Thursday, Oct. 1, 2020

Posted by: William Shults & Michael Caskey on Oct 1, 2020

 

Messieurs [et Madames] c’est les microbes qui auront le dernier mot.[1]    – Louis Pasteur

Introduction

Since the authors last addressed the COVID-19 pandemic, in the March issue of the Tennessee Bar Journal and in a subsequent webinar, much has changed and continues to change with respect to the ongoing pandemic. The United States, for one, has changed from a nation with only prospective concern to a nation with the largest number of confirmed cases in the world.[2]  As of Sept. 30, 2020, at least 7.2 million people have contracted the disease in the United States, with 196,000 overall cases and 14,000 active cases reported in Tennessee at that time.[3]  More than 206,000 people have died from the virus so far in the United States.[4]

Given the pervasiveness of COVID-19 and the effects of its spread, along with the effects of our countermeasures to it, it is unlikely that it will simply disappear overnight and there will be lingering ramifications of the virus in the legal field for years to come. The following established authorities and sources should prove useful in navigating constitutional and contractual issues that might arise during this pandemic.[5]

CONTRACTS

Impossibility, Impracticability, Force Majeure or Frustration of Purpose: What’s My Best Defense?

Doubtlessly, all over Tennessee contracting parties are struggling with meeting their obligations under contracts entered into before and during the COVID-19 crisis. This topic has already been addressed once in the May issue of the Tennessee Bar Journal in an article addressing the force majeure defense, originally published in a Texas bar journal and contributed to by Charles H. Barnett IV of the Madison County [Tenn.] Bar.[6]  That article notes that the authors could find no cases from any jurisdiction discussing force majeure in the context of a pandemic. Instead, the article explains, non-performing parties have relied on a common law impossibility defense.[7]  Absent a specific force majeure clause in a contract, a party affirmatively raising a force majeure defense must prove that an event(s) caused by forces of nature not under the control of man prevented the party’s ability to perform and that foresight or aid from a reasonably available “appliance(s)” could not have been invoked to avoid a breach.[8]

An excellent starting point for anyone concerned about their rights and obligations in an alleged breach of contract setting would be a review of the applicable sections of the two volume treatise on contracts in the Tennessee Practice Series authored by Stephen W. Feldman.[9]  With characteristic thoroughness, Mr. Feldman reviews Tennessee law in the area, including an applicable provision from the Uniform Commercial Code, Tennessee Code Annotated § 47-2-615, which may be important in the pandemic setting.

 Some notable contract cases worthy of the reader’s study during this pandemic would definitely include the following:

1.  Hinchman v. City Water Co., 167 S.W.2d 986 (Tenn. 1943).
Water in a spring on Lookout Mountain became adulterated such that it could not be used in the city of Chattanooga water system pursuant to an existing contract. Quoting Williston on Contracts, the Tennessee Supreme Court on rehearing held that impossibility of performance was a defense where promised performance became “impracticable owing to some extreme or unreasonable difficulty, expense, injury or loss.”[10]  The court at that time cautioned that this might not be a good defense if the event could have been contemplated by the parties at the time of contracting.

2. North American Capital Corporation v. McCants, 510 S.W.2d 901 (Tenn. 1974).
In this case building lessees wanted out of a contract to rent a building since their application to operate a federal savings and loan institution was unsuccessful because they were unable to obtain a federal charter.  Emphasizing that parties involved in pre-contract negotiations should be acutely mindful of factors that could make a contract untenable, the Supreme Court relied on Hinchman and its language extending the impossibility defense to include impracticability in reversing the lower court which had awarded damages for breach of contract and potential attorney’s fees.[11] 

3. APAC-Atlantic Inc. v. State, No. E 2012-01536-COA-R3-CV, 2013 WL 5883697, *15 (Tenn. Ct. App. Oct. 31, 2013).
Refining the impossibility defense, this paving contract case discusses two rules which constitute the modern version of the impossibility defense, i.e. (1) supervening impracticability and (2) existing impracticability. This very fine distinction is well worth studying. 

