Gallo Glass Company v. Special Shapes Refractory Company, Inc. et al
Filing
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FINDINGS and RECOMMENDATIONS Approving Motion for Good Faith Settlement Determination, signed by Magistrate Judge Barbara A. McAuliffe on 1/29/19. Objections to F&R Due Within Fifteen Days. (Marrujo, C)
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UNITED STATES DISTRICT COURT
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FOR THE EASTERN DISTRICT OF CALIFORNIA
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GALLO GLASS COMPANY
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Plaintiff,
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v.
SPECIAL SHAPES REFRACTORY
COMPANY, INC., and NIKOLAUS
SORG GMBH & COMPANY KG,
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FINDINGS AND RECOMMENDATIONS
APPROVING MOTION FOR GOOD FAITH
SETTLEMENT DETERMINATION
(Doc. 61)
Defendants
NIKOLAUS SORG GMBH &
COMPANY KG,
Cross-Claimant
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No. 1:16-cv-01446 LJO-BAM
v.
SPECIAL SHAPES REFRACTORY
COMPANY, INC.,
Cross-Defendant.
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I.
INTRODUCTION
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Before the Court is Defendant Special Shapes Refractory Company, Inc.’s motion for good
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faith settlement determination pursuant to California Code of Civil Procedure Section 877.6. (Doc.
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61.) No opposition to the motion was filed. The Court deemed the matter suitable for decision
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without oral argument pursuant to Local Rule 230(g), and vacated the hearing scheduled for
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February 1, 2019. For the reasons discussed below, this Court recommends that Defendant’s
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Motion for Good Faith Settlement Determination be GRANTED.
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II.
BACKGROUND
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A.
Relevant Factual Background
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Plaintiff Gallo Glass Company (“Gallo”) is a glassmaker that has been manufacturing
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myriad types of glass containers since approximately 1958. Defendant Nikolaus Sorg GMBH &
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Company KG (“Sorg”) is an industrial engineering and design firm specializing in the design of
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glass container furnaces. Defendant Special Shapes Refractory Co. (“SSRC”) is a manufacturer of
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refractory material for use in glass furnaces. Declaration of Luke Evans (“Evans Decl.”) ¶ 3 (Doc
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61-2).
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In 2011, and pursuant to a Master Independent Contractor Agreement (“MICA”) and a
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series of subsequent Project Work Orders (“PWO”) and/or Change Orders, Gallo engaged Sorg to
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provide certain design, engineering and technical supervision in connection with the re-design and
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re-construction of one of Gallo’s glass container furnaces commonly known as Furnace No. 4.
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Pursuant to a MICA and a series of subsequent PWO’s, Gallo also retained SSRC to manufacture
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and deliver certain refractory materials that were used to construct the throat end wall of Furnace
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No. 4. Evans Decl. ¶¶ 3-4.
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On or around April 2013, construction on Furnace No. 4 was complete, the furnace was
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placed into operation, and Gallo formally accepted Furnace No. 4 approximately three months later.
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Evans Decl. ¶ 6. On February 16, 2016, a large section of the throat end wall of Furnace No. 4
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collapsed, requiring the furnace to be shut down and placed into an inoperable safe mode. Evans
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Decl. ¶ 7. Several months later, on April 13, 2016, with the assistance of Sorg and other vendors,
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contractors and design professionals, Furnace No. 4 was repaired and placed back into operation.
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Id.
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B.
Procedural History and Settlement
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On September 28, 2016, Gallo filed the underlying action stemming from the furnace
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collapse. Declaration of Lisa Schlittner (“Schlittner Decl.”) ¶ 3 (Doc. 61-3). The complaint named
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Sorg and SSRC as the only defendant parties. Id. Plaintiff’s complaint alleged causes of action
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against Sorg for Breach of Contract, Breach of Warranty, Negligence, Professional Negligence,
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and Indemnity. Id. The complaint alleged causes of action against SSRC for Breach of Contract,
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Breach of Warranty, Negligence, Product Liability, Professional Negligence, and Indemnity. Id.
