Siegmund v. Bian et al

Filing 97

ORDER denying 87 Xuelian Bian and Wei Guan's Motion to Dismiss the First Amended Complaint. Xuelian Bian and Wei Guan must file an answer to Frederick Siegmund's First Amended Complaint by April 20, 2018. Signed by Judge Federico A. Moreno on 4/2/2018. (da00)

UN I
TED STATES D I
STRI COU RT FO R TH E
CT
SO U THERN DI
STRI OF FLOR I A
CT
D
M i m iD i s on
a
vi i
C as N um be 1 62506- V- O R EN O
e
r: 6CI M
FREDERI SI M UN D ,
CK EG
Pl i if
a ntf ,

XU ELI N BI N ,W E1GU A N ,SI LEY
A
A
D
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LEA D W G FI ST CA PI L LI I
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TA
M TED ,
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ON
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nt .
O R DER DEN Y I G X U ELI BI AN D W El G UA N ' M O TI N T O DI I TH E
N
AN AN
S
O
SM SS
FI ST AM EN D ED CO M PLA INT
R
1. INTRODUCTI
ON

Thi i a s c ii s cl s a i ale ng vi a i ofs a e a f r ll i co w c i
s s e ur te a s cton l gi
ol tons
t t nd ede a aw n m ton

wih Li l Copor in' 201 g prvae mege (i e e- M e g ' . Fr rck
t nkwel r ato s
4 o- i t
r r tFrez out r er'
) edei
Si gm und t Cl s Re es a i ar ue t t s x D ef nda s enga d i a de e i
e
he as
pr ent tve
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e nt
ge n
c ptve
s m e desgne t he p t o Li e l D iec or avoi la lt f pr or s l - a i and
che
i d o l w
nkw l r t s
d i biiy or i e fde lng

fa e l de i Li
r udulnty prve nkwe ls r hol r oft i soc f l s t n f i vaue.Si
l ha e de s her t k or es ha ar l
egmund'
s

Fis Ame d Compl nti l st f lwi f co s ()vi ain ofSe ton 1 b)of
rt nde
ai ncude he olo ng our unt: I olto
ci 0(
t Se urtesExc ngeAc of1 a Rul 1 5;(1 br c offducay dut (1)adi
he c ii
ha
t 934 nd e 0b- 1) ea h i ir y; 11 i ng
a a ti br c oftd i y duy;a (V)cvi c pia y.
nd betng ea h i ucar t nd I i l ons rc
De e nt X ue i n B i n a W e Gua na e i Count 1 l , a I
f nda s
la
a nd
i
n
m d n
s , 1 nd V

mo d t
ve o

dim i s Si gm und' cl m s Fis , X uela a W e c e t t t Cour l c pe s l
s s e
s ai . r t
i n nd
i ont nd ha he
t a ks r ona

j iditonove t m on Si mund' s c ii fa cam (
urs ci
r he
eg
s e urtes rud li Count1 a rgadls ,Sigmund
) nd, e r e s e

fist saeacam u e Rue 1 b 5. e o d t e c aln ete Co r' pes n l u id cin
al o tt li nd r l 0 - S c n , h y h l g h u ts ro a j rs ito
e

o e t e wih r s e tt Se mu d scamsf rb e c o fd ca y d t ( u tl)a d cvl
v r h m t e p c o ig n ' li o r a h f i u ir uy Co n l n ii
c pia (
ons rcy Countl .Thid,Xuein and W e aguet tSi mund fist sae a cam f
V) r
la
i r ha eg
al o tt li or
r le i Count 1 a I .
e if n
s 1 nd V

Be a s t eCo r h spes n l u idcino e Xueina d W e o al h e c u t,h
c u e h u t a ro a j rs ito v r la n
i n lt re o n s te
mo in t d s s f r lc o p ro a j rs ito i DENI W ih r s e tt Co n 1
to o imis o a k f es n l u idcin s
ED. t e p c o u t ,
Sigmund haspld wih pa tc art s fce f t t saeacam unde Se ton 1 b)oft
e
e t riul iy ufiint acs o tt li
r ci 0(
he
Exc nge A c .A cc di y,Xuela a W eis m oton t di m i s Count l i DEN I .As f
ha
t
or ngl
i n nd
'
i o s s
s
ED
or
Count 1 and l ,t Cour fnds t tSi gm und s a e va i cl i s ag ns Xue i n a W e f
s1
V he
ti
ha e
t t d ld a m
ai t
la nd i or
br a off d i r dut a c vi c pia The e or ,X uela a W eis m otons t di m is
e ch
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i n nd
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i
o s s
Count 1 a I f f iur t sa e cl i s a e D EN I .
s 1 nd V or a l e o t t a m r
ED
I BACKGROUND
I.
Pl ntff
ai i

1. Fr rc Sigm und( a sRe e e atv)
ede ik e
Cls pr s nt ie
Fr de ik Si gmund i t na
e rc e
s he med pl n ifb i ng t ss ti vi ly a on be fof
aitf rngi hi ui ndi dua l nd
hal
a1 s m ia l s t t d ts r e - m e' s r hol s ofLil e l Cor a i He i a c tze oft
1 i l ry iua e 't e tna ' ha e der
rkw l
por ton.
s ii n he
St t of N e Yor A c di t t Com pl i ,Si gm u owned Li
ae
w
k. cor ng o he
a nt e nd
nkwel s r s t z
l ha e h ougho
ut
t r e nttm e pe i Thos s r w e e c nce l d f om hi br r ge a ounton N ove be
he el va i
r od.
e ha es r a le r
s oke a cc
m r
201 f l i t Fr ze out M er r Si gm und c ai s t t neihe he nor hi br r
4 olow ng he ee ge . e
l m ha
t r
s oke
r c ve a i or a i c
e ei d ny nf m ton once i t Fr e m ng he e ze out M e ger H e w a not pr de w ih t
r .
s
ovi d t he

me ger a e nt pr
r
gr eme , oxy sa e t or notc of t s r hol r ' mee i t vot on t
tt men ,
ie
he ha e de s
tng o
e
he
ta a ton.Fi l he ale s t t he di no r ce ve notce of hi s a ut y a a s lr gh s or
r ns c i
naly,
l ge ha
d te i
i
s t t or ppr i a i t
any ot ri s i connecton w ih t Fr
her ght n
i
t he eeze- M er
out
ger.
B. Def
endant
s
Si e A ustn LLP
dly
i

Si e A us i i a i t m a i
dl y
tn s n n e tonal 1 w 51 oper tng as a lm ie la lt pa t r hi
a
%1
ai
i t d i biiy r ne s p.
Si e m ai ai ishe
dl y
nt ns t adqua t s i Chi ago,I a hasofi esi 20 c tesw ordw i
rer n c
L nd
fc n
ii
l de.

