Richardson International (US) Limited et al v. Buhler Inc
Filing
112
ORDER ON FINAL PRETRIAL CONFERENCE - Counsel estimate the length of trial will consume not less than 3 days, not more than 12 days, and probably about 8 days. Trial is set for May 8, 2017. Ordered by Senior Judge Joseph F. Bataillon. (GJG)
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IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF NEBRASKA
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RICHARDSON INTERNATIONAL (U.S.)
LIMITED, and NATIONWIDE
AGRIBUSINESS INSURANCE COMPANY,
Plaintiffs,
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CASE NO. 8: 1k-~t.:on148
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ORDER ON FINAL PRETRIAL
CONFERENCE
v.
BUHLER INC.,
Defendant.
A final pretrial conference was held on the 11th day of April, 2017. Appearing for the
parties as counsel were:
1. For plaintiffs:
Nile Hicks (admitted pro hac vice)
Beattie Law Firm, P.C.
4300 Grand Avenue
Des Moines, IA 50312
Telephone: (515) 263-1000
Email: nile.hicks(Q)beattielawfinn.com
Note: Don Beattie will be participating in trial as co-counsel for Plaintiff but currently is
unable to appear at the Pretrial Conference due to an unavoidable conflict in Case No.
5:13-cv-04106-CJW (N.D. Iowa). Should the conflict in the Bruhn matter be resolved,
Attorney Beattie is expected to be present.
2. For defendant:
James J. Hartnett (admitted pro hac vice)
Rachel A. Osdoba (admitted pro hac vice)
Faegre Baker Daniels LLP
2200 Wells Fargo Center
90 South Seventh Street
US. I I I075974.02
,.
Minneapolis, MN 55402-3901
Telephone: (612) 766-7000
Fax: (612) 766-1600
Email: james.hartnett@faegrebd .com
Email: rachel.osdoba@faegrebd.com
(A)
exhibit lists.
Exhibits.
See attached Exhibit Lists and the parties' objections noted in the
Uncontroverted Facts. The parties have agreed that the following may be
accepted as established facts for purposes of this case only:
(B)
This case is about a fire that occurred at a grain processing plant located in South Sioux
City Nebraska on June 3, 2013. Richardson International was the owner of the plant at
the time of the fire . Nationwide Agribusiness Insurance Company is the insurance
company for Richardson International that paid to repair the plant after the fire. A
reference to Nationwide Agribusiness can be considered a reference to Richardson during
the course of this litigation. Buhler, Inc. is the owner of a company that supplied
commercial granola drying equipment to the plant in 1994 and 2008, and provided
additional services in the years leading up to the fire.
Plaintiff Nationwide Agribusiness Insurance Company, as subrogated party for the rights
and interests of Richardson International ("Nationwide Insurance") alleges that faulty
design of equipment designed, manufactured, and supplied by Buhler was responsible for
the damage claimed in this matter. Buhler denies that any fault in its design,
manufacturing, or supply of the equipment caused the fire and denies any responsibility
for the claimed damages.
Nationwide Insurance further alleges that the warmngs and instructions provided by
Buhler were inadequate. Buhler denies any fault in its warnings and instructions, and
denies any fault in causing the fire .
Buhler claims that the fire was caused by faulty operation and maintenance of the
equipment by Richardson. Nationwide Insurance denies that the fire was caused by
faulty operation and maintenance of the equipment by Richardson.
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Nationwide Insurance has asserted damages consisting of equipment repair, replacement,
facility cleaning, business interruption, and product loss. Buhler denies responsibility for
these damages.
Documents in this case from 2007 and 2008 may refer to 21 st Century Grain and
Aeroglide Corporation, but for the purposes of this case, you should assume that 21 st
Century Grain is the same as Richardson and Aeroglide Corporation is the same as
Buhler. For the purposes of this case summary, I will refer to the owner of the plant as
Richardson and the supplier of the equipment as Buhler.
The granola drying equipment that Richardson purchased from Buhler in 2007 was
intended to be used as part of a production line to make granola. Granola is made by
mixing oat flakes and other dry ingredients with a liquid syrup that binds the dry products
together into clumps. The equipment that Richardson purchased from Buhler in 2007 was
intended to dry the granola. The dryer at issue in this case was the second granola
production dryer at the plant, known as Granola Line 2.
