            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 DS




81,7('67$7(6&28572)$33($/6
                    )257+(6,;7+&,5&8,7
                      BBBBBBBBBBBBBBBBB


 (8*(1( 7(55$1&(DV               ;
 3HUVRQDO5HSUHVHQWDWLYHRIWKH     
 (VWDWHRI(YHUHWW/7HUUDQFH     
                                      1R
            3ODLQWLII$SSHOODQW    
                                     !
                                    
           Y                      
                                    
1257+9,//( 5(*,21$/                 
36<&+,$75,& +263,7$/HW            
DO                                
                                    
        'HIHQGDQWV$SSHOOHHV 
                                   1
       $SSHDOIURPWKH8QLWHG6WDWHV'LVWULFW&RXUW
      IRUWKH(DVWHUQ'LVWULFWRI0LFKLJDQDW'HWURLW
1R²/DZUHQFH3=DWNRII&KLHI'LVWULFW-XGJH
                     $UJXHG2FWREHU
                 'HFLGHGDQG)LOHG$SULO
   %HIRUH-21(6DQG&/$<&LUFXLW-XGJHV'2:'
                    'LVWULFW-XGJH

    
     7KLV RSLQLRQ ZDV VXEPLWWHG WR WKH FRXUW SULRU WR -XGJH 1DWKDQLHO 5
-RQHV¶ GHSDUWXUH IURP WKH FRXUW HIIHFWLYH 0DUFK  


    
        7KH +RQRUDEOH 'DYLG $ 'RZG 8QLWHG 6WDWHV 'LVWULFW -XGJH IRU WKH
1RUWKHUQ 'LVWULFW RI 2KLR VLWWLQJ E\ GHVLJQDWLRQ



                                    
     7HUUDQFHY1RUWKYLOOH5HJLRQDO               1R
      3V\FKLDWULF+RVSHWDO

                     BBBBBBBBBBBBBBBBB
                          &2816(/
$5*8('  -HUHPLDK - .HQQH\ ),(*(5 ),(*(5
6&+:$57= 	 .(11(< 6RXWKILHOG 0LFKLJDQ IRU
$SSHOODQW  0DUN 6 0HDGRZV 2)),&( 2) 7+(
$77251(<*(1(5$//DQVLQJ0LFKLJDQIRU$SSHOOHHV
21 %5,()  7DPP\ - 5HLVV ),(*(5 ),(*(5
6&+:$57= 	 .(11(< 6RXWKILHOG 0LFKLJDQ IRU
$SSHOODQW  0DUN 6 0HDGRZV 2)),&( 2) 7+(
$77251(<*(1(5$//DQVLQJ0LFKLJDQIRU$SSHOOHHV
                     BBBBBBBBBBBBBBBBB
                         23,1,21
                     BBBBBBBBBBBBBBBBB
   1$7+$1,(/5-21(6&LUFXLW-XGJH3ODLQWLII(XJHQH
7HUUDQFH ³7HUUDQFH´ IDWKHU RI (YHUHWW 7HUUDQFH ³WKH
GHFHGHQW´ DQG WKH SHUVRQDO UHSUHVHQWDWLYH RI KLV HVWDWH
DSSHDOVWKHGLVWULFWFRXUW¶VRUGHUJUDQWLQJVXPPDU\MXGJPHQW
LQ IDYRU RI GHIHQGDQWV 1RUWKYLOOH 5HJLRQDO 3V\FKLDWULF
+RVSLWDO ³153+´ WKH 6WDWH RI 0LFKLJDQ 'HSDUWPHQW RI
0HQWDO +HDOWK DQG WKH QDPHG GHIHQGDQWV LQ D  86&
 DFWLRQ FODLPLQJ GHOLEHUDWH LQGLIIHUHQFH WR PHGLFDO
QHHGVDQGODFNRIGXHSURFHVVLQYLRODWLRQRIWKHGHFHGHQW¶V
ULJKWVXQGHUWKH(LJKWKDQG)RXUWHHQWK$PHQGPHQWV7KH
GLVWULFW FRXUW KHOG WKDW QR JHQXLQH LVVXH RI PDWHULDO IDFW
H[LVWHG DV WR ZKHWKHU WKH GHIHQGDQWV ZHUH GHOLEHUDWHO\
LQGLIIHUHQWWRWKHGHFHGHQW¶VPHGLFDOQHHGV7KHFRXUWGLGQRW
DGGUHVVWKHGXHSURFHVVFODLP2QDSSHDOSODLQWLIIDUJXHV
WKDWWKHDZDUGRIVXPPDU\MXGJPHQWZDVLQHUURU)RUWKH
UHDVRQV VWDWHG EHORZ ZH $)),50 WKH GLVWULFW FRXUW DV WR
FHUWDLQ GHIHQGDQWV RQ WKH (LJKWK $PHQGPHQW FODLP EXW
5(9(56(WKHGLVWULFWFRXUW¶VJUDQWRIVXPPDU\MXGJPHQWDV
WRRWKHUGHIHQGDQWVRQWKH(LJKWK$PHQGPHQWFODLPDQGDVWR
DOO GHIHQGDQWV RQ WKH )RXUWHHQWK $PHQGPHQW FODLP DQG
5(0$1' IRU IXUWKHU SURFHHGLQJV FRQVLVWHQW ZLWK WKLV
RSLQLRQ
1R             7HUUDQFHY1RUWKYLOOH5HJLRQDO        
                               3V\FKLDWULF+RVSHWDO

                          ,)$&76
   2Q -XQH   (YHUHWW 7HUUDQFH ZDV LQYROXQWDULO\
FRPPLWWHG WR 153+ WR UHFHLYH WUHDWPHQW IRU DXGLWRU\
KDOOXFLQDWLRQVGHSUHVVLRQHUUDWLFPRRGVZLQJVDQGSDUDQRLG
GHOXVLRQV :KHQ WKH GHFHGHQW DUULYHG DW 153+ KH ZDV
KRXVHGLQDURRPORFDWHGGLUHFWO\DERYHDPDLQVWHDPOLQH
6WDUWLQJ LQ -XQH  153+ XQGHUZHQW DQ DVEHVWRV
DEDWHPHQWSURJUDPGXULQJZKLFKDVEHVWRVSLSHLQVXODWLRQZDV
UHPRYHG IURP WKH VWHDP OLQH DQG ODWHU UHSODFHG ZLWK
ILEHUJODVVLQVXODWLRQ7KHH[SRVXUHRIWKHEDUHSLSHFDXVHG
PRUHKHDWWRHPDQDWHXQWLOWKHQHZLQVXODWLRQZDVDSSOLHG
   'XULQJ KLV KRVSLWDOL]DWLRQ DW 153+ WKH GHFHGHQW ZDV
WUHDWHGE\VHYHUDOPHGLFDOSURIHVVLRQDOV6WDIISV\FKLDWULVW
'U25/HHZDVWKHGHFHGHQW¶VSULPDU\SV\FKLDWULVW'U
*RYLQGDQ6DGDVLYDQFRYHUHGWKHGHFHGHQW¶VXQLWZKLOH'U
/HHZDVRQYDFDWLRQ7KHGHFHGHQWZDVDOVRWUHDWHGE\'U
$UGHVKLU6DLGZKRZDVWKHSULPDU\LQWHUQLVWUHVSRQVLEOHIRU
RYHUVHHLQJDOORIWKHGHFHGHQW¶VPHGLFDOSUREOHPVRQDQ³DV
QHHGHG´EDVLV'U6DLGWUHDWHGDQGKDGPRUHFRQWDFWZLWKWKH
GHFHGHQWWKDQDQ\RWKHUSK\VLFLDQDW153+7KHGHFHGHQW
ZDVDOVRWUHDWHGE\SULPDU\WKHUDSLVW1XUVH6KHUOH\2ZHQV
DQG RFFXSDWLRQDO WKHUDSLVW %DUEDUD )DQQLQJ  'XULQJ WKH
GHFHGHQW¶VVWD\LQWKHIDFLOLW\'U0HKGL$OPDVLVHUYHGDV
0HGLFDO'LUHFWRUDQGDVVXFKZDVUHVSRQVLEOHIRUGUDIWLQJDOO
RI153+¶VSROLFLHVDQGSURFHGXUHV
  :KLOHDW153+WKHGHFHGHQWVXIIHUHGIURPDQXPEHURI
PHGLFDOFRQGLWLRQV+HUHFHLYHGDYDULHW\RIWUHDWPHQWVIRU
SV\FKRORJLFDO LOOQHVV LQFOXGLQJ WKH DGPLQLVWUDWLRQ RI
SV\FKRWURSLF PHGLFDWLRQV VXFK DV +DOGRO &RJHQWLQ DQG
/LWKLXP  7KHVH PHGLFDWLRQV FDQ FDXVH K\SHUWKHUPLD
GHK\GUDWLRQKHDWH[KDXVWLRQDQGKHDWVWURNH7KHGHFHGHQW
DOVR VXIIHUHG IURP SUHH[LVWLQJ KHDUW FRQGLWLRQV LQFOXGLQJ
K\SHUWHQVLRQDQGGLDEHWHV2Q-XQH1XUVH2ZHQV
GHYHORSHGD³&RPSUHKHQVLYH1XUVLQJ$VVHVVPHQW´IRUWKH
GHFHGHQW LQ ZKLFK VKH FRQFOXGHG WKDW KH KDG SUREOHPV
IROORZLQJGLUHFWLRQVDQGWKXVUHTXLUHGVWDIIVXSHUYLVLRQLQRII
       7HUUDQFHY1RUWKYLOOH5HJLRQDO                    1R        1R            7HUUDQFHY1RUWKYLOOH5HJLRQDO      
        3V\FKLDWULF+RVSHWDO                                                                           3V\FKLDWULF+RVSHWDO

