Filed: Jan. 14, 2003
Latest Update: Mar. 02, 2020
Summary: 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 s8' LQJ@LQGLYLGXDOV RU PHGLD WR KDUDVV ERWKHU WKUHDWHQ LH SUHVHQWLQJ LQIRUPDWLRQSKRWRVGHWDLOVRISDVWUHODWLRQVKLSl7KHVWDWH 7DKIVY3URFWRUHWDO 1RV 1RV 7DKIVY3URFWRUHWDO FRXUWGHFOLQHGWRVHWDVL
Summary: 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 s8' LQJ@LQGLYLGXDOV RU PHGLD WR KDUDVV ERWKHU WKUHDWHQ LH SUHVHQWLQJ LQIRUPDWLRQSKRWRVGHWDLOVRISDVWUHODWLRQVKLSl7KHVWDWH 7DKIVY3URFWRUHWDO 1RV 1RV 7DKIVY3URFWRUHWDO FRXUWGHFOLQHGWRVHWDVLG..
More
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 s8' LQJ@LQGLYLGXDOV RU PHGLD WR KDUDVV ERWKHU WKUHDWHQ LH SUHVHQWLQJ LQIRUPDWLRQSKRWRVGHWDLOVRISDVWUHODWLRQVKLSl7KHVWDWH 7DKIVY3URFWRUHWDO 1RV 1RV 7DKIVY3URFWRUHWDO FRXUWGHFOLQHGWRVHWDVLGHWKH 332VDQGLQVWHDGLVVXHGD XQGLVSXWHGIDFWVLQIURQWRI7DKIVjVDWWRUQH\DWWKHWLPHWKH QHZ332SUHYHQWLQJ:LOOLDP3URFWRUIURPFRQWDFWLQJ7DKIV FRPSODLQWZDVILOHG0XFKRIZKDWZHKDYHVDLGZLWKUHJDUG WRWKH5XOHEDVLVIRUDZDUGLQJDWWRUQH\IHHVRQDVDQFWLRQ 7DKIV WKHQ DPHQGHG KHU SUHYLRXVO\ ILOHG IHGHUDO DSSOLHVKHUHDOWKRXJKWKHFULWHULDIRUWKHWZREDVHVDUHQRW FRPSODLQWDQGDOOHJHGDPRQJRWKHUWKLQJVYLRODWLRQRIKHU LGHQWLFDO ,Q OLJKW RI WKH UHSHDWHG KHDULQJ GHOD\V WKH IUHH VSHHFK DQG GXH SURFHVV ULJKWV XQGHU WKH )LUVW DQG LQDFFHVVLEOHFRXUWILOHVDQG:LOOLDP3URFWRUjVDOOHJHGWKUHDW )RXUWHHQWK$PHQGPHQWVUHVSHFWLYHO\7DKIVFRQWHQGHGWKDW ZH KROG WKDW WKH ILOLQJ RI WKH VXLW ZDV QHLWKHU WKH3URFWRUVKDGDFWHGLQFRQFHUWZLWKVWDWHDFWRUVWRGHSULYH mIULYRORXVXQUHDVRQDEOHRUJURXQGOHVVl,G,QVKRUWWKLVLV KHU RI mKHU )LUVW $PHQGPHQW ULJKWV EHFDXVH VKH FDQQRW QRW DQ mHJUHJLRXV FDVH>@l WKDW PHULWV DQ DZDUG RI WUXWKIXOO\VSHDNWRWKLUGSHUVRQVRUPHGLDRUSURYLGHWKHP DWWRUQH\ IHHV ,G DW $V ZH KDYH VWDWHG 7DKIVjV ZLWK SKRWRV DQG GRFXPHQWV UHJDUGLQJ WKH 'HIHQGDQWVl FRPSODLQWZDVLQDGHTXDWHEXWQRWIULYRORXV 7DKIV DOVR FODLPHG WKDW WKH 3URFWRUV REWDLQHG WKH 332V mFRUUXSWO\l DQG WKDW EHFDXVH VWDII PHPEHUV RI WKH :D\QH ,,,&21&/86,21 &RXQW\&LUFXLW&RXUWDFWHGMRLQWO\ZLWKWKH3URFWRUVWRREWDLQ XQFRQVWLWXWLRQDO332VWKHGHIHQGDQWVZHUHVWDWHDFWRUVIRU %HFDXVH7DKIVjVFRPSODLQWIDLOVWRSURYLGHPRUHWKDQEDUH SXUSRVHV,QUHVSRQVHWKH3URFWRUVILOHGDPRWLRQWR DOOHJDWLRQVRIVWDWHDFWLRQLWGRHVQRWPDNHRXWDQDFWLRQDEOH GLVPLVV FODLPDQGZH$)),50WKHGLVWULFWFRXUWjVRUGHUGLVPLVVLQJ KHUFRPSODLQWSXUVXDQWWR5XOHE+RZHYHUEHFDXVH $WDKHDULQJKHOGLQIHGHUDOGLVWULFWFRXUW7DKIVjVFRXQVHO WKHFRPSODLQWZDVQRWXQUHDVRQDEOHZLWKLQWKHPHDQLQJRI DUJXHG WKDW RQFH WKH 3URFWRUV REWDLQHG DQ mLPPHGLDWHO\ 5XOHXQGHUWKHFLUFXPVWDQFHVDQGEHFDXVHWKHILOLQJRIWKH HQIRUFHDEOHVWDWHMXGJPHQWlWKH\FRXOGLQYRNHWKHIXOOSRZHU DFWLRQ GLG QRW FRQVWLWXWH HJUHJLRXV FRQGXFW ZH RIWKHVWDWHDQGFRXOGEHFRQVLGHUHGVWDWHDFWRUVIRU 5(9(56( WKH DZDUG RI DWWRUQH\ IHHV XQGHU 5XOH DQG SXUSRVHV7KHGLVWULFWFRXUWQRWHGWKDWZKLOH7DKIVPD\KDYH EHHQmGLVDSSRLQWHGDERXWWKHWUHDWPHQW>VKH@UHFHLYHGE\ DFOHUNLQWKH:D\QH&RXQW\&LUFXLW&RXUWlWKHFRPSODLQW IDLOHG WR PDNH DQ\ VKRZLQJ WKDW WKH GHIHQGDQWV ZHUH VWDWH DFWRUV,QSDUWLFXODUWKHGLVWULFWFRXUWQRWHGWKDW7DKIVIDLOHG WRDOOHJHDQ\IDFWVWKDWZRXOGGHPRQVWUDWHWKDWWKHGHIHQGDQWV RU :D\QH &RXQW\ &LUFXLW &RXUW VWDII PHPEHUV KDG DFWHG FRUUXSWO\ 7KH GLVWULFW FRXUW GLVPLVVHG 7DKIVjV FRPSODLQW SXUVXDQWWR5XOHE %5XOH6DQFWLRQVDQG$WWRUQH\)HHV 2Q $SULO RQH PRQWK EHIRUH WKH GLVWULFW FRXUW GLVPLVVHG7DKIVjVFRPSODLQWWKH3URFWRUVjFRXQVHOVHUYHGD PRWLRQIRU5XOHVDQFWLRQVRQ7DKIVDQGRQWKHVDPHGDWH FRXQVHO ILOHG DQ LGHQWLFDO PRWLRQ ZLWK WKH GLVWULFW FRXUW $SSDUHQWO\FRXQVHOYHU\VRRQUHFRJQL]HGWKDWE\ILOLQJWKH 5XOHPRWLRQFRQWHPSRUDQHRXVO\ZLWKLWVVHUYLFHXSRQWKH SODLQWLIIFRXQVHOKDGIDLOHGWRFRPSO\ZLWK5XOHjVmVDIH 7DKIVY3URFWRUHWDO 1RV 1RV 7DKIVY3URFWRUHWDO $WWRUQH\)HHV KDUERUl SURYLVLRQ 6HH )HG 5 &LY 3 F$ +H WKHUHIRUHSURPSWO\ILOHGD1RWLFHRI:LWKGUDZDORI0RWLRQLQ 7KH GLVWULFW FRXUWjV DOWHUQDWLYH EDVLV IRU DZDUGLQJ WKH WKH GLVWULFW FRXUW $OWKRXJK WKH SDUWLHV GLVSXWH WKH GHIHQGDQWVDWWRUQH\IHHVZDV:HGRQRWGLVWXUEDQ VLJQLILFDQFH RI GHIHQVH FRXQVHOjV QRQFRPSOLDQFH ZLWK WKH DZDUGRIDWWRUQH\IHHVSXUVXDQWWRXQOHVVZHFRQFOXGH mVDIHKDUERUlSURYLVLRQVIRURXUSXUSRVHVLWLVVXIILFLHQWWR WKDWWKHFRXUWDEXVHGLWVGLVFUHWLRQLQDZDUGLQJWKHP+DGL[ QRWHWKDWRQ0D\GHIHQVHFRXQVHOUHILOHGKLVPRWLRQ YsRKQVRQ)GWK&LUm%HFDXVHRI IRU5XOHVDQFWLRQVUHTXHVWLQJLQDWWRUQH\IHHVDQG µWKHGLVWULFWFRXUWjVVXSHULRUXQGHUVWDQGLQJRIWKHOLWLJDWLRQ H[SHQVHV,QDGGLWLRQWKH3URFWRUVSHWLWLRQHGWKHFRXUWIRU DQGWKHGHVLUDELOLW\RIDYRLGLQJIUHTXHQWDSSHOODWHUHYLHZRI DWWRUQH\IHHVSXUVXDQWWR86&EDOVRVHHNLQJ ZKDWHVVHQWLDOO\DUHIDFWXDOPDWWHUVjDQDZDUGRIDWWRUQH\Vj 7KHPDWWHUZDVUHIHUUHGWRDPDJLVWUDWHMXGJH IRU IHHVXQGHULVHQWLWOHGWRVXEVWDQWLDOGHIHUHQFHl,G FRQVLGHUDWLRQ TXRWLQJ+HQVOH\Y(FNHUKDUW86 7KHPDJLVWUDWHMXGJHLVVXHGD5HSRUWDQG5HFRPPHQGDWLRQ m,Q DQ\ DFWLRQ RU SURFHHGLQJ WR HQIRUFH D SURYLVLRQ RI FRQFOXGLQJWKDW7DKIVjVFRPSODLQWHYHQUHDGOLEHUDOO\IDLOHG VHFWLRQWKHFRXUWLQLWVGLVFUHWLRQPD\DOORZ WR PDNH RXW DQ DFWLRQDEOH FODLP WKDW WKH 3URFWRUVj 332V WKHSUHYDLOLQJSDUW\RWKHUWKDQWKH8QLWHG6WDWHVDUHDVRQDEOH YLRODWHG 7DKIVjV )LUVW $PHQGPHQW ULJKWV 7KH PDJLVWUDWH DWWRUQH\jVIHHDVSDUWRIWKHFRVWVl86&E MXGJH DOVR KHOG WKDW WKH FRPSODLQWjV YDJXH XQVXSSRUWHG :HVW6XSS+RZHYHU DOOHJDWLRQVRIFRUUXSWMRLQWDFWLRQIDLOHGDGHTXDWHO\WRDOOHJH WKDW WKH 3URFWRUV ZHUH VWDWH DFWRUV 7KH PDJLVWUDWH MXGJH >D@QDZDUGRIDWWRUQH\IHHVDJDLQVWDORVLQJSODLQWLIILQD FRQFOXGHG WKDW IHHV DQG 5XOH VDQFWLRQV ZHUH FLYLOULJKWVDFWLRQLVDQH[WUHPHVDQFWLRQDQGPXVWEH mFOHDUO\ZDUUDQWHGl OLPLWHGWRWUXO\HJUHJLRXVFDVHVRIPLVFRQGXFW$ SUHYDLOLQJGHIHQGDQWVKRXOGRQO\UHFRYHUXSRQDILQGLQJ ,Q D WZRSDUDJUDSK RUGHU WKH GLVWULFW FRXUW DFFHSWHG WKH E\ WKH GLVWULFW FRXUW WKDW WKH SODLQWLIIjV DFWLRQ ZDV PDJLVWUDWHMXGJHjVUHFRPPHQGDWLRQDQGLQDVHSDUDWHRUGHU IULYRORXV XQUHDVRQDEOH RU ZLWKRXW IRXQGDWLRQ HYHQ GLUHFWHGWKHSDUWLHVWRVXEPLWSURSRVDOVIRU5XOHVDQFWLRQV WKRXJKQRWEURXJKWLQVXEMHFWLYHEDGIDLWK DQG DSSOLFDEOH DWWRUQH\ IHHV ,Q UHVSRQVH WKH 3URFWRUVj FRXQVHO UHFDOFXODWHG KLV HVWLPDWHG IHHV DQG FRVWV DQG 5LGGOH Y (JHQVSHUJHU )G WK &LU UHTXHVWHGDWRWDORI7KHGLVWULFWFRXUWWKHQLVVXHG LQWHUQDO TXRWDWLRQ PDUNV DQG FLWDWLRQV RPLWWHG m>,@W LV DQRUGHUGHQ\LQJ7DKIVjVPRWLRQWRUHFRQVLGHUWKHPDJLVWUDWH LPSRUWDQW WKDW D GLVWULFW FRXUW UHVLVW WKH XQGHUVWDQGDEOH MXGJHjV UHFRPPHQGDWLRQ DQG DZDUGHG GHIHQVH FRXQVHO WHPSWDWLRQ WR HQJDJH LQ SRVW KRF UHDVRQLQJ E\ FRQFOXGLQJ 7KHGLVWULFWFRXUWGLGQRWLQGLFDWHWKHEDVLVIRULWV WKDWEHFDXVHDSODLQWLIIGLGQRWXOWLPDWHO\SUHYDLOKLVDFWLRQ GHFLVLRQRUKRZLWDUULYHGDWWKHDZDUGDPRXQW PXVW KDYH EHHQ XQUHDVRQDEOH RU ZLWKRXW IRXQGDWLRQl &KULVWLDQVEXUJ*DUPHQW&RY((2&86 ,,$1$/ W@R GHWHUPLQH ZKHWKHU D FODLP LV IULYRORXV XQUHDVRQDEOH RU JURXQGOHVV WKH FRXUW PXVW %HIRUHSURFHHGLQJWRWKHPHULWVRIWKHSDUWLHVjDUJXPHQW GHWHUPLQHSODLQWLIIjVEDVLVIRUILOLQJWKHVXLWl5LGGOH ZH DGGUHVV D WKUHVKROG TXHVWLRQ UDLVHG E\ WKH GHIHQGDQWV )GDW FRQFHUQLQJ RXU MXULVGLFWLRQ WR SURFHHG ,Q WKHLU EULHI WKH 3URFWRUVFKDOOHQJHGZKHWKHUZHKDYHDSSHOODWHMXULVGLFWLRQ 3URSHUO\ IRFXVHG RQ RXU WDVN RI mGHWHUPLQ>LQJ WKH@ QRWLQJ WKDW 7DKIVjV EULHI KDG RPLWWHG DQ\ UHIHUHQFH WR SODLQWLIIjV EDVLV IRU ILOLQJ WKH VXLWl ZH DJDLQ WXUQ WR WKH 86&RUVRPHVLPLODUVWDWXWHZKHQGLVFXVVLQJ 7DKIVY3URFWRUHWDO 1RV 1RV 7DKIVY3URFWRUHWDO WKHEDVLVIRUDSSHOODWHMXULVGLFWLRQ,QDGGLWLRQWKH3URFWRUV VKRXOGKDYHUHDOL]HGWKDWKLVVXLWZDVXQOLNHO\WRVXUYLYHD FRQWHQGHGWKDWWKHSHQGHQF\RIWKHDWWRUQH\IHHLVVXHUHQGHUHG 5XOH E PRWLRQ DEVHQW PRUH VSHFLILF DOOHJDWLRQV RI WKH5XOHEPRWLRQDQRQILQDORUGHU7KHVHDUJXPHQWV FRUUXSWLRQ WKDWDORQHZRXOGQRWZDUUDQWWKHLPSRVLWLRQRI DUHZLWKRXWPHULW VDQFWLRQV 7KH LQYROXQWDU\ GLVPLVVDO RI DQ DFWLRQ mRSHUDWHV DV DQ $UHYLHZRIWKHILQGLQJVE\WKHPDJLVWUDWHMXGJHZKLFK DGMXGLFDWLRQXSRQWKHPHULWVl)HG5&LY3E:KHQ ZHUH DGRSWHG E\ WKH GLVWULFW FRXUW DUH LQVWUXFWLYH 7KH WKH GLVWULFW FRXUW GLVPLVVHG 7DKIVjV FRPSODLQW LW LVVXHG D PDJLVWUDWH MXGJH EHJDQ E\ H[DPLQLQJ 7DKIVjV )LUVW ILQDODSSHDODEOHRUGHU7KHSODLQWLIIjVIDLOXUHWRFLWH $PHQGPHQW DUJXPHQW :LWKRXW FLWLQJ DQ\ FDVHV KH LVRIQRMXULVGLFWLRQDOPRPHQW)XUWKHUPRUHWKH6XSUHPH GHWHUPLQHG WKDW WKH 332V DW LVVXH GLG QRW LQIULQJH DQ\ RI &RXUWKDVDGRSWHGmDXQLIRUPUXOHWKDWDQXQUHVROYHGLVVXHRI 7DKIVjVIUHHVSHHFKULJKWV1H[WKHWUHDWHG7DKIVjVFODLPV DWWRUQH\jVIHHVIRUWKHOLWLJDWLRQLQTXHVWLRQGRHVQRWSUHYHQW UHJDUGLQJFRUUXSWLRQDQGMRLQWDFWLRQLQWKH:D\QH&RXQW\ MXGJPHQWRQWKHPHULWVIURPEHLQJILQDOl%XGLQLFKY%HFWRQ &LUFXLW &RXUW DV FRQVSLUDF\ DOOHJDWLRQV 5HYLHZLQJ WKH 'LFNLQVRQ DQG &R 86 :H DUH mFRQVSLUDF\ FODLPVl DV VWDWXWRU\ YLRODWLRQV RI 86& VDWLVILHGWKDWZHKDYHDSSHOODWHMXULVGLFWLRQ DQG WKH PDJLVWUDWH MXGJH FRQFOXGHG WKDW 7DKIVjV DOOHJDWLRQV ZHUH FRQFOXVRU\ XQVXSSRUWHG E\ IDFWV $0RWLRQWR'LVPLVV DQG YDJXH %DVHG RQ WKHVH