Cincinnati Bengals, Inc. v. Abdullah et al
Filing
73
ORDER granting (36) plaintiff's motion to confirm award; denying (59) defendants' motion to vacate award; granting (60) plaintiff's Motion for Summary Judgment. Signed by Judge Sandra S Beckwith on 1/15/13. (mb)
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF OHIO
WESTERN DIVISION
Cincinnati Bengals, Inc.,
:
:
:
:
:
:
:
:
:
Plaintiff,
vs.
Khalid Abdullah, et al.,
Defendants.
Case No. 1:09-cv-738
ORDER
Before the Court is the motion filed by the Plaintiff, the Cincinnati Bengals, Inc.
(“Bengals”), to confirm the arbitration award entered in their favor (Doc. 36), and a
related motion for summary judgment (Doc. 60). The Defendants, a group of former
Bengals players, oppose the motion to confirm (Doc. 61) and the motion for summary
judgment (Doc. 63). The Defendants also filed a motion to vacate the arbitration award
(Doc. 59), to which the Bengals have responded (Doc. 62).
For the following reasons, the Court will grant the Bengals’ motion to confirm and
deny the Defendants’ motion to vacate.
FACTUAL BACKGROUND
The parties are well acquainted with the facts and the procedural background of
this case. Briefly summarized, the Bengals originally filed a complaint in state court
against six of its former players, seeking an injunction to prevent the players from filing
or continuing to prosecute worker’s compensation claims in California against the
Bengals. The Bengals alleged that the players’ actions violated their NFL contracts,
specifically a provision requiring that any workers’ compensation claims arising out of a
player’s employment with the Bengals be filed in Ohio under Ohio law. The complaint
also sought a declaratory judgment enforcing that contractual provision. Additional
players were added as defendants by way of amended complaints. After the players
removed the case, this Court denied the Bengals’ motion to remand. This Court then
granted the motion filed by the players (joined by the NFL Players Association) to
compel arbitration of the Bengals’ claims. This Court stayed this case pending
completion of the arbitration process. (See Doc. 31, April 28, 2010 Order.)
The parties submitted the case to Arbitrator Michael H. Beck on the following
stipulated facts:
(1) each of the Players entered into a contract that contained the following
clause:
As a material inducement for the [Bengals] to employ
Player’s services, Player promises and agrees that any
workers’ compensation claim, dispute, or cause of action
arising out of Player’s employment with the [Bengals] shall
be subject to the workers’ compensation laws of Ohio
exclusively and not the workers’ compensation laws of any
other state. Player further agrees that any claim, filing,
petition, or cause of action in any way relating to workers’
compensation rights or benefits arising out of Player’s
employment with the Club, including without limitation the
applicability or enforceability of this addendum, shall be
brought solely and exclusively with the courts of Ohio, the
Industrial Commission of Ohio, or such other Ohio tribunal
that has jurisdiction over the matter.
(2) each of the Players has filed a claim for workers’ compensation benefits in
California; and
(3) each of the players “... alleges that he has sufficient contacts with California
to maintain a California workers’ compensation claim before the California Workers’
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Compensation Appeals Board.” (Doc. No. 36-1, Opinion and Award of Arbitrator, at 2-3
(emphasis added).) After reciting these facts, Arbitrator Beck reviewed a number of
recently-issued arbitration awards, all of which enforced similar choice-of-law/exclusive
remedy worker’s compensation provisions in NFL Player Contracts entered into
between several other clubs and their players. He noted that two of those arbitration
awards had recently been affirmed by federal district courts. And he noted that
subsequent to one of those court decisions, another NFL arbitrator held that the prior
decisions constituted the “law of the shop.” After citing two recent arbitration awards
that he authored, in which he found in favor of NFL teams on this issue, Arbitrator Beck
concluded that the “law of the shop” established by these decisions applied to the
current dispute, and required rejecting the Players’ contentions that the contract
provision violated California public policy, federal labor law, or the Full Faith and Credit
Clause of the Constitution.
