McMorrow et al v. Mondelez International, Inc.
Filing
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ORDER Denying Defendant's Ex Parte Motion to Stay Pending Disposition of Rule 23(f) Petition (ECF No. 178 ). Signed by Judge Cynthia Bashant on 4/5/21. (jmo)
Case 3:17-cv-02327-BAS-JLB Document 181 Filed 04/05/21 PageID.14834 Page 1 of 6
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UNITED STATES DISTRICT COURT
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SOUTHERN DISTRICT OF CALIFORNIA
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PATRICK MCMORROW, et al.,
Plaintiffs,
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Case No. 17-cv-02327-BAS-JLB
ORDER DENYING DEFENDANT’S
EX PARTE MOTION TO STAY
PENDING DISPOSITION OF RULE
23(f) PETITION (ECF No. 178)
v.
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MONDELĒZ INTERNATIONAL, INC.,
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Defendant.
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On March 8, 2021, the Court granted Plaintiffs’ motion for class certification.
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(Order, ECF No. 172.) Defendant Mondelēz Global LLC (MDLZ) petitioned the Ninth
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Circuit for permission to appeal the class certification under Federal Rule of Civil
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Procedure 23(f). McMorrow v. Mondelez International, Inc., No. 21-80019 (9th Cir.), Pet.
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for Permission to Appeal under Fed. R. Civ. P. 23(f), ECF No. 1. MDLZ argues that the
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Court erred in ruling that (1) Plaintiffs’ conjoint analysis sets forth a class-wide damages
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model in satisfaction of Comcast Corp. v. Behrend, 569 U.S. 27, 35 (2013); and (2) the
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falsity of the term “nutritious” is susceptible to common proof. Id.
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MDLZ now moves the Court ex parte for a stay of the proceedings pending the Ninth
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Circuit’s resolution of its interlocutory appeal. (Mot. to Stay (“Mot.”), ECF No. 178.)
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Plaintiffs oppose. (Resp. in Opp’n, ECF No. 180.) The Court finds the motion suitable for
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determination on the papers and without oral argument. Civ. L. R. 7.1(d)(1). For the
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reasons stated below, the Court DENIES MDLZ’s motion to stay.
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I.
LEGAL STANDARD
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Federal Rule of Civil Procedure 23(f) provides a mechanism for interlocutory appeal
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of a court’s order granting or denying class certification. Such appeals do “not stay
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proceedings in the district court unless the district court or the court of appeals so orders.”
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Fed. R. Civ. P. 23(f). “A stay is not a matter of right, even if irreparable injury might
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otherwise result.” Nken v. Holder, 556 U.S. 418, 433 (2009). The decision of whether to
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grant a stay is an “exercise of judicial discretion” and “the propriety of its issue is dependent
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upon the circumstances of the particular case.” Id. A court balances four factors in
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determining how to exercise its discretion: (1) whether the movant is likely to succeed on
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the merits; (2) whether the movant is likely to suffer irreparable harm in the absence of a
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stay; (3) whether the issuance of the stay would not substantially harm the non-moving
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party; and (4) whether a stay will serve the public interest. Rainbow Bus. Sols. v. Merch.
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Servs., Inc., No. C 10-1993 CW, 2014 WL 1783945, at *1 (N.D. Cal. May 5, 2014). The
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first two factors of the standard “are the most critical.” Id.
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These four factors should be examined on a flexible “continuum,” which is
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“essentially the same as the ‘sliding scale’ approach” applied to requests for preliminary
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injunctions. Leiva–Perez v. Holder, 640 F.3d 962, 964–66 (9th Cir. 2011). Under this
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approach, “the elements . . . are balanced, so that a stronger showing of one element may
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offset a weaker showing of another.” Id. at 964.
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III.
ANALYSIS
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A.
Likelihood of Success on the Merits / Serious Legal Questions
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The first prong of the stay analysis requires the Court to determine whether Plaintiffs
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have demonstrated a likelihood of success on the merits. Leiva–Perez, 640 F.3d at 966.
