .\ 5HY 6WDW $QQ †  GHILQLQJ WHQDQW RU EHFDXVH WKH VKHOWHU LV , GLGQjW KDYH DQ\ OHJDO SDSHUV LQ IURQW RI PH VLJQHG E\ D MXGJH H[HPSWIURP.HQWXFN\ODQGORUGWHQDQWODZ,G† QR HYLFWLRQ SDSHUV VLJQHG E\ \RX NQRZ WKH FRXUWV RU WKH V\VWHP ,QGHHGDOOIRXURIILFHUVWHVWLILHGWKDWWKH\GLGQRWEHOLHYHWKDW GRZQWRZQ ,W ORRNHG OLNH D UHVLGHQFH WR PH 7KH URRP , ZDV SODLQWLIIV DQG $XJXVWD +RXVH KDG D ODQGORUGWHQDQW VWDQGLQJ LQ ORRNHG OLNH D OLYLQJ URRP 7KHUH ZDV IXUQLWXUH WKHUH     , GLGQjW VHH DQ\ VLJQ RI GLVRUGHUO\ FRQGXFW 7KH\ ZHUHQj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mVWDQGDUGSUDFWLFHlIRUWKHSROLFHWRDVVLVWZLWKWKHLU s$ DW   7KRPDVHWDOY&RKHQHWDO 1R 1R 7KRPDVHWDOY&RKHQHWDO  7KHIROORZLQJPRUQLQJ=LQLRXVFDOOHGWKHSROLFHWRKDYH BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB 3ODLQWLIIV UHPRYHG  7KLV WLPH WKH 'HIHQGDQW RIILFHUV UHVSRQGHG WR WKH FDOO  7KH\ KDG QR NQRZOHGJH RI 2IILFHU &21&855,1*,13$57',66(17,1*,13$57 &XVKPDQjV SULRU LQWHUDFWLRQ ZLWK 3ODLQWLIIV  :KHQ WKH BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB RIILFHUV DUULYHG DW WKH UHVLGHQFH =LQLRXV WROG WKHP WKDW 3ODLQWLIIVKDGYLRODWHGWKHUXOHVRIWKHVKHOWHUE\SRVVHVVLQJ :$//$&(&LUFXLWsXGJH,FRQFXUZLWKsXGJH*LOPDQ DOFRKRODQGLOOHJDOGUXJVRQWKHSUHPLVHV6KHDOVRWROGWKHP WKDW WKH RIILFHUV DUH HQWLWOHG WR TXDOLILHG LPPXQLW\ RQ WKH WKDW3ODLQWLIIVWKUHDWHQHGRWKHU$XJXVWD+RXVHUHVLGHQWVDQG )RXUWK$PHQGPHQWFODLPEHFDXVHDQ\)RXUWK$PHQGPHQW WKDWWKH\UHIXVHGWROHDYHGHVSLWHKHURUGHUVWRGRVR=LQLRXV ULJKW QRW WR EH HYLFWHG LI WKHUH LV RQH KDV QRW EHHQ WKHQWROGWKHRIILFHUVWKDWHYLFWLRQZDVmVWDQGDUGSURFHGXUHl GHPRQVWUDWHG WR EH D VHL]XUH DQG KDV QRW \HW EHHQ FOHDUO\ XQGHUWKHFLUFXPVWDQFHVDQGDVNHGWKHPWRUHPRYH3ODLQWLIIV HVWDEOLVKHG  , GLVVHQW KRZHYHU IURP WKH PDMRULW\jV IURPWKHUHVLGHQFH6KHQHYHUSURGXFHGDFRXUWRUGHURURWKHU FRQFOXVLRQWKDWWKHUHLVDJHQXLQHLVVXHRIPDWHULDOIDFWDVWR GRFXPHQWDWLRQDXWKRUL]LQJWKHHYLFWLRQ ZKHWKHUWKHRIILFHUVDUHHQWLWOHGWRTXDOLILHGLPPXQLW\RQWKH )RXUWHHQWK$PHQGPHQW'XH3URFHVVFODLP,ZRXOGUHYHUVH 3ODLQWLIIVFODLPWKDWWKHRIILFHUVWKHQHQWHUHGWKHLUURRPV DQGDQQRXQFHGWKDWWKH\ZRXOGKDYHWROHDYHWKHSUHPLVHV 7KHTXDOLILHGLPPXQLW\GRFWULQHKDVEHHQGHVFULEHGLQWKH LPPHGLDWHO\3ODLQWLIIVLQIRUPHGWKHRIILFHUVWKDWWKH\SDLG IROORZLQJ WHUPV mJRYHUQPHQW RIILFLDOV SHUIRUPLQJ PRQWKO\UHQWWRWKH$XJXVWD+RXVHDQGVKRZHGRURIIHUHGWR GLVFUHWLRQDU\IXQFWLRQVJHQHUDOO\DUHVKLHOGHGIURPOLDELOLW\ VKRZWKHPWKHOHWWHUIURPWKH/7$7KHRIILFHUVGLVUHJDUGHG IRU FLYLO GDPDJHV LQVRIDU DV WKHLU FRQGXFW GRHV QRW YLRODWH 3ODLQWLIIVj DWWHPSWV WR SURYLGH H[SODQDWLRQV DQG FOHDUO\HVWDEOLVKHGVWDWXWRU\RUFRQVWLWXWLRQDOULJKWVRIZKLFK GRFXPHQWDWLRQ VXSSRUWLQJ WKHLU OHJDO ULJKW WR UHVLGH DW WKH D UHDVRQDEOH SHUVRQ ZRXOG KDYH NQRZQl  +DUORZ Y SUHPLVHVDQGSURFHHGHGWRHYLFWWKHPZLWKRXWWKHEHQHILWRI )LW]JHUDOG867RGHWHUPLQHZKHWKHU DFRXUWRUGHU$WVRPHSRLQWRQH3ODLQWLIIDWWHPSWHGWRFDOO WKHRIILFHUVLQWKLVFDVHDUHHQWLWOHGWRWKLVLPPXQLW\ZHILUVW DWWRUQH\ 5REHUWV WR WHOO KHU WKDW WKH SROLFH ZHUH HYLFWLQJ DVN ZKHWKHU mWKH IDFWV DOOHJHG VKRZ WKH RIILFHUjV FRQGXFW 3ODLQWLIIVEXWDQRIILFHURUGHUHGKHUWROHDYHODXJKHGDWKHU YLRODWHGDFRQVWLWXWLRQDOULJKW>@l6DXFLHUY.DW]86 DQGWROGKHUWKDWVKHZDVKRPHOHVVDQGGLGQRWKDYHDODZ\HU ,IZHGHWHUPLQHWKDWDFRQVWLWXWLRQDOULJKW 7KHUHZDVQRSK\VLFDOFRQIURQWDWLRQGXULQJWKHHYLFWLRQDQG KDVEHHQYLRODWHGZHWKHQmDVNZKHWKHUWKHULJKWZDVFOHDUO\ QRQH RI 3ODLQWLIIVj SHUVRQDO SURSHUW\ ZDV GHVWUR\HG HVWDEOLVKHGl  ,G  m7KH UHOHYDQW GLVSRVLWLYH LQTXLU\ LQ +RZHYHU 3ODLQWLIIV ZHUH QRW DEOH WR UHWULHYH DOO RI WKHLU GHWHUPLQLQJZKHWKHUDULJKWLVFOHDUO\HVWDEOLVKHGLVZKHWKHU EHORQJLQJVSULRUWRWKHHYLFWLRQ7KHRIILFHUVGRQRWFODLP LWZRXOGEHFOHDUWRDUHDVRQDEOHRIILFHUWKDWKLVFRQGXFWZDV WKDW DQ HPHUJHQF\ RU H[LJHQW FLUFXPVWDQFHV H[LVWHG DW WKH XQODZIXOLQWKHVLWXDWLRQKHFRQIURQWHGl,GFLWDWLRQDQG WLPHWRMXVWLI\WKHHYLFWLRQ TXRWDWLRQPDUNVRPLWWHG 3ODLQWLIIV VXEVHTXHQWO\ ILOHG VXLW DJDLQVW WKH RIILFHUV )XUWKHU VHHNLQJPRQHWDU\GDPDJHVDJDLQVWWKHPLQWKHLULQGLYLGXDO FDSDFLWLHV XQGHU  86& †  IRU YLRODWLQJ 3ODLQWLIIVj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j)RXUWK$PHQGPHQWULJKWWREHIUHHIURPWKH LQYRNLQJ WKH GRFWULQH RI TXDOLILHG LPPXQLW\  7KH GLVWULFW XQUHDVRQDEOH VHL]XUH RI WKHLU UHDO HVWDWH LQWHUHVW  , ZRXOG FRXUW GHQLHG WKLV PRWLRQ DQG 'HIHQGDQWV ILOHG D WLPHO\ WKHUHIRUHDIILUPWKHGLVWULFWFRXUWjVGHFLVLRQWRGHQ\TXDOLILHG DSSHDO LPPXQLW\ RQ WKH SODLQWLIIVj GXH SURFHVV FODLP EXW ZRXOG UHYHUVHWKHGLVWULFWFRXUWjVGHWHUPLQDWLRQWKDWWKHSODLQWLIIVDUH ,,s85,6',&7,21$1'67$1'$5'2)5(9,(: HQWLWOHGWRSURFHHGWRWULDORQWKHLUVHL]XUHRISURSHUW\FODLP %HIRUH WXUQLQJ WR WKH PHULWV RI WKH FDVH ZH PXVW ILUVW DGGUHVV 3ODLQWLIIVj FRQWHQWLRQ WKDW WKLV DSSHDO VKRXOG EH GLVPLVVHGEHFDXVHZHODFNMXULVGLFWLRQWRUHYLHZWKHGLVWULFW FRXUWjV GHQLDO RI VXPPDU\ MXGJPHQW  'HIHQGDQWVj DSSHDO IRFXVHVVROHO\RQWKHGLVWULFWFRXUWjVGHWHUPLQDWLRQWKDWWKH\ DUHQRWHQWLWOHGWRTXDOLILHGLPPXQLW\*HQHUDOO\GHQLDOVRI VXPPDU\ MXGJPHQW RQ WKH EDVLV RI TXDOLILHG LPPXQLW\ DUH mFROODWHUDO RUGHUVl WKDW DUH LPPHGLDWHO\ DSSHDODEOH WR WKH H[WHQW WKDW WKH\ SUHVHQW LVVXHV RI ODZ VHSDUDEOH IURP WKH PHULWV\HWSRWHQWLDOO\GHWHUPLQDWLYHRIDFODLP0DWWR[Y&LW\ RI)RUHVW3DUN)GWK&LU%HUU\PDQ Y5HLJHU)GWK&LU7KH6XSUHPH &RXUWKDVH[SODLQHGWKDWmDGLVWULFWFRXUWjVGHQLDORIDFODLP RITXDOLILHGLPPXQLW\WRWKHH[WHQWWKDWLWWXUQVRQDQLVVXHRI ODZLVDQDSSHDODEOHµILQDOGHFLVLRQjZLWKLQWKHPHDQLQJRI 86& † l 0LWFKHOO Y )RUV\WK  