Meridian Autonomous Inc. et al v. Coast Autonomous LLC et al
Filing
142
OPINION& ORDER re: 136 MOTION for Perry R. Clark to Withdraw as Attorney filed by Meridian USA, Global Resources Management Consultancy Inc., Meridian Autonomous Inc., For the reasons stated herein, Moving Defendants' m otion to dismiss is GRANTED. Accordingly, it is hereby:ORDERED that Counts 1, 3, 4, 9, 11, 1418, and 2224 of Plaintiffs' First Amended Complaint are dismissed as against the non-signatory Defendants, and Counts 2, 58, 10, 12, 13, 1921 are dismis sed as against all Defendants.IT IS FURTHER ORDERED that Plaintiffs' Counsel's motion to withdraw as attorney for Plaintiffs, (Doc. 136), is GRANTED.IT IS FURTHER ORDERED that, in light of Plaintiffs' representation in related case Coa st Autonomous, LLC et al. v. Global Resources Management Consultancy, Inc. et al., 17-cv-8422, that the related case and the instant case "involve the same parties, property, transactions, and events," (Related Case Statement, 17-cv-8422, D oc. 45), as well as Plaintiff's representations in the instant case that "the Defendants' parallel case [] deals with the same facts and issues as this case," (Doc. 129, at 1), the parties are directed to meet and confer and submi t a joint letter on the docket in 17-cv-8422, no later than January 31, 2020, proposing a course of action in the related case.The Clerk of Court is respectfully requested to close the open motions at Documents 108 and 136, and is further directed to terminate this case.SO ORDERED. Attorney Perry Clark terminated. (Signed by Judge Vernon S. Broderick on 1/30/2020) (rro) Transmission to Docket Assistant Clerk for processing.
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK
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:
MERIDIAN AUTONOMOUS INC.,
:
MERIDIAN USA, INC., and GLOBAL
:
RESOURCES MANAGEMENT
:
:
CONSULTANCY INC.,
:
:
Plaintiffs,
:
- against :
:
:
COAST AUTONOMOUS LLC, PHOENIX :
WINGS, LTD., EMAPSCAN LLC, PIERRE :
:
LEFEVRE, MATTHEW LESH, COREY
CLOTHIER, CYRIL ROYERE, JONATHAN :
:
GARRETT, and ADRIAN SUSSMANN,
:
Defendants. :
:
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Appearances:
Perry R. Clark
Law Offices of Perry R. Clark
Palo Alto, California
Counsel for Plaintiffs
David M. Hickey
Hickey Smith LLP
Pasadena, California
Christian Dodd
Hickey Smith LLP
Jacksonville, Florida
Peter E. Perkowski
Perkowski Legal, PC
Los Angeles, California
Counsel for Defendants
1/30/2020
17-CV-5846 (VSB)
OPINION & ORDER
VERNON S. BRODERICK, United States District Judge:
Plaintiffs Global Resources Management Consultancy, Inc. (“GRMC”), Meridian
Autonomous, Inc., and Meridian USA, Inc. (together, “Plaintiffs”) bring this action against
Defendants Coast Autonomous LLC (“Coast”), Phoenix Wings, Ltd. (“Phoenix Wings”),
eMAPscan LLC (“eMAPscan”), Pierre Lefevre, Matthew Lesh, Corey Clothier, Cyril Royere,
Jonathan Garrett, and Adrian Sussmann (together, “Defendants”), alleging federal and state law
claims related to the alleged misappropriation of Plaintiffs’ physical and intellectual property by
Defendants. On September 30, 2018, I issued an Opinion & Order dismissing Counts 1, 3, 4, 9,
11, 14–18, and 22–24 of Plaintiffs’ First Amended Complaint (“September 30 Opinion &
Order”), (Doc. 94), as against Defendants Lefevre, Phoenix Wings, and Royere (“signatory
Defendants”), concluding that these counts were subject to the parties’ agreement to arbitrate,
(Doc. 130). However, I reserved decision on Defendants’ motion to dismiss with regard to the
remaining counts in the First Amended Complaint and with regard to application of the
arbitration clauses to Defendants Lesh, Clothier, Garrett, Sussmann, and eMAPscan (“nonsignatory Defendants”), who were not signatories to the arbitration agreements. Because I find
that (1) Plaintiffs are estopped from avoiding arbitration against the non-signatory defendants,
and (2) the remaining counts are encompassed by the broad language of the arbitration clauses, I
dismiss Counts 1, 3, 4, 9, 11, 14–18, and 22–24 of Plaintiffs’ First Amended Complaint as
against the non-signatory Defendants, and dismiss the remaining counts (2, 5–8, 10, 12, 13, 19–
21) against all Defendants.
