consumer action

Container Size Speaks Volumes in a Lanham Act Case

** District Court Rejects Slack Fill Defendant’s Claims That Package Size is Not Commercial Speech **                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        .

Cardboard Boxes Balancing on a Seesaw

We’ve blogged about the rise in slack-fill consumer class actions and, specifically, the numerous actions brought against McCormick and Company for allegedly under filling its red, white and blue pepper tins.  These lawsuits were consolidated and transferred to the United States District Court for the District of Columbia in December 2015.  Curiously, one individual action initially brought in Minnesota federal court was allowed to come along for the ride – and it was this single-plaintiff lawsuit that started the avalanche of consumer actions against McCormick.  “Who was the plaintiff?” you ask.  McCormick’s competitor, Watkins, Inc., claiming a Lanham Act violation for the alleged slack-fill in McCormick’s pepper tins.  Watkins filed its complaint on June 9, 2015, and a week later, the consumer class actions started cascading downhill.

Lanham Act cases are very different beasts from consumer class actions even though they both focus on alleged misrepresentations made to consumers.  In a Lanham Act lawsuit, the competitor is trying to collect lost profits (or disgorgement of the defendant’s profits) due to “a false or misleading representation of fact” in “commercial advertising or promotion.”  15 U.S.C. § 1125(a)(1).  In a consumer class action, on the other hand, the class representative is trying to recover for the class either the entire purchase price of the product or the “price premium” class members paid for it based on the misrepresentation under state statutes and common law.

Slack-fill cases, of course, do not involve words – rather, they focus on the size of the package.  As the FDA elucidates:  “A container that does not allow the consumer to fully view its contents shall be considered to be filled as to be misleading if it contains nonfunctional slack-fill. Slack-fill is the difference between the actual capacity of a container and the volume of product contained therein. Nonfunctional slack-fill is the empty space in a package that is filled to less than its capacity.”  21 C.F.R. § 100.100(a).  In McCormick’s case, it sought dismissal of Watkin’s complaint on the theory (among others) that a container’s size is not “commercial advertising and promotion” because no words are involved”, citing Farah v. Esquire Magazine, 736 F.3d 528, 541 (D.C. Cir. 2013), where the court concluded that the Lanham Act only applies to “commercial speech.”

In this case of first impression – there are no other reported cases of one competitor suing another over slack-fill – Judge Ellen Segal Huvelle was not buying what McCormick was selling:  “McCormick argues that size of its pepper tins is not commercial speech, but it is difficult to understand how the size of a package or container could possibly not be considered a form of ‘advertising or promotion.’  The size of a package signals to the consumer vital information about a product and is as influential in affecting a customer’s choices as an explicit message on its surface.”  Memorandum Opinion, MDL Docket No. 2665, Misc. No. 15-1825 (ESH) (October 17, 2016).  The court analogized package size to other non-verbal advertising, such as images appearing on a product’s container.  In sum, like Depeche Mode, Judge Huvelle concluded that “words are very unnecessary” to make out a Lanham Act claim.

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The New Naturals

** Where are Class Action Claims Against Consumer Food and Personal Product Companies Trending in 2016?**                                                                                                                                                                                                                                                        PrintWe have blogged in the past about some of the “usual suspects” in the consumer class action line-up – particularly for food, beverage, cosmetics and related industries – for example, the “all-natural” case – the “evaporated cane juice” case – and the “handmade” or “craft beer” case.   Trends come and go – as Plaintiffs run out of companies to sue and as companies change their labeling and advertising in response to the litigation risks.

Which begs the question:  Where are the current litigation trends leading?  We have surveyed recent filings to identify some of the tropes and traps that plaintiffs lawyers are currently focusing on:

