Undesignated Hitters

When employees are used as witnesses, practitioners need to carefully consider whether the employees will be offering expert testimony or undesignated lay opinions

February 11, 2004

Published in the Los Angeles Lawyer magazine, February 2004.  Reprinted with permission from the Los Angeles Lawyer, 2004

The outcomes of trials are increasingly dependent upon expert testimony. As a result, comprehensive knowledge of the procedures required to properly identify expert witnesses in state and federal courts is crucial. Failure to abide by the Federal Rules of Civil Procedure, the Federal Rules of Evidence, the California Code of Civil Procedure, and the California Evidence Code may result in an unexpected and unnecessary failure of proof at trial.

Perhaps nowhere are the expert witness procedures more complex than in the case of parties' employees who have expert knowledge of some kind. The procedures are complicated by the analyses required to determine which opinions are expert and which are merely percipient. Thus counsel must be familiar with the scope of permissible opinion testimony in state and federal courts by employees not designated as experts in light of the often blurry distinction between expert and percipient opinion testimony.

The general rule in federal court is that nondesignated witnesses, including employees, are barred from providing expert opinion testimony at trial pursuant to Rules 702, 703, or 705 of the Federal Rules of Evidence. Rather, under Rule 701 of the Federal Rules of Evidence, a nondesignated employee may only provide testimony at trial in the form of opinions or inferences that are rationally based on the perception of the witness and helpful to a clear understanding of the witness's testimony.

Distinguishing between expert and lay opinion testimony, however, is not always clear, because lay witnesses frequently have been permitted to provide opinion testimony based on technical or specialized knowledge. This trend, however, will most likely be modified by the recent addition of subsection (c) to Rule 701 of the Federal Rules of Evidence and its accompanying commentary. Still, clarification of the distinction between expert and lay opinion testimony is particularly critical in light of the extensive expert disclosure requirements of the Federal Rules of Civil Procedure and the penalties for failing to abide by those requirements.1

Expert discovery in federal courts is governed by Rule 26(a)(2) of the Federal Rules of Civil Procedure, which states, in relevant part: "[A] party shall disclose to other parties the identity of any person who may be used at trial to present evidence under Rules 702, 703 or 705 of the Federal Rules of Evidence."2 In turn, Rule 702 provides that parties may introduce opinion testimony at trial predicated on "scientific, technical, or other specialized knowledge."3

Under Rule 26(a)(2)(B), employees who are identified as expert witnesses under Rule 26(a)(2)(A) and who either 1) have been retained or specially employed to provide expert testimony in the case, or 2) whose duties as employees of the party regularly involve giving expert testimony—in other words, these employees are in-house experts—must disclose a wide range of information. An expert witness is required to produce and sign a report that includes: a complete statement of all opinions; the basis and reasons for the opinions; all data or other information considered by the witness; any exhibits to be used as a summary of or in support of the opinions; the witness's qualifications, including a list of all publications authored by the witness in the preceding 10 years; the compensation to be paid to the witness; and a list of all cases in which the expert has testified in the preceding four years.4

However, courts are split over whether employees whose duties do not regularly involve giving expert testimony must produce reports under Rule 26(a)(2)(B). While at least one court has held that these employees need not provide reports under the plain meaning of Rule 26(a)(2)(B),5 others have held that an employee who does not regularly provide expert testimony but who is offered to testify at trial necessarily has been "specially employed" to provide such testimony and thus must submit the report required under the rule.6

Outside the context of employees, perhaps the best example of witnesses who are experts but need not submit to the extensive reporting requirements of Rule 26(a)(2)(B) are treating physicians who are percipient fact witnesses.7 Still, all identified experts whose opinions may be offered at trial must submit to a deposition,8 even if they are not required to comply with the reporting requirements of Rule 26(a)(2)(B).

Finally, Rule 26(a)(2)(C) governs the timing of expert disclosure. The rule provides alternatives: All discovery shall be conducted in the sequence directed by the court, or initial expert disclosures must take place at least 90 days before the trial date, with rebuttal expert disclosures occurring within 30 days of the presentation of an initial expert disclosure to which rebuttal is sought.