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Gallo alleges that the furnace collapse was directly and proximately caused by failures in both the
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refractory materials provided by SSRC, and the furnace’s design, maintenance, auditing, and
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construction supervision provided by Sorg. Schlittner Decl. ¶ 5. Following the initial complaint,
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Defendants Sorg and SSRC filed Cross-Claims against one another for Indemnity, Contribution,
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and Declaratory Relief. Schlittner Decl. ¶ 6.1
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Beginning on May 29, 2018, the parties attended a two-day mediation with retired judge,
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the Honorable Rebecca Westerfield. Schlittner Decl., ¶ 3. After two full days of mediation, the
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parties were unable to reach an agreement. Id. However, SSRC and Gallo were able to negotiate
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a settlement agreement in the weeks following this mediation. Id. The settlement was reached out
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of a desire to compromise and settle all disputes that have arisen out of the incident and the lawsuit
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Gallo filed against SSRC to avoid the burden and expense of protracted litigation, including trial
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and appeal. Id. The settlement provides for payment to Gallo in the amount of $6,000,000.00 in
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exchange for a dismissal with prejudice as to SSRC and a full release of all claims against SSRC.
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Id. The settlement agreement is contingent upon a finding by this Court that the agreement was
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reached in good faith under California Code of Civil Procedure Section 877.6 (a)(1) and (c). Id.
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Accordingly, SSRC now seeks an order for a determination that the settlement was made in
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good faith and barring any future actions against SSRC relating to this action. (Doc. 61.)
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III.
LEGAL STANDARD
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Under California law, “[w]here a release, dismissal with or without prejudice or a covenant
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not to sue or not to enforce judgment is given in good faith before verdict or judgment to one or
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more of a number of tortfeasors claimed to be liable for the same tort ... [i]t shall discharge the
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tortfeasor to whom it is given from all liability for any contribution to any other tortfeasors,” Cal.
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Civ. Proc. Code § 877. As a check on the validity of settlement agreements that might affect joint
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tortfeasors not a party to the settlement, California Code of Civil Procedure Section 877.6 provides
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that “[a] determination by the court that the settlement was made in good faith shall bar any other
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Pursuant to a prior good faith determination, this Court has dismissed SSRC’s Cross-Claims
against Sorg. (Docs. 55, 60.)
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joint tortfeasor from any further claims against the settling tortfeasor for equitable comparative
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contribution, or partial or comparative indemnity, based on comparative negligence or comparative
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fault.” Id. at § 877.6(c).
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A settlement is made in good faith if is within a “reasonable range” of the settling parties’
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proportionate share of liability to the plaintiff. Tech–Bilt Inc. v. Woodward–Clyde & Assoc., 38
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Cal.3d 488, 499 (1985). Courts, in making a good faith settlement determination consider the
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following factors: (1) “a rough approximation of plaintiffs’ total recovery and the settlor’s
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proportionate liability”; (2) “the amount paid in settlement”; (3) “the allocation of settlement
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proceeds among plaintiffs”; (4) “a recognition that a settlor should pay less in settlement than he
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would if he were found liable after trial”; (5) “the financial conditions and insurance policy limits
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of settling defendants”; and (6) “the existence of collusion, fraud, or tortious conduct aimed to
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injure the interests of nonsettling defendants.” Id. (citation omitted). Any party opposing an
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application for good-faith settlement bears the burden of proving “that the settlement is so far ‘out
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of the ballpark’ in relation to these factors as to be inconsistent with the equitable objectives of the
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statute.” Id. at 499–500; see also Cal. Civ. Proc. Code § 877.6(d).
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When no party objects to the proposed settlement, the court may bypass the Tech–Bilt
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factors and enter a finding of good faith when presented merely with “the barebones motion which
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sets forth the ground of good faith, accompanied by a declaration which sets forth a brief
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background of the case.” City of Grand Terrace v. Super. Ct. of San Bernardino Cnty., 192
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Cal.App.3d 1251, 1261 (1987); PAG–Daly City, LLC v. Quality Auto Locators, Inc., No. C 12–
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3907 WHA, 2014 WL 807415, at **1–2 (N.D. Cal. Feb. 27, 2014); Bonds v. Nicoletti Oil, Inc., No.
