Opinion
Case No. 2:23-cv-03455-SPG Bankr. Case No. 2:20-bk-10654-VZ Adversary No. 2:23-ap-01088-VZ
2023-07-24
IN RE CACHET FINANCIAL SERVICES, Debtor. Cachet Financial Services, Plaintiff, v. Everest National Insurance Company, Defendant.
Joseph Ronald Ignatuk, Franklin Joseph Contreras, Jr., James C. Bastian, Jr., Ryan Daniel O'Dea, Shane M. Biornstad, Shulman Bastian Friedman & Bui LLP, Irvine, CA, Christopher Thomas Pasich, Kirk A. Pasich, Pasich LLP, Los Angeles, CA, for Plaintiff. Matthew J. Hafey, Alison V. Lippa, Nicolaides Fink Thorpe Michaelides Sullivan LLP, Los Angeles, CA, Douglas B. Giombarrese, Pro Hac Vice, Michael B. Chester, Pro Hac Vice, Rebecca Z. Amdursky, Pro Hac Vice, Skarzynski Marick and Black LLP, New York, NY, for Defendant.
Joseph Ronald Ignatuk, Franklin Joseph Contreras, Jr., James C. Bastian, Jr., Ryan Daniel O'Dea, Shane M. Biornstad, Shulman Bastian Friedman & Bui LLP, Irvine, CA, Christopher Thomas Pasich, Kirk A. Pasich, Pasich LLP, Los Angeles, CA, for Plaintiff. Matthew J. Hafey, Alison V. Lippa, Nicolaides Fink Thorpe Michaelides Sullivan LLP, Los Angeles, CA, Douglas B. Giombarrese, Pro Hac Vice, Michael B. Chester, Pro Hac Vice, Rebecca Z. Amdursky, Pro Hac Vice, Skarzynski Marick and Black LLP, New York, NY, for Defendant.
ORDER GRANTING DEFENDANT'S MOTION TO WITHDRAW REFERENCE [ECF NO. 1]
SHERILYN PEACE GARNETT, UNITED STATES DISTRICT JUDGE
Before the Court is Defendant Everest National Insurance Company's Motion to Withdraw Reference of Adversary Proceeding to Bankruptcy Court. (ECF No. 1). Having considered the parties' submissions, the relevant law, and the record in this case, the Court finds this matter suitable for resolution without oral argument. See Fed. R. Civ. P. 78(b); Local Rule 7-15. For the reasons set forth below, the Court GRANTS Defendant's Motion.
I. BACKGROUND
This case arises out of an insurance coverage dispute in which Defendant Everest National Insurance Company denied Plaintiff Cachet Financial Services coverage under a Private Company Management Liability Policy (the "Policy"). Cachet acted as a third-party Automated Clearing House ("ACH") processor servicing its payroll company clients, also known as "remarketers." (ECF No. 1-3 ("Adversary Compl.") ¶ 7). Cachet utilized its ACH electronic funds transfer process to transfer funds from its remarketers' employer clients to those employers' employees using instructions provided to Cachet's server which contained details concerning the transfers, such as the amounts and account information. (Id.). MyPayrollHR was one such remarketer client that utilized Cachet's system to route payments. (Id. ¶ 26). In August and September 2019, MyPayrollHR and its principal stole more than $26 million from Cachet through two fraudulent transactions, one involving approximately $19.2 million and one involving approximately $7.2 million. (Id. ¶ 27). In connection with the $7.2 million fraud, Cachet's settlement account number was altered and replaced with MyPayrollHR's account number, resulting in funds being debited from the employers' bank accounts and credited to MyPayrollHR's bank instead of the Cachet settlement account. (Id.).
The Court GRANTS Everest's unopposed requests for judicial notice ("RJN") of federal and state court filings. (ECF Nos. 1-2; 21). See Fed. R. Evid. 201; see also Reyn's Pasta Bella, LLC v. Visa USA, Inc., 442 F.3d 741, 746 n.6 (9th Cir. 2006) (holding that courts may take judicial notice of court filings and other matters of public record such as pleadings, briefs, memoranda, motions, and transcripts filed in the underlying and related litigation).
