McGowan v. Genesis Health Clubs Management, Inc.
Filing
16
MEMORANDUM AND ORDER granting 10 Motion to Dismiss. The court grants defendant's motion and dismisses plaintiff's KWPA claim (Count II) from this action. Signed by District Judge Daniel D. Crabtree on 1/26/18. (kao)
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF KANSAS
RONNIE MCGOWAN, on behalf of
himself and all other persons similarly
situated,
Plaintiffs,
v.
Case No. 17-2419-DDC-KGS
GENESIS HEALTH CLUBS
MANAGEMENT, INC.,
Defendant.
_____________________________________
MEMORANDUM AND ORDER
Plaintiff Ronnie McGowan worked as a Fitness Advisor for defendant Genesis Health
Clubs Management, Inc. He brings this action against defendant, on behalf of himself and all
others similarly situated, asserting that defendant violated the Fair Labor Standards Act
(“FLSA”) and the Kansas Wage Payment Act (“KWPA”) by failing to pay its employees
overtime compensation.
Defendant has filed a Motion to Dismiss. Doc. 10. The motion asks the court to dismiss
Count II of plaintiff’s Complaint—the KWPA claim—under Federal Rule of Civil Procedure
12(b)(6). Defendant asserts that plaintiff’s KWPA claim fails to state a plausible claim for relief
because Kansas law precludes plaintiff from asserting state law overtime wage claims against an
employer covered by the FLSA. Plaintiff has filed an Opposition to defendant’s Motion to
Dismiss. Doc. 14. And defendant has filed a Reply. Doc. 15.
After considering the parties’ arguments, the court grants defendant’s Motion to Dismiss.
The court explains why below.
I.
Factual Background
The following facts are taken from plaintiff’s Complaint. The court accepts the facts
asserted in the Complaint as true and views them in the light most favorable to plaintiff. Burnett
v. Mortg. Elec. Registration Sys., Inc., 706 F.3d 1231, 1235 (10th Cir. 2013) (citing Smith v.
United States, 561 F.3d 1090, 1098 (10th Cir. 2009)).
Defendant is a health and fitness club who operates about 40 locations in Kansas,
Missouri, Nebraska, and Oklahoma. From February 2017 until April 2017, defendant employed
plaintiff as a Fitness Advisor at one of its health clubs in Overland Park, Kansas. Defendant paid
plaintiff on a salary plus commission basis.
During plaintiff’s employment, defendant had a policy and practice of failing and
refusing to pay overtime compensation to its Fitness Advisors for all hours worked exceeding 40
hours per week. Defendant subjected plaintiff and other employees to this policy and practice
during their employment. According to plaintiff, defendant requires its Fitness Advisors to work
about 50 hours per week. Thus, plaintiff asserts, defendant failed to pay him and other similarly
situated employees overtime compensation for all hours worked.
Plaintiff asserts that defendant’s pay practices violate the FLSA, 29 U.S.C. § 216(b), and
the KWPA, Kan. Stat. Ann. § 44-313, et seq. He seeks to bring his FLSA claim as a collective
action under 29 U.S.C. § 216(b) and his KWPA claim as a class action under Federal Rule of
Civil Procedure 23. Plaintiff asks to represent a putative class that includes current and former
employees of defendant who worked as Fitness Advisors in Kansas, and throughout the nation,
and who never received overtime compensation for all hours worked.
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II.
Legal Standard
Fed. R. Civ. P. 8(a)(2) provides that a complaint must contain “a short and plain
statement of the claim showing that the pleader is entitled to relief.” Although this Rule “does
not require ‘detailed factual allegations,’” it demands more than “[a] pleading that offers ‘labels
and conclusions’ or ‘a formulaic recitation of the elements of a cause of action’” which, as the
Supreme Court explained, “will not do.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting
Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007)).
