Cockrel v. Shelby Cnty School
Opinion
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&28572)$33($/6 )257+(6,;7+&,5&8,7 BBBBBBBBBBBBBBBBB
'211$ &2&.5(/ ; 3ODLQWLII$SSHOODQW 1R Y ! 6+(/%< &2817< 6&+22/ ',675,&7HWDO 'HIHQGDQWV$SSHOOHHV 1 $SSHDOIURPWKH8QLWHG6WDWHV'LVWULFW&RXUW IRUWKH(DVWHUQ'LVWULFWRI.HQWXFN\DW)UDQNIRUW 1R nsRVHSK0+RRG'LVWULFWsXGJH $UJXHG 0DUFK 'HFLGHGDQG)LOHG 1RYHPEHU %HIRUH 6,/(50225(DQG&/$<&LUFXLWsXGJHV BBBBBBBBBBBBBBBBB &2816(/ $5*8(' 0DWWKHZ/0RRQH\0221(<0221(< 0221(</H[LQJWRQ.HQWXFN\IRU$SSHOODQW5REHUW/ &KHQRZHWK &+(12:(7+ /$: 2)),&( )UDQNIRUW .HQWXFN\IRU$SSHOOHHV21%5,() 0DWWKHZ/0RRQH\ (XJHQH ) 0RRQH\ sDPHV 0 0RRQH\ 0221(< 0221(< 0221(< /H[LQJWRQ .HQWXFN\ IRU
&RFNUHOY6KHOE\&RXQW\6FKRRO 1R 'LVWULFWHWDO
$SSHOODQWsRKQ&)RJOH,,,&+(12:(7+/$:2)),&( )UDQNIRUW.HQWXFN\IRU$SSHOOHHV 0225(sGHOLYHUHGWKHRSLQLRQRIWKHFRXUWLQZKLFK &/$<sMRLQHG6,/(5s SS GHOLYHUHGDVHSDUDWH FRQFXUULQJRSLQLRQ BBBBBBBBBBBBBBBBB 23,1,21 BBBBBBBBBBBBBBBBB .$5(1 1(/621 0225( &LUFXLW sXGJH 3ODLQWLII 'RQQD &RFNUHO m&RFNUHOl DSSHDOV WKH GLVWULFW FRXUWjV GHFLVLRQJUDQWLQJWKH6KHOE\&RXQW\3XEOLF6FKRRO'LVWULFW m6FKRRO 'LVWULFWl RU m'LVWULFWl 6XSHULQWHQGHQW /HRQ 0RRQH\KDQDQG3ULQFLSDO%UXFH6ODWHjV FROOHFWLYHO\UHIHUUHG WR DV mGHIHQGDQWVl PRWLRQ IRU VXPPDU\ MXGJPHQW ZLWK UHVSHFW WR &RFNUHOjV )LUVW $PHQGPHQW UHWDOLDWLRQ FODLP ZKLFK VKH EURXJKW SXUVXDQW WR 86& :H 5(9(56(DQG5(0$1'WKHFDVHWRWKHGLVWULFWFRXUWIRU IXUWKHUSURFHHGLQJVFRQVLVWHQWZLWKWKLVRSLQLRQ ,%$&.*5281' 3ODLQWLII 'RQQD &RFNUHO D WHQXUHG ILIWKJUDGH WHDFKHU DW 6LPSVRQYLOOH (OHPHQWDU\ 6FKRRO LQ WKH 6KHOE\ &RXQW\ .HQWXFN\6FKRRO'LVWULFWZDVWHUPLQDWHGRQsXO\ E\ WKH 'LVWULFWjV VXSHULQWHQGHQW 'U /HRQ 0RRQH\KDQ 7KH 6FKRRO'LVWULFWjVSURIIHUHGJURXQGVIRU&RFNUHOjVWHUPLQDWLRQ ZHUH LQVXERUGLQDWLRQ FRQGXFW XQEHFRPLQJ D WHDFKHU LQHIILFLHQF\LQFRPSHWHQF\DQGQHJOHFWRIGXW\$VWKHEDVLV IRU WKHVH FKDUJHV WKH 6FKRRO 'LVWULFW GHWDLOHG VHYHQWHHQ VSHFLILF LQVWDQFHV RI PLVFRQGXFW HQJDJHG LQ E\ &RFNUHO LQFOXGLQJ IDLOLQJWRWHDFKDQGGLVSDUDJLQJWKHVFKRROjVmsXVW 7KLQNl FXUULFXOXP FDOOLQJ 3ULQFLSDO +DUU\ 6ODWH QDPHV LQ IURQWRIVWDIIPHPEHUVDQGVWXGHQWV DQGIDLOLQJWRFRRSHUDWH ZLWKWKH7LWOH,SURJUDPDQGWKH7LWOH,DLGHVLQKHUFODVVDV ZHOODVZLWKRWKHUIDFXOW\PHPEHUVDQGVWDIIRI6LPSVRQYLOOH (OHPHQWDU\6FKRRO 1R &RFNUHOY6KHOE\&RXQW\6FKRRO 'LVWULFWHWDO
:KLOHWKH6FKRRO'LVWULFWDOOHJHGQXPHURXVUHDVRQVIRULWV GHFLVLRQ WR WHUPLQDWH &RFNUHO VKH FODLPV WKDW WKH 'LVWULFW ILUHGKHUGXHWRKHUGHFLVLRQWRLQYLWH:RRG\+DUUHOVRQWKH WHOHYLVLRQDQGILOPDFWRUPRVWIDPRXVIRUKLVUROHDVm:RRG\l RQWKHQHWZRUNWHOHYLVLRQVKRZm&KHHUVlDQGRWKHUVWRKHU FODVVURRPWRJLYHSUHVHQWDWLRQVRQWKHHQYLURQPHQWDOEHQHILWV RILQGXVWULDOKHPS+HPSDQLOOHJDOVXEVWDQFHLQ.HQWXFN\ .\5HY6WDW$$ LVDSODQWIURP ZKLFKERWKPDULMXDQDDQGDYDOXDEOHILEHUFDQEHKDUYHVWHG 7KHUH DUH WZR YDULHWLHV RI WKH KHPS SODQW 2QH LV WKH PDULMXDQD SODQW LWVHOI ZLWK DSSUR[LPDWHO\ IRXU WR VHYHQ SHUFHQW RI LWV ZHLJKW FRPSULVHG RI WHWUDK\GURFDQQDELQRO m7+&l WKHDFWLYHFKHPLFDOLQWKHPDULMXDQDGUXJ WKHRWKHU LVLQGXVWULDOKHPSDSODQWZKLFKJURZVLQVWDONVDQGIURP ZKLFK ILEHUV FDQ EH WDNHQ WR PDNH YDULRXV JRRGV VXFK DV SDSHU DQG FORWKHV sRKQ 0LQW] 6SOHQGRU LQ WKH *UDVV" :DVKLQJWRQ3RVWsDQ DW+8QOLNHPDULMXDQDWKH LQGXVWULDOKHPSSODQWLVRQO\FRPSULVHGRIEHWZHHQDQG SHUFHQW7+&DQLQVXIILFLHQWDPRXQWWRKDYHDQ\QDUFRWLF HIIHFW,G1HYHUWKHOHVV.HQWXFN\ODZSURKLELWVSRVVHVVLRQ RIERWKYDULHWLHVRIWKHKHPSSODQWLQFOXGLQJmLWVVHHGVRU UHVLQ RU DQ\ FRPSRXQG PL[WXUH RU SUHSDUDWLRQ ZKLFK FRQWDLQVDQ\TXDQWLW\RIWKHVHVXEVWDQFHVl.\5HY6WDW $$ &RFNUHOFODLPVWKDWRQDWOHDVWWKUHHRFFDVLRQVGXULQJKHU VHYHQ\HDUWHQXUHDW6LPSVRQYLOOH(OHPHQWDU\VKHRUJDQL]HG RXWVLGHVSHDNHUVWRFRPHWRKHUFODVVWRVSHDNDERXWLQGXVWULDO KHPS&RFNUHOIXUWKHUFODLPVWKDWERWK3ULQFLSDO6ODWHDQG 6XSHULQWHQGHQW 0RRQH\KDQ NQHZ WKDW VKH RUJDQL]HG LQGXVWULDOKHPSSUHVHQWDWLRQV:KLOH3ULQFLSDO6ODWHDOOHJHV WKDWKHQHYHUNQHZLQGXVWULDOKHPSZDVEHLQJGLVFXVVHGLQ &RFNUHOjVFODVVKHGRHVDGPLWWKDW&RFNUHOjVOHVVRQSODQVRQ DWOHDVWRQHRFFDVLRQVSHFLILFDOO\PHQWLRQHGWKDWKHPSZDV WREHGLVFXVVHG 2QRUDERXW$SULO IROORZLQJ&RFNUHOjVGHFLVLRQWR HQGWKH VFKRRO\HDUZLWKDSURMHFWHQWLWOHGm6DYLQJ WKH7UHHVlLQZKLFKWKHXVHRILQGXVWULDOKHPSILEHUVDVD &RFNUHOY6KHOE\&RXQW\6FKRRO 1R 1R &RFNUHOY6KHOE\&RXQW\6FKRRO 'LVWULFWHWDO 'LVWULFWHWDO
SRVVLEOH DOWHUQDWLYH WR ZRRG SXOS ZDV WR EH GLVFXVVHG WRWKHFRQWUDU\ZKLFKPDNHVWKLVDIDFWXDOLVVXHWKDWFDQQRW &RFNUHOZDVFRQWDFWHGE\DUHSUHVHQWDWLYHRIWKH&DEOH1HZV EHGHFLGHGE\VXPPDU\MXGJPHQW 1HWZRUN m&11l DQG DVNHG LI VKH ZRXOG SHUPLW &11jV FDPHUDV WR ILOP KHU FODVV SUHVHQWDWLRQ IRU XVH LQ D ODUJHU SURJUDPRQWUHHFRQVHUYDWLRQ&RFNUHOFODLPVWKDWVKHWKHQ LPPHGLDWHO\LQIRUPHG6ODWHRI&11jVSRWHQWLDOYLVLWWRWKHLU VFKRROWKRXJK6ODWHGRHVQRWUHFDOOWKLVFRQYHUVDWLRQ ,QHDUO\0D\ sRH+LFNH\SUHVLGHQWRIWKH.HQWXFN\ +HPS*URZHUV$VVRFLDWLRQLQIRUPHG&RFNUHOWKDW:RRG\ +DUUHOVRQPLJKWYLVLW.HQWXFN\ZLWK&11DQGWKDW+DUUHOVRQ PLJKWDOVRYLVLWKHUFODVVURRP&RFNUHOFODLPVWKDWVKHZDV JLYHQ QR VSHFLILF LQIRUPDWLRQ DV WR ZKHQ +DUUHOVRQ PLJKW YLVLWKHUFODVVURRPDQGWKDWLWZDVQRWXQWLOWKHPRUQLQJRI 0D\ WKHODVWGD\RIWKHVFKRRO\HDUWKDWVKHZDV QRWLILHG WKDW +DUUHOVRQ ZRXOG EH YLVLWLQJ 6LPSVRQYLOOH (OHPHQWDU\ 6FKRRO WKDW GD\ &RFNUHO LQIRUPHG 3ULQFLSDO 6ODWHRIWKHLPSHQGLQJYLVLWDQGKHDJUHHGWRDOORZLWWKRXJK 6ODWHFODLPVWKDWKHZDVRQO\WROGWKDWWKHSUHVHQWDWLRQWREH JLYHQZDVDERXWDJULFXOWXUH +DUUHOVRQDUULYHGDWWKHVFKRROODWHUWKDWPRUQLQJZLWKDQ mHQWRXUDJHLQFOXGLQJUHSUHVHQWDWLYHVRIWKH.HQWXFN\+HPS 0XVHXP DQG .HQWXFN\ +HPS *URZHUV &RRSHUDWLYH $VVRFLDWLRQVHYHUDOKHPSJURZHUVIURPIRUHLJQFRXQWULHV &11 DQG YDULRXV .HQWXFN\ QHZV PHGLD UHSUHVHQWDWLYHVl $SSHOODQWjV %U DW $V VWDWHG LQ &RFNUHOjV FRPSODLQW +DUUHOVRQ VSRNH ZLWK WKH FKLOGUHQ DERXW KLV RSSRVLWLRQ WR PDULMXDQDXVH\HWKHGLVWLQJXLVKHGPDULMXDQDIURPLQGXVWULDO KHPS DQG DGYRFDWHG WKH XVH RI LQGXVWULDO KHPS DV DQ DOWHUQDWLYH WR LQFUHDVHG ORJJLQJ HIIRUWV $V SDUW RI WKH SUHVHQWDWLRQSURGXFWVPDGHIURPKHPSZHUHVKRZQWRWKH FKLOGUHQDVZHUHKHPSVHHGVDEDQQHGVXEVWDQFHLQWKHVWDWH RI .HQWXFN\ +DUUHOVRQjV YLVLW UHFHLYHG ERWK ORFDO DQG QDWLRQDO PHGLD DWWHQWLRQ 2QH VWXGHQW ZKR GLG QRW KDYH SDUHQWDOSHUPLVVLRQWREHYLGHRWDSHGRUSKRWRJUDSKHGE\WKH QHZVPHGLDZDVLQFOXGHGE\WKHSUHVVLQDFODVVSKRWRJUDSK ZLWK+DUUHOVRQ &RFNUHOY6KHOE\&RXQW\6FKRRO 1R 1R &RFNUHOY6KHOE\&RXQW\6FKRRO 'LVWULFWHWDO 'LVWULFWHWDO
Free access — add to your briefcase to read the full text and ask questions with AI
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&28572)$33($/6 )257+(6,;7+&,5&8,7 BBBBBBBBBBBBBBBBB
'211$ &2&.5(/ ; 3ODLQWLII$SSHOODQW 1R Y ! 6+(/%< &2817< 6&+22/ ',675,&7HWDO 'HIHQGDQWV$SSHOOHHV 1 $SSHDOIURPWKH8QLWHG6WDWHV'LVWULFW&RXUW IRUWKH(DVWHUQ'LVWULFWRI.HQWXFN\DW)UDQNIRUW 1R nsRVHSK0+RRG'LVWULFWsXGJH $UJXHG 0DUFK 'HFLGHGDQG)LOHG 1RYHPEHU %HIRUH 6,/(50225(DQG&/$<&LUFXLWsXGJHV BBBBBBBBBBBBBBBBB &2816(/ $5*8(' 0DWWKHZ/0RRQH\0221(<0221(< 0221(</H[LQJWRQ.HQWXFN\IRU$SSHOODQW5REHUW/ &KHQRZHWK &+(12:(7+ /$: 2)),&( )UDQNIRUW .HQWXFN\IRU$SSHOOHHV21%5,() 0DWWKHZ/0RRQH\ (XJHQH ) 0RRQH\ sDPHV 0 0RRQH\ 0221(< 0221(< 0221(< /H[LQJWRQ .HQWXFN\ IRU
&RFNUHOY6KHOE\&RXQW\6FKRRO 1R 'LVWULFWHWDO
$SSHOODQWsRKQ&)RJOH,,,&+(12:(7+/$:2)),&( )UDQNIRUW.HQWXFN\IRU$SSHOOHHV 0225(sGHOLYHUHGWKHRSLQLRQRIWKHFRXUWLQZKLFK &/$<sMRLQHG6,/(5s SS GHOLYHUHGDVHSDUDWH FRQFXUULQJRSLQLRQ BBBBBBBBBBBBBBBBB 23,1,21 BBBBBBBBBBBBBBBBB .$5(1 1(/621 0225( &LUFXLW sXGJH 3ODLQWLII 'RQQD &RFNUHO m&RFNUHOl DSSHDOV WKH GLVWULFW FRXUWjV GHFLVLRQJUDQWLQJWKH6KHOE\&RXQW\3XEOLF6FKRRO'LVWULFW m6FKRRO 'LVWULFWl RU m'LVWULFWl 6XSHULQWHQGHQW /HRQ 0RRQH\KDQDQG3ULQFLSDO%UXFH6ODWHjV FROOHFWLYHO\UHIHUUHG WR DV mGHIHQGDQWVl PRWLRQ IRU VXPPDU\ MXGJPHQW ZLWK UHVSHFW WR &RFNUHOjV )LUVW $PHQGPHQW UHWDOLDWLRQ FODLP ZKLFK VKH EURXJKW SXUVXDQW WR 86& :H 5(9(56(DQG5(0$1'WKHFDVHWRWKHGLVWULFWFRXUWIRU IXUWKHUSURFHHGLQJVFRQVLVWHQWZLWKWKLVRSLQLRQ ,%$&.*5281' 3ODLQWLII 'RQQD &RFNUHO D WHQXUHG ILIWKJUDGH WHDFKHU DW 6LPSVRQYLOOH (OHPHQWDU\ 6FKRRO LQ WKH 6KHOE\ &RXQW\ .HQWXFN\6FKRRO'LVWULFWZDVWHUPLQDWHGRQsXO\ E\ WKH 'LVWULFWjV VXSHULQWHQGHQW 'U /HRQ 0RRQH\KDQ 7KH 6FKRRO'LVWULFWjVSURIIHUHGJURXQGVIRU&RFNUHOjVWHUPLQDWLRQ ZHUH LQVXERUGLQDWLRQ FRQGXFW XQEHFRPLQJ D WHDFKHU LQHIILFLHQF\LQFRPSHWHQF\DQGQHJOHFWRIGXW\$VWKHEDVLV IRU WKHVH FKDUJHV WKH 6FKRRO 'LVWULFW GHWDLOHG VHYHQWHHQ VSHFLILF LQVWDQFHV RI PLVFRQGXFW HQJDJHG LQ E\ &RFNUHO LQFOXGLQJ IDLOLQJWRWHDFKDQGGLVSDUDJLQJWKHVFKRROjVmsXVW 7KLQNl FXUULFXOXP FDOOLQJ 3ULQFLSDO +DUU\ 6ODWH QDPHV LQ IURQWRIVWDIIPHPEHUVDQGVWXGHQWV DQGIDLOLQJWRFRRSHUDWH ZLWKWKH7LWOH,SURJUDPDQGWKH7LWOH,DLGHVLQKHUFODVVDV ZHOODVZLWKRWKHUIDFXOW\PHPEHUVDQGVWDIIRI6LPSVRQYLOOH (OHPHQWDU\6FKRRO 1R &RFNUHOY6KHOE\&RXQW\6FKRRO 'LVWULFWHWDO