To avoid these losses, on September 4, 2019, Cachet reversed the payroll transactions, which caused the employers' employees to have their direct deposits reversed. (Id. ¶ 28). However, before completing the process of unwinding the transactions, on October 18, 2019, Cachet fell victim to another fraud through which a different payroll client and its principal stole more than $21 million from Cachet. (Id.). Five days later, on October 23, 2019, Cachet's bank, Bancorp, terminated its agreement with Cachet and froze its accounts. (Id. ¶¶ 28, 36).
As a result of the reversals, Cachet was named as a defendant in two class actions filed by impacted employees: (1) Simmons v. Cachet Financial Services and (2) Stevens v. Cachet Financial Services (together, the "Class Actions"). (Id. ¶ 29). In the Simmons action, filed in the District of Nevada, two individual plaintiffs alleged that their payroll payments were withdrawn from their bank accounts by Cachet without authorization. (Id. ¶ 30). The Simmons plaintiffs alleged 13 causes of action against Cachet and sought damages, attorneys' fees, interest, and injunctive relief. (Id. ¶ 31). The plaintiffs in the Stevens action, filed in the Central District of California, made similar allegations, including violations of Electronic Funds Transfer Act and California's Unfair Competition Law, and sought relief in the form of class certification, damages, interest, and attorneys' fees. (Id. ¶¶ 32, 34). Cachet settled the two Class Actions for $2 million. (Id. ¶ 35).
On November 4, 2019, Bancorp initiated an Interpleader Action in the District of Delaware. (Id. ¶ 36). The Interpleader Action named 247 remarketers and employers, as well as Cachet, as potential claimants. (Id.). On November 20, 2019, in response to a court order, Bancorp deposited $15,799,963.27 into the Registry of the Court. (Id. ¶ 37). Cachet alleges that it incurred significant defense costs to resolve the Interpleader Action. (Id. ¶ 38).
On January 21, 2020, Cachet filed for bankruptcy relief under Chapter 11 of the United States Bankruptcy Code in the Bankruptcy Court for the Central District of California (the "Bankruptcy Court"). (Id. ¶ 39). In total, 192 proofs of claim were filed, most of which were filed by remarketers. (Id. ¶ 40). Cachet alleges that it also incurred significant defense costs in resolving the Bankruptcy Proceeding. (Id. ¶ 41). Cachet emerged from bankruptcy on July 15, 2021, when its Chapter 11 Plan (the "Plan") was approved by the Bankruptcy Court. See (RJN Ex. 2). Pursuant to the terms of the Plan, the Class Actions and the Interpleader Action have been resolved.
Cachet commenced the instant lawsuit against Everest on March 1, 2023, before the Bankruptcy Court. Cachet seeks coverage under the Policy for Cachet's defense costs and settlements allegedly incurred from the Class Actions, the Interpleader Action, and the Bankruptcy Proceeding. (ECF No. 1-3). Cachet alleges three causes of action against Everest: (1) breach of contract; (2) tortious breach of the implied covenant of good faith and fair dealing; and (3) declaratory relief.
On May 5, 2023, Everest filed the instant motion seeking permissive withdrawal of the reference. (ECF No. 1 ("Mot.")). Cachet opposed on June 7, 2023, (ECF No. 19 ("Opp.")), and Everest replied on June 14, 2012. (ECF No. 20).
Everest does not seek mandatory withdrawal of the reference. See (Mot. at 15-16).
II. LEGAL STANDARD
District courts have "original but not exclusive jurisdiction" over all bankruptcy proceedings. See 28 U.S.C. § 1334(b). Such proceedings fall into one of two categories: "core proceedings, in which the bankruptcy court may enter appropriate orders and judgment," and "non-core proceedings, which the bankruptcy court may hear but for which it may only submit proposed findings of fact and conclusions of law to the district court for de novo review." Sec. Farms v. Int'l Brotherhood of Teamsters, Chauffers, Warehousemen & Helpers, 124 F.3d 999, 1008 (9th Cir. 1997) (quoting 28 U.S.C. § 157). Actions that do not depend on bankruptcy laws for their existence and that could proceed in another court are considered "non-core." Id. (citation omitted).
