MICHAEL NASON V STATE EMPLOYEES RETIREMENT BOARD
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STATE OF MICHIGAN
COURT OF APPEALS
MICHAEL NASON,
FOR PUBLICATION
October 28, 2010
9:10 a.m.
Petitioner-Appellee,
v
STATE EMPLOYEES’ RETIREMENT SYSTEM,
No. 290431
Marquette Circuit Court
LC No. 08-045798-AA
Respondent-Appellant.
Before: MURPHY, C.J., and BECKERING and M.J. KELLY, JJ.
MURPHY, C.J.
In this case involving petitioner’s request for nonduty related disability retirement status
and benefits pursuant to § 24 of the State Employees’ Retirement Act (SERA), MCL 38.1 et seq.,
respondent State Employees’ Retirement System (SERS) appeals by leave granted the circuit
court’s order that reversed the decision of the State Employees’ Retirement Board (the Board) to
deny petitioner retirement benefits.1 We vacate the circuit court’s order and remand the case to
the Board for further proceedings consistent with this opinion.
I. OVERVIEW
Petitioner, a corrections officer, shattered his right calcaneus or heel bone while on
vacation and subsequently submitted an application for retirement benefits with the Office of
Retirement Services, which denied the application. Petitioner, seeking to dispute the application
denial, then filed a request for a hearing with the State Office of Administrative Hearings and
Rules, and a hearing was scheduled pursuant to the Administrative Procedures Act (APA), MCL
24.201 et seq. Following a hearing before an Administrative Law Judge (ALJ), the ALJ issued a
proposal for decision, finding that petitioner had suffered a total and permanent disability, that
the disability rendered petitioner unable to adequately and safely perform his job as a corrections
1
We note that the administrative proceedings initiated by petitioner listed the SERS as the
respondent, but in the circuit court appeal the Board was named as the respondent. On appeal to
this Court, the filings by respondent-appellant refer to it as the SERS. Because we believe that
the SERS is the properly designated respondent, with the Board being the arbiter of the dispute,
we shall treat the SERS as the respondent-appellant.
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officer, and finding that he was entitled to benefits. The ALJ recommended that the Board adopt
her findings of fact and conclusions of law. Exceptions to the proposal for decision were filed by
the SERS, challenging the ALJ’s recommendation.
The Board, relying on Knauss v State Employees’ Retirement Sys, 143 Mich App 644;
372 NW2d 643 (1985), found that petitioner was not entitled to retirement status and benefits
under MCL 38.24, where the petitioner, based on his past experience and training, was still able
to perform jobs other than a corrections officer. On petitioner’s appeal to the circuit court, the
court reversed and remanded the case to the Board for entry of a decision awarding petitioner
nonduty related disability retirement benefits. The circuit court placed the focus on petitioner’s
experience and training as a corrections officer, reasoning that the Board had “reached too far
back into [petitioner’s] employment history . . . before he had any real training and experience.”
We hold that, when read in context, the plain and unambiguous language of MCL 38.24,
which refers to a member’s2 “total incapacitat[ion] for further performance of duty,” solely
allows consideration of whether a member can perform the state job from which the member
seeks retirement because of the nonduty related injury or disease, not other employment
positions or fields for which the member may be qualified by experience and training. To the
extent that Knauss, which is not binding on us, MCR 7.215(J)(1), conflicts with our holding, it is
disavowed, given that it did not honor the comparable language in MCL 38.21, the statutory
provision that governs duty related disability retirement status and benefits. Because it is unclear
from its decision whether the Board found that petitioner was totally incapacitated relative to his
job as a corrections officer, we vacate the circuit court’s order and remand the case to the Board
to directly address that issue.
II. UNDERLYING FACTS
At the administrative hearing, petitioner testified that he was 44 years of age, that he was
a high school graduate, and that he had taken one semester of criminal justice courses, as
required to obtain employment with the Michigan Department of Corrections (DOC). Following
graduation from high school, petitioner had worked for Marquette Bottling Works as a truck
driver and salesman of Pepsi products for roughly five years. He next worked for Nelson ChevyOlds selling cars for two and a half years. Petitioner further testified that he also worked odd
jobs, including a job at his parents’ store and selling satellite dishes door to door. He started
working with the DOC in April 1989.
In February 2006, petitioner was in Tobago on vacation, and as he was walking out of the
ocean, a roughly 15-foot wave crested, picking him up and driving his right heel into the hard
sand. Petitioner suffered a shattered right calcaneus (heel bone). He was placed on long-term
disability in March 2006.
2
For purposes of the SERA, a “member” is “a state employee included in the membership of the
retirement system[.]” MCL 38.1f(1).
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Petitioner originally saw his orthopedic surgeon, Dr. Robert H. Blotter, about a month
after the accident. As a result of the injury, petitioner underwent various surgeries, with
numerous pins and screws being placed in his heel. He had to wear a full cast and was still
accommodating his injury at the time of the hearing. Petitioner was told that his injury was
permanent and that he would be unable to return to work as a corrections officer. He further
testified:
I can’t run. I can’t do steps. The ability to respond to any incident in the
prison just isn’t there. I don’t know if I would trust myself letting somebody else
being dependent on me after working in the prison for 18 years.
As of the hearing date, petitioner still suffered from sharp pain while walking, along with
discomfort and a tingling ache all day long. Petitioner testified that he was told by Dr. Blotter
that he will likely need to have his ankle fused, which would cause him to lose 100 percent
mobility but would remove the pain.
In his letter dated a few months before the hearing, Dr. Blotter indicated that petitioner
was stable, but he would not be able to walk effectively on uneven surfaces and may need
additional surgery in several years if the pain becomes worse. Dr. Blotter stated that he did not
believe that petitioner would be able to return to his old job with the DOC. However, on the
basis of independent medical examinations, Dr. Russell E. Holmes opined that petitioner’s injury
did not render him totally disabled. 3
On December 13, 2007, the ALJ issued her proposal for decision. As indicated above,
the ALJ, recommending that the Board adopt her factual findings and legal conclusions, found
that petitioner had suffered a total and permanent disability, that the disability rendered petitioner
unable to adequately and safely perform his job as a corrections officer, and that he was entitled
to benefits. The ALJ focused solely on petitioner’s job as a corrections officer with the DOC,
observing:
Petitioner[] submitted substantive and material evidence that he has a total
and permanent disability, which shows that he has met the criteria for non-duty
disability retirement benefits pursuant to Section 24 of the Act. The Petitioner[’s]
employment history with the State of Michigan has been only as a corrections
officer. With his current impairment, the Petitioner would not be able to
guarantee the safety and security of the prison inmates and his fellow correction
officer[s]. He walks with a limp and sometimes uses a cane when necessary,
which makes his impairment apparent and obvious. The Petitioner is unable to
3
We note that the parties stipulated at the hearing that petitioner’s application was filed within
one year of his termination from state employment and that petitioner was a state employee for at
least ten years before his termination. See MCL 38.24(1)(a)(application for benefits must be
filed no later than 1 year after termination of state employment) and (c)(member must have been
a state employee for a minimum of 10 years).
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stand for long periods of time, run, and walk on uneven surfaces. He could be a
target or weak point for the inmates, which would put the other prison inmates
and corrections officers at increased risk if he was to return to his job. Finally, the
Petitioner’s employer did not make any reasonable accommodations so that he
could return to his correction officer position with his limitations.
The SERS filed exceptions with the Board with respect to the ALJ’s recommendation.
The Board, declining to adopt the ALJ’s recommendation and taking note of petitioner’s work
history, issued a decision and order on April 10, 2008, ruling as follows:
1. In this proceeding Petitioner has the burden of proving, by a
preponderance of the evidence, that he is entitled to non-duty disability retirement
benefits under Section 24 of the Act. Petitioner must show that he is unable to
engage in employment reasonably related to his past experience and training
because of a disability that is likely to be permanent. Knauss, [143 Mich App
644].
2. While the Petitioner presented documentation from his treating
physician, Dr. Blotter, that he will not be able to run or walk effectively on
uneven surfaces, the Petitioner can still perform other jobs that he has performed
in the past, as he possesses experience and training in a number of occupations
that he was employed in prior to working for the state.