Arbitrator Beck then addressed the Players’ contention that the contract clause
violated Ohio public policy because the clause operated as an invalid waiver of the right
to seek workers’ compensation benefits. Arbitrator Beck found that the clause was not
a waiver of any player’s right to compensation under Ohio law to which the player may
be entitled. He also cited Ohio Rev. Code 4123.54(H)(1), which permits an employer
and employee to stipulate to the application of Ohio law or another state’s law under
certain conditions. He did not expressly conclude, but his opinion strongly suggests,
that he found the statute to contradict the Players’ argument that Ohio law or public
policy forbids an employer from negotiating with an employee about which state’s law
will apply.
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Arbitrator Beck ultimately ordered the Players to cease and desist from pursuing
their worker’s compensation claims in California and to withdraw those claims. He also
found that the Players must pursue any workers’ compensation claims in accordance
with their contracts.
Following this decision, the Bengals moved to lift the stay and to confirm the
award. (Doc. 36) They also filed a separate action (Case No. 1:12-cv-377) against a
group of players who were not named as defendants in this action but who appeared
and participated in the arbitration process. That action was consolidated with this case,
and the Bengals filed a summary judgment motion with respect to that group of players.
(Doc. 60) The Court lifted the stay and set a briefing schedule for all parties and issues.
(Doc. 41) All of the motions are now fully briefed and ready for disposition.
STANDARD OF REVIEW
Under the Federal Arbitration Act, a district court’s review of an arbitrator’s award
is fairly circumscribed. The Court’s task is to determine whether the arbitrator’s decision
“draws its essence from the contract.” Michigan Family Res., Inc. v. SEIU Local 517M,
475 F.3d 746, 752 (6th Cir. 2007). If the arbitrator was “even arguably construing or
applying the contract,” the award must be confirmed. Id. “Only when the arbitrator
strays from interpretation and application . . . does he enter the forbidden world of
effectively dispensing his own brand of industrial justice, making the arbitrator’s decision
unenforceable.” Id. (quoting in part Major League Baseball Players Ass’n v. Garvey,
532 U.S. 504, 509 (2001)) (internal brackets and quotation marks omitted). The Sixth
Circuit explained further that:
The [Supreme] Court’s repeated insistence that the federal
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courts must tolerate “serious” arbitral errors suggests that
judicial consideration of the merits of a dispute is the rare
exception, not the rule. At the same time, we cannot ignore
the specter that an arbitration decision could be so ignorant
of the contract’s plain language as to make implausible any
contention that the arbitrator was construing the contract.
An interpretation of a contract thus could be so untethered to
the terms of the agreement . . . that it would cast doubt on
whether the arbitrator indeed was engaged in interpretation.
Such an exception of course is reserved for the rare case.
For in most cases, it will suffice to enforce the award that the
arbitrator appeared to be engaged in interpretation, and if
there is doubt we will presume that the arbitrator was doing
just that.
...
This view of the “arguably construing” inquiry no doubt will
permit only the most egregious awards to be vacated. But it
is a view that respects the parties’ decision to hire their own
judge to resolve their disputes, a view that respects the
finality clause in most arbitration agreements . . . and a view
whose imperfections can be remedied by selecting better
arbitrators.
Id. at 753-54 (internal citations, brackets and quotation marks omitted). Thus, the
reviewing court cannot vacate the arbitrator’s award even if he made “serious,
improvident, or silly errors in resolving the merits of the dispute.” Id. at 753 (internal
quotation marks omitted). Similarly, the reviewing court cannot reverse the arbitrator’s
decision based on mistakes of fact or law, Beacon Journal Pub. Co. v. Akron
Newspaper Guild Local No. 7, 114 F.3d 596, 599 (6th Cir. 1997), or because the
arbitrator misinterpreted federal law. Anaconda Co. v. District Lodge No. 27 of the Int’l
Ass’n of Machinists, 693 F.2d 35, 37-38 (6th Cir. 1982).