2. X uelan Bi
i
an

Xuela Bin i a Chi e Ciie a f
in a s
nes tz n nd onne co r lng s r hol r ofLi
r ntoli ha e de 1
nkwel. He
l
be am e a co r lng s r hol r i M a 2005 a r m a ne a co r lng s r hol r of
c
nt oli
ha e de n
y
nd e i d
nt oli ha e de

Lil l a a lr l nttmes Sigm und alege t tas a Ofi e a Die t ofLi
rkwe l t l eeva i . e
l s ha
n fc r nd r c or
nkwel,
l
Xuela e
in ngage i and a t i d t miconduc a lge i t Am e d Compl i .
d n
u horze he s
t le d n he
nde
ant
Sigmund as a s rs t tXuela ha t powe t co r t c en s of Li
e
lo s e t ha
in d he
r o ntol he ont t
nkwelspublc
l'
i
s a em e st t fna a m a ke pl ce a w e la a e st a
t t nt o he i nci l r t a s l s cc s o dver e non- i i or a i a
s
publc nf m ton bout
t c pany. Se g und c ends t t X ue i n t r f e ha a oblga i t pr pty a
he om
im
ont
ha
la he e or d n
i ton o om l nd
a c a el di c os s h adve s f c st t com pa ss r hol r a t fnanc alm ar t .
c ur t y s l e uc
r e a t o he
ny' ha e de s nd he i i
ke s

Xuein alo manti t f l ngpostons:()ChifExec i Ofi era Die t
la s i ans he olowi
ii
i e
utve tc nd r cor

ofLi
nkwel Te snc isi pto i 2004,(i Ge r lM a ge ofLi ng Dii e tntsnc
l ch i e t nce in n
. i) ne a na r
ka
snfca i e
1 ,(i)Exe utveDie t a c r lng s e derofZho
993. ii c i rcor nd ontoli harhol
ngyouPhama eutca;(v)Cor c ili
Owne ofLi l l e nai l( t W el and ( Owne of30% oft equiyofZho you
r
nkwel ntr tona wih i;
v)
r
he t
ng
( ng )Tecmol De opme Compa Li td.
Sha hai l ogy vel nt
ny mie
J. W eiG uan

nkw l .
W e Gua i a Chi e Cii n a f m e c r lng s r hol r of Li e l He
i
n s
nes tze nd or r ont oli ha e de 2
be a e a c r lng s r hol r i M a 2005 a r m a ned a c r lng s r hol r of
cm
ontoli
ha e de n
y
nd e i
ont oli ha e de
Lil e la a lr l va tm e .Si gm und alege t ta a O f i ra Di e t ofLi el,W e
r l t l e e nt i s e
kw
l s ha s n fce nd r c or
nkw l i
e ge i a a horze t m i c
nga d n nd ut i d he s onduc alege i t A m ende Com pl i . Si gm u a s
t l d n he
d
a nt e nd l o
a s l s t t W ei ha t pow e t c r t c e s of Li e ls publc sat m e s t t
s e ' ha
t
d he
r o ontol he ont nt
nkw l '
i t e nt o he
fna i lm a ke pl ce as w e las a ce s t a
i nc a
r t a
l
c s o dver e non- i i or a i abou t com pa
s
publc nf m ton
t he
ny.
Sei m und c e
g
ont nds t t W e t r f e had a oblga i n t pr pty a a c a e y di c os
ha
i he e or
n i to o om l nd c ur t l s l e
s h a r e f t t t co pa s s r hol sand t fna i lm a ke s
uc dve s ac s o he m ny' ha e der
he i nc a r t .

1A lhough Si
t
egmund des i s Xuein and W eias contoli sha ehol r , he does noti cae
crbe
la
r lng r de s
ndi t
whatper age ofLi
cent
nkwe lsouttndi s e ea oft
l' sa ng har s ch hem owned i vi l He alegest tt t r
ndi dualy.
l
ha oge he

te o e 43 ofLi welso ttn ngs a e a d c n r ldi r t a 6 ofLi welsso k'(
h y wn d %
nk l' usa di h rs n o tol s e h n 0%
e mo
nk l' tc . Am.
'

C mp. S. pra note 1.
o l!8 )
2 su
ee

W eias manti t f l ngpostons ()ViePrsdentofLi l Te h snc is
lo i ans he olowi
ii : i c e i
nkwel c i e t
i e in i J 2004.(i Vie Ge rlM a rofLi ng Dii eca snc 2002,(i)Conc pto n une
, i) c nea nage
ka
snf tnt i e
. ii
Owne ofLikwel l enai l( t Xueinl (v)Ownerof35 oft e t ofZhongyou
r
n l ntr tona wih la ; i
%
he quiy
Te mol ( alosr sa as r ior.
cl ogy he s e ve s upe vs )
#. Shanghai Yi i A s e M ana m entCo pan Li ie
nlng s t
ge
m
y, m t d

Shang i Yi i i a Chi s lm ie labiiy c
ha nlng s
ne e i t d i lt ompa f m ed on Aprl 1 201
ny or
i 8, 4.
Y i i ope a es prm a iy i Sha
nlng
rt
i rl n
nghai Chi Yi i i t s e s r de of Le di Fi s
, na. nlng s he ol ha ehol r
a ng r t

a i am i iy s r de ofZhongyou Phar a utc l
nd s
nort ha ehol r
m ce i a .
5. Leadi Fi CapialLi ied
ng rst
t
mt

Le di Fis i a Brts Vigi I lndsCompa wih a busnes a es i Sha
a ng rt s
iih r n sa
ny t
i s ddr s n
ngha ,
i
Chi Si gmund al ge t tSi e f r d Le ng Fis ç o a utJ 25,201 f r t
na. e
le s ha dly o me
adi
r t ' r bo une
on
4 o he
pur e ofe e i i o a c u m a i tans tons c e pl t d by t m e ge ag e m en .'
pos
nt rng nt nd ons m tng r ac i
ont m a e
he r r r e t'
6 Leadi W ord Cor aton
.
ng
l
por i
Lea ng W ord i a Fl i c por ton wih a bus ne s a e s i Sha
di
l s orda or a i
t
i s ddr s n
nghai Chi .I i a
, na t s
wholy owned s i a y ofLe ng Fis .Si m und aleg t tSsi e f m e Le di W ord
l
ubs di r
adi
r t eg
l es ha ç dl y or d a ng
l
on o a
r bout A ugus 5, 201 f t pur e of en e i i o a c um m a i t a ac i ns
t
4 or he pos
t rng nt nd ons
tng r ns to
c e pl t d by t m e ge ag e m e .
ont m a e
he r r r e nt'
'
R el
evantN onpartes
i

1. Li
nkwel Cor aton
l por i
Lil el i a Fl i c po a i w ih ispr nc pa pl e ofbus nes i Sha
rkw l s
orda or r ton t t i i l ac
i sn
nghai Chi
, na.
D u i t r e t pe i Li e l ope a e as a publc hol ng c pa f a num be of
r ng he el van r od, nkw l
r td
i
di om ny or
r

afiitd e ii ,i udi t f l ng die tope ai s i ai :()Li l Te h;(i
tlae nttes ncl ng he olowi rc r tng ubsdires i nkwel c i)
Li ng Bi ogi l a mos noa y (i)Li ng Dii e tnt Thr
ka
ol ca; nd t tbl ii ka
snfca . ough t s e iis Li l
he e ntte , nkwel
de l ped, m a a t e s d, a di ti t d di i e t nt he t ca e pr
ve o
nuf c ur d, ol nd sr bu e
s nf c a
alh r oduc s i Chi
t n
na.
Si gm und a l ge t t Li
e
le s ha nkwel a Li ng D i i e t nt s r t s e r s e e bus ne s
l nd ka
s nf c a ha e he am egit r d
i s

a es a ofi s ce H e al o c e t t Li ng D i i e t nt a count f gr a e t
ddr s nd tce pa .
s ont nds ha ka
s nf c a c
ed or e t r han
99% ofLi el' t a ne r ve s i 2011
nkw ls ot l t e nue n
.
D . St em e of Fac s
at nt
t

