Pogue v. Principal Life Insurance Company
Filing
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MEMORANDUM OPINION AND ORDER by Judge Greg N. Stivers. For the foregoing reasons, IT IS HEREBY ORDERED that Defendant Principal Life's Motion to Dismiss for Forum Non Conveniens or, in the Alternative, Transfer Venue and Motion to Dismiss for Failure to State a Claim (DN 8 ) is DENIED. cc: Counsel (CDR)
UNITED STATES DISTRICT COURT
WESTERN DISTRICT OF KENTUCKY
LOUISVILLE DIVISION
CIVIL ACTION NO. 3:14-CV-00599-GNS
JAMES H. POGUE
PLAINTIFF
v.
PRINCIPAL LIFE INSURANCE COMPANY
DEFENDANT
MEMORANDUM OPINION AND ORDER
This matter is before the Court on Defendant’s Motion to Dismiss Plaintiff’s Complaint
for Forum Non Conveniens or, in the Alternative, to Transfer Venue and Motion to Dismiss for
Failure to State a Claim. (Def.’s Mot. to Dismiss Pl.’s Compl. for Forum Non Conveniens or, in
the Alternative, to Transfer Venue and Mot. to Dismiss for Failure to State a Claim [hereinafter
Def.’s Mot. to Dismiss], DN 8). The motion has been fully briefed and is ripe for decision. This
motion, with regard to both claims is DENIED.
I.
BACKGROUND
This action arises from the denial by Principal Life Insurance Company (“Principal Life”)
of the disability insurance claim filed by Plaintiff James H. Pogue (“Pogue”). Pogue was
employed in Tennessee at the time of the formation of the contract and his medical license was
revoked in Tennessee, leading to his ultimate unemployment. (Def.’s Mot. to Dismiss 2). Pogue
was examined by multiple Tennessee doctors who diagnosed his disability. (Def.’s Mot. to
Dismiss 2). Pogue currently resides in Kentucky, made insurance premium payments while in
Kentucky, and the denial of Pogue’s claim for coverage was communicated to him in Kentucky.
(Pl.’s Resp. to Def.’s Mot. to Dismiss 4).
On August 6, 2014, Pogue filed this lawsuit against Principal Life in Jefferson Circuit
Court alleging that Principal Life improperly denied coverage under its policy issued to Pogue.
(Compl. 1, DN 1-2; Wallace Aff. 1, DN 1-3). On August 29, 2014, Principal Life removed the
action to this Court on the basis of diversity of citizenship. (Notice of Removal, DN 1).
II.
JURISDICTION
The Court has subject matter jurisdiction over this action under 28 U.S.C. § 1332 as there
is complete diversity between the Plaintiff and Defendant and the amount in controversy exceeds
the sum of $75,000.00.
III.
STANDARD OF REVIEW
In order to survive dismissal for failure to state a claim under Rule 12(b)(6), “a complaint
must contain sufficient factual matter, accepted as true, to state a claim to relief that is plausible
on its face.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (internal quotation marks omitted)
(citation omitted). “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. (citation omitted). “[A] district court must (1) view the complaint in the light most
favorable to the plaintiff and (2) take all well-pleaded factual allegations as true.” Tackett v. M &
G Polymers, USA, LLC, 561 F.3d 478, 488 (6th Cir. 2009) (citation omitted). “But the district
court need not accept a bare assertion of legal conclusions.” Id. (internal quotation marks
omitted) (citation omitted). “A pleading that offers labels and conclusions or a formulaic
recitation of the elements of a cause of action will not do. Nor does a complaint suffice if it
tenders naked assertion[s] devoid of further factual enhancement.” Iqbal, 556 U.S. at 678
(internal quotation marks omitted) (citation omitted).
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IV.