86     7KXV ZKLOH ZH mFDQQRW UHYLHZ RQ LQWHUORFXWRU\ DSSHDODGLVWULFWFRXUWjVGHWHUPLQDWLRQWKDWDJHQXLQHLVVXHRI IDFWH[LVWVIRUWULDOZHUHWDLQMXULVGLFWLRQRYHUWKHOHJDO TXHVWLRQRITXDOLILHGLPPXQLW\LHZKHWKHUDJLYHQVHWRI IDFWVYLRODWHVFOHDUO\HVWDEOLVKHGODZl0DWWR[)GDW FLWDWLRQVRPLWWHG$VDSXUHO\OHJDOGHWHUPLQDWLRQWKH GLVWULFWFRXUWjVGHQLDORITXDOLILHGLPPXQLW\LVVXEMHFWWRGH QRYRUHYLHZ,G  3ODLQWLIIV DOVR ILOHG VXLW DJDLQVW 0LVVLRQ +RXVH ,QF VHHNLQJ D WHPSRUDU\ LQMXQFWLRQ DQG UHVWUDLQLQJ RUGHU XQGHU WKH .HQWXFN\ /DQGORUG 7HQDQW $FW 7KLV DFWLRQ ZDV ODWHU GLVPLVVHG DIWHU WKH SDUWLHV VHWWOHG WKH FDVH RQ 'HFHPEHU    ,Q UHYLHZLQJ ZKHWKHU 'HIHQGDQWV DUH HQWLWOHG WR TXDOLILHG LPPXQLW\ ZH WDNH WKH IDFWV LQ WKH OLJKW PRVW IDYRUDEOH WR 3ODLQWLIIV 6HH 3KHOSV Y &R\  )G   WK &LU  ,Q GHWHUPLQLQJ WKDW 'HIHQGDQWV  7KRPDVHWDOY&RKHQHWDO 1R 1R 7KRPDVHWDOY&RKHQHWDO  ,,,$1$/ $@JRYHUQPHQWRIILFLDOjVGLVFUHWLRQDU\DEXVH RISRZHUZKLFKJRHVEH\RQGWKHVFRSHRIKLVRUKHUDXWKRULW\ ,QFRQFOXGLQJWKDWWKHHYLFWLRQLQWKLVFDVHZDVDVHL]XUHRI ZLOOXVXDOO\KDYHEHHQSHUIRUPHGXQGHUFRORURIVWDWHODZIRU SURSHUW\ WKH OHDG RSLQLRQ UHOLHV XSRQ 8QLWHG 6WDWHV Y SXUSRVHVRIVHFWLRQOLDELOLW\l&DVVDG\Y7DFNHWW sDFREVHQ86DQG6ROGDOY&RRN&RXQW\ )GWK&LU(QJOHsFRQFXUULQJLQSDUW 86%RWKRIWKHVHFDVHVKRZHYHULQYROYHG DQGGLVVHQWLQJLQSDUW FRQGXFWWKDWLQFOXGHGWKHWDNLQJRISK\VLFDOFRQWURORYHUWKH SURSHUW\ LQ TXHVWLRQ  7KH JRYHUQPHQW DFWRUV LQ sDFREVHQ $7KH'RFWULQHRI4XDOLILHG,PPXQLW\ VHL]HGSURSHUW\ZKHQWKH\WRRNmGRPLQLRQDQGFRQWUROlRYHU DSDFNDJHDQGGHVWUR\HGLWVFRQWHQWVLQDILHOGQDUFRWLFVWHVW 7KHGRFWULQHRITXDOLILHGLPPXQLW\JHQHUDOO\VKLHOGVVWDWH 86DW/LNHZLVHWKHVHL]XUHRISURSHUW\LQ DFWRUVIURPOLDELOLW\XQGHU†EDVHGRQWKHLUGLVFUHWLRQDU\ 6ROGDORFFXUUHGZKHQWKHJRYHUQPHQWDFWRUVKHOSHGFRQGXFW DFWV$QGHUVRQY&UHLJKWRQ86 DQHYLFWLRQE\SK\VLFDOO\UHPRYLQJDPRELOHKRPHIURPLWV +DUORZY)LW]JHUDOG86'DXJKHUW\ IRXQGDWLRQ86DW Y&DPSEHOO)GWK&LU$VQRWHG E\WKLV&RXUWLQ'DXJKHUW\m>T@XDOLILHGLPPXQLW\HQWLWOHVLWV $OWKRXJK D JRYHUQPHQW RIILFLDO PD\ EH KHOG OLDEOH IRU SRVVHVVRUWRµLPPXQLW\IURPVXLWUDWKHUWKDQDPHUHGHIHQVH YLRODWLQJDFOHDUO\HVWDEOLVKHGULJKWHYHQLIWKDWULJKWKDVQRW WROLDELOLW\jl,GDWTXRWLQJ0LWFKHOOY)RUV\WK86 EHHQH[SOLFLWO\UHFRJQL]HGSUHFHGHQWPXVWH[LVWWKDWPDNHV HPSKDVLVLQRULJLQDO7KXVJRYHUQPHQW WKH XQODZIXOQHVV RI WKH RIILFLDOjV FRQGXFW mDSSDUHQWl DFWRUVLQFOXGLQJSROLFHRIILFHUVKDYHWKHIUHHGRPWRSHUIRUP 5LVEULGJHU  )G DW   %XW , DP KDUGSUHVVHG WR WKHLURIILFLDOGXWLHVZLWKRXWIHDUWKDWHYHQDVOLJKWPLVVWHSZLOO FRQFOXGH WKDW WKH HYLFWLRQ LQ WKLV FDVH ZDV D VHL]XUH RI WULJJHUWKHLUILQDQFLDOUXLQ:\DWWY&ROH86 SURSHUW\DWDOOPXFKOHVVWKDWSUHFHGHQWPDGHLWFOHDUWRWKH +RZHYHUJRYHUQPHQWDFWRUVPD\ORVHWKLVLPPXQLW\ RIILFHUVWKDWWKHLUFRQGXFWLQIDFWFRQVWLWXWHGVXFKDVHL]XUH ZKHQWKH\YLRODWHFOHDUO\HVWDEOLVKHGFRQVWLWXWLRQDOULJKWVRI 7KHWHUPmVHL]XUHlLQP\YLHZFRQQRWHVDSK\VLFDODFWRI ZKLFKDUHDVRQDEOHSHUVRQVKRXOGKDYHNQRZQ$QGHUVRQ FRQWURO RU SRVVHVVLRQ RYHU WKH LWHP VHL]HG DQG ERWK WKH 86DW+DUORZ86DWm>:@KHWKHUDQ 6XSUHPH&RXUWDQGWKLVFRXUWKDYHFRQVLVWHQWO\FRQVWUXHGWKH RIILFLDO SURWHFWHG E\ TXDOLILHG LPPXQLW\ PD\ EH KHOG WHUPZLWKLQWKHERXQGVRILWVSODLQPHDQLQJ(J6ROGDO 86DW)ODWIRUGY&LW\RI0RQURH)G WK&LUFRQFOXGLQJWKDWDVHL]XUHRISURSHUW\RFFXUUHG DUH HQWLWOHG WR TXDOLILHG LPPXQLW\ RQ 3ODLQWLIIVj )RXUWK DQG )RXUWHHQWK ZKHUHJRYHUQPHQWDFWRUVHYLFWHGWKHSODLQWLIIVLQWKHFRXUVH $PHQGPHQW FODLPV sXGJH :DOODFH LQ KLV GLVVHQWLQJ RSLQLRQ RIFRQGHPQLQJWKHLUDSDUWPHQWEXLOGLQJ LQDSSURSULDWHO\ FRQVWUXHV WKH IDFWV LQ WKH OLJKW PRVW IDYRUDEOH WR 'HIHQGDQWV &RQWUDU\ WR WKH DVVHUWLRQ LQ sXGJH :DOODFHjV RSLQLRQ WKDW 3ODLQWLIIV GLG QRW GLVSXWH 'HIHQGDQWVj WHVWLPRQ\ WKDW 3ODLQWLIIVj EHKDYLRU ,Q DQ\ HYHQW , GR QRW EHOLHYH WKDW ZH QHHG WR GHFLGH LQVLGH $XJXVWD +RXVH SUHYHQWHG DQ\ FRPPXQLFDWLRQ WKH GHSRVLWLRQ ZKHWKHUDVHL]XUHDFWXDOO\WRRNSODFHLQWKLVFDVHEHFDXVHDW WHVWLPRQ\ LQ WKH UHFRUG FOHDUO\ LQGLFDWHV WKDW 3ODLQWLIIV GLVSXWHG WKHYHU\OHDVWDUHDVRQDEOHSHUVRQLQWKHRIILFHUVjSRVLWLRQ 'HIHQGDQWVj YHUVLRQ RI WKH HYHQWV LQ TXHVWLRQ  7KRPDVHWDOY&RKHQHWDO 1R 1R 7KRPDVHWDOY&RKHQHWDO  BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB SHUVRQDOO\ OLDEOH IRU DQ DOOHJHGO\ XQODZIXO RIILFLDO DFWLRQ JHQHUDOO\WXUQVRQWKHµREMHFWLYHOHJDOUHDVRQDEOHQHVVjRIWKH &21&855,1*,13$57',66(17,1*,13$57 DFWLRQl$QGHUVRQ86DWTXRWLQJ+DUORZ BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB 86DW 521$/'/((*,/0$1&LUFXLWsXGJHFRQFXUULQJLQSDUW 3ODLQWLIIVEHDUWKHEXUGHQRIGHIHDWLQJWKLVLPPXQLW\ZKLFK DQG GLVVHQWLQJ LQ SDUW  , FRQFXU LQ WKH OHDG RSLQLRQjV LVDOHJDOLVVXHWREHGHFLGHGE\WKHFRXUW%ODNHY:ULJKW GHWHUPLQDWLRQWKDWDWOHDVWDWWKHVXPPDU\MXGJPHQWVWDJH )GWK&LU)LUVW3ODLQWLIIVPXVW WKH SROLFH RIILFHUV LQ WKH SUHVHQW FDVH DUH QRW HQWLWOHG WR VKRZWKDW'HIHQGDQWVGHSULYHGWKHPRIDULJKWSURWHFWHGE\ TXDOLILHGLPPXQLW\ZLWKUHJDUGWRWKHSODLQWLIIVjGXHSURFHVV WKH &RQVWLWXWLRQ  6HFRQG WKLV ULJKW PXVW EH VR FOHDUO\ FODLPXQGHUWKH)RXUWHHQWK$PHQGPHQW%XW,GLVDJUHHZLWK HVWDEOLVKHGWKDWDUHDVRQDEOHRIILFHUZRXOGXQGHUVWDQGWKDWKLV WKHOHDGRSLQLRQjVFRQFOXVLRQWKDWWKHRIILFHUVDUHQRWHQWLWOHG RUKHUDFWLRQVZRXOGYLRODWHWKDWULJKW+DUORZ86DW WRTXDOLILHGLPPXQLW\RQWKHSODLQWLIIVjVHL]XUHRISURSHUW\ &RRSHUY3DUULVK)GWK&LU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$ULJKWLVmFOHDUO\HVWDEOLVKHGlRQO\ZKHUHWKH $QGHUVRQ  86 DW  FLWDWLRQ RPLWWHG VHH DOVR FRQWRXUVRIWKDWULJKWDUHVRFOHDUmWKDWDUHDVRQDEOHRIILFLDO 'DXJKHUW\)GDW ZRXOGXQGHUVWDQGWKDWZKDWKHLVGRLQJYLRODWHVWKDWULJKWl 