Puerto Rico Telephone Company, Inc. v. San Juan Cable LLC
Filing
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ORDER: GRANTING in part and DENYING in part 34 Defendant's Motion for Reconsideration, and DENYING 22 Defendant's Motion to Dismiss. Signed by Judge Gustavo A. Gelpi on 9/13/12. (CL)
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IN THE UNITED STATES DISTRICT COURT
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FOR THE DISTRICT OF PUERTO RICO
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PUERTO RICO TELEPHONE
COMPANY, INC.,
Plaintiff,
Civil No. 11-2135 (GAG)
v.
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SAN JUAN CABLE, LLC,
Defendant.
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OPINION AND ORDER
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Puerto Rico Telephone Company, Inc. (“Plaintiff”) brings this action seeking damages for
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violations of federal antitrust laws and state Anti-Monopoly laws by San Juan Cable LLC d/b/a/
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OneLink Communications (“Defendant”). Plaintiff claims Defendant committed violations of
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Sections two and three of the Sherman Act, 15 U.S.C. §§ 2 and 3, as well as the Puerto Rico Anti16
Monopoly Act, P.R. LAWS ANN. tit. 10, §§ 257-276. Presently before the court is Defendant’s
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Motion for Reconsideration (Docket No. 34) of the court’s denial of Defendant’s Motion to Dismiss
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(Docket No. 30). After reviewing the parties’ submissions and the pertinent law, the court
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GRANTS IN PART and DENIES IN PART Defendant’s Motion for Reconsideration (Docket No.
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34) and affirms the court’s denial of Defendant’s Motion to Dismiss (Docket No. 22).
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I.
Request for Reconsideration Granted
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Defendant seeks reconsideration of the court’s order at Docket No. 30 due to the court’s
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inadvertent failure to consider Defendant’s Reply Brief at Docket No. 25. The timely submission
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of the reply merits consideration. Defendant’s request for reconsideration is therefore GRANTED.
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A.
Standard of Review
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Motions for reconsideration are generally considered under FED.R.CIV.P. 59 or 60, depending
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on the time such motion is served. Perez-Perez v. Popular Leasing Rental, Inc., 993 F.2d 281, 284
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Civil No. 11-2135 (GAG)
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(1st Cir. 1993). Whether under Rule 59 or Rule 60, a motion for reconsideration cannot be used as
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a vehicle to relitigate matters already litigated and decided by the court. Villanueva-Mendez v.
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Vazquez, 360 F. Supp. 2d 320, 322 (D.P.R. 2005). These motions are entertained by courts if they
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seek to correct manifest errors of law or fact, present newly discovered evidence, or when there is
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an intervening change in law. See Rivera Surillo & Co. v. Falconer Glass. Indus. Inc., 37 F.3d 25,
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29 (1st Cir. 1994) (citing F.D.I.C. Ins. Co. v. World University, Inc., 978 F.2d 10, 16 (1st Cir. 1992);
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Cherena v. Coors Brewing Co., 20 F. Supp. 2d 282, 286 (D .P.R. 1998)). Hence, this vehicle may
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not be used by the losing party “to repeat old arguments previously considered and rejected, or to
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raise new legal theories that should have been raised earlier.” National Metal Finishing Com. v.
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BarclaysAmerican/Commercial, Inc ., 899 F.2d 119, 123 (1st Cir. 1990).
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B.
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Discussion
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Defendant asserts that Plaintiff fails to sufficiently allege an antitrust injury, (see Docket No.
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25 at 6), claims Noerr-Pennington immunity, (see id. at 1-5), and requests the court to reconsider
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accepting the pattern exception theory. (See id. at 5-6; 8-10; Docket No. 34 at 4-8.) The court
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addresses each concern in turn.
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1.
Antitrust Injury
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Plaintiff bears the burden of alleging an antitrust injury. See Sterling Merchandising, Inc.
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v. Nestle, S.A., 656 F.3d 112, 121 (1st Cir. 2011). “Antitrust injury is ‘injury of the type the
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antitrust laws were intended to prevent and that flows from that which makes defendants’ acts
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unlawful.’” Id. (quoting Brunswick Corp. v. Pueblo Bowl–O–Mat, Inc., 429 U.S. 477, 489 (1977)).
