Before this Court are two motions by Defendant Idexx's (“Defendant”): (1) Renewed Motion for Sanctions for the Spoliation of Critical Evidence; and (2) Motion to Strike Improper Rebuttal Testimony of Dr. Nisha Mody. The Court finds the matter appropriate for decision without oral argument. Fed.R.Civ.P. 78; Local R. 7-15. Accordingly, the hearing set for October 22, 2007 on the present motion is removed from the Court's calendar. After considering the moving and opposing papers, the Court GRANTS both Defendant's Motions.

Defendant is the dominant manufacturer and seller of veterinary diagnostic products in the United States. (First Amended Complaint (“FAC”) ¶¶ 1, 24). Plaintiff Cyntegra, Inc. (“Plaintiff”) claims that it has designed veterinary diagnostic products that tap into a previously unmet demand for simultaneous detection of multiple animal pathogens. (FAC ¶¶ 13, 40). Plaintiff alleges that Defendant sells its animal diagnostic products to distributors only if they agree to refrain from promoting or selling any product that the Defendant deems “competitive.” (FAC ¶¶ 46-47). Plaintiff further claims that Defendant sees Plaintiff as such a competitor, and has used it market power to force distributors to cancel pending orders on molecular-based diagnostic products from Plaintiff. (FAC ¶¶ 49-50).

On June 30, 2006, Plaintiff filed a Complaint against Defendant alleging Defendant “lock[ed] up” several major distributors, thereby preventing Plaintiff from competing in the market for animal diagnostic products. Defendant now claims that Plaintiff, with knowledge of this impending litigation, failed to preserve critical documents necessary for its defense. Plaintiff stored a majority of its documents on third-party servers run by NetNation Communications, Inc. (“NetNation”) and failed to make payment to maintain the service after March 7, 2006. (Brodie Dec. ¶ 9). NetNation cleared its servers of Plaintiff's documents at an unknown date soon afterwards. (Id. ¶ 11). Plaintiff did not backup the information or take any affirmative action to save the files. During discovery, Plaintiff were only able to produce 1339 pages of extraneous e-mails found on Plaintiff's laptops. (Renewed Motion at 3:8-21).

On July 2, 2007, Defendant moved to sanction Plaintiff for the spoliation of critical evidence, requesting entry of default judgment and monetary sanctions. In the alternative, Defendant requested a jury instruction allowing negative inferences to be drawn from Plaintiff's spoliation and monetary sanctions.

On July 23, 2007, the Court struck the motion on the grounds that Defendant failed to comply with Local Rule 7-3. Defendant now brings a Renewed Motion for Sanctions for the Spoliation of Critical Evidence. In addition, Defendant moves to strike the Plaintiff's expert rebuttal report of Dr. Nisha Mody, filed on August 15, 2007.

*2 A party's destruction of evidence qualifies as spoliation if the party has “some notice that the documents were potentially relevant to the litigation before they were destroyed.” United States v. Kitsap Physicians Serv., 314 F.3d 995, 1001 (9th Cir.2002). The court has two inherent bases of authority to impose sanctions for the spoliation of evidence. The court has the inherent power to levy sanctions in response to abusive litigation practices. Roadway Express, Inc. v. Piper, 447 U.S. 752, 764-65, 100 S.Ct. 2455, 65 L.Ed.2d 488 (1980). Alternatively, the court can sanction a party for failure comply with court ordered discovery pursuant to Fed.R.Civ.P. 37(b).

The court has broad discretion to fashion, on a case-by-case basis, an appropriate sanction for spoliation. Unigard Sec. Ins. Co. v. Lakewood Engineering & Mfg. Corp., 982 F.2d 363, 367 (9th Cir.1992). Sanctions may include monetary sanctions, issue-preclusion sanctions, evidentiary sanctions, terminating sanctions, or entry of default judgment. See Anheuser-Busch, Inc. v. Natural Beverage Distribs., 69 F.3d 337, 348 (9th Cir.1995). Dismissal is proper when “a party has engaged deliberately in deceptive practices that undermine the integrity of judicial proceedings.” Anheuser-Busch, 69 F.3d at 348. Before imposing the “harsh sanction” of dismissal, however, the district court should consider the following factors: “(1) the public's interest in expeditious resolution of litigation; (2) the court's need to manage its dockets; (3) the risk of prejudice to the party seeking sanctions; (4) the public policy favoring disposition of cases on their merits; and (5) the availability of less drastic sanctions.” Id. While the district court need not make explicit findings regarding each of these factors, United States ex rel. Wiltec Guam, Inc. v. Kahaluu Constr. Co., 857 F.2d 600, 603 (9th Cir.1988), a finding of “willfulness, fault, or bad faith” is required for dismissal to be proper. Anheuser-Busch, 69 F.3d at 348. Additionally, the district court should consider “less severe alternatives” than outright dismissal. Wiltec-Guam, 857 F.2d at 604.

