Alabama Treatment, LLC v. Waste Alliance, Inc et al
Filing
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MEMORANDUM OPINION AND ORDER: Plf's 54 Motion for Default Judgment is GRANTED, as further set out in order. Signed by Honorable Judge Stephen Michael Doyle on 6/17/2020. (bes, )
IN THE UNITED STATES DISTRICT COURT
FOR THE MIDDLE DISTRICT OF ALABAMA
SOUTHERN DIVISION
ALABAMA TREATMENT, LLC,
Plaintiff,
v.
WASTE ALLIANCE, INC., et al.,
Defendants.
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Civ. Action No. 1:17-cv-733-SMD
MEMORANDUM OPINION AND ORDER
Pending before the Court is Plaintiff’s Motion for Entry of Default Judgment (Doc.
54). The Motion asks the Court to grant default judgment as to Count 1 (breach of warranty
for a particular purpose), Count 2 (fraudulent misrepresentation of material facts), and
Count 3 (suppression of material facts) in the Amended Complaint.1 See (Doc. 54). For the
reasons set forth herein, Plaintiff’s Motion is due to be granted.
I.
Introduction
This case arises from an alleged breach of contract between Plaintiff and Defendants
for the purchase of an autoclave suitable for use in Plaintiff’s medical sterilization business.
The case was originally filed in state court and was removed by Defendants on October 31,
2017.
1
Plaintiff’s Amended Complaint contains a fourth cause of action for civil conspiracy. (Doc. 25) at 14.
However, Plaintiff does not seek default judgment on this claim; therefore, the undersigned will dismiss
the claim.
On May 1, 2018, Plaintiff filed an Amended Complaint against Defendants Waste
Alliance, Inc.; Sharps MD of Tampa Bay, LLC; Sharps MD Franchise Group, Inc.; United
Autoclaves, Inc.; and Sharps MD of USA, LLC. (Doc. 25). In the Amended Complaint,
Plaintiff alleged a breach of warranty claim, a claim for fraud, and a claim that Defendants
suppressed material facts pertaining to the purchase of the autoclave. Plaintiff also alleged
a claim for civil conspiracy and requested that the Court rescind the contract that was the
basis of the claims alleged. Id.
Defendants United Autoclaves, Inc. and Sharps MD of USA, LLC were
subsequently dismissed without prejudice because Plaintiff failed to serve them within the
requisite timeframe set forth in Federal Rule of Civil Procedure 4(m). (Doc. 41). The
remaining Defendants, whose counsel were permitted to withdraw based upon their
inability to contact their clients, did not answer Plaintiff’s Amended Complaint. On August
13, 2019, the Clerk of Court entered default against Defendants Waste Alliance, Inc.,
Sharps MD Franchise Group, Inc., and Sharps MD of Tampa Bay, LLC. (Doc. 50). Plaintiff
now seeks a default judgment against these remaining Defendants, who are no longer
represented by counsel. (Doc. 54).
II.
Findings of Fact2
2
These facts are derived from the well-pleaded allegations in Plaintiff’s Amended Complaint. See
Nishimatsu Const. Co., Ltd. v. Houston Nat'l Bank, 515 F.2d 1200, 1206 (5th Cir.1975) (noting that a party’s
default admits the “well-pleaded allegations of fact” and that a defendant “is not held to admit facts that are
not well-pleaded or to admit conclusions of law.”). Bonner v. City of Prichard, 661 F.2d 1206 (11th Cir.
1981) (en banc) (adopting as binding precedent all of the decisions of the former Fifth Circuit handed down
prior to the close of business on September 30, 1981).
2
On August 21, 2016, Plaintiff received a proposal for an autoclave from Defendant
Sharps M.D. It was represented to Plaintiff that Defendant Sharps M.D. had recently
purchased United Autoclaves, a former Defendant, which was now manufacturing
autoclaves on behalf of Defendant Waste Alliance. Common ownership exists between
Defendant Waste Alliance and former Defendant United Autoclaves.