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A party moving to stay the proceedings pending the resolution of a Rule 23(f) petition need
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not demonstrate that it is more likely than not that it will win on the merits. Id. Instead
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“serious legal questions” raised in the petition can satisfy this first prong. Id. at 967–68.
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When relying on “serious legal questions,” the movant must not only show that a serious
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legal question exists, but also that the hardship balance tips sharply towards the movant.
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All. for the Wild Rockies v. Cottrell, 632 F.3d 1127, 1132 (9th Cir. 2011); see Leiva–Perez,
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640 F.3d at 966 (applying the “serious questions” approach to a stay).
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Here, MDLZ argues that its Rule 23(f) petition raises two serious legal questions:
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(1) whether Plaintiffs’ conjoint analysis “can measure price premium damages and
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therefore satisfy Plaintiffs’ burden of proving a class-wide damages model consistent with
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their theory of liability, as required under Comcast Corp. v. Behrend, 569 U.S. 27, 35
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(2013)”; and (2) whether “the claim that belVita biscuits are ‘nutritious’ is subject to
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common proof, or whether the healthiness of a given product cannot be assessed in
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isolation from a consumer’s diet as a whole.” (Mot. at 3–4, ECF No. 178.) For the
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following reasons, the Court finds that these issues do not qualify as a serious legal question
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required of a stay pending appeal.
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1.
Whether the Conjoint Analysis Satisfies the Comcast Standard for
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Damages
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MDLZ argues that the first issue presents a serious legal issue, citing several
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nonbinding cases including the unpublished opinion in Zakaria v. Gerber Prod. Co., 755
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F. App’x 623, 624 (9th Cir. 2018), in which the Ninth Circuit affirmed the trial court’s
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rejection of a damages model based on conjoint analysis. As the Court explained at length
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in the March 8, 2021 Order,1 Plaintiffs’ damages model satisfies the standard to test
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conjoint analysis for establishing price premium damages set out in Hadley v. Kellogg
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Sales Co., 324 F. Supp. 3d 1084 (N.D. Cal. 2018). Namely, Plaintiffs’ damages model
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uses actual market prices and quantity of products sold during the relevant period, whereas
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(Order at 7–8, 25–27, ECF No. 172.)
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the conjoint analysis rejected in Zakaria relied only on hypothetical data. MDLZ has not
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shown that a serious legal question calls into doubt the Court’s earlier conclusion finding
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Plaintiffs’ damages model suitable under Comcast, 569 U.S. at 35.
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To the extent that MDLZ argues its challenge to Plaintiffs’ damages model is likely
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to succeed on appeal, the Court is not persuaded. The Ninth Circuit abides by “the premise
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that Rule 23(f) review should be a rare occurrence.” Chamberlan v. Ford Motor Co., 402
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F.3d 952, 955 (9th Cir. 2005). To justify review, the court must find “the presence of a
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death knell situation for either party absent review”; “the presence of an unsettled and
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fundamental issue of law related to class actions”; and “manifest error in the district court’s
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certification decision.” Tellingly, the Ninth Circuit has already denied a Rule 23(f) petition
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in a mislabeling case raising a similar challenge to the price premium damages model using
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conjoint analysis. See Krommenhock v. Post Foods, LLC, No. 20-80083 (9th Cir. Jul. 21,
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2020), Order, ECF No. 5.2 Id. The Court is not persuaded that the Ninth Circuit would
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reach a different conclusion in this case.
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In sum, MDLZ has not presented a serious question of law nor shown that it will
succeed on the merits as to whether Plaintiffs’ damages model satisfies Comcast.
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2.
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Whether the “Nutritious” Claim is Subject to Common Proof
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MDLZ argues that the claim that its belVita biscuits are nutritious is not subject to
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common proof, raising substantially the same arguments this Court rejected in certifying
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the class. The Court rejected MDLZ’s argument because, under the objective standard
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governing the class claims at issue, the question of whether MDLZ’s product labeling could
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have been materially misleading to a reasonable consumer “will not require the court to
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investigate class members.” (Order at 23–24 (citing Hadley, 324 F. Supp. 3d at 1115),
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ECF No. 172.) MDLZ challenges the Court’s ruling, relying on certain unreported
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decisions by several district courts finding that healthfulness of sugary products is not
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For the relevant arguments raised in the rejected petition see Pet. for Permission to Appeal at 20–
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subject to class-wide proof. These cases are not binding, and a mere disagreement with a
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court’s finding or holding “does not establish a serious legal question.” See Adams v.
