Potter v. SABIC Innovative Plastics US LLC
Filing
31
OPINION AND ORDER. The Court grants 24 Motion for Attorney Fees in the amount of $15,412.28. Signed by Magistrate Judge Terence P Kemp on 10/13/2011. (pes1)
IN THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF OHIO
EASTERN DIVISION
Mark A. Potter,
:
Plaintiff,
:
v.
:
SABIC Innovative Plastics US, :
LLC,
:
Defendant.
Case No. 2:10-cv-696
MAGISTRATE JUDGE KEMP
OPINION AND ORDER
Plaintiff Mark A. Potter suffers from a tremor disorder that
causes his hands and arms to shake.
For thirty-six years, he
worked for Defendant SABIC Innovative Plastics US, LLC as a truck
driver.
He stopped working in 2008, and in 2009, he filed an
application for benefits with his employer-sponsored long-term
disability plan.
The plan administrator denied Mr. Potter’s
application and his subsequent appeal.
Mr. Potter filed this action against SABIC pursuant to the
Employee Retirement Income Security Act (ERISA).
The parties
filed competing motions for judgment on the record.
On June 6,
2011, this Court denied Defendant’s motion for summary judgment,
and granted Mr. Potter’s motion for judgment on the
administrative record.
The Court held that the plan’s decision
was arbitrary and capricious, reversed the administrative
decision denying Mr. Potter’s claim for long-term disability
benefits, and remanded the case to the plan administrator for
further proceedings in accordance with the Opinion and Order.
Following this Court’s decision, Mr. Potter filed a motion
for attorney’s fees pursuant to 29 U.S.C. § 1132(g).
has been fully briefed.
That motion
For the reasons that follow, Mr.
Potter’s motion will be granted.
I.
Background
Mr. Potter was employed by Defendant SABIC as a landfill
truck driver and equipment operator.
As an employee, he was a
participant in a group disability plan sponsored by SABIC and
administered by Sedgwick Claims Management.
The plan provides
long-term disability benefits for covered employees who meet the
following definition of “disabled”:
“Disabled” means that an Employee, because of a
medically determinable, permanent, physical or mental
impairment, is unable to perform his present job and
unable to earn more than 80% of his pre-disability
earnings at his own occupation, or for any employer/job
within the Employee’s remaining capacities in the local
economy, and for which the Employee is reasonably
fitted by education, training, or experience is
available . . . . For purposes of determining whether
an Employee is Disabled, the local economy shall be
defined as being within 60 miles from the Employee’s
residence at the time of disability.
See Doc. # 15-4, 88.
For a portion of the thirty-six years that
Mr. Potter worked for SABIC, he was being treated for a tremor
disorder that caused his hands and arm to shake.
On May 8, 2008,
Mr. Potter stopped working, and he has not worked since.
In 2009, Mr. Potter applied for benefits with his employersponsored long-term disability plan.
In January, 2010, the Plan
administrator denied Mr. Potter’s application, stating that the
evidence did not demonstrate that his impairments were
permanently disabling.
In April, 2010, Mr. Potter appealed that
denial, pointing to, among other evidence, a work evaluation
concluding that he could not do any fine manipulation.
Mr.
Potter also pointed to disability awards he received from another
insurer and the Social Security Administration.
On June 18, 2010, SABIC denied Mr. Potter’s appeal.
final denial, SABIC wrote that the “Independent Physician
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In that
Assessment, IPA has reviewed the file and has opined that the
[claimant] does have a familial tremor and is disabled from his
own position, but is not disabled from any position that he may
qualify for based on training, education, or experience.”
15-3, 98-99.
Doc. #
Defendant’s June 18 letter cites to a review by
Robert D. Petrie, M.D., and quotes Dr. Petrie’s criticism of Mr.
Potter for not implementing a neurologist’s recommendations or
following up with that neurologist.
However, the letter
ultimately concludes, “[b]ased on the available information, the
employee is permanently disabled from his previous occupation as
a truck driver; however, he is not disabled from any occupation
for which he is suited based on education, training or
experience.”