DISCUSSION
Principal Life seeks relief under two theories of relief. Principal Life’s first theory is
under the doctrine of forum non conveniens. The doctrine of forum non conveniens allows courts
to “resist imposition upon its jurisdiction even when jurisdiction is authorized by the letter of a
general venue statute.” Gulf Oil Corp. v. Gilbert, 330 U.S. 501, 507 (1947). “[T]he central
purpose of any forum non conveniens inquiry is to ensure that the trial is convenient . . . .” Piper
Aircraft Co. v. Reyno, 454 U.S. 235, 256 (1981). Second, and alternatively, Principal Life argues
that choice of law favors Tennessee law in this action and that Pogue’s action is invalid under the
law of that state. (Def.’s Mot. to Dismiss 3). In support, Principal argues that Tennessee, rather
than Kentucky, has the most significant relationship to this action under the “most significant
relationship” test as stated in the Restatement (Second) of Conflict of Laws Section 188. (Def.’s
Mot. to Dismiss 3; Def.’s Reply to Pl.’s Resp. to Mot. to Dismiss 3).
A.
Forum Non Conveniens
To determine whether dismissal based upon forum non conveniens is appropriate, the
Court must apply a two-step analysis. First, the defendant must establish that an appropriate
alternative forum is available. AEP Indus., Inc. v. UTECO N. Am., Inc., No. 1:14-CV-96-GNS,
2015 WL 1298556, at * 2 (W.D. Ky. Mar. 23, 2015) (citing Zions First Nat’l Bank v. Moto
Diesel Mexicana, S.A. de C.V., 629 F.3d 520, 523 (6th Cir. 2010)). Second, the balance of public
and private interest factors must demonstrate an unnecessary hardship on the defendants. Id. If
these factors show that “oppression and vexation to a defendant [is] out of all proportion to
plaintiff’s convenience” dismissal is appropriate. Zions, 629 F.3d at 525 (internal quotation
marks omitted) (citation omitted). In addition, a plaintiff’s choice of forum is given heightened
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deference. AEP, 2015 WL 1298556, at * 2 (citing Duha v. Agrium, Inc., 448 F.3d 867, 874 (6th
Cir. 2006)).
“Private factors are unique to the parties and dispute.” AEP, 2015 WL 1298556, at *2.
These include the “relative ease of access to sources of proof; availability of compulsory process
for attendance of unwilling, and the cost of obtaining attendance of willing, witnesses; possibility
of view of premises, if view would be appropriate to the action; and all other practical problems
that make trial of a case easy, expeditious and inexpensive.” Id. (citing Gulf Oil Corp., 330 U.S.
at 508). “Private factors must weigh heavily in the defendant's favor to warrant dismissal.” Id.
“Public interests are those particular to the forum.” Id. “If the dispute’s origin is outside
the forum, these factors generally weigh against the exercise of jurisdiction.” Id. (citing Gulf Oil
Corp., 330 U.S. at 509) (internal quotation marks omitted). “In particular, juries from
jurisdictions without a connection to the dispute should not be burdened.” Id. “Conversely, the
citizens of a jurisdiction, through their participation in a jury pool, have an interest in deciding
local controversies.” Id. (citing Gulf Oil Corp., 330 U.S. at 508). “Finally, the application of
foreign law unfamiliar to a court creates a burden which weighs against the exercise of
jurisdiction.” Id. Thus, the Court must balance the private and public interest factors established
in Gulf Oil.
1.
Adequate Alternative Forum
“Before weighing the public and private factors, the Court must first determine that a
suitable alternative forum in fact exists.” Id. (citing Wong v. PartyGaming Ltd., 589 F.3d 821,
830 (6th Cir. 2009)). Neither party contests Tennessee’s suitability as a forum, and the Court has
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little trouble concluding Tennessee would provide an amenable alternative.1 “Absent an
obviously deficient forum, an alternative is generally deemed suitable if the parties are amenable
to process there.” Id. As all parties in this suit have some connection to Tennessee, there are no
obstacles to an alternative forum.
2.
Private Interest Factors
Principal Life argues that private interest factors weigh in favor of dismissal. (Def.’s Mot.
to Dismiss 6). Principal Life argues that the “relative ease of access of sources of proof” favors
Tennessee. (Def.’s Mot. to Dismiss 5). Yet, this Court has held that technological advancements
have largely made this factor a wash. Pharmerica Corp. v. Crestwood Care Ctr., No. 3:12-CV00511-CRS, 2013 WL 542547 (W.D. Ky. Sept. 26, 2013). Principal Life presents no evidence
indicating that this Court will be unable to obtain all sources of proof relevant to this action.
