Pierre v. Midland Credit Management, Inc.
Filing
105
MEMORANDUM Opinion and Order. Signed by the Honorable Harry D. Leinenweber on 2/5/2018. Mailed notice (mc, )
IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ILLINOIS
EASTERN DIVISION
RENETRICE R. PIERRE,
Individually and on Behalf
of others Similarly
Situated,
Plaintiff,
Case No. 16 C 2895
v.
Judge Harry D. Leinenweber
MIDLAND CREDIT MANAGEMENT,
INC., a Kansas Corporation,
Defendant.
MEMORANDUM OPINION AND ORDER
Plaintiff
Renetrice
Pierre
(“Pierre”)
sued
Defendant
Midland
Credit Management, Inc. (“Midland”) on behalf of a class of plaintiffs
(Count I) and herself individually (Count II), alleging violations of
the
Fair
Debt
Collection
Practices
Act,
15
U.S.C.
§ 1692
et
seq.
Pierre now moves for summary judgment as to liability on both counts.
(Pl.’s Mot., ECF No. 68.)
Midland moves to strike (Def.’s Mot. to
Strike, ECF No. 79) certain paragraphs from the documents Pierre files
in support of her Motion.
grants
Pierre’s
Motion
For the reasons stated herein, the Court
for
Summary
Judgment
and
denies
Midland’s
Motion to Strike.
I.
BACKGROUND
Sometime in 2006 or 2007, Pierre opened and began to use a credit
card account with Target National Bank (“TNB”).
(Pl.’s Statement of
Facts (“SOF”), ECF No. 70 ¶ 11; Def.’s Resps. to Pl.’s SOF, ECF No. 81
¶ 11.)
She eventually failed to pay off the balance (Pl.’s SOF ¶ 13)
and later defaulted in March or April 2008. (Def.’s Resps. to Pl.’s
SOF ¶ 14.)
Thereafter, TNB sold the debt to Midland Funding, LLC, for
which Defendant Midland Credit Management, Inc. is a debt collector.
(Def.’s SOF Responses ¶¶ 7, 13.)
In an effort to collect on that
debt, Midland sent a dunning letter to Pierre on September 2, 2015.
(Id. ¶ 17; see, Demand Let., Ex. 1 to Pl.’s Second Am. Compl. (“SAC”),
ECF No. 40-1.)
Pierre maintains, without contradiction by Midland,
that the statute of limitations on a collection action for that debt
had run by the time Midland sent the letter.
27; 735 ILCS 5/13-205.)
(See, Pl.’s SOF ¶¶ 26-
That letter is the keystone in this case, so
some description of it is necessary.
The letter stated a current
balance of $7,578.57 and listed Target National Bank as the original
creditor to the debt.
(Demand Let.)
The letter began by stating:
“Congratulations! You have been pre-approved for a discount program
designed to save you money.” (Id. (emphasis in original).)
then
presented
three
“options”:
Option
1
offered
The letter
40%
off
the
advertised balance if Pierre paid by October 2, 2015; Option 2 offered
20% off if Pierre elected to make 12 monthly payments; and Option 3
invited Pierre to call Midland to discuss her options and perhaps pay
only $50/month on the debt. (Id.)
Finally, the letter included the
following disclosure:
The law limits how long you can be sued on a debt. Because
of the age of your debt, we will not sue you for it, we
will not report it to any credit reporting agency, and
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payment or non-payment of this debt will not affect your
credit score.
Id.
II.
DISCUSSION
Pierre filed this action alleging that Midland violated the Fair
Debt Collection and Practices Act, 15 U.S.C. § 1692, et seq. (the
“FDCPA”).
She
pressed
both
individual
claims
and
putative
class
claims, and on April 21, 2017, the Court certified a class of all
persons with Illinois addresses to whom Midland sent, from March 7,
2015 through March 7, 2016, a letter containing the disclosure laid
out above.
(See, generally, Mem. Op. and Order, Apr. 21, 2017, ECF
No. 59.)
This
opinion
now
rules
on
two
Motions
before
the
Court:
Pierre’s Motion for Summary Judgment as to liability on both Count I
(class claims) and Count II (individual claims), and Midland’s Motion
to Strike certain statements from the documents supporting Pierre’s
Motion.