In view of these disclosure requirements, the failure to designate a party's employee as an expert witness and/or provide the required disclosures may require exclusion of any expert opinions at trial under Rule 37(c) of the Federal Rules of Civil Procedure.9 For example, in Simplex, Inc. v. Diversified Energy Systems, Inc., the Seventh Circuit upheld the district court's preclusion of the proposed expert testimony of the defendant's employee, reasoning that the plaintiff "would have been disadvantaged severely if it were confronted for the first time at trial by previously undisclosed experts. If Diversified intended to proffer its employees as experts at trial, it was obligated to disclose that fact…."10 Similarly, the First Circuit in Prentiss & Carlisle Company, Inc. v. Koehring-Waterous Division of Timberjack, Inc. held that employee testimony that requires expert qualifications is properly excludable if the employee has not been designated as an expert witness.11

Rules 701 and 702 of the Federal Rules of Evidence

Whether and what type of testimony a nondesignated employee can offer at trial fundamentally depends on whether the testimony falls under Rule 701 or Rule 702 of the Federal Rules of Evidence. Rule 701 provides the parameters of permissible lay opinion testimony:

If the witness is not testifying as an expert, the witness' testimony in the form of opinions or inferences is limited to those opinions or inferences which are (a) rationally based on the perception of the witness, (b) helpful to a clear understanding of the witness' testimony or the determination of a fact in issue, and (c) not based on scientific, technical, or other specialized knowledge within the scope of Rule 702.

In drawing a distinction between Rules 701 and 702, federal courts often have relied on the Third Circuit's opinion in Asplundh Manufacturing Division v. Benton Harbor Engineering:

The prototypical example of the type of evidence contemplated by the adoption of Rule 701 relates to the appearance of persons or things, identity, the manner of conduct, competency of a person, degrees of light or darkness, sound, size, weight, distance, and an endless number of items that cannot be described factually in words apart from inferences….Other examples of this type of quintessential Rule 701 opinion testimony include identification of an individual, the speed of a vehicle, the mental state or responsibility of another, whether another was healthy, the value of one's property, and other situations in which the differences between fact and opinion blur and it is difficult or cumbersome for the examiner to elicit an answer from the witness that will not be expressed in the form of an opinion. These cases, it is important to add, all meet the core definitional terms of Rule 701—the opinion is based upon personal knowledge, is rationally based thereon, and is helpful to the trier of fact.12

Conversely, under Rule 702:

If scientific, technical, or other specialized knowledge will assist the trier of fact to understand the evidence or to determine a fact in issue, a witness qualified as an expert by knowledge, skill, experience, training, or education, may testify thereto in the form of an opinion or otherwise, if (1) the testimony is based upon sufficient facts or data, (2) the testimony is the product of reliable principles and methods, and (3) the witness has applied the principles and methods reliably to the facts of the case.13

Relying on the plain meaning of Rule 701, courts routinely have allowed employees and other lay witnesses to render lay opinion testimony on a variety of topics when the testimony is based on personal knowledge and helpful to the trier of fact.14 However, some courts have stretched the scope of Rule 701 by allowing employees to give lay opinion testimony that appears to closely approach expert opinion under Rule 702.

For example, in Teen-Ed, Inc. v. Kimball International, Inc., the Third Circuit held that opinions by the plaintiff's accountant and bookkeeper on the calculation of the plaintiff's purported lost profits were properly allowed under Rule 701:

The personal knowledge of appellant's balance sheets acquired by Zeitz as Teen-Ed's accountant was clearly sufficient under Rule 602 to qualify him as a witness eligible under Rule 701 to testify to his opinion of how lost profits could be calculated and to inferences that he could draw from his perception of Teen-Ed's books.

The fact that Zeitz might have been able to qualify as an expert witness on the use of accepted accounting principles in the calculation of business losses should not have prevented his testifying on the basis of his knowledge of appellant's records about how lost profits could be calculated from the data contained therein.15

Similarly, in Soden v. Freightliner Corporation, the Fifth Circuit permitted a lay witness to opine that the design of a truck was dangerous and defective.16 Moreover, in Simplex, the court noted that certain employees had been permitted to give opinions regarding the inadequacy of a prototype with reference to particular technical specifications. The opinions were based on the employee's knowledge and familiarity with the contract specifications.17 Other examples of admissible lay opinion testimony include testimony by employees regarding future lost profits,18 testimony concerning the percentage of the plaintiff's losses resulting from the failure of heat-treating furnaces,19 and testimony regarding the likelihood of injuries under particular circumstances.20

