MONTELEONE v. THE NUTRO COMPANY et al
Filing
41
OPINION fld. Signed by Judge Esther Salas on 6/30/16. (sr, )
NOT FOR PUBLICATION
UNITED STATES DISTRICT COURT
DISTRICT OF NEW JERSEY
DAMIAN MONTELEONE, an individual
and on behalf of all others similarly
situated,
Plaintiff
Civil Action No. 14-801 (ES) (JAD)
OPINION
v.
THE NUTRO COMPANY, a Delaware
corporation, et al.,
Defendants.
SALAS, DISTRICT JUDGE
Pending before the Court is the unopposed motion for attorneys’ fees, expenses, and
incentive award filed by Plaintiff on behalf of Plaintiff’s Counsel (“Class Counsel”). (D.E. Nos.
37, 38). On December 7, 2015, the Court held oral argument on, among other things, Plaintiff’s
and Defendants’ joint motion for final certification of settlement class and approval of class
settlement, notice procedures, and plan of allocation, (D.E. No. 34), as well as the instant motion
for attorneys’ fees, expenses, and incentive award, (D.E No. 38). (See D.E. No. 39). The Court
did not receive any objections. For the reasons stated herein, the Court GRANTS Plaintiff’s
motion for attorneys’ fees, expenses, and incentive award.
I.
FACTUAL BACKGROUND AND PROCEDURAL HISTORY
This action arises out of a class action complaint that was filed in New Jersey state court.
(See D.E. No. 1, Notice of Removal). Plaintiff alleges that Defendants The Nutro Company and
MARS, Inc. made false representations that certain dog kibble and biscuit products (the “Class
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Products”) contained a healthy, digestive probiotic additive referred to as Bacillus. (D.E. No. 381, Plaintiff’s Amended Memorandum of Law in Support of Unopposed Motion, (“Pl. Mov. Br.”)
at 2). According to Plaintiff, “this representation was false because Bacillus was essentially
missing from the Class Products.” (Id.).
On August 4, 2015, the Court granted the joint motion for preliminary approval of class
action settlement. (D.E. No. 33). On November 13, 2015, the parties filed a joint motion for final
certification of settlement class and approval of class settlement, notice procedures, and plan of
allocation (the “Class Settlement Motion”). (D.E. No. 34, Joint Motion). The Class Settlement
Motion discussed the settlement terms, which provided that Defendant will reserve up to $500,000
for a common fund to be distributed to individuals who purchased the Class Products during the
relevant time period (the “Settlement Class Members”). (D.E. No. 34-1, Memorandum of Law in
Support of Joint Motion at 5). Settlement Class Members may elect to receive a single payment
of $2.00 or a gift certificate for $5.00 towards the purchase of any Nutro product, or donate $5.00
worth of dry kibble to animal shelters. (Id.). In addition to the common fund, Defendants also
agree to donate $500,000 worth of dry kibble to animal shelters. (Id.).
On November 24, 2015, Plaintiff filed the instant unopposed motion for attorneys’ fees,
expenses, and incentive award on behalf of Class Counsel. (D.E. No. 38). Class Counsel is
seeking $370,000 in attorneys’ fees and expenses incurred by Gordon Rees Scully Mansukhani
LLP and Del Mar Law Group, LLP (Pl. Mov. Br. at 2, 9). Class Counsel is also seeking an
incentive award of $5,000 for Plaintiff Damian Monteleone in his capacity as class representative.
(Id.).
On December 7, 2015, the Court held a fairness hearing on the parties’ Class Settlement
Motion. (See D.E. No. 39). Based on the Class Settlement Motion and the arguments placed on
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the record during the fairness hearing, the Court concluded that class certification was warranted,
and approved final certification of the class under Federal Rule of Civil Procedure 23. (See id.).
The Court also concluded that the proposed settlement was fair, reasonable, and adequate under
Federal Rule of Civil Procedure 23(e). As such, the Court approved the class settlement. (See
id.).
