Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-caed-2_05-cv-00761/USCOURTS-caed-2_05-cv-00761-1/pdf.json

Nature of Suit Code: 190
Nature of Suit: Other Contract Actions
Cause of Action: 28:1332 Diversity-Contract Dispute

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UNITED STATES DISTRICT COURT

EASTERN DISTRICT OF CALIFORNIA

----oo0oo----

EKLAND MARKETING COMPANY OF

CALIFORNIA, INC.,

NO. CIV. S-05-0761 FCD/GGH

Plaintiff,

v. MEMORANDUM AND ORDER

JAVIER ESTABAN LOPEZ; VIVEROS

EL PINAR, S. COOP, a

cooperative organized under

the laws of Spain; and DOES 1-

100,

Defendants.

----oo0oo----

This matter comes before the court on Javier Estaban Lopez’s

(“Lopez”) and Viveros El Pinar’s (“VEP”) (collectively

“defendants”) motion to dismiss for lack of personal jurisdiction

and on forum non conveniens grounds. Ekland Marketing Company of

California (“Ekland” or “plaintiff”) opposes the motion,

asserting that this court has specific jurisdiction over

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1 Because oral argument will not be of material

assistance, the court orders this matter submitted on the briefs.

E.D. Cal. Local Rule 78-230(h).

2 For the purposes of this motion, the court recounts

plaintiff’s version of the facts. In deciding whether plaintiff

has met its burden of establishing personal jurisdiction, the

court accepts plaintiff’s allegations as true. Core-Vent Corp.

v. Nobel Industries AB, 11 F.3d 1482, 1485 (9th Cir. 1993)

(citation omitted).

2

defendants and that this is a proper forum for litigation. For

the reasons set forth below,1 defendants’ motion is DENIED.

BACKGROUND2

Plaintiff is in the business of implementing, licensing, and

marketing alternate sources of strawberry varieties into the

world market. In 1993, plaintiff entered into a contract with

the Florida Strawberry Growers Association (“FSGA”) to perform

specific services related to promoting new strawberry varieties

in the international market. (Pl.’s First Am. Compl., filed Dec.

29, 2005 [“FAC”], ¶ 11.) In 2000, plaintiff entered into a

similar contract with California Giant, Inc. (“CalGiant”). (Id.

¶ 14.) CalGiant maintains a proprietary strawberry breeding

program in Watsonville, California. (Id.) 

On or about February 1, 2001, in Butte County, California,

plaintiff and defendant VEP entered into two Propagation

Agreements. (FAC ¶ 16.) Plaintiff licensed the right to

propagate, distribute, and sell certain proprietary strawberry

varieties derived from FSGA and CalGiant plant breeding programs

to defendants. (Id.) In addition, defendant VEP agreed to

follow certain agricultural practices of the international

strawberry industry. (Id. ¶ 17.) These obligations included

accounting for all planting stock produced and sold and paying

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royalties based on the number of plants sold to third-party

producers or utilized by defendants in their own fruit

production. (Id.)

The first Propagation Agreement included a forum selection

clause under which defendants expressly consented to the

jurisdiction of the courts of California. (First Propagation

Agreement, Ex. B to Decl. of Roy Ekland in Opp’n to Defs.’ Mot.

to Dismiss, filed Aug. 29, 2006 [“Ekland Decl.”].) This

Propagation Agreement had an express duration of one year. (Id.) 

The second Propagation Agreement--entered into by the parties on

the same day--did not contain a forum selection clause or consent

from defendants to submit to jurisdiction in a California court. 

(Second Propagation Agreement, Ex. C to Ekland Decl.)

During the summer of 2002, plaintiff negotiated an expansion

of its variety trial program with FSGA and CalGiant. (FAC ¶ 23.) 