2
Procedural History 1
In the September 30 Opinion & Order, I directed the parties to submit additional briefing
regarding (1) whether the remaining claims in the Amended Complaint fall within the scope of
the arbitration clauses in the parties’ agreements, and (2) whether the non-signatory defendants
are nevertheless subject to arbitration. (Doc. 130, at 16.) In compliance with my order,
Plaintiffs filed a statement in opposition to dismissal on October 22, 2018, (Doc. 131), and
Defendants filed a response in support of dismissal on November 5, 2018, (Doc. 132).
Legal Standards
The Federal Arbitration Act (“FAA”), 9 U.S.C. § 1 et seq., provides that a contractual
arbitration provision “shall be valid, irrevocable, and enforceable, save upon such grounds as
exist at law or in equity for the revocation of any contract,” 9 U.S.C. § 2. In creating “a body of
federal substantive law of arbitrability, applicable to any arbitration agreement within [its]
coverage,” the FAA was “a congressional declaration of a liberal federal policy favoring
arbitration agreements, notwithstanding any state substantive or procedural policies to the
contrary.” Moses H. Cone Mem’l Hosp. v. Mercury Constr. Corp., 460 U.S. 1, 24 (1983).
“Today federal policy strongly favors arbitration as an alternative dispute resolution forum.”
Leadertex, Inc. v. Morganton Dyeing & Finishing Corp., 67 F.3d 20, 24–25 (2d Cir. 1995).
Notwithstanding the strong policy in favor of arbitration agreements, “a party cannot be required
to submit to arbitration any dispute which he has not agreed so to submit.” In re Am. Express
Fin. Advisors Sec. Litig., 672 F.3d 113, 127 (2d Cir. 2011) (quoting Howsam v. Dean Witter
Reynolds, Inc., 537 U.S. 79, 83 (2002)).
1
I incorporate by reference the facts contained in the Background section of the September 30 Opinion & Order,
and only add in this opinion subsequent procedural history.
3
The Second Circuit has “repeatedly found that non-signatories to an arbitration
agreement may nevertheless be bound according to ordinary principles of contract and agency.
These principles include (1) incorporation by reference; (2) assumption; (3) agency; (4) veilpiercing/alter ego; and (5) estoppel.” Smith/Enron Cogeneration Ltd. P’ship, Inc. v. Smith
Cogeneration Int’l, Inc., 198 F.3d 88, 97 (2d Cir. 1999) (citations and internal quotation marks
omitted). The Second Circuit has applied the doctrine of estoppel where a non-signatory to an
arbitration agreement seeks to arbitrate certain claims against a signatory. Id. at 98.
Under principles of estoppel, “[a] non-signatory who attempts to compel arbitration []
must demonstrate that: (1) ‘the issues the nonsignatory is seeking to resolve in arbitration are
intertwined with the agreement that the estopped party has signed,’ and (2) the ‘relationship
among the parties . . . justifies a conclusion that the party which agreed to arbitrate with another
entity should be estopped from denying an obligation to arbitrate a similar dispute with the [nonsignatory].’” Medidata Sols., Inc. v. Veeva Sys. Inc., 748 F. App’x 363, 366 (2d Cir. 2018)
(summary order) (citing Ragone v. Atl. Video at Manhattan Ctr., 595 F.3d 115, 127 (2d Cir.