An alternative sanction is an adverse inference jury instruction. Several district courts in California have adopted the Second Circuit's three-part test to determine whether the specific sanction of an adverse inference instruction is appropriate. This test requires that a party seeking such an instruction establish that (1) the party having control over the evidence had an obligation to preserve it; (2) the records were destroyed with a culpable state of mind; and (3) the destroyed evidence was relevant to the party's claim or defense. Residential Funding Corp. v. DeGeorge Fin. Corp., 306 F.3d 99, 105 (2d Cir.2002); In re Napster, 462 F.Supp.2d 1060, 1078 (N.D.Cal.2006); Hamilton v. Signature Flight Support Corp., No. C 05-0490, 2005 U.S. Dist. LEXIS 40088 at *3 (N.D. Cal. Dec. 20, 2005); AmeriPride Svcs, Inc. v. Valley Indus. Svc., Inc., No. CIV S-00-113, 2006 U.S. Dist. LEXIS 59398, 2006 WL 2308442, at *5 n. 6 (E.D.Cal. Aug.9, 2006). The court also has the discretion to impose a wide array of monetary sanctions. The “assessment of attorney's fees is undoubtedly within a court's inherent powers,” upon a showing of bad faith. Chambers v. NASCO, 501 U.S. 32, 44-45, 111 S.Ct. 2123, 115 L.Ed.2d 27 (1991).

*3 Defendant claims that without the deleted files, its defense-that Plaintiff was not sufficiently prepared to enter the market and did not take adequate or reasonable steps to obtain distribution of its products-is irreparably harmed. (Answer at 8-9). Defendant alleges that Plaintiff's failure to preserve critical evidence regarding Plaintiff's relationship and interactions with distributors, has prevented Defendant from presenting alternative explanations for Plaintiff's failure to attract distributors.

Defendant asserts that Plaintiff's failure to preserve business documents constituted spoliation and make sanctions appropriate. Although the documents were stored on NetNation's outsourced servers, they were deleted due to Plaintiff's failure to make payments after March 7, 2006. (Opp'n to Renewed Motion at 1:22-23). Plaintiff, in defense, claims: (1) the lost information was irrelevant to this action; (2) the information Defendant says it needs for its defense was produced, was available in discovery, or does not exist; and (3) it lacked sufficient control over the documents. Plaintiff also seeks sanctions against Defendant for acting in bad faith by refiling this motion. The law and facts provided do not support Plaintiff's defenses, and instead demonstrate spoliation of evidence.

A litigant has a duty to preserve evidence it knows or should know is relevant to imminent litigation. Dillon v. Nissan Motor Co., Ltd., 986 F.2d 263, 267 (8th Cir.1993); see also Silvestri v. General Motors Corp., 271 F.3d 583, 591 (4th Cir.2001) (“The duty to preserve material evidence arises not only during litigation but also extends to that period before the litigation when a party reasonably should know that the evidence may be relevant to anticipated litigation.”). A party “should only be penalized for destroying documents if it was wrong to do so, and that requires, at a minimum, some notice that the documents are potentially relevant.” Akiona v. United States, 938 F.2d 158, 161 (9th Cir.1991).

Unlike defendants, plaintiffs may be imputed notice of the duty to preserve potentially relevant evidence prior to the filing of the complaint. Plaintiffs are “in control of when the litigation is to be commenced” and must necessarily anticipate litigation before the complaint is filed. See Hynix Semiconductor, Inc. v. Rambus Inc., C-00-20905 RMN, 2006 U.S. Dist. LEXIS 30690 at *58 (N.D.Cal. Jan. 4, 2006). The court in Hynix penalized the plaintiff for destroying documents when litigation was “reasonably foreseeable.” See Id. at *56; see also Iowa Ham Canning, Inc. v. Handtmann, Inc., 870 F.Supp. 238, 245 (N.D.Ill.1994) (“[T]he requisite knowledge for imposing sanctions ... is not [just] the ‘potential’ for litigation, but the ‘contemplation’ or ‘anticipation’ of product litigation”).