Thi lws tse fom a201 mege ta a ton (d e zeou M e ge' t tc red
s a ui tms r
4 r r rns ci ûFr e - t r r' ha onve t
)
Lil l Co por ton f om a pu i y tade com pa i o a prva e e iy. Ac di t
r
kwe l r a i r
blcl r d
ny nt
i t ntt
cor ng o
Si gm und, t Fr ez out M er r w a S
e
he e ege
s ç
undera n on be f of a f t bene i of
t ke
hal
nd or he
ft

( fn a tjXu la a W e t ( )e t uih t ev la l camsa sre a an tt m i a
Dee d n s ein nd i o: a xi s h au be li se td g is he n
ng
prvi l fl dei tveacin ( e
e ousy ied rvai to Sigmundv Bi ,e al, 1 c 62539 ( D. a.) ( and
. an t .No 2-vS. F1 ), b)
'
die l a quief Xue in,W e ,a t i afii est alc r oft Compa sdii e t nt
r cty c r or
la
i nd he r flat ot ontol he
ny' snf c a
busne si Chi '
i s n na.
'

Sigmund pr vi l fl a dei tve a i (d rvai Aci ' on behaf of
e
e ousy ied
rvai cton C i tve ton')
De
l
Li
nkwe lalegng t tXue in a W eienga d i s l- a i durng a 201 Ss m ' r ve s
l l i ha
la nd
ge n e fde lng i
2 lha ' e r e

meger ta acin ($ 2 Reves M eger' i vi Li l,Li ng Dii eca ,and
r r ns to 1
201
re r ' nvol ng nkwel ka
)
snf tnt
s ve a t r pa t e ii .The 201 Re r eM e ge al ge y i ve t compone s Fis,
e r l hid- ry nttes
2 ve s
r r le dl nvol d wo
nt . r t
Li e l i s d 94% of is e t t t o com pa e M et m i ng l op or t d a Chi
nkw l s ue
t quiy o w
ni s
a ni nc
a e nd
na
Di e t l s m e s l or a e i e ha e f 1
r c nve t nt nc por t d n xc ng or 00% ow ne s p of a c pany c l d
r hi
om
ale

M e a i ng Neva Si m und c e t tM etm i ng Ne
t m ni
da. eg
ontnds ha
a ni
vada ha no as e s ope a i ,or
d
s t, r tons
e pl yee .Se ond,Li e ls c e l s of Li
m o s c
nkw l e r ty pun- f kang D i i e t nta t a f r ed ow ne s p t
s nf c a nd r ns e r
r hi o

Xuela a W e f no consde a i Si m und c e t tt pur e oft 201 Re r e
in nd i or
i r ton. eg
ontnds ha he pos
he 2 ve s
M e g r t a t e bl X uela a W e t ta f r c r of Li w el t ce t n r l t t r
r e s s o na e
w
i n nd
i o r ns e ontol
nk l o rai e a ed hid
pa tes w hie s rppi t as e sa ope a i oft s i a y di i ec a bus nes i Chi
ri , l t i ng he s t nd r tons he ubs di r s nf t nt i s n
na

f t ms l a frno c i rtont g-nkwel.
or he eves nd o
onsdeai o li lq'
'
X ue i n a W e m e w ih Si e on M a c 7, 201 and M a ch 28,201 t di c s a
la nd
i t t dl y
rh
4
r
4 o s us
pos i e t ke- i t t a a ton a uli a e y hie Si e on A pr l 4, 201 t begi
s bl a pr va e r ns c i
nd tm t l r d dl y
i
4 o
n
ef ect i t Fr
f uatng he eeze- ut M erger. The Fr
o
eeze- ut M erger w as desi
o
gned f t expr
or he
ess

pur eofti rnga f c d s l ofSigmund' (nd ohe s rhol r )Li l socka
pos rgge i
ore ae
e
s a t r hae des' nkwel t nd,

i t ,di tng hi of s a ng t pur ue c a m s a i t X ue i n a W e i t D e i tve
n um ves i
m
t ndi o
s li
ga ns
la nd
i n he rva i
Ac i N ot bl X uela and W e had al o r t ne Si e t a s t m a Li
ton. a y,
in
i
s e ai d dl y o dvie he nd nkwel on t
l he
Derva i A c i
i tve ton.
On A ugus 1 201 Li e l s Boa d a o d t Fr z out M er r l ag e d t
t 2, 4, nkw l'
r ppr ve he ee ege . t r e o

c r e h oft 5 000 outt ndi s r sofLi
onve t ac
he 49,
sa ng ha e
nkwel soc i o t rg t r eve $ 88
l t k nt he i ht o ec i 0.
i c s Xuei n a W e a oved t mer er consde a i pai t Li
n a h.
la nd
i ppr
he
g
i r ton d o nkwel s r hol s
l ha e der,

whih t ae $48 1 The t a mer er c i r ton amount t l s t n 1 of Li ng
c ot ld
3,20.
ot l g onsde a i
ed o es ha %
ka
D i i e t t s 201 ne a s val N o a y,Li el,t oug Li el Te h,owne 1 1 %
s nf c an '
4 t s et ue. t bl nkw l hr h nkw l c
d 6. 7
ofLi
kang D i i ec a t s e t a t tm e oft Fr e - u M e ge .
snf t n ' quiy t he i
he e ze o t r r

Folowi t Boa d' appr va oft Fr z outM e ge on Aug t1 Si e dr he a
l ng he
r s
o l he ee er r
us 2, dly a d
pr
oxy sa e
tt ment s he i a s i me tng of Li
c dulng
pecal e i
nkwel s e de s i Sha
l har hol r n
ngha on
i
Se e be 1 201 l a s pr pa e a no i f t s ci m e tng i tng a l Li e l
pt m r 9, 4. t l o e r d
tce or he pe al e i nvii l nkw l
s r hol r t a t
ha e de s o tend a vo e t a ove t Fr e nd t o ppr
he e ze out M e g . Si e ove s w a
r er dl y
r a nd
co m uni a e wih t ta f r a nt t ked w ih m aii t pr
m
c t d t he r ns e ge as
t
lng he oxy s a e en a m ee i
t t m t nd
tng

notc t Li l' s rhol r.Si mund saes upon i or in a belet t Xuela
ie o nkwels hae des eg
tt ,
nf mato nd i l hat
in
a W e l r d fom Si e t tt pr
nd
i ea ne r
dly ha he oxy sa e e a t notc of t s cil me tng
tt m nt nd he i e
he pe a
ei

wo dn tra h Lik l' sre- a s a e od r lntmef rte t s e a ij n to o
ul o e c n wels te tn me h rh le s û i o h m o e k n n u ci n f
i
t Fr e - M e g o e r ie a aialrght . I ed,Xuela a W e r t i d Si ey
he e ze out r er r xe c s ppr s i s' nde
'
in nd i e ane dl
pur ua t t a e
s n o n ngag nt lte t t ts iia l c e a e t t r woul be no
eme e tr ha specfc ly ont mplt d hat he e
d
i erope s ord ltga i '
nt l r
eal ii ton.
'
The Fr z outM e ge w a a oved durng t Se e be 1 s i m e tng.Xuela
ee er r s ppr
i he pt m r 9 pec al e i
in
a W e - w ho, al
nd
i
ong w ih t i afi i t , c r l d ove 60% of Li e ls out t ndi
t he r tla es ontole
r
nkw l'
s a ng
shar - atended t Speci M eetng and vot t r Li el shar i f
es t
he
al
i
ed hei nkw l
es n avor of t m er
he
ger.

