Ferrara et al v. Munro et al
Filing
18
ORDER RE: SUBJECT MATTER JURISDICTION (see attached) directing Plaintiff New England Alpacas and Defendant Tripping Gnome Farm, LLC to submit affidavits establishing their citizenship for federal diversity jurisdiction purposes on or before Novemb er 29, 2016. Plaintiffs are also directed to file an affidavit to prove that their claims meet the jurisdictional minimum -- exceeding $75,000, exclusive of interest and costs, 28 U.S.C. § 1332(a). In particular, because their alleged damages of not less than $55,000 fail to exceed $75,000, Plaintiffs' affidavit must address their alleged attorneys' fees (past and projected) to show that such amounts are both reasonable and based in law. If, upon review of th e affidavits, the Court determines that it possesses subject matter jurisdiction, the action may proceed. Otherwise, in the absence of such jurisdiction, the Court will dismiss the action. All case deadlines are stayed pending the Court's review of the affidavits. Signed by Judge Charles S. Haight, Jr. on November 22, 2016. (Dorais, L.)
UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF CONNECTICUT
LOUIS FERRARA, MELISSA FERRARA,
and NEW ENGLAND ALPACAS,
Civil Action No.
3: 16 - CV - 950 (CSH)
Plaintiffs,
v.
RYEN MUNRO and TRIPPING GNOME
FARM, LLC,
NOVEMBER 22, 2016
Defendants.
ORDER RE: SUBJECT MATTER JURISDICTION
HAIGHT, Senior District Judge:
I. BACKGROUND
Plaintiffs Louis Ferrara, Melissa Ferrara, and New England Alpacas (collectively,
"Plaintiffs") bring this action against Defendants Ryen Munro and Tripping Gnome Farm, LLC
("Defendants") for damages "arising from the Defendants' refusal to pay the Plaintiffs commission
on the Defendants' sale of certain alpaca[s] to non-party Pamela Brewster and her company
Stillmeadow Farm, LLC."1 Doc. 1, at 1 (¶ 1). The Plaintiffs allege that they had a contract with
Defendants "under which the Defendants were obligated to pay the Plaintiffs a commission on the
sale of alpacas by Defendants to Ms. Brewster and her company during a two-year period ending
June 19, 2013." Id., at 1-2 (¶ 1). With respect to these alpaca sales, however, Defendants have
allegedly "repeatedly refused to pay [Plaintiffs] the commission owed." Id., at 2 (¶ 1). In their
1
The Court takes judicial notice that an alpaca is "a domesticated species of South American
camelid," which resembles a small llama in appearance. See https://en.wikipedia.org/wiki/Alpaca.
They are often bred for the fiber of their coats, which is similar to wool. Id.
1
Complaint, Plaintiffs have included the following state law claims against all Defendants: breach of
contract, unjust enrichment, breach of the implied covenant of good faith and fair dealing, and
violation of Connecticut's Unfair Trade Practices, Conn. Gen. Stat. § 42-110a, et seq. In addition,
Plaintiffs have asserted a claim for tortious interference with contractual relations against individual
defendant Munro.
Due to the fact that Plaintiffs bring solely state law claims, they base the Court's subject
matter jurisdiction over this action on diversity of citizenship under 28 U.S.C. § 1332(a)(1). Doc.
1, at 2 (¶ 2). Specifically, they allege that "none of the Plaintiffs are citizens of the same state as any
of the Defendants" and the amount in controversy "exceeds the sum or value of seventy-five
thousand dollars ($75,000), exclusive of interest and costs." Id. However, as set forth below,
Plaintiffs' allegations are insufficient to establish diversity jurisdiction.
II. DISCUSSION
A.
Subject Matter Jurisdiction
Pursuant to Article III of the Constitution, a federal court has limited jurisdiction. Bender v.
Williamsport Area Sch. Dist., 475 U.S. 534, 541(1986) (citing Marbury v. Madison, 1 Cranch (5
U.S.) 137, 173-80 (1803)). In general, it may only exercise subject matter jurisdiction if either: (1)
the plaintiff sets forth a colorable claim arising under the Constitution or federal statute, creating
"federal question" jurisdiction, 28 U.S.C. § 1331; or (2) there is complete diversity of citizenship
between plaintiff and all defendants and the amount in controversy exceeds $75,000, exclusive of
interest and costs, 28 U.S.C. § 1332(a)(1). Strawbridge v. Curtiss, 3 Cranch 267, 1806 WL 1213,
at *1 (February Term 1806). See also Da Silva v. Kinsho Int'l Corp., 229 F.3d 358, 363 (2d Cir.