As we have discussed in the past, the attractiveness of the all-natural class claim lies in the gaps between FDA guidance and labeling law and the vagaries of the reasonable consumer standardThat gap may be closing with the FDA taking comments and perhaps looking to expand its policy on “natural” foods.  As the term “Natural” loses some of its vagueness, the term “healthy” appears to be taking its place – particularly in so far as the term has the required “eye of the beholder” quality necessary to support class action claims (although in some respects the term “healthy” is regulated see e.g.,  21 CFR 101.65(d)(2)) .  For example in  Kaufman v. CVS Caremark Corp., No. 16-1199, 2016 WL 4608131, at *1 (1st Cir. Sept. 6, 2016) (reversing district court dismissal on Rule 12), CVS Pharmacy, Inc. was sued for its Vitamin E dietary supplement because its label touts the product as supporting “heart health.”  Plaintiff argues that this is misleading because the medical literature does not support a link between consuming vitamin E and cardiovascular health.  Kaufman v. CVS Caremark Corp., No. CV 14-216-ML, 2016 WL 347324, at *1 (D.R.I. Dkt. No. 1 at 7) (and in some studies cited by Plaintiff – Vitamin E dosage increases the rate of heart failure).  In Hunter v. Nature’s Way Prod., LLC, No. 16CV532-WQH-BLM, 2016 WL 4262188, at *1 (S.D. Cal. Aug. 12, 2016) (denying motion to dismiss), Plaintiff alleges that Nature’s Way’s coconut oil is advertised with various health claims (such as its “Variety of Healthy Uses”, “ideal for exercise & weight loss programs”, “fuel a[] healthy lifestyle”), but according to Plaintiff, coconut oil products are not “healthy” . . . “but rather their consumption causes increased risk of CHD, stroke, and other morbidity.” (Dkt. No. 1-5 Compl. at ¶ 118).  In Campbell v. Campbell Soup Co., No 3:16-cv-01005 (S.D. Cal. August 8, 2016) (Dkt 18) (Def. Mot. to Dismiss), Campbell’s Soup Co is defending against Plaintiff’s claims that its Healthy Request® soups are not “healthy” because they contains partially hydrogenated oil (PHO).  Notably, Campbell’s soups are somewhat unique from other food labelling cases because they contain more than 2% meat or poultry and therefore are USDA regulated (see 21 U.S.C. § 451, et seq.) and their labelling is pre-approved (see 21 U.S.C. § 457; accord 21 U.S.C. § 607).  Campbell’s has doubled-down on that argument – moving for Rule 11 sanctions.  No 3:16-cv-01005 (S.D. Cal. August 29, 2016) (Dkt 18).  In Lanovaz v. Twinings N. Am., Inc., No. 5:12-CV-02646-RMW (N.D. Cal. September 6, 2016) (dismissing remaining claims), Twinings successfully defended against claims that the labeling of its tea as a “healthy tea drinking experience” and having “antioxidant” benefits were misleading.  In particular Plaintiff claimed that Twinings’ health benefits could not be substantiated and  were contrary to FDA regulations.  No. 5:12-CV-02646-RMW (N.D. Cal. Dkt. Nos. 1, 24).  It appears that “Healthy” is the new “Natural.”

Plaintiff’s lawyers are also taking a close look at ingredients – to determine if touted anchor ingredients are prominent enough.  For example in Coe v. Gen. Mills, Inc., No. 15-CV-05112-TEH, 2016 WL 4208287, at *1 (N.D. Cal. Aug. 10, 2016) (Order denying Mot. to Dismiss), Plaintiffs argued (successfully at the pleading stage) that General MillsCheerios Protein product labeling is misleading because it implies that the product is essentially the same as normal Cheerios but with added protein.  While Plaintiffs acknowledge that Cheerios Protein does have more protein than regular Cheerios (Plaintiffs calculate that 200 calories of Cheerios contains 6 grams of protein, whereas 200 grams of Cheerios Protein contains 6.4 or 6.7 grams of protein), they argue that this smidgen of an increase is so immaterial as to be misleading.  In another example, in Nazari v. Gen. Mills, Inc., No. 2:16-cv-02015 (E.D. Cal. Aug. 23, 2016), the Plaintiff sued Target with a proposed class action alleging the retailer’s up & up™ Green Aloe Vera Gel lacks traces of Aloe Vera.  Plaintiff alleges that while the product is labelled as an “aloe vera gel” with “pure aloe vera,” its laboratory testing (which it contends would have revealed acemannan, the key compound in aloe vera) could detect no active aloe ingredient.  In another example, in Torrent v. Thierry Oliver., No. 2:15-cv-02511 (C.D. Cal. Sept. 2, 2016) (denying motion to dismiss), Plaintiff survived dismissal on claims that Natierra brand Himalania Goji berries are misleadingly labeled because they are not berries from the Himalayan mountain region in China – which was inferred by the “Himalania” brand name.  In labelling, as in everything else, attention to detail counts.

