De Luna-Lopez et al v. A Lawn and Landcare Services Company LLC et al
Filing
37
Memorandum Opinion and Order: The Court GRANTS IN PART and DENIES IN PART Plaintiffs' Motion 28 for Partial Summary Judgment. Plaintiffs' Motion is GRANTED as to (1) the FLSA employee status of Alexander Ortiz and Saul De Luna-Lopez; and (2) the FLSA employer status of Mark Rygh. Plaintiffs' Motion is DENIED in all other respects. (Ordered by Judge Barbara M.G. Lynn on 7/29/2013) (cea)
UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF TEXAS
DALLAS DIVISION
GENARO DE LUNA-LOPEZ, ALEXANDER §
ORTIZ, SAUL DE LUNA-LOPEZ and all
§
others similarly situated under 29 U.S.C. 216(b),§
§
Plaintiffs,
§
§
v.
§
§
A LAWN AND LANDCARE SERVICES
§
COMPANY, LLC and MARK RYGH
§
§
Defendants.
§
Civil Action No. 3:11-CV-1782-M
MEMORANDUM OPINION AND ORDER
Before the Court is the Motion for Partial Summary Judgment filed by Plaintiffs Genaro
De Luna-Lopez, Alexander Ortiz and Saul De Luna-Lopez [Docket Entry #28]. For the reasons
stated below, Plaintiffs’ Motion is GRANTED IN PART and DENIED IN PART.
I.
FACTUAL BACKGROUND
Plaintiffs filed a complaint against Defendants for violations of the Fair Labor Standards
Act (“FLSA”). See generally Pls.’ Compl. Plaintiffs purport to be three former employees of
both Defendant A Lawn and Landcare Services Company (“ALLSC”) and Defendant Mark
Rygh. Id. ¶¶ 3-4; Pls.’ Br. in Supp. of Mot. for Partial Summ. J. (“Brief”) at ¶¶ 10-12.
Defendant Rygh owns ALLSC. Answer ¶ 4. Plaintiffs allege that they have not been paid any
overtime wages as provided for by the FLSA. Pls.’ Compl. ¶¶ 17-20.
II.
SUMMARY JUDGMENT STANDARD
Summary judgment is proper when “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.” Fed. R. Civ. P.
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56(a). If a reasonable jury could return a verdict for the non-moving party, then there is a
genuine dispute of material fact. Gates v. Tex. Dep’t of Protective & Regulatory Servs., 537 F.3d
404, 417 (5th Cir. 2008) (citing Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986)). The
moving party bears the initial burden of identifying those portions of the record that demonstrate
the absence of a genuine dispute of material fact. See Celotex Corp. v. Catrett, 477 U.S. 317,
323 (1986); Lynch Props., Inc. v. Potomac Ins. Co., 140 F.3d 622, 625 (5th Cir. 1998). Once the
movant carries its initial burden, the burden shifts to the non-movant to show that summary
judgment is inappropriate, by designating specific facts beyond its own pleadings that prove the
existence of a genuine dispute of material fact. See Fed. R. Civ. P. 56(a); Anderson, 477 U.S. at
250; Fields v. City of S. Houston, Tex., 922 F.2d 1183, 1187 (5th Cir. 1991). In determining
whether a genuine dispute of material fact exists, “factual controversies are construed in the light
most favorable to the non-movant, but only if both parties have introduced evidence showing
that a controversy exists.” Lynch Props., 140 F.3d at 625 (citation omitted).
III.
ANALYSIS
1. Whether ALLSC Was a Covered Enterprise
With exceptions not relevant here, the FLSA requires covered “employers” to pay
covered “employees” at least one and one-half times the regular rate at which the employee is
employed for any work hours exceeding forty. See 29 U.S.C. § 207(a)(1). Accordant with
Congress’s authority to regulate interstate commerce, this provision only applies to employees:
(1) “engaged in commerce or in the production of goods for commerce” (“individual coverage”);
or (2) “employed in an enterprise engaged in commerce or in the production of goods for
commerce” (“enterprise coverage”). Id.
