Real Money Sports, Inc. v. Real Sports, Inc. et al
Filing
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ORDER Denying 9 Motion to Dismiss. Denying as moot 13 Motion to Stay. Denying as moot 24 Motion to Stay. Signed by Judge James C. Mahan on 2/28/2013. (Copies have been distributed pursuant to the NEF - SLR)
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UNITED STATES DISTRICT COURT
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DISTRICT OF NEVADA
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REAL MONEY SPORTS, INC.,
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2:12-CV-1714 JCM (CWH)
Plaintiff(s),
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v.
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REAL SPORTS, INC., et al.,
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Defendant(s).
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ORDER
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Presently before the court is defendant Real Sports, Inc.’s (“Real Sports”) motion to
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dismiss. (Doc. # 9). Plaintiff Real Money Sports, Inc. (“Real Money”) filed a response in
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opposition (doc. # 18), and defendant filed replies (docs. ## 21 & 25).
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Also before the court is defendant’s motion to stay. (Doc. # 13). Plaintiff filed a
response (doc. # 15), and defendant filed a reply (doc. # 20).
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Also before the court is defendant’s motion to stay discovery. (Doc. # 24). No response
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or reply has been filed to this motion.
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I.
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Background
Both plaintiff and defendant participate in the sports-handicapping industry. (Doc. # 1,
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Compl. ¶¶ 11 & 17). They are direct competitors. (See id.). Plaintiff actively protects its clients’
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personal information and does sell the personal information to outside companies. (Id. at ¶ 16).
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Plaintiff considers its customer information a valuable trade secret. (Id. at ¶ 29).
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James C. Mahan
U.S. District Judge
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Plaintiff stores certain proprietary customer information in private accounts with
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Windstream Communications (“Windstream”). (See id. at ¶ 18). In or about September 2012,
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plaintiff discovered that its private account with Windstream had been breached. (See id. at ¶
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18). Plaintiff alleges that insiders that worked for plaintiff used stolen confidential company
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usernames and passwords to access its private customer accounts/information with Windstream.
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(See id. at ¶ 19). This occurred without plaintiff’s consent. (See id. at ¶ 19). Plaintiff alleges the
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stolen information contained confidential proprietary data pertaining to thousands of its clients.
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(Id. at ¶ 20).
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Plaintiff alleges that defendant conspired with the insiders that stole the proprietary
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information and paid the insiders a substantial amount of money for the information. (Id. at ¶
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21). Plaintiff further alleges that defendant used the proprietary information to contact plaintiff’s
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clients and offer them competing handicapping services. (Id. at ¶ 22). Plaintiff also alleges that
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defendant sold the proprietary information to competing handicapping services. (Id. at ¶ 23).
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Based on the these facts, plaintiff filed a complaint alleging eleven causes of action.
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II.
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Discussion
Defendant filed a motion to dismiss the plaintiff’s complaint. (Doc. # 9). Defendant
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seeks to dismiss the complaint under the following three theories: (1) incomplete diversity; (2)
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failure to state a claim; and (3) failure to join indispensable parties. (See id.). The court will
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address each theory in turn.
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Defendant also filed two motions in addition to the motion to dismiss. These two
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additional motions are both titled as motions to stay. (See docs. ## 13 & 24). The court will
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address each of these motions in turn as well.
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A.
Incomplete Diversity
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Defendant argues that this court has personal jurisdiction over the plaintiff. Defendant
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then argues that since this court has personal jurisdiction over the plaintiff then diversity
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jurisdiction is destroyed. To summarize, defendant argues that this court has personal
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jurisdiction over both plaintiff and defendant; therefore, there can be no diversity jurisdiction.
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James C. Mahan
U.S. District Judge
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“The federal court’s basic diversity jurisdiction extends to ‘all civil actions where the
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matter in controversy exceeds $75,000 and is between citizens of different states.’” Johnson v.