(C)
Controverted and Unresolved Issues. The issues remaining to be determined
and unresolved matters for the court' s attention are :
[List all legal issues remaining to be determined, setting out in detail each element of the
claim or defense which is genuinely controverted (including issues on the merits and
issues of jurisdiction, venue, joinder, validity of appointment of a representative of a
party, class action, substitution of parties, attorney ' s fee and applicable law under which
it is claimed, and prejudgment interest).
injuries claimed.
Specify any special damages or permanent
In any negligence action, specify elements of negligence and
contributory negligence, if any.
Any other unresolved matters requiring the court' s
attention, such as possible consolidation for trial, bifurcated trials on specified issues, and
pending motions, shall also be listed.]
I.
1.
Choice of Law
See Defendant's Summary Judgment and Plaintiffs Resistance.
claims that North Carolina substantive law applies.
Plaintiff denies that North Carolina
substantive law applies and asserts that Nebraska law applies.
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Defendant
II.
Plaintifrs Causes of Action and Specifications of Fault
Plaintiff asserts the following causes of action and specifications of fault, which are denied
by Defendant.
1.
Defendant is strictly liable for failing to design adequate fire suppression into the
granola dryer supplied to Plaintiff;
2.
Defendant is strictly liable for designing a dryer in violation of NFP A 86 (1999) §
3-2.1 in failing to design out the fire hazards inherent in equipment operating at
elevated temperatures;
3.
Defendant is strictly liable for designing a dryer in violation of NFP A 86 (1999)
Chapter 11 in failing to design the granola dryer with an adequate fire protection
system;
4.
Defendant is strictly liable for violating NFPA 86 (1999) § 1-3.4 in failing to
comply with NFP A 86 requirements and demonstrating and documenting the
safety and validity of the design of the granola dryer;
5.
Defendant is strictly liable for designing a dryer in violation of NFPA 86 (2007) §
5.2.1 in failing to design out and minimize the fire hazard inherent in equipment
operating at elevated temperatures;
6.
Defendant is strictly liable for designing a dryer in violation of NFPA 86 (2007) §
14.1 in failing to conduct a study as to the need for fixed or portable fire
protection systems for the granola dryer;
7.
Defendant is strictly liable for designing a dryer in violation of FM Global DS 6-9
(2003) § 2.2.4.1 in failing to provide automatic fire suppression for the granola
dryer;
8.
Defendant is strictly liable for designing a dryer in violation of NFPA and FM
Global standards in violation of the contract terms;
9.
Defendant is strictly liable for failing to adequately warn Plaintiff concerning the
requirements for fire suppression on the granola dryer;
10.
Defendant is strictly liable for failing to adequately warn Plaintiff concerning the
requirements under NFPA 86 (1999) for fire suppression on the granola dryer;
11.
Defendant is strictly liable for failing to adequately warn Plaintiff concerning the
requirements under NFPA 86 (2003) for fire suppression on the granola dryer;
12.
Defendant is strictly liable for failing to adequately warn Plaintiff concerning the
requirements under NFP A 86 (2007) for fire suppression on the granola dryer;
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13.
Defendant is strictly liable for failing to adequately warn Plaintiff concerning the
requirements under FM Global DS 6-9 (2003) for fire suppression on the granola
dryer;
14.
Defendant is strictly liable for failing to adequately warn Plaintiff concerning
what to do in the event they smell a fire in the dryer by failing to place
instructions on the dryer itself;
15.
Defendant is strictly liable for failing to adequately warn Plaintiff concerning the
need to keep doors closed on the dryer until a fire has dissipated and it is safe to
enter the dryer;
16.
Defendant is negligent for failing to design adequate fire suppression into the
granola dryer supplied to Plaintiff;
17.
Defendant is negligent for designing a dryer in violation of NFP A 86 (1999) § 32.1 in failing to design out the fire hazards inherent in equipment operating at
elevated temperatures;
18.
Defendant is negligent for designing a dryer in violation of NFP A 86 (1999)
Chapter 11 in failing to design the granola dryer with an adequate fire protection
system;
19.
