Prusin v. Canton's Pearls, LLC et al
Filing
82
MEMORANDUM OPINION. Signed by Magistrate Judge Stephanie A Gallagher on 8/15/2017. (dass, Deputy Clerk)
Case 1:16-cv-00605-JKB Document 82 Filed 08/15/17 Page 1 of 12
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MARYLAND
KRISTOFER L. PRUSIN
Plaintiff
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vs.
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CANTON’S PEARLS, LLC, et al.
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Civil Action No.: JKB-16-605
Defendants
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MEMORANDUM OPINION
On March 2, 2016, Plaintiff Kristofer Prusin filed a complaint against Canton’s Pearls,
LLC (t/a “Canton Dockside”) and its owner, Eric K. Hamilton, (collectively, “the Defendants”)
under the Fair Labor Standards Act (“FLSA”) and Maryland State law. [ECF No. 1]. The case
has been referred to me for all discovery and related scheduling matters.
[ECF No. 18].
Presently pending is Plaintiff’s Motion to Exclude Defendants’ Supplemental Expert Report, as
well as the opposition and reply thereto. [ECF Nos. 66, 70, 76].
No hearing is
necessary. See Local Rule 105.6 (D. Md. 2016). For the reasons set forth herein, Plaintiff’s
motion will be DENIED.
I.
BACKGROUND
On July 28, 2016, Judge Bredar ordered, in relevant part, that the Defendants’ Rule
26(a)(2) expert disclosures were due on October 1, 2016. [ECF No. 12]. On October 3, 2016,
the Defendants produced an expert report from Anthony Pelura, a CPA candidate. [ECF No. 661]. In his report, Mr. Pelura opined that Canton Dockside owed Plaintiff $108.06 in unpaid
minimum and overtime wages. Id. Following other extensions, on March 28, 2017, this Court
entered a revised scheduling order that modified Plaintiff’s rebuttal expert report deadline to
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May 1, 2017, the parties’ supplementation deadline to May 19, 2017, and the discovery deadline
to May 31, 2017. [ECF No. 52]. On May 1, 2017, Plaintiff produced rebuttal expert reports
from Mr. Joel Heiserman and Mr. Alan Hayman. [ECF No. 66-22, pp. 1-55]. In their rebuttal
reports, Mr. Heiserman and Mr. Hayman opined that Canton Dockside’s service charges did not
qualify as wages under the FLSA. Id. On May 15, 2017, Plaintiff produced a supplemental
expert report from Mr. Hayman. Id. at p. 56. On May 19, 2017, the Defendants produced a
supplemental expert report from Mr. Pelura. [ECF No. 66-23]. In his supplemental report, Mr.
Pelura opined that Canton Dockside’s mandatory service charges were included in its gross
receipts, and therefore constituted wages under the FLSA. Id. On May 30, 2017, one day before
the close of discovery, Plaintiff filed the instant motion to exclude Mr. Pelura’s expert report and
his supplemental expert report. [ECF No. 66].
II.
LEGAL STANDARD
Federal Rule of Civil Procedure 26(a)(2)(A) requires a party to disclose “the identity of
any witness it may use at trial to present evidence under Federal Rule of Evidence 702, 703, or
705.” Fed. R. Civ. P. 26(a)(2)(A). In addition, Rule 26(a)(2)(B) requires parties to produce
written reports for any witness who is “retained or specially employed to provide expert
testimony in the case” or “whose duties as the party’s employee regularly involve giving expert
testimony.” Fed R. Civ. P. 26(a)(2)(B). An expert’s report must be detailed and complete, and
must include “a complete statement of all opinions the witness will express and the basis and
reasons for them [and] the facts or data considered by the witness in forming them.” Id.; see also
Osunde v. Lewis, 281 F.R.D. 250, 257 (D. Md. 2012) (“[T]he report must contain ‘a complete
statement of all opinions the witness will express,’ as well as the basis and reasons for those
opinions and the facts or data considered by the witness in forming his opinions.”); Fed. R. Civ.