There is no evidence cited in the letter or in Dr. Petrie’s
report of what occupation or occupations Defendant believed Mr.
Potter was suited for based on education, training or experience.
Indeed, Dr. Petrie’s report noted that whether jobs that did not
require fine manipulation “exist in the employee’s community, and
whether they are within his sphere of education, training, or
experience, is a question to be answered through a vocational
assessment.”
Defendant did not point to any record evidence of
any occupation that Mr. Potter could perform, much less any
occupation available in his community that was within his sphere
of education, training or experience.
The plan administrator
also completely failed to acknowledge or consider the Social
Security Administration’s award of benefits.
In its Opinion and Order granting Mr. Potter’s motion for
judgment on the administrative record, the Court noted that the
basis for the plan administrator’s final denial of Mr. Potter’s
claim was fairly narrow, resting solely on the conclusion that
Mr. Potter could do jobs other than his previous job.
Because
there was no evidence to support that decision, the Court held
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that the plan administrator’s decision was arbitrary and
capricious, reversed the administrative decision denying Mr.
Potter’s claim for long-term disability benefits, and remanded
the case to the plan administrator for further proceedings.
Mr. Potter then moved for attorney’s fees, and that motion
has been fully briefed.
On July 21, 2011, Mr. Potter filed a
motion for leave to file a supplemental brief in support of his
motion for fees.
That brief attached a letter from the plan
administrator dated July 14, 2011 informing Mr. Potter that his
application for Disability Pension has been approved.
This Court
grants Mr. Potter’s motion for leave to file a supplemental brief
(#30) and takes notice of the plan administrator’s approval of
Mr. Potter’s application.
II.
Threshold Determination
In an ERISA action by a plan participant to recover
benefits, "the court in its discretion may allow a reasonable
attorney's fee and costs of action to either party.”
1132(g)(1).
29 U.S.C. §
This language does not require the party seeking
attorney’s fees to be the prevailing party. Hardt v. Reliance
Standard Life Ins. Co., --- U.S. ---, 130 S. Ct. 2149, 2152
(2010).
Rather, the Supreme Court has interpreted § 1132(g)(1)
to allow courts to exercise their discretion in awarding
attorney’s fees to either party “as long as the fee claimant has
achieved some degree of success on the merits.” Id. at 2152
(2010) (internal citations and quotation marks omitted).
A
claimant that achieves only “trivial success on the merits” or a
“purely procedural victor[y]” does not satisfy the “some degree
of success” requirement.
Id. at 2158 (citations omitted).
The Hardt Court determined that, based on the facts of that
case, the plaintiff’s success in persuading the court to remand
the plan administrator’s decision was “far more than” a trivial
success on the merits or purely procedural victory.
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Hardt, 130
S. Ct. at 2158-59.
While the Court in Hardt did not reach the
decision of whether a remand order, without more, constitutes
“some success on the merits,” the Sixth Circuit subsequently held
that a plaintiff achieves some degree of success on the merits by
achieving a remand based on failure to comply with ERISA
guidelines.
McKay v. Reliance Standard Life Ins. Co., 2011 WL
2518728, *9 (6th Cir. June 27, 2011) (affirming the award of
attorney fees to plaintiff and stating “[i]ndeed, [the plaintiff]
was just like the Hardt claimant in that he ‘persuaded the
District Court to find that the plan administrator . . . failed
to comply with the ERISA guidelines’ and that, as a result, he
‘did not get the kind of review to which [he] was entitled under
the applicable law.’”); see also Bowers v. Hartford Life and
Accident Ins. Co., 2010 WL 4117515, *2 (S.D. Ohio Oct. 19, 2010).
Here, there is no question that under Hardt and Sixth
Circuit precedent, Mr. Potter achieved some success on the
merits.
Mr. Potter was able to persuade the Court that the plan
administrator’s decision was arbitrary and capricious and that it
should not be upheld under ERISA.
The Court reversed the plan
administrator’s decision and remanded for further consideration
consistent with the Court’s Opinion and Order.
As noted, the
decision was based on the complete absence of evidence supporting
the basis for the plan administrator’s decision, and the plan
administrator’s failure to consider or acknowledge the Social
Security Administration’s award of benefits.