3. As the Petitioner has not established by a preponderance of the
evidence that he cannot engage in employment reasonably related to his past
experience and training, the Petitioner is not eligible for non-duty disability
retirement benefits pursuant to MCL 38.24.
Petitioner appealed to the circuit court, arguing that the Board’s ruling was erroneous as a
matter of law and that the decision was arbitrary, capricious, and based on a misapplication of
the law. At oral argument in the circuit court, the court opined:
I think the question is, is [petitioner] able to return to employment, based
on his training and his experience, that he is qualified to perform. And I think we
have to look at this in the context of 17 years of employment, much like the 10year LPN in the Knauss case, his training, taking courses to qualify to apply for
employment, and then training for work with the [DOC]. It is a matter of
relativity, but I think, frankly, the [B]oard reached too far back into . . .
[petitioner’s] employment history, all the way to post high school, before he had
any real training and experience, to reach the conclusion that he was able to
perform some of that work, therefore he did not meet the test of total and
permanent incapacity.
I find this to be an error of law by the [B]oard in application of the Knauss
case to the statute, and by reason of that error, I’m going to remand this back to
the board for entry of a decision adopting the proposal for decision of the [ALJ] . .
. . That is the decision of the Court.
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In an order subsequently entered by the circuit court, the court reversed the Board’s
decision and remanded the case for entry of an order approving petitioner’s application for
nonduty related disability retirement benefits. The SERS appeals by leave granted.
III. ANALYSIS
A. STANDARD OF REVIEW – CIRCUIT COURT
In Dignan v Michigan Pub School Employees Retirement Bd, 253 Mich App 571, 576;
659 NW2d 629 (2002), this Court, setting forth the applicable standard of review relative to a
circuit court’s review of the Board’s decision, stated:
A circuit court's review of an administrative agency's decision is limited to
determining whether the decision was contrary to law, was supported by
competent, material, and substantial evidence on the whole record, was arbitrary
or capricious, was clearly an abuse of discretion, or was otherwise affected by a
substantial and material error of law. “Substantial” means evidence that a
reasoning mind would accept as sufficient to support a conclusion. Courts should
accord due deference to administrative expertise and not invade administrative
fact finding by displacing an agency's choice between two reasonably differing
views. [Citations omitted.]
B. OUR STANDARD OF REVIEW
We review a circuit court's decision on an administrative appeal to determine whether the
circuit court applied correct legal principles and whether the court misapprehended or grossly
misapplied the substantial evidence test to the agency's factual findings, which essentially
constitutes a clearly erroneous standard of review. Jackson-Rabon v State Employees’
Retirement System, 266 Mich App 118, 119; 698 NW2d 157 (2005). A finding is clearly
erroneous when, after review of the record, this Court is left with a definite and firm conviction
that a mistake was made. Id. at 119-120.
Further, we ultimately decide this case on the basis of our interpretation of MCL 38.24,
and this Court reviews de novo issues of statutory construction. In re Complaint of Rovas
Against SBC Michigan, 482 Mich 90, 102; 754 NW2d 259 (2008). “When considering an
agency's statutory construction, the primary question presented is whether the interpretation is
consistent with or contrary to the plain language of the statute.” Id. at 108. Although a court
must consider an agency's interpretation of a statute, “the court's ultimate concern is a proper
construction of the plain language of the statute.” Id. We do note that in the case at bar the
Board relied on Knauss in regard to interpretation of MCL 38.24 and not on any independent
agency construction of the statute.
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C. GOVERNING PRINCIPLES OF STATUTORY CONSTRUCTION
In Zwiers v Growney, 286 Mich App 38, 44; 778 NW2d 81 (2009), this Court recited the
well-established principles of statutory construction:
Our primary task in construing a statute is to discern and give effect to the
intent of the Legislature. The words contained in a statute provide us with the
most reliable evidence of the Legislature's intent. In ascertaining legislative intent,
this Court gives effect to every word, phrase, and clause in the statute. We must
consider both the plain meaning of the critical words or phrases as well as their
placement and purpose in the statutory scheme. This Court must avoid a
construction that would render any part of a statute surplusage or nugatory. The
statutory language must be read and understood in its grammatical context, unless
it is clear that something different was intended. If the wording or language of a
statute is unambiguous, the Legislature is deemed to have intended the meaning
clearly expressed, and we must enforce the statute as written. A necessary
corollary of these principles is that a court may read nothing into an unambiguous
statute that is not within the manifest intent of the Legislature as derived from the
words of the statute itself. [Citations and quotation marks omitted.]