One narrow exception to this doctrine is that the court may review a party’s
argument that the arbitrator’s interpretation of a collective bargaining agreement
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violates public policy. Board of County Comm’rs of Lawrence County v. L. Robert
Kimball & Assoc., 860 F.2d 683, 686 (6th Cir. 1988). A federal court may overturn an
arbitrator’s contract interpretation on public policy grounds only in “... situations where
the contract as interpreted would violate 'some explicit public policy' that is 'well defined
and dominant, and is to be ascertained ‘by reference to the laws and legal precedents
and not from general considerations of supposed public interests.’ ” Id. (quoting United
Paperworkers Int’l Union v. Misco, 484 U.S. 29, 43 (1987)). Moreover, the court’s
review of an award challenged on public policy grounds is not de novo: “[W]hen an
arbitration award is challenged on public policy grounds, the court must determine
whether the arbitrator's interpretation of the contract jeopardizes a well-defined and
dominant public policy, taking the facts as found by the arbitrator.” Id. (emphasis
added).
DISCUSSION
The Players argue that the arbitration award in this case falls within the narrow
exception discussed above, because the award violates public policy. They contend
that an employer cannot rely on choice-of-law and exclusive-forum contract clauses to
limit an employee’s right to claim worker’s compensation benefits in other states. The
Players rely on what they contend is California’s strong public policy against such
contractual waivers of worker’s compensation rights. Moreover, they argue that it would
violate Ohio public policy, federal labor law, and/or the Full Faith and Credit Clause to
allow one state to infringe on another state’s right to apply its own laws.
The Bengals generally respond that California’s public policy is not even relevant
to the interpretation of a contract entered into in Ohio between an Ohio-based employer
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and employee. And even if it is, there is nothing in the contractual provision that
operates as a waiver of any player’s right to seek worker’s compensation benefits. It
only requires the Players to do so in Ohio. The Bengals note that California law
specifically recognizes other states’ laws in situations where an out-of-state employee is
temporarily in California, so long as his employer has provided coverage in his home
state. The Bengals further argue that the contractual provision does not offend Ohio
public policy. They cite the Ohio statute that Arbitrator Beck referred to in his award
(Ohio Rev. Code 4123.54(H)) that specifically permits employers and employees to
agree to choice of law/choice of forum contracts covering worker’s compensation
claims. The Bengals contend that the contractual provision does not violate any general
public policy, federal law, or the Full Faith and Credit Clause.
This Court agrees that the contractual provision does not violate any well-defined
or dominant Ohio public policy. Ohio Rev. Code 4123.54(H)(1) states in pertinent part:
Whenever, with respect to an employee of an employer who is subject to
and has complied with this chapter, there is [the] possibility of conflict with
respect to the application of workers' compensation laws because the
contract of employment is entered into and all or some portion of the work
is or is to be performed in a state or states other than Ohio, the employer
and the employee may agree to be bound by the laws of this state or by
the laws of some other state in which all or some portion of the work of the
employee is to be performed. The agreement shall be in writing and shall
be filed with the bureau of workers' compensation within ten days after it is
executed and shall remain in force until terminated or modified by
agreement of the parties similarly filed. If the agreement is to be bound by
the laws of this state and the employer has complied with this chapter,
then the employee is entitled to compensation and benefits regardless of
where the injury occurs or the disease is contracted and the rights of the
employee and the employee's dependents under the laws of this state are
the exclusive remedy against the employer on account of injury, disease,
or death in the course of and arising out of the employee's employment. If
the agreement is to be bound by the laws of another state and the
employer has complied with the laws of that state, the rights of the
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employee and the employee's dependents under the laws of that state are
the exclusive remedy against the employer on account of injury, disease,
or death in the course of and arising out of the employee's employment
without regard to the place where the injury was sustained or the disease
contracted. ...
This statute clearly permits employers and employees to agree to follow either Ohio law
or the law of some other state under the conditions described in the statute. Nothing in
the statute, or in Section 4123.54(H)(2) (cited by the Players to the arbitrator) reflects
any clearly-defined public policy prohibiting the exclusive remedy provision in the
Players’ contracts. Section 4123.54(H)(2) simply provides that “if” an employee
receives compensation benefits in another state, those amounts are credited towards
any payments made by the Ohio Workers Compensation Bureau. There are no facts
found by the arbitrator that would support a different conclusion than the one he
reached. The contract provision does not amount to a prohibited waiver of any Player’s
right to seek compensation benefits in Ohio, and does not violate clearly-defined Ohio
public policy.
The Players focus their arguments on California, arguing that the arbitrator’s
enforcement of the choice of law provision violates that state’s clearly-defined public
policy. They cite Alaska Packers Ass’n v. Industrial Accident Comm’n of Cal., 294 U.S.
532 (1935), and Pacific Emp. Ins. Co. v. Industrial Accident Comm’n of California, 306
U.S. 493 (1939). Alaska Packers involved a contract entered into in California between
a California employer and a Mexican citizen for temporary work in Alaska during the
salmon canning season. The employee was injured while working in Alaska and filed a
compensation claim in California when he returned to California to collect his wages.
The California Supreme Court rejected the employer’s attempt to enforce an Alaska
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choice of law clause in the employee’s contract. The Supreme Court affirmed, holding:
We cannot say that the statutory requirement of California, that the
provisions for compensation shall extend to injuries without the state when
the contract for employment was entered into within it, is given such an
unreasonable application in the present case as to transcend
constitutional limitations. The employee, an alien more than 2,000 miles
from his home in Mexico, was, with fifty-three others, employed by
petitioner in California. The contract called for their transportation to
Alaska, some 3,000 miles distant, for seasonal employment of between
two and three months, at the conclusion of which they were to be returned
to California, and were there to receive their wages.
The meagre facts disclosed by the record suggest a practice of employing
workers in California for seasonal occupation in Alaska, under such
conditions as to make it improbable that the employees injured in the
course of their employment in Alaska would be able to apply for
compensation there. It was necessary for them to return to California in
order to receive their full wages. They would be accompanied by their
fellow workers, who would normally be the witnesses required to establish
the fact of the injury and its nature. The probability is slight that injured
workmen, once returned to California, would be able to retrace their steps
to Alaska, and there successfully prosecute their claims for compensation.
Without a remedy in California, they would be remediless, and there was
the danger that they might become public charges, both matters of grave
public concern to the state.
California, therefore, had a legitimate public interest in controlling and
regulating this employer-employee relationship in such fashion as to
impose a liability upon the employer for an injury suffered by the
employee, and in providing a remedy available to him in California. In the
special circumstances disclosed, the state had as great an interest in
affording adequate protection to this class of its population as to
employees injured within the state.
294 U.S. at 542-543.
Pacific Employers involved a Massachusetts resident who worked for a
Massachusetts-based employer, and whose contract included a Massachusetts choice
of law clause. The employee’s primary job assignment site was in Massachusetts, but
he suffered a specific injury while on temporary assignment in California, and received
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medical treatment there. He filed a compensation claim in California, and the
employer’s Massachusetts-based insurer appealed the award. The California Supreme
Court affirmed the compensation board’s award, relying on a California statute
prohibiting contracts that exempt any employer from liability under the workers’
compensation statutes. The Supreme Court affirmed that decision and held: “The
Supreme Court of California has declared in its opinion in this case that it is the policy of
the state, ... to apply its own provisions for compensation, to the exclusion of all others,
and that it would be obnoxious to that policy to deny persons who have been injured in
this state the right to apply for compensation when to do so might require physicians
and hospitals to go to another state to collect charges for medical care and treatment
given to such persons." Id. at 504.
The Players argue that these cases make clear that California’s well-defined
public policy prohibits the Bengals from enforcing the contractual clause requiring them
to file workers’ compensation claims only in Ohio. And in their reply brief, the Players
urged this Court to await a decision from the Ninth Circuit Court of Appeals in a case
involving an NFL player’s challenge to a substantially identical contract clause. In
Matthews v. NFL Management Council, 688 F.3d 1107 (9th Cir. 2012)(August 6, 2012),
the Ninth Circuit concluded that the clause in Matthews’ NFL player contract with the
Tennessee Titans, requiring Matthews to pursue workers’ compensation claims
exclusively in Tennessee, did not violate California public policy. Matthews played for
the Titans and their predecessor teams from 1983 until he retired in 2002. He filed a
California workers’ compensation claim in 2008 against the Titans, alleging he suffered
pain and disability as a result of his 19-year career. Matthews did not allege that he
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sustained a particular specific injury in California. An arbitrator ordered Matthews to
dismiss his California claim because it violated his contract, and the district court denied
Matthews’ motion to vacate that decision.
