                           UNITED STATES DISTRICT COURT
                           FOR THE DISTRICT OF COLUMBIA



 BUDHA ISMAIL JAM, et al.,

         Plaintiffs,
                 v.                                        Civil Action No. 15-612 (JDB)
 INTERNATIONAL FINANCE
 CORPORATION,

         Defendant.



                                 MEMORANDUM OPINION

       Located in a coastal region of Gujarat, India, the coal-fired Tata Mundra Power Plant was

constructed in order to supply much-needed power for India’s continued economic growth. But

according to plaintiffs, who live, fish, and farm in the shadow of the Plant, its main legacy has

been environmental and social harm—to the marine ecosystem, to the quality of the air, to

plaintiffs’ health, and to their way of life.   Plaintiffs believe that the International Finance

Corporation (IFC), which provided $450 million for construction of the Plant, is primarily

responsible for their injuries. They have sued IFC in this Court seeking several forms of equitable

relief or, in the alternative, compensatory and punitive damages. IFC now moves to dismiss on

several grounds, most notably that it is immune from this suit under the International Organizations

Immunities Act. Because the Court agrees that IFC is immune from this suit, it will dismiss

plaintiffs’ complaint in its entirety, without reaching IFC’s other arguments.

                                        BACKGROUND

       IFC is an international organization with 184 member countries, including the United

States and India. Def.’s Mot. to Dismiss [ECF No. 10-1] at 3. As described in its Articles of

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Agreement, IFC’s purpose is “to further economic development by encouraging the growth of

productive private enterprise in member countries.”         Ex. 1 to Zeidan Decl. [ECF No. 10-8]

(Articles of Agreement) Art. I. To fulfill that purpose, IFC may invest in privately run projects for

which “sufficient capital is not available on reasonable terms.” Id. The project at the center of

this case, development of the Tata Mundra Power Plant, was carried out by Coastal Gujarat Power

Limited (CGPL), a subsidiary of Tata Power, an Indian power company. IFC loaned CGPL $450

million for the development of the Plant. Total project cost was estimated to be $4.14 billion.

Compl. [ECF No. 1] ¶¶ 56, 47.

        Internal IFC policies demand careful attention to the environmental and social impacts of

IFC-financed projects.        IFC’s “Performance Standards on Environmental                and Social

Sustainability” create a framework for the assessment, avoidance, minimization, and mitigation of

environmental and social risks. See Ex. 5 to Herz Decl. [ECF No. 22-5] (2012 Performance

Standards) at ¶¶ 1–8. “IFC will only finance investment activities that are expected to meet the

requirements of the Performance Standards within a reasonable period of time.” Ex. 2 to Herz

Decl. [ECF No. 22-5] (2012 Policy on Environmental and Social Sustainability) ¶ 22. When IFC

does invest in a project, the resulting loan agreement requires the client to comply with the

Performance Standards and other related policies. See 2012 Policy on Environmental and Social

Sustainability ¶ 24. Thus, “managing environmental and social risks and impacts in a manner

consistent with the Performance Standards [becomes] the responsibility of the client.” Id. ¶ 7. But

IFC retains responsibility for monitoring and supervising its clients’ efforts. Id. “If the client fails

to comply with its environmental and social commitments,” then “IFC will work with the client to

bring it back into compliance.” Id. ¶ 24. “Persistent delays in meeting [those commitments] can

lead to loss of financial support from IFC.” Id. ¶ 22.



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       From the earliest stages of its involvement, IFC recognized that the development of the

Plant entailed significant—and possibly irreversible—environmental and social risks. See Ex. 7

to Zeidan Decl. [ECF No. 10-14] (Compliance Advisory Ombudsman Assessment Report) at 4–5.

Hence, before closing the deal on IFC’s $450 million investment, IFC and CGPL developed an

Environmental and Social Action Plan in an attempt to manage the risks they had identified.

Compl. ¶¶ 49–51. Ultimately, the Action Plan was incorporated into the loan agreement, along

with IFC’s Performance Standards and other environmental guidelines. See Ex. 1 to Karim Decl.

[ECF No. 10-5 & -6] (Schedule I to Loan Agreement) at 91–92 (requiring CGPL to comply with

the “Environmental and Social Requirements”); see also id. at 13–14 (defining “Environmenta l

and Social Requirements”).