For a complaint to survive a motion to dismiss under Rule 12(b)(6), the pleading “must
contain sufficient factual matter, accepted as true, to ‘state a claim for relief that is plausible on
its face.’” Iqbal, 556 U.S. at 679 (quoting Twombly, 550 U.S. at 570). “A claim has facial
plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable
inference that the defendant is liable for the misconduct alleged.” Id. at 678 (citing Twombly,
550 U.S. at 556). “The plausibility standard is not akin to a ‘probability requirement,’ but it asks
for more than a sheer possibility that a defendant has acted unlawfully.” Id. (quoting Twombly,
550 U.S. at 556); see also Christy Sports, LLC v. Deer Valley Resort Co., Ltd., 555 F.3d 1188,
1192 (10th Cir. 2009) (“The question is whether, if the allegations are true, it is plausible and not
merely possible that the plaintiff is entitled to relief under the relevant law.” (citation omitted)).
When considering whether a plaintiff has stated a plausible claim, the court must assume
that the factual allegations in the complaint are true. Iqbal, 556 U.S. at 678 (citing Twombly, 550
U.S. at 555). But, the court is “‘not bound to accept as true a legal conclusion couched as a
factual allegation.’” Id. (quoting Twombly, 550 U.S. at 555). “‘Threadbare recitals of the
elements of a cause of action, supported by mere conclusory statements, do not suffice’” to state
a claim for relief. Bixler v. Foster, 596 F.3d 751, 756 (10th Cir. 2010) (quoting Iqbal, 556 U.S.
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at 678). Also, the complaint’s “[f]actual allegations must be enough to raise a right to relief
above the speculative level.” Twombly, 550 U.S. at 555 (citations omitted).
III.
Analysis
Defendant argues that plaintiff’s KWPA claim fails to state a plausible claim for relief
because Kansas law prohibits a plaintiff from asserting overtime wage claims based on state law
against an employer covered by the FLSA. Thus, defendant contends, plaintiff cannot assert
both a FLSA claim and a KWPA claim based on the same set of facts that defendant failed to
pay plaintiff overtime compensation.
The KWPA requires employers to pay “all wages due” to their employees. Kan. Stat.
Ann. § 44-314. The statute also directs employers “when and how those wages are paid out.”
Garcia v. Tyson Foods, Inc., 766 F. Supp. 2d 1167, 1187 (D. Kan. 2011) (citing Kan. Stat. Ann.
§ 44-314). So, as Judge Lungstrum explained in Garcia, the KWPA “does not provide plaintiffs
with any substantive rights, but simply provides a mechanism for plaintiffs to recover wages
due.” Id.; see also Larson v. FGX Int’l, Inc., No. 14-2277-JTM, 2015 WL 1034334, at *2 (D.
Kan. Mar. 10, 2015) (“The KWPA thus provides a very general state-law mechanism for
enforcing the payment of wages earned by employees.”).
The Kansas Supreme Court recently described the KWPA in this fashion:
The KWPA is an expansive and comprehensive legislative scheme that is broad in
its scope and the rights created for Kansas workers to secure unpaid wages earned
from their labors. It was enacted in 1973 and primarily sought to address
problems being encountered by employees of small businesses. The KWPA’s
primary concern was to protect low income workers who were shorted, docked, or
cheated out of pay for services performed. A goal of the legislation was to protect
Kansas employees who were not then covered by the Fair Labor Standards Act
(FLSA), minimum wage requirements, or the National Labor Relations Board.
The KWPA controls several aspects of wages and benefits for the Kansas worker
that are not covered by the Fair Labor Standards Act of 1938, 29 U.S.C. § 201
(2012) et seq. The KWPA governs when wages must be paid, the manner in
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which they must be paid, and the circumstances in which wages can be withheld.
The KWPA also requires employers to provide certain notice requirements with
respect to the payment of wages and the provision of benefits. It provides for
remedies and penalties for violation of its requirements. Notably, the KWPA does
not contain any express provision relating to the payment of overtime, which is
typically pursued under a FLSA claim.