ZDUGDFWLYLWLHV%HFDXVHRIWKHGHFHGHQW¶VFRQGLWLRQVDQGKLV                   In the instant case, the decedent was involuntarily
LQDELOLW\ WR IROORZ GLUHFWLRQV KH ZDV NHSW XQGHU VWDII               committed. The lower court should have considered the
VXSHUYLVLRQGXULQJRIIZDUGDFWLYLWLHV                                       defendants’ duty to provide reasonable safety for the decedent
                                                                              under a heightened Fourteenth Amendment standard. Under
   2Q-XQHDWWKHGLUHFWLRQRIWKHPHGLFDOVWDIIWKH               this legal standard, there clearly was a genuine issue of
GHFHGHQWEHJDQSDUWLFLSDWLQJLQFHQWUDOL]HGDFWLYLWLHV³&$7´                material fact with regard to some of the defendants which
LQWKHPRUQLQJVDQGZRUNWKHUDS\LQWKHDIWHUQRRQV2Q-XO\                  could lead a rational fact finder to find in Terrance’s favor:
  WKH GHFHGHQW ZDQGHUHG RII IURP &$7 EXW ZDV                 whether the actions and inactions of the named defendants
DSSUHKHQGHG E\ VHFXULW\ DQG UHWXUQHG WR WKH ZDUG VHYHUDO             were based upon accepted professional judgment. The facts
KRXUVODWHU7KHGHFHGHQWZDVWKHQSODFHGRQ³HVFDSHDOHUW´                 in this case could likely support a finding that one or more
'U6DGDVLYDQGLVFRQWLQXHGWKHHVFDSHDOHUWRQ-XO\DIWHU                  defendants committed a substantial departure from accepted
WKHGHFHGHQWWROGWKHGRFWRUWKDWKHGLGQRWIHHOOLNHHVFDSLQJ              professional judgment. Thus, the district court’s grant of
2ISDUWLFXODUQRWHKHUHLVWKDWDFFRUGLQJWRKRVSLWDOUHFRUGV               summary judgment in defendants’ favor was erroneous.
WKH RQO\ DLU FRQGLWLRQLQJ XQLW ZLWKLQ WKH ZDUG ZDV QRW               Accordingly, we find that is necessary upon remand for the
ZRUNLQJRQ-XO\DQGZDVQRWUHSDLUHGXQWLORQHZHHNODWHU                 district court to conduct a trial on plaintiff’s claims against
                                                                              each named defendant under the Fourteenth Amendment
   2Q-XO\WKHGHFHGHQWWROG1XUVH2ZHQVWKDWKHZDQWHG                   standard as outlined in this opinion as the lower court has not
WRUHWXUQWRWKH&$7SURJUDP1XUVH2ZHQVGHWHUPLQHGWKDW                    yet considered the decedent’s due process rights under this
WKH GHFHGHQW VKRXOG QRW OHDYH WKH ZDUG XQWLO -XO\   2Q          standard.
-XO\  WKH GHFHGHQW FRPSODLQHG RI IHHOLQJ ZHDN
&RQVHTXHQWO\ 'U 6DLG RUGHUHG WHVWV WR EH UXQ RQ WKH                                   ,,,&21&/86,21
GHFHGHQW  7KH WHVWV VKRZHG QR VLJQV RI K\SHUJO\FHPLD
'HVSLWH 1XUVH 2ZHQV¶V RUGHU WKH GHFHGHQW SDUWLFLSDWHG LQ                )RU WKH IRUHJRLQJ UHDVRQV ZH $)),50 WKH JUDQW RI
RXWGRRUDFWLYLW\IRUIRXUKRXUVRQWKHDIWHUQRRQRI-XO\                  VXPPDU\MXGJPHQWDVWRGHIHQGDQWV'U3DQ 'U1DLU6U
7KH QH[W GD\ WKH GHFHGHQW ZDV ³UHWXUQHG WR WKH ZDUG                 .LP'U$OPDVL0V)DQQLQJWKH0LFKLJDQ'HSDUWPHQWRI
FRPSODLQLQJRIFKHVWSDLQ´7KHGHFHGHQW¶VEORRGSUHVVXUH                    +HDOWK DQG 153+ RQ WKH (LJKWK $PHQGPHQW FODLP EXW
ZDV HOHYDWHG DQG KLV (.* ZDV LQWHUSUHWHG DV DEQRUPDO                 5(9(56(WKHGLVWULFWFRXUW¶VGHFLVLRQDVWRGHIHQGDQWV'U
'HVSLWHWKHVHUHVXOWV'U6DLG¶VPHGLFDOSODQIRUWKHGHFHGHQW               6DLG'U/HH'U6DGDVLYDQDQG1XUVH2ZHQVRQWKH(LJKWK
LQGLFDWHGWKDWQRDFWLRQQHHGHG'U6DLGODWHUQRWHGWKDWWKH               $PHQGPHQWFODLPDQGDVWRDOOGHIHQGDQWVRQWKH)RXUWHHQWK
GHFHGHQW¶VGLDEHWHVZDVXQFRQWUROOHGEXW'U6DLGWRRNQR                    $PHQGPHQW FODLP DQG 5(0$1' WKLV FDVH IRU IXUWKHU
PHDVXUHVWRFRQWUROWKHGHFHGHQW¶VJOXFRVHOHYHODWWKDWWLPH                SURFHHGLQJVFRQVLVWHQWZLWKWKLVRSLQLRQ

    
     ³(VFDSH DOHUW´ LV D KRVSLWDO SURWRFRO FDOOLQJ IRU LQWHQVH VXSHUYLVLRQ
SURKLELWLQJ RIIZDUG DFWLYLW\ DQG UHTXLULQJ REVHUYDWLRQV RI WKH SDWLHQW¶V
ZKHUHDERXWV HYHU\  PLQXWHV

    
     ³+\SHUJO\FHPLD´ LV WKH SK\VLFDO FRQGLWLRQ RI KDYLQJ DQ DEQRUPDOO\
KLJK FRQFHQWUDWLRQ RI JOXFRVH EORRG VXJDU LQ WKH FLUFXODWLQJ EORRG
67('0$1 6 (',&$/ ,&7,21$5<
         ¶ 0         '             WK HG 
       7HUUDQFHY1RUWKYLOOH5HJLRQDO                1R        1R             7HUUDQFHY1RUWKYLOOH5HJLRQDO         
         3V\FKLDWULF+RVSHWDO                                                                        3V\FKLDWULF+RVSHWDO

KDV FRQVLGHUDEOH GLVFUHWLRQ LQ GHWHUPLQLQJ WKH QDWXUH DQG             $FFRUGLQJWRKRVSLWDOUHFRUGVEHWZHHQ-XO\DQG-XO\
VFRSHRILWVUHVSRQVLELOLWLHVLWLVDOVRFKDUJHGZLWKDGKHULQJ            WKHGHFHGHQWGUDQNDORWRIZDWHUZDVFRQIXVHGDQGEHFDPH
WR SURIHVVLRQDO QRUPV RI FRQGXFW ,G DW                DJLWDWHGWRWKHSRLQWRIEHLQJQRQUHVSRQVLYH7KHGHFHGHQW
0RUHRYHU ZKHUH KRVSLWDO VWDII DGPLWWHGO\ IDLO WR IROORZ            ZDV DOVR REVHUYHG WDONLQJ WR KLPVHOI DQG UHVSRQGLQJ WR
LQVWLWXWLRQDO SROLFLHV DQG SURFHGXUHV TXHVWLRQV DERXW WKH           YRLFHV2Q-XO\'U/HHLQFUHDVHGWKHGHFHGHQW¶VGRVDJH
6WDWH¶V DGKHUHQFH WR DFFHSWHG SURIHVVLRQDO FRQGXFW DUH QRW          RI +DOGRO  2Q -XO\  WKH VWDII REVHUYHG WKH GHFHGHQW
XQZDUUDQWHG                                                               GULQNLQJH[FHVVLYHDPRXQWVRIZDWHUDQGZDVWKHUHIRUHNHSW
                                                                           XQGHUFORVHREVHUYDWLRQEHFDXVHWKHVWDIIVXVSHFWHGWKDWWKH
   7KHGHFHGHQW¶VSHUVRQDOVDIHW\ZDVHQWUXVWHGWR153+DQG                GHFHGHQWZDVGHK\GUDWHG
LWVVWDII<HWWKHGHFHGHQWPHWKLVGHPLVHZKLOHFRPPLWWHG
WR153++HUHQXPHURXVTXHVWLRQVDERXWWKHGHFHGHQW¶V                      7ZR GD\V ODWHU 'U /HH RUGHUHG DQ DGGLWLRQDO GDLO\
VDIHW\ DQG 153+ VWDII¶V DFWLRQV DERXQG  )LUVW ZRXOG D           LQMHFWLRQRI+DOGROWKXVLQFUHDVLQJDJDLQWKHGHFHGHQW¶VWRWDO
UHDVRQDEOHPHGLFDOSURIHVVLRQDOLQWKLVVLWXDWLRQKDYHDOORZHG             GDLO\GRVDJHRIWKHGUXJ$WWKLVWLPH'U/HHLVVXHGDSODQ
DPHQWDOKHDOWKSDWLHQWNQRZQWRKDYHKHLJKWHQHGsensitivity               WRREVHUYHWKHGHFHGHQWIRUULVNRIGHK\GUDWLRQ
to heat stroke be placed in a location with the potential for
high temperatures? Additionally, would a reasonable medical                   2Q-XO\WKHGHFHGHQWFRPSODLQHGWR1XUVH2ZHQVWKDW
professional have allowed such a patient to wander off on an               KLVPHGLFLQHZDVFDXVLQJKLPWRVZHDWSURIXVHO\DQGVXIIHU
extremely hot day when the patient was ordered to stay                     VWLIIQHVV  7KH GHFHGHQW ZDV JLYHQ &RJHQWLQ WR FRXQWHUDFW
indoors? Finally, would a reasonable medical professional                  VWLIIQHVVDQGKDQGWUHPRUVZKLFKDUHVLGHHIIHFWVRI+DOGRO
take an hour to respond to a medical emergency involving a                 5HJDUGLQJWKHSLSHUHSDLUVRQWKHVDPHGD\WKHPDLQWHQDQFH
patient known to have numerous serious medical conditions                  SHUVRQQHOZHUHLQVWDOOLQJLQVXODWLRQWRWKHHOERZVRIWKHEDUH
without any explanation for the delay?                                     VWHDP SLSHV GLUHFWO\ EHORZ WKH GHFHGHQW¶V URRP FDXVLQJ
                                                                           DGGLWLRQDOKHDWWRHPDQDWHIURPWKHSLSHVLQWRWKHZDUGDERYH
  These factual issues have not been clarified in this case
because the district court failed to consider this case under the             2Q-XO\1XUVH2ZHQVUHFRUGHGQRIXUWKHUFRPSODLQWVRI
Fourteenth Amendment standard.:HGHFOLQHWRPDNHVXFK                   UHDFWLRQVE\WKHGHFHGHQWDQGDOVRQRWHGWKHGHFHGHQWEHJDQ
IDFWXDOGHWHUPLQDWLRQVDVWKLVLVZHOOEH\RQGWKHUHDOPRIWKLV            WRSDUWLFLSDWHLQDFWLYLWLHVZLWKVWDIILQFOXGLQJRFFDVLRQDOYDQ
FRXUW¶VDXWKRULW\+RZHYHUZHEHOLHYHWKDWLWLVHVVHQWLDOWKDW          ULGHVZLWK0V)DQQLQJ2Q-XO\1XUVH2ZHQVQRWHGKHU
VXFK IDFWXDO GHWHUPLQDWLRQV DUH PDGH LQ DFFRUG ZLWK                 LQWHQWLRQ WR UHIHU WKH GHFHGHQW EDFN WR &$7 DQG LQWR WKH
DSSURSULDWHOHJDOVWDQGDUGV                                               FHQWUDOL]HGWKHUDS\SURJUDP³&73´WKHIROORZLQJZHHN
                                                                             2Q -XO\  WKH WHPSHUDWXUH RXWVLGH ZDV  GHJUHHV
                                                                           )DKUHQKHLW DQG WKH KXPLGLW\ OHYHO ZDV DERYH  SHUFHQW
     
      &RXQW  RI WKH DSSHOODQW¶V 6HFRQG $PHQGHG &RPSODLQW DW          153+¶VWHPSHUDWXUHFKDUWZKLFKZDVGLVWULEXWHGWRKRVSLWDO
GHVFULEHG WKH FRQGXFW RI WKH LQGLYLGXDO GHIHQGDQWV DV DPRXQWLQJ WR D       HPSOR\HHVGXULQJWKHVXPPHUPRQWKVLQGLFDWHGWKDWWKHVH
GHOLEHUDWH LQGLIIHUHQFH WR SODLQWLII¶V GHFHGHQW¶V VHULRXV PHGLFDO QHHGV   FRQGLWLRQVSURGXFHGDKHDWLQGH[RIGHJUHHV$FFRUGLQJ
0RUHRYHU WKH 6HFRQG $PHQGHG &RPSODLQW DOOHJHG QHLWKHU DQ (LJKWK QRU
D )RXUWHHQWK $PHQGPHQW FODLP          +RZHYHU LQ UHVSRQGLQJ WR WKH
                                                                           WR153+DGYLVRU\JXLGHOLQHVWKHGHFHGHQWZDVWKHW\SHRI
GHIHQGDQWV¶ PRWLRQ IRU VXPPDU\ MXGJPHQW WKH SODLQWLII GLG LQIHUHQWLDOO\
                                                                           SDWLHQW ZKR VKRXOG KDYH EHHQ LQ D FRRO URRP  DQG QRW
DGYDQFH WKH )RXUWHHQWK $PHQGPHQW FODLP E\ FLWLQJ <RXQJEHU Y 5RPHR        SHUPLWWHGWRJRRXWGRRUVRUWRHQJDJHLQVWUHQXRXVDFWLYLW\
 86  
       7HUUDQFHY1RUWKYLOOH5HJLRQDO              1R       1R              7HUUDQFHY1RUWKYLOOH5HJLRQDO         
        3V\FKLDWULF+RVSHWDO                                                                      3V\FKLDWULF+RVSHWDO