5LVEULGJHUY&RQQHOO\)GWK&LU ,Q WKH LQVWDQW FDVH WKH GLVWULFW FRXUW GHWHUPLQHG WKDW 7R GHWHUPLQH LI D ULJKW LV FOHDUO\ HVWDEOLVKHG WKLV FRXUW 'HIHQGDQWVYLRODWHGWZRRI3ODLQWLIIVjH[SOLFLWFRQVWLWXWLRQDO mORRN>V@ ILUVW WR GHFLVLRQV RI WKH 6XSUHPH &RXUW WKHQ WR ULJKWV  WKHLU )RXUWK $PHQGPHQW ULJKW WR EH IUHH IURP GHFLVLRQVRIWKLVFRXUWDQGRWKHUFRXUWVZLWKLQRXUFLUFXLWDQG XQUHDVRQDEOHVHL]XUHVDQGWKHLU)RXUWHHQWK$PHQGPHQWULJKW ILQDOO\WRGHFLVLRQVRIRWKHUFLUFXLWVl.H\Y*UD\VRQ WREHDIIRUGHGGXHSURFHVVRIODZ2QDSSHDO'HIHQGDQWV )GWK&LU FODLPWKDWWKH\ZHUHHQWLWOHGWRTXDOLILHGLPPXQLW\EHFDXVH WKHLU LQYROYHPHQW LQ D mJDUGHQYDULHW\l ODQGORUGWHQDQW 7KHFRQVWLWXWLRQDOULJKWWREHIUHHIURPWKHXQUHDVRQDEOH GLVSXWH FDQQRW FRQVWLWXWH D YLRODWLRQ RI WKH )RXUWK VHL]XUHRISURSHUW\LVFOHDUO\HVWDEOLVKHG86&RQVWDPHQG $PHQGPHQW'HIHQGDQWVIXUWKHUFRQWHQGWKDWLQDVPXFKDV ,9 m7KH ULJKW RI WKH SHRSOH WR EH VHFXUH LQ WKHLU SHUVRQV WKH\ZHUHQRWDXWKRUL]HGWRFRQGXFWDSUHGHSULYDWLRQKHDULQJ KRXVHVSDSHUVDQGHIIHFWVDJDLQVWXQUHDVRQDEOHVHDUFKHVDQG XQGHU.HQWXFN\ODZDQGEHFDXVHDGHTXDWHSRVWGHSULYDWLRQ VHL]XUHVVKDOOQRWEHYLRODWHGl:KHWKHUWKHHYLFWLRQ UHPHGLHV ZHUH LQ SODFH WKHLU DFWLRQV FDQQRW DPRXQW WR D WKDW RFFXUUHG LQ WKH SUHVHQW FDVH FRQVWLWXWHV D VHL]XUH RI YLRODWLRQ RI WKH )RXUWHHQWK $PHQGPHQWjV 'XH 3URFHVV SURSHUW\ KRZHYHU LV DQ\WKLQJ EXW FOHDU  ,Q HYLFWLQJ WKH &ODXVH  )LQDOO\ 'HIHQGDQWV FODLP WKDW HYHQ LI 3ODLQWLIIVj FRQVWLWXWLRQDOULJKWVZHUHYLRODWHGWKRVHULJKWVZHUHQRWVR  7KRPDVHWDOY&RKHQHWDO 1R 1R 7KRPDVHWDOY&RKHQHWDO  FOHDUO\HVWDEOLVKHGWKDWUHDVRQDEOHRIILFHUVZRXOGKDYHNQRZQ FRQVWLWXWHGDYLRODWLRQRIWKHLUFOHDUO\HVWDEOLVKHG)RXUWHHQWK WKDWWKH\ZHUHYLRODWLQJWKHP $PHQGPHQWULJKWV,QDGGLWLRQZHILQGWKDWWKHRIILFHUVKDG QRUHDVRQDEOHEDVLVWREHOLHYHWKDWWKHHYLFWLRQZDVMXVWLILHG %'HSULYDWLRQRI)RXUWK$PHQGPHQW5LJKWV LQ WKH DEVHQFH RI H[LJHQW FLUFXPVWDQFHV  $FFRUGLQJO\ 'HIHQGDQWV DUH QRW HQWLWOHG WR TXDOLILHG LPPXQLW\ DQG WKH 7KH)RXUWK$PHQGPHQWPDGHDSSOLFDEOHWRWKH6WDWHVE\ GLVWULFWFRXUWjVGHFLVLRQLV$)),50('ZLWKUHVSHFWWRWKH WKH)RXUWHHQWK$PHQGPHQWSURYLGHVLQSHUWLQHQWSDUWWKDWWKH )RXUWHHQWK$PHQGPHQWFODLPV'HIHQGDQWVDUHHQWLWOHGWR mULJKW RI WKH SHRSOH WR EH VHFXUH LQ WKHLU SHUVRQV KRXVHV TXDOLILHG LPPXQLW\ DV WR 3ODLQWLIIVj )RXUWK $PHQGPHQW SDSHUV DQG HIIHFWV DJDLQVW XQUHDVRQDEOH VHDUFKHV DQG FODLPV DQG DV WR WKRVH FODLPV WKH GLVWULFW FRXUW LV VHL]XUHVVKDOOQRWEHYLRODWHGl86 & $%DPHQG,9 5(9(56('  7KLV ULJKW DSSOLHV ZLWK HTXDO IRUFH LQ ERWK WKH FLYLO DQG FULPLQDOFRQWH[WV&DPDUDY0XQ&RXUWRI6DQ)UDQFLVFR 86,Q8QLWHG6WDWHVYsDFREVHQ 86WKH6XSUHPH&RXUWH[SODLQHGWKDWWKH ILUVWFODXVHRIWKH)RXUWK$PHQGPHQWmSURWHFWVWZRW\SHVRI H[SHFWDWLRQV RQH LQYROYLQJ VHDUFKHV WKH RWKHU VHL]XUHVl $FFRUGLQJWRsDFREVHQDVHDUFKRFFXUVZKHQDQH[SHFWDWLRQ RISULYDF\WKDWVRFLHW\LVSUHSDUHGWRFRQVLGHULVLQIULQJHG ZKHUHDV D VHL]XUH RI SURSHUW\ RFFXUV ZKHQ mWKHUH LV VRPH PHDQLQJIXO LQWHUIHUHQFH ZLWK DQ LQGLYLGXDOjV SRVVHVVRU\ LQWHUHVWVLQWKDWSURSHUW\l,G,QsDFREVHQWKH&RXUWIXUWKHU H[SODLQHGm:KLOHWKHFRQFHSWRIDµVHL]XUHjRISURSHUW\LVQRW PXFKGLVFXVVHGLQRXUFDVHVWKLVGHILQLWLRQIROORZVIURPRXU RIWUHSHDWHGGHILQLWLRQRIWKHµVHL]XUHjRIDSHUVRQZLWKLQWKH PHDQLQJ RI WKH )RXUWK $PHQGPHQW  PHDQLQJIXO LQWHUIHUHQFHKRZHYHUEULHIZLWKDQLQGLYLGXDOjVIUHHGRPRI PRYHPHQWl  ,G DW  Q   7KLV H[SDQVLYH GHILQLWLRQ LV QHFHVVDU\EHFDXVHDVHL]XUHWKUHDWHQVDQLQGLYLGXDOjVGLVWLQFW LQWHUHVWLQUHWDLQLQJSRVVHVVLRQRIKLVRUKHUSURSHUW\6HH 7H[DVY%URZQ866WHYHQVs FRQFXUULQJ 6ROGDOY&RRN&RXQW\,OOLQRLV86 7KH 6XSUHPH &RXUW KDV DOVR UHFRJQL]HG WKDW WKH SDUWLFLSDWLRQ RI D SROLFH RIILFHU LQ DQ LPSURSHU HYLFWLRQ FRQVWLWXWHVDVHL]XUHLQYLRODWLRQRIWKH)RXUWK$PHQGPHQW 7KHFRQWUROOLQJFDVHLQWKLVUHJDUGLV6ROGDOY&RRN&RXQW\ ,OOLQRLV  86   ZKHUH WKH 6XSUHPH &RXUW UHYHUVLQJDQHQEDQFRSLQLRQZULWWHQE\sXGJH3RVQHURIWKH 6HYHQWK&LUFXLWDGGUHVVHGZKHWKHUPRELOHKRPHRZQHUVKDG  7KRPDVHWDOY&RKHQHWDO 1R 1R 7KRPDVHWDOY&RKHQHWDO  HYLFWLRQQRWLFH,WLVFOHDUWKDWWKHRIILFHUVQHYHUXQGHUWRRNWR WKHLUPRELOHKRPHVHL]HGZLWKLQWKHPHDQLQJRIWKH)RXUWK GHWHUPLQH ZKHWKHU 3ODLQWLIIV ZHUH LQ IDFW WHQDQWV  7KH\ $PHQGPHQW ZKHQ GHSXW\ VKHULIIV DVVLVWHG WKH RZQHU DQG PHUHO\FODLPWKDWLWZDVREMHFWLYHO\UHDVRQDEOHIRUWKHPWR PDQDJHURIWKHWUDLOHUSDUNLQSK\VLFDOO\WHDULQJWKHPRELOH UHO\ XSRQ =LQLRXVj UHSUHVHQWDWLRQV WR WKH FRQWUDU\ DQG WKDW KRPHIURPLWVIRXQGDWLRQDQGWRZLQJLWWRDQRWKHUORW$VWKH WKH\ ZHUH QRW UHTXLUHG WR EHOLHYH 3ODLQWLIIVj VWRU\  :KLOH &RXUW QRWHG LQ 6ROGDO WKH 6HYHQWK &LUFXLW ZKLOH 2IILFHU&XVKPDQjVSUHYLRXVLQWHUDFWLRQZLWK3ODLQWLIIVLVQRW DFNQRZOHGJLQJWKDWWKHUHZDVDmµVHL]XUHjLQWKHOLWHUDOVHQVHl GLVSRVLWLYHZHILQGLWUHOHYDQWWKDW&XVKPDQUHDOL]HGRQO\WKH IRXQGQR)RXUWK$PHQGPHQWYLRODWLRQmEHFDXVHLWZDVQRW HYHQLQJ EHIRUH WKH HYLFWLRQ WKDW KH KDG QR OHJDO EDVLV IRU PDGHLQWKHFRXUVHRISXEOLFODZHQIRUFHPHQWDQGEHFDXVHLW IRUFLQJ 3ODLQWLIIV RXW RQWR WKH VWUHHW  8QGHU WKHVH GLGQRWLQYDGHWKH6ROGDOVjSULYDF\l,GDW,Q6ROGDOWKH FLUFXPVWDQFHVZHILQGWKDWWKLVFDVHSUHVHQWVPRUHWKDQPHUH 86 6XSUHPH &RXUW UHPDUNHG RQ WKH UHDVRQLQJ RI WKH PLVWDNHQMXGJPHQWEXWUDWKHUDQXQZDUUDQWHGIDLOXUHWRPDNH 6HYHQWK&LUFXLWDVIROORZV WKH GHWHUPLQDWLRQV QHFHVVDU\ SULRU WR WDNLQJ KDVW\ DFWLRQ 7KXV ZH DUH XQDEOH WR UDWLRQDOL]H WKH RIILFHUVj IDLOXUH WR 7KLVFRQFOXVLRQIROORZHGIURPDQDUURZUHDGLQJRIWKH HQVXUHDQ\IRUPRISURFHVVSULRUWRHYLFWLQJ3ODLQWLIIV $PHQGPHQWZKLFKWKHFRXUWFRQVWUXHGWRVDIHJXDUGRQO\ SULYDF\DQGOLEHUW\LQWHUHVWVZKLOHOHDYLQJXQSURWHFWHG )RU WKH VDPH UHDVRQV , EHOLHYH WKDW 'HIHQGDQWV DUH QRW SRVVHVVRU\LQWHUHVWVZKHUHQHLWKHUSULYDF\QRUOLEHUW\ZDV HQWLWOHG WR TXDOLILHG LPPXQLW\ RQ WKH )RXUWK $PHQGPHQW DWVWDNH2WKHUZLVHWKHFRXUWVDLG FODLP$VZHLQGLFDWHGLQ)ODWIRUGmWKH)RXUWK$PHQGPHQW VWDQGDUGRIUHDVRQDEOHQHVVUHTXLUHVQRPRUHRIJRYHUQPHQW mDFRQVWLWXWLRQDOSURYLVLRQHQDFWHGWZRFHQWXULHV RIILFLDOVWKDQWKDWRIGXHSURFHVVRIODZ%RWKFRQVWLWXWLRQDO DJR>ZRXOG@PDNHHYHU\UHSRVVHVVLRQDQGHYLFWLRQ SURYLVLRQVUHFRJQL]HDQH[LJHQF\H[FHSWLRQDQGWKXVOHDGWR ZLWK SROLFH DVVLVWDQFH DFWLRQDEOH XQGHU  RI DOO QRSUDFWLFDOGLVWLQFWLRQLQWKLVFDVHl)ODWIRUG)GDW WKLQJV  WKH )RXUWK $PHQGPHQW> ZKLFK@ ZRXOG FLWDWLRQV DQG LQWHUQDO TXRWDWLRQ PDUNV RPLWWHG WULYLDOL]H WKH DPHQGPHQW DQG JUDWXLWRXVO\ VKLIW D )XUWKHUPRUH 6ROGDO ZDV D XQDQLPRXV 6XSUHPH &RXUW ODUJHERG\RIURXWLQHFRPPHUFLDOOLWLJDWLRQIURPWKH GHFLVLRQ GHFLGHG ZHOO EHIRUH WKH LQFLGHQWV JLYLQJ ULVH WR VWDWHFRXUWVWRWKHIHGHUDOFRXUWV7KDWWULYLDOL]LQJ 3ODLQWLIIVj FRPSODLQW RFFXUUHG  ,Q DGGLWLRQ 6ROGDO PHUHO\ WKLV VKLIW FDQ EH SUHYHQWHG E\ UHFRJQL]LQJ WKH UHILQHGZHOOVHWWOHGUXOHVRIODZ7KXVLWZDVFOHDULQWKLV GLIIHUHQFH EHWZHHQ SRVVHVVRU\ DQG SULYDF\ &LUFXLWDWWKHWLPHRIWKHHYLFWLRQWKDW3ODLQWLIIVKDGDULJKW LQWHUHVWVl QRWWRKDYHWKHLUSRVVHVVRU\LQWHUHVWVLQSURSHUW\HQFXPEHUHG E\WKHW\SHRIXQUHDVRQDEOHVHL]XUHWKDWRFFXUUHGLQWKLVFDVH %HFDXVH WKH RIILFHUV KDG QRW HQWHUHG 6ROGDOjV KRXVH 2EMHFWLYHO\ UHDVRQDEOH RIILFHUV LQ WKH VDPH FLUFXPVWDQFHV UXPPDJHGWKURXJKKLVSRVVHVVLRQVRULQWKH&RXUWRI ZRXOGKDYHNQRZQWKDWWKH\ZHUHYLRODWLQJ3ODLQWLIIVj)RXUWK $SSHDOVjYLHZLQWHUIHUHGZLWKKLVOLEHUW\LQWKHFRXUVHRI $PHQGPHQWULJKWV,WKHUHIRUHFRQFOXGHWKDW'HIHQGDQWVDUH WKH HYLFWLRQ WKH )RXUWK $PHQGPHQW RIIHUHG QR QRWHQWLWOHGWRTXDOLILHGLPPXQLW\ZLWKUHVSHFWWR3ODLQWLIIVj SURWHFWLRQ DJDLQVW WKH mJUDYH GHSULYDWLRQl RI SURSHUW\ XQUHDVRQDEOHVHL]XUHFODLP WKDWKDGRFFXUUHG ,9&21&/86,21 6ROGDO86DWFLWDWLRQVRPLWWHG %DVHGXSRQ6XSUHPH&RXUWDQG6L[WK&LUFXLWSUHFHGHQWZH ,Q UHMHFWLQJ WKH 6HYHQWK &LUFXLWjV LQWHUSUHWDWLRQ RI WKH KROG WKDW 3ODLQWLIIVj HYLFWLRQ IURP WKH $XJXVWD +RXVH )RXUWK $PHQGPHQW WKH 6XSUHPH &RXUW KHOG WKDW mWKH $PHQGPHQW SURWHFWV SURSHUW\ DV ZHOO DV SULYDF\l ,G  7KRPDVHWDOY&RKHQHWDO 1R 1R 7KRPDVHWDOY&RKHQHWDO  5HVSRQGLQJWRWKHDUJXPHQWWKDWDIWHU.DW]Y8QLWHG6WDWHV WKDW>3ODLQWLIIV@ZHUHHQWLWOHGWRSUHHYLFWLRQMXGLFLDORYHUVLJKW 86:DUGHQY+D\GHQ86 LQWKHDEVHQFHRIHPHUJHQF\FLUFXPVWDQFHVl)ODWIRUG DQG &DUGZHOO Y /HZLV  86   mWKH )RXUWK )GDW)XUWKHUPRUH.HQWXFN\ODZVIRUELGGLQJVHOIKHOS $PHQGPHQW LV RQO\ PDUJLQDOO\ FRQFHUQHG ZLWK SURSHUW\ HYLFWLRQV ZLWKRXW MXGLFLDO SURFHVV DQG SURYLGLQJ IRU ULJKWVlWKH&RXUWVWDWHGWKDWmWKHPHVVDJHRIWKRVHFDVHVLV SUHHYLFWLRQ QRWLFH DQG IRUFLEOH GHWDLQHU DFWLRQV ZHUH ZHOO WKDW SURSHUW\ ULJKWV DUH QRW WKH VROH PHDVXUH RI )RXUWK HVWDEOLVKHG  $V WUDLQHG SROLFH RIILFHUV 'HIHQGDQWV VKRXOG $PHQGPHQWYLRODWLRQVl6ROGDO86DW0RUHRYHU KDYHNQRZQWKDWVHOIKHOSHYLFWLRQVDUHSURKLELWHGLQWKHVWDWH WKH &RXUW UHMHFWHG WKH FODLP WKDW mDQ\ RI WKH &RXUWjV SULRU RI .HQWXFN\ DQG WKDW WKH HYLFWLRQ WKH\ IDFLOLWDWHG ZDV FDVHVVXSSRUWVWKHYLHZWKDWWKH)RXUWK$PHQGPHQWSURWHFWV WKHUHIRUHmSDWHQWO\XQODZIXOl&RILHOGY5DQGROSK&RXQW\ DJDLQVWXQUHDVRQDEOHVHL]XUHVRISURSHUW\RQO\ZKHUHSULYDF\ &RPPjQ)GWK&LUFI+DYHUWLVFN RU OLEHUW\ LV DOVR LPSOLFDWHGl ,G DW   7KH &RXUW DOVR )GDWGLVWLQJXLVKLQJEHWZHHQRIILFHUVHQJDJHGLQ UHMHFWHGWKHYLHZWKDWWKH)RXUWK$PHQGPHQWSURWHFWVRQO\ SDVVLYHSHDFHNHHSLQJFRQGXFWGXULQJDODZIXOHYLFWLRQDQG DJDLQVWVHL]XUHVWKDWDUHWKHRXWFRPHRIDVHDUFKKROGLQJWKDW DFWLYLW\GHVLJQHGWRIDFLOLWDWHDQXQODZIXOLQWHUIHUHQFHZLWK mVHL]XUHV RI SURSHUW\ DUH VXEMHFW WR )RXUWK $PHQGPHQW SRVVHVVRU\LQWHUHVWV VFUXWLQ\ HYHQ WKRXJK QR VHDUFK ZLWKLQ WKH PHDQLQJ RI WKH $PHQGPHQWKDVWDNHQSODFHl,GDW3XWWLQJIRUWKDUDWKHU 'HIHQGDQWVFODLPWKDWWKH\ZHUHQRWDWWHPSWLQJWRGHSULYH H[SDQVLYHLQWHUSUHWDWLRQRIWKH)RXUWK$PHQGPHQWWKH&RXUW 3ODLQWLIIVRIWKHLUSURSHUW\ULJKWVDQGLQGHHGGLGQRWEHOLHYH LQ6ROGDOGHFODUHGWKDWLWVSXUSRVHZDVWRSURWHFWWKHSHRSOH WKDW3ODLQWLIIVKDGDQ\VXFKULJKWVEHFDXVHLWZDVXQFOHDUDW IURPJRYHUQPHQWDOLQWHUIHUHQFH WKH WLPH  ZKHWKHU 3ODLQWLIIV ZHUH mVKHOWHU UHVLGHQWVl RU mWHQDQWVl 'HIHQGDQWVDGPLWWKDWKDGWKH\NQRZQ3ODLQWLIIV ,Q RXU YLHZ WKH UHDVRQ ZK\ DQ RIILFHU PLJKW HQWHU D ZHUH WHQDQWV RI WKH $XJXVWD +RXVH WKH\ ZRXOG QRW KDYH KRXVHRUHIIHFWXDWHDVHL]XUHLVZKROO\LUUHOHYDQWWRWKH HYLFWHG WKHP  %XW WKH\ DUJXH WKDW WKH\ DUH HQWLWOHG WR WKUHVKROG TXHVWLRQ ZKHWKHU WKH $PHQGPHQW DSSOLHV TXDOLILHG LPPXQLW\ LI WKH\ PLVWDNHQO\ EXW UHDVRQDEO\ :KDW PDWWHUV LV WKH LQWUXVLRQ RQ WKH SHRSOHjV VHFXULW\ FRQFOXGHGWKDW3ODLQWLIIVZHUHQRWWHQDQWVHYHQWKRXJKWKH\ IURP JRYHUQPHQWDO LQWHUIHUHQFH  7KHUHIRUH WKH ULJKW QRZDGPLWLQKLQGVLJKWWKDW3ODLQWLIIVZHUHLQGHHGWHQDQWV DJDLQVW XQUHDVRQDEOH VHL]XUHV ZRXOG EH QR OHVV 7KH TXDOLILHG LPPXQLW\ GRFWULQH JHQHUDOO\ HQFRPSDVVHV MXGJPHQWDOHUURUV+RZHYHU'HIHQGDQWVKDGDQRSSRUWXQLW\ WRUHVROYHWKLVTXHVWLRQSULRUWRHYLFWLQJ3ODLQWLIIVEXWWKH\ IDLOHGWRGRVR7KHRIILFHUVFRQFHGHWKDW3ODLQWLIIVWROGWKHP  WKDWWKH\SDLGUHQWZHUHSURWHFWHGE\ODQGORUGWHQDQWODZDQG 8 YDULRXV FRPPHQWDWRUV KDYH SRLQWHG RXW HDUO\ LQ WKH ODVW FHQWXU\ FODLPHGDQHQWLWOHPHQWWRUHPDLQDWWKHUHVLGHQFHDEVHQWDQ WKH 6XSUHPH &RXUW UHO\LQJ XSRQ /RUG &DPGHQjV RSLQLRQ LQ WKH  FDVH RI (QWLFN Y &DUULQJWRQ  +RZHOOjV 6WDWH 7ULDOV   (QJ 5HS  &3  ILQGLQJ LQYDOLG WKH VHL]XUH RI SULYDWH SDSHUV SXUVXDQW WR D  JHQHUDO ZDUUDQW DQDO\]HG )RXUWK $PHQGPHQW FDVHV