Some relevant witnesses involved in this cause of action reside in Tennessee. (Def.’s Mot. to
Dismiss Pl.’s Compl. 4-5; Def.’s Reply to Pl.’s Resp. to Mot. to Dismiss 7). In addition, most
documents relevant to this action exist in Tennessee. Principal Life relies on the “inconvenience”
of requiring witnesses in Nashville, Tennessee to travel “in excess of 100 miles” to Louisville,
Kentucky. (Def.’s Mot. to Dismiss 5; Def.’s Reply to Pl.’s Resp. to Mot. to Dismiss 12). Yet,
distance alone is not sufficient to find in favor of Principal Life. See Egrsco, LLC v. Evans
Garment Restoration, LLC, No. 2:09-CV-358 2009, WL 3259423, at *7 (S.D. Ohio Oct. 8,
2009). Further, Principal Life makes no claim that it or its representatives will be inconvenienced
by a Kentucky forum. (Def.’s Mot. to Dismiss 4-5; Def.’s Reply to Pl.’s Resp. to Mot. to Dismiss
7). Thus, this argument is not persuasive.
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Some forums offering only “clearly unsatisfactory” remedies may be deemed inadequate. Piper
Aircraft, 454 U.S. at 255 n.22. Neither party contends Tennessee is such a forum.
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Principal Life also asserts that this Court cannot exercise jurisdiction over essential
witnesses should they be unwilling to appear. Principal Life presents no evidence that any of the
witnesses may be unwilling to appear in this matter and relies entirely on the distance between
Nashville, Tennessee, and Louisville, Kentucky. This, without more, cannot be the basis of
dismissing the case on the basis of forum non conveniens.2 Thus, the private interest factors do
not support a transfer to Tennessee.
3.
Public Interest Factors
The “public” interest factors to be considered include “(1) administrative difficulties
flowing from court congestion; (2) the local interest in having localized controversies decided at
home; (3) the interest in having the trial of a diversity case in a forum that is at home with the
law that must govern the action; (4) the avoidance of unnecessary problems in conflict of laws;
and (5) the unfairness of burdening citizens in an unrelated forum with jury duty.” Piper Aircraft
Co., 454 U.S. at 241 n.6; Gulf Oil, 330 U.S. at 508-09.
Principal Life’s Motion to Dismiss asserts that many of the early events that gave rise to
this action occurred in Tennessee and therefore, Kentucky courts should not be burdened with
Pogue’s claims. (Def.’s Mot. to Dismiss 6-7). Yet, Principal Life ultimately made its decision to
deny his claim while Pogue was a resident of Kentucky. Principal Life also conducts business in
the state of Kentucky. (Pl.’s Resp. to Def.’s Mot. to Dismiss 14). Thus, a denial of insurance
coverage to a Kentucky resident by a company which does business in the state would have an
effect on citizens of this jurisdiction, notwithstanding Tennessee’s citizens’ interest in an
insurance agreement formed within the state. While Pogue is a resident of the forum, Principal
2
A federal court can issue a subpoena for a witness to appear if the witness is located within 100
miles of the deposition. See Hallamore Corp. v. Capco Steel Corp., 259 F.R.D. 76, 79 n.7 (D.
Del. 2009) (discussing the scope of Fed. R. Civ. P. 45(b)(2)(B))..
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Life is not a resident of Tennessee,3 and thus Tennessee has a lesser public interest in this matter.
Piper Aircraft Co., 454 U.S. at 241 n.6; Gulf Oil, 330 U.S. at 508-09.
Principal Life also alleges that the administrative difficulties flowing from court
congestion in this forum favor transferring the case to the Middle District of Tennessee. (Def.’s
Reply to Pl.’s Resp. to Mot. to Dismiss 9-10). The Court rejects this argument and is fully
capable of ruling on this matter without delay. Thus, this factor favors a Kentucky forum.
