                           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 <RXQJ +DEOLVWRQ DQG 6H\PRXU 5 <RXQJ -U DUH LQYROYHG LQ DQ

DUELWUDWLRQ DJDLQVW :HOOV )DUJR $GYLVRUV //& FRQFHUQLQJ WKHLU GHFHDVHG SDUHQWV¶ EURNHUDJH

DFFRXQWV $SSDUHQWO\ WKH\ DUH H[WUHPHO\ GLVVDWLVILHG ZLWK KRZ LW LV JRLQJ VR IDU DQG WKH\ KDYH

EURXJKW WKLV DFWLRQ DJDLQVW GHIHQGDQW ),15$ 5HJXODWLRQ ,QF ³),15$ 5HJXODWLRQ´ 6XEVWLWXWH

$P &RPSO >'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  86&   &RPSO   DQG WKH\ DVN WKH &RXUW WR DSSRLQW QHZ

DUELWUDWRUV WR KHDU WKH SHQGLQJ DUELWUDWLRQ Id.  

       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    ±  DOOHJLQJ ),15$ YLRODWHG LWV RZQ UXOHV LQ FRQGXFWLQJ
GLVFRYHU\ DQG SRVWSRQLQJ KHDULQJV id.  ±   ± DOOHJLQJ ),15$ DUELWUDWRUV DUH
LQGXVWU\ELDVHG DQG KDYH GLVTXDOLI\LQJ UHODWLRQVKLSV id.    ±  DOOHJLQJ ),15$
DFWHG ZLWK NQRZQ FRQIOLFWV RI LQWHUHVW id.  % . DOOHJLQJ ),15$ KDV QR PHDQLQJIXO
PHWKRG RI RYHUVLJKW EHFDXVH DUELWUDWLRQV DUH KHOG LQ SULYDWH DQG KDYH LQDGHTXDWH DSSHDO
PHFKDQLVPV id.   ±      DOOHJLQJ WKH DUELWUDWLRQ LV QRW DQ LPSDUWLDO
KHDULQJ EHIRUH XQELDVHG DUELWUDWRUV id.  ±      DOOHJLQJ SODLQWLIIV¶
GLVFRYHU\ UHTXHVWV ZHUH XQIDLUO\ GHQLHG RU UHMHFWHG id.       DOOHJLQJ SODLQWLIIV
ZHUH XQIDLUO\ GHQLHG SRVWSRQHPHQW RI D KHDULQJ GDWH IRU H[WUDRUGLQDU\ FLUFXPVWDQFHV id.  
DOOHJLQJ UHSODFHPHQW DUELWUDWRUV ZLOO EH ELDVHG

       See, e.g. &RPSO   DOOHJLQJ IDLOXUH WR HQWHU DQ HQIRUFHPHQW DFWLRQ DJDLQVW :HOOV )DUJR
IRU YLRODWLRQV RI ),15$ UXOHV id.  $ $  DOOHJLQJ ),15$ DQG ),15$ 5HJXODWLRQ
DOORZHG YRWLQJ ),15$ PHPEHUV WR UHPDLQ OLFHQVHG ZLWK LQDGHTXDWH VXSHUYLVRU\ SURFHGXUHV id.
  DOOHJLQJ YLRODWLRQV RI IHGHUDO DQG VWDWH VHFXULWLHV ODZV DV ZHOO DV ),15$ 5XOHV id.  
DOOHJLQJ ),15$ FRQFHDOHG FULPLQDO PLVFRQGXFW DQG GHFHSWLYH VDOHV SUDFWLFHV E\ :HOOV )DUJR

       See, e.g. &RPSO    ± DOOHJLQJ WKH SURYLVLRQV VKRXOG EH GHFODUHG YRLG
DJDLQVW SODLQWLIIV EHFDXVH GHIHQGDQW YLRODWHG SODLQWLIIV¶ FRQVWLWXWLRQDO ULJKWV   DOOHJLQJ WKH\
VKRXOG EH YRLG RU YDFDWHG EHFDXVH ³WKH\ ZHUH REWDLQHG DJDLQVW WKH >S@ODLQWLIIV¶ ZLOO´  
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         $ :HOOV )DUJR EURNHU &KULVWRSKHU

&XQQLQJKDP ZDV FRQYLFWHG RI WDNLQJ RYHU  PLOOLRQ IURP SODLQWLIIV¶ SDUHQWV DQG RWKHU FXVWRPHUV

Id.   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.  

