Foster v. Halter

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 DS

81,7('67$7(6&28572)$33($/6 )257+(6,;7+&,5&8,7 BBBBBBBBBBBBBBBBB

7+(5(6$ ( )267(5 ; 3ODLQWLII$SSHOODQW    1R Y  !  :,//,$0 $ +$/7(5  'HIHQGDQW$SSHOOHH  1 $SSHDOIURPWKH8QLWHG6WDWHV'LVWULFW&RXUW IRUWKH6RXWKHUQ'LVWULFWRI2KLRDW'D\WRQ 1Rn:DOWHU+5LFH&KLHI'LVWULFWsXGJH $UJXHG1RYHPEHU 'HFLGHGDQG)LOHG'HFHPEHU %HIRUH&/$<DQG*,/0$1&LUFXLWsXGJHV('*$5 &KLHI'LVWULFWsXGJH

7KLV GHFLVLRQ ZDV RULJLQDOO\ LVVXHG DV DQ mXQSXEOLVKHG GHFLVLRQl ILOHG RQ 'HFHPEHU   2Q sDQXDU\   WKH FRXUW GHVLJQDWHG WKH RSLQLRQ DV RQH UHFRPPHQGHG IRU IXOOWH[W SXEOLFDWLRQ

7KH +RQRUDEOH 5 $OODQ (GJDU &KLHI 8QLWHG 6WDWHV 'LVWULFW sXGJH IRU WKH (DVWHUQ 'LVWULFW RI 7HQQHVVHH VLWWLQJ E\ GHVLJQDWLRQ

  )RVWHUY+DOWHU 1R

BBBBBBBBBBBBBBBBB &2816(/ $5*8('&OLIIRUG0)DUUHOO0$15,1* )$55(// &ROXPEXV2KLRIRU$SSHOODQW5LFN

,%$&.*5281' $ )DFWXDO%DFNJURXQG )RVWHUZDV\HDUVROGZKHQVKHLQMXUHGKHUOHIWOHJLQsXO\ RI   $OWKRXJK )RVWHU ZDV LQLWLDOO\ GLDJQRVHG ZLWK D VSUDLQWRKHUPHGLDOFROODWHUDOOLJDPHQWVKHODWHUGHYHORSHG DIRRWGURSJDLW%HJLQQLQJLQ0DUFKRI)RVWHUDOVR VRXJKW WUHDWPHQW IURP D SV\FKLDWULVW  )RVWHU XQGHUZHQW D SV\FKLDWULF HYDOXDWLRQ E\ &KDUOHV :DOWHUV 0' RQ sDQXDU\   DW WKH UHTXHVW RI WKH 6RFLDO 6HFXULW\ $GPLQLVWUDWLRQ  'U :DOWHUV UHSRUWHG WKDW )RVWHU PHW WKH FULWHULDIRUVHYHUHPRRGGLVRUGHUDQGWKDWDVDUHVXOWVKHKDG DGHFUHDVHGDELOLW\WRUHODWHWRRWKHUVGHDOZLWKWKHSXEOLF DQGZLWKVWDQGWKHVWUHVVDQGSUHVVXUHVDVVRFLDWHGZLWKGD\WR GD\ZRUNDFWLYLWLHV 2Q)HEUXDU\sDPHV&7DQOH\3K'GLDJQRVHG )RVWHUDVKDYLQJDQDGMXVWPHQWGLVRUGHUZLWKGHSUHVVHGPRRG )RVWHULQIRUPHG'U7DQOH\WKDWVKHKDGFRPSOHWHGWKHQLQWK JUDGHLQVSHFLDOHGXFDWLRQFODVVHVDQGWKDWVKHKDGWULHGIRXU WLPHVZLWKRXWVXFFHVVWRHDUQKHU*(''U7DQOH\UHSRUWHG WKDW)RVWHUjVYHUEDO,4ZDVKHUSHUIRUPDQFH,4ZDV DQGKHUIXOOVFDOH,4ZDVEXWKHTXHVWLRQHGZKHWKHU)RVWHU ZDVPDNLQJDJRRGIDLWKHIIRUW7KHVHVFRUHVSODFHG)RVWHUDW WKHXSSHUPRVWOLPLWRIWKHPLOGUDQJHRIPHQWDOUHWDUGDWLRQ )RVWHUjVDWWRUQH\VXEVHTXHQWO\UHIHUUHGKHUWR5R[DQQH/HZLV 3K' IRU DGGLWLRQDO WHVWLQJ  2Q 'HFHPEHU   'U /HZLV UHSRUWHG WKDW )RVWHUjV YHUEDO ,4 ZDV  KHU SHUIRUPDQFH,4ZDVDQGKHUIXOOVFDOH,4ZDV'U /HZLV QRWHG WKDW )RVWHU ZDV mYHU\ FRRSHUDWLYH ZLWK WKH H[DPLQDWLRQl % 3URFHGXUDOEDFNJURXQG )RVWHUDSSOLHGIRUGLVDELOLW\LQVXUDQFHEHQHILWV',%XQGHU 7LWOH ,, DQG 6XSSOHPHQWDO 6HFXULW\ ,QFRPH 66, EHQHILWV XQGHU 7LWOH ;9, RI WKH 6RFLDO 6HFXULW\ $FW DOOHJLQJ D GLVDELOLW\RQVHWGDWHRIsXO\7KHDSSOLFDWLRQVZHUH GHQLHGERWKLQLWLDOO\DQGRQUHFRQVLGHUDWLRQ$IWHUDKHDULQJ WKH$/sGHWHUPLQHGWKDW)RVWHUZDVQRWGLVDEOHGZLWKLQWKH  )RVWHUY+DOWHU 1R 1R )RVWHUY+DOWHU 