In addition, while
not necessary for a finding of some degree of success, the plan
administrator awarded Mr. Potter the benefits that he sought
after the case was remanded.
See Doc. # 30-1 at 3; see also
McKay, 2011 WL 2518728 at *9 (holding that the plaintiff had
achieved some degree of success notwithstanding the fact that the
plan administrator ultimately denied the plaintiff his benefits
and the Sixth Circuit upheld that denial).
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Defendant argues that Mr. Potter’s victory was merely a
procedural one.
Defendant points to this Court’s statement that,
apart from two defects, “the balance of the decision-making
process appears to be reasonable.”
However, the balance of the
decision-making process is not at issue and does not diminish the
errors which led to reversal and remand.
Defendant also points
to the fact that this Court did not make a finding as to whether
Mr. Potter was, in fact, eligible for benefits under the plan.
As support for this argument, Defendant notes that in Hardt,
although the district court did not make a finding as to
eligibility, the Supreme Court stated that the district court
“found ‘compelling evidence that [the plaintiff] is totally
disabled due to her neuropathy,’ and stated that it was ‘inclined
to rule in [the plaintiff’s] favor’ on her benefits claim, but
declined to do so before ‘first giving [the defendant] the chance
to address the deficiencies in its’ statutorily mandated ‘full
and fair review’ of that claim.”
130 S. Ct. at 2158.
Contrary
to this argument, following Hardt the Sixth Circuit has neither
required such commentary from district courts for a finding that
the plaintiff achieved some degree of success on the merits, nor
has it required any indication that plaintiff will ultimately be
awarded benefits.
McKay, 2011 WL 2518728.
To the contrary,
McKay held that the plaintiff achieved some degree of success on
the merits notwithstanding the fact that the plaintiff’s claim
was denied by the plan administrator after remand and that the
Sixth Circuit affirmed that denial.
Id.
Furthermore, unlike Hardt, in this case there was simply not
enough evidence in the record for the Court to develop an
inclination one way or the other as to the factual issue at hand,
that is, whether there were jobs available within Mr. Potter’s
community that precluded him from being considered fully
disabled.
Defendant’s failure to gather evidence needed to
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support its decision cannot serve to diminish the degree of
success that Mr. Potter achieved.
Accordingly, Mr. Potter has
satisfied the threshold requirement of achieving “some degree of
success,” which allows this Court to exercise its discretion in
ruling on his request for attorney fees.
III.
Five-Factor Test
The Court of Appeals has developed a five-factor test for
district courts to consider in exercising their discretion as to
whether to award fees under § 1132(g).
Those factors are:
(1) the degree of the opposing party's culpability or
bad faith; (2) the opposing party's ability to satisfy
an award of attorney's fees; (3) the deterrent effect
of an award on other persons under similar
circumstances; (4) whether the party requesting fees
sought to confer a common benefit on all participants
and beneficiaries of an ERISA plan or resolve
significant legal questions regarding ERISA; and (5)
the relative merits of the parties' positions.
McKay, 2011 WL 2518728 at *8 (quoting Gaeth v. Hartford Life Ins.
Co., 538 F.3d 524, 529 (6th Cir. 2008) (internal citations and
quotations omitted)).
“No single factor is determinative, and
thus, the district court must consider each factor before
exercising its discretion.”
Gaeth, 538 F.3d at 529 (internal
quotation marks and citation omitted).
The first factor is the degree of culpability or bad faith
of the opposing party.
A decision that a plan administrator’s
decision was arbitrary and capricious does not require a finding
that he or she acted culpably or in bad faith, but neither does
it preclude such a finding “based only on the evidence that
supported a district court's arbitrary-and-capricious
determination.”
Gaeth, 538 F.3d at 530 (citations omitted).
In
Gaeth, the court concluded that the district court did not abuse
its discretion in weighing the first factor in favor of awarding
attorney’s fees even if the plan administrator had a good-faith
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basis for believing that the plaintiff was no longer disabled,
because “it terminated his benefits without a single piece of
current medical evidence regarding his physical condition as it
relates to the occupation for which he had been deemed disabled,”
and the plan administrator was “therefore culpable for making a
benefits determination that was unsupported by competent medical
evidence.”