4.  In the sale of goods context, Tenn. Code Ann. § 47-2-615 adopts in large part the impracticability concepts discussed in Tennessee case law and also derived from the Restatement (Second) of Contracts in a situation where performance becomes impossible. The language of subsection (a) is cautionary in the sense that it provides that contractually assuming risks in the event of all contingencies may totally negate the use of an impracticability defense. According to Feldman, supra, this defense tool encompasses both a frustration of purpose scenario and a situation in which performance has become commercially impracticable.[12] 

The nuances between the defenses of the impossibility or impracticability, force majeure, and frustration of purpose appear to be fine. A common element to each of these defenses, however, is that an intervening event or occurrence is unanticipated or unexpected. Although a pandemic was not necessarily on the forefront of a contracting party’s mind prior to and during 2019, in all likelihood it is now. Using the proper defense could be critical in a breach of contract case.

It would indeed be strange if the ongoing COVID-19 crisis did not generate a number and variety of contractual disputes, many of which, we suspect, will be between well-meaning parties who perhaps never conceived that the country would be experiencing something akin to what it endured literally 100 years ago. This being the case, we can expect that the dearth of cases involving force majeure, impossibility (impracticability) and frustration of purposes issues will soon be filled.  Those cases will involve many difficult real-life issues, which our legal system, as it always does, will resolve only after a fulsome and thorough examination of the facts and law applicable to those situations.

A Few Useful Constitutional Cases

The power of the federal government to order isolation and quarantine is derived from the U.S. Constitution, Article 1, in Section 8, Clause 3, the Commerce Clause, and is implemented by presidential Executive Order.  42 U.S.C. § 264 authorizes the Department of Health and Human Services to prevent the spread of contagious diseases from outside the nation and between the states. Authority for the daily handling of these matters has been delegated to the CDC.[13] 

On the other hand, the states have broad police powers which can be used to prevent the spread of disease in their respective jurisdictions.  These powers must of course pass muster under the Constitution.[14]  Ultimately, in case of conflicts between federal and state laws, federal law is supreme.[15]

The following cases, although some are quite old, contain legal principles which are useful in understanding how the law works in the time of pandemic. 

1. Jew Ho v. Williamson, 103 F. 10 (C.C.N.D. Cal. 1900)
1900 – People of Chinese descent were quarantined in San Francisco.  The court acknowledged the police powers of the state, but the quarantine was held to be too broad, burdensome and discriminatory in violation of the Fourteenth Amendment.[16]

2.  Morgan’s Louisiana & T.R. & S.S. Co. v. Board of Health, 118 U.S. 455 (1886).
This case involved fees levied for inspections of boats under a quarantine law.  The Court ruled that until usurped by federal law, state law remains effective.

3. Compagnie Francaise de Navigation a Valeur v. State Board of Health, 186 U.S. 380 (1902).
This damages case involved a Louisiana statute that prohibited the docking of a ship that was transporting cargo and also carrying Italian immigrants in any city that had a quarantine in effect. The ship was diverted to Florida. Citing Morgan, supra, the court upheld the power of the state to enforce such a statute unless its provisions ran afoul of federal law. Justices Brown and Harlan dissented.

4.  Jacobson v. Massachusetts, 197 U.S. 11 (1905).
This case involved a challenge to one state’s mandatory smallpox vaccine statute. The Supreme Court affirmed the scheme as constitutional under a state’s police powers and rejected the argument that the mandatory vaccinations unduly infringed on individual liberties: “[T]he liberty secured by the Constitution of the United States to every person within its jurisdiction does not import an absolute right in each person to be, at all times and in all circumstances, wholly freed from restraint … . Real liberty for all could not exist under the operation of a principle which recognizes the right of each individual person to use his own, whether in respect of his person or his property, regardless of the injury that may be done to others.”[17]

5.  Public Health Service Act, 42 U.S.C. § 201 et seq. (2020).
This legislation, in § 264(d)(1), provides the Surgeon General, following approval by the Secretary of Health and Human Services, with the power to enact regulations designed to prevent the spread of infectious diseases, including isolation and quarantine.  State and local laws and regulations are not pre-empted except to the extent they conflict “with an exercise of Federal authority under this section . . . .”[18]

6. Simpson v. Shepard, 230 U.S. 352 (1913).
In the context of a state railroad rate setting case, dictum discusses state power to prevent the introduction or spread of a disease, even though such efforts may affect interstate commerce, until Congress assumes control.

The following cases, although they do not deal with laws or regulations applied during a health crisis, do address issues such as the right to travel and move about and privacy regarding medical information, which could arise during the COVID-19 pandemic.  