Notably, however, subsection (c) of Rule 701 was added by amendment in 2000. The subsection expressly limits lay opinion testimony to that which is "not based on scientific, technical, or other specialized knowledge within the scope of Rule 702." The Advisory Committee Notes on the 2000 amendments to Rule 701 show the intention of the drafters to apply a brake to the trend toward allowing lay opinion testimony that closely approximates expert opinion:

Rule 701 has been amended to eliminate the risk that the reliability requirements set forth in Rule 702 will be evaded through the simple expedient of proffering an expert in lay witness clothing. Under the amendment, a witness' testimony must be scrutinized under the rules regulating expert opinion to the extent that the witness is providing testimony based on scientific, technical, or other specialized knowledge within the scope of Rule 702….By channeling testimony that is actually expert testimony to Rule 702, the amendment also ensures that a party will not evade the expert witness disclosure requirements set forth in Fed. R. Civ. P. 26 and Fed. R. Crim. P. 16 by simply calling an expert witness in the guise of a layperson.21

The drafters also explained, "The amendment makes clear that any part of a witness' testimony that is based upon scientific, technical, or other specialized knowledge within the scope of Rule 702 is governed by the standards of Rule 702 and the corresponding disclosure requirements of the Civil and Criminal Rules."22 Perhaps most importantly, the drafters also reconciled prior decisions permitting lay witnesses to provide highly technical testimony by explaining that such testimony is admissible not because of the witnesses' experience, training, or specialized knowledge within the realm of expert witnesses but because of the particularized knowledge that the witnesses have as a result of their positions in a business.23

Indeed, consistent with this commentary, the Advisory Committee Notes that accompany Rule 26(b)(4) of the Federal Rules of Civil Procedure suggest a bright-line rule for distinguishing between expert and lay witness testimony:

It should be noted that the subdivision does not address itself to the expert whose information was not acquired in preparation for trial but rather because he was an actor or viewer with respect to transactions or occurrences that are part of the subject matter of the lawsuit. Such an expert should be treated as an ordinary witness.24

These dual criteria provide federal court practitioners with a sound framework to evaluate and develop case strategy regarding the identification of employees as expert or percipient trial witnesses.

Code of Civil Procedure Section 2034

In California state courts, expert disclosure is governed by Code of Civil Procedure Section 2034. A demand to exchange expert witness information must be made no later than the 10th day after the initial trial date has been set, or 70 days before that trial date, whichever is later.25 Since Section 2034 does not expressly permit courts or counsel to extend the time for making a demand, failure to make a timely demand may constitute a waiver of the right to present expert testimony at trial.

Once a demand is made, Section 2034(a)(1) requires that each party identify the name and address of every person whose expert opinion that party expects to offer at trial, or provide a statement that the party does not presently intend to offer expert testimony.26 A party must designate any witness who will offer opinion testimony on a subject sufficiently beyond common experience to assist the trier of fact.27 The designation must include not only those experts specially retained to provide testimony at trial but also individuals who may render opinions based on information perceived prior to litigation, including information acquired in the course of their job duties.

In addition, unlike federal courts, Section 2034(a)(2) specifically requires parties designating employees as expert witnesses to automatically provide an expert witness declaration under Section 2034(f)(2).28 In practice, lawyers seldom provide a declaration for employees who will offer testimony in the form of expert opinion at trial. Notably, however, Section 2034(a)(2) requires the production of an expert declaration by a party's employee irrespective of whether the employee is "retained" by the party.

The declaration, which must be submitted under penalty of perjury, is significantly less burdensome than its federal analog and only requires: a brief narrative of the expert's qualifications and the general substance of the expert's testimony; a representation that the expert has agreed to testify at trial; a representation that the expert will be sufficiently familiar with the pending action to submit to a meaningful oral deposition concerning the expert's expected trial testimony, including the expert's opinion and its basis; and a statement of the expert's hourly and daily fee for providing deposition testimony and for consulting with the retaining attorney.29