ILQGLQJV WKH PDJLVWUDWH MXGJH GHWHUPLQHGWKDWm>L@WLVFOHDUWKDW3ODLQWLIIjVFRPSODLQWZDV :HUHYLHZGHQRYRWKHGLVPLVVDORIDFRPSODLQWSXUVXDQW ODFNLQJLQIDFWXDOVXSSRUWDQGXQZDUUDQWHGE\H[LVWLQJODZl WR5XOHE3IHQQLJY+RXVHKROG&UHGLW6HUYV,QF :KLOH ZH DJUHH WKDW WKH PDJLVWUDWH MXGJHjV 5HSRUW DQG )GWK&LUm$OWKRXJKWK>H@VWDQGDUG 5HFRPPHQGDWLRQSURYLGHVDIRUFHIXODUJXPHQWIRUGLVPLVVDO IRU5XOHEGLVPLVVDOVLVTXLWHOLEHUDOlWKHFRPSODLQW RI7DKIVjVFRPSODLQWSXUVXDQWWR5XOHEIRUODFNRI PXVW FRQWDLQ mHLWKHU GLUHFW RU LQIHUHQWLDO DOOHJDWLRQV IDFWXDO VSHFLILFLW\ LW GRHV QRW IROORZ WKHUHIURP WKDW mWKH UHVSHFWLQJDOOWKHPDWHULDOHOHPHQWVlDQGWKHDOOHJDWLRQVPXVW FODLPVWKHUHLQDUH>XQ@ZDUUDQWHGE\H[LVWLQJODZlDVWKH FRQVWLWXWHmPRUHWKDQEDUHDVVHUWLRQVRIOHJDOFRQFOXVLRQVl H[SUHVVLRQLVXVHGLQ5XOHE,IWKDWZHUHVRDOPRVW 6FKHLGY)DQQ\)DUPHU&DQG\6KRSV,QF)G DQ\FRPSODLQWGLVPLVVHGXQGHU5XOHEZRXOGZDUUDQW WK &LU LQWHUQDO TXRWDWLRQ PDUNV DQG FLWDWLRQV WKH LPSRVLWLRQ RI VDQFWLRQV +DG WKH GLVWULFW FRXUW UHDG RPLWWHG 7DKIVjVFRPSODLQWLQDOLJKWPRVWIDYRUDEOHWRKHUDVLWZDV REOLJDWHGWRGRZHDUHFRQYLQFHGLWZRXOGKDYHVHHQWKDWWKH 7KHGLVWULFWFRXUWGLVPLVVHG7DKIVjVFODLPKROGLQJ ILOLQJRIDIHGHUDOFRPSODLQWZDVQRWmXQUHDVRQDEOHlXQGHUWKH WKDW WKH 3URFWRUV FRXOG QRW EH FRQVLGHUHG VWDWH DFWRUV IRU FLUFXPVWDQFHV 6HH 0DQQ )G DW 7DKIVjV SXUSRVHVm$FODLPPXVWVDWLVI\WZRHOHPHQWV FRPSODLQW ZDV GLVPLVVHG EHFDXVH LW IDLOHG WR SURYLGH WKH WKHGHSULYDWLRQRIDULJKWVHFXUHGE\WKH&RQVWLWXWLRQRU GHIHQGDQWV VXIILFLHQW QRWLFH UHJDUGLQJ WKH DFWRUV ZKR ODZVRIWKH8QLWHG6WDWHVDQGWKHGHSULYDWLRQZDVFDXVHG DOOHJHGO\ZHUHFRUUXSWDQGWKHLUDOOHJHGO\FRUUXSWDFWLRQV$ E\ D SHUVRQ DFWLQJ XQGHU FRORU RI VWDWH ODZl (OOLVRQ Y FRPSODLQWDOOHJLQJFRQVSLUDF\ZKRVHHVVHQWLDOGHILFLHQF\LV *DUEDULQR )G WK &LU LQWHUQDO WKDWLWLVODFNLQJLQVXIILFLHQWIDFWXDOGHWDLODQGVSHFLILFLW\LV TXRWDWLRQPDUNVDQGFLWDWLRQRPLWWHG$SODLQWLIIPD\QRW QRWSHUIRUFHm>XQ@ZDUUDQWHGE\H[LVWLQJODZlRUIULYRORXV SURFHHGXQGHUDJDLQVWDSULYDWHSDUW\mQRPDWWHUKRZ $FRPSODLQWGRHVQRWPHULWVDQFWLRQVXQGHU5XOHVLPSO\ GLVFULPLQDWRU\RUZURQJIXOlWKHSDUW\jVFRQGXFW$P0IUV EHFDXVHLWPHULWVGLVPLVVDOSXUVXDQWWR5XOHE:H 0XW,QV&RY 6XOOLYDQ86LQWHUQDO FRQFOXGHWKDWDWWRUQH\IHHVZHUHQRWDZDUGDEOHXQGHU5XOH TXRWDWLRQPDUNVDQGFLWDWLRQVRPLWWHG 7DKIVY3URFWRUHWDO 1RV 1RV 7DKIVY3URFWRUHWDO EDVLVWRVXSSRUWWKHFODLPVDOOHJHGLQWKHFRPSODLQW%XWWKDW 1HYHUWKHOHVVWKHUHDUHFLUFXPVWDQFHVXQGHUZKLFKSULYDWH ZDVQRWWKHFLUFXPVWDQFHFRQIURQWLQJWKHPDJLVWUDWHMXGJHRU SHUVRQV PD\ E\ WKHLU DFWLRQV EHFRPH mVWDWH DFWRUVl IRU WKHGLVWULFWFRXUWKHUH$WWKHSOHDGLQJVWDJHLQWKHOLWLJDWLRQ SXUSRVHVm3ULYDWHSHUVRQVMRLQWO\HQJDJHGZLWKVWDWH RUGLQDULO\WKHUHLVOLWWOHRUQRHYLGHQFHEHIRUHWKHFRXUWDWDOO RIILFLDOVLQ>D@SURKLELWHGDFWLRQDUHDFWLQJXQGHUFRORURIODZ DQGVXFKIDFWVDVDUHDOOHJHGPXVWEHLQWHUSUHWHGLQIDYRURI IRUSXUSRVHVRIWKHVWDWXWH7RDFWXQGHUFRORURIODZGRHVQRW WKHQRQPRYDQW:KLOHDSDUW\LVERXQGE\5XOHWRUHIUDLQ UHTXLUH WKDW WKH DFFXVHG EH DQ RIILFHU