Defendant is negligent for violating NFPA 86 (1999) § 1-3.4 in failing to comply
with NFP A 86 requirements and demonstrating and documenting the safety and
validity of the design of the granola dryer;
20.
Defendant is negligent for designing a dryer in violation of NFPA 86 (2007) §
5.2.1 in failing to design out and minimize the fire hazard inherent in equipment
operating at elevated temperatures;
21.
Defendant is negligent for designing a dryer in violation of NFP A 86 (2007) §
14 .1 in failing to conduct a study as to the need for fixed or portable fire
protection systems for the granola dryer;
22.
Defendant is negligent for designing a dryer in violation of FM Global DS 6-9
(2003) § 2.2.4.1 in failing to provide automatic fire suppression for the granola
dryer;
23.
Defendant is negligent for designing a dryer in violation of NFP A and FM Global
standards in violation of the contract terms;
24.
Defendant is negligent for failing to adequately warn Plaintiff concerning the
requirements for fire suppression on the granola dryer;
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25.
Defendant is negligent for failing to adequately warn Plaintiff concerning the
requirements under NFPA 86 (1999) for fire suppression on the granola dryer;
26.
Defendant is negligent for failing to adequately warn Plaintiff concerning the
requirements under NFPA 86 (2003) for fire suppression on the granola dryer;
27.
Defendant is negligent for failing to adequately warn Plaintiff concerning the
requirements under NFP A 86 (2007) for fire suppression on the granola dryer;
28.
Defendant is negligent for failing to adequately warn Plaintiff concerning the
requirements under FM Global DS 6-9 (2003) for fire suppression on the granola
dryer;
29.
Defendant is negligent for failing to adequately warn Plaintiff concerning what to
do in the event they smell a fire in the dryer by failing to place instructions on the
dryer itself;
III.
Defendant's Legal & Factual Defenses
Defendant asserts the following defenses which have been briefed m support of
Defendant' s Motion for Summary Judgment. Plaintiff denies and resists the defenses on the
legal and factual grounds as stated in Plaintiffs previous filings.
Strict Liability - North Carolina Law
1.
There is no valid claim for strict liability in North Carolina for products liability
actions. Warren v. Colombo, 377 S.E.2d 249, 255 (N.C. 1989); N.C. Gen. Stat.§ 99B-l.l.
Strict Liability - Ne braska Law
2.
Under Nebraska law, to recover on a claim of strict liability, the plaintiff must
prove that:
(1) the defendant placed the product on the market for use and knew, or in the
exercise of reasonable care should have known, that the product would be used
without inspection for defects; (2) the product was in a defective condition when
it was placed on the market and left the defendant's possession; (3) the defect is
the proximate or a proximately contributing cause of the plaintiffs injury
sustained while the product was being used in a way and for the general purpose
for which it was designed and intended; (4) the defect, if existent, rendered the
product unreasonably dangerous and unsafe for its intended use; and (5) the
plaintiffs damages were a direct and proximate result of the alleged defect.
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Krajewski v. Enderes Tool Co., Inc. , 469 F.3d 705 , 708- 09 (8th Cir. 2006).
3.
Where a plaintiff had knowledge of a "defect prior to the accident and injury in
question, then that plaintiff has no basis for recovery in strict liability." NJI2d Civ. 11.20,
Comments & Authorities (emphasis added); see also Waegli v. Vaterpillar Tractor Co., 251
N.W.2d 370, 372 (Neb. 1977) (stating that under Nebraska law, " [t]here is no duty to warn of a
known danger.").
4.
Defendant claims that Plaintiffs cannot recover for strict liability for design defect
because they knew that the Dryer did not have sprinklers and used it anyway.
5.
Defendant claims that Plaintiffs cannot recover for strict liability for failure to
warn because they knew of the warnings and instructions on the equipment and in the Owner's
Manual; were aware of the risk of fire in the dryers based upon years of experience in dealing
with such fires; and had successfully employed the warnings and instructions provided by Buhler
to extinguish fires in dryers for nineteen years prior to the incident at issue.
Misuse Defense
6.
[A] misuse defense is available in a products liability case based on a theory of
recovery of strict liability." Jay v. Moog Auto, Inc., 652 N.W.2d 872, 885-886 (Neb. 2002).
