Free Motion for New Trial - District Court of Arizona - Arizona


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STEPTOE & JOHNSON LLP Collier Center 201 East Washington Street Suite 1600 Phoenix, Arizona 85004-2382 Telephone: (602) 257-5200 Facsimile: (602) 257-5299 Karl M. Tilleman (013435) P. Bruce Converse (005868) Jason Sanders (018600) Attorneys for Defendants Harlem Globetrotters International, Inc. and Mannie L. and Catherine Jackson DREIER LLP 499 Park Avenue New York, New York 10022 (212) 328-6100 Ira S. Sacks, admitted pro hac vice Attorneys for Defendant GTFM, LLC UNITED STATES DISTRICT COURT DISTRICT OF ARIZONA Meadowlark Lemon, et al., Plaintiffs, vs. Harlem Globetrotters International, Inc., et al. Defendants.
DEFENDANTS' MOTION FOR A NEW TRIAL ON LIABILITY AND COMPENSATORY DAMAGES

Nos. CV-04-0299 PHX DGC and CV-04-1023 PHX DGC

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Pursuant to Fed. R. Civ. P. 59, Defendants Harlem Globetrotters International, Inc. and GTFM, LLC (collectively " Defendants" move for a new trial, or in the ) alternative for a remittitur, setting aside the jury' verdict in favor of Plaintiff s Meadowlark Lemon for $783,900 in compensatory damages against Defendants on Plaintiff'claim for invasion of the right of publicity. s Defendants are entitled to a new trial on liability because the clear weight of the evidence is that Plaintiff consented to the Defendants' of his name on the FUBU use apparel through his conduct over 25 years, through his 1975 player contract, and through a Collective Bargaining Agreement that contains a royalty provision that Plaintiff has argued applies to the FUBU apparel at issue. Defendants are also entitled to a new trial, or a remittitur, on damages because the jury' verdict was excessive and against the clear weight of the evidence. In s awarding Plaintiff all of Defendants' gross revenues without taking any deductions, including any deduction for GTFM'undisputed expenses, the jury completely ignored s both the Court'damages instruction and the clear weight of the undisputed evidence. s 1. DEFENDANTS ARE ENTITLED TO A NEW TRIAL BECAUSE THE JURY' VERDICT IS EXCESSIVE AND AGAINST THE CLEAR S WEIGHT OF THE EVIDENCE. It is well-established that the trial court should grant a new trial where " the verdict is contrary to the clear weight of the evidence, or is based upon evidence which is false, or to prevent, in the sound discretion of the trial judge, a miscarriage of justice." Hanson v. Shell Oil Co., 541 F.2d 1352, 1359 (9th Cir. 1976) (citation omitted); accord Gasperini v. Center for Humanities, Inc., 518 U.S. 415, 433 (1996) (" trial judge in the federal system, we have reaffirmed, has discretion to grant a new the trial if the verdict appears to the judge to be against the weight of the evidence" ) (citation omitted). The trial court may grant a new trial even if the verdict is supported by some, or even substantial, evidence. Hanson, 541 F.2d at 1359. " new trial may A also be granted when in his judgment, the trial judge finds that the amount of compensation awarded is excessive."Id. (citation omitted). The trial court may award
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a new trial " without qualification or conditioned on the verdict winner' refusal to s agree to a reduction (remittitur)."Gasperini, 518 U.S. at 433. In considering a motion for a new trial, the trial court need not view the evidence in the light most favorable to the opposing party. Rather, it is well-

established that the court " may properly consider the credibility of witnesses and the weight of the evidence."Fount-Wip, Inc. v. Reddi-Wip, Inc. 568 F.2d 1296, 1302 (9th Cir. 1978), citing 9 Wright & Miller, Federal Practice and Procedure § 2531, at 575 (1971); Plain Jane, Inc. v. Lechters, Inc., 1995 WL 608483, at *1 (E.D. La. 1995) (" the Court is not required to take that view of the evidence most favorable to the verdictwinner and is free to weigh the evidence" (citation omitted). ) A. Plaintiff Consented To The Use Of His Name On The FUBU Apparel.