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Columbia Props. Anchorage, LP, 437 F.3d 894, 899 (9th Cir. 2006) (ellipses omitted) (quoting
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28 U.S.C. § 1332(a)(1). “[A] corporation is a citizen only of (1) the state where its principal
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place of business is located, and (2) the state in which it is incorporated.” Id. (citing 28 U.S.C. §
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1332(c)(1)). “[T]he phrase ‘principal place of business’ refers to the place where the
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corporation’s high level officers direct, control, and coordinate the corporation’s activities.”
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Hertz Corp. v. Friend, 559 U.S. 77, 130 S.Ct. 1181, 1186 (2010). The principal place of
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business is also known as the “nerve center.” Id.
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Defendant has confused and conflated personal jurisdiction and diversity jurisdiction.
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First, defendant argues that this court, as well as Nevada state courts, have personal jurisdiction
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over the plaintiff. This is irrelevant because personal jurisdiction is a defendant focused inquiry.
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Helicopteros Nacionales de Colombia, S.A. v. Hall, 466 U.S. 408, 414 (1984) (“Due process
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requirements are satisfied when in personam jurisdiction is asserted over a nonresident corporate
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defendant that has ‘certain minimum contacts with [the forum] such that the maintenance of the
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suit does not offend traditional notions of fair play and substantial justice.’”) (quoting Int’l Shoe
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Co. v. Washington, 326 U.S. 310, 316 (1945)). The court need not even consider whether it has
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personal jurisdiction over the plaintiff.
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Next, defendant argues that because this court has personal jurisdiction over the plaintiff
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then diversity jurisdiction is therefore destroyed. Simply, personal jurisdiction and diversity
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jurisdiction do not operate together in such a fashion. For purposes of diversity jurisdiction, the
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plaintiff and defendant must be citizens of different states. When the parties are corporations, the
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court looks at the place of incorporation and the principal place of business–not, as defendant
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argues, all the forums where a party may be haled into court.
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In its complaint, plaintiff states that it is incorporated in Florida and its principal place of
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business is in Florida. (Doc. # 1, Compl. ¶ 1). The complaint also states that it believes the
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defendant is incorporated in Nevada with its principal place of business in Nevada. (Id. at ¶ 2).
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James C. Mahan
U.S. District Judge
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In defendant’s motion to dismiss, it does not state or assert citizenship from a place that could
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destroy diversity jurisdiction in this case. Plaintiff is a citizen of Florida and defendant is a
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citizen of Nevada. The parties are completely diverse. Finally, plaintiff alleges the amount in
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controversy is over $75,000, (Id. at ¶ 9), and defendant does not dispute the amount in its motion.
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The court properly has diversity jurisdiction over the action.
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B.
Failure to State a Claim
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A court may dismiss a plaintiff's complaint for “failure to state a claim upon which relief
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can be granted.” Fed. R. Civ. P. 12(b)(6). A properly pled complaint must provide “[a] short and
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plain statement of the claim showing that the pleader is entitled to relief.” Fed. R. Civ. P.
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8(a)(2); Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555 (2007). While Rule 8 does not
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require detailed factual allegations, it demands “more than labels and conclusions” or a
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“formulaic recitation of the elements of a cause of action.” Ashcroft v. Iqbal, 129 S.Ct. 1937,
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1949 (2009) (citation omitted). “Factual allegations must be enough to rise above the speculative
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level.” Twombly, 550 U.S. at 555. Thus, to survive a motion to dismiss, a complaint must
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contain sufficient factual matter to “state a claim to relief that is plausible on its face.” Iqbal, 129
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S.Ct. at 1949 (citation omitted).
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Where the complaint does not “permit the court to infer more than the mere possibility of
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misconduct, the complaint has alleged, but it has not shown, that the pleader is entitled to relief.”
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Id. (internal quotations and alterations omitted). When the allegations in a complaint have not
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crossed the line from conceivable to plausible, plaintiff's claim must be dismissed. Twombly,
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550 U.S. at 570.