2000) (delineating two categories of subject matter jurisdiction).
2
It is incumbent on a federal court to determine with certainty whether it has subject matter
jurisdiction over a case pending before it. If necessary, the court must consider its subject matter
jurisdiction sua sponte. Joseph v. Leavitt, 465 F.3d 87, 89 (2d Cir. 2006) ("Although neither party
has suggested that we lack appellate jurisdiction, we have an independent obligation to consider the
presence or absence of subject matter jurisdiction sua sponte."), cert. denied, 549 U.S. 1282 (2007);
Promisel v. First Am. Artificial Flowers, Inc., 943 F.2d 251, 254 (2d Cir. 1991) ("Although we
would not normally consider an issue not raised below, the lack of subject matter jurisdiction may
be raised at any time, by the parties, or by the court sua sponte."), cert. denied, 502 U.S. 1060
(1992).2
Unlike personal jurisdiction, "subject matter jurisdiction is not waivable." Lyndonville Sav.
Bank & Trust Co. v. Lussier, 211 F.3d 697, 700 (2d Cir. 2000). If subject matter jurisdiction is
lacking, the action must be dismissed. See Fed. R. Civ. P. 12(h)(3); Lyndonville, 211 F.3d at 70001. See also, e.g., Cortlandt St. Recovery Corp. v. Hellas Telecomms., S.À.R.L., 790 F.3d 411, 41617 (2d Cir. 2015) (district court properly dismisses an action for lack of subject matter jurisdiction
if it "lacks the statutory or constitutional power to adjudicate it") (citing Makarova v. United States,
201 F.3d 110, 113 (2d Cir. 2000)); Transatlantic Marine Claims Agency, Inc. v. Ace Shipping
Corp., Div. of Ace Young Inc., 109 F.3d 105, 108 (2d Cir. 1997) ("Whenever it appears by suggestion
of the parties or otherwise that the court lacks jurisdiction of the subject matter, the court shall
2
See also Univ. of S. Alabama v. American Tobacco Co., 168 F.3d 405, 410 (11th Cir.
1999) ("a federal court is obligated to inquire into subject matter jurisdiction sua sponte whenever
it may be lacking"); Licari v. Nutmeg Ins. Adjusters, Inc., No. 3:08mc245(WIG), 2008 WL
3891734, at * 1 (D. Conn. July 31, 2008) ("This Court has a duty to review a plaintiff's complaint
at the earliest opportunity to determine whether this Court has subject matter jurisdiction.") (citing
Transatlantic Marine Claims Agency, Inc. v. Ace Shipping Corp., 109 F.3d 105, 107 (2d Cir. 1997)
for its holding that a district court may raise the issue of subject matter jurisdiction sua sponte).
3
dismiss the action.") (citing Fed. R. Civ. P. 12(h)(3)); Lovejoy v. Watson, 475 F. App'x 792, 792 (2d
Cir. 2012) ("Where jurisdiction is lacking . . . dismissal is mandatory.") (quoting United Food &
Commercial Workers Union, Local 919, AFL–CIO v. CenterMark Props. Meriden Square, Inc., 30
F.3d 298, 301 (2d Cir.1994)); Manway Constr. Co. v. Housing Auth. of Hartford, 711 F.2d 501, 503
(2d Cir. 1983) ("It is common ground that in our federal system of limited jurisdiction any party or
the court sua sponte, at any stage of the proceedings, may raise the question of whether the court has
subject matter jurisdiction; and, if it does not, dismissal is mandatory.").
In the case at bar, Plaintiffs have included solely state law claims in their Complaint.
Therefore, there is no arguable basis upon which the Court may assert "federal question" subject
matter jurisdiction over this action, 28 U.S.C. § 1331.3
Plaintiffs allege that the alternate
jurisdictional basis of "diversity of citizenship" exists under 28 U.S.C. § 1332(a).4
In order for diversity of citizenship to exist, each plaintiff's citizenship must be diverse from
that of all defendants. See, e.g., St. Paul Fire and Marine Ins. Co. v. Universal Builders Supply, 409
F.3d 73, 80 (2d Cir. 2005) ("Diversity is not complete if any plaintiff is a citizen of the same state
as any defendant.") (citing Owen Equip. & Erection Co. v. Kroger, 437 U.S. 365, 373-74 (1978)).