The Court did, however, reserve ruling on Class Counsel’s requested attorneys’ fees,
expenses, and incentive award. The Court directed the parties to submit supplemental briefing
addressing whether the Court could consider the $500,000 charitable donation—the cy pres
award—as an aggregate portion of the settlement for the purposes of determining attorneys’ fees. 1
The Court also ordered Class Counsel to submit billing records for an in camera review.
II.
DISCUSSION
Federal Rule of Civil Procedure 23(h) provides that, “[i]n a certified class action, the court
may award reasonable attorney’s fees and nontaxable costs that are authorized by law or by the
parties’ agreement.” It further provides, in relevant part, that the following procedures apply:
(1)
A claim for an award must be made by motion under Rule 54(d)(2), subject
to the provisions of this subdivision (h), at a time the court sets. Notice of the motion
must be served on all parties and, for motions by class counsel, directed to class
members in a reasonable manner.
(2)
A class member, or a party from whom payment is sought, may object to
the motion.
(3)
The court may hold a hearing and must find the facts and state its legal
conclusions under Rule 52(a).
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Based on the parties’ joint submission, (D.E. No. 40), the Court is satisfied that it may consider the cy pres award in
the normal course, and that it need not give any special attention to the cy pres award—particularly when adopting
the lodestar method, as discussed below.
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A.
Attorneys’ Fees
The District Court abuses its discretion in awarding attorneys’ fees if it fails to: apply the
proper legal standard; follow proper procedures in making its determination; or base an award
upon findings of fact that are clearly erroneous. In re Cendant Corp. PRIDES Litig., 243 F.3d 722,
727 (3d Cir. 2001); see also In re Rite Aid Corp. Sec. Litig., 396 F.3d 294, 301-02 (3d Cir. 2005)
(“Notwithstanding our deferential standard of review of fee determinations, we have required
district courts to clearly set forth their reasoning for fee awards so that we will have a sufficient
basis to review for abuse of discretion. . . . [W]e remind the trial courts to engage in robust
assessments of the fee award reasonableness factors when evaluating a fee request.”). So, “[i]n a
class action settlement, the court must thoroughly analyze an application for attorneys’ fees, even
where the parties have consented to the fee award.” Varacallo v. Massachusetts Mut. Life Ins. Co.,
226 F.R.D. 207, 248 (D.N.J. 2005) (citing In re General Motors Corp., 55 F.3d 768, 820 (3d Cir.
1995)).
1.
Assessing Requested Fee
“Attorneys’ fees requests are generally assessed under one of two methods: the percentageof-recovery (‘POR’) approach or the lodestar scheme.” Sullivan v. DB Investments, Inc., 667 F.3d
273, 330 (3d Cir. 2011). The POR method is favored in cases involving a common fund, and is
designed to allow courts to award fees from the fund “in a manner that rewards counsel for success
and penalizes it for failure.” In re General Motors, 55 F.3d at 821. The lodestar method is
commonly applied in statutory fee-shifting cases, and is designed to reward counsel for
undertaking socially beneficial litigation in cases where the expected relief has a small enough
monetary value that a POR method would provide inadequate compensation. Id.
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The lodestar method is the appropriate method in the instant case. Class Counsel asserts
claims under the New Jersey Consumer Fraud Act, which contains a statutory fee-shifting
provision. See N.J.S.A. 56:8-19 (“In all actions under this section the court shall also award
reasonable attorneys’ fees, filing fees and reasonable costs of suit.”). Moreover, the Settlement
would not be depleted based on the amount of attorneys’ fees. Rather, attorneys’ fees, costs and
expenses, and the incentive award will be dispersed separately from the Settlement and will not
reduce the Settlement Class Members’ recovery. (Pl. Mov. Br. at 6, 15). For these reasons, the
Court concludes that the lodestar method is applicable. See Weber v. Gov’t Employees Ins. Co.,
262 F.R.D. 431, 449-50 (D.N.J. 2009) (concluding that the lodestar method was proper in a New
Jersey Consumer Fraud Act class action given the fee-shifting provision and where the award of
attorneys’ fee would not affect the settlement).