Id. at 530-31; see also McKay, 2011 WL 2518728, *8
(affirming district court’s determination that the defendant’s
“failure to conduct a ‘full and fair investigation’ into [the
plaintiff’s] claims, including its failure to consider the
correct policy, amounted to arbitrary and capricious conduct that
rose to the level of culpability required for a fee award” such
that the first factor weighed heavily in the plaintiff’s favor);
cf. Shelby Cty. Health Care Corp. v. Majestic Star Casino, LLC,
581 F.3d 355, 377 (6th Cir. 2009) (concluding that the district
court erred in weighing the first factor in favor of a fee award
because the plan administrator’s decision resulted from “its
misreading of a Plan provision rather than a selective review of
the record or reliance on incompetent medical evidence”).
Here, Mr. Potter points to the facts supporting this Court’s
arbitrary and capricious decision to argue that bad faith was
evident.
While the Court cannot, looking at the record, infer
reckless or intentional disregard of Mr. Potter’s interests or
other evidence that reaches the level of bad faith, the plan
administrator’s actions do reach the level of some culpability.
Defendant denied Mr. Potter’s benefits without evidence in the
record supporting its determination that Mr. Potter was not
disabled from performing unspecified jobs for which he was suited
by his experience, education and training.
There was no evidence
of what jobs Mr. Potter might be suited for based on his
experience, education, and training; no evidence of whether any
such jobs existed within the sixty miles of his residence; and no
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evidence of whether these jobs paid at least 80% of his predisability earnings.
Defendant was therefore culpable for making
a benefits determination that was unsupported by competent
evidence.
In addition, the plan administrator failed to consider
or acknowledge the Social Security Administration’s award of
benefits to Mr. Potter.
Accordingly, the first factor weighs in
favor of awarding attorney’s fees.
The second factor – the opposing party’s ability to satisfy
an award of attorney’s fees - is not in dispute.
Defendant
acknowledges its ability to satisfy Mr. Potter’s request for
attorney’s fees.
This factor therefore weighs in favor of
awarding attorney’s fees.
The third factor is the deterrent effect of a fee award.
The Court of Appeals “has consistently interpreted the deterrence
factor as requiring consideration of a fee award’s deterrent
effect on other plan administrators.”
Gaeth, 538 F.3d at 531.
fee award may deter other plan administrators where the facts of
the case “are not so unique that they fail to serve any
deterrence value to other insurance companies under similar
circumstances,” and where the court’s opinion “articulated
important principles that all plan administrators should heed.”
Id. at 531 (internal quotation marks and citation omitted).
While attorney fee awards “are likely to have the greatest
deterrent effect where deliberate misconduct is in the offing,”
the Court of Appeals has upheld district court decisions
determining that the award of attorney’s fees was warranted as a
deterrent measure where the decision to terminate benefits was
improper solely because it was made without any supporting
medical evidence.
Id. at 532 (internal quotation marks and
citations omitted); see also McKay, 2011 WL 2518728, at *8; cf.
Shelby Cty. Health Care Corp., 581 F.3d at 377-78 (holding that
awarding attorney fees to the plaintiff would not have a
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A
deterrent effect because the defendant’s decision to deny
benefits was based on improper application of a plan provision to
the particular facts in that case, and noting that a “‘deterrence
measure is arguably more appropriate’ where a plan administrator
performs a cursory review of a claim for benefits or bases its
denial on unreliable medical evidence”) (citation omitted).
The Court’s decision to remand here rested on an important
principle that all plan administrators should heed: plan
administrators abuse their discretion when they make a decision
as to any significant aspect of disability that is not supported
by any evidence.
Even the more narrow holding of this case is
neither unique or new.
When a claimant is disabled from his or
her job and the relevant plan nonetheless denies eligibility for
disability benefits unless he or she is unable to perform other
jobs, a decision to deny or terminate benefits on that basis
cannot be made without some evidence of what jobs the claimant
can perform.
