Litigation Forecast 2021 - Crowell & Moring

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Litigation Forecast 2021What Corporate Counsel Need to Knowfor the Coming YearCOVID and the Courts

COVID andthe CourtsSince 2013, Crowell& Moring has startedeach year by publishinga Litigation Forecastfocused on what weexpected would affectour clients’ approach tolitigation in the monthsto come. But this volume is different. As withso many aspects of ourlives, COVID-19 has changed the way that litigation isconducted, in ways that will be with us forever.This past year challenged both courts and litigantsto adapt—constantly—to changing circumstances.Courts were closed, reopened, and closed again.Hearings and depositions went remote. Technologyachieved an unprecedented prominence.Some of these changes are permanent; many areclearly beneficial: Both courts and litigation proceedings, for example, are likely to be more efficient. Thismeans fundamental changes in the art of preparingyour case and presenting your arguments.Our Forecast this year provides a guide to the future of litigation. Informed by 2020, it looks ahead tothe many ways in which litigants must now adapt tomeet a future that’s coming faster than ever before.Mark KlapowPartner, Crowell & MoringEditor, Litigation Forecast 2021Crowell & Moring LLPCreator and Editor: Mark KlapowContents3How COVID Is ChangingLitigation—Today and TomorrowA look at three areas—depositions, hearings,and trials—points to changes that may becomeembedded in how courts and counsel work.Valerie Goo7AmandaShafer BermanNathanielBualatNew Litigation Frontiers,Brought to You by COVIDThe stress that COVID has put on business relationships can be seen clearly through litigation focusedon safety standards, leases, and contracts.AllysonMcKinstry11Luke vanHouwelingenChalanaDamronCourts Reopen—or Try ToWith no national standard, unpredictable pandemic strikes, and mounting litigation,courts are struggling with an increasing backlog.Leverage Media LLCEditorial Director: Mike WinklemanDesign Director: Dean AbatemarcoWriter: Peter HaapaniemiCopyeditors: Jerry Goodbody, Sue KhodarahmiAndrewHolmerRochelle-LeighRosenberg

How COVID Is ChangingLitigation—Today and TomorrowKeeping the wheels of justice turning during the pandemic hasrequired innovative practices, which may become routine.LIKE MANY AMERICANS, courts and attorneys in 2020 found themselveshaving to take a crash course in how to use technology to work remotelyduring the COVID-19 crisis. For courts in particular, this has been an especiallychallenging period, as they have had to upend traditional practices and findinnovative ways to keep the wheels of justice turning while ensuring the healthand safety of everyone involved.These changes have promptedmany to wonder how much of “thenew normal” will be remembered asa short-term response and how muchwill become permanent. If anything,the past year has shown how difficultit is to predict the future. But a lookat three key areas—trials, hearings,and depositions—highlights how thepandemic has reshaped courtroomsand litigation and points to the waysin which some of these changesmay well become embedded in howcourts and counsel work.Trials: Finding a wayforwardAfter COVID caused most courts toshut down their normal operationsentirely, they typically adopted one oftwo approaches moving forward: shiftto virtual trials, or try to resume livetrials with extensive safety precautions.Not long ago, a virtual trial was simply unheard of. But in early May, theCollin County District Court in suburban Dallas held such a trial—reportedlythe first in the country—which provedthat it could be done, even if the process had many shortcomings. Needingto find a way to move cases forward,many courts also adopted the virtualmodel for civil jury trials and benchtrials. These have run relatively well.That’s not to say there haven’tbeen problems. Technical glitcheshave been common, and some courtshave established “remote bailiffs” toprovide technology support. But other issues have emerged. For example,judges have had to remind jurors toremove pets and other distractionsfrom the room. As Crowell & Moringpartner Valerie Goo notes, “How can3you adequately monitor juror conduct and control distractions?”In an asbestos case in AlamedaCounty Superior Court in California,the judge was removed after makingcomments about his own possibleasbestos exposure while he wasunmuted during a Zoom session. Inanother virtual asbestos trial, also inAlameda County, a jury awarded theplaintiff 2.5 million. During the trial,the defendant made several motionsfor mistrial, saying that remote jurorswere exercising, lying down, or usingother computers during the proceedings and pointing to the fact that theplaintiff talked directly to jurors whilethe judge and attorneys were in a separate video chatroom. These motionswere denied, but they highlighted thechallenges of conducting virtual trials.Perhaps more importantly, recentjury research indicates that remotejurors who are physically separatedfrom one another are less likely toreach a verdict. And many observershave questioned the fairness of usingremote jurors because this can resultin excluding significant numbers of

