Habliston v. Finra Regulation, Inc. ( 2017 )

81,7(' 67$7(6 ',675,&7 &2857
)25 7+( ',675,&7 2) &2/80%,$
BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB
$11 025721 <281*
+$%/,6721 et al.
3ODLQWLIIV
Y  &LYLO $FWLRQ 1R  $%-
),15$ 5(*8/$7,21 ,1&
'HIHQGDQW
BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB
0(025$1'80 23,1,21
3ODLQWLIIV $QQD 0RUWRQ 'NW  @ ³&RPSO´
 3ODLQWLIIV RULJLQDOO\ EURXJKW WKLV ODZVXLW RQ 'HFHPEHU   DJDLQVW ),15$ 'LVSXWH
5HVROXWLRQ ,QF &RPSO >'NW  @ EXW WKH\ ILOHG DQ DPHQGHG FRPSODLQW RQ 0D\   DJDLQVW
),15$ 5HJXODWLRQ ,QF $P &RPSO >'NW  @ 3ODLQWLIIV WKHQ ILOHG D VXEVWLWXWH DPHQGHG
FRPSODLQW RQ -XQH   6XEVWLWXWH $P &RPSO >'NW  @
3ODLQWLIIV DOOHJH WKDW ),15$ 5HJXODWLRQ KDV IDLOHG WR SURYLGH D IDLU DUELWUDWLRQ IRUXP
EHFDXVH WKH DUELWUDWRUV DUH ELDVHG DQG WKHLU SURFHGXUDO UXOLQJV WR GDWH KDYH EHHQ XQIDLU WKDW
),15$ 5HJXODWLRQ KDV IDLOHG WR FDUU\ RXW LWV UHJXODWRU\ GXWLHV SURSHUO\ DQG WKDW WKH ELQGLQJ
DUELWUDWLRQ SURYLVLRQV FRQWDLQHG LQ WKH EURNHUDJH FRQWUDFWV DUH YRLG RU XQHQIRUFHDEOH 3ODLQWLIIV
DOVR VHHN GDPDJHV XQGHU  86& †  &RPSO ˆ  DQG WKH\ DVN WKH &RXUW WR DSSRLQW QHZ
DUELWUDWRUV WR KHDU WKH SHQGLQJ DUELWUDWLRQ Id. ˆ 
2Q -XO\   GHIHQGDQW PRYHG WR GLVPLVV WKH FRPSODLQW SXUVXDQW WR )HGHUDO 5XOHV RI
&LYLO 3URFHGXUH E E E DQG K RQ PXOWLSOH JURXQGV ,W DUJXHV WKDW
SODLQWLIIV¶ FODLPV DUH QRW ULSH IRU UHYLHZ VLQFH WKH DUELWUDWLRQ LV RQJRLQJ GHIHQGDQW LV LPPXQH IURP
VXLW XQGHU WKH GRFWULQHV RI DUELWUDO DQG UHJXODWRU\ LPPXQLW\ SODLQWLIIV KDYH IDLOHG WR QDPH
LQGLVSHQVDEOH SDUWLHV GHIHQGDQW LV QRW D VWDWH DFWRU IRU SXUSRVHV RI VHFWLRQ  WKH 6HFXULWLHV DQG
 See, e.g. &RPSO ˆˆ   ±  DOOHJLQJ ),15$ YLRODWHG LWV RZQ UXOHV LQ FRQGXFWLQJ
GLVFRYHU\ DQG SRVWSRQLQJ KHDULQJV id. ˆˆ ±   ± DOOHJLQJ ),15$ DUELWUDWRUV DUH
LQGXVWU\ELDVHG DQG KDYH GLVTXDOLI\LQJ UHODWLRQVKLSV id. ˆˆ   ±  DOOHJLQJ ),15$
DFWHG ZLWK NQRZQ FRQIOLFWV RI LQWHUHVW id. ˆˆ % . DOOHJLQJ ),15$ KDV QR PHDQLQJIXO
PHWKRG RI RYHUVLJKW EHFDXVH DUELWUDWLRQV DUH KHOG LQ SULYDWH DQG KDYH LQDGHTXDWH DSSHDO
PHFKDQLVPV id. ˆˆ  ±      DOOHJLQJ WKH DUELWUDWLRQ LV QRW DQ LPSDUWLDO
KHDULQJ EHIRUH XQELDVHG DUELWUDWRUV id. ˆˆ ±      DOOHJLQJ SODLQWLIIV¶
GLVFRYHU\ UHTXHVWV ZHUH XQIDLUO\ GHQLHG RU UHMHFWHG id. ˆˆ      DOOHJLQJ SODLQWLIIV
ZHUH XQIDLUO\ GHQLHG SRVWSRQHPHQW RI D KHDULQJ GDWH IRU H[WUDRUGLQDU\ FLUFXPVWDQFHV id. ˆ 
DOOHJLQJ UHSODFHPHQW DUELWUDWRUV ZLOO EH ELDVHG
 See, e.g. &RPSO ˆ  DOOHJLQJ IDLOXUH WR HQWHU DQ HQIRUFHPHQW DFWLRQ DJDLQVW :HOOV )DUJR
IRU YLRODWLRQV RI ),15$ UXOHV id. ˆˆ $ $  DOOHJLQJ ),15$ DQG ),15$ 5HJXODWLRQ
DOORZHG YRWLQJ ),15$ PHPEHUV WR UHPDLQ OLFHQVHG ZLWK LQDGHTXDWH VXSHUYLVRU\ SURFHGXUHV id.