   $W  DP RQ WKH PRUQLQJ RI -XO\  WKH GHFHGHQW      OLEHUWLHV´ WKDW FDQ EH OLPLWHG RQO\ E\ DQ ³RYHUULGLQJ QRQ
FRPSODLQHGRIGU\PRXWK1HYHUWKHOHVVVRPHWKUHHKRXUV               SXQLWLYH´VWDWHLQWHUHVW,GDWIRRWQRWHRPLWWHG7KH
ODWHU 'U /HH GHWHUPLQHG WKDW WKH GHFHGHQW VKRXOG UHVXPH      6XSUHPH&RXUWYDFDWHGWKH7KLUG&LUFXLW¶VGHFLVLRQEHFDXVH
SDUWLFLSDWLRQLQPRUH RXWGRRUDFWLYLWLHV$WDSSUR[LPDWHO\           LWFRQFOXGHGWKDWWKHMXU\ZDVHUURQHRXVO\LQVWUXFWHGRQWKH
DP'U6DLGVDZWKHGHFHGHQWDQGUHDOL]HGWKDWWKH            DSSURSULDWHVWDQGDUGRIOLDELOLW\<RXQJEHUJ86DW
GHFHGHQWKDGQRWUHFHLYHGKLVEORRGSUHVVXUHPHGLFDWLRQRYHU           7KH&RXUWVWDWHGWKDWWKHDSSURSULDWHTXHVWLRQIRUWKHMXU\ZDV
WKHZHHNHQGEHFDXVHWKHQXUVHVDSSDUHQWO\IRUJRWWRUHPLQG             QRW VLPSO\ ZKHWKHU WKH GHFHGHQW¶V OLEHUW\ LQWHUHVW ZDV
'U 6DLG WR UHQHZ WKH RUGHU  $IWHU WZR HOHYDWHG EORRG       LQIULQJHG,G DW   5DWKHU WKH ORZHU FRXUW VKRXOG KDYH
SUHVVXUHUHDGLQJVZHUHREWDLQHGIURPWKHGHFHGHQW'U6DLG            FKDUJHGWKHMXU\WRGHWHUPLQHZKHWKHUWKHODFNRIDEVROXWH
GRXEOHGWKHGHFHGHQW¶VPHGLFDWLRQWRFRPSHQVDWHIRUWKHGD\V           VDIHW\YLRODWHGWKHGHFHGHQW¶VVXEVWDQWLYHGXHSURFHVVULJKWV
WKDW WKH GHFHGHQW KDG JRQH ZLWKRXW EORRG SUHVVXUH               ,G
PHGLFDWLRQ+RZHYHU'U6DLG¶VRUGHUIRUWKLVGRVDJHZDV
QHYHUFDUULHGRXW                                                        ,QRUGHUWRGHWHUPLQH³ZKHWKHUDVXEVWDQWLYHULJKWSURWHFWHG
                                                                       E\WKH'XH3URFHVV&ODXVHKDVEHHQYLRODWHGLWLVQHFHVVDU\
   2QWKDWVDPHGD\QRRQHDW153+NQHZRIWKHGHFHGHQW¶V             WREDODQFHµWKHOLEHUW\RIWKHLQGLYLGXDO¶DQGµWKHGHPDQGVRI
ZKHUHDERXWVIURPWKHWLPHKHZDVVHHQZLWK'U6DLGLQWKH             DQRUJDQL]HGVRFLHW\¶´,GFLWLQJ3RHY8OOPDQ86
PRUQLQJ XQWLO DERXW  SP WKDW DIWHUQRRQ ZKHQ WKH         6&W/(GG+DUODQ-
GHFHGHQWZDVVHHQVWDJJHULQJLQWKHKDOOZD\QHDUWKHQXUVLQJ           GLVVHQWLQJ  ,Q RUGHU WR DVFHUWDLQ ZKHWKHU D VWDWH KDV
VWDWLRQ'U/HHDQG0V)DQQLQJDVVLVWHGWKHGHFHGHQWLQWR           DGHTXDWHO\SURWHFWHGWKHULJKWVRIDQLQYROXQWDULO\FRPPLWWHG
D WUHDWPHQW URRP DQG REVHUYHG WKDW WKH GHFHGHQW ZDV            PHQWDO SDWLHQW ³WKH &RQVWLWXWLRQ RQO\ UHTXLUHV WKDW FRXUWV
VZHDWLQJKRWWRWKHWRXFKDQGFRPSODLQLQJWKDWKHGLGQRW            PDNH FHUWDLQ WKDW SURIHVVLRQDO MXGJPHQW LQ IDFW ZDV
IHHO ZHOO 'U /HH WKRXJKW WKDW WKH GHFHGHQW ZDV VXIIHULQJ    H[HUFLVHG´ <RXQJEHUJ  86 DW  ,Q PDNLQJ VXFK
IURPKHDWVWURNHDQGQHHGHGLPPHGLDWHWUHDWPHQWEXWKDGWR            GHWHUPLQDWLRQV GHFLVLRQV PDGH E\ WKH DSSURSULDWH
FRQVXOWZLWK'U6DLGEHIRUHSUHVFULELQJWUHDWPHQW                    SURIHVVLRQDO DUH HQWLWOHG WR D SUHVXPSWLRQ RI FRUUHFWQHVV
                                                                       XQOHVVLWLVHVWDEOLVKHGWKDWWKHSHUVRQUHVSRQVLEOHGLGQRWEDVH
  'U/HHLQVWUXFWHG1XUVH2ZHQVWRSDJH'U6DLG³67$7´             WKHGHFLVLRQRQDFFHSWHGSURIHVVLRQDOMXGJPHQW,GDW
$WDSSUR[LPDWHO\SP1XUVH2ZHQVSDJHG'U6DLG                7KURXJKRXW WKLV DQDO\VLV FRXUWV PXVW DFNQRZOHGJH WKDW D
DQGH[SODLQHGWKDWWKHGHFHGHQWZDVVZHDW\FRQIXVHGKDGD            KHLJKWHQHG GHJUHH RI SURWHFWLRQ PXVW EH DIIRUGHG WR WKH
WHPSHUDWXUHRIGHJUHHVDQGZDVUHVWOHVVWRWKHSRLQWRI         LQYROXQWDULO\FRPPLWWHG6HHLGDW
EHLQJXQFRRSHUDWLYH1XUVH2ZHQVDOVRLQIRUPHG'U6DLG
WKDW WKH GHFHGHQW KDG EHHQ RXWVLGH  'U 6DLG WROG 1XUVH        $SSOLFDWLRQRI)RXUWHHQWK$PHQGPHQWVWDQGDUGWR
2ZHQVWKDWKHZDVRQKLVZD\WRWKHZDUGZKHUHWKHGHFHGHQW                 GHIHQGDQWV
ZDVORFDWHG
                                                                         +HUHDVLQ<RXQJEHUJWKHUHVSHFWLYHGXHSURFHVVLQWHUHVWV
                                                                       RIWKHGHFHGHQWDQG153+VKRXOGKDYHEHHQEDODQFHG:KLOH
                                                                       153+KDVDQLQWHUHVWLQUXQQLQJDQDGPLQLVWUDWLYHO\HIILFLHQW
                                                                       LQVWLWXWLRQVXFKDQLQWHUHVWVKRXOGQRWEHDOORZHGWRWUXPS
                                                                      WKHFRQVWLWXWLRQDOULJKWVRIWKHLQYROXQWDULO\FRPPLWWHGZKR
     ³67$7´ LV D FRPPRQ PHGLFDO DEEUHYLDWLRQ ZKLFK LV XVHG WR LPSO\
XUJHQW RU UXVK ,W LV GHULYHG IURP D /DWLQ ZRUG VWDWLP ZKLFK PHDQV     DUHLQVWLWXWLRQDOL]HGIRUWKHLURZQVDIHW\$OWKRXJKWKH6WDWH
LPPHGLDWHO\ 6 7('0$1 6 (',&$/ ,&7,21$5<
                        ¶ 0        '            UG HG 
    7HUUDQFHY1RUWKYLOOH5HJLRQDO                1R       1R             7HUUDQFHY1RUWKYLOOH5HJLRQDO         
      3V\FKLDWULF+RVSHWDO                                                                       3V\FKLDWULF+RVSHWDO

KHLJKWHQHG SURWHFWLRQ DIIRUGHG WR WKH GHFHGHQW XQGHU WKH          $WWKLVWLPHWKHGHFHGHQW¶VEORRGSUHVVXUHZDVHOHYDWHG
)RXUWHHQWK $PHQGPHQW  6SHFLILFDOO\ LQ LWV DQDO\VLV WKH       DQGKLVPHQWDOVWDWHZDVGHWHULRUDWLQJTXLFNO\'U/HHDQG
ORZHU FRXUW GLG QRW FRQVLGHU WKH GHFHGHQW¶V KHLJKWHQHG          1XUVH2ZHQVZDLWHGDSSUR[LPDWHO\RQHKRXUEHIRUHFDOOLQJ
FRQVWLWXWLRQDOSURWHFWLRQXQGHU<RXQJEHUJ                           DPHGLFDOHPHUJHQF\DWSP'U6DLGDUULYHGDW
                                                                       SP'UV5HJLQD3DQ5DPDFKDQGUDQ1DLUDQG.LMRRQ.LP
   7KH PHUH IDFW WKDW WKH GHFHGHQW ZDV LQYROXQWDULO\            UHVSRQGHGWRWKHHPHUJHQF\FDOOVRRQWKHUHDIWHUEXWGLGQRW
FRPPLWWHGXQGHUSURSHUSURFHGXUHVGRHVQRWGHSULYHKLPRI              SURYLGHDQ\GLUHFWFDUHWRWKHGHFHGHQWEHFDXVH'UV6DLGDQG
DOO VXEVWDQWLYH OLEHUW\ LQWHUHVWV XQGHU WKH )RXUWHHQWK           $OPDVLKDGDOUHDG\EHJXQWUHDWLQJWKHGHFHGHQW
$PHQGPHQW6HH9LWHNY-RQHV866&W
  / (G G   ³WKH VWLJPDWL]LQJ                  8SRQKLVDUULYDO'U6DLGWROGWKHGRFWRUVWRUHPRYHWKH
FRQVHTXHQFHVRIDWUDQVIHUWRDPHQWDOKRVSLWDOIRULQYROXQWDU\        GHFHGHQW¶V FORWKLQJ :KLOH WKH GRFWRUV ZHUH UHPRYLQJ KLV
SV\FKLDWULF WUHDWPHQW FRXSOHG ZLWK WKH VXEMHFWLRQ RI WKH       FORWKLQJWKHGHFHGHQWORVWFRQVFLRXVQHVV'U/HHLQVHUWHGDQ
SULVRQHUWRPDQGDWRU\EHKDYLRUPRGLILFDWLRQDVDWUHDWPHQW             ,9DQGSODFHGZHWWRZHOVRYHUWKHGHFHGHQW¶VERG\'U/HH
IRU PHQWDO LOOQHVV FRQVWLWXWH WKH  NLQG RI GHSULYDWLRQV RI   ZDQWHGWRDGPLQLVWHUDQLFHZDWHUHQHPDEXWWKHUHZDVQR
OLEHUW\ WKDW UHTXLUHV SURFHGXUDO SURWHFWLRQV´  7KH OLEHUW\    HQHPD HTXLSPHQW RU LFH ZDWHU RQ WKH ZDUG  'U /HH DOVR
LQWHUHVWWKDWRQHUHWDLQVLVQRWKRZHYHUDEVROXWH<RXQJEHUJ       UHTXHVWHG D UHFWDO WKHUPRPHWHU EXW WKHUH ZDV QR UHFWDO
86DW                                                    WKHUPRPHWHUDYDLODEOHRQWKHZDUG,QDGGLWLRQ'DQWUROHQH
                                                                       D GUXJ XVHG WR WUHDW K\SHUWKHUPLD LQGXFHG E\ SV\FKRWURSLF
   7KLVLVVXHKHUHLVJRYHUQHGODUJHO\E\<RXQJEHUJEHFDXVH            PHGLFDWLRQVZDVDOVRUHTXHVWHGE\'U/HHEXWWKHGUXJZDV
WKH IDFWV LQ WKLV FDVH DUH VLPLODU LQ NH\ UHVSHFWV WR WKH   QRWDYDLODEOHZLWKLQWKHKRVSLWDO
<RXQJEHUJFDVH/LNHWKHGHFHGHQWKHUHWKHUHVSRQGHQWLQ
<RXQJEHUJZDVLQYROXQWDULO\FRPPLWWHGWRDPHQWDOKHDOWK                 $WSP(PHUJHQF\0HGLFDO6HUYLFHV³(06´ZDV
IDFLOLW\³WR>REWDLQ@UHDVRQDEOHFDUHDQGVDIHW\FRQGLWLRQVQRW       FDOOHGE\RQHRIWKHGRFWRUVZKRZDVWUHDWLQJWKHGHFHGHQW
DYDLODEOHWRKLPRXWVLGHRIDQLQVWLWXWLRQ´,GDWQ        (06 DUULYHG DW  SP DQG EHJDQ UHVXVFLWDWLRQ HIIRUWV
7KH UHVSRQGHQW EURXJKW D VXEVWDQWLYH GXH SURFHVV FODLP          ZKLFKZHUHXQVXFFHVVIXO(06WKHQWUDQVIHUUHGWKHGHFHGHQW
DJDLQVWWKHLQVWLWXWLRQDOOHJLQJWKDWKLVFRQVWLWXWLRQDOULJKWWR     WR 6W 0DU\¶V +RVSLWDO ZKHUH UHVXVFLWDWLRQ PHDVXUHV
VDIH FRQGLWLRQV RI FRQILQHPHQW KDG EHHQ YLRODWHG  7KH         FRQWLQXHG7KHGHFHGHQWGLHGDWDSSUR[LPDWHO\SP7KH
GLVWULFWFRXUWKHOGWKDWWKH(LJKWK$PHQGPHQWZDVWKHSURSHU           RIILFLDOFDXVHRIGHDWKZDVOLVWHGDVDFXWHFDUGLRSXOPRQDU\
VWDQGDUG IRU GHWHUPLQLQJ WKH ULJKWV RI WKH LQYROXQWDULO\        DUUHVW DQG  K\SHUWKHUPLD H[DFHUEDWHG E\ +DOGRO DQG
FRPPLWWHG,G DW   7KH 7KLUG &LUFXLW VLWWLQJ HQ EDQF   %HQ]RWURSLQH
UHYHUVHGDQGUHPDQGHGIRUDQHZWULDO5RPHRY<RXQJEHUJ
)GG&LUHQEDQFYDFDWHG86            2Q -XQH   7HUUDQFH WKH GHFHGHQW¶V IDWKHU DQG
. 7KHHQEDQFFRXUWGHWHUPLQHGWKDWWKH)RXUWHHQWK           SHUVRQDOUHSUHVHQWDWLYHRIWKHGHFHGHQW¶VHVWDWHILOHGVXLWLQ
$PHQGPHQW DQG WKH OLEHUW\ LQWHUHVW SURWHFWHG E\ WKDW            WKH:D\QH&RXQW\0LFKLJDQ&LUFXLW&RXUWDOOHJLQJPHGLFDO
$PHQGPHQWSURYLGHWKHSURSHUFRQVWLWXWLRQDOEDVLVIRUWKRVH            PDOSUDFWLFH QHJOLJHQFH JURVV QHJOLJHQFH DQG ZDQWRQ
ULJKWV,GDW,QDSSO\LQJWKH)RXUWHHQWK$PHQGPHQWWKH          PLVFRQGXFWDJDLQVWDOOGHIHQGDQWV³&RXQW,´DQGQHJOLJHQFH
FRXUW IRXQG WKDW WKH LQYROXQWDULO\ FRPPLWWHG UHWDLQ OLEHUW\     DQGJURVVQHJOLJHQFHDJDLQVWGHIHQGDQWV153+DQGWKH6WDWH
LQWHUHVWVLQIUHHGRPRIPRYHPHQWDQGLQSHUVRQDOVHFXULW\             RI0LFKLJDQ'HSDUWPHQWRI0HQWDO+HDOWK³&RXQW,,´2Q
,G7KHFRXUWFRQFOXGHGWKDWWKHVHULJKWVDUH³IXQGDPHQWDO            6HSWHPEHUSODLQWLIIDPHQGHGKLV&RPSODLQWLQWKH
       7HUUDQFHY1RUWKYLOOH5HJLRQDO                1R       1R              7HUUDQFHY1RUWKYLOOH5HJLRQDO        
        3V\FKLDWULF+RVSHWDO                                                                        3V\FKLDWULF+RVSHWDO