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Defendant dedicates less than two pages of its motion to the argument that plaintiff has
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failed to stated a claim under Rule 12(b)(6). What is actually conclusory is not plaintiff’s factual
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allegations in the complaint, but, rather, defendant’s arguments that the complaint should be
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dismissed for failure to state a claim. Defendant does not address why any one of the causes of
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action should be dismissed or why the alleged facts are merely conclusory. Defendant fails to
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argue how the sixteen paragraphs in the complaint with specific facts do not push the complaint
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James C. Mahan
U.S. District Judge
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over the line from the possible to the plausible. Defendant simply states that plaintiff’s
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complaint is conclusory. Defendant has not carried its burden to demonstrate any claim for relief
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has failed to state a claim under Rule 12(b)(6).
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C.
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Federal Rule of Civil Procedure 12(b)(7) allows a court to dismiss a claim or action if the
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plaintiff “fail[s] to join a party under Rule 19.” Defendant argues that nonparty Windstream is an
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indispensable party.
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Required Joinder of Parties Under Rule 19
Under Rule 19, a court must first determine whether a nonparty is necessary. EEOC v.
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Peabody W. Coal Co., 400 F.3d 774, 779 (9th Cir. 2005); United States v. Bowen, 172 F.3d 682,
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688 (9th Cir. 1999) (“First, the court must determine whether the absent party is ‘necessary.’”).
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“As is evident, Fed. R. Civ. P. 19(a) provides that a party is ‘necessary’ in two circumstances: (1)
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when complete relief is not possible without the absent party’s presence, or (2) when the absent
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party claims a legally protected interest in the action.” Bowen, 172 F.3d at 688.
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Neither of these two factors are present. Plaintiffs have not alleged any wrongdoing or
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misconduct against Windstream. Even if wrongdoing were alleged against Windstream, then
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Windstream would likely be either a coconspirator or joint tortfeasor. “It has long been the rule
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that it is not necessary for all joint tortfeasors to be named as defendants in a single lawsuit.”
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Temple v. Synthes Corp., Ltd., 498 U.S. 5, 7 (1990) (stating also that “[t]he Advisory Committee
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notes to Rule 19(a) explicitly state that ‘a tortfeasor with the usual joint-and-several liability is
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merely a permissive party to an action against another with like liability.’”). Windstream is not a
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necessary party.
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D.
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Defendant moves this court to stay discovery because it has “show[n] a likelihood of
First Motion to Stay (Doc. # 13)
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success on the merits in connection with [its] pending motion to dismiss.” (Doc. # 13).
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However, “[a] party seeking a stay of discovery carries the heavy burden of making a strong
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showing why discovery should be denied.” Turner Broad. Sys., Inc. v. Tracinda Corp., 175
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F.R.D. 554, 556 (D. Nev. 1997). The magistrate judge has yet to issue an order on the motion to
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James C. Mahan
U.S. District Judge
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stay or sign the proposed discovery plan/scheduling order. (See doc. # 19). This order denying
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the motion to dismiss moots the motion to stay discovery pending resolution of the motion to
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dismiss.
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E.
Second Motion to Stay (Doc. # 24)
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Document number 24 is titled “motion to stay” on the docket. However, the body of this
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motion requests a hearing on the motion to dismiss and the motion to stay discovery pending
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resolution of the motion to dismiss. The court finds the issues presented unnecessary for
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resolution via a hearing. This motion is also denied as moot.
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Accordingly,
IT IS HEREBY ORDERED, ADJUDGED, AND DECREED that defendant’s motion to
dismiss (doc. # 9) be, and the same hereby, is DENIED.
IT IS FURTHER ORDERED, ADJUDGED, AND DECREED that defendant’s motion to
stay (doc. # 13) be, and the same hereby, is DENIED as moot.
IT IS FURTHER, ORDERED, ADJUDGED, AND DECREED that defendant’s motion
to stay (doc. # 24) be, and the same hereby, is DENIED as moot.
DATED February 28, 2013.
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UNITED STATES DISTRICT JUDGE
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James C. Mahan
U.S. District Judge
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