Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-cand-4_16-cv-04305/USCOURTS-cand-4_16-cv-04305-0/pdf.json

Nature of Suit Code: 120
Nature of Suit: Marine Contract Actions
Cause of Action: 28:1331 Fed. Question: Interstate Commerce Act

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United States District Court

Northern District of California

UNITED STATES DISTRICT COURT

NORTHERN DISTRICT OF CALIFORNIA

POLYNESIA LINE, LTD.,

Plaintiff,

v.

FAX CARGO INC., et al.,

Defendants.

Case No. 4:16-cv-04305-KAW 

REPORT AND RECOMMENDATION 

TO GRANT PLAINTIFF'S MOTION 

FOR DEFAULT JUDGMENT

Re: Dkt. No. 17

On December 23, 2016, Plaintiff Polynesia Line, Ltd. filed a motion for default judgment 

against Defendants Fax Cargo Inc. (“Fax”), Xavier A. Faletoi, and Easter Galo for breach of a 

maritime contract pursuant to Rule 9(h) of the Federal Rules of Civil Procedure and 28 U.S.C. § 

1333(1). Defendants have not appeared in this action, nor did they respond to Plaintiff’s 

complaint or motion for default judgment.

On February 16, 2017, the Court held a hearing on Plaintiff’s motion for default judgment, 

at which Defendants did not appear. Since Defendants, by the very virtue of being in default, have

not consented to the undersigned, the Court reassigns this action to a district judge and 

recommends that Plaintiff’s motion be GRANTED.

I. BACKGROUND

The complaint alleges that Defendants committed breach of a maritime contract, 

fraud/intentional misrepresentation, and negligent misrepresentation. (Compl., Dkt No. 1 ¶¶ 15-

28). The essential facts that gave rise to this action include the following: Polynesia Line and Fax 

were parties to a Master Carrier Service Agreement (“MCSA”) which also incorporated by 

reference the terms and conditions of Plaintiff’s tariff and Subject Bill of Lading (“B/L”). 

(Compl. at ¶ 8). Fax was a Shipper and/or Merchant (as those terms are used in the Plaintiff’s 

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Subject B/L, tariff and MCSA) with respect to various shipments for which proper bills of lading 

and freight bills were issued by or on behalf of Plaintiff. (Compl. ¶ 9). The said shipments were 

tendered for transportation between United States and territorial ports on board ocean vessels for 

which freight charges were lawfully incurred in favor of Plaintiff pursuant to the aforesaid tariff 

and contracts of carriage. Id. Individual Defendants Faletoi and Galo directed and/or participated 

in the misrepresentations at issue herein. (Compl. ¶ 10).

Under the applicable contracts of carriage, Defendants are obligated to pay the entire 

amounts of freight due under the applicable tariff and/or service contract for each shipment, as 

well as additional damages if the cargo is misdescribed or misdeclared to Plaintiff. (Compl. ¶ 11). 

Defendants repeatedly obtained transportation of property at less than the rates or charges 

established by Plaintiff in its published tariff and in the MCSA by misdescribing or misdeclaring

commodities on at least 33 shipments. (Compl. ¶¶ 11-12). As a result, Plaintiff charged and 

collected less than was actually due under the relevant MCSA and tariff. (Compl. ¶ 12).

On July 29, 2016, Plaintiff filed an action against Defendants. Fax and Faletoi were 

personally served on September 22, 2016. (Dkt. Nos. 10-11.) Galo was personally served on 

September 7, 2016. (Dkt. No. 9.) None of the defendants appeared.

On March 2, 2016, the Clerk entered default. (Dkt. No. 15.) On December 23, 2016, 

Plaintiff filed a motion for default judgment. (Pl.’s Mot., Dkt. No. 17) Defendants did not file an 

opposition. On February 16, 2017, the Court held a hearing, at which Defendants did not appear.

II. LEGAL STANDARD

Federal Rule of Civil Procedure 55(b)(2) permits a court to enter a final judgment in a case 

following a defendant’s default. Shanghai Automation Instrument Co. v. Kuei, 194 F. Supp. 2d 

995, 999 (N.D. Cal. 2001). Whether to enter a judgment lies within the court’s discretion. Id. at 

999 (citing Draper v. Coombs, 792 F.2d 915, 924-25 (9th Cir. 1986)).