How COVID Is Changing Litigation—Today and Tomorrowpeople who are not able to afford thetechnology needed to participate.Courts that resumed live jury trialshave run into their own challenges. Tokeep participants safe, some have relocated to larger venues, such as highschool gymnasiums or fire stations,to enable social distancing. Some arebringing small groups of potentialjurors into the courtroom in wavesand using prescreening juror questionnaires to limit the amount of timepeople are gathered for jury selection. The pandemic has also requiredother changes to live jury trials suchas requests to stipulate to a reducedAs courtroom safety measurescontinue into 2021, courts and counselwill need to weigh their effect on strategies and trials. With widely spaced,mask-wearing participants, says Goo,“it is harder for jurors and judgesto read facial expressions and bodylanguage and for counsel to assess theattitudes of individual jurors. If witnesses are far from the jury, or even testifying remotely, can that be prejudicial?Should counsel consider challengingsuch practices?”Many have speculated that thecourts’ recent experience with technology will lead to the widespread useshe says. “They want to be ready to gothe minute they can.”Virtual oral arguments:A new normal?While virtual civil trials are likely tobe rare post-pandemic, virtual oralarguments are another story. Whenthe pandemic started, many courtshad already been using telephonichearings for oral arguments on motions to dismiss, summary judgments,and so forth to accommodate out-ofarea litigants and lawyers. As courtsclosed, that practice spread—in May2020, the U.S. Supreme Court began“It is harder for jurors and judges to read facialexpressions and body language and for counsel toassess the attitudes of individual jurors. If witnessesare far from the jury, or even testifying remotely,can that be prejudicial? “ Valerie Goonumber of jurors, limiting the numberof attorneys in the courtroom, and, ofcourse, wearing masks.It has also been difficult to findpeople willing to serve on juriesduring the pandemic. A recent studyfound that in September 2020, 71percent of potential jury pool members said they would be likely to ignore a jury duty summons because ofCOVID, and the courts are seeing thistrend as well. Research has suggestedthat those who are least inclined toserve include young people, lowwage earners, and ethnic minorities,potentially skewing the demographicmakeup of juries. This problem willprobably abate as infection rates decline, but until the pandemic is over, itis likely to remain a factor.of virtual trials after the pandemic isover. But trial attorneys and courtsgenerally don’t seem to share thatview. “Most of the virtual trials havebeen smaller bench trials,” Goo says.“A handful have been smaller jurytrials. But large, complex civil trials,whether bench or jury, have eithergone forward in person with COVIDrestrictions or have been postponed. Idon’t think we will see a shift to virtualtrials as the new norm.”Both the trial lawyers and thecourts are eager to get back toin-person trials, says Goo. Even ascourts have closed, reopened, andthen reclosed, they have continuedto schedule and reschedule in-persontrials. “Courts are continuing to set trial dates and send out jury summons,”4hearing oral arguments via teleconference for the first time—and manycourts soon turned to virtual videohearings. Some, such as the technologically advanced Ninth Circuit, werequick to make the shift, while otherswere slower to change. But withinmonths, “most courts had movedhearings onto video platforms, andthat became fairly standard,” saysAmanda Shafer Berman, a partner atCrowell & Moring.Virtual hearings have played animportant role in keeping proceedings moving forward while physicalcourts are closed, but they have alsopresented attorneys with somethingof a learning curve. “You are notin the courtroom, of course, andyou’re sitting, rather than standing

