United States Court of Appeals
Fifth Circuit
F I L E D
REVISED APRIL 4, 2003 April 3, 2003
Charles R. Fulbruge III
UNITED STATES COURT OF APPEALS Clerk
For the Fifth Circuit
No. 02-20377
CLIFTON HALL
Plaintiff-Appellant,
VERSUS
GE PLASTIC PACIFIC PTE LTD. ET AL.
Defendants
GENERAL ELECTRIC COMPANY
Defendant-Appellee.
Appeal from the United States District Court
For the Southern District of Texas, Houston
Before JONES, WIENER and DeMOSS Circuit Judges.
DeMOSS, Circuit Judge:
Clifton Hall, Jr. (“Hall”), the plaintiff-appellant, brought a
personal injury lawsuit, in Texas state court, against GE Plastic
Pacific PTE Limited and General Electric Company (collectively,
“GE”) claiming GE had manufactured an extension cord that was
allegedly the cause of a fire in which Hall was severely burned.
The matter was removed to federal court and then referred to a
magistrate judge. GE moved for summary judgment based on judicial
estoppel. The magistrate judge applied federal law and recommended
granting GE’s motion. After de novo review, the district court
adopted the magistrate’s memorandum and recommendation and granted
GE’s motion and entered final judgment. Hall now appeals claiming
state law should have been applied and judicial estoppel was
inappropriate.
BACKGROUND
This is the second lawsuit that Hall has filed to recover for
injuries he suffered on July 30, 1996, when he was burned in a
fire at his grandparents’s home. In July of 1998 Hall, then 15
years old, and other injured parties, brought the first lawsuit in
a Texas state court. As discovery proceeded in the lawsuit, Hall,
through a next friend, alleged that the fire was caused by a faulty
electrical extension cord, that the cord was purchased at a Wal-
Mart store, and that various companies were responsible as
manufacturer of the cord. The case was removed to the United
States District Court for the Southern District of Texas and placed
before Judge Vanessa Gilmore, the same judge who presided over the
present case.
On May 14, 1999, Hall amended his complaint to include claims
against Pacific Electricord Company (“Pacific”) and Woods
Industries, Incorporated (“Woods”). Ultimately, Hall obtained an
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affidavit indicating that the cord was purchased from a Wal-Mart
store and answers from Wal-Mart to interrogatories indicating that
Wal-Mart only sold cords manufactured by Pacific and Woods.
Pacific persuaded Hall that it did not manufacture the cord and
Hall agreed to dismiss claims against Pacific.
Hall then moved for Interlocutory Summary Judgment against Wal-
Mart and Woods, claiming “Woods is the only remaining
manufacturer.” Woods also moved for summary judgment claiming it
did not manufacture the cord and supported its claim with an
affidavit from an expert who suggested that GE may have
manufactured the cord. In his Response and in his Supplemental
Response to Woods’s Motion for Summary Judgment, Hall challenged
this evidence claiming, “Woods remains as the only possible and
viable manufacturer and/or supplier” and “[t]he remnant cord is a
Woods product.” Additionally, on May 8, 2000, in an affidavit
Hall’s attorney stated, “Plaintiffs believe that the combination of
the documents and the deposition testimony of [Woods’s expert] will
show from Woods’[sic] own resources that Woods or one of
Woods’[sic] manufacturers, distributors or suppliers was the
creator of the extension cord which is the subject of this
litigation.”1
While these motions were pending, Woods moved for leave to file
a third party complaint against GE. Hall opposed this motion and
1
Hall has been represented by the same attorney, Mr. Joe W.
Meyer, in both the previous lawsuit and this current lawsuit.
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argued that “[t]he totality of the evidence discovered demonstrates
Woods supplied the subject extension cord” and that GE was not a
necessary and indispensable party because there could be only one
manufacturer of the extension cord. On July 19, 2000, the district
court denied Woods’s motion for leave to file a third party
complaint against GE. The next day, in a minute entry, the court
denied both Hall’s and Woods’s motions for summary judgment.