Before assessing the merits of a default judgment, a court must confirm that it has subject 

matter jurisdiction over the case and personal jurisdiction over the parties, as well as ensure the 

adequacy of service on the defendant. See In re Tuli, 172 F.3d 707, 712 (9th Cir. 1999). If the 

court finds these elements satisfied, it turns to the following factors (“the Eitel factors”) to 

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determine whether it should grant a default judgment: 

(1) the possibility of prejudice to the plaintiff, (2) the merits of 

plaintiff’s substantive claim, (3) the sufficiency of the complaint, (4) 

the sum of money at stake in the action[,] (5) the possibility of a 

dispute concerning material facts[,] (6) whether the default was due 

to excusable neglect, and (7) the strong policy underlying the 

Federal Rules of Civil Procedure favoring decision on the merits. 

Eitel v. McCool, 782 F.2d 1470, 1471-72 (9th Cir. 1986) (citation omitted). In this analysis, “the 

well-pleaded allegations of the complaint relating to a defendant’s liability are taken as true.” 

Pepsico, Inc. v. Cal. Sec. Cans, 238 F. Supp. 2d 1172, 1175 (C.D. Cal. 2002) (citing Televideo 

Sys., Inc. v. Heidenthal, 826 F.2d 915, 917-18 (9th Cir. 1987)). Nevertheless, default does not 

compensate for essential facts not within the pleadings and those legally insufficient to prove a 

claim. Cripps v. Life Ins. Co. of N. Am., 980 F.2d 1261, 1267 (9th Cir. 1992).

III. DISCUSSION

A. Jurisdiction and service of process

In considering whether to enter default judgment, a district court must first determine 

whether it has jurisdiction over the subject matter and the parties to the case. In re Tuli, 172 F.3d 

707, 712 (9th Cir. 1999). 

i. Subject Matter Jurisdiction

This is a suit for unpaid freight charges pursuant to an ocean bill of lading, tariff, and/or 

service contract and comprises an admiralty and maritime claim pursuant to Rule 9(h) of the 

Federal Rules of Civil Procedure and 28 U.S.C. § 1333(1). It also presents a federal question 

under 28 U.S.C. § 1331, because it arises under the Shipping Act, as amended, 46 U.S.C. § 40101 

et seq. Finally, Plaintiff’s supplemental tort claims are proper under 28 U.S.C. § 1367.

ii. Personal Jurisdiction

 Federal courts have a three prong test to determine whether specific, personal jurisdiction

may be exercised over a nonresident defendant: (1) the defendant purposefully directed its 

activities toward residents of the state or purposefully avails himself of the privileges of 

conducting activities in the forum; (2) the cause of action arises out of the defendant’s contacts 

with the state; and (3) the exercise of jurisdiction is reasonable. Harris Rutsky & Co. Ins. Servs. v. 

Bell & Clements Ltd., 328 F.3d 1122, 1129 (9th Cir. 2003). 

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a. Purposeful Availment 

“A showing that a defendant purposefully availed himself of the privilege of doing 

business in a forum state typically consists of evidence of the defendant's actions in the forum, 

such as executing or performing a contract there.” Schwarzenegger v. Fred Martin Motor Co., 374 

F.3d 797, 802 (9th Cir. 2004). Such actions are considered to be a purposeful availment of the 

privilege of conducting activities within the State, therefore invoking the benefits and protections 

of its laws. Id. As a “quid pro quo” for these “benefits and protections,” a defendant must 

“submit to the burdens of litigation in that forum.” Id. Factors evaluated include: prior 

negotiations and contemplated future consequences, the terms of the contract, and the parties' 

actual course of dealing. Doe v. Unocal Corp., 248 F.3d 915, 924 (9th Cir. 2001).