How COVID Is Changing Litigation—Today and Tomorrowand moving around. So you have toadjust the performance element ofyour presentation,” says Berman. Shealso notes that she has seen attorneys “forget that the video formatis still very much a hearing and youneed to remain very formal. There isno reason to relax the considerationthat you would normally give to thecourt,” she says. “And judges definitely don’t appreciate it when attorneysdo so.“It’s a different medium, and whatworks in person may not work in thevirtual world,” Berman continues.To assess the difference, she says,courts’ previous use of telephonichearings reflects an openness to electronic interactions that has likely onlyincreased as virtual hearings havebecome standard practice.In addition, experience has mademany courts more comfortable withthe virtual setting. “Certainly, thereare judges who were averse to usingtechnology before all this happened,”Berman says. “But now that all judgeshave basically been forced by thepandemic to adopt virtual hearings,it may absolutely make sense tocontinue. Why have out-of-towncounsel hop on a plane for five hourssays Berman. “So much of it is aboutestablishing a connection with thepanel through eye contact, readingthe room to figure out which issuesto follow up on, and assessing on thefly how each panel member is reacting. That is much tougher to do in avirtual setting, even when there is avideo feed.” In addition, appeals courtjudges on a panel often interact withone another during hearings—something that is obviously more difficult,if not impossible, when they are inseparate locations and interactingonly on a computer screen.More broadly, appeals court judg-“[Some attorneys] forget that the video format isstill very much a hearing and you need to remainvery formal. There is no reason to relax the consideration that you would normally give to the court.”Amanda Shafer Bermancompanies “need to hold at least onevideo moot in advance of a videohearing. That gives arguing counsela chance to interact with a virtualjudge, even if it’s a fake one, and haveother attorneys provide feedbackabout what works and what doesn’tin the virtual format.”Such practices may continue tobe important over the long term.Berman says that virtual hearings areexpected to be the norm for at leastthe first half of 2021—and that theymay well become permanent in manycourts. “District courts in particularmay be more open to virtual hearingsafter the pandemic is over,” she says.That will, of course, vary by court andthe type of hearing, but many districtfor a hearing that may not last long?Courts may be more willing to allowcompanies to forgo those costs, particularly for procedural matters andstatus conferences.”The same may not be true withappeals courts, however. While theyhave made use of virtual hearingsduring the pandemic, most will likelyreturn to holding in-person hearingsas soon as they feel it is safe to do so.To a great extent, that’s because ofthe mechanics of how those courtswork. “As an advocate, you’re tryingto have a conversation with the judgewhere you are really locking in andfiguring out what their concerns are,listening carefully, and responding toboth explicit and implicit questions,”5es tend to view in-person argumentsas a time-honored tradition. “It’s really seen as a key part of our appellatesystem,” Berman says. “If somethingis hotly debated in oral argument,that exchange of ideas plays a veryimportant role and can shape thedecision.”Virtual depositions: Howwill they work in trials?Video depositions shot in legal officeswith a host of witnesses have beenavailable for a long time. COVIDforced many courts and litigantsto take things a step further andembrace fully remote depositions. Inthese depositions, all participants—the opposing and deposing counsel,

How COVID Is Changing Litigation—Today and Tomorrowcourt reporter, and witness—are all inseparate locations. And the witness isleft on their own to handle the technical details on their end.Prior to the pandemic, these fullyremote depositions were rare, largelybecause deponents had to be swornin in person, deponents preferred tohave their counsel present in person,and the other side did not want to beleft out. As COVID emerged, a number of state and federal courts, statelegislatures, and governors took stepsto allow oaths to be administered remotely—and remote depositions weresoon used across most courts.poor sound, being backlit, or lookinglike a phantasm floating around?”asks Bualat. “How will that affecthow judges and juries interpret thetestimony?”Nevertheless, the upside of usingremote depositions has proven to besignificant—so much so that courtsare expected to continue using themin a post-COVID world, especially forminor, less critical witnesses. “Thecost savings are pretty clear,” saysBualat. Attorneys on both sides don’thave to travel to do a deposition,which often means going acrossthe state or the country. Corporateequipment, and static backgroundsas well as instructions on using theequipment effectively. Companiescan also prep their employees—who will not have their attorneys inthe room with them during a deposition—about having the right mannerisms and behavior.Such efforts will be more and moreimportant as we go forward. “WhenCOVID came on the scene, everyoneunderstood that there would bechallenges with remote depositions,because they were new,” Bualat says.“But over time, as more people getbetter at it, there will be less toler-“When COVID came on the scene, everyoneunderstood that there would be challengeswith remote depositions. But over time, as morepeople get better at it, there will be less tolerancein courts for poor quality.” Nathaniel BualatHowever, the use of fully remotevideo depositions is new. “Therehaven’t been many instances wherewe’ve seen how they play out in anactual trial,” says Nathaniel Bualat, apartner at Crowell & Moring. And thatleaves some open questions. “Howwill the layers of disconnect resultingfrom a lack of in-person interactionsaffect the way judges and juries assess the veracity and temperament ofwitnesses?” he asks.With deponents having to manage their own video technology,some depositions are bound to beof better quality than others. “Whatwill happen when judges and juriesare seeing 10 different remote videodepositions and four of them areespecially bad, with people havingin-house counsel can avoid travel aswell, and they can be easily includedin key limited portions of depositions.“If outside counsel is doing a directof a key witness, they can have theirclient appear for that portion just byclicking a link,” he says.For companies that want to takeadvantage of this trend, making surethat videos are of high quality will bekey to making points in court. “Companies should institute practices thathelp their personnel come off wellin their remote depositions,” Bualatsays. “If they are involved in regularlitigations, it may be worthwhile toprepare ‘deposition packs’ that canbe shipped out to witnesses.” Thesepacks could include good camerasand microphones, tripods, lighting6ance in courts for poor quality.”The past year has shown thatremote depositions can work well,but that doesn’t mean that they areright for every situation. Ultimately,companies need to weigh the costsand convenience benefits against thequestion of effectiveness.“With important witnesses inparticular, companies have to consider how well they will come off onscreen in court,” says Bualat. “Thisis especially true for a corporatedefendant who is being compared toan individual plaintiff who is appearing in person in court.” Overall, hesays, remote depositions should notbe seen as an automatic default butrather as “one more tool in a litigation tool kit.”