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Defendant’s reply does not convince the court to amend its original ruling. The complaint
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contains sufficient factual allegations that Defendant’s conduct not only delayed Plaintiff’s entry into
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the market, but also protected Defendant’s market share. (See Docket No. 11 at ¶ 62.) Plaintiff
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specifically alleges that Defendant fostered an anti-competitive market by delaying a competitor
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from entering into the market, resulting in higher fees to the public. (See id.) Plaintiff also alleges
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the delays resulted in lost revenue. (See Docket No. 11 at ¶ 63.) Contrary to Defendant’s
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contention, the complaint alleges Plaintiff suffered injury due to the process of these proceedings,
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Civil No. 11-2135 (GAG)
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not simply the outcome.
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2.
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Noerr-Pennington Doctrine and Pattern of Proceedings
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The court acknowledges the delicate balance between the First Amendment right to petition
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the judiciary for redress, and the import of shielding nascent businesses from sham litigation. Those
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who petition the government for redress enjoy immunity from antitrust liability. See Prof’l Real
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Estate Investors, Inc. v. Columbia Pictures Indus., Inc, 508 U.S. 49, 56 (1993). However, the
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Supreme Court has created an exception to this general rule when the petition seeking redress is a
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sham. See id. (citing E. R.R. Presidents Conference v. Noerr Motor Freight, Inc., 365 U.S. 127
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(1961)). This exception includes proceedings before administrative agencies. See California Motor
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Transp. Co. v. Trucking Unlimited, 404 U.S. 508 (1972).
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Proceedings must be objectively unreasonable to fall under the auspices of the sham
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exception. See PRE, 508 U.S. at 58. “[R]epetitive lawsuits carrying the hallmark of insubstantial
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claims” comprise a sham. Otter Tail Power Co. v. United States, 410 U.S. 366, 380 (1973). The
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PRE Court outlined a two-part definition of sham litigation, opining that “the lawsuit must be
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objectively baseless in the sense that no reasonable litigant could realistically expect success on the
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merits,” and “whether the baseless lawsuit conceals an attempt to interfere directly with the business
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relationships of a competitor through the use [of] the governmental process—as opposed to the
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outcome of that process—as an anticompetitive weapon.” PRE, 508 U.S. at 60 (internal quotation
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marks omitted) (internal citations omitted).
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The Second and Ninth Circuits have held this requirement applies when determining if one
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action constitutes a sham, but does not apply when the challenged proceedings constitute a pattern
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of repetitive litigation. See USS-POSCO Indus. v. Contra Costa County Bldg. & Const. Trades
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Council, AFL-CIO, 31 F.3d 800, 810-11 (9th Cir. 1994) (“Professional Real Estate Investors
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provides a strict two-step analysis to assess whether a single action constitutes sham petitioning.”);
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Primetime 24 Joint Venture v. Nat’l Broad., Co., Inc., 219 F.3d 92, 100-01 (2d Cir. 2000).
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However, various district courts outside of these circuits have held the objectively baseless
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Civil No. 11-2135 (GAG)
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requirement applies to cases asserting a pattern of proceedings. See e.g., Christian Mem’l Cultural
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Ctr., Inc. v. Michigan Funeral Dirs. Ass’n, 998 F. Supp. 772, 777 n.2 (E.D. Mich. 1998).
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In California Motor, the Court recognized that filing a series of litigation has more serious
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implications than one singular suit. See USS-POSCO, 31 F.3d at 811. The question in pattern cases
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is not only whether the suits have merit, but also whether they were instituted as part of or pursuant
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to a pattern, without regard to the merits. See id. There is no language in the PRE decision
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indicating the Court intended to overrule California Motor. Without such an explicit holding that
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the Court intended to overrule California Motor, this court reads PRE and California Motor as
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complimenting one another.