Moreover, "diversity must exist at the time the action is commenced." Universal Licensing Corp.
3
28 U.S.C. § 1331, captioned "Federal question," provides: "The district courts shall have
original jurisdiction of all civil actions arising under the Constitution, laws, or treaties of the United
States."
4
28 U.S.C. § 1332(a) provides, in relevant part:
The district courts shall have original jurisdiction of all civil actions where the matter
in controversy exceeds the sum or value of $75,000, exclusive of interest and costs,
and is between –
(1) citizens of different States . . . .
4
v. Lungo, 293 F.3d 579, 581 (2d Cir. 2002). See also Wolde–Meskel v. Vocational Instruction
Project Cmty. Servs., Inc., 166 F.3d 59, 62 (2d Cir.1999) ("Satisfaction of the § 1332(a) diversity
requirements (amount in controversy and citizenship) is determined as of the date that suit is filed
– the 'time-of-filing' rule.").
Furthermore, there must be a minimum amount in controversy exceeding "$75,000, exclusive
of interest and costs," 28 U.S.C. § 1332(a). Plaintiffs must allege in good faith that they sustained
sufficient damages to invoke the Court's subject matter jurisdiction based on diversity of citizenship.
Congress included this jurisdictional amount with the intention of "remov[ing] from the federal
courts claims insubstantial in character, which contributed to the mounting backlogs of these courts."
Brown v. Bodak, 188 F. Supp. 532, 533–34 (S.D.N.Y. 1960) (citing 1958 U.S. Code Congressional
and Administrative News, pp. 2594-95). In cases where there is evidence that a plaintiff has inflated
damages "solely to exceed the jurisdictional threshold," dismissal by the district court is proper.
Deutsch v. Hewes St. Realty Corp., 359 F.2d 96, 100 (2d Cir. 1966) (citing Brown, 188 F. Supp.
532).
B.
Diversity of Citizenship
1.
Citizenship of the Parties
Plaintiffs Louis Ferrara and Melissa Ferrara allege that they are citizens and residents of the
state of Connecticut. Doc. 1, at 2 (¶ 4). An individual's citizenship for diversity purposes is
determined by his or her domicile, as opposed to residence. See Palazzo v. Corio, 232 F.3d 38, 42
(2d Cir. 2000). See also John Birch Soc. v. Nat'l Broad. Co., 377 F.2d 194, 199 (2d Cir.1967) ("it
has long been held that a statement of residence, unlike domicile, tells the court only where the
parties are living and not of which state they are citizens"). "In general, the domicile of an individual
5
is his true, fixed and permanent home and place of habitation"—i.e, "the place to which, whenever
he is absent, he has the intention of returning." Martinez v. Bynum, 461 U.S. 321, 331 (1983).
Accepting that both Ferraras are domiciled in Connecticut, that state is their state of citizenship.
With respect to "New England Alpacas," however, Plaintiffs have failed to indicate what type
of entity it is – e.g., corporation, limited liability company, etc. Rather, Plaintiffs simply allege that
the "Ferraras do business under the trade name 'New England Alpacas' and have a principal place
of business located in Killingworth, Connecticut."5 Doc. 1, at 2 (¶ 4). If New England Alpacas is
actually a corporation, pursuant to 28 U.S.C.§ 1332(c)(1), it "shall be deemed to be a citizen of any
State by which it has been incorporated and of the State where it has its principal place of business."
However, if New England Alpacas is a limited liability company, "a limited liability company takes
the citizenship of each of its members." Bayerische Landesbank, New York Branch v. Aladdin
Capital Mgmt., 692 F.3d 42, 49 (2d Cir. 2012) (emphasis added). See also Wise v. Wachovia Secs,
LLC, 450 F.3d 265, 267 (7th Cir. 2006) ("[t]he citizenship for diversity purposes of a limited liability
company . . . is the citizenship of each of its members") (emphasis added), cert. denied, 549 U.S.