The s m e da Si e fl d Li w el' Ar i l s ofM e ge a Am e d A r i l s ofl or a i
a
y, dl y ie nk l s tc e
r r nd
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Reasonabl
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urs cin ve t l s olts he
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Xu la a d W e l wie c aln e te Co r' p ro a j rs ito o e te o
ein n
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ke
u ts es n l u idcin v r h m n
Si gm und' s urte f a c a m unde Rul 1 5.
e
s ec ii s r ud l i
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ha
t low
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p ro a j rs cint t elmio t Fit Ame d n Du Pr c s Clu e S eS v S h
e s n lu idito o h i t f he fh
n me t e o e s a s . e EC . myt,

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2 3 2 5 2 3 1 t r 2 0 ) ctn EC . u d AL, 0 .d 0 , 0 3 2 r
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9 )
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t ef r m,a d (i e ri pes n l u idcin c mp rswih ta iin ln to so f i pa
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n u sa ta j sie Se a c se l r v M/ a m. 1 3 2 6 1 t r 1 9 )
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)

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c r igy,h u t y x rie e s n l u idcin v r ei n
a
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s urte f a c ai .
ec ii s r ud l m
Pers
onalJuri di ti Over X uelan and W eion A l T hree C l m s
s c on
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ve
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c pia y.Furhe e,e r sng pes lj iditon ove Xuela and W eion Sigmund'
ons r c
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s
12

sa ea f r l1 w cli sc porswih t Due Pr es Clus oft Fit a Foure nt
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V
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l t
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l el va i s or da' our s ons s e l
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t xe c s lge e nd

g fih t pr ec t i e et oft co ny.) Diecor S r r quied t a twih t
ood at o ot t he ntr ss he mpa ' . r t s f e e r o c t he
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ut os good f t a t y a e f bi n t de l i or ha e t f
m t
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ndl he unds or pr t of t
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cor r ton t t r ow n a nt .'I at 31 s e al o l o Fl I . v Som e s Ve ur r
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r ogni ng hat r t
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ny
t otc he ompany' i e et) Theeor Sigmund'
s ntr ss. rf e, e
s
alega i t t X ue i n a W e s r e as D ie t s of Li e l lke i e e t bls t t t
l tons ha
la nd
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nkw l i w s s a i h ha hey
ow e fduci r dute t t c pa a iss r hol r .
d i a y i s o he om ny nd t ha e de s
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t nnor Si gm und pl ads f t esabls ng t t Xuela a W e br a hed t r
e, e
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i ir
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in nd
poredl ngage i s l- lng aspar oft 201 Re re
d n efdeai
t he 2 ve s
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4 e e out M e ge .To f c lt t t Fr z out M e ge ,t a horze
r r
a iia e he ee er r hey ut i d
Si e t f m a Fl i ba e m er r s i a y,f l doc e s w ih t Fl i Sec e a y of
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um nt t he orda
rtr
St t and unde t ke d eptve c
a e,
r a ec i onduc t de i Li e ls s r hol r of t i s a ng t
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pu s t De i tve A c i n i t Sout r D i ti tof Fl i Fi ly,Si gm und a l ges t t
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13

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he he
s de oft de lby pur s ng t s oc f l st n f i va ue.
i
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ke s r
e
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i ir
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t r f e sa e a vald cli a i t Xuelan and W e f br a h of t r fducar dute ,
he e or t t d
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X ue i n a W eis m oton t di m i sCount1 i de e
la nd
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V . CI L C ONS RACY
VI
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Xue in a W e alo c l
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r c g ie a id p nd n c u e o a to f r cv l c ns ia y Alo c v Ci o Co a
e o nz n n e e e t a s f cin o ii o prc . l c o . t f r l
y
Gabls 221F.Su 2d 1 7,1 -61( D.Fl 200 .Rahe,ci lc pia y i adei tve
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1
4

V I SECURI ES FRAUD
.
TI

Sigmund al gest tXue in and W eivi a e Rul 1 5 by vit oft r r e i
e
le
ha
la
olt d
e 0brue hei ols n
c um m a i t Fr e - ut M e ge . The a gue, howeve , t t t Cour m us di m i s
ons
tng he e ze o
r r
y r
r ha he
t
t s s
Si gm und' s c ii f a c a m f f iur t s a e a c a m f r i f
e
s e urtes r ud l i or a l e o t t l i or ele .
A . St
andards

( s v ve a m oton t dim i s pl ntf s m us do m or t n m e e y s a e l l
C
TO ur i
i o s s , ai i f
t
e ha
r l t t ega
c l i ns' i t ad pl i if m us Sa l ge s e s ii f c ua ba i f t e c us ons or
onc us o ,' ns e
a ntf s
t d le om pec fc a t l s s or hos oncl i

fc dimis loft i cams' Jac a v Belsouh Teec
a e s s a her li . k on . l t l omm. ?7lF.d 1
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3 250,1 ( 1h Ci.
263 1 t r
200 . W he r i on a moton t dimis ac tmus vi t c ai i t lgh mos
4)
n ulng
i o s s, our
t ew he ompl nt n he i t t
f vor bl t t pl ntf a ac e t pl ntf swe lpl de f c sast u Se St J e '
a a e o he ai if nd c pt he ai if
l- ea d a t
r e. e . os ph s

Hop.l c v Hop. r o
s , n . . s Cop. fAm. 7 F.d9 8 9 3( 1h Ci.1 8 ) Thi tn t h we e, o s
, 95 2 4 , 5 1 t r 9 6 . s e e, o v r d e
not a y t l gal c l i . Se As r .f v I al 556 U. 662,677 (
ppl o e
onc us ons
e hc o t . qb ,
S.
2009 . Mor r
)
eove,

Sg hielga c usonsc n pr det fa wor ofac ant t y mus bes
kwl l e l oncl i a ovi he r me k
ompli ,he
t upporedby
t

f cu l l g to s' 1 . tl 5 Tho edta t a alg to mus b e o g t r iearg tt
a ta al ain . d a 9 0.
e
'
s il cu l le ains t e n u h o as ih o
g
r i a
elef bove t s c a i l velon t a s pton t t al of t c pl i ' a l ga i a e
he pe ul tve e
he s um i ha l he om a nt s le tons r

tue. BelAt.Cop.v Twombl 55 U. 5 5 (
r ' l l r .
'
y, 0 S. 44, 45 2007) l s r,t co ai mus not
. n ho t he mpl nt t
m e e y alege a m i c
rl l
s onduc ,butm us de onsr t t tt pl ade i e il t r i . Se l al
t
t m t a e ha he e r s ntted o elef e qb ,
556 U . a 679.
S. t

Unde Fedea Rul ofCi lPr e e 9( ,a pli ifmus pl d t cr tnc
r
rl e
vi oc dur b)
antf
t ea he icumsa es
c tt tng fa wih pa tc a iy. I c i rng am o i t dimi sf f iur t plad fa
onsiu i r ud t riul rt n onsde i
ton o s s or a l e o e r ud
wih pariulrt howe r co t mus as ke p i m i t notc pl di sa d s tf t
t
tc a iy,
ve , urs
t lo e n nd he i e ea ng t ndar e orh

i Rul 8() Coursd tbecaeult ha
n e a.
tc
mus
rf o nnoniet die tvesofFe R.Ci P. b)wiht
z he rci
d. v. 9( t he
br de polc of notce pl a ng.' SEC v Ph c ans G u di Uni I . T s e r l
oa r i y
i
e di '
. ysi i
ar an
t nv ru t x e .