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The movant must therefore sufficiently allege a pattern or series of litigation intended to
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disrupt Plaintiff’s ability to conduct business. Defendant claims Plaintiff fails to demonstrate
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sufficient proceedings to constitute a pattern. (See Docket No. 22 at 29.) Courts characterize as few
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as nine proceedings as a pattern, while three proceedings are insufficient. Compare Livingston
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Downs Racing Ass’n Inc. v. Jefferson Downs Corp., 192 F. Supp. 2d 519, 539 (M.D. La. 2001), with
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Luxpro Corp. v. Apple Inc., No. C 10–03058 JSW, 2011 WL 1086027, at *5 (N.D. Cal. Mar. 24,
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2011). The proceedings listed in paragraphs 39, 41, 44-46, 50, 53-55, and 58 of Plaintiff’s
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Complaint adequately demonstrate an alleged pattern of sham litigation according to the
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aforementioned precedent. See Docket No.11.
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3. Defendant’s Motion for Reconsideration
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Defendant urges the court to consider supplemental factors aside from the sheer volume of
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the proceedings. Whether the proceedings, regardless of their volume, were brought “without regard
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to the merits and for the purpose of injuring a market rival” poses a wholly relevant question to
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consider. USS-POSCO, 31 F.3d at 811. Secondly, whether the movant succeeded in the
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proceedings in question also factors into analysis of pattern sham litigation.
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Hydrochloride Antitrust Litig., 335 F. Supp. 2d 1336, 1366-67 (S.D. Fla. 2004). Thirdly, Defendant
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correctly asserts that the Court should not “count appeals as a separate proceeding” for pattern claim
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In re Terazosin
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Civil No. 11-2135 (GAG)
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purposes. 2011 WL 1086027, at *5 n.1. In reconsidering PRTC’s pattern claim, the court adheres
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to the logic that appeals from one proceeding constitute action within the same litigation.
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Cognizant of OneLink’s purported successes in paragraphs 35, 36-38, 41, 44, and 58 of
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PRTC’s Complaint, and excluding appeals in the assessment of the volume of proceedings, the court
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nonetheless reaffirms its original holding that PRTC sufficiently alleges a pattern of sham litigation.
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PRTC’s claim against OneLink is not “sustained based on an extremely small number of
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proceedings;” rather, on the basis of allegations set forth in paragraphs 39, 41, 44-46, 50, 53-55, and
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58 of Plaintiff’s Complaint. (See Docket Nos. 34 at 7; 11 .) Considering the volume of allegedly
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sham proceedings, the admonishments from various tribunals regarding OneLink’s claims, and
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whether OneLink “brought [the proceedings] without regard to the merits and for the purpose of
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injuring a market rival,” dismissal at this stage would be improper. (See Docket No. 34 at 6.)
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II.
Request for Interlocutory Appeal Denied
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The court denies Defendant’s request for certification of an interlocutory appeal to the First
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Circuit. The First Circuit does not generally grant interlocutory appeals from a denial of a motion
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to dismiss. Caraballo-Seda v. Municipality of Homigueros, 395 F.3d 7, 9 (1st Cir. 2005). As
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Plaintiff establishes, “Section 1292(b) is meant to be used sparingly. . .” Camacho v. Puerto Rico
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Ports Authority, 369 F.3d 570, 573 (1st Cir. 2004).
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The First Circuit has yet to interpret the principles of pattern sham litigation espoused in
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Justice Stevens’s concurrence and its progeny. PRE, 508 U.S. at 66. Nonetheless, the Second and
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Ninth Circuits share a similar position on the matter and no ostensible disagreement between the
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circuit courts of appeals exists. The Second and Ninth Circuits and numerous district courts have
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opined on the issue to sufficiently guide the court in its analysis of PRE and pattern sham litigation.
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Consequently, the court’s order does not involve a “new legal question” appropriate for interlocutory
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certification, particularly at this stage in the proceedings. Mohawk Indus. v. Carpenter, 588 U.S.
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100, 130 S. Ct. 599, 607 (2009).
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III.
Conclusion
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For the reasons set forth above, the court GRANTS IN PART and DENIES IN PART
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Defendant’s Motion for Reconsideration (Docket No. 34) and DENIES Defendant’s Motion to
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Dismiss. (Docket No. 25.)
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SO ORDERED.
In San Juan, Puerto Rico this 13th day of September, 2012.
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s/ Gustavo A. Gelpí
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GUSTAVO A. GELPI
United States District Judge
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