7.
Misuse is a defense if the product's user' s actions were unforeseeable and the
proximate cause of the damages at issue. Carlson v. Freightliner LLC, 226 F.R.D. 343 , 358 (D.
Neb. 2004).
8.
Defendant claims that Richardson misused the dryer when its employees failed to
follow the instructions in the Owner's Manual (and those provided by their supervisor), and
therefore failed to shut down the dryer and promptly investigate and extinguish the fire, instead
allowing the dryer to continue running and failing to investigate the source of the fire for
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approximately ten minutes. Defendant claims that it was unforeseeable that Richardson's
employees would fail to follow the instructions in the Owner's Manual and those of their
supervisor, when they had done so previously, without incident, for nineteen years.
Negligent Products Liability - North Carolina Law
9.
Contributory negligence bars recovery in products liability actions. Nicolson v.
Am. Safety Util. Corp., 488 S.E.2d 240, 244 (N.C. 1997). The doctrine is codified at N.C. Gen.
Stat. § 99B-4; see also Fontenot v. Taser Int'l, Inc. , 736 F.3d 318, 327 (4th Cir. 2013). The
statute provides that no recovery for negligent product liability can be maintained if:
(1) The use of the product giving rise to the product liability action was contrary
to any express and adequate instructions or warnings delivered with,
appearing on, or attached to the product or on its original container or
wrapping, if the user knew or with the exercise of reasonable and diligent care
should have known of such instructions or warnings; or
(2) The user knew of or discovered a defect or dangerous condition of the product
that was inconsistent with the safe use of the product, and then unreasonably
and voluntarily exposed himself or herself to the danger, and was injured by
or caused injury with that product; or
(3) The claimant failed to exercise reasonable care under the circumstances in the
use of the product, and such failure was a proximate cause of the occurrence
that caused the injury or damage complained of.
10.
Defendant claims Plaintiffs' contributory negligence bars any recovery under
North Carolina law. Defendant claims Richardson was negligent when its employees failed to
follow the Owner's Manual's instructions provided by Buhler (and the instructions of their
supervisor) thus barring a products liability claim under N.C. Gen. Stat. § 99B-4(1).
11.
Defendant claims Richardson was negligent when its employees failed to exercise
reasonable care by ignoring a smoldering fire for ten minutes, contrary to the Owner's Manual
instructions and those of their supervisor, which allowed the fire to grow, which bars their
products liability claim under N.C. Gen. Stat. § 99B-4(3).
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12.
Defendant claims Richardson was aware of the lack of internal fire suppression
systems and and fire warnings on the dryer itself, yet continued to operate the dryer for five
years-including addressing occasional fires that occurred therein- which bars their products
liability claim under N.C. Gen. Stat. § 99B-4(2).
Spoliation Defens e
13.
An adverse instruction for spoliation is warranted when: (1) there is "a finding of
intentional destruction indicating a desire to suppress the truth, and (2) there must be a finding of
prejudice to the opposing party." Burris v. Gulf Underwriters Ins. Co., 787 F.3d 875, 879 (8th
Cir. 2015).
14.
Where litigation is reasonably foreseeable, a plaintiff has a duty to preserve
related evidence. Micron Tech. , Inc. v. Rambus Inc., 645 F.3d 1311 , 1319- 20 (Fed. Cir. 2011).
15.
Defendant claims that the dryer' s control systems data provides the only
incontrovertible evidence of what happened in the critical minutes from when smoke was first
detected to when the fire got out of control. Defendant claims that Plaintiffs failed to save the
control systems data. Plaintiff claims that Defendant lacks evidence of intentional destruction.
16.
Defendant claims it has been prejudiced by plaintiffs' spoliation of evidence, and
that spoliation should preclude plaintiffs from avoiding a finding of contributory fault. Plaintiff
claims that Defendant lacks evidence of prejudice.
Nebraska Law
17.
In order to recover under a negligence theory of products liability under Nebraska
law, a plaintiff must establish a duty, a breach, causation, and damages. Morris v. Chrysler
Corp., 303 N.W.2d 500, 502 (1981).
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18.