:D\QH&RXQW\VXLWWRLQFOXGHDYLRODWLRQRIWKHGHFHGHQW¶V                 MXGJPHQWSUDFWLFHRUVWDQGDUGVDVWRGHPRQVWUDWHWKDWWKH
FLYLOULJKWVXQGHU86&FODLPLQJYLRODWLRQVRIWKH            SHUVRQUHVSRQVLEOHDFWXDOO\GLGQRWEDVHWKHGHFLVLRQRQ
GHFHGHQW¶V(LJKWKDQG)RXUWHHQWK$PHQGPHQWULJKWVRQWKH                   VXFKDMXGJPHQW
JURXQGVWKDWWKHGHIHQGDQWVDFWHGZLWKGHOLEHUDWHLQGLIIHUHQFH
WR WKH GHFHGHQW¶V VHULRXV PHGLFDO QHHGV DQG YLRODWHG WKH              «
GHFHGHQW¶VULJKWWRGXHSURFHVV³&RXQW,,,´
                                                                           >)XUWKHUPRUHXQGHUWKH)RXUWHHQWK$PHQGPHQW@>W@KH
  2Q6HSWHPEHUGHIHQGDQWVUHPRYHGWKHDFWLRQWR                  VWDWH DOVR KDV WKH XQTXHVWLRQHG GXW\ WR SURYLGH
WKH 8QLWHG 6WDWHV 'LVWULFW &RXUW IRU WKH (DVWHUQ 'LVWULFW RI     UHDVRQDEOHVDIHW\IRUDOOUHVLGHQWVDQGSHUVRQQHOZLWKLQ
0LFKLJDQ   7KH GLVWULFW FRXUW QRWHG WKDW LW KDG RULJLQDO         WKHLQVWLWXWLRQ
MXULVGLFWLRQRYHU&RXQW,,,DQGVXSSOHPHQWDOMXULVGLFWLRQRYHU
WKH VWDWH ODZ FODLPV LQ &RXQWV , DQG ,,  -$ DW       ,GDW
+RZHYHUWKHGLVWULFWFRXUWIRXQGWKDW³WKHFRQWHPSRUDQHRXV
SUHVHQWDWLRQRISODLQWLII¶VSDUDOOHOVWDWHODZFODLPVIRUUHOLHI            ,QWKHSUHVHQWFDVH7HUUDQFHDVVHUWVWKDWHDFKLQGLYLGXDOO\
>ZLWKWKHIHGHUDOFLYLOULJKWVFODLPZRXOG@UHVXOWLQWKHXQGXH          QDPHG GHIHQGDQW FRPPLWWHG D VXEVWDQWLDO GHSDUWXUH IURP
FRQIXVLRQRIWKHMXU\´,G7KHGLVWULFWFRXUWWKXVUHPDQGHG           DFFHSWHG SURIHVVLRQDO WUHDWPHQW  )RU H[DPSOH 7HUUDQFH
&RXQWV , DQG ,, WR WKH :D\QH &RXQW\ &LUFXLW &RXUW EXW         DUJXHVWKDW'U6DLGGLGQRWUHVSRQGWRWKHGHFHGHQW¶VPHGLFDO
UHWDLQHGMXULVGLFWLRQRYHU&RXQW,,,,G                               HPHUJHQF\LQDWLPHO\IDVKLRQDQGWKXVVXEVWDQWLDOO\GHSDUWHG
                                                                         IURPDFFHSWHGSURIHVVLRQDOWUHDWPHQW7HUUDQFHFODLPVWKDW
   2Q $SULO   GHIHQGDQWV PRYHG IRU VXPPDU\                 'U /HH VXEVWDQWLDOO\ GHSDUWHG IURP DFFHSWHG SURIHVVLRQDO
MXGJPHQWDOOHJLQJWKDWWKHUHZDVQRJHQXLQHLVVXHRIPDWHULDO           WUHDWPHQWEHFDXVHVKHLQFUHDVHGWKH GHFHGHQW¶VPHGLFDWLRQ
IDFW WR EH GHFLGHG DQG DUJXLQJ WKDW SODLQWLII¶V FDVH GLG QRW   GHVSLWHWKHGHFHGHQW¶VGHK\GUDWLRQDOORZHGWKHGHFHGHQWWR
GHPRQVWUDWH D FRQVWLWXWLRQDO YLRODWLRQ  ,Q WKH DOWHUQDWLYH      SDUWLFLSDWHLQRXWGRRUDFWLYLWLHVDQGIDLOHGWRVHHNDOWHUQDWH
GHIHQGDQWVDVVHUWHGWKHGHIHQVHRITXDOLILHGLPPXQLW\7KH              DVVLVWDQFH LQ OLJKW RI 'U 6DLG¶V GHOD\HG UHVSRQVH WR WKH
GLVWULFWFRXUWDQDO\]HGGHIHQGDQWV¶DFWLRQVXQGHUDKHLJKWHQHG           GHFHGHQW¶V PHGLFDO HPHUJHQF\  7HUUDQFH DOVR FODLPV WKDW
VWDQGDUG IRU GHOLEHUDWH LQGLIIHUHQFH  7KH FRXUW IRXQG WKDW      1XUVH 2ZHQV PDGH D VXEVWDQWLDO GHSDUWXUH IURP DFFHSWHG
GHIHQGDQWVGLGQRWNQRZRIQRUGLVUHJDUGDQH[FHVVLYHULVNWR            SURIHVVLRQDOWUHDWPHQWEHFDXVHVKHGLGQRWHTXLS:DUG&ZLWK
WKHGHFHGHQW¶VKHDOWKDQGVDIHW\&RQVHTXHQWO\RQWKH(LJKWK           LFHHQHPDHTXLSPHQWDQGDUHFWDOWKHUPRPHWHUDQGIDLOHGWR
$PHQGPHQWFODLPWKHFRXUWKHOGWKDWWKHQDPHGGHIHQGDQWV                VHHN DOWHUQDWH DVVLVWDQFH LQ OLJKW RI 'U 6DLG¶V XQWLPHO\
GLGQRWDFWGHOLEHUDWHO\LQGLIIHUHQWLQVXSHUYLVLQJDQGWUHDWLQJ         UHVSRQVH WR WKH GHFHGHQW¶V PHGLFDO HPHUJHQF\  )LQDOO\
WKH GHFHGHQW DQG ZHUH WKHUHIRUH HQWLWOHG WR TXDOLILHG            7HUUDQFHDUJXHVWKDW'U$OPDVLPDGHDVXEVWDQWLDOGHSDUWXUH
LPPXQLW\  0RUHRYHU WKH FRXUW KHOG WKDW 153+ DQG WKH           EHFDXVHKHGLGQRWLQVWLWXWHSROLFLHVDQGSURFHGXUHVWRSUHYHQW
0LFKLJDQ 'HSDUWPHQW RI 0HQWDO +HDOWK FRXOG QRW EH KHOG           WKHGHFHGHQW¶VGHDWK
OLDEOH XQGHU WKH GRFWULQH RI UHVSRQGHDW VXSHULRU
$FFRUGLQJO\WKHGLVWULFWFRXUWJUDQWHGGHIHQGDQWV¶PRWLRQ                 7KHGLVWULFWFRXUWKHOGWKDWGHIHQGDQWV¶LQGLYLGXDODFWLRQV
                                                                         GLG QRW FRQVWLWXWH YLRODWLRQV RI WKH GHFHGHQW¶V GXH SURFHVV
                                                                         ULJKWV 7KH ORZHU FRXUW UHDVRQHG WKDW 7HUUDQFH IDLOHG WR
                                                                         GHPRQVWUDWH WKDW GHIHQGDQWV WUHDWHG WKH GHFHGHQW
                                                                        LQDSSURSULDWHO\RUGLGOHVVWKDQWKHLUWUDLQLQJLQGLFDWHGZDV
     'HIHQGDQW 'U + %ODQGD ZDV GLVPLVVHG IURP WKH DFWLRQ SULRU WR
UHPRYDO DQG LV QR ORQJHU LQYROYHG LQ WKLV GLVSXWH                       QHFHVVDU\+RZHYHUWKHGLVWULFWFRXUWIDLOHGWRFRQVLGHUWKH
      7HUUDQFHY1RUWKYLOOH5HJLRQDO            1R      1R               7HUUDQFHY1RUWKYLOOH5HJLRQDO            
        3V\FKLDWULF+RVSHWDO                                                                    3V\FKLDWULF+RVSHWDO