Plaintiff was given a quote of $159,000.00 for the cost of an autoclave. On
September 23, 2016, Plaintiff placed a deposit of $15,750.00 toward the purchase of the
autoclave with Defendant Waste Alliance. On October 14, 2017, Plaintiff received an email
stating that the autoclave was on a truck in Charlotte, North Carolina, and was ready to be
shipped to Plaintiff’s place of business in Houston County, Alabama, upon receipt of the
balance of $128,925.00 minus ten percent that was due upon receipt. Plaintiff wired the
balance of the money to Defendant Waste Alliance.
Despite wiring and receiving confirmation of receipt of the money to Defendant
Waste Alliance, the autoclave was never received by Plaintiff. Plaintiff contacted
Defendant Waste Alliance about the missing autoclave and was told that the autoclave was
not shipped because Plaintiff did not wire the balance in time. Plaintiff inquired when it
should receive the autoclave and was told “soon.”
By December 2016, Plaintiff had yet to receive the autoclave. Plaintiff was told by
Defendant Waste Alliance that Plaintiff could expect delivery of the autoclave by the end
of January 2017. By March 2017, Plaintiff was not in receipt of the autoclave.
Plaintiff’s representative drove to the offices of Defendant Waste Alliance and made
inquiries regarding the undelivered autoclave. Gerald Hubble, a representative of
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Defendant Waste Alliance informed Plaintiff’s representative that Defendant Waste
Alliance had another autoclave that had been shipped to Defendant Waste Alliance and
that Defendant Waste Alliance would send the second autoclave to Plaintiff.
In April 2017, Defendant Waste Alliance shipped the second autoclave to Plaintiff’s
place of business. Defendant Waste Alliance did not provide technicians to install the
second autoclave despite repeatedly making statements to Plaintiff to the contrary.
B & L Cremations (“B & L”), who was tasked to start up an on-site incinerator sold
to Plaintiff by Defendant Waste Alliance, informed Plaintiff that B & L would also install
and start up the second autoclave sold to Plaintiff by Defendant Waste Alliance. B & L’s
technician informed Plaintiff that, after inspecting the second autoclave, he found that the
second autoclave was not a new autoclave but was nine years old. B & L’s technician
informed Plaintiff that the autoclave was missing many pieces, including the control panel,
which was used to start the second autoclave, as well as piping and pumps needed to
operate the autoclave. B & L’s technician informed Plaintiff that the second autoclave
probably would not work even if those missing pieces were present.
Plaintiff, after learning of the missing control panel, piping, pumps, and other
pieces, contacted Defendant Waste Alliance and inquired why the parts were missing.
Plaintiff was told that in order to receive the missing parts, Plaintiff would have to pay an
additional $14,960.00. Plaintiff informed Defendant Waste Alliance that Plaintiff would
send the additional money once Plaintiff was in possession of all the missing parts.
Defendant Waste Alliance agreed to send the missing parts but demanded a copy of the
check for $14,960.00. Plaintiff sent a copy of the check to Defendant Waste Alliance, who
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took the information on Plaintiff’s check and attempted to ACH debit Plaintiff’s account.
Plaintiff’s bank blocked the ACH.
When the driver for Defendant Waste Alliance arrived at Plaintiff’s place of
business to deliver the missing parts, the only missing part in his possession was the control
panel. The control panel was missing the touch screen and the necessary software to run it.
Plaintiff informed Defendant Waste Alliance that it would like a refund of all the money it
paid to Defendant Waste Alliance and offered to pack up the nonfunctioning autoclave and
ship it back to Defendant Waste Alliance. Defendant Waste Alliance refused Plaintiff’s
offer.
III.
Applicable Law
Although the Clerk entered default against Defendants, this does not mean that a
default judgment is automatically warranted in favor of Plaintiff. Nishimatsu Const. Co.,
515 F.2d at 1206 (“[A] default does not in itself warrant the court in entering a default
judgment.”); DIRECTV, Inc. v. Huynh, 318 F. Supp. 2d 1122, 1127 (M.D. Ala. 2004). This
is so because “[t]he defendant is not held to admit facts that are not well-pleaded or to
admit conclusions of law” when a plaintiff seeks a default judgment. Nishimatsu Const.