7. Edwards v. California, 314 U.S. 160 (1941).
The valid exercise of a state’s police power does not include prohibition against bringing indigent individuals into California. A statute to that effect encroached on the power of Congress to regulate interstate commerce under Article 1, Section 8 of the Constitution. Justices Douglas and Jackson concurred with the holding and further discussed the right to travel under the privileges and immunities clause of the Fourteenth Amendment.[19] 

8. Whalen v. Roe, 429 U.S. 589 (1977).
The keeping of records on drug prescriptions is not an “invasion of any right or liberty protected by the Fourteenth Amendment.”[20]

It is certainly worth noting that the courts in cases of this nature appear to rely heavily on the opinions of medical professionals in ruling on public health mandates put in place by the states.

Is This Thing Going to Be Over Soon?!

Positive test results are rising,[21] due in part to the expanded testing capabilities in the United States, allowing us to track and hopefully isolate the spread of the virus with more certainty. In Tennessee, a free test has been available for anyone who wants one since at least May 2020.[22] 

Despite these increased efforts toward increased testing and treatment capabilities, it is important to note that the virus has already disproportionately affected certain communities in the state. Racial and ethnic communities appear to have been particularly impacted by the virus. A recent study conducted by Vanderbilt University found that only 5.7% of the first 18,400 patients tested spoke 37 languages other than English, but this group constituted 19.4% of the overall positive test results.[23]  Representing only 5 percent of Tennessee’s population, Spanish speakers constituted 20 percent of the positive coronavirus cases in a statewide count.[24]  Even these numbers are likely an undercount since many members of that community may fear adverse immigration effects if they are tested and, thus, avoid the testing process.[25]

One of the most frightening aspects of COVID-19 illness, which is caused by the SARS-COV-2 virus, seems to be that it is extremely infectious and may be spread by individuals who are asymptomatic.[26]  There is ongoing research regarding this possibility, but of course if this is true, real problems slowing its spread will be presented.

History is instructive on the virus spread issue. For example, during the 2003 SARS (SARS-CoV-1) outbreak, one individual set in motion a process that resulted in the virus being spread to Hong Kong, Singapore and Canada. That person was working in a seafood market in Guangzhou, China, when he became ill and sought treatment from a local doctor. That doctor later traveled to Hong Kong for a wedding, where he stayed on the ninth floor of an upscale hotel.  Also staying on the ninth floor were tourists from Singapore and Canada. The citizen of Singapore returned to her country carrying the virus, and eventually it caused the death of 22 people there. Eight hundred individuals were quarantined. 

At the same time, a 78-year-old Canadian tourist staying on the same floor of the Hong Kong hotel transported the disease home where she became ill. She then sought treatment at a Toronto hospital, where she passed the disease on to two other individuals in the emergency room who, in turn, infected 28 persons, 17 of whom died.[27]  Eventually, 30,000 people, who by and large were cooperative with local authorities, were quarantined in Toronto.[28]

 Following the 2003 SARS outbreak, the Centers for Disease Control and the University of Louisville commissioned a study, which reached the following conclusions and should be useful in our current circumstance:

The general approach of the government of Singapore to SARS was ‘detect, isolate, and contain.’ An underlying theme in government actions in response to SARS was that of social and civic responsibility on the part of residents of Singapore. Under this general approach, the government engaged in a wide range of activities, including identifying cases as early as possible, isolating patients, tracing and monitoring contacts, and adopting and enforcing stringent infection control measures for healthcare workers and others in settings where the risk of transmission was high. It also launched a number of public information campaigns ….[29]

Obviously, in situations such as we are facing now, it cannot be emphasized too strongly that viruses such as this one can spread exponentially. The public must vigorously be made aware of this fact. 

 In answer to the question posed above, however: no.  In all likelihood, the current COVID-19 pandemic is far from over. 

Will COVID Illnesses Surge Now That It's Fall?

That could happen. Again, if history is a teacher – and it usually is[30] – SARS-COV-2 infections may flare up with a vengeance in the fall and winter of 2020-2021. 