PHDQLQJRIWKH6RFLDO6HFXULW\$FWEHFDXVHVKHmUHWDLQHGWKH VFRUHVDQGPDGHQRUHIHUHQFHWR)RVWHUjVVFKRROUHFRUGVRU UHVLGXDOIXQFWLRQDOFDSDFLW\WRSHUIRUPDVLJQLILFDQWQXPEHU ZRUNKLVWRU\ RIMREVLQWKHQDWLRQDOHFRQRP\l *LYHQ WKH ODFN RI HYLGHQFH LQ VXSSRUW RI 'U /HZLVjV )RVWHUDSSHDOHGWKH$/sjVGHFLVLRQ7KH$SSHDOV&RXQFLO GLDJQRVLV )RVWHU KDV QRW HVWDEOLVKHG WKDW WKHUH ZDV mD YDFDWHG WKH GHFLVLRQ DQG UHPDQGHG WKH PDWWHU DIWHU UHDVRQDEOHSUREDELOLW\WKDWWKH6HFUHWDU\ZRXOGKDYHUHDFKHG FRQFOXGLQJ WKDW  mDGGLWLRQDO HYLGHQFH LV QHHGHG WR DGLIIHUHQWGLVSRVLWLRQRIWKHGLVDELOLW\FODLPLISUHVHQWHGZLWK GRFXPHQW WKH QDWXUH DQG VHYHULW\ RI >)RVWHUjV@ PHQWDO >WKLV@HYLGHQFHl6L]HPRUH)GDW:HWKHUHIRUH LPSDLUPHQWlDQGWKH$/sIDLOHGWRmGLUHFWWKHYRFDWLRQDO DIILUPWKHGLVWULFWFRXUWjVGHWHUPLQDWLRQWKDWWKHUHSRUWZDV H[SHUWWRDVVXPHPRGHUDWHUHVWULFWLRQVLQGDLO\DFWLYLWLHVDQG QRW SDUW RI WKH UHFRUG IRU SXUSRVHV RI VXEVWDQWLDO HYLGHQFH VRFLDO IXQFWLRQLQJ DQG GHILFLHQFLHV RI FRQFHQWUDWLQJ UHYLHZDQGWKDWDUHPDQGZDVQRWZDUUDQWHGXQGHU86& RFFXUULQJRIWHQl2QUHPDQGWKH$/sZDVGLUHFWHGWRREWDLQ †J DGGLWLRQDOHYLGHQFHFRQFHUQLQJ)RVWHUjVDIIHFWLYHGLVRUGHUDQG VXSSOHPHQWDOHYLGHQFHIURPDYRFDWLRQDOH[SHUWWRFODULI\WKH ,,,&21&/86,21 HIIHFWRI)RVWHUjVPRGHUDWHUHVWULFWLRQVLQGDLO\DFWLYLWLHVDQG VRFLDOIXQFWLRQLQJRQKHUFDSDFLW\WRZRUN )RU DOO RI WKH UHDVRQV VHW IRUWK DERYH ZH $)),50 WKH MXGJPHQWRIWKHGLVWULFWFRXUW $IWHU KROGLQJ DQRWKHU KHDULQJ WKH $/s DJDLQ GHQLHG )RVWHUjVDSSOLFDWLRQIRU',%DQG66,7KH$/sIRXQGWKDW GHVSLWHKHUVHYHUHLPSDLUPHQWV)RVWHUmUHWDLQVWKHUHVLGXDO IXQFWLRQDO FDSDFLW\ WR GR ZRUN ZKLFK H[LVWV LQ VLJQLILFDQW QXPEHUVLQWKHQDWLRQDOHFRQRP\l)RVWHUDJDLQDSSHDOHGWKH $/sjVGHFLVLRQEXWWKLVWLPHWKH$SSHDOV&RXQFLOGHQLHGKHU FODLP 6KH WKHQ ILOHG D FRPSODLQW LQ WKH 8QLWHG 6WDWHV 'LVWULFW &RXUW IRU WKH 6RXWKHUQ 'LVWULFW RI 2KLR  +HU FDVH ZDV UHIHUUHG WR D PDJLVWUDWH MXGJH  7KH PDJLVWUDWH MXGJH UHFRPPHQGHG WKDW WKH FRXUW DIILUP WKH GHQLDO RI EHQHILWV 2YHU REMHFWLRQV E\ )RVWHU WKH GLVWULFW FRXUW DGRSWHG WKH PDJLVWUDWHMXGJHjV5HSRUWDQG5HFRPPHQGDWLRQ7KLVDSSHDO IROORZHG ,,$1$/<6,6 $ 6WDQGDUGRIUHYLHZ 8QGHU  86& † J WKH $/sjV ILQGLQJV DUH FRQFOXVLYH DV ORQJ DV WKH\ DUH VXSSRUWHG E\ VXEVWDQWLDO HYLGHQFH'XQFDQY6HFj\RI+HDOWK +XPDQ6HUYV )GWK&LUVWDWLQJWKDWWKLVFRXUWjVUHYLHZ  )RVWHUY+DOWHU 1R 1R )RVWHUY+DOWHU 