Where "[t]he duty [plaintiffs] seek to establish cannot be made without reference
to the contract, [then] such duties do not exist independent of the contract." Moglia v. McNeil
Co., 700 N.W.2d 608, 618 (Neb. 2005).
19.
While "one may sue in tort when there has been negligence in the performance of
a contract," the appropriate duty to consider in that situation is the "common-law duty to perform
with care, skill, reasonable expediency, and faithfulness the thing agreed to be done." Lincoln
Grain, Inc. v. Coopers & Lybrand, 345 N.W.2d 300, 305 (Neb. 1984).
20.
Defendant claims that performance of the contract between Buhler and
Richardson was the only duty owed by Buhler. Plaintiff denies that only contractual duties form
the basis of tort duties.
21.
Defendant claims that it did not breach any duty to provide a fire suppression
system with its dryer, because the contract expressly excluded fire suppression systems and
compliance with local legal requirements. Richardson was aware that the dryer did not have
internal fire suppression. The Nebraska State Fire Marshal inspected and approved Granola Line
2 in 2008 and did not insist that the dryer be equipped with an internal fire suppression system.
Plaintiff denies.
22.
Regarding plaintiffs' negligent failure to warn claim, "there is no duty to warn if
the user knows or should know of the potential danger, especially when the user is a professional
who should be aware of the characteristics of the product." Strong v. E.I DuPont de Nemours
Co., Inc., 667 F.2d 682, 687 (8th Cir. 1981).
23.
Defendant claims that Buhler owed no duty to warn of fire in the dryer, because
Richardson was well aware of the potential for fire , based on previous experience and the
instructions in the Owner's Manual. Buhler also owed no duty to warn because Richardson is a
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professional in the business of manufacturing granola, and knows of the inherent combustibility
of grain products.
Additional Defenses to Plaintiffs ' Claims
24.
Defendant claims that if there is any actionable liability of Buhler, the existence
of which is denied, Buhler alleges the defense of contributory negligence and/or comparative
fault.
25.
Defendant claims that it fully performed its duties under the contract between
Buhler and Richardson.
26.
Defendant claims that Plaintiffs' claims are barred by the doctrine of estoppel
with respect to their spoliation of critical control systems evidence.
27.
Defendant claims that Plaintiffs' claims are barred by the doctrine of waiver, to
the extent that the parties' contract specifically bars claims for incidental or consequential
damages, including lost profits.
Motions in Limine
The parties have filed various motions in limine. Defendant has filed a motion in limine
concerning all of Plaintiffs experts. Plaintiff resists. The parties have further filed motions in
limine as set forth in the pleadings which will be resisted following the pretrial order.
(D)
Witnesses. All witnesses, including rebuttal witnesses, expected to be called to
testify by plaintiff, except those who may be called for impeachment purposes as defined in
NECivR 16.2(c) only, are:
See attached Plaintiff's Witness List.
All witnesses expected to be called to testify by defendant, except those who may be
called for impeachment purposes as defined in NECivR 16.2(c) only, are:
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.
See attached Buhler's Witness List.
It is understood that, except upon a showing of good cause, no witness whose name and
address does not appear herein shall be permitted to testify over objection for any purpose except
impeachment. A witness whose only testimony is intended to establish foundation for an exhibit
for which foundation has not been waived shall not be permitted to testify for any other purpose,
over objection, unless such witness has been disclosed pursuant to Federal Rule of Civil
Procedure 26(a)(3). A witness appearing on any party's witness list may be called by any other
party.
(E)
Expert Witnesses' Qualifications. Experts to be called by plaintiff and their
qualifications are:
1.
A curriculum vitae of Plaintiffs expert, Ken Scurto, is attached.
2. A curriculum vitae of Plaintiffs expert, Dr. Thomas Schnell, is attached.
3. A curriculum vitae of Plaintiffs expert, James Maness, is attached.
Experts to be called by defendant and their qualifications are:
1. A curriculum vitae of Defendant's expert Richard J. Martin, PhD, PE, CFI, CFPS is
attached.