Although the virus is not a flu virus, what has happened in the past with the flu may be instructive. For example, the H1N1 avian flu, which first appeared in 1918, came in three waves, the second of which was the most lethal.[31]  It appeared to target 15- to 40-year olds in particular, though especially vulnerable were pregnant women, a significant majority of whom died after contracting the virus.[32] This flu was so deadly that in Philadelphia 800 people died in one day, and a total of 4,597 individuals succumbed to the disease during the course of the pandemic.[33]

In 1957, the H2N2 flu virus appeared in the summer and became even more serious in the fall. In the United States its favorite targets were the very young, the elderly, and again, pregnant women. This strain of the flu claimed 70,000 lives in this country alone and 2 million worldwide.[34]  

Later in 1968, the H3N2 Hong Kong flu came in two waves, the most serious of which was during the winter.  Thirty-four thousand people died in the United States and one million worldwide with the very young and the elderly being most vulnerable.[35] 

So yes, COVID-19 could become worse during subsequent waves based on a number of factors, including failure to socially distance, isolate, quarantine, consistently mask and practice good hand washing hygiene. Unfortunately, again pregnant women have been added to the list of those individuals most at risk for severe illness cause by COVID-19.[36]  The authors continue to believe that social distancing, as discussed in our article in the March issue of this Journal, can play a critical role in stopping the spread of the COVID-19 virus. Such measures are a part of Tennessee’s current pandemic plan.[37]  We also should not forget that viruses can mutate, further complicating an already serious situation. Furthermore, such a scenario could become horrific should a strain of the avian flu appear, which we have never experienced before. Indeed, the former director of the Centers for Disease Control and Prevention (CDC), Dr. Tom Frieden, has stated that fear of the appearance of an avian flu is what keeps him up at night.  [38]

Conclusion

Waves of disease are a regular occurrence throughout human history and becoming more common. The data suggest that roughly every 10-20 years there are epidemics with some mortality that infect a quarter to a third of the world’s population.[39]

For whatever reason, pandemic outbreaks seem to be occurring frequently. A study of their etiology is for another day.  Pandemic disease will inevitably sweep through the country again.     

The current pandemic crisis in the United States raises issues for which the population at large is not adequately prepared.  There is every possibility that the COVID-19 crisis could get worse in the fall and winter 2020-2021. An already bad situation could become horrific if a virulent strain of influenza appears at the same time.

The silver lining to the current situation, if there is one, is that it is a wake-up for much better preparedness when the next pandemic occurs, as it most assuredly will.  As we stated in our March 20, 2020, webinar, what lawyers do is bring order to chaos. Our ability to do that is being sorely tested, but if we follow our training, we can do exactly that for the legal system and our fellow citizens.   


Claims Commissioner (Ret.) WILLIAM O. SHULTS is a 1975 graduate of the Cecil C. Humphreys School of Law of The University of Memphis. He served as a commissioner on the Tennessee Claims Commission between 2006 and 2017.  Prior to that, he practiced as an attorney in East Tennessee. Between 1985 and 1991 he served on the staff of the chairman of the National Labor Relations Board and in the Legal Department of the United Mine Workers of America in Washington, D.C.

MICHAEL CASKEY is a 2013 graduate of The University of the South in Sewanee, Tennessee, and a 2020 graduate of the University of Tennessee College of Law in Knoxville. He previously worked as an extern at the Attorney General’s Office in Nashville and as an executive editor for the Tennessee Law Review Journal.

 

Notes

[1] “It is the microbes who will have the last word."

[2] See generally Coronavirus Resource Center, Maps & Trends, Johns Hopkins U. of Med., https://coronavirus.jhu.edu/data (last visited Oct. 1, 2020) (tracking data trends for COVID-19 nationwide and worldwide). Indicative of the total virulence of COVID-19 is the fact that the total confirmed cases in the United States on March 20, 2020 is only about fifteen percent of the total daily reported cases in the United States by July 9, 2020.  These daily infection numbers have since declined somewhat, but at 7,233,042 reported cases as of October 1, 2020, the United States still remains the country with the highest number of COVID-19 cases—and overall deaths.  See id.

[3] See Here Are the Latest Coronavirus Maps, Charts and Numbers in Tennessee, Tennesseean (updated Sep. 30, 2020), https://www.tennessean.com/story/news/health/2020/04/01/coronavirus-tennessee-what-know-spreading-pandemic/5097440002/.

[4] Id.