On August 25, 2000, Judge Gilmore held a pretrial hearing. At
the hearing the court questioned why the case should go to trial if
Hall could not prove Woods was the manufacturer. Hall’s attorney
insisted that he could prove that Woods was the manufacturer. The
court then asked the parties if they had tried to talk about the
case and resolve the matter. The court then indicated the case
should be set for trial.
On September 27, 2000, Hall’s attorney sent letters to two expert
witnesses informing them that the case had settled but requesting
that they keep their files open because he “anticipate[d] further
prosecution of this case against General Electric.” Some time in
October of 2000, Hall and the other plaintiffs reached formal
settlement with Woods, Wal-Mart, and the defendants’s insurance
underwriter, Wausau Underwriters Insurance Company (“Wausau”). The
defendants collectively settled for $15 million and the plaintiffs
agreed to dismiss the claim. On October 4, 2000, the district
court entered final judgment giving counsel the right to reinstate
the suit if the settlement was not consummated.
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On November 24, 2000, Hall filed the current lawsuit against GE
in Texas state court. Hall, the sole plaintiff, now claims that
GE, not Woods, manufactured the extension cord. In mid-December,
while the suit was pending in state court, Hall entered into a
“reimbursement agreement” with Wausau. Wausau agreed to cover
Hall’s expenses in this current litigation in return for Hall
sharing proportionately any recovery with Wausau up to Wausau
receiving a maximum amount equal to the amount Wausau paid Hall to
settle the previous suit.
On January 5, 2001, GE removed the case to federal court on
diversity grounds and the case was assigned to Judge Gilmore who
referred all pretrial matters to Magistrate Judge Mary Milloy. On
May 11, 2001, GE moved for summary judgment. GE argued that Hall
was judicially estopped from pursuing the second suit because Hall
was arguing a position that is inconsistent with his earlier claim
that only Woods was the manufacturer of the extension cord. Hall
successfully asserted this earlier claims, and Hall should not be
allowed to manipulate the court system into allowing him double
recovery. Hall argued that state law should apply and judicial
estoppel is inappropriate.
On January 23, 2002, the magistrate judge issued a Memorandum and
Recommendation that first considered whether federal law should
apply and then applied federal law concerning judicial estoppel and
concluded that judicial estoppel is applicable and GE’s motion
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should be granted. Hall filed several objections but on February
28, 2002, after de novo review, Judge Gilmore adopted the
Memorandum and Recommendation in full and entered final judgment.
Hall timely filed notice of appeal and claims the district court
erred because Texas, not federal, law concerning judicial estoppel
should apply in this case and that the “elements” of judicial
estoppel have not been satisfied and therefore GE’s motion for
summary judgment should not have been granted. GE argues that
applying federal law is appropriate, although irrelevant because
Texas law requires Hall’s claims to be estopped as well, and the
district court was correct in finding judicial estoppel and
granting GE’s motion.
DISCUSSION
I. Whether the district court erred in applying federal, not
state, law on the issue of judicial estoppel.
Whether the district court applied the proper law is subject to
de novo review. Woodfield v. Bowman, 193 F.3d 354, 358 (5th Cir.
1999). “Federal courts apply state substantive law when
adjudicating diversity-jurisdiction claims, but in doing so apply
federal procedural law to the proceedings.” Exxon Corp. v.
Burglin, 42 F.3d 948, 950 (5th Cir. 1995) (citing Erie R.R. v.
Tompkins, 304 U.S. 64 (1938)). To determine whether an issue is
substantive or procedural, this Court must consider the “twin aims”
of Erie: the discouragement of forum shopping and the avoidance of
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the inequitable administration of the laws. Cates v. Sears,
Roebuck & Co., 928 F.2d 679, 687 (5th Cir. 1991).
Application of federal law was appropriate in this case for two
reasons that are consistent with the aims of Erie. First, in the
instant case, the application of federal law is not outcome
determinative because Texas law would likely require the same
result and therefore applying federal law does not encourage forum
shopping. See Byrd v. Blue Ridge Rural Elec. Coop., 356 U.S. 525,
537 (1958) (outlining the role of outcome in the Erie analysis);
see also Zipp Indus. v. Ranger Ins. Co., 39 S.W.3d 658, 665 (Tex.