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P. 26 advisory committee note (1993) (noting that the report “should be written in a manner that
reflects the testimony to be given” by the expert witness).
Federal Rule of Civil Procedure 26(e) requires that a Rule 26(a)(2) disclosure be
supplemented “in a timely manner if the party [making the disclosure] learns that in some
material respect the disclosure or response is incomplete.” Fed. R. Civ. P. 26(e)(1)(A). “[F]or an
expert whose report must be disclosed under Rule 26(a)(2)(B), the party’s duty to supplement
extends both to information included in the report and to information given during the expert’s
deposition.” Fed. R. Civ. P. 26(e)(2). This required supplementation, however, “does not create
a right to produce information in a belated fashion.” EEOC v. Freeman, 961 F. Supp. 2d 783,
797 (D. Md. 2013). “To construe supplementation to apply whenever a party wants to bolster or
submit additional expert opinions would [wreak] havoc on docket control and amount to
unlimited expert opinion preparation.” Campbell v. United States, 470 Fed. Appx. 153, 157 (4th
Cir. 2012) (citations and internal quotation marks omitted).
III.
ANALYSIS
Although his motion is only entitled “Motion to Exclude Supplemental Expert Report,”
Plaintiff appears to argue that Mr. Pelura’s original expert report should be excluded because it is
untimely and incomplete. [ECF No. 66, pp. 17-20]. Plaintiff also contends that Mr. Pelura’s
supplemental expert report should be excluded because it “contains entirely new and different
information and opinions” based on previously available materials in violation of Rule 26(e)(2).1
Id. In opposition, the Defendants argue that Mr. Pelura’s expert report is timely and complete,
and that his supplemental expert report is proper under Rule 26(e). [ECF No. 70, p. 17].
A. Mr. Pelura’s Original Expert Report
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Notably, Plaintiff does not argue that Mr. Pelura’s expert reports should be excluded under FRE 702. Rather,
Plaintiff notes that he “will address the admissibility of Mr. Pelura’s legal opinion in a Motion in Limine.” [ECF
No. 66, p. 17] (italics added).
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First, Plaintiff contends that Mr. Pelura’s expert report should be excluded because it is
untimely. [ECF No. 66, pp. 17-20]. Plaintiff correctly notes that the Defendants’ expert report
deadline was October 1, 2016. [ECF No. 12]. However, because October 1, 2016 was a
Saturday, the Defendants’ deadline was modified to October 3, 2016. Fed. R. Civ. P. 6(a)(1)(C)
(holding that “if the last day [of a period] is a Saturday, Sunday, or legal holiday, the period
continues to run until the end of the next day that is not a Saturday, Sunday, or legal holiday.”).
On October 3, 2016, then, the Defendants timely filed Mr. Pelura’s expert report. [ECF No. 661].
Second, Plaintiff contends that Mr. Pelura’s expert report should be excluded because it
is incomplete. [ECF No. 66, pp. 17-20]. As noted above, an expert’s report must be detailed and
complete, and must include “a complete statement of all opinions the witness will express and
the basis and reasons for them [and] the facts or data considered by the witness in forming
them.” Fed R. Civ. P. 26(a)(2)(B); see also Osunde v. Lewis, 281 F.R.D. 250, 257 (D. Md.
2012). Specifically, Rule 26 requires that an expert report contain: (1) the opinions a witness
will express and their basis; (2) the data considered by the witness; (3) any exhibits used to
support the witness; (4) the witnesses qualifications, including all publications authored in the
last ten years; (5) a list of all other cases that the witness testified as an expert; (6) and a
statement of compensation. See Fed. R. Civ. P. 26(a)(2)(B). In this case, Mr. Pelura’s report is
complete under Rule 26(a)(2)(B). Mr. Pelura opines that Canton Dockside’s service charge
payments counted towards the Defendants’ wage obligations under the FLSA. [ECF No. 66-1].