Pursuant to 28 U.S.C. § 157(d), a district court may withdraw reference to the bankruptcy court. See 28 U.S.C. § 157(d). The provision provides for both permissive and mandatory withdrawal. Id. "The district court may withdraw, in whole or in part, any case or proceeding referred . . . on its own motion or on timely motion of any party, for cause shown." Id. The district court shall withdraw if "resolution of the proceeding requires consideration of both title 11 and other laws of the United States regulating organizations or activities affecting interstate commerce." Id. The party seeking withdrawal carries the "burden of persuasion." FTC v. First Alliance Mortg. Co., 282 B.R. 894, 902 (C.D. Cal. 2001); see also In re Heller Ehrman LLP, 464 B.R. 348, 351-52 (N.D. Cal. 2011).
"To determine whether cause for permissive withdrawal exists, a district court 'should first evaluate whether the claim is core or non-core, since it is upon this issue that questions of efficiency and uniformity will turn.' " One Longhorn Land I, L.P. v. Presley, 529 B.R. 755, 762 (C.D. Cal. 2015) (quoting In re Orion Pictures Corp., 4 F.3d 1095, 1101 (2d Cir. 1993)). Additionally, courts should weigh "the efficient use of judicial resources, delay and costs to the parties, uniformity of bankruptcy administration, the prevention of forum shopping, and other related factors" in deciding whether to withdraw a reference. See Sec. Farms, 124 F.3d at 1008. Ultimately, "it is within a district court's discretion to grant or deny a motion for permissive withdrawal of reference; that decision will not be disturbed unless the court abuses its discretion." In re EPD Inv. Co. LLC, No. ADV 2:12-AP-02424-ER, 2013 WL 5352953, at *2 (C.D. Cal. Sept. 24, 2013) (citing In re Cinematronics, Inc., 916 F.2d 1444, 1451 (9th Cir. 1990)).
III. DISCUSSION
A. Judicial Efficiency
As a preliminary matter, the Court considers whether Everest's claims against Cachet are either core or non-core, "since it is upon this issue that questions of efficiency and uniformity will turn." Hjelmeset v. Cheng Hung, No. 17-CV-05697-BLF, 2018 WL 558917, at *3 (N.D. Cal. Jan. 25, 2018). Because bankruptcy judges are not Article III judges, "the Constitution limits their ability to adjudicate—i.e., to render a final judgment—to issues that are at the 'core' of the bankruptcy power." In re Harris, 590 F.3d 730, 737 (9th Cir. 2009). "If a matter is core [under 28 U.S.C. § 157(b)], the statute empowers the bankruptcy judge to enter final judgment on the claim, subject to appellate review by the district court." Exec. Benefits Ins. Agency v. Arkison, 573 U.S. 25, 34, 134 S.Ct. 2165, 189 L.Ed.2d 83 (2014). Conversely, "[i]f a matter is non-core, and the parties have not consented to final adjudication by the bankruptcy court, the bankruptcy judge must propose findings of fact and conclusions of law." Id. The district court may then enter a final order or judgment "after considering the bankruptcy judge's proposed findings and conclusions and after reviewing de novo those matters to which any party has timely and specifically objected." 28 U.S.C. § 157(c)(1). Since a bankruptcy court's determination of non-core matters may be subject to de novo review by the district court, in cases where non-core issues predominate, judicial efficiency may be "enhanced" and "unnecessary costs could be avoided by a single proceeding in the district court." See Sec. Farms, 124 F.3d at 1008-09. See also In re We Ins. Servs., Inc., No. 20-CV-2076 JLS, 2021 WL 4150311, at *3 (S.D. Cal. Sept. 13, 2021) ("Generally, where the claims at issue are non-core, efficiency favors withdrawing the reference."); Everett v. Art Brand Studios, LLC, 556 B.R. 437, 443 (N.D. Cal. 2016) ("If the claims sought to be withdrawn are non-core and the Bankruptcy Court can not enter final judgment, then efficiency generally favors withdrawing the reference.").