RI WKH 6WDWH ,W LV IURP ILOLQJ D FRPSODLQW mIRU DQ\ LPSURSHU SXUSRVHl IURP HQRXJKWKDWKHLVDZLOOIXOSDUWLFLSDQWLQMRLQWDFWLYLW\ZLWKWKH PDNLQJ FODLPV m>XQ@ZDUUDQWHG E\ H[LVWLQJ ODZl RU IURP 6WDWHRULWVDJHQWVl$GLFNHVY6+.UHVV &R86 PDNLQJmDOOHJDWLRQVDQGRWKHUIDFWXDOFRQWHQWLRQV>ZLWKRXW@ LQWHUQDO TXRWDWLRQ PDUNV DQG FLWDWLRQ HYLGHQWLDU\VXSSRUWlVHH)HG5&LY3EPDNLQJ RPLWWHG7KHUHIRUHDSULYDWHSDUW\FDQIDLUO\EHVDLGWREHD WKRVHGHWHUPLQDWLRQVLVGLIILFXOWZKHQWKHUHLVQRWKLQJEHIRUH VWDWHDFWRULIWKHGHSULYDWLRQFRPSODLQHGRIZDVmFDXVHG WKHFRXUWH[FHSWWKHFKDOOHQJHGFRPSODLQW:HGRQRWGLVSXWH E\WKHH[HUFLVHRIVRPHULJKWRUSULYLOHJHFUHDWHGE\WKH6WDWHl mWKDWWKHFHQWUDOSXUSRVHRI5XOHLVWRGHWHUEDVHOHVVILOLQJV DQG WKH RIIHQGLQJ SDUW\ mDFWHG WRJHWKHU ZLWK RU KDV LQGLVWULFWFRXUWl&RRWHU *HOO86DWDQGFRXUWV REWDLQHGVLJQLILFDQWDLGIURPVWDWHRIILFLDOVRUEHFDXVHKLV PXVWEHZDU\RISODLQWLIIVZKRPD\PDNHEDVHOHVVDOOHJDWLRQV FRQGXFW LV RWKHUZLVH FKDUJHDEOH WR WKH 6WDWHl /XJDU Y RIVWDWHFRUUXSWLRQLQDQHIIRUWWRVXUYLYHWKHHDUO\VWDJHVRI (GPRQGVRQ2LO&R86*HQHUDOO\mD VXLWV %XW m5XOH >@ PXVW EH UHDG LQ OLJKW RI SULYDWH SDUW\jV PHUH XVH RI WKH 6WDWHjV GLVSXWH UHVROXWLRQ FRQFHUQV WKDW LW ZLOO VSDZQ VDWHOOLWH OLWLJDWLRQ DQG FKLOO PDFKLQHU\ZLWKRXWWKHµRYHUWVLJQLILFDQWDVVLVWDQFHRIVWDWH YLJRURXVDGYRFDF\l,G5XOHmµLVQRWLQWHQGHGWRFKLOODQ RIILFLDOVjFDQQRW>EHFRQVLGHUHGVWDWHDFWLRQ@l$P0IUV DWWRUQH\jVHQWKXVLDVPRUFUHDWLYLW\LQSXUVXLQJIDFWXDORUOHJDO 86DWTXRWLQJ7XOVD3URIjO&ROOHFWLRQ6HUYV,QFY WKHRULHVjl0F*KHHY6DQLODF&RXQW\)GWK 3RSH86)LQDOO\ &LUTXRWLQJ)HG5&LY3DGYLVRU\FRPPLWWHHjV QRWH 7KLV FLUFXLW UHFRJQL]HV WKUHH WHVWV IRU GHWHUPLQLQJ ZKHWKHUSULYDWHFRQGXFWLVIDLUO\DWWULEXWDEOHWRWKHVWDWH %DVHGRQWKHXQGLVSXWHGIDFWVVHWIRUWKLQWKHSDUWLHVjEULHIV WKHSXEOLFIXQFWLRQWHVWWKHVWDWHFRPSXOVLRQWHVWDQGWKH DQG GLVFXVVHG DW RUDO DUJXPHQW LW DSSHDUV WKDW SODLQWLIIjV QH[XV WHVW 7KH SXEOLF IXQFWLRQ WHVW UHTXLUHV WKDW WKH FRXQVHOjV LQYHVWLJDWLRQ VKRZHG WKH IROORZLQJ IRU SULYDWH HQWLW\ H[HUFLVH SRZHUV ZKLFK DUH WUDGLWLRQDOO\ XQH[SODLQHG UHDVRQV 7DKIVjV KHDULQJ FRQWHVWLQJ WKH 332V H[FOXVLYHO\ UHVHUYHG WR WKH VWDWH 7KH VWDWH ZDV UHSHDWHGO\ GHOD\HG WKH ILOHV IURP WKH 332 ZHUH FRPSXOVLRQWHVWUHTXLUHVSURRIWKDWWKHVWDWHVLJQLILFDQWO\ LQDFFHVVLEOHWR7DKIVjVDWWRUQH\ZKHQKHDWWHPSWHGWRDFFHVV HQFRXUDJHGRUVRPHKRZFRHUFHGWKHSULYDWHSDUW\HLWKHU WKHPDWWKHFRXUWKRXVHDQG7DKIVUHSRUWHGWRKHUDWWRUQH\WKDW RYHUWO\RUFRYHUWO\WRWDNHDSDUWLFXODUDFWLRQVRWKDWWKH :LOOLDP 3URFWRU D ORFDO WHOHYLVLRQ QHZV UHSRUWHU KDG FKRLFHLVUHDOO\WKDWRIWKHVWDWH)LQDOO\WKHQH[XVWHVW WKUHDWHQHGWRXVHKLVmFRQQHFWLRQVlLQ:D\QH&RXQW\&LUFXLW UHTXLUHV D VXIILFLHQWO\ FORVH UHODWLRQVKLS LH WKURXJK &RXUWVWDIIPHPEHUV2QWKHEDVLVRIWKLVLQIRUPDWLRQWKH VWDWH UHJXODWLRQ RU FRQWUDFW EHWZHHQ WKH VWDWH DQG WKH FRPSODLQWZDVGUDIWHGDQGILOHGDSSDUHQWO\LQWKHEHOLHIWKDW SULYDWHDFWRUVRWKDWWKHDFWLRQWDNHQPD\EHDWWULEXWHGWR GLVFRYHU\ZRXOGERWKUHYHDOWKHLGHQWLW\RIWKHFRXUWVWDIIHUV