Ph i an Guar an,I ,72 F.Su 2d l
ysci s
di nc.
pp. 342,1 2 ( . Fl 1
35 M D. a. 999)( tngFre anderv
cii
idl
.
Ni ,755 F. 81 81 ( 1h Ci.1 ) Ac or ng t t Elve h Cicui,d e9( i
ms
2d 0, 0 1 t r 985). c di o he e nt r t i
Rul b) s
stsidi t c ants t f ' $ )prcs ywha sae t weemadei wha doc
aife f he ompli es olh 41 e iel
t
t ttmens r
n t umens
t
15

o orlr prs nttonsorwha omiso wee ma ,a ( t tmeand pl e ofe h s h
r a e e e ai
t sins r de nd 2) he i
ac
ac uc
sae n a t pes rs i ef ma ng( ,i t c s ofomisons notma ng sme
ttme t nd he ron e ponsbl or ki or n he a e
si ,
ki ) a ,
and( t c e ofs h saeme sandt manne i whih t y mildt plitf,and(
3) he ontnt uc tt nt
he
r n c he se he anif
4)
w ha t def nda s obt ne a a c e
t he e nt ai d s ons quenc oft f a '' Zi m ba v Ca c 1 ' I . 256
e he r ud.' e
. s ade ntl nc ,
,

F.d 1 9 ,1 0 ( 1h Ci. 0 1 ( u tn Br o sv BleCr s a dBl eS ed o o ia l c,
3 1 4 2 2 1 t r 2 0 ) q oi g o k . u o s n u hil fFlrd , n .
11 F. 1 4,1 (1lhCi. ).
6 3d 36 371 t r1997)
Fi ly,plitfsalgi sc iisfa unde Seci 1 b)oft Exc ngeAc and
nal anif le ng e urte rud
r ton 0(
he ha
t
Rul 1 5 mus s ts y t heght ne pl di sa r oft Prva e Sec iis Lii ton
e 0bt a if he i e d ea ng t nda ds he i t
urte tgai

Reor Ac (çk f m Ac' .Thes pla ng sa r i ude srnge r rme s fr
f m t ' eor
l
t'
)
e e di tndads ncl
ti nt equie nt o
pla ng s e e .Se 15 U. C.j 78u- b)1-( . Sg oral prvat 1 5 camsrquii
e di cintr e
S.
4( ( ) 2) dFl l i e 0b- li e rng
pr ofs i t r 'he c pl i s l,w ih r pe tt e ch a tor o i s on alege t vi a e t s
oof c en e , t om a nt ha l t es c o a c
m si
l d o ol t hi
c t r s a e w ih pa tc a iy f c s gi ng r s t a sr
hap e , t t t r i ul rt a t vi i e o tong i e e e t t t de e n a t
nf r nc ha he f nda t c ed

wih t r quie saeofmi g.. s intr.'Fi hatI sorGr v Fi atc 658
t he e rd tt
nd /e, ce el'' nd*r nve t p. . ndO .om,
F. 1 1 ( 1hCi.20l1 ( tng 1 U. C.j78 4( ( ) Thec antmus esa ih
3d 282, 296 1 t r
) cii 5 S.
u- b)2).
ompli
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t ssrng ifrnc S o e c d fn a twih r s e tt e c vilto 'Phi isv S in sc
hi to n ee e i r a h e e d n t e p c o a h oain. lp . ce t f
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Atant I . 37 F. 1 5,1 6( 1hCi.2004) Howe r e nund teh ghe pla ng
l a, nc, 4 3d 01 01 1 t r
.
ve, ve
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nf encest ef om ar constued i t lghtm os f abl t t pl ntf ' Fi hat1 ' Gr
her r
e
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nv r p.

v FidWhatc 6 F.d 1 2,1 6 ( lh Ci.20ll .Furhe mor t Cour S u tc ie t e
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) t r e, he
t s s onsd r h
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c an i ise tr t 'Te l s I .v Mak ls e & Ri s Lt ,5 1U. 308 31 ( 07)
omplit n t n iey. lab , nc . or s u s ght, d. 5 S. , 0 20 .
'

B. Se ton 1 b)oft Exc
ci 0(
he hangeAc
t
Seci 1 b)of t Exc nge Ac ma i il lior a pes ...die ty or
ton 0(
he ha
t kes t lega ç ny ron
f
rcl
i r ty ...gl us ore oy,i c ci wiht pur s ors eofa s c iy ...a
ndiecl
to e mpl n onne ton t he cha e al ny e urt
ny
m a pul tve o de e i devi e or con rvanc ' t t vi a e t Sec ii a Exc nge
ni a i r c ptve
c
t i e ' ha ol t s he
urtes nd
ha

Co sin' r ls p oe t iv so s 1 U. C.j 7 j Ru e 1 b 5 p o lae u d r
mmiso s ue r tci n e tr. 5 S.
ng
8 . l 0 - r mug td n e
Secin l bl rndes i unl ult ()t ke a untue sae ntofa maeilfc ort
to Ot - e r t awf o a '
ma ny r ttme
tra a t o
16

om i t s a e a m a e i l f c nec s r i or r t m a t s a e e s m a ,i t lg oft
t o tt
t r a a t es a y n de o ke he t t m nt
de n he i ht he

cic tnc unde whih t y weema notmila ng' ( te oy a de c ,s he ,
rumsa es r c he r de,
se di ' b) dmpl ny vie c me
;
ora tfc t derud''or()t nga i a a t prcie,o co s ofbusne swhih opeae
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e
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ae

anyscurt ' 1 C. R.j240. b- (
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.
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ams
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si .
e nt r ui s xpl ne hat ' e ur te r ud l m s d
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rvea i or i t i tr ...ha sx eeme s ( )amaeil...omiso ( madewih
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e urt 4) einc
he omiso ,
( )e no cl s a ( )aca a c
5 co mi os; nd 6
us l onneci bewe n t mae il...omison a t l s
ton t e he tra
s i nd he os,
co
mmonl cald Sos ca ai '' iz ov HomeDe ,I .544 F. 1
y le l s us ton.'M z ar .
pot nc,
3d 230,1 6-37( 1h
23
1t

Ci. )(ii Dur Phar .I .v Br do,5 U. 336,341 42(
r 2008 ctng a
ms, nc . ou 44 S.
- 2005).
)
l c r t cai underSubsci ()and ()ofRul 1 5 i veale tonsofa
n ontas, l ms
e tons a
c
e 0b- nvol lgai
de ptve or m a pul tve s he e ie ,Ss m e la lt ' Sc e la lt cl i s ar ditnc
ce i
ni a i c m
. . iche
i biiy.' hem i biiy a m
e si t

fom cli unde Rul 1 5b) tRul 1 b-5( cai ae bas s ey on de eptve
r
ams
r e 0b- ( . i e 0 b) l ms r
ed oll
c i
s a e e s orom i s ons w he e s he e la lt cl i s i ve de eptve c
t t m nt
s i , r as c m i biiy a m nvol
c i onduc ,w hi h m ay
t
c
i ude de e i s a em e s or om i s o but m us a s i l
ncl
c ptve t t nt
s i ns
t l o nc ude a tonal c
ddii
onduc .' I r
t' n e