Keeping these principles of statutory construction in mind, we commence our discussion
of MCL 38.24.
D. DISCUSSION
Before examining this Court’s decision in Knauss, we shall independently construe § 24
of the SERA without contemplation of Knauss. MCL 38.24 provides:
(1) Except as may otherwise be provided in sections 33 and 34, a member
who becomes totally incapacitated for duty because of a personal injury or disease
that is not the natural and proximate result of the member's performance of duty
may be retired if all of the following apply:
(a) The member, the member's personal representative or guardian, the
member's department head, or the state personnel director files an application on
behalf of the member with the retirement board no later than 1 year after
termination of the member's state employment.
(b) A medical advisor conducts a medical examination of the member and
certifies in writing that the member is mentally or physically totally incapacitated
for further performance of duty, that the incapacitation is likely to be permanent,
and that the member should be retired.
(c) The member has been a state employee for at least 10 years.
[Emphasis added.]
According to § 24(1)(b), the question of total incapacitation is examined in relationship to
the further performance of duty. Thus, in general, a member could be considered totally
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incapacitated if the member’s injury prevents him or her from performing the member’s
particular job duties. But, another member with a different job, having the exact same injury,
might not be considered totally incapacitated if the member is still capable of performing his or
her particular job duties. Stated otherwise, an injury that hinders one person in performing his or
her job duties might not hinder another person who works in a different field given the
uniqueness of tasks related to each particular job. And § 24(1)(b) requires consideration of the
injury-to-duty relationship. The issue then becomes whether it is proper to consider not only the
state job and associated duties from which a member wishes to retire because of an injury or
disease, but also any other job that the member, taking into consideration his or her past training
and experience, may still be capable of performing. In resolving this issue, it is necessary to
unravel the meaning and extent of the word “duty” as used in § 24(1)(b).
For the reasons stated below, we conclude that “duty” refers or relates solely to the state
job from which the member seeks retirement based on a nonduty related injury or disease;
therefore, it is impermissible, in determining whether the member is totally incapacitated, to
contemplate other jobs or employment fields that might be suitable for the member.
We initially note that the term “duty” is not defined in the SERA. See MCL 38.1c
(definitions commencing with “d”). Section 24(1) provides that the injury or disease cannot be
“the natural and proximate result of the member’s performance of duty.” Section 21(1)(b), on
the other hand, pertains to situations where the injury or disease “is the natural and proximate
result of the member’s performance of duty.” (Emphasis added.) These causation provisions
address two different scenarios, i.e., one in which a member’s injury or disease arises directly
from the performance of duty and one in which the injury or disease does not arise from the
performance of duty. In both instances, the “performance of duty” language clearly and
unambiguously refers to work-related or job-related activities, which necessarily means that
“duty” can only relate to state employment. In other words, the Legislature envisioned occasions
where a member is injured at work while on a state job and occasions, like that which occurred
here, where the member, although employed in a state job at the time, is injured outside of work.
Either way, the term “duty” is a reference or relates to a state job held by the member. It would
be nonsensical and unworkable to conclude, for purposes of causation under §§ 24(1) and
21(1)(b), that performance of “duty” related to performance of a job or jobs, unrelated to state
employment, for which a member had prior relevant training and experience. And where that
identical language, “performance of duty,” is again used in § 24(1)(b) as to total incapacitation,
its definition, for purposes of cohesiveness and harmony, must parallel its meaning as used
elsewhere in the statute and the SERA overall. Accordingly, the term “duty” in § 24(1)(b) refers
or relates to state employment, and thus the total incapacitation must relate to the member’s
performance as a state employee.