The clear weight of the evidence is that Plaintiff consented, both contractually and through his conduct, to the use of his name on the FUBU apparel. Defendants have set forth that evidence in detail in their Motion for Judgment as a Matter of Law (" JMOL" 1-7) and for the sake of brevity incorporate the same evidence here. at In sum, Plaintiff consented to the use of his name on the FUBU apparel through his actions over 25 years. Plaintiff monitored the Globetrotters' of his name, and use saw products bearing his name, likeness, and image all over, including in programs that were sold all over the world. Plaintiff never once objected to the Globetrotters' of use his name, likeness, and image in those 25 years. (Id. at 1-3) Plaintiff also consented to the use of his name on the FUBU apparel through a Collective Bargaining Agreement that Plaintiff argued applies to and governs the sales of FUBU apparel using his name or likeness. (Id. at 6-7) Plaintiff also consented through his 1975 player contract (Id. at 3-6), which specifically granted the Globetrotters the license and right to use his name, likeness, and image " any manner," in including for the advertising and promotion of the sale of commercial products. (Trial Ex. 1115 at 11-12) That license specifically authorized the Globetrotters to continue to use Plaintiff'name and likeness after his playing days s
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" the extent they are put to the same uses as they were put prior to" end of his to the contract. (Id. at 12) The clear weight of the evidence demonstrated that, while Plaintiff was under contract, the Globetrotters caused his name, likeness, and image to appear on all kinds of items, including clothing, iron-ons, programs, trading cards, lunch boxes, records, comic books, and cartoons. (JMOL at 5-6) The clear weight of the evidence thus demonstrated that, by placing Plaintiff' name on the FUBU apparel, Defendants s used Plaintiff'name in the same way it was used during his playing days. s As stated in their JMOL, Defendants believe that the Court should rule, as a matter of law, that Plaintiff consented to the use of his name on the FUBU apparel. Alternatively, because the jury' liability determination is against the clear weight of s the evidence, Defendants respectfully request that the Court grant them a new trial on the issue of whether Plaintiff consented to the use of his name on the FUBU apparel. B. The Jury' Refusal To Follow The Court' Instructions And Failure s s To Deduct GTFM' Undisputed Costs Requires a New Trial or a s Remittitur.