The FLSA defines “commerce” as “trade, commerce, transportation, transmission, or
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communication among the several States or between any State and any place outside thereof.”
29 U.S.C. § 203(b). “Enterprise” is defined as “the related activities performed (either through
unified operation or common control) by any person or persons for a common business purpose
. . . but shall not include the related activities performed for such enterprise by an independent
contractor.” Id. § 203(r)(1). The statute further defines “enterprise engaged in commerce or in
the production of goods for commerce” as one that: (1) “has employees engaged in commerce or
in the production of goods for commerce, or that has employees handling, selling, or otherwise
working on goods or materials that have been moved in or produced for commerce by any
person” (the “enterprise commerce requirement”); and (2) has “annual gross volume of sales
made or business done [of] not less than $500,000 (exclusive of excise taxes at the retail level
that are separately stated)” (the “gross sales requirement”). Id. § 203(s)(1)(A)(i)-(ii).
Plaintiffs assert only enterprise coverage as the grounds for conferring subject matter
jurisdiction here. See Br. ¶ 4. While Plaintiffs do not explicitly identify the “handling” clause as
the basis of their argument for enterprise coverage, the Court understands their Motion as
arguing such. 1 See id. (stating that, “[f]or the purpose of enterprise coverage, 29 U.S.C.
203(s)(1) defines ‘enterprise’ coverage as an enterprise that has employees ‘handling, selling, or
otherwise working on goods or materials that have been moved in or produced for commerce by
any person . . . .’”) (quoting 29 U.S.C. § 203(s)(1)); id. ¶ 1.f (“During the time that Plaintiffs
worked for Defendants, the Defendants employed at least two employees who routinely and
regularly used and handled goods that were manufactured outside the state of Texas, and they
employed at least two employees who routinely and regularly used and handled Motorola
cellular telephones issued by the Company to coordinate the employees’ work through use of the
1
Nowhere in Plaintiffs’ Brief do they argue that ALLSC had employees “engaged in commerce” or in the
“production of goods for commerce.” Thus, the Court focuses its analysis only on the “handling” clause
of the enterprise commerce requirement.
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NEXTEL network.”); id. ¶ 6 (“The evidence . . . establishes that two or more of ALLSC’s
employees regularly and recurrently handled or worked on products that originated outside the
state of Texas i.e. [sic] manufactured by Toro and STHIL [sic]. These facts and the gross
receipts establish enterprise coverage.”).
In support of this factual position, Plaintiffs cite to Paragraph six of their respective
affidavits. This Paragraph, in each affidavit, states: 2
During the time that I worked for Defendants, the Defendants employed at least
two employees who routinely and regularly used and handled STIHL trimmers
and edgers and engine oil that I believe to be manufactured outside the state of
Texas, as well as Toro mowers that I believe to be manufactured outside the state
of Texas. Defendants employed at least two employees who routinely and
regularly used and handled Motorola cellular telephones issued by the Company
to coordinate the employees’ work. These phones used the NEXTEL network.
G. De Luna-Lopez Aff. ¶ 6; S. De Luna-Lopez Aff. ¶ 6; Ortiz Aff. ¶ 6.
Federal Rule of Civil Procedure 56 requires that “[a]n affidavit or declaration used to
support or oppose a motion must be made on personal knowledge, set out facts that would be
admissible in evidence, and show that the affiant or declarant is competent to testify on the
matters stated.” Fed. R. Civ. P. 56(c)(4). Paragraph six of Plaintiffs’ affidavits fall short of this
threshold, and Plaintiffs do not point to any other evidence in the record to support their
“handling” claims. Thus, even assuming that Plaintiffs have established that ALLSC, at all
relevant times, was an “enterprise”—a question that this Court need not decide to resolve
whether Plaintiffs are entitled to summary judgment on the issue of enterprise coverage—they
2
Messrs. Genaro and Saul De Luna-Lopez state the exact language quoted above in Paragraph six of their
respective affidavits. See G. De Luna-Lopez Aff. ¶ 6; S. De Luna-Lopez Aff. ¶ 6. Mr. Ortiz states the
exact language quoted above in Paragraph six of his affidavit, except that he also states that, in addition to
ALLSC employees “routinely and regularly” using and handling “STIHL trimmers” and “edgers,” they
also routinely and regularly used and handled STIHL “blowers.” See Ortiz Aff. ¶ 6 (“During the time that
I worked for Defendants, the Defendants employed at least two employees who routinely and regularly
used and handled STIHL trimmers, blowers and edgers and engine oil that I believe to be manufactured
outside the state of Texas . . . .”) (emphasis added). This difference in language does not affect the
Court’s analysis.