Until that time, plaintiff only had licenses to strawberry

varieties receiving patent protection in the United States and

the European Union (“EU”). (Id.) Plaintiff convinced CalGiant

to allow access to strawberry varieties that did not have EU

patent protection. (Id.) In return, plaintiff and defendants

planned to generate data that would permit an early evaluation of

these advanced selection cultivars. (Id.) 

On December 8, 2002, Ekland and defendant Lopez met in San

Francisco, California to negotiate the basic terms of the

advanced selection contracts concerning the CalGiant and

University of Florida varieties. (Ekland Decl. ¶ 15.) Ekland

asserts that Lopez agreed to extend the Propagation Agreements

until December 31, 2004. (Id.; Ex. D to Ekland Decl.) 

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In March 2003, in Butte County, California, plaintiff and

defendants formalized their commitment to the advanced selection

program with two additional contracts, the Advanced Selection

Contracts. (Ekland Decl. ¶ 16.) The Advanced Selection

Contracts were backdated to January 1, 2003, and complemented the

Propagation Agreements, but were not replacements for the

Propagation Agreements. (Id.) Under the Advanced Selection

Contracts, defendants agreed to evaluate advanced selection

cultivars of strawberries selected by FSGA and CalGiant with the

objective of determining the competitive characteristics and

commercial viability of these cultivars in Spain. (FAC ¶ 24.) 

Defendants continued to perform under the Propagation

Agreements by accounting for and paying royalty fees to plaintiff

in California on strawberry varieties and cultivars produced

through 2003. (Id. ¶ 29.) The royalty payments for 2001 through

2003 totaled over $100,000 for approximately 4.3 million

cultivars. (Ekland Decl. ¶ 18.) All of these cultivars were

propagated from mother stock defendants obtained from California

nurseries. (Id.) Additional royalties of over $100,000 for

approximately 12 million cultivars were invoiced for 2004, but

have never been paid. (Id.)

In addition to the unpaid royalties, plaintiff claims that

defendants failed to fulfill other obligations under the

Propagation Agreements and Advanced Selection Contracts. Among

other things, plaintiff alleges that defendants failed to order

mother plants for the 2004 nursery season and failed to deliver

the required reports on the performance of either the advanced

selection or the commercial varieties that defendants placed with

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fruit growers in October and November of 2003. (Id. ¶ 35.) 

Plaintiff contacted defendants to remind them of their

obligations to deliver these reports. (Id. ¶ 38.) The reports

establish plaintiff’s competitive position in the marketplace. 

(Id. ¶ 40.)

Plaintiff filed this action in this court alleging eight

causes of action, including: breach of contract of the

Propagation Agreements and the Advanced Selection Contracts,

breach of fiduciary duty, negligence, declaratory relief,

intentional interference with contract, interference with

prospective economic advantage, and negligent interference with

prospective economic advantage. Defendants have filed an action

for breach of contract in a Spanish court. (Decl. of Javier

Esteban Lopez in Supp. of Defs.’ Mot. to Dismiss, filed Apr. 24,

2006 [“Lopez Decl.”], ¶¶ 17-20.) The Spanish court found

jurisdiction over plaintiff and has issued a preliminary

injunction. (Id.) Defendants now move to dismiss the case for

lack of personal jurisdiction and on forum non conveniens

grounds.

ANALYSIS

A. Personal Jurisdiction

Under Rule 12(b)(2) of the Federal Rules of Civil Procedure,

a defendant may seek dismissal of an action for lack of personal

jurisdiction. “Where, as here, there is no applicable federal

statute governing personal jurisdiction, the law of the state in

which the district court sits applies.” Core-Vent, 11 F.3d at

1484 (citation omitted). “California’s long-arm statute allows

courts to exercise personal jurisdiction over defendants to the

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extent permitted by the Due Process Clause of the United States

Constitution.” Id. at 1484 (citation omitted). Thus, only

constitutional principles constrain the jurisdiction of a federal

court in California. Sher v. Johnson, 911 F.2d 1357, 1361 (9th

Cir. 1990).