WKURXJK WKH SULVP RI &HUWDLQ OLYLQJ DUUDQJHPHQWV DUH H[FOXGHG IURP FRYHUDJH XQGHU WKH SURSHUW\ ULJKWV FXOPLQDWLQJ LQ WKH FDVH RI 2OPVWHDG Y 8QLWHG 6WDWHV  .HQWXFN\ 85/7$ LQFOXGLQJ m>U@HVLGHQFH DW DQ LQVWLWXWLRQ SXEOLF RU 86   ZKLFK KHOG WKDW WKH )RXUWK $PHQGPHQW GRHV QRW SURWHFW SULYDWH LI LQFLGHQWDO WR GHWHQWLRQ RU WKH SURYLVLRQ RI PHGLFDO JHULDWULF D KRPHRZQHU DJDLQVW ZLUHWDSV RI SKRQH FRQYHUVDWLRQV SURYLGHG WKDW WKHUH HGXFDWLRQDO FRXQVHOLQJ UHOLJLRXV RU VLPLODU VHUYLFHl .56 †  ZDV QR WUHVSDVV RI WKH KRPHRZQHUjV SURSHUW\ +D\GHQ DQG .DW] FKDQJHG 'HIHQGDQWV EULHIO\ FODLP LQ WKHLU UHSO\ EULHI WKDW 3ODLQWLIIVj OLYLQJ FRXUVH KROGLQJ WKDW SULYDF\ QRW SURSHUW\ ZDV WKH RUJDQL]LQJ SULQFLSOH RI DUUDQJHPHQWV DW $XJXVWD +RXVH FRXOG IDOO ZLWKLQ WKLV H[FOXVLRQ GXH WR WKH )RXUWK $PHQGPHQW DQDO\VLV 7KXV 6ROGDO PXVW EH XQGHUVWRRG DJDLQVW ILQDQFLDO DQG UHOLJLRXV FRXQVHOLQJ VHUYLFHV SURYLGHG E\ 0LVVLRQ +RXVH WKLV EDFNGURS RI WKH &RXUWjV )RXUWK $PHQGPHQW MXULVSUXGHQFH GXULQJ WKH ,QF VWDII +RZHYHU 'HIHQGDQWV KDYH FRQFHGHG IRU SXUSRVHV RI WKLV ODVW FHQWXU\ DSSHDO WKDW 3ODLQWLIIV DUH WHQDQWV XQGHU .HQWXFN\ ODZ  7KRPDVHWDOY&RKHQHWDO 1R 1R 7KRPDVHWDOY&RKHQHWDO  SURYLGHQRWLFHKDYLQJDVXEVWDQWLDOGHJUHHRIHIIHFWLYHQHVVDW WUDQVJUHVVHGLIWKHVHL]XUHRIWKHKRXVHZDVXQGHUWDNHQ DPHDQLQJIXOWLPHSULRUWRHYLFWLRQl6DOOLH)6XSSDW WRHIIHFWDQHYLFWLRQE\WKHSROLFH  ,GDWHPSKDVLVDGGHG '4XDOLILHG,PPXQLW\ $SSO\LQJ WKLV EURDG LQWHUSUHWDWLRQ RI WKH )RXUWK :HPXVWDOVRGHFLGHZKHWKHULQOLJKWRIFOHDUO\HVWDEOLVKHG $PHQGPHQW WKH &RXUW IRXQG WKDW WKH DFWLRQ WKDW ODZDSSOLFDEOHRQWKHGDWHRIWKHHYLFWLRQDUHDVRQDEOHRIILFHU mGLVSRVVHVVHGWKH6ROGDOVRIWKHLUWUDLOHUKRPHE\SK\VLFDOO\ ZRXOG KDYH EHOLHYHG WKDW 'HIHQGDQWVj FRQGXFW GHSULYHG WHDULQJLWIURPLWVIRXQGDWLRQDQGWRZLQJLWWRDQRWKHUORWl 3ODLQWLIIVRIWKHLU)RXUWKDQG)RXUWHHQWK$PHQGPHQWULJKWV LPSOLFDWHG WKH LQWHUHVWV RI WKH )RXUWK $PHQGPHQW  ,Q m:KHQ FRQGXFWLQJ DQ LQTXLU\ WR GHWHUPLQH ZKHWKHU D UHDFKLQJ WKLV FRQFOXVLRQ WKH &RXUW UHMHFWHG WKH 6HYHQWK FRQVWLWXWLRQDO ULJKW LV FOHDUO\ HVWDEOLVKHG WKH ODZ RI RXU &LUFXLWjVYLHZWKDWEHFDXVHmWKH6ROGDOVjFODLPZDVPRUHDNLQ >&@LUFXLWUHTXLUHVXVWRORRNILUVWWRGHFLVLRQVRIWKH6XSUHPH WRDFKDOOHQJHDJDLQVWWKHGHSULYDWLRQRISURSHUW\ZLWKRXWGXH &RXUWWKHQWRGHFLVLRQVRIWKLV&RXUWDQGRWKHUFRXUWVZLWKLQ SURFHVVRIODZWKDQDJDLQVWDQXQUHDVRQDEOHVHL]XUHWKH\ RXU >&@LUFXLW DQG ILQDOO\ WR GHFLVLRQV RI RWKHU FLUFXLWVl VKRXOGQRWEHDOORZHGWREULQJWKHLUVXLWXQGHUWKHJXLVHRIWKH 'DXJKHUW\Y&DPSEHOO)GWK&LU )RXUWK $PHQGPHQWl ,G DW   5DWKHU WKH &RXUW FLWLQJ FLWDWLRQV DQG TXRWDWLRQ PDUNV RPLWWHG  7KH VWDQGDUG IRU +XGVRQY3DOPHU86IRXQGmQREDVLVIRU TXDOLILHGLPPXQLW\mGHSHQGVVXEVWDQWLDOO\XSRQWKHOHYHORI GROLQJRXWFRQVWLWXWLRQDOSURWHFWLRQVLQVXFKIDVKLRQlDQGWKDW JHQHUDOLW\DWZKLFKWKHUHOHYDQWµOHJDOUXOHjLVWREHLGHQWLILHG m>F@HUWDLQ ZURQJV DIIHFW PRUH WKDQ D VLQJOH ULJKW DQG l5XVVRY&LW\RI&LQFLQQDWL)GWK DFFRUGLQJO\ FDQ LPSOLFDWH PRUH WKDQ RQH RI WKH &LU  TXRWLQJ $QGHUVRQ Y &UHLJKWRQ  86  &RQVWLWXWLRQjV FRPPDQGVl 6ROGDO  86 DW   7KH   TXRWDWLRQ PDUNV RPLWWHG  7KXV m>W@KH &RXUWDOVRIRXQGH[DJJHUDWHGWKHFRQFHUQWKDWLWVH[SDQGHG FRQWRXUV RI WKH ULJKW PXVW EH VXIILFLHQWO\ FOHDU WKDW D LQWHUSUHWDWLRQ RI WKH )RXUWK $PHQGPHQW ZRXOG IHGHUDOL]H UHDVRQDEOHRIILFLDOZRXOGXQGHUVWDQGWKDWZKDWKHLVGRLQJ mDUHDVRIODZWUDGLWLRQDOO\WKHFRQFHUQRIWKH6WDWHVl,GDW YLRODWHVWKDWULJKWl5XVVR)GDW$OWKRXJKLW 1RWLQJWKDWmµUHDVRQDEOHQHVVLVVWLOOWKHXOWLPDWHVWDQGDUGj QHHG QRW EH WKH FDVH WKDW mWKH YHU\ DFWLRQ LQ TXHVWLRQ KDV XQGHUWKH)RXUWK$PHQGPHQWlWKH&RXUWREVHUYHGWKDWmKDG SUHYLRXVO\EHHQKHOGXQODZIXOLQWKHOLJKWRISUHH[LVWLQJ WKH HMHFWLRQ LQ WKLV FDVH SURSHUO\ DZDLWHG WKH VWDWH FRXUWjV ODZ WKH XQODZIXOQHVV PXVW EH DSSDUHQWl ,G  ,PPXQLW\ MXGJPHQWLWLVTXLWHXQOLNHO\WKDWWKHIHGHUDOFRXUWZRXOGKDYH DSSOLHVLIUHDVRQDEOHRIILFLDOVFRXOGGLVDJUHHDVWRZKHWKHUWKH EHHQ ERWKHUHG ZLWK D †  DFWLRQ DOOHJLQJ D )RXUWK FRQGXFWYLRODWHGWKHSODLQWLII VULJKWV0F&ORXGY7HVWD $PHQGPHQWYLRODWLRQl,G$FFRUGLQJO\WKH&RXUWEHOLHYHG )G   WK &LU   +RZHYHU WKH GRFWULQH WKDWmUHDIILUPDQFHRI)RXUWK$PHQGPHQWSULQFLSOHVVKRXOG RIIHUVQRSURWHFWLRQWRmWKHSODLQO\LQFRPSHWHQWRUWKRVHZKR QRWIRPHQWDZDYHRIQHZOLWLJDWLRQLQWKHIHGHUDOFRXUWVl,G NQRZLQJO\YLRODWHWKHODZl0DOOH\Y%ULJJV86 DW . :HGRQRWEHOLHYHWKDW'HIHQGDQWVDUHHQWLWOHGWRTXDOLILHG LPPXQLW\ZLWKUHVSHFWWR3ODLQWLIIVjSURFHGXUDOGXHSURFHVV  FODLP7KH6XSUHPH&RXUWKDGGHFLGHG)XHQWHVDQG*RRG $ERXW RQH \HDU DIWHU 6ROGDO WKLV SRLQW ZDV GHYHORSHG E\ WKH &RXUW LQ 8QLWHG 6WDWHV Y sDPHV 'DQLHO *RRG 5HDO 3URS  86   5HDO3URSORQJEHIRUH3ODLQWLIIjVHYLFWLRQ$VZHVWDWHGLQ ZKHUH LW KHOG WKDW EHIRUH WKH VHL]XUH RI UHDO SURSHUW\ WKH KRPHRZQHU ZDV )ODWIRUGmLWZDVVXIILFLHQWO\FOHDUDWWKHWLPHRIWKHHYLFWLRQ HQWLWOHG WR QRWLFH DQG DQ RSSRUWXQLW\ WR EH KHDUG XQGHU WKH 'XH 3URFHVV &ODXVH  7KRPDVHWDOY&RKHQHWDO 1R 1R 7KRPDVHWDOY&RKHQHWDO   3ODLQWLIIVZHUHGHSULYHGRIFOHDUO\HVWDEOLVKHGULJKWV GHWHUPLQHG LQ WKDW FDVH WKDW mSRVWGHSULYDWLRQ VWDWH WRUW XQGHUWKH)RXUWK$PHQGPHQW UHPHGLHV DUH QHLWKHU WLPHO\ QRU VXIILFLHQWO\ UHPHGLDO IRU HPHUJHQF\ HYDFXHHVl EHFDXVH m>I@XQGDPHQWDO IDLUQHVV 7KHTXHVWLRQEHIRUHXVLVZKHWKHUWKH6XSUHPH&RXUWLQ H[SHFWVPRUHWKDQPHUHWRUWUHPHGLHVZKHUH>WKH@JRYHUQPHQW sDFREVHQDQG6ROGDOFOHDUO\HVWDEOLVKHGWKDWDmVHL]XUHlRI GLVSRVVHVVHVLWVFLWL]HQVIURPWKHLUKRPHVl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sDFREVHQ WKHUH LV mVRPH PHDQLQJIXO SURFHVV LQFOXGLQJ QRWLFH RI WKH ULJKW WR DQ DGPLQLVWUDWLYH LQWHUIHUHQFHlZLWKDWHQDQWjVSRVVHVVRU\LQWHUHVWLQKLVRUKHU KHDULQJDQGGLUHFWLRQDVWRWKHSURFHGXUHIRUDGPLQLVWUDWLYH SURSHUW\ mKRZHYHU EULHIl ZKHQ D JRYHUQPHQWDO DJHQW UHYLHZ+RZHYHUZHUHDFKHGWKLVUHVXOWRQO\EHFDXVH WKH UHPRYHVDWHQDQWIURPKLVRUKHUUHVLGHQFHZKHWKHUDKRPH H[LVWHQFH RI H[LJHQW FLUFXPVWDQFHV PDGH SUHGHSULYDWLRQ RUDSDUWPHQW6ROGDOUHLWHUDWHGWKLVSRLQW6LPSO\SXW6ROGDO SURFHVV LPSUDFWLFDO  2XU KROGLQJ ZDV EDVHG XSRQ WKH GRHV QRW UHTXLUH WKDW WKH mPHDQLQJIXO LQWHUIHUHQFHl E\ UDWLRQDOHWKDWmHPHUJHQF\HYDFXDWLRQVDUHQRWVRUDUHWKDW JRYHUQPHQWDODJHQWVDFWXDOO\LQYROYHWKHSK\VLFDOVHL]XUHRI FLW\RIILFLDOVFDQQRWSUHSDUHIRUDGYLVLQJHPHUJHQF\HYDFXHHV WKH SURSHUW\ LQ TXHVWLRQ UDWKHU WR FRQVWLWXWH D VHL]XUH RI RI WKHLU ULJKW WR DQ DGPLQLVWUDWLYH KHDULQJ DV VLPLODUO\ SURSHUW\ZLWKLQWKHPHDQLQJRIWKH)RXUWK$PHQGPHQWLWLV SURYLGHG WR ODQGORUGVl  ,G DW  HPSKDVLV DGGHG HQRXJK WKDW WKH JRYHUQPHQWDO DJHQWjV DFWLRQ DPRXQWHG WR &RQYHUVHO\LQWKHLQVWDQWFDVHQRH[LJHQWFLUFXPVWDQFHVZHUH mPHDQLQJIXO LQWHUIHUHQFH ZLWK DQ LQGLYLGXDOjV SRVVHVVRU\ SUHVHQW  )XUWKHUPRUH .HQWXFN\ ODZ SURYLGHV IRU MXGLFLDO LQWHUHVWV LQ WKDW SURSHUW\l  sDFREVHQ  86 DW  SUHGHSULYDWLRQ SURFHVV SULRU WR HYLFWLRQV  7KHUHIRUH WKH (VFRUWLQJ WHQDQWV IURP WKHLU UHVLGHQFHV LQ WKH FRXUVH RI LQVWDQWFDVHLVIDFWXDOO\GLVWLQJXLVKDEOHIURPVLWXDWLRQVVXFK HIIHFWXDWLQJ DQ HYLFWLRQ DV LQ WKLV FDVH VDWLVILHV WKH DVWKRVHLQ3DUUDWWLQZKLFKWKHGHSULYDWLRQLVXQSUHGLFWDEOH UHTXLUHPHQWRImPHDQLQJIXOLQWHUIHUHQFHlZLWKWKHLUOHDVHKROG DQGSUHGHSULYDWLRQSURFHVVLVLPSUDFWLFDO LQWHUHVWVRDVWRDPRXQWWRDVHL]XUHRIWKHLUSURSHUW\,QWKLV UHJDUG WKH ODFN RI SK\VLFDO IRUFH LV QRW WHUULEO\ JHUPDQH 7KH 6XSUHPH &RXUW KDV UHFRJQL]HG WKDW WKH mULJKW WR LQDVPXFKDVWKHSROLFHHIIHFWXDWHGWKHHYLFWLRQE\WKHYHU\ PDLQWDLQ FRQWURO RYHU >RQHjV@ KRPH DQG WR EH IUHH IURP DSSDUHQWDQGQRWWRRVXEWOHWKUHDWRISK\VLFDOIRUFHDQGGLUH JRYHUQPHQWDOLQWHUIHUHQFHLVDSULYDWHLQWHUHVWRIKLVWRULFDQG OHJDOFRQVHTXHQFHVVKRXOGWKHWHQDQWVQRWFRPSO\ZLWKWKH FRQWLQXLQJLPSRUWDQFHl*RRG5HDO3URS86DW RIILFHUVjLQVWUXFWLRQVWRYDFDWHWKHSURSHUW\8QGHUWKHIDFWV 7KH JRYHUQPHQWjV LQWHUHVW LQ HQIRUFLQJ D ODQGORUGjV RIWKLVFDVH3ODLQWLIIVWKHUHIRUHKDGDFOHDUO\HVWDEOLVKHGULJKW XQDXWKRUL]HGGLUHFWLYHVSDOHVLQFRPSDULVRQWRWKHLPSRUWDQFH WR EH IUHH IURP VXFK XQFRQVWLWXWLRQDO VHL]XUHV +DYHUVWLFN RI3ODLQWLIIVjLQWHUHVWLQPDLQWDLQLQJSRVVHVVRU\ULJKWVWRWKHLU (QWHUV,QFY)LQ&UHGLW,QF)GWK&LU SODFHRIUHVLGHQFH7KHUHIRUHSRVWGHSULYDWLRQUHPHGLHVRI  DQ\VRUWZRXOGEHLQDGHTXDWH,QVWHDGZHEHOLHYHWKDWmJLYHQ WKH PDJQLWXGH RI WKH LQGLJQLW\ DQG WKH ORVV RI SHUVRQDOW\ 'HIHQGDQWV DWWHPSW WR GLVWLQJXLVK WKH LQVWDQW FDVH IURP DWWHQGDQWWRDQHYLFWLRQZLWKRXWQRWLFHLWLVLQGLVSXWDEOHWKDW 6ROGDOE\DUJXLQJWKDWWKH\RQO\KHOSHGWRUHVROYHDmJDUGHQ >3@ODLQWLIIV DUH HQWLWOHG WR LQVLVW XSRQ D JHQXLQH HIIRUW WR  7KRPDVHWDOY&RKHQHWDO 1R 1R 7KRPDVHWDOY&RKHQHWDO  SURFHVVFODLPDQGWKHFRXUWRIDSSHDOVDIILUPHGKROGLQJWKDW YDULHW\lODQGORUGWHQDQWGLVSXWHZKLFKZRXOGQRWFRQVWLWXWH EHFDXVHWKHVWDWHSURYLGHGDGHTXDWHSRVWGHSULYDWLRQUHPHGLHV DVHL]XUH+RZHYHU'HIHQGDQWVKDYHFLWHGRXWRIFRQWH[WWKH IRUZURQJIXOHYLFWLRQQRGXHSURFHVVYLRODWLRQKDGRFFXUUHG IROORZLQJ ODQJXDJH LQ WKH FRQFOXVLRQ WR sXVWLFH :KLWHjV 5HHVH)GDW RSLQLRQLQ6ROGDO 2QDSSHDO'HIHQGDQWVUHO\XSRQ5HHVHIRUWKHSURSRVLWLRQ 7KHFRPSODLQWKHUHDOOHJHVWKDWUHVSRQGHQWVDFWLQJXQGHU WKDW D †  DFWLRQ PD\ QRW OLH XQGHU D SURFHGXUDO GXH FRORURIVWDWHODZGLVSRVVHVVHGWKH6ROGDOVRIWKHLUWUDLOHU SURFHVV WKHRU\  1HHGOHVV WR VD\ ZH DUH QRW ERXQG E\ D KRPH E\ SK\VLFDOO\ WHDULQJ LW IURP LWV IRXQGDWLRQ DQG GHFLVLRQIURPDQRWKHUFLUFXLW6HH,QUH$QQ$UERU55&R WRZLQJLWWRDQRWKHUORW7DNLQJWKHVHDOOHJDWLRQVDVWUXH )GWK&LU,QDGGLWLRQVXEVHTXHQW WKLV ZDV QR mJDUGHQYDULHW\l ODQGORUGWHQDQW RU FDVHV OHDG XV WR D GLIIHUHQW FRQFOXVLRQ WKDQ WKH RQH FRPPHUFLDO GLVSXWH  7KH IDFWV DOOHJHG VXIILFH WR 'HIHQGDQWV DGYRFDWH  )LUVW 5HHVH ZDV GHFLGHG SULRU WR FRQVWLWXWHDmVHL]XUHlZLWKLQWKHPHDQLQJRIWKH)RXUWK 6ROGDO *RRG 5HDO 3URS DQG )ODWIRUG  ,WV FRQWLQXLQJ $PHQGPHQW IRU WKH\ SODLQO\ LPSOLFDWH WKH LQWHUHVWV UHOHYDQFH LV WKHUHIRUH GRXEWIXO  )XUWKHUPRUH LQ GHFLGLQJ SURWHFWHGE\WKDWSURYLVLRQ 5HHVH WKH (LJKWK &LUFXLW UHOLHG XSRQ DQ RXWGDWHG LQWHUSUHWDWLRQRIWKH6XSUHPH&RXUWjVGHFLVLRQLQ3DUUDWWY 86DW7KLVFORVLQJSDVVDJHLVPHUHO\LQWHQGHGWR 7D\ORU86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mUDQGRPl DQG mXQDXWKRUL]HGlFRQGXFWZDVSURYLGHGXQGHUVWDWHWRUWODZ,Q >Z@KLOH WKH >6ROGDO@ &RXUW ZDV QRW FUHDWLQJ QHZ 5HHVH WKH (LJKWK &LUFXLW KHOG WKDW DQ H[WUDMXGLFLDO SROLFH VXEVWDQWLYH )RXUWK $PHQGPHQW ODZ LW VWDWHG LQ QR HYLFWLRQZDVWKHW\SHRIUDQGRPFRQGXFWDWLVVXHLQ3DUUDWW XQFHUWDLQ WHUPV WKDW WKH ULJKW DJDLQVW XQUHDVRQDEOH +RZHYHUWKLVUHDGLQJRI3DUUDWWKDVVLQFHEHHQFDOOHGLQWR VHL]XUHVLVmWUDQVJUHVVHGLIWKHVHL]XUHRIWKHKRXVHZDV TXHVWLRQ,Q=LQHUPRQY%XUFK86 XQGHUWDNHQWRFROOHFWHYLGHQFHYHULI\FRPSOLDQFHZLWKD WKH 6XSUHPH &RXUW GHFOLQHG WR H[WHQG WKH mUDQGRPl DQG KRXVLQJUHJXODWLRQHIIHFWDQHYLFWLRQE\WKHSROLFHRURQ mXQDXWKRUL]HGl FRQGXFW VWDQGDUG WR VLWXDWLRQV ZKHUH D DZKLPIRUQRUHDVRQDWDOOl GHSULYDWLRQ RI ULJKWV LV SUHGLFWDEOH  ,QVWHDG WKH &RXUW UHFRJQL]HGWKDW3DUUDWWSUHVHQWHGmDVSHFLDOFDVHLQZKLFK )ODWIRUGY&LW\RI0RQURH)GQWK&LU SRVWGHSULYDWLRQWRUWUHPHGLHVDUHDOOWKHSURFHVVWKDWLVGXH  HPSKDVLV DGGHG TXRWLQJ 6ROGDO  86 DW  VLPSO\EHFDXVHWKH\DUHWKHRQO\UHPHGLHVWKH6WDWHFRXOGEH 7KXV LW LV DSSDUHQW WKDW WKH 6XSUHPH &RXUW IRUHVDZ D H[SHFWHGWRSURYLGHl VSHFWUXPRISRWHQWLDOGHSULYDWLRQVRISRVVHVVRU\LQWHUHVWVLQ SURSHUW\ %DVHGXSRQWKHUHDVRQLQJLQ=LQHUPRQZHUHFRJQL]HGLQ )ODWIRUGWKDWDFLWL]HQKDVQRFDXVHRIDFWLRQXQGHU† 0RUHRYHUWKHPHWKRGRILQWHUIHUHQFHQHHGQRWEHIDFWXDOO\ IRUGXHSURFHVVYLRODWLRQVmZKHUHVWDWHWRUWODZIXUQLVKHVDOO RQ DOO IRXUV ZLWK 6ROGDO LQ RUGHU IRU D VHL]XUH WR KDYH DSSURSULDWH SURFHVV RU ZKHUH WKH GHSULYDWLRQ FDQQRW EH SUHGLFWHGl  )ODWIRUG )G DW   +RZHYHU ZH  7KRPDVHWDOY&RKHQHWDO 1R 1R 7KRPDVHWDOY&RKHQHWDO  RFFXUUHG  $V WKH $QGHUVRQ &RXUW PDGH FOHDU LW LV QRW 'HIHQGDQWVj%UDW+RZHYHU3\OHVLVWRWDOO\LQDSSRVLWH QHFHVVDU\ WKDW mWKH YHU\ DFWLRQ LQ TXHVWLRQ KDV EHHQ ,QWKDWFDVHZHKHOGWKDWDQDUUHVWHHFRXOGQRWUHFRYHUXQGHU SUHYLRXVO\KHOGXQODZIXOl86DW5DWKHUZKDWLV †IRUDQDUUHVWZKLFKYLRODWHG.HQWXFN\ODZEXWZKLFK UHTXLUHG LV RQO\ WKDW m>W@KH FRQWRXUV RI WKH ULJKW PXVW EH ZDVVXSSRUWHGE\SUREDEOHFDXVHEHFDXVHVXFKDQDUUHVWGLG VXIILFLHQWO\FOHDUWKDWDUHDVRQDEOHRIILFLDOZRXOGXQGHUVWDQG QRWLPSOLFDWHDQ\IHGHUDOFRQVWLWXWLRQDOULJKW%XWLQDVPXFK WKDWZKDWKHLVGRLQJYLRODWHVWKDWULJKWl,G DVDQLQWHUIHUHQFHZLWK3ODLQWLIIVj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mµDWWKHYHU\FRUHjRIWKH)RXUWK$PHQGPHQWµVWDQGVWKH 'HIHQGDQWV IXUWKHU FRQWHQG WKDW WKH H[LVWHQFH RI ULJKWRID>SHUVRQ@WRUHWUHDWLQWR>KHU@RZQKRPHjlLGDW SRVWGHSULYDWLRQ UHPHGLHV IRU HYLFWLRQ XQGHU .HQWXFN\ ODZ TXRWLQJ 6LOYHUPDQ Y 8QLWHG 6WDWHV  86   VDWLVILHV WKH UHTXLUHPHQWV RI GXH SURFHVV DQG D ODFN RI  WKHUHE\ JLYLQJ XV HYHU\ UHDVRQ WR UHJDUG WKH SUHGHSULYDWLRQ SURFHVV LV WKHUHIRUH QRW YLRODWLYH RI WKH GHSULYDWLRQ RI 3ODLQWLIIVj SRVVHVVRU\ LQWHUHVWV LQ WKHLU )RXUWHHQWK $PHQGPHQW  ,Q VXSSRUW RI WKLV DUJXPHQW UHVLGHQFHDVDYLRODWLRQRIWKH)RXUWK$PHQGPHQW7RKROG 'HIHQGDQWVSRLQWWRWKH(LJKWK&LUFXLWjVGHFLVLRQLQ5HHVHY RWKHUZLVH LQ WKH FRQWH[W QRZ SUHVHQWHG ZRXOG FRQVWLWXWH D .HQQHG\  )G  WK &LU   ,Q 5HHVH DQ GHSDUWXUHIURPSUHFHGHQW,QGHHGZHKDYHSUHYLRXVO\IRXQG XQPDUULHGFRXSOHVKDUHGDKRPHIRUWZR\HDUV7KHFRXSOH WKDWPHUHGDPDJHWRSURSHUW\LQVLGHDKRPHPD\FRQVWLWXWHD VKDUHG ELOOV EXW WKH GHHG WR WKH KRXVH ZDV LQ WKH PDOH PHDQLQJIXO LQWHUIHUHQFH ZLWK SRVVHVVRU\ ULJKWV  6HH HJ GHIHQGDQWjVQDPHDQGKHPDGHWKHPRUWJDJHSD\PHQWV$W %RQGVY&R[)GWK&LUKROGLQJ VRPHSRLQW5HHVHKLVIHPDOHFRPSDQLRQDJUHHGWRPRYHRXW WKDW XQGHU 6ROGDO GDPDJH WR D KRXVH LQFOXGLQJ EURNHQ DVVRRQDVVKHZDVILQDQFLDOO\DEOH%XWEHIRUHVKHFRXOGGR GRRUV PXWLODWHG YLQ\O VLGLQJ EURNHQ GHVNV DQG KROHV LQ VRWKHGHIHQGDQWZKRZDVRXWRIWRZQDWWKHWLPHFDOOHG ZDOOV ULVHV WR WKH OHYHO RI mPHDQLQJIXO LQWHUIHUHQFHl ZLWK SROLFHRIILFHUVWRUHPRYHKHUIURPWKHKRPH7ZRRIILFHUV RQHjVSRVVHVVRU\LQWHUHVWV VSRNH WR WKH FRXSOHjV QHLJKERUV DQG WKHQ DVNHG 5HHVH WR OHDYH7KHRIILFHUVSUHYHQWHGKHUIURPUHWULHYLQJDQ\RIKHU EHORQJLQJV5HHVHILOHGD†DFWLRQDJDLQVWWKHRIILFHUV DQGRWKHUV7KHGLVWULFWFRXUWUHMHFWHG5HHVHjVSURFHGXUDOGXH  ,W VKRXOG EH QRWHG WKDW WKLV DQDO\VLV LV QRW LQ WHQVLRQ ZLWK RXU  GHFLVLRQ LQ )R[ Y 9DQ 2RVWHUXP  )G   WK &LU  LQ (VVHQWLDOO\ 'HIHQGDQWV DUH UHF\FOLQJ WKH DUJXPHQW WKDW WKH\ DUH ZKLFK ZH QRWHG WKDW m>W@KH 6XSUHPH &RXUW KDV RQO\ DSSOLHG WKH OHJDOO\ LQFDSDEOH RI YLRODWLQJ WKH 85/7$ EHFDXVH WKH VWDWXWHjV SXUSRVH µPHDQLQJIXO LQWHUIHUHQFH ZLWK SRVVHVVRU\ LQWHUHVWVj GHILQLWLRQ RI VHL]XUH LV WR JRYHUQ WKH ULJKWV DQG UHVSRQVLELOLWLHV RI ODQGORUGV DQG WHQDQWV QRW WR FDVHV ZKHUH WKHUH LV QR GHEDWH WKDW WKH FKDOOHQJHG DFW LV RQH RI WDNLQJ WKLUG SDUWLHV .56 †  +RZHYHU DV WKH GLVWULFW FRXUW DSWO\ SURSHUW\ DZD\ IURP DQ LQGLYLGXDO    l ,Q WKDW FDVH D SODLQWLII DOOHJHG D QRWHG 3ODLQWLIIV KDYH QRW DOOHJHG WKDW WKH RIILFHUV WKHPVHOYHV YLRODWHG WKH )RXUWK $PHQGPHQW YLRODWLRQ GXH WR SROLFH RIILFHUVj XQZDUUDQWHG UHWHQWLRQ 85/7$ UDWKHU 3ODLQWLIIV PHUHO\ SRLQW WR WKH 85/7$ DV HYLGHQFH RI WKH RI KLV GULYHUjV OLFHQVH DIWHU DQ LQLWLDOO\ ODZIXO VHL]XUH 8QOLNH WKH SURFHVV ZKLFK ZDV GXH SULRU WR HYLFWLRQ (YHQ LI 'HIHQGDQWV GLG QRW FRQILVFDWLRQ RI WKH OLFHQVH LQ )R[ WKH HYLFWLRQ LQ WKH FDVH DW EDU ZDV QHYHU YLRODWH 85/7$ WKHLU DFWLRQV PD\ KDYH VWLOO YLRODWHG WKH )RXUWHHQWK VDQFWLRQHG XQGHU WKH ODZ $PHQGPHQW  7KRPDVHWDOY&RKHQHWDO 1R 1R 7KRPDVHWDOY&RKHQHWDO  WKH\ FRQWHQG WKDW RQO\ 3ODLQWLIIVj ULJKWV DJDLQVW DQ )LQDOO\WKHVHL]XUHRI3ODLQWLIIVjSRVVHVVRU\LQWHUHVWLQWKHLU XQUHDVRQDEOHVHL]XUHDUHLPSOLFDWHG:HILQGQRPHULWWRWKLV UHVLGHQFH LPSOLFDWHV WKH LQWHUHVWV RI SULYDF\ VHFXULW\ DQG DUJXPHQW OLEHUW\XQGHUO\LQJWKH)RXUWK$PHQGPHQW6HH7KRPDV. &ODQF\ :KDW 'RHV 7KH )RXUWK $PHQGPHQW 3URWHFW 7KH 6XSUHPH &RXUW KDV UHMHFWHG WKH QRWLRQ WKDW WKH 3URSHUW\3ULYDF\RU6HFXULW\:DNH)RUHVW/5HY DSSOLFDELOLW\RIRQHFRQVWLWXWLRQDODPHQGPHQWSUHHPSWVWKH 0RUJDQ&ORXG7KH)RXUWK$PHQGPHQW'XULQJWKH JXDUDQWHHVRIDQRWKHU*RRG5HDO3URS86DW,Q /RFKQHU(UD3ULYDF\3URSHUW\DQG/LEHUW\LQ&RQVWLWXWLRQDO 6ROGDOWKH6XSUHPH&RXUWUHFRJQL]HGWKDWm>F@HUWDLQZURQJV 7KHRU\6WDQ/5HY:LOOLDP&+HIIHUQDQ DIIHFWPRUHWKDQDVLQJOHULJKWDQGDFFRUGLQJO\FDQLPSOLFDWH 3URSHUW\3ULYDF\DQG7KH)RXUWK$PHQGPHQW%URRN/ PRUHWKDQRQHRIWKH&RQVWLWXWLRQjVFRPPDQGV:KHUHVXFK 5HY)LUVWDWHQDQWKDVDSULYDF\LQWHUHVWDWVWDNH PXOWLSOH YLRODWLRQV DUH DOOHJHG ZH DUH QRW LQ WKH KDELW RI LQ KLV RU KHU OHDVHKROG  $V WKH &RXUW KDV VWDWHG WKH LGHQWLI\LQJ DV D SUHOLPLQDU\ PDWWHU WKH FODLPjV µGRPLQDQWj OHJLWLPDWLRQRIH[SHFWDWLRQVRISULYDF\PXVWKDYHDVRXUFH FKDUDFWHU5DWKHUZHH[DPLQHHDFKFRQVWLWXWLRQDOSURYLVLRQ RXWVLGH WKH )RXUWK $PHQGPHQW HLWKHU E\ UHIHUHQFH WR