Galna Biphar ,I .Se .Lii ,ll F.Supp.3d 11 11 ( Or 2015 .A defnda
e
o ma nc c tg. 7
45, 92 D. . )
e nt
e es i a s me t tvi ae Rul 1 5() a ( whe he dc
ngag n che ha olts e 0b- a nd c) n
lommis de e i or
t c ptve
m a pul tve a t i f t r nc of a f a
ni a i c s n urhe a e
r udul nts he e. SEC v Br nnan,201 W L 1
e c m '
'
. e
3
2091
655,

a * ( D.Fl De 1 201 .Conduc i dec ptve whe i ha khe prncpalpur e a
t 2 S. a. c. 0, 3)
ts e i
n t sl
t i i
pos nd
e f c ofc e tng a f s a a a e off cti f t r nce oft s he e ' 1
fe t r a i
al e ppe r nc
a n ur he a
he c m .' d.
The Supr e Cour has expl ned t a pl ntf brngi a schem e labiiy cl m sil
em
t
ai
hat
ai if i ng
i lt ai tl
m us alege t el ent of secur tes f
t l
he em s
ii raud.See St
oneri Inv.Par ner LL C v.Sci-qtant
dge
t s,
.z l a,

552 U. 1 1 (
S. 48, 58 2008) Howe r ig ec us s he la lt doe notr quie a algai
.
ve, ibl a e c me ibiiy s
e r n le ton
t tt defnda smade a saeme ,camsbr
ha he e nt
tt nt li
oughtunde Rul 1
r e 0b-5()a ()ne not
a nd c ed

c
ompor wih Subs ci ( ()oft g or Acl whi rquie t tpl ntfss tfrhe h
t t
e ton b) 1 he Ref m t, ch e rs ha ai if e o t ac
17

sa e ntale t ha be n m iladi a f cs gi ng rs t t sbei f' l r Eltobr
tt me lged o ve e
se ng, nd a t vi ie o hi le .' n e er as

Sec Lii ,245 F.Supp.3d 450,473 ( D. Y.201 (ntr lquot ins a pu t ton
. tg.
S. N.
7) i ena
ato nd ncuai
o te .Ac or ngl t sae af rls urtesfaud cam basd on adec ptve she a
mitd) c di y, o tt edea ec ii r
li
e
e i c me,

pli ifmus alge:C )t def ntco tedade ptveormani ai a ti f t rnc
antf t le ( he enda mmit
(1
ce i
pultve c n urhea e

o te alg d s h me ( ) s ine ; ( ) a c n e to b t e t alg d d c p ie o
f h l e c e ; 2 ce tr 3
e
o n cin ewe n he le e e e tv r
ma pultvea ta t pur s ors l ofascurt ( rla upont alege de ptveor
ni ai c nd he cha e ae
e iy; 4) eince
he l d ce i
ma pultve a t ( ec
ni ai c; 5) onomi l s a ( l sc ai 'l r Gal ll F.Supp.3d a
c os ; nd 6) os auston. n e ena, 7
'
t

1 92(ii Hali ronCo.v Erc P.
l ctng lbu t
. ia JohnFu I . 1 S.Ct 2398 2406( 4).
nJ nc, 34
. ,
201 )
Anal i ofSi gm und' Se ur t e Fr
ys s
e
s c ii s aud Cl m A gai tX ue i and W e
ai
ns
lan
i
Si gm und a l ges t t whie Di e t r a O f i er of Li e l X ue i n and W ei
e
le
ha ,
l
r c o s nd fc s
nkw l,
la

vi ae Rul 1 5( a
oltd
e 0b- a) nd

by k ove ty e neei ' t Fr zeout Me g and
i rl ngi rng' he ee c
r er

i t nto ly c
n e i na l once lng t M e ge f o Lil e ls s r hol r des t t r fduc a y dut t
a i he r r r m rkw l' ha e de s pie hei i i r
y o
di c os t tm a e i i or a i H e con e t t t s de e i s he e de i Li e ls
s l e ha
t ral nf m ton.
t nds ha hi c ptve c m
prved nkw l'
s r hol s of t i s oc t hr
ha e der
he r t k d ough t unia e a s l of t i s r w ihout pa e t of f i
t
he l t r l a e
he r ha es t
ym n
ar

v le'a d dmp o e l p e e td Plitf a d Cls me e s fo mo i g t e j i te
au ' n t r p ry rv ne anif n a s mb r r m v n o n on h
i
Fr e e- M e ge prort isc um m a i n.
e z out r r i o t ons
to '
'
Xuela a W e c l
i n nd i halenge m uli e a pec s ofSi gm und' s urtes f a cl m aga ns
tpl s t
e
s ec ii r ud ai
i t
t m . Spe fca l t y c e t t Si gm und' Am e d Com pl n f is t es a i h t
he
cii ly, he ont nd ha e
s
nde
ai t a l o t bls he

f l ng ee nt ofa she labiiycl m'()ade e i ac oro si ,(i s e e ;(i)
olowi lme s
c me i lt ai . i c ptve t mison' i) cintr ii
rla e;a (v)ca ai
einc nd i uston.
1. Pl ng D ece i
eadi
pton
A s aleady di
r
scussed, Si und aleges t X uelan and W ei s
egm
l
hat
i
erved as Di ect and
r ors
Ofi s of Li el and, as s
tcer
nkw l
uch, owed t
iduci
ary dutes t Li el and Li
i o nkw l
nkwel'
ls

s r hol r .H e ar s t t Xue i n a W e i d an a fnna i d y t di c os a1 m a e i l
ha e de s
gue ha
la nd
iû
ha
f i tve ut o s l e l t r a

i or to rgadi t ta a ton t als r de s a g t y br c d t rdut of
nf main e r ng he rns ci o 1 haehol r, nd j he ea he hei y

18

dicos e by c eai a lm ae il i or ton r ga di t Fr e s l ur
onc lng l tra nf ma i e r ng he e ze out M e g r a t i
r e nd her

i e et t ri .'( p. t1 )
ntr ss heenll' Res a 3.
Pe s s ve a bi ng c e 1 w i c e t tX ue i n' and W e ' co
r ua i nd ndi as a ndi at s ha
la s
i s nduc qua ii a
t lfes s
Sde e i ' f pu pos of a Rul 1 5 a ton. O ve f r dec des ag J e Fre y
d c ptve ' or r es
e 0b- c i
r ou
a
o, udg
i ndl

expli dt tdhe ei de ptonoft copo ain (nef tofismi rt s r hol r)when
ane ha t r s ce i
t
he r r to i fec, t no iy ha e de s
t c por to i i l nc by isc r lng s r hol t enga i ata a ton a r et
he or ai n s ntue ed
t ontoli ha e der o
ge n r ns c i dve s o

t c por i s itr t (n efc, t mi iy s r der' i erss a t r i
he or aton' neess i fe t he nort haehol s nt e t) nd hee s
nondi cl ur o m i l adi di c os e a t t m at r a f c s oft tans c i ' G ol r v
s os e r s e ng s l ur s s o he
eil a t
he r a ton.' dbe g .