       Plaintiffs include fishermen and farmers who live and work near the Plant, suing on behalf

of themselves and others similarly situated; a local trade union (MASS) dedicated to protection of

fisherworkers’ rights; and the local government of a nearby village. See Compl. ¶¶ 13–15. In

plaintiffs’ view, CGPL and IFC have failed to honor their commitments. They point to a host of

negative environmental and social impacts allegedly caused by the operation of the Plant: hot water

from the cooling system has substantially altered the marine environment, depressing the fish catch

near the shore; the water intake channel has leaked saltwater into the groundwater, thereby making

it unsuitable for drinking or irrigation; emissions have significantly degraded local air quality;

local fisherman and farmers have been displaced. See Pls.’ Opp’n [ECF No. 22] at 3–5; see also

Compl. ¶¶ 74–115.     Plaintiffs feel that, when these individual impacts are considered in the

aggregate, their “way of life [has been] fundamentally threatened or destroyed by the Tata Mundra

Plant.” Compl. ¶ 6.




                                                3
       Plaintiffs blame IFC for the injuries they have suffered.       In their view, if IFC had

“follow[ed] its own policies and enforce[d] the conditions of the loan agreement,” the negative

environmental and social impacts caused by the Plant could have been avoided, minimized, or

mitigated. Compl. ¶ 191; see id. ¶¶ 176–92. Based on that conviction, plaintiffs filed a complaint

with IFC’s Compliance Advisor Ombudsman (CAO). See Ex. 6 to Zeidan Decl. [ECF No. 10-

13].   The CAO is IFC’s “independent recourse and accountability mechanism . . . for

environmental and social concerns.” Ex. 3 to Zeidan Decl. [ECF No. 10-10] (CAO Operational

Guidelines) at 4. But the CAO’s compliance function is focused on IFC’s environmental and

social performance, not on the performance of IFC’s clients.        Id. at 22.   CAO compliance

investigations focus on whether IFC has “fail[ed] to address environmental and/or social issues as

part of [its] review process,” and whether that failure has “resulted in outcomes that are contrary

to the desired effect of the [IFC’s] policy provisions.” Id. at 24. The final investigation report,

which is made available on the CAO’s website, will detail any identified policy violations. Id. at

25. However, the CAO is not a court, has “no authority with respect to judicial processes,” and

creates no “legal enforcement mechanism.” Id. at 4. Thus, the CAO cannot compel IFC to right

its wrongs, or to provide remedies to individuals who have been harmed by IFC-financed projects.

       Plaintiffs understand that well. The CAO investigation into their complaint concluded that

IFC had failed adequately to consider the environmental and social risks to which plaintiffs would

be exposed as a result of the Plant’s development. See Ex. 11 to Zeidan Decl. [ECF No. 10-18]

(CAO Audit Report) at 4. In the CAO’s estimation, IFC then compounded that error by failing to

perform an environmental and social impact assessment “commensurate with project risk,” and by

failing to “address [subsequent] compliance issues during [project] supervision.” Id.; see also id.

at 50–53 (summarizing the key compliance findings). IFC responded with a letter challenging



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some of the CAO’s conclusions, see Ex. 12 to Zeidan Decl. [ECF No. 10-19], and with a statement

laying out a ten-item action plan to address any compliance shortcomings, see Ex. 13 to Zeidan

Decl. [ECF No. 10-20]. But the CAO was unimpressed. In a subsequent monitoring report, it

explained that “a number of its findings suggest the need for a rapid, participatory and expressly

remedial approach to assessing and addressing project impacts raised by [plaintiffs].” Ex. 14 to

Zeidan Decl. [ECF No. 10-21] at 5. In the eyes of the CAO, the action plan proposed by IFC and

CGPL fell short of that mark. Id. The matter remains open for continued monitoring. Def.’s Mot.

to Dismiss at 7.