Finally, as addressed below, Kentucky law applies to this case. Therefore, Kentucky has an
interest in “having the trial of a diversity case in a forum that is at home with the law that must
govern the action” and unnecessary problems in conflict of laws are avoided by the application
of Kentucky law. Piper, 454 U.S. at 241 n.6 (quoting Gulf Oil, 330 U.S. at 509).
Thus, private interest factors appear inconclusive while public interests favor a Kentucky
forum. This Court need not finely balance the two. “[U]nless the balance is strongly in favor of
the defendant, the plaintiff's choice of forum should rarely be disturbed.” Gulf Oil Corp., 330
U.S. at 508. Further, the “heightened deference” afforded a plaintiff’s choice of forum has been
deemed determinative. Duha, 448 F.3d at 874 (citation omitted). Given that there is no
suggestion of forum-shopping or improper motive in Pogue’s choice of forum, the motion to
dismiss for forum non conveniens will be denied.
B.
Choice of Law
The Court need only conduct a choice-of-law analysis if a conflict exists between two
states’ laws. Williams v. Toys “R” Us, 138 F. App’x 798, 803 (6th Cir. 2005). The parties do not
contest that a conflict between Kentucky and Tennessee law exists. Specifically, Tennessee does
not recognize the tort of a bad faith denial of an insurance claim, whereas Kentucky does.
3
Principal Life is incorporated and has its principal place of business in Iowa. (Notice of
Removal 2).
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Compare Persian Galleries, Inc. v. Transcontinental Ins. Co., 38 F.3d 253, 257 (6th Cir. 1994)
with Wittmer v. Jones, 864 S.W.2d 885, 886 (Ky. 1993). In addition, Tennessee does not
recognize the remedy of punitive damages regarding breach of contract claims, whereas
Kentucky does, albeit in very limited circumstances. Compare Heil Co. v. Evanston Ins. Co., 690
F.3d 722, 728 (6th Cir. 2012) with Wittmer, 864 S.W.2d at 885. Thus, the Court must resolve the
conflict in this case between Tennessee and Kentucky law.
“Federal courts hearing cases based on diversity must determine which state’s law to
apply to the case. This begins with an analysis of the choice-of-law rules of the forum
state . . . .” Wells Fargo Fin. Leasing, Inc. v. Griffin, 970 F. Supp. 2d 700, 707 (W.D. Ky. 2013).
Pogue’s claims are founded in both contract and in tort. Kentucky applies the “most significant
relationship” test in Section 188 of the Restatement (Second) of Conflict of Laws (1971) for
contract disputes and “any significant contacts” for tort actions. Saleba v. Schrand, 300 S.W.3d
177, 181 (Ky. 2009). All tort claims in this action arise out of the breach of contract claim. Since
the “most significant relationship” test is the more stringent test and the parties do not dispute
this test applies to all claims, Section 188 of the Restatement (Second) of Conflict of Laws
applies. The Court must consider several factors to determine which state has the most
significant relationship to the transaction. Griffin, 970 F. Supp. 2d at 710. These factors are: 1)
the place of contracting; 2) the place of negotiation of the contract; 3) the location of the subject
matter of the contract; 4) the place of performance; and 5) the domicile, residence, nationality,
place of incorporation and business of the parties. Id. at 707 n.4 (citation omitted). The Court
will consider each factor in turn.
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1.
The Place of Contracting
Principal Life argues that the place of contracting is Tennessee as Pogue originally
entered into the insurance agreement in Tennessee. (Def.’s Mot. to Dismiss 2). Pogue counters
that premium payments were made while he was a resident of Kentucky and each premium
payment constituted the “last act necessary” to form a contract. (Pl.’s Resp. to Def.’s Mot. to
Dismiss 7).
Kentucky law is unclear on the issue and neither party cites applicable law. In other
states, courts consider the “last act necessary” to form an insurance agreement as it relates to the
signing and countersigning of the agreement. See Steelcase, Inc. v. Am. Motorists Ins., No. G87553 CA1, 1989 WL 253892 (W.D. Mich. Feb. 24, 1989); see also Moody v. Kirkpatrick, 234 F.