ˆ  DOOHJLQJ YLRODWLRQV RI IHGHUDO DQG VWDWH VHFXULWLHV ODZV DV ZHOO DV ),15$ 5XOHV id. ˆ 
DOOHJLQJ ),15$ FRQFHDOHG FULPLQDO PLVFRQGXFW DQG GHFHSWLYH VDOHV SUDFWLFHV E\ :HOOV )DUJR
 See, e.g. &RPSO ˆˆ   ± DOOHJLQJ WKH SURYLVLRQV VKRXOG EH GHFODUHG YRLG
DJDLQVW SODLQWLIIV EHFDXVH GHIHQGDQW YLRODWHG SODLQWLIIV¶ FRQVWLWXWLRQDO ULJKWV ˆ  DOOHJLQJ WKH\
VKRXOG EH YRLG RU YDFDWHG EHFDXVH ³WKH\ ZHUH REWDLQHG DJDLQVW WKH >S@ODLQWLIIV¶ ZLOO´ ˆ 
DVNLQJ WKH &RXUW ³WR GHFODUH ),15$ SUH GLVSXWH ELQGLQJ DUELWUDWLRQ SURYLVLRQV    YRLG RU QRW
HQIRUFHDEOH´ EHFDXVH ),15$ 5HJXODWLRQ ³PDWHULDOO\ EUHDFKHG ),15$ $UELWUDWLRQ 5XOHV´

([FKDQJH $FW GRHV QRW FUHDWH D SULYDWH ULJKW RI DFWLRQ IRU DOOHJHG YLRODWLRQV RI UXOHV HQDFWHG XQGHU
WKH $FW DQG SODLQWLIIV¶ UHTXHVW WKDW WKH &RXUW DSSRLQW QHZ DUELWUDWRUV LV PRRW EHFDXVH UHSODFHPHQW
DUELWUDWRUV KDYH DOUHDG\ EHHQ DSSRLQWHG 0RW WR 'LVPLVV WKH &RPSO >'NW  @ ³'HI¶V 0RW´
DW  0HP RI /DZ LQ 6XSS RI 'HI¶V 0RW >'NW  @ ³'HI¶V 0HP´ DW ±
3ODLQWLIIV IDLOHG WR RSSRVH PDQ\ RI WKHVH DUJXPHQWV VR WKH PRWLRQ KDV EHHQ ODUJHO\
FRQFHGHG :LWK UHVSHFW WR WKH RSHQ LVVXHV WKH &RXUW FRQFOXGHV WKDW SODLQWLIIV¶ FODLPV DUH QRW ULSH
IRU UHYLHZ DQG WKDW GHIHQGDQW LV HQWLWOHG WR DUELWUDO LPPXQLW\ 7KHUHIRUH WKH PRWLRQ WR GLVPLVV
ZLOO EH JUDQWHG
%$&.*5281'
3ODLQWLIIV¶ SDUHQWV ZKR DUH QRZ GHFHDVHG PDLQWDLQHG LQYHVWPHQW DFFRXQWV ZLWK :DFKRYLD
6HFXULWLHV ,QF QRZ :HOOV )DUJR $GYLVRUV //& ³:HOOV )DUJR´ DQG WKH\ ZHUH WKH XQIRUWXQDWH
YLFWLPV RI FULPLQDO PLVFRQGXFW &RPSO ˆˆ   $ :HOOV )DUJR EURNHU &KULVWRSKHU
&XQQLQJKDP ZDV FRQYLFWHG RI WDNLQJ RYHU  PLOOLRQ IURP SODLQWLIIV¶ SDUHQWV DQG RWKHU FXVWRPHUV
Id. ˆ  7KHUHDIWHU SODLQWLIIV DFWLQJ LQ WKHLU SDUHQWV¶ VWHDG EURXJKW VXLW DJDLQVW :HOOV )DUJR DQG
)XOFUXP 6HUYLFHV ,QF ³)XOFUXP´ DOOHJLQJ WKDW WKH\ NQRZLQJO\ DQG UHFNOHVVO\ DOORZHG WKH WKHIW
WR RFFXU OHDGLQJ WR D ORVV RI RYHU  PLOOLRQ Id. ˆ 
8QGHU WKH WHUPV RI WKH DFFRXQW DJUHHPHQWV ZLWK :HOOV )DUJR DQG )XOFUXP SODLQWLIIV ZHUH
UHTXLUHG WR VXEPLW WKHLU FODLPV WR D ELQGLQJ DUELWUDWLRQ SURFHHGLQJ DGPLQLVWHUHG E\ WKH )LQDQFLDO
,QGXVWU\ 5HJXODWRU\ $XWKRULW\ ,QF ³),15$´ See &RPSO ˆ  ),15$ LV D SULYDWH QRWIRU
SURILW 'HODZDUH FRUSRUDWLRQ id. ˆ  DQG DFFRUGLQJ WR GHIHQGDQW LV D VHOIUHJXODWRU\ RUJDQL]DWLRQ
³652´ UHJLVWHUHG ZLWK WKH 6HFXULWLHV DQG ([FKDQJH &RPPLVVLRQ ³6(&´ DV D QDWLRQDO
 $ VHOIUHJXODWRU\ RUJDQL]DWLRQ LV GHILQHG DV ³DQ\ QDWLRQDO VHFXULWLHV H[FKDQJH UHJLVWHUHG
VHFXULWLHV DVVRFLDWLRQ RU UHJLVWHUHG FOHDULQJ DJHQF\´  86& † FD

VHFXULWLHV DVVRFLDWLRQ 'HI¶V 0HP DW  ,WV ZKROO\ RZQHG VXEVLGLDU\ ),15$ 5HJXODWLRQ
RSHUDWHV D GLVSXWH UHVROXWLRQ IRUXP WKDW DGPLQLVWHUV ),15$ DUELWUDWLRQV &RPSO ˆ  $FFRUGLQJ
WR GHIHQGDQW ),15$ 5HJXODWLRQ¶V 2IILFH RI 'LVSXWH 5HVROXWLRQ DSSRLQWV DUELWUDWRUV PDLQWDLQV WKH
DUELWUDWLRQ ILOHV SURFHVVHV SOHDGLQJV DQG PRWLRQV GUDIWV RUGHUV ZLWK DUELWUDWRU GLUHFWLRQ DQG
WUDQVPLWV GRFXPHQWV EHWZHHQ WKH SDUWLHV 'HI¶V 0HP DW 
3ODLQWLIIV¶ IRUW\IRXU SDJH VXEVWLWXWHG DPHQGHG FRPSODLQW LV KDUGO\ D ³VKRUW DQG SODLQ´
VWDWHPHQW RI WKH FODLPV )HG 5 &LY 3 D EXW LW ERLOV GRZQ WR IRXU FRXQWV See &RPSO ,Q
&RXQW , SODLQWLIIV DOOHJH WKDW WKH FRQWUDFWXDO ³),15$ SUHGLVSXWH ELQGLQJ DUELWUDWLRQ SURYLVLRQV
VKRXOG EH YDFDWHG RU GHFODUHG YRLG´ EHFDXVH WKH\ YLRODWH SODLQWLIIV¶ FRQVWLWXWLRQDO ULJKWV Id. ˆˆ 
 ± ,Q &RXQW ,, WKH\ DOOHJH WKDW WKH DUELWUDWLRQ SURYLVLRQV VKRXOG EH GHFODUHG YRLG EHFDXVH
),15$ 5HJXODWLRQ KDV PDWHULDOO\ EUHDFKHG ),15$ DUELWUDWLRQ UXOHV Id. ˆ  ,Q &RXQW ,,,
SODLQWLIIV EULQJ D FODLP IRU GDPDJHV XQGHU  86& ††  DQG  DOOHJLQJ WKDW ),15$
5HJXODWLRQ DFWHG ³XQGHU FRORU RI ODZ´ WR GHQ\ SODLQWLIIV WKHLU FRQVWLWXWLRQDO ULJKWV XQGHU WKH GXH
SURFHVV DQG HTXDO SURWHFWLRQ FODXVHV Id. ˆ  6SHFLILFDOO\ SODLQWLIIV FODLP WKDW ),15$