The Court addresses these in reverse order, and, for the
reasons stated below, denies Midland’s Motion to Strike and grants
Pierre’s Motion for Summary Judgment as to liability.
A.
To
establish
a
Midland’s Motion to Strike
prima
facie
case
for
an
FDCPA
violation,
a
plaintiff must demonstrate (among other things, discussed below at
Part
II.B.1)
entered
for
that
she
personal,
incurred
family,
a
or
debt
arising
household
from
a
purposes.
transaction
15
U.S.C.
§ 1692a(5); Pantoja v. Portfolio Recovery Assocs., LLC, 78 F.Supp.3d
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743, 745 (N.D. Ill. 2015) (hereafter, “Pantoja I”) aff’d, 852 F.3d 679
(7th Cir. 2017) (hereafter, “Pantoja II”).
Midland moves to strike
(ECF No. 79) certain paragraphs from Pierre’s declaration (ECF No. 723) and her Statement of Facts (ECF No. 70), asserting that these
paragraphs state legal conclusions and not facts.
suggests
that
if
these
paragraphs
are
struck
result will be “fatal” to Pierre’s lawsuit.
¶ 2.)
as
Midland further
it
requests,
the
(Pl.’s Mot. to Strike
In the paragraphs at issue, Pierre states:
“From 2007 to 2008,
I used the TNB Card for personal, family, household items for me and
my son.
I never used the TNB Card for anything other than personal,
family, household items, including for any business purpose” (Pierre
Decl., ECF No. 72-3 ¶¶ 4-5), and “[I] used the TNB Card only for
personal, family, household purposes.”
(Pl.’s SOF ¶ 12.)
These statements may be lean, but in light of relevant case law
and the lack of contrary facts before the Court, they are sufficient
to demonstrate Pierre’s personal use of the card.
In Pantoja I, the
defendant
here:
made
the
same
argument
Midland
makes
that
the
plaintiff failed to demonstrate he accumulated the at-issue debt for
personal purposes.
Pantoja I, 78 F.Supp.3d at 745-46.
The Pantoja
plaintiff never actually used the credit card in question, but had
accumulated debt assessed from activation and late fees on the card.
Id.
The court found that the plaintiff had adequately demonstrated a
consumer
(i.e.,
personal
purpose)
debt
because
undisputed
evidence
showed that the card was issued to the plaintiff personally, and no
evidence in the record “even remotely suggest[ed]” that the card was
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issued for anything other than household purposes.
Id. at 746.
In
another FDCPA case, the plaintiff noted in her deposition that she
used her credit to buy “gas, clothes, things like that.”
Gomez v.
Portfolio Recovery Assocs., LLC, No. 15 C 4499, 2016 WL 3387158, at *2
(N.D. Ill. June 20, 2016).
The defendant protested that the plaintiff
could not establish her personal use of the credit, but the defendant
cited no evidence to contradict plaintiff’s assertions, despite having
“every
opportunity”
to
develop
plaintiff’s deposition.
Id.
its
evidence
on
this
issue
at
the
The court ruled that merely questioning
the sufficiency of the plaintiff’s evidence was not a proper basis to
dispute assertions in a statement of facts and accordingly plaintiff’s
assertions of personal use were deemed undisputed pursuant to Local
Rule 56.1.
Id.
Although the Court acknowledges that Pantoja and Gomez are not
identical
to
distinction.
the
case
at
bar,
these
are
differences
without
Pierre set forth that she used the (later defaulted-
upon) card — which the parties do not dispute was issued to her
personally, rather than to some business of hers — to buy household
items for herself and her son, and that she never used the card for
any business purpose.
(Pierre Decl. ¶¶ 4-5; Pl.’s SOF ¶ 12.)
Though
Midland takes issue with the sufficiency of that description, Midland
has not said it is untrue, nor has Midland put forward any evidence to
contradict it.
Gomez, 2016 WL 3387158, at *2.
And as in Gomez,
Midland did not pursue this issue when it had the opportunity during
Pierre’s deposition.