App. –- Amarillo 2001, no writ) (stating that under Texas law “if
a party takes an affirmative position in a proceeding and is
successful in having the court adopt its position, the party doing
so may be judicially estopped from later taking an inconsistent
position in that or in another proceeding, even though the prior
action is not a sworn declaration”). Second, although many courts
have simply assumed that either federal or state law applies and
therefore have applied either federal or state law without
analysis, the majority of cases to consider the question have
concluded that federal law should apply because a federal court
should have the ability “to protect itself from manipulation” and
this ability should not vary in a diversity action because it is a
matter of federal procedure and not a substantive concern.
Rissetto v. Plumbers & Steamfitters Local 343, 94 F.3d 597, 602-04
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(9th Cir. 1996) (discussing diversity cases applying federal and
state law on judicial estoppel); see also New Hampshire v. Maine,
532 U.S. 742, 749 (2001) (stating the purpose of judicial estoppel
is “to protect the integrity of the judicial process”); Johnson v.
Oregon, 141 F.3d 1361, 1364 (9th Cir. 1998) (finding “[f]ederal law
governs the application of judicial estoppel in federal courts”);
Edwards v. Aetna Life Ins. Co., 690 F.2d 595, 598 n.4 (6th Cir.
1982) (stating that the judicial estoppel “question primarily
concerns federal interests”). Moreover, some older Fifth Circuit
cases have held that state law applies when “nonfederal issues are
at stake,” Continental Cas. Co. v. McAllen ISD, 850 F.2d 1044, 1046
n.2 (5th Cir. 1988), but generally this Circuit considers judicial
estoppel “a matter of federal procedure” and therefore applies
federal law. Ergo Science, Inc. v. Martin, 73 F.3d 595, 600 (5th
Cir. 1996); accord Grigson v. Creative Artists Agency, L.L.C., 210
F.3d 524, 530 (5th Cir. 2000). Therefore, the application of
federal law concerning judicial estoppel is appropriate in this
case because both suits filed by Hall ended up in federal court and
it is the federal court that is subject to manipulation and in need
of protection. Accordingly, the district court’s adoption of the
magistrate’s application of federal law is affirmed.
II. Whether the district court erred in granting GE’s motion for
summary judgment based on judicial estoppel.
Summary judgment is appropriate if no genuine issue of material
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fact exists and the moving party is entitled to judgment as a
matter of law. FED. R. CIV. P. 56(c). While a grant of summary
judgment is generally reviewed de novo, this Court applies the same
standard applied in the district court and a “district court’s
invocation of judicial estoppel is reviewed for abuse of
discretion.” Ahrens v. Perot Systems Corp., 205 F.3d 831, 833 (5th
Cir. 2000); accord New Hampshire, 532 U.S. at 750 (stating
“judicial estoppel is an equitable doctrine invoked by a court at
its discretion”); In re Coastal Plains, Inc., 179 F.3d 197, 205
(5th Cir. 1999) (stating judicial estoppel is an equitable
doctrine, and the decision whether to invoke it is within the
court’s discretion).
Judicial estoppel “prevents a party from asserting a position in
a legal proceeding that is contrary to a position previously taken
in the same or some earlier proceeding.” Ergo Science, 73 F.3d at
598. The purpose of the doctrine is to prevent litigants “from
‘playing fast and loose’ with the courts . . . .” Id. In this
Circuit, “two bases for judicial estoppel” must be satisfied before
a party can be estopped. Ahrens, 205 F.3d at 833. First, it must
be shown that “the position of the party to be estopped is clearly
inconsistent with its previous one; and [second,] that party must
have convinced the court to accept that previous position.” Id.
A. Clearly Inconsistent Positions
GE argues that Hall’s allegation that GE is the manufacturer of
9
the electric cord is clearly inconsistent with the position Hall
asserted in the prior lawsuit that only Woods could be the
manufacturer. Hall responds that he never made a “sworn” statement
that is clearly inconsistent with the position he now asserts and
that statements made by his attorney, co-parties in affidavits, in
the pleadings, or in the settlement agreement in the previous
litigation are not sufficient to satisfy the requirements of
judicial estoppel.