EXWGHFOLQHVWRUHYLHZDFODLPDQWjVDSSOLFDWLRQIRUGLVDELOLW\ mLV OLPLWHG WR GHWHUPLQLQJ ZKHWKHU WKHUH LV VXEVWDQWLDO LQVXUDQFH EHQHILWV RQ WKH PHULWV WKH GLVWULFW FRXUW FDQQRW HYLGHQFHLQWKHUHFRUGWRVXSSRUWWKHILQGLQJVlmµ6XEVWDQWLDO FRQVLGHUWKDWQHZHYLGHQFHLQGHFLGLQJZKHWKHUWRXSKROG HYLGHQFHjPHDQVµPRUHWKDQDPHUHVFLQWLOOD,WPHDQVVXFK PRGLI\RUUHYHUVHWKH$/sjVGHFLVLRQlm7KHGLVWULFWFRXUW UHOHYDQW HYLGHQFH DV D UHDVRQDEOH PLQG PLJKW DFFHSW DV FDQ KRZHYHU UHPDQG WKH FDVH IRU IXUWKHU DGPLQLVWUDWLYH DGHTXDWHWRVXSSRUWDFRQFOXVLRQjl.LUNY6HFj\RI+HDOWK SURFHHGLQJVLQOLJKWRIWKHHYLGHQFHLIDFODLPDQWVKRZVWKDW +XPDQ6HUYV)GWK&LUTXRWLQJ WKHHYLGHQFHLVQHZDQGPDWHULDO DQGWKDWWKHUHZDVJRRG 5LFKDUGVRQ Y 3HUDOHV  86     FDXVHIRUQRWSUHVHQWLQJLWLQWKHSULRUSURFHHGLQJl,G )XUWKHUPRUHZHPXVWGHIHUWRDQDJHQF\jVGHFLVLRQmHYHQLI WKHUHLVVXEVWDQWLDOHYLGHQFHLQWKHUHFRUGWKDWZRXOGKDYH )RUWKHSXUSRVHVRID86&†JUHPDQGHYLGHQFH VXSSRUWHG DQ RSSRVLWH FRQFOXVLRQ VR ORQJ DV VXEVWDQWLDO LV QHZ RQO\ LI LW ZDV mQRW LQ H[LVWHQFH RU DYDLODEOH WR WKH HYLGHQFHVXSSRUWVWKHFRQFOXVLRQUHDFKHGE\WKH$/sl.H\ FODLPDQW DW WKH WLPH RI WKH DGPLQLVWUDWLYH SURFHHGLQJl Y&DOODKDQ)GWK&LU 6XOOLYDQ Y )LQNHOVWHLQ  86     6XFK HYLGHQFH LV mPDWHULDOl RQO\ LI WKHUH LV mD UHDVRQDEOH 2XUUROHLVQRWWRUHVROYHFRQIOLFWLQJHYLGHQFHLQWKHUHFRUG SUREDELOLW\WKDWWKH6HFUHWDU\ZRXOGKDYHUHDFKHGDGLIIHUHQW RUWRH[DPLQHWKHFUHGLELOLW\RIWKHFODLPDQWjVWHVWLPRQ\6HH GLVSRVLWLRQRIWKHGLVDELOLW\FODLPLISUHVHQWHGZLWKWKHQHZ *DIIQH\ Y %RZHQ  )G   WK &LU  SHU HYLGHQFHl6L]HPRUHY6HFj\RI+HDOWK +XPDQ6HUYV FXULDP,QVWHDGZHIRFXVRQZKHWKHUVXEVWDQWLDOHYLGHQFH )G   WK &LU   $ FODLPDQW VKRZV mJRRG VXSSRUWVWKH&RPPLVVLRQHUjVGHWHUPLQDWLRQWKDW)RVWHULVQRW FDXVHl E\ GHPRQVWUDWLQJ D UHDVRQDEOH MXVWLILFDWLRQ IRU WKH GLVDEOHGZLWKLQWKHPHDQLQJRIWKH6RFLDO6HFXULW\$FW IDLOXUHWRDFTXLUHDQGSUHVHQWWKHHYLGHQFHIRULQFOXVLRQLQWKH KHDULQJEHIRUHWKH$/s:LOOLVY6HFj\RI+HDOWK +XPDQ % /HJDOIUDPHZRUNIRUHYDOXDWLQJGLVDELOLW\FODLPV 6HUYV  )G    SHU FXULDP  $V QRWHG DERYHWKHEXUGHQRIVKRZLQJWKDWDUHPDQGLVDSSURSULDWHLV $SHUVRQLVFRQVLGHUHGGLVDEOHGXQGHUWKH6RFLDO6HFXULW\ RQWKHFODLPDQW2OLYHUY6HFj\RI+HDOWK +XPDQ6HUYV $FWmLI>V@KHLVXQDEOHWRHQJDJHLQDQ\VXEVWDQWLDOJDLQIXO )GWK&LU DFWLYLW\E\UHDVRQRIDQ\PHGLFDOO\GHWHUPLQDEOHSK\VLFDORU PHQWDOLPSDLUPHQWZKLFKFDQEHH[SHFWHGWRUHVXOWLQGHDWK 