Co., 515 F.2d at 1206. Instead, “[t]here must be a sufficient basis in the pleadings for the
judgment entered.” Id. at 1206. Besides the pleadings, a court may also consider evidence
presented in the form of an affidavit or declaration. See Antoine v. Atlas Turner, Inc., 66
F.3d 105, 111 (6th Cir. 1995) (“Use of affidavits in granting default judgments does not
violate ... due process[.]”).
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A sufficient basis for granting default judgment is akin to the standard necessary to
survive a motion to dismiss for failure to state a claim. See Chudasama v. Mazda Motor
Corp., 123 F.3d 1353, 1370 n. 41 (11th Cir. 1997) (“[A] default judgment cannot stand on
a complaint that fails to state a claim.”); Wooten v. McDonald Transit Assocs., Inc., 775
F.3d 689, 695 (5th Cir. 2015) (stating in the context of a motion for default judgment,
“whether a factual allegation is well-pleaded arguably follows the familiar analysis used to
evaluate motions to dismiss under Rule 12(b)(6)”); United States v. Kahn, 164 F. App’x
855, 858 (11th Cir. 2006) (“[A] default judgment may not stand on a complaint that fails
to state a claim.”). When evaluating a motion to dismiss, a court looks to see whether the
complaint “contain[s] sufficient factual matter, accepted as true, to ‘state a claim to relief
that is plausible on its face.’” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atl.
Corp. v. Twombly, 550 U.S. 544, 570 (2007)). This plausibility standard is met “when the
plaintiff pleads factual content that allows the court to draw the reasonable inference that
the defendant is liable for the misconduct alleged.” Id. (citing Twombly, 550 U.S. at 556).
Here, Plaintiff has not provided the Court with a declaration or affidavit along with
its Motion for Default Judgment. Therefore, the undersigned will review the well-pleaded
factual allegations in Plaintiff’s Amended Complaint and the reasonable inferences to be
drawn from these allegations to determine whether Plaintiff has stated claims for relief
sufficient to grant default judgment.
IV.
Discussion
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a. The Well-Pleaded Facts Contained in Plaintiff’s Amended Complaint
Are Sufficient to Grant Default Judgment for Plaintiff’s Breach of
Warranty Claim.3
Section 7-2-315 of the Alabama Code addresses warranties for a particular purpose.
It states:
Where the seller at the time of contracting has reason to know any particular
purpose for which the goods are required and that the buyer is relying on the
seller's skill or judgment to select or furnish suitable goods, there is unless
excluded or modified under Section 7-2-316 an implied warranty that the
goods shall be fit for such purpose.
Ala. Code § 7-2-315 (1975). Where there has been no valid modification or exclusion, the
warranty will be implied if: (1) the seller has reason to know the buyer’s particular purpose;
(2) the seller has reason to know that the buyer is relying on the seller’s skill or judgment
to furnish appropriate goods; and (3) the buyer, in fact, relied upon the seller’s skill or
judgment. Donald v. City Nat’l Bank of Dothan, 329 So. 2d 92, 95 (Ala. 1976) (citation
omitted). Thus, in an action for breach of the implied warranty of fitness for a particular
purpose, a plaintiff must prove: (1) the existence of the implied warranty; (2) breach of the
implied warranty; and (3) damages proximately resulting from that breach. Barrington
Corp. v. Patrick Lumber Co., Inc., 447 So. 2d 785, 787 (Ala. Civ. App. 1984).
Here, Plaintiff’s Amended Complaint suggests that there was an implied warranty
regarding the autoclave. Plaintiff’s Amended Complaint states that “Defendant Waste
Alliance had reason to know that the Plaintiff’s purpose in purchasing the Second
Autoclave was to operate it in the sterilization of medical instruments.” (Doc. 25) at 8. The
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Plaintiff’s Amended Complaint asserts a claim for breach of warranty against Defendant Waste Alliance
and Defendant United Autoclave. (Doc. 25) at 8. Because Defendant United Autoclave has been dismissed,
the undersigned will examine the claim as against Defendant Waste Alliance alone.