Thus, if a party intends to offer employee expert witness testimony at trial, it must designate the employee and provide the accompanying declaration. But how does counsel determine whether the employee will be called to offer "expert" testimony? The standards for expert qualifications under the California and federal rules are very similar.30 Under Evidence Code Section 720(a), any person is qualified to testify as an expert if he or she has special knowledge, skill, experience, training, or education sufficient to qualify him or her as an expert on the subject to which his or her testimony relates. Further, a determination of expertise is driven by the nature of the subject at issue. Expertise is not a rigid classification based on formal education or certification.31 Also, "work in a particular field is not an absolute prerequisite to qualification as an expert in that field."32

A similar controlling question applies in federal and state courts: Is the subject of inquiry one of common knowledge that people of ordinary education would reach a conclusion as intelligently as the witness, or is the matter beyond common experience that expert opinion would assist the trier of fact?33 In other words, does the employee's testimony add anything to the jury's common knowledge? If the answer is yes, counsel should designate the employee and provide a declaration.

The employee-expert scenario is not analogous to the situation involving a nonretained treating physician as discussed by the California Supreme Court in Schreiber v. Estate of Kaiser.34 The state supreme court held that a treating physician is not a retained expert for purposes of Section 2034(a)(2).35 Therefore, a treating physician need not provide an expert witness declaration in order to testify regarding a plaintiff's injuries and prognosis, or even regarding the standard of care or causation. However, if the treating physician provides testimony concerning matters that are outside the scope of the work he or she performed in treating the patient, then the physician is treated as a retained expert and counsel must comply with the declaration requirements of Section 2034(f)(2). Conversely, employee experts must provide a declaration under Section 2034(f)(2) merely by virtue of their status as employees.

Exceptions

Not all is lost if counsel fails to disclose under the various federal and state rules. For example, in federal court, a party may avoid exclusion of its employee's testimony under Rule 37(c) of the Federal Rules of Civil Procedure by showing either substantial justification for the failure to disclose or by establishing that the nondisclosure was harmless.36 Moreover, parties need not make Rule 26(a)(2) disclosures for those employees acting solely as consulting experts.37

California state courts also have discretion to grant leave to file tardy expert disclosures. Under Section 2034(l), the court will consider the breadth of prejudice to the other party and the nature and extent of the moving party's mistake, inadvertence, surprise, or excusable neglect, as well as the party's promptness in bringing the matter to the court's attention.38

Moreover, certain exceptions to the disclosure requirements may also permit a party's undesignated employees to provide certain opinion testimony at trial. Under Section 2034(m), a party may present an undesignated expert called specifically to testify to the falsity or nonexistence of any foundational facts relied upon by an opposing expert. However, this undesignated expert may not offer testimony that contradicts the opposing expert's opinion.39 In Stark v. City of Los Angeles, the court of appeal held that an undesignated expert could provide opinion testimony to impeach the foundational facts underlying the opposing party's expert opinions on the audibility of a police siren: "Although a party may not call an expert witness merely to express an opinion contrary to that expressed by another expert, a party may impeach by showing the falseness of any matter upon which the expert based his opinion."40

Further, parties need not disclose the identity of employees who will provide strictly factual testimony. In Stone v. Foster, the defendant in a medical malpractice suit arising from a cosmetic procedure called another doctor who had performed a previous cosmetic procedure on the same patient.41 In precluding the doctor from testifying at trial, the trial court explained that the doctor had not been disclosed as an expert. The court of appeal reversed and explained that the defendant did not seek to elicit any opinion testimony (regarding, for example, the standard of care) but instead properly sought to obtain percipient testimony on whether the plaintiff was aware of the risk of the cosmetic procedure.

In addition, expert witness disclosure requirements apply only for trial purposes. In Kennedy v. Modesto City Hospital, the trial court refused to consider the declaration of an undesignated expert and granted summary judgment.42 The court of appeal reversed and held that references to "trial," "trial date," and "testify at trial" pervade Section 2034 and "the Legislature had in mind the exclusion of expert testimony offered by noncomplying parties at trial, not at a pretrial proceeding."43 The reasoning of this decision likely applies with equal force to any pretrial expert testimony. Conversely, however, Rule 37(c) of the Federal Rules of Civil Procedure appears to proscribe the use of testimony by nondesignated experts at trial as well as "at a hearing, or on a motion…."44

Given the increasing importance of expert testimony at trial, it is crucial that a party determine early in a case whether it will rely on its employees to provide trial testimony, and, if so, the nature and extent to which its employees will provide expert testimony. Compliance with expert disclosure rules will minimize unnecessary motion practice and avoid problems of proof at trial.