2010)). Such a conclusion is justified when there exists “a relationship among the parties which
either support[s] the conclusion that [the signatory] had consented to extend its agreement to
arbitrate to [the non-signatory], or, otherwise put, [makes] it inequitable for [the signatory] to
refuse to arbitrate on the ground that it had made no agreement with [the non-signatory].” Sokol
Holdings, Inc. v. BMB Munai, Inc., 542 F.3d 354, 361 (2d Cir. 2008); see also Republic of Iraq
v. BNP Paribas USA, 472 F. App’x 11, 14 n.3 (2d Cir. 2012) (summary order). The Second
Circuit has stated that “the estoppel inquiry is fact-specific.” Ross v. Am. Exp. Co., 547 F.3d
137, 144 (2d Cir. 2008) (quoting JLM Indus., Inc. v. Stolt–Nielsen S.A., 387 F.3d 163, 178 (2d
Cir. 2004)).
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Discussion
Plaintiffs argue that an obligation to arbitrate must be based on a party’s consent, and that
the relationship between Plaintiffs and the non-signatory Defendants is insufficient to support
arbitration based on estoppel. Defendants assert that the claims against the non-signatory
Defendants are pled in a group-pleading format and are inextricably linked to the claims I
previously dismissed based on the parties’ agreement to arbitrate. In addition, Defendants argue
that arbitration based on estoppel is appropriate in the instant case because Plaintiffs’ claims
against the non-signatory Defendants are intertwined with the underlying agreements, and the
non-signatory Defendants have a relationship with the signatories to the agreements that is
sufficiently close to support arbitration on the basis of estoppel.
A.
The Issues Raised Are Intertwined
Here, there does not appear to be a dispute that the issues raised in the claims against the
non-signatory Defendants are intertwined with the underlying agreements giving rise to
arbitration. As Defendants argue, “the allegations are so intertwined that they are made against
all Defendants in group pleading format.” (Doc. 131, at 3.) In fact, Plaintiffs’ civil conspiracy
claim—Count 12—alleges that the Defendants entered into an agreement between themselves to
commit the alleged acts that serve as the basis for Plaintiffs’ other claims, which include claims I
have already concluded are subject to arbitration. (Doc. 94 ¶ 160.) Pleading concerted action
between a non-signatory Defendant and a signatory Defendant is evidence that claims between
the parties are intertwined. See Ragone, 595 F.3d at 128 (concluding that claims against a nonsignatory Defendant were intertwined with a dispute under an arbitration agreement when
“claims of unlawful harassment and retaliation against [signatory and non-signatory defendants]
rely on the concerted actions of both defendants”). Similarly, the Second Circuit has found a
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claim to be intertwined with an arbitration agreement when that claim involved allegations of
tortious interference with the contract giving rise to arbitration. Sokol Holdings, Inc., 542 F.3d at
358–59 (“Because Sokol must prove Tolmakov’s breach of the Emir Contract in order to make
out its claim for [non-signatory] BMB’s tortious interference with the contract, [the tortious
interference] claim is ‘intertwined’ with the Emir Contract.”). The factual issues underlying
Plaintiffs’ claims here are similarly intertwined.
Plaintiffs do not seriously contest this conclusion, but instead oppose only Defendants’
demonstration of the second estoppel factor. (See Doc. 131, at 4 (“Defendants’ argument is that
‘the allegations are so intertwined that . . . they are made against all defendants in group pleading
format.’ [] But assuming that this is true—which it is not—a finding that allegations are
‘intertwined’ is not all that is required to find that a party is obligated to arbitrate on the basis of
estoppel.”)) (internal citation omitted). For these reasons, I find that Defendants have satisfied
the first factor required by the estoppel analysis.
B.