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Amended Complaint also alleges that the autoclave ultimately delivered to Plaintiff did not
contain a control panel, piping, pumps, and other parts necessary for its operation. Despite
affording Defendant Waste Alliance the opportunity to correct this issue, Defendant only
delivered a defective control panel and the purchased autoclave still did not work.
Therefore, Plaintiff received a broken, incomplete autoclave that was not fit for any
purpose. Certainly, Plaintiff expected an autoclave that was functional, and Defendant
knew as much.
Further, Plaintiff’s Amended Complaint states that it “relied upon the skills of
Defendant Waste Alliance in designing and manufacturing the Second Autoclave.” Id. at
8. Defendant’s knowledge of Plaintiff’s reliance is reasonably inferred from the wellpleaded facts in Plaintiff’s Amended Complaint. Specifically, the Amended Complaint
notes that Defendant Waste Alliance manufactures autoclaves, and that Defendant Sharps
M.D. gave Plaintiff a proposal for the manufacture of an autoclave. See (Doc. 25) at 3-4.
By proposing a particular autoclave for Plaintiff’s business, it is reasonable to infer that
Defendant Waste Alliance, as the manufacturer of the autoclave, knew that Plaintiff was
relying upon its judgment in manufacturing the appropriate autoclave. Indeed, Plaintiff did
not simply walk into Defendant Waste Alliance’s place of business and purchase an
autoclave from its shelves. Instead, Plaintiff engaged Defendant Waste Alliance to
manufacture the appropriate autoclave and received a proposal for such—indicating that
Defendant Waste Alliance knew Plaintiff was relying upon its judgment—for the
manufacture of an autoclave. Plaintiff accepted the proposal by remitting the appropriate
funds—indicating that Plaintiff relied upon Defendant Waste Alliance’s judgment in
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selecting the autoclave. Therefore, the undersigned finds that an implied warranty existed
regarding the sale of the autoclave.
Having determined that an implied warranty existed regarding the sale of the
autoclave, the undersigned also finds that Amended Complaint is sufficient to establish a
breach of this implied warranty. By delivering Plaintiff a broken, used autoclave that did
not work and by further failing to provide essential parts that would cause the used
autoclave to function, Defendant Waste Alliance clearly breached the agreement to provide
Plaintiff with a newly-manufactured autoclave that would function. Plaintiff suffered
damages in at least the amount of the purchase price of the autoclave, along with collateral
costs and incidental costs. Accordingly, the undersigned finds that Plaintiff’s Amended
Complaint states sufficient well-pleaded facts to grant default judgment as to Plaintiff’s
claim for breach of an implied warranty.
b. The Well-Pleaded Facts Contained in Plaintiff’s Amended Complaint
Are Sufficient to Grant Default Judgment as to Plaintiff’s Claim for
Misrepresentation of Material Facts.4
To prove fraud based on misrepresentation under Alabama law, a plaintiff must
show the existence of a misrepresentation of a material fact, reliance, and that it sustained
damages as a proximate result of the misrepresentation. Sherrin v. Nw. Nat’l Life Ins. Co.,
2 F.3d 373, 378 (11th Cir. 1993) (citing Earnest v. Pritchett-Moore, 401 So. 2d 752, 754
(Ala. 1981)); AmerUs Life Ins. Co. v. Smith, 5 So. 3d 1200, 1207 (Ala. 2008). A “material
4
Plaintiff’s Amended Complaint asserts a claim for misrepresentation of material facts against Defendant
Waste Alliance, Defendant United Autoclave, and “FDB.” (Doc. 25) at 10. Because Defendant United
Autoclave has been dismissed, and because the Amended Complaint does not identify FDB, the
undersigned will examine the claim as against Defendant Waste Alliance alone.
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fact” is “a fact of such a nature as to induce action on the part of the complaining party.”