5HJXODWLRQ ³NQRZLQJO\ YLRODWHG LWV GXW\ WR DFW REMHFWLYHO\ DQG LPSDUWLDOO\´ DQG DFWHG ZLWK WKH
 ),15$ LV D UHJLVWHUHG QDWLRQDO VHFXULWLHV DVVRFLDWLRQ SXUVXDQW WR WKH 6HFXULWLHV ([FKDQJH
$FW RI   86& † D et seq. ³([FKDQJH $FW´ 'HI¶V 0HP DW 
 7KH 6(& DXWKRUL]HG ),15$ WR LQFOXGH SUHGLVSXWH ELQGLQJ DUELWUDWLRQ SURYLVLRQV LQ WKHLU
FXVWRPHU DFFRXQW DJUHHPHQWV 2UGHU *UDQWLQJ $FFHOHUDWHG $SSURYDO 5HJDUGLQJ 5XOH *RYHUQLQJ
3UHGLVSXWH $UELWUDWLRQ $JUHHPHQWV ZLWK &XVWRPHUV  )HG 5HJ  'HF  
$GGLWLRQDOO\ WKH 6(& DXWKRUL]HG ),15$ WR GHOHJDWH LWV DGPLQLVWUDWLRQ RI DUELWUDWLRQV WR ),15$
5HJXODWLRQ DQG ),15$ KDV GRQH VR See 2UGHU $SSURYLQJ 3URSRVHG 5XOH &KDQJH WR 0HUJH
),15$ 'LVSXWH 5HVROXWLRQ ,QF LQWR DQG ZLWK ),15$ 5HJXODWLRQ ,QF  )HG 5HJ  'HF
  see also ),15$ 5XOH  'HOHJDWLRQ $XWKRULW\ DQG $FFHVV 
KWWSILQUDFRPSOLQHWFRPHQGLVSOD\GLVSOD\BPDLQKWPO"UELG  HOHPHQWBLG 
+RZHYHU ),15$ PDLQWDLQV XOWLPDWH UHVSRQVLELOLW\ IRU WKH ZRUN RI ),15$ 5HJXODWLRQ See
),15$ ),15$¶V 3ODQ RI $OORFDWLRQ DQG 'HOHJDWLRQ RI )XQFWLRQV E\ ),15$ WR ),15$
5HJXODWLRQ ,QF  http://finra.complinet.com/en/display/display_viewall.html?rbid=2403&
element_id=4594&record_id=16680&filtered_tag=

³LQWHQW WR SUHMXGLFH´ SODLQWLIIV E\ LQIOXHQFLQJ ³WKH REMHFWLYLW\ DQG LPSDUWLDOLW\´ RI ),15$
5HJXODWLRQ¶V DUELWUDWRUV Id. ˆ  )LQDOO\ LQ &RXQW ,9 SODLQWLIIV UHTXHVW WKDW WKH &RXUW DSSRLQW
UHSODFHPHQW DUELWUDWRUV XQGHU  86& †  EHFDXVH WKH\ ³ZLOO EH LPPLQHQWO\ DQG LUUHSDUDEO\
KDUPHG´ LI WKH &RXUW GRHV QRW LQWHUYHQH WR SUHYHQW ),15$ 5HJXODWLRQ ³IURP YLRODWLQJ LWV DUELWUDWRU
VHOHFWLRQ UXOHV´ Id. ˆˆ ±
2Q 6HSWHPEHU   SODLQWLIIV ILOHG DQ RSSRVLWLRQ WR GHIHQGDQW¶V PRWLRQ WR GLVPLVV
See 3OV¶ 0HP LQ 2SS WR 'HI¶V 0RW >'NW  @ ³3OV¶ 2SS´ %XW SODLQWLIIV IDLOHG WR DGGUHVV
DQG WKHUHE\ FRQFHGHG D QXPEHU RI GHIHQGDQW¶V DUJXPHQWV 3ODLQWLIIV EULHIHG WKH LVVXHV RI DUELWUDO
LPPXQLW\ DQG ZKHWKHU ),15$ 5HJXODWLRQ LV D VWDWH DFWRU IRU SXUSRVHV RI WKHLU VHFWLRQ  FODLP
DQG WKH\ WRXFKHG XSRQ GHIHQGDQW¶V ULSHQHVV DUJXPHQW id. DW ± ± EXW WKH\ PDGH QR
DWWHPSW WR DGGUHVV DQ\ RWKHU LVVXHV ,QVWHDG SODLQWLIIV GHYRWHG DSSUR[LPDWHO\ VL[ SDJHV WR
DWWDFNLQJ WKH YDOLGLW\ RI WKH DUELWUDWLRQ FODXVHV LQ WKH EURNHUDJH FRQWUDFWV WR ZKLFK GHIHQGDQW
),15$ 5HJXODWLRQ ZDV QRW D SDUW\ See id. DW ± 'HIHQGDQW ILOHG D UHSO\ WR SODLQWLIIV¶
RSSRVLWLRQ RQ 6HSWHPEHU   5HSO\ LQ 6XSS RI 'HI¶V 0RW >'NW  @ ³'HI¶V 5HSO\´
67$1'$5' 2) 5(9,(:
, 6XEMHFW 0DWWHU -XULVGLFWLRQ
8QGHU 5XOH E WKH SODLQWLII EHDUV WKH EXUGHQ RI HVWDEOLVKLQJ MXULVGLFWLRQ E\ D
SUHSRQGHUDQFH RI WKH HYLGHQFH See Lujan v. Defs. of Wildlife  86    Shekoyan
v. Sibley Int’l Corp.  ) 6XSS G   ''&  )HGHUDO FRXUWV DUH FRXUWV RI OLPLWHG
MXULVGLFWLRQ DQG WKH ODZ SUHVXPHV WKDW ³D FDXVH OLHV RXWVLGH WKLV OLPLWHG MXULVGLFWLRQ´ Kokkonen v.
Guardian Life Ins. Co. of Am.  86    see also Gen. Motors Corp. v. EPA 
)G   '& &LU  ³$V D FRXUW RI OLPLWHG MXULVGLFWLRQ ZH EHJLQ DQG HQG ZLWK DQ
H[DPLQDWLRQ RI RXU MXULVGLFWLRQ´ ³>%@HFDXVH VXEMHFWPDWWHU MXULVGLFWLRQ LV µDQ $UW>LFOH@ ,,, DV

ZHOO DV D VWDWXWRU\ UHTXLUHPHQW    QR DFWLRQ RI WKH SDUWLHV FDQ FRQIHU VXEMHFWPDWWHU MXULVGLFWLRQ
XSRQ D IHGHUDO FRXUW¶´ Akinseye v. District of Columbia  )G   '& &LU 
TXRWLQJ Ins. Corp. of Ir., Ltd. v. Compagnie des Bauxites de Guinee  86   
:KHQ FRQVLGHULQJ D PRWLRQ WR GLVPLVV IRU ODFN RI MXULVGLFWLRQ XQOLNH ZKHQ GHFLGLQJ D
PRWLRQ WR GLVPLVV XQGHU 5XOH E WKH FRXUW ³LV QRW OLPLWHG WR WKH DOOHJDWLRQV RI WKH FRPSODLQW´
Hohri v. United States  )G   '& &LU  vacated on other grounds  86
  5DWKHU ³D FRXUW PD\ FRQVLGHU VXFK PDWHULDOV RXWVLGH WKH SOHDGLQJV DV LW GHHPV
DSSURSULDWH WR UHVROYH WKH TXHVWLRQ >RI@ ZKHWKHU LW KDV MXULVGLFWLRQ WR KHDU WKH FDVH´ Scolaro v.