       Seeking the relief they cannot obtain from the CAO, plaintiffs have filed a complaint in

this Court. Their case is focused on “the irresponsible and negligent conduct of the International

Finance Corporation in appraising, financing, advising, supervising and monitoring its significant

loan to enable the development of the Tata Mundra Project in Gujarat, India.” Compl. ¶ 2. That

conduct, plaintiffs contend, gives rise to valid claims for negligence, negligent supervision, public

nuisance, private nuisance, trespass, and breach of contract. See id. ¶¶ 294–332. As remedies,

plaintiffs seek various forms of injunctive relief running against IFC or, in the alternative,

compensatory and punitive damages. See id. ¶¶ 333–45. IFC has responded with a motion to

dismiss. At the threshold, IFC believes plaintiffs’ suit is barred by the International Organizations

Immunities Act (IOIA), 22 U.S.C. § 288 et seq. Alternatively, IFC asks the Court to dismiss on

grounds of forum non conveniens or for failure to join indispensable third parties. Finally, IFC

argues that some of the counts in plaintiffs’ complaint fail to state a claim upon which relief can

be granted. See Def.’s Mot. to Dismiss at 1–2. As the Court agrees that IFC is immune from

plaintiffs’ suit, it will address only IFC’s threshold immunity argument.




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                                       LEGAL STANDARD

       IFC’s immunity claim seeks dismissal for lack of subject-matter jurisdiction under Federal

Rule of Civil Procedure 12(b)(1). As “[f]ederal courts are courts of limited jurisdiction[,] . . . [i]t

is to be presumed that a cause lies outside this limited jurisdiction, and the burden of establishing

the contrary rests upon the party asserting” it. Kokkonen v. Guardian Life Ins. Co. of Am., 511

U.S. 375, 377 (1994) (citations omitted).        Thus, plaintiffs must establish jurisdiction by a

preponderance of the evidence. See Gordon v. Office of the Architect of the Capitol, 750 F. Supp.

2d 82, 87 (D.D.C. 2010). In making this determination, “the Court must accept as true all of the

factual allegations contained in the complaint,” but those allegations “will bear closer scrutiny in

resolving a 12(b)(1) motion than in resolving a 12(b)(6) motion for failure to state a claim.” Id. at

86–87 (internal quotation marks and citations omitted).

                                           DISCUSSION

       “It is well established that statutes like the IOIA that grant immunity to foreign nations and

international organizations limit the District Court’s jurisdiction over parties that are entitled to

such protection.” Weinstock v. Asian Dev. Bank, 2005 WL 1902858, at *3 (D.D.C. July 13, 2005).

“The International Organizations Immunities Act applies to those international organizations

which the President designates as entitled to [its] benefits . . . .” Osseiran v. Int’l Finance Corp.,

552 F.3d 836, 838 (D.C. Cir. 2009).         IFC is among those organizations that have been so

designated. Id. (citing Exec. Order No. 10,680, 21 Fed. Reg. 7,647 (Oct. 2, 1956)). Under the

IOIA, IFC generally “enjoy[s] the same immunity from suit and every form of judicial process as

is enjoyed by foreign governments.” 22 U.S.C. § 288a(b). “When Congress enacted the IOIA in

1945, foreign sovereigns enjoyed—contingent only upon the State Department’s making an

immunity request to the court—‘virtually absolute immunity.’” Atkinson v. Inter-Am. Dev. Bank,



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156 F.3d 1335, 1340 (D.C. Cir. 1998) (quoting Verlinden B.V. v. Cent. Bank of Nigeria, 461 U.S.

480, 486 (1983)).        The IOIA thus confers that same absolute immunity upon international

organizations like IFC. Id. at 1341. Immunity may be waived, however, “for the purpose of any

proceedings or by the terms of any contract.” 22 U.S.C. § 288a(b).

         IFC’s Articles of Agreement contain such a waiver provision.                    Titled “Position of the

Corporation with Regard to Judicial Process,” it reads:

                  Actions may be brought against the Corporation only in a court of
                  competent jurisdiction in the territories of a member in which the
                  Corporation has an office, has appointed an agent for the purpose of
                  accepting service of process, or has issued or guaranteed securities.
                  No actions shall, however, be brought by members or persons acting
                  for or deriving claims from members. The property and assets of
                  the Corporation shall, wheresoever located and by whomsoever
                  held, be immune from all forms of seizure, attachment or execution
                  before the delivery of final judgment against the Corporation.

