Managed Care Solutions, Inc. v. Essent Healthcare, Inc.

Filing 382

ORDER Granting in Part and Overruling in Part Objections to Magistrate Report, Affirming In Part Magistrate's Report, Denying Essesnt's Motion for Monetary Sanctions and Referring Conduct to the Florida Bar; denying as moot 371 Motion to Strike; granting in part and overruling in part 355 Objections; Overruling 351 Objections to Report and Recommendations; Overruling 353 Objections to Report and Recommendations ; denying 299 Motion for Sanctions; adopting in part 347 Report and Recommendations. Signed by Judge Patricia A. Seitz on 9/20/2011. (asl) Modified date filed on 9/21/2011 (asl).

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UN I
TED STA TES DI
STR I C O U R T
CT
SOUTHERN DI
STRI O F FLO RI
CT
DA
CASE NO.0960351 PAS- TZ/ M ON TON
SEI Sl

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M ANAGED CARE SOLUTI
ONS,l ,
NC.
Pl i tf ,
a n if
V.

ESSENT HEALTHCARE,I ,
NC.
De e n .
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O R DER G R AN TI G I PAR T A ND O V ER R ULI G I PAR T O BJEC TI N S TO
N N
N N
O
M AGI
STM TE' REPORT.
S
AFFI I I PART M AGI
RM NG N
STM TE' REPORT.
S
DENYI ESSENT' M OTI FOR M ONETARY SANCTI
NG
S
ON
ONS
A N D R EFER RI G C O ND U C T TO TH E FLO R I BA R
N
DA

Thi c s i vesltgai g a y.Afe mont ofq si bl ltga i t tc
s a e nvol ii ton one m
tr
hs ue tona e ii ton aci s

a dn me o a v rec u t uig , anifMa g dCa eSoui n (M CS' a q e c dt a
n u r us d es o r r l s Pli t
n
f na e r lto s $
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)

d fut u g n a asn to o t ee o til Dee a t sn He lh aete flda
ea lj d me t s a cin n h ve f ra. fnd n Ese t at c r h n i
e
moton s e ng$1, 862. i s nc i a ns M CS,o ofisexe utvesa isa t ne .
i e ki
430, 92 n a tons gai t
ne t c i nd t tor ys
Es en a s fld a s pa a emoton f $2, 903. i a t ne f e ,c t a e ns unde
s t lo ie e r t
i or 081, 76 n tor ys e s oss nd xpe es
r
t pa te 'con r c ua f e s fi pr so i f voroft pr vaii pa t Thi Cour r e r d
he ri s
ta t l e - hitng ovii n n a
he e lng ry. s
t efr e
t s nc i m oton t M ag s r t J
he a tons i o
i t a e udge J O ' lva f a Re ta Re om m e ton a
ohn Suli n or
por nd c
nda i nd

r e r dt m o i n f rato ne 'f es c t a e
efr e he to o tr ys e , oss nd xpens f fna r s uton i ac or ewih
es or i l e ol i n c danc t

2 U. C. 6 c , e7 a dt ec n e t ft Pate .Se Or e ofS p . 2 2 0 ! 6 a a d
8 S. 63 () Rul 3 n h o s n o he ris e d r e t 2 , 01 , ! () n
( )( 2 3 .M a itaeJ d eO' lia heda e ie tmy h aiga d is da38p g
b DE- 9 ) g srt u g Sulv n l n vd n i e rn n sue
-a e
Re t e om m e ng t tt Cou ts ton M CS' a t ne Rob tI
por r c
ndi ha he
r anc i
S tor y, er ngha ,i t a ounti
m n he m
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$8 736. a den a1 ot rs nc i . By s pa a eOr ,M a sr t J
7, 95, nd y 1 he a tons
e r t der gitae udge O' lva
Suli n
a de Es en m o e t n $1. milo i a t ne f es c t a e ns , ch M CS has
war d s t r ha
5 li n n tor ys e , oss nd xpe es whi
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a p ae t t eElv n hCic i.Cur nl b fr teCo r a eo j ci n fldb l g n
p e ld o h e e t r ut re t e o e h u t r be to s ie y n h m,
y