1 See Fed. R. Civ. P. 26(a)(2), 37(c).
2 See Fed. R. Civ. P. 26(a)(2)(A).
3 See Fed. R. Evid. 702. Further, Rule 703 provides that the facts or data on which the opinion is based may be made known to the expert at or before the trial and need not be admissible if reasonably relied on by experts in the particular field. See Fed. R. Evid. 703. In turn, Rule 705 states, "The expert may testify in terms of opinion or inference and give reasons therefore without first testifying to the underlying facts or data, unless the court requires otherwise. The expert may in any event be required to disclose the underlying facts or data on cross-examination." See Fed. R. Evid. 705.
4 See Fed. R. Civ. P. 26(a)(2)(B).
5 See Navajo Nation v. Norris, 189 F.R.D. 610, 613 (E.D. Wash. 1999).
6 See Kw Plastics v. United States Can Co., 199 F.R.D. 687, 690 (M.D. Ala. 2000); Minnesota Mining & Mfg. Co. v. Signtech USA, Ltd., 177 F.R.D. 459, 460-61 (D. Minn. 1998).
7 See Advisory Committee Notes to Rule 26(a)(2) ("The requirement of a written report in paragraph (2)(B), however, applies only to those experts who are retained or specially employed to provide such testimony in the case or whose duties as an employee of a party regularly involve the giving of such testimony. A treating physician, for example, can be deposed or called to testify at trial without any requirement for a written report."). See also Sipes v. United States, 111 F.R.D. 59, 61 (S.D. Cal. 1986) ("The Court further rules that it is improper to name treating physicians as expert witnesses where the information and opinions possessed by said physicians was obtained by virtue of their roles as actors or viewers of the transactions or occurrences giving rise to the litigation….Said physicians are percipient fact witnesses, and as such, the information and opinions they possess should be freely accessible to both parties to the present litigation, as would be the case with any other ordinary fact witness.").
8 See Fed. R. Civ. P. 26(b)(4)(A).
9 See Fed. R. Civ. P. 37(c) ("A party that without substantial justification fails to disclose information required by Rule 26(a) or 26(e)(1)…is not, unless such failure is harmless, permitted to use as evidence at a trial, at a hearing, or on a motion any witness or information not so disclosed.").
10 See Simplex, Inc. v. Diversified Energy Sys., Inc., 847 F. 2d 1290, 1292-93 (7th Cir. 1988).
11 See Prentiss & Carlisle Co., Inc. v. Koehring-Waterous Div. of Timberjack, Inc., 972 F. 2d 6, 8-9 (1st Cir. 1992); see also Rosemount, Inc. v. Beckman Instruments, Inc., 727 F. 2d 1540, 1549 (Fed. Cir. 1984) (affirming district court's refusal to allow witness not listed as expert to testify concerning tests of a product involved in patent litigation).
12 Asplundh Mfg. Div. v. Benton Harbor Eng'g, 57 F. 3d 1190, 1196-98 (3d Cir. 1995) (internal citations omitted).
13 See Fed. R. Evid. 702.
14 United States v. Lawson, 653 F. 2d 299, 303 (7th Cir. 1981) (Opinion testimony regarding defendant's sanity was properly admitted.); United States v. McCullah, 745 F. 2d 350, 352 (6th Cir. 1984) (Testimony that tractor was hidden was admissible.). See also United States v. Sweeney, 688 F. 2d 1131, 1145-46 (7th Cir. 1982) (concluding that a PCP and methamphetamine drug user could testify as to identity of these drugs based on his prior use and knowledge and his sampling of the substance in question); United States v. Ranney, 719 F. 2d 1183, 1189 & n.11 (1st Cir. 1983) (permitting defrauded investors to testify regarding their investment); Neff v. Kehoe, 708 F. 2d 639, 643-44 (11th Cir. 1983) (reversing the exclusion of lay opinion testimony about the value of stolen coins).