[5] Although not as extensive as a treatise on the topic, the idea of providing some established cases in order to provide a foundational starting point for research has proven useful in the past and should do so in the future.  With acknowledgement to John Day, who has done so already—quite extensively—in the field of tort law.

[6] Russell Lewis et al., "Force Majeure to the Rescue?" Tenn. Bar J., May 2020, at 20.

[7] Id. at 21.

[8] Butts v. City of S. Fulton, 565 S.W.2d 879, 832 (Tenn. Ct. App. 1977).

[9] Steven W. Feldman, Tennessee Practice Series Contract Law and Practice §§ 11:35-45 (2020), Westlaw TNPRAC-CON.

[10] Hinchman, 167 S.W.2d at 992

[11] McCants, 510 S.W.2d at 905; see also Rural Development, LLC v. Tucker, No. M2008-00172-COA-R3-CV, 2009 WL 112541, *10 (Tenn. Ct. App. Jan. 14, 2009) (citing E. Allen Farnsworth, Farnsworth on Contracts § 9.7 et. seq. (4th ed. 2004)) (explaining the doctrine of frustration of purpose as being premised on a mutually unforeseeable occurrence).

[12] See Feldman, supra note 9, at § 11:40; McCants, 510 S.W.2d at 901-04; see also Tenn. Code Ann. § 47-1-103. 

[13] See also 42 C.F.R. 70-71 (2017).

[14] The Tennessee Attorney General recently published an extremely thorough and well-reasoned opinion on the constitutional purview of State authority apropos to mask mandates. As the advisory opinion articulates, constitutional muster in this field generally relates to a two-prong test examining whether (1) the mandate has no real or substantial relation to public health, or (2) the mandate is “beyond all question” a plain and palpable invasion of rights secured by fundamental law.  See "Constitutionality of Gov’tl Mandate to Wear Face Coverings," Tenn. Att’y Gen. Op. 20-14, 4 (2020) (citing Jacobson v. Massachusetts, 197 U.S. 11, 27 (1905)). The opinion concludes that a face mask mandate, at the very least, safely passes both hurdles. Id. at 5.

[15] Legal Authorities for Isolation and Quarantine, CDC, https://www.cdc.gov/quarantine/aboutlawsregulationsquarantineisolation.html (last updated Feb. 24, 2020).

[16] The discriminatory effect of the quarantine in Jew Ho was what the court determined to be the underlying purpose, as opposed to discrimination as an incidental effect. See Jew Ho, 103 F. at 23 (“The evidence here is clear that this is made to operate against the Chinese population only, and the reason given for it is that the Chinese may communicate the disease from one to the other. That explanation, in the judgment of the court, is not sufficient.”). 

[17] Jacobson, 197 U.S. at 26.

[18] 42 U.S.C. 264(e) (2020).

[19] See also Shapiro v. Thompson, 394 U.S. 618, 629-30 (1974) (noting the fundamental requirement under the constitution “that all citizens be free to travel throughout the length and breadth of our land uninhibited by statutes, rules, or regulations which unreasonably burden or restrict this movement.”). Prior Supreme Court dicta has not deterred some counties from adopting more heavy-handed approaches towards preventing the spread of the virus. Gunnison County in Colorado, for example, enacted a mandate ordering non-Colorado residents to vacate any second homes they may have in the county. See Nancy Lofholm, "It’s Unclear If Colorado Counties Can Legally Evict Visitors to Slow Coronavirus. But One Is Doing It Anyway," Colorado Sun (Apr. 10, 2020), https://coloradosun.com/2020/04/10/colorado-counties-gunnison-banning-visitors-texas/.  It is still untested whether such measures would hold up to judicial scrutiny.

[20] Whalen, 429 U.S. at 606.

[21] See also Joel Christopher, "Tennessee COVID Cases Sharply Increase," Knoxville News-Sentinel, June 10, 2020, at 1, 9A.  

[22] Blake Farmer, "Tennessee’s Secrets to Plentiful Coronavirus Testing? Picking Up the Tab," (May 15, 2020), https://legacy.npr.org/sections/health-shots/2020/05/15/856458421/tennessees-secret-to-plentiful-coronavirus-testing-picking-up-the-tab.

[23] See Holly Fletcher, "Initial COVID-19 Testing Data Show Impact in Nashville’s Minority Communities," VUMC Reporter (June 17, 2020), https://news.vumc.org/2020/06/17/initial-covid-19-testing-data-show-impact-in-nashvilles-minority-communities/.