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Es enta M CS t t Re t e omm e ng s tonsa i tI
s nd
o he por r c
ndi anc i
gans nghnm .Ha ng r vi d t
vi e ewe he

matr o j ce t d n v ,h Co r wil e l et er c mme d to t a r mo eay
te s be td o e o o t e u t l d ci h e o n ain o wad n tr
n
s tonsa o he wi e a fnn and a
anc i
nd t r s fi
doptt r m a nde oft Re t
he e i r he por .
1
.

LEGAL STANDARD

W h nrviwi ama itaej d esrp r, d src j d erviwsG en v a yp r o
e e e ng gsrt u g ' e o ta itit u g e e ç o o n a t f
d
tema itaej g ' dipo iint a ha be np o e l o jce t ' FE R. V. 7 ( ) s e
h gsrt ud es s sto h t s e r p ry be t d o. D. CI P. 2 b ; e
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as 2 U. C. 6 6 b . l i ciia t a t eo j cinb s fiinl s e i a dn tag n rl
lo 8 S. j 3 ( )1 t s rtc l h t h b e to e u fce t p ct n o e ea
y
k

o j cint ter p r.Ma s e v Mo r , 47F.d 1 3 ,1 48( 1hCi.1 8 ) Th ditit
be to o h e o t r d n . o e 8 2 5 6 5 1 t r 9 8 . e src
j d ei gve d srto wh t e t C c e trjc, rmo iy'h r c mme d dd s o iin
u g s i n icein eh r o l c p ,ee t o df 'te e o n e ip sto
a
ma eb t ema itaej g .F D. CI P. 2b) 2 U. C. 6 6 b .F rh r ( d src
d y h gsrt ud e E R. V. 7 ( ; 8 S. j 3 ( ) u te ,t itit
a
c tha di c e i t dec i t c i ra pary' a gu e whe t a g e w asnottr t
our s s r ton o lne o ons de
t s r m nt
n hat r um nt
is

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p e e tdt tema itaej d e' Wil msv Mc i, 5 F.d 1 7,1 2 ( 1hCi. 0 )
r sn e o h gsrt u g . li . Nel 5 7 3 28 29 1 t r 20 9
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II.

LEGAL A NALYSI
S

A.

D EFENDANT ES
SENT H EALTHCARE,I S O BJ
NC'
ECTI
ON

Ese t b e t t M a itaeJ d eO' lia src mme d to t de ysncins
s n o j cs o gsrt u g Sulv n' e o n ain o n a to
a an tM CS, p a l r c a dJ n ta W a c , q.S eDe.sOb .p . - 3 ( 3 3 .
g is
Ra h e Ba u h, n o ah n ni k Es e f' j, p 5 1 DE- 5 1
Ese hadague t tM CS,Ba u handW arc s dbes nci dunderRul 37( ( a
s nt
r d ha
rc
rik houl
a tone
e d)3) nd
t Cour' i r ntpowe s Es e alos hts nci a i tW a c t 28U. C.j
he
ts nhe e
r. s nt s oug a tons gans ni k mder
S.

' ga dls ofwhehert sa r ofr ew i deerntalordenovo,hi Cour woul r ac t s me
Re r e s
t he tndad evi s f e i
ts
t
d e h he a
r s the e
e ul r .