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have not satisfied the enterprise commerce requirement. That is, Plaintiffs have not
demonstrated an absence of genuine dispute as to whether, during the times relevant to Plaintiffs’
complaint, ALLSC employed individuals that were “handling, selling or otherwise working on
goods or materials that [had] been moved in or produced for commerce.” See 29 U.S.C.
§ 203(s)(1)(A)(i).
First, Plaintiffs’ statement that Defendants’ employed at least two employees that
“routinely and regularly used and handled” items that Plaintiffs “believe to be manufactured
outside the state of Texas,” see G. De Luna-Lopez Aff. ¶ 6 (emphasis added); Ortiz Aff. ¶ 6
(emphasis added); S. De Luna-Lopez Aff. ¶ 6 (emphasis added), is not based on personal
knowledge and therefore cannot be utilized on Plaintiffs’ motion. “A statement that an affidavit
is based on the affiant’s personal belief does not automatically satisfy the requirement . . . that
the affidavit be based on personal knowledge.” Provident Life and Acc. Ins. Co. v. Goel, 274
F.3d 984, 1000 (5th Cir. 2001) (internal citation and quotation marks omitted); see also 10B
C. Wright, et al., Federal Practice and Procedure § 2738 (3d ed. 1998) (“[U]ltimate or conclusory
facts and conclusions of law, as well as statements made on belief or ‘on information and belief,’
cannot be utilized on a summary-judgment motion.”); Pearrow v. Abbott Labs., No. 1:11-cv1322, 2013 WL 1305329, at *4 (W.D. Mich. March 28, 2013) (finding affiant’s statement, “I
believe,” to be “akin to making a statement upon ‘information and belief’ . . . rather than
personal knowledge.”).
Second, Plaintiffs’ statements that Defendants employed at least two employees who
“routinely and regularly used and handled Motorola cellular telephones” using the NEXTEL
network, see G. De Luna-Lopez Aff. ¶ 6; Ortiz Aff. ¶ 6; S. De Luna-Lopez Aff. ¶ 6, are similarly
insufficient to be utilized on summary judgment. These statements do not proffer any facts to
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establish, and are therefore not evidence that the cellular telephones have been “moved in or
produced for” commerce.
Having failed to demonstrate a lack of genuine issue as to whether ALLSC was an
“enterprise engaged in commerce,” the Court concludes that Plaintiffs have failed to demonstrate
enterprise coverage. The Court, therefore, declines to address the parties’ arguments respecting
whether ALLSC satisfied the additional (and necessary) gross sales requirement of enterprise
coverage—i.e., whether, at all relevant times, ALLSC was an “enterprise” with an “annual gross
volume of sales made or business done [of] not less than $500,000.” See 29 U.S.C.
§ 203(s)(1)(A)(ii). 3
The Court, however, does take note of Defendants’ admissions in their answer that
ALLSC’s “gross sales or business done” for the years 2009 and 2010 exceeded $500,000. 4 See
Answer ¶ 14. Defendants have not amended their answer, and “[f]actual assertions in pleadings
are judicial admissions conclusively binding on the party that made them.” Johnson v.
Houston’s Rest., Inc., 167 Fed. Appx. 393, 396 (5th Cir. 2006) (internal quotations and citations
omitted, alteration in original). Therefore, were the Court to decide whether ALLSC satisfied
the gross sales requirement, which it does not do, the Court would hold Defendants to these
admissions in doing so, notwithstanding the evidence that Defendants submitted in connection
with their Opposition, and upon which they rely to argue that the gross sales requirement was not
3
Plaintiffs ask, for the first time in their Reply, that, should the Court not grant Plaintiffs’ Motion in its
entirety, the Court instead grant Plaintiffs’ Motion “as to all issues other than the $500,000 threshold for
the years 2009 and 20[1]1.” See Pls.’ Reply to Defs.’ Resps. to Pls.’ Mot. for Summ. J. at 3. For the
reasons stated above, the Court does not reach this argument.