WKHVWDWH ZLWKZKRP3URFWRUDOOHJHGO\KDGmFRQQHFWLRQVlDQGUHYHDO KRZ WKRVH mFRQQHFWLRQVl UHVXOWHG LQ MRLQW FRUUXSW DFWLRQ (OOLVRQ)GDWLQWHUQDOTXRWDWLRQPDUNVDQGLQWHUQDO 7KRVHSODQVZHUHIUXVWUDWHGE\WKHGHIHQGDQWVjWLPHO\PRWLRQ FLWDWLRQVRPLWWHG WRGLVPLVVSXUVXDQWWR5XOHE:KLOH7DKIVjVDWWRUQH\ 7DKIVY3URFWRUHWDO 1RV 1RV 7DKIVY3URFWRUHWDO $OOHJDWLRQVLQDSODLQWLIIj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m>S@ULYDWHSDUWLHVZKRFRUUXSWO\ )HG5&LY3E FRQVSLUHZLWKDMXGJHLQFRQQHFWLRQZLWKVXFKFRQGXFWDUH WKXVDFWLQJXQGHUFRORURIVWDWHODZZLWKLQWKHPHDQLQJRI 5XOHVDQFWLRQVDUHDSSURSULDWHZKHQWKHGLVWULFWFRXUW l,GDW'HQQLVDFFHSWHGWKHDOOHJDWLRQVRI GHWHUPLQHVWKDWDQDWWRUQH\jVFRQGXFWLVQRWmUHDVRQDEOHXQGHU FRUUXSWLRQ DV WUXH DQG ZDV PRUH FRQFHUQHG ZLWK WKH OHJDO WKHFLUFXPVWDQFHVl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mLPSURSHUO\DSSOLH>G@WKHODZlRI5XOH WKHFRPSODLQWDOOHJDWLRQVWKDWWKHSULYDWHSDUW\VRXJKWmWKH E DQG WKHUHIRUH DEXVHG LWV GLVFUHWLRQ ZKHQ LW VWDWHFRXUWUHVWUDLQLQJRUGHULQEDGIDLWKZLWKNQRZOHGJHWKDW JUDQWHG WKH 3URFWRUVj 5XOH PRWLRQ :H UHFRJQL]H RI DQH[SDUWHUHVWUDLQLQJRUGHUZRXOGEHXQFRQVWLWXWLRQDORU FRXUVHWKHLOORJLFRIHTXDWLQJDQHUURURIODZZLWKDEXVHRI ZLWK DQ LPSURSHU SXUSRVHl /RXLVYLOOH $UHD ,QWHU)DLWK mGLVFUHWLRQl EXW LW LV WRR ODWH LQ WKH OLIH RI 5XOH FDVH &RPP IRU 8QLWHG )DUP :RUNHUV Y 1RWWLQJKDP /LTXRUV SUHFHGHQW WR XQPDNH WKDW UXOH RI ODZ :H UHDFK RXU /WG )G WK &LU $V ZH UHFHQWO\ FRQFOXVLRQUHJDUGLQJWKH5XOHVDQFWLRQVIRUWZRUHDVRQV QRWHG D SODLQWLIIjV IDLOXUH WR DOOHJH WKDW WKH )LUVWZHEHOLHYHWKDWZKLOH7DKIVjVVWDWHDFWRUDUJXPHQWLV mGHIHQGDQWV SHWLWLRQHGWKHVWDWHFRXUWVLQEDGIDLWKRUZLWK XOWLPDWHO\XQDYDLOLQJLWZDVQRWFRPSOHWHO\XQZDUUDQWHGE\ NQRZOHGJH WKDW REWDLQLQJ DQ LQMXQFWLRQ ZRXOG EH H[LVWLQJODZQRUGLGWKHFRPSODLQWFRQWDLQIDFWXDODOOHJDWLRQV XQFRQVWLWXWLRQDOlPHULWHGGLVPLVVDORIWKHVXLWRQWKHJURXQGV XQZDUUDQWHG E\ WKH HYLGHQFH $OWKRXJK 7DKIV IDLOHG WR WKDW WKHUH LV QR VWDWH DFWLRQ *RWWIULHG Y 0HG 3ODQQLQJ LQFOXGH PRUH WKDQ EDUH FRQFOXVRU\ DVVHUWLRQV LQ KHU 6HUYV,QF)GWK&LU FRPSODLQW DQG WKXV IDLOHG WR SOHDG ZLWK WKH UHTXLVLWH VSHFLILFLW\QHFHVVDU\WRPDNHDQDFWLRQDEOHFODLPVKHGLGQRW 7DKIVjV VWDWH DFWRU DUJXPHQW LV SUHGLFDWHG RQ WZR EURDG IDLO LQ WKLV HQGHDYRU E\ D ZLGH PDUJLQ 7KLV OHDGV WR RXU FRQWHQWLRQV7KHILUVWLVEDVHGRQDOOHJDWLRQVRIFRUUXSWLRQLQ VHFRQGSRLQW$VDJHQHUDOSURSRVLWLRQDGLVWULFWFRXUWVKRXOG WKH:D\QH&RXQW\&LUFXLW&RXUW7DKIVKDVLQFOXGHGLQKHU EH KHVLWDQW WR GHWHUPLQH WKDW D SDUW\jV FRPSODLQW LV LQ FRPSODLQWDOOHJDWLRQVWKDWWKH3URFWRUVjSHWLWLRQVIRUWKH332V YLRODWLRQRI5XOHEZKHQWKHVXLWLVGLVPLVVHGSXUVXDQWWR ZHUH LQ EDG IDLWK DQG GRQH ZLWK WKH NQRZOHGJH WKDW WKH\ 5XOHEDQGWKHUHLVQRWKLQJEHIRUHWKHFRXUWVDYHWKH ZRXOG EH XQFRQVWLWXWLRQDO :KLOH 7DKIV KDV PDGH WKH EDUH DOOHJDWLRQV RI WKH FRPSODLQW 7KH VLWXDWLRQ LV YHU\ DOOHJDWLRQV RI FRUUXSWLRQ WKDW ZHUH PLVVLQJ IURP WKH GLIIHUHQW