New Litigation Frontiers,Brought to You by COVIDTo make sense of the uncertainty that COVID has injected into business relationships, companies have frequently turned to litigation.AS IT SWEPT ACROSS THE U.S. and the world, the COVID-19 pandemic left awide swath of disruption that cut across geographic and industry boundaries—and its effects were felt quickly by businesses everywhere.The pandemic has put a great dealof stress on business relationships, andit has put companies in a difficult position as they work to keep their employees and customers safe while trying tokeep the business up and running. Thishas fostered numerous COVID-relatedlawsuits, and companies have startedgoing to court. Still, we are in the earlystages of COVID-driven litigation, withmore on the way. Much of this hasfocused on three fundamental legalareas: commercial leases, commercialcontracts, and tort liability.Commercial leases:The details are moreimportant than everCOVID has affected a broad range ofindustries, but early on, governmentorders issued to limit social gatheringsand restrict the activities of nonessential businesses hit retailers, movietheaters, and restaurants especiallyhard. With tenants facing restrictionson the use of leased premises for theirnormal business operations, commercial leases were soon at the forefrontof COVID-related legal issues.The experience of retailers wasespecially dramatic, but it illustrateshow commercial leases in general havebeen affected by the pandemic. In Mayand June of last year, roughly 40 percent of national retailers did not maketheir lease payments to landlords,according to Datex Property Solutions.“The impact on the retail industry wasinstantaneous,” says Allyson McKinstry,a partner at Crowell & Moring. “Manylarge retailers with locations all acrossthe country were overwhelmed, andmost started with a triage approach,focusing on analyzing high-value leasesor those for critical locations.”At the same time, many tenantstried to negotiate with landlords toget rent abatements or other adjustments, but those efforts were notalways successful. By the end of 2020,7many disputes had gone into litigation.“We’ve seen an uptick in breach ofcontract litigation from both sides,”says McKinstry. “There’s also anever-increasing number of tenants whoare taking preemptive actions seekingdeclaratory relief before the landlorddoes.” Many of these lawsuits involveforce majeure arguments—with someleases, a tenant may be able to invokethe provision as a basis to abate rent,but more often these provisions favorthe landlord and are being relied onby landlords to excuse performance ofdifferent lease obligations.In the relatively few cases that havebeen decided, no clear pattern hasemerged. For example, force majeurearguments have prevailed in some instances, but not others. Several courtshave shown that they are lookingbeyond force majeure principles andcommon law doctrines, and instead areheavily focused on the lease languageand location-specific facts, as well asthe law in the forum in question.Retailers and other commerciallease holders should “take the timeto really understand their leases,”

