Suchanek v. Sturm Foods, Inc.

MEMORANDUM AND ORDER

ROSENSTENGEL, District Judge:

Defendants, Sturm Foods, Inc., and its parent company Treehouse Foods, Inc., manufactured single-serve coffee cups for use in Keurig machines and marketed them under the name Grove Square Coffee (“GSC”). The eight named Plaintiffs each purchased GSC, but were extremely unsatisfied with their purchase. They claim that Defendants packaged, marketed, distributed, and sold GSC as premium, ground coffee. In truth, GSC was actually more than 95% instant coffee. The named Plaintiffs claim they would not have purchased GSC, or would have paid less for it, had they known it was actually instant coffee. They brought suit against Defendants for violating the consumer protection statutes and unjust enrichment laws of Alabama, California, Illinois, New Jersey, New York, North Carolina, South Carolina, and Tennessee.

*244 District Judge G. Patrick Murphy denied Plaintiffs’ original motion for class certification and granted summary judgment for Defendants on each of the named Plaintiffs’ individual claims. Plaintiffs appealed to the Seventh Circuit Court of Appeals; the Seventh Circuit reversed Judge Murphy’s decisions and remanded the matter for further proceedings. Upon remand, the case was reassigned to the undersigned because Judge Murphy retired while the case was on appeal. Plaintiffs have renewed their motion for class certification, which is presently before the Court. Also before the Court are five related motions filed by the parties seeking to exclude expert reports and testimony and arguments deemed improper. The Court will first consider the motions to exclude, as these rulings may affect the analysis of the motion to certify the class.

MOTIONS TO EXCLUDE

The Court has divided the motions to exclude into two categories: non -Daubert motions and Daubert motions. The non-Daubert motions challenge the admissibility of expert testimony based on purported procedural deficiencies, while the Daubert motions challenge the substance of the expert testimony as unreliable or irrelevant.

I. Daubert Motions

District courts have a “gatekeeping” obligation to ensure that expert testimony is both relevant and reliable. Fed. R. Evid. 702; Daubert v. Merrell Dow Pharmaceuticals, Inc., 509 U.S. 579 , 113 S.Ct. 2786 , 125 L.Ed.2d 469 (2993); Lees v. Carthage College, 714 F.3d 516, 521 (7th Cir.2013). Essentially, the district court must ask three questions before admitting expert testimony: is the expert qualified, is the expert’s methodology reliable, and will the expert’s testimony assist the trier of fact in understanding the evidence or determining a fact in issue. Myers v. Illinois Cent. R. Co., 629 F.3d 639, 644 (7th Cir.2010). In determining relevance and reliability, the party offering the expert testimony bears the burden of proof. Brown v. Burlington N. Santa Fe Ry. Co., 765 F.3d 765, 772 (7th Cir.2014) (citing Lewis v. CIT-GO Petroleum Corp., 561 F.3d 698, 705 (7th Cir.2009)).

The Court did not conduct a hearing on the Daubert motions because the record is adequate to decide the motions without one. Additionally, the parties did not indicate that a hearing was necessary or set forth what missing information a hearing would supply. See Niam v. Ashcroft, 354 F.3d 652, 660 (7th Cir.2004) (“[A] Daubert hearing is [not] always required.”); Kirstein v. Parks Corp., 159 F.3d 1065, 1067 (7th Cir.1998) (no automatic entitlement to a Daubert hearing because the Seventh Circuit has “not required that the Daubert inquiry take any specific form”); Target Market Publishing, Inc. v. ADVO, Inc., 136 F.3d 1139 , 1143 n. 3 (7th Cir.1998) (“[T]he Supreme Court did not suggest in either Daubert or General Electric that district courts would be required to conduct in limine hearings concerning every rejected proffer of expert testimony.”).

A. Defendants’ Motion re: Bobby Calder (Doc. 196) 1

Bobby Calder is a professor at Northwestern University, and he teaches graduate and post-graduate level courses in consumer behavior and marketing strategies. He has published numerous articles in research journals and has been a consultant to a number of widely-recognizable companies, including Aetna, Coca-Cola, GE, GM, and Kraft. Calder was hired by Plaintiffs to address whether GSC’s packaging was likely to mislead reasonable consumers, which is the question common to all class members. Suchanek v. Sturm Foods, Inc., 764 F.3d 750, 755 (7th Cir.2014). Plaintiffs submitted Calder’s opinions to show that the issue of liability is capable of resolution on a class-wide basis and predominates over the class members’ individual issues.

Defendants claim that Calder’s report and testimony must be excluded (Doc. 197). Calder’s report contains two sets of opinions (See Doe. 101-8). The first set of opinions is based on his review of GSC packaging, Sturm’s marketing documents, and consumer complaints. Calder concluded, in short, that

*245 A reasonable consumer would have been led to falsely believe that [GSC] contained regular ground coffee for brewing in a Keurig machine ____ Usage of the word “instant” on the package in a non-prominent way would not have been sufficient to prevent consumers being misled and deceived .... (and) Sturm’s plan for marketing the [GSC] product was at its heart intended to distract consumers from realizing that the product quality or standard was instant coffee and not regular ground coffee for brewing.

(Doc. 101-8, pp. 4, 5, 7).

Defendants argue that these opinions must be excluded because they are not based on evidence of actual consumer perceptions, like a survey (Doc. 197, pp. 10-11). The Court disagrees. A consumer survey is not the only acceptable evidence of consumer deception. See Muha v. Encore Receivable Mgmt., Inc., 558 F.3d 623, 628 (7th Cir.2009) (explaining that the “best evidence” that a statement is misleading is “a responsible survey,” but testimony from consumers can also suffice); Durkin v. Equifax Check Servs., Inc., 406 F.3d 410, 415 (7th Cir.2005) (explaining that the need for evidence to show a collection letter is confusing “might be met through the use of a carefully designed and conducted consumer survey. Also, we have suggested that an appropriate expert witness might suffice.”); Hickson Corp. v. N. Crossarm Co., 357 F.3d 1256, 1261 (11th Cir.2004) (requiring plaintiff to present evidence of deception “in the form of consumer surveys, market research, expert testimony, or other evidence.”)

Calder had plenty of other evidence regarding consumer deception. First, he had Defendants’ own market research. This research showed Keurig users did not want instant coffee, so Defendants avoided using the word “instant” on the label. Defendants also conducted product testing to see if eonsumez’s noticed the physical differences between GSC cups and regular K-cups that signaled GSC was instant coffee (see Doc. 101-1, p. 4; Doc. 101-7; Doc. 219). Next, and most importantly, Calder had hundreds of consumer complaints. In those complaints, customers said they felt disappointed, dissatisfied, displeased, disgusted, swindled, robbed, cheated, ripped off, duped, and misled (Doc. 221). 2 Others said GSC was a hoax, deceptive, an absolute fi'aud, a zap off, a sad joke, a gross misrepresentation, a clearly substandard instant coffee disguised as a Keurig K-cup, and a waste of money (Id.). The Court simply does not see why Calder needed a survey to measure the perceptions of potential GSC purchasers when he had oodles of complaints explicitly stating what consumers thought. Thus, the fact that Calder’s first set of opinions were not based on a consumer survey does not make them inadmissible.

Defendants also claim that Calder’s opinions are based upon an erroneous understanding of the relevant facts and his irrelevant personal feelings. For example, he didn’t know some “Keurig products” contain instant coffee (e.g., vanilla flavored mocha) and no filter (e.g., ciders, hot chocolate), and he ignores that some Plaintiffs knew what “soluble” meant. To the extent that Defendants want to quibble with Calder’s understanding of the facts or the materials that he reviewed, those are matters for cross-examination because they go more to the weight and credibility of his opiziions, rather than their admissibility.

Calder’s second set of opinions is based on a consumer study that he designed and conducted. For his study, Professor Calder interviewed twenty-three randomly recruited individuals in Chicago who owned and used Keurig machines (Doc. 101-8). The results of his study were consistent with his first set of opinions (Id. at p. 23). The participants “overwhelmingly identity [sic] the single-serve brands with the quality of ground roasted coffees, not instant coffees.” (Doc. 101-8, p. 9). Consistent with that idea, the participants expected GSC “to be a traditional ground coffee filtered from z’oasted beans that did not contain instant coffee (Id. at p. 15). After a product demonstration, 3 the par *246 ticipants “changed their minds dramatically,” and said GSC was more similar to instant coffee than ground roasted coffee (I'd at pp. 18, 23). Qualitative results also showed the participants “for the most part realized that they had been misled.” (Id. at pp. 18, 23).

Defendants argue that Calder’s opinions based on his consumer study must be stricken because the study deviated from accepted scientific principles for a valid consumer survey (Doc. 197). Defendants hired Gary Ford, Ph.D., a professor emeritus of marketing at American University, to critique Calder’s methodology. Ford identified a number of purported deficiencies in Calder’s study and discussed each one in a rebuttal report (Doc. 107-4). Based on Ford’s report, Defendants argue that Calder used an improper universe, an unrepresentative sample from the universe, and ambiguous, imprecise, and biased questions (Id.). Defendants further argue that Calder failed to include a control group, failed to replicate the store environment, and failed to use a double-blind format (Id.).

It does not seem that Professor Calder’s second set of opinions are critical to class certification. Am. Honda Motor Co. v. Allen, 600 F.3d 813, 815-16 (7th Cir.2010) (“We hold that when an expert’s report or testimony is critical to class certification ... a district court must conclusively rule on any challenge to the expert’s qualifications or submissions prior to ruling on a class certification motion.”) It seems that the consumer complaints and Defendants’ own internal documents, along with Professor Calder’s first set of opinions, supply all the needed proof as to whether the common issue of liability is capable of resolution on a class-wide basis and predominates over the class members’ individual issues. While Calder’s study is not critical, it is nevertheless important. Thus, the Court will undertake the Daubert analysis to put this issue to bed.

Consumer survey evidence must comply with principles of professional survey research in order to be admissible. Evory v. RJM Acquisitions Funding L.L.C., 505 F.3d 769, 776 (7th Cir.2007). See also Shari Seidman Diamond, Reference Guide on Survey Research, in Fed. Judicial Ctr„ Reference Manual on Scientific Evidence, p. 364 (3d ed. 2011) (provided by Defendants at Doc. 107-2). “While there will be occasions when the proffered survey is so flawed as to be completely unhelpful to the trier of fact and therefore inadmissible, such situations will be rare[.]” PBM Products, LLC v. Mead Johnson & Co., 639 F.3d 111, 123 (4th Cir.2011) (citing AHP Subsidiary Holding Co. v. Stuart Hale Co., 1 F.3d 611, 618 (7th Cir. 1993)). “Usually, objections based on flaws in the survey’s methodology are properly addressed by the trier of fact.” PBM Products, LLC, 639 F.3d at 123 ; accord Citizens Fin. Group, Inc. v. Citizens Nat’l Bank, 383 F.3d 110 , 121 (3d Cir.2004); Clicks Billiards, Inc. v. Sixshooters Inc., 251 F.3d 1252, 1262-63 (9th Cir.2001); AHP Subsidiary Holding Co., 1 F.3d at 618 .

While Calder’s survey may not be perfect, and Defendants undoubtedly would have done things differently, the survey is not so fundamentally flawed that it is inadmissible. Calder’s universe — individuals who currently own and actively use a Keurig machine — is a sufficiently close approximation of the consumers who would potentially purchase GSC. 4 In other words, it is self-evident that the vast majority of people who were likely to buy GSC were those who owned and actively used a Keurig machine. To the extent Calder’s chosen universe was deficient, it goes to the weight of the survey, not its admissibility.

Calder’s use of a convenience sample of only twenty-three participants in the Chieago-area also does not doom his survey because convenience samples are “routinely” relied on in surveys conducted by experts in *247 marketing and in deceptive advertising eases. Diamond, Reference Guide on Survey Research, p. 361, 382 (available at Doc. 107-2). And those surveys “are admitted into evidence based on the argument that nonprobability sampling is used widely in marketing research and that ‘results of these studies are used by major American companies in making decisions of considerable consequence.’” Id. (citations omitted). Case in point: Defendants’ own market research was comprised of interviews with only seven consumers (see Doc. 219).

The Court also does not believe that Calder biased participants by displaying a GSC cup and a Green Mountain cup simultaneously at the beginning of the study. Contrary to Defendants’ assertion, Calder did not ask participants whether the cups — “both the Green Mountain K-Cups and the Grove Square K-Cups” — were more similar to ground coffee or instant coffee (Doc. 197, p. 17). Instead, Calder asked the question about single-serve coffee cups in general. 5 Even if Defendants had accurately represented Calder’s question, them argument is still insufficient because it does not make clear how the simple presence of the Green Mountain cup injected an impermissible bias into the study.

Furthermore, the form of Calder’s questions is not so flawed that the study is inherently unreliable. To the extent Calder’s questions elicited ambiguous responses, participants immediately explained them responses, which in the Court’s opinion eliminated any ambiguities (see Doc. 101-8, p. 39). And while many of Calder’s questions were close-ended, that does not automatically render a study inadmissible. See Diamond, Reference Guide on Survey Research, pp. 391-94. In fact, close-ended questions are particularly useful “for assessing choices between well-identified options or obtaining rating on a clear set of alternatives.” Mat p. 394. Additionally, the absence of a “no opinion” option does not significantly compromise the study because participants were still able to indicate neutrality. 6 The absence of a “don’t know” option also does not doom the study because participants were encouraged to offer commentary during their interview. Despite the lack of a “don’t know” option, participants commented on their uncertainty in a number of instances (see Doc. 101-8, pp. 54, 58, 68). Calder also told the participants that if they were unsure about a question, they should ask him for an explanation.

The lack of an external control group also does not make Calder’s study inadmissible. His study was designed with a before and after format in which each participant served as his or her own control. The weaknesses of conducting a study in that format go to the weight of Calder’s study, not its admissibility. Likewise, the failure to conduct a double-blind study does not make Calder’s study wholly inadmissible; it simply limits the reliability of it.

Finally, the study is not inadmissible because Calder failed to replicate real-world conditions when he pointed out and read aloud six sections of the GSC package that Plaintiffs consider to be deceptive. Professor Calder explained that the entire puipose of his study was to examine whether consumers were misled by information on the GSC package, so it was necessary to ensure that the participants saw that information (Doc. 107-1, pp. 37-88). That approach is certainly used by other experts in conducting consumer surveys. See Diamond, Reference Guide on Survey Research, p. 397 (available at Doc. 107-2) (“Some surveys attempt to reduce the impact of preexisting impressions on respondent’s answers by ... directing] respondent’s attention to the mark at issue (e.g., ‘these stripes on the package’). Such efforts are likely to be only partially successful.”); Mike Rappeport, Response to Survey Methodology *248 Articles, 96 Trademark Rep. 769 , 774-75 (2006) (“[F]or statements on packages ... frequently it is proper to ‘focus’ the respondent on that aspect or aspects of the product packaging ... the plaintiff thinks is offending .... [0]ne could reasonably argue that it is only fair to the defendant to make sure the respondent sees what the defendant said, because after all, if the defendant didn’t think it would help the consumer to see it, why did they put it on the package?”) Any deficiency in Calder’s approach goes to the weight of the study, not its admissibility.

In sum, Defendants’ arguments do not demonstrate that any of the alleged issues with Professor Calder’s study are significant enough, even when considered in their totality, to warrant exclusion of the study. The issues identified by Defendants more appropriately go to the weight of the study than to its admissibility. For this reason, Defendants’ motion to exclude the expert report and corresponding testimony of Professor Bobby Calder is denied.

B. Defendants’ Motion re: Candace Preston (Doc. 194) 7

Candace Preston is the damages expert hired by Plaintiffs. In her original report, she opined that there were two potential models for calculating damages in this case: Wholesale Damages and Retail Damages (Doc. 101-12). The “Wholesale Damages” model reflects the revenue Defendants earned selling GSC at wholesale prices to retailers (Id.). The “Retail Damages” model reflects the amount of money consumers spent purchasing GSC (Id.).