Accordingly, Pierre’s assertion that her debt
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was consumer in nature is deemed an undisputed fact.
Rule 56.1.
N.D. Ill. Local
Midland’s Motion to Strike is denied.
B.
Pierre’s Motion for Summary Judgment on Liability
On a summary judgment motion, the movant bears the burden of
establishing that there is no genuine dispute of any material fact and
that she is entitled to judgment as a matter of law. FED. R. CIV.
P. 56(a); Becker v. Tenenbaum-Hill Assocs., Inc., 914 F.2d 107, 110
(7th Cir. 1990).
The court construes facts favorably to the nonmoving
party and grants the nonmoving party all reasonable inferences in its
favor.
Bagley v. Blagojevich, 646 F.3d 378, 388 (7th Cir. 2011)
(quoting Ogden v. Atterholt, 606 F.3d 355, 358 (7th Cir. 2010)).
1.
Count I: Class Action Claims
Pierre alleges that Midland’s letter violates the FDCPA because
it falsely represents the character and legal status of the debt, 15
USC § 1692e(2), it is a deceptive communication, 15 USC § 1692e(10),
and
because
Midland’s
use
of
the
letter
was
an
unfair
or
unconscionable means to attempt to collect a debt, 15 USC § 1692f.
To
prevail on her Motion as to Count I, Pierre need only prove that the
class is entitled to summary judgment on any one of these bases.
Because the Court finds that she so prevails on Section 1692e(10), the
Court devotes its analysis to that issue.
To establish a prima facie case under the FDCPA, a plaintiff must
prove:
she
is
a
natural
person
or
“consumer”
who
is
harmed
by
violations of the FDCPA; the debt arises from a transaction entered
for personal, family, or household purposes; the defendant is a debt
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collector; and the defendant has violated a provision of the FDCPA.
Pantoja I, 78 F.Supp.3d at 745 (citation omitted).
Here, Pierre has
shown there is no genuine issue of material fact as to whether she is
a consumer who accrued her debt from a transaction entered into for
personal, family, or household purposes (see above, at Part II.A), and
that the defendant is a debt collector.
¶ 6.)
(Def.’s Resps. to Pl.’s SOF
Accordingly, the Court need only consider whether Pierre has
shown an FDCPA violation as a matter of law.
In
showing
Section
that
1692e
the
cases,
debt
the
collection
plaintiff
language
perspective of an unsophisticated consumer.
proves
is
is
“uninformed,
naïve,
and
violation
misleading
from
by
the
McMahon v. LVNV Funding,
LLC, 744 F.3d 1010, 1019-20 (7th Cir. 2014).
consumer
a
The unsophisticated
trusting,
but
possesses
rudimentary knowledge about the financial world, is wise enough to
read
collection
notices
with
added
care,
possesses
reasonable
intelligence, and is capable of making basic logical deductions and
inferences.”
(7th
Cir.
Williams v. OSI Educ. Servs., Inc., 505 F.3d 675, 678
2007)
omitted).
(citations
Whether
unsophisticated
consumer
omitted)
collection
is
an
(internal
language
objective
quotation
would
test.
marks
confuse
Id.
at
an
677-78.
Plaintiffs in Section 1692e cases may prevail by showing that the
language is misleading or confusing on its face.
When they cannot
show that the language is plainly misleading, plaintiffs can still
prevail by producing extrinsic evidence (such as consumer surveys) to
demonstrate
that
unsophisticated
consumers
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do
in
fact
find
the
language misleading or deceptive.
Lox v. CDA, Ltd., 689 F.3d 818, 822
(7th Cir. 2012) (citing Ruth v. Triumph P’ships, 577 F.3d 790, 801
(7th Cir. 2009)).
Finally, plaintiffs must show that the misleading
language is material.
Lox, 689 F.3d at 826 (citing Hahn v. Triumph
P’ships, 557 F.3d 755, 757-58 (7th Cir. 2009)).
Pierre levies several arguments for how the dunning letter is
impermissibly misleading.
Court.
One argument in particular persuades the
When Midland sent Pierre the dunning letter in September 2015,
the statute of limitations on any debt collection action had passed.