In the instant case, Plaintiff could have anticipated that litigation was “reasonably foreseeable.” Plaintiff's pending claim is based on Defendant's alleged monopolistic practice of forcing distributors to cancel Plaintiff's orders. Beginning in March 2006, Defendant allegedly made it impossible for Plaintiff to “continue seeking or filling any orders for its products, and forced the Plaintiff to virtually cease all marketing and sales operations.” (Opp'n to Defendant's First Motion for Sanctions at 4). Due to Defendant's alleged conduct, Plaintiff was unable to raise enough revenue to continue paying for use of NetNation's servers to store business documents after March 7, 2006. (Id. at 4:9-13). Since Plaintiff was claiming injury before March 7, 2006, it should have anticipated litigation. The conduct that serves the basis of Plaintiff's entire claim against Defendant occurred before Plaintiff decided to stop making payments to NetNation, when litigation was already “reasonably foreseeable.” Although Plaintiff negotiated with Defendant in the hopes of releasing distributors from exclusivity, (Id.), Plaintiff should have known that negotiation breakdowns were a distinct possibility, and that legal recourse might be necessary to prevent bankruptcy. No other events relevant to the current litigation occurred after March 7, 2006 and the actual filing on June 30, 2006.

*4 Plaintiff asserts, however, that statements made by Brendan O'Dwyer, the acting vice-president of Cyntegra Inc. from November 2005 to May 8, 2006, conclusively establishes the lost information was and is not relevant to Defendant's defenses. (Opp'n to Renewed Motion, Ex. B “O' Dwyer Dec”, ¶ 2). According to O' Dwyer's declaration, the contents of the two NetNation servers included:

(O' Dwyer Dec. ¶ 9).

O'Dwyer also states that “[n]o information relating to communications with other parties, such as veterinary product distributors, was inputted or stored on any of the two (2) servers by myself, or anyone else.” (Id. ¶ 11). In addition, Plaintiff submitted the declaration of Simon Brodie, Cyntegra's Chief Executive Officer, stating that no data regarding the underlying molecular diagnostic technology or other components of Cyntegra products, no information regarding communications to or from distributors, and no emails were stored on this server. (See Opp'n, Ex. A, “Brodie Dec.” at ¶¶ 4-6).

O'Dwyer's and Brodie's statements directly conflict with Brodie's previous deposition testimony. In May of 2007, Brodie testified that “[e]verything was scanned into the server and then destroyed unless it was of-unless it was something that we had to actually keep such as corporate documents which are held by the attorneys that incorporated the company.” (Reply, Ex. B, Brodie Depo. at 233:12-13). At his deposition, Brodie stated that the only documents preserved were emails, since “[a]ny other documentation was destroyed when we lost our servers.” (Reply, Ex. C, Brodie Depo. at 228:21-23). When asked if Plaintiff stored any portion of the lost information on laptops, Brodie replied, “Not that I recall. We were very security conscious and wanted to make sure that everything was on the server.” (Reply, Ex. F, Brodie Depo. at 229:23-25). Given the stark contrast between Brodie's previous sworn testimony at deposition and Brodie and O'Dwyer's current statements in their declarations, and given that Plaintiff's conflicting testimony arises when Plaintiff faces a spoliation motion, Brodie's and O'Dwyer's statements in support of the current motion provide minimal persuasive value.

Furthermore, even accepting Plaintiff's position that only limited information regarding the Client Relationship Management System was lost from the server, such data is exactly the type of information relevant to Defendant's defenses. While Plaintiff claims no information about distributors were on the servers, O'Dwyer described the Client Relationship Management System as a means “for tracking all tests sold and results obtained, and reported to veterinarians ....” (O' Dwyer Dec. ¶ 9). The number of veterinarians that were part of the database is relevant to Defendant's argument that Plaintiff never had a viable business and that Plaintiff's products were not accepted by veterinarians. If no veterinarian ever used the server to track the progress and obtain test results from Plaintiff, then such information would strongly support Defendant's contention that Plaintiff was not a viable market participant, that Plaintiff's suspect business model and health were alternative explanations for Plaintiff's business failure, and that Plaintiff therefore lacked standing to sue. In any case, since Plaintiff “kept no hard files .... [and] [e]verything was scanned into the server and then destroyed,” (Brodie Dec. 233:12-13), it was not only likely, but entirely foreseeable and reasonable that Defendant would request Plaintiff's documents. Plaintiff thus destroyed relevant information protected under the duty to preserve relevant evidence.