7KHGLVWULFWFRXUWFRUUHFWO\FRQFOXGHGWKDW)RVWHUKDGIDLOHG RUZKLFKKDVODVWHGRUFDQEHH[SHFWHGWRODVWIRUDFRQWLQXRXV WRGHPRQVWUDWHWKDWDUHPDQGZDVDSSURSULDWH)LUVWJLYHQ SHULRG RI QRW OHVV WKDQ WZHOYH PRQWKVl   86& WKDW WKH $SSHDOV &RXQFLO UHPDQGHG WKLV PDWWHU IRU IXUWKHU †FD  $)XUWKHUPRUH FRQVLGHUDWLRQRI)RVWHUjVPHQWDOLPSDLUPHQWVLQ$XJXVWRI DQGWKDWWKHUHKHDULQJGLGQRWWDNHSODFHXQWLO0DUFKRI DQLQGLYLGXDOVKDOOEHGHWHUPLQHGWREHXQGHUDGLVDELOLW\ )RVWHUKDGPRUHWKDQD\HDUDQGDKDOIWRSUHVHQWQHZ RQO\ LI >KHU@ SK\VLFDO RU PHQWDO LPSDLUPHQW RU HYLGHQFHWRWKH$/s)RVWHUFODLPVWKDWWKH$/sjVIDLOXUHWR LPSDLUPHQWVDUHRIVXFKVHYHULW\WKDW>V@KHLVQRWRQO\ UHVSRQGWRKHUUHTXHVWVIRUDGGLWLRQDOWHVWLQJZDVWKHUHDVRQ XQDEOHWRGR>KHU@SUHYLRXVZRUNEXWFDQQRWFRQVLGHULQJ IRU KHU IDLOXUH WR DFTXLUH DQG SUHVHQW WKH HYLGHQFH  7KH >KHU@DJHHGXFDWLRQDQGZRUNH[SHULHQFHHQJDJHLQDQ\ EXUGHQRISURYLGLQJDFRPSOHWHUHFRUGKRZHYHUUHVWVRQWKH RWKHUNLQGRIVXEVWDQWLDOJDLQIXOZRUNZKLFKH[LVWVLQWKH FODLPDQW/DQGVDZY6HFj\RI+HDOWK +XPDQ6HUYV QDWLRQDO HFRQRP\ UHJDUGOHVV RI ZKHWKHU VXFK ZRUN )GWK&LU)XUWKHUPRUHHYHQLI)RVWHU H[LVWV LQ WKH LPPHGLDWH DUHD LQ ZKLFK >V@KH OLYHV RU KDGGHPRQVWUDWHGmMXVWFDXVHlIRUWKHGHOD\'U/HZLVEDVHG ZKHWKHU D VSHFLILF MRE YDFDQF\ H[LVWV IRU >KHU@ RU KHU GLDJQRVLV RI PHQWDO UHWDUGDWLRQ VROHO\ RQ )RVWHUjV ,4 ZKHWKHU>V@KHZRXOGEHKLUHGLI>V@KHDSSOLHGIRUZRUN  )RVWHUY+DOWHU 1R 1R )RVWHUY+DOWHU 

 86& † FD  %  7KH EXUGHQ OLHV ZLWK WKH :DOWHUVDQG'U/HZLV,QDTXHVWLRQQDLUH'U7DQOH\VWDWHG FODLPDQW WR SURYH WKDW VKH LV GLVDEOHG  &DVH\ Y 6HFj\ RI WKDW)RVWHUjVDELOLWLHVWRSHUIRUPPRVWZRUNUHODWHGDFWLYLWLHV +HDOWK +XPDQ6HUYV)GWK&LU ZHUHRQO\mIDLUlRUmSRRURUQRQHl7KHVHILQGLQJVKRZHYHU ZHUHQHLWKHUH[SODLQHGQRUVXSSRUWHGE\PHGLFDORUFOLQLFDO $ ILYHVWHS DQDO\VLV LV XWLOL]HG IRU HYDOXDWLQJ GLVDELOLW\ ILQGLQJV0RUHRYHUWKHVHILQGLQJVZHUHLQFRQVLVWHQWZLWK'U FODLPV&)5†7KHFODLPDQWPXVWILUVWVKRZ 7DQOH\jVQDUUDWLYHUHSRUW7KH$/sZDVWKHUHIRUHHQWLWOHGWR WKDW VKH LV QRW HQJDJHG LQ VXEVWDQWLDO JDLQIXO DFWLYLW\   FRQFOXGHWKDWWKHILQGLQJVOLVWHGLQWKHTXHVWLRQQDLUHZHUHQRW &)5†E1H[WWKHFODLPDQWPXVWGHPRQVWUDWH HQWLWOHGWRVLJQLILFDQWZHLJKW&)5††G  WKDWVKHKDVDmVHYHUHLPSDLUPHQWl&)5†F G m7KHPRUHDPHGLFDOVRXUFHSUHVHQWVUHOHYDQW $ILQGLQJRImGLVDEOHGlZLOOEHPDGHDWWKHWKLUGVWHSLIWKH HYLGHQFHWRVXSSRUWDQRSLQLRQSDUWLFXODUO\PHGLFDOVLJQVDQG FODLPDQWFDQWKHQGHPRQVWUDWHWKDWKHULPSDLUPHQWPHHWVWKH ODERUDWRU\ ILQGLQJV WKH PRUH ZHLJKW ZH ZLOO JLYH WKDW