Specifically, Mr. Pelura opines that Plaintiff was “owed $108.06 for a minimum wage
adjustment for period of 3/25/2013 to 4/7/2013.” Id. To support his conclusion, Mr. Pelura
provides the basis for his opinion, notes the methodology he employed, and cites the data he
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considered. Id. Moreover, Mr. Pelura notes his qualifications, lists the only other case in which
he has testified as an expert, and provides a statement of his compensation in accordance with
Rule 26(a)(2)(B). Id. Although Mr. Pelura’s report is admittedly brief, it provides sufficient
information to satisfy Rule 26’s completeness requirement. Accordingly, exclusion of Mr.
Pelura’s expert report is unwarranted.
B. Mr. Pelura’s Supplemental Expert Report
Plaintiff also moves to exclude Mr. Pelura’s supplemental expert report because it
“contains entirely new and different information and opinions” based on previously available
evidence in violation of Rule 26(e)(2). [ECF No. 66, pp. 16-22]. Rule 26(e)(2) confers a duty
on all parties to supplement or correct any expert reports required to be disclosed under Rule
26(a)(2)(B). See Fed. R. Civ. P. 26(e)(2). Specifically, the rule requires that a Rule 26(a)(2)(B)
disclosure be supplemented “in a timely manner if the party [making the disclosure] learns that
in some material respect the disclosure or response is incomplete or incorrect.” Fed. R. Civ. P.
26(e)(1)(A). “Supplementation under the Rules means correcting inaccuracies, or filling the
interstices of a[n] incomplete report based on information that was not available at the time of
the initial disclosure.” Keener v. United States, 181 F.R.D. 639, 640 (D. Mont. 1998);
Congressional Air, Ltd. v. Beech Aircraft Corporation, 176 F.R.D. 513, 516 (D. Md. 1997)
(same). This required supplementation, however, “does not create a right to produce information
in a belated fashion.” EEOC v. Freeman, 961 F. Supp. 2d 783, 797 (D. Md. 2013) (citation
omitted). Indeed, “[t]o construe supplementation to apply whenever a party wants to bolster or
submit additional expert opinions would [wreak] havoc on docket control and amount to
unlimited expert opinion preparation.” Campbell v. United States, 470 Fed. Appx. 153, 157 (4th
Cir. 2012) (citations and internal quotation marks omitted).
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In this case, Plaintiff contends that, “Mr. Pelura’s supplemental report addressed an issue
entirely neglected and omitted from the expert report, i.e., the ‘gross receipts’ issue.” [ECF No.
66, p. 18]. Specifically, in his supplemental report, Mr. Pelura opined, “Canton Dockside
included the service charges (also known as mandatory gratuity) it received from customers in
[its] gross receipts.” [ECF No. 66-23, p. 3]. Mr. Pelura further opined that service charges
“were included as part of the total amounts received by the restaurant and commingled with
other income sources.” Id. To support his assertion, Mr. Pelura performed a series of new
calculations, previously omitted in his initial report, which assessed Plaintiff’s “effective hourly
rate,” and provided complex analyses of Canton Dockside’s sales data, tip totals, service charges,
and hourly wages. Id. at pp. 5-32. As a result of those calculations, and in contrast to Mr.
Pelura’s previous findings in his initial expert report, Mr. Pelura opined that Canton Dockside
owed Plaintiff $436.52 in unpaid minimum wage and overtime payments. [ECF No. 66-23, pp.
30-32]; see [ECF No. 66-1].
Mr. Pelura did not examine Canton Dockside’s gross receipts, calculate Plaintiff’s
effective hourly rate, or address the theory that mandatory service charges were “commingled”
with other income sources in his initial report. See [ECF No. 66-1]. Indeed, Mr. Pelura only
made brief mention of Canton Dockside’s mandatory service charge policy in his initial filing.
[ECF No. 66-1, p. 3] (noting that “Canton Dockside restaurant imposes a 15% mandatory service
charge.”); see [ECF No. 66-23, p. 2] (noting in his supplemental report that “[t]he initial report
was based on the assumption that Canton Dockside did have a policy of mandatory gratuity.”).