ZKHQ VDQFWLRQV DUH VRXJKW DIWHU GLVFRYHU\ LV FRPSODLQWV ILOHG LQ WKH 1RWWLQJKDP /LTXRUV DQG *RWWIULHG FRPSOHWHDQGDPRWLRQIRUVXPPDU\MXGJPHQWXQGHU)HG5 FDVHV7DKIVj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mLOOHJDOO\ FRQVLGHUWKRVHEDVHVLQRUGHU LVVXHGlDQLQMXQFWLRQSURKLELWLQJDWKLUGSDUW\IURPH[WUDFWLQJ RLO 86 DW 7KLV FDVH GLYHUJHV IURP 'HQQLV 5XOH EHFDXVHWKHUHKDVEHHQQRSUHYLRXVILQGLQJWKDWWKH0LFKLJDQ MXGJHRUDQ\PHPEHUVRIKLVVWDIIDFWHGLOOHJDOO\LQLVVXLQJ :H UHYLHZ DOO DVSHFWV RI D GLVWULFW FRXUWjV LPSRVLWLRQ RI WKH332,QGHHG7DKIVDVVXUHVXVVKHLVQRWFODLPLQJWKDWWKH VDQFWLRQVSXUVXDQWWR5XOHIRUDEXVHRIGLVFUHWLRQ&RRWHU 0LFKLJDQ VWDWH FRXUW MXGJH DFWHG LQDSSURSULDWHO\ ZKHQ KH *HOOY+DUWPDU[&RUS867URSI LVVXHGWKH332VWKH3URFWRUVUHTXHVWHG,QVWHDG7DKIVPDNHV Y)LG1DWjO7LWOH,QV&R)GWK&LU XQYHULILDEOHDOOHJDWLRQVRImFRUUXSWLRQlWKDWFHQWHURQDVHULHV $Q DEXVH RI GLVFUHWLRQ RFFXUV ZKHQ WKH GLVWULFW FRXUW KDV RIRXWFRPHVWKDWKDYHJRQHDJDLQVWKHULQFOXGLQJWKH UHOLHG RQ FOHDUO\ HUURQHRXV ILQGLQJV RI IDFW ZKHQ LW VHDOLQJRIWKHILOHVFRQQHFWHGZLWKWKH332SURFHHGLQJV LPSURSHUO\DSSOLHVWKHODZRUZKHQLWXVHVDQHUURQHRXVOHJDO WKH LVVXDQFH RI H[ SDUWH 332V DQG WKH UHSHDWHG VWDQGDUG5RPVWDGWY$OOVWDWH,QV&R)GWK DGMRXUQPHQWVRIWKH332KHDULQJV7DKIVPD\QRWVLPSO\OLVW &LUm$EXVHRIGLVFUHWLRQLVGHILQHGDVDGHILQLWHDQG DVHULHVRIVWDWHFRXUWUXOLQJVWKDWKDYHQRWJRQHDVVKHZRXOG ILUPFRQYLFWLRQWKDWWKHWULDOFRXUWFRPPLWWHGDFOHDUHUURURI KDYHOLNHGPDNHWKHFRQFOXVRU\DOOHJDWLRQWKDWWKH\DUHWKH MXGJPHQWl$PHUQDWLRQDO,QGXV,QFY$FWLRQ7XQJVUDP UHVXOWRIFRUUXSWLRQDQGH[SHFWWRVXUYLYHD5XOHE ,QF )G WK &LU LQWHUQDO TXRWDWLRQ PRWLRQ0LFKLJDQSHUPLWVFRXUWVWRVHDOFHUWDLQILOHV0&5 PDUNVDQGFLWDWLRQRPLWWHG ) DQG WR LVVXH H[ SDUWH 332V 0LFK &RPS /DZV :HILQGLWVLJQLILFDQWWKDW7DKIVGRHVQRW 5XOHVWDWHV DUJXHWKDWWKHVWDWHMXGJHjVGHFLVLRQVWRVXSSUHVVWKHILOHVRU E5HSUHVHQWDWLRQVWR&RXUW%\SUHVHQWLQJWRWKH LVVXHWKHH[SDUWH332VZHUHZURQJDVPDWWHUVRIODZ0RVW FRXUWDSOHDGLQJZULWWHQPRWLRQRURWKHUSDSHUDQ VLJQLILFDQWO\7DKIVQHYHULGHQWLILHVWKHVWDWHFRXUWDFWRUVZLWK DWWRUQH\LVFHUWLI\LQJWKDWWRWKHEHVWRIWKHSHUVRQjV ZKRP WKH 3URFWRUV DOOHJHGO\ FRQVSLUHG RWKHU WKDQ WR NQRZOHGJH LQIRUPDWLRQ DQG EHOLHI IRUPHG DIWHU DQ GHVLJQDWH WKHP DV :D\QH &RXQW\ &LUFXLW &RXUW VWDII LQTXLU\UHDVRQDEOHXQGHUWKHFLUFXPVWDQFHVn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jV VHFRQG EDVLV IRU DUJXPHQW FHQWHUV RQ D GHFLVLRQ IURP WKH )LIWK &LUFXLW KROGLQJ WKDW D SDUW\ ZKR REWDLQV DQ 7DKIVY3URFWRUHWDO 1RV 1RV 7DKIVY3URFWRUHWDO LPPHGLDWHO\HQIRUFHDEOHVWDWHFRXUWMXGJPHQWLVDVWDWHDFWRU WRWKHVWDWH(OOLVRQ)GDW+HUH7DKIVIDLOHGWR IRUSXUSRVHVRIDFODLP+HQU\Y)LUVW1DWjO%DQNRI SURYLGH DQ\ KLVWRULFDO DUJXPHQW RU DQDO\VLV m&RQVLGHULQJ &ODUNVGDOH)GWK&LU 7KHFRXUW WKDWSODLQWLIIEHDUVWKHEXUGHQRQWKLVLVVXHWKLVIDLOXUHDORQH VWDWHG UHQGHUVWKLVWHVWLQDSSOLFDEOHl,G)XUWKHUPRUHLWFDQQRWEH VDLGWKDWE\REWDLQLQJD332WKHSHWLWLRQHULVWDNLQJRYHUD 