As required by Rule 59, Federal Courts routinely grant a new trial or a remittitur on damages if a jury' verdict is excessive or against the weight of the evidence. See, s e.g., Franceschi v. Hospital General San Carlos, 420 F.3d 1, 5 (1st Cir. 2005) (trial court properly reduced verdict from $200,000 to $10,000 because " evidence did not the support the jury'award" Dossett v. First State Bank, 399 F.3d 940, 945-46 (8th Cir. s ); 2005) (trial court properly granted a new trial where the verdict was excessive); Evans v. Port Authority of New York and New Jersey, 273 F.3d 346, 353-54 (3rd Cir. 2001) (trial court properly granted a remittitur of " excessive" jury verdict from $1.15 million to $375,000); Mid-America Tablewares, Inc. v. Mogi Trading Co., 100 F.3d 1353, 1367 (7th Cir. 1996) (trial court abused its discretion in denying defendant' motion for a s new trial where the jury' award of plaintiff' lost future profits was excessive and s s without any rational basis in the evidence); Unisplay, S.A. v. American Electronic Sign Co., 69 F.3d 512, 518-19 (Fed. Cir. 1995) (ordering a new trial on damages, or alternatively a remittitur, because the jury' verdict was not " s within the range
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encompassed by the record as a whole" Toole v. McClintock, 999 F.2d 1430, 1432-33 ); (11th Cir. 1993) (trial court conditionally granted defendant'motion for a new trial on s damages unless the plaintiffs agreed to a remittitur reducing the jury' " s excessive" verdict from $5,400,000 to $2,275,000); Seidman v. American Airlines, Inc., 923 F.2d 1134, 1140-42 (5th Cir. 1991) (trial court reduced the jury' " s excessive" verdict from $657,000 to $487,000, but should have reduced it to $277,000). Indeed, Federal Courts ­including the Ninth Circuit and District Courts within this Circuit ­ have consistently granted a new trial or a remittitur in factual circumstances strikingly similar to this case, where the jury awards a plaintiff the total amount of a defendant' gross sales and fails to reduce that number by any amount, s notwithstanding clear and undisputed evidence of the defendant' manufacturing s expenses. See, e.g., Watec Co, Ltd. v. Liu, 403 F.3d 645, 655 (9th Cir. 2005); Plain Jane, 1995 WL 608483 at *5-6; The Daisy Group, Ltd. v. Newport News, Inc., 1998 WL 796473, at *2-4 (S.D.N.Y. 1998). In Watec, for example, a Japanese manufacturer sued one of its American distributors for improperly using the manufacturer' trademarks on competing goods. s 403 F.3d at 647. After the plaintiff obtained a $5 million jury verdict, Judge Cooper of the Central District of California held that the damages were excessive as a matter of law and granted the defendant a new trial unless the plaintiff would agree to a remittitur of the damages to roughly $2.1 million. Id. at 649. On appeal, the Ninth Circuit affirmed Judge Cooper' conclusion that " jury' original $5 million trademark s the s infringement damages award was not supported by, and in fact completely ignores and rejects, the evidence,"because the jury " awarded the entire gross sales figure to plaintiff."Id. at 655. That is precisely what the jury did in this case as well. Similarly, in Plain Jane, a copyright holder sued competing manufacturers for infringement. 1995 WL 608483 at *1. As in this case, the jury found in favor of the plaintiff and awarded the plaintiff the defendants' total gross revenues on the infringing item. Id. at *6. In granting the defendants' motion for a new trial, the trial court
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recognized that, as in this case, the defendants had " presented legally sufficient evidence [of] their direct expenses incurred in producing their products." Id. The trial court specifically held that " jury had no authority to refuse to deduct defendants' the direct expenses from their revenues to reach its award of defendants' profits." Thus, Id. " legally sufficient evidentiary basis exists for a reasonable jury to find that plaintiff no is entitled to all of defendants' profits without any reduction for direct expenses, and the verdict is excessive as a matter of law to that extent."Id. at *5. Again, the holding in Plain Jane applies with equal force to the facts of this case. Likewise, in The Daisy Group, the holder of a trademark for women' apparel s obtained a jury verdict against an infringer for the infringer' gross revenues from the s sale of infringing goods. 1998 WL 796473 at *1. The defendant moved for a new trial on damages on the basis that the jury " failed to take into account [defendant' s] expenses when calculating [its] profits on the infringing goods."Id. at *1-*2. The defendant had presented evidence and testimony regarding its expenses, including the cost of producing and mailing the infringing catalogs, paper, printing, and ink. Id. at *3. The court noted that, as in this case, the plaintiff " not present evidence did

contradicting this testimony." Id. The court found that the jury " no basis to had conclude that [defendant] did not meet its burden of proving proportional expenses" because the defendant' testimony " to the amount of the expenses was s as uncontradicted."Id. at 4. The court ordered a partial new trial on damages because the jury' award of gross profits " s exceeded the maximum amount of profits supported by the record," was " and against the weight of the evidence and clearly erroneous."Id. That is exactly what happened here. The jury plainly ignored the Court' s damages instruction and failed to take into account significant, clear, and undisputed evidence of GTFM' manufacturing, distribution, and overhead expenses. The Court s instructed the jury that Plaintiff had the burden of establishing (a) the sales revenue Defendants received from selling products bearing Plaintiff' name, likeness, or s identity. (2/7/07 tr. (Ex. 4) at 151:9-152:8) It is undisputed that the sales revenue in (a)
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could not exceed $783,900. (Id. at 152:7-8; Trial Ex. 24 (attached as Ex. 5)) The Court also specifically instructed the jury that Defendants had the burden of establishing by a preponderance of the evidence (b) any portion of the sales revenue that is attributable to factors other than appropriation of Plaintiff' name, likeness, or s identity, and (c) any expenses incurred by Defendants in the production or marketing of the products bearing Plaintiff'name, likeness, or identity. (2/7/07 tr. (Ex. 4) at 151:9s 152:8; Final Jury Instruction No. 16) The Court instructed the jury that, in arriving at Plaintiff' damages, the jury " s should start with (a) and subtract (b) and (c)." (Id.) (emphasis added). Following well-established legal principles, the Court'instruction required the s jury to subtract (b) and (c), assuming Defendants had proven them by a preponderance of the evidence, i.e., it was more likely than not that they existed. By awarding Plaintiff $783,900, the maximum amount that the jury could include in (a), the jury simply refused to subtract anything­ a penny­ either (b) or (c). It is against the not for clear weight of the evidence, and common sense, for the jury to conclude that it cost nothing to produce and market the FUBU apparel bearing Plaintiff' name. s See