GXUDWLRQDO UHTXLUHPHQW DQG mPHHWV RU HTXDOV D OLVWHG RSLQLRQl  )RU WKH VDPH UHDVRQV WKH $/s GLG QRW HUU LQ LPSDLUPHQWl&)5†G,IWKHLPSDLUPHQW GHFOLQLQJ WR LQFOXGH OLPLWDWLRQV IRXQG E\ 'U :DOWHUV GRHVQRWPHHWRUHTXDODOLVWHGLPSDLUPHQWWKHIRXUWKVWHS )RVWHUjVDUJXPHQWWKDW'U/HZLVjVILQGLQJVVKRXOGKDYHEHHQ UHTXLUHV WKH FODLPDQW WR SURYH WKDW VKH LV LQFDSDEOH RI LQFRUSRUDWHGLQWRWKHK\SRWKHWLFDOTXHVWLRQDOVRIDLOVEHFDXVH SHUIRUPLQJ ZRUN WKDW VKH KDV GRQH LQ WKH SDVW   &)5 'U/HZLVGLGQRWWHVW)RVWHUXQWLO'HFHPEHURIZHOO † H  )LQDOO\ LI WKH FODLPDQWjV LPSDLUPHQW LV VR DIWHUWKH$/sFRQGXFWHGWKHKHDULQJLQTXHVWLRQ VHYHUHDVWRSUHFOXGHWKHSHUIRUPDQFHRISDVWZRUNWKHQRWKHU IDFWRUVLQFOXGLQJDJHHGXFDWLRQSDVWZRUNH[SHULHQFHDQG %DVHGRQWKHDERYHDQDO\VLVZHFRQFOXGHWKDWWKH$/sGLG UHVLGXDOIXQFWLRQDOFDSDFLW\PXVWEHFRQVLGHUHGWRGHWHUPLQH QRWHUULQIRUPXODWLQJWKHK\SRWKHWLFDOTXHVWLRQVSRVHGWRWKH LIRWKHUZRUNFDQ EHSHUIRUPHG&)5†I YRFDWLRQDOH[SHUW:HWKHUHIRUHDIILUPWKH$/sjVFRQFOXVLRQ 7KHEXUGHQVKLIWVWRWKH&RPPLVVLRQHUDWWKLVILIWKVWHSWR WKDW)RVWHUZDVQRWGLVDEOHG HVWDEOLVK WKH FODLPDQWjV DELOLW\ WR GR RWKHU ZRUN  7\UD Y 6HFj\RI+HDOWK +XPDQ6HUYV)GWK ) 7KHGLVWULFWFRXUWGLGQRWHUULQUHIXVLQJWRUHPDQG &LU WKHFDVHIRUFRQVLGHUDWLRQRIDGGLWLRQDOHYLGHQFH & )RVWHUjVLPSDLUPHQWGRHVQRWmPHHWRUHTXDOl/LVWLQJ )RVWHUILQDOO\DUJXHVWKDWWKHGLVWULFWFRXUWHUUHGLQUHIXVLQJ & WR UHPDQG WKH FDVH WR WKH $/s IRU FRQVLGHUDWLRQ RI WKH 'HFHPEHU  UHSRUW E\ 'U /HZLV  7KH GLVWULFW FRXUW )RVWHUILUVWDUJXHVWKDWWKH$/sHUUHGE\IDLOLQJWRILQGWKDW UHIXVHGWRUHPDQGWKHFDVHEHFDXVHWKHUHSRUWZDVQRWSDUW KHULPSDLUPHQWPHHWVRUHTXDOV/LVWLQJ&WKHOLVWLQJIRU RIWKHUHFRUGIRUSXUSRVHVRIVXEVWDQWLDOHYLGHQFHUHYLHZDQG PHQWDO UHWDUGDWLRQ  $V QRWHG DERYH D FODLPDQW KDV WKH DUHPDQGZDVQRWZDUUDQWHGXQGHU86&†J EXUGHQRIGHPRQVWUDWLQJWKDWKHULPSDLUPHQWPHHWVRUHTXDOV EHFDXVH)RVWHUKDGIDLOHGWRVKRZmJRRGFDXVHlIRUKHUIDLOXUH DOLVWHGLPSDLUPHQW WRVXEPLWWKHHYLGHQFHGXULQJWKHSULRUSURFHHGLQJ /LVWLQJ&SURYLGHVLQSHUWLQHQWSDUWDVIROORZV $V WKH &RPPLVVLRQHU KDV SRLQWHG RXW WKLV FRXUW KDV UHSHDWHGO\ KHOG WKDW HYLGHQFH VXEPLWWHG WR WKH $SSHDOV 0HQWDO UHWDUGDWLRQ UHIHUV WR VLJQLILFDQWO\ VXEDYHUDJH &RXQFLODIWHUWKH$/sjVGHFLVLRQFDQQRWEHFRQVLGHUHGSDUWRI JHQHUDOLQWHOOHFWXDOIXQFWLRQLQJZLWKGHILFLWVLQDGDSWLYH WKHUHFRUGIRUSXUSRVHVRIVXEVWDQWLDOHYLGHQFHUHYLHZ&OLQH IXQFWLRQLQJLQLWLDOO\PDQLIHVWHGGXULQJWKHGHYHORSPHQWDO Y &RPPjU RI 6RFLDO 6HFXULW\  )G   WK &LU m>:@KHUHWKH$SSHDOV&RXQFLOFRQVLGHUVQHZHYLGHQFH  )RVWHUY+DOWHU 1R 1R )RVWHUY+DOWHU 