The Ninth Circuit affirmed. In its decision, the court explained:
Matthews contends that California has an explicit, well-defined and
dominant public policy militating against agreements that purport to waive
an employee's right to seek California workers' compensation benefits
before a California tribunal, no matter how tenuous the connection
between California and the employee or the employment. ...
We do not read California's policy so broadly. Rather than guarantee a
universal right to seek California workers' compensation benefits, the
workers' compensation statute establishes a rule that an employee who is
otherwise eligible for California benefits cannot be deemed to have
contractually waived those benefits, and an employer who is otherwise
liable for California benefits cannot evade liability through contract. ...
Our reading of the statute is consistent with Alaska Packers. ... The
California Supreme Court concluded that the choice of law clause was
unenforceable under the statutory predecessor to § 5000, but only after
finding that the employment relationship in question had sufficient contacts
with California to apply California's workers' compensation law. ...
To establish that the arbitration award here violates California policy,
Matthews must show that his workers' compensation claim comes within
the scope of California's workers' compensation regime. ...
In Pacific Employers, ... the [California Supreme Court] acknowledged
that, given the employee's limited contacts with California, California's
interests would ordinarily be only “casual” as compared to the interests of
Massachusetts, ... , but concluded that, because the employee was
injured and received medical treatment in California, California's interest
was superior, ... The court reasoned that providing California hospitals and
doctors convenient mechanisms for obtaining compensation for services
rendered to injured employees was a critical component of California's
workers' compensation regime and that maintaining an effective workers'
compensation system was of vital interest to the state.
Under Pacific Employers, then, California's workers' compensation law
covers an employee who suffers a discrete injury in California, at least
where the costs associated with the employee's injury may impact
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California's medical system and other resources. ... The facts underlying
Matthews' claim are distinct enough from existing California cases that we
cannot say whether the California courts would consider Matthews' limited
contacts with the state sufficient to justify the application of California law.
Under our standard of review of arbitration awards, this uncertainty is fatal
to Matthews' claim. He has not shown that he falls within the category of
employees to whom the “no waiver” rule applies. He has thus not shown
that the arbitration award is contrary to a clear, well-defined and dominant
public policy of the state of California. ...
An employee who makes a prima facie showing that his claim falls within
the scope of California's workers' compensation regime may indeed be
able to establish that an arbitration award prohibiting him from seeking
such benefits violates California policy. Matthews did not do so here
because he did not allege facts showing an injury in California or any
burden on the state's medical system, and it is not clear that California
would extend its workers' compensation regime to cover the cumulative
injuries Matthews claims, given his limited contacts with the state.
Id. at 1111-1114 (footnotes and citations omitted).
This Court is persuaded by the Ninth Circuit’s thoughtful analysis regarding the
impact of Alaska Packers and Pacific Employers on current-day California public policy.
The concerns underlying Alaska Packers clearly do not arise with respect to the
Players. And the protection of California-based medical providers that was of concern
to the court in Pacific Employers has been largely mooted by advances in interstate
communication and cooperation among both providers and insurers. Moreover, after
both of those decisions, the California workers’ compensation statute was amended by
adding Labor Code 3600.5(b), which exempts employees hired outside of California
from coverage under the statute while the employee is temporarily in California, so long
as his employer provides workers’ compensation coverage to him in another state that
covers the temporary assignment. California law (and public policy) therefore recognize
the right of employers and employees to agree to provisions such as the one at issue
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here, and there is no suggestion in the record that the Bengals do not provide Ohio
workers’ compensation coverage for its players while they may be on temporary
assignment in California.