:KLOHWKH6FKRRO'LVWULFWDOOHJHGQXPHURXVUHDVRQVIRULWV GHFLVLRQ WR WHUPLQDWH &RFNUHO VKH FODLPV WKDW WKH 'LVWULFW ILUHGKHUGXHWRKHUGHFLVLRQWRLQYLWH:RRG\+DUUHOVRQWKH WHOHYLVLRQDQGILOPDFWRUPRVWIDPRXVIRUKLVUROHDVm:RRG\l RQWKHQHWZRUNWHOHYLVLRQVKRZm&KHHUVlDQGRWKHUVWRKHU FODVVURRPWRJLYHSUHVHQWDWLRQVRQWKHHQYLURQPHQWDOEHQHILWV RILQGXVWULDOKHPS+HPSDQLOOHJDOVXEVWDQFHLQ.HQWXFN\ .\5HY6WDW$$ LVDSODQWIURP ZKLFKERWKPDULMXDQDDQGDYDOXDEOHILEHUFDQEHKDUYHVWHG 7KHUH DUH WZR YDULHWLHV RI WKH KHPS SODQW 2QH LV WKH PDULMXDQD SODQW LWVHOI ZLWK DSSUR[LPDWHO\ IRXU WR VHYHQ SHUFHQW RI LWV ZHLJKW FRPSULVHG RI WHWUDK\GURFDQQDELQRO m7+&l WKHDFWLYHFKHPLFDOLQWKHPDULMXDQDGUXJ WKHRWKHU LVLQGXVWULDOKHPSDSODQWZKLFKJURZVLQVWDONVDQGIURP ZKLFK ILEHUV FDQ EH WDNHQ WR PDNH YDULRXV JRRGV VXFK DV SDSHU DQG FORWKHV sRKQ 0LQW] 6SOHQGRU LQ WKH *UDVV" :DVKLQJWRQ3RVWsDQ DW+8QOLNHPDULMXDQDWKH LQGXVWULDOKHPSSODQWLVRQO\FRPSULVHGRIEHWZHHQDQG SHUFHQW7+&DQLQVXIILFLHQWDPRXQWWRKDYHDQ\QDUFRWLF HIIHFW,G1HYHUWKHOHVV.HQWXFN\ODZSURKLELWVSRVVHVVLRQ RIERWKYDULHWLHVRIWKHKHPSSODQWLQFOXGLQJmLWVVHHGVRU UHVLQ RU DQ\ FRPSRXQG PL[WXUH RU SUHSDUDWLRQ ZKLFK FRQWDLQVDQ\TXDQWLW\RIWKHVHVXEVWDQFHVl.\5HY6WDW $$ &RFNUHOFODLPVWKDWRQDWOHDVWWKUHHRFFDVLRQVGXULQJKHU VHYHQ\HDUWHQXUHDW6LPSVRQYLOOH(OHPHQWDU\VKHRUJDQL]HG RXWVLGHVSHDNHUVWRFRPHWRKHUFODVVWRVSHDNDERXWLQGXVWULDO KHPS&RFNUHOIXUWKHUFODLPVWKDWERWK3ULQFLSDO6ODWHDQG 6XSHULQWHQGHQW 0RRQH\KDQ NQHZ WKDW VKH RUJDQL]HG LQGXVWULDOKHPSSUHVHQWDWLRQV:KLOH3ULQFLSDO6ODWHDOOHJHV WKDWKHQHYHUNQHZLQGXVWULDOKHPSZDVEHLQJGLVFXVVHGLQ &RFNUHOjVFODVVKHGRHVDGPLWWKDW&RFNUHOjVOHVVRQSODQVRQ DWOHDVWRQHRFFDVLRQVSHFLILFDOO\PHQWLRQHGWKDWKHPSZDV WREHGLVFXVVHG 2QRUDERXW$SULO IROORZLQJ&RFNUHOjVGHFLVLRQWR HQGWKH VFKRRO\HDUZLWKDSURMHFWHQWLWOHGm6DYLQJ WKH7UHHVlLQZKLFKWKHXVHRILQGXVWULDOKHPSILEHUVDVD &RFNUHOY6KHOE\&RXQW\6FKRRO 1R 1R &RFNUHOY6KHOE\&RXQW\6FKRRO 'LVWULFWHWDO 'LVWULFWHWDO
SRVVLEOH DOWHUQDWLYH WR ZRRG SXOS ZDV WR EH GLVFXVVHG WRWKHFRQWUDU\ZKLFKPDNHVWKLVDIDFWXDOLVVXHWKDWFDQQRW &RFNUHOZDVFRQWDFWHGE\DUHSUHVHQWDWLYHRIWKH&DEOH1HZV EHGHFLGHGE\VXPPDU\MXGJPHQW 1HWZRUN m&11l DQG DVNHG LI VKH ZRXOG SHUPLW &11jV FDPHUDV WR ILOP KHU FODVV SUHVHQWDWLRQ IRU XVH LQ D ODUJHU SURJUDPRQWUHHFRQVHUYDWLRQ&RFNUHOFODLPVWKDWVKHWKHQ LPPHGLDWHO\LQIRUPHG6ODWHRI&11jVSRWHQWLDOYLVLWWRWKHLU VFKRROWKRXJK6ODWHGRHVQRWUHFDOOWKLVFRQYHUVDWLRQ ,QHDUO\0D\ s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mHQWRXUDJHLQFOXGLQJUHSUHVHQWDWLYHVRIWKH.HQWXFN\+HPS 0XVHXP DQG .HQWXFN\ +HPS *URZHUV &RRSHUDWLYH $VVRFLDWLRQVHYHUDOKHPSJURZHUVIURPIRUHLJQFRXQWULHV &11 DQG YDULRXV .HQWXFN\ QHZV PHGLD UHSUHVHQWDWLYHVl $SSHOODQWjV %U DW $V VWDWHG LQ &RFNUHOjV FRPSODLQW +DUUHOVRQ VSRNH ZLWK WKH FKLOGUHQ DERXW KLV RSSRVLWLRQ WR PDULMXDQDXVH\HWKHGLVWLQJXLVKHGPDULMXDQDIURPLQGXVWULDO KHPS DQG DGYRFDWHG WKH XVH RI LQGXVWULDO KHPS DV DQ DOWHUQDWLYH WR LQFUHDVHG ORJJLQJ HIIRUWV $V SDUW RI WKH SUHVHQWDWLRQSURGXFWVPDGHIURPKHPSZHUHVKRZQWRWKH FKLOGUHQDVZHUHKHPSVHHGVDEDQQHGVXEVWDQFHLQWKHVWDWH RI .HQWXFN\ +DUUHOVRQjV YLVLW UHFHLYHG ERWK ORFDO DQG QDWLRQDO PHGLD DWWHQWLRQ 2QH VWXGHQW ZKR GLG QRW KDYH SDUHQWDOSHUPLVVLRQWREHYLGHRWDSHGRUSKRWRJUDSKHGE\WKH QHZVPHGLDZDVLQFOXGHGE\WKHSUHVVLQDFODVVSKRWRJUDSK ZLWK+DUUHOVRQ &RFNUHOY6KHOE\&RXQW\6FKRRO 1R 1R &RFNUHOY6KHOE\&RXQW\6FKRRO 'LVWULFWHWDO 'LVWULFWHWDO
BBBBBBBBBBBBBBBBBBB )ROORZLQJ +DUUHOVRQjV YLVLW DQG WKH PHGLD DWWHQWLRQ LW JDUQHUHG SDUHQWV DQG WHDFKHUV ZURWH QXPHURXV OHWWHUV WR &21&855(1&( PHPEHUVRIWKH6KHOE\&RXQW\6FKRRO'LVWULFWYRLFLQJWKHLU BBBBBBBBBBBBBBBBBBB FRQFHUQ DQG GLVPD\ UHJDUGLQJ WKH LQGXVWULDO KHPS SUHVHQWDWLRQ6HYHUDORIWKHOHWWHUVQRWHGWKHPL[HGPHVVDJH 6,/(5 &LUFXLW sXGJH FRQFXUULQJ 2Q WKH IDFH RI LW LW WKH VFKRRO ZDV VHQGLQJ RQ GUXJ XVH DV +DUUHOVRQjV DSSHDUVLQDSSURSULDWHIRUDILIWKJUDGHFODVVWRKDYHDFHOHEULW\ SUHVHQWDWLRQ RFFXUUHG RQ WKH VDPH GD\ WKDW PDQ\ VSHDNHURQDPDWWHUDVFRPSOLFDWHGDVOHJDOL]LQJLQGXVWULDO 6LPSVRQYLOOH (OHPHQWDU\ 6FKRRO VWXGHQWV ZHUH JUDGXDWLQJ KHPS ,W LV D PDWWHU RI SXEOLF FRQFHUQ LQ .HQWXFN\ DV IURP WKH 'UXJ $EXVH 5HVLVWDQFH (GXFDWLRQ m'$5(l HYLGHQFHGE\DQHFGRWDOLOOXVWUDWLRQVLQWKHPDMRULW\RSLQLRQ SURJUDPRIIHUHGLQWKHVFKRRO QHYHUWKHOHVVPDWWHUVRISXEOLFFRQFHUQPD\EHRXWZHLJKHGE\ WKHVFKRROjVLQWHUHVWLQPDLQWDLQLQJFHUWDLQOHJLWLPDWHJRDOVRU %DVHG RQ WKH FRPSODLQWV H[SUHVVHG LQ WKH OHWWHUV PLVVLRQV6HH:LOOLDPVY.HQWXFN\)G WK 6XSHULQWHQGHQW 0RRQH\KDQ GHFLGHG WR LQLWLDWH DQ &LU FHUWGHQLHG86 LQYHVWLJDWLRQ LQWR &RFNUHOjV FRQGXFW )ROORZLQJ WKH LQYHVWLJDWLRQ0RRQH\KDQDGYLVHGWKH.HQWXFN\(GXFDWLRQ +HUHWKHVFKRROPLJKWYHU\ZHOOKDYHSUHFOXGHGWKHWHDFKHU 3URIHVVLRQDO 6WDQGDUGV %RDUG m(36%l WKDW &RFNUHO KDG IURPDOORZLQJ+DUUHOVRQDQGRWKHUVWRGLVFXVVOHJDOL]DWLRQRI DOORZHGKHPSVHHGVDQLOOHJDOVXEVWDQFHWREHSDVVHGDURXQG LQGXVWULDOKHPSEHIRUHDFODVVRIFKLOGUHQLQDJUDGHVFKRRO WRVWXGHQWVLQKHUFODVVGXULQJ+DUUHOVRQjVFODVVYLVLW7KH HYHQZKHUHLWPLJKWEHDYDOLGWRSLFLQKLJKVFKRRORUFROOHJH 6WDQGDUGV %RDUG DIWHU LQYHVWLJDWLQJ WKH PDWWHU XOWLPDWHO\ 2QHFRXOGSRLQWRXWDP\ULDGRIVXEMHFWVDSSURSULDWHIRUDQ GLVPLVVHG0RRQH\KDQjVFRPSODLQWZLWKRXWSUHMXGLFHVWDWLQJ ROGHUDXGLHQFH WKDWZRXOGQRWSURPRWHDYDOLGHGXFDWLRQDO WKDWWKHUHZDVDQmLQVXIILFLHQWEDVLVWRZDUUDQW>D@FHUWLILFDWH SXUSRVH IRU JUDGH VFKRRO FKLOGUHQ +RZHYHU WKH VFKRRO UHYRFDWLRQDFWLRQlsRLQW$SSHQGL[ ms$l DW (36% DSSURYHGLQDGYDQFHWKHVXEMHFWPDWWHUDQGWKHVSHDNHU,W /HWWHUWR&RFNUHO QRZPXVWSD\WKHSHQDOW\IRUJLYLQJSULRUDSSURYDOEHFDXVH LW FDQQRW QRZ EH KHDUG WKDW VXFK FRQGXFW E\ &RFNUHO ZDV ,Q WKH PRQWKV IROORZLQJ +DUUHOVRQjV YLVLW 6LPSVRQYLOOH GLVUXSWLYH (OHPHQWDU\ 6FKRRO DGRSWHG D QHZ YLVLWRUV SROLF\ IRU mFRQWURYHUVLDOl WRSLFV WKDW UHTXLUHG DGYDQFH DSSURYDO E\ /LNHZLVH&RFNUHOjVFRQGXFWLIWUXHWRZDUGWKHSULQFLSDO VFKRRO DGPLQLVWUDWLRQ DQG ZULWWHQ FRQVHQW E\ VWXGHQWVj DQGRWKHUWHDFKHUVPD\YHU\ZHOOKDYHVXSSRUWHGDGLVPLVVDO SDUHQWV7KLVSROLF\ZDVSXWWRXVHZKHQGXULQJWKHQH[W IRUFDXVHEXWWKHVFKRROWRRNQRDFWLRQWRZDUGKHUIRUVRPH RI WKLV FRQGXFW XQWLO DIWHU WKH FRPPXQLW\ EHFDPH DJLWDWHG IROORZLQJ+DUUHOVRQjV YLVLW7KXVDVWKHPDMRULW\RSLQLRQ 2Q 6HSWHPEHU EDVHG RQ WKH ILQGLQJV RI WKH LQYHVWLJDWLRQ UHODWHVWKHEXUGHQLVXSRQWKHVFKRROERDUGWRVKRZWKDWWKH 0RRQH\KDQ JDYH &RFNUHO D SULYDWH UHSULPDQG ERWK IRU KHU FRQGXFW GXULQJ GLVPLVVDO ZRXOG KDYH RFFXUUHG HYHQ LQ WKH DEVHQFH RI WKH WKH +DUUHOVRQ YLVLW DQG IRU RWKHU LQDSSURSULDWH DFWLRQV WKDW ZHUH SURWHFWHG FRQGXFW 6HH 0W +HDOWK\ &LW\ %G RI (GXF Y GLVFRYHUHG 7KH FULWLFLVPV VSHFLILFDOO\ SHUWDLQLQJ WR +DUUHOVRQj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
VFKRRO\HDU&RFNUHOLQIRUPHG6ODWHWKDW+DUUHOVRQZRXOGEH GLVFKDUJH 5DWKHU RQ UHYLHZ RI D GHIHQGDQWjV PRWLRQ IRU PDNLQJDVHFRQGYLVLWWRKHUFODVVURRPWRGLVFXVVLQGXVWULDO VXPPDU\MXGJPHQWLIWKHSODLQWLIIKDVPDGHRXWWKHHOHPHQWV KHPS&RFNUHOPHWDOORIWKHUHTXLUHPHQWVRIWKHQHZYLVLWRUV RI KHU )LUVW $PHQGPHQW UHWDOLDWLRQ FODLP ZH PXVW EH SROLF\ LQFOXGLQJ SURYLGLQJ WKH UHTXLVLWH DGYDQFH QRWLFH WR FRQILGHQW WKDW WKH GHIHQGDQWjV GHFLVLRQ WR WHUPLQDWH WKH 3ULQFLSDO6ODWHDQGREWDLQLQJSHUPLVVLRQIURPWKHSDUHQWVRI SODLQWLIIZDVQRWEDVHGLQSDUWXSRQWKHSODLQWLIIj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mORXGO\ )RU WKH IRUHJRLQJ UHDVRQV ZH 5(9(56( WKH GLVWULFW YRLFHG WKHLU REMHFWLRQVl WR 6ODWH DERXW KLV SHUPLWWLQJ FRXUWjV GHFLVLRQ JUDQWLQJ GHIHQGDQWVj PRWLRQ IRU VXPPDU\ +DUUHOVRQWRYLVLWWKHVFKRRODVHFRQGWLPHs$DW 6ODWH MXGJPHQW DQG 5(0$1' WR WKDW FRXUW IRU IXUWKHU 'HS SURFHHGLQJV