LQWXUQl6ROGDO86DW%RQGV)GDW FRQFHSWVRIUHDORUSHUVRQDOSURSHUW\RUWRXQGHUVWDQGLQJVWKDW DUHUHFRJQL]HGDQGSHUPLWWHGE\VRFLHW\5DNDVY,OOLQRLV $V ERWK WKH GLVWULFW FRXUW DQG 3ODLQWLIIV FRUUHFWO\ QRWH 86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mULJKWWREHVHFXUH UHJDUGOHVVRISURFHVV%DUWHOOY/RKLVHU)G LQWKHLUKRXVHVl7KHSHUVRQDOVHFXULW\RIWHQDQWVLVWKXV WK&LU&RXUWVJHQHUDOO\IDYRUDQDO\VHVRIDOOHJHGO\ WKUHDWHQHG ZKHQ WKH\ FDQQRW FRQWURO WKHLU SRVVHVVLRQV IUHH XQFRQVWLWXWLRQDOJRYHUQPHQWDODFWVXQGHUDVSHFLILFWH[WXDO IURPXQUHDVRQDEOHJRYHUQPHQWDOLQIHUHQFHZKHWKHURUQRW ULJKWUDWKHUWKDQXQGHUWKHDPRUSKRXVVXEVWDQWLYHGXHSURFHVV WKHVH SRVVHVVLRQV DUH FKDUDFWHUL]HG DV UHDO RU SHUVRQDO VWDQGDUG*UDKDPY&RQQRU86DFFRUG SURSHUW\)LQDOO\WKHOLEHUW\LQWHUHVWRIWHQDQWVLQFRQWUROOLQJ 7KDGGHXV;Y%ODWWHU)GWK&LU WKHLUSRVVHVVLRQVDQGLQEHLQJOHIWDORQHLQWKHLURZQKRPHV +RZHYHUEHFDXVHWKHVHL]XUHLQWKHFDVHDWEDULPSOLFDWHVWZR ZRXOGEHVHYHUHO\FRPSURPLVHGLISHRSOHZHUHQRWIUHHIURP H[SOLFLW WH[WXDO VRXUFHV RI FRQVWLWXWLRQDO SURWHFWLRQ WKH XQUHDVRQDEOHJRYHUQPHQWDOLQWHUIHUHQFH )RXUWKDQG)RXUWHHQWK$PHQGPHQWVmWKHSURSHUTXHVWLRQLV QRW ZKLFK $PHQGPHQW FRQWUROV EXW ZKHWKHU HLWKHU $PHQGPHQW>KDVEHHQ@YLRODWHGl*RRG5HDO3URS86 DW 'HIHQGDQWVGRQRWGLVSXWHWKDW3ODLQWLIIVSUHVXPHGWREH  $V SRLQWHG RXW E\ WKH 6XSUHPH &RXUW LQ 2OLYHU Y 8QLWHG 6WDWHV  WHQDQWVKDYHULJKWVUHFRJQL]HGE\VWDWHODZ '@HIHQGDQWVKDYHQRWHYHQDWWHPSWHGWR LPPXQLW\EHFDXVHWKH\UHDVRQDEO\SUHVXPHGWKHYDOLGLW\RID VXJJHVW D JRYHUQPHQWDO RU SULYDWH LQWHUHVW DPRXQWLQJ WR EXLOGLQJLQVSHFWRUjVGHWHUPLQDWLRQWKDWH[LJHQWFLUFXPVWDQFHV µH[LJHQWFLUFXPVWDQFHVjl6DOOLHY7D[6DOH,QYHVWRUV,QF H[LVWHGZKLFKSRVHGDGDQJHUWRWHQDQWV )6XSS'0G7KXVLWVHHPVWKDW  7KRPDVHWDOY&RKHQHWDO 1R 1R 7KRPDVHWDOY&RKHQHWDO  )URPWKHVWDQGSRLQWRImREMHFWLYHOHJDOUHDVRQDEOHQHVVl ZKHWKHUWKHGHSULYDWLRQRIWKDWLQWHUHVWFRQWUDYHQHGQRWLRQV WKHQ'HIHQGDQWVDUHQRWHQWLWOHGWRWKHSURWHFWLRQRITXDOLILHG RIGXHSURFHVV6HH%GRI5HJHQWVY5RWK86 LPPXQLW\SURYLGLQJWKHPZLWKLPPXQLW\IURPWKLVODZVXLW .HQWXFN\'HSjWRI&RUUVY7KRPSVRQ 6HH$QGHUVRQ86DWTXRWLQJ+DUORZ86DW 860DWKHZVY(OGULGJH86 +HUH'HIHQGDQWVZHUHLQIRUPHGWKDW3ODLQWLIIVZHUH )HUHQF]Y+DLUVWRQ)GWK OHJDOUHVLGHQWVRIWKHKRXVHKDYLQJNH\VWRWKHSUHPLVHVDQG &LU7RQ\/Y&KLOGHUV)GWK&LU SD\LQJUHQWIRUWKHLULQGLYLGXDOURRPV)XUWKHU'HIHQGDQWV 3URSHUW\ LQWHUHVWV DUH QRW FUHDWHG E\ WKH &RQVWLWXWLRQ ZHUHSURYLGHGZLWKGRFXPHQWDWLRQHVWDEOLVKLQJWKDW3ODLQWLIIV &OHYHODQGY%GRI(GXFRI/RXGHUPLOO86 ZHUHWHQDQWVXQGHU.HQWXFN\ODZ'HIHQGDQWVDOVRNQHZRU ,QVWHDGWKH\DUHmFUHDWHGDQGWKHLUGLPHQVLRQVDUH VKRXOGKDYHNQRZQWKDWDFRXUWRUGHULVQHHGHGWRSHUIRUPDQ GHILQHGE\H[LVWLQJUXOHVRUXQGHUVWDQGLQJVWKDWVWHPIURPDQ HYLFWLRQ)XUWKHU'HIHQGDQWVZHUHDZDUHWKDWWKH6KHULIIjV LQGHSHQGHQWVRXUFHVXFKDVVWDWHODZl5RWK86DW 'HSDUWPHQW QRW WKH SROLFH FDUULHG RXW FRXUWRUGHUHG VHHDOVR9HUEDY2KLR&DV,QV&R)G HYLFWLRQVLQ/RXLVYLOOH0RUHRYHUWKHUHZHUHQRHPHUJHQF\ WK &LU   8QGHU .HQWXFN\ ODZ WHQDQWV KROGLQJ RUH[LJHQWFLUFXPVWDQFHV%DVHGXSRQWKHIRUHJRLQJIDFWV OHDVHKROG HVWDWHV KDYH D UHFRJQL]HG SURSHUW\ LQWHUHVW  6HH 'HIHQGDQWVFRXOGQRWKDYHKDGDUHDVRQDEOHEHOLHIWKDWWKH\ .56†7KXV3ODLQWLIIVKDYHDUHFRJQL]HGSURSHUW\ FRXOGOHJDOO\HYLFW3ODLQWLIIVIURPWKH$XJXVWD+RXVH LQWHUHVWIRU)RXUWHHQWK$PHQGPHQWSXUSRVHV )LQDOO\ D EDODQFLQJ RI WKH JRYHUQPHQWDO DQG SULYDWH 'XHSURFHVVGHPDQGVSUHGHSULYDWLRQSURFHVV LQWHUHVWVDWVWDNHPDNHVWKHXQUHDVRQDEOHQHVVRIWKHVHL]XUH SODLQ,DJUHHZLWKWKHGLVWULFWFRXUWWKDWDEVHQWDFRXUWRUGHU ,WLVZHOOHVWDEOLVKHGWKDWSRVVHVVRU\LQWHUHVWVLQSURSHUW\ RUH[LJHQF\WKHJRYHUQPHQWjVLQWHUHVWLQHYLFWLQJ3ODLQWLIIV LQYRNHSURFHGXUDOGXHSURFHVVSURWHFWLRQV6HH)XHQWHVY IURP WKHLU KRPH ZDV mPLQLPDO DW EHVWl HVSHFLDOO\ LQ 6KHYLQ  86     'XH SURFHVV JHQHUDOO\ FRPSDULVRQ WR 3ODLQWLIIVj SULYDWH LQWHUHVW LQ UHWDLQLQJ UHTXLUHVQRWLFHDQGDKHDULQJSULRUWRHYLFWLRQ ,GDW SRVVHVVRU\ ULJKWV WR WKHLU SODFH RI UHVLGHQFH  7KH RIILFHUV /HDU\ Y 'DHVFKQHU  )G   WK &LU  WKHUHIRUHVXEMHFWHG3ODLQWLIIVWRDQXQUHDVRQDEOHVHL]XUHLQ m:KHQ D SODLQWLII KDV D SURWHFWHG SURSHUW\ LQWHUHVW D GHSULYDWLRQRIWKHLU)RXUWK$PHQGPHQWULJKWV SUHGHSULYDWLRQKHDULQJRIVRPHVRUWLVJHQHUDOO\UHTXLUHGWR &'HSULYDWLRQRI)RXUWHHQWK$PHQGPHQW5LJKWV  $V WKH )RXUWK &LUFXLW VWDWHG GXH SURFHVV LQ WKH HYLFWLRQ FRQWH[W 'HIHQGDQWVDOVRGLVSXWHWKHGLVWULFWFRXUWjVKROGLQJWKDWWKH UHTXLUHV WKH IROORZLQJ QRQMXGLFLDOHYLFWLRQFRQVWLWXWHGDGHQLDORI3ODLQWLIIVjULJKWV WRSURFHGXUDOGXHSURFHVVXQGHUWKH)RXUWHHQWK$PHQGPHQW  WLPHO\ DQG DGHTXDWH QRWLFH GHWDLOLQJ UHDVRQV IRU SURSRVHG 7KH 'XH 3URFHVV &ODXVH RI WKH )RXUWHHQWK $PHQGPHQW WHUPLQDWLRQ  DQ RSSRUWXQLW\ RQ SDUW RI WHQDQW WR FRQIURQW DQG FURVVH[DPLQH DGYHUVH ZLWQHVVHV  ULJKW RI WHQDQW WR EH JXDUDQWHHVWKDWm>Q@R6WDWHVKDOOGHSULYHDQ\SHUVRQRI UHSUHVHQWHG E\ FRXQVHO SURYLGHG E\ KLP WR GHOLQHDWH LVVXHV OLIHOLEHUW\RUSURSHUW\ZLWKRXWGXHSURFHVVRIODZl 86 SUHVHQW IDFWXDO FRQWHQWLRQV LQ DQ RUGHUO\ PDQQHU FRQGXFW & $% DPHQG ;,9  3URFHGXUDO GXH SURFHVV FODLPV DUH FURVVH[DPLQDWLRQ DQG JHQHUDOO\ WR VDIHJXDUG KLV LQWHUHVW  D H[DPLQHG XQGHU D WZRSDUW DQDO\VLV  )LUVW WKH FRXUW PXVW GHFLVLRQ EDVHG RQ HYLGHQFH DGGXFHG DW KHDULQJ LQ ZKLFK GHWHUPLQHZKHWKHUWKHLQWHUHVWDWVWDNHLVDSURWHFWHGOLEHUW\ UHDVRQV IRU GHFLVLRQ DQG HYLGHQFH UHOLHG RQ DUH VHW IRUWK DQG  DQ LPSDUWLDO GHFLVLRQ PDNHU RU SURSHUW\ ULJKW XQGHU WKH )RXUWHHQWK $PHQGPHQW  2QO\ DIWHU LGHQWLI\LQJ VXFK D ULJKW GR ZH FRQWLQXH WR FRQVLGHU &DXOGHU Y 'XUKDP +RXV $XWK  )G   WK &LU  FLWLQJ *ROGEHUJ Y .HOO\  86