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1 2 I de ng s nc i a i tt et e M agita eJ
927. n nyi a tons ga ns hes hr e,
sr t udgeO ' lva co l
Suli n ncuded a a
s n

i ta matrt tRul 37( ( pr desnoba i fri i s tonso t sr or Se
niil te ha e d)3) ovi
ss o mposng anci n hi ec d. e

Re o tp 1 2 - 4 2 a d3 .Es e tso j ci n h we e, k sn me to o Rue
p r, p. 9, 3 2 , 6 n 2 s n ' be to , o v r ma e o nin f l
37( () muc l sa s rst tt r ea horz s nci hee.I ta Ese smpl
d)3 , h es s e t ha he ul ut ies a tons r nse d, snt i y
r pe t dl a guest ts nc i s d ha be n a r d wiho dif r nta i be wee a
e ae y r
ha a tons houl ve e wa de t ut f e e itng t n ny

o t ea t o iisf ra r i s c sncins TheCo r viwst i o j cina t g n rla d
f h u h rte o wadng u h a to .
u t e h s b e to s oo e ea n
c l or a fnds t ti l kst r ui ie s ii iy t e bl t Cour t pr r y e l t
onc us y nd i ha t ac he eq s t pec fc t o na e he
t o ope l va ua e

t eo j ci n M a s e 8 F.da 1 48 s e Uni dSttsv Sc u t, 6 F.d 1 5 ,1 6
h b e to . rd n, 47 2 t 5 . e
,
t ae . h l 5 5 3 3 3 3 0
e
z

( 1hCi. 0 9 (d pa t t s e t p e e v iso j cinmu t. pn it h s e ii
1 t r 2 0 ) ç dy ha wih s o r s r e t b e to s . ipon t e p cfc
a
.
fn ig t a tepat d sg e swih).Fidngnop o ro j cint M a itaeJ d e
idn s h t h ry ia re t ' n i
r pe be to o g srt u g
O' lva sc usont tRul 37( ( doe nota yhee,heCour wilafr a a
Suli n' oncl i ha e d)3) s ppl r t
t l fim nd dopt
t tpo ton oft Re t The Cour wilnow t n t t r comm e ton t de s nci ns
ha ri
he por.
t l
ur o he e
nda i o ny a to
unde t Co ts i r tpow e s a i tBa uc a M CS a unde s c i 1
r he ur ' nhe en
r ga ns r h nd
nd
r e ton 927 a t e
nd hos
i r ntpow e saga ns W a rck.
nhe e
r
i t ri
i
.

SANCTI A GAI T M C S UNDER THE C OURT' I
ONS
NS
S NHERENT POW ERS

Fornea l a l ast f de alc t ha e s e i hasbee t de s ood t t
ry s ong he e r our s ve xit d, t
n m rt
ha ,

t gl rani le po r mus ne e srl rs t oo rCo rso j tc fo t n tleo ter
t ce ti mp id we s t c saiy eult u u t f usie r m he at f h i
ç
r
i tt i n, pow e s ç hi h c nnotbe di pe e w ih i a Cour,be us t y a e nec s a y t
nsiuto '
r w c a
s ns d t n
t ca e he r
esr o

tee ecs o a1 tes' Ch mb r v NASCO, n .5 U. 3 43( g lq oi gUni d
h x rie f 1 oh r .' a e s .
'
I c, 01 S. 2, l glt u tn
t
e

2Til 28, UntdSae Co e S cin 1 2 Cscin1 2 ' po d sta ian atr e . wh s
te
ie tts d , e t 9 7 çe to 9 75 rvie h tç ly ton y . o o
o
)
l
.
muli i t pr e ngsi a c s unr onabl a ve tousym a ber r d byt cou tt s if
tples he oce di n ny a e eas
y nd xa i l y equie
he r o atsy
pe s ly t exc sc t,e
r onal he es oss xpens s a a t ne 'e r as bl i uredbec us ofs co ucv'28U . C.
e , nd tor ys fes e ona y nc r
a e uch nd t'
S.

j127
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Sttsv Hu s n 7Crn h 3 3 3L. 25 ( 8 2 ) ç rt i ra o t u t o j sieae
ae . d o , a c 2, 4, Ed. 9 1 1 ). To hs e s n,co rs f u tc r
uni raly a knowldge t bevesed,b t i ve y c e ton, t powe t i
ve s l c
e do
t y her r r a i wih
r o mpos sl nc
e ie e,

r s ta de or m,i t i prs nce a s si t t rlwf ma ts''1 ( i
epec, nd c u n her e e , nd ubmison o hei a ul ndae .' d. quotng