Me i r 567 F. 209,217( Ci.1 ) Contoli pr e ntfom t Fit Cic tsae ,
rdo ,
2d
2d r 977 . r lng ec de r he fh rui tts
i r sa ofi er ofacop orton a e unde ad y t dicos t ri e essi ot rpa tes
û edor nd tc s
di
ai r
r ut o s l e hei nt r t n he ri
t te
ha ngag i t a a tons w ih t c or ton.The e s e of s h i e e t i a pary t a
e n r ns c i
t he op a i
xit nce
uc nt r s s n
t o
s c ii ta ac i n wih t co por ton i ( a e i l i o m a i t t c por ton'
e urtes r ns to
t he r a i
s m t r a ' nf r ton o he or a i s
s r hol r or die t s t ,t f iur t di cl e s h i or a i i d c ptve'w ihi t
ha e de s
r c or ' hus he a l e o s os uc nf m ton s de e i
,
t n he
m e ni of Rul 1 . . Al
a ng
e 0*- ' abam a Far Bu e M ut
55
m r au
.

F. 602,609 ( h Ci.l .Couls i t s Cic tha i er ee Gol r and Al
2d
5t r 979)
' n hi rui ve nt prtd dbeg
t
abama
Far Bur au a es a i hi t tC r a e di e t s ow e t t r c tt nt i or a i n t t
m
e s t bls ng ha t por t r c or
co
o hei ons iue s nf m to ha

wilal t s r hol st t ke a on t e or e r s i e a on by t c por ton a is
l low he ha e der o a di o nf c e ponsbl di
he or a i nd t

o fc r. Fre ln e v Ni ,5 F.S p 1 8 ,1 9 ( D.Ga 1 8 ) atd,7 5 F.d 81
fie s' ida d r . ms 71 u p. 1 8 1 8 N.
'
. 9 3 , fn 5 2 0
( 1hCi.1 .
1 t r 985)
Sei m und a l gest tX uela a W eis ood on bot s de oft ta a i a r f e
g
le
ha
i n nd
t
h i s he r ns cton nd e us d

t notf Li l s rhol r oft dea t prve t m fom i e i a ij ton oft
o iy nkwel hae des he l o e nt he r t ekrng) n nunci
s
he

Fre eou M e g ro e riln )a p as lrg t. ( Co l ! 8 . Tha c n u tmir r
e z - t r e r xecsig p r ia i hs' Am. mp . 2) t o d c ro s
'
t d e i i Gol r and Al
he ec pton n
dbe g
abama Far Bu e whe e def nda s wihhed ma e i
m
r au,
r
e nt t l
t ral
i or a i i o de t l l t t nta pl ntf s i o not pur ui l gal m ea of pr ve i a
nf m ton n r r o u1 d e i l ai i f nt
po
s ng e
ns
e ntng
ta a ton. Fr dl
r ns c i ' ei ander 571 F. Supp. 11 X ue i n a W eis f iur t di c os m a e i l
'
,
88.
la nd
' al e o s l e tra

1
9

f cs a
a t bout t Fr ez out M e ge t r or s ts i t k ce i co uc' elment of a
he e er r he ef e a ifes he l ptve nd t' e
de
s hem e la lt cl i .5
c
i biiy a m
2. Pl ng Sci er
eadi
ent

To s a e a s c ii s f aud cl i unde Rul 1 b- Si gm und m us pl a w ih
tt
e ur te r
am
r
e 0 5, e
t ed t
pari ul rt f c s gi ng r s t a s r ng i e e e t t X ue i n a W e ac e w ih a û e al
tc a iy a t vi i e o t o nf r nc ha
la nd
i t d t û nt
m
sa e e b ac ng i e t dec i , m a pul t , or def a ' Te l , 551 U . a 31 n. The
t t m r i nt nt o
e ve
ni a e
r ud. labs
'
S. t 9 3.

alegai nsa
l to boutXuela sand W e ' m e alsa e mus gi rs t a i e e ofs int rt t
in'
is nt t t s t ve ie o n nf r nce ce e ha
i dc nt a a l as as c pe lng as a o
s d oge nd t e t
om li
ny pposng i e enc one co d dr w f om t f c s
i nf r e
ul a r
he a t

alege 'I Heca s tsyt sr uie ntby ()d l ng f t t s t tdee nt ha
l d.' d
n aif hi eq rme
i t egi acs o how ha fnda s d
al
bot moi a opporuniy t c
h tve nd
t t o ommi fa ' or (i l le ng f t t tc tt e sr
t rud,
' i) s lgi acs ha onsiut tong
a
cic san i e de
r um t tal vi nce of c c ous m i be vi or r c es ne s' I r Al t S , 406 F.
ons i
s ha or
e kl s s . n e s om A
'

Supp.2d433,445( D. . 2005 ( tngKal tv.Eihlr, F. 1 ,1 ( Ci.2001)
S. N Y. ) cii
ni
c e 264 3d 31 38 2d r
).
Si gm und pl ads wih pa tc a iy s fci nt f c ua a l ga i t e t i h t t Si e
e
e
t ri ul rt uf i e a t l le tons o s abls ha dl y
ac e wih t r qui ie i e t Cde e ve m a pul t ordef a ' Te l ,551 U . a 31 n.
t d t he e st nt nt o t c i , ni a e,
r ud. labs
'
S. t 9 3.
The Am e d Com pl i e a ns how t Fr z out M e ge w a i e d t r i Xue i
nde
a nt xpl i
he ee er r s nt nde o eleve
lan
and W e of t bur n and pot nta la lt i pos d by t D e i tve Acton and alow
i he de
e i l i biiy m e
he r va i
i
l
t m t obt n c r of Li ng D i i e t nt s as e s a oper tons f no cons de a i
he o
ai ontol
ka
s nf c a ' s t nd
ai
or
i r ton.
N ot bl X uela and W eia r a t i d t a com pls t l te w ih t r f ie 201 R e r e
a y,
in
l e dy re o c
i h he a t r t hei a l d
2 ve s
5Xuela and W eicieSant Fel . I .v Gr e 4 U. 4 2 (9 )t s p r t i po iinta
in
t
a
nd nc . e n, 30 S. 6 1 77 o u po ther sto h t