HUURQHRXV$FFRUGLQJO\ZHUHPDQGZLWKLQVWUXFWLRQVWRVHQG        7KH FRXUW GLG QRW DGGUHVV WKH )RXUWHHQWK $PHQGPHQW GXH
WKHSODLQWLII¶VFODLPVDJDLQVW'U6DLG'U/HH'U6DGDVLYDQ     SURFHVV FODLP  7HUUDQFH QRZ DSSHDOV WKH GLVWULFW FRXUW¶V
DQG1XUVH2ZHQVWRWULDOWRGHWHUPLQHZKHWKHUDQ\RIWKHVH          RUGHU
GHIHQGDQWV KDG D GHOLEHUDWH LQGLIIHUHQFH WR WKH GHFHGHQW¶V
VHULRXV PHGLFDO QHHGV XQGHU WKH ³JURVVO\ LQDGHTXDWH FDUH´                            ,,',6&866,21
VWDQGDUG
                                                                    $ 6XPPDU\-XGJPHQW
  $FFRUGLQJO\XQGHUWKHIDFWVRIWKLVFDVHZHILQGWKDWWKH
FRQGXFW RI 'U 3DQ 'U 1DLU 'U .LP 'U $OPDVL 0V       7KLVFRXUWUHYLHZVDQRUGHUJUDQWLQJVXPPDU\MXGJPHQWGH
)DQQLQJ WKH 0LFKLJDQ 'HSDUWPHQW RI 0HQWDO +HDOWK DQG       QRYR7HUU\%DUU6DOHV$JHQF\,QFY$OO/RFN&R)G
153+GRHVQRWVXSSRUWDILQGLQJRIGHOLEHUDWHLQGLIIHUHQFH         WK&LU6XPPDU\MXGJPHQWLVDSSURSULDWH
$FFRUGLQJO\ZHDIILUPWKHGLVWULFWFRXUW¶VRUGHURIVXPPDU\        ³LIWKHSOHDGLQJVGHSRVLWLRQVDQVZHUVWRLQWHUURJDWRULHVDQG
MXGJPHQW LQ IDYRU RI WKHVH GHIHQGDQWV RQ WKH (LJKWK         DGPLVVLRQVRQILOHWRJHWKHUZLWKWKHDIILGDYLWVLIDQ\VKRZ
$PHQGPHQWFODLP                                                    WKDWWKHUHLVQRJHQXLQHLVVXHDVWRDQ\PDWHULDOIDFWDQGWKDW
                                                                    WKHPRYLQJSDUW\LVHQWLWOHGWRMXGJPHQWDVDPDWWHURIODZ´
' )RXUWHHQWK$PHQGPHQW                                             )(' 5 &,9 3F7HUU\%DUU)GDW1RJHQXLQH
                                                                    LVVXHIRUWULDOH[LVWVZKHQ³WKHUHFRUGWDNHQDVDZKROHFRXOG
     'XHSURFHVVYLRODWLRQ                                        QRW OHDG D UDWLRQDO WULHU RI IDFW WR ILQG IRU WKH QRQPRYLQJ
                                                                    SDUW\´0DWVXVKLWD(OHF,QGXV&RY=HQLWK5DGLR&RUS
   7KH 'XH 3URFHVV &ODXVH RI WKH )RXUWHHQWK $PHQGPHQW        866&W/(GG
DIIRUGVLQFDUFHUDWHGLQGLYLGXDOVWKHULJKWWRDGHTXDWHIRRG        0RUHRYHU WKLV FRXUW PXVW UHYLHZ WKH UHFRUG DQG DQ\
VKHOWHUFORWKLQJDQGPHGLFDOFDUH<RXQJEHUJY5RPHR         LQIHUHQFHVGHULYHGWKHUHIURPLQWKHOLJKWPRVWIDYRUDEOHWR
866&W/(GG7KH         WKH QRQPRYLQJ SDUW\ ,G  $FFRUGLQJO\ ³ZKHQ WKH QRQ
LQYROXQWDULO\ FRPPLWWHG KDYH JUHDWHU ULJKWV UHJDUGLQJ          PRYLQJSDUW\SUHVHQWVGLUHFWHYLGHQFHUHIXWLQJWKHPRYLQJ
FRQILQHPHQWXQGHUWKH)RXUWHHQWK$PHQGPHQWWKDQFULPLQDOV           SDUW\¶VPRWLRQIRUVXPPDU\MXGJPHQWWKHFRXUWPXVWDFFHSW
DUH GXH XQGHU WKH (LJKWK $PHQGPHQW ³3HUVRQV ZKR KDYH       WKHHYLGHQFHDVWUXH´$GDPVY0HWLYD)GWK
EHHQLQYROXQWDULO\FRPPLWWHGDUHHQWLWOHGWRPRUHFRQVLGHUDWH       &LU
WUHDWPHQWLQFRQGLWLRQVRIFRQILQHPHQWWKDQFULPLQDOVZKRVH
FRQGLWLRQVRIFRQILQHPHQWDUHGHVLJQHGWRSXQLVK´,GDW      %3ODLQWLII¶VFODLPVRQDSSHDO
6XFKSHUVRQVKDYHDFODLPWRVDIHFRQGLWLRQVLQDVPXFKDV
WKH6XSUHPH&RXUWKDVVWDWHGWKDW³>L@ILWLVFUXHODQGXQXVXDO        7HUUDQFH DSSHDOV WKH GLVWULFW FRXUW¶V RUGHU DZDUGLQJ
SXQLVKPHQWWRKROGFRQYLFWHGFULPLQDOVLQXQVDIHFRQGLWLRQV        VXPPDU\MXGJPHQWLQIDYRURIGHIHQGDQWVLQWKLV86&
LW PXVW EH XQFRQVWLWXWLRQDO WR FRQILQH WKH LQYROXQWDULO\       DFWLRQ  +H DVVHUWV WKDW GHIHQGDQWV YLRODWHG WKH
FRPPLWWHG  ZKR PD\ QRW EH SXQLVKHG DW DOO  LQ XQVDIH   GHFHGHQW¶V(LJKWK$PHQGPHQWULJKWWRPHGLFDOFDUHEHFDXVH
FRQGLWLRQV´,GDW7KH&RXUWKHOGWKDWDQLQGLYLGXDO       GHIHQGDQWV DFWHG ZLWK GHOLEHUDWH LQGLIIHUHQFH LQ WKHLU
PD\LPSRVHFLYLOOLDELOLW\DJDLQVWSURIHVVLRQDOVYLRODWLQJVXFK     WUHDWPHQW DQG FDUH RI WKH GHFHGHQW WKDW OHG GLUHFWO\ WR KLV
ULJKWV                                                             GHDWK6SHFLILFDOO\7HUUDQFHDUJXHVWKDWGHIHQGDQWV¶FRQGXFW
                                                                    UHIOHFWHG VXEVWDQWLDO GHSDUWXUH IURP DFFHSWHG SURIHVVLRQDO
     ZKHQ WKH GHFLVLRQ E\ WKH SURIHVVLRQDO LV VXFK D        WUHDWPHQW DQG GLG QRW UHVSRQG WR WKH GHFHGHQW¶V PHGLFDO
     VXEVWDQWLDO GHSDUWXUH IURP DFFHSWHG SURIHVVLRQDO           HPHUJHQF\LQDWLPHO\IDVKLRQ$GGLWLRQDOO\KHDVVHUWVWKDW
    7HUUDQFHY1RUWKYLOOH5HJLRQDO                 1R       1R               7HUUDQFHY1RUWKYLOOH5HJLRQDO          
      3V\FKLDWULF+RVSHWDO                                                                          3V\FKLDWULF+RVSHWDO

WKHGHFHGHQW¶V)RXUWHHQWK$PHQGPHQWULJKWWRGXHSURFHVV                  +0LFKLJDQ'HSDUWPHQWRI0HQWDO+HDOWKDQG153+
ZDVYLRODWHGEHFDXVHWKHGHIHQGDQWVYLRODWHGWKHGHFHGHQW¶V
ULJKW WR EH WUHDWHG LQ D IDFLOLW\ ZLWK VDIH FRQGLWLRQV           )LQDOO\WKH0LFKLJDQ'HSDUWPHQWRI0HQWDO+HDOWK¶VUROH
0RUHRYHU7HUUDQFHFRQWHQGVWKDWWKHGHFHGHQWVKRXOGKDYH               DVRSHUDWRURI153+DQG153+¶VUROHDVKHDOWKFDUHSURYLGHU
EHHQ DIIRUGHG PRUH FRQVLGHUDWH WUHDWPHQW EHFDXVH KH ZDV          GRHV QRW VXEMHFW HLWKHU WR OLDELOLW\ XQGHU WKH GRFWULQH RI
LQYROXQWDULO\FRPPLWWHGWRWKHGHIHQGDQWIDFLOLW\                      UHVSRQGHDW VXSHULRU LQ WKH DEVHQFH RI VRPH HYLGHQFH RI D
                                                                        SROLF\ RU FXVWRP WKDW ZRXOG VXEMHFW WKHVH HPSOR\HUV WR
  8QGHU86&VWDWHDFWRUVDUHSURKLELWHGIURP                OLDELOLW\ XQGHU WKH IDFWV RI WKH FDVH QRZ EHIRUH XV
YLRODWLQJWKHFLYLOULJKWVRIRWKHUV6HFWLRQSURYLGHV           0RQHOOY'HSWRI6RFLDO6HUY866&W
                                                                        /(GG8QGHUWKHVHIDFWVWKHUHLVQR
  (YHU\SHUVRQZKRXQGHUFRORURIDQ\VWDWXWHRUGLQDQFH              PDWHULDOLVVXHRIIDFWDVWRZKHWKHUHLWKHURIWKHVHGHIHQGDQWV
  UHJXODWLRQFXVWRPRUXVDJHRIDQ\6WDWHRU7HUULWRU\RU            KDGVXFKDSROLF\DQGZHUHWKHUHIRUHGHOLEHUDWHO\LQGLIIHUHQW
  WKH 'LVWULFW RI &ROXPELD VXEMHFWV RU FDXVHV WR EH           WRWKHGHFHGHQW¶VVHULRXVPHGLFDOQHHGV
  VXEMHFWHGDQ\FLWL]HQRIWKH8QLWHG6WDWHVRURWKHUSHUVRQ
  ZLWKLQWKHMXULVGLFWLRQWKHUHRIWRWKHGHSULYDWLRQRIDQ\               ,QOLJKWRIWKHIRUHJRLQJSODLQWLIIKDVSUHVHQWHGVXIILFLHQW
  ULJKWV SULYLOHJHV RU LPPXQLWLHV VHFXUHG E\ WKH                HYLGHQFHWRHVWDEOLVKDTXHVWLRQRIIDFWUHJDUGLQJZKHWKHURQH
  &RQVWLWXWLRQDQGODZVVKDOOEHOLDEOHWRWKHSDUW\LQMXUHG           RU PRUH GHIHQGDQWV ZHUH GHOLEHUDWHO\ LQGLIIHUHQW WR WKH
  LQ DQ DFWLRQ DW ODZ VXLW LQ HTXLW\ RU RWKHU SURSHU        GHFHGHQW¶VVHULRXVPHGLFDOQHHGV7KHGLVWULFWFRXUWDQDO\]HG
  SURFHHGLQJIRUUHGUHVVH[FHSWWKDWLQDQ\DFWLRQEURXJKW             WKLVFDVHXQGHUDKLJKHUWKDQZDUUDQWHGVWDQGDUGIRUGHOLEHUDWH
  DJDLQVWDMXGLFLDORIILFHUIRUDQDFWRURPLVVLRQWDNHQLQ            LQGLIIHUHQFH7KHGLVWULFWFRXUWFRQFOXGHGWKDWWKHLQGLYLGXDO
  VXFKRIILFHU
VMXGLFLDOFDSDFLW\LQMXQFWLYHUHOLHIVKDOOQRW         GHIHQGDQWVGLGUHVSRQGWRWKHGHFHGHQW¶VPHGLFDOQHHGVDQG
  EHJUDQWHGXQOHVVDGHFODUDWRU\GHFUHHZDVYLRODWHGRU                WKDWDOWKRXJKHDFKGHIHQGDQW¶VLQGLYLGXDOUHVSRQVHPD\QRW
  GHFODUDWRU\UHOLHIZDVXQDYDLODEOH                                   KDYHEHHQLPPHGLDWHWKHGLVWULFWFRXUWIRXQGWKDWSODLQWLII
                                                                        IDLOHG WR DGYDQFH IDFWV WR VXSSRUW D VKRZLQJ RI GHOLEHUDWH
 86&    7KLV FRXUW KDV FRQVLVWHQWO\ KHOG WKDW      LQGLIIHUHQFH7KHGLVWULFWFRXUWGHWHUPLQHGWKDWGHIHQGDQWV¶
GDPDJHFODLPVDJDLQVWJRYHUQPHQWDORIILFLDOVDOOHJHGWRDULVH           UHVSRQVHVDQGDWWHPSWVWRWUHDWWKHGHFHGHQWIRUHFORVHGWKH
IURP YLRODWLRQV RI FRQVWLWXWLRQDO ULJKWV FDQQRW EH IRXQGHG       SRVVLELOLW\RIGHOLEHUDWHLQGLIIHUHQFHRQGHIHQGDQWV¶SDUW
XSRQ FRQFOXVRU\ YDJXH RU JHQHUDO DOOHJDWLRQV EXW PXVW
LQVWHDGDOOHJHIDFWVWKDWVKRZWKHH[LVWHQFHRIWKHDVVHUWHG              7KH GLVWULFW FRXUW¶V DQDO\VLV LJQRUHV WKH ORZHU ³JURVVO\
FRQVWLWXWLRQDO ULJKWV YLRODWLRQ UHFLWHG LQ WKH FRPSODLQW DQG     LQDGHTXDWHFDUH´VWDQGDUGIRUILQGLQJGHOLEHUDWHLQGLIIHUHQFH
ZKDWHDFKGHIHQGDQWGLGWRYLRODWHWKHDVVHUWHGULJKW6HH            WRVHULRXVPHGLFDOQHHGV-$DW8QGHUWKLVVWDQGDUG
HJ&KDSPDQY&LW\RI'HWURLW)GWK&LU           LW LV SUREDEOH WKDW D MXU\ FRXOG FRQFOXGH WKDW UHDVRQDEOH
7KLVFRXUWKDVDGRSWHGWKHUHTXLUHPHQWWKDWDSODLQWLII         PHGLFDOSURIHVVLRQDOVLQ'U6DLG'U/HH'U6DGDVLYDQDQG
DOOHJH³ZLWKSDUWLFXODULW\´DOOPDWHULDOIDFWVWREHUHOLHGXSRQ        1XUVH2ZHQV¶SRVLWLRQVZRXOGKDYHFRQFOXGHGWKDWWKHUHZDV
ZKHQ DVVHUWLQJ WKDW D JRYHUQPHQWDO RIILFLDO KDV YLRODWHG D      D VXEVWDQWLDO ULVN WR WKH GHFHGHQW¶V VDIHW\ DQG WKDW WKHVH
FRQVWLWXWLRQDO ULJKW  (OOLRWW Y 3HUH]  )G     GHIHQGDQWVH[KLELWHGDGHOLEHUDWHLQGLIIHUHQFHLQWUHDWLQJDQG
WK&LUVHHDOVR'RPLQLTXHY7HOE)G              FDULQJIRUWKHGHFHGHQWZKLFKGLUHFWO\OHGWRKLVGHDWK7KXV
WK&LU                                                    WKHGLVWULFWFRXUW¶VJUDQWRIVXPPDU\MXGJPHQWLQIDYRURI'U
                                                                        6DLG 'U /HH 'U 6DGDVLYDQ DQG 1XUVH 2ZHQV ZDV
    7HUUDQFHY1RUWKYLOOH5HJLRQDO                   1R       1R               7HUUDQFHY1RUWKYLOOH5HJLRQDO          
      3V\FKLDWULF+RVSHWDO                                                                            3V\FKLDWULF+RVSHWDO