Articles of Agreement, Art. VI, § 3. 1 Based on the broad language of this waiver, one might

conclude that IFC retained immunity only from suits by its members. The D.C. Circuit, however,

has instructed courts to read such waivers more narrowly, with careful attention to “the

interrelationship between the functions of the [IFC] set forth in the Articles of Agreement and the

underlying purposes of international immunities.” Mendaro v. World Bank, 717 F.2d 610, 615

(D.C. Cir. 1983).

         “‘Since the purpose of the immunities accorded to international organizations is to enable

the organizations to fulfill their functions, applying the same rationale in reverse, it is likely that

most organizations would be unwilling to relinquish their immunity without receiving a

corresponding benefit which would further the organization’s goals.’” Atkinson, 156 F.3d at 1338



         1
          IFC’s waiver provision is identical to that of its parent entity, the World Bank, Osseiran, 552 F.3d at 839,
and nearly identical to that of the Inter-American Investment Corporation, Vila v. Inter-Am. Inv. Corp., 570 F.3d 274,
278 (D.C. Cir. 2009).

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(quoting Mendaro, 717 F.2d at 617). Waivers should be more broadly construed only “when the

waiver would arguably enable the organization to pursue more effectively its institutional goals.”

Vila, 570 F.3d at 278–89 (internal quotation marks omitted).         On the other hand, “‘when the

benefits accruing to the organization as a result of the waiver would be substantially outweighed

by the burdens caused by judicial scrutiny of the organization’s discretion to select and administer

its programs, it is logically less probable that the organization actually intended to waive its

immunity.’” Id. at 279 (quoting Mendaro, 717 F.2d at 617). The relevant question is thus “whether

a waiver of immunity to allow this type of suit, by this type of plaintiff, would benefit the

organization over the long term.” Osseiran, 552 F.3d at 840.           Hence, immunity “should be

construed as not waived unless the particular type of suit would further [IFC’s] objectives.”

Atkinson, 156 F.3d at 1338.

       As a general matter, “promises founded on good faith alone are worth less than obligations

enforceable in court.” Osseiran, 552 F.3d at 187. International organizations, which must often

participate in the marketplace in order to fulfill their chartered functions, may therefore waive their

immunity from certain kinds of suits to enhance their credibility in dealings with certain

counterparties. The World Bank, for example, waives its immunity for suits arising out of its

“commercial transactions with the outside world,” brought by “its debtors, creditors, bondholders,

and those other potential plaintiffs to whom the Bank would have to subject itself to suit in order

to achieve its chartered objectives.” Mendaro, 717 F.2d at 615, 618. IFC has waived immunity

for a suit by a prospective buyer of an IFC investment, who brought promissory estoppel and

breach of confidentiality claims after the deal soured. Osseiran, 552 F.3d at 840–41. And the

Inter-American Investment Corporation was not immune from the unjust enrichment claim of an




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independent consultant who had provided advisory services to the organization without being paid.

Vila, 570 F.3d at 276–78.

       Plaintiffs believe their suit fits comfortably within this precedent. Because their suit arises

from IFC’s “external activities and relationships with host communities,” and because IFC “could

not function without credible policies and promises” to those communities, plaintiffs argue that a

waiver would benefit IFC here. Pls.’ Opp’n at 22. But plaintiffs’ argument glosses over some

material differences between those waiver of immunity cases and this one.               International

organizations have previously waived immunity for suits brought by individual plaintiffs with

whom the organization had a direct commercial relationship. Here, on the other hand, plaintiffs

are a would-be class of fishermen and farmers, and two institutional plaintiffs that represent their

interests—none of whom have a commercial relationship with IFC. See Compl. ¶¶ 6, 13–15. Nor

is this the type of suit for which waiver has previously been found. In both Osseiran and Vila, the

underlying claims invoked principles of contract law. See Vila, 570 F.3d at 276. Plaintiffs’ claims,

however, sound primarily in tort. See Compl. ¶¶ 294–324 (asserting claims for negligence,

negligent supervision, public nuisance, private nuisance, and trespass); see also Banco de Seguros

del Estado v. Int’l Finance Corp., 2007 WL 2746808, at *5–6 (S.D.N.Y. Sept. 20, 2007) (IFC did

not waive immunity for negligent supervision claim by third-party). True, plaintiffs do bring one

claim for breach of contract. See Compl. ¶¶ 325–32. But it is a stretch to characterize that claim,

as plaintiffs attempt to do, as one arising purely from IFC’s external activities. Plaintiffs’ own

complaint characterizes the suit as one that “arises out of” IFC’s “irresponsible and negligent

conduct . . . in appraising, financing, advising, supervising and monitoring its significant loan” to