A court may exercise either general or specific jurisdiction

over a non-resident defendant. “General jurisdiction exists when

a defendant is domiciled in the forum state or his activities

there are ‘substantial’ or ‘continuous and systematic.’”

Panavision Int’l, L.P. v. Toeppen, 141 F.3d 1316, 1320 (9th Cir.

1998) (quoting Helicopteros Nacionales de Columbia, S.A. v. Hall,

466 U.S. 408, 414-416 (1984)).

When general jurisdiction does not exist, the court may

determine whether it has specific jurisdiction over the

defendant. Specific jurisdiction exists when the defendant has

sufficient “minimum contacts” with the forum and when “assertion

of personal jurisdiction would comport with fair play and

substantial justice.” Burger King v. Rudzewciz, 471 U.S. 462,

476 (1985) (internal quotation omitted). The Ninth Circuit

articulates the requirements sufficient to satisfy due process as

follows: 

(1) the nonresident defendant must purposefully direct

[its] activities or consummate some transaction

with the forum or resident thereof; or perform

some act by which [it] purposefully avails

[itself] of the privilege of conducting activities

in the forum, thereby invoking the benefits and

protections of its laws; 

(2) the claim must be one which arises out of or

relates to the defendant’s forum-related

activities; and 

(3) the exercise of jurisdiction must comport with

fair play and substantial justice, i.e. it must be

reasonable.

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Core-Vent, 11 F.3d at 1485 (citation omitted).

Once a defendant challenges jurisdiction, the burden of

proof to show that jurisdiction is appropriate lies with the

plaintiff. Sher, 911 F.2d at 1361. When a defendant's motion to

dismiss is to be decided on the pleadings, affidavits, and

discovery materials, the plaintiff need only make a prima facie

showing that personal jurisdiction exists in order for the action

to proceed. Id. In deciding whether plaintiff has met this

burden, the court accepts plaintiff’s allegations as true. Id. 

The purposeful availment prong of the minimum contacts

analysis may be satisfied when a defendant purposefully directs

its activities at the forum or its residents. Core-Vent, 11 F.3d

at 1485 (citation omitted). Here, defendants entered into

contracts with plaintiff--Propagation Agreements and Advanced

Selection Contracts--in California to purchase strawberry plants. 

Under the Propagation Agreements, defendants paid royalties to

plaintiff on strawberry varieties and cultivars produced through

2003. All of these cultivars were propagated from mother stock

defendants obtained from California nurseries through plaintiff. 

Therefore, the court finds that defendants purposefully directed

activity toward this forum.

The Ninth Circuit relies “on a ‘but for’ test to determine

whether a particular claim arises out of forum-related activities

and thereby satisfies the second requirement for specific

jurisdiction.” Ballard v. Savage, 65 F.3d 1495, 1500 (9th Cir.

1995)(citation omitted). Here, plaintiff’s claims arise out of

the alleged breach of the Propagation Agreements and Advanced

Selection Contracts between plaintiff and defendants. But for

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3 Defendants admit that California has an interest in

adjudicating the present dispute.

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defendants’ agreement with plaintiff, a California corporation,

plaintiff’s claims for breach of contract, breach of fiduciary

duty, and negligence would not have arisen. See Hirsch v. Blue

Cross, Blue Shield of Kan. City, 800 F.2d 1474, 1480 (9th Cir.

1986)(holding that where a contract constitutes defendant’s

contacts with a forum, breach of that contract satisfies the

“arising out of” requirement). Thus, the causation element of

the minimum contacts analysis is satisfied.

“Once it has been decided that a defendant purposefully

established minimum contacts within the forum State, these

contacts may be considered in light of other factors to determine

whether the assertion of personal jurisdiction would comport with

‘fair play and substantial justice.’” Burger King, 471 U.S. at

476 (citation omitted). Defendant has the burden to show that it

would not. Sher, 911 F.2d at 1164. Courts in the Ninth Circuit

apply this requirement by weighing seven factors:

(1) the extent of the defendant[‘s] 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

defendant[‘s] state;

(4) the forum state’s interest in adjudicating the

dispute;3

(5) the most efficient [forum for] 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.