2ZHQV¶SRVLWLRQZRXOGKDYHFRQFOXGHGWKDWDVXEVWDQWLDOULVN                7KHNH\LVVXHLQWKLVFDVHLVZKHWKHUVXPPDU\MXGJPHQW
RIVHULRXVKDUPWRWKHGHFHGHQWH[LVWHG                                  ZDV DSSURSULDWH   )LUVW ZH FRQVLGHU ZKHWKHU GHIHQGDQWV¶
                                                                          DFWLYH DQG SDVVLYH WUHDWPHQW RI WKH GHFHGHQW YLRODWHG KLV
  (7KH(06WHDP                                                        ULJKWVUHJDUGLQJPHGLFDOFDUHXQGHUWKH(LJKWK$PHQGPHQW
                                                                          $GGLWLRQDOO\ EHFDXVH WKH GHFHGHQW ZDV LQYROXQWDULO\
   ,QFRQWUDVWWRWKHDERYHGHIHQGDQWVSODLQWLIIKDVIDLOHGWR           FRPPLWWHGWR153+IRUSV\FKLDWULFFDUHDQGWUHDWPHQWZH
DOOHJH³ZLWKSDUWLFXODULW\´VXIILFLHQWPDWHULDOIDFWVWRVXSSRUW          PXVW FRQVLGHU WKH VXEVWDQWLYH GXH SURFHVV ULJKWV RI
D ILQGLQJ WKDW 'U 3DQ 'U 1DLU RU 'U .LP DFWHG ZLWK         LQYROXQWDULO\ FRPPLWWHG SHUVRQV XQGHU WKH )RXUWHHQWK
GHOLEHUDWHLQGLIIHUHQFHXQGHUWKH³JURVVO\LQDGHTXDWHFDUH´               $PHQGPHQW:HILQGWKDWDMXU\FRXOGUHDVRQDEO\FRQFOXGH
VWDQGDUG  'U 3DQ 'U 1DLU DQG 'U .LP GLG QRW SURYLGH       WKDWRQHRUPRUHRIWKHGHIHQGDQWVYLRODWHGWKH GHFHGHQW¶V
GLUHFW WUHDWPHQW WR WKH GHFHGHQW EHFDXVH 'U 6DLG DQG 'U        FRQVWLWXWLRQDO ULJKWV LQ WKLV FDVH DQG WKHUHIRUH VXPPDU\
$OPDVLKDGDOUHDG\EHJXQWUHDWLQJWKH GHFHGHQWEHIRUHWKH                MXGJPHQWLQIDYRURIDOOGHIHQGDQWVZDVLQDSSURSULDWH
HPHUJHQF\WUHDWPHQWWHDPDUULYHG(DFKRIWKHVHGHIHQGDQWV¶
LQYROYHPHQWZLWKWKHGHFHGHQWGRHVQRWVXSSRUWDILQGLQJRI               & (LJKWK$PHQGPHQW
GHOLEHUDWHLQGLIIHUHQFHWRZDUGVWKHGHFHGHQW,QWKHSUHVHQW
FDVHWKHUHLVQRPDWHULDOLVVXHRIIDFWDVWRZKHWKHUDQ\RI                'HOLEHUDWH,QGLIIHUHQFH6WDQGDUG
WKHVH GHIHQGDQWV ZHUH GHOLEHUDWHO\ LQGLIIHUHQW WR WKH
GHFHGHQW¶VVHULRXVPHGLFDOQHHGV                                           7KH(LJKWK$PHQGPHQWWRWKH&RQVWLWXWLRQSURKLELWVWKH
                                                                          LQIOLFWLRQ RI FUXHO DQG XQXVXDO SXQLVKPHQW 86 &2167
  )'U$OPDVL                                                          DPHQG9,,,7KH³FUXHODQGXQXVXDOSXQLVKPHQW´SURYLVLRQ
                                                                          LVLQYRNHGKHUHDVLWDSSOLHVWRSULVRQHUV$VWKHGHFHGHQWZDV
  6LPLODUO\SODLQWLIIKDVIDLOHGWRDOOHJHVXIILFLHQWPDWHULDO           LQYROXQWDULO\FRPPLWWHGWR153+IRUSV\FKLDWULFWUHDWPHQW
IDFWV WR VXSSRUWDILQGLQJWKDW'U$OPDVLZDVGHOLEHUDWHO\             KH ZDV  VLPLODUO\ VLWXDWHG WR D SULVRQHU ZLWK UHJDUG WR WKH
LQGLIIHUHQWWRWKHGHFHGHQW¶VVHULRXVPHGLFDOQHHGVXQGHUWKH             (LJKWK$PHQGPHQWULJKWWRPHGLFDOFDUH7KLVFRXUWKDVKHOG
³JURVVO\ LQDGHTXDWH FDUH´ VWDQGDUG  :LWKRXW PRUH 'U             WKDWWKHOHJDOVWDQGDUGIRUDVVHUWLQJDQ(LJKWK$PHQGPHQW
$OPDVL¶V UROH DV PHGLFDO GLUHFWRU DQG GUDIWHU RI 153+¶V           FODLP UHJDUGLQJ PHGLFDO FDUH IRU SULVRQHUV LV ³GHOLEHUDWH
SROLFLHVLVLQVXIILFLHQWWRVXEMHFWKLPWRLQGLYLGXDOOLDELOLW\           LQGLIIHUHQFH´:LOOLDPVY0HKUD)GWK&LU
XQGHUWKHIDFWVRIWKLVFDVH7KHUHLVQRPDWHULDOLVVXHRIIDFW         HQEDQF
DVWRZKHWKHU'U$OPDVLZDVGOLEHUDWHO\LQGLIIHUHQWWRWKH
GHFHGHQW¶VVHULRXVPHGLFDOQHHGV                                          ,WLVZHOOVHWWOHGWKDWWKH³GHOLEHUDWHLQGLIIHUHQFHWRVHULRXV
                                                                          PHGLFDOQHHGVRISULVRQHUVFRQVWLWXWHVWKHµXQQHFHVVDU\DQG
  *0V)DQQLQJ                                                         ZDQWRQ LQIOLFWLRQ RI SDLQ¶   SURVFULEHG E\ WKH (LJKWK
                                                                          $PHQGPHQW´(VWHOOHY*DPEOH866&W
  /LNH'U$OPDVL0V)DQQLQJ¶VDFWLRQVLQKHUFDSDFLW\DV              /(GGTXRWLQJ*UHJJY*HRUJLD
WKHGHFHGHQW¶VRFFXSDWLRQDOWKHUDSLVWYLHZHGLQDOLJKWPRVW             86    6 &W   / (G G  
IDYRUDEOH WR WKH SODLQWLII OLNHZLVH GRHV QRW VXEMHFW KHU WR     +RZHYHU QRW ³HYHU\ FODLP E\ D SULVRQHU WKDW KH KDV QRW
LQGLYLGXDO OLDELOLW\  :H ILQG WKDW QR PDWHULDO LVVXH RI IDFW   UHFHLYHGDGHTXDWHPHGLFDOWUHDWPHQWVWDWHVDYLRODWLRQRIWKH
H[LVWVDVWRZKHWKHU0V)DQQLQJZDVGHOLEHUDWHO\LQGLIIHUHQW             (LJKWK$PHQGPHQW´(VWHOOH86DW³>$@FRPSODLQW
WRWKHGHFHGHQW¶VVHULRXVPHGLFDOQHHGV                               WKDWDSK\VLFLDQKDVEHHQQHJOLJHQWLQGLDJQRVLQJRUWUHDWLQJ
    7HUUDQFHY1RUWKYLOOH5HJLRQDO                  1R       1R             7HUUDQFHY1RUWKYLOOH5HJLRQDO       
      3V\FKLDWULF+RVSHWDO                                                                         3V\FKLDWULF+RVSHWDO