Craig v. FedEx Ground Package Sys., Inc., 335 P.3d 66, 73 (Kan. 2014) (emphasis added)
(citations and internal quotation marks omitted).1 Our court has construed this passage from
Craig as the Kansas Supreme Court’s acknowledgement that “the KWPA is not the usual
mechanism for overtime—and presumably minimum wage—claims under Kansas law.” Larson,
2015 WL 1034334, at *2.
Instead, another Kansas statute addresses overtime wages specifically—the Kansas
Minimum Wage Maximum Hour Law (“KMWMHL”). See Kan. Stat. Ann. § 44-1204(a)
(requiring employers to pay their employees overtime wages for hours worked exceeding 46
hours per week); see also Gipson v. Sw. Bell Tel. Co., No. 08-2017-KHV-DJW, 2008 WL
4307617, at *1 (D. Kan. July 18, 2008) (“Unlike the KWPA, the Kansas Minimum Wage and
Maximum Hours Law covers overtime pay.”); Dollison v. Osborne Cty., 737 P.2d 43, 48 (Kan.
1987) (explaining that the KMWMHL “is the state counterpart to the federal Fair Labor
Standards Act” and applies to claims for unpaid overtime).
But the KMWMHL explicitly excludes from its definition of employer any employer
who is subject to the provisions of the FLSA. See Kan. Stat. Ann. § 44-1202(d) (expressly
excluding from the definition of “employer” any “employer who is subject to the provisions of
the fair labor standards act of 1938 and any other acts amendatory thereof or supplemental
1
Plaintiff urges the court to disregard the Kansas Supreme Court’s description of the KWPA as
dicta. Doc. 14 at 7. But, when determining how the Kansas Supreme Court would rule if faced with an
issue, a federal court “do[es] not limit [itself] to the technical holdings of the [state] cases. Instead,
‘[b]oth the holdings and considered dicta of the State Courts should be applied.’” Colo. Visionary Acad.
v. Medtronic, Inc., 397 F.3d 867, 871 (10th Cir. 2005) (citing Hardy Salt Co. v. S. Pac. Transp. Co., 501
F.2d 1156, 1163 (10th Cir. 1974) (citing Hawks v. Hamill, 288 U.S. 52, 59 (1933))).
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thereto”); see also Brown v. Ford Storage & Moving Co., Inc., 224 P.3d 593, 596 (Kan. Ct. App.
2010) (citing Kan. Stat. Ann. § 44–1204(c)(1)).
Here, plaintiff’s Complaint specifically alleges that defendant is an employer covered by
the FLSA. Doc. 1 ¶ 10. Thus, defendant argues, plaintiff cannot assert a claim for unpaid
overtime wages under the KWPA because the KMWMHL expressly prohibits such a claim when
defendant is covered by the FLSA. The parties do not cite, and the court had not found in its
own research, any Kansas Supreme Court case directly addressing this issue.2 But the majority
of our court’s cases have reached the conclusion that the defendant urges the court to reach
here—that plaintiff’s KWPA claim for overtime wages fails to state a claim against an employer
covered by the FLSA.3 See, e.g., Stockton v. Alltite, Inc., No. 15-1278-JTM, 2016 WL 3973778,
at *2 (D. Kan. July 25, 2016) (dismissing plaintiff’s KWPA claim based on unpaid overtime
wages because the “state act does not apply to FLSA-covered employers”); Larson, 2015 WL
1034334, at *3 (Marten, J.) (holding that where plaintiff alleged that defendant was a FLSA
2
Plaintiff’s Complaint never alleges that it pleads a KWPA claim in the alternative to the FLSA
claim. Instead, plaintiff’s Complaint maintains that defendant is an employer covered by the FLSA, and
it bases both the FLSA and KWPA claims on defendant’s alleged failure to pay overtime compensation.
Although Rule 8(d) allows a plaintiff to plead alternative or inconsistent claims, plaintiff neither alleges
that he is asserting such claims nor asks the court for leave to assert such claims. Cf. Gregor v. Almighty
Tow Serv., LLC, No. 10-2207-JWL, 2010 WL 4386907, at *1 (D. Kan. Oct. 29, 2010) (recognizing that
Rule 8(d) allows plaintiff to plead inconsistent claims but concluding—contrary to plaintiff’s assertion—
that his proposed amended complaint recognized no inconsistency between his FLSA and KMWMHL
claims, and so, the court ordered plaintiff to “amend his complaint to reflect that he is asserting his
KMWMHL claim only if defendant is not subject to FLSA regulation.”).