1047 (2006). Put simply, the "citizenship of a limited liability company is not the state in which it
is organized or has its principal place of business, but rather, each of the states in which it has
members." Lewis v. Allied Bronze LLC, No. 07 Civ. 1621(BMC), 2007 WL 1299251, at *1-2
(E.D.N.Y. May 2, 2007) (citing Handelsman v. Bedford Vill. Assocs. Ltd. P'ship, 213 F.3d 48, [5152] (2d Cir. 2000) and remanding removed action for lack of diversity jurisdiction). If New England
Alpacas is a limited liability company, the Ferraras have failed to specify the identities and
5
A "tradename" is simply "the name under which a business operates." Black's Law
Dictionary (10th ed. 2014). It thus provides "a means of identifying a business . . . to establish
goodwill." Id.
6
citizenship of each member of that entity. Citizenship of each member must be known to insure that
complete diversity exists in this action between Plaintiffs and Defendants.
With respect to the citizenship of Defendants, Plaintiffs have sufficiently alleged that
Defendant "Ryen Munro is a citizen and resident of the State of Maine." Doc. 1, at 3 (¶ 5).
However, Plaintiffs have simply described "Defendant Tripping Gnome Farm, LLC, [as] a Maine
Limited Liability Company with its primary place of business in Freeport, Maine." Id. As set forth
supra, in order to establish the citizenship of a limited liability company, Plaintiffs must provide the
citizenship of each member of that entity.
Plaintiffs have alleged that Munro is the "owner,
operator, and alter ego" of Tripping Gnome Farm, LLC. Id. If that means that Munro is the sole
member of that limited liability company, Plaintiffs must specify that fact. Absent such an assertion,
Plaintiffs must specify the names and citizenship of each member of Tripping Gnome Farm, LLC.
2.
Amount in Controversy
In addition to diversity of citizenship, "[a] party invoking the jurisdiction of the federal court
has the burden of proving that it appears to a 'reasonable probability' that the claim is in excess of
the statutory jurisdictional amount": $75,000, exclusive of interest and costs. Scherer v. Equitable
Life Assurance Soc'y of U.S., 347 F.3d 394, 397 (2d Cir. 2003) (quoting Tongkook Am., Inc. v.
Shipton Sportswear Co., 14 F.3d 781, 784 (2d Cir.1994)). See also Chase Manhattan Bank, N.A.
v. Am. Nat'l Bank and Trust Co. of Chicago, 93 F.3d 1064, 1070 (2d Cir.1996) (same). The amount
in controversy must thus "appear on the face of the complaint or be established by proof." Miller v.
European Am. Bank, 921 F. Supp. 1162, 1167 (S.D.N.Y.1996).
This burden is "hardly onerous," however, because the Second Circuit recognizes "a
rebuttable presumption that the face of the complaint is a good faith representation of the actual
7
amount in controversy." Wolde–Meskel v. Vocational Instruction Project Cmty. Servs., Inc., 166 F.3d
59, 63 (2d Cir.1999). See also Colon v. Rent-A-Ctr., Inc., 13 F. Supp. 2d 553, 558 (S.D.N.Y. 1998)
("the amount in controversy is measured strictly from the plaintiff's viewpoint, without regard to the
amount at stake for any other party") (citing Kheel v. Port of N.Y. Auth., 457 F.2d 46, 48-49 (2d Cir.
1972), cert. denied, 409 U.S. 983 (1972)). This focus on the plaintiff's viewpoint remains the
"majority rule" in this Circuit, applying to both removal actions as well as actions filed originally
in federal court. Colon, 13 F. Supp. 2d at 553 (citing Cowan v. Windeyer, 795 F. Supp. 535, 537
(N.D.N.Y.1992)).
In addition to damages, "[a] potential award of attorneys' fees may be considered by the court
when determining whether a case involves the jurisdictional minimum." Gardiner Stone Hunter Int'l
v. Iberia Lineas Aereas De Espana, S.A., 896 F. Supp. 125, 128 (S.D.N.Y.1995). However, such
a consideration is only appropriate if: (1) the attorneys' fees are reasonable and (2) such fees are
provided for by contract or state statute. See Givens v. W.T. Grant Co., 457 F.2d 612, 614 (2d Cir.
1972), vacated on other grounds, 409 U.S. 56 (1972).6 See also Colon v. Rent-A-Ctr., Inc., 13 F.