+DUUHOVRQ UHVFKHGXOHG WKH YLVLW IRU WKH IROORZLQJ ZHHN sDQXDU\ DQG&RFNUHODJDLQIXOO\FRPSOLHGZLWKWKH VFKRROjV YLVLWRUV SROLF\ 3ULQFLSDO 6ODWH DJDLQ DSSURYHG +DUUHOVRQjV YLVLW 7KLV WLPH +DUUHOVRQ GLG PDNH DQ DSSHDUDQFH+DUUHOVRQZDVPHWE\DJURXSRISDUHQWVRXWVLGH WKH VFKRRO ZKR ZHUH SURWHVWLQJ KLV YLVLW 'XH WR VFKRRO VFKHGXOLQJSUREOHPV+DUUHOVRQZDVRQO\DEOHWRVSHDNWRWKH VWXGHQWVIRUDIHZPLQXWHVEHIRUHWKHVWXGHQWVKDGWROHDYHIRU OXQFK +DUUHOVRQjV YLVLW DJDLQ JDUQHUHG QDWLRQDO PHGLD DWWHQWLRQIURP&113ULQFLSDO6ODWHZKRKDGEHHQDVNHGE\ &11IRUDQLQWHUYLHZUHJDUGLQJ&RFNUHOjVSUHVHQWDWLRQVRQ LQGXVWULDOKHPSFKRVHWRLVVXHDZULWWHQVWDWHPHQWLQVWHDG,Q KLVVWDWHPHQW6ODWHVDLGWKHIROORZLQJ 7KHPHGLDKDVUHSRUWHGWKDW0V&RFNUHOKDVH[SHULHQFHG SUREOHPVZLWK6KHOE\&RXQW\VFKRRORIILFLDOVLQFOXGLQJ
$OO EXW RQH RI KHU VWXGHQWV ZDV JLYHQ SHUPLVVLRQ WR DWWHQG WKH +DUUHOVRQ SUHVHQWDWLRQ &RFNUHOY6KHOE\&RXQW\6FKRRO 1R 1R &RFNUHOY6KHOE\&RXQW\6FKRRO 'LVWULFWHWDO 'LVWULFWHWDO
,Q DGGLWLRQ LQ /DQJIRUG SODLQWLIIjV VXSHUYLVRU DSSHDUHG PH UHJDUGLQJ KHU WHDFKLQJ DERXW LQGXVWULDO KHPS , UHDG\DQGZLOOLQJWRWHUPLQDWHSODLQWLIIDVVRRQDVSODLQWLII DGPLWWKDWZHKDYHKDGSUREOHPVKRZHYHUQRWDOORXU UHIXVHGWRVSHDNZLWKKHUDERXWWKHSUREOHPVWKHWZRZHUH FRQFHUQVDUHDERXW0V&RFNUHOjVWHDFKLQJDERXWKHPS KDYLQJ/DQJIRUGZDVWKHQVZLIWO\WHUPLQDWHGDIWHUVKHIDLOHG , KDYH DOVR UHFHLYHG FRPSODLQWV DERXW KHU FRQGXFW LQ WRDWWHQGDPHHWLQJZLWK/DQHLQZKLFKWKH\ZHUHWRGLVFXVV RWKHUDUHDV7KH6KHOE\&RXQW\VFKRRORIILFLDOVDQG,GR WKHLUGLVSXWH,QWKHFXUUHQWFDVHWKHUHLVOHVVHYLGHQFHWKDW QRWGLVDSSURYHRI0V&RFNUHOWHDFKLQJDERXWKHPSSHU WKH GHIHQGDQWV ZHUH VXIILFLHQWO\ PRWLYDWHG E\ &RFNUHOjV VH ZKLFK ZH DGPLW KDV HGXFDWLRQDO YDOXH DV WR LWV FRQGXFW DSDUW IURP KHU GHFLVLRQ WR VSHDN ZKHQ WKH\ PDGH KLVWRULFDO DQG FXUUHQW XVHV DQG LWV SRWHQWLDO DV DQ WKHLU GHFLVLRQ WR WHUPLQDWH KHU ,Q WKLV FDVH DOWKRXJK DOWHUQDWLYHFURS5DWKHUZHKDYHEHHQFRQFHUQHGDERXW 0RRQH\KDQFLWHGVHYHQWHHQFKDUJHVFRQVWLWXWLQJWKHEDVLVIRU WKH PHWKRGV 0V &RFNUHO KDV XVHG WR SUHVHQW LVVXHV &RFNUHOjV WHUPLQDWLRQ VHYHUDO RI WKH SURIIHUHG UHDVRQV UHJDUGLQJKHPSWRKHUVWXGHQWV SURYLGH D OHVV WKDQ FRPSHOOLQJ EDVLV IRU WHUPLQDWLRQ )RU H[DPSOH 0RRQH\KDQ FLWHG &RFNUHOjV IUHTXHQW XVH RI WKH s$ DW 6WDWHPHQW IRU &11 HPSKDVLV LQ RULJLQDO VFKRROjVWHOHSKRQHIRUQRQVFKRROUHODWHGEXVLQHVVKHUIDLOXUH 6ODWHjV VWDWHPHQW WKHQ ZHQW RQ WR FULWLFL]H &RFNUHOjV WRSUHSDUHDGHTXDWHOHVVRQSODQVIRUVXEVWLWXWHWHDFKHUVDQG SHUPLWWLQJKHPSVHHGVWREHSDVVHGDURXQGWRWKHVWXGHQWVDW KHUIDLOXUHWRIROORZWKHVFKRROjVYLVLWRUVSROLF\IRUWKHILUVW WKH ILUVW SUHVHQWDWLRQ DV ZHOO DV KHU IDLOXUH WR LQIRUP KLP +DUUHOVRQ YLVLW )RU HDFK RI WKHVH FKDUJHV WKHUH LV QR SURPSWO\ RI +DUUHOVRQjV ILUVW YLVLW ZKLFK RFFXUUHG RQ WKH HYLGHQFHLQWKHUHFRUGWKDW&RFNUHOKDGHYHUEHHQGLVFLSOLQHG VDPHGD\DVWKH'$5(JUDGXDWLRQ RUUHSULPDQGHGLQDQ\ZD\IRUWKHVHYLRODWLRQVSULRUWRWKHLU LQFOXVLRQDVEDVHVIRUKHUWHUPLQDWLRQ)XUWKHUPRUHZKLOH ,QWKHPRQWKVIROORZLQJ+DUUHOVRQjVLQLWLDOYLVLWDQGVKRUWO\ PDQ\ RI WKH PRUH VHULRXV DOOHJDWLRQV GHWDLOHG LQ WKH DIWHU KLV VHFRQG YLVLW LQ sDQXDU\ 6ODWH VDW LQ RQ WHUPLQDWLRQ OHWWHU LH FDOOLQJ 3ULQFLSDO 6ODWH QDPHV DQG &RFNUHOj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jVHDUO\UHYLHZZDVKLV WKH GHIHQGDQWV KDYH PHW WKHLU EXUGHQ DW WKH VXPPDU\ SHUFHSWLRQWKDWWKLQJVKDGEHHQmJRLQJGRZQKLOOlEHWZHHQWKH MXGJPHQWVWDJHRIVKRZLQJWKDWWKHLUGHFLVLRQWRGLVFKDUJH WZRRIWKHPIRUWKHSUHYLRXVWZR\HDUVs$DW 6ODWH &RFNUHOZRXOGKDYHEHHQPDGHUHJDUGOHVVRIKHUGHFLVLRQWR 'HS 6ODWH IXUWKHU H[SODLQHG WKDW &RFNUHO ZDV QHLWKHU HQJDJHLQFRQVWLWXWLRQDOO\SURWHFWHGVSHHFK FRPPXQLFDWLQJQRUFRRSHUDWLQJZLWKKLPDQGWKHUHVWRIWKH VWDII DQG IDFXOW\ RI 6LPSVRQYLOOH (OHPHQWDU\ QRU ZDV VKH :HDUHZHOODZDUHWKDW&RFNUHOjVGHFLVLRQWRVSHDNFDQQRW DGHTXDWHO\IROORZLQJWKHVFKRROjVFXUULFXOXPDQGSROLFLHV LPPXQL]HKHUIURPDQDGYHUVHHPSOR\PHQWGHFLVLRQDULVLQJ RXW RI LQDSSURSULDWH ZRUNSODFH EHKDYLRU XQUHODWHG WR KHU &LWLQJ H[DPSOHV RI WKLV GRZQZDUG WUHQG LQ &RFNUHOj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jV JUDQW RI VXPPDU\ PHHWLQJV MXGJPHQWWRWKHJRYHUQPHQWHPSOR\HUWKLVFRXUWKHOGWKDWWKH HYLGHQFHZDVVWURQJHQRXJKIRUDUHDVRQDEOHMXU\WRVWDWHWKDW ,QWKH VFKRRO\HDUGXULQJDQGDIWHUWKHQHZVWKDW WKH HPSOR\HHjV VSHHFK PRWLYDWHG DW OHDVW LQ SDUW WKH +DUUHOVRQ ZRXOG EH YLVLWLQJ KHU FODVV RQFH DJDLQ ILYH GHIHQGDQWjV GHFLVLRQ WR GLVFKDUJH KHU ,G DW VWXGHQWV DW WKHLU SDUHQWVj UHTXHVW ZHUH WUDQVIHUUHG RXW RI 1HYHUWKHOHVV WKLV FRXUW WKHQ KHOG WKDW EDVHG RQ WKH &RFNUHOjVFODVV(DFKWLPH6ODWHDWWHPSWHGWRLQIRUP&RFNUHO /DQJIRUGjVmUDQNLQVXERUGLQDWLRQlLQLQVXOWLQJ/DQHLQIURQW RIDVWXGHQWjVWUDQVIHU&RFNUHOZRXOGUHIXVHWRWDONZLWKKLP RIFRZRUNHUVDQGUHIXVLQJWRGLVFXVVKHUHPSOR\PHQWGLVSXWH VRPHWLPHVZDONLQJULJKWSDVWKLPZKHQKHWULHGWRVSHDNZLWK ZLWK/DQHGHVSLWH/DQHjVUHTXHVWVWRGRVRWKHGHIHQGDQWV KHURUWXUQLQJKHUEDFNWRKLPRUUHIXVLQJWRPHHWZLWKKLP ZRXOGKDYHWHUPLQDWHG/DQJIRUGUHJDUGOHVVRIKHUSURWHFWHG LQKLVRIILFHZKHQKHVRUHTXHVWHG VSHHFK,GDW 2Q)HEUXDU\ LQWKHZDNHRI&RFNUHOjVGHFLVLRQWR $OWKRXJKWKHGHIHQGDQWVLQWKHFDVHDWEDUKDYHDVPXFK FRQWLQXH GLVFXVVLQJ WKH EHQHILWV RI LQGXVWULDO KHPS ZLWK HYLGHQFH RI LQVXERUGLQDWLRQ DQG RWKHU PLVFRQGXFW XSRQ RXWVLGH VSHDNHUV WKH 6LPSVRQYLOOH 3DUHQW 7HDFKHUV ZKLFKWREDVHWKHLUGHFLVLRQWRGLVFKDUJHDVGLGWKHGHIHQGDQWV $VVRFLDWLRQ m37$l DGRSWHGDmSRVLWLRQVWDWHPHQWlZKLFK LQ /DQJIRUG LW LV OHVV FOHDU LQ WKH FXUUHQW FDVH WKDW WKH VWDWHGLQSDUW GHIHQGDQWV ZRXOG KDYH ILUHG &RFNUHO HYHQ KDG VKH QRW HQJDJHGLQSURWHFWHGVSHHFK)LUVWLQ/DQJIRUGWKLVFRXUW ,QRXURSLQLRQ0UV&RFNUHOjVEHKDYLRURYHUWKHSDVWIHZ DFNQRZOHGJHG WKDW DVLGH IURP WKH WHPSRUDO SUR[LPLW\ PRQWKV KDV EHHQ LQDSSURSULDWH IRU D WHDFKHU DQG UROH EHWZHHQ/DQHjVUHTXHVWVWRVSHDNZLWK/DQJIRUGDERXWWKHLU PRGHO IRU RXU FKLOGUHQ :H IHHO VKH YLRODWHG WKH SUREOHPV DQG /DQJIRUGjV VFKHGXOHG VSHDNLQJ HQJDJHPHQW SURIHVVLRQDO FRGH RI HWKLFV IRU .< >VLF@ VFKRRO ZLWKWKH%RDUGRI&RPPLVVLRQHUVSODLQWLIIKDGEURXJKWIRUWK SHUVRQQHO ,Q RXU RSLQLRQ VKH FDQ QR ORQJHU EH DQ QRHYLGHQFHVKRZLQJWKDW/DQHZDVWU\LQJWRLQWLPLGDWHKHU HIIHFWLYH HGXFDWRU LQ RXU V\VWHP DQG RXU FKLOGUHQjV LQWR QRW VSHDNLQJ LQ IURQW RI WKH %RDUG QRU ZDV WKHUH DQ\ HGXFDWLRQZRXOGEHEHWWHUVHUYHGE\DQRWKHUWHDFKHU DGGLWLRQDOHYLGHQFHDVLGHIURPWKHWHPSRUDOSUR[LPLW\RIWKH WHUPLQDWLRQ DQG KHU VSHHFK ZKLFK LQGLFDWHG WKDW WKH s$DW 37$3RVLWLRQ6WDWHPHQW $OLWWOHPRUHWKDQD GHIHQGDQWVKDGUHWDOLDWHGDJDLQVWKHUIRUVSHDNLQJ,GDW PRQWKODWHU3ULQFLSDO6ODWHLVVXHGDmVXPPDWLYHHYDOXDWLRQl ,QWKHFXUUHQWFDVH&RFNUHOjVWHVWLPRQ\UHJDUGLQJWKHZDUQLQJ RI&RFNUHOjVSHUIRUPDQFHVWDWLQJWKDW&RFNUHOGLGQRWPHHW VKH UHFHLYHG IURP 0RRQH\KDQ DV ZHOO DV WKH PDWHULDOV WKHUHTXLVLWHOHYHORISHUIRUPDQFHLQILYHRIWKHIRUW\WKUHH DWWDFKHGWRWKHVXPPDWLYHHYDOXDWLRQDUHSLHFHVRIHYLGHQFH FDWHJRULHVRIHYDOXDWLRQ'HILFLHQWSHUIRUPDQFHZDVQRWHGLQ WKDW FDVW PRUH GRXEW RQ WKH GHIHQGDQWVj PRWLYHV LQ WKHIROORZLQJDUHDV FRPPXQLFDWLRQZLWKSDUHQWVUHJDUGLQJ WHUPLQDWLQJ&RFNUHOWKDQH[LVWHGLQ/DQJIRUG VWXGHQWSHUIRUPDQFHDQGWHDFKHUH[SHFWDWLRQV GRFXPHQWDWLRQ &RFNUHOY6KHOE\&RXQW\6FKRRO 1R 1R &RFNUHOY6KHOE\&RXQW\6FKRRO 'LVWULFWHWDO 'LVWULFWHWDO RI &RFNUHOjV DOOHJHGO\ GHILFLHQW SHUIRUPDQFH LQ VHYHUDO RIOHVVRQSODQV VKRZLQJmFRQVLVWHQWVHQVLWLYLW\WRLQGLYLGXDO FDWHJRULHVRIHYDOXDWLRQ3ULQFLSDO6ODWHDWWDFKHGQXPHURXV DFDGHPLF SK\VLFDO VRFLDO DQG FXOWXUDO GLIIHUHQFHV DQG GRFXPHQWVWRWKHHYDOXDWLRQ$PRQJWKHVHGRFXPHQWVZHUH UHVSRQG>LQJ@WRDOO VWXGHQWVLQDFDULQJPDQQHUl DELOLW\WR VHYHUDO OHWWHUV IURP VWDII DQG SDUHQWV FULWLFL]LQJ &RFNUHOjV EXLOGSRVLWLYHUHODWLRQVKLSVZLWKLQWKHVFKRRODQGEHWZHHQWKH GHFLVLRQWRVSHDNRQLQGXVWULDOKHPSDVZHOODVDSRVLWLRQ VFKRRODQGFRPPXQLW\ DQGDFWLQJLQDFFRUGDQFHZLWKODZV VWDWHPHQWDGRSWHGE\WKH6LPSVRQYLOOH37$UHFRPPHQGLQJ DQGZLWKVFKRROUHJXODWLRQVDQGSURFHGXUHVs$DW WKDW&RFNUHOQRORQJHUEHSHUPLWWHGWRWHDFKDWWKDWVFKRRO 3HUIRUPDQFH(YDOXDWLRQ0DU $WWDFKHGWRWKH EDVHGRQKHUFRQGXFWDVVRFLDWHGZLWKWKHKHPSSUHVHQWDWLRQV HYDOXDWLRQ ZHUH VHYHUDO OHWWHUV IURP SDUHQWV FRPSODLQLQJ :KLOH LQ WKH GRFXPHQWV DSSHQGHG WR WKH VXPPDWLYH DERXW &RFNUHOjV GLVFXVVLRQ RI KHPS LQ FODVV DV ZHOO DV