Because a member may have held different state jobs during his or her career, and
because a member may have been injured while performing one particular state job with the
effect of the injury only becoming disabling later while in a new state job, we next need to
address whether § 24(1)(b) requires contemplation of all previous state jobs or only the one from
which a member seeks to retire. The answer to this question is found in the use of the word
“further” in § 24(1)(b) when describing the performance of duty. This indicates that the
Legislature was speaking of a duty the performance of which would have been continuing or
extended, but for the injury or disease suffered by the member. Thus, total incapacitation
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necessarily relates solely to the incapacity of the member to continue performing, or to further
perform, the member’s state job from which he or she seeks retirement. Additional support for
this conclusion is found in MCL 38.33(a), which is referenced in § 24(1), and § 33(a) provides
for post-retirement medical examinations of persons retired under, in part, §§ 21 and 24. If, upon
the medical examination, the medical advisor reports and the Board concurs that the retiree “is
physically capable of resuming employment,” the retiree must be restored to active service with
the state and the retirement benefits are terminated. (Emphasis added.) To resume employment
means that the member would be picking up where he or she left off, i.e., continuing the state job
from which the member retired. Determining the physical capacity to work under § 33(a) is thus
related to the capacity to perform the state job from which the member retired.
Furthermore, MCL 38.33(b) also supports our holding in this case, and it provides as
follows:
If the secretary reports and certifies to the retirement board that a person
retired under . . . [MCL 38.24] . . . is engaged in a gainful occupation paying
more than the difference between his or her disability retirement allowance and
his or her final compensation, and if the retirement board concurs in the report,
then his or her retirement allowance shall be reduced to an amount which together
with the amount earned by him or her shall equal his or her final compensation.
Should the earnings of the person retired under . . . [MCL 38.24] . . . be later
changed, the amount of his or her retirement allowance shall be further modified
in like manner. [Emphasis added.]
This language clearly and unambiguously contemplates situations in which a member is
employed, yet has also retired from state employment due to a nonduty related injury or disease
and is collecting state disability retirement benefits. Section § 33(b) is completely consistent
with our interpretation of § 24, given that, under our analysis, you could have a member who is
totally incapacitated from performing his or her state job and thus receiving disability retirement
benefits, but who is not totally incapacitated relative to performing a different job and thus being
“engaged in a gainful occupation,” § 33(b). For example, under MCL 38.33(b), if a member’s
final compensation (annual rate of pay)4 was $50,000 at the time of retirement and the member
then began receiving $25,000 in annual retirement benefits, the member would still be permitted
to work at a new job and earn up to $25,000 a year without loss of any of his or her retirement
benefits. Disability retirement benefits are not terminated in full merely because the member
may be working at a new job for which he or she has past experience and training.
We now examine this Court’s decision in Knauss. The panel considered whether the
petitioner, Teresa Knauss, was eligible for duty related disability retirement benefits under MCL
38.21, which, as indicated above, contains the same “performance of duty” language as MCL
38.24. Knauss worked as a licensed practical nurse at a medical facility, and she injured her
right knee in the course of her employment. Because of her knee injury, Knauss could no longer
4
See the definitions contained in MCL 38.1e(2) and 38.1b(2).
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perform her nursing duties. The Board denied her request for disability retirement benefits, but
the circuit court, for reasons fairly consistent with our analysis above, including citation to MCL
38.33(b), reversed that ruling and awarded her benefits. The circuit court concluded that the
question of whether there was a total disability under the statute related to Knauss’s capacity to
perform her previous job as a nurse. Knauss, 143 Mich App at 645-648.
The Knauss panel essentially agreed with the circuit court’s construction of the statute,
but then deviated from the circuit court’s analysis:
We also read MCL 38.33(b) . . . as anticipating that a person receiving
disability-retirement benefits could be employed in another job. One cannot
harmonize the Legislature's allowing a disabled person to work in another job
while receiving benefits with the Board's interpretation of “totally incapacitated
for duty[”] . . . as meaning “totally incapacitated from any duty.”
We disagree, however, with the trial court's decision that the Legislature
intended that a person who cannot perform his or her previous job should always
be entitled to disability-retirement benefits. In an analogous situation dealing with
total-disability benefits provided by a private insurance company, this Court
recognized that there are three ways of interpreting the term “total disability[.”]
[Knauss, 143 Mich App at 648-649.]
