Nguyen v. City of Cleveland Ohio et al
Filing
51
Order that the court grants in part and denies in part Defendant's Motion for Summary Judgment. Plaintif's CAA claim as it relates to conduct that occurred from 1996 until Plaintiff filed his bankruptcy petition in October of 2005 is dismissed with prejudice. Plaintiffs CAA claim as it relates to conduct occurring from the time he filed his bankruptcy petition in October 2005 until he filed his Complaint in 2009 remains. A telephonic conference with counsel for the parties is set for 8/5/2014 at 11:30 a.m. Judge Solomon Oliver, Jr on 7/15/2014. (Related Doc # 46 )(M,V)
UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF OHIO
EASTERN DIVISION
PRAM NGUYEN, Ex Rel. United States,
Plaintiff
v.
CITY OF CLEVELAND, OHIO,
Defendant
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Case No.: 1:09 CV 452
JUDGE SOLOMON OLIVER, JR.
ORDER
Currently pending before the court in the above-captioned case is Defendant City of
Cleveland Ohio’s (“Defendant”) Motion for Summary Judgment (ECF No. 46). For the reasons set
forth below, the court grants in part and denies in part Defendant’s Motion.
I. FACTS AND PROCEDURAL HISTORY
In 2009, Plaintiff Pram Nguyen (“Plaintiff”) filed this, his second, lawsuit against Defendant
concerning Cleveland Hopkins International Airport’s (“CHIA”) impact on the environment.
Plaintiff holds a Bachelor of Science Degree in Chemical
Engineering from Ohio University and has extensive experience
working with major United States International Airports on Air
Quality Control. [Plaintiff] has worked with airports across the
country as well as environmental agencies on issues including
Volatile Organic Compound (“VOC”) and ozone Emission
Reductions, Environmental Auditing, compliance reviews, testing,
and the compilation of comprehensive emission inventories.
[Plaintiff] has observed the emission of VOCs and other regulated
pollutants into the air at CHIA on numerous occasions.
[Plaintiff] has independently conducted studies on the
emissions at various airports throughout the United States, including
CHIA. [Plaintiff] developed mathematical models for predicting
emissions due to the airport activities detailed in this complaint while
he was working with the Air Pollution Control Agency in Cleveland,
Ohio. [Plaintiff’s] models are able to approximately predict actual
emissions. The base figures that [Plaintiff] used for his calculations
have been taken from a variety of sources, including public
documents, government documents, industry publications, and
financial records; in some cases, [Plaintiff] has made conservative
estimations based on his extensive personal and professional
knowledge of the industry and information he has obtained on the
operations of airports of similar size and traffic as CHIA.
***
In 1994, [Plaintiff] . . . . informed defendant’s agent that defendant
was in violation of environmental laws because defendant had not
received proper permits for its emissions and had not notified the
government organizations in charge of monitoring environmental
compliance of its activities.
(Am. Compl., at ¶¶ 3–4, 61, ECF No. 16.)
In 2000, Plaintiff filed a qui tam action, United States ex rel. Pram Nguyen v. City of
Cleveland, 1:00 CV 208 (N.D. Ohio) (“Nguyen I”), under the False Claims Act (“FCA”) against
seventy airport owners in the United States, including Defendant. Plaintiff alleged that the airports
had fraudulently accepted federal funds prior to 2000 by falsely certifying compliance with
environmental laws, including the Clean Air Act (“CAA”), in order to meet conditions for receiving
those funds. The alleged violations concerned the airports’ use of aircraft deicing and anti-icing
fluids (collectively, “ADF”). Ultimately, all of the claims against all of the airports were dismissed.
The essence of Plaintiff’s claim against Defendant was that Defendant wrongfully calculated
its ADF-related emissions by using Federal Aviation Administration (“FAA”) guidelines instead of
the purportedly more accurate testing and calculation methods he had recommended to City of
Cleveland officials. The court granted summary judgment in favor of Defendant and dismissed
Plaintiff’s suit against Defendant with prejudice in September 2005. U.S. ex rel Nguyen v. City of
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Cleveland, 1:00 CV 208, 2005 WL 2416925, at *12 (N.D. Ohio Sept.. 30, 2005). The court
determined that: (1) it was proper for Defendant to rely on the FAA for their emissions factor data
and not Plaintiff’s scientific methodology for measuring air emissions; and (2) there was no FCA
violation.