HYDOXDWLRQ WKHUH LV HYLGHQFH RI &RFNUHO HQJDJLQJ LQ GRFXPHQWDWLRQRIRWKHUDOOHJHGPLVFRQGXFW%DVHGRQWKLV LQDSSURSULDWH EHKDYLRU DSDUW IURP KHU SDUWLFLSDWLRQ LQ DQ\ HYDOXDWLRQ6ODWHUHFRPPHQGHGWR6XSHULQWHQGHQW0RRQH\KDQ LQGXVWULDOKHPSSUHVHQWDWLRQVZHGRQRWEHOLHYHWKDWEDVHG WKDW &RFNUHO EH WHUPLQDWHG &RFNUHO ZDV WHUPLQDWHG E\ RQWKHWRWDOLW\RIWKHHYLGHQFHLQWKLVFDVHHYHU\UHDVRQDEOH 0RRQH\KDQRQsXO\ MXURU ZRXOG FRQFOXGH WKDW &RFNUHO ZRXOG KDYH EHHQ WHUPLQDWHG QRWZLWKVWDQGLQJ KHU FRQVWLWXWLRQDOO\ SURWHFWHG 7KHWHUPLQDWLRQOHWWHULQIRUPLQJ&RFNUHORIKHUGLVFKDUJH VSHHFK GHWDLOHG QXPHURXV LQVWDQFHV RI PLVFRQGXFW DOO RI ZKLFK DOOHJHGO\VHUYHGDVWKHEDVLVIRUKHUGLVFKDUJH6HYHUDORI 7KHGHIHQGDQWVFLWHWRWKLVFLUFXLWjVGHFLVLRQLQ/DQJIRUGY WKHVHFKDUJHVGHWDLOHGPLVFRQGXFWWKDWRFFXUUHGZHOOEHIRUH /DQH )G WK &LU DV VXSSRUW IRU WKHLU +DUUHOVRQPDGHKLVLQLWLDOYLVLWWR6LPSVRQYLOOH(OHPHQWDU\ FRQWHQWLRQ WKDW WKH\ KDYH PHW WKHLU EXUGHQ RI UHEXWWLQJ 7KHUHLVQRHYLGHQFHLQWKHUHFRUGKRZHYHUWKDW&RFNUHOKDG &RFNUHOjV UHWDOLDWLRQ FODLP :H EHOLHYH KRZHYHU WKDW EHHQUHSULPDQGHGIRUVXFKDFWLYLW\SULRUWR+DUUHOVRQjVYLVLWV /DQJIRUG LV GLVWLQJXLVKDEOH ,Q/DQJIRUG D QXUVLQJ KRPH WRKHUFODVVURRP HPSOR\HH ZDV ILUHG DIWHU HQJDJLQJ LQ FRQVWLWXWLRQDOO\ SURWHFWHGDFWLYLW\LQVSHDNLQJDERXWDQHPSOR\PHQWGLVSXWH $V LV KHU ULJKW XQGHU .HQWXFN\ ODZ &RFNUHO LQLWLDOO\ LQIURQWRIWKH&RXQW\%RDUGRI&RPPLVVLRQHUV/DQJIRUG GHFLGHGWRDSSHDOWKH6XSHULQWHQGHQWjVGHFLVLRQWRWHUPLQDWH )GDW 7KHGD\EHIRUHWKHSODLQWLIILQ/DQJIRUG KHU6KRUWO\WKHUHDIWHUKRZHYHUVKHZLWKGUHZKHUDSSHDO ZDV VFKHGXOHG WR VSHDN KHU VXSHUYLVRU /DQH DVNHG WKH SODLQWLII /DQJIRUG WRGLVFXVVZK\/DQJIRUGZDVVRKRVWLOHWR 3XUVXDQW WR .\ 5HY 6WDW 6XSHULQWHQGHQW KHU /DQJIRUG KDG HDUOLHU LQVXOWHG /DQH LQ IURQW RI FR 0RRQH\KDQIRUZDUGHGRQWRWKH(36%WKHSURIIHUHGUHDVRQV ZRUNHUV DQGZKDW/DQJIRUGSODQQHGWRVD\WRWKH%RDUGWKH IRUWHUPLQDWLQJ&RFNUHOLQFDVHWKH%RDUGZLVKHGWRUHYRNH QH[WHYHQLQJ/DQJIRUGWZLFHUHIXVHGWRHQJDJHLQGLVFXVVLRQ &RFNUHOjV WHDFKLQJ FHUWLILFDWH )ROORZLQJ UHYLHZ E\ WKH RQFHLQIURQWRIRWKHUHPSOR\HHV$IWHU/DQJIRUGUHIXVHGWR (36%&RFNUHOHQWHUHGLQWRDZULWWHQDJUHHPHQWZKHUHE\KHU VSHDNZLWKKHU/DQHDVNHGKHUVXSHUYLVRULI/DQHFRXOGILUH WHDFKLQJFHUWLILFDWHZDVVXUUHQGHUHGIRUWZR\HDUV sXQH /DQJIRUG EDVHG RQ WKLV LQVXERUGLQDWH FRQGXFW /DQHjV WR sXQH DQG VXVSHQGHG IRU WZR \HDUV sXO\ VXSHUYLVRU WROG KHU WKDW EHFDXVH KH KDG QRW ZLWQHVVHG WKH WKURXJKs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jVPRWLRQIRUVXPPDU\MXGJPHQWZHDUH ZKHQSUHVHQWHGDWIRUPDOKHDULQJLVVXFKWRUHVXOWLQD UHTXLUHGWRYLHZWKHHYLGHQFHLQWKHOLJKWPRVWIDYRUDEOHWR ILQGLQJRQDOOFKDUJHVWKDWKHUFRQGXFWLVLQYLRODWLRQRI &RFNUHOWKHQRQPRYLQJSDUW\7KLVDORQHFUHDWHVDPDWHULDO .56DQGWKH3URIHVVLRQDO&RGHRI(WKLFVIRU IDFWLVVXHRYHUWKH H[WHQWWRZKLFKGHIHQGDQWVjGHFLVLRQWR .HQWXFN\6FKRRO3HUVRQQHO7KHUHIRUH&RFNUHOEHOLHYHV GLVFKDUJH &RFNUHO ZDV PRWLYDWHG E\ KHU GHFLVLRQ WR EULQJ WKDWLWLVLQKHUEHVWLQWHUHVWDWWKLVWLPHWRHQWHULQWRWKLV LQGXVWULDOKHPSDGYRFDWHVWRFODVV $JUHHG2UGHU 2WKHUPRUHFLUFXPVWDQWLDOHYLGHQFHDOVRZHLJKVLQIDYRU s$DW (36%$JUHHG2UGHU RI DOORZLQJ &RFNUHO WR SURFHHG WR WULDO RQ KHU UHWDOLDWLRQ FODLP $V QRWHG HDUOLHU 3ULQFLSDO 6ODWH LQLWLDWHG HDUO\ 2QsXQH &RFNUHOILOHGVXLWLQ WKH 8QLWHG6WDWHV HYDOXDWLRQVRI&RFNUHOLQWKH VFKRRO\HDUIROORZLQJ 'LVWULFW&RXUWIRUWKH(DVWHUQ'LVWULFWRI.HQWXFN\&RFNUHO +DUUHOVRQjVILUVWYLVLWRQWKHODVWGD\RIWKHSULRUVFKRRO\HDU EURXJKWDFODLPSXUVXDQWWR86& LQZKLFKVKH ,QDGGLWLRQ6XSHULQWHQGHQW0RRQH\KDQjVGHFLVLRQWRFRQGXFW DOOHJHGWKDWVKHZDVWHUPLQDWHGLQUHWDOLDWLRQIRUH[HUFLVLQJ DQLQYHVWLJDWLRQLQWR&RFNUHOjVFRQGXFWZDVEDVHGVROHO\RQ KHU)LUVW$PHQGPHQWULJKWRIIUHHVSHHFKZKHQGLVFXVVLQJWKH WKH SDUHQWVj DQG WHDFKHUVj FRPSODLQW OHWWHUV KH UHFHLYHG SRWHQWLDOHQYLURQPHQWDOEHQHILWVRILQGXVWULDOKHPS&RFNUHO IROORZLQJWKHLQLWLDO+DUUHOVRQYLVLW7KHUHLVQRHYLGHQFHLQ DOVRLQFOXGHGDVWDWHODZEUHDFKRIFRQWUDFWFODLP)ROORZLQJ WKHUHFRUGWKDWDQ\QHZVRIWKHLPSURSHUFRQGXFWDOOHJHGLQ OLPLWHG GLVFRYHU\ WKH GHIHQGDQWV PRYHG IRU VXPPDU\ &RFNUHOjV WHUPLQDWLRQ OHWWHU PXFK RI ZKLFK RFFXUUHG ZHOO MXGJPHQW RQ &RFNUHOjV FODLP DQG DVNHG WKDW WKH EHIRUH +DUUHOVRQ VHW IRRW RQ WKH JURXQGV RI 6LPSVRQYLOOH GLVWULFW FRXUW DEVWDLQ IURP GHFLGLQJ KHU VWDWH ODZ FODLP RI (OHPHQWDU\ KDG HYHU EHHQ UHOD\HG WR WKH 6XSHULQWHQGHQW EUHDFKRIFRQWUDFW EHIRUHWKHGHFLVLRQWRLQYHVWLJDWH&RFNUHOKDGEHHQPDGHQRU LVWKHUHDQ\HYLGHQFHWKDW&RFNUHOKDGEHHQGLVFLSOLQHGE\DQ\ 7KHGLVWULFWFRXUWDJUHHGWRDEVWDLQIURPGHFLGLQJ&RFNUHOjV VFKRRODGPLQLVWUDWRUIRUWKLVFRQGXFWEHIRUH+DUUHOVRQDUULYHG VWDWH ODZ EUHDFK RI FRQWUDFW FODLP $V IRU &RFNUHOjV )LUVW RQWKHVFHQH:KLOHPDQ\RIWKHDOOHJDWLRQVPDGHDJDLQVW $PHQGPHQWUHWDOLDWLRQFODLPWKHGLVWULFWFRXUWJUDQWHGWKH &RFNUHOZRXOGLIWUXHDPRXQWWRVHULRXVPLVFRQGXFWRQKHU GHIHQGDQWVjPRWLRQIRUVXPPDU\MXGJPHQW,QGRLQJVRWKH SDUW WKH IDFW WKDW VKH ZDV QRW GLVFLSOLQHG IRU DQ\ RI WKLV GLVWULFWFRXUWKHOGWKDW&RFNUHOjVGHFLVLRQWREULQJLQDVSHDNHU EHKDYLRUQRUGLGWKH6XSHULQWHQGHQWNQRZRILWXQWLODIWHU WR GLVFXVV LQGXVWULDO KHPS FRQVWLWXWHG FRQGXFW WKDW ZDV +DUUHOVRQ YLVLWHG DQG YDULRXV PHPEHUV RI WKH VFKRRO QHLWKHU H[SUHVVLYH QRU LQWHQGHG WR FRQYH\ D SDUWLFXODUL]HG FRPPXQLW\ YRLFHG WKHLU GLVSOHDVXUH ZLWK WKH SUHVHQWDWLRQ PHVVDJHDQGWKXVZDVQRWFRQVLGHUHGSURWHFWHGVSHHFKXQGHU OHDGV WR D JHQXLQH LVVXH RI PDWHULDO IDFW FRQFHUQLQJ WKH 6XSUHPH&RXUWMXULVSUXGHQFH7KHGLVWULFWFRXUWIXUWKHUKHOG GHIHQGDQWVj DVVHUWLRQ WKDW &RFNUHO ZRXOG KDYH EHHQ ILUHG WKDW&RFNUHOjVGHFLVLRQWRGLVFXVVLQGXVWULDOKHPSDVSDUWRI UHJDUGOHVV RI KHU GHFLVLRQ WR VSHDN RQ WKH HQYLURQPHQWDO WKHILIWKJUDGHFXUULFXOXPFRXOGEHFRQVLGHUHGQRWKLQJPRUH EHQHILWVRILQGXVWULDOKHPS WKDQSULYDWHVSHHFKE\DWHDFKHUZKRZDVFRPPXQLFDWLQJLQ KHUUROH DV DQHPSOR\HHQRWDVDFLWL]HQDQGWKXVGLGQRW $OVR WHOOLQJ LV WKH VXPPDWLYH HYDOXDWLRQ LWVHOI ZKLFK WRXFKRQPDWWHUVRISXEOLFFRQFHUQ8OWLPDWHO\WKHGLVWULFW 3ULQFLSDO 6ODWH WHVWLILHG ZDV WKH EDVLV XSRQ ZKLFK KH FRXUW FRQFOXGHG WKDW EHFDXVH &RFNUHOjV FRQGXFW FRXOG QRW UHFRPPHQGHGWR0RRQH\KDQWKDW&RFNUHOEHILUHGDQGZKLFK HYHQEHFRQVLGHUHGH[SUHVVLYHVSHHFKDQGEHFDXVHHYHQLILW 0RRQH\KDQDGPLWWHGZDVDIDFWRULQKLVXOWLPDWHGHFLVLRQWR ZDVVSHHFKKHUFXUULFXODUFKRLFHVGLGQRWWRXFKRQPDWWHUVRI GLVFKDUJH&RFNUHO0RRQH\KDQ'HS,,DW$VHYLGHQFH &RFNUHOY6KHOE\&RXQW\6FKRRO 1R 1R &RFNUHOY6KHOE\&RXQW\6FKRRO 'LVWULFWHWDO 'LVWULFWHWDO ,Q WKH sXO\ WHUPLQDWLRQ OHWWHU VHQW E\ SXEOLFFRQFHUQVKHGLGQRWKDYHD)LUVW$PHQGPHQWULJKWWR 6XSHULQWHQGHQW 0RRQH\KDQ WR &RFNUHO VHYHQWHHQ UHDVRQV GLVFXVVLQGXVWULDOKHPSLQKHUFODVVURRP7KXVEHFDXVHVKH ZHUHJLYHQDVWKHEDVLVIRUWKHVFKRROGLVWULFWjVGHFLVLRQWR KDGQR)LUVW$PHQGPHQWULJKWWRVSHDNLQWKLVLQVWDQFHWKH GLVFKDUJHKHUs$DW$PRQJWKHOLWDQ\RIUHDVRQV FRXUW FRQFOXGHG WKDW &RFNUHO KDG QR DFWLRQDEOH )LUVW RIIHUHGE\WKHGHIHQGDQWVIRU&RFNUHOjVGLVFKDUJHZHUH KHU $PHQGPHQWUHWDOLDWLRQFODLP&RFNUHOjVDSSHDOWRWKLVFRXUW FDOOLQJ3ULQFLSDO6ODWHQDPHVLQIURQWRIVWDIIPHPEHUVDQG IROORZHG VWXGHQWV KHUIDLOXUHWRWHDFKWKHVFKRROjVPDQGDWRU\msXVW 7KLQNl FXUULFXOXP KHU SHUVLVWHQW IDLOXUH WR IROORZ WKH ,,$1$/<6,6 VFKRROjV 7LWOH , SURJUDP KHU LQDSSURSULDWH ODQJXDJH DQG GLVSOD\VRIDQJHULQFODVV DQGKHUJHQHUDOIDLOXUHWRFRRSHUDWH :HPXVWILUVWDGGUHVVWZRSURFHGXUDODUJXPHQWVUDLVHGE\ ZLWKRWKHUPHPEHUVRIWKH6LPSVRQYLOOHVFKRROFRPPXQLW\ WKHDSSHOOHHVWKDWLIVXFFHVVIXOZRXOGUHQGHUDUHYLHZRIWKH DSRLQWZKLFKZHKDYHDOUHDG\GLVFXVVHGLQGHWDLO7KHUHLV PHULWV RI &RFNUHOjV )LUVW $PHQGPHQW UHWDOLDWLRQ FODLP QRTXHVWLRQWKDW&RFNUHOjVFRQGXFWLILWGLGLQIDFWRFFXUDV XQQHFHVVDU\ WKH GHIHQGDQWV DOOHJH ZDV FRPSOHWHO\ LQDSSURSULDWH )XUWKHUPRUHZHKDYHQRGRXEWWKDWFRQGXFWRIWKLVQDWXUHFDQ $&ROODWHUDO(VWRSSHO VHUYH DV DGHTXDWH JURXQGV IRU DQ HPSOR\HHjV WHUPLQDWLRQ 'HVSLWHWKLVKRZHYHUDIWHUYLHZLQJDOOWKHHYLGHQFHLQWKH 7KHGHIHQGDQWVILUVWDUJXHWKDWEHFDXVH&RFNUHOIDLOHGWR UHFRUG LQ WKH OLJKW PRVW IDYRUDEOH WR &RFNUHO ZH GR QRW DSSHDOWKH6XSHULQWHQGHQWjVGHFLVLRQWRWHUPLQDWHKHUDVZDV EHOLHYHWKDWWKHGHIHQGDQWVKDYHPHWWKHLUVLJQLILFDQWEXUGHQ KHU ULJKW XQGHU .HQWXFN\ ODZ VKH LV FROODWHUDOO\ HVWRSSHG RIVKRZLQJWKDWHYHU\UHDVRQDEOHMXURUZRXOGFRQFOXGHWKDW IURPFKDOOHQJLQJKHUGLVPLVVDOLQWKLVFRXUW$VWKLVFLUFXLW HYHQKDG&RFNUHOQRWVSRNHQWRKHUVWXGHQWVDERXWLQGXVWULDO