7KHFUXFLDOGLIIHUHQFHEHWZHHQDSULYDWHSDUW\ZKRKDV VWDWHUROHm0RUHWKDQPHUHDSSURYDORUDFTXLHVFHQFHLQWKH PHUHO\ ILOHG D FLYLO VXLW LQ D VWDWH IRUXP DQG WKH LQLWLDWLYHVRIWKHSULYDWHSDUW\LVQHFHVVDU\WRKROGWKHVWDWH VXFFHVVIXO OLWLJDQW ZKR SRVVHVVHV DQ LPPHGLDWHO\ UHVSRQVLEOHIRUWKRVHLQLWLDWLYHVl:RORWVN\Y+XKQ)G HQIRUFHDEOHVWDWHMXGJPHQWLVWKDWLQWKHODWWHUFDVHWKH WK &LU ,Q IDFW WKH VWDWH WKURXJK LWV IXOOSRZHUDQGDXWKRULW\RIWKHVWDWHFDQEHLQYRNHGRQ FRXUWV DQG SROLFH SRZHUV UHWDLQV WKH DXWKRULW\ DQG EHKDOIRIWKHOLWLJDQW UHVSRQVLELOLW\WRHQIRUFHWKH332 ,G HPSKDVLV DGGHG 7DKIV ILQGV WKLV FDVH VLJQLILFDQW 8QGHUWKHmVWDWHFRPSXOVLRQWHVWlLWLVFOHDUWKDW0LFKLJDQ EHFDXVHDFFRUGLQJWR0LFKLJDQODZm$SHUVRQDOSURWHFWLRQ GLGQRWHQFRXUDJHRUFRHUFHWKH3URFWRUVWRILOHIRUD332WKH RUGHULVHIIHFWLYHDQGLPPHGLDWHO\HQIRUFHDEOHDQ\ZKHUHLQ VWDWHPHUHO\PDGHLWSRVVLEOHWRREWDLQD332,Q(OOLVRQWKH WKLV VWDWH ZKHQ VLJQHG E\ D MXGJHl 0LFK &RPS /DZV VWDWH SURYLGHG D SURFHGXUH DOORZLQJ SULYDWH SK\VLFLDQV WR HPSKDVLVLQRULJLQDO:HVW6XSSVHH FRPPLWPHQWDOO\LOOSDWLHQWVWRWKHKRVSLWDODQGLWZDVKHOG WKDWWKHFRPPLWPHQWDFWLRQmFRPSOHWHO\OHDYHV>WKHGHFLVLRQ@ WR WKH SULYDWH LQGLYLGXDOjV GLVFUHWLRQl (OOLVRQ )G DW +HQU\ D QRQELQGLQJ )LIWK &LUFXLW GHFLVLRQ LV D XQLTXH $VLQ(OOLVRQKHUHWKHGHFLVLRQWRVHHND332LVHQWLUHO\ FLYLO ULJKWV FDVH LQYROYLQJ D VWDWH FRXUW LQMXQFWLRQ EDUULQJ WKHSULYDWHGHFLVLRQRIWKHSHWLWLRQHU SURWHVWRUV IURP ER\FRWWLQJ PHUFKDQWV ZKR UHIXVHG WR GHVHJUHJDWH WKHLU VKRSV )G DW $IWHU FDUHIXOO\ )LQDOO\XQGHUWKHmQH[XVWHVWl7DKIVDUJXHVWKDWEDVHGRQ VWXG\LQJ+HQU\ZHDUHVDWLVILHGWKDWLWLVWKHTXLQWHVVHQWLDO KHUDOOHJDWLRQVRIMRLQWDFWLRQDQGFRQVWUXLQJWKHFRPSODLQW KDUGIDFWVPDNHEDGODZ FDVH DQG ZH GHFOLQH WR DGRSW LWV OLEHUDOO\ LQ KHU IDYRU VKH KDV SOHG D mVXIILFLHQWO\ FORVH UHDVRQLQJRUFRQFOXVLRQ7KHPHUHIDFWWKDWWKH3URFWRUVZHUH UHODWLRQVKLSl ,G DW 0@HUHO\UHVRUWLQJWRWKHFRXUWVDQG MRLQW DFWLRQ LQ WKH :D\QH &RXQW\ &LUFXLW &RXUW ZLWKRXW EHLQJRQWKHZLQQLQJVLGHRIDODZVXLWGRHVQRWPDNHDSDUW\ GHVFULELQJDQ\FRUUXSWDFWLRQRULGHQWLI\LQJDQ\FRUUXSWDFWRU DFRFRQVSLUDWRURUDMRLQWDFWRUZLWKWKHMXGJHl'HQQLV 7DKIVjVJHQHUDOL]HGDQGFRQFOXVRU\DFFXVDWLRQVGRQRWPHHW 86DW HYHQ WKH ORZ WKUHVKROG QHFHVVDU\ WR VXUYLYH D PRWLRQ WR GLVPLVV7DKIVjVFRPSODLQWGRHVQRWVDWLVI\WKHQH[XVWHVW $SSO\LQJWKHWKUHHSDUWVWDWHDFWLRQWHVWODLGGRZQE\WKH FRXUWLQ(OOLVRQLWLVFOHDUWKDWE\REWDLQLQJD332IURPD %HFDXVH WKH SODLQWLIIjV FRPSODLQW GRHV QRW SOHDG IDFWV VWDWHFRXUWDSULYDWHOLWLJDQWGRHVQRWPDNHKLPVHOIRUKHUVHOI ZKLFKLISURYHGZRXOGVKRZWKH3URFWRUVWREHVWDWHDFWRUV DVWDWHDFWRU)LUVW7DKIVGRHVQRWPHHWWKHmSXEOLFIXQFWLRQ IRUSXUSRVHVRIWKHGLVWULFWFRXUWSURSHUO\GLVPLVVHG WHVWlZKLFKmUHTXLUHVWKDWWKHSULYDWHHQWLW\H[HUFLVHSRZHUV 7DKIVjVFRPSODLQW ZKLFK DUH WUDGLWLRQDOO\ H[FOXVLYHO\ UHVHUYHG WR WKH VWDWHl (OOLVRQ)GDW:KHQDSSO\LQJWKLVWHVWWKHFRXUW JHQHUDOO\FRQGXFWVDQKLVWRULFDODQDO\VLVWRGHWHUPLQHZKHWKHU WKHSULYDWHSDUW\KDVHQJDJHGLQDFWLRQVWUDGLWLRQDOO\UHVHUYHG