3
Where, as here, the court exercises supplemental jurisdiction over a state law claim, the court
applies the substantive law of Kansas and must reach the same decision that it predicts the state’s highest
court would reach. See Lytle v. City of Haysville, Kan., 138 F.3d 857, 868 (10th Cir. 1998) (“When
exercising jurisdiction over pendent state claims, we must apply the substantive law of the forum state
and reach the same decision we believe the state’s highest court would, just as we would if our
jurisdiction rested on diversity of citizenship.”); see also Sherman v. Klenke, 653 F. App’x 580, 593 (10th
Cir. 2016) (explaining that, when exercising supplemental jurisdiction over a state law claim, the court
must “defer to the most recent decisions of the state’s highest court” and “treat[ ] opinions of a state’s
intermediate courts of appeals as highly persuasive, though not binding” (citation and internal quotation
marks omitted)). The court applies this governing standard in its analysis here.
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employer, “her KWPA claims for FLSA minimum wage and overtime violations are not
plausible because they are legally impossible”); Garcia, 766 F. Supp. 2d at 1186 n.15
(Lungstrum, J.) (explaining that employers “who are covered by the FLSA are expressly
exempted from Kansas’ overtime statute [the KMWMHL],” so “permitting plaintiffs to recover
overtime wages from [defendant] under the KWPA is incompatible with the exemption provision
of the KMWMHL and would undermine the integrity of Kansas’ wage and hour statutory
scheme as a whole.”). See also Wheaton v. Hinz JJ, LLC, No. 14-2223-RDR, 2014 WL
5311310, at *1–2 (D. Kan. Oct. 16, 2014) (dismissing plaintiff’s KWPA claim for minimum
wage violations under Rule 12(b)(6) because Kansas law allows a plaintiff to pursue minimum
wage violations under the KMWMHL alone and that act expressly exempts FLSA-covered
employers like defendant); Spears v. Mid-America Waffles, Inc., No. 11-2273-CM, 2011 WL
6304126, at *4–5 (D. Kan. Dec. 16, 2011) (denying plaintiffs leave to amend their Complaint to
assert a KWPA claim based on defendant’s failure to pay minimum wages because such a claim
was futile when the KMWMHL expressly exempts employers covered by the FLSA). Cf. Brown
v. Ford Storage & Moving Co., 224 P.3d 593, 599 (Kan. Ct. App. 2010) (holding that an
employer, who was subject to FLSA regulation, was not an employer under the KMWMHL and
had no duty to pay overtime wages under the KMWMHL).
Plaintiff asserts that these cases were wrongly decided. For support, plaintiff first relies
on Elkins v. Showcase, Inc., 704 P.2d 977 (Kan. 1985). Elkins affirmed a Kansas Department of
Human Resources administrative hearing officer’s decision that the defendant, a restaurant
employer, had violated the FLSA by (1) diverting an excessive percentage of plaintiff’s tips into
a tip pool, and (2) making payments from the tip pool to non-tipped employees. Id. at 988.
Based on this FLSA violation, the administrative hearing officer concluded that the restaurant
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had violated the KWPA by failing to pay plaintiff “wages” due to him under the KWPA. Id. at
981–82. The Kansas Supreme Court affirmed the officer’s ruling, approving his conclusion that
the FLSA violation “had to be considered in order to determine if there had been a violation of
the KWPA.” Id. at 984.
Our court already has concluded that Elkins and its theory that defendant wrongly had
diverted plaintiff’s tips differs from a minimum wage claim asserted under the KWPA. See
Wheaton, 2014 WL 5311310, at *2. For the same reasons expressed there, the court also
concludes that Elkins differs from this case where plaintiff asserts a KWPA claim based on
unpaid overtime wages. Elkins involved no allegations that the defendant restaurant had failed to
pay overtime wages. Instead, the Elkins plaintiff asserted just that his employer had deducted his
wages improperly by diverting an excessive percentage of his tips into a tip pool. While Elkins
held that the withheld tips were “wages” due and recoverable under the mechanism provided by
the KWPA, this same analysis does not apply to overtime compensation. It does not apply
because the KMWMHL—not the KWPA—specifically applies to overtime. So, the court
concludes, Elkins does not apply here.