Here, it is undisputed that Everest's claims in this case are exclusively non-core and that Everest does not consent to the Bankruptcy Court conducting a jury trial. (Mot. at 2, 9); see In re Castlerock Properties, 781 F.2d 159, 162 (9th Cir. 1986) (stating that state law contract claims have been held to be "noncore" related proceedings under § 157(c) and collecting cases). Cachet argues that if the Bankruptcy Court retained jurisdiction over this case, any concerns regarding judicial efficiency at this early stage in the proceedings "would be pure speculation whether either party might object to any of the bankruptcy court's findings." (Opp. at 7-8). However, because Everest does not consent, the Bankruptcy Court is limited to submitting proposed findings and conclusions of law to this Court. See 28 U.S.C. § 157(c)(l). This Court must then review de novo those matters to which any party objects. Id. Thus, it is not speculative that this Court would be required to undergo an additional and duplicative layer of review if the Bankruptcy Court were to retain jurisdiction over Cachet's non-core claims, given Everest's lack of consent. Judicial efficiency therefore weighs in favor of granting withdrawal. See Sec. Farms, 124 F.3d at 1008 (affirming withdrawal where "non-core issues predominate"); In re Sullivan Int'l Grp., Inc., No. 19-CV-1008-WQH-NLS, 2019 WL 5648671, at *4 (S.D. Cal. Oct. 31, 2019) (finding the "efficient use of judicial resources favors the withdrawal of reference" where both parties agreed the claim at issue was non-core); In re Rosales, No. 13-CV-01316-LHK, 2013 WL 5962007, at *6 (N.D. Cal. Nov. 7, 2013) (finding that "efficiency concerns favor withdrawal" because the bankruptcy court could enter final judgment with respect to only one of plaintiffs' twelve claims).
Cachet contends that whether its claims are core or non-core is not dispositive and cites two recent decisions from the Central District of California where the courts declined to withdraw reference of other adversary proceedings initiated by Cachet in the Bankruptcy Court. See (Opp. at 7-8 (citing In re Debtor Cachet Financial Services, No. CV 22-1362-DMG, ECF No. 17 (C.D. Cal. Oct. 26, 2022) ("Cachet I") and In re Cachet Fin. Servs. v. Bancorp Bank, No. 2:21-cv-08778-FLA, 2023 WL 1785766 (C.D. Cal. Feb. 6, 2023) ("Cachet II")). While it is true that the determination of whether core or non-core claims predominate is not dispositive, both Cachet I and Cachet II are distinguishable because Cachet asserted core claims in each case. In Cachet I, Cachet brought one core claim and five non-core claims in an adversary proceeding against Pioneer Bancorp Inc. in the Bankruptcy Court. See Cachet I, at 4. Even though the claims at issue were predominately non-core, the court found that the facts underlying Cachet's state law claims were "intimately related" to its claims that arose from bankruptcy law. Cachet I, at 6. The court therefore concluded that withdrawal would result in the court "losing the benefit of the bankruptcy court's experience in both the law and the facts." Id. (citation omitted). In Cachet II, the court found that judicial efficiency weighed against withdrawal because core issues predominated over Cachet's non-core claims. See Cachet II, 2023 WL 1785766, at *6-7. Thus, Cachet's core claims were clearly significant to the courts' decisions denying withdrawal.
See In re We Ins. Servs., Inc., 2021 WL 4150311, at *3 ("[T]he non-core nature of the claims is not necessarily dispositive.").
Here, unlike in either Cachet I or Cachet II, Cachet's lawsuit against Everest is exclusively non-core and its claims are not related to any claims that may arise under bankruptcy law. Thus, if the Court were to deny Everest's motion, it would result in an unnecessary layer of judicial review, which would in turn waste time and judicial resources. Judicial efficiency would be best served by withdrawing reference of Cachet's claims against Everest. See In re Tamalpais Bancorp, 451 B.R. 6, 11 (N.D. Cal. 2011) (withdrawing the reference of a non-core matter because "(1) judicial resources would be most efficiently used by withdrawing the reference, and (2) unnecessary delay and costs to the parties can be avoided by withdrawing the reference"); In re Cinematronics, Inc., 916 F.2d at 1451 (holding that "where a jury trial is required and the parties refuse to consent to bankruptcy jurisdiction, withdrawal of the case to the district court is appropriate").
B. Uniformity of Bankruptcy Administration
Everest argues that withdrawal of the reference will not impact uniformity of administering Cachet's Bankruptcy Proceeding. (Mot. at 23). Everest claims that, because the Cachet's bankruptcy Plan already went into effect, no further distributions from Cachet's estate are due to any creditors other than Cachet's company insiders. In other words, the Class Actions' plaintiffs and unsecured creditors will not be entitled to any further distributions regardless of the outcome of this case. In response, Cachet does contest that the Class Action plaintiffs and unsecured creditors will be unaffected by any potential recovery from Everest. (Opp. at 10). Instead, Cachet asserts that withdrawal is improper because its claims against Everest "directly relate to the administration of the bankruptcy estate," insofar as the claims "will further fund the Estate and facilitate Cachet's payments required under the Plan."