CGPL. Id. ¶ 2. By focusing on IFC’s internal decision-making processes, the suit invites—indeed ,

demands—“judicial scrutiny of the [IFC’s] discretion to select and administer its programs.” Vila,



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570 F.3d at 279 (internal quotation marks omitted). Waiver of immunity is highly unlikely in such

circumstances. See Mendaro, 717 F.2d at 617.

       Nonetheless, in assessing the claim that immunity has been waived, the Court remains

obliged to weigh the benefits and costs that a waiver may entail. Vila, 570 F.3d at 281. On the

cost side of the ledger, the Court may appropriately consider the litigation costs inherent in

defending this type of suit. See Atkinson, 156 F.3d at 1339. In cases where the D.C. Circuit has

found a waiver, the organization has failed to come forward with robust arguments about costs.

See Osseiran, 552 F.3d at 841 (“International Finance identifies no unique countervailing

costs . . . .”); Vila, 570 F.3d at 281 (The Inter-American Investment Corporation “has not

identified countervailing costs that are distinguishable from the costs associated with a claim for

promissory estoppel.”). But here, IFC argues that waiver would “produce a considerable chilling

effect on IFC’s capacity and willingness to lend money in developing countries,” by opening “a

floodgate of lawsuits by allegedly aggrieved complainants from all over the world.” Def.’s Reply

[ECF No. 23] at 9–10. Litigation of this kind, in other words, would “open [IFC] to disruptive

interference with its lending policies.” Vila, 570 F.3d at 281 (internal quotation marks and brackets

omitted). Since this type of suit is aimed at IFC’s internal decision-making process, the Court has

little reason to doubt IFC’s assessment of its concerns.

       But plaintiffs take issue with IFC’s cost contentions.       IFC will only incur this cost,

plaintiffs’ argument goes, if it persists in providing loans “irrespective of the environmental and

human toll.” See Pls.’ Opp’n at 26. To avoid litigation, IFC can simply “choose projects and

partners that follow IFC policy and obey the law.” Id. at 27. If it fails to do so, some suits may be

filed. But because each of these suits would seek only to encourage “IFC’s management to do

what the IFC already requires,” plaintiffs assert, the suits would actually benefit IFC and further



                                                 10
its development goals. Id. at 26. Thus, in plaintiffs’ view, the “costs” identified by IFC are not

costs at all. Id.

        Plaintiffs cannot so easily blur the boundaries between cost and benefit. The D.C. Circuit

has identified “judicial scrutiny of the organization’s discretion to select and administer its

programs” as a burden or cost, without regard to whether the underlying litigation is meritorious

or in some other sense deserved. See Mendaro, 717 F.2d at 617. This Court will not completely

dismiss the possibility that a waiver could provide some incentive for IFC to adhere more

scrupulously to its policies, over and above the pressure already applied by the CAO. But that

marginal benefit must be weighed against the relevant costs which, in suits like this by these kinds

of plaintiffs, remain quite substantial.

        Plaintiffs also offer a more modest theory regarding the benefits of waiver in cases where

the CAO has identified a compliance failure but IFC has failed to deliver a remedy. See Pls.’

Opp’n at 25–26. IFC-funded projects are likely to be more successful when they garner support

from local communities, plaintiffs argue. If, however, IFC can breach its environmental and social

policies without providing redress to those who are negatively impacted, that support will be

difficult to secure. Local communities “may hesitate to do business with an entity insulated from

judicial process,” Vila, 570 F.3d at 279 (internal quotation marks omitted), and may instead decide

to “fight [IFC] projects tooth and nail,” Pls.’ Opp’n at 22. Waiver of immunity, plaintiffs contend,

is the solution to this problem. By creating a legal avenue for the redress of environmental and

social harms, IFC can credibly assuage any doubts that local communities may harbor about

hosting IFC-funded projects. 2 See id. at 21–26.