“A court determines the lodestar by multiplying the number of hours counsel reasonably
worked on a client’s case by a reasonable hourly billing rate for such services in a given
geographical area provided by a lawyer of comparable experience.” Gunter v. Ridgewood Energy
Corp., 223 F.3d 190, 199 (3d Cir. 2000). “The reasonable attorney rate is determined by reference
to the marketplace.” In re Ins. Brokerage Antitrust Litig., 297 F.R.D. 136, 157 (D.N.J. 2013).
Based upon their usual billing rates, Class Counsel calculated a combined lodestar amount
of $384,928: (1) 358.3 hours expended by Gordon Rees Scully Mansukhani LLP for a total lodestar
of $187,387.50; and (2) 466.3 hours expended by Del Mar Group, LLP for a total lodestar of
$197,540.50. (Pl. Mov. Br. at 8-9). Billing rates for both firms are outlined in the Declaration of
John H. Donboli. (See D.E. No. 38-2). Class Counsel did not submit blended rates. The lodestar
amount does not include any billable time after November 13, 2015. (Pl. Mov. Br. at 9 n.5).
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The Court concludes that Class Counsel’s lodestar calculation is appropriate. First, Class
Counsel expended a reasonable amount of time working on the instant nationwide class action.
Second, the Court concludes that Class Counsel’s billing rates are reasonable for their respective
geographic areas in comparable cases. Billing rates for Gordon Rees Scully Mansukhani LLP—
which is located in New Jersey—are as follows: $595 for senior partners; $550 for partners; $425
for associates; and $325 for paralegals. (D.E. No. 38-2, Declaration of John H. Donboli at 2).
When considering these billing rates, a blended (or average) rate would amount to approximately
$473. Billing rates for Del Mar Law Group, LLP—which is located in California—are as follows:
$495 for senior partners; $425 for partners; $375 for associates; and $325 for paralegals. (Id.).
When considering these billing rates, a blended (or average) rate would amount to approximately
$405. These rates—both the rates charged and the Court’s calculated blended rates—fall within
ranges approved by other courts in similar geographic areas for comparable cases. See In re
Mercedes-Benz Tele Aid Contract Litig., No. 07-2720, 2011 WL 4020862, at *7 (D.N.J. Sept. 9,
2011) (approving hourly rates ranging from $500 to $855 for partners and $265 to $445 for
associates in a complex class action litigation based on similar cases in other metropolitan areas);
Chaikin v. Lululemon USA Inc., No. 12-02481, 2014 WL 1245461, at *6 (S.D. Cal. Mar. 17, 2014)
(approving hourly rates ranging from $350 to $650 for a commercial class action litigation based
upon hourly rates approved by California state and federal courts).
Thus, when multiplying Class Counsel’s hours by their billing rates, the proposed lodestar
amount of $384,928 is appropriate. Moreover, multiplying Class Counsel’s blended billing rate
by the hours expended yields a lodestar amount of $358,327.40.
After determining the lodestar, the Court should divide the fee request by the lodestar to
arrive at a multiplier. See In re Rite Aid, 396 F.3d at 305-06; In re Schering-Plough Corp. Enhance
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Sec. Litig., No. 08-2177, 2013 WL 5505744, at *33 (D.N.J. Oct. 1, 2013). “In performing the
lodestar cross-check, the district courts should apply blended billing rates that approximate the fee
structure of all the attorneys who worked on the matter.” In re Rite Aid, 396 F.3d at 306.
Notably, “[t]he lodestar cross-check serves the purpose of alerting the trial judge that when
the multiplier is too great, the court should reconsider its calculation . . . with an eye toward
reducing the award.” Id. To be sure, “[e]ven when used as a cross-check, courts should ‘explain
how the application of a multiplier is justified by the facts of a particular case.’” Id. (quoting In
re Prudential, 148 F.3d at 340-41). Finally, in using the lodestar cross-check, “the district court
may rely on summaries submitted by counsel and need not review billing records.” In re ScheringPlough Corp. Enhance Sec. Litig., 2013 WL 5505744, at *33.