Supp. 2d 553, 561 (S.D.N.Y. 1998); In re Abbott, 51 F.3d 524 (5th Cir.), reh'g denied en banc, 65
F.3d 33 (1995); Goldberg v. CPC Int'l, Inc., 678 F.2d 1365 (9th Cir.), cert. denied, 459 U.S. 945
(1982); Graham v. Henegan, 640 F.2d 732, 735-36 (5th Cir. 1981), reh'g denied, 646 F.2d 566 (5th
Cir.1981); Velez v. Crown Life Ins. Co., 599 F.2d 471, 474 (1st Cir.1979).
6
"[I]t is settled that such [reasonable attorneys'] fees may not properly be included in
determining the jurisdictional amount unless they are recoverable as a matter of right." Givens v. W.
T. Grant Co., 457 F.2d 612, 614 (2d Cir. 1972)(citing Wright, Federal Courts § 35, at 119 (1970);
1 Moore's Federal Practice ¶ 0.99 [2] (2d ed. 1964)). "In the absence of a contract or statutory
authority, neither of which is to be found here, plaintiffs cannot recover attorneys' fees . . . ." Givens,
457 F.2d at 614.
8
In their Complaint, Plaintiffs allege that "[t]he reasonable value and agreed price of the
commissions for which the Defendants have failed and refused to pay will be proven at trial, but in
no event is it less than fifty five thousand dollars ($55,000.00)." Doc. 1, at 6 (¶ 33). They then allege
that they have "already incurred in excess of twenty five thousand dollars ($25,000.00) in reasonable
attorney fees in legal proceedings arising out of the Contract," id., (¶ 35); and they further "expect
to incur in excess of thirty thousand dollars ($30,000.00) in reasonable attorney fees in this federal
action," id., (¶ 36). Adding up the alleged damages for unpaid commissions, incurred attorneys'
fees, and potential future attorneys' fees, the sum is $110,000.00 ($55,000.00 plus $25,000.00 and
$30,000.00), which exceeds the $75,000.00 jurisdictional minimum.
As discussed above, however, the Court may only consider Plaintiffs' attorneys' fees if they
are reasonable and provided for by contract or state statute. As to reasonableness of the alleged past
and future attorneys' fees (totaling $55,000.00), the Court notes that, in aggregate, these fees equal
the amount of damages Plaintiffs seek to recover for unpaid commissions (at least $55,000.00). It
is questionable whether such an amount in attorneys' fees, equaling the amount of damages allegedly
recoverable, is " reasonable." See, e.g., Diamond D. Enterprises USA, Inc. v. Steinsvaag, 979 F.2d
14, 19 (2d Cir.1992) (with respect to reasonableness, "[t]he rule in New York is that an award of fees
in excess of the amount involved in a litigation would normally appear to be unreasonable")
(citation and internal quotation marks omitted).
In addition, Plaintiffs' allegations regarding their "already incurred" attorneys' fees simply
declare the amount of $25,000.00 without providing sufficient factual background. Plaintiffs state
that "[t]he Defendants brought suit in the Superior Court, State of Maine against the Plaintiffs arising
out of the Contract;" and "[t]he Plaintiffs brought suit in the Superior Court, State of Connecticut
9
against the Defendants arising out of the Contract." Doc. 1, at 6 (¶¶ 34-35). Plaintiffs provide no
case names or details of the proceedings and no description as to why the attorneys' fees in these state
court proceedings should be recovered in the present action. Furthermore, Plaintiffs detail no work
performed by the attorneys and/or dates and hours worked.
As to future or "potential" attorneys' fees, Plaintiffs specify that they expect to incur $30,000
in attorneys' fees and that "Plaintiffs are entitled to reasonable attorney[s'] fees and costs incurred
in any legal proceed arising out of the Contract." Id., at 6 (¶¶ 36-37). However, Plaintiffs have
neither cited any particular contract terms nor appended "the Contract" at issue to the Complaint.
Instead, Plaintiffs simply conclude that Defendants "are jointly and severally liable for the unpaid
commissions and damages caused to the Plaintiffs by the breach of the Contract, including, but not
limited to, reasonable attorney fees and costs as provided under the Contract." Id., at 6 (¶ 38)
(emphasis added).