Supp. 537, 540 (M.D. Tenn. 1964). While premium payments were a condition of continuing
coverage under the insurance agreement, the agreement at issue in this case was originally
signed, countersigned, and delivered in Tennessee. (Def.’s Mot. to Dismiss 4; Wallace Aff. 46).
Thus, this factor weighs in favor of the application of Tennessee law.
2.
The Place of Negotiation
Most insurance policies are considered contracts of adhesion under Kentucky law. See
Pryor v Colony Ins., 414 S.W.3d 424, 430 (Ky. App. 2013); see also Unlimited Marine, Inc. v.
Empire Indem. Ins. Co., No. 1:11-CV-00016-R, 2012 WL 1015458, at *9 (W.D. Ky. Mar. 22,
2012). Standard insurance agreements are not “negotiated” under Kentucky law. Jones v.
Bituminous Cas. Corp., 821 S.W.2d 798, 801-02 (Ky. 1991). “They are offered to the insurance
consumer on essentially a take it or leave it basis without affording the consumer a realistic
opportunity to bargain.” Id. (internal quotation marks omitted). Neither party makes a colorable
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claim that this agreement was negotiated in either Kentucky or Tennessee. Kentucky law is clear
that such contracts are not negotiated. Id. Thus, this factor is a wash.
3.
The Location of the Subject Matter of the Contract
Principal Life argues that the subject matter of the contract existed in Tennessee rather
than Kentucky. (Def.’s Reply to Pl.’s Resp. to Mot. to Dismiss 4). Since the contract at issue
involves disability income coverage which was predicated on the loss of Pogue’s Tennessee job
due to a disability that first arose in Tennessee, it appears the subject matter of the contract was
in Tennessee. (Def.’s Mot. to Dismiss 2). In addition, Pogue’s disability condition was first
diagnosed in Tennessee and all hearings that lead to the termination of Pogue’s medical license
occurred in Tennessee. (Def.’s Reply to Pl.’s Resp. to Mot. to Dismiss 4). Pogue has
demonstrated no facts which indicate the subject matter of the contract was in Kentucky. Thus,
this factor favors the application of Tennessee law.
4.
The Place of Performance
The Sixth Circuit has held that insurance agreements are “generally unilateral contracts”
in which the insured pays premiums in exchange for the insurance company’s promise to provide
insurance. Combs v. Int’l Ins. Co., 354 F.3d 568, 599 (6th Cir. 2004). Principal Life offers few
arguments in support of Tennessee as the place of performance. While many of the early events
that formed the contract occurred in Tennessee, the performance of the contract occurred in
Kentucky. Pogue upheld his side of the bargain by paying his premiums in Kentucky which,
while not sufficient to form the contract, was sufficient to perform under the original agreement.
See id.; (Pl.’s Resp. to Def.’s Mot. to Dismiss 7). In addition, Principal Life arguably failed to
perform when it denied Pogue’s claim while he was living in Kentucky and failed to make the
payment promised in the agreement. Thus, this factor favors the application of Kentucky law.
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5.
The Domicile, Residence, Nationality, Place of Incorporation and
Business of the Parties
This factor is clear. Pogue is currently domiciled in Kentucky. (Pl.’s Resp. to Def.’s Mot.
to Dismiss 7). Principal Life is incorporated and has its principal place of business in Iowa.
While Principal Life conducts business in Tennessee, it also conducts business in Kentucky and
maintains offices in the state. (Pl.’s Resp. to Def.’s Mot. to Dismiss 14). A Kentucky resident is
involved in this case and a Tennessee resident is not. Thus, this factor favors the application of
Kentucky law.
When applying the substantial relationship test to these facts, two factors favor the
application of Tennessee law and two favor Kentucky, while one is a wash. Yet, to apply
Tennessee law in this case would ignore the strong presumption of the application of Kentucky
law under the forum’s choice of law rules.
“Kentucky courts are very egocentric or protective concerning choice of law questions.”