*5 Next, Plaintiff contends the information Defendant purports to need for its defense was produced, was available in discovery, or does not exist Specifically, Plaintiff argues that the information Defendant proposes was on the servers was either available to Defendant for some time, or was not sought by Defendant during discovery. To the contrary, Plaintiff's own submission-the O'Dwyer declaration-belies this contention. For the reasons discussed above, because the Client Relationship Management System was entirely relevant to Defendant's defenses, Plaintiff's contention lacks merit.

Finally, Plaintiff claims that the destroyed information was not within its control. Plaintiff claims that NetNation deleted the files, and that it “did not even know the erasure had occurred, until after this suit was filed.” (Opp'n to Renewed Motion at 11). Nonetheless, courts have extended the affirmative duty to preserve evidence to instances when that evidence is not directly within the party's custody or control so long as the party has access to, or indirect control over, such evidence. See, e.g., King v. American Power Conversion Corp., 181 Fed. Appx. 373, 378 (4th Cir.2006); Silvestri, 271 F.3d at 591; World Courier v. Barone, C06-3072 TEH, 2007 U.S. Dist. LEXIS 31714 at *2-3 (N.D. Cal. filed April 16, 2007). In Columbia Pictures Indus. v. Bunnell, CV 06-1093 FMC (JCx), 2007 U.S. Dist. LEXIS 46364 at *25 (C.D.Cal. May 29, 2007), the court found that even though a party's electronic information was “temporarily stored” by another party, it retained “control” since it had “the ability to manipulate at will how the [information was] routed.” See also United States v. Int'l Union of Petroleum and Indus. Workers, AFL-CIO, 870 F.2d 1450, 1452 (9th Cir.1989) (defining control as “the legal right to obtain documents upon demand”). Similarly, Plaintiff had sufficient control and legal right over the deleted files to constitute fault. Plaintiff contracted to store business documents on NetNation's computer servers. At least until March 7, 2006, when payment was discontinued, Plaintiff could direct the flow of information to and from NetNation's servers. Because Plaintiff could have anticipated the possibility of litigation by this time, it had an affirmative duty to make payments and preserve the evidence. Plaintiff cannot bypass this duty by abandoning its documents to a third-party and claiming lack of control. Plaintiff could have saved or printed the information after determining it could no longer make payments. Moreover, Plaintiff has made no showing that the costs to save the information was prohibitive or that it lacked funds to rescue the information. A contractual relationship with a third-party entity provides, at a minimum, an obligation to make reasonable inquiry of the third party entity for the data at issue. Columbia Pictures, 2007 U.S. Dist. LEXIS 46364 at *3 n. 1; A. Farber and Partners, Inc. v. Garber, 234 F.R.D. 186, 189 (C.D.Cal.2006). Plaintiff claims no efforts, by request or right, to preserve its documents from NetNation's erasure. Releasing Plaintiff from sanctions when it could have, but chose not to save information would undermine the discovery process. Plaintiff had sufficient, albeit indirect, control to preserve evidence, and by failing to do so, violated an affirmative duty.

*6 In light of Plaintiff's violation, Defendant asks the Court to strike the FAC and enter default judgment against Plaintiff. In the alternative, Defendant requests monetary sanctions of $25,000, and a jury instruction containing the following adverse inference:

(See Proposed Order Granting Defendant Idexx's Renewed Motion for Sanction).