Plaintiff filed a notice of appeal in October 2005. However, prior to filing this appeal,
Plaintiff filed a Chapter 7 bankruptcy petition. See In re Nguyen, No. 05-95756 (Bankr. N.D. Ohio
Oct. 16, 2005) (Doc. 1). Thus, Plaintiff’s Nguyen I appeal and claims became apart of the
bankruptcy estate. The bankruptcy trustee ultimately settled Nguyen I with defendants City of
Cleveland and Toledo-Lucas County Port Authority for a total of $10,100. (Id. at Doc. 49.) Plaintiff
initially objected to settling the claim; however, he withdrew his objection and waived his right to
appeal the case as part of the final agreement. (Id.) The settlement agreement included a Release
and Covenant Not to Sue, in which the Trustee, on behalf of the Nguyen Estate, agreed on August
18, 2006, to the following:
...not to sue and [] to forever release and discharge the [Defendant],
together with their assigns; agents, and current and former officers,
directors, and employees, of and from all past, present, and future
claims, demands, rights, losses, expenses, actions, and/or causes of
action of whatever kind or nature, whether known or unknown,
suspected or unsuspected, vested or contingent, including, without
limitation any such claims that are the property of the Nguyen Estate,
whether disclosed or undisclosed in the Nguyen bankruptcy schedules,
relating to, (1) the [Defendant] obtaining []any funds from the United
States or any of its Agencies in connection with construction at the
[Defendant’s] facilities, (2) the [Defendant’s] certifications that [it]
ha[s] complied with or will comply with all applicable environmental
protection laws and regulations, and (3) all claims that were or could
have been asserted in the Qui Tam Actions, except only as provided in
the following sentence. Specifically excluded from this release are
claims asserted in the "whistleblower case," originally filed in the
United States District Court for the Northern District of Ohio, Eastern
Division, captioned Nguyen v. City of Cleveland et al. (Case No.
-3-
1:99-cv-02990), and subsequently submitted to arbitration by order of
the court.
Appellee’s Br. App. A. at 5-6, Nguyen v. City of Cleveland, 534 F. App’x 445 (6 th Cir. 2013) ( No.
12-4296). The parties to the Release and Covenant not to Sue agreement were the City of
Cleveland, Toledo-Lucas County Port Authority and Lauren A. Helbling, acting in her capacity as
the duly appointed Chapter 7 Trustee of the bankruptcy estate of Plaintiff. (Id. at 2.)
In 2009, Plaintiff filed the present suit under both the FCA and the CAA, using a provision
of the latter act allowing for citizen suits. In his Amended Complaint, he alleges violations under
the FCA regarding false certification of compliance with environmental laws similar to the
violations alleged in Nguyen I, but this time, Plaintiff expands his focus beyond ADF activity. In
addition to the same substantive ADF-related allegations presented in Nguyen I, he alleges that
emissions from other sources, namely the refueling of airplanes, use of ground support equipment
and auxiliary power units, roadway operations, construction, and the daily taxiing, taking off, and
landing of airplanes (collectively, “non-ADF activities”), also violate the CAA and other
environmental laws. Plaintiff alleges that Defendant falsely certified its compliance with the CAA
and other environmental laws as they relate to non-ADF activities in violation of the FCA. He claims
he was unaware of those emission sources’ illegality when he filed Nguyen I, but acknowledges they
existed at the time of that suit. In all, the present suit covers four areas:
(1) Allegations under the FCA based on Defendant’s false certification of its
compliance with emission standards concerning ADF-related activity at CHIA.
(2) Allegations under the FCA based on Defendant’s false certification of its
compliance with emission standards for non-ADF-related activity at CHIA, focusing
on the other emission sources (refueling, ground support equipment, etc.) that
Nguyen identified in this suit but did not include in Nguyen I.