See, e.g., McDonald v. Western-Southern Life Ins.
Co., 347 F.3d 161 (6th Cir. 2003) (holding that plan
administrator’s termination of the plaintiff’s benefits because
it determined that the plaintiff could engage in an occupation
for wages was improper without some evidence of what jobs the
claimant could perform); Crider v. Highmark Life Ins. Co., 458 F.
Supp. 2d 487, 507 (W.D. Mich. 2006) (where a claimant is not
eligible for disability benefits if he or she can work at a
different job and make at least 80% of the claimant’s predisability earnings, a plan administrator responsible for
terminating benefits on that basis must “(1) identify the type of
jobs that the administrator believes plaintiff is capable of
performing; and (2) make a sufficient inquiry into whether the
jobs it has identified are jobs the claimant can reasonably
perform in light of the claimant’s specific functional
limitations.”) (citations omitted); Caldwell v. Life Ins. Co. Of
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North America, 287 F.3d 1276, 1289 (10th Cir. 2002)(considering
similar plan language and holding that a denial of benefits on
the basis of the claimant’s ability to perform other jobs
“requires a complicated evaluation of a claimant’s abilities,
skills, and education as well as an assessment of the labor
market in the claimant’s geographic region”).
Defendant’s error
here is one that other plan administrators have made, and a fee
award could have a deterrent effect on other plan administrators.
While this is not a case where evidence of misconduct magnifies
the deterrent effect, it is also not a case where the plan
administrator’s error was a reasonable misinterpretation of the
specific terms of a plan that other plan administrators are
unlikely to have to interpret.
Accordingly, this factor weighs
in favor of awarding fees.
The fourth factor - whether Mr. Potter sought to confer a
common benefit on plan participants or resolve a significant
legal question under ERISA - is not in dispute.
Mr. Potter
acknowledges that this factor does not favor a fee award.
The fifth factor is the relative merits of the parties’
positions.
McKay upheld the district court’s conclusion that the
fifth factor favored the plaintiff because he “had overcome the
highly deferential arbitrary or capricious standard to achieve a
remand and that further, because [the defendant] had failed to
fully develop the record necessary for a full and fair review,
[the plaintiff] had the better position.”
*8.
2011 WL 2518728, at
In that case, following the district court’s decision
awarding attorney’s fees, the plan administrators ultimately
denied benefits to the plaintiff.
Id. at *2.
Nevertheless, the
court upheld both the plan administrator’s denial of benefits and
the district court’s award of attorney’s fees.
Id. at *9; but
cf. Gaeth, 538 F.3d at 534 (noting that the record left open the
possibility that the defendant might prevail in providing
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evidence to support its previous decision and stating that, as a
result, the merits of the plaintiff’s position “are at best
questionable as compared to the merits of [the defendant’s]
position, causing this factor to weigh against an award of
attorney fees at this point in the proceedings”).
Here, as in McKay, Mr. Potter overcame the highly
deferential arbitrary or capricious standard when he obtained a
remand.
As noted, Defendant failed to develop fully the record
necessary for a full and fair review.
Furthermore, unlike McKay,
the plan administrator granted benefits to Mr. Potter following
remand.
Although not dispositive, that is further evidence of
the merits of Mr. Potter’s position.
As a result, the fifth
factor weighs in favor of awarding fees.
On balance, these
factors persuade the Court that a fee award should be made.
IV.
Amount of Award
ERISA allows courts in their discretion to award “a
reasonable attorney's fee and costs of action to either party,”
29 U.S.C. § 1132(g)(1).
Thus, the inquiry now turns to what
attorney’s fee is “reasonable” in this case.
In many situations
where statutes provide for fee shifting, the proper first step in
determining a reasonable attorney’s fee is to “multiply the
number of hours reasonably expended on the litigation times a
reasonable hourly rate.”
Pennsylvania v. Del. Valley Citizen’s
Counsel for Clean Air, 478 U.S. 546, 564 (1986) (citation
omitted) (ruling on award of attorney’s fees under the Clean Air
Act and discussing the award of fees under civil rights statute);
see also Imwalle v. Reliance Medical Products, Inc., 515 F.3d
531, 551 (6th Cir. 2008) (ruling on award of attorney’s fees
pursuant to retaliation claims brought under Title VII, the ADEA
and Ohio state law).