735 ILCS 5/13-205.
Pierre thus bore no legal responsibility to pay
that stale debt and could face no legal jeopardy whatsoever if she
refused to pay it.
However, under Illinois law, had Pierre made a
partial payment or promised to repay that debt, she could have revived
the
statute
of
obligation anew.
limitations
and
subjected
herself
to
the
debt
Pantoja I, 78 F.Supp.3d at 746 (Ross v. St. Clair
Foundry Corp., 271 Ill. App. 271, 273 (Ill. App. Ct. 1933)).
Pierre
argues that because the letter failed to warn of this possibility, the
letter is misleading as a matter of law.
The Court agrees.
The parties do not dispute that Midland’s letter never warns of
the
possibility
comatose debt.
that
certain
actions
could
breathe
new
life
into
Instead, the parties argue at length over whether this
omission even matters.
Put more finely:
Pierre says such an omission
is fatal for Midland’s FDCPA defense; Midland argues that the FDCPA
does not require debt collectors to warn of the potential danger of
revival, and so the omission is of no moment.
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Midland has some
authority for its argument, but that authority is not controlling here
and anyway runs contrary to an explicit ruling by the Seventh Circuit.
Midland leans heavily on a District of Kansas case in which its
argument prevailed.
In Boedicker v. Midland Credit Mgmt., Inc., 227
F.Supp.3d 1235, 1236 (D. Kan. 2016), the plaintiff claimed that a
Midland dunning letter violated the FDCPA by failing to warn that
under Kansas law, a partial payment toward stale debt could renew the
statute of limitations.
The Boedicker court awarded Midland summary
judgment, concluding that the FDCPA did not require such a warning.
Boedicker, 227 F.Supp.3d at 1241-42.
But there are some problems with
Midland’s proposed application of that ruling to this case.
the
Boedicker
court
Circuit did on appeal.
read
Pantoja
I
differently
than
the
First,
Seventh
Boedicker took care to distinguish Pantoja I,
but later concluded (in language that Midland now borrows) that “[n]o
case has determined that a debt collector must warn of a potential
revival of a time-barred claim.”
Id. at 1241; Def.’s Resp. at 5.
two years earlier, Pantoja I determined just that.
Pantoja I found a
similar dunning letter deceptive under the FDCPA and observed:
Upon receipt of the letter the only reasonable conclusion
that an unsophisticated consumer (or any consumer) could
reach is that defendant was seeking to collect on a legally
enforceable debt, even if defendant indicated that it chose
not to sue. Nor would a consumer, sophisticated or
otherwise, likely know that a partial payment would reset
the limitations period, making that consumer vulnerable to
a suit on the full amount . . . [Further, the letter is
deceptive on its face because it] does not indicate when
the debt was incurred, only that “[b]ecause of the age of
your debt, we will not sue you for it and we will not
report it to any credit reporting agency.” The letter is
deceptive because it does not tell the consumer that the
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But
debt is time-barred and defendant cannot sue plaintiff to
collect it, rather, it implies that defendant has chosen
not to sue. Nor does it tell plaintiff that the effect of
making (or agreeing to make) a partial payment on a timebarred debt is to revive the statute of limitations for
enforcing that debt.
Pantoja I, 78 F.Supp.3d at 746 (citing McMahon, 744 F.3d at 1021)
(emphasis added).
Although this Court reads Pantoja I as imposing
exactly the requirement both Boedicker and Midland eschew, Pantoja II
eliminates any guesswork.
In the Seventh Circuit, a debt collector
must indeed warn of a potential revival of a time-barred claim:
We agree with the district court’s two reasons for finding
that the dunning letter here was deceptive. First, the
letter does not even hint, let alone make clear to the
recipient, that if he makes a partial payment or even just
a promise to make a partial payment, he risks loss of the
otherwise
ironclad
protection
of
the
statute
of
limitations. Second, the letter did not make clear to the
recipient that the law prohibits the collector from suing
to collect this old debt. Either is sufficient reason to
affirm summary judgment for the plaintiff.
Pantoja II, 852 F.3d at 684 (emphasis added).