The Knauss panel, quoting Chalmers v Metropolitan Life Ins Co, 86 Mich App 25, 30-31;
272 NW2d 188 (1978), proceeded to list the three interpretations or views and then held that the
“intermediate view” would control. Knauss, 143 Mich App at 649. The intermediate view
examines the question of whether there is a total disability by looking at whether a person is able
to engage in employment reasonably related to his or her past experience, without limiting the
examination to looking only at the job that was held when the disability arose, but not being so
expansive as to allowing consideration of any job whatsoever. Id. The Court, which also cited,
along with Chalmers, this Court’s decision in Herring v Golden State Mut Life Ins Co, 114 Mich
App 148; 318 NW2d 641 (1982), then engaged in the following reasoning:
We recognize that the insurance policies involved in Chalmers and
Herring provided for benefits when the insured was unable to engage in any and
every gainful occupation for which the insured was fitted by education, training
or experience. In other jurisdictions that have also adopted the “intermediate”
definition of total disability, the courts have concluded that an insurance policy
requiring that the disabled person be unable to engage in any gainful employment
should be interpreted as providing benefits when the person is unable to engage in
employment reasonably related to the person's past experience and training.
[Knauss, 143 Mich App at 649-650 (emphasis added; citations omitted).]
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Therefore, the Knauss panel not only entirely ignored the language of MCL 38.21 and
38.33 despite agreeing with the circuit court’s interpretation of those provisions, it then
proceeded to rely on cases interpreting language from insurance policies that were allencompassing, i.e., any gainful employment based on past experience and training, and which
language is completely different and contradictory to the language of MCL 38.21.5 Knauss is
not binding on us, MCR 7.215(J)(1), and we disavow it with respect to the issue presented, given
that it did not honor the plain language of MCL 38.21, and by analogy MCL 38.24.
Finally, we acknowledge that in VanZandt v State Employees Retirement Sys, 266 Mich
App 579, 595-596; 701 NW2d 214 (2005), a case that is binding on us under MCR 7.215(J)(1),
this Court placed some reliance on Knauss. However, VanZandt did not cite Knauss in
connection to the issue that we are addressing. Rather, VanZandt, in citing Knauss, was
addressing the petitioner’s criticism that the Board, in rejecting her claim for benefits,
improperly relied on evidence of the petitioner’s lifestyle and her ability to function outside of
the workplace when making the determination of whether she was totally incapacitated
(depression) in connection with her job as a youth specialist. VanZandt, 266 Mich App at 594596 (“evidence that petitioner was able to function normally in maintaining a home and caring
for three small children, two of whom had learning disabilities, is probative relative to whether
petitioner could function in a workplace setting in which her primary responsibility was
supervising troubled youth”). Our holding is not in conflict with VanZandt, and to the extent
that elements of Knauss supported the ruling in VanZandt, we are not disavowing those elements
of Knauss. Indeed, we would agree that here, evidence, had there been any, showing that the
petitioner was engaging in physical activities at home that discredited his claim that he could not
perform comparable activities at the prison would certainly be admissible.
IV. CONCLUSION
We hold that, when read in context, the plain and unambiguous language of MCL 38.24,
which refers to a member’s “total incapacitat[ion] for further performance of duty,” solely allows
consideration of whether a member can perform the state job from which the member seeks
retirement because of the nonduty related injury or disease, not other employment positions or
fields for which the member may be qualified by experience and training. To the extent that
Knauss, which is not binding on us, MCR 7.215(J)(1), conflicts with our holding, it is
disavowed, given that it did not honor the comparable language in MCL 38.21, the statutory
provision that governs duty related disability retirement status and benefits. Because it is unclear
from its decision whether the Board found that petitioner was totally incapacitated relative to his
job as a corrections officer, we vacate the circuit court’s order and remand the case to the Board
to directly address that issue.
5
We note that the panel ended up affirming the circuit court’s decision, not its analysis, on the
basis that, under the intermediate standard, Knauss’s only training and experience was as a nurse.
Knauss, 143 Mich App at 650.
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Vacated and remanded for proceedings consistent with this opinion. We do not retain
jurisdiction.
/s/ William B. Murphy
/s/ Jane M. Beckering
/s/ Michael J. Kelly
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