The Parties’ Relationship Justifies Estoppel
The relationship among the parties is sufficiently close and formal to justify the
conclusion that estoppel is appropriate, satisfying the second factor required by the estoppel
analysis. When assessing relationships between signatories and non-signatories to an arbitration
agreement, the Second Circuit has noted that estoppel cases “have tended to share a common
feature in that the non-signatory party asserting estoppel has had some sort of corporate
relationship to a signatory party; that is, [the Circuit] has applied estoppel in cases involving
subsidiaries, affiliates, agents, and other related business entities.” Ross v. Am. Exp. Co., 547
F.3d 137, 144 (2d Cir. 2008) (citing Contec Corp. v. Remote Solution Co., 398 F.3d 205, 209 (2d
Cir. 2005) (holding that post-merger survivor corporation could invoke arbitration agreement
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signed by corporation subsumed in merger); JLM Industries, 387 F.3d at 178 (holding that
plaintiffs could not avoid arbitration of antitrust conspiracy claim where plaintiffs argued that the
conspiratorial conduct giving rise to claim was undertaken by non-signatory parent companies
rather than contracting subsidiaries); Astra Oil Co., Inc., 344 F.3d 276, 280 (2d Cir. 2003)
(compelling arbitration where plaintiff acted toward non-signatory affiliated corporation “as if it
were signatory”); Smith/Enron Cogeneration Ltd. P’ship, 198 F.3d at 97 (compelling plaintiff to
arbitration where “it treated a group of related companies as though they were
interchangeable”)). In one case, the Circuit applied principles of estoppel to compel arbitration
where a signatory admitted and knew that when she signed an arbitration agreement with her
employer, “she would work with and be supervised by [non-signatory] personnel in the ordinary
course of her daily duties.” Ragone, 595 F.3d at 128 (“This knowledge that she would
extensively treat with ESPN personnel is sufficient to demonstrate the existence of a relationship
between Ragone and ESPN that allows the latter to avail itself of the arbitration agreement
between Ragone and AVI.”). The Circuit has distinguished the above types of cases from cases
in which “a defendant [] became ‘aligned or associated’ with a signatory to [an] arbitration
agreement ‘by wrongfully inducing [the signatory] to breach its obligation [to the plaintiff] under
that contract.’” Medidata Sols., Inc., 748 F. App’x at 367 (internal citation omitted); see also
Ross, 547 F.3d at 146 (rejecting estoppel because the defendant credit card company’s “only
relation” with agreements between holders of competitor cards and issuing banks “was as a third
party allegedly attempting to subvert the integrity of the cardholder agreements”).
Plaintiffs’ relationship with the non-signatory Defendants demonstrates that Plaintiffs not
only treated the non-signatory Defendants as affiliates of the signatory Defendants, but also
“admitted and knew” that the non-signatory Defendants would be involved in the performance of
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the agreements giving rise to arbitration. Ragone, 595 F.3d at 128. The First Amended
Complaint specifically alleges that “Defendants Royere, Clothier, Lesh, Garret, Sussman,
eMAPscan, Phoenix Wings, and Coast are, at least, employees, agents, partners, advisors,
subsidiaries, or affiliates of Defendant Lefevre.” (Doc. 94 ¶ 117). Thus, Plaintiffs admit that
this case involves the same “common feature” found in most Second Circuit estoppel cases, “that
the non-signatory part[ies] asserting estoppel [] had some sort of corporate relationship to a
signatory party.” Ross, 547 F.3d at 144; see also Carroll v. LeBoeuf, Lamb, Greene & McCrae,
374 F.Supp. 2d 375, 378 (S.D.N.Y.2005) (because signatory plaintiffs “specifically and
repeatedly allege” that signatory defendant “acted at all relevant times [as] the agent” of nonsignatory defendants, plaintiffs were estopped from avoiding arbitration with non-signatories). 2
In addition, as Plaintiffs admit, they are the ones that brought the individual non-signatory
Defendants into the fold. (Doc. 94 ¶ 23 (“In addition to Defendant Lefevre, Plaintiffs brought
Defendants Clothier, Garret, Lesh, Royere, and Sussman into the autonomous vehicle project as
employees.”).) Indeed, the individual non-signatory defendants worked at Plaintiffs’ facilities in
Florida on the autonomous vehicle project created by the parties’ agreements because of
Plaintiffs. (Doc. 94 ¶ 30.) Plaintiffs entrusted these defendants as managing agents of Plaintiffs’
Florida facilities and provided them complete control over access and security of the facilities in
connection with the autonomous vehicle project. (Id); cf. Birmingham Assocs., Ltd. v. Abbott
Labs., 547 F. Supp. 2d 295, 304 (S.D.N.Y.2008) (finding estoppel appropriate in part because a
2
It is also likely that Plaintiffs could be bound to arbitrate against the non-signatory defendants based on an agency
theory. “The Second Circuit has noted that ‘it remains an open question’ whether a non-signatory may proceed to
arbitration against a signatory under any theory other than estoppel.” McLaughlin v. MacQuarie Capital (USA) Inc.,
No. 17-CV-9023(RA), 2018 WL 3773992, at *4 n.5 (S.D.N.Y. Aug. 7, 2018) (citing Ross v. Am. Express Co., 547
F.3d 137, 143 n.3 (2d Cir. 2008)). “Until that path is definitively foreclosed, however, ‘[c]ourts in this and other
circuits consistently have held that employees or disclosed agents of an entity that is a party to an arbitration
agreement are protected by that agreement.’” Id. (citing Campaniello Imps., Ltd. v. Saporiti Italia S.p.A., 117 F.3d
655, 668 (2d Cir. 1997) (citation omitted); accord Roby v. Corp. of Lloyd’s, 996 F.2d 1353, 1360 (2d Cir. 1993)).