Defendants are located in American Samoa. The Master Carrier Service Agreement 

subject to this action, effective October 30, 2013, however, contemplated shipments through 

California Ports, notably Los Angeles, Long Beach, and Oakland. In furtherance of this 

agreement, Defendants booked shipments utilizing California ports in 2015 and 2016, over the 

course of the effective contract period. Therefore, in the course of dealings by the parties in 

shipping units through California, coupled with the contract terms, confirms that Defendant 

availed itself of the privilege of doing business in California. 

b. The Cause of Action Arises Out of Defendant’s Contacts with the Forum 

State

This element is established if Plaintiff would not have been injured “but for” the 

nonresident defendant’s forum-related activities. See Ballard v. Savage, 65 F.3d 1495, 1500 (9th 

Cir. 1995). Here, the misdeclarations and/or midescriptions giving rise to Defendants’ tortious 

conduct, and breach of contract occurred on shipments booked by Defendants, moving through 

ports in the State of California. Therefore, “but for” Defendants’ conduct, Plaintiff would not 

have suffered harm in the form of underpaid freight, and liquidated damages. Thus, Plaintiff 

satisfies the second prong of specific jurisdiction.

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c. Reasonableness

The Ninth Circuit looks to seven factors to determine reasonableness: “(1) the extent of the 

defendants' purposeful interjection into the forum state's affairs; (2) the burden on the defendant of 

defending in the forum; (3) the extent of conflict with the sovereignty of the defendants' state; (4) 

the forum state's interest in adjudicating the dispute; (5) the most efficient judicial resolution of the 

controversy; (6) the importance of the forum to the plaintiff's interest in convenient and effective 

relief; and (7) the existence of an alternative forum.” Panavision Int'l, L.P. v. Toeppen, 141 F.3d 

1316, 1323 (9th Cir. 1998). A balancing test is employed, and no one factor is dispositive. Id. at 

1323.

1. Purposeful Interjection

Distinct from purposeful availment, the Court must consider the degree to which 

Defendant interjected itself to the privileges and forum of California. See id. Defendants operated 

an extensive amount of shipments through California ports, and profited from this lucrative 

business.

2. Burden on Defendant 

“The unique burdens placed upon one who must defend in a foreign system should have 

significant weight in assessing the reasonableness of stretching the long arms of personal 

jurisdiction over national borders.” Asahi Metal Ind. v. Superior Court, 480 U.S. 102, 114 (1987). 

However, “modern advances in communications and transportation have significantly reduced the 

burden of litigating in another country.” Sinatra v. National Enquirer, 854 F.2d 1191, 1199 (9th 

Cir. 1988). American Samoa is a territory of the United States, and, is, therefore not a foreign 

nation. Furthermore, the Defendants conducted extensive business in California, and are well 

adept at operating in the United States and California legal systems. Nevertheless, Defendants 

have chosen not to defend or engage in this action.

3. Extent of Conflict with the Sovereignty of the Defendant’s State

Conflict with the sovereignty of a defendant’s state requires “an examination of the 

competing sovereign interests in regulating [the defendant’s] behavior.” Dole Food Co., 303 F.3d 

at 1115. Since sovereignty concerns inevitably arise whenever a United States court exercises 

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jurisdiction over a foreign national, this factor is “by no means controlling.” Ballard, 65 F.3d at 

1501. Otherwise, “it would always prevent suit against a foreign national in a United States 

court.” Gates Learjet Corp. v. Jensen, 743 F.2d 1325, 1333 (9th Cir. 1984). Sovereignty concerns 

weigh more heavily when the defendants have no United States-based relationships.” Core–Vent 

Corp. v. Nobel Indus. AB, 11 F.3d 1482, 1489 (9th Cir. 1993) (citing Sinatra, 854 F.2d at 1191). 

No conflict is apparent here, as Defendants are domiciled in American Samoa, which is a 

territory of the United States, and, thus, an extension of the federal judicial institution. American 

Samoa has asserted no sovereignty or interest over this litigation. At the very least, this factor is 

neutral.

4. California’s Interest in Adjudicating the Dispute

“California maintains a strong interest in providing an effective means of redress for its 

residents [who are] tortiously injured.” Sinatra, 854 F.2d at 1200. Plaintiff conducts a significant 

amount of business through California ports, such that California courts possess a significant 

interest in adjudicating disputes involving resident corporate entities.