Here, Class Counsel submits that the total number of hours expended by attorneys and
paraprofessionals involved in this case is 824.6 hours. (Pl. Mov. Br. at 9). As previously stated,
Class Counsel did not submit a blended billing rate. Rather, Class Counsel submitted invoices
indicating that the attorneys and professionals billed at their normal rates, for a total lodestar of
$384,928. (Id.). Class Counsel seeks $370,000 in fees. (Id.). Dividing $370,000 by $384,928
yields a multiplier of 0.96. As to Class Counsel’s blended rates—calculated by the Court—
dividing $370,000 by $358,327.40 yields a multiplier of 1.03.
The Court concludes that the lodestar amounts of $384,928 and $358,327.40 and
multipliers of .96 and 1.03 are reasonable and appropriate. First, the lack of objections to the rates
and requested fee counsels heavily in favor of reasonableness. Moreover, after review of Class
Counsel’s in camera billing invoices, the Court is satisfied that the submitted number of 824.6
hours is accurate—minus a few hours entries that can be seen as unnecessary overlap between the
two firms. Finally, the Court concludes that the multiplier of .96 and 1.03 are more than reasonable
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in light of case precedent. See In re Cendant, 243 F.3d at 742 (stating that “[m]ultipliers ranging
from one to four are frequently awarded.”). Accordingly, the Court concludes that lodestar amount
and cross-check counsel in favor of approving the requested fee.
2.
Reasonableness
When reviewing attorneys’ fees in class action settlements, district courts should consider
the factors outlined in Gunter v. Ridgewood Energy Corp, 223 F.3d 190 (3d Cir. 2000) and In re
Prudential Ins. Co., 148 F.3d 283 (3d Cir. 1998). See In re AT&T Corp., 455 F.3d 160, 166 (3d
Cir. 2006). District courts should also utilize any other factors that are useful and relevant to the
particular facts of the case. Id. The reasonableness factors “need not be applied in a formulaic
way . . . and in certain cases, one factor may outweigh the rest.” In re Rite Aid, 396 F.3d at 301
(quoting Gunter, 223 F.3d at 195 n.1).
The Gunter factors are as follows:
(1) the size of the fund created and the number of persons benefitted; (2) the
presence or absence of a substantial objections by members of the class to the
settlement terms and/or fees requested by counsel; (3) the skill and efficiency of the
attorneys involved; (4) the complexity and duration of the litigation; (5) the risk of
nonpayment; (6) the amount of time devoted to the case by plaintiffs’ counsel; and
(7) the awards in similar cases.
In re Rite Aid, 396 F.3d at 301. In addition, the Court should also consider the following
Prudential factors:
(1) the value of benefits attributable to the efforts of class counsel as opposed to the
efforts of other groups, such as government agencies conducting investigations,
. . . (2) the percentage fee that would have been negotiated had the case been subject
to a private contingent fee arrangement at the time counsel was retained, . . . and
(3) any innovative terms of settlement.
In re AT&T Corp., 455 F.3d at 165.
The Court will consider the factors in turn.
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a.
Case Specific Considerations
As an initial matter, the Court notes that the lodestar amount in the instant case is $384,928.
However, Class Counsel is only seeking $370,000 in attorneys’ fees, as negotiated amongst the
parties. The Court concludes that the requested amount below the lodestar weighs in favor of
reasonableness. See Weber, 262 F.R.D. at 450 (noting that the amount of attorneys’ fees requested
was lower than the lodestar figure).
b.
The size of the fund created and the number of beneficiaries
The Settlement obtained in this action is $1,000,000. (Pl. Mov. Br. at 10). Pursuant to the
terms of the Settlement, $500,000 will be distributed to eligible Settlement Class Members who
purchased the Class Products during the relevant time period. (Id. at 3). The remaining $500,000
will be donated to animal shelters in the form of dry dog kibble. (Id.). The claims administrator
received 29,947 claims, from which 26,419 were eligible to receive reimbursement in the form of
a $2.00 check, $5.00 gift certificate, or a $5.00 donation. (Id. at 4).