Next, plaintiff relies on three cases where our court held that a plaintiff may assert
KWPA claims as an alternative claim to a FLSA action. See Rukavitsyn v. Sokolov Dental Labs.,
Inc., No. 12-2253-JAR, 2012 WL 3066578, at *4 (D. Kan. July 27, 2012); Tarcha v. Rockhurst
Univ. Continuing Educ. Ctr., Inc., No. 11-2487-KHV, 2012 WL 1998782, at *4 (D. Kan. June 4,
2012); Veale v. Sprint Corp., No. 95-2379-GTV, 1997 WL 49114, at *2–3 (D. Kan. Feb. 3,
1997). The court does not find the reasoning of these cases persuasive for two reasons.
First, Rukavitsyn and Tarcha construed Judge Lungstrum’s opinion in Garcia as one
holding that a plaintiff could rely on a FLSA violation to support a KWPA claim for unpaid
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overtime compensation in certain circumstances. Rukavitsyn, 2012 WL 3066578, at *2
(explaining that “courts in the District of Kansas have held that plaintiffs may rely on the
FLSA—which requires employees to be paid at an overtime rate of ‘one and one-half times
[their] regular rate’ of pay—to form the legal basis for KWPA claims (first quoting 29 U.S.C. §
207(a)(1); then citing Garcia, 766 F. Supp. 2d at 1187) (further citations omitted)); Tarcha, 2012
WL 1998782, at *4 (“The Court finds that plaintiffs may rely on the FLSA as the legal basis for
a KWPA claim.” (citing Garcia, 766 F. Supp. 2d at 1187)). But Garcia did not involve
allegations of unpaid overtime compensation. Instead, the Garcia plaintiffs alleged that
defendants never paid them for time they spent at work donning, doffing, and walking. Garcia,
766 F. Supp. 2d at 1187. Judge Lungstrum held that the Garcia plaintiffs could assert KWPA
claims based on these allegations “to recover non-overtime wages owed but not paid by
[defendant].” Id. at 1186 (emphasis added).
In a footnote, Judge Lungstrum explained that plaintiffs—who had not opted to join the
FLSA class—could not seek to recover overtime wages under the KWPA because “employers
like [defendant] who are covered by the FLSA are expressly exempted from Kansas’ overtime
statute”—the KMWMHL. Id. at 1186 n.15. Rukavitsyn and Tarcha explain that this footnote
merely analyzes whether the plaintiffs who had not opted to join the FLSA class could state
viable claims under the KMWMHL. Rukavitsyn, 2012 WL 3066578, at *3 n.35; Tarcha, 2012
WL 1998782, at *3. Both cases reasoned that plaintiffs, who had not opted in to the FLSA, must
rely on the KMWMHL as the “only potential legal basis for their overtime claims.”4 Tarcha,
2012 WL 1998782, at *3; Rukavitsyn, 2012 WL 3066578, at *3 n.35. But, because the
4
As defendants point out, plaintiffs who do not opt in to an FLSA action can assert their own,
individual FLSA claim in a separate action. Doc. 11 (citing 29 U.S.C. § 216(b) (explaining that an
employee can become a party plaintiff in a FLSA action only if he gives consent in writing and files that
consent with the court)). Thus, the KMWMHL is not the only potential legal basis to assert overtime
claims for a plaintiff who does not opt in to a FLSA action.
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KMWMHL specifically exempted their employers, “those plaintiffs were left with no legal basis
to establish the amount of wages due under the KWPA.” Tarcha, 2012 WL 1998782, at *3.
That same reasoning applies with equal force here. That is, the KMWMHL specifically exempts
FLSA-covered employers from overtime claims, plaintiff has “no legal basis” to assert a KWPA
claim against defendant. Instead, the FLSA provides the only legal basis for plaintiff’s overtime
claim.