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(3) Allegations under the CAA based on ADF-related activity at CHIA, claiming that
ADF-related emissions exceeded maximum thresholds set by the Act.
(4) Allegations under the CAA based on non-ADF-related activity at CHIA, claiming
that emissions from the other sources (refueling, ground support equipment, etc.)
exceeded maximum thresholds set by the Act.
Defendant filed a Motion to Dismiss for failure to state a claim (ECF No. 25), arguing that
issue preclusion bars Plaintiff’s FCA claims and res judicata bars all of his claims. The court found
that collateral estoppel or issue preclusion barred Plaintiff’s ADF-related FCA claim and res
judicata barred Plaintiff’s non-ADF-related FCA claim and his ADF-related CAA claim. The court
denied Defendant’s Motion in regard to Plaintiff’s non-ADF-related CAA claim. Defendant then
filed a Motion for Reconsideration (ECF No. 33), requesting the court to reconsider its finding that
Plaintiff may proceed on the non-ADF-related CAA claim. The court granted that Motion, finding
that the non-ADF related CAA claim should have been brought in Nguyen I and was therefore
barred by res judicata.
Plaintiff then filed a notice of appeal on October 24, 2012. The Sixth Circuit affirmed this
court’s decision regarding Plaintiff’s FCA claims and reversed this court’s decision regarding
Plaintiff’s CAA claims, finding that “the conduct that forms the basis for Plaintiff’s Clean Air Act
claim is alleged to have occurred continuously until he filed his complaint in 2009, well after
Nguyen I was decided in 2005. Therefore, because Plaintiff has asserted causes of action that arose
after the decision in Nguyen I, the doctrine of claim preclusion does not bar the consideration of
those claims.” Additionally, the Sixth Circuit found that, because “no court has ever evaluated
Defendants’ conduct under the Clean Air Act,” issue preclusion also does not preclude Plaintiff from
litigating that issue. Thus, the only claims presently before this court are Plaintiff’s CAA claims.
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Defendant has now filed the present Motion for Summary Judgment, arguing that “[t]he
Release and Covenant Not to Sue bars all of the claims remanded to this Court by the Sixth Circuit.”
(Mot. for Summ. J. at 3, ECF No. 46-1.)
II. LEGAL STANDARD
Federal Rule of Civil Procedure 56(a) governs summary judgment motions and provides:
The court shall grant summary judgment if the movant shows that there
is no genuine dispute as to any material fact and the movant is entitled
to judgment as a matter of law. The court should state on the record the
reasons for granting or denying the motion.
A party asserting there is no genuine dispute as to any material fact or that a fact is genuinely
disputed must support the assertion by:
(A) citing to particular parts of materials in the record, including
depositions, documents, electronically stored information, affidavits or
declarations, stipulations (including those made for purposes of the
motion only), admissions, interrogatory answers, or other materials; or
(B) showing that the materials cited do not establish the absence or
presence of a genuine dispute, or that an adverse party cannot produce
admissible evidence to support the fact.
Fed. R. Civ. P. 56(c)(1).
Though the Rule was amended in 2010, the summary judgment standards and burdens have
not materially changed. See Fed. R. Civ. P. 56 advisory committee’s notes (2010 Amendments)
(“Subdivision (a) carries forward the summary-judgment standard expressed in former subdivision
(c)....”); Farmers Ins. Exch. v. RNK, Inc., 632 F.3d 777, 782 n. 4(1st Cir. 2011). In reviewing
summary judgment motions, this court must view the evidence in a light most favorable to the
non-moving party to determine whether a genuine issue of material fact exists. Adickes v. S.H.
Kress & Co., 398 U.S. 144, 153 (1970); White v. Turfway Park Racing Ass'n, Inc., 909 F.2d 941,
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943-44 (6th Cir. 1990). A fact is “material” only if its resolution will affect the outcome of the
lawsuit. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). Determination of whether a
factual issue is “genuine” requires consideration of the applicable evidentiary standards. Thus, in
most cases the Court must decide “whether reasonable jurors could find by a preponderance of the
evidence that the [non-moving party] is entitled to a verdict.” Id. at 252. However, “[c]redibility
judgments and weighing of the evidence are prohibited during the consideration of a motion for
summary judgment.” Ahlers v. Scheibil, 188 F.3d 365, 369 (6th Cir. 1999).