Midland
next
argues
that
even
if
a
warning
against
possible
revival were required ordinarily, no such warning would be necessary
in this case because of Midland’s policy “never to revive the statute
of limitations after it expires.”
SOF ¶ 28, ECF No. 81).)
(Def.’s Resp. at 8 (citing Def.’s
Pierre takes umbrage with this defense on a
number of grounds, but the most persuasive of them is that revivals of
the statute of limitations are controlled not by Midland’s policies,
but by operation of law.
See, Pantoja I, 78 F.Supp.3d at 746.
A
revival would be a hazard to Pierre, who may face suit by Midland if
it changed its policies or by someone else if Midland sold Pierre’s
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debt to another, less principled collector.
Further, the question in
FDCPA cases is whether the at-issue language would mislead or deceive
an
unsophisticated
consumer.
McMahon,
744
F.3d
at
1019.
An
unsophisticated consumer would not know about the dangers of revival
(even assuming that Midland’s letter adequately advises consumers of
the
statute
of
limitations
in
the
first
instance),
certainly not know about Midland’s internal policies.
Ltd.,
689
collector’s
F.3d
818,
contention,
825
(7th
that
an
Cir.
2012)
and
would
Cf. Lox v. CDA,
(finding,
unsophisticated
she
contrary
consumer
may
to
well
consider dunning letter’s discussion of possible fees a threat because
consumer would not know of legal procedure dictating that such fees
could not be imposed absent collector moving a court to do so).
Midland also relies on Boedicker for the proposition that because
neither the Consumer Fraud Protection Bureau nor the Federal Trade
Commission have determined that such warnings are necessary, Midland
is free to omit them.
F.Supp.3d at 1240-41).)
(Def.’s Resp. at 4-6 (citing Boedicker, 227
Specifically, Midland points to: an outline
of “proposals under consideration” at the CFPB that suggests that
revival warnings might actually compound consumer confusion, rather
than dispel it (Def.’s Resp. at 5-6); a consent order entered into
between Midland and the CFPB in which the CFPB mandated that Midland
use the disclosure language it used in the letter sent to Pierre
(Ex. A to Def. Resp., ECF No. 82-1); and an FTC consent decree which
did not require revival warnings, despite the FTC’s apparent earlier
consideration of requiring them in the decree.
- 11 -
(Def.’s Resp. at 6
n.10.)
Though Midland never says so, it essentially argues that these
administrative
impressions
are
entitled
deference and should be adhered to.
to
Chevron
or
Skidmore
Chevron U.S.A., Inc. v. Natural
Res. Def. Council, Inc., 467 U.S. 837 (1984); Skidmore v. Swift & Co.,
323 U.S. 134 (1944).
The Court cannot agree.
First, the Seventh Circuit’s explicit
holding—that revival warnings are required—controls here.
852 F.3d at 684.
Pantoja
II
True, the Seventh Circuit did not consider in
whether
the
Pantoja
deference.
I
mentioned
here
mandated
therein
considered.
Pantoja II,
by
sources
and
Midland,
from
the
II
Midland
cites
acknowledge
but
only
language
of
to
the
are
FTC
consent
distinguish
the
dunning
entitled
the
letter
to
decree
language
Pantoja
The Pantoja cases express no opinion as to the deference,
if any, that should be afforded the decree.
However, as Judge Edmond E. Chang points out, several courts in
this District have held that the consent decrees from both the FTC and
the CFPB to which Midland now points should be afforded no deference.
Harris v. Total Card, Inc., No. 12 C 05461, 2013 WL 5221631, at *7
(N.D. Ill. Sept. 16, 2013) (collecting cases); accord, Richardson v.
LVNV Funding, LLC, No. 16 C 9600, 2017 WL 4921971, at *4 (N.D. Ill.
Oct. 31, 2017) (stating that these decrees do not warrant Chevron
deference).
Midland “cites no authority demonstrating that congress
gave the FTC or the CFPB rulemaking power under the FDCPA through the
filing and settling of lawsuits against debt collectors,” and Midland
has not explained how or if the CFPB “proposals” it identifies were
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ever
adopted
or
endorsed
proposals and nothing more.
by
the
CFPB,
as
opposed
to
remaining
Harris, 2013 WL 5221631, at *7 (citing
Vulcan Constr. Materials, L.P. v. Fed. Mine Safety & Health Review
Comm’n, 700 F.3d 297, 315 (7th Cir. 2012)).