Defendants argue that Ms. Preston’s opinions should be excluded because her calculations do not fit Plaintiffs’ theory of liability or the facts of this case, and they are contrary to law (Doc. 194, pp. 13-14, 14-15). It seems to the Court that these arguments do not bear on the relevance and reliability of Ms. Preston’s opinions, but rather go to the issue of predominance under Rule 23(b)(3). Therefore these arguments are not a good fit for a Daubert motion, and they are more appropriately considered with respect to the motion for class certification. They will be addressed later in this order.

Defendants also argue that Ms. Preston’s opinions regarding the Wholesale and Retail Damages models should be stricken because they are based on an unreliable assumption that “if the product [GSC] had been marketed truthfully, consumers would not have purchased the product at all” (Doc. 195, pp. 16-17 (citing Doc. 101-12)). Ms. Preston claimed this assumption was supported by the analysis and conclusions reached by Bobby Calder and customer complaints (Doc. 101-12), which Defendants claim is not true (Doc. 195). Defendants contend that Professor Calder’s report actually contradicts Ms. Preston’s assumption and cite to a cherry-picked passage from that report, which states “very few consumers would have purchased the product at its price point if it had disclosed that it was instant coffee.” (Doc. 195, p. 16 (citing Doe. 101-8, p. 23)). But Defendants ignored another passage opining that consumers “did not believe that the product was instant coffee when they bought it and would not have bought it if they did,” which utterly supports Ms. Preston’s assumption (see Doc. 101-8, p. 7). Defendants also contend that Ms. Preston’s assumption is contradicted by favorable consumer comments (Doc. 195, p. 17). This argument is laughable. Ten positive reviews do not somehow negate the hundreds, if not thousands, of bad (sometimes scathing) reviews, particularly when there is evidence that Defendants had their employees write fake, positive reviews (see Doc. 101-1, p. 28). In the Court’s opinion, the overall and intended spirit of Professor Calder’s report and the consumer complaints very clearly support Ms. Preston’s assumptions. Defendants’ overly-technical nitpicking is not sufficient to convince the Court that Preston’s report is unreliable.

Defendants’ Motion To Strike Expert Witness Reports of Candace Preston and to Exclude Her Expert Testimony (Doc. 195) is denied.

C. Plaintiffs’ Motion re: Neal

*249 Róese (Doc. 203) 8

Neal Róese is a professor at Northwestern University. He is a social psychologist with expertise on judgment and decision-making. Róese was hired by Defendants to address the psychology of purchasing decisions. Specifically, he determined that there was no uniform or typical consumer decision process across consumers who have purchased GSC; instead, there were significant variations (Doc. 116-1). Defendants used Roese’s report in opposing class certification to show that factual distinctions between the claims of the named Plaintiffs meant there was a lack of typicality and that individual issues predominate.

Plaintiffs claim that Roese’s report and testimony should be excluded because it is nothing more than a recitation of passages from the named Plaintiffs’ depositions that were cherry-picked to reach a predetermined outcome (Id. at pp. 2-4). Plaintiffs further claim that the named Plaintiffs’ deposition testimony regarding their individual purchase decisions is irrelevant to the objective inquiry of whether a reasonable consumer was likely to be misled (Doc. 203, p. 4). The Court disagrees.

Róese began his report by explaining the steps involved in the consumer buying process: attention, interpretation, and attitude (Doc. 116-1). He then used the named Plaintiffs’ deposition testimony to illustrate the variability between them at each mental step, which ultimately meant they had different reasons for purchasing GSC (Id.). Plaintiffs seem to suggest that he should have interviewed prospective or actual GSC purchasers rather than relying on the named Plaintiffs’ depositions (see Doc. 203, p. 2). The Court does not see what difference that makes. Regardless of what he read or who he talked to, Róese was going to reach the conclusion that there was a significant variation in consumers’ decision-making process when it came to purchasing GSC. No two people are the same, so it is axiomatic that no two people would make a purchase decision in the same exact manner for the same exact reasons. While people may reach the same ultimate decision to buy a product, the factors that went into making that decision are as varied as people themselves.

As far as the relevance of Roese’s report, it is undoubtedly relevant to this case; it’s just not particularly helpful for the purposes for which Defendants submitted it. Defendants believe that Roese’s report tends to show a lack of typicality and that individual issues predominate. For the reasons explained later in this Order, based on the case law of this Circuit, the Court disagrees. In other words, Roese’s report is not unreliable or irrelevant under Daubert , it just doesn’t help Defendants’ accomplish anything with respect to class certification. But that does not mean that his report must be excluded and stricken from the record. The Court simply chooses to afford it little to no weight on the matters relevant to class certification. Plaintiffs’ motion to exclude the expert report and corresponding testimony of Professor Neal Róese is denied.

II. Non-Daubert Motions

A. Defendants’ Motion re: Robert Klein (Doc. 193) 9

Robert Klein was hired by Keurig, Inc. as an expert witness in its lawsuit against Sturm Foods for violations of the Lanham Act. Keurig, Inc. v. Sturm Foods, Inc., Case No. 10-cv-841-SLR (D. Del.). After conducting four market research surveys, Klein concluded, in pertinent part, that few potential purchasers of GSC understood that it contained instant coffee (Doc. 115-4). He further concluded that after learning GSC contained instant coffee, consumers’ interest in purchasing GSC fell significantly, which demonstrated the materiality of this information to their purchase decision (Id.).

In this matter, Plaintiffs had to identify all class certification experts by August 30, 2012, and all other experts by February 14, 2013. Plaintiffs did not identify Robert Klein as an expert witness or tender his report to Defendants before either of those dates. They made no mention of Klein until March 26, *250 2013, when they submitted his report in support of their brief opposing Defendants’ original Daubert motion regarding Bobby Calder (see Docs. 115-4,115-5). Plaintiffs referred to Klein’s reports again in opposing Defendants’ motions for summary judgment (see Doc. 141-12). Additionally, the Seventh Circuit explicitly referenced Klein’s reports in them opinion. See Suchanek v. Sturm Foods, 764 F.3d 750, 753 (7th Cir.2014). According to Plaintiffs, the Seventh Circuit’s mention of Klein’s reports is what prompted them to ask him “to opine on the relevance of his findings submitted in the other litigation to the claims asserted here” (Doc. 202, p. 3). Klein then prepared a declaration in which he asserts that his findings in the Keurig case are relevant to this matter (Doc. 187-2). Plaintiffs submitted that declaration in support of their amended motion for class certification.

Defendants argue that Klein’s reports, his declaration, and any corresponding testimony should be excluded in connection with the motion for class certification and trial because Klein was not retained as an expert in this case, and his documents were submitted long after the deadline for expert disclosures (Doc. 193). The Court agrees.

Klein cannot serve as an expert witness because Plaintiffs did not disclose him as an expert before the deadlines had passed. Consequently, Plaintiffs are not allowed to use his expert report to supply evidence on for the motion for class certification unless the failure was substantially justified or is harmless. Fed. R. Civ. P. 37(c)(1). But Plaintiffs do not offer any reason for failing to disclose Klein as an expert (see Doc. 202). In fact, they continue to maintain that they have no desire to designate him as an expert (Id). They claim that Klein’s reports are simply “additional anecdotal evidence on the issue of consumer confusion” (Id. at p. 4). Plaintiffs do not, however, adequately explain or set forth any legal authority (such as a Federal Rule of Evidence or ease law) demonstrating how Klein’s findings can be treated as anything other than undisclosed expert opinions. As best the Court can tell, Plaintiffs seem to believe that because Klein’s reports were previously submitted to the Court for other (presumably permissible) purposes, those reports are somehow now generally available for any and all purposes. That is not so. See, e.g., Matter of James Wilson Associates, 965 F.2d 160, 173 (7th Cir.1992) (“The fact that inadmissible evidence is the (permissible) premise of the expert’s opinion does not make that evidence admissible for other purposes, purposes independent of the opinion,”).

Accordingly, Defendants’ motion to strike the reports and declaration of Robert Klein (Doc. 193) is granted.

B. Defendants’ Motion to Strike Improper Arguments and Evidence from Plaintiffs’ Reply Brief (Doc. 210) 10

Defendants ask the Court to strike various arguments from Plaintiffs’ motion for class certification and their reply brief (Doc. 210). First, Defendants claim that any arguments related to the supplemental report of Candace Preston should be stricken (Id). Again, Candace Preston is the damages expert hired by Plaintiffs. Magistrate Judge Philip Frazier barred Plaintiffs from using Ms. Preston’s supplemental report for purposes of their original class certification motion because it was submitted after the applicable deadline (Doc. 201 citing Doc. 103). 11 Consequently, Defendants argue that Plaintiffs should also be barred from using it for their amended motion for class certification (Doc. 210, p. 3). The Court disagrees.

After this case came back on remand, the parties chose to submit new briefs on the issue of class certification in order to align their arguments with the Seventh Circuit’s opinion. The parties did not make any requests regarding evidentiary restrictions, and the Court imposed none. The Court sees no reason why it should not consider all of the available and properly submitted evi *251 dence in the record, including evidence that came into being after the deadlines applicable to the original motion for class certification.

Second, Defendants argue that Ms. Preston’s declaration that was submitted as part of Plaintiffs’ reply brief should be stricken (Doc. 210). 12 Defendants claim that Ms. Preston’s declaration contains an opinion that GSC had zero value, which is a new and previously undisclosed opinion that is untimely and prejudicial to them (Doc. 210). This argument is a non-starter. Ms. Preston never explicitly stated in her declaration that she was of the opinion that GSC was worthless (see Doc. 201-2). To the extent that her declaration can be read to stand for that opinion, it is hardly new — it has been implicit in her reports from the get-go. Ms. Preston explained that, for her original report, she was asked to assume that if GSC had been marketed truthfully, consumers would not have purchased it (Doc. 201-2, p. 3). Operating on that assumption, Ms, Preston opined that one potential measure of damages was the amount of money consumers spent purchasing GSC (“Retail Damages” model) (Doc. 101-12). In other words, class members would receive a full refund for their purchase of GSC. A full refund model is based on the notion that consumers received no benefit from the product and therefore the product was valueless. See, e.g., Rikos v. Procter & Gamble Co., 799 F.3d 497, 524 (6th Cir.2015); In re Scotts EZ Seed, 304 F.R.D. 397, 412 (S.D.N.Y.2015).

Defendants next attack Ms. Preston’s opinion that she can calculate the actual value of GSC from the cost of the ingredients in a GSC pod or the price of a cup of comparable instant coffee (Doc. 210). Again, Defendants claim this opinion was previously undisclosed and should be stricken because it is untimely and its admission would be prejudicial to them (Id). In the Court’s opinion, however, Ms. Preston’s failure to present this opinion earlier is substantially justified.

As previously mentioned, the Retail Damages model in Ms. Preston’s original report was based on the notion that a full refund was the proper measure of damages. During the first round of class certification briefing, Defendants did not file a Daubert motion or otherwise challenge Ms. Preston’s report or the full-refund model. Things changed once the Seventh Circuit issued its opinion suggesting that the proper measure of damages is a partial refund. Suchanek v. Sturm Foods, Inc., 764 F.3d 750, 760 (7th Cir.2014) (“[F]or example, plaintiffs damages might be computed by taking the difference between the actual value of the package she purchased (instant coffee) and the inflated price she paid (thinking the cups contained real coffee grounds).”) Now, for the first time in the course of this litigation, Defendants take exception to the full-refund model of damages and argue that Ms. Preston’s original and supplemental report do not provide any method for calculating a partial refund. As the Court sees it, if Defendants are going to mount a new challenge to Ms. Preston’s original report years after it was submitted and supplemented, it is only fair to give her a chance to respond. What’s good for the goose is good for the gander.

Defendants also argue that Ms. Preston’s opinion that she can calculate the GSC’s value from the cost of its ingredients or the price of a cup of comparable instant coffee is speculative and unreliable. The Court is doubtful that the value of the ingredients in an individual serving of GSC can be used as the measure of its actual value to consumers. And Plaintiffs do not cite to any case law or other legal authority showing that this is an acceptable way to calculate a product’s actual value. Much like Neal Roese’s report, however, the Court does not see why that means Ms. Preston’s declaration, or a portion of it, must be excluded and stricken from the record. The Court simply chooses to reject that opinion for purposes of class certification.

On the other hand, using the cost of other instant coffees seems to the Court to be a perfectly acceptable method for determining the actual value of GSC. Defendants quibble that this fails to take into account any value associated with the K-cup brewing system or that the Starbucks VIA product was sold at a higher price than GSC (Doc. 210, p. 6). But *252 the Court is unconvinced that either of these things make Ms. Preston’s opinion so unreliable that it must be excluded. As the Seventh Circuit noted during oral arguments, it simply makes no sense that a Keurig machine would be any more convenient for making instant coffee than, say, a microwave or a hot water spigot. 13 And if Starbucks VIA is truly a comparable product, then its price would be factored into Ms. Preston’s computation of the cost of an equivalent instant coffee. Simply put, there is enough evidence in the record to satisfy the Court that consumers paid an inappropriately high premium for GSC. Ms. Preston will be given an opportunity to identify and isolate that premium. If, after further discovery, she is unable to do so, Plaintiffs will not be able to proceed on them theory that class members are entitled to a partial refund.

Finally, Defendants take issue with Plaintiffs’ argument in them reply brief that individual issues relating to reliance do not predominate because reliance can be presumed on a class-wide basis (Doc. 210, p. 6). Defendants claim this argument is “new” and should be stricken (Id.). This portion of Plaintiffs’ reply brief, however, was prompted by Defendants’ argument in their response brief. Accordingly, it was appropriate for Plaintiffs to make this argument for the first time as a rebuttal argument in them reply brief. See Cent. States, Se. & Sw. Areas Pension Fund v. White, 258 F.3d 636 , 640 n. 2 (7th Cir.2001); Matter of Wildman, 859 F.2d 553 , 556 n. 4 (7th Cir.1988). Defendants also claim that Plaintiffs’ argument regarding a presumption of reliance is wrong as a matter of law (Doc. 210, p. 6). This assertion goes to the merits of the argument, and ultimately the merits of the motion for class certification. Therefore, it will be addressed later in this order with respect to the motion for class certification.

In sum, all of Defendants’ arguments are meritless, and them Motion to Strike Improper Argument and Evidence from Plaintiffs’ Reply (Doc. 210) is denied.

MOTION FOR CLASS CERTIFICATION

I. Proposed Class Definition

Plaintiffs seek certification of a class, or subclasses by state, of:

All persons or consumers that during the Class Period, from September of 2010, up through the date the case is certified and notice is disseminated, who purchased Defendants’ Grove Square Coffee (“GSC”) products in Alabama, California, Illinois, New Jersey, New York, North Carolina, South Carolina, and Tennessee. Excluded from the Class are: (a) Defendants’ Board members or executive-level officers, including its attorneys; (b) persons or entities who purchased the GSC primarily for resale; (c) retailers or re-sellers of the GSC; (d) governmental entities, including this Court; and (e) any consumer that already received a refund from Defendants. The named Plaintiffs assert claims under their respective state’s consumer protection laws and also assert claims for unjust enrichment and injunctive relief.

(Doc. 186, p. 18).

Since filing their motion for class certification, Plaintiffs have agreed that certain modifications to the class definition are necessary. Specifically, they agreed that class members are no longer seeking injunctive relief and that online purchasers of GSC should be excluded from the class. The analysis that follows is based on a proposed class definition incorporating those modifications.

The analysis that follows also considers only whether class certification is appropriate with respect to Plaintiffs’ consumer fraud claims and does not consider certification on the unjust enrichment claims. That is because Plaintiffs’ motion for class certification focuses almost exclusively on the consumer fraud claims (see Doc. 186). In fact, they mention the words “unjust enrichment” only a handful of times. Plaintiffs do not address how any of the class certification requirements, such as commonality, typicality, and *253 adequacy, are satisfied with respect to the unjust enrichment claim. Plaintiffs also do not set out the elements of unjust enrichment under the common law of each of the eight states at issue or comparatively analyze those laws to show that the laws are substantially similar and/or that the variances are manageable. Simply put, to the extent that Plaintiffs are seeking certification of an unjust enrichment claim, it is denied because the parties did not sufficiently address class treatment of that claim.