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non-signatory parent company “participated” in a drug development program established by the
relevant contract, and thus signatory plaintiff “could have foreseen . . . it might be required to
arbitrate” with the parent company).
The facts also indicate that the non-signatory Defendants were not mere peripheral “third
part[ies] [who] allegedly attempt[ed] to subvert the integrity of the [signatories’ agreements].”
Ross, 547 F.3d at 146. Instead, the relationship between Plaintiffs and the non-signatory
Defendants predates any alleged subversion of Plaintiffs’ rights under the agreements. This was
by Plaintiffs’ design because, as stated, Plaintiffs hired the non-signatory Defendants to carry out
the performance of the agreements in question. Accordingly, the “relationship among the parties
[] support[s] the conclusion that [Plaintiffs] had consented to extend [their] agreement to
arbitrate to [the non-signatory Defendants], or, otherwise put, [makes] it inequitable for
[Plaintiffs] to refuse to arbitrate on the ground that [they] had made no agreement with [the nonsignatory Defendants].” Sokol Holdings, Inc., 542 F.3d at 361. The second factor of the
estoppel analysis is therefore satisfied.
C.
The Remaining Claims
In the September 30 Opinion & Order I declined to dismiss Counts 2, 5–8, 10, 12, 13,
19–21 of the First Amended Complaint because Defendants only identified these counts as being
subject to arbitration in their reply brief. (Doc. 130, at 15.) However, after reviewing the
parties’ supplemental briefing, and in light of my conclusion above that the issues raised in all of
Plaintiffs’ claims are intertwined with the claims subject to arbitration, I now dismiss all the
claims in the Amended Complaint as being subject to arbitration.
The arbitration provision to the underlying agreement states that:
Any dispute, controversy or claim arising out of or relating to this Agreement, or
the breach, termination or invalidity thereof, the Parties shall seek to solve amicably
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through negotiations. If the Parties do not reach an amicable solution within two
(2) weeks, any dispute[,] controversy or claim shall be finally settled by arbitration
in the State of New York that shall have exclusive jurisdiction over all disputes
arising in connection with this Agreement.
(Lefevre Decl. Ex. B, § 6; id. Ex. C, § 18.) 3 This type of arbitration clause is incredibly broad.