We will update you on these trends as they progress.

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Lawyers Don’t Always Win

** Purported Class of Lawyers Suing for Misappropriation of Image and Likeness Fails at First Hurdle  **                                                                                                                                                                                                                                                                                                                                                                                                                       crsfkvk5jmarrd3ls7emnw-avvo_logo-color_blue_taglineBucking the popular notion that the legal system protects its own – a recent putative class action in Illinois bought by and for a class of lawyers – failed.  Vrdolyak v. Avvo, Inc., No. 16 C 2833, 2016 WL 4765716, at *1 (N.D. Ill. Sept. 12, 2016).  The defendant in the lawsuit,  Avvo.com, publishes a directory that includes “profile pages” for millions of U.S. attorneys.   Most lawyers, however, have never asked avvo.com to create profile pages for them – let alone had any input into them (or even know they exist) – rather the machine generated profiles are created using data gleaned from public records such as bar admissions and court records.  The generated “profile page” contains identifying information and a rating calculated by an algorithm (which, rather crudely, primarily uses the number of years in practice as its measure).  But some lawyers purchase from avvo.com special “sponsored listings” which promote their avvo.com profile above the unwashed mass.  It appears that avvo.com’s business model relies on its critical mass of (involuntary) profiles and the ability to allow lawyers willing to pay a fee, to appear more prominently (i.e. what Google does!).  Plaintiff John Vrdolyak (a University of Chicago law school graduate) cried foul.  He claimed that his identity (and that of every other involuntarily avvo.com profiled lawyer) was misappropriated for commercial purposes without consent in violation of the Illinois Right of Publicity Act (“IRPA”), 765 ILCS 1075/1 et seq.

The Court sided with avvo.com – agreeing with its argument that the profile pages were speech that is fully protected by the First Amendment.  The court reasoned that what avvo.com does is akin to a yellow pages directory, which receives First Amendment protection.  Dex Media West, Inc. v. City of Seattle, 696 F.3d 952, 962 (9th Cir. 2012) (concluding that publications like yellow pages directories and newspapers receive full First Amendment protection because, as a threshold matter, they do not constitute commercial speech.)  The Court also analogized the avvo.com profiles to those of a magazine, like Sports Illustrated, that publishes non-commercial information (i.e. articles about athletes) and sells and places advertisements within and around that information.  The articles are fully protected non-commercial speech – the advertisements are (less protected) commercial speech.  In this case the “Sponsored Listings” were the commercial speech – but they were authorized and not at issue.  Those profiles that were at issue – the unauthorized profiles – were protected speech and their placement with the sponsored listing did not convert the entire website into commercial speech – the court opined.  Gallingly, the court not only refused to side with the lawyers – but used the Constitution to do so.

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Sugar By Any Other Name Not Just As Sweet – Says FDA

** FDA concludes its study on “Evaporated Cane Juice” – issues guidance that it is a misleading description for mere Sugar **                                                                                                                                                                                                                

Candy shop at local bazaar in Barcelona, Spain.

On May 25, 2016, the Food and Drug Administration (FDA) issued guidance that it is false or misleading to describe sweeteners made from sugar cane as “evaporated cane juice.” Guidance for Industry: Ingredients Declared as Evaporated Cane Juice.

The FDA promised guidance before the end of 2016 – so they under-promised and over-delivered.  The FDA’s guidance reasoned that the term “cane juice”— as opposed to cane syrup or cane sugar—calls to mind vegetable or fruit juice, see 21 CFR 120.1(a), which the FDA said is misleading as sugar cane is not typically eaten as a fruit or vegetable.  See U.S. Department of Agriculture, Center for Nutrition Policy and Promotion. “Added Sugars.”  As such, the FDA concluded that the term “evaporated cane juice” fails to disclose that the ingredient’s “basic nature” is sugar. Guidance, Section III.  As support, the FDA cited the Codex Alimentarius Commission — a source for international food standards sponsored by the World Health Organization and the United Nations — which defines “raw cane sugar” in the same way as “evaporated cane juice.” Codex 212-1999.1.  The FDA therefore advised that “‘evaporated cane juice’ is not the common name of any type of sweetener and should be declared on food labels as ‘sugar,’ preceded by one or more truthful, non-misleading descriptors if the manufacturer so chooses.” Guidance, Section III.  The FDA’s decision comes after a 2009 draft guidance advising against using the term “evaporated cane juice” and a host of lawsuits against food companies that ignored the guidance.  Draft Guidance for Industry: Ingredients Declared as Evaporated Cane Juice (2009).