        2
          Plaintiffs also argue that waiver would help IFC maintain the support of donor governments like the United
States. See Pls.’ Opp’n at 24. But the United States government has adequate tools at its disposal to make its view
on IFC’s immunity known directly—specifically, the “President retains authority to modify, condition, limit, and even

                                                        11
        Although plaintiffs’ argument makes some intuitive sense, it is ultimately insufficient to

support a finding of waiver here. As an initial matter, the Court hesitates to extend the “credibility”

theory upon which plaintiffs rely outside the context of commercial transactions, where it was

initially developed and has been exclusively applied. But even if the Court were to stretch that

theory to reach this case, plaintiffs would not prevail. The preceding analysis has left plaintiffs

with a daunting task. To support a finding of waiver, they must point to a benefit that would justify

opening the courthouse doors to a new type of plaintiff, bringing a new and very broad type of

suit, more costly than those that have previously been allowed and aimed squarely at IFC’s

discretion to select and administer its own projects. Plaintiffs’ benefit argument simply cannot

bear that substantial weight. Immunity “should be construed as not waived unless the particular

type of suit would further [IFC’s] objectives.” Atkinson, 156 F.3d at 1338. Any “ties go to the

organization.” Vila, 570 F.3d at 286 (Williams, J., dissenting). In the Court’s view, for all the

reasons reviewed above, suits like plaintiffs’ are likely to impose considerable costs upon IFC

without providing commensurate benefits. Hence, IFC has not waived its immunity to this suit.

        The Court can deal quickly with plaintiffs’ remaining arguments, which urge several

changes to the D.C. Circuit’s immunity jurisprudence.               First, plaintiffs believe Atkinson was

incorrectly decided. Citing the Third Circuit’s decision in OSS Nokalva, Inc. v. European Space

Agency, 617 F.3d 756 (3d Cir. 2010), plaintiffs argue that the IOIA was intended to incorporate

subsequent changes to the law of foreign sovereign immunity (like the Foreign Sovereign

Immunities Act’s commercial activity exception), rather than to preserve the understanding of

foreign sovereign immunity that prevailed in 1945. See Pls.’ Opp’n at 19–20. Plaintiffs also argue,

citing several FSIA decisions by the Supreme Court, that Atkinson mischaracterized the pre-1945


revoke the otherwise absolute immunity of a designated organization,” Atkinson, 156 F.3d at 1341. In this setting,
the Court thinks it unwise to speculate as to the United States government’s views on IFC’s immunity.

                                                       12
law by holding that it had provided absolute immunity for foreign sovereigns. See id. at 14–19.

Finally, they intend to argue on appeal that Mendaro’s “corresponding benefit” test, which

structured the preceding analysis, “unduly narrows the plain meaning of the IFC’s waiver.” Id. at

21 n.12.

         But as plaintiffs recognize, this Court cannot overturn Mendaro or Atkinson. Nor will it

authorize an end-run around Atkinson, which the D.C. Circuit said less than two years ago

“remains vigorous as Circuit law.” Nyambal v. Int’l Monetary Fund, 772 F.3d 277, 281 (D.C. Cir.

2014).     This Court’s role is to apply Circuit law, not to “reconsider” it.    Cf. Steven Herz,

International Organizations in U.S. Courts: Reconsidering the Anachronism of Absolute

Immunity, 31 Suffolk Transnat’l L. Rev. 471 (2008) (making plaintiffs’ arguments). Perhaps the

D.C. Circuit will adopt plaintiffs’ suggested approach to questions concerning waivers of

international organization immunity. This Court, however, cannot do so. And plaintiffs’ invitation

to the Court to undertake such a revision of controlling case law simply underscores the conclusion

that, under that precedent, plaintiffs’ waiver claim fails.

                                          CONCLUSION

         Because IFC has not waived its immunity from this suit, its motion to dismiss will be

granted, and plaintiffs’ complaint will be dismissed in its entirety. A separate Order has issued on

this date.

                                                                           /s/
                                                                    JOHN D. BATES
                                                               United States District Judge

Dated: March 24, 2016




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