New Litigation Frontiers, Brought to You by COVIDMcKinstry says. That may sound basic,but large retailers, for example, mayhave leases for hundreds or eventhousands of locations that they haven’t reviewed in depth for some time.Even if they have, they have probablynot looked at them in light of how thepandemic has affected their business.For example, “co-tenancy provisionsare front and center given the largenumber of COVID-driven vacanciesin many malls,” she says. How do youcalculate co-tenancy if other retailersare operating at reduced hours? Retailers need to start analyzing their leaselanguage through a new lens.”companies can engage only in limitedoperations, with limited numbersof customers in a store or curbsidepickup for retail customers, howmight that affect arguments aboutan abatement of rent or co-tenancyrent? Or, if there are further waves ofshutdowns in the coming year, whatwill it mean to companies that negotiated abatements at the beginning ofthe pandemic—will that affect theirability to revisit those issues or openthe door to negotiating new leaseterms? Overall, McKinstry says, “weare in a different world, and a broaderunderstanding of what your rights andMachina analytics.Perhaps most prominent, however,are the disagreements involving supplychain partners. Supply chains aroundthe world were severely disrupted bythe pandemic as plants, transportationnetworks, and even large geographicregions were suddenly shut down.“There is no question that contractsand commercial relationships havebeen strained—there’s a lot of pain,and we are seeing litigation up anddown the supply chain,” says Crowell &Moring partner Luke van Houwelingen.Force majeure has been a part ofthese arguments, but as with com-“Co-tenancy provisions are front and center giventhe large number of COVID-driven vacancies in manymalls. How do you calculate co-tenancy if, for example, other retailers are operating at reduced hours?Retailers need to start analyzing their lease languagethrough a new lens.” Allyson McKinstryIn looking at leases, McKinstrysays, “force majeure may be the startof your analysis, but it should not bethe end.” Instead, tenants need tounderstand all of the lease provisions,such as casualty, use, and contingencyclauses; abatement and terminationrights; and even provisions dealingwith hazardous materials, which couldinclude COVID as the science about thevirus and how it is transmitted develops. This analysis is valuable, she says,because “key provisions vary widelyin commercial leases. And you mayhave language in your contract that issurprisingly helpful.”Companies should also look at theirleases with an eye toward a stillevolving future. For example, ifchanging pandemic rules mean thatobligations are under your portfolio ofleases is essential to making businessdecisions and navigating current andfuture government restrictions.”Commercial contracts:Sorting out supply chaindisruptionThe pandemic has strained businessrelationships and led to commercialcontract disputes over everythingfrom service agreements to IP licenses, advertising, event-venue rentals,and even mergers and acquisitions.Between March and November 2020,the pleadings in more than 2,400contract cases filed in federal courtsinvolved COVID, and 438 invoked forcemajeure—twice as many as in thesame period in 2019, according to Lex8mercial leases, resolution depends onthe specific contract language, andcourts have focused on the traditionalelements of a claim, a defense, andcontract interpretation. As a result,says van Houwelingen, “the pandemichas made a lot of lawyers think a greatdeal about provisions that have usuallybeen considered boilerplate, like forcemajeure, as well as common law defenses such as impossibility, impracticability, and frustration of purpose.”These defenses raise a number ofquestions, he continues. “At heart,they are about who assumed the riskof unexpected, extraordinary circumstances. Did the contract identify thepandemic as a risk that would resultin an excused performance? Does theforce majeure clause identify condi-