The FDA’s decision does not bode well for pending cases on this point.  As we have blogged about recently, many evaporated cane juice lawsuits are currently stayed awaiting the outcome of the FDA’s guidance, see, e.g., Gitson, et al. v. Clover-Stornetta Farms, Inc., Case No. 3:13-cv-01517-EDL (N.D. Cal. Jan. 7, 2016); Swearingen v. Amazon Preservation Partners, Inc., Case No. 13-cv-04402-WHO (N.D. Cal. Jan. 11, 2016).  And some have been revived on appeal – just in time – see Kane v. Chobani, LLC, No. 14-15670, 2016 WL 1161782, at *1 (9th Cir. Mar. 24, 2016) (overturning 2014 order from Northern District of California dismissing case).  These suits (and others) are now set to proceed in the wake of the FDA’s guidance.  Bear in mind, the guidance is not binding on courts and, in of itself, does not create a private right of action.  21 U.S.C. § 337(a) (“[A]ll such proceedings for the enforcement, or to restrain violations, of [the FDCA] shall be by and in the name of the United States”); see POM Wonderful LLC v. Coca-Cola Co., 573 U.S. ___ (2014); Buckman Co. v. Pls.’ Legal Comm., 531 U.S. 341, 349 n.4 (2001); Turek v. Gen. Mills, Inc., 662 F.3d 423, 426 (7th Cir. 2011); see also Smith v. U.S. Dep’t of Agric., 888 F. Supp. 2d 945, 955 (S.D. Iowa 2012) (holding that there is no private right of action regarding USDA statute).

In most false advertising cases, the governing test is what consumers, themselves, think – not what the FDA does.  For example, in Mason v. Coca-Cola Co., plaintiffs alleged that “Diet Coke Plus” was misleading because the word “Plus” implied the product was “healthy” under FDA regulations.  774 F. Supp. 2d 699 (D.N.J. 2011).  The court begged to differ: “At its core, the complaint is an attempt to capitalize on an apparent and somewhat arcane violation of FDA food labeling regulations . . .  not every regulatory violation amounts to an act of consumer fraud . . . . It is simply not plausible that consumers would be aware of [the] FDA regulations [plaintiff relies on].”  Id. at 705 n.4; see also Polk v. KV Pharm. Co., No. 4:09-CV-00588 SNLJ, 2011 WL 6257466, at *7 (E.D. Mo. Dec. 15, 2011);  In re Frito-Lay N. Am., Inc. All Natural Litig., No. 12-MD-2413 RRM RLM, 2013 WL 4647512, at *15 (E.D.N.Y. Aug. 29, 2013) (“[T]he Court [cannot] conclude that a reasonable consumer, or any consumer, is aware of and understands the various federal agencies’ views on the term natural.”)  Defendants in evaporated cane juice cases often assert that “evaporated cane juice” is a more accurate term than sugar to describe a type of sweetener that is made from sugar cane but undergoes less processing than white sugar.  See e.g., Morgan v Wallaby Yogurt Company, No. CV 13-0296-CW, 2013 WL 11231160 (N.D. Cal, April 8, 2013) (Mot. to Dismiss).  Those issues aside, many commentators believe the guidance will spur settlements – and they may be right.  The guidance may also spur a round of label changes for those who have not already abandoned the controversial term.