[24] Shannon Smith, "Spike in Hispanic Covid-19 Cases in Knox County, Statewide," (June 1, 2020, 7:09 p.m.), https://www.wbir.com/article/news/health/coronavirus/spike-in-hispanic-covid-19-cases-in-knox-county-statewide/51-b1f88e8c-4d96-4771-83dd-35423ec0d494.

[25] Anita Wadhwani/Tennessee Lookout, "Latino-serving Organizations Ask Tennessee Gov. Lee for Robust Plan on COVID-19" (June 25, 2020), https://www.timesfreepress.com/news/local/story/2020/jun/25/latino-serving-organizations-ask-tennessee-go/526130/.

[26] Andrew Joseph, "‘We Don’t Actually Have That Answer Yet’: WHO Clarified Comments on a Symptomatic Spread of Covid-19 (June 9, 2020)," https://www.statnews.com/2020/06/09/who-comments-asymptomatic-spread-covid-19/; see generally Nathan W. Furukawa et al., "Evidence Supporting Transmission of Severe Acute Respiratory Syndrome Coronavirus 2 While Presymptomatic or Asymptomatic," 26 Emerging Infectious Diseases e1 (2020), available at https://wwwnc.cdc.gov/eid/article/26/7/20-1595_article.

[27] David Quammen, "Why Weren’t We Ready for the Coronavirus?" The New Yorker (May 4, 2020), https://www.newyorker.com/magazine/2020/05/11/why-werent-we-ready-for-the-coronavirus.

[28] Mark A. Rothstein, et al, Univ. of Louisville School of Medicine, "Quarantine and Isolation: Lessons Learned from SARS 54" (Nov. 2003), https://biotech.law.lsu.edu/blaw/cdc/SARS_REPORT.pdf.

[29] Id.  at 90.

[30] See generally Nancy Tomes, “'Destroyer and Teacher': Managing the Masses During the 1918-1919 Influenza Pandemic," 125 Pub. Health Reports 48, 61 (2010), available at https://www.ncbi.nlm.nih.gov/pmc/articles/PMC2862334/ (“[D]espite  our  renewed  fear  of  the  germ,  the  implementation of social-distancing measures still faces many challenges today. Public-gathering bans, school closures, and transportation restrictions are difficult to enforce for the same reasons they encountered resistance in 1918–1919. Nor are we any more likely than our World War I forbears to be able to sustain an exacting hygiene of nose/mouth/hand prevention.”).

[31] See Jeffery K. Taubenberger and David M. Morens, "1918 Influenza: The Mother of All Pandemics," 12 Emerging Infectious Diseases 15, 17 (2006), available at https://www.ncbi.nlm.nih.gov/pmc/articles/PMC3291398/.

[32] See Tom Quinn, "Flu: A Social History of Influenza" 149 (2008) (reporting a two-thirds fatality); See Sonja A. Ramussen et al., "Pandemic Influenza and Pregnant Women," 14 Emerging Infectious Diseases 95 (2008), available at https://www.ncbi.nlm.nih.gov/pmc/articles/PMC2600164/ (reporting a 27-47% fatality rate based on two separate sample sizes).

[33] See Quinn, supra note 32, at 149.

[34] See Quinn, supra note 32, at 168-69.

[35] Quinn, supra note 32, at 168-69.

[36] Mike Stobbe, "U.S. Officials Add Those Pregnant to Virus Risk Groups," Knoxville News-Sentinel, June 27, 2020, at 14A.

[37] Tenn. Dep’t of Health, "Novel Virus/Pandemic Influenza Response Plan," 5-6, 43-55 (2020), https://wpln.org/wp-content/uploads/sites/7/2020/03/Final-2020-Novel-VirusPan-Flu-Plan.pdf.  

[38] Candy Sagon, "A Conversation With Tom Frieden," AARP Bulletin (Apr. 2016), https://www.aarp.org/politics-society/advocacy/info-2016/talking-with-cdc-director-tom-frieden.html.

[39] Walter Dodds, "Disease Now and Potential Future Pandemics, in The World’s Worst Problems" 31, 40-41 (2019), available at https://www.ncbi.nlm.nih.gov/pmc/articles/PMC7120200/.

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