This method of calculating fees is known as
the “lodestar” approach.
Air, 478 U.S. at 563.
Del. Valley Citizen’s Counsel for Clean
While the Court of Appeals has not
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required courts to apply the lodestar approach when awarding fees
under section 1132(g)(1), it has noted that courts are “free to
take into account prevailing market rates for comparable legal
work, the amount of time reasonably necessary to accomplish tasks
in the course of the litigation and the quality of representation
provided by counsel,” so long as it provides some basis for its
determination.
Bemis v. Hogue, 1991 WL 102385, *7 (6th Cir. June
13, 1991).
The standard for determining whether the number of hours
expended was reasonable is “whether a reasonable attorney would
have believed the work to be reasonably expended in pursuit of
success at the point in time when the work was performed.”
Woolridge v. Marlene Indus. Corp., 898 F.2d 1169, 1173 (6th Cir.
1990), abrogated on other grounds by Buckhannon Bd. & Care Home,
Inc. v. W. Va. Dep’t of Health & Human Resources, 532 U.S. 598
(2001).
Mr. Potter provided an affidavit from counsel and an
itemized billing statement detailing the 63.1 hours expended by
counsel.
Defendant has not objected to the hours claimed by Mr.
Potter’s counsel.
After reviewing counsel’s billing statement,
the Court finds these hours reasonable.
To determine whether a billing rate is reasonable, courts
should assess the prevailing market rate in the relevant
community, which is the rate that “lawyers of comparable skill
and experience can reasonably expect to command within the venue
of the court of record . . . .”
Adcock-Ladd v. Secretary of
Treasury, 227 F.3d 343, 350 (6th Cir. 2000) (citations omitted).
Mr. Potter seeks a fee award based on an hourly rate of $277 per
hour for the work done by an eighth-year attorney who is a
principal partner in his law firm and $237 per hour for the work
done by an attorney who has been licensed for fifteen years and
is serving as “of counsel” at the same firm.
Defendant has not
objected to these rates, and the Court finds that these rates are
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reasonable. See, e.g., Eppard v. ViaQuest, Inc., No. 2:09-CV-234,
2010 WL 4568868, *4 (S.D. Ohio Nov. 2, 2010) (concluding that the
blended hourly rate of $216 per hour was somewhat lower than some
hourly rates, but reasonable); Bowers v. Hartford Life and
Accident Ins. Co., No. 2:09-cv-290, 2010 WL 4117515, *6 (S.D.
Ohio Oct. 19, 2010) (finding that an hourly rate of $350 was
reasonable); Weidauer v. Broadspire Servs., No. C-3-07-097, 2009
WL 152501, *10 (S.D. Ohio Jan. 21, 2009) (approving an hourly
rate of $300); Kauffman v. Sedalia Med. Ctr., Inc., No.
2:04-CV-543, 2007 WL 490896, * (S.D. Ohio Feb. 9, 2007)
(approving hourly rates of $300 to $325 for an attorney who
graduated from law school 35 years prior and $210.00 to $235.00
for an attorney who graduated from law school 10 years prior);
Plummer v. Hartford Life Ins. Co., No. C-3-06-094, 2007 WL
838926, *3 (S.D. Ohio March 15, 2007) (finding that an hourly
rate of $175.00 and $200.00 for two different attorneys was
reasonable).
The billing statement provided by Mr. Potter includes costs
of litigation in the amount of $141.58.
Defendant has not
objected to those costs and the Court finds them to be
reasonable.
Accordingly, the attorney’s fees and costs sought by
Mr. Potter, totaling $15,412.28, are reasonable.
V.
Conclusion and Order
For the reasons set forth above, the Court grants Mr.
Potter’s motion for attorney’s fees in the amount of $15,412.28
(#24).
The Clerk shall enter judgment accordingly.
/s/ Terence P. Kemp
United States Magistrate Judge
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