Graham v. First Union Nat’l Bank of Ga., 18 F. Supp. 2d 1310, 1317 (M.D. Ala. 1998)
(citing Bank of Red Bay v. King, 482 So. 2d 274 (Ala. 1985)). “Further, the
misrepresentation need not be the sole inducement. It is sufficient if it materially
contributes and is of such a character that the [complaining] party would not have
consummated the contract had he known the falsity of the statement.” Id. (citation omitted).
In Plaintiff’s Motion for Default Judgment, Plaintiff states that “Defendants made
false and misleading statements to the Plaintiff in order to induce the Plaintiff to purchase
the Second Autoclave.” (Doc. 54) at 6. Plaintiff continues: “The unrefuted factual
allegations show that the Defendants misrepresented the Second Autoclave as ‘new’ when
in actuality, the Second Autoclave was nothing more than a hodgepodge [of] refurbished
parts. Because of the false misrepresentations made by the Defendants to the Plaintiff, the
Plaintiff acted by paying money to the Defendants when it otherwise would not have.” Id.
The reasonable inferences drawn from Plaintiff’s Amended Complaint suggest that
Defendant Waste Alliance misrepresented material facts to Plaintiff regarding the newness
and the functionality of the autoclave. The Court finds that Plaintiff contracted for a newlymanufactured autoclave that worked, not some “hodgepodge” of refurbished, missing, and
defective parts. Had Plaintiff known that Defendant Waste Alliance would deliver a used
autoclave with missing and defective parts that did not work, Plaintiff would not have
consummated the contract by remitting payment to Defendant Waste Alliance. Therefore,
the undersigned finds that Defendant Waste Alliance misrepresented material facts to
Plaintiff regarding the purchased autoclave, and that Plaintiff relied upon those
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misrepresentations in entering the contract with Defendant Waste Alliance. As previously
noted, Plaintiff suffered damages in at least the amount of the purchase price of the
autoclave, along with collateral costs and incidental costs.
Accordingly, the undersigned finds that Plaintiff’s Amended Complaint is sufficient
to grant default judgment as to Plaintiff’s claim for misrepresentation of a material fact.
c. The Well-Pleaded Facts Contained in Plaintiff’s Amended Complaint
Are Sufficient to Grant Default Judgment as to Plaintiff’s Claim for
Fraudulent Suppression.5
Under Alabama law, “[t]he elements of a cause of action for fraudulent suppression
are: (1) a duty on the part of the defendant to disclose facts; (2) concealment or
nondisclosure of material facts by the defendant; (3) inducement of the plaintiff to act;
[and] (4) action by the plaintiff to his or her injury.” Lambert v. Mail Handlers Benefit
Plan, 682 So. 2d 61, 63 (Ala. 1996). “Suppression of a material fact which the party is
under an obligation to communicate constitutes fraud. The obligation to communicate may
arise from the confidential relations of the parties or from the particular circumstances of
the case.” Ala. Code § 6-1-102 (1975). One may also recover for fraudulent concealment
by showing active concealment of a material fact with an intent to deceive or mislead. § 65-103, Alabama Code 1975; Harrell v. Dodson, 398 So. 2d 272, 276 (Ala. 1981).
Plaintiff’s Amended Complaint states that “Defendant Waste Alliance was and is
under a duty to communicate to the Plaintiff that the Second Autoclave was not safe and/or
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Plaintiff’s Amended Complaint asserts a claim for breach of warranty against Defendant Waste Alliance,
Defendant United Autoclave, and FDB. (Doc. 25) at 12-13. Because Defendant United Autoclave has been
dismissed, and because the Amended Complaint does not identify FDB, the undersigned will examine the
claim as against Defendant Waste Alliance alone.