KDVH[SODLQHGFROODWHUDOHVWRSSHORWKHUZLVHNQRZQDVLVVXH KHPSVKHZRXOGKDYHEHHQWHUPLQDWHGLQDQ\HYHQW SUHFOXVLRQmUHIHUVWRWKHHIIHFWRIDMXGJPHQWLQIRUHFORVLQJ UHOLWLJDWLRQRIDPDWWHUWKDWKDVEHHQOLWLJDWHGDQGGHFLGHGl 6HYHUDO SLHFHV RI HYLGHQFH ZHLJK DJDLQVW JUDQWLQJ %DUQHVY0F'RZHOO)GQ WK&LU GHIHQGDQWVj VXPPDU\ MXGJPHQW PRWLRQ )LUVW &RFNUHO FHUWGHQLHG86 7KH%DUQHVFRXUWIXUWKHU WHVWLILHGLQKHUGHSRVLWLRQWKDWDWWKHEHJLQQLQJRIWKH H[SODLQHGWKDWIHGHUDOFRXUWVPXVWJLYHWKHIDFWXDOILQGLQJVRI VFKRRO\HDUIROORZLQJ+DUUHOVRQjVILUVWYLVLWWRKHUFODVV DVWDWHDJHQF\WKDWLVDFWLQJLQDMXGLFLDOFDSDFLW\SUHFOXVLYH VKH VSRNH ZLWK 6XSHULQWHQGHQW 0RRQH\KDQ DERXW WKH HIIHFW LI VXFK ILQGLQJV ZRXOG KDYH SUHFOXVLYH HIIHFW LQ WKH SRVVLELOLW\RI+DUUHOVRQPDNLQJDVHFRQGYLVLWWR6LPSVRQYLOOH 6WDWHjVFRXUWV,GDW FLWLQJ8QLYHUVLW\RI7HQQHVVHHY (OHPHQWDU\&RFNUHOFODLPHGWKDWGXULQJWKHFRXUVHRIWKLV (OOLRWW86 .HQWXFN\FRXUWVJLYH FRQYHUVDWLRQ0RRQH\KDQWROGKHUWKDWLWZRXOGQRWEHLQKHU SUHFOXVLYHHIIHFWWRIDFWXDOILQGLQJVLQDSUHYLRXVSURFHHGLQJ EHVWLQWHUHVWVLI+DUUHOVRQPDGHDQ\PRUHYLVLWVWRKHUFODVV mµRQO\ DV WR PDWWHUV ZKLFK ZHUH QHFHVVDULO\ LQYROYHG DQG s$DW &RFNUHO'HS :KLOH0RRQH\KDQGHQLHVHYHU GHWHUPLQHG LQ WKH IRUPHU DFWLRQl DV RSSRVHG mWR PDWWHUV PDNLQJ VXFK D VWDWHPHQW 0RRQH\KDQ 'HS , DW ZKHQ ZKLFKZHUHLPPDWHULDORUXQHVVHQWLDOWRWKHGHWHUPLQDWLRQRI WKHSULRUDFWLRQRUZKLFKZHUHQRWQHFHVVDU\WRXSKROGWKH MXGJPHQWjl%DUQHV)GDW TXRWLQJ6HGOH\Y &LW\RI:HVW%XHFKHO6:G .\ 0RRQH\KDQjV OHWWHU WR &RFNUHO GHVFULEHV LQ GHWDLO WKH QDPHV RI IDFXOW\ DQG VWDII DWWHVWLQJ WR &RFNUHOjV SURIDQLW\ODFHG UHPDUNV GLUHFWHG ,Q WKLV FDVH WKH TXHVWLRQ RI ZKHWKHU &RFNUHO ZDV DW 6ODWH WHUPLQDWHG LQ UHWDOLDWLRQ IRU WKH H[HUFLVH RI KHU )LUVW &RFNUHOY6KHOE\&RXQW\6FKRRO 1R 1R &RFNUHOY6KHOE\&RXQW\6FKRRO 'LVWULFWHWDO 'LVWULFWHWDO $PHQGPHQW ULJKWV ZDV QRW UHVROYHG E\ DQ\ SULRU VWDWH 5HEXWWLQJ WKH 3ODLQWLIIjV )LUVW $PHQGPHQW SURFHHGLQJ$V&RFNUHOQRWHVLQKHUUHSO\EULHIm>W@KHUHZDV 5HWDOLDWLRQ&ODLP QRKHDULQJRQDQ\LVVXHLQYROYHGLQWKLVDFWLRQ7KHUHDUHQR VWDWHFRXUWRUDGPLQLVWUDWLYHILQGLQJVRQDQ\IDFWXDOPDWWHUV %HFDXVH&RFNUHOKDVVXFFHVVIXOO\HVWDEOLVKHGIRUSXUSRVHV LQYROYHG KHUHl $SSHOODQWjV 5HSO\ %U DW (YHQ LI WKH RIWKHVXPPDU\MXGJPHQWVWDJHWKHWKUHHHOHPHQWVRIKHU)LUVW DSSHDOVERDUGKDGGHFLGHGWKDWWKHUHDVRQVSURIIHUHGE\WKH $PHQGPHQWUHWDOLDWLRQFODLPWKHEXUGHQRISHUVXDVLRQVKLIWV GHIHQGDQWVIRU&RFNUHOjVGLVFKDUJHZHUHDGHTXDWHWRVXSSRUW WRWKHGHIHQGDQWV$VVWDWHGHDUOLHUWRGHIHDWWKHSODLQWLIIjV WKH WHUPLQDWLRQ DQG WKDW WKHUH ZDV VXEVWDQWLDO HYLGHQFH RI FODLPDWWULDOWKHGHIHQGDQWVPXVWVKRZE\DSUHSRQGHUDQFH GHIHQGDQWVjSURIIHUHGUHDVRQVLQWKHUHFRUGXQOHVV&RFNUHO RIWKHHYLGHQFHWKDWWKH\ZRXOGKDYHWHUPLQDWHG&RFNUHOHYHQ UDLVHGKHUUHWDOLDWLRQFODLPLWZRXOGQRWKDYHGHFLGHGQRU KDG VKH QRW HQJDJHG LQ FRQVWLWXWLRQDOO\ SURWHFWHG DFWLYLW\ HYHQFRQVLGHUHGZKHWKHUWKHWUXHPRWLYDWLRQRIGHIHQGDQWVj /HDU\ )G DW 7R GHIHDW SODLQWLIIjV FODLP RQ D DFWLRQV ZDV WR UHWDOLDWH DJDLQVW KHU IRU H[HUFLVLQJ KHU IUHH PRWLRQ IRU VXPPDU\ MXGJPHQW KRZHYHU D VXEVWDQWLDOO\ VSHHFKULJKWV6HH%DUQHV)GDW7KXVEHFDXVH KLJKHUKXUGOHPXVWEHVXUSDVVHGSDUWLFXODUO\ZKHUHDVLVWKH &RFNUHOjV )LUVW $PHQGPHQW UHWDOLDWLRQ FODLP ZDV QRW FDVH KHUH WKH PRYLQJ SDUW\ EHDUV WKH XOWLPDWH EXUGHQ RI DGGUHVVHGLQDQ\SULRUSURFHHGLQJVLVVXHSUHFOXVLRQGRHVQRW SHUVXDVLRQRQWKLVLVVXHDWWULDOsDPHV:LOOLDP0RRUHHW SUHYHQWKHUIHGHUDOVXLW,G DO0RRUHjV)HGHUDO3UDFWLFH>@DW GHG VWDWLQJWKDWLIWKHPRYLQJSDUW\DOVREHDUVWKHEXUGHQ %&RFNUHOjV0RWLRQWR5HFRQVLGHU RI SHUVXDVLRQ DW WULDO WKH PRYLQJ SDUW\jV LQLWLDO VXPPDU\ MXGJPHQW EXUGHQ LV mKLJKHU LQ WKDW LW PXVW VKRZ WKDW WKH $VGHIHQGDQWVQRWHLQWKHLUEULHI&RFNUHOIDLOHGWRUHVSRQG UHFRUGFRQWDLQVHYLGHQFHVDWLVI\LQJWKHEXUGHQRISHUVXDVLRQ WRWKHLUPRWLRQIRUVXPPDU\MXGJPHQWZLWKLQWKHUHTXLVLWH DQGWKDWWKHHYLGHQFHLVVRSRZHUIXOWKDWQRUHDVRQDEOHMXU\ WLPH SHULRG 7KH GLVWULFW FRXUW ZLWKRXW EHQHILW RI DQ\ ZRXOGEHIUHHWRGLVEHOLHYHLWl 7RPHULWVXPPDU\MXGJPHQW UHVSRQVH E\ SODLQWLII LVVXHG LWV PHPRUDQGXP DQG RUGHU LQ WKHLU IDYRU WKH GHIHQGDQWV PD\ QRW VLPSO\ EULQJ IRUWK JUDQWLQJ GHIHQGDQWVj PRWLRQ IRU VXPPDU\ MXGJPHQW RQ HQRXJKHYLGHQFHWRDOORZDMXU\WRILQGWKDWWKH\ZRXOGKDYH sDQXDU\ 2Q )HEUXDU\ &RFNUHO ILOHG D WHUPLQDWHG &RFNUHO UHJDUGOHVV RI KHU VSHHFK 5DWKHU LQ PRWLRQZLWKWKHGLVWULFWFRXUWDVNLQJLWWRUHFRQVLGHUDQGVHW UHYLHZLQJDPRWLRQIRUVXPPDU\MXGJPHQWZHPXVWYLHZWKH DVLGHWKHLVVXDQFHRILWVRUGHUJUDQWLQJVXPPDU\MXGJPHQWLQ HYLGHQFHDQGGUDZDOOUHDVRQDEOHLQIHUHQFHVLQWKHOLJKWPRVW IDYRUDEOHWRWKHQRQPRYLQJSDUW\0DWVXVKLWD86DW DQGm>V@XPPDU\MXGJPHQWLQIDYRURIWKHSDUW\ZLWKWKH 7KH GHIHQGDQWV ILOHG WKHLU PRWLRQ IRU VXPPDU\ MXGJPHQW E\ PDLO RQ EXUGHQRISHUVXDVLRQLVLQDSSURSULDWHZKHQWKHHYLGHQFH 'HFHPEHU WKXV JLYLQJ &RFNUHO HLJKWHHQ GD\V WR ILOH KHU LVVXVFHSWLEOHRIGLIIHUHQWLQWHUSUHWDWLRQVRULQIHUHQFHVE\WKH UHVSRQVH LH WKH ILIWHHQ GD\V WR UHVSRQG DOORWWHG E\ ORFDO UXOHV RI WKH WULHURIIDFWl+XQWY&URPDUWLH86 (DVWHUQ 'LVWULFW RI .HQWXFN\ SOXV WKUHH DGGLWLRQDO GD\V SXUVXDQW WR )HG 7KXVEHFDXVHSODLQWLIIKDVHVWDEOLVKHGWKHHOHPHQWVRIKHU 5 &LY 3 H EHFDXVH VKH ZDV VHUYHG ZLWK WKH PRWLRQ E\ PDLO 7KXV FODLPIRU)LUVW$PHQGPHQWUHWDOLDWLRQVXPPDU\MXGJPHQWIRU &RFNUHOjV UHVSRQVH ZDV GXH E\ sDQXDU\ 2Q sDQXDU\ &RFNUHOjV DWWRUQH\ REWDLQHG GHIHQVH FRXQVHOjV DJUHHPHQW WKDW WLPH EH WKHGHIHQGDQWVLVSURSHURQO\LIWKHHYLGHQFHLVVXFKWKDWHYHU\ HQODUJHG DQ DGGLWLRQDO WKLUW\ GD\V WR UHVSRQG WR WKH GHIHQGDQWVj PRWLRQ UHDVRQDEOHMXURUZRXOGFRQFOXGHWKDWWKHGHIHQGDQWVKDYHPHW 1HYHUWKHOHVV E\ WKH WLPH &RFNUHOjV FRXQVHO FRXOG SXW WKH DJUHHPHQW LQ WKHLU EXUGHQ RI VKRZLQJ WKDW &RFNUHO ZRXOG KDYH EHHQ ZULWLQJ DQG FLUFXODWH LW WR RSSRVLQJ FRXQVHO IRU KLV VLJQDWXUH WKH GLVWULFW WHUPLQDWHG HYHQ KDG VKH QRW VSRNHQ WR KHU FODVV DERXW WKH MXGJH RQ sDQXDU\ LVVXHG KLV UXOLQJ RQ WKH PRWLRQ IRU VXPPDU\ PHULWVRILQGXVWULDOKHPS MXGJPHQW &RFNUHOY6KHOE\&RXQW\6FKRRO 1R 1R &RFNUHOY6KHOE\&RXQW\6FKRRO 'LVWULFWHWDO 'LVWULFWHWDO UHDVRQDEOHIDFWILQGHUWRFRQFOXGHE\DSUHSRQGHUDQFHRIWKH OLJKWRIWKHSDUWLHVjDJUHHPHQWWRHQODUJHWLPHDQDGGLWLRQDO HYLGHQFH WKDW KHU VSHHFK DW OHDVW LQ SDUW PRWLYDWHG WKH WKLUW\ GD\V VR WKDW SODLQWLII FRXOG UHVSRQG WR GHIHQGDQWVj GHIHQGDQWVWRGLVFKDUJHKHU,G PRWLRQIRUVXPPDU\MXGJPHQW7KHGLVWULFWFRXUWGHQLHGWKLV PRWLRQ VWDWLQJ WKDW m>L@W UHPDLQV FOHDU WR WKLV &RXUW WKDW $OWKRXJK WKHUH FHUWDLQO\ LV VLJQLILFDQW HYLGHQFH WKDW 3ODLQWLIIjV VHOHFWLRQ RI LQGXVWULDO KHPS DV SDUW RI KHU &RFNUHOjVEHKDYLRUDWVFKRRODSDUWIURPWKHLQGXVWULDOKHPS FODVVURRP FXUULFXOXP LV QRW D IRUP RI VSHHFK HQWLWOHG WR SUHVHQWDWLRQV ZDV RIWHQ LQDSSURSULDWH ZH EHOLHYH WKDW SURWHFWLRQ E\ WKH )LUVW $PHQGPHQWl s$ DW 'LVW &W &RFNUHOKDVSUHVHQWHGHQRXJKHYLGHQFHVXFKWKDWDUHDVRQDEOH 2UGHU)HE 7KHFRXUWIXUWKHUVWDWHGWKDWLQOLJKW MXU\FRXOGILQGWKDWWKHGHIHQGDQWVLQWHUPLQDWLQJKHUZHUH RIWKHODZGLVFXVVHGLQLWVPHPRUDQGXPJUDQWLQJVXPPDU\ DW OHDVW SDUWLDOO\ PRWLYDWHG E\ KHU GHFLVLRQ WR VSHDN RQ MXGJPHQW m>S@HUPLWWLQJ 3ODLQWLII WR ILOH D EHODWHG UHVSRQVH LQGXVWULDO KHPS 6HYHUDO SLHFHV RI HYLGHQFH ZRUN LQ KHU ZRXOGEHDQH[HUFLVHLQIXWLOLW\ls$DW IDYRU )LUVW 3ULQFLSDO 6ODWH LQLWLDWHG HDUO\ HYDOXDWLRQV RI &RFNUHOLQWKH VFKRRO\HDUIROORZLQJ+DUUHOVRQjVILUVW 0RWLRQV IRU UHFRQVLGHUDWLRQ ILOHG ZLWKLQ WHQ GD\V RI WKH YLVLWWRKHUFODVVRQWKHODVWGD\RIWKH VFKRRO\HDU GLVWULFWFRXUWjVILQDOMXGJPHQWDVWKLVRQHZDVDUHJHQHUDOO\ ,Q WKH VFKRRO \HDU &RFNUHO ZDV WKH RQO\ WHQXUHG WUHDWHGDVDPRWLRQWRDOWHURUDPHQGWKHMXGJPHQWSXUVXDQW WHDFKHU 6ODWH UHYLHZHG RQ D VFKHGXOH RI PRUH WKDQ RQH WR )HG 5 &LY 3 H sDPHV :P 0RRUH HW DO HYDOXDWLRQIRUHYHU\WKUHH\HDUV,QDGGLWLRQEDVHGRQWKH 0RRUHjV)HGHUDO3UDFWLFH >@ GHG :KLOH SDUHQWVjDQGWHDFKHUVjFRPSODLQWOHWWHUVIROORZLQJWKHLQLWLDO WKLVFRXUWJHQHUDOO\UHYLHZVWKHGHQLDORID5XOH H PRWLRQ +DUUHOVRQYLVLW6XSHULQWHQGHQW0RRQH\KDQLQLWLDWHGDQRSHQ WRDOWHURUDPHQGDMXGJPHQWIRUDQDEXVHRIGLVFUHWLRQDGH HQGHGLQYHVWLJDWLRQLQWR&RFNUHOjVVFKRROFRQGXFW)LQDOO\ QRYR VWDQGDUG RI UHYLHZ LV DSSOLHG ZKHQ WKH 5XOH H WKH GHSRVLWLRQ WHVWLPRQ\ VKRZV WKDW WKH 0DUFK PRWLRQVHHNVUHYLHZRIDJUDQWRIVXPPDU\MXGJPHQW6PLWK VXPPDWLYH HYDOXDWLRQ VHUYHG DV WKH EDVLV XSRQ ZKLFK