       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   ),15$ LV D SULYDWH QRWIRU

SURILW 'HODZDUH FRUSRUDWLRQ id.   DQG DFFRUGLQJ WR GHIHQGDQW LV D VHOIUHJXODWRU\ RUJDQL]DWLRQ

³652´ UHJLVWHUHG ZLWK WKH 6HFXULWLHV DQG ([FKDQJH &RPPLVVLRQ ³6(&´ DV D QDWLRQDO



       $ VHOIUHJXODWRU\ RUJDQL]DWLRQ LV GHILQHG DV ³DQ\ QDWLRQDO VHFXULWLHV H[FKDQJH UHJLVWHUHG
VHFXULWLHV DVVRFLDWLRQ RU UHJLVWHUHG FOHDULQJ DJHQF\´  86&  FD


                                                  
VHFXULWLHV DVVRFLDWLRQ 'HI¶V 0HP DW  ,WV ZKROO\ RZQHG VXEVLGLDU\ ),15$ 5HJXODWLRQ

RSHUDWHV D GLVSXWH UHVROXWLRQ IRUXP WKDW DGPLQLVWHUV ),15$ DUELWUDWLRQV &RPSO   $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$ SUHGLVSXWH ELQGLQJ DUELWUDWLRQ SURYLVLRQV

VKRXOG EH YDFDWHG RU GHFODUHG YRLG´ EHFDXVH WKH\ YLRODWH SODLQWLIIV¶ FRQVWLWXWLRQDO ULJKWV Id.  

 ± ,Q &RXQW ,, WKH\ DOOHJH WKDW WKH DUELWUDWLRQ SURYLVLRQV VKRXOG EH GHFODUHG YRLG EHFDXVH

),15$ 5HJXODWLRQ KDV PDWHULDOO\ EUHDFKHG ),15$ DUELWUDWLRQ UXOHV Id.   ,Q &RXQW ,,,

SODLQWLIIV EULQJ D FODLP IRU GDPDJHV XQGHU  86&   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.   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   86&  D et seq. ³([FKDQJH $FW´ 'HI¶V 0HP DW 

        7KH 6(& DXWKRUL]HG ),15$ WR LQFOXGH SUHGLVSXWH 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 $FFHVV 
KWWSILQUDFRPSOLQHWFRPHQGLVSOD\GLVSOD\BPDLQKWPO"UELG 	HOHPHQWBLG 
+RZHYHU ),15$ 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.   )LQDOO\ LQ &RXQW ,9 SODLQWLIIV UHTXHVW WKDW WKH &RXUW DSSRLQW

UHSODFHPHQW DUELWUDWRUV XQGHU  86&   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.  ±

       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  86    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.  86    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 VXEMHFWPDWWHU MXULVGLFWLRQ LV µDQ $UW>LFOH@ ,,, DV



                                                 
ZHOO DV D VWDWXWRU\ UHTXLUHPHQW    QR DFWLRQ RI WKH SDUWLHV FDQ FRQIHU VXEMHFWPDWWHU MXULVGLFWLRQ

XSRQ D IHGHUDO FRXUW¶´ Akinseye v. District of Columbia  )G   '& &LU 

TXRWLQJ Ins. Corp. of Ir., Ltd. v. Compagnie des Bauxites de Guinee  86   

       :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  86

  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

 86    LQWHUQDO TXRWDWLRQ PDUNV RPLWWHG accord Bell Atl. Corp. v. Twombly

 86    ,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´  86 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  86 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\LQIDFW WKDW LV µLPPLQHQW¶ RU µFHUWDLQO\ LPSHQGLQJ¶´ Am.

Petrol. Inst. v. Envtl. Prot. Agency  )G   '& &LU  see also Lujan  86

DW  KROGLQJ LQMXU\LQIDFW 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  86    $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  86 DW ±

       :KLOH WKH FRQVWLWXWLRQDO DVSHFW RI ULSHQHVV PD\ LQYROYH WKH VDPH LPSHQGLQJ LQMXU\LQIDFW

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  86    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.  86  ±  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     DQG WKH\ WDNH LVVXH ZLWK FHUWDLQ LQWHUORFXWRU\ SURFHGXUDO UXOLQJV VXFK DV WKH

GHQLDO RI WKH UHTXHVWHG GLVFRYHU\ DQG WKH SRVWSRQHPHQW RI KHDULQJ GDWHV id.      

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  86

   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  86  
 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  ± &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\

DJUHHGXSRQ 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

TXDVLMXGLFLDO 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
                                                