DPHGLFDOFRQGLWLRQGRHVQRWVWDWHDYDOLGFODLPRIPHGLFDO              PHGLFDO QHHGV DV D MXU\ FRXOG SRVVLEO\ GHFLGH WKDW D
PLVWUHDWPHQW XQGHU WKH (LJKWK $PHQGPHQW 0HGLFDO                    UHDVRQDEOHGRFWRULQ'U6DGDVLYDQ¶VSRVLWLRQZRXOGKDYH
PDOSUDFWLFHGRHVQRWEHFRPHDFRQVWLWXWLRQDOYLRODWLRQPHUHO\            FRQFOXGHG WKDW D VXEVWDQWLDO ULVN RI VHULRXV KDUP WR WKH
EHFDXVHWKHYLFWLPLVDSULVRQHU´,GDW³,QRUGHUWRVWDWH       GHFHGHQWH[LVWHG
DFRJQL]DEOHFODLPDSULVRQHUPXVWDOOHJHDFWVRURPLVVLRQV
VXIILFLHQWO\ KDUPIXO WR HYLGHQFH GHOLEHUDWH LQGLIIHUHQFH WR          '1XUVH2ZHQV
VHULRXVPHGLFDOQHHGV,WLVRQO\VXFKLQGLIIHUHQFHWKDWFDQ
RIIHQG µHYROYLQJ VWDQGDUGV RI GHFHQF\¶ LQ YLRODWLRQ RI WKH          7KHUHLVDOVRDQH[LVWLQJLVVXHRIIDFWUHJDUGLQJZKHWKHU
(LJKWK$PHQGPHQW´,GHPSKDVLVDGGHG                                 1XUVH 2ZHQV¶ DFWLRQV WRZDUGV WKH GHFHGHQW FRQVWLWXWH D
                                                                         ILQGLQJRIGHOLEHUDWHLQGLIIHUHQFHZKHQDQDO\]HGXQGHUWKH
  ,Q(VWHOOHWKH6XSUHPH&RXUWHVWDEOLVKHGWKH³GHOLEHUDWH              ³JURVVO\ LQDGHTXDWH FDUH´  /LNH WKH DIRUHPHQWLRQHG
LQGLIIHUHQFH´ VWDQGDUG  7KH &RXUW IXUWKHU FODULILHG WKH          GHIHQGDQWV1XUVH2ZHQVZDVDOVRDZDUHRIWKHQXPHURXV
PHDQLQJRIWKDWWHUPLQ)DUPHUY%UHQQDQ86                 KHDOWKULVNVFRQIURQWLQJWKHGHFHGHQWLQFOXGLQJKLVREHVLW\
 6 &W   / (G G   D GHFLVLRQ         GLDEHWHVK\SHUWHQVLRQDQGLQFUHDVHGULVNRIKHDWVWURNH6KH
UHJDUGLQJ SULVRQ RIILFLDOV¶ GXW\ WR SURWHFW LQPDWHV IURP          DOVRNQHZWKDWWKHGHFHGHQWQHHGHGVXSHUYLVLRQZKHQKHOHIW
YLROHQFHDWWKHKDQGVRIRWKHULQPDWHV,Q)DUPHUWKH&RXUW            WKH ZDUG  0RUHRYHU 1XUVH 2ZHQV ZDV DOVR DZDUH RI WKH
KHOGWKDW³DSULVRQRIILFLDOFDQQRWEHIRXQGOLDEOHXQGHUWKH            H[WUHPHKHDWDQGKXPLGLW\RQWKHGD\RIWKHGHFHGHQW¶VGHDWK
(LJKWK$PHQGPHQWIRUGHQ\LQJDQLQPDWHKXPDQHFRQGLWLRQV                 'HVSLWH KHU NQRZOHGJH RI WKLV LQIRUPDWLRQ 1XUVH 2ZHQV
RIFRQILQHPHQWXQOHVVWKHRIILFLDONQRZVRIDQGGLVUHJDUGVDQ            UHIHUUHG WKH GHFHGHQW WR RIIZDUG DFWLYLWLHV ZLWKRXW
H[FHVVLYH ULVN WR LQPDWH KHDOWK RU VDIHW\ WKH RIILFLDO PXVW    VXSHUYLVLRQRQDQXQXVXDOO\KRWDQGKXPLGGD\DQGLQGLUHFW
ERWK EH DZDUH RI IDFWV IURP ZKLFK WKH LQIHUHQFH FRXOG EH       FRQWUDYHQWLRQWR153+¶VRZQSROLF\$VDUHVXOWRI1XUVH
GUDZQWKDWDVXEVWDQWLDOULVNRIVHULRXVKDUPH[LVWVDQGKH             2ZHQV¶FDUHOHVVDFWLRQVWKHGHFHGHQW ZDVSHUPLWWHGWRJR
PXVW DOVR GUDZ WKH LQIHUHQFH´ ,G DW   +RZHYHU ³DQ       RXWGRRUVXQVXSHUYLVHGRYHUH[HUWKLPVHOIDQGFROODSVHGDIWHU
(LJKWK $PHQGPHQW FODLPDQW QHHG QRW VKRZ WKDW D SULVRQ            EHLQJRXWVLGHLQWKHH[WUHPHKHDW
RIILFLDODFWHGRUIDLOHGWRDFWEHOLHYLQJWKDWDKDUPDFWXDOO\
ZRXOGEHIDOODQLQPDWHLWLVHQRXJKWKDWWKHRIILFLDODFWHGRU             $GGLWLRQDOO\1XUVH2ZHQV¶WRRNRWKHUDFWLRQVZLWKUHJDUG
IDLOHG WR DFW GHVSLWH KLV NQRZOHGJH RI D VXEVWDQWLDO ULVN RI   WR WKH GHFHGHQW¶V VHULRXV PHGLFDO QHHGV  'HVSLWH KHU
VHULRXV KDUP´  ,G DW   )XUWKHU ³>Z@KHWKHU D SULVRQ      NQRZOHGJH RI WKH GHFHGHQW¶V VXVFHSWLELOLW\ WR KHDW VWURNH
RIILFLDOKDGWKHUHTXLVLWHNQRZOHGJHRIDVXEVWDQWLDOULVNLVD          1XUVH2ZHQVIDLOHGWRHTXLSWKHGHFHGHQW¶VZDUGZLWKSURSHU
TXHVWLRQRIIDFWVXEMHFWWRGHPRQVWUDWLRQLQWKHXVXDOZD\V             PHGLFDOHTXLSPHQWVXFKDVLFHDQLFHZDWHUHQHPDDQGD
LQFOXGLQJLQIHUHQFHIURPFLUFXPVWDQWLDOHYLGHQFHDQGD             UHFWDO WKHUPRPHWHU  ,Q DGGLWLRQ 1XUVH 2ZHQV DFWLQJ
IDFWILQGHU PD\ FRQFOXGH WKDW D SULVRQ RIILFLDO NQHZ RI D        WRJHWKHUZLWK'U/HHIDLOHGWRLPPHGLDWHO\VHHNDOWHUQDWH
VXEVWDQWLDOULVNIURPWKHYHU\IDFWWKDWWKHULVNZDVREYLRXV´          PHGLFDODVVLVWDQFHLQOLJKWRI'U6DLG¶VGHOD\HGUHVSRQVHWR
,G                                                                     WKH67$7SDJH1XUVH2ZHQV¶GHOD\HGUHVSRQVHDOVRFRVWWKH
                                                                         GHFHGHQWWLPHGXULQJZKLFKKHFRXOGKDYHUHFHLYHGPHGLFDO
  7KHIHGHUDOFRXUWVKDYHDOVRKHOGWKDWOHVVIODJUDQWFRQGXFW           FDUHZKLFKPLJKWKDYHVDYHGKLVOLIH7DNHQLQWKHDJJUHJDWH
PD\ DOVR FRQVWLWXWH GHOLEHUDWH LQGLIIHUHQFH LQ PHGLFDO             1XUVH2ZHQV¶DFWLRQVFRXOGFRQVWLWXWHDILQGLQJRIGHOLEHUDWH
PLVWUHDWPHQWFDVHV)RUH[DPSOHWKH(OHYHQWK&LUFXLWKDV               LQGLIIHUHQFHWRWKHGHFHGHQW¶VVHULRXVPHGLFDOQHHGVEHFDXVH
KHOG WKDW ³GHOLEHUDWH LQGLIIHUHQFH PD\ EH HVWDEOLVKHG E\ D       DMXU\FRXOGSRVVLEO\GHFLGHWKDWDUHDVRQDEOHQXUVHLQ1XUVH
    7HUUDQFHY1RUWKYLOOH5HJLRQDO                1R       1R              7HUUDQFHY1RUWKYLOOH5HJLRQDO        
      3V\FKLDWULF+RVSHWDO                                                                        3V\FKLDWULF+RVSHWDO

DQGFROODSVHDVDUHVXOWRIKLVH[SRVXUHWRWKHDEQRUPDOO\KRW         VKRZLQJRIJURVVO\LQDGHTXDWHFDUHDVZHOODVDGHFLVLRQWR
HQYLURQPHQW  :KHQ 'U /HH GLVFRYHUHG WKH GHFHGHQW              WDNH DQ HDVLHU EXW OHVV HIILFDFLRXV FRXUVH RI WUHDWPHQW´
VWXPEOLQJGRZQWKHKDOOZD\DWSPVKHLPPHGLDWHO\               0F(OOLJRWWY)ROH\)GWK&LUD
VXVSHFWHG K\SHUWKHUPLD EXW ZDLWHG DOPRVW DQ KRXU IRU 'U       GRFWRU¶VDZDUHQHVVWKDWSODLQWLII
VFRQGLWLRQZDVGHWHULRUDWLQJ
6DLG WR DUULYH RQ WKH ZDUG EHIRUH SURYLGLQJ WKH QHFHVVDU\     DQG VXEVHTXHQW IDLOXUH WR WUHDW SODLQWLII FRXOG VXSSRUW D
PHGLFDO WUHDWPHQW  $V VXFK DOWKRXJK VKH NQHZ DERXW WKH      ILQGLQJRIGHOLEHUDWHLQGLIIHUHQFHVHH:DOGURSY(YDQV
GHFHGHQW¶VVHULRXVPHGLFDOFRQGLWLRQ'U/HHFKRVHWRZDLW            )G   WK &LU  D GRFWRU¶V GHFLVLRQV WR
IRU 'U 6DLG LQVWHDG RI LPPHGLDWHO\ FRQWDFWLQJ DQRWKHU          UHPRYHSDWLHQWIURPPHGLFDWLRQDQGWRUHVWRUHWKHPHGLFDWLRQ
SK\VLFLDQRUWKHHPHUJHQF\WHDP'U/HH¶VGHOD\HGDFWLRQ             ZLWKRXW /LWKLXP FRQVWLWXWHV GHOLEHUDWH LQGLIIHUHQFH WR
DOVRFRVWWKHGHFHGHQWLQYDOXDEOHWLPHGXULQJZKLFKKHFRXOG          SDWLHQW¶VSV\FKLDWULFFRQGLWLRQ0RUHRYHU³>Z@KHQWKHQHHG
KDYHUHFHLYHGPHGLFDOFDUHZKLFKPD\KDYHVDYHGKLVOLIH              IRUWUHDWPHQWLVREYLRXVPHGLFDOFDUHZKLFKLVVRFXUVRU\DV
&ROOHFWLYHO\'U/HH¶VDFWLRQVFRXOGFRQVWLWXWHDILQGLQJRI          WR DPRXQW WR QR WUHDWPHQW DW DOO PD\ DPRXQW WR GHOLEHUDWH
GHOLEHUDWH LQGLIIHUHQFH WR WKH GHFHGHQW¶V VHULRXV PHGLFDO        LQGLIIHUHQFH´0DQGHOY'RH)GWK&LU
QHHGVEHFDXVHDMXU\FRXOGSRVVLEO\GHFLGHWKDWDUHDVRQDEOH           DSK\VLFLDQ¶VDVVLVWDQW¶VIDLOXUHWRLQIRUPKLVVXSHULRU
GRFWRULQ'U/HH¶VSRVLWLRQZRXOGKDYHFRQFOXGHGWKDWD             RU D PHGLFDO GRFWRU RI D SULVRQHU¶V NQRZQ LQMXUHG OHJ
VXEVWDQWLDOULVNRIVHULRXVKDUPWRWKHGHFHGHQWH[LVWHG       FRQVWLWXWHVGHOLEHUDWHLQGLIIHUHQFH&RRSHUY'\NH)G
                                                                       WK&LUDSULVRQHPSOR\HH¶VWZRKRXU
  &'U6DGDVLYDQ                                                    GHOD\LQSURYLGLQJPHGLFDOFDUHWRDQLQPDWHNQRZQWRKDYH
                                                                       JXQVKRWZRXQGVFRQVWLWXWHVGHOLEHUDWHLQGLIIHUHQFH
   6LPLODUWR'UV6DLGDQG/HHDQDQDO\VLVRIWKLVFDVHXQGHU
WKH ³JURVVO\ LQDGHTXDWH FDUH´ VWDQGDUG UDLVHV D IDFWXDO            2XU FRQVLGHUDWLRQ RI ZKHWKHU GHIHQGDQWV DFWHG ZLWK
TXHVWLRQ UHJDUGLQJ ZKHWKHU 'U 6DGDVLYDQ DFWHG ZLWK D           GHOLEHUDWH LQGLIIHUHQFH WR WKH GHFHGHQW¶V VHULRXV PHGLFDO
GHOLEHUDWH LQGLIIHUHQFH WR WKH GHFHGHQW¶V VHULRXV PHGLFDO        QHHGVLVJXLGHGE\WKH(OHYHQWK&LUFXLW¶VKROGLQJLQ:DOGURS
QHHGV'U6DGDVLYDQZDVDZDUHRIWKHULVNRIWKHGHFHGHQW¶V          ,Q:DOGURSWKHSDUHQWVRIDVWDWHSULVRQLQPDWHEURXJKWVXLW
HVFDSH'U6DGDVLYDQNQHZWKDWWKHGHFHGHQWKDGZDQGHUHG             DJDLQVW SULVRQ PHGLFDO SHUVRQQHO XQGHU  86&  
RIIIURP&$7ZDVDSSUHKHQGHGDQGUHWXUQHGE\VHFXULW\DQG            DOOHJLQJWKDWWKHSULVRQRIILFLDOVSURYLGHGJURVVO\LQDGHTXDWH
ZDVVXEVHTXHQWO\SXWRQHVFDSHDOHUW'HVSLWHKLVNQRZOHGJH           PHGLFDO FDUH DQG ZHUH WKXV GHOLEHUDWHO\ LQGLIIHUHQW WR WKH
RIWKHGHFHGHQW¶VHVFDSHULVN'U6DGDVLYDQGLVFRQWLQXHGWKH          LQPDWH
V SV\FKLDWULF QHHGV LQ YLRODWLRQ RI WKH (LJKWK
HVFDSH DOHUW MXVW IRXU GD\V ODWHU EDVHG XSRQ WKH GHFHGHQW¶V   $PHQGPHQW,QLWVDQDO\VLVWKH(OHYHQWK&LUFXLWGHVFULEHG
VWDWHPHQWWKDWKHGLGQRWIHHOOLNHHVFDSLQJ$VDUHVXOWRI'U      JURVVO\ LQDGHTXDWH PHGLFDO FDUH DV PHGLFDO WUHDWPHQW ³VR
6DGDVLYDQ¶VGLVFRQWLQXDQFHRIWKHHVFDSHDOHUWWKHGHFHGHQW           JURVVO\LQFRPSHWHQWLQDGHTXDWHRUH[FHVVLYHDVWRVKRFNWKH
GLG QRW UHFHLYH WKH FORVH VXSHUYLVLRQ WKDW KH QHHGHG ZDV     FRQVFLHQFH RU WR EH LQWROHUDEOH WR IXQGDPHQWDO IDLUQHVV´
SHUPLWWHGWROHDYHWKHZDUGDQGZDVH[SRVHGWRWKHH[WUHPH            :DOGURS  )G DW  TXRWLQJ5RJHUV Y (YDQV 
ZHDWKHU FRQGLWLRQV  'U 6DGDVLYDQ¶V LQFRQVLGHUDWH DFWLRQ        )GWK&LU7KHFRXUWVWDWHGWKDWWKH
GHSULYHGWKHGHFHGHQWRIWKHFORVHVXSHUYLVLRQWKDWKHQHHGHG         UHOHYDQWLQTXLU\DVWRZKHWKHUWKHGHIHQGDQWVSURYLGHGJURVVO\
WR HQVXUH KLV RZQ VDIHW\ DQG ZHOOEHLQJ ZKLFK PD\ KDYH       LQDGHTXDWHFDUHZDV³ZKHWKHUDUHDVRQDEOHGRFWRUFRXOG
SUHYHQWHGWKHGHFHGHQWIURPJRLQJRXWGRRUVLQWKHH[WUHPH              KDYH FRQFOXGHG KLV DFWLRQV ZHUH ODZIXO´ ,G DW   ,Q
KHDW&ROOHFWLYHO\'U6DGDVLYDQ¶VDFWLRQVFRXOGFRQVWLWXWH          :DOGURSWKHFRXUWDIILUPHGWKHGHQLDORIGHIHQGDQWV¶PRWLRQ
DILQGLQJRIGHOLEHUDWHLQGLIIHUHQFHWRWKHGHFHGHQW¶VVHULRXV         IRU VXPPDU\ MXGJPHQW LQ D   DFWLRQ ILQGLQJ WKDW D
      7HUUDQFHY1RUWKYLOOH5HJLRQDO                 1R        1R              7HUUDQFHY1RUWKYLOOH5HJLRQDO         
        3V\FKLDWULF+RVSHWDO                                                                          3V\FKLDWULF+RVSHWDO