( )RVWHU ZDV FDSDEOH RI SHUIRUPLQJ D VLJQLILFDQW SHULRGLHWKHHYLGHQFHGHPRQVWUDWHVRUVXSSRUWVRQVHW QXPEHURIMREVLQWKHQDWLRQDOHFRQRP\ RIWKHLPSDLUPHQWEHIRUHDJH 7KH UHTXLUHG OHYHO RI VHYHULW\ IRU WKLV GLVRUGHU LV PHW )RVWHUDOVRDUJXHVWKDWWKH$/sHUUHGLQUHO\LQJXSRQWKH ZKHQWKHUHTXLUHPHQWVLQ$%&RU'DUHVDWLVILHG YRFDWLRQDO H[SHUWjV WHVWLPRQ\ EHFDXVH WKH K\SRWKHWLFDO  TXHVWLRQWKDWWKH$/sSRVHGWRWKHH[SHUWGLGQRWLQFOXGHDOO &$YDOLGYHUEDOSHUIRUPDQFH RU IXOOVFDOH,4RI RIWKHOLPLWDWLRQVRQ)RVWHUjVFDSDELOLWLHV7KHGLVWULFWFRXUW WKURXJKDQGDSK\VLFDORURWKHUPHQWDOLPSDLUPHQW FRQFOXGHG WKDW WKH $/s GLG QRW HUU E\ UHO\LQJ RQ WKH LPSRVLQJ DQ DGGLWLRQDO DQG VLJQLILFDQW ZRUNUHODWHG YRFDWLRQDO H[SHUWjV WHVWLPRQ\  $V QRWHG DERYH WKLV FRXUW OLPLWDWLRQRIIXQFWLRQ UHYLHZVWKH$/sjVGHFLVLRQWRGHWHUPLQHZKHWKHUVXEVWDQWLDO HYLGHQFH VXSSRUWV WKH ILQGLQJ WKDW WKH FODLPDQW LV QRW  &)5 3W  6XESW 3 $SS  †  HPSKDVLV GLVDEOHG DGGHG$FODLPDQWPXVWGHPRQVWUDWHWKDWKHULPSDLUPHQW VDWLVILHVWKHGLDJQRVWLFGHVFULSWLRQIRUWKHOLVWHGLPSDLUPHQW 7KH$/sSRVHGWZRK\SRWKHWLFDOTXHVWLRQVWRWKHYRFDWLRQDO LQRUGHUWREHIRXQGGLVDEOHGWKHUHXQGHU&)53W H[SHUW)LUVWWKH$/sDVNHGZKHWKHUDK\SRWKHWLFDOSHUVRQ 6XESW3$SS†$m6SHFLILFV\PSWRPVVLJQVDQG ZLWK WKH FODLPDQWjV SK\VLFDO OLPLWDWLRQV DQG SULRU ZRUN ODERUDWRU\ILQGLQJVLQWKHSDUDJUDSK$FULWHULDRIDQ\RIWKH H[SHULHQFHZKRZDVmOLPLWHGWRVLPSOHUHSHWLWLYHWDVNVORZ OLVWLQJVLQWKLVVHFWLRQFDQQRWEHFRQVLGHUHGLQLVRODWLRQIURP VWUHVV MREVl ZLWK mPLQLPDO LQWHUSHUVRQDO FRQWDFWV LQ WKH WKH GHVFULSWLRQ RI WKH PHQWDO GLVRUGHU FRQWDLQHG DW WKH ZRUNSODFHl FRXOG SHUIRUP MREV WKDW H[LVW LQ WKH QDWLRQDO EHJLQQLQJRIHDFKOLVWLQJFDWHJRU\l.LQJY+HFNOHU HFRQRP\$IWHUWKHYRFDWLRQDOH[SHUWLQGLFDWHGWKDWVXFKMREV )GWK&LUKROGLQJWKDWDODFNRIHYLGHQFH GRH[LVWWKH$/sPRGLILHGWKHK\SRWKHWLFDOE\DVNLQJZKHWKHU WR VXSSRUW WKH UHTXLUHPHQWV RI /LVWLQJ & SURYLGHG WKHVH MREV FRXOG EH SHUIRUPHG ZLWK VRPHRQH ZLWK DQ ,4 VXEVWDQWLDOHYLGHQFHWKDWWKHFODLPDQWZDVQRWGLVDEOHG$V EHWZHHQDQG7KHYRFDWLRQDOH[SHUWDJDLQLQGLFDWHG WKH&RPPLVVLRQHUKDVSRLQWHGRXWUHFHQWDPHQGPHQWVWRWKH WKDWVXFKMREVGRH[LVW UHJXODWLRQVIXUWKHUFODULI\WKDWDFODLPDQWZLOOPHHWWKHOLVWLQJ IRUPHQWDOUHWDUGDWLRQRQO\m>L@I>WKHFODLPDQWjV@LPSDLUPHQW )RVWHUILUVWFODLPVWKDWWKH$/sIDLOHGWRFRPSO\ZLWKWKH VDWLVILHV WKH GLDJQRVWLF GHVFULSWLRQ LQ WKH LQWURGXFWRU\ $SSHDOV&RXQFLOjVRUGHURQUHPDQG7KH$SSHDOV&RXQFLO