An es nv Du n, W h a. 0 , 2 , L. . 4 ( 8 :.Attesmetme h we e ,he e
d r o . n 6 e t 2 4 2 7 5 Ed 2 2 1 21
h n i , o v rt s
powe smus beexe cie t t r sr i a dicr ton. 1 Sprncpl ofdef e e c
r
t
r s d d h e tant nd s ei ' d. ç i i es
wi
'
er nc ouns l
e
r sr i i r ori t i r ntpowe , r quie isus t bear a ona er pons t t
e tant n es tng o nhe e
r and e r t e o
e s bl es e o he

p o lmsa dn e st a pr v k i( ' De nv UntdSa e , 7U. 8 , 2 - 4( 9 6 .
r be n e d h t o o e t.' ge . ie tts 51 S. 20 8 3 2 1 9 )
1
TheS y f unl ng't Cour' i r ntpowe st s nc i i a fndi ofbad f ih.
E or ocki ' he
ke
ts nhe e
r o a ton s i ng
at

Norlsv.De y'I ,628F. 1 1 ( 1hCi. 0)
eu
nn s nc.
3d 270, 282 1 t r 201 .

Ese tfrt r u st a Ma itaeJ d eO' ulva i ro o sy (omd t t CS dd
s n is a g e h t gsrt u g S l n û rne u l f l l ha M
i e
i
n ta ti b df i i b ign a dpt s n isc mpan gj'S eDe .sOb .p. .Es e t
o c n a at n rn ig n l uig t o lit.' e f' j, 7 s n
h
r
s g e t ta tema itaej d ein r dC ma sv b d o u c n r v re e d n e (1
u g ss h t h g sr t u g g o e 1 s ie o y f n o to e td vie c ,
a
c r lnglw,lndt prvi fndi a gui eoft dititc t i deci ngt
ontoli a a he) e ous i ngs nd danc he src our' n lni o
'

s n to M CS.S eDe .sOb .p. ( 3 3 .Be a eEse t eiv st er c r ce ry
a cin
e f' j, 7 DE- 5 1 c us s n b l e h e o d la l
e
r fe t MCS' b dfih i srn o l o j cst Ma itaeJ d eO' l v n' çe r a e
elcs
S a at ,t te u usy b e t o gsrt u g Sul a s t mak bl
i
r
c n l so t a M CS s o l no b s n to e gl'1 .Ese ta k t i Co r t rj c te
o cu i n h t
h ud t e a cin d .' d sn s s h s u to ee t h
rc
e omm e ton a e r s isi r ntpowe sa a r s nc i i t a ountof
nda i nd xe cie t nhe e
r nd wa d a tons n he m

$1430, 92 f a tr ysf sa c t a ns M CS.
, 862. or to ne ee nd oss gai t
Es e ' a gument,howe r a e mipl c M agita eJ
s nts r
s
ve , r s a ed.
sr t udgeO' lva di not
Suli n d
rc
e omm e t tt Cour de lnet exe cieisi r ntpowe sbe a e oft a e e ofbadnd ha he
t ci o r s t nhe e
r c us
he bs nc
f ih c
a t onduc by M SC. Ra he ,M a s r t J
t
t r gi ta e udge O ' lva co l d t tM CS ha a r a
Suli n nc ude ha
d l e dy

s fee t ç li t s n to 'b h vn adea lj dg n e tr da as nci nu e Rue I
u frd he ç tmae a ci n' y a ig fut u me t nee s a to nd r l
u
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37( ( ( .SeeRe tpp 1 20.Asar s toft tRul 37s ncin,as nci t M CS
b)2)A)
por, 9eul ha e a to a ton hat
a e t no l s M CS lt rbe ame la et Es e tf $1. m ilon i a t ne f e ,c t a
gr ed o es ,
ae c
ibl o s n or 5 li n tor ys e s oss nd
e ns . O n t sr or he dec i d t r om m e t Cour e r s is i r ntpower t
xpe es
hi ec d,
lne o ec
nd he
t xe ci e t nhe e
so
i pos addii nals nc i a i tM CS. 1
m e
to
a tons ga ns
d.D e i ng a tonals nc i c pors w ih t
clni ddii
a tons om t t he