Statements made in a previous suit by an attorney before the
court can be imputed to a party and subject to judicial estoppel.
New Hampshire, 532 U.S. at 753 (statements made at oral argument);
Hidden Oaks Ltd. v. City of Austin, 138 F.3d 1036, 1047 (5th Cir.
1998) (statements made at charge conference); Ergo Science, 73 F.3d
at 598 (statements made at pretrial hearing). Here, Hall’s
attorney made the statements to the court in the pleadings, his own
motions, in response to Woods’s motions, and at the pretrial
hearing. This Circuit has indicated that the doctrine applies to
more than just sworn statements of a party and likewise has never
specifically stated that it applies only to a party’s sworn
statements. See, e.g., Ahrens, 205 F.3d at 835 (requiring only the
presence of inconsistent statements, although the statements at
issue were sworn statements); Afram Carriers Inc. v. Moeykens, 145
F.3d 298, 304 n.12 (5th Cir. 1998) (assuming, without holding,
“that representations that a plaintiff makes in its complaint are
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subject to the doctrine of judicial estoppel”); Brandon v.
Interfirst Corp., 858 F.2d 266, 268 (5th Cir. 1988) (stating “a
party who has assumed one position in his pleadings may be estopped
from assuming an inconsistent position”).
Hall also argues that cases applying judicial estoppel to
statements made by a party’s attorney only involve circumstances
where the attorney made a “concession.” However, there is no such
“concession” requirement that must be met before applying judicial
estoppel based on the statements of a party’s attorney. See,
e.g., New Hampshire, 532 U.S. at 752, 756 (focusing on a party’s
“position,” “oral argument,” and “interpretation”); Ergo Science,
73 F.3d at 598 (stating “judicial estoppel prevents a party from
asserting a position in a legal proceeding that is contrary to a
position previously taken in . . . some earlier proceeding”)
(emphasis added). Further, Hall’s attempt to assert that GE is the
manufacturer is contrary to the “general principles of judicial
estoppel” which state “a party cannot advance one argument and
then, for convenience or gamesmanship after that argument has
served its purpose, advance a different and inconsistent argument.”
Hotard v. State Farm Fire & Cas. Co., 286 F.3d 814, 818 (5th Cir.
2002).
Hall also claims that his current statements are not inconsistent
with any previous statements because the earlier statements
concerned future actions and were not unequivocal. Hall’s argument
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in this case is not a factually accurate representation of what
occurred in the earlier lawsuit and, moreover, is contrary to Fifth
Circuit precedent.
This case is similar to Ahrens v. Perot Systems Corporation, 205
F.3d 831 (5th Cir. 2000). In that case, Wendy J. Ahrens (“Ahrens”)
was discharged from Perot Systems Corporation (“Perot Systems”),
and she filed a state court action, alleging that several other
individuals and companies, including International Business
Machines Corporation (“IBM”), “had tortiously interfered with her
employment with Perot Systems.” 205 F.3d at 832. IBM claimed
fraudulent joinder and removed the action to federal court. Id. at
834. In a motion for remand, Ahrens submitted a sworn declaration
that “[t]he IBM defendants disparaged [her] to Perot Systems and
requested that Perot Systems terminate [her].” Id. The district
court granted the remand. Id. Ahrens then filed for an
injunction, claiming “Perot Systems terminated [her] employment as
a direct result of the interference by the IBM Defendants.” Id.
(emphasis original). In a later deposition, Ahrens testified that
she was terminated from Perot Systems because a defendant
“tort[i]ously interfered with [her] employment contract.” Id.
While the state action was pending, Ahrens filed a separate suit
against Perot Systems in federal court, claiming that her discharge
was based on her gender and disability. Id. at 833. In a
deposition taken in that federal discrimination suit, Ahrens was
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asked, once again, the reason for her termination. Id. at 834-35.
She answered, “I was terminated from Perot Systems because of my
sex . . . and . . . because of the fact that I was considered
damaged goods or handicapped and unable to provide value to the
company.” Id. at 835 Following her deposition, Perot Systems
moved for summary judgment, arguing that “Ahrens was judicially
estopped from pursuing her discrimination claims” because the
district court in the tortious interference action had relied on
her earlier, but inconsistent, statements when it granted her
motion to remand the first suit to state court. Id. at 833.
Ahrens, like Hall, claimed that judicial estoppel was inapplicable
because there was “no inconsistency in her positions in the two
actions.” Id. at 835. She maintained that:
[S]he [had] never claimed, or been required to prove, that her
discharge was caused solely either by tortious interference or
by discrimination. She assert[ed] that her statements in the
first action (discharged because of tortious interference)
were not admissions that there were no other causes for
discharge; and that, even if tortious interference was part of
the reason for discharge, it would not foreclose finding
discrimination was also part of the motivation for it.
Id. (emphasis original). The district court rejected that argument
as “no more than ineffectual hair splitting,” and it granted
summary judgment for Perot Systems. Ahrens v. Perot Sys. Corp.,
39 F. Supp. 2d 773, 778 (N.D. Tex. 1999). The Fifth Circuit
affirmed the judgment. 205 F.3d at 832. In doing so, we explained
that,
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[Ahrens’s] attempt to reconcile her inconsistent positions on
the basis that she was never asked for the sole reason for
discharge is unavailing . . . . In each action, she was
asked: why were you terminated. For each action, she gave a
glaringly inconsistent, all-encompassing, non-qualified
response. For the first action, discharge was due to tortious
interference; for the second, discrimination. Accordingly,
the first requirement for judicial estoppel–use of
inconsistent positions-is satisfied.
Id. at 835.
Here, Hall’s lawyer was asked specifically if he could prove that
“Woods is the one who designed, who manufactured this cord.” He
answered unequivocally, “I can prove that Judge . . . . I can put
this at the doorstep of Woods Industries.” Hall argued,
repeatedly, that no other manufacturer of the cord was a possible
tortfeasor: “Woods is the only remaining manufacturer;” “Woods
remains as the only possible and viable manufacturer and/or
supplier;” “The remnant cord is a Woods product;” “[T]here can be
only one manufacturer of the extension cord.”
In contrast, Hall’s current position is that “[t]he fire was
caused by defects in the extension cord which was manufactured” by
GE. This statement is clearly inconsistent with Hall’s prior
assertion that the only possible manufacturer of the cord was
Woods. Hall’s argument that he never admitted that Woods was the
manufacturer of the extension cord in question or that General
Electric was not the manufacturer is “no more than ineffectual hair
splitting.” See Ahrens, 39 F. Supp. 2d at 778. The manufacturer
of the cord cannot be Woods in the first action but GE in the
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second. Likewise, there cannot be only one identifiable
manufacturer in the first action, but several possible
manufacturers in the second. Accordingly, the district court did
not abuse its discretion in finding the first bases for judicial
estoppel-use of inconsistent positions-was satisfied.
B. Acceptance of Prior Position
GE argues that because the district court relied on Hall’s
statement, ruled on Hall’s behalf concerning procedural matters
(i.e., preventing Woods from joining GE and denying Woods’s Motion
for Summary Judgment), and dismissed the case after Hall received
a 15 million dollar settlement, Hall successfully maintained his
position in the prior suit for purposes of judicial estoppel. Hall
counters that the district court never accepted or adopted any of
his statements and the procedural rulings and settlement do not
satisfy the success requirement.
The purpose of the prior success or “judicial acceptance”
requirement is to “minimize[] the danger of a party contradicting
a court’s determination based on the party’s prior position and,
thus, mitigate[] the corresponding threat to judicial integrity.”
Coastal Plains, 179 F.3d at 206. The previous court’s acceptance
of a party’s argument could be “either as a preliminary matter or
as part of a final disposition.” Id. “The ‘judicial acceptance’
requirement does not mean that the party against whom the judicial
estoppel doctrine is to be invoked must have prevailed on the
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merits.” Id. Our cases suggest that doctrine may be applied
whenever a party makes an argument “with the explicit intent to
induce the district court’s reliance.” Hidden Oaks, 138 F.3d at
1047. Again in Ahrens, a case similar to the present case, we
stated that when a court “necessarily accepted, and relied on” a
party’s position in making a determination, then the prior success
requirement is satisfied. See Ahrens, 205 F.3d at 836 (relying on
a party’s position when remanding a case).
The district court in the present case did not rely only on the
settlement as an indication of prior success nor did the court
imply that a party cannot plead alternative theories nor did the
court imply that the earlier court adopted Hall’s factual
assertions. Rather, the district court found that in deciding the
summary judgment motions and the joinder motion, the previous court
“necessarily accepted, and relied on” Hall’s statements in
resolving the conflict between the contradictory evidence (i.e.,
Hall’s claim that only Woods could be the manufacturer and
therefore GE should not be joined as opposed to Woods’s claim that
it was not the manufacturer). Therefore, the district court did
not abuse its discretion in finding that Hall’s earlier position
had been accepted and, to protect the integrity of the court, in
refusing to let Hall assert a position that is inconsistent with
the position he previously asserted.
C. Other Factors
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In New Hampshire, the Supreme Court outlined three “non-
exclusive” factors that “typically inform the decision whether to
apply the doctrine in a particular case.” 532 U.S. at 750. In
addition to the two factors primarily relied on in this Circuit and
already discussed, the Supreme Court articulated a third, “whether
the party seeking to assert the inconsistent position would derive
an unfair advantage or impose an unfair detriment on the opposing
party if not estopped.” Id. at 751. In present case, Hall argues
that allowing him to pursue his claim against GE would not impose
an unfair detriment on GE because GE should have known that they
were potentially subject to suit for Hall’s injuries. This may be
true; however, it is the defendants in the prior suit that may have
the right to go after GE and not Hall. Hall has already recovered
his damages and been made whole and therefore cannot now come back
and attempt to recover, yet again, from another party whose
presence in the first suit he insisted was unnecessary.
In conclusion, Hall raises several other points of error. First
he claims that the district court failed to require a showing of
additional “elements” such as detrimental reliance, privity, and
intent. None of these “elements” are required under Fifth Circuit
law. See Coastal Plains, 179 F.3d at 205 (stating judicial
estoppel is “intended to protect the judicial system, rather than
the litigants”). Second, Hall claims the district court erred by
not accepting his defense of “mistake” – that he was wrong in the
17
earlier suit but is now correct. However, even the case Hall cites
to support his defense, New Hampshire v. Maine, does not allow the
defense to be raised when the party had the same opportunity or
incentive to determine who was the manufacturer in the first suit
as it did in the second and the information necessary to make the
determination was no less available in the first suit than it is
now. 532 U.S. at 754. Hall has not argued that he now has new
information or that he had less incentive to determine the
manufacturer in the first suit; in fact, Hall rejected the
opportunity to determine if GE was the manufacturer in the first
suit. See Coastal Plains, 179 F.3d at 212-13 (refusing, in a
bankruptcy case, to allow a party to avoid judicial estoppel with
a claim of “inadvertence” where the party had knowledge and motive
to conceal that knowledge in the prior case).
Because Hall’s current position is clearly inconsistent with his
previous position which he successfully asserted in the previous
suit and because he lacks any defense, the district court did not
err in finding him judicially estopped. Moreover, it was within
the court’s discretion to utilize judicial estoppel and prevent
Hall from playing “fast and loose” with the court by “changing
positions based upon the exigencies of the moment.” Ergo Science,
73 F.3d at 598.
CONCLUSION
In conclusion, the district was correct in applying federal
18
law because, when there are no nonfederal interests at stake,
judicial estoppel is a matter of federal procedure. Likewise the
court did not abuse its discretion by judicially estopping Hall
because the two bases necessary for the doctrine to apply were
present and Hall has no defense available. Therefore, the
decision of the district court granting GE’s motion for summary
judgment is affirmed. AFFIRMED.
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