II. Legal Standard for Class Certification

A plaintiff seeking to certify a class must satisfy the four requirements of Federal Rule of Civil Procedure 23(a): numerosity, commonality, typicality, and adequacy of representation. See, e.g., Harper v. Sheriff of Cook County, 581 F.3d 511, 513 (7th Cir. 2009). In addition to meeting the threshold requirements of Rule 23(a), a plaintiff also must satisfy the requirements of at least one subsection of Rule 23(b). Here, Plaintiffs seek to certify a class under Rule 23(b)(3), and therefore they must show that “questions of law or fact common to the class members predominate over any questions affecting individual members” and that a “class action is superior to other available methods for fairly and efficiently adjudicating the controversy.” Fed. R. Civ. P. 23(b)(3); Messner v. Northshore Univ. HealthSystem, 669 F.3d 802, 811 (7th Cir.2012). Finally, the Seventh Circuit has “long recognized an implicit requirement under Rule 23” that a class must be ascertainable, meaning “the class must be defined clearly and that membership be defined by objective criteria.” Mullins v. Direct Digital, LLC, 795 F.3d 654, 657 (7th Cir. 2015).

“Plaintiffs bear the burden of showing that a proposed class satisfies the Rule 23 requirements, but they need not make that showing to a degree of absolute certainty.” Messner, 669 F.3d at 811 (internal citation omitted). “It is sufficient if each disputed requirement has been proven by a preponderance of evidence.” Messner, 669 F.3d at 811 (citing Teamsters Local 445 Freight Div. Pension Fund v. Bombardier Inc., 546 F.3d 196, 202 (2d Cir.2008)).

III. Rule 23(A) Requirements

A. Numerosity

The first requirement of Rule 23(a) is that the proposed class “be so numerous that joinder of all members is impracticable.” Fed. R. Crv. P. 23(a)(1). It is undisputed that tens of thousands of units of 6SC were sold during the class period and therefore numerosity is satisfied (see Doc. 192).

B. Commonality

The second requirement of Rule 23(a) is that there is at least one question of law or fact common to the class. Fed. R. Civ. P. 23(a)(2). The Seventh Circuit determined that commonality was satisfied: “The question whether the GSC packaging was likely to mislead a reasonable consumer is common to the claims of every class member.” Suchanek v. Sturm Foods, Inc., 764 F.3d 750, 755 (7th Cir.2014).

Defendants argue that the Seventh Circuit got it wrong (Doc. 192). But that argument can be disregarded entirely because, even if Defendants are correct, it is not this Court’s place to correct that error. See Trinidad v. McCaughtry, 17 Fed.Appx. 394, 396 (7th Cir.2001) (“There is even an institution in the judicial hierarchy charged with the duty of correcting error by a United States Court of Appeals — but that institution is not the United States District Court____”) The mandate rule requires this Court to adhere to the rulings of the Seventh Circuit on remand. Kovacs v. United States, 739 F.3d 1020, 1024 (7th Cir.2014) (“The lower court is bound, through the mandate rule, to the resolution of any points that the higher court has addressed.” (citing United States v. Morris, 259 F.3d 894, 898 (7th Cir.2001))); see also Waid v. Merrill Area Pub. Sch., 130 F.3d 1268, 1272 (7th Cir.1997) (“The most elementary application of [the law of the ease doctrine] is that when a court of appeals has reversed a final judgment and remanded the case, the district court is required to comply with the express or implied rulings of the appellate court.”) (citations omitted). Therefore, commonality is satisfied.

*254 Plaintiffs argue that there are four additional common questions (Doc. 186, p.21-23). The first is whether Defendants’ conduct was willful. By Plaintiffs’ own admission, however, intent “is not a required element of liability under any of the eight consumer protection statutes” (Doc. 186, p. 21). 14 Instead, it is only relevant under the statutes of Alabama, South Carolina, and Tennessee and only with respect to the imposition of damages (those states provide that treble damages can be awarded if the defendant’s conduct was willful or knowing) (Doc. 186, pp. 21, 22). Because intent is a relevant, but not necessary, component to the consumer fraud claims under the laws of three states, it is not an issue that is common across all class members, nor does it seem likely to “generate [an] answer apt to drive the resolution of the litigation.” Suchanek, 764 F.3d at 756 (citing Wal-Mart Stores, Inc. v. Dukes, 564 U.S. 338 , 131 S.Ct. 2541, 2551 , 180 L.Ed.2d 374 (2011)).

Two of the other common questions proposed by Plaintiffs include whether Defendants committed fraud by omission and whether Defendants engaged in fraudulent concealment. In the section of their brief addressing commonality, Plaintiffs do very little in the way of explaining how these questions are central to the validity of the claims of every single class member or how they would drive the resolution of the litigation (see Doc. 186, pp. 22-23). Instead, Plaintiffs simply repeat the relevant facts and make the unadorned assertion that these issues are common questions (see Doc. 186, pp. 22, 23). Elsewhere in their brief, however, Plaintiffs offer some clues as to why these questions matter (Doc. 186, pp. 44, 45). Plaintiffs believe that if Defendants are guilty of fraud by omission or concealment, then reliance/causation can be presumed on a class-wide basis, and individual proof from each class member is not needed (Id.). But Plaintiffs have not presented sufficient argument or authority to show that all eight states permit reliance/causation to be proven on a class-wide basis or that it would be appropriate in this particular case (see Doc. 186, p. 45). See also 1 Joseph M. McLaughlin, McLaughlin on Class Actions § 5:55 (11th ed. 2014) (discussing that class-wide reliance can only be presumed in very limited circumstances). Therefore, the Court cannot say that these questions are common across all class members or likely to “generate [an] answer apt to drive the resolution of the litigation.”

Finally, Plaintiffs simply claim that another common question is “whether the changing of the label from ‘soluble’ to ‘instant’ cured the deceptive nature of the packaging” (Doc. 186, p. 23). Plaintiffs say nothing more. “[S]tating blankly what one’s argument is and actually arguing a position are different things.” Raghunathan v. Holder, 604 F.3d 371, 378 (7th Cir.2010) (emphasis in original). “[I]t is not the obligation of this court to research and construct the legal arguments open to parties.” United States v. Holm, 326 F.3d 872, 877 (7th Cir.2003). Without more, the Court cannot conclude that this question is common to every single member of the class.

In sum, commonality is satisfied because the question whether the GSC packaging was likely to mislead a reasonable consumer is common to the claims of every class member.

C. Typicality

The third requirement of Rule 23(a) is that the claims or defenses of the representative parties are typical of the claims or defenses of the class. Fed. R. Civ. P. 23(a)(3). The typicality requirement is meant to ensure that there is “enough congruence between the named representative’s claim and that of the unnamed members of the class to justify allowing the named party to litigate on behalf of the group.” Spano v. The Boeing Co., 633 F.3d 574, 586 (7th Cir. 2011). In other words, the named representative’s claims must have “the same essential *255 characteristics as the claims of the class at large.” Oshana v. Coca-Cola Co., 472 F.3d 506, 514 (7th Cir.2006) (quoting De La Fuente v. Stokely-Van Camp, Inc., 713 F.2d 225, 232 (7th Cir.1983)). It is well-established that typicality is satisfied if the named representative’s claim “arises from the same event or practice or course of conduct that gives rise to the claims of other class members and ... [the] claims are based on the same legal theory.” Oshana, 472 F.3d at 514 (citing Rosario v. Livaditis, 963 F.2d 1013, 1018 (7th Cir.1992)); De La Fuente, 713 F.2d at 232 .

On appeal, the Seventh Circuit did not explicitly take up the issue of typicality, but the opinion includes commentary that strongly suggests typicality is satisfied. Specifically, the Seventh Circuit stated that “the Plaintiffs’ claims and those of the class they would like to represent all derive from a single course of conduct by Sturm: the marketing and packaging of GSC.” Suchanek v. Sturm Foods, Inc., 764 F.3d 750, 756 (7th Cir.2014). The Seventh Circuit further stated “[t]he same legal standards govern every class member’s claim; [Defendant] admits in its brief that ‘[a]ll of the applicable state consumer protection laws require proof that a statement is either (1) literally false, or (2) likely to mislead (either through a statement or material omission) a reasonable consumer.’ ” Id.

Despite this commentary from the Court of Appeals and Defendants own concessions, Defendants nevertheless argue that typicality is not satisfied (Doc. 192). They urge the Court to focus on the injury and “how the named plaintiffs were injured [versus] how the other class members were injured” (Doe. 192, p. 32). Defendants argue that typicality is not satisfied because the class members “bought GSC for different reasons and formed their beliefs about it for different reasons” (Id.). For example, “[s]ome Plaintiffs bought GSC because a retailer placed it on a shelf near the Keurig K-cups. Others bought GSC because they wanted to try something new. Still others bought GSC because of its low price.” (Doc. 192, p. 32).

What Defendants are essentially saying is that typicality is not satisfied unless the class members all had the same perceptions and knowledge about GSC and the same preferences and reasons for purchasing GSC. This argument goes too far. The standard for typicality does not require the facts underlying every claim to be identical. De La Fuente, 713 F.2d at 232 (“The typicality requirement may be satisfied even if there are factual distinctions between the claims of the named plaintiffs and those of other class members.”) (citations omitted); 1 Joseph M. McLaughlin, McLaughlin on Class Actions § 4:17 (11th ed. 2014) (“[M]inor factual differences between the claim of the putative representative and class members ordinarily will not defeat a finding of typicality, as the requirement does not require perfect overlap of circumstances.”). In fact, when it comes to consumer fraud class actions, individual differences are to be expected. See also McLaughlin on Class Actions § 5:54 (“[I]n most contexts individuals choose consumer goods or services based on disparate knowledge and varied beliefs and reasons.”); William Rubenstein, Newberg on Class Actions § 3:36 (5th ed. 2013) (“In consumer fraud cases, the proposed class representative’s claims are generally held to be typical of the class members’ claims if the allegations can be traced to the same overall fraud, even if class members’ specific claims are factually distinct.”)

Here, as previously mentioned, the class members were all exposed to the exact same course of conduct by Defendants: the marketing and packaging of GSC. Suchanek v. Sturm Foods, Inc., 764 F.3d 750, 756 (7th Cir.2014). See also In re IKO Roofing Shingle Products Liability Litigation, 757 F.3d 599, 602 (7th Cir.2014)(“In a suit alleging a defect common to all instances of a consumer product ... the conduct does not differ.”). Additionally, the claims of the named representative and the other class members have the same essence: they were duped into believing they were purchasing ground coffee, and they would not have purchased GSC (or paid as much as they did) had they known it was actually instant coffee. Variations among the named representatives in their perception of the GSC packaging or their motivation for ultimately purchasing GSC simply means their claims are not completely identi *256 cal. It does not mean their claims are atypical of the class. See also In re IKO Roofing Shingle Products Liab. Litig., 757 F.3d 599, 601 (7th Cir.2014) (reversing because district court mistakenly held class could not be certified because different plaintiffs had different experiences with sub-standard roofing tiles); Butler v. Sears, Roebuck, and Co., 727 F.3d 796, 798, 800 (7th Cir.2013) (affirming certification of single class of consumers who purchased washing machines that accumulated mold even though class members did not all own same exact model and “different models [were] differently defective.”); Pella Corp. v. Saltzman, 606 F.3d 391, 392 (7th Cir.2010) (affirming certification of class of consumers who purchased windows with a design defect even though consumers’ experiences with defective windows may have been caused by many individual variances such as specific conditions and improper installation); Rosario v. Livaditis, 963 F.2d 1013, 1018 (7th Cir.1992) (finding typicality in an action by former students alleging two beauty schools had made fraudulent claims about the education they provided even though the plaintiffs spent varying amounts of time at the school and some left “satisfied”). Typicality is satisfied.

D. Adequacy

The fourth and final requirement of Rule 23(a) is that the named plaintiffs and proposed class counsel must fairly and adequately protect the interests of the class. Fed. R. Civ. P. 23(a)(4). Defendants do not challenge the adequacy of class counsel (see Doc. 192), and the Court has no reason to believe they are not qualified. Therefore, the Court will only analyze whether the named Plaintiffs are adequate representatives.

Once again, the Seventh Circuit did not explicitly take up the issue of adequacy of representation, but the opinion includes commentary which strongly suggests adequacy is satisfied. The Court of Appeals stated, “[I]t is apparent that this is not a case where few, if any, of the putative class members share the named representative’s grievance against the defendant. If it were, things would be different [because a] person whose claim is idiosyncratic or possibly unique is an unsuitable class representative.” Suchanek v. Sturm Foods, Inc., 764 F.3d 750, 758 (7th Cir.2014) (citations omitted).

Defendants nevertheless argue that the named Plaintiffs are not suitable class representatives (Doc. 192, p. 33). They point out that the named Plaintiffs ascribe different causes to their mistaken beliefs about GSC and had different reasons for purchasing GSC (Id.). “In other words, they do not agree on what would cause the packaging to create the impression GSC is all ground coffee. (Id.). Thus, according to Defendants, the named Plaintiffs are antagonistic to each other on causation, reliance, and the materiality of information on the packaging (Id.). The Court disagrees.

The adequacy requirement is satisfied when the named representatives have “a sufficient interest in the outcome of the case to ensure vigorous advocacy” and “[do] not have interests antagonistic to those of the class.” Saltzman v. Pella Corp., 257 F.R.D. 471, 480 (N.D.Ill.2009) aff'd, 606 F.3d 391 (7th Cir.2010). See also Uhl v. Thoroughbred Tech. & Telecommunications, Inc., 309 F.3d 978 , 985 (7th Cir.2002) (“A class may not satisfy the requirements of Rule 23(a)(4) if the class representative does not possess the same interest and suffer the same injury as the class members.”) (internal quotation marks and citation omitted); Rosario v. Livaditis, 963 F.2d 1013, 1018 (7th Cir.1992) (“A class is not fairly and adequately represented if class members have antagonistic or conflicting claims.”).

The named Plaintiffs all claim that the overall GSC packaging was deceptive in that it created, and/or failed to correct, the misimpression that the product was premium, ground coffee. The named Plaintiffs also claim they would not have purchased the product (or paid as much as they did) had they known it was actually instant coffee. They are not alone in their claims. The evidence in the record illustrates that hundreds, if not thousands, of other consumers held the same mistaken belief and were equally disappointed upon learning the true nature of the product.

*257 The Court fails to see how or why it makes a difference whether some of the named Plaintiffs were misled solely by affirmative misrepresentations in statements, images, and descriptions set forth on the packaging as opposed to a material omission or some combination of affirmative misrepresentations and omissions. They all have the same interest in proving the GSC packaging was unfair or deceptive because all of their claims stand or fall on the issue of whether a reasonable consumer was likely to be misled by the overall packaging, not any one particular attribute or omission. Additionally, they all suffered the same injury — they paid an inflated price for instant coffee or paid for a product they would not have bought at all had they known it was instant coffee. Defendants provide little to no explanation as to how these differences could create misaligned incentives among class members and the class representatives. And the Court cannot think of a reason for anticipating antagonism based on these differences. See 1 Joseph M. McLaughlin, McLaughlin on Class Actions § 4:30 (11th ed. 2014) (“Likely differences in the ways in which individual class members will prove causation and damages generally ‘does not affect the alignment of them interests’ so as to cause conflict.”); 6A Fed. Prog, L. Ed. § 12:119 (“Where the central question common to all of the class members goes to the heart of the controversy, it outweighs other minor variations respecting individual interests in the class.”). Adequacy is satisfied. 15

IV. Rule 23(B)(3) Requirements

Plaintiffs seek to certify a class under Rule 23(b)(3), and therefore must show that “questions of law or fact common to the class members predominate over any questions affecting individual members” and that a “class action is superior to other available methods for fairly and efficiently adjudicating the controversy.” Fed. R. Civ. P. 23(b)(3); Messner v. Northshore Univ. HealthSystem, 669 F.3d 802, 811 (7th Cir.2012). “The matters pertinent to these findings include: (A) the class members’ interests in individually controlling the prosecution ... of separate actions; (B) the extent and nature of any litigation concerning the controversy already begun by or against class members; (C) the desirability or undesirability of concentrating the litigation of the claims in the particular forum; and (D) the likely difficulties in managing a class action.” Fed. R. Civ. P. 23(b)(3).