5. The Most Efficient Judicial Resolution of the Controversy 

Efficiency in the jurisdictional context is focused on the location of the evidence and 

witnesses. Caruth v. International Psychoanalytical Ass'n, 59 F.3d 126, 129 (9th Cir. 1995). This 

criterion inherently weighs in Defendants’ favor, since Defendants’ business records are located in 

American Samoa. This factor, however, is “no longer weighed heavily given the modern 

advances in communication and transportation.” Panavision, 141 F.3d at 1323.

6. Importance of the Forum to the Plaintiff’s Interest in Convenient and 

Effective Relief

Courts have previously noted that this factor is not of paramount importance. See, e.g., 

Dole Food Co., Inc. v. Watts, 303 F.3d 1104, 1116 (9th Cir. 2002). Notwithstanding, Plaintiff 

would benefit from litigating from California, as it regularly conducts operations through 

California ports. Thus, while given little weight, this factor weighs in favor of reasonableness.

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7. Existence of an Alternative Forum 

The only alternative forum in this case would be American Samoa, which, given the lack 

predictability—and absence of a federal district court—does not present Plaintiff an equal 

opportunity to litigate its claim.

In light of the foregoing factors, the exercise of jurisdiction over Defendants is reasonable, 

and the district court may exercise personal jurisdiction over Defendants.

iii. Venue

Venue is proper, because the Court has jurisdiction over the parties, and the applicable 

contract provisions specify that the parties submit to the venue in this district, which includes the 

Port of Oakland, where Plaintiff transports cargo by ocean vessel. (Compl. ¶ 2.)

iv. Service of process

Plaintiff personally served the summons, complaint, and other required documents upon 

Defendant Galo on September 7, 2016. (Dkt. No. 9.) Plaintiff personally served the summons, 

complaint, and other required documents upon Defendants Fax and Faletoi on September 22, 

2016. (Dkt. No. 10 & 11.) Plaintiff subsequently served its motion for default judgment upon 

Defendants, and filed a certificate of service on December 29, 2016. (Dkt. No. 19.) Thus, 

Defendants were properly served with the complaint.

B. Application to the case at bar

Since the Court has jurisdiction in this matter, this Court must turn to the Eitel factors to 

determine whether the entering of a default judgment is appropriate in this matter.

i. Plaintiffs will suffer prejudice if default judgment is not granted

Plaintiffs would be prejudiced if the Court did not enter default judgment, because it 

possesses no alternative recourse for recovery. Eitel, 782 F.2d at 1471.

ii. Merits of Plaintiffs’ claims and the sufficiency of the complaint

The second and third Eitel factors focus on the merits of Plaintiffs’ substantive claim and 

the sufficiency of the complaint. Eitel, 782 F.2d at 1471–72. A party seeking default judgment 

must state a valid claim upon which it may recover. Walters v. Statewide Concrete Barrier, Inc., 

2005 U.S. Dist. LEXIS 49433, at *8 (N.D. Cal. Sept. 2, 2005). 

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Plaintiff alleges that Defendants breached a maritime contract. Pursuant to the Subject B/L 

and otherwise, Defendants agreed and became bound to pay Polynesia Line for ocean freight and 

related charges in amounts provided by the MCSA and/or tariff. (Compl. ¶ 16). Defendants, 

however, had repeatedly obtained transportation of property at less than the rates or charges 

established by Polynesia Line in its tariff or service contract and have failed to pay all damages to 

which it is obligated under the relevant tariff and service contract. (Compl. ¶ 16). 

The contract terms between Plaintiff and Defendants include language which provides: 

Freight has been calculated on the basis of particulars furnished by 

or on behalf of the Shipper. If the particulars furnished by or on 

behalf of the Shipper are incorrect, it is agreed that a sum equal to 

double the correct Freight less the Freight charged shall be payable 

as liquidated damages to the Carrier . . . .