SDUDJUDSKDQGDQ\RQHRIWKHIRXUVHWVRIFULWHULDl YDFDWHGWKH$/sjVILUVWGHFLVLRQEHFDXVHKHIDLOHGWRmGLUHFW &)53W6XESW3$SS†$DVDPHQGHGE\ WKHYRFDWLRQDOH[SHUWWRDVVXPHPRGHUDWHUHVWULFWLRQVLQGDLO\ )HG5HJ$XJXVWHPSKDVLVDGGHG DFWLYLWLHV DQG VRFLDO IXQFWLRQLQJ DQG GHILFLHQFLHV RI FRQFHQWUDWLQJ RFFXUULQJ RIWHQl  2Q UHPDQG KRZHYHU WKH 6XEVWDQWLDOHYLGHQFHH[LVWVWRVXSSRUWWKH$/sjVFRQFOXVLRQ $SSHDOV&RXQFLOVLPSO\VWDWHGWKDWDQ\K\SRWKHWLFDOTXHVWLRQ WKDW)RVWHUGRHVQRWPHHWWKHOLVWLQJIRUPHQWDOUHWDUGDWLRQ VKRXOG mUHIOHFW WKH VSHFLILF FDSDFLW\ DQG OLPLWDWLRQV )LUVWWKHHYLGHQFHGRHVQRWGHPRQVWUDWHRUVXSSRUWRQVHWRI HVWDEOLVKHGE\WKHUHFRUGDVDZKROHl,WGLGQRWRUGHUWKH WKHmVLJQLILFDQWO\VXEDYHUDJHJHQHUDOLQWHOOHFWXDOIXQFWLRQLQJ $/s WR LQFRUSRUDWH HYHU\ VSHFLILF OLPLWDWLRQ RQ ZKLFK ZLWKGHILFLWVLQDGDSWLYHIXQFWLRQLQJlEHIRUHDJH)RVWHU HYLGHQFHZDVSUHVHQWHG KDVIDLOHGWRVKRZWKDWKHUJHQHUDOLQWHOOHFWXDOIXQFWLRQLQJ ZDVmVLJQLILFDQWO\VXEDYHUDJHlSULRUWRWKDWDJH1RQHRIKHU )RVWHU DOVR FRPSODLQV WKDW WKH K\SRWKHWLFDOV IDLOHG WR WHVWLQJ RU HYDOXDWLRQ ZDV FRQWHPSRUDQHRXV ZLWK KHU LQFRUSRUDWHWKHOLPLWDWLRQVRQKHUZRUNIXQFWLRQVFDXVHGE\ GHYHORSPHQWDOSHULRGVKHZDVDOUHDG\\HDUVRIDJHZKHQ KHUPRRGGLVRUGHUDQGPHQWDOLPSDLUPHQWVDVHVWDEOLVKHGE\ WKHILUVWWHVWLQJZDVSHUIRUPHGLQ7KHRQO\HYLGHQFHLQ WKHSV\FKRORJLFDODQG,4WHVWLQJSHUIRUPHGE\'U7DQOH\'U  )RVWHUY+DOWHU 1R 1R )RVWHUY+DOWHU 

WKHUHFRUGSHUWDLQLQJWRWKLVLVVXHLVWKDW)RVWHUOHIWVFKRRO ' 7KH $/s GLG QRW DEXVH KLV GLVFUHWLRQ LQ UHMHFWLQJ DIWHU FRPSOHWLQJ WKH QLQWK JUDGH EXW ZK\ )RVWHU GLG QRW )RVWHUjV UHTXHVWV IRU DGGLWLRQDO WHVWLQJ RU H[SHUW FRQWLQXHKHUVWXGLHVLVXQFOHDU WHVWLPRQ\ 0RUHRYHUWKHHYLGHQFHGRHVQRWGHPRQVWUDWHRUVXSSRUW )RVWHUQH[WFODLPVWKDWWKH$/sHUUHGZKHQKHUHMHFWHGKHU RQVHW RI mGHILFLWV LQ DGDSWLYH IXQFWLRQLQJl EHIRUH DJH  UHTXHVWVIRUDGGLWLRQDOWHVWLQJRUH[SHUWWHVWLPRQ\$Q$/s %XUUHOOY&RPPjURI6RFLDO6HFXULW\1R:/ KDVGLVFUHWLRQWRGHWHUPLQHZKHWKHUIXUWKHUHYLGHQFHVXFKDV  DW  WK &LU 'HF   XQSXEOLVKHG WDEOH DGGLWLRQDOWHVWLQJRUH[SHUWWHVWLPRQ\LVQHFHVVDU\&)5 GHFLVLRQSHUFXULDPm>5@HFHLYLQJEHQHILWVXQGHU/LVWLQJ ††m,I\RXUPHGLFDOVRXUFHVFDQQRWRUZLOO  DOVR UHTXLUHV D GHILFLW LQ DGDSWLYH IXQFWLRQLQJl QRW JLYH XV VXIILFLHQW PHGLFDO HYLGHQFH DERXW \RXU LQWHUQDO TXRWDWLRQ PDUNV RPLWWHG  )RVWHUjV ZRUN DV DQ LPSDLUPHQWIRUXVWRGHWHUPLQHZKHWKHU\RXDUHGLVDEOHGRU DFFRXQWLQJFOHUNDWDEDQNDQGDOLTXRUVWRUHFOHUNSULRUWR EOLQGZHPD\DVN\RXWRKDYHRQHRUPRUHSK\VLFDORUPHQWDO