D.C. Bd. of Elections & Ethics  ) 6XSS G   ''&  FLWLQJ Herbert v. Nat’l
Acad. of Scis.  )G   '& &LU  see also Jerome Stevens Pharm. Inc. v. FDA
 )G   '& &LU 
,, )DLOXUH WR 6WDWH D &ODLP
³7R VXUYLYH D >5XOH E@ PRWLRQ WR GLVPLVV D FRPSODLQW PXVW FRQWDLQ VXIILFLHQW IDFWXDO
PDWWHU DFFHSWHG DV WUXH WR VWDWH D FODLP WR UHOLHI WKDW LV SODXVLEOH RQ LWV IDFH´ Ashcroft v. Iqbal
 86    LQWHUQDO TXRWDWLRQ PDUNV RPLWWHG accord Bell Atl. Corp. v. Twombly
 86    ,Q Iqbal WKH 6XSUHPH &RXUW UHLWHUDWHG WKH WZR SULQFLSOHV XQGHUO\LQJ LWV
GHFLVLRQ LQ Twombly ³)LUVW WKH WHQHW WKDW D FRXUW PXVW DFFHSW DV WUXH DOO RI WKH DOOHJDWLRQV
FRQWDLQHG LQ D FRPSODLQW LV LQDSSOLFDEOH WR OHJDO FRQFOXVLRQV´  86 DW  $QG ³>V@HFRQG
RQO\ D FRPSODLQW WKDW VWDWHV D SODXVLEOH FODLP IRU UHOLHI VXUYLYHV D PRWLRQ WR GLVPLVV´ Id DW 
$ FODLP LV IDFLDOO\ SODXVLEOH ZKHQ WKH SOHDGHG IDFWXDO FRQWHQW ³DOORZV WKH FRXUW WR GUDZ WKH
UHDVRQDEOH LQIHUHQFH WKDW WKH GHIHQGDQW LV OLDEOH IRU WKH PLVFRQGXFW DOOHJHG´ Id DW  ³7KH
SODXVLELOLW\ VWDQGDUG LV QRW DNLQ WR D µSUREDELOLW\ UHTXLUHPHQW¶ EXW LW DVNV IRU PRUH WKDQ D VKHHU
SRVVLELOLW\ WKDW D GHIHQGDQW KDV DFWHG XQODZIXOO\´ Id $ SOHDGLQJ PXVW RIIHU PRUH WKDQ ³ODEHOV

DQG FRQFOXVLRQV´ RU D ³IRUPXODLF UHFLWDWLRQ RI WKH HOHPHQWV RI D FDXVH RI DFWLRQ´ id TXRWLQJ
Twombly  86 DW  DQG ³>W@KUHDGEDUH UHFLWDOV RI WKH HOHPHQWV RI D FDXVH RI DFWLRQ VXSSRUWHG
E\ PHUH FRQFOXVRU\ VWDWHPHQWV GR QRW VXIILFH´ Id
:KHQ FRQVLGHULQJ D PRWLRQ WR GLVPLVV XQGHU 5XOH E WKH &RXUW LV ERXQG WR FRQVWUXH
D FRPSODLQW OLEHUDOO\ LQ WKH SODLQWLII¶V IDYRU DQG LW VKRXOG JUDQW WKH SODLQWLII ³WKH EHQHILW RI DOO
LQIHUHQFHV WKDW FDQ EH GHULYHG IURP WKH IDFWV DOOHJHG´ Kowal v. MCI Commc’ns Corp.  )G
  '& &LU  1HYHUWKHOHVV WKH &RXUW QHHG QRW DFFHSW LQIHUHQFHV GUDZQ E\ WKH
SODLQWLII LI WKRVH LQIHUHQFHV DUH XQVXSSRUWHG E\ IDFWV DOOHJHG LQ WKH FRPSODLQW QRU PXVW WKH &RXUW
DFFHSW SODLQWLII¶V OHJDO FRQFOXVLRQV See id. Browning v. Clinton  )G   '& &LU
 ,Q UXOLQJ XSRQ D PRWLRQ WR GLVPLVV IRU IDLOXUH WR VWDWH D FODLP D FRXUW PD\ RUGLQDULO\
FRQVLGHU RQO\ ³WKH IDFWV DOOHJHG LQ WKH FRPSODLQW GRFXPHQWV DWWDFKHG DV H[KLELWV RU LQFRUSRUDWHG
E\ UHIHUHQFH LQ WKH FRPSODLQW DQG PDWWHUV DERXW ZKLFK WKH &RXUW PD\ WDNH MXGLFLDO QRWLFH´
Gustave-Schmidt v. Chao  ) 6XSS G   ''&  FLWDWLRQV RPLWWHG
$1$/<6,6
, 3ODLQWLIIV FRQFHGHG WKH DUJXPHQWV WKDW WKH\ IDLOHG WR DGGUHVV LQ WKHLU RSSRVLWLRQ WR
GHIHQGDQW¶V PRWLRQ WR GLVPLVV
3ODLQWLIIV IDLOHG WR DGGUHVV IRXU RI WKH VHYHQ DUJXPHQWV WKDW GHIHQGDQW UDLVHG LQ LWV PRWLRQ
WR GLVPLVV See 3OV¶ 2SS :KHQ D SODLQWLII IDLOV WR DGGUHVV DUJXPHQWV PDGH LQ D GHIHQGDQW¶V
PRWLRQ WR GLVPLVV WKH &RXUW PD\ WUHDW WKRVH DUJXPHQWV DV FRQFHGHG See /&Y5 E ³,W LV ZHOO
XQGHUVWRRG LQ WKLV &LUFXLW WKDW ZKHQ D SODLQWLII ILOHV DQ RSSRVLWLRQ WR D PRWLRQ WR GLVPLVV DGGUHVVLQJ
RQO\ FHUWDLQ DUJXPHQWV UDLVHG E\ WKH GHIHQGDQW D FRXUW PD\ WUHDW WKRVH DUJXPHQWV WKDW WKH SODLQWLII
IDLOHG WR DGGUHVV DV FRQFHGHG´ Hopkins v. Women’s Div., Gen. Bd. of Global Ministries  )
6XSS G   ''&  FLWLQJ FDIC v. Bender  )G  ± '& &LU 
7KH GLVFUHWLRQ WR HQIRUFH WKLV UXOH OLHV ZKROO\ ZLWK WKH GLVWULFW FRXUW Id.