Cour' dut t e r ie isi r ntpowe si t r sr ntand dic e i ' Chambe s,5 U .
ts y o xe c s t nhe e
r û h e tai
wi
s r ton.
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r 01 S.
a 50. Furher t Supr m e Cour ha e a ne t t
t
t , he
e
t s xpl i d ha
whe t r i ba f t c
n he e s d- aih onducti t cotr e ofltga i t tcoul be a qua el
n he ls
ii ton ha
d
de t y
s tone unde t Rul s t c tor na iy s d r y on t Rul r t r
anc i d
r he e , he our di rl houl el
he es a he
t n t i r ntpo r Buti i t i onneddic e i oft c t net rt
ha he nhe e
we .
f n he nf
s r ton he our, ihe he
s a ut nort Rul a e up t t t s t cour m ay s f y r l on is i r n
tt e
he es r
o he a k, he
t
a el e y
t nhe e t
pow er
.

I .Ene igad f ut u g n u d rRu e3 t t e utdi a$15mil nd la a r
d trn ea lj d me t n e l 7 ha r s le n . li o lr wa d
o
r tecst tt Rul we eup t t t s i t si t cea pr dedan a
el t ha he es r
o he a k n hi nsan nd ovi
dequae s to f
t anci n oz
M CS'c
ondu . l Thi Cour mus t r o ea fr a ado t r c
ct d
s
t t he ef r fim nd pt he e omme ton t de
nda i o ny

a d t n ls insu d ri ih rn p wes Ese tsfrto jcin i o er ld
d ii a mwto n e t n e e t o r . s n ' is be to s v rue .
o
s
lI
.

SANCTI AGAI BARUCH UNDER THE C OURT' INHERENT POW ERS
ONS
NST
S

I t es c ndobe t n, sn tk sis ewihM a itaeJ dg O' u l a '
n h e o j ci Ese t a e su t g sr t u e S li n s
o
v
r c m e i t tt Cour de s tonsaga ns Bar h,a die orf M CS a t
e om ndaton ha he
t ny anc i
i t uc
r ct or
nd he

hus nd ofM CS' owne ,Ka aAthi o Ba u h wa t s l- c i d t a em a ge 'f r
ba
S
r r c s n. r c
s he efdes rbe f s
c
na r' o
l ws t i vi M CS. Hepe s ly r vi d pla ngsa l te si t sc s ate d
a uis nvol ng
r ona l e ewe e di
nd e tr n hi a e, tnde

m os oral oft de ii a ge a l cons td wih t t a t ne ac e of
t
l he postons nd ner ly
ore t he wo tor ys cus d
wr ng ng he e, ngha a W ani k, par ofhi r a busnes da 3
o doi
r I m nd
c as t
s egulr i s y.

Ese tss c n o j cin h we e ,sa tal as bsto tetrt b e to b c u ete
s n ' e o d b e to , o v r i cu l u e f h is o j cin e a s h
y
3 coul s f y tndt t( avor 'de crbe ape s who e gesi t t ofi i s 'c
One
d ael i ha i
uns y' s i s ron
nga n he ype ç ne s' onduced
bus
t
by Bar c
u h.