In determining whether predominance and superiority are satisfied, the Court must first ask whether the plaintiffs “damages are susceptible of measurement across the entire class.” Suchanek v. Sturm Foods, Inc., 764 F.3d 750, 760 (7th Cir.2014) (citing Comcast Corp. v. Behrend, — U.S. -, 133 S.Ct. 1426, 1433 , 185 L.Ed.2d 515 (2013)). If damages can be estimated, the Court will move on to examining the matters identified in Rule 23(b)(3), which “deal with the interests of individualized members of the class in controlling their own litigations and carrying them on as they see fit.” Suchanek, 764 F.3d at 760 (citing Amchem Products, Inc. v. Windsor, 521 U.S. 591, 615-16 , 117 S.Ct. 2231 , 138 L.Ed.2d 689 (1997)) (internal quotation marks omitted); see Fed. R. Civ. P. 23(b)(3). In particular, the court should assess “the difficulty and complexity of the class-wide issues as compared with the individual issues.” Suchanek, 764 F.3d at 760 . The court should also assess “whether the class allegations are satisfied through evidentiary proof.” Suchanek, 764 F.3d at 760 (citation omitted).

A. Measurement of damages

“Damages are susceptible of measurement across the entire class” if there is “a single or common method that can be used to measure and quantify the damages of each class member.” William Rubenstein, Newberg on Class Actions § 12:4 (5th ed. 2013). If damages are capable of measurement on a classwide basis, questions of individual damage calculations will *258 not overwhelm questions common to the class. Contra Comcast Corp., 133 S.Ct. at 1433 .

Plaintiffs’ theory of liability rests on the claim that because GSC was overwhelmingly instant coffee, GSC’s actual value is either nothing or a figure substantially lower than the price consumers paid for it. If GSC’s value is nothing, Plaintiffs would be entitled to receive all of their money back. If GSC is worth something less than what consumers paid, Plaintiffs would be entitled to receive a partial refund. See Suchanek v. Sturm Foods, Inc., 764 F.3d 750, 760 (7th Cir.2014) (“[F]or example, plaintiffs damages might be computed by taking the difference between the actual value of the package she purchased (instant coffee) and the inflated price she paid (thinking the cups contained real coffee grounds).”)

Candace Preston’s “Retail Damages” model matches the full-refund theory (Doc. 101-12). Defendants contend, however, that the full-refund model is contrary to law (Doc. 192). They claim that “courts have universally rejected attempts to apply the theory that a defendant’s product is worthless to food and beverage products, even if them value is minimal” (Id. at p. 36). Defendants vehemently insist that GSC is not completely worthless because it provided convenience, hydration, and caffeine (Id. at pp. 36-37).

Defendants’ assertion that courts have “universally rejected” full refunds in eases involving the deceptive packaging of food or beverages is a gross exaggeration. Defendants cite to four cases from only three district courts. There are ninety-four districts in the federal court system and over six hundred authorized district judgeships. So it goes without saying that the decisions of four judges in three districts hardly establish “universal” proposition of law. Furthermore, the cases cited by Defendants are of very little persuasive value given that two of them are unpublished, 16 Defendants cited to only a footnote from the third, 17 and the fourth case specifically noted that it was “quite different” from the instant case. 18 As such, the Court is not convinced that a full refund is never the proper measure of damages in a case involving deceptive packaging of food or beverages.

And if there was ever a case where this theory was appropriate, this may be it. There is plenty of evidence in the record suggesting that consumers would not have purchased GSC but for its deceptive labeling that created and/or failed to correct the misimpression that GSC was premium, ground coffee. Specifically, there is evidence that the only consumers who would potentially purchase GSC were those who owned a Keurig machine (or who were buying it for someone else who owned a Keurig machine) (Doc. 101-1, p. 253). And there is plenty of evidence showing that, when it came to coffee, Keurig machine owners wanted to brew only premium, fresh, ground coffee (Doc. 101-1, p. 4; Doc. 219; Doc. 101-7). There is also evidence that Defendants were fully aware of Keurig machine owners’ preferences and went to great lengths to disguise the fact that GSC was not premium, fresh, ground coffee. And of course there is evidence showing that hundreds of consumers misunderstood GSC to be ground coffee and purchased the product based on misunderstanding (see Doc. 221). Furthermore, Defendants have produced absolutely no evidence that some consumers may have still purchased GSC had they known GSC was instant coffee. There is also no evidence that some consumers did, in fact, know that GSC was instant coffee yet purchased it anyway. Accordingly, the Court thinks it is entirely possible that the finder of fact could conclude that GSC was worthless to consumers.

To the extent that a partial refund turns out to be the correct measure of damages, *259 the Retail Damages model could simply be offset by subtracting the actual value of GSC. Ms. Preston explained she could calculate actual value of GSC from the consumer price per cup of an equivalent instant coffee (Doc. 201-2).

Ms. Preston also presented a third damages model, the “Wholesale Damages” model (Doc. 101-12). This model awards class members the revenue Defendants earned selling GSC at wholesale prices to retailers (Id.). This model does not match either of Plaintiffs’ theories of liability, and thus this damages model is rejected.

Accordingly, Plaintiffs have met their burden of showing a proposed class-wide damages model that is consistent with their theory of liability. Comcast Corp. v. Behrend, — U.S.-, 133 S.Ct. 1426, 1435 , 185 L.Ed.2d 515 (2013) (“The first step in a damages study is the translation of the legal theory of the harmful event into an analysis of the economic impact of that event.”) (citation omitted). If a single class is certified for the purposes of establishing damages, each class member will receive a full refund or a partial refund. Alternatively, in the event subclasses are created, class members in certain states will receive statutory damages. 19

B. Complexity and class-wide proof

Because damages can be estimated, the Court will move on to examining “the difficulty and complexity of the class-wide issues as compared with the individual issues” and “whether the class allegations are satisfied through evidentiary proof.” Suchanek v. Sturm Foods, Inc., 764 F.3d 750, 760 (7th Cir.2014) (citation omitted).

As previously discussed, the common, class-wide issue in this case is liability, which turns on whether the GSC packaging was likely to deceive a reasonable consumer. This question is particularly appropriate for class-wide resolution. It is identical across every class member because all of the applicable consumer protection statutes require proof that Defendants’ statement was likely to mislead a reasonable consumer. Suchanek, 764 F.3d at 756 . And it is the most central aspect of every class member’s consumer fraud claim; as noted by the Seventh Circuit, “the claims of every class member will rise or fall on the resolution of that question.” Suchanek, 764 F.3d at 757 . Additionally, the proof needed to resolve the question of liability — survey evidence and expert testimony— is common to all class members. It is also costly. For these reasons, it would be extraordinarily duplicative and wasteful of the time and resources of both the Court and the parties to litigate this question in individual cases. That is particularly true because Defendants make no argument, and the Court has no reason to believe, that multiple, individual proceedings are necessary to ensure that the question of liability is accurately resolved. See Pella Corp. v. Saltzman, 606 F.3d 391, 394 (7th Cir.2010); Mejdrech v. Met-Coil Sys. Corp., 319 F.3d 910, 912 (7th Cir.2003); Thorogood v. Sears, Roebuck & Co., 547 F.3d 742, 745 (7th Cir.2008).

Individual litigation is not even a realistic alternative. The Court estimates that the value of each class member’s claim is somewhere in the ballpark of $10. And “only a lunatic or a fanatic sues for [$10].” Carnegie v. Household Int’l., Inc., 376 F.3d 656, 661 (7th Cir.2004). But even if some of the class members were feeling especially fanatical, the survey evidence and expert testimony needed to prove the issue of liability would cost considerably more than their claim is worth, which almost certainly eviscerates any interest they may have in filing an individual suit.

Furthermore, contrary to Defendants’ assertion (Doc. 192, p. 44), the fact that individualized proof from each class member may be required on the issues of proximate causation and reliance does not make the class format unmanageable or support the denial of class certification. Suchanek, 764 F.3d at 760 ; Pella Corp., 606 F.3d at 394 (“Proximate cause, however, is necessarily an individual issue and the need for individual proof alone does not necessarily preclude class certification.”) Proximate causation and reliance are *260 simpler issues than the issue of liability, and the information needed to prove them is more accessible to individual litigants than the information needed to prove liability. Suchanek, 764 F.3d at 760 . That’s because each class member can simply state for himself that, based on GSC’s packaging, he mistakenly believed GSC was ground coffee, and he purchased it as a result of that mistaken belief. See Suchanek, 764 F.3d at 760 (“At the back end, if the class prevails on the common issue, it would be a straightforward matter for each purchaser to present her evidence on reliance and causation.”). The individualized assessments can be conducted after liability is determined and damages are being considered. Suchanek, 764 F.3d at 756 (“It is routine in class actions to have a final phase in which individualized proof must be submitted.”)

Accordingly, the Court thinks “it makes good sense” to resolve the common issue of liability “in one fell swoop.” Pella Corp., 606 F.3d at 394 (citing Mejdrech, 319 F.3d at 911 ). See also Chicago Teachers Union, Local No. 1 v. Bd. of Educ., 797 F.3d 426, 444 (7th Cir.2015) (“[W]hen adjudication of questions of liability common to the class will achieve economies of time and expense, the predominance standard is generally satisfied.” (quoting Comcast Corp. v. Behrend, — U.S.-, 133 S.Ct. 1426, 1436-37 , 185 L.Ed.2d 515 (2013))); 7AA Charles Alan Wright, et al„ Federal Practice & Procedure § 1778 (3d ed.) (‘When common questions represent a significant aspect of the case and they can be resolved for all members of the class in a single adjudication, there is a clear justification for handling the dispute on a representative rather than on an individual basis.”).

To conclude, because common issues of law and fact predominate, and trying these claims individually would result in a substantial amount of repetition and wasted resources, proceeding as a class action is the superior form of adjudication for this case.

V. Issues with the Class Definition

A. Ascertainability

The Seventh Circuit has “long recognized an implicit requirement under Rule 23” that a class must be ascertainable, meaning “the class must be defined clearly and that membership be defined by objective criteria.” Mullins v. Direct Digital, LLC, 795 F.3d 654, 657 (7th Cir.2015). Defendants do not dispute that the proposed class is defined by reference to objective criteria (Doc. 192, p. 24). The definition identifies a particular group of individuals (in-store purchasers of GSC) harmed in a particular way (defrauded by packaging) during a specific period (from September 2010 to the present) in particular states (Alabama, California, Illinois, New Jersey, New York, North Carolina, South Carolina, and Tennessee). Defendants’ objection to the proposed class is that Plaintiffs have not pointed to any evidence that identifies the class members or proposed a reliable method for ascertaining their identities (Doc. 192, p. 24).

The Seventh Circuit recently ruled on this precise issue in Mullins v. Direct Digital, LLC, 795 F.3d 654 (7th Cir.2015). The Court noted that some courts have recently imposed a “new” and “heightened” requirement to ascertainability by “requiring plaintiffs to prove at the certification stage that there is a ‘reliable and administratively feasible’ way to identify all who fall within the class definition.” Mullins, 795 F.3d at 657 . The Seventh Circuit declined to follow suit for two general reasons. First, the new, more “stringent” version of ascertainability “does not further any interest of Rule 23 that is not already adequately protected by the Rule’s explicit requirements.” Id. at 662 . And second, the costs of imposing the requirement are high because it “erect[s] a nearly insurmountable hurdle at the class certification stage in situations where a class action is the only viable way to pursue valid but small individual claims,” namely low-value consumer class actions like the instant case. Id. Accordingly, the Seventh Circuit opted to “stick with our settled law,” which focuses on “the adequacy of the class definition itself,” and not “whether, given an adequate class definition, it would be difficult to identify particular members of the class.” Id. at 659 . Under that standard, as previously indicated, Plaintiffs have satisfied the requirement of ascertainability.

*261 B. Overbreadth

A class is defined too broadly if it includes “a great number of members who for some reason could not have been harmed by the defendant’s allegedly unlawful conduct.” Messner v. Northshore Univ. Health-System, 669 F.3d 802, 824, 825 (7th Cir.2012). There is a difference between class members who could not have been harmed and those who ruere not harmed. Id. at 825 . Class members who could not have been harmed are those who “could not bring a valid claim under the best of circumstances.” See, e.g., Id. at 824-25 (antitrust plaintiff class could not be defined to include persons who purchased product before defendant possessed market power because those persons could not have been injured by defendant’s alleged abuse of market power). On the other hand, class members who were not harmed are those who have valid claims that will ultimately fail on the merits for various, individual reasons. See id. A class should not be certified if it is apparent that it contains “a great many persons” who could not have been harmed at the hands of the defendant. Id. at 825 , 826 n. 15.

Defendants claim that the proposed class, which is defined as purchasers of “Grove Square Coffee products,” is overly broad because it includes consumers who purchased the instant and microground coffee products as well as Grove Square’s cappuccino products, which also contain instant coffee (Doc. 192, p. 28), The Court disagrees. Based on the images of the packaging submitted by Defendant (Doc. 192, p. 29), it seems rather obvious that the instant and microground coffee product, which is called “Grove Square Coffee,” is something entirely different from the cappuccino product, which is called “Grove Square Cappuccino.” In fact, the package of the cappuccino product does not appear to mention the word “coffee” at all. Thus, in the Court’s opinion, defining the class as consumers “who purchased Defendants’ Grove Square Coffee products” is sufficiently limiting. Furthermore, the risk that cappuccino purchasers will self-identify as members of the class seems slim as there is no evidence in the record that large numbers of cappuccino purchasers ever complained of being duped or were otherwise dissatisfied with their purchase.

Defendants also claim that the proposed class definition is overly broad and certification should be denied because the class is not limited to consumers who purchased the original package with the words “soluble and microground” (Doe. 192, p. 27). Instead, it also includes consumers who purchased the modified package with the words “instant and microground” (Id.), Defendants argue that none of the named Plaintiffs purchased, and therefore could not have been injured by, the modified package, and thus they cannot seek to represent consumers who purchased the modified packaging (Id.).

The Court is not persuaded that a class with both original-package-purchasers and modified-package-purehasers is so overly broad that certification must be denied. Defendants have not presented any evidence whatsoever as to how many purchasers of the modified packaging actually exist. Therefore the Court has no reason to believe that a “great many” of the putative class members are modified-package-purehasers and has no basis to deny certification. See Messner, 669 F.3d at 826 . If anything, the Court should amend the class definition to correct for the overbreadth. Id. at 826 n. 15. But not even that appears to be necessary at this time. Defendants do not argue or set forth any evidence that the consumers who purchased the modified package could not have been deceived by the packaging. On the other hand, Plaintiffs have put forth evidence that the modified package was not sufficient to prevent a customer from being misled and that consumers continued complaining about GSC after the modified packaging was rolled out (Doe. 101-8, p. 5; Doc. 100-12; Doc. 101-9). Therefore, it cannot be said that modified-package-purehasers could not have been harmed by Defendants’ allegedly unlawful conduct in marketing and packaging GSC. Accordingly, including both original-package-purchasers and modified-package-purehasers in the class does not appear to implicate overbreadth concerns.

Instead, it seems to the Court that the question of whether the named Plaintiffs can present claims on behalf of others who pur *262 chased the same product in the slightly modified package actually implicates issues related to commonality, typicality, and adequacy of representation. 7AA Charles Alan Wright, et al„ Federal Practice & Procedure § 1785.1 (3d ed.) (“[T]he question whether [representative parties] may be allowed to present claims on behalf of others who have similar, but not identical, interests depends ... on an assessment of typicality and adequacy of representation.”); see also Bruno v. Quten Research Inst., LLC, 280 F.R.D. 524, 530 (C.D.Cal.2011). But Defendants did not make that argument. The Court nevertheless spent considerable time thinking about that issue and is convinced that the requirements of Rule 23(a) are still satisfied.