See Paramedics Electromedicina Comercial. Ltda v. GE Med. Sys. Info. Techs., Inc., 369 F.3d
645, 649 (2d Cir. 2004) (clause requiring arbitration for “any controversy, claim or dispute
between the Parties arising out of or relating in any way to this Agreement” was “of the broad
type”); Vera v. Saks & Co., 335 F.3d 109, 117 (2d Cir. 2003) (language in collective bargaining
agreement requiring arbitration of “[a]ny dispute, claim, grievance or difference arising out of or
relating to this Agreement which the Union and the Employer have not been able to settle”
constituted a broad arbitration clause); Smith/Enron Cogeneration Ltd. P’ship. Inc., 198 F.3d at
98–99 (clause providing that “[a]ny Dispute that is not resolved by the parties shall be finally
settled by arbitration” was broad). The broad nature of the arbitration clause, combined with the
rule “that doubts as to whether a claim falls within the scope of [an] agreement should be
resolved in favor of arbitrability,” ACE Capital Re Overseas Ltd. v. Central United Life Ins. Co.,
307 F.3d 24, 28 (2d Cir. 2002) (quotation marks and citations omitted), compels the conclusion
that Counts 2, 5–8, 10, 12, 13, 19–21 of the First Amended Complaint should be dismissed in
favor of arbitration. 4
Plaintiffs’ only argument to the contrary is that certain counts that have not yet been
dismissed—Count 5 (breach of contract (confidentiality agreement)), and Count 6 (breach of
employment agreement)—involve contractual obligations other than those contained in the
3
“Lefevre Decl.” refers to the Declaration of Pierre Lefevre, filed February 9, 2018. (Doc. 110.)
4
This conclusion is buttressed by the fact that many of the remaining counts are duplicative of counts I have already
concluded are subject to arbitration. For example, Count 2 (breach of duty of loyalty), Count 8 (breach of duty of
agent), and Count 10 (faithless servant) are duplicative of dismissed Count 9 (breach of fiduciary duty).
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agreements giving rise to arbitration. (Doc. 131, at 2.) This argument is inapposite because
Plaintiffs do not identify anything in those agreements that forecloses the conclusion that the
obligations in those agreements arose out of or relate to the agreements containing the arbitration
clause. In fact, the evidence indicates that these contracts did indeed arise out of the parties’
original agreements creating the autonomous vehicle project and containing the arbitration
clause. With respect to the confidentiality agreement in Count 5, the agreement was made a
month after the agreements containing the arbitration clause, and was made “in connection with
the consideration of a possible transaction between [Defendant Lefevre] and [Plaintiffs] relating
to [autonomous vehicle products].” (Lefevre Decl., Ex. A.; see also Doc. 94 ¶¶ 29, 118 (alleging
a connection between the agreements giving rise to arbitration, and the confidentiality
agreement).) With respect to the employment agreement in Count 6, the agreement similarly
post-dated the agreements that created the autonomous vehicle project, and was entered into so
that Plaintiffs could employ Defendant Garrett to work on the project. (See Doc. 94 ¶ 29.)
Therefore, I cannot say “with positive assurance that the arbitration clause is not susceptible of
an interpretation that covers the[se] dispute[s].” Birmingham Assocs. Ltd., 547 F. Supp. 2d at
300 (quoting Collins & Aikman Prods. Co. v. Building Sys., Inc., 58 F.3d 16, 19 (2d Cir. 1995)).
Conclusion
For the reasons stated herein, Moving Defendants’ motion to dismiss is GRANTED.
Accordingly, it is hereby:
ORDERED that Counts 1, 3, 4, 9, 11, 14–18, and 22–24 of Plaintiffs’ First Amended
Complaint are dismissed as against the non-signatory Defendants, and Counts 2, 5–8, 10, 12, 13,
19–21 are dismissed as against all Defendants.
IT IS FURTHER ORDERED that Plaintiffs’ Counsel’s motion to withdraw as attorney
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for Plaintiffs, (Doc. 136), is GRANTED.
IT IS FURTHER ORDERED that, in light of Plaintiffs’ representation in related case
Coast Autonomous, LLC et al. v. Global Resources Management Consultancy, Inc. et al., 17-cv8422, that the related case and the instant case “involve the same parties, property, transactions,
and events,” (Related Case Statement, 17-cv-8422, Doc. 45), as well as Plaintiff’s
representations in the instant case that “the Defendants’ parallel case [] deals with the same facts
and issues as this case,” (Doc. 129, at 1), the parties are directed to meet and confer and submit a
joint letter on the docket in 17-cv-8422, no later than January 31, 2020, proposing a course of
action in the related case.
The Clerk of Court is respectfully requested to close the open motions at Documents 108
and 136, and is further directed to terminate this case.
SO ORDERED.
Dated: January 30, 2020
New York, New York
______________________
Vernon S. Broderick
United States District Judge
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