Mr. Pelura also concedes that his supplemental report was, in part, a “response to the report
produced by [Plaintiff’s expert] Joel Heiserman, CPA, CGMA,” and was based on materials that
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were available to him prior to his initial submission.2 [ECF No. 66-23, pp. 2-3] (noting that his
supplemental report was based on Canton Dockside’s payroll documents, employee time card
and job detail reports, employee sales and tip totals, income returns, and profit and loss
statements); [ECF No. 70, p. 11] (noting that, “[a]s with Mr. Pelura’s Initial Report, his
Supplemental Report was based on payroll reports, employee paystubs, and information
regarding sales from Canton Dockside and provided greater detail in the description of the
documents.”); see [ECF No. 66-1, p. 3].
However, as noted above, Rule 26(e) “permits
supplemental reports only for the narrow purpose of correcting inaccuracies or adding
information that was not available at the time of the initial report.” Bresler v. Wilmington Tr.
Co., 855 F.3d 178, 212 (4th Cir. 2017) (citation omitted); see id. (citing Minebea Co. v. Papst,
231 F.R.D. 3, 6 (D.D.C. 2005)) (excluding “supplement” that was a “substantial ‘refinement’ of
the original report, containing new or different material and providing additional information to
support specific elements of [the proponent’s] case”). Indeed, Rule 26(e) is not a “loophole
through which a party…who wishes to revise [their] disclosures in light of [their] opponent’s
challenges…can add to them to [their] advantage after the court’s deadline for doing so has
passed.” EEOC v. Freeman, 961 F. Supp. 2d 783, 797 (D. Md. 2013) (quoting Luke v. Family
Care & Urgent Med. Clinics, 323 Fed. Appx. 496, 500 (9th Cir. 2009)). Accordingly, because
Mr. Pelura’s supplemental report included new opinions outside the scope of the original report,
and relied on information that was available at the time of the initial report, it does not constitute
a valid supplement under Rule 26(e).
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In his supplemental report, Mr. Pelura also claims to have reviewed documents made available since his initial
expert report. [ECF No. 66-23, pp. 2-3]. However, Mr. Pelura notes that he relied on previously available evidence
– specifically, Canton Dockside’s sales reports, employee detail reports, and payroll records – to draw his
conclusions regarding Canton Dockside’s service charges and Plaintiff’s owed wages under the FLSA. Id. at pp. 4-5.
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Because the opinions disclosed in Mr. Pelura’s supplemental report do not qualify as a
supplement under Rule 26(e), his supplemental disclosure must be excluded under Rule 37(c)
unless the filing “was either substantially justified or harmless.” Campbell v. United States, 470
Fed. Appx. 153, 157 (4th Cir. 2012); Fed. R. Civ. P. 37(c). In Southern States Rack and Fixture,
Inc. v. Sherwin-Williams Co., the Fourth Circuit set forth several factors to guide district courts
in making this determination. A court may consider “(1) the surprise to the party against whom
the evidence would be offered; (2) the ability of that party to cure the surprise; (3) the extent to
which allowing the evidence would disrupt the trial; (4) the importance of the evidence; and (5)
the nondisclosing party’s explanation for its failure to disclose the evidence.” S. States Rack &
Fixture, 318 F.3d at 597. The nondisclosing party bears the burden of establishing that its Rule
26(a)(2) violation does not warrant preclusion. Id. at 597. While the Rule 37(c) sanction of
striking expert testimony is self-executing and automatic, see Fed. R. Civ. P. 37(c) advisory
committee note (1993), courts are conferred “broad discretion” in determining whether a party’s
noncompliance with Rules 26(a)(2) and (e) was substantially justified or harmless, S. States Rack
and Fixture, Inc., 318 F.3d at 596. District courts need not expressly consider each Southern
States factor when evaluating discovery violations. See Hoyle v. Freightliner LLC, 650 F.3d 321,
330 (4th Cir. 2011).