Core-Vent, 11 F.3d at 1487-88 (citation omitted).

The court must weigh the extent of defendants’ purposeful

interjection into the affairs of the forum state, even if the

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purposeful availment prong is satisfied. Id. at 1488 (citation

omitted). In the present case, defendants’ interjection is

significant. Since 2000, defendants have purchased over six

million California mother plants, and reported production of at

least 49.5 million cultivars from these California mother plants. 

Defendants are required to pay royalties on these 49.5 million

cultivars to California companies, which in turn must pay

royalties to other California entities that own plant rights to

subject plant varieties. Moreover, defendant Lopez sought out

plants from nearly every major nursery in California and

attempted to purchase mother plants from each of them. 

Defendants continue to purchase mother plants from California

nurseries to this day. 

In order for a defendant to demonstrate that defending a

suit in this forum is unreasonable, the defendant must show that

jurisdiction in California would make the litigation “so gravely

difficult and inconvenient that a party unfairly is at a severe

disadvantage in comparison to his opponent.” Sher, 911 F.2d at

1365. Defendants contend that this case concerns a dispute that

arose entirely in Spain. (Defs.’ Mem. of P. & A. in Supp. of

Mot. to Dismiss, filed Apr. 10, 2006 [“Mot.”], at 6:20-21.) 

Further, defendants assert that the burden of bringing all of the

witnesses and the evidence located in Spain to the United States,

translate it, and present it in a California court is immense,

and thus unreasonable. However, in a case where an out-of-state

defendant alleged similar hardships, the Ninth Circuit found that

jurisdiction in the forum was nonetheless reasonable. Sher, 911

F.2d at 1365. In Sher, defendant, a Florida law firm, asserted

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that jurisdiction in California would be unreasonable because

defendant would be unable to run its law practice if it were

required to defend a suit in California. Id. at 1364. The

defendant in Sher also argued that all the evidence and most of

the witnesses were located in Florida. Id. The Ninth Circuit

found that “[i]n this era of fax machines and discount air

travel, requiring [defendant] to defend itself in California

under the circumstances as it alleges them would not be so

unreasonable as to violate due process.” Id. at 1365. 

Defendants have not demonstrated that the burden of litigating

this claim in a California forum would be place them at an unfair

disadvantage. 

Defendants also argue that the existence of its suit against

plaintiff in a Spanish court presents potential conflict with

Spanish sovereignty, “as the outcome of this action [as

adjudicated by this court] could conflict with the outcome of the

Spanish action, in which a preliminary injunction has already

been issue[d].” (Mot. at 7:3-6.) The government of Spain

clearly has an interest in resolving disputes that involve its

citizen. However, although this factor is important, the Ninth

Circuit has stated that the potential affront to the sovereignty

of the defendants’ state is not dispositive to the determination

of whether the exercise of jurisdiction is reasonable since 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). 

Defendants contend that Spain is the most efficient forum

for judicial resolution of this action because the present

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4 Plaintiff alleges that the present dispute arises under

both the Propagation Agreements and the Advanced Selection

Contracts. The first Propagation Agreement included a forum

selection clause under which defendants expressly consented to

the jurisdiction of the courts of California. The second

Propagation Agreement and the Advanced Selection Contracts did

not contain a choice of forum provision. Defendants admit that

the first Propagation Agreement contained a choice of forum

clause, but asserts that the present dispute arose from the

Advanced Selection Contracts. The court does not reach the

merits of this issue. However, the court accepts the plaintiff’s

allegations as true for purposes of this motion.

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dispute arose in Spain, where the strawberry plants under the

Advanced Selection contracts were planted and all the activity

that plaintiff alleges to constitute a breach of contract took

place. Conversely, plaintiff argues that California is the most

efficient forum to resolve this matter due to the choice of law

provision in the Propagation Agreements.4 (Ex. B to Ekland Decl.