Nobell, Inc. v. Sharper Image Corp., 1993 WL 195281 at *1-*2 (N.D. Cal. May 25, 1993) (jury' calculation that either unreasonably assumed all sales were infringing or s was based on entire gross sales amount warranted a remittitur or new trial on damages); Lawton v. Gorman Furniture Corp., 282 N.W.2d 797, 801 (Mich. App. 1979) (new trial granted where damages award equal to gross sales failed to take any deductions for the costs of the goods sold, commissions paid, the costs of delivery, and normal overhead). Indeed, the clear and undisputed evidence ­particularly in support of item (c), the expenses incurred in producing and marketing the FUBU apparel bearing Plaintiff' s name, likeness, or identity ­went far beyond the preponderance of the evidence standard. Defendants presented significant and undisputed evidence establishing those expenses. First, Bruce Weisfeld, the co-owner of GTFM, and Larry Blenden, GTFM' s
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general counsel, both testified that Samsung America handles " logistics"for GTFM, including financing, shipping, warehousing, invoicing, collecting, and other back office functions. (1/25/07 am tr. (Ex. 1) at 22:21-24, 28:10-19, 29:14-23; 2/6/07 tr. (Ex. 3) at 170:14-171:1) In return, GTFM pays Samsung a fee of 13% of the wholesale price of the goods sold by GTFM. (1/25/07 am tr. (Ex. 1) at 29:14-23, 58:7-10; 1/25/07 pm tr. (Ex. 2) at 31:7-8; 2/6/07 tr. (Ex. 3) at 170:14-24) GTFM' payment to Samsung of 13% of the price of goods sold was s undisputed. There was no contrary evidence from any witness. Nor did Plaintiff' s counsel even attempt to cross-examine either Mr. Weisfeld or Mr. Blenden about the Samsung payment. The jury simply chose to ignore the undisputed evidence that part of the expenses incurred by GTFM in producing and selling the Globetrotter line included a 13% payment to Samsung ($101,907 of the $783,900). Second, Defendants presented undisputed evidence that GTFM' overhead is s 17%. (1/25/07 am tr. (Ex. 1) at 58:15-24; 1/25/07 pm tr. (Ex. 2) at 31:21-32:5) Mr. Weisfeld testified that the 17% overhead represented " general overhead of running the the office and the selling, the cost associated with selling the product, managing the product. For example, salaries, advertising, back office, and everything associated with making the product and selling it." (1/25/07 am tr. (Ex. 1) at 58:17-21) Mr. Weisfeld specifically testified that the 17% overhead was " required to manufacture, market, and sell all of the items in the Globetrotters line."(Id. at 58:22-24) GTFM'overhead is a s recognized and reasonable deduction. See Kamar Int' Inc. v. Russ Berrie & Co., 752 l, F.2d 1326, 1329 (9th Cir. 1984) (costs of goods, shipping, administrative expenses incurred in foreign operations, and general overhead expenses are deductible); Sygma Photo News, Inc. v. High Society Magazine, 778 F.2d 89, 92-94 (2d Cir. 1985) (all production expenses are deductible, including materials, printing, laminating, wrapping, binding costs, color separations, type, stats, art supplies, and retouching expenses).