%HFDXVH SODLQWLIIV KDYH QRW DGGUHVVHG GHIHQGDQW¶V DUJXPHQWV WKDW GHIHQGDQW LV HQWLWOHG WR
UHJXODWRU\ LPPXQLW\ WKH FRPSODLQW IDLOV WR QDPH LQGLVSHQVDEOH SDUWLHV WKH ([FKDQJH $FW GRHV QRW
FUHDWH D SULYDWH ULJKW RI DFWLRQ DQG WKH UHTXHVW IRU WKH &RXUW WR DSSRLQW QHZ DUELWUDWRUV LV PRRW WKH
&RXUW ZLOO WUHDW WKH PRWLRQ WR GLVPLVV RQ WKRVH JURXQGV DV FRQFHGHG
'HIHQGDQW FRQWHQGV WKDW LW LV QRW D SURSHU SDUW\ WR WKLV ODZVXLW DQG WKDW &RXQWV , DQG ,,
VKRXOG EH GLVPLVVHG EHFDXVH SODLQWLIIV IDLOHG WR QDPH WKH UHDO SDUWLHV LQ LQWHUHVW ± :HOOV )DUJR DQG
)XOFUXP 'HI¶V 0HP DW ± %HFDXVH SODLQWLIIV GLG QRW UHVSRQG WR GHIHQGDQW¶V DUJXPHQW WKLV
DUJXPHQW LV FRQFHGHG DQG WKH &RXUW ZLOO GLVPLVV &RXQWV , DQG ,, See Hopkins  ) 6XSS G
DW 
3ODLQWLIIV IDLOHG WR RSSRVH GHIHQGDQW¶V DUJXPHQW WKDW &RXQW ,9 LV PRRW EHFDXVH WKH
DUELWUDWRU YDFDQFLHV KDYH DOUHDG\ EHHQ ILOOHG See 'HI¶V 0HP DW  6R &RXQW ,9 ZLOO EH
GLVPLVVHG DV ZHOO See Hopkins  ) 6XSS G DW 
$OO WKDW UHPDLQV WKHQ LV &RXQW ,,, WKH VHFWLRQ  FODLP $OWKRXJK SODLQWLIIV GLG UHVSRQG
WR GHIHQGDQW¶V DUJXPHQW WKDW LW LV QRW D VWDWH DFWRU 3OV¶ 2SS DW ± SODLQWLIIV GLG QRW DGGUHVV
GHIHQGDQW¶V DUJXPHQW WKDW LW LV LPPXQH IURP VXLW XQGHU WKH GRFWULQH RI UHJXODWRU\ LPPXQLW\ See
'HI¶V 0HP DW ± 6R WKH &RXUW FRXOG GLVPLVV SODLQWLIIV¶ FODLPV RQ WKDW EDVLV DORQH
0RUHRYHU WKH &RXUW KDV JURXQGV WR JUDQW GHIHQGDQW¶V PRWLRQ WR GLVPLVV EHFDXVH SODLQWLIIV¶
FODLPV DUH QRW ULSH IRU UHYLHZ DQG GHIHQGDQW LV HQWLWOHG WR DUELWUDO LPPXQLW\ 7KHUHIRUH WKH FDVH
ZLOO EH GLVPLVVHG LQ LWV HQWLUHW\
 %HFDXVH WKHVH JURXQGV DUH DGHTXDWH WR GLVPLVV WKH FRPSODLQW LQ LWV HQWLUHW\ WKH &RXUW QHHG
QRW DGGUHVV GHIHQGDQW¶V DGGLWLRQDO DUJXPHQWV

,, 3ODLQWLIIV¶ FODLPV LQ &RXQW ,,, WKDW WKHLU FRQVWLWXWLRQDO ULJKWV ZHUH YLRODWHG GXH WR DQ
DOOHJHGO\ XQIDLU DUELWUDWLRQ SURFHVV DUH QRW ULSH IRU UHYLHZ
³7KH ULSHQHVV GRFWULQH JHQHUDOO\ GHDOV ZLWK ZKHQ D IHGHUDO FRXUW FDQ RU VKRXOG GHFLGH D
FDVH 3DUW RI WKH GRFWULQH LV VXEVXPHG LQWR WKH $UWLFOH ,,, UHTXLUHPHQW RI VWDQGLQJ ZKLFK UHTXLUHV
D SHWLWLRQHU WR DOOHJH inter alia DQ LQMXU\LQIDFW WKDW LV µLPPLQHQW¶ RU µFHUWDLQO\ LPSHQGLQJ¶´ Am.
Petrol. Inst. v. Envtl. Prot. Agency  )G   '& &LU  see also Lujan  86
DW  KROGLQJ LQMXU\LQIDFW PXVW EH ³DFWXDO´ RU ³LPPLQHQW´ $QG ³>H@YHQ LI D FDVH LV
µFRQVWLWXWLRQDOO\ ULSH¶    WKHUH PD\ DOVR EH µSUXGHQWLDO UHDVRQV IRU UHIXVLQJ WR H[HUFLVH
MXULVGLFWLRQ¶´ Am. Petrol. Inst.  )G DW  TXRWLQJ Nat’l Park Hospitality Ass’n v. Dep’t of
Interior  86    $V WKH '& &LUFXLW KDV H[SODLQHG
7KH IXQGDPHQWDO SXUSRVH RI WKH ULSHQHVV GRFWULQH LV ³WR SUHYHQW WKH FRXUWV
WKURXJK DYRLGDQFH RI SUHPDWXUH DGMXGLFDWLRQ IURP HQWDQJOLQJ WKHPVHOYHV
LQ DEVWUDFW GLVDJUHHPHQWV RYHU DGPLQLVWUDWLYH SROLFLHV DQG DOVR WR SURWHFW
WKH DJHQFLHV IURP MXGLFLDO LQWHUIHUHQFH XQWLO DQ DGPLQLVWUDWLYH GHFLVLRQ KDV
EHHQ IRUPDOL]HG DQG LWV HIIHFWV IHOW LQ D FRQFUHWH ZD\ E\ WKH FKDOOHQJLQJ
SDUWLHV´
Sprint Corp. v. Fed. Commc’ns Comm’n  )G   '& &LU  TXRWLQJ Nat’l Park
Hospitality  86 DW ±
:KLOH WKH FRQVWLWXWLRQDO DVSHFW RI ULSHQHVV PD\ LQYROYH WKH VDPH LPSHQGLQJ LQMXU\LQIDFW
UHTXLUHPHQW WKDW LV QHFHVVDU\ IRU VWDQGLQJ WKH SUXGHQWLDO DVSHFW RI ULSHQHVV UHTXLUHV PRUH D FRXUW
PXVW ³EDODQFH>@ µWKH ILWQHVV RI WKH LVVXHV IRU MXGLFLDO GHFLVLRQ DQG WKH KDUGVKLS WR WKH SDUWLHV RI
ZLWKKROGLQJ FRXUW FRQVLGHUDWLRQ¶´ Nat’l Treasury Emps. Union v. United States  )G 
± '& &LU  TXRWLQJ Abbott Labs. v. Gardner  86    7KH ILWQHVV
RI DQ LVVXH IRU MXGLFLDO GHFLVLRQ GHSHQGV RQ ZKHWKHU WKHUH DUH ³FRQWLQJHQW IXWXUH HYHQWV WKDW PD\
QRW RFFXU DV DQWLFLSDWHG RU LQGHHG PD\ QRW RFFXU DW DOO´ Thomas v. Union Carbide Agric. Prods.