The Court was unable to locate photos in the record of the modified package, but throughout these proceedings, the Court was given the impression that the original package and the modified package were nearly identical. The only difference was the original package stated in small font that it contained “soluble and microground coffee” while the modified package said “instant and micro-ground coffee.” As best the Court can tell, the modified package still contained all the other misleading descriptions, images, and statements and still omitted what percentage of GSC was instant coffee. And regardless of the package, the problem — that GSC’s package misrepresented and concealed the true nature of the product — remains the same. The Court does not believe that the single variation between the original and modified packages is so significant that it makes the packages sufficiently and meaningfully distinct and requires an independent review of each. As the litigation unfolds, if there are large and unmanageable differences in proving the deceptive nature of the original and modified packages, the Court may decide to exclude the modified-package-purchasers from the class or create a subclass. But, at this point, the Court does not see the different packages as an obstacle to certification of a single class.

In sum, neither of Defendants’ arguments regarding overbreadth requires the denial of certification or even a modification of the proposed class definition.

C. Class Claims Under Alabama, Tennessee, and South Carolina Law

The consumer protection statutes of the states of Alabama, Tennessee, and South Carolina permit individual actions, but not class actions. 20 If this case were proceeding in state court, these statutes would undoubtedly preclude Plaintiffs from proceeding with a class action. But, obviously, this case is in federal court. The parties dispute whether those state statutes also bar class actions in federal court. The dispute centers on the Supreme Court’s decision in Shady Grove Orthopedic Assoc., P.A. v. Allstate Ins. Co., 559 U.S. 393 , 130 S.Ct. 1431 , 176 L.Ed.2d 311 (2010).

In Shady Grove, the plaintiff brought a putative class action in federal court against an insurance carrier seeking to recover unpaid statutory interest on late benefit payments. The issue was whether the case could proceed as a class action. Rule 23 of the Federal Rules of Civil Procedure, which sets out the procedures for pursuing a class action in federal court, “unambiguously authorizes any plaintiff, in any federal civil pro *263 ceeding, to maintain a class action if the Rule’s prerequisites are met.” Shady Grove, 559 U.S. at 406, 130 S.Ct. 1431 . New York law, by contrast, prohibits class actions to recover penalties, such as the statutory interest sought by the plaintiff. Thus, the Supreme Court was tasked with deciding whether Rule 23 or the New York statute controlled.

A majority of the justices agreed that there was a direct conflict between Rule 23 and the New York law because they both address “whether a class action may proceed for a given suit.” Shady Grove, 559 U.S. at 401, 130 S.Ct. 1431 . When a federal rule of procedure conflicts with state law, the Rules Enabling Act directs federal courts to apply the federal rule so long as its application does “abridge, enlarge, or modify any substantive right” under the state law. Id. at 407, 130 S.Ct. 1431 . A majority of the justices also agreed that Rule 23 would not alter the parties’ substantive rights. In determining that Rule 23 was valid, however, the Court fractured 4-1-4. Pour justices applied one test, while Justice John Paul Stevens applied another. Importantly, however, five justices concluded that Rule 23 controlled. See Hahn v. Walsh, 762 F.3d 617, 631 (7th Cir.2014), cert. denied, — U.S.-, 135 S.Ct. 1419 , 191 L.Ed.2d 365 (2015) (“A plurality of the Court held that Rule 23 was valid under the Rules Enabling Act ... and five Justices agreed that Rule 23, not the New York law at issue, should be applied in federal court.”) (internal citation omitted).

Defendants believe that the fractured opinion in Shady Grove leaves room for debate as to whether this Court is required to apply Rule 23 or the laws of Alabama, South Carolina, and Tennessee that explicitly limit Plaintiffs’ ability to bring a class action. More specifically, the question for this Court is whether Rule 23 abridges, modifies, or enlarges a substantive right afforded by those three statutes.

In answering that question, Defendants insist that the Court should follow the analysis of Justice Stevens in Shady Grove, and they cite to two district court cases from other circuits in which Justice Stevens’s concurrence opinion was deemed to be the controlling opinion. (Doe. 192, p. 47, n. 27). Defendants then mention four district court cases where the courts evaluated the Alabama, South Carolina, and Tennessee proscriptions on class actions in light of Shady Grove (Id. at pp. 47-48, 130 S.Ct. 1431 ). Defendants assert those courts determined the proscriptions against class actions “are substantive restrictions on the state created rights, and declined to permit class action treatment under Rule 23” (Id). Defendants then declare, without any further elaboration, that the three statutory prohibitions on class actions at issue are, in fact, “substantive definitions of the private right of action afforded under each statute, and not mere procedural rules” and therefore this Court “should follow the decisions cited above and refuse to permit class action treatment of those state law claims” (Doc. 192, p. 48).

Simply put, Defendants’ argument is not good enough. It is really nothing more than an assertion. They did not even discuss the analysis of the other courts (let alone conduct their own independent analysis) regarding how the three statutes at issue are materially different from the New York law at issue in Shady Grove or how Rule 23 actually alters a substantive right under any of those three statutes. They also provide no explanation as to why the other courts decided to go the opposite way of the Supreme Court on the issue of whether Rule 23 displaced a state law prohibiting class actions. This Court will not employ a sort of herd mentality and mindlessly follow the decisions of other district courts without reexamining the legal issues. This Court will also not do Defendants’ job for them and comb through the cited cases to piece together the contours of their argument in order to determine whether those decisions are persuasive.

Additionally, one of the district court cases cited by Defendants was recently overturned by the Eleventh Circuit. Lisk v. Lumber One Wood Preserving, LLC, 792 F.3d 1331 , 1335—37 (11th Cir.2015). In Lisk , the Eleventh Circuit held that, under Shady Grove, Rule 23 controlled over the prohibition on private class actions in the Alabama Deceptive Trade Practices Act (“ADTPA”). Id at 1336. In the view of the Eleventh Circuit, it didn’t matter *264 whether the plurality opinion or the concurring opinion in Shady Grove was controlling. See id. at 1335, 1336. That’s because “all five justices agreed that applying Rule 23 to allow a class action for a statutory penalty created by New York law did not abridge, enlarge, or modify a substantive right,” and “[tjhere is no relevant, meaningful distinction” between the New York law in Shady Grove and the ADTPA. Id. at 1335. The Eleventh Circuit supported that conclusion by addressing the major points of the plurality’s analysis as well as Justice Stevens’s analysis (e.g., the legislative history of the ADT-PA; the placement of the prohibition on class actions within the code; the scope of the prohibition; and the rights and obligations of the parties under the ADPTA, the available remedies, and the rules of decision for enforcing either). See id at 1336. Under either analysis, Rule 23 was valid. See id. at 1336, 1337. Thus the Court concluded “[t]he Alabama statute restricting class actions, like the New York statute at issue in Shady Grove, does not apply in federal court. Rule 23 controls.” Id. at 1336.

Defendants’ anemic argument is no match for the thorough, well-reasoned opinion of the Eleventh Circuit. The rationale by which the Eleventh Circuit arrived at its decision in Lisle convinces this Court that Rule 23 controls over the Alabama proscription on class actions. The Court also believes that the decision in Lisk applies with equal force and logic to the South Carolina and Tennessee proscriptions on consumer fraud class actions. See also 7A Charles Alan Wright, et al„ Federal Practice & Procedure § 1758 (3d ed.) (“It now is clear that Rule 23 controls whether a class action may be maintained, regardless of a conflicting state law.”) Defendants have not given the Court any reason to think otherwise, and once again, the Court will not dig through the cases cited by Defendants in an attempt to supply itself with those reasons.

Accordingly, the Court finds class treatment of the named Plaintiffs’ claims arising under the consumer protection statutes of Alabama, South Carolina, and Tennessee is permitted.

CONCLUSION

For the reasons set forth above, Plaintiffs’ Renewed Motion for Class Certification (Doc. 186) is GRANTED in part and DENIED in part. It is denied with respect to Plaintiffs’ request to certify an unjust enrichment class. It is granted with respect to Plaintiffs’ request to certify a statutory consumer fraud class under Rule 23(b)(3). The following class is certified on the issue of liability only:

All persons or consumers that during the Class Period, from September of 2010, up through the date the case is certified and notice is disseminated, who purchased Defendants’ Grove Square Coffee (“GSC”) products in Alabama, California, Illinois, New Jersey, New York, North Carolina, South Carolina, and Tennessee.

Excluded from the Class are: (a) Defendants’ Board members or executive-level officers, including its attorneys; (b) persons or entities who purchased the GSC primarily for resale; (c) retailers or re-sellers of the GSC; (d) governmental entities, including this Court; (e) any consumer that already received a refund from Defendants; and (f) any consumer who purchased GSC online.

It is further ordered that:

1. The law firms of Burke Harvey, LLC and Ward & Wilson are hereby APPOINTED as co-lead class counsel.

2. Defendants’ motion to exclude the expert report and corresponding testimony of Robert Klein (Doc. 193) is GRANTED.

3. Defendants’ motion to exclude the expert report and corresponding testimony of Candace Preston (Doc. 194) is DENIED.

4. Defendants’ motion to exclude the expert report and corresponding testimony of Professor Bobby Calder (Doc. 196) is DENIED.

5. Plaintiffs’ motion to exclude the expert report and corresponding testimony of Professor Neal Róese (Doc. 203) is DENIED.

6. Defendants’ Motion to Strike Improper Arguments and Evidence from Plain *265 tiffs’ Reply Brief (Doc. 210) is DENIED.

7. Plaintiffs are GRANTED leave to file a Second Amended Complaint as discussed at the hearing held on July 9, 2015, on the motion for class certification. The Second Amended Complaint SHALL be filed on or before November 17, 2015.

8. Finally, the parties SHALL, on or before December 4,2015, advise the Court what, if any, additional discovery is needed (and explain how much time is needed for that discovery) and submit a proposed schedule for notice to the class and trial on the common issues of liability.

IT IS SO ORDERED.

*266 UNITED STATES COURT OF INTERNATIONAL TRADE 18TH JUDICIAL CONFERENCE December 1,2014 The New York Palace New York, New York The views expressed are those of the author and do not necessarily reflect the views of the publisher.

*267 THE CALL OF THE CONFERENCE AND WELCOME TINA POTUTO KIMBLE: Good morning, everybody. Welcome to the Eighteenth Court of International Trade Judicial Conference. Just a couple of housekeeping matters while your first panel sets up. First of all, in keeping with our tradition, there’s no papers and no handouts, no materials for you today. Everything that you need is up on our website. So if there is something that you hear that is of interest to you today, just go on the CIT’s website and you’ll find it there. CLE, we’re doing something a little bit different. So those of you who need CLE, you should have signed in when you registered this morning. If you did not do so, please go make sure that you do it. Then you have little note cards. Turn in those note cards as you .leave the room. So, for this panel there’s no break between the first and second panel so you can turn in those note cards for the first and second panel when you leave. And then, every time you leave the room turn in those note cards. Speaking of note cards, in keeping with our tradition, you have note cards on your table. Those are for asking questions. We have some court staff who are here, who will come around and collect the note cards from you when you have questions. So just hold up the card and you can ask your question. And then, finally, our luncheon speaker, Beth Macy, she will be signing your books if you brought your books. She’ll do it at the break after the first two panels. And then, depending on how tired her hand is, we can actually have her sign again during the pre-lunch reception. She will be leaving immediately after lunch, so if you want to see her, you know, do so in the morning. Are you ready? Okay. With that, I will turn you over to the good hands of John Herrmann from Kelley Drye, who’s going to be the moderator for your first panel this morning. Thank you. RESPONDING TO AGENCY REQUESTS FOR ACTUAL INFORMATION: RESPONSIBILITIES, BURDENS & CONSEQUENCES MR. HERRMANN: Thank you, Tina. Thank you all for joining us this morning, and good morning. Glad to see everyone made it out on cyber Monday after Thanksgiving. And hopefully we’ll have a good, strong panel to start us off here this morning. The subject for our first plenary panel is responding to agency requests for factual information, responsibilities, burdens, and consequences. I’ll introduce them in advance of their remarks in greater detail, but we’re fortunate to have an excellent panel with us this morning. First, to my

*268 immediate right, we have the Vice Chairman of the United States International Trade Commission, Dean Pinkert. To my far right we have the Deputy Assistant Secretary of Commerce for Antidumping and Countervailing Duty Operations, Chris Marsh. And in between the two we have Frances Hadfíeld, an attorney at Grunfeld, Desiderio, Lebowitz, Silverman, and Klestadt, LLP, who has written an excellent paper which I would commend to you all if you haven’t read it already. In terms of the format for our panel, we’re going to have each speaker present introductory remarks of probably about 10 minutes. We’ll then have a Q and A session which I will moderate with some questions. And then we’re going to save some time at the end for questions from the audience, so we’d encourage you to fill out cards or, if a question strikes you at the end of the session, please just raise your hand and we’ll recognize you. Finally, one last housekeeping matter to take care of. While the remarks today and I guess all of the conference, frankly, is on the record, the speakers today are appearing in their individual capacities. Their remarks do not reflect the views of their agencies or of their firm or their clients. So, with that, why don’t I introduce our first speaker. Vice Chairman Pinkert has served as a commissioner of the ITC for more than seven years. I don’t know if it seems that long to you. It doesn’t seem that long to me. Following his nomination by President Bush and confirmation by the United States Senate on February 1st, 2007, he was designated vice chairman by President Obama earlier this year for a term from June 17th, 2014, to June 16th, 2016. Dean had a wealth of experience in the international trade arena before becoming a member of the Commission. He had two tours in the office of Chief Counsel for Import Administration, most recently serving as a senior attorney with responsibilities for liaising with U.S. Customs and Border Protection, counseling the foreign trade zone program, advising the U.S. Trade Representative’s Office in various trade negotiations, including the conclusion of the softwood lumber agreement in 2006, as well as serving as litigation counsel on antidumping and countervailing duty matters in U.S. and international tribunals. Dean also served as trade and judiciary counsel to Senator Robert Byrd in 2001, and worked in the trade and litigation group of a major U.S. law firm. He’s a graduate of Oberlin College with high honors, got his J.D. degree from the University of Texas Law School with honors, and also holds a Master of Laws with Merit from the London School of Economics. With that, let me give you Dean Pinkert. Thank you. (Applause) MR. PINKERT: Thank you, John. And I thank the Court of International Trade for organizing this conference. John already gave the standard disclaimer, but since there are a number of people from the Commission here, including former commissioners, I want to add to that disclaimer that I speak only as one commissioner out of six, and I can only give you my personal perspective. I can’t give you the perspective of the other commissioners or of the Commission as a whole.