LQMXULQJ KHU OHJ GHPRQVWUDWH WKDW VKH KDG WKH DELOLW\ WR H[DPLQDWLRQVRUWHVWVlHPSKDVLVDGGHGVHH/DQGVDZY SHUIRUPUHODWLYHO\FRPSOLFDWHGWDVNVSULRUWRWKHLQMXU\WRKHU 6HFj\RI+HDOWK +XPDQ6HUYV)GWK&LU OHJLQ m>7@KHUHJXODWLRQVGRQRWUHTXLUHDQ$/sWRUHIHUD FODLPDQWWRDFRQVXOWDWLYHVSHFLDOLVWEXWVLPSO\JUDQWKLPWKH ,QWKHDOWHUQDWLYH)RVWHUFODLPVWKDWWKHFRPELQHGHIIHFWRI DXWKRULW\ WR GR VR LI WKH H[LVWLQJ PHGLFDO VRXUFHV GR QRW KHU PLOG PHQWDO UHWDUGDWLRQ DQG D VHYHUH PRRG GLVRUGHU LV FRQWDLQVXIILFLHQWHYLGHQFHWRPDNHDGHWHUPLQDWLRQl7KH HTXLYDOHQWWR/LVWLQJ$FODLPDQWFDQGHPRQVWUDWHWKDW GLVWULFWFRXUWFRQFOXGHGWKDWJLYHQmWKHDEVHQFHRIHYLGHQFH VKHLVGLVDEOHGEHFDXVHKHULPSDLUPHQWVDUHHTXLYDOHQWWRD RI GHILFLWV LQ DGDSWLYH EHKDYLRU ZKLFK LQLWLDOO\ PDQLIHVWHG OLVWHGLPSDLUPHQWE\SUHVHQWLQJmPHGLFDOILQGLQJVHTXDOLQ >WKHPVHOYHV@ GXULQJ WKH GHYHORSPHQWDO SHULRG >WKH $/s@ VHYHULW\ WR DOO WKH FULWHULD IRU WKH RQH PRVW VLPLODU OLVWHG SURSHUO\H[HUFLVHG>WKDW@GLVFUHWLRQl LPSDLUPHQWl6XOOLYDQY=HEOH\86 HPSKDVLVLQRULJLQDO *LYHQ WKDW WKHUH ZDV DOUHDG\ VXIILFLHQW WHVWLPRQ\ RQ )RVWHUjVLPSDLUPHQWVLQWKHUHFRUGIRUWKH$/sWRHYDOXDWHKHU $OWKRXJK WKH SUHVHQFH RI PXOWLSOH LPSDLUPHQWV FDQ RQ PHQWDOFRQGLWLRQDQGUHVLGXDOIXQFWLRQDOFDSDFLW\WKH$/sGLG RFFDVLRQVXSSRUWDILQGLQJWKDWWKHLPSDLUPHQWVDUHHTXLYDOHQW QRW DEXVH KLV GLVFUHWLRQ LQ GHQ\LQJ )RVWHUjV UHTXHVWV IRU WRDOLVWLQJDILQGLQJRIHTXLYDOHQFHXQGHU/LVWLQJ& DGGLWLRQDO WHVWLQJ RU H[SHUW WHVWLPRQ\  $OWKRXJK )RVWHU ZLOOmµYHU\UDUHO\EHUHTXLUHGjl5LOH\Y$SIHO1R IRFXVHV PXFK RI KHU DUJXPHQW RQ WKH $/sjV DOOHJHG :/DW WK&LU$XJXQSXEOLVKHG PLVLQWHUSUHWDWLRQ RI KHU ,4 UHSRUWV WKHUH ZDV VXEVWDQWLDO WDEOHGHFLVLRQTXRWLQJ6RFLDO6HFXULW\3URJUDPV2SHUDWLRQV HYLGHQFH LQ WKH UHFRUG WR VXSSRUW WKH GLVWULFW FRXUWjV 0DQXDO',',&*LYHQWKDW)RVWHUKDVIDLOHGWR FRQFOXVLRQWKDW)RVWHUjVLPSDLUPHQWVGRQRWPHHWRUHTXDOWKH SUHVHQW DQ\ HYLGHQFH VKRZLQJ mVLJQLILFDQWO\ VXEDYHUDJH OLVWLQJIRUPHQWDOUHWDUGDWLRQ:HWKHUHIRUHILQGQRHUURULQ JHQHUDO LQWHOOHFWXDO IXQFWLRQLQJ ZLWK GHILFLWV LQ DGDSWLYH WKHGLVWULFWFRXUWjVFRQFOXVLRQWKDWWKH$/sGLGQRWDEXVHKLV IXQFWLRQLQJlSULRUWRWKHDJHRIWKHUHLVDOVRVXEVWDQWLDO GLVFUHWLRQLQGHQ\LQJ)RVWHUjVUHTXHVWVIRUDGGLWLRQDOWHVWLQJ HYLGHQFH WR VXSSRUW WKH $/sjV FRQFOXVLRQ WKDW )RVWHUjV RUH[SHUWWHVWLPRQ\ LPSDLUPHQWVGRQRWHTXDOWKHOLVWLQJIRUPHQWDOUHWDUGDWLRQ 7KH$/sjVFRQFOXVLRQWKDW)RVWHUGLGQRWmPHHW>@RUHTXDO>@ DOLVWHGLPSDLUPHQWlLVWKHUHIRUHDIILUPHG