2. A curriculum vitae of Defendant's expert Gavin Huntley-Fenner, PhD is attached.
(F)
Voir Dire. Counsel have reviewed Federal Rule of Civil Procedure 47(a) and
NECivR 47.2(a) and suggest the following with regard to the conduct of juror examination:
Preliminary voir dire will be conducted by the Court. The parties will have the
opportunity for further examination, limited
to~
hour,i per side. In addition to background
preliminary questions, areas of inquiry for the Court may include the following:
1. What knowledge or experience do you have with:
a. Buhler, Inc.
b. Aeroglide Corporation
c. Richardson International (U.S.) Limited
d. Nationwide Agribusiness Insurance Company
e. ConAgra Foods, Inc.
f. 21st Century Grain Processors
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•.
g. Viterra/Glencore
h. Granola dryers
2. Have you ever worked in an industrial manufacturing facility? Or are you related to
anyone that has?
a. Who did you work for?
b. What was your job?
c. Did the company use outside contractors to provide good or services?
3. Have you ever worked with industrial dryers or ovens? In what capacity?
a. What knowledge or experience do you have with industrial dryers or ovens?
4. What knowledge or experience do you have with grain mills?
a. Have you ever worked at a grain mill? Has anyone in your family?
5. What knowledge or experience do you have related to fire suppression systems?
6. Has your home or workplace ever experienced a fire that resulted in damage to property?
7. What knowledge or experience do you have with commercial or industrial fires?
8. What knowledge or experience do you have with industrial food production/processing?
9. Does anyone have any degrees, licenses, certificates, or professional experience with:
a. Fire investigation?
b. Engineering of manufacturing equipment?
c. Ergonomics or human factors?
10. Aside from purchasing or consuming it, does anyone have any knowledge or experience
with the manufacturing of granola?
a. Does anyone have any knowledge or experience with the manufacturing of cereal,
grains, or other dry goods?
(G)
Number of Jurors. Counsel have reviewed Federal Rule of Civil Procedure 48
and NECivR 48.1 and suggest that this matter be tried to a jury composed of 8
members.
(H)
Verdict. The parties will not stipulate to a less-than-unanimous verdict.
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(I)
Briefs, Instructions, and Proposed Findings. Counsel have reviewed NECivR
39.2(a), 51.l(a), and 52.1, and suggest the following schedule for filing trial briefs, proposed jury
instructions, and proposed findings of fact, as applicable:
The Trial Brief and Proposed Jury Instructions will be filed by May 1, 2017.
[State any special requests.
Unless otherwise ordered, trial briefs, proposed jury
instructions, and proposed findings of fact shall be filed five (5) working days before the
first day of trial.]
Length of Trial. Counsel estimate the length of trial will consume not less than 3
day(s), not more than 12 day(s), and probably about 8 day(s).
(J)
(K)
Trial Date. Trial is set for May 8, 2017.
Dated: April 10, 2017
s/ Nile Hicks
Donald G. Beattie (Iowa Bar #AT0000736)
Nile Hicks (Iowa Bar #AT0009391)
BEATTIE LAW FIRM, P.C.
4300 Grand Ave.
Des Moines IA 50312
Telephone: 5(515) 263-1000
Fax: (515) 263-1411
E-mail: don.beattie@beattielawfirm.com
E-mail: nile.hicks@beattielawfirm.com
(Admitted pro hac vice)
ATTORNEYS FOR PLAINTIFFS
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Dated: April 10, 2017
s/ James J Hartnett
James J. Hartnett (admitted pro hac vice)
Rachel A. Osdoba (admitted pro hac vice)
FAEGRE BAKER DANIELS LLP
2200 Wells Fargo Center
90 South Seventh Street
Minneapolis, MN 55402-3901
Telephone: (612) 766-7000
Fax: (612) 766-1600
Email: james.hartnett@faegrebd.com
Email: rachel.osdoba@faegrebd.com
- andRex A. Rezac #17787
Elizabeth A. Culhane #23632
FRASER STRYKER PC LLO
409 S. 17th Street
500 Energy Plaza
Omaha, NE 68102
Telephone: (402) 341-6000
Fax: (402) 341-8290
E-mail: rrezac@fraserstryker.com
E-mail: eculhane@fraserstryker.com
ATTORNEYS FOR DEFENDANT
BY THE COURT:
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