*269 The subject matter today involves Title VII, the antidumping countervailing duty injury determinations that we at the Commission make. Of course, you know that we have lots of other activities at the ITC. We do Section 337 intellectual property cases. We handle lots of reports that Congress and the U.S. Trade Representative may have requested. But this area of Title VII has its own distinctive issues regarding information requests and the need to fill in the gaps in the record, whether those gaps are created inadvertently or because of the actions or inactions of a party. And, as you all know, the way that gaps are filled in, in technical statutory terms, is by the use of facts otherwise available, also known as “facts available.” And, as I said, there are lots of reasons why there may be a need to resort to facts otherwise available. It’s not necessarily the actions or inactions of an interested party. It could be anybody that has made it difficult or impossible for the Commission to get the information that it needs. Typically, when resorting to facts otherwise available, the Commission will attempt to figure out what the best picture, what the best public information or best inference that can be drawn from the information that’s on the record might be, and we don’t typically resort to adverse inferences. Adverse inferences, under the statute, can be resorted to when an interested party has failed to supply information and has not cooperated to the best of its ability in supplying the information. Adverse inferences are not typically resorted to by the Commission, I think in large part because we are not allowed to penalize a cooperating party for the actions of a non-cooperating party. And when we do injury determinations in Title VII cases, we are making determinations on a countrywide basis. The Commerce Department, which is charged with making determinations regarding dumping and subsidies, frequently makes company-specific determinations, but our injury determinations are not company-specific. And so typically, if we resorted to adverse inferences, we would be responding to the actions of a non-cooperating interested party, and other parties may be harmed by that. They may regard it as not in their interest for us to do so. So the difficulty is what do you do if you’re in that situation where you’ve had a party not supply information, not acted to the best of its ability, but if you— if, as a Commission, you apply an adverse inference, what does that do to other parties that have cooperated. Another factor that is important, I think, is that we’re required to work with parties who have difficulty in supplying information that we’ve requested. And there is frequently, I think, a back and forth between Commission staff and parties that are having difficulty. The Commission may pare down its request for information, get down to the absolutely essential elements, if there’s a difficulty in supplying that information. Also, you’ve probably heard about sunset reviews. At the outset of sunset reviews, which are the five-year reviews to determine whether to continue an order, the Commission has to make a determination about whether to expedite. And a lot of the focus on whether to expedite or, in the alternative, go to a full review, is on the participation of the parties from the two sides, the responding parties and the domestic parties. And if there is an inadequate participation by responding parties, the Commission has the option of still going to full review, still conducting a hearing, or

*270 expediting. But the decision to expedite means that we’re deciding whether we are going to make that final decision in the sunset review based solely on the information that was supplied at the outset. And by regulation, if we decide to expedite, then we are using facts available. If you’re relying on facts available and you don’t have a full picture, can you supply an inference that’s reasonable? Can you rely on public information that enables you to answer the questions that are in front of the Commission? And, with that, I would just urge everybody to participate fully at the Commission in all of these cases and help us to avoid having to resort to facts available, with or without adverse inferences. Thank you. MR. HERRMANN: Thank you, Vice Chairman Pinkert. Our next speaker is Chris Marsh, the Deputy Assistant Secretary for AD/CVD operations since December of 2010. In that position, Chris is responsible for leading Enforcement and Compliance’s efforts to administer the U.S. trade remedy laws. His office consists of seven offices with more than 100 staff; I think about 110, Chris? If I’ve got that right. He was previously the Director of the Office of Accounting within Import Administration. He’s been a partner at International Trade Resources, LLC, which is a consultancy specializing in litigation support for trade remedy proceedings. In that capacity he worked on behalf of U.S. and foreign companies in proceedings before Import Administration, the European Commission, the Ministry of Commerce in China, as well as WTO dispute settlement proceedings. Chris’s prior experience also involves serving as a senior manager in Grant Thornton’s consulting practice, as well as a manager for tax and audit — in the tax and audit practices at Price Waterhouse Coopers. Despite his modesty, Chris holds a B.A. in economics from Harvard University. He is a certified public accountant and a member of the American Institute of Certified Public Accountants. Chris. MR. MARSH: Thanks, John. Good morning. I would first like to thank the judges and Clerk of the Court for their hospitality today. A special thanks to my friend Tina, who is always so very warm and welcoming at this event. And if I seem a little nervous — I always joke about this because an accountant in a room full of lawyers, it can’t have a good outcome for me. But I will nonetheless try to do my best here. When John Mclnemey first strong-armed me into this process he told me it was a great opportunity for me. And I have appeared on panels before— you may not think so when this is over — but I thought on this one particular panel, because of the audience, I would take this opportunity, as John called it, to do a little research on something that has always interested me and always something that I wanted to do, and I thought I would share that with you. What I did was I looked back at AD/CVD proceedings going back to the 1970s. Indeed, the first one I looked at was a 1968 case. And I kind of marched through the decades. I’ve been looking at samples of cases, just to see how Commerce’s trade practice has changed. And many of you — or some of you here, not many of you, kind of are familiar with some of those cases in the past. Admittedly, my sampling technique wasn’t as precise as

*271 our respondent sampling technique at Commerce, but it was close. I looked at probably over 100 — well, I know I looked at well over 100 cases, sort of throughout the decades, so let me start by sharing some of my fun facts with you. I’ll start with final determinations. Although I looked at reviews and investigations, I’ll just give you some of the highlights. A comparison of final determinations drafted by Commerce in AD/CVD cases. So, in the 1970s the final determinations in AD/CVD cases averaged about one or two pages in the Federal Register notice. So, by 1980 the average final determination had grown to about six pages for an AD case and 19 for a CVD case. In the 1990s the final determination averaged 18 pages for AD and 42 pages for CVD. Today, the average final determination and investigation for an AD case is 109 pages, and for a CVD case it’s 88. So, moving on to the questionnaire, looking at questionnaires in the 1970s. I got — me personally having done this for a while, I got a kick out of this. In the 1970s, AD and CVD questions averaged about six pages. The first one I saw was a page. So in the 1980s, the AD questionnaire leapt to 47 pages, and the CVD questionnaire was 34 pages, in the ’80s. And by the ’90s, the CVD and AD — the AD questionnaire was 75 pages long and the CVD questionnaire was 68 pages long. Today the AD questionnaire averages about 183 pages. And the CVD questionnaire is 111 pages long. So let me throw in a couple more fun facts that weren’t part of my research, but I thought they were interesting. On average, each month during fiscal year 2014 that just ended in September, Commerce received nearly 190,000 pages of AD/CVD case filings through its electronic filing system. So add it all up for the 12 months, that’s over two and a quarter million pages for the 12 months. Now, all that falls on a group of 115 Commerce analysts. To John’s point, the 110 figure he mentioned, that’s just the analysts, not their managers. That’s just the people on the ground doing the work. Now we have five new ones, so we have 115. But that’s about two-thirds of the staff we had a decade ago. So it’s gotten — so what’s this all say? And I posed that question to some of my friends at Commerce, some of my colleagues, and some of my colleagues that I still remember, friends from the trade bar. And I got some of most heated reactions of finger pointing, of who’s responsible for this and who’s responsible for that. I got more than a few jokes about like putting their kids through college and that kind of thing, right? But most folks kind of lamented about process, how the process has gotten too complicated. Way too complicated. It’s hard for petitioners to petition and respondents to respond. So then I asked, I said, “Well, who’s responsible or what’s responsible for making this so complicated?” And there I asked my trade group again, and a lot of folks offered up a number of different ideas. A lot of folks pointed to the Uruguay Agreements — or the Agreements Act. They said the URAA has made things more complicated, and I — more than one person mentioned that, but I will note the fact that the questionnaire and our final determinations were growing pretty rapidly even before the URAA. So I think it’s probably more than one thing. But then, turning to the who, who made the process so complicated? I will say, before I get into that, I think John talked a little bit about my

*272 background, but let me just say that I’ve been working in AD/CVD for almost 30 years now. And when I left Price Waterhouse I went to the Commerce Department — I’m on my fourth tour now at the Commerce Department. I’ve been a case analyst, an accountant, a program manager, an office director, and now DAS. So — and in between each one of those I spent a lot of time working for respondents, mostly for foreign respondents but a number of petitioners as well. So I’ve written the questionnaire, I’ve answered the questionnaire, and I’ve tried to decipher answers to the questionnaire. So I have some background in this. And I point this out only because I think maybe that entitles me to an opinion as to the who. And so, if I have to pick the who I would say it’s all of us. It’s Commerce, it’s the respondents bar, it’s the petitioners bar, and it’s the courts. And for me it’s just — in very broad terms, to me it seems like at Commerce we’re constantly looking for a rule, like a one-size-fits-all rule. And on the one hand I can say that makes for transparency and it makes for consistency in an application of what we do in our practice. But on the other hand, if I had to be honest, there’s an element, though — let’s face it. There’s an element that just says it’s easy. It’s easy to apply a rule. You don’t have to think. Right? Sometimes you don’t have to analyze the facts; you just put the rule into place. And that’s when it doesn’t work. So, as for the trade bar’s part in this, I think to myself, what do good lawyers do when their clients face an issue, when they have an issue and the rule doesn’t work for them? Well, they argue why their client’s an exception to the rule; right? And so it’s the nature of what you do, and which one of you out there wouldn’t make the best argument they could for their client simply because the Commerce Department says you shouldn’t, right? It doesn’t stop you. So sometimes we agree with your arguments, which more than — more often than not we sort of create the exception to the rule of the basic rule, right? And oftentimes what that leads to is more discussion in our final determinations and more questions in our questionnaires so that we can discern whether you’re the exception to the rule or you are the basic rule. So we try to ferret that out early in the case. But whether we agree with your application of the rule or our rule or not, we generally — well, we oftentimes end up in litigation. And there it seems to me that the courts want to understand from Commerce like, what’s the rule and how does it fit into the framework of the law? What seems to happen in cases with a court, the court will tell us something about — well, generally, the courts will say, “We understand the rule. We understand it fits in the law. But the results aren’t reasonable.” And so they say, “Commerce, go back and rethink whether there’s an exception to the rule for these set of facts.” And here again it leads to more discussion in our issues in decision memos and more questions in our questionnaire. And in some cases we don’t necessarily agree with the court, which also leads to confusion as to what’s the rule. I remember when I worked in the private sector I was often answering the questionnaire with maybe two or three different data sets, saying, “If the rule is this, you have this set of

*273 sales. If you think the rule is that, you have this set of sales.” So it creates more work for respondents and more work for petitioners. So, is there a way to make the AD/CVD law less complicated? Can we dial it back a couple of decades? And maybe the first question I would ask you guys is, is that what we really want? Because, I mean, shouldn’t, where we have this complicated process and more involved, shouldn’t it yield more accurate measurements of AD and CVD duties where they exist? Maybe. Maybe not. Because at Commerce I sometimes feel like these days we spend a lot of time with process and less time actually trying to determine whether or not there are — whether dumping is occurring or whether there’s subsidies, and if so how much. Well, one thing is certain to me. Whether you’re on the petitioner or the respondent side, participation in an AD or CVD case has gotten extremely expensive for your clients. So are there ways that we can simplify the trade remedy process? And to me, I think that’s difficult because it would take Commerce, respondent’s counsel, petitioner’s counsel, and the courts all working together to build a better mousetrap. Yet we all — at some level, we all bring different visions to the table of what the AD/CVD practice should look like, in which case we end up with our current Rube Goldberg mousetrap that we have. Somewhat complicated. So, from Commerce’s viewpoint I’d like to say there are certain things we could probably do better. What we could do better depends on who you talk to, but from my point of view, with my practice, I think that we would do parties a better service if we actually, when we ask for information in the questionnaire and we first got the questionnaire response, if we sat down with petitioners and respondents to try to have a better understanding. What we usually do at Commerce is you send in a questionnaire and we try to write — if we don’t understand something we write another question and send you supplemental questionnaires with lots of questions. And if you come back again and haven’t quite answered, we send another supplemental questionnaire. And in complicated cases when I was working for respondents, I would sometimes get eight or nine supplemental questionnaires. Now, the secret is most respondent’s counsel, good ones, know that if you have an issue it may or may not be an issue, but if it’s something that’s kind of sticky, you just want to avoid it, you keep answering the question you want to answer, right? You can always dodge these interrogatories, right? Because the idea is get them to verification. If you can get Commerce to verification, then you can sit down with them and explain your concept and what’s wrong and what’s right, without petitioner looking over your shoulder and seeing everything that you do. On the petitioner’s side, though, sometimes they’re looking for the little anomaly in the data that they can exploit and say that’s an issue, whether it is or not. But what I think would be in everyone’s interest if we sat down and went through the questionnaire first and were able to direct our questions, talk to counsel and say, “These are the things that interest us. These are the things we want to know, and we will send you a questionnaire, we’ll send you questions like this and please answer them.” Rather than take a shot that maybe they’ll answer our questions or not. What that will entail, though, is counsel will need to know a little bit more

*274 about what’s in their response, which for some people might be a bit of a heavy lift these days because we oftentimes get responses to questionnaires, certified or not, that if you ask counsel what’s in this they would have no idea. So the other thing I think that we do, that we could improve on at Commerce, is we have a policy office. Most people don’t know, but our process of determination — I run the operations. There’s a policy office and then there’s a general counsel’s office. And when we disagree on something we write a briefing paper to the assistant secretary. We all express our views. And the assistant secretary sits down with us and goes through the process. I tend to listen carefully to my counsel because when they say something is not defensible, that’s a problem. Oftentimes they’ll say, “It’s defensible,” right? And so I’ll take that as, “Okay, let’s go.” But we have a policy office that is extremely busy these days. And they spread themselves very thin. And the problem with that is when they try to man each case that we have they oftentimes spend their time thinking about what have we done in the past; how can we be consistent with what we’ve done in the past. Or here we get back into that rule again and applying a rule that may not fit the situation. And what I think we might do better at is having a policy that looks forward. If the court’s trying to tell us something, maybe we should be thinking about how we change our policy and how we look forward rather than backwards every time. So, but beyond that, unless the stakeholders are willing to sort of meet somewhere in the middle ground I think the AD/CVD law just will continue to get more complex, or at least the practice. MR. HERRMANN: Thank you, Chris. Our final speaker this morning is Frances Hadfield. She’s an associate attorney in the New York office of Grunfeld, Desiderio, Lebowitz, Silverman, and Klestadt, where her practice focuses on Customs litigation, intellectual property, and regulatory matters pertaining to the importation and exportation of goods. She has lectured widely on Customs litigation and import procedures, including at the World Trade Institute at Pace University. She is a licensed Customs broker, is active in the leadership of the Customs and International Trade Bar Association, and also is a former law clerk of Judge Evan Wallach during his time as a judge on the Court of International Trade. She’s a graduate of the University of Wisconsin-Milwaukee, and earned her J.D. degree from the John Marshall School of Law cum laude. Frances. MS. HADFIELD: Good morning. I feel like, “And now for something completely different,” after our morning of AD/CVD. So some of the comments that Dean and Chris have made this morning regarding responding to the agency carry over to the administrative side of practice with Customs. And there are currently, as we all know, some growing pains going on with the agency as Customs is developing these centers for excellence and, is it expertise? I always get this a little bit backwards. It doesn’t seem like a week goes by that some attorney in my office isn’t complaining about a bollix with these new centers. So, in making

*275 my comments this morning I’m going to highlight a few of what we see as growing pains in responding to the agency. According to the CBP, the agency hopes that these virtual centers will be able to focus on industry-specific issues and provide tailored support. Well, one of the comments last week was, “Why was this NIS — ” and I’m going to make this up, to protect the innocent — “changed from ball bearings over to rubber gloves? He spent 20 years in ball bearings. He doesn’t know anything about rubber gloves.” So, as far as providing tailored support— they’re working on it. I don’t think that Customs has necessarily developed the expertise that we were hoping these centers for excellence would have, and we’re seeing this in the form of the factual requests that we’re getting. The forms of factual requests from the agency haven’t changed. We’re still seeing requests for information. We’re still seeing notices of action. We get the occasional summons or third-party summons for a Customs broker. But the scope of the requests had changed, as you have new people in the agency and they’re not necessarily certain what they’re asking for. And to Dean’s point about, you know, when parties are trying to provide the best response it becomes a little bit problematic when the agency is asking for information that’s not in the possession of the importer. And that typically happens in areas like FTA compliance. The collection and presentation of information of the agency is exceptionally arduous. So you get a CF28 and they want to have all this information. You’re like, “Hey. I gotta go out and get the A1A information from someone else. I don’t have it in my immediate possession.” And it takes time for the importer to collect this information, not going to usually happen in 30 days, and then you have to have someone put it together. It has to be translated, in some cases, analyzed by the attorneys; and this is also very costly. In the area of FTA compliance, you know, without naming names, I can say that we recently had two clients that decided it was better to manufacture in China than to keep on getting CF28s on every entry. And this was a client that was C-TPAT certified in the third tier. So you have clients who are saying, you know, “Nuts to this. It’s costing me too much and it involves too many attorney hours in providing this information and putting it together.” And if the request for information isn’t, you know, responded to in a appropriate fashion, well, much like the adverse facts available, suddenly you had a notice of action from the agency which is doing a rate advance. And that’s nothing that a client wants. One of the questions we’re getting from clients is, “Why is Customs asking me this question on every entry? Why did I bother with C-TPAT certification if I’m going to have all these requests?” And I think this is part of the growing pains of the agencies and these CEEs, along with the question, “Didn’t we just do this?” And while this is, you know, wonderful to Chris’s point about, you know, this will put my kid through college, you know, is that necessarily the goal of having this many responses and this much attorney involvement as the agency grows? And we have kind of this prior disclosure conundrum. A Form 28 or 29 may be routine or it may indicate, you know, a significant problem for the importer, and we’re having a little bit of a difficult time deciphering at this