Co.  86  ±  TXRWLQJ $ & :ULJKW $ 0LOOHU ( &RRSHU )HGHUDO
3UDFWLFH DQG 3URFHGXUH †  

6LQFH WKH DUELWUDWLRQ LV VWLOO RQJRLQJ SODLQWLIIV¶ FKDOOHQJH WR WKH SURFHHGLQJ LV QRW ULSH IRU
UHYLHZ )RU $UWLFOH ,,, SXUSRVHV SODLQWLIIV FDQQRW GHPRQVWUDWH WKDW WKH\ KDYH VXIIHUHG DQ DFWXDO
LQMXU\ RU WKDW DQ\ KDUP LV ³LPPLQHQW RU FHUWDLQO\ LPSHQGLQJ´ Chlorine Inst., Inc. v. Fed. R.R.
Admin.  )G   '& &LU  GLVPLVVLQJ SODLQWLII¶V SHWLWLRQ IRU UHYLHZ RI DJHQF\¶V
ILQDO UXOH IRU ODFN RI MXULVGLFWLRQ ZKHUH UXOH KDG QRW \HW EHHQ LPSOHPHQWHG VR LQMXU\ KDG QRW
HPHUJHG DQG WKHUHIRUH FDVH ZDV QRW ULSH IRU UHYLHZ $QG SUXGHQWLDO FRQVLGHUDWLRQV IDYRU
GLVPLVVDO DV ZHOO :KLOH SODLQWLIIV H[SUHVV IHDU WKDW WKH\ ZLOO QRW UHFHLYH DQ REMHFWLYH KHDULQJ
&RPSO ˆˆ    DQG WKH\ WDNH LVVXH ZLWK FHUWDLQ LQWHUORFXWRU\ SURFHGXUDO UXOLQJV VXFK DV WKH
GHQLDO RI WKH UHTXHVWHG GLVFRYHU\ DQG WKH SRVWSRQHPHQW RI KHDULQJ GDWHV id. ˆˆ     
WKH DUELWUDWLRQ KDV QRW \HW FRQFOXGHG DQG WKH RXWFRPH ± ZKLFK FRXOG EH LQ SODLQWLIIV¶ IDYRU ± LV
XQNQRZQ 6R DQ\ DOOHJHG ELDV RQ WKH SDUW RI ),15$ 5HJXODWLRQ¶V DUELWUDWRUV KDV QRW \HW SURGXFHG
DQ\ DGYHUVH FRQVHTXHQFHV DQG WKH UHFRUG XSRQ ZKLFK RQH ZRXOG GHWHUPLQH ZKHWKHU SODLQWLIIV¶

FRQVWLWXWLRQDO ULJKWV KDYH EHHQ YLRODWHG KDV QRW \HW EHHQ GHYHORSHG 7KXV SODLQWLIIV¶ FODLPV XQGHU
&RXQW ,,, DUH QRW ULSH IRU UHYLHZ DQG WKH\ ZLOO EH GLVPLVVHG
,,, 3ODLQWLIIV¶ UHPDLQLQJ FODLPV PXVW EH GLVPLVVHG EHFDXVH GHIHQGDQW LV HQWLWOHG WR
DUELWUDO LPPXQLW\
7KH 6XSUHPH &RXUW KDV H[SODLQHG WKDW ³MXGJHV DGYRFDWHV DQG ZLWQHVVHV´ HQMR\ ³DEVROXWH
LPPXQLW\    EHFDXVH RI WKH VSHFLDO QDWXUH RI WKHLU UHVSRQVLELOLWLHV´ Butz v. Economou  86
   ³7KH ORVHU LQ RQH IRUXP ZLOO IUHTXHQWO\ VHHN DQRWKHU FKDUJLQJ WKH SDUWLFLSDQWV
LQ WKH ILUVW ZLWK XQFRQVWLWXWLRQDO DQLPXV $EVROXWH LPPXQLW\ LV WKXV QHFHVVDU\ WR DVVXUH WKDW
MXGJHV DGYRFDWHV DQG ZLWQHVVHV FDQ SHUIRUP WKHLU UHVSHFWLYH IXQFWLRQV ZLWKRXW KDUDVVPHQW RU
LQWLPLGDWLRQ´ Id. DW  LQWHUQDO FLWDWLRQV RPLWWHG &RXUWV KDYH H[WHQGHG WKH GRFWULQH RI DEVROXWH
LPPXQLW\ WR D ZLGH UDQJH RI SHUVRQV ZKR SOD\ D UROH LQ WKH DGMXGLFDWLYH SURFHVV See, e.g. id. DW
± ³:H WKLQN WKDW DGMXGLFDWLRQ ZLWKLQ D IHGHUDO DGPLQLVWUDWLYH DJHQF\ VKDUHV HQRXJK RI WKH
 %HFDXVH SODLQWLIIV¶ FRQVWLWXWLRQDO FODLPV DUH QRW ULSH IRU UHYLHZ WKH &RXUW GRHV QRW QHHG WR
GHWHUPLQH ZKHWKHU GHIHQGDQW LV D ³VWDWH DFWRU´ IRU SXUSRVHV RI SODLQWLIIV¶ VHFWLRQ  FODLP EXW
WKH FODLP IDLOV RQ WKDW EDVLV DV ZHOO ,Q RUGHU WR VWDWH D FODLP XQGHU VHFWLRQ  D SODLQWLII ³PXVW
DOOHJH WKDW VRPH SHUVRQ KDV GHSULYHG KLP RI D IHGHUDO ULJKW´ DQG ³WKDW WKH SHUVRQ ZKR KDV GHSULYHG
KLP RI WKDW ULJKW DFWHG XQGHU FRORU RI VWDWH RU WHUULWRULDO ODZ´ Gomez v. Toledo  86  
 see also Ranger v. Tenet  ) 6XSS G   ''&  KROGLQJ WKDW SODLQWLII IDLOHG
WR VWDWH D FODLP XQGHU VHFWLRQ  ZKHUH SODLQWLII DOOHJHG WKH &,$ D JRYHUQPHQW DJHQF\ DFWHG
³XQGHU FRORU RI IHGHUDO VWDWXWHV DQG DJHQF\ SURFHGXUHV ZKHQ LW DOOHJHGO\ YLRODWHG >SODLQWLII¶V@ )LIWK
DQG )RXUWHHQWK $PHQGPHQW ULJKWV´ 3ODLQWLIIV KDYH IDLOHG WR VWDWH D FODLP XQGHU VHFWLRQ 
EHFDXVH WKH\ GR QRW DOOHJH WKDW GHIHQGDQW DFWHG XQGHU VWDWH ODZ UDWKHU WKH\ DOOHJH WKDW GHIHQGDQW
DFWHG ³XQGHU IHGHUDO ODZV´ DQG LQ YLRODWLRQ RI ³),15$ 5XOHV´ &RPSO ˆˆ ± &RXUWV LQ WKLV
MXULVGLFWLRQ KDYH DOUHDG\ GHWHUPLQHG WKDW ),15$ DQG ),15$ 5HJXODWLRQ RU WKHLU SUHGHFHVVRUV
1$6' DQG 1$6' 5HJXODWLRQ DUH QRW ³VWDWH DFWRUV´ IRU SXUSRVHV RI D VHFWLRQ  FODLP See
Marchiano v. Nat’l Ass’n of Secs. Dealers, Inc.  ) 6XSS G   ''&  ³7KH FRXUW
LV DZDUH RI QR FDVH    LQ ZKLFK 1$6' >G@HIHQGDQWV ZHUH IRXQG WR EH VWDWH DFWRUV´ Graman v.