Y:DO0DUW6WRUHV,QF)G WK&LU 3ULQFLSDO6ODWHUHFRPPHQGHGWR0RRQH\KDQWKDW&RFNUHOEH ILUHGDQGZDVDOVRDIDFWRULQ0RRQH\KDQjVXOWLPDWHGHFLVLRQ ,QGHHG EHFDXVH WKH GLVWULFW FRXUW ZDV QRW H[HUFLVLQJ LWV WR WHUPLQDWH &RFNUHO $WWDFKHG WR WKLV HYDOXDWLRQ ZHUH GLVFUHWLRQLQUHIXVLQJWRDOORZ&RFNUHOjVUHVSRQVHEXWLQVWHDG VHYHUDO OHWWHUV IURP SDUHQWV DQG VWDII FULWLFDO RI &RFNUHOjV ZDV VWDWLQJ DV D PDWWHU RI ODZ WKDW DQ\ UHVSRQVH E\ WKH GHFLVLRQWRWHDFKKHUVWXGHQWVDERXWLQGXVWULDOKHPS SODLQWLII ZRXOG EH IXWLOH ZH DSSO\ D GH QRYR VWDQGDUG RI UHYLHZWRWKLVOHJDOFRQFOXVLRQ:HQRZWXUQWRWKHPHULWVRI $IWHU H[DPLQLQJ WKLV HYLGHQFH ZH FRQFOXGH WKDW D MXU\ WKH FDVH LQ RUGHU WR HYDOXDWH WKH GLVWULFW FRXUWjV ILQGLQJ RI FRXOG ILQG E\ D SUHSRQGHUDQFH RI WKH HYLGHQFH WKDW WKH IXWLOLW\$VZLOOEHGLVFXVVHGODWHUQRWRQO\LVLWFOHDUWKDW GHIHQGDQWVjGHFLVLRQWRGLVFKDUJH&RFNUHOZDVPRWLYDWHGDW &RFNUHOjVGHFLVLRQWREULQJLQVSHDNHUVDGYRFDWLQJWKHXVHRI OHDVW LQ SDUW E\ KHU GHFLVLRQ WR WHDFK KHU VWXGHQWV DERXW LQGXVWULDO KHPS LV SURWHFWHG VSHHFK XQGHU WKH )LUVW LQGXVWULDO KHPS 7KH WHPSRUDO SUR[LPLW\ EHWZHHQ WKH +DUUHOVRQ YLVLWV DQG &RFNUHOjV VHULHV RI XQVFKHGXOHG HYDOXDWLRQVDVZHOODVWKHLQIOXHQFHWKHSDUHQWDQGWHDFKHU $OWKRXJK &RFNUHO GLG QRW VXEPLW DUJXPHQWV RQ WKH PHULWV RI KHU FRPSODLQWVDSSHDUHGWRKDYHRQWKHGHIHQGDQWVLQWKHZDNHRI FODLPV LQ KHU PRWLRQ WR UHFRQVLGHU WKH GLVWULFW FRXUW GLG QRW IDXOW KHU IRU WKH+DUUHOVRQYLVLWVFRQVWLWXWHVXIILFLHQWHYLGHQFHIRU&RFNUHO WKLV RPLVVLRQ ,QVWHDG WKH VROH EDVLV IRU LWV GHQLDO RI &RFNUHOjV PRWLRQ WRHVWDEOLVKWKHFDXVDWLRQHOHPHQWRIKHU)LUVW$PHQGPHQW ZDV WKH IXWLOLW\ RI KHU FODLPV LQ OLJKW RI WKH FRXUWjV SULRU OHJDO FRQFOXVLRQ UHWDOLDWLRQFODLP WKDW &RFNUHOjV GHFLVLRQ WR WHDFK KHU VWXGHQWV DERXW LQGXVWULDO KHPS ZDV QRW SURWHFWHG VSHHFK XQGHU WKH )LUVW $PHQGPHQW &RFNUHOY6KHOE\&RXQW\6FKRRO 1R 1R &RFNUHOY6KHOE\&RXQW\6FKRRO 'LVWULFWHWDO 'LVWULFWHWDO $PHQGPHQW EXW KHU )LUVW $PHQGPHQW UHWDOLDWLRQ FODLP LV H[DPLQDWLRQRIWKHUHPDLQGHURIWKHHOHPHQWVRISODLQWLIIjV VWURQJHQRXJKWRVXUYLYHWKHGHIHQGDQWVjPRWLRQIRUVXPPDU\ )LUVW$PHQGPHQWUHWDOLDWLRQFODLP MXGJPHQW 7KXV WKH GLVWULFW FRXUWjV GHQLDO RQ IXWLOLW\ JURXQGV RI &RFNUHOjV 5XOH H PRWLRQ WR UHFRQVLGHU LWV F 'LGWKH3ODLQWLII6XIIHUDQ,QMXU\DVD5HVXOWRI MXGJPHQWZDVHUURU +HU 6SHHFK 7KDW :RXOG &KLOO DQ 2UGLQDU\ 3HUVRQ )URP &RQWLQXLQJ WR (QJDJH LQ 6XFK &&RFNUHOjV)LUVW$PHQGPHQW5HWDOLDWLRQ&ODLP 6SHHFK" 6WDQGDUGRI5HYLHZ )RU WKH QH[W HOHPHQW RI &RFNUHOjV UHWDOLDWLRQ FODLP VKH PXVWVKRZmWKDWWKHGHIHQGDQW>Vj@DGYHUVHDFWLRQFDXVHG>KHU@ 7KLVFRXUWUHYLHZVGHQRYRDGLVWULFWFRXUWjV GHFLVLRQWR WRVXIIHUDQLQMXU\WKDWZRXOGOLNHO\FKLOODSHUVRQRIRUGLQDU\ JUDQWVXPPDU\MXGJPHQW0LOOHUY$P+HDY\/LIW6KLSSLQJ ILUPQHVVIURPFRQWLQXLQJWRHQJDJHLQWKDWDFWLYLW\>@l/HDU\ )G WK&LU 6XPPDU\MXGJPHQWPD\ )G DW 7KHUH LV QR TXHVWLRQ WKDW E\ EHLQJ EHJUDQWHGRQO\LIWKHUHDUHQRJHQXLQHLVVXHVRIPDWHULDOIDFW WHUPLQDWHG&RFNUHOKDVVXIIHUHGDQLQMXU\WKDWZRXOGFKLOODQ DQG RQHSDUW\LVHQWLWOHGWRDMXGJPHQWDVDPDWWHURIODZ RUGLQDU\SHUVRQIURPFRQWLQXLQJWRHQJDJHLQVSHHFKRQWKH )HG5&LY3 F $GLVSXWHRYHUDPDWHULDOIDFWFDQQRW HQYLURQPHQWDOEHQHILWVRILQGXVWULDOKHPS EHmJHQXLQHlXQOHVVDUHDVRQDEOHMXU\FRXOGUHWXUQDYHUGLFW IRUWKHQRQPRYLQJSDUW\$QGHUVRQY/LEHUW\/REE\,QF G :DV WKH 'HFLVLRQ WR 7HUPLQDWH &RFNUHO 86 ,Q UHYLHZLQJ WKH GLVWULFW FRXUWjV 0RWLYDWHG DW /HDVW LQ 3DUW E\ 3ODLQWLIIjV GHFLVLRQWRJUDQWVXPPDU\MXGJPHQWZHYLHZDOOWKHIDFWV 'HFLVLRQWR6SHDN$ERXW,QGXVWULDO+HPS" DQG WKH LQIHUHQFHV GUDZQ WKHUHIURP LQ WKH OLJKW PRVW IDYRUDEOHWRWKHQRQPRYLQJSDUW\0DWVXVKLWD(OHF,QGXV 7KHILQDOHOHPHQWRI&RFNUHOjV)LUVW$PHQGPHQWUHWDOLDWLRQ &RY=HQLWK5DGLR&RUS86 FODLP UHTXLUHV KHU WR VKRZ WKDW GHIHQGDQWVj GHFLVLRQ WR GLVFKDUJHKHUZDVPRWLYDWHGDWOHDVWLQSDUWE\WKHH[HUFLVH 7KH (OHPHQWV RI D )LUVW $PHQGPHQW 5HWDOLDWLRQ RIKHUIUHHVSHHFKULJKWV,G7KLVFLUFXLWKDVVWDWHGWKDWmWKH &ODLP QRQPRYLQJ SDUW\ PD\ QRW UHO\ RQ WKH PHUH IDFW WKDW DQ DGYHUVHHPSOR\PHQWDFWLRQIROORZHGVSHHFKWKDWWKHHPSOR\HU 'RQQD &RFNUHO D WHDFKHU LQ WKH 6KHOE\ &RXQW\ 3XEOLF ZRXOGKDYHOLNHGWRSUHYHQW5DWKHUWKHHPSOR\HHPXVWOLQN 6FKRRO'LVWULFWLVDSXEOLFHPSOR\HH)RUDSXEOLFHPSOR\HH WKHVSHHFKLQTXHVWLRQWRWKHGHIHQGDQWjVGHFLVLRQWRGLVPLVV WRHVWDEOLVKDFODLPRI)LUVW$PHQGPHQWUHWDOLDWLRQWKLVFRXUW KHUl %DLOH\ )G DW FLWDWLRQ RPLWWHG ,Q RWKHU KDVKHOGWKDWVKHPXVWGHPRQVWUDWH ZRUGVWRVXUYLYHGHIHQGDQWVjPRWLRQIRUVXPPDU\MXGJPHQW &RFNUHO PXVW SUHVHQW VXIILFLHQW HYLGHQFH WR DOORZ D WKDW>VKH@ZDVHQJDJHGLQDFRQVWLWXWLRQDOO\SURWHFWHG DFWLYLW\ WKDWWKHGHIHQGDQWjVDGYHUVHDFWLRQFDXVHG >KHU@WRVXIIHUDQLQMXU\WKDWZRXOGOLNHO\FKLOODSHUVRQ RIRUGLQDU\ILUPQHVVIURPFRQWLQXLQJWRHQJDJHLQWKDW FRQVLVWHQWO\ DSSOLHG WR FDVHV RI WHDFKHU VSHHFK LQ WKLV FLUFXLW 6HH HJ DFWLYLW\ DQG WKDWWKHDGYHUVHDFWLRQZDVPRWLYDWHGDW %RQQHOO )G DW DSSO\LQJ 3LFNHULQJ WR D FROOHJH SURIHVVRUjV OHDVW LQ SDUW DV D UHVSRQVH WR WKH H[HUFLVH RI >KHU@ VSHHFK /HDU\ )G DW DSSO\LQJ 3LFNHULQJ WR HOHPHQWDU\ VFKRRO WHDFKHUVj VSHHFK :H VHH QR UHDVRQ WR SDUW IURP 3LFNHULQJ ZKHQ FRQVWLWXWLRQDOULJKWV GHFLGLQJ FDVHV LQYROYLQJ D WHDFKHUjV LQFODVV VSHHFK QRU KDYH HLWKHU RI WKH SDUWLHV LQ WKLV FDVH DUJXHG WKDW 3LFNHULQJ VKRXOG QRW DSSO\ &RFNUHOY6KHOE\&RXQW\6FKRRO 1R 1R &RFNUHOY6KHOE\&RXQW\6FKRRO 'LVWULFWHWDO 'LVWULFWHWDO SUHVHQWDWLRQ:HGRQRWEHOLHYHWKDWGHIHQGDQWVFDQXVHWKH /HDU\Y'DHVFKQHU)G WK&LU 7R RXWFU\ ZLWKLQ WKH VFKRRO FRPPXQLW\ SURWHVWLQJ &RFNUHOjV GHPRQVWUDWH WKDW VKH ZDV HQJDJLQJ LQ FRQVWLWXWLRQDOO\ VSHHFK VSHHFK WKDW ZDV DSSURYHG E\ VFKRRO RIILFLDOV LQ SURWHFWHGVSHHFK&RFNUHOPXVWVKRZWKDWKHUVSHHFKWRXFKHG DGYDQFHDVDVKLHOGIRUWKHLUGHFLVLRQWRGLVFKDUJHKHU:KLOH RQ PDWWHUV RI SXEOLF FRQFHUQ DQG WKDW KHU mLQWHUHVW LQ RUGLQDULO\ ZH ZRXOG JLYH VXEVWDQWLDO ZHLJKW WR WKH FRPPHQWLQJXSRQPDWWHUVRISXEOLFFRQFHUQRXWZHLJK>V@ JRYHUQPHQW HPSOR\HUjV FRQFHUQV RI ZRUNSODFH HIILFLHQF\ WKH LQWHUHVW RI WKH 6WDWH DV DQ HPSOR\HU LQ SURPRWLQJ WKH KDUPRQ\DQGGLVFLSOLQHLQFRQGXFWLQJRXUEDODQFLQJRIWKH HIILFLHQF\ RI WKH SXEOLF VHUYLFHV LW SHUIRUPV WKURXJK LWV HPSOR\HHjVDQGHPSOR\HUjVFRPSHWLQJLQWHUHVWVZHFDQQRW HPSOR\HHVl,G TXRWDWLRQRPLWWHG VHHDOVR%DLOH\Y)OR\G DOORZWKHVHFRQFHUQVWRWLOWWKH3LFNHULQJVFDOHLQIDYRURIWKH &RXQW\ %G RI (GXF )G WK &LU JRYHUQPHQW DEVHQW RWKHU HYLGHQFH ZKHQ WKH GLVUXSWLYH VDPH ,IWKHSODLQWLIIFDQHVWDEOLVKWKHWKUHHHOHPHQWVRIKHU FRQVHTXHQFHVRIWKHHPSOR\HHVSHHFKFDQEHWUDFHGEDFNWR )LUVW$PHQGPHQWUHWDOLDWLRQFODLPWKHEXUGHQRISHUVXDVLRQ WKHJRYHUQPHQWjVH[SUHVVGHFLVLRQSHUPLWWLQJWKHHPSOR\HH WKHQ VKLIWV WR WKH GHIHQGDQWV ZKR PXVW VKRZ E\ D WRHQJDJHLQWKDWVSHHFK SUHSRQGHUDQFHRIWKHHYLGHQFHWKDWWKH\mZRXOGKDYHWDNHQ WKHVDPHDFWLRQHYHQLQWKHDEVHQFHRIWKHSURWHFWHGFRQGXFWl $FFRUGLQJO\ ZH KROG WKDW RQ EDODQFH WKH GHIHQGDQWVj /HDU\)GDW TXRWDWLRQRPLWWHG LQWHUHVWV LQ DQ HIILFLHQW RSHUDWLRQ RI WKH VFKRRO DQG D KDUPRQLRXV ZRUNSODFH GR QRW RXWZHLJK WKH SODLQWLIIjV D:DV7KLV6SHHFK" LQWHUHVWVLQVSHDNLQJDERXWWKHEHQHILWVRILQGXVWULDOKHPSDQ LVVXH RI VXEVWDQWLDO SROLWLFDO DQG HFRQRPLF FRQFHUQ LQ %HIRUH GHFLGLQJ ZKHWKHU &RFNUHOjV VSHHFK ZDV .HQWXFN\ 7KXV EHFDXVH &RFNUHOjV VSHHFK WRXFKHV RQ FRQVWLWXWLRQDOO\ SURWHFWHG WKLV FRXUW PXVW ILUVW DGGUHVV WKH PDWWHUV RI SXEOLF FRQFHUQ DQG EHFDXVH WKH EDODQFLQJ RI TXHVWLRQ RI ZKHWKHU &RFNUHOjV DFWLYLW\ FDQ EH FRQVLGHUHG LQWHUHVWVXQGHU3LFNHULQJZHLJKVLQKHUIDYRUKHUVSHHFKLV VSHHFK DW DOO 7KH GLVWULFW FRXUWjV GHFLVLRQ GLVSRVLQJ RI FRQVWLWXWLRQDOO\ SURWHFWHG :H QRZ SURFHHG ZLWK DQ &RFNUHOjV)LUVW$PHQGPHQWFODLPVDSSHDUVWREHEDVHGRQ WZR VHSDUDWH WKHRULHV WKDW WKH FRXUW XVHV LQWHUFKDQJHDEO\ )LUVWWKHGLVWULFWFRXUWVWDWHGWKDW&RFNUHOjVGHFLVLRQWREULQJ LQ D VSHDNHU ZKR ZRXOG JLYH D SUHVHQWDWLRQ RQ LQGXVWULDO 7KLV FLUFXLW KDV QRWHG ZLWK PLQLPDO H[SODQDWLRQ WKDW DQ KHPS VKRXOG QRW EH FRQVLGHUHG VSHHFK 7KH GLVWULFW FRXUW XQFRQVWLWXWLRQDO GLOHPPD PD\ H[LVW IRU D WHDFKHU ZKRVH FRQWURYHUVLDO VSHHFK LV DSSURYHG H[ DQWH E\ VFKRRO RIILFLDOV EXW XVHG H[ SRVW LQ WKH IXUWKHUKHOGWKDWDWHDFKHUjVGHFLVLRQVUHJDUGLQJWKHFRQWHQWRI ZDNH RI SDUHQWDO DQG RU FRPPXQLW\ GLVPD\ ZLWK WKDW VSHHFK DV WKH UHDVRQ WKHFXUULFXOXPVKHZLOOWHDFKWRKHUFODVVHYHQLIFRQVLGHUHG IRU