*276 point — is there a problem or do we have someone who’s new and just doesn’t know what questions to ask? So are we getting all these 28s because, you know, we need to dig deeper or is it just a new program? So growing pains with the agency. Tina mentioned to me that our CLE panel this morning is going to qualify for ethics credits, so let me flip over to the ethics discussion real quick. Administrative agencies are part of what the New York Rules of Professional Conduct consider a tribunal. And the rules regarding tribunals — I did a quick survey across the states because we are a court of national jurisdiction — and they are pretty much the same across the country. So a tribunal denotes a court, an arbitrator in an arbitration proceeding, a legislative body, administrative agency or other body acting in an adjudicative capacity. So obviously, in the same way that you owe a duty of candor to the tribunal as far as the court, you owe a duty of candor to the administrative agency as well. CBP, Commerce, what-have-you. I want to make a few points where there’s been some recent case law, as kind of an update, regarding first confidentiality of information. That a lawyer shall not knowingly reveal confidential information. And an attorney has an attorney-client privilege. What’s happened in a few cases, specifically in New York, is in-house counsel thought they were getting savvy and they would say, “Okay, well, I’ll just cc the attorney on every communication, and that way I’ll be covered by privilege.” But we’ve seen two district courts recently say, “Not so fast. You can’t copy 30 people, you know, on an Email, blind copy, you know, the in-house counsel, and suddenly say, T have attorney-client privilege.’ ” Two cases that highlight this, one in Pennsylvania and one in Louisiana, is the Vioxx cases and the SmithKline Beecham cases. And I’d also mention this as far as government counsel. Sometimes the government wants to have widespread dissemination of information and then, you know, cc the DOJ on it. Well, counsel should be mindful about this emerging trend and start educating their clients about only dispensing legal advice to those who actually need it. Communication with the government when you’re in the middle of litigation. The ABA has been a little bit less than clear on this matter. They’ve gone back and forth actually, as far as their ethics opinions. So I will say that the most current ABA opinion on communicating with the agency when you’re in litigation is Formal Opinion 97-408, and the committee opined that there were two conditions on allowing direct contact: requiring the communication be only about a policy issue, which may include settlement of a dispute; and two, requiring notice to the government lawyer before the communication takes place. And the ABA concluded if these two conditions were not met, that you had a violation of the model rules of professional conduct. NOTE: END OF 8:30AM SESSION AND BEGINNING OF 9:45AM SESSION NOT RECORDED

*277 REPRESENTATION IN CUSTOMS PENALTY ACTIONS AFTER TREK LEATHER: FIFTY SHADES OF GRAY IN CONFLICTS OF INTEREST MR. JUNKER: A company receives a penalty notice from Customs under Section 1592 or 19 U.S.C. 1592, and the president of the company comes in. They’ve been manufacturing and importing widgets for ten years, and they get a penalty notice from Customs, and the penalty notice claims that they have incorrectly valued items for the last five years under the statute of limitations. So he’s wondering how to deal with this penalty matter. You’re visited by the president of the company. President of the company has run the operation for some time, but he’s looking at retirement or she’s looking at retirement, and is just kind of handling these — troubleshooting these kind of problems. They’re importing widgets, and they’ve gotten notice to their company, XYZ Company, for a penalty under 1592. The president of the company runs the operation, deals with problems, is titularly responsible under the import manual for Customs compliance. He or she has a younger brother and sister who are really the hands-on operations people. They have the relationships overseas, they’re running the sales, they’re running the manufacturing, they’re running the import side, they’re running the sales side. And then they also, as is common these days, have an import compliance person who is responsible and tasked with compliance on importing under U.S. Customs laws. And that person, of course, is assisted by one’s Customs’ broker who has responsibility both to the government, as an officer of the government, ironically, and also of course to one’s client, from whom he or she is trying to make an honest living. The question is, in our scenario, when the company receives the penalty notice which occasions the president visiting with you, who is your client? Well, the penalty notice is issued to the company, the importer of record typically, for a penalty under 1592, but there are also, of course, officers and directors and shareholders who are very often the management of the company. You have employees such as your import manager or your compliance manager. And then you have, of course, agents such as your Customs house broker, who work for you. You receive the penalty notice. Let’s say in this case there was $200,000 in penalties — duties with interest due. You get the penalty notice. Say it’s a culpability level of gross negligence, so your penalty is starting off at four times the amount of the underpaid duty. So the company conveniently shuts down, since the president is retiring, although there is a residual liability under the bond, and then the government sues to collect the outstanding duty and penalties and names not only the company, the importer of record and the party involved in the penalty proceeding, but also the brothers and the sisters and the Customs compliance person and the broker. It’s conceivable that all those people could be named in an action to collect under 1582.

*278 Who is your client at this point? To whom do you owe ethical obligations to defend or advise that you have a conflict, and advise them that they should get other counsel. Do they each have a potential liability? Are their interests adverse so that you cannot represent them even with a waiver of a conflict? Can those conflicts be waived? And indeed, when do you find out that you have conflicts of interest in these situations? These are all questions that are not necessarily clean in the middle of the haste of battle when your client is facing a million dollar penalty notice and the like. So it can be slippery business for counsel who’s just trying to solve the initial problem placed on his or her desk by the representative of the company. I don’t want to be too pedantic here, but I know some of you are more into countervailing antidumping duties than you are Customs matters, so in the interest of just kind of putting us all on the level playing field, 1592 provides that no person, by fraud, gross negligence or negligence, may enter, introduce, or attempt to enter or introduce any merchandise by means of a document, electronically or transmitted data, a written or oral statement, or an act which is material and false, or any omission which is material. And it’s also a violation of 1592 to aid and abet those actions that are culpable. The recovery of duties is possible, as well as penalties, under the 1592 statute, with interest of course. And that falls within the jurisdiction of the court under 28 U.S.C. 1582. Under 1582, for that enforcement action to collect duties and penalties, it is the trial court de novo. So the court is not bound by the agency’s record. And indeed, you can join parties — which is the crux of our problem — you can join parties that were not necessarily named parties in the underlying penalty action. I’m going to focus on two quick lines of cases here to kind of set the stage for our issues before I turn it over to Professor Godsoe. One has been around a long time, and that’s the Priority Products case that was in 1986 or ’85, I believe. And in that case you had two owners that were 50/50 in the company, and one of the partners’ wives was actively involved in the case. The government went after the company, Priority Products, as well as the individual owners. The one owner bailed in the penalty proceeding, and the remaining owner and his wife, Mr. Huss, were left to deal with the penalty matter. They provided information and then, of course, the matter went to collection. And the issue is whether there was actual or constructive notice to the parties for purposes of jurisdiction. The court noted that not only was the company liable, but the individuals were liable as well as the wife of the owner. The court found that the owner had constructive notice and there was personal jurisdiction. But they’ve brought in the wife as well. As the court said: “It is also significant that she had access to the corporation’s attorney whom she could have consulted or perhaps did consult regarding the possibility of whether she might be called upon to pay some or all of the mitigated penalty. Under these limited facts and in view of her admission that she was largely responsible for attempting to import the imported merchandise, we believe that Mrs. Huss at the very least had constructive notice of her potential liability such that she should have consulted with Priority’s lawyer on whether to pay the mitigated penalty

*279 or risk the imposition of greater penalties at the trial court level. She was therefore afforded all due process to which she was due.” Then there was a subsequent case in 2000, which was the Nussbaum case before Judge Watson at the Court of International Trade. In that case the individual was the president and sole shareholder of the company, called Discount. The original penalty notice said that Discount and its principals filed false statements with Customs under 1592. The penalty notice did not name Mr. Nussbaum, President personally or as a principal. And in fact when Customs sought to enforce the matter they obtained a statute of limitations waiver from the corporation only, and did not seek one against— or did not obtain a statute of limitations waiver from the individual. The court held that — this is Judge Watson: “Although Priority Products was expressly decided by the federal circuit on its limited facts, and personal liability expressly occurs only in certain circumstances, it would appear that being a sole officer, director, shareholder of a small corporation represented by legal counsel and personal participation in the importation are significant concomitants of constructive notice of the potential personal liability for the penalties.” So now we have actions against the individual’s under these limited facts, and the question becomes to what extent are they personally liable as well as the importer of record. The more recent case now that has just come down from the court of appeals to the federal circuit is the Trek Leather case, in which Mr. Shadadpuri — I’ll call him “Mr. S” if you don’t mind — was not included in the underlying penalty action but was included as a party in the collection action before the court. In that case, the government granted motion for summary judgment as against both the company and Mr. S. The Federal Circuit in its decision found that liability was limited to the importer of record in the absence of fraud. And so the government sought to have a hearing en banc, and it was granted. The decision below was vacated and then the complete court vacated, reversed the finding that only the importer of record had duties to make entry, and found that the individual was also personally liable. They sort of cut the Gordian knot in their decision. The court said, first of all, that the issues that were not being reviewed were the aiding and abetting issue. I just want to point that out because I’ll return to that. But the two questions that were presented were whether Mr. S was a person within 1592, the penalty statute, or is it just the importer of record, and whether the action was within the entered and introduced or attempted to enter and introduce provisions. • The court took a very expansive view of who is actionable, if you will, under the statute. The “person” — who is a “person?” Is it just limited to the importer of record or can it be someone else? And the court expansively ruled that a “person” — the issue is straightforward in 1592. “Any person” in the statute is addressed this way: “There is simply no basis for giving and artificially limiting the meaning to this most encompassing of terms which plainly covers human beings.” With respect to entering and introducing merchandise, they did not address the statutory limitations on what persons are authorized to enter

*280 merchandise under the statute 1484. They relied on the — rather than the “entry” provision of the statute, to “introduction” of merchandise. And they held that: “The statute is broad enough to reach acts beyond the act of filing with Customs officials papers that enter goods into the United States Commerce. 'Introduce’ is a flexible and broad term added to ensure that the statute was not restricted to the technical process of entering goods. It is broad enough to cover, among other things, actions completed before any formal entry filings made to effectuate release of the imported goods. The term covers actions that bring goods to the threshold of the process of entry by moving goods into CBP custody and entering the United States and prior to critical — and producing critical documents for use in the filing of papers for a contemplated release into the United States Commerce even if no release ever occurs.” So, under the Restatement of Torts they found out that anybody who provides any activity, there is no argument that the person who personally commits a wrongful act is not relieved of liability because of the person acting for another. Note that this is the compliance liability for brokers as well. “This ruling does not weaken the requirements of aiding and abetting liability for those who do not violate subparagraph (a).” So aiding and abetting is clearly included. So I’m going to turn it over here quickly, but the point is, that when you’re representing an individual — or you’re representing companies now, the individuals with whom you’ll be working, not just the company officer, but you may be dealing with operational people, you may be dealing with the compliance personnel, and indeed you’ll be dealing with the Customs broker, these people are now potential parties to the action to collect. So this is a whole new era of Customs enforcement, potentially. And I point out that with respect to our client representation where this would probably have the greatest impact is within medium and smaller size companies. The larger companies now very often have their act together with compliance personnel. It’s the smaller companies who don’t quite fully understand the implications of what they’re doing and whose individual owners may have liability. What that means for us attorneys, of course, is that if a party in a company, an import compliance person or the like, all of a sudden finds out that they have personal liability and are named in a collection action under 1582 and they find this out for the first time when they receive a notice, they may not be too happy that they weren’t advised of this before. And so the possibility exists that a company or an individual who is facing that kind of liability may claim that counsel did not and should have advised them of that liability and the right to have their own counsel or the advisability of having their own counsel as they got into the matter. So all of a sudden that puts us in the uncomfortable position of maybe potentially facing E & 0 claims and dealing with our errors and omissions for indemnification. So it’s a wild and wooly area out there that we are looking at potentially, in having individuals sued for duties and penalties as well.

*281 So I’m going to turn it over to good professor here. She’s going to be giving us some of the black letter on exposure here that we should be sensitive to as we’re advising our clients. Professor. PROFESSOR GODSOE: Sure. Thank you, Joel. As Joel mentioned, I’m from Brooklyn Law School, Brooklyn being home to the not world champion Brooklyn Nets, but we still love them. But also many distinguished alumni, lawyers, and judges, some of whom are here today. So I wanted to give some of the black letter on conflicts law, most of which, you know, should be a review to people but it still is definitely more pertinent now for people representing small to medium size companies, given Trek Leather. There is always the risk there, but the risk is greater now that individual employees could be held personally liable. So basically the issue is not unique to this bar, right? It comes up for anyone representing entities basically, and so the basic rule, as Joel mentioned, the most important thing is to be clear at the beginning of who the client is. At Rule 1.13, this is — I’m going to talk about the Model Rules of Professional Conduct, but they’re basically every state except, to some degree California, which is always an outlier, but every state follows them really pretty closely. So basically the — the basic rule is that a lawyer represents the entity. So that’s the entity itself, whether or not it’s closely held or publicly traded. A lawyer may also represent employees or constituents, officers or directors of the entity, but does not necessarily. So it’s always a risk to represent individual employees as well. Now, what happens a lot is that people do represent both. That’s common practice I’m sure in this area of law but certainly also in other areas. And what has to happen for that joint representation to occur is a client waiver. So first of all, there can’t be joint representation if there’s a significant risk that the representation will be materially limited because of a conflict. So if there is a conflict, like there’s already a penalty notice, that might be a situation where you couldn’t represent both the entity and its employees. But if the conflict is just potential in the future, it hasn’t come, there’s nothing significant there right now, then you have to get a waiver from all the clients that you’d be jointly representing, and it has to be in writing. And you can’t do blanket waivers. Courts have consistently found blanket waivers are not sufficient. So a client can’t waive, you know, any future conflict that will come up. No. It has to be very specific and you have to specify what would happen if the conflict does arise. So if a conflict arises, is the lawyer going to withdraw from representing both parties? Is the lawyer going to continue representing one party? And even though you might agree to that, that sometimes things fall apart, right? Sometimes courts have said you can’t continue to represent one. So there are always these risks to joint representation. But you put as much in the waiver as you can, and then it could potentially survive review if that does come up. So once you have these waivers, then what happens? What happens if you decide not to represent the employees of the entity, that it’s too risky and you want to be able to continue representing the entity and don’t want

*282 the risk that you’re going to have to withdraw. Well, then you have to give what are called Upjohn warnings to the employees or other constituents of the entity. So the minute that you basically start representing this company, whether it’s a mom and pop company like I said or a large company, if you’re not going to represent them, you have to tell all the employees that you do not represent them. And going back to something Joel said, if you think there is enough of a risk that they’re going to need representation at that time, tell them that they might want individual representation. Or that if a penalty notice comes or something, that they might want individual representation. But if you don’t give those warnings at the beginning, then it’s very likely that you could be held to be representing both parties, which, as I mentioned, can lead to significant problems down the road if there is a conflict and you have to withdraw from all of them. The other way that a client representation can be imputed is through your conduct. So Joel was discussing the case where the partner’s wife, it was seen that perhaps she had consulted with the attorneys. So if attorneys aren’t really clear about treating clients and non-clients differently, and that would include the entity and its individual constituents, if you give legal advice to employees or if you don’t give them these warnings that you don’t represent them, then even if there's no retainer or anything or no letter of engagement, it’s very likely that you could be imputed to be representing them. So it’s not just that you can decide down the road who you’re representing. It’s really something that has to happen up front before any conflict arises. Or else, as I said, the relationship could be imputed, and then there’s real significant problems for maintaining representation of any of the parties down the road. Okay. So what do these warnings look like? And let me just clarify that the title of this panel talks about gray and, unfortunately, that is the reality of conflicts, so even sometimes where attorneys have given these Upjohn warnings to entity employees but then have acted in a way that sort of implied that they were their attorneys, then they’ve not been found to be enough. So again, you have to give these warnings and then you have to consistently act in a way that shows that you are not individually representing them. The warnings include saying that you represent the entity, that if there’s, you know, anything that they do or say that harms the entity that first of all it’s not privileged or confidential, and that you would use that, you know, to protect the entity. And again, as I mentioned, that they might want to seek individual counsel. And these warnings have to be given at the beginning of the relationship and again, you know, if a conflict arises. You want to be clear that your conversations with non-clients are not privileged or confidential, and you know, who you are representing. So, finally, a couple of practice tips that come out of some other areas, because as I mentioned this is true in a lot of areas where people represent small businesses or multiple parties. First of all, at the beginning, be very clear who you represent in either a retainer engagement letter, and, if you’re jointly representing, have the waivers in writing about specific potential conflicts in the future.