The moving party has the burden of production to make a prima facie showing that it is
entitled to summary judgment. Celotex Corp. v. Catrett, 477 U.S. 317, 331 (1986). If the burden of
persuasion at trial would be on the non-moving party, then the moving party can meet its burden of
production by either: (1) submitting “affirmative evidence that negates an essential element of the
nonmoving party’s claim”; or (2) demonstrating “to the court that the nonmoving party’s evidence
is insufficient to establish an essential element of the nonmoving party’s claim.” Id.
If the moving party meets its burden of production, then the non-moving party is under an
affirmative duty to point out specific facts in the record which create a genuine issue of material fact.
Zinn v. United States, 885 F.Supp.2d 866, 871 (citing Fulson v. City of Columbus, 801 F. Supp. 1,
4 (S.D. Ohio 1992)). The non-movant must show “more than a scintilla of evidence to overcome
summary judgment”; it is not enough to show that there is slight doubt as to material facts. Id.
Moreover, “the trial court no longer has a duty to search the entire record to establish that it is bereft
of a genuine issue of material fact.” Street v. J.C. Bradford & Co., 886 F.2d 1472, 1479–80 (6th Cir.
1989) (citing Frito-Lay, Inc. v. Willoughby, 863 F.2d 1029, 1034 (D.C. Cir. 1988)).
III. LAW AND ANALYSIS
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Defendant argues that “[t]he Release and Covenant Not to Sue bars all of the claims
remanded to this Court by the Sixth Circuit.” (Mot. for Summ. J. at 3, ECF No. 46-1.) Defendant
asserts that Plaintiff’s bankruptcy estate owned all of his interests in the Nguyen I claims, the
bankruptcy trustee had authority to settle the Nguyen I appeal, and therefore, the Release and
Covenant Not to Sue bars Plaintiff from pursing his CAA claims raised in this present case. (Id. at
8-11.) Plaintiff contends that the Release and Covenant Not to Sue expressly limits the scope of the
agreement to the items that comprised his bankruptcy estate. (Pl.’s Mem. Contra at 3-5.) He further
argues that his current CAA claims could not have possibly been included as property of his
bankruptcy estate because they did not exist when the Release and Covenant Not to Sue was drafted
or at the conclusion of the Nguyen I litigation.(Id.) Plaintiff also asserts that his CAA claims do not
relate to any claims raised in Nguyen I and therefore the release does not bar him from pursuing the
CAA claims raised in the present suit. (Id.)
The Sixth Circuit has stated that, “[a]s a general matter, Ohio law recognizes the validity of
releases of causes of actions as part of settlement agreements.” Wheel Specialities, Ltd.v. Starr
Wheel Group, Inc., 530 F. App’x 491, 494 (6th Cir. 2013). Additionally, the Sixth Circuit has noted
that, under Ohio law, traditional principles of contract interpretation are applied to releases and the
general rule is “that courts are to ‘presume that the intent of the parties is reflected in the language
of the contract.’” Id. (citing Sunoco, Inc. (R&M) v. Toledo Edison Co., 953 N.E.2d 285, 292 (2011).
However, Ohio courts have carved out an important exception to this general rule concerning
anticipatory releases. AM Int’l Inc. v. Int’l Forging Equip. Corp., 982 F. 2d 989, 995-96 (6th Cir.
1993) (citing Solan v. Standard Oil Co., 203 N.E.2d 237 (1964)).