(Compl. ¶ 13). Further, the definition of “Freight includes all charges payable to the Carrier in 

accordance with the applicable tariff and this Bill of Lading.” Id. Defendants misdescribed or 

misdeclared commodities to Plaintiff on at least 33 shipments. (Compl. ¶ 12). These 

misdescriptions and misdeclarations violate the terms to which Defendants agreed; such an 

allegation is sufficiently pleaded to demonstrate Defendants breached a maritime contract.

Plaintiff also alleges that Defendants committed fraud and/or intentional misrepresentation. 

Defendants falsely described the contents of shipments and/or fraudulently concealed the true 

contents and facts thereof. (Compl. ¶ 20). These false representations were made by various 

agents, employees, joint venturers, co-loaders, and/or co-conspirators of Defendants. (Compl. ¶ 

21). In reliance, Plaintiff repeatedly charged amounts less than were in fact due for the shipments 

in question, and suffered harm. (Compl. ¶¶ 21, 23). 

Furthermore, Plaintiff alleges that Defendants committed negligent misrepresentation. 

Defendants falsely described the contents of shipments and/or concealed the true contents and 

facts thereof despite a legal obligation to disclose the same. (Compl. ¶ 25). These false 

representations were made by various agents, employees, joint venturers, co-loaders and/or coconspirators of Defendants. (Compl. ¶ 26). In reliance, Plaintiff repeatedly charged amounts less 

than were in fact due for the shipments in question, and suffered harm. Id.

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Such allegations set forth the elements necessary to satisfy Plaintiff’s breach of a maritime 

contract, fraud/intentional representation, and negligent misrepresentation claims. Accordingly, 

the Court finds that Plaintiff has sufficiently stated claims for these three causes of action.

iii. Sum of Money at Stake

The fourth Eitel factor assesses the reasonableness of the potential award if a default 

judgment is entered. In making this assessment, the Court must take into account the amount of 

money at stake in relation to the seriousness of Defendant’s conduct. Eitel, 782 F.2d at 1471. If 

the sum of money at issue is reasonably proportionate to the harm caused by Defendant’s actions, 

properly documented, and contractually justified, then default judgment is warranted. Bd. of Trs. 

of Cal. Metal Trades v. Pitchometer Propeller, 1997 WL 797922, at *2 (N.D. Cal. Dec. 15, 

1997). A default judgment is only disfavored when a large amount of money is involved or is 

unreasonable in light of Defendant’s actions. Truong Giang Corp. v. Twinstar Tea Corp., 2007 

WL 1545173, at *12 (N.D. Cal. May 29, 2007). In determining if the amount at stake is 

reasonable, the Court may consider Plaintiffs' declarations, calculations, and other documentation 

of damages. Id.

Here, Plaintiff requests compensatory damages in the amount of $285,605.00 resulting 

from Defendants’ misdescriptions and misdeclarations. (Pl.’s Mot. at 6-7.) The amount Defendants 

owe has been established in the “Damages Table,” which is attached as Exhibit 6 to Plaintiff’s motion 

for default judgment and explained in the supporting declaration of Torben Henry. (Pl.’s Mot., Ex. 6; 

Decl. of Torben Henry, “Henry Decl.,” Dkt. No. 17-2 ¶ 4.) Therefore, the sum of money at stake is well 

documented, and due under the service contracts. Thus, the fourth factor weighs in Plaintiff’s favor. 

iv. The Possibility of a Dispute Concerning Material Facts

The fifth Eitel factor considers the possibility of dispute as to any material facts of the 

case. Defendants have not participated in this action and have not made any attempt to contest any 

of Plaintiff’s material facts or legal assertions or moved to set aside the entry of default despite 

being served with all papers. Thus, this factor weighs in favor of default judgment.

v. Whether Default was a Result of Excusable Neglect

The sixth Eitel factor contemplates the possibility that Defendant’s default was the result 

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of excusable neglect. Under this analysis, the Court considers whether Defendant was put on 

adequate notice to apprise it of the pendency of the action brought against it. Phillip Morris USA, 

Inc. v. Castworld Prod., Inc., 219 F.R.D. 494, 500 (C.D. Cal. 2003). In addition, the Court also 

considers whether the circumstances surrounding Defendant’s failure to answer the complaint are 

sufficient to excuse or justify its default. Shanghai Automation Instrument Co. v. Kuei, 194 F. 