Second, in Veale, the defendant argued that the KWPA did not provide plaintiff with a
substantive cause of action to seek overtime wages. Id. at *2. The court noted that the KWPA
requires employers to pay an employee’s “earned wages” after an employee quits, resigns, or is
discharged. Id. (citing Kan. Stat. Ann. § 44-315(a)). The court never addressed—and it doesn’t
appear that defendant ever argued—that the KMWMHL governed plaintiff’s claim for overtime
wages and precluded such a claim if the defendant was covered by the FLSA. See generally id.
Veale thus differs from this case where defendant specifically argues that the KMWMHL
exempts it from liability for plaintiff’s overtime claim under the KWPA.
Also, to the extent these three cases conflict with more recent decisions from our court
holding that a plaintiff cannot assert a KWPA claim for unpaid overtime wages against an
employer covered by the FLSA, the court finds the reasoning used in the more recent cases
persuasive. As described above, these cases have concluded that the plain language of the
Kansas statutes prohibits overtime wage claims against FLSA-covered employers. See, e.g.,
Stockton, 2016 WL 3973778, at *2 (Marten, J.) (“[T]he Kansas statute explicitly excepts FLSAcovered workers from its protection.”); Larson, 2015 WL 1034334, at *3 (Marten, J.) (“Kansas
has no substantive minimum wage or maximum hour law that covers FLSA employers—it relies
on the FLSA.”); Garcia, 766 F. Supp. 2d at 1186 n.15 (Lungstrum, J.) (“Employers . . . who are
10
covered by the FLSA are expressly exempted from Kansas’ overtime statute”). If the Kansas
legislature had intended to permit employees to pursue overtime wage claims under both the
Kansas state law and the FLSA, then it never would have included an express exemption in the
plain language of the KMWMHL excluding FLSA-covered employers. See Polson v. Farmers
Ins. Co., Inc., 200 P.3d 1266, 1269–70 (Kan. 2009) (“[W]hen the language of a statute is plain
and unambiguous, [courts] must give effect to that language rather than determine what the law
should or should not be, speculate as to legislative intent, add something not readily found in the
statute, resort to the canons of statutory construction, or consult legislative history.”). The court
thus infers from the plain language of the statute that the Kansas legislature, when enacting the
KMWMHL, intended to exclude FLSA-covered employees from state overtime wage laws. The
most likely reason for this exclusion is that the FLSA already provides a remedy for employees
to recover unpaid overtime wages against FLSA-covered employers. The Kansas legislature
didn’t need to create a second remedy under state law.
Also, one of these more recent cases determined that the FLSA preempts any state law
claim that attempts to assert a cause of action for overtime claims because the federal statute
expressly provides for such a claim. See, e.g., Larson, 2015 WL 1034334, at *3 (Marten, J.)
(“Thus, to the extent that the KWPA could be interpreted as a mechanism for asserting FLSAbased claims for minimum or overtime wages, it would be preempted by §§ 206 and 207 of the
FLSA. That is [so] because any attempt to bring minimum wage or overtime claims against
FLSA employers through the KWPA mechanism can only be an attempt to assert the remedies
found in §§ 206 and 207 of the FLSA.”).
The court finds the reasoning of these more recent cases sound and convincing. And, it
predicts that the Kansas Supreme Court—if presented with this issue—would reach the same
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conclusion as these cases. The court thus follows the majority of cases our court has decided on
this issue. And the court concludes that plaintiff’s KWPA claim for overtime violations fails to
state a plausible claim for relief because Kansas law precludes state statutory claims to recover
overtime wages against FLSA-covered employers, like defendant. For this reason, the court
grants defendant’s Motion to Dismiss.
IV.
Conclusion
For reasons explained above, the court grants defendant’s motion and dismisses
plaintiff’s KWPA claim (Count II) from this action.
IT IS THEREFORE ORDERED BY THE COURT THAT defendant Genesis Health
Clubs Management, Inc.’s Motion to Dismiss (Doc. 10) is granted.
IT IS SO ORDERED.
Dated this 26th day of January, 2018, at Topeka, Kansas.
s/ Daniel D. Crabtree
Daniel D. Crabtree
United States District Judge
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