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While anticipatory releases are not per se void under Ohio law, “the Ohio Supreme Court
[has] held that verbatim terms of a general release are not controlling under circumstances where
the parties to a release did not actually intend to discharge all liability.” Wheel Specialties, Ltd., 530
F. App’x at 494 (quoting AM Int’l Inc., 982 F.2d at 996) (citing Solan, 203 N.E.2d 237). The Ohio
Supreme Court has also held that “‘[w]hether the parties to a release actually intended to discharge
all liability is a question of fact for the trier of the facts’ and set out factors for ascertaining the
parties’ intent.” AM Int’l Inc., 982 F.2d at 996 (quoting Solan, 177 N.E.2d at 240). Those factors
include:
The absence of bargaining and negotiating leading to settlement; the
releasee is clearly liable; absence of discussion concerning personal
injuries; the contention that the injuries were in fact unknown at the
time the release was executed is reasonable; an inadequate amount of
consideration received compared with the risk of the existence of
unknown injuries...; haste by the releasee in securing the release...; and
the terms of the release exclude the injuries alleged.
Solan v. Standard Oil Co., 203 N.E.2d at 240. It is also necessary to examine all the circumstances
surrounding the execution of the release to determine the intent of the parties. Id. Furthermore,
Ohio courts have stated that “releases from liability for future tortious conduct ... are generally not
favored by the law and will be narrowly construed.” Denlinger v. City of Columbus, 2000 WL
1803923, at *6 (Ohio Ct. App. Dec. 7, 2000). Thus, “anticipatory releases can only be enforced
if the future conduct to be released is stated in clear and unambiguous terms and notes exactly what
kind of liability and what persons and/or entities are being released.” Id. (quoting Denlinger, 2000
WL 1803923, at *6.)
Here, the relevant parties to the Release and Covenant Not to Sue were Defendant and
Lauren A. Helbling, acting in her capacity as the duly-appointed Chapter 7 Trustee of the
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bankruptcy estate of Plaintiff. Plaintiff was not a party to the agreement. Additionally, because
Lauren A. Helbling was acting in her capacity as a trustee, she only possessed the authority that was
conferred upon her by the Bankruptcy Code when entering into the agreement. In re Cannon, 277
F. 3d 838, 853 (6th Cir. 2002). Under the Bankruptcy Code, “‘all legal or equitable interests of the
debtor in property as of the commencement of the case’ are considered property of the bankruptcy
estate.” Tyler v. DH Capital Mgmt., Inc., 736 F.3d 455, 461 (6th Cir. 2013) (citing U.S.C. § 541
(a)(1)). Therefore, causes of action belonging to the debtor prior to the bankruptcy are considered
property of the bankruptcy estate. In re RCS Engineered Prods. Co., Inc., 102 F.3d 223, 225 (6th
Cir. 1996). The Sixth Circuit has stated, that “[t]he trustee stands in the shoes of the debtor and has
standing to bring any action that the bankrupt could have brought had he not filed a petition for
bankruptcy.” Id.; see also Tyler, 736 F.3d at 461 (6th Cir. 2013) (“only the bankruptcy trustee has
standing to pursue pre-petition causes of action.”). However, only those cause of action belonging
to the debtor when the bankruptcy petition is filed are property of the bankruptcy estate to be
administered by the trustee. In re Patterson, 2008 WL 2276961, at * 3 (Bankr. N.D. Ohio Jun. 3,
2008). Thus, the court finds that the trustee had no authority to release future claims, which were
not property of the bankruptcy estate. So the question is whether the claims at issue herein can be
deemed property of the estate.
The Sixth Circuit has held, that “[w]hether a particular cause of action belongs to the debtor
so that it constitutes ‘property of the estate’ depends upon state law.” In re Cannon, 277 F. 3d at
853 (citing In re RCS Engineered Prods. Co., Inc., 102 F.3d at 225.) Therefore, the Sixth Circuit
has stated, that “if the debtor could have raised a state claim at the commencement of the bankruptcy
case, then that claim is the exclusive property of the bankruptcy estate.” Id. at 854; In re Patterson,
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2008 WL 2276961, at * 3 (If the last element constituting the cause of action occurred prior to the
bankruptcy petition being filed, then the cause of action is property of the bankruptcy estate.).
Furthermore, the Sixth Circuit has clarified that “the entire cause of action is property of the estate,
even if further post-petition damages were incurred.” Tyler, 736 F.3d at 462.
In this case, the conduct that forms the basis for Plaintiff’s CAA claim is alleged to have
occurred continuously from September 1996 until he filed his Complaint in 2009. (First. Am.