*283 Interview clients separately if you are going to represent them jointly or you’re thinking about it. Then interview each employee or constituent of the entity separately so that you can find out if it’s even possible to jointly represent them. Right? So you might find information from one that leads you to believe, “I can’t represent them jointly because there’s already sort of a potential conflict here.” And also, if you do represent jointly, so for instance the entity and various employees, they have them waive as well confidentiality and privilege between each other, right? So you can’t be representing the entity and an employee and have them have confidential information from each other. That would put you in a problematic position of not being able to inform your clients, and so then you would have to withdraw. So you want them to waive confidentiality when they’re being jointly represented. And finally, determine at the outset what would happen if the joint representation ends. So if there is a conflict that arises, you want to put in writing at the beginning who you’re going to continue to represent, if you do want to continue to represent, or oftentimes jointly represented clients don’t want to agree to that. They want you to withdraw from both, and sometimes, as I mentioned, courts will require that. So, again, that’s a risk of joint representation, but you could try to, you know, if you can get clients to agree, “Oh, if a conflict arises I’m going to continue to represent party X.” You should put that in writing and that will at least, have a chance of standing up. But you want to determine that at the beginning, again, rather than waiting until the penalty notice comes and sort of the crisis is happening. These are all things that need to happen at the beginning of the representation. Now I guess, Josh, you’re going to talk about the government interests and enforcement? MR. KURLAND: Sure. So, Josh Kurland from the Washington, D.C. office of the Department of Justice. And I can’t speak to Washington, D.C. sports teams. I’m a native New Yorker, so we have one sports team on Long Island, where I grew up, the New York Islanders, and they’re in first place— PROFESSOR GODSOE: They’re moving. MR. KURLAND: They’re in first place for the first time in 20 years, and moving to Brooklyn next year. And that’s about the bottom of the scale, from world champions, to my team’s leaving me for Atlantic Yards in Brooklyn. I should also say at the outset that as government attorneys always do, my views are solely my own and don’t express the views of — necessarily express the views of the Department of Justice or of the U.S. government in general. So, as government attorneys, we are rarely if ever in the type of position that Joel described, where we have concerns about who our client really is. We tend to know who the client is. Although, you know, I should note briefly that that’s not always the ease. It’s rare in our CBP practice or our Customs enforcement practice, but the government does run into these types of issues where you have more than one agency who are interested in

*284 a particular legal case, and then there are various bureaucratic processes that occur where we as the Department of Justice determine what the position of the government is, even though different agencies may have different views about the correct position. But that’s not really an issue that often arises in our Customs practice. What makes my presence here relevant is that the type of conflicts that Joel is talking about and the type of decision-making largely arise out of the type of decisions that we make, “we” the government make, in terms of how to pursue Customs enforcement proceedings, and particularly in seeking to initiate Customs enforcement proceedings against individuals or entities other than the official importer of record, which is really what the Trek Leather decision is all about. When can the government pursue a Section 1592 Customs enforcement proceeding against, canonically, an individual, but you could also have parent entities or related entities who are not the official importer STFT record, the person whose name is on the Customs form. And so my intention is to talk a little bit about our practice in this area, to give you all as much insight as I can into how we approach these cases and what types of decision-making goes on, on our end, to lead to how we pursue these types of individuals or entities. I’m going to kind of give some background. I’ll discuss a little bit about my own view of Trek Leather, and then go into a little bit of our process. The overriding concern that leads the government to initiate Customs enforcement proceedings against a party that is not the importer of record is generally a concern about allowing violators, and particularly serial violators of the Customs law, to escape liability. And in that regard I would say that we take our role as the folks who are charged with protecting public revenues fairly seriously. And in that vein, I know a lot of people in this audience, but all of us here, I think, or most of us here, are U.S. taxpayers. And it’s only a bit of an exaggeration to say that in cases where you have people who have shorted the government potentially hundreds of thousands of dollars in Customs duties that they were obligated to pay, for example, but didn’t pay, that the American taxpayer is left holding the bag. And so I think it would be fair to say that we and CBP both take seriously the notion that we are charged with protecting the public revenue by ensuring that people don’t escape liability, at the very least for the duties that are supposed to be owed on imported merchandise. And another concern that may arise is simply making sure that the remedies that the government provides, whether in antidumping proceedings or CVD proceedings, are real remedies and not illusory remedies. So, for example, if you have a case where a party is subject to antidumping or countervailing duty remedies and then, when it comes time to pay the duties that are owed, that company simply dissolves or goes out of business or otherwise disappears, you’re left with a situation where a party — well, I know that we have folks who are respondents’ counsel as well as petitioners’ counsel in the room, but at some level if a party has gone through the process and has earned legitimately an antidumping or countervailing duty remedy, our view tends to be that then that remedy should be enforced.

*285 And so when you have parties that are ultimately evading that remedy, that’s another motivator for ensuring that those who are responsible for either paying duties or general import duties or antidumping and countervailing duties, are not allowed to escape liability. This is complicated by a couple of trends that Joel referred to earlier. First of all, corporate importers tend to be closely held corporations or even sole proprietorships. In addition to that, we’ve seen a significant trend — • and there are recent cases coming out of the Court of International Trade that reflect this trend — of under-capitalized companies and corporations. So companies that are — if, at the end of the day, if they are hit with duties from the get-go they’re unable to pay those duties, and there’s been, I think, a fair amount of struggle as to how do you deal with those companies, both in the context of Customs enforcement proceedings and simply in the context of the bonding requirements and cash deposit requirements that go along with the general antidumping and countervailing duty practice. I’ve found in my practice, when you are in a Customs enforcement proceeding the frequent scenario is that you’re dealing with a company that is a dissolved corporation with maybe a principal who still exists. And that’s the type of scenario that we confront when we are determining whether it’s appropriate to seek to initiate proceedings. And it would be fair to say the same is true of CBP when we’re determining whether to seek proceedings against an individual versus a company. That’s the type of scenario we confront. So this is where Trek Leather comes in. And turning to that decision I think it’s fair to say that my sense is that my colleagues and I take a different view of the Trek Leather decision than some of the articles that I’ve seen written about it in the legal press. I’ve seen articles that have referred to it as a “groundbreaking decision or a new font of potential liability for individual importers.” And it would be fair to say that we just don’t view it that way. As far as I can tell, and I’m only speaking for myself, but my sense is that around the halls of the Department of Justice the view of Trek Leather is that the Court of Appeals for the Federal Circuit confirmed that Section 1592 means what we and CBP have always interpreted it to mean. Which is that the term “person” in 1592, which is an extremely broad term and is one that is subject to considerable jurisprudence, even recent Supreme Court decisions outside of the trade realm, is a very broad term, and that can include individuals and other entities. And the same with the term “introduce.” So a person who introduces goods into the United States by means of a false statement or a similarly misleading omission may be subject to liability. And indeed, one can look at our brief before the Federal Circuit in the en banc decision and see that we noted various decisions of the Court of International Trade that not only permitted the government historically to proceed on the type of joint and several liability theory that we did in Trek Leather, but took the time to say that this statute has long been interpreted or the government has often pursued cases in this way. So you don’t have to agree with the view of Trek Leather I just espoused to understand that if I’m saying that as far as we’re concerned it’s business

*286 as usual, it’s unlikely to expect a significant change in practice as a result of the Trek Leather decision. Because essentially from, at least my perspective, and I’m one of the attorneys who’s charged with enforcing these proceedings, it didn’t change much from what I was already doing. So let me turn to that practice to try to describe what that’s like. And although one certainly can’t guarantee that practice doesn’t change over time, what I’m seeking to describe has been our historical practice, and I have no indication that the practice is in the process of changing. One thing to note is that we are not typically involved in Customs enforcement proceedings at the CBP stage. Usually we get, towards the end of that process, a referral from CBP where CBP has had proceedings going on for a significant amount of time. We may get the referral right at the end of the process, when CBP is ready to sue. On occasion, we will get advance notice from CBP that something is coming, so that we can begin working on it. But, at least in my experience, we have not received notice of these types of proceedings years in advance when the penalty notices are first starting to issue and CBP is considering, for example, whether or not to include individuals in the penalty notices. The referrals come from the individual ports at CBP, which means it’s a fairly decentralized process. CBP has folks in Washington, D.C. and in New York, and actually in Indianapolis, who are coordinators, but a lot of the individual decision-making in a particular case will occur at the particular port, whether it’s the Port of Chicago or the Port of New Orleans or other ports around the country. And so it is somewhat dependent on the STFT actions and the idiosyncrasies of those individuals. Generally I would say that, if it’s coming to us, it’s because the Section 1592 process has broken down. It’s a robust administrative proceeding. And with lots of opportunities for mitigation, for parties to go back and forth with penalty notices with the agency, and in and of itself as we heard on the first panel, the agency itself is considered effectively a tribunal. So for us to get the case, generally either there has to be some kind of overriding legal issue that makes it impossible for the case to be resolved before CBP, or the 1592 process simply hasn’t worked, and so the case is referred to us essentially in a debt collection posture where we are in the position of having penalties, or frequently penalties and outstanding duties that weren’t paid that are owed and CBP hasn’t been able to resolve the issue, and it’s our job to go and collect this money from the party that isn’t paying it. And so in that context, in this kind of debt collection and protecting the public revenue posture, it’s important for me to note that there’s really very little incentive for the government to pursue proceedings against, for lack of a better term, middle management. Right? I mean, you have the importer of record, who’s responsible. And if the importer’s a large company the government is generally going to be able to pursue any type of collection action from the large company and there isn’t a lot of need for us to pursue middle managers or even individual executives unless they’ve engaged in some kind of particularly egregious behavior, in order for the government to collect the money that’s owed.

*287 Even in the case of smaller to mid-size companies, there still isn’t a tremendous amount of incentive to initiate proceedings against peripheral actors who may not really be in a position to satisfy the debt that we’re seeking to collect. In that regard, the main actors that the government would seek to enforce against are the importer itself and if it’s an individual or a corporate importer, and if we’re assuming it’s a corporate importer then the government may seek to collect against a principal who, if you have a company that’s dissolved, the principal potentially is the only source of funds from the company’s assets. But again, there isn’t a heck of a lot of incentive to go after these types of other parties. That said, there’s always an exception that is going to prove the rule, and you know, given Priority Products and cases like that, there may be egregious circumstances where, for example, a middle manager’s behavior is just so beyond the pale or someone is doing something repeatedly in some way, that we do believe that it’s necessary and important to include that individual. But in the main, as far as we’re concerned, Trek Leather has confirmed that the statute means what we’ve thought it meant for all these decades. Customs has not spent a lot of time going after peripheral people, going after importers and Customs brokers and other professionals who have a shared responsibility with the government to ensure the accuracy of Customs entries. Could they, in egregious circumstances? Yes. But to date neither CBP nor we have sought those types of proceedings, and there’s no indication that we are on the verge of a rash of doing so. MR. JUNKER: Great. Thank you, Josh. If you have questions, there are cards that can be filled out and circulated. You know, we can sit here in the cool of this beautiful room and talk about these refined issues. Out there in the hurly-burly of the real world, of course, it’s not nearly that neat and clean for purposes of analysis and handling. You know a very typical example is when you sit down with the vice presidents of operations, the Customs compliance person, talk to the broker, you advise them that they could have, at this point, personal exposure to penalties under this case, and then of course you should get waivers but the next day the compliance person comes in and says, “You know, I talked to my mother’s lawyer who wrote her will and I think I want my own counsel in this thing,” and obviously you have to work with that counsel and prepare your petition for the penalty or deal with the collection action without this person’s perhaps active cooperation. So it can get pretty messy in terms of your own representation and what you factually can represent, factually cannot, how much control you have over your case. So it is not a clean, nice, neat situation that practicing counsel often inherit. Another interesting situation is your relationship with the broker. I happen to have had the privilege of representing a lot of Customs brokers as well as importers, and the Customs broker is an agent for the importer. However, they have their own interests and they have their own liability and penalty exposure. And so their willingness to cooperate and provide information and all can interfere with your preparation of the case when they find out that they could be party to the collection of the entire penalty and duties.

*288 I did have one case where the importer disappeared, went under. And Customs was not very happy about it in a western port and so they went after the broker for a broker penalty, maxing out at $30,000. And so the broker is not necessarily your friend, not necessarily an ally, and so that can be another complicating factual situation. I want to just throw this out for you — responding to one of the comments that distinguished counsel made, and the definition of “person.” Who is likely to have liability, or who would the government go after? The court was quite clear that the issue of who is a person for purposes of collection is an issue that is straightforward: “There is simply no basis for giving an artificially limiting meaning to this most encompassing of terms, which plainly covers human beings.” So, while the Justice Department may think that things haven’t changed, the court certainly used language which opens up the possibility that individuals could have liability and be named. So that creates some discomfort on the part of importers as well. Do we have any questions? Everybody feels comfortable with the state of play? Okay. We have just a couple of minutes. There is a very practical, from the practice standpoint, consideration when you’re dealing with a client. In the good old days you’d sit down, you’d meet with the president or the vice president of a company or their head of operations, trade operations, and that was your client. And then you’d interview the witnesses. You’d talk to the compliance person. You’d talk to the broker. You’d talk to the V.P. who did the ordering and did the valuation decisions and the like. And it was nice and neat. Now, of course, it’s a fairly extensive operation where you almost have to advise them of the right to remain silent, to get their own counsel, to make sure you get a conflict of interest waiver. So the process of getting in to a client and analyzing their involvement and determining and advising individual employees what their rights are can make a relatively straightforward Customs penalty type situation quite complex, as far as being advising counsel. I have a question from the audience for Josh. MR. KURLAND: Okay. MR. JUNKER: “Do you recognize that Trek Leather will increase CBP’s leverage in dealing with small importers?” That’s a good question. MR. KURLAND: Well, let me kind of combine that a little bit with the response to your point about the term “person.” You know, if I wasn’t clear, I think we’ve always taken the view that person has that type of broad connotation, and that’s certainly not inconsistent with the general jurisprudence. I mean, we are in a time when people are speaking a lot out there about the notion of corporate personhood, and the very broad notion of person in that realm. And so I don’t know that we view it as having changed that definition. It’s always been a broad definition as far as we’re concerned. As to the specific question, whether Trek Leather changes CBP’s leverage. Again, this is just my own opinion. It would seem to me that this is

*289 one of those issues that has been around the CIT for quite a long time, but you know, only bubbled up to Trek Leather — I’m sorry, to the Circuit in Trek Leather. And so to the extent that the Circuit has now confirmed that view of Trek Leather, I guess one would imagine that CBP can now rely on that view as additional leverage. But again, for us, we — as far as I can tell, the government has, for a long time, viewed the statute as meaning what the Circuit ultimately decided it meant in Trek Leather. And so, as a result, there may be more leverage, but it’s not going to change tremendously the way that the government approaches these type of situations. For example, when you’re talking about using leverage. MR. JUNKER: Just one final thought and then we’ll close. You know, in the era of informed compliance it can be fairly said that through outreach and strong efforts by Customs, we have achieved a level of compliance among the larger importers who

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