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c
onduc ofBa u i t c
t
r ch s he onduc ofM CS andvie ve s The Cour hasde lne t i
t
c r a.
t
ci d o mpos
e
addii ls nc i a i tM CS a willkewi ede s nc i a ns Ba u h. W hiet
tona a tons ga ns
nd l i s ny a tons gai t r c
l he
Cou tr ma nstoubl dby am os e r a pe tofBa u h' i veme i t spr e di t
r e i r e
l t ve y s c
r c s nvol
nt n hi oc e ng, he
Cou ta e w ih M agit a e J
r gr es t
s r t udge O ' lvan t tM CS,a t r f e Bar h,ha be n
Suli
ha
nd he e or
uc
ve e

çs fce l pt s d'ale y.Re t p. Ac di y,a f rt r s s tf t a
sufi inty mihe ' r ad
por, 25. cor ngl nd o he ea ons e orh bove

rj cigt frto j ci n,h so j cinmu tas b o er ld
ee tn he is b e to ti b e to s lo e v rue .
ii
i.

SANCTI A GAI W ARRI UNDER THE C OURT' INHERENT
ONS
NST
CK
S

PowEt AND2 U.. j1 2
ls
8 SC. 9 7
I ist ido j cin Ese t r u st a t ema itaej d eSg o e t erc r a a
n t hr b e to , s n a g e h t h g srt u g t n rd h e o d s
i

wh l'i fi n t s n to atr e J n t a W a i k.De .sOb , 1 ( 3 3 .The
o e'n al g o a cin to n y o ah n n c
i
f' j p. 1 DE- 5 )
Re t howe r claryr te st tM a sr eJ
por,
ve , e l el ct ha
gitat udge O' lva di noti et e ie
Suli n d
gnor he ntr

r c r .Hi a ay i a dc ncuso r fe t u t h o p st - ta h c rf lyc nsd rda1o
e o d s n lss n o l ins elc j s t e p o ie h t e ae ul o ie e 1 f
t a g e sa e de ea a ve a at
he r um nt nd vi nc nd ni d t houghtu a r tai d r ol i oft is .
f l nd esr ne es uton he s ues
M agita eJ
sr t udge O' lva c l d t whieW ani k' c uc m i wa r r f ralt
Suli n onc ude hat l
c s ond t ght rant e e r o
The Fl i Ba ,i di nots
orda r t d
uppor t i pos ton ofm onet r s nc i . Re t pp. 33.
t he m ii
a y a tons por, 32-

Tha her ac d a dif r ntc l i t Es en woul havelke doesno mea t t
t e he
fe e onc uson han s t
d
i d
t n ha
M a sr t J
gita e udgeO' lva i edt e ier or TheCour e hosM a sr e J
Suli n gnor he ntr ec d.
tc
gitat udge
O ' lva svi t tW a r c t t rw ih I m ,e bie t t ofunpr es i i m i
Suli n' ew ha
r i k, oge he t ngha xhi t d he ype
of sonals n
t s c s t ts dl l nds s
hi a e ha a y e
uppor t t s e e yped c r c tle ofa t ne he d by s e
t o he t r ot
a i a tr s tor ys l
om

me r oft publc.W a c sa tonsj tf r erlt TheFl i Ba f pr esi ls
mbe s he i
ni k' ci usiy efra o
orda r or of sonaim
a e hi tai ng, do nots
nd t cs r ni but
uppor m one a y s nc i . Bas on W ani k' a a a
t
t r a tons
ed
c s ppe r nce
be o e t s Cour , s c
f r hi
t hi onduc r l c s a s gnii a f itr t unde s and hi e hi al
t ete t i tc nt a lze o
rt
s t c

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rs o sblte , riua l t ee ecs o id pe d n j d me t a d ap o omdlc o b sc
e p n i i is patc lry h x rie f n e n e t u g n, n r f t a k f a i
i
c pe e
om t nce. Suc c
h onduc w ilnotbe c r c e by m one my s nc i . Ther f e, he Cour
t l
or e t d
t
a tons
e or t
t

o e z st so j cina dafr a da o t t i p rin o t eRe o t
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M C S' O BJ
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anci t he
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s urhe i t o y s nt . li n tor ys

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n
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ORD ERED THA T:

MagitaeJ O' lva sRe tandRe mmendai ( 3471i
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DECLI ED I PA RT A N D AFFI ED AN D A D OPTED I PAR T. The
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