The Fourth Circuit has noted that the “basic purpose” of Rule 37(c) is to prevent surprise
and prejudice to the opposing party. S. States Rack and Fixture, Inc., 318 F.3d at 596. Thus,
four of the five factors articulated in Southern States—“surprise to the opposing party, ability to
cure that surprise, disruption of the trial, and importance of the evidence—relate mainly to the
harmlessness exception,” since the Court’s focus in determining whether preclusion is
appropriate should be on the prejudice that the opposing party will suffer if the testimony is
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admitted. Id. at 597. “[T]he remaining factor—the explanation for the nondisclosure—relates
primarily to the substantial justification exception.” Id.
Plaintiff contends that all these factors weigh in favor of excluding Mr. Pelura’s
supplemental expert report. [ECF No. 66, pp. 22-29]. Specifically, Plaintiff argues that Mr.
Pelura’s assertion that Canton Dockside included service charges in its gross receipts unfairly
deprived Plaintiff of the opportunity to adequately depose Mr. Pelura or to request additional
discovery materials in response to his supplemental report. Id. at p. 23. Additionally, Plaintiff
contends that the Defendants are unable to cure the surprise of the supplemental disclosure now
that discovery is closed, and claims that reopening discovery to do so would disrupt the trial
schedule. Id. at p. 27. Further, Plaintiff argues that the Defendants “cannot offer an objectively
reasonable explanation why it is necessary for [Mr. Pelura] to have issued additional, new, and
expanded opinions in their supplemental expert report” when the Defendants “have always been
in possession of the information necessary to form a full and complete report[.]” Id. at p. 28.
The Defendants, in contrast, maintain that exclusion of Mr. Pelura’s supplemental report
is unwarranted. Specifically, the Defendants argue that Plaintiff “understood the nature of [the]
Defendants’ Service Charge Defense arguments,” and that “Mr. Pelura’s Supplemental Report
further discloses supporting information[.]” [ECF No. 70, p. 16].
Additionally, assuming
without conceding error, the Defendants contend that Plaintiff may reopen discovery to depose
Mr. Pelura, thereby curing any harm stemming from the alleged surprise. [ECF No. 70, pp. 2224]. Moreover, the Defendants claim that a modification of the discovery schedule would not
disrupt the trial schedule, since a trial date has not been set. Id. Furthermore, the Defendants
claim that the opinions contained within Mr. Pelura’s supplemental report constitute “highly
important evidence for the Court to consider in its determination on the merits,” and were
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disclosed in a supplemental report – as opposed to Mr. Pelura’s initial report – due to the
Defendants’ “significant” discovery obligations, and the admitted difficulties in scheduling the
parties’ experts during tax season. Id. at pp. 24-25; see [ECF Nos. 45, 47].
Weighing these factors, exclusion of Mr. Pelura’s supplemental report is not appropriate.
As an initial matter, Plaintiff was on notice of the Defendants’ service charge defense as early as
October, 2016.
See [ECF No. 14, pp. 2-3].
In addition, despite the Defendants’ belated
supplemental disclosure, Plaintiff’s experts provided extensive analysis of Canton Dockside’s
gross receipts in their initial filings, for the purpose of discrediting Mr. Pelura’s opinion. [ECF
No. 66-22, p. 3] (Mr. Hayman’s expert report) (“It is my opinion that service charges are not
included in the ‘gross receipts,’ ‘gross sales,’ or ‘net sales.’”); id. at 7 (Mr. Heiserman’s expert
report) (“It is my opinion that service charges were not included in the gross receipts of the
Defendants’ operations.”).