"Where the resolution of claims may impact the assets available to creditors, this factor weighs against withdrawal." In re We Ins. Servs., Inc., 2021 WL 4150311, at *4 (finding this factor weighed against withdrawal where the bankruptcy court had already ruled that the insurance policy and its proceeds belonged to the estate). Here, Cachet fails to explain how a potential recovery from Everest in this litigation would impact its creditors. The fact that the Plan allows the Bankruptcy Court to retain jurisdiction over Cachet's claims, on its own, does not mean that uniformity of bankruptcy administration would be better served by declining to withdraw reference. In fact, as explained more fully below, Cachet has previously chosen to bring a similar lawsuit in the District Court instead of the Bankruptcy Court, which belies any potential concern Cachet may have for its bankruptcy administration should Cachet need to litigate in this Court. Thus, this factor weighs neither for nor against withdrawing the reference.
C. Forum Shopping
Everest argues that withdrawing the reference will prevent Cachet from forum shopping. (Mot. at 21-22). " 'Forum shopping' occurs when a party attempts to manipulate an action to have it heard before a forum it deems more favorable, charitable, or sympathetic toward its point of view." Calvert v. Berg, No. C13-1019, 2013 WL 3407790, at *5 (W.D. Wash. July 8, 2013) (citation omitted). "It is likely present when a party, 'perceiving that it may find itself forced into a disadvantageous forum, seeks to manipulate procedural devices to secure an advantage which, were those devices not available, it could not employ to defeat its opponent's choice of forum.' " In re: KSL Media, Inc., No. AP 15-01212-GM, 2016 WL 74385, at *9 (C.D. Cal. Jan. 6, 2016) (quoting Calvert, 2013 WL 3407790, at *5).
On February 19, 2022, Cachet sued Berkley Insurance Company and Great American Insurance Company (together, "Berkley") for insurance coverage in this Court. See Cachet Fin. Servs. v. Berkley Ins. Co., No. 2:22-cv-01157-SPG-JEM, 2023 WL 2558413 (C.D. Cal. Jan. 20, 2023) (the "Berkley Action"). In the Berkley Action, Cachet sought to obtain coverage for losses stemming from the same MyPayRollHR frauds at issue in this case under a commercial crime policy. This Court granted Berkley's motion to dismiss without prejudice on January 20, 2023. See id. In response to this Court's order, Cachet requested to enter an appealable order dismissing with prejudice. See (RJN, Ex. E). Then, less than one month later, Cachet initiated this action before the Bankruptcy Court. When it filed the Adversary Complaint, Cachet did not list the Berkley Action as a related case pursuant to Central District of California Local Rule 83-1.3.1.
The Berkley Action is pending appeal before the Ninth Circuit.
Central District of California Local Rule 83-1.3.1 provides:
It shall be the responsibility of the parties to promptly file a Notice of Related Cases whenever two or more civil cases filed in this District: (a) arise from the same or a closely related transaction, happening, or event; (b) call for determination of the same or substantially related or similar questions of law and fact; or (c) for other reasons would entail substantial duplication of labor if heard by different judges . . . . The Notice must be filed at the time any case (including a notice of removal or bankruptcy appeal) appearing to relate to another is filed, or as soon thereafter as it reasonably should appear that the case relates to another.
Everest asserts that Cachet's decision to initiate this case in the Bankruptcy Court—rather than in this Court—less than one month after this Court dismissed the Berkley Action while neglecting to list the Berkley Action as a related case is evidence of Cachet's attempt to shop for a more favorable forum. Cachet argues in opposition that the Berkley Action is not related to this case because the Berkley Action seeks coverage for losses from the MyPayrollHR thefts based on first party coverage under a different policy, whereas this case seeks third party coverage for settlement payments and defense costs under a different policy. (Opp. at 11). Thus, according to Cachet, the two cases "have very little in common," other than the fact they both involve insurance coverage issues and bad faith claim denials. (Id.). The Court disagrees.
