Corrected entry: It's perfectly legal for cops to hold suspects at gunpoint when making an arrest. So when Newman caught Royce holding Sheridan at gunpoint, he could've just taken him into custody and killed him later. Instead he does the stupidest thing possible, he shoots Newman, which also lets Sheridan escape.
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Correction: Taking Sheridan into custody and killing him later would have looked incredibly suspicious. Royce is trying to stage the scene so it looks like he was forced to shoot Sheridan in self-defense. Shooting Newman isn't stupid at all, if anything it helps Royce's story as he can pin the shooting on Sheridan. He can't let Newman live at this point, he's planning on executing Sheridan and the second Newman walks into that room that plan would go awry unless Newman dies as well. The fact that Sheridan gets away is credited to his reflexes and skill, not to Royce's stupidity.
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