Nat’l Ass’n of Secs. Dealers, Inc. 1R   :/  DW
± ''& $SULO  
³(YHU\ FRXUW WKDW KDV FRQVLGHUHG WKH TXHVWLRQ KDV FRQFOXGHG WKDW 1$6' LV QRW D JRYHUQPHQW
DFWRU´ $QG RWKHU FRXUWV KDYH UHDFKHG WKH VDPH FRQFOXVLRQ See, e.g. Epstein v. Secs. & Exch.
Comm’n  ) $SS¶[   G &LU  Perpetual Secs., Inc. v. Tang  )G  
G &LU  ³,W LV FOHDU WKDW 1$6' LV QRW D VWDWH DFWRU DQG LWV UHTXLUHPHQW RI PDQGDWRU\
DUELWUDWLRQ LV QRW VWDWH DFWLRQ´ Shrader v. Nat’l Ass’n of Secs. Dealers, Inc.  ) 6XSS 
 ('1&  aff’d  )G  WK &LU 

FKDUDFWHULVWLFV RI WKH MXGLFLDO SURFHVV WKDW WKRVH ZKR SDUWLFLSDWH LQ VXFK DGMXGLFDWLRQ VKRXOG DOVR
EH LPPXQH IURP VXLWV IRU GDPDJHV´ Wagshal v. Foster  )G   '& &LU 
H[WHQGLQJ LPPXQLW\ WR PHGLDWRUV 'HIHQGDQW FRQWHQGV WKDW LW LV LPPXQH IURP VXLW LQ LWV
SRVLWLRQ DV DQ DUELWUDWLRQ IRUXP DQG WKDW SODLQWLIIV ³DUH XQDEOH WR DGYDQFH DQ\ VHW RI IDFWV WKDW
ZRXOG VWDWH D FODLP DJDLQVW´ ),15$ 5HJXODWLRQ 'HI¶V 0HP DW ± 7KH &RXUW DJUHHV
7KH PDMRULW\ RI FLUFXLW FRXUWV KDYH H[WHQGHG DUELWUDO LPPXQLW\ WR FRYHU QRW RQO\ WKH
LQGLYLGXDO DUELWUDWRU EXW WKH DUELWUDWLRQ IRUXP DV ZHOO See e.g. Pfannenstiel v. Merrill Lynch
 )G   WK &LU  ³>&@RXUWV XQLIRUPO\ KROG WKDW DUELWUDWLRQ IRUXPV DQG
VSRQVRUV OLNH FRXUWV RI ODZ DUH LPPXQH IURP OLDELOLW\ IRU DFWLRQV WDNHQ LQ FRQQHFWLRQ ZLWK
DGPLQLVWHULQJ DUELWUDWLRQ´ Int’l Med. Grp., Inc. v. Am. Arbitration Ass’n., Inc.  )G 
 WK &LU  ILQGLQJ DUELWUDWLRQ IRUXP LPPXQH IURP VXLW New England Cleaning Servs.,
Inc. v. Am. Arbitration Ass’n  )G   VW &LU  ³>2@UJDQL]DWLRQV WKDW VSRQVRU
DUELWUDWLRQV DV ZHOO DV DUELWUDWRUV WKHPVHOYHV HQMR\ WKLV LPPXQLW\ IURP FLYLO OLDELOLW\´ Hawkins
v. Nat’l Ass’n of Sec. Dealers Inc.  )G   WK &LU  ³7KH 1$6' HQMR\V DUELWUDO
LPPXQLW\ IURP FLYLO OLDELOLW\ IRU WKH DFWV RI LWV DUELWUDWRUV LQ WKH FRXUVH RI FRQGXFWLQJ FRQWUDFWXDOO\
DJUHHGXSRQ DUELWUDWLRQ SURFHHGLQJV´ abrogated on other grounds by Merrill Lynch, Pierce,
Fenner & Smith v. Manning  6 &W   Olson v. Nat’l Ass’n of Sec. Dealers  )G
  WK &LU  ³$UELWUDO LPPXQLW\ SURWHFWV DOO DFWV ZLWKLQ WKH VFRSH RI WKH DUELWUDO
SURFHVV´ LQFOXGLQJ WKRVH E\ ³VSRQVRULQJ RUJDQL]DWLRQV´ Austern v. Chi. Bd. Options Exch., Inc.
 )G   G &LU  KROGLQJ WKDW WKH ³FRPPHUFLDO VSRQVRULQJ RUJDQL]DWLRQ´ LV
³HQWLWOHG WR LPPXQLW\ IRU DOO IXQFWLRQV WKDW DUH LQWHJUDOO\ UHODWHG WR WKH DUELWUDO SURFHVV´ Corey v.