4
Specifically, Defendants state: “Defendants deny the allegations set forth in Paragraph 14 of the
Complaint; Defendants assert that Defendant A Lawn and Landcare Services Compnay [sic], LLC’s gross
sales or business done in 2009 exceeded $500,000; Defendants admit the allegations set forth in
Paragraph 14 of the Complaint that Defendant A Lawn and Landcare Services Company, LLC’s business
gross sales or business done exceeded $500,000 for the year 2010.” Answer ¶ 14.
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met for certain years relevant to Plaintiffs’ complaint.
2. Employee Status of Alexander Ortiz and Saul De Luna-Lopez
Plaintiffs argue that “[g]iven the Defendants’ control over [Plaintiffs] and their
livelihood, Plaintiffs were employees and not independent contractors.” Br. ¶ 4.
Notwithstanding that this language suggests that Plaintiffs move for summary judgment as to the
FLSA employee status of all three Plaintiffs, and despite the fact that Section five of Plaintiffs’
Brief is titled, “Plaintiffs Were Employees Not Independent Contractors,” Plaintiffs explicitly
request in their prayer for relief a finding that “Ortiz and S. De Luna were Defendants’
employees and not independent contractors.” Br. at § 7. Plaintiffs make no such request as to
Mr. Genaro De Luna-Lopez. 5 Thus, the Court construes Plaintiffs’ arguments with respect to
employee status to apply only to Messrs. Ortiz and Saul De Luna-Lopez.
To determine FLSA employee status, the Fifth Circuit “focus[es] on whether the alleged
employee, as a matter of economic reality, is economically dependent upon the business to which
she renders her services.” Reich v. Circle C. Invs., Inc., 998 F.2d 324, 327 (5th Cir. 1993). To
assess the degree of dependency, the court considers five factors: “(1) the degree of control
exercised by the alleged employer; (2) the extent of the relative investments of the worker and
alleged employer; (3) the degree to which the worker’s opportunity for profit and loss is
determined by the alleged employer; (4) the skill and initiative required in performing the job;
and (5) the permanency of the relationship.” Id. “No one of these considerations can become
5
Plaintiffs appear to limit their FLSA employee arguments solely to Messrs. Ortiz and Saul De LunaLopez on the basis that “Defendants concede in their Answer, as they do not raise the independent
contract defense as to him, and [Genaro] De Luna[-Lopez] states in his affidavit that he was a W-2
employee of Defendants. Defendants raise the independent contractor defense only with regard to [Saul]
[D]e Luna[-Lopez] and Ortiz.” Br. ¶ 10. Accordingly, the Court limits its determination of FLSA
employee status solely to Messrs. Ortiz and Saul De Luna-Lopez, and does not determine the status of
Mr. Genaro De Luna-Lopez as a FLSA employee.
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the final determinant, nor can the collective answers to all of the inquiries produce a resolution
which submerges consideration of the dominant factor-economic dependence.” Usery v. Pilgrim
Equip. Co., Inc., 527 F.2d 1308, 1311 (5th Cir 1976).
Messrs. Ortiz and Saul De-Luna Lopez each state in their respective affidavits that: “I
worked for the Defendants . . . as a commercial lawn maintenance worker,” Ortiz Aff. ¶ 3; S. De
Luna-Lopez Aff. ¶ 3; “I did not work for anyone else during the time that I worked for the
Defendants,” Ortiz Aff. ¶ 3; S. De Luna-Lopez Aff. ¶ 3; “Mark Rygh hired me, directed Jose
Guadalupe Machuca to terminate me, 6 set my schedule, set my rate of pay, paid me and provided
the tools, equipment and materials that I used,” Ortiz Aff. ¶ 5; S. De Luna-Lopez Aff. ¶ 5;
“Defendants controlled the locations where I would work and had the contracts with the
customers I served at those locations,” Ortiz Aff. ¶ 7; S. De Luna-Lopez Aff. ¶ 7; “Defendants set
my schedule, set my rate of pay, and provided the tools, equipment and materials that I used,”
Ortiz Aff. ¶ 7; S. De Luna-Lopez Aff. ¶ 7; “I have no professional licenses or training . . .,” Ortiz
Aff. ¶ 8; S. De Luna-Lopez Aff. ¶ 8; and that “I performed unskilled lawn care services for the
Defendants whose business was to provide those services to their customers,” Ortiz Aff. ¶ 9; S.