Of the 29,947 claims
submitted, there were only three opt-outs, none of whom expressed dissatisfaction with the terms
of the Settlement. (Id.). Furthermore, there were no objections to the Settlement. (Id.). Given
the large size of the fund and number of potential beneficiaries, the Court finds that this factor
weighs in favor of approving the requested fee.
c.
The presence or absence of substantial objections by members of the
class to the settlement terms and/or fees requested by counsel
Again, out of the 29,947 claims that the claims administrator received, 26,419 were eligible
to receive compensation under the Settlement. (Id. at 4). Of the 29,947 claims received, there
were only three opt-outs—none of whom expressed objections to the Settlement. (Id. at 11).
Moreover, there are no objectors to the Settlement. “The absence of large numbers of objections
mitigates against reducing fee awards.” In re Cendant Corp., Derivative Action Litig., 232 F.
9
Supp. 2d 327, 337 (D.N.J. 2002).
Thus, given the complete absence of objections to the
Settlement, the Court concludes that this factor weighs in favor of approving the requested fee.
d.
The skill and efficiency of the attorneys involved
To determine the skill and efficiency of the attorneys involved, courts have looked to “the
quality of the result achieved, the difficulties faced, the speed and efficiency of the recovery, the
standing, experience and expertise of the counsel, the skill and professionalism with which counsel
prosecuted the case and the performance and quality of opposing counsel.” In re Ikon Office
Solutions, Inc. Sec. Litig., 194 F.R.D. 166, 194 (E.D. Pa. 2000).
Here, the Court concludes that this factor weighs in favor of the requested fee. Fairly early
on in the case, the parties recognized the benefit of mediation, which they attended before the
Honorable Mark B. Epstein (Ret.). (Pl. Mov. Br. at 8). Although mediation was unsuccessful,
Class Counsel continued settlement discussions with defense counsel. (Id.). The parties were
ultimately able to reach a settlement in an efficient timeframe. (Id.). Moreover, there is no reason
to believe that Class Counsel is anything but experienced and skilled—particularly given their
involvement in a very similar action in the State of California. Accordingly, the Court concludes
that this factor weighs in favor of approving the requested fee.
e.
The complexity and duration of the litigation
The Court concludes that this factor neither weighs in favor of nor against the fee. Indeed,
the instant case was removed to the District Court on February 7, 2014. (D.E. No. 1). By
September 2014, the parties had reached a settlement agreement in principle, and executed a final
settlement agreement on December 17, 2014. (Pl. Mov. Br. at 5). Thus, the duration of the
litigation was less than a year. Although this timeframe speaks to the efficiency of Class Counsel,
it does not speak favorably to the duration of the litigation.
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Nevertheless, this was a complex litigation. Indeed, this was a nation-wide class action
litigation. The Court concludes that duration and complexity balance each other out. Accordingly,
this factor neither weighs in favor nor against the requested fee.
f.
The risk of nonpayment
Class Counsel contends that the risk of nonpayment was high in the instant case given the
strength of Defense counsel. (Pl. Mov. Br. at 12). This is particularly true given that Class Counsel
accepted the case on a contingency basis. (See id. at 9 (“billed over 824.6 contingency fee hours
on this case.”)). In any event, the Court also recognizes the importance of encouraging attorneys
to take on complex class action litigation, and does not wish to deter attorneys from doing so.
Accordingly, the Court concludes that this factor weighs in favor of the requested fee.
g.
The amount of time devoted to the case by Class Counsel
Collectively, Class Counsel dedicated over 824.6 hours to this case. (Id.). The Court has
confirmed this figure by Class Counsel’s in camera submission, which includes separate time
entries from Del Mar Law Group, LLP and Gordon & Rees, LLP. The Court’s in camera review
did reveal duplicate or overlapping time entries. Nevertheless, Class Counsel is not requesting
fees for the total 824.6 hours. Indeed, Class Counsel billed a total of $384,928 for the 824.6 hours,
but is only requesting $370,000. (Id. at 8). The lower requested fee would account for any removal
of billable time that overlapped between the two firms.
The Court concludes that 824.6 hours is reasonable for a nationwide class action—with the
exception for California—that reached the motion to dismiss stage, entered mediation, and was
ultimately settled by the parties. Accordingly, this factor weighs in favor of approving the
requested fee.