Griffin, 970 F. Supp. 2d at 707 (citation omitted). “[T]here is a strong preference in Kentucky for
applying Kentucky law.” Id. “This provincial tendency has been recognized routinely by the
Sixth Circuit when applying Kentucky’s choice-of-law rules.” Id. (internal quotation marks
omitted) (citation omitted). In sum, when a Kentucky court has jurisdiction over the parties, the
Court’s “primary responsibility” is to follow Kentucky law. Id. Furthermore, Kentucky applies
the “most significant relationship test” as favoring the application of Kentucky law as long as
there are “sufficient contacts and no overwhelming interests to the contrary.” Harris Corp. v.
Comair, Inc., 712 F.2d 1069, 1071 (6th Cir. 1983) (internal quotation marks omitted) (citation
omitted). Thus, while Pogue must only show sufficient contacts with the transaction for
Kentucky law to apply, Principal Life must establish “overwhelming interests” to overcome the
presumption of the application of Kentucky law. Id.
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In this case, Principal Life points to notable events that occurred in Kentucky and the
factors of both the place of contracting and the subject matter of the contract favor the
application of Tennessee law. Yet, this is not enough to overcome the strong presumption
favoring the application of Kentucky law. Pogue was a Kentucky resident during the denial of
his claim, he paid insurance premiums while in Kentucky, and performance under the agreement
was to be ultimately rendered in Kentucky. Principal Life does not present “overwhelming
interests” to the contrary supporting the application of Tennessee law. Furthermore, Principal
Life conducts business in Kentucky, and the Court has established jurisdiction over the company.
Under such circumstances, it is the Court’s “primary responsibility” to apply Kentucky law in
this case. Griffin, 970 F. Supp. 2d at 707 (citation omitted).
Principal Life cites three cases from the Supreme Court as governing the conflict of law
question in this case. (Def.’s Reply to Pl.’s Resp. to Mot. to Dismiss 4-5). These cases indicate
that the forum’s choice of law may violate the full faith and credit clause of the U.S. Constitution
under circumstances where the forum state has no relation to the events that gave rise to the
action. Home Ins. Co. v. Dick, 281 U.S. 397, 410 (1930); John Hancock Mut. Life Ins. Co v.
Yates, 299 U.S. 178, 182 (1936); Allstate Ins. Co. v. Hague, 449 U.S. 302, 302-03 (1981). This
case, however, involves far more contacts related to the forum state than any of the cited cases.
Pogue is a Kentucky resident and maintained a Kentucky residency during the payment of
premiums and the ultimate denial of his claim. (Pl.’s Resp. to Def.’s Mot. to Dismiss 14). In
contrast, the claimants in the cases cited by Principal Life were life insurance beneficiaries with
only minimal connections to the chosen forum. In addition, in both Dick and Yates, the
defendants had virtually no connection to the forum state and few of the underlying facts that
gave rise to the claim occurred in the forum. See Dick, 281 U.S. at 402; Yates, 299 U.S. at 179.
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Here, Principal Life does business in the Kentucky and significant events that giving rise to the
action occurred in the state. (Pl.’s Resp. to Def.’s Mot. to Dismiss 14).
Furthermore, Principal Life cites Allstate Insurance Co. v. Hague as authority for
applying Tennessee law in this case. (Def.’s Reply to Pl.’s Resp. to Mot. to Dismiss 4-5). Yet
Hague is not supportive of Principal Life’s argument. Hague stands for the proposition that a
court need only to find minimal contacts to apply forum law. Hague, 449 U.S. at 318-19. Hague
supports the application of Kentucky law to this case, as this matter has several connections to
this state. Thus, Kentucky law applies to this action, and Principal Life’s motion must be denied.
V.
CONCLUSION
For the foregoing reasons, IT IS HEREBY ORDERED that Defendant Principal Life’s
Motion to Dismiss for Forum Non Conveniens or, in the Alternative, Transfer Venue and Motion
to Dismiss for Failure to State a Claim (DN 8) is DENIED.
Greg N. Stivers, Judge
United States District Court
September 24, 2015
cc:
counsel of record
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