Although the Defendants’ supplemental disclosure frustrated
Plaintiff’s ability to rebut the opinions contained therein, Plaintiff’s allegation of surprise is
largely unfounded. Moreover, Plaintiff’s harm “can be remedied, without derailing the [C]ourt’s
effort to achieve a just and timely resolution of this case.” Pennington Partners, LLC v. Midwest
Steel Holding Co., 271 F.R.D. 462, 464 (D. Md. 2010). Indeed, the appropriate resolution in this
case is to treat Mr. Pelura’s supplemental report as an improper Rule 26(e) disclosure that can be
rectified by a modification of the schedule.3 The Court is mindful that the discovery deadlines
3
This ruling is consistent with several cases in this circuit where, after balancing the Southern States factors, courts
have not automatically excluded the non-disclosing party’s expert witness pursuant to Rule 37(c). See Pennington
Partners, LLC, 271 F.R.D. at 464-65 (declining to strike defendant’s untimely supplemental expert disclosures in
favor of extending the discovery period so that the plaintiffs could conduct additional discovery, but prohibiting the
defendant from conducting additional discovery); Ace American Insurance Co. v. McDonald’s Corp., No. GLR-113150, 2012 WL 2523883, at *4-5 (D. Md. June 28, 2012) (finding the plaintiff’s 26(a)(2) disclosures were untimely
and incomplete, but substantially justified or harmless because the disclosures were essential to the plaintiff’s case);
Khosmukhamedov v. Potomac Elec. Power Co., No. AW-11-449, 2012 WL 1670152, at *3 (D. Md. May 11, 2012)
(finding that the plaintiffs’ untimely disclosed expert report was harmless because the plaintiffs could cure the
failure, the new evidence would not disrupt trial, and the evidence was important to the plaintiffs’ case).
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have been modified several times in this matter. See, e.g., [ECF Nos. 12, 16, 20, 44, 51].4
However, a brief extension of the discovery period to permit Plaintiff an opportunity to depose
Mr. Pelura or to provide further expert supplementation will not disrupt the trial, because there is
no scheduled trial date. Pennington Partners, LLC, 271 F.R.D. at 464 (“Given that the trial has
not yet been scheduled, and that affording the Plaintiffs the opportunity to have additional
discovery of [the experts’] supplemental opinions is an available option, however unsatisfactory
it is to—yet again—extend discovery, it is clear to me, under the factors articulated in Southern
States, 318 F.3d 592, that is the appropriate thing to do.”).
Furthermore, considering the
importance of the evidence to the ultimate determination of the case, a complete exclusion of Mr.
Pelura’s expert testimony regarding Canton Dockside’s mandatory service charges would
severely harm the Defendants’ position and is excessive, given that the Defendants’ error can
largely be cured without such drastic measures. See The Mayor and City Council of Baltimore v.
Unisys Corporation, No. 12-cv-614, 2013 WL 4784118, at *5 (D. Md. Sept. 5, 2013).
Accordingly, Plaintiff’s motion, [ECF No. 66], will be denied. However, Plaintiff will be
allowed 30 days to depose Mr. Pelura and/or to request further information regarding the
opinions contained within Mr. Pelura’s supplemental report. At the end of this 30-day period,
Plaintiff will have 21 days to supplement his expert disclosure, if so desired. Plaintiff’s reply
brief to his Motion for Summary Judgment will be due 14 days later, so that Plaintiff has an
opportunity to respond to Mr. Pelura’s supplemental report, which was cited by the Defendants
in their opposition. The scheduling order will be amended to reflect the limited extensions.
“Courts issue scheduling orders specifically to avoid such dilemmas, and they are intended to be
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However, contrary to Plaintiff’s assertion, these extensions were not “all the fault of the Defendants.” [ECF No.
66, p. 8]; see, e.g., [ECF Nos. 16, 20, 51].
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taken seriously.” Pennington Partners, 271 F.R.D. at 464. The Defendants will not be afforded
additional discovery or an additional opportunity to rebut Plaintiff’s experts.
IV.
CONCLUSION
For the reasons set forth herein, Plaintiff’s Motion to Exclude Defendants’ Supplemental
Expert Report, [ECF No. 66], is DENIED.
An implementing order shall follow denying Plaintiff’s motion, but granting the limited
schedule modification described above.
Dated: August 15, 2017
/s/
Stephanie A. Gallagher
United States Magistrate Judge
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