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Postmates, Inc., No. 19-3042 SBA, 2020 WL 1066980, at *4 (N.D. Cal. Mar. 5, 2020)
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(declining to stay the action pending a Rule 23(f) appeal of the class certification). The
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Court does not find that MDLZ is likely to prevail on this issue on appeal, for the same
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reasons based on which the Court granted Plaintiffs’ class certification motion. (See Order
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at 23–24, ECF No. 172.)
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Therefore, the first factor—whether MDLZ is likely to succeed on the merits—
weighs against a stay.
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B.
Irreparable Harm / Balance of Hardships
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The second and third prongs of the stay analysis require the Court to consider,
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respectively, the likelihood of irreparable harm to MDLZ if the Court denies a stay, and
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injury to Plaintiffs should the Court grant a stay. To the extent that MDLZ relies on a
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“serious legal question” to satisfy the first prong of the stay analysis, MDLZ must show
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that the balance of harm tips sharply in its favor. Cottrell, 632 F.3d at 1132. Therefore,
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the Court will consider the second and third prongs together.
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MDLZ argues that the costs and time to litigate this action constitute irreparable
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harm. “The cost of pretrial litigation may amount to irreparable harm if it is substantial,
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unrecoverable and wasteful but also may not be irreparable harm if pretrial litigation costs
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are inevitable regardless of the results of the appeal, manageable, or ‘avoidable by tailored
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procedures.’” Victorino v. FCA US LLC, No. 16CV1617-GPC(JLB), 2018 WL 3438773,
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at *2 (S.D. Cal. July 17, 2018) (citing Pena v. Taylor Farms Pacific, Inc., No. 13cv1282-
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KJM-AC, 2015 WL 5103157, at *4 (E.D. Cal. Aug. 31, 2015)). Here, the pretrial litigation
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costs that MDLZ seeks to avoid would not be wasteful, given the low likelihood that
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MDLZ will prevail on appeal. See supra Part II.A. Besides, even if the Ninth Circuit were
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to grant MDLZ’s Rule 23(f) petition and reverse the class certification in MDLZ’s favor,
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some discovery would still be necessary to litigate Plaintiffs’ individual claims for damages
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and injunction. Cf. Mauss v. NuVasive, Inc., No. 13CV2005 JM (JLB), 2017 WL 4838826,
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at *1 (S.D. Cal. Apr. 27, 2017) (“While individual damages are certainly less than class-
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wide damages, Defendants simply fail to explain how a denial of class certification will
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eliminate the necessity for discovery on Plaintiffs’ individual claims.”).
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On the other hand, the delay in the proceedings that would result from a stay would
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burden Plaintiffs. The Ninth Circuit has not accepted MDLZ’s Petition, and there is no
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indication that it will accept it soon. Staying the action without knowing when the stay
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will be lifted would be unfair to Plaintiffs, in this action that is already more than three
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years old. See Mauss, 2017 WL 4838826, at *1 (finding that “[t]he minimal harm identified
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by [the defendant] [did] not support a stay of the action, particularly where a stay would
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further delay resolution of [the] [p]laintiffs’ nearly four-year quest for relief”).
In sum, the Court is not persuaded that the balance of harm tips sharply in MDLZ’s
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favor. Thus, the second and third factors weigh against staying this action.
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C.
Public Interest
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Finally, this case has been pending since 2017, and the public has an interest in the
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efficient prosecution of consumer laws. The Court finds that public interests disfavor
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granting a stay of this action.
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IV.
CONCLUSION
The Court finds that a stay of this action is not in the interests of justice. Defendant’s
motion to stay (ECF No. 178) is DENIED.
IT IS SO ORDERED.
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DATED: April 5, 2021
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