Because the total alleged damages (unpaid commissions) is only $55,000.00, the Court
cannot find that the Plaintiffs have met the jurisdictional amount for diversity, exceeding $75,000,
under 28 U.S.C. § 1332(a), unless the Court may include the alleged "already incurred" attorneys'
fees and/or the expected additional attorneys' fees. To do so, the Court must be able to find such
attorneys' fees both reasonable and owing to Plaintiffs as a matter of right (by contract or statute).
To make such a finding, the Court requires additional information.
III. CONCLUSION
A federal court has limited subject matter jurisdiction pursuant to Article III of the
Constitution. It is thus the Court's duty to determine with certainty whether it has subject matter
jurisdiction over this case pending before it. In the absence of subject matter jurisdiction, "the court
10
must dismiss the action," Fed. R. Civ. P. 12(h)(3).
In the case at bar, with no basis to exercise "federal question" jurisdiction under 28 U.S.C.
§ 1331, this Court may exercise subject matter jurisdiction only if there is diversity of citizenship,
28 U.S.C. § 1332(a)(1). For such diversity jurisdiction to exist, the citizenship of each plaintiff must
be diverse from that of all defendants and "the matter in controversy [must] exceed[ ] the sum or
value of $75,000, exclusive of interest and costs," id. For the reasons set forth supra, the Plaintiffs
have failed to properly allege the citizenship of Plaintiff New England Alpacas and Defendant
Tripping Gnome Farm, LLC.
Under such circumstances, the Court hereby ORDERS Plaintiff New England Alpacas to
submit an affidavit on or before November 29, 2016, to establish its citizenship for diversity
purposes. In so doing, an officer or owner of New England Alpacas must specify what kind of entity
it is (e.g, corporation, limited liability company). If it is a corporation, it must provide the "State
by which it has been incorporated" and the State in which it has "its principal place of business," 28
U.S.C. § 1332(c)(1). If New England Alpacas is a limited liability company, it must name all of its
members and establish the citizenship of each such member. If any member is an individual, New
England Alpacas must provide his or her domicile, Palazzo v. Corio, 232 F.3d 38, 42 (2d Cir.
2000), which is her or his true, "fixed and permanent home and place of habitation"—i.e, "the place
to which, whenever he is absent, he has the intention of returning," Martinez v. Bynum, 461 U.S.
321, 331 (1983).
Similarly, Defendant Tripping Gnome Farm, LLC must establish its citizenship by submitting
an affidavit to the Court on or before November 29, 2016. In that affidavit, it must specify the
names of each and all of its members and their citizenship(s) for diversity purposes.
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Finally, because Plaintiffs' alleged damages, without attorneys' fees, are "in no event . . . less
than fifty five thousand dollars ($55,000.00)," Doc. 1, at 6 (¶ 33), their claims fail to meet the
jurisdictional minimum – exceeding $75,000, exclusive of interest and costs, 28 U.S.C. § 1332(a)
– unless attorneys' fees are included. Although Plaintiffs have alleged past attorneys' fees of $25,000
and expected attorneys' fees of $30,000, id., at 6 (¶¶ 35-36), they have provided no factual basis to
support these amounts. Plaintiffs are thus ordered to file a joint affidavit on or before November
29, 2016, specifying facts to show how these amounts were calculated. In addition, Plaintiffs must
provide the contractual terms which warrant the Court's consideration of these attorneys' fees in
determining the jurisdictional amount. In sum, the Court must be provided with all necessary facts
to support a finding that these past and/or projected attorneys' fees are both "reasonable" and based
in law (on contract or statutory language).
If, upon review of the affidavits, the Court finds that, at the commencement of this action,
there was proper "diversity of citizenship" between Plaintiffs and Defendants and the matter in
controversy exceeds $75,000, exclusive of interest and costs, the action may proceed. Alternatively,
if there is an absence of subject matter jurisdiction, the Court will dismiss the action without
prejudice to Plaintiffs' filing, if so advised, in an appropriate jurisdiction. All case deadlines are
stayed pending the outcome of this Court's determination on subject matter jurisdiction.
It is So ORDERED.
Dated: New Haven, Connecticut
November 22, 2016
/s/Charles S. Haight, Jr.
CHARLES S. HAIGHT, JR.
Senior United States District Judge
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