Dismissal and entry of default judgment is an available sanction under the court's inherent power when “a party has engaged deliberately in deceptive practices that undermine the integrity of judicial proceedings.” Anheuser-Busch, 69F.3d at 348. Before imposing the “harsh sanction” of dismissal, however, courts should consider the following factors: “(1) the public's interest in expeditious resolution of litigation; (2) the court's need to manage its dockets; (3) the risk of prejudice to the party seeking sanctions; (4) the public policy favoring disposition of cases on their merits; and (5) the availability of less drastic sanctions.” Id. While the district court need not make explicit findings regarding each of these factors, Wiltec-Guam, 857 F.2d at 603, a finding of “willfulness, fault, or bad faith” is required for dismissal to be proper. Anheuser-Busch, 69 F.3d at 348. Additionally, the district court must consider “less severe alternatives” than outright dismissal. Wiltec-Guam, 857 F.2d at 604.

While Plaintiff's actions raise serious questions regarding its wilfulness and bad faith, the Court concludes that striking the FAC is inappropriate given the availability of a less severe sanction in the form of an adverse jury instruction.

Several courts in California have adopted the Second Circuit's 3-part test to decide whether the specific sanction of an adverse inference instruction is appropriate. This test requires that a party seeking such an instruction establish that: (1) the party having control over the evidence had an obligation to preserve it; (2) the records were destroyed with a culpable state of mind; and (3) the destroyed evidence was relevant to the party's claim or defense. Residential Funding Corp. v. DeGeorge Fin. Corp., 306 F.3d 99, 105 (2d Cir.2002); In re Napster, 462 F.Supp.2d 1060, 1078 (N.D.Cal.2006); Hamilton v. Signature Flight Support Corp., No. C 05-0490, 2005 U.S. Dist. LEXIS 40088 at *3 (N.D. Cal Dec. 20, 2005); AmeriPride Servs, Inc. v. Valley Indus. Serv., Inc., No. CIV S-00-113, 2006 U.S. Dist. LEXIS 59398, 2006 WL 2308442, at *5 n. 6 (E.D.Cal. Aug.9, 2006).

*7 Defendant has satisfied these requirements. First, Plaintiff had control, albeit indirectly, over the destroyed information on NetNation's server. Second, the records were destroyed with the necessary culpability. The “mental culpability” factor is satisfied where the party acted “knowingly or ... negligently.” Residential Funding Corp., 306 F.3d at 108; see also Silvestri, 271 F.3d at 593 (finding negligence sufficient to justify dismissal where the effect of the conduct is so prejudicial that it substantially denies defendant the ability to defend the claim); World Courier, 2007 U.S. Dist. LEXIS 31714 at *5 (finding negligence sufficient where a party failed to prevent spoliation). Plaintiff was at least negligent in not taking any affirmative actions to preserve the documents. Plaintiff did not copy the documents from NetNation's servers or request that NetNation preserve the documents, even though Plaintiff knew of or should have known of the possibility of deletion. Third, the parties' own statements indicate the lost information was relevant to Defendant's defense. Since the documents were deleted and independent verification is impossible, the Court cannot accept Plaintiff's characterization of the evidence as irrelevant, especially since Plaintiff's own employee, Brodie, indicated the contrary in his sworn deposition testimony. Consequently, an adverse jury instruction is warranted in this case.

Defendant also requests $25,000 in monetary sanctions against Plaintiff. The Court has the discretion to impose a wide array of monetary sanctions and the “assessment of attorney's fees is undoubtedly within a court's inherent powers,” upon a showing of bad faith, Chambers v. NASCO, 501 U.S. 32, 44-45, 111 S.Ct. 2123, 115 L.Ed.2d 27 (1991), as compensation for costs incurred as a result of the opposing party's destruction of evidence. Wm. T. Thompson Co., 593 F.Supp. at 1456. The amount of monetary sanctions must be “reasonable.” In re Matter of Yagman, 796 F.2d 1165, 1184 (9th Cir.1986). Having granted Defendant's request for an adverse jury instruction, however, the Court declines to impose further monetary sanctions. Even if Plaintiff's actions demonstrate bad faith, Defendant has provided no declarations or other evidence to show $25,000 is a “reasonable” amount.

On July 31, 2007, the discovery cut-off date and last day for the parties to disclose expert witnesses, Defendant submitted the expert reports of Drs. Gary Dorman and Richard E. Walck pursuant to Fed.R.Civ.P. 26(a)(2)(B)(C). That same date, Plaintiff submitted the declaration of its economics expert, Dr. Nisha Mody. (Ex. E “Mody Dec”), attached to Cyntegra Inc.'s Exhibits A to F to Plaintiff's Motion for Reconsideration of the Denial of Plaintiff's Ex Parte Application for Modification of the Pre-Trial Scheduling Order, and Continuance of Defendant's Motion for Summary Judgment). In a cover letter attached to the declaration, Plaintiff's counsel wrote:

(Id.).