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GTFM' overhead of 17% was undisputed. There was no contrary evidence s from any witness. The jury simply chose to ignore the undisputed evidence that part of the expenses incurred by GTFM in producing and selling the Globetrotter line included GTFM'17% overhead ($133,263 of the $783,900). s Third, Defendants presented detailed -- and undisputed -- testimony and documentary evidence of GTFM' actual cost of goods sold (or " s landed duty paid" or " LDP" for each of the five styles of FUBU apparel that bore Plaintiff'name, as listed ) s on Trial Exhibit 24. (Trial Exs. 1011 (attached as Ex. 6), 1031 (attached as Ex. 7), 1094A (attached as Ex. 8); 1/25/07 am tr. (Ex. 1) at 60:15-73:13) Mr. Weisfeld testified that Trial Exhibit 1094A, admitted at trial without objection, sets forth the analysis of GTFM' actual costs. (1/25/07 am tr. (Ex.4) at 60:22-24, 64:7-10) Mr. s Weisfeld explained that the analysis in Trial Exhibit 1094A is based upon GTFM' s actual sales detail reports for each of the individual styles. (Id. at 60:25-61:2) Mr. Weisfeld further explained that the sales detail reports provide for each style number, the quantity sold, the amount received by GTFM, GTFM' actual costs, and GTFM' s s gross profit. (Trial Ex. 1011 (Ex. 6); 1/25/07 am tr. (Ex. 1) at 44:6-18) Mr. Weisfeld testified that the cost column in the sales detail reports represents the actual cost to GTFM to buy a garment overseas, ship it, pay duties, and any other miscellaneous costs to get it into GTFM' warehouse. (Id. at 44:23-45:4) Put another way, this s represents GTFM'actual total cost for each garment. (Id.) s This evidence was undisputed. Indeed, the Court ruled that Trial Exhibit 1094A is " accurate summary"of the voluminous sales detail reports (2/6/07 tr. (Ex. 3) at an 238:21-239:6), which undisputedly contain GTFM' actual costs to manufacture these s clothes. The Court further ruled that Defendants did not " have an additional burden to
1 put in the supporting materials." (Id. at 239:4-6) The Court confirmed that Plaintiff' s

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The sales detail reports were marked as trial exhibits and were available in court. (1/25/07 am tr. (Ex. 1) at 63:18-64:4) Two of the sales detail reports (Trial Exs. 1011 and 1031) were admitted without objection. (Id. at 43:12-17, 52:21-25)
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counsel did not intend to argue in closing argument that Defendants had such a burden. (Id. at 239:8-10) Mr. Weisfeld testified that the bottom chart on Trial Exhibit 1094A (Ex. 8) summarizes the revenue information from the sales detail reports, and the manufacturing costs per unit for each style, and then calculates the actual percentage of GTFM' cost per individual garment. (1/25/07 am tr. (Ex. 1) at 64:15-65:6) Mr. s Weisfeld explained in detail how the analysis in Trial Exhibit 1094A was completed using the data contained within the individual sales detail reports. (Id. at 65:7-70:8) Mr. Weisfeld also explained how, for each style, the calculation was performed to arrive at an actual cost of goods sold percentage. (Id. at 65:7-70:8) Mr. Weisfeld then explained, again in great detail, how Trial Exhibit 1094A is used to determine GTFM' s net profits for each of the relevant styles on Trial Exhibit 24. (Id. at 71:1-73:5) The calculation of GTFM'net profits for each style is set forth as follows: s
Style Revenue/ Units Unit $22.90 $36.94 $34.07 $34.86 $33.89 Total Revenue Samsung General Payment Overhead 17% 17% 17% 17% 17% LDP% Total Costs Profit % Profit $32,215 $47,382 $3,006 $39,494 $42,653 $164,750

H3003 8160 H3347 3600 H3335 360 H3351 3600 H3352 3600 Total

$186,864 13% $132,984 13% $12,265 13%

52.76% 82.76% 17.24% 34.37% 64.37% 35.63% 45.49% 75.49% 24.51% 38.53% 68.53% 31.47% 35.04% 65.04% 34.96%

$125,496 13% $122,004 13%

The undisputed testimony and trial exhibits therefore conclusively proved that GTFM' net profits on the sales of the five styles of FUBU apparel bearing Plaintiff' s s name as listed on Trial Exhibit 24 was $164,750. That is the maximum amount to which Plaintiff could possibly be entitled, assuming each and every individual sale was made only because Plaintiff' name was on the particular garment. Plaintiff offered s nothing to rebut that significant evidence. Plaintiff'counsel did not even address Trial s