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Ice Ice (Baby)

** Purported Class Action Attempts to Sink Starbucks with claims over allegedly misleadingly frozen water **                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         

danger thin ice - warning sign by a lake

Last week, a disgruntled Starbucks patron in Chicago filed a putative class action against the coffee icon in the Northern District of Illinois claiming that consumers like her have been defrauded over the past ten years by big plastic cups of ice.  Pincus v. Starbucks Corporation, 1:16-cv-04705 (N.D. Ill. April 27, 2016) (Dkt. No. 1).  Granted, all of the drinks that are part of the lawsuit are called “Iced Something-Or-Other,” but according to the Plaintiff that doesn’t justify Starbucks putting ice in the beverages.  Okay, that’s overstating it a bit.

The lawsuit hinges on Starbucks’ use of the acronym for fluid ounce (“fl. oz.”) on its menus and in other advertising.  Plaintiff contends that “fl. oz.” means just that – an ounce of fluid – and the actual fluid ounces in Starbucks iced drinks are less than those claimed in its advertising.  It is only by putting pre-measured scoops of ice in the drinks that the nefarious Starbucks baristas are able to completely fill those ubiquitous transparent cups.  Starbucks, of course, is behind the whole scheme supplying the baristas with beverage cups with fill-lines printed on them (product/water or lemonade/ice) as well as different size ice scoopers (Tall/Grande/Venti).  Plaintiff claims that she, and millions of other Starbucks aficionados across the United States, relied on the Company’s representations about the number of fluid ounces in their drinks and “Plaintiff would not have paid as much, if anything for the Cold Drinks had she known that it [sic] contained less, and in many cases, nearly half as many, fluid ounces than claimed by Starbucks.”

“Ounce” is Middle English from the Anglo-French “unce” and is a unit of mass equal to 1/16 of an avoirdupois pound and 1/12 of the troy pound favored by precious metal dealers.  More importantly, an ounce is 0.666682 of a jigger of Jim Beam.  Accordingly, any class certified in this case must certainly exclude gold investors and may need to be limited to hard core drinkers who know what an ounce looks (and feels) like.  But while the public may have some difficulty visually identifying an ounce, they certainly know the difference between a Grande and a Venti, which is, after all, what they’re buying.

Plaintiff’s class definition is “[a]ll persons in the United States of America who purchased one or more of Defendant’s Cold Drinks at any time between April 27, 2006 and the present.”  “Cold Drinks”  include, but are not limited to, “iced coffee, shaken iced tea, shaken iced tea lemonade, Refreshers®, and Fizzio™ handcrafted sodas” (which, as an aside, are sadly not available at all Starbucks locations – but for those in the right locale, our pro tip is the Golden Ginger Ale).  Although both cold and a drink, the Frappuccino® is not included.  And that’s the whole problem with this case, isn’t it?

The Frappuccino® contains plenty of ice.  But because the ice is blended with the flavored ingredients, it apparently qualifies as a liquid even though it’s really tiny shards of ice.  Which raises the questions:  If the ice melts in a Starbucks Iced Coffee before the purchaser finishes drinking it, is the purchaser getting the advertised number of fluid ounces?  What if the purchaser is an ice chomper?  Plaintiff’s complaint shrewdly anticipates these defenses.  First, Starbucks uses “large pieces of ice” that “take up more space and thus when melted, will yield fewer measured ‘fluid’ ounces of coffee or tea . . . .”  (Starbucks is skimping on the water!)  More broadly, Plaintiff declares that “a reasonable consumer does not wait for the ice in a Cold Drink to melt before consuming the Cold Drink.”  This point, of course, will require survey evidence to establish — or perhaps the class can be limited to purchasers of Starbucks Cold Beverages who are not sippers or chompers.  (Ascertainability might be a problem here.)

Starbucks suffers from its transparency (which is the opposite of the problem it faced in a now dismissed slack fill case against it filed in New York).  Anyone who purchases an iced beverage for the first time – particularly a shaken iced tea, a Refresher® or a Fizzio™  – is startled when the barista pours such a small amount of the flavored stuff in the bottom of one of those big plastic cups and then tops it off with water (or lemonade) and finally, a huge mound of ice.  A Diet Coke from the McDonald’s drive-thru window retains its mystery.  How much syrup?  How much ice?  But for those who love Starbucks, the beverages are consistently great – a treat to be savored slowly . . . while the triple-filtered ice melts.