çalr t po d g n tc woudn tb ab ssfraSe ton l ( )cam. ( . t1 )Tob s r, anaFe
t iue o rvie l o ie l o e a i o
f
ci 0 b li ' Mota 3. e ue S t
'
ge al ba sRul 1 5 cli bas d on br achesoffducir dut Howeve ,Xuelan a W eii e t
ner ly r
e 0b- ams e
e
i a y y.
r
i nd
gnor he
wellknown Foot e 1 whi s m st pr de a e epton i ca eswher a her a fducir sf l et
not 4, ch ee o ovi n xc i n s
e, s e, i a y' aiur o

dico eif maina o tamege d p i d s ae od r o t op o tni t e j i t tmege. eS nt
s ls nor to b u
r r e rve h rh le s f he p ru t o non ha r r Se a a
y
Fe 43 U. a 4 4 n.4 (9 )(xpanig ta çh f iue t gv a va c n ie wa n ta maeil
, 0 S. t 7 1 1 77 e li n h t : e alr o ie d n e otc s o
t
tra
nondicl ur wihi t mea ng oft sat e ort Rul 'whe e t s r hol sçcoul nothave a e
s os e t n he
ni
he t ut
he e'
r he ha e der ç d
ctd

difrnl h dte h dp i noie' e a s ç n rDea r lw te c l n th vee j ie t mege';
fee ty a h y a ror t 'b c u e ç de lwae a h y oud o a n on d he r r'
c
u
)
s e as God r 5 F.d a 22 (ttng ta (h a ia iiy ofa ij n tv a to un e (tt)Iw
e lo lbeg, 67 2 t 0 sai h t ç e valblt
t
n nu cie cin d r sae a
c n tttd a s fi in ba i fr ditn ihig te c cu in i ( oon t 1 o S nt Fe';s e alo
o siue
utce t ss o sigus n h on lso n F toe 4 f a a )' e s
)
Fre ln r 5 1F.S pp a 1 9 -9 ( oig ta çh Godb r ln o c s s'itr rtd Fo t t 1 a
ida de , 7
u . t 1 6 7 n tn h t ç e l eg ie f a e ' nep ee onoe 4 s
t
s
uppor f t posii t çf l e t dicl e br ches offduci y dut i actonabl unde Rul 1 7 5'
t or he
ton hat çaiur o s os ea
i ar
y s i
e
r e 01-. 5

whees c f lr d prv ss ae ol r o terij cin rme y ; ag rtV.Sa h ,J d Fre l a d
r u h ai e e ie h r h des f h i nun to e d l M r ae
u
c s u ge indy n
te LJ o Se u iis Re l in. T Cr at n o a Ju calRe t in 5 SMU L.Re .7 7 ( 9 )
h w f c rte guat . he e i f
o
o
dii puato , 0
v 7 1 97
(x ann ta i God e g J d eFre dl itmrtd F toe 1 t me n çh ts ae oleswh h d te
e pliig h t n lb r , u g in y ne ee oon t 4 o a û a h rh d r o a h
t
rgh t e j i ameg ru e saelw ha ac nc mi n rg t us Rul 1 b 5'.
i to n on re nd r tt a d o o t t ihto e e 0 - '
a
)
20

M e ge .Thus Si gm und c e r y e t i he t tX uelan a W eiha a c pe lng m otve t
r r
, e
l a l s abls s ha
i nd
d om li
i o

efc t eF e z - tM eg r S eI r Altm S 4 6 F. p . t 45 Gie te eo j ci e ,
fe t h r e e ou r e . e n e so A, 0 Su p a 4 . v n h s b e tv s
Xuei n' a W e ' f l e t notf Si gmund and ot r Cls M e be s of t Fr e ela s nd is aiur o iy e
he a s m r
he e z out

M eg rrte t ac lultd atmp t p e e tLik l' s ae le sfo e j i n t ed a
r e el cs ac ae te t o r v n n wels h rhod r r m nonig h e l
or t ki o he s e C o e or r pons bl a ton by t cor a i a is of i er .
a ng t r t ps l nf ce es
t
i e ci
he
por ton nd t fc s'
'
Fr e ande , 571 F. Supp. a 11
i dl r
t 98. Acc di y, Si gm und ha pl d f c s w ih s fci nt
or ngl
e
s e a t t uf i e
pa tc art t s
r i ul iy o how t tX ue i n a W e a t w ih t r qui ie s i e .
ha
la nd i c ed t he e s t c ent r
J. Pl ad ng Relanc and Caus i n
e i
i e
ato
Fi ly, X uela a W ei c e t t Si gm und' s cu ii s f aud cl i m us f i
na l
i n nd
ont nd ha e
s e r te r
am
t al
be aus he ca t esabls r i nc and c us ton.The Supr m e Cour ha e pha i e t t
c e
nno t i h ela e
a ai
e
t s m
s z d ha

Srein eb tePlitf u nDe e d n ' d c p iea t i a e sn il lme to t ej 1 ()
t l l c y h anif po fn a ts e e tv cs s n se ta ee n f h 0b
l a
prva e c e of ac i n. St r d , 55 U . a 1 Re r ng pl i i f t es a ih r la e
i t aus
to ' one i ge 2 S. t 49. quii
'
a ntf s o t bls e i nc
e ur s t t t d e st ca al c
ns e ha he i qui ie us onnec i n' be w e n t def nt s de pton a t
r
to ' t e he
enda ' ce i
nd he

pli ifsha S xit a a prdiaef la lt '1 (ii Basi l ,48 U. a 243 a
antf
nu t ss s e c t or ibiiy. d. ctng
e
'
c nc. 5 S. t
nd

Ahlae Ut Ciz n o a v Uni dSa e , 0 U. 1 , 5 ( 97 ).
l itd e t e s futh . t tts 4 6 S. 28 1 4 1 2 )
i
e
l Fr e ande ,a c por ton' m a ge ent S i t ef e t a s r e of t a ac i
n i dl r
or a i s na m
i ded o f c
dec
e is
r ns tons
t te d w ih t m i iy s e de s be ng hope e s y f oz outof c i d pa tc pa i
ha nde
t he nor t har hol r i
l s l r en
ontnue r i i ton
i t com pa ' 571 F. Supp.a 11 M a ge e ' f iur t di c os t t a a ton- a
n he
ny.
'
t 90. na m nts a l e o s l e he r ns c i

vi ai of fducar dutes ha t efe tof Culi (he mi iy s r des it not
olton i i y i
d he f c
t lng t
l
nort haehol r) no
pur ui l l m ea of pr ve i a tans ton be a e t y di not s e t t t tue
s ng ega
ns
e ntng
r ac i
c us he
d
e ha he r

cru tn e ,i b o g tt lg ti c u two l s p o ta ij n to t so teta s cin.
ic msa c s f r u h o ih n o r, u d u p r n n u cin o t p h r n a to '
'
1iTh Co r f u dt t h Cls Re ee ttv ' d cso no t iiit ltg to t e j i t
( e u t o n ha t e a s prs naie s e iin t o ntae i ain o n on he
i
tans c i (ha be m a e i ly a f c ed by a f l e ofi onna i 'and C n t ts ns he r led
r a ton C d en t r a l f e t
aiur
nf
ton'
t ha e e
i
ei

upon ( na men 'ldicos e. l Ac or ngl t Cour hed t tt la pli ifha
ma ge ts s l ur ' d c di y, he
'
t l ha he e d antf d
C how n s fci ntr la e t s a e a cl i .' d
û
s
uf i e e i nc o t t
am 'l

21

The s m e r tona e a i i t s c e. A s i Al
a
a i l pples n hi as
n abama Fa m Bur au, Li e ls
r
e
nkw l'

s ae od r S o l ha e s u h ij n tv rle ( n e Flrd lwlt bo k t e ( r e e ou
h r h les t ud v o g t nu cie eif u d r o i a a o lc h F e z - t
c
Mere )i t y had be a r oft s s me. 606 F. a 61 And lke t pli ifi
g r f he
en wae hi che '
'
2d t 4.
i he antf n
Gol r Si gm und a l ges t t he a ot r Li e l s e de s d oul not ha be n
dbe g, e
le
ha
nd he nkw l har hol r i d
w
ve e
wihout r m e i t aleg f t ha be n di cl e ' 567 F. at 21 Thus Xuela and
t
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