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capable of water operations, the normal and intended use of the Second Autoclave.” Id. at
12-13. Combined with Plaintiff’s allegation that Defendant Waste Alliance represented the
second autoclave as “new,” the undersigned finds that the circumstances surrounding this
case show that Defendants actively concealed the condition of the autoclave delivered to
Plaintiff in order for Plaintiff to remit the funds and accept the used and faulty machine. It
is obvious that Defendant Waste Alliance did so with the intent to deceive Plaintiff into
thinking it would receive an autoclave fit for its purposes. Plaintiff was injured because of
this concealment, not only in the money spent on the faulty autoclave but also the time
invested in attempting to secure a functional autoclave for its business. Accordingly, the
undersigned finds that Plaintiff’s Amended Complaint is sufficient to grant default
judgment as to Plaintiff’s claim for fraudulent suppression.
V.
Relief Requested
Plaintiff seeks the following relief:
a. actual damages from the Defendants in the amount of $159,000.00;
b. statutory prejudgment interest pursuant to Ala. Code (1975) Section 8-8-1
and Section 8-8-8;
c. punitive damages in an amount to sufficiently deter future conduct of this
type;
d. prejudgment and post judgment interest;
e. cost associated with the filing of this action (see Exhibit A – E-File
Receipt);
f. attorney’s fees in the amount of $12,934.00 (see Exhibit B – Attorney
Billing Sheet); and
g. such other relief as the Court deems necessary and proper.
(Doc. 54) at 7-8.
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Regarding Plaintiff’s request for actual damages, the undersigned will award
Plaintiff $131,782.50. This amount is based upon the facts alleged in Plaintiff’s Amended
Complaint. Specifically, Plaintiff alleges that it made a down payment of $15,750.00 for
the autoclave. See (Doc. 25) at ¶ 13. Plaintiff also alleges that it remitted the balance of
$128,925.00 minus ten (10) percent to Defendant Waste Alliance. Id. at ¶¶ 14-15. These
payments total $131,782.50. The Amended Complaint does not state that Plaintiff ever
remitted the remaining ten percent that was due upon receipt of the autoclave. Also, while
the Amended Complaint alleges that Plaintiff sent a copy of a check for $14,960.00 to
Defendant Waste Alliance for additional parts to fix the second autoclave, it appears that
the transaction was blocked by Plaintiff’s bank and that payment was never remitted to
Defendant Waste Alliance. Id. at ¶¶ 34-38. Accordingly, based upon the facts pleaded in
Plaintiff’s Amended Complaint, Plaintiff suffered $131,782.50 in actual damages.
The undersigned will award Plaintiff $25,172.57 in prejudgment interest pursuant
to Ala. Code § 8-8-1. This amount reflects a six (6) percent interest rate applied per annum6
to the actual damages awarded Plaintiff ($131,782.50) from May 2017 through May 2020.
Plaintiff’s Amended Complaint alleges that in April 2017, the second autoclave was
delivered to Plaintiff. (Doc. 25) at ¶ 24. The Amended Complaint does not state the date
on which Plaintiff demanded its money back after discovering that the autoclave did not
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Under Alabama law, it is well established that prejudgment interest at the default rate of 6% may be
available in the breach of contract and fraud context where, as here, damages were reasonably certain at the
time of breach. See Goolesby v. Koch Farms, LLC, 955 So. 2d 422, 429 (Ala. 2006) (“Prejudgment interest
may be available in a breach-of-contract case, . . . but only if damages were reasonably certain at the time
of the breach.”) (citations omitted); Rhoden v. Miller, 495 So. 2d 54, 58 (Ala. 1986) (“Where no written
contract controls the interest rate . . . , the legal rate of pre-judgment interest is six percent per annum.”).
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work and that the additional parts were defective. Therefore, because it is not clear if
Plaintiff demanded its money back in April 2017, the undersigned will begin the
calculation for prejudgment interest the following month and will continue the calculation
through May 2020.
The undersigned declines to award punitive damages, attorney’s fees, costs, or any
further prejudgment or postjudgment interest.
VI.
Conclusion
For the reasons set forth above, Plaintiff’s Motion for Default Judgment (Doc. 54)
is GRANTED.
A separate judgment will be entered.
DONE this 17th day of June, 2020.
/s/ Stephen M. Doyle
UNITED STATES MAGISTRATE JUDGE
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