Supp. 2d 995, 1005 (N.D. Cal. 2001) (Default cannot be attributed to excusable neglect where

defendants were properly served with the complaint, the notice of entry of default, and the papers 

in support thereof.). 

Here, Defendants received notice of the Complaint and have been served with this motion. 

Defendants have neither answered the complaint, nor otherwise appeared. Defendant filed its motion for 

default judgment more than two months following proper service of the complaint. Consequently, 

there is nothing to suggest that Defendants’ failure to appear and litigate this matter is based on

excusable neglect.

vi. Federal Rules Preference for a Decision on the Merits

After an examination of these facts in the aggregate, the undersigned finds that Eitel 

factors one through six outweigh the Federal Rules of Civil Procedure’s preference for a decision 

on the merits. The undersigned, therefore, recommends the entry of default judgment.

IV. DAMAGES

After entry of default, well-pleaded factual allegations in the complaint are taken as true, 

except as to the amount of damages. Fair Hous. of Marin v. Combs, 285 F.3d 899, 906 (9th Cir. 

2002). To recover damages after securing a default judgment, a plaintiff must prove the relief it 

seeks through testimony or written affidavit. Bd. of Trs. of the Boilermaker Vacation Trust v. 

Skelly, Inc., 389 F. Supp. 2d 1222, 1226 (N.D. Cal. 2005); see Pepsico, Inc., 238 F. Supp. 2d at 

1175 (citing Televideo Sys., Inc., 826 F.2d at 917-18).

In the complaint and in making this motion, Plaintiff seeks $285,605.00 in damages for 

Defendants’ tortious conduct and, in the alternative, breach of a maritime contract. (Pl.’s Mot. at 

8-9.) These damages are reflected in a report titled “Damages Table,” which is explained in the 

declaration of Torben Henry. (Pl.’s Mot., Ex. 6; Henry Decl.” ¶ 4). The “Correct Charge” column 

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of the Damages Table spreadsheet is the accurate full amount of all tariff or contract freight and 

charges due on each commodity that should and would have been charged had the cargo not been 

misdesribed. (Henry Decl. ¶ 4). The “Difference” column identifies the difference between the 

correct amount of all tariff or contract freight and charges particular to each Subject B/L and the 

amount that was originally charged, which is determined by reviewing Plaintiff’s contract rates 

and comparing the freight and charges that were assessed based on the original misdescription to 

the freight charges that should and would have been charged if truthful particulars had been 

provided. (Henry Decl. ¶ 4). The “Total” column is the sum of the “Correct Charge” column and 

the “Difference” column, to obtain Polynesia Line’s total liquidated damages of $285,605.00. 

(Henry Decl. ¶ 4). 

As alleged in the complaint, Defendants committed the torts of fraud/intentional 

misrepresentation and negligent misrepresentation, and also breached a maritime contract. 

(Compl. ¶¶ 15-28). As set forth above, pursuant to the bill of lading, Defendants’ conduct 

proximately caused Plaintiff damages in the amount of $285,605.00.

V. CONCLUSION

For the reasons set forth above, the undersigned RECOMMENDS that Plaintiff Polynesia 

Line, Ltd.’s motion for default judgment against Defendants Fax Cargo Inc., Xavier A. Faletoi, 

and Easter Galo be GRANTED, and that Plaintiff be awarded damages in the amount of 

$285,605.00.

Any party may file objections to this report and recommendation with the district judge 

within 14 days of being served with a copy. See 28 U.S.C. § 636(b)(l); Fed. R. Civ. P. 72(b); N.D. 

Civil L.R. 72-3. The parties are advised that failure to file objections within the specified time 

may waive the right to appeal the District Court's order. IBEW Local 595 Trust Funds v. ACS 

Controls Corp., No. C-10-5568, 2011 WL 1496056, at *3 (N.D. Cal. Apr. 20, 2011).

IT IS SO RECOMMENDED.

Dated: February 16, 2017

__________________________________

KANDIS A. WESTMORE

United States Magistrate Judge

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