In her declaration, Dr. Mody stated:

(Mody Dec. ¶ 3). Dr. Mody also briefly outlined the analysis she intended to conduct, including an econometric analysis of sales data. (Id. ¶ 4).

On August 15, 2007, Plaintiff submitted the Expert Rebuttal Report of Dr. Mody to rebut Defendant's expert reports by Dorman and Walck. Defendant now moves to strike Dr. Mody's report, arguing it is nothing more than a late-filed expert witness disclosure submitted nearly two weeks after the July 31, 2007 discovery cut-off date.

Rule 26(a) (2) of the Federal Rules of Civil Procedure establishes notice requirements for the use of expert witnesses in civil cases. Subdivision (B) of Rule 26(a)(2) requires the party for whom the witness will testify to submit a written report, signed by the witness. Fed.R.Civ.P. 26(a)(2)(B). The report shall contain:

Fed R. Civ. P. 26(a)(2)(B).

Absent other direction from the court, a rebuttal report shall be filed “within 30 days after the disclosure” of the evidence that the expert is assigned to rebut. Fed.R.Civ.P. 26(a)(2)(C). “Rule 37(c)(1) gives teeth to these requirements by forbidding the use at trial of any information required to be disclosed by Rule 26(a) that is not properly disclosed.” Yeti by Molly, Ltd. v. Deckers Outdoor Corp., 259 F.3d 1101, 1106 (9th Cir.2001). Rule 37(c)(1) provides, in relevant part:

*9 Fed.R.Civ.P. 37(c) (emphases added).

Defendant asks the Court to strike the Expert Rebuttal Report of Dr. Mody, on the grounds that it is nothing more than a late-filed expert witness report submitted nearly two weeks after the July 31, 2007 discovery cut-off date. Defendant asserts that Dr. Mody's declaration, submitted on July 31, 2007 and barely exceeding one-page, did not constitute a proper expert witness report under Rule 26. Defendant's experts, Drs. Dorman and Walck, relied on third-party data and independent sources to prepare their expert reports. Defendant argues that Dr. Mody should have done the same.

Plaintiff concedes it did not produce Dr. Mody's expert report by the July 31, 2007 cut-off date. (Memorandum of Points and Authorities in Support of Plaintiff Cyntegra's Motion for Reconsideration of Denial of Plaintiff's Ex Parte Modification of Pre-Trial Scheduling Order, and Continuance of Defendant's Motion for Summary Judgment, p. 5). Plaintiff argues, however, that Dr. Mody's Expert Rebuttal Report, which contains opinions on the relevant market, IDEXX's market share, the nature of competition, and Cyntegra's damages, properly presents evidence specifically to contradict or rebut evidence presented by Defendant's experts, Drs. Dorman and Walck.

Plaintiff's arguments do not persuade the Court. Dr. Mody's declaration, submitted on the July 31, 2007 cut-off date, did not constitute a proper expert report in the first instance. Her declaration conspicuously lacked “a complete statement of all opinions to be expressed and the basis and reasons therefor,” and “the data or other information considered” by Dr. Mody in forming the opinions.” Fed.R.Civ.P. 26(a)(2)(B). Dr. Mody admits as much, when she states, “If and when I am provided with the necessary information, I intend to conduct my analysis and issue an expert report.” (Mody Dec. ¶ 7). Here, in order to have properly complied with the federal rules, Plaintiff should have substantively complied with the written report requirements of Rule 26(a)(2)(B). Then Plaintiff's later rebuttal report by that expert would have been proper under Rule 26(a)(2)(C). However, Plaintiff may not submit its first report by an expert, two weeks after the expert disclosure was due, simply by labeling it a “rebuttal report.” Accordingly, the Court hereby STRIKES the Expert Rebuttal Report of Dr. Mody.

For the foregoing reasons, the Court hereby GRANTS Defendant's Renewed Motion for Sanctions for the Spoliation of Critical Evidence, and GRANTS Defendant's Motion to Strike Plaintiff's Improper Expert Rebuttal Report of Dr. Nisha Mody.

IT IS SO ORDERED.