On one hand, Cachet argues that the Bankruptcy Court should retain jurisdiction, given "its extensive and long-standing oversight of Cachet's case and its intimate familiarity with the complex factual allegations of kiting and bank fraud that permeate the other adversary actions it is adjudicating." (Opp. at 8). Yet on the other hand, Cachet argues that the Berkely Action and this case are not related and therefore do not arise from the same closely related transaction or call for determination of a substantially similar question of law or fact. (Id. at 11). Cachet cannot have it both ways. Cachet's proposed rationale for why it believes the Bankruptcy Court is somehow better equipped to decide the merits of this case directly contradicts its assertion that the two cases are unrelated. According to Cachet's argument, the Bankruptcy Court should retain jurisdiction because it "is familiar with the issues" in this case even though Cachet's claims against Everest are distinct from Cachet's other adversary actions such that it should not be deemed a related case under the Local Rules. Cachet's argument lacks merit, and this Court rejects Cachet's argument that this case shares very little in common with the Berkley Action. Just like in the Berkley Action, the facts giving rise to Cachet's Adversary Complaint against Everest are based on the same fraudulent scheme carried out by MyPayrollHR. Compare (Adversary Compl. ¶¶ 26-28) with (RJN Ex. C ¶¶ 28-34). Indeed, this Court became familiar with Cachet's allegations of kiting and bank fraud surrounding the MyPayrollHR scheme when it decided the Berkley Action. That different insurance policies are implicated in each case does not detract from the identical set of facts that gave rise to Cachet's breach of contract and bad faith denial claims against Berkeley and Everest.
"The discretion to withdraw a reference to the bankruptcy court should be employed judiciously in order to prevent withdrawal from becoming just another litigation tactic for parties eager to find a way [into or] out of bankruptcy court.' " In re GTS 900 F, LLC, No. 2:09-BK-35127-VZ, 2010 WL 4878839, at *5 (C.D. Cal. Nov. 23, 2010) (citation omitted). For example, in Wechsler v. Squadron, Ellenoff, Plesent, & Sheinfeld LLP, 201 B.R. 635, 641 (S.D.N.Y. 1996), the defendant law firm moved to withdraw the reference of an action filed by a bankruptcy trustee which alleged malpractice, breach of fiduciary duty, and breach of contract. Id. at 637. Several months before that action was filed, the magistrate judge, who was also deciding the law firm's motion to withdraw the reference, recommended to dismiss a related securities fraud lawsuit against defendant. Id. In granting the defendant's motion to withdraw the reference, the magistrate judge found it was "more than coincidental" that the action was filed in bankruptcy court shortly after the magistrate judge issued its report and recommendation.
Here, too, it appears to be "more than coincidental" that Cachet chose to bring its concededly non-core claims against Everest in Bankruptcy Court after this Court dismissed a related suit only one month prior. Cachet fails to explain why it chose to initiate this case in Bankruptcy Court when it chose to initiate the Berkley Action in this Court in such proximity. Accordingly, the Court finds that withdrawing the reference will prevent Cachet from seeking a more favorable forum by taking advantage the procedural mechanisms available in the Bankruptcy Court.
D. Whether the Bankruptcy Court Should Retain Jurisdiction Over Pre-Trial Matters
Cachet alternatively argues that if the Court were to grant Everest's motion the Court should order the Bankruptcy Court to preside over all pretrial matters. (Opp. at 12). It is true that allowing bankruptcy judges "to resolve pre-trial matters" may "promote[ ] judicial economy and efficiency by making use of the bankruptcy court's unique knowledge of Title 11 and familiarity with the actions before them." In re Heller Ehrman LLP, 464 B.R. 348, 358 (N.D. Cal. 2011). "However, where, as here, non-core claims completely overwhelm claims that can be finally adjudicated in Bankruptcy Court, the matter is more likely to eventually come before this Court and efficiency is best served by having the matter heard in the correct forum at the earliest possible opportunity." Everett, 556 B.R. at 445 (emphasis added). Cachet's lawsuit against Everest is at its earliest possible stage—no motions or responsive pleadings have been filed in response to Cachet's Adversary Complaint and no discovery has been served. Accordingly, the Court declines Cachet's request to send this matter to the Bankruptcy Court for pretrial matters and finds that a prompt withdrawal would be most efficient.
IV. CONCLUSION
For the foregoing reasons, the Court GRANTS Everest's Motion to Withdraw Reference.
IT IS SO ORDERED.