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Exhibit 1094A in his closing argument. Instead, he focused solely on Trial Exhibit 1093, which he told the jury to read " laughs."(2/7/07 tr. (Ex. 4) at 72:12-73:13) for As in Watec, Plain Jane, and Daisy Group, the jury in this case, by awarding Plaintiff an amount equal to Defendants' gross profits, completely ignored the court' s damages instruction and the significant, clear, and undisputed evidence of GTFM' s manufacturing, distribution, and overhead costs. As in those cases, the Court here should order a remittitur or a new trial on damages because the jury' verdict is clearly s excessive and against the clear weight of the evidence. In addition, even an award of $164,750 would be against the weight of the evidence. The undisputed evidence at trial was that each and every item of FUBU clothing in the Globetrotter line used both the FUBU marks and the Harlem Globetrotters marks. (1/25/07 am tr. (Ex. 1) at 39:2-18) The undisputed testimony from Mr. Weisfeld and Mr. Aurum was that the use of the players'names was unimportant because FUBU' core consumers -- 15 to 30 year old urban, hip-hop and s rap music fans -- do not buy FUBU apparel because a player'name happened to be on s the back. (Id. at 23:6-24:5, 34:10-25; 1/25/07 pm tr. (Ex. 2) at 42:3-16, 46:1-11, 54:1820, 60:11-21) Mr. Weisfeld and Mr. Aurum testified that their consumers bought the Globetrotter jerseys because they were made by FUBU and came in a variety of colors that allowed the consumer to match their jersey to their sneakers and hats. (1/25/07 am tr. (Ex. 1) at 42:21-43:6) Their consumers also bought items in the Globetrotter line because it displayed the FUBU marks and the words " Harlem" " and Globetrotters"not ; because of a name on the back. (1/25/07 pm tr. (Ex. 2) at 57:24-58:12, 59:7-21) Plaintiff offered nothing to rebut that testimony. Plaintiff presented no evidence to suggest that any individual consumer purchased a FUBU/Globetrotters jersey because it had Plaintiff'name on the back. Accordingly, it is against the clear weight s of the evidence for the jury to conclude that each and every individual sale of the styles bearing Plaintiff'name was made only because Plaintiff'name appeared on the back. s s

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Conclusion For the foregoing reasons, the Court should vacate the compensatory damages verdict against the Defendants and grant Defendants a new trial, or alternatively, a remittitur of the damages awarded to Plaintiff to no more than $164,750. DATED this 27th day of February 2007. STEPTOE & JOHNSON LLP By: /s/ Karl M. Tilleman Karl M. Tilleman P. Bruce Converse Jason Sanders 201 East Washington Street Suite 1600 Phoenix, Arizona 85004-2382 [email protected] [email protected] [email protected] Attorneys for Defendants Harlem Globetrotters International, Inc., Mannie L. Jackson, and Catherine Jackson and DREIR LLP

By:

/s/ Ira S. Sacks with permission Ira S. Sacks 499 Park Avenue New York, New York 10022 [email protected]

Attorneys for Defendant GTFM, LLC

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CERTIFICATE OF SERVICE 1. I hereby certify that on 27th day of February 2007, a true and

correct copy of the foregoing Motion was electronically transmitted to the Clerk' s Office using the CM/ECF System for filing and transmittal of a Notice of Electronic Filing to the following CM/ECF registrants: Safia A. Anand: [email protected] Florence M. Bruemmer: [email protected] Edward R. Garvey: [email protected], Christa O. Westerberg: [email protected] [email protected] Robert Williams Goldwater III: [email protected] Ray Kendall Harris: [email protected] [email protected] Joel Louis Herz: [email protected], [email protected] Alec R. Hillbo: [email protected] [email protected] Brandon Scott Peters: [email protected] [email protected] [email protected] Anders V. Rosenquist , Jr: [email protected] Ira S. Sacks: [email protected] Clay M. Townsend: [email protected] [email protected] [email protected] Jason R. Leonard: [email protected]
[email protected] [email protected]

By: /s/ Karl Tilleman Karl Tilleman

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