De Luna-Lopez Aff. ¶ 9. Defendants do not address any of these facts and the Court considers
them undisputed for the purpose of resolving Plaintiffs’ Motion. See Fed. R. Civ. P. 56(e).
Considering the factors listed above in light of Plaintiffs’ evidence, it is clear that Messrs.
Ortiz and Saul De Luna-Lopez were economically dependent upon Defendants, and not in
business for themselves. Their economic status was inseparable from the significant control
6
Because Messrs. Ortiz and Saul De Luna-Lopez do not state the grounds for their knowledge that
Defendant Rygh directed Jose Machuca to terminate them, the Court does not consider this statement in
reaching the determination that they are FLSA employees. See Galindo v. Precision Am. Corp., 754 F.2d
1212, 1221 (5th Cir. 1985) (“We have long recognized that mere statements of conclusions of law or
ultimate fact cannot shift the summary judgment burden to the nonmovant.”).
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Defendants exercised with respect to ALLSC. Defendants, not Messrs. Ortiz or Saul De LunaLopez, held the contracts with ALLSC’s customers. Defendants instructed Messrs. Ortiz and
Saul De Luna-Lopez as to when and where they would work. Defendants, not Messrs. Ortiz and
Saul De Luna-Lopez, supplied the “tools, equipment and materials” used. Messrs. Ortiz and
Saul De Luna-Lopez were wage earning employees, 7 whose hours of work and rates of pay (and
therefore opportunity for profit) were set by Defendants. The permanency of the relationship
between Messrs. Ortiz and Saul De Luna-Lopez, who worked exclusively for Defendants for
periods of approximately 15 and 10 months, respectively, 8 also points to employee status. So,
too, does the lack of skill and initiative possessed by Messrs. Ortiz and Saul De Luna-Lopez: the
two had no specialized training and performed unskilled lawn care services on behalf of
Defendants when and where they were told to do so.
The Court therefore concludes that Messrs. Ortiz and Saul De Luna-Lopez were FLSA
employees at all relevant times. See, e.g., Robicheaux v. Radcliff Material, Inc., 697 F.2d 662,
666-67 (5th Cir. 1983) (finding FLSA employee status where plaintiffs worked exclusively with
defendant for a “substantial period of time,” spanning ten months to three years, and defendant
provided plaintiffs with “steady reliable work over a substantial period of time.”); Carrell v.
Sunland Constr., Inc., 998 F.2d 300, 334 (5th Cir. 1993) (noting that a defendant’s control over a
plaintiff’s hours of work and hourly rate can suggest control over the plaintiff’s opportunity for
7
See Ortiz Aff. ¶ 4 (“During the time that I worked for the Defendants [,] I worked and [sic] average of 50
hours per week and was paid $8.00 per hour when I started and increased to an average hourly wage of
$9.30 per hour.”); S. De Luna-Lopez Aff. ¶ 4 (“During the time that I worked for the Defendants [,] I
worked and [sic] average of 50 hours per week and was paid $9.00 per hour when I started and increased
to an average hourly wage of $11.00 per hour.”).
8
See Ortiz Aff. ¶ 3 (“I worked for Defendants . . . from April 19, 2010 through July 18, 2011 as a
commercial lawn maintenance worker.”); S. De Luna-Lopez Aff. ¶ 3 (“I worked for Defendants . . . from
September 10, 2010 through July 22, 2011 as a commercial maintenance worker.”).