New Litigation Frontiers, Brought to You by COVIDtions like a pandemic, public healthemergencies, government orders,acts of God and nature? Can labordisruptions excuse performance? Isthere catchall language about unforeseeable conditions beyond the party’scontrol—and where in the clause doesthat language fall? Because even thatcan matter in how a court will interpret the contract. And then there’scausation—what was the performancethat was required, and how was thatperformance impacted?”These types of questions wereeasier to answer early on in the pandemic, when comprehensive, govern-business challenges, he says, “is goingto be a big part of commercial contractlitigation in the future.”In the coming months, and perhapsyears, companies will need to makesure that the ongoing uncertainty created by the pandemic is reflected in newcontracts. “You’ll need to address thatuncertainty directly in the languageof the contract. Courts are going toassume that parties writing a contractat the beginning of 2021 knew aboutthe pandemic and its impact,” vanHouwelingen says. This will mean doingmore than adding the term “pandemic” to force majeure clauses. “ForceDamron, counsel at Crowell & Moring.In particular, Damron continues,companies need to consider theincreased risk of exposure litigation inwhich plaintiffs allege that the companies they work for or visit have beennegligent and have not done enoughto protect them from the virus. Manyof these lawsuits have been directed atcompanies hit most heavily in the earlystages of the pandemic, such as nursinghomes and cruise lines. But they arereaching more and more industries.In negligence cases, the key defense, of course, is showing that thecompany used a reasonable standard“The pandemic has made a lot of lawyers think agreat deal about provisions that have usually beenconsidered boilerplate, like force majeure, as well ascommon law defenses such as impossibility, impracticability, and frustration of purpose.”Luke van Houwelingenment-mandated shutdowns made theissue much clearer. With businessesreopening, van Houwelingen says, “theeffects of the pandemic are more diffuse and less concrete, but still real. Operations are permitted, but things arestill not normal, and certainly not whatparties likely envisioned when they contracted.” Courts tend to interpret forcemajeure clauses narrowly. That meansthat situations such as being unableto source materials, worker shortagesfrom illness, or a decline in customerdemand may be seen depending on thecontract language, context, and governing law—as traditional and somewhatpredictable economic changes thatcompanies need to adapt to, ratherthan as unforeseeable events. Sortingthrough this next stage of COVID-drivenmajeure is for the risk of unanticipatedcontingencies that parties otherwisedidn’t allocate,” he says. And while itmay be hard to predict precisely whatwill happen, it should not be hard torecognize the possibility of further pandemic-driven disruption. “Just becausesomething is uncertain doesn’t meanthat it’s unforeseeable,” he says.COVID and new sourcesof tort litigationBeyond the disruptions to contractsand leases, 2020 opened the doorto a range of liability lawsuits tied toCOVID-19. As a result, companies nowface a changing landscape “where theyneed to think strategically about howto mitigate the risk of pandemicrelated litigation,” says Chalana9of care in its operations—but doingso presents some special challengesin the cases arising out of the globalpandemic. “COVID is unique in that thestandard of care is somewhat amorphous and evolving,” says Damron.Through much of 2020, companiessaw differing and shifting mandatesfrom various federal organizations,and different states and municipalitiesproduced a patchwork of ever-changing COVID restrictions—rules thatwere often voluntary and sometimesreflected political priorities as much aspublic health considerations.“With constantly changing guidance, companies are wondering howto comply, and how they’ll justify today’s decisions about standard of carea year or two from now,” Damron says.

New Litigation Frontiers, Brought to You by COVIDFor example, she points out that inApril of last year, few areas mandatedthe use of masks in stores, but by thebeginning of 2021, “companies almostuniversally had a mask policy in place.And when they’re getting sued in 2021,plaintiffs are going to hold them to thatnewer standard—or whatever the newstandard is at that point.” The maintakeaway, says Damron, is that companies should document the currentstandard of care and their rationale forimplementing corresponding policiesand countermeasures. “Creating ‘good’contemporaneous documents cancertainly reduce the risk that jurors,negation of liability waivers and anyCOVID-related legal immunity laws thatmight be in place—not to mentiondecades of potential litigation from theplaintiffs’ bar. “Plaintiffs’ lawyers areoutlining a laundry list of issues, like failing to implement contact tracing, installphysical barriers, or require employeesto wear masks,” she says. “These casesshould give us a clearer indication ofwhat the courts and juries will take intoaccount for actions to be consideredgross negligence with COVID.”In the cruise line cases, Damroncontinues, negligence lawsuits haveinvolved situations where passengersget out in front of governments andtheir often-mixed messages and lookfor more concrete sources to understand the standard of care.“Given the uniqueness and cloudiness of the situation, looking at regulatory guidance may not be enough,”Damron says. “It may be better to baseyour case and decisions on science andthe recommendations from health careorganizations such as the WHO and theCDC.” At the same time, she says, “remain flexible. With COVID, policies thatare reasonable today may not seem soreasonable in a few months.”At the same time, companies should“Given t

a Litigation Forecast embedded in how courts and counsel work. focused on what we expected would affect our clients’ approach to litigation in the months to come. But this vol- . or try to resume live trials with exte

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