SDUWLFXODUL]HG IDFWVSHFLILF LQTXLU\ ZDV D QHFHVVLW\ WR WKH        NQRZOHGJHRIWKHGHFHGHQW¶VQXPHURXVKHDOWKULVNV'U6DLG
SURSHUDQDO\VLVRISODLQWLII¶VFODLP+HUHDVLQWKDWFDVHWKH          GLG QRW DUULYH DW WKH KRVSLWDO XQWLO DSSUR[LPDWHO\ RQH KRXU
SURSHUDQDO\VLVRI7HUUDQFH¶VFODLPUHTXLUHVDVLPLODULQTXLU\            DIWHUEHLQJSDJHGE\WKH153+VWDIIZLWKRXWSURYLGLQJDQ\
                                                                           H[SODQDWLRQRIKLVZKHUHDERXWV'U6DLG¶VGHOD\HGUHVSRQVH
     $SSOLFDWLRQ RI (LJKWK $PHQGPHQW VWDQGDUG WR                    FRVWWKHGHFHGHQWSUHFLRXVWLPHGXULQJZKLFKKHFRXOGKDYH
       GHIHQGDQWV                                                          UHFHLYHGPHGLFDOWUHDWPHQWZKLFKPD\KDYHVDYHGKLVOLIH
                                                                           7DNHQLQWKHDJJUHJDWH'U6DLG¶VDFWLRQVFRXOGFRQVWLWXWHD
  ,Q WKH LQVWDQW FDVH WKHUH DUH VHYHUDO LVVXHV RI IDFW DV WR   ILQGLQJ RI GHOLEHUDWH LQGLIIHUHQFH WR WKH GHFHGHQW¶V VHULRXV
ZKHWKHUVRPHGHIHQGDQWVZHUHGHOLEHUDWHO\LQGLIIHUHQWWRWKH               PHGLFDO QHHGV EHFDXVH D MXU\ FRXOG SRVVLEO\ GHFLGH WKDW D
GHFHGHQW¶V VHULRXV PHGLFDO QHHGV  (DFK GHIHQGDQW LV                UHDVRQDEOH GRFWRU LQ 'U 6DLG¶V SRVLWLRQ ZRXOG KDYH
DGGUHVVHGEHORZ                                                           FRQFOXGHG WKDW D VXEVWDQWLDO ULVN RI VHULRXV KDUP WR WKH
                                                                           GHFHGHQWH[LVWHG
     $'U6DLG
                                                                             %'U/HH
   $OWKRXJKZHILQGWKDWSODLQWLIIKDVIDLOHGWRVWDWHD
FODLPDVWRDOOGHIHQGDQWVDQDQDO\VLVRIWKLVFDVHXQGHUWKH               $GGLWLRQDOO\ DQ DQDO\VLV RI WKLV FDVH XQGHU WKH ³JURVVO\
³JURVVO\LQDGHTXDWHFDUH´VWDQGDUGUDLVHVDIDFWXDOTXHVWLRQ               LQDGHTXDWHFDUH´VWDQGDUGUDLVHVDIDFWXDOTXHVWLRQUHJDUGLQJ
UHJDUGLQJ ZKHWKHU 'U 6DLG DFWHG ZLWK D GHOLEHUDWH                  ZKHWKHU'U/HHDFWHGZLWKDGHOLEHUDWHLQGLIIHUHQFHWRWKH
LQGLIIHUHQFHWRWKHGHFHGHQW¶VVHULRXVPHGLFDOQHHGV'U6DLG            GHFHGHQW¶V VHULRXV PHGLFDO QHHGV  /LNH 'U 6DLG 'U /HH
ZDV DZDUH RI WKH QXPHURXV KHDOWK ULVNV FRQIURQWLQJ WKH             ZDVDOVRDZDUHRIWKHQXPHURXVKHDOWKULVNVFRQIURQWLQJWKH
GHFHGHQW+HNQHZWKDWWKHGHFHGHQWZDVDQREHVHGLDEHWLF                 GHFHGHQWDQGNQHZWKDWWKHGHFHGHQWZDVDQREHVHGLDEHWLF
VXIIHULQJ IURP K\SHUWHQVLRQ DQG D KHDUW FRQGLWLRQ ZLWK              VXIIHULQJ IURP K\SHUWHQVLRQ DQG D KHDUW FRQGLWLRQ ZLWK
DEQRUPDO(.*UHDGLQJV,QDGGLWLRQKHZDVDOVRDZDUHWKDW                DEQRUPDO(.*UHDGLQJV0RUHRYHU'U/HHZDVDZDUHWKDW
WKH GHFHGHQW ZDV RQ PHGLFDWLRQ ZKLFK SODFHG KLP DW DQ             WKHZDUGRQZKLFKWKHGHFHGHQWZDVORFDWHGZDVXQXVXDOO\
LQFUHDVHGULVNIRUKHDWVWURNH0RUHRYHU'U6DLGDOVRNQHZ              KRW GXULQJ WKH VXPPHU DQG NQHZ WKDW WKH KHDW EHFDPH D
WKDW WKH ZHDWKHU RQ -XO\   ZDV H[WUHPHO\ KRW DQG          KHDOWKGDQJHUWRSDWLHQWV,QDGGLWLRQVKHZDVDOVRDZDUH
KXPLG'HVSLWHWKLVLQIRUPDWLRQDQGKLVNQRZOHGJHRIVHYHQ                WKDWWKHGHFHGHQWZDVRQPHGLFDWLRQZKLFKSODFHGKLPDWDQ
RUHLJKWSULRUQRQIDWDOK\SHUWKHUPLDFDVHVDW153+DVZHOO               LQFUHDVHGULVNIRUKHDWVWURNH'HVSLWHWKLVLQIRUPDWLRQDQG
DVWKHGHFHGHQW¶VVXVFHSWLELOLW\WRKHDWVWURNH'U6DLGIDLOHG           WKHGHFHGHQW¶VGHK\GUDWLRQV\PSWRPV'U/HHFRQWLQXHGWR
WRIROORZ153+¶VSURWRFRODQGZULWHDQRUGHUUHVWULFWLQJWKH               SUHVFULEH LQFUHDVLQJ DPRXQWV RI SV\FKRWURSLF GUXJV WR WKH
GHFHGHQWWRVWD\ZLWKLQDFRRODUHDRQWKHGD\RIKLVFROODSVH             GHFHGHQW DOWKRXJK VKH NQHZ WKDW WKH GUXJV FDXVHG GUXJ
DQGVXEVHTXHQWGHPLVH$VDUHVXOWRI'U6DLG¶VIDLOXUHWR               LQGXFHGK\SHUWKHUPLD
IROORZKRVSLWDOSURWRFROWKHGHFHGHQWZHQWRXWGRRUVRYHU
H[HUWHGKLPVHOIDQGFROODSVHGGXHWRWKHH[WUHPHZHDWKHU                    )XUWKHUPRUHRQ-XO\'U/HHZDQWHGDOO153+
FRQGLWLRQV                                                                SDWLHQWV WR VWD\ LQGRRUV  1HYHUWKHOHVV WKRVH SDWLHQWV ZLWK
                                                                           DFWLYLW\FDUGVLQFOXGLQJWKHGHFHGHQWZHUHSHUPLWWHGWRJR
  'U6DLG¶VFRQGXFWUHJDUGLQJWKHGHFHGHQW¶VVHULRXVPHGLFDO              RXWVLGHWKDWGD\$VDUHVXOWRI'U/HH¶VGLVUHJDUGRIWKH
QHHGVLVQRWKRZHYHUOLPLWHGWRKLVNQRZOHGJHDQGLQDFWLRQ               GHFHGHQW¶VVXVFHSWLELOLW\WRH[WUHPHWHPSHUDWXUHFRQGLWLRQV
UHJDUGLQJWKHGHFHGHQW¶VPHGLFDOFRQGLWLRQV'HVSLWHEHLQJ                 WKHGHFHGHQWZDVDOORZHGWRJRRXWGRRUVRYHUH[HUWKLPVHOI
SDJHG67$7E\WKHPHGLFDOVWDIIDWSPDQGGHVSLWHKLV