WKH WHDFKHUjV GLVFKDUJH 6WDFKXUD Y 7UXV]NRZVNL )G VSHHFKLVVWLOOQRWSURWHFWHGE\WKH)LUVW$PHQGPHQW:HSXW WK &LU UHYjG RQ RWKHU JURXQGV 86 WKHVHFRQGKROGLQJDVLGHIRUDPRPHQWDQGWXUQWRWKHILUVW 7KHGLVWULFWFRXUWKHOGWKDWEHFDXVH&RFNUHOVLPSO\FKRVH 5DWKHU WKDQ DSSO\ 3LFNHULQJ VHYHUDO FLUFXLWV KDYH FKRVHQ WR DSSO\ WKH 6XSUHPH &RXUWjV DQDO\VLV RI VWXGHQWVj LQFODVV VSHHFK ULJKWV LQ WREULQJLQVSHDNHUVZKRZRXOGWDONDERXWLQGXVWULDOKHPS +D]HOZRRG 6FKRRO 'LVWULFW Y .XKOPHLHU 86 WR FDVHV UDWKHUWKDQVSHDNLQJRQWKHPDWWHUKHUVHOIm>K@HUIUHHVSHHFK LQ ZKLFK WHDFKHUVj LQFODVV VSHHFK ULJKWV DUH DW LVVXH 6HH :DUG Y +LFNH\ FODLPLVEDVHGVROHO\RQFRQGXFWls$DW 'LVW&W0HP )G VW &LU 6LODQR Y 6DJ +DUERU 8QLRQ )UHH 6FK 'LVW %G RI (GXF )G G &LU FHUW GHQLHG 86 2S $OVRLQIOXHQWLDOLQWKHGLVWULFWFRXUWjVGHFLVLRQZDVLWV 0LOHV Y 'HQYHU 3XE 6FKV )G WK &LU QRWLRQ WKDW LQ VWDJLQJ DQ LQGXVWULDO KHPS SUHVHQWDWLRQ %LVKRS Y $URQRY )G WK &LU FHUW &RFNUHO ZDV QRW LQWHQGLQJ WR FRQYH\ D mSDUWLFXODUL]HG GHQLHG 86 7KH 3LFNHULQJ EDODQFLQJ DQDO\VLV KDV EHHQ &RFNUHOY6KHOE\&RXQW\6FKRRO 1R 1R &RFNUHOY6KHOE\&RXQW\6FKRRO 'LVWULFWHWDO 'LVWULFWHWDO PHVVDJHlQRUZDVVKHDGYRFDWLQJRUVSHDNLQJDJDLQVWKHPSjV RIILFHU DQGWKXVWKHGHIHQGDQWVZLOOKDYHWRPDNHDVWURQJHUVKRZLQJ 7KH GLVWULFW FRXUW SRLQWV WR sXGJH 0LOEXUQjV FRQFXUULQJ WKDWWKHLULQWHUHVWVLQUHJXODWLQJSODLQWLIIjVVSHHFKRXWZHLJKHG RSLQLRQLQ)RZOHUY%RDUGRI(GXFDWLRQ )G WK &RFNUHOjVLQWHUHVWVLQVSHDNLQJ &LU FHUW GHQLHG 86 LQ VXSSRUW RI LWV DUJXPHQW WKDW &RFNUHOjV FRQGXFW VKRXOG QRW EH FRQVLGHUHG :HLJKLQJLQSODLQWLIIjVIDYRULQWKLVDQDO\VLVLVWKHIDFWWKDW VSHHFK,Q)RZOHUDKLJKVFKRROWHDFKHUDWWKHUHTXHVWRIKHU KHUVSHHFKVXEVWDQWLDOO\LQYROYHGPDWWHUVRIVLJQLILFDQWSXEOLF VWXGHQWVVKRZHGWKHP3LQN)OR\G7KH:DOODQm5lUDWHG FRQFHUQLQ.HQWXFN\'HIHQGDQWVFODLPKRZHYHUWKDWWKHLU ILOPFRQWDLQLQJQXGLW\DQGDJUHDWGHDORIYLROHQFHRQWKHODVW mLQWHUHVW LQ PDLQWDLQLQJ OR\DOW\ HIILFLHQW RSHUDWLRQ RI WKH GD\RIVFKRROZKLOHVKHFRPSOHWHGJUDGHFDUGV,GDW VFKRROVDQGZRUNSODFHKDUPRQ\lRXWZHLJKVWKHSODLQWLIIjV 7KHWHDFKHUZDVODWHUWHUPLQDWHGIRUVKRZLQJWKHILOP7KH LQWHUHVWLQVSHDNLQJDERXWLQGXVWULDOKHPS$SSHOOHHVj%UDW WHDFKHUWKHQEURXJKWVXLWFODLPLQJWKDWVKHZDVWHUPLQDWHGLQ :H ILUVW QRWH WKDW WKH GHIHQGDQWV GR QRW FODLP WKDW UHWDOLDWLRQIRUH[HUFLVLQJKHU)LUVW$PHQGPHQWULJKWV &RFNUHOjV SUHVHQWDWLRQV RQ LQGXVWULDO KHPS PHDQLQJIXOO\ LQWHUIHUHG ZLWK WKH SHUIRUPDQFH RI KHU WHDFKLQJ GXWLHV sXGJH 0LOEXUQ ZULWLQJ RQO\ IRU KLPVHOI RQ WKH LVVXH RI 'HIHQGDQWVZRXOGKDYHDGLIILFXOWWLPHPDNLQJWKLVDUJXPHQW ZKHWKHU WKH FRQGXFW RI VKRZLQJ WKH ILOP WR WKH FODVV KRZHYHUFRQVLGHULQJWKH\RSHQO\DFNQRZOHGJHGLQDSXEOLF FRQVWLWXWHGSURWHFWHGVSHHFKVWDWHGWKDWEHFDXVHWKHWHDFKHU VWDWHPHQW WR &11 WKDW WKHUH ZDV mHGXFDWLRQDO YDOXHl LQ KDG QHYHU VHHQ WKH PRYLH EHIRUH DQG KDG QR LGHD RI LWV WHDFKLQJVWXGHQWVDERXWLQGXVWULDOKHPSDVDQDOWHUQDWLYHFURS FRQWHQWKHUGHFLVLRQWRVKRZWKHILOPFRXOGQRWEHFRQVLGHUHG s$ DW 6WDWHPHQW IRU &11 :H IXUWKHU QRWH WKDW mH[SUHVVLYH RU FRPPXQLFDWLYHl LQ QDWXUH ,G DW GHIHQGDQWVj SXUSRUWHG LQWHUHVW LQ mPDLQWDLQLQJ OR\DOW\l LV 7KXV sXGJH 0LOEXUQ FRQFOXGHG WKH WHDFKHUjV FRQGXFW LQ LQDSSRVLWHLQWKLVFDVH:KLOHWKLVFLUFXLWKDVVWDWHGWKDWLW VKRZLQJ WKH ILOP ZDV QRW HQWLWOHG WR )LUVW $PHQGPHQW ZRXOG FRQVLGHU LQ LWV EDODQFLQJ ZKHWKHU HPSOR\HH VSHHFK SURWHFWLRQ,G RSHUDWHG WR mGHVWUR\ WKH UHODWLRQVKLS RI OR\DOW\ DQG WUXVW UHTXLUHGRIFRQILGHQWLDOHPSOR\HHV>@l:LOOLDPV)GDW sXGJHV3HFNDQG0HUULWWGLVDJUHHGZLWKsXGJH0LOEXUQjV DSXEOLFVFKRROWHDFKHUZHEHOLHYHLVKDUGO\WKHW\SH DQDO\VLVRIZKHWKHUWKHWHDFKHUjVVKRZLQJRIDILOPFRXOGEH RIFRQILGHQWLDOHPSOR\HHWKHFRXUWKDGLQPLQG7KXVDQ\ FRQVLGHUHGVSHHFK,GDW sXGJH3HFNZKLOH OR\DOW\ FRQFHUQV WKDW WKH GHIHQGDQWV PD\ KDYH ZLOO QRW EH FRQFXUULQJ LQ WKH RXWFRPH RI WKH FDVH VWDWHG WKDW WKH WDNHQ LQWR FRQVLGHUDWLRQ LQ RXU ZHLJKLQJ RI WKH FRPSHWLQJ H[SUHVVLYHFRQGXFWFDVHVXVHGE\sXGJH0LOEXUQWRDQDO\]H LQWHUHVWVDWVWDNH WKHWHDFKHUjVVKRZLQJRIWKHILOPZHUHmLQDSSRVLWHl,GDW sXGJH0HUULWWQRWLQJWKDWERRNVPRYLHVDQGPXVLFWKDW 7XUQLQJWRWKHGHIHQGDQWVjSURIIHUHGLQWHUHVWVLQDQHIILFLHQW DUH SXUHO\ IRU HQWHUWDLQPHQW YDOXH VWLOO UHFHLYH )LUVW RSHUDWLRQRIWKHVFKRRODQGDKDUPRQLRXVZRUNHQYLURQPHQW $PHQGPHQWSURWHFWLRQDUJXHGWKDWWKHWHDFKHUjVGHFLVLRQWR WKHUHLVHYLGHQFHWKDWSODLQWLIIjVVSHHFKKDVOHGWRSUREOHPVLQ VKRZWKHILOPFOHDUO\ZDVSURWHFWHGVSHHFK,GDW ERWKRIWKHVHDUHDV)RUH[DPSOHIROORZLQJ+DUUHOVRQjVILUVW YLVLW WR 6LPSVRQYLOOH QXPHURXV PHPEHUV RI WKH VFKRROjV :KLOHsXGJH0LOEXUQjVDQDO\VLVLQ)RZOHULVQRWELQGLQJRQ IDFXOW\DQGVWDIIFLUFXODWHGDQGRUVLJQHGOHWWHUVDGGUHVVHGWR WKLVFRXUWHYHQLILWZHUHWKHIDFWVRIWKLVFDVHDUHFOHDUO\ VFKRRORIILFLDOVFULWLFL]LQJ&RFNUHOjVDFWLRQVLQDGYRFDWLQJWKH GLVWLQJXLVKDEOHIURP)RZOHU8QOLNHWKHWHDFKHUjVVKRZLQJ XVH RI LQGXVWULDO KHPS WR KHU VWXGHQWV &RFNUHO WKHUHDIWHU RI D ILOP WKH FRQWHQW RI ZKLFK VKH NQHZ QRWKLQJ DERXW H[SUHVVHGKHUGLVSOHDVXUHZLWKKHUFRZRUNHUVjVHQWLPHQWVRQ &RFNUHOjVGHFLVLRQWREULQJLQLQGXVWULDOKHPSDGYRFDWHVGLG VHYHUDORFFDVLRQV$VGLVFXVVHGHDUOLHUIROORZLQJ'$5( KDYHDQLQWHQWWRFRQYH\DSDUWLFXODUL]HGPHVVDJH&RFNUHO &RFNUHOY6KHOE\&RXQW\6FKRRO 1R 1R &RFNUHOY6KHOE\&RXQW\6FKRRO 'LVWULFWHWDO 'LVWULFWHWDO ZKRLQKHUFRPSODLQWVWDWHVWKDWm>V@KHZDVDWHDFKHUWUDLQHU LL3LFNHULQJ%DODQFLQJ LQWKHVWDWHVSRQVRUHG.HQWXFN\$JULFXOWXUHDQG(QYLURQPHQW LQ WKH &ODVVURRP SURMHFW IURP WR >@l ZRUNHG DW +DYLQJKHOGWKDW&RFNUHOjVVSHHFKWRXFKHVRQPDWWHUVRI GHVLJQLQJ PHWKRGV WR LQWHJUDWH DJULFXOWXUDO WRSLFV LQWR KHU SXEOLFFRQFHUQZHPXVWQRZZHLJKWKHHPSOR\HHjVLQWHUHVW ILIWKJUDGHFXUULFXOXPs$DW &RPSO 6KHKDGRQDW LQVSHDNLQJDJDLQVWWKHHPSOR\HUjVLQWHUHVWLQUHJXODWLQJWKH OHDVWWKUHH RFFDVLRQVEHIRUHWKH+DUUHOVRQYLVLWEURXJKWLQ VSHHFKWRGHWHUPLQHLIWKHVSHHFKLVFRQVWLWXWLRQDOO\SURWHFWHG VSHDNHUV ZKR DGYRFDWHG WKH XVH RI LQGXVWULDO KHPS WR ,Q3LFNHULQJY%RDUGRI(GXFDWLRQ 86 WKH FRQVHUYHWUHHVDQGRWKHUQDWXUDOUHVRXUFHV9LHZLQJWKHIDFWV 6XSUHPH &RXUW HQGHDYRUHG WR VWULNH D EDODQFH EHWZHHQ D LQWKHOLJKWPRVWIDYRUDEOHWR&RFNUHOZHFDQQRWVWDWHDVWKH SXEOLFHPSOR\HHjVVSHHFKULJKWVRQPDWWHUVRISXEOLFLQWHUHVW GLVWULFWFRXUWGLGWKDWLWZDVQRWXQWLOmVRPHSRLQWGXULQJRU LQ WKDW FDVH D SXEOLF VFKRRO WHDFKHUjV VSHHFK RXWVLGH RI DIWHUWKHSUHVHQWDWLRQ>WKDW@3ODLQWLIIPD\KDYHGHYHORSHGDQ VFKRRO DQGWKH6WDWHjVLQWHUHVWDVDQHPSOR\HULQPDLQWDLQLQJ DSSURYDORUGLVDSSURYDORIWKHXVHRILQGXVWULDOKHPS>@ls$ DSURGXFWLYHZRUNSODFH,QDFFRUGDQFHZLWKWKHEDODQFLQJWHVW DW 'LVW&W0HP2S ,QVWHDGWKHHYLGHQFHVKRZV FUHDWHG LQ 3LFNHULQJ SXEOLF HPSOR\HH VSHHFK HYHQ LI WKDW&RFNUHOZDVZHOODZDUHRIWKHDUJXPHQWVIRULQGXVWULDO WRXFKLQJ RQ PDWWHUV RI SXEOLF FRQFHUQ ZLOO QRW EH KHPSDQGWKDWWKLVZDVDPHVVDJHVKHZDQWHGGHOLYHUHGWR FRQVWLWXWLRQDOO\SURWHFWHGXQOHVVWKH HPSOR\HHjVLQWHUHVWLQ KHUVWXGHQWV VSHDNLQJ RQ WKHVH LVVXHV mRXWZHLJK>V@ µWKH LQWHUHVW RI WKH 6WDWH DV DQ HPSOR\HU LQ SURPRWLQJ WKH HIILFLHQF\ RI WKH 7KXV ZKLOH ZH EHOLHYH WKDW &RFNUHO KDG DQ DGYRFDWLYH SXEOLFVHUYLFHVLWSHUIRUPVWKURXJKLWVHPSOR\HHVjl/HDU\ SXUSRVHLQEULQJLQJLQVSHDNHUVZKRSUHVHQWHGKHUVWXGHQWV )GDW TXRWLQJ3LFNHULQJ 86DW ,Q ZLWKLQIRUPDWLRQRQWKHHQYLURQPHQWDOEHQHILWVRILQGXVWULDO VWULNLQJWKHEDODQFHEHWZHHQWKH6WDWHjVDQGWKHHPSOR\HHjV KHPS HYHQ LI &RFNUHO GLG QRW KDYH VXFK D SXUSRVH ZKHQ UHVSHFWLYHLQWHUHVWVWKLVFRXUWKDVVWDWHGWKDWLWZLOOmFRQVLGHU RUJDQL]LQJWKHVHSUHVHQWDWLRQVKHUGHFLVLRQWRSUHVHQWWKHVH ZKHWKHUDQHPSOR\HHjVFRPPHQWVPHDQLQJIXOO\LQWHUIHUHZLWK VSHDNHUVWRKHUFODVVVWLOOFRQVWLWXWHVVSHHFK WKHSHUIRUPDQFHRIKHUGXWLHVXQGHUPLQHDOHJLWLPDWHJRDORU PLVVLRQ RI WKH HPSOR\HU FUHDWH GLVKDUPRQ\ DPRQJ FR E,V&RFNUHOjV6SHHFK&RQVWLWXWLRQDOO\3URWHFWHG" ZRUNHUV LPSDLU GLVFLSOLQH E\ VXSHULRUV RU GHVWUR\ WKH UHODWLRQVKLS RI OR\DOW\ DQG WUXVW UHTXLUHG RI FRQILGHQWLDO *LYHQRXUGHWHUPLQDWLRQWKDW&RFNUHOjVGHFLVLRQWREULQJ HPSOR\HHVl:LOOLDPVY.HQWXFN\)G WK LQGXVWULDOKHPSDGYRFDWHVLQWRKHUFODVVLVVSHHFKWKHQH[W &LU FHUW GHQLHG 86 FLWLQJ 5DQNLQ Y TXHVWLRQ ZH PXVW DVN LV ZKHWKHU WKDW VSHHFK LV 0F3KHUVRQ86 FRQVWLWXWLRQDOO\ SURWHFWHG $V VWDWHG HDUOLHU VSHHFK RI D SXEOLFHPSOR\HHLVSURWHFWHGE\WKH)LUVW$PHQGPHQWRQO\LI %HIRUH HQJDJLQJ LQ D mSDUWLFXODUL]HG EDODQFLQJl RI WKH LW WRXFKHV RQ PDWWHUV RI SXEOLF FRQFHUQ DQG RQO\ LI mWKH FRPSHWLQJLQWHUHVWVDWVWDNHLQWKLVFDVH&RQQLFN86DW HPSOR\HHjV LQWHUHVW LQ FRPPHQWLQJ XSRQ PDWWHUV RI SXEOLF LW LV LPSRUWDQW WR QRWH WKDW mLI DQ HPSOR\HHjV VSHHFK FRQFHUQ RXWZHLJK>V@ WKH LQWHUHVW RI WKH 6WDWH DV DQ VXEVWDQWLDOO\ LQYROYH>V@ PDWWHUV RI SXEOLF FRQFHUQ DQ HPSOR\HULQSURPRWLQJWKHHIILFLHQF\RIWKHSXEOLFVHUYLFHV HPSOR\HU PD\ EH UHTXLUHG WR PDNH D SDUWLFXODUO\ VWURQJ LWSHUIRUPVWKURXJKLWVHPSOR\HHVl/HDU\)GDW VKRZLQJWKDWWKHHPSOR\HHjVVSHHFKLQWHUIHUHGZLWKZRUNSODFH TXRWDWLRQRPLWWHG ,I&RFNUHOjVVSHHFKFDQQRWPHHWERWKRI IXQFWLRQLQJEHIRUHWDNLQJDFWLRQl/HDU\)GDW WKHVHVWDQGDUGVWKHQKHU)LUVW$PHQGPHQWUHWDOLDWLRQFODLP TXRWDWLRQRPLWWHG ,QWKLV FDVHLWLVFOHDUWKDW&RFNUHOjV FDQQRWJRIRUZDUG VSHHFKGLGVXEVWDQWLDOO\LQYROYHPDWWHUVRISXEOLFFRQFHUQ &RFNUHOY6KHOE\&RXQW\6FKRRO 1R 1R &RFNUHOY6KHOE\&RXQW\6FKRRO 'LVWULFWHWDO 'LVWULFWHWDO HPSOR\HHZHUHDFWLQJRXWRIDSULYDWHPRWLYHZLWKQRLQWHQW L 'RHV &RFNUHOjV 6SHHFK 7RXFK RQ D 0DWWHU RI WRDLUKHUVSHHFKSXEOLFO\DVZDVWKHFDVHZLWK0\HUVVRORQJ 3XEOLF&RQFHUQ" DVWKHVSHHFKUHODWHVWRPDWWHUVRImSROLWLFDOVRFLDORURWKHU FRQFHUQWRWKHFRPPXQLW\lDVRSSRVHGWRPDWWHUVmRQO\RI ,Q GHWHUPLQLQJ ZKHWKHU &RFNUHOjV VSHHFK WRXFKHG RQ D SHUVRQDO LQWHUHVWl LW VKDOO EH FRQVLGHUHG DV WRXFKLQJ XSRQ PDWWHURISXEOLFFRQFHUQZHWXUQWR&RQQLFNY0\HUV PDWWHUVRISXEOLFFRQFHUQ,GDW 86 WKH6XSUHPH&RXUWjVPRVWLQVWUXFWLYHFDVH RQWKLVLVVXH,Q&RQQLFNWKH&RXUW VWDWHGWKDWPDWWHUVRI ,Q&RFNUHOjVFDVHDOWKRXJKVKHZDVVSHDNLQJLQKHUUROHDV SXEOLF FRQFHUQ DUH WKRVH WKDW FDQ mEH IDLUO\ FRQVLGHUHG DV DQ HPSOR\HH ZKHQ SUHVHQWLQJ LQIRUPDWLRQ RQ WKH UHODWLQJWRDQ\PDWWHURISROLWLFDOVRFLDORURWKHUFRQFHUQWR HQYLURQPHQWDOEHQHILWVRILQGXVWULDOKHPSWKHFRQWHQWRIKHU WKHFRPPXQLW\>@l,GDW7KHUHLVQRTXHVWLRQWKDWWKH VSHHFKDVGLVFXVVHGVXSUDPRVWFHUWDLQO\LQYROYHGPDWWHUV LVVXH RI LQGXVWULDO KHPS LV D PDWWHU RI JUHDW SROLWLFDO DQG UHODWHGWRWKHSROLWLFDODQGVRFLDOFRQFHUQRIWKHFRPPXQLW\ VRFLDOFRQFHUQWRPDQ\FLWL]HQVRI.HQWXFN\DQGZHEHOLHYH DVRSSRVHGWRPHUHPDWWHUVRISULYDWHLQWHUHVW7KXVFRQWUDU\ WKDW&RFNUHOjVSUHVHQWDWLRQVFOHDUO\FRPHZLWKLQWKH6XSUHPH WR WKH DQDO\VHV LQ %RULQJ DQG .LUNODQG ZH KROG WKDW &RXUWjV XQGHUVWDQGLQJ RI VSHHFK WRXFKLQJ RQ PDWWHUV RI &RFNUHOjVVSHHFKGRHVWRXFKRQPDWWHUVRISXEOLFFRQFHUQ SXEOLFFRQFHUQ ,QVXSSRUWRIWKLVFRQFOXVLRQZHILUVWWXUQWRWKHGLVWULFW FRXUWjVRSLQLRQZKLFKXQHTXLYRFDOO\VWDWHGmWKDWWKHLVVXHRI LQGXVWULDOKHPSLVSROLWLFDOO\FKDUJHGDQGRIJUHDWFRQFHUQWR FHUWDLQFLWL]HQVls$DW 'LVW&W0HP2S 6HFRQGLQ WKHSDVW\HDUDORQHLQGXVWULDOKHPSDGYRFDF\LQ.HQWXFN\KDV PDGH QHZV RQ VHYHUDO RFFDVLRQV UHYHDOLQJ WKH VLJQLILFDQW :KLOH &RFNUHO LQ WHDFKLQJ KHU VWXGHQWV DERXW WKH HQYLURQPHQWDO EHQHILWV RI LQGXVWULDO KHPS ZDV DUJXDEO\ VSHDNLQJ ERWK DV DQ HPSOR\HH H[WHQWWRZKLFKLQGXVWULDOKHPSKDVEHFRPHDQLPSRUWDQWDQG DQG DV D FLWL]HQ ZH GR QRW EHOLHYH WKDW WKLV FDVH LV EHVW DQDO\]HG DV D SXEOLFO\GHEDWHGLVVXHLQWKH6WDWH,Q2FWREHUSUHVLGHQWLDO mPL[HG VSHHFKl FDVH 6HH %RQQHOO Y /RUHQ]R )G WK &LU ,Q PL[HG VSHHFK FDVHV WKH HPSOR\HH DW LVVXH VSHDNV QRW RQO\ FDQGLGDWH 5DOSK 1DGHU LQ D FDPSDLJQ VWRS LQ .HQWXFN\ DV ERWK D FLWL]HQ DQG DQ HPSOR\HH EXW WKH FRQWHQW RI KHU VSHHFK LQYROYHV VSRNHRXWLQIDYRURIWKHOHJDOL]DWLRQRILQGXVWULDOKHPSDQG PDWWHUV RI ERWK SXEOLF DQG SULYDWH FRQFHUQ 6HH LG ,Q WKLV FDVH ZKLOH WKH RIWKHEHQHILWVLWZRXOGKDYHIRUVPDOOIDPLO\IDUPHUV$O YHU\ QDWXUH RI &RFNUHOjV SURIHVVLRQ HQWDLOV WKDW KHU VSHHFK RQ PDWWHUV RI &URVV1DGHU%ODVWV)RHVLQ9LVLWWR/RXLVYLOOH7KH&RXULHU SROLWLFDO DQG VRFLDO LQWHUHVW LV OLNHO\ WR EH PDGH ERWK DV DQ HPSOR\HH DQG sRXUQDO /RXLVYLOOH.< 2FWDW$,Q'HFHPEHU D FLWL]HQ WKH FRQWHQW RI KHU VSHHFK LV QRW PL[HG ,QVWHDG UDWKHU WKDQ DIWHU WKH 'UXJ (QIRUFHPHQW $JHQF\ FRQILVFDWHG LQGXVWULDO FRQFHUQLQJ LQ SDUW DQ HPSOR\HH JULHYDQFH RU VRPH RWKHU SULYDWH GLVSXWH DV ZDV WKH FDVH ZLWK WKH SURIHVVRUjV VSHHFK LQ %RQQHOO &RFNUHOjV VSHHFK KHPSEHLQJJURZQRQWKH3LQH5LGJH6RXWK'DNRWD,QGLDQ UHODWHV WR PDWWHUV SDUWLFXODUO\ RI SXEOLF FRQFHUQ (YHQ LI ZH ZHUH WR DSSO\ 5HVHUYDWLRQ PHPEHUV RI WKH .HQWXFN\ +HPS *URZHUV WKH PL[HG VSHHFK DQDO\VLV VR ORQJ DV mDQ\ SDUW RI DQ HPSOR\HHjV VSHHFK $VVRFLDWLRQLQFOXGLQJIRUPHU.HQWXFN\JRYHUQRU/RXLH% ZKLFK FRQWULEXWHV WR WKH GLVFKDUJH UHODWHV WR PDWWHUV RI SXEOLF FRQFHUQ 1XQQ WUDYHOHG WR 6RXWK 'DNRWD DQG LQ D FHUHPRQ\ DW WKH WKH FRXUW PXVW FRQGXFW D EDODQFLQJ RI LQWHUHVWV WHVW DV VHW IRUWK LQ EDVH RI 0RXQW 5XVKPRUH GHOLYHUHG OHJDOO\ LPSRUWHG 3LFNHULQJ Y %RDUG RI (GXFDWLRQ 86 6&W /(GG l 5DKQ Y 'UDNH &WU ,QF )G WK &LU LQGXVWULDOKHPSWRWKHWULEHDVDVLJQRILWVVROLGDULW\'DYLG $V ZH ZLOO GLVFXVV LQ PRUH GHWDLO ODWHU EHFDXVH &RFNUHOj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j UHDVRQLQJ ZRXOG OHDYH VXFK VSHHFK ZLWKRXW :KLOHGLVFXVVLRQRILQGXVWULDOKHPSSODLQO\PHHWVWKHEURDG FRQVWLWXWLRQDO SURWHFWLRQ IRU WKH WHDFKHU LV VSHDNLQJ DV DQ FRQFHSWRImSXEOLFFRQFHUQlDVGHILQHGE\WKH6XSUHPH&RXUW HPSOR\HHDQGQRWDVDFLWL]HQ VRPHFRXUWVKDYHIRFXVHGRQRWKHUSRUWLRQVRIWKH6XSUHPH &RXUWjV &RQQLFN GHFLVLRQ LQ FRQFOXGLQJ WKDW D WHDFKHUjV 7KH IDFWV LQ &RQQLFN LQGLFDWH WKDW WKH )RXUWK DQG )LIWK FODVVURRP VSHHFK GRHV QRW WRXFK RQ PDWWHUV RI SXEOLF &LUFXLWVKDYHUHDGWKH6XSUHPH&RXUWjVODQJXDJHWRREURDGO\ FRQFHUQ6HH%RULQJY%XQFRPEH&RXQW\%GRI(GXF ,Q &RQQLFN DQ DVVLVWDQW GLVWULFW DWWRUQH\ IROORZLQJ D )G WK&LU HQEDQF FHUWGHQLHG86 GLVDJUHHPHQW ZLWK D VXSHUYLVRU SUHSDUHG D TXHVWLRQQDLUH .LUNODQGY1RUWKVLGH,QGHS6FK'LVW )G VHHNLQJ WKH RSLQLRQV RI KHU FRZRUNHUV RQ LVVXHV VXFK DV WK &LU FHUW GHQLHG 86 mRIILFHWUDQVIHUSROLF\RIILFHPRUDOHWKHQHHGIRUDJULHYDQFH 7KHVHFDVHVSD\SDUWLFXODUDWWHQWLRQWRWKHIROORZLQJ FRPPLWWHH WKH OHYHO RI FRQILGHQFH LQ VXSHUYLVRUV DQG SRUWLRQRIWKH&RQQLFN&RXUWjVKROGLQJ ZKHWKHU HPSOR\HHV IHOW SUHVVXUHG WR ZRUN LQ SROLWLFDO FDPSDLJQVl&RQQLFN86DW&RQQLFNZDVODWHU >:@KHQDSXEOLFHPSOR\HHVSHDNVQRWDVDFLWL]HQXSRQ ILUHG IRU FLUFXODWLQJ WKH TXHVWLRQQDLUH RQ WKH JURXQGV RI PDWWHUV RI SXEOLF FRQFHUQ EXW LQVWHDG DV DQ HPSOR\HH LQVXERUGLQDWLRQ,G7KH&RXUWKHOGWKDWZKLOHPDQ\RIWKH XSRQPDWWHUVRQO\RISHUVRQDOLQWHUHVWDEVHQWWKHPRVW TXHVWLRQV VLPSO\ UHIOHFWHG WKH SODLQWLIIjV HIIRUWV WR JDWKHU XQXVXDO FLUFXPVWDQFHV D IHGHUDO FRXUW LV QRW WKH LQIRUPDWLRQ WR XVH DJDLQVW KHU VXSHUYLVRUV LQ KHU SULYDWH DSSURSULDWHIRUXPLQZKLFKWRUHYLHZWKHZLVGRPRID HPSOR\PHQWGLVSXWH0\HUVjVTXHVWLRQUHJDUGLQJWKHSUHVVXUH SHUVRQQHOGHFLVLRQWDNHQE\DSXEOLFDJHQF\DOOHJHGO\LQ WR ZRUN RQ SROLWLFDO FDPSDLJQV GLG WRXFK RQ D PDWWHU RI UHDFWLRQWRWKHHPSOR\HHjVEHKDYLRU SXEOLFFRQFHUQ,GDW 7KXVWKH&RXUWKHOGWKDWHYHQ WKRXJK0\HUVZDVVSHDNLQJDVDQHPSOR\HHRXWRIKHUSULYDWH &RQQLFN 86 DW %DVHG XSRQ WKLV ODQJXDJH WKH LQWHUHVWLQFRPEDWLQJKHUVXSHUYLVRUVjGHFLVLRQWRWUDQVIHUKHU )RXUWKDQG)LIWK&LUFXLWVKDYHGHWHUPLQHGWKDWDWHDFKHULQ WKHIDFWWKDWRQHRIKHUTXHVWLRQVGHDOWZLWKWKHIXQGDPHQWDO FKRRVLQJZKDWKHZLOOWHDFKKLVVWXGHQWVLVQRWVSHDNLQJDVD FRQVWLWXWLRQDOULJKWQRWWREHFRHUFHGLQWRFDPSDLJQLQJIRUD FLWL]HQ EXW UDWKHU DV DQ HPSOR\HH RQ PDWWHUV RI SULYDWH SROLWLFDOFDQGLGDWHZDVHQRXJKWRPDNHWKLVSDUWLFXODULVVXH LQWHUHVW%RULQJ)GDW .LUNODQG )GDW WRXFKRQDPDWWHURISXEOLFFRQFHUQ,G ,IWKH)RXUWKDQG)LIWK&LUFXLWVjLQWHUSUHWDWLRQRI&RQQLFN :HEHOLHYHWKDWWKH)RXUWKDQG)LIWK&LUFXLWVKDYHH[WHQGHG ZHUHFRUUHFWWKHQDQ\WLPHDSXEOLFHPSOR\HHZDVVSHDNLQJ WKH KROGLQJ RI &RQQLFN EH\RQG ZKDW WKH 6XSUHPH &RXUW DVDQHPSOR\HHOLNH0\HUVZDVZKHQVKHDVNHGKHUTXHVWLRQ LQWHQGHG8QGHUWKHFRXUWVjDQDO\VHVLQ%RULQJDQG.LUNODQG DERXWHPSOR\HHVEHLQJSUHVVXUHGWRFDPSDLJQWKHVSHHFKDW D WHDFKHU UHJDUGOHVV RI ZKDW KH GHFLGHV WR LQFOXGH LQ KLV LVVXHZRXOGQRWEHSURWHFWHG$VWKH6XSUHPH&RXUWPDGH FXUULFXOXPLVVSHDNLQJDVDQHPSOR\HHRQDSULYDWHPDWWHU FOHDULQLWVDQDO\VLVKRZHYHUWKHNH\TXHVWLRQLVQRWZKHWKHU %RULQJ)GDW .LUNODQG )GDW7KLV DSHUVRQLVVSHDNLQJLQKLVUROHDVDQHPSOR\HHRUDFLWL]HQ HVVHQWLDOO\JLYHVDWHDFKHUQRULJKWWRIUHHGRPRIVSHHFKZKHQ EXWZKHWKHUWKHHPSOR\HHjVVSHHFKLQIDFWWRXFKHVRQPDWWHUV WHDFKLQJVWXGHQWVLQDFODVVURRPIRUWKHYHU\DFWRIWHDFKLQJ RI SXEOLF FRQFHUQ ,G 7KXV HYHQ LI D SXEOLF
Cockrel v. Shelby Cnty School (Cockrel v. Shelby Cnty School) — published by Counsel Stack Legal Research, free access to 12M+ legal documents.