¶ 15). At the current stage of the litigation, California would

appear to be the more efficient forum to resolve this dispute. 

This court is in a better position than a Spanish court to apply

California law.

Plaintiff’s interest in convenient and effective relief

favors this forum. A California court certainly provides Ekland

with the most convenient forum for seeking relief. Defendants

argue that effective relief is difficult because defendants have

no assets in California and this court cannot impact orders

issued in a Spanish court. However, effective relief is

available to plaintiff in the form of hindering defendants’

ability to transact business in California. As such, the

existence of defendants’ business activities in California is

motivation for defendants to abide by a judgment issued by this

court. Therefore, this factor weighs in favor of plaintiff.

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Finally, defendants assert that a Spanish court would be an

alternate forum to litigate this case. A Spanish court has ruled

that it can assert jurisdiction over plaintiff. Plaintiff is

silent on this issue and has not carried its “burden of proving

the unavailability of an alternative forum.” Core-Vent, 11 F.3d

at 1490 (citation omitted). In light of the other factors,

however, this factor is not dispositive. 

Considering all the relevant factors, the court finds that

exercise of personal jurisdiction over defendants is reasonable. 

Defendants’ purposeful interjection into the forum is

significant, and thus, weighs strongly in favor of finding

jurisdiction. Further, California has an interest in the

litigation and is the most efficient forum. In weighing these

factors, the court is not convinced that adjudication of this

dispute in California will affront the sovereignty of the Spain. 

Although the availability of an alternative forum supports

defendants’ position, the other factors weigh more strongly in

plaintiff’s favor. Defendants assert that litigating the case in

California would be an undue hardship. To violate due process,

however, defendants “must show that jurisdiction in California

would make the litigation ‘so gravely difficult and inconvenient

that a party unfairly is at a severe disadvantage compared to

[its] opponent.’” Sher, 911 F.2d at 1365 (quoting Burger King,

471 U.S. at 478.) Defendants have not made such a showing.

Therefore, the court finds that it has specific jurisdiction over

defendants.

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B. Forum Non Conveniens

A court has “the discretion to decline jurisdiction in a

case where litigation in foreign forum would be more convenient

for the parties.” Gulf Oil Corp. v. Gilbert, 330 U.S. 501, 504

(1947). A party moving for dismissal on forum non conveniens

grounds has the burden of showing: (1) whether an adequate

alternative forum exists; and (2) whether the balance of private

and public interest factors favors dismissal. Ceramic Corp. of

America v. Inka Maritime Corp., 1 F.3d 947, 949 (9th Cir. 1993).

There is a strong presumption to honor a plaintiff’s choice

of forum, but a court may balance that presumption against the

“private interests” and “public interests” of litigating in a

foreign country. Lueck v. Sundstrand Corp., 236 F.3d 1137, 1145

(9th Cir. 2001). The Ninth Circuit considers the following

“private interests” in its analysis:

(1) the residence of the parties and the witnesses;

(2) the forum’s convenience to the litigants;

(3) access to physical evidence and other sources of

proof;

(4) whether unwilling witnesses can be compelled to

testify;

(5) the cost of bringing witnesses to trial;

(6) the enforceability of the judgment; and

(7) all other practical problems that make trial of a

case easy, expeditious, and inexpensive.

Id. (citing Gulf Oil, 330 U.S. at 508). In addition, the Ninth

Circuit considers the following “public interests”:

(1) local interest of lawsuit;

(2) the court’s familiarity with governing law;

(3) burden on local courts and juries;

(4) congestion in the court; and

(5) the costs of resolving a dispute unrelated to this

forum.

Id. at 1147 (citing Piper Aircraft Co. v. Reyno, 454 U.S. 235,

259-61 (1981)). A court should consider the “private interest”

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and “public interest” factors applicable to a case before it and

give appropriate weight to each factor. Id. at 1145 (citing Gulf

Oil, 330 U.S. at 508 (citations omitted)). A court “should

consider [these factors] together in arriving at a balanced

conclusion.” Id.