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CV–F–07–1600 OWW/DLB, 2008 U.S. Dist. LEXIS 79814, at *14, 2008 WL 4104272 (E.D. Cal.
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Sept. 3, 2008) (granting motion for good faith settlement and declining to consider Tech–Bilt factors
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because there was no opposition to the motion).
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IV.
ANALYSIS
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Here, no opposition or objection has been filed to the motion. Prior to filing the Motion,
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SSRC met and conferred with counsel for the parties in this action. Schlittner Decl. ¶ 14. Counsel
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for Sorg, the only other defendant in this action, has stipulated that the settlement is in good faith
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and expressly agreed that Sorg would not contest the good faith basis of the settlement reached. Id.
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In an abundance of caution, the Court has reviewed the Tech-Bilt factors in relation to the
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facts of this case and Plaintiff’s claims, and ultimately, the Court finds nothing about the
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consideration of these factors that weighs against making a good faith settlement determination.
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The Court has reviewed the terms of the settlement, as well as the supporting declarations, and is
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satisfied that the settlement is in good faith. There is no evidence the settlement resulted from fraud,
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collusion, or tortious conduct. Further, the Court finds the settlement fair and reasonable, and in
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Gallo’s best interest given SSRC’s defenses to both liability and Gallo’s damages in this case. All
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parties are represented by competent counsel, who have chosen not to oppose the terms of the
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settlement, nor the request that the Court deem the settlement to have been made in good faith.
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Accordingly, in the absence of any objection, and based on the existing record in this case, the
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Court concludes that SSRC’s settlement reached with Gallo was made in good faith and otherwise
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complies with Section 877.6. SSRC’s motion should therefore be granted.
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V.
CONCLUSION AND RECOMMENDATIONS
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For the reasons discussed above, this Court RECOMMENDS, that
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Defendant Special Shapes Refractory Company, Inc.’s Motion for Good Faith
Settlement Determination be GRANTED;
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The settlement between Special Shapes Refractory Company, Inc. and Gallo Glass
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Company be found as made and entered into in good faith pursuant to California
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Code of Civil Procedure Section 877.6(a)(1) and (c) and in accordance with Tech-
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Bilt, Inc. v. WoodwardClyde & Assoc., 38 Ca1.3d 488, 494 (1985);
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3.
Any party, person or entity should therefore be barred from maintaining or making
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any future claim(s) against Special Shapes Refractory Company, Inc. for equitable
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comparative contribution or for partial or complete comparative indemnity, under
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common law or statute, or based upon principles of comparative negligence or
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comparative fault based upon the claims at issue in this matter; and
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4.
The Cross-Claim filed with this Court by Nikolaus Sorg GMBH & Company KG
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(Case No.: 1:16-CV-01446-LJO-BAM) which alleges causes of action for Implied
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and Equitable Indemnity, Contribution, and Declaratory Relief against Special
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Shapes Refractory Company, Inc. be hereby DISMISSED WITH PREJUDICE.
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These Findings and Recommendations are submitted to the United States District Judge
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assigned to the case, pursuant to the provisions of 28 U.S.C. § 636(b)(1)(B) and Rule 304 of the
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Local Rules of Practice for the United States District Court, Eastern District of California. Within
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fifteen (15) days after being served with these Findings and Recommendations, any party may file
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written objections with the court and serve a copy on all parties. Such a document should be
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captioned “Objections to Magistrate Judge’s Findings and Recommendations.” The district judge
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will review the magistrate judge’s findings and recommendations pursuant to Title 28 of the United
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States Code section 636(b)(1)(C). The parties are advised that failure to file objections within the
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specified time may waive the right to appeal the District Court’s order. Martinez v. Ylst, 951 F.2d
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1153 (9th Cir. 1991).
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IT IS SO ORDERED.
Dated:
/s/ Barbara
January 29, 2019
A. McAuliffe
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UNITED STATES MAGISTRATE JUDGE
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