15 Teen-Ed, Inc. v. Kimball Int'l, Inc., 620 F. 2d 399, 403 (3d Cir. 1980).
16 Soden v. Freightliner Corp., 714 F. 2d 498, 510-12 (5th Cir. 1983).
17 Simplex, Inc. v. Diversified Energy Sys., Inc., 847 F. 2d 1290, 1292-93 (7th Cir. 1988).
18 State Office Sys., Inc. v. Olivetti Corp. of Am., 762 F. 2d 843, 845-46 (10th Cir. 1985).
19 Joy Mfg. Co v. Sola Basic Indus., Inc., 697 F. 2d 104, 110-12 (3d Cir. 1982).
20 Eckert v. Aliquippa & S. R.R. Co., 828 F. 2d 183, 185 n.5. (3d Cir. 1987).
21 See Advisory Committee Notes to 2000 Amendments to Fed. R. Evid. 701 (internal citations omitted). See also Joseph, Emerging Expert Issues under the 1993 Disclosure Amendments to the Federal Rules of Civil Procedure, 164 F.R.D. 97, 108 (1996) (noting that "there is no good reason to allow what is essentially surprise expert testimony," and that "the Court should be vigilant to preclude manipulative conduct designed to thwart the expert disclosure and discovery process.").
22 See Advisory Comm. Notes to 2000 Amendments to Fed. R. Evid. 701.
23 Id.
24 See Advisory Committee Notes to Fed. R. Civ. P. 26(b)(4).
25 Code Civ. Proc. §2034(b).
26 Code Civ. Proc. §2034(f)(1); Kalaba v. Gray, 95 Cal. App. 4th 1416, 1419 (2002).
27 See Evid. Code §801.
28 Code Civ. Proc. §2034(a)(2), (f)(2); Bonds v. Roy, 20 Cal. 4th 140, 144 (1999); Kalaba, 95 Cal. App. 4th at 1421.
29 See Code Civ. Proc. §2034(a)(f)(2)(A)-(E).
30 Compare Evid. Code §720(a) with Fed. R. Evid. 702.
31 Estate of Toomes, 54 Cal. 509, 514 (1880).
32 Osborn v. Irwin Mem'l Blood Bank, 5 Cal. App. 4th 234, 274 (1992).
33 See Evid. Code §801; People v. Hernandez, 70 Cal. App. 3d 271, 280-81 (1977); People v. Arguello, 244 Cal. App. 2d 413, 420 (1966).
34 Schreiber v. Estate of Kaiser, 22 Cal. 4th 31 (1999).
35 Id. at 34-37.
36 See Fed. R. Civ. P. 37(c)(1); Yeti by Molly, Ltd. v. Deckers Outdoor Corp., 259 F. 3d 1101, 1106 n.1 (9th Cir. 2001); In re TMI Litig., 922 F. Supp. 997, 1003-04 (M.D. Pa. 1996) (Exclusion requires a showing of bad faith or failure to disclose when trial was imminent or in progress.). See also Fed. R. Civ. P. 26(e) (discussing duty to supplement incomplete or incorrect disclosure information).
37 See Fed. R. Civ. P. 26(b)(4)(B) (providing that the facts known by consultants and their opinions are discoverable under a showing of "exceptional circumstances").
38 Code Civ. Proc. §2034(l).
39 Code Civ. Proc. §2034(m).
40 Stark v. City of Los Angeles, 168 Cal. App. 3d 276, 287 (1985), superseded by statute as stated in Thomas v. City of Richmond, 9 Cal. 4th 1154, 1161-62 (1995); Code Civ. Proc. §2034(m). See also Kennemur v. State of Cal., 133 Cal. App. 3d 907, 921-22 (1982); Mizel v. City of Santa Monica, 93 Cal. App. 4th 1059, 1067-68 (2001) (rejecting purported impeachment expert because undisclosed expert was expected to render contrary opinion, not to contradict underlying factual foundation of physician's direct testimony); Fish v. Guevara, 12 Cal. App. 4th 142, 145-46 (1993).
41 Stone v. Foster, 106 Cal. App. 3d 334, 351-52 (1980).
42 Kennedy v. Modesto City Hosp., 221 Cal. App. 3d 575, 580-81 (1990).
43 Id. at 582.
44 See Fed. R. Civ. P. 37(c). See also Quevedo v. Trans-Pac. Shipping, Inc., 143 F. 3d 1255, 1258 (9th Cir. 1998) (upholding district court's exclusion of expert testimony in summary judgment proceedings based on party's failure to designate the expert on a timely basis, and granting summary judgment).

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