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profits); Usery, 527 F.2d at 1314 (holding that “[r]outine work which requires industry and
efficiency is not indicative of independence and nonemployee status”); Reich v. Priba Corp., 890
F. Supp. 586, 592 (N.D. Tex. 1995) (finding the degree of control exercised by defendants to
favor employee status where plaintiffs’ economic status was “inextricably linked to those
conditions over which defendants have complete control”).
3. Employer Status of Mark Rygh
Plaintiffs also move for summary judgment as to Mr. Rygh’s FLSA employer status.
Plaintiffs contend that Rygh is a FLSA employer “subject to derivative liability” because he “is
the owner of the corporate Defendant” and “exerted operational and financial control.” Br. ¶ 9.
The FLSA defines an employer as “any person acting directly or indirectly in the interest
of an employer in relation to an employee.” 29 U.S.C. § 203(d). “To determine whether an
individual or entity is an employer, the court considers whether the alleged employer:
‘(1) possessed the power to hire and fire employees; (2) supervised or controlled employee work
schedules or conditions of employment; (3) determined the rate or method of payment; and
(4) maintained employee records.’” Gray v. Powers, 673 F.3d 352, 355 (5th Cir. 2012) (quoting
Williams v. Henagen, 595 F.3d 610, 620 (5th Cir. 2010)). “Each element need not be present in
every case.” Id. at 357. The Fifth Circuit has held that “an individual qualifies as an employer if
he ‘independently exercised control over the work situation.’” Circle C., 998 F.2d at 329
(quoting Donovan v. Grim Hotel Co., 747 F.2d 966, 972 (5th Cir. 1984)). If an individual is held
to be an employer, the individual may be jointly and severally liable with the corporate employer
for damages stemming from non-compliance with FLSA. See Lee v. Coahoma Cnty. Miss., 937
F.2d 220, 226 (5th Cir. 1991).
For the reasons discussed above, Plaintiffs sufficiently have demonstrated Mr. Rygh’s
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FLSA employer status. While there is no evidence as to whether Mr. Rygh maintained employee
records, Plaintiffs state—and Defendants do not address—that Mr. Rygh owned ALLSC
(Defendants also admit this in their answer, see Answer ¶ 4), hired Plaintiffs, terminated Mr.
Genaro De Luna-Lopez, 9 set Plaintiffs’ schedule and rate of pay, and provided the tools and
equipment that Plaintiffs used in the course of their duties. G. De Luna-Lopez Aff. ¶ 5; Ortiz Aff.
¶ 5; S. De Luna-Lopez Aff. ¶ 5. These facts establish that Mr. Rygh independently exercised
control over the work situation. See Miller v. Prominence Sec. Agency, Inc., Civ. A. No. H-08978, 2009 WL 3858394, at *1 (S.D. Tex. Nov. 17, 2009) (“[T]he evidence shows that Aikens
was an employer of the Plaintiffs. Aikens testified that he was the sole owner and president of
Prominence . . . Aikens determined who to hire and fire, the hours each employee worked and
their rates of pay.”). Thus, the Court finds that Mr. Rygh was a FLSA employer at all relevant
times.
IV.
CONCLUSION
For the reasons given, the Court GRANTS IN PART and DENIES IN PART Plaintiffs’
Motion for Partial Summary Judgment. Plaintiffs’ Motion is GRANTED as to (1) the FLSA
employee status of Alexander Ortiz and Saul De Luna-Lopez; and (2) the FLSA employer status
of Mark Rygh. Plaintiffs’ Motion is DENIED in all other respects.
SO ORDERED.
Dated: July 29, 2013.
9
Only Mr. Genaro De Luna-Lopez states in his affidavit that Mr. Rygh terminated his employment. G.
De Luna-Lopez Aff. ¶ 5. While, as already discussed, Messrs. Ortiz and Saul De Luna-Lopez state that
Mr. Rygh directed another individual to terminate their employment, see Ortiz Aff. ¶ 5; S. De Luna-Lopez
Aff. ¶ 5, the Court does not consider these statements in reaching the determination that Mr. Rygh is a
FLSA employer. See supra n.6.
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