Defendants admit that some of the private interest factors

are neutral, such as the residences of the parties and the

forum’s convenience to the litigants. Defendants assert that

nearly all of the evidence is in Spain because all of the

activity took place there. However, the court’s analysis of this

factor does not rest on the number of witnesses or quantity of

evidence in Spain; rather, the court must look at “the

materiality and importance of the anticipated [evidence and]

witnesses’ testimony and then determine[s] their accessibility

and convenience to the forum.” Gates Learjet, 743 F.2d at 1335-

36. Defendants identify a number of witnesses--business leaders,

managers of nurseries, and buying agents--that will have to

travel to California. (Lopez Decl. at 6:1-6.) Defendants assert

that the case will require expert witness evaluation and

testimony, “experts that logically will be found in Europe, not

in the United States.” (Mot’n at 9:13-15.) 

However, plaintiff has also identified witnesses--employees,

representatives from California nurseries, and representatives

from entities holding rights to various strawberry varieties--

that will be summoned for trial but cannot be compelled to travel

to Spain. Plaintiff asserts that significant evidence necessary

to the resolution of this dispute is in California, including

documents relating to exclusive distribution rights plaintiff has

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over certain protected strawberry plants in question. Based upon

the submissions of the parties, crucial documents and witnesses

exist in both fora. Thus, this private interest factor, at best,

is neutral since both defendants and plaintiff have identified

witnesses that would have to travel abroad for this action or for

the pending action in Spain.

Similar to the private interest factors, the court considers

any or all of the public interest factors that are relevant to

the dispute and gives appropriate weight to each when arriving at

a balanced conclusion. Id. at 1145-46 (citing Piper Aircraft,

454 U.S. at 255). Of the public interest factors listed above,

defendants emphasize that Spain has a much higher interest in

this dispute than California. Defendants contend that

California’s interests in this dispute are solely monetary in

nature. They argue that Spain has a greater interest in this

dispute because the present dispute not only affects the

defendants, but the preliminary injunction issued by the Spanish

court also impacts the entire Spanish strawberry market, as no

one can do business relating to the strawberry varieties covered

by the Advanced Selection Agreements. 

However, California has a significant interest in resolving

this controversy in a local forum. Defendants knowingly and

explicitly subjected themselves to the application of California

law under the Propagation Agreement. Defendants purposefully

interjected themselved into this forum when they purchased

millions of strawberry plants from California nurseries to be

distributed in Spain. California’s interest in this litigation

concerns the protection of its strawberry industry. Moreover, if

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the court finds that California law is applicable to this

controversy, then California has a significant interest in

interpreting its own law. See Gates Learjet, 743 F.2d at 1336-

37. This public interest factor therefore cuts in favor of

plaintiff.

On balance, the relevant private and public interest factors

support the court’s dismissal of defendants’ motion to dismiss

based on forum non conveniens grounds. The relevant private

interest factor of access to physical evidence and other sources

of proof is, at best, neutral. Defendants and plaintiff both

have witnesses that would have to travel abroad for this action

or for the pending action in Spain. The relevant public interest

factor of local interest in this dispute weighs in favor of

plaintiff due to its impact on California’s strawberry industry. 

Therefore, the court finds that this court is a proper forum for

the dispute.

CONCLUSION

For the foregoing reasons, defendants’ motion to dismiss for

lack of personal jurisdiction and on forum non conveniens grounds

is DENIED. 

IT IS SO ORDERED.

DATED: September 29, 2006.

/s/ Frank C. Damrell Jr. 

FRANK C. DAMRELL, Jr.

UNITED STATES DISTRICT JUDGE

Case 2:05-cv-00761-FCD-GGH Document 26 Filed 09/29/06 Page 16 of 16