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Pepper Purchaser Problems

**Spice Maker McCormack Moves the Multi-District Panel to Consolidate From Around the Country its Black Pepper “Slack-Fill” Lawsuits ** . . .                                                                                                                                                                                                                                                                                                                                                                                                                                                                 

A “slack-fill” lawsuit is the term given to a consumer action alleging that a company is using empty space in non-transparent containers in a misleading or otherwise illegal manner, i.e. to confuse consumers as to volume or amount of the actual product they are buying.  U.S. Food and Drug Administration (FDA) regulations contain a deeming provision that claimants typically rely on: “[a] container that does not allow the consumer to fully view its contents shall be considered to be filled as to be misleading if it contains nonfunctional slack-fill.”  21 C.F.R. § 100.100 (emphasis added).  McCormick & Company is the newest target of nonfunctional “slack-fill” plaintiffs – the company has been sued in multiple states not just by consumer plaintiffs but also by in a competitor action under the Lanham Act.

The first to file was Watkins Inc., who  sell spices and herbs in direct competition with McCormick.  Watkins’ complaint filed on June 15, 2015, alleges that McCormick responded to a recent increase in black pepper prices by using misleading slack fill.  Watkins Inc., v. McCormick and Co., Inc., 0:15-cv-02688-DSD-BRT (D. Minn.).  Watkins alleges that McCormick’s (and other manufacturers) sell pepper in almost identical sized tins that traditionally have held 2, 4 or 8 ounces respectively – without slack fill.  But Watkins alleges that in early 2015, due to a sharp rise in international black pepper prices, McCormick began filling these same pepper tins with approximately 25% less ground pepper without changing the size and shape of the tin and without changing the price.  Because the tins were not transparent, the complaint alleges that consumers could not see that they were “slack-filled.”  Watkins avers that McCormick has violated the Lanham Act and various state consumer laws .

Consumer-driven “copycat” suits were quickly filed around the country.  Dupler v. McCormick & Company, Inc., No. 2:15- cv-3454-SJF-AKT (E.D.N.Y.); Bunting et al. v. McCormick & Company, Inc., No. 3:15-cv- 1648-BAS-BGS (S.D. Cal.); Marsh v. McCormick & Company, Inc., No. 2:15-cv-1625-MCEEFB (E.D. Cal.); Esparza v. McCormick & Company, Inc., No. 2:15-cv-5823-JFW-E (C.D. Cal.); Bittle v. McCormick & Company, Inc., No. 3:15-cv-989 (S.D. Ill.); Ferreri v. McCormick & Company, Inc., 7:15-cv-6760-KMK (S.D.N.Y.); Linker v. McCormick & Company, Inc., 4:15-cv-01340-CDP (E.D. Mo.).  On August 10, 2015, McCormick moved to have the cases consolidated.  Case MDL No. 2665.

This case is one to watch.  McCormick’s principal defense is straightforward – i.e., whatever plaintiffs’ claims may be about what volume they thought they were buying based on the traditional size of the container, the tins clearly and unambiguously stated the correct volume.  It is also one to watch because of the unusual interplay between competitor and consumer lawsuits.  Arguments at the MDL Panel currently are focused, not on the merits, but on whether the cases should be consolidated, and if so, where.

This McCormick case is just the latest in a string of slack-fill suits.  In March, 2015, Starbucks® faced a lawsuit alleging that it covered the neck of otherwise transparent glass bottles containing   Frappuccino® and Iced Coffee with opaque wrapping that concealed non-functional slack-fill.  Lee et al v. Starbucks Corporation 1:15-cv-01634-CBA-VMS (E.D.N.Y).  The practice alleged by plaintiff is that Starbucks misled consumers as to how much liquid was in the bottles. The plaintiffs seek class action status, alleging that consumers across the country were injured by Starbucks’ alleged slack-fill practices.  This case is another one to watch.  There are many legitimate reasons a company will use slack-fill in its products, such as protecting the contents and accommodating tamper-resistant devices, or that the space is caused by product settling during shipping and handling.  (A listing of legitimate reasons for slack-fill in food product containers as identified by the FDA can be found at 21 C.F.R. § 100.100).  It is not clear at present which defense Starbucks will take.

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