Compl. ¶ 51, ECF No. 16.) Therefore, while it is clear that Plaintiff could have raised a CAA claim
at the commencement of his bankruptcy case in 2005 for conduct occurring before that time, he
could have also raised a CAA claim subsequent to filing his bankruptcy petition for the conduct that
occurred after he filed his petition. Thus, Plaintiff’s CAA claim that arose from the conduct
occurring from 1996 until Plaintiff filed his bankruptcy petition in 2005 was property of the
bankruptcy estate and the trustee had authority settle this claim. However, Plaintiff’s CAA claim
that arose from the conduct occurring from the time he filed his bankruptcy petition in 2005 until
he filed his Complaint in 2009 constituted a cause of action for post-petition conduct; therefore it
was not property of the bankruptcy estate. As such, the court finds that the bankruptcy trustee could
not have intended to release Plaintiff’s future CAA claim relating to conduct that occurred from the
time Plaintiff filed his bankruptcy petition in October 2005 until he filed his Complaint in 2009 as
she did not have authority to release this future claim. Thus, the court finds that Plaintiff’s CAA
claim relating to conduct that occurred from the time he filed his bankruptcy petition in 2005 until
he filed his Complaint in 2009 is not barred by the Release and Covenant Not to Sue.
However, the court finds that the bankruptcy trustee did have authority to settle Plaintiff’s
CAA claim as it relates to conduct that occurred from 1996 until Plaintiff filed his bankruptcy
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petition in October of 2005. Thus, the court must first look to the language of the Release and
Covenant Not to Sue to determine whether the trustee intended to release Plaintiff’s CAA claim as
it relates to this conduct. The court finds that the agreement entered into by the trustee and
Defendant was unambiguous and specific. It released Defendant from specifically noted claims
including in relevant part:
all past, present, and future claims, demands, rights, losses, expenses,
actions, and/or causes of action of whatever kind or nature, whether
known or unknown, suspected or unsuspected, vested or contingent,
including, without limitation any such claims that are the property of the
Nguyen Estate, whether disclosed or undisclosed in the Nguyen
bankruptcy schedules, relating to ...the [Defendant’s] certifications that
[it] ha[s] complied with or will comply with all applicable
environmental protection laws and regulations; and (3) all claims that
were or could have been asserted in [Nguyen I]...
Appellee’s Br. App. A. at 5-6, Nguyen v. City of Cleveland, 534 F. App’x 445 (6th Cir. 2013) ( No.
12-4296). It is clear from the language of the agreement that Defendant is released from all claims
that are the property of the bankruptcy estate arising from failure to comply with environmental
protection laws and regulations and all other claims that could have been asserted in Nguyen I.
Additionally, there is no evidence to suggest anything to the contrary. Therefore, the court finds
that the Release and Covenant Not to Sue is enforceable as it relates to conduct that occurred from
1996 until Plaintiff filed his bankruptcy petition in October of 2005. Additionally, because Plaintiff
alleges in his CAA claim that Defendant violated the Clean Air Act, an environmental law, and
because the portion of the claim involving conduct from 1996 until Plaintiff filed his bankruptcy
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petition in October of 2005 could have been asserted in Nguyen I, a suit for such conduct is
specifically barred.
IV. CONCLUSION
For the foregoing reasons, the court hereby grants in part and denies in part Defendant’s
Motion for Summary Judgment (ECF No. 46). Accordingly, Plaintiff’s CAA claim as it relates to
conduct that occurred from 1996 until Plaintiff filed his bankruptcy petition in October of 2005 is
dismissed with prejudice. However, Plaintiff’s CAA claim as it relates to conduct occurring from
the time he filed his bankruptcy petition in October 2005 until he filed his Complaint in 2009
remains.
This court hereby sets a telephonic conference with counsel for the parties in the within case
on August 5, 2014, at 11:30 a.m.
IT IS SO ORDERED.
/s/ SOLOMON OLIVER, JR.
CHIEF JUDGE
UNITED STATES DISTRICT COURT
July 15, 2014
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