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h.
The awards in similar cases
This factor asks the Court to look at awards in similar cases when assessing the
reasonableness of a fee request. See Gunter, 223 F.3d at 195 n.1. “This factor is addressed in two
ways: a court (1) compares the actual award requested to other awards in comparable settlements;
and (2) ensures that the award is consistent with what an attorney would have likely received if
the fee was negotiated on the open market.” Rowe, 2011 WL 3837106, at *21 (citation and
quotation marks omitted).
Class Counsel did not address this factor. Thus, the Court concludes that this factor is not
determinative.
i.
Benefits to eligible members attributable to Class Counsel
The Court concludes that this factor weighs in favor of approving the requested fee. The
benefits Settlement Class Members will receive is directly attributable to the efforts of Class
Counsel, rather than some other agency. Indeed, Class Counsel engaged in mediation with
Defendants, and continued settlement negotiations following unsuccessful mediation. There is no
indication that any government investigation was underway or imminent. Accordingly, the Court
concludes that this factor weighs in favor of approving the requested fee.
j.
Percentage fee that would have been negotiated had the case been
subject to a private contingent fee agreement
This factor requires the Court to determine what the market would pay for the attorneys’
efforts. See In re Diet Drugs (Phentermine, Fenfluramine, Dexfenfluramine) Products Liab. Litig.,
553 F. Supp. 2d 442, 482 (E.D. Pa. 2008), aff’d sub nom. In re Diet Drugs, 582 F.3d 524 (3d Cir.
2009). Class Counsel did not address this factor. Nevertheless, Class Counsel billed their normal
rates for this matter, and are requesting less than the amount billed. Accordingly, the Court
concludes that this factor slightly weighs in favor of approving the requested fee.
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k.
Innovative terms of settlement
The final factor counsels in favor of approving the requested fee. The settlement terms in
the instant case are highly innovative. The Settlement terms give Settlement Class Members
multiple options—including options other than simply receiving money. Moreover, the Settlement
also includes a large charitable donation. Importantly, the requested fee will not reduce the
settlement fund available to the Settlement Class Members. Accordingly, the Court concludes that
this factor weighs in favor of approving the requested fee.
Based on the above analysis, the Court grants Class Counsel’s motion for attorneys’ fees
in the amount of $370,000.
B. Costs
Class Counsel seeks $10,086.81 in costs—to be paid from the $370,000 requested fee. (Pl.
Mov. Br. at 9). In a class action, counsel “is entitled to reimbursement of expenses that were
adequately documented and reasonably and appropriately incurred in the prosecution of the class
action.” In re Safety Components, Inc. Sec. Litig., 166 F. Supp. 2d 72, 108 (D.N.J. 2001).
Here, Class Counsel submitted documentation of its expenses for in camera review. The
Court has no reason to believe that the expenses were nothing more than “adequately documented
and reasonably and appropriately incurred.” Id. Accordingly, the Court approves reimbursement
of the requested costs—to be paid out of the $370,000 requested fee.
C. Incentive award
Finally, Class Counsel seeks a $5,000 incentive award for the named Plaintiff Damian
Monteleone. (Pl. Mov. Br. at 15). There are no set factors to address when determining the amount
of incentive awards. Brady v. Air Line Pilots Ass’n, 627 F. App’x 142, 146 (3d Cir. 2015).
Here, Plaintiff expended a significant amount of time litigating this action on behalf of the
Class. (Id.). These efforts should not go unrecognized. Importantly, Class Counsel did not receive
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objections to the incentive award, and it will not reduce the Settlement available to the Settlement
Class Members. Accordingly, the Court approves the $5,000 incentive award to named Plaintiff.
III.
CONCLUSION
For the reasons stated above, the Court approves attorneys’ fees in the amount of $370,000,
expenses in the amount of $10,086.61, both to be paid from the $370,000, and $5,000 incentive
award. An appropriate Order accompanies this Opinion.
s/Esther Salas
Esther Salas, U.S.D.J.
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