The Court will not extend
deference on this basis to the sources cited by Midland.
As its final argument that it need not include a revival warning
in its disclosure, Midland says that in Illinois, a partial payment
does not revive the limitations period unless the paying party also
makes a new and express promise to pay.
Pantoja II dealt with this also.
(Def.’s Resp. at 5 n.8.)
The Seventh Circuit acknowledged
that though there is some “room for disagreement” about the scope of
Illinois law, that disagreement does not free debt collectors of the
requirement
revival.
to
warn
about
the
danger
Pantoja II, 852 F.3d at 685.
of
statute
of
limitations
Whether a plaintiff makes a
new promise or simply tenders a partial payment, either action puts
her in a worse legal position than she would have been in had she done
nothing.
Id.
Either she has revived the statute of limitations by
her promise, or she has by her payment opened herself up to possible
suit in which she would have to challenge the collector’s reading of
uncertain Illinois law.
Id.
One further step is required.
Pierre must also show that the
dunning letter is materially misleading.
818, 822 (7th Cir. 2012).
Lox v. CDA, Ltd., 689 F.3d
Arguing against materiality, Midland makes
much hay of its claim that Pierre “never made any payments, [and] did
not do anything different as a result of the letter.”
- 13 -
(Def.’s Resp.
at 1 n.1.)
whether
Midland misses the point.
the
plaintiff
understanding,
but
actually
rather
Materiality does not hinge upon
acted
whether
in
the
reliance
misleading
ability to influence a consumer’s decision.”
on
a
letter
confused
“has
the
Lox, 689 F.3d at 827
(quoting O’Rourke v. Palisades Acquisition XVI, LLC, 635 F.3d 938, 942
(7th Cir. 2011)) (internal quotation marks omitted).
here.
Such is the case
A consumer receiving this dunning letter may well choose to pay
up or promise to do the same, things she likely would not have done
but for her receipt and misunderstanding of the letter.
Thus, the
letter may “lead to a real injury” — the newly revived vulnerability
to suit, especially — and so the letter is materially misleading.
In
Pantoja
II
and
here,
the
collector’s
silence
about
Id.
the
significant risk of losing the ironclad protection of the statute of
limitations renders the letter misleading and deceptive as a matter of
law.
Pierre
and
the
class
members
are
thus
entitled
to
summary
judgment as to liability on Count I.
2.
Count II: Individual Claims
In Count II as in Count I, Pierre presses FDCPA claims based on
Sections 1692e and 1692f.
Her rationale for those claims is different
here than in Count I, however, Count II’s claims focus on Midland’s
contested right to charge interest on Pierre’s debt.
Pierre contends
that Midland has no such right, and so the dunning letter’s “current
balance,”
which
Pierre
alleges
includes
over
$1,500
in
interest,
either falsely represents the debt amount (violating Section 1692e) or
reflects
Midland’s
attempt
to
collect
- 14 -
an
amount
not
expressly
authorized by agreement or permitted by law (violating Section 1692f).
(SAC ¶¶ 31-45.)
However,
as
the
Court
has
already
determined
that
the
class
Pierre represents is entitled to summary judgment as to liability in
Count I, and Counts I and II are both premised upon violations of the
FDCPA,
the
Court
need
not
address
the
alternative
individual relief Pierre raises in Count II.
arguments
for
Everyone in the class is
entitled to summary judgment on liability because they received the
FDCPA-violative letter.
Pierre also received the letter, so she is
entitled to summary judgment on liability as well.
Nothing more is
needed.
III.
For the reasons
Strike is denied.
CONCLUSION
stated herein, Defendant Midland’s
Motion to
Plaintiff Pierre’s Motion to Summary judgment as to
liability on both Counts I and II is granted.
IT IS SO ORDERED.
Harry D. Leinenweber, Judge
United States District Court
Dated: 2/5/18
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