This Court also agrees with the observation of the court in Matthews, that an
employee who makes a “prima facie showing” that he has a right to receive California
compensation benefits for a specific injury sustained in California, may be able to
demonstrate that an exclusive remedy/choice of law provision that would bar him from
seeking those benefits may run afoul of California law or public policy. But here, the
agreed facts submitted to the arbitrator were only that each player “alleges” that he has
sufficient contacts with California to pursue a cumulative injury claim. (See Doc. 36-1 at
p. 3.) There are no facts amounting to a prima facie showing that any of the Players’
claims are actually cognizable under California law. None of the Players have set forth
facts establishing that they sustained a specific or particular injury in California, or that
they received any care in that state as a result.
In that regard, the Court takes note of the decision by the California Workers’
Compensation Appeals Board in Booker v. Cincinnati Bengals, et al, 2012 Cal. Wrk.
Comp. P.D. LEXIS 114 (May 1, 2012). While this panel decision is not binding on this
Court, and was not designated as a “significant” decision by the Appeals Board, it
involves the dispute between a defendant in this case, Vaughn Booker, and the Bengals
about Booker’s California worker’s compensation claim. The WCAB held that it lacked
subject matter jurisdiction over Booker’s claim against the Bengals because there was
no basis for the Board to assert jurisdiction due to any injury Booker sustained in
California. The Bengals provided prima facie evidence of self-insurance in Ohio, and
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there was no basis for the Board to exercise extra-territorial jurisdiction, based on
injuries outside of California, because Booker was not “regularly employed” in California.
The Board also found that California has no significant interest in Booker’s claim, as his
contract was not made in California, he had worked in California for only one day in
three years of playing, and he had no other significant connection to California. Even if
all these hurdles were surmounted and the Board assumed jurisdiction, it held it would
not do so based on the forum selection clause in Booker’s player’s contract. The panel
noted that enforcing the forum selection clause would not be contrary to California’s
interest, as the state also has a strong interest in “avoidance of overburdening local
courts with congested calendars ... [in] cases in which the local community has little
concern.” Id. at *29-30 (internal citation omitted).
Again, the Court recognizes that this is not a binding decision nor one from the
California appellate court. Nevertheless, its reasoning is persuasive and supports the
conclusion that California’s public policy is not offended by enforcement of the
contractual forum selection clause for all of the Defendants. Moreover, in addition to
Matthews, several other district courts have also rejected the arguments the Players
assert here. In Atlanta Falcons Football Club, LLC v. National Football League Players
Assoc., 2012 U.S. Dist. LEXIS 158057, 2012 WL 5392185 (N.D. Ga., Nov. 5, 2012), the
district court affirmed an arbitration award in favor of the Falcons and against several of
its former players. The court found that the players’ contract (containing a Georgia
choice of law clause) does not violate California public policy, federal labor policy, or the
Full Faith and Credit Clause, and citing Matthews. A similar result was reached in
Chicago Bears Football Club, Inc. v. Haynes, 816 F. Supp.2d 534, 538 (N.D. Ill. 2011),
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where the district court questioned why California’s public policy would be relevant at all
to review of an arbitration award in favor of the Bears, and enforcing an Illinois choice of
law clause in the players’ contracts. The district court noted that Illinois law governed
the contracts, the Bears are located in Illinois, the players executed and substantially
performed the contracts in Illinois, the parties negotiated for the choice of law clause,
and the arbitrator’s decision was consistent with Illinois law. Id. at 538. All of those
observations fully apply to this case as well. Given the wealth of authorities discussed
above, the Court concludes that the Players’ contracts do not violate any public policy,
federal labor law, or the Full Faith and Credit Clause.
CONCLUSION
For all of the reasons discussed above, the Court grants the Bengals’ motion to
confirm Arbitrator Beck’s May 4, 2012 Opinion and Award (Doc. 36), and the motion for
summary judgment against certain players. (Doc. 60) The Court denies the Players’
motion to vacate the award. (Doc. 59)
SO ORDERED.
THIS CASE IS CLOSED.
DATED: January 15, 2013
s/Sandra S. Beckwith
Sandra S. Beckwith
Senior United States District Judge
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