 7KH 'LVWULFW RI &ROXPELD KDV FRGLILHG DUELWUDO LPPXQLW\ DQG JUDQWHG DQ DUELWUDWRU DEVROXWH
LPPXQLW\ IURP OLDELOLW\ ³WR WKH VDPH H[WHQW DV D MXGJH RI D FRXUW RI WKH 'LVWULFW RI &ROXPELD DFWLQJ
LQ D MXGLFLDO FDSDFLW\´ '& &RGH † 

N.Y. Stock Exch.  )G   WK &LU  ³([WHQVLRQ RI DUELWUDO LPPXQLW\ WR
HQFRPSDVV ERDUGV ZKLFK VSRQVRU DUELWUDWLRQ LV D QDWXUDO DQG QHFHVVDU\ SURGXFW RI WKH SROLFLHV
XQGHUO\LQJ DUELWUDO LPPXQLW\´ :KLOH WKH '& &LUFXLW KDV \HW WR WDNH XS WKH LVVXH WKH &RXUW
ILQGV WKH UHDVRQLQJ RI RWKHU FLUFXLWV SHUVXDVLYH
7KH GRFWULQH RI DUELWUDO LPPXQLW\ ³UHVWV RQ WKH QRWLRQ WKDW DUELWUDWRUV DFWLQJ ZLWKLQ WKHLU
TXDVLMXGLFLDO GXWLHV DUH WKH IXQFWLRQDO HTXLYDOHQW RI MXGJHV DQG DV VXFK VKRXOG EH DIIRUGHG
VLPLODU SURWHFWLRQ´ Pfannenstiel  )G DW  $V WKH 6L[WK &LUFXLW QRWHG LQ Corey IDLOLQJ
WR H[WHQG LPPXQLW\ WR WKH ERDUGV VSRQVRULQJ WKH DUELWUDWRUV ZRXOG UHQGHU WKH LPPXQLW\
³LOOXVLRQDU\´ EHFDXVH ³>L@W ZRXOG EH RI OLWWOH YDOXH WR WKH ZKROH DUELWUDO SURFHGXUH WR PHUHO\ VKLIW
WKH OLDELOLW\ WR WKH VSRQVRULQJ DVVRFLDWLRQ´  )G DW  see also Olson  )G DW 
³:LWKRXW WKLV H[WHQVLRQ DUELWUDO LPPXQLW\ ZRXOG EH DOPRVW PHDQLQJOHVV EHFDXVH OLDELOLW\ ZRXOG
VLPSO\ EH VKLIWHG IURP LQGLYLGXDO DUELWUDWRUV WR WKH VSRQVRULQJ RUJDQL]DWLRQ´ &RQVLVWHQW ZLWK
WKH SXUSRVHV RI DUELWUDO LPPXQLW\ WKH &RXUW ZLOO H[WHQG WKH LPPXQLW\ WR ),15$ 5HJXODWLRQ KHUH
3ODLQWLIIV¶ DUJXPHQW WKDW GHIHQGDQW LV QRW HQWLWOHG WR LPPXQLW\ EHFDXVH LW KDV ³XQFOHDQ
KDQGV´ LV XQDYDLOLQJ 3ODLQWLIIV SRVLW WKDW GHIHQGDQW ³LV QRZ VHHNLQJ LPPXQLW\ IRU YLRODWLQJ LWV
GXWLHV DV DQ DUELWUDWLRQ VSRQVRU WR SUHYHQW GLVFRYHU\ RI LWV RZQ PLVFRQGXFW´ WKDW LV WKH DOOHJHG
IDLOXUH WR DGKHUH WR LWV RZQ UXOHV 3OV¶ 2SS DW ± %XW SODLQWLIIV¶ SURSRVHG H[FHSWLRQ ZRXOG
VZDOORZ WKH UXOH DQG WKH FDVH ODZ VXSSRUWV DSSO\LQJ DUELWUDO LPPXQLW\ HYHQ LQ WKH IDFH RI VLPLODU
FODLPV See e.g. Olson  )G DW  ³$ VSRQVRULQJ RUJDQL]DWLRQ LV LPPXQH IURP FLYLO OLDELOLW\
IRU LPSURSHUO\ VHOHFWLQJ DQ DUELWUDWLRQ SDQHO HYHQ ZKHQ WKH VHOHFWLRQ YLRODWHV WKH RUJDQL]DWLRQ¶V
RZQ UXOHV´ Austern  )G DW ± Corey  )G DW ± %HFDXVH DOO RI SODLQWLIIV¶

FODLPV DJDLQVW ),15$ 5HJXODWLRQ DUH EDUUHG E\ WKH GRFWULQH RI DUELWUDO LPPXQLW\ WKH DFWLRQ ZLOO
EH GLVPLVVHG
&21&/86,21
3ODLQWLIIV IDLOHG WR RSSRVH PXOWLSOH DUJXPHQWV DV WR ZK\ WKHLU FODLPV VKRXOG QRW EH
GLVPLVVHG DQG WKH &RXUW WUHDWV WKRVH DUJXPHQWV DV FRQFHGHG 7KRVH FRQFHGHG DUJXPHQWV DORQH
SURYLGH D VXIILFLHQW EDVLV IRU WKH &RXUW WR GLVPLVV DOO RI SODLQWLIIV¶ FODLPV DJDLQVW ),15$
5HJXODWLRQ 0RUHRYHU SODLQWLIIV¶ FRQVWLWXWLRQDO FODLPV LQ &RXQW ,,, UHJDUGLQJ XQIDLU WUHDWPHQW
GXULQJ WKH DUELWUDWLRQ PXVW EH GLVPLVVHG XQGHU )HGHUDO 5XOH RI &LYLO 3URFHGXUH E EHFDXVH
WKH\ DUH QRW ULSH IRU UHYLHZ 3ODLQWLIIV¶ FODLPV DJDLQVW GHIHQGDQW DUH EDUUHG E\ WKH GRFWULQH RI
DUELWUDO LPPXQLW\ VR SODLQWLIIV KDYH DOVR IDLOHG WR VWDWH D FODLP DJDLQVW GHIHQGDQW XQGHU )HGHUDO
5XOH RI &LYLO 3URFHGXUH E 7KHUHIRUH WKH &RXUW ZLOO JUDQW GHIHQGDQW¶V PRWLRQ DQG WKLV
FDVH ZLOO EH GLVPLVVHG
$ VHSDUDWH RUGHU ZLOO LVVXH
$0< %(50$1 -$&.621
8QLWHG 6WDWHV 'LVWULFW -XGJH
'$7( -DQXDU\  
 7KHUH LV DOVR VXSSRUW IRU WKH SURSRVLWLRQ WKDW WKH GRFWULQH RI UHJXODWRU\ LPPXQLW\ SURYLGHV
DQ DOWHUQDWLYH EDVLV WR GLVPLVV WKH DFWLRQ See In re Series 7 Broker Qualification Exam Scoring
Litig.  )G   '& &LU  KROGLQJ WKDW ZKHQ DQ 652 VXFK DV ),15$ ³DFWV XQGHU
WKH DHJLV RI WKH ([FKDQJH $FW¶V GHOHJDWHG DXWKRULW\ LW LV DEVROXWHO\ LPPXQH IURP VXLW IRU WKH
LPSURSHU SHUIRUPDQFH RI UHJXODWRU\ DGMXGLFDWRU\ RU SURVHFXWRULDO GXWLHV GHOHJDWHG E\ WKH 6(&´
see also DL Capital Grp. v. NASDAQ Stock Mkt., Inc.  )G   G &LU  +RZHYHU
WKH &RXUW QHHG QRW UHDFK WKLV LVVXH EHFDXVH SODLQWLIIV KDYH FRQFHGHG LW