Legislature(1995 - 1996)
02/01/1995 01:05 PM House JUD
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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
HOUSE JUDICIARY STANDING COMMITTEE
February 1, 1995
1:05 p.m.
MEMBERS PRESENT
Representative Brian Porter, Chairman
Representative Con Bunde
Representative Bettye Davis
Representative Al Vezey
Representative Cynthia Toohey
Representative David Finkelstein
MEMBERS ABSENT
Representative Joe Green, Vice Chairman
COMMITTEE CALENDAR
* HB 19:"An Act relating to the definition of `fault' as
that term is used for the purposes of determining
the liabilities of parties in civil actions,
setting limitations on civil liability, and
authorizing the award, in conformance with
applicable court rule, of attorney fees in civil
actions."
HEARD AND HELD
* HB 103:"An Act relating to the sale of correctional
industries products and services."
HEARD AND HELD
(* First public hearing)
WITNESS REGISTER
REPRESENTATIVE GENE THERRIAULT
Alaska State Legislature
State Capitol, Room 421
Juneau, AK 99801-1182
Telephone: (907) 465-4797
POSITION STATEMENT: Sponsor of HB 19
SHELDON WINTERS, Attorney
One Sealaska Plaza, Suite 303
Juneau, AK 99801
Telephone: (907) 586-5912
POSITION STATEMENT: Provided information regarding HB 19
SUSAN COX, Assistant Attorney General
Civil Division, Special Litigation Section
Department of Law
P.O. Box 110300
Juneau, AK 99811-0300
Telephone: (907) 465-3603
POSITION STATEMENT: Provided information regarding HB 19
ROD MOURANT, Legislative Aide to Representative Pete Kott
Alaska State Legislature
State Capitol, Room 432
Juneau, AK 99811-1182
Telephone: (907) 465-3777
POSITION STATEMENT: Testified in favor of HB 103
WALLY ROMAN, Correctional Industries Program Manager
Department of Corrections
P.O. Box 112000
Juneau, AK 99811-2000
Telephone: (907) 465-3309
POSITION STATEMENT: Testified in favor of HB 103
HERB SIMON
Little Nelchina Farm, Mile 135
Glenn Highway, HC03
P.O. Box 8591
Palmer, AK 99645
Telephone: (907) 822-3059
POSITION STATEMENT: Testified against HB 103
PREVIOUS ACTION
BILL: HB 19
SHORT TITLE: DEFINITION OF "FAULT" FOR CIVIL LIABILITY
SPONSOR(S): REPRESENTATIVE(S) THERRIAULT
JRN-DATE JRN-PG ACTION
01/06/95 25 (H) PREFILE RELEASED
01/16/95 25 (H) READ THE FIRST TIME - REFERRAL(S)
01/16/95 25 (H) JUD, FIN
01/30/95 (H) JUD AT 01:00 PM CAPITOL 120
02/01/95 (H) JUD AT 01:00 PM CAPITOL 120
BILL: HB 103
SHORT TITLE: COMPETITION W/ PVT SECTOR:CORRECTION IND.
SPONSOR(S): REPRESENTATIVE(S) KOTT,Bunde
JRN-DATE JRN-PG ACTION
01/20/95 101 (H) READ THE FIRST TIME - REFERRAL(S)
01/20/95 101 (H) JUD, FIN
01/30/95 (H) JUD AT 01:00 PM CAPITOL 120
02/01/95 (H) JUD AT 01:00 PM CAPITOL 120
ACTION NARRATIVE
TAPE 95-6, SIDE A
Number 000
The House Judiciary Standing Committee was called to order at 1:05
p.m. on Wednesday, February 1, 1995. A quorum was present.
CHAIRMAN BRIAN PORTER noted all members were present, with the
exception of Representative Green, who was on his way to
Washington, D.C. He stated the following bills would be heard: HB
19, and HB 103, via teleconference. He called Representative Gene
Therriault to come forward and introduce HB 19.
HJUD-02/01/95
HB 19 - DEFINITION OF "FAULT" FOR CIVIL LIABILITIES
REPRESENTATIVE GENE THERRIAULT, Sponsor, described HB 19 as
intending to clarify a gray area of state liability law, which
allows defendants to argue that they are not liable for offenses
they have committed intentionally. Defendants have argued that
because the law refers only to acts that are negligent or reckless,
and not specifically to acts that are intentional, it does not
allow for a portion of a fault to go to those who have committed
offenses intentionally. In cases where more than one person
contributed to the injuries, or could be sued, the law is unclear
as to whether or not a person who committed an offense
intentionally can be held responsible for any portion of the fault.
In the cases that have been heard so far, the judges have found the
argument to be without merit. Tightening the law would eliminate
the need for these costly court proceedings.
REPRESENTATIVE THERRIAULT said he introduced this bill after a
scenario that arose out of a mail bombing case. He understood that
in the civil action, the mail bombers were trying to make the case
that because they intentionally meant to injure somebody by sending
the bomb, they would not be covered by this definition, and
therefore no portion of the fault could be attached to their
actions. The courts have turned that argument down so far, but
clarifying that language would close the potential loophole that
somebody may be able to take advantage of in the future. This
would also avoid some abuse of court time.
Number 075
REPRESENTATIVE AL VEZEY supported the philosophy of this change,
but also expressed concerns as to how it may increase insurance
premiums. Insurance policies cover accidental acts, but if they
were to cover intentional offenses, rates would rise.
Number 120
REPRESENTATIVE THERRIAULT noted that up to now, the courts have
turned down that argument. The intentional acts are excluded by
the current definition of fault. We are basically clarifying and
codifying what the courts have said up to this point.
REPRESENTATIVE CON BUNDE thought that broadening the definition of
"fault" may affect other areas of tort reform.
Number 150
REPRESENTATIVE THERRIAULT believed most insurance policies exclude
acts committed intentionally.
Number 160
CHAIRMAN PORTER called both Susan Cox and Sheldon Winters forward
to testify and answer questions.
Number 185
SHELDON WINTERS, Attorney representing State Farm Insurance
Company, stated their main concerns were about how the language
change may affect the liability aspects in our tort system. This
statute does not address when you may be liable, but when you may
apportion liability. The general rule is that the intentional
tortfeasor is always liable for all the damages. You completely
ignore apportionment. An intentional tortfeasor cannot recover, in
a lawsuit, for his own damages. There is not a realistic chance of
the courts varying from their theme. He felt what Representative
Therriault was proposing would create the ability of an intentional
tortfeasor to avoid some of his responsibility, when he should be
responsible for the whole portion.
Number 260
SUSAN COX, Assistant Attorney General, spoke about the problem she
encounters when defending the state. A victim may choose not to
sue her rapist, because the accused has no money; and instead sues
only the property owner. We have a problem of whether the property
owner is going to be stuck holding the liability for the entire
event, when there is the conduct, arguably intentional, of another
party who is not named in the lawsuit. This problem occurs in a
number of scenarios. It is not a situation where the truly
culpable party is sued at all. It arises in a situation where the
defendants who are sued, were allegedly negligent, want to bring
the most culpable party to the lawsuit, and that is the intentional
tortfeasor, or the arguably intentional tortfeasor.
MS. COX continued, saying the tort reform legislation we have in
Alaska has attempted to deal with fault, so every defendant bears
only their portion of the fault; and so we have had several
liabilities since March of 1989, when the most recent enactment
became effective. The problem is that juries are told to apportion
fault among all people who are parties to the litigation, who were
in any way negligent, grossly negligent, or even wilfully and
wantonly conducted themselves. When you have multiple defendants,
the jury apportions fault among all of them to the extent of the
liability. Then those defendants pay only the portion of their
personal fault. They are not paying for the fault of someone else
who is a defendant who may have no money. That is a policy
decision that has been made in this state. The plaintiff may walk
away not recovering from those who have no resources to pay a
judgment against them. We have decided to abandon the system of
joint and several liability where one defendant is responsible for
the whole group, and seeks contribution from other defendants if
they have any resources to chip in to the final outcome. We have
a situation where plaintiffs have chosen not to go after the
intentional or arguably intentional tortfeasor because that person
has no money. They, instead, go only after one or more possibly
negligent parties, and those defendants want to bring a third party
into the arguably intentional act.
MS. COX continued, saying it has arisen in the mail bombing case
Representative Therriault mentioned, where in all but one of the
decisions, the courts have said if they are going to apportion
fault and make it fair, so that no defendant is paying more than
their fair share of fault, we have to allow the defendants who are
allegedly negligent to bring in the allegedly intentional actor. It
has been in the context where those negligent tortfeasors wanted
the intentional tortfeasor in the case, because they were being
left out. One case where it has not happened, raises something of
an anomaly. We have a ruling from one judge that involves sexual
abuse by uncles of a victim. The state has been sued from failing
to prevent the abuse to these young victims, and the uncles who
committed the sexual abuse were not originally parties. The state
sought to bring them in as parties, because they perpetrated the
act that is the subject of the lawsuit. The judge says that
arguably, they did not act intentionally to cause the resultant
harm. They acted intentionally in doing the act, but did not
necessarily intend the harm, so it was going to be a question for
the jury. If the jury decides that the uncles committed the abuse,
but did not intend to hurt the girls, then they were unintentional
acts, in the allocation of fault. However, if they intended the
harm, then they were intentional actors; and because that is not
included in the definition of `fault' in AS 09.17.900, that fault
will not be considered or apportioned by the jury. It seems
something of an anomaly.
MS. COX said there is a problem in making things fair to the
defendants who are brought into the litigation by the plaintiff.
The proposal here before you in HB 19 would do what at least
several courts have implied should be done in terms of fault among
all parties. Tortfeasors should not be allowed to be absolved
altogether from allocation of fault when under AS 09.17.080.
Number 400
CHAIRMAN PORTER noted they intended to file a bill to address and
solve that problem soon. There was a big hole in passing the
elimination of joint and several liability, because we stated that
any party to the suit would be involved. Immediately, those
involved on one side of these kinds of issues took that to the
court and argued that, by definition, it is only the parties to the
suit; those named, as opposed to those unnamed, but still shared in
the responsibility. The tort reform bill that will hopefully be
going through this legislature should correct that problem.
Number 425
MS. COX did not object to the provision in this bill. It would be
helpful to the attorneys defending the state because the fact is,
the state has the deep pocket and is the one being sued, and there
are circumstances in which the culpable party is not there. It
does raise an awkward situation when someone is trying to decide
how to apportion fault between someone who has acted intentionally
in doing something, which is often criminal conduct, and there is
no question about it, versus the state for failing to prevent the
criminal from doing whatever it was they did. It would be a hard
thing for a jury to do. The bottom line is, if they are not there
at all, the existing defendants in the case would bear 100 percent
of it. This is better than what we have now. She mentioned
another better way to go at this is where we included something
else in the existing tort reform law that spells out exactly what
happens when you have an intentional tortfeasor and specifies that
other people, allegedly negligently involved, do not have any
responsibility; and if you determine that someone has acted
intentionally and caused any of these damages, you go no further in
allocating any fault. There are other possibilities, but
certainly, as far as this bill is concerned and what it does, Ms.
Cox did not have any problem with it.
Number 460
REPRESENTATIVE VEZEY asked where the issue of double jeopardy comes
in, if it does.
Number 470
MS. COX said it does not come in if they are sued civilly. That is
not precluded by double jeopardy. There is nothing to prevent
someone from suing a criminal who has victimized them. They can
definitely sue an intentional tortfeasor. The situation we are
confronting is a case where they choose not to because that person
has no money, so they have nothing to gain by suing the intentional
actor, and instead try to go after the resources of someone else
who arguably failed to prevent the intentional actor from doing
what they did.
Number 495
REPRESENTATIVE VEZEY asked if bringing the party in who has no
money, would actually decrease the state or other deep pocketed
defendant's liability. Would there be a hole in the award?
Number 502
MS. COX said yes. If the person is a party, under the tort reform
system, when we have gone from joint and several liability to
several liability, it means that each party pays only their share.
A jury goes through a verdict form and says, "How much is the
plaintiff responsible for whatever happened, if at all?," and for
each defendant, "What percentage of the harm was caused by them to
the plaintiff?" The plaintiff will not recover for whatever amount
is awarded as to the defendant.
Number 525
REPRESENTATIVE DAVID FINKELSTEIN was afraid of including
"intentional" in this. There is a chance it may be interpreted as
removing it from the category it is in now, which is taking
complete fault, in some cases.
Number 530
MR. WINTERS felt the issue Ms. Cox had discussed can be addressed
by the bill that will be filed shortly. That is, saying if you
want to apportion fault, you can, even of non-parties.
Number 540
CHAIRMAN PORTER noted the courts have impled that "intentional" is
in this statute.
Number 545
MR. WINTERS knew of no case where they have apportioned intentional
conduct with negligent conduct for an allocation of fault. It has
basically held that if your act was intentional, you are liable for
the whole ball of wax.
Number 550
MS. COX clarified that. In Benner v. Whitman, the Supreme Court
said in order to allocate fault among parties, they all really have
to be parties in the case. Defendants who are not satisfied that
everyone who could be responsible is in the case, have brought in
any of the defendants who should be part of the litigation in order
to get that allocation done. When we have tried to bring in third
parties to part of the case, we have had plaintiffs object, saying
you cannot do that because they are criminals and they have
committed intentional acts, and they cannot be in this lawsuit.
The courts have, in a number of situations, let them be in this
lawsuit, even recognizing that the word intentional is not in the
definition of "fault" in this statute.
Number 575
REPRESENTATIVE FINKELSTEIN felt it was unclear that we would be
putting "intentional" into a new category, where it would be
apportioned out, versus its current category, where it is not
apportioned out. If we are doing that, do we know why we are doing
it? Are we intending to change this case law conclusion that
intentional acts have no sharing, that they are completely liable,
and if we are changing that, why?
Number 590
MS. COX noted that if you look at AS 09.17.080, it does refer to
allocation of fault among the parties, so when you look at fault,
it does mean if we include intentional in the definition of fault,
those parties that are in there, whether intentional or otherwise,
are going to be included in the allocations, so there will be an
allocation. The people who are arguing that this party acted
intentionally, will argue that, if so, they should bear 100 percent
of the liability, and then all the rest of the defendants in there
would get a zero for their allocation of fault if the jury is
convinced of that. If the jury is not convinced that they acted
intentionally, but only negligently, or somewhere else on the
scale, they will be in for whatever percentage the jury gives them.
One thing that could be done would be to express in some kind of
legislative intent, that is not the committee's intention to change
the law with respect to the extent of the liability of the
intentional actors. This is to make clear that you are not trying
to change the common law with respect to intentional fault, only to
include allegedly intentionally acting parties in the litigation.
Another way to achieve this would be not to change the definition
of fault, but to create another section in the tort reform statute
that enables the defendant in this situation to bring allegedly
intentional tortfeasors into litigation and let the consequences
flow from that.
Number 625
CHAIRMAN PORTER summed up that this bill would not do anything more
than make sure that someone is not excluded from consideration
because of an intentional act. It would not affect case law as
relates to a case where there are negligent and intentional actors,
in a single act; that the intentional actor is going to be
apportioned 100 percent of the take.
Number 633
MR. WINTERS felt it would, because in layman's terms, the jury
shall apportion all fault, and in this amendment, we are redefining
"fault" as "negligence, recklessness, and intentional conduct." So
the jury is going to be instructed that you shall apportion
negligent tortfeasor fault with intentional tortfeasor fault.
Number 640
CHAIRMAN PORTER found it hard to believe legislation would
supersede case law. He asked Susan Cox to work on a committee
substitute or a letter of intent with Anne Carpeneti. The bill
would be held until Monday, and then heard again.
HJUD - 02/01/95
HB 103 - COMPETITION W/PVT SECTOR: CORRECTION IND.
Number 685
ROD MOURANT, Aide to Representative Kott, sponsor of HB 103, stated
Representative Kott is a strong endorser of the correctional
industries program. Current statute allows correctional industries
to enter into a competitive environment with previously existing
private industry operations. This legislation attempts not to
force the correctional industry to back out of those circumstances,
but merely to charge their prices competitively in those
circumstance; thereby not defeating the purpose of the correctional
industries program, but rather protecting a circumstance where a
government subsidized operation at a correctional industry is
competitive with the private sector. Its investments are therefore
protected. Specifically, there are letters from different meat
packing industries, both of whom are affected by the current
circumstances described. In a slaughterhouse/meatpacking
operation, which is actually under state control, there is no
requirement to charge competitive overhead and wage expenses. They
are able to price their product at a considerably less than market
value price. That adversely affects these companies in the private
sector. In those circumstances where competition exists with the
private sector, this bill calls for the correctional industries'
workers to be paid a competitive wage for the service. Those wages
would be paid over to the Commissioner of Corrections; for paying
both to the inmate and for deposit into the state general fund. A
negative fiscal note accompanies the bill, indicating if they had
to charge higher prices for their services, they would lose
business.
Number 750
REPRESENTATIVE CYNTHIA TOOHEY asked if the Palmer facility was the
only registered slaughterhouse in Alaska.
Number 760
MR. MOURANT thought there were two slaughterhouses, but there is no
competition in the slaughterhouse industry. Therefore the
slaughterhouse operation is not affected by this legislation at
all. The two slaughterhouses are in two different environments.
One is a federally inspected slaughterhouse and the other is a
state licensed and inspected facility; two different categories,
and there is no competition within the state in that regard.
Number 764
REPRESENTATIVE TOOHEY was confused by the letters from Mikes'
Quality Meats and Indian Valley Meats, complaining about the
competitiveness of the Palmer slaughterhouse. Are we not talking
about apples and oranges?
MR. MOURANT said there is no competition in regards to slaughter
operations. The competition is within the cutting, packaging and
marketing of products. The slaughterhouse provides both functions.
Number 781
REPRESENTATIVE BUNDE asked if the meat was currently on the market
at below market prices.
Number 785
MR. MOURANT thought that the wholesale purchase price for the
finished product was considerably lower than the fair market rate.
Number 795
REPRESENTATIVE FINKELSTEIN asked why the existing system was not
working and what the negative impact was.
Number 800
MR. MOURANT understood that it falls through the cracks in the
existing statutes because it is not privately owned, and that is,
in fact, what the current legislation speaks to, in regard to the
commission not entering into competition with a privately owned
facility. The facility we are dealing with is one that used to
have a loan through the Agricultural Revolving Loan Fund. That
loan was foreclosed on in 1986. The state now owns that Mt.
McKinley operation.
Number 825
REPRESENTATIVE FINKELSTEIN understood the statute to mean that
within the system, they are supposed to look at the impact of these
activities on private industry; that private industry being other
folks who might want to do it. If the correction industries is
involved with it, they have to make the determination that it will
not adversely impact other companies out there who are offering the
same services. He thought there was a system in place to handle
these types of conflicts - a commission to make these
determinations. He was confused as to why that did not work.
TAPE 95-6, SIDE B
Number 000
WALLY ROMAN, Corrections Industries Program (CIP) Manager,
Department of Corrections, gave a little background about CIP to
bring the committee up to date. The purpose of the CIP is to
reduce idleness and to employ prisoners in realistic work
experiences. Recently, they have developed two cooperative
ventures with the private sector. The part of the statute being
talked about is the part that allows them to do that. During
hearings four years ago, the legislature clearly defined more
requirements on establishing new markets and new industries to
minimize the impact on the private sector. Since 1992, CIP has
striven to communicate all of its activities to the public sector
through advanced advertising, citizens advisory groups, chamber of
commerce presentations, and more hearings to receive public
comment. The program has been very conservative in ensuring that
all proposed ventures are scheduled for discussion before the CIP
implements any operations. In addition, the program has promoted
cooperative ventures with the private sector that would control the
possibility of competition. Of the total $2,000,000 in gross
sales, approximately 20 percent have been sales to nonprofit
organizations, private individuals, and wholesale to the private
sector businesses.
MR. ROMAN said the department does have several concerns with the
provision of HB 103. It is anticipated that the proposed
provisions may be difficult to define and implement, and in
addition, there are existing statutes that already provide for the
defined process we are talking about, and can be addressed under
the Correctional Industries Commission. We believe they should
evaluate and regulate the potential competition of the private
sector. He said their primary concerns were that the statute
establishing free venture businesses has been utilized to implement
several different models of correctional industries operations in
conjunction with the private sector. This section of the bill was
put in there in 1986 to allow them to take advantage of a program
called the Prison Industry Enhancement Act, which was under the
United States Department of Justice. It was specifically put in
there to design a level playing field with the private sector.
They have had operations under that program and are in the process
of implementing a couple more. They are concerned that adjusting
the provisions of 43.32.017 may affect future implementations of
cooperative ventures with the private sector.
MR. ROMAN explained the difficulty that would result from trying to
pay comparable wages to workers, since their workers are completely
untrained inmates. If actual costs reflected training hours, the
prevailing rate would be so much higher, they would place
themselves out of the market. Another aspect that keeps them
noncompetitive with the other slaughterhouses is that they are only
allowed to cut and wrap one animal per customer per year. They are
unlimited in the number of animals they can slaughter for wholesale
distribution purposes.
Number 330
REPRESENTATIVE BUNDE asked if the Department of Corrections' meat
prices in the stores are comparable to meat purchased from private
meat packing operations.
MR. ROMAN explained that their meats would not be found in stores,
because they cannot keep up with the demand for volume. They sell
to private restaurants.
REPRESENTATIVE TOOHEY stated she was opposed to the state competing
at all with the private sector, if the playing field is not totally
level at all perceptions.
Number 415
REPRESENTATIVE VEZEY commented that we have a large societal
problem in incarcerating people. He supported anything they could
do to make this cost of incarceration less of a burden to society.
He did not know of anything constructive that could be done that
does not, conceivably, compete with private sector. He felt there
needs to be a balance between the need to have an affordable system
of incarceration and maintaining a healthy private sector. He felt
the commission that is in place would be a much better forum to
address the fairness of this type of competition than a statute or
legislative committee. If there is a problem, maybe the makeup of
the commission should be looked at, rather than trying to codify
what competition is.
Number 450
HERB SIMON, resident of Nelchina, explained his frustrations with
the complications involved in conveying his public opinion to the
committee members in time for the meeting. He then explained in
full detail, the slaughter process and how that relates to their
pricing formula. He felt the Mt. McKinley facility to be unique in
its services due to the equipment used, quality of inspections, and
capacity for processing. Also, it is the only facility that
slaughters animals grown exclusively in Alaska. He said it would
be hard for the Department of Corrections' operations to compete
with private sector wages. He also thought the industry should be
deregulated.
Number 660
CHAIRMAN PORTER felt that if the committee were to consider this
bill, it would be more to the point to recognize that there is
already a system in place to deal with these issues. He asked the
bill sponsor to meet with the Department of Corrections to see if
the constituent concerns could be addressed through another avenue.
REPRESENTATIVE DAVIS agreed with Chairman Porter. She felt that
maybe the two private industries who expressed concern, do not
fully understand what Mt. McKinley does, exactly. They need to be
educated and included in the discussion. She felt there was a
difference between what is going on at the private meat packing
plants and the Mt. McKinley slaughterhouse.
Number 711
CHAIRMAN PORTER noted the statute provides a mechanism to deal with
the problem they are expressing, which is unfair competition. The
competition comes in the sale, not what goes into the costs; and so
the sale price mechanism is there.
REPRESENTATIVE BUNDE observed that the competition question could
be answered by having comparable prices placed on the finished
product.
Number 730
REPRESENTATIVE DAVIS asked about the pricing on products going to
the wholesalers.
Number 735
MR. ROMAN explained that their prices are based on an agricultural
index and the restaurant index.
MR. SIMON mentioned that Alaska is known as a dumping ground for
the lower 48, for products they do not want; so the fresher
products coming from Mt. McKinley are higher in quality.
Number 750
REPRESENTATIVE BUNDE felt maybe Mt. McKinley's prices were too low
for what the product is.
Number 825
CHAIRMAN PORTER asked what happens if there are no competitors when
starting a new business, and one pops up two years later. Are you
then required to adjust, based on what that business does?
Number 840
MR. ROMAN said that has happened, and what they did is stayed in
the business and tried to meet the prevailing market rate created
within the business. The free venture statute allows for somebody
to come in and run a business inside the prison with their managers
completely. It also allows them to sell to a private company at
wholesale, according to their specifications. That is what they
are doing with Aurora Caskets right now. It allows them to come in
and purchase a block of hours from the inmate work force. It also
allows them to do some business with the public. For all of those,
they have to go out and receive special certifications, and if it
is interstate commerce, they have to meet certain federal
guidelines before they can do business.
CHAIRMAN